[Federal Register Volume 60, Number 143 (Wednesday, July 26, 1995)]
[Rules and Regulations]
[Pages 38241-38256]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-18157]
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DEPARTMENT OF JUSTICE
Office of Justice Programs
28 CFR Part 70
[OJP No. 1004; AG Order No. 1980-95]
RIN 1121-AA18
Uniform Administrative Requirements for Grants and Agreements
With Institutions of Higher Education, Hospitals and Other Non-Profit
Organizations
January 23, 1995.
AGENCY: Department of Justice.
ACTION: Final rule.
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SUMMARY: On November 29, 1993, the Office of Management and Budget
(OMB) published a revision of OMB Circular A-110. The Circular is
applicable to awards made by Federal agencies and subawards made by
States to nongovernmental entities. This rule implements the OMB
Circular A-110.
FOR FURTHER INFORMATION CONTACT:Cynthia J. Schwimer, Director,
Financial Management Division, Office of the Comptroller, Office of
Justice Programs at 202-307-3186.
EFFECTIVE DATE: July 26, 1995.
SUPPLEMENTARY INFORMATION: This final rule amends 28 CFR by setting
forth a new part 70 to enact the changes established by revised OMB
Circular A-110, ``Uniform Administrative Requirements for Grants and
Agreements with Institutions of Higher Education, Hospitals and Other
Non-Profit Institutions,'' published by OMB on November 29, 1993 (58 FR
62992).
In November 1990, OMB established an interagency task force to
revise Circular A-110. The task force developed a proposed revision of
the Circular, which OMB published with a request for comments on August
27, 1992 (57 FR 39018). After considering the over 200 comments from a
wide variety of Federal and non-Federal respondents, OMB published the
final revised Circular in the Federal Register on November 29, 1993 (58
FR 62992).
OMB Circular A-110 sets forth government-wide standards governing
Federal agency administration of grants and other agreements with
institutions of higher education, hospitals and other non-profit
organizations. Federal agencies must apply the provisions of the
Circular in making awards to the covered entities; all primary
recipients (including governments) of Federal awards must also apply
the Circular's provisions to any subawards they make to such entities.
Those provisions that affect Federal agencies were effective on
December 29, 1993 (58 FR 62992-93). With respect to the Circular's
application to recipients of Federal agency awards, OMB's notice
directed each agency to promulgate its own rules adopting the
provisions of the Circular (58 FR 62992-93).
Agency specific rules must follow the provisions of the Circular
unless OMB has granted the agency an exception for classes of
recipients of awards from a particular requirement of the Circular (58
FR 62992, 62995). The terms of the Circular, however, permit Federal
awarding agencies to make exceptions on an award-by-award basis without
prior OMB approval and to apply less restrictive requirements in the
case of small awards. Where a conflict exists between a provision of
the Circular and
[[Page 38242]]
a statute, the statute governs (58 FR 62992-93, 62995).
With respect to our implementation of the Circular, in general, we
have faithfully followed its provisions. However, in several instances
we have either elaborated on a provision or modified it to make it
pertain more clearly to the Department of Justice's (the Department)
environment. Directives made strictly to the Federal agencies and not
to grantees have been deleted.
A notice of proposed rulemaking is not necessary for this
regulation because OMB obtained public comments in the development of
the Circular, and the Circular was written in a regulatory format.
Furthermore, OMB requires that Federal agencies implement the Circular
within six months of its publication.
Impact Analysis
1. Executive Order 12866
This regulation has been drafted and reviewed in accordance with
Executive Order 12866, 1(b), Principles of Regulation. This rule is not
a significant regulatory action under Executive Order 12866, 3(f),
Regulatory Planning and Review, and accordingly, this rule has not been
reviewed by OMB.
2. Regulatory Flexibility Act
This rule has been reviewed in accordance with the requirements of
the Regulatory Flexibility Act of 1980 (5 U.S.C. 601 et seq.) The
Attorney General has determined that compliance with the rule would not
have a significant economic impact on a substantial number of small
entities and, therefore, a Regulatory Flexibility Analysis is not
required.
3. Paperwork Reduction Act
The information collection requirements contained in this rule are
cleared by OMB as Standard Forms.
Catalog of Federal Domestic Assistance
This rule affects all of the grant programs administered by the
Department.
List of Subjects in 28 CFR Part 70
Accounting; Administrative practice and procedures; Grant
programs--health; Grant programs--social programs; Grants
administration; and Reporting and recordkeeping requirements.
For the reasons set out in the preamble, Title 28, Chapter I of the
Code of Federal Regulations is amended by adding the new part 70 as set
forth below.
PART 70--UNIFORM ADMINISTRATIVE REQUIREMENTS FOR GRANTS AND
AGREEMENTS (INCLUDING SUBAWARDS) WITH INSTITUTIONS OF HIGHER
EDUCATION, HOSPITALS AND OTHER NON-PROFIT ORGANIZATIONS
Subpart A--General
Sec.
70.1 Purpose and applicability.
70.2 Definitions.
70.3 Effect on other issuances.
70.4 Deviations.
70.5 Subawards.
Subpart B--Pre-Award Requirements
70.10 Purpose.
70.11 Pre-award policies.
70.12 Forms for applying for Federal assistance.
70.13 Debarment and suspension.
70.14 Special award conditions.
70.15 Metric system of measurement.
70.16 Resource Conservation and Recovery Act (RCRA) (Pub. L. 94-580
Codified at 42 U.S.C. 6962).
70.17 Certifications and representations.
Subpart C--Post-Award Requirements
Financial and Program Management
70.20 Purpose of financial and program management.
70.21 Standards for financial management systems.
70.22 Payment.
70.23 Cost sharing or matching.
70.24 Program income.
70.25 Revision of budget and program plans.
70.26 Non-Federal audits.
70.27 Allowable costs.
70.28 Period of availability of funds.
Property Standards
70.30 Purpose of property standards.
70.31 Insurance coverage.
70.32 Real property.
70.33 Federally-owned and exempt property.
70.34 Equipment.
70.35 Supplies and other expendable property.
70.36 Intangible property.
70.37 Property trust relationship.
Procurement Standards
70.40 Purpose of procurement standards.
70.41 Recipient responsibilities.
70.42 Codes of conduct.
70.43 Competition.
70.44 Procurement procedures.
70.45 Cost and price analysis.
70.46 Procurement records.
70.47 Contract administration.
70.48 Contract provisions.
Reports and Records
70.50 Purpose of reports and records.
70.51 Monitoring and reporting program performance.
70.52 Financial reporting.
70.53 Retention and access requirements for records.
Termination and Enforcement
70.60 Purpose of termination and enforcement.
70.61 Termination.
70.62 Enforcement.
Subpart D--After-the-Award Requirements
70.70 Purpose.
70.71 Closeout procedures.
70.72 Subsequent adjustments and continuing responsibilities.
70.73 Collection of amounts due.
Appendix A to Part 70--Contract Provisions
Authority: 5 U.S.C. 301; the Omnibus Crime Control and Safe
Streets Act of 1968, 42 U.S.C. 3711, et seq. (as amended); Juvenile
Justice and Delinquency Prevention Act of 1974, 42 U.S.C. 5601, et
seq. (as amended); Victims of Crime Act of 1984, 42 U.S.C. 10601, et
seq. (as amended); 18 U.S.C. 4042, 4351-4353.
Subpart A--General
Sec. 70.1 Purpose and applicability.
This part establishes uniform administrative requirements for the
Department grants and agreements awarded to institutions of higher
education, hospitals, and other non-profit organizations. It also
establishes rules governing how State, local and Indian tribal
governments shall administer subawards to nongovernmental entities.
Sec. 70.2 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
[[Page 38243]]
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 Department 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 the Department determines
that all applicable administrative actions and all required work of the
award have been completed by the recipient and the Department.
(h) Contract means a procurement contract under an award or
subaward, and a procurement subcontract under a recipient's or
subrecipient's contract.
(i) Cost sharing or matching means the portion of project or
program costs not borne by the Federal Government.
(j) The Department refers to the United States Department of
Justice awarding agencies, which include the Office of Justice Programs
(OJP), Community Relation Service (CRS), United States Marshals Service
(USMS), National Institute of Corrections (NIC), Office of Special
Counsel (OSC), and the Civil Rights Division (CRD).
(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 the Department sponsorship ends.
(l) Disallowed costs means those charges to an award that the
Department 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 $5000 or more per
unit. However, consistent with recipient policy, lower limits may be
established.
(n) Excess property means property under the control of the
Department 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 Department 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 funds authorized means the total amount of Federal
funds obligated by the Federal Government for use by the recipient.
This amount may include any authorized carryover of unobligated funds
from prior funding periods when permitted by agency regulations or
agency implementing instructions.
(q) Federal share of real property, equipment, or supplies means
that percentage of the property's acquisition costs and any improvement
expenditures paid with Federal funds.
(r) Funding period means the period of time when Federal funding is
available for obligation by the recipient.
(s) Independent Research and Development costs means research and
development conducted by an organization which is not sponsored by
Federal or non-Federal awards, contracts, or other agreements.
(t) 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.
(u) 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.
(v) 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.
(w) 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.
(x) Prior approval means written approval by an authorized official
evidencing prior consent.
(y) 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. 70.24 (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, interest on loans made with award funds, and income from
asset forfeitures accounted for from the time of seizure. Interest
earned on advances of Federal funds is not program income. Except as
otherwise provided in the Department 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.
(z) Project costs means all allowable costs, as set forth in the
applicable Federal costs 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.
(aa) Project period means the period established in the award
document during which Federal sponsorship begins and ends.
(bb) Property means, unless otherwise stated, real property,
equipment, intangible property and debt instruments.
(cc) Real property means land, including land improvements,
structures and appurtenances thereto,
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but excludes movable machinery and equipment.
(dd) Recipient means an organization receiving financial assistance
directly from the Department to carry out a project or program. The
term includes public and private institutions of higher education,
public and private hospitals, and other quasi-public and private non-
profit organizations such as, but not limited to, community action
agencies, research institutes, educational associations, and health
centers. The term may include commercial organizations, foreign or
international organizations (such as agencies of the United Nations)
which are recipients, subrecipients, or contractors or subcontractors
of recipients or subrecipients at the discretion of the Department. 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
designed as Federally-funded research and development centers.
(ee) 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.
(ff) Small awards means a grant or cooperative agreement not
exceeding the small purchase threshold fixed at 41 U.S.C. 403(11)
(currently $25,000).
(gg) 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. 70.2(e).
(hh) 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
Department.
(ii) 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.''
(jj) Suspension means an action by the Department that temporarily
withdraws the Department sponsorship under an award, pending corrective
action by the recipient or pending a decision to terminate the award by
the Department. Suspension of an award is a separate action from
suspension under the Department regulations implementing Exec. Order
No. 12549 and 12689, ``Debarment and Suspension.''
(kk) Termination means the cancellation of the Department
sponsorship, in whole or in part, under an agreement at any time prior
to the date of completion.
(ll) 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.
(mm) 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.
(nn) Unobligated balance means the portion of the funds authorized
by the Department that has not been obligated by the recipient and is
determined by deducting the cumulative obligations from the cumulative
funds authorized.
(oo) 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.
(pp) 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. 70.3 Effect on other issuances.
For awards subject to this part, all administrative requirements of
codified program regulations, program manuals, handbooks and other
nonregulatory materials which are inconsistent with the requirements of
this part shall be superseded, except to the extent they are required
by statute, or authorized in accordance with the deviations provision
in Sec. 70.4.
Sec. 70.4 Deviations.
OMB, after consultation with the Department's Division of Financial
Management and Grants Administration may grant exceptions for classes
of grants or recipients subject to the requirements of this part when
exceptions are not prohibited by statute. However, in the interest of
maximum uniformity, exceptions from the requirements of this part shall
be permitted only in unusual circumstances. The Department shall apply
more restrictive requirements to a class of recipients when approved by
OMB. The Department may apply less restrictive requirements when
awarding small awards, except for those requirements which are
statutory. Exceptions on a case-by-case basis may also be made by
Department.
Sec. 70.5 Subawards.
Unless sections of this part specifically exclude subrecipients
from coverage, all of the Department's recipients, including State and
local governments, shall apply the provisions of this part to
subrecipients performing work under awards if such subrecipients are
institutions of higher education, hospitals or other non-profit
organizations. State and local government subrecipients are subject to
the provisions of regulations implementing the grants management common
rule, ``Uniform Administrative Requirements for Grants and Cooperative
Agreements to State and Local Governments,'' published at 28 CFR part
66 (3/11/88).
Subpart B--Pre-Award Requirements
Sec. 70.10 Purpose.
Sections 70.11 through 70.17 prescribe forms and instructions and
other pre-award matters to be used in applying for the Department's
awards.
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Sec. 70.11 Pre-award policies.
(a) Use of grants and cooperative agreements, and contracts. In
each instance, the Department shall decide on the appropriate award
instrument (i.e., grant, cooperative agreement, or contract). The
Federal Grant and Cooperative Agreement Act (31 U.S.C. 6301-08) governs
the use of grants, cooperative agreements and contracts. A grant or
cooperative agreement shall be used only when the principal purpose of
a transaction is to accomplish a public purpose of support or
stimulation authorized by Federal statute. The statutory criterion for
choosing between grants and cooperative agreements is that for the
latter, ``substantial involvement is expected between the executive
agency and the State, local government, or other recipient when
carrying out the activity contemplated in the agreement.'' Contracts
shall be used when the principal purpose is acquisition of property or
services for the direct benefit or use of the Federal Government.
(b) Public notice and priority setting. The Department shall notify
the public of its intended funding priorities for discretionary grant
programs, unless funding priorities are established by Federal statute.
Sec. 70.12 Forms for applying for Federal assistance.
(a) The Department 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
Department as a supplement to the Standard Form 424 (SF-424) series.
(b) Applicants shall use the SF-424 series and instructions
prescribed by the Department.
(c) For the Department's programs covered by Exec. Order No. 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
``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.
Sec. 70.13 Debarment and suspension.
Recipients shall comply with the nonprocurement debarment and
suspension common rule implementing Exec. Order No. 12549 and 12689,
``Debarment and Suspension.'' This common rule restricts subawards and
contracts with certain parties that are debarred, suspended or
otherwise excluded from or ineligible for participation in Federal
assistance programs or activities.
Sec. 70.14 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 part, Has not conformed to the terms and
conditions of a previous award, or Is not otherwise responsible, the
Department will 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 will be promptly removed once the conditions that
prompted them have been corrected.
Sec. 70.15 Metric system of measurement.
The Metric Conversion Act, as amended by the Omnibus Trade and
Competitiveness Act (15 U.S.C. 205) declares that the metric system is
the preferred measurement system for U.S. trade and commerce. The Act
requires each Federal agency to establish a date or dates in
consultation with the Secretary of Commerce, when the metric system of
measurement will be used in the agency's procurements, grants, and
other business-related activities. Metric implementation may take
longer where the use of the system is initially impractical or likely
to cause significant inefficiencies in the accomplishment of Federally-
funded activities. The Department will follow the provisions of Exec.
Order No. 12770, ``Metric Usage in Federal Government Programs.''
Sec. 70.16 Resource Conservation and Recovery Act (RCRA) (Pub. L. No.
94-580 codified at 42 U.S.C. 6962).
Under the Act, any State agency or agency of a political
subdivision of a State which is using appropriated Federal funds must
comply with section 6002. Section 6002 requires that preference be
given in procurement programs to the purchase of specific products
containing recycled materials identified in guidelines developed by the
Environmental Protection Agency (EPA) (40 CFR parts 247-254).
Accordingly, State and local institutions of higher education,
hospitals, and non-profit organizations that receive direct Federal
awards or other Federal funds shall give preference in their
procurement programs funded with Federal funds to the purchase of
recycled products pursuant to the EPA guidelines.
Sec. 70.17 Certifications and representations.
Unless prohibited by statute or codified regulation, the Department
will allow recipients to submit certifications and representations
required by statute, executive order, or regulation on an annual basis,
if the recipients have ongoing and continuing relationships with the
agency. Annual certifications and representations must 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. 70.20 Purpose of financial and program management.
Sections 70.21 through 70.28 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. 70.21 Standards for financial management systems.
(a) Recipients must relate financial data to performance data and
development unit cost information whenever practical.
(b) Recipients' financial management systems must 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. 70.52. When the
Department requires reporting on an accrual basis from a recipient that
maintains its records on other than an accrual basis, the recipient
will 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 must contain
information pertaining to Federal awards, authorizations, obligations,
unobligated balances, assets, outlays, income and interest.
[[Page 38246]]
(3) Effective control over and accountability for all funds,
property and other assets. Recipients must 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 must 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) 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 will require adequate fidelity bond coverage
when the recipient lacks sufficient coverage to protect the Federal
Government's interest.
(e) Where bonds are required in the situations described above, the
bonds must 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. 70.22 Payment.
(a) Payment methods must 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 must
be consistent with Treasury-State CMIA agreements or default procedures
codified at 31 CFR part 205.
(b) Recipients may 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. 70.21. Cash advances to a recipient organization will 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 must 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 will 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 may 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 must be submitted
on SF-270, ``Request for Advance or Reimbursement.''
(e) Reimbursement is the method that will be used when the
requirements in paragraph (b) of this section 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 will make
payment within 30 days after receipt of the billing, unless the billing
is improper.
(2) Recipients will be authorized to submit requests 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 will 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 will
reimburse the recipient for its actual cash disbursements. The working
capital advance method of payment will 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 must 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 will not
withhold payments for proper charges made by recipients at any time
during the project period unless paragraph (h) (1) or (2) of this
section apply.
(1) A recipient has failed to comply with the project objectives,
the terms and conditions of the award, or the Department's 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, DOS may, upon reasonable
notice, inform the recipient that payments must not be made for
obligations incurred after a specified date until the conditions are
corrected or the indebtedness to the Federal Government is liquidated.
(i) Standards governing the use of banks and other institutions as
depositories of funds advanced under awards are as follows.
(1) Except for situations described in paragraph (i)(2) of this
section, the Department will 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 the Department funds must 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 are encouraged to use women-owned and minority-owned banks
(a bank which is owned at least fifty percent by women or minority
group members).
(k) Recipients must maintain advances of the Department's funds in
[[Page 38247]]
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 must be remitted annually to Department of Health and
Human Services, (HHS), Payment Management System, P.O. Box 6021,
Rockville, MD 20852. Interest amounts up to $250 per year may be
retained by the recipient for administrative expense. State
universities and hospitals must 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. In keeping with Electronic Funds Transfer rules, (31 CFR part
206), interest should be remitted to the HHS Payment Management System
through an electronic medium such as the FEDWIRE Deposit System.
Recipients which do not have this capability should use a check.
(m) Recipients must use the SF-270, Request for Advance or
Reimbursement or other standard form for all nonconstruction programs
when electronic funds transfer is not used.
Sec. 70.23 Cost sharing or matching.
(a) All contributions, including cash and third party in-kind, will
be accepted as part of the recipient's cost sharing or matching when
such contributions meet all of the following criteria.
(1) Are verifiable from the recipient's records.
(2) Are not included as contributions for any other Federally-
assisted project or program.
(3) Are necessary and reasonable for proper and efficient
accomplishment of project or program objectives.
(4) Are allowable under the applicable cost principles.
(5) Are not paid by the Federal Government under another award,
except where authorized by Federal statute to be used for cost sharing
or matching.
(6) Are provided for in the approved budget.
(7) Conform to other provisions of this Part, as applicable.
(b) Unrecovered indirect costs may be included as part of cost
sharing or matching only with the prior approval of the Department.
(c) Values for recipient contributions of services and property
must 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 must be the
lesser of paragraph (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 must 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 must 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 must 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 skills for which the
employee would normally be 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 must be reasonable and must 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 must be determined in accordance
with the usual accounting policies of the recipient, with the following
qualifications.
(1) The value of donated land and buildings must 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 must 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 must 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 must 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 must 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 must be documented.
Sec. 70.24 Program income.
(a) The standards set forth in this section requiring recipient
organizations to account for program income related to projects
financed in whole or in part with Department funds.
(b) Except as provided in paragraph (h) of this section, program
income earned during the project period must be retained by the
recipient and, in
[[Page 38248]]
accordance with the Department regulations or the terms and conditions
of the award, must 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 Department authorizes the disposition of program
income as described in paragraphs (b)(1) or (b)(2), of this section,
program income in excess of any limits stipulated must be used in
accordance with paragraph (b)(3) of this section.
(d) In the event that the Department does not specify in its
regulations or the terms and conditions of the award how program income
is to be used, paragraph (b)(3), of this section applies automatically
to all projects or programs.
(e) Unless the Department's regulations or the terms and conditions
of the award provide otherwise, recipients will 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 must be handled in
accordance with the requirements of the Property Standards (See
Secs. 70.30 through 70.37).
(h) Unless the terms and conditions of the award provide otherwise,
recipients will 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.
(i) Recipients must account for seized assets from the date of
seizure until forfeiture and liquidation of funds occur.
Sec. 70.25 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 the Department's requirements. It must be related to performance
for program evaluation purposes whenever appropriate.
(b) Recipients are required to report deviations from budget and
program plans, and request prior approvals for budget and program plan
revisions, in accordance with this section.
(c) For nonconstruction awards, recipients must request in writing
prior approval 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, 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) The Department restricts the transfer of funds among direct
cost categories or programs, functions and activities, without prior
written approval 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 ten percent of the total budget as last approved
by the Department. The Department will 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.
(e) All other changes to nonconstruction budgets, except for the
changes described in paragraph (h) of this section, do not require
prior approval.
(f) For construction awards, recipients must request prior written
approval promptly from the Department for budget revisions whenever
paragraph (e) (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 Department 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. 70.27.
(g) When the Department makes an award that provides support for
both construction and nonconstruction work, the Department will require
the recipient to request prior approval from the Department before
making any fund or budget transfers between the two types of work
supported.
(h) For both construction and nonconstruction awards, the
Department will 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
$5000 or five percent of the award, whichever is greater. This
notification will not be required if an application for additional
funding is submitted for a continuation award.
(i) When requesting approval for budget revisions, recipients must
use the budget forms that were used in the application unless the
Department indicates a letter of request suffices.
(j) Within thirty of the request for budget revisions, the
Department will 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 thirty calendar days, the Department will
inform the recipient in writing of the date when the recipient may
expect the decision.
Sec. 70.26 Non-Federal audits.
(a) Recipients and subrecipients that are institutions of higher
education or other non-profit organizations are subject to the audit
requirements contained in OMB Circular A-133, ``Audits of Institutions
of Higher
[[Page 38249]]
Education and Other Non-Profit Institutions.''
(b) State and local governments are subject to the audit
requirements contained in the Single Audit Act (31 U.S.C. 7501-7) and
the Department's regulations implementing OMB Circular A-128, ``Audits
of State and Local Governments.''
(c) Hospitals not covered by the audit provisions of OMB Circular
A-133 and commercial organizations must follow the audit thresholds in
OMB Circular A-133 in determining whether to conduct an audit in
accordance with Government Auditing Standards.
Sec. 70.27 Allowable costs.
(a) For each kind of recipient, there is a set of Federal
principles for determining allowable costs. Allowability of costs must
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 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.
(b) OMB Circular A-122 does not cover the treatment of bid and
proposal costs or independent research and development costs. The
following rules apply to these costs for non-profit organizations
subject to the Circular.
(1) Bid and proposal costs. Bid and proposal costs are the
immediate costs of preparing bids, proposals, and applications for
Federal and non-Federal awards, contracts, and agreements, including
the development of scientific, costs, and other data needed to support
the bids, proposals, and applications. Bid and proposal costs of the
current accounting period are all allowable as indirect costs. Bid and
proposal costs of past accounting periods are unallowable in the
current period. However, if the recipient's established practice is to
treat these costs by some other method, they may be accepted if they
are found to be reasonable and equitable. Bid and proposal costs do not
include independent research and development costs covered by paragraph
(b)(2) of this section, or preaward costs covered by Attachment B,
Paragraph 33 of OMB Circular A-122.
(2) Independent Research and Development costs. Independent
research and development shall must be allocated its proportionate
share of indirect costs on the same basis as the allocation of indirect
costs to sponsored research and development. The costs of independent
research and development, including its proportionate share of indirect
costs, are unallowable.
Sec. 70.28 Period of availability of funds.
Where a funding period is specified, a recipient must charge to the
grant only allowable costs resulting from obligations incurred during
the funding period and any pre-award costs authorized by the
Department.
Property Standards
Sec. 70.30 Purpose of property standards.
Sections 70.31 through 70.37 sets 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 will require recipients to observe these
standards under awards and will 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. 70.31 through 70.37.
Sec. 70.31 Insurance coverage.
Recipients must, 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. 70.32 Real property.
(a) Title to real property will vest in the recipient subject to
the condition that the recipient use the real property for the
authorized purpose of the project as long as it is needed and will not
encumber the property without approval of the Department.
(b) The recipient must 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 will 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) of this section, the recipient must request
disposition instructions from the Department. The Department will
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 must 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. 70.33 Federally-owned and exempt property.
(a) Federally-owned property. (1) Title to Federally-owned property
remains vested in the Federal Government. Recipients may be required by
the terms and conditions of the award, to 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 must report the property to the Department for further
Federal agency utilization.
(2) If the Department has no further need for the property, it will
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
[[Page 38250]]
U.S.C. 3710 (I)) to donate research equipment to educational and non-
profit organizations in accordance with Exec. Order No. 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. The Department will vest title to property
acquired with Federal funds in the recipient without further obligation
to the Federal Government when such property is ``exempt property.''
Sec. 70.34 Equipment.
(a) Title to equipment acquired by a recipient with Federal funds
will vest in the recipient, subject to conditions of this section.
(b) The recipient must 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 must 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 must not
encumber the property without approval of the Department. When no
longer needed for the original project or program, the recipient must
use the equipment in connection with its other Federally-sponsored
activities, in the following order of priority:
(1) Activities sponsored by the Department which funded the
original project, then
(2) Activities sponsored by other Federal awarding agencies.
(d) During the time that equipment is used on the project or
program for which it was acquired, the recipient must 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
must be given to other projects or programs sponsored by the
Department. Second preference must be given to projects or programs
sponsored by other Federal awarding agencies. If the equipment is owned
by the Federal Government, use on other activities not sponsored by the
Federal Government may be permissible if authorized in writing by the
Department. User charges must 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 written approval of the Department.
(f) The recipient's property management standards for equipment
acquired with Federal funds and Federally-owned equipment must include
all of the following:
(1) Equipment records must be maintained accurately and must
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 must be identified to
indicate Federal ownership.
(3) A physical inventory of equipment must be taken and the results
reconciled with the equipment records annually. Any differences between
quantities determined by the physical inspection and those shown in the
accounting records must be investigated to determine the causes of the
difference. The recipient must, in connection with the inventory,
verify the existence, current utilization, and continued need for the
equipment.
(4) A control system must be in effect to insure adequate
safeguards to prevent loss, damage, or theft of the equipment. Any
loss, damage, or theft of equipment must be investigated and fully
documented; if the equipment was owned by the Federal Government, the
recipient must promptly notify the Department.
(5) Adequate maintenance procedures must be implemented to keep the
equipment in good condition.
(6) Where the recipient is authorized or required to sell the
equipment, proper sales procedures must 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 Department or its successor.
The amount of compensation must 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 must request disposition
instructions from the Department. The Department will 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 must 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 will issue
instructions to the recipient no later than 120 calendar days after the
recipient's request and the following procedures will govern.
(1) If so instructed or if disposition instructions are not issued
within 120 calendar days after the recipient's request, the recipient
may 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 may 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 may 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 may be reimbursed by the Department for such
costs incurred in its disposition.
[[Page 38251]]
(4) The Department reserves the right to transfer the title to the
Federal Government or to a third party named by the Federal Government
when such third party is otherwise eligible under existing statutes.
Such transfer will be subject to the following standards.
(i) The equipment must be appropriately identified in the award or
otherwise made known to the recipient in writing.
(ii) The Department will issue disposition instructions within 120
calendar days after receipt of a final inventory. The final inventory
must 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 may apply the
standards of this section, as appropriate.
(iii) When the Department exercises its right to take title, the
equipment is subject to the provisions for Federally-owned equipment.
Sec. 70.35 Supplies and other expendable property.
(a) Title to supplies and other expendable property vests in the
recipient upon acquisition. If there is a residual inventory of unused
supplies exceeding $5000 in total aggregate value upon termination or
completion of the project or program and the supplies are not needed
for any other Federally-sponsored project or program, the recipient may
retain the supplies for use on non-Federal sponsored activities or sell
them, but must, in either case, compensate the Federal Government for
its share. The amount of compensation must be computer in the same
manner as for equipment.
(b) The recipient must 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. 70.36 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) The Department, unless expressly waived by the Department, has
the right to paragraphs (c) (1) and (2) of this section.
(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 must use that property for the originally-authorized purpose,
and the recipient must not encumber the property without approval of
the Department. When no longer needed for the originally authorized
purpose, disposition of the intangible property must occur in
accordance with the provisions of Sec. 70.34(g).
Sec. 70.37 Property trust relationship.
Real property, equipment, intangible property and debt instruments
that are acquired or improved with Federal funds must 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. Recipients
are required 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. 70.40 Purpose of procurement standards.
Sections 70.41 through 70.48 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 will be
imposed by the Department upon recipients, unless specifically required
by Federal statute or executive order or approved by OMB.
Sec. 70.41 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. 70.42 Codes of conduct.
The recipient must 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 must
provide for disciplinary actions to be applied for violations of such
standards by officers, employees, or agents of the recipient.
Sec. 70.43 Competition.
All procurement transactions must be conducted in a manner to
provide, to the maximum extent practical, open and free competition.
The recipient must 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 must be excluded from competing for such procurements.
Awards must be made to the bidder or offeror whose bid or offer is
responsive to the solicitation and is most advantageous to the
recipient,
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price, quality and other factors considered.
Solicitations must clearly set forth all requirements that the
bidder or offeror must 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. 70.44 Procurement procedures.
(a) All recipients must establish written procurement procedures.
These procedures must 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 must 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 must be made by recipients to utilize small
businesses, minority-owned firms, and women's business enterprises,
whenever possible. Recipients of Federal awards must take all of the
following steps to further this goal.
(1) Ensure that small businesses, minority-owned firms, and women's
business enterprises are used to the fullest extent practicable.
(2) Make information on forthcoming opportunities available and
arrange time frames for purchases and contracts to encourage and
facilitate participation by small businesses, minority-owned firms, and
women's business enterprises.
(3) Consider in the contract process whether firms competing for
larger contracts intend to subcontract with small businesses, minority-
owned firms, and women's business enterprises.
(4) Encourage contracting with consortiums of small businesses,
minority-owned firms and women's business enterprises when a contract
is too large for one of these firms to handle individually.
(5) Use the services and assistance, as appropriate, of such
organizations as the Small Business Administration and the Department
of Commerce's Minority Business Development Agency in the solicitation
and utilization of small businesses, minority-owned firms and women's
business enterprises.
(c) The type of procuring instruments used (e.g., fixed price
contracts, cost reimbursable contracts, purchase orders, and incentive
contracts) must be determined by the recipient and must 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 must not
be used.
(d) Contracts must be made only with responsible contractors who
possess the potential ability to perform successfully under the terms
and conditions of the proposed procurement. Consideration must be given
to such matters as contractor integrity, record of past performance,
financial and technical resources or accessibility to other necessary
resources. In certain circumstances, contracts with certain parties are
restricted by agencies' implementation of Exec. Order No. 12549 and
12689, ``Debarment and Suspension.''
(e) Recipients must, 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 regulation.
(2) The procurement is expected to exceed the small purchase
threshold fixed at 41 U.S.C. 403(11) (currently $25,000) and is to be
awarded without competition or only one bid or offer is received in
response to a solicitation.
(3) The procurement, which is expected to exceed the small purchase
threshold, specifies a ``brand name'' product.
(4) The proposed award over the small purchase threshold is to be
awarded to other than the apparent low bidder under a sealed bid
procurement.
(5) A proposed contract modification changes the scope of a
contract or increases the contract amount by more than the amount of
the small purchase threshold.
Sec. 70.45 Cost and price analysis.
Some form of cost or price analysis must 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. 70.46 Procurement records.
Procurement records and files for purchases in excess of the small
purchase threshold must 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. 70.47 Contract administration.
A system for contract administration must 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 must evaluate contractor performance and
document, as appropriate, whether contractors have met the terms,
conditions and specifications of the contract.
Sec. 70.48 Contract provisions.
The recipient must include, in addition to provisions to define a
sound and complete agreement, the following provisions in all
contracts. The following provisions must also be applied to
subcontracts.
(a) Contracts in excess of the small purchase threshold must
contain contractual provisions or conditions that allow for
administrative, contractual, or legal remedies in instances in which a
contractor violates or breaches the contract terms, and provide for
such remedial actions as may be appropriate.
(b) All contracts in excess of the small purchase threshold must
contain suitable provisions for termination by the recipient, including
the manner by
[[Page 38253]]
which termination must be effected and the basis for settlement. In
addition, such contracts must describe conditions under which the
contract may be terminated for default as well as conditions where the
contract may be terminated because of circumstances beyond the control
of the contractor.
(c) Except as otherwise required by statute, an award that requires
the contracting (or subcontracting) for construction or facility
improvements must 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 are to be as follows:
(1) A bid guarantee from each bidder equivalent to five percent of
the bid price. The ``bid guarantee'' must consist of a firm commitment
such as a bid bond, certified check, or other negotiable instrument
accompanying a bid as assurance that the bidder must, upon acceptance
of his bid, execute such contractual documents as may be required
within the time specified.
(2) A performance bond on the part of the contractor for 100
percent of the contract price. A ``performance bond'' is one executed
in connection with a contract to secure fulfillment of all the
contractor's obligations under such contract.
(3) A payment bond on the part of the contractor for 100 percent of
the contract price. A ``payment bond'' is one executed in connection
with a contract to assure payment as required by statute of all persons
supplying labor and material in the execution of the work provided for
in the contract.
(4) Where bonds are required in the situations described herein,
the bonds must be obtained from companies holding certificates of
authority as acceptable sureties pursuant to 31 CFR part 223, ``Surety
Companies Doing Business with the United States.''
(d) All negotiated contracts (except those for less than the small
purchase threshold) awarded by recipients must 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,
must 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 must contain the procurement provisions of
Appendix A to this part as applicable.
Reports and Records
Sec. 70.50 Purpose of reports and records.
Sections 70.51 through 70.53 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. 70.51 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 must monitor subawards to ensure subrecipients have
met the audit requirements as delineated in Sec. 70.26.
(b) Performance reports must be submitted based on each calendar
quarter. Reports are due thirty days after the reporting period, unless
stated differently in the terms and conditions of the award. The final
performance reports are due ninety calendar days after the expiration
or termination of the award.
(c) Performance reports must 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.
(d) Recipients are required to submit the original and two copies
of performance reports.
(e) Recipients must immediately notify DOS, in writing, of
developments that have a significant impact on the award-supported
activities. Also, written notification must 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 must
include a statement of the action taken or contemplated, and any
assistance needed to resolve the situation.
(f) The Department will make site visits, as needed.
(g) The Department will comply with clearance requirements of 5 CFR
part 1320 when requesting performance data from recipients.
Sec. 70.52 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) Recipients are required to use the SF-269 or SF-269A to report
the status of funds for all nonconstruction projects or programs.
(ii) Reports must be on an accrual basis. Recipients are not
required to convert their accounting system, but must develop such
accrual information through best estimates based on an analysis of the
documentation on hand.
(iii) The Department requires the SF-269, SF-269A, or turnaround
document to be submitted no later than forty days after the calendar
quarter. The final report is due ninety days from the end date of the
award.
(b) When the Department needs additional information or more
frequent reports, the following will be observed.
(1) When additional information is needed to comply with
legislative requirements, the Department will 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. 70.21, additional pertinent
information to further monitor awards will 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, will comply
with report clearance requirements of 5 CFR part 1320.
(3) The Department will accept the identical information from the
recipients in machine readable format or computer printouts or
electronic outputs in lieu of prescribed formats.
(4) The Department will provide computer or electronic outputs to
recipients when such expedites or contributes to the accuracy of
reporting.
Sec. 70.53 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 will not
impose any other record retention or access requirements upon
recipients.
[[Page 38254]]
(b) Financial records, supporting documents, statistical records,
and all other records pertinent to an award must 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 three year period, the records must 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 must be retained for three years after final disposition.
(3) When records are transferred to or maintained by DOS, the three
year retention requirement is not applicable to the recipient.
(4) Indirect cost rate proposals, cost allocations plans, etc. as
specified in Sec. 70.53(g).
(c) Copies of original records may be substituted for the original
records if authorized by the Department.
(d) The Department will 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 will make arrangements for recipients to
retain any records that are continuously needed for joint use.
(e) The Department, its 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 must last as long as records are retained.
(f) Unless required by statute, the Department will not 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 must 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 allocation plans, etc.
Paragraphs (g)(1) and (g)(2) of this section apply to the following
types of documents, and their supporting records: Indirect cost rate
computations or proposals, cost allocation plans, and any similar
accounting computations of the rate at which a particular group of
costs is chargeable (such as computer usage chargeback rates or
composite fringe benefit rates).
(1) If 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 three 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 three 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. 70.60 Purpose of termination and enforcement.
Sections 70.61 and 70.62 set forth uniform suspension, termination
and enforcement procedures.
Sec. 70.61 Termination.
(a) Awards may be terminated in whole or in part only if paragraph
(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 must 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 paragraph (a) (1) or
(2) of this section.
(b) If costs are allowed under an award, the responsibilities of
the recipient referred to in Sec. 70.71(a), including those for
property management as applicable, must be considered in the
termination of the award, and provision must be made for continuing
responsibilities of the recipient after termination, as appropriate.
Sec. 70.62 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 will, in addition to imposing any of the special
conditions outlined in Sec. 70.14, 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
Department will 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 Department 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.
[[Page 38255]]
(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 Exec. Order No. 12549 and 12689 and DOS
implementing regulations (see Sec. 70.13).
Subpart D--After-the-Award Requirements
Sec. 70.70 Purpose.
Sections 70.71 through 70.73 contain closeout procedures and other
procedures for subsequent disallowances and adjustments.
Sec. 70.71 Closeout procedures.
(a) Recipients must 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
Department may approve extensions when requested in writing by the
recipient.
(b) Unless the Department authorizes an extension, a recipient must
liquidate all obligations incurred under the award not later than
ninety calendar days after the funding period or the date of completion
as specified in the terms and conditions of the award or in agency
implementing instructions.
(c) The Department will make prompt payments to a recipient for
allowable reimbursable costs under the award being closed out.
(d) The recipient must 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 will make a settlement for any upward or downward
adjustments to the Federal share of costs after closeout reports are
received.
(f) The recipient must account for any real and personal property
acquired with Federal funds or received from the Federal Government in
accordance with Secs. 70.31 through 70.37.
(g) In the event a final audit has not been performed prior to the
closeout of an award, the Department retains the right to recover an
appropriate amount after fully considering the recommendations on
disallowed costs resulting from the final audit.
Sec. 70.72 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. 70.26.
(4) Property management requirements in Secs. 70.31 through 70.37.
(5) Records retention as required in Sec. 70.53.
(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. 70.73(a), including those for property
management as applicable, are considered and provisions made for
continuing responsibilities of the recipient, as appropriate.
Sec. 70.73 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 paragraph (a) (1), (2) or (3) of this
section.
(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 may charge
interest on an overdue debt in accordance with 4 CFR Chapter II,
``Federal Claims Collection Standards.''
Appendix A to Part 70--Contract Provisions
All contracts, awarded by a recipient including small purchases,
must contain the following provisions as applicable:
1. Equal Employment Opportunity--All contracts must contain a
provision requiring compliance with Exec. Order No. 11246, ``Equal
Employment Opportunity,'' as amended by Exec. Order No. 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 subawards in excess of $2000 for
construction or repair awarded by recipients and subrecipients must
include a provision for compliance with the Copeland ``Anti-
Kickback'' Act (18 U.S.C. 874), as supplemented by Department of
Labor regulations (29 CFR part 3, ``Contractors and Subcontractors
on Public Building or Public Work Financed in Whole or in Part by
Loans or Grants from the United States''). The Act provides that
each contractor or subrecipient must 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 must 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 must
include a provision for compliance with the Davis-Bacon Act (40
U.S.C. 276a to a-7) and as supplemented by Department of Labor
regulations (29 CFR part 5, ``Labor Standards Provisions Applicable
to Contracts Governing Federally Financed and Assisted
Construction''). Under this Act, contractors must 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 are required to pay wages not less
than once a week. The recipient must place a copy of the current
prevailing wage determination issued by the Department of Labor in
each solicitation and the award of a contract must be conditioned
upon the acceptance of the wage determination. The recipient must
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 must include a provision for compliance with sections 102
and 107 of the Contract Work Hours and Safety Standards Act (40
U.S.C. 327-333), as supplemented by Department of Labor regulations
(29 CFR part 5). Under section 102 of the Act, each contractor is
required to compute the wages of every mechanic and laborer on the
basis of a standard work week of forty hours. Work in excess of the
standard work week is permissible provided that the worker is
compensated at a rate of not less than one and one-half times the
basic rate of pay for all hours worked in excess of forty 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
[[Page 38256]]
agreements for the performance of experimental, developmental, or
research work must provide for the rights of the Federal Government
and the recipient in any resulting invention in accordance with 37
CFR part 401, ``Rights to Inventions Made by Nonprofit Organizations
and Small Business Firms Under Government Grants, Contracts and
Cooperative Agreements,'' and any implementing regulations issued by
the awarding agency.
6. Clean Air Act (42 U.S.C. 7401 et seq.) and the Federal Water
Pollution Control Act (33 U.S.C. 1251 et seq.), as amended--
Contracts and subawards of amounts in excess of $100,000 must
contain a provision that requires the recipient to agree to comply
with all applicable standards, orders or regulations issued pursuant
to the Clean Air Act (42 U.S.C. 7401 et seq.) and the Federal Water
Pollution Control Act as amended (33 U.S.C. 1251 et seq.).
Violations must be reported to the DOS 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 must 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 must 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 (Exec. Order No. 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 Exec. Order No. 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 Exec. Order No. 12549. Contractors
with awards that exceed the small purchase threshold must provide
the required certification regarding its exclusion status and that
of its principal employees.
Dated: July 18, 1995.
Janet Reno,
Attorney General.
[FR Doc. 95-18157 Filed 7-25-95; 8:45 am]
BILLING CODE 4410-18-M
