[Federal Register Volume 60, Number 12 (Thursday, January 19, 1995)]
[Rules and Regulations]
[Pages 3743-3760]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-975]
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AGENCY FOR INTERNATIONAL DEVELOPMENT
22 CFR Part 226
Administration of Assistance Awards to U.S. Non-Governmental
Organizations
AGENCY: Agency for International Development (USAID).
ACTION: Interim final rule.
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SUMMARY: This interim final rule adds a new 22 CFR part 226 which
implements Office of Management and Budget (OMB) Circular A-110
establishing uniform administrative requirements for Federal grants and
agreements awarded to institutions of higher education, hospitals, and
other non-profit organizations. In keeping with existing USAID policy,
this rule is also being made applicable to commercial organizations.
EFFECTIVE DATE: This rule is effective February 21, 1995. Comments must
be submitted before March 20, 1995.
FOR FURTHER INFORMATION CONTACT:
Diana Joan Esposito, Office of Procurement, Procurement Policy and
Evaluation (M/OP/P), USAID, SA-14 Rm.1600I, 320 21st Street, Washington
DC 20523. Telephone 703 875-1529, Fax 703 875-1243.
SUPPLEMENTARY INFORMATION: On August 27, 1992, OMB published a proposed
version of Circular A-110 (57 FR 39018). Over 200 comments were
received from Federal agencies, non-profit organizations, professional
organizations, and others. OMB addressed these comments in the final
version of the Circular published November 29, 1993.
The revised Circular was developed by an interagency task force for
government-wide use in a common rule format to facilitate regulatory
adoption by executive departments and agencies. This interim final rule
essentially adopts the Government-wide common rule format and
provisions of the Circular with some minor changes to the Circular to
add clarity and some agency-specific technical changes.
I. The Circular provides agencies with a certain discretion in
implementing its provisions. USAID has exercised this discretion as
follows:
[[Page 3744]]
USAID has decided to include commercial organizations as recipients
and subrecipients covered by this rule and not to include foreign or
international organizations. The definitions have been revised to
reflect this.
The Circular states in ____.22(c) that advance payment mechanisms
include, but are not limited to, Treasury check and electronic funds
transfer. Because USAID frequently issues agency letters of credit for
advances, a USAID letter of credit is also referenced in 226.22.
In Section 226.23(b), USAID has determined that unrecovered
indirect costs may be included as part of cost sharing without
additional approval from USAID.
Section 226.24(d) is amended to reflect USAID's policy
determination that commercial organizations may not use the additive
formula for program income.
In Section 226.24(f), USAID provides that costs incident to the
generation of program income may be deducted from gross income when
they are in keeping with the applicable cost principles.
II. 22 CFR Part 226 includes the following additions and changes to
A-110 that have been submitted for OMB review and approval as
deviations:
Section 226.22(g) is revised to provide that it does not apply to
funds earned in foreign currency.
Section 226.22(i) is revised to state that separate depository
accounts may be required by the terms of an award where specifically
required under USAID's guidance covering endowment funds.
Section 226.22(l) is revised to provide that interest earned shall
be remitted to USAID, not HHS, and that USAID may authorize recipients
to retain all interest earned in accordance with USAID's statutory
authority.
Sections 226.32 and 226.34 are revised to allow for USAID to vest
title in an entity other than the recipient (e.g., so that the
recipient country government may take title when the award is funded
under a bilateral project agreement between USAID and a developing
country).
Section 226.44(b) is expanded to provide that certain procurement
information be sent to the USAID Office of Small Disadvantaged Business
Utilization in accordance with established USAID practice and Section
602 of the Foreign Assistance Act of 1961, as amended.
Section 226.61 is expanded to incorporate USAID's existing
authority to suspend or terminate an award where continuation would be
in violation of applicable law or otherwise not be in the national
interest of the United States.
Subpart G contains additional procurement eligibility requirements
based on USAID's statutory and regulatory requirements. The coverage on
eligibility of goods and services, local cost financing, air
transportation, and ocean shipment is currently reserved.
III. Editorial changes designed to help clarify the provisions for
USAID recipients and program/agreement officers include the following:
Section 226.2 adds definitions of ``Agreement Officer'' and
``USAID.''
Section 226.15 includes USAID's existing implementation of the
Metric Conversion Act, as amended by the Omnibus Trade and
Competitiveness Act (15 U.S.C. 205).
Subpart E contains additional requirements for awards to commercial
(for-profit) organizations.
Subpart F contains coverage of USAID's process for disputes with
recipients.
Appendix A contract provisions have been altered to indicate
applicability to activities conducted in or outside the United States.
Also in Appendix A, the provision on the Byrd Anti-Lobbying Amendment
corrects the applicability of the provision which was inadvertently
misstated in the Circular. The provision applies to awards exceeding
$100,000 rather than awards of $100,000 or more.
Waiver of Proposed Rulemaking
It is the practice of USAID to offer interested parties the
opportunity to comment on proposed regulations. However, USAID has
determined that further public comment on the common rule portion is
unnecessary because the substance of the rule received public comment
when published by OMB. Given the mandatory nature of the bulk of the
text, USAID has determined that issuance of a Notice of Proposed
Rulemaking for the modifications would be impractical, unnecessary and
contrary to the public interest since the changes are relatively few
and most reflect existing policies and practices. Public comments on
USAID-specific implementation of this interim final rule are welcome.
Executive Order 12866
USAID has determined that this is not a significant rule in
accordance with E.O. 12866.
Regulatory Flexibility Act
This is a mandatory, Government-wide uniform rule. The limited
USAID-specific provisions in the rule have been reviewed in accordance
with the requirements of the Regulatory Flexibility Act of 1980 (5
U.S.C. Chapter 6). USAID has determined that these portions of the rule
would not have a significant economic impact on a substantial number of
small entities and, therefore, a Regulatory Flexibility Analysis is not
required.
The information collection requirements contained in this rule have
been previously cleared by OMB.
List of Subjects in 22 CFR Part 226
Accounting, Administrative practice and procedures, Grant programs,
Grant administration, Reporting and recordkeeping requirements.
Accordingly, Part 226 of Title 22 of the Code of Federal
Regulations is added, consisting of Subparts A through G and Appendix
A, to read as follows:
PART 226--ADMINISTRATION OF ASSISTANCE AWARDS TO U.S. NON-
GOVERNMENTAL ORGANIZATIONS
Subpart A--General
Sec.
226.1 Purpose and applicability.
226.2 Definitions.
226.3 Effect on other issuances.
226.4 Deviations.
226.5 Subawards.
Subpart B--Pre-Award Requirements
226.10 Purpose.
226.11 Pre-award policies.
226.12 Forms for applying for Federal assistance.
226.13 Debarment and suspension.
226.14 Special award conditions.
226.15 Metric system of measurement.
226.16 Resource Conservation and Recovery Act.
226.17 Certifications and representations.
Subpart C--Post-Award Requirements
Financial and Program Management
226.20 Purpose of financial and program management.
226.21 Standards for financial management systems.
226.22 Payment.
226.23 Cost sharing or matching.
226.24 Program income.
226.25 Revision of budget and program plans.
226.26 Non-Federal audits.
226.27 Allowable costs.
226.28 Period of availability of funds.
Property Standards
226.30 Purpose of property standards.
226.31 Insurance coverage.
226.32 Real property.
226.33 Federally-owned and exempt property.
226.34 Equipment.
226.35 Supplies and other expendable equipment.
226.36 Intangible property.
226.37 Property trust relationship.
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Procurement Standards
226.40 Purpose of procurement standards.
226.41 Recipient responsibilities.
226.42 Codes of conduct.
226.43 Competition.
226.44 Procurement procedures.
226.45 Cost and price analysis.
226.46 Procurement records.
226.47 Contract administration.
226.48 Contract provisions.
226.49 USAID-Specific procurement requirements.
Reports and Records
226.50 Purpose of reports and records.
226.51 Monitoring and reporting program performance.
226.52 Financial reporting.
226.53 Retention and access requirements for records.
Suspension, Termination and Enforcement
226.60 Purpose of suspension, termination and enforcement.
226.61 Suspension and termination.
226.62 Enforcement.
Subpart D--After-the-Award Requirements
226.70 Purpose.
226.71 Closeout procedures.
226.72 Subsequent adjustments and continuing responsibilities.
226.73 Collection of amounts due.
Subpart E--Special Provisions for Awards to Commercial Organizations
226.80 Scope of subpart.
226.81 Prohibition against profit.
226.82 Program income.
Subpart F--Miscellaneous
226.90 Disputes.
Subpart G--USAID-Specific Requirements
226.1001 Eligibility rules for goods and services. [Reserved]
226.1002 Local cost financing. [Reserved]
226.1003 Air transportation. [Reserved]
226.1004 Ocean shipment of goods. [Reserved]
Appendix A to Part 226--Contract Provisions
Authority: Sec. 621, Pub. L. 87-195, 75 Stat. 445 (22 U.S.C.
2381), as amended; E.O. 12163, Sept. 29, 1979, 44 FR 56673; 3 CFR
1979 Comp., p. 435.
Subpart A--General
Sec. 226.1 Purpose and applicability.
Except as otherwise authorized by statute, this part establishes
uniform administrative requirements for grants and cooperative
agreements awarded by USAID to U.S. institutions of higher education,
hospitals, and other non-profit organizations, and to U.S. commercial
organizations; and to subawards thereunder. USAID shall not impose
additional or inconsistent requirements, except as provided in Sections
226.4, and 226.14, or unless specifically required by Federal statute
or executive order. Non-profit and commercial organizations that
implement Federal programs for the States are also subject to State
requirements.
Sec. 226.2 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 services performed by the
recipient, and 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.
Agreement Officer means a person with the authority to enter into,
administer, terminate and/or closeout assistance agreements subject to
this part, and make related determinations and findings on behalf of
USAID. An Agreement Officer can only act within the scope of a duly
authorized warrant or other valid delegation of authority. The term
``Agreement Officer'' includes persons warranted as ``Grant Officers.''
It also includes certain authorized representatives of the Agreement
Officer acting within the limits of their authority as delegated by the
Agreement Officer.
Award means financial assistance that provides support or
stimulation to accomplish a public purpose. Awards include grants,
cooperative agreements and other agreements in the form of money or
property in lieu of money, by the Federal Government to an eligible
recipient. The term does not include: Technical assistance, which
provides services instead of money; other assistance in the form of
loans, loan guarantees, interest subsidies, or insurance; direct
payments of any kind to individuals; and, contracts which are required
to be entered into and administered under procurement laws and
regulations.
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 the Agreement Officer
determines that all applicable administrative actions and all required
work of the award have been completed by the recipient and USAID.
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 the Federal Government.
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 USAID sponsorship ends.
Disallowed costs means those charges to an award that the USAID
Agreement Officer determines to be unallowable, in accordance with the
applicable Federal costs 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 $5,000 or more per unit.
However, consistent with recipient policy, lower limits may be
established.
Excess property means property under the control of USAID that, as
determined by the head of the Agency, 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 the Federal awarding agency has
statutory authority to vest title in the recipient without further
obligation to the Federal Government. An example of exempt property
authority is contained in the Federal Grant and Cooperative Agreement
Act (31 U.S.C. 6306), for property acquired under an award to conduct
basic or applied research by a non-profit institution of higher
education or non-profit organization whose principal purpose is
conducting scientific research.
[[Page 3746]]
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 the Federal Government for use by the recipient. This
amount may include any authorized carryover of unobligated funds from
prior funding periods when permitted by agency regulations or agency
implementing instructions.
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 applies 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. 226.24 (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 USAID 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 Federal sponsorship begins and ends.
Property means, unless otherwise stated, real property, equipment,
supplies, 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 a grant or cooperative
agreement directly from USAID to carry out a project or program. The
term includes the following types of U.S. organizations: public and
private institutions of higher education; public and private hospitals;
quasi-public and private non-profit organizations such as, but not
limited to, community action agencies, research institutes, educational
associations, and health centers; and commercial organizations. 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.
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
the small purchase threshold fixed at 41 U.S.C. 403(11).
Subaward means an award of financial assistance in the form of
money, or property in lieu of money, made under an award by a recipient
to an eligible subrecipient or by a subrecipient to a lower tier
subrecipient. The term includes financial assistance when provided by
any legal agreement, even if the agreement is called a contract, but
does not include procurement of goods and services nor does it include
any form of assistance which is excluded from the definition of
``award'' in this section.
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.
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 USAID that temporarily withdraws
Federal sponsorship under an award, pending corrective action by the
recipient or pending a decision to terminate the award. Suspension of
an award is a separate action from suspension under USAID regulations
implementing E.O.s 12549 and 12689, ``Debarment and Suspension.'' See
22 CFR Part 208.
Termination means the cancellation of USAID 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
[[Page 3747]]
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
USAID 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.
USAID means the United States Agency for International Development.
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. 226.3 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
Sec. 226.4.
Sec. 226.4 Deviations.
The Office of Management and Budget (OMB) may grant exceptions for
classes of grants or recipients subject to the requirements of this
part when exceptions are not prohibited by statute. However, in the
interest of maximum uniformity, exceptions from the requirements of
this part shall be permitted only in unusual circumstances. USAID may
apply more restrictive requirements to a class of recipients when
approved by OMB. USAID may apply less restrictive requirements when
awarding small awards, except for those requirements which are
statutory. Exceptions on a case-by-case basis may also be made by the
USAID Deputy Assistant Administrator for Management.
Sec. 226.5 Subawards.
Unless sections of this part specifically exclude subrecipients
from coverage, the provisions of this part shall be applied to
subrecipients if such subrecipients are organizations which, if
receiving awards directly from USAID, would fall within the definition
of recipients. State and local government subrecipients are subject to
the provisions of regulations implementing the grants management common
rule, ``Uniform Administrative Requirements for Grants and Cooperative
Agreements to State and Local Governments,'' as amended.
Subpart B--Pre-award Requirements
Sec. 226.10 Purpose.
Sections 226.11 through 226.17 prescribe forms and instructions and
other pre-award matters to be used in applying for USAID awards.
Sec. 226.11 Pre-award policies.
(a) Use of Grants and Cooperative Agreements, and Contracts. In
each instance USAID 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. USAID shall notify the
public of its intended funding priorities for discretionary grant
programs, unless funding priorities are established by Federal statute.
Sec. 226.12 Forms for applying for Federal assistance.
(a) USAID 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 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 USAID.
(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 Federal awarding agency or
the Catalog of Federal Domestic Assistance. The SPOC shall advise the
applicant whether the program for which application is made has been
selected by that State for review.
(d) Federal awarding agencies that do not use the SF-424 form
should indicate whether the application is subject to review by the
State under E.O. 12372.
Sec. 226.13 Debarment and suspension.
USAID and recipients shall comply with the nonprocurement debarment
and suspension common rule implementing E.O.s 12549 and 12689,
``Debarment and Suspension,'' 22 CFR Part 208. This common rule
restricts subawards and contracts with certain parties that are
debarred, suspended or otherwise excluded from or ineligible for
participation in Federal assistance programs or activities.
Sec. 226.14 Special award conditions.
If an applicant or recipient: Has a history of poor performance, is
not financially stable, has a management system that does not meet the
standards prescribed in this part, has not conformed to the terms and
conditions of a previous award, or is not otherwise responsible, the
USAID Agreement Officer 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 will be promptly removed
once the conditions that prompted them have been corrected.
Sec. 226.15 Metric system of measurement.
(a) 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.
(b) Wherever measurements are required or authorized, they shall be
made, computed, and recorded in metric system units of measurement,
unless otherwise authorized by the
[[Page 3748]]
agreement officer in writing when it has been found that such usage is
impractical or is likely to cause U.S. firms to experience significant
inefficiencies or the loss of markets. Where the metric system is not
the predominant standard for a particular application, measurements may
be expressed in both the metric and the traditional equivalent units,
provided the metric units are listed first.
Sec. 226.16 Resource Conservation and Recovery Act.
Under the Act, any U.S. State agency or agency of a political
subdivision of a State which is using appropriated Federal funds must
comply with Section 6002. Section 6002 requires that preference be
given in procurement programs to the purchase of specific products
containing recycled materials identified in guidelines developed by the
Environmental Protection Agency (EPA) (40 CFR parts 247-254).
Accordingly, State and local institutions of higher education and
hospitals that receive direct Federal awards or other Federal funds
shall given preference in their procurement programs funded with
Federal funds to the purchase of recycled products pursuant to the EPA
guidelines.
Sec. 226.17 Certifications and representations.
Unless prohibited by statute or codified regulation, USAID may at
some future date, 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. 226.20 Purpose of financial and program management.
Sections 226.21 through 226.28 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 costs and establishing funds availability.
Sec. 226.21 Standards for financial management systems.
(a) Recipients shall 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. 226.52. While USAID
requires reporting on an accrual basis, if the 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 all 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, USAID, 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) USAID 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. 226.22 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)(1) Recipients will be paid in advance, provided they maintain
or demonstrate the willingness to maintain:
(i) Written procedures that minimize the time elapsing between the
transfer of funds and disbursement by the recipient, and
(ii) financial management systems that meet the standards for fund
control and accountability as established in Section 226.21.
(2) 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 will be consolidated to cover
anticipated cash needs for all awards made by USAID to the recipient.
(1) Advance payment mechanisms include, but are not limited to,
USAID Letter of Credit, Treasury check and electronic funds transfer.
[[Page 3749]]
(2) Advance payment mechanisms are subject to 31 CFR part 205.
(3) Recipients will 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
USAID instructions for electronic funds transfer.
(e) Reimbursement is the preferred method when the requirements in
paragraph (b) of this section cannot be met. USAID 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, USAID shall make payment
within 30 days after receipt of the billing, unless the billing is
improper.
(2) Recipients are authorized to submit a 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 USAID has determined that reimbursement is not feasible because the
recipient lacks sufficient working capital, the USAID Agreement Officer
may provide cash on a working capital advance basis. Under this
procedure, USAID shall advance cash to the recipient to cover its
estimated disbursement needs for an initial period generally geared to
the recipient's disbursing cycle, normally 30 days. Thereafter, USAID
shall reimburse the recipient for its actual cash disbursements. The
working capital advance method of payment will not be used for
recipients unwilling or unable to provide timely advances to their
subrecipients to meet the subrecipients' 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. This paragraph is not applicable to such
earnings which are generated as foreign currencies.
(h) Unless otherwise required by statute, USAID will not withhold
payments for proper charges made by recipients at any time during the
project period unless:
(1) A recipient has failed to comply with the project objectives,
the terms and conditions of the award, or Federal reporting
requirements, or
(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, USAID 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, or as otherwise provided in USAID regulations or implementing
guidance governing endowment funds, USAID does 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 are 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:
(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, or
(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) Except as otherwise provided in the terms and conditions of the
award in accordance with USAID regulations or other implementing
guidance, 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, Rockville, MD
20852. 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 part, only the following
forms shall be authorized for the recipients in requesting advances and
reimbursements. USAID shall not require more than an original and two
copies of these forms.
(1) The SF-270, Request for Advance or Reimbursement, is the
standard form for all nonconstruction programs when electronic funds
transfer or predetermined advance methods are not used. USAID 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) The SF-271, Outlay Report and Request for Reimbursement for
Construction Programs, is the standard form to be used for requesting
reimbursement for construction programs. However, USAID may substitute
the SF-270 when it determines that it provides adequate information to
meet Federal needs.
Sec. 226.23 Cost sharing or matching.
(a) All contributions, including cash and third party inkind, 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.
(7) Conform to other provisions of this part, as applicable.
[[Page 3750]]
(b) Unrecovered indirect costs may be included as part of cost
sharing or matching.
(c) Values for recipient contributions of services and property
shall be established in accordance with the applicable cost principles.
If USAID 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:
(1) The certified value of the remaining life of the property
recorded in the recipient's accounting records at the time of donation,
or
(2) The current fair market value. However, when there is
sufficient justification, the USAID Agreement Officer 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 organizations. 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:
(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, or
(2) If the purpose of the award is to support activities that
require the use of equipment, buildings or land, normally only
depreciation or use charges for equipment and buildings may be made.
However, the full value of equipment or other capital assets and fair
rental charges for land may be allowed, provided that the USAID
Agreement Officer 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.
(i) The following requirements pertain to the recipient's
supporting records for in-kind contributions from third parties.
(1) Volunteer services shall be documented and, to the extent
feasible, supported by the same methods used by the recipient for its
own employees,
(2) The basis for determining the valuation for personal services,
material, equipment, buildings and land shall be documented.
Sec. 226.24 Program income.
(a) Recipients shall apply the standards set forth in this section
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 USAID regulations, other implementing
guidance, or the terms and conditions of the award, shall be used in
one or more of the following ways:
(1) Added to funds committed by USAID and the recipient to the
project or program, and used to further eligible project or program
objectives.
(2) Used to finance the non-Federal share of the project or
program.
(3) Deducted from the total project or program allowable cost in
determining the net allowable costs on which the Federal share of costs
is based.
(c) When the agreement authorizes the disposition of program income
as described in paragraph (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) If the terms and conditions of the award do not specify 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 the terms and conditions of the award
provide another alternative, or the recipient is subject to special
award conditions, as indicated in Sec. 226.14. Recipients which are
commercial organizations may not apply paragraph (b)(1) of this
section, in accordance with Sec. 226.82 of this part.
(e) Unless the terms and conditions of the award provide otherwise,
recipients shall have no obligation to the Federal Government regarding
program income earned after the end of the project period.
(f) 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 and they comply with the cost
principles applicable to the award funds.
(g) Proceeds from the sale of property shall be handled in
accordance with the requirements of the Property Standards (See
Secs. 226.30 through 226.37).
(h) Unless the terms and condition of the award provide otherwise,
recipients shall have no obligation to the Federal Government with
respect to program income earned from license fees and royalties for
copyrighted material, patents, patent applications, trademarks, and
inventions produced under an award. However, Patent and Trademark
Amendments (35 U.S.C. 18) apply to inventions made under an
experimental, developmental, or research award.
Sec. 226.25 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
[[Page 3751]]
may include either the sum of the Federal and non-Federal shares, or
only the Federal share, depending upon USAID requirements as reflected
in the terms and conditions of the agreement. 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 the USAID Agreement Officer 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.
(6) The inclusion, unless waived in the agreement by USAID, 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
budget of the award, 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) USAID may waive cost-related and administrative prior written
approvals required by this part and OMB Circulars A-21 and A-122,
except for requirements listed in paragraphs (c)(1) and (c)(4) of this
section. Such waivers may authorize recipients to do any one or more of
the following:
(1) Incur pre-award costs 90 calendar days prior to award or more
than 90 calendar days with the prior approval of the USAID Agreement
Officer. All pre-award costs are incurred at the recipient's risk
(i.e., USAID 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. For one-time extensions, the recipient must
notify the USAID Agreement Officer 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. The
recipient may initiate a one-time extension unless one or more of the
following conditions apply:
(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) Except for awards under Section 226.14 and Subpart E of this
part, for awards that support research, unless USAID provides otherwise
in the award or in its regulations or other implementing guidance, the
prior approval requirements described in paragraphs (e) (1) through (3)
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) USAID may, at its option, restrict the transfer of funds among
direct cost categories or programs, functions and activities for awards
in which the Federal share of the project exceeds $100,000 and the
cumulative amount of such transfers exceeds or is expected to exceed 10
percent of the total budget as last approved by the USAID Agreement
Officer. USAID 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 non-construction 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 the USAID Agreement Officer for budget revisions
whenever:
(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, or
(3) A revision is desired which involves specific costs for which
prior written approval requirements may be imposed consistent with the
applicable cost principles listed in Sec. 226.27.
(i) No other prior approval requirements for specific items may be
imposed unless a deviation has been approved by OMB.
(j) When USAID makes an award that provides support for both
construction and nonconstruction work, the USAID Agreement Officer may
require the recipient to request prior approval before making any fund
or budget transfers between the two types of work supported.
(k) For both construction and nonconstruction awards, recipients
shall notify the USAID Agreement Officer 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 the USAID
Agreement Officer indicates a letter of request suffices.
(m) Within 30 calendar days from the date of receipt of the request
for budget revisions, the USAID Agreement Officer shall review the
request and notify the recipient whether the budget revisions have been
approved. If the revision is still under consideration at the end of 30
calendar days, the USAID Agreement Officer shall inform the recipient
in writing of the date when the recipient may expect the decision.
Sec. 226.26 Non-Federal audits.
(a) Recipients and subrecipients shall be subject to the audit
requirements contained in OMB Circular A-133, ``Audits of Institutions
of Higher Education and Other Non-Profit Institutions.''
(b) State and local governments shall be subject to the audit
requirements contained in the Single Audit Act (31
[[Page 3752]]
U.S.C. 7501-7) and Federal awarding agency regulations implementing OMB
Circular A-128, ``Audits of State and Local Governments.''
(c) Hospitals not covered by the audit provisions of OMB Circular
A-133 shall be subject to the audit requirements of USAID.
(d) Commercial organizations shall be subject to the audit
requirements of USAID or the prime recipient as incorporated in the
award document.
Sec. 226.27 Allowable costs.
For each kind of recipient, there is a set of Federal principles
for determining allowable costs. Allowability of costs shall be
determined by the Agreement Officer 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. 226.28 Period of availability of funds.
Where a funding period is specified, a recipient may charge to the
award only allowable costs resulting from obligations incurred during
the funding period and any pre-award costs authorized by the USAID
Agreement Officer.
Property Standards
Sec. 226.30 Purpose of property standards.
Sections 226.31 through 226.37 set forth uniform standards
governing management and or disposition of property furnished by the
Federal Government or whose cost was charged to a project supported by
a Federal award. USAID shall not impose additional requirements unless
specifically required by statute. The recipient may use its own
property management standards and procedures provided it observes the
provisions of Secs. 226.31 through 226.37.
Sec. 226.31 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. 226.32 Real property.
(a) Unless the agreement provides otherwise, title to real property
shall vest in the recipient subject to the condition that the recipient
shall use the real property for the authorized purpose of the project
as long as it is needed and shall not encumber the property without
approval of the Agreement Officer.
(b) The recipient shall obtain written approval from the Agreement
Officer 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 USAID.
(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 the Agreement Officer. The Agreement
Officer will give 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 USAID 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. 226.33 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 USAID. Upon completion of the award or when the property is
no longer needed, the recipient shall report the property to USAID for
further Federal agency utilization.
(2) If USAID has no further need for the property, it shall be
declared excess and reported to the General Services Administration,
unless USAID 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 USAID.
(b) Exempt property. When statutory authority exists, USAID 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 USAID considers appropriate. Such property is ``exempt
property'' (see definition in Sec. 226.2). Should USAID not establish
conditions, title to exempt property upon acquisition shall vest in the
recipient without further obligation to the Federal Government.
Sec. 226.34 Equipment.
(a) Unless the agreement provides otherwise, title to equipment
acquired by a recipient with Federal funds shall vest in the recipient,
subject to conditions of this part.
(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.
[[Page 3753]]
(c) The recipient shall use the equipment in the project or program
for which it was acquired as long as needed, whether or not the project
or program continues to be supported by Federal funds and shall not
encumber the property without approval of USAID. When no longer needed
for the original project or program, the recipient shall use the
equipment in connection with its other federally-sponsored activities,
in the following order of priority:
(1) Activities sponsored by USAID, then
(2) Activities sponsored by other Federal 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 USAID; second
preference shall be given to projects or programs sponsored by other
Federal 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 USAID. 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 USAID.
(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, the Federal Government,
or other specified entity.
(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 USAID for its share.
(2) Equipment owned by the Federal Government shall be identified
to indicate Federal ownership.
(3) A physical inventory of equipment shall be taken and the
results reconciled with the equipment records at least once every two
years. Any differences between quantities determined by the physical
inspection and those shown in the accounting records shall be
investigated to determine the causes of the difference. The recipient
shall, in connection with the inventory, verify the existence, current
utilization, and continued need for the equipment.
(4) A control system shall be in effect to insure adequate
safeguards to prevent loss, damage, or theft of the equipment. Any
loss, damage, or theft of equipment shall be investigated and fully
documented; if the equipment was owned by the Federal Government, the
recipient shall promptly notify the Federal awarding agency with whose
funds the equipment was purchased.
(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 the original Federal awarding
agency or its successor. The amount of compensation shall be computed
by applying the percentage of Federal participation in the cost of the
original project or program to the current fair market value of the
equipment. If the recipient has no need for USAID-financed equipment,
the recipient shall request disposition instructions from the Agreement
Officer. USAID shall determine whether the equipment can be used to
meet the agency's requirements. If no requirement exists within USAID,
the availability of the equipment shall be reported to the General
Services Administration to determine whether a requirement for the
equipment exists in other Federal agencies. The USAID Agreement Officer
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 USAID 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 will be reimbursed by USAID for such costs
incurred in its disposition.
(h) USAID reserves the right to transfer the title to the Federal
Government or to a third party named by the Federal Government when
such third party is otherwise eligible under existing statutes. Such
transfer shall be subject to the following standards:
(1) The equipment shall be appropriately identified in the award or
otherwise made known to the recipient in writing.
(2) USAID shall issue disposition instructions within 120 calendar
days after receipt of a final inventory. The final inventory shall list
all equipment acquired with award funds and federally-owned equipment.
If USAID fails to issue disposition instructions within the 120
calendar day period, the recipient shall apply the standards of this
section, as appropriate.
(3) When USAID exercises its right to take title, the equipment
shall be subject to the provisions for federally-owned equipment.
Sec. 226.35 Supplies and other expendable equipment.
(a) Title to supplies and other expendable equipment shall vest in
the recipient upon acquisition. If there is a
[[Page 3754]]
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. 226.36 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. USAID 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 USAID, the Federal Government has the right
to:
(1) Obtain, reproduce, publish or otherwise use the data first
produced under an award; and
(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 USAID. When no longer needed for the originally authorized
purpose, disposition of the intangible property shall occur in
accordance with the provisions of Sec. 226.34(g).
Sec. 226.37 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. Recipients
shall record liens or other appropriate notices of record to indicate
that personal or real property has been acquired, improved or
constructed with Federal funds and that use and disposition conditions
apply to the property.
Procurement Standards
Sec. 226.40 Purpose of procurement standards.
Sections 226.41 through 226.48 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 USAID upon recipients, unless
specifically required by Federal statute or executive order or approved
by OMB.
Sec. 226.41 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 USAID, 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. 226.42 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. 226.43 Competition.
All procurement transactions shall be conducted in a manner to
provide, to the maximum extent practical, open and free competition.
The recipient shall be alert to organizational conflicts of interest as
well as noncompetitive practices among contractors that may restrict or
eliminate competition or otherwise restrain trade. In order to ensure
objective contractor performance and eliminate unfair competitive
advantage, contractors that develop or draft specifications,
requirements, statements of work, invitations for bids and/or requests
for proposals shall be excluded from competing for such procurements.
Awards shall be made to the bidder or offeror whose bid or offer is
responsive to the solicitation and is most advantageous to the
recipient, price, quality and other factors considered. Solicitations
shall clearly establish 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. 226.44 Procurement procedures.
(a) All recipients shall establish written procurement procedures.
These procedures shall provide, at a minimum, that:
(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, and
(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
[[Page 3755]]
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 USAID 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. To permit USAID, in accordance with the
small business provisions of the Foreign Assistance Act of 1961, as
amended, to give United States small business firms an opportunity to
participate in supplying commodities and services procured under the
award, the recipient shall to the maximum extent possible provide the
following information to the Office of Small Disadvantaged Business
Utilization (OSDBU/MRC), USAID Washington, DC 20523, at least 45 days
prior to placing any order or contract in excess of the small purchase
threshold:
(i) Brief general description and quantity of goods or services;
(ii) Closing date for receiving quotations, proposals or bids; and
(iii) Address where solicitations or specifications can be
obtained.
(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, 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.''
(e) Recipients shall, on request, make available for USAID, pre-
award review and procurement documents, such as request for proposals
or invitations for bids, independent cost estimates, etc., when any of
the following conditions apply.
(1) A recipient's procurement procedures or operation fails to
comply with the procurement standards in this part.
(2) The procurement is expected to exceed the small purchase
threshold fixed at 41 U.S.C. 403(11) 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. 226.45 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. 226.46 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. 226.47 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. 226.48 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
[[Page 3756]]
contract or subcontract exceeds $100,000. For those contracts or
subcontracts exceeding $100,000, the USAID Agreement Officer may accept
the bonding policy and requirements of the recipient, provided that
USAID determines that the Federal Government's interest is adequately
protected. In making this determination for contract or subcontracts to
be performed overseas, the Agreement Officer shall take into
consideration any established local practices relating to security. 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 its 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, 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, USAID, 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 part, as applicable. Whenever a provision is
required to be inserted in a contract under an agreement, the recipient
shall insert a statement in the contract that in all instances where
the U.S. Government or USAID is mentioned, the recipient's name shall
be substituted.
Sec. 226.49 USAID-Specific procurement requirements
Procurement requirements which are applicable to USAID because of
statute and regulation are in Subpart G.
Reports and Records
Sec. 226.50 Purpose of reports and records.
Sections 226.51 through 226.53 establish 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. 226.51 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 Section 226.26.
(b) The terms and conditions of the agreement will prescribe the
frequency with which the performance reports shall be submitted. Except
as provided in paragraph 226.51(f), performance reports will not be
required more frequently than quarterly or, less frequently than
annually. Annual reports shall be due 90 calendar days after the award
year; quarterly or semi-annual reports shall be due 30 days after the
reporting period. USAID 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) 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 submit the original and two copies of
performance reports.
(f) Recipients shall immediately notify USAID 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) USAID may make site visits, as needed.
(h) USAID shall comply with clearance requirements of 5 CFR part
1320 when requesting performance data from recipients.
Sec. 226.52 Financial reporting.
(a) The following forms are used for obtaining financial
information from recipients.
(1) SF-269 or SF-269A, Financial Status Report.
(i) USAID will require recipients to use either the SF-269 or SF-
269A to report the status of funds for all nonconstruction projects or
programs. The type of form required will be established in the award.
USAID may, however, have the option of not requiring the SF-269 or SF-
269A when the SF-270, Request for Advance or Reimbursement, or SF-272,
Report of Federal Cash Transactions, is determined to provide adequate
information to meet its needs, except that a final SF-269 or SF-269A
shall be required at the completion of the project when the SF-270 is
used only for advances.
(ii) The type of reporting required will be established in the
agreement. If USAID 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) USAID will determine the frequency of the Financial Status
Report for each project or program, considering the size and complexity
of the particular project or program. The frequency of reports will be
established in the agreement. 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) Recipients shall submit the SF-269 or SF-269A (an original and
two
[[Page 3757]]
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 USAID upon request of the recipient.
(2) SF-272, Report of Federal Cash Transactions.
(i) When funds are advanced to recipients USAID shall require each
recipient to submit the SF-272 and, when necessary, its continuation
sheet, SF-272a. USAID shall use this report to monitor cash advanced to
recipients and to obtain disbursement information for each agreement
with the recipients.
(ii) USAID may require forecasts of Federal cash requirements in
the ``Remarks'' section of the report.
(iii) When practical and deemed necessary, USAID may require
recipients to report in the ``Remarks'' section the amount of cash
advances received in excess of three days. Recipients shall provide
short narrative explanations of actions taken to reduce the excess
balances.
(iv) Recipients shall be required to submit not more than the
original and two copies of the SF-272 15 calendar days following the
end of each quarter. USAID may require a monthly report from those
recipients receiving advances totaling $1 million or more per year.
(v) USAID 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 USAID'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 USAID needs additional information or more frequent
reports, the following shall be observed.
(1) When additional information is needed to comply with
legislative requirements, USAID shall issue instructions to require
recipients to submit such information under the ``Remarks'' section of
the reports.
(2) When USAID determines that a recipient's accounting system does
not meet the standards in Section 226.21, 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. USAID, in obtaining this information, shall comply with
report clearance requirements of 5 CFR part 1320.
(3) USAID may accept the identical information from the recipients
in machine readable format or computer printouts or electronic outputs
in lieu of prescribed formats.
(4) USAID may provide computer or electronic outputs to recipients
when such expedites or contributes to the accuracy of reporting.
Sec. 226.53 Retention and access requirements for records.
(a) This section sets forth requirements for record retention and
access to records for awards to recipients. USAID 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 USAID. 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 USAID, the 3-
year retention requirements is not applicable to the recipient.
(4) Indirect cost rate proposals, cost allocations plans, etc. as
specified in paragraph 226.53(g).
(c) Copies of original records may be substituted for the original
records if authorized by USAID.
(d) USAID 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,
USAID may make arrangements for recipients to retain any records that
are continuously needed for joint use.
(e) USAID, the Inspector General, Comptroller General of the United
States, or any of their duly authorized representatives, have the right
of timely and unrestricted access to any books, documents, papers, or
other records of recipients that are pertinent to the awards, in order
to make audits, examinations, excerpts, transcripts and copies of such
documents. This right also includes timely and reasonable access to a
recipient's personnel for the purpose of interview and discussion
related to such documents. The rights of access in this paragraph are
not limited to the required retention period, but shall last as long as
records are retained.
(f) Unless required by statute, USAID will not place restrictions
on recipients that limit public access to the records of recipients
that are pertinent to an award, except when USAID 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 USAID.
(g) Indirect cost rate proposals, cost allocations plans, etc.
Paragraphs (g)(1) and (g)(2) of this section apply to the following
types of documents, and their supporting records: indirect cost rate
computations or proposals, cost allocation plans, and any similar
accounting computations of the rate at which a particular group of
costs is chargeable (such as computer usage chargeback rates or
composite fringe benefit rates).
(1) If submitted for negotiation. If the recipient submits to the
Federal awarding agency or the subrecipient submits to the recipient
the proposal, plan, or other computation to form the basis for
negotiation of the rate, then the 3-year retention period for its
supporting records starts on the date of such submission.
(2) If not submitted for negotiation. If the recipient is not
required to submit to the Federal awarding agency 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.
Suspension, Termination and Enforcement
Sec. 226.60 Purpose of suspension, termination and enforcement.
Sections 226.61 and 226.62 set forth uniform suspension,
termination and enforcement procedures.
Sec. 226.61 Suspension and termination.
(a) Awards may be terminated (or, with respect to paragraphs (a)
(1) and (3) of this section, suspended) in whole or in part if any of
the circumstances stated in paragraphs (a)(1) through (4) of this
section apply.
[[Page 3758]]
(1) By USAID, if a recipient materially fails to comply with the
terms and conditions of an award.
(2) By USAID 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) If at any time USAID determines that continuation of all or
part of the funding for a program should be suspended or terminated
because such assistance would not be in the national interest of the
United States or would be in violation of an applicable law, then USAID
may, following notice to the recipient, suspend or terminate the award
in whole or in part and prohibit the recipient from incurring
additional obligations chargeable to the award other than those costs
specified in the notice of suspension. If a suspension is effected and
the situation causing the suspension continues for 60 days or more,
then USAID may terminate the award in whole or in part on written
notice to the recipient and cancel any portion of the award which has
not been disbursed or irrevocably committed to third parties.
(4) By the recipient upon sending to USAID 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 USAID determines in the case of partial termination that
the reduced or modified portion of the award will not accomplish the
purposes for which the grant was made, it may terminate the award in
its entirety under paragraph (a)(1), (a)(2) or (a)(3) of this section.
(b) If costs are allowed under an award, the responsibilities of
the recipient referred to in paragraph 226.71(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. 226.62 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, USAID may, in addition to imposing any of the special conditions
outlined in Sec. 226.14, 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 USAID.
(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. The recipient may appeal, in accordance
with Subpart F, any action taken by USAID on which a dispute exists and
a decision by the Agreement Officer has been obtained. There is no
right to a hearing on such an appeal.
(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
USAID 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:
(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, and
(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 USAID's
implementing regulations (see 22 CFR Part 208).
Subpart D--After-the-Award Requirements
Sec. 226.70 Purpose.
Sections 226.71 through 226.73 contain closeout procedures and
other procedures for subsequent disallowances and adjustments.
Sec. 226.71 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. USAID may
approve extensions when requested by the recipient.
(b) Unless USAID 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 agency
implementing instructions.
(c) USAID will 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 USAID 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, USAID
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. 226.31 through 226.37.
(g) In the event a final audit has not been performed prior to the
closeout of an award, USAID retains the right to recover an appropriate
amount after fully considering the recommendations on disallowed costs
resulting from the final audit.
Sec. 226.72 Subsequent adjustments and continuing responsibilities.
(a) The closeout of an award does not affect any of the following.
(1) The right of USAID 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 Secs. 226.26.
(4) Property management requirements in Secs. 226.31 through
226.37.
(5) Records retention as required in Sec. 226.53.
(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
USAID and the recipient, provided the responsibilities of the recipient
referred to in paragraph 226.73(a), including those for property
management as applicable, are considered and provisions made for
continuing responsibilities of the recipient, as appropriate.
[[Page 3759]]
Sec. 226.73 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.
USAID reserves the right to require refund by the recipient of any
amount which USAID determines to have been expended for purposes not in
accordance with the terms and condition of the award, including but not
limited to costs which are not allowable in accordance with the
applicable Federal cost principles or other terms and conditions of the
award. If not paid within a reasonable period after the demand for
payment, USAID may reduce the debt by:
(1) Making an administrative offset against other requests for
reimbursements,
(2) Withholding advance payments otherwise due to the recipient, or
(3) Taking other action permitted by law.
(b) Except as otherwise provided by law, USAID will charge interest
on an overdue debt in accordance with 4 CFR Chapter II, ``Federal
Claims Collection Standards.''
Subpart E--Additional Provisions For Awards to Commercial
Organizations
Sec. 226.80 Scope of subpart.
This subpart contains additional provisions that apply to awards to
commercial organizations. These provisions supplement and make
exceptions for awards to commercial organizations from other provisions
of this part.
Sec. 226.81 Prohibition against profit.
No funds shall be paid as profit to any recipient that is a
commercial organization. Profit is any amount in excess of allowable
direct and indirect costs.
Sec. 226.82 Program income.
The additional costs alternative described in Sec. 226.24(b)(1) may
not be applied to program income earned by a commercial organization.
Subpart F--Miscellaneous
Sec. 226.90 Disputes.
(a) Any dispute under or relating to a grant or agreement shall be
decided by the USAID Agreement Officer. The Agreement Officer shall
furnish the recipient a written copy of the decision.
(b) Decisions of the USAID Agreement Officer shall be final unless,
within 30 days of receipt of the decision, the grantee appeals the
decision to USAID's Deputy Assistant Administrator for Management,
USAID, Washington, DC 20523. Appeals must be in writing with a copy
concurrently furnished to the Agreement Officer.
(c) In order to facilitate review on the record by the Deputy
Assistant Administrator for Management, the recipient shall be given an
opportunity to submit written evidence in support of its appeal. No
hearing will be provided.
(d) Decisions by the Deputy Assistant Administrator for Management
shall be final.
Subpart G--USAID-Specific Requirements
Sec. 226.1001 Eligibility rules for goods and services. [Reserved]
Sec. 226.1002 Local cost financing. [Reserved]
Sec. 226.1003 Air transportation. [Reserved]
Sec. 226.1004 Ocean shipment of goods. [Reserved]
Appendix A to Part 226--Contract Provisions
All contracts, awarded by a recipient including small purchases,
shall contain the following provisions as applicable:
1. Equal Employment Opportunity--All contracts to be performed
in the United States, or to be performed with employees who were
recruited in the United States, 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 Chapter 60, ``Office of Federal Contract Compliance
Programs, Equal Employment Opportunity, Department of Labor,'' to
the extent required by the foregoing.
2. Copeland ``Anti-Kickback'' Act (18 U.S.C. 874 and 40 U.S.C.
276c)--All contracts and subawards in excess of $2,000 for
construction or repair to be performed in the United States 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
the Federal awarding agency.
3. Davis-Bacon Act, as amended (40 U.S.C. 276a to a-7)--When
required by Federal program legislation, all construction,
alteration, and/or repair contracts to be performed in the United
States awarded by the recipients and subrecipients of more than
$2,000 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
the Federal awarding agency.
4. Contract Work Hours and Safety Standards Act (40 U.S.C. 327-
333)--Where applicable, all contracts awarded by recipients in
excess of $2000 for construction contracts to be performed in the
United States and in excess of $2500 for other such 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 work week of 40 hours. Work in excess of the standard work
week is permissible provided that the worker is compensated at a
rate of not less than 1\1/2\ times the basic rate of pay for all
hours worked in excess of 40 hours in the work week. Section 107 of
the Act is applicable to construction work and provides that no
laborer or mechanic shall be required to work in surroundings or
under working conditions which are unsanitary, hazardous or
dangerous. These requirements do not apply to the purchases of
supplies or materials or articles ordinarily available on the open
market, or contracts for transportation or transmission of
intelligence.
5. Rights to Inventions Made Under a Contract or Agreement--
Contracts or agreements for the performance of experimental,
developmental, or research work shall provide for the rights of the
Federal Government and the recipient in any resulting invention in
accordance with 37 CFR part 401, ``Rights to Inventions Made by
Nonprofit Organizations and Small Business Firms Under Government
Grants, Contracts and Cooperative Agreements,'' and any implementing
regulations issued by the awarding agency.
6. Clean Air Act (42 U.S.C. 7401 et seq.) and the Federal Water
Pollution Control Act (33 U.S.C. 1251 et seq.), as amended--
Contracts and subawards of amounts in excess of $100,000 to be
performed in the United States 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
[[Page 3760]]
U.S.C. 7401 et seq.) and the Federal Water Pollution Control Act as
amended (33 U.S.C. 1251 et seq.). Violations shall be reported to
the Federal awarding agency 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 exceeding $100,000 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)--Certain
contracts shall not be made to parties listed on the nonprocurement
portion of the General Services Administration's ``Lists of Parties
Excluded from Federal Procurement or Nonprocurement Programs'' in
accordance with E.O.s 12549 and 12689, ``Debarment and Suspension.''
This list contains the names of parties debarred, suspended, or
otherwise excluded by agencies, and contractors declared ineligible
under statutory or regulatory authority other than 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 principals.
9. Contracts which require performance outside the United States
shall contain a provision requiring Worker's Compensation Insurance
(42 U.S.C. 1651, et seq.). As a general rule, Department of Labor
waivers will be obtained for persons employed outside the United
States who are not United States citizens or residents provided
adequate protection will be given such persons. The recipient should
refer questions on this subject to the USAID Agreement Officer.
* * * * *
Dated: January 6, 1995.
Michael D. Sherwin,
Deputy Assistant Administrator for Management.
[FR Doc. 95-975 Filed 1-18-95; 8:45 am]
BILLING CODE 6116-01-M