[Federal Register Volume 59, Number 76 (Wednesday, April 20, 1994)]
[Unknown Section]
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From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-9181]
[[Page Unknown]]
[Federal Register: April 20, 1994]
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DEPARTMENT OF STATE
[Public Notice 1985]
22 CFR Part 145
Grants and Cooperative Agreements With Institutions of Higher
Education, Hospitals, and Other Non-Profit Organizations
ACTION: Final rule.
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SUMMARY: This final rule establishes regulations for grants and
cooperative agreements with insitutions of higher education, hospitals,
and other non-profit organizations.
DATES: This regulation is effective October 1, 1994.
FOR FURTHER INFORMATION CONTACT: Robert Lloyd, Office of the
Procurement Executive, room 603, SA-6, U.S. Department of State,
Washington, DC 20522-0602. Tel. (703) 516-1690.
SUPPLEMENTARY INFORMATION: The Department of State establishes this
final rule as part 145 of title 22 of the Code of Federal Regulations.
The regulation implements Office of Management and Budget Circular
A-110, published in the Federal Register on November 29, 1993 (58 FR
62992). The regulation is essentially the same as Circular A-110,
except for editorial changes, internal approval procedures, and
exclusion of foreign and international organizations and agreements
performed overseas. The Circular was published as a proposed rule in
the Federal Register, and the final version of the Circular published
on November 29, 1993 addressed the public comments received.
List of Subjects in 22 CFR Part 145
Administrative practices and procedure, Grant programs, Grants
administration, Reporting and recordkeeping requirements.
Title 22 of the Code of Federal Regulations, chapter I, is amended
as set forth below.
Lloyd W. Pratsch,
Procurement Executive.
Part 145 is added to subchapter O to read as follows:
PART 145--GRANTS AND AGREEMENTS WITH INSTITUTIONS OF HIGHER EDUCATION,
HOSPITALS, AND OTHER NON-PROFIT ORGANIZATIONS
Subpart A--General
Sec.
145.1 Purpose.
145.2 Definitions.
145.3 Effect on other issuances.
145.4 Deviations.
145.5 Subawards.
Subpart B--Pre-Award Requirements
145.10 Purpose.
145.11 Pre-award policies.
145.12 Forms for applying for Federal assistance.
145.13 Debarment and suspension.
145.14 Special award conditions.
145.15 Metric system of measurement.
145.16 Resource Conservation and Recovery Act.
145.17 Certifications and representations.
Subpart C--Post-Award Requirements
Financial and Program Management
145.20 Purpose of financial and program management.
145.21 Standards for financial management systems.
145.22 Payment.
145.23 Cost sharing or matching.
145.24 Program income.
145.25 Revision of budget and program plans.
145.26 Non-Federal audits.
145.27 Allowable costs.
145.28 Period of availability of funds.
Property Standards
145.30 Purpose of property standards.
145.31 Insurance coverage.
145.32 Real property.
145.33 Federally-owned and exempt property.
145.34 Equipment.
145.35 Supplies and other expendable property.
145.36 Intangible property.
145.37 Property trust relationship.
Procurement Standards
145.40 Purpose of procurement standards.
145.41 Recipient responsibilities.
145.42 Code of conduct.
145.43 Competition.
145.44 Procurement procedures.
145.45 Cost and price analysis.
145.46 Procurement records.
145.47 Contract administration.
145.48 Contract clauses.
Reports and Records
145.50 Purpose of reports and records.
145.51 Monitoring and reporting program performance.
145.52 Financial reporting.
145.53 Retention and access requirements for records.
Termination and Enforcement
145.60 Purpose of termination and enforcement.
145.61 Termination.
145.62 Enforcement.
Subpart D--After-the-Award Requirements
145.70 Purpose.
145.71 Closeout procedures.
145.72 Subsequent adjustments and continuing responsibilities.
145.73 Collection of amounts due.
Appendix A to Part 145--Clauses for Contracts and Small Purchases
Awarded by Recipient
Authority: 22 U.S.C. 2658.1
Subpart A--General
Sec. 145.1 Purpose.
This regulation establishes uniform administrative requirements for
Department of State grants and cooperative agreements awarded to
institutions of higher education, hospitals, and other non-profit
organizations pursuant to OMB Circular A-110. Non-profit organizations
that implement Federal programs for the States are also subject to
State requirements. Copies of the OMB circulars mentioned in this part
may be ordered from the Office of Management and Budget Publications
Office (202) 395-7000.
Sec. 145.2 Definitions.
(a) Accrued expenditures means the charges incurred by the
recipient during a given period requiring the provision of funds for:
(1) Goods and other tangible property received;
(2) Services performed by employees, contractors, subrecipients,
and other payees; and,
(3) Other amounts becoming owed under programs for which no current
services or performance is required.
(b) Accrued income means the sum of:
(1) Earnings during a given period from
(i) Services performed by the recipient, and
(ii) Goods and other tangible property delivered to purchasers, and
(2) Amounts becoming owed to the recipient for which no current
services or performance is required by the recipient.
(c) Acquisition cost of equipment means the net invoice price of
the equipment, including the cost of modifications, attachments,
accessories, or auxiliary apparatus necessary to make the property
usable for the purpose for which it was acquired. Other charges, such
as the cost of installation, transportation, taxes, duty or protective
in-transit insurance, shall be included or excluded from the unit
acquisition cost in accordance with the recipient's regular accounting
practices.
(d) Advance means a payment made by Treasury check or other
appropriate payment mechanism to a recipient upon its request either
before outlays are made by the recipient or through the use of
predetermined payment schedules.
(e) Award means financial assistance that provides support or
stimulation to accomplish a public purpose. Awards include grants and
other agreements in the form of money or property in lieu of money, by
the Federal Government to an eligible recipient. The term does not
include: Technical assistance, which provides services instead of
money; other assistance in the form of loans, loan guarantees, interest
subsidies, or insurance; direct payments of any kind to individuals;
and, contracts which are required to be entered into and administered
under procurement laws and regulations.
(f) Cash contributions means the recipient's cash outlay, including
the outlay of money contributed to the recipient by third parties.
(g) Closeout means the process by which an awarding agency
determines that all applicable administrative actions and all required
work of the award have been completed by the recipient and awarding
agency.
(h) Contract means a procurement contract under an award or
subaward, and a procurement subcontract under a recipient's or
subrecipient's contract.
(i) Cooperative agreement, as defined in 31 U.S.C. 6305, means a
legal instrument reflecting a relationship between the United States
Government and a recipient when the principal purpose of the
relationship is to transfer a thing of value to the recipient to carry
out a public purpose of support or stimulation authorized by law,
instead of acquiring property or services for the direct use of the
United States Government, and substantial involvement is expected
between the awarding agency and the recipient when carrying out the
activity contemplated in the agreement.
(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
awarding agency determines to be unallowable, in accordance with the
applicable Federal cost principles or other terms and conditions
contained in the award.
(m) 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 $5,000 or more
per unit. However, consistent with recipient policy, lower limits may
be established.
(n) Excess property means property under the control of any
awarding agency that, as determined by the head thereof, is no longer
required for its needs or the discharge of its responsibilities.
(o) Exempt property means tangible personal property acquired in
whole or in part with Federal funds, where the awarding agency has
statutory authority to vest title in the recipient without further
obligation to the Federal Government. An example of exempt property
authority is contained in the Federal Grant and Cooperative Agreement
Act (31 U.S.C. 6306), for property acquired under an award to conduct
basic or applied research by a non-profit institution of higher
education or non-profit organization whose principal purpose is
conducting scientific research.
(p) Federal awarding agency or awarding agency means the Federal
agency that provides an award to the recipient.
(q) 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.
(r) 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.
(s) Funding period means the period of time when Federal funding is
available for obligation by the recipient.
(t) Grant, as defined in 31 U.S.C. 6304, means a legal instrument
reflecting a relationship between the United States Government and a
recipient when the principal purpose of the relationship is to transfer
a thing of value to the recipient to carry out a public purpose of
support or stimulation authorized by law, instead of acquiring property
or services for the direct use of the United States Government, and
substantial involvement is not expected between the awarding agency and
the recipient when carrying out the activity contemplated in the
agreement.
(u) 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.
(v) 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.
(w) 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.
(x) 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.
(y) Prior approval means written approval by an authorized official
evidencing prior consent.
(z) 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. 145.24 (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 awarding agency regulations or the terms and
conditions of the award, program income does not include the receipt of
principal on loans, rebates, credits, discounts, etc., or interest
earned on any of them.
(aa) 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.
(bb) Project period means the period established in the award
document during which Federal sponsorship begins and ends.
(cc) Property means, unless otherwise stated, real property,
equipment, intangible property and debt instruments.
(dd) Real property means land, including land improvements,
structures and appurtenances thereto, but excludes movable machinery
and equipment.
(ee) Recipient means an organization receiving financial assistance
directly from Federal awarding agencies to carry out a project or
program.
(1) The term includes public and private institutions of higher
education; public and private hospitals; other quasi-public and private
non-profit organizations such as, but not limited to, community action
agencies, research institutes, educational associations, and health
centers; and commercial organizations receiving grants or cooperative
agreements from the Department.
(2) The term does not include any of the following which are
recipients, subrecipients, or contractors or subcontractors of
recipients or subrecipients:
(i) Foreign organizations (governmental or non-governmental);
(ii) International organizations (such as agencies of the United
Nations); or
(iii) Organizations whose assistance agreement is for work to be
performed outside the United States.
(3) 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.
(ff) Research and development means all research activities, both
basic and applied, and all development activities that are supported at
universities, colleges, and other non-profit institutions. ``Research''
is defined as a systematic study directed toward fuller scientific
knowledge or understanding of the subject studied. ``Development'' is
the systematic use of knowledge and understanding gained from research
directed toward the production of useful materials, devices, systems,
or methods, including design and development of prototypes and
processes. The term research also includes activities involving the
training of individuals in research techniques where such activities
utilize the same facilities as other research and development
activities and where such activities are not included in the
instruction function.
(gg) Small awards means a grant or cooperative agreement not
exceeding $100,000 or the small purchase limitation fixed at 41 U.S.C.
403(11), whichever is greater.
(hh) Small purchase limitation, for procurements transactions
awarded by recipients, means $100,000 or the small purchase limitation
fixed at 41 U.S.C. 403(11), whichever is greater.
(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 Sec. 145.2(e).
(jj) Subrecipient means the legal entity to which a subaward is
made and which is accountable to the recipient for the use of the funds
provided. The term may include foreign or international organizations
(such as agencies of the United Nations) at the discretion of the
awarding agency.
(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 by a awarding agency that
temporarily withdraws Federal sponsorship under an award, pending
corrective action by the recipient or pending a decision to terminate
the award by the awarding agency. Suspension of an award is a separate
action from suspension under Federal agency regulations implementing
E.O.s 12549 and 12689, ``Debarment and Suspension.''
(mm) Termination means the cancellation 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 awarding agency 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 where by funds are
advanced to the recipient to cover its estimated disbursement needs for
a given initial period.
Sec. 145.3 Effect on other issuances.
For awards subject to this regulation, all administrative
requirements of codified program regulations, program manuals,
handbooks and other nonregulatory materials which are inconsistent with
the requirements of this regulation are superseded, except to the
extent they are required by statute, or authorized in accordance with
the deviations provision in Sec. 145.4.
Sec. 145.4 Deviations.
The Office of Management and Budget (OMB) may grant exceptions for
classes of grants or recipients subject to the requirements of this
regulation when exceptions are not prohibited by statute. However, in
the interest of maximum uniformity, exceptions from the requirements of
this regulation shall be permitted only in unusual circumstances. The
Department may apply more restrictive requirements to a class of
recipients when approved by OMB. The Department may apply less
restrictive requirements when issuing small awards, except for those
requirements which are statutory. Exceptions on a case-by-case basis
may also be made by the Department. Deviation requests shall be
submitted to the Office of the Procurement Executive (A/OPE) for
approval or transmittal to OMB.
Sec. 145.5 Subawards.
Unless sections of this regulation specifically exclude
subrecipients from coverage, the provisions of this regulation shall be
applied to subrecipients performing work under awards if such
subrecipients are institutions of higher education, hospitals or other
non-profit organizations. State and local government subrecipients are
subject to the provisions of part 135 of this chapter implementing the
grants management common rule, ``Uniform Administrative Requirements
for Grants and Cooperative Agreements to State and Local Governments.''
Subpart B--Pre-Award Requirements
Sec. 145.10 Purpose.
Sections 145.11 through 145.17 prescribe forms and instructions and
other pre-award matters to be used in applying for Federal awards.
Sec. 145.11 Pre-award policies.
(a) Use of grants and cooperative agreements, and contracts. In
each instance, the awarding agency shall decide on the appropriate
award instrument (i.e., grant, cooperative agreement, or contract). The
Federal Grant and Cooperative Agreement Act (31 U.S.C. 6301-08) governs
the use of grants, cooperative agreements and contracts. A grant or
cooperative agreement shall be used only when the principal purpose of
a transaction is to accomplish a public purpose of support or
stimulation authorized by Federal statute. The statutory criterion for
choosing between grants and cooperative agreements is that for the
latter, ``substantial involvement is expected between the executive
agency and the State, local government, or other recipient when
carrying out the activity contemplated in the agreement.'' Contracts
shall be used when the principal purpose is acquisition of property or
services for the direct benefit or use of the Federal Government. The
Department may not award grants or cooperative agreements unless
specific statutory authority exists for a program allowing the award of
Federal assistance.
(b) Public notice and priority setting.
(1) The Department shall notify the public of its intended funding
priorities for discretionary grant programs, except for:
(i) Awards for which funding priorities are established by Federal
statute,
(ii) Small awards, and
(iii) Awards for which program purposes would not be served by
public notice.
(2) In the case of the exception in paragraph (b)(1)(iii) of this
section, the award file shall be documented with the rationale for not
issuing a public notice.
Sec. 145.12 Forms for applying for Federal assistance.
(a) Department Grants Officers 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
awarding agency in place of or as a supplement to the Standard Form 424
(SF-424) series.
(b) Applicants shall use the SF-424 series or those forms and
instructions prescribed by the Grants Officer and approved by the
Office of the Procurement Executive (A/OPE).
(c) For Federal programs covered by Executive Order 12372,
``Intergovernmental Review of Federal Programs,'' the applicant shall
complete the appropriate sections of the SF-424 (Application for
Federal Assistance) indicating whether the application was subject to
review by the State Single Point of Contact (SPOC). The name and
address of the SPOC for a particular State can be obtained from the
awarding agency or the Catalog of Federal Domestic Assistance. The SPOC
shall advise the applicant whether the program for which application is
made has been selected by that State for review.
(d) Department Grants Officers who do not use the SF-424 form
should indicate whether the application is subject to review by the
State under Executive Order 12372.
Sec. 145.13 Debarment and suspension.
The Department and recipients shall comply with the nonprocurement
debarment and suspension common rule implementing Executive Orders
12549 and 12689, ``Debarment and Suspension,'' as implemented in 22 CFR
part 137. 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. 145.14 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 regulation, has not conformed to the terms
and conditions of a previous award, or is not otherwise responsible,
the Department 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. 145.15 Metric system of measurement.
The Metric Conversion Act, as amended by the Omnibus Trade and
Competitiveness Act (15 U.S.C. 205) declares that the metric system is
the preferred measurement system for U.S. trade and commerce. The Act
requires each Federal agency to establish a date or dates in
consultation with the Secretary of Commerce, when the metric system of
measurement will be used in the agency's procurements, grants, and
other business-related activities. Metric implementation may take
longer where the use of the system is initially impractical or likely
to cause significant inefficiencies in the accomplishment of federally-
funded activities. Federal awarding agencies shall follow the
provisions of E.O. 12770, ``Metric Usage in Federal Government
Programs.''
Sec. 145.16 Resource Conservation and Recovery Act.
Under the Resource Conservation and Recovery Act (RCRA) (Pub. L.
94-580 codified at 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, and non-profit organizations that receive direct
Federal awards or other Federal funds shall give preference in their
procurement programs funded with Federal funds to the purchase of
recycled products pursuant to the EPA guidelines.
Sec. 145.17 Certifications and representations.
Unless prohibited by statute or codified regulation, the Department
is authorized to accept and encourages 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 Department. Annual certifications
and representations shall be signed by responsible officials with the
authority to ensure recipients' compliance with the pertinent
requirements.
Subpart C--Post-Award Requirements
Financial and Program Management
Sec. 145.20 Purpose of financial and program management.
Sections 145.21 through 145.28 prescribe standards for financial
management systems, methods for making payments and rules for:
Satisfying cost sharing and matching requirements, accounting for
program income, budget revision approvals, making audits, determining
allowability of cost, and establishing fund availability.
Sec. 145.21 Standards for financial management systems.
(a) The Department 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. 145.52. If the
Department requires reporting on an accrual basis from a recipient that
maintains its records on other than an accrual basis, the recipient
shall not be required to establish an accrual accounting system. These
recipients may develop such accrual data for its reports on the basis
of an analysis of the documentation on hand.
(2) Records that identify adequately the source and application of
funds for federally-sponsored activities. These records shall contain
information pertaining to Federal awards, authorizations, obligations,
unobligated balances, assets, outlays, income and interest.
(3) Effective control over and accountability for all funds,
property and other assets. Recipients shall adequately safeguard all
such assets and assure they are used solely for authorized purposes.
(4) Comparison of outlays with budget amounts for each award.
Whenever appropriate, financial information should be related to
performance and unit cost data.
(5) Written procedures to minimize the time elapsing between the
transfer of funds to the recipient from the U.S. Treasury and the
issuance or redemption of checks, warrants or payments by other means
for program purposes by the recipient. To the extent that the
provisions of the Cash Management Improvement Act (CMIA) (Pub. L. 101-
453) govern, payment methods of State agencies, instrumentalities, and
fiscal agents shall be consistent with CMIA Treasury-State Agreements
or the CMIA default procedures codified at 31 CFR part 205,
``Withdrawal of Cash from the Treasury for Advances under Federal Grant
and Other Programs.''
(6) Written procedures for determining the reasonableness,
allocability and allowability of costs in accordance with the
provisions of the applicable Federal cost principles and the terms and
conditions of the award.
(7) Accounting records including cost accounting records that are
supported by source documentation.
(c) Where the Federal Government guarantees or insures the
repayment of money borrowed by the recipient, the Department, at its
discretion, may require adequate bonding and insurance if the bonding
and insurance requirements of the recipient are not deemed adequate to
protect the interest of the Federal Government.
(d) The Department 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. 145.22 Payment.
(a) Payment methods shall minimize the time elapsing between the
transfer of funds from the United States Treasury and the issuance or
redemption of checks, warrants, or payment by other means by the
recipients. Payment methods of State agencies or instrumentalities
shall be consistent with Treasury-State CMIA agreements or default
procedures codified at 31 CFR part 205.
(b) Recipients are to be paid in advance, provided they maintain or
demonstrate the willingness to maintain: 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. 145.21. Cash advances to a recipient organization shall be
limited to the minimum amounts needed and be timed to be in accordance
with the actual, immediate cash requirements of the recipient
organization in carrying out the purpose of the approved program or
project. The timing and amount of cash advances shall be as close as is
administratively feasible to the actual disbursements by the recipient
organization for direct program or project costs and the proportionate
share of any allowable indirect costs.
(c) Whenever possible, advances shall be consolidated to cover
anticipated cash needs for all awards made by the Department to the
recipient.
(1) Advance payment mechanisms include, but are not limited to,
Treasury check and electronic funds transfer.
(2) Advance payment mechanisms are subject to 31 CFR part 205.
(3) Recipients shall be authorized to submit requests for advances
and reimbursements at least monthly when electronic fund transfers are
not used.
(d) Requests for Treasury check advance payment shall be submitted
on SF-270, ``Request for Advance or Reimbursement,'' or other forms as
may be authorized by OMB (e.g., SF-1034). This form is not to be used
when Treasury check advance payments are made to the recipient
automatically through the use of a predetermined payment schedule or if
precluded by special Department instructions for electronic funds
transfer.
(e) Reimbursement is the preferred method when the requirements in
paragraph (b) cannot be met. The Department 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 Department shall
make payment within 30 days after receipt of the billing, unless the
billing is improper.
(2) Recipients shall be authorized to submit request for
reimbursement at least monthly when electronic funds transfers are not
used.
(f) If a recipient cannot meet the criteria for advance payments
and the Department has determined that reimbursement is not feasible
because the recipient lacks sufficient working capital, the Department
may provide cash on a working capital advance basis. Under this
procedure, the Department shall advance cash to the recipient to cover
its estimated disbursement needs for an initial period generally geared
to the awardee's disbursing cycle. Thereafter, the Department shall
reimburse the recipient for its actual cash disbursements. The working
capital advance method of payment shall not be used for recipients
unwilling or unable to provide timely advances to their subrecipient to
meet the subrecipient's actual cash disbursements.
(g) To the extent available, recipients shall disburse funds
available from repayments to and interest earned on a revolving fund,
program income, rebates, refunds, contract settlements, audit
recoveries and interest earned on such funds before requesting
additional cash payments.
(h) Unless otherwise required by statute, the Department shall not
withhold payments for proper charges made by recipients at any time
during the project period unless paragraphs (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 Department 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), the
Department 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 paragraphs (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 the Department for
submission to Treasury. 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 Department, it waives its right to recover the interest under
CMIA.
(m) Except as noted elsewhere in this regulation, only the
following forms shall be authorized for the recipients in requesting
advances and reimbursements. The Department shall not require more than
an original and two copies of these forms except if OMB approval is
obtained.
(1) SF-270, Request for Advance or Reimbursement. The Department
shall use the SF-270 as a standard form for all nonconstruction
programs when electronic funds transfer or predetermined advance
methods are not used. Grants Officers may use forms equivalent to the
SF-270 if approved in writing by the Office of the Procurement
Executive (A/OPE). The Department has the option of using the SF-270
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. The Department shall use the SF-271 as the
standard form to be used for requesting reimbursement for construction
programs. However, the Department may substitute the SF-270 when the
Department determines that it provides adequate information to meet
Federal needs.
Sec. 145.23 Cost sharing or matching.
(a) All contributions, including cash and third party in-kind,
shall be accepted as part of the recipient's cost sharing or matching
when such contributions meet all of the following criteria.
(1) Are verifiable from the recipient's records.
(2) Are not included as contributions for any other Federally-
assisted project or program.
(3) Are necessary and reasonable for proper and efficient
accomplishment of project or program objectives.
(4) Are allowable under the applicable cost principles.
(5) Are not paid by the Federal Government under another award,
except where authorized by Federal statute to be used for cost sharing
or matching.
(6) Are provided for in the approved budget when required by the
Department.
(7) Conform to other provisions of this regulation, as applicable.
(b) Unrecovered indirect costs may be included as part of cost
sharing or matching only with the prior approval of the Department
Grants Officer.
(c) Values for recipient contributions of services and property
shall be established in accordance with the applicable cost principles.
If the Department 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 paragraphs (c) (1) or (2) of this section.
(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 Department 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 apply.
(1) If the purpose of the award is to assist the recipient in the
acquisition of equipment, buildings or land, the total value of the
donated property may be claimed as cost sharing or matching.
(2) If the purpose of the award is to support activities that
require the use of equipment, buildings or land, normally only
depreciation or use charges for equipment and buildings may be made.
However, the full value of equipment or other capital assets and fair
rental charges for land may be allowed, provided that the Department
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. 145.24 Program income.
(a) The Department shall apply the standards set forth in this
section in requiring recipient organizations to account for program
income related to projects financed in whole or in part with Federal
funds.
(b) Except as provided in paragraph (h) of this section, program
income earned during the project period shall be retained by the
recipient and, in accordance with 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 Department and
recipient and used to further eligible project or program objectives.
(2) Used to finance the non-Federal share of the project or
program.
(3) Deducted from the total project or program allowable cost in
determining the net allowable costs on which the Federal share of costs
is based.
(c) When the award authorizes the disposition of program income as
described in paragraphs (b)(1) or (b)(2), program income in excess of
any limits stipulated shall be used in accordance with paragraph
(b)(3).
(d) In the event that the Department does not specify in the terms
and conditions of the award how program income is to be used, paragraph
(b)(3) shall apply automatically to all projects or programs except
research. For awards that support research, paragraph (b)(1) shall
apply automatically unless the awarding agency indicates in the terms
and conditions another alternative on the award or the recipient is
subject to special award conditions, as indicated in Sec. 145.14.
(e) Unless the terms and conditions of the award provide otherwise,
recipients shall have no obligation to the Federal Government regarding
program income earned after the end of the project period.
(f) If authorized by the terms and conditions of the award, costs
incident to the generation of program income may be deducted from gross
income to determine program income, provided these costs have not been
charged to the award.
(g) Proceeds from the sale of property shall be handled in
accordance with the requirements of the Property Standards (See
Secs. 145.30 through 145.37).
(h) Unless the terms and condition of the award provide otherwise,
recipients shall have no obligation to the Federal Government with
respect to program income earned from license fees and royalties for
copyrighted material, patents, patent applications, trademarks, and
inventions produced under an award. However, Patent and Trademark
Amendments (35 U.S.C. 18) apply to inventions made under an
experimental, developmental, or research award.
Sec. 145.25 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 Department 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, unless, at the discretion
of the Grants Officer, a small percentage variance is allowed by the
terms of the grant or cooperative agreement.
(c) For nonconstruction awards, recipients shall request prior
approvals from the Department for one or more of the following program
or budget related reasons.
(1) Change in the scope or the objective of the project or program
(even if there is no associated budget revision requiring prior written
approval).
(2) Change in a key person specified in the application or award
document.
(3) The absence for more than three months, or a 25 percent
reduction in time devoted to the project, by the approved project
director or principal investigator.
(4) The need for additional Federal funding.
(5) The transfer of amounts budgeted for indirect costs to absorb
increases in direct costs, or vice versa, if approval is required by
the Department.
(6) The inclusion, unless waived by the Department, of costs that
require prior approval in accordance with OMB Circular A-21, ``Cost
Principles for Institutions of Higher Education,'' OMB Circular A-122,
``Cost Principles for Non-Profit Organizations,'' or 45 CFR part 74
appendix E, ``Principles for Determining Costs Applicable to Research
and Development under Grants and Contracts with Hospitals,'' or 48 CFR
part 31, ``Contract Cost Principles and Procedures,'' as applicable.
(7) The transfer of funds allotted for training allowances (direct
payment to trainees) to other categories of expense.
(8) Unless described in the application and funded in the approved
awards, the subaward, transfer or contracting out of any work under an
award. This provision does not apply to the purchase of supplies,
material, equipment or general support services.
(d) No other prior approval requirements for specific items
described by this regulation 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, Grants Officers are authorized, at their option, to
waive cost-related and administrative prior written approvals required
by this regulation 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 Department. All
pre-award costs are incurred at the recipient's risk (i.e., the
Department 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
Department 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 Department
provides otherwise in the award, the prior approval requirements
described in paragraph (e) are automatically waived (i.e., recipients
need not obtain such prior approvals) unless one of the conditions
included in paragraph (e)(2) applies.
(f) The Department may, at its option, restrict the transfer of
funds among direct cost categories or programs, functions and
activities for awards in which the Federal share of the project exceeds
$100,000 and the cumulative amount of such transfers exceeds or is
expected to exceed 10 percent of the total budget as last approved by
the Grants Officer. Grants Officers shall not permit a transfer that
would cause any Federal appropriation or part thereof to be used for
purposes other than those consistent with the original intent of the
appropriation.
(g) All other changes to nonconstruction budgets, except for the
changes described in paragraph (j), do not require prior approval.
(h) For construction awards, recipients shall request prior written
approval promptly from the Grants Officer for budget revisions whenever
paragraphs (h) (1), (2) or (3) of this section apply.
(1) The revision results from changes in the scope or the objective
of the project or program.
(2) The need arises for additional Federal funds to complete the
project.
(3) A revision is desired which involves specific costs for which
prior written approval requirements may be imposed consistent with
applicable OMB cost principles listed in Sec. 145.27.
(i) No other prior approval requirements for specific items may be
imposed unless a deviation has been approved by OMB.
(j) When the Department makes an award that provides support for
both construction and nonconstruction work, the Department may require
the recipient to request prior approval from the Department before
making any fund or budget transfers between the two types of work
supported.
(k) For both construction and nonconstruction awards, the
Department shall require recipients to notify the Department 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
$5,000 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, the Grants Officer shall review the request and
notify the recipient whether the budget revisions have been approved.
If the revision is still under consideration at the end of 30 calendar
days, the Grants Officer shall inform the recipient in writing of the
date when the recipient may expect the decision.
Sec. 145.26 Non-Federal audits.
(a) Recipients and subrecipients that are institutions of higher
education or other non-profit organizations shall be subject to the
audit requirements contained in OMB Circular A-133, ``Audits of
Institutions of Higher Education and Other Non-Profit Institutions.''
(b) State and local governments shall be subject to the audit
requirements contained in the Single Audit Act (31 U.S.C. 7501-7) and
Department regulations at part 135 of this chapter implementing OMB
Circular A-128, ``Audits of State and Local Governments.''
(c) Hospitals not covered by the audit provisions of OMB Circular
A-133 shall be subject to the audit requirements of the Department.
(d) Commercial organizations shall be subject to the audit
requirements of the Department or the prime recipient as incorporated
into the award document.
Sec. 145.27 Allowable costs.
For each kind of recipient, there is a set of Federal principles
for determining allowable costs. Allowability of costs shall be
determined in accordance with the cost principles applicable to the
entity incurring the costs. Thus, allowability of costs incurred by
State, local or federally-recognized Indian tribal governments is
determined in accordance with the provisions of OMB Circular A-87,
``Cost Principles for State and Local Governments.'' The allowability
of costs incurred by non-profit organizations is determined in
accordance with the provisions of OMB Circular A-122, ``Cost Principles
for Non-Profit Organizations.'' The allowability of costs incurred by
institutions of higher education is determined in accordance with the
provisions of OMB Circular A-21, ``Cost Principles for Educational
Institutions.'' The allowability of costs incurred by hospitals is
determined in accordance with the provisions of appendix E of 45 CFR
part 74, ``Principles for Determining Costs Applicable to Research and
Development Under Grants and Contracts with Hospitals.'' The
allowability of costs incurred by commercial organizations and those
non-profit organizations listed in Attachment C to Circular A-122 is
determined in accordance with the provisions of the Federal Acquisition
Regulation (FAR) at 48 CFR part 31.
Sec. 145.28 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
Department, unless otherwise provided in the grant or cooperative
agreement.
Property Standards
Sec. 145.30 Purpose of property standards.
Sections 145.31 through 145.37 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 Department 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. 145.31 through 145.37.
Sec. 145.31 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. 145.32 Real property.
Each award shall prescribe any applicable requirements for
recipients concerning the use and disposition of real property acquired
in whole or in part under awards. Unless otherwise provided by statute,
such requirements, at a minimum, shall contain the following:
(a) Title to real property shall vest in the recipient subject to
the condition that the recipient shall use the real property for the
authorized purpose of the project as long as it is needed and shall not
encumber the property without approval of the Department.
(b) The recipient shall obtain written approval by the Department
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
Department.
(c) When the real property is no longer needed as provided in
paragraphs (a) and (b), the recipient shall request disposition
instructions from the cognizant Grants Officer. The Department shall
observe one or more of the following disposition instructions.
(1) The recipient may be permitted to retain title without further
obligation to the Federal Government after it compensates the Federal
Government for that percentage of the current fair market value of the
property attributable to the Federal participation in the project.
(2) The recipient may be directed to sell the property under
guidelines provided by the Department 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. 145.33 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 Department. Upon completion of the award or when the
property is no longer needed, the recipient shall report the property
to the Department for further Federal agency utilization.
(2) If the Department has no further need for the property, it
shall be declared excess and reported to the General Services
Administration, unless the Department 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 Executive Order 12821, ``Improving Mathematics and
Science Education in Support of the National Education Goals.'')
Appropriate instructions shall be issued to the recipient by the
Department.
(b) Exempt property. When statutory authority exists, the
Department 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 Department considers
appropriate. Such property is ``exempt property.'' Should the
Department not establish conditions, title to exempt property upon
acquisition shall vest in the recipient without further obligation to
the Federal Government.
Sec. 145.34 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 Department. 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: First, Activities
sponsored by the Department which funded the original project, then
activities sponsored by other the Department.
(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
Department that financed the equipment; second preference shall be
given to projects or programs sponsored by other the Department. 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 Department. 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 Department.
(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 Department 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 Department.
(5) Adequate maintenance procedures shall be implemented to keep
the equipment in good condition.
(6) Where the recipient is authorized or required to sell the
equipment, proper sales procedures shall be established which provide
for competition to the extent practicable and result in the highest
possible return.
(g) When the recipient no longer needs the equipment, the equipment
may be used for other activities in accordance with the following
standards. For equipment with a current per unit fair market value of
$5,000 or more, the recipient may retain the equipment for other uses
provided that compensation is made to the original agency or its
successor. The amount of compensation shall be computed by applying the
percentage of Federal participation in the cost of the original project
or program to the current fair market value of the equipment. If the
recipient has no need for the equipment, the recipient shall request
disposition instructions from the Department. The Department 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 Department to determine whether a requirement for
the equipment exists in other Federal agencies. The Department 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 Department 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 Department for such
costs incurred in its disposition.
(4) The Department may reserve the right to transfer the title to
the Federal Government or to a third party named by the Federal
Government when such third party is otherwise eligible under existing
statutes. Such transfer shall be subject to the following standards.
(i) The equipment shall be appropriately identified in the award or
otherwise made known to the recipient in writing.
(ii) The Department 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 Department fails to issue disposition instructions
within the 120 calendar day period, the recipient shall apply the
standards of this section, as appropriate.
(iii) When the Department exercises its right to take title, the
equipment shall be subject to the provisions for federally-owned
equipment.
Sec. 145.35 Supplies and other expendable property.
(a) Title to supplies and other expendable property shall vest in
the recipient upon acquisition. If there is a residual inventory of
unused supplies exceeding $5,000 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. 145.36 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 Department 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 Department of Commerce at 37 CFR part 401, ``Rights to Inventions
Made by Nonprofit Organizations and Small Business Firms Under
Government Grants, Contracts and Cooperative Agreements.''
(c) Unless waived by the Department, the Federal Government has the
right to:
(1) Obtain, reproduce, publish or otherwise use the data first
produced under an award.
(2) Authorize others to receive, reproduce, publish, or otherwise
use such data for Federal purposes.
(d) Title to intangible property and debt instruments acquired
under an award or subaward vests upon acquisition in the recipient. The
recipient shall use that property for the originally-authorized
purpose, and the recipient shall not encumber the property without
approval of the Department. When no longer needed for the originally
authorized purpose, disposition of the intangible property shall occur
in accordance with the provisions of Sec. 145.34(g).
Sec. 145.37 Property trust relationship.
Real property, equipment, intangible property and debt instruments
that are acquired or improved with Federal funds shall be held in trust
by the recipient as trustee for the beneficiaries of the project or
program under which the property was acquired or improved. Agencies may
require recipients to record liens or other appropriate notices of
record to indicate that personal or real property has been acquired or
improved with Federal funds and that use and disposition conditions
apply to the property.
Procurement Standards
Sec. 145.40 Purpose of procurement standards.
Sections 145.41 through 145.48 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 Department upon recipients, unless
specifically required by Federal statute or executive order or approved
by OMB. The standards in Secs. 145.1 through 145.48 do not apply to
small awards, except where imposed by Federal statute or Executive
Order.
Sec. 145.41 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 Department, regarding the settlement and satisfaction
of all contractual and administrative issues arising out of
procurements entered into in support of an award or other agreement.
This includes disputes, claims, protests of award, source evaluation or
other matters of a contractual nature. Matters concerning violation of
statute are to be referred to such Federal, State or local authority as
may have proper jurisdiction.
Sec. 145.42 Code 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. 145.43 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. 145.44 Procurement procedures.
(a) All recipients shall establish written procurement procedures.
These procedures shall provide for, at a minimum, that paragraphs
(a)(1), (2) and (3) of this section apply.
(1) Recipients avoid purchasing unnecessary items.
(2) Where appropriate, an analysis is made of lease and purchase
alternatives to determine which would be the most economical and
practical procurement for the Federal Government.
(3) Solicitations for goods and services provide for all of the
following:
(i) A clear and accurate description of the technical requirements
for the material, product or service to be procured. In competitive
procurements, such a description shall not contain features which
unduly restrict competition.
(ii) Requirements which the bidder/offeror must fulfill and all
other factors to be used in evaluating bids or proposals.
(iii) A description, whenever practicable, of technical
requirements in terms of functions to be performed or performance
required, including the range of acceptable characteristics or minimum
acceptable standards.
(iv) The specific features of ``brand name or equal'' descriptions
that bidders are required to meet when such items are included in the
solicitation.
(v) The acceptance, to the extent practicable and economically
feasible, of products and services dimensioned in the metric system of
measurement.
(vi) Preference, to the extent practicable and economically
feasible, for products and services that conserve natural resources and
protect the environment and are energy efficient.
(b) Positive efforts shall be made by recipients to utilize small
businesses, minority-owned firms, and women's business enterprises,
whenever possible. Recipients of Federal awards shall take all of the
following steps to further this goal.
(1) Ensure that small businesses, minority-owned firms, and women's
business enterprises are used to the fullest extent practicable.
(2) Make information on forthcoming opportunities available and
arrange time frames for purchases and contracts to encourage and
facilitate participation by small businesses, minority-owned firms, and
women's business enterprises.
(3) Consider in the contract process whether firms competing for
larger contracts intend to subcontract with small businesses, minority-
owned firms, and women's business enterprises.
(4) Encourage contracting with consortiums of small businesses,
minority-owned firms and women's business enterprises when a contract
is too large for one of these firms to handle individually.
(5) Use the services and assistance, as appropriate, of such
organizations as the Small Business Administration and the Department
of Commerce's Minority Business Development Agency in the solicitation
and utilization of small businesses, minority-owned firms and women's
business enterprises.
(c) The type of procurement instruments used (e.g., fixed price
contracts, cost reimbursement 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 awarded only to 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 implementation of E.O.s 12549 and
12689, ``Debarment and Suspension,'' implemented at 22 CFR 137.
(e) Recipients shall, on request, make available for the
Department, pre-award review and procurement documents, such as request
for proposals or invitations for bids, independent cost estimates,
etc., when any of the following conditions apply.
(1) A recipient's procurement procedures or operation fails to
comply with the procurement standards in the Department's
implementation of this regulation.
(2) The procurement is expected to exceed the small purchase
limitation 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
limitation, specifies a ``brand name'' product.
(4) The proposed award over the small purchase limitation is to be
awarded to other than the apparent low bidder under a sealed bid
procurement.
(5) A proposed contract modification changes the scope of a
contract or increases the contract amount by more than the amount of
the small purchase limitation.
Sec. 145.45 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. 145.46 Procurement records.
Procurement records and files for purchases in excess of the small
purchase limitation 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. 145.47 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. 145.48 Contract clauses.
The recipient shall include, in addition to clauses to define a
sound and complete agreement, the following clauses in all contracts.
The following clauses shall also be applied to subcontracts.
(a) Contracts in excess of the small purchase limitation shall
contain contract clauses 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 limitation shall
contain suitable clauses for termination by the recipient, including
the manner by which termination shall be effected and the basis for
settlement. The clauses shall describe conditions under which the
contract may be terminated by the recipient for default of the
contractor as well as conditions where the contract may be terminated
for convenience 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 Department
may accept the bonding policy and requirements of the recipient,
provided the Department 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 or other amount approved by the Grants
Officer. A ``performance bond'' is one executed in connection with a
contract to secure fulfillment of all the contractor's obligations
under such contract.
(3) A payment bond on the part of the contractor for 100 percent of
the contract price. A ``payment bond'' is one executed in connection
with a contract to assure payment as required by statute of all persons
supplying labor and material in the execution of the work provided for
in the contract.
(4) Where bonds are required in the situations described herein,
the bonds shall be obtained from companies holding certificates of
authority as acceptable sureties pursuant to 31 CFR part 223, ``Surety
Companies Doing Business with the United States.''
(d) All negotiated contracts (except those for less than the small
purchase limitation) awarded by recipients shall include a provision to
the effect that the recipient, the Department, 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 contract clauses in appendix A
to this regulation, as applicable.
Reports and Records
Sec. 145.50 Purpose of reports and records.
Sections 145.51 through 145.53 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. 145.51 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. 145.26.
(b) The Department shall prescribe the frequency with which the
performance reports shall be submitted. Except as provided in
Sec. 145.51(f), performance reports shall not be required more
frequently than quarterly or, less frequently than annually. Annual
reports shall be due 90 calendar days after the grant year; quarterly
or semi-annual reports shall be due 30 days after the reporting period.
The Department 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 Department of
developments that have a significant impact on the award-supported
activities. Also, notification shall be given in the case of problems,
delays, or adverse conditions which materially impair the ability to
meet the objectives of the award. This notification shall include a
statement of the action taken or contemplated, and any assistance
needed to resolve the situation.
(g) The Department may make site visits, as needed.
(h) The Department shall comply with clearance requirements of 5
CFR part 1320 when requesting performance data from recipients.
Sec. 145.52 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) The Department shall require recipients to use the SF-269 or
SF-269A to report the status of funds for all nonconstruction projects
or programs, unless an equivalent form has been prescribed by the
Grants Officer and approved by the OMB and the Office of the
Procurement Executive (A/OPE), e.g., Form JF-61 for the Office of
Overseas Schools (A/OPR/OS). The Department may also have the option of
not requiring the SF-269 or SF-269A when the SF-270, Request for
Advance or Reimbursement, or SF-272, Report of Federal Cash
Transactions, is determined to provide adequate information to meet its
needs, except that a final SF-269 or SF-269A shall be required at the
completion of the project when the SF-270 is used only for advances.
(ii) The Grants Officer shall prescribe whether the report shall be
on a cash or accrual basis. If the Department 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 Department 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 Department 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 Department
upon request of the recipient.
(2) SF-272, Report of Federal Cash Transactions
(i) When funds are advanced to recipients the Department shall
require each recipient to submit the SF-272 and, when necessary, its
continuation sheet, SF-272a. The Department shall use this report to
monitor cash advanced to recipients and to obtain disbursement
information for each agreement with the recipients.
(ii) The Department may require forecasts of Federal cash
requirements in the ``Remarks'' section of the report.
(iii) When practical and deemed necessary, the Department may
require recipients to report in the ``Remarks'' section the amount of
cash advances received in excess of three days. Recipients shall
provide short narrative explanations of actions taken to reduce the
excess balances.
(iv) Recipients shall be required to submit not more than the
original and two copies of the SF-272 15 calendar days following the
end of each quarter. The Department 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 Department needs additional information or more
frequent reports, the following shall be observed.
(1) When additional information is needed to comply with
legislative requirements, the Department shall issue instructions to
require recipients to submit such information under the ``Remarks''
section of the reports.
(2) When the Department determines that a recipient's accounting
system does not meet the standards in Sec. 145.21, 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 Department, in obtaining this information, shall comply
with report clearance requirements of 5 CFR part 1320.
(3) The Grants Officer may ``shade out'' any line item on any
report if not necessary.
(4) The Department 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 Department may provide computer or electronic outputs to
recipients when such expedites or contributes to the accuracy of
reporting.
Sec. 145.53 Retention and access requirements for records.
(a) This section sets forth requirements for record retention and
access to records for awards to recipients. The Department 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 Department. 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
Department, the 3-year retention requirement is not applicable to the
recipient.
(4) Indirect cost rate proposals, cost allocations plans, etc. as
specified in Sec. 145.53(g).
(c) Copies of original records may be substituted for the original
records if authorized by the Department.
(d) The Department 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, the Department may make arrangements for recipients to
retain any records that are continuously needed for joint use.
(e) The Department, the Inspector General, Comptroller General of
the United States, or any of their duly authorized representatives,
have the right of timely and unrestricted access to any books,
documents, papers, or other records of recipients that are pertinent to
the awards, in order to make audits, examinations, excerpts,
transcripts and copies of such documents. This right also includes
timely and reasonable access to a recipient's personnel for the purpose
of interview and discussion related to such documents. The rights of
access in this paragraph are not limited to the required retention
period, but shall last as long as records are retained.
(f) Unless required by statute, no Department shall place
restrictions on recipients that limit public access to the records of
recipients that are pertinent to an award, except when the Department
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
Department.
(g) Indirect cost rate proposals, cost allocations plans, etc.
Paragraphs (g)(1) and (g)(2) apply to the following types of documents,
and their supporting records: Indirect cost rate computations or
proposals, cost allocation plans, and any similar accounting
computations of the rate at which a particular group of costs is
chargeable (such as computer usage chargeback rates or composite fringe
benefit rates).
(1) If submitted for negotiation. If the recipient submits to the
Department or the subrecipient submits to the recipient the proposal,
plan, or other computation to form the basis for negotiation of the
rate, then the 3-year retention period for its supporting records
starts on the date of such submission.
(2) If not submitted for negotiation. If the recipient is not
required to submit to the Department 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. 145.60 Purpose of termination and enforcement.
Sections 145.61 and 145.62 set forth uniform suspension,
termination and enforcement procedures.
Sec. 145.61 Termination.
(a) Awards may be terminated in whole or in part only if paragraphs
(a) (1), (2) or (3) of this section apply.
(1) By the Department, if a recipient materially fails to comply
with the terms and conditions of an award.
(2) By the Department, 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 Department 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 Department determines in the case of
partial termination that the reduced or modified portion of the grant
will not accomplish the purposes for which the grant was made, it may
terminate the grant in its entirety under either paragraphs (a) (1) or
(2).
(b) If costs are allowed under an award, the responsibilities of
the recipient referred to in Sec. 145.71(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. 145.62 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 Department may, in addition to imposing any of the special
conditions outlined in Sec. 145.14, take one or more of the following
actions, as appropriate in the circumstances.
(1) Temporarily withhold cash payments pending correction of the
deficiency by the recipient or more severe enforcement action by the
Department.
(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 Executive Orders 12549 and 12689 and the
implementing regulations at 22 CFR part 137.
Subpart D--After-the-Award Requirements
Sec. 145.70 Purpose.
Sections 145.71 through 145.73 contain closeout procedures and
other procedures for subsequent disallowances and adjustments.
Sec. 145.71 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.
(c) The Department shall make prompt payments to a recipient for
allowable reimbursable costs under the award being closed out.
(d) The recipient shall promptly refund any balances of unobligated
cash that the Department 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
Department 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. 145.31 through 145.37.
(g) In the event a final audit has not been performed prior to the
closeout of an award, the Department shall retain the right to recover
an appropriate amount after fully considering the recommendations on
disallowed costs resulting from the final audit.
Sec. 145.72 Subsequent adjustments and continuing responsibilities.
(a) The closeout of an award does not affect any of the following:
(1) The right of the Department 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. 145.26.
(4) Property management requirements in Secs. 145.31 through
145.37.
(5) Records retention as required in Sec. 145.53.
(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 Department and the recipient, provided the responsibilities of the
recipient referred to in Sec. 145.73(a), including those for property
management as applicable, are considered and provisions made for
continuing responsibilities of the recipient, as appropriate.
Sec. 145.73 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
Department may reduce the debt by:
(1) Making an administrative offset against other requests for
reimbursements.
(2) Withholding advance payments otherwise due to the recipient.
(3) Taking other action permitted by statute.
(b) Except as otherwise provided by law, the Department shall
charge interest on an overdue debt in accordance with 4 CFR Chapter II,
Federal Claims Collection Standards.
Appendix A to Part 145--Clauses for Contracts and Small Purchases
Awarded by Recipient
All contracts and small purchases, awarded by a recipient who is
subject to this regulation, shall contain the following clauses, as
applicable:
1. Equal Employment Opportunity--All contracts shall contain a
clause requiring compliance with Executive Order 11246, ``Equal
Employment Opportunity,'' as amended by Executive Order 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 clause 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 Department.
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 clause 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 Department.
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 clause 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 Department.
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 clause 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 Department 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 (Executive Orders 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 Executive Orders 12549
and 12689, ``Debarment and Suspension.'' This list contains the
names of parties debarred, suspended, or otherwise excluded by
agencies, and contractors declared ineligible under statutory or
regulatory authority other than Executive Order 12549. Contractors
with awards that exceed the small purchase limitation shall provide
the required certification regarding its exclusion status and that
of its principal employees.
[FR Doc. 94-9181 Filed 4-19-94; 8:45 am]
BILLING CODE 4710-24-P
