[Federal Register Volume 63, Number 190 (Thursday, October 1, 1998)]
[Notices]
[Pages 52693-52696]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-26319]


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ENVIRONMENTAL PROTECTION AGENCY

[FRL-6171-1]


Implementation Order to Streamline Small Grants

AGENCY: Environmental Protection Agency.

ACTION: Notice.

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SUMMARY: The Environmental Protection Agency is issuing an 
Implementation Order to Streamline Small Grants. The purpose of the 
order is to simplify and

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improve the administration of Small Grants. The Agency has determined 
that small grant recipients should not be subject to the same 
administrative requirements and procedures as larger grant recipients. 
The Small Grants Order does not change EPA's regulatory or statutory 
requirements. This policy will allow the Agency more time to focus on 
technical assistance to grantees and promoting partnerships.

DATES: The Order becomes effective October 1, 1998.

FOR FURTHER INFORMATION CONTACT: Linda Yancey, Grants Administration 
Division, Environmental Protection Agency, 401 M Street, SW (3903R), 
Washington, DC 20460 (202) 564-5352.

SUPPLEMENTARY INFORMATION: The Order follows and is available for 
viewing on the Internet at http://www.epa.gov/
ogd/. The Funding Recommendation, Decision and Approval Package 
identified as an attachment to the policy is not included in this 
notice since it is used as an internal Agency document only.

Implementation Order to Streamline Small Grants

Classification No. 5700.2
Approval Date 9/1/98

    1. Purpose. To simplify and improve administration of small grants 
and cooperative agreements without compromising standards of 
accountability.
    2. Applicability. This order applies to all grants and cooperative 
agreements (hereinafter referred to as ``small grants'' or ``grants'') 
$100,000 or less in Federal funds; have budget and project periods 
which are of the same duration; and for which the total amount of 
Federal grant funds is obligated at the time of award. This order does 
not apply to the following: Performance Partnership grants; Fellowship 
grants; loans; Senior Environmental Employment (SEE) Program 
Cooperative Agreements; Environmental Program Grants to State, 
Interstate and Local agencies; Construction Grants; Superfund 
Cooperative Agreements awarded under 40 CFR Part 35, Subpart O; and the 
State Revolving Fund Program Capitalization Grants.
    This order does not relieve recipients from complying with any 
statute or regulation. The order clarifies situations when a more 
flexible approach can be used if a grant award is $100,000 or less. EPA 
considers submission of an application by a small grant recipient as 
the applicant's assurance that it will meet the following criteria: (1) 
a satisfactory performance record for completion of projects and 
subagreements; (2) sound fiscal management including accounting and 
auditing procedures adequate to control property, funds, and assets; 
and (3) technical qualifications, experience, organization, and 
facilities adequate to carry out the project, or a demonstrated ability 
to obtain these.
    Agency officials must comply with this order unless the applicant/
recipient is a high risk grantee under 40 CFR 31.12 or is subject to 
special award conditions under 40 CFR 30.14.
    3. Effective date. This policy is effective for all new grants 
awarded on or after October 1, 1998.
    4. Background. The number of EPA grant programs has increased five-
fold over the past ten years with a dramatic increase in grant awards 
of $100,000 or less on average. These small awards account for about 
50% of new project grant awards, but less than 5% of the respective 
assistance dollars awarded.
    Current practice subjects all grant awards regardless of the dollar 
amount to the same administrative requirements and procedures. This 
order reduces the administrative burden for both the EPA and the 
applicant/recipient while maintaining sufficient accountability. Its 
intent is to increase customer satisfaction and to focus EPA's limited 
resources on larger dollar grant programs.
    5. Definitions.
    a. Advance Payment. A payment made by Treasury check or other 
appropriate payment mechanism to a recipient either before outlays are 
made by the recipient or through the use of pre-determined payment 
schedules.
    b. Approval Official. An EPA official delegated the authority to 
approve or reject applications for assistance and the technical/
programmatic terms and conditions of proposed assistance projects.
    c. Award Official. The EPA official with the authority to execute 
assistance agreements and to take other actions authorized by 40 CFR 
Chapter I, Subchapter A and by EPA Orders.
    d. Funding Recommendation, Decision and Approval Package. The EPA 
Program Office's memorandum containing the decision and justification 
to fund an assistance proposal. The memorandum is sent to the Grants 
Management Office (GMO) as part of the assistance funding package. (See 
attached suggested Model Funding Recommendation, Decision and Approval 
Package).
    e. Indirect Cost Rate Proposal. The documentation prepared by an 
organization to substantiate its claim for the reimbursement of 
indirect costs.
    f. Supplemental Funding. Additional funding over and above what was 
agreed upon in the grant agreement for a given budget period.
    6. Policy. This order establishes simplified and streamlined 
policies for small grants. Receipt of a small grant does not relieve 
the applicant/recipient from compliance with any statute, circular or 
regulation. In furtherance of this new approach, EPA establishes the 
following for Small Grants:
    a. Limitation on Number of Application Copies Required for 
Submission. Applicants are required to submit only the original 
application and one copy to EPA unless otherwise required by the 
regulations.
    b. Abbreviated Workplan and Resume. The narrative workplan should 
not exceed five pages in length. The workplan must include: 1) a 
summary of specific objectives, expected outcomes and deliverables; and 
2) a discussion of the budget and how the budget relates to the 
objectives, outcomes and deliverables in the workplan. Resumes and 
supplementary biographical information, if any, should not exceed an 
additional two pages.
    c. Budget. Applicants are not required to submit supporting budget 
detail over and beyond the object class categories identified on the 
applicant's Form 424A (formal budget page). The EPA Program Office 
should base the reasonableness of the cost of the grant on their 
evaluation of the workplan, using their technical knowledge and 
previous experience with similar work. The workplan should stand on its 
own merit in support of project costs. If the Program Office is unable 
to make a determination solely on this basis, they should first request 
additional information on how the workplan supports the budget. 
However, there may be some circumstances where evaluating the workplan 
alone is insufficient to make a reasonableness determination. In these 
situations, the Program Office or Grants Management Office may request 
additional supporting budget information.
    d. Recipients Without Negotiated Indirect Cost Rates (ICR). Those 
applicants requesting reimbursement for indirect costs and who do not 
have an established indirect cost rate with a Federal agency must 
prepare an Indirect Cost Rate Proposal but are only required to retain 
it in their files, subject to audit. The proposal must be based on 
guidance in the EPA Booklet ``Preparing Indirect Cost Proposals for 
Grants and Contracts'' (August 1990).
    e. Projects Must Be Fully Funded By The Program Office. The EPA 
Approval Official must fully fund the project at

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the time of award. The EPA Award Official must obligate the entire 
amount of a small grant at the time of award. However, from time-to-
time, emergency, unusual or unanticipated circumstances warrant 
additional funds being added to a grant. Additional funding for 
unanticipated or unusual circumstances to a small grant is permissible 
provided the entire grant (original grant + additional funding) does 
not exceed $100,000. The intent is to provide flexibility for 
infrequent and unusual situations. Once the additional funds cause the 
grant to exceed the $100,000 threshold, the additional funding segment 
is not entitled to the Small Grant policy and procedures.
    f. Streamlined Funding Recommendation Process. Grants Management 
Offices should streamline their Funding Recommendation package 
documenting program approval/funding requests. They may utilize the 
attached Model Small Grants Funding Recommendation, Decision and 
Approval Package.
     g. Terms and Conditions. For small grant awards, GMOs must keep 
administrative terms and conditions to a minimum. Specifically, terms 
and conditions which merely restate statutory or regulatory 
requirements shall be eliminated. Instead, the GMOs will provide 
recipients with copies of the relevant regulatory requirements. 
However, terms and conditions detailing reporting requirements may be 
included in the assistance agreement at the discretion of the GMO or 
Program Office.
    h. Limitation on Length of Award Document. The GMO will ensure that 
the EPA award document will, to the maximum extent possible, not exceed 
four pages in length.
    i. Payment Policy.
    All Small Grant Recipients. GMOs will work with Program Offices and 
Servicing Finance Offices to ensure small grant payments are made 
quickly. To ensure expeditious reimbursement of payment requests, 
recipients of small grants should submit requests for payment directly 
to the EPA Servicing Finance Office. Recipients shall be reimbursed for 
grant-related eligible, allocable, allowable, and reasonable costs up 
to the amount of the grant which have been incurred and which the 
recipients are currently and legally obligated to pay. Project Officers 
and GMOs shall monitor grantee performance and compliance with 
applicable rules, and when appropriate, may recommend withholding or 
requiring prior approval of future grant payments.
    Small Grants $5,000 or Less. Recipients of small grants up to and 
including $5,000 may request an advance payment of up to eighty (80) 
percent of the total Federal share of the project by submitting a 
Request for Advance or Reimbursement (Form SF-270) upon acceptance of 
the assistance agreement. The remaining twenty (20) percent will be 
reimbursed to the recipient upon satisfactory completion of the Final 
Project Report and Final Financial Status Report.
    j. Simplified Minority Business Enterprise/Women's Business 
Enterprise Reporting Requirements. Small Grant recipients awarded 
assistance agreements under 40 CFR Part 30 (i.e., Institutions of 
Higher Education, Hospitals and other Non-Profit Organizations) will 
meet MBE/WBE reporting requirements by submitting a MBE/WBE Utilization 
Form (Standard Form 5700-52A) on an annual basis. The reports are due 
within one month after the end of the Federal fiscal year. Small Grant 
recipients awarded assistance agreements under 40 CFR Part 31 (i.e., 
State and Local Governments) will meet MBE/WBE reporting requirements 
by submitting a MBE/WBE Utilization Form (Standard Form 5700-52A) on a 
quarterly basis. The reports are due within one month after the end of 
each Federal fiscal year quarter.
    k. Final Technical or Performance Report. Recipients are not 
required to submit more than the original and two copies of the final 
technical or performance report. The report must include actual 
outcomes based on the objectives identified in the workplan.
    l. Pre-award Costs Permitted. Small Grant recipients awarded 
assistance agreements under 40 CFR Part 30 may incur allowable pre-
award costs up to 90 calendar days prior to award without the prior 
written approval of EPA. However, all pre-award costs are incurred at 
the recipient's risk (i.e., EPA is under no obligation to reimburse 
such costs if for any reason the applicant does not receive an award or 
if the award is less than anticipated and inadequate to cover such 
costs); and EPA will only allow pre-award costs without prior written 
approval if there are sufficient programmatic reasons for incurring the 
expenditures prior to the award (e.g., time constraints, weather 
factors, etc.), they are in conformance with the appropriate cost 
principles, and any procurement complies with the requirements of this 
policy. Further, recipients may be reimbursed for pre-award costs they 
incur 90 days prior to award provided they include such costs in the 
application and the application in its entirety is approved by EPA.
    7. Roles and Responsibilities.
    In addition to the roles and responsibilities cited in Section 5, 
``Policy'', the following are actions the Grants Management Office, 
Program Office and recipient are expected to take:
a. Grants Management Office
    (1) Develop and distribute application kits.
    (2) Provide the same level of advice, technical assistance and 
guidance to potential applicants and small award recipients as they 
would to any other recipients.
    (3) Ensure application includes all essential information (e.g., 
assurances, certifications, narrative).
    (4) Ensure that all elements of the application and funding package 
comply with EPA's legal and regulatory requirements.
    (5) Review application and determine eligibility of EPA assistance 
recipients to receive indirect costs.
    (6) Determine that the grantee has sound financial management.
    (7) Prepare awards/amendments.
    (8) Monitor the financial and management aspects of awards through 
reviews of reports, correspondence, site visits, or other appropriate 
means.
    (9) Ensure timely close out of awards when all project work in the 
agreement is completed.
b. Program Office
    (1) Ensure applicant's workplan reasonably and clearly explains how 
the activities will be accomplished, and contains well-defined 
commitments and outputs that foster accountability.
    (2) Determine that the applicant has technical qualifications to 
perform the work.
    (3) Review the workplan and budget (along with the GMO) to 
determine appropriateness and reasonableness of the project, whether 
they comply with program regulations and guidelines, and identify any 
deficiencies in the application.
    (4) If the proposal is approved, prepare and forward a funding 
recommendation, which consists of the following primary documents: (1) 
Commitment Notice (EPA Form 2550-9), and (2) Decision Documentation 
(See Model Small Awards Decision Memo) to the appropriate GMO.
    (5) Monitor the recipient's progress on the project.
    (6) Conduct periodic reviews to assure that the recipient is 
complying with applicable regulations and programmatic terms and 
conditions of the agreement.

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    (7) Ensure that any/all deliverables required under the award are 
received, and are acceptable in a timely manner.
c. Recipient
    (1) Expend and account for funds in accordance with the assistance 
agreement, program regulations and statutes.
    (2) Maintain sound fiscal management.
    (3) Comply with all applicable reporting requirements, including 
submitting timely Financial Status Reports, Final Technical Reports, 
Property Reports and MBE/WBE Reports.
    8. Additional References.
    a. Federal Grant and Cooperative Agreement Act of 1977 (FGCAA), 31 
U.S.C. 6301-6308.
    b. 40 CFR Parts 30, 31, 35, 40, 45, and 47.
    c. OMB Circular A-110.
    d. OMB Circular A-102.
    e. OMB Circular A-133.
    f. OMB Circular A-87.
    g. EPA Assistance Administration (AA) Manual.
    h. EPA--Managing Your Financial Assistance Agreement--Project 
Officer Responsibilities.
    i. EPA 96-1 Indirect Cost Policy for Nonprofit Organizations and 
Educational Institutions.
    9. For Further Information: For further information regarding this 
Order, please contact: Chief, Policy, Information and Training Branch, 
Grants Administration Division on (202) 564-5325.

    (Agency Policy)
    Dated September 24, 1998.
Gary M. Katz,
Director, Grants Administration Division.
[FR Doc. 98-26319 Filed 9-30-98; 8:45 am]
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