[Federal Register Volume 63, Number 172 (Friday, September 4, 1998)]
[Rules and Regulations]
[Pages 47155-47172]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-22725]
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DEPARTMENT OF COMMERCE
15 CFR Part 14
[Docket No. 980422101-8101-01]
RIN 0605-AA09
Uniform Administrative Requirements for Grants and Agreements
With Institutions of Higher Education, Hospitals, Other Non-Profit, and
Commercial Organizations
AGENCY: Department of Commerce (DoC).
ACTION: Interim Final Rule.
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SUMMARY: This interim final rule implements the revisions to the Office
of Management and Budget (OMB) Circular A-110, ``Uniform Administrative
Requirements for Grants and Agreements With Institutions of Higher
Education, Hospitals, and Other Non-Profit Organizations'' which was
published in the Federal Register on November 29, 1993. The revised
Circular was developed by an interagency task force for governmentwide
use in a model rule format to facilitate regulatory adoption by
executive departments and agencies. In the published revised Circular,
OMB specified as ``required action'' that Federal agencies responsible
for awarding and administering grants and other agreements to
recipients described therein, shall adopt the language of the Circular
unless other provisions are required by Federal statute or exceptions
or deviations are approved by OMB. This interim final rule adopts the
provisions of the Circular and its language to the maximum extent
feasible. However, minor changes were made to update the procedures,
clarify the language, and make the language apply specifically to the
DoC and its operating units. No changes are intended to deviate from
the substance of Circular A-110. The Circular covers both grants and
cooperative agreements made by Federal agencies and subawards, unless
sections of the Circular specifically exclude subrecipients from
coverage. Consistent with guidance provided in the Circular, DoC will
apply its provisions to grants and agreements with institutions of
higher education, hospitals, other nonprofit, and commercial
organizations. The provisions of the interim final rule will also apply
to foreign governments, organizations under the jurisdiction of foreign
governments, and international organizations when appropriate.
DATES: This regulation is effective October 1, 1998. Written and signed
comments must be received on or before November 3, 1998.
ADDRESSES: Interested persons should submit written and signed comments
to Docket No. 980422101-8101-01, U.S. Department of Commerce, Office of
Executive Assistance Management, Room 6020, 14th and Constitution
Avenue, Washington, D.C. 20230.
FOR FURTHER INFORMATION CONTACT: John J. Phelan, III, Director, Office
of Executive Assistance Management, Telephone Number 202-482-4115.
SUPPLEMENTARY INFORMATION: This interim final rule incorporates and
reflects the provisions of the OMB issuance of the revised OMB Circular
A-110, published at 58 FR 62992, to be codified at 15 CFR part 14 of
the DoC regulatory requirements for financial assistance awards. OMB
Circular A-110 was originally issued by OMB in 1976, and except for a
minor revision in 1987 it remained unchanged until this revision was
issued. The standards it contained were structured into 15 attachments
lettered A through O. An interagency task force also reviewed the
circular in 1987 and recommended that it be combined with OMB Circular
A-102, ``Uniform Requirements for Grants and Agreements with State and
Local Governments,'' as a consolidated ``common rule.'' In November
1988, a proposed consolidated ``common rule'' was published in the
Federal Register (53 FR 44716) but, due to adverse concerns by some
university groups and Federal agencies, it was not finalized and issued
by OMB. In November 1990, another interagency task force was convened
to review Circular A-110 and a revision in a ``common rule'' format was
proposed and developed. This revision was published for comment in the
Federal Register (57 FR 39018) in August 1992 and over 200 comments
were received by OMB from many sources. All comments were considered in
developing the final revision of Circular A-110 which was issued for
governmentwide use in the Federal Register on November 29, 1993.
Consequently, this rule is published as an interim final rule because
of the previous request for comment process used in the development of
the Circular, the large number of comments already received and
considered by OMB and the Federal agencies, and the limited flexibility
to revise the requirements prescribed by OMB. This interim final rule
contains the following updates to procedures and clarifying language:
Foreign governments, organizations under the jurisdiction
of foreign governments, and international
[[Page 47156]]
organizations will be covered by this interim final rule.
Taxpayer identification numbers will be required of
applicants in accordance with the provisions of the Debt Collection
Improvement Act of 1996.
Federal payments to recipients shall be made by electronic
funds transfer in accordance with the Debt Collection Improvement Act
of 1996, unless waived in accordance with the provisions of the Act.
The recipient may not transfer funds among direct cost
categories or programs, functions and activities for construction or
nonconstruction awards in which the cumulative amount of such transfers
exceeds or is expected to exceed 10 percent of the total budget as last
approved by the Grants Officer. This restriction applies to all awards,
regardless of the amount of Federal funding, and it does not prohibit
the recipient from requesting Grants Officer approval for revisions to
the budget.
Recipients and subrecipients that are institutions of
higher education or other non-profit organizations (including
hospitals) shall be subject to the requirements contained in the Single
Audit Act Amendments of 1996 and OMB Circular A-133. Subrecipients that
are state and local governments shall also be subject to the
requirements contained in the Single Audit Act Amendments of 1996 and
OMB Circular A-133. Commercial organizations, foreign governments,
organizations under the jurisdiction of foreign governments, and
international organizations shall be subject to the audit requirements
as stipulated in the award document.
If there is a residual inventory of supplies exceeding
$5000 in total aggregate value upon termination or completion of a
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-Federally sponsored activities or sell them,
but shall, in either case, compensate the Federal Government for its
cost share. This encompasses a residual inventory of both used and
unused supplies exceeding $5000 in total aggregate value.
The small purchase threshold (previously $25,000) fixed at
41 U.S.C. 403 (11) reflects the simplified acquisition threshold
(currently $100,000) established at 41 U.S.C. 4031 (11) by the Federal
Acquisition Streamlining Act of 1994.
For purposes of this interim final rule, ``DoC'' is a term
referring to the Department of Commerce collectively. For purposes of
decision making or actions affecting outside entities, ``DoC'' is also
an eclectic term which refers to the organizational entity exercising
authority in the specific subject matter under discussion. Within the
language of the rule, when the Economic Development Administration
(EDA) enters into awards under which it is contemplated that the
recipient will dispose of real property improved with Federal funds,
EDA may impose conditions for its approval of such disposition.
Executive Orders 12866 and 12875
This interim final rule has been determined to be ``significant''
for purposes of Executive Order 12866, ``Regulatory Planning and
Review.'' In addition, it has been determined that, consistent with the
requirements of Executive Order 12875, ``Enhancing Intergovernmental
Partnership,'' this interim final rule will not impose any unfunded
mandates upon State, local, and tribal governments.
Administrative Procedure Act and Regulatory Flexibility Act
Because notice and comment is not required under 5 U.S.C. 553, or
any other law, for this rule relating to public property, loans, grants
benefits or contracts (5 U.S.C. 553(a)), a Regulatory Flexibility
Analysis is not required and has not been prepared for this interim
final rule. As stated above, this rule is based on the revised OMB
Circular A-110 that was developed by an interagency task force and
received extensive public comment. The revised Circular specifies that
Federal agencies responsible for awarding and administering grants and
other agreements to recipients described therein, shall adopt the
language in the Circular unless different provisions are required by
Federal statute or are approved by OMB. This interim final rule
essentially adopts the provisions of the Circular word-for-word to the
maximum extent feasible.
Executive Order 12612 (Federalism Assessment)
This action has been reviewed in accordance with the principles and
criteria contained in Executive Order 12612. The rule primarily applies
to organizations other than State and local governments, but for some
programs State or local governments are required to pass on these
requirements to subrecipients covered by this rule. The rule was
drafted to be as consistent as possible with requirements imposed on
State and local governments. Accordingly, it has been determined that
this proposal does not have sufficient Federalism implications to
warrant a full Federalism Assessment under the principles and criteria
contained in Executive Order 12612.
Paperwork Reduction Act
These regulatory actions do not impose any new reporting or
recordkeeping requirements under the Paperwork Reduction Act. Reporting
and recordkeeping requirements in 15 CFR Part 14 are those required by
OMB Circular A-110 and have already been cleared by OMB.
Catalog of Federal Domestic Assistance
This rule affects all of the grant and cooperative agreement
programs with institutions of higher education, hospitals, other non-
profit, and commercial organizations administered by DoC.
List of Subjects in 15 CFR Part 14
Accounting, Administrative practice and procedure, Colleges and
universities, Grants administration, Grant programs--economic
development, Grant programs--oceans and atmosphere, Grant programs--
minority businesses, Grant programs--travel and tourism, Grant
programs--technology, Grant programs--telecommunications, Grant
programs--international, Hospitals, Nonprofit organizations, Reporting
and recordkeeping requirements.
Issued this 19th day of August, 1998, at Washington, D.C.
John J. Phelan,
Director for Executive Assistance Management.
Accordingly, 15 CFR subtitle A is amended by adding part 14 to read
as follows:
PART 14--UNIFORM ADMINISTRATIVE REQUIREMENTS FOR GRANTS AND
AGREEMENTS WITH INSTITUTIONS OF HIGHER EDUCATION, HOSPITALS, OTHER
NON-PROFIT, AND COMMERCIAL ORGANIZATIONS
Subpart A--General
Sec.
14.1 Purpose.
14.2 Definitions.
14.3 Effect on other issuances.
14.4 Deviations.
14.5 Subawards.
Subpart B--Pre-Award Requirements
14.10 Purpose.
14.11 Pre-award policies.
14.12 Forms for applying for Federal assistance.
14.13 Debarment and suspension.
14.14 High risk special award conditions.
14.15 Metric system of measurement.
[[Page 47157]]
14.16 Resource Conservation and Recovery Act (RCRA).
14.17 Certifications and representations.
14.18 Taxpayer identification number.
Subpart C--Post-Award Requirements
Financial and Program Management
14.20 Purpose of financial and program management.
14.21 Standards for financial management systems.
14.22 Payment.
14.23 Cost sharing or matching.
14.24 Program income.
14.25 Revision of budget and program plans.
14.26 Non-Federal audits.
14.27 Allowable costs.
14.28 Period of availability of funds.
Property Standards
14.30 Purpose of property standards.
14.31 Insurance coverage.
14.32 Real property.
14.33 Federally-owned and exempt property.
14.34 Equipment.
14.35 Supplies and other expendable property.
14.36 Intangible property.
14.37 Property trust relationship.
Procurement Standards
14.40 Purpose of procurement standards.
14.41 Recipient responsibilities.
14.42 Codes of conduct.
14.43 Competition.
14.44 Procurement procedures.
14.45 Cost and price analysis.
14.46 Procurement records.
14.47 Contract administration.
14.48 Contract provisions.
Reports and Records
14.50 Purpose of reports and records.
14.51 Monitoring and reporting program performance.
14.52 Financial reporting.
14.53 Retention and access requirements for records.
Termination and Enforcement
14.60 Purpose of termination and enforcement.
14.61 Termination.
14.62 Enforcement.
Subpart D--After-the-Award Requirements
14.70 Purpose.
14.71 Closeout procedures.
14.72 Subsequent adjustments and continuing responsibilities.
14.73 Collection of amounts due.
Appendix A to Part 14--Contract Provisions
Authority: 5 U.S.C. 301.
Subpart A--General
Sec. 14.1 Purpose.
This Part establishes uniform administrative requirements for
Department of Commerce (DoC) grants and agreements awarded to
institutions of higher education, hospitals, other non-profit, and
commercial organizations. The Grants Officer shall incorporate this
Part by reference into financial assistance awards made to
organizations to which it will be applied. The DoC shall not impose
additional or inconsistent requirements, except as provided in
Secs. 14.4, and 14.14 or unless specifically required by Federal
statute or executive order. This part applies to grants and agreements
awarded to foreign governments, organizations under the jurisdiction of
foreign governments, and international organizations unless otherwise
determined by the Grants Officer after coordination with the
appropriate program officials. Uniform requirements for State, local,
and tribal governments are in 15 CFR Part 24, Uniform Administrative
Requirements for Grants and Cooperative Agreements to State and Local
Governments. Non-profit organizations that implement Federal programs
for the States are also subject to State requirements.
Sec. 14.2 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 services performed by the
recipient, and 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 electronic funds transfer,
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) Assistant Secretary means the DoC Chief Financial Officer and
Assistant Secretary for Administration who has been delegated by the
Secretary of Commerce the responsibility for developing and
implementing policies, standards, and procedures for the administration
of financial assistance programs of the DoC.
(f) 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.
(g) Cash contributions means the recipient's cash outlay, including
the outlay of money contributed to the recipient by third parties.
(h) Closeout means the process by which the Grants Officer
determines that all applicable administrative actions and all required
work of the award have been completed by the recipient and the DoC.
(i) Contract means a procurement contract under an award or
subaward, and a procurement subcontract under a recipient's or
subrecipient's contract.
(j) Cost sharing or matching means that portion of project or
program costs not borne by the Federal Government.
(k) 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.
(l) Disallowed costs means those charges to an award that the
Grants Officer determines to be unallowable, in accordance with the
applicable Federal cost principles or other terms and conditions
contained in the award.
(m) DoC operating unit means an organizational unit of the
Department that has the authority to fund financial assistance awards.
(n) 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.
(o) Excess property means property under the control of the DoC
that, as determined by the Grants Officer after
[[Page 47158]]
coordination with the authorized property official, is no longer
required for DoC needs or the discharge of its responsibilities.
(p) Exempt property means tangible personal property acquired in
whole or in part with Federal funds, where the DoC 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.
(q) Federal awarding agency means the Federal agency that provides
an award to the recipient.
(r) 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.
(s) 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.
(t) Funding period means the period of time when Federal funding is
available for obligation by the recipient.
(u) Grants Officer means the DoC official with the delegated
authority to award, amend, administer, closeout, suspend, and/or
terminate grants and cooperative agreements and make related
determinations and findings.
(v) 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.
(w) 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.
(x) 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.
(y) 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.
(z) Prior approval means written approval by an authorized official
evidencing prior consent.
(aa) 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 Sec. 14.24 (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 DoC 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.
(bb) 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.
(cc) Project period means the period established in the award
document during which Federal sponsorship begins and ends.
(dd) Property means, unless otherwise stated, real property,
equipment, intangible property and debt instruments.
(ee) Real property means land, including land improvements,
structures and appurtenances thereto, but excludes movable machinery
and equipment.
(ff) Recipient means an organization receiving financial assistance
directly from the DoC 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 DoC. 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.
(gg) Research and development means all research activities, both
basic and applied, and all development activities that are supported at
universities, colleges, other non-profit, and commercial 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.
(hh) Small awards means a grant or cooperative agreement not
exceeding the small purchase threshold fixed at 41 U.S.C. 403(11)
(currently $100,000).
(ii) 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 (f) of this section.
(jj) Subrecipient means the legal entity to which a subaward is
made and which
[[Page 47159]]
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 DoC.
(kk) 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.''
(ll) Suspension means an action taken by the Grants Officer after
coordination with the DoC operating unit that temporarily withdraws
Federal sponsorship under an award, pending corrective action by the
recipient or pending a decision to terminate the award by the Grants
Officer. Suspension of an award is a separate action from suspension
under DoC regulations at 15 CFR Part 26 implementing E.O.s 12549 and
12689, ``Debarment and Suspension.''
(mm) Termination means the cancellation by the Grants Officer of
Federal sponsorship, in whole or in part, under an agreement at any
time prior to the date of completion.
(nn) 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.
(oo) 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.
(pp) Unobligated balance means the portion of the funds authorized
by the DoC that has not been obligated by the recipient and is
determined by deducting the cumulative obligations from the cumulative
funds authorized.
(qq) 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.
(rr) Working capital advance means a procedure whereby funds are
advanced to the recipient to cover its estimated disbursement needs for
a given initial period.
Sec. 14.3 Effect on other issuances.
For awards subject to this part, all administrative requirements of
codified program regulations, program manuals, handbooks and other
nonregulatory materials which are inconsistent with the requirements of
this part shall be superseded, except to the extent they are required
by statute, or authorized in accordance with the deviations provision
in Sec. 14.4.
Sec. 14.4 Deviations.
The Office of Management and Budget (OMB) may grant exceptions for
classes of grants or recipients subject to the requirements of this
part when exceptions are not prohibited by statute. However, in the
interest of maximum uniformity, exceptions from the requirements of
this part shall be permitted only in unusual circumstances. The
Assistant Secretary may apply more restrictive requirements to a class
of recipients when approved by OMB. The Assistant Secretary 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 the Assistant Secretary. An exception made on
a case-by-case basis will apply to a single award.
Sec. 14.5 Subawards.
Unless sections of this part specifically exclude subrecipients
from coverage, the provisions of this part shall be applied to
subrecipients performing work under awards if such subrecipients are
institutions of higher education, hospitals, other non-profit, or
commercial organizations. This part also applies to subrecipients
performing work under awards if the subrecipients are foreign
governments, organizations under the jurisdiction of foreign
governments, and international organizations unless otherwise
determined by the Grants Officer. 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,'' (15 CFR Part 24).
Sec. 14.6 Availability of OMB circulars.
OMB circulars cited in this part are available from the Office of
Management and Budget (OMB) by writing to the Executive Office of the
President, Publications Service, 725 17th Street, NW, Suite 200,
Washington DC 20503.
Subpart B--Pre-Award Requirements
Sec. 14.10 Purpose.
Sections 14.11 through 14.18 prescribe forms and instructions and
other pre-award matters to be used in applying for Federal awards.
Sec. 14.11 Pre-award policies.
(a) Use of grants and cooperative agreements, and contracts. In
each instance, the Grants Officer after coordination with the DoC
operating unit 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. The DoC operating units
shall notify the public of their intended funding priorities for
discretionary grant programs, unless funding priorities are established
by Federal statute. At a minimum, public notices shall be published in
the Federal Register.
Sec. 14.12 Forms for applying for Federal assistance.
(a) The DoC operating units 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 DoC
operating units 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 DoC.
(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).
[[Page 47160]]
The name and address of the SPOC for a particular State can be obtained
from the DoC 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) DoC operating units that do not use the SF-424 form should
indicate whether the application is subject to review by the State
under E.O. 12372.
Sec. 14.13 Debarment and suspension.
The DoC and recipients shall comply with the nonprocurement
debarment and suspension common rule implementing E.O.s 12549 and
12689, ``Debarment and Suspension,'' which is implemented by DoC at 15
CFR Part 26. 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.
Sec. 14.14 High risk special award conditions.
If an applicant or recipient: has a history of poor performance, is
not financially stable, has a management system that does not meet the
standards prescribed in this part, has not conformed to the terms and
conditions of a previous award, or is not otherwise responsible, the
Grants Officer 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.
Sec. 14.15 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. The DoC shall follow the provisions of E.O. 12770,
``Metric Usage in Federal Government Programs.''
Sec. 14.16 Resource Conservation and Recovery Act (RCRA).
Under RCRA (Pub. L. 94-580, 42 U.S.C. 6962), 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, non-profit, and commercial 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.
Sec. 14.17 Certifications and representations.
Unless prohibited by statute or codified regulation, Grants
Officers may 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. When authorized, annual certifications
and representations shall be signed by responsible officials with the
authority to ensure recipients' compliance with the pertinent
requirements.
Sec. 14.18 Taxpayer identification number.
In accordance with the provisions of the Debt Collection
Improvement Act of 1996 (31 U.S.C. 7701), the taxpayer identifying
number will be required from applicants for grants and cooperative
agreements funded by the DoC. This number may be used for purposes of
collecting and reporting on any delinquent amounts arising from awards
made under this part.
Subpart C--Post-Award Requirements
Financial and Program Management
Sec. 14.20 Purpose of financial and program management.
Sections 14.21 through 14.28 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, conducting audits,
determining allowability of cost, and establishing fund availability.
Sec. 14.21 Standards for financial management systems.
(a) The Grants Officer 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 Sec. 14.52. If the Grants
Officer 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.
[[Page 47161]]
(7) Accounting records including cost accounting records that are
supported by source documentation.
(c) Where the DoC guarantees or insures the repayment of money
borrowed by the recipient, the Grants Officer 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 Grants Officer 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.''
Sec. 14.22 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. Federal payments to recipients
shall be made by electronic funds transfer in accordance with the Debt
Collection Improvement Act of 1996, unless waived in accordance with
the provisions of this Act.
(b) Recipients are to be paid in advance, provided they maintain or
demonstrate the willingness to maintain: written procedures that
minimize the time elapsing between the transfer of funds and
disbursement by the recipient, and financial management systems that
meet the standards for fund control and accountability as established
in Sec. 14.21. Advances of funds 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 advances of funds 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 may be consolidated to cover
anticipated cash needs for all awards made by the DoC operating unit to
the recipient.
(1) Advance payment mechanisms include, but are not limited to,
electronic funds transfer and Treasury check when the electronic funds
transfer requirement is waived.
(2) Advance payment mechanisms are subject to 31 CFR part 205.
(3) Recipients may submit requests for advances and reimbursements
on a monthly basis.
(d) Requests for 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 advance payments
are made to the recipient automatically through the use of a
predetermined payment schedule or if precluded by special DoC
instructions for electronic funds transfer.
(e) Reimbursement is the preferred method when the requirements in
paragraph (b) of this section cannot be met. The Grants Officer 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 DoC shall make
payment within 30 days after receipt of the billing, unless the billing
is improper.
(2) Recipients are authorized to submit request for reimbursement
at least monthly when electronic funds transfers are not used.
(f) If a recipient cannot meet the criteria for advance payments
and the Grants Officer after coordination with the operating unit has
determined that reimbursement is not feasible because the recipient
lacks sufficient working capital, the Grants Officer may authorize
payment on a working capital advance basis. Under this procedure, the
Grants Officer shall provide for advancing funds to the recipient to
cover its estimated disbursement needs for an initial period generally
geared to the awardee's disbursing cycle. Thereafter, payments shall be
provided by reimbursing 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 payments.
(h) Unless otherwise required by statute, Grants Officers shall not
withhold payments for proper charges made by recipients at any time
during the project period unless paragraph (h) (1) or (2) of this
section 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 Grants Officer 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) of this
section, the DoC 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 paragraph (k) (1), (2) or (3) of this section
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
[[Page 47162]]
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 Grants Officer, it waives its right to recover the interest
under CMIA.
(m) Except as noted elsewhere in this part, only the following
forms shall be authorized for the recipients in requesting advances and
reimbursements. Grants Officers shall not require more than an original
and two copies of these forms.
(1) SF-270, Request for Advance or Reimbursement. DoC has adopted
the SF-270 as a standard form for all nonconstruction programs when
predetermined advance methods are not used. The Grants Officer,
however, may waive the requirement to use the SF-270 for requesting
funds under grants and cooperative agreements. Grants Officers 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. DoC has adopted the SF-271 as the standard form
to be used for requesting reimbursement for construction programs.
However, the Grants Officer may substitute the SF-270 when the Grants
Officer determines that the SF-270 provides adequate information to
meet Federal needs.
Sec. 14.23 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.
(7) Conform to other provisions of this part, as applicable.
(b) Unrecovered indirect costs may be included as part of cost
sharing or matching only with the prior approval of the Grants Officer.
(c) Values for recipient contributions of services and property
shall be established in accordance with the applicable cost principles.
If DoC 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 paragraph (c) (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 Grants Officer 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
paragraph (g) (1) or (2) of this section applies.
(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 Grants
Officer 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.
Sec. 14.24 Program income.
(a) The standards set forth in this section shall apply in
requiring recipient organizations to account for program income related
to projects financed in whole or in part with Federal funds.
[[Page 47163]]
(b) Except as provided in paragraph (h) of this section, program
income earned during the project period shall be retained by the
recipient and, in accordance with DoC 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 DoC and
recipient and used to further eligible project objectives.
(2) Used to finance the non-Federal share of the project.
(3) Deducted from the total project 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 paragraph (b)(1) or (b)(2) of this section, program income
in excess of any limits stipulated shall be used in accordance with
paragraph (b)(3) of this section.
(d) In the event that the DoC does not specify in its regulations
or the terms and conditions of the award how program income is to be
used, paragraph (b)(1) of this section shall apply automatically to all
projects or programs.
(e) Unless DoC 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) 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
Secs. 14.30 through 14.37).
(h) Unless DoC regulations or the terms and conditions 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.
Sec. 14.25 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 DoC 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 the Grants Officer for one or more of the following
program or budget related reasons. Approvals will be provided in
writing by the Grants Officer.
(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 DoC.
(6) The inclusion, unless waived by the DoC, of costs that require
prior approval in accordance with OMB Circular A-21, ``Cost Principles
for Educational Institutions,'' OMB Circular A-122, ``Cost Principles
for Non-Profit Organizations,'' 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) For nonconstruction awards, 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, the Grants Officer may waive cost-related and
administrative prior written approvals required by this part 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 Grants Officer
after coordination with the DoC operating unit. All pre-award costs are
incurred at the recipient's risk (i.e., the DoC 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 Grants
Officer 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 DoC provides
otherwise in the award or in the DoC regulations, the prior approval
requirements described in paragraph (e) of this section are
automatically waived (i.e., recipients need not obtain such prior
approvals) unless one of the conditions included in paragraph (e)(2) of
this section applies.
(f) The recipient may not transfer funds among direct cost
categories or programs, functions and activities for construction or
nonconstruction awards in which the cumulative amount of such transfers
exceeds or is expected to exceed 10 percent of the total budget as last
approved by the Grants Officer. This does not prohibit the recipient
from requesting Grants Officer approval for revisions to the budget. No
transfers are permitted 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) of this section, do not require
prior approval.
(h) For construction awards, recipients shall request prior written
approval promptly from the Grants Officer for budget revisions whenever
paragraph (h) (1), (2) or (3) apply.
[[Page 47164]]
Approvals will be provided in writing by the Grants Officer.
(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 Sec. 14.27.
(i) For construction awards, no other prior approval requirements
for specific items may be imposed unless a deviation has been approved
by OMB.
(j) When the DoC makes an award that provides support for both
construction and nonconstruction work, the Grants Officer may require
the recipient to request prior approval from the Grants Officer before
making any fund or budget transfers between the two types of work
supported. Approvals will be provided in writing by the Grants Officer.
(k) For both construction and nonconstruction awards, the DoC shall
require recipients to notify the Grants Officer 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
Grants Officer indicates a letter of request suffices.
(m) Within 30 calendar days from the date of receipt of the request
for budget revisions, DoC shall review the request and the Grants
Officer shall notify the recipient in writing whether the budget
revisions have been approved. If the revision is still under
consideration at the end of 30 calendar days, the Grants Officer shall
inform the recipient in writing of the date when the recipient may
expect the decision.
Sec. 14.26 Non-Federal audits.
(a) Recipients and subrecipients that are institutions of higher
education or other non-profit organizations (including hospitals) shall
be subject to the audit requirements contained in the Single Audit Act
Amendments of 1996 (31 U.S.C. 7501-7507) and revised OMB Circular A-
133, ``Audits of States, Local Governments, and Non-Profit
Organizations.''
(b) State and local governments shall be subject to the audit
requirements contained in the Single Audit Act Amendments of 1996 (31
U.S.C. 7501-7507) and revised OMB Circular A-133, ``Audits of States,
Local Governments, and Non-Profit Organizations.''
(c) For-profit hospitals not covered by the audit provisions of
revised OMB Circular A-133 shall be subject to the audit requirements
as stipulated in the award document.
(d) Commercial and other organizations not covered by paragraph
(a), (b), or (c) of this section shall be subject to the audit
requirements as stipulated in the award document or the prime recipient
as stipulated in the sub-award document.
Sec. 14.27 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, Local and Indian Tribal 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.
Sec. 14.28 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 Grants
Officer.
Property Standards
Sec. 14.30 Purpose of property standards.
Sections 14.31 through 14.37 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. The DoC 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 Secs. 14.31 through 14.37.
Sec. 14.31 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.
Sec. 14.32 Real property.
The DoC award 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, provided
that, in lieu of title, with the approval of the Grants Officer, the
recipient may hold a leasehold or other interest in the property
appropriate to the project purpose. The recipient shall not dispose of
or encumber the property or any interest therein without approval of
the Grants Officer.
(b) The recipient shall obtain written approval by the Grants
Officer 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 DoC.
(c) When the real property is no longer needed as provided in
paragraphs (a) and (b) of this section, the recipient shall request
disposition instructions from the DoC or its successor Federal awarding
agency. The responsible Federal 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
[[Page 47165]]
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 Grants Officer 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.
Sec. 14.33 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 DoC operating unit. Upon completion of the award or when
the property is no longer needed, the recipient shall report the
property to the DoC operating unit for further Federal agency
utilization.
(2) If the DoC operating unit has no further need for the property,
it shall be declared excess and reported to the General Services
Administration, unless the DoC 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 Grants Officer.
(b) Exempt property. When statutory authority exists, the DoC 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 DoC considers appropriate. Such property is
``exempt property.'' Should the DoC not establish conditions, title to
exempt property upon acquisition shall vest in the recipient without
further obligation to the Federal Government.
Sec. 14.34 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 DoC. 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:
(1) Activities sponsored by the DoC operating unit which funded the
original project;
(2) Activities sponsored by other DoC operating units; then
(3) 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 DoC
operating unit that financed the equipment; second preference shall be
given to projects or programs sponsored by other DoC operating units,
and third 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 Grants
Officer after coordination with the DoC operating unit. 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 Grants Officer after coordination with the DoC
operating unit.
(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 DoC 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 Grants Officer.
(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
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accordance with the following standards. Equipment with a current per-
unit fair market value of less than $5000 may be retained, sold, or
otherwise disposed of with no further obligation to the awarding
agency. 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 DoC operating unit 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 Grants Officer. The Grants Officer
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 Grants Officer to determine whether a requirement
for the equipment exists in other Federal agencies. The Grants Officer
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 DoC 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 DoC for such costs
incurred in its disposition.
(h) The DoC reserves 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:
(1) The equipment shall be appropriately identified in the award or
otherwise made known to the recipient in writing.
(2) The Grants Officer 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 Grants Officer fails to issue written
disposition instructions within the 120 calendar day period, the
recipient shall apply the standards of this section, as appropriate.
(3) When the DoC exercises its right to take title, the equipment
shall be subject to the provisions for federally-owned equipment.
Sec. 14.35 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
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.
Sec. 14.36 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 DoC reserves 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 DoC 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 DoC, the Federal Government has the right
to:
(1) Obtain, reproduce, publish or otherwise use the data first
produced under an award; and
(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
written approval from the Grants Officer. When no longer needed for the
originally authorized purpose, disposition of the intangible property
shall occur in accordance with the provisions of Sec. 14.34(g).
Sec. 14.37 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. The Grants
Officer 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
Sec. 14.40 Purpose of procurement standards.
Sections 14.41 through 14.48 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 DoC upon recipients, unless
specifically required by Federal statute or executive order or approved
by OMB.
Sec. 14.41 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 DoC, regarding the settlement and satisfaction of all
contractual and administrative issues arising out of procurements
entered into
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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.
Sec. 14.42 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.
Sec. 14.43 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.
Sec. 14.44 Procurement procedures.
(a) All recipients shall establish written procurement procedures.
These procedures shall provide for, at a minimum, that:
(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; and
(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 DoC'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,'' as implemented by DoC
regulations at 15 CFR Part 26.
(e) Recipients shall, on request, make available for the Grants
Officer, 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 this part.
(2) The procurement is expected to exceed the small purchase
threshold fixed at 41 U.S.C. 403 (11) (currently $100,000) 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
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increases the contract amount by more than the amount of the small
purchase threshold.
Sec. 14.45 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.
Sec. 14.46 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.
Sec. 14.47 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.
Sec. 14.48 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 DoC may
accept the bonding policy and requirements of the recipient, provided
the Grants Officer 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 in this
part, 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 DoC, 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 part, as applicable.
Reports and Records
Sec. 14.50 Purpose of reports and records.
Sections 14.51 through 14.53 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.
Sec. 14.51 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 Sec. 14.26.
(b) The Grants Officer after coordination with the DoC operating
unit shall prescribe the frequency with which the performance reports
shall be submitted. Except as provided in paragraph (f) of this
section, 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 Grants
Officer 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 DoC operating unit of
developments that have a significant impact on the award-supported
activities. Also,
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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) The DoC 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.
Sec. 14.52 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 DoC award shall require recipients to use the SF-269 or
SF-269A to report the status of funds for all nonconstruction projects
or programs. The DoC, however, has 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 DoC shall prescribe whether the report shall be on a cash
or accrual basis. If the DoC 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 DoC 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 DoC 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 Grants Officer
upon request of the recipient.
(2) SF-272, Report of Federal Cash Transactions.
(i) When funds are advanced to recipients the DoC shall require
each recipient to submit the SF-272 and, when necessary, its
continuation sheet, SF-272a. The DoC shall use this report to monitor
funds advanced to recipients and to obtain disbursement information for
each agreement with the recipients.
(ii) The DoC may require forecasts of Federal funds requirements in
the ``Remarks'' section of the report.
(iii) When practical and deemed necessary, the DoC may require
recipients to report in the ``Remarks'' section the amount of 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 Grants Officer may require a monthly report
from those recipients receiving advances totaling $1 million or more
per year.
(v) The Grants Officer may waive the requirement for submission of
the SF-272 for any one of the following reasons:
(A) When monthly advances do not exceed $25,000 per recipient,
provided that such advances are monitored through other forms contained
in this section;
(B) If, in the Grants Officer's opinion, the recipient's accounting
controls are adequate to minimize excessive Federal advances; or
(C) When the electronic payment mechanisms provide adequate data.
(b) When the DoC needs additional information or more frequent
reports, the following shall be observed:
(1) When additional information is needed to comply with
legislative requirements, the Grants Officer shall issue instructions
to require recipients to submit such information under the ``Remarks''
section of the reports.
(2) When the DoC determines that a recipient's accounting system
does not meet the standards in Sec. 14.21, 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 DoC, in obtaining this information, shall comply with
report clearance requirements of 5 CFR part 1320.
(3) Grants Officers are encouraged to shade out any line item on
any report if not necessary.
(4) The DoC may accept the identical information from the
recipients in machine readable format or computer printouts or
electronic outputs in lieu of prescribed formats.
(5) The DoC may provide computer or electronic outputs to
recipients when such expedites or contributes to the accuracy of
reporting.
Sec. 14.53 Retention and access requirements for records.
(a) This section sets forth requirements for record retention and
access to records for awards to recipients. The DoC 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 DoC. 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 DoC, the
3-year retention requirement is not applicable to the recipient.
(4) Indirect cost rate proposals, cost allocations plans, etc. as
specified in paragraph (g) of this section.
(c) Copies of original records may be substituted for the original
records if authorized by the DoC.
(d) The Grants Officer after coordination with the DoC operating
unit 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
DoC operating unit or Grants Officer may make arrangements for
recipients to retain any records that are continuously needed for joint
use.
(e) The DoC, 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
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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 DoC operating unit shall place
restrictions on recipients that limit public access to the records of
recipients that are pertinent to an award, except when the DoC
operating unit 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 DoC operating unit.
(g) Paragraphs (g)(1) and (g)(2) of this section 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 the recipient submits to the Federal awarding agency
responsible for negotiating the recipient's indirect cost rate 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 the recipient is not required to submit to the cognizant
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
Sec. 14.60 Purpose of termination and enforcement.
Sections 14.61 and 14.62 set forth uniform suspension, termination
and enforcement procedures.
Sec. 14.61 Termination.
(a) Awards may be terminated in whole or in part only if paragraph
(a)(1), (2) or (3) apply.
(1) By the Grants Officer, if a recipient materially fails to
comply with the terms and conditions of an award.
(2) By the Grants Officer 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 Grants Officer 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 Grants Officer 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 paragraph (a)(1) or
(2).
(b) If costs are allowed under an award, the responsibilities of
the recipient referred to in Sec. 14.71(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.
Sec. 14.62 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 Grants Officer may, in addition to imposing any of the
special conditions outlined in Sec. 14.14, take one or more of the
following actions, as appropriate in the circumstances:
(1) Temporarily withhold payments of funds pending correction of
the deficiency by the recipient or more severe enforcement action by
the Grants Officer after coordination with the DoC operating unit.
(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 paragraphs (c) (1) and (2) of this section
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 DoC
implementing regulations (see Sec. 14.13) at 15 CFR Part 26.
Subpart D--After-the-Award Requirements
Sec. 14.70 Purpose.
Sections 14.71 through 14.73 contain closeout procedures and other
procedures for subsequent disallowances and adjustments.
Sec. 14.71 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
Grants Officer may approve extensions when requested by the recipient.
(b) Unless the Grants Officer 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 Grants Officer shall authorize and the DoC 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
funds that the DoC 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
Grants
[[Page 47171]]
Officer 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 Secs. 14.31 through 14.37.
(g) In the event a final audit has not been performed prior to the
closeout of an award, the DoC shall retain the right to recover an
appropriate amount after fully considering the recommendations on
disallowed costs resulting from the final audit.
Sec. 14.72 Subsequent adjustments and continuing responsibilities.
(a) The closeout of an award does not affect any of the following:
(1) The right of the DoC 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 Sec. 14.26.
(4) Property management requirements in Secs. 14.31 through 14.37.
(5) Records retention as required in Sec. 14.53.
(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 DoC and the recipient, provided the responsibilities of the
recipient referred to in Sec. 14.73(a), including those for property
management as applicable, are considered and provisions made for
continuing responsibilities of the recipient, as appropriate.
Sec. 14.73 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
Grants Officer may reduce the debt by:
(1) Making an administrative offset against other requests for
reimbursements;
(2) Withholding advance payments otherwise due to the recipient; or
(3) Taking other action permitted by statute.
(b) Except as otherwise provided by law, the DoC shall charge
interest on an overdue debt in accordance with 4 CFR Chapter II,
``Federal Claims Collection Standards.''
Appendix A to Part 14--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 $2000 for
construction or repair awarded by recipients and subrecipients shall
include a provision for compliance with the Copeland ``Anti-
Kickback'' Act (18 U.S.C. 874), as supplemented by Department of
Labor regulations (29 CFR part 3, ``Contractors and Subcontractors
on Public Building or Public Work Financed in Whole or in Part by
Loans or Grants from the United States''). The Act provides that
each contractor or subrecipient shall be prohibited from inducing,
by any means, any person employed in the construction, completion,
or repair of public work, to give up any part of the compensation to
which he is otherwise entitled. The recipient shall report all
suspected or reported violations to the DoC operating unit.
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 $2000 shall
include a provision for compliance with the Davis-Bacon Act (40
U.S.C. 276a to a-7) and as supplemented by Department of Labor
regulations (29 CFR part 5, ``Labor Standards Provisions Applicable
to Contracts Governing Federally Financed and Assisted
Construction''). Under this Act, contractors shall be required to
pay wages to laborers and mechanics at a rate not less than the
minimum wages specified in a wage determination made by the
Secretary of Labor. In addition, contractors shall be required to
pay wages not less than once 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 DoC operating unit.
4. Contract Work Hours and Safety Standards Act (40 U.S.C. 327-
333)--Where applicable, all contracts awarded by recipients in
excess of $2000 for construction contracts and in excess of $2500
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 DoC operating unit 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'' as implemented by DoC regulations at 15
CFR Part 26. This list contains the names of parties debarred,
suspended, or otherwise excluded by
[[Page 47172]]
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. 98-22725 Filed 9-3-98; 8:45 am]
BILLING CODE 3510-FA-P
