HomeMy WebLinkAbout96-226 Resolution No. 96-226
RESOLUTION
AUTHORIZING EXECUTION OF A SUBRECIPIENT AGREEMENT WITH THE
COMMUNITY CRISIS CENTER
BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF ELGIN,
ILLINOIS, that Richard B. Helwig, City Manager, and Dolonna
Mecum, City Clerk, be and are hereby authorized and directed
to execute a Subrecipient Agreement on behalf of the City of
Elgin with the Community Crisis Center for building
rehabilitation work at 37 S. Geneva Street, a copy of which is
attached hereto and made a part hereof by reference.
s/ Kevin Kelly
Kevin Kelly, Mayor
Presented: July 24 , 1996
Adopted: July 24 , 1996
Omnibus Vote: Yeas 6 Nays 0
Attest:
s/ Dolonna Mecum
Dolonna Mecum, City Clerk
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Agenda Item No.
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July 2, 1996
TO: Mayor and Members of the City Council
FROM: Richard B. Helwig, City Manager
SUBJECT: Subrecipient Agreement With the Community
Crisis Center
PURPOSE
The purpose of this memorandum is to provide the Mayor and
members of the City Council with information to consider a
subrecipient agreement with the Community Crisis Center.
BACKGROUND
The Community Development Block Grant Program provided funds
to the Community Crisis Center for building rehabilitation
work and foundation repairs resulting from the infiltration of
water. In August of 1995 design work was awarded by the City
Council to the firm of Sutter and Schroeder. During August
and September of 1995 the Community Crisis Center was having
gutters and downspouts installed on their building. The
architect conducted an infiltration analysis after the instal-
lation of the gutters and downspouts to investigate whether
water infiltration and associated building damage was still
occurring. It was determined that the gutters and downspouts
had stopped the infiltration of water that had been occurring.
Therefore, the CDBG funds could be focused on repairing the
existing water damage and other building rehabilitation work.
The Community Crisis Center requested that the CDBG funded
work on the building be delayed until May of 1996 at which
time the lease for the occupant of the area to be repaired
would expire. On May 14th the building and necessary repair
work was reviewed with the Crisis Center by the architect.
The associated plans and specifications are nearing completion
and the CDBG required subrecipient agreement needs to be
approved and executed for the project to move forward.
4
The attached subrecipient agreement provides $62, 600 for
building rehabilitation work and that the CDBG funds be re-
turned if the Community Crisis Center is sold within 5 years
of the completion of the project. The attached agreement has
been reviewed by the Legal Department and the Community Crisis
Center.
COMMUNITY GROUPS/INTERESTED PERSONS CONTACTED
Community Crisis Center.
FINANCIAL IMPACT
The total amount of dollars set aside in CDBG funds total
$62,600 . Account 230-0000-791. 92-32 project 154123 ($52,000)
and project 154814 ($10, 600) will be charged.
LEGAL IMPACT
None.
ALTERNATIVES
A subrecipient agreement is required when $25,000 or more in
Community Development Block Grant funds is committed to a
privately owned building.
RECOMMENDATION
It is recommended that the Mayor and City Council approve the
attached subrecipient agreement. If approved a resolution
authorizing execution of the agreement will be prepared for
the next City Council meeting.
W,ypectfully submitted,
(-Q6 .k«k‘i
Rog< . Dahlstrom, Direct
Planning Department
Richard B. Helwig
City Manager
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SUBRECIPIENT AGREEMENT
COMMUNITY DEVELOPMENT BLOCK GRANT PROGRAM
COMMUNITY CRISIS CENTER
THIS AGREEMENT is entered into this ay of , 19�by and between the City
of Elgin, Illinois, a municipal corporation (herein called t e " rantee") and the Community Crisis
Center, an Illinois not-for-profit corporation (herein called the "Subrecipient).
WHEREAS, the City of Elgin has applied for and received funds from the United States
Government under Title I of the Housing and Community Development Act of 1974, Public Law
93-383; and
WHEREAS, the City of Elgin wishes to engage the Community Crisis Center to assist the City of
Elgin in utilizing such funds:
WHEREAS, the Subrecipient operates a shelter for abused women and children and provides
services to moderate and low income persons in the community.. The Community Crisis Center
1 facility is in need of building rehabilitation work and additional equipment to facilitate the
continued provision of services to the Elgin community.
NOW, THEREFORE, in consideration of the mutual promises and covenants contained herein,
the sufficiency of which is hereby acknowledged, it is agreed between the parties hereto that;
I. SCOPE OF SERVICE
A. The Subrecipient and the Grantee shall develop specifications for the building rehabilitation
work to be accomplished and for any equipment to be purchased. The specifications developed
shall be reviewed and approved by the Grantee and the Subrecipient. Bids on the specified work
shall be solicited bythe Grantee. The completed rehabilitation work and
and equipment p
equipment purchased shall be approved ,in writing, by the Subrecipient prior to payment by the
Grantee.
The Subrecipient shall be responsible for documenting the addresses, names and household
income of all persons utilizing the Community Crisis Center facility and services. A minimum of
51% of the persons provided services on an annual basis must be at or below the Section 8
Income Limits contained in Exhibit A in order for the Subrecipient to maintain eligibility for
1 the10 Community Development Block Grant funds expended on the Community Crisis Center
facility (said income levels will be updated and revised periodically by the U.S. Department of
Housing and Urban Development). Failure to meet the minimum 51% threshold shall require the
Subrecipient to reimburse the Community Development Block Program for funds expended for
the rehabilitation work to ,and equipment purchased for, the Community Crisis Center facility.
All documentation shall be available for inspection by the Grantee and representatives of the U.S.
Department of Housing and Urban Development.
II. PERFORMANCE MONITORING
The Grantee shall monitor,at a minimum, on a semi-annual basis the performance of the
Subrecipient regarding the goals and performance standards contained herein. Substandard
performance, as determined by the Grantee, shall constitute material breach of this agreement. If
action to correct such substandard performance is not taken by the Subrecipient within 30 days
after being notified by the Grantee, the Grantee may terminate this agreement, and may pursue
any remedies provided herein or by law.
III. TIME OF PERFORMANCE
The useful life of the building improvements and equipment to be purchased is estimated to be
five (5) years. Based upon life expectancy, the use of said improvements and equipment shall be
reported on by the Subrecipient and monitored by the Grantee for a five year period from the date
of this agreement. The Subrecipient shall be responsible for assuring that 51% of the persons
served by the Community Crisis Center qualify according to the Section 8 Income Limits (Exhibit
A). Purchase of all building rehabilitation work and equipment shall be completed within twelve
(12) months from the date of execution of this agreement.
IV. PAYMENT
It is expressly agreed and understood that the total amount of funding to be provided for the
Community Crisis Center building rehabilitation and equipment under this agreement shall not
exceed $62,600. The Grantee will provide payment to the selected vendors and contractors after
work completion and/or equipment delivery upon approval of the rehabilitation work and
equipment by the Subrecipient.
Payments may be contingent upon certification of the Subrecipient's financial management system
in accordance with the standards specified in OMB Circular A-110, Attachment F(see Exhibit D).
V. NOTICES
Communication and details concerning this agreement shall be directed to the following
representatives:
City of Elgin Community Crisis Center
Planning Department Gretchen Vapner
Patricia Andrews, CDBG Administrator Executive Director
150 Dexter Court 37 South Geneva Street
Elgin, IL 60120 Elgin, IL 60120
(847) 931-5911 (847) 697-2380
VI. SPECIAL CONDITIONS
The Subrecipient agrees to comply with the requirements of Title 24 Code of Federal Regulations,
Part 570 of the Housing and Urban Development regulations concerning Community
Development Block Grants and all federal regulations and policies issued pursuant to these
regulations. The Subrecipient further agrees to utilize funds available under this Agreement to
supplement rather than supplant funds otherwise available.
VII. GENERAL CONDITIONS
A. General Compliance
The Subrecipient agrees to comply with all applicable federal, state and local laws and regulations
governing the funds provided under this agreement.
B. Independent Contractor
Nothing contained in this agreement is intended to, or shall be construed in any manner, as
creating or establishing the relationship of employer/employee between the parties. The
Subrecipient shall at all times remain an independent contractor with respect to the services to be
performed under this agreement. The Grantee shall be exempt from payment of all
Unemployment Compensation, FICA, retirement, life and/or medical insurance and Workers'
Compensation Insurance as the Subrecipient is an independent Subrecipient.
C. Hold Harmless
The Subrecipient shall hold harmless, defend and indemnify the Grantee from any and all claims,
actions, suits, charges and judgments whatsoever that arise out of the Subrecipient's performance
or nonperformance of the services or subject matter called for in this agreement.
D. Workers' Compensation
The Subrecipient shall provide Workers' Compensations Insurance coverage for all employees
involved in the performance of this agreement.
E. Insurance and Bonding
The Subrecipient shall carry sufficient insurance coverage to protect contract assets from loss due
to theft, fraud and/or undue physical damage, and as a minimum shall purchase a blanket fidelity
bond covering all employees in an amount equal to cash advances from the Grantee.
The Subrecipient shall comply with the bonding and insurance requirements of Attachment B of
OMB Circular A-110, Bonding and Insurance.
F. Grantor Recognition
The Subrecipient shall ensure recognition of the role of the Grantee in providing services through
this agreement. All activities, facilities and items utilized pursuant to this contract shall be
prominently labeled as to funding source. In addition, the Subrecipient shall include a reference to
the support provided herein in all publications made possible with funds made available under this
contract.
G. Amendments
The Grantee or the Subrecipient may amend this Agreement at any time, provided that such
to this Agreement, are executed in writing, signed by a duly
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authorized representative of the parties hereto, and approved by the Elgin City Council. Such
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amendments shall not invalidate this Agreement, nor relieve or release the Subrecipient from its
obligations under this Agreement.
The Grantee may, in its discretion, amend this Agreement to conform with federal, state or local
governmental guidelines, policies and available funding amounts or for other reasons. If such
amendments result in a change in the funding, the scope of services, or schedule of the activities
to be undertaken as part of this Agreement, such modifications shall be incorporated only by a
written amendment signed by both the Grantee and Subrecipient. The Subrecipient shall
cooperate in the execution of any and all documents necessary to effect such amendments at the
sole discretion of the Grantee.
H. Suspension or Termination
Either party may terminate this contract at any time by giving written notice to the other of such
termination and specifying the effective date thereof at least 30 days before the effective date of
such termination. Partial terminations of the Scope of Service may only be undertaken with the
prior approval of the Grantee. In the event of any termination, all finished or unfinished
documents, data, studies, surveys, maps, models, photographs, reports or other materials
prepared by the Subrecipient under this agreement shall, at the option of the Grantee, become the
property of the Grantee, and the Subrecipient shall be entitled to receive just and equitable
compensation, to the extent provided by the availability of funds as provided herein, for any
satisfactory work completed on such documents or materials prior to the termination.
The Grantee may also suspend or terminate this Agreement, in whole or in part, if the
Subrecipient materially fails to comply with any term of this Agreement, or with any of the rules,
regulations or provisions referred to herein; and the Grantee may declare the Subrecipient
ineligible for any further participation in Grantee contracts, in addition to other remedies as
provided by law. In the event there is probable cause to believe the Subrecipient is in
noncompliance with any applicable rules or regulation, the Grantee may withhold up to fifteen
(15) percent of said Agreement funds until such time as the Subrecipient is found to be in
compliance by the Grantee, or is otherwise adjudicated to be in compliance.
VHI. ADMINISTRATIVE REQUIREMENTS
A. Financial Management - The Subrecipient agrees to comply with Attachment F of OMB
Circular A-110 (see Exhibit D) and agrees to adhere to the accounting principles and procedures
required therein, utilize adequate internal controls, and maintain necessary source documentation
for all costs incurred.
The Subrecipient shall administer its program in conformance with OMB Circulars A-122, "Cost
Principles for Non-Profit Organizations" (see Exhibit E) for all costs incurred whether charged on
a direct or indirect basis.
B. Records and Reports
The Subrecipient shall be responsible for the following reports and documentation:
1. For each person utilizing the Community Crisis Center the
Subrecipient shall maintain a record containing the following
information:
a. Name and address of the participant.
b. Race and ethnicity of the participant.
c. Age of the participant.
c. Any fee charged to the participant.
d. Household income of the participant.
2. The Subrecipient shall provide the Grantee with semi-annual reports on the number of
persons served by the Community Crisis Center. Said reports shall include the monthly number of
persons served, number of low and moderate income persons served, the average fee charged per
person, the average fee charged for low and moderate income persons, the percentage of persons
served that are low and moderate income, any rehabilitation work problems, and any other
information as appropriate.
4. Retention of Records - The Subrecipient shall retain all records pertinent to the
Community Crisis Center participation and expenditures incurred under this contract for a period
of five (5) years from the date of this agreement.
5. Client Data - The Subrecipient shall maintain client data demonstratingclient name,
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address, age, racial/ethnic group, household income and any fees paid to the Community Crisis
Center. Such information shall be made available to the Grantee for review upon request.
6. Disclosure - The Subrecipient understands that client information collected under this
contract is private and the use or disclosure of such information, when not directly connected with
the administration of the Grantee's or Subrecipient's responsibilities with respect to services
provided under this agreement is prohibited unless written consent is obtained from such person
receiving the service.
7. Property Records - The Subrecipient shall maintain real property inventory records
which clearly identify properties purchased with the allocated Grantee Community Development
Block Grant funds.
8. Close-Outs - Subrecipient obligations to the Grantee shall not end until all close-out
requirements are completed. Activities during this close-out period shall include, but are not
limited to; making final payments, completion of all required reporting, disposing of program
assets (return of unspent cash advances, of unused materials and program income balances) and
determining custodianship of records.
9. Audits and Inspections - All Subrecipient records with respect to any matters covered
by this agreement shall be made available to the Grantee and the U.S. Department of Housing and
Urban Development at any time during normal business hours, as often as the Grantee or the U.S.
Department of Housing and Urban Development deems necessary, to audit, examine, and make
excerpts or transcripts of all relevant data. Any deficiencies noted in audit reports shall be fully
satisfied by the Subrecipient within 30 days after receipt by the Subrecipient. Failure of the
Subrecipient to comply with the above audit requirements will constitute a violation of this
agreement and mayresult in the withholdingof future payments. The Subrecipient hereby agrees
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v anannual agency audit conducted in compliance with anyrelevant requirement of the
to have
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Single Audit Act or other audit requirements as applicable.
C. Program Income
There should be no Program Income generated from this activity which is limited to building
rehabilitation and the purchase of equipment. However, if Program Income is generated from the
disposition of anyof the materials purchased with CDBG funds, any such income shall be
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returned to the Grantee for use in the Community Development Block Grant Program.
D. Uniform Administrative Requirements
The Subrecipient hereby agrees to comply with the uniform administrative requirements contained
in 570.502 (see Exhibit B).
E. Procurement
The Subrecipient shall maintain an inventory record(s) of all personal property and materials that
may be procured with funds provided herein. All program assets shall revert to the Grantee upon
termination of this contract. As used in this agreement "program assets" shall be defined as
equipment purchased with Community Development Block Grant funds and reimbursement for
building improvements accomplished with Community Development Block Grant funds.
Additionally, if the subject property is sold within five years from the date of this agreement the
Grantee shall be reimbursed for all equipment and building improvement expenditures made with
Community Development Block Grant funds.
The Subrecipient shall procure materials in accordance with the requirements of Attachment 0 of
OMB Circular A-110, Procurement Standards, and shall subsequently follow Attachment N,
Property Management Standards, covering utilization and disposal of property.
IX. PERSONNEL AND PARTICIPANT CONDITIONS
A. Civil Rights
1. The Subrecipient agrees to comply with Title VI of the Civil Rights Act of 1964 as
amended, Title VIII of the Civil Rights Act of 1968 as amended, Section 109 of Title I of the
Housing and Community Development Act of 1974, Section 504 of the Rehabilitation Act of
1973, the Americans with Disabilities Act of 1990, the Age Discrimination Act of 1975,
Executive Order 11063, and with Executive Order 11246 as amended by Executive Orders 11375
and 12086.
2. Nondiscrimination - The Subrecipient shall not discriminate against any employee or
applicant for employment because of race, color, creed, religion, ancestry, national origin, sex,
disability, or other handicap, age, marital status, or status with regard to public assistance. The
Subrecipient shall take affirmative action to ensure that all employment practices are free from
such discrimination. Such employment practices include but are not limited to the following:
hiring, upgrading, demotion, transfer, recruitment or recruitment advertising, layoff, termination,
rates of pay or other forms of compensation, and selection for training, including apprenticeship.
3. Section 504 - The Subrecipient agrees to comply with any federal regulations issued
pursuant to compliance with Section 504 of the Rehabilitation Act of 1973, (29 U.S.C. 706)
which prohibits discrimination against the handicapped in any federally assisted program. The
Grantee shall provide the Subrecipient with any guidelines necessary for compliance with that
portion of the regulations in force during the term of this contract. Failure of the Grantee to
provide such guidelines shall not relieve the Subrecipient of the obligation to comply with the
terms of such guidelines.
B. Affirmative Action
1. Written Commitment - The Subrecipient agrees that it shall be committed to carry out
an Affirmative Action Program in compliance with the City of Elgin Ordinance No. G19-93
Amending Chapter 3.12 of the Elgin Municipal Code. The Subrecipient agrees to comply with
Chapter 3.12.100 Affirmative action-City contracts (see Exhibit F). The Subrecipient shall submit
a written commitment as provided for in Chapter 3.12.100 to the Grantee prior to the first payout.
2. Minority Business - The Subrecipient shall use its best efforts to afford minority and
women-owned business enterprises the maximum practicable opportunity to participate in the
performance of this contract. As used in this agreement, the term "minority and female business
enterprise" means a business at least fifty-one (51) percent owned and controlled by minority
group members or women. For the purpose of this definition, "minority group members" are
Afro-Americans, Spanish-speaking, Spanish surnamed or Spanish-heritage Americans,
Asian-Americans and American Indians.
3. Access to Records - The Subrecipient shall furnish all information and reports required
hereunder and shall permit access to its books, records and accounts by the Grantee, HUD or its
agent, or other authorized federal officials for purposes of investigation to ascertain compliance
with the rules, regulations and provisions stated herein.
4. Notifications - The Subrecipient shall send to each labor union or representative of
workers with which it has a collective bargaining agreement or other contract or understanding , a
notice, to be provided by the agency contracting officer, advising the labor union or worker's
representative of the Subrecipient's commitments hereunder, and shall post copies of the notice in
conspicuous places available to employees and applicants for employment.
5. EEO/AA Statement - The Subrecipient shall, in all solicitations or advertisements for
employees placed by or on behalf of the Subrecipient, state that it is an Equal Opportunity or
Affirmative Action employer.
6. Subcontract Provisions - The Subrecipient shall include the provisions of Paragraphs
VII A, Civil Rights, and B, Affirmative Action, in every subcontract or purchase order,
specifically or by reference, so that such provisions shall be binding upon each subSubrecipient or
vendor.
C. Employment Restrictions
1. Prohibited Activity - The Subrecipient is prohibited from using funds provided herein or
personnel employed in the administration of the program for political activities; sectarian, or
religious activities; lobbying, political patronage, and nepotism activities.
2. OSHA- Where employees are engaged in activities not covered under the Occupational
Safety and Health Act of 1970, they shall not be required or permitted to work, be trained, or
receive services in buildings or surroundings or under working conditions which are unsanitary,
hazardous or dangerous to the participants' health or safety.
3. Right to Know - Participants employed or trained for inherently dangerous occupations
shall be assigned to work in accordance with reasonable safety practices.
4. Labor Standards - The Subrecipient agrees to comply with the requirements of the
Secretary of labor in accordance with the Davis-Bacon Act as amended, the provisions of
Contract Work Hours, the Safety Standards Act, the Copeland "Anti-Kickback" Act and all other
applicable federal, state and local laws and regulations pertaining to labor standards insofar as
those acts apply to the performance of this contract. The Subrecipient shall maintain
documentation which demonstrates compliance with hour and wage requirements of this part.
Such documentation shall be made available to the Grantee for review upon request.
The Subrecipient agrees that, except with respect to the rehabilitation or construction of
residential property designed for residential use for less than eight (8) households, all contractors
engaged under contracts in excess of$2,000 for construction, renovation or repair of any building
or work financed in whole or in part with assistance provided under this contract, shall comply
with federal requirements of the regulations of the Department of Labor, under 29 CFR, Parts 3,
1, 5, and 7 governing the payment of wages and ratio of apprentices and trainees to journeymen;
provided, that if wage rates higher than those required under the regulations are imposed by or
local law, nothing hereunder is intended to relieve the Subrecipient of its obligation, if any, to
require payment of the higher wage. The Subrecipient shall cause or require to be inserted in full,
in all such contracts subject to such regulations, provisions meeting the requirements of this
paragraph, for such contracts in excess of$10,000.
5. Section 3 Clause - Compliance with the provisions of Section 3, the regulations set
forth in 24 CFR 135, and all applicable rules and orders issued hereunder prior to the execution of
this contract, shall be a condition of the federal financial assistance provided under this contract
and binding upon the Grantee, the Subrecipient and any subSubrecipients, their successors and
assigns, to those sanctions specified by the agreement through which federal assistance is
provided. The Subrecipient further agrees to comply with these "Section 3" requirements and to
include the following language in all subcontracts executed under this agreement:
"The work to be performed under this contract is a project assisted under a program providing
direct federal financial assistance from HUD and is subject to the requirements of Section 3 of the
Housing and Urban Development Act of 1968, as amended, 12 U.S.C. 1701. Section 3 requires
that to the greatest extent feasible opportunities for training and employment be given to lower
income residents of the project area and contracts for work in connection with the project be
awarded to business concerns which are located in, or owned in substantial part by persons
residing in the areas of the project."
The Subrecipient certifies and agrees that no contractual or other disability exists which would
prevent compliance with the requirements.
The Subrecipient agrees to send to each labor organization or representative of workers with
which it has a collective bargaining agreement or other contract or understanding, if any, a notice
advising said labor organization or worker's representative of its commitments under this Section
3 clause and shall post copies of the notice in conspicuous places available to employees and
applicants for employment or training.
The Subrecipient shall include this Section 3 clause in every subcontract and shall take
appropriate action pursuant to the subcontract upon a finding that the subSubrecipient is in
violation of regulations issued by the Grantor Agency. The Subrecipient shall not subcontract
with any subSubrecipient where it has notice or knowledge that the latter has been found in
violation of regulations under 24 CFR 135 and shall not let any subcontract unless the
subSubrecipient has first provided it with a preliminary statement of ability to comply with the
requirements of these regulations.
D. Conduct
1. Assignability - The Subrecipient shall not assign or transfer any interest in this contract
without the prior written consent of the Grantee thereto; provided, however, that claims for
money due or to become due to the Subrecipient from the Grantee under this contract may be
assigned to a bank, trust company, or other financial institution without such approval. Notice of
any such assignment or transfer shall be furnished promptly to the Grantee.
2. Hatch Act - The Subrecipient agrees that no funds provided, nor personnel employed
under this contract, shall be in any way or to any extent engaged in the conduct of political
activities in violation of Chapter 15 of Title V United State Code.
3. Conflict of Interest - The Subrecipient agrees to abide by the provisions of 24 CFR
570.611 with respect to conflicts of interest, and covenants that it presently has no financial
interest and shall not acquire any financial interest, direct or indirect, which would conflict in any
manner or degree with the performance of services required under this contract. The Subrecipient
further covenants that in the performance of this contract no person having such a financial
interest shall be employed or retained by the Subrecipient hereunder. These conflict of interest
provisions apply to any person who is an employee, agent, consultant, officer, or elected official
or appointed official of the Grantee, or of any designated public agencies or subrecipients which
are receiving funds under the CDBG Entitlement program.
4. Subcontracts - The Subrecipient shall not enter into any subcontracts with any agency
or individual in the performance of this contract without the written consent of the Grantee prior
to the execution of such agreement.
The Subrecipient shall monitor all subcontracted services on a regular basis to assure contract
compliance. Results of monitoring efforts shall be summarized in written reports and supported
with documented evidence off follow-up actions taken to correct areas of noncompliance.
The Subrecipient shall cause all of the provisions of this contract in its entirety to be included in
and made a part of any subcontract executed in the performance of this agreement.
The Subrecipient shall undertake to ensure that all subcontracts let in the performance of this
agreement shall be awarded on a fair and open competition basis. Executed copies of all
subcontracts shall be forwarded to the Grantee along with documentation concerning the selection
process.
5. Religious Organization - The Subrecipient agrees that funds provided under this
contract shall not be utilized for religious activities, to promote religious interests, or for the
benefit of a religious organization in accordance with the federal regulations specified in 24 CFR
570.200(j).
X. ENVIRONMENTAL CONDITIONS
The Subrecipient agrees to comply with the following regulations insofar as they apply to the
performance of this contract:
1. Clean Air Act, 42 U.S.C., 1857, et seq.
2. Federal Water Pollution Control Act, as amended, 33 U.S.C. 1251, et seq., as amended
1318 relating to inspection, monitoring, entry, reports, and information, as well as other
requirements specified in said Section 114 and Section 308, and all regulations and guidelines
issued thereunder.
3. Environmental Protection Agency (EPA) regulations pursuant to 40 C.F.R., Part 50, as
amended.
4. National Environmental Policy Act of 1969
5. HUD Environmental Review Procedures (24 CFR, Part 58).
6. Flood Disaster Protection - The Subrecipient agrees to comply with the requirements of
the Flood Disaster Protection Act of 1973 (P.L.-2234) in regard to the sale, lease or other
transfer of land acquired, cleared or improved under the terms of this contract, as it may apply to
the provisions of this contract.
7. Lead Based Paint - The Subrecipient agrees that any construction or rehabilitation of
residential structures with assistance provided under this contract shall be subject to HUD Lead
Based Paint Regulations at 24 CFR 570.608, and 24 CFR Part 35, and in particular Sub-part B
thereof. Such regulations pertain to all HUD-assisted housing and require that all owners,
prospective owners, and tenants or properties constructed prior to 1978 be properly notified that
such properties may include lead-based paint. Such notification shall point out the hazards of
lead-based paint and explain the symptoms, treatment and precautions that should be taken when
dealing with lead-based paint poisoning.
8. Historic Preservation - The Subrecipient agrees to comply with the Historic
Preservation requirements set forth in the National Historic Preservation Act of 1966, as amended
(16 U.S.C. 470) and the procedures set forth in 36 CFR, Part 800, Advisory Council on Historic
Preservation Procedures for Protection of Historic Properties, insofar as they apply to the
performance of this contract.
In general, this requires concurrence from the State Historic Preservation Officer for all
rehabilitation and demolition of historic properties that are fifty (50) years or older or that are
included on a Federal, State, or local historic property list.
1 zci 4
Gretchen Vapner Date Richard B. Helwig Date
Executive Director City Manager
Community Crisis Center City of Elgin
Subscribed and sworn to before me
this^dayfy of ,9 , 1996
DeLonna Mecum
City Clerk
111--
1
EXHIBIT A
L'
STATE : ILLINOIS
INMEMIT
PREPARED: 12-07-95 PROGRAM 1 PERSON 2 PERSON 3 PERSON C4OPERSON L5IPERSON S6 PERSON 7 PERSON 8 PERSON
MSA : Bloomington-Normal , IL
FY 1996 MEDIAN FAMILY VERY LOW-INCOME 16550 18900 21300 23650 25550 27450 29350 31200
INCOME: 51100 LOW-INCOME 26500 30250 34050 37850 40850 43900 46900 49950
MSA : Champaign-Urbana, IL
FY 1996 MEDIAN FAMILY VERY LOW-INCOME 15750 18000 20250 22500 24300 26100 27900 29700
INCOME: 45000 LOW-INCOME 25200 28800 32400 36000 38900 41750 44650 47500
AREA : Chicago, IL
FY 1996 MEDIAN FAMILY VERY LOW-INCOME 18950 21650 24350 27050 29200 31400 33550 35700
INCOME: 54100 LOW-INCOME 29100 33300 37450 41600 44950 48250 51600 54900
MSA : Davenport-Moline-Rock Island,
FY 1996 MEDIAN FAMILY VERY LOW-INCOME 14400 • 16500 18550 20600 22250 23900 25550 27200
INCOME: 41200 LOW-INCOME 23050 26350 29650 32950 35600 38250 40850 43500
MSA : Decatur, IL •
FY 1996 MEDIAN FAMILY VERY LOW-INCOME 14050 16100 18100 20100 21700 23300 24900 26550
INCOME: 40700 LOW-INCOME 22500 25750 28950 32150 34750 37300 39900 42450
AREA : De Kalb County, IL
FY 1996 MEDIAN FAMILY VERY LOW-INCOME 16850 19300 21700 24100 26050 27950 29900 31800
INCOME: 48200 LOW-INCOME 27000 30850 34700 38550 41650 44750 47800 50900
AREA : Grundy County, IL
FY 1996 MEDIAN FAMILY VERY LOW-INCOME 17150 19600 22050 24500 26450 28400 30400 32350
INCOME: 51000 LOW-INCOME 27450 31350 35300 39200 42350 45450 48600 51750
PMSA : Kankakee, IL
FY 1996 MEDIAN FAMILY VERY LOW-INCOME 14900 17000 19100 21250 22950 24650 26350 28050
INCOME: 42500 LOW-INCOME 23800 27200 30600 34000 36700 39450 42150 44900
AREA : Kendall County, Il
FY 1996 MEDIAN FAMILY VERY LOW-INCOME 21200 24250 27250 30300 32700 35150 37550 40000
INCOME: 61600 LOW-INCOME 29100 33300 37450 41600 44950 48250 51600 54900
MSA : Peoria-Pekin, IL
FY 1996 MEDIAN FAMILY VERY LOW-INCOME 15250 17450 19600 21800 23550 25300 27050 28800
INCOME: 43600 LOW-INCOME 24400 27900 31400 34900 37650 40450 43250 46050
MSA : Rockford, IL
FY 1996 MEDIAN FAMILY VERY LOW-INCOME 15400 17600 19800 22000 23750 25500 27300 29050
INCOME: 44000 LOW-INCOME
24650 28150 31700 35200 38000 40850 43650 46450
MSA : St. Louis, MO-IL
FY 1996 MEDIAN FAMILY VERY LOW-INCOME 15800 18100 20350 22600 24400 26200 28000 29850
INCOME: 46900 LOW-INCOME 25300 28950 32550 36150 39050 41950 44850 47750
EXHIBIT B
DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
24 CFR Part 85
'Administrative Requirements for Grants and
Cooperative Agreements to State, Local and Federally
Recognized Indian Tribal Governments"
This "common rule" is applicable to the Community
Development Block Grant Entitlement Program to the
extent specified in 24 CFR Part 570 at §570.502 (a) .
•
,:u=ra, ..:gist: I Vol. 33. tic. 18 I 7riday, March 11, 1988 / Rules and Regulations 8035
Background
In November 1983,a 20-agency task this schedule.23 agencies proposed a
force under the President's Council on government wide"common rule"in the
Management Improvement(PCMI). June 9.1987 Federal Register(52 FR
chaired by the Office of Management 21820-21862).In the same issue,OMB
and Budget(OMB).was established to proposed a revised Circular A-102(52
explore streamlining grants management FR 21 8 1 8-21 81 8).
and review OMB Circular A-102. The final common rule will be
BACKGROUND INFORMATION "Uniform Administrative Requirements codified in each agency's portion of the
for Grants to State and Local Code of Federal Regulations,as
Governments."THE "COhL*10N RULE" indicated In the Information provided
On June 18,1981.OMB published a for individual agencies below.Several
Notice in the Federal Register(19 FR agencies'rules reflect differences
24958-24959)seeking comments on over required In statute(e.g the five-year
do issues and possible options for each. record retention requirement for the
Federal agencies.States,local Department of Education programs
• governments,interest groups,business under the General Education Provisions
organizations,and nonprofit Act(CEPA)).Such differences are
.organisations,as well as members of indicated in the text.
Congress.submitted several hundred All grants administration provisions
comments in program regulations which are
Five agency-chaired teams studied the inconsistent with the common rule are
comments.existing Federal agency rescinded,except to the extent they are
Unite en Administrative Requirements grants administration regulations.and required by legislation or approved as a
for Grants and Cooperative deviation by OMB.Each agency will
noncodified manuals and handbooks
Agreements to State and Local specify to the preamble
implementing ONtB Circular A-102 to
"common"Governments and amendments additional to the
draft agovernment-wide common rule those agency regulations
.AGD4ars:Department of Agriculture: rule.The proposed common rule that are rescinded.Likewise,all grants
Department of Commerce: Department contained fiscal and administrative administration provisions of noncodified
of Defense:Department of Education: requirements for grants to State and program manuals,handbooks,and other
Department of Energy:Department of local governments (grantees) and materials which are inconsistent with
Health and Hurnan Services: subrecipients which are State and local the rule are superseded,except to the
Department of Housing and Urban governments(subgrantees).At the same extent they are required by legislation or
Development:Department of the time.OMB and the agencies prepared a approved by OMB.
Interior,Department of justice: revised Circular A-102--directed solely This rule is effective for grants and
Department of Labor. Department of to Federal agencies—containing cooperative agreements awarded on or
State:Depar meet of Transportation; guidance to Federal agencies on how after October 1.1988.the start of the
ACTION.Commission on the they should manage the award and next Federal fiscal year.As noted in the
Bicentennial of the United States administration of Federal grants. agency-specific preambles.some
Constitution:Environmental Protection On March 12,1987,the President Federal agencies may authorize earlier
Agency:Federal Emergency directed all affected agencies to effective dates.For exempla,some
Management Agency. Federal Mediation simultaneously propose and Federal agencies may allow grantees to
and Conciliation Service: Institute of subsequently adopt a common rule use the new definition of equipment and
Museum Services. National Archives verbatim.except where inconsistent the increase in the threshold for small
with statutoryrequirements.The urchase procedures as of the issuance
miaistratior.: National p p
and Records Ad.
Endowment for the Arts: National President explained that at the time it of the final rule.
• Endowment for the Humanities: was issued "Circular A-102 was a
National Science Foundation:Small significant step toward simplification of
Business Administration:Veterans grants management."He went on to say.
Administration. however,that "after 16 years.some of
ACTION:Final rule. the provisions are out of date.there are
• gaps where the standards do not cover
tsu+rsasstr:This action finalizes a important areas,and agencies have
common rule establishing consistency -interpreted the circular in numerous
and uniformity among the Federal different ways in their regulations.It is
agencies shown above in the now time for the circular to be revised to
administration of grants and cooperative reflect developments consistent with our
-agreements to State.local and federally Federalism policies and State and local
• recognized Indian tribal governments. regulatory relief objectives and the
arracrrv[Dart:This rule is effective President's Management Improvement
October 1.19t38. except for the Program"Te President directed the
Department of Transportation.See the affected agencies to propose a common
Department of Transportation agency rule within 90 days and adopt a final
specific preamble below. cotrrrnoe role within one year.To meet
.
Federal Register / Vol. 51, No. 48 / Friday. Mat ca-. 1. 1988 / Rules and Regulations
PART I!S-ADMINISTRATIVE
REQUIREMENTS FOR GRANTS AND
COOPERATIVE AGREEMENTS TO
STATE,LOCAL AND FEDERALLY
RECOGNIZED INDIAN TRIBAL
GOVERNMENTS
Su-pert A-Gerwaral
Sec
85.1 Purpose and scope of this part
652 Scope of subpart
85.3 Definitions.
85.4 Applicability.
65.5 Effect on other issuances.
85.8 Additions and Exceptions.
Subpart S-"Prrr'Award Requirements
65.10 Forms for applying for grants.
85.11 State plans.
65.12 Special grant or subgrant conditions
for"high-risk"grantees.
Subpart C-Poet-Award Requirements
Flnandal Admlaistratioo
85.20 Standards for financial management
systems. -
65.21 Payment requirements.
85.22 Allowable costs.
8523 Period of availability of funds.
8514 Matching or cost sharing.
85.25 Program income.
85.28 Non-Federal audits.
Changes,Property.and Suba wards
65.30 Changes under discretionary(project)
awards.
85.31 Real property.
85.32 Equipment.
65.33 Supplies.
85.34 Copyrights.
65.35 Subawarda to debarred and
suspended parties.
65.38 Procurement.
65.37 Subgrants.
Reports,Records Retention,and Enforcement
65.40 Monitoring and reporting program
performance.
85.41 Financial reporting.
85.42 Retention and access requirements for
records.
85.43 Enforcement
85.44 Termination for convenience.
Subpart D--After-Cre-Grant Requirements
85.50 Closeout
85.51 Later disallowances and adjustments.
8532 Collection of amounts due.
Subpart E-Entttfernenta(Reserved)
Authority.Section 7(d).Department of
Housing and Urban Development Act.42
U.S.C.3535(d).
Dated:February 10.1968.
Carl D.Covitt.
Acting Secretory.
1141 MG COO(4210-22-II
8088 Federal Resister / Vol_ 53. No 48 ; Friday. ?still: 11. ;- . and Reg.,lahons
outlay of money contributed to the assistance.such as a fellowship or other
grantee or sc.bgrantee by other public lump sure award. which the grantee is
Subpart A--General agencies and institutions.and private not required to account for.
f. 1 se and scope of this part organizations and individuals.When -Grantee"means the government to
This part establishes uniform authorized by Federal legislotion, which a grant is awarded and which is
admirustrative rules for Fede al grants Federal funds received from other accountable for the use of the funds
and cooperative agreements.ind assistance agreements may be provided.The grantee is the entire legal
considered as grantee or subgrantee entityeven if onlyparticular
subawards to State,local ant Indian a
tribal governments. cash contributions. component of the entity is designated in
"Contract"means(except as used in the grant award document.
§312 Scope or&depart the definitions for"grant"and
This subpart containsgeneral rules "subgrant"in this section and except "Local government"means a county.
D municipality.city.town.township.local
pertaining to ilia part and pn cedur•es where qualified by"Federal")a public authority(including any public
for control of exceptions fron this part procurement contract under a grant or and Indian housing agency ender the
subgrant.and means a procurement
*_ai3 Definitions. subcontract under a contract. United States Housing Act of 193?)
As used in this part: "Cost sharing or matching"means the school district. special district.intrastate
"Accrued expenditures"mean the value of the third party in-kind district.council of governments
charges incurred by the grantee during a contributions and the portion of the (whether or not incorporated as a
•
given period requiring the pr.•vision of costs of a federally assisted project or nonprofit corporation under state la%).
funds for(t)Goods and other tangible program not borne by the Federal any other regional or interstate
property received:(2)services Government. government entity.or any agency or
performed by employees.contractors. `Cost-type contract"means a contract instrumentality of a local government. .
aubgrantees. subcontractors. end other or subcontract under a grant in which "Obligations" means the amounts of
rayees:and(3)other amount..becoming the contractor or subcontractor it.paid orders placed.contracts and subgranu
owed under programs for wh ch no on the basis of the costs it incurs.with awarded,goods and services received.
current services or performance is or without a fee. and similar transactions during a given
required.such as annuities, insurance "Equipment"means tangible. period that will require payment by the
c;aims.and other benefit payments. cone x pendable.personal property gran:ee during the same or a future
"Accrued income"mean, the sum of: having a useful life of more than one period.
i )Earnings dunns a giver.period from year end an acquisition cost of$5.000 or "OMB"means the United States
f •rvices performed by the grantee and more per unit A grantee may use its Office of Management and Budget.
i. rods and other tangible.prope.ey own definition of equipment provided "Outlays"(expenditures)mean
ceiivered to purchasers. arc i:.i amounts that such definition would at least charges made to the project or program.
becoming owed to the grantee for which include ail equipment defined above. They may be reported on a cash or
n•current services or;.0 iur t once is "Expenditure report"means:(1)For acetai basis.For reports prepared on a
required by the�r :rr° ner.construction grants.the SF-269 cash basis.outlays are the sum of actual w
"Acquisition cost"of an ite n of "Financial Status Report"(or other cash disbursement for direct charges for
pu-chased equipment means the net equivalent report): (2)for construction goods and services,the amount of
in nice unit price cf the property grants.the SF-271 "Outlay Report and expense incurred.the value of
in .,ud:rthe ccs• c(-..od:i;ca'ivns. Request for Reimbursement"(or other indirect
.g in-kind contributions applied,and the
a: ace-nerds.tic essor.ea.or auxiliary equivalent report). amot:nt of cash advances and payments
apparatus necessary t3 r:.a,.e the "Federally recognized Indian tribal
made to contractors and subgrantees.
prrpert7: usable far the pa.—voice for or a gnment"means the governing body For reports prepared on an accrued
wh . a ,.c.,,;::e- ;.;Tier;.hak or es a uver mental agency of any Indian expenditure basis,outlays are the aim
But C.bs;.:_ u.a;C; ::,;:, .:.t:o , fiber band.nation, or other organized of ac:::al cash disbursements,the
tra < •r:aticr:. .,. „: protective grr;up or community(including any
in- ran_, t: in ,:::.- . . ,ci;.ded u
or tiave village as defined in section 3 of amount indirect expense incurred.the
value of
inkin::contribunona applied.
- , i...:t f,:::;t.:, ':oa 5c, :.'re.`v+d�a Native Claims Settlement i
?. 85 Stat Me)certified by the art, the new increase(or decrease)in
:,- the amounts owed by the grantee for
"- _ Se.retart•of the Interior as eligible for goods and other property received, for
... . .., ,. .:tie.: .ipeci ; rrc.grarns and services
-- rrGed by him through the Bureau of services performed by employees.
r' cont-actors. subgranteea.
..an Affairs
a.:;... .. .. .
- ,cve:nment"means n State or local subcontractors.and other payees.and
;.ei,. L_,: . , , , a;, 6 :•emriect or a federally recognized other amounts becoming owed under
= - - Lr-:�:tic t ibal government pros-rams for which no current services
.. i. ...X..;bni• : ?f.-a' _Litt
re..,u ,-, _ .s „ -Grant"means an award of financial or performance are required.such as
assistance. including cooperative annuities.insurance claims,and other
thy. .tic, - ,•:q<rarc benefit payments. •
toy-pr`.d i ._ _ass.a'. :h s,a.reemCnu.to the form of money.or es :.:IC-:..;f-c'...•.c. ;:• C..:oe property in lieu of money.by he Federal "Percentage of completion method" 1
au;na:t_.: ,i::s .. .:et c 1,,.;ua,:a. Government to ar,eligible grantee.The rare s to a system under which
does not include technical payments are made for construction
"A•..a.r..... ..,..-.... .,:.,.;• ,.,wit.n css:stance which prov des services work according to the percentage of
reaped. u,.;i.., :. ;:.e r,... .a, ..,,en:y. : .6:Pat:ei money.or other assistance in completion of the work.rather than to
and et. . 1.-5 .;Li .•., a .,.tea:sat.thettie grantee's coat insured.
,�; tn� loin of revenue staring loans,loan
part' t:.a' _ .•,:..t•, lire c.a,;,,.-ii. g•.ara.1tees. .r.terest aubaidiea. "Prior approval"means
•'Can;: cc. t.,:.fiat,:.s'rr.Ee.. a ate ir.s.irance.or direct appropriations. documentation evidencing consent prior
grantee a c:,.•r..c•uuay. ...uudind lire Also. the term does not include to incurruig specific cost
Federal Register / Vol. 53. No. 48 / Friday, March 11, 1988 / `. ules and Regulations 8089
"Real property" means land,Including as of the expiration of a grant;(3)
Health Service for the Homeless Block
land improvements, structures end Refusal to extend a grant or award Grant).
appurtenances thereto, excluding additional funds,to make a competing (3) Entitlement grants to carry out the
movable machinery and equipment. or noncompeting continuation.renewal, following programs of the Social
"Share",when referring to the extension.
or supplemental
upple an tdal award:or(4) Sec i d toy Act:
Needy Families with
awarding agency's portion of real voiding 8 P
property,equipment or supplies,means that the award was obtained Dependent Children(Title IV-A of the
the same percentage as the awarding fraudulently,or was otherwise illegal or Act,not including the Work Incentive
agency's portion of the acquiring party's invalid from inception. Program(WIN)authorized by section
total costs under the grant to which the "Terms of a grant or subgrant"mean 4002( 19( this S g)rants for WIN are
subject acquisition costs under the grant to all requirements of the grant ortr Cho his ort Enforcement end
which the acquisition cost of the subgrant.whether in statute. ( ) pp
property was charged.Only costs are to regulations,or the award document. Establishment of Paternity(Title IV-D of
be counted—not the value of third-party -Third party in-kind contributions" the Act);
in-kind contributions. mean property or services which benefit (iii)Foste: Care and Adoption
"State"means any of the several a federally assisted project or program Assistance(Title IV-E of the Act);
States of the United States. the District and which are contributed by non- (iv)Aid to the Aged.Blind,and
of Columbia. the Commonwealth of Federal third parties without charge to Disabled(Titles I.X.XIV.and XVI-
• Puerto Rico,any territory or possession the grantee.or a cost-type contractor AABD of the Act);and
any agencyunder thegrant agreement. (v)Medical Assist.tnce(Medicaid)
of the United States,or or 8
instrumentality of a State exclusive of ••Unliquidated obligations"for reports (Title XIX of the Act not include,? :he
local governments.The term does not prepared on a cash basis mean the State Medicaid Frau,i Control Nic.,:ri-n
• include any public and Indian housing amount of obligations incurred by the authorized by section 1cte"'
agency under United States Housing Act grantee that has not been paid.For (4)Entitlement grants under the,
of 1937. reports prepared on an accrued following programs of The National
1 "Subgrant"means an award of expenditure basis, they represent the School Lunch Act:
financial assistance in the form of amount of obligations incurred by the (i) School Lunch(s action 4 of the Act).
money,or property in lieu of money. it Commodity As:istance (section 8
p p y y grantee for which an outlay has not ( 1
made under a grant by a grantee to an been recorded. of the Act).
eligible subgrantee.The term includesP.ssistance(section
g g "Unobligated balance"means the (iii)Special Meal
financial assistance when provided by portion of the funds authorized by the 11 of the Act).
contractual legal agreement.but does Federal agency that has not been (iv)Summer Food Service for Children
nut include procurement purchases.nor obligated by the grantee and is (section 13 of the Act),and
does it include any fromoan of assistance determined by deducting the cumulative (v)Child Care Food Program(section
which is excluded the definition of obligations from the cumulative funds 17 of the Act).
ant" in thispart. (5)Entitlement grants under the
-grant" authorized.
"Subgrantee"r legalmeans the government following programs of The Child
or other entity to which a subgrant 1 8 5 4 Applicability. Nutrition Act ofl1k(section 3 of the Act),
is awarded and which is accountable to (a)General.Subparts A-D of this part (I)Special
the grantee for the use of the funds apply to all grants and subgrants to and
provided. governments,except where inconsistent (il)School Breakfa:t(section 4 of the
"Supplies" means all tangible with Federal statutes or with regulations Act).
personal property other than authorized in accordance with the (8)Entitlement grar to for State
"equipment" as defined in this part
exception provision of 41�8,or. Administrative expenses under The
"Suspension" means depending on the (1)Grants and subgrants to State and Food Stamp Act of 1977(section 18 of
context.either(1) temporary withdrawal local institutions of higher education or the Act).
of the authority to obligateaction byrant funds State and local hospitals. (7)A grant for an experimental.pilot.
pendingr subgrantee
corrective ci the grantee (2)The block grants authorized by the or demonstration project that is also
o
the grant.or(2) a decision taken bymia Omnibus Budget Reconciliation Act of supported by a grant listed in paragraph
the end g l is action a 1981 (Community Services;Preventive (a)(3)of this section:
agencyuspending official in accordance Cult. Health and Health Services:'Alcohol. (8)Grant funds awarded under
49 regulations implementing E O. subsection 412(e)of the Immigration and
12549 to immediately exclude a person Drug Abuse.and Mental Health Nationality Act(8 U.S.C.1522(e))and
from participating in grant transactions Services:Maternal and Child Health
for a period.pending completion of an Seances;Social Services:Low-Income subsection 501(a)of the Refugee
d investigationandsuch legal or
debarment
Home Energy Assistance:States' Education Assistance Act of 1980(Pub.
debarmennpt proceedings as may ensue. Program of Community Development Ds��'� assistance,and
h
'Termination" means permanent Block Grants for Small Cities;and medicale a e benefits
withdrawal of the authority to obligate Elementary and Secondaryadministered
by the supplemental security
is and the
previously-awarded grant funds before other than programsto refugees ue and costs of providingandth the
that authority would otherwise expire.It Secretary of Education under Title V. aassistance and benefits;
also means the voluntary relinquishment Subtitle D.Chapter 2.Section 583—the 9 Grantsc to local education agencies
of that authority by the grantee or Secretary's discretionary grant program) 20 U.S.0 238c through nen
subgrantee."Termination"does not
and Titles I-Ill of the Job Training and under 2 through 244h(portions of 241-1(a).
the
include:(1)Withdrawal of funds Partnership Act of 1982 and under the Impact Aid program). for 20
awarded on the basis of the grantee's Public Health Services Act(Section U.S.C.23id rogr and exceptt
1921),Alcohol and Drug Abuse (Entitlement Increase for Handicapped
underestimatelan of the period:(2) ed Treatment and Rehabilitation Block
Withdrawali in prior at Grant and Part C of Title V.Mental Children):and
of the unobiigated balance
•
8090 Federal Register / Vol. 53. No. 48 / Friday. March 11, 1988 / Rules and i eriuisaur,s
(10)Payments under the Veterans to plan.budget, and evaluate the work (1)Has a history of unsatisfactory
Administration's State Home Per Diem under a grant.Other supplementary performance.or
Program (38 U.S.C.841(a)). instructions may be issued only with the (2) Is not financially stable.or
(b)Entitlement programs.Entitlement approval of OMB to the extent required (3) Has a management system which
programs enumerated above in under the Paperwork Reduction Act of does not meet the management
§ 85 4(a)(3H8)are subject to Subpart 1980.For any standard form,except the standards set forth in this part,or
E. SF-424 facesheet,Federal agencies may (4) Has not conformed to terms and
shade out or instruct the applicant to conditions of previous awards. or
§ _S Effect on other issuances. disregard any line item that is not (5)is otherwise not respomible: and if
All other grants administration needed. the awarding agency determines that an
provisions of codified program (4)When a grantee applies for award will be made, special conditions
regulations.program manuals. additional funding(such as a and/or restrictions shall correspond to
handbooks and other nonregulatory continuation or supplemental award)or the high risk condition and shall be
materials which are inconsistent with amends a previously submitted included in the award.
this part are superseded. except to the application.only the affected pages
extent they are required by statute,or need be submitted.Previously submitted (b) Special conditions or restrictions
authorized in accordance with the may include:
pages with information that is still (1) Payment on a reimbursement
exception provision in § 8 S ti current need not be resubmitted
basis:
4Ja.6 Additions and exceptions §85 11 State plans. (2) Withholding authority to proceed
(a) For cla:.ses of grants and grantees (a)Scope.The statutes for some to the next phase until receipt of
subject to this part. Federal agencies programs require States to submit plans. evidence of acceptable performance
may not impose additional before receiving grants. Under within a given funding period.
administrative requirements except in regulations implementing Executive (3) Requiring additional more detailed
codified regulations published in the Order 12372."Intergovernmental Review financial reports:
Federal Register. of Federal Programs,"States are (4) Additional project monitoring:
(b)Exceptions for classes of grants or allowed to simplify,consolidate and (5) Requinng the grante or subgrantee
grantees may be authorized only by substitute plans.This section contains to obtain technical or management
OMB. additional provisions for plans that are assistance: or
(c)Exceptions on a case-by-case basis sub;ect to regulations implementing the (6)Establishing additional prior
and for subgrantees may be authorized Executive Order. approvals.
by the affected Federal agencies. (b)Requirements. A State need meet (c)If an awarding agency decides to
Subpart 8—Pr-Award Requirements only Federal administrative or impose such conditions.the awarding
programmatic requirements for a plan official will notify the grantee or
4 115-10 Forms for apptytn9 for grants. that are in statutes or codified subgrantee as early as possible.in
(a)Scope. (l)This section prescribes regulations. writing.of:
forms and instructions to be used by (c;Assurances. In each plan the State (1)The nature of the special sa_..a
governmenta: organizations(except will :nclude an assurance that the State conditions/restrictions:
hospitals and institutions of higher shall comply with all applicable Federal (2)The reason(s)for imposing them:
education operated by a government) in statutes and regulations in effect with (3)The corrective actions which must
applying for grants.This section is not respect to the periods for which it :,e taken before they will be removed
applicable,however, to formula grant receives grant funding.For this and the time allowed for completing the
programs which do not require assurance and other assurances corrective actions and
applicants to apply for funds on a required in the plan,the State may: (4)The method of requesting
project basis. (1)Cite by number the statutory or reconsideration of the conditions/
(2)This sec ion applies only to regulatory provisions requiring the restrictions imposed.
applications to Federal agencies for assurances and affirm that it gives the
grants. and is not required to be applied assurances required by those provisions. Subpart C—Post-Award Requiremerft
by grantees in dealing with applicants (2)Repeat the assurance language in
for subgrants.However.grantees are the statutes or regulations,or Financial Administration
encouraged to avoid more detailed or (3)Develop its own language to the 4 2/20 Standards for financial
burdensome application requirements extent permitted by law. management systems.
for subgrar.ts. (d)Amendments. A State will amend (a)A State must expand and account
(b)Authorized forms and instructions a plan whenever necessary to reflect:(1) for grant funds in accordance with State
forgovernmen:cl ordonizctions. (1) In New or revised Federal statutes or laws and procedures for expending and
applying for grants, applicants shall only regulations or(2)a material change in accounting for its own funds.Fiscal
use standard application forms or those any State law,organization.policy,or control and accounting procedures of
prescribed by the granting agency with State agency operation.The State will the State as well as its subgrantees and
the approval of OMB under the obtain approval for the amendment and cost-type contractors must be sufficient
Paperwork Reduction Act of 1980. its effective date but need submit for to—
(2)Applicants are not required to approval only the amended portions of (1)Per u it preparation of reports
submit more than the original and two the plan. required by this part and the statutes
copies of preapplications or
applications. 4.8_t.12 Spectat grant or suborsotl authorizing the grant.and
(3)Applicants must follow all conolttoru for"tvgti-rime"grantees. (2) Permit the tracing of funds to a
applicable instructions that tear OMB (a) A grantee or subgrantee may be level of expenditures adequate to
clearance numbers. Federal agencies considered"high risk"if an awarding establish that such funds have not been
may specify and describe the programs. agency determines that a grantee or used in violation of the restrictions and
functions. or activities that will be used subgaantrte prohibitions of applicable statutes.
••—/
I
Federal Register / Vol. 53 No. 48 / Friday, March 11. 1888 / Rules and Regulations gQgi
(b)The financial management systems disbursements.Granges must monitor disbursements.The working capital
of other grantees and subgrantees must cash drawdowns by their subgrantees to ad.ante method of payment shall not be
meet the following standards: assure that they conform substantially used by grantees or subgrantees if the
(1)Financial reporting. Accurate, to the same standards of timing and reason for using such method is the
curry it,and complete disclosure of the amount as apply to advances to the unwillingness provide or imelynabilityv ofto a the
finan� ial results of financially assisted grantees.
activities must be made in accordance (c) An awarding agency may review subgrantee to meet the sub.;rantee's
with :he financial reporting the adequacy of the financial actual cash disbursements.
requirements of the grant or subgrant. management system of any applicant for (f)Effect of program income.refunds.
(2)Accounting records. Grantees and financial assistance as part of a and audit recoveries on pa_'mert. (1)
subgrantees must maintain records preaward review or at any time Grantees and subgrantees:•hall disburse
which adequately identify the source subsequent to award. repayments
fund and
interest
re restegai requesting
on a
and application of funds provided for § 8 5 ,1 oaym•nt
financially-assisted activities.These additional cash payments for the same
records must contain information (a)Scope.This section prescribes the activity.
basic standard and the methods under (2) Except as provided in paragraph
and pertaining ho to tiont oro obligations.
awards which a Federal agency will make (�(1)of this section. grantees and
and authorizations.obligations. payments to grantees. and grantees will subgranteesoi shall disburseg program
unobligated balances, assets.income.lic .es. make payments to subgrantees and income, rebates, refunds. contract
outlays or expenditures, end contractors. settlements, audit recoveries and
(3)Internal cota ili y must Ef beetive control (b)Basic standard. Methods and interest earned on such funds before
and accountability maintained rocedures for payment shall minimize requesting aearned
cash payments.befre
for all grant and y. and
subgrant cash.real and the time elapsing between the transfer
P ng g) Withholding payments. (1) Unless
• Grantees
property. end otherm assets. of funds and disbursement by the
Grantees and subgrantees must otherwise required by Federal statute.
adequately safeguard all such property grantee or subgrantee,in accordance awarding agencies shall not withhold
and must assure that it is used solely for with Treasury regulations at 31 CFR Part payments for proper charges incurred by
205. grantees or subgrantees inau(4) Budgetrized control.
(c)Advances. Grantees and
(4) control. s mustar (i)The grantee or subgrantee has
unless—
expenditures or outlays be subgrantees shall be paid in advance.
compared with budgeted amounts for provided they maintain or demonstrate failed to comply with grant award or
each grant or subgrant.Financial the
willingness and ability to maintain conditions The or subgrantee a
information must be related to procedures to minimize the time (ii)indebted to grantee United States.
perfo,mtance or productivity data, elapsing between the transfer of the (2) Cash withheld for failuret to Corr ply
funds and their disbursement by the with grant a condition. with.tit
including the development appropriate unit cost grantee or subgrantee. with
grant awardof the grant.shall but
information whenever or g (d) Reimbursement. Reimbursement
�, sbe
specifically a required in the grant or shall be the preferred method when the released to the grantee upon subseque at
required,
agreement a unit coat data are requirements in paragraph(c) of t.�.is compliance.When a grant is suspend •d.
documentation
estimates based onep available section are not met.Grantees and payment adjustments will be made in
documentation will be acrxpttd accordance with 18�.43(c).
whenever possible. subgantees may also be paid by g A Federal agency shall not make
(5)Allowable cost Applicable OMB reimbursement for any construction (3)
r ,+ payment to grantees for amounts that
grant.Except as otherwise specified. in P y or that
cost regulations.
an agency program sfgrant regulation.Federal agencies shall not are withheld by grantees
nte es
regulations and the terms be and use the percentage of completion from payment to contractors to assure
determining
agreements will l followedl in method to pay construction grants.The satisfactory completion of work.
determining the reasonablenesf, grantee or subgrantee may use that Payments shall be made by the Federal
silo Sou ty, and mento n. of costs. agency when the grantees or
(8).Source documentation. Accounting method to pay its construction' subgrantees
records must be supported by such contractor, and if it does, the awarding withheld funds actually the disburseb thers or to
source documentation as cancelled agency's payments to the grantee or
subgrantee will be based on the escrow accounts established to assure
checks,ttendncid cos.payrolls. time and grantee's or subgrantee';actual rate of satisfactory completion of work.
attendance records,contract and di (h) Cash depositories. (1) Consisterc
subgrant award documents, etc- disbursement, t with the national goal of expanding the
(7) Cash management Procedures for (e) Working capital advances. If a
grantee cannot meet the cntena for opportunities for minority business
the minimizing the time elapsing between !� enterprises.gantees and subgrantees
the transfer of funds from the U.S. advance payments described in
Treasury and disbursement by grantees paragraph(c)of this section. and the are encouraged to use minority banks (a
Federal agency has determined that bank which is owned at least 50 percent
and subgrantees must be followed minority group members).A list of
whenever advance payment procedures reimbursement is not feasible because bynor ty owned banks can be obtained
are used.Grantees must establish the grantee lacks sufficient working.
reasonable procedures to ensure the capital. the awarding agency may from the Minority Business Development
A ens Deparmient of Commerce.
ash
receipt of reports on snbgrantees'cash provide cash or a working capital Wiy Washington. 20230.
balances and cash disbursements in advance basis.Under this procedure the as i ng onon,D or subgrantee shall
sufficient time to enable them to prepare awarding agency shall advance cash to g
complete and accurate cash transactions the grantee to cover its estimated maintain a separate bank. account only
reports to the awarding agency.When disbursement needs for an initial period when required by Federal-State
advances are made by letter-of-credit or generally geared to the grantee's agreement.
electronic transfer of funds methods,the disbursing cycle.Thereafter, the (i)Interest earned on advances.
grantee must make drawdowns as close awarding agency shall reimburse the Except for interest earned on advances
as possible to the time of making wr antee for its actual cash of funds exempt under the
8092 Federal Register / N.of 5�. N0 4d / Friday. March 11. 1988 / Rt:es and Regulat;ons
Intergovernmental Cooperation Act (31 90 days after the end of the funding awarding the contract. No costs of
U.S C.8501 et seq ) and the Indian Self- period (or as specified in a program services or property supported by this
Determination Act (23 U.S.C. 450), regulation)to coincide with the income may count toward satisfying a
grantees and subgrantees shall submission of the annual Financial cost sharing or matching requirement
promptly, but at least quarterly, remit Status Report (SF-269).The Federal unless other provisions of the grant
interest earned on advances to the agency may extend this deadline at the agreement expressly permit this kind of
Federal agency.The grantee or request of the grantee. income to be used to meet the
subgrantee may keep interest amounts 35 requirement.
up to S100 per year for administrative —24 Natchin9 a cost sAsriny. (6)Records. Costs and third party in-
expenses. •a)Basic rule:Costs and contributions kind contributions counting towards
acceptable. With the qualifications and satisfying a cost sharing or matching
3 R S 22 Allowable cats. ex:eptions listed in paragraph(b)of this
(a)Limitation on u:e of funds. Grant section.a matching or cost sharing requirement must be verifiable from the
funds may be used only for requirement may be satisfied by either records of grantees and subgrantee or
cost-type contractors.These records
(1)The allowable costs of the or both of the following: must show how the value placed on
grantees. subgrantees and cost•type (1)Allowable costs incurred by the third party in-kind contributions was
contractors. including allowable costs in grantee.subgrantee or a cost-type derived.To the extent feasible.
the form of payments to fixed-price contractor under the assistance volunteer services will ebea supported by
contractors: and agreement.This includes allowable
(2)Reasonable fees or profit to cost- costs borne by non-Federal grants or by the same methods that the organization
type contractors but not any fee or profit others cash donations from non-Federal uses to support the allocability of
(cr other increment above allowable third parties. regular personnel costs.
costs) to the grantee or subgrantee. (2)The value of third party in-kind (7)Special standards for third party
in-kind contributions. (i)Third partyin-
(b)Applicable cost principles. For co;tnbutions applicable to the period to
kindw contributions count towards
each kind of organization. there is a set which the cost sharing or matching -
of Federal principlesrequirements applies.
satisfying a cost sharing or matching
for determining y pp
allowable costs. Allowable costs will be (b) Qualifications and exceptions—(1) requirement only where,if the party
determined in accordance with the cost Costs borne by other Federal grant receiving the contributions were to pay
•
prInc:pies applicable to the organization ogreemencs. Except as provided by for them. the payments would be
incurring the costs.The following chart Federal statute. a cost sharing or allowable costs.
lists the kinds of organizations and the matching requirement may not be met (ii) Some third party in-kind
.applicable Gear rind principles. by costs borne byanother Federalgrant. contributions are goods and services -
P P :
This prohibition does not apply to that. .f the grantee.subgrantee:or
income earned by a grantee or contractor receiving the contribution
subgrantee from a contract awarded had :o pay for them,the payments
For the costa of b— Use Fria pnnaPas'''--- under another Federal grant. would have been an indirect costs.
(2)General revenue sharing. For the Costs sharing or matching credit for
State.local or,-,6a- 0+.13 _ac:;ar A az purpose of this section.general revenue such contributions shall be given only if
?na a no o,oM rt 'i �3u C�pie,a_tZZ sharing funds distributed under 31 the grantee.subgrantee.or contractor ��
o,-rariaat.on otter Fria, U.S.C.6702 are not considered Federal has established. along with its regular .
sr,i1i nsw.iit.on of grant funds.- • indirect cost rate. a special rate for
en",ao„catron (2) (3) Cost or contributions counted allocating to individual projects or
nOSpt" or Pt programs the value of the contributions.
orga� �a „mimeo towards other Federal casts-sharing
otta Grata/A-122 requirements. Neither costs nor the (iii)A third party in-kind contribution
as not a.,gect to trial j values of third party in-kind to a fixed-ph(e contract may count
•
• ctra'ia` contributions may count towards towards satis ying a cost sharing or
Er....-st,f,a trii iona._._I 01.19 Cortar A-21
Fay obi agan¢at on 48 c a Part 31. satisfying a cost sharing or matching matching regt irement only if it results
oaw x,,.:a neap Lao j Contract Cost requirement of a grant agreement if they in:
a,:an.,f(lsn.zat,[X, Pr,G-prey ano have been or will be counted towards (A)An increase in the services or
-_.-.Y;:.' Pro.:alres.0,vr,to ^ satisfying a cost sharing or matching property provided under the contract
..:.:._:.z: a-122 as rot ors'accoununy requirement of another Federal grant (without addi ional cost to the grantee
suc,o t tc Cut d C1 8 i s Ca 05 W I y
•r:n os:pnnaPea agreement.a Federal procurement or subgrantee or
;:a,:ta:,,e to U.e cor,:ract.or any other award of Federal (H; A cost s.ivings to the grantee or
waaoa.•• funds. subgrantee.
---- — - 4) Costs financed by program income. (iv)The values placed on third party
Ccs:s financed by program income,as in-kind contributions for cost sharing or 1
3" L '3 s,,.... .„....i.-..a;y,.t tun is. defined in i.5 25. shall not count matching purposes will conform to the
(a) C enera:. v1 tier. a rutiding period is towards satisfying a cost sharing or rules in the succeeding sections of this
ro,,iee e
specified fi^ charge to the matching requirement unless they are part.If a third party in-kind contribution_
P may
award only cos, ,-esuii., from expressly permitted in the terms of the is a type not treated in those sections.
. 't8
obligations,of ,r.e ^ i i.ipenudunless assistance agreement. (This use of the value placed upon it shall be fair
g u, d , � 8
carryover of unooligaied balances is general program income is described in and reasonable.
permitted 1n wr.,ch case Lie carryover 4_-1•-25(81•) (c) Valuation of donated services—(1)
bx.a.,ces::n.,• charged for casts (5)Services or property financed by Volunteer services. Unpaid services
t'eau;:.nil fro.:, c.i ia.ion:, of the income earned by contractors. provided to a grantee or subgrantee by
•
subbe4u,,1; iL.n:.ng Neno..:. Contactors under a grant may earn individuals will be valued at rates
(b L.quio,i..or o,'-.:-J..;i,:.:o„s. A income from the activities carried out consistent with those ordinarily paid for
grantee m..st,iy;.,aate art obligations under the contract in addition to the similar work in the grantee's or
incurred under the aware no; later than amounts earned from the party suhgrantee'a organization.If the grantee 1
March 11. 1988 Rules and Regulations 8093
Federal Register / Vol. 53, No. 48 / Friday. / g
or ibgrantee does not have employees land.and only depreciation or use (c)Cost of generating program
performing similar work, the rates will allowances may be counted for donated income. If authorized by Federal
be cpnsistent with those ordinarily paid equipment and buildings.The regulations or the grant agreement.costs
by other employers for similar work in depreciation or use allowances for this incident to the generation if program
the same labor market. In either case,a property are not treated as third party income may be deducted from gross
reasonable amount for fringe benefits in-kind contributions.Instead.they are income to determine program income.
may be included in the valuation. treated as costs incurred by the grantee (d)Governmental revenues.Taxes,
(21 Employees of other organizations. or subgrantee.They are computed and special assessments,levies,fines, and
•
Whin an employer other than a grantee. allocated(usually as indirect costs)in other such revenues raised by a grantee
subf rantee,or cost-type contractor accordance with the cost principles or subgrantee are not program income
furn.shes free of charge the services of specified in 0—.22.in the same way as unless the revenues are specifically
an employee in the employee's normal depreciation or use allowances for identified'in the grant agreement or
line of work.the services will be valued purchased equipment and buildings.The Federal agency regulations as program
at the employee's regular rate of pay amount of depreciation or use income.
exclusive of the employee's fringe allowances for donated equipment and (e)Royalties.Income from royalties
benefits and overhead costs. If the buildings is based on the property's and license fees for copyrighted
services are in a different line of work. market value at the time it was donated. material.patents.and inventions
paragraph-(c)(1)of this section applies. (f) Valuation of grantee or subgrantee developed by a grantee or subgrantee is
(d) Valuation of third party donated donated real property for construction/ program income only if the revenues are
supplies and loaned equipment or space. acquisition. If a grantee or subgrantee specifically identified in the grant
(1) If a third party donates supplies, the donates real property for a construction agreement or Federal agency regulations
contribution will be valued at the or facilities acquisition project.the as program income.(See § 85 34.)
market value of the supplies at the time current market value of that property (f)Property. Proceeds from the sale of
of donation. may be counted as cost sharing or real property or equipment will be.
(2) If a third party donates the use of matching.If any part of the donated handled in accordance with the
•
equipment or space in a building but property was acquired with Federal requirements of§§ 85 .31 and 85 .32. •
retains title.the contribution will be funds.only the non-federal share of the (g) Use of program income. Program •
valued at the fair rental rate of the property may be counted as cost sharing income shall be deducted from outlays
equipment or space. or matching. which may be both Federal and non-
(e) Valuation of third party donated (g)Appraisal of real property. In some Federal as described below,unless the
equipment.buildings. and land. If a third cases under paragraphs(d).(e) and(f)of Federal agency regulations or the grant
party donates equipment,buildings,or this section.it will be necessary to agreement specify another alternative
land.and title passes to a grantee or establish the market value of land or a (or a combination of the alternatives). In
subgrantee, the treatment of the donated building or the fair rental rate of land or specifying alternatives,the Federal
property will depend upon the purpose of space in a building. In these cases, the agency may distinguish between income
of the grant or subgrant, as follows: Federal agency may require the market earned by the grantee and income
(1)Awards for gran! subgrant
is. value or fair rental value be set by an earned by subgrantees and between the
the purpose of the grant or subgrant is to independentPP appraiser,and that the sources.kinds,or amounts of income.
assist the grantee or subgrantee in theWhen Federal agencies authorize the
acquisition of property. the market value value or rate be certified by the grantee. alternatives inparagraphs 2 and(3)
of that property at the time of donation This requirement will also be imposed of (g) ( )
p p y by the grantee on subgrantees. this section.program income in
may be counted as cost sharing or excess of any limits stipulated shall also
matching, § Ft S 25 grogram Income. be deducted from outlays.
(2) Otherawards. If assisting in the (a)General. Grantees are encouraged (1)Deduction. Ordinarily program
acquisition of property is not the to earn income to defray program costs. income shall be deducted from total
purpose of the grant or subgrant, Program income includes income from allowable costs to determine the net
paragraphs (e;(t) (i) and(ii)of this fees for services performed. from the use allowable costs.Program income shall
section apply:
(i) If approval is obtained from the or rental of real or personal property be used for current costs unless the
awarding agency. the market value at acquired with grant funds, from the sale Federal agency authorizes otherwise.
the time of donation of the donated of commodities or items fabricated Program income which the grantee did
equipment or buildings and the fair under a grant agreement.and from not anticipate at the time of the award
rental rate of the donated land may be payments of principal and interest on shall be used to reduce the Federal
counted as cost sharing or matching.In loans made with grant funds.Except as agency and grantee contributions rather
Ltle case of a subgrant. the terms of the otherwise provided in regulations of the than to increase the funds committed to
grant agreement may require that the Federal agency. program income does the project.
approval be obtained from the Federal not include interest on grant funds. (2)Addition.When authorized.
agency as well as the grantee. In all rebates.credits.discounts.refunds.etc.. program income may be added to the
cases,the approval may be given only if and interest earned on any of them. funds committed to the grant agreement
a purchase of the equipment or rental of (b)Definition of program income. by the Federal agency and the grantee.
the land would be approved as an Program income means gross income The program income shall be used for
allowable direct cost.If any part of the received by the grantee or subgrantee the purposes and under the conditions of
donated property was acquired with directly generated by a grant supported the grant agreement.
Federal funds,only the non-federal activity.or earned only as a result of the (3) Cost shoring or matching.When
share of the property may be counted as grant agreement during the grant period. authorized.program income may be
cost-sharing or matching. "During the grant period"is the time used to meet the cost sharing or
(ii)If approval is not obtained under between the effective date of the award matching requirement of the grant
paragraph (e)(2)(i)of this section.no and the ending date of the award agreement.The amount of the Federal
amount may be counted for donated reflected in the Final financial report grant award remains the same.
- -194 Federal Ragrator / Vol. S3. Na. 48 / Friday. March 11. L988 / Rules and Regt:lations
(h)Insure after the award period (c)Auditor selection. In arranging for (1)Any revision of the scope or
There are no Federal requirements • audit services, §ii___38 shall be objectives of the project (regardless of
•governing the disposition of program followed. whether there is an associated budget
income earned niter the end of the revision requiring prior approval).
award period(i.e..until the ending darts rtanges,Property,and Subaw2.-ds (2)Need to extend the period of
of the final financial report.see availability of funds.
paragraph(a)of this section).unless the f 135 3eChinos (3) Changes in key persons in cases
terms of the agreement or the Federal (a)General. Grantees and subgrantees where specified in an application ova
agency regulations provide otherwise. are permitted to rebudget within the grant award. In research projects, a
approved direct cost budget to meet change in the project director or
§8..52s lionrfederat audit- unanticipated requirements and may principal investigator shall always
(a)BosicRule.Grantees and make limited program changes to the require approval unless waived by the
subgrantees are responsible for approved project.However, unless awarding agency.
obtaining audits in accordance with the waived by the awarding agency.certain (4)Under nonconstruction projects.
Single Audit Act of 1984 (31 US.C.7501- types of post-award changes in budgets contracting out. subgranting(if
7)and Federal agency implementing and projects shall require the prior authorized by law)or otherwise
regulations.The audits shall be made by written approval of the awarding obtaining the services of a third party to
an independent auditor in accordance agency. perform activities which are central to
with generally accepted government (b)Relation to cost principles.The the purposes of the award.This
auditing standards covering fusaacial applicable cost principles (see § 85 .2z) approval requirement is in addition to
and compliance audits. contain requirements for prior approval the approval requirements of§ 85 .36
(b)Subgrontees. State or local of certain types of costs.Except where but does not apply to the procurement of
governments,as those terms are defined waived. those requirements apply to all • equipment. supplies.and general
for purposes of the Single Audit Act. grants and subgrants even if paragraphs support services.
that receive Federal financial assistance (c) through (f)of this section do not. (e)Additional prior approval
and provide S25.000 or more of it in a (c)Budget changes. (1) requirements.The awarding agency may
fiscal year to a subgrantee shall: Nonconstruction projects. Except as not require prior approval for any
(1)Determine whether Starr or loco: stated in other regulations or an award budget revision which is not described
subgrantees have met the audit document,grantees or subgrantees shall in paragraph(c)of this section.
requirements of the Act and whether obtain the prior approval of the (f)Requesting prior approval. (1)A
subgrantees covered by OMB Circular awarding agency whenever any of the request for prior approval of any bucgei
A-110."Uniform Requirements for following changes is anticipated under a revision will be in the same budget
Grants and Other Agreements with nonconstruction award formal the grantee used in its
institutions of Higher Education. (i)Any revision which would result in application and shall be accompanied
Hos rota and Other Nonprofit the need for additional funding. by a narrative justification for the
(ii) Unless waived by the awarding proposed revision.
Organizations"have met the audit agency cumulative transfers among (2)A request for a prior approval
requirement.(private
Commercial contractors direct cost categories. or, if applicable. under the applicable Federal cost e..„..../
te o t and private and among separately budgeted programs. principles (see § 85 77)may be made
governmental organizations)providing
goads and services to State and local projects. functions. or activities which by letter.
goveiimrcirts are not required to have a exceed or are expected to exceed ten (3)A request by a subgrantee for prior
percent of the current total approved approval will be addressed in writing to
single audit performed.State and local
govenments should use their own budget.whenever the awarding agency's the grantee The grantee will promptly
procedures to ensure that thecontractor share exceeds S100.030. review such request and shall approve
has complied with laws and regulations (iii)Transfer of funds allotted for cr disapprove the request in writing.A
affi the dittm of Federal training allowances (i.e.. from Tired grantee will not approve any budget or
funds: •
payments to trainees to other expense protect revision which is inconsistent
categories). with the purpose or terms and
(:)Determine whether the s ibgrantee (2)Construction projects. Grantees conditions of the Federal grant to the
spent Federal assistance funde provided
inccardance with applicable laws and and trubgrantees shall obtain prior grantee.if the revision.requested by the
This may be acco npliahed written approval for any budget revision subgrantee would result in a change to
bye regulations. an audit of the a ilo ionise which would result in the seed for the grantee's approved project which
gg add4tional funds. requires Federal prior approval.the
made in accordance with the Act• (3)Combined construction and grantee will obtain the Federal agency's
Circular A-110.or reviews)
ifh other means nosicosutruction projects. When a grant approval before approving the
(e.g.,program reviews) the subgrantee or subgrant provides funding for both subgrantee's request.
has not had such an audit construction and nonconstruction
(3)Ensure that appropriate corrective activities. the grantee or subgrantee f fi 5 at Real property.
action is taken within six months after must obtain prior written approval from (a) Title. Subject to the obligations
receipt of the audit report in instance of the awarding agency before making any and conditions set forth in this section,
noncompliance with Federal laws and fund or budget transfer from title to real property acquired under a
regulations: nonconstruetion to construction or vice grant or subgrant will vest upon
1 (4)Consider whether subgrantee versa. acquisition in the grantee or subgrantee
audits necessitate adjustment of the (d)Progrronmatic changes. Grantees respectively.
(b) Use. Except as otherwise provided
or subgrantees must obtain the prior P
grantee's own rzcordt:and gr
(5)Require each subgrantee to permit approval of the awarding agency • by Federal statutes.real property will be
Independent auditors to have access to whenever any of the following actions is used for the originally authorized
the records and financial statements. - anticipated: .. purposes as long as needed for that
N-..i
Federal Register / Vol. 53, No. 48 / Friday, March 11. 1988 / Rules and Regulations 8095
purposes, and the grantee or subgrantee (c) Use. (1)Equipment shall be used (4) Adequate maintenance procedures
shall not dispose of or encumber its title by the grantee or subgrantee in the must be developed to keep the property
or other interests. program or project for which it was in good condition.
(c)Disposition. When real property is acquired as long as needed,whether or (5) If the grantee or subgrantee is
no longer needed for the originally not the project or program continues to authorized or required to sell the
authorized purpose. the grantee or be supported by Federal funds.When no property, proper sales procedures must
subgrantee will request disposition longer needed for the original program be established to ensure the highest
instructions from the awarding agency. or project,the equipment may be used In possible return.
The instructions will provide for one of other activities currently or previously (e)Disposition.When original or
the following alternatives: supported by a Federal agency. replacement equipment acquired under
(1)Retention of title.Retain title after (2)The grantee or subgrantee shall a grant or subgrant is no longer needed
compensating the awarding agency.The also make equipment available for use for the original project or program or for
amount paid to the awarding agency on other projects or programs currently other activities currently or previously
will be computed by applying the or previously supported by the Federal supported by a Federal agency.
awarding agency's percentage of Government.providing such use will not disposition of the equipment will be
participation in the coat of the original interfere with the work on the projects made as follows:
purchase to the fair market value of the or program for which it was originally (1) Items of equipment with a current
property.However,in those situations acquired.First preference for other use per-unit fair market value of less than
• where a grantee or subgrantee is shall be given to other programs or S5.000 may be retained. sold or
disposing of real property acquired with projects supported by the awarding otherwise disposed of with no further
grant funds and acquiring replacement agency.User fees should be considered -obligation to the awarding agency.
real property under the same program. if appropriate. (2) Items of equipment with a current
the net proceeds from the disposition (3)Notwithstandingthe per unit fair market value in excess of
may be used as an offset to the cost of encouragement in § 5 .25(a) to earn S.5•C00 may be retained or sold and the
the replacement property. program income,the grantee or awarding agency shall have a right to an
(2)Sale of property. Sell the property subgrantee must not use equipment amount calculated by multiplying the
and compensate the awarding agency. acquired with grant funds to provide current market value or proceeds from
The amount due to the awarding agency services for a fee to compete unfairly sale by the awarding agency's share of
will be calculated by applying the with private companies that provide the equipment.
awarding agency's percentage of equivalent services,unless specifically (3) In cases where a grantee or
participation in the cost of the original permitted or contemplated by Federal subgrantee fails to take appropriate
purchase to the proceeds of the sale statute. disposition actions.the awarding agency
after deduction of any actual and (4)When acquiring replacement may direct the grantee or subgrantee to
reasonable selling and fixing-up equipment, the grantee or subgrantee take excess and disposition actions.
-N expenses.If the grant is still active,the may use the equipment to be replaced as (f)Federal equipment. In the event a
net proceeds from sale may be offset a trade-in or sell the property and use grantee or subgrantee is provided
against the original cost of the property. the proceeds to offset the cost of the federally-owned equipment:
When a grantee or subgrantee is replacement property. subject to the (1)Title will remain vested in the
directed to sell property,sales approval of the awarding agency. Federal Covenunent.
•
• procedures shall be followed that (d)Management requirements. (2) Grantees or subgrantees will
• provide for competition to the extent Procedures for mans a quip meat manage the equipment in accordance
practicable and result in the highest q p with Federal agency rules and
Bible return. (including replacement equipment), procedures,and submit an annual
whether acquired in whole or in part'
•
• (3) Transfer o title.Transfer title to inventory listing.
f with grant funds,until disposition takes the awarding agency or to a third-parry place will,as a minimum,meet-ihe (3)When the equipment is no longerneeded,the grantee or subgrantee will
designated/approved by the awarding following requirements: request disposition instructions from the
agency.The grantee or subgrantee shall (1)property records must be Federal agency.
be paid an amount calculated by maintained that include a description of (g)Right to transfer title.The Federal
applying the grantee or subgrantee's the a serial number or other
percentage of participation in the property, awarding agency may reserve the right
identification number.the source of to transfer title to the Federal
purchase of the real property to the
current fair market value of the property.who holds title.the acquisition Government or a third part named by
date,and cost of the property, the awarding agency when such a third
propem'' percentage of Federal participation in party is otherwise eligible under existing
85 12 Equlpen.nt the cost of the property.the location.use statutes. Such transfers shall be subject
(a) Tide. Subject to the obligations and condition of the property.and any to the following standards:
• and conditions set forth in this section. ultimate disposition data including the (1)The property shall be identified in
• title to equipment acquired under a date of disposal and sale price of the the grant or otherwise made known to
•
grant or subgrant will vest upon property. the grantee in writing•
acquisition in the grantee or subgrantee (2)A physical inventory of the (2)The Federal awarding agency shall
respectively. property must be taken and the results issue disposition instruction within 120
(b)States.A State will use.manage. reconciled with the property records at calendar days after the end of the
and dispose of equipment acquired least once every two years. Federal support of the project for which
under a grant by the State In accordance (3)A control system must be it was acquired.If the Federal awarding
with State laws and procedures.Other developed to ensure adequate agency fails to issue disposition
grantees and subgrantees will follow safeguards to prevent loss. damage,or instructions within the 120 calendar-day
(e)of this theft of the property.Any loss, damage, period the grantee shall follow
section.
paragraphs
(c) or theft shall be investigated 85 12(e).
(3)When title to equipment is (')Grantees and aubgrantees will new equipment and property whenever
transferred. the grantee shall be paid an maintain a contract administration each use is feasible and reduces project
amount calculated by applying the system which ensures that contractors costs.
percentage of participation in the perform in accordance with the terms. (7) Grantees and subgrantees are
purchase to the current fare market conditions. and specifications of their encouraged to use value engineering
value of the property. contracts or purchase orders. clauses in contracts for construction
(3)Grantees and aubgrantees will protects of sufficient size to offer
f AS 13 Supplies. maintain a written code of standards of reaecrtable opportunities for cost
(a) Tit,e.Title to supplies acquired conduct governing the performance of reductions.Value engineering is a
under a grant or subgrant will vest, upon their employees engaged in the award systematic and creative anaylsis of each
acquisition.in the grantee or subgrantee and administration of contracts.No contract item or task to ensure that its
respectively. employee,officer or agent of the grantee essential function is provided at the
(b)Dis,iosition.If there is a residual or subgrantee shall participate in overall lower cost.
it ventory of unused supplies exceeding selection,or In the award or (8) Grantees and subgrantees will
5:.000 in otal aggregate fair market administration of a contract supported make awards only to responsible
value upon termination or completion of by Federal funds it a conflict of interest, contractors possessing the ability to
the aware'.and if the supplies are not real or apparent.would be involved. perform successfully under the terms
needed for any other federally Such a conflict would arise when: and conditions of a proposed
sponsorea programs or projects,the (1)The employee.officer or agent. procurement.Consideration will be
grantee or rubgrantee shall compensate (ii) Any member of his immediate given to such matters as contractor
the awarding agency for Its share family, integrity.compliance with public policy.
(lil) His or her partner.or record of past performance, and
(iv)An organization which employs, financial and technical resources.
f R 5 K CoPYrtph'a or is about to employ, any of the above.
The Federal awarding agency has a financial or other interest in the (0)Grantees and subgrantees will
rnselected for award.The grantee'sma:stain records sufficient to detail the
reserves a ro ale free,nonexclusive. f:. or
y y r significant history of a procurement.
rid irrevocable license to reproduce. acbgrantee's officers, employees or
ub;ih or otherwise use. and to agents will neither solicit nor accept These records will include.but are not
s
thorize others to use. for Federal gratuities. favors or anything of necessarily limited to the following:
,:
monetary value from contractors. rationale for the method of procurement.
.oa)The
merit purposes: selection of contract type.contractor
(
(a)T copyright m:. any work potential contractors, or parties to.eselection or rejection,and the basis for
veloped under a grant_ s s
ubgrant.or subagreements.Grantee and she contract price.
antract under a grant or suiegrane and subgrantees may set minimum rules
(b;Any rights of copyright to which a where the financial interest is not (10) Grantees and subgrantees will
-arrtee, subgrantee or a contractor substent:al or the gift is an unsolicited use time and material type contracts
. chases ownership with grant support. item of nominal intrinsic value.To the oniy—
extent permitted by State or local law or (i(After a determination that no other
'....... 5 S.bswardi to debarred ar9 contract is suitable.and 'so..."regulations.such standards or conduct
euapenueo parties- will provide for penalties.aanctions.or (ii) If the contract includes a ceiling
Grantees and subgrantees must not other disciplinary actions for violations price that the contractor exceeds at its
make any award or permit any award of such standards by the grantee's and over. risk.
(sebgrant or contract) at any tier to any subgrantee's officers.employees,or (:1)Grantees and aubgrantees alone
pa which is debarred or suspended or agents.orcontractors or their eats. will be responsible.in accordance with
p � by agents.
is otherwise awarding agencymay in regulationgood administrative practice and sound
se excluded from or ineligible The a rig
for participation in Federal assistance provide additional prohibitions relative business judgment,for the settlement of
• p.c- gnu under Executive Order 12549. to reaL apparent.or potential conflicts all contractual and administrative Issues
-Debarment and Suspension." of interest. / arising out of procurements.These
(4) Grantee and snbgrantee issues include.but are not limited to
f C.O6 Pro'cu:'mont procedures will provide for a review of source evaluation.protests.disputes.
e.;,tes. Vleer, proceng property proposed procurements to avoid and claims.These standards do not
and service:: raider a grant,a State will eurohase of unnecessary or duplicative reLeve the grantee or subgrantee of any
t:.,ow .tie Ea.'.lt• ...zits and procedures items.Ccnsidetation should be given to contractual responsibilities under its
is _ire. ._'r eioceteete.nts from 3s non- consolidating or breaking out contracts.Federal agencies will not
_e.eer a. .ands.The State will ensure that prcaerements to obtain a more substitute their judgment for that of the
eveey e-:,-tia se arse cr ether contract econarnical purchase_1Nhere grantee or subgrantee unless the matter
inciedte _ny :.;;uses reecired by appropriate,an ar.alysis will be made of is primarily a Federal concern.
Federal statues and executive orders 'ease versus purchase alternatives.and Viclations of law will be referred to the
are: tie:.'i piernereeng regulations. any other appropriate analysis to local. State.or Federal authority having
Other grantees end subgrsntres will determine the most economical proper furisdietion.
follow paragraphs lb)tbrougi (i)in this approach. (12) Grantees and subgrantees will
section (5)To foster greater economy and heve protest procedures to handle and
(b)Procurement stmrtlorjs. (1) a'iiciency.grantees and subgrantees are resolve disputes relating to their
Grantees and sube.enteea will use their encouraged to enter into State and local procurements and shall in all instances
owe procc.remer.t procedures which i,tergovernmental agreements for disclose information regarding the
mileet appbcabie Srate and local laws procurement or use of common goods protest to the awarding agency.A
and regulations.provided that the and services. protestor must exhaust all
procz emerrts conform to applicable (8i Grantees and subgrantees are acleeinistrative remedies with the
Federal law and the standards identified et,eetu- -.• to use Federal excess and grantee and subgrantee before punerfng •
In this section. surplus property in lieu of per chasing a protest with the Federal agency.
•
Federal Register / Vol. 53. No. 48 / Friday. March 11, 1588 / Rules and Regulations 8097
Reviews of protests by the Federal unduly restrict competition_The (u) if sealed bids are used,the
agency will be limited to: descnptioa may include a statement of following requirements apply:
(i) Violations of Federal law or the qualitative nature of the material, (A)The invitation for bids will be
regulations and the standards of th s product or service to be procured and publicly advertised and bids shall be
section(violations of State or loaf law when necessary.shall set forth these solicited from an adequate number of
will be under the jurisdiction of State or eiinimum essential characteristics and known suppliers providing them
local authorities) and standards to which it must conform if it sufficient time prior to the date set for
(ii) Violations of the grantee's or is to satisfy its intended use_Detailed opening the bids:
subgrantee's protest procedures for product specifications should be (B)The invitation for bids. which will
failure to review a complaint or protest avoided if at all possible. When it is include any specifications and pertinent
Protests received by the Federal agency impractical or uneconomical to make a attachments,shall define the items or
other than those specified above will be clear and accurate description of the services in order for the bidder to
to referred the granteesubgrantee.or sub rantee. technical requirements,a"brand name properly respond:
e(c) Competition.(1) All procurement or equal..description may be used as a (C)All bids will be puolicl) opened at
transactions will be conducted in a means to define the performance or the time and place prescribed in the
manner providing full and open other salient requirements of a invitation for bids:
competition consistent with the procurement.The specific features of the (D)A firm fixed-prce contract award
standards of §8538.Some of the named brand which must be met by will be made in writi ig to the lowest
situations considered to be restrictive of offerors shall be dearly stated:and responsive and responsible bidder.
competition include but are not limited (ii) Identify all requirements which the Where specified in bedding dcdurnents.
to: offerors must fulfill and all other factors factors such as discounts,transportation
(i) Placing nnreaeo'nable requirements to be used in evaluating bids or cost,and life cycle co its shall be
on firms in order for them to qualify to proposals. considered in determining which bid is
do business, (4)Grantees and subgrantees will lowest.Payment disc vents will only be
(ii)Requiring unnecessary experience ensure that all prequalified lists of used to determine the low bid when
and excessive banding. persons,firms. or products which are prior experience rods :ales that such
(iii) Noncompetitive pricing practices used in acquiring goods and services are discounts are usually taken a.lvantage
between firms or between affiliated current and include enough qualified of: and
companies, sources to ensure maximum open and (E) Any or all bids+nay be re-lected if
(iv) Noncompetitive swards to free competition.Also grantees and there a is -sound docu nented eason.
an consultants that are a retainer subgrantees will not preclude potential (3) is aProcorernent by competitive
contracts. bidders from qualifying during the proposals.The techni cue of competitive
(v) Organizational conflicts of solicitation period. proposals is normally conducted with
interest. (d)Methods of procnrrernent to be more than one source submitting an
(vi) Specifying only a "brand name- followed. (1)Procurement by small more and either a fixed-price or cost•
product instead of al'.owin;"an equal" purchase procedures. Small pure offer.reimbursement type contract is
product to be offered and describing the procedures are those relatively simple awarded. It is generally used when
performance of other relevant and informal procurement methods for conditions are not appropriate for the
requirements of the procurement. and securing services.supplies,or other use of sealed bids.If this method is
(ni)Any arbit dry action in the property that do not cost more than use thes following tthis errenesmethod Ispplyt
s
procurement process. S 5..G00 in the aggregate.if small (i)Requests for proposals will be
(2)Grantees and su}rgr anteee will purchase procurements are uvd.price publicized and identify all evaluation
conduct procurements it a manner that or rate quotations will be obtained from factors and reuniters importance.
prohibits the use of statutorily or an adequate number of qualified Any response,end their publicized port for
administratively imposed in-State or sources. proposals shall be honored requests the
local geographical preferences in the (2)Procurement by sealed aids maximum extentb ed
evaluation of bids or proposals.except (formal advertising).Bids are peblidy (ii)x practical:sl cited from an
in those cases where applicable Federal solicited and a !Seen-fixed-price contract adequate Proposalsnumb will be solicited
sources:
atatotes expressly mandate or (lump sum or unit pnoe)is;awarded to riq)Grantees and subgranteesallledso will
encourage geographic preference_ the responsible bidder whose bid have a method for technical
Nothing m this section prexrnpts State conforming with all the material terries evaluationse of the proposals technic
licensing laws.When contracting for and conditions of the invitation for bids. and for selecting e
ceived
architectural and engineering(AJE) is the lowest in price.The sealed bid (iv)Awards willaa made to the
services,geographic',ocstzon rsay be a method is the preferred method for ( wafirm whose proposal is most
selection criteria provided its procuring construction.if the rn.rLit'nnt _responsible
advantageous to the program. with price
a},yilic.ation leaven salappiea.gate in II-fl-5--�(d)(2)(i)apP1Y• d other factors considered:and
number of qualified firms.given the (i)in order for sealed bidding to be an
Grantees and subgrantees may use
nature and sin of the project to feasible.the fallowing conA.it,.cs should (v)
compete for the contract. be present: competitive proposal procedures for
(3)Grantees will have written (A)A complete.adequate. and qualificatinns-based procurement of -
seiection procedures for w'esruat realistic specification or purr-'ate architectural!engineering(A/E)
traraactioea.These procedures will description is available: Prvfessaonal services whereby
ensure that all soljcitabons: (B)Two or more re y+tihle bidders competitors qualifications are
(i) Incorporate a clear and accarate are willing and able to compete evaluated and the most qualified
description of the technical effectively for the business:and competitor is selected.subject to
requirements for the material product, (C)The procurement lends itself to a negotiation of fair and reasonable
or service to be procured Such -firm fixed once contrac:and the corrponaation.The method.where price
description snail not. in competitive selection of the e ulbidder be .s of ue used procurement ie !actor,
f oo ATE
procurements, contain Cent xes-ss h made principally price. y
lSir`�7 a cuc.a, ..erg. -
professional services. It cannot be used (vi)Requiring the prime contractor,if generally will take place prior to the
to purchase other types of services subcontracts are to be let. to take the time the specification is incorporated
though A/E firms are a potential source affirmative steps listed in paragraphs into a solicitation document. However, if
to perform the proposed effort. (e)(2)(i)through(v)of this section. the grantee or subgrantee desires to
(4)Procurement by noncompetitive (f)Contract cost and price. (1) have the review accomplished after a
proposals is procurement through Grantees and subgrantees must perform solication has been developed,the
solicitation of a proposal from only one a cost or price analysis in connection awarding agency may still review the
source,or after solicitation of a number with every procurement action including specifications,with such review usually
of sources.competition is determined contract modifications.The method and limited to the technical aspects of the
inadequate. degree of analysis is dependent on the proposed purchase.
(i)Procurement by noncompetitive facts surrounding the particular (2)Grantees and subgrantees must on
proposals may be used only when the procurement situation,but as a starting request make available for awarding
award of a contract is infeasible under point.grantees must make independent agency pre-award review( delete".")
small purchase procedures,sealed bids estimates before receiving bids or procurement documents,such as
or competitive proposals and one of the proposals.A cost analysis must be requests for proposals or invitations for
following circumstances applies: performed when the offeror is required bids.independent cost estimates.etc..
(A)The.term is available only from a to submit the elements of his estimated when:
single source; cost.e.g..under professional.consulting. (i)A grantee's or subgrantee s
(B)The public exigency or emergency and architectural engineering services procurement procedures or operation
for the requirement will not permit a contracts.A cost analysis will be fails to comply with the procurement
delay resu:ting from competitive necessary when adequate price standards in this section:or
solicitatior. competition is lacking. and for sole (ii) procurement expected to
(C)The.iwarding agency authorizes source procurements,including contract exceed The procurement
and is t is be awarded
noncompetitive proposals:or modifications or change orders,unless - without e or only one bid or
(D)After solicitation of a number of price resonableness can be established offer competitionpeti in response to a
sources,competition is determined on the basis of a catalog or market price offer is received
or
inadequate. of a commercial product sold in is The procurement, is
(ii)Cost analysis.i.e..verifying the substantial quantities to the general ( T to exceed ent. which specifies a
proposed cost data,the projections of public or based on prices set by law orexpected
the data,and the evaluation of the regulation.A price analysis will be used "brand name"product;or
specific elements of costs and profit.is in all other instances to determine the (iv)The proposed award over S25.000
required. reasonableness of the proposed contract is to be awarded to other than the
(iii).Grantees and subgrantees may be price. apparent low bidder under a sealed bid
required to submit the proposed (2)Grantees and subgrantees will procurement:or
procurement to the awarding agency for negotiate profit as a separate element of (v)A proposed contract modification
pre-award review in accordance with the price for each contract in which changes the scope of a contract or
paragraph(g)of this section. there is no price competition and in all increases the contract amount by more
(e)Contracting with small and cases where cost analysis is performed. than S.25.000. ��
minority firms. women's business To establish a fair and reasonable profit. (3)A grantee or subgrantee will be
enterprise and labor surplus area firms. consideration will be given to the exempt from the pre-award review in
(1)The grantee and subgrantee will take complexity of the work to be•performed. paragraph(g)(2)of this section if the
all necessary affirmative steps to assure the risk borne by the contractor,the awarding agency determines that its
that minority firms.women's business contractor's investment.the amount of procurement systems comply with the
enterprises.and labor surplus area firms subcontracting.the quality of its record standards of this section.
are used when possible. of past performance.and industry profit (i)A grantee or subgrantee may
(2)Affirmative steps shall include: rates in the surrounding geographical request that its procurement system be
(i)Placing qualified small and area for similar work. reviewed by the awarding agency to
minority businesses and women's (3)Costs-or prices based on estimated determine whether its system meets
business enterprises on solicitation lists: costs for contracts under grants will be these standards in order for its system
(ii)Assuring that small and minority allowable only to the extent that costs to be certified.Generally, these reviews
businesses.and women's business incurred or cost estimates included in shall occur where there is a continuous
enterprises are solicited whenever they negotiated prices are consistent with high-dollar funding.and third party
are potential sources: Federal cost principles(see 4 9 5 71. contracts are awarded on a regular
(iii)Dividing total requirements,when Grantees may reference their own cost bases;
economically feasible,into smaller tasks principles that comply with the rantee or subgrantee may or quantities to permit maximum applicable Federal cost principles. (ir)A its rocurement system.Such
self-
participation by small and minority (4)The cost plus a percentage of costcertifyP
nter and women's business and percentage of construction cost self-certification shall not limit the
enterprises;
awarding agency's right to survey the
erises: methods of contracting shall not be system.Under a self-certification
(iv) the requirement
endeltve r its,whichles, used.(g)Awardingagency review. (1) procedure.awarding agencies may wish
where the requirement permits, g y
encourage participation by small and Grantees and subgrantees must make 1oantee or subgrantee that t assurances
isrom the
minority business.and women's available.upon request of the awarding g
agency.technical specifications on complying with these standards.A
business enterprises;rprises: procurements where the grantee or subgrantee will cite specific
(v)Using the services and assistance proposed
of the Small Business Administration. awarding agency believes such review procedures,regulations,standards.etc..
and the Minority Business Development is needed to ensure that the item and/or as being in nc mpliandance iance ts ith then
e
Agency of the Department of Commerce; service specified is the one being q
and proposed for purchase.This review available for review.
7ede;ta register / Vol. 53, ivo. 4.; / Fric;hy, March 11, 1988 / Rules and Regulations gQgg
(h)Bonding requirements. For (4) Compliance with the Copeland i 37 Subgrants.
construction or facility improvement "Anti-Kickback"Act (18 U.S.C.874) as (a)States. States shall follow state •
contracts or subconstracts exceeding supplemented in Department of Labor law and procedures when awarding and
S100,000, the awarding agency may regulations(29 CFR Part 3).(All administering subgrants (whether on a
accept the bonding policy and contracts and subgrants for construction cost reimbursement or fixed amount
requirements of the grantee or or repair) ' basis)of financial assistance to local
subgrantee provided the awarding (5) Compliance with the Davis-Bacon and Indian tribal governments. States
agency has made a determination that Act(40 U.S.C.276a to a-7)as shall:
the awarding agency's interest is supplemented by Department of Labor (1)Ensure that every subgrant
adequately protected.If such a regulations(29 CFR Part 5). includes any clauses required by
determination has not been made,the (Construction contracts in excess of Federal statute and executive orders
minimum requirements shall be as S2,000 awarded by grantees and and their implementing regulations:
follows: subgrantees when required by Federal (2)Ensure that subgrantees are aware
(1)A bid guarantee from each bidder grant program legislation) of requirements imposed upon them by
equivalent to five percent of the bid (g) Compliance with Sections 103 and Federal statute and regulation.
price.The"bid guarantee" ashall consist 107 of the Contract Work Hours and (3) Ensure that a provision for
of a firm commitmentcheck,such a bid
bond,certified or other Safety Standards Act (40 U.S.C.327-330) compliance with Section $5 .42 is
supplemented byDepartment of placed in esery cost reimbursement
•
negotiable instrument accompanying a as P
bid as assurance that the bidder will, Labor regulations (29 CFR Part 5). subgrant;and
upon acceptance of his bid,execute (Construction contracts awarded by (4) Conform any advances of grant
such contractual documents as may be grantees and subgrantees in excess of funds to subgrantees substantially to the
required within the time specified. S2.000, and in excess of S2,500 for other same standards of timing and amount
(2)A performance bond on the part of contracts which involve the employment that apply to cash advances by Federal
the contractor for 100 percent of the of mechanics or laborers) agencies.
controct price. A"performance bond"is (7)Notice of awarding agency (b)All other grantees. All other
one executed in connection with a requirements and regulations pertaining grantees shall follow the provisions of
contract to secure fulfillment of all the to reporting. this part which are applicable to
contractor's obligations under such (8)Notice of awarding agency awarding agencies when awarding and
contract. requirements and regulations pertaining administering subgrants (whether on a
(3)A payment bond on the part of the to patent rights with respect to any cost reimbursement or fixed amount
contractor far 1X percent of the discovery or invention which arises or is basis) of financial assistance to local
contract price. A"payment bond"is one developed in the course of or under such and Indian tribal governments. Grantees
executed in connection with a contract contract. shall:
to assure payment as required by law of (1)Ensure that every subgrant
all persons supplying labor and material (9)Awarding agency requirements includes a provision for compliance with
in the execution of the work provided and regulations pertaining to copyrights this part:
for in the contract. and rights in data. (2)Ensure that every subgrant
(i)Contract provisions. A grantee's (10)Access by the grantee,the includes any clauses required by
and subgrantee'a contracts must contain subgrantee, the Federal grantor agency. Federal statute and executive orders
provisions in paragraph (i)of this the Comptroller General of the United and their implementing regulations: an
Section.Federal agencies are permitted States, or any of their duly authorized (3) rim that subgrantees are aware
to require changes,remedies,changed representatives to any books, of imposed upon them aware
by
conditions, access and records documents,papers,and records of the of requirementserui statutes and regulations.
retention,suspension of work.and other contractoro which are directly pertinent c Exceptions. Bytheir own
clauses approved by the Office of to that specific contract for the purpose certain provisions f this partterms.not
• Procurement Policy. of making audit,examination.Excerpts. apply to ov award and administrationartdo
(1)Administrative.contractual.or and transcriptions. of plysu to the
legal remedies in instances where (11)Retention of all required records (1)Section $5-10
nta:
contractors violate or breach contract for three years after grantees or Section R S_11;
terms, and provide for such sanction' subgrantees make final payments and (2)
and penalties as may be appropriate. all other pending matters are closed. (3)The letter-of-credit procedures
at 3:
(Contracts other than small purchases) (12)Compliance with all applicable specified in Treasury Reg
(2)Termination for cause and for standards,order,or requirements CFR Part 205.cited in I 1:and
convenience by the grantee or issued under section 306 of the Clear Air (4)Section 50.
subgrantee including the manner by Act(42 US.C.1857(h)), section 306 of the Reports.Records,Retention and
which it will be effected and the basis Clean Water Act(33 U.S.C.1368). Enforcement
settlement(All contracts in excess Executive Order 11738, and
of 510.000) Environmental Protection Agency i Q�;.40 iontt°fing and re9°4�9
(3) Come Executive Order regulations(40 CFR Part 15).(C.ontracts. PrOQ1 rn WIOfT^a"ce'
11246 of September
24.1985 entitled
subcontracts,and subgrants of amounts (a)Monitoring by grantees.Grantees
amended Executive
O Ordeinit 11375 ofs in excess of 5100,000) are responsible for managing the day-to-
by 7 Order day
October 13,1967 and as supplemented in relating
Mandatoryenergy efficiencys which arets supported ectivitlesa must subgrant
Department of Labor regulations (41 i.ngmonitor grant and subgrant Grantees ted
CFR Part 60) (All construction contracts contained in the state energy
awarded in excess of S10.000 by conservation plan issued Iii compliance activities to assure compliance with
with the EnergyPolicy and applicable Federal requirements and
grantees and their contractors or Conservation Act(Pub.L.94-163). that performance goals art being
subgrantees)
1DO Federal Regis*er I Vol. 53. No 48 / Friday Marc-- '1. ;J / R-.-- and regulations
achieved Grantee monitoring must performance reporting dates which have (5) Federal agencies may provide
cover each program.function or activity stgrificant impact upon the grant or computer outputs to grantees to expedite
ib)Nonconstruction performance su'bgrant supported activity. In such or contribute to the accuracy of
reports The Federal agency may. it at cases. the grantee must inform the reporting Federal agencies may accept
decides that performance information Federal agency as soon as the following the required information from grantees --
available from subsequent applications types of conditions become known: in machine usable format or computer
contains sufficient information to meet Ai) Problems. delays.or adverse printouts instead of prescribed forms.
its programmatic needs. require the conditions which will materially impair (6) Federal agencies may waive any
grantee to submit a performance report the ability to meet the objective of the report required by this section if not
only upon expiration or termination of award.This disclosure must include a needed.
grant support.Unless waived by the statement of the action taken,or (7) Federal agencies may extend the
Federal agency this report will be due contemplated.and any assistance due date of any financial report upon
on the same date as the final Financial needed to resolve the situation. receiving a justified request from a
Status Report. (2) Favorable developments which grantee.
(1) Grantees shall submit annual enable meeting time schedules and (b) Financial Status Report.—(1)
performance reports unless the objectives sooner or at less cost than Form. Grantees will use Standard Form
awarding agency requires quarterly or anticipated or producing more beneficial 269 or 269A.Financial Status Report.to
semiannual reports. However, results than originally planned. report the status of funds for all
performance reports will not be required (e)Federal agencies may make site noncenstruction grants and for
more frequently than quarterly. Annual visits as warranted by program needs. construction grants when required in
reports shall be due 90 days after the (fi Waivers.extensions. (1)Federal accordance with paragraph
grant year.quarterly or semi-annual agencies may waive any performance § _41(e)(2)(iii)of this section.
report, shall be due 30 days after the report required by this part if not (2)Accounting basis. Each grantee
reporting period.The final performance needed. will report program outlays and program
report will be due 90 days after the , , p p g pr s
expiration or termination of grant i2;The grantee may waive any income on a cash or accrual basis as
•xpirati If a oft i performance report from a subgrantee prescribed by the awarding agency.If
upporte by a justified request
e. the Federal when not needed.The grantee may the Federal agency requires accrual
extend the due date for any performance information and the grantee's
rQency may extend the due date for any report from a subgrantee if the grantee accounting records are not normally
terformance report. Additionally. will still be able to meet its performance kept on the accural basis. the grantee
requirements for unnecessary reporting obligations to the Federal shall not be required to convert its
performance reports may be waived by agency accounting system but shall develop
the Federal agency. such accrual information through and
(2) Performance reports will contain. § 8 5 41 Financial Reporting. analysis of the documentation on hand.
or each grant.brief information on the (a) General. (1)Except as provided in (3)Frequency.The Federal agency
following: ara (a) (2) may prescribefrequency
(i) A comparison of actual
paragraphs h 8 Pe and(5)of this section, the fie uenc of the
a.conpiahmer.ts to he objectives grantees will use only the forms report for each project or program. \�
established for the encd.'Jl hers the specified in paragraphs(a)through(e) of However,the report will not be required
output of the project
P can be quaatified,a this section.and such supplementary or more frequently than quarterly.If the
u;mpu atton of the cost per unit of other forms as may from time-to tune be Federal agency does not specify the
output may be required if that authorized by OMB, for: frequency of the report.it will be
information will be useful. (i) Submitting financial reports to submitted annually.A final report will
(ii)The reasons for slippage if Federal agencies.or •
be required upon expiration or
established objectives were not met. (ii)Requesting advances or 2ertnirtation of grant support.
(iii) Additional pertinent information reimbursements when letters of credit (4) Due date.When reports are
ircludmg. when appropriate. analysis are not used. _ - required on a quarterly or semiannual
and explanation of cost over-runs or high (2) Grantees need not apply the forms basis. they will be due 30 days after the
ui:ii costs. prescribed in this section in dealing with reporting period.When required on an
3 .,r.nteeb will not be required to their subgrantees. However..grantees annual basis.they will be due 90 days
tit am: more than the original and two shall not impose more burdensome after the grant year.Final reports will be
z reports. requirements on subgrantees. due 90 days after the expiration or
_d.r.ere to the - (3) Grantees shall follow all termination of grant support.
s-t..ndr.r ds in :his section in prescribing applicable standard and supplemental (c)Federal Cash Transactions
;>�.::,.-r:L n,c repo.tu ig requirements for Federal.agency instructions approved by Reper t—(1)Form. (i)For grants paid by
su; a. - OLfl to the extend required under the letter or credit,Treasury check
Cor.s;r Jcnw:performance reports. Paperwork Reduction Act of I980 for use advances or electronic transfer of funds.
Fc: the iccbt par..on-site technical in connection with forms specified in the grantee will submit the Standard
ins:',c::,.c_. dill.crr.:aed percentage-of- paragraphs (b) through (e) of this Form 272.Federal Cash Transactions
eor,,p,e;:,.i. de,., are relied on heavily by section.Federal agencies may issue Report. acid when necessary.its
Fec oral agencies to monitor progress substantive supplementary instructions continuation sheet,Standard Form 272a.
un:.er cc nstruc:'on grants ana only with the approval of OMB.Federal unless the terms of the award exempt
subgrants The federal agency will agencies may shade out or instruct the the grantee from this requirement.
re.u:re aaaniurai formai performance grantee to disregard any line item that ail)These reports will be used by the
• reports only ' :.en considered the Federal agency finds unnecessary Federal agency to monitor cash
nec esaary. and never more frequently for its deciaionmaking purposes. advanced to grantees and to obtain
than quarterly. (4) Grantees will not be required to disbursement or outlay information for
(a)Significunt developments. Events submit more than the original and two each grant-from grantees.The format of
may occur between the scheduled - copies of forms required under this part. the report may be adapted as-
•..._/
Federal Re *ter / Vol. 53, No. 48 / Friday. March 1•t, 1988 t Rules and Regulations 8101
appropriate when reporting is to be electronic Funds transfer or Treasury The awarding agency will request
accomplished with the assistance of check advance. transfer of records to its custody when it
automatic data processing equipment (i)When a construction grant is paid determines that the records possess
provided that the information to be by letter of credit.electronic funds long-term retention value.When the
submitted is not changed in substance. transfer or Treasury check advances, records are transferred to or maintained
(2)Forecasts of Federal cash the grantee will report its outlays to the by the Federal agency.the 3-year
requirements. Forecasts of Federal cash Federal agency using Standard Form retention requirement is not applicable
requirements may be required in the 271.Outlay Report and Request for to the grantee or subgrantee.
"Remarks"section of the report. Reimbursement for Construction (c)Starting date of retention period—
(3) Cash in hands of subgrantees. Programs.The Federal agency will (1) General. When grant support is
When considered necessary and provide any necessary special continued or renewed at annual or other
feasible by the Federal agency.grantees instruction.However,frequency and due intervals, the retention period for the
may be required to report the amount of date shall be governed by } 5 41(b) records of each funding period starts on
cash advances in excess of three days' (3) and(4). the day the grantee or subgrantee
needs in the hands of their subgrantees (ii)When a construction grant is paid submits to the awarding agency its
or contractors and to provide short by Treasury check advances based on single or last expenditure report for that
narrative explanations of actions taken periodic requests from the grantee.the period.However, if grant support is
by the grantee to reduce the excess advances will be requested on the form continued or renewed quarterly,the
b
balances. specified in § (d). retention period for each year's records
(4)Frequency and due date. Grantees (iii)The Federal agency may starts on the day the grantee submits its
must submit the report no later than 15 substitute the Financial Status Report expenditure report for the last quarter of
working days following the end of each specified in § 85 41(b)for the Outlay the Federal fiscal year. In all other
quarter.However, where an advance Report and Request for Reimbursement cases, the retention period starts on the
either by letter of credit or electronic for Construction Programs. day the grantee submits its final
transfer of funds is authorized at an (3)Accounting basis.The accounting expenditure report.If an expenditure
annualized rate of one million dollars or basis for the Outlay Report and Request report has been waived, the retention
more,the Federal agency may require for Reimbursement for Construction period starts on the day the report
the report to be submitted within 15 Programs shall be governed by would have been due.
working days following the end of each § 8 5.41(b)(2). (2)Real property and equipment
month. §-S_5_42 Retention and*cases records.The retention period for real
(d)Requestfor advance or
requirements for records. property and equipment records starts
reimbursement--(1)Advance payments.
Requests for Treasury check advance (a)Applicability. (1)This section from the date of the disposition orreplacement or transfer at the direction
payments will be submitted on Standard applies to all financial and of the awarding agency.
Form 270, Request for Advance or programmatic records.supporting (3)Records for income tronsoctions
Reimbursement (This form will not be documents, statistical records,and other after grant orsubgrant support. In some
used for drawdowns under a letter of records of grantees or subgrantees cases grantees must report income after
credit,electronic funds transfer or when which are: the period of grant support.Where there
Treasury check advance payments are (i) Required to be maintained by the is such a requirement.the retention
made to the grantee automatically on a terms of this Part,program regulations period for the records pertaining to the
predetermined basis.) or the grant agreement.or
(2)Reimbursements. Requests for (ii) Otherwise reasonably considered earning of the income starts from the
as pertinent to program regulations or end of the grantee's fiscal year in which
reimbursement under nonconatruction the income is earned.
grants will also be submitted on the grant agreement. (4)indirect cost rote proposals, cost
Standard Form 270. (For reimbursement (2)This section does not apply to
records maintained by contractors or allocations plans.etc.This paragraph
requests under construction grants.see paragraph (e)(1)of this section.) subcontractors. For a requirementapplies to the following types of to documents,and supporting records:
(3)The frequency for submitting place a provision concerning records in indirect cost rate their supporting
or
certain kinds of contracts.see
1payment requests is treated in proposals.cost allocation plans. and any
§ 5 .41(b)(3). § 85 36(i)(10).
utlay
b Len ofretention period. (1) similar accounting computations of the
reimbursement for construction Except as otherwise provided,records
(e) O report and request for ( )Lengthrate at which a particular group of costs
must be retain
ed for three years from is chargeable(such as computer usage
programs. (1) Grants that support chargeback rates or composite fringe
the starting date specified in paragraph B p �
construction reimbursementctivities paid by (c)of this section. benefit rates).
qestsmethod. (i)Ifsubmitted orn negotiation. If the
(i)Requests for reimbursement under (2)1f any litigation claim.negotiation. f �
construction grants will be submitted on audit or other action involving the proposal.plan.or other computation is
Standard Form 271.Outlay Report and records has been started before the required to be submitted to the Federal
Request_ expiration of the 3-year period.the Government(or to the grantee) to form
Construction
t Reimbursement Programs.Federal for p the basis for negotiation of the rate,then -
agencies records must be retained untilriod for
may,however,prescribe the Request for completion of the action and resolution the 3-yearje retentio sans from its date
Advance or Reimbursement form, of all issues which arise from it.or until supporting
R.5 41 of such submission.
for-rn specified in § (d),instead of this the end the regular 3-year period. it 1 not submitted for negotiation.If
form w whichevee r is later. ( ) j
(ii)The frequency for submitting (3)To avoid duplicate recordkeeping. the proposal.plan.or other computation
reimbursement requests is treated in awarding agencies may make special is not required to be submitted to the
§ a. -41(b)(3). arrangements with grantees and Federal Government(or to the grantee)
(2)Grants that support construction subgrantees to retain any records which for negotiation purposes.then the 3-year
activities paid by letter of credit. art continuously needed for 1oint use. retention period for the proposal plan.or
4102 Federal it igicter / Vol. 53. No. 48 / Friday. March U. 1966 f Rules and Regutauons
computation and its supporting records (cJ Effects of suspension and actions and all required work of the
starts from end oflhe fiscal year(or termination. Costs of grantee or grant has been completed.
other accounting period) covered by tie subgrantee resulting from obligations ,(b)Reports. Within 90 days after the
proposal.plan.or other computation. incurred by the grantee or aubgrantee expiration or termination of the grant.
id)Substitution of microfilm. Copies during a suspension or after termination the grantee must submit all financiul.
' made by microfilming.photocopying.or plan award are not allowable unless performance.and other reports required
similar methods may be subs ituted for the awarding agency expressly as a condition of the grant.Upon request
the original records. authorizes them in the notice of by the grantee.Federal agencies may
(e)Access to records—(1)Records of suspension or termination or extend this timeframe.These may
grantees and subgrantees.The awarding subsequently.Other grantee or include but are not limited to:
agency and the Comptroller General of subgrantee costs during suspension or (1)Final performance or progress
the United States,or any of their after termination which are necessary report.
Authorized representatives.shall have and not reasonably avoidable are (2)Financial Status Report(SF269)or
the right of access to any pertinent allowable if: Outlay Report and Request for
broke.documents,papers.or other . jl)The costs result from obligations Reimbursement for Construction
xe:nrds of grantees and subgrantees which were properly incurred by the Programs(SF-271)(os applicable.)
which.are pertinent to the grant.in order grantee or subgrantee before the 13)Final request for payment(SF-270)
to make audits.examinations.excerpts. effective date of suspension or (if applicable).
and transcripts. termination,are not in anticipation of it, (4)invention disclosure(if
(2)Expiration of right of access.The and, in the case of a termination,are applicable)•
rights of access in this section must not noncancellable.and. (5)Federally-owned property report.-
be limited to the required retention (2)The costs would be allowable if .In accordance with § 8 5 32(f). a
period but shall last as long as the the award were not suspended or grantee must submit an inventory of all
records are retained. expired normally at the end of the federally owned property(as distinct
if)Restrictions on public occess.The funding period in which the termination from property acquired with grant
Federal Freedom of Information Act(3 Makes effect. 'funds) for which it is accountable and
U.S.C.552)does not apply to records (d)Relationship to Debarment and request disposition instructions from the
Unless required by Federal.State.or Suspension.The enforcement remedies Federal agency of property no longer
local law.grantees and subgrantees are identified in this section.including needed.
not required to permit public access to suspension and termination,do riot (c)Cost adjustment.The Federal
their records. preclude grantee or subgrantee from agency will,within 90 days after receipt
i_sa Enforcement subject to"Debarment and of reports in paragraph(b)of this
iSuspension"under E.O.O 12549(see section,make upward or downward
(:i)Remedies for noncompliance.If a 'i S 5 35), adjustments to the allow.-able costs.
gra itee or subgrantee materially fails to (d)Cash adjustments. (1)The Federal
ccrn ly with any term of an award. . R 5 44 Termination for convenience, agency will make prompt payment to the
whether stated in a Federal statute or Except as provided in 3 85 43 grantee for allowable reimbursable `-.-
regulation.an assurance.In a State plan awards may be terminated in whole or costs.
or application,a notice of award.or in_part only as follows: (2)The grantee must immediately
•elsewhere,the awarding agency may (a)By the awarding agency with the refund to the Federal agency any
take one or more of the following consent of the grantee or subgrantee in balance of unobligated(unencumbered)
actions,as appropriate in the which case the two parties shall agree cash advanced that is not authorized to
circumstances: upon the termination conditions, be retained for use on other grants.
11)Temporarily withhold cash including the effective date and in the $5 St cater disallowances and
payments pending correction of the case of partial termination.the portion
deficiencythegrantee or subgrantee adjustments.
by gr to be terminated,nr The closeout of a grant does not
or more severe enforcement action by (b)By the grantee ar subgrantee upon
the awarding agency, written notification to the awarding affect:
(2)Disallow(that is.deny both use of agency.setting forth the reasons for (a)The Federal agency's right to
funds and matching credit for)all or part such termination.the effective date.and disallow costs and recover funds on the
of the cost of the activity oraction riot in in The case of partial termination.the basis of a later audit or other review,
compliance, poation to be terminated.However.If,in (b)The grantee's obligation to return
(3)Wholly or partly suspend or tie case of a partial termination.the any funds due as a result of later
terminate the current award for the awarding agency determines that the refunds.corrections.or other
grantee's or s.bgrantee's program. remaining portion of the award will not transactions:
j4)Withhold further awards for She accomplish the purposes for which the i (c Records retention as required in
program.or •
award was made.the awarding agency
15)Take other remedies that may be may terminate the award in its entirety (d)Property management
legally available. - under either i 8S---43 or paragraph(a) requirements in 5§ .5-31 and
(b)Hearings,appeals.In taking an of this section. i 85 17- and
enforcement action the awarding (e)Audit requirements in q 85 26.
agency will provide the grantee or Subpart D—After-The-Grant 85 52 Collection of amounts due.
subgrantee an opportunity for such Requirements (a)Arty funds paid to a grantee in
hearing.appeal. or other administrative 4 8 5 50 seout excess of the amount to which the
proceeding to which t.he,grantee nr
aubgrantee is entitled under.any statute (a) General The Federal agency will grantee is finally determined to be
or regulation applicable 1othe action c ose.out the award when it determines entitled under the terms of the award
Involved. that.all applicable administrative constitute a debt to the Federal
•
Federal Register / Vol. 53. No. 48 / Friday, March 11, ia88 / Rules and Regulations 8103
Government. If not paid within a (b)Except where otherwise provided Subpart E—Entitlement[Reserved]
reasonable period after demand, the by statutes or regulations, the Federal lFR Doc.as-S251 Filed 3-�a-aa.a�s.m�
Federal agency may reduce the debt by: agency will charge interest on an
(1) Making an adminstrative offset overdue debt in accordance with the e1LLH«G coats 3410-Rs-Y,4150--Y 1102S-01-1‘.
3510-JI-Id, 4710-2r-Y,42 10-32-Y. 4410-I Sal 1310-
agalnst other requests for Federal Claims Collection Standards (4 73 44 032-01-M,31110-01-Y, 4000-01-1‘. )Si3-01-w.
reimbursements. CFR Ch.II).The date from which 1720-01-Y.S540-S0-41. 4310-+1if-Y, 1173S-21-Y, 4I3-
(2) Withholding advance payments interest is computed is riot extended by ' -2 � 1-,-0910i2'�
otherwise due to the grantee, or litigation or the filing of any form of
(3)Other action permitted by law. appeal.
EXHIBIT C
09:0642 HOUSING AND DEVELOPMENT REPORTER
8)Rehabilitation loans made with non- (d) Outstanding findings. .twith- §570.601 Public Law 88-352 and •
CP:G funds. If the deposited funds o s.•nding any other provision o this sec- Public Law 90-284; affirmatively
pro: am income derived from deposit:• tio•, no recipient shall enter •nto a new furthering fair housing; Executive Order
fund are used to subsidize or guaran -e agre• ent during any perio; of time in 11063.
repay' ents of rehabilitation loans m•de which -n audit or monitor' g finding on a
with .n-CDBG funds, or to provi.- a previou ump sum draw-,own agreement (a) The following requirements apply
supple ental loan or grant to the bor ow- remains u•resolved. according to sections 104(b) and 107 of
er of the non-CDBG funds,the reha. lita- (e) Prior notificati,n. The recipient the Act:
Lion a ivities are considered t s be shall provide e H .D field office with (I) Public Law 88-352,which is title VI
CDBG-a sisted activities subject o the written notific io• of the amount of of the Civil Rights Act of 1964(42 U.S.C.
requirem: is applicable to such activi- funds to be distri't ted to a private finan- 2000d et seq.), and implementing regula-
ties,excep that repayment of no CDBG cial institution •.e . e distribution under lions in 24 CFR part 1.
funds sha not be treated as .rogram the provision of th section. (2) Public Law 90-284, which is the
income. (f) Recor. eeping •quirements. The Fair Housing Act (42 U.S.C. 3601-3620).
(9) Provi .on of consideratio . In con- recipient s all maintain • its files a copy In accordance with the Fair Housing Act,
sideration fts the lump sum .eposit by of the ritten agreemen and related the Secretary requires that grantees
the recipient a private fina ial institu- docu nts establishing ,nformance administer all programs and activities
tion, the dep. it must result n appropri- wit his section and concern[ : perfor- related to housing and community devel-
ate benefits in support of t e recipient's m• ce by a financial institution t .ccor- opment in a manner to affirmatively
local rehabilita ion progr . Minimum r•nce with the agreement. further the policies of the Fair Housing
requirements fo such be efits are: Act. Furthermore, in accordance with
(i) Grantees s •11 re u' e the financial section 104(b)(2) of the Act, for each
q Subpart K—Other Program community receiving a grant under sub-
institution to pa inter: t on the lump Requirements part D of this part, the certification that
sum deposit. the grantee will affirmatively further fair
(A)The interest ate said by the finan- §570.600 General. housing shall specifically require the
three institution sw•Il .e no more than grantee to assume the responsibility of
points below e rate to one year
Treasury obligation= at constant maturi- (a) This subpart K enumerates laws fair housing planning by conducting an
ty.
that the Secretary will treat as applicable analysis to identify impediments to fair
(B) When an a: :-men[ sets a fixed to grants made under section 106 of the houstaking ing choice oiatetthin its actions to orisdiction,
vercome
interest rate for t e -ntire term of the Act, other than grants to States made the effects ofappropriate
impediments identified
agreement, the ra e st ould be based on pursuant to section 106(d) of the Act, for any
the rate at the ime the agreement is purposes of the Secretary's determina- through that analysis, and maintaining
tions under section 104(e)(1) of the Act, records reflecting the analysis and actions
executed. in regard.
(C)The agree ent m y provide for an including statutes expressly made appli- this e e 1 1063,as amended
interest rate th would 'uctuate periodi- cable by the Act and certain other statutes by Executive Executive
ti Order 1 10 (3 CFR,amended
cally during t - term o' the agreement, and Executive Orders for which the Sec- y 3 Comp., Orderp. 3 CFR, 1980CFComp-
but at no time -hall the rat be established retary has enforcement responsibility. 307) (Equal Opportunity in Housing),
at more than hree points below the rate This subpart K applies to grants made and implementing regulations in 24 CFR
on one year 'reasury obli ations at con- under the Insular areas program in art pl en apply.
stant maturi . §570.405, with the exception of p
(ii) In addition to the payment of §570.612.The absence of mention herein 570.602 Section 109 of the Act.
interest, at least one of e following of any other statute for which the Secre- §
benefits m st be provided 1 y the finan- tary does not have direct enforcement
cial instit ion: responsibility is not intended to be taken (a)Section 109 of the Act requires that
(A) Lev:rage of the deposited funds so as an indication that, in the Secretary's no person in the United States shall on
that the inancial institutio' commits opinion, such statute or Executive Order the ground of race,color,religion,nation-
private f nds for loans in the rehabilita- is not applicable to activities assisted al origin,or sex,be excluded from partici-
tion prop am in an amount s .stantially under the Act. For laws that the Secretary pation in, or be denied the benefits of. or
in exces• of the amount of the ump sum will treat as applicable to grants made to be subjected to discrimination under, any
deposit; States under section 106(d)of the Act for program or activity funded in whole or in
(B) commitment of private unds by purposes of the determination required to part with community development funds
the fin•ncial institution for reha,ilitation be made by the Secretary pursuant to made available pursuant to the Act. For
loans -t below market interest ates, at section 104(e)(2) of the Act, see purposes of this section "program or
than than normal e t or wit longer §57) 487.This
activity" is defined as any function con-
than normal repayment periods; or (b) Thi subpart also sets forth certain ducted by an identifiable administrative
(C) Provision of administrati e ser- additional program requirements which unit of government, subrecipient, or pri-
vices in support of the rehabi 'cation the Secretary has determined to be appli- vete o ccontractor
cei loangs from mhe unity de-
pro• am by the participating fi ancial cable to grants provided under the Act as velopment
ution at no cost or at lowe than a matter of administrative discretion. ent. "Funded in whole or in part with
act • cost. (c) In addition to grants made pursuant community development funds" means
(•) Program income. Interest earn-d on to section 106(b) and 106(d)(2)(B) of the that community development funds in
lu p sum deposits and payment. on Act (Subparts D and F, respectively), the any amount in the form of grants or
to ns made from such deposits are pro- requirements of this Subpart K are appli- proceeds from HUD guaranteed loans
: am income and, during the perils• of cable to grants made pursuant to sections have been transferred by the recipient or
e agreement, shall be used for reh bili- 107 and 119 of the Act (Subparts E and a subrecipient to an identifiable adminis-
tation activities under the provisio s of G, respectively), and to loans guaranteed trative unit and disbursed in a program or
this section.
pursuant to Subpart M. activity. In subsection (b) of the section,
. Published by Warren Gorham Lamont
COMMUNITY DEVELOPMENT
09:0643
HDR RF-782
4-29-96
"subrecipient" means recipient as identi- is sufficient evidence to conclude that (b) The regulations in 24 CFR part 70
Pied in 24 CFR 1.2(0. such discrimination existed, the recipient apply to the use of volunteers.
(b)Specific discriminatory actions pro- must take remedial affirmative action to
hibited and corrective actions. overcome the effects of prior discrimina- §570.604 Environmental standards.
(1) A recipient may not, under any tion. The word "previously does not
program or activity to which the regula- exclude current discriminatory practices. For purposes of section 104(g) of the
tions of this part may apply, directly or (ii) In the absence of discrimination, a Act, the regulations in 24 CFR part 53
through contractual or other arrange- recipient, in administering a program or specify the other provisions of law which
ments, on the ground of race, color, activity funded in whole or in part with further the purposes of the National Envi-
religion, national origin, or sex: funds made available under this part, ronmental Policy Act of 1969, and the
(i) Deny any individual any facilities, may take any nondiscriminatory affirma- procedures by which grantees must fulfill
services, financial aid or other benefits tive action necessary to ensure that the their environmental responsibilities. In
provided under the program or activity. program or activity is open to allow certain cases,grantees assume these envi-
(ii) Provide any facilities, services, fi- without regard to race, color, religion, ronmental review, decisionmaking, and
nancial aid or other benefits which are national origin or sex. action responsibilities by execution of
different, or are provided in a different (iii) After a finding of noncompliance grant agreements with the Secretary.
form, from that provided to others under or after a recipient has a firm basis to
the program or activity. conclude that discrimination has oc- §570.605 National Flood Insurance
(iii)Subject an individual to segregated curred,a recipient shall not be prohibited program,
or separate treatment in any matter of by this section from taking any action
process related to receipt of any service or eligible under Subpart C to ameliorate an Notwithstanding the date of HUD ap-
benefit under the program or activity. imbalance in services or facilities provid- proval of the recipient's application (or,
(iv) Restrict an individual in any way ed to any geographic area or specific in the case of grants made under subpart
in access to, or in the enjoyment of, any group of persons within its jurisdiction, D of this part or HUD-administered
advantage or privilege enjoyed by others where the purpose of such action is to small cities recipients in Hawaii, the date
in connection with facilities, services, remedy prior discriminatory practice or of submission of the grantee's consoli-
financial aid or other benefits under the usage. dated plan, in accordance with 24 CFR
program or activity. (5) Notwithstanding anything to the part 91), section 202(a) of the Flood
(v)Treat an individual differently from contrary in this section, nothing con- Disaster Protection Act of 1973 (42
others in determining whether the indi- rained herein shall be construed to pro- U.S.C. 4106) and the regulations in 44
vidual satisfies any admission, enroll- hibit any recipient from maintaining or CFR parts 59 through 79 apply to funds
ment, eligibility, membership, or other constructing separate living facilities or provided under this part 570.
requirement or condition which the indi- rest room facilities for the different sexes.
vidual must meet in order to beprovided Furthermore, selectivity on the basis of
§570.606 Displacement, relocation,
any facilities, services or other benefit sex is not prohibited when institutional or acquisition, and replacement of housing. 1
provided under the program or activity. custodial services can properly be(vi) per-
Denyan individual an opportunityformed only by a member of the same sex
as the recipients of the services. (a) General policy for minimizing dis-
to participate in a program or activity as (c) Section 109 of the Act further placement. Consistent with the other
an employee. provides that any prohibition against goals and objectives of this part,grantees
(2) A recipient may not use criteria or discrimination on the basis of under (or States or state recipients, as applica-
methods of administration which have g ble) shall assure that they have taken all
the Age Discrimination Act of 1975 (42
the effect of subjecting persons to dis- reasonable steps to minimize the dis-
crimination 6101 et seq.) or with respect to an
on the basis of race, color, placement of persons (families, izati du-
otherwise qualified handicapped person
religion, national origin, or sex, or have als, businesses, nonprofit organizations,
the effect of defeating or substantially as provided in section 504 of the Rehabil-1 and farms)as a result of activities assisted
impairing accomplishment of the objec- itatton Act of 1973 (29 U.S.C. 794) shall under this part.
tives of the program or activity with also apply to any program or activity (b) Relocation assistance for displaced
p persons of aparticular race, funded in whole or in part with funds
respect to made available pursuant to the Act. HUD persons at URA levels. (I) A displaced
color, religion, national origin, or sex. person shall be provided with relocation
(3) A recipient, in determining the site regulations implementing the Age Dis
crimination Act are contained in 24 CFR assistance at the levels described in, and
or location of housing or facilities provid- part 146 and the regulations implement- in accordance with the requirements of
ed in whole or in part with funds under , 49 CFR part 24, which contains the
this part, may not make selections of such ing section 504 are contained in _4 CFR government-wide regulations implement-
site or location which have the effect of part 8. ing the Uniform Relocation Assistance
excluding persons from,denying them the and Real Property Acquisition Policies
benefits of,or subjecting them to discrim- §570.603 Labor standards. Act of 1970 (URA) (42 U.S.C. 4601-
ination on the ground of race, color, 4655).
religion, national origin, or sex; or which (a) Section 110(a) of the Act contains (2)Displaced person.(i)For purposes of'
have the purpose or effect of defeating or labor standards that apply to nonvolun- paragraph (b) of this section, the term
substantially impairing the accomplish- teer labor financed in whole or in part "displaced person" means any person
ment of the objectives of the Act and of with assistance received under the Act. In (family, individual, business, nonprofit
this section. accordance with section 1 I0(a)of the Act, organization, or farm) that moves from
(4)(i) In administering a program or the Contract Work Hours and Safety real property,or moves his or her person-
activity funded in whole or in part with Standards Act(40 U.S.C. 327 et seq.) also al property from real property, perma-
CDBG funds regarding which the recipi- applies. However, these requirements ap- nently and involuntarily,as a direct result
ent has previously discriminated against ply to the rehabilitation of residential of rehabilitation, demolition, or acquisi-
persons on the ground of race, color, property only if such property contains tion for an activity assisted under this
religion, national origin,or sex,or if there not less than 8 units. part. A permanent, involuntary move for
Published by Warren Gorham Lament
J
09:0644 HOUSING AND DEVELOPMENT REPORTER
an assisted activity includes a permanent provide relocation assistance under this ted to rnder this
artinme dwelling) cedun with I
move from real property that is made: section;
(A) After notice by the grantee (or the (B) A person who moves into the (ii) Replacement low/moderate-income
state recipient, if applicable) to move property after the date of the notice dwelling units may be provided by any
permanently from the property, if the described in paragraph (b)(2)(i)(A) or (B) government agency or private developer,
move occurs after the initial official sub- of this section,but who received a written and must meet the following require-
mission to HUD(or the State, as applica- notice of the expected displacement be- ments:
The units must be within
ble) for grant, loan, or loan guarantee fore occupancy. (Athejurisdiction of the grantee located the istatein
funds under this part that are later pro- (C) A person who is not displaced as
vided or granted.
described in 49 CFR 24.2(g)(2). recipient, as applicable). To the extent
(B)
(B) After notice by the property owner (D)A person who the grantee(or State, feasible
ri[iescand �hestent with units shallt be located
to move permanently from the property, as applicable)determines is not displaced
if the move occurs after the date of the as a direct result of the acquisition, within the same neighborhood as the
submission of a request for financial rehabilitation, or demolition for an assis- units replaced.
assistance by the property owner (or ted activity. To exclude a person on this (B) The units must be sufficient in
person in control of the site) that is later basis, HUD must concur in that determi- number and size to house no fewer than
nation. the number of occupants who could have
approved for the requested activity. been housed in the units that are demol-
(C) Before the date described in para- (iii) A grantee (or State or state recipi-
graph (b)(2)(i)(A) or (B) of this section, if ent, as applicable) may, at any time, ished or converted. The number of occu-
either HUD or the grantee (or State, as request HUD to determine whether a Pants who could have been housed in
applicable) determines that the displace- person is a displaced person under this units shall be determined in accordance
with applicable occupancy
ment directly resulted from acquisition, section. codes. The grantee local housing ccupa as
rehabilitation, or demolition for the re- (3) Initiation of negotiations. For pur- applicable)T mayn not recipient,c unitsa
quested activity. poses of determining the type of replace- vith smaller units replace,a thseunit
(D) After the "initiation of negotia- ment housing assistance to be provided u units),2-bedroomo the
tions"if the person is the tenant-occupant under paragraph (b)of this section, if the withhtee two 1-bedroom recipient, ), unless t e)
of a dwelling unit and any one of the displacement is the direct result of pri- has provided(orstate information as
on applicable)
lic bed
following three situations occurs: vately undertaken rehabilitation, demoli- underas paragr the(c)(1)anal) of this d
(I) The tenant has not been provided tion, or acquisition of real property, the lion.
sec-
with a reasonable opportunity to lease term "initiation of negotiations" means
and occupy a suitable decent, safe, and the execution of the grant or loan agree- (C) The units must be provided in
standard condition. Replacement low/
sanitary dwelling in the same building/ ment between the grantee (or State or moderate-income dweng units may linow/
upon the completion of the state recipient, as applicable) and the elude units that have been raised to
project, including a monthly rent that person owning or controlling the real standard from substandard condition if:
does not exceed the greater of the tenant's property.monthly rent and estimated average utili- (c) Residential antidisplacement and (I) No person was displaced from theunit as a direct result of an assisted
ty costs before the initiation of negotia- relocation assistance plan. In accordance activity (see definition of "displaced per-
tions or 30 percent of the household's with section 104(d) of the Act, each asonct "'in paragraph(c)(3)(ii)of this section;
average monthly gross income; or grantee must adopt, make public, and and
(2) The tenant is required to relocate certify (or, as applicable, each State must (2) The unit was vacant for at least
temporarily for the activity but the tenant ensure that each state recipient adopts, three months before execution of the
is not offered payment for all reasonable makes public, and certifies to the State) agreement between the grantee and the
out-of-pocket expenses incurred in con- that it is following a residential antidis- property owner.
nection with the temporary relocation, placement and relocation assistance plan (D) The units must initially be made
including the cost of moving to and from providing one-for-one replacement units available for occupancy at any time dur-
the temporary location and any increased (paragraph (c)(1) of this section), and ing the period beginning one year before
housing costs, or other conditions of the relocation assistance (paragraph (c)(2) of the grantee's(or state recipient's,as appli-
temporary relocation are not reasonable; this section). As applicable, section cable) submission of the information re-
and the tenant does not return to the 106(d)(5)(A) of the Act requires the state quired under paragraph (c)(1)(iii) of this
building/complex; or recipient also to certify to the State that it section and ending three years after the
(3) The tenant is required to move to will minimize displacement of persons as commencement of the demolition or re-
another unit in the building/complex,but a result of assisted activities. Except with habilitation related to the conversion.
is not offered reimbursement for all rea- regard to the State CDBG Program, the (E) The units must be designed to
sonable out-of-pocket expenses incurred plan shall also indicate the steps that will remain low/moderate-income dwelling
in connection with the move. be taken consistent with other goals and units for at least 10 years from the date of
(ii) Notwithstanding the provisions of objectives of this part to minimize the initial occupancy.Replacement low/mod-
paragraph (b)(2)(i) of this section, the displacement of families and individuals grate-income dwelling units may include,
term "displaced person-" does not in- from their homes and neighborhoods as a but are not limited to, public housing, or
elude: result of any activities assisted under this existing housing receiving Section 8
(A) A person who is evicted for cause part.
project-based assistance under the United
based upon serious or repeated violations (1) One-for-one replacement of low/ States Housing Act of 1937.
of material terms of the lease or occupan- moderate-income dwelling units. (i) All (iii) Before the grantee (or state recipi-
cy agreement.To exclude a person on this occupied and vacant occupiable low/ ent, as applicable) enters into a contract
basis, the grantee(or State or state recipi- moderate-income dwelling units that are committing it to provide funds under this
ent, as applicable) must determine that demolished or converted to a use other part for any activity that will directly
the eviction was not undertaken for the than as low/moderate-income dwelling result in the demolition of low/moderate-
purpose of evading the obligation to units in connection with an activity assis- income dwelling units or the conversion
Published by Warren Gorham Lamont
COMMUNITY DEVELOPMENT 09:0645
HDR RF-582
4-29-96
of low/moderate-income dwelling units to on the ability of low- and moderate-in- in such a manner that, to the extent
another use, the grantee (or state recipi- come households to find suitable housing. feasible, will provide a choice between
ent,as applicable) must make public,and HUD will consider relevant evidence of relocating within their neighborhoods
submit the following information in writ- housing supply and demand including, and other neighborhoods consistent with
ing to the HUD Field Office (or State, as but not limited to, the following factors: the responsibility of the grantee (or the
applicable) for monitoring purposes: the housing vacancy rate in the jurisdic- state recipient, as applicable) to affirma-
(A)A description of the proposed assis- tion;the number of vacant low/moderate- tively further fair housing;
ted activity; income dwelling units in the jurisdiction (ii)Payment for moving expenses at the
(B)The location on a map and number (excluding units that will be demolished levels described in 49 CFR part 24,
of dwelling units by size (number of or converted); the number of eligible subpart D.
bedrooms) that will be demolished or families on waiting lists for housing assis- (iii) The reasonable and necessary cost
converted to a use other than for low/ ted under the United States Housing Act of any security deposit required to rent
moderate-income dwelling units as a di- of 1937 in the jurisdiction; the needs the replacement dwelling unit, and for
rect result of the assisted activity; analysis contained in any applicable credit checks required to rent or purchase
(C)A time schedule for the commence- HUD-approved consolidated plan; and the replacement dwelling unit.
ment and completion of the demolition relevant past orpredicted demographic (iv) Interim livin
g_ p costs. The grantee
or conversion; changes. (or recipient,
state reci pent, as applicable) shall
(D) The location on a map and the (B) HUD may consider the supply of reimburse a person for actual reasonable
number of dwelling units by size(number vacant low/moderate-income dwelling out-of-pocket costs incurred in connec-
of bedrooms) that will be provided as units in a standard condition available on tion with temporary relocation, including
replacement dwelling units. If such data a nondiscriminatory basis in an area that moving expenses and increased housing
are not available at the time of the general is larger than the jurisdiction of the costs, if:
submission, the submission shall identify grantee(or state recipient, as applicable). (A)The person must relocate temporar-
the general location on an area map and Such additional dwelling units shall be ily because continued occupancy of the
the approximate number of dwelling considered if the Field Office determines dwelling unit constitutes a substantial
units by size, and information identifying that the units would be suitable to serve danger to the health or safety of the
the specific location and number of dwell- the needs of the low- and moderate-in- person or the public; or
ing units by size shall be submitted and come households that could be served by (B) The person is displaced from a
disclosed to the public as soon as it is the low/moderate-income dwelling units "low/moderate-income dwelling unit,"
available; that are to be demolished or converted to none of the comparable replacement
(E) The source of funding and a time another use. HUD will base this determi- dwelling units to which the person has
schedule for the provision of replacement nation on geographic and demographic been referred qualifies as a low/moderate-
t;
dwelling units; factors, such as location and access to income dwelling unit (defined in para-
(F) The basis for concluding that each places of employment and to other facili- graph (c)(3)(iii) of this section), and a
replacement dwelling unit will remain a ties. suitable low/moderate-income dwelling
low/moderate-income dwelling unit for at (C) The grantee (or state recipient, as unit is scheduled to become available in
least 10 years from the date of initial applicable) must submit the request for accordance with paragraph (c)(1) of this
occupancy; and determination under paragraph (cX1)(iv) section. (Because a "comparable replace-
(G) Information demonstrating that of this section directly to the Field Office ment dwelling unit" may be made afford-
any proposed replacement of dwelling (or State, as applicable). Simultaneously able to a person through a rental assis-
units with smaller dwelling units (e.g., a with the submission of the request, the tance payment and its market rent may
2-bedroom unit with two 1-bedroom grantee (or state recipient, as applicable) exceed the Fair Market Rent (FMR)
units) is consistent with the needs analy- must make the submission public and under the Section 8 Existing Housing
sis contained in the HUD-approved con- inform interested persons that they have Program, it may not meet the definition
solidated plan; or, for purposes of the 30 days from the date of submission to of a "low/moderate-income dwelling
State CDBG program,consistent with the provide to HUD (or to the State, as unit")
housing needs of low- and moderate-in- applicable) additional information sup- (v) Replacement housing assistance.
come households in the jurisdiction. A porting or opposing the request. For Persons are eligible to receive one of the
grantee that is not required to submit a purposes of the State CDBG program, if following two forms of replacement hous-
consolidated plan to HUD must submit the State, after considering the submis- ing assistance:
information demonstrating that the pro- sion and the additional data, agrees with (A) Each person must be offered rental
posed replacement is consistent with the the request, the State must provide its assistance equal to 60 times the amount
housing needs of low- and moderate-in- recommendation with supporting infor- necessary to reduce the monthly rent and
come households in the jurisdiction. mation to HUD. estimated average monthly cost of utili-
(iv)(A) The one-for-one replacement (2) Relocation assistance under section ties for a replacement dwelling(compara-
requirement of paragraph (c)(l) of this 104(d) of the Act. Under section 104(d), ble replacement dwelling or decent, safe,
section does not apply to the extent the each "displaced person"(defined in para- and sanitary replacement dwelling to
Field Office determines, based upon ob- graph (c)(3)(ii) of this section) is entitled which the person relocates, whichever
jective data, that there is an adequate to choose to receive either assistance at costs less) to the "Total Tenant Pay-
supply of vacant low/moderate-income URA levels (see paragraph (b) of this ment," as determined under§813.107 of
dwelling units in standard condition section) or the following relocation assis- this title. All or a portion of this assis-
available on a nondiscriminatory basis tance: tance may be offered through a certificate
within the jurisdiction of the grantee (or (i) Advisory services at the levels de- or housing voucher for rental assistance
state recipient, as applicable). In deter- scribed in 49 CFR part 24, subpart C (if available) provided through the Local
mining the adequacy of supply,HUD will (General Relocation Requirements). Ten- Public Agency under Section 8 of the
I consider whether the demolition or con- ants shall be advised of their rights under United States Housing Act of 1937. If a
version of the low/moderate-income the Fair Housing Act(42 U.S.C. 3601-19) Section 8 certificate or housing voucher is
dwelling units will have a material impact and of replacement housing opportunities provided to a person, the grantee(or state
Published by Warren Gorham tamcrt
09:0646 HOUSING AND DEVELOPMENT REPORTER
recipient, as applicable) must provide demolition in connection with an activity sonable out-of-pocket expenses incurred
referrals to comparable replacement assisted under this part. A permanent in connection
withthe
ethe vmoveovisions of
dwelling units for which the owner is involuntary move for an assisted activity (B) Notwithstandingtheo
willing to participate in the Section 8 includes a permanent move from real paragraph (c)(3)(ii)(A)of this section,
Existing Housing Program. To the extent property that is made: term "displaced person" does not in-
that cash assistance is provided, it will be (1) After notice by the grantee(or state chide:
provided in installments. recipient, as applicable) to move perma- (1) A person who is evicted for cause
(B) If the person purchases an interest nently from the property, if the move based upon serious or repeated violations
in a housing cooperative or mutual hous- occurs after the initial official submission of material terms of the lease or occupan-
ing association and occupies a decent, to HUD for grant,loan,or loan guarantee cy agreement.To exclude a person on this
safe,and sanitary dwelling in the coopera- funds under this part that are later grant- basis, themans[ determine ttee (or ste hat thent,e epics
tive or association, the person may elect ed; or, for purposes of the State CDBG applicable)
to receive a lump sum payment. This Program, if the move occurspp after the tion was evading undertaken
ode taken torp e purpose
lump sum payment shall be equal to the initial submission of an application to the cationo assistancen under this section;ov
relo-
capitalized value of 60 monthly install- State by the recipient requesting assis- ) A person who moves into prop
-
subtracting of the amount that is obtained by tance under this subpart that is later erty afterA the date of the o described
the "Total Tenant Payment," granted for the requested activity. paragraph (c)(3)(ii)(A)fI noticeo (2)cbd
as determined under §813.107 of this (2) After notice by the property owner, section, received (I)
tor 2 off this
title, from the monthly rent and estimat- to move permanently from the property, thec on, but displacement before e f
ed average monthly cost of utilities at a if the move occurs after the date of expectedthene ecupancy.
corn-
comparable replacement dwelling unit. submission of a request for financial (3)nnA person who is not displaced as
To compute the capitalized value, the assistance by the property owner (or defined rso49w 24.2(g)(2).displaced
installments shall be discounted at the person in control of the site) that is later defined
dA person under who CFRe (or State,
rate of interest paid on passbook savings approved for the requested activity. applicable)determinesh grantee c
deposits by a Federally insured bank or (3) Before the date described in para- as as a direct result e notsdisplaced of a
savings and loan institution conducting graph (c)(3)(ii)(A) (1) or (2) of this sec- as a dir low/moderate-income of h conversion do of a
business within the jurisdiction of the tion, if either HUD or the grantee (or tion in me an lieor activii-
-
To (or state recipient, as applicable). State or state recipient, as applicable) ty. For a connection with State assisted exclude a
To the extent necessary to minimize determines that the displacement directly person a this granteesor HUD must concur
hardship to the household,the grantee(or resulted from the conversion of a low/ in determination.
state recipient, as applicable) shall, sub- moderate-income dwelling unit or demo- (that determi at any time, request
ject to appropriate safeguards, issue a lition in connection with the requested HUD to determinentee may,at any a person request
is a
payment in advance of the purchase of activity. H displaced person under haragra rs n a
f
the interest in the housing cooperative or (4) After the execution of the agree- diss section.
mutual housing association. merit by the grantee(or state recipient, as (iii) Low/moderate-income dwelling
(C) Displaced low/moderate income applicable) covering the rehabilitation or unit. The term "low/moderate-income
tenants shall be advised of their right to demolition, if the person is the tenant- dwelling unit"means a unit with
elect relocation assistance pursuant to the occupant of a dwelling unit and any one a rent(includingmans dwelling costs)nitthat
Uniform Relocation Assistance and Real of the following three situations occurs: market not utility Fair
Property Acquisition Policies Act of 1970 (i) The tenant has not been provided Coes Rentotexceed the for applicablel housing
Mar-
and the regulations appearing at 49 CFR with a reasonable opportunity to lease ket
established under 24 CFR part 888,housing
iex-
ng
part 24 as an alternative to the relocation and occupy a suitable decent, safe, and C to that the term does not include a unit
assistance available under paragraph sanitary dwelling in the same building/ that is owned and occupied by the same
(c)(2) of this section. complex upon completion of the project, person before and after the assisted reha
(3) Definitions. For purposes of provid- including a monthly rent that does not bilitation.
ing section 104(d) assistance under para- exceed the greater of the tenant's monthly (iv) Standard condition and substan-
graph (c) of this section: rent and estimated average utility costs gars condition suitable for rehabilitation.
(i) Comparable replacement dwelling before the execution of such agreement (A) If the grantee has a HUD approved
unit. The term "comparable replacement (or, for purposes of the State CDBG consolidated plan, the definitions of
dwelling unit"means a dwelling unit that: Program,before the "initiation of negoti- "standard condition" and "substandard
(A) Meets the criteria of 49 CFR ations"), or the "Total Tenant Payment" condition suitable for rehabilitation" es-
for(1) through (6); and for the person as determined under tablished in the plan will apply.
(B) Is available at aa monthly cost for §813.107 of this title; or (B) For purposes of the State CDBG
rent plus estimated average monthly utili (ii) The tenant, required to relocate program, a State may define the terms
ty costs that does not exceed the "Total temporarily for the activity, does not "standard condition" and "substandard
Tenant13.1Payment"fthis determined aftetaking underto return to the building/complex; and ei- condition suitable for rehabilitation", or it
§ 7 of this title, after into ther the tenant is not offered payment for may allow the state recipient to establish
account any rental assistance the house all reasonable out-of-pocket expenses in- and make public.its definition of these
hold would receive. curred in connection with the temporary terms. If a State permits the recipient to
lip cedplersd person.ma anyA) The term
"displaced person"means low/moder- location (including the cost of moving to establish its definition of these terms, the
ate-income family or individual that and from the temporary location and any State must determine if the state recipi-
moves from real property,or moves his or increased housing costs), or other condi- ent's definition is acceptable.
her personal property from real property, tions of the temporary relocation are not (v) Vacant occupiable dwelling unit.
result
of e and involuntarily,a as a direct reasonable; or
The term "vacant occupiable dwelling
result of the conversion of a low/moder- (iii)The tenant is required to move to unit"means a vacant dwelling unit that is
mplex,
ie-income dwelling
go unit f this(sect on) or is noter unit offeredn the reimburseme reimbursement all eat unit in a sthatt isdin adition;a substandard condition,
paragraph (c)(3)(iv))
Published by Warren Gorham Lamont
COMMUNITY DEVELOPMENT 09:0647
HDR RF-582
4-29-96
but is suitable for rehabilitation; or a certify that they will comply with the ing maintenance and removal techniques
dwelling unit in any condition that has requirements of this section. for eliminating such hazards);
been occupied (except by a squatter) at (2) The cost of assistance required (v) Of the advisability and availability
any time within the period beginning one under this section may be paid from local of blood lead level screening for children
year before the date of execution of the public funds, funds provided under this under seven years of age; and
agreement by the grantee (or state recipi- part, or funds available from other (vi) That in the event of lead-based
ent,as applicable)covering the rehabilita- sources. paint is found on the property, appropri-
tion or demolition. (3) The grantee (or State and state ate abatement procedures may be under-
(d) Optional relocation assistance. Un- recipient, as applicable) must maintain taken.
der section 105(a)(1 1) of the Act, the records in sufficient detail to demonstrate (c)Elimination of lead-based paint ha=-
grantee may provide (or the State may compliance with the provisions of this ards. The purpose of this paragraph is to
permit the state recipient to provide, as section. implement the provisions of section 302
applicable) relocation payments and oth- of the Lead-Based Paint Poisoning Fre-
er relocation assistance to persons dis- §570.607 Employment and contracting vention Act,42 U.S.C. 4822,by establish-
placed by activities that are not subject to opportunities. ingprocedures to eliminate as far as
paragraphs (b) or (c) of this section. The
grantee may also provide (or the State practicable the hazards due to the pres-
may also permit the state recipient to Grantees shall comply with: ence of paint which may contain lead and
provide, as applicable) relocation assis (a)Executive Order 11246, as amended to which children under seven years of
tance persons receiving assistance un- by Executive Orders 11375, 11478, age may be exposed in existing housing
der paragraphs (b)or of this section at 12086, and 12107 (3 CFR, 1964-1965 which is rehabilitated with assistance
levels in excess of those required by these Comp.,p. 339;3 CFR, 1966-1970 Comp., provided under this part. The Secretary
paragraphs. Unless such assistance is pro- p. 684;3 CFR, 1966-1970 Comp., p. 803; has promulgated requirements regarding
vided under State or local law,the grantee 1978 Comp., p. 264)(Equal Employment the elimination of lead-based paint haz-
(or state recipient, as applicable) shall 41 lations at Opportunity CFR chapter 60; and)and the implementing regu- ards in HUD-associated housing at 24
provide such assistance only upon the (b)Section 3 of the Housingand Urban CFR Part 35, Subpart C. This paragraph
authoriza-
basis of a written determination that the is promulgated pursuant to the assistance is appropriate 24 Development Act of 1968 (12 U.S.C. tion granted in 24 CFR 35.24(b)(4) and
(see, e.g., 1701 u) and implementing regulations at
CFR 570.201(i), as applicable). The 24 CFR part 135. supercedes, with respect to all housing to
grantee (or state recipient, as applicable) which it applies, the requirements pre-
must adopt a written policy available to scribed by Subpart C of 24 CFR Part 35.
the public that describes the relocation §570.608 Lead-based paint. (1) Applicability. This paragraph ap-
tr- assistance that the grantee(or state recipi- plies to the rehabilitation of applicable
ent, as applicable) has elected to provide (a) Prohibition against the use of lead- surfaces in existing housing which is
and that provides for equal relocation based paint. Section 401(b) of the Lead- assisted under this part. The following
assistance within each class of displaced Based Paint Poisoning Prevention Act activities assisted under the Community
persons. (42 U.S.C. 4831(b))and regulations in 24 Development Block Grant program are
(e) Acquisition of real property. The CFR part 35, subpart B apply to residen- not covered by this paragraph:
acquisition of real property for an assis- tial structures constructed or rehabilitat- (i) Emergency repairs (not including
ted activity is subject to 49 CFR part 24, ed with assistance provided under this lead-based paint-related emergency re-
subpart B. part 570. pairs);
(f) Appeals. If a person disagrees with (b)Notification of hazards of lead-based (ii) Weatherization;
the determination of the grantee (or the paint poisoning. (1) The Secretary has (iii) Water or sewer hook-ups;
state recipient, as applicable) concerning promulgated requirements regarding no- (iv) Installation of security devices;
the person's eligibility for, or the amount tification to purchasers and tenants of (v) Facilitation of tax exempt bond
of, a relocation payment under this sec- HUD-associated housing constructed pri- issuances which provide funds for reha-
tion, the person may file a written appeal or to 1978 of the hazards of lead-based bilitation;
of that determination with the grantee(or paint poisoning at 24 CFR Part 35, (vi) Other similar types of single-pur-
state recipient, as applicable). The appeal Subpart A. This paragraph is promulgat- pose programs that do not include physi-
procedures to be followed are described ed pursuant to the authorization granted cal repairs or remodeling of applicable
in 49 CFR 24.10. In addition, a low- or in 24 CFR 35.5(c) and supersedes, with surfaces (as defined in 24 CFR 35.22) of
moderate-income household that has respect to all housing to which it applies, residential structures; and
been displaced from a dwelling may file a the notification requirements prescribed (vii)Any non-single purpose rehabilita-
written request for review of the grantee's by Subpart A of 24 CFR Part 35.
decision to the HUD Field Office. For (2) For properties constructed prior to tion that does not involve applicable
purposes of the State CDBG program, a 1978, applicants for rehabilitation assis- surfaces (as defined in 24 CFR 35.22)
low- or moderate-income household may tance provided under this part and ten- that does not exceed $3,000 per unit.
file a written request for review of the ants or purchasers of properties owned by (2) Definitions.
state recipient's decision with the State. the grantee or its subrecipient and ac- "Applicable surface." All intact and
(g) Responsibility of grantee or State. quired or rehabilitated with assistance nonintact interior and exterior painted
(1)The grantee (or State, if applicable) is provided under this part shall be notified: surfaces of a residential structure.
responsible for ensuring compliance with (i)That the property may contain lead- "Chewable surfaces."All chewable pro-
the requirements of this section, notwith- based paint; truding painted surfaces up to five feet
standing any third party's contractual (ii) Of the hazards of lead-based paint; from the floor or ground, which are
obligation to the grantee to comply with (iii) Of the symptoms and treatment of readily accessible to children under seven
I‘ the provisions of this section. For pur- lead-based poisoning; years of age, e.g., protruding corners,
poses of the State CDBG program, the (iv) Of the precautions to be taken to windowsills and frames, doors and
State shall require state recipients to avoid lead-based paint poisoning (includ- frames, and other protruding woodwork.
Published by Warren Gorham Lamont
09:0648 HOUSING AND DEVELOPMENT REPORTER
.?.
"Defective paint surface. Paint on ap- tion and agree to repaint by a specified section of any responsibility for compli-
plicable surfaces that is cracking, scaling, date. A separate inspection is required. ance with State or local laws,ordinances,
chipping, peeling or loose." (5)Abatement methods.At a minimum, codes or regulations governing lead-based
"Elevated blood lead level or EBL." treatment of the defective areas and paint testing or hazard abatement.
Excessive absorption of lead, that is, a chewable lead-based paint surfaces shall (iv)Disposal of lead-based paint debris.
confirmed concentration of lead in whole consist of covering or removal of the Lead-based paint and defective paint de-
blood of 25 µ/dl (micrograms of lead per painted surfaces as described in 24 CFR bris
shaall bebe disple posed
a l,f State or in da local
deciliter of whole blood) or greater. 35.24(b)(2)(ii)•
"Lead-based paint surface." A paint (6) Funding for inspection, testing and requirements.(See e.g.,40 CFR Parts 260
surface, whether or not defective, identi- abatement. Program requirements and through 271.)
feed as having a lead content greater than local program design will determine
or equal to 1 mg/cm2. whether the cost of inspection, testing or §570.609 Use of debarred, suspended
(3) Inspection and Testing—(i) Defec- abatement is to be borne by the owner/ or ineligible contractors or
tive paint surfaces. The grantee shall in- developer and the grantee. subrecipients.
specs for defective paint surfaces in all (7) Tenant protection. The owner/de-
units constructed prior to 1978 which are veloper shall take appropriate action to The requirements set forth in 24 CFR
occupied by families with children under protect tenants from hazards associated part 5 apply to this program.
seven years of age and which are pro- with abatement procedures.Where neces-
posed for rehabilitation assistance. The sary, these actions may include the tem- §570.610 Uniform administrative
inspection shall occur at the same time porary relocation of tenants during the requirements and cost principles.
the property is being inspected for reha- abatement process. The owner/developer
bilitation. Defective paint conditions shall notify the grantee of all such actions The recipient, its agencies or instru-
shall be included in the work write-up for taken. mentalities, and subrecipients shall corn-
the remainder of the rehabilitation work. (8) Records. The grantee shall keep a ply with the policies, guidelines, and
(ii) Chewable surfaces. The grantee copy of each inspection and/or test report requirements of 24 CFR part 85 and
shall be required to test the lead content for at least three years. OMB Circulars A-87,A-110 (implement-
of chewable surfaces if the family residing (9) Monitoring and enforcement. HUD ed at 24 CFR part 84), A-I22, A-133
in a unit, constructed prior to 1978 and field office monitoring of rehabilitation (implemented at 24 CFR part 45),and A-
receiving rehabilitation assistance, in- programs includes reviews for compli- 1282(implemented at 24 CFR part 44),as
eludes a child under seven years of age ance with applicable program require- applicable, as they relate to the accep-
with an identified EBL condition. Lead ments for lead-based paint. The CPD tance and use of Federal funds under this content shall be tested by using an X-ray Field Monitoring Handbook which cur- part. The applicable sections of 24 CFR
1
fluorescence analyzer (XRF) or other rently includes instructions for monitor- parts 84 and 85 are set forth at§570.502.
method approved by HUD.Test readings ing lead-based paint requirements will be
of lmg/cm2 or higher using an XRF shall amended as appropriate. In cases of non- §570.611 Conflict of interest.
be considered positive for presence of compliance, HUD may impose condi-
lead-based paint. tions or sanctions on grantees to encour- (a)Applicability.(1)In the procurement
(iii) Abatement without testing. In lieu age prompt compliance. of'supplies,equipment,construction,and
of the procedures set forth in paragraph (10) Compliance with other program services by recipients and by subreci-
(c)(3)(ii) of this section, in the case of a requirements. Federal, State and local pieII ts 4,CFR 85.36 and the conflict of i24nterest
st provisions
residential structure constructed prior to laws.
1978. the grantee may forgo testing and (i) Other program requirements. To the respectively, shall apply.
abate all applicable surfaces in accor- extent that assistance from any of the (2)In all cases not governed by 24 CFR
dance with the methods set out in 24 programs covered by this section is used 85.36 and 84.42, the provisions of this
CFR 35.24(b)(2)(ii). in conjunction with other HUD program section shall apply.Such cases include the
(4) Abatement Actions. (1) For inspec- assistance which have lead-based paint acquisition and disposition of real prop-
tions performed under §570.608(c)(3)(i) requirements which may have more or erty and the provision of assistance by the
and where defective paint surfaces are less stringent requirements, the more recipient or by its subrecipients to indi-
found, treatment shall be provided to stringent requirements will prevail. viduals, businesses, and other private
defective areas. Treatment shall be per- (ii) HUD responsibility. If HUD deter- entities under eligible activities that au-
formed before final inspection and ap- mines that a State or local law,ordinance, thorize such assistance (e.g., rehabilita-
proval of the work. code or regulation provides for lead- tion, preservation, and other improve-
(ii) For testing performed under based paint testing or hazard abatement ments of private properties or facilities
§570.608(c)(3)(ii) and where interior in a manner which provides a level of pursuant to §570.202; or grants, loans,
chewable surfaces are found to contain protection from the hazards of lead-based and other assistance to businesses, indi-
lead-based paint, all interior chewable paint poisoning at least comparable to viduals, and other private entities pursu-
surfaces in any affec
ted room shall be that provided by the requirements of this ant to §§570.203, 570.204, 570.455, or
treated.Where exterior chewable surfaces section and that adherence to the require- 570.703(i)).
are found to contain lead-based paint,the ments of this subpart would be duplica- (b) Conflicts prohibited. The general
entire exterior chewable surface shall be tive or otherwise cause inefficiencies, rule is that no persons described in para-
treated. Treatment shall be performed HUD may modify or waive the require- graph (c) of this section who exercise or
before final inspection and approval of mentsa ofa apprhis oection priate to tn such manner promote effic ency bilities with have ed any re respect to functions
CDBG activities
the work. may be app pP
(iii)When weather prohibits repainting while ensuring such comparable level of assisted under this part, or who are in a
exterior surfaces before final inspection, protection. position to participate in a decisionmak-
the grantee may permit the owner to (iii) Grantee responsibility. Nothing in ing process or gain inside information
abate the defective paint or chewable this section is intended to relieve any
lead-based paint as requiredby this sec- grantee in the programs covered by this : See footnote t at Sec. 570.200(a)(5).
Published by Warren Gorham Lamont
•
COMMUNITY DEVELOPMENT 09:0649
HDR RF-582
4-29-96
i
with regard to such activities, may obtain and the exception will permit such person meeting the requirements of§570.208(a)
a financial interest or benefit from a to receive generally the same interests or that either:
CDBG-assisted activity, or have a finan- benefits as are being made available or (1) Have income eligibility require-
cial interest in any contract, subcontract, provided to the group or class; ments limiting the benefits exclusively to
or agreement with respect to a CDBG- (iv) Whether the affected person has low and moderate income persons; or
assisted activity, or with respect to the withdrawn from his or her functions or (2) Are targeted geographically or oth-
proceeds of the CDBG-assisted activity, responsibilities, or the decisionmaking erwise to primarily benefit low and mod-
either for themselves or those with whom process with respect to the specific assis- erate income persons(excluding activities
they have business or immediate family ted activity in question; serviing the public at large, such as sew-
ties, during their tenure or for one year (v) Whether the interest or benefit was ers,roads,sidewalks,and parks),and that
thereafter. For the UDAG program, the present before the affected person was in provide benefits to persons on the basis of
above'restrictions shall apply to all activi- a position as described in paragraph(b)of an application.
ties that are a part of the UDAG project, this section; (c)Limitation on coverage. The restric-
and shall cover any such financial interest (vi)Whether undue hardship will result tions under this section apply only to
or benefit during, or at any time after, either to the recipient or the person applicants for new benefits not being
such person's tenure. affected when weighed against the public received by covered resident aliens as of
(c) Persons covered. The conflict of interest served by avoiding the prohibited the effective date of this section.
interest provisions of paragraph (b) of conflict; and (d) Compliance. Compliance can be
this section apply to any person who is an (vii)Any other relevant considerations. accomplished by obtaining certification
employee, agent, consultant, officer, or as provided in 24 CFR 49.20.
elected official or appointed official of the §570.612 Executive Order 12372. (e)Programs affected. (I)The Commu-
recipient, or of any designated public nity Development Block Grant program
agencies, or of subrecipients that are (a) General. Executive Order 12372, for small cities, administered under sub-
receiving funds under this part. Intergovernmental Review of Federal Part F of part 570 of this title until
(d) Exceptions. Upon the written re- Programs, and the Department's imple- closeout of the recipient's grant.
quest of the recipient,HUD may grant an menting regulations at 24 CFR Part 52, (2) The Community Development
exception to the provisions of paragraph allow each State to establish its own Block Grant program for entitlement
(b) of this section on a case-by-case basis process for review and comment on pro- grants, administered under subpart D of
when it has satisfactorily met the thresh- posed Federal financial assistance pro- Part 570 of this title.
old requirements of(d)(1) of this section, grams. (3) The Community Development
• taking into account the cumulative effects of paragraph (d)(2) of this section. (b) Applicability. Executive Order Block Grant program for States,adminis-
tered under subpart I of part 570 of this
(1) Threshold requirements. HUD will program and the UDAG program. The title until closeout of the unit of general
consider an exception only after the recip- Executive Order applies to all activities local government's grant by the State.
ient has provided the following documen- Proposed to be assisted under UDAG,but (4) The Urban Development Action
cation: it applies to the Entitlement program only Grants program,administered under sub-
(i) A disclosure of the nature of the where a grantee proposed to use funds for Part G of part 570 of this title until
conflict, accompanied by an assurance the planning or construction (reconstruc- closeout of the recipient's grant.
that there has been public disclosure of tion or installation) of water or sewer
the conflict and a description of how the facilities. Such facilities include storm §570.614 Architectural Barriers Act
public disclosure was made; and sewers as well as all sanitary sewers, but and the Americans with Disabilities
(ii) An opinion of the recipient's attor- do not include water and sewer lines Act.
ney that the interest for which the excep- connecting a structure to the lines in the
tion is sought would not violate State or Public right-of-way or easement. It is the (a) The Architectural Barriers Act of
local law, responsibility of the grantee to initiate the 1968 (42 U.S.C. 4151-4157) requires cer-
(2) Factors to be considered for excep- Executive Order review process if it pro- tain Federal and Federally funded build-
tions. In determining whether to grant a Poses to use its CDBG or UDAG funds ings and other facilities to be designed,
requested exception after the recipient for activities subject to review. constructed,or altered in accordance with
has satisfactorily met the requirements of standards that insure accessibility to, and
paragraph (d)(1) of this section, HUD §570.613 Eligibility restrictions for use by, physically handicapped people. A
shall conclude that such an exception will certain resident aliens. building or facility designed, constructed,
serve to further the purposes of the Act or altered with funds allocated or reallo-
and the effective and efficient administra- (a) Restriction. Certain newly legalized cated under this part after December II,
tion of the recipient's program or project, aliens, as described in 24 CFR part 49, 1995 and that meets the definition of
taking into account the cumulative effect are not eligible to apply for benefits under "residential structure" as defined in 24
of the following factors, as applicable: covered activities funded by the programs CFR 40.2 or the definition of"building"
(i) Whether the exception would pro- listed in paragraph (e) of this section. as defined in 41 CFR 101-19.602(a) is
vide a significant cost benefit or an "Benefits" under this section means fi- subject to the requirements of the Archi-
essential degree of expertise to the pro- nancial assistance, public services, jobs tectural Barriers Act of 1968 (42 U.S.C.
gram or project that would otherwise not and access to new or rehabilitated hous- 4151-4157) and shall comply with the
be available; ing and other facilities made available Uniform Federal Accessibility Standards
(ii) Whether an opportunity was pro- under covered activities funded by pro- (Appendix A to 24 CFR part 40 for
vided for open competitive bidding or grams listed in paragraph (e) of this residential structures, and Appendix A to
negotiation; section. "Benefits" do not include reloca- 41 CFR part 101-19, subpart 101-19.6,
• (iii) Whether the person affected is a tion services and payments to which for general type buildings).
member of a group or class of low- or displacees are entitled by law. (b) The Americans with Disabilities
moderate-income persons intended to be (b) Covered activities. "Covered activi- Act (42 U.S.C. 12131; 47 U.S.C. 155,
this section means activities 201, 218 and 225) (ADA) provides corn-
the beneficiaries of the assisted activity, ties" under 1
Published by Warren Gorham Lamont
09:0650 HOUSING AND DEVELOPMENT REPORTER
prehensive civil rights to individuals with 70.702 Eligible applicants. g) Payment of issuance, underwriting
disabilities in the areas of employment, se icing, trust administration and othe
public accommodations, State and local The flowing public entities may app cost- associated with private sector -
II government services, and telecommuni- for loan uarantee assistance under t•is nanci g of debt obligations under t is
cations. It further provides that discrimi- subpart. subpa '.
nation includes a failure to design and (a) Entit ment public entities. (h) •using rehabilitation eligible n-
construct facilities for first occupancy no (b) Nonen itlement public entitie that
der Sec. 570.202. (i) The following co-
later than January 26, 1993 that are are assisted i the submission of a plica- nomic d-velopment activities:
readily accessible to and usable by indi- tions by State that administer the DBG (I) Act,vities eligible under §57►.203:
viduals with disabilities. Further, the program (und subpart I of th.. part). and
ADA requires the removal of architectur- Such assistance shall consist, at a mini- (2)Com unity economic Bevel•pment
al barriers and communication barriers mum,of the cert fications requi d under projects el ible under §570.204
that are structural in nature in existing §570.704(b)(9) nd actions pursuant (j)Const ction of housing by onprof-
facilities, where such removal is readily thereto). it organizat ons for homeowne, hip un-
achievable-that is, easily accomplishable der section 17(d) of the Uni(c)Nonentitlem t public e tides eligi- -d States
and able to be carried out without much ble to apply for nt assis nce under Housing Act of 1937 (Housin: Develop-
difficulty or expense. subpart F of this p rt. ment Grants •rogram, 24 CF' part 850)
or title VI of e Housing an• Communi-
ubpart M-Loan Guarantees ty Developme t Act of 198 (Nehemiah
§570.703 Eligible act vitie Housing Opp•rtunity Gra ts Program,
§57 b 700 Purpose. 24 CFR part 80).
Guaranteed loan fund ay be used for (k)A debt se ice resery to be used in
This subpart contains requirements the following activities, •rovided such accordance with require, ents specified
governin: the guarantee under sect'•n activities meet the r-•uirements of in the contract ntered i to pursuant to
108 of t e Act of debt obligation- as §570.200. .However, : ,ranteed loan §570.705(b)(l).
defined in §570.701. funds may not be used o eimburse the (1) Acquisitio , construction; recon-
CDBG program accoun or line of credit struction,rehabilrtatio ,or installation of
§570.701 D= initions. for costs incurred by t pu lic entity or public facilities ( xcep for buildings for
designated public age y a paid with the general condu t o t government), pub-
BorrowerCDBG grant funds o progr m income. lic streets, sidewal s and other site im-
m <ns the public en ty or its a Acquisition of i prove or unim- provements and p 'tic utilities.
designated pub c agency that i- ues debt O (m) In the cas of applications by '
obligations und= this subpa proved real property in fee o by long- entities whi• are, which Debt obligatio• means a •romissory term lease, including acquisiti for eco- publicl "colonias" h lrfa e, orin which con-
note or other obli::tion issue apublic nomic development purposes.
by of the Cranston- o zalez National Af-
916
fordable or its design.ted pub.' agency and (b) Rehabilitatio of real property fordable Housin A t (42 U.S.C. 5306
guaranteed byHU►� unde, this subpart, owned or acquired ,y the public ntity or
gnote), as amende b section 810 of the
or a trust certificat- or o er obligation its designated pub ic agency. Housing and C mm pity Development
offered by HUD or ,y - trust or other (c) Payment of nterest on ob gations Act of 1992, a quisi ion, construction,
offeror approved for • rposes of this guaranteed under this subpart. reconstruction, ehabi cation or installa-
tion by HUD whic , is guaranteed by (d) Relocatio payments an other tion of public works nd site or other
HUD under this subp. ' and is based on relocation assista ce for individua , fam- improvementslwhich s rve the colonic.
and backed by a trust or •ool composed ilies, businesses, nonprofit organiz tions,
of notes or other o• igat ons issued by and farm oper• ions who must r ocate /lication r �uirements.
public entities or th- r des :need public permanently or temporarily as a re It of §570.704 A p/
agencies and guara teed (3, eligible for an activity fin.nced with guarantee loan
guarantee by HU' under t is subpart. funds, where he assistance is: (a)Presub/nission and 'tizen participa-
Designated publ agency m ans a pub- (1) Requir-d under the provisio s of tion requirements.
lic agency design• ed by a publ c entity to §570.606(b) •r (c); or (1)Before submission o an application
issue debt oblig• ions as borro er under (2) Dete fined by the public entit to for loan gu rantee assistan - to HUD,the
this subpart. be approp to under the provision of public en ty must:
Entitlement ,,ublic entity mea a met- §570.606( . (i)Dev lop a proposed ap0lication that
ropolitan city •r an urban count receiv- (e)Clea nce,demolition and remo al, includes/he following item,
ing a grant u,der subpart D of th part. including ovement of structures to h- (A) The community devel‘pment ob-
Guarantee' loan funds means t pro- er sites, f buildings and improveme ts jectives the public entity p oposes to
ceeds pays a to the borrower fro the on real operty acquired or rehabilita d pursue ith the guaranteed I•<n funds.
issuance o debt obligations unde this pursua to paragraphs(a)and(b) of t is (B) he activities the pub ic entity
subpart. section propo es to carry out with the g :ranteed
Nonent dement public entity means •ny (f)S to preparation,including constru - loan unds. Each activity must be de-
unit of eneral local government i a tion, econstruction, or installation f scrib d in sufficient detail, including the
nonenti ement area. publi and other site improvements,util- spec' ic provision of §570.703 under
Pub!' entity shall have the mean g ties, or facilities (other than buildings , w•hi it is eligible and the na ional
provi d for the term "Eligible pub ic whi h is: obj tive to be met, amount of gu ran-
entity ' in section 108(o) of the Act. ( )Related to the redevelopment or us tee loan funds expected to be used, and
St te-assisted public entity means a un t of he real property acquired or rehabili loc tion, to allow citizens to deter ine
of g neral local government in a nonent- t ed pursuant to paragraphs (a) and (b) th degree to which they will be affec -d.
tle ent area which is assisted by a Stat o this section, or The proposed application must indic.te
a required in §570.704(b)(9) and (2) For an economic development pur- whichr activities
tivities are
expected totioennerate
570.705(b)(2). pose. program
Published by Warren Gorham Lamont
EXHIBIT D
EXECUTIVE OFFICE OF THE PRESIDENT
.11-14i7t OFFICE OF MANAGEMENT AND BUDGET
•'�j �� WASHINGTON. D.C. 245CO
`ea�J November 19, 1993
THE DIRECTOR
CIRCULAR NO. A-110
Revised"
TO THE HEADS OF EXECUTIVE DEPARTMENTS AND ESTABLISHMENTS
SUBJECT: Uniform Administrative Requirements for Grants and
Agreements With Institutions of Higher Education,
Hospitals, and Other Non-Profit Organizations
•
1. purpose. This Circular sets forth standards tor obtaining
consistency and uniformity among Federal agencies in the
administration of grants to and agreements with institutions
of higher education, hospitals, .and other non-profit
organizations.
2. ?Authority. Circular A-110 is issued under the authority of
31 U.S.C. 503 (the Chief Financial Officers Act) , 31 U.S.C.
1111, 41 U.S.C. 405 (the Office of Federal Procurement
Policy Act) , Reorganization Plan No. 2 of 1970, and E.O.
11541 ("Prescribing the Duties of the Office of Management
and Budget and the Domestic Policy Council in the Executive
Office of the President") .
3. policy. Except as provided herein, the standards set forth
in this Circular are applicable to all Federal agencies. If
any statute specifically prescribes policies or specific
requirements that differ from the standards provided herein, _
the provisions of the statute shall govern.
•
The provisions of the sections of this Circular shall be
applied by Federal agencies to recipients. Recipients shall
apply the provisions of this Circular to subrecipients
performing substantive work under grants and agreements that
are passed through or awarded by the primary recipient, if
such subrecipients are organizations described in paragraph
1.
This Circular does not apply to grants, contracts, or other
agreements between the Federal Government and units of State
or local governments covered by OMB Circular A-102, "Grants
and Cooperative Agreements with State and Local
Governments, " and the Federal agencies' grants management
common rule which standardized and codified the
administrative requirements Federal agencies impose on State
and local grantees. In addition, subawards and contracts to
State or local governments are not covered by this Circular.
However, this Circular applies to subawards made by State
and local governments to organizations covered by this
the provisions of this
Circular. Federal agencies may apply P sions of t
Circular to commercial organizations, foreign governments,
organizations under the jurisdiction of foreign governments,
and international organizations.
4 . Dslinit on_s. Definitions of key terms used in this Circular
are contained in Section .2 in the Attachment.
5. Esmairs21_221tign. The specific requirements and
responsibilities of Federal agencies and institutions of
higher education, hospitals, and other non-profit
organizations are set forth in this Circular. Federal
agencies responsible for awarding and administering grants
to and other agreements with organizations described in
paragraph 1 shall adopt the language in the Circular unless
different provisions are required•by Federal statute or are
approved by OMB.
6. gED nC
•�_§Y.�. SsQ., ibi1itigS. OMB will review agency regulations
and implementation of this Circular, and will provide
interpretations of policy requirements and assistance to
insure effective and efficient implementation. Any
exceptions will be subject to approval by OMB, as indicated
in Section .4 in the Attachment. Exceptions will only be
made in particular cases where adequate justification is
presented.
7. =nformation Contact- Further information concerning this
Circular may be obtained by contacting the Office of Federal
Financial Management, Office of Management and Budget,
Washington, DC 20503, Telephone (202) 395-3993.
8 . Termination Review Date. This Circular
issuance.
have a policy
review three years from date
9 . Effective Date. The standards set forth in this Circular
which affect Federal agencies will be effective 30 days
after publication of the final revision in the Federal
Register. Those standards which Federal agencies impose on
grantees will be adopted by agencies in codified regulations
within six months after publication in the Federal Register.
Earlier implementation is encour —
';AllOr
• 4 E. Panetta
•irector
Attachment
•
-2-
Grants and Agreements with Institutions of Higher Education,
Hospitals, and Other Non-Profit Organizations
SUBPART A - GENERAL
Sec
. 1 purpose.
.2 Definitions.
.3 Effect on other issuances.
.4 Deviations.
. 5 Subawards.
SUBPART B - PRE-AWARD REQUIREMENTS
. 10 Purpose.
. 11 Pre-award policies.
. 12 Forms for applying for Federal assistance.
. 13 Debarment and suspension.
•
. 14 Special award conditions.
. 15 Metric system of measurement.
. 16 Resource Conservation and Recovery Act.
. 17 Certifications and representations.
SUBPART C - POST-AWARD REQUIREMENTS
Financial and Program Management
,20 Purpose of financial and program management.
. 21 Standards for financial management systems.
. 22 Payment.
.23 Cost sharing or matching.
. 24 Program income.
. 25 Revision of budget and program plans.
.26 Non-Federal audits.
.27 Allowable costs.
.28 Period of availability of funds.
property Standards
.30 Purpose of property standards.
.31 Insurance coverage.
.32 Real property.
.33 Federally-owned and exempt property.
. 34 Equipment.
. 35 Supplies and other expendable property.
. 36 Intangible property.
. 37 Property trust relationship.
3
Procurement Standards
. 40 Purpose of procurement standards.
. 41 Recipient responsibilities.
.42 Codes of conduct. •
.43 Competition.
. 44 Procurement procedures.
. 45 Cost and price analysis.
. 46 Procurement records.
. 47 Contract administration.
.48 Contract provisions.
Renorts and Records
. 50 Purpose of reperts and records.
.51 Monitoring and reporting program performance.
. 52 Financial reporting.
. 53 Retention and access requirements for- records.
Termination and Enforcement
. 60 Purpose of termination and enforcement.
. 61 Termination.
. 62 Enforcement.
•
REQUIREMENTS
SUBPART D AFTER-THE-AWARD Q
.70 Purpose.
.71 Closeout procedures.
. 72 Subsequent adjustments and continuing responsibilities.
.73 Collection of amounts due.
APPENDIX A - CONTRACT PROVISIONS
SUBPART A - General
. 1 purpose. This Circular establishes uniform
administrative requirements for Federal grants and agreements
awarded to institutions of higher education, hospitals, and other
non-profit organizations. Federal awarding agencies shall not
impose additional or inconsistent requirements, except as
provided in Sections . 4 , and . 14 or unless specifically
required by Federal statute or executive order. Non-profit
organizations that implement Federal programs for the States are
also subject to State requirements.
•
. 2 Definitions.
(a) Accrued expenditures means the charges incurred by the recipient during a given period requiring the provision of
4
funds for: (1) goods and other tangible property received;
(2) services performed and other by
amyees,and,c(3�othersamounts
subrecipients, payees;
becoming owed under programs for which no current services
or performance is required.
(b) Accrued income means
serformedlby earnings
the recipient,during
and
givenservices period from (i) pe
rformed
(ii) goods and other trugtsle becomi_ng owedy delivered
to the recipient
purchasers, and (2) amounts
for which no current services or performance is required by
the recipient.
(c) Acquisition cost of equipment means the net invoice price of
the equipment, including the cost of modifications,
attachments, accessories;-or auxiliary apparatus necessary
to make the property usable for the purpose for which it was
acquired. Other charges, such as the cost of installation,
transportation, taxes, duty or protective in-transit
insurance, shall be included or excluded from the unit
acquisition cost in accordance with the recipient's regular
accounting practices.
(d) Advance means a payment made by Treasury check or other
appropriate payment mechanism to a recipient upon its
request either before outlays are made by the recipient or
through the use of predetermined payment schedules.
(e) Award means financial assistance that provides support or
stimulation to accomplish a public purpose. Awards include
grants and other agreements in the form of money or property
in lieu of money, by the Federal Government to an eligible
recipient. The term does not include: technical assistance,
whic
h provides .services instead of money; other assistance
in the form of loans, loan guarantees, interest subsidies,
or insurance; direct payments of any kind to individuals;
and, contracts which are required to be entered into and
administered under procurement laws and regulations.
(f) Cash contributions means the recipient's cash outlay,
including the outlay of money contributed to the recipient
by third parties.
(g) Closeout means the process by which a Federal awarding
agency determines that all applicable administrative actions
and all required work of the award have been completed by
the recipient and Federal awarding agency.
(h) Contract means a procurement contract under an award or
subaward, and a procurement subcontract under a recipient's
or subrecipient's contract.
5
•
(i) Cost sharing or matching means that portion of project or
program costs .not borne by the Federal Government.
(j) Date of completion means the date on which all work under an
award is completed or the date on the award document, or any
supplement or amendment thereto, on which Federal
sponsorship ends.
(k) Disallowed costs means those charges to an award that the
Federal awarding agency determines to be unallowable, in
accordance with the applicable Federal cost principles or
other terms and conditions contained in the award.
(1) Ecruipment means tangible nonexpendable personal property
including exempt property charged directly to the award
having a useful life of more-than one year -and an
acquisition cost of $5000 or more per unit. However,
consistent with recipient policy, lower limits may be
established.
(m) Excess property means property under the control of any
Federal awarding agency that, as determined by the head
thereof, is no longer required for its needs or the
discharge of its responsibilities. -
(n) Exempt property means tangible personal property acquired in
whole or in part with Federal funds, where the Federal
awarding agency has statutory authority to vest title in the
recipient without further obligation to the Federal
Government. An example of exempt property authority is
contained in the Federal Grant and Cooperative Agreement Act
(31 U.S.C. 6306) , for property acquired under an award to
conduct basic or applied research by a non-profit
institution of higher education or non-profit organization
whose principal purpose is conducting scientific research.
(o) Federal awarding agency 'means the Federal agency that
provides an award to the recipient.
(p) Federal funds authorized means the total amount of Federal
funds obligated by the Federal. Government for use by the
recipient. This amount may include any authorized carryover
of unobligated funds from prior funding periods when
permitted by agency regulations or agency implementing
instructions.
(q) Federal share of real property, equipment, or supplies means
that percentage of the property's acquisition costs and any
improvement expenditures paid with Federal funds.
(r) Funding period means the period of time when Federal funding
is available for obligation by the recipient.
6
(s) 2ntangible property and debt- instruments means, but is not
limited to, trademarks, copyrights, patents and patent
• applications and such property as loans,-notes and other
debt instruments, lease agreements, stock and other
instruments of property ownership, whether considered
tangible or intangible.
(t) Obligations
means the amounts of orders placed, contracts
and grants awarded, services received and similar
transactions during a given period that require .payment by
the recipient during the same or a future period.
(u) Outlays or expenditures means charges made to the project or
program. They may be reported on- a cash or accrual basis.
For reports prepared on a cash basis, outlays are the sum of
cash disbursements for 'direct charges for -goods and
services, the amount of indirect expense charged, the value
of third party in-kind contributions applied and the amount
of cash advances and payments made to subrecipients. For
reports prepared on an accrual basis, outlays are the sum of
cash disbursements for direct charges for goods and
services, the amount of indirect expense incurred, the value
of in-kind contributions applied, and the net increase (or
decrease) in the amounts owed by the recipient for goods and
• other property received, for services performed by and
employees, contractors, subrecipients and other payees
other amounts becoming owed under programs for which no
current services or performance are required.
(v) Personal property means property of any kind except real
property. It may be tangible, having physical existence, or
intangible, having no physical existence, such as
copyrights, patents, or securities.
(w) prior approval means written approval by an authorized
official evidencing prior consent.
(x) program income means gross income earned by the recipient
that is directly generated by a supported activity or earned
as a result of the award (see exclusions in paragraphs
.24 (e) and (h) ) . Program income includes, but is not
limited to, income from fees for services performed, the use
or rental of real or personal property acquired under
federally-funded projects, the sale of commodities or items
fabricated under an award, license fees and. royalties on
patents and copyrights, and interest on loans made with
'award funds. Interest earned on advances of Federal funds
is not program income. Except as otherwise provided in
Federal awarding agency regulations or the terms and
conditions of the award, program income does not include the
receipt of principal on loans, rebates, credits, discounts,
etc. , or interest earned on any of them.
7
(y) project costs means all allowable costs, as set forth in the
applicable Federal cost principles, incurred by a recipient
and the value of the contributions made by third parties in
accomplishing the oojectives of the award during the project
period.
(z) pro-iect period means the period established in the award
document during which Federal sponsorship begins and ends.
(aa) property means, unless otherwise stated, real property,
equipment, intangible property and debt instruments.
(bb) Meal property means land, including land improvements,
structures and appurtenances thereto, but excludes movable
machinery and equipment.
(cc) Fecipient means an organization receiving financial
assistance directly from Federal awarding agencies to carry
out a project or program. The term includes public and
private institutions of higher education, public and private
hospitals, and other quasi-public and private' non-profit
organizations such as, but not limited to, community action
agencies, research institutes, educational associations, and
health centers. The term may include commercial
organizations, foreign or international organizations (such •
as agencies of the United Nations) which are recipients,
subrecipients, or contractors or subcontractors of
recipients or subrecipients at the discretion of the Federal
awarding agency. The term does not include government-owned
contractor-operated facilities or research centers providing
continued support for mission-oriented, large-scale programs
that are government-owned or controlled, or are designated
as federally-funded research and development centers.
(dd) pesearch and development means all research activities, both
basic and applied, and all development activities that are
supported at universities, - colleges, and other non-profit
institutions. "Research" is defined as a systematic study
directed toward fuller scientific knowledge or understanding
of the subject studied. "Development" is the systematic use
of knowledge and understanding gained from research directed
toward the production of useful materials, devices, systems,
or methods, including design and development of prototypes
and processes. The term research also includes activities
involving the training of individuals in research techniques
where such activities utilize the same facilities as other
research and development activities and where such
activities are not included in the instruction function.
(ee) §mall awards means a grant or cooperative agreement not
exceeding the small purchase threshold fixed at 41 U.S.C.
403 (11) (currently $25, 000) .
8
(ff) Sub_d means an award of financial assistance in the form
of money, or property in lieu of money, made under an award
by a recipient to an eligible subrecipient or by a
subrecipient to a lower tier subrecipient. The term
includes financial assistance when provided by any legal
agreement, even if the agreement is called a contract, but
does not include procurement of goods and. services nor does
it include any form of assistance which is excluded from the
"award" in paragraph (e) .
of away p �
definition
(gg) S»brecipient means the legal entity to which a subaward is
made and which is accountable to the recipient for the use
of the funds provided. The term may include foreign or
international organizations (such as agencies of the United
Nations) at the discretion of the Federal awarding agency.
(hh) Supplies means all personal property excluding equipment,
intangible property, and debt instruments as defined in this
section, and inventions of a contractor conceived or first
• actually reduced to practice in the performance of work
under a funding agreement ("subject inventions") , as defined
in 37 CFR part 401, "Rights to Inventions Made by Nonprofit
Organizations and Small Business Firms Under Government
Grants, Contracts, and Cooperative Agreements. "
(ii) Suspension means an action by a Federal awarding agency that
temporarily withdraws Federal sponsorship under an award,
pending corrective action by the recipient or pending a
decision to terminate the award by the Federal awarding
agency. Suspension of an award is a separate action from
suspension under Federal agency regulations implementing
E.O.s 12549 and 12689 , "Debarment and Suspension."
(jj ) Termination means the cancellation of Federal sponsorship,
in whole or in part, under an agreement at any time prior to
the date of completion.
(kk) Third party in-kind contributions means the value of non-
cash contributions provided by non-Federal third parties.
Third party in-kind contributions may be in the form of real
property, equipment, supplies and other expendable property,
and the value of goods and services directly benefiting and
specifically identifiable to the project or program.
(11) Unliguidated obligations, for financial reports prepared on
a cash basis, means the amount of obligations incurred by
the recipient that have not been paid. For reports prepared
on an accrued expenditure basis, they represent the amount
of obligations incurred by the recipient for which an outlay
has not been recorded.
9
•
•
(mm) Unobliaated balance means the portion of the funds
authorized by the Federal awarding agency that has not been
obligated by the recipient and is determined by deducting
the cumulative obligations from the cumulative funds
authorized.
(nn) mountvawad indirect he°am means
nwhich could have been difference een the
awa awarded
amount awarded an
under the recipient's approved negotiated indirect cost
rate.
(oo) Working capital advance means a procedure where by funds are
advanced to the recipient to cover its estimated
disbursement needs for a given initial period.
.3 Effect on other issuances: For- awards subject -to this
Circular, all administrative requirements of codified program
regulations, program manuals, handbooks and other nonregulatory
materials which are inconsistent with the requirements of this.
Circular shall be superseded, except to the extent they are
required by statute, or authorized in accordance with the
deviations provision in Section .4.
.4 Deviations. The Office of Management and Budget (OMB)
may grant exceptions for classes of grants or recipients subject
to the requirements of this Circular when exceptions are not
prohibited by statute. However, in the interest of maximum
uniformity, exceptions from the requirements of this Circular
shall be permitted only in unusual circumstances. Federal
awarding agencies may apply more restrictive requirements to a
class of recipients when approved by OMB. Federal awarding
agencies may apply less restrictive requirements when awarding
small awards, except for those requirements which are statutory.
Exceptions on a case-by-case basis may also be made by Federal
awarding agencies. -
.5 Subawards. Unless sections of this Circular specifically
exclude subrecipients from coverage, the provisions of this
Circular shall be applied to subrecipients performing work under
awards if such subrecipients are institutions of higher
education, hospitals or other non-profit organizations. State
and local government subrecipients are subject to the provisions
of regulations implementing the grants management common
rule, "Uniform Administrative Requirements for Grants and
Cooperative Agreements to State and Local Governments, " published
at 53 FR 8034 (3/11/88) .
SUBPART B - Pr•-Award Requirements
. 10 Purpose. Sections . 11 through . 17 prescribes
forms and instructions and other pre-award matters to be used in
applying for Federal awards.
10
. 11 Pre-award policies. •
-
(a) Use of Grants and Cooperative Agreements, and Contracts. In
each instance, the Federal awarding agency shall decide on
the appropriate award instrument (i.e. , grant, cooperative
agreement, or contract) . The Federal Grant and Cooperative
Agreement Act (31 U.S.C. 6301-08) governs the use of grants,
cooperative agreements and contracts. A grant or
cooperative agreement shall be used only when the principal
purpose of a transaction is to accomplish a public purpose
of support or stimulation authorized by Federal statute.
The statutory criterion for choosing between grants and
cooperative agreements is that for the latter, . "substantial
involvement is expected between the executive agency and the
State, local government, or other recipient when carrying
out the activity contemplated in -the • agreement."- Contracts
shall be used when the principal purpose is acquisition of
property or services for the direct benefit or use of the
Federal Government.
(b) Public Notice and Priority Setting. Federal awarding
agencies shall notify the public of its intended funding
priorities for discretionary grant programs, unless funding
priorities are established by Federal statute.
. 12 Forms for applying for Federal assistance.
(a) Federal awarding agencies shall comply with the applicable
report clearance requirements of 5 CFR part 1320,
"Controlling Paperwork Burdens on the Public, " with regard
to all forms used by the Federal awarding agency in place of
or as a supplement to the Standard Form 424 (SF-424) series.
(b) Applicants shall use the SF-424 series or those forms and
instructions prescribed by the Federal awarding agency.
(c) For Federal programs covered by E.O. 12372 ,
"Intergovernmental Review of Federal Programs, " the
applicant shall complete the appropriate sections of the SF-
424 (Application for Federal Assistance) indicating whether
the application was subject to review by the State Single
Point of Contact (SPOC) . The name and address of the SPOC
for a particular State can be obtained from the Federal
awarding agency or the Catalog of Federal Domestic
Assistance. The SPOC shall advise the applicant whether the
program for which application is made has been selected by
that State for review.
(d) Federal awarding agencies that do not use the SF-424 form
should indicate whether the application is subject to review
by the State under E.O. 12372.
11
.13 Debarment and suspension: Federal awarding agencies and
recipients shall comply with the nonprocurement debarment and
suspension common rule implementing E.O.s 12549 and 12689 ,
"Debarment and Suspension. " This common rule restricts subawards
and contracts with certain parties that are debarred, suspended
or otherwise excluded from or ineligible for participation in
Federal assistance programs or activities.
. 14 Special award conditions. If an applicant or recipient:
(a) has a historyof poor performance, (b) is not financially
stable, (c) has a management system that does not meet the
standards prescribed in this Circular, (d) has not conformed to
the terms and conditions of a previous award, or (e)- is not
otherwise responsible, Federal awarding agencies may impose
additional requirements as needed, provided that such applicant
or recipient is notified in writing- as for the nature of the -
additional requirements, the reason why the additional
requirements are being imposed, the nature of the corrective
action needed, the time allowed for completing the co
rrective
actions, and the method for requesting reconsideration of the
additional requirements imposed. Any special conditions shall be
promptly removed once the conditions that prompted them have been
corrected.
. 15 Metric system of measurement. The Metric Conversion
Act, as amended by the Omnibus Trade and Competitiveness Act (15
U.S.C. 205) declares that the metric system is the preferred
measurement system for U.S. trade and commerce. The Act requires
each Federal agency to establish a date or dates in consultation
with the Secretary of Commerce, when the metric system of
measurement will be used in the agency's procurements, grants,
and other business-related activities. Metric implementation may
take longer where the use of the system is initially impractical
or likely to cause significant inefficiencies in the
accomplishment of federally-funded activities. Federal awarding
agencies shall follow the provisions of E.O. 12770, "Metric Usage
in Federal Government Programs. "
. 16 Resource Conservation and Recovery Act (RCRA) (Pub. L.
94-580 codified at 42 U.S.C. 6962) . Under the Act, any State
agency or agency of a political subdivision of a State which is
using appropriated Federal funds must comply with Section 6002 .
Section 6002 requires that preference be given in procurement
programs to the purchase of specific products containing recycled
materials identified in guidelines developed by the Environmental
Protection Agency (EPA) (40 CFR parts 247-254) . Accordingly,
Statd and local institutions of higher education, hospitals, and
non-profit organizations that receive direct Federal awards or
other Federal funds shall give preference in their procurement
programs funded with Federal funds to the purchase of recycled
products pursuant to the EPA guidelines.
12
. 17 Certifications and representations. Unless prohibited
by statute or codified regulation, each Federal awarding agency
is authorized and encouraged to allow recipients to submit
certifications and representations required by statute, executive
order, or regulation on an annual basis, if the recipients have
ongoing and continuing relationships with the agency. Annual
certifications and representations shall be signed by responsible
officials with the authority to ensure recipients' compliance
with the pertinent requirements.
•
SUBPART C - Post-Award Requirements
Financial and Program Management •
.20 Purpose of financial and program management. Sections
.21 through .28 prescribe.stand.ards -far financial.
management systems, methods for making payments and rules for:
satisfying cost sharing and matching requirements, accounting for
program income, budget revision approvals, making audits,
determining allowability of cost, and establishing fund
availability.
•
.21 Standards for financial management systems.
(a) Federal awarding agencies shall require recipients to relate
financial data to performance data and develop unit cost
information whenever practical.
(b) Recipients' financial management systems shall provide for
the following.
(1) Accurate, current and complete disclosure of the
financial results of each federally-sponsored project
• or program in accordance with the reporting
requirements set forth in Section .52. If a
Federal awarding agency requires reporting on an
accrual basis from a recipient that maintains its
records on other than an accrual basis, the recipient
shall not be required to establish an accrual •
accounting system. These recipients may develop such
accrual data for its reports on 'the basis of an
analysis of the documentation on hand.
(2) Records that identify adequately the source and
application of funds for federally-sponsored
activities. These records shall contain information
pertaining to Federal awards, authorizations,
obligations, unobligated balances, assets, outlays,
income and interest.
(3) Effective control over and accountability for all
funds, property and other assets. Recipients shall
13
1
adequately safeguard all such assets and assure they
are used solely for authorized purposes.
(4) Comparison' of outlays with budget amounts for each
award.
Whenever appropriate, financial information
should be related to performance and unit cost data.
(5) Written procedures to minimize the time elapsing
between the transfer of funds to the recipient from the
U.S. Treasury and the issuance or redemption of checks,
warrants or payments by other means for program
purposes by the recipient. To the extent that the
provisions of the Cash Management Improvement Act
(CMIA)
pub. L. 101-453) govern, payment methods of
State agencies, instrumentalities, and fiscal agents
shall be consistent with CMIA Treasury-State Agreements
or the CMIA default procedures codified at 31 CFR part
205, "Withdrawal of Cash from the Treasury for Advances
under Federal Grant and Other Programs. "
(6) Written procedures for determining the reasonableness,
allocabilitY and allowability of costs in accordance
with the provisions of the applicable Federal cost
principles and the terms and conditions of the award.
(7) Accounting records including cost accounting records
that are supported by source documentation.
(c) Where the Federal Government guarantees or insures the
repayment of money borrowed by the recipient, the Federal
awarding agency, at its discretion, may require adequate
bonding and insurance if the bonding and insurance
requirements of the recipient are not deemed adequate to
protect the interest of the Federal Government.
(d) The Federal awarding agency may require adequate fidelity
bond coverage where the recipient lacks sufficient coverage
to protect the Federal Government's interest.
(e) Where bonds are required in the situations described above,
the bonds shall be obtained from companies holding
certificates of authority as acceptable sureties, as
prescribed in 31 CFR part 223 , "Surety Companies Doing
Business with the United States. "
14
.22 Payment. .
•
(a) Payment methods shall minimize the time elapsing btweeneen the e
transfer of funds from the United States Treasury issuance or redemption of checks, warrants, or payment by
other means by the recipients. Payment methods of State
agencies or instrumentalities
shall
default procedures II
Treasury-State CMIA agreements or
codified at 31 CFR part 205.
in advance, provided
Recipients are to be paid they maintain
or demonstrate the willingness to maintain: (1) written
procedures that minimize the time elapsing between the
transfer of funds and disbursement by the recipient, and (2)
financial management systems that meet the standards for
fund control and accountability as -estab-lished- in Section'
• .21. Cash advances to a recipient organization shall be
limited to the minimum amounts needed and be..timed to be in
accordance with the actual, immediate cash requirements of
the recipient organization in carrying out the purpose of
the approved program or project. The timing and amount of
cash advances shall be as close as is administratively
• feasible to the actual disbursements by the recipient
organization for direct program or project costs and the
proportionate share of any allowable indirect costs.
(c) Whenever possible, advances shall be consolidated to cover
anticipated cash needs for all awards made by the Federal
awarding agency to the recipient.
(1) Advance PaYmtandmechanisms
ctroniccfunds transflude, but er.
notlimited 'I
to, Treasury check
(2) Advance payment mechanisms are subject to 31 CFR part
205.
it
for
(3) Recipients shall bes authorized
leastomo�ly wheneelectronic
advances and reimbursement
fund transfers are not used.
(d) Requests for Treasury check advance payment shall be
submitted on SF-270, "Request for Advance or Reimbursement, "
or other forms as may be authorized by OMB. This form is
not to be used when Treasury check advance payments are made
to the recipient automatically through the use of a
predetermined payment schedule or if precluded by special
Federal awarding agency instructions for electronic funds
transfer.
•
(e) Reimbursement is the preferred method when the requirements
in paragraph (b) cannot be met. Federal awarding agencies
may also use this method on any construction agreement, or
15
•
if the major portion of the construction project is
accomplished through private market financing or •Federal
loans, and the Federal assistance constitutes a minor
portion of the project.
(1) When the reimbursement method is used, the Federal
awarding agency shall make payment within 30 days after
receipt of the billing, unless the billing is improper.
(2) Recipients shall be authorized to submit request for
reimbursement at least monthly when electronic funds
transfers are not used.
(f) If a recipient cannot meet the criteria for advance payments
and the Federal awarding agency has determined that
reimbursement is not feasible because the recipient lacks
sufficient working capital, the Federal awarding agency may
provide cash on a working capital advance basis. Under this
procedure, the Federal awarding agency shall advance cash to
the recipient to cover its estimated disbursement needs for
an initial period generally geared to the awardee's
disbursing cycle. Thereafter, the Federal awarding agency
shall reimburse the recipient for its actual cash
disbursements. The working capital advance method of
payment shall not be used for recipients unwilling or unable
to provide timely advances to their subrecipient to meet the
subrecipient's actual cash disbursements.
(g) To the extent available, recipients shall disburse funds
available from repayments to and interest earned on a
revolving fund, program income, rebates, refunds, contract
settlements, audit recoveries and interest earned on such
funds before requesting additional cash payments.
(h) Unless otherwise required by statute, Federal awarding
agencies shall not withhold payments for proper charges made
by recipients at any time during the project period unless
(1) or (2) apply.
(1) A recipient has failed to comply with the project
objectives, the terms and conditions of the award, or
Federal reporting requirements.
(2) The recipient or subrecipient is delinquent in a debt to
the United States as defined in OMB Circular A-129 ,
"Managing Federal Credit Programs. " Under such conditions,
the Federal awarding agency may, upon reasonable notice,
inform the recipient that payments shall not be made for
obligations incurred after a specified date until the
conditions are corrected or the indebtedness to the Federal
Government is liquidated.
16
(i) Standards 'governing the use of banks and other institutions
as depositories of funds advanced under awards are as
follows.
(1) Except for situations described in paragraph (i) (2) ,
Federal awarding agencies shall not require separate
depository accounts for funds provided to a recipient
or establish any eligibility requirements for
depositories for funds provided to a recipient.
However, recipients must be able to account for the
receipt, obligation and expenditure of funds.
(2) Advances of Federal funds shall be deposited
tediald.
maintained in insured accounts whenever possible..
(j) Consistent -with the national goal-- of expanding the
• opportunities for women-owned and minority-owned business
enterprises, recipients shall be encouraged to use women-
owned and minority-owned banks (a bank which is owned at
least 50 percent by women or minority group members) .
(k) Recipients shall maintain advances of Federal funds in
interest bearing .accounts, unless (1) , (2) or (3) apply.
(1) The recipient .receives less than $120,000 in Federal
awards per year.
(2) The best reasonably available interest bearing account
would not be expected to earn interest in excess of. $250 per
year on Federal cash balances.
(3) The depository would require an average or minimum
balance so high that it would not be feasible within the
expected Federal and non-Federal cash resources.
(1) For those entities where CMIA and its implementing
regulations do not apply, interest earned on Federal
advances deposited in interest bearing accounts shall be
remitted annually to Department of Health and Human
20852 .
Services, Payment Management System, Rockville,
Interest amounts up to $250 per year may be retained by the
recipient for administrative expense. State veities
and hospitals shall comply with CMIA, as it pertains
interest. If an entity subject to CMIA uses its own funds
to pay pre-award costs for discretionary awards without
prior written approval from the Federal awarding agency, it
waives its right to recover the interest under CMIA.
(m) Except as noted elsewhere in this Circular, only the
following forms shall be authorized for the recipients in
requesting advances and reimbursements. Federal agencies
17
shall not require more than an original and two copies of
these forms. -
(1) SF-270, Request for Advance or Reimbursement. Each
Federal awarding agency shall adopt the SF-270 as a
standard form for all nonconstruction programs when
electronic funds transfer or predetermined advance
methods are not used. Federal awarding agencies,
however, have the option of using this form for
construction programs in lieu of the SF-271, "Outlay
Report and Request for Reimbursement for Construction
Programs. "
(2) SF-271, Outlay Report and Request for Reimbursement for
Construction Programs. Each Federal awarding agency
shall adopt the SF-271 as the standard form to be used
for requesting reimbursement for construction programs.
However, a Federal awarding agency may substitute the
SF-270 when the Federal awarding agency determines that
it provides adequate information to meet Federal needs.
. 23 Cost sharing or matching.
(a) All contributions, including cash and third party in-kind,
shall be accepted as part of the recipient's cost sharing or
matching when such contributions meet all of the following
criteria.
(1) Are verifiable from the recipient's records.
(2) Are not included as contributions for any other
federally-assisted project or program.
(3) Are necessary and reasonable for proper and efficient
accomplishment of project or program objectives.
(4) Are allowable under the applicable cost principles.
(5) Are not paid by the Federal Government under another
award, except where authorized by Federal statute to be
used for cost sharing or matching.
(6) Are provided for in the approved budget when required
by the Federal awarding agency.
(7) Conform to other provisions of this Circular, as
applicable.
(b) Unrecovered indirect costs may be included as part of cost
sharing or matching only with the prior approval of the
Federal awarding agency.
18
(c) Values for recipient contributions of services and property
shall be established in accordance with the applicable cost
principles. If a Federal awarding agency authorizes
recipients to donate buildings or land for
construction/facilities acquisition projects or long-term
use, the value of the donated property for cost sharing or
matching shall be the lesser of (1) or (2) .
(1) The certified value of the remaining life of the
property recorded in the recipient's accounting records
at the time of donation.
(2) The current fair market value. However, when there is
sufficient justification, the Federal awarding agency
may approve the use of the current fair market value of
the donated property-,- even-if -it exceeds the- certified
value at the time of donation to the project.
(d) Volunteer services furnished by professional and technical
personnel, consultants, and other skilled and unskilled
labor may be counted as cost sharing or matching if the
service is an integral and necessary part of an approved
project or program. Rates for volunteer services shall be
consistent with those paid for similar work in the
recipient's organization. In those instances in which the
required skills are not found in the recipient organization,
rates shall be consistent with those paid for similar work
in the labor market in which the recipient competes for the
kind of services involved. In either case, paid fringe
benefits that are reasonable, allowable, and allocable may
be included in the valuation.
(e) When an employer other than the recipient furnishes the
services of an employee, these services shall be valued at
the employee's regular rate of pay (plus an amount of fringe
benefits that are reasonable, allowable, and allocable, but
exclusive of overhead costs) , provided these services are in
the same skill for which the employee is normally paid.
(f) Donated supplies may include such items as expendable
equipment, office supplies, laboratory supplies or workshop
and classroom supplies. Value assessed to donated supplies
included in the cost sharing or matching share shall be
reasonable and shall not exceed the fair market value of the
property at the time of the donation.
(g) The method used for determining cost sharing or matching for
donated equipment, buildings and land for which title passes
to the recipient may differ according to the purpose of the
award, if (1) or (2) apply.
19
•
(1) If the purpose of the award is to assist the recipient
• in the acquisition of equipment, buildings or land, the
total value of the donated property may be claimed as
cost sharing or matching.
(2) If the purpose of the award is to support activities
that require the use of equipment, buildings or land,
normally only depreciation or use charges for equipment
and buildings may be made. However, the full value of
equipment or other capital assets and fair rental
charges for land may be allowed, provided that the
Federal awarding agency has approved the charges.
'(h) The value of donated property shall be determined in
accordance with the usual accounting policies of the
recipient, with the following qualifications-.
(1) The value of donated land and buildings shall not
exceed its fair market value at the time of donation to
the recipient as established by an independent
appraiser (e.g. , certified real property appraiser or
General Services Administration representative) and
certified by a responsible official of the recipient.
(2) The value of donated equipment shall not exceed the
fair market value of equipment of the same age and
condition at the time of donation.
(3) The value of donated space shall not exceed the fair
rental value of comparable space -as established by an
independent appraisal of comparable space and
facilities in a privately-owned building in the same
locality.
(4) The value of loaned equipment shall not exceed its fair
rental value.
(5) The following requirements pertain to the recipient's
supporting records for in-kind contributions from third
parties.
(i) Volunteer services shall be documented and, to the
extent feasible, supported by the same methods
used by the recipient for its own employees.
(ii) The basis for determining the valuation for
personal service, material, equipment, buildings
and land shall be documented.
20
.24 Program income. •
(a) Federal awarding agencies shall apply the standards set
forth in this section in requiring recipient organization
to account for program income related to projects finance
• in whole or in part with Federal funds.
(b) Except as provided in paragraph (h) below, program income
earned during the project period shall be retained by the
recipient and, in accordance with Federal awarding agency
regulations or the terms and conditions of the award, shall
• be used in .one or more of the ways listed in the following.
(1) Added to funds committed to the project by the Federal
awarding agency and recipient and used to further
eligible projector program objectives. -. .
(2) Used to finance the non-Federal share of the project or
program.
(3) Deducted from the total project or program allowable
cost in determining the net allowable costs on which
the Federal share of costs is based.
(c) When an agency authorizes the disposition of program income
as described in paragraphs (b) (1)__or (b) (2) , program income
in excess .of any limits stipulated shall be used in
accordance with paragraph (b) (3) .
(d) In the event that the Federal awarding agency does not
specify in its regulations or the terms and conditions of
the award how program income s to be used, paragraph (b) (3)
shall apply automatically to all projects or programs except
research. For awards that support research, paragraph
(b) (1) shall apply automatically unless the awarding agency
indicates in the terms and conditions another alternative on
the award or the recipient is subject to special award
conditions, as indicated in Section . 14 .
(e) Unless Federal awarding agency regulations or the terms and
conditions of the award provide otherwise, recipients shall
have no obligation to the Federal Government regarding
program income earned after the end of the project period.
(f) If authorized by Federal awarding agency regulations or the
terms and conditions of the award, costs incident to the
• generation of program- income may be deducted from gross
•
income to determine program income, provided these costs
have not been charged to the award.
21
(g) Proceeds from the ;ale of property shall be handled in
accordance with t: , requirements of the Property Standards
(See Sections 30 through .37) . --
(h) Unless Federal aw 'ding agency .regulations or the terms and
condition of the rard provide otherwise, recipients shall
• have no obligaticz to the Federal Government with respect to
program income eat ►ed from license fees and royalties for
copyrighted water ,1, patents, patent applications,
trademarks, and is ventions produced under an award.
However, Patent a: I Trademark Amendments (35 U.S.C. 18)
apply to invention, : made under an experimental,
developmental, or -esearch award.
.25 Revision of b iget and program plans.
(a) The budget. plan i• the financial expression of the project
or program as app. wed during the award process. It may
include either t?: : Federal and non-Federal share, or only
the Federal share depending upon Federal awarding agency
requirements. It. ;hail be related. to performance for
program evaluation purposes whenever appropriate.
(b) Recipients are re iired to report deviations from budget and
program plans, an rec.,;iest prior approvals for budget. and
•
• program plan revi ions , in accordance with this section.
(c) For nonconstruct:. z a ,rds, recipients shall request prior
approvals from Fe.. era:: awarding agencies for one or more of
the following pro, -am lr budget related reasons.
(1j Change in try sc- :_)e or the objective of the project or
program (eve if there is no associated budget revision
requiring pr or ,::itten approval) .
(2) Change in a , '_y parson specified in the application or
award docume: =•
(3) The absence : or more than three months, or a 25 percent
reduction in time devoted to the project, by the
approved pro: ect director or principal investigator.
(4) The need for. add tional Federal funding.
(5) The transfer of mounts budgeted for indirect costs to
absorb incre ses in direct costs, or vice versa, if
approval is equ:.Yed by' the Federal awarding agency.
(6) The inclusir , u- :Less waived by the Federal awarding
agency, of <: sts that require prior approval in
accordance ,,, th Ott Circular A-21, "Cost Principles for
Institution of Higher Education," OMB Circular A-122 ,
22
•
"Cost Principles for Non-Profit Organizations, " or 45
CFR part 74 Appendix E, "Principles for Determining
Costs Applicable to Research and Development under
Grants and Contracts with Hospitals, " or 48 CFR part
31, "Contract Cost Principles and 'Procedures, " as
applicable.
(7) The transfer of funds allotted for training allowances
(direct payment to trainees) to other categories of
expense.
(8) Unless described in the application and funded in the
approved .awards, the subaward, transfer or contracting
out of any work under an award. This provision does
not apply to the purchase of supplies, material,
equipment' or general -support -services. - - -
(d) No other prior approval requirements for specific items may
be imposed unless a deviation has been approved by OMB.
(e) Except for requirements listed in paragraphs (c) (1) and
(c) (4) of this section, Federal awarding agencies are'
authorized, at their option, to waive cost-related and
administrative prior written approvals required by this
Circular and OMB Circulars A-21 and A-122. Such waivers may
include authorizing recipients to do any one or more of the
following.
(1) Incur pre-award costs 90 calendar days prior to award
or more than 90 calendar days with the prior approval
of the Federal awarding agency. All pre-award costs
are incurred at the recipient's risk (i.e. , the Federal
awarding agency is under no obligation to reimburse
such costs if for any reason the recipient does not
receive an award or if the award is less than
anticipated and inadequate to cover such costs) .
(2) . Initiate a one-time extension of the expiration date of
the award of up to 12 months unless one or more of the
following conditions apply. For one-time extensions,
• the recipient must notify the Federal awarding agency
in writing with the supporting reasons and revised
expiration date at least 10 days before the expiration
date specified in the award. This one-time extension
may not be exercised merely for the purpose of using
unobligated balances.
(i) The terms and conditions of award prohibit
the extension.
(ii) The extension requires additional Federal
funds.
23
(iii) - The extension involves any change in the
approved objectives or scope of the project.
(3) Carry forward unobligated balances to subsequent
funding periods.
(4) For awards that support research, unless the Federal
awarding agency provides otherwise in the award or in
the agency's regulations, the prior approval
requirements described in paragraph (e) are
automatically waived (i.e. , recipients need not obtain
such prior approvals) unless one of the conditions
included in paragraph (e) (2) applies..
(f) The Federal awarding agency may, at its option, restrict the
transfer of funds among- direct cost categories or 'programs,
functions and activities for awards in which the Federal
share of the project exceeds $100, 00-0 and the cumulative
amount of such transfers exceeds or is expected to exceed 10
percent of the total budget as last approved by the Federal
awarding agency. No Federal awarding agency shall permit a
transfer that would cause any Federal appropriation or part
thereof to be used for purposes other than those consistent
with the original intent of the appropriation.
(g) All other changes to nonconstruction budgets, except for the
changes described in paragraph (j) , do not require prior
approval.
(h) For construction awards, recipients shall request prior
written approval promptly from Federal awarding agencies for
budget revisions whenever (1) , (2) or (3) apply.
(1) The revision results from changes in the scope or the
objective of the project or program.
(2) The need arises for additional Federal funds to
complete the project.
(3) A revision is desired which involves specific costs for
which prior written approval requirements may be
imposed consistent with applicable OMB cost principles
listed in Section .27.
(i) No other prior approval requirements for specific items may
be imposed unless a deviation has been approved by OMB.
(j ) When a Federal awarding agency makes an award that provides
support for both construction and nonconstruction work, the
Federal awarding agency may require the recipient to request
prior approval from the Federal awarding agency before
24
making any fund or budget transfers between the two types of
work supported.
(k) For both construction and nonconstruction awards, Federal
awarding agencies shall require recipients to notify the
Federal awarding agency in writing promptly whenever the
amount of Federal authorized funds is expected to exceed the
needs of the recipient for the project period by more than
$5000 or five percent of the Federal award, whichever is
greater. This notification shall not be required if an
application for additional funding is submitted for a
continuation award. .
(1) When requesting approval for budget revisions, recipients
shall use the budget. forms that were used in the application
unless the Federal awarding -agency- indicates -a -letter -of
request suffices.
(m) Within 30 calendar days from the date of receipt of the
request for budget revisions, Federal awarding agencies
shall review the request and notify the recipient whether
the budget revisions have been approved. If the revision is
still under consideration at the end of 30 calendar days,
the Federal awarding agency shall inform the recipient in
writing of the *date when the recipient may expect the
decision.
•
.26 Non-Federal audits.
(a) Recipients and subrecipients that are institutions of higher
education or other non-profit organizations shall be subject
to the audit requirements contained in OMB Circular A-133 ,
"Audits of Institutions of Higher Education and Other Non-
• Profit Institutions."
(b) State and local governments shall be subject to the audit
requirements contained in the Single Audit Act (31 U.S.C.
7501-7) and Federal awarding agency regulations implementing
OMB Circular A-128 , "Audits of State and Local
• Governments. "
(c) Hospitals not covered by the audit provisions of OMB
Circular A-133 shall be subject to the audit requirements of
the Federal awarding agencies.
(d) Commercial organizations shall be subject to the audit
requirements of the Federal awarding agency a p
recipient as incorporated into the award document.
. 27 Allowable costs. For each kind of recipient, there is a
set of Federal principles for determining allowable costs.
Allowability of costs shall be determined in accordance with the
25
cost principles applicable to the entity incurring the costs.
Thus, allowability of costs incurred by State, local or -
federally-recognized Indian tribal governments is determined in
accordance with the provisions of OMB Circular A-87, "Cost
Principles for State and Local Governments. " The allowability of
costs incurred by non-profit organizations is determined in
accordance with the provisions of OMB Circular A-122, "Cost
Principles for Non-Profit Organizations. " The allowability of
costs incurred by institutions of higher education is determined
in accordance with the provisions of OMB Circular A-21, "Cost
Principles for Educational Institutions. " The allowability of
costs incurred by hospitals is determined in accordance with the
provisions of Appendix E of 45 CFR part 74, "Principles for
Determining Costs Applicable to Research and Development Under
Grants and Contracts with Hospitals. " The allowability of costs
incurred by commercial_ organizations and those non-profit
organizations listed in Attachment C to Circular A-122 is
determined in accordance with the provisions of the Federal
Acquisition Regulation (FAR) at 48 CFR part 31.
.28 Period of availability of funds. Where a funding period
is specified, a recipient may charge to the grant only allowable
costs resulting from obligations incurred during the funding
period and any pre-award costs authorized by the Federal awarding
agency.
property Standards
.30 Purpose of property standards. Sections .31 through
.37 set forth uniform standards governing management and
disposition of property furnished by the Federal Government whose
cost was charged to a project supported by a Federal award.
Federal awarding agencies shall require recipients to observe
these standards under awards and shall not impose additional
requirements, unless specifically required by Federal statute.
The recipient may use its own property management standards and
procedures provided it observes the provisions of Sections
. 31 through .37.
•
. 31 Insurance coverage. Recipients shall, at a minimum,
provide the equivalent insurance coverage for real property and
equipment acquired with Federal funds as provided to property
. owned by the recipient. Federally-owned property need not be
insured unless required by the terms and conditions of the award.
.32 Real property. Each Federal awarding agency shall
prescribe requirements for recipients concerning the use and
disposition of real property acquired in whole or in part under
awards. Unless otherwise provided by statute, such requirements,
at a minimum, shall contain the following. .
26
(a) Title to real property shall vest in the recipient subject
to the condition that the recipient shall use the real
property for the authorized purpose of the project as long
as it is needed and shall not encumber the property without
approval of the Federal awarding agency.
(b) The recipient shall obtain written approval by the Federal
awarding agency for the use of real property in other
federally-sponsored projects when the recipient determines
that the property is no longer needed for the purpose of the
original project. Use in other projects shall be limited to
those under federally-sponsored projects (i.e. , awards) or
programs that have purposes consistent with those authorized
for support by the Federal awarding agency.
(c) When the real property is- no. longer- needed as provided in
paragraphs (a) and (b) , the recipient shall request
disposition instructions from the Federal
awarding
dinglagency
ncyior
its successor Federal awarding agency. The
agency shall observe one or more of the following
disposition instructions.
(1) The recipient may be permitted to retain title without
further obligation to the Federal Government after it
compensates the Federal Government for that percentage
of the current fair market value of the property
attributable to the Federal participation in the
project.
(2) The recipient may be directed to sell the property
under guidelines provided by the Federal awarding
agency and pay the Federal Government for that
percentage of the current fair market value of the
property attributable to the Federal participation in
the project (after deducting actual and reasonable
selling and fix-up expenses, if any, from the sales
proceeds) . When the recipient is authorized or
required to sell the property, proper sales procedures
shall be established that provide for competition to
the extent practicable and result in the highest
possible return.
(3) The recipient may be directed to transfer title to the
property to the Federal Government or to an eligible
third party provided that, in such cases, the recipient
shall be entitled to compensation for its attributable
percentage of the current fair market value of the
property.
27
.33 Federally-owned and exempt property.
(a) Federally-owned property.
(1) Title to federally-owned property remains vested in the
Federal Government. Recipients shall submit annually
an inventory listing of federally-owned property in
their custody to the Federal awarding agency. Upon
completion of the award or when the property is no
longer needed, the recipient shall report the property
to the Federal awarding agency for further Federal
agency utilization.
(2) If the Federal awarding agency has no further need for
the property, it shall be declared excess and reported
to the General Services Administration, unless the
Federal awarding agency has statutory authority to
dispose of the property by alternative methods (e.g. ,
the authority provided by the Federal Technology
• Transfer Act (15 D.S.C. 3710 (I) ) to donate research
equipment to educational and non-profit organizations
in accordance with E.O. 12821, "Improving Mathematics
and Science Education in Support of the National
Education Goals. ") Appropriate instructions shall be
issued to the recipient by the Federal awarding agency.
(b) Exempt property. When statutory authority exists, the
Federal awarding agency has the option to vest title to
property acquired with Federal funds in the recipient
without further obligation to the Federal Government and
under conditions the Federal awarding agency considers
appropriate. Such property is "exempt property. " Should a
Federal awarding agency not establish conditions, title to
exempt property upon acquisition shall vest in the recipient
without further obligation to- the Federal Government.
.34 Equipment.
acquired bya recipient with Federal
(a) Title to equipmentQu
funds shall vest in the recipient, subject to conditions of
this section.
(b) The recipient shall not use equipment acquired with Federal
funds to provide services to non-Federal outside
organizations for a fee that is less than private companies
charge for equivalent services, unless specifically
authorized by Federal statute, for as long as the Federal
Government retains an interest in the equipment.
(c) The recipient shall use the equipment in the project or
program for which it was acquired as long as needed, whether
or not the project or program continues to be supported by
28
Federal funds and shall not encumber the property without
approval of the Federal awarding agency. When no longer
needed for the original project or program, the recipient
shall use the equipment in connection with its other
federally-sponsored activities, in the following order of
priority: (i) Activities sponsored by the Federal awarding
agency which funded the original project, then (ii)
activities sponsored by other Federal awarding agencies.
(d) During the time that equipment is used on the project or
program for which it was acquired, the recipient shall make
it available for use on other projects or programs if such
other use will not interfere with the work on the project or
program for which the .equipment was originally acquired.
First preference fcr such other use shall be given to other
projects or programs- sponsored-by-the -Federal awarding
agency that financed the equipment; second preference shall
be given to projects or programs sponsored by other Federal
awarding agencies. If the equipment is owned by the Federal
Government, use on other activities not sponsored by the
Federal Government shall be permissible
sifla aut be horized
edebyatthe
Federal awarding agency. User Charges
program income.
(e) When acquiring replacement equipment, the recipient may use
•
the equipment to be replaced as trade-in or sell the
equipment and use the proceeds to offset the costs of- the
replacement equipment- subject to the approval of the Federal
awarding agency.
(f) The recipient's property management standards for equipment
acquired with Federal funds and federally-owned equipment
shall include all of the following.
(1) Equipment records shall be maintained accurately -and
shall include the following information.
(i)
A description .of the equipment. •
(ii) Manufacturer's serial number, model number,
Federal stock number, national stock number,
or other identification number.
(iii) Source of the equipment, including the award
number.
(iv) Whether title vests in the recipient or the
Federal Government.
(v) Acquisition date (or date received, if the
equipment was furnished by the Federal
Government) and cost.
29
•
(vi) Information from which one can calculate the
percentage of Federal participation in the
cost of the equipment (not applicable to
equipment furnished by the Federal
Government) .
(vii) Location and condition of the equipment and
the date the information was reported.
(viii) Unit acquisition cost.
(ix) Ultimate disposition data, including date of
disposal and sales price or the method used
to determine current fair market value where
a recipient compensates the Federal awarding
agency - for-Its share. - -
(2) Equipment owned by the Federal Government shall be
identified to indicate Federal ownership.
(3) A physical inventory of equipment shall be taken and
the results reconciled with the equipment records at
least once every two years. Any differences between
quantities determined by the physical inspection and
those shown in the accounting records shall be
investigated to determine the causes of the difference.
The recipient shall, in connection with the inventory,
verify the existence, current utilization, and
continued need for the equipment.
(4) A control system shall be in effect to insure adequate
safeguards to prevent loss, damage, or theft of the
equipment. Any loss, damage, or theft of equipment
shall be investigated and fully documented; if the
equipment was owned by the Federal Government, the
recipient shall promptly notify the Federal awarding
agency.
(5) Adequate maintenance procedures shall be implemented to
keep the equipment in _good condition.
(6) Where the recipient is authorized or required to sell
the equipment, proper sales procedures shall be
established which provide for competition to the extent
practicable and result in the highest possible return.
(g) When the recipient no longer needs the equipment, the
equipment may be used for other activities in accordance
with the following standards. For equipment with a current
per unit fair market value of $5000 or more, the recipient
may retain the equipment for other uses provided that
compensation is made to the original Federal awarding agency
30
1
or its successor. The amount of compensation shall be
computed by applying the percentage of Federal participation
in the cost of the original project or program to the
current fair market value of the equipment. If the
recipient has no need for the equipment, the recipient shall
• request disposition instructions from
stthe
Federal
aawarding
el ede
agency. The Federal awarding agency re erwdinhethe.
the equipment can be used to meet the agency'squ
If no requirement exists within that agency, the
availability of the equipment shall be reported to the
General Services Administration by the Federal awarding
gment
agency to determine whether a requirement
exists in other Federal agencies. The Federal awarding
agency shall issue instructions to the recipient no later
than 120 calendar days after the recipient's request and the
following procedures shall.-govern: '
(1) If so instructed or if disposition instructions are not
issued within 120 calendar days after the recipient's
request, the recipient shall sell the equipment and
reimburse the Federal awarding agency ari• amount
computed by applying to the sales proceeds the
percentage of Federal participation in the cost of the
original project or program. However, the recipient
shall be permitted to deduct and retain from the.
Federal share $500 or ten percent of the proceeds,
whichever is less, for the recipient's selling and
handling expenses.
(2) If the recipient is instructed to ship the equipment
elsewhere, the recipient shall be reimbursed by the
Federal Government by an amount which is computed by
applying the percentage of the recipient's participation in the cost of the original project or
program to the current fair market value of the
equipment, plus any reasonable shipping or interim
storage costs incurred.
(3) If the recipient is instructed to otherwise dispose of
the equipment, the recipient shall be reimbursed by the
Federal awarding agency for such costs incurred in its
disposition.
(4) The Federal awarding agency may reserve the right to
transfer the title to the Federal Government or to a
third party named by the Federal Government when such
third party is otherwise eligible under exis
existing
statutes. Such transfer shall be subject
following standards.
31
• (i) The equipment shall be appropriately
identified in the award or otherwise made
known to the recipient in writing.
(ii) The Federal awarding agency shall issue
disposition instructions within 120 calendar
days after receipt of a final inventory. The
final inventory shall list all equipment
acquired with grant funds and federally-owned
equipment. If the Federal awarding agency
fails to issue disposition instructions
within the 120 calendar day period, the
recipient shall apply the standards of this
section, as appropriate.
(iii) When the Federal- awarding agency -exercises
its right to take title, the equipment shall
be subject to the provisions for federally-
owned equipment.
.35 Supplies and other expendable property.
(a) Title to supplies and other expendable property shall vest
in the recipient upon acquisition. If there is a residual
inventory of unused supplies exceeding $5000 in total
aggregate value upon termination or completion of the
project or program and the supplies are not needed for any
other federally-sponsored project or program, the recipient
shall retain the supplies for use on non-Federal sponsored
activities or sell them, but shall, in either case,
compensate the Federal Government for its share. The amount
of compensation shall be computed in the same manner as for
equipment.
(b) The recipient shall not use supplies acquired with Federal
funds to provide services to non-Federal outside
organizations for a fee that is less than private companies
charge for equivalent services, unless specifically
authorized by Federal statute as long as the Federal
Government retains an interest in the supplies.
. 36 Intangible property.
(a) The recipient may copyright any work that is subject to
copyright and was developed, or for which ownership was
purchased, under an award. The Federal awarding agency(ies)
reserve a royalty-free, nonexclusive and irrevocable right
to reproduce, publish, or otherwise use the work for Federal
purposes, and to authorize others to do so.
(b) Recipients are subject to applicable regulations governing
patents and inventions, including government-wide
32
regulations issued by the Department of Commerce at 37 CFR
part 401, "Rights to Inventions Made by Nonprofit
Organizatin�acts and a'n�dlCooperative Firms
Agreemen Agreements. "
Grants, Co
(c) Unless waived by the Federal awarding agency, the Federal
Government has the right to (1) and (2) .
(1) Obtain, reproduce, publish or otherwise use the data
• first produced under an award.
Authorize others to receive, reproduce, publish, or
(2) purposes.
otherwise use such data for Federal
(d) Title to intangible property and debt instruments acquired
under an award or' subaward vests-upon acquisition in the-
recipient. The recipient shall use that property
ysforl not
the
originally-authorized purpose,
encumber the property without approval of the Federal
awarding agency. When no longer needed for the originally
authorized purpose, disposition of the intangible property
shall occur in accordance with the provisions of paragraph
.34 (g) .
•
.37 Property trust relationship. Real property, equipment,
intangible property and debt instruments that are acquired or
improved with Federal funds shall be held in trust by the
recipient as trustee for the beneficiaries of the project or
program under which the property was acquired or improved.
Agencies may require recipients to record liens .or other
appropriate notices of record to indicate that personal or real
property has been acquired or improved with Federal funds and
that use and disposition conditions apply to the property.
•
procurement Standards
.40 Purpose of procurement standards. Sections
.41
through .4-i set forth standards for use by recipients in
establishing procedures for the procurement of supplies and other
expendable property, equipment, real property and other services
with Federal funds. These standards are furnished to ensure that
such materials and services are obtained in aneffctiverale manner
and in compliance with the provisions of applicable
statutes and executive orders. No additional prcuremenl
t
standards or requirements shall be imposed by the
awarding agencies upon recipients, unless specifically required
by Federal statute or executive order or approved by OMB.
.41 Recipient responsibilities. The standards contained in
this section do not relieve the recipient of the contractual is
responsibilities arising unwer its thout reco ase(to.the Federal
the responsible authority,
33
I I
awarding agency, regarding the settlement and satisfaction of all
contractual and administrative issues arising out of procurements
entered into in support of an award or other agreement. This
includes disputes, claims, protests of award, source evaluation
or other matters of a contractual nature. Matters concerning
violation of statute are to be referred to such Federal, State or
local authority as may have proper jurisdiction.
.42 Codes of condoverninThe�eecipi�noit�s�Cel mfaitsain emp employees
standards of conduct governing performance
engaged in the award and administration of contracts. No
employee, officer, or agent shall participate in the selection,
award, or administration of a contract supported by Federal funds
if a real or apparent conflict of interest would be involved.
Such a conflict would arise when the employee, officer, or agent,
any member of his or her_immediate -famiiy, =his or her partner, - or
' an organization which employs or is about to employ any of the
parties indicated herein, has a financial or other interest in
the firm selected for an award. The officers, employees, and
agents of the recipient shall neither solicit nor accept
gratuities, favors, or anything of monetary- value from
contractors, or parties to subagreements. However, recipients
may -set standards for situations in which the financial interest
is not substantial or the gift is an unsolicited item of nominal
value. The standards of conduct shall provide for disciplinary
actions to be applied for violations of such standards by
officers, employees, or agents of the recipient..
.43 Competition. All procurement transactions shall be
. conducted in a manner to provide, to the maximum extent
practical, open and free competition. The recipient shall be
alert to organizational conflicts of interest as well as
noncompetitive practices among contractors that may restrict or
eliminate competition or otherwise restrain trade. In order to
ensure objective contractor performance and eliminate unfair
competitive advantage, contractors that develop or draft
specifications, requirements, statements of work, invitations for
bids and/or requests for proposals. shall be excluded from
competing for such procurements. Awards shall be made to the
bidder or offeror whose bid or offer is responsive to the
solicitation and is most advantageous to the recipient, price,
quality and other factors considered. Solicitations shall
clearly set forth all requirements that the bidder or offeror
shall fulfill in order for the bid or offer to be evaluated by
the recipient. Any and all bids or offers may be rejected when
it is in the recipient' s interest to do so.
.44 Procurement procedures.
(a) All recipients shall establish written procurement
procedures. These procedures shall provide for, at a
minimum, that (1) , (2) and (3) apply.
34
•
(1) Recipients avoid purchasing unnecessary items.
• (2) Where appropriate, an analysis is made of lease and
purchase alternatives to determine which would be the
most economical and practical procurement for the
Federal Government.
(3) Solicitations for goods and services provide for all of
the following. •
(i) A clear and accurate description of the
technical requirements for the material,
product or service to be procured. In
competitive procurements, such a description
shall not contain .features which unduly
restrict -competition: • -
(ii) Requirements which the bidder/offeror must
fulfill and all other factors to be used in
evaluating bids or proposals.
(iii) A description, whenever practicable, of
technical requirements in terms of functions
to be performed or performance required,
• including the range of acceptable
characteristics or minimum acceptable
• standards.
(iv) The specific features of "brand name or
equal" descriptions that bidders are required
to meet when such items are included in the
solicitation.
(v) The acceptance, to the extent practicable and
economically feasible, of products and
services dimensioned in the metric system of
measurement.
(vi) Preference, to the extent practicable and
economically feasible, for products and
services that conserve natural resources and
protect the environment and are energy
efficient.
(b) Positive efforts shall be made by recipients to utilize
small businesses, minority-owned firms, and women's business
' enterprises, whenever possible. Recipients of Federal
awards shall take all of the following steps to further this
goal.
35
(1) Ensure that small businesses, minority-owned firms, and
women's business enterprises are used to the fullest
extent practicable.
(2) Make information on forthcoming opportunities available
and arrange time frames for purchases and contracts to
encourage and facilitate participation by small
businesses, minority-owned firms, and women's business
enterprises.
(3) Consider in the contract process whether firms
competing for larger contracts intend to subcontract
with small businesses, minority-owned firms, and _
women's business enterprises.
(4) Encourage contracting-with consortiums of small
businesses, minority-owned firms and women's business
enterprises when a contract is too large for one of
these firms to handle individually.
(5) Use the services and assistance, as appropriate, of
such organizations as the Small Business Administration
and the Department of Commerce's Minority Business
Development Agency in the solicitation and utilization
of small businesses, minority- owned firms and women's
business enterprises.
(c) The type of procuring instruments used (e.g. , fixed price
contracts, cost reimbursable contracts, purchase orders, and
incentive contracts) shall be determined by the recipient
but shall be appropriate for the particular procurement and
for promoting the best interest of the program or project
involved. The "cost-plus-a-percentage-of-cost" or
"percentage of construction cost" methods of contracting
shall not be used.
(d) Contracts shall be made only with responsible contractors
who possess the potential ability to perform successfully
under the terms and conditions of the proposed procurement.
Consideration shall be given to such matters as contractor
integrity, record of past performance, financial and
technical resources or accessibility to other necessary
resources. In certain circumstances, contracts with certain
parties are restricted by agencies' implementation of E.O.s
12549 and 12689 , "Debarment and Suspension. "
(e) Recipients shall, on request, make available for the Federal
awarding agency, pre-award review and procurement documents,
such as request for proposals or invitations for bids,
independent cost estimates, etc. , when any of the following
conditions apply.
36
(1) A recipient's procurement procedures or operation fails
to comply with the procurement standards in the Federal
awarding agency's implementation of this Circular.
(2) The procurement is expected to exceed the small
purchase threshold fixed at 41 U.S.C. 403 (11)
(currently $25, 000) and is to be awarded without
competition or only one bid or offer is received in
response to a solicitation.
(3) The procurement, which is expected to exceed the small
purchase threshold, specifies a "brand name" product.
(4) The proposed award over the small purchase threshold is
to be awarded to other than the apparent low bidder
under a sealed bid procurement. - -
(5) A proposed contract modification changes the scope of a
contract or increases the contract amount by more than
the amount of the small purchase threshold.
.45 Cost and price analysis. Some form of cost or price
analysis shall be made and documented in the procurement files in
connection with every procurement action. Price analysis may be
accomplished in various ways, including the comparison of price
quotations submitted, market prices and similar indicia, together
with discounts. Cost analysis is the review and evaluation of
each element of cost to determine reasonableness, allocability
and allowability.
. 46 Procurement records. Procurement records and files for
purchases in excess of the small purchase threshold shall include
the following at a minimum: (a) basis for contractor selection,
(b) justification for lack of competition when competitive bids
or offers are not obtained, and (c) basis for award cost or
price.
.47 Contract administration. A system for contract
administration shall be maintained to ensure contractor
conformance with the terms, conditions and specifications of the
contract and to ensure adequate and timely follow up of all
purchases. Recipients shall evaluate contractor performance and
document, as appropriate, whether contractors have met the terms,
conditions and specifications of the contract.
. 48 Contract provisions. The recipient shall include, in
addition to provisions to define a sound and complete agreement,
the following provisions in all contracts. The following
provisions shall also be applied to subcontracts.
•
(a) Contracts in excess of the small purchase threshold shall
contain contractual provisions or conditions that allow for
37
administrative, contractual, or legal remedies in instances
in which a contractor violates or breaches the contract .
terms, and provide for such remedial actions as may be
appropriate.
(b) All contracts in excess of the small purchase threshold
shall contain suitable provisions for termination by the
recipient, including the manner by which termination shall
be effected and the basis for settlement. In addition, such
contracts shall describe conditions under which the contract
may be terminated for default as well as conditions where
the contract may be terminated because of circumstances
beyond the control of the contractor.
(c) Except as otherwise required by statute, an award that
requires the contracting -(or -subcontracting) for
construction or facility improvements shall provide for the
recipient to follow its own requirements relating to bid
guarantees, performance bonds, and payment bonds unless the
construction contract or subcontract exceeds $100, 000. For
those contracts or subcontracts exceeding $100, 000, the
Federal awarding agency may accept the bonding policy and
requirements of the recipient, provided the Federal awarding
agency has made a determination that the Federal
Government's interest is adequately protected. If such a
determination has not been made, the minimum requirements
shall be as follows.
(1) A bid guarantee from each bidder equivalent to five
percent of the bid price. The "bid guarantee" shall
consist of a firm commitment such as a bid bond,
certified check, or other negotiable instrument
accompanying a bid as assurance that the bidder shall,
upon acceptance of his bid, execute such contractual
documents as may be required within the time specified.
(2) A performance bond on the part of the contractor for
100 percent of the contract price. A "performance
bond" is one executed in connection with a contract to
secure fulfillment of all the contractor's obligations
under such contract.
(3) A payment bond on the part of the contractor for 100
percent of the contract price. A "payment bond" is one
executed in connection with a contract to assure
payment as required by statute of all persons supplying
labor and material in the execution of the work
provided for in the contract.
(4) Where bonds are required in the situations described
herein, the bonds shall be obtained from companies
holding certificates of authority as acceptable
38
•
sureties pursuant to 31 CFR part 223 , "Surety Companies
Doing Business with the United States. "
(d) All negotiated contracts (except those for less than the
small purchase threshold) awarded by recipients shall
include a provision to the effect that the recipient, the
Federal awarding agency, the Comptroller General of the
united States, or any of their duly authorized
representatives, shall have access to any books, documents,
papers and records of the contractor which are directly
pertinent to a specific program for the purpose of making
audits, examinations, excerpts and transcriptions.
(e) All contracts, including small purchases, awarded by
recipients and their contractors shall contain the
procurement provisions- of Appendix- A to this Circular, as
applicable.
Reports and Records
. 50 Purpose of reports and records. Sections .51
through .53 set forth the procedures for monitoring and
reporting on the recipient's financial and program performance
and the necessary standard reporting forms. They also set forth
record retention requirements.
.51 Monitoring and reporting program performance.
(a) Recipients are responsible for managing and monitoring each
project,. program, subaward, function or activity supported
by the award. Recipients shall monitor subawards to ensure
subrecipients have met the audit requirements as delineated
in Section .26.
(b) The Federal awarding agency shall prescribe the frequency
with which the performance reports shall be submitted.
Except as provided in paragraph . 51(f) , performance
reports shall not be required more frequently than quarterly
or, less frequently than annually. Annual reports shall
be
due 90 calendar days after the grant year; quarterly or
semi-annual reports shall be due 30 days after the reporting
period. The Federal awarding agency may require annual
reports before the anniversary dates of multiple year awards
in lieu of these requirements. The final performance
reports are due 90 calendar days after the expiration or
termination of the award.
(c) If inappropriate, a final technical or performance report
shall not be required after completion of the project.
(d) When required, performance reports shall generally contain,
for each award, brief information on each of the following.
39
(1) A comparison of actual 'accomplishments with the goals
and objectives established for the period, the findings
of the investigator, or both. Whenever appropriate and
the output of programs or projects can be readily
quantified, such quantitative data should be related to
cost data for computation of unit costs.
(2) Reasons why established goals were not met, if
appropriate.
(3) Other pertinent information including, when
appropriate, analysis and explanation of cost overruns
or high unit costs.
(e) Recipients shall not be required to submit more than the
original and two copies of performance- reports.
(f) Recipients shall immediately notify the Federal awarding
agency of developments that have a significant impact on the
award-supported activities. Also, notification shall be
given in the case of problems, delays, or adverse conditions
which materially impair the ability to meet the objectives
of the award. This notification shall include a statement
of the action taken or contemplated, and any assistance
needed to resolve the situation.
(g) Federal awarding agencies may make site visits, as needed.
(h) Federal awarding agencies shall comply with clearance
requirements of 5 CFR part 1320 when requesting performance
data from recipients.
. 52 Financial reporting.
(a) The following forms or such other forms as may be approved
by OMB are authorized for obtaining financial information
from recipients.
(1) SF-269 or SF-269A, Financial Status Report.
(i) Each Federal awarding agency shall require
recipients to use the SF-269 or SF-269A to
report the status of funds for all
nonconstruction projects or programs. A
Federal awarding agency may, however, have
the option of not requiring the SF-269 or SF-
269A when the SF-270, Request for Advance or
Reimbursement, or SF-272 , Report of Federal
Cash Transactions, is determined to provide
adequate information. to meet its needs,
except that a final SF-269 or SF-269A shall
40
be required at the completion of the project
when the SF-270 -ic -used -only for advances. -
(ii) The Federal awarding agency shall prescribe
whether the report shall be on a cash or
accrual basis. If the Federal awarding
agency requires accrual information and the
recipient's accounting records are not
normally kept on the accrual basis, the
recipient shall not be required to convert
its accounting system, but shall develop such
accrual information through best estimates
based on an analysis of the documentation on
hand.
(iii) The Federal awarding agency shall determine
the frequency of the Financial Status Report
for each project or program, considering the
• size and complexity of the particular project
or program. However, the report shall not be
required more frequently than quarterly or
• less frequently than annually.- A final
report shall be required at the completion of
the agreement.
(iv) The Federal awarding agency shall require
- recipients to submit the SF-269 or SF-269A
(an original and no more than two copies) no
later than 30 days after the end of each
specified reporting period for quarterly and
semi-annual reports, and 90 calendar days for
annual and final reports. " Extensions of
may approved by the
due dates be
reporting
Federal awarding agency upon request of the
recipient.
(2) SF-272 , Report of Fe
deral Cash Transactions.
(i) When funds are advanced to recipients the
Federal awarding agency shall require each
recipient to submit the SF-272 and, when
'necessary, its continuation sheet, SF-272a.
The Federal awarding agency shall use this
report to monitor cash advanced to recipients
and to obtain disbursement information for
each agreement with the recipients.
(ii) Federal awarding agencies may require
forecasts of Federal cash requirements in the
"Remarks" section of the report.
41
(iii) When practical and deemed necessary, Federal
awarding agencies may require recipients to
report in the "Remarks" section the amount of
cash advances received in excess of three
days. Recipients shall provide short
• narrative explanations of actions taken to
reduce the excess balances.
(iv) Recipients shall be required to submit not
more than the original and two copies of the
SF-272 15 calendar days following the end of
each quarter. The Federal awarding agencies
. may require a monthly report from those
recipients receiving advances totaling $1
million or more per year.
(v) Federal awarding agencies may waive the
requirement for submission- of the SF-272 for
any one of the following reasons: (1) when
monthly advances do not exceed $25, 000 per
recipient, provided that such advances are
monitored through other forms contained in
this section; (2) If, in the Federal awarding
agency's opinion, the recipient's accounting
. controls are adequate to minimize excessive
Federal advances; or, (3) When the electronic
payment mechanisms provide adequate data.
(b) When the Federal awarding agency needs additional
information or more frequent reports, the following shall be
observed.
(1) When additional information is needed to comply with
legislative requirements, Federal awarding agencies
shall issue instructions to require recipients to
submit such information under the "Remarks" section of
the reports.
(2) When a Federal awarding agency determines that a
recipient's accounting system does not -meet the
• standards in Section .21, additional pertinent
information to further monitor awards may be obtained
upon written notice to the recipient until such time as
the system is brought up to standard. The Federal
awarding agency, in obtaining this information, shall
comply with report clearance requirements of 5 CFR part
1320.
(3) Federal awarding agencies are encouraged to shade out
any line item on any report if not necessary.
•
42
•
(4) Federal awarding agencies may accept the identical
information from the recipients in machine readable
format or computer printouts or electronic outputs in
lieu of prescribed formats.
(5) Federal awarding agencies may provide computer or
electronic outputs to recipients when such expedites or
contributes to the accuracy of reporting.
.53 Retention and access requirements for records.
(a) This section sets forth requirements for record retention
and access to records for awards to recipients. Federal
awarding agencies shall not impose any other record
retention or access requirements upon recipients.
(b) Financial records, supporting documents, statistical
records, and all other records pertinent to an award shall
be retained for a period of three years from the date of
submission of the final expenditure report or, for awards
that are renewed quarterly or annually, from the date of the
submission of the quarterly or annual financial report, as
authorized by the Federal awarding agency. The only
exceptions are the following.
(1) If any litigation, claim, or audit is started before
the expiration of the 3-year period, the records shall
be retained until all litigation, claims or audit
findings involving the records have been resolved and
final action taken.
(2) Records for real property and. equipment acquired with
Federal funds shall be retained for 3 years after final
disposition.
(3) When records are transferred to or maintained by the
Federal awarding agency, the 3-year retention
requirement is not applicable to the recipient.
(4 ) Indirect cost rate proposals, cost allocations plans,
etc. as specified in paragraph .53 (g) .
(c) Copies of original records may be substituted for the
original records if authorized by the Federal awarding
agency.
(d) The Federal awarding agency shall request transfer of
certain records to its custody from recipients when it
determines that the records possess long term retention
value. However, in order to avoid duplicate recordkeeping,
a Federal awarding agency may make arrangements for
43
•
recipients to retain any records that are continuously
needed for joint use.
(e) The Federal awarding agency, the Inspector General,
Comptroller General of the United States, or any of their
duly authorized representatives, have the right of timely
and unrestricted access to any books, documents, papers, or
other records of recipients that are pertinent to the
awards, in order to make audits, examinations, excerpts,
transcripts and copies of such documents. This right also
includes timely and reasonable access to a recipient's
personnel for the purpose of interview and discussion .
related to such documents. The rights of access in this
paragraph are not limited to the required retention period,
but shall last as long as records are retained.
(f) Unless required by statute, no Federal awarding agency shall
place restrictions on recipients that limit public access to
the records of recipients that are pertinent to an award,
except when the Federal awarding agency can demonstrate that
such records shall be kept confidential and would have been
exempted from disclosure pursuant to the Freedom of
Information Act (5 U.S.C. 552) if the records had belonged
to the Federal awarding agency.
(g) Indirect cost rate proposals, cost allocations plans, etc.
Paragraphs (g) (1) and (g) (2) apply to the following types of
documents, and their supporting records: indirect cost rate
computations or proposals, cost allocation plans, and any
similar .accounting computations of the rate at which a
particular group of costs is chargeable (such as computer
usage chargeback rates or composite fringe benefit rates) .
(1) If submitted for negotiation. If the recipient submits
to the Federal awarding agency or the subrecipient
submits to the recipient the proposal, plan, or other
computation to form the basis for negotiation of the
rate, then the 3-year retention period for its
supporting records starts on the date of such
submission.
(2) If not submitted for negotiation. If the recipient is
not required to submit to the Federal awarding agency
or the subrecipient is not required to submit to the
recipient the proposal, plan, or other computation for
negotiation purposes, then the 3-year retention period
for the proposal, plan, or other computation and its
supporting records starts at the end of the fiscal year
(or other accounting period) covered by the proposal,
plan, or other computation.
44
Termination and Enforcement
. 60 Purpose of termination and enforcement. Sections
. 61 and . 62 set forth uniform suspension, termination and
enforcement procedures.
. 61 Termination.
(a) Awards may be terminated in whole or in part only if (1) ,
(2) or (3) apply.
(1) By the Federal awarding agency, if a recipient
materially fails to comply with the terms and
conditions of an award.
(2) By the Federal -awarding- agency with the consent of the
recipient, in which case the two parties shall agree
upon the termination conditions, including the
effective date and, in the case of partial termination,
the portion to be terminated.
•
(3) By the recipient upon sending to the Federal awarding
agency written notification setting forth the reasons
for such termination, the effective date, and, in the
case of partial termination, the portion to be
terminated. However, if the Federal awarding agency
determines in the case of partial termination that the
reduced or modified portion of the grant will not
accomplish the purposes for which the grant was made,
it may terminate the grant in its entirety under either
paragraphs (a) (1) or (2) .
(b) If costs are allowed under an award, the responsibilities of
the recipient referred to in paragraph .71(a) , including
those for property management as applicable, shall be
considered in the termination of the award, and provision
shall be made for continuing responsibilities of the
recipient after termination, as appropriate.
. 62 Enforcement.
(a) Remedies for noncompliance. If a recipient materially fails
to comply with the terms and conditions of an award, whether
stated in a Federal statute, regulation, assurance,
application, or notice of award, the Federal awarding agency
may, in addition to imposing any of the special conditions
outlined in Section .14 , take one or more of the
following actions, as appropriate in the circumstances.
(1) Temporarily withhold cash payments pending correction
of the deficiency by the recipient or more severe
enforcement action by the Federal awarding agency.
45 •
(2) Disallow (that is, deny both use of funds and any
applicable matching credit for) all or part of the cost
of the activity or action not in compliance.
(3) Wholly or partly suspend or terminate the current
award.
(4) Withhold further awards for the project or program.
(5) Take other remedies that may be legally available.
(b) Hearings and appeals. In taking an enforcement action, the
awarding agency shall provide the recipient an opportunity
for hearing, appeal, or other administrative proceeding to
which the recipient is entitled under any statute or
regulation applicable- to the -action involved.
(c) Effects of suspension and termination. Costs of a recipient
resulting from obligations incurred by the recipient during
a suspension or after termination of an award are not
allowable unless the awarding agency expressly authorizes
them in the notice of suspension or termination or
subsequently. Other recipient costs during suspension or
after termination which are necessary and not reasonably
avoidable are allowable- if (1) and (2) apply.
(1) The costs result from obligations which were properly
incurred by the recipient before the effective date of
suspension or termination, are not in anticipation of
it, and in the case of a- termination, are
noncancellable:
(2) The costs would be allowable if the award were not
suspended or expired normally at the end of the funding
period in which the termination takes effect.
(d) Relationship to debarment and suspension. The enforcement
remedies identified in this section, including suspension
and termination, do not preclude a recipient from being
subject to debarment and suspension under E.O.s 12549 and
12689 and the Federal awarding agency implementing
regulations (see Section .13) .
SUBPART D - After-the-Award Requirements
.70 purpose. Sections .71 through .73 contain
closeout procedures and other procedures for subsequent
disallowances and adjustments.
46
.71 Closeout procedures.
(a) Recipients shall submit, w_:hin. 90 calendar days after the
date of completion of the award, all financial, performance,
and other reports as required by the terms and conditions of
the award.. The Federal awarding agency may approve
extensions when requested by the recipient.
(b) Unless the Federal awarding agency authorizes an extension,
a recipient shall liquidate all obligations incurred under
the award not later than 90 calendar days after the funding
period or the date of completion as specified in the terms
and conditions of the award or in agency implementing
instructions.
(c) The Federal awarding--agency shall -make prompt payments to a
recipient for allowable reimbursable costs under the award
being closed out. - - -
(d) The recipient shall promptly refund any balances of
unobligated cash that the Federal awarding agency has
advanced or paid and that is not authorized to be retained
by the recipient for use in other projects. OMB Circular A-
129 governs unreturned amounts that become delinquent debts.
(e) When authorized by the terms and conditions of the award,
the Federal awarding agency shall make a settlement for any
upward or downward adjustments to the Federal share of costs
after closeout reports are received.
(f) The recipient shall account for any real and personal
property acquired with Federal funds or received from the
Federal Government in accordance with Sections .31
through .37..
(g) In the event a final audit has not been performed prior to
the closeout of an award, the Federal awarding agency shall
retain the right to recover an appropriate amount after
fully considering the recommendations on disallowed costs
resulting from the final audit.
. 72 Subsequent adjustments and continuing responsibilities.
(a) The closeout of an award does not affect any of the
following.
(1) The right of the Federal awarding agency to disallow
costs and recover funds on the basis of a later audit
or other review.
47
(2) The obligation of the recipient to return any funds due
as a result of later refunds, corrections, or other
transactions.
(3) Audit requirements in Section .26.
(4) Property management requirements in Sections . 31
through .37.
(5) Records retention as required in Section .53 .
(b) After closeout of an award, a relationship created under an
award may be modified or ended in whole or in part with the
consent of the Federal awarding agency and the recipient,
provided the responsibilities of the recipient referred to
in paragraph .73 (a) , including- those for property
management as applicable, are considered and provisions made
for continuing responsibilities of the recipient, as
appropriate.
.73 Collection of amounts due.
(a) Any funds paid to a recipient in excess of the amount to
which the recipient is finally determined to be entitled
under the terms and conditions of the award constitute a
debt to the Federal Government. If not paid within a
reasonable period after the demand for payment, the Federal
awarding agency may reduce the debt by (1) , (2) or (3) .
(1) Making an administrative offset against other requests
for reimbursements.
(2) Withholding advance payments otherwise due to the
recipient.
(3) Taking other action permitted by statute.
(b) Except as otherwise provided by law, the Federal awarding
agency shall charge interest on an overdue debt in
accordance with 4 CFR Chapter II, "Federal Claims Collection
Standards. "
48
Appendix A
• Contract Provisions
All contracts, awarded by a recipient including small
purchases, shall contain the following provisions as applicable:
1. equa „nloyment OpportuTity - All contracts shall contain a
provision requiring compliance with E.O. 11246, "Equal Employment
ortunity, "
as amended by E.O. 11375, "Amending Executive Order
11p1246 Relating to Equal Employment Opportunity, " and as
supplemented by regulations at 41 CFR part 60, "Office of Federal
Contract Compliance Programs, Equal Employment Opportunity,
' Department of Labor. "
2 . Copeland "Anti-Ric back" ACt t18 U.s.C, $74 and 44 U. S.C.
276c) - All contracts and subgrants in excess of $2000 for
construction or repair awarded by recipients and subrecipients
shall include a provision for compliance with the Copeland "Anti-
Kickback" Act (18 U.S.C. 874) , as supplemented by Department of
Labor regulations (29 CFR part 3 , "Contractors_ and Subcontractors
on Public Building or Public Work Financed in Whole or in Part by
Loans or Grants from the United States") . The Act provides that
each contractor or subrecipient shall be prohibited from
inducing, by any means, any person employed in the construction,
completion, or repair of public work, to give up any part of the
compensation to -which he is otherwise entitled. The recipient
shall report all suspected or reported violations to the Federal
awarding agency.
3 . Davis-Bacon Apt. as amended (40 U. S.C. 276a to a-7) - When
required by Federal program legislation, all construction
contracts awarded by the recipients and subrecipients of more
than $2000 shall include a provision for compliance with the
Davis-Bacon Act (40 U.S.C. 276a to a-7) and as supplemented by
Department of Labor regulations (29 CFR part 5, "Labor Standards
Provisions Applicable to Contracts Governing Federally Financed
and Assisted Construction") . Under this Act, contractors shall
be required to pay wages to laborers and mechanics at a rate not
less than the minimum wages specified in a wage determination
made by the Secretary of Labor. In addition, contractors shall
be required to pay wages not less than once aweek.
The g e
. recipient shall place a copy of the current pr g
determination issued by the Department of Labor in each
solicitation and the award of a contract shall be conditioned
upon the acceptance ° wage
reported1violationstion. htoe rthepFederal
ient
shall report all suspected or
awarding agency.
40 U S ('_ 327-
nrir�ras t�ti.�- t
4 . r-�.,�-,-r ct wor
333) - Where applicable, all contracts awarded by recipients in
excess of $2000 for construction contracts and in excess of $2500
49
for other contracts that involve the employment of mechanics or
laborers shall include a provision for compliance with Sections
102 and 107 of the Contract Work Hours and Safety Standards Act
(40 U.S.C. 327-333) , as supplemented by Department of Labor
regulations (29 CFR part 5) . Under. Section 102 of the Act, each
contractor shall be required to compute the wages of every
mechanic and laborer on the basis of a standard work week of 40
hours. Work in excess of the standard work week is permissible
provided that the worker is compensated at a rate of not less
than 1 1/2 times the basic rate of pay for all hours worked in
excess of 40 hours in the work week. Section 107 of the Act is
applicable to construction work and provides that no laborer or
mechanic shall be required to work in surroundings or under
working conditions which are unsanitary, hazardous or dangerous.
These requirements do not apply to the purchases of supplies or
materials or articles ordinarily available on the open market, or
contracts for transportation or transmission of intelligence.
5. tights to Inventions Dade Under a Contract or Agreement -
Contracts or agreements for the performance of experimental,
developmental, or research work shall provide- for :the rights of
the Federal Government and the recipient in- any resulting
invention in accordance with 37 CFR part. 401, "Rights to
Inventions Made by Nonprofit Organizations and Small Business
•
_ Firms Under Government .Grants, Contracts and Cooperative .
Agreements, " and any implementing regulations issued by the
awarding agency.
6. Clean Air Act (42 T.S.C. 7401 et seal and the Federal Water
Pollution Control Aan33 ofU, S.C,amounts251 et in excess•of $100�,000ed -
shall
Contracts and subgrants
contain a provision that requires -the recipient to agree to
comply with all applicable standards, orders or regulations
issued pursuant to the Clean Air Act (42 U.S.C. 7401 et seq. ) and
the Federal Water Pollution Control Act as amended (33 U.S.C.
1251 et seq. ) . Violations shall be reported to the Federal
awarding agency and the Regional Office of the Environmental
Protection Agency (EPA) .
7. Livrd Anti-Lobbvinq Amendment (31 U.S.C. 1352) - Contractors
who apply or bid for an award of 5100,000 or more shall file the
required certification. Each tier certifies to the tier above
that it will not and has not used Federal appropriated funds to
pay any person or organization for influencing or attempting to
influence an officer or employee of any agency, a member of
Congress, officer or employee of Congress, or an employee of a
member of Congress in connection with obtaining any Federal
contract, grant or any other award covered by 31 U.S.C. 1352.
Each tier shall also disclose any lobbying with non-Federal funds
that takes place in connection with obtaining any Federal award.
Such disclosures are forwarded from tier to tier up to the -
recipient.
50
8. Debarment and Suspension (E,O.s 12549 and 12689) - No
contract shall be made to parties listed on the General Services
Administration's List of Parties Excluded from Federal
Procurement or Nonprocurement Programs in accordance with E.O.s
12549 and 12689 , "Debarment and Suspension. " This list contains
the names of parties debarred, suspended, or otherwise excluded
by agencies, and contractors declared ineligible under statutory
or regulatory authority other than E.O. 12549. Contractors with
awards that exceed the small purchase threshold shall provide the
required certification regarding its exclusion status and that of
its principal employees.
51
EXHIBIT E
e'"'t.,°`N.
Handbook 1300.20
11,1114
U.S.Department of Housing and Urban Development
`'ate Office of Community Planning and Development
Program Participants
and Departmental Staff
Cost Principles for
Nonprofit Organizations
( A Reprint of Office of
Management and Budget
Circular A-1 22 )
CFFO:Distribution:W-3-1,R-1,R-5-1,(SpecuI)
Ex{4151T
•
t-•
•
1300. 20
1-1. ALLOWABLE COSTS. Generally, costs must be necessary,
reasonable and directly related to the grant. In
addition, they must be legal, proper and consistent
with the policies that govern the grantee' s other
expenditures. Any credits such as purchase discounts,
rebates and allowances, adjustments of over payments
must be deducted from total costs. In some instances,
amounts received from the Federal Government to finance
organizational activities or service operations should
also be treated as applicable credits.
1-2. COMPOSITION OF COSTS.
a. Costs applicable to a grant program may be direct
or indirect. There are no strict guidelines for
classifying costs as direct or indirect. In most
cases, the accounting system used by the recipient
will specify which types of costs are direct and
which are indirect. The important thing is that
grantees treat costs consistently for all grant
programs .
b. Direct costs should be identified specifically
with a particular grant. Typical examples are
employee compensation, materials, equipment, and
services furnished in connection with the specific
grant.
c. Indirect costs are those incurred for common or
joint objectives that benefit more than one
activity or cost objective. Typical examples are
depreciation or use allowances on buildings and
equipment, the costs of operating and maintaining
facilities, and general administration and general
expenses, such as the salaries and expenses of
executive officers, personnel administration, and
accounting. Indirect costs should be allocated
in a manner which will result in the grant program
bearing its fair share of total indirect cost. To
do this, a grantee must develop an indirect cost
rate. This rate, expressed in percentage terms, is
applied 'o direct costs in order to determine the
amount of reimbursement a grantee can obtain for
indirect costs. A predetermined rate may be negotiated
for use in awards where there is reasonable assurance
that the rate is not likely to exceed a rate based on
the organization' s actual costs.
-1-
•
1300. 20
1-3. COGNIZANT AGENCY.
a. Unless different arrangements are agreed to by
the agencies concerned, the Federal agency with
the largest dollar value of awards will be desig-
nated as the cognizant agency for the negotiation
and approval of indirect cost rates. After a rate
has been agreed upon, it will be accepted by all
Federal agencies.
1-4. INDIRECT COST PROPOSALS.
a. In order to recover indirect costs, the grantee
must have an indirect cost proposal, which is the
documentation prepared by an organization to
substantiate its claim for the reimbursement of
indirect costs. The proposal should describe the
services provided and explain their relevance to
the grant programs ; list the expenses to be
charged to grant programs; and explain the method
used to distribute the costs.
b. A nonprofit organization which has not previously
established an indirect cost rate with a Federal
agency is required to submit its initial cost
proposal to the cognizant agency as soon as possible
after an award is made. Organizations that have
previously established indirect cost rates must
submit a new indirect cost proposal to the cognizant
agency within 6 months after the close of each fiscal
year.
1-5. MAJOR SUBSTANTIVE AREAS COVERED BY THE CIRCULAR.
a. Clarifies nonprofit organizations not covered by
the circular.
b. Permits Federal agencies to request exemptions
from the circular.
c. Establishes procedures for negotiation and approval
of indirect cost rates.
•
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I1300. 20 .
d. Permits Federal agencies to accept a substitute
system for documenting personnel costs through
means other than personnel activity reports.
e. Clarifies provisions covering the allowability of
costs for unemployment compensation of workmen' s
compensation and costs of insurance polices on the
lives of trustees, officers or other employees.
f. Makes allowable any increased costs of pension
plans caused by delayed funding.
g. Clarifies the value of donated services used in
the performance of a direct cost activity.
h. Establishes a new definition of capital equipment
cost $500, useful life or more than two years.
_ i. Permits organizational costs to be allowed when
approved by awarding agency in writing.
j. Allows Public Information Service Costs as direct
costs with awarding agency approval.
k. Clarifies rental costs.
1. Deletes the travel cost requirement for prior
approval for domestic costs.
1-6. EXCEPTIONS. OMB may grant exceptions. However, in the
interest of achieving maximum uniformity, exceptions
will be permitted only in highly unusual circumstances.
Attachment A: OMB Circular A-122 Cost Principles for
Non-Profit Organizations.
1300.20
i.
• Tuesday
July •, 1980
96
giamow
al": ____7-7.__=----.
Part III
Office of
- Management and
_ - Budget
_— — Circular A-122, "Cost Principles for
_
__ _ Nonprofit Organizations"
-=_INIO
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46022 Federal Register I Vol. 45, No.132 / Tuesday, July fi.1980 / Notices
OFRCE OF MANAGEMENT AND public comments.The more significant .cognizant agency and the recipient to
BUDGET changes to the basic Circular and negotiate when there is no basis for
Attachment A include: determining the fair market value of the
Circular A-122,"Cost Principles for 1.Paragraph Z"Supersession"was services rendered and to permit indirect
Nonprofit Organizations" added to the basic Circular to make it costs allocated to donated services to be
AGENCY Office of Management and clear that;his Circular supersedes cost charged to an agreement or used to meet
principles'issued by individual agencies. cost sharing or matching requirements.
Budget 2.Paragraph 4 of the basic Circular 4.Paragraph 31,Equipment and Other
ACT)Ost Final Policy. has been amended to make it clear that Capital Expenditures,was changed. •
the absence of an advance agreement an Capital equipment is now defined as
•t MMARY;This notice advises of a new any element of cost will not in itself having an acquisition cost of$500 and a
OMB Circular dealing with principles for affect the reasonableness of allocability useful life of more than two years.
determining costs of grants,contracts, of that element Also,this paragrapD a.Paragraph 25,Meetings,
and other agreements with nonprofit was amended to make it clear that Conferences.The prior approval
orgaoizatians where an item of cost requiring prior requirement for charging meetings and
The Circular Is the product of an approval is specified in,the budget conferences as a direct cost was
interagency review conducted over a approval of the budget constitutes deleted.A sentence was added to make
two-year period.Its purpose is to approval of the coal it clear such costs were allowable
provide a set of cost principles to 3.Paragraph 5 of the basic Circular provided they meet the criterion for the
replace existing principles issued by has been changed to remove any doubt allowability of cost shown in
individual agencies.These have often as to which nonprofit organizations Attachment A.
would not be covered by the Circular. d Paragraph 27,Organization Casts,
contained varying and conflicting
Now,Appendix C to the Circular lists a31 was amended to provide that
requirements,and created confusion
among agency administrators,auditors, exclusions organization costs may be allowable
4.Paragraph 8 was added to the basic when approved in writing bythe
and nonprofit officials.The new Circular Circular to permit Federal agencies to pp
will provide a uniform approach to the awarding agency.
request exceptions from the 7.Paragraph 30, Charges in
problem of determining costs,andPage
requirements of the Circular. professional Journals, was revised to
promote efficiency and better I
5.Paragraph F_Z was added to vide that page charges maybe
understanding between recipients and Attachment A to cover the negotiation pro P g r8
the Federal Government allowable.
and approval of indirect cost rates,and
EFFECTIVE DATE The Circular becomes to provide for cognizance arrangements. ti.Paragraph 37,Public Information
effective on issuance. The more significant changes to Service Costs, was modified to make
FOR FURTNER INFORMATION CONTACT. Attachment B to the Circular include: public information costs allowable as
Palmer A.Marcantonio,Financial . 1.Paragraph 5,Compensation for direct costs with awarding agency
Management Branch.Office of Personal Services, was modified to: approval.
Management and Budget,Washington. a.Permit Federal agencies to accept a 9•Paragraph 43.Rental Costs,was
D.C.20503,(202)395
-4773. to bstitute system for documenting
rewritten to:
SUPPLEMENTARY INFORMATIOIC Before personnel costs through means other a.Make it clear that rental costs
the Circular became final there was than personnel activity reports. under leases which create a material
extensive coordination with the affected b.Clarify provisions covering the equity on the leased property are
nonprofit organizations,professional allowability of costs for unemployment allowable only to the amount that the
associations,Federal agencies and compensation or workmen's organization would have been allowed
others.All interested persons were compensation. and costs of insurance had they purchased the property:e.g.,
given an opportunity to comment on the policies on the lives of trustees,officers, depreciation or use allowances,
proposed Circular through informal or other employees: maintenance,taxes,insurance,etc.
consultations and a notice in the Federal a Make unallowable any increased b.Clarify the criteria for material
Register.In response to our requests for costs of pension plans caused by equity leases.
comment,we received about 100 letters delayed funding. 10.Paragraph 51,Travel Costs,was
from Federal agencies.nonprofit d.Delete a paragraph dealing with amended to delete the prior approval
organizations, associations,and other review and approval of compensation of requirement for domestic travel.In
interested members of the public.These individual employees. addition to the above,a number of
comments were considered in the final 2.Paragraph b,Contutgenoier,wee editorial changes were made to the
version of the Circular.There follows a changed to make it clear that the term original document
summary of the major comments and the "contingency reserves"excludes self-
Suggested Changes Not Considered
action tal.en on each. Insurance reserves or pension funds Nere+smry.
In addition to the changes described. 3.Paragraph 10 was modified w
other changes have been made to provide that the value of donated Comment Several respondents
_Improve the clarity and readability of services used in the performance of a questioned the provision that,for"less
the Circular.To the extent possible,we direct cost activity shall be allocated a Uri n arm's length"leases.rental costs
have tried to make the language of this share of indirect cost only when(a)the are allowable only up to the amount that
Circular consistent with that of cost aggregate value of the service is would be allowed had title to the
principles for educational institutions material,(b)the services are supported property been vested in the grantee
[Circular A-21),and State and local . by a significant amount of the indirect organization.In their opinion this rule
governments(Circular 74-4). cost incurred by the organization.and writ.result in unnecessary cost to the
SummaryofSignificant (c)�direct cost activity is not pursued Federal Government.since it would
Changes: primarily for the benefit of the Federal encourage an organization to lease
Set forth are changes that have been Government Provisions were also space on the commercial market at
made in the final Circular as a result of added to this paragraph for the higher rate.
—1—
Federal Register I Vol. 45, No. 132 1 Tuesday, !lily $. 1980 I Notices 48323
relationship in the individual agencies for nonprofit
Response.The cost principles sire employerorganization.
designed to cover most situations: arrangements for this assistance,nor are o i Applicability.a.These principles
however,there are always exceptions there committee members normally i
that must be considered on a case-by- reimbursed for such services.Further,it shall be used by all Federal agencies in
case basis.The Circular contains a was pointed out the committee members determining
the
ccoosts s of work performed
forme
provision for Federal agencies to request spend many thousands of hours outside by
grants.
the organizations premises conducting cooperative agreements.cost
exceptions. respondents stsearch reimbursement contracts,and other
Comment Several contracts in are used in
questioned why Interest is not an . . Response.It would appear that thisadn which costso or used in
allowable cost,since it is an ordinary type of committee arrarigrment would pricing.
. ad instruments are hereafter
and necessary cost of doing business. not be considered in the determination All of
these
s as awards.The principles do
Response.It has been a longstanding of the organization's indirect cost rate refnot ed to to awards i le
policy not to,v..va,uze interest as a cost provided that Federal agreements do not not applyap to is and under whichaccount
an
However,this policy has recently been bear an unreasonable share of indirect to the Government for actual costs
revised for State and local governments _ cost.However,the cognizant agency incurred.
in Circular 74-{faith respect to the cost will be responsible for evaluating theb. cost reimbursement subaxards
of office space.The revision provides allocation of indirect coat where there (sub All ,subcontracts,etc.)are
that"rental"rates for publicly owned are committee-type arrangements on a subject t , tc)principles
buildings may be based on actual costs, case-by-case basis. saubject
to the Federalda costorganizationpriipes
including depreciation interest. Comment. One respondent suggested concerned.Thus,if a subawardr is to a
operation and mairitenace costs.and that wherever possible the language in nonprofit organizationation this Circular
other allowable costs.This revision was the Federal Procurement Regulations be'
under consideration for some time.Itno nonll apply,if a n . i is to•
used for nonprofit organizations. commercial organization the cost
was studied extensively OMB,the Response.The language in the Federal principles applicable to commercial
General Accounting Officece and others. Procurement Regulations wsu concerns shall apply,if a subewerd is to
and considerable analysis went into Its designated primarily for commercial a college or university,Circular A-21
formulation.Suggestions for extending it funs and is •
not necessarily well suited shall apply,it,a subaward is to a State.
to nonprofit organizations would have to to nonprofit organizations.At the local,or federally recognized Indian
be examined with equal care.This has suggestion of the General Accounting tribal government.Circular 74-4 shall
not yet been done,and we were Office,the nonprofit cost principles apply,
reluctant to further delay issuance of were written to conform as closely u 4.Definitions.a."Nonprofit
this Circular.
Comment.Several respondents possible to those of educational organization"means any corporation.
pinstitutions(Circular A-21),and State trust.association.cooperative,or other
questioned why bub Information
information costs and local governments(Circular 74-4). organization which(1)is operated
Response.Public
were not allowalc n an indirect costformation costs jobs).Lordae,. . primarily sl for scientific,educational.
lManagementBranch. service, charitable,or similar purposes
are often direct services to an Chief.Finanua in the public interest(2)is not
allowa a e,ho ever programs.They are [Circular No.A-i22) organized primarily for profit and(3)
allowable,however,as a direct charge uses its net proceeds to maintain.
when they are within the scope of work 27,Ipeo improve,and/or expand its operations.
of a particular agreement To The Heads of Executive For this purpose.the term"nonprofit
Comment One respondent suggested Departments and Establishments organization"excludes(i)colleges and
that smaller grantees berc excluded from Subject Cost principles for nonprofit universities;(ii)hospitals;(tit)State.
complying .with thea for organizations. local,and federally recognized Indian
Response.Similar rules would the 50 1.Purpose.This Circular establishes tribal governments;and(iv)those
selected is of the costof the be ee Tod rind les for determining costs of nonprofit organizations which are
regardless f possible.size the grantee.l principles
grante contracts and other agreements excluded from coverage of this Circular
the extent s Circular with nonprofit organizations.It does not in accordance with paragraph 5 below.
provides simplified methods for smaller apply to colleges and universities which b. 'Prior approval"means securing
Comment.One respondent said the are covered by Circular A-21:State, the awarding agency's permission in j
local,and federally recognized Indian advance to incur cost for those items
reStandardsquirements B ofr the shouldt beA applied tonting tribal governments which are covered that are designated as requiring prior
contractsBoard with nonprofit applied byCircular 74-4;6r hospitals.The approval by the Circular.Generally this
cover on Where an
arganiutions principles are designed to provide that permission will be in writing.
Response.It is unlikely that the type the Federal Government bear its fair item of cost requiring prior approval is
of grantees covered by this Circular share of costs except where restricted or specified in the budget of an award.
- vcontracts large enough to be prohibited by law.The principles do not approval of the budget constitutes
would have B the extent of cost approval of that cost.
Covered by the CASB.In the event that attempt to prescribe PP
sharing or matching on grants,contracts, 5.Exclusion of some nonprofit
the regulations of the Some nonprofit
they do,however, gar agreements.However,such cost organizations.
or other greand
use of their size
1 runations,beca
CASH would ape i sharing or matching shall not gee raga
respondent said thelions can be Considered
Comment.One re p
1 allocation of indirect cost to donated accomplished through arbitrary; nature ofopera
serices would pose a tremendous limitations on individual cost elements to be similar to commercial concerns for
difficulty to the organization.The by Federal agencies.Provision for profit purpose of applicability of cost
organization relies on a corps of or other increment above cost is outside principles.Such nonprofit organizations
approximately 8.000 committee members the scope of this Circular. shall
operate
Federal
cost commercial
to carry out obligations in response to 2.Supersession.This Circular p1
supersedes costprinciples issued by concerns.A listing of these
Government requests.There is no
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48024 Federal Register / Vol. 45, No. 132 / Tuesday, July 8, 1980 I Notices
organization is contained in E.Applicable credits clients.the public at large.and the
Attachment C.Other organizations may s Advance understandings Government
be added from time to time. B.Direct Coatsd.Significant deviations from the
E Responsibilities. cedes established practices of the organisettOn
Po A8 C.Indirect Costs which may unjustifiably increase the award
responsible for administering programs its,
that involve awards to nonprofit D.Allocation of Indirect Costs and 4.Allocable mete
organizations shall implement the Determination of Indirect Cost Rates a.A cost is allocable to a particular cost
provisions of this Circular.Upon 1.General objective.such as a grant project service,or
request.implementing instruction shall 2-Simplified dlocation method other activity.to accordance with the relative
be furnished to the Dirks of 3.Multiple allocation bass method benefits received.A cost is allocable to a
Management and Budget.Agencies shall am
Direct allocation method Government award if it is treated
L Special indirect cost rams consistently with other casts Incurred for the
designate a liaison official to serve as te same purpose in like circumstances and tilt
the agency representative on matters E.Negotiation and Approval of Indirect Cost
8 P 0)Is incurred specifically for the award
ates
relating,to the implementation of this (2)Benefits both the award and other wont
Circular.?be name and title of such 1.Definitions .and can be distributed In reasonable
representative shall be furnished to the 2.Negotiations and approval of rates proportion to the benefits received.
Office of Management and Budget (Circular No.A-1222 (3)Is necessary to the overall operational
within 30 days of the date of this Attachment A the organization,although a direct
GlTcttlar. relationship to any particular cost objective
7:Attochments.The and General Principles cannot be shown.
principles b.Any cost allocable to a particular award
related policy guides are set forth in the A.Basic Considerations. or other cost objective undo these principles
following Attachments: 1.Composition of total cosh The total oast may not be shifted to other Federal awards to
Attachment A—General Principles of an award is the sum of the allowable overcome funding deficiencies,or to avoid
Attachment B- Selected Items of Cost deny arid allocable indirect coats leas any restrictions imposed by law or by the terms
Attachment C—Nonprofit applicable creditn of the award.
Organizations Not Subject to This 2.Factors affecting allowobility of oasts. 5.Applicable credits.
Circular To be allowable under an award.costa mat a.The term applicable credits refers to
those receipts,or reduction of expenditures
&Requests for exceptions.The Office meet the following general criteria: which operate to offset or reduce expanses
of Management and Budget may grant a.Be reasonable for the performance of the items that era allocable to awards as direct
exceptions to the requirements of this sward and be allocable thereto under these or indirect costs.Typical examples of such
Circular when permissible under `b.��rm to say limitations or exclusions transactions arc purchase discounts,rebates
existing law.However,in the interest of set forth in these principles or in the sward or allowances,recoveries or indemnities on
achieving maximum uniformity, u type of amount of cost items losses,insurance refunds,and adjustments of
exceptions will be permitted only in c.Be consistent with policies and overpayments or erroneous charges.To the
exhighly unusual circumstances. procedures that apply uniformly to both by theent organization
that such credits accruing allowableo or received
9.Effective Dote.The revisions of federallyfinanced and other activities of the they the shall be credited
relate the oerm cost
P be credited to Government
this Circular are effective Immediately. organization. either as a cost reduction or cash refund u
Implementation shall be phased in by d.Be accorded consistent treatment appropriate.
Incorporating the provisions into new • a.Be determined in accordance with b.In some inllznces,the amounts rescind
awards made after the start of the generally accepted accounting principles. form the Federal Government-to Mande
organisation's next fiscal year.For L Not be Included as a cost or used to meet organisational activities or service operations
existing the new principles may cost sharing or matching requirements of any should be treated as applicable credits.
be applied is awards organization and the other federally financed program to either the Specifically,the concept of netting each
DP o r8 current or a prior period. credit items against related expenditures
cognizant Federal agency agree.Earilez • g.Be adequately documented. should be applied by the organizaton in
implementation,or a delay in . 3.Reasonable costs.A cost is reasonable determing the rates or amounts to be
implementation of individual provisions if.In its nature or amount,It does not exceed charged to Federal awards for services
is also permitted by mutual agreement that which would be incurred by a prudent rendered whenever the fcitltiea or other
between an organization and the person render the circumstances prevailing et - resources used in providing;such cervices
cognizant Federal agency the time the decision was gads to incur the have been financed directly,to whole an
10.Inquiries.Further informatics! costs.The question of the reasonableness of in wt.by Feder,)fun&
specific coats must be scrutinized with
concerning this Circular may ba particular eve in connection with a(c)For roles covering program income
obtained by contacting the Financial organisations or separate divisions tbarsof (i.s.,g,'o.s Income earned from federally
Management Branch. Budget Review which receive the preponderance of their supported activities)see Attachment D of
•
Division.Office of Management and support from awards made by Federal . OMB Circular A-IIQ
Budget,Washington,D.C.2D3D3, agencies.In determining the reasoaabreness . 5.Advance and undarstandinp.Mader awf
telephone(202)305-4773, of a gives coat consideration shall be given gfvezr award the reasonableness and
lames T.Malatya,Jr - - to: allocability of certain items of caste may be -
Director. a.Whether the cost is of a type generally difficult to determine.his is particularly tree
• recog th nised as ordinary and necessary for e }a connection with or•gizatioas that receive a
(Cirailar No.A-122) - operation of the organisation or the . - preponderance of their support from Federal
Attachment A performance of the award. agencies.In tinier to avoid eubeegoest
. b.The restraints or requirements Imposed disallowance or disputa based oo
General Primal , by such factors u generally accepted Bound unreasonableness or nonalloubWty,It d '
?.obi.of Content, • business practices,arms length bargaining, often desirable to seek a written agreement
Federal and State laws and regulations,and with the cognizant or awarding agency to
A.Basic Considerations •
terms and conditions of the award advance of the Incurrence of special or
1.Composition of total costa c.Whether the individual concerned acted carcase]costa Tha absence of an advance
2-Factors affecting allowahility placate with prudence in the circumstances. agreement on any element of cost will not.to
3.Reasonable costs - considering their responsibilities to the Itself.affect the reasonablanem os
4.Allocable costa organization,Its members,employees,and allocabilit7 of that element. •
-
_3-
•
Federal Register / Vol. 45, No. 132 / Tuesday, July b3, 19&) / Notices 4802S
•
3.Direct Coe*- -•_.__ . —— - -4e like°irounts•nc has beet..aatignedito , where an organs.tioo has only one major _
as"'Iala direct coma. function encompassing a number of
1.
identified tified poets era speciSully Ehose.at can be' i Because of the diverse characteristics individual projects or activities.and may be
- and socuartiag treetops aorspsv6t with a particular f4aal used where the keel of Federal awards to an
out objective:La.,a particular award. �aniytl�,it is not possible to specify the organization is relatively small.
protect aervltx or other direct aettvtt)of asty es of cost which maybe classified as both the direct costs and the indirect
organiassignzation.However,a cost may net be b ct cost in at situation.Howevee,typical costs shall exclude capital expenditures and
oth„co to an award as ea direct cost if any examples of indirect cost for many nonprofit unallowable costs.However.unallowable
likother cost Incurred has for been
cried to
orgaaizanun'may include depreciation or Costs which represent activities must be
,w rd ii atndir tbeen Costsocated ie an use cello ancas on beltdinge and equipment.' included In the direct costs tinder the
award u an with awards cost identified the costs of°panting and maintaining condition.described in paragraph 8.1.above.
scpsotfi
awards
are direct coat of the facilities,and rural administration and c.The dtstributioc base may be total direct
awards and are to be assigned directly general expanses each as the,a3arius meld costs(excluding capital expenditures and
finnan t obi idtnes o f the organisation
with other expenses of executive officers.personnel other distorting sterns.each as major
flail cost costs ofhose of objectives
and are administration,and aocoaatiei. . eubc otrects or subQants).direct salaries
tffirac! those cost a stivea are and wages.or ether base which remits in an
're to be meshed 19 other awards direct))or D.Allocation of&+direct Cott etstel equltablt distribution.The distribution bass
- Determination of indirect Cost Rates. shall generally txAu 4"participant suport
i Any direct cost of a minor amount may . 1. Ger>:ral costs as defined in paragraph m of
•
be treated as an a the indirect cost clod reasonstreatmt a.Where a nonprofit organiratloe►as only Attachment L
practicality where the accounting treatment one major function m where all its major d Except where a.pedal rates)Is
for such cost L ivesistenily applied to all functions benefit from Its indirect costs to required in socordanoe with parag•apb D.5
final cost ost of certain approximately the same degree.the below,the indirect coat rate developed vender .
g.She oust of activities edalwe not allow lion of iadirsd costa aad the the above priinc.'ples is applicable to all
foanowab)e as tundras to costal awards paragraph *amputation of an indirect cost rate maybe awards at the organization.If a special
of Attachment
fund ).raising cues to eventhough
ug accomplished through simplified allocation rste(sl is required.appropnat,modifications
ZI of are
Bj. n arm as described in paragraph 2 shall be marls in order to develop the special
thee,costs are unallowable for purposes of bw tata(a).
computing charges to Federal awards,they b.Where an organizatioe be.'several ttoejor t Multiple cllocnlion bass method
purpos e (must it treated a direct cost for functions which benefit from its indirect costs a_1'Ybers an organise doe's indirect oasts
and be allocated ar their
are of
cart rates In varyingdegrees.,allocation of indirect benefit its major functions in varying degrees.
and rbeo iodized efr aha s of the Costs may require the accumulation of such such coeu shalt be socumulated into separate
arg vitiesiwhi h11)i ousts if they represent of costs into separate cost groupings which then cost grouping'.Each grouping shall then be
activities personnel.
which(u include the salaries es a are allocated individually to..benefiting allocated individually to benefiting functions
from the organisation's(2)taupy indirect and coa bena�t functions by means of a be which best by means of a base which best measures the
fromcostsof
activi p performed
measures the relativs degree of benefit.The relative benefits.
prig The pasta service activities pe bermed indirect costs allocated to each fenctioe are b.The groupings shall be established so as
the g nee as a litwhen to member,rand at then distributed to individual wards and to permit the atlocatio°of each grouping on
the general the organization's significant mission
and the baits of benefits provided to the major
accessary to the tsiisaton statist other activities included in that duncti°a by functions-Each grouping should constitute a
be treated as direct ooets when or not . means of an indirect cost rete(s)
C.The determination of what comtitutes an pool of expenses that are of like character in
allowable of
indirect and be.asts.Sod a egtiftabte airation's major functions will depend oo terms of the functions they benefit and in
there tyesfcosts.activities some exaatpks of i�a In being the typCs of serrioa it terms of the allocation base which best
ffiese mint of membership pur tsC
a.Maintenance of rolls. " tenders to the public,its clients,and its measurs the relative benefits lxovidd to each
subsaiptiona,publications,and related memberx and the amount of effort It devotee function.The number of separate groupings
functions to such activities as fund raising,public should be held within practical limits,taking
b.providing Derriere and information to information and membership activities. into consideration the materiality of the
members.legislative or administrative d.Sped&methods for allocating Indirect amounts involved and the degree of precision
costs and computing indirect cost rates along desired.
bodies,
the with the conditions under which each method c.Actual conditions must be taken into
c.prommotion lobbying.and other forms of should be used are described in paragraphs 2 account in selecting the base to be used in
public Meetingse I below. allocating the expenses in each grouping to
hd nda t and general administration s those a The base period fox the allocation of bene! r,f functions.When an allocation can
theeld to conauct the general d Indirect costs is the period in which such be maeo by assignment of a cost grouping
organtenaca costs are incurred and ausrmulated for directly to the function benefited.the
3.Maal funds not used
operationon.andofthe investment
of,pedal used in of the allocation to work performed in that period allocation shall be made In that manner.
organization. The base period normally should coincide • When the expenses in a grouping are more
f.Administration of benefits on with the organization's fiscal year,but in any general in nature,the allocation should be
bshelf of members or chents including life sent shall be so selected as to avoid made through the use of a selected base
inequities in the aliotio°of the costs. which produces results that are equitable to
and s fin insurance,annuity or retirement 2.Simplified allocation method both the Government and the organization.In
plans,financial
arance aid.etc. • a.When ash organizetioc'a major functions genera.any coat element or cost related
C Wired Cod )benefit from its indirect costs to factor r<.seocrated with the organizations
L Indirect costs are those that have been approximately the same degre,the allocation work is potentially adaptable for use as an
Incurred for common or joint objectives and of indirect costs may be accomplished by(I) allocation base provided(i)it can readily be
cannot be readily.identified with a particular 'separating the organization's total costs for expressed in terms of dollars or other
final cost objective.Direct nowt of minor the base period as either direct or indirect quantitative measures(total direct costa
amounts may be treated as indirect costs and(li)dividing the total allowable indirect dire�nsalariesa dbowaa of uaaff hours
cepplied.
of
under the conditions described in paragraph costs(net of applicable eedits)by an a gun nerved and
B.i above.After direct costs have been equitable distribution base.The result of this documents processed,population
determined and assigned directly to awards process is an indirect coat rats which is used the like)and(Li)it is common to the
or other work as appropriate.indirect costa to die route indirect Costs to individual benefiting functions during the base period
an.those remaining to be allocated to awards.The rate should be expressed as the d.Except where a special indirect°oat
benefiting coat objectives.A cost may not be percentage which the total amount of rate(,)is required In accordance with
cost if allowable indirect costs bears to the teas paragraph Ds.below,the separate groupings
allocated ed to et award foran he sal= 'elected This method should aloe be tread of indirect costs allocated to ea&major
any otter poet incurred the same purpose.
—4—
48028 Federal Register /, Vol. 45. No. 132 / Tuesday. July d 1980 / Notices
functionift in the dollar volume
omm shall egress at andtreated as a used. any combination
menof work la performed In en of the Fedeor ral swa.rdag-term hto the organizer All
common pool for that function.The costs in particular
the common pool shall then be distributed to environment which appear to generate a concerned
Federal
tralagencies iss negotiation
e
tndwidual awed'included in that function by' signilficantly different level of indirect costa, opportunity but after participate rasa has theen ego
ass of s single indirect cost nos. provision'should be made for a separate- process,
eed I
a.The distribution based used in computing tndf act cost pool applicable to such work. upon it will be accepted by all Federal
the indirect cost rate for each function may The separate indirect cost pool should be agencies.When a Federal agency has reason
be total direct costs(excluding capital developed during the course of the regular to believe that special operating factors
cial
as major sub and otherctsdistortingubgr items such allcost
s rationte resulting and the therefrom separate uld be used in indirect cost rates ing its swards necesaitate accordance with
major subcontracts wages and rubasenta),direct Di above,it will,prior to the time
salaries and wages,or other base which provided it y determined that(I)the rate paragraph
results in an equitable distribution.The differs signifIcantly from that which would the rates are negotiated.notLfy the cognisant
distribution base shall generally exclude have been obtained under paragraph Di g. atgency•
participant support costs as defined In and 1 above,and(tl)the volume of work to b.previously A nonp
ofit orguoizatoa which
cost b
paragraph 20.Attachment B.An indirect cost which the rats wooid apply is material. ith a Federal establishedagenc shall after the
rate should be developed fir each separate b Negotiotion and Approval of Indirect Cost organization Is advised that an award win be
Indirect cost pool developed.The rate in each made and in no event later than three
case should be stated as the perosnttaagg�e 1.Ds Dons.As aced in this section.the months after the effective data of the award
which the amount of the distribution
base
iadited anis.ations that have previously
cost pool Is of the distribution base ldentitiad following team have the meanings set forth established indirect cost rates must submit a
with that pool. below
4.Direct allocation method S."Cognizant agency"ream the Federal indirect
within i!x mon�tha�aftar the colt
. a.Some nonprofit organizations,treat all agency responsible for negotiating and agency
costs as direct costs except general •approving Indirect cost rates for a nonprofit each fiscal year.
organization oc behalf of all Federal d.A predetermined rats may be negotiated
organiadministration and generally expenses.their Theseost for use on awards where there is reasonable
into threer basic
c categories:
iseparate(i)G costs agencies. etermined rate"means an indirect assurance,based on past experience and
into basic and g ex enses,
admisistsatioa general expenses.Iasi cost rate,applicable to a specified current ar reliable projection of the organization's
fund retiring and(lii)other direct functions future period.usually the organization's fiscal that the rate is not likely to exceed a rate
.jincludtna projects performed under Federal year.The rate is based on an estimate of the based on the organization's actual costa.
costs to be incurred during the period.A S.Fixed rates may be negotiated where
,Swards).joint cost, nuan as depreciation predetermined rate la not subject to predetermined rates are not considered
frectal costs,operation and maintenance of j appropriate.A fixed rat,however,shall not
are
telephone expanses,and thelike adjustment."Fixed
be negotiated if(i)all or a substantial portion
prorated lndiviaually as direct cost to a"Fixed rats'maser an Indirect cost rate of the organization's awards expected W
each category and to each award.or other which has the same characteristics as a beforethe n a are a expected
eat.
activity using a base most appropriate to the predetermined rats,except that the difference expire
between the estimated cost and the actual can be made,(ii)the mix of Government and
Particular This
cost being acceptable
non-government work at the organization is
`i h This method is acceptable provided each .between
of the period covered by the rate L too erratic to permit equitable carry-
joint cost Is prorated using a base which carried forward as an adjustment to the rats forwardoa adjustmentan eii) a carrsation's
accurately measures the benefit'provided to computation of a subsequent period. operations fluctuate or(till the o from year to
each award or other activity.The bases must d"Final rate"means an indirect cost raher-
be established in accordance with resonable applicable to a specified past period which is ri Provisional and final rates shall be
criteria.and be supported by current data. based on the actual costs of the period.A negotiated where neither predetermined nor
This method is compatible with the final rate is not subject to adjustment fixed rates are appropriate.
Standards of Accounting and Financial a."Provisional rats"or billing rate means a = T a result f ra negotiation shaIl be -
Reporting for Voluntary Health and Welfare temporary indirect cost rate applicable to a formalized in ta writteneacagreementshall between
Organizations Issued jointly by the National specified period which is used for funding, the cognizant agency end the nonprofit
Health Council Inc.,the National Assembly interim reimbursement,and reporting indirect the c g izen. ge cognizant anenp shall
of Voluntary Health and Social Welfare . costs on awards pending the establishment of distribute copies of the agreementc to all
America.
Organizations,and the United Way of a rate for the period concerned Federal agencies.
America. i Indirect cost proposal"means the h,u s arises in a negotiation of as
a Under this method indirect costs consist documentation prepared by an organization indirect cost dispute betweenees inthe negotiation
*elusively of general administration and to substantiate its claim for the agency and the nonprofit organization.the
• • general expenses.In all other respects.the reimbursement of indirect costs.This agent be resolved in accordance with
• organisation's indirect cost rates'shal be proposal provides the basis for the review disputes appeals procedures of the cordance
computed in the same manner as that and negotiation seeding tone establishment
cognizant
of an organization's indirect cost rate. �mry'
described in paragraph Ds above. I.To the extent that problems ar.
&Special indirect cost rotes.In some g."Cost objective"means a funWon, encountered among the Federal agencies In
Instances.a single Indirect cost rate for tIl organizational subdivision contract grantor connection with the negotiation a and approval
activities of an organization or for each major other work unit for which cost data are process,the Office of Management
n and
function of the organization ay not be desired and for which provision is made to Budget will lend assistance as to
d requfireired
appropriate,since It would not take Into accun inner and measure the cost of rerolva ro�problem'is a timely 10 -
account those different factors which miry processes.projects,jobs and capitalized
[Circular No.Ar-122j-. -.
substantially affect the indirect costs prolacts rvval of star -
applicable to a particular segment of work. Z.Negotiation and app Attachment 11 -
For this purpose,a particular segment of a.Unless different arrangements are •
work-For this purpose.a particular segment agreed to by the agencies concerned.the Selected Items of Cost
of work may be that performed under a single Federal agency with the largest dollar value Table of Contents
•
award or It may consist of work ander a of awards with an organisation will be
group of award'performed in a common designated as the cognisant agency for the I.Advertising costs
environment The factors may include the negotiation sad approval of Indirect cost 2.Bad debts
physical location of the work,the Ievel of rates and,where neoetwas7,other rates such g.Bid and proposal owls(reee'veelji. "r
benefit end computer charge-rat 4.Bonding costs
the administrative�there resources
the nature thee eat is assigned S.Communication coats -— • .
`the facilities or other resourua employed, roles.Once en agency � co�!zanet tot personal aarvtoes
scientific dtdplinea or technical skills for a perticnls<r nonprofit organization.the !.Compensation
Involved.the organisational arrangements ae'tgssaaa wiii not be changed anleas there 7.Contingency provisions
Federal Register / VoL 45, No. 132 7 Tuesday. July Q, 1980 f Notices 46027
-ft Contributions In parsgreph tee fill the procurement deeods activities,meepensstioe for employees on .
S.Depredation and awe allowances and services:(Ili)the disposal el samples Goversment-upoosored wort will be •
10.Donations materials acquired la the performance ef the considered reasonable to the extant that it le
11.Employee morale,health and welfare • award except when organize dons ace comparable to that paid for similar work in
costs and credits reimbursed for disposals at a pndetwmined the labor markets to which the organization
12.Entertainment oats amount in'mordants with Attachment N of competes for the kind of employees involved.
13.Equipment and other capital sipenffitnres OMB Clreular A-11Q or(Iv)ipecac d.Special cormiderotioru is determining '
14.Fines and penalties• requirements of the award. cllo.ebiA7y.Certain 000ditwns require
13.Fringe benefits 2.Rod debts.Bad debts.i c ethos leases special consideration and possible limitations
16.Idle facilities and Idle cepadty (whether actual or e(Minuted)arising from in determining costs under Federal awards
17.Independent research and development encolleetible accounts and other claims. where amcrtnts or types of compensation
(reserved) related collection costa,and related le* appear unreasonable.Among each conditions
18.Insurance and indemnification costa.art unallowable. are the following:
10.Interest fund raising,and investment 3.Bid and proposal aorta(reeervede • (1)Compensation to members of nonprofit
management costs 4.¢onding its- organizations.trustees,directors,associates.
20.Labor relations costs a.Bonding costs arise when the officers.or the immediate families thereof.
21.Losses on other awards Government requires assurance against Determination should be made that such
22 Maintenance and repair cost - . financial loss to itself dr others by reverie of compensation Is reasonable for the actual .
21.Materials and supplies he act or default of the organization They personal services rendered rather than a
24.Meetings.conferences aria also in instances where the organization distribution of earnings in excess of costa
2.5.Memberships subscriptions.and requires similar assurance.Included are snob (2)Any change in an organization's
professional activity coats bonds as bid performance,payment compensation policy resulting in a
28.Organization coats advance payment infringement and fidelity substantial increase in the organisation's
27.Overtime.extra-pay shill and mu ltiabltt bonds. level of compensation,particularly when it
remiums b.Costs of bonding required pursuant to was concurrent with an increase in the ratio
2.Page charges in professional towards the terms of the award art allowable. of Government swards to other activities of
29.Participant support oats c.Costs of bonding required by the the organization or any change in the .
Xt.Patent cab organization in the general conduct of its treatment of aflowel:411 p of specific types of
21 pension plant operations are allowable to the extent that compensation due to changes in Government
32.Plant security oats such bonding la in aocvrdanoe with sound policy.
33.Preaw•ard coats business practice and the rates and premiums a.Unallowable omits.Costs which are
34.Professional service costs are reasonable under the dreumatances. unallowable under other paragraphs of this
3ti.Profits and tousle oe disposttlon of L Communication coats.Costs incuurid for Attachment shall not be allowable under this
depreciable property or other capital telephone services,local and tong distance paragraph solely on the basis that they
assets telephone calls.telegrams,radiograms. constitute personal compensation.
2E.Public Information service costs postage and the like.are allowable. f.Fringe benefit&
37.Publication and printing costs • d Compensation for personalssrviae. (1)Fringe benefits In the form ofregular
3&Rearrangement and alteration costs a.Definition.Corupensatioc for personal compensation paid to employees during
39.Reconversion costs services includes all compensation paid periods of authorised absences from the)ob.
40.Recruiting&Nits currently or accrued by the organization for such as vacation leave.sick leave,military .
41.Relocation mats services of employees rendered during the leave,and the like,art allowable provided
42 Rental costs - period of the award(except as otherwise such costs are absorbed by all organization
43.Royalties and other costs fce ate of provided in paragraph g.below).It includes. activities to proportion to the relative amount
patents and copyrights but is not limited to,salaries.wages. of time or effort actually devoted to each.
44.Severance pay director's and executive committee members (2)Fringe benefits in the form of employer .
45.Specialized service facilities fees.Incentive awards,fringe benefits, contributions or expenses for soda)security.
4&Taxes pension plan courts.allowances for off-site employee insurance,workmen's
47.Termination costs pay.incentive pay,location allowances. compensation insurance,pension plan costs
48.Training and education oats hardship pay.and cost of living diScmtida. (see paragraph g.below),and the like.are
40.Transportation costs b.Allowability.Except as otherwise allowable provided such benefits are granted
E0.Travel oats specifically provided in this paragraph the in accordance with established written
costs of such compensation are allowable to organization policies.Such benefits whether
'Circular No.A-12.j the extent that treated as indirect costs or as direct costs.
Attachment S ' - (1)Total oompensatioo to individual shall be distributed to particular awards and
Selected Items of Cps employees is reasonable forthe services other activities in a manner consistent with
rendered and conforms to the established the pattern of benefits accruing to the
Paragraphs 1 through 50 provide principles policy of the organization consistently individuals or group of employees whore
to be applied in establishing the allowability applied to both Government Badmen- salaries and wages are chargeable to such
of certain items of coat These principles . Government activities;and awards and other activities.
apply whether a cost is treated as direct or (2)Charges to awards whether treated as (3)(a)Provisions fora reserve under a self-
Indirect Failure to mention a particular lien direct or Indirect costs are determined and insurance program for unemployment
of cost is not intended to imply that it is supported as required io this Qarageaph. compensation or workmen's compensation
unallowable,rather determination as to c.Reasonableness. are allowable to the extant that the
allowsbility in each case should be based oo (1)When the organization is predominantly provisions represent reasonable estimates of
the treatment or principles provided for engaged to activities other than those the liabilities for such compensation.and the
similar or related items Boost sponsored by the Government compensation types of coverage,extent of coverage.and
1.Advertising coats. for employee.on Gov emment sponsored rates and premiums would have been
a.Advertising costs mean the mats of work will be considered reasonable to the allowable had insurance been purchased to
media services and associated costs.Media extent that It is consistent with that paid for cover the risks.However,provisions for self-
advertising includes magazines,newspapers. similar work in the organisation's other insured liabilities which do not become .
radio and television programs.direct mail. activities. • payable for more than one year after the
exhibits,and the like. (2)When the organization is predominantly provision is made shall not exceed the
b.The only advertising costs allowable are engaged in Government-sponsored activities present value of the liability.
those which are solely for(I)the recruitment and in cases where the kind of employees (b)Where an organization follows a
of personnel when considered in ccn)unction required for the Government activities are consistent poky of expensing actual
with all other recruitment costa,as set forth nbt found in the organisation's other - . payments to,or on behalf of,employees or
•
_6_
,won Federal Register I Vol. 45, No. 132 / Tuesday, July S, 1980 / Notices
farmer employees for unemployment (2)Reports reflecting the distribution of on band may be made through use
cor..pcneation or workmen's compensation. activity of eecb employee must be allowances or depreciation.However.except
such payments are allowable in the year of maintained for ell staff members as provided in paragraph I.below a
payment with the prior approval of the (professionals and nonprofessionals)whose combination of the two methods may not be
awarding agency provided they are allocated compensation Is charged.in whole or in part. used in connection with a single class of
to air sctivtties of the organization. di.ractly to awards.in addition.in order to fixed assets(e.g.,bui!4ing. office equipment.
(4)Costa of insurance on the lives of support the allocation of indirect costs,such . computer equipment,etc.).
trustees,officers,or other employees holding reports must also be maintained for other b.The computation of use afowanos of
positions of similar responsibility are employees whose work Involves two or more depreciation shall be based on the
allowable only to the extent that the functions or activities if a distribution of their acquisition cost of the assets involved The
insurance represents additional compensation between such functions or acquisition cost of an asset donated to the
compensation.The costa of such insurance activities ifneeded in the determination of organization by a third party shall be its fair
when the organisation Is named as the organisation's indirect cost rates)(e.g.. . market value at the time of the donation.
beneficiary are unallowable. an employee engaged pest-time in indirect a The computation of use allowances or
s.Pension plop coats. cost activities and part-time in a direct depredation will exclude. .
(1)Costs of the/organisation's pension plan function).Reports maintained by nonprofit (1)The cost of land;
which are incurred in accordance with the organizations to satisfy these requirements (2)Any portion of the coat of buildings and
established policies of the organization are must meet the following standards equipment borne by or donated by the
allowable,provided (a)The reports must reflect an after-the- Federal Government irrespective of where
(a)Such policies meet the test of fact determination of the actual activity of title was originally vested or where It
reasonableness; each employee.Budget estimates(Lc, presently resides:and
(b)The methods of cost allocation are not 'estimates determined before the services are (3)Any portion of the cost of buildings and
disciminator) • performed)do not qualify as support for equipment contributed by at for the
(c)The cost assigned to each fiscal year is charges to awards. organization in satisfaction of a statutory
determined in accordance with generally (b)Each report must account for the total matching retirement
erupted accounting principles as prescribed activity for which employees are d.Where the use allowance method it
to Accounting Principles Board Opinion No.g compensated and which is required in followed,the use allowance for buildings and
issued by the American Institute of Certified fulfillment of their obligations to the improvement(including land improvements
Public Accountants;and •
organization. such as paved parking areas,fences,and
(d)The costs assigned to a given fiscal year (c)• e reports moat be stoned by the sidewalks)will be computed at an anneal
are funded for all plan participants within six vlduei empkyea,or by a reepooaibla rats not exceeding two percent of acquisition
months:after the end of that year.However. sepervienry official having first hand cost.The use allowance Ice equipment wen
taQsasea to normal and put wtvia pinata° knowledge of the activities prfermed by the be computed at an annual rate not exceeding
costs mused by a delay in finding the arc l7ee.that the distribetcn of activity six and two-thirds percent of acgaieltioa cost
actuarial liability beyond 30 days after each represents a reasonable estimate of the When the use allowance method is used for
quarter of the year to which rods coots are actual work performed by the employee building',the entire bd}dtag mast be treated
as ogneble are unallowable. during the periods ooewed by the reports, as a single asset the beildtng's ooespaaasb
(2)Peaaon plan termination e (d)The reports must be preps-red at least (e g.plumbing system,beet rig and air
premiums paid orsua t security the Employee monthly and wnat coincide with one or taste oonditioalag eta)cannot be se�egetad rest
Retirement rs all° able.! e p of payment
Tab. ode. the building's shell.The two paroeat
L ar es o ere allowable.Late payment �(3 Charges for the salaries and wages of limitation.however,need not be applied to
charges oa curb prernirms
ale f unallowable. nonprofessional employees,U addition to the equipment which is merely attached or
(3)Excise taxes on penalaccumulated funding supporting documentation described In fastened to the building but not permanently
deficiencies and other penalties Imposed subparagraphs(1)and(2)above,must also fixed to it and which is used as furnishings or
under the Employee Retirement income be supported by records indicating the total decorations or for specialised purposes(e.g..
Security Act are unallowable. number of hours worked each day dentist chairs and dental treatment unite.
h.incentiveanon t°employees s an maintained in conformance with counters,laboratory benches bolted to the
wespemaation to employees based on cost of Labor regulations Implementing the Fair floor,dishwashers carpeting.etc.).Such
reduction or ar efficient performance. Labor Standard,Act(29 CFR Part 316).For equipment will be considered as not being
suggestion awarilsds,,safety awards,etc,are this purpose,the term"nonprofessional • permanently fixed to the building if it can be
allowable to the extent that the overall employee"shall have the same meaning as removed without the need for costly a
•
compensation Is determined to be reason:bb 'nonexempt employes."ands the Pair Labae extensive ale rations a repairs tot e
and such costs are paid or into inaccruedgood
du fwith Standards Mt. building or the equipment.Equipment that
to tanw en the agreement organization
in employees (4)Salaries and wages of employees used meets these criteria will be subject to the six
between thehe r services
rend the b meeting cot sharing or matching - and two-thirds percent equipment use
before a were repderedl a requirements on awards ust be supported le allowance limitation. •
theo pursuanteto an established plan followed by a.Where depreciation method is followed.
the organisation so consistently as to imply. clot same manner as salaries and wages PRd
in effect,an agreement to make such claimed for reimbursement from awarding the period of useful service(useful life)
established in each case for usable capital
payment agencies. • .
l.Overtime.extra pay shift andmultiahlft 7.CoContingencypr1Dvisions,Contributions to assets must take into consideration such •
premiums.See paragraph V. a contingency reserve or any similar factors as type of construction,nature of the
I. made for events the occurrence of equipment used technological developments
Severance ndy.See education
paragraph eels provision ch cannot be foretold with certainty as to in the particular program area,and the
grahing and eduaotiaa enet+ free time,intensity,or with an assurers of their renewal and replacement polidee followed
1 paragraph k bappera1ri,are unallowable-The term - tor the the Individual items or classes of -
Support of salaries rd and s salaries "contingency reserve"excludes self- assets involved.The melted of depredation
(1)gCharges r swards for and insurance reserves(�paragraph e.f.(3)and used to assign the cost of en asset(or group
indiwages,whether treated as direct costs or 1g.a.(2)(dlk pension funds(see paragraph of assets)to accounting periods shall reflect
payrollsrll costa,willd be belied responsible documented ed
approved by a offida](e) CV;and reserves foe normal severance pay the pattern of consumption of the asset
of the organization.The distribution of (see paragraph 44.(bXt. during Its useful life.In the absence of dear
salaries and wages to awards must be S.Contributions.Contributions and evidence Indicating that the expected
supported by personnel activity reports as donations by the organisation to others are consumption of the asset will be signifons icantly
prescribed in subparagraph(2)below,except unallowable, greater or lessen in the early bona the
when a substitute system has been approved g.Depreciation and ass allowances. useful life than In the later portions, b
cognizant a.Compensation foe the use of straight-line method*hall be presumed
paragraph be
writing by the Attachmenteagency.(See ementa.and equipment the appropriate method.Depredation
E2 of A) other capital�v
-7-
- • - --- — • federal Rerlstef / Vol. 45. Asa 132 j Tuesday, July 4 1980 / Notices 46029
t�imbwsed under the award or seed to feet (1)"Equipment"means an article of
methods poor used shall net be d requirements. aontxpendable tangible perso .al property
sinless approved to advance the d by the time sal oust sharing uor matching the d having a useful life of more than two years
Federal agaacT.When the depredatloa (6)The value of the donated services mil and an acquisition cost of f500 or more per
method is Introduced for application to assets be need to meet coat sharing or matching �t organization acquisition
its own
p�toualy subject to a use allowance.the requirements under conditions described in colt Annnp Tided may it use est includes all
combtaatioa of use allowances and Attachment E,OMB Circular No.A-110. endabvi-ed that personal property as
depredation applicable to such&seen must Where donated cervices are treated as ���herein.
not sxosed the total acquisition coif of the indirect costs,indirect cost rates will rein- cast"means the net
assets.When the depreciation method is used &operate the value of die donations SO that (2)"Acq
for butidings.s b.rtt i,>,is shell may be reimbursement will not be made. invoice unit price of an item of equipment
6 Farr market value of donated asrviews tacludtng the cost of any modifications,
s
(egrepluming each.be ring, air shent all becomputed as follows: attachments,accessories,or auxiliary
fees.. onini system. eacandh
(a)Rotas volunteer services.Reuse for apparatus necessary to maks it usable for the
depred tedover
itsetc)and each item a purpose for which it Is acquired.Ancillary
depredated oval is estimated useful lira;or v uateere shall be consistent with those such as taxes.duty,protective la-
the entire building(i.e.,the shell and all regular rates charges,for almftar work in other s' d
components)may be treated as a single asset activities of a organization.In cases where transit Insurance,freight an installation
(if the kinds of skills involved are not found in shall be included in or excluded from
and depreciated ever a single uheful a acquisition cost in accordance with the
L When the depredation method is used the other activities of the organization dui organisation's regular written ac>;otmtirg
for a particular clue of assets,no rates used shall be consistent with thou paid
depreciation may be allowed oa any such for similar work in the labor market in which P e� �purpose equipment"meats
assets that under paragraph a.above,would the organization;yompetes for such skills. equipment)"Spawhich is equ pme for mans
be viewed u fully depredated.However.a (b)Services donated by other medical, which
or technical usable cal activities.
sea
reasonable use allowance may be negotiated orycnuations.When an employer donates Examples i pedal equipment
for ruch assets if warranted after taking into the services of an employee,these ear+dus gaols a miof pedal,x-ray purposeInsruipm surgical
consideration the amount of depredation shall be valued at the employee's regular rate Mclu a mice and spectrometers
previously charged to the Government the of pay(exclusive of fringe benefits and (tr..Canes d spect equipment"means
estimated useful life remaining at time of Indirect coats)provided the services are in which i,usable equipment"
other than
ergottation.the effect of any increased the same skill for which the employee is equipmentph. which susable for
technical
maintenance chines or decreased efficiency normally paid.If the services are not to the re"arc t c not special
due to age.and any other factors pertinent to same skill for which the employee is normally activities,
whether are or not to wake them
the utilization of the asset for the purpose paid.fair market value shall be computed in stable for a particular purpose.Examples of
contemplated. accordance with subparagraph(a)above general purpose equipment include office
s.Charges for use allowances or b.Goods and spew. equipment and furnishings,air conditioning
drpreciatioa must be supported by adequate , (1)Donated roods:tea.,expendable equipment reproduction and printing
property records and physical inventories personal property/supplies.and donated um equipment motor vehicles,and automatic
most be taken at least once every two years of space may be furnished to an organization. data processing equipment
(a statistical sampling basis is acceptable)to The value of the goods and space is not b.(1)Capital expenditures for
ensure that assets exist and are usable and reimbursable either as a direct or indirect purpose equipment are unallowa Ic as a
needed.When the depredation method is oat direct cost except with the prior approval of
followed,adequate depredation records (2)The value of the donations may be used the awarding agency.
Indicating the amount of depreciation taken to meet cat sharing or matt-ions share (2)Capital expenditures for special purpose
each period must oleo be maintained requirements under the conditions described equipment are allowable as direct costs
10.Doaotiaru in Attachment E OMB Circular No.A-110. provided that items with a unit cost of 111C
103
a.Services received. The value of the donations shall be or more have the prior approval of the
(1)Donated or volunteer services may be determined in accordance with Attachment awarding agency.
furnished to an organization by professional E.Where donations are treated as indirect a Capital expenditures for land or
and technical personnel,corsultants,and costs,indirect cost rates will separate the buildings ere unallowable as a direct cost
other skilled and unskilled labor.The value value of the donations so that reimbureemeat e,<rept with the prior approval of the
of these services is not reimbursable either as will not be made. awarding agency
a direct or indirect cost 11.Employee morale.health.and welfare d.Capital expenditures for
which
improvements
(2)The value of donated services utilized costs and credits.he costs of house to land.buildings,or equipment
in the performance of a direct cost activity publications,health or first-aid clinics,and/ materially Increase their value or useful life
shall be considered in the determination of or infirmaries,recreational activities. are unallowable as a direct cost except with
the organization's indirect cost rates)and. employees'counseling services,and other tht prior approval of the awarding agency.
a y,shell be allocated a expenses Incurred in accordance with the a.Equipment and other capital
proportionate share of applicable indirect organization's established practice or custom expenditures are r*nellowa ales s In
rect
costs when the following circumstances exist for the improvement of working conditions, costs.However,eel paragraph
a for
(a)The aggregate value of the'orrice*is employer-employes relations,employee ellowability ofuse allowances or
material: monk,and employee performance are depreciation on buildings,capital
(b)The services are supported by a allowable.Such costs will be equitably • improvements,end equipment Also.see
significant amount of the indirect costs apportioned to all activities of the paragraph 42 for allowability of rental costs
inhirred by the organization: organization.Income generated from any of for lan&building&,and equipment
(c)The direct cost activity is not pursued these activities will be credited to the oust 14.From and penalties.costs of fines and
primarily for the benefit of the Federal thereof unless such income has been penalties resulting from violations of,or
Government irrevocably set ovary to employee welfare failure of the organization to comply with
(3)In those instances where there is so organizations. • Federal,State,and local laws and regulations
basis for determining the fair market value of 12-Entertainment costs.Costs of are unallowable except when incurred .sa
the services rendered.the recipient and the amusement diversion.nodal activities, result of compliance with rpe provisions
cognizant agency shall negotiate an ceremonials,and costs relating thereto.such of an award or instructions in writing from
appropriate allocation of indirect cost to the as meals,lodging.rentals,transportation.and the awarding agency.
•
services• gratuities are unallowable(but see 15.Fringe benefits.See paragraph d.L
a 11 and 26). 16.Idle facilities and idle capacity.
(4)projectWhere supported donated services rd.dir they indirectet paragraphs a.As used in this paragraph the following
a by an award, 13,Equipment and other capital firms have the meanings set forth below:
costs allocated to the services will be expenditures
considered as a of the total costs of the a-Al used in this paragraph.the following (1)"Facilities"means land and buildings or
part
project Such inct costs may b terms have the meanings set forth below: any portion thereof.equipment individually
dire
-8-
48030 Federal Register / Vol. 43, No. 132 / Tuesday, July a, 1980 / Notices
•
or collectively,or arty other tangible capital (a)Types and extent of ooverags shall be 21.Losses on other awards.Any exoesi of
"asset wherever located and whether owned in accordance with sound businase practice costs over income on any award Is
or leased by the organization. and the rates and premiums shall be unallowable as a cost of any other award.
(2)Idle facilities'means nompletely reasonable under the circumstances. This includes,loot is not limited to.the
unused facilities that are excess to the (b)Costs allowed for business interruption organisation's contributed portion by ressors
organisation's current needs. or other similar Insurance shall be limited to of cost sharing agreements or any
(3)'Idle capsdt� means the unused exclude coverage of management fees. mnderrecovenes through negotiation of lump
•
capacity of partially used facilities.It is the (c)Costs of insurance or of any provisions sums for.or ceilings on.indirect costs.
difference between that which a facility for a reserve covering the risk of loss or 21 Maintenance and repair costs.Costs
could achieve under lilt)per cent operating damage to Government property are incurred for necessary maintenance,repair,
time one one-ahlft basis lass operating allowable only to the extent that the or upkeep of buildings and equipment
interruptions resulting from time lost for organisation is liable for such loss or damage. (including Government property unless
repairs,setups,unsatisfactory materials,and (d)Provisions for a reserve under a self- otherwise provided for)which neither add to
other normal delays,and the extant to which ta,urance program are allowable to the the permanent value of the property nor
the ad s was"enmity ey used tg meet
A coverage.mitent that tes, of coverage.extent of and premiums wouldhave appreciably
�it rniin a n strident operwt its intended
condition.are
Itie,but
demands during the accounting period.
multishift basis may be used if it can be been allowed had ti:buranca been purchased allowable.Cosh Incurred for improvements
shown that this amount of usage could to cover the risks.Sow ever,provision for which add to the permanent value of the
normally be expected for the type of facility known or reasonably estimated self-insured buildings and equipment or appreciably
'Involved. liabilities,which do not become payable for prolong their intended life shell be treated a
(4)"Casts of idle facilities re Idle capacity" more than one year after the prevision Is capital expenditures(see paragraph 13).
means costa such as maintenance,repair. made shall not exceed the present value of • 23.Materials and supplies.The costs of
housing.rent,and other related costa:ej,. the liability. materials and supplies necessary to carry out
property taxes,insurance and depredation (e)Costs of Insurance on the lives of an award are allowable.Such costs should be
or use allowances trusters,officers,or other employees holding charged at their actual prices after deducting
b.The costs of idle facilities ase positions of similar rerpansibilitiee are all cash discounts,trade discounts,rebates,
.unallowable except to the extant that allowable only to the extent that the and allowances received by the organization.
(1)They are necessary to meet Insurance represents additional Withdrawals from general stores or
fluctuations in workload:or compensation(see paragraph 6).The cost at stockrooms shoulded charged at cost under
(2)Although Dot necessary to meet method such insurance when the organization Is any recognized e> pricing
fluctuations in workload.they wen identified as the beneficiary Is unallowable. consistently applied.Incoming transportation
necessary when acquired and are now idle (3)Actual locus which could have been charges may be a proper part of material
becaus.of changes in program requir toecta. covered by permissible insurance(through cost Materiel,and supplies charged as a
efforts to achieve more economical the purchase of insurance ore self-insurance direct cost should include only the materials
operations,reorganization.terminates or program)are unallowable unless expressly and supplies actually used for the
other causes which could not have bee: provided for to the award.except performance of the contract or grant,and due
reasonably foreseen.Under the exception (a)Corte incurred because of losses eat credit should be given for any excess
stated to this subparagraph.coats of idle covered under nominal deductible insurances materials or supplies retained.or returned to
facilities are allowable for a reasonable - coverage provided in keeping with sound vendors.
period of time,ordinarily not to exceed one business practice are allowable. 24.Meetings.conferences.
year.depending upon the initiative takers to (b)Minor losses not covered by Insnran= a Costs associated with the conduct of
use.lease,or dispose of retch facilities(bet such as spoilage,breakage.and meetings,and conferences,and include the
see paragraphs 47.b and d.). disappearance of supplies,which occur to the cost of renting facilities,meals,speakers'
e The costs of idle capacity ars normal ordinary course of operations,are allowable. fees,and the like.But see paragraph 12.
costs of doing business and are a factor in the b.Indemnification includes the Entertainment carts,and paragraph 29,
normal Ductuattoe a of usage or indirect met organization against Iisbllities� Participant support costs.
rates from period to period.Sock costs are persons and any other lows or damage.not b.To the extent that these costs are
allowable,provided the capacity is compensated by insurance or otherwise.The identifabe with
particular
Djobjective(e.
reasonably anticipated to be necessary or Government is obligated to indemnifyshouldcharged ed to that
was originally reasonebls and is not r3bjed organization only to the extent paragraph B.of Attachment A.)These costs
to reduction or elimination by subletting, provided in the award. are allowable provided that they meet the
renting,or sale,In eccardancs with sound 19.Interest fund raising,andlareetawct general teats of allowable,shawl In
business,econectics or security prsctiaa management costs, Attachment A to this Circular.
Widespread idle capacity throughout as. a.Coen Incurred for Merest on borrowed • c.Costs of meetings and conferrnt_es held
- entire facility or among a group of assets - capita)or temparery use of endowment to conduct the general administration of the
having substantially the same function meg funds,however represented.are unallowable. organization are allowable.
be idle facilities b.Costs of organized fund rafting. 23.Memberships,subscriptions,and
17.Independentresaurh anddrralopmsat including financial campaigns,endowment professional octivity cos*
drives,solicitation of es and bequests,and a.Coats of the organisation's membership
andtadrmafflcattaaL -. Weiner expenses Incurred solely to eaten in civic,business,technical and professional
a,lociannee tndt:des tasmtaw which the capital or obtain contributions gigs _ organizations are allowable
organization is required to carry,or which is unallow+bl& b.Costs of the organisation's snbsaip�eo�ne•
approved under the terms of as.award and- esin c.Coots of lavert counsel and Ad!• - to oleic,business,professional.and technical
any other insurance which the organization and sortie,eixpelses incurred solely to periodicals are allowable. _
maintains In connection with the lenerai • • enhance beams from lave etmersta are - c.Costs of attendance at meetings and
conduct of its operations,This paragraph unallowable. conferences,sponsored by others when the
does not apply to Insurance which represent d.Fund raising and investment activities primary purpose Is the dissemination of
fringe benefits for employees(sae paragraph shall be allocated an sppropriete share of technical_information,ire allowable.This
61.and 11.g.(2)). indirect costs under the conditions described includes costs of meals.transportation.and
(1)Costs of insurance requtred er ° hi paragraph B of Attachment A. other items incidental to such attendance.
•
approved and maintained ranee*be is . : 20.Labor relators nosh.Costs insured it 26.Organisation costs.Expenditures.such
award are allowable. maintaining satisfactory relations between as Incorporation fees,brokers'fees,fees to
(21 Corte of otherineottsts matnathedby " the organization and its employees.including promoters.organizers or management
the organisation la mussed*with the costa of labor management committees. . - consultants,attorneys,seceuntants,or
general conduct of its operations are employee publications.and other related •_ Investment counselors,whether or not
allowable subject to the folic-twirls 21mlt;tlma activities are allowable _ employees of the organisation to connection
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Federal Register I VoL 45, No;132 f Tue ftrty-ft, 1080 /--Nags 48031
with establishment or tear anlradon of an *3.Preaward costs.Preaward costs are to which the depreciation applicable to such
organization.are unallowable except with ' those incurred prior to the effective dale at property was included.The amount of the
prior approval of the awarding agency. the award directly pursuant to the gain or loss to be included as a credit or
27.Overtime.extra pay Shift and . negotiation and In antidpatioa of the award charge to the appropriate colt groupings)
multrkhift premiums.Premiums for overtime, where such costs is necessary to comply with shall be the difference between the amount
extra-ply shifts.and multiahift work are the proposed delivery schedule or period of realised on the property and the
•
allowable only with the prior approval of the performance.Such costs are allowable only undepredated basis of the
awarding agency except to the'steal that they would have been (2)Gains and losses on the dispoettion of
a.When necessary to cope with allowable If incurred after the date of the depreciable property shall not be recognized
emergencies,such as those reeulting from award and only with the written approval of as a separate credit or charge under the
accidents,natural disasters.breakdowns of the awarding agency. following condition. .•
equipment or occasional operational • 34.Professional service aorta. (a)The gain or loss is processed through a
bottlenecks of a sporadic nature. a.Costs of professional and consultant depreciation reserve account and,is reflected
b.When employees are performing indirect services rendered by persons who are in the depredation allowable under
functions such as administration, members of a particular profession or possessparagzap 9. - •
maintenance.or accounting. a special skill.and who are not officers or (b)The property is given to exchange as -
e In the performance of tests,laboratory employees of the organization,are allowable, Part of the purchase price of a similar Item
procedures,or other similar operations which subject to b,c,and d of this paragraph when and the gain or loss is taken into account In
are continuous in nature and cannot reasonable in relation to•the services determining the depreciation frost basis of the
reasonably be interrupted or otherwise rendered and when not contingent upon Dew Item.
tompleted. recovery of the costs from the Government (Cl A loss results from the failure to
d.When lower overall cost to the b.In detsrming the allowability of costs in maintain permissible insurance.except as
Government will malt a particular case,no single factor or any otherwise provided in paragraph i$.a.(S).
25.Page charges in professional journals. special combination of factors is necessarily (d)Compensation for the use of the
Page charges for professional journal determinative.However,the following property was provided through use
publications are allowable as s necessary factors are relevant allowances in lieu of depreciation in
part of research costs.where•. (1)The nature and scope of the service accordance with paragraph 9.
a.The research papers report work rendered in relation to the service required (e)Gains and losses arising from mesa or
supported by the Government and (2)The necessity of contracting for the extraordinary salsa retirements,or other
b.The charges art levied impartially on all service,considering the organizatioa's dispositions shall be considered as a freer
research papers published by the journal capability in the particular area. by-case basis
whether or not by Government-sponsored (3)The past pattern of such costs b.Gains saleor lacer of any nature Sty otg
ar
authors. particularly in the years prior to Government from the or exchange of property hta.
2ti.Participant ice support costs.Participant awards than the property covered!n paragraph a
P� PPdabove shall be excluded in computing award
rt colts are direct costs for items such (4)The Impact of Government awards on
PPo Hosts
as stipends or subsistence allowances,travel the organization's business(Lam what new 36-
Public information Beerier costs.
allowances,allowances,and registration fees paid to or problems have arisen) a.Public information service costs inchsde
on behalf of participants or trainees(but not (5)Whether the proportion of Government the toet associated with pamphlets,news
employees)in connection with meetings, work to the organization's total business is releases,and other forms of information
conferences,symposia.or training projects. such as to influence the organization in favor services.��costs are normally Incurred to -
These costs are allowable with the prior of incurring the cost,particularly where the (1)Inform or instruct individuals.groups,or
approval of the awarding agency. services rendered are not of a continuing the general public.
30.Polent'easb nature and have little relationship to work (2)Interest individuals or poops In
a.Costs of(I)preparing disclosures, under Government grants and contracts. participating In a service program of the
reports,and ether document'required by the (6)Whether the'service can be performed organization.
award and of searching the art to the extend more economically by direct employment (3)Diseeminate the results of sponsored
necessary to make such disclosures.(II) tether than coAtracting and nonsponsored activities.
preparing documents and any other patent (7)The qualifications of the individual or b.Public information service costs are
costs in connection with the filing and concern rendering the service and the allowable as direct costs with the prior
prosecution of a United states patent customary fees charged.especially on nos approval of the awarding agency.Such costs
application where title or royalty-free license Government awards. are unallowable as indirect costs.
isrequired by the Government to be (8)Adequacy of the contractual agreement 37.Publication and printing costs.
conveyed to the Government and(ail)general for the service(e.g.,description of the service, a.Publication costs include the costs of
counseling services relating to patent and estimate of time required,rats of - printing(including the processes of -
copyright matters,such as advice on patent compensation,and termination provisions). composition,plate-making press work,
and copyright laws.regulations.clauses,and c.In addition to the fecton in paragraph b binding.and the end products produced by
employee agreements are allowable(but see above.retainer fees to the allowable must be such processes),distribution.promotion.
paragraph 34). supported by eviden of of halves fide services mallin .and general handling.
b.Cost of re disclosures.reports, available or rendered b.lf�these costa art not identifiable with a
andother Pth art d.Cost of 1 aL accounting.and consultingparticular cost objective,they should be
documents and of searching eg ting i
to the extent necessary to make disclosures. services,and related colts incurred in allocated as indirect costs to all benefiting
if not required bythe award are connection with defense of antitrust suits, activities of the organization.
4
unallowable.Costs in connection with(I) and the prosecution of claims against the c.Publication and printing costs
are
filing and prosecuting any foreign patent Government are unallowable.Costs of legal. unallowable as direct costs except with the
application,or(ii)any United States patent accounting and consulting services,and prior approval of the awarding agency
application,where the award does not related costs,incurred In connection with d.The cost of page charges in journals is
require conveying title or a royalty-fen patent infringement litigation,organization addressed paragraph 28.
license to the Government are unallowable' and reorganization,are unallowable unless 38.Rearrangement and alteration coats.
(also see paragraph 43). otherwise provided for in the award(but eve Costs incurred for ordinary or normal
31.Pension plans.See paragraph S.g. paragraph 47e). . rearrangement end alteration of facilities are •
32 Plant security costs.Necessary 35.Profits and losses on disposition of allowable.Special arrangement and
expenses Incurred to comply with depreciable property or other capital pssets. alteration costs Incurred specifically for the
Government security requirements or for a.(1)Gains and losses on sale,retirement project are allowable with the prior approval
facilities protection.including wages, or other disposition of depreciable property of the awarding agency.
uniforms,and equipment of personnel are shall be included in the year in which they 39.Reconversion costs.Cost"incurred in
allowable. occur as credits or charges to cost groupings) the restoration or rehabilitation of the
—10— I
L
•
46032 Federal Register / VoL 45, No. 192 / Tuesday, July 8. 1980 / Notices
organiatlon a facilities to apprcxdmately the control witbin 12 months after hire.the tf any)is equal to 75 per cent or more of the
same condition striating immediately prior to organisation shall refund or credit the economic life of the leased property;Ls..the
commencement of Government awards.fair Government for its share of the cost period the property Is expected to be
wear and taai excepted are allowable However,the costs of travel to an overseas economically usable by one or more tours.
urg 40.Recruit oasts The following loutiokshall be considered travel costa in 43.Royalties and other costs far use of
recruiting costa are allowable:cost of'"help accordance with paragraph 50 and not patents and ts.
wanted"advertising,operating coats of an relocation costs for the purpose of this a.Royalties or copyright or
employment office,costs of operating an paragraph if dependents are not permitted at amortization of the cost of acquiring by
educational tasting program.travel expense the location for any reason and the costa do purchase a copyright.patent or tights
including food and lodging of employees not include costs of transporting household thereto,necessary for the proper performance
while engaged in recruiting personnel.trend gee• • of the award are allowable nniese
costs of applicants for interviews for • d.The following costs related to relocation (1)The Government has a license or the
prospective employment,and relocation costs are unallowable right to free use of the patent or copyright
incurred incident to recruitment of new (1)Fees and other coats associated with • (2)The patent or copyright has been
employees(see paragraph 41c).Where the acquiring a new homao adjudicated to be invalid.or has been
organtlzatlon.uses employment agencies, (2)A loss on the sale of a former home. administratively determined to be invalid
costs not in excess of standard commercial (3)Continuing mortgage principal and' (3)The patent or copyright is considered to
rates for each services are allowable. interest payments on a home being sold be unenforceable.
41.Relocation carts (4)Income taxes•paid dy an smpsioye' (4)The patent or copyright Le expired.
a.Relocation costs are costs incident to the related to reimbursed re,locatlm carts, b.Special care should be exercised to
permanent change of duty assignment(for an 42.Rental coma determining reasonableness where the
indefinite period or fora stated period of not a.Subject to the limitations described In royalties may have been arrived at as a result
Ieee than 12 months)of an existing employee paragraphs b•through d.of ibis paragraph• of less then arm's length bargaining;e.g.: •
or upon recruitment of a rsew employee rental costs are allowable to the extent that (1)Royalties paid to persons,including
Relocation costs are allowable,subject to the the refer art reasonable in light pinch corporations,affiliated with the organization.
limitation described in paragraphs b.a and d, factors as:rental costa of comparable (2)Royalties paid to unaffiliated parties.
below.provided that property,if any,market conditions in the including corporations.under an agreement
(1)The move is for the benefit of the area,alternatives available;and the type bfe entered into in contemplation that a
employer. expectancy.condition,and value Government award would be made.
(2)Reimbursement to the employee Is to property eased (3)Royalties paid under an agreement
accordance with an established written D.Rental costs tender sale and kasebet ; entered into after an award is made to an
policy consistently followed by the employs arrangements are allowable only up to the organization.
(3)The reimbursement does not exceed the amount that would be allowed had the C.In any case involving a patent tr
employee's actual(or reasonably estimated) organization continued to own the property. copyright formerly owned by the
c Rental costa under less-than-length
e xpenses. leases are allowable only cep to the amount organiutlon,the amount of royalty allowed
b.Allowable relocation costs for cement that would be allowed had title to the should not exceed the cost which world have
employees are limited to the foUowirrt• property vested in the organization.For this been allowed bad the organization retained
(1)The coats of transportation of the title thereto.
e mployee.members of his immediate family purpose,which one less-then-arms-length to a lea lsaw 4 one �•Sever«
and his household,and personal effects to the under o one party to the jeers agreement a.Severance p�also commonly referred
is able to control or substantially influence
new location. the actions of he other.Such leases include, to as diamusal wages,is a payment to
(2)The costs of finding a new borne such but are not limited to those between(I) addition to regular salaries and wages,by
as advance trips by employees and spouses divisions clan wganisatioa(11)myanfatiosss organizations to workers whose employment
to locate living quarters and temporary under common control through oommoa is being terminated.Costs of severance pay
lodging during the transition period up to a aeons,directors.or memberx and(ii)an are allowable only to the extent that in each
maximum period of 30 days,Including organization and a director.trustee,officer, case,it is required by(i)law.(II)employer-
advance trip time. or key employee of the organization or Ida employee agreement.(till established policy
(3)Closing coats,such as brokerage,legal. immediate(amity either directly or&mush that constitutes,in effect an fmplled
and appraisal fees,incident to the disposition corporations,trusts,or similar arrsngemsato agreement on the orgenization's part or(iv)
of the employee's former home.These costs, In which they hold a controlling interest. circumstances of the particular employment
together with those described in(4)below, d Rental costs under leases which create a b.Costs of severance payments are divided
are limited to!per cent of the sales price of material equity in the leased property are into two categories as follows:
the employee's former boas. allowable only up to the amount that would (1)Actual normal trunover severance
(4)The continuing costs of ownership of be allowed had the organization ptashaeed payments shall be allocated to all activities
horns vacant former hos after the settlement the property oa the date the r menasa agreea or,where the organization provides far a
or lease date of the employee's new was executed;e.g.depredation or rule reserve for normal severances such method
permanent home,such as maintenance of allowances,malntesance.taxes,insurance will be acceptable if the charge to current
buildings and grounds(exrlueiva of fixing up but excluding interest expense and other ' operations is reasonable in light of payments
expenses),utilities,taxes,and property unallowable costs.For this purpose.a actually made for normal severances over a
insurance• material equity in the property exists if the representative past period,and if amain$
(5)Other necessary and reasonable • lease in rsoncancelable or is cancelable oaty charged are allocated to all activities of the
expenses normally incident to rslooetiesa upon the oamrrenre of some»mote organized=
such es the costa of cancelling an unexpired contingency and has oar or toots of tie. . - (2)Abnormal or mace severance pay is of
lease.disconnecting and reinstalling • following charsctertat cis - such a nan,)tctural nature that measurement
household appliances,and purchasing (1)The oraanlzation has the tight to of costs by means of an accrual will not
insurance against loss of or damages to purchase the property for a price which at the achieve equity to both parties.Thus,accruals
personal property.The cost of cancelling as beginning of the lease appears to be for this purpose are not allowable.However.
unexpired lease is limited to three times the substantially less than the probable fair the Government recognizes its obligation to
monthly rectal market van,at the time it Is permitlied to participate to the extent of its fair share.In
C.Allowable relocation costs foe new u the property(commonly celled a any specific payment.Thus,allowability will
employees are limited to those described Inlease with a bargain purchase optimal - be considered on a case-by-case basis is the
(1)and(2)of paragraph b.above.When (2)Tntla to the property passes to the event of occurre>ua
relocation costs incurred incident to the organize tion at soma time during or alter the 45.Specialized service facilities.
recruitment of new employees have been tease period; . a-The costa of services provided by hie*
allowed either as a direct or indirect cost and (3)The term of the lease(Initial term plus complex or aperialiv.d facilities operated by
the employee resigns for reasons within his" periods covered by bargain renewal apt ant, the organization.such as electronic
—11—
•
Federal Register I Vol_ 45. No 132 / 'Nevin% ja}y a, 1990 / Notices 48033
h Co+ir orsaLta• `uvsfaatlart Inn wrttb the bask�deliast emteis.d m -
rnearsand cwiadharge'
far
a particular ease. etpits a^,reasonable Attachment A.The indirect expense w
and the s eit efforts by the ore its+t ;Attain allocated shall exclude the same and Limner
graph
of either ib.o. eat - cannot be disco:. wad lar.rdlately altar the costs claimed directly or iadtrsdiy u
graph and.incomees addition.Federal
�+lab s000� affective date of rminatica,ma coats en settlement expense&
�ti of orcrcredits radar paragraph Bi�pwa s within the limitations set 41 Training andsduovtian costs.
.f u aforth Z.esot^r4 that sly each a.Coats of preparation and mainteaanos of
A. 4 continuing ter terrzein*tion due to the a program of tnatrudtoo ire-holies but not
The*oats us of rackcharged
ged►i directlyrat or eat' fsTu�e the me+nisatioa limited to co-the-job.classroom and
trial maws be clsa cecti too .costs seen be apprenticeship training,designed to increase
icaDk s or,the based f armed sump - - taato lla le. the vocational effectiveness of employees.
service&or, basis of a sc rLm doss
C.Las of robe.t.ow of useful value including training materials,textbooks,
r or iminiit against
methodology l' ofspec al tool- nac'hin+7 and egmtpmant salaries or wages of trainees(excluding
i1eQ{mfthe rgataet organisation.
h y ding wagetede
. which was act - rg*d to the award as a overtime compensation which might arise
✓ kes a the ion fo inter l p rpoe &aM ,is rc ale W gb therefrom!,end(!)salaries of the director of
be organization cot er o !h aggregate
and ea Such expend'' tooling;to ortraining and staff when the training program
s of the sa toVI re.The only theo each
(1) spec
of earl, - �quipmmt la tit'' 'ss�a=?v capable of,eats L conducted by the orgeai:atio4 or jell
s of the s cionsi a The cow the other work,:- be otga.sn tt�aa - tuition and tees whose the training is in an
ice costs consist llocabley of both an r if the Government is institution no operated by the organisation.
sect c and its allocable e of all protected bytre4; Per of ti::s or by other are allowable.
costs.Advance agreements pursuant mean'deemed a. aroprietc by the awarding b.Costa of part-time education.at an
a clarly p of Attachment A area undergraduate to posagrsduate college level.
tlnilare important is this foratioo befco a tante coos tinder tocleding that provided at the organisation's
Where n costs incurred a service unexpired leasers, fe generally allowable - own facilities,arc allowable only when the
not material.they may be allocated Y , where chary eta en�y course or degree pursued is relative to the
irect costs reasonably uecae ary for the performance of geld in which the employee is now working
6 Thse the terminated re and less the residual valve or may reasonably be expected to work.and
e q rdgeneral.taxes which the cpaid tiara r )the ar~- t d sect rurEd are limited too:
rued in to pay and whichthare a ld or ofi such does ;i r roved the reaenable um (1)Training materials.
epte in accordance inci les,and claimed of does pr lea se;i for the period of (2)Textbooks.
xpprinciples,and value s the d Ct h period meted accounting p pvarnmaaU to din the sward and sex• h fcathx� as may be (tt)Fees charges by the educational
taxes which are oommensursta with the reasonable.and' )the or-geairation makes. institution.
all reasonable ' ate to terminate.assign. (4)Tuition charged by the educational
o able,
ex eat services received from are settle,or othe--«•-. .reduce the cost of such tastitutioi or to lieu of tuition.instructors'
empt ens except availablel( the from organiwhichsation
sa be tectnded the cost of salaries and the related share of indirect
ectly or are to orgaaizatien lease.There e 7 costs of the educational institution to the
alterations of roe: leased property,Famed
tatty ti whichs d available cosh, e, e1e necessary for the extent that the sum thereof is not in excess of
I Government
based on the exemption case afforded suchf ammo d th award, and of reasonable the tuition which would have ben paid to the
I awarding
and In latter when paten dth of the participating educational institution.
e awarding agency makes available the eustontion fit' by provision' (5)Salaries and related costs of tastrsyc3oes
eesaary exemption which represent
ens c,dal liens,. who are employees of the organisation.
sesements m land represent capital &Set lep>'sesf a" (6)Straight-time compensation each
tprovemente and(its)Federal Income taxes. expenses treacleo iotaawing employee S ra for time spent nsatio of classes
e Any izfund of texas and any thereon. ghat to ! ]A t3etioal,and Medlar during working boars not to excess of itt6
e aorganizationlweasof interestrd'cos. e+btch (t reaeon ` per year and only to the extent that
owes reasonably ecedsa:7 for Lours
ere ad either sa cost du will be ion and presentation to . circumstances do not permit the operation of
edited o a , t reduction Government.test (a)Tex '' d settl ment claims and classes or attendance at classes after regular
fund r maroon a s to the rofagency awarding8e ti th respect to� working bouts:otherwise such compensation
wars genitally weer Termination of supportingof the sw�unless the is unallowable.
wards or the need f rise to treatment incurrence terminated lie fie
f costs,or the for special of terminative is for tefault.(See paragraph is a Costs of tuition.fees.training materials,
Attarhnsent L.' t1.t8 C.rrxiiar No.A-11a and textbooks(bet not subsistmre.salary.or
war which would not ed arisen had the of any other emoluments)in connection with
ward not been terminated.Cosh below. .��;. lem,eat el full-time education,Including that provided at
d
overlies these items art set forth • (b)The tannic* ion
organisation's own Ldlitie&at a
hey arertoi be used this c Circulares with the sum Reuc .+hie nets for Ss strange. postgraduate(but not undergraduate)college
ether tioni itu of to transportation.p` ,tection,and disposition of level.are allowable only when the course or
ermine tic&situations by the Government or degree pursued is related to the field in which
a. nobly usable bets.The cost ofn items property Pro' '' the employee is now working or may
e
•
red far the award neaps
work
shall
te oo the allowablee unless the other acquired ntor k be for disposals reasonably be expected to work,and
o
sr ga ahaII not be evidenceunless the t I amouni in accordance wrbere the,costs receive the prior approval
of
cot retain
anonsuch ate submits cost thatott would withat a predetermine 4 Of OMl Circular A-110. the awarding agency.Such cats are limited
pot !tend at oat without Atdirhmco
rusta
whether suet (S)Indirect cog- a related to salaries and to the costs attributable to a local period not
art a Ives.In decidingle a; setikment expenses in to exceed one school year for each employee
Items art reasonably usable on agencyother work td subpwagearagraphs� andl2)a this paragraph. so trained In unusual cases the period may
the organization,the awarding should tubpuay.Fuels
(t ,
consider the organisation's plans and orders Normally,Fuels'ii- tired curse shall be limited be extended.
d.attendance of era to 16 weeks
cost,sad
for current and us pu activity. Immediatefrin pani' Mon.Occupancy per et.uployee per year at specialised
•
item then rga purchases shall be regarded1.Claims ceder subaev#rd, ;aims ender programs speciScally designed to enhance
items by the organisation
rs
u wtdre that such items art reasonablywor in:bewclaim' c art :o the award and onto prepare effectiveness
employees for such positions
usable the organization'sg other . to to which era
acceptance of common items as allocable to to other work of :e organ;catioa are are allowable_Such costs Include enrollment
s , ;a.An appropriate share of fees,training materials,textbooks and
theiterminateddtothe portion of the quantities
w nd iesshall be the rganiaeon indirect expense may be related charge&employees'salaries,
suchmed m extent thato transit the qua and of allocated to the mount settlements with subsistence,and travel Costs allowable
c Items on fiend to reasonableu ontaty subcontractor/E. , ant,:,,,provided chat the . under this paragraph do not include those Lor
requirementsar
in excess of ther wrk gaantitati •
other wait. • &mascot allocates u othrc:-glee consistent courses that are part of a degree-oriented
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• 46034 Federal Register / Vol. 45, No. 132 / Tuesday. July 1 1980 / Notices
Universities Research Association,
eurnculum,which are allowable only to the allocation on the basis of work or time period Incorporatedsitiesa(National Acceleration Lab}
benefited when appropriate.Advance Argonne,Illinois
extent Maintenance forth expense.and c.above. agreements are particularly important e.depreciation
orfair and normalot charges lot foreign travel costa are Universities Corporation for Atmospheric
` ownedtortte se y the or onerr facilities when the travel has received Research.Boulder,Colorado
owned or leaseda the organisation for prioro allowable only awarding agency.Each Nonprofit Insurance Companies such as Blue
training purposes an allowable to the extent approval of the Cj.osa and Blue Shield Organizations
set forth In paragraphs 9.22.and 42. separate foreign trip must be approved.For Other s and lt Shield
Organizations
as negotiated
[Contributions na orni donationstiors Includlnt to purposes
d as any travel outside of Canada and with awarding agencies.
theeducationaldoioor training Qu Dot sa•armo riled r•r'� e�
the donation of facilities or other properties. the United Stales and its territories and corns� �
and scholarships or fellowships,are ppoossessions.Howevef,for an organization
unallowable. busted in foreign countries,the term"foreign
g.Training and education costa In excess of travel"means travel outside that country.
those otherwise allowable may�er paragra be o wed � �No A-S2zj
b.and c.of this paragraph
with prior approval of the awarding agency. Attachment C
•
To be considered for approval.theme M t♦Via
organization must demonstrate that an �f L
established
aris consistentlyairinga� urred ediic+t o ate. Aerospace Corporation 0 Segundo
and and training California
and that the course or degree pursued Ir
relative to the field la which the employee is Argonne Universities Association.f'bli1r,
DDow workir4 o work of may reasonably be expected Illinois
Associated Universities,Incorporated.
49.T}ONportotion costs Transportation Washington.D.C.
costs include freight express,cartage,and Associated Universities far Research and
postage charges resting either to goods Astronomy,Tucson Arizona
purchased in process,or delivered These Atomic Casualty Commissions.Washington.
costs are allowable.When such costa cam D.C.readily be identified with the Items involved. Battelle Memorial Institute,Headquartered is
:they may be directly charged as Columbus.Ohio
;transportation costa or added t��_Of Brookhaven National Laboratory.tiptoe.
aunt items(see paragraph
). New York
'Identification with the materialsfved aosts Center for Energy and Environmental
cannot readily be made,transportation Research(t�ER}.(university
may be charged to the ro riate indirect
coot accounts if the rgappropriate
niizaton follows a Commonwealth of Puerto Rico,Charles Stark
Consistent equitable procedure In this Draper Laboratory,Incorporated
Cambridge,Massachusetts.Comparative
f T}vref oasts. Animal Research Laboratory(CARL)
a.Travel costs are the expenees for
(University of Tennessee).Oakrldg+.
related Items employees by wb'o are Tennessee
ental institute of Michigan.Arad
in travel status o0 ofEcial business of the Arbor,Michigan
organization. costs Travel are allow.bie Hanford Environmental Health Ironmdation.
subject to paragraphs b.through a.below. Richland Washington
when they are directly attributable to spedbo UT Research Institute.Chicago,nooks
nwortormal
under coursean award orni are ton offt m the Institute for Defense Analysis.Arlington.
normal of administration the co Virginia .
pryanizatl on as tetaal nstitute of Gas Technology,Chicago.Minnieb.Such rap may urged i Midwest Research Institute.Haadquartaed
•
baste,on a per er diem or a mileage basis>a Bert' to Kansas City,Missoot!
of actual costs incurred,or on a combination Litre Cns srratly,Missouri Manachusetss
Iofn the chargesun.provided the me those used results Montana Energy Research;led Development
In by the organizaistent tion
those s regalnormally Institute,Inc.R�DI�Ana,�taaa
allowed the In Its regular National Radiological Astronomy
operations. Observatory.Green Bank West Vtrgtaia
C.The difference In and l less
thanaes rsstta-isa Oa��Associated Universities.Oaia'idgns
air accommodations less first-class ,Tennessee
air accommodations is unallowable except ]Project M.nAg„r,,,,t,!Corporatism.Oandga.
when Inge than first-class air
accommodations are not reasonably Rand nimiseation Santa Moeiea.California
available rem ton msuct n ssary miss t Ruearcb Triangle Institute.Rasearati
requirements such as where less than deaf~ Triangle Park.North Carolina
class accommodations would require Riverside Research Institute.New Tort.Piste;
circuitous routing.(Si)require trival during York
unreasonable bouts,(iii)greatly Increase theNew
duration of the flight(iv)result in additional. Sandia Corporation.Albo4�
•
Costs which would offset the transportation Mexico savings,or offer accommodations
Institute,Birmingham. .
are not reasonably
e o avly adeequuatthe medical �
ma
needs of the ttraveler. Southwest lnattul i.San Ant
d.Necessary and reasonable costs d Texas
r family movements and personnel movementsSRI Internatloaal.Menlo Park.Ca/donna
t:of a special or mass nature are allowable. Syracuse Ressarnis o Corporation.Symms'''.
to paragraphs 40 and 41.sab}ed to
—13— •v.s. r.avarneent Printing Office : 1183 -Sal-astttw
EXHIBIT F
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' Ordinance No. G19-93
IAN ORDINANCE
AMENDING CHAPTER 3.12 ENTITLED "COMMISSION ON HUMAN RELATIONS"
I
BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF ELGIN, ILLINOIS:
I Section 1. That Chapter 3. 12 entitled "Commission on Human
Relations" of the Elgin Municipal Code, 1976, as amended, be and is
hereby amended to read as follows:
I3.12.010 Created. .
A commission on human relations is created.
3.12.020 Declaration of policy.
I A. The city council, in support of constitutional provisions
against prejudice and the practice of discrimination
' against any individual or group because of race, color,
I religion, creed, sex, national origin, age, ancestry,
familial -status or handicap, desires to establish a
commission on human relations. To eliminate such prejudice
I and discrimination, an instrumentality should be
established through which the citizens of Elgin may be kept
informed of developments in human relations, the citizens
and public officials of the city may obtain expert advice
I and assistance in progressive practices to keep peace and
good order, and private persons and groups may be
officially encouraged to promote tolerance, goodwill,
I • interfaith and interracial harmony between all people.
B. It is declared to be the public policy of the city to assure
full and equal opportunity to all residents of the city to
Iobtain fair and adequate housing for themselves and their
_ families in the city without discrimination against them
because of their race, color, religion, creed, sex, .
I national origin, . age, ancestry, familial status or
handicap, and to secure to its residents the economic.,
social, and professional benefits of living in an
1 integrated society.
3.12.030 Appointment of ,embers-composition-term-salary.
1 A. " The human relations commission shall consist of up to eight
• members appointed by the mayor with the advice and consent
of the city council. Commission members shall be as
I broadly representative of the community as practically
feasible, in such areas as race, color, religion, creed,
sex, national origin, 'age, ancestry, familial status,
I handicap, education, welfare, labor, and management. There
shall be two •x officio members of the human relations
1
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G. All rules of procedure and regulations adopted by the
commission shall preserve the right of due process under
law established with respect to civil cases in the circuit
courts of the state.
Z. The commission is empowered to determine the facts and such
findings must be made by a majority vote of the commission.
I. The commission is empowered to issue an order for relief as
may be appropriate, including monetary relief. In the case
of an order issued pursuant to Section 3. 12 .090, the
commission may order such relief as provided in that
section including paragraph (J) .
The commission shall make a final administrative
disposition of a complaint within one year of the date of
receipt of a complaint unless it is impracticable to do
so. If the commission is unable to do so it shall notify
the complainant and respondent, in writing, of the reasons
for not doing so.
•
J. Any resolution of a charge before a final order under this
section shall require the consent of the aggrieved person
on whose behalf the charge is issued.
R. Judicial. Review. Any party aggrieved by a final order for
relief may upon application obtain judicial review of such
order, in accordance with the provisions of Ill . Ann. Stat.
Ch 110, paragraphs 3-110 and 3-111, in the judicial circuit
in which the discriminatory housing practice is alleged to
have occurred, and filing of the petition for review shall
be not later than 30 days after the order is entered.
' The commission may not continue administrative proceedings
under this section regarding any alleged discriminatory
housing practice after the beginning of the trial of a
civil action commenced by the aggrieved party under an Act
of Congress or a State or local law, seeking relief with
respect to that discriminatory housing practice.
3.12.100 Affirmative action-City contracts.
A. The city shall not contract with any contractor or vendor,
maintain any financial relation with any financial
institution, or use the service of any labor organization
or member thereof, which employs five or more person which
does not first submit to the city a written commitment to
provide equal employment opportunity. However when .a
contractor, vendor, financial • institution, labor
organization or member thereof is the sole source of the
particular work product or service desired by the City of . 1
Elgin and such work, product or service is essential for
the efficient governmental operations of the City of Elgin
such written commitment shall not be required.
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The written commitment required by this section shall:
1. Set out and agree to maintain specific employment or
membership practices and' policies sufficient to
achieve equal opportunity;
2. Set out specific goals for participation by minority
groups and female person qualified by or for training
or through previous work experience. This provision
will not infringe upon the right of the employer to
determine the need for or qualifications of employees;
3. Agree to submit to the city upon request written
evidence of the effectiveness of the above-required
practices, policies and goals;
4 . Agree to submit to the city upon request statistical
data concerning employee composition or membership
composition on race, color, sex and job description;
5. Agree to distribute copies of the above commitment to
all persons who participate in recruitment, screening,
referral and selection of job applicants, prospective
job applicants or members;
6. Agree to require any subcontractor to submit to the
city a written commitment which. contains the
provisions required by subdivisions one (1) through
• five (5) of this subsection;
7. The written commitment required by this section may
also be satisfied by filing a copy of an affirmative
action program of the contractor/vendor which is in
effect and which has been approved by any local, state
or federal agency with jurisdiction to approve such
programs.
B. All such contracts by and between the city of Elgin and
contractors and vendors for the purchase of the city of
Elgin of goods and/or services shall contain the following
clauses:
"The contractor/vendor will not discriminate
against any employee or applicant for employment
because of race, color, religion, sex, ancestry,
national origin, place of birth, age or physical
• handicap which would not interfere with the
efficient performance of the job in question.
The contractor/vendor will take affirmative
action to comply with the provisions of this
ordinance and will require any subcontractor to
submit to the city of Elgin a written commitment
to comply with those provisions. The
contractor/vendor will distribute copies of this
commitment to all persons who - participate in
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I
•
recruitment screening, referral and selection of
job applicants, prospective subcontractors."
"The contractor/ vendor agrees that the
provisions of Chapter 3. 12 of the Elgin Municipal
Code, 1976, is hereby incorporated by reference,
as if set out verbatim."
C. Any contractor, vendor, financial institution or labor
organization contracting with the city of Elgin will be
request required to submit to the city, upon written re Q by the
city, compliance liance reports containing such information as to
P P
the practices, policies, programs and statistics of
employee or membership composition on race, color, sex, age
and job description, as may be prescribed by the city and
will require any subcontractor to submit a compliance
report upon written request by the city. The required
compliance report shall be substantially in the form
attached hereto as Exhibit A, a copy of which is on file in
the purchasing office.
D. Before a contract is let to a contractor or financial
institution by the city of Elgin, or before purchases are
made from a vendor, the purchasing agent or city clerk must
have on file a written statement from the staff
representative that the contractor, vendor, or financial
institution has a present or proposed program which is
approved as an acceptable equal employment opportunity or
affirmative action plan for the utilization of minorities
in their work force. Neither this section, nor any other
section of this chapter, shall be construed to prevent the
- . city manager or department heads from authorizing or doiAg
business with contractors or vendors for emergency services
or supplies.
E. In the event that any contractor, vendor, financial
institution or labor organization contracting with the city
-of Elgin fails to comply with the fair employment and
affirmative action provisions of this section, the city of
Elgin, in its discretion, may:•
1. Cancel, terminate or suspend the contract in whole or
in part;
2. Declare the contractor, vendor, financial institution
or labor organization ineligible for further contracts
for a calendar year;
3. Recover from the contractor 'or vendor by setoff
against the unpaid portion of the contract price, or
otherwise pursuant to this contract, the sum of fifty
dollars per day, as liquidated damages and not as a
penalty, for each day that the contractor or vendor
shall fail to comply . with these provisions of the
contract, as determined by the city council after
•
Jr
recommendation by the human relation
n co being�commission
in
con the said accordance with its rules, and extreme
and between the contractor and the
and agreed upon by impracticability
city because of the the actual
difficulty of fixing and ascertaining
damages which the city. would sustain in the event cod
9 and said amount is agreed
-
such a breach of contract, which the city
to be the amount of damages •
sustain)
m se such other sanctions as may be recommended by
4. Z po relations commission pursuant to this
- - the human
section or other ordinances. of ordinances in
Section 2. That all ordinances or parts d are hereby
conflict with the provisions of this ordinance be an
repealed' in force and
Section 3. That this ordinance shallbe fullin thef mannerand
effect from and after its passage and publication
provided by law.
Geor VanDeVoorde, Mayor
Presented: May 12, 1993
passed: May 12, 1993
Omnibus Vote: Yeas 7 Nays 0
Recorded: May 13, 1993
Published: May 13, 1993
Attest:
• Atg_ce-4-", .
Dolonna Mecum, City Clerk
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