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 for 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 Circular. Federal agencies may apply the provisions
of this Circular to commercial organizations, foreign governments,
organizations under the jurisdiction of foreign governments,
and international organizations.
4. Definitions. Definitions of key terms used in this Circular
are contained in Section ____.2 in the Attachment.
5. Required Action. 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. OMB Responsibilities. 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. Information 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 will have a policy
review three years from date of issuance.
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 encouraged.
Leon E. Panetta,
Director.
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.
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.
Reports and Records
____.50 Purpose of reports 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.
Subpart D-After-the-Award Requirements
____.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 funds
for: (1) Goods and other tangible property received; (2) services
performed by employees, contractors, subrecipients, and other
payees; and, (3) other amounts becoming owed under programs
for which no current services or performance is required.
(b) Accrued income means the sum of: (1) Earnings during
a given period from (i) services performed by the recipient,
and (ii) goods and other tangible property delivered to purchasers,
and (2) amounts becoming owed to the recipient 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, which 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.
(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.
(l) Equipment 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.
(s) Intangible 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 employees, contractors, subrecipients and other
payees and 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.
(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 objectives of the award during the project
period.
(z) Project 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) Real property means land, including land improvements,
structures and appurtenances thereto, but excludes movable machinery
and equipment.
(cc) Recipient 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) Research 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) Small awards means a grant or cooperative agreement
not exceeding the small purchase threshold fixed at 41 U.S.C.
403(11) (currently $25,000).
(ff) Subaward 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 definition of ``award'' in paragraph __(e).
(gg) Subrecipient 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.
(ll) Unliquidated 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.
(mm) Unobligated 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) Unrecovered indirect cost means the difference between
the amount awarded and the amount which could have been awarded
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-Pre-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.
____.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.
____.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 history of 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 to: 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 corrective 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,
State 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.
____.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 standards for 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 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.''
____.22 Payment.
(a) Payment methods shall minimize the time elapsing between
the transfer of funds from the United States Treasury and the
issuance or redemption of checks, warrants, or payment by other
means by the recipients. Payment methods of State agencies or
instrumentalities shall be consistent with Treasury-State CMIA
agreements or default procedures codified at 31 CFR part 205.
(b) Recipients are to be paid in advance, provided 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 established 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 payment mechanisms include, but are not limited
to, Treasury check and electronic funds transfer.
(2) Advance payment mechanisms are subject to 31 CFR part
205.
(3) Recipients shall be authorized to submit a requests for
advances and reimbursements at least monthly when electronic
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 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 a 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.
(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 and 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.
(l) 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 Services, Payment Management System, Rockville,
MD 20852. Interest amounts up to $250 per year may be retained
by the recipient for administrative expense. State universities
and hospitals shall comply with CMIA, as it pertains to 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 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.
(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.
(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.
____.24 Program income.
(a) Federal awarding agencies shall apply the standards set
forth in this section in requiring recipient organizations to
account for program income related to projects financed 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 project
or 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 is 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.
(g) Proceeds from the sale of property shall be handled in
accordance with the requirements of the Property Standards (See
Sections ____.30 through ____.37).
(h) Unless Federal awarding agency regulations or the terms
and condition of the award provide otherwise, recipients shall
have no obligation to the Federal Government with respect to
program income earned from license fees and royalties for copyrighted
material, patents, patent applications, trademarks, and inventions
produced under an award. However, Patent and Trademark Amendments
(35 U.S.C. 18) apply to inventions made under an experimental,
developmental, or research award.
____.25 Revision of budget and program plans.
(a) The budget plan is the financial expression of the project
or program as approved during the award process. It may include
either the Federal and non-Federal share, or only the Federal
share, depending upon Federal awarding agency requirements.
It shall be related to performance for program evaluation purposes
whenever appropriate.
(b) Recipients are required to report deviations from budget
and program plans, and request prior approvals for budget and
program plan revisions, in accordance with this section.
(c) For nonconstruction awards, recipients shall request
prior approvals from Federal awarding agencies for one or more
of the following program or budget related reasons.
(1) Change in the scope or the objective of the project or
program (even if there is no associated budget revision requiring
prior written approval).
(2) Change in a key person specified in the application or
award document.
(3) The absence for more than three months, or a 25 percent
reduction in time devoted to the project, by the approved project
director or principal investigator.
(4) The need for additional Federal funding.
(5) The transfer of amounts budgeted for indirect costs to
absorb increases in direct costs, or vice versa, if approval
is required by the Federal awarding agency.
(6) The inclusion, unless waived by the Federal awarding
agency, of costs that require prior approval in accordance with
OMB Circular A-21, ``Cost Principles for Institutions of Higher
Education,'' OMB Circular A-122, ``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.
(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 $100,000 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 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.
(l) 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 or the prime 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 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.
(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 agency or its successor
Federal awarding agency. The Federal awarding 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.
____.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 U.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.
(a) Title to equipment acquired by a recipient with Federal
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 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
for 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 if authorized
by the Federal awarding agency. User charges shall be treated
as 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.
(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 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 the Federal awarding
agency. The Federal awarding agency shall determine whether
the equipment can be used to meet the agency's requirements.
If no requirement exists within that agency, the availability
of the equipment shall be reported to the General Services Administration
by the Federal awarding agency to determine whether a requirement
for the equipment 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 an 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 existing statutes. Such transfer shall be subject
to the following standards.
(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 regulations
issued by the Department of Commerce at 37 CFR part 401, ``Rights
to Inventions Made by Nonprofit Organizations and Small Business
Firms Under Government Grants, Contracts and Cooperative Agreements.''
(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.
(2) Authorize others to receive, reproduce, publish, or otherwise
use such data for Federal purposes.
(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 for the originally-authorized
purpose, and the recipient shall not 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 ____.48 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 an effective
manner and in compliance with the provisions of applicable Federal
statutes and executive orders. No additional procurement standards
or requirements shall be imposed by the Federal 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
responsibilities arising under its contract(s). The recipient
is the responsible authority, without recourse to the Federal
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 conduct. The recipient shall maintain written
standards of conduct governing the performance of its employees
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 family, 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.
(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.
(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.
(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
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 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.
(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 be required at the completion
of the project when the SF-270 is 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
reporting due dates may be approved by the Federal awarding
agency upon request of the recipient.
(2) SF-272, Report of Federal 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.
(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.
(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 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.
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.
(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.
____.71 Closeout procedures.
(a) Recipients shall submit, within 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.
(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.''
Appendix A-Contract Provisions
All contracts, awarded by a recipient including small purchases,
shall contain the following provisions as applicable:
1. Equal Employment Opportunity-All contracts shall contain
a provision requiring compliance with E.O. 11246, ``Equal Employment
Opportunity,'' as amended by E.O. 11375, ``Amending Executive
Order 11246 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-Kickback'' Act (18 U.S.C. 874 and 40 U.S.C.
276c)-All contracts and subgrants in excess of $2,000 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 Act, 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 $2,000
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 a week. The recipient shall
place a copy of the current prevailing wage determination issued
by the Department of Labor in each solicitation and the award
of a contract shall be conditioned upon the acceptance of the
wage determination. The recipient shall report all suspected
or reported violations to the Federal awarding agency.
4. Contract Work Hours and Safety Standards Act (40 U.S.C.
327-333)-Where applicable, all contracts awarded by recipients
in excess of $2,000 for construction contracts and in excess
of $2,500 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. Rights to Inventions Made 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 U.S.C. 7401 et seq.) and the Federal
Water Pollution Control Act (33 U.S.C. 1251 et seq.), as amended-
Contracts and subgrants of amounts in excess of $100,000 shall
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. Byrd Anti-Lobbying Amendment (31 U.S.C. 1352)-Contractors
who apply or bid for an award of $100,000 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.
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.
[FR Doc. 93-29077 Filed 11-26-93; 8:45 am]