[Federal Register Volume 59, Number 76 (Wednesday, April 20, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-9181]


[[Page Unknown]]

[Federal Register: April 20, 1994]


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DEPARTMENT OF STATE

[Public Notice 1985]

22 CFR Part 145

 

Grants and Cooperative Agreements With Institutions of Higher 
Education, Hospitals, and Other Non-Profit Organizations

ACTION: Final rule.

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SUMMARY: This final rule establishes regulations for grants and 
cooperative agreements with insitutions of higher education, hospitals, 
and other non-profit organizations.

DATES: This regulation is effective October 1, 1994.

FOR FURTHER INFORMATION CONTACT: Robert Lloyd, Office of the 
Procurement Executive, room 603, SA-6, U.S. Department of State, 
Washington, DC 20522-0602. Tel. (703) 516-1690.

SUPPLEMENTARY INFORMATION: The Department of State establishes this 
final rule as part 145 of title 22 of the Code of Federal Regulations.
    The regulation implements Office of Management and Budget Circular 
A-110, published in the Federal Register on November 29, 1993 (58 FR 
62992). The regulation is essentially the same as Circular A-110, 
except for editorial changes, internal approval procedures, and 
exclusion of foreign and international organizations and agreements 
performed overseas. The Circular was published as a proposed rule in 
the Federal Register, and the final version of the Circular published 
on November 29, 1993 addressed the public comments received.

List of Subjects in 22 CFR Part 145

    Administrative practices and procedure, Grant programs, Grants 
administration, Reporting and recordkeeping requirements.

    Title 22 of the Code of Federal Regulations, chapter I, is amended 
as set forth below.
Lloyd W. Pratsch,
Procurement Executive.

    Part 145 is added to subchapter O to read as follows:

PART 145--GRANTS AND AGREEMENTS WITH INSTITUTIONS OF HIGHER EDUCATION, 
HOSPITALS, AND OTHER NON-PROFIT ORGANIZATIONS

Subpart A--General

Sec.
145.1  Purpose.
145.2  Definitions.
145.3  Effect on other issuances.
145.4  Deviations.
145.5  Subawards.

Subpart B--Pre-Award Requirements

145.10  Purpose.
145.11  Pre-award policies.
145.12  Forms for applying for Federal assistance.
145.13  Debarment and suspension.
145.14  Special award conditions.
145.15  Metric system of measurement.
145.16  Resource Conservation and Recovery Act.
145.17  Certifications and representations.

Subpart C--Post-Award Requirements

Financial and Program Management

145.20  Purpose of financial and program management.
145.21  Standards for financial management systems.
145.22  Payment.
145.23  Cost sharing or matching.
145.24  Program income.
145.25  Revision of budget and program plans.
145.26  Non-Federal audits.
145.27  Allowable costs.
145.28  Period of availability of funds.

Property Standards 
145.30  Purpose of property standards.
145.31  Insurance coverage.
145.32  Real property.
145.33  Federally-owned and exempt property.
145.34  Equipment.
145.35  Supplies and other expendable property.
145.36  Intangible property.
145.37  Property trust relationship. 
Procurement Standards 
145.40  Purpose of procurement standards.
145.41  Recipient responsibilities.
145.42  Code of conduct.
145.43  Competition.
145.44  Procurement procedures.
145.45  Cost and price analysis.
145.46  Procurement records.
145.47  Contract administration.
145.48  Contract clauses. 
Reports and Records 
145.50  Purpose of reports and records.
145.51  Monitoring and reporting program performance.
145.52  Financial reporting.
145.53  Retention and access requirements for records. 
Termination and Enforcement 
145.60  Purpose of termination and enforcement.
145.61  Termination.
145.62  Enforcement. 
Subpart D--After-the-Award Requirements 
145.70  Purpose.
145.71  Closeout procedures.
145.72  Subsequent adjustments and continuing responsibilities.
145.73  Collection of amounts due.

Appendix A to Part 145--Clauses for Contracts and Small Purchases 
Awarded by Recipient

    Authority: 22 U.S.C. 2658.1

Subpart A--General
Sec. 145.1  Purpose.

    This regulation establishes uniform administrative requirements for 
Department of State grants and cooperative agreements awarded to 
institutions of higher education, hospitals, and other non-profit 
organizations pursuant to OMB Circular A-110. Non-profit organizations 
that implement Federal programs for the States are also subject to 
State requirements. Copies of the OMB circulars mentioned in this part 
may be ordered from the Office of Management and Budget Publications 
Office (202) 395-7000.
Sec. 145.2  Definitions.

    (a) Accrued expenditures means the charges incurred by the 
recipient during a given period requiring the provision of funds for:
    (1) Goods and other tangible property received;
    (2) Services performed by employees, contractors, subrecipients, 
and other payees; and,
    (3) Other amounts becoming owed under programs for which no current 
services or performance is required.
    (b) Accrued income means the sum of:
    (1) Earnings during a given period from
    (i) Services performed by the recipient, and
    (ii) Goods and other tangible property delivered to purchasers, and
    (2) Amounts becoming owed to the recipient for which no current 
services or performance is required by the recipient.
    (c) Acquisition cost of equipment means the net invoice price of 
the equipment, including the cost of modifications, attachments, 
accessories, or auxiliary apparatus necessary to make the property 
usable for the purpose for which it was acquired. Other charges, such 
as the cost of installation, transportation, taxes, duty or protective 
in-transit insurance, shall be included or excluded from the unit 
acquisition cost in accordance with the recipient's regular accounting 
practices.
    (d) Advance means a payment made by Treasury check or other 
appropriate payment mechanism to a recipient upon its request either 
before outlays are made by the recipient or through the use of 
predetermined payment schedules.
    (e) Award means financial assistance that provides support or 
stimulation to accomplish a public purpose. Awards include grants and 
other agreements in the form of money or property in lieu of money, by 
the Federal Government to an eligible recipient. The term does not 
include: Technical assistance, which provides services instead of 
money; other assistance in the form of loans, loan guarantees, interest 
subsidies, or insurance; direct payments of any kind to individuals; 
and, contracts which are required to be entered into and administered 
under procurement laws and regulations.
    (f) Cash contributions means the recipient's cash outlay, including 
the outlay of money contributed to the recipient by third parties.
    (g) Closeout means the process by which an awarding agency 
determines that all applicable administrative actions and all required 
work of the award have been completed by the recipient and awarding 
agency.
    (h) Contract means a procurement contract under an award or 
subaward, and a procurement subcontract under a recipient's or 
subrecipient's contract.
    (i) Cooperative agreement, as defined in 31 U.S.C. 6305, means a 
legal instrument reflecting a relationship between the United States 
Government and a recipient when the principal purpose of the 
relationship is to transfer a thing of value to the recipient to carry 
out a public purpose of support or stimulation authorized by law, 
instead of acquiring property or services for the direct use of the 
United States Government, and substantial involvement is expected 
between the awarding agency and the recipient when carrying out the 
activity contemplated in the agreement.
    (j) Cost sharing or matching means that portion of project or 
program costs not borne by the Federal Government.
    (k) Date of completion means the date on which all work under an 
award is completed or the date on the award document, or any supplement 
or amendment thereto, on which Federal sponsorship ends.
    (l) Disallowed costs means those charges to an award that the 
awarding agency determines to be unallowable, in accordance with the 
applicable Federal cost principles or other terms and conditions 
contained in the award.
    (m) Equipment means tangible nonexpendable personal property 
including exempt property charged directly to the award having a useful 
life of more than one year and an acquisition cost of $5,000 or more 
per unit. However, consistent with recipient policy, lower limits may 
be established.
    (n) Excess property means property under the control of any 
awarding agency that, as determined by the head thereof, is no longer 
required for its needs or the discharge of its responsibilities.
    (o) Exempt property means tangible personal property acquired in 
whole or in part with Federal funds, where the awarding agency has 
statutory authority to vest title in the recipient without further 
obligation to the Federal Government. An example of exempt property 
authority is contained in the Federal Grant and Cooperative Agreement 
Act (31 U.S.C. 6306), for property acquired under an award to conduct 
basic or applied research by a non-profit institution of higher 
education or non-profit organization whose principal purpose is 
conducting scientific research.
    (p) Federal awarding agency or awarding agency means the Federal 
agency that provides an award to the recipient.
    (q) Federal funds authorized means the total amount of Federal 
funds obligated by the Federal Government for use by the recipient. 
This amount may include any authorized carryover of unobligated funds 
from prior funding periods when permitted by agency regulations or 
agency implementing instructions.
    (r) Federal share of real property, equipment, or supplies means 
that percentage of the property's acquisition costs and any improvement 
expenditures paid with Federal funds.
    (s) Funding period means the period of time when Federal funding is 
available for obligation by the recipient.
    (t) Grant, as defined in 31 U.S.C. 6304, means a legal instrument 
reflecting a relationship between the United States Government and a 
recipient when the principal purpose of the relationship is to transfer 
a thing of value to the recipient to carry out a public purpose of 
support or stimulation authorized by law, instead of acquiring property 
or services for the direct use of the United States Government, and 
substantial involvement is not expected between the awarding agency and 
the recipient when carrying out the activity contemplated in the 
agreement.
    (u) Intangible property and debt instruments means, but is not 
limited to, trademarks, copyrights, patents and patent applications and 
such property as loans, notes and other debt instruments, lease 
agreements, stock and other instruments of property ownership, whether 
considered tangible or intangible.
    (v) Obligations means the amounts of orders placed, contracts and 
grants awarded, services received and similar transactions during a 
given period that require payment by the recipient during the same or a 
future period.
    (w) Outlays or expenditures means charges made to the project or 
program. They may be reported on a cash or accrual basis. For reports 
prepared on a cash basis, outlays are the sum of cash disbursements for 
direct charges for goods and services, the amount of indirect expense 
charged, the value of third party in-kind contributions applied and the 
amount of cash advances and payments made to subrecipients. For reports 
prepared on an accrual basis, outlays are the sum of cash disbursements 
for direct charges for goods and services, the amount of indirect 
expense incurred, the value of in-kind contributions applied, and the 
net increase (or decrease) in the amounts owed by the recipient for 
goods and other property received, for services performed by employees, 
contractors, subrecipients and other payees and other amounts becoming 
owed under programs for which no current services or performance are 
required.
    (x) Personal property means property of any kind except real 
property. It may be tangible, having physical existence, or intangible, 
having no physical existence, such as copyrights, patents, or 
securities.
    (y) Prior approval means written approval by an authorized official 
evidencing prior consent.
    (z) Program income means gross income earned by the recipient that 
is directly generated by a supported activity or earned as a result of 
the award (see exclusions in Sec. 145.24 (e) and (h)). Program income 
includes, but is not limited to, income from fees for services 
performed, the use or rental of real or personal property acquired 
under federally-funded projects, the sale of commodities or items 
fabricated under an award, license fees and royalties on patents and 
copyrights, and interest on loans made with award funds. Interest 
earned on advances of Federal funds is not program income. Except as 
otherwise provided in awarding agency regulations or the terms and 
conditions of the award, program income does not include the receipt of 
principal on loans, rebates, credits, discounts, etc., or interest 
earned on any of them.
    (aa) Project costs means all allowable costs, as set forth in the 
applicable Federal cost principles, incurred by a recipient and the 
value of the contributions made by third parties in accomplishing the 
objectives of the award during the project period.
    (bb) Project period means the period established in the award 
document during which Federal sponsorship begins and ends.
    (cc) Property means, unless otherwise stated, real property, 
equipment, intangible property and debt instruments.
    (dd) Real property means land, including land improvements, 
structures and appurtenances thereto, but excludes movable machinery 
and equipment.
    (ee) Recipient means an organization receiving financial assistance 
directly from Federal awarding agencies to carry out a project or 
program.
    (1) The term includes public and private institutions of higher 
education; public and private hospitals; other quasi-public and private 
non-profit organizations such as, but not limited to, community action 
agencies, research institutes, educational associations, and health 
centers; and commercial organizations receiving grants or cooperative 
agreements from the Department.
    (2) The term does not include any of the following which are 
recipients, subrecipients, or contractors or subcontractors of 
recipients or subrecipients:
    (i) Foreign organizations (governmental or non-governmental);
    (ii) International organizations (such as agencies of the United 
Nations); or
    (iii) Organizations whose assistance agreement is for work to be 
performed outside the United States.
    (3) The term does not include government-owned contractor-operated 
facilities or research centers providing continued support for mission-
oriented, large-scale programs that are government-owned or controlled, 
or are designated as federally-funded research and development centers.
    (ff) Research and development means all research activities, both 
basic and applied, and all development activities that are supported at 
universities, colleges, and other non-profit institutions. ``Research'' 
is defined as a systematic study directed toward fuller scientific 
knowledge or understanding of the subject studied. ``Development'' is 
the systematic use of knowledge and understanding gained from research 
directed toward the production of useful materials, devices, systems, 
or methods, including design and development of prototypes and 
processes. The term research also includes activities involving the 
training of individuals in research techniques where such activities 
utilize the same facilities as other research and development 
activities and where such activities are not included in the 
instruction function.
    (gg) Small awards means a grant or cooperative agreement not 
exceeding $100,000 or the small purchase limitation fixed at 41 U.S.C. 
403(11), whichever is greater.
    (hh) Small purchase limitation, for procurements transactions 
awarded by recipients, means $100,000 or the small purchase limitation 
fixed at 41 U.S.C. 403(11), whichever is greater.
    (ii) Subaward means an award of financial assistance in the form of 
money, or property in lieu of money, made under an award by a recipient 
to an eligible subrecipient or by a subrecipient to a lower tier 
subrecipient. The term includes financial assistance when provided by 
any legal agreement, even if the agreement is called a contract, but 
does not include procurement of goods and services nor does it include 
any form of assistance which is excluded from the definition of 
``award'' in Sec. 145.2(e).
    (jj) Subrecipient means the legal entity to which a subaward is 
made and which is accountable to the recipient for the use of the funds 
provided. The term may include foreign or international organizations 
(such as agencies of the United Nations) at the discretion of the 
awarding agency.
    (kk) Supplies means all personal property excluding equipment, 
intangible property, and debt instruments as defined in this section, 
and inventions of a contractor conceived or first actually reduced to 
practice in the performance of work under a funding agreement 
(``subject inventions''), as defined in 37 CFR part 401, ``Rights to 
Inventions Made by Nonprofit Organizations and Small Business Firms 
Under Government Grants, Contracts, and Cooperative Agreements.''
    (ll) Suspension means an action by a awarding agency that 
temporarily withdraws Federal sponsorship under an award, pending 
corrective action by the recipient or pending a decision to terminate 
the award by the awarding agency. Suspension of an award is a separate 
action from suspension under Federal agency regulations implementing 
E.O.s 12549 and 12689, ``Debarment and Suspension.''
    (mm) Termination means the cancellation of Federal sponsorship, in 
whole or in part, under an agreement at any time prior to the date of 
completion.
    (nn) Third party in-kind contributions means the value of non-cash 
contributions provided by non-Federal third parties. Third party in-
kind contributions may be in the form of real property, equipment, 
supplies and other expendable property, and the value of goods and 
services directly benefiting and specifically identifiable to the 
project or program.
    (oo) Unliquidated obligations, for financial reports prepared on a 
cash basis, means the amount of obligations incurred by the recipient 
that have not been paid. For reports prepared on an accrued expenditure 
basis, they represent the amount of obligations incurred by the 
recipient for which an outlay has not been recorded.
    (pp) Unobligated balance means the portion of the funds authorized 
by the awarding agency that has not been obligated by the recipient and 
is determined by deducting the cumulative obligations from the 
cumulative funds authorized.
    (qq) Unrecovered indirect cost means the difference between the 
amount awarded and the amount which could have been awarded under the 
recipient's approved negotiated indirect cost rate.
    (rr) Working capital advance means a procedure where by funds are 
advanced to the recipient to cover its estimated disbursement needs for 
a given initial period.


Sec. 145.3  Effect on other issuances.

    For awards subject to this regulation, all administrative 
requirements of codified program regulations, program manuals, 
handbooks and other nonregulatory materials which are inconsistent with 
the requirements of this regulation are superseded, except to the 
extent they are required by statute, or authorized in accordance with 
the deviations provision in Sec. 145.4.


Sec. 145.4  Deviations.

    The Office of Management and Budget (OMB) may grant exceptions for 
classes of grants or recipients subject to the requirements of this 
regulation when exceptions are not prohibited by statute. However, in 
the interest of maximum uniformity, exceptions from the requirements of 
this regulation shall be permitted only in unusual circumstances. The 
Department may apply more restrictive requirements to a class of 
recipients when approved by OMB. The Department may apply less 
restrictive requirements when issuing small awards, except for those 
requirements which are statutory. Exceptions on a case-by-case basis 
may also be made by the Department. Deviation requests shall be 
submitted to the Office of the Procurement Executive (A/OPE) for 
approval or transmittal to OMB.


Sec. 145.5  Subawards.

    Unless sections of this regulation specifically exclude 
subrecipients from coverage, the provisions of this regulation shall be 
applied to subrecipients performing work under awards if such 
subrecipients are institutions of higher education, hospitals or other 
non-profit organizations. State and local government subrecipients are 
subject to the provisions of part 135 of this chapter implementing the 
grants management common rule, ``Uniform Administrative Requirements 
for Grants and Cooperative Agreements to State and Local Governments.''

Subpart B--Pre-Award Requirements


Sec. 145.10  Purpose.

    Sections 145.11 through 145.17 prescribe forms and instructions and 
other pre-award matters to be used in applying for Federal awards.


Sec. 145.11  Pre-award policies.

    (a) Use of grants and cooperative agreements, and contracts. In 
each instance, the awarding agency shall decide on the appropriate 
award instrument (i.e., grant, cooperative agreement, or contract). The 
Federal Grant and Cooperative Agreement Act (31 U.S.C. 6301-08) governs 
the use of grants, cooperative agreements and contracts. A grant or 
cooperative agreement shall be used only when the principal purpose of 
a transaction is to accomplish a public purpose of support or 
stimulation authorized by Federal statute. The statutory criterion for 
choosing between grants and cooperative agreements is that for the 
latter, ``substantial involvement is expected between the executive 
agency and the State, local government, or other recipient when 
carrying out the activity contemplated in the agreement.'' Contracts 
shall be used when the principal purpose is acquisition of property or 
services for the direct benefit or use of the Federal Government. The 
Department may not award grants or cooperative agreements unless 
specific statutory authority exists for a program allowing the award of 
Federal assistance.
    (b) Public notice and priority setting.
    (1) The Department shall notify the public of its intended funding 
priorities for discretionary grant programs, except for:
    (i) Awards for which funding priorities are established by Federal 
statute,
    (ii) Small awards, and
    (iii) Awards for which program purposes would not be served by 
public notice.
    (2) In the case of the exception in paragraph (b)(1)(iii) of this 
section, the award file shall be documented with the rationale for not 
issuing a public notice.


Sec. 145.12  Forms for applying for Federal assistance.

    (a) Department Grants Officers shall comply with the applicable 
report clearance requirements of 5 CFR part 1320, ``Controlling 
Paperwork Burdens on the Public,'' with regard to all forms used by the 
awarding agency in place of or as a supplement to the Standard Form 424 
(SF-424) series.
    (b) Applicants shall use the SF-424 series or those forms and 
instructions prescribed by the Grants Officer and approved by the 
Office of the Procurement Executive (A/OPE).
    (c) For Federal programs covered by Executive Order 12372, 
``Intergovernmental Review of Federal Programs,'' the applicant shall 
complete the appropriate sections of the SF-424 (Application for 
Federal Assistance) indicating whether the application was subject to 
review by the State Single Point of Contact (SPOC). The name and 
address of the SPOC for a particular State can be obtained from the 
awarding agency or the Catalog of Federal Domestic Assistance. The SPOC 
shall advise the applicant whether the program for which application is 
made has been selected by that State for review.
    (d) Department Grants Officers who do not use the SF-424 form 
should indicate whether the application is subject to review by the 
State under Executive Order 12372.


Sec. 145.13  Debarment and suspension.

    The Department and recipients shall comply with the nonprocurement 
debarment and suspension common rule implementing Executive Orders 
12549 and 12689, ``Debarment and Suspension,'' as implemented in 22 CFR 
part 137. This common rule restricts subawards and contracts with 
certain parties that are debarred, suspended or otherwise excluded from 
or ineligible for participation in Federal assistance programs or 
activities.


Sec. 145.14  Special award conditions.

    If an applicant or recipient: has a history of poor performance, is 
not financially stable, has a management system that does not meet the 
standards prescribed in this regulation, has not conformed to the terms 
and conditions of a previous award, or is not otherwise responsible, 
the Department may impose additional requirements as needed, provided 
that such applicant or recipient is notified in writing as to: The 
nature of the additional requirements, the reason why the additional 
requirements are being imposed, the nature of the corrective action 
needed, the time allowed for completing the corrective actions, and the 
method for requesting reconsideration of the additional requirements 
imposed. Any special conditions shall be promptly removed once the 
conditions that prompted them have been corrected.


Sec. 145.15  Metric system of measurement.

    The Metric Conversion Act, as amended by the Omnibus Trade and 
Competitiveness Act (15 U.S.C. 205) declares that the metric system is 
the preferred measurement system for U.S. trade and commerce. The Act 
requires each Federal agency to establish a date or dates in 
consultation with the Secretary of Commerce, when the metric system of 
measurement will be used in the agency's procurements, grants, and 
other business-related activities. Metric implementation may take 
longer where the use of the system is initially impractical or likely 
to cause significant inefficiencies in the accomplishment of federally-
funded activities. Federal awarding agencies shall follow the 
provisions of E.O. 12770, ``Metric Usage in Federal Government 
Programs.''


Sec. 145.16  Resource Conservation and Recovery Act.

    Under the Resource Conservation and Recovery Act (RCRA) (Pub. L. 
94-580 codified at 42 U.S.C. 6962), any State agency or agency of a 
political subdivision of a State which is using appropriated Federal 
funds must comply with section 6002. Section 6002 requires that 
preference be given in procurement programs to the purchase of specific 
products containing recycled materials identified in guidelines 
developed by the Environmental Protection Agency (EPA) (40 CFR parts 
247-254). Accordingly, State and local institutions of higher 
education, hospitals, and non-profit organizations that receive direct 
Federal awards or other Federal funds shall give preference in their 
procurement programs funded with Federal funds to the purchase of 
recycled products pursuant to the EPA guidelines.


Sec. 145.17  Certifications and representations.

    Unless prohibited by statute or codified regulation, the Department 
is authorized to accept and encourages recipients to submit 
certifications and representations required by statute, executive 
order, or regulation on an annual basis, if the recipients have ongoing 
and continuing relationships with the Department. Annual certifications 
and representations shall be signed by responsible officials with the 
authority to ensure recipients' compliance with the pertinent 
requirements.

Subpart C--Post-Award Requirements

Financial and Program Management


Sec. 145.20  Purpose of financial and program management.

    Sections 145.21 through 145.28 prescribe standards for financial 
management systems, methods for making payments and rules for: 
Satisfying cost sharing and matching requirements, accounting for 
program income, budget revision approvals, making audits, determining 
allowability of cost, and establishing fund availability.


Sec. 145.21  Standards for financial management systems.

    (a) The Department shall require recipients to relate financial 
data to performance data and develop unit cost information whenever 
practical.
    (b) Recipients' financial management systems shall provide for the 
following.
    (1) Accurate, current and complete disclosure of the financial 
results of each federally-sponsored project or program in accordance 
with the reporting requirements set forth in Sec. 145.52. If the 
Department requires reporting on an accrual basis from a recipient that 
maintains its records on other than an accrual basis, the recipient 
shall not be required to establish an accrual accounting system. These 
recipients may develop such accrual data for its reports on the basis 
of an analysis of the documentation on hand.
    (2) Records that identify adequately the source and application of 
funds for federally-sponsored activities. These records shall contain 
information pertaining to Federal awards, authorizations, obligations, 
unobligated balances, assets, outlays, income and interest.
    (3) Effective control over and accountability for all funds, 
property and other assets. Recipients shall adequately safeguard all 
such assets and assure they are used solely for authorized purposes.
    (4) Comparison of outlays with budget amounts for each award. 
Whenever appropriate, financial information should be related to 
performance and unit cost data.
    (5) Written procedures to minimize the time elapsing between the 
transfer of funds to the recipient from the U.S. Treasury and the 
issuance or redemption of checks, warrants or payments by other means 
for program purposes by the recipient. To the extent that the 
provisions of the Cash Management Improvement Act (CMIA) (Pub. L. 101-
453) govern, payment methods of State agencies, instrumentalities, and 
fiscal agents shall be consistent with CMIA Treasury-State Agreements 
or the CMIA default procedures codified at 31 CFR part 205, 
``Withdrawal of Cash from the Treasury for Advances under Federal Grant 
and Other Programs.''
    (6) Written procedures for determining the reasonableness, 
allocability and allowability of costs in accordance with the 
provisions of the applicable Federal cost principles and the terms and 
conditions of the award.
    (7) Accounting records including cost accounting records that are 
supported by source documentation.
    (c) Where the Federal Government guarantees or insures the 
repayment of money borrowed by the recipient, the Department, at its 
discretion, may require adequate bonding and insurance if the bonding 
and insurance requirements of the recipient are not deemed adequate to 
protect the interest of the Federal Government.
    (d) The Department may require adequate fidelity bond coverage 
where the recipient lacks sufficient coverage to protect the Federal 
Government's interest.
    (e) Where bonds are required in the situations described above, the 
bonds shall be obtained from companies holding certificates of 
authority as acceptable sureties, as prescribed in 31 CFR part 223, 
``Surety Companies Doing Business with the United States.''


Sec. 145.22  Payment.

    (a) Payment methods shall minimize the time elapsing between the 
transfer of funds from the United States Treasury and the issuance or 
redemption of checks, warrants, or payment by other means by the 
recipients. Payment methods of State agencies or instrumentalities 
shall be consistent with Treasury-State CMIA agreements or default 
procedures codified at 31 CFR part 205.
    (b) Recipients are to be paid in advance, provided they maintain or 
demonstrate the willingness to maintain: Written procedures that 
minimize the time elapsing between the transfer of funds and 
disbursement by the recipient, and financial management systems that 
meet the standards for fund control and accountability as established 
in Sec. 145.21. Cash advances to a recipient organization shall be 
limited to the minimum amounts needed and be timed to be in accordance 
with the actual, immediate cash requirements of the recipient 
organization in carrying out the purpose of the approved program or 
project. The timing and amount of cash advances shall be as close as is 
administratively feasible to the actual disbursements by the recipient 
organization for direct program or project costs and the proportionate 
share of any allowable indirect costs.
    (c) Whenever possible, advances shall be consolidated to cover 
anticipated cash needs for all awards made by the Department to the 
recipient.
    (1) Advance payment mechanisms include, but are not limited to, 
Treasury check and electronic funds transfer.
    (2) Advance payment mechanisms are subject to 31 CFR part 205.
    (3) Recipients shall be authorized to submit requests for advances 
and reimbursements at least monthly when electronic fund transfers are 
not used.
    (d) Requests for Treasury check advance payment shall be submitted 
on SF-270, ``Request for Advance or Reimbursement,'' or other forms as 
may be authorized by OMB (e.g., SF-1034). This form is not to be used 
when Treasury check advance payments are made to the recipient 
automatically through the use of a predetermined payment schedule or if 
precluded by special Department instructions for electronic funds 
transfer.
    (e) Reimbursement is the preferred method when the requirements in 
paragraph (b) cannot be met. The Department may also use this method on 
any construction agreement, or if the major portion of the construction 
project is accomplished through private market financing or Federal 
loans, and the Federal assistance constitutes a minor portion of the 
project.
    (1) When the reimbursement method is used, the Department shall 
make payment within 30 days after receipt of the billing, unless the 
billing is improper.
    (2) Recipients shall be authorized to submit request for 
reimbursement at least monthly when electronic funds transfers are not 
used.
    (f) If a recipient cannot meet the criteria for advance payments 
and the Department has determined that reimbursement is not feasible 
because the recipient lacks sufficient working capital, the Department 
may provide cash on a working capital advance basis. Under this 
procedure, the Department shall advance cash to the recipient to cover 
its estimated disbursement needs for an initial period generally geared 
to the awardee's disbursing cycle. Thereafter, the Department shall 
reimburse the recipient for its actual cash disbursements. The working 
capital advance method of payment shall not be used for recipients 
unwilling or unable to provide timely advances to their subrecipient to 
meet the subrecipient's actual cash disbursements.
    (g) To the extent available, recipients shall disburse funds 
available from repayments to and interest earned on a revolving fund, 
program income, rebates, refunds, contract settlements, audit 
recoveries and interest earned on such funds before requesting 
additional cash payments.
    (h) Unless otherwise required by statute, the Department shall not 
withhold payments for proper charges made by recipients at any time 
during the project period unless paragraphs (h) (1) or (2) of this 
section apply.
    (1) A recipient has failed to comply with the project objectives, 
the terms and conditions of the award, or Federal reporting 
requirements.
    (2) The recipient or subrecipient is delinquent in a debt to the 
United States as defined in OMB Circular A-129, ``Managing Federal 
Credit Programs.'' Under such conditions, the Department may, upon 
reasonable notice, inform the recipient that payments shall not be made 
for obligations incurred after a specified date until the conditions 
are corrected or the indebtedness to the Federal Government is 
liquidated.
    (i) Standards governing the use of banks and other institutions as 
depositories of funds advanced under awards are as follows.
    (1) Except for situations described in paragraph (i)(2), the 
Department shall not require separate depository accounts for funds 
provided to a recipient or establish any eligibility requirements for 
depositories for funds provided to a recipient. However, recipients 
must be able to account for the receipt, obligation and expenditure of 
funds.
    (2) Advances of Federal funds shall be deposited and maintained in 
insured accounts whenever possible.
    (j) Consistent with the national goal of expanding the 
opportunities for women-owned and minority-owned business enterprises, 
recipients shall be encouraged to use women-owned and minority-owned 
banks (a bank which is owned at least 50 percent by women or minority 
group members).
    (k) Recipients shall maintain advances of Federal funds in interest 
bearing accounts, unless paragraphs (k) (1), (2) or (3) of this section 
apply.
    (1) The recipient receives less than $120,000 in Federal awards per 
year.
    (2) The best reasonably available interest bearing account would 
not be expected to earn interest in excess of $250 per year on Federal 
cash balances.
    (3) The depository would require an average or minimum balance so 
high that it would not be feasible within the expected Federal and non-
Federal cash resources.
    (l) For those entities where CMIA and its implementing regulations 
do not apply, interest earned on Federal advances deposited in interest 
bearing accounts shall be remitted annually to the Department for 
submission to Treasury. Interest amounts up to $250 per year may be 
retained by the recipient for administrative expense. State 
universities and hospitals shall comply with CMIA, as it pertains to 
interest. If an entity subject to CMIA uses its own funds to pay pre-
award costs for discretionary awards without prior written approval 
from the Department, it waives its right to recover the interest under 
CMIA.
    (m) Except as noted elsewhere in this regulation, only the 
following forms shall be authorized for the recipients in requesting 
advances and reimbursements. The Department shall not require more than 
an original and two copies of these forms except if OMB approval is 
obtained.
    (1) SF-270, Request for Advance or Reimbursement. The Department 
shall use the SF-270 as a standard form for all nonconstruction 
programs when electronic funds transfer or predetermined advance 
methods are not used. Grants Officers may use forms equivalent to the 
SF-270 if approved in writing by the Office of the Procurement 
Executive (A/OPE). The Department has the option of using the SF-270 
for construction programs in lieu of the SF-271, ``Outlay Report and 
Request for Reimbursement for Construction Programs.''
    (2) SF-271, Outlay Report and Request for Reimbursement for 
Construction Programs. The Department shall use the SF-271 as the 
standard form to be used for requesting reimbursement for construction 
programs. However, the Department may substitute the SF-270 when the 
Department determines that it provides adequate information to meet 
Federal needs.


Sec. 145.23  Cost sharing or matching.

    (a) All contributions, including cash and third party in-kind, 
shall be accepted as part of the recipient's cost sharing or matching 
when such contributions meet all of the following criteria.
    (1) Are verifiable from the recipient's records.
    (2) Are not included as contributions for any other Federally-
assisted project or program.
    (3) Are necessary and reasonable for proper and efficient 
accomplishment of project or program objectives.
    (4) Are allowable under the applicable cost principles.
    (5) Are not paid by the Federal Government under another award, 
except where authorized by Federal statute to be used for cost sharing 
or matching.
    (6) Are provided for in the approved budget when required by the 
Department.
    (7) Conform to other provisions of this regulation, as applicable.
    (b) Unrecovered indirect costs may be included as part of cost 
sharing or matching only with the prior approval of the Department 
Grants Officer.
    (c) Values for recipient contributions of services and property 
shall be established in accordance with the applicable cost principles. 
If the Department authorizes recipients to donate buildings or land for 
construction/facilities acquisition projects or long-term use, the 
value of the donated property for cost sharing or matching shall be the 
lesser of paragraphs (c) (1) or (2) of this section.
    (1) The certified value of the remaining life of the property 
recorded in the recipient's accounting records at the time of donation.
    (2) The current fair market value. However, when there is 
sufficient justification, the Department may approve the use of the 
current fair market value of the donated property, even if it exceeds 
the certified value at the time of donation to the project.
    (d) Volunteer services furnished by professional and technical 
personnel, consultants, and other skilled and unskilled labor may be 
counted as cost sharing or matching if the service is an integral and 
necessary part of an approved project or program. Rates for volunteer 
services shall be consistent with those paid for similar work in the 
recipient's organization. In those instances in which the required 
skills are not found in the recipient organization, rates shall be 
consistent with those paid for similar work in the labor market in 
which the recipient competes for the kind of services involved. In 
either case, paid fringe benefits that are reasonable, allowable, and 
allocable may be included in the valuation.
    (e) When an employer other than the recipient furnishes the 
services of an employee, these services shall be valued at the 
employee's regular rate of pay (plus an amount of fringe benefits that 
are reasonable, allowable, and allocable, but exclusive of overhead 
costs), provided these services are in the same skill for which the 
employee is normally paid.
    (f) Donated supplies may include such items as expendable 
equipment, office supplies, laboratory supplies or workshop and 
classroom supplies. Value assessed to donated supplies included in the 
cost sharing or matching share shall be reasonable and shall not exceed 
the fair market value of the property at the time of the donation.
    (g) The method used for determining cost sharing or matching for 
donated equipment, buildings and land for which title passes to the 
recipient may differ according to the purpose of the award, if 
paragraph (g) (1) or (2) of this section apply.
    (1) If the purpose of the award is to assist the recipient in the 
acquisition of equipment, buildings or land, the total value of the 
donated property may be claimed as cost sharing or matching.
    (2) If the purpose of the award is to support activities that 
require the use of equipment, buildings or land, normally only 
depreciation or use charges for equipment and buildings may be made. 
However, the full value of equipment or other capital assets and fair 
rental charges for land may be allowed, provided that the Department 
has approved the charges.
    (h) The value of donated property shall be determined in accordance 
with the usual accounting policies of the recipient, with the following 
qualifications.
    (1) The value of donated land and buildings shall not exceed its 
fair market value at the time of donation to the recipient as 
established by an independent appraiser (e.g., certified real property 
appraiser or General Services Administration representative) and 
certified by a responsible official of the recipient.
    (2) The value of donated equipment shall not exceed the fair market 
value of equipment of the same age and condition at the time of 
donation.
    (3) The value of donated space shall not exceed the fair rental 
value of comparable space as established by an independent appraisal of 
comparable space and facilities in a privately-owned building in the 
same locality.
    (4) The value of loaned equipment shall not exceed its fair rental 
value.
    (5) The following requirements pertain to the recipient's 
supporting records for in-kind contributions from third parties.
    (i) Volunteer services shall be documented and, to the extent 
feasible, supported by the same methods used by the recipient for its 
own employees.
    (ii) The basis for determining the valuation for personal service, 
material, equipment, buildings and land shall be documented.


Sec. 145.24  Program income.

    (a) The Department shall apply the standards set forth in this 
section in requiring recipient organizations to account for program 
income related to projects financed in whole or in part with Federal 
funds.
    (b) Except as provided in paragraph (h) of this section, program 
income earned during the project period shall be retained by the 
recipient and, in accordance with the terms and conditions of the 
award, shall be used in one or more of the ways listed in the 
following.
    (1) Added to funds committed to the project by the Department and 
recipient and used to further eligible project or program objectives.
    (2) Used to finance the non-Federal share of the project or 
program.
    (3) Deducted from the total project or program allowable cost in 
determining the net allowable costs on which the Federal share of costs 
is based.
    (c) When the award authorizes the disposition of program income as 
described in paragraphs (b)(1) or (b)(2), program income in excess of 
any limits stipulated shall be used in accordance with paragraph 
(b)(3).
    (d) In the event that the Department does not specify in the terms 
and conditions of the award how program income is to be used, paragraph 
(b)(3) shall apply automatically to all projects or programs except 
research. For awards that support research, paragraph (b)(1) shall 
apply automatically unless the awarding agency indicates in the terms 
and conditions another alternative on the award or the recipient is 
subject to special award conditions, as indicated in Sec. 145.14.
    (e) Unless the terms and conditions of the award provide otherwise, 
recipients shall have no obligation to the Federal Government regarding 
program income earned after the end of the project period.
    (f) If authorized by the terms and conditions of the award, costs 
incident to the generation of program income may be deducted from gross 
income to determine program income, provided these costs have not been 
charged to the award.
    (g) Proceeds from the sale of property shall be handled in 
accordance with the requirements of the Property Standards (See 
Secs. 145.30 through 145.37).
    (h) Unless the terms and condition of the award provide otherwise, 
recipients shall have no obligation to the Federal Government with 
respect to program income earned from license fees and royalties for 
copyrighted material, patents, patent applications, trademarks, and 
inventions produced under an award. However, Patent and Trademark 
Amendments (35 U.S.C. 18) apply to inventions made under an 
experimental, developmental, or research award.


Sec. 145.25  Revision of budget and program plans.

    (a) The budget plan is the financial expression of the project or 
program as approved during the award process. It may include either the 
Federal and non-Federal share, or only the Federal share, depending 
upon Department requirements. It shall be related to performance for 
program evaluation purposes whenever appropriate.
    (b) Recipients are required to report deviations from budget and 
program plans, and request prior approvals for budget and program plan 
revisions, in accordance with this section, unless, at the discretion 
of the Grants Officer, a small percentage variance is allowed by the 
terms of the grant or cooperative agreement.
    (c) For nonconstruction awards, recipients shall request prior 
approvals from the Department for one or more of the following program 
or budget related reasons.
    (1) Change in the scope or the objective of the project or program 
(even if there is no associated budget revision requiring prior written 
approval).
    (2) Change in a key person specified in the application or award 
document.
    (3) The absence for more than three months, or a 25 percent 
reduction in time devoted to the project, by the approved project 
director or principal investigator.
    (4) The need for additional Federal funding.
    (5) The transfer of amounts budgeted for indirect costs to absorb 
increases in direct costs, or vice versa, if approval is required by 
the Department.
    (6) The inclusion, unless waived by the Department, of costs that 
require prior approval in accordance with OMB Circular A-21, ``Cost 
Principles for Institutions of Higher Education,'' OMB Circular A-122, 
``Cost Principles for Non-Profit Organizations,'' or 45 CFR part 74 
appendix E, ``Principles for Determining Costs Applicable to Research 
and Development under Grants and Contracts with Hospitals,'' or 48 CFR 
part 31, ``Contract Cost Principles and Procedures,'' as applicable.
    (7) The transfer of funds allotted for training allowances (direct 
payment to trainees) to other categories of expense.
    (8) Unless described in the application and funded in the approved 
awards, the subaward, transfer or contracting out of any work under an 
award. This provision does not apply to the purchase of supplies, 
material, equipment or general support services.
    (d) No other prior approval requirements for specific items 
described by this regulation may be imposed unless a deviation has been 
approved by OMB.
    (e) Except for requirements listed in paragraphs (c)(1) and (c)(4) 
of this section, Grants Officers are authorized, at their option, to 
waive cost-related and administrative prior written approvals required 
by this regulation and OMB Circulars A-21 and A-122. Such waivers may 
include authorizing recipients to do any one or more of the following.
    (1) Incur pre-award costs 90 calendar days prior to award or more 
than 90 calendar days with the prior approval of the Department. All 
pre-award costs are incurred at the recipient's risk (i.e., the 
Department is under no obligation to reimburse such costs if for any 
reason the recipient does not receive an award or if the award is less 
than anticipated and inadequate to cover such costs).
    (2) Initiate a one-time extension of the expiration date of the 
award of up to 12 months unless one or more of the following conditions 
apply. For one-time extensions, the recipient must notify the 
Department in writing with the supporting reasons and revised 
expiration date at least 10 days before the expiration date specified 
in the award. This one-time extension may not be exercised merely for 
the purpose of using unobligated balances.
    (i) The terms and conditions of award prohibit the extension.
    (ii) The extension requires additional Federal funds.
    (iii) The extension involves any change in the approved objectives 
or scope of the project.
    (3) Carry forward unobligated balances to subsequent funding 
periods.
    (4) For awards that support research, unless the Department 
provides otherwise in the award, the prior approval requirements 
described in paragraph (e) are automatically waived (i.e., recipients 
need not obtain such prior approvals) unless one of the conditions 
included in paragraph (e)(2) applies.
    (f) The Department may, at its option, restrict the transfer of 
funds among direct cost categories or programs, functions and 
activities for awards in which the Federal share of the project exceeds 
$100,000 and the cumulative amount of such transfers exceeds or is 
expected to exceed 10 percent of the total budget as last approved by 
the Grants Officer. Grants Officers shall not permit a transfer that 
would cause any Federal appropriation or part thereof to be used for 
purposes other than those consistent with the original intent of the 
appropriation.
    (g) All other changes to nonconstruction budgets, except for the 
changes described in paragraph (j), do not require prior approval.
    (h) For construction awards, recipients shall request prior written 
approval promptly from the Grants Officer for budget revisions whenever 
paragraphs (h) (1), (2) or (3) of this section apply.
    (1) The revision results from changes in the scope or the objective 
of the project or program.
    (2) The need arises for additional Federal funds to complete the 
project.
    (3) A revision is desired which involves specific costs for which 
prior written approval requirements may be imposed consistent with 
applicable OMB cost principles listed in Sec. 145.27.
    (i) No other prior approval requirements for specific items may be 
imposed unless a deviation has been approved by OMB.
    (j) When the Department makes an award that provides support for 
both construction and nonconstruction work, the Department may require 
the recipient to request prior approval from the Department before 
making any fund or budget transfers between the two types of work 
supported.
    (k) For both construction and nonconstruction awards, the 
Department shall require recipients to notify the Department in writing 
promptly whenever the amount of Federal authorized funds is expected to 
exceed the needs of the recipient for the project period by more than 
$5,000 or five percent of the Federal award, whichever is greater. This 
notification shall not be required if an application for additional 
funding is submitted for a continuation award.
    (l) When requesting approval for budget revisions, recipients shall 
use the budget forms that were used in the application unless the 
Grants Officer indicates a letter of request suffices.
    (m) Within 30 calendar days from the date of receipt of the request 
for budget revisions, the Grants Officer shall review the request and 
notify the recipient whether the budget revisions have been approved. 
If the revision is still under consideration at the end of 30 calendar 
days, the Grants Officer shall inform the recipient in writing of the 
date when the recipient may expect the decision.


Sec. 145.26  Non-Federal audits.

    (a) Recipients and subrecipients that are institutions of higher 
education or other non-profit organizations shall be subject to the 
audit requirements contained in OMB Circular A-133, ``Audits of 
Institutions of Higher Education and Other Non-Profit Institutions.''
    (b) State and local governments shall be subject to the audit 
requirements contained in the Single Audit Act (31 U.S.C. 7501-7) and 
Department regulations at part 135 of this chapter implementing OMB 
Circular A-128, ``Audits of State and Local Governments.''
    (c) Hospitals not covered by the audit provisions of OMB Circular 
A-133 shall be subject to the audit requirements of the Department.
    (d) Commercial organizations shall be subject to the audit 
requirements of the Department or the prime recipient as incorporated 
into the award document.


Sec. 145.27  Allowable costs.

    For each kind of recipient, there is a set of Federal principles 
for determining allowable costs. Allowability of costs shall be 
determined in accordance with the cost principles applicable to the 
entity incurring the costs. Thus, allowability of costs incurred by 
State, local or federally-recognized Indian tribal governments is 
determined in accordance with the provisions of OMB Circular A-87, 
``Cost Principles for State and Local Governments.'' The allowability 
of costs incurred by non-profit organizations is determined in 
accordance with the provisions of OMB Circular A-122, ``Cost Principles 
for Non-Profit Organizations.'' The allowability of costs incurred by 
institutions of higher education is determined in accordance with the 
provisions of OMB Circular A-21, ``Cost Principles for Educational 
Institutions.'' The allowability of costs incurred by hospitals is 
determined in accordance with the provisions of appendix E of 45 CFR 
part 74, ``Principles for Determining Costs Applicable to Research and 
Development Under Grants and Contracts with Hospitals.'' The 
allowability of costs incurred by commercial organizations and those 
non-profit organizations listed in Attachment C to Circular A-122 is 
determined in accordance with the provisions of the Federal Acquisition 
Regulation (FAR) at 48 CFR part 31.


Sec. 145.28  Period of availability of funds.

    Where a funding period is specified, a recipient may charge to the 
grant only allowable costs resulting from obligations incurred during 
the funding period and any pre-award costs authorized by the 
Department, unless otherwise provided in the grant or cooperative 
agreement.

Property Standards


Sec. 145.30  Purpose of property standards.

    Sections 145.31 through 145.37 set forth uniform standards 
governing management and disposition of property furnished by the 
Federal Government whose cost was charged to a project supported by a 
Federal award. The Department shall require recipients to observe these 
standards under awards and shall not impose additional requirements, 
unless specifically required by Federal statute. The recipient may use 
its own property management standards and procedures provided it 
observes the provisions of Secs. 145.31 through 145.37.


Sec. 145.31  Insurance coverage.

    Recipients shall, at a minimum, provide the equivalent insurance 
coverage for real property and equipment acquired with Federal funds as 
provided to property owned by the recipient. Federally-owned property 
need not be insured unless required by the terms and conditions of the 
award.


Sec. 145.32  Real property.

    Each award shall prescribe any applicable requirements for 
recipients concerning the use and disposition of real property acquired 
in whole or in part under awards. Unless otherwise provided by statute, 
such requirements, at a minimum, shall contain the following:
    (a) Title to real property shall vest in the recipient subject to 
the condition that the recipient shall use the real property for the 
authorized purpose of the project as long as it is needed and shall not 
encumber the property without approval of the Department.
    (b) The recipient shall obtain written approval by the Department 
for the use of real property in other Federally-sponsored projects when 
the recipient determines that the property is no longer needed for the 
purpose of the original project. Use in other projects shall be limited 
to those under Federally-sponsored projects (i.e., awards) or programs 
that have purposes consistent with those authorized for support by the 
Department.
    (c) When the real property is no longer needed as provided in 
paragraphs (a) and (b), the recipient shall request disposition 
instructions from the cognizant Grants Officer. The Department shall 
observe one or more of the following disposition instructions.
    (1) The recipient may be permitted to retain title without further 
obligation to the Federal Government after it compensates the Federal 
Government for that percentage of the current fair market value of the 
property attributable to the Federal participation in the project.
    (2) The recipient may be directed to sell the property under 
guidelines provided by the Department and pay the Federal Government 
for that percentage of the current fair market value of the property 
attributable to the Federal participation in the project (after 
deducting actual and reasonable selling and fix-up expenses, if any, 
from the sales proceeds). When the recipient is authorized or required 
to sell the property, proper sales procedures shall be established that 
provide for competition to the extent practicable and result in the 
highest possible return.
    (3) The recipient may be directed to transfer title to the property 
to the Federal Government or to an eligible third party provided that, 
in such cases, the recipient shall be entitled to compensation for its 
attributable percentage of the current fair market value of the 
property.


Sec. 145.33  Federally-owned and exempt property.

    (a) Federally-owned property. (1) Title to Federally-owned property 
remains vested in the Federal Government. Recipients shall submit 
annually an inventory listing of Federally-owned property in their 
custody to the Department. Upon completion of the award or when the 
property is no longer needed, the recipient shall report the property 
to the Department for further Federal agency utilization.
    (2) If the Department has no further need for the property, it 
shall be declared excess and reported to the General Services 
Administration, unless the Department has statutory authority to 
dispose of the property by alternative methods (e.g., the authority 
provided by the Federal Technology Transfer Act (15 U.S.C. 3710 (I)) to 
donate research equipment to educational and non-profit organizations 
in accordance with Executive Order 12821, ``Improving Mathematics and 
Science Education in Support of the National Education Goals.'') 
Appropriate instructions shall be issued to the recipient by the 
Department.
    (b) Exempt property. When statutory authority exists, the 
Department has the option to vest title to property acquired with 
Federal funds in the recipient without further obligation to the 
Federal Government and under conditions the Department considers 
appropriate. Such property is ``exempt property.'' Should the 
Department not establish conditions, title to exempt property upon 
acquisition shall vest in the recipient without further obligation to 
the Federal Government.


Sec. 145.34  Equipment.

    (a) Title to equipment acquired by a recipient with Federal funds 
shall vest in the recipient, subject to conditions of this section.
    (b) The recipient shall not use equipment acquired with Federal 
funds to provide services to non-Federal outside organizations for a 
fee that is less than private companies charge for equivalent services, 
unless specifically authorized by Federal statute, for as long as the 
Federal Government retains an interest in the equipment.
    (c) The recipient shall use the equipment in the project or program 
for which it was acquired as long as needed, whether or not the project 
or program continues to be supported by Federal funds and shall not 
encumber the property without approval of the Department. When no 
longer needed for the original project or program, the recipient shall 
use the equipment in connection with its other federally-sponsored 
activities, in the following order of priority: First, Activities 
sponsored by the Department which funded the original project, then 
activities sponsored by other the Department.
    (d) During the time that equipment is used on the project or 
program for which it was acquired, the recipient shall make it 
available for use on other projects or programs if such other use will 
not interfere with the work on the project or program for which the 
equipment was originally acquired. First preference for such other use 
shall be given to other projects or programs sponsored by the 
Department that financed the equipment; second preference shall be 
given to projects or programs sponsored by other the Department. If the 
equipment is owned by the Federal Government, use on other activities 
not sponsored by the Federal Government shall be permissible if 
authorized by the Department. User charges shall be treated as program 
income.
    (e) When acquiring replacement equipment, the recipient may use the 
equipment to be replaced as trade-in or sell the equipment and use the 
proceeds to offset the costs of the replacement equipment subject to 
the approval of the Department.
    (f) The recipient's property management standards for equipment 
acquired with Federal funds and Federally-owned equipment shall include 
all of the following.
    (1) Equipment records shall be maintained accurately and shall 
include the following information.
    (i) A description of the equipment.
    (ii) Manufacturer's serial number, model number, Federal stock 
number, national stock number, or other identification number.
    (iii) Source of the equipment, including the award number.
    (iv) Whether title vests in the recipient or the Federal 
Government.
    (v) Acquisition date (or date received, if the equipment was 
furnished by the Federal Government) and cost.
    (vi) Information from which one can calculate the percentage of 
Federal participation in the cost of the equipment (not applicable to 
equipment furnished by the Federal Government).
    (vii) Location and condition of the equipment and the date the 
information was reported.
    (viii) Unit acquisition cost.
    (ix) Ultimate disposition data, including date of disposal and 
sales price or the method used to determine current fair market value 
where a recipient compensates the Department for its share.
    (2) Equipment owned by the Federal Government shall be identified 
to indicate Federal ownership.
    (3) A physical inventory of equipment shall be taken and the 
results reconciled with the equipment records at least once every two 
years. Any differences between quantities determined by the physical 
inspection and those shown in the accounting records shall be 
investigated to determine the causes of the difference. The recipient 
shall, in connection with the inventory, verify the existence, current 
utilization, and continued need for the equipment.
    (4) A control system shall be in effect to insure adequate 
safeguards to prevent loss, damage, or theft of the equipment. Any 
loss, damage, or theft of equipment shall be investigated and fully 
documented; if the equipment was owned by the Federal Government, the 
recipient shall promptly notify the Department.
    (5) Adequate maintenance procedures shall be implemented to keep 
the equipment in good condition.
    (6) Where the recipient is authorized or required to sell the 
equipment, proper sales procedures shall be established which provide 
for competition to the extent practicable and result in the highest 
possible return.
    (g) When the recipient no longer needs the equipment, the equipment 
may be used for other activities in accordance with the following 
standards. For equipment with a current per unit fair market value of 
$5,000 or more, the recipient may retain the equipment for other uses 
provided that compensation is made to the original agency or its 
successor. The amount of compensation shall be computed by applying the 
percentage of Federal participation in the cost of the original project 
or program to the current fair market value of the equipment. If the 
recipient has no need for the equipment, the recipient shall request 
disposition instructions from the Department. The Department shall 
determine whether the equipment can be used to meet the agency's 
requirements. If no requirement exists within that agency, the 
availability of the equipment shall be reported to the General Services 
Administration by the Department to determine whether a requirement for 
the equipment exists in other Federal agencies. The Department shall 
issue instructions to the recipient no later than 120 calendar days 
after the recipient's request and the following procedures shall 
govern.
    (1) If so instructed or if disposition instructions are not issued 
within 120 calendar days after the recipient's request, the recipient 
shall sell the equipment and reimburse the Department an amount 
computed by applying to the sales proceeds the percentage of Federal 
participation in the cost of the original project or program. However, 
the recipient shall be permitted to deduct and retain from the Federal 
share $500 or ten percent of the proceeds, whichever is less, for the 
recipient's selling and handling expenses.
    (2) If the recipient is instructed to ship the equipment elsewhere, 
the recipient shall be reimbursed by the Federal Government by an 
amount which is computed by applying the percentage of the recipient's 
participation in the cost of the original project or program to the 
current fair market value of the equipment, plus any reasonable 
shipping or interim storage costs incurred.
    (3) If the recipient is instructed to otherwise dispose of the 
equipment, the recipient shall be reimbursed by the Department for such 
costs incurred in its disposition.
    (4) The Department may reserve the right to transfer the title to 
the Federal Government or to a third party named by the Federal 
Government when such third party is otherwise eligible under existing 
statutes. Such transfer shall be subject to the following standards.
    (i) The equipment shall be appropriately identified in the award or 
otherwise made known to the recipient in writing.
    (ii) The Department shall issue disposition instructions within 120 
calendar days after receipt of a final inventory. The final inventory 
shall list all equipment acquired with grant funds and federally-owned 
equipment. If the Department fails to issue disposition instructions 
within the 120 calendar day period, the recipient shall apply the 
standards of this section, as appropriate.
    (iii) When the Department exercises its right to take title, the 
equipment shall be subject to the provisions for federally-owned 
equipment.


Sec. 145.35  Supplies and other expendable property.

    (a) Title to supplies and other expendable property shall vest in 
the recipient upon acquisition. If there is a residual inventory of 
unused supplies exceeding $5,000 in total aggregate value upon 
termination or completion of the project or program and the supplies 
are not needed for any other Federally-sponsored project or program, 
the recipient shall retain the supplies for use on non-Federal 
sponsored activities or sell them, but shall, in either case, 
compensate the Federal Government for its share. The amount of 
compensation shall be computed in the same manner as for equipment.
    (b) The recipient shall not use supplies acquired with Federal 
funds to provide services to non-Federal outside organizations for a 
fee that is less than private companies charge for equivalent services, 
unless specifically authorized by Federal statute as long as the 
Federal Government retains an interest in the supplies.


Sec. 145.36  Intangible property.

    (a) The recipient may copyright any work that is subject to 
copyright and was developed, or for which ownership was purchased, 
under an award. The Department reserves a royalty-free, nonexclusive 
and irrevocable right to reproduce, publish, or otherwise use the work 
for Federal purposes, and to authorize others to do so.
    (b) Recipients are subject to applicable regulations governing 
patents and inventions, including government-wide regulations issued by 
the Department of Commerce at 37 CFR part 401, ``Rights to Inventions 
Made by Nonprofit Organizations and Small Business Firms Under 
Government Grants, Contracts and Cooperative Agreements.''
    (c) Unless waived by the Department, the Federal Government has the 
right to:
    (1) Obtain, reproduce, publish or otherwise use the data first 
produced under an award.
    (2) Authorize others to receive, reproduce, publish, or otherwise 
use such data for Federal purposes.
    (d) Title to intangible property and debt instruments acquired 
under an award or subaward vests upon acquisition in the recipient. The 
recipient shall use that property for the originally-authorized 
purpose, and the recipient shall not encumber the property without 
approval of the Department. When no longer needed for the originally 
authorized purpose, disposition of the intangible property shall occur 
in accordance with the provisions of Sec. 145.34(g).


Sec. 145.37  Property trust relationship.

    Real property, equipment, intangible property and debt instruments 
that are acquired or improved with Federal funds shall be held in trust 
by the recipient as trustee for the beneficiaries of the project or 
program under which the property was acquired or improved. Agencies may 
require recipients to record liens or other appropriate notices of 
record to indicate that personal or real property has been acquired or 
improved with Federal funds and that use and disposition conditions 
apply to the property.

Procurement Standards


Sec. 145.40  Purpose of procurement standards.

    Sections 145.41 through 145.48 set forth standards for use by 
recipients in establishing procedures for the procurement of supplies 
and other expendable property, equipment, real property and other 
services with Federal funds. These standards are furnished to ensure 
that such materials and services are obtained in an effective manner 
and in compliance with the provisions of applicable Federal statutes 
and executive orders. No additional procurement standards or 
requirements shall be imposed by the Department upon recipients, unless 
specifically required by Federal statute or executive order or approved 
by OMB. The standards in Secs. 145.1 through 145.48 do not apply to 
small awards, except where imposed by Federal statute or Executive 
Order.


Sec. 145.41  Recipient responsibilities.

    The standards contained in this section do not relieve the 
recipient of the contractual responsibilities arising under its 
contract(s). The recipient is the responsible authority, without 
recourse to the Department, regarding the settlement and satisfaction 
of all contractual and administrative issues arising out of 
procurements entered into in support of an award or other agreement. 
This includes disputes, claims, protests of award, source evaluation or 
other matters of a contractual nature. Matters concerning violation of 
statute are to be referred to such Federal, State or local authority as 
may have proper jurisdiction.


Sec. 145.42  Code of conduct.

    The recipient shall maintain written standards of conduct governing 
the performance of its employees engaged in the award and 
administration of contracts. No employee, officer, or agent shall 
participate in the selection, award, or administration of a contract 
supported by Federal funds if a real or apparent conflict of interest 
would be involved. Such a conflict would arise when the employee, 
officer, or agent, any member of his or her immediate family, his or 
her partner, or an organization which employs or is about to employ any 
of the parties indicated herein, has a financial or other interest in 
the firm selected for an award. The officers, employees, and agents of 
the recipient shall neither solicit nor accept gratuities, favors, or 
anything of monetary value from contractors, or parties to 
subagreements. However, recipients may set standards for situations in 
which the financial interest is not substantial or the gift is an 
unsolicited item of nominal value. The standards of conduct shall 
provide for disciplinary actions to be applied for violations of such 
standards by officers, employees, or agents of the recipient.


Sec. 145.43  Competition.

    All procurement transactions shall be conducted in a manner to 
provide, to the maximum extent practical, open and free competition. 
The recipient shall be alert to organizational conflicts of interest as 
well as noncompetitive practices among contractors that may restrict or 
eliminate competition or otherwise restrain trade. In order to ensure 
objective contractor performance and eliminate unfair competitive 
advantage, contractors that develop or draft specifications, 
requirements, statements of work, invitations for bids and/or requests 
for proposals shall be excluded from competing for such procurements. 
Awards shall be made to the bidder or offeror whose bid or offer is 
responsive to the solicitation and is most advantageous to the 
recipient, price, quality and other factors considered. Solicitations 
shall clearly set forth all requirements that the bidder or offeror 
shall fulfill in order for the bid or offer to be evaluated by the 
recipient. Any and all bids or offers may be rejected when it is in the 
recipient's interest to do so.


Sec. 145.44  Procurement procedures.

    (a) All recipients shall establish written procurement procedures. 
These procedures shall provide for, at a minimum, that paragraphs 
(a)(1), (2) and (3) of this section apply.
    (1) Recipients avoid purchasing unnecessary items.
    (2) Where appropriate, an analysis is made of lease and purchase 
alternatives to determine which would be the most economical and 
practical procurement for the Federal Government.
    (3) Solicitations for goods and services provide for all of the 
following:
    (i) A clear and accurate description of the technical requirements 
for the material, product or service to be procured. In competitive 
procurements, such a description shall not contain features which 
unduly restrict competition.
    (ii) Requirements which the bidder/offeror must fulfill and all 
other factors to be used in evaluating bids or proposals.
    (iii) A description, whenever practicable, of technical 
requirements in terms of functions to be performed or performance 
required, including the range of acceptable characteristics or minimum 
acceptable standards.
    (iv) The specific features of ``brand name or equal'' descriptions 
that bidders are required to meet when such items are included in the 
solicitation.
    (v) The acceptance, to the extent practicable and economically 
feasible, of products and services dimensioned in the metric system of 
measurement.
    (vi) Preference, to the extent practicable and economically 
feasible, for products and services that conserve natural resources and 
protect the environment and are energy efficient.
    (b) Positive efforts shall be made by recipients to utilize small 
businesses, minority-owned firms, and women's business enterprises, 
whenever possible. Recipients of Federal awards shall take all of the 
following steps to further this goal.
    (1) Ensure that small businesses, minority-owned firms, and women's 
business enterprises are used to the fullest extent practicable.
    (2) Make information on forthcoming opportunities available and 
arrange time frames for purchases and contracts to encourage and 
facilitate participation by small businesses, minority-owned firms, and 
women's business enterprises.
    (3) Consider in the contract process whether firms competing for 
larger contracts intend to subcontract with small businesses, minority-
owned firms, and women's business enterprises.
    (4) Encourage contracting with consortiums of small businesses, 
minority-owned firms and women's business enterprises when a contract 
is too large for one of these firms to handle individually.
    (5) Use the services and assistance, as appropriate, of such 
organizations as the Small Business Administration and the Department 
of Commerce's Minority Business Development Agency in the solicitation 
and utilization of small businesses, minority-owned firms and women's 
business enterprises.
    (c) The type of procurement instruments used (e.g., fixed price 
contracts, cost reimbursement contracts, purchase orders, and incentive 
contracts) shall be determined by the recipient but shall be 
appropriate for the particular procurement and for promoting the best 
interest of the program or project involved. The ``cost-plus-a-
percentage-of-cost'' or ``percentage of construction cost'' methods of 
contracting shall not be used.
    (d) Contracts shall be awarded only to responsible contractors who 
possess the potential ability to perform successfully under the terms 
and conditions of the proposed procurement. Consideration shall be 
given to such matters as contractor integrity, record of past 
performance, financial and technical resources or accessibility to 
other necessary resources. In certain circumstances, contracts with 
certain parties are restricted by implementation of E.O.s 12549 and 
12689, ``Debarment and Suspension,'' implemented at 22 CFR 137.
    (e) Recipients shall, on request, make available for the 
Department, pre-award review and procurement documents, such as request 
for proposals or invitations for bids, independent cost estimates, 
etc., when any of the following conditions apply.
    (1) A recipient's procurement procedures or operation fails to 
comply with the procurement standards in the Department's 
implementation of this regulation.
    (2) The procurement is expected to exceed the small purchase 
limitation and is to be awarded without competition or only one bid or 
offer is received in response to a solicitation.
    (3) The procurement, which is expected to exceed the small purchase 
limitation, specifies a ``brand name'' product.
    (4) The proposed award over the small purchase limitation is to be 
awarded to other than the apparent low bidder under a sealed bid 
procurement.
    (5) A proposed contract modification changes the scope of a 
contract or increases the contract amount by more than the amount of 
the small purchase limitation.


Sec. 145.45  Cost and price analysis.

    Some form of cost or price analysis shall be made and documented in 
the procurement files in connection with every procurement action. 
Price analysis may be accomplished in various ways, including the 
comparison of price quotations submitted, market prices and similar 
indicia, together with discounts. Cost analysis is the review and 
evaluation of each element of cost to determine reasonableness, 
allocability and allowability.


Sec. 145.46  Procurement records.

    Procurement records and files for purchases in excess of the small 
purchase limitation shall include the following at a minimum:
    (a) basis for contractor selection,
    (b) justification for lack of competition when competitive bids or 
offers are not obtained, and
    (c) basis for award cost or price.


Sec. 145.47  Contract administration.

    A system for contract administration shall be maintained to ensure 
contractor conformance with the terms, conditions and specifications of 
the contract and to ensure adequate and timely follow up of all 
purchases. Recipients shall evaluate contractor performance and 
document, as appropriate, whether contractors have met the terms, 
conditions and specifications of the contract.


Sec. 145.48  Contract clauses.

    The recipient shall include, in addition to clauses to define a 
sound and complete agreement, the following clauses in all contracts. 
The following clauses shall also be applied to subcontracts.
    (a) Contracts in excess of the small purchase limitation shall 
contain contract clauses that allow for administrative, contractual, or 
legal remedies in instances in which a contractor violates or breaches 
the contract terms, and provide for such remedial actions as may be 
appropriate.
    (b) All contracts in excess of the small purchase limitation shall 
contain suitable clauses for termination by the recipient, including 
the manner by which termination shall be effected and the basis for 
settlement. The clauses shall describe conditions under which the 
contract may be terminated by the recipient for default of the 
contractor as well as conditions where the contract may be terminated 
for convenience because of circumstances beyond the control of the 
contractor.
    (c) Except as otherwise required by statute, an award that requires 
the contracting (or subcontracting) for construction or facility 
improvements shall provide for the recipient to follow its own 
requirements relating to bid guarantees, performance bonds, and payment 
bonds unless the construction contract or subcontract exceeds $100,000. 
For those contracts or subcontracts exceeding $100,000, the Department 
may accept the bonding policy and requirements of the recipient, 
provided the Department has made a determination that the Federal 
Government's interest is adequately protected. If such a determination 
has not been made, the minimum requirements shall be as follows.
    (1) A bid guarantee from each bidder equivalent to five percent of 
the bid price. The ``bid guarantee'' shall consist of a firm commitment 
such as a bid bond, certified check, or other negotiable instrument 
accompanying a bid as assurance that the bidder shall, upon acceptance 
of his bid, execute such contractual documents as may be required 
within the time specified.
    (2) A performance bond on the part of the contractor for 100 
percent of the contract price or other amount approved by the Grants 
Officer. A ``performance bond'' is one executed in connection with a 
contract to secure fulfillment of all the contractor's obligations 
under such contract.
    (3) A payment bond on the part of the contractor for 100 percent of 
the contract price. A ``payment bond'' is one executed in connection 
with a contract to assure payment as required by statute of all persons 
supplying labor and material in the execution of the work provided for 
in the contract.
    (4) Where bonds are required in the situations described herein, 
the bonds shall be obtained from companies holding certificates of 
authority as acceptable sureties pursuant to 31 CFR part 223, ``Surety 
Companies Doing Business with the United States.''
    (d) All negotiated contracts (except those for less than the small 
purchase limitation) awarded by recipients shall include a provision to 
the effect that the recipient, the Department, the Comptroller General 
of the United States, or any of their duly authorized representatives, 
shall have access to any books, documents, papers and records of the 
contractor which are directly pertinent to a specific program for the 
purpose of making audits, examinations, excerpts and transcriptions.
    (e) All contracts, including small purchases, awarded by recipients 
and their contractors shall contain the contract clauses in appendix A 
to this regulation, as applicable.

Reports and Records


Sec. 145.50  Purpose of reports and records.

    Sections 145.51 through 145.53 set forth the procedures for 
monitoring and reporting on the recipient's financial and program 
performance and the necessary standard reporting forms. They also set 
forth record retention requirements.


Sec. 145.51  Monitoring and reporting program performance.

    (a) Recipients are responsible for managing and monitoring each 
project, program, subaward, function or activity supported by the 
award. Recipients shall monitor subawards to ensure subrecipients have 
met the audit requirements as delineated in Sec. 145.26.
    (b) The Department shall prescribe the frequency with which the 
performance reports shall be submitted. Except as provided in 
Sec. 145.51(f), performance reports shall not be required more 
frequently than quarterly or, less frequently than annually. Annual 
reports shall be due 90 calendar days after the grant year; quarterly 
or semi-annual reports shall be due 30 days after the reporting period. 
The Department may require annual reports before the anniversary dates 
of multiple year awards in lieu of these requirements. The final 
performance reports are due 90 calendar days after the expiration or 
termination of the award.
    (c) If inappropriate, a final technical or performance report shall 
not be required after completion of the project.
    (d) When required, performance reports shall generally contain, for 
each award, brief information on each of the following.
    (1) A comparison of actual accomplishments with the goals and 
objectives established for the period, the findings of the 
investigator, or both. Whenever appropriate and the output of programs 
or projects can be readily quantified, such quantitative data should be 
related to cost data for computation of unit costs.
    (2) Reasons why established goals were not met, if appropriate.
    (3) Other pertinent information including, when appropriate, 
analysis and explanation of cost overruns or high unit costs.
    (e) Recipients shall not be required to submit more than the 
original and two copies of performance reports.
    (f) Recipients shall immediately notify the Department of 
developments that have a significant impact on the award-supported 
activities. Also, notification shall be given in the case of problems, 
delays, or adverse conditions which materially impair the ability to 
meet the objectives of the award. This notification shall include a 
statement of the action taken or contemplated, and any assistance 
needed to resolve the situation.
    (g) The Department may make site visits, as needed.
    (h) The Department shall comply with clearance requirements of 5 
CFR part 1320 when requesting performance data from recipients.


Sec. 145.52  Financial reporting.

    (a) The following forms or such other forms as may be approved by 
OMB are authorized for obtaining financial information from recipients.

(1) SF-269 or SF-269A, Financial Status Report

    (i) The Department shall require recipients to use the SF-269 or 
SF-269A to report the status of funds for all nonconstruction projects 
or programs, unless an equivalent form has been prescribed by the 
Grants Officer and approved by the OMB and the Office of the 
Procurement Executive (A/OPE), e.g., Form JF-61 for the Office of 
Overseas Schools (A/OPR/OS). The Department may also have the option of 
not requiring the SF-269 or SF-269A when the SF-270, Request for 
Advance or Reimbursement, or SF-272, Report of Federal Cash 
Transactions, is determined to provide adequate information to meet its 
needs, except that a final SF-269 or SF-269A shall be required at the 
completion of the project when the SF-270 is used only for advances.
    (ii) The Grants Officer shall prescribe whether the report shall be 
on a cash or accrual basis. If the Department requires accrual 
information and the recipient's accounting records are not normally 
kept on the accrual basis, the recipient shall not be required to 
convert its accounting system, but shall develop such accrual 
information through best estimates based on an analysis of the 
documentation on hand.
    (iii) The Department shall determine the frequency of the Financial 
Status Report for each project or program, considering the size and 
complexity of the particular project or program. However, the report 
shall not be required more frequently than quarterly or less frequently 
than annually. A final report shall be required at the completion of 
the agreement.
    (iv) The Department shall require recipients to submit the SF-269 
or SF-269A (an original and no more than two copies) no later than 30 
days after the end of each specified reporting period for quarterly and 
semi-annual reports, and 90 calendar days for annual and final reports. 
Extensions of reporting due dates may be approved by the Department 
upon request of the recipient.

(2) SF-272, Report of Federal Cash Transactions

    (i) When funds are advanced to recipients the Department shall 
require each recipient to submit the SF-272 and, when necessary, its 
continuation sheet, SF-272a. The Department shall use this report to 
monitor cash advanced to recipients and to obtain disbursement 
information for each agreement with the recipients.
    (ii) The Department may require forecasts of Federal cash 
requirements in the ``Remarks'' section of the report.
    (iii) When practical and deemed necessary, the Department may 
require recipients to report in the ``Remarks'' section the amount of 
cash advances received in excess of three days. Recipients shall 
provide short narrative explanations of actions taken to reduce the 
excess balances.
    (iv) Recipients shall be required to submit not more than the 
original and two copies of the SF-272 15 calendar days following the 
end of each quarter. The Department may require a monthly report from 
those recipients receiving advances totaling $1 million or more per 
year.
    (v) The Grants Officer may waive the requirement for submission of 
the SF-272 for any one of the following reasons:
    (A) When monthly advances do not exceed $25,000 per recipient, 
provided that such advances are monitored through other forms contained 
in this section;
    (B) If, in the Grants Officer's opinion, the recipient's accounting 
controls are adequate to minimize excessive Federal advances; or
     (C) When the electronic payment mechanisms provide adequate data.
    (b) When the Department needs additional information or more 
frequent reports, the following shall be observed.
    (1) When additional information is needed to comply with 
legislative requirements, the Department shall issue instructions to 
require recipients to submit such information under the ``Remarks'' 
section of the reports.
    (2) When the Department determines that a recipient's accounting 
system does not meet the standards in Sec. 145.21, additional pertinent 
information to further monitor awards may be obtained upon written 
notice to the recipient until such time as the system is brought up to 
standard. The Department, in obtaining this information, shall comply 
with report clearance requirements of 5 CFR part 1320.
    (3) The Grants Officer may ``shade out'' any line item on any 
report if not necessary.
    (4) The Department may accept the identical information from the 
recipients in machine readable format or computer printouts or 
electronic outputs in lieu of prescribed formats.
    (5) The Department may provide computer or electronic outputs to 
recipients when such expedites or contributes to the accuracy of 
reporting.


Sec. 145.53  Retention and access requirements for records.

    (a) This section sets forth requirements for record retention and 
access to records for awards to recipients. The Department shall not 
impose any other record retention or access requirements upon 
recipients.
    (b) Financial records, supporting documents, statistical records, 
and all other records pertinent to an award shall be retained for a 
period of three years from the date of submission of the final 
expenditure report or, for awards that are renewed quarterly or 
annually, from the date of the submission of the quarterly or annual 
financial report, as authorized by the Department. The only exceptions 
are the following.
    (1) If any litigation, claim, or audit is started before the 
expiration of the 3-year period, the records shall be retained until 
all litigation, claims or audit findings involving the records have 
been resolved and final action taken.
    (2) Records for real property and equipment acquired with Federal 
funds shall be retained for 3 years after final disposition.
    (3) When records are transferred to or maintained by the 
Department, the 3-year retention requirement is not applicable to the 
recipient.
    (4) Indirect cost rate proposals, cost allocations plans, etc. as 
specified in Sec. 145.53(g).
    (c) Copies of original records may be substituted for the original 
records if authorized by the Department.
    (d) The Department shall request transfer of certain records to its 
custody from recipients when it determines that the records possess 
long term retention value. However, in order to avoid duplicate 
recordkeeping, the Department may make arrangements for recipients to 
retain any records that are continuously needed for joint use.
    (e) The Department, the Inspector General, Comptroller General of 
the United States, or any of their duly authorized representatives, 
have the right of timely and unrestricted access to any books, 
documents, papers, or other records of recipients that are pertinent to 
the awards, in order to make audits, examinations, excerpts, 
transcripts and copies of such documents. This right also includes 
timely and reasonable access to a recipient's personnel for the purpose 
of interview and discussion related to such documents. The rights of 
access in this paragraph are not limited to the required retention 
period, but shall last as long as records are retained.
    (f) Unless required by statute, no Department shall place 
restrictions on recipients that limit public access to the records of 
recipients that are pertinent to an award, except when the Department 
can demonstrate that such records shall be kept confidential and would 
have been exempted from disclosure pursuant to the Freedom of 
Information Act (5 U.S.C. 552) if the records had belonged to the 
Department.
    (g) Indirect cost rate proposals, cost allocations plans, etc. 
Paragraphs (g)(1) and (g)(2) apply to the following types of documents, 
and their supporting records: Indirect cost rate computations or 
proposals, cost allocation plans, and any similar accounting 
computations of the rate at which a particular group of costs is 
chargeable (such as computer usage chargeback rates or composite fringe 
benefit rates).
    (1) If submitted for negotiation. If the recipient submits to the 
Department or the subrecipient submits to the recipient the proposal, 
plan, or other computation to form the basis for negotiation of the 
rate, then the 3-year retention period for its supporting records 
starts on the date of such submission.
    (2) If not submitted for negotiation. If the recipient is not 
required to submit to the Department or the subrecipient is not 
required to submit to the recipient the proposal, plan, or other 
computation for negotiation purposes, then the 3-year retention period 
for the proposal, plan, or other computation and its supporting records 
starts at the end of the fiscal year (or other accounting period) 
covered by the proposal, plan, or other computation.

Termination and Enforcement


Sec. 145.60  Purpose of termination and enforcement.

    Sections 145.61 and 145.62 set forth uniform suspension, 
termination and enforcement procedures.


Sec. 145.61  Termination.

    (a) Awards may be terminated in whole or in part only if paragraphs 
(a) (1), (2) or (3) of this section apply.
    (1) By the Department, if a recipient materially fails to comply 
with the terms and conditions of an award.
    (2) By the Department, with the consent of the recipient, in which 
case the two parties shall agree upon the termination conditions, 
including the effective date and, in the case of partial termination, 
the portion to be terminated.
    (3) By the recipient, upon sending to the Department written 
notification setting forth the reasons for such termination, the 
effective date, and, in the case of partial termination, the portion to 
be terminated. However, if the Department determines in the case of 
partial termination that the reduced or modified portion of the grant 
will not accomplish the purposes for which the grant was made, it may 
terminate the grant in its entirety under either paragraphs (a) (1) or 
(2).
    (b) If costs are allowed under an award, the responsibilities of 
the recipient referred to in Sec. 145.71(a), including those for 
property management as applicable, shall be considered in the 
termination of the award, and provision shall be made for continuing 
responsibilities of the recipient after termination, as appropriate.


Sec. 145.62  Enforcement.

    (a) Remedies for noncompliance. If a recipient materially fails to 
comply with the terms and conditions of an award, whether stated in a 
Federal statute, regulation, assurance, application, or notice of 
award, the Department may, in addition to imposing any of the special 
conditions outlined in Sec. 145.14, take one or more of the following 
actions, as appropriate in the circumstances.
    (1) Temporarily withhold cash payments pending correction of the 
deficiency by the recipient or more severe enforcement action by the 
Department.
    (2) Disallow (that is, deny both use of funds and any applicable 
matching credit for) all or part of the cost of the activity or action 
not in compliance.
    (3) Wholly or partly suspend or terminate the current award.
    (4) Withhold further awards for the project or program.
    (5) Take other remedies that may be legally available.
    (b) Hearings and appeals. In taking an enforcement action, the 
awarding agency shall provide the recipient an opportunity for hearing, 
appeal, or other administrative proceeding to which the recipient is 
entitled under any statute or regulation applicable to the action 
involved.
    (c) Effects of suspension and termination. Costs of a recipient 
resulting from obligations incurred by the recipient during a 
suspension or after termination of an award are not allowable unless 
the awarding agency expressly authorizes them in the notice of 
suspension or termination or subsequently. Other recipient costs during 
suspension or after termination which are necessary and not reasonably 
avoidable are allowable if paragraphs (c) (1) and (2) of this section 
apply.
    (1) The costs result from obligations which were properly incurred 
by the recipient before the effective date of suspension or 
termination, are not in anticipation of it, and in the case of a 
termination, are noncancellable.
    (2) The costs would be allowable if the award were not suspended or 
expired normally at the end of the funding period in which the 
termination takes effect.
    (d) Relationship to debarment and suspension. The enforcement 
remedies identified in this section, including suspension and 
termination, do not preclude a recipient from being subject to 
debarment and suspension under Executive Orders 12549 and 12689 and the 
implementing regulations at 22 CFR part 137.

Subpart D--After-the-Award Requirements


Sec. 145.70  Purpose.

    Sections 145.71 through 145.73 contain closeout procedures and 
other procedures for subsequent disallowances and adjustments.


Sec. 145.71  Closeout procedures.

    (a) Recipients shall submit, within 90 calendar days after the date 
of completion of the award, all financial, performance, and other 
reports as required by the terms and conditions of the award. The 
Grants Officer may approve extensions when requested by the recipient.
    (b) Unless the Grants Officer authorizes an extension, a recipient 
shall liquidate all obligations incurred under the award not later than 
90 calendar days after the funding period or the date of completion as 
specified in the terms and conditions of the award.
    (c) The Department shall make prompt payments to a recipient for 
allowable reimbursable costs under the award being closed out.
    (d) The recipient shall promptly refund any balances of unobligated 
cash that the Department has advanced or paid and that is not 
authorized to be retained by the recipient for use in other projects. 
OMB Circular A-129 governs unreturned amounts that become delinquent 
debts.
    (e) When authorized by the terms and conditions of the award, the 
Department shall make a settlement for any upward or downward 
adjustments to the Federal share of costs after closeout reports are 
received.
    (f) The recipient shall account for any real and personal property 
acquired with Federal funds or received from the Federal Government in 
accordance with Secs. 145.31 through 145.37.
    (g) In the event a final audit has not been performed prior to the 
closeout of an award, the Department shall retain the right to recover 
an appropriate amount after fully considering the recommendations on 
disallowed costs resulting from the final audit.


Sec. 145.72  Subsequent adjustments and continuing responsibilities.

    (a) The closeout of an award does not affect any of the following:
    (1) The right of the Department to disallow costs and recover funds 
on the basis of a later audit or other review.
    (2) The obligation of the recipient to return any funds due as a 
result of later refunds, corrections, or other transactions.
    (3) Audit requirements in Sec. 145.26.
    (4) Property management requirements in Secs. 145.31 through 
145.37.
    (5) Records retention as required in Sec. 145.53.
    (b) After closeout of an award, a relationship created under an 
award may be modified or ended in whole or in part with the consent of 
the Department and the recipient, provided the responsibilities of the 
recipient referred to in Sec. 145.73(a), including those for property 
management as applicable, are considered and provisions made for 
continuing responsibilities of the recipient, as appropriate.


Sec. 145.73  Collection of amounts due.

    (a) Any funds paid to a recipient in excess of the amount to which 
the recipient is finally determined to be entitled under the terms and 
conditions of the award constitute a debt to the Federal Government. If 
not paid within a reasonable period after the demand for payment, the 
Department may reduce the debt by:
    (1) Making an administrative offset against other requests for 
reimbursements.
    (2) Withholding advance payments otherwise due to the recipient.
    (3) Taking other action permitted by statute.
    (b) Except as otherwise provided by law, the Department shall 
charge interest on an overdue debt in accordance with 4 CFR Chapter II, 
Federal Claims Collection Standards.

Appendix A to Part 145--Clauses for Contracts and Small Purchases 
Awarded by Recipient

    All contracts and small purchases, awarded by a recipient who is 
subject to this regulation, shall contain the following clauses, as 
applicable:
    1. Equal Employment Opportunity--All contracts shall contain a 
clause requiring compliance with Executive Order 11246, ``Equal 
Employment Opportunity,'' as amended by Executive Order 11375, 
``Amending Executive Order 11246 Relating to Equal Employment 
Opportunity,'' and as supplemented by regulations at 41 CFR part 60, 
``Office of Federal Contract Compliance Programs, Equal Employment 
Opportunity, Department of Labor.''
    2. Copeland ``Anti-Kickback'' Act (18 U.S.C. 874 and 40 U.S.C. 
276c)--All contracts and subgrants in excess of $2000 for 
construction or repair awarded by recipients and subrecipients shall 
include a clause for compliance with the Copeland ``Anti-Kickback'' 
Act (18 U.S.C. 874), as supplemented by Department of Labor 
regulations (29 CFR part 3, ``Contractors and Subcontractors on 
Public Building or Public Work Financed in Whole or in Part by Loans 
or Grants from the United States''). The Act provides that each 
contractor or subrecipient shall be prohibited from inducing, by any 
means, any person employed in the construction, completion, or 
repair of public work, to give up any part of the compensation to 
which he is otherwise entitled. The recipient shall report all 
suspected or reported violations to the Department.
    3. Davis-Bacon Act, as amended (40 U.S.C. 276a to a-7)--When 
required by Federal program legislation, all construction contracts 
awarded by the recipients and subrecipients of more than $2000 shall 
include a clause for compliance with the Davis-Bacon Act (40 U.S.C. 
276a to a-7) and as supplemented by Department of Labor regulations 
(29 CFR part 5, ``Labor Standards Provisions Applicable to Contracts 
Governing Federally Financed and Assisted Construction''). Under 
this Act, contractors shall be required to pay wages to laborers and 
mechanics at a rate not less than the minimum wages specified in a 
wage determination made by the Secretary of Labor. In addition, 
contractors shall be required to pay wages not less than once a 
week. The recipient shall place a copy of the current prevailing 
wage determination issued by the Department of Labor in each 
solicitation and the award of a contract shall be conditioned upon 
the acceptance of the wage determination. The recipient shall report 
all suspected or reported violations to the Department.
    4. Contract Work Hours and Safety Standards Act (40 U.S.C. 327-
333)--Where applicable, all contracts awarded by recipients in 
excess of $2000 for construction contracts and in excess of $2500 
for other contracts that involve the employment of mechanics or 
laborers shall include a clause for compliance with sections 102 and 
107 of the Contract Work Hours and Safety Standards Act (40 U.S.C. 
327-333), as supplemented by Department of Labor regulations (29 CFR 
part 5). Under section 102 of the Act, each contractor shall be 
required to compute the wages of every mechanic and laborer on the 
basis of a standard work week of 40 hours. Work in excess of the 
standard work week is permissible provided that the worker is 
compensated at a rate of not less than 1\1/2\ times the basic rate 
of pay for all hours worked in excess of 40 hours in the work week. 
Section 107 of the Act is applicable to construction work and 
provides that no laborer or mechanic shall be required to work in 
surroundings or under working conditions which are unsanitary, 
hazardous or dangerous. These requirements do not apply to the 
purchases of supplies or materials or articles ordinarily available 
on the open market, or contracts for transportation or transmission 
of intelligence.
    5. Rights to Inventions Made Under a Contract or Agreement--
Contracts or agreements for the performance of experimental, 
developmental, or research work shall provide for the rights of the 
Federal Government and the recipient in any resulting invention in 
accordance with 37 CFR part 401, ``Rights to Inventions Made by 
Nonprofit Organizations and Small Business Firms Under Government 
Grants, Contracts and Cooperative Agreements,'' and any implementing 
regulations issued by the Department.
    6. Clean Air Act (42 U.S.C. 7401 et seq.) and the Federal Water 
Pollution Control Act (33 U.S.C. 1251 et seq.), as amended--
Contracts and subgrants of amounts in excess of $100,000 shall 
contain a clause that requires the recipient to agree to comply with 
all applicable standards, orders or regulations issued pursuant to 
the Clean Air Act (42 U.S.C. 7401 et seq.) and the Federal Water 
Pollution Control Act as amended (33 U.S.C. 1251 et seq.). 
Violations shall be reported to the Department and the Regional 
Office of the Environmental Protection Agency (EPA).
    7. Byrd Anti-Lobbying Amendment (31 U.S.C. 1352)--Contractors 
who apply or bid for an award of $100,000 or more shall file the 
required certification. Each tier certifies to the tier above that 
it will not and has not used Federal appropriated funds to pay any 
person or organization for influencing or attempting to influence an 
officer or employee of any agency, a member of Congress, officer or 
employee of Congress, or an employee of a member of Congress in 
connection with obtaining any Federal contract, grant or any other 
award covered by 31 U.S.C. 1352. Each tier shall also disclose any 
lobbying with non-Federal funds that takes place in connection with 
obtaining any Federal award. Such disclosures are forwarded from 
tier to tier up to the recipient.
    8. Debarment and Suspension (Executive Orders 12549 and 12689)--
No contract shall be made to parties listed on the General Services 
Administration's List of Parties Excluded from Federal Procurement 
or Nonprocurement Programs in accordance with Executive Orders 12549 
and 12689, ``Debarment and Suspension.'' This list contains the 
names of parties debarred, suspended, or otherwise excluded by 
agencies, and contractors declared ineligible under statutory or 
regulatory authority other than Executive Order 12549. Contractors 
with awards that exceed the small purchase limitation shall provide 
the required certification regarding its exclusion status and that 
of its principal employees.

[FR Doc. 94-9181 Filed 4-19-94; 8:45 am]
BILLING CODE 4710-24-P