[Federal Register Volume 59, Number 198 (Friday, October 14, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-25509]
[[Page Unknown]]
[Federal Register: October 14, 1994]
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Part III
Office of Management and Budget
_______________________________________________________________________
Grants and Cooperative Agreements With State and Local Governments;
Notice
OFFICE OF MANAGEMENT AND BUDGET
Grants and Cooperative Agreements With State and Local
Governments
AGENCY: Office of Management and Budget.
ACTION: Final revisions to OMB Circular A-102.
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SUMMARY: The Office of Management and Budget is revising Circular A-102
to include references to the requirements in three executive orders and
four statutory provisions issued or enacted since the last issuance of
the Circular in March 1988. The revisions relate to: use of the metric
system of measurement, cash management, infrastructure investment,
purchase of recycled products, and disclosure of the Federal
contribution in procurement of goods and services.
DATES: The revisions to the Circular are effective October 14, 1994.
FOR FURTHER INFORMATION CONTACT: Thomas Cocozza, Financial Standards
and Reporting Branch, Office of Federal Financial Management, Office of
Management and Budget, (202) 395-3993.
SUPPLEMENTARY INFORMATION:
A. Background
On August 5, 1992, the Office of Management and Budget (OMB)
published a notice in the Federal Register (57 FR 34599) requesting
comments on proposed revisions to OMB Circular A-102, ``Grants and
Cooperative Agreements with State and Local Governments.'' The proposed
revisions referenced three statutory provisions and an executive order.
These relate to: (a) A requirement that encourages recipients of
federally-funded grants and cooperative agreements to use the metric
system of measurement in their assistance programs; (b) a reference to
the Department of the Treasury's regulations to implement the Cash
Management Improvement Act of 1990; (c) a requirement that State and
local governments comply with section 6002 of the Resource Conservation
and Recovery Act (RCRA), as amended; and (d) a requirement that Federal
agencies comply with Executive Order 12803, ``Infrastructure
Privatization.''
Interested parties were invited to submit comments on the revisions
by October 5, 1992. Federal agencies submitted two comments.
B. Comments and Responses
Comment: One commenter said, in accordance with Section 6002(a) of
RCRA, procurement items under $10,000 are not covered. The commenter
recommended that the $10,000 ceiling be noted in the Circular. The same
commenter said that RCRA provides that ``each procuring agency shall
procure items * * * consistent with maintaining a satisfactory level of
competition.''
Response: The substance of these provisions in Section 6002 are
included in the Environmental Protection Agency's (EPA's) guidelines
found at 40 CFR 247-253. Since EPA's guidelines are referenced in
paragraph 2.h. of the Circular, it is not necessary to make a specific
reference in the Circular to the particular provisions within Section
6002.
Comment: One commenter recommended that OMB add language to the
Circular which states that the Metric Conversion Act requires each
Federal agency to establish a date(s) when the metric system of
measurement will be used in that agency's procurement, grants and other
business-related activities.
Response: OMB has added language which cites to the requirement for
each agency to establish dates showing when the metric system of
measurement will be used. This paragraph was also expanded to explain
procedures for obtaining exceptions from metric usage.
C. Additional Changes
In addition to revising the Circular to add references to the
statutory provisions and executive orders described in the August 1992
Notice, OMB is also revising the Circular to add references to another
statutory provision and to two other executive orders. OMB is not
requesting additional comment on these changes before finalization
because they merely reference new requirements without elaboration.
In Section 623 of the Treasury, Postal Service, and General
Government Appropriations Act for fiscal year 1993, Congress provided
that grantees must specify, in any announcement of the awarding of
contracts with an aggregate value of $500,000 or more, the amount of
Federal funds that will be used to finance the acquisitions. In the
following year, Congress reenacted this provision (see Section 621 of
the fiscal year 1994 Appropriations Act). Congress is likely to reenact
this provision for fiscal year 1995 and for subsequent fiscal years.
Accordingly, a paragraph has been added to this Circular that
references this requirement.
In January 1994, the President issued Executive Order No. 12893
(``Principles for Federal Infrastructure Investment''). A reference to
this Executive Order, and to OMB's guidance for implementing it, has
been included in the paragraph that references Executive Order No.
12803 (``Infrastructure Privatization'').
Finally, in the proposed paragraph that would reference the Metric
Conversion Act of 1975, a reference should have also been made to
Executive Order No. 12770 (``Metric Usage in Federal Government
Programs''). A reference to the Executive Order has been included in
this paragraph.
Locations of the added (or amended) paragraphs and the citations
for the four statutory provisions and three executive orders are as
follows:
(1) Paragraph 1.j.--Metric Conversion Act of 1975, as amended (codified
as amended at 15 U.S.C. 205a-205k), and Executive Order No. 12770
(``Metric Usage in Federal Government Programs''), 56 FR 35,801 (1991).
(2) Paragraph 2.a.--Cash Management Improvement Act of 1990, as amended
(codified as amended in scattered sections of Title 31 U.S. Code).
(3) Paragraph 2.g.--Executive Order No. 12803 (``Infrastructure
Privatization''), 57 FR 19,036 (1992), and Executive Order No. 12893
(``Principles for Federal Infrastructure Investment''), 59 FR 4233
(1994).
(4) Paragraph 2.h.--Resource Conservation and Recovery Act of 1976,
section 6002, as amended (codified as amended at 42 U.S.C. 6962).
(5) Paragraph 2.i.--Treasury, Postal Service, and General Government
Appropriations Act, 1994, Public Law 103-123, section 621, 107 Stat.
1226, 1265 (1993).
No other changes have been made to the Circular, which is being
reissued in its entirety, as revised.
Darrell A. Johnson,
Deputy Assistant Director for Administration.
To the Heads of Executive Departments and Establishments
SUBJECT: Grants and Cooperative Agreements with State and Local
Governments
1. Purpose. This Circular establishes consistency and uniformity
among Federal agencies in the management of grants and cooperative
agreements with State, local, and federally recognized Indian tribal
governments. This revision supersedes Office of Management and
Budget (OMB) Circular No. A-102, dated March 3, 1988.
2. Authority. This Circular is issued under the authority of the
Budget and Accounting Act of 1921, as amended; the Budget and
Accounting Procedures Act of 1950, as amended; Reorganization Plan
No. 2 of 1970; Executive Order 11541 and the Chief Financial
Officers Act, 31 U.S.C. 503. Also included in the Circular are
standards to ensure consistent implementation of sections 202, 203,
and 204 of the Intergovernmental Cooperation Act of 1968, the Office
of Federal Procurement Policy Act Amendments of 1983, and sections
6301-08, title 31, United States Code.
3. Background. On March 12, 1987, the President directed all
affected agencies to issue a grants management common rule to adopt
government-wide terms and conditions for grants to State and local
governments, and they did so. In 1988, OMB revised the Circular to
provide guidance to Federal agencies on other matters not covered in
the common rule.
4. Required Action. Consistent with their legal obligations, all
Federal agencies administering programs that involve grants and
cooperative agreements with State, local and Indian tribal
governments (grantees) shall follow the policies in this Circular.
If the enabling legislation for a specific grant program prescribes
policies or requirements that differ from those in this Circular,
the provisions of the enabling legislation shall govern.
5. OMB Responsibilities. OMB may grant deviations from the
requirements of this Circular when permissible under existing law.
However, in the interest of uniformity and consistency, deviations
will be permitted only in exceptional circumstances.
6. Information Contact. Further information concerning this
Circular may be obtained from: Office of Federal Financial
Management, Office of Management and Budget, Room 6025, New
Executive Office Building, Washington, DC 20503, (202) 395-3993.
7. Termination Review Date. The Circular will have a policy
review three years from the date of issuance.
8. Effective Date. The Circular is effective on publication.
Alice M. Rivlin,
Acting Director.
Attachment:
Grants and Cooperative Agreements With State and Local Governments
1. Pre-Award Policies
a. Use of grants and cooperative agreements. Sections 6301-08,
title 31, United States Code govern the use of grants, contracts and
cooperative agreements. 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. Contracts shall be used when the principal purpose
is acquisition of property or services for the direct benefit or use
of the Federal Government. 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.''
b. Advance Public Notice and Priority Setting.--(1) Federal
agencies shall provide the public with an advance notice in the
Federal Register, or by other appropriate means, of intended funding
priorities for discretionary assistance programs, unless funding
priorities are established by Federal statute. These priorities
shall be approved by a policy level official.
(2) Whenever time permits, agencies shall provide the public an
opportunity to comment on intended funding priorities.
(3) All discretionary grant awards in excess of $25,000 shall be
reviewed for consistency with agency priorities by a policy level
official.
c. Standard Forms for Applying for Grants and Cooperative
Agreements.--(1) Agencies shall use the following standard
application forms unless they obtain Office of Management and Budget
(OMB) approval under the Paperwork Reduction Act of 1980 (44 U.S.C.
35) and the 5 CFR Part 1320, ``Controlling Paperwork Burdens on the
Public'':
SF-424 Facesheet
SF-424a Budget Information (Non-Construction)
SF-424b Standard Assurances (Non-Construction)
SF-424c Budget Information (Construction)
SF-424d Standard Assurances (Construction)
When different or additional information is needed to comply
with legislative requirements or to meet specific program needs,
agencies shall also obtain prior OMB approval.
(2) A preapplication shall be used for all construction, land
acquisition and land development projects or programs when the need
for Federal funding exceeds $100,000, unless the Federal agency
determines that a preapplication is not needed. A preapplication is
used to:
(a) Establish communication between the agency and the
applicant,
(b) Determine the applicant's eligibility,
(c) Determine how well the project can compete with similar
projects from others, and
(d) Discourage any proposals that have little or no chance for
Federal funding before applicants incur significant costs in
preparing detailed applications.
(3) Agencies shall use the Budget Information (Construction) and
Standard Assurances (Construction) when the major purpose of the
project or program is construction, land acquisition or land
development.
(4) Agencies may specify how and whether budgets shall be shown
by functions or activities within the program or project.
(5) Agencies should generally include a request for a program
narrative statement which is based on the following instructions:
(a) Objectives and need for assistance. Pinpoint any relevant
physical, economic, social, financial, institutional, or other
problems requiring a solution. Demonstrate the need for the
assistance and state the principal and subordinate objectives of the
project. Supporting documentation or other testimonies from
concerned interests other than the applicant may be used. Any
relevant data based on planning studies should be included or
footnoted.
(b) Results or Benefits Expected. Identify costs and benefits to
be derived. For example, show how the facility will be used. For
land acquisition or development projects, explain how the project
will benefit the public.
(c) Approach. Outline a plan of action pertaining to the scope
and detail how the proposed work will be accomplished for each
assistance program. Cite factors which might accelerate or
decelerate the work and reasons for taking this approach as opposed
to others. Describe any unusual features of the project, such as
design or technological innovations, reductions in cost or time, or
extraordinary social and community involvements. Provide for each
assistance program quantitative projections of the accomplishments
to be achieved, if possible. When accomplishments cannot be
quantified, list the activities in chronological order to show the
schedule of accomplishments and target expected completion dates.
Identify the kinds of data to be collected and maintained, and
discuss the criteria to be used to evaluate the results and success
of the project. Explain the methodology that will be used to
determine if the needs identified and discussed are being met and if
the results and benefits identified are being achieved. List each
organization, cooperator, consultant, or other key individuals who
will work on the project along with a short description of the
nature of their effort or contribution.
(d) Geographic location. Give a precise location of the project
and area to be served by the proposed project. Maps or other graphic
aids may be attached.
(e) If applicable, provide the following information: for
research and demonstration assistance requests, present a
biographical sketch of the program director with the following
information: name, address, telephone number, background, and other
qualifying experience for the project. Also, list the name, training
and background for other key personnel engaged in the project.
Describe the relationship between this project and other work
planned, anticipated, or underway under Federal assistance. Explain
the reason for all requests for supplemental assistance and justify
the need for additional funding. Discuss accomplishments to date and
list in chronological order a schedule of accomplishments, progress
or milestones anticipated with the new funding request. If there
have been significant changes in the project objectives, location,
approach or time delays, explain and justify. For other requests for
changes, or amendments, explain the reason for the change(s). If the
scope or objectives have changed or an extension of time is
necessary, explain the circumstances and justify. If the total
budget has been exceeded or if the individual budget items have
changes more than the prescribed limits, explain and justify the
change and its effect on the project.
(6) Additional assurances shall not be added to those contained
on the standard forms, unless specifically required by statute.
d. Debarment and Suspension. Federal agencies shall not award
assistance to applicants that are debarred or suspended, or
otherwise excluded from or ineligible for participation in Federal
assistance programs under Executive Order 12549. Agencies shall
establish procedures for the effective use of the List of Parties
Excluded from Federal Procurement or Nonprocurement programs to
assure that they do not award assistance to listed parties in
violation of the Executive Order. Agencies shall also establish
procedures to provide for effective use and/or dissemination of the
list to assure that their grantees and subgrantees (including
contractors) at any tier do not make awards in violation of the
nonprocurement debarment and suspension common rule.
e. Awards and Adjustments.--(1) Ordinarily awards shall be made
at least ten days prior to the beginning of the grant period.
(2) Agencies shall notify grantees immediately of any
anticipated adjustments in the amount of an award. This notice shall
be provided as early as possible in the funding period. Reductions
in funding shall apply only to periods after notice is provided.
Whenever an agency adjusts the amount of an award, it shall also
make an appropriate adjustment to the amount of any required
matching or cost sharing.
f. Carryover Balances. Agencies shall be prepared to identify to
OMB the amounts of carryover balances (e.g., the amounts of
estimated grantee unobligated balances available for carryover into
subsequent grant periods). This presentation shall detail the fiscal
and programmatic (level of effort) impact in the following period.
g. Special Conditions or Restrictions. Agencies may impose
special conditions or restrictions on awards to ``high risk''
applicants/grantees in accordance with section ____.12 of the grants
management common rule. Agencies shall document use of the
``Exception'' provisions of section ____.6 and ``High-risk''
provisions of section ____.12 of the grants management common rule.
h. Waiver of Single State Agency Requirements.--(1) Requests to
agencies from the Governors, or other duly constituted State
authorities, for waiver of ``single'' State agency requirements in
accordance with section 31 U.S.C. 6504, ``Use of existing State or
multi-member agency to administer grant programs,'' shall be given
expeditious handling and, whenever possible, an affirmative
response.
(2) When it is necessary to refuse a request for waiver of
``single'' State agency requirements under section 204 of the
Intergovernmental Corporation Act, the Federal grantor agency shall
advise OMB prior to informing the State that the request cannot be
granted. The agency shall indicate to OMB the reasons for the denial
of the request.
(3) Legislative proposals embracing grant-in-aid programs shall
avoid inclusion of proposals for ``single'' State agencies in the
absence of compelling reasons to do otherwise. In addition, existing
requirements in present grant-in-aid programs shall be reviewed and
legislative proposals developed for the removal of these restrictive
provisions.
i. Patent Rights. Agencies shall use the standard patent rights
clause specified in ``Rights to Inventions made by Non-profit
Organizations and Small Business Firms'' (37 CFR Part 401), when
providing support for research and development.
j. Metric System of Measurement. The Metric Conversion Act of
1975, as amended, 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(s), in consultation with the
Secretary of Commerce, when the metric system of measurement will be
used in the agency's procurement, 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.
Heads of departments and agencies shall establish a process for a
policy level and program level review of proposed exceptions to
metric usage in grants programs. Executive Order 12770 (``Metric
Usage in Federal Government Programs'') elaborates on implementation
of the Act.
2. Post-Award Policies
a. Cash Management. Agency methods and procedures for
transferring funds shall minimize the time elapsing between the
transfer to recipients of grants and cooperative agreements and the
recipient's need for the funds.
(1) Such transfers shall be made consistent with program
purposes, applicable law and Treasury regulations contained in 31
CFR Part 205, Federal Funds Transfer Procedures.
(2) Where letters-of-credit are used to provide funds, they
shall be in the same amount as the award.
b. Grantee Financial Management Systems. In assessing the
adequacy of an applicant's financial management system, the awarding
agency shall rely on readily available sources of information, such
as audit reports, to the maximum extent possible. If additional
information is necessary to assure prudent management of agency
funds, it shall be obtained from the applicant or from an on-site
review.
c. Financial Status Reports.--(1) Federal agencies shall require
grantees to use the SF-269, Financial Status Report-Long Form, or
SF-269a, Financial Status Report-Short Form, to report the status of
funds for all non-construction projects or programs. Federal
agencies need not require the Financial Status Report when the SF-
270, Request for Advance or Reimbursement, or SF-272, Report of
Federal Cash Transactions, is determined to provide adequate
information.
(2) Federal agencies shall not require grantees to report on the
status of funds by object class category of expenditure (e.g.,
personnel, travel, equipment).
(3) If reporting on the status of funds by programs, functions
or activities within the project or program is required by statute
or regulation, Federal agencies shall instruct grantees to use block
12, Remarks, on the SF-269, or a supplementary form approved by the
OMB under the Paperwork Reduction Act of 1980.
(4) Federal agencies shall prescribe whether the reporting shall
be on a cash or an accrual basis. If the Federal agency requires
accrual information and the grantees's accounting records are not
normally kept on an accrual basis, the grantee shall not be required
to convert its accounting system but shall develop such accrual
information through an analysis of the documentation on hand.
d. Contracting With Small and Minority Firms, Women's Business
Enterprises and Labor Surplus Area Firms. It is national policy to
award a fair share of contracts to small and minority business
firms. Grantees shall take similar appropriate affirmative action to
support of women's enterprises and are encouraged to procure goods
and services from labor surplus areas.
e. Program Income.--(1) Agencies shall encourage grantees to
generate program income to help defray program costs. However,
Federal agencies shall not permit grantees to use grant-acquired
assets to compete unfairly with the private sector.
(2) Federal agencies shall instruct grantees to deduct program
income from total program costs as specified in the grants
management common rule at paragraph ----.25 (g)(1), unless agency
regulations or the terms of the grant award state otherwise.
Authorization for recipients to follow the other alternatives in
paragraph ____.25 (g) (2) and (3) shall be granted sparingly.
f. Site Visits and Technical Assistance. Agencies shall conduct
site visits only as warranted by program or project needs. Technical
assistance site visits shall be provided only (1) In response to
requests from grantees, (2) based on demonstrated program need, or
(3) when recipients are designated ``high risk'' under section
____.12 of the grants management common rule.
g. Infrastructure Investment. Agencies shall encourage grantees
to consider the provisions of the common rule at Section ____. 31
and Executive Order 12803 (``Infrastructure Privatization''). This
includes reviewing and modifying procedures affecting the management
and disposition of federally-financed infrastructure owned by State
and local governments, with their requests to sell or lease
infrastructure assets, consistent with the criteria in Section 4 of
the Order. Related guidance contained in Executive Order 12893
(``Principles for Federal Infrastructure Investments'') requiring
economic analysis and the development of investment options,
including public-private partnership, shall also be applied. On
March 7, 1994, OMB issued guidance on Executive Order 12893 in OMB
Bulletin No. 94-16.
h. Resource Conservation and Recovery Act. Agencies shall
implement the Resource Conservation and Recovery Act of 1976 (RCRA)
(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 of RCRA. 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).
Current guidelines are contained in 40 CFR Parts 247-253. State and
local recipients of grants, loans, cooperative agreements or other
instruments funded by appropriated Federal funds shall give
preference in procurement programs to the purchase of recycled
products pursuant to the EPA guidelines.
i. Procurement of Goods and Services. Agencies should be aware
of and comply with the requirement enacted in Section 623 of the
Treasury, Postal Service and General Government Appropriations Act,
1993, and reenacted in Section 621 of the fiscal year 1994
Appropriations Act. This Section requires grantees to specify in any
announcement of the awarding of contracts with an aggregate value of
$500,000 or more, the amount of Federal funds that will be used to
finance the acquisitions.
3. After-the-grant Policies
a. Closeout. Federal agencies shall notify grantees in writing
before the end of the grant period of final reports that shall be
due, the dates by which they must be received, and where they must
be submitted. Copies of any required forms and instructions for
their completion shall be included with this notification. The
Federal actions that must precede closeout are:
(1) Receipt of all required reports,
(2) Disposition or recovery of federally-owned assets (as
distinct from property acquired under the grant), and
(3) Adjustment of the award amount and the amount of Federal
cash paid the recipient.
b. Annual Reconciliation of Continuing Assistance Awards.
Federal agencies shall reconcile continuing awards at least annually
and evaluate program performance and financial reports.
Items to be reviewed include:
(1) A comparison of the recipient's work plan to its progress
reports and project outputs,
(2) the Financial Status Report (SF-269),
(3) Request(s) for payment,
(4) Compliance with any matching, level of effort or maintenance
of effort requirement, and
(5) A review of federally-owned property (as distinct from
property acquired under the grant).
[FR Doc. 94-25509 Filed 10-13-94; 8:45 am]
BILLING CODE 3110-01-P
