[Federal Register Volume 60, Number 65 (Wednesday, April 5, 1995)]
[Rules and Regulations]
[Pages 17237-17253]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-8175]
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DEPARTMENT OF THE INTERIOR
Office of the Secretary
43 CFR Part 12
RIN 1090-AA42
Uniform Administrative Requirements for Grants and Agreements
With Institutions of Higher Education, Hospitals, and Other Non-Profit
Organizations
AGENCY: Office of the Secretary, Interior.
ACTION: Final rule.
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SUMMARY: This action finalizes an interim final rule the Department
published in response to the publication by the Office of Management
and Budget (OMB) of revised OMB Circular A-110, ``Uniform
Administrative Requirements for Grants and Agreements With Institutions
of Higher Education, Hospitals, and Other Non-Profit Organizations.''
Agencies were required to adopt those standards which would be
imposed on grantees in codified regulations within six months after
publication in the Federal Register.
Over 200 comments were received by OMB from Federal agencies, non-
profit organizations, professional organizations, and others in
response to the notice published on August 27, 1992, (57 FR 39018)
requesting comments on proposed revisions. The comments were considered
in developing the final version. Consequently, the Department published
an interim final rule because of the previous request for comment
process used in the development of the Circular, the large number of
comments already received and considered by OMB and the Federal
agencies, and due to the limited flexibility to revise the rule
provided by OMB.
EFFECTIVE DATE: May 5, 1995.
FOR FURTHER INFORMATION CONTACT:
Dean A. Titcomb, (Chief, Acquisition and Assistance Division), (202)
208-6432.
SUPPLEMENTARY INFORMATION: OMB Circular A-110 (58 FR 62991) covers both
grants made by Federal agencies and subgrants made by States to
nongovernmental organizations.
Following the August 26, 1994, publication in the Federal Register
(59 FR 44040), no public comments were received by the Department.
This final rule essentially adopts all the language in the Circular
with two exceptions. At Section 12.904, language has been added to
describe the procedure for handling requests for [[Page 17238]] class
deviations and case-by-case exceptions. At Section 12.915, the
Department is revising the provision concerning use of the metric
system of measurement. This revision indicates that the system should
be used to the maximum extent possible and that both metric and inch-
pound units (dual units) may be used if necessary during any
transaction period(s).
The reference to the small purchase threshold currently being
$25,000 in section 12.944(e)(2) has been changed to $100,000. This
change is based on a provision of the Federal Acquisition Streamlining
Act of 1994.
The Circular inadvertently misstates the applicability of the
statute commonly known as the Byrd Anti-Lobbying Amendment, 31 U.S.C.
1352. The statute applies to organizations which apply or bid for an
award exceeding $100,000, not $100,000 or more. We have made this
correction in Appendix A.
Two other changes have been made to Appendix A because of recent
changes brought about by the Federal Acquisition Streamlining Act of
1994. The threshold for the requirement to include a provision for
compliance with the Copeland ``Anti-Kickback Act'' (18 U.S.C. 874) was
raised from $2,000 to $100,000.
The threshold for the requirement to include the provision for
compliance with sections 102 and 107 of the Contract Work Hours and
Safety Standards Act (40 U.S.C. 327-333) was raised to $100,000.
Other minor editorial changes are being made to conform with
language in the Circular.
The Department is amending 43 CFR part 12, by revising subpart F to
implement these requirements.
Executive Order 12866, Paperwork Reduction Act, and Regulatory
Flexibility Act
This final rule was not subject to Office of Management and Budget
review under Executive Order 12866.
The Department has determined that this rule will not have a
significant economic impact on a substantial number of small entities
because it does not affect the amount of funds provided in the covered
programs, but rather modifies and updates administrative and procedural
requirements. This final rule does not contain a collection of
information subject to the Paperwork Reduction Act of 1980 (44 U.S.C.
3501 et seq.).
Environmental Effects
The Department has determined that this rule does not constitute a
major Federal action having a significant impact on the human
environment under the National Environmental Policy Act of 1969.
Executive Order No. 12778
The Department has certified to the Office of Management and Budget
that this proposed rule meets the applicable standards provided in
Sections 2(a) and 2(b)(2) of Executive Order 12778.
List of Subjects in 43 CFR Part 12
Cooperative agreements, Grants administration, Grant program.
Dated: March 15, 1995.
Bonnie R. Cohen,
Assistant Secretary-Policy, Management and Budget.
For the reasons set forth in the preamble, Title 43, part 12 of the
Code of Federal Regulations is amended as set forth below:
PART 12--ADMINISTRATIVE AND AUDIT REQUIREMENTS AND COST PRINCIPLES
FOR ASSISTANCE PROGRAMS
1. The authority citation for part 12 is revised to read as
follows:
Authority: 5 U.S.C. 301; 31 U.S.C. 6101 note, 7501; 41 U.S.C.
252a, 701 et seq.; sec. 307, Pub. L. 103-332, 108 Stat. 2499; sec.
501, Pub. L. 103-316, 108 Stat. 1723; E.O. 12549, 3 CFR, 1986 Comp.,
p. 189; E.O. 12674, 3 CFR, 1989 Comp., p. 215; E.O. 12731, 3 CFR,
1990 Comp., p. 306; OMB Circular A-102; OMB Circular A-110; OMB
Circular A-128; and OMB Circular A-133.
2. Part 12 is amended by revising subpart F to read as follows:
Subpart F--Uniform Administrative Requirements for Grants and
Agreements With Institutions of Higher Education, Hospitals, and
Other Non-Profit Organizations
General
Sec.
12.901 Purpose.
12.902 Definitions.
12.903 Effect on other issuances.
12.904 Deviations.
12.905 Subawards.
Pre-Award Requirements
12.910 Purpose.
12.911 Pre-award policies.
12.912 Forms for applying for Federal assistance.
12.913 Debarment and suspension.
12.914 Special award conditions.
12.915 Metric system of measurement.
12.916 Resource Conservation and Recovery Act (RCRA) (Pub. L. 94-580
codified at 42 U.S.C. 6962).
12.917 Certifications and representations.
Post-Award Requirements
Financial and Program Management
12.920 Purpose of financial and program management.
12.921 Standards for financial management systems.
12.922 Payment.
12.923 Cost sharing or matching.
12.924 Program income.
12.925 Revision of budget and program plans.
12.926 Non-Federal audits.
12.927 Allowable costs.
12.928 Period of availability of funds.
Property Standards
12.930 Purpose of property standards.
12.931 Insurance coverage.
12.932 Real property.
12.933 Federally-owned and exempt property.
12.934 Equipment.
12.935 Supplies and other expendable property.
12.936 Intangible property.
12.937 Property trust relationship.
Procurement Standards
12.940 Purpose of procurement standards.
12.941 Recipient responsibilities.
12.942 Codes of conduct.
12.943 Competition.
12.944 Procurement procedures.
12.945 Cost and price analysis.
12.946 Procurement records.
12.947 Contract administration.
12.948 Contract provisions.
Reports and Records
12.950 Purpose of reports and records.
12.951 Monitoring and reporting program performance.
12.952 Financial reporting.
12.953 Retention and access requirements for records.
Termination and Enforcement
12.960 Purpose of termination and enforcement.
12.961 Termination.
12.962 Enforcement.
After-the-Award Requirements
12.970 Purpose.
12.971 Closeout procedures.
12.972 Subsequent adjustments and continuing responsibilities.
12.973 Collection of amounts due.
Appendix A to Subpart F--Contract Provisions
General
Sec. 12.901 Purpose.
This subpart establishes uniform administrative requirements for
Federal grants and agreements awarded to institutions of higher
education, hospitals, and other non-profit organizations.
Sec. 12.902 Definitions.
Accrued expenditures means the charges incurred by the recipient
during a given period requiring the provision of funds
for: [[Page 17239]]
(1) goods and other tangible property received;
(2) services performed by employees, contractors, subrecipients,
and other payees; and,
(3) other amounts becoming owed under programs for which no current
services or performance is required.
Accrued income means the sum of:
(1) earnings during a given period from:
(i) services performed by the recipient, and
(ii) goods and other tangible property delivered to purchasers, and
(2) amounts becoming owed to the recipient for which no current
services or performance is required by the recipient.
Acquisition cost of equipment means the net invoice price of the
equipment, including the cost of modifications, attachments,
accessories, or auxiliary apparatus necessary to make the property
usable for the purpose for which it was acquired. Other charges, such
as the cost of installation, transportation, taxes, duty or protective
in-transit insurance, shall be included or excluded from the unit
acquisition cost in accordance with the recipient's regular accounting
practices.
Advance means a payment made by Treasury check or other appropriate
payment mechanism to a recipient upon its request either before outlays
are made by the recipient or through the use of predetermined payment
schedules.
Award means financial assistance that provides support or
stimulation to accomplish a public purpose. Awards include grants and
other agreements in the form of money or property in lieu of money, by
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 a Federal agency determines
that all applicable administrative actions and all required work of the
award have been completed by the recipient and Federal awarding agency.
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 Federal sponsorship ends.
Disallowed costs means those charges to an award that the Federal
awarding agency determines to be unallowable, in accordance with the
applicable Federal cost principles or other terms and conditions
contained in the award.
Equipment means tangible nonexpendable personal property including
exempt property charged directly to the award having a useful life of
more than one year and an acquisition cost of $5,000 or more per unit.
However, consistent with recipient policy, lower limits may be
established.
Excess property means property under the control of any Federal
awarding agency that, as determined by the Secretary, is no longer
required for its needs or the discharge of its responsibilities.
Exempt property means tangible personal property acquired in whole
or in part with Federal funds, where 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.
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 applied and the
amount of cash advances and payments made to subrecipients. For reports
prepared on an accrual basis, outlays are the sum of: cash
disbursements for direct charges for goods and services; the amount of
indirect expense incurred; the value of in-kind contributions applied;
and the net increase (or decrease) in the amounts owed by the recipient
for goods and other property received, for services performed by
employees, contractors, subrecipients and other payees and other
amounts becoming owed under programs for which no current services or
performance are required.
Personal property means property of any kind except real property.
It may be tangible, having physical existence, or intangible, having no
physical existence, such as copyrights, patents, or securities.
Prior approval means written approval by an authorized official
evidencing prior consent.
Program income means gross income earned by the recipient that is
directly generated by a supported activity or earned as a result of the
award (see exclusions in Sec. 12.924 (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 patients 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 Federal awarding agency regulations or the terms
and conditions of the award, program income does not include the
receipt of principal on loans, rebates, credits, discounts, etc., or
interest earned on any of them.
Project costs means all allowable costs, as set forth in the
applicable Federal cost principles, incurred by a
[[Page 17240]] 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 financial assistance
directly from Federal awarding agencies to carry out a project or
program. The term includes public and private institutions of higher
education, public and private hospitals, and other quasi-public and
private non-profit organizations such as, but not limited to, community
action agencies, research institutes, educational associations, and
health centers. The term may include, at the discretion of the Federal
awarding agency, foreign or international organizations (such as
agencies of the United Nations) which are recipients, subrecipients, or
contractors or subcontractors of recipients or subrecipients. The term
does not include government-owned contractor-operated facilities or
research centers providing continued support for mission-oriented,
large-scale programs that are government-owned or controlled, or are
designated as federally-funded research and development centers.
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.
(1) Research is defined as a systematic study directed toward
fuller scientific knowledge or understanding of the subject studied.
(2) 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) (currently
$100,000).
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. The term may include foreign or international organizations
(such as agencies of the United Nations) at the discretion of the
Federal awarding agency.
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 a Federal awarding agency that
temporarily withdraws Federal sponsorship under an award, pending
corrective action by the recipient or pending a decision to terminate
the award by the Federal awarding agency. Suspension of an award is a
separate action from suspension under the Department of the Interior
Regulations implementing E.O.'s 12549 and 12689, ``Debarment and
Suspension.'' See subpart D of 43 CFR part 12.
Termination means the cancellation of Federal 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 noncash
contributions provided by non-Federal third parties. Third party in-
kind contributions may be in the form of real property, equipment,
supplies and other expendable property, and the value of goods and
services directly benefiting and specifically identifiable to the
project or program.
Unliquidated obligations, for financial reports prepared on a cash
basis, means the amount of obligations incurred by the recipient that
have not been paid. For reports prepared on an accrued expenditure
basis, they represent the amount of obligations incurred by the
recipient for which an outlay has not been recorded.
Unobligated balance means the portion of the funds authorized by
Federal awarding agency that has not been obligated by the recipient
and is determined by deducting the cumulative obligations from the
cumulative funds authorized.
Unrecovered indirect cost means the difference between the amount
awarded and the amount which could have been awarded under the
recipient's approved negotiated indirect cost rate.
Working capital advance means a procedure whereby funds are
advanced to the recipient to cover its estimated disbursement needs for
a given initial period.
Sec. 12.903 Effect on other issuances.
For awards subject to this subpart, all administrative requirements
of codified program regulations, program manuals, handbooks and other
nonregulatory materials which are inconsistent with the requirements of
this subpart shall be superseded, except to the extent they are
required by statute, or authorized in accordance with the deviations
provision in Section 12.904.
Sec. 12.904 Deviations.
The Office of Management and Budget (OMB) may grant exceptions for
classes of grants or recipients subject to the requirements of this
subpart when exceptions are not prohibited by statute. However, in the
interest of maximum uniformity, exceptions from the requirements of
this subpart shall be permitted only in unusual circumstances. Federal
awarding agencies may apply more restrictive requirements to a class of
recipients when approved by OMB. All requests for class deviations
shall be processed through the Assistant Secretary-Policy, Management,
and Budget. Federal awarding agencies 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 Federal awarding agencies. Bureau/office application of less
restrictive requirements when awarding small awards, except for those
requirements which are statutory, as well as exceptions on a case-by-
case basis, will be handled by designated officials identified in
bureau/office procedures.
Sec. 12.905 Subawards.
Unless sections of this subpart specifically exclude subrecipients
from [[Page 17241]] coverage, the provisions of this subpart shall be
applied to subrecipients performing work under awards if such
subrecipients are institutions of higher education, hospitals, or other
non-profit organizations. State and local government subrecipients are
subject to the provisions of regulations implementing the grants
management common rule, ``Uniform Administrative Requirements for
Grants and Cooperative Agreements to State and Local Governments,'' 43
CFR part 12.
Pre-Award Requirements
Sec. 12.910 Purpose.
Sections 12.011 through 12.917 prescribe forms and instructions and
other pre-award matters to be used in applying for Federal awards.
Sec. 12.911 Pre-award policies.
(a) Use of Grants and Cooperative Agreements, and Contracts. In
each instance, the Federal awarding agency shall decide on the
appropriate award instrument (i.e., grant, cooperative agreement, or
contract). The Federal Grant and Cooperative Agreement Act (31 U.S.C.
6301-6308) 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. Federal awarding agencies
shall notify the public of their funding priorities for discretionary
grant programs, unless funding priorities are established by Federal
statute.
Sec. 12.912 Forms for applying for Federal assistance.
(a) Federal awarding agencies shall comply with the applicable
report clearance requirements of 5 CFR part 1320, ``Controlling
Paperwork Burdens on the Public,'' with regard to all forms used by the
Federal awarding agency in place of or as a supplement to the Standard
Form 424 (SF-424) series.
(b) Applicants shall use the SF-424 series or those forms and
instructions prescribed by the Federal awarding agency.
(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. (See also 43 CFR part 9).
(d) Federal awarding agencies that do not use the SF-424 form will
indicate whether the application is subject to review by the State
under E.O. 12372.
Sec. 12.913 Debarment and suspension.
Federal awarding agencies and recipients shall comply with the
nonprocurement debarment and suspension common rule implementing E.O.s
12549 and 12689, ``Debarment and Suspension,'' subpart D of 43 CFR part
12. 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. 12.914 Special award conditions.
(a) Federal awarding agencies may impose additional requirements as
needed, if an applicant or recipient:
(1) Has a history of poor performance;
(2) Is not financially stable;
(3) Has a management system that does not meet the standards
prescribed in this part;
(4) Has not conformed to the terms and conditions of a previous
award; or
(5) Is not otherwise responsible.
(b) Additional requirements may only be imposed provided that the
applicant or recipient is notified in writing as to:
(1) The nature of the additional requirements;
(2) The reason why the additional requirements are being imposed;
(3) The nature of the corrective action needed;
(4) The time allowed for completing the corrective actions; and
(5) The method for requesting reconsideration of the additional
requirements imposed.
(c) Any special conditions shall be promptly removed once the
conditions that prompted them have been corrected.
Sec. 12.915 Metric system of measurement.
The Metric Conversion Act, as amended by the Omnibus Trade and
Competitiveness Act (15 U.S.C. 205) declares that the metric system is
the preferred measurement system for U.S. trade and commerce. The Act
requires each Federal agency to establish a date or dates in
consultation with the Secretary of Commerce when the metric system of
measurement will be used in the agency's procurements, grants, and
other business-related activities. Metric implementation may take
longer where the use of the system is initially impractical or likely
to cause significant inefficiencies in the accomplishment of federally-
funded activities. Federal awarding agencies will follow the provisions
of E.O. 12770, ``Metric usage in Federal Government Programs.'' When
applicable, the awarding agency shall request that measurement-
sensitive information to be included as part of the application, be
expressed in metric units. When required by the awarding agency, for
grants to recipients, the following term and condition will be
incorporated into the grant:
Provision
All progress and final reports, other reports, or
All progress and final reports, other reports, or publications
produced under this award shall employ the metric system of
measurements to the maximum extent practicable. Both metric and
inch-pound units (dual units) may be used if necessary during any
transition period(s). However, the recipient may use non-metric
measurements to the extent that the recipient has supporting
documentation that the use of metric measurements is impracticable
or is likely to cause significant inefficiencies or loss of markets
to the recipient, such as when foreign competitors are producing
competing products in non-metric units.
End of Provision
Sec. 12.916 Resource Conservation and Recovery Act (RCRA) (Pub. L. 94-
580 codified at 42 U.S.C. 6962).
Under the Act, any State agency or agency of a political
subdivision of a State that is using appropriated Federal funds must
comply with section 6002 of RCRA. Section 6002 of RCRA 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 give preference in their procurement programs funded with Federal
funds to the purchase of [[Page 17242]] recycled products pursuant to
the EPA guidelines.
Sec. 12.917 Certifications and representations.
Unless prohibited by statute or codified regulation, each Federal
awarding agency is authorized and encouraged to allow recipients to
submit certifications and representations required by statute,
executive order, or regulation on an annual basis, if the recipients
have ongoing and continuing relationships with the agency. Annual
certifications and representations shall be signed by responsible
officials with the authority to ensure recipients' compliance with the
pertinent requirements.
Post-Award Requirements
Financial and Program Management
Sec. 12.920 Purpose of financial and program management.
Sections 12.921 through 12.928 prescribe standards for financial
management systems, methods for making payments and rules for:
satisfying cost sharing and matching requirements, accounting for
program income, budget revision approvals, making audits, determining
allowability of cost, and establishing fund availability.
Sec. 12.921 Standards for financial management systems.
(a) Federal awarding agencies shall require recipients to relate
financial data to performance data and develop unit cost information
whenever practical.
(b) Recipients' financial management systems shall provide for the
following:
(1) Accurate, current and complete disclosure of the financial
results of each federally-sponsored project or program in accordance
with the reporting requirements set forth in Sec. 12.952. If a Federal
awarding agency requires reporting on an accrual basis from a recipient
that maintains its records on other than an accrual basis, the
recipient shall not be required to establish an accrual accounting
system. These recipients may develop such accrual data for their
reports on the basis of an analysis of the documentation on hand.
(2) Records that identify adequately the source and application of
funds for federally-sponsored activities. These records shall contain
information pertaining to Federal awards, authorizations, obligations,
unobligated balances, assets, outlays, income and interest.
(3) Effective control over and accountability for all funds,
property and other assets. Recipients shall adequately safeguard all
such assets and assure they are used solely for authorized purposes.
(4) Comparison of outlays with budget amounts for each award.
Whenever appropriate, financial information should be related to
performance and unit cost data.
(5) Written procedures to minimize the time elapsing between the
transfer of funds to the recipient from the U.S. Treasury and the
issuance or redemption of checks, warrants or payments by other means
for program purposes by the recipient. To the extent that the
provisions of the Cash Management Improvement Act (CMIA) (31 U.S.C.
6501 note) govern, payment methods of State agencies,
instrumentalities, and fiscal agents shall be consistent with CMIA
Treasury-State Agreements or the CMIA default procedures codified at 31
CFR part 205, ``Withdrawal of Cash from the Treasury for Advances under
Federal Grant and Other Programs.''
(6) Written procedures for determining the reasonableness,
allocability and allowability of costs in accordance with the
provisions of the applicable Federal cost principles and the terms and
conditions of the award.
(7) Accounting records, including cost accounting records, that are
supported by source documentation.
(c) Where the Federal Government guarantees or insures the
repayment of money borrowed by the recipient, the Federal awarding
agency, at its discretion, may require adequate bonding and insurance
if the bonding and insurance requirements of the recipient are not
deemed adequate to protect the interest of the Federal Government.
(d) The Federal awarding agency 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 in
Sec. 12.921 (c) and (d), 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. 12.922 Payment.
(a) Payment methods shall minimize the time elapsing between the
transfer of funds from the United States Treasury and the issuance or
redemption of checks, warrants, or payment by other means by the
recipients. Payment methods of State agencies or instrumentalities
shall be consistent with Treasury-State CMIA agreements or default
procedures codified at 31 CFR part 205.
(b) Recipients are to be paid in advance, provided they maintain or
demonstrate the willingness to maintain or demonstrate written
procedures that minimize the time elapsing between the transfer of
funds and disbursement by the recipient, and financial management
systems that meet the standards for fund control and accountability as
established in Sec. 12.921. 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 purposes 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 the Federal awarding
agency to the recipient.
(1) Advance payment mechanisms include, but are not limited to,
Treasury check and electronic funds transfer.
(2) Advance payment mechanisms are subject to 31 CFR part 205.
(3) Recipients shall be authorized to submit requests for advances
and reimbursements at least monthly when electronic fund transfers are
not used.
(d) Requests for Treasury check advance payment shall be submitted
on SF-270, ``Request for Advance or Reimbursement,'' or other forms as
may be authorized by OMB. This form is not to be used when Treasury
check advance payments are made to the recipient automatically through
the use of a predetermined payment schedule or if precluded by special
Federal awarding agency instructions for electronic funds transfer.
(e) Reimbursement is the preferred method when the requirements in
paragraph (b) of this section cannot be met. Federal awarding agencies
may also use this method on any construction agreement, or if the major
portion of the construction project is accomplished through private
market financing or Federal loans, and the Federal assistance
constitutes a minor portion of the project.
(1) When the reimbursement method is used, the Federal awarding
agency shall make payment within 30 days after receipt of the billing,
unless the billing is improper. [[Page 17243]]
(2) Recipients shall be 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 the Federal awarding agency has determined that reimbursement is
not feasible because the recipient lacks sufficient working capital,
the Federal awarding agency may provide cash on a working capital
advance basis. Under this procedure, the Federal awarding agency shall
advance cash to the recipient to cover its estimated disbursement needs
for an initial period generally geared to the awardee's disbursing
cycle. Thereafter, the Federal awarding agency shall reimburse the
recipient for its actual cash disbursements. The working capital
advance method of payment shall not be used for recipients unwilling or
unable to provide timely advances to their subrecipient to meet the
subrecipient's actual cash disbursements.
(g) To the extent available, recipients shall disburse funds
available from repayments to and interest earned on a revolving fund,
program income, rebates, refunds, contract settlements, audit
recoveries and interest earned on such funds before requesting
additional cash payments.
(h) Unless otherwise required by statute, Federal awarding agencies
shall not withhold payments for proper charges made by recipients at
any time during the project period unless paragraph (h)(1) or (h)(2) of
this section apply:
(1) A recipient has failed to comply with the project objectives,
the terms and conditions of the award, or Federal reporting
requirements; 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, the Federal awarding agency
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, Federal awarding agencies shall not require separate
depository accounts for funds provided to a recipient or establish any
eligibility requirements for depositories for funds provided to a
recipient. However, recipients must be able to account for the receipt,
obligation and expenditure of funds.
(2) Advances of Federal funds shall be deposited and maintained in
insured accounts whenever possible.
(j) Consistent with the national goal of expanding 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 paragraph (k)(1), (2) or (3) apply:
(1) The recipient receives less than $120,000 in Federal awards per
year.
(2) The best reasonably available interest bearing account would
not be expected to earn interest in excess of $250 per year on Federal
cash balances.
(3) The depository would require an average or minimum balance so
high that it would not be feasible within the expected Federal and non-
Federal cash resources.
(l) For those entities where CMIA and its implementing regulations
do not apply, interest earned on Federal advances deposited in interest
bearing accounts shall be remitted annually to Department of Health and
Human Services, Payment Management System, P.O. Box 6021, Rockville, MD
20852. Interest amounts up to $250 per year may be retained by the
recipient for administrative expense. In keeping with Electronic Funds
Transfer rules, (31 CFR part 206), interest should be remitted to the
HHS Payment Management System through an electronic medium such as the
FEDWIRE Deposit system. Recipients which do not have this capability
should use a check. 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 subpart, only the following
forms shall be authorized for the recipients in requesting advances and
reimbursements. Federal agencies shall not require more than an
original and two copies of these forms.
(1) SF-270, Request for Advance or Reimbursement. Each Federal
awarding agency shall adopt the SF-270 as a standard form for all
nonconstruction programs where electronic funds transfer or
predetermined advance methods are not used. Federal awarding agencies,
however, have the option of using this form for construction programs
in lieu of the SF-271, ``Outlay Report and Request for Reimbursement
for Construction Programs.''
(2) SF-271, Outlay Report and Request for Reimbursement for
Construction Programs. Each Federal awarding agency shall adopt the SF-
271 as the standard form to be used for requesting reimbursement for
construction programs. However, a Federal awarding agency may
substitute the SF-270 when the Federal awarding agency determines that
it provides adequate information to meet Federal needs.
Sec. 12.923 Cost sharing or matching.
(a) All contributions, including cash and third party in-kind,
shall be accepted as part of the recipient's cost sharing or matching
when such contributions meet all of the following criteria:
(1) Are verifiable from the recipient's records.
(2) Are not included as contributions for any other federally-
assisted project or program.
(3) Are necessary and reasonable for proper and efficient
accomplishment of project or program objectives.
(4) Are allowable under the applicable cost principles.
(5) Are not paid by the Federal Government under another award,
except where authorized by Federal statute to be used for cost sharing
or matching.
(6) Are provided for in the approved budget when required by the
Federal awarding agency.
(7) Conform to other provisions of this subpart, as applicable.
(b) Unrecovered indirect costs may be included as part of cost
sharing or matching only with the prior approval of the Federal
awarding agency.
(c) Values for recipient contributions of services and property
shall be established in accordance with the applicable cost principles.
If a Federal awarding agency 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 paragraph (c) (1) or (2) of this section:
(1) The certified value of the remaining life of the property
recorded in the recipient's accounting records at the time of donation.
(2) the current fair market value. However, when there is
sufficient justification, the Federal awarding agency may approve the
use of the current fair market value of the donated
[[Page 17244]] property, even if it exceeds the certified value at the
time of donation to the project.
(d) Volunteer services furnished by professional and technical
personnel, consultants, and other skilled and unskilled labor may be
counted as cost sharing or matching if the service is an integral and
necessary part of an approved project or program. Rates for volunteer
services shall be consistent with those paid for similar work in the
recipient's organization. In those instances in which the required
skills are not found in the recipient organization, rates shall be
consistent with those paid for similar work in the labor market in
which the recipient competes for the kind of services involved. In
either case, paid fringe benefits that are reasonable, allowable, and
allocable may be included in the valuation.
(e) When an employer other than the recipient furnishes the
services of an employee, these services shall be valued at the
employee's regular rate of pay (plus an amount of fringe benefits that
are reasonable, allowable, and allocable, but exclusive of overhead
costs), provided these services are in the same skill for which the
employee is normally paid.
(f) Donated supplies may include such items as expendable
equipment, office supplies, laboratory supplies or workshop and
classroom supplies. Value assessed to donated supplies included in the
cost sharing or matching share shall be reasonable and shall not exceed
the fair market value of the property at the time of the donation.
(g) The method used for determining cost sharing or matching for
donated equipment, buildings and land for which title passes to the
recipient may differ according to the purpose of the award, if
paragraph (g) (1) or (2) of this section apply:
(1) If the purpose of the award is to assist the recipient to
acquire equipment, buildings, or land, the total value of the donated
property may be claimed as cost sharing or matching.
(2) If the purpose of the award is to support activities that
require the use of equipment, buildings or land, normally only
depreciation or use charges for equipment and buildings may be made.
However, the full value of equipment or other capital assets and fair
rental charges for land may be allowed, provided that the Federal
awarding agency 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 their
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 service,
material, equipment, buildings and land shall be documented.
Sec. 12.924 Program income.
(a) Federal awarding agencies shall apply the standards set forth
in this section in requiring recipient organizations to account for
program income related to projects financed in whole or in part with
Federal funds.
(b) Except as provided in paragraph (h) of this section, program
income earned during the project period shall be retained by the
recipient and, in accordance with Federal awarding agency regulations
or the terms and conditions of the award, shall be used in one or more
of the following ways:
(1) added to funds committed to the project or program by the
Federal awarding agency and recipient and used to further eligible
project or program objectives;
(2) used to finance the non-Federal share of the project or
program; or
(3) deducted from the total project or program allowable cost in
determining the net allowable costs upon which the Federal share of
costs is based.
(c) When an agency 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 Federal awarding agency does not specify in its
regulations or the terms and conditions of the award how program income
is to be used, paragraph (b)(3) of this section shall apply
automatically to all projects or programs except research. For awards
that support research, paragraph (b)(1) of this section shall apply
automatically unless the awarding agency indicates in the terms and
conditions another alternative on the award or the recipient is subject
to special award conditions, as indicated in Sec. 12.914.
(e) Unless Federal awarding agency regulations or the terms and
conditions of the award provide otherwise, recipients shall have no
obligation to the Federal Government regarding program income earned
after the end of the project period.
(f) If authorized by Federal awarding agency regulations or the
terms and conditions of the award, costs incident to the generation of
program income may be deducted from gross income to determine program
income, provided these costs have not been charged to the award.
(g) Proceeds from the sale of property shall be handled in
accordance with the requirements of the Property Standards (See
Secs. 12.930 through 12.937).
(h) Unless Federal awarding agency regulations or the terms and
conditions 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. 12.925 Revision of budget and program plans.
(a) The budget plan is the financial expression of the project or
program as approved during the award process. It may include either the
Federal and non-Federal share, or only the Federal share, depending
upon Federal awarding agency requirements. It shall be related to
performance for program evaluation purposes whenever appropriate.
(b) Recipients are required to report deviations from budget and
program plans, and request prior approvals for budget and program plan
revisions, in accordance with this section.
(c) For nonconstruction awards, recipients shall request prior
approvals from Federal awarding agencies 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 [[Page 17245]] if there is no associated budget revision
requiring prior written approval).
(2) Change in a key person specified in the application or award
document.
(3) The absence for more than three months, or a 25 percent
reduction in time devoted to the project, by the approved project
director or principal investigator.
(4) The need for additional Federal funding.
(5) The transfer of amounts budgeted for indirect costs to absorb
increases in direct costs, or vice versa, if approval is required by
the Federal awarding agency.
(6) The inclusion, unless waived by the Federal awarding agency, 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
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) Except for requirements listed in paragraph (c)(1) and (c)(4)
of this section, Federal awarding agencies are authorized, at their
option, to waive cost-related and administrative prior written
approvals required by this subpart and OMB Circulars A-21 and A-122.
Such waivers may include authorizating 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 Federal awarding
agency. All pre-award costs are incurred at the recipient's risk (i.e.,
the Federal awarding agency is under no obligation to reimburse such
costs if for any reason the recipient does not receive an award or if
the award is less than anticipated and inadequate to cover such costs).
(2) Initiate a one-time extension of the expiration date of the
award of up to 12 months unless one or more of the following conditions
apply. For one-time extensions, the recipient must notify the Federal
awarding agency 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 conditions that prevent
issuance of a one-time extension are:
(i) the terms and conditions of award prohibit the extension;
(ii) the extension requires additional Federal funds; or
(iii) the extension involves any change in the approved objectives
or scope of the project.
(3) Carry forward unobligated balances to subsequent funding
periods.
(4) For awards that support research, unless the Federal awarding
agency provides otherwise in the award or in the agency's regulations,
the prior approval requirements described in paragraph (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) applies.
(f) The Federal awarding agency 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 the transfer exceeds or
is expected to exceed 10 percent of the total budget as last approved
by the Federal awarding agency. No Federal awarding agency shall 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) No other changes to nonconstruction budgets, except for the
changes described in paragraph (j) of this section, require prior
approval.
(h) For construction awards, recipients shall request prior written
approval promptly from Federal awarding agencies for budget revisions
whenever paragraph (h) (1), (2) or (3) of this section apply:
(1) the revision results from changes in the scope or the objective
of the project or program;
(2) additional Federal funds are needed to complete the project; or
(3) the recipient requests a revision that involves specific costs
for which prior written approval requirements may be imposed under
Sec. 12.927.
(i) No other prior approval requirements for specific items will be
imposed unless OMB approves a deviation.
(j) When a Federal awarding agency makes an award that provides
support for both construction and nonconstruction work, the Federal
awarding agency 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, Federal
awarding agencies shall require recipients to notify the Federal
awarding agency in writing promptly whenever the amount of Federal
authorized funds is expected to exceed the needs of the recipient for
the project period by more than $5,000 or five percent of the Federal
award, whichever is greater. This notification shall not be required if
an application for additional funding is submitted for a continuation
award.
(l) When requesting approval for budget revisions, recipients shall
use the budget forms that were used in the application unless the
Federal awarding agency indicates that a letter of request suffices.
(m) Within 30 calendar days from the date of receipt of the request
for budget revisions, the Federal awarding agencies 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 Federal awarding agency shall inform the recipient
in writing of the date when the recipient may expect the decision.
Sec. 12.926 Non-Federal audits.
Certain recipients and subrecipients shall be subject to non-
Federal audits in accordance with the applicable directive from the
table in this section.
------------------------------------------------------------------------
Type of recipient Applicable directive
------------------------------------------------------------------------
Institution of higher OMB Circular A-133.
education or other non-
profit organization.
State or local government Single Audit Act 31 U.S.C. 7501-7507 and 43
CFR part 12, subpart B.
Hospital................. OMB Circular A-133 or audit requirements of
the Federal awarding agency.
------------------------------------------------------------------------
[[Page 17246]]
Sec. 12.927 Allowable costs.
Federal awarding agencies shall determine allowable costs in
accordance with the type of entity incurring the costs, using the
appropriate directive from the table below.
------------------------------------------------------------------------
Entity incurring costs Applicable directive
------------------------------------------------------------------------
State, local, or OMB Circular A-87, Cost Principles for State
Federally recognized and Local Governments.
Indian Tribe.
Non-profit organization.. OMB Circular A-122, Cost Principles for Non-
profit Organizations and 43 CFR 12.927(b).
Institution of Higher OMB Circular A-21, Cost Principles for
Education. Educational Institutions.
Hospital................. 45 CFR part 74, appendix E, Principles for
Determining Costs Applicable to Research and
Development Under Grants and Contracts with
Hospitals.
Commercial organization 48 CFR part 31, Contract Principles and
or non-profit Procedures or uniform cost accounting
organization listed in standards that comply with cost principles
Attachment C of OMB acceptable to the Federal agency.
Circular A-122.
------------------------------------------------------------------------
Sec. 12.928 Period of availability of funds.
Where a funding period is specified, a recipient may charge to the
grant only allowable costs resulting from obligations incurred during
the funding period and any pre-award costs authorized by the Federal
awarding agency.
Property Standards
Sec. 12.930 Purpose of property standards.
Sections 12.931 through 12.937 set forth uniform standards
governing management and disposition of property furnished by the
Federal Government whose cost was charged to a project supported by a
Federal award. Federal awarding agencies shall require recipients to
observe these standards under awards and shall not impose additional
requirements, unless specifically required by Federal statute. The
recipient may use its own property management standards and procedures
provided it observes the provisions of Secs. 12.931 through 12.937.
Sec. 12.931 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. 12.932 Real property.
Each Federal awarding agency shall prescribe requirements for
recipients concerning the use and disposition of real property acquired
in whole or in part under awards. Unless otherwise provided by statute,
such requirements, at a minimum, shall contain the following.
(a) Title to real property shall vest in the recipient subject to
the condition that the recipient shall use the real property for the
authorized purpose of the project as long as it is needed and shall not
encumber the property without approval of the awarding agency.
(b) The recipient shall obtain written approval by the Federal
awarding agency for the use of real property in other federally-
sponsored projects when the recipient determines that the property is
no longer needed for the purpose of the original project. Use in other
projects shall be limited to those under federally-sponsored projects
(i.e., awards) or programs that have purposes consistent with those
authorized for support by the Department of the Interior.
(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 Federal awarding agency or its
successor. The Federal awarding agency 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 the Federal awarding agency 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. 12.933 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 to the Federal awarding agency an inventory listing of
federally-owned property in their custody. Upon completion of the award
or when the property is no longer needed, the recipient shall report
the property to the Federal awarding agency for further utilization.
(2) If the Federal awarding agency has no further need for the
property, it shall be declared excess and reported to the General
Services Administration, unless the Federal awarding agency 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
the Federal awarding agency.
(b) Exempt property. Exempt property. When statutory authority
exists, the Federal awarding agency has the option to vest title to
property acquired with Federal funds in the recipient without further
obligation to the Federal Government and under conditions the Federal
awarding agency considers appropriate. Such property is ``exempt
property.'' Should a Federal awarding agency not establish conditions,
title to exempt property upon acquisition shall vest in the recipient
without further obligation to the Federal Government.
Sec. 12.934 Equipment.
(a) Title to equipment acquired by a recipient with Federal funds
shall vest [[Page 17247]] in the recipient, subject to conditions of
this section.
(b) The recipient shall not use equipment acquired with Federal
funds to provide services to non-Federal outside organizations for a
fee that is less than private companies charge for equivalent services,
unless specifically authorized by Federal statute, for as long as the
Federal Government retains an interest in the equipment.
(c) The recipient shall use the equipment in the project or program
for which it was acquired as long as needed, whether or not the project
or program continues to be supported by Federal funds, and shall not
encumber the property without approval of the Federal awarding agency.
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 the Federal awarding agency, 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 the Federal
awarding agency that financed the equipment; 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 the Federal awarding agency. User charges shall be
treated as program income.
(e) When acquiring replacement equipment, the recipient may use the
equipment to be replaced as trade-in or sell the equipment and use the
proceeds to offset the costs of the replacement equipment subject to
the approval of the Federal awarding agency.
(f) The recipient's property management standards for equipment
acquired with Federal funds and federally-owned equipment shall include
all of the following.
(1) Equipment records shall be maintained accurately and shall
include the following information.
(i) A description of the equipment.
(ii) Manufacturer's serial number, model number, Federal stock
number, national stock number, or other identification number.
(iii) Source of the equipment, including the award number.
(iv) Whether title vests in the recipient or the Federal
Government.
(v) Acquisition date (or date received, if the equipment was
furnished by the Federal Government) and cost.
(vi) Information from which one can calculate the percentage of
Federal participation in the cost of the equipment (not applicable to
equipment furnished by the Federal Government).
(vii) Location and condition of the equipment and the date the
information was reported.
(viii) Unit acquisition cost.
(ix) Ultimate disposition data, including date of disposal and
sales price or the method used to determine current fair market value
where a recipient compensates the Federal awarding agency 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.
(5) Adequate maintenance procedures shall be implemented to keep
the equipment in good condition.
(6) Where the recipient is authorized or required to sell the
equipment, proper sales procedures shall be established which provide
for competition to the extent practicable and result in the highest
possible return.
(g) When the recipient no longer needs the equipment, the equipment
may be used for other activities in accordance with the following
standards. For equipment with a current per unit fair market value of
$5,000 or more, the recipient may retain the equipment for other uses
provided that compensation is made to the original 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 the equipment, the
recipient shall request disposition instructions from the Federal
awarding agency. The Federal awarding agency shall determine whether
the equipment can be used to meet the agency's requirements. If no
requirement exists within that agency, the availability of the
equipment shall be reported to the General Services Administration by
the Federal awarding agency to determine whether a requirement for the
equipment exists in other Federal agencies. The Federal awarding agency
shall issue instructions to the recipient no later than 120 calendar
days after the recipient's request and the following procedures shall
govern:
(1) If so instructed or if disposition instructions are not issued
within 120 calendar days after the recipient's request, the recipient
shall sell the equipment and reimburse the Federal awarding agency 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 the Federal awarding
agency for such costs incurred in its disposition.
(h) The Federal awarding agency may reserve the right to transfer
the title to the Federal Government or to a third party named by the
Federal Government when the third party is otherwise eligible under
existing statutes. The 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) The Federal awarding agency shall issue disposition
instructions within 120 calendar days after receipt of a final
inventory. The final inventory shall list all equipment acquired with
Federal funds and federally-owned equipment. [[Page 17248]] If the
Federal awarding agency fails to issue disposition instructions within
the 120-calendar-day period, the recipient shall apply the standards of
this section, as appropriate.
(3) When the Federal awarding agency exercises its right to take
title, the equipment shall be subject to the provisions for federally-
owned equipment.
Sec. 12.935 Supplies and other expendable property.
(a) Title to supplies and other expendable property shall vest in
the recipient upon acquisition. If there is a residual inventory of
unused supplies exceeding $5,000 in total aggregate value upon
termination or completion of the project or program and the supplies
are not needed for any other federally-sponsored project or program,
the recipient shall retain the supplies for use on non-Federal
sponsored activities or sell them, but shall, in either case,
compensate the Federal Government for its share. The amount of
compensation shall be computed in the same manner as for equipment.
(b) The recipient shall not use supplies acquired with Federal
funds to provide services to non-Federal outside organizations for a
fee that is less than private companies charge for equivalent services,
unless specifically authorized by Federal statute as long as the
Federal Government retains an interest in the supplies.
Sec. 12.936 Intangible property.
(a) The recipient may copyright any work that is subject to
copyright and was developed, or for which ownership was purchased,
under an award. The Federal awarding agency(ies) reserves a royalty-
free, nonexclusive and irrevocable right to reproduce, publish, or
otherwise use the work for Federal purposes, and to authorize others to
do so.
(b) Recipients are subject to applicable regulations governing
patents and inventions, including government-wide regulations issued by
the Department of Commerce at 37 CFR part 401, ``Rights to Inventions
Made by Nonprofit Organizations and Small Business Firms Under
Government Grants, Contracts and Cooperative Agreements.''
(c) Unless waived by the Federal awarding agency, 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 the data for Federal purposes.
(d) Title to intangible property and debt instruments acquired
under an award or subaward vests upon acquisition in the recipient. The
recipient shall use that property for the originally-authorized
purpose, and the recipient shall not encumber the property without
approval of the Federal awarding agency. When no longer needed for the
originally authorized purpose, disposition of the intangible property
shall occur in accordance with the provisions of Sec. 12.934(g).
Sec. 12.937 Property trust relationship.
Real property, equipment, intangible property and debt instruments
that are acquired or improved with Federal funds shall be held in trust
by the recipient as trustee for the beneficiaries of the project or
program under which the property was acquired or improved. Agencies may
require recipients to record liens or other appropriate notices of
record to indicate that personal or real property has been acquired or
improved with Federal funds and that use and disposition conditions
apply to the property.
Procurement Standard
Sec. 12.940 Purpose of procurement standards.
Sections 12.941 through 12.948 set forth standards for use by
recipients in establishing procedures for the procurement of supplies
and other expendable property, equipment, real property and other
services with Federal funds. These standards are furnished to ensure
that such materials and services are obtained in an effective manner
and in compliance with the provisions of applicable Federal statutes
and executive orders. No additional procurement standards or
requirements shall be imposed by the Federal awarding agencies upon
recipients, unless specifically required by Federal statute or
executive order or approved by OMB.
Sec. 12.941 Recipient responsibilities.
The standards contained in this section do not relieve the
recipient of the contractual responsibilities arising under its
contract(s). The recipient is the responsible authority, without
recourse to the Federal awarding agency, 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. 12.942 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. 12.943 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 bids or offer is
responsive to the solicitation and is most advantageous to the
recipient, price, quality and other factors considered. Solicitations
shall clearly set forth all requirements that the bidder or offeror
shall fulfill in order for the bid or offer to be evaluated by the
recipient. Any and all bids or offers may be rejected when it is in the
recipient's interest to do so. [[Page 17249]]
Sec. 12.944 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 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 use small
businesses, minority-owned firms, and women's business enterprises,
whenever possible. Recipients of Federal awards shall take all of the
following steps to further this goal.
(1) Ensure that small businesses, minority-owned firms, and women's
business enterprises are used to the fullest extent practicable.
(2) Make information on forthcoming opportunities available and
arrange time frames for purchases and contracts to encourage and
facilitate participation by small businesses, minority-owned firms, and
women's business enterprises.
(3) Consider in the contract process whether firms competing for
larger contracts intend to subcontract with small businesses, minority-
owned firms, and women's business enterprises.
(4) Encourage contracting with consortiums of small businesses,
minority-owned firms and women's business enterprises when a contract
is too large for one of these firms to handle individually.
(5) Use the services and assistance, as appropriate, of such
organizations as the Small Business Administration and the Department
of Commerce's Minority Business Development Agency in the solicitation
and utilization of small businesses, minority-owned firms and women's
business enterprises.
(c) The type of procuring instruments used (e.g., fixed price
contracts, cost reimbursable contracts, purchase orders, and incentive
contracts) shall be determined by the recipient but shall be
appropriate for the particular procurement and for promoting the best
interest of the program or project involved. The ``cost-plus-a-
percentage-of-cost'' or ``percentage of construction cost'' methods of
contracting shall not be used.
(d) Contracts shall be made only with responsible contractors who
possess the potential ability to perform successfully under the terms
and conditions of the proposed procurement. Consideration shall be
given to such matters as contractor integrity, 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.'' See 43 CFR part 12.
(e) Recipients shall, on request, make available for the Federal
awarding agency, pre-award review of procurement documents, such as
requests for proposals or invitations for bids, independent cost
estimates, etc., when any of the following conditions apply:
(1) A recipient's procurement procedures or operation fails to
comply with the procurement standards in this part.
(2) The procurement is expected to exceed the small purchase
threshold fixed at 41 U.S.C. 403 (11) (currently $100,000) and is to be
awarded without competition or only one bid or offer is received in
response to a solicitation.
(3) The procurement, which is expected to exceed the small purchase
threshold, specifies a ``brand name'' product.
(4) The proposed award over the small purchase threshold is to be
awarded to other than the apparent low bidder under a sealed bid
procurement.
(5) A proposed contract modification changes the scope of a
contract or increases the contract amount by more than the amount of
the small purchase threshold.
Sec. 12.945 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. 12.946 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. 12.947 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
documents, as appropriate, whether contractors have met the terms,
conditions and specifications of the contract.
Sec. 12.948 Contract provisions.
The recipient shall include, in addition to provisions to define a
sound and complete agreement, the provisions below in all contracts and
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 [[Page 17250]] guarantees, performance
bonds, and payment bonds unless the construction contract or
subcontract exceeds $100,000. For those contracts or subcontracts
exceeding $100,000, the Federal awarding agency may accept the bonding
policy and requirements of the recipient, provided the Federal awarding
agency has made a determination that the Federal Government's interest
is adequately protected. If such a determination has not been made, the
minimum requirements shall be as follows:
(1) A bid guarantee from each bidder equivalent to five percent of
the bid price. The ``bid guarantee'' shall consist of a firm commitment
such as a bid bond, certified check, or other negotiable instrument
accompanying a bid as assurance that the bidder shall, upon acceptance
of his bid, execute such contractual documents as may be required
within the time specified.
(2) A performance bond on the part of the contractor for 100
percent of the contract price. A ``performance bond'' is one executed
in connection with a contract to secure fulfillment of all the
contractor's obligations under such contract.
(3) A payment bond on the part of the contractor for 100 percent of
the contract price. A ``payment bond'' is one executed in connection
with a contract to assure payment as required by statute of all persons
supplying labor and material in the execution of the work provided for
in the contract.
(4) Where bonds are required in the situations described herein,
the bonds shall be obtained from companies holding certificates of
authority as acceptable sureties pursuant to 31 CFR part 223, ``Surety
Companies Doing Business with the United States.''
(d) All negotiated contracts (except those for less than the small
purchase threshold) awarded by recipients shall include a provision to
the effect that the recipient, the Federal awarding agency, 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 subpart, as applicable.
Reports and Records
Sec. 12.950 Purpose of reports and records.
Sections 12.951 through 12.953 set forth the procedures for
monitoring and reporting on the recipient's financial and program
performance and the necessary standard reporting forms. They also set
forth record retention requirements.
Sec. 12.951 Monitoring and reporting program performance.
(a) Recipients are responsible for managing and monitoring each
project, program, subaward, function or activity supported by the
award. Recipients shall monitor subawards to ensure subrecipients have
met the audit requirements as delineated in Sec. 12.926.
(b) The Federal awarding agency shall prescribe the frequency of
submission for performance reports. Except as provided in
Sec. 12.951(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 grant year; quarterly
or semi-annual reports shall be due 30 days after the reporting period.
The Federal awarding agency may require annual reports before the
anniversary dates of multiple year awards in lieu of these
requirements. The final performance reports are due 90 calendar days
after the expiration or termination of the award.
(c) A final technical or performance report shall be required after
completion of the project only if the awarding agency determines this
to be appropriate.
(d) When required, performance reports shall generally contain, for
each award, brief information on each of the following:
(1) A comparison of actual accomplishments with the goals and
objectives established for the period, the findings of the
investigator, or both. Whenever appropriate and the output of programs
or projects can be readily quantified, such quantitative data should be
related to cost data for computation of unit costs.
(2) Reasons why established goals were not met, if appropriate.
(3) Other pertinent information including, when appropriate,
analysis and explanation of cost overruns or high unit costs.
(e) Recipients shall not be required to submit more than the
original and two copies of performance reports.
(f) Recipients shall immediately notify the Federal awarding agency
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) Federal awarding agencies may make site visits, as needed.
(h) Federal awarding agencies shall comply with clearance
requirements of 5 CFR part 1320 when requesting performance data from
recipients.
Sec. 12.952 Financial reporting.
(a) The following forms or such other forms as may be approved by
OMB are authorized for obtaining financial information from recipients.
(1) SF-269 or SF-269A, Financial Status Report.
(i) Each Federal awarding agency will require recipients to use
either the SF-269 or SF-269A to report the status of funds for all
nonconstruction projects or programs. A Federal awarding agency 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 Federal awarding agency shall prescribe whether the report
shall be on a cash or accrual basis. If the Federal awarding agency
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 accrual
information through best estimates based upon an analysis of the
documentation on hand.
(iii) The Federal awarding agency shall determine the frequency of
the Financial Status Report for each project or program, considering
the size and complexity of the particular project or program. However,
the report shall not be required more frequently than quarterly or less
frequently than annually. A final report shall be required at the
completion of the agreement.
(iv) The Federal awarding agency shall require recipients to submit
the SF-269 or SF-269A (an original and no more than two copies) no
later than 30 days after the end of each specified reporting period for
quarterly and semi-annual reports, and 90 calendar days for annual and
final reports. Extensions of reporting due dates may be approved by the
Federal awarding agency upon request by the recipient.
(2) SF-272, Report of Federal Cash Transactions. [[Page 17251]]
(i) When funds are advanced to recipients, the Federal awarding
agency shall require each recipient to submit the SF-272 and, when
necessary, its continuation sheet, SF-272a. The Federal awarding agency
shall use this report to monitor cash advanced to recipients and to
obtain disbursement information for each agreement with the recipients.
(ii) Federal awarding agencies may require forecasts of Federal
cash requirements in the ``Remarks'' section of the report.
(iii) When practical and deemed necessary, Federal awarding
agencies may require recipients to report in the ``Remarks'' section
the amount of cash advances received in excess of three days.
Recipients shall provide short narrative explanations of actions taken
to reduce the excess balances.
(iv) Recipients shall be required to submit not more than the
original and two copies of the SF-272 15 calendar days following the
end of each quarter. The Federal awarding agencies may require a
monthly report from those recipients receiving advances totaling $1
million or more per year.
(v) Federal awarding agencies may waive the requirement for
submission of the SF-272 for any one of the following reasons:
(A) When monthly advances do not exceed $25,000 per recipient,
provided that such advances are monitored through other forms contained
in this section;
(B) If, in the Federal awarding agency's opinion, the recipient's
accounting controls are adequate to minimize excessive Federal
advances; or
(C) When the electronic payment mechanisms provide adequate data.
(b) When the Federal awarding agency needs additional information
or more frequent reports, the following shall be observed:
(1) When additional information is needed to comply with
legislative requirements, Federal awarding agencies shall issue
instructions to require recipients to submit such information under the
``Remarks'' section of the reports.
(2) When a Federal awarding agency determines that a recipient's
accounting system does not meet the standards in Sec. 12.921,
additional pertinent information to further monitor awards may be
obtained upon written notice to the recipient until such time as the
system is brought up to standard. The Federal awarding agency, in
obtaining this information, shall comply with report clearance
requirements of 5 CFR part 1320.
(3) Federal awarding agencies are encouraged to shade out any line
item on any report if not necessary.
(4) Federal awarding agencies may accept the identical information
from the recipients in machine readable format or computer printouts or
electronic outputs in lieu of prescribed formats.
(5) Federal awarding agencies may provide computer or electronic
outputs to recipients when such action expedites or contributes to the
accuracy or reporting.
Sec. 12.953 Retention and access requirements for records.
(a) This section sets forth requirements for record retention and
access to records for awards to recipients. Federal awarding agencies
shall not impose any other record retention or access requirements upon
recipients.
(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. The only exceptions are the following:
(1) If any litigation, claim, or audit is started before the
expiration of the 3-year period, the records shall be retained until
all litigation, claims or audit findings involving the records have
been resolved and final action taken.
(2) Records for real property and equipment acquired with Federal
funds shall be retained for 3 years after final disposition.
(3) When records are transferred to or maintained by the Federal
awarding agency, the 3-year retention requirement is not applicable to
the recipient.
(4) Indirect cost rate proposals, cost allocation plans, etc., as
specified in Sec. 12.953(g).
(c) Copies of original records may be substituted for the original
records if authorized by the Federal awarding agency.
(d) The Federal awarding agency will request transfer of certain
records to its custody from recipients when it determines that the
records possess long term retention value. However, in order to avoid
duplicate recordkeeping, a Federal awarding agency may make
arrangements for recipients to retain any records that are continuously
needed for joint use.
(e) The Federal awarding agency, the Inspector General, Comptroller
General of the United States, or any of their duly authorized
representatives, have the right of timely and unrestricted access to
any books, documents, papers, or other records of recipients that are
pertinent to the awards, in order to make audits, examinations,
excerpts, transcripts and copies of such documents. This right also
includes timely and reasonable access to a recipient's personnel for
the purpose of interview and discussion related to such documents. The
rights of access in this paragraph are not limited to the required
retention period, but shall last as long as records are retained.
(f) Unless required by statute, no Federal awarding agency shall
place restrictions on recipients that limit public access to the
records of recipients that are pertinent to an award, except when the
Federal awarding agency can demonstrate that such records shall be kept
confidential and would have been exempted from disclosure pursuant to
the Freedom of Information Act (5 U.S.C. 552) if the records had
belonged to the Federal awarding agency.
(g) Indirect cost rate proposals, cost allocation plans, etc.
Paragraphs (g)(1) and (g)(2) of this section apply to the following
types of documents, and their supporting records: indirect cost rate
computations or proposals, cost allocation plans, and any similar
accounting computations of the rate at which a particular group of
costs is chargeable (such as computer usage chargeback rates or
composite fringe benefit rates).
(1) If submitted for negotiation. If the recipient submits to the
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 the 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.
Termination and Enforcement
Sec. 12.960 Purpose of termination and enforcement.
Sections 12.961 and 12.962 set forth uniform suspension,
termination and enforcement procedures. [[Page 17252]]
Sec. 12.961 Termination.
(a) Awards may be terminated in whole or in part only if paragraph
(a)(1), (a)(2) or (a)(3) of this section applies.
(1) By the Federal awarding agency, if a recipient materially fails
to comply with the terms and conditions of an award.
(2) By the Federal awarding agency with the consent of the
recipient, in which case the two parties shall agree upon the
termination conditions, including the effective date and, in the case
of partial termination, the portion to be terminated.
(3) By the recipient upon sending to the Federal awarding agency
written notification setting forth the reasons for such termination,
the effective date, and, in the case of partial termination, the
portion to be terminated. However, if the Federal awarding agency
determines in the case of partial termination that the reduced or
modified portion of the grant will not accomplish the purposes for
which the grant was made, it may terminate the grant in its entirety
under either paragraph (a) (1) or (2) of this section.
(b) If costs are allowed under an award, the responsibilities of
the recipient referred to in Sec. 12.971(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. 12.962 Enforcement.
(a) Remedies for noncompliance. If a recipient materially fails to
comply with the terms and conditions of an award, whether stated in a
Federal statute, regulation, assurance, application, or notice of
award, the Federal awarding agency may, in addition to imposing any of
the special conditions outlined in Sec. 12.914, take one or more of the
following actions, as appropriate in the circumstances.
(1) Temporarily withhold cash payments pending correction of the
deficiency by the recipient or more severe enforcement action by the
Federal awarding agency.
(2) Disallow (that is, deny both use of funds and any applicable
matching credit for) all or part of the cost of the activity or action
not in compliance.
(3) Wholly or partly suspend or terminate the current award.
(4) Withhold further awards for the project or program.
(5) Take other remedies that may be legally available.
(b) Hearings and appeals. In taking an enforcement action, the
awarding agency shall provide the recipient an opportunity for hearing,
appeal, or other administrative proceeding to which the recipient is
entitled under any statute or regulation applicable to the action
involved.
(c) Effects of suspension and termination. Costs of a recipient
resulting from obligations incurred by the recipient during a
suspension or after termination of an award are not allowable unless
the Federal awarding agency expressly authorizes them in the notice of
suspension or termination or subsequently. Other recipient costs during
suspension or after termination which are necessary and not reasonably
avoidable are allowable if paragraphs (c) (1) and (2) of this section
apply:
(1) The costs result from obligations which are properly incurred
by the recipient before the effective date of suspension or
termination, are not in anticipation of it, and in the case of a
termination, are noncancellable.
(2) The costs would be allowable if the award were not suspended or
expired normally at the end of the funding period in which the
termination takes effect.
(d) Relationship to debarment and suspension. The enforcement
remedies identified in this section, including suspension and
termination, do not preclude a recipient from being subject to
debarment and suspension under E.O.s 12549 and 12689 and the Federal
awarding agency implementing regulations (see 43 CFR part 12).
After-the-Award Requirements
Sec. 12.970 Purpose.
Sections 12.971 through 12.973 contain closeout procedures and
other procedures for subsequent disallowances and adjustments.
Sec. 12.971 Closeout procedures.
(a) Recipients shall submit, within 90 calendar days after the date
of completion of the award, all financial, performance, and other
reports as required by the terms and conditions of the award. The
Federal awarding agency may approve extensions when requested by the
recipient.
(b) Unless the Federal awarding agency 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) The Federal awarding agency shall make prompt payments to a
recipient for allowable reimbursable costs under the award being closed
out.
(d) The recipient shall promptly refund any balances of unobligated
cash that the Federal awarding agency has advanced or paid and that is
not authorized to be retained by the recipient for use in other
projects. OMB Circular A-129 governs unreturned amounts that become
delinquent debts.
(e) When authorized by the terms and conditions of the award, the
Federal awarding agency 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. 12.931 through 12.937.
(g) If a final audit has not been performed prior to the closeout
of an award, the Federal awarding agency shall retain the right to
recover an appropriate amount after fully considering the
recommendations on disallowed costs resulting from the final audit.
Sec. 12.972 Subsequent adjustments and continuing responsibilities.
(a) The closeout of an award does not affect any of the following.
(1) The right of the Federal awarding agency to disallow costs and
recover funds on the basis of a later audit or other review.
(2) The obligation of the recipient to return any funds due as a
result of later refunds, corrections, or other transactions.
(3) Audit requirements in Sec. 12.926.
(4) Property management requirements in Secs. 12.931 through
12.937.
(5) Records retention as required in Sec. 12.953.
(b) After closeout of an award, a relationship created under an
award may be modified or ended in whole or in part with the consent of
the Federal awarding agency and the recipient, provided the
responsibilities of the recipient referred to in Sec. 12.973(a),
including those for property management as applicable, are considered
and provisions made for continuing responsibilities of the recipient,
as appropriate.
Sec. 12.973 Collection of amounts due.
(a) Any funds paid to a recipient in excess of the amount to which
the recipient is finally determined to be entitled under the terms and
conditions of the award constitute a debt to the Federal Government. If
not paid within a reasonable period after the demand for payment, the
Federal awarding agency may reduce the debt by paragraph (a) (1), (2)
or (3) of this section: [[Page 17253]]
(1) Making an administrative offset against other requests for
reimbursements.
(2) Withholding advance payments otherwise due to the recipient.
(3) Taking other action permitted by statute.
(b) Except as otherwise provided by law, the Federal awarding
agency shall charge interest on an overdue debt in accordance with 4
CFR chapter II, ``Federal Claims Collection Standards.''
Appendix A to Subpart F--Contract Provisions
All contracts awarded by a recipient, including small purchases,
shall contain the following provisions as applicable:
1. Equal Employment Opportunity--All contracts shall contain a
provision requiring compliance with E.O. 11246, ``Equal Employment
Opportunity,'' as amended by E.O. 11375, ``Amending Executive Order
11246 Relating to Equal Employment Opportunity,'' and as
supplemented by regulations at 41 CFR part 60, ``Office of Federal
Contract Compliance Programs, Equal Employment Opportunity,
Department of Labor.''
2. Copeland ``Anti-Kickback'' Act (18 U.S.C. 874 and 40 U.S.C.
276c)--All contracts and subgrants in excess of $100,000 for
construction or repair awarded by recipients and subrecipients shall
include a provision for compliance with the Copeland ``Anti-
Kickback'' Act (18 U.S.C. 874), as supplemented by Department of
Labor regulations (29 CFR part 3, ``Contractors and Subcontractors
on Public Building or Public Work Financed in Whole or in Part by
Loans or Grants from the United States''). The Act provides that
each contractor or subrecipient shall be prohibited from inducing,
by any means, any person employed in the construction, completion,
or repair of public work, to give up any part of the compensation to
which he is otherwise entitled. The recipient shall report all
suspected or reported violations to 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 contracts
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 $100,000 for construction contracts and for other
contracts that involve the employment of mechanics or laborers shall
include a provision for compliance with sections 102 and 107 of the
Contract Work Hours and Safety Standards Act (40 U.S.C. 327-333), as
supplemented by Department of Labor regulations (29 CFR part 5).
Under section 102 of the Act, each contractor shall be required to
compute the wages of every mechanic and laborer on the basis of a
standard 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 subgrants of amounts in excess of $100,000 shall
contain a provision that requires the recipient to agree to comply
with all applicable standards, orders or regulations issued pursuant
to the Clean Air Act (42 U.S.C. 7401 et seq.) and the Federal Water
Pollution Control Act as amended (33 U.S.C. 1251 et seq.).
Violations shall be reported to 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 of more than $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)--No
contracts shall be made to parties listed on 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 their exclusion status and that of their
principals.
[FR Doc. 95-8175 Filed 4-4-95; 8:45 am]
BILLING CODE 4310-RF-M