[Federal Register Volume 59, Number 176 (Tuesday, September 13, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-22416]


[[Page Unknown]]

[Federal Register: September 13, 1994]


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Part II





Department of Housing and Urban Development





_______________________________________________________________________



Office of the Secretary



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24 CFR Part 84




Uniform Administrative Requirements for Grants and Agreements With 
Institutions of Higher Education, Hospitals and Other Non-Profit 
Organizations--Revised OMB Circular A-110; Interim and Final Rule
DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

Office of the Secretary

24 CFR Part 84

[Docket No. R-94-1736; FR-3639-I-01]
RIN 2501-AB74

 
Uniform Administrative Requirements for Grants and Agreements 
With Institutions of Higher Education, Hospitals and Other Non-Profit 
Organizations--Revised OMB Circular A-110

AGENCY: Office of the Secretary, HUD.

ACTION: Interim and final rule.

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SUMMARY: Office of Management and Budget (OMB) Circular A-110 provides 
standards for obtaining consistency and uniformity among Federal 
agencies in the administration of grants and agreements with 
institutions of higher education, hospitals, and other non-profit 
organizations.
    OMB issued Circular A-110 in 1976 and made a minor revision in 
February 1987. To update the Circular, OMB established an interagency 
task force to review the Circular. The task force solicited suggestions 
for changes to the Circular from university groups, non-profit 
organizations and other interested parties and compared, for 
consistency, the provisions of similar provisions applied to State and 
local governments. On November 29, 1993, OMB issued a revised circular 
which reflects the results of these efforts. This final rule adopts the 
revised circular as it pertains to HUD. However, this rule contains, in 
subpart E, special provisions relating to the use of lump sum grants. 
Therefore, subpart E will be treated as an interim rule, and the public 
is invited to submit comments on subpart E.

DATES: Effective date: October 13, 1994.
    Comments due date: Comments on subpart E are due on November 14, 
1994.

ADDRESSES: Interested persons are invited to submit comments regarding 
subpart E of this rule to the Rules Docket Clerk, Office of General 
Counsel, Room 10276, Department of Housing and Urban Development, 451 
Seventh Street, S.W., Washington, D.C. 20410. Communications should 
refer to the above docket number and title. A copy of each 
communication submitted will be available for public inspection and 
copying between 7:30 a.m. and 5:30 p.m. weekdays at the above address.

FOR FURTHER INFORMATION CONTACT: Aliceann B. Muller, Policy and 
Evaluation Division, Office of Procurement and Contracts, Department of 
Housing and Urban Development, 451 Seventh Street, SW, Room 5262, 
Washington, DC 20410. Telephone: (202) 708-0294; TDD: (202) 708-1112. 
(These are not toll-free numbers.)

SUPPLEMENTARY INFORMATION:
    Office of Management and Budget (OMB) Circular A-110 provides 
standards for obtaining consistency and uniformity among Federal 
agencies in the administration of grants and agreements with 
institutions of higher education, hospitals, and other non-profit 
organizations.
    OMB Circular A-110 was issued under the authority of 31 U.S.C. 503 
(the Chief Financial Officers Act), 31 U.S.C. 1111, 41 U.S.C. 405 (the 
Office of Federal Procurement Policy Act), Reorganization Plan No. 2 of 
1970, and E.O. 11541 (``Prescribing the Duties of the Office of 
Management and Budget and the Domestic Policy Council in the Executive 
Office of the President'').
    OMB issued Circular A-110 in 1976 and made a minor revision in 
February 1987. To update the circular, OMB established an interagency 
task force to review the circular. The task force solicited suggestions 
for changes to the circular from university groups, non-profit 
organizations and other interested parties and compared, for 
consistency, the provisions of similar provisions applied to State and 
local governments. On August 27, 1992, OMB published a notice in the 
Federal Register, at 57 FR 39018, requesting comments on proposed 
revisions to OMB Circular A-110. Interested parties were invited to 
submit comments. OMB received over 200 comments from Federal agencies, 
non-profit organizations, professional organizations and others. All 
comments were considered in developing the final revision. On November 
29, 1993, at 58 FR 62992, OMB issued a revised circular which reflects 
the results of these efforts. This final rule represents HUD's adoption 
of the revised circular as part 84 of title 24 of the Code of Federal 
Regulations and sets forth the provisions and procedures HUD will 
follow in compliance with the uniform requirements set for Federal 
agencies in the newly revised OMB Circular A-110 regarding the 
administration of grants to and agreements with institutions of higher 
education, hospitals, commercial organizations and international 
organizations when operating domestically, and other non-profit 
organizations. If any statute specifically prescribes policies or 
specific requirements that differ from the standards provided herein, 
the provisions of the statute shall govern.
    Recipients shall apply the provisions of this Circular to 
subrecipients performing substantive work under grants and agreements 
that are passed through or awarded by the primary recipient. This rule 
does not apply to grants, contracts, or other agreements between HUD 
and units of State or local governments covered by OMB Circular A-102, 
``Administrative Requirements for Grants and Cooperative Agreements to 
State, Local and Federally Recognized Indian Tribal Governments,'' as 
codified in 24 CFR part 85. In addition, subawards and contracts to 
State or local governments are not covered by this rule. However, this 
rule applies to subawards made by State and local governments to 
organizations covered by this rule. HUD shall apply the provisions of 
this part to commercial organizations and international organizations 
(when operating domestically).
    The definition of ``award'' does not include technical assistance, 
which provides services instead of money; other assistance in the form 
of loans, loan guarantees, capital advances under the Sections 202 and 
811 programs, 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. 
Therefore, this rule does not apply to these types of activities. 
Consequently, this rule does not apply to any matter involving funds 
which would be covered by a regulatory agreement between a mortgagor 
and the Secretary, executed under Sections 201, 207(b), 232(d)(1), 
242(d)(1), and 236 (including Rental Assistance Payments) of the 
National Housing Act; Section 101(a) of the Housing and Urban 
Development Act of 1965; and Section 201(a) of the Housing and 
Community Development Amendments of 1978.

Other Matters

Justification for Interim and Final Rule

    The Department has determined that notice and public comment are 
unnecessary and contrary to the public interest before making this rule 
effective because the substance of the rule received public comment 
when the circular was published on August 27 1992. All comments 
received were reviewed and considered in the development of the revised 
circular. However, the Department will accept and review any comments 
received on subpart E because of the selective use of certain 
provisions as they apply to the use of lump sum grants.

Executive Order 12866

    This rule was reviewed by the Office of Management and Budget (OMB) 
under Executive Order 12866 on Regulatory Planning and review, issued 
by the President on September 30, 1993. Any changes made in the rule 
subsequent to its submission to OMB are identified in the docket file, 
which is available for public inspection with the Rules Docket Clerk, 
Room 10276, Department of Housing and Urban Development, 451 Seventh 
Street, SW, Washington, DC 20410.

Environmental Review

    A Finding of No Significant Impact with respect to the environment 
has been made in accordance with HUD regulations at 24 CFR Part 50, 
which implement section 102(2)(C) of the National Environmental Policy 
Act of 1969. The Finding of No Significant Impact is available for 
public inspection between 7:30 a.m. and 5:30 p.m. weekdays in the 
Office of the Rules Docket Clerk, Office of the General Counsel, 
Department of Housing and Urban Development, Room 10276, 451 Seventh 
Street, SW., Washington, DC 20410.

Regulatory Flexibility Act

    The Secretary, in accordance with the Regulatory Flexibility Act (5 
U.S.C. 605(b)), has reviewed this rule before publication and by 
approving it certifies that this rule does not have a significant 
economic impact on a substantial number of small entities. It pertains 
only to the administration of grants and agreements with institutions 
of higher education, hospitals, and other non-profit organizations.

Executive Order 12612, Federalism

    The General Counsel, as the Designated Official under section 6(a) 
of Executive Order 12612, Federalism, has determined that this rule 
does not have ``federalism implications'' because it does not have 
substantial direct effects on the States (including their political 
subdivisions), or on the distribution of power and responsibilities 
among the various levels of government.

Executive Order 12606, the Family

    The General Counsel, as the Designated Official under Executive 
Order 12606, the Family, has determined that this rule does not have 
potential significant impact on family formation, maintenance, and 
general well-being. It pertains only to the administration of grants 
and agreements with institutions of higher education, hospitals, and 
other nonprofit organizations.

Semiannual Agenda of Regulations

    This rule was listed as item number 1527 in the Department's 
Semiannual Agenda of Regulations published on April 25, 1994 (59 FR 
20424, 20434) in accordance with Executive Order 12866 and the 
Regulatory Flexibility Act.

List of Subjects in 24 CFR part 84

    Accounting, Colleges and universities, Grant programs--Housing and 
community development, Loan programs--Housing and community 
development, Nonprofit organizations, Reporting and recordkeeping 
requirements.

    Accordingly, subtitle A of title 24 of the Code of Federal 
Regulations is amended to add a new part 84, consisting of subparts A 
through E and appendix A, as follows:

PART 84--GRANTS AND AGREEMENTS WITH INSTITUTIONS OF HIGHER 
EDUCATION, HOSPITALS, AND OTHER NON-PROFIT ORGANIZATIONS

Subpart A--General

Sec.
84.1  Purpose.
84.2  Definitions.
84.3  Effect on other issuances.
84.4  Deviations.
84.5  Subawards.

Subpart B--Pre-Award Requirements

84.10  Purpose.
84.11  Pre-award policies.
84.12  Forms for applying for Federal assistance.
84.13  Debarment and suspension; Drug-Free Workplace.
84.14  Special award conditions.
84.15  Metric system of measurement.
84.16  Resource Conservation and Recovery Act.
84.17  Certifications and representations.

Subpart C--Post-Award Requirements

Financial and Program Management

84.20  Purpose of financial and program management.
84.21  Standards for financial management systems.
84.22  Payment.
84.23  Cost sharing or matching.
84.24  Program income.
84.25  Revision of budget and program plans.
84.26  Non-Federal audits.
84.27  Allowable costs.
84.28  Period of availability of funds.

Property Standards

84.30  Purpose of property standards.
84.31  Insurance coverage.
84.32  Real property.
84.33  Federally-owned and exempt property.
84.34  Equipment.
84.35  Supplies and other expendable property.
84.36  Intangible property.
84.37  Property trust relationship.

Procurement Standards

84.40  Purpose of procurement standards.
84.41  Recipient responsibilities.
84.42  Codes of conduct.
84.43  Competition.
84.44  Procurement procedures.
84.45  Cost and price analysis.
84.46  Procurement records.
84.47  Contract administration.
84.48  Contract provisions.

Reports and Records

84.50  Purpose of reports and records.
84.51  Monitoring and reporting program performance.
84.52  Financial reporting.
84.53  Retention and access requirements for records.

Termination and Enforcement

84.60  Purpose of termination and enforcement.
84.61  Termination.
84.62  Enforcement.

Subpart D--After-the-Award Requirements

84.70  Purpose.
84.71  Closeout procedures.
84.72  Subsequent adjustments and continuing responsibilities.
84.73  Collection of amounts due.

Subpart E--Use of Lump Sum Grants

84.80  Conditions for use of Lump Sum (fixed price or fixed amount) 
grants.
84.81  Definition.
84.82  Provisions applicable to lump sum grants.
84.83  Property standards.
84.84  Procurement standards.
84.85  Reports and records.
84.86  Termination and enforcement.
84.87  Closeout procedures, subsequent adjustments and continuing 
responsibilities.

Appendix A to Part 84--Contract Provisions

    Authority: 42 U.S.C. 3535(d).

Subpart A--General


Sec. 84.1   Purpose.

    This part establishes uniform administrative requirements for 
Federal grants and agreements awarded to institutions of higher 
education, hospitals, and other non-profit organizations. Additional or 
inconsistent requirements shall not be imposed, except as provided in 
Secs. 84.4, and 84.14 or unless specifically required by Federal 
statute or executive order. Non-profit organizations that implement 
Federal programs for the States are also subject to State requirements.


Sec. 84.2   Definitions.

    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.
    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.
    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.
    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.
    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 
HUD 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, capital advances under the 
Sections 202 and 811 programs, 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.
    Cash contributions means the recipient's cash outlay, including the 
outlay of money contributed to the recipient by third parties.
    Closeout means the process by which HUD determines that all 
applicable administrative actions and all required work of the award 
have been completed by the recipient and HUD.
    Contract means a procurement contract under an award or subaward, 
and a procurement subcontract under a recipient's or subrecipient's 
contract.
    Cost sharing or matching means that portion of project or program 
costs not borne by HUD.
    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 HUD sponsorship ends.
    Disallowed costs means those charges to an award that HUD 
determines to be unallowable, in accordance with the applicable Federal 
cost principles or other terms and conditions contained in the award.
    Equipment means tangible nonexpendable personal property including 
exempt property charged directly to the award having a useful life of 
more than one year and an acquisition cost of $5000 or more per unit. 
However, consistent with recipient policy, lower limits may be 
established.
    Excess property means property under the control of HUD that, as 
determined by the Secretary, is no longer required for its needs or the 
discharge of its responsibilities.
    Exempt property means tangible personal property acquired in whole 
or in part with Federal funds, where HUD 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.
    Federal awarding agency means the Federal agency that provides an 
award to the recipient.
    Federal funds authorized means the total amount of Federal funds 
obligated by HUD for use by the recipient. This amount may include any 
authorized carryover of unobligated funds from prior funding periods 
when permitted by HUD regulations or implementing instructions.
    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.
    Funding period means the period of time when Federal funding is 
available for obligation by the recipient.
    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.
    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.
    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.
    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.
    Prior approval means written approval by an authorized official 
evidencing prior consent.
    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 Secs. 84.24 (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 HUD 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.
    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.
    Project period means the period established in the award document 
during which HUD sponsorship begins and ends.
    Property means, unless otherwise stated, real property, equipment, 
intangible property and debt instruments.
    Real property means land, including land improvements, structures 
and appurtenances thereto, but excludes movable machinery and 
equipment.
    Recipient means an organization receiving financial assistance 
directly from HUD to carry out a project or program. The term includes 
public and private institutions of higher education, public and private 
hospitals, and other quasi-public and private non-profit organizations 
such as, but not limited to, community action agencies, research 
institutes, educational associations, and health centers. The term 
includes commercial organizations, international organizations when 
operating domestically (such as agencies of the United Nations) which 
are recipients, subrecipients, or contractors or subcontractors of 
recipients or subrecipients. 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. The term does not include mortgagors that receive 
mortgages insured or held by HUD or mortgagors or project owners that 
receive capital advances from HUD under the Section 202 and 811 
programs.
    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.
    Small awards means a grant or cooperative agreement not exceeding 
$100,000 or the small purchase threshold fixed at 41 U.S.C. 403(11), 
whichever is greater.
    Subaward means:
    (1) 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''.
    (2) For Community Development Block Grants, the term ``subaward'' 
does not include the arrangement whereby the prime recipient transfers 
funds to another entity and that entity is the project. A distinction 
is made between such a transfer for the furtherance of the prime 
recipient's goals and the transfer of funds to a subrecipient who 
carries out activities and is accountable to the prime recipient. For 
example, in a CDBG award where a prime recipient has as its program 
goal the revitalization of a downtown area, the funds transferred to a 
business in the downtown area to remodel its store would not be 
considered a subaward subject to this part 84.
    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 includes commercial organizations and international 
organizations operating domestically (such as agencies of the United 
Nations).
    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.''
    Suspension means an action by HUD that temporarily withdraws HUD 
sponsorship under an award, pending corrective action by the recipient 
or pending a decision to terminate the award by HUD. Suspension of an 
award is a separate action from suspension under HUD regulations 
implementing E.O. 12549 and E.O. 12689, ``Debarment and Suspension,'' 
at 24 CFR part 24.
    Termination means the cancellation of HUD sponsorship, in whole or 
in part, under an agreement at any time prior to the date of 
completion.
    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.
    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.
    Unobligated balance means the portion of the funds authorized by 
HUD that has not been obligated by the recipient and is determined by 
deducting the cumulative obligations from the cumulative funds 
authorized.
    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.
    Working capital advance means a procedure whereby funds are 
advanced to the recipient to cover its estimated disbursement needs for 
a given initial period.


Sec. 84.3   Effect on other issuances.

    For awards subject to this part, all administrative requirements of 
codified program regulations, program manuals, handbooks and other 
nonregulatory materials which are inconsistent with the requirements of 
this part shall be superseded, except to the extent they are required 
by statute, or authorized in accordance with the deviations provision 
in Sec. 84.4.


Sec. 84.4   Deviations.

    The Office of Management and Budget (OMB) may grant exceptions for 
classes of grants or recipients subject to the requirements of this 
rule when exceptions are not prohibited by statute. However, in the 
interest of maximum uniformity, exceptions from the requirements of 
this rule shall be permitted only in unusual circumstances. HUD may 
apply more restrictive requirements to a class of recipients when 
approved by OMB. HUD may apply less restrictive requirements when 
awarding small awards and when approved by OMB, except for those 
requirements which are statutory. Exceptions on a case-by-case basis 
may also be made by HUD.


Sec. 84.5  Subawards.

    Unless sections of this part specifically exclude subrecipients 
from coverage, the provisions of this part shall be applied to 
subrecipients performing work under awards if such subrecipients are 
institutions of higher education, hospitals, commercial organizations 
and international organizations operating domestically, or other non-
profit organizations. State, local and Federally recognized Indian 
tribal government subrecipients are subject to the provisions of 
regulations implementing the grants management common rule, 
``Administrative Requirements for Grants and Cooperative Agreements to 
State, Local and Federally Recognized Indian Tribal Governments,'' (24 
CFR part 85).

Subpart B--Pre-Award Requirements


Sec. 84.10   Purpose.

    Sections 84.11 through 84.17 prescribe forms and instructions and 
other pre-award matters to be used in applying for HUD awards.


Sec. 84.11   Pre-award policies.

    (a) Use of Grants and Cooperative Agreements, and Contracts. In 
each instance, HUD shall decide on the appropriate award instrument 
(i.e., grant, cooperative agreement, or contract). The Federal Grant 
and Cooperative Agreement Act (31 U.S.C. 6301-08) governs the use of 
grants, cooperative agreements and contracts. A grant or cooperative 
agreement shall be used only when the principal purpose of a 
transaction is to accomplish a public purpose of support or stimulation 
authorized by Federal statute. The statutory criterion for choosing 
between grants and cooperative agreements is that for the latter, 
``substantial involvement is expected between the executive agency and 
the State, local government, or other recipient when carrying out the 
activity contemplated in the agreement.'' Contracts shall be used when 
the principal purpose is acquisition of property or services for the 
direct benefit or use of the Federal Government.
    (b) Public Notice and Priority Setting. HUD shall notify the public 
of its intended funding priorities for discretionary grant programs, 
unless funding priorities are established by Federal statute.


Sec. 84.12  Forms for applying for Federal assistance.

    (a) HUD 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 HUD 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 HUD.
    (c) For Federal programs covered by E.O. 12372, ``Intergovernmental 
Review of Federal Programs,'' the applicant shall complete the 
appropriate sections of the SF-424 (Application for Federal Assistance) 
indicating whether the application was subject to review by the State 
Single Point of Contact (SPOC). The name and address of the SPOC for a 
particular State can be obtained from the Catalog of Federal Domestic 
Assistance. The SPOC shall advise the applicant whether the program for 
which application is made has been selected by that State for review.


Sec. 84.13  Debarment and suspension; Drug-Free Workplace.

    (a) HUD and its recipients and subrecipients shall comply with the 
nonprocurement debarment and suspension common rule implementing E.O.s 
12549 and 12689, ``Debarment and Suspension,'' at 24 CFR part 24. 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.
    (b) HUD and its recipients and subrecipients shall comply with the 
certification requirements of the Drug-Free Workplace Act of 1988 (42 
U.S.C. 701), as set forth at 24 CFR part 24, subpart F.


Sec. 84.14  Special award conditions.

    If an applicant or recipient:
    (a) Has a history of poor performance;
    (b) Is not financially stable;
    (c) Has a management system that does not meet the standards 
prescribed in this part;
    (d) Has not conformed to the terms and conditions of a previous 
award; or
    (e) Is not otherwise responsible, HUD 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. 84.15  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. HUD shall follow the provisions of E.O. 12770, 
``Metric Usage in Federal Government Programs.''


Sec. 84.16  Resource Conservation and Recovery Act.

    Under the Resource Conservation and Recovery Act (RCRA) (Pub. L. 
94-580, 42 U.S.C. 6962), any State agency or agency of a political 
subdivision of a State which is using appropriated Federal funds must 
comply with Section 6002. Section 6002 requires that preference be 
given in procurement programs to the purchase of specific products 
containing recycled materials identified in guidelines developed by the 
Environmental Protection Agency (EPA) (40 CFR parts 247 through 254). 
Accordingly, State and local institutions of higher education, 
hospitals, commercial organizations and international organizations 
when operating domestically, 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. 84.17  Certifications and representations.

    Unless prohibited by statute or codified regulation, HUD is 
authorized and encouraged to allow recipients to submit certifications 
and representations required by statute, executive order, or regulation 
on an annual basis, if the recipients have ongoing and continuing 
relationships with the agency. Annual certifications and 
representations 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. 84.20  Purpose of financial and program management.

    Sections 84.21 through 84.28 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. 84.21  Standards for financial management systems.

    (a) HUD 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. 84.52. If a recipient 
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 their 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, HUD, 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) HUD 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. 84.22  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:
    (1) Written procedures that minimize the time elapsing between the 
transfer of funds and disbursement by the recipient; and
    (2) Financial management systems that meet the standards for fund 
control and accountability as established in Sec. 84.21. 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 HUD 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. 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 
HUD instructions for electronic funds transfer. 
    (e) Reimbursement is the preferred method when the requirements in 
paragraph (b) of this section cannot be met. HUD 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, HUD 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 HUD has determined that reimbursement is not feasible because the 
recipient lacks sufficient working capital, HUD may provide cash on a 
working capital advance basis. Under this procedure, HUD 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, HUD 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, HUD shall not withhold 
payments for proper charges made by recipients at any time during the 
project period unless paragraphs (h)(1) or (h)(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, HUD may, upon reasonable 
notice, inform the recipient that payments shall not be made for 
obligations incurred after a specified date until the conditions are 
corrected or the indebtedness to the Federal Government is liquidated.
    (i) Standards governing the use of banks and other institutions as 
depositories of funds advanced under awards are as follows.
    (1) Except for situations described in paragraph (i)(2) of this 
section, HUD 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), (k)(2), or (k)(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 Department of Health and 
Human Services, Payment Management System, P.O. Box 6021, Rockville, MD 
20852. In keeping with Electronic Funds Transfer rules (31 CFR part 
206), interest should be remitted to the HHS Payment Management System 
through an electronic medium such as the FEDWIRE Deposit system. 
Recipients which do not have this capability should use a check. 
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 Federal awarding agency, it 
waives its right to recover the interest under CMIA.
    (m) Except as noted elsewhere in this rule, only the following 
forms shall be authorized for the recipients in requesting advances and 
reimbursements. Federal agencies shall not require more than an 
original and two copies of these forms.
    (1) SF-270, Request for Advance or Reimbursement. HUD has adopted 
the SF-270 as a standard form for all nonconstruction programs when 
electronic funds transfer or predetermined advance methods are not 
used. HUD has the option of using this form for construction programs 
in lieu of the SF-271, ``Outlay Report and Request for Reimbursement 
for Construction Programs.''
    (2) SF-271, Outlay Report and Request for Reimbursement for 
Construction Programs. HUD has adopted the SF-271 as the standard form 
to be used for requesting reimbursement for construction programs. 
However, HUD may substitute the SF-270 when HUD determines that it 
provides adequate information to meet Federal needs.


Sec. 84.23   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 HUD.
    (7) Conform to other provisions of this part, as applicable.
    (b) Unrecovered indirect costs may be included as part of cost 
sharing or matching only with the prior approval of HUD.
    (c) Values for recipient contributions of services and property 
shall be established in accordance with the applicable cost principles. 
If HUD 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 (c)(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, HUD 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 
paragraphs (g)(1) or (g)(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 HUD 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. 84.24   Program income.

    (a) HUD 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 HUD regulations or the terms and 
conditions of the award, shall be used in one or more of the ways 
listed in the following.
    (1) Added to funds committed to the project by HUD 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 HUD authorizes the disposition of program income as 
described in paragraphs (b)(1) or (b)(2) of this section, program 
income in excess of any limits stipulated shall be used in accordance 
with paragraph (b)(3) of this section.
    (d) In the event that HUD does not specify in its regulations or 
the terms and conditions of the award how program income is to be used, 
paragraph (b)(3) of this section shall apply automatically to all 
projects or programs except research. For awards that support research, 
paragraph (b)(1) of this section shall apply automatically unless HUD 
indicates in the terms and conditions another alternative on the award 
or the recipient is subject to special award conditions, as indicated 
in Sec. 84.14.
    (e) Unless HUD regulations or the terms and conditions of the award 
provide otherwise, recipients shall have no obligation to the Federal 
Government regarding program income earned after the end of the project 
period.
    (f) If authorized by HUD regulations or 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. 84.30 through 84.37).
    (h) Unless HUD regulations or 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. 84.25   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 HUD requirements. It shall be related to performance for program 
evaluation purposes whenever appropriate.
    (b) Recipients are required to report deviations from budget and 
program plans, and request prior approvals for budget and program plan 
revisions, in accordance with this section.
    (c) For nonconstruction awards, recipients shall request prior 
approvals from HUD 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 
HUD.
    (6) The inclusion, unless waived by HUD, 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 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, HUD is authorized, at its option, to waive cost-
related and administrative prior written approvals required by Circular 
A-110 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 HUD. All pre-award 
costs are incurred at the recipient's risk (i.e., HUD 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 HUD 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 HUD provides otherwise 
in HUD's regulations, the prior approval requirements described in 
paragraph (e) of this section are automatically waived (i.e., 
recipients need not obtain such prior approvals) unless one of the 
conditions included in paragraph (e)(2) of this section applies.
    (f) HUD 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 HUD. HUD 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) of this section, do not require 
prior approval.
    (h) For construction awards, recipients shall request prior written 
approval promptly from HUD for budget revisions whenever paragraphs 
(h)(1), (h)(2) or (h)(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. 84.27.
    (i) No other prior approval requirements for specific items may be 
imposed unless a deviation has been approved by OMB.
    (j) When HUD makes an award that provides support for both 
construction and nonconstruction work, HUD may require the recipient to 
request prior approval from HUD before making any fund or budget 
transfers between the two types of work supported.
    (k) For both construction and nonconstruction awards, HUD shall 
require recipients to notify HUD in writing promptly whenever the 
amount of Federal authorized funds is expected to exceed the needs of 
the recipient for the project period by more than $5000 or five percent 
of the Federal award, whichever is greater. This notification shall not 
be required if an application for additional funding is submitted for a 
continuation award.
    (l) When requesting approval for budget revisions, recipients shall 
use the budget forms that were used in the application unless HUD 
indicates a letter of request suffices.
    (m) Within 30 calendar days from the date of receipt of the request 
for budget revisions, HUD 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, 
HUD shall inform the recipient in writing of the date when the 
recipient may expect the decision.


Sec. 84.26   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,'' 
as codified in 24 CFR part 45.
    (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 
HUD regulations implementing OMB Circular A-128, ``Audits of State and 
Local Governments,'' at 24 CFR part 44.
    (c) Hospitals are covered by the audit provisions of OMB Circular 
A-133, as codified in 24 CFR part 44.
    (d) Commercial organizations shall be subject to the audit 
requirements of HUD or the prime recipient as incorporated into the 
award document.


Sec. 84.27   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. 84.28   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 HUD.

Property Standards


Sec. 84.30   Purpose of property standards.

    Sections 84.31 through 84.37 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. HUD 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. 84.31 through 84.37.


Sec. 84.31   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. 84.32   Real property.

    HUD prescribes the following requirements for recipients concerning 
the use and disposition of real property acquired in whole or in part 
under awards:
    (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 HUD.
    (b) The recipient shall obtain written approval by HUD 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 HUD.
    (c) When the real property is no longer needed as provided in 
paragraphs (a) and (b) of this section, the recipient shall request 
disposition instructions from HUD or its successor Federal awarding 
agency. HUD 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 HUD 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. 84.33   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 HUD. Upon completion of the award or when the property is no 
longer needed, the recipient shall report the property to HUD for 
further HUD utilization.
    (2) If HUD has no further need for the property, it shall be 
declared excess and reported to the General Services Administration, 
unless HUD has statutory authority to dispose of the property by 
alternative methods (e.g., the authority provided by the Federal 
Technology Transfer Act (15 U.S.C. 3710 (I)) to donate research 
equipment to educational and non-profit organizations in accordance 
with E.O. 12821, ``Improving Mathematics and Science Education in 
Support of the National Education Goals.'') Appropriate instructions 
shall be issued to the recipient by HUD.
    (b) Exempt property. When statutory authority exists, HUD 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 HUD considers appropriate. Such property is ``exempt 
property.'' Should HUD not establish conditions, title to exempt 
property upon acquisition shall vest in the recipient without further 
obligation to the Federal Government.


Sec. 84.34  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 equipment without approval of HUD. When the equipment is 
no longer needed for the original project or program, the recipient 
shall use the equipment in connection with its other federally-
sponsored activities, in the following order of priority:
    (1) Activities sponsored by HUD which funded the original project; 
then
    (2) Activities sponsored by other Federal awarding agencies.
    (d) During the time that equipment is used on the project or 
program for which it was acquired, the recipient 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 HUD that 
financed the equipment; second preference shall be given to projects or 
programs sponsored by other Federal awarding agencies. If the equipment 
is owned by the Federal Government, use on other activities not 
sponsored by the Federal Government shall be permissible if authorized 
by HUD. 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 HUD.
    (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 HUD 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 HUD.
    (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 
$5000 or more, the recipient may retain the equipment for other uses 
provided that compensation is made to HUD 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 HUD. HUD shall determine whether the equipment can be 
used to meet HUD's requirements. If no requirement exists within HUD, 
the availability of the equipment shall be reported to the General 
Services Administration by HUD to determine whether a requirement for 
the equipment exists in other Federal agencies. HUD 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 HUD 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 HUD for such costs 
incurred in its disposition.
    (4) HUD 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) HUD 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 HUD fails to issue disposition instructions within the 120 calendar 
day period, the recipient shall apply the standards of this section, as 
appropriate.
    (iii) When HUD exercises its right to take title, the equipment 
shall be subject to the provisions for federally-owned equipment.


Sec. 84.35  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 $5000 in total aggregate value upon 
termination or completion of the project or program and the supplies 
are not needed for any other federally-sponsored project or program, 
the recipient shall retain the supplies for use on non-Federal 
sponsored activities or sell them, but shall, in either case, 
compensate the Federal Government for its share. The amount of 
compensation shall be computed in the same manner as for equipment.
    (b) The recipient shall not use supplies acquired with Federal 
funds to provide services to non-Federal outside organizations for a 
fee that is less than private companies charge for equivalent services, 
unless specifically authorized by Federal statute, as long as the 
Federal Government retains an interest in the supplies.


Sec. 84.36  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. HUD 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 HUD, the Federal Government has the right to 
paragraphs (c)(1) and (c)(2) of this section.
    (1) Obtain, reproduce, publish or otherwise use the data first 
produced under an award.
    (2) Authorize others to receive, reproduce, publish, or otherwise 
use such data for Federal purposes.
    (d) Title to intangible property and debt instruments acquired 
under an award or subaward vests upon acquisition in the recipient. The 
recipient shall use that property for the originally-authorized 
purpose, and the recipient shall not encumber the property without 
approval of HUD. When no longer needed for the originally authorized 
purpose, disposition of the intangible property shall occur in 
accordance with the provisions of Sec. 84.34(g).


Sec. 84.37  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. HUD 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. 84.40  Purpose of procurement standards.

    Sections 84.41 through 84.48 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 HUD upon recipients, unless 
specifically required by Federal statute or executive order or approved 
by OMB.


Sec. 84.41  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 HUD, 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. 84.42  Codes of conduct.

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


Sec. 84.43  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. The other 
factors shall include the bidder's or offeror's compliance with Section 
3 of the Housing and Urban Development Act of 1968 (12 U.S.C. 1701u), 
hereafter referred to as ``Section 3.'' Section 3 provides that, to the 
greatest extent feasible, and consistent with existing Federal, State, 
and local laws, and regulations, economic opportunities generated by 
certain HUD financial assistance shall be directed to low- and very 
low-income persons. 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. 84.44  Procurement procedures.

    (a) All recipients shall establish written procurement procedures. 
These procedures shall provide for, at a minimum, that paragraphs 
(a)(1), (a)(2) and (a)(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 procuring instruments used (e.g., fixed price 
contracts, cost reimbursable contracts, purchase orders, and incentive 
contracts) shall be determined by the recipient but shall be 
appropriate for the particular procurement and for promoting the best 
interest of the program or project involved. The ``cost-plus-a-
percentage-of-cost'' or ``percentage of construction cost'' methods of 
contracting shall not be used.
    (d) Contracts shall be made only with responsible contractors who 
possess the potential ability to perform successfully under the terms 
and conditions of the proposed procurement. Consideration shall be 
given to such matters as contractor integrity; compliance with public 
policy, including, where applicable, Section 3 of the Housing and Urban 
Development Act of 1968 (12 U.S.C. 1701u); 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,'' at 24 CFR part 24.
    (e) Recipients shall, on request, make available for the Federal 
awarding agency, pre-award review and procurement documents, such as 
requests 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 HUD's implementation of 
Circular A-110.
    (2) The procurement is expected to exceed $100,000 or the small 
purchase threshold fixed at 41 U.S.C. 403 (11), whichever is greater, 
and is to be awarded without competition or only one bid or offer is 
received in response to a solicitation.
    (3) The procurement, which is expected to exceed the small purchase 
threshold, specifies a ``brand name'' product.
    (4) The proposed award over the small purchase threshold is to be 
awarded to other than the apparent low bidder under a sealed bid 
procurement.
    (5) A proposed contract modification changes the scope of a 
contract or increases the contract amount by more than the amount of 
the small purchase threshold.


Sec. 84.45  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. 84.46  Procurement records.

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


Sec. 84.47   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. 84.48   Contract provisions.

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

Reports and Records


Sec. 84.50  Purpose of reports and records.

    Sections 84.51 through 84.53 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. 84.51  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. 84.26.
    (b) HUD shall prescribe the frequency with which the performance 
reports shall be submitted. Except as provided in Sec. 84.51(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. HUD 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 HUD 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) HUD may make site visits, as needed.
    (h) HUD shall comply with clearance requirements of 5 CFR part 1320 
when requesting performance data from recipients.


Sec. 84.52  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) HUD requires recipients to use the SF-269 or SF-269A to report 
the status of funds for all nonconstruction projects or programs. HUD 
has the option of not requiring the SF-269 or SF-269A when the SF-270, 
Request for Advance or Reimbursement, or SF-272, Report of Federal Cash 
Transactions, is determined to provide adequate information to meet its 
needs, except that a final SF-269 or SF-269A shall be required at the 
completion of the project when the SF-270 is used only for advances.
    (ii) HUD shall prescribe whether the report shall be on a cash or 
accrual basis. If HUD 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) HUD 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) HUD requires 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 HUD upon request of the 
recipient.
    (2) SF-272, Report of Federal Cash Transactions.
    (i) When funds are advanced to recipients HUD shall require each 
recipient to submit the SF-272 and, when necessary, its continuation 
sheet, SF-272a. HUD shall use this report to monitor cash advanced to 
recipients and to obtain disbursement information for each agreement 
with the recipients.
    (ii) HUD may require forecasts of Federal cash requirements in the 
``Remarks'' section of the report.
    (iii) When practical and deemed necessary, HUD may require 
recipients to report in the ``Remarks'' section the amount of cash 
advances received and retained 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. HUD may require a monthly report from those 
recipients receiving advances totaling $1 million or more per year.
    (v) HUD 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 HUD'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 HUD needs additional information or more frequent reports, 
the following shall be observed.
    (1) When additional information is needed to comply with 
legislative requirements, HUD shall issue instructions to require 
recipients to submit such information under the ``Remarks'' section of 
the reports.
    (2) When HUD determines that a recipient's accounting system does 
not meet the standards in Sec. 84.21, 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. HUD, 
in obtaining this information, shall comply with report clearance 
requirements of 5 CFR part 1320.
    (3) HUD will shade out any line item on any report if not 
necessary.
    (4) HUD may accept the identical information from the recipients in 
machine readable format or computer printouts or electronic outputs in 
lieu of prescribed formats.
    (5) HUD may provide computer or electronic outputs to recipients 
when such expedites or contributes to the accuracy of reporting.


Sec. 84.53  Retention and access requirements for records.

    (a) This section sets forth requirements for record retention and 
access to records for awards to recipients. HUD 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 HUD. 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 HUD, the 3-
year retention requirement is not applicable to the recipient.
    (4) Indirect cost rate proposals, cost allocation plans, etc. as 
specified in Sec. 84.53(g).
    (c) Copies of original records may be substituted for the original 
records if authorized by HUD.
    (d) HUD 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, 
HUD may make arrangements for recipients to retain any records that are 
continuously needed for joint use.
    (e) HUD, 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 (e) 
are not limited to the required retention period, but shall last as 
long as records are retained.
    (f) Unless required by statute, HUD shall not place restrictions on 
recipients that limit public access to the records of recipients that 
are pertinent to an award, except when HUD 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 HUD.
    (g) Indirect cost rate proposals, cost allocation plans, etc. 
Paragraphs (g)(1) and (g)(2) of this section apply to the following 
types of documents, and their supporting records--indirect cost rate 
computations or proposals, cost allocation plans, and any similar 
accounting computations of the rate at which a particular group of 
costs is chargeable (such as computer usage chargeback rates or 
composite fringe benefit rates).
    (1) If submitted for negotiation. If the recipient submits to HUD 
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 HUD 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. 84.60  Purpose of termination and enforcement.

    Sections 84.61 and 84.62 set forth uniform suspension, termination 
and enforcement procedures.


Sec. 84.61  Termination.

    (a) Awards may be terminated in whole or in part only if paragraphs 
(a)(1), (a)(2) or (a)(3) of this section apply.
    (1) By HUD, if a recipient materially fails to comply with the 
terms and conditions of an award.
    (2) By HUD 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 HUD 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 HUD 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 (a)(2) of this section.
    (b) If costs are allowed under an award, the responsibilities of 
the recipient referred to in Sec. 84.71(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. 84.62  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, HUD may, in addition to imposing any of the special conditions 
outlined in Sec. 84.14, 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 HUD.
    (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, HUD 
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 
HUD 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 (c)(2) of this section apply.
    (1) The costs result from obligations which were properly incurred 
by the recipient before the effective date of suspension or 
termination, are not in anticipation of it, and in the case of a 
termination, are noncancellable.
    (2) The costs would be allowable if the award were not suspended or 
expired normally at the end of the funding period in which the 
termination takes effect.
    (d) Relationship to debarment and suspension. The enforcement 
remedies identified in this section, including suspension and 
termination, do not preclude a recipient from being subject to 
debarment and suspension under E.O.s 12549 and 12689 and HUD's 
implementing regulations at 24 CFR part 24 (see Sec. 84.13).

Subpart D--After-the-Award Requirements


Sec. 84.70  Purpose.

    Sections 84.71 through 84.73 contain closeout procedures and other 
procedures for subsequent disallowances and adjustments.


Sec. 84.71  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. HUD may 
approve extensions when requested by the recipient.
    (b) Unless HUD authorizes an extension, a recipient shall liquidate 
all obligations incurred under the award not later than 90 calendar 
days after the funding period or the date of completion as specified in 
the terms and conditions of the award or in HUD instructions.
    (c) HUD 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 HUD 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, HUD 
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. 84.31 through 84.37.
    (g) In the event a final audit has not been performed prior to the 
closeout of an award, HUD shall retain the right to recover an 
appropriate amount after fully considering the recommendations on 
disallowed costs resulting from the final audit.


Sec. 84.72  Subsequent adjustments and continuing responsibilities.

    (a) The closeout of an award does not affect any of the following.
    (1) The right of HUD 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. 84.26.
    (4) Property management requirements in Secs. 84.31 through 84.37.
    (5) Records retention as required in Sec. 84.53.
    (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 
HUD and the recipient, provided the responsibilities of the recipient 
referred to in Sec. 84.73(a), including those for property management 
as applicable, are considered and provisions made for continuing 
responsibilities of the recipient, as appropriate.


Sec. 84.73  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, HUD 
may reduce the debt by paragraphs (a)(1), (a)(2) or (a)(3) of this 
section.
    (1) Making an administrative offset against other requests for 
reimbursements.
    (2) Withholding advance payments otherwise due to the recipient.
    (3) Taking other action permitted by statute.
    (b) Except as otherwise provided by law, HUD shall charge interest 
on an overdue debt in accordance with 4 CFR Chapter II, ``Federal 
Claims Collection Standards.''

Subpart E--Use of Lump Sum Grants


Sec. 84.80  Conditions for use of Lump Sum (fixed price or fixed 
amount) grants.

    (a) Heads of awarding activities (HAAs) shall determine and publish 
the funding arrangement for award programs having a published program 
regulation or Notice of Funding Availability. For other awards, 
discretion may be provided to Grant Officers to determine the funding 
arrangement on a transaction basis. In such cases, Grant Officers shall 
document the basis for selection of the funding arrangement in the 
negotiation record. Appropriate consideration to fixed amount (lump 
sum) awards shall be made if one or more of the following conditions 
are present:
    (1) The HUD funding amount is definitely less than the total actual 
cost of the project.
    (2) The HUD funding amount does not exceed $100,000 or the small 
purchase threshold fixed at 41 U.S.C. 403 (11), whichever is greater.
    (3) The project scope is very specific and adequate cost, 
historical, or unit pricing data is available to establish a fixed 
amount award with assurance that the recipient will realize no 
increment above actual cost.
    (b) [Reserved]


Sec. 84.81  Definition.

    (a) A lump sum award is an award for a predetermined amount, as set 
forth in the grant agreement, which amount does not vary with the 
amount of the recipient's actual incurred costs. Under this type of 
award, HUD does not pay the recipient for its incurred costs but rather 
for completing certain defined events in the work or achievement of 
some other well-defined milestone. Some of the ways in which the grant 
amount may be paid are, but are not limited to:
    (1) In several partial payments, the amount of each agreed upon in 
advance, and the ``milestone'' or event triggering the payment also 
agreed upon in advance, and set forth in the grant;
    (2) On a unit price basis, for a defined unit or units (such as a 
housing counseling unit), at a defined price or prices, agreed to in 
advance of performance of the grant and set forth in the grant; or,
    (3) In one payment at grant completion.
    (b) The key distinction between a lump sum and a cost reimbursement 
grant is the lack of a direct relationship between the costs incurred 
by the recipient and the amount paid by HUD in the lump sum 
arrangement.


Sec. 84.82  Provisions applicable only to lump sum grants.

    In addition to the provisions of this subpart E, subparts A and B 
of this part apply to lump sum grants.
    (a) Financial and program management. Paragraphs (b) through (e) of 
this section prescribe standards for financial management systems, 
methods for making payments, budget revision approvals, and making 
audits.
    (b) Standards for financial management systems.
    (1) Records that identify adequately the source and application of 
funds for federally-sponsored activities are required. These records 
shall contain information pertaining to Federal awards, authorizations, 
obligations, unobligated balances, assets, outlays, income and 
interest.
    (2) Effective control over and accountability for all funds, 
property and other assets are required. Recipients shall adequately 
safeguard all such assets and assure they are used solely for 
authorized purposes.
    (3) Comparison of outlays with budget amounts for each award is 
required. Whenever appropriate, financial information should be related 
to performance and unit cost data.
    (4) Where HUD guarantees or insures the repayment of money borrowed 
by the recipient, HUD, 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.
    (5) HUD may require adequate fidelity bond coverage where the 
recipient lacks sufficient coverage to protect the Federal Government's 
interest.
    (6) 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.''
    (c) Payment. (1) The standard governing the use of banks and other 
institutions as depositories of funds advanced under awards is, HUD 
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) 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).
    (3) Except as noted elsewhere in this part, only the following 
forms shall be authorized for the recipients in requesting payments. 
HUD shall not require more than an original and two copies of these 
forms.
    (i) SF-270, Request for Advance or Reimbursement. HUD has adopted 
the SF-270 as a standard form for all nonconstruction programs when 
electronic funds transfer or predetermined advance methods are not 
used. The SF-270 shall also be used for lump sum payment requests. HUD, 
however, has the option of using this form for construction programs in 
lieu of the SF-271, ``Outlay Report and Request for Reimbursement for 
Construction Programs.''
    (ii) SF-271, Outlay Report and Request for Reimbursement for 
Construction Programs. HUD has adopted the SF-271 as the standard form 
to be used for requesting reimbursement for construction programs. 
However, HUD may substitute the SF-270 when HUD determines that it 
provides adequate information to meet HUD's needs.
    (d) Revision of budget and program plans. (1) 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 HUD requirements. It 
shall be related to performance for program evaluation purposes 
whenever appropriate.
    (2) Recipients are required to report deviations from program 
plans, and request prior approvals for budget and program plan 
revisions, in accordance with this section.
    (3) For nonconstruction awards, recipients shall request prior 
approvals from HUD for one or more of the following program or budget 
related reasons.
    (i) Change in the scope or the objective of the project or program 
(even if there is no associated budget revision requiring prior written 
approval).
    (ii) The need for additional Federal funding.
    (iii) 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.
    (4) No other prior approval requirements for specific items may be 
imposed unless a deviation has been approved by OMB.
    (5) Except for requirements listed in paragraphs (d)(3)(i) and 
(d)(3)(ii) of this section, HUD is authorized, at its option, to waive 
cost-related and administrative prior written approvals required by 
Circular A-110 and OMB Circulars A-21 and A-122. Such waivers may 
include authorizing recipients to do any one or more of the following.
    (i) 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 HUD in 
writing with the supporting reasons and revised expiration date at 
least 10 days before the expiration date specified in the award. This 
action may be taken unless:
    (A) The terms and conditions of award prohibit the extension.
    (B) The extension requires additional Federal funds.
    (C) The extension involves any change in the approved objectives or 
scope of the project.
    (6) For construction awards, recipients shall request prior written 
approval promptly from HUD for budget revisions whenever paragraphs 
(d)(6)(i) or (d)(6)(ii) of this section apply.
    (i) The revision results from changes in the scope or the objective 
of the project or program.
    (ii) The need arises for additional Federal funds to complete the 
project.
    (7) No other prior approval requirements for specific items may be 
imposed unless a deviation has been approved by OMB.
    (8) When HUD makes an award that provides support for both 
construction and nonconstruction work, HUD may require the recipient to 
request prior approval from HUD before making any fund or budget 
transfers between the two types of work supported.
    (e) Non-Federal audits. (1) 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,'' as codified in 24 CFR part 44.
    (2) State and local governments shall be subject to the audit 
requirements contained in the Single Audit Act (31 U.S.C. 7501-7) and 
HUD regulations implementing OMB Circular A-128, ``Audits of State and 
Local Governments,'' at 24 CFR part 45.
    (3) Hospitals are covered by the audit provisions of OMB Circular 
A-133, as codified in 24 CFR part 44.
    (4) Commercial organizations shall be subject to the audit 
requirements of HUD or the prime recipient as incorporated into the 
award document.


Sec. 84.83  Property standards.

    (a) Purpose of property standards. Paragraphs (b) through (g) of 
this section 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. HUD 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 
paragraphs (b) through (g) of this section.
    (b) 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.
    (c) Real property. HUD prescribes the following requirements for 
recipients concerning the use and disposition of real property acquired 
in whole or in part under awards:
    (1) 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 HUD.
    (2) The recipient shall obtain written approval by HUD 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 HUD.
    (d) Federally-owned and exempt property. (1) Federally-owned 
property.
    (i) 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 HUD. Upon completion of 
the award or when the property is no longer needed, the recipient shall 
report the property to HUD for further HUD utilization.
    (ii) If HUD has no further need for the property, it shall be 
declared excess and reported to the General Services Administration, 
unless HUD has statutory authority to dispose of the property by 
alternative methods (e.g., the authority provided by the Federal 
Technology Transfer Act (15 U.S.C. 3710 (I)) to donate research 
equipment to educational and non-profit organizations in accordance 
with E.O. 12821, ``Improving Mathematics and Science Education in 
Support of the National Education Goals.'') Appropriate instructions 
shall be issued to the recipient by HUD.
    (2) Exempt property. When statutory authority exists, HUD 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 HUD considers appropriate. Such property is ``exempt 
property.'' Should HUD not establish conditions, title to exempt 
property upon acquisition shall vest in the recipient without further 
obligation to the Federal Government.
    (e) Equipment. (1) Title to equipment acquired by a recipient with 
Federal funds shall vest in the recipient, subject to conditions of 
this section.
    (2) 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 equipment without approval of HUD. When the equipment is 
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:
    (i) Activities sponsored by HUD which funded the original project; 
then
    (ii) Activities sponsored by other Federal awarding agencies.
    (3) 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 HUD that 
financed the equipment; second preference shall be given to projects or 
programs sponsored by other Federal awarding agencies. If the equipment 
is owned by the Federal Government, use on other activities not 
sponsored by the Federal Government shall be permissible if authorized 
by HUD.
    (4) The recipient's property management standards for equipment 
acquired with Federal funds and federally-owned equipment shall include 
all of the following.
    (i) Equipment records shall be maintained accurately and shall 
include the following information.
    (A) A description of the equipment.
    (B) Manufacturer's serial number, model number, Federal stock 
number, national stock number, or other identification number.
    (C) Source of the equipment, including the award number.
    (D) Whether title vests in the recipient or the Federal Government.
    (E) Acquisition date (or date received, if the equipment was 
furnished by the Federal Government) and cost.
    (F) Location and condition of the equipment and the date the 
information was reported.
    (ii) Equipment owned by the Federal Government shall be identified 
to indicate Federal ownership.
    (iii) 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.
    (iv) 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 HUD.
    (v) Adequate maintenance procedures shall be implemented to keep 
the equipment in good condition.
    (5) HUD 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) HUD 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 HUD fails to issue disposition instructions within the 120 calendar 
day period, the recipient shall apply the standards of this section, as 
appropriate.
    (iii) When HUD exercises its right to take title, the equipment 
shall be subject to the provisions for federally-owned equipment.
    (f) Intangible property. (1) The recipient may copyright any work 
that is subject to copyright and was developed, or for which ownership 
was purchased, under an award. HUD 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.
    (2) 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.''
    (3) Unless waived by HUD, the Federal Government has the right to 
paragraphs (f)(3)(i) and (f)(3)(ii) of this section.
    (i) Obtain, reproduce, publish or otherwise use the data first 
produced under an award.
    (ii) Authorize others to receive, reproduce, publish, or otherwise 
use such data for Federal purposes.
    (4) 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.
    (g) 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. HUD 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.


Sec. 84.84   Procurement standards.

    (a) Purpose of procurement standards. Paragraphs (b) through (i) of 
this section 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 
HUD upon recipients, unless specifically required by Federal statute or 
executive order or approved by OMB.
    (b) 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 HUD, 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.
    (c) Codes of conduct. The recipient shall maintain written 
standards of conduct governing the performance of its employees engaged 
in the award and administration of contracts. No employee, officer, or 
agent shall participate in the selection, award, or administration of a 
contract supported by Federal funds if a real or apparent conflict of 
interest would be involved. Such a conflict would arise when the 
employee, officer, or agent, any member of his or her immediate family, 
his or her partner, or an organization which employs or is about to 
employ any of the parties indicated herein, has a financial or other 
interest in the firm selected for an award. The officers, employees, 
and agents of the recipient shall neither solicit nor accept 
gratuities, favors, or anything of monetary value from contractors, or 
parties to subagreements. However, recipients may set standards for 
situations in which the financial interest is not substantial or the 
gift is an unsolicited item of nominal value. The standards of conduct 
shall provide for disciplinary actions to be applied for violations of 
such standards by officers, employees, or agents of the recipient.
    (d) 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. The other 
factors shall include the bidder's or offeror's compliance with Section 
3 of the Housing and Urban Development Act of 1968 (12 U.S.C. 1701u), 
hereafter referred to as ``Section 3.'' Section 3 provides that, to the 
greatest extent feasible, and consistent with existing Federal, State, 
and local laws, and regulations, economic opportunities generated by 
certain HUD financial assistance shall be directed to low- and very 
low-income persons. 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.
    (e) Procurement procedures. (1) All recipients shall establish 
written procurement procedures. These procedures shall provide for, at 
a minimum, that paragraphs (e)(1)(i), (e)(1)(ii) and (e)(1)(iii) of 
this section apply.
    (i) Recipients avoid purchasing unnecessary items.
    (ii) Where appropriate, an analysis is made of lease and purchase 
alternatives to determine which would be the most economical and 
practical procurement for the recipient.
    (iii) Solicitations for goods and services provide for all of the 
following.
    (A) 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.
    (B) Requirements which the bidder/offeror must fulfill and all 
other factors to be used in evaluating bids or proposals.
    (C) 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.
    (D) The specific features of ``brand name or equal'' descriptions 
that bidders are required to meet when such items are included in the 
solicitation.
    (E) The acceptance, to the extent practicable and economically 
feasible, of products and services dimensioned in the metric system of 
measurement.
    (F) Preference, to the extent practicable and economically 
feasible, for products and services that conserve natural resources and 
protect the environment and are energy efficient.
    (2) 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.
    (i) Ensure that small businesses, minority-owned firms, and women's 
business enterprises are used to the fullest extent practicable.
    (ii) 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.
    (iii) 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.
    (iv) 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.
    (v) 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.
    (3) The type of procuring instruments used (e.g., fixed price 
contracts, cost reimbursable contracts, purchase orders, and incentive 
contracts) shall be determined by the recipient but shall be 
appropriate for the particular procurement and for promoting the best 
interest of the program or project involved. The ``cost-plus-a-
percentage-of-cost'' or ``percentage of construction cost'' methods of 
contracting shall not be used.
    (4) Contracts shall be made only with responsible contractors who 
possess the potential ability to perform successfully under the terms 
and conditions of the proposed procurement. Consideration shall be 
given to such matters as contractor integrity; compliance with public 
policy, including, where applicable, Section 3 of the Housing and Urban 
Development Act of 1968 (12 U.S.C. 1701u); record of past performance; 
financial and technical resources or accessibility to other necessary 
resources. In certain circumstances, contracts with certain parties are 
restricted by agencies' implementation of E.O.'s 12549 and 12689, 
``Debarment and Suspension,'' as set forth at 24 CFR part 24.
    (5) Recipients shall, on request, make available for the Federal 
awarding agency, pre-award review and procurement documents, such as 
requests for proposals or invitations for bids, independent cost 
estimates, etc., when any of the following conditions apply.
    (i) A recipient's procurement procedures or operation fails to 
comply with the procurement standards in HUD's implementation of 
Circular A-110.
    (ii) The procurement is expected to exceed $100,000 or the small 
purchase threshold fixed at 41 U.S.C. 403 (11), whichever is greater, 
and is to be awarded without competition or only one bid or offer is 
received in response to a solicitation.
    (iii) The procurement, which is expected to exceed the small 
purchase threshold, specifies a ``brand name'' product.
    (iv) The proposed award over the small purchase threshold is to be 
awarded to other than the apparent low bidder under a sealed bid 
procurement.
    (v) A proposed contract modification changes the scope of a 
contract or increases the contract amount by more than the amount of 
the small purchase threshold.
    (f) 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.
    (g) Procurement records. Procurement records and files for 
purchases in excess of the small purchase threshold shall include the 
following at a minimum:
    (1) Basis for contractor selection;
    (2) Justification for lack of competition when competitive bids or 
offers are not obtained; and
    (3) Basis for award cost or price.
    (h) 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.
    (i) Contract provisions. The recipient shall include, in addition 
to provisions to define a sound and complete agreement, the following 
provisions in all contracts. The following provisions shall also be 
applied to subcontracts.
    (1) Contracts in excess of the small purchase threshold shall 
contain contractual provisions or conditions that allow for 
administrative, contractual, or legal remedies in instances in which a 
contractor violates or breaches the contract terms, and provide for 
such remedial actions as may be appropriate.
    (2) All contracts in excess of the small purchase threshold shall 
contain suitable provisions for termination by the recipient, including 
the manner by which termination shall be effected and the basis for 
settlement. In addition, such contracts shall describe conditions under 
which the contract may be terminated for default as well as conditions 
where the contract may be terminated because of circumstances beyond 
the control of the contractor.
    (3) 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, HUD may accept 
the bonding policy and requirements of the recipient, provided HUD 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:
    (i) 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.
    (ii) A performance bond on the part of the contractor for 100 
percent of the contract price. A ``performance bond'' is one executed 
in connection with a contract to secure fulfillment of all the 
contractor's obligations under such contract.
    (iii) 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.
    (iv) 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.''
    (4) All negotiated contracts (except those for less than the small 
purchase threshold) awarded by recipients shall include a provision to 
the effect that the recipient, HUD, 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.
    (5) All contracts, including small purchases, awarded by recipients 
and their contractors shall contain the procurement provisions of 
Appendix A to this rule, as applicable.


Sec. 84.85   Reports and records.

    (a) Purpose of reports and records. Paragraphs (b) and (c) of this 
section 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.
    (b) Monitoring and reporting program performance.
    (1) 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. 84.82(e).
    (2) The Federal awarding agency shall prescribe the frequency with 
which the performance reports shall be submitted. Except as provided in 
paragraph (b)(6) of this section, performance reports shall not be 
required more frequently than quarterly or less frequently than 
annually. Annual reports shall be due 90 calendar days after the grant 
year; quarterly or semi-annual reports shall be due 30 days after the 
reporting period. The Federal awarding agency 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.
    (3) If inappropriate, a final technical or performance report shall 
not be required after completion of the project.
    (4) When required, performance reports shall generally contain, for 
each award, brief information on each of the following:
    (i) 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.
    (ii) Reasons why established goals were not met, if appropriate.
    (5) Recipients shall not be required to submit more than the 
original and two copies of performance reports.
    (6) Recipients shall immediately notify HUD 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.
    (7) HUD may make site visits, as needed.
    (8) HUD shall comply with clearance requirements of 5 CFR part 1320 
when requesting performance data from recipients.
    (c) Retention and access requirements for records.
    (1) This paragraph (c) sets forth requirements for record retention 
and access to records for awards to recipients. Federal awarding 
agencies shall not impose any other record retention or access 
requirements upon recipients.
    (2) 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 HUD. The only exceptions are the 
following.
    (i) 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.
    (ii) Records for real property and equipment acquired with Federal 
funds shall be retained for 3 years after final disposition.
    (iii) When records are transferred to or maintained by the Federal 
awarding agency, the 3-year retention requirement is not applicable to 
the recipient.
    (3) Copies of original records may be substituted for the original 
records if authorized by HUD.
    (4) HUD 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, 
HUD may make arrangements for recipients to retain any records that are 
continuously needed for joint use.
    (5) HUD, 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 
(c)(5) are not limited to the required retention period, but shall last 
as long as records are retained.
    (6) Unless required by statute, HUD shall not place restrictions on 
recipients that limit public access to the records of recipients that 
are pertinent to an award, except when HUD 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 HUD.


Sec. 84.86  Termination and enforcement.

    (a) Termination. (1) Awards may be terminated in whole or in part 
only if paragraphs (a)(1)(i), (a)(1)(ii), or (a)(1)(iii) of this 
section apply.
    (i) By HUD, if a recipient materially fails to comply with the 
terms and conditions of an award.
    (ii) By HUD 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.
    (iii) By the recipient upon sending to HUD 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 HUD 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)(i) or (a)(1)(ii) of this 
section.
    (2) If costs are allowed under an award, the responsibilities of 
the recipient referred to in Sec. 84.87(a)(1), 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.
    (3) If costs are allowed, the cost principles in Sec. 84.27 apply, 
even though the award was made on a lump-sum basis. Alternatively, a 
termination settlement may be reached by prorating the grant amount 
against the percentage of completion or by some other method as 
determined by the Grant Officer, as long as the method used results in 
an equitable settlement to both parties.
    (b) Enforcement. (1) 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, HUD may, in addition to imposing any 
of the special conditions outlined in Sec. 84.14, take one or more of 
the following actions, as appropriate in the circumstances.
    (i) Temporarily withhold cash payments pending correction of the 
deficiency by the recipient or more severe enforcement action by HUD.
    (ii) Wholly or partly suspend or terminate the current award.
    (iii) Withhold further awards for the project or program.
    (iv) Take other remedies that may be legally available.
    (2) Hearings and appeals. In taking an enforcement action, HUD 
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.
    (3) 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 
HUD 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 (b)(3)(i) and (b)(3)(ii) of this section apply.
    (i) 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.
    (ii) 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.
    (4) Relationship to debarment and suspension. The enforcement 
remedies identified in this section, including suspension and 
termination, do not preclude a recipient from being subject to 
debarment and suspension under E.O.s 12549 and 12689 and HUD's 
implementing regulations at 24 CFR part 24 (see Sec. 84.13).


Sec. 84.87  Closeout procedures, subsequent adjustments and continuing 
responsibilities.

    (a) Closeout procedures.
    (1) 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. HUD may 
approve extensions when requested by the recipient.
    (2) The recipient shall account for any real and personal property 
acquired with Federal funds or received from the Federal Government in 
accordance with Secs. 84.83(b) through (g).
    (b) Subsequent adjustments and continuing responsibilities.
    (1) The closeout of an award does not affect any of the following:
    (i) Audit requirements in Sec. 84.26.
    (ii) Property management requirements in Secs. 84.83(b) through 
(g).
    (iii) Records retention as required in Sec. 84.53.
    (2) 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 
HUD and the recipient, provided the responsibilities of the recipient 
are considered and provisions made for continuing responsibilities of 
the recipient, as appropriate.

Appendix A to Part 84--Contract Provisions

    All contracts, awarded by a recipient including small purchases, 
shall contain the following provisions as applicable:
    1. Equal Employment Opportunity--All contracts shall contain a 
provision requiring compliance with E.O. 11246, ``Equal Employment 
Opportunity,'' as amended by E.O. 11375, ``Amending Executive Order 
11246 Relating to Equal Employment Opportunity,'' and as 
supplemented by regulations at 41 CFR part 60, ``Office of Federal 
Contract Compliance Programs, Equal Employment Opportunity, 
Department of Labor.''
    2. Copeland ``Anti-Kickback'' Act (18 U.S.C. 874 and 40 U.S.C. 
276c)--All contracts and subgrants in excess of $2000 for 
construction or repair awarded by recipients and subrecipients shall 
include a provision for compliance with the Copeland ``Anti-
Kickback'' Act (18 U.S.C. 874), as supplemented by Department of 
Labor regulations (29 CFR part 3, ``Contractors and Subcontractors 
on Public Building or Public Work Financed in Whole or in Part by 
Loans or Grants from the United States''). The Act provides that 
each contractor or subrecipient shall be prohibited from inducing, 
by any means, any person employed in the construction, completion, 
or repair of public work, to give up any part of the compensation to 
which he is otherwise entitled. The recipient shall report all 
suspected or reported violations to HUD.
    3. Davis-Bacon Act, as amended (40 U.S.C. 276a to a-7)--When 
required by Federal program legislation, all construction contracts 
awarded by the recipients and subrecipients of more than $2000 shall 
include a provision for compliance with the Davis-Bacon Act (40 
U.S.C. 276a to a-7) and as supplemented by Department of Labor 
regulations (29 CFR part 5, ``Labor Standards Provisions Applicable 
to Contracts Governing Federally Financed and Assisted 
Construction''). Under this Act, contractors shall be required to 
pay wages to laborers and mechanics at a rate not less than the 
minimum wages specified in a wage determination made by the 
Secretary of Labor. In addition, contractors shall be required to 
pay wages not less than once a week. The recipient shall place a 
copy of the current prevailing wage determination issued by the 
Department of Labor in each solicitation and the award of a contract 
shall be conditioned upon the acceptance of the wage determination. 
The recipient shall report all suspected or reported violations to 
HUD.
    4. Contract Work Hours and Safety Standards Act (40 U.S.C. 327 
through 333)--Where applicable, all contracts awarded by recipients 
in excess of $2000 for construction contracts and in excess of $2500 
for other contracts that involve the employment of mechanics or 
laborers shall include a provision for compliance with Sections 102 
and 107 of the Contract Work Hours and Safety Standards Act (40 
U.S.C. 327-333), as supplemented by Department of Labor regulations 
(29 CFR part 5). Under Section 102 of the Act, each contractor shall 
be required to compute the wages of every mechanic and laborer on 
the basis of a standard workweek of 40 hours. Work in excess of the 
standard workweek 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 workweek. 
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 HUD.
    6. Clean Air Act (42 U.S.C. 7401 et seq.) and the Federal Water 
Pollution Control Act (33 U.S.C. 1251 et seq.), as amended--
Contracts and subgrants of amounts in excess of $100,000 shall 
contain a provision that requires the recipient to agree to comply 
with all applicable standards, orders or regulations issued pursuant 
to the Clean Air Act (42 U.S.C. 7401 et seq.) and the Federal Water 
Pollution Control Act as amended (33 U.S.C. 1251 et seq.). 
Violations shall be reported to HUD and the Regional Office of the 
Environmental Protection Agency (EPA).
    7. Byrd Anti-Lobbying Amendment (31 U.S.C. 1352)--Contractors 
who apply or bid for an award of $100,000 or more shall file the 
required certification. Each tier certifies to the tier above that 
it will not and has not used Federal appropriated funds to pay any 
person or organization for influencing or attempting to influence an 
officer or employee of any agency, a member of Congress, officer or 
employee of Congress, or an employee of a member of Congress in 
connection with obtaining any Federal contract, grant or any other 
award covered by 31 U.S.C. 1352. Each tier shall also disclose any 
lobbying with non-Federal funds that takes place in connection with 
obtaining any Federal award. Such disclosures are forwarded from 
tier to tier up to the recipient.
    8. Debarment and Suspension (E.O.s 12549 and 12689)--No contract 
shall be made to parties listed on the General Services 
Administration's List of Parties Excluded from Federal Procurement 
or Nonprocurement Programs in accordance with E.O.s 12549 and 12689, 
``Debarment and Suspension,'' as set forth at 24 CFR part 24. 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 E.O. 12549. Contractors 
with awards that exceed the small purchase threshold shall provide 
the required certification regarding its exclusion status and that 
of its principal employees.
    9. Drug-Free Workplace Requirements--The Drug-Free Workplace Act 
of 1988 (42 U.S.C. 701) requires grantees (including individuals) of 
federal agencies, as a prior condition of being awarded a grant, to 
certify that they will provide drug-free workplaces. Each potential 
recipient must certify that it will comply with drug-free workplace 
requirements in accordance with the Act and with HUD's rules at 24 
CFR part 24, subpart F.

    Dated: September 1, 1994.
Henry G. Cisneros,
Secretary.
[FR Doc. 94-22416 Filed 9-12-94; 8:45 am]
BILLING CODE 4210-32-P