[Federal Register Volume 64, Number 22 (Wednesday, February 3, 1999)]
[Rules and Regulations]
[Pages 5348-5486]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-1983]



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_______________________________________________________________________

Part II





Department of Commerce





_______________________________________________________________________



Economic Development Administration



_______________________________________________________________________



13 CFR Chapter III



Economic Development Administration Regulations; Revision To Implement 
the Economic Development Reform Act of 1998; Interim Rule

  Federal Register / Vol. 64, No. 22 / Wednesday, February 3, 1999 / 
Rules and Regulations  

[[Page 5348]]



DEPARTMENT OF COMMERCE

Economic Development Administration

13 CFR Chapter III

[Docket No. 990106003-9003-01]
RIN 0610-AA56


Economic Development Administration Regulations; Revision To 
Implement the Economic Development Reform Act of 1998

AGENCY: Economic Development Administration (EDA), Department of 
Commerce (DoC).

ACTION: Interim rule with request for comments.

-----------------------------------------------------------------------

SUMMARY: The purpose of this interim-final rule is to revise 
regulations of the Economic Development Administration (EDA) to 
implement the comprehensive amendment to the Public Works and Economic 
Development Act of 1965, as amended, by the Economic Development 
Administration Reform Act of 1998 (Pub. L.105-393).

DATES: Effective date: February 11, 1999.
    Comment date: Comments are due on or before April 5, 1999.

ADDRESSES: Send comments to Edward M. Levin, Chief Counsel, Economic 
Development Administration, U.S. Department of Commerce, Herbert C. 
Hoover Building, 1401 Constitution Avenue, NW, Room 7005, Washington, 
DC 20230

FOR FURTHER INFORMATION CONTACT: Edward M. Levin, Chief Counsel, 
Telephone Number 202-482-4687, fax 202-482-5671, and e-mail 
EL[email protected].

SUPPLEMENTARY INFORMATION:

Background

    The Economic Development Administration (EDA) was reauthorized for 
a five-year period by legislation enacted on November 13, 1998. 
Congress had not authorized the agency since 1982. This legislative 
accomplishment will create stability and opportunities for EDA to 
better serve economically distressed communities across the country.
    EDA continues to take steps toward improving its program delivery, 
policies and procedures, and to be more responsive to those whom it 
serves. In step with the National Performance Review and Paperwork 
Reduction Act, EDA had completely revised its regulations, thereby 
creating fewer burdens on and making them more accessible to the 
public. This interim-final rule continues EDA's efforts in this regard.

Description of Major Changes

    This interim-final rule removes, adds, redesignates and revises 
parts and sections of EDA's regulations at 13 CFR Chapter III to 
implement Pub. L. 105-393 and to continue the streamlining and plain 
language initiatives of this administration. Significant changes are 
described below.

Removals of Parts and Sections

    Certain parts and sections have been removed because the programs 
to which these regulations apply were deleted by Pub. L. 105-393 as 
follows: Part 302 Economic Development Districts, Subpart B--Standards 
for Designation, Modification, and Termination of Economic Development 
Centers and Subpart C, Financial and Other Assistance to Economic 
Development Centers and Districts; part 312, Supplemental and Basic 
Assistance Under Section 304 of the Act; references to and requirements 
under the Public Works Impact Program in parts 301 and 305 and 
Sec. 316.3; Sec. 305.10 Construction cost increases; Sec. 316.2 
Certification as to waste treatment, and Sec. 316.5 Electric and gas 
facilities.
    Other parts and sections were removed to streamline and simplify 
the rules such as: Sec. 302.1 Authorization of Economic Development 
Districts, and Sec. 305.12 Variance in cost of grant projects.

New Parts and Sections

    New parts and sections have been added to implement Pub. L. 105-393 
as follows: Pursuant to sec. 302 of Pub. L. 105-393, new language has 
been added in Secs. 301.3, 305.3 and 308.5 on requirements for 
strategies for public works and economic adjustment projects (except 
for planning); pursuant to sec. 601 of Pub. L. 105-393, with EDA's 
prior written approval EDA may release its grant related property 
interests 20 years after the grant award, and Sec. 314.11(b) releases 
all real and personal property in projects funded under Pub. L. 94-369, 
as amended by Pub. L. 95-28. Other sections have been added in light of 
new provisions in Pub. L. 105-393, such as Sec. 316.13 Economic 
development information clearinghouse, Sec. 316.17 Acceptance of 
certifications by applicants, and Sec. 316.18 Reports by recipients, 
and part 318 Evaluations of Economic Development Districts and 
University Centers.
    New parts of sections have been added for other reasons, for 
example, Sec. 314.3(c) defines ``adequate consideration'' to 
distinguish it from fair market value; and Sec. 314.7(c) provides 
exceptions to the title requirement when for example, a railroad or 
state or local highway is part of the EDA funded project.

Significant Revisions

    Part 301--Designation of Areas has been substantially rewritten 
because under Pub. L. 105-393 areas designated by EDA prior to the 
effective date of Pub. L. 105-393 will no longer be so designated and 
areas thereafter will be determined on a project by project basis (for 
public works and economic adjustment projects, except for planning 
activities); and Sec. 316.2 has been redesignated and substantially 
changed to more accurately reflect statutory intent and practices and 
procedures for determining if a project would result in excess 
capacity.
    Other significant changes--Grant rates have been modified at 
Sec. 301.4 to cover all EDA grants (not just public works awards) and 
to reflect changed unemployment conditions; and Sec. 308.3 has been 
changed to revise area criteria for economic adjustment projects to 
emphasize unique economic adjustment tools.

Note

     EDA has recently established a task force to examine 
its Revolving Loan Fund (RLF) program as described in part 308 of 
these rules. The results of this task force may lead to changes in 
EDA's RLF program.
     An interest rate buy down program (see Sec. 308.3), is 
being considered under EDA's Economic Adjustment program. 
Suggestions on structuring and implementing such a program are 
welcome.
     As part of the economic development clearinghouse 
described in Sec. 316.14, EDA's Office of Economic Development 
Information is accessible on the internet web sites at http://
www.doc.gov/eda and http://netsite.esa.doc.gov/oeci.

                            Table of Changes
------------------------------------------------------------------------
                                                       Description of
         Old section               New section             change
------------------------------------------------------------------------
Sec.  300.1.................  Sec.  300.1.........  Renamed and changed
                                                     for Plain Language
                                                     purposes.

[[Page 5349]]

 
Part 301--Designation of      Part 301--General     Renamed.
 areas.                        eligibility and
                               grant rate
                               requirements.
Secs.  301.1-301.16.........  ....................  Removed since under
                                                     Pub. L. 105-393
                                                     there is no longer
                                                     area designation
                                                     except on a project-
                                                     by-project basis.
                              Secs.  301.1-301.4..  New Secs.  include
                                                     information and
                                                     requirements about
                                                     applicants, area
                                                     eligibility,
                                                     strategy required
                                                     and grant rates.
Sec.  302.1.................  ....................  Removed.
Sec.  302.2.................  Sec.  302.1.........  Redesignated and
                                                     modified for Plain
                                                     Language purposes.
Sec.  302.3.................  Sec.  302.2.........  Redesignated and
                                                     modified for Plain
                                                     Language purposes.
Sec.  302.4.................  Sec.  302.3.........  Redesignated and
                                                     modified for Plain
                                                     Language purposes.
Sec.  302.5.................  Sec.  302.4.........  Redesignated and
                                                     modified for Plain
                                                     Language purposes.
Sec.  302.6.................  Sec.  302.4.........  Made part of this
                                                     new section.
Sec.  302.7.................  Sec.  302.5.........  Redesignated and
                                                     streamlined.
Sec.  302.8.................  Sec.  302.6.........  Redesignated,
                                                     modified and
                                                     streamlined.
Sec.  302.9.................  Sec.  301.4(d)......  Redesignated,
                                                     terminology
                                                     modified, and
                                                     portions removed
                                                     since Economic
                                                     Development Centers
                                                     are no longer part
                                                     of PWEDA
                              Sec.  302.7.........  New under Pub. L.
                                                     105-393.
Secs.  302.10-302.19........  ....................  Removed since
                                                     Economic
                                                     Development Centers
                                                     are no longer part
                                                     of PWEDA.
Part 303--Overall Economic    Part 303--Planning    Renamed.
 Development Program.          Process and
                               Strategies for
                               District and Other
                               Planning
                               Organizations
                               Supported by EDA.
Sec.  303.1.................  Sec.  303.1.........  Renamed and modified
                                                     to add definitions
                                                     and streamlined.
Secs.  303.2, 303.3.........  ....................  Removed.
Secs.  303.4, 303.5, 303.6..  Secs.  303.2, 303.3.  Renamed and revised
                                                     for Plain Language
                                                     purposes and
                                                     consistent with
                                                     Pub. L. 105-393.
Sec.  304.1.................  Secs.  304.1, 304.2.  Renamed and revised
                                                     to make more
                                                     accessible to
                                                     reader.
Sec.  304.2.................  Secs.  307.11,        Renamed and
                               307.14.               redesignated to
                                                     implement Pub. L.
                                                     105-393.
Part 305--Public Works and    ....................  Part 305--Grants for
 Development Facilities                              Public Works and
 Program.                                            Development
                                                     Facilities Renamed.
Sec.  305.2.................  Sec.  300.2.........  Renamed and
                                                     applicable to all
                                                     programs.
                              Sec.  305.3.........  Application
                                                     requirements.
Secs.  305.3, 305.4.........  Sec.  305.2.........  Renamed, merged and
                                                     modified to
                                                     implement Pub. L.
                                                     105-393.
Secs.  305.5, 305.6.........  Sec.  305.4.........  Renamed, combined
                                                     and modified to
                                                     implement Pub. L.
                                                     105-393.
Sec.  305.7.................  ....................  Removed.
Secs.  305.8, 305.9.........  Sec.  301.4.........  Renamed and
                                                     applicable to all
                                                     programs.
Sec.  305.10................  ....................  Removed.
Sec.  305.11................  Sec.  305.5.........  Redesignated and
                                                     revised to make
                                                     more accessible to
                                                     reader.
Sec.  305.12................  ....................  Removed.
Sec.  305.13................  Sec.  305.6.........  Redesignated.
                              Sec.  305.7.........  Added for guidelines
                                                     and reports.
Part 306 [Reserved]; Part     Part 306--Planning    Renamed and revised
 307--Local Technical          Assistance.           under Pub. L. 105-
 Assistance, University                              393 and for Plain
 Center Technical                                    Language purposes.
 Assistance, National
 Technical Assistance,
 Research and Evaluation and
 Planning--Subpart E--
 Economic Development
 Districts American Indian
 Tribes and Redevelopment
 Areas Economic Development
 Planning Grants and Subpart
 F--State and Urban
 Development Planning Grants.
Part 307--Local Technical     Part 307--Local       Renamed consistent
 Assistance, University        Technical             with Pub. L. 105-
 Center Technical              Assistance,           393.
 Assistance, National          University Center
 Technical Assistance,         Technical
 Research and Evaluation and   Assistance,
 Planning.                     National Technical
                               Assistance,
                               Training, Research
                               and Evaluation.
Sec.  307.2.................  Sec.  300.2.........  Redesignated to
                                                     apply to all
                                                     programs and this
                                                     program in
                                                     particular.
Secs.  307.3, 307.4.........  Sec.  307.2.........  Renamed, merged and
                                                     revised to make
                                                     more accessible to
                                                     reader.

[[Page 5350]]

 
Sec.  307.5.................  Sec.  307.3.........  Renamed,
                                                     redesignated and
                                                     revised to make
                                                     more accessible to
                                                     reader and in
                                                     accordance with
                                                     Pub. L. 105-393.
Sec.  307.6.................  Sec.  307.4.........  Redesignated.
Sec.  307.7.................  Sec.  300.2.........  Redesignated to
                                                     apply to all
                                                     programs and this
                                                     program in
                                                     particular.
Secs.  307.8, 307.9.........  Sec.  307.5.........  Renamed, merged and
                                                     revised to make
                                                     more accessible to
                                                     reader.
Sec.  307.10................  Sec.  307.6.........  Renamed,
                                                     redesignated and
                                                     revised to make
                                                     more accessible to
                                                     reader and in
                                                     accordance with
                                                     Pub. L. 105-393.
Subpart C--National           Subpart C--National   Renamed, merged and
 Technical Assistance,         Technical             redesignated to be
 Subpart D--Research and       Assistance,           consistent with
 Evaluation.                   Training, Research,   Pub. L. 105-393.
                               and Evaluation.
Secs.  307.11, 307.16.......  Sec.  307.7.........  Redesignated, merged
                                                     and revised to make
                                                     more accessible to
                                                     reader.
Secs.  307.12, 307.17.......  Sec.  300.2.........  Renamed and merged
                                                     as applicable to
                                                     all programs and to
                                                     this program in
                                                     particular.
Secs.  307.13, 307.14,        Sec.  307.8.........  Renamed, merged and
 307.18, 307.19.                                     revised to make
                                                     more accessible to
                                                     reader.
Secs.  307.15, 307.21.......  Sec.  307.9.........  Renamed, revised and
                                                     modified for Plain
                                                     Language purposes.
Sec.  307.20................  ....................  Removed--will be in
                                                     Notice(s) of
                                                     Funding
                                                     Availability--Reque
                                                     st for Proposals.
Secs.  307.22...............  Sec.  306.1.........  Redesignated, merged
                                                     and revised
                                                     consistent with
                                                     Pub. L. 105-393.
Sec.  307.23................  ....................  Removed.
Secs.  307.24, 307.30.......  Sec.  300.2.........  Applicable to all
                                                     programs.
Secs.  307.25, 307.26,        Sec.  306.2.........  Renamed, merged,
 307.31, 307.32.                                     streamlined and
                                                     modified for Plain
                                                     Language purposes.
Secs.  307.27, 307.33.......  Secs.  306.3, 306.4.  Redesignated and
                                                     made consistent
                                                     with Pub. L. 105-
                                                     393.
Sec.  307.28................  Sec.  302.3.........  Part of new
                                                     provision on
                                                     District
                                                     Organizations.
Part 308--Requirements for    Part 308--            Renamed consistent
 Grants Under the Title IX     Requirements for      with Pub. L. 105-
 Economic Adjustment Program.  Economic Adjustment   393.
                               Grants.
Sec.  308.2.................  Sec.  308.3.........  Renamed and revised
                                                     to make more
                                                     accessible to
                                                     reader.
Sec.  308.3.................  Secs.  308.5, 300.2.  Renamed and revised
                                                     to be more
                                                     accessible to
                                                     readers and
                                                     applicable to all
                                                     programs.
Sec.  308.4.................  Sec.  308.2.........  Renamed and revised
                                                     for consistency
                                                     with Pub. L. 105-
                                                     393.
Secs.  308.5, 308.6.........  Sec.  308.4.........  Renamed, merged and
                                                     modified to
                                                     implement Pub. L.
                                                     105-393 and to be
                                                     more accessible to
                                                     readers.
Sec.  308.7.................  Sec.  308.6.........  Renamed and
                                                     streamlined.
Part 312--Supplemental and    Section 304 of the    Removed as no longer
 Basic Assistance Under.       Act.                  in effect.
Part 314--Property..........  Part 314--Property    Renamed.
                               Management
                               Standards.
Sec.  314.9.................  Sec.  314.9.........  Renamed and expanded
                                                     to refer to title
                                                     requirements.
                              Subpart D--Release    Added to implement
                               of EDA's Property     provision of Pub.
                               Interest.             L. 105-393 and to
                                                     clarify EDA's
                                                     property release
                                                     requirements.
Sec.  316.2.................  ....................  Removed as no longer
                                                     in effect.
Sec.  316.3.................  Sec.  316.2.........  Redesignated and
                                                     clarified.
Sec.  316.4.................  Sec.  316.3.........  Redesignated.
Sec.  316.5.................  ....................  Removed as no longer
                                                     in effect.
Sec.  316.6.................  Sec.  316.4.........  Redesignated.
Sec.  316.7.................  Sec.  316.5.........  Redesignated.
Sec.  316.8.................  Sec.  316.6.........  Redesignated.
Sec.  316.9.................  Sec.  316.7.........  Redesignated.
Sec.  316.10................  Sec.  316.8.........  Redesignated and
                                                     clarified.
Sec.  316.11................  Sec.  316.9.........  Redesignated.
Sec.  316.12................  ....................  Removed as included
                                                     in Sec.  316.8.
Sec.  316.13................  Sec.  316.10........  Renamed and
                                                     modified.
                              Secs.  316.11-316.18  Added to implement
                                                     provisions of Pub.
                                                     L. 105-393.
                              Sec.  316.19........  Added to replace
                                                     current procedures
                                                     and requirements.
                              Part 318--            Added to implement
                               Evaluations of        provisions of Pub.
                               Economic              L. 105-393.
                               Development
                               Districts and
                               University Centers.
------------------------------------------------------------------------


[[Page 5351]]

Savings Clause

    The rights, duties, and obligations of all the parties pursuant to 
parts, sections and portions thereof of the Code of Federal Regulations 
removed by this rule shall continue in effect, except that EDA may 
waive administrative or procedural requirements of provisions removed 
by this rule.

Executive Orders 12866 and 12875

    This rule has been determined to be significant for the purposes of 
E.O. 12866, Regulatory Planning and Review. In addition, it has been 
determined that, consistent with the requirements of E.O. 12875, 
Enhancing Intergovernmental Partnership, this interim final rule will 
not impose any unfunded mandates upon State, local, and tribal 
governments.

Notice and Comment

    This rule is not subject to the rulemaking requirements of 5 U.S.C. 
553 because it relates to public property, loans, grants, benefits, and 
contracts, 5 U.S.C. 553(c)(2), including the provision of prior notice 
and an opportunity for public comment and delayed effective date.
    No other law requires that notice and opportunity for comments be 
given for this rule.
    However, because the Department is interested in receiving comments 
from those who will benefit from the amendments, this rule is being 
issued as interim final. Public comments on the interim final rule are 
invited and should be sent to the address or numbers listed in the 
ADDRESSES and FOR FURTHER INFORMATION CONTACT sections above. Comments 
received by April 5, 1999 will be considered in promulgating a final 
rule.

    Note: EDA is particularly interested in comments relating to its 
use of Plain Language in order to make these requirements more 
readily accessible to the public.

Regulatory Flexibility Act

    Since notice and an opportunity for comment are not required to be 
given for the rule under 5 U.S.C. 553 or any other law, under sections 
603(a) and 604(a) of the Regulatory Flexibility Act (5 U.S.C. 601-612) 
no initial or final Regulatory Flexibility Analysis is required, and 
none has been prepared.

Paperwork Reduction Act

    This regulation imposes new information collection or recordkeeping 
requirements under the Paperwork Reduction Act of 1980 (44 U.S.C. 
3501), as amended, but has been cleared under OMB's Emergency 
Clearances process under OMB approval numbers: 0610-0093; 0610-0094; 
0610-0095; 0610-0096 and will expire on July 31, 1999. To remain 
effective after such expiration date, EDA must receive OMB's final 
clearance and display a currently valid OMB control number. If such 
final clearance is not obtained after the expiration date of the 
Emergency Clearance so that a currently valid OMB control number is not 
displayed, applicants and recipients will not thereafter be required to 
submit information requested pursuant to this rule.
    The information is needed to determine eligibility of those 
applicants and projects and to monitor projects for compliance with 
EDA's construction or Revolving Loan Fund requirements, as applicable. 
EDA then uses information obtained in these collections to help carry 
out its mission to aid economically distressed areas of the Nation. 
Responses to requests for information are necessary under Pub. Law 105-
393 for obtaining and for keeping benefits. The reporting burden for 
this collection is estimated to be approximately 7 burden hours for the 
Proposal; approximately 50 burden hours for the Application; 
approximately 18 burden hours for Requirements for Approved 
Construction Projects; approximately 240 burden hours for the CED 
Strategy Guidelines; and approximately 76 burden hours for the series 
of Guidelines for the Revolving Loan program, including the time for 
gathering and maintaining the data needed for completing and reviewing 
the collection of information. Comments are invited on: (a) whether the 
collection of information is necessary for the proper performance of 
the functions of the agency, including whether the information shall 
have practical utility; (b) the accuracy of the agency's estimate of 
the burden of the proposed collection of information; (c) ways to 
enhance the quality, utility, and clarity of the information to be 
collected; and (d) ways to minimize the burden of the collection of 
information on respondents, including through the use of automated 
collection techniques or other forms of information technology. 
Comments regarding these burden estimates or any other aspects of the 
collection of information, including suggestions for reducing the 
burdens, should be forwarded to Edward M. Levin, Chief Counsel, 
Economic Development Administration, U.S. Department of Commerce, 
Herbert C. Hoover Building, 1401 Constitution Avenue, NW, Room 7005, 
Washington, DC 20230 and to the Office of Information and Regulatory 
Affairs, Office of Management and Budget, Washington, DC 20503 
(Attention EDA Desk Officer).

Administrative Procedure Act and Regulatory Flexibility Act

Executive Order 12612 (Federalism Assessment)

    This action has been reviewed in accordance with the principles and 
criteria contained in E.O. 12612. It has been determined that this 
interim final rule does not have significant Federalism implications to 
warrant a full Federalism Assessment under the principles and criteria 
contained in E.O. 12612.

List of Subjects

13 CFR Part 300

    Reporting and recordkeeping requirements; Non-profit organizations; 
American Indians.

13 CFR Part 301

    Grant Programs; Community Development; American Indians.

13 CFR Part 302

    Community Development; Grant programs-community development; 
Technical assistance.

13 CFR Part 303

    Community Development; Grant programs-community development.

13 CFR Part 304

    Selection and evaluation.

13 CFR Part 305

    Community development; Community facilities; Grant programs-
community development.

13 CFR Part 306

    Community development; Grant programs-community development.

13 CFR Part 307

    Business and industry; Community development; Community facilities; 
Grant programs-business; Grant programs-community development; 
Research; Technical Assistance.

13 CFR Part 308

    Business and industry; Community development; Community facilities; 
Grant programs-business; Grant programs-community development; American 
Indians; Manpower training programs; Mortgages; Research; Technical 
assistance.

[[Page 5352]]

13 CFR Part 314

    Community development; Grant programs-community development.

13 CFR Part 315

    Administrative practice and procedure; Community development; Grant 
programs-business; Technical assistance; Trade adjustment assistance.

13 CFR Part 316

    Community development; Grant programs-community development; 
Freedom of Information; Uniform Relocation Act; Loan programs-business; 
Loan programs-community development; Environmental protection; Record 
retention; Records.

13 CFR Part 317

    Civil rights; sex discrimination.

13 CFR Part 318

    Colleges and universities.

    For the reasons set forth in the preamble, 13 CFR Chapter III is 
revised to read as follows:

CHAPTER III--DEPARTMENT OF COMMERCE, ECONOMIC DEVELOPMENT 
ADMINISTRATION

Part
300  General Information.
301  General Eligibility and Grant Rate Requirements.
302  Economic Development Districts; standards for designation, 
modification and termination.
303  Planning Process and Strategies for District and Other Planning 
Organizations Supported by EDA.
304  General Selection Process and Evaluation Criteria.
305  Grants for Public Works and Development Facilities.
306  Planning Assistance.
307  Local Technical Assistance, University Center Technical 
Assistance, National Technical Assistance, Training, Research, and 
Evaluation.
308  Requirements for Economic Adjustment Grants.
309-313  [Reserved].
314  Property.
315  Certification and Adjustment Assistance for Firms.
316  General Requirements for Financial Assistance.
317  Civil Rights.
318  Evaluations of University Centers and Economic Development 
Districts.

PART 300--GENERAL INFORMATION

Sec.
300.1  Introduction and purpose.
300.2  Definitions.
300.3  OMB control numbers.
300.4  Economic Development Administration--Washington, DC, Regional 
and Economic Development Representatives.

    Authority: 42 U.S.C. 3211; Department of Commerce Organization 
Order 10-4.


Sec. 300.1  Introduction and Purpose.

    (a) Introduction. Is your community suffering from severe economic 
distress (e.g., high unemployment, low income, sudden economic changes, 
etc.)? Are you a representative of a State or local unit of government, 
Indian tribe, public or private nonprofit organization, educational 
institution, or community development corporation looking for grant 
assistance to enhance your opportunities for economic development? If 
so, these regulations of the Economic Development Administration (EDA) 
of the U.S. Department of Commerce may be of help. These regulations 
tell you the purpose of EDA and outline the program requirements, 
project selection process, project evaluation criteria, and other 
relevant matters. The information in these regulations covers grant 
programs of EDA that provide financial awards for the following:

     Public Works and Development Facilities;
     Planning;
     Research, Evaluation, Training and Technical 
Assistance;
     Trade Adjustment Assistance; and
     Economic Adjustment Assistance.

    (b) What is the Purpose of the Economic Development Administration?
    (1) Many communities lag behind and suffer economic distress in one 
form or another, such as:

     High unemployment;
     Low income;
     Underemployment;
     Outmigration;
     Sudden economic changes due to the restructuring or 
relocation of industrial firms;
     Closing or realignment of defense bases or cutbacks in 
defense procurement;
     Economic impact of natural disasters or other 
emergencies;
     Actions of the Federal government (such as 
environmental requirements) that curtail or remove economic 
activities; and
     Impacts of foreign trade.

    (2) The purpose of the Economic Development Administration is to 
address economic problems affecting economically distressed rural and 
urban communities; by helping them:
    (i) Develop and strengthen their economic development planning and 
institutional capacity to design and implement business outreach and 
development programs; and
    (ii) Develop or expand public works and other facilities, financing 
tools, and resources that will create new job opportunities, save 
existing jobs, retain existing businesses, and support the development 
of new businesses.
    (3) To promote a strong and growing economy throughout the United 
States, EDA works in partnership with State and local governments, 
Indian tribes and local, regional, and State public and private 
nonprofit organizations. With them EDA develops and carries out 
comprehensive economic development strategies that address the economic 
problems of distressed communities. EDA helps such communities increase 
their economic development capacities so that they can take advantage 
of existing resources and development opportunities.


Sec. 300.2  Definitions.

    Unless otherwise defined in other parts or sections of this 
Chapter, the terms listed are defined as follows:
    Comprehensive Economic Development Strategy, CED Strategy, or 
strategy means a strategy approved by EDA under Sec. 301.3 of these 
regulations.
    Department means the Department of Commerce.
    Economic Development District or district:
    (1) Means any area in the United States that has been designated by 
EDA as an Economic Development District under Sec. 302.1 of these 
regulations; and
    (2) Includes any Economic Development District designated by EDA 
under sec. 403 of the Public Works and Economic Development Act of 
1965, as amended, as in effect on the day before the effective date of 
Public Law 105-393.
    EDA means the Economic Development Administration in the U.S. 
Department of Commerce when a place or agency is intended, and refers 
to the headquarters office in Washington, D.C., or a regional office, 
as appropriate; or it means the Assistant Secretary of Commerce for 
Economic Development or his/her designee when a person is intended. The 
locations of EDA's offices are listed each year in a Notice of Funding 
Availability (NOFA). The general information telephone number for EDA 
is (202) 482-2309.
    Eligible applicant means:
    (1) In general,--
    (i) An entity qualified to be an eligible recipient, or
    (ii) Its authorized representative.
    (2) Except in the case of Research, Evaluation, Training, or 
Technical Assistance grants under part 307, a private individual or 
for-profit organization cannot be an eligible applicant.
    Eligible recipient means
    (1) In general,--
    (i) An area described in Sec. 301.2 of these regulations;
    (ii) An Economic Development District;
    (iii) An Indian tribe or a consortium of Indian tribes;

[[Page 5353]]

    (iv) A State;
    (v) A city or other political subdivision of a State or a 
consortium of political subdivisions;
    (vi) An institution of higher education or a consortium of 
institutions of higher education; or
    (vii) A public or private nonprofit organization or association 
acting in cooperation with officials of a political subdivision of a 
State.
    (2) In the case of Research, Evaluation, Training, and Technical 
Assistance grants under part 307, eligible recipient also includes 
private individuals and for-profit organizations.
    Federal agency means a department, agency, or instrumentality of 
the United States.
    Financial assistance means grant.
    Grant means the non-procurement award of EDA funds to an eligible 
recipient under PWEDA or the Trade Act, as applicable. The term 
includes a cooperative agreement, within the meaning of chapter 63 of 
title 31, United States Code.
    Indian tribe means any Indian tribe, band, nation, pueblo, or other 
organized group or community, including any Alaska Native Village or 
Regional Corporation (as defined in or established under the Alaska 
Native Claims Settlement Act (43 U.S.C. 1601 et seq.)), that is 
recognized as eligible for the special programs and services provided 
by the United States to Indians because of their status as Indians. The 
term includes: The governing body of a tribe, nonprofit Indian 
corporation (restricted to Indians), Indian authority, or other 
nonprofit tribal organization or entity, provided that the tribal 
organization or entity is wholly owned by, and established for the 
benefit of, the tribe or Alaska Native Village.
    Local share, matching share or local share match are used 
interchangeably to mean non-Federal funds or goods and services 
provided by recipients or third parties that are required as a 
condition of a grant, and includes funds from other Federal agencies 
only if there is statutory authority allowing such use.
    Notice of Funding Availability or NOFA, refers to the notice or 
notices EDA publishes each year in the Federal Register and on EDA's 
internet web site, http://www.doc.gov/eda, describing the available 
amounts, particular procedures, priorities, and special circumstances 
for the EDA grant programs for that year.
    OEDP (Overall Economic Development Program), as the term is used in 
part 317 (Civil Rights) of this chapter, means CED Strategy developed 
in accordance with part 303 of this chapter.
    PWEDA means the Public Works and Economic Development Act of 1965, 
as amended (Pub. L. 89-136, 42 U.S.C. 3121 et seq.), including the 
comprehensive amendments by the Economic Development Administration 
Reform Act of 1998 (Pub. L. 105-393). (The term ``PWEDA'' was used to 
refer to EDA's authorizing legislation as it was in effect before the 
effective date of Public Law 105-393, signed into law on November 13, 
1998. In these regulations, the term ``PWEDA'' refers to the 
legislation as currently amended by the 1998 law.)
    Project means the activity or activities the purpose of which 
fulfills EDA program requirements and that EDA funds in whole or in 
part.
    Proposed District means a geographic entity composed of one or more 
eligible areas proposed for designation as an Economic Development 
District.
    Recipient and grantee are used interchangeably to mean an entity 
receiving funds from EDA under PWEDA or the Trade Act, as applicable, 
and includes any EDA approved successor to such recipient.
    State means a State, the District of Columbia, the Commonwealth of 
Puerto Rico, the U.S. Virgin Islands, Guam, American Samoa, the 
Commonwealth of the Northern Mariana Islands, the Republic of the 
Marshall Islands, the Federated States of Micronesia, and the Republic 
of Palau.
    The Trade Act means Title II, Chapters 3 and 5, of the Trade Act of 
1974, as amended (19 U.S.C. 2341, et seq.).
    United States means all of the States.


Sec. 300.3  OMB Control Numbers.

    (a) This table displays control numbers assigned to EDA's 
information collection requirements by the Office of Management and 
Budget (``OMB'') pursuant to the Paperwork Reduction Act of 1980, Pub. 
L. 96-511. EDA intends that this table comply with Section 3507(f) of 
the Paperwork Reduction Act, requiring agencies to display a current 
control number assigned by the Director of OMB for each agency 
information collection requirement.
    (b) Control Number Table:

------------------------------------------------------------------------
  13 CFR part or section where identified
               and described                   Current OMB control No.
------------------------------------------------------------------------
301.......................................  0610-0094.
302.......................................  0610-0094.
303.......................................  0610-0093.
304.......................................  0610-0094.
305.......................................  0610-0094 and 0610-0096.
306.......................................  0610-0094.
307.......................................  0610-0094.
308.......................................  0610-0094 and 0610-0095.
314.......................................  0610-0094.
315.......................................  0610-0094.
316.......................................  0610-0094.
------------------------------------------------------------------------

Sec. 300.4  Economic Development Administration-Washington, D.C., 
Regional and Economic Development Representatives.

    For addresses and phone numbers of the Economic Development 
Administration in Washington, D.C., Regional and Field Offices and 
Economic Development Representatives, refer to EDA's annual Fiscal Year 
(FY) Notice of Funding Availability (NOFA).

PART 301--GENERAL ELIGIBILITY AND GRANT RATE REQUIREMENTS

Sec.
301.1  Applicants.
301.2  Area eligibility.
301.3  Strategy required.
301.4  Grant rates.

    Authority: 42 U.S.C. 3211; Department of Commerce Organization 
Order 10-4.


Sec. 301.1  Applicants.

    (a) Eligible applicants are defined in Sec. 300.2 of this chapter.
    (b) Except as otherwise provided in part 307, a public or private 
nonprofit organization applicant must include in its application for 
assistance, a resolution passed by, or a letter signed by an authorized 
representative of, a political subdivision of a State or an Indian 
tribe, acknowledging that the applicant is acting in cooperation with 
officials of the political subdivision or Indian tribe, as applicable.


Sec. 301.2  Area eligibility.

    (a) EDA awards public works and development facilities grants under 
part 305 and economic adjustment grants under part 308 for projects to 
enhance economic development in economically distressed areas.
    (b) An area is eligible for a project grant under part 305 or 308 
if it has one of the following:
    (1) An unemployment rate that is, for the most recent 24-month 
period for which data are available, at least one percent greater than 
the national average unemployment rate. For example, if the national 
average unemployment rate is 6 percent, an area is eligible under this 
provision if it has an unemployment rate of 7 percent.
    (2) Per capita income that is, for the most recent period for which 
data are

[[Page 5354]]

available, 80 percent or less of the national average per capita 
income.
    (3) A special need, as determined by EDA, arising from actual or 
threatened severe unemployment or economic adjustment problems 
resulting from severe short-term or long-term changes in economic 
conditions, for example:
    (i) Substantial outmigration or population loss;
    (ii) Underemployment, that is, employment of workers at less than 
full time or at less skilled tasks than their training or abilities 
permit;
    (iii) Military base closures or realignments, defense contractor 
reductions-in-force, or Department of Energy defense-related funding 
reductions;
    (iv) Natural or other major disasters or emergencies;
    (v) Extraordinary depletion of natural resources;
    (vi) Closure or restructuring of industrial firms, essential to 
area economies; or
    (vii) Destructive impacts of foreign trade.
    (c) A non-distressed area [i.e., an area that does not meet the 
criteria of paragraph (b) of this section] within an Economic 
Development District is also eligible, provided the project will be of 
a substantial direct benefit to an area that meets at least one of the 
criteria of paragraph (b) of this section. A project provides 
substantial direct benefit if it provides significant employment 
opportunities for unemployed, underemployed or low income residents.
    (d) Normally an area is defined by geographical/political 
boundaries, e.g., city, county, Indian reservation. However, a smaller 
area (without regard to political boundaries) is also eligible even 
though it may be part of a larger community that overall is 
experiencing low distress. When the boundaries of the project area 
differ from established political boundaries, the project area must be 
of sufficient size appropriate to the proposed project, and the 
applicant must justify the proposed boundaries in relation to the 
project's benefits to the area.
    (e) Eligibility is determined at the time that EDA receives an 
application and is based on the most recent Federal data available for 
the area where the project will be located or where the substantial 
direct benefits will be received. If no Federal data are available to 
determine eligibility, an applicant must submit to EDA the most recent 
data available through the government of the State in which the area is 
located.
    (f) EDA may reject any documentation of eligibility that it 
determines is inaccurate.
    (g) There is no area eligibility requirement for a project grant 
under part 306 or 307.
    (h) EDA will describe special needs criteria under paragraph (b)(3) 
of this section in a NOFA.


Sec. 301.3  Strategy Required.

    (a) To be eligible for a project grant under part 305 or 308, the 
application for assistance must include a CED Strategy acceptable to 
EDA. The applicant may, however, incorporate by reference a current 
strategy previously approved by EDA, as an alternative to including the 
strategy in the application. (Exception: A strategy is not required 
when a funding request is for planning assistance, i.e., a strategy 
grant, under part 308.) The strategy must:
    (1) Be the result of a continuing economic development planning 
process;
    (2) Identify the economic development problems to be addressed 
using the assistance;
    (3) Identify past, present, and projected future economic 
development investments in the area receiving the assistance;
    (4) Identify the public and private participants in the investments 
and the sources of the funding for them;
    (5) Describe how the problems identified under paragraph (a) (2) of 
this section will be addressed, in a manner that promotes economic 
development and opportunity, fosters effective transportation access, 
enhances and protects the environment, and balances resources through 
sound management of development; and
    (6) Describe how the activities described under paragraph (a) (5) 
of this section will contribute to the solution of the problems.
    (b) EDA will approve as acceptable a strategy that it determines 
meets the requirements of paragraph (a) of this section. The strategy 
may be one developed:
    (1) With EDA assistance,
    (2) Under another Federally supported program, or
    (3) Through a local, regional, or State process.
    (c) In determining acceptability of a strategy, EDA will take into 
consideration the circumstances of the application, so that for 
instance a strategy accompanying an application for assistance 
immediately following a natural disaster will require less depth and 
detail than would be the case in other circumstances.
    (d) To be acceptable, a strategy must be approved by the 
applicant's governing body within one year prior to the date of 
application.


Sec. 301.4  Grant Rates.

    (a) Except as otherwise provided for in this chapter, the amount of 
the EDA grant may not exceed 50 percent of the cost of the project. 
Cash or in-kind contributions, fairly evaluated by EDA, including 
contributions of space, equipment, and services, may provide the non-
Federal share of the project cost. In-kind contributions must be 
eligible project costs and meet applicable Federal cost principles and 
uniform administrative requirements.
    (b) EDA may supplement the Federal share of a grant project where 
the applicant is able to demonstrate that the non-Federal share that 
would otherwise be required cannot be provided because of the overall 
economic situation. It is not necessary for an applicant to prove that 
it would be impossible to provide a full 50 percent non-Federal share, 
but it must show circumstances warranting any reduction. In determining 
whether to provide a Federal share greater than 50 percent for a 
project, EDA will give due consideration to the applicant's economic 
situation and the relative needs of the area. In the case of Indian 
tribes, EDA may reduce or waive the non-Federal share, and in other 
cases EDA may reduce the non-Federal share of the cost of the project 
below 50 percent, in accordance with the following table, showing the 
maximum Federal grant rate, including the supplement:

------------------------------------------------------------------------
                                                           Maximum grant
                        Projects                               rates
                                                           (percentage)
------------------------------------------------------------------------
Projects of Indian tribes where EDA has made a
 determination to waive the non-Federal share of the
 cost of the project....................................             100
Projects located in Federally-declared disaster areas
 for which EDA receives an application for assistance
 within one year of the date of declaration, and for
 which the President established a rate of Federal
 participation, based on the public assistance grant
 rate of the Federal Emergency Management Agency (FEMA)
 for the disaster, of greater than 80 percent...........             100
Projects of Indian tribes where EDA has made a
 determination to reduce the non-Federal share of the
 cost of the project....................................             (1)

[[Page 5355]]

 
Projects of States or political subdivisions of States
 that have exhausted their effective taxing and/or
 borrowing capacity, or nonprofit organizations that
 have exhausted their borrowing capacity................             (1)
Projects located in Federally-declared disaster areas
 for which EDA receives an application for assistance
 within one year of the date of declaration, unless the
 applicant or the area is otherwise eligible for a
 higher rate of Federal participation under another
 provision of this section..............................              80
Projects located in eligible areas where: (1) the 24-
 month unemployment rate is at least 11 percent and is
 at least 225% of the national average or (2) the per
 capita income (PCI) is not more than 50% of the
 national average.......................................              80
Projects located in eligible areas that are not eligible
 for a higher rate, where: (1) the 24-month unemployment
 rate is at least 9 percent and is at least 180% of the
 national average or (2) the PCI is not more than 60% of
 the national average...................................              70
Projects located in eligible areas that are not eligible
 for a higher rate, where: (1) the 24-month unemployment
 rate is at least 7.5 percent and is at least 150% of
 the national average or (2) the PCI is not more than
 70% of the national average............................              60
Projects in all other eligible areas....................              50
------------------------------------------------------------------------
\1\ Less than 100.

    (c) Projects under part 306 or 307 are eligible for maximum grant 
rates as provided in those parts.
    (d) Projects located in designated Economic Development Districts 
are eligible for an amount of additional Federal grant assistance not 
to exceed 10 percent of the estimated cost of the project, provided
    (1) The project applicant is actively participating in the economic 
development activities of the district;
    (2) The project is consistent with the strategy of the district; 
and
    (3) The non-Federal share of the project is not less than 20 
percent.
    (e) EDA may make grants to supplement grants awarded in other 
Federal grant programs.
    (1) Supplemental grants under paragraph (e) of this section are 
only available for projects:
    (i) Under Federal grant programs that
    (A) Provide assistance in the construction or equipping of public 
works, public service, or development facilities, and
    (B) Are designated by EDA as eligible for supplemental EDA grants, 
and
    (ii) Are consistent with a strategy.
    (2) EDA's funds combined with funds from another Federal grant 
program may be at the maximum EDA grant rate, as set forth above, even 
if the other Federal program has a lower grant rate. If the other 
Federal program has a grant rate higher than the maximum EDA grant rate 
as set forth above, the combination of funds may exceed the EDA rate 
provided the EDA share does not exceed the EDA rate.
    (f) An applicant is eligible for the highest applicable maximum 
grant rate, as set forth above, in effect between the time EDA invites 
the application and the time the project is approved. The Federal share 
of a project receiving EDA grant assistance may be (and often is) less 
than the maximum grant rate for which the recipient is eligible.
    (g) EDA's NOFA will provide additional criteria to ensure that the 
level of economic distress of an area, rather than a preference for a 
geographic area or a specific type of economic distress, is the primary 
factor in allocating assistance.

PART 302--ECONOMIC DEVELOPMENT DISTRICTS; STANDARDS FOR 
DESIGNATION, MODIFICATION AND TERMINATION

Sec.
302.1  Designation of economic development districts.
302.2  Designation of nonfunded districts.
302.3  District organizations.
302.4  District organization functions and responsibilities.
302.5  Modification of district boundaries.
302.6  Termination and suspension of district designation.
302.7  Eligibility of non-distressed areas.

    Authority: 42 U.S.C. 3211; Department of Commerce Organization 
Order 10-4.


Sec. 302.1  Designation of Economic Development Districts.

    EDA will designate a proposed district as an Economic Development 
District with the concurrence of the State or States in which the 
District will be wholly or partially located, when the proposed 
district meets the following requirements:
    (a) It is of sufficient size or population, and contains sufficient 
resources, to foster economic development on a scale involving more 
than a single eligible area;
    (b) It has an EDA approved strategy which:
    (1) Contains a specific program for intra-district cooperation, 
self-help, and public investment;
    (2) Is approved by each affected State;
    (3) Identifies problems, and conditions underlying economic 
distress in the district; and
    (4) Promotes economic development opportunities, plans for 
transportation access, enhancement and protection of the environment 
and balances resources through sound management of development;
    (c) It contains at least one area, eligible for assistance under 
Sec. 301.2, that has been identified in an approved strategy;
    (d) At least a majority of the counties, or other areas as 
determined by EDA, within the proposed district boundaries have 
submitted documentation of their commitment to support the economic 
development activities of the district;
    (e) A district organization has been established in the proposed 
district which meets the requirements of Sec. 302.4; and
    (f) The proposed district organization requests such designation.


Sec. 302.2  Designation of nonfunded districts.

    The continuing designation of any Economic Development District is 
subject to the criteria and organization requirements of this part 
whether or not the Economic Development District organization receives 
any EDA financial assistance.


Sec. 302.3  District organizations.

    (a) The district shall be organized in one of the following ways:
    (1) As a public organization through an intergovernmental agreement 
for the joint exercise of local government powers; or
    (2) As a public organization established under State enabling 
legislation for the creation of multi-jurisdictional area wide planning 
organizations; or
    (3) As a non-profit organization incorporated under the laws of the 
State in which it is located.
    (b) Each district organization must meet EDA requirements 
concerning membership composition [Sec. 302.3(c)], the maintenance of 
adequate staff support to perform its economic development functions 
[Sec. 302.3(d)], and its authorities and responsibilities for

[[Page 5356]]

carrying out economic development functions [Sec. 302.4]. Such 
requirements must also be met by the board of directors (or other 
governing body of the organization) as a whole.
    (c) The district organization shall demonstrate that its governing 
body meets all of the following requirements:
    (1) It is broadly representative of the principal economic 
interests of the district area including the interests of its minority 
and low-income populations;
    (2) There is at least a simple majority of its membership who are 
elected officials and/or employees of a general purpose unit of local 
government who have been appointed to represent the government; and
    (3) At least 20 percent of its membership who are private citizens, 
i.e., neither elected officials of a general purpose unit of local 
government nor employees of such a government who have been appointed 
to represent that government.
    (d) The district organization shall be assisted by a professional 
staff drawn from qualified persons in economic development, planning or 
related disciplines. EDA may provide planning grants to Economic 
Development Districts to employ professional staff in accordance with 
part 306 of this chapter.
    (e) The governing bodies of district organizations shall provide 
access for persons who are not members to make their views known 
concerning ongoing and proposed district activities in accordance with 
the following requirements:
    (1) The economic development district organization must hold 
meetings open to the public at least once a year and shall also publish 
the date and agenda of the meeting enough in advance to allow the 
public a reasonable time to prepare to participate effectively.
    (2) The district organization shall adopt a system of parliamentary 
procedures to assure that board members and others have access to and 
an effective opportunity to participate in the affairs of the district.
    (3) Information should be provided sufficiently in advance of 
public decisions to give the public adequate opportunity to review and 
react to proposals. District organizations should seek to relate 
technical data and other material to the public so they may understand 
the impact of public programs, available options and alternative 
decisions.


Sec. 302.4  District organization functions and responsibilities.

    (a) All Economic Development District organizations are responsible 
for seeing that the following are provided on a continuing basis, 
consistent with the requirements of Sec. 302.3:
    (1) Organizational actions, including:
    (i) Arranging the legal form of organization which will be used;
    (ii) Arranging for the membership of the governing body to meet 
Sec. 302.3 requirements;
    (iii) Recruiting staff to carry out the economic development 
functions;
    (iv) Establishing a management system;
    (v) Contracting for services to carry out district functions;
    (vi) Establishing and directing activities of economic development 
subcommittees; and
    (vii) Submitting reports as determined by EDA to comply with civil 
rights requirements under part 317 of this chapter.
    (2) Actions to develop and maintain the required district strategy, 
and any subsequent supplements or revisions, including:
    (i) Preparing the analytic, strategic and implementation components 
of the strategy;
    (ii) Adopting the strategy by formal action of the Economic 
Development District governing board;
    (iii) Submitting the strategy, any supplements or revisions and 
annual reports for reviews by appropriate governmental bodies and 
interested organized groups, and attaching dissenting opinions and 
comments received; and
    (iv) Submitting to EDA an approvable strategy.
    (b) Organizations receiving EDA financial assistance for the 
development and implementation of Comprehensive Economic Development 
Strategies must also:
    (1) Coordinate and implement economic development activities in the 
district, including:
    (i) Assisting other eligible units within the district to apply for 
grant assistance for economic development purposes;
    (ii) Carrying out economic development related research, planning, 
implementation and advisory functions as are necessary to the 
development and implementation of the strategy;
    (2) Coordinate the development and implementation of the strategy 
with other local, State, Federal and private organizations (including 
minority organizations);
    (3) Carry out the annual strategy for implementation; and
    (4) Comply with the requirement of part 303.


Sec. 302.5  Modification of district boundaries.

    EDA, at the request of a district and with concurrence of the State 
or States affected (unless such concurrence is waived by the Assistant 
Secretary), may modify the boundaries of a district, if it determines 
that such modification will contribute to a more effective program for 
economic development.


Sec. 302.6  Termination and suspension of district designation.

    EDA may, upon 30 days prior written notice, terminate the 
designation status of an Economic Development District:
    (a) When the district no longer meets the standards for designation 
as set forth above;
    (b) When a district has not maintained a currently approved 
strategy in accordance with part 303 of this chapter; or
    (c) When a district has requested termination (with the approval of 
the State or States affected).


Sec. 302.7  Eligibility of non-distressed areas.

    Areas in districts which are not themselves eligible for assistance 
under parts 305 or 308 may be eligible, as provided in Sec. 301.2(c).

PART 303--PLANNING PROCESS AND STRATEGIES FOR DISTRICT AND OTHER 
PLANNING ORGANIZATIONS SUPPORTED BY EDA

Sec.
303.1  Definitions, purpose and scope.
303.2  Planning process.
303.3  Requirements for a strategy.

    Authority: 42 U.S.C. 3211; Department of Commerce Organization 
Order 10-4.


Sec. 303.1  Definitions, Purpose and Scope.

    (a) As used in this part 303.
    (1) Planning organization means an Economic Development District 
organization, Indian tribe, or other recipient of an EDA grant under 
part 306 which grant is awarded in whole or in part to develop, update, 
or replace a CED Strategy, and
    (2) Strategy committee means that committee or other entity 
identified by the planning organization as responsible for developing, 
updating, or replacing a strategy.
    (b) This part describes the planning process of and requirements 
for strategies developed and implemented by planning organizations 
supported by EDA. The requirements for a strategy in this part 303 
exceed the requirements of Sec. 301.3.

[[Page 5357]]

Sec. 303.2  Planning Process.

    (a) The strategy committee must be inclusive and representative of 
the main economic interests of the area covered by the strategy. Such 
interests include public officials, community leaders, private 
individuals, business leaders, labor groups, minorities, and others who 
can contribute to and benefit from improved economic development in the 
area covered.
    (b) The planning organization must support the strategy committee 
with a staff skilled in economic planning or related fields.
    (c) The planning organization must conduct an initial and 
continuous study and analysis of the opportunities for economic 
development and of problems contributing to economic and related 
distress in the area covered, such as, for example, unemployment, 
underemployment, outmigration, or low per capita income, and possible 
solutions to such problems.
    (d) Planning organizations covered by this part 303 must submit an 
initial strategy to EDA in compliance with the requirements of 
Sec. 303.3, as determined by EDA. Each year thereafter, the planning 
organization must submit an annual strategy report, acceptable to EDA.
    (e) A new or revised strategy is required at least every five 
years, or sooner if EDA or the planning organization determines that 
the strategy is inadequate due to changed circumstances. Each strategy 
must be available for review and comment by appropriate government 
bodies and interest groups in the area covered. Strategies submitted by 
Districts require concurrence by the State or States in which they are 
located, prior to EDA approval. If EDA identifies any deficiencies, it 
will notify the organization in writing and provide the organization a 
reasonable opportunity to remedy such deficiencies.


Sec. 303.3  Requirements for a strategy.

    A strategy must contain the following:
    (a) An analysis of economic and community development problems and 
opportunities including incorporation of any relevant material or 
suggestions from other government sponsored or supported plans;
    (b) Background and history of the economic development situation of 
the area covered, with a discussion of the economy, including 
geography, population, labor force, resources, and the environment;
    (c) A discussion of community participation in the planning 
efforts;
    (d) A section setting forth goals and objectives for taking 
advantage of the opportunities of and solving the economic development 
problems of the area serviced;
    (e) A plan of action, including suggested projects to implement 
objectives and goals set forth in the strategy; and
    (f) Performance measures that will be used to evaluate whether and 
to what extent goals and objectives have been or are being met.

PART 304--GENERAL SELECTION PROCESS AND EVALUATION CRITERIA

Sec.
304.1 Project proposal, application, selection and evaluation for 
programs under PWEDA.
304.2 How EDA evaluates proposals and applications for projects 
funded under PWEDA.

    Authority: 42 U.S.C. 3211; Department of Commerce Organization 
Order 10-4.


Sec. 304.1  Project proposal, application, selection and evaluation for 
programs under PWEDA.

    (a) Local projects. Parties eligible as applicants who are 
interested in a public works, economic adjustment, planning, local 
technical assistance or university center project grant should contact 
the appropriate Economic Development Representative (EDR) (or EDA 
Regional or headquarters office), identified in the NOFA. The EDR or 
other EDA official is available to provide program information, 
including the current published NOFA; provide a proposal form approved 
by the U.S. Office of Management and Budget (OMB), and provide 
assistance as needed in filling out the proposal form.
    (1) After submission of the proposal to the appropriate EDR or 
Regional Office of EDA, the appropriate Regional Office Project Review 
Committee (PRC), consisting of at least three EDA officials, will 
review the proposal. The EDR or other appropriate EDA official will 
evaluate the proposal under Sec. 304.2, program specific sections of 
this rule, and the NOFA, if applicable, before submitting it to the EDA 
Regional Office for its review.
    (2) After review by the PRC, EDA will send a letter in a timely 
manner to each submitter advising either that:
    (i) EDA invites the submitter to prepare and present a formal 
application on a standard application form, with attachments for the 
type of grant being requested; or
    (ii) EDA returns the proposal because of specified deficiencies and 
suggests resubmission when the deficiencies are cured; or
    (iii) EDA denies the proposal for specifically stated reasons.
    (b) National Technical Assistance Research, Evaluation, or Training 
Projects. Parties eligible as applicants who are interested in a 
national technical assistance, research, evaluation, or training 
project under PWEDA, should make initial contact with EDA in 
Washington, D.C., at locations identified in the NOFA, for information 
and assistance concerning proposals and to obtain program information, 
including a copy of the current NOFA, and OMB approved proposal form. 
After submission of the proposal to the appropriate EDA Washington, 
D.C. office, generally, three or more technically knowledgeable EDA 
officials will review the proposal for relevance and quality.
    (1) If EDA determines that the proposal is acceptable under 
Sec. 304.2, program specific sections of this rule, and the NOFA, if 
applicable, EDA may by letter invite the submitter to provide an 
application with a more detailed and comprehensive project narrative. 
EDA expects that applications will generally be submitted within 30 
days after receipt of an invitation letter.
    (2) If EDA determines that the proposal is not acceptable because 
of specified deficiencies, EDA will so notify the submitter in writing 
in a timely manner.
    (c) EDA expects that applications will generally be submitted 
within 30 days after receipt of an invitation letter. EDA's invitation 
to submit an application does not assure EDA funding.


Sec. 304.2  How EDA evaluates proposals and applications for projects 
funded under PWEDA.

    (a) General proposal and application evaluation criteria for 
projects funded under PWEDA are as follows: EDA will screen all 
proposals/applications for:
    (1) Conformance to statutory and regulatory requirements,
    (2) The relative severity of the economic problem of the area,
    (3) The quality of the scope of work proposed to address the 
problem,
    (4) The merits of the activity(ies) for which funding is requested, 
and
    (5) The ability of the prospective applicant to carry out the 
proposed activity(ies) successfully.
    (b) EDA will also review applications for conformance with any 
additional program specific evaluation criteria as stated in applicable 
sections of these rules or the NOFA.
    (c) The NOFA may identify special areas of interest or priority 
consideration for the period of such NOFA.

[[Page 5358]]

PART 305--GRANTS FOR PUBLIC WORKS AND DEVELOPMENT FACILITIES

Subpart A--General

Sec.
305.1  Purpose and scope.
305.2  Criteria.
305.3  Application requirements.
305.4  Selection and evaluation.

Subpart B--Other Requirements

305.5  Disbursements of funds for grants.
305.6  Final inspection.
305.7  Requirements for approved projects.

Appendix A to Part 305--Requirements for Approved Construction 
Projects.

    Authority: 42 U.S.C. 3211; Department of Commerce Organization 
Order 10-4.

Subpart A--General


Sec. 305.1  Purpose and scope.

    The purpose of Public Works and Development Facilities grants is to 
help the Nation's distressed communities revitalize and expand their 
physical and economic infrastructure and thereby provide support for 
the creation or retention of jobs for area residents by helping 
eligible recipients with their efforts to promote the economic 
development of distressed areas. The primary focus is on the creation 
of new, or the retention of existing, long-term private sector job 
opportunities in communities experiencing significant economic distress 
as evidenced by high unemployment, low income, or a special need 
arising from actual or threatened severe unemployment or severe changes 
in local economic conditions. These grants are intended to help 
communities achieve sustainable economic development by developing and 
expanding new and existing public works and other infrastructure 
facilities that will help generate long-term jobs and economic growth, 
improve economic conditions or otherwise enhance and promote the 
economic recovery of the area.


Sec. 305.2  Criteria.

    (a) A grant may be made under part 305 for the following purposes:
    (1) For the acquisition or development of land and improvements for 
use for a public works, public service or other type of development 
facility; or
    (2) For the acquisition, design and engineering, construction, 
rehabilitation, alteration, expansion, or improvement of such a 
facility, including related machinery and equipment.
    (b) A grant may be made under part 305 only when:
    (1) The project for which the grant is applied for will, directly 
or indirectly--
    (i) Improve the opportunities, in the area where the project is or 
will be located, for the successful establishment or expansion of 
industrial or commercial plants or facilities;
    (ii) Assist in the creation of additional long-term employment 
opportunities in the area; or
    (iii) Primarily benefit the long-term unemployed and members of 
low-income families;
    (2) The project for which the grant is applied for will fulfill a 
pressing need of the area, or a part of the area, in which the project 
is or will be located; and
    (3) The area for which the project is to be carried out has a 
strategy and the project is consistent with the strategy.
    (c) Additional criteria, or priority consideration factors for 
assistance, may be set forth in a NOFA.
    (d) Maximum assistance for each State. Not more than 15 percent of 
the annual appropriations available to carry out this part may be 
expended in any one State.


Sec. 305.3  Application requirements.

    Each application for a grant under part 305 must:
    (a) Include evidence of area and applicant eligibility;
    (b) Include, or incorporate by reference, a strategy, as provided 
in Sec. 301.3;
    (c) Identify the sources of the other funds, both eligible Federal 
and non-Federal, that will make up the balance of the proposed 
project's financing, including any private sources of financing. The 
application must show that such other funds are committed to the 
project and will be available as needed. The local share must not be 
encumbered in any way that would preclude its use consistent with the 
requirements of the grant; and
    (d) Explain how the proposed project meets the criteria of 
Sec. 305.2.


Sec. 305.4  Selection and Evaluation.

    (a) Projects will be selected in accordance with the application 
evaluation criteria set forth in Sec. 304.2 of this chapter.
    (b) In addition to the evaluation criteria set forth in part 304 of 
this chapter, project selection and evaluation will be made on the 
basis of whether, and to what extent, the proposed project will:
    (1) Assist in creating new or retaining existing private sector 
jobs and assist in the creation of additional long-term employment 
opportunities rather than merely transferring jobs from one area of the 
country to another;
    (2) Be supported by significant private sector investment;
    (3) Leverage or be a catalyst for the effective use of private, 
local government, State or other Federal funding that is available;
    (4) Likely be started and completed in a timely fashion; and
    (5) If the project is located in an area with a stable economy and 
low distress, provide employment opportunities for residents of nearby 
areas of high distress.

Subpart B--Other Requirements


Sec. 305.5  Disbursements of funds for grants.

    (a) Disbursements of funds for construction grants are generally 
made on a reimbursable basis on request of the recipient for 
reimbursement. Disbursements may be made only:
    (1) After execution of all contracts required for the completion of 
the project. This condition may be waived by EDA if the grantee can 
demonstrate that enforcement of the condition would place an undue 
burden on it;
    (2) For itemized and certified eligible costs incurred, as 
substantiated by such documentary evidence as EDA may require;
    (3) On the basis of the work accomplished and the percentage of EDA 
participation, but in no event for more than the total sum stated in 
the financial assistance award accepted by the grantee;
    (4) Upon such evidence as EDA may require that grantee's 
proportionate share of funds is on deposit;
    (5) After a determination by EDA that all applicable terms and 
conditions of the grant have been met; and
    (6) After meeting such other requirements as EDA may establish in 
accordance with other Federal laws, rules and regulations.
    (b) Disbursements are generally made in installments, based upon 
grantee's actual rate of disbursement in accordance with the grant 
rate.
    (c) Advances of funds are allowable when disbursement on a 
reimbursable basis would impose an undue burden, as determined by EDA, 
upon the recipient.


Sec. 305.6  Final inspection.

    A final inspection will be scheduled by the recipient and 
appropriate notification given to EDA, when the project has been 
completed and all deficiencies have been corrected. EDA personnel may 
attend and participate in the final inspection and, in any event, EDA 
must be advised of the outcome of such final inspection and the 
recipient's acceptance of the work.

[[Page 5359]]

Sec. 305.7  Requirements for Approved Projects.

    (a) The requirements for approved projects are set forth in this 
part and the EDA publication, Requirements for Approved Construction 
Projects, Appendix A to this part displayed at EDA's web site, http://
www.doc.gov/eda. A copy of this publication is available from EDA and a 
copy will be furnished to an award recipient with the Offer of 
Financial Assistance.
    (b) Financial, performance, and progress reports will be specified 
in the Special Award Conditions of the grant.

Appendix A to Part 305--Requirements For Approved Construction 
Projects

OMB Approval No. 0610-0096
Approval Expires 07/31/99

Burden Statement for REQUIREMENTS FOR APPROVED CONSTRUCTION 
PROJECTS INTERIM NINTH EDITION, OCTOBER 1998:

    Notwithstanding any other provision of the law, no person is 
required to respond to, nor shall any person be subject to a penalty 
for failure to comply with, a collection of information subject to 
the requirements of the Paperwork Reduction Act, unless that 
collection of information displays a currently valid OMB Control 
Number.
    The information is required to obtain or retain benefits from 
the Economic Development Administration pursuant to Economic 
Development Administration Reform Act, Public Law 105-393. The 
reason for collecting this information is to enable the Economic 
Development Administration to monitor construction projects for 
compliance with Federal and other requirements. No confidentiality 
for the information submitted is promised or provided except that 
which is exempt under 5 U.S.C. 552(b)(4) as confidential business 
information.
    The public reporting burden for this collection is estimated to 
average 18 hours per response including the time for reviewing 
instructions, searching existing data sources, gathering and 
maintaining the data needed, and completing and reviewing the 
collection of information. Send comments regarding this burden 
estimate or any other aspect of this collection of information, 
including suggestions for reducing this burden to: Economic 
Development Administration, Herbert C. Hoover Building, Washington, 
DC, 20230, and to the Office of Information and Regulatory Affairs, 
Office of Management and Budget, Washington, DC 20503.

Requirements for Approved Construction Projects

Table of Contents

Section I. General and Pre-Construction Requirements

1. Basis for Economic Development Administration Requirements
    A. Applicable OMB Circulars & Code of Federal Regulations
    B. Purpose of this publication
    C. Changes to policies and procedures
    D. Variances to these requirements
2. The EDA Grant Award
    A. Project description
    B. Standard terms and conditions
    C. Special conditions
    D. Grant expiration date
    E. EDA approved budget
    F. Performance measures
3. Initial Actions
    A. Initial EDA Regional Office actions
    B. Pre-award construction
    C. Davis-Bacon requirement for pre-award construction
4. Project Management Conference
5. Selection of the Architect/Engineer
    A. Pre-award selection of the A/E
    B. Acceptable forms of contracts
6. The Architect/Engineer Contract for Services
    A. Suggested forms for contract format
    B. Acceptable types of cost reimbursement for A/E services
    C. Prohibited forms of compensation
    D. Basic and special services
    E. Construction inspection
    F. A/E record keeping and access to records
    G. Required provisions of the A/E contract
7. Multiple Contracts and Phasing
    A. Project phasing
    B. Disbursement of the grant for phased projects
8. Recipient Furnished Equipment and/or Materials
9. Services Performed by the Recipient's Own Forces
    A. Use of in-house forces
    B. Use of force-account forces
10. Construction Management Services
    A. Definition of construction management services
    B. Cost threshold
    C. EDA approval for cost reimbursement
    D. Compensation
    E. Assigning responsibility
11. Certification of Acquisition of Land, Easements and Rights-of-
Way
    A. Title, easements, rights-of-way, etc.
    B. Title opinions
    C. Amount and cost of land, etc.
    D. Changes in amount and cost of land
    E. Federally owned/controlled airfield restriction
12. Relocation Assistance
13. Certification of Adequacy of Treatment of sewage and other waste
    A. Certification of adequacy
    B. Exceptions
    C. Certification Requirements
14. Project Financing
15. Safeguarding Funds
    A. Documentation of project costs
    B. Use of minority banks
    C. Separate bank accounts
    D. Bonding of project fund custodian
16. Department of Commerce Metric Program
17. Seasonality
18. Design for the Handicapped
    A. Source of requirement
    B. Requirements for buildings
    C. Exceptions
    D. Waivers
19. Reporting of Project Progress
    A. Recipient review of project progress
    B. The project performance report
    C. Project performance report due dates
    D. Reporting non-routine performance items
    E. Project performance report format
    F. Grant advances
    G. Delinquent performance reports
20. Environmental Requirements
    A. Policy statement
    B. Applicable directives
    C. Hazardous substances requirements
21. Project Revisions

Section II: Contracting for Project Construction

1. Contracting Standards
    A. State recipients
    B. Recipients other than states
    C. The contract administration system
    D. Standards of conduct
    E. State and local agreements
    F. Use of surplus property
    G. Value engineering
    H. Awards to responsible contractors
    I. Maintenance of records
    J. Use of time and material contracts
    K. Settlement of contractual issues
    L. Protest procedures
2. Competition in Procurement
    A. Full and open competition
    B. Prohibition of use of state or local geographical preferences
    C. Requirements for procurement actions
    D. Use of prequalification lists
3. Acceptable Methods of Procurement
    A. Small purchase procedures
    B. Procurement by sealed bids
    C. Requirements for sealed bids
    D. Procurement by competitive proposals
    E. Procurement by noncompetitive proposals
4. Unacceptable Method of Procurement
5. Contracting with Disadvantaged Firms
    A. Affirmative steps for use of disadvantaged firms
6. Contract Cost and Price Analysis
    A. The price analysis
    B. The profit line item
    C. Federal cost principles
    D. Prohibited methods of contracting
7. Advertising for Bids
    A. Frequency of advertisement for bids
    B. Requirements for projects over $1,000,000
    C. Additional circulation of invitation for bids
    D. Thirty day limit
8. Bonding and Insurance Requirements
    A. Minimum bond amounts
    B. Insurance requirements
9. Bid Schedules for Alternative Materials
    A. Use of bid schedules
    B. Method of award
    C. Exceptions and deviations
10. Non-EDA Work
    A. Requirements for adding non-EDA work
    B. Restrictions on award of contract
11. EDA Review of Proposed Procurement Documents
    A. Procurement sytem certification
    B. EDA aproval of contract documents
    C. EDA prebid review
    D. EDA preaward review
    E. Use of standardized documents and checklists
    F. Proceeding at recipient's risk
12. Construction and Services Contract Provisions
    A. Required contract documents

[[Page 5360]]

    B. Cost documentation
    C. Required contract provisions
13. Wage Rates
    A. Applicable act
    B. Wage rate coverage
    C. Different types of coverage
    D. Period of wage rate validity
    E. Application and exception for wage rates
    F. Exceptions for railroads and public utilities
    G. EDA or Department of Labor investigations
    H. Record retention
    I. Retroactivity of wage rates
14. The Bid Opening
    A. EDA representation at the bid opening
15. Overrun at Bid Opening
    A. When lowest bid exceeds funds available
    B. When lowest bid less deductive alternates exceeds funds 
available
16. Underrun at Bid Opening
    A. EDA notification
17. EDA Approval of the Contract Award
    A. EDA approval
    B. Requirements for EDA approval
    C. Checking debarred ineligible or suspended contractors
18. Executed Bid Award
    A. Contents of executed contract documents to be furnished to 
EDA
19. Preconstruction Conference

Section III: Construction Procedures

1. Recipient Responsibilities
    A. Recipient responsibilities for project monitoring
    B. Recipient responsibilities for project documents
2. Employment of Local Labor
    A. Anticipated labor requirements
    B. Inclusion in contracts and subcontracts
3. Construction Progress Schedule
    A. Construction progress chart
    B. Monthly update
    C. Acceptable formats
4. Construction Sign
    A. Contractor responsibility
    B. Location of sign
    C. Local agency coordination
    D. Modification of sign specifications
    E. Bilingual signs
5. Inspection of Construction
6. Occupancy Prior to Completion
    A. Recipient responsibilities
    B. Role of EDA
7. Contractor Payrolls
    A. Payroll retention requirements
    B. Applicable Executive Order and form
8. Civil Rights Requirements
9. Contract Change Orders
    A. Notification to and approval from EDA
    B. Cost and price analysis
    C. Required copies
    D. Prohibited change of scope
    E. Change order requirements
    F. EDA approval
    G. Substantial variations
10. Inspection for Final Acceptance
    A. Final inspection
    B. Interested parties
11. Specific Requirements for Subcontractors
12. Safety

Section IV: Financial Administration

1. Standards for Financial Management Systems
    A. Requirements for State recipients
    B. Requirements for other recipients
    C. EDA review
2. Grant Disbursements
    A. The reimbursement method
    B. Effect of program income
    C. Withholding payments
    D. Cash depositories
    E. Interest earned on advances
3. Allowable Costs
    A. Limitation on use of funds
    B. Applicable cost principles
4. Period of Availability of Funds
    A. General
    B. Liquidation of obligations
5. Matching or Cost Sharing
    A. Basic rule
    B. Qualification and exceptions
    C. Valuation of donated services
    D. Valuation of 3rd party donated supplies and loaned equipment 
or space
    E. Valuation of 3rd party donated equipment, buildings and land
    F. Valuation of Recipient donated real property for 
construction/acquisition
    G. Appraisal of real property
6. Program Income
    A. General
    B. Definition of program income
    C. Cost of generating program income
    D. Governmental revenues
    E. Royalties
    F. Sale of real property
    G. Use of program income
    H. Income after the award period
7. Non-Federal Audit

Section V: Amendments to Grant Agreements

1. General Requirements
    A. Unforeseen problems
    B. Types of project amendments
    C. Change of scope determination
2. Changes to the Project Scope
    A. Definition of project scope
    B. Approval by EDA
    C. Types of project modifications
    D. EDA review of proposed modifications
3. Time Extensions
    A. Recipient responsibilities
    B. Suspension of disbursements
    C. EDA right to suspend or terminate the grant
4. Budget Line Item Revisions
    A. Requirements for approval by EDA
    B. Transfers between budget line items
    C. Transfer from contingencies line item
    D. Use of underrun funds
    E. Notification of budget line item changes
5. Additional EDA Funding
    A. Request for additional EDA funds
    B. Proceeding before EDA approval
6. Termination of the EDA Grant
    A. Termination for cause
    B. Termination for convenience

Section VI: Project Closeout Procedures

1. Audit Requirements
    A. Securing Single Audit Act audit
    B. Specific audits
    C. Department of Commerce audits
    D. Audit standards
2. Closeout Procedures
    A. Beginning the closeout process
    B. Final grant reports
    C. Liquidation of obligations
    D. The final grant disbursement
    E. Eligible and ineligible costs
    F. After closeout requirements

Section VII: Post Construction Grant Requirements

1. Real Property
    A. Grantee ownership
    B. EDA's reversionary interest
    C. Successor grantees
    D. Applicability of requirements
2. Definitions
3. Use of Property
    A. Use only for authorized purposes
    B. Property no longer needed for grant purpose
    C. Property for lease or sale
    D. Property substitutions
4. Unauthorized use
    A. Disposal without EDA approval
    B. EDA actions for disposal without approval
5. Federal Share
    A. Calculation of federal share
    B. Leasehold depreciation
    C. Transfer to another eligible grantee
    D. EDA interest after compensation
6. Encumbrances
    A. Restrictions on encumbrances
    B. Compensation for encumbrances
    C. Waivers
    D. Water and sewer exceptions
7. Civil Rights Restriction
8. Performance Reports
9. Record Retention
10. Program Income Earned After the Award Period

Section VIII: Exhibits

Section I--General and Pre-Construction Requirements

1. Basis for Economic Development Administration (EDA) Requirements

    A. These Requirements for Approved Projects apply to all awards 
for construction projects and they are based on Office of Management 
and Budget (OMB) administrative requirements for Federal grants as 
set forth in OMB Circulars and on regulations set forth in the Code 
of Federal Regulations (CFR) Section 13 Chapter III, Section 15 Part 
24 and Section 15 Part 14 as they may be amended.
    B. These Requirements for Approved Projects are intended to 
organize and explain the various requirements that apply to 
Federally-assisted construction programs. They are not intended to 
derogate, replace, or negate the above cited Federal requirements. 
Conflicts between these Requirements for Approved Projects and the 
documents referred to above should be brought to the attention of 
EDA immediately. Any inconsistences or conflicts shall be resolved 
in favor of such Federal requirements.
    C. EDA, as a Federal agency, is obligated to promulgate policies 
and procedures applicable to Recipients of EDA grants to insure 
compliance with Federal requirements, to safeguard the public's 
interest in the grant assets, and to promote the effective use of 
grant funds in accomplishing the purpose for which they

[[Page 5361]]

were granted. Pursuant to this obligation, grant terms and 
conditions require Recipients to comply with changes in regulations 
and other requirements and policies EDA may issue from time to time. 
Such changes apply to actions taken by all Recipients of EDA grants, 
existing and prospective, after the effective date of the changes.
    D. EDA's policy is to administer grants uniformly, but it is 
understood that there may be situations warranting a variance. To 
accommodate these situations and to encourage innovative and 
creative ways to address economic development problems, requests for 
variances to the requirements of this Requirements for Approved 
Projects will be considered if they are consistent with the goals of 
EDA programs, make sound and financial sense, and do not conflict 
with applicable Federal and regulatory requirements.

2. The EDA Grant Award

    The EDA grant award contains mandatory requirements and 
information vital to the accomplishment of the project. It should be 
read carefully with particular attention paid to:
    A. The description of the project. This description and the 
corresponding scope of work must be adhered to. Proposed changes to 
EDA approved projects will be permitted by EDA only if they are 
necessary to the proper functioning of the project. Enhancements to 
the project that were not envisioned in the grant award will not be 
approved for EDA participation.
    B. The Standard Terms and Conditions for Title I Public Works 
and Development Facilities and Title IX Economic Adjustment 
Construction Projects. The Standard Terms and Conditions contain, by 
reference or substance, a summary of the pertinent statutes, 
regulations published in the Federal Register or Code of Federal 
Regulations, Executive Orders or OMB Circulars.
    C. The Special Conditions of the grant award. The Special 
Conditions generally contain two types of information. The first 
type relates specifically to the grant being awarded. The second 
type relates to all approved grants and are of recent origin and 
therefore have not yet been incorporated into the Standard Terms and 
Conditions. Special attention should be paid to the Project 
Development Time Schedule. The time schedule can only be extended as 
a result of a written request from the Recipient and a written 
approval by EDA. Failure to meet the time schedule is considered a 
violation of the grant award and may result in action by EDA to 
suspend and/or terminate the grant. No disbursement of EDA grant 
funds is permitted when a project has exceeded the time schedule in 
the grant award unless EDA has given written approval to a time 
schedule extension.
    D. Please note that, unless otherwise stated, EDA funds are 
available for a period beginning at the time the project is approved 
and ending five years after the end of the fiscal year in which the 
project was approved. Any funds not disbursed to the Recipient 
before the end of that period are automatically canceled and will be 
deobligated and will no longer be available for payment of costs 
incurred by the Recipient.
    E. Combination construction and nonconstruction grants. If the 
EDA grant award is for both construction and nonconstruction, the 
Recipient must obtain prior written approval from EDA before making 
any fund or budget transfer from nonconstruction to construction or 
vice versa.
    F. Performance Measures. The Standard Terms and Conditions of 
the EDA grant award make reference to ``Core Performance Measures'' 
that require post-construction reports to be submitted to EDA. The 
first report will be due at the completion of construction of the 
project. The due dates for the submission of the second and third 
reports are 3 years and six years after the completion of 
construction. Questions regarding the content or submission of these 
reports should be directed to EDA.

3. Initial Actions

    A. After the Grant Award has been affirmed, the EDA Regional 
Office will mail a pre-construction package to the Recipient that 
includes a copy of ``Requirements for Approved Projects'', and a 
list of items that need special attention (such as the project 
development time schedule), and a list of any unresolved problems 
identified during the preapproval review process. The EDA Project 
Manager will then contact the Recipient to offer assistance and 
guidance, to arrange for an updated schedule of the Recipient's 
proposed activities and to arrange a Project Management Conference.
    B. Because it is the policy of EDA to discourage the undertaking 
of any construction prior to the submission of an application for 
financial assistance, special consideration and judgment must be 
executed if it becomes necessary for a project to proceed prior to 
award of the EDA grant. Commencement of a project prior to approval 
of the application for assistance is not prohibited, but it may 
jeopardize the favorable consideration of such application since, 
among other things, it raises a rebuttable presumption that funds 
necessary for the accomplishment of the project are otherwise 
available and that proper contracting procedures and labor standards 
may not have been followed.
    C. If construction of the project was begun before affirmation 
of the grant award, the Recipient will be required to document to 
EDA's satisfaction that it has complied with all EDA requirements, 
including but not limited to the payment of Davis-Bacon wages from 
the start of construction and environmental requirements, in order 
to qualify for EDA reimbursement of costs incurred, if agreed to in 
the grant award.

4. Project Management Conference

    Whenever practical, the Project Management Conference will be 
held at the Recipient's location; however, if necessary and required 
for appropriate EDA personnel to be present, it may be held at 
another location including in the Regional Office. The Recipient's 
Authorized Representative, Architect/Engineer, attorney and possibly 
the Recipient's financial representative should be in attendance. 
Reasonable costs for transportation, meals and lodging for these 
individuals are an authorized cost under the administrative line 
item in the project budget. Per diem costs eligible for EDA 
reimbursement may not exceed the current Federal per diem rate.

5. Selection of the Architect/Engineer

    A. If an Architect/Engineer has been selected by the Recipient 
prior to EDA approval of the grant award and the contract between 
the Recipient and the Architect/Engineer has not been previously 
submitted to EDA, it should be submitted as soon after the grant 
award as possible. If the selection has not been made at the time of 
grant award the contract should be sent to the EDA Regional Office 
as soon as possible after its execution by both parties.
    B. For EDA to participate in the cost for architect/engineer 
services the Architect/Engineer must be selected competitively by 
sealed bids (formal advertising) or by competitive proposals. If the 
selection is made by competitive proposal the following requirements 
apply:
    (1) Requests for proposals shall be publicized and shall 
identify all evaluation factors and their relative importance. Any 
response to publicized requests for proposals shall be honored to 
the maximum extent practical;
    (2) Proposals will be solicited from an adequate number of 
qualified sources (normally sufficient to secure at least three 
proposals from qualified proposers);
    (3) The Recipient will have a method for conducting technical 
evaluations of proposals received and for selecting the best 
proposal, price and other factors considered;
    (4) The Recipient will determine the responsible firm whose 
proposal is most advantageous to the program, with price and other 
factors considered. Competitor's qualifications will be evaluated 
and the most qualified competitor will be selected, subject to 
negotiation of fair and reasonable compensation.

6. The Architect/Engineer Contract for Services

    A. The architect/engineer agreement shall provide for all 
services required by the Recipient for the planning, design and 
construction phase of the proposed project. Appropriate standards or 
guides developed by such professional organizations as the American 
Consulting Engineers Council (ACEC), American Society of Civil 
Engineers (ASCE), National Society of Professional Engineers (NSPE), 
and/or the American Institute of Architects (AIA) may be used where 
the Recipient does not have standard procurement documents.
    B. The Architect/Engineer's fee for basic services must be 
either a fixed price or a cost reimbursement with an agreed maximum 
to be eligible for EDA participation. The amount of EDA 
participation will be based on a determination, subject to audit, 
that the compensation is reasonable.
    C. The use of the cost-plus-a-percentage-of-cost and percentage 
of construction cost forms of compensation are specifically 
prohibited.

[[Page 5362]]

    D. The Architect/Engineer's fee shall cover all services 
necessary for the successful execution of the project, including 
consultations, surveys, soil investigations, supervision, travel, 
``as-built'' or record drawings, arrow diagram (CPM/PERT) where 
applicable, and incidental costs. The basic fee shall not exceed 
that prevailing for comparable services in the project area. If the 
total fee is in excess of the prevailing rate because of special 
services to be performed, these services shall be identified in the 
agreement. Such additional charges may be approved for grant 
participation by EDA if they:
    (1) Do not duplicate a charge for services provided for in the 
basic fee and are within the normal scope of the Architect/
Engineer's responsibilities;
    (2) Are a proper charge against the project cost; and
    (3) Are reasonable for the extra services to be rendered.
    E. Regardless of who furnishes the construction inspector, the 
Architect/Engineer shall be held responsible for making sufficient 
visits to the project site to determine, in general, if the work is 
proceeding in accordance with the construction contract.
    F. All negotiated Architect/Engineer contracts (except those of 
$100,000 or less awarded under small purchase procedures) awarded by 
Recipients shall include a provision to the effect that the 
Recipient, EDA, the Comptroller General of the United States, the 
Inspector General of the Department of Commerce, or any of their 
duly authorized representatives, shall have access to any documents, 
books, papers, and records of the Architect/Engineer (which are 
directly pertinent to a specific grant project) for the purpose of 
making an audit, examination, excerpts, and transcriptions. The 
Recipient shall require the Architect/Engineer to maintain all 
required records for at least three years after the Recipient makes 
final payment and all pending matters are closed.
    G. EDA requirements for the agreement for Architect/Engineer 
services are contained in Exhibit A-1 to these ``Requirements for 
Approved Projects''.

7. Multiple Contracts and Phasing

    A. The Recipient is strongly urged to award all contracts for 
the project construction at one time. Where compelling reasons 
justify phasing the project, the Recipient must secure the approval 
of EDA for phasing prior to advertising any portion for bid. The 
Recipient's request for approval of phasing must include:
    (1) Valid reasons justifying the request, and
    (2) A statement from the Recipient that it can, and will, fund 
any overrun that arises in the later phases.
    B. Normally EDA will not disburse funds until all construction 
contracts have been awarded (an exception is the development of a 
water source when required to determine the availability of an 
adequate source of water supply in terms of both quality and 
quantity as called for in the Grant Agreement). Disbursement of 
grant funds by phases must be approved by EDA. Such approvals will 
be given only if the Recipient can demonstrate that a severe 
hardship will result if such approval is not given and there are 
compelling reasons why all phases cannot be contracted for at the 
same time. The Recipient must be capable of meeting incurred costs 
prior to the first disbursement of EDA grant funds.

8. Recipient Furnished Equipment and/or Materials

    The Recipient may wish to incorporate into the project equipment 
and/or materials which it will secure through its own efforts. It is 
the responsibility of the Recipient to assure that such equipment 
and/or materials are adequate for the proposed use. The use of such 
equipment and materials must be approved by EDA to be eligible for 
EDA financial participation. The Recipient must be prepared to show 
that the cost claimed for such equipment and/or materials is 
competitive with local market costs. Acquisitions of Recipient 
furnished equipment and/or materials under this section is subject 
to the requirements of 15 CFR Part 24 or OMB Circular A-110 (or any 
DOC rule implementing such Circular, as applicable). The Recipient 
shall be required to submit with its request for approval either a 
paid invoice or current quotes from not less than three suppliers 
who normally distribute such equipment and/or materials. EDA may 
require that major equipment items be subject to a lien in favor of 
EDA and may also require a statement from the Recipient regarding 
expected useful life and salvage value.

9. Services Performed by the Recipient's Own Forces

    A. The Recipient may have a portion or all of the design, 
construction, inspection, legal services, or other work and/or 
services in connection with the project performed by personnel who 
are employed by the Recipient either full-time or part-time (in-
house), subject to the following conditions:
    (1) EDA must review and approve the Recipient's plan if this 
method is to be elected by the Recipient.
    (2) Such work or services performed by in-house personnel may be 
considered an eligible cost for EDA reimbursement if in conformance 
with Office of Management and Budget Circulars A-87, A-21 or A-122, 
as appropriate.
    (3) If a portion of the architect/engineer services is to be 
performed by in-house forces, the Recipient will submit a statement 
listing the services to be so performed. This statement should 
accompany the architect/engineer agreement when it is submitted to 
EDA for approval.
    B. Due to the difficulty in monitoring force account 
construction and the limited EDA staff available to perform the 
monitoring, force account construction is strongly discouraged. The 
force account method of construction may be approved only if:
    (1) The Recipient has a special skill required for the 
construction, e.g., construction of unique Indian structures, or
    (2) Substantial cost savings can be demonstrated, or
    (3) The Regional Office is satisfied that the Recipient has made 
all reasonable efforts to obtain a contractor, but has failed to do 
so because of uncontrollable factors, such as the remoteness of the 
site combined with a small contract or an overabundance of 
construction work in the project area, or
    (4) It has been determined by EDA that special circumstances 
require its use to successfully complete the project.
    (5) EDA has available the publication, ``Guidelines for Force 
Account Projects'', which can be secured from the EDA Regional 
Office. This publication can be very helpful in ensuring that this 
type of project activity would be an eligible project cost.

10. Construction Management Services

    A. For the purposes of this document, Construction Management is 
defined as the services of a firm with competent and experienced 
staff to act as the Recipient's agent to perform all or part of the 
following:
    (1) Aid the project designer to find expedited or less costly 
methods of construction (Value Engineering).
    (2) Monitor the contracting process. This may vary in scope from 
giving advice to the Recipient to complete control of the 
contracting process.
    (3) Inspection or supervision of inspection of the construction 
work.
    (4) Controlling the expenditure of project funds on a multi-
faceted or highly complex project.
    (5) Controlling unusual methods of contracting such as ``fast 
track'' or ``turn-key''.
    B. EDA will not normally approve the use of a Construction 
Management firm for projects costing less than $5 million.
    C. If the Recipient wishes to use a Construction Manager, EDA 
will participate in such costs only if EDA approves the proposed or 
actual contract for such services between the Recipient and the 
Construction Manager.
    D. The compensation for Construction Management services is 
subject to the same rules as those for architect/engineer services.
    E. The Construction Management Agreement must spell out who is 
responsible for construction inspection, approval of construction 
and supply contracts, change orders and other areas of possible 
conflicts (i.e., the division of responsibility and authority 
between the Recipient, the Architect/Engineer and the Construction 
Manager).

11. Certification of Acquisition of Land, Easements and Rights-of-
Way

    A. As required in the Financial Assistance Award the Recipient 
must furnish evidence satisfactory to the EDA that it has good and 
merchantable title to the tracts or parcels of land on which 
buildings, structures, or other project improvements will be 
located, with any liens or encumbrances noted, and that it has 
obtained all necessary easements, permits, rights-of-way, 
franchises, condemnations, and all Federal, State and local 
approvals necessary to the completion of the project.
    B. To aid EDA in making its determination, the Recipient must 
furnish a description of the sites and rights-of-way on which the 
project will be located. Exhibit C of this

[[Page 5363]]

document is a ``Certificate as to Project Site, Rights-of-Way, and 
Easements,'' which is a format acceptable to EDA as evidence of the 
Recipient's title to the real property necessary for the project. 
The Recipient has the option to prepare the title opinion in a 
format that meets local law or custom. Any title opinion submitted 
must be approved by EDA. EDA may require additional documentation.
    C. If land acquisition is a part of the project, the EDA project 
file must be documented to show the basis for determining that the 
amount of land acquired and the cost of the land is reasonable. If 
an appraisal is required, a professional appraiser(s) should perform 
the service. An appraiser registered with a national society and/or 
licensed by the State will normally be required.
    D. Any significant change in the amount and cost of land from 
that upon which the project approval was based must be approved by 
EDA to be eligible for EDA reimbursement.
    E. No financial assistance under the Act will be approved for a 
project involving public or privately owned land adjacent to or in 
the vicinity of a federally owned or operated airfield, unless the 
Recipient can demonstrate that the proposed project is compatible 
with the airfield land use plan prepared for that facility.

12. Relocation Assistance

    The provisions of the Uniform Relocation Assistance and Real 
Property Acquisition Policies Act of 1970 (P.L. 91-646), as amended, 
are applicable to all States and political subdivisions of States 
and non-profits which are recipients of EDA funding assistance. This 
Act requires financial and other assistance to persons, businesses, 
or farm operations displaced from real property acquired for a 
project financed wholly or in part with Federal funds. It also 
requires compliance with specific guidelines pertaining to 
reimbursable costs incidental to such land acquisition. Recipients 
are required to comply fully with the intent of this Act.

13. Certification of Adequacy of Treatment of Sewage and Other 
Waste

    A. EDA will not provide financial assistance for projects 
involving sewer or other waste disposal facilities unless a State 
permit has been obtained by the Recipient in those States where EPA 
has delegated authority to the State to certify adequacy of 
treatment. In those States where EPA has not delegated such 
authority, a certificate of adequacy of treatment must be obtained 
from EPA in addition to a State permit.
    B. Certification of adequacy of treatment is not normally 
required under the following conditions:
    (1) For single service connections unless an unusual effluent is 
expected.
    (2) For replacement of portions of an existing sewer system 
where sewage flow resulting from the project is not increased.
    (3) For projects which will include only storm drainage as the 
component and the flow from the storm sewer is not introduced in the 
existing sanitary sewer system.
    C. If EPA certification is required, EDA will not authorize the 
advertising, bid opening nor a disbursement of grant funds until an 
unconditional certificate has been obtained. The EDA Project Manager 
will prepare all EDA requests to EPA for Certificates of Adequacy of 
Treatment for projects which involve sewage and/or storm drainage 
facilities. The certification should be obtained as early as 
practicable after acceptance of the project application by EDA. The 
Recipient must provide as much of the following information as is 
required to obtain the certification:
    (1) For sanitary sewer system.
    a. A general descriptive statement of the project explaining the 
problem to be eliminated and the proposed method of elimination.
    b. A vicinity map of the complete project area showing the 
location and size of all existing and proposed sanitary and storm 
sewer lines in plan view, the street system, topographical features, 
overflows and bypasses.
    c. Project design criteria, including the following data:
    (i) Industrial and domestic contribution. (Type of industrial 
contribution should be stated).
    (ii) Line and treatment facility sizing and design criteria used 
therefor.
    (iii) Population figures used.
    (iv) Number of existing and planned sewer connections.
    d. Design criteria to be used for the new treatment facilities. 
This should include the following data:
    (i) Type and extent of existing treatment.
    (ii) Industrial and domestic contribution. (Type of industrial 
contribution should be stated).
    (iii) Peak and average flow data.
    (iv) Component sizing and design criteria used therefor.
    e. For existing treatment facilities to be affected by the 
proposed project submit the design criteria, permit number and 
effluent limitations.
    f. If available, as-built drawings of existing treatment 
facilities showing the location, type, number and size of the 
treatment facilities. If as-built drawings are not available a 
single line drawing of the existing structures such as lift 
stations, manholes, pumping stations, etc., will be accepted.
    g. Agreements, if any, for treatment by other entities.
    (2) For projects involving only storm sewer facilities submit 
the following dated statement, signed by the Recipient's authorized 
representative; ``This proposed storm water sewer system will be 
constructed and operated so as to exclude the introduction of 
domestic sewage and industrial or agricultural waste and will not be 
connected in any way to a sanitary sewer system.''
    (3) Upon receipt by EDA, the certification of adequacy of 
treatment will be reviewed to assure that the certification is 
unconditional. EDA will not accept a conditional certification 
(defined as an approval conditioned on the occurrence of a future 
event such as the future construction of a sewage treatment plant).

14. Project Financing

    Prior to obtaining EDA approval of the project's final plans and 
specifications, the Recipient should furnish evidence to the EDA 
Project Manager that the Recipient has its share of matching funds 
either on hand or firmly committed. Any change in the amount or 
availability of the Recipient's share must be made known to EDA at 
this time. This is equally true of the interim financing amount and 
availability.

15. Safeguarding Funds

    A. Checks drawn to pay project costs will be signed by the 
Authorized Representative of the Recipient and may be counter-signed 
by other representatives of the Recipient if he/she so designates. 
The Recipient shall retain all bank statements, deposit slips, 
canceled checks, and related invoices pertaining to these project 
costs to facilitate final audit.
    B. Consistent with the national goal of expanding the 
opportunities for minority business enterprises, Recipients are 
encouraged to use minority banks as the depository for project 
funds.
    C. Although a separate bank account is not required by EDA, the 
Recipient is urged to use one for the EDA project as it will be 
helpful to audit project costs claimed by the Recipient at project 
closeout.
    D. For non-governmental Recipients EDA requires that the 
Recipient furnish evidence that the custodian of the project funds 
is bonded in an amount not less than the amount of the EDA grant. If 
subject to 15 CFR Part 24, the Recipient must furnish assurances 
that the Recipient's financial management system meets the 
requirements of 15 CFR Part 24.20, Financial Administration, if this 
was not accomplished prior to approval of the grant award.

16. Department of Commerce Metric Program

    Section 5164 of the Omnibus Trade and Competitiveness Act of 
1988 (P.L. 100-418) designates the metric system of measurement as 
the preferred system of weights and measures for U.S. trade and 
commerce.

17. Seasonality

    It is EDA policy to promote construction of projects 
continuously throughout the year. Recipients and their Architect/
Engineers are encouraged to design projects so that construction 
will not be unreasonably curtailed by weather.

18. Design for the Handicapped

    A. Any building or facility financed in whole or in part with 
assistance under the Act must be designed, constructed, or altered, 
so as to insure ready access to, and use of, such building or 
facility by the physically handicapped, as required by P.L. 90-480 
(42 U.S.C. 4151-4156) and the regulations promulgated thereunder (41 
CFR Subpart 101-19.6).
    B. Except as otherwise provided in paragraph C of this section, 
every building, except a residential structure, shall be designed, 
constructed, or altered in accordance with the minimum standards 
contained in the ``American National Standard Specifications for 
Making Buildings

[[Page 5364]]

and Facilities Accessible to, and Usable by, the Physically 
Handicapped,'' Number A 117.1 (1971) approved by and available from 
the American National Standards Institute, Inc., 1430 Broadway, New 
York, NY 10018.
    C. The standards established in paragraph (B) of this section 
shall not apply to:
    (1) The design, construction, or alteration of any portion of a 
building or facility which need not, because of its intended use, be 
made accessible to, or usable by, the public or by physically 
handicapped persons;
    (2) The alteration of an existing building if the alteration 
does not involve the installation of, or work on, existing stairs, 
doors, elevators, toilets, entrances, drinking fountains, floors, 
telephone locations, curbs, parking areas, or any other facilities 
susceptible of installations or improvements to accommodate the 
physically handicapped;
    (3) The alteration of an existing building or facility, or of 
such portions thereof, to which application of the standards is not 
structurally possible.
    D. The standards established in paragraph (B) of this section 
may be modified or waived on a case-by-case basis, provided that the 
Administrator of the General Services Administration determines that 
such waiver or modification is clearly necessary.

19. Reporting of Project Progress

    A. Recipients are required to constantly monitor project 
progress to assure that time schedules are being met, project work 
units by time periods are being accomplished, and other performance 
goals are being achieved. This review shall be made for each 
program, function, or activity as set forth in the approved grant 
application.
    B. The Recipient is required to submit a project performance 
report for each calendar quarter. The report will cover the 
following for each program, function, or activity involved:
    (1) A comparison of actual accomplishments to the timetable 
established in the Grant Award;
    (2) Reasons for delays in those cases where the time table 
approved by EDA was not met;
    (3) Any change to the purpose, nature, location, bona-fide need, 
neighborhood served, size, funding, or cost of the project;
    (4) All change orders issued up to the date of the report and 
not previously reported to EDA, and
    (5) Other pertinent information including, when appropriate, an 
analysis and explanation of and cost overruns or high unit costs.
    C. The project performance report will be due not later than 
January 15, April 15, July 15 and October 15 for the immediate 
previous quarter year. This requirement shall begin with the 
Recipient's acceptance of the EDA Grant Award and shall end when EDA 
approves the final grant disbursement.
    D. Between the required performance reporting dates, events may 
occur which have significant impact upon the project or program. In 
such cases, the Recipient will be required to inform EDA as soon as 
the following types of conditions become known:
    (1) Problems, delays, or adverse conditions which will 
materially affect the ability of the Recipient to attain program 
objectives, prevent the meeting of time schedules and goals, or 
preclude the attainment of project work by established time periods. 
This disclosure shall be accomplished by a statement of the action 
taken, or contemplated, and any Federal assistance needed to resolve 
the situation.
    (2) Favorable developments or events which enable meeting time 
schedules and goals sooner than anticipated or producing more work 
than originally projected; or
    (3) If any performance review conducted by the Recipient 
discloses the need for change in the budget estimates, the Recipient 
is required to submit a request for budget revision.
    E. A sample format for the required project performance report 
is included herein as Exhibit J. The report will be sent to the EDA 
Regional Office. The Recipient may use a format other than the EDA 
sample, provided that the information called for in this section is 
furnished.
    F. EDA does not normally permit grant advances. However, where 
EDA determines that grant advances are necessary and in the best 
interest of the Government and the Recipient, the Recipient will be 
required to submit with the project performance report a Report of 
Federal Cash Transactions. The EDA Regional Office shall furnish the 
required forms for this report.
    G. EDA will not process any requests for grant disbursement from 
Recipients with delinquent performance reports.

20. Environmental Requirements

    A. EDA is required by law to insure that proper environmental 
review of its actions take place; that there is a proper balance 
between the goals of economic development and environmental 
enhancement in its actions; and, that adverse environmental impacts 
from its actions are mitigated or avoided to the extent possible.
    B. Environmental assessments of EDA actions are conducted in 
accordance with the National Environmental Policy Act of 1969, as 
amended (NEPA) (42 U.S.C. 4321 et. seq.), the Environmental Quality 
Improvement Act (42 U.S.C. 4371 et. seq.), The Clean Air Act, as 
amended (42 U.S.C. 7401 et. seq.), the National Historic 
Preservation Act of 1966 (16 U.S.C. 470 et. seq.), The Wild and 
Scenic Rivers Act, as amended (16 U.S.C. 1271 et. seq.), the Flood 
Disaster Protection Act of 1973, as amended (42 U.S.C. 4002 et. 
seq.), the Federal Water Pollution Control Act, as amended (33 
U.S.C. 1251 et. seq.), and the Council on Environmental Quality 
(CEQ) Regulations (40 CFR Section 1500-1508), as specified in EDA 
Directives 17.02-2, 17.02-7, and 17.04, as hereafter amended or 
superseded. Directives are available from any EDA office.
    C. EDA recipients are subject to Federal, state and local 
requirements concerning hazardous substances, including, but not 
limited to, the Comprehensive Environmental Response, Compensation 
and Liability Act (CERCLA), Public Law 96-510 (1980), as amended by 
Public Law 99-499 (1986), 42 U.S.C. 9601-9675; and the Resource 
Conservation and Recovery Act (RCRA), Public Law 89-272 (1965), as 
amended by Public Law 94-580 (1976), Public Law 96-482 (1980) and 
Public Law 98-616 (1984), 42 U.S.C. 6901-6991.

21. Project Revisions

    After Recipient acceptance of the EDA grant award, any change to 
the project as described in the grant award must be reviewed and 
approved by EDA. To be eligible for EDA financial participation the 
proposed revision must meet certain conditions. See Section V of 
this document for guidelines on securing EDA approval of proposed 
project revisions.

Section II--Contracting For Project Construction

1. Contracting Standards

    A. For States: If a State is the recipient of the EDA grant 
award, the State may follow the same policies and procedures it uses 
for procurements from its non-Federal funds provided that the State 
will ensure that every purchase order or other contract includes any 
clauses required by Federal statutes and Executive Orders and their 
implementing regulations. For reimbursable cost determinations, OMB 
Circular A-87 will be applicable.
    B. For Other than States: Recipients of EDA grants other than 
States may use their own procurement procedures which reflect 
applicable State and local laws and regulations, provided that the 
procurements conform to applicable Federal law and the standards 
contained in these ``Requirements for Approved Projects''. 
Recipients may request EDA to approve self-certification of their 
procurement system. Such self-certification shall not limit EDA's 
right to survey the system. The Recipient must cite specific 
procedures, regulations, standards, etc. as being in compliance with 
EDA and other Federal requirements and have its system available for 
review. In the absence of written procurement regulations issued by 
the Recipient which meet the following requirements, applicable 
federal procurement standards shall govern.
    C. Contract Administration System: Recipients will maintain a 
contract administration system which ensures that contractors 
perform in accordance with the terms, conditions and specifications 
of their contracts or purchase orders.
    D. Standards of Conduct: Recipients shall maintain a written 
code or standards of conduct which shall govern the performance of 
their officers, employees or agents engaged in the award and 
administration of contracts supported by Federal funds. No employee, 
officer or agent of the Recipient shall participate in selection, or 
in the award or administration of a contract supported by Federal 
funds if a conflict of interest, real or apparent, would be 
involved. Such a conflict would arise when any of the following has 
a financial or other interest in the firms elected for award:
    (1) an employee, officer or agent
    (2) any member of his/her immediate family
    (3) his or her partner
    (4) an organization which employs, or is about to employ, any of 
the above.
    The Recipient's officers, employees or agents shall neither 
solicit nor accept

[[Page 5365]]

gratuities, favors or anything of monetary value from contractors, 
potential contractors, or parties to subagreements except that 
Recipients may set minimum rules where the financial interest is not 
substantial or the gift is an unsolicited item of nominal intrinsic 
value.
    To the extent permitted by State or local law or regulations, 
such standards of conduct shall provide for penalties, sanctions, or 
other disciplinary actions for violations of such standards by the 
Recipient's officers, employees, or agent, or by contractors or 
their agents.
    E. State and Local Agreements: To foster greater economy and 
efficiency, Recipients are encouraged to enter into State and local 
intergovernmental agreements for procurement or use of common goods 
and services.
    F. Surplus Property: Recipients are encouraged to use Federal 
excess and surplus property in lieu of purchasing new equipment and 
property whenever such use is feasible and reduces project costs.
    G. Value Engineering: Recipients are encouraged to use value 
engineering clauses in contracts for construction projects of 
sufficient size to offer reasonable opportunities for cost 
reductions. EDA will not normally approve value engineering costs 
for construction contracts with estimated costs of less than 
$1,000,000. Value engineering is defined for the purposes of this 
paragraph as a systematic and creative analysis of each contract 
item or task to ensure that its essential function is provided at 
the overall lower cost. Value engineering, as a function, is done 
separately from the architect/engineer design by a person or firm 
not controlled by the architect/engineer.
    H. Awards to Responsible Contractors: Recipients will make 
awards only to responsible contractors possessing the ability to 
perform successfully under the terms and conditions of a proposed 
procurement. Consideration will be given to such matters as 
contractor integrity, compliance with public policy, record of past 
performance and financial and technical resources.
    I. Maintenance of Records: Recipients will maintain records 
sufficient to detail the significant history of each procurement 
affecting the EDA assisted project. These records will include, but 
are not necessarily limited to, the rationale for method of 
procurement, selection of contract type, contractor selection or 
rejection, and the basis for contract price.
    J. Time and Material Contracts: Recipients will use time and 
material type contracts only:
    (1) After a determination that no other type of contract is 
suitable, and
    (2) If the contract includes a ceiling price that the contractor 
exceeds at its own risk.
    K. Settlement of Issues: Recipients alone will be responsible, 
in accordance with good administrative practice and sound business 
judgment, for the settlement of all contractual and administrative 
issues arising out of procurements. These issues include, but are 
not limited to source evaluation, protests, disputes and claims. 
These standards do not relieve the Recipient of any contractual 
responsibilities under its contracts. EDA will not substitute its 
judgment for that of the Recipient unless the matter is primarily a 
Federal concern. Violations of law will be referred to the local, 
State, or Federal authority having proper jurisdiction.
    L. Protest Procedures: Recipients will have protest procedures 
to handle and resolve disputes relating to their procurements and 
shall in all instances disclose information regarding the protest to 
EDA. A protestor must exhaust all administrative remedies with the 
Recipient before pursuing a protest with EDA. Reviews of protests by 
EDA will be limited to:
    (1) Violations of Federal law or regulations (violations of 
State or local law will be under the jurisdiction of State or local 
authorities); and
    (2) Violations of the Recipient's protest procedures for failure 
to review a complaint or protest. Protests received by EDA other 
than those specified above will be referred to the Recipient for 
resolution.

2. Competition in Procurement

    A. All procurement transactions affecting the EDA project will 
be conducted in a manner providing full and open competition 
consistent with the standards contained herein. Some of the 
situations considered to be restrictive of competition include but 
are not limited to:
    (1) Placing unreasonable requirements on firms in order for them 
to qualify to do business,
    (2) Requiring unnecessary experience and excessive bonding,
    (3) Noncompetitive pricing practices between firms or between 
affiliated companies,
    (4) Noncompetitive awards to consultants that are on retainer 
contracts,
    (5) Organizational conflicts of interest,
    (6) Specifying only a ``brand name'' product instead of allowing 
``an equal'' product to be offered and describing the performance of 
other relevant requirements of the procurement, and
    (7) Any arbitrary action in the procurement process.
    B. Recipients will conduct procurements in a manner that 
prohibits the use of statutorily or administratively imposed in-
State or local geographical preferences in the evaluation of bids or 
proposals, except in those cases where applicable Federal statutes 
expressly mandate or encourage geographic preference. Nothing in 
these Requirements for Approved Projects preempts State licensing 
laws. When contracting for architectural and engineering (A/E) 
services, geographical location may be a selection criteria provided 
its application leaves an appropriate number of qualified firms, 
given the nature and size of the project, to compete for the 
contract.
    C. Recipients will have written selection procedures for 
procurement actions. These procedures will ensure that all 
solicitations:
    (1) Incorporate a clear and accurate description of the 
technical requirements for the material, product, or service to be 
procured. Such descriptions shall not, in competitive procurements, 
contain features which unduly restrict competition. The description 
may include a statement of the qualitative nature of the material, 
product or service to be procured, and when necessary, shall set 
forth those minimum essential characteristics and standards to which 
it must conform if it is to satisfy its intended use. Detailed 
product specifications should be avoided if at all possible. When it 
is impractical or uneconomical to make a clear and accurate 
description of the technical requirements, a ``brand name or equal'' 
description may be used as a means to define the performance or 
other salient requirements of a procurement. The specific features 
of the named brand which must be met by offerors shall be clearly 
stated; and
    (2) Identify all requirements which the offerors must fulfill 
and all other factors to be used in evaluating bids or proposals.
    D. Recipients will ensure that all lists of prequalified 
persons, firms or products which are used in acquiring goods and 
services are current and include enough qualified sources to ensure 
maximum open and free competition. Also, Recipients will not 
preclude potential bidders from qualifying during the solicitation 
period.

3. Acceptable Methods of Procurement

    A. Procurement by Small Purchase Procedures: Small purchase 
procedures are those relatively simple and informal procurement 
methods for securing services, supplies or other property that do 
not cost more than the simplified acquisition threshold fixed at 41 
U.S.C. 403(11) (currently set at $100,000) in the aggregate. If 
small purchase procurements are used, price or rate quotations will 
be obtained from an adequate number of qualified sources (normally 
at least three quotes will be required).
    B. Procurement by Sealed Bids (formal advertising): Bids are 
publicly solicited and a firm-fixed-price contract (lump sum or unit 
price) is awarded to the responsible bidder whose bid, conforming 
with all the material terms and conditions of the invitation for 
bids, is lowest in price. The sealed bid method is the preferred 
method for procuring construction. In order for sealed bidding to be 
feasible, the following conditions should be present:
    (1) A complete, adequate and realistic specification or purchase 
description approved by EDA is available,
    (2) Two or more responsible bidders are willing and able to 
compete effectively for the business, and
    (3) The procurement lends itself to a firm fixed-price contract 
and the selection of the successful bidder can be made principally 
on the basis of price.
    C. If sealed bids are used, the following requirements apply:
    (1) The invitation for bids will be publicly advertised and bids 
shall be solicited from an adequate number of known suppliers, 
providing them sufficient time prior to the date set for the opening 
of bids.
    (2) The invitation for bids, which will include any 
specifications and pertinent attachments, shall define the items or 
services in order for the bidder to properly respond.
    (3) All bids will be publicly opened at the time and place 
prescribed in the invitation for bids.

[[Page 5366]]

    (4) A firm fixed-price contract award will be made in writing to 
the lowest responsive and responsible bidder. When specified in 
bidding documents, factors such as discounts, transportation costs 
and life cycle costs shall be considered in determining which bid is 
lowest. Payment discounts will only be used to determine the low bid 
when prior experience indicates that such discounts are usually 
taken advantage of.
    (5) Any or all bids may be rejected if there is a sound and 
properly documented reason.
    D. Procurement by Competitive Proposals: The technique of 
competitive proposals may be used on EDA projects to secure 
architect/engineer services and is conducted with more than one 
source submitting an offer, and either a fixed price or cost-
reimbursement type contract is awarded. It is generally used when 
conditions are not appropriate for the use of sealed bids. If this 
method is used, the following requirements apply:
    (1) Requests for proposals will be publicized and will identify 
all evaluation factors and their relative importance. Any response 
to publicized requests for proposals shall be honored to the maximum 
extent practical.
    (2) Proposals will be solicited from an adequate number of 
qualified sources (normally EDA requires responses from at least 
three responsible firms).
    (3) Recipients will have a method for conducting technical 
evaluations of the proposals received and for selecting awardees.
    (4) Awards will be made to the responsible firm whose proposal 
is most advantageous to the program, with price and other factors 
considered.
    (5) Recipients may use competitive proposal procedures for 
qualifications-based procurement of architectural/engineering (A/E) 
professional services whereby competitors' qualifications are 
evaluated and the most qualified competitor is selected, subject to 
negotiation of fair and reasonable compensation. The method, where 
price is not used as a selection factor, can only be used in 
procurement of A/E professional services. It cannot be used to 
purchase other types of services though A/E firms are a potential 
source to perform the proposed effort.
    E. Procurement by Noncompetitive Proposals: This technique 
requires EDA prior written concurrence and is conducted by 
solicitation of a proposal from only one source, or after 
solicitation of a number of sources, competition is determined 
inadequate. Procurement by noncompetitive proposals may be used only 
when the award of a contract is infeasible under small purchase 
procedures, sealed bids or competitive proposals and one of the 
following circumstances applies:
    (1) The item is available only from a single source; or
    (2) The public exigency or emergency for the requirement will 
not permit a delay resulting from competitive solicitation; or
    (3) After solicitation of a number of sources, competition is 
determined inadequate.

4. Unacceptable Method of Procurement

    The cost-plus-a-percentage-of-cost method of contracting is 
unacceptable for use on EDA assisted projects. EDA grant funds may 
not be used to reimburse costs incurred under such a contract.

5. Contracting with Disadvantaged Firms

    A. The Recipient shall make positive efforts to utilize small 
businesses, minority-owned firms, and women's business enterprises, 
whenever possible. Recipients 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.

6. Contract Cost and Price Analysis

    A. Recipients must perform a cost or price analysis in 
connection with every procurement action including contract 
modifications (change orders). The method and degree of analysis is 
dependent upon the facts surrounding the particular procurement 
situation, but as a starting point, Recipients must make independent 
estimates before receiving bids or proposals. A cost analysis must 
be performed when the offeror is required to submit the elements of 
his estimated cost, e.g., under professional, consulting, and 
architectural/engineering services contracts. A cost analysis will 
be necessary when adequate price competition is lacking, and for 
sole source procurements, including contract modifications or change 
orders, unless price reasonableness can be established on the basis 
of a catalog or market price of a commercial product sold in 
substantial quantities to the general public or based on prices set 
by law or regulation. A price analysis will be used in all other 
instances to determine the reasonableness of the proposed contract 
price.
    B. Recipients will negotiate profit as a separate element of the 
price for each contract in which there is no price competition and 
in all cases where cost analysis is performed. To establish a fair 
and reasonable profit, consideration will be given to the complexity 
of the work to be performed, the risk borne by the contractor, the 
contractor's investment, the amount of subcontracting, the quality 
of its record of past performance and industry profit rates in the 
surrounding geographical area for similar work.
    C. Costs or prices based on estimated costs for contracts under 
grants will be allowable only to the extent that costs incurred or 
cost estimates included in negotiated prices are consistent with 
Federal cost principles (see OMB Circulars A-21, A-87 or A-122 as 
applicable). Recipients may reference their own cost principles that 
comply with the applicable Federal cost principles.
    D. The cost-plus-a-percentage of cost and percentage of 
construction cost methods of contracting shall not be used.

7. Advertising for Bids

    A. In the absence of State or local law to the contrary, the 
advertisement for bids should appear in publications of general 
circulation a minimum of four times within a 30 day period prior to 
the opening of bids.
    B. When the estimated construction cost exceeds one million 
dollars, the advertisement for bids should appear in publication(s) 
with national circulation a minimum of four times within the 30-day 
period prior to the opening of bids.
    C. Additional circulation of the invitation for bids is 
encouraged if it is needed to obtain the coverage necessary to 
secure competitive bids.
    D. Generally, a minimum of 30 days should be allowed for 
submission of bids.

8. Bonding and Insurance Requirements

    A. For construction or facility improvement contracts or 
subcontracts exceeding $100,000 the following minimum bonding 
requirements apply:
    (1) The bonding company selected must be listed in U.S. Treasury 
Department Circular 570.
    (2) 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 will, 
upon acceptance of his bid, execute such contractual documents as 
may be required within the time specified.
    (3) A performance bond on the part of the contractor for 100 
percent of the contract price.
    (4) A payment bond on the part of the contractor for 100 percent 
of the contract provisions.
    B. The Recipient shall require that each construction contractor 
and all subcontractors maintain, during the life of its contract, 
Workmen's Compensation Insurance, Public Liability Insurance, and 
such other types of special coverage required by the nature of the 
work and State and local law. When appropriate, the Recipient shall 
require the prime contractor to provide Builder's Risk Insurance as 
part of the construction contract. In any case, the responsibility 
for seeing that coverage is obtained and kept in force remains with 
the Recipient. Such coverage is an eligible project cost, when 
obtained by the Recipient directly.

[[Page 5367]]

9. Bid Schedules for Alternative Materials

    A. Should the Recipient, acting upon the advice of his/her 
consultant Architect/Engineer desire to obtain competitive prices 
for differing materials, such bids should be requested on the basis 
of ``Bid Schedule A'', ``Bid Schedule B'', etc. Bid Schedules, as 
used herein, refer to the method used to obtain bids on more than 
one material to be used for the same purpose. As an example, if 
2,000 linear feet of sewer line were to be installed, Bid Schedule A 
might call for the pipe material to be cast iron. Bid Schedule B 
might call for the pipe material to be ductile iron. Bid Schedule C 
might call for the material to be asbestos cement, etc.
    B. If bids are asked for on the basis of two or more Bid 
Schedules as set forth above, the bid documents must clearly set 
forth that the contract will be awarded to the bidder having 
proposed the lowest responsive bid within the amount of funds 
announced as available by the Recipient to finance the contract and 
including the Bid Schedule upon which that Contractor bid the lowest 
price.
    C. If the Recipient wishes to use a bid material which will 
result in increased cost, EDA may permit the use of the material 
chosen, but the amount of grant participation by EDA shall remain 
based on the lowest responsive bid. The contract must be awarded to 
the lowest bidder determined in accordance with the procedure 
described above unless a deviation is specifically allowed in 
applicable State and local law.

10. Non-EDA Work

    A. If the Recipient plans to add work that is an addition to the 
approved EDA project, the following will apply:
    (1) The advertisement for bids, all bid documents, and contract 
documents shall clearly define and separate the EDA portion of the 
work from the non-EDA portion.
    (2) The Recipient may offer for bid and award work in addition 
to the EDA portion, provided:
    a. the Recipient understands that EDA will participate in the 
EDA portion only;
    b. the additional work does not adversely affect the original 
intent of the EDA project or its economic impact, as approved.
    (3) Contracts shall be so drawn that the EDA-assisted portion of 
the work is clearly identifiable at all times during construction.
    (4) Underruns in the EDA project cannot be applied to assist the 
Recipient in funding work which is not a part of the EDA project. It 
is the responsibility of the Recipient to pay for all added work in 
full.
    (5) In the event of an overrun on the EDA portion of the work, 
it is the Recipient's responsibility to supply the necessary 
additional funds and to deposit such funds in the project account. A 
revised project budget estimate will then be prepared which will 
clearly show the portion of project cost to be shared by EDA and the 
portion the Recipient must fund in its entirety. In addition, the 
overall percentage participation of EDA in the project shall be 
clearly identified.
    B. When the EDA project is included with non-EDA assisted work, 
the Recipient will normally award to the lowest bidder on all the 
work. However, EDA participation will be based on the lowest bid for 
the EDA-assisted portion. When this occurs, the Recipient will 
prepare a memorandum to EDA, which will clearly present the details 
of the award.

11. EDA Review of Proposed Procurement Documents

    A. If a Recipient wishes to have its procurement system 
certified by EDA, it should follow the procedures in Section II 1 B 
of these ``Requirements for Approved Projects''. If EDA certifies 
the Recipient's procurement system, the Recipient may not have to 
submit proposed bid documents to EDA for approval if instead it 
submits an executed copy of the Checklist for Construction Contracts 
(see Exhibit A-2).
    B. EDA approval of plans, specifications, contract and related 
documents is to assure compliance with terms of the EDA grant award 
and does not attest to the accuracy or completeness of design, 
dimensions, details, proper selection of materials nor compliance 
with required codes or ordinances. This responsibility rests with 
the Recipient.
    C. A pre-bid review of proposed construction bid documents by 
EDA is required if:
    (1) The procurement is expected to exceed the simplified 
acquisition threshold (currently $100,000) and the Recipient's 
procurement procedures and operations have not been certified by EDA 
and/or do not comply with the procurement standards of this 
document, or
    (2) The scope of the work as approved in the EDA grant award has 
changed, or
    (3) The proposed bid documents specify one or more ``brand 
name'' products.
    D. A pre-award review by EDA is required if:
    (1) The procurement is expected to exceed the simplified 
acquisition threshold (currently $100,000) and is to be awarded 
without competition after one bid or offer is received in response 
to a solicitation, or
    (2) The proposed award is more than the simplified acquisition 
threshold and is to be awarded to other than the apparent low bidder 
under a sealed bid procurement, or
    (3) A proposed contract modification changes the scope of a 
contract or increases the contract amount by more than the 
simplified acquisition threshold, or
    (4) The Recipient's procurement procedures or operation fails to 
comply with the procurement standards in this Requirement for 
Approved Construction Projects, or
    (5) The procurement, which is expected to exceed the simplified 
acquisition threshhold, specifies a ``brand name'' product.
    E. It will greatly expedite EDA's review of the proposed bid 
documents if the Recipient completes the Checklist for Construction 
Contracts (Exhibit A-2), has it signed by the Recipient's authorized 
representative and submits it to the EDA regional office with the 
proposed construction bid package for approval. EDA review and 
approval of the proposed contract documents will also be expedited 
if the Recipient uses standardized documents such as ``Contract 
Documents for Construction of Federally Assisted Water and Sewer 
Projects'' jointly prepared, endorsed by, and available from, the 
Environmental Protection Agency, the Rural Development Agency, the 
Department of Housing and Urban Development, the Associated General 
Contractors of America, the Consulting Engineers Council and the 
National Society of Professional Engineers. Standardized contract 
forms available from the American Institute of Architects are also 
acceptable to EDA.
    F. Until EDA has reviewed and approved the Recipient's proposed 
contracts and related procurement documents, the Recipient will be 
proceeding at its own risk regarding the eligibility of costs 
incurred.

12. Construction and Services Contract Provisions

    A. The proposed contract documents to be part of the invitation 
for bids should contain at least the following:
    (1) An Index.
    (2) Advertisement for Bids.
    (3) Information for Bidders.
    (4) Bid Form.
    (5) Contract Form.
    (6) Bid Bond.
    (7) Performance Bond.
    (8) Payment Bond.
    (9) General Conditions.
    (10) ``Supplemental General Conditions'' (to be furnished by 
EDA).
    (11) Technical Specifications.
    (12) Working Drawings.
    (13) Notice of Requirements for Affirmative Action to Ensure 
Equal Employment Opportunity (E.O. 11246 and 41 CFR 60-4) (Exhibit 
E).
    B. The package sent to EDA should also contain a documentation 
of the estimated cost for the proposed contract (see Section II 6. 
of these ``Requirements for Approved Projects'').
    C. The Recipient shall include the following contract provisions 
or conditions in all procurement contracts and subcontracts for the 
EDA assisted project.
    (1) Contracts in excess of the simplified acquisition threshold 
(currently $100,000) shall contain provisions or conditions which 
will allow for administrative, contractual, or legal remedies in 
instances where contractors violate or breach contract terms, and 
provide for such sanctions and penalties as may be appropriate.
    (2) Contracts in excess of the simplified acquisition threshold 
shall contain suitable provisions for termination by the Recipient 
including the manner by which it will be effected and the basis for 
settlement. In addition, such contracts shall describe conditions 
under which the contract may be terminated for default as well as 
conditions where the contract may be terminated because of 
circumstances beyond the control of the contractor.
    (3) All contracts awarded in excess of $10,000 by the Recipient 
and their contractors or subrecipients shall contain a provision 
requiring compliance with Executive Order 11246, entitled ``Equal 
Employment Opportunity,'' as amended by Executive Order 11375, and 
as supplemented in Department of Labor regulations (41 CFR Part 60).
    (4) All contracts and subgrants in excess of $2,000 for 
construction or repair shall

[[Page 5368]]

include a provision for compliance with the Copeland ``Anti-
Kickback'' Act (18 U.S.C. 874) as supplemented in Department of 
Labor regulations (29 CFR, Part 3). This 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 works, to give up any part of the compensation to 
which he/she is otherwise entitled. The Recipient shall report all 
suspected or reported violations to EDA.
    (5) All construction contracts in excess of $2,000 awarded by 
the Recipient and Subrecipients shall include a provision for 
compliance with the Davis-Bacon Act (40 U.S.C. 276a to a-7) as 
supplemented by Department of Labor regulations (29 CFR Part 5). 
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 often 
than once a week. The Recipient shall place a copy of the current 
prevailing wage determination issued for 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 EDA.
    (6) Where applicable, all contracts awarded by the Recipients 
and Subrecipients in excess of $2,000 for construction contracts and 
in excess of $2,500 for other contracts which 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. 327-330) as supplemented by Department of 
Labor regulations (29 CFR Part 5). Under Section 102 of this 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.
    (7) Section 107 of the Contract Work Hours and Safety Standards 
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.
    (8) 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 Grants, 
Contracts and Cooperative Agreements''.
    (9) All negotiated contracts (except those awarded by small 
purchases procedures) awarded by the Recipient shall include a 
provision to the effect that the Recipient, EDA, the Office of 
Inspector General, the Comptroller General of the United States, or 
any of their duly authorized representatives, shall have access for 
the purpose of audit and examination to any books, documents, 
papers, and records of the contractor which are directly pertinent 
to that specific contract.
    (10) The Recipient shall require contractors to maintain all 
required records for three years after the Recipient makes final 
payments and all other pending matters are closed.
    (11) 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 EDA and the regional office of 
the Environmental Agency (EPA).
    (12) Recipients and subrecipients must contain mandatory 
standards and policies relating to energy efficiency which are 
contained in the State energy conservation plan, where applicable, 
issued in compliance with the Energy Policy and Conservation Act 
(P.L. 94-165).
    (13) EDA may require changes, remedies, changed conditions, 
access and record retention and suspension of work clauses approved 
by the Office of Federal Procurement Policy.
    (14) The EDA project number should appear on all drawings and on 
the face sheet of specification documents. In the case of a single 
sheet layout included in folders, the project number should be shown 
on the face of the sheet or at a point which will be outside when 
folded. If the layout consists of two or more sheets, all sheets 
should be so identified.
    (15) In all cases, a reasonable time must be allowed to perform 
the work and the contract documents should stipulate the number of 
calendar days allowed for completing the work.
    (16) EDA urges that a liquidated damage provision be included in 
all construction contracts with a specific dollar amount of daily 
damage to be assessed against the Contractor for each calendar day 
beyond the stipulated completion date. The daily amount of damages 
shall be a reasonable and adequate amount based upon the 
circumstances and estimated dollar cost of the individual contract, 
or the revenue-producing capacity of the project. The liquidated 
damages provision provides the Recipient with a feasible means of 
securing compensation for damages for delays in completing the work. 
Without such a provision, the proving of such damage is difficult 
and usually entails court action. In the event that the Recipient 
objects to the inclusion of a liquidated damages provision in 
construction contracts, a statement of the reasons for objecting 
should be submitted with the proposed contract documents.
    (17) The Architect/Engineer should be encouraged to use 
deductive alternates which do not alter the scope of the project, 
affect the economic impact or project revenue, or change the project 
justification. Thus, should the bids exceed the cost estimate, 
deductive alternates may be used to reduce the cost to the extent 
necessary to come within the approved funds. Deductive alternates, 
where used, must be listed in the order to be used on the bid 
documents and must be taken in that order when awarding the 
contract. Deductive alternates should not be used for material. EDA 
recommends that unit price bidding based on quantities estimated by 
the Architect/Engineer so as to arrive at a total base bid be used 
to the greatest practical degree.
    (18) The limiting of materials and/or equipment to a particular 
manufacturer or brand name (``sole source'') must have EDA approval 
to be eligible for reimbursement from grant funds unless an ``or 
equal'' clause is included in the equipment specifications.
    (19) EDA discourages the use of performance type specifications. 
If the Recipient or his/her Architect/Engineer wishes to use 
performance type specifications, written approval must be secured 
from EDA.
    (20) See Section II, paragraph 8 of these ``Requirements for 
Approved Projects'' for bonding and insurance requirements.
    (21) Exhibit B, ``Supplemental General Conditions'' found in the 
Exhibits section of these ``Requirements for Approved Projects'' 
must be made a part of the construction bid and contract documents 
unless all EDA and other Federal requirements contained therein are 
covered elsewhere.
    (22) The bidding documents should stipulate that:
    a. the Recipient may consider any bid informal which is not 
prepared and submitted in accordance with the provision of the bid 
documents and may waive any informalities or reject any and all 
bids;
    b. any bid may be withdrawn prior to the time scheduled for the 
opening of bids but not afterward; and
    c. any bid received after the time and date specified for the 
bid opening shall not be considered.
    (23) Stated allowances may be used for certain items such as 
door and/or window hardware with the approval of EDA.
    (24) All of the above documents shall be included in the sets of 
bidding documents to be issued to prospective bidders, with any 
changes or additions recommended by EDA. The responsibility for 
complying with all State and local laws rests with the Recipient.
    (25) Exhibit E to these ``Requirements for Approved Projects'' 
is a notice which provides goals and timetables for minority and 
female participation in construction work. This notice must be 
included in all invitations for bids for construction projects for 
which the prime contract and any related subcontracts are in excess 
of $10,000. EDA shall furnish the Recipient with the appropriate 
goals and timetables to be inserted in the above notice. In 
addition, the requirements of the above notice have been provided in 
the ``Supplemental General Conditions'' (Exhibit B) as the Standard 
Federal Equal Employment Opportunity Construction Contract 
Specifications.
    (26) EDA approval of plans, specifications, contract and related 
documents is to assure compliance with terms of the Grant

[[Page 5369]]

Agreement and does not imply nor attest to the accuracy or 
completeness of design, dimensions, details, proper selection of 
materials, nor compliance with required codes or ordinances. This 
responsibility rests with the Recipient.
    (27) In the absence of State or local law to the contrary, the 
advertisement for bids will conform to the requirements of Section 
II 7 of these ``Requirements for Approved Projects''.
    (28) Only complete sets of plans and specifications should be 
issued to prospective contractors and/or subcontractors.
    (29) Generally, a minimum of 30 days should be allowed for 
submission of bids.

13. Wage Rates

    A. Wage rates paid for labor must not be less than the 
prevailing area wages as determined by the Secretary of Labor and 
embodied in the construction contract, pursuant to the provisions of 
the Davis-Bacon Act, as amended (40 U.S.C. 276a to 276a-7). EDA will 
secure the wage determination for the Recipient based on the 
following.
    B. Most areas of the United States are covered by existing 
Department of Labor (DOL) wage decisions published and updated at 
irregular intervals. If the Recipient's project is in a covered 
area, the EDA Regional Office will supply copies of the applicable 
wage decision upon the Recipient's request. If the area is not 
covered by an existing wage decision the following procedure will 
apply. Between 60 and 45 days prior to the anticipated date of 
advertising for bids, the Recipient shall send to the EDA Regional 
Office a request for a wage determination (also referred to as a 
wage decision) defining the type of construction category (Building, 
Heavy or Highway) with each feature of work listed under the 
appropriate category. In addition, the crafts or skills needed for 
each category shall be listed and any pertinent wage information 
available submitted, such as statements from the secretaries of the 
Association of General Contractors and the Building Trades Council 
having jurisdiction. In isolated communities, certified copies of 
current contractors' payrolls for similar type work in the area 
concerned may accompany the request. When a State wage determination 
is required by State law, the Recipient must secure a schedule of 
rates from the State Labor Department and incorporate both State and 
Federal schedules of rates in the contract documents. The Recipient 
is responsible for seeing that the wage rates shown in the contract 
documents reflect not less than the higher of the Federal or State 
rate by trade. EDA will secure the wage decision from the 
appropriate Department of Labor Regional Administrator.
    C. Each feature of work scheduled must call for Building, Heavy, 
or Highway wage rates, if applicable. Where a proposed contract 
involves only one type of construction, the specifications shall so 
state. Where more than one type of construction is involved, the 
specification shall identify, as specifically as possible, into 
which category of construction each work item falls. This decision, 
made by the Recipient in consultation with the Architect/Engineer, 
shall be based on local or area practice to insure fairness to all 
prospective bidders on construction contracts to be awarded.
    D. Wage decisions are only valid for a 120-day period and 
extensions of wage decisions shall not be granted. If the decision 
expires without being superseded prior to award of contract, a new 
wage decision must be secured and included in the proposed contract 
documents prior to award. The request for a new wage decision shall 
be addressed to the EDA Regional Office. If the wage rate included 
in the Invitation for Bids is superseded, the new wage rate must be 
substituted if the new wage rate decision is dated over ten days 
prior to the bid openings; otherwise the old wage rate shall apply.
    E. Contractors and subcontractors shall be advised that upon 
acceptance of their bids, they are obligated to pay not less than 
the established wage rate unless otherwise required by law. Wage 
rates need not be listed for non-manual workers, including 
executive, supervisory, administrative and clerical employees.
    F. Wage rate schedules are generally not required for contracts 
between Recipients and railroads and other public utilities for 
construction services to the extent that the services are performed 
by personnel employed directly by the utility concerned and paid at 
rates prevailing for the type of work and utility concerned.
    G. EDA or the Department of Labor may cause investigation to be 
made as may be necessary to assure compliance with the labor 
standard clauses required by the regulations contained in 29 CFR, 
Part 5 and the applicable statutes listed therein. Complaints made 
to, or which come to the attention of the Recipient, shall be called 
to the attention of the EDA Regional Office.
    H. The Recipient shall require each contractor and subcontractor 
to submit, in compliance with the Davis-Bacon Act, a weekly payroll 
record. These records shall be retained for a period of three years 
from the date of completion of the contract and in a manner 
reasonably accessible. Such payroll records shall be made available 
at all times for inspection by EDA, the Department of Commerce 
Inspector General or their authorized representative, and by 
authorized representatives of the Department of Labor. The Recipient 
shall file these records by contract number. If the Recipient wishes 
to use another system for maintaining these records, the EDA 
Regional Office shall be consulted to avoid any violations of the 
Privacy Act. The Recipient shall check the submitted payroll records 
to assure they contain the following:
    (1) A properly completed payroll Form WH-347, or
    (2) If another form is used, all the information required by 
Form WH-347, including the name, address, correct job 
classification, rate of pay, daily and weekly number of hours 
worked, deductions made, and actual wages paid for all employees; 
and the Statement of Compliance, properly executed as shown on the 
reverse side of Department of Labor Form WH-347, ``Payroll Reporting 
Form'' containing all of the information requirements including the 
Statement of Compliance. Copies are available from the 
Superintendent of Documents, U.S. Government Printing Office, 
Washington, D.C. 20402.
    I. Where a construction contract has been awarded and work has 
commenced on the EDA approved project prior to acceptance of the 
Grant Award, wage rates and requirements listed herein shall be 
retroactive to the date of start of construction.

14. The Bid Opening

    A. Whether or not an EDA representative is present at the bid 
opening, the Recipient will furnish the following to the EDA 
Regional Office:
    (1) a statement signed by the Authorized Representative of the 
Recipient, certifying that all bids were received sealed and were 
opened in his/her presence;
    (2) copy of official minutes of the bid opening;
    (3) a copy of the bid tabulation.

15. Overrun at the Bid Opening

    A. If the lowest responsive bid received at the bid opening 
exceeds the amount of funds available to finance the contract:
    (1) the Recipient may without taking deductive alternates:
    a. reject all bids;
    b. augment the funds available in an amount sufficient to enable 
award to the lowest responsive bidder.
    (2) The Recipient may take deductive alternates in the order 
shown in the Invitation for Bids until at least one of the 
responsive bids less deductive alternates result in a price within 
the funds announced as available. Then award may be made to that 
bidder. It should be noted that this procedure may change the order 
of bidders and thus extra care must be exercised to insure that:
    a. all responsive bids are considered;
    b. deductive alternates have been taken in the exact order shown 
in the Invitation for Bids; and
    c. only sufficient deductive alternates have been taken to 
reduce at least one of the responsible bids to or below the amount 
of funds announced as available.
    (3) In no event, however, should the Recipient negotiate with 
the low bidder or other bidders in order to reduce the cost within 
the funds available.
    B. If the low bid less all deductive alternates exceeds the 
funds available, the Recipient may:
    (1) furnish the additional funds required. If the Recipient 
intends to finance the overrun from his/her own funds, he/she will 
furnish a written letter or statement to the EDA regional office 
affirming his/her intention to finance the overrun and indicating 
the source of funds. If such funds are to be borrowed an appropriate 
supplemental financial plan must be prepared by the Recipient; or
    (2) reject all bids and have the Architect/Engineer redesign the 
project, within the approved scope, to reduce the cost to, or below 
the approved amount and readvertise; or
    (3) request additional EDA financial assistance as a last 
resort. However, before the Regional Office can accept a request for 
additional EDA funds, it will be necessary for the Recipient to 
furnish the following documentation to the EDA Regional Office:

[[Page 5370]]

    a. a written statement from the Architect/Engineer giving his/
her professional opinion that redesign of the project within the 
approved scope or using new or additional deductive alternates 
cannot reasonably be expected to reduce the cost to within the 
available funds; and
    b. a written statement from the Authorized Representative or 
governing body of the Recipient that the Recipient cannot furnish 
the additional funds required, giving the reasons plus documentation 
and/or statistics relative to the financial condition of the 
Recipient.

16. Underrun Funds at the Bid Opening

    A. If the total amount of construction contract awards is less 
than the approved line item for construction and/or any of the other 
line items in the EDA approved budget experiences an underrun such 
that the total expected actual cost will be less than the cost 
estimated in the EDA approved budget, EDA must be notified.
    B. Underrun funds resulting from the situation described in 
paragraph A above may not be used to enhance or increase the scope 
of the project.

17. EDA Approval of the Contract Award

    A. EDA must review and approve the award of all necessary 
contracts in order for the cost to be eligible for EDA 
reimbursement. However, pending EDA approval the Recipient may issue 
the Notice to Proceed permitting the work to go forward.
    B. To obtain approval of the contract award, the Recipient shall 
submit to the EDA Regional Office:
    (1) those items listed in Section II, Paragraph 13A and 13B of 
these ``Requirements for Approved Projects'', if not furnished 
previously;
    (2) evidence of bidder's qualification. Architect/Engineer must 
review and add his/her opinion of bidder's qualifications;
    (3) evidence of publication of advertisement for bids;
    (4) certified evidence of the Recipient's ability to provide the 
financial participation required by the Grant Agreement;
    (5) evidence of ability to provide construction financing;
    (6) evidence of ability to provide the movable equipment and 
furnishings necessary to make the project a usable facility;
    (7) a resume of Resident Engineer's or Resident Inspector's 
qualifications for approval if not previously furnished;
    (8) evidence of establishing a project accounting system for the 
project; and
    (9) evidence of bonding of those persons authorized to draw upon 
the project funds as required by State and/or local law.
    C. Prior to awarding any contract the Recipient should contact 
the EDA Regional Office so that the contractor can be checked 
against the list of contractors debarred, ineligible, or suspended 
from dealing with the Federal government or indebted to the United 
States. Costs for work done by such contractors are ineligible for 
EDA financial participation.

18. Executed Bid Award

    A. After the bid award has been made, if EDA requests it, the 
Recipient will submit to EDA one set of bound executed contract 
documents. Each set shall consist of:
    (1) all documents furnished the bidder prior to receipt of bids 
and upon which base bids were submitted;
    (2) a signed or certified copy of the contract or agreement 
executed between the Recipient and the Contractor, including all 
addenda as issued, with necessary blanks completed;
    (3) a copy of performance and payment bonds, dated the same date 
or subsequent to the date of the contract, supported by a properly 
signed and dated power of attorney, issued by the Surety. The Surety 
must be authorized to transact a fidelity and surety business in the 
State where the project is located and must be on the Treasury 
Department's current Circular 570, as ``Companies Holding 
Certificate of Authority as Acceptable Sureties on Federal Bonds and 
as Acceptable Reinsuring Companies''. The underwriting limitations 
provided for in the said Treasury Department listing shall be 
applicable. A bound set of final plans are to be submitted with each 
set of contract documents.
    (4) copies of insurance policies and/or certificates described 
in paragraph 5 of Section III of these ``Requirements for Approved 
Projects''.

19. Preconstruction Conference

    Before the start of construction, an EDA representative may 
arrange to meet with the Recipient, the Architect/Engineer, and the 
Prime Contractor(s) to discuss EDA requirements on such matters as 
project supervision, on-site inspections, progress schedules, 
reports, payrolls, payments to contractors, contract change orders, 
insurance, safety, and other items pertinent to the project. At this 
conference, all parties shall be prepared to discuss any anticipated 
problems or issues that could affect the timely completion of the 
project.

Section III--Construction Procedures

1. Recipient Responsibilities

    A. The Recipient is responsible for expeditiously prosecuting 
the project to completion, for monitoring project progress, for 
keeping EDA advised of project progress, for adequate construction 
inspection, for prompt payment of costs incurred for the project and 
for monitoring the contractor's compliance with local, State and 
Federal construction requirements.
    B. The Recipient, with the assistance of its architect/engineer, 
is responsible for the accuracy and completeness of the plans, 
specifications and other contract documents. The Recipient, with the 
assistance of its architect/engineer, is responsible for the 
accuracy and completeness of the design, dimensions, details, proper 
selection of materials, and compliance with applicable building 
codes or ordinances. EDA review of proposed and/or final contract 
documents does not in any way relieve the Recipient of the foregoing 
responsibilities.

2. Employment of Local Labor

    A. The maximum feasible employment of local labor shall be made 
in the construction of EDA assisted public works projects. The 
Recipient should supply a list of the successful bidder's 
anticipated labor requirements to the applicable Federal/State 
Employment Office far enough in advance of the start of construction 
so that the employment office may provide the contractor with the 
names of suitable local personnel from its rolls.
    B. The contractor shall be required to include the above 
requirement in every subcontract for all work on the EDA assisted 
project.

3. Construction Progress Schedule

    A. If requested by EDA, the Recipient will secure from the 
contractor or Architect/Engineer, and furnish a copy to EDA, of the 
predicted construction progress chart and a schedule of amounts for 
contract payments.
    B. The construction progress chart should be updated monthly by 
the Recipient, the Architect/Engineer or the contractor. A copy for 
each month will be attached to the Quarterly Performance Report. The 
EDA Regional Office will advise as to the content of the report. The 
report will be due quarterly throughout the construction of the 
project.
    C. After a review of the project the EDA project manager may 
discuss with the Recipient, or the Recipient's representative, the 
appropriate type of progress chart. The bar graph type of chart will 
generally be acceptable but some type of network analysis may be 
more appropriate for projects with cost in excess of $1 million and 
with greater than average complexity. The cost for such network 
analysis may be an eligible project cost if EDA approves its use.

4. Construction Sign

    A. The Recipient shall require the prime contractor to secure or 
construct, erect, and maintain in good condition throughout the 
construction period, a sign or signs, (specifications for the sign 
are included as an exhibit to this document), at the project site in 
a conspicuous place indicating that the Federal government is 
participating in the project. EDA may require more than one sign if 
site conditions so warrant.
    B. Project signs will not be erected on public highway rights-
of-way.
    C. Location and height of signs will be coordinated with the 
agency responsible for highway or street safety in the area if any 
possibility exists for obstruction to traffic line of sight.
    D. Whenever EDA site sign specifications conflict with State law 
or local ordinance, the EDA regional director may modify such 
conflicting specifications so as to comply with the State law or 
local ordinance.
    E. When appropriate, EDA may require that a bilingual project 
sign be used. Specifications for such a sign are contained in this 
document in Exhibit B.

5. Inspection of Construction

    The Recipient must provide competent project inspection during 
the construction period. The inspector may be an employee of the 
Recipient, an employee of the architect/

[[Page 5371]]

engineer, or a person(s) under contractual control of the Recipient. 
The extent of the inspection and the selection of the inspector must 
be approved by EDA. Pertinent information regarding the proposed 
inspector's experience, qualifications, salary plan and the scope of 
his responsibilities and authorities shall be furnished to EDA for 
this purpose.

6. Occupancy Prior to Completion

    A. If the project or any part of it is to be occupied or used 
prior to its acceptance from the contractor, the Recipient must:
    (1) notify EDA of the intent to occupy or use the facility and 
the effective date of the occupancy or use;
    (2) secure the written consent of the contractor;
    (3) secure an endorsement from the insurance carrier and consent 
of the surety permitting occupancy or use during the period of 
construction; and.
    (4) secure permanent fire and extended coverage insurance, where 
applicable, including a permit to complete construction.
    B. EDA may require from the Recipient an assurance to protect 
the EDA investment in the project, prior to the approval of 
occupancy and/or use of all or any part of the project before 
completion of the construction.

7. Contractor Payrolls

    A. Each contractor and subcontractor must be required by the 
Recipient to maintain weekly payroll records. These records are to 
be retained for a period of three years from the date of project 
closeout. Each contractor and subcontractor must also be required to 
furnish a copy of each payroll to the Recipient. The Recipient is 
responsible to assure that the payrolls meet the following 
standards:
    (1) Wage rates and fringe benefits paid agree with the 
Department of Labor wage rate, or State wage rates if they are 
higher.
    (2) Name, address, and Social Security number and work 
classification is shown for all employees.
    (3) The Certificate of Prime Contractor on the reverse side of 
the Form WH-347 has been properly executed. If EDA has approved a 
substitute form for the WH-347 the substitute form must contain the 
certification as well as all of the above standards.
    B. EDA may require that copies of the weekly payroll records be 
furnished to the applicable EDA regional office.

8. Civil Rights Requirements

    The regulations issued under Executive Order 11246 (41 CFR 60-
1.7) require the submission of compliance reports regarding civil 
rights. Standard Form 100 is to be used for this purpose. The 
requirement applies to any person or entity subject to Executive 
Order 11246 who:
    (1) has 50 or more employees; and
    (2) is a prime contractor or first-tier subcontractor; and
    (3) has a Federally assisted contract, subcontract or purchase 
order amounting to $50,000 or more.

9. Contract Change Orders

    A. After the construction contracts have been executed, it may 
become necessary to alter them. This requires a formal contract 
change order, issued by the Recipient and accepted by the 
contractor. All contract change orders must be concurred in by EDA 
even if the Recipient is to pay for all additional costs resulting 
from the change or the contract price is to be reduced. The work on 
the project may continue pending EDA review and concurrence in the 
change order but the Recipient should be aware that all such work is 
at the Recipient's risk as to whether the cost for the work will be 
an eligible project cost for EDA participation until EDA concurrence 
is received for the change order.
    B. The Recipient or its architect/engineer shall perform a cost 
or price analysis in connection with every change order which 
affects the contract price.
    C. Proposed contract change orders will be prepared by the 
Recipient in sufficient quantity that two copies can be furnished to 
EDA for concurrence. Necessary supporting statements, estimates, 
specifications, and plans will be attached. Before submission to the 
EDA regional office, the change order must be signed by the 
Recipient, the Architect/Engineer, and the contractor. The Recipient 
will be notified in writing of EDA concurrence if the change order 
is acceptable to EDA.
    D. EDA will not approve change orders which change the purpose 
and intent (the scope) of the project. Change orders that add 
minimally or incidently to the cost of the project but do not change 
the project scope may be approved by EDA provided that either:
    (1) the Recipient has agreed in writing to fund the additional 
cost, in which case all work involved in the accomplishment of the 
change order will be an ineligible project cost and no EDA funds 
will be used to pay for it; or
    (2) there are sufficient funds remaining in the project budget 
to cover the change order without jeopardizing the completion of the 
project.
    E. EDA will not approve EDA financial participation in change 
orders that are solely for the purpose of using excess funds 
resulting from an underrun of one or more of the items in the EDA 
approved project budget. EDA approval of change orders must be based 
on a finding by EDA that the work called for in the change order is 
within the project scope and is necessary for the proper functioning 
of the project.
    F. Normally change orders should be submitted to EDA for 
approval as the changes occur.
    G. Unit prices are often used as a basis on which to make a 
contract award. In addition, they may be used for establishing 
actual costs where actual quantities differ from estimated 
quantities. When actual quantities differ substantially from those 
estimated quantities upon which the contractor's bid was based, a 
``substantial variation'' results. A substantial variation is 
usually considered to be for actual quantities in excess of 115% to 
120% or less than 85% to 90% of the estimated quantities. 
Substantial variations will normally require a change order to the 
contract whether or not a change in unit price is involved. Any 
increase in quantity which will result in an overall project cost 
overrun will require a change order to the contract. Any change to a 
unit price shown in the contract documents will require a change 
order to the contract.

10. Inspection for Final Acceptance

    A. A final inspection will be scheduled by the Recipient when 
all construction has been completed, the architect/engineer has 
accomplished his/her final inspection and all deficiencies have been 
corrected. The project must be complete and functional before the 
final inspection is performed.
    B. The final inspection will be made by representatives of the 
Recipient, the architect/engineer and the contractor(s). EDA must be 
given advance notice of the final inspection so that an EDA 
representative may participate, at the option of EDA.

11. Specific Requirements for Subcontractors

    A. The Recipient is responsible to ensure that the contractor(s) 
causes appropriate provisions to be inserted in all subcontracts to 
bind subcontractors to EDA contract requirements as contained 
herein, in 15 CFR Part 24, or in 15 CFR Part 14 as appropriate.
    B. Each subcontractor must agree to comply with all applicable 
Federal, State, and local requirements in addition to those set 
forth in this section.
    C. Prior to the approval of any subcontract EDA will check the 
proposed subcontractor against the listing of contractors debarred, 
ineligible, suspended or indebted to the United States from 
contractual dealings with Federal government departments. The work 
performed by any such contractor or subcontractor will be ineligible 
for reimbursement wholly or partially from EDA grant funds.
    D. All subcontracts in excess of $10,000 shall include, or 
incorporate by reference, the equal opportunity clause of Executive 
Order 11246.
    E. All subcontracts must contain a nondiscrimination clause.
    F. Each subcontract must contain a requirement for compliance 
with the Davis-Bacon and related acts.
    G. Each subcontractor must submit weekly payroll records and a 
weekly statement of compliance. These documents should be submitted 
to the prime contractor. The subcontractor can satisfy this 
requirement by submitting a properly executed Department of Labor 
Form WH-347.
    H. Each subcontract with every subcontractor must contain a 
clause committing the subcontractor to employment of local labor to 
the maximum extent possible.
    I. The Standard Terms and Conditions of the grant agreement 
impose other requirements which the Recipient will be required to 
have the prime contractor impose on the subcontractor.
    J. All subcontractors who meet the conditions set forth in 
Paragraph 9B of this Section III must submit a completed Standard 
Form 100 by March 30 of each year.
    K. Subcontractors performing work in areas covered by published 
goals for minorities will be required to report monthly on Form CC-
257.

[[Page 5372]]

12. Safety

    A. All contractors on EDA assisted projects are required to 
perform their work in accordance with OSHA regulations and the 
Contract Work Hours and Safety Standards Act (40 USC 327-330) as 
supplemented by Department of Labor regulations (29 CFR Part 5). The 
Recipient or its Architect/Engineer should periodically check the 
contractor's compliance.
    B. The Recipient shall notify EDA of all serious accidents and/
or injuries that occur on the EDA assisted project.

Section IV--Financial Administration

1. Standards for Financial Management Systems

    A. A State must expend and account for grant funds in accordance 
with State laws and procedures for expending and accounting for its 
own funds. Fiscal control and accounting procedures of the State, as 
well as its Subrecipients and cost-type contractors, must be 
sufficient to:
    (1) Permit preparation of reports required by this document and 
applicable regulations and statutes cited herein, and
    (2) Permit the tracing of funds to a level of expenditures 
adequate to establish that such funds have not been used in 
violation of the restrictions and prohibitions of applicable 
statutes.
    B. The financial management systems of other Recipients must 
meet the following standards:
    (1) Financial reporting: Accurate, current, and complete 
disclosure of the financial results of financially assisted 
activities must be made in accordance with the financial reporting 
requirements of the grant or subgrant.
    (2) Accounting records: Recipients must maintain records which 
adequately identify the source and application of funds provided for 
financially assisted activities. These records must contain 
information pertaining to grant awards and authorizations, 
obligations, unobligated balances, assets, liabilities, outlays or 
expenditures, and income.
    (3) Internal controls: Effective control and accountability must 
be maintained for all grant and subgrant cash, real and personal 
property, and other assets. Recipients must adequately safeguard all 
such property and must assure that it is used solely for authorized 
purposes.
    (4) Budget controls: Actual expenditures or outlays must be 
compared with budgeted amounts for each grant or subgrant. Financial 
information must be related to performance or productivity data, 
including the development of unit cost information whenever 
appropriate or specifically required in the grant or subgrant 
agreement. If unit cost data are required, estimates based on 
available documentation will be accepted whenever possible.
    (5) Allowable costs: Applicable OMB cost principles, agency 
program regulations, and the terms of grant agreements will be 
followed in determining the reasonableness, allowableness, and 
allocability of costs.
    (6) Source documentation. Accounting records must be supported 
by such source documentation as canceled checks, paid bills, 
payrolls, time and attendance records, contract and subgrant award 
documents, etc.
    (7) Cash management. Procedures for minimizing the time elapsing 
between the transfer of funds from the U.S. Treasury and 
disbursement by Recipients must be followed whenever advance payment 
procedures are used. When advances are made by electronic transfer 
of funds methods, the Recipient must make drawdowns as close as 
possible to the time of making disbursements.
    C. EDA may review the adequacy of the financial management 
system of any applicant for financial assistance as part of a pre-
award review or at any time subsequent to award.

2. Grant Disbursements

    A. Reimbursement. Reimbursement is the preferred method of grant 
disbursement. EDA will not use the percentage of completion method 
to pay construction grants. The Recipient may use that method to pay 
its construction contractor. However, EDA's payments to the 
Recipient will be based on the Recipient's actual rate of 
disbursement.
    B. Effect of program income, refunds, and audit recoveries on 
payment. Recipients shall disburse program income, rebates, refunds, 
contract settlements, audit recoveries and interest earned on such 
funds before requesting additional grant disbursements.
    C. Withholding payments. EDA will not withhold payments for 
proper charges incurred by Recipients unless--
    (1) The Recipient has failed to comply with grant award 
conditions, or
    (2) The Recipient is indebted to the United States.
    Cash withheld for failure to comply with grant award conditions, 
but without suspension of the grant, shall be released to the 
Recipient upon subsequent compliance. When a grant is suspended, 
payment adjustments will be made in accordance with the section on 
enforcement contained in this document.
    EDA will not make payment to Recipients for amounts that are 
withheld by Recipients from payment to contractors to assure 
satisfactory completion of work. Payments shall be made by EDA when 
the Recipients actually disburse the withheld funds to the 
contractors or to escrow accounts established to assure satisfactory 
completion of work.
    D. Cash depositories. Consistent with the national goal of 
expanding the opportunities for minority business enterprises, 
Recipients are encouraged to use minority banks (a bank which is 
owned at least 50 percent by minority group members). A list of 
minority owned banks can be obtained from the Minority Business 
Development Agency, Department of Commerce, Washington, DC 20230. 
EDA will not require the Recipient to maintain a separate bank 
account unless required by Federal-State agreement.
    E. Interest earned on advances.
    (1) For entities subject to 15 CFR Part 24: Except for interest 
earned on advances of funds exempt under the Intergovernmental 
Cooperation Act (31 U.S.C. 6501 et seq.) and the Indian Self-
Determination Act (23 U.S.C. 450), Recipients shall promptly, but at 
least quarterly, remit interest earned on advances to EDA. The 
Recipient may keep interest amounts up to $100 per year for 
administrative expenses.
    (2) For entities subject to 15 CFR Part 14 and any DOC rule 
implementing such Circular: Entities not subject to the Cash 
Management Improvement Act may keep up to $250 for administrative 
costs, to be remitted annually.

3. Allowable Costs

    A. Limitation on use of funds. Grant funds may be used only for:
    (1) The allowable costs of the Recipients, and cost-type 
contractors, including allowable costs in the form of payments to 
fixed-price contractors; and
    (2) Reasonable fees or profit to cost-type contractors but not 
any fee or profit (or other increment above allowable costs) to the 
Recipient.
    B. Applicable cost principles. For each kind of organization, 
there is a set of Federal principles for determining allowable 
costs. Allowable costs will be determined in accordance with the 
cost principles applicable to the organization incurring the costs. 
The following chart lists the kinds of organizations and the 
applicable cost principles.

                        Table 1.--Cost Principles
------------------------------------------------------------------------
           For the costs of a--                Use the principles in--
------------------------------------------------------------------------
State, local or Indian tribal government..  OMB Circular A-87.
Private nonprofit organization other than   OMB Circular A-122
 an (1) institution of higher education,
 (2) hospital, or (3) organization named
 in OMB Circular A-122 as not subject to
 that circular.
Educational institutions..................  OMB Circular A-21.
For-profit organization other than a        48 CFR Part 31. Contract
 hospital and an organization named in OMB   Cost Principles and
 Circular A-122 as not subject to that       Procedures, or uniform cost
 circular.                                   accounting standards that
                                             comply with cost principles
                                             acceptable to EDA.
------------------------------------------------------------------------

4. Period of Availability of Funds

    A. Generally, the maximum period for any EDA financial 
assistance that is provided is not more than 5 years from the end of 
the fiscal year of the award. Normally, costs incurred after the end 
of the funding period will not be eligible for reimbursement from 
the EDA grant.
    B. Liquidation of obligations. A Recipient must liquidate all 
obligations incurred under the award not later than 90 days after 
the acceptance of the project from the construction contractor or 
before the end of the funding period, whichever occurs earlier.

[[Page 5373]]

5. Matching or Cost Sharing

    A. Acceptable Costs and Contributions: With the qualifications 
and exceptions listed on the next page of this section, a matching 
or cost sharing requirement may be satisfied by either or both of 
the following:
    (1) Allowable costs incurred by the Recipient, or a cost-type 
contractor under the assistance agreement. This includes allowable 
costs borne by non-Federal grants or by cash donations from non-
Federal third parties.
    (2) The value of third party in-kind contributions applicable to 
the period to which the cost sharing or matching requirements 
applies.
    B. Qualifications and exceptions:
    (1) Costs borne by other Federal grant agreements. Except as 
provided by Federal statute, a cost sharing or matching requirement 
may not be met by costs borne by another Federal grant. This 
prohibition does not apply to income earned by a Recipient or 
Subrecipient from a contract awarded under another Federal grant.
    (2) General revenue sharing. For the purpose of this section, 
general revenue sharing funds distributed under 31 U.S.C. 6702 are 
not considered Federal grant funds.
    (3) Cost or contributions counted towards other Federal costs-
sharing requirements. Neither costs nor the values of third party 
in-kind contributions may count towards satisfying a cost sharing or 
matching requirement of a grant agreement if they have been or will 
be counted towards satisfying a cost sharing or matching requirement 
of another Federal grant agreement, a Federal procurement contract, 
or any other award of Federal funds.
    (4) Costs financed by program income. Costs financed by program 
income, as defined in the following section on program income, shall 
not count towards satisfying a cost sharing or matching requirement 
unless they are expressly permitted in the terms of the assistance 
agreement.
    (5) Services or property financed by income earned by 
contractors. Contractors under a grant may earn income from the 
activities carried out under the contract in addition to the amounts 
earned from the party awarding the contract. No costs of services or 
property supported by this income may count toward satisfying a cost 
sharing or matching requirement unless other provisions of the grant 
agreement expressly permit this kind of income to be used to meet 
the requirement.
    (6) Records. Costs and third party in-kind contributions 
counting towards satisfying a cost sharing or matching requirement 
must be verifiable from the records of Recipients or cost-type 
contractors. These records must show how the value placed on third 
party in-kind contributions was derived. To the extent feasible, 
volunteer services will be supported by the same methods that the 
organization uses to support the allocability of regular personnel 
costs.
    (7) Special standards for third party in-kind contributions.
    a. Third party in-kind contributions count towards satisfying a 
cost sharing or matching requirement only where, if the party 
receiving the contributions were to pay for them, the payments would 
be allowable costs.
    b. Some third party in-kind contributions are goods and services 
that, if the Recipient, or contractor receiving the contribution had 
to pay for them, the payments would have been an indirect costs. 
Costs sharing or matching credit for such contributions shall be 
given only if the Recipient, or contractor has established, along 
with its regular indirect cost rate, a special rate for allocating 
to individual projects or programs the value of the contributions.
    c. A third party in-kind contribution to a fixed-price contract 
may count towards satisfying a cost sharing or matching requirement 
only if it results in:
    (i) An increase in the services or property provided under the 
contract (without additional cost to the Recipient or Subrecipient), 
or
    (ii) A cost savings to the Recipient or Subrecipient.
    d. The values placed on third party in-kind contributions for 
cost sharing or matching purposes will conform to the rules in the 
succeeding sections of this part. If a third party in-kind 
contribution is a type not treated in those sections, the value 
placed upon it shall be fair and reasonable.
    C. Valuation of Donated Services:
    (1) Volunteer services. Unpaid services provided to a Recipient 
by individuals will be valued at rates consistent with those 
ordinarily paid for similar work in the Recipient's organization. If 
the Recipient does not have employees performing similar work, the 
rates will be consistent with those ordinarily paid by other 
employers for similar work in the same labor market. In either case, 
a reasonable amount for fringe benefits may be included in the 
valuation.
    (2) Employees of other organizations. When an employer other 
than a Recipient, or cost-type contractor furnishes free of charge 
the services of an employee in the employee's normal line of work, 
the services will be valued at the employee's regular rate of pay 
exclusive of the employee's fringe benefits and overhead costs. If 
the services are in a different line of work, paragraph A of this 
section applies.
    D. Valuation of Third Party Donated Supplies and Loaned 
Equipment or Space:
    (1) If a third party donates supplies, the contribution will be 
valued at the market value of the supplies at the time of donation.
    (2) If a third party donates the use of equipment or space in a 
building but retains title, the contribution will be valued at the 
fair rental rate of the equipment or space.
    E. Valuation of Third Party Donated Equipment, Buildings, and 
Land: If a third party donates equipment, buildings, or land, and 
title passes to a Recipient or Subrecipient, the treatment of the 
donated property will depend upon the purpose of the grant, as 
follows:
    (1) Awards for capital expenditures. If the purpose of the grant 
is to assist the Recipient in the acquisition of property, the 
market value of that property at the time of donation may be counted 
as cost sharing or matching.
    (2) Other awards. If assisting in the acquisition of property is 
not the purpose of the grant or subgrant, the following paragraphs 
of this section apply:
    a. If approval is obtained from EDA, the market value at the 
time of donation of the donated equipment or buildings and the fair 
rental rate of the donated land may be counted as cost-sharing or 
matching. In all cases, the approval may be given only if a purchase 
of the equipment or rental of the land would be approved as an 
allowable direct cost. If any part of the donated property was 
acquired with Federal funds, only the non-federal share of the 
property may be counted as cost-sharing or matching.
    b. If approval is not obtained under the above paragraph, E(2)b 
no amount may be counted for donated land, and only depreciation or 
use allowances may be counted for donated equipment and buildings. 
The depreciation or use allowances for this property are not treated 
as third party in-kind contributions. Instead, they are treated as 
costs incurred by the Recipient. They are computed and allocated 
(usually as indirect costs) in accordance with the cost principles 
specified in OMB Circulars A-87, A-21 and A-122, in the same way as 
depreciation or use allowances for purchased equipment and 
buildings. The amount of depreciation or use allowances for donated 
equipment and buildings is based on the property's market value at 
the time it was donated.
    F. Valuation of Recipient Donated Real Property for 
Construction/Acquisition: If a Recipient donates real property for a 
construction or facilities acquisition project, the current market 
value of that property may be counted as cost-sharing or matching. 
If any part of the donated property was acquired with Federal funds, 
only the non-federal share of the property may be counted as cost-
sharing or matching.
    G. Appraisal of Real Property: In some cases it will be 
necessary to establish the market value of land or a building or the 
fair rental rate of land or of space in a building. In these cases, 
EDA may require the market value or fair rental value be set by an 
independent appraiser, and that the value or rate be certified by 
the Recipient.

6. Program Income

    A. General. Recipients are encouraged to earn income to defray 
program costs. Program income includes income from fees for services 
performed, from the use or rental of real or personal property 
acquired with grant funds, from the sale of commodities or items 
fabricated under a grant agreement, and from payments of principal 
and interest on loans made with grant funds. Program income does not 
normally include interest on grant funds, rebates, credits, 
discounts, refunds, etc. and interest earned on any of them.
    B. Definition of program income. Program income means gross 
income received by the Recipient directly generated by a grant 
supported activity, or earned only as a result of the grant 
agreement during the grant period. ``During the grant period'' is 
the time between the effective date of the award and the ending date 
of the award reflected in the final financial report.
    C. Cost of generating program income. If authorized by Federal 
regulations or the grant agreement, costs incidental to the 
generation

[[Page 5374]]

of program income may be deducted from gross income to determine 
program income.
    D. Governmental revenues. Taxes, special assessments, levies, 
fines, and other such revenues raised by a Recipient are not program 
income unless the revenues are specifically identified in the grant 
agreement as program income.
    E. Royalties. Income from royalties and license fees for 
copyrighted material, patents, and inventions developed by a 
Recipient is program income only if the revenues are specifically 
identified in the grant agreement as program income.
    F. Property. Proceeds from the sale of real property or 
equipment will be handled in accordance with the requirements of 
Section VII of these ``Requirements for Approved Projects''.
    G. Use of program income. Program income shall be deducted from 
outlays which may be both Federal and non-federal as described 
below, unless the grant agreement specifies another alternative (or 
a combination of the alternatives). In specifying alternatives, the 
Federal agency may distinguish between sources, kinds, or amounts of 
income. Alternative uses include:
    (1) Deduction. Ordinarily program income shall be deducted from 
total allowable costs to determine the net allowable costs. Program 
income shall be used for current costs unless EDA authorizes 
otherwise. Program income which the Recipient did not anticipate at 
the time of the award shall be used to reduce the EDA and Recipient 
contributions rather than to increase the funds committed to the 
project.
    (2) Addition. When authorized, program income may be added to 
the funds committed to the grant agreement by EDA and the Recipient. 
The program income shall be used for the purposes and under the 
conditions of the grant agreement.
    (3) Cost sharing or matching. When authorized, program income 
may be used to meet the cost sharing or matching requirement of the 
grant agreement. The amount of the Federal grant award remains the 
same.
    H. Income after the award period. Income earned beginning at the 
end of the award period (see Paragraph 4A of this Section IV) and 
ending at the end of the useful life of the project shall be used 
only for the following purposes:
    (1) To satisfy any debt service (mortgage payments) existing 
during this time period. Note that any new encumbrances on the EDA 
assisted facility during this period must have EDA approval.
    (2) For necessary operation, maintenance and repair services.
    (3) Any excess above the costs of (1) and (2) above may be used 
for other economic development purposes in the same economic 
development area with the concurrence of EDA.

7. Non-Federal Audit

    A. Basic rule: Recipients and Subrecipients are subject to audit 
requirements contained in the Single Audit Act amendments of 1996 
(31 U.S.C. 7501-7) and revised OMB Circular A-133, ``Audits of 
State, Local Governments, and Non-Profit Organizations''.

Section V--Amendments to Grant Agreements

1. General Requirements

    A. Between approval and closeout of an EDA construction project, 
one or more changes in the project may be necessary to resolve 
unforeseen problems or remove obstacles to the project's successful 
completion. In most instances, the proposed change can be effected 
only through a formal amendment to the project.
    B. Project amendments generally fall into the following 
categories.
    (1) Time extensions;
    (2) Budget revisions;
    (3) Additional funding (overrun);
    (4) Permitted waiver of EDA regulations;
    (5) Changes which do not involve overall funding (e.g., change 
of Recipient; method and schedule of financing; addition, deletion, 
or change affecting a line item in the approved project cost 
estimate);
    (6) Change to the Special Conditions of the Grant Award;
    (7) Termination (for cause or by mutual consent).
    C. A change-of-scope determination may be necessary before a 
decision can be made if the requested change involves a change to 
the purpose, bona fide need, nature or community served of the 
project.

2. Changes to the Project Scope

    A. Project scope is defined as the purpose, bona fide need, 
nature and community served of the approved grant. A project 
amendment which amounts to a change of scope is, in fact, the 
substitution of one grant for another. A change of scope 
modification to a project which was funded in a prior fiscal year 
cannot be approved by EDA. Modifications to projects funded from the 
current fiscal year's appropriation, or from a no-year 
appropriation, do not constitute a prohibited change of scope but 
must have the written approval of EDA. Any proposed change to an EDA 
assisted project which is a change of scope will be disapproved by 
EDA.
    B. Certain types of project modifications can be approved by EDA 
if specified findings can be made. These include time extensions for 
commencement or completion of work, waivers of certain EDA 
requirements and some types of budget line item changes.
    C. Certain types of project modifications presumptively 
constitute a change of scope, although the facts of a particular 
situation could permit such modifications to be approved. Examples 
are:
    (1) A change of Recipient;
    (2) A change of project location;
    (3) Addition of a new line item to the EDA approved budget;
    (4) An expansion of the activity associated with a budget line 
item.
    D. Every proposed modification to a grant shall be considered 
not only in the light of the foregoing policy on change of scope, 
but shall also be processed in accordance with all EDA legal and 
technical requirements so that grants as amended will not deviate 
from the standards employed in initial grant approval.

3. Time Extensions

    A. The Recipient is responsible for expeditiously prosecuting 
the implementation of the project in accordance with the project 
development time schedule contained in the EDA grant award. As soon 
as the Recipient becomes aware that it will not be possible to meet 
the time schedule, it must notify the EDA Regional Office. The 
Recipient's notice to EDA should contain the following information.
    (1) An explanation of the Recipient's inability to complete work 
by the specified date (e.g., a lengthy period of unusual weather 
delayed the contractor's ability to excavate the site; major re-
engineering required in order to obtain state or Federal approvals; 
or unplanned environmental mitigation required).
    (2) A statement that no other changes to the project are 
contemplated;
    (3) Documentation that demonstrates there is still a bona fide 
need for the project; and
    (4) A statement that no further delay is anticipated and that 
the project can be completed within the revised time schedule.
    B. EDA will advise the Recipient if a formal written request 
from the Recipient for a time extension will be required. The 
Recipient should be aware that grant disbursements may be suspended 
while the Recipient is not in compliance with the time schedule.
    C. EDA reserves the right to suspend and/or terminate any grant 
if the Recipient fails to proceed with reasonable diligence to 
accomplish the project as intended.

4. Budget Line Item Revisions

    A. The tabulation of estimated project costs contained in the 
EDA Grant Award is the controlling budget for the project. Budget 
line item revisions which do not involve a change of scope may be 
approved by EDA if:
    (1) no new EDA funds are involved; and
    (2) another budget line item (preferably the contingency line 
item, although this is not mandatory) has funds which can be used 
without significantly adversely affecting the object of that line 
item; and
    (3) unless the line item which is proposed to be supplemented is 
supplemented, the activity associated with that line item cannot be 
completed; and
    (4) no new line items are being added to the budget.
    B. Funds may be transferred to other approved budget line items 
from the contingencies line item provided the activity associated 
with the line item cannot be completed unless the line item to be 
supplemented is supplemented.
    C. The transfer of funds from line items other than the 
contingencies line item may be permitted with EDA written permission 
provided there will be no significant adverse effect to the object 
of the line item from which the transfer is to be made.
    D. The construction line item shall be revised at the time of 
contract award to reflect the actual contract amount(s). Underrun 
amounts shall be transferred to the contingencies line item. 
Recipients are reminded that contingency funds are only to be used 
to cover situations resulting from unknown conditions and changes 
required

[[Page 5375]]

for the fulfillment of the previously authorized project activities 
intended under the grant award. Underrun funds cannot be used to 
change the scope of the project.
    E. The Recipient shall notify EDA of any proposed transfer of 
funds from one budget line item to another.

5. Additional EDA Funding

    A. In accepting the award of an EDA grant the Recipient agreed 
to fund any overrun(s). Additional EDA funding for an approved 
project is unlikely to be approved. To be considered for approval it 
must compete with other requests for scarce EDA funds. If an overrun 
occurs as a result of the construction contract bid opening, before 
EDA will accept a formal request for additional EDA funds it will be 
necessary for the Recipient to furnish the following documentation 
to EDA:
    (1) A written statement from the Recipient's Architect/Engineer 
giving reasons for his professional opinion that redesign of the 
project within the approved scope, or using new or additional 
deductive alternates cannot reasonably be expected to reduce the 
cost to within the available funds.
    (2) A written statement from the administrative head of the 
Recipient's organization justifying why the Recipient cannot furnish 
the additional funds required. Relevant data may be in the form of 
an audit performed within the past two years, schedule of bonded 
debt, assessed property values as a percentage of market value, tax 
rates, and percent of collection. The statement should state why 
non-EDA sources of funds cannot be used.
    B. Acceptance by EDA of a request for additional EDA assistance 
does not indicate approval. Any further action by the Recipient 
pending EDA's review of the Recipient's request is at the 
Recipient's risk.

6. Termination of the EDA Grant

A. Termination for Cause

    (1) If a Recipient materially fails to comply with any term of a 
grant award, whether stated in a Federal statute, regulation, 
assurance, grant application, or notice of award, EDA may take one 
or more of the following actions, as appropriate in the 
circumstances:
    a. Temporarily withhold disbursement of grant funds pending 
correction of the deficiency by the Recipient, or more severe 
enforcement action by EDA;
    b. Disallow (that is, deny both use of funds and matching credit 
for) all or part of the cost of the activity or action not in 
compliance;
    c. Wholly or partly suspend or terminate the current award;
    d. Withhold further awards for the project or program;
    e. Take other remedies that may be legally available.
    (2) In taking an enforcement action, EDA will provide the 
Recipient an opportunity for such hearing, appeal, or other 
administrative proceeding to which the Recipient is entitled under 
any statute or regulation applicable to the action involved.
    (3) Costs resulting from obligations incurred by the Recipient 
after notice by EDA of suspension of, or termination of, the grant, 
are not allowable unless EDA expressly authorizes them in the notice 
of suspension or intent to terminate, or subsequently. Other 
Recipient costs during suspension or after termination which are 
necessary and not reasonably avoidable are allowable if:
    a. The costs result from obligations which were properly 
incurred by the Recipient before the effective date of the 
suspension or termination, are not in anticipation of it, and in the 
case of termination, are noncancellable; and,
    b. The costs would be allowable if the award were not suspended 
or expired normally at the end of the funding period in which the 
termination takes effect.
    (4) The enforcement remedies identified in this section, 
including suspension and termination, do not preclude Recipient from 
being subject to ``Debarment and Suspension'' under E.O.s 12549 and 
12689 and implementing regulations at 15 CFR Part 26.

B. Termination for Convenience

    (1) Terminations for convenience have the following 
requirements:
    a. EDA may propose the termination for convenience, 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; or
    b. The Recipient may propose the termination to EDA in writing, 
setting forth the reasons for such termination, the effective date, 
and in the case of partial termination, the portion to be 
terminated. However, if, in the case of a partial termination, EDA 
determines that the remaining portion of the grant will not 
accomplish the purposes for which the grant was made, EDA may 
terminate the grant in its entirety under the termination for cause 
procedures or termination for convenience procedures with the 
consent of the Recipient. An appropriate official of the Recipient 
may request EDA to cancel or terminate a project. This request must 
be accompanied by a certified resolution or ordinance authorizing 
the requesting party to make such request. EDA will determine the 
legal sufficiency of such request.

Section VI--Project Closeout Procedures

1. Audit Requirements

    A. Recipients are subject to audit requirements contained the 
Single Audit Act of 1984, and the amendments of 1996, (31 U.S.C. 
7501-7) and revised OMB Circular A-133, ``Audits of States, Local 
Governments, and Non-Profit Organizations''. If the Recipient has no 
current audit performed in accordance with the Single Audit Act, EDA 
will advise the Recipient of the procedure for securing the required 
audit.
    B. Normally, if the Recipient has had an audit in accordance 
with the Single Audit Act within the prescribed period, EDA will not 
require a project specific audit. However, if the documentation 
supplied by the Recipient is inadequate for a determination by EDA 
of the eligibility of claimed costs for reimbursement from the EDA 
grant, EDA may require such a project specific audit. EDA reserves 
the right to: (1) require the Recipient to secure an independent 
audit of the project cost, or (2) conduct an audit of project costs 
using Department of Commerce auditors, and (3) recover any costs 
previously allowed for EDA reimbursement but found by the audit to 
be not allowable.
    C. From time to time the Department of Commerce Office of the 
Inspector General selects an EDA assisted project for audit. If its 
project is one of those selected, the Recipient will be notified in 
advance.
    D. In arranging for audit services, Section II, Contracting for 
Project Construction will be followed. An independent audit arranged 
by the Recipient must meet the standards of the Comptroller General 
publication, ``Standards for Audit of Government Organizations, 
Programs, Activities, and Functions''.

2. Closeout Procedures

    A. When project construction is complete, the final inspection 
has been completed, and the Recipient has accepted the project from 
the contractor, the Recipient can begin the closeout process. This 
should include notifying EDA of the following actions:
    (1) Compliance with all Special Conditions of the EDA grant 
award, including but not limited to the following:
    (2) Securing permanent insurance for above ground facilities.
    (3) Results of a review of the project to determine that all 
changes to the project have been brought to the attention of EDA.
    (4) Provisions have been made for the retention for three years 
of all records pertaining to the project.
    (5) Certificate of Final Completion has been prepared, executed 
and a copy furnished to EDA.
    (6) As-built drawings have been received from the contractor 
and/or the architect/engineer.
    (7) A copy of a current Single Audit Act audit of the Recipient 
has been furnished to EDA. If no Single Audit Act audit is available 
but is required, the Recipient's plan to secure the audit has been 
furnished to EDA and approved. If no Single Audit Act audit is 
required, EDA has been advised and has determined whether an 
independent audit will be required.
    (8) To the knowledge of the Recipient there are no outstanding 
Davis-Bacon or local labor employment violations.
    (9) EDA has been notified of any change, lien, mortgage or other 
encumbrance relating to the ownership of the project.
    (10) EDA has been notified of any unresolved contract/contractor 
disputes.
    (11) If required, a lien or Covenant of Purpose, Use, and 
Ownership in favor of EDA has been executed and recorded.
    (12) A record will be maintained by the Recipient of the useful 
life of the facility as determined by EDA during which period the 
Recipient may not alienate its ownership or change the use and 
purpose of the EDA assisted facility without EDA's written 
permission.
    B. Recipients shall submit, within 90 calendar days after the 
completion of the project, all financial, performance and other 
reports as required by the terms and conditions of the grant award.
    C. Unless EDA authorizes an extension, the Recipient shall 
liquidate all obligations

[[Page 5376]]

incurred under the grant award no later than 90 calendar days after 
the funding period or the date of completion, whichever is earlier, 
as specified in the terms and conditions of the award.
    D. When EDA is satisfied that the audit requirement has been met 
and the actions discussed in paragraphs A, B, and C above have been 
accomplished, the Recipient may request the final grant 
disbursement. The request will be will be prepared on EDA Form ED-
113, Outlay Report and Request for Reimbursement for Construction 
Programs. EDA may assist with filling out the form but it is the 
responsibility of the Recipient to assure that the numbers on the 
form are correct. The following documentation should accompany the 
executed form ED-113 when it is sent to the EDA Regional Office 
unless the documentation has been previously furnished:
    (1) Copies of all executed contracts, subcontracts (if claimed 
separate from the prime contract), contract change orders, vouchers, 
canceled checks, and other evidence of costs incurred necessary to 
substantiate the costs claimed on the Form ED-113;
    (2) A copy of the currently valid Single Audit Act audit if one 
was performed;
    (3) Payroll forms, if any of the cost claimed is for work 
performed by in-house work forces
    (4) Payroll Compliance Certificate;
    (5) Civil Rights documents;
    (6) Title opinions, legal descriptions, bills of sale, title 
records, etc., for any land cost being claimed; and
    (7) Specifics of any administrative costs being claimed.
    E. The Recipient will be advised by EDA of costs found eligible, 
costs found ineligible and the reasons for findings of 
ineligibility. If a balance of the grant is due to the Recipient, 
the balance will be paid by electronic transmittal. If the Recipient 
has received a grant amount in excess of the amount due the 
Recipient, the Recipient will be requested to refund the excess to 
EDA payable to the U.S. Treasury.
    F. The closeout of an award does not affect any of the 
following:
    (1) The right of EDA 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) Requirements for property management, records retention and 
performance measurement reports.
    (4) Audit requirements.

Section VII--Post Construction Grant Requirements

1. Real Property

    A. All property that is acquired or improved with EDA grant 
assistance shall be held in trust by the grantee for the benefit of 
the project purposes under which the property was acquired or 
improved.
    B. During the estimated useful life of the project, EDA retains 
an undivided equitable reversionary interest in property acquired or 
improved with EDA grant assistance.
    C. EDA may approve the substitution of an eligible entity for a 
grantee. The original grantee remains responsible for the period it 
was the grantee, and the successor grantee holds the project 
property with the responsibilities of an original grantee under the 
award.
    D. The requirements contained in this part apply solely to grant 
and cooperative agreement award projects.

2. Definitions

    A. As used in this Section VII:
    (1) Dispose includes sell, lease, abandon, or use for a purpose 
or purposes not authorized under the grant award or this part.
    (2) Estimated useful life means that period of years from the 
time of award, determined by EDA as the expected life-span of the 
project.
    (3) Grantee includes any recipient, subrecipient, awardee, or 
subawardee of grant assistance under the Public Works and Economic 
Development Act of 1965.
    (4) Owner includes fee owner, transferee, lessee, or optionee of 
real property upon which project facilities or improvements are or 
will be located, or real property improved under a project which has 
as its purpose that the property be sold.
    (5) Personal Property means all property other than real 
property.
    (6) Project means the activity and property acquired or improved 
for which a grant is awarded. When property is used in other 
programs ``project'' includes such programs.
    (7) Property includes all forms of property, real, personal 
(tangible and intangible), and mixed.
    (8) Real property means any land, improved land, structures, 
appurtenances thereto, or other improvements, excluding movable 
machinery and equipment. Improved land also includes land which is 
improved by the construction of such project facilities as roads, 
sewers, and water lines which are not situated directly on the land 
but which contribute to the value of such land as a specific part of 
the project purpose.

3. Use of Property

    A. The grantee or owner shall use any property acquired or 
improved in whole or in part with grant assistance only for the 
authorized purpose of the project as long as it is needed during the 
estimated useful life of the project and such property shall not be 
leased, sold, disposed of or encumbered without the written 
authorization of EDA.
    B. In the event that EDA and the grantee determine that property 
acquired or improved in whole or in part with grant assistance is no 
longer needed for the original grant purpose, it may be used in 
other Federal grant programs, or programs that have purposes 
consistent with those authorized for support by EDA, if EDA approves 
such use.
    C. When the authorized purpose of the EDA grant is to develop 
real property to be leased or sold, as determined by EDA, such sale 
or lease is permitted provided the sale is consistent with the 
authorized purpose of the grant and with applicable EDA requirements 
concerning, but not limited to, nondiscrimination.
    D. When acquiring replacement personal property of equal or 
greater value, the grantee may trade-in the property originally 
acquired or sell the original property and use the proceeds in the 
acquisition of the replacement property, provided that the 
replacement property shall be used for the project and be subject to 
the same requirements as the original property.

4. Unauthorized Use

    A. Except as provided in 3B, 3C, or 3D above, whenever, during 
the expected useful life of the project, any property acquired or 
improved in whole or in part with grant assistance is disposed of 
without the approval of EDA, or no longer used for the authorized 
purpose of the project, the Federal Government shall be compensated 
by the grantee for the Federal share of the value of the property; 
provided that for equipment and supplies, the standards of the 
Uniform Administrative Requirements for Grants at 15 CFR Part 24 and 
15 CFR Part 14 or any supplements or successors thereto, as 
applicable, shall apply.
    B. If property is disposed of without approval, EDA may assert 
its interest in the property to recover the Federal share of the 
value of the property for the Federal Government. EDA may pursue its 
rights under both paragraphs A and B of this section, except that 
the total amount to be recovered shall not exceed the Federal share, 
plus costs and interest.

5. Federal Share

    A. For purposes of this Section, the Federal share of the value 
of property is that percentage of the current fair market value of 
the property attributable to the EDA participation in the project 
(after deducting actual and reasonable selling and fix-up expenses, 
if any, incurred to put the property into condition for sale).
    B. Where the grantee's interest in property is a leasehold for a 
term of years less than the depreciable remaining life of the 
property, that factor shall be considered in determining the 
percentage of the Federal share.
    C. If property is transferred from the grantee to another 
eligible entity, as provided in paragraph 1C above, the Federal 
Government shall be compensated the Federal share of any money paid 
by or on behalf of the successor grantee to or for the benefit of 
the original grantee, provided that EDA may first permit the 
recovery by the original grantee of an amount not exceeding its 
investment in the project nor exceeding that percentage of the value 
of the property that is not attributable to the EDA participation in 
the project.
    D. When the Federal Government is compensated for the Federal 
share of the value of property acquired or improved in whole or in 
part with grant assistance, EDA has no further interest in the 
ownership, use or disposition of the property.

6. Encumbrances

    A. Except as provided in paragraph 6C below, grantee-owned 
property acquired or improved in whole or in part with grant 
assistance may not be used to secure a mortgage or deed of trust or 
otherwise be

[[Page 5377]]

used as collateral or encumbered except to secure a grant or loan 
made by a State or Federal agency or other public body participating 
in the same project.
    B. Encumbering such property other than as permitted in this 
section is an unauthorized use of the property requiring 
compensation to the Federal Government as provided in paragraphs 4 
and 5 above.
    C. EDA may waive the provisions of paragraph 6A above for good 
cause when EDA determines all of the following:
    (1) All proceeds from the grant/loan to be secured by the 
encumbrance on the property shall be available only to the grantee, 
and all proceeds from such secured grant/loan shall be used only on 
the project for which the EDA grant was awarded or on related 
activities of which the project is an essential part;
    (2) The lender/grantor would not provide funds without the 
security of a lien on the project property; and
    (3) There is a reasonable expectation that the borrower/grantee 
will not default on its obligation.
    D. The EDA Assistant Secretary or his/her designee may waive the 
provisions of paragraphs A and B above as to an encumbrance on 
property which is financed by an EDA construction grant when he/she 
determines that the encumbrance arises solely from the provisions of 
a pre-existing water, sewer or other utility encumbrance which by 
its terms extends to additional property connected to such 
facilities. EDA's determination shall make reference to the specific 
requirements (for example, ``water system and all accessions, 
additions or improvements thereto'') which extend the terms of the 
pre-existing encumbrance to the property which is financed and/or 
improved by the EDA construction grant.

7. Civil Rights Restriction

    Among other applicable requirements, the Recipient or in the 
case of a transfer , the transferee, of real property, structures or 
improvements thereon or interests therein acquired, leased, or 
improved with EDA assistance may not sell, lease, or otherwise make 
any part of such premises available for occupancy by any person, 
firm, or entity unless the Recipient includes in the instrument 
effecting the sale, lease or transfer a covenant running with the 
land that assures that the purchaser, lessee or occupant will comply 
with the nondiscrimination provisions of the Civil Rights Act of 
1964, as amended as provided in 15 CFR 8.5(b)(5)(6) and (11).

8. Performance Reports

    The Government Performance and Results Act of 1993 (GPRA) 
requires EDA to report the outputs and outcomes of projects (e.g. 
actual job creation). Recipients are required to submit reports of 
performance to EDA at the intervals stated in Section I Paragraph 2E 
of these Requirements for Approved Construction Projects.

9. Record Retention

    Architect/engineering records and payroll records relating to 
the project must be retained as described in Section I Paragraph 6 F 
, Section II Paragraph 14 H, and Section III Paragraph 9 A.

10. Program Income Earned After the Award Period

    The uses for program income earned after the award period are 
described in Section IV 6 H.

Section VIII--Exhibits

    This section contains a copy of the Exhibits cited elsewhere in 
this Volume and other items which may be helpful to the Recipient as 
it proceeds through project design, construction, and closeout. The 
EDA forms shown as exhibits herein are updated and revised as new 
procedures and requirements become known. Thus, the exhibit may not 
be the latest version of the form currently in use. The Recipient 
should check with the EDA regional office to be sure the correct 
form is being used before the initial use of any of the exhibits. 
The documents marked with an asterisk (*) are available from the EDA 
regional office, if needed.

A. Checklists for:
    (1) Architect/Engineer Contracts
    (2) Construction Contracts
    (3) Initial Grant Disbursement
    (4) Project Closeout
B. Supplemental General Conditions
C. Certificate as to Project Site, Rights-of-Way, and Easements 
(Form ED-152)
D. *Sample Agreement and Mortgage
E. Notice of Requirements for Affirmative Action to Ensure Equal 
Employment Opportunity (E.O. 11246)
F. *Sample Contract Documents
    (1) Advertisement for Bid
    (2) Information for Bidders
    (3) Bid for Lump Sum or Unit Price Contracts
    (4) Bid Bond
    (5) Agreement (Construction Contract)
    (6) Performance Bond
    (7) Payment Bond
    (8) General Conditions
    (9) Contractor's Application for Payment (AIA Document #G 702)
    (10) Weekly Payroll Form (use Dept. of Labor's Form WH-347)
    (11) Notice of Award
    (12) Notice to Proceed
    (13) Change Order
G. Recipient's Outlay Report and Request for Reimbursement for 
Construction Programs (Form ED-113)
H. ACH Vendor/Miscellaneous Payment Enrollment Form (Form SF-3881)
I. Sample Final Acceptance Inspection Report
J. Sample Quarterly Performance Report
K. Sample Architect/Engineer's Certificate
L. Sample Certificate of Grantee/Borrower's Attorney
M. Information Required for EPA Certification as to Adequacy of 
Treatment
N. Financial Status Report (Form SF269)

Checklist for Architect/Engineer Contracts

    Although the use of this checklist is not mandatory, its use 
will expedite EDA's review of the architect/engineer contract. When 
completed by the Recipient it should be submitted to the EDA 
regional office soon after the grant award is approved by EDA and 
accepted by the Recipient if the architect/engineer contract has 
been previously executed. If the architect/engineer contract has not 
been executed prior to the Recipient's acceptance of the grant 
award, this checklist may be completed and sent to the appropriate 
regional office as soon as the architect/engineer contract is signed 
and prior to any request for disbursement of EDA grant funds. The 
appropriate responses should be circled in ink and signed by the 
authorized representative of the Recipient.

Y  N                               The Recipient has written procurement
                                    procedures with which the architect/
                                    engineer contract has been found to
                                    be in compliance.
Y  N                               The Architect/Engineer was selected
                                    competitively by sealed bids (formal
                                    advertising) or by competitive
                                    proposals. If not, attach an
                                    explanation of the selection method
                                    and the reason(s) for using that
                                    method.
Y  N                               Requests for proposals were
                                    publicized and all evaluation
                                    factors and their relative
                                    importance were identified therein.
                                    Any response to publicized requests
                                    for proposals were honored to the
                                    maximum extent practical.
Y  N                               Proposals were solicited from an
                                    adequate number of qualified sources
                                    (normally it is sufficient to secure
                                    at least three proposals from
                                    qualified proposers). If less than 3
                                    qualified proposals were secured,
                                    attach an explanation to this
                                    document.
Y  N                               The Recipient has a method for
                                    conducting technical evaluations of
                                    proposals received and for selecting
                                    the best proposal, price and other
                                    factors considered.
Y  N                               The Recipient determined the
                                    responsible firm whose proposal was
                                    most advantageous to the program,
                                    with price and other factors
                                    considered. Competitor's
                                    qualifications were evaluated and
                                    the most qualified competitor was
                                    selected, subject to negotiation of
                                    fair and reasonable compensation.
Y  N                               The Architect/Engineer agreement
                                    provides for all services required
                                    by the Recipient for the planning,
                                    design and construction phase of the
                                    proposed project. Appropriate
                                    standards or guides developed by
                                    such professional organizations as
                                    the American Consulting Engineers
                                    Council (ACEC), American Society of
                                    Civil Engineers (ASCE), National
                                    Society of Professional Engineers
                                    (NSPE), and/or the American
                                    Institute of Architects (AIA) may be
                                    used where the Recipient does not
                                    have standard procurement documents.

[[Page 5378]]

 
Y  N                               The Architect/Engineer's fee for
                                    basic services is either a fixed
                                    price or a cost reimbursement with
                                    an agreed maximum. (The amount of
                                    EDA participation will be based on a
                                    determination, subject to audit,
                                    that the fee compensation is
                                    reasonable)
Y  N                               The architect/engineer contract
                                    compensation is not based on the use
                                    of the cost-plus-a-percentage-of-
                                    cost or percentage of construction
                                    cost form of compensation. (These
                                    forms of compensation are not
                                    eligible for EDA participation).
Y  N                               The Architect/Engineer's fee covers
                                    all services necessary for the
                                    successful execution of the project,
                                    including consultations, surveys,
                                    soil investigations, supervision,
                                    travel, ``as-built'' or record
                                    drawings, arrow diagram (CPM/PERT)
                                    where applicable, and incidental
                                    costs.
Y  N                               The basic fee does not exceed that
                                    prevailing for comparable services
                                    in the project area. If the total
                                    fee is in excess of the prevailing
                                    rate because of special services to
                                    be performed, these services are
                                    identified in the agreement. Such
                                    additional charges may be approved
                                    for grant participation by the EDA
                                    if they:
                                   11. Do not duplicate a charge for
                                    services provided for in the basic
                                    fee and are within the normal scope
                                    of the Architect/Engineer's
                                    responsibilities;
                                   12. Are a proper charge against the
                                    project cost; and
                                   c. Are reasonable for the extra
                                    services to be rendered.
Y  N                               Regardless of who furnishes the
                                    construction inspector, the
                                    agreement requires the Architect/
                                    Engineer to make sufficient visits
                                    to the project site to determine, in
                                    general, if the work is proceeding
                                    in accordance with the construction
                                    contract.
Y  N                               If the Architect/Engineer contract(s)
                                    price exceeds $100,000 (awarded
                                    under small purchase procedures), it
                                    includes a provision to the effect
                                    that the Recipient, EDA, the
                                    Comptroller General of the United
                                    States, the Inspector General of the
                                    Department of Commerce, or any of
                                    their duly authorized
                                    representatives, shall have access
                                    to any documents, books, papers, and
                                    records of the Architect/Engineer
                                    (which are directly pertinent to a
                                    specific grant program) for the
                                    purpose of making an audit,
                                    examination, excerpts, and
                                    transcriptions. The Recipient shall
                                    require the Architect/Engineer to
                                    maintain all required records for at
                                    least three years after the
                                    Recipient makes final payment and
                                    all pending matters are closed.
Y  N                               The agreement for architect/engineer
                                    services provides an adequate basis
                                    for the Recipient to require the
                                    Architect/Engineer to:
 


                       Y  N                   Design the project in
                                               accordance with the
                                               intent of the Grant
                                               Award;
                       Y  N                   Redesign the project in
                                               the event the preliminary
                                               cost estimate, the final
                                               cost estimate, or the
                                               lowest responsive bid
                                               less deductive
                                               alternates, exceeds the
                                               funds available by an
                                               amount or percentage to
                                               be mutually agreeable to
                                               the Recipient and the
                                               Architect/Engineer;
                       Y  N                   Design any sewage
                                               treatment or other sewage
                                               facility so that a
                                               certificate of adequacy
                                               of treatment can be
                                               obtained as required by
                                               Section 106 of the Public
                                               Works and Economic
                                               Development Act of 1965,
                                               as amended;
                       Y  N                   Include in all contracts
                                               and subcontracts with
                                               costs in excess of
                                               $100,000 a provision
                                               which requires compliance
                                               with all applicable
                                               standards, orders, or
                                               requirements issued under
                                               the Clean Air Act (42
                                               U.S.C. 7401 et. seq.) and
                                               the Federal Water
                                               Pollution Act (33 USC
                                               1251 et seq., as
                                               amended). (Violations
                                               shall be reported to EDA
                                               and to the regional
                                               office of the U.S.
                                               Environmental Protection
                                               Agency).
                       Y  N                   Include in all contracts
                                               and subcontracts in
                                               excess of the small
                                               purchase threshold of
                                               $100,000, provisions or
                                               conditions which will
                                               allow for administrative,
                                               contractual or legal
                                               remedies in instances
                                               where contractors violate
                                               or breach contract terms,
                                               and provide for such
                                               sanctions and penalties
                                               as may be appropriate;
                       Y  N                   Include in all contracts
                                               in excess of $10,000
                                               suitable provisions for
                                               termination by the
                                               Recipient including the
                                               manner in which it will
                                               be affected 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;
                       Y  N                   Include in all contracts
                                               in excess of $10,000 a
                                               provision requiring
                                               compliance with Executive
                                               Order 11246,
                                               entitled''Equal
                                               Employment Opportunity,''
                                               as amended by Executive
                                               Order 11375, and as
                                               supplemented in
                                               Department of Labor
                                               regulations (41 CFR Part
                                               60);
                       Y  N                   Include in all contracts
                                               in excess of $2,000 for
                                               construction or repair a
                                               provision for compliance
                                               with the Copeland ``Anti-
                                               Kickback''Act (18 USC
                                               874) as supplemented in
                                               Department of Labor
                                               regulations (29 CFR, Part
                                               3). This 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
                                               EDA).

[[Page 5379]]

 
                       Y  N                   Include in all
                                               construction contracts in
                                               excess of $2,000 a
                                               provision for compliance
                                               with the Davis-Bacon Act
                                               (40 USC 276a to a-7) as
                                               supplemented by
                                               Department of Labor
                                               regulations (29 CFR Part
                                               5). 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 often than once a
                                               week. A copy of the
                                               current prevailing wage
                                               determination issued by
                                               the Department of Labor
                                               must be included in each
                                               solicitation and the
                                               award of a contract shall
                                               be conditioned upon the
                                               acceptance of the wage
                                               determination. (All
                                               suspected or reported
                                               violations shall be
                                               reported to EDA. Davis-
                                               Bacon wage determinations
                                               are not applicable to
                                               Recipient employed
                                               ``Force Account''
                                               workers).
                       Y  N                   Include in all contracts
                                               in excess of $2,000 for
                                               construction contracts
                                               and in excess of $2,500
                                               for other contracts which
                                               involve the employment of
                                               mechanics or laborers, a
                                               provision for compliance
                                               with Sections 102 and 107
                                               of the Contract Work
                                               Hours and Safety
                                               Standards Act (40 USC 327-
                                               330) as supplemented by
                                               Department of Labor
                                               regulations (29 CFR, Part
                                               5). Under Section 103 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 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
                                               to his health and safety.
                                               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. Work
                                               performed by employees of
                                               the Recipient (in-house
                                               forces) on the EDA-
                                               assisted project will be
                                               subject to the following:
                                              1. Work performed in
                                               excess of eight hours per
                                               day will be reimbursed by
                                               EDA at the normal rate of
                                               pay unless the Recipient
                                               can show that a higher
                                               rate is required by State
                                               or local law or union
                                               contract;
                                              2. Work performed in
                                               excess of 40 hours per
                                               week may be reimbursed by
                                               EDA at a higher rate than
                                               normal if the Recipient
                                               can show that it normally
                                               pays for such work at a
                                               higher rate. In any case
                                               the rate for work in
                                               excess of 40 hours per
                                               week may not exceed one
                                               and one half times the
                                               normal hourly rate.
                       Y  N                   Include a notice in all
                                               contracts involving
                                               research, developmental,
                                               experimental or
                                               demonstration work
                                               requiring that all
                                               patentable processes,
                                               discoveries or inventions
                                               which arise or are
                                               developed in the course
                                               of, or under, such
                                               contract shall be
                                               reported to EDA. The
                                               notice will state that
                                               the Government has an
                                               interest in any such
                                               patentable processes,
                                               discoveries or inventions
                                               corresponding to the
                                               percentage of total
                                               project cost funded by
                                               EDA.
                       Y  N                   Include in all negotiated
                                               contracts (except those
                                               awarded by small purchase
                                               procedures) a provision
                                               to the effect that the
                                               Recipient, EDA, 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 that
                                               specific contract, for
                                               the purpose of making
                                               audit, examination,
                                               excerpts, and
                                               transcriptions.
                       Y  N                   Include in all contracts a
                                               requirement that the
                                               contractor maintain all
                                               relevant project records
                                               for three years after the
                                               Recipient has made final
                                               payment to the contractor
                                               and all other pending
                                               matters are closed.
                       Y  N                   State a specific timetable
                                               in the architect/engineer
                                               agreement for:
                                              1. Completing preliminary
                                               plans and associated cost
                                               estimates;
                                              2. Completing final plans,
                                               specifications, and cost
                                               estimates;

[[Page 5380]]

 
                                              3. Securing required State
                                               and local approvals; and
                                              4. Completing proposed
                                               contract documents in a
                                               form sufficient for
                                               soliciting bids for
                                               construction of the
                                               project.
                                              (If the Recipient has
                                               executed an Architect/
                                               Engineer agreement
                                               without such a
                                               requirement for a
                                               timetable, EDA shall
                                               require that an addendum
                                               to the agreement be
                                               executed to incorporate
                                               this requirement).
                       Y  N                   Provide surveillance of
                                               project construction to
                                               assure compliance with
                                               plans, specifications,
                                               and all other contract
                                               documents. If the
                                               Recipient chooses to use
                                               the Architect/Engineer as
                                               the project inspector,
                                               the requirements for
                                               construction inspection
                                               services shall be clearly
                                               defined and the amount
                                               the Recipient is required
                                               to pay for such services
                                               shall be stated.
                       Y  N                   Be responsible for any
                                               damages arising from any
                                               defects in design or
                                               negligence in the
                                               performance of the
                                               construction inspector,
                                               if the inspector is
                                               furnished by the
                                               Architect/Engineer. (EDA
                                               recommends that the
                                               Architect/Engineer be
                                               required to take
                                               insurance, when
                                               available, to cover
                                               liability for such
                                               damages).
                       Y  N                   Supervise any required
                                               subsurface explorations
                                               such as borings, soil
                                               tests, and the like, to
                                               determine amounts of rock
                                               excavation or foundation
                                               conditions, no matter
                                               whether they are
                                               performed by the
                                               Architect/Engineer or by
                                               others paid by the
                                               Recipient.
                       Y  N                   Attend bid openings,
                                               prepare and submit
                                               tabulation of bids, and
                                               make a recommendation as
                                               to contract award.
                       Y  N                   Review proof of bidder's
                                               qualifications and
                                               recommend approval or
                                               disapproval.
                       Y  N                   Prepare and submit
                                               proposed contract change
                                               orders when applicable.
                                               There shall be no charge
                                               to the Recipient when the
                                               change order is required
                                               to correct errors or
                                               omissions by the
                                               Architect/Engineer. (To
                                               be eligible for EDA
                                               participation the
                                               specific change order
                                               must have written
                                               approval from EDA and
                                               must have some form of
                                               cost or price analysis
                                               performed by the
                                               Recipient or the
                                               Architect/Engineer).
                       Y  N                   Submit a report not less
                                               frequently than quarterly
                                               to the Recipient covering
                                               the general progress of
                                               the job and describing
                                               any problems or factors
                                               contributing to delay.
                       Y  N                   Review and approve the
                                               contractor's schedule of
                                               amounts for contract
                                               payment.
                       Y  N                   Certify partial payments
                                               to contractors.
                       Y  N                   Assure that a ten percent
                                               (10%) retainage is
                                               withheld from all
                                               payments on construction
                                               contracts until final
                                               acceptance by the
                                               Recipient and approval by
                                               the EDA Regional Office,
                                               unless State or local law
                                               provides otherwise.
                       Y  N                   Prepare ``as-built'' or
                                               record drawings after
                                               completion of the
                                               project. Reproducible
                                               originals will be
                                               furnished to the
                                               Recipient within 60 days
                                               after all construction
                                               has been completed and
                                               the final inspection has
                                               been performed. (One set
                                               of copies shall be
                                               furnished to the EDA
                                               Regional Office only if
                                               requested by the Regional
                                               Office).
                       Y  N                   Review and approve the
                                               contractor's submission
                                               of samples and shop
                                               drawings, where
                                               applicable.
                       Y  N                   Comply with all Federal
                                               statutes relating to non-
                                               discrimination. These
                                               include but are not
                                               limited to:
                                              1. Title VI of the Civil
                                               Rights Act of 1964 (P.L.
                                               88-352) which prohibits
                                               discrimination on the
                                               basis of race, color, or
                                               national origin;
                                              2. Section 112 of PL 92-45
                                               and Title IX of the
                                               Education Amendments of
                                               1972, as amended (20
                                               U.S.C. 1681-1683, and
                                               1685-1686) which
                                               prohibits discrimination
                                               on the basis of sex;
                                              3. Section 504 of the
                                               Rehabilitation Act of
                                               1973, as amended (29
                                               U.S.C. 794) which
                                               prohibits discrimination
                                               on the basis of
                                               handicaps;
                                              4. The Age Discrimination
                                               Act of 1975, as amended
                                               (42 U.S.C. 6101-6107)
                                               which prohibits
                                               discrimination because of
                                               age;
                                              5. The Drug Abuse Office
                                               and Treatment Act of 1972
                                               (P.L. 93-255), as
                                               amended, relating to non-
                                               discrimination on the
                                               basis of drug abuse;
                                              6. The Comprehensive
                                               Alcohol Abuse and
                                               Alcoholism Prevention,
                                               Treatment and
                                               Rehabilitation Act of
                                               1970 (P.L. 91-616), as
                                               amended, relating to non-
                                               discrimination on the
                                               basis of alcohol abuse or
                                               alcoholism;
                                              7. Sections 523 and 527 of
                                               the Public Health Service
                                               Act of 1912 (42 U.S.C.
                                               290 dd-3 and 290ee-3), as
                                               amended, relating to
                                               confidentiality of
                                               alcohol and drug abuse
                                               patient records;
                                              8. Title VIII of the Civil
                                               Rights Act of 1968 (42
                                               U.S.C. 3601 et. seq.), as
                                               amended, relating to non-
                                               discrimination in the
                                               sale, rental or financing
                                               of housing;
                                              9. Any other non-
                                               discrimination provisions
                                               in the specific
                                               statute(s) under which
                                               the application for
                                               Federal assistance is
                                               being made; and
                                              10. The requirements of
                                               any other non-
                                               discrimination statute(s)
                                               which may apply.

[[Page 5381]]

 
                       Y  N                   Incorporate into the
                                               proposed construction
                                               contract documents a
                                               designation of all of the
                                               different types of
                                               construction which will
                                               be used for the project;
                                               such as Building, Heavy
                                               or Highway in accordance
                                               with all local and State
                                               laws and practices. For
                                               this purpose either the
                                               plans, the specifications
                                               or both shall clearly
                                               delineate where each type
                                               stops and another starts.
                       Y  N                   Consider in the
                                               establishment of the
                                               compensation any cost
                                               savings that may be
                                               realized through multiple
                                               use of the same design.
                       Y  N                   Provide in all proposed
                                               construction contracts
                                               deductive alternates
                                               which can be taken, if
                                               necessary, to reduce the
                                               bid price so that the
                                               lowest responsive bid for
                                               construction of the
                                               project will not exceed
                                               the funds available.
                       Y  N                   Design the facility to
                                               comply with the Americans
                                               with Disabilities Act
                                               (ADA) (P.L. 101-336) and
                                               the Accessibility
                                               Guidelines for Buildings
                                               and Facilities, as
                                               amended, (36 CFR Part 191
                                               and Executive Order
                                               12699.
                       Y  N                   Design for seismic safety
                                               in accordance with
                                               Executive Order 12699
                                               which imposes
                                               requirements that
                                               federally assisted
                                               facilities be designed
                                               and constructed in
                                               accordance with the 1991
                                               ICBO Uniform Building
                                               Code or 1992 Supplement
                                               to the BOCA National
                                               Building Code and/or 1991
                                               Amendments to the SBCC
                                               Standard Building Code.
                       Y  N                   Provide sufficient plans,
                                               specifications, bid
                                               sheets, cost estimates,
                                               design analysis, and
                                               other contract documents
                                               required for the project.
                                               The number of copies to
                                               be furnished by the
                                               Architect/Engineer as
                                               part of his/her
                                               compensation for basic
                                               services shall be
                                               specified in the
                                               agreement.
                       Y  N                   Use forms for instructions
                                               to bidders, general
                                               conditions, contract, bid
                                               bond, performance bond,
                                               and payment bond which
                                               meet EDA requirements.
                                               All proposed contract
                                               documents are subject to
                                               EDA approval. (Documents
                                               contained in ``Contract
                                               Documents for
                                               Construction of Federally
                                               Assisted Water and Sewer
                                               Projects'' are acceptable
                                               for this purpose).
The name and address of the Architect/Engineer is: __________
                       Y  N                   The Architect/Engineer
                                               will perform project
                                               inspection services. If
                                               not, provide the name and
                                               address of the firm or
                                               person that will provide
                                               project construction
                                               inspection services:
                                               __________
 

The contract price for Basic Services is $-----------------------------
The contract price for Extra Services is $-----------------------------
The contract price for inspection services is $.-----------------------
The number of proposals received were----------------------------------
The number of bidders disqualified were--------------------------------
----------------------------------------------------------------------
Recipients Authorized Representative
----------------------------------------------------------------------
Date

Checklist for Construction Contracts

    Although the use of this checklist is not mandatory, its use by 
the Recipient will expedite EDA's review of the construction 
contract. When used by the Recipient, it should be submitted to EDA 
at or before the invitation for construction contract bids is 
published. EDA reserves the right to perform a pre-award review of 
the proposed procurement documents or a review of the executed 
contract documents at any time within the record retention time 
frame. The appropriate responses should be circled in ink and the 
authorized representative of the Recipient should sign the form 
where indicated.


The following documents are included in the invitation for bids:
Y  N                               An index
Y  N                               The advertisement for bids
Y  N                               The information for bidders
Y  N                               The bid form
Y  N                               The contract form
Y  N                               EDA's Supplemental General Conditions
                                    (to be furnished by EDA)
Y  N                               The recipient's general conditions
Y  N                               The technical specifications
Y  N                               The working drawings
Y  N                               The applicable wage rates (to be
                                    furnished by EDA)
Y  N                               Notice of Requirements for
                                    Affirmative Action to Ensure Equal
                                    Employment Opportunity (to be
                                    furnished by EDA)
The bid documents contain the following provisions:
Y  N                               Details of how the successful bidder
                                    will be selected
Y  N                               Actions to be taken by the Recipient
                                    if the lowest bid exceeds the funds
                                    available
Y  N                               Requirement for 5% bid bond, 100%
                                    payment bond and 100% performance
                                    bond
Y  N                               The order in which alternates, if
                                    any, are to be taken
Y  N                               Provisions for termination of the
                                    contract including default of the
                                    contractor and conditions beyond the
                                    control of the contractor
Y  N                               Provisions for administrative,
                                    contractural or legal remedies for
                                    contractor breach or violation of
                                    contract terms and provision for
                                    such sanctions and penalties as may
                                    be appropriate
Y  N                               A requirement that the contractor
                                    maintain all relevant project
                                    records for three years after the
                                    Recipient has made final payment to
                                    the contractor
Y  N                               A requirement that the bidders submit
                                    proof of qualification to do the
                                    work called for in the contract
Y  N                               Notice that progress payments will
                                    have a 10% retainage ( unless
                                    otherwise required by State or local
                                    law)
Y  N                               A requirement for the contractor to
                                    submit all shop drawings, samples
                                    and change orders to the Architect/
                                    Engineer and Recipient for approval
Y  N                               A requirement for a construction
                                    progress estimate and periodic
                                    progress reports from the
                                    construction contractor
Y  N                               A procedure for the settlement of
                                    disputes between the contractor, the
                                    contractor's subcontractors, the
                                    Architect/Engineer and the Recipient
Y  N                               A liquidated damages provision for
                                    failure of the contractor to meet
                                    the specified construction
                                    timetable. The amount specified in
                                    the proposed contract is $---- per
                                    day
Y  N                               The proposed design contains no
                                    materials or products specified by
                                    brand name without an ``or equal''
                                    provision
Y  N                               A requirement is included for
                                    compliance with Federal regulations
                                    as listed in EDA's Supplemental
                                    General Conditions, EDA's Standard
                                    Terms and Conditions to the grant
                                    award and the Special Conditions to
                                    the grant award
Y  N                               The bidders will be limited to those
                                    on a prequalified list maintained by
                                    the Recipient. If so, explain on an
                                    attached sheet the procedure that is
                                    used to place prospective bidders on
                                    the list.
Y  N                               Recipient furnished materials and/or
                                    equipment will be incorporated into
                                    the projects outside the
                                    construction contract. If so, attach
                                    a list of such materials and/or
                                    equipment.

[[Page 5382]]

 
Y  N                               No part of the project construction
                                    will be accomplished by the
                                    Recipient's own forces or by labor
                                    hired directly by the Recipient for
                                    this specific project. If so,
                                    contact the EDA regional office for
                                    further guidance
Y  N                               The contract is solely for the EDA
                                    project. If non-EDA work is
                                    included, contact the EDA regional
                                    office for further guidance.
Y  N                               The land, rights of way and easements
                                    required for the construction and
                                    operation of the project are owned
                                    by the Recipient or otherwise have
                                    been appropriately permitted by the
                                    responsible authorities.
Y  N                               The Recipient's share of the project
                                    cost is on hand or immediately
                                    available.
Y  N                               Provisions for construction
                                    inspection are in place.
Y  N                               All applicable terms and conditions
                                    of the grant award have been
                                    satisfied. If not, please explain on
                                    an attached sheet.
Y  N                               The scope of work for the project as
                                    described in the grant award has not
                                    changed.
 

    The construction period specified in the proposed contract is 
for ______ months.
    The Architect/Engineer's cost estimate for construction is 
$______.
    The advertising period will be from ______ to ______.
----------------------------------------------------------------------
Recipient's Authorized Representative
----------------------------------------------------------------------
Date

Checklist for Initial Grant Disbursement

Grant Recipient:-------------------------------------------------------
EDA Project #----------------------------------------------------------
Grant Recipient's Authorized Representative:
Name:------------------------------------------------------------------
Title:-----------------------------------------------------------------
    This checklist is for guidance on the information the EDA 
regional office will need before an initial grant disbursement can 
be approved. The regional office may use their own version of this 
checklist which may or may not be required to be sent in with the 
initial grant disbursement request. Use of the checklist will 
expedite EDA processing of the initial grant disbursement.

Y  N  NA                            The EDA grant award/offer was
                                     accepted within the 15 day after
                                     receipt time limit.
Y  N  NA                            Those Special Conditions to the
                                     grant award requiring action prior
                                     to the initial grant disbursement
                                     have been satisfied.
Y  N  NA                            An architect/engineer contract has
                                     been approved by EDA.
Y  N  NA                            An unconditional ``EPA Section 106''
                                     certificate has been secured and a
                                     copy furnished to, or received
                                     from, EDA.
Y  N  NA                            All required land, easements and
                                     rights-of-way have been secured and
                                     title opinion has been approved by
                                     EDA.
Y  N  NA                            The proposed bid documents were
                                     approved by EDA.
Y  N  NA                            The final plans, specifications and
                                     contract documents have been
                                     approved by EDA.
Y  N  NA                            All contracts required for
                                     completion of the project have been
                                     executed and approved by EDA.
Y  N  NA                            If the answer to the previous
                                     question is ``N'', a request for
                                     phasing has been made to, and
                                     approved by, EDA.
Y  N  NA                            Bid award of the construction
                                     contract was to the lowest bidder.
Y  N  NA                            The full firm name and owner's name
                                     of all contractors have been
                                     furnished to EDA for checking
                                     against the Federal debarred and
                                     ineligible list.
Y  N  NA                            The company listed as surety for the
                                     low bidder is listed on Treasury
                                     Department Circular 570 and
                                     possesses sufficient capability to
                                     insure the project.
Y  N  NA                            Davis-Bacon wage rates have been
                                     incorporated into all construction
                                     contracts.
Y  N  NA                            EDA's Supplemental General
                                     Conditions have been incorporated
                                     into all construction contracts.
Y  N  NA                            Matching funds for the Recipient's
                                     share are on hand or immediately
                                     available.
Y  N  NA                            A first lien or Property Management
                                     Agreement has been executed,
                                     recorded and submitted to EDA.
Y  N  NA                            A relocation assistance plan as
                                     required by the Uniform Relocation
                                     Assistance Act has been approved by
                                     EDA.
Y  N  NA                            Use of force account (workmen hired
                                     by the Recipient specifically for
                                     the EDA approved project) has been
                                     approved by EDA.
Y  N  NA                            Use of in-house forces (workmen who
                                     are part of the Recipient's current
                                     workforce) has been approved by
                                     EDA.
Y  N  NA                            EDA approval of the start of
                                     construction before the award of
                                     the EDA grant has been received.
Y  N  NA                            All work accomplished by change
                                     order which is part of the claim
                                     for the initial grant disbursement
                                     has been approved by EDA.
Y  N  NA                            All proposed or actual changes to
                                     the EDA approved budget have been
                                     approved by EDA.
Y  N  NA                            All project activities to the date
                                     of the initial grant disbursement
                                     request have been accomplished
                                     within the approved time schedule
                                     or EDA approved extension.
Y  N  NA                            Currently due project performance
                                     reports have been submitted to EDA.
Y  N  NA                            Tabulation of bids, bid form of the
                                     low bidder (and bid form of any
                                     bidder to whom the Recipient has
                                     made, or proposes to make to other
                                     than the lowest bidder) and
                                     certified minutes of the bid
                                     opening have been submitted to EDA.
 

Checklist for Project Closeout

Grant Recipient:-------------------------------------------------------
EDA Project #----------------------------------------------------------
Grant Recipient's Authorized Representative:
Name:------------------------------------------------------------------
Title:-----------------------------------------------------------------
    This checklist is for the Recipient's guidance on the 
information the EDA regional office will need to close out the EDA 
assisted project. Although its use is not mandatory, using it will 
expedite EDA's processing of the final grant disbursement.

Y  N  NA                            All of the Special Conditions to the
                                     EDA grant award have been satisfied
                                     and approved by the EDA regional
                                     office.
Y  N  NA                            A final inspection was performed by
                                     the Architect/Engineer and the
                                     completion of the project with all
                                     deficiencies corrected has been
                                     accepted by the Architect/Engineer
                                     in writing.
Y  N  NA                            The Recipient has accepted the
                                     project without deficiencies from
                                     the contractor.
Y  N  NA                            All currently due project progress
                                     reports have been submitted to the
                                     EDA regional office.
Y  N  NA                            The project was completed on time or
                                     an EDA approved time extension is
                                     on file.
Y  N  NA                            As-built drawings have been received
                                     from the Architect/Engineer and are
                                     on file.
Y  N  NA                            If requested by EDA, photographs of
                                     above ground facilities have been
                                     submitted to EDA.
Y  N  NA                            The Recipient understands that a
                                     warranty inspection is to be
                                     performed before the warranty
                                     expiration date and the results
                                     submitted to EDA.
Y  N  NA                            All audit issues have been resolved.
Y  N  NA                            If occupancy of the facilities by
                                     the Recipient was obtained prior to
                                     the Recipient's or Architect/
                                     Engineer's acceptance of the
                                     facility from the contractor
                                     evidence of consent of the
                                     contractor, the insurance carrier,
                                     and the surety is on file.
Y  N  NA                            Permanent insurance on the facility
                                     has been obtained.
Y  N  NA                            The Recipient is aware that project
                                     records must be retained for a
                                     minimum of three years.

[[Page 5383]]

 
Y  N  NA                            The Recipient is aware that for the
                                     EDA determined useful life of the
                                     EDA assisted facilities, all real
                                     property must be used for
                                     originally authorized purposes and
                                     the Recipient shall not dispose of
                                     or encumber its title or other
                                     interests. When the facility is no
                                     longer needed for the orignally
                                     authorized purpose and the useful
                                     life has not expired, the Recipient
                                     will request instructions from EDA.
                                     The instructions will conform to
                                     applicable DoC and EDA regulations.
Y  N  NA                            All payments due to contractors for
                                     construction, services and supplies
                                     for the project are current except
                                     for contract retainage if project
                                     has not been accepted.
Y  N  NA                            The first Post Construction Report
                                     evaluating the achievement of the
                                     Core Performance Measures listed in
                                     the Standard Terms and Conditions
                                     to the EDA grant has been submitted
                                     to EDA.
 

Exhibit B--Supplemental General Conditions

    These Supplemental General Conditions are intended for use by 
Economic Development Administration Grantees. They contain specific 
EDA and other Federal requirements not normally found in non-Federal 
contract documents. The requirements contained herein must be 
incorporated into all construction contracts and subcontracts funded 
wholly or in part with EDA funds.

Supplemental General Conditions

S1  Definitions
S2  Federally Required Contract Provisions
S3  Required Provisions Deemed Inserted
S4  Inspection by EDA Representatives
S5  Construction Schedule and Periodic Estimates
S6  Contractor's Title to Material
S7  Inspection and Testing of Materials
S8  ``Or Equal'' Clause
S9  Patents
S10  Claims for Extra Cost
S11  Contractor's and Subcontractor's Insurance
S12  Contract Security
S13  Safety and Health Regulations for Construction
S14  Minimum Wages
S15  Withholding of Payments
S16  Payrolls and Basic Records
S17  Apprentices and Trainees
S18  Subcontracts
S19  Termination and Debarment
S20  Overtime Requirements
S21  Equal Employment Opportunity
S22  Other Prohibited Interests
S23  Employment of Local Labor
S24  Historical and Archeological Data Preservation Act of 1974
S25  Clean Air and Federal Water Pollution Control Act
S26  Use of Lead-Based Paints on Residential Structures
S27  Signs

Supplemental General Conditions

S-1  Definitions

    The following terms as used in these Supplemental General 
Conditions are respectively defined as follows:
    a. ``Contractor'': A person, firm, or corporation with whom this 
Contract is made by the Owner.
    b. ``Subcontractor'': A person, firm, or corporation supplying 
labor and materials or only labor, for work at the site of the 
project, for and under separate contract or agreement with the 
Contractor.
    c. ``Work on (at) the project'': Work to be performed at the 
location of the project, including the transportation of materials 
and supplies to or from the location of the project by employees of 
the Contractor and any subcontractor.
    d. ``Apprentice'': (1) A person employed and individually 
registered in a bona fide apprenticeship program registered with the 
U.S. Department of Labor, Bureau of Apprenticeship and Training, or 
with a State apprenticeship agency recognized by the Bureau; or (2) 
a person in his/her first 90 days of probationary employment as an 
apprentice in such an apprenticeship program, who is not 
individually registered in the program, but who has been certified 
by the Bureau of Apprenticeship and Training or a State 
apprenticeship council (where appropriate) to be eligible for 
probationary employment as an apprentice.
    e. ``Trainee'': A person receiving on-the-job training in a 
construction occupation under a program which is approved (but not 
necessarily sponsored) by the U.S. Department of Labor, Manpower 
Administration, Bureau of Apprenticeship and Training, and which is 
reviewed from time to time by the Manpower Administration to insure 
that the training meets adequate standards.

S-2  Federally Required Contract Provisions

    a. Administrative, contractual, or legal remedies in instances 
where contractors violate or breach contract terms, and provide for 
such sanctions and penalties as may be appropriate (Contracts more 
than the simplified acquisition threshold--currently fixed at 
$100,000, see 41 USC 403(11)).
    b. Termination for cause and for convenience by the grantee 
including the manner by which it will be effected and the basis for 
settlement (All contracts in excess of $10,000).
    c. Compliance with Executive Order 11246 of September 24, 1965 
entitled ``Equal Employment Opportunity,'' as amended by Executive 
Order 11375 of October 13, 1967 and as supplemented in Department of 
Labor regulations (41 CFR Chapter 60) (All construction contracts 
awarded in excess of $10,000 by grantees and their contractors or 
subgrantees).
    d. Compliance with the Copeland ``Anti-Kickback'' Act (18 U.S.C. 
874) as supplemented in Department of Labor regulations (29 CFR Part 
3) (All contracts and subgrants for construction or repair).
    e. Compliance with the Davis-Bacon Act (40 U.S.C. 276a to a-7) 
as supplemented by Department of Labor regulations (29 CFR Part 5) 
(Construction contracts in excess of $2,000 awarded by grantees and 
subgrantees).
    f. Compliance with sections 103 and 107 of the Contract Work 
Hours and Safety Standards Act (40 U.S.C. 327-330) as supplemented 
by Department of Labor regulations (29 CFR Part 5) (Construction 
contracts awarded by grantees and subgrantees in excess of $2,000, 
and in excess of $2,500 for other contracts which involve the 
employment of mechanics or laborers).
    g. EDA requirements and regulations pertaining to reporting.
    h. EDA requirements and regulations pertaining to patent rights 
with respect to any discovery or invention which arises or is 
developed in the course of or under such contract.
    i. EDA requirements and regulations pertaining to copyrights and 
rights in data.
    j. Access by the grantee, EDA, the Comptroller General of the 
United States, or any of their duly authorized representatives to 
any books, documents, papers, and records of the contractor which 
are directly pertinent to that specific contract for the purpose of 
making audit, examination, excerpts, and transcriptions.
    k. Retention of all required records for three years after 
grantees or subgrantees make final payments and all other pending 
matters are closed.
    l. Compliance with all applicable standards, orders, or 
requirements issued under section 306 of the Clear Air Act (42 
U.S.C. 1857(h)), section 508 of the Clean Water Act (33 U.S.C. 
1368), Executive Order 11738, and Environmental Protection Agency 
regulations (40 CFR Part 15) (Contracts, subcontracts, and subgrants 
of amounts in excess of $ 100,000).
    m. Mandatory standards and policies relating to energy 
efficiency which are contained in the state energy conservation plan 
issued in compliance with the Energy Policy and Conservation Act 
(Pub L. 94-163, 89 Stat. 871).

S-3  Required Provisions Deemed Inserted

    Each and every provision of law and clause required by law to be 
inserted in this contract shall be deemed to be inserted herein and 
the contract shall be read and enforced as though it were included 
herein, and if through mistake or otherwise any such provision is 
not inserted, or is not correctly inserted, then upon the 
application of either party the contract shall forthwith be 
physically amended to make such insertion of correction.

S-4  Inspection by Economic Development Representatives

    The authorized representatives and agents of the Economic 
Development Administration shall be permitted to inspect all work, 
materials, payrolls, records of personnel, invoices of materials and 
other relevant data and records.

S-5  Construction Schedule and Periodic Estimates

    Immediately after execution and delivery of the contract, and 
before the first partial payment is made, the Contractor shall 
deliver

[[Page 5384]]

to the Owner an estimated construction progress schedule in form 
satisfactory to the Owner, showing the proposed dates of 
commencement and completion of each of the various subdivisions of 
work required under the Contract Documents and the anticipated 
amount of each monthly payment that will become due the Contractor 
in accordance with the progress schedule. The Contractor also shall 
furnish the Owner (a) a detailed estimate giving a complete 
breakdown of the contract price and (b) periodic itemized estimates 
of work done for the purpose of making partial payments thereon. The 
costs employed in making up any of these schedules will be used only 
for determining the basis of partial payments and will not be 
considered as fixing a basis for additions to or deductions from the 
contract price.

S-6  Contractor's Title to Material

    No materials or supplies for the work shall be purchased by the 
Contractor or by any subcontractor subject to any chattel mortgage 
or under a conditional sale contract or other agreement by which an 
interest is retained by the seller. The Contractor warrants that he/
she has good title to all materials and supplies used by him/her in 
the work, free from all liens, claims or encumbrances.

S-7  Inspection and Testing of Materials

    All materials and equipment used in the construction of the 
project shall be subject to adequate inspection and testing in 
accordance with accepted standards. The laboratory or inspection 
agency shall be selected by the Owner.
    Materials of construction, particularly those upon which the 
strength and durability of the structure may depend, shall be 
subject to inspection and testing to establish conformance with 
specifications and suitability for intended users.

S-8  ``Or Equal'' Clause

    Whenever a material, article or piece of equipment is identified 
on the plans or in the specifications by reference to manufacturers' 
or vendors' names, trade names, catalogue numbers, etc., it is 
intended merely to establish a standard; and, any material, article 
or equipment of other manufacturers and vendors which will perform 
adequately the duties, imposed by the general design will be 
considered equally acceptable provided the material, article or 
equipment so proposed is, in the opinion of the Architect/Engineer, 
of equal substance and function. It shall not be purchased or 
installed by the Contractor without the Architect/Engineer's written 
approval.

S-9  Patents

    The Contractor shall hold and save the owner and its officers, 
agents, servants and employees harmless from liability of any nature 
or kind, including cost and expenses for, or on account of, any 
patented or unpatented invention, process, article or appliance 
manufactured or used in the performance of the contract, including 
its use by the Owner, unless otherwise specifically stipulated in 
the contract documents.
    License or Royalty Fee: License and/or royalty fees for the use 
of a process which is authorized by the Owner of the project must be 
reasonable, and paid to the holder of the patent, or his authorized 
licensee, directly by the Owner and not by or through the 
Contractor. If the Contractor uses any design, device or materials 
covered by letters, patent or copyright, he/she shall provide for 
such use by suitable agreement with the Owner of such patented or 
copyrighted design, device or material. It is mutually agreed and 
understood that, without exception, the contract prices shall 
include all royalties or costs arising from the use of such design, 
device or materials, in any way involved in the work. The Contractor 
and/or his/her Sureties shall indemnify and hold harmless the Owner 
of the project from any and all claims for infringement by reason of 
the use of such patented or copyrighted design, device or materials 
or any trademark or copyright in connection with work agreed to be 
performed under this contract,and shall indemnify the Owner for any 
cost, expense or damage which it may be obliged to pay by reason of 
such infringement at any time during the prosecution of the work or 
after completion of the work.

S-10  Claims for Extra Costs

    No claims for extra work or cost shall be allowed unless the 
same was done in pursuance of a written order from the Architect/
Engineer approved by the Owner.

S-11  Contractor's and Subcontractor's Insurance

    The Contractor shall not commence work under this contract until 
he/she has obtained all the insurance required by the Owner, nor 
shall the Contractor allow any subcontractor to commence work on 
his/her subcontract until the insurance required of the 
subcontractor has been so obtained and approved.
    a. Types of insurance normally required are:
    1. Workmen's Compensation.
    2. Contractor's Public Liability and Property Damage.
    3. Contractor's Vehicle Liability.
    4. Subcontractors Public Liability, Property Damage and Vehicle 
Liability.
    5. Builder's Risk (Fire and Extended Coverage).
    b. Scope of Insurance and Special Hazards. The insurance 
described above shall provide adequate protection for the Contractor 
and his/her claims which may arise from operations under this 
contract, whether such operations be by the insured or by any one 
directly or indirectly employed by him/her and also against any of 
the special hazards which may be encountered in the performance of 
this contract.
    c. Proof of Carriage of Insurance The Contractor shall furnish 
the Owner with certificates showing the type, amount, class of 
operations covered, effective dates and dates of expiration of 
policies.

S-12  Contract Security Bonds

    If this contract is for an amount in excess of $100,000 the 
Contractor shall furnish a performance bond in an amount at least 
equal to one hundred percent (100%) of the contract price as 
security for the faithful performance of this contract and also a 
payment bond in an amount equal to one hundred percent (100%) of the 
contract price or in a penal sum not less than that prescribed by 
State, Territorial or local law, as security for the payment of all 
persons performing labor on the project under this contract and 
furnishing materials in connection with this contract. The 
performance bond and the payment bond may be in one or in separate 
instruments in accordance with local law. Before final acceptance 
each bond must be approved by the Economic Development 
Administration. If this contract is for an amount less than $100,000 
the Owner will specify the amount of the payment and performance 
bonds.

S-13  Safety and Health Regulations for Construction

    In order to protect the lives and health of his/her employees 
under the contract, the Contractor shall comply with all pertinent 
provisions of the Contract Work Hours and Safety Standards Act, as 
amended, commonly known as the Construction Safety Act as pertains 
to health and safety standards; and shall maintain an accurate 
record of all cases of death, occupational disease, and injury 
requiring medical attention or causing loss of time from work, 
arising out of and in the course of employment on work under the 
contract. 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 to his health and safety as determined under 
construction, safety and health standards promulgated by the 
Secretary of Labor.
    The Contractor alone shall be responsible for the safety, 
efficiency, and adequacy of his/her plan, equipment, appliances, and 
methods, and for any damage which may result from their failure or 
their improper construction, maintenance, or operation.

S-14  Minimum Wages

    All mechanics and laborers employed or working on the site of 
the work, or under the United States Housing Act of 1937, or under 
the Housing Act of 1949 in the construction or development of the 
project will be paid unconditionally and not less often than once a 
week, and without subsequent deduction or rebate on any account 
(except such payroll deductions as are permitted by regulations 
issued by the Secretary of Labor under the Copeland Act (29 CFR Part 
3)), the full amounts due at time of payment computed at wage rates 
not less than those contained in the wage determination of the 
Secretary of Labor which is attached hereto and made a part hereof, 
regardless of any contractual relationship which may be alleged to 
exist between the Contractor and subcontractor and such laborers and 
mechanics; and the wage determination decision shall be posted by 
the Contractor at the site of the work in a prominent place where it 
can be easily seen by the workers. For the purpose of this clause, 
contributions made or costs reasonably anticipated under Section 
1(b)(2) of the Davis-Bacon Act on behalf of laborers or mechanics 
are considered wages paid to

[[Page 5385]]

such laborers or mechanics, subject to the provisions of 29 CFR 
5.5(a)(1)(iv).
    Also for the purpose of this clause, regular contributions made 
or costs incurred for more than a weekly period under plans, funds, 
or programs, but covering the particular weekly period, are deemed 
to be constructively made or incurred during such weekly period.
    The Owner shall require that any class of laborers and 
mechanics, including apprentices and trainees, which is not listed 
in the wage determination and which is to be employed under the 
contract, shall be classified or reclassified conformable to the 
wage determination and a report of the action taken shall be sent by 
the Federal agency to the Secretary of Labor. In the event the 
interested parties cannot agree on the proper classification or 
reclassification of a particular class of laborers and mechanics, 
including apprentices and trainees, to be used, the questions 
accompanied by the recommendation of the contracting officer shall 
be referred to the Secretary of Labor for final determination.
    Whenever the minimum wage rate prescribed in the contract for a 
class of laborers or mechanics includes a fringe benefit which is 
not expressed as an hourly wage rate and the Contractor is obligated 
to pay a cash equivalent of such a fringe benefit, the Owner shall 
require an hourly cash equivalent to be established. In the event 
the interested parties cannot agree upon a cash equivalent of the 
fringe benefit, the question, accompanied by the recommendation of 
the Owner, shall be referred to the Secretary of Labor for 
determination.
    If the Contractor does not make payments to a trustee or other 
third person, he/she may consider as part of the wages of any 
laborer or mechanic the amount of any costs reasonably anticipated 
in providing benefits under a plan or program of a type expressly 
listed in the wage determination decision of the Secretary of Labor 
which is a part of this contract; provided, however, the Secretary 
of Labor has found, upon the written request of the Contractor, that 
the applicable standards of the Davis-Bacon Act have been met. The 
Secretary of Labor may require the Contractor to set aside in a 
separate account assets for the meeting of obligations under the 
plan or program.

S-15  Withholding of Payments

    The Economic Development Administration may withhold or cause to 
be withheld from the Contractor as much of the accrued payments or 
advances as may be considered necessary to pay laborers and 
mechanics, including apprentices and trainees, employed by the 
Contractor or any subcontractor on the work, the full amount of 
wages required by the contract in accordance with the Davis-Bacon 
Act. In the event of failure to pay any laborer or mechanic, 
including any apprentice or trainee employed or working on the 
project site or under the United States Housing Act of 1937 or under 
the Housing Act of 1949, in the construction or development of the 
project, all or part of the wages required by the contract, the 
Economic Development Administration may, after written notice to the 
Contractor, sponsor, applicant, or Owner, take action as may be 
necessary to cause the suspension of any further payment, advance, 
or guaranty of funds until such violations have ceased.

S-16  Payrolls and Basic Records

    Payrolls and basic records relating thereto will be maintained 
during the course of the work and preserved for a period of three 
years thereafter for all laborers and mechanics working at the EDA 
project site, or under the United States Housing Act of 1937 or 
under the Housing Act of 1949, in the construction or development of 
the project. Such records shall contain the name and address of each 
employee, his/her correct classification, rate of pay (including 
contributions or costs anticipated of the types described in Section 
9(b)(2) of the Davis-Bacon Act), daily and weekly number of hours 
worked, deductions made and actual wages paid. Whenever the 
Secretary of Labor has found under 29 CFR 5.5(a)(1)(iv) that the 
wages of any laborer or mechanic include the amount of any costs 
reasonably anticipated in providing benefits under a plan program 
described in Section 1(b)(2)(B) of the Davis-Bacon Act the 
Contractor shall maintain records which show that the commitment to 
provide such benefits is enforceable, that the plan or program is 
financially responsible, and that the plan or program has been 
communicated in writing to the laborers or mechanics affected, plus 
records which show the costs anticipated or the actual cost incurred 
in providing such benefits.
    The Contractor shall submit weekly a copy of all payrolls to the 
Owner on DOL Form WH-347 or equivalent. The copy shall be signed on 
the reverse side by the employer or his/her agent indicating that 
the payrolls are correct and complete, that the wage rates contained 
therein are not less than those determined by the Secretary of Labor 
and that the classifications set forth for each laborer or mechanic 
conform with the work he/she performed. This submission is required 
under this contract and the Copeland regulations of the Secretary of 
Labor (29 CFR Part 3) and the filing with the initial payroll or any 
subsequent payroll of a copy of any findings by the Secretary of 
Labor under 20 CFR 5.5(a)(1)(iv) shall satisfy this requirement. The 
Prime Contractor shall be responsible for the submission of copies 
of payrolls of all subcontractors. The Contractor shall make the 
records required under the labor standards clause of the contract 
available for inspection by authorized representatives of the 
Economic Development Administration and the Department of Labor, and 
shall permit such representatives to interview employees during 
working hours on the job.

S-17  Apprentices and Trainees

    Apprentices will be permitted to work as such only when they are 
registered, individually, under a bona fide apprenticeship program 
registered with a State apprenticeship agency which is recognized by 
the Bureau of Apprenticeship and Training, U.S. Department of Labor; 
or, if no such recognized agency exists in a State, under a program 
registered with the Bureau of Apprenticeship and Training, U.S. 
Department of Labor. The allowable ratio of apprentices to 
journeymen in any craft classification shall not be greater than the 
ratio permitted to the Contractor as to his/her entire work force 
under the registered program. Any employee listed on a payroll at an 
apprentice wage rate, who is not a trainee as defined in Section S-
1e herein and is not registered as above, shall be paid the wage 
rate determined by the Secretary of Labor for the classification of 
work he actually performed. The Contractor or subcontractor shall be 
required to furnish to the Owner written evidence of the 
registration of his/her program and apprentices as well as of the 
appropriate ratios and wage rates for the area of construction prior 
to using any apprentices on the contract work.
    Trainees will be permitted to work as such when they are bona 
fide trainees employed pursuant to a program approved by the U.S. 
Department of Labor, Manpower Administration, Bureau of 
Apprenticeship and Training, and when the subparagraph below is 
applicable, in accordance with the provisions of Part 5, Subpart A, 
Title 29, Code of Federal Regulations.
    On contracts in excess of $10,000, the employment of all 
laborers and mechanics, including apprentices and trainees, as 
defined in Section 29 CFR 5.5 shall also be subject to the 
provisions of Part 5, Subpart A, Title 29, Code of Federal 
Regulations. Apprentices and trainees shall be hired in accordance 
with the requirements of Part 5, Subpart A. The provisions of 
Sections S-14, S-15, and S-17 shall be applicable to every 
invitation for bids, and to every negotiation, request for 
proposals, or request for quotations, for an assisted construction 
contract, and to every such contract entered into on the basis of 
such invitation or negotiation. Part 5, Subpart A, Title 29, Code of 
Federal Regulations shall constitute the conditions of each assisted 
contract in excess of $10,000, and each Owner concerned shall 
include these conditions or provide for their inclusion, in each 
such contract. These ``Supplemental General Conditions'' shall also 
be included in each such contract.

S-18  Subcontracts

    The Contractor shall insert in any subcontracts these same 
``Supplemental General Conditions.''

S-19  Termination and Debarment

    A breach of any one of the Sections S-15 through S-18 may be 
considered by the Owner and by the Economic Development 
Administration as grounds for termination of the contract and for 
debarment as provided in 29 CFR 5.6.

S-20  Overtime Requirements

    No Contractor nor any subcontractor contracting for any part of 
the contract work which may require or involve the employment of 
laborers or mechanics shall require or permit any laborer or 
mechanic in any workweek in which he/she is employed on such work to 
work in excess of forty hours in such workweek unless such laborer 
or mechanic receives compensation at a rate not less than one and 
one-half times his/her basic

[[Page 5386]]

rate of pay for all hours in excess of forty hours in such workweek.
    In the event of any violation of the clause set forth in the 
subsection above, the Contractor and any subcontractor responsible 
therefor, shall be liable to any affected employee for his/her 
unpaid wages. In addition, such Contractor and subcontractor shall 
be liable to the United States (in the case of work done under 
contract for the District of Columbia or territory, to such District 
of Columbia or to such territory) for liquidated damages. Such 
liquidated damages shall be computed with respect to each individual 
laborer or mechanic employed in violation of the clause set forth 
above in the sum of $10.00 for each calendar day on which such 
employee was required or permitted to work in excess of the standard 
workweek of forty hours without payment of the overtime wages 
required by the clause set forth above.
    The Economic Development Administration may withhold or cause to 
be withheld, from any monies payable on account of work performed by 
the Contractor or subcontractor, such sums as may administratively 
be determined to be necessary to satisfy any liabilities of such 
Contractor or subcontractor for unpaid wages and liquidated damages 
as provided in the clause set forth above.
    The Contractor shall insert in all subcontracts the clause set 
forth above in this section and also a clause requiring the 
subcontractors to include these clauses in any lower tier 
subcontracts that may, in turn, be made.

S-21  Equal Employment Opportunity

    No person in the United States shall, on the grounds of race, 
color, national origin, age, physical handicap, or sex be excluded 
from participation in, be denied the benefits of, or be subjected to 
discrimination under any program or activity receiving Federal 
financial assistance; Reference Title VI of the Civil Rights Act of 
1964 (42 USC 2000d) and Section 112 of Public Law 92-65, Age 
Discrimination Act of 1975 (42 USC 6102) and Section 504 of the 
Rehabilitation Act of 1973 (26 USC 794).
    Form ED-503. The Owner and all Contractors, subcontractors, 
suppliers, leasees and other parties directly participating in the 
Recipient's project agree that during and in connection with the 
associated agreement relating to the Federally assisted program, (i) 
they will comply, to the extent applicable, as Contractors, 
subcontractors, lessees, suppliers, or in any other capacity, with 
the applicable provisions of 13 CFR 311 and the Regulations of the 
United States Department of Commerce (Part 8 of Subtitle A of Title 
15 of the Code of Federal Regulations) issued pursuant to Title VI 
of the Civil Rights Act of 1964 (P.L. 88-352), and will not thereby 
discriminate against any person on the grounds of race, sex, color, 
age, or national origin in their employment practices, in any of 
their own contractual agreements, in all services or accommodations 
which they offer to the public, and in any of their other business 
operations, (ii) they will provide information required by or 
pursuant to said Regulations to ascertain compliance with the 
Regulations and these assurances, and (iii) their non-compliance 
with the nondiscrimination requirements of said Regulations and 
these assurances shall constitute a breach of their contractual 
arrangements with the Owner whereby said agreements may be canceled, 
terminated or suspended in whole or in part or may be subject to 
enforcement otherwise by appropriate legal proceedings.
    Executive Order 11246, 3 CFR 339 (1965) (Equal Opportunity 
Clause). During the performance of this contract, the Contractor 
agrees as follows:
    a. The Contractor shall not discriminate against any employee or 
applicant for employment because of age, race, color, religion, sex, 
handicap, or national origin. The Contractor shall take affirmative 
action to ensure the applicants are employed, and that employees are 
treated during employment, without regard to their age, race, color, 
religion, sex, handicap or national origin. Such action shall 
include, but not be limited to, the following: employment, 
upgrading, demotion, or transfer; recruitment or recruitment 
advertising; layoff or termination; rates of pay or other forms of 
compensation; and selection for training, including apprenticeship.
    b. The Contractor agrees to post in conspicuous places available 
to employees and applicants for employment, notices to be provided 
by the Grantee setting forth the provisions of this 
nondiscrimination clause.
    c. The Contractor shall, in all solicitations or advertisements 
for employees placed by or on behalf of the Contractor, state that 
all qualified applicants shall receive consideration for employment 
without regard to race, color, religion, sex, or national origin.
    d. A notice to be provided by the Grantee shall be sent to each 
labor union or representative of workers with which he/she has a 
collective bargaining agreement or other contract of understanding, 
advertising the labor union or workers' representative of the 
Contractor's commitment under Section 202 of Executive Order No. 
11246 of September 24, 1965, and copies of the notice shall be 
posted in conspicuous places available to employees and applicants 
for employment.
    e. The Contractor shall comply with all provisions of Executive 
Order No. 11246 of September 24, 1965, and of rules, regulations, 
and relevant orders of the Secretary of Labor.
    f. The Contractor shall furnish all information and reports 
required by Executive Order No. 11246 of September 24, 1965, and by 
rules, regulations, and orders of the Secretary of Labor, or 
pursuant thereto, and will permit access to his/her books, records, 
and accounts by the Economic Development Administration and the 
Secretary of Labor for purpose of investigation to ascertain 
compliance with such rules, regulations, and orders. Each Contractor 
and subcontractor of federally assisted construction work is 
required to file an Equal Employment Opportunity Employer 
Information Report (EEO-1) on Standard Form 100, annually on March 
31. Forms and instructions are available at the EDA Regional 
Offices.
    g. In the event of the Contractor's noncompliance with the 
nondiscrimination clauses of this contract or with any such rules, 
regulations, or orders, this contract may be canceled, terminated, 
or suspended in whole or in part and the Contractor may be declared 
ineligible for further Government contracts in accordance with 
procedures authorized in Executive Order No. 11246 of September 24, 
1965, and such other sanctions may be imposed (and remedies 
involved) as provided in Executive Order No. 11246 of September 24, 
1965, or by rule, regulation, or order of the Secretary of Labor, or 
as otherwise provided by law.
    h. The Contractor shall include the provisions of paragraphs a. 
through g. in every subcontract or purchase order unless exempted by 
rules, regulations, or orders of the Secretary of Labor issued 
pursuant to Section 203 of Executive Order No. 11246 of September 
24, 1965, so that such provisions will be binding upon each 
subcontractor or vendor. The Contractor shall take such action with 
respect to any subcontractor or purchase order as the Economic 
Development Administration may direct as a means of enforcing such 
provisions, including sanctions for noncompliance; provided, 
however, that in the event the Contractor becomes involved in, or is 
threatened with litigation with a subcontractor or vendor as a 
result of such direction by the Grantee/Borrower, the Contractor may 
request the United States to enter into such litigation to protect 
the interests of the United States.
    i. Exemptions to Above Equal Opportunity Clause (41 CFR Chap. 
60):
    (1) Contracts and subcontracts not exceeding $10,000 (other than 
Government bills of lading) are exempt. The amount of the contract, 
rather than the amount of the Federal financial assistance, shall 
govern in determining the applicability of this exemption.
    (2) Except in the case of subcontractors for the performance of 
construction work at the site of construction, the clause shall not 
be required to be inserted in subcontracts below the second tier.
    (3) Contracts and subcontracts not exceeding $10,000 for 
standard commercial supplies or raw materials are exempt.

Standard Federal Equal Employment Opportunity Construction Contract 
Specifications (Executive Order 11246 et seq)

    1. As used in these specifications:
    a. ``Covered area'' means the geographical area described in the 
solicitation from which this contract resulted;
    b. ``Director'' means Director, Office of Federal Contract 
Compliance Programs, United States Department of Labor, or any 
person to whom the Director delegates authority;
    c. ``Employer identification number'' means the Federal Social 
Security number used on the Employer's Quarterly Federal Tax Return, 
U. S. Treasury Department Form 941.
    d. ``Minority'' includes:
    (i) Black (all persons having origins in any of the Black 
African racial groups not of Hispanic origin);
    (ii) Hispanic (all persons of Mexican, Puerto Rican, Cuban, 
Central or South

[[Page 5387]]

American or other Spanish Culture or origin, regardless of race);
    2. Asian and Pacific Islander (all persons having origins in any 
of the original peoples of the Far East, Southeast Asia, the Indian 
Subcontinent, or the Pacific Islands);
    a. American Indian or Alaskan Native (all persons having origins 
in any of the original peoples of North America and maintaining 
identifiable tribal affiliations through membership and 
participation or community identification).
    3. Whenever the Contractor, or any subcontractor at any tier, 
subcontracts a portion of the work involving any construction trade, 
it shall physically include in each subcontract in excess of $l0,000 
the provisions of these specifications and the Notice which contains 
the applicable goals for minority and female participation and which 
is set forth in the solicitations from which this contract resulted.
    4. If the Contractor is participating (pursuant to 41 CFR 60-
4.5) in a Hometown Plan approved by the U. S. Department of Labor in 
the covered area either individually or through an association, its 
affirmative action obligations on all work in the Plan area 
(including goals and timetables) shall be in accordance with that 
Plan for those trades which have unions participating in the Plan. 
Contractors must be able to demonstrate their participation in and 
compliance with the provisions of any such Hometown Plan. Each 
Contractor or subcontractor participating in an approved Plan is 
individually required to comply with its obligations under the EEO 
clause, and to make a good faith effort to achieve each goal under 
the Plan in each trade in which it has employees. The overall good 
faith performance by other Contractors or subcontractors toward a 
goal in an approved Plan does not excuse any covered Contractor's or 
subcontractor's failure to make good faith efforts to achieve the 
Plan goals and timetables.
    5. The Contractor shall implement the specific affirmative 
action standards provided in Paragraphs 7a through p of these 
specifications. The goals set for the Contractor in the solicitation 
from which this contract resulted are expressed as percentages of 
the total hours of employment and training of minority and female 
utilization the Contractor should reasonably be able to achieve in 
each construction trade in which it has employees in the covered 
area. The Contractor is expected to make substantially uniform 
progress toward its goals in each craft during the period specified.
    6. Neither the provisions of any collective bargaining agreement 
nor the failure by a union with whom the Contractor has a collective 
bargaining agreement, to refer either minorities or women shall 
excuse the Contractor's obligations under these specifications, 
Executive Order 11246, or the regulations promulgated pursuant 
thereto.
    7. In order for the nonworking training hours of apprentices and 
trainees to be counted in meeting the goals, such apprentices and 
trainees must be employed by the Contractor during the training 
period, and the Contractor must have made a commitment to employ the 
apprentices and trainees at the completion of their training, 
subject to the availability of employment opportunities. Trainees 
must be trained pursuant to training programs approved by the U.S. 
Department of Labor.
    8. The Contractor shall take specific affirmative actions to 
ensure equal employment opportunity. The evaluation of the 
Contractor's compliance with these specifications shall be based 
upon its effort to achieve maximum results from its actions. The 
Contractor shall document these efforts fully, and shall implement 
affirmative action steps at least as extensive as the following:
    a. Ensure and maintain a working environment free of harassment, 
intimidation, and coercion at all sites, and in all facilities at 
which the Contractor's employees are assigned to work. The 
Contractor, where possible, will assign two or more women to each 
construction project. The Contractor shall specifically ensure that 
all superintendents and other on-site supervisory personnel are 
aware of and carry out the Contractor's obligation to maintain such 
a working environment, with specific attention to minority or female 
individuals working at such sites or in such facilities.
    b. Establish and maintain a current list of minority and female 
recruitment sources, provide written notification to minority and 
female recruitment sources and to community organizations when the 
Contractor or its unions have employment opportunities available, 
and maintain a record of the organizations' responses.
    c. Maintain a current file of the names, addresses and telephone 
numbers of each minority and female off-the-street applicant and 
minority and female referral from a union, a recruitment source or 
community organization and of what action was taken with respect to 
each such individual. If such individual was sent to the union 
hiring hall for referral and was not referred back to the Contractor 
by the union or, if referred, not employed by the Contractor, this 
shall be documented in the file with the reason therefor, along with 
whatever additional actions the Contractor may have taken.
    d. Provide immediate written notification to the Regional 
Director when the union or unions, with which the Contractor has a 
collective bargaining agreement, have not referred to the Contractor 
a minority person or woman sent by the Contractor, or when the 
Contractor has other information that the union referral process has 
impeded the Contractor's efforts to meet its obligations.
    e. Develop on-the-job training opportunities and/or participate 
in training programs for the area which expressly include minorities 
and women, including upgrading programs and apprenticeship and 
trainee programs relevant to the Contractor's employment needs, 
especially those programs funded or approved by the Department of 
Labor. The Contractor shall provide notice of these programs to the 
sources compiled under Paragraph 7b above.
    f. Disseminate the Contractor's EEO policy by providing notice 
of the policy to unions and training programs and requesting their 
cooperation in assisting the Contractor in meeting its EEO 
obligations; by including it in any policy manual and collective 
bargaining agreement; by publicizing it in the company newspaper, 
annual report, etc.; by specific review of the policy with all 
management personnel and with all minority and female employees at 
least once a year; and by posting the company EEO policy on bulletin 
boards accessible to all employees at each location where 
construction work is performed.
    g. Review, at least annually, the company's EEO policy and 
affirmative action obligations under these specifications with all 
employees having any responsibility for hiring, assignment, layoff, 
termination or other employment decisions including specific review 
of these items with onsite supervisory personnel such as 
Superintendents, Supervisors, etc., prior to the initiation of 
construction work at any job site. A written record shall be made 
and maintained identifying the time and place of these meetings, 
persons attending, subject matter discussed, and disposition of the 
subject matter.
    h. Disseminate the Contractor's EEO policy externally by 
including it in any advertising in the news media, and providing 
written notification to, and discussing the Contractor's EEO policy 
with, other Contractors and subcontractors with whom the Contractor 
anticipates doing business.
    i. Direct its recruitment efforts, both oral and written, to 
minority, female and community organizations, to schools with 
minority and female students and to minority and female recruitment 
and training organizations serving the Contractor's recruitment area 
and employment needs. Not later than one month prior to the date for 
the acceptance of applications for apprenticeship or other training 
by any recruitment source, the Contractor shall send written 
notification to organizations such as the above, describing the 
openings, screening procedures, and tests to be used in the 
selection process.
    j. Encourage present minority and female employees to recruit 
other minority persons and women and, where reasonable, provide 
after-school, summer and vacation employment to minority and female 
youth both on the site and in other areas of a Contractor's 
workforce.
    k. Validate all tests and other selection requirements where 
there is an obligation to do so under 14 CFR Part 60-3.
    l. Conduct, at least annually, an inventory and evaluation of 
all minority and female personnel for promotional opportunities and 
encourage these employees to seek or to prepare for, through 
appropriate training, etc., such opportunities.
    m. Ensure that seniority practices, job classifications, work 
assignments and other personnel practices, do not have a 
discriminatory effect by continually monitoring all personnel and 
employment-related activities to ensure that the EEO policy and the 
Contractor's obligations under these specifications are being 
carried out.
    n. Ensure that all facilities and company activities are 
nonsegregated except that separate or single-user toilet and 
necessary changing facilities shall be provided to assure privacy 
between the sexes.
    o. Document and maintain a record of all solicitations of offers 
for subcontracts from

[[Page 5388]]

minority and female construction contractors and suppliers, 
including circulation of solicitations to minority and female 
contractor associations and other business associations.
    p. Conduct a review, at least annually, of all supervisors' 
adherence to and performance under the Contractor's EEO policies and 
affirmative action obligations.
    8. Contractors are encouraged to participate in voluntary 
associations which assist in fulfilling one or more of their 
affirmative action obligations (Paragraph 7a through p). The efforts 
of a contractor association, joint contractor-union, contractor 
community, or other similar group of which the Contractor is a 
member and participant, may be asserted as fulfilling any one or 
more of its obligations under Paragraph 7a through p of these 
Specifications provided that the Contractor actively participates in 
the group, makes every effort to assure that the group has a 
positive impact on the employment of minorities and women in the 
industry, ensures that the concrete benefits of the program are 
reflected in the Contractor's minority and female workforce 
participation, makes a good faith effort to meet its individual 
goals and timetables, and can provide access to documentation which 
demonstrates the effectiveness of actions taken on behalf of the 
Contractor. The obligation to comply, however, is the Contractor's 
and failure of such a group to fulfill an obligation shall not be a 
defense for the Contractor's noncompliance.
    9. A single goal for minorities and a separate single goal for 
women have been established. The Contractor, however, is required to 
provide equal employment opportunity and to take affirmative action 
for all minority groups, both male and female, and all women, both 
minority and nonminority. Consequently, the Contractor may be in 
violation of the Executive Order if a particular group is employed 
in a substantially disparate manner (for example, even though the 
Contractor has achieved its goals for women generally, the 
Contractor may be in violation of the Executive Order if a specific 
minority group of women is underutilized).
    10. The Contractor shall not use the goals and timetables or 
affirmative action standards to discriminate against any person 
because of race, color, religion, sex, or national origin.
    11. The Contractor shall not enter into any subcontract with any 
person or firm debarred from Government contracts pursuant to 
Executive Order 11246.
    12. The Contractor shall carry out such sanctions and penalties 
for violation of these specifications and of the Equal Opportunity 
Clause, including suspension, termination and cancellation of 
existing subcontracts as may be imposed or ordered pursuant to 
Executive Order 11246, as amended, and its implementing regulations, 
by the Office of Federal Contract Compliance Programs. Any 
Contractor who fails to carry out such sanctions and penalties shall 
be in violation of these specifications and Executive Order 11246, 
as amended.
    13. The Contractor, in fulfilling its obligations under these 
specifications, shall implement specific affirmative action steps, 
at least as extensive as those standards prescribed in Paragraph 7 
of these specifications, so as to achieve maximum results from its 
efforts to ensure equal employment opportunity. If the Contractor 
fails to comply with the requirements of the Executive Order, the 
implementing regulations or these specifications, the Director shall 
proceed in accordance with 41 CFR 60-4.8.
    14. The Contractor shall designate a responsible official to 
monitor all employment-related activity to ensure that the company 
EEO policy is being carried out, to submit reports relating to the 
provisions hereof, as may be required by the Government and to keep 
records. Records shall at least include for each employee the name, 
address, telephone numbers, construction trade union affiliation if 
any, employee identification number when assigned, social security 
number, race, sex, status (e.g., mechanic, apprentice, trainee 
helper, or laborer), dates of changes in status, hours worked per 
week in the indicated trade, rate of pay, and locations at which the 
work was performed. Records shall be maintained in an easily 
understandable and retrievable form; however, to the degree that 
existing records satisfy this requirement, contractors shall not be 
required to maintain separate records.
    15. Nothing herein provided shall be construed as a limitation 
upon the application of other laws which establish different 
standards of compliance or upon the application or requirements for 
the hiring of local or other area residents (e.g., those under the 
Public Works Employment Act of 1977 and the Community Development 
Block Grant Program).
    16. The goals for minority and female participation in each 
trade will be furnished by the Economic Development Administration 
of the U.S. Department of Commerce.

S-22  Other Prohibited Interests

    No official of the Owner who is authorized in such capacity and 
on behalf of the Owner to negotiate, make, accept or approve, or to 
take part in negotiating, making, accepting, or approving any 
architectural, engineering, inspection, construction or material 
supply contract or any subcontract in connection with the 
construction of the project, shall become directly or indirectly 
interested personally in this contract or in any part hereof. No 
officer, employee, architect, attorney, engineer, or inspector of or 
for the Owner who is authorized in such capacity and on behalf of 
the Owner to exercise any legislative, executive, supervisory or 
other similar functions in connection with the construction of the 
project, shall become directly or indirectly interested personally 
in this contract or in any part thereof, any material supply 
contract, subcontract, insurance contract, or any other contract 
pertaining to the project.

S-23  Employment of Local Labor

    a. The maximum feasible employment of local labor shall be made 
in the construction of public works and development facility 
projects receiving direct Federal grants. Accordingly, every 
Contractor and subcontractor undertaking to do work on any such 
project which is or reasonably may be done as on-site work, shall 
employ, in carrying out such contract work, qualified persons who 
regularly reside in the designated area where such project is to be 
located, or in the case of Economic Development Centers, qualified 
persons who regularly reside in the center or in the adjacent or 
nearby redevelopment areas within the Economic Development District, 
except:
    (1) To the extent that qualified persons regularly residing in 
the designated area or Economic Development District are not 
available.
    (2) For the reasonable needs of any such Contractor or 
subcontractor, to employ supervisory or specially experienced 
individuals necessary to assure an efficient execution of the 
Contract.
    (3) For the obligation of any such Contractor or subcontractor 
to offer employment to present or former employees as the result of 
a lawful collective bargaining contract, provided that in no event 
shall the number of non-resident persons employed under this 
subparagraph exceed twenty percent of the total number of employees 
employed by such Contractor and his/her subcontractors on such 
project.
    b. Every such Contractor and subcontractor shall furnish the 
United States Employment Service Office in the area in which a 
public works or development facility project is located with a list 
of all positions for which it may from time to time require 
laborers, mechanics, and other employees, the estimated numbers of 
employees required in each classification, and the estimated dates 
on which such employees will be required.
    c. The Contractor shall give full consideration to all qualified 
job applicants referred by the local employment service, but it is 
not required to employ any job applicants referred whom the 
Contractor does not consider qualified to perform the classification 
of work required.
    d. The payrolls maintained by the Contractor shall contain the 
following information: full name, address, and social security 
number and a notation indicating whether the employee does, or does 
not, normally reside in the area in which the project is located, or 
in the case of an Economic Development Center, in such center or in 
an adjacent or nearby redevelopment area within the Economic 
Development District, as well as an indication of the ethnic 
background of each worker.
    e. The Contractor shall include the provisions of this condition 
in every subcontract for work which is, or reasonably may be, done 
as on-site work.

S-24  Historical and Archaeological Data Preservation Act 
Requirements

    The Contractor agrees to facilitate the preservation and 
enhancement of structures and objects of historical, architectural 
or archaeological significance and when such items are found and/or 
unearthed during the course of project construction, to consult

[[Page 5389]]

with the State Historic Preservation Officer for recovery of the 
items. Reference: National Historic Preservation Act of 1966 (80 
Stat 915, 16 USC 470) and Executive Order No. 11593 of May 31, 1971.

S-25  Clean Air Act of 1970, Et Seq. and Federal Water Pollution 
Control Act as Amended by the Clean Water Act of 1977

    The Contractor agrees to comply with Federal clean air and water 
standards during the performance of this contract and specifically 
agrees to the following:
    a. The term ``facility'' means any building, plant, 
installation, structure, mine, vessel or other floating craft, 
location or site of operations; owned, leased, or supervised; by the 
Contractor and the subcontractors; for the construction, supply and 
service contracts entered into by the Contractor;
    b. Any facility to be utilized in the accomplishment of this 
contract is not listed on the Environmental Protection Agency's List 
of Violating Facilities pursuant to 40 CFR, Part 15.20;
    c. In the event a facility utilized in the accomplishment of 
this contract becomes listed on the EPA list, this contract may be 
canceled, terminated, or suspended in whole or in part;
    d. It will comply with all the requirements of Section 114 of 
the Clean Air Act and Section 308 of the Water Pollution Control Act 
relating to inspection, monitoring, entry, reports, and information, 
as well as all other requirements specified in Section 114 and 
Section 308, respectively, and all regulations and guidelines issued 
thereunder;
    e. It will promptly notify the Government of the receipt of any 
notice from the Director, Office of Federal Activities, 
Environmental Protection Agency, indicating that any facility 
utilized or to be utilized in the accomplishment of this contract is 
under consideration for listing on the EPA List of Violating 
Facilities;
    f. It will include the provisions of Paragraphs a. through g. in 
every subcontract or purchase order entered into for the purpose of 
accomplishing this contract, unless otherwise exempted pursuant to 
the EPA regulations implementing the Air or Water Acts above (40 
CFR, Part 15.5), so that such provisions will be binding on each 
subcontractor or vendor;
    g. In the event that the Contractor or the subcontractor for the 
construction, supply and service contracts entered into for the 
purpose of accomplishing this contract were exempted from complying 
with the above requirements under the provisions of 40 CFR, Part 
15.5 (a), the exemption shall be nullified should the facility give 
rise to a criminal conviction (see 40 CFR 15.20) during the 
accomplishment of this contract. Furthermore, with the nullification 
of the exemption, the above requirements shall be effective. The 
Contractor shall notify the Government, as soon as the Contractors' 
or the subcontractors' facility is listed for having given rise to a 
criminal conviction noted in 40 CFR, Part 15.20.

S-26  Use of Lead-Based Paints on Residential Structures

    If the work under this contract involves construction or 
rehabilitation of residential structures, the Contractor shall 
comply with the Lead-based Paint Poisoning Prevention Act (see 42 
U.S.C. 4831). The Contractor shall assure that paint used on the 
project on applicable surfaces does not contain lead in excess of 
the percentages set forth in Paragraphs (a) and (b) of this section. 
In determining compliance with these standards, the lead content of 
the paint shall be measured on the basis of the total nonvolatile 
content of the paint or on the basis of an equivalent measure of 
lead in the dried film of paint already applied.
    a. For paint manufactured after June 22, 1977, paint may not 
contain lead in excess of 6 one-hundredths of 1 percent (.00006) 
lead by weight.
    b. For paint manufactured on or before June 22, 1977, paint may 
not contain lead in excess of five-tenths of 1 percent lead by 
weight.
    As a condition to receiving assistance under the Act, recipients 
shall assure that the restriction against the use of lead-based 
paint is included in all contracts and subcontracts involving the 
use of Federal funds.

Definitions

    1. ``Applicable surfaces'' are those exterior surfaces which are 
readily accessible to children under 7 years of age.
    2. ``Residential structures'' means houses, apartments, or other 
structures intended for human habitation, including institutional 
structures where persons reside, which are accessible to children 
under 7 years of age, such as day care centers, intermediate and 
extended care facilities, and certain community facilities.

S-27  EDA Signs

    The Contractor shall supply, erect, and maintain a project sign 
according to the specifications set forth below:

EDA Site Sign Specifications

Size: Sign A: 4' x 8' x 1\7/8\'' Sign B: 4' x 8' x \3/4\''
Materials: Face: Sign A: \1/4\'' tempered Masonite; Sign B: \3/4\'' 
or greater shop sanded (exterior) Plywood (one side only)
Framing: Sign A: 2'' x 4'' nominal on four sides and center cross 
bracing; Sign B: 2'' x 4'' center cross bracing only
Supports: 4'' x 4'' x 12' nominal post
Assembly: Sign A: 2'' x 4'' frame to fit 4' x 8' board with 2'' x 
4'' cross braces; Sign B: To be mounted directly to the 4'' x 4'' 
post, with cross bracing
Mounting: Signs A and B are to be mounted to the 4'' x 4'' post with 
a \3/8\'' minimum bolt and nut, four on each side of the sign. Each 
bolt is to have two washers, one between the sign and the head of 
the bolt and the other between the post and the nut.
Erection: 4'' x 4'' posts are to be set three to four feet deep into 
concrete 12'' in diameter.
Paint: Face: Three coats outdoor enamel (sprayed); Rear: One coat 
outdoor enamel (sprayed)
Colors: Crimson Red, Stark White and Royal Blue. Specifically, white 
background; ``JOBS'' in red; ``for your community'' in blue; ``EDA'' 
logo and ``PROVIDED BY EQUAL OPPORTUNITY EMPLOYERS, in partnership 
with the U.S. DEPARTMENT OF COMMERCE--Economic Development 
Administration'' in black. ``By working together we can provide 
economic opportunities for Americans'' in black.
Lettering: Silk screen enamels. Lettering sizes and positioning will 
be as illustrated.

    Project signs will not be erected on public highway rights-of-
way.
    Location and height of signs will be coordinated with the agency 
responsible for highway or street safety in the area, if any 
possibility exists for obstruction to traffic line of sight.
    If, at the end of the project, the sign is reusable, it shall be 
disposed of as directed by the EDA Regional Office.
    Whenever EDA Site Sign specifications conflict with State law or 
local ordinances, the EDA Regional Director may modify such 
conflicting specifications so as to comply with that State law or 
local ordinance.

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Notice

    This attached Exhibit D, ``Agreement and Mortgage'' is furnished 
as a sample. The actual form which the Recipient may be required to 
sign may differ from the sample dependent upon the type of property, 
the form of ownership, and the intent of the EDA assisted project 
(Check with the Regional Attorney in the EDA regional office). 
Attention is called to the ``useful life'', stated in terms of 
years, during which period the ``Agreement and Mortgage'' will 
remain in effect.

Agreement and Mortgage

    WHEREAS, ________ (hereinafter called ``Mortgagor''), whose 
address is ________ has applied to, received and accepted from the 
United States Department of Commerce, Economic Development 
Administration (EDA), whose address is ________ a grant in the 
amount of ________ and No/100 Dollars ($      ) (Grant Amount) 
pursuant to a Grant Agreement entered into by the parties on 
________, and bearing EDA Project Number ____-____-____ (the 
Project); and
    WHEREAS, pursuant to the application filed by Mortgagor 
requesting said grant and pursuant to the Grant Agreement, the Grant 
Amount is to be used for the purpose of making improvements 
consisting of ________ on the real Property described in Exhibit 
``A,'' attached hereto and made a part hereof (the Property); and
    WHEREAS, any transfer or conveyance of a Project by an EDA 
Grantee must have the prior written approval of EDA. However, EDA, 
under authority of the Public Works and Economic Development Act of 
1965, as amended, 42 U.S.C. Section 3121, is not authorized to 
permit transfer or conveyance of a Project to parties which are not 
eligible to receive EDA grants unless EDA is repaid its share of the 
fair market value of the Project or unless the authorized purpose of 
the EDA grant was to develop land in order to lease it for a 
specific use, in which case EDA may authorize a lease of the Project 
if certain conditions are met; and
    WHEREAS, the aforesaid grant from EDA provides that the 
authorized purpose for which the Grant Amount may be used is to 
develop and improve the Property in order to lease it for a specific 
use while further providing, inter alia, that Mortgagor will not 
sell, mortgage, or otherwise use or alienate any right to, or 
interest in the Property, other than by a lease permitted by the 
Grant Agreement, or use the Property for purposes other than and 
different from those purposes set forth in the Grant Agreement and 
the application made by Mortgagor therefor, such alienation or use 
being prohibited by 13 CFR Part 314, or by 15 CFR Part 24 or by 
Office of Management and Budget Circular A-110, Attachment N (the 
OMB Circular); and
    WHEREAS, the value of EDA's right to repayment under the terms 
of 15 CFR Part 24 and OMB Circular A-110 is difficult to establish; 
and
    WHEREAS, at this time, Mortgagor and EDA desire to establish a 
value for EDA's share of the Project in the event that the Property 
is used, transferred or alienated in violation of the Grant 
Agreement, 15 CFR Part 24, OMB Circular A-110 or 13 CFR Part 314;
    NOW THEREFORE, Mortgagor does hereby mortgage, warrant, grant 
and convey unto EDA, its successors and assigns, a mortgage on said 
Property to secure a debt that shall become due and payable by 
Mortgagor to EDA upon the use, transfer or alienation of the 
Property in violation of the Grant Agreement or in violation of the 
regulations set forth in 13 CFR Part 314, 15 CFR Part 24, or OMB 
Circular A-110, as such Grant Agreement, regulations or Circular may 
be amended from time to time, provided, however, that the lien and 
encumbrance of this AGREEMENT AND MORTGAGE shall terminate and be of 
no further force and effect        years from the date hereof, which 
period of years has been established as the useful life of the 
improvements to the Property. The amount of the lien, encumbrance 
and debt created by this Agreement shall be the Grant Amount or the 
amount actually disbursed or an amount determined pursuant to 13 CFR 
Part 314. Mortgagor does hereby acknowledge that said debt shall 
accrue and be due and payable upon any use, transfer, or alienation 
prohibited by the Grant Agreement, 15 CFR Part 24, OMB Circular A-
110, or 13 CFR Part 314, and does, moreover, agree that such debt 
shall be extinguished only through the full payment thereof to the 
United States.
    Mortgagor further covenants and agrees as follows:

1. Lease of Property:

    If the Grant Application and Grant Agreement authorize Mortgagor 
to lease the Property, all lease arrangements must be consistent 
with the authorized general and special purpose of the grant; said 
lease arrangements will provide adequate employment and economic 
benefits for the area in which the Property is located; said lease 
arrangements must be consistent with EDA policies concerning, but 
not limited to, nondiscrimination and environmental requirements, 
and that the proposed Lessee is providing adequate compensation to 
Mortgagor for said lease. Any lease agreements entered into by 
Mortgagor of the Property shall be subordinate, junior and inferior 
to this AGREEMENT AND MORTGAGE.

2. Charges; Liens:

    Mortgagor shall protect the title and possession of the 
Property, pay when due all taxes, assessments, and other charges, 
fines and impositions now existing or hereafter levied or assessed 
upon the Property and preserve and maintain the priority of the lien 
hereby created on the Property including any improvements hereafter 
made a part of the realty.

3. Hazard Insurance:

    Mortgagor shall insure and keep insured all improvements now or 
hereafter created upon the Property against loss or damage by fire 
and windstorm and any other hazard or hazards included within the 
term ``extended coverage.'' The amount of insurance shall be the 
full insurable value of said improvements. Any insurance proceeds 
received by Mortgagor due to loss shall be applied to restoration or 
repair of the Property damaged, provided such restoration or repair 
is economically feasible and the security of this Mortgage is not 
thereby impaired. If such restoration or repair is not economically 
feasible or if the security of this Mortgage would be impaired, 
Mortgagor shall use said insurance proceeds to compensate EDA for 
its fair share. EDA's fair share shall be a percentage of said 
insurance proceeds equal to its grant percentage in the total cost 
of the grant program for which the damaged or destroyed real 
property was acquired or improved.

4. Preservation and Maintenance of the Property:

    Mortgagor shall keep the Property in good condition and repair 
and shall not permit or commit any waste, impairment, or 
deterioration of the Property.

5. Inspection:

    EDA may make or cause to be made reasonable entries upon and 
inspection of the Property.

6. Condemnation:

    The proceeds of any award or claim for damages, direct or 
consequential, in connection with any condemnation or other taking 
of the Property, or part thereof, or for any conveyance in lieu of 
condemnation shall be used by Mortgagor to compensate EDA for its 
fair share. EDA's fair share shall be a percentage in the total cost 
of the grant program for which the condemned property was acquired 
or improved.

7. Forbearance by EDA Not a Waiver:

    Any forbearance by EDA in exercising any right or remedy 
hereunder, or otherwise affordable by applicable law, shall not be a 
waiver of or preclude the exercise of any right or remedy hereunder.

8. Recording of Mortgage--Mortgagee's Copy:

    Mortgagor shall record this AGREEMENT AND MORTGAGE in the County 
where the Property is located, thereby securing to EDA an estate in 
the Property. Mortgagee shall be furnished a confirmed copy of this 
Mortgage at the time of execution, and after recordation thereof.

9. Remedies Cumulative:

    All remedies provided in this Mortgage are distinct and 
cumulative to any other right or remedy under this Mortgage or 
afforded by law or equity, and may be exercised concurrently, 
independently or successively.

10. Notice:

    Any notice from EDA to Mortgagor provided for in this Mortgage 
shall be mailed by certified mail to Mortgagor's last known address 
or at such address as Mortgagor may designate to EDA by certified 
mail to EDA's address, except for any Notice given to Mortgagor in 
the manner as may be prescribed by applicable law as provided 
hereafter in this Mortgage.
    11. Upon Mortgagor's breach of any covenant or agreement of 
Mortgagor in this AGREEMENT AND MORTGAGE, EDA, its designees, 
successors or assigns may declare the entire indebtedness secured 
hereby immediately due, payable and collectible. This AGREEMENT AND 
MORTGAGE may be enforced by the Secretary of Commerce of the United 
States of America, the Assistant

[[Page 5393]]

Secretary of Commerce for Economic Development or their designees, 
successors or assigns, by and through a foreclosure action brought 
either in a United States District Court, or in any State Court 
having jurisdiction, but such action shall not be deemed to be a 
waiver of the aforesaid debt or of any possible further or 
additional action to recover repayment thereof.
    After any breach on the part of Mortgagor, EDA, its designees, 
successors or assigns shall, upon bill filed or the proper legal 
proceedings being commenced for the foreclosure of this Mortgage, be 
entitled, as a matter of right, to the appointment by any competent 
court, without notice to any party, of a receiver of the rents, 
issues and profits of the Property, with power to lease and control 
the Property, and with such other powers as may be deemed necessary.

12. Governing Law; Severability:

    This AGREEMENT AND MORTGAGE shall be governed by applicable 
Federal law and nothing contained herein shall be construed to limit 
the rights the EDA, its designees, successors or assigns is entitled 
to under applicable Federal law. In the event that any provision or 
clause of this instrument conflicts with applicable law, such 
conflict shall not affect other provisions of this instrument which 
can be given effect without the conflicting provision, and to this 
end the provisions of this instrument are declared to be severable.
    IN WITNESS WHEREOF, Mortgagor has hereunto set its hand and seal 
on this the ______ day of ______19, ______.
    WITNESS:
----------------------------------------------------------------------
----------------------------------------------------------------------
----------------------------------------------------------------------
By:--------------------------------------------------------------------
Mortgagor
Its:-------------------------------------------------------------------
STATE OF
COUNTY OF
    The foregoing instrument was acknowledged before me, a Notary 
Public in and for said County and State, this day of ______ 
19______, by the ______ on behalf of said
----------------------------------------------------------------------
Notary Public
My commission expires--------------------------------------------------

Notice of Requirements for Affirmative Action To Ensure Equal 
Employment Opportunity (Executive Order 11246 and 41 CFR Part 60-4)

    The following notice shall be included in, and shall be a part 
of all solicitations for offers and bids on all Federal and 
federally assisted construction contracts or subcontracts in excess 
of $10,000.
    The Offerer's or Bidder's attention is called to the ``Equal 
Opportunity Clause'' and the ``Standard Federal Equal Employment 
Opportunity Construction Contract Specifications'' set forth herein.
    The goals and timetables for minority and female participation, 
expressed in percentage terms for the Contractor's aggregate 
workforce in each trade on all construction work in the covered area 
are as follows:

------------------------------------------------------------------------
                                  Goals for minority   Goals for female
           Timetables              participation for   participation for
                                      each trade          each trade
------------------------------------------------------------------------
                                  * Insert goals for  * Insert goals for
                                   each year.          each year.
------------------------------------------------------------------------
* Goals to be furnished by EDA.

    These goals are applicable to all the Contractor's construction 
work (whether or not it is Federal or federally assisted) performed 
in the covered area.
    The Contractor's compliance with the Executive Order and the 
regulations in 41 CFR Part 60-4 shall be based on its implementation 
of the Equal Opportunity Clause, specific affirmative action 
obligations required by the specifications set forth in 41 CFR 60-
4.3 (a) and its efforts to meet the goals established for the 
geographical area where the contract resulting from this 
solicitation is to be performed.
    The hours of minority and female employment and training must be 
substantially uniform throughout the length of the contract, and in 
each trade. The Contractor shall make a good faith effort to employ 
minorities and women evenly on each of its projects. The transfer of 
minority or female employees or trainees from Contractor to 
Contractor or from project to project for the sole purpose of 
meeting the Contractor's goals shall be a violation of the contract, 
the Executive Order and the regulations in 41 CFR 60-4. Compliance 
with the goals will be measured against the total work hours 
performed.
    The Contractor shall provide written notification to the 
appropriate Regional Office of the Office of Contract Compliance 
Programs within 10 working days of award of any construction 
subcontract in excess of $10,000 at any tier for construction work 
under the contract resulting from this solicitation. The 
notification shall list the name, address and telephone number of 
the subcontractor; employer identification number; estimated dollar 
amount of the subcontract; estimated starting and completion dates 
of the subcontract; and the geographical area in which the contract 
is to be performed.
    As used in this notice, and in the contract resulting from this 
solicitation, the ``covered area'' is (insert description of the 
geographical area where the contract is to be performed giving the 
state, county and city, if any).

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Information for Bidders

BIDS will be received by-----------------------------------------------
(herein called the ``OWNER''), at--------------------------------------
until ______, 19______, and then at said office publicly opened and 
read aloud.
    Each BID must be submitted in a sealed envelope, addressed to 
______ at ______. Each sealed envelope containing a BID must be 
plainly marked on the outside as BID for ______ and the envelope 
should bear on the outside the name of the BIDDER, his address, his 
license number if applicable and the name of the project for which 
the BID is submitted. If forwarded by mail, the sealed envelope 
containing the BID must be enclosed in another envelope addressed to 
the OWNER at ______.
    All BIDS must be made on the required BID form. All blank spaces 
for BID prices must be filled in, in ink or typewritten, and the BID 
form must be fully completed and executed when submitted. Only one 
copy of the BID form is required.
    The OWNER may waive any informalities or minor defects or reject 
any and all BIDS. Any BID may be withdrawn prior to the above 
scheduled time for the opening of BIDS or authorized postponement 
thereof. Any BID received after the time and date specified shall 
not be considered. No BIDDER may withdraw a BID within 60 days after 
the actual date of the opening thereof. Should there be reasons why 
the contract cannot be awarded within the specified period, the time 
may be extended by mutual agreement between the OWNER and the 
BIDDER.
    BIDDERS must satisfy themselves of the accuracy of the estimated 
quantities in the BID Schedule by examination of the site and a 
review of the drawings and specifications including ADDENDA. After 
BIDS have been submitted, the BIDDER shall not assert that there was 
a misunderstanding concerning the quantities of WORK or of the 
nature of the WORK to be done.
    The OWNER shall provide to BIDDERS prior to BIDDING, all 
information which is pertinent to, and delineates and describes, the 
land owned and rights-of-way acquired or to be acquired.
    The CONTRACT DOCUMENTS contain the provisions required for the 
construction of the PROJECT. Information obtained from an officer, 
agent, or employee of the OWNER or any other person shall not affect 
the risks or obligations assumed by the CONTRACTOR or relieve him 
from fulfilling any of the conditions of the contract.
    Each BID must be accompanied by a BID bond payable to the OWNER 
for five percent of the total amount of the BID. As soon as the BID 
prices have been compared, the OWNER will return the BONDS of all 
except the three lowest responsible BIDDERS. When the Agreement is 
executed the bonds of the two remaining unsuccessful BIDDERS will be 
returned. The BID BOND of the successful BIDDER will be retained 
until the payment BOND and performance BOND have been executed and 
approved, after which it will be returned. A certified check may be 
used in lieu of a BID BOND.
    A performance BOND and a payment BOND, each in the amount of 100 
percent of the CONTRACT PRICE, with a corporate surety approved by 
the OWNER, will be required for the faithful performance of the 
contract.
    Attorneys-in-fact who sign BID BONDS or payment BONDS and 
performance BONDS must file with each BOND a certified and effective 
dated copy of their power of attorney.
    The party to whom the contract is awarded will be required to 
execute the Agreement and obtain the performance BOND and payment 
BOND within ten (10) calendar days from the date when the NOTICE OF 
AWARD is delivered to the BIDDER. The NOTICE OF AWARD shall be 
accompanied by the necessary Agreement and BOND forms. In case of 
failure of the BIDDER to execute the Agreement, the OWNER may at his 
option consider the BIDDER in default, in which case the BID BOND 
accompanying the proposal shall become the property of the OWNER.
    The OWNER within ten (10) days of receipt of acceptable 
performance BOND, payment BOND, and Agreement signed by the party to 
whom the Agreement was awarded shall sign the Agreement and return 
to such party an executed duplicate of the Agreement. Should the 
OWNER not execute the Agreement within such period, the BIDDER may 
by WRITTEN NOTICE withdraw his signed Agreement. Such notice of 
withdrawal shall be effective upon receipt of the notice by the 
OWNER.
    The NOTICE TO PROCEED shall be issued within ten (10) days of 
the execution of the Agreement by the OWNER. Should there be reasons 
why the NOTICE TO PROCEED cannot be issued within such period, the 
time may be extended by mutual agreement between the OWNER and the 
CONTRACTOR. If the NOTICE TO PROCEED has not been issued within the 
ten (10) day period or within the period mutually agreed upon, the 
CONTRACTOR may terminate the Agreement without further liability on 
the part of either party.
    The OWNER may make such investigations as he deems necessary to 
determine the ability of the BIDDER to perform the WORK, and the 
BIDDER shall furnish to the OWNER all such information and data for 
this purpose as the OWNER may request. The OWNER reserves the right 
to reject any BID if the evidence submitted by, or investigation of, 
such BIDDER fails to satisfy the OWNER that such BIDDER is properly 
qualified to carry out the obligations of the Agreement and to 
complete the WORK contemplated therein.
    A conditional or qualified BID will not be accepted.
    Award will be made to the lowest responsible BIDDER.
    All applicable laws, ordinances, and the rules and regulations 
of all authorities having jurisdiction over construction of the 
PROJECT shall apply to the contract throughout.
    Each BIDDER is responsible for inspecting the site and for 
reading and being thoroughly familiar with the CONTRACT DOCUMENTS. 
The failure or omission of any BIDDER to do any of the foregoing 
shall in no way relieve any BIDDER from any obligation in respect to 
his BID.
    Further, the BIDDER agrees to abide by the requirements under 
Executive Order No. 11246, as amended, including specifically the 
provisions of the equal opportunity clause set forth in the 
SUPPLEMENTAL GENERAL CONDITIONS.
    The low BIDDER shall supply the names and addresses of major 
material SUPPLIERS and SUBCONTRACTORS when requested to do so by the 
OWNER.
    Inspection trips, for prospective BIDDERS will leave from the 
office of the
----------------------------------------------------------------------
    The ENGINEER is ____________. His address is ____________.

Bid

    Proposal of __________ (hereinafter called ``BIDDER''), 
organized and existing under the laws of the State of __________ 
doing business as __________.*
---------------------------------------------------------------------------

    * Insert ``a corporation'', ``a partnership'', or ``an 
individual as applicable.
---------------------------------------------------------------------------

    To the __________ (hereinafter called ``OWNER'').
    In compliance with your Advertisement for Bids, BIDDER hereby 
proposes to perform all WORK for the construction of __________ in 
strict accordance with the CONTRACT DOCUMENTS, within the time set 
forth therein, and at the prices stated below.
    By submission of this BID, each BIDDER certifies, and in the 
case of a joint BID each party thereto certifies as to his own 
organization, that this BID has been arrived at independently, 
without consultation, communication, or agreement as to any matter 
relating to this BID with any other BIDDER or with any competitor.
    BIDDER hereby agrees to commence WORK under this contract on or 
before a date to be specified in the NOTICE TO PROCEED and to fully 
complete the PROJECT within __________ consecutive calendar days 
thereafter. BIDDER further agrees to pay as liquidated damages, the 
sum of $__________ for each consecutive calendar day thereafter as 
provided in section 15 of the General Conditions.
    BIDDER acknowledges receipt of the following ADDENDUM:
----------------------------------------------------------------------
----------------------------------------------------------------------

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[[Page 5406]]

General Conditions

1. Definitions
2. Additional Instructions and Detail Drawings
3. Schedules, Reports and Records
4. Drawings and Specifications
5. Shop Drawings
6. Materials, Services and Facilities
7. Inspection and Testing
8. Substitutions
9. Patents
10. Surveys, Permits, Regulations
11. Protection of Work, Property, Persons
12. Supervision by Contractor
13. Changes in the Work
14. Changes in the Contract Price
15. Time for Completion and Liquidated Damages
16. Correction of Work
17. Subsurface Conditions
18. Suspension of Work, Termination and Delay
19. Payments to Contractor
20. Acceptance of Final Payment as Release
21. Insurance
22. Contract Security
23. Assignments
24. Indemnification
25. Separate Contracts
26. Subcontracting
27. Engineer's Authority
28. Land and Rights of Way
29. Guaranty
30. Arbitration
31. Taxes

1. Definitions

    1.1  Wherever used in the CONTRACT DOCUMENTS, the following 
terms shall have the meanings indicated which shall be applicable to 
both the singular and plural thereof:
    1.2  ADDENDA--Written or graphic instruments issued prior to the 
execution of the Agreement which modify or interpret the CONTRACT 
DOCUMENTS, DRAWINGS and SPECIFICATIONS, by additions, deletions, 
clarifications or corrections.
    1.3  BID--The offer or proposal of the BIDDER submitted on the 
prescribed form setting forth the prices for the WORK to be 
performed.
    1.4  BIDDER--Any person, firm or corporation submitting a BID 
for the WORK.
    1.5  BONDS--Bid, Performance, and Payment Bonds and other 
instruments of security, furnished by the CONTRACTOR and his surety 
in accordance with the CONTRACT DOCUMENTS.
    1.6  CHANGE ORDER--A written order to the CONTRACTOR authorizing 
an addition, deletion or revision in the WORK within the general 
scope of the CONTRACT DOCUMENTS, or authorizing an adjustment in the 
CONTRACT PRICE or CONTRACT TIME.
    1.7  CONTRACT DOCUMENTS--The contract, including Advertisement 
For Bids, Information for Bidders, BID, Bid Bond, Agreement, Payment 
Bond, Performance Bond, NOTICE OF AWARD, NOTICE TO PROCEED, CHANGE 
ORDER, DRAWINGS, SPECIFICATIONS, and ADDENDA.
    1.8  CONTRACT PRICE--The total monies payable to the CONTRACTOR 
under the terms and conditions of the CONTRACT DOCUMENTS.
    1.9  CONTRACT TIME--The number of calendar days stated in the 
CONTRACT DOCUMENTS for the completion of the WORK.
    1.10  CONTRACTOR--The person, firm or corporation with whom the 
OWNER has executed the Agreement.
    1.11  DRAWINGS--The part of the CONTRACT DOCUMENTS which show 
the characteristics and scope of the WORK to be performed and which 
have been prepared or approved by the ENGINEER.
    1.12  ENGINEER--The person, firm or corporation named as such in 
the CONTRACT DOCUMENTS.
    1.13  FIELD ORDER--A written order effecting a change in the 
WORK not involving an adjustment in the CONTRACT PRICE or an 
extension of the CONTRACT TIME, issued by the ENGINEER to the 
CONTRACTOR during construction.
    1.14  NOTICE OF AWARD--The written notice of the acceptance of 
the BID from the OWNER to the successful BIDDER.
    1.15  NOTICE TO PROCEED--Written communication issued by the 
OWNER to the CONTRACTOR authorizing him to proceed with the WORK and 
establishing the date of commencement of the WORK.
    1.16  OWNER--A public or quasi-public body or authority, 
corporation, association, partnership, or individual for whom the 
WORK is to be performed.
    1.17  PROJECT--The undertaking to be performed as provided in 
the CONTRACT DOCUMENTS.
    1.18  RESIDENT PROJECT REPRESENTATIVE--The authorized 
representative of the OWNER who is assigned to the PROJECT site or 
any part thereof.
    1.19  SHOP DRAWINGS--All drawings, diagrams, illustrations, 
brochures, schedules and other data which are prepared by the 
CONTRACTOR, a SUBCONTRACTOR, manufacturer, SUPPLIER or distributor, 
which illustrate how specific portions of the WORK shall be 
fabricated or installed.
    1.20  SPECIFICATIONS--A part of the CONTRACT DOCUMENTS 
consisting of written descriptions of a technical nature of 
materials, equipment, construction systems, standards and 
workmanship.
    1.21  SUBCONTRACTOR--An individual, firm or corporation having a 
direct contract with the CONTRACTOR or with any other SUBCONTRACTOR 
for the performance of a part of the work at the site.
    1.22  SUBSTANTIAL COMPLETION--That date as certified by the 
ENGINEER when the construction of the PROJECT or a specified part 
thereof is sufficiently completed, in accordance with the CONTRACT 
DOCUMENTS, so that the PROJECT or specified part can be utilized for 
the purposes for which it is intended.
    1.23  SUPPLEMENTAL GENERAL CONDITIONS--Modifications to General 
Conditions required by a Federal agency for participation in the 
PROJECT and approved by the agency in writing prior to inclusion in 
the CONTRACT DOCUMENTS, or such requirements that may be imposed by 
applicable state laws.
    1.24  SUPPLIER--Any person or organization who supplies 
materials or equipment for the WORK, including that fabricated to a 
special design, but who does not perform labor at the site.
    1.25  WORK--All labor necessary to produce the con struction 
required by the CONTRACT DOCUMENTS, and all materials and equipment 
incorporated or to be incorporated in the PROJECT.
    1.26  WRITTEN NOTICE--Any notice to any party of the Agreement 
relative to any part of this Agreement in writing and considered 
delivered and the service thereof completed, when posted by 
certified or registered mail to the said party at his last given 
address, or delivered in person to said party or his authorized 
representative on the WORK.

2. Additional Instructions and Detail Drawings

    2.1  The CONTRACTOR may be furnished additional instructions and 
detail drawings, by the ENGINEER, as necessary to carry out the WORK 
required by the CONTRACT DOCUMENTS.
    2.2  The additional drawings and instruction thus supplied will 
become a part of the CONTRACT DOCUMENTS. The CONTRACTOR shall carry 
out the WORK in accordance with the additional detail drawings and 
instructions.

3. Schedules, Reports and Records

    3.1  The CONTRACTOR shall submit to the OWNER such schedule of 
quantities and costs, progress schedules, payrolls, reports, 
estimates, records and other data where applicable as are required 
by the CONTRACT DOCUMENTS for the WORK to be performed.
    3.2  Prior to the first partial payment estimate the CONTRACTOR 
shall submit construction progress schedules showing the order in 
which he proposes to carry on the WORK, including dates at which he 
will start the various parts of the WORK, estimated date of 
completion of each part and, as applicable:
    3.2.1  The dates at which special detail drawings will be 
required; and
    3.2.2  Respective dates for submission of SHOP DRAWINGS, the 
beginning of manufacture, the testing and the installation of 
materials, supplies and equipment.
    3.3  The CONTRACTOR shall also submit a schedule of payments 
that he anticipates he will earn during the course of the WORK.

4. Drawings and Specifications

    4.1  The intent of the DRAWINGS and SPECIFICATIONS is that the 
CONTRACTOR shall furnish all labor, materials, tools, equipment, and 
transportation necessary for the proper execution of the WORK in 
accordance with the CONTRACT DOCUMENTS and all incidental work 
necessary to complete the PROJECT in an acceptable manner, ready for 
use, occupancy or operation by the OWNER.
    4.2  In case of conflict between the DRAWINGS and 
SPECIFICATIONS, the SPECIFICATIONS shall govern. Figure dimensions 
on DRAWINGS shall govern over scale dimensions, and detailed 
DRAWINGS shall govern over general DRAWINGS.
    4.3  Any discrepancies found between the DRAWINGS and 
SPECIFICATIONS and site

[[Page 5407]]

conditions or any inconsistencies or ambiguities in the DRAWINGS or 
SPECIFICATIONS shall be immediately reported to the ENGINEER, in 
writing, who shall promptly correct such inconsistencies or 
ambiguities in writing. WORK done by the CONTRACTOR after his 
discovery of such discrepancies, inconsistencies or ambiguities 
shall be done at the CONTRACTOR'S risk.

5. Shop Drawings

    5.1  The CONTRACTOR shall provide SHOP DRAWINGS as may be 
necessary for the prosecution of the WORK as required by the 
CONTRACT DOCUMENTS. The ENGINEER shall promptly review all SHOP 
DRAWINGS. The ENGINEER'S approval of any SHOP DRAWING shall not 
release the CONTRACTOR from responsibility for deviations from the 
CONTRACT DOCUMENTS. The approval of any SHOP DRAWING which 
substantially deviates from the requirement of the CONTRACT 
DOCUMENTS shall be evidenced by a CHANGE ORDER.
    5.2  When submitted for the ENGINEER'S review, SHOP DRAWINGS 
shall bear the CONTRACTOR'S certification that he has reviewed, 
checked and approved the SHOP DRAWINGS and that they are in 
conformance with the requirements of the CONTRACT DOCUMENTS.
    5.3  Portions of the WORK requiring a SHOP DRAWING or sample 
submission shall not begin until the SHOP DRAWING or submission has 
been approved by the ENGINEER. A copy of each approved SHOP DRAWING 
and each approved sample shall be kept in good order by the 
CONTRACTOR at the site and shall be available to the ENGINEER.

6. Materials, Services and Facilities

    6.1  It is understood that, except as otherwise specifically 
stated in the CONTRACT DOCUMENTS, the CONTRACTOR shall provide and 
pay for all materials, labor, tools, equipment, water, light, power, 
transportation, supervision, temporary construction of any nature, 
and all other services and facilities of any nature whatsoever 
necessary to execute, complete, and deliver the WORK within the 
specified time.
    6.2  Materials and equipment shall be so stored as to insure the 
preservation of their quality and fitness for the WORK. Stored 
materials and equipment to be incorporated in the WORK shall be 
located so as to facilitate prompt inspection.
    6.3  Manufactured articles, materials and equipment shall be 
applied, installed, connected, erected, used, cleaned and 
conditioned as directed by the manufacturer.
    6.4  Materials, supplies and equipment shall be in accordance 
with samples submitted by the CONTRACTOR and approved by the 
ENGINEER.
    6.5  Materials, supplies or equipment to be incorporated into 
the WORK shall not be purchased by the CONTRACTOR or the 
SUBCONTRACTOR subject to a chattel mortgage or under a conditional 
sale contract or other agreement by which an interest is retained by 
the seller.

7. Inspection and Testing

    7.1  All materials and equipment used in the construction of the 
PROJECT shall be subject to adequate inspection and testing in 
accordance with generally accepted standards, as required and 
defined in the CONTRACT DOCUMENTS.
    7.2  The OWNER shall provide all inspection and testing services 
not required by the CONTRACT DOCUMENTS.
    7.3  The CONTRACTOR shall provide at his expense the testing and 
inspection services required by the CONTRACT DOCUMENTS.
    7.4  If the CONTRACT DOCUMENTS, laws, ordinances, rules, 
regulations or orders of any public authority having jurisdiction 
require any WORK to specifically be inspected, tested, or approved 
by someone other than the CONTRACTOR, the CONTRACTOR will give the 
ENGINEER timely notice of readiness. The CONTRACTOR will then 
furnish the ENGINEER the required certificates of inspection, 
testing or approval.
    7.5  Inspections, tests or approvals by the engineer or others 
shall not relieve the CONTRACTOR from his obligations to perform the 
WORK in accordance with the requirements of the CONTRACT DOCUMENTS.
    7.6  The ENGINEER and his representatives will at all times have 
access to the WORK. In addition, authorized representatives and 
agents of any participating Federal or state agency shall be 
permitted to inspect all work, materials, payrolls, records of 
personnel, invoices of materials, and other relevant data and 
records. The CONTRACTOR will provide proper facilities for such 
access and observation of the WORK and also for any inspection, or 
testing thereof.
    7.7  If any WORK is covered contrary to the written instructions 
of the ENGINEER it must, if requested by the ENGINEER, be uncovered 
for his observation and replaced at the CONTRACTOR'S expense.
    7.8  If the ENGINEER considers it necessary or advisable that 
covered WORK be inspected or tested by others, the CONTRACTOR, at 
the ENGINEER'S request, will uncover, expose or otherwise make 
available for observation, inspection or testing as the ENGINEER may 
require, that portion of the WORK in question, furnishing all 
necessary labor, materials, tools, and equipment. If it is found 
that such WORK is defective, the CONTRACTOR will bear all the 
expenses of such uncovering, exposure, observation, inspection and 
testing and of satisfactory reconstruction. If, however, such WORK 
is not found to be defective, the CONTRACTOR will be allowed an 
increase in the CONTRACT PRICE or an extension of the CONTRACT TIME, 
or both, directly attributable to such uncovering, exposure, 
observation, inspection, testing and reconstruction and an 
appropriate CHANGE ORDER shall be issued.

8. Substitutions

    8.1  Whenever a material, article or piece of equipment is 
identified on the DRAWINGS or SPECIFICATIONS by reference to brand 
name or catalogue number, it shall be understood that this is 
referenced for the purpose of defining the performance or other 
salient requirements and that other products of equal capacities, 
quality and function shall be considered. The CONTRACTOR may 
recommend the substitution of a material, article, or piece of 
equipment of equal substance and function for those referred to in 
the CONTRACT DOCUMENTS by reference to brand name or catalogue 
number, and if, in the opinion of the ENGINEER, such material, 
article, or piece of equipment is of equal substance and function to 
that specified, the ENGINEER may approve its substitution and use by 
the CONTRACTOR. Any cost differential shall be deductible from the 
CONTRACT PRICE and the CONTRACT DOCUMENTS shall be appropriately 
modified by CHANGE ORDER. The CONTRACTOR warrants that if 
substitutes are approved, no major changes in the function or 
general design of the PROJECT will result. Incidental changes or 
extra component parts required to accommodate the substitute will be 
made by the CONTRACTOR without a change in the CONTRACT PRICE or 
CONTRACT TIME.

9. Patents

    9.1  The CONTRACTOR shall pay all applicable royalties and 
license fees. He shall defend all suits or claims for infringement 
of any patent rights and save the OWNER harmless from loss on 
account thereof, except that the OWNER shall be responsible for any 
such loss when a particular process, design, or the product of a 
particular manufacturer or manufacturers is specified, however if 
the CONTRACTOR has reason to believe that the design, process or 
product specified is an infringement of a patent, he shall be 
responsible for such loss unless he promptly gives such information 
to the ENGINEER.

10. Surveys, Permits, Regulations

    10.1   The OWNER shall furnish all boundary surveys and 
establish all base lines for locating the principal component parts 
of the WORK together with a suitable number of bench marks adjacent 
to the WORK as shown in the CONTRACT DOCUMENTS. From the information 
provided by the OWNER, unless otherwise specified in the CONTRACT 
DOCUMENTS, the CONTRACTOR shall develop and make all detail surveys 
needed for construction such as slope stakes, batter boards, stakes 
for pile locations and other working points, lines, elevations and 
cut sheets.
    10.2   The CONTRACTOR shall carefully preserve bench marks, 
reference points and stakes and, in case of willful or careless 
destruction, he shall be charged with the resulting expense and 
shall be responsible for any mistakes that may be caused by their 
unnecessary loss or disturbance.
    10.3  Permits and licenses of a temporary nature necessary for 
the prosecution of the WORK shall be secured and paid for by the 
CONTRACTOR unless otherwise stated in the SUPPLEMENTAL GENERAL 
CONDITIONS. Permits, licenses and easements for permanent structures 
or permanent changes in existing facilities shall be secured and 
paid for by the OWNER, unless otherwise specified. The CONTRACTOR 
shall give all notices and

[[Page 5408]]

comply with all laws, ordinances, rules and regulations bearing on 
the conduct of the WORK as drawn and specified. If the CONTRACTOR 
observes that the CONTRACT DOCUMENTS are at variance therewith, he 
shall promptly notify the ENGINEER in writing, and any necessary 
changes shall be adjusted as provided in Section 13, CHANGES IN THE 
WORK.

11. Protection of Work, Property and Persons

    11.1  The CONTRACTOR will be responsible for initiating, 
maintaining and supervising all safety precautions and programs in 
connection with the WORK. He will take all necessary precautions for 
the safety of, and will provide the necessary protection to prevent 
damage, injury or loss to all employees on the WORK and other 
persons who may be affected thereby, all the WORK and all materials 
or equipment to be incorporated therein, whether in storage on or 
off the site, and other property at the site or adjacent thereto, 
including trees, shrubs, lawns, walks, pavements, roadways, 
structures and utilities not designated for removal, relocation or 
replacement in the course of construction.
    11.2  The CONTRACTOR will comply with all applicable laws, 
ordinances, rules, regulations and orders of any public body having 
jurisdiction. He will erect and maintain, as required by the 
conditions and progress of the WORK, all necessary safeguards for 
safety and protection. He will notify owners of adjacent utilities 
when prosecution of the WORK may affect them. The CONTRACTOR will 
remedy all damage, injury or loss to any property caused directly or 
indirectly, in whole or in part, by the CONTRACTOR, any 
SUBCONTRACTOR or anyone directly or indirectly employed by any of 
them or anyone for whose acts any of them be liable, except damage 
or loss attributable to the fault of the CONTRACT DOCUMENTS or to 
the acts or omissions of the OWNER or the ENGINEER or anyone 
employed by either of them or anyone for whose acts either of them 
may be liable, and not attributable, directly or indirectly, in 
whole or in part, to the fault or negligence of the CONTRACTOR.
    11.3  In emergencies affecting the safety of persons or the WORK 
or property at the site or adjacent thereto, the CONTRACTOR, without 
special instruction or authorization from the ENGINEER or OWNER, 
shall act to prevent threatened damage, injury or loss. He will give 
the ENGINEER prompt WRITTEN NOTICE of any significant changes in the 
WORK or deviations from the CONTRACT DOCUMENTS caused thereby, and a 
CHANGE ORDER shall thereupon be issued covering the changes and 
deviations involved.

12. Supervision by Contractor

    12.1  The CONTRACTOR will supervise and direct the WORK. He will 
be solely responsible for the means, methods, techniques, sequences 
and procedures of construction. The CONTRACTOR will employ and 
maintain on the WORK a qualified supervisor or superintendent who 
shall have been designated in writing by the CONTRACTOR as the 
CONTRACTOR'S representative at the site. The supervisor shall have 
full authority to act on behalf of the CONTRACTOR and all 
communications given to the supervisor shall be as binding as if 
given to the CONTRACTOR. The supervisor shall be present on the site 
at all times as required to perform adequate supervision and 
coordination of the WORK.

13. Changes in the Work

    13.1  The OWNER may at any time, as the need arises, order 
changes within the scope of the WORK without invalidating the 
Agreement. If such changes increase or decrease the amount due under 
the CONTRACT DOCUMENTS, or in the time required for performance of 
the WORK, an equitable adjustment shall be authorized by CHANGE 
ORDER.
    13.2  The ENGINEER, also, may at any time, by issuing a FIELD 
ORDER, make changes in the details of the WORK. The CONTRACTOR shall 
proceed with the performance of any changes in the WORK so ordered 
by the ENGINEER unless the CONTRACTOR believes that such FIELD ORDER 
entitles him to a change in CONTRACT PRICE or TIME, or both, in 
which event he shall give the ENGINEER WRITTEN NOTICE thereof within 
seven (7) days after the receipt of the ordered change. Thereafter 
the CONTRACTOR shall document the basis for the change in CONTRACT 
PRICE or TIME within thirty (30) days. The CONTRACTOR shall not 
execute such changes pending the receipt of an executed CHANGE ORDER 
or further instruction from the OWNER.

14. Changes in Contract Price

    14.1  The CONTRACT PRICE may be changed only by a CHANGE ORDER. 
The value of any WORK covered by a CHANGE ORDER or of any claim for 
increase or decrease in the CONTRACT PRICE shall be determined by 
one or more of the following methods in the order of precedence 
listed below:
    (a) Unit prices previously approved.
    (b) An agreed lump sum.
    (c) The actual cost for labor, direct overhead, materials, 
supplies, equipment, and other services necessary to complete the 
work. In addition there shall be added an amount to be agreed upon 
but not to exceed fifteen (15) percent of the actual cost of the 
WORK to cover the cost of general overhead and profit.

15. Time For Completion and Liquidated Damages

    15.1  The date of beginning and the time for completion of the 
WORK are essential conditions of the CONTRACT DOCUMENTS and the WORK 
embraced shall be commenced on a date specified in the NOTICE TO 
PROCEED.
    15.2  The CONTRACTOR will proceed with the WORK at such rate of 
progress to insure full completion within the CONTRACT TIME. It is 
expressly understood and agreed, by and between the CONTRACTOR and 
the OWNER, that the CONTRACT TIME for the completion of the WORK 
described herein is a reasonable time, taking into consideration the 
average climatic and economic conditions and other factors 
prevailing in the locality of the WORK.
    15.3  If the CONTRACTOR shall fail to complete the WORK within 
the CONTRACT TIME, or extension of time granted by the OWNER, then 
the CONTRACTOR will pay to the OWNER the amount for liquidated 
damages as specified in the BID for each calendar day that the 
CONTRACTOR shall be in default after the time stipulated in the 
CONTRACT DOCUMENTS.
    15.4  The CONTRACTOR shall not be charged with liquidated 
damages or any excess cost when the delay in completion of the WORK 
is due to the following, and the CONTRACTOR has promptly given 
WRITTEN NOTICE of such delay to the OWNER or ENGINEER.
    15.4.1  To any preference, priority or allocation order duly 
issued by the OWNER.
    15.4.2  To unforeseeable causes beyond the control and without 
the fault or negligence of the CONTRACTOR, including but not 
restricted to, acts of God, or of the public enemy, acts of the 
OWNER, acts of another CONTRACTOR in the performance of a contract 
with the OWNER, fires, floods, epidemics, quarantine restrictions, 
strikes, freight embargoes, and abnormal and unforeseeable weather: 
and
    15.4.3  To any delays of SUBCONTRACTORS occasioned by any of the 
causes specified in paragraphs 15.4.1 and 15.4.2 of this article.

16. Correction of Work

    16.1  The CONTRACTOR shall promptly remove from the premises all 
WORK rejected by the ENGINEER for failure to comply with the 
CONTRACT DOCUMENTS, whether incorporated in the construction or not, 
and the CONTRACTOR shall promptly replace and reexecute the WORK in 
accordance with the CONTRACT DOCUMENTS and without expense to the 
OWNER and shall bear the expense of making good all WORK of other 
CONTRACTORS destroyed or damaged by such removal or replacement.
    16.2  All removal and replacement WORK shall be done at the 
CONTRACTOR'S expense. If the CONTRACTOR does not take action to 
remove such rejected WORK within ten (10) days after receipt of 
WRITTEN NOTICE, the OWNER may remove such WORK and store the 
materials at the expense of the CONTRACTOR.

17. Subsurface Conditions

    17.1  The CONTRACTOR shall promptly, and before such conditions 
are disturbed, except in the event of an emergency, notify the OWNER 
by WRITTEN NOTICE of:
    17.1.1  Subsurface or latent physical conditions at the site 
differing materially from those indicated in the CONTRACT DOCUMENTS: 
or
    17.1.2 Unknown physical conditions at the site, of an unusual 
nature, differing materially from those ordinarily encountered and 
generally recognized as inherent in WORK of the character provided 
for in the CONTRACT DOCUMENTS.
    17.2  The OWNER shall promptly investigate the conditions, and 
if he finds that such conditions do so materially differ and cause 
an increase or decrease in the cost of, or in the time required for, 
performance of the WORK, an equitable adjustment shall be made and 
the CONTRACT DOCUMENTS

[[Page 5409]]

shall be modified by a CHANGE ORDER. Any claim of the CONTRACTOR for 
adjustment hereunder shall not be allowed unless he has given the 
required WRITTEN NOTICE; provided that the OWNER may, if he 
determines the facts so justify, consider and adjust any such claims 
asserted before the date of final payment.

18. Suspension of Work, Termination and Delay

    18.1  The OWNER may suspend the WORK or any portion thereof for 
a period of not more than ninety days or such further time as agreed 
upon by the CONTRACTOR by WRITTEN NOTICE to the CONTRACTOR and the 
ENGINEER which notice shall fix the date on which WORK shall be 
resumed. The CONTRACTOR will resume that WORK on the date so fixed. 
The CONTRACTOR will be allowed an increase in the CONTRACT PRICE or 
an extension of the CONTRACT TIME, or both, directly attributable to 
any suspension.
    18.2  If the CONTRACTOR is adjudged as bankrupt or insolvent, or 
if he makes a general assignment for the benefit of his creditors, 
or if a trustee or receiver is appointed for the CONTRACTOR or for 
any of his property, or if he files a petition to take advantage of 
any debtor's act, or to reorganize under the bankruptcy or 
applicable laws, or if he repeatedly fails to supply sufficient 
skilled workmen or suitable materials or equipment, or if he 
repeatedly fails to make prompt payments to SUBCONTRACTORS or for 
labor, materials or equipment or if he disregards laws, ordinances, 
rules, regulations or orders of any public body having jurisdiction 
of the WORK or if he disregards the authority of the ENGINEER, or if 
he otherwise violates any provision of the CONTRACT DOCUMENTS, then 
the OWNER may, without prejudice to any other right or remedy and 
after giving the CONTRACTOR and his surety a minimum of ten (10) 
days from delivery of a WRITTEN NOTICE, terminate the services of 
the CONTRACTOR and take possession of the PROJECT and of all 
materials, equipment, tools, construction equipment and machinery, 
thereon owned by the CONTRACTOR, and finish the WORK by whatever 
method he may deem expedient. In such case the CONTRACTOR shall not 
be entitled to receive any further payment until the WORK is 
finished. If the unpaid balance of the CONTRACT PRICE exceeds the 
direct and indirect costs of completing the PROJECT, including 
compensation for additional professional services, such excess SHALL 
BE PAID TO THE CONTRACTOR. If such costs exceed such unpaid balance, 
the CONTRACTOR will pay the difference to the OWNER. Such costs 
incurred by the OWNER will be determined by the ENGINEER and 
incorporated in a CHANGE ORDER.
    18.3  Where the CONTRACTOR'S services have been so terminated by 
the OWNER, said termination shall not affect any right of the OWNER 
against the CONTRACTOR then existing or which may thereafter accrue. 
Any retention or payment of monies by the OWNER due the CONTRACTOR 
will not release the CONTRACTOR from compliance with the CONTRACT 
DOCUMENTS.
    18.4  After ten (10) days from delivery of a WRITTEN NOTICE to 
the CONTRACTOR and the ENGINEER, the OWNER may, without cause and 
without prejudice to any other right or remedy, elect to abandon the 
PROJECT and terminate the Contract. In such case, the CONTRACTOR 
shall be paid for all WORK executed and any expense sustained plus 
reasonable profit.
    18.5  If, through no act or fault of the CONTRACTOR, the WORK is 
suspended for a period of more than ninety (90) days by the OWNER or 
under an order of court or other public authority, or the ENGINEER 
fails to act on any request for payment within thirty (30) days 
after it is submitted or the OWNER fails to pay the CONTRACTOR 
substantially the sum approved by the ENGINEER or awarded by 
arbitrators within thirty (30) days of its approval and 
presentation, then the CONTRACTOR may, after ten (10) days from 
delivery of a WRITTEN NOTICE to the OWNER and the ENGINEER, 
terminate the CONTRACT and recover from the OWNER payment for all 
WORK executed and all expenses sustained. In addition and in lieu of 
terminating the CONTRACT, if the ENGINEER has failed to act on a 
request for payment or if the OWNER has failed to make any payment 
as aforesaid, the CONTRACTOR may upon ten (10) days written notice 
to the OWNER and the ENGINEER stop the WORK until he has been paid 
all amounts then due, in which event and upon resumption of the 
WORK, CHANGE ORDERS shall be issued for adjusting the CONTRACT PRICE 
or extending the CONTRACT TIME or both to compensate for the costs 
and delays attributable to the stoppage of the WORK.
    18.6  If the performance of all or any portion of the WORK is 
suspended, delayed, or interrupted as a result of a failure of the 
OWNER or ENGINEER to act within the time specified in the CONTRACT 
DOCUMENTS, or if no time is specified, within a reasonable time, an 
adjustment in the CONTRACT PRICE or an extension of the CONTRACT 
TIME, or both, shall be made by CHANGE ORDER to compensate the 
CONTRACTOR for the costs and delays necessarily caused by the 
failure of the OWNER or ENGINEER.

19. Payments to Contractor

    19.1  At least ten (10) days before each progress payment falls 
due (but not more often than once a month), the CONTRACTOR will 
submit to the ENGINEER a partial payment estimate filled out and 
signed by the CONTRACTOR covering the WORK performed during the 
period covered by the partial payment estimate and supported by such 
data as the ENGINEER may reasonably require. If payment is requested 
on the basis of materials and equipment not incorporated in the WORK 
but delivered and suitably stored at or near the site, the partial 
payment estimate shall also be accompanied by such supporting data, 
satisfactory to the OWNER, as will establish the OWNER's title to 
the material and equipment and protect his interest therein, 
including applicable insurance. The ENGINEER will, within ten (10) 
days after receipt of each partial payment estimate, either indicate 
in writing his approval of payment and present the partial payment 
estimate to the OWNER, or return the partial payment estimate to the 
CONTRACTOR indicating in writing his reasons for refusing to approve 
payment. In the latter case, the CONTRACTOR may make the necessary 
corrections and resubmit the partial payment estimate. The OWNER 
will, within ten (10) days of presentation to him of an approved 
partial payment estimate, pay the CONTRACTOR a progress payment on 
the basis of the approved partial payment estimate. The OWNER shall 
retain ten (10) percent of the amount of each payment until final 
completion and acceptance of all work covered by the CONTRACT 
DOCUMENTS. The OWNER at any time, however, after fifty (50) percent 
of the WORK has been completed, if he finds that satisfactory 
progress is being made, shall reduce retainage to five (5%) percent 
on the current and remaining estimates. When the WORK is 
substantially complete (operational or beneficial occupancy), the 
retained amount may be further reduced below five (5) percent to 
only that amount necessary to assure completion. On completion and 
acceptance of a part of the WORK on which the price is stated 
separately in the CONTRACT DOCUMENTS, payment may be made in full, 
including retained percentages, less authorized deductions.
    19.2  The request for payment may also include an allowance for 
the cost of such major materials and equipment which are suitably, 
stored either at or near the site.
    19.3  Prior to SUBSTANTIAL COMPLETION, the OWNER, with the 
approval of the ENGINEER and with the concurrence of the CONTRACTOR, 
may use any completed or substantially completed portions of the 
WORK. Such use shall not constitute an acceptance of such portions 
of the WORK.
    19.4  The OWNER shall have the right to enter the premises for 
the purpose of doing work not covered by the CONTRACT DOCUMENTS. 
This provision shall not be construed as relieving the CONTRACTOR of 
the sole responsibility for the care and protection of the WORK, or 
the restoration of any damaged WORK except such as may be caused by 
agents or employees of the OWNER.
    19.5  Upon completion and acceptance of the WORK, the ENGINEER 
shall issue a certificate attached lo the final payment request that 
the WORK has been accepted by him under the conditions of the 
CONTRACT DOCUMENTS. The entire balance found to be due the 
CONTRACTOR, including the retained percentages, but except such sums 
as may be lawfully retained by the OWNER, shall be paid to the 
CONTRACTOR within thirty (30) days of completion and acceptance of 
the WORK.
    19.6  The CONTRACTOR will indemnify and save the OWNER or the 
OWNER'S agents harmless from all claims growing out of the lawful 
demands of SUBCONTRACTORS, laborers, workmen, mechanics, 
materialmen, and furnishers of machinery and parts thereof, 
equipment, tools, and all supplies, incurred in the furtherance of 
the performance of the WORK. The CONTRACTOR shall, at the OWNER'S 
request, furnish satisfactory evidence that all obligations of the 
nature designated above have been paid, discharged, or waived. If 
the CONTRACTOR fails to do so the OWNER may, after having notified 
the

[[Page 5410]]

CONTRACTOR, either pay unpaid bills or withhold from the 
CONTRACTOR'S unpaid compensation a sum of money deemed reasonably 
sufficient to pay any and all such lawful claims until satisfactory 
evidence is furnished that all liabilities have been fully 
discharged whereupon payment to the CONTRACTOR shall be resumed, in 
accordance, with the terms of the CONTRACT DOCUMENTS, but in no 
event shall the provisions of this sentence be construed to impose 
any obligations upon the OWNER to either the CONTRACTOR, his Surety, 
or any third party. In paying any unpaid bills of the CONTRACTOR, 
any payment so made by the OWNER shall be considered as a payment 
made under the CONTRACT DOCUMENTS by the OWNER to the CONTRACTOR and 
the OWNER shall not be liable to the CONTRACTOR for any such 
payments made in good faith.
    19.7  If the OWNER fails to make payment thirty (30) days after 
approval by the ENGINEER, in addition to other remedies available to 
the CONTRACTOR, there shall be added to each such payment interest 
at the maximum legal rate commencing on the first day after said 
payment is due and continuing until the payment is received by the 
CONTRACTOR.

20. Acceptance of Final Payment as Release

    20.1  The acceptance by the CONTRACTOR of final payment shall be 
and shall operate as a release to the OWNER of all claims and all 
liability to the CONTRACTOR other than claims in stated amounts as 
may be specifically excepted by the CONTRACTOR for all things done 
or furnished in connection with this WORK and for every act and 
neglect of the OWNER and others relating to or arising out of this 
WORK. Any payment, however, final or otherwise, shall not release 
the CONTRACTOR or his sureties from any obligations under the 
CONTRACT DOCUMENTS or the Performance BOND and Payment BONDS.

21. Insurance

    21.1  The CONTRACTOR shall purchase and maintain such insurance 
as will protect him from claims set forth below which may arise out 
of or result from the CONTRACTOR'S execution of the WORK, whether 
such execution be by himself or by any SUBCONTRACTOR or by anyone 
directly or indirectly employed by any of them, or by anyone for 
whose acts any of them may be liable:
    21.1.1  Claims under workmen's compensation, disability benefit 
and other similar employee benefit acts;
    21.1.2  Claims for damages because of bodily injury, 
occupational sickness or disease, or death of his employees;
    21.1.3  Claims for damages because of bodily injury, sickness or 
disease, or death of any person other than his employees;
    21.1.4  Claims for damages insured by usual personal injury 
liability coverage which are sustained (1) by any person as a result 
of an offense directly or indirectly related to the employment of 
such person by the CONTRACTOR, or (2) by any other person; and
    21.1.5  Claims for damages because of injury to or destruction 
of tangible property, including loss of use resulting therefrom.
    21.2  Certificates of Insurance acceptable to the OWNER shall be 
filed with the OWNER prior to commencement of the WORK. These 
Certificates shall contain a provision that coverages afforded under 
the policies will not be canceled unless at least fifteen (15) days 
prior WRITTEN NOTICE has been given to the OWNER.
    21.3  The CONTRACTOR shall procure and maintain, at his own 
expense, during the CONTRACT TIME, liability insurance as 
hereinafter specified;
    21.3.1  CONTRACTOR'S General Public Liability and Property 
Damage Insurance including vehicle coverage issued to the CONTRACTOR 
and protecting him from all claims for personal injury, including 
death, and all claims for destruction of or damage to property, 
arising out of or in connection with any operations under the 
CONTRACT DOCUMENTS, whether such operations be by himself or by any 
SUBCONTRACTOR under him, or anyone directly or indirectly employed 
by the CONTRACTOR or by a SUBCONTRACTOR under him. Insurance shall 
be written with a limit of liability of not less than, $500,000 for 
all damages arising out of bodily injury, including death, at any 
time resulting therefrom, sustained by any one person in any one 
accident; and a limit of liability of not less than $500,000 
aggregate for any such damages sustained by two or more persons in 
any one accident. Insurance shall be written with a limit of 
liability of not less than $200,000 for all property damage 
sustained by any one person in any one accident; and a limit of 
liability of not less than $200,000 aggregate for any such damage 
sustained by two or more persons in any one accident.
    21.3.2  The CONTRACTOR shall acquire and maintain, if 
applicable, Fire and Extended Coverage insurance upon the PROJECT to 
the full insurable value thereof for the benefit of the OWNER, the 
CONTRACTOR, and SUBCONTRACTORS as their interest may appear. This 
provision shall in no way release the CONTRACTOR or CONTRACTOR'S 
surety from obligations under the CONTRACT DOCUMENTS to fully 
complete the PROJECT.
    21.4  The CONTRACTOR shall procure and maintain at his own 
expense, during the CONTRACT TIME, in accordance with the provisions 
of the laws of the state in which the work is performed, Workmen's 
Compensation Insurance, including occupational disease provisions, 
for all of his employees at the site of the PROJECT and in case any 
work is sublet, the CONTRACTOR shall require such SUBCONTRACTOR 
similarly to provide Workmen's Compensation Insurance, including 
occupational disease provisions for all of the latter's employees 
unless such employees are covered by the protection afforded by the 
CONTRACTOR. In case any class of employees engaged in hazardous work 
under this contract at the site of the PROJECT is not protected 
under Workmen's Compensation statute, the CONTRACTOR shall provide, 
and shall cause each SUBCONTRACTOR to provide, adequate and suitable 
insurance for the protection of his employees not otherwise 
protected.
    21.5  The CONTRACTOR shall secure, if applicable, ``All Risk'' 
type Builder's Risk Insurance for WORK to be performed. Unless 
specifically authorized by the OWNER, the amount of such insurance 
shall not be less than the CONTRACT PRICE totaled in the BID. The 
policy shall cover not less than the losses due to fire, explosion, 
hail, lightning, vandalism, malicious mischief, wind, collapse, 
riot, aircraft, and smoke during the CONTRACT TIME, and until the 
WORK is accepted by the OWNER. The policy shall name as the insured 
the CONTRACTOR, the ENGINEER, and the OWNER.

22. Contract Security

    22.1  The CONTRACTOR shall within ten (10) days after the 
receipt of the NOTICE OF AWARD furnish the OWNER with a Performance 
Bond and a Payment Bond in penal sums equal to the amount of the 
CONTRACT PRICE, conditioned upon the performance by the CONTRACTOR 
of all undertakings, covenants, terms, conditions and agreements of 
the CONTRACT DOCUMENTS, and upon the prompt payment by the 
CONTRACTOR to all persons supplying labor and materials in the 
prosecution of the WORK provided by the CONTRACT DOCUMENTS. Such 
BONDS shall be executed by the CONTRACTOR and a corporate bonding 
company licensed to transact such business in the state in which the 
WORK is to be performed and named on the current list of ``Surety 
Companies Acceptable on Federal Bonds'' as published in the Treasury 
Department Circular Number 570. The expense of these BONDS shall be 
borne by the CONTRACTOR. If at any time a surety on any such BOND is 
declared a bankrupt or loses its right to do business in the state 
in which the WORK is to be performed or is removed from the list of 
Surety Companies accepted on Federal BONDS, CONTRACTOR shall within 
ten (10) days after notice from the OWNER to do so, substitute an 
acceptable BOND (or BONDS) in such form and sum and signed by such 
other surety or sureties as may be satisfactory to the OWNER. The 
premiums on such BOND shall be paid by the CONTRACTOR. No further 
payments shall be deemed due nor shall be made until the new surety 
or sureties shall have furnished an acceptable BOND to the OWNER.

23. Assignments

    23.1  Neither the CONTRACTOR nor the OWNER shall sell, transfer, 
assign or otherwise dispose of the Contract or any portion thereof 
or of his right, title or interest therein, or his obligations 
thereunder, without written consent of the other party.

24. Indemnification

    24.1  The CONTRACTOR will indemnify and hold harmless the OWNER 
and the ENGINEER and their agents and employees from and against all 
claims, damages, losses and expenses including attorney's fees 
arising out of or resulting from the performance of the WORK, 
provided that any such claims, damage, loss or expense is 
attributable to bodily injury sickness, disease or death, or to 
injury to or destruction of

[[Page 5411]]

tangible property including the loss of use resulting therefrom; and 
is caused in whole or in part by any negligent or willful act or 
omission of the CONTRACTOR, and SUBCONTRACTOR, anyone directly or 
indirectly employed by any of them or anyone for whose acts any of 
them may be liable.
    24.2  In any and all claims against the OWNER or the ENGINEER, 
or any of their agents or employees, by any employee of the 
CONTRACTOR, any SUBCONTRAC-TOR, anyone directly or indirectly 
employed by any of them, or anyone for whose acts any of them may be 
liable, the indemnification obligation shall not be limited in any 
way by any limitation on the amount or type of damages, compensation 
or benefits payable by or for the CONTRACTOR or any SUBCONTRACTOR 
under workmen's compensation acts, disability benefit acts or other 
employee benefits acts.
    24.3  The obligation of the CONTRACTOR under this paragraph 
shall not extend to the liability of the ENGINEER, his agents or 
employees arising out of the preparation or approval of maps, 
DRAWINGS, opinions, reports, surveys, CHANGE ORDERS, designs or 
SPECIFICATIONS.

25. Separate Contracts

    25.1  The OWNER reserves the right to let other contracts in 
connection with this PROJECT. The CONTRACTOR shall afford other 
CONTRACTORS reasonable opportunity for the introduction and storage 
of their materials and the execution of their WORK, and shall 
properly connect and coordinate his WORK with theirs. If the proper 
execution or results of any part of the CONTRACTOR'S WORK depends 
upon the WORK of any other CONTRACTOR, the CONTRACTOR shall inspect 
and promptly report to the ENGINEER any defects in such WORK that 
render it unsuitable for such proper execution and results.
    25.2  The OWNER may perform additional WORK related to the 
PROJECT by himself, or he may let other contracts containing 
provisions similar to these. The CONTRACTOR will afford the other 
CONTRACTORS who are parties to such Contracts (or the OWNER, if he 
is performing the additional WORK himself), reasonable opportunity 
for the introduction and storage of materials and equipment and the 
execution of WORK, and shall properly connect and coordinate his 
WORK with theirs.
    25.3  If the performance of additional WORK by other CONTRACTORS 
or the OWNER is not noted in the CONTRACT DOCUMENTS prior to the 
execution of the CONTRACT, written notice thereof shall be given to 
the CONTRACTOR prior to starting any such additional WORK. If the 
CONTRACTOR believes that the perform-ance of such additional WORK by 
the OWNER or others involves him in additional expense or entitles 
him to an extension of the CONTRACT TIME, he may make a claim 
therefor as provided in Sections 14 and 15.

26. Subcontracting

    26.1  The CONTRACTOR may utilize the services of specialty 
SUBCONTRACTORS on those parts of the WORK which, under normal 
contracting practices, are performed by specialty SUBCONTRACTORS.
    26.2  The CONTRACTOR shall not award WORK to SUBCONTRACTOR(s), 
in excess of fifty (50%) percent of the CONTRACT PRICE, without 
prior written approval of the OWNER.
    26.3  The CONTRACTOR shall be fully responsible to the OWNER for 
the acts and omissions of his SUBCONTRACTORS, and of persons either 
directly or indirectly employed by them, as he is for the acts and 
omissions of persons directly employed by him.
    26.4  The CONTRACTOR shall cause appropriate provisions to be 
inserted in all subcontracts relative to the WORK to bind 
SUBCONTRACTORS to the CONTRACTOR by the terms of the CONTRACT 
DOCUMENTS insofar as applicable to the WORK of SUBCONTRACTORS and to 
give the CONTRACTOR the same power as regards terminating any 
subcontract that the OWNER may exercise over the CONTRACTOR under 
any provision of the CONTRACT DOCUMENTS.
    26.5  Nothing contained in this CONTRACT shall create any 
contractual relation between any SUBCONTRACTOR and the OWNER.

27. Engineer's Authority

    27.1  The ENGINEER shall act as the OWNER'S representative 
during the construction period. He shall decide questions which may 
arise as to quality and acceptability of materials furnished and 
WORK performed. He shall interpret the intent of the CONTRACT 
DOCUMENTS in a fair and unbiased manner. The ENGINEER will make 
visits to the site and determine if the WORK is proceeding in 
accordance with the CONTRACT DOCUMENTS.
    27.2   The CONTRACTOR will be held strictly to the intent of the 
CONTRACT DOCUMENTS in regard to the quality of materials, 
workmanship and execution of the WORK. Inspections may be made at 
the factory or fabrication plant of the source of material supply.
    27.3   The ENGINEER will not be responsible for the construction 
means, controls, techniques, sequences, procedures, or construction 
safety.
    27.4   The ENGINEER shall promptly make decisions relative to 
interpretation of the CONTRACT DOCUMENTS.

28. Land and Rights-of-Way

    28.1  Prior to issuance of NOTICE TO PROCEED, the OWNER shall 
obtain all land and rights-of-way necessary for carrying out and for 
the completion of the WORK to be performed pursuant to the CONTRACT 
DOCUMENTS, unless otherwise mutually agreed.
    28.2  The OWNER shall provide to the CONTRACTOR information 
which delineates and describes the lands owned and rights-of-way 
acquired.
    28.3  The CONTRACTOR shall provide at his own expense and 
without liability to the OWNER any additional land and access 
thereto that the CONTRACTOR may desire for temporary construction 
facilities, or for storage of materials.

29. Guaranty

    29.1  The CONTRACTOR shall guarantee all materials and equipment 
furnished and WORK performed for a period of one (1) year from the 
date of SUBSTANTIAL, COMPLETION. The CONTRACTOR warrants and 
guarantees for a period of one (1) year from the date of SUBSTANTIAL 
COMPLETION of the system that the completed system is free from all 
defects due to faulty materials or workmanship and the CONTRACTOR 
shall promptly make such corrections as may be necessary by reason 
of such defects including the repairs of any damage to other parts 
of the system resulting from such defects. The OWNER will give 
notice of observed defects with reasonable promptness. In the event 
that the CONTRACTOR should fail to make such repairs, adjustments, 
or other WORK that may be made necessary by such defects, the OWNER 
may do so and charge the CONTRACTOR the cost thereby incurred. The 
Performance BOND shall remain in full force and effect through the 
guarantee period.

30. Arbitration

    30.1  All claims, disputes and other matters in question arising 
out of, or relating to, the CONTRACT DOCUMENTS or the breach 
thereof, except for claims which have been waived by the making and 
acceptance of final payment as provided by Section 20, shall be 
decided by arbitration in accordance with the Construction Industry 
Arbitration Rules of the American Arbitration Association. This 
agreement to arbitrate shall be specifically enforceable under the 
prevailing arbitration law. The award rendered by the arbitrators 
shall be final, and judgment may be entered upon it in any court 
having jurisdiction thereof.
    30.2  Notice of the demand for arbitration shall be filed in 
writing with the other party to the CONTRACT DOCUMENTS and with the 
American Arbitration Association, and a copy shall be filed with the 
ENGINEER. Demand for arbitration shall in no event be made an any 
claim, dispute or other matter in question which would be barred by 
the applicable statute of limitations.
    30.3  The CONTRACTOR will carry on the WORK and maintain the 
progress schedule during any arbitration proceedings, unless 
otherwise mutually agreed in writing.

31. Taxes

    31.1  The CONTRACTOR will pay all sales, consumer, use and other 
similar taxes required by the law of the place where the WORK is 
performed.

BILLING CODE 3510-24-P

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Exhibit G--[Reserved]

Exhibit H--[Reserved]

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BILLING CODE 3510-24-C

[[Page 5426]]

Instructions for Completion of EDA'S Core Performance Measures Report 
for Title I/IX Construction Facilities

    The instructions below are in outline form and correspond to 
identical items in the Core Performance Measures Report. Complete 
the report by filling in the spaces and responding to the questions. 
If there is not sufficient space on the report for a response, 
please respond on an attachment to the report. On page one of the 
Report, indicate the EDA Project Number and the Reporting Period.

Part I: Grantee Organization

    1. Grantee Name: Enter the legal name of the Grantee.
    2. Address: Enter the physical address of the Grantee.
    3. Telephone: Enter the telephone number, including area code, 
of the Grantee.
    4. Fax: Enter the facsimile number, including area code, of the 
Grantee.
    5. E-mail Address: Enter the Internet address of the Grantee.
    6. Contact Person & Title: Name the person to contact on matters 
related to this report. Also, provide the contact person's telephone 
number, including area code, if different from the Grantee's 
telephone number.
    7. Project Location: Enter the county, state and zip code of 
project location.
    8. GIS Coordinates: Provide geographic mapping coordinates for 
project location, if available.

Part II: EDA Project Budget

    Enter the project budget as estimated at time of approval.
    Enter the actual project budget at time of project completion 
and close-out.
    Enter only dollars used as part of the EDA total project cost 
for the construction project (scope of work and eligible costs 
defined in the grant agreement).

Part III: Outcomes (Actual) Reported at Project Completion Only

1. Compliance With Construction Schedule

    a. Construction start date: Ener the estimated date (specified 
in the Special Award Conditions) for starting construction on the 
EDA project. Also, enter the actual date (substantiated by the 
Grantee's construction records and source documentation) for 
starting construction on the EDA project.
    b. Construction completion date: Enter the estimated date 
(specified in the Award Conditions) for completing construction on 
the EDA project. Also, enter the actual date (substantiated by the 
Grantee's construction records and source documentation) for 
completing construction on the EDA project.

2. Construction Jobs Created (Please provide information on 
construction jobs for all construction projects, not just PWIP)

    a. Construction jobs created: Enter the estimated number of 
construction jobs at the time of project approval and the actual 
number of construction jobs at project completion (Part-time 
construction jobs which were created during the construction phase 
of the EDA project should be converted to FTE.). If estimated/actual 
figures are not available, please provide the average annual 
construction wage for your area $______ and the proportion of total 
project costs allocated to labor for this or similar projects of 
this type ______%.

Part IV: Outcomes (Actual) Reported at Project Completion and at 3 
Years and 6 Years After Project Completion.

1. Permanent Jobs:

    a. Created jobs: Enter the number of private sector jobs created 
by project beneficiaries as a result of the EDA construction 
project. In tallying direct jobs, only permanent and direct jobs may 
be counted; part-time jobs should be converted to full-time 
equivalents (by summing the total hours worked per week for all 
part-time employees and dividing by the standard hourly work week 
for full-time employees, normally 35-40 hours). Indirect jobs should 
be reported separately in the space provided.
    1. Direct Jobs: These are jobs that are created at the project 
site by the identified beneficiaries, and other directly-related 
jobs created by subsequent employers as a result of the project. For 
some projects (e.g., roads, water and sewer lines), direct jobs may 
include those created by firms that which were not originally 
anticipated as part of the project, but which located or expanded in 
the area as a result of the project.
    2. Indirect Jobs: These are jobs that are created within the 
local labor market area by the EDA project through increased 
supplier or consumer demand--commonly referred to as spin-off jobs 
resulting from increased employment by local suppliers and increased 
commercial/retail jobs due to increased wages generated by direct 
jobs. (For the purpose of this report, there is no need to 
distinguish between indirect and induced effects).
    b. Retained (saved) jobs: Enter the number of private sector 
jobs retained or saved by project beneficiaries as a result of the 
EDA construction project. In tallying jobs, follow the instructions 
for created jobs in the paragraph (IV.1.a.) above.
    c. Total jobs: Add the number of created jobs in IV.1.a. and the 
number of retained jobs in IV.1.b. and enter the total jobs here in 
IV.1.c.

    Note: A list of the employers showing the number of jobs created 
or saved by each should be maintained as part of the supporting data 
in the Grantee's project files.

2. Additional Dollars Invested:

    (Note: Dollars should be separated between: (1) dollars invested 
in the EDA construction project; and (2) dollars directly related 
to, but not a part of, the EDA construction project. Dollars 
invested in the EDA construction project are the non-Federal 
matching funds that were identified at the time of EDA grant 
approval and are included in the total project costs for the 
construction project shown in Section II above. Do not double count 
these dollars below.)
    Additional dollars invested include dollars that support project 
objectives, but are not included as part of the EDA project costs. 
Though occasionally difficult to quantify these directly-related 
investments, an attempt should be made to identify them on this 
report. Examples are investments in facilities occupied by project 
beneficiaries or employers that were constructed with other public 
or private funds as a result of the EDA project. Also include 
investments by firms using residual capacity of EDA-financed 
infrastructure (notably water and sewer services).
    Indirect investments are those associated with the location or 
expansion of spin-off commercial business and/or wholesalers 
resulting from increased demand for goods and services generated by 
the project, or new investment in retail and consumer services.
    If you cannot determine indirect jobs or investment, estimate 
the number of firms which located or expanded in the area as result 
of the increased supplier/consumer demand generated by the project 
below: Estimated number of firms creating indirect jobs ______ and/
or investment ______.
    a. Private Sector: Enter the total dollars from private sector 
investors, employers and other private sector sources such as the 
local financing institutions, and private donors. Include private 
investment in plant and equipment.
    b. Local public: Enter the total dollars from local public 
sources such city/county appropriations, G.O./revenue bond issues, 
and economic development sales taxes.
    c. State: Enter the total dollars from state sources such as 
state appropriations and CDBG funds to the state.
    d. Other Federal: Enter the total dollars from other Federal 
sources as HUD, Agriculture, and Transportation funds.
    e. Totals: Add the other dollars from IV.2.a through IV.2.d. and 
enter the total dollars on IV.2.e.

3. Increase in Local Tax Base:

    Enter here on IV.3 the dollar increase in the local tax base 
(the taxable real and business personal property) attributable to 
the EDA project. Please check whether these are actual dollars of 
dollars computed using a multiplier. Please provide the multiplier, 
if applicable.

4. Local Capacity Anticipated and Actual Results:

    An evaluation should be made regarding how well the EDA 
construction project has met the initial objectives listed in IV.4.a 
through IV.4.e below. Indicate by percentages, that portion of the 
project which was initially envisioned as the justification for the 
project under one or more of the listed categories. Individual 
ratings (with 10 being the ``best'' (i.e., the project has totally 
met the objective in every conceivable way) and 1 being the 
``worst'' (i.e., the project has not met the objective in any way at 
all). As an example, a project may have initially been intended to 
support a single private business (100%), but may actually have 
resulted in creating jobs associated with other businesses, perhaps 
diversified the local economy, or provided other community benefits. 
Thus, a rating would be warranted for those categories as well as 
for the first category.
    Not all objectives listed here may apply to the EDA project. 
Please mark ``NA'' if a given result was not anticipated or 
achieved. A narrative explaining the results or any unique 
situations associated with the project would also be useful.

[[Page 5427]]

    V. Please submit a photograph of the project and/or business 
activity assisted by the project.

PART 306--PLANNING ASSISTANCE

Sec.
306.1  Purpose and scope.
306.2  Application evaluation criteria.
306.3  Award requirements.
306.4  Award conditions.

    Authority: 42 U.S.C. 3211; Department of Commerce Organization 
Order 10-4.


Sec. 306.1  Purpose and scope.

    The primary objective of planning assistance is to provide funding 
for administrative expenses to support the formulation and 
implementation of economic development planning programs and for the 
conduct of planning activities designed to create and retain permanent 
jobs and increase incomes, particularly for the unemployed and 
underemployed in the nation's most economically distressed areas. 
Planning activities supported by these funds must be part of a 
continuous process involving the active participation of public 
officials and private citizens, and include the following:
    (a) Analyzing local economies;
    (b) Defining economic development goals;
    (c) Determining project opportunities; and
    (d) Formulating and implementing an economic development program 
that includes systematic efforts to reduce unemployment and increase 
incomes.


Sec. 306.2  Application evaluation criteria.

    (a) EDA uses the application evaluation criteria set forth in part 
304 of this chapter. In addition, EDA evaluates applications on the 
following:
    (1) Quality of the proposed work program;
    (2) Management and staff capacity and qualifications of the 
applicant organization; and
    (3) Extent of broad-based representation including for example, 
involvement of the local civic, business, leadership, labor, minority, 
and other community interests in the applicant's economic development 
activities.
    (b) Previously funded grantees, in addition to the requirements of 
paragraph (a) of this section, will also be evaluated on the basis of 
the quality of their past performance.


Sec. 306.3  Award requirements.

    (a) Planning assistance shall be used in conjunction with any other 
available Federal planning assistance to ensure adequate and effective 
planning and economical use of funds.
    (b) Grant rate:
    (1) The maximum Federal grant rate for a project under this part 
is,
    (i) 50 percent, except as supplemented as provided in 
Sec. 301.4(b), or
    (ii) 75 percent, if that is greater than the maximum supplemented 
grant rate provided in Sec. 301.4(b), and the project meets the 
criteria of paragraph (b)(2) of this section.
    (2) A project is eligible for a supplemental grant increasing the 
Federal share to up to 75 percent when the applicant is able to 
demonstrate that,
    (i) The project is intended to address problems arising from actual 
or threatened severe unemployment, significantly low per capita income, 
or a special need that qualifies an area for eligibility under 
Sec. 301.2(b),
    (ii) The project is in substantial part devoted to activities 
addressing the needs of the most economically distressed parts of the 
total area served by the applicant,
    (iii) The applicant is uniquely qualified to address the major 
causes of actual or threatened economic distress in the area served by 
the applicants, and
    (iv) The applicant cannot provide the non-Federal share otherwise 
required because in the overall economic situation there is a lack of 
available non-Federal share due, for instance, to the pressing demand 
for its use elsewhere.
    (3) A project receiving a supplemental grant increasing the Federal 
share under paragraph (b)(2) of this section is not eligible for 
additional Federal grant assistance under Sec. 301.4(d).
    (c) As a condition of the receipt of assistance by a State under 
this part 306:
    (1) The State must have or develop a CED Strategy;
    (2) Any State plan developed with such assistance must be developed 
cooperatively by the State, political subdivisions of the State, and 
the economic development districts located wholly or partially within 
the State;
    (3) Any overall State economic development planning assisted under 
this section shall be a part of a comprehensive planning process that 
shall consider the provision of public works to:
    (i) Promote economic development and opportunity,
    (ii) Foster effective transportation access,
    (iii) Enhance and protect the environment, and
    (iv) Balance resources through the sound management of physical 
development;
    (4) Upon completion of the State plan, the State must,
    (i) Certify to EDA that, in the development of the State plan, 
local and economic development district plans were considered and, to 
the maximum extent practicable, the State plan is consistent with the 
local and economic development district plans; and
    (ii) Identify any inconsistencies between the State plan and the 
local and economic development district plans and provide a 
justification for each inconsistency; and
    (5) The State must submit to EDA an annual report on the planning 
process so assisted.


Sec. 306.4  Award conditions.

    Financial, performance and progress reports, and project products 
will be as specified in the Special Award Conditions of the grant.

PART 307--LOCAL TECHNICAL ASSISTANCE, UNIVERSITY CENTER TECHNICAL 
ASSISTANCE, NATIONAL TECHNICAL ASSISTANCE, TRAINING, RESEARCH, AND 
EVALUATION

Subpart A--Local Technical Assistance

Sec.
307.1  Purpose and scope.
307.2  Application evaluation criteria.
307.3  Award and grant rate requirements.

Subpart B--University Center Program

307.4  Purpose and scope.
307.5  Application evaluation criteria.
307.6  Award and grant rate requirements.

Subpart C--National Technical Assistance, Training, Research, and 
Evaluation

307.7  Purpose and scope.
307.8  Application evaluation criteria.
307.9  Award and grant rate requirements.

    Authority: 42 U.S.C. 3211; Department of Commerce Organization 
Order 10-4.

Subpart A--Local Technical Assistance


Sec. 307.1  Purpose and scope.

    Local Technical Assistance projects are intended to:
    (a) Determine the causes of excessive unemployment, 
underemployment, low per capita income, or high poverty rates in areas 
and regions of the Nation;
    (b) Assist in formulating and implementing new economic development 
tools, models, and innovative techniques that will raise employment and 
income levels; and
    (c) Assist distressed communities in formulating and implementing 
new economic development programs to increase the technology and human 
capacity of the communities. Local Technical Assistance funds may not 
be used to start or expand a private business.


Sec. 307.2  Application evaluation criteria.

    EDA selects local technical assistance projects for grant awards 
according to

[[Page 5428]]

the general application evaluation criteria set forth in part 304 of 
this chapter and the extent, as appropriate, the project:
    (a) Strengthens the local capacity to undertake and promote 
effective economic development programs targeted to people and areas of 
distress;
    (b) Benefits distressed areas;
    (c) Helps to diversify distressed economies;
    (d) Demonstrates innovative approaches to stimulating economic 
development in distressed areas;
    (e) Is consistent with the CED Strategy or other strategy accepted 
by EDA for the area in which the project is located; and
    (f) Presents a reasonable, itemized budget.


Sec. 307.3  Award and grant rate requirements.

    (a) EDA will provide assistance for the period of time required to 
complete the project scope of work, generally not to exceed twelve 
months.
    (b) Financial reports, progress reports, and project products will 
be specified in the Special Award Conditions of the grant or 
cooperative agreement.
    (c) If the project is regional in scope, EDA may determine that the 
requirement that public or private nonprofit organizations must act in 
cooperation with officials of a political subdivision of a State is 
satisfied by the nature of the project;
    (d) Grant rate:
    (1) The maximum Federal grant rate for a project under this subpart 
is:
    (i) 50 percent, except as supplemented as provided in 
Sec. 301.4(b); or
    (ii) 100 percent, if the project is not feasible without, and 
merits, a reduction or waiver of the non-Federal share required under 
the rate provided in Sec. 301.4(b).
    (2) A project is eligible for a supplemental grant increasing the 
Federal share to up to 75 percent when the applicant is able to 
demonstrate that,
    (i) It cannot provide the non-Federal share otherwise required 
because in the overall economic situation there is a lack of available 
non-Federal share due, for instance, to the pressing demand for its use 
elsewhere;
    (ii) The project is addressing major causes of distress in the 
service area and requires the unique characteristics of the applicant, 
which will not participate in the program if it must provide all or 
part of a 50 percent non-Federal share; or
    (iii) The project is for the benefit of local, State, regional, or 
national economic development efforts, and will be of no or only 
incidental benefit to the recipient.
    (3) A project receiving a supplemental grant increasing the Federal 
share under paragraph (d)(2) of this section is not eligible for 
additional Federal grant assistance under Sec. 301.4(d).

Subpart B--University Center Program


Sec. 307.4  Purpose and scope.

    The University Center technical assistance program is designed to 
help improve the economies of distressed areas. It helps institutions 
of higher education (or other applicants) use their own and other 
resources to address the economic development problems and 
opportunities of areas serviced.


Sec. 307.5  Application evaluation criteria.

    EDA selects University Center projects for grant awards according 
to the general application evaluation criteria set forth in part 304 of 
this chapter and the extent, as appropriate, the project:
    (a) Has the commitment of the highest management levels of the 
sponsoring institution;
    (b) Provides evidence of adequate non-Federal financial support, 
either from the sponsoring institution or other sources;
    (c) Outlines activities consistent with the expertise of the 
proposed staff, the academic programs, and other resources available 
within the sponsoring institution;
    (d) Presents a reasonable budget;
    (e) Documents past experience of the sponsoring institution in 
operating technical assistance programs; and
    (f) Balances the geographic distribution of University Centers 
across the country. Only the Assistant Secretary has the authority to 
approve the selection for grant assistance of a University Center that 
has not received University Center assistance for the previous year.


Sec. 307.6  Award and grant rate requirements.

    (a) EDA will provide assistance for the period of time required to 
complete the project scope of work, generally not to exceed twelve 
months.
    (b) If the project is regional in scope, EDA may determine that the 
requirement that public or private nonprofit organizations must act in 
cooperation with officials of a political subdivision of a State is 
satisfied by the nature of the project;
    (c) Financial reports, progress reports and project products will 
be specified in the Special Award Conditions of the grant or 
cooperative agreement.
    (d) Grant rate:
    (1) The maximum Federal grant rate for a project under this subpart 
is:
    (i) 50 percent, except as supplemented as provided in 
Sec. 301.4(b), or
    (ii) 75 percent, if that is greater, if the project is not feasible 
without, and merits, a reduction or waiver of the non-Federal share 
required under the rate provided in Sec. 301.4(b).
    (2) A project is eligible for a supplemental grant increasing the 
Federal share to up to 75 percent when the applicant is able to 
demonstrate that:
    (i) It cannot provide the non-Federal share otherwise required 
because in the overall economic situation there is a lack of available 
non-Federal share due, for instance, to the pressing demand for its use 
elsewhere;
    (ii) The project is addressing major causes of distress in the area 
serviced and requires the unique characteristics of the applicant, 
which will not participate in the program if it must provide all or 
part of a 50 percent non-Federal share; or
    (iii) The project is for the benefit of local, State, regional, or 
national economic development efforts, and will be of no or only 
incidental benefit to the recipient.
    (3) A project receiving a supplemental grant increasing the Federal 
share under paragraph (e)(2) of this section is not eligible for 
additional Federal grant assistance under Sec. 301.4(d).

Subpart C--National Technical Assistance, Training, Research, and 
Evaluation


Sec. 307.7  Purpose and scope.

    (a) The purposes of National Technical Assistance, Training, 
Research, and Evaluation projects are:
    (1) To determine the causes of excessive unemployment, 
underemployment, outmigration or other problems indicating economic 
distress in areas and regions of the Nation;
    (2) To assist in formulating and implementing new economic 
development tools and national, State, and local programs that will 
raise employment and income levels and otherwise produce solutions to 
problems resulting from the above conditions;
    (3) To evaluate the effectiveness and economic impact of programs, 
projects, and techniques used to alleviate economic distress and 
promote economic development, and
    (4) To assist in disseminating information about effective 
programs,

[[Page 5429]]

projects and techniques that alleviate economic distress and promote 
economic development.
    (b) EDA may during the course of the year, identify specific 
national technical assistance, training, research or evaluation 
projects it wishes to have conducted. Ordinarily, EDA specifies these 
projects in a NOFA, which also provides the appropriate point of 
contact and address.
    (c) National technical assistance, research, training, and 
evaluation funds may not be used to start or expand a private business.


Sec. 307.8  Application evaluation criteria.

    EDA selects projects for national technical assistance, training, 
research or evaluation grant awards according to the general 
application evaluation criteria set forth in part 304 of this chapter 
and the extent, as appropriate, the project:
    (a) Does not depend upon further EDA or other Federal funding 
assistance to achieve results;
    (b) Strengthens the capability of local, State, or national 
organizations and institutions, including nonprofit economic 
development groups, to undertake and promote effective economic 
development programs targeted to people and areas of distress;
    (c) Benefits severely distressed areas;
    (d) Helps to diversify distressed economies; and
    (e) Demonstrates innovative approaches to stimulating economic 
development in distressed areas.


Sec. 307.9  Award and grant rate requirements.

    (a) EDA will provide assistance for the period of time required to 
complete the project scope of work. Normally, this does not exceed 
twelve months.
    (b) If the project is regional or national in scope, EDA may 
determine that the requirement that public or private nonprofit 
organizations must act in cooperation with officials of a political 
subdivision of a State is satisfied by the nature of the project;
    (c) Financial reports, progress reports, and project products will 
be specified in the Special Award Conditions of the grant or 
cooperative agreement.
    (d) Grant rate:
    (1) The maximum Federal grant rate for a project under this subpart 
is:
    (i) 50 percent, except as supplemented as provided in 
Sec. 301.4(b); or
    (ii) 100 percent, if the project is not feasible without, and 
merits, a reduction or waiver of the non-Federal share required under 
the rate provided in Sec. 301.4(b).
    (2) A project is eligible for a supplemental grant increasing the 
Federal share to up to 100 percent when the applicant is able to 
demonstrate that
    (i) The project is addressing major causes of distress in the area 
serviced and requires the unique characteristics of the applicant, 
which will not participate in the program if it must provide all or 
part of a 50 percent non-Federal share; or
    (ii) The project is for the benefit of local, State, regional, or 
national economic development efforts, and will be of no or only 
incidental benefit to the recipient.

PART 308--REQUIREMENTS FOR ECONOMIC ADJUSTMENT GRANTS

Sec.
308.1  Purpose and scope.
308.2  Criteria.
308.3  Use of economic adjustment grants.
308.4  Selection and evaluation factors.
308.5  Applicant requirements.
308.6  Post-approval requirements.

Appendix A to Part 308--Section 209 Economic Adjustment Program 
Revolving Loan Fund; Plan Guidelines.

Appendix B to Part 308--Section 209 Economic Adjustment Program 
Revolving Loan Fund Grants; Standard Terms and Conditions.

Appendix C to Part 308--Section 209 Economic Adjustment Program 
Revolving Loan Fund Grants; Administrative Manual.

Appendix D to Part 309--Section 209 Economic Adjustment Program 
Revolving Loan Fund Grants; Audit Guidelines

    Authority: 42 U.S.C. 3211; Department of Commerce Organization 
Order 10-4.


Sec. 308.1  Purpose and scope.

    (a) The purpose of economic adjustment grants is to address the 
needs of communities experiencing adverse economic changes that may 
occur suddenly or over time, including but not limited to those caused 
by:
    (1) Military base closures or realignments, defense contractor 
reductions in force, or Department of Energy defense-related funding 
reductions,
    (2) Disasters or emergencies, in areas with respect to which a 
major disaster or emergency has been declared under the Robert T. 
Stafford Disaster Relief and Emergency Assistance Act (42 U.S.C. 5121 
et seq.),
    (3) International trade,
    (4) Fishery failures, in areas with respect to which a 
determination that there is a commercial fishery failure has been made 
under sec. 312(a) of the Magnuson-Stevens Fishery Conservation and 
Management Act (16 U.S.C. 1861a(a)),
    (5) Long-term economic deterioration, or
    (6) Loss of a major community employer.
    (b) Economic Adjustment grants are intended to enhance a distressed 
community's ability to compete economically by stimulating private 
investment in targeted economic sectors through use of tools that:
    (1) Help organize and carry out a CED Strategy;
    (2) Expand the capacity of public officials and economic 
development organizations to work effectively with businesses;
    (3) Assist in overcoming major obstacles identified in the 
strategy;
    (4) Enable communities to plan and coordinate: The use of Federal 
and other resources available to support economic recovery, development 
of regional economies, or recovery from natural or other disasters; and
    (5) Encourage the development of innovative public/private 
approaches to economic restructuring and revitalization.


Sec. 308.2  Criteria.

    (a) A grant may be made under this part only when the project will 
help the area to meet a special need arising from actual or threatened 
severe unemployment or economic adjustment problems resulting from 
severe changes in economic conditions; and the area for which a project 
is to be carried out has a strategy and the project is consistent with 
the strategy, except that the strategy requirement shall not apply to 
planning projects.
    (b) The term ``special need'' in paragraph (a) of this section 
means conditions of unemployment, per capita income, or special need 
that qualify an area for eligibility under Sec. 301.2(b).
    (c) Additional criteria, and/or priority consideration factors for 
assistance, may be set forth in a NOFA.


Sec. 308.3  Use of economic adjustment grants.

    (a) Grants may be used to pay for developing a strategy to 
alleviate long-term economic deterioration or a sudden and severe 
economic dislocation, or to pay for a project in implementation of such 
a strategy.
    (1) Strategy grants may support developing, updating, or refining a 
strategy.
    (2) Implementation grants support activities identified in an EDA-
approved strategy. Specific activities may be funded as separate grants 
or as multiple elements of a single grant. Examples of implementation 
activities include:
    (i) Infrastructure improvements, such as site acquisition, site 
preparation,

[[Page 5430]]

construction, rehabilitation and/or equipping of facilities;
    (ii) Provision of business or infrastructure financing through the 
funding of locally administered Revolving Loan Funds (RLFs), which may 
include interest rate buy downs;
    (iii) Market or industry research and analysis;
    (iv) Technical assistance, including organizational development 
such as business networking, restructuring or improving the delivery of 
business services, or feasibility studies;
    (v) Public services;
    (vi) Training (provided that it does not duplicate Department of 
Labor, Department of Education or other Federally-supported training 
programs), and
    (vii) Other activities as justified by the strategy which meet 
statutory and regulatory requirements.
    (b) Economic Adjustment grants may be spent directly by the grantee 
or redistributed to other entities.
    (1) Redistribution in the form of grants may only be to eligible 
recipients of grants under part 308.
    (2) Redistribution in the form of loans, loan guarantees, or 
equivalent assistance may be to public or private entities, including 
private for-profit entities.
    (c) Revolving Loan Fund (RLF) applicants must submit an RLF Plan in 
accordance with this part and RLF guidelines, Appendix A of this part, 
displayed at EDA's web site, http://www.doc.gov/eda. A copy of the RLF 
guidelines is available from EDA and a copy will be furnished to an 
award recipient with the Offer of Financial Assistance.


Sec. 308.4  Selection and evaluation factors.

    (a) Projects will be selected in accordance with part 304 of this 
chapter and the additional criteria as provided in subsections (b) and 
(c), as applicable.
    (b) Strategy grants. EDA will review strategy grant applications 
for:
    (1) Proper authority, mandate, and capacity of the applicant to 
lead and manage the planning process and strategy implementation;
    (2) Representation of the public and private sectors in the 
development of the strategy's objectives. Representation may include: 
Public program and service providers, trade and business associations, 
educational and research institutions, community development 
corporations, minorities, labor, low-income, etc.; and
    (3) The proposed scope of work for the strategy focuses on the 
structural economic problem(s) and includes provisions for undertaking 
appropriate research and analysis to support a realistic, market-based, 
adjustment strategy.
    (c) Implementation Grants.
    (1) EDA will review implementation grant applications for the 
extent to which,
    (i) The strategy shows
    (A) An understanding of the economic problems being addressed;
    (B) An analysis of the economic sectors that constitute the 
community's economic base, including particular strengths and 
weaknesses that contribute to or detract from a community's current and 
potential economic competitiveness;
    (C) Strategic objectives that focus on stimulating investment in 
new and/or existing economic activities that offer good prospects for 
revitalization and growth; and
    (D) Identified resources and plans for coordinating such resources 
to implement the overall strategy; and
    (ii) The proposed project is identified as a necessary element of 
or consistent with the strategy.
    (2) Revolving Loan Fund (RLF) Grants. For applicants asking to 
capitalize or recapitalize an RLF, EDA will review the application for:
    (i) The need for a new or expanded public financing tool to enhance 
other business assistance programs and services targeting economic 
sectors and/or locations described in the strategy;
    (ii) The types of financing activities anticipated; and
    (iii) The capacity of the RLF organization to manage lending, 
create networks between the business community and other financial 
providers, and contribute to the adjustment strategy.
    (d) Additional criteria, or priority consideration factors for 
assistance, may be set forth in a NOFA.


Sec. 308.5  Applicant requirements.

    Each application for a grant under part 308 must:
    (a) Include evidence of area and applicant eligibility (see part 
301);
    (b) Include, or incorporate by reference, if so approved by EDA, a 
strategy, as provided in Sec. 301.3 (except that a strategy is not 
required when a funding request is for planning assistance, i.e., a 
strategy grant);
    (c) Identify the sources of the other funds, both eligible Federal 
and non-Federal, that will make up the balance of the proposed 
project's financing, including any private sources of financing. The 
application must show that such other funds are committed to the 
project and will be available as needed. The local share must not be 
encumbered in any way that would preclude its use consistent with the 
requirements of the grant; and
    (d) Explain how the proposed project meets the criteria of 
Sec. 308.2.


Sec. 308.6  Post-Approval requirements.

    (a) Financial, performance, and progress reports will be specified 
in the Special Award Conditions of the grant.
    (b) Projects involving construction shall comply with the 
provisions of subpart B of part 305.
    (c) RLF Supplemental Requirements and Guidelines--RLF grants are 
subject to the requirements set forth in this part and the 
publications: EDA's RLF Standard Terms, EDA's RLF Administrative 
Manual, and EDA's RLF Audit Guidelines, Appendixes B-D of this part 
displayed at EDA's web site, http://www.doc.gov/eda. A copy of these 
documents is available from EDA and a copy will be furnished to an 
award recipient with the Offer of Financial Assistance.

Appendix A to Part 308--Section 209  Economic Adjustment Program 
Revolving Loan Fund; Plan Guidelines

    OMB Approval No. 0610-0095.
    Approval expires 07/31/99

Burden Statement for Revolving Loan Fund Plan

    Notwithstanding any other provision of the law, no person is 
required to respond to, nor shall any person be subject to a penalty 
for failure to comply with, a collection of information subject to 
the requirements of the Paperwork Reduction Act, unless that 
collection of information displays a currently valid OMB Control 
Number.
    The information is required to obtain or retain benefits from 
the Economic Development Administration pursuant to Economic 
Development Administration Reform Act, Public Law 105-393. No 
confidentiality for the information submitted is promised or 
provided except that which is exempt under 5 U.S.C. 552(b)(4) as 
confidential business information.
    The public reporting burden for this collection is estimated to 
average 40 hours per response including the time for reviewing 
instructions, searching existing data sources, gathering and 
maintaining the data needed, and completing and reviewing the 
collection of information. Send comments regarding this burden 
estimate or any other aspect of this collection of information, 
including suggestions for reducing this burden to: Economic 
Development Administration, Herbert C. Hoover Building, Washington, 
DC, 20230, and to the Office of Information and Regulatory Affairs, 
Office of Management and Budget, Washington, DC 20503.

Purpose

    EDA requires Revolving Loan Fund (RLF) grantees to manage their 
RLFs in accordance with a plan. The Plan must be approved by EDA 
prior to the grant award, but may be modified subsequently, with EDA 
approval,

[[Page 5431]]

as provided for in the RLF Administrative Manual (Section X.D.). 
These guidelines are designed to assist grant applicants prepare and 
document an RLF Plan that (1) is tailored to supporting 
implementation of the area's Economic Adjustment Strategy, (2) 
provides for administrative clarity, continuity and consistency, and 
(3) is acceptable to EDA.

EDA Evaluation Criteria

    EDA will use the following criteria in evaluating RLF Plans:
    1. The Plan flows from and is consistent with the Economic 
Adjustment Strategy for the area, as approved by EDA.
    2. It is internally consistent, i.e., it is a coherent statement 
of the strategic purpose of the particular RLF and the various 
considerations influencing the selection of its financing strategy, 
policies and loan selection criteria.
    3. The financing strategy demonstrates a knowledgeable analysis 
of the local capital market and the financing needs of the targeted 
businesses.
    4. The financing policies and portfolio standards are consistent 
with EDA policy and requirements.
    5. The strategic objectives defined are sufficiently meaningful, 
though not necessarily quantified, so that progress toward them can 
be assessed over time.
    6. The administrative procedures for operating the RLF are 
consistent with generally accepted prudent lending practices for 
public lending institutions.

Format and Content

    The format for the Plan provides for two distinct parts: the 
Revolving Loan Fund Strategy and the Operational Procedures. Each 
part contains a number of sections designed to facilitate the 
orderly and logical presentation of the required information. 
However, the organization of the material and the level of detail 
provided in the subsections of Part I may be varied to improve the 
narrative flow, provided the substantive content is adequately 
covered.
    The title page of the Plan document should show the grant 
recipient organization's name and the date the Plan was approved. 
Normally, approval is required to be by resolution of the 
organization's governing board. States are exempted from this 
requirement.

Part I: The Revolving Loan Fund Strategy

    The RLF strategy is the approach selected by the grant recipient 
organization for using RLF financing as part of the broader business 
development strategy designed to support achievement of the goals 
and objectives established through the area/community's economic 
adjustment or development planning process. The sequence of the 
subsections of this Part are designed to lead the reader from the 
general to the more specific, providing the reader with an 
understanding of how the RLF strategy was arrived at, and 
establishing the strategic, organizational and programmatic context 
for the proposed use of the RLF.

A. Economic Adjustment Program Overview

    A short description of the area's economic adjustment program, 
i.e., the strategy and the full range of activities planned and 
being implemented, should be provided. The following topics must be 
included:
    1. The nature and scale of the economic adjustment problem(s) 
underlying the economic distress statistics that resulted in the 
area becoming eligible for Section 209 assistance.
    2. The process through which the Economic Adjustment Strategy 
was developed. Was it an outgrowth of an ongoing economic 
development program, such as the Overall Economic Development 
Program (OEDP) required for other forms of EDA assistance, or a 
special initiative undertaken in-house or by a consultant? What 
community organizations and interest groups were, and continue to 
be, involved in further refining the strategy and overseeing its 
implementation?
    3. Area resources/assets (potential or actual growth industries, 
industries that could be more productive, work force skills, natural 
resources, etc.) on which the strategy is designed to build. What 
specific opportunities have been identified for expanding or 
strengthening existing economic activities and/or creating new 
activities?
    4. The strategic adjustment goals and objectives derived from 
the conclusions described above and an assessment of the capacity of 
the community to invest in pursuing the opportunities identified.
    5. The implementation programs and activities, both underway and 
planned, that support the strategic objectives. Note that while 
business development activities should be identified here, in 
addition to other activities, Section B requires a detailed 
discussion of the business development strategy.
    6. The organizational structure and distribution of 
responsibility for managing the on-going adjustment program. What 
agency is responsible for maintaining the adjustment strategy, 
evaluating results and updating it as needed? What agencies/
organizations manage or coordinate implementation of key elements in 
the overall strategy, in particular, the business development 
strategy of which the RLF is to be a component.

B. The Business Development Strategy

    As emphasized in EDA's guidelines for preparing an Economic 
Adjustment Strategy, a key element of any community's adjustment 
program should be its business development strategy. A community's 
business development strategy will depend on the particular 
opportunities identified for stimulating business investment and 
productivity. Participation of the business community in the 
development of the strategy is essential, as is a firsthand 
knowledge of the characteristics of firms within the targetted 
economic sectors and their individual needs for assistance.
    It is the experience of working with the business sector in 
designing and implementing a business development strategy that 
enables the community to (1) determine the need for an RLF, and (2) 
define the types of RLF investments that will be most effective in 
complementing other types of business assistance in supporting the 
objectives of the adjustment program.
    If the business development strategy is already well documented 
in the community's Economic Adjustment Strategy, it need only be 
summarized sufficiently to provide a bridge between the adjustment 
strategy and the RLF financing strategy. If not well documented, it 
should be described in more detail. The following features of the 
strategy should be addressed:
    1. The objectives of the business development strategy, for 
example, increase the capacity of local firms to supply parts and 
services to a major local manufacturer, encourage creation of firms 
to develop and commercialize products that add value to a local 
resource, assist small manufacturing firms incorporate new 
production technologies and/or develop new markets, etc.
    2. The pertinent characteristics of the businesses or 
prospective businesses in the economic sectors targeted by the 
strategy; for example, their size, age, ownership, management, 
products, markets, competitiveness, production processes, capital, 
etc.
    3. The types of assistance needed by these businesses and would-
be entrepreneurs to take advantage of the opportunities identified; 
for example, access to technical information (market data, new 
technologies and production processes, exporting), hands-on 
management and technical assistance, financing, incubator space, 
etc. How were and are these needs being identified: surveys, on-site 
interviews, business forums, etc.?
    4. The programs/activities being undertaken by the public sector 
and/or development organizations to address the identified needs. 
Are there other sources of assistance available; for example, a 
technical college, business development center, industrial extension 
service, SCORE program, an SBA Small Business Development Center 
and/or a Certified Development Corporation, etc.? Are there private 
sector organizations, industry and/or business associations that 
promote information exchange and technical support?

C. The Financing Strategy

    The community's financing strategy should take into account all 
the sources of financing, public and private, available to support 
its business development objectives, and should identify the best 
and appropriate sources to meet the differing creditworthiness and 
needs of the types of businesses targeted for investment. Analysis 
of the characteristics of the demand for and supply of financing 
will determine the appropriate financing niche for the RLF. This 
should be discussed in terms of the following:
    1. The current types of financing needs and opportunities in the 
targeted business sectors and specific types of firms within them. 
What further needs and opportunities are expected to emerge as 
implementation of the strategy progresses?
    2. The current availability of public and private financing in 
the area. What are the prevailing commercial lending policies/
restrictions? What role is anticipated for the public and private 
lenders in supporting the community's business development strategy?

[[Page 5432]]

    3. The characteristics of the financing niche that the RLF would 
occupy.
    a. Types of businesses/firms?
    b. Types of financing?
    c. Types of terms?
    4. The impact RLF financing is anticipated to have on 
accomplishing the community's economic adjustment objectives in the 
next 3-5 years. For example, with respect to:
     a. Restructuring/strengthening the local economy.
    b. Stimulating private investment, both through leveraging 
commercial financing and ``showing the way to other investors.''
    c. Enhancing job opportunities.

D. Financing Policies

    Consistent with the role identified for the RLF in the 
community's financing strategy, and with due consideration for the 
need to manage and protect the RLF capital, the specific policies 
designed to govern RLF financing should be discussed as follows:
    1. The standard lending terms, and any concessionary or special 
financing techniques that the RLF will entertain to accomplish the 
objectives of the business development strategy. Discuss the key 
factors that will determine how such techniques might be employed.
    a. The range of allowable interest rates the RLF will charge 
borrowers.
    b. Requirements for equity or cash injections to be provided by 
the RLF borrower.
    (1) Will the policy be the same for new as opposed to 
established businesses?
    (2) Will any deviations be allowed, e.g., for working capital 
loans?
    c. The standard repayment terms for both working capital and 
fixed asset loans, and any deviations.
    (1) If the RLF anticipates moratoria on principal payments, 
specify the maximum moratorium period.
    (2) What key factors will determine when any deviations will be 
employed?
    2. The types of collateral to be required of borrowers.
    3. The minimum and maximum loan sizes that the RLF will 
entertain.

E. Portfolio Standards and Targets

    RLF portfolio standards and targets are used by EDA as surrogate 
measures for the economic performance of an RLF. They should be 
established as follows:
    1. The anticipated percentage of RLF investments in each of the 
following:
    a. Industrial/commercial/Service businesses (Show any 
subcomponents, if significant and if identified in the business 
development strategy.)
    b. New businesses/expansion/retention
    2. The anticipated percentage of the RLF portfolio that will be 
targeted towards working capital loans and fixed asset loans (note 
that EDA allows a maximum of 50 percent for working capital loans 
during the grant disbursement phase of the RLF)
    3. Private investment leveraging ratio for the portfolio 
overall. Sources of private investment that may be included are: 
financing from other lenders (e.g., banks, investment companies, 
etc.) or private investment on the part of the borrower or other 
firms in conjunction with the RLF financing.
    4. Cost per job for the portfolio overall.

F. RLF Loan Selection Criteria

    In addition to the required selection criterion that financing 
is not otherwise available, what ``economic impact'' criteria will 
be used to evaluate proposed loans?

G. Performance Assessment Process

    Describe the process and factors that the grant recipient will 
use (1) to periodically assess the performance of the RLF in 
accomplishing its stated economic adjustment objectives, and (2) to 
modify the RLF Plan as needed.

Part II: Revolving Loan Fund Operational Procedures

    This part of the RLF Plan is designed to cover in detail the 
specific operational procedures to be followed by the grant 
applicant/recipient in administering the RLF.
    Section A requires an overview of the organizational 
distribution of responsibility for the key elements in operating the 
RLF. Sections B. through E. require, for each item indicated, a 
short description of (1) how it will be addressed, the procedure/
requirement to be used, if any, (2) the documentation that will be 
used, (3) the party(ies) responsible for carrying out the 
requirement, and (4) the time frame within which it is to be 
implemented.

A. Organizational Structure

    1. Provide an overview of the organizational structure within 
which the RLF will be operated. For each of the functions critical 
to the conduct of the RLF's lending activities, identify the 
responsible parties including any from outside the organization. Use 
a schematic diagram if helpful.
    Critical operational functions include: identification and 
development of appropriate financing opportunities; provision of 
business assistance and advisory services to prospective and actual 
borrowers (identify the types and sources of services available); 
environmental reviews; and loan management (loan processing, credit 
analysis, loan write-ups and recommendations, closings, collections 
and servicing, handling defaulted loans and foreclosures, and 
compliance with grant requirements). Note that a more detailed 
description of how some of these functions will be handled is 
requested in sections below.
    2. Describe the size and general composition of the 
organization's RLF loan board; include experience and occupational 
requirements. Describe its duties and responsibilities, membership 
terms and quorum requirements.
    An RLF loan board must be responsible for approving loans, all 
major loan modifications (or waivers), and loan foreclosure actions. 
It must also be responsible for at least recommending RLF loan 
policy (actual approval of loan policy may take place at a higher 
level). The loan board should include members with business 
experience (representation of targeted industries and/or business 
sectors is desirable provided it will not cause a conflict of 
interest), members with financing experience, members from both the 
public and private sectors and minority members representative of 
the community. At least one member with financing experience 
(similar to the type of loans to be made under the RLF program) must 
be present for each loan decision.

B. Loan Processing Procedures

    1. Standard Loan Application Requirements--include a list of 
items or a checklist showing the items to be required of RLF loan 
applicants. [It is acknowledged that not all items will apply to 
each loan applicant and that certain situations may require 
additional items not on the list.]
    2. Credit Reports.
    3. Appraisal Reports.
    4. Environmental Reviews.
    5. Standard Collateral Requirements--include requirements for 
personal guarantees and insurance (hazard, keyman life, flood, and 
title).
    6. Standard Equity Requirements--when listing equity 
requirements, differentiate between existing and new companies, and 
fixed asset and working capital loans. Note that an allowable 
requirement for a working capital loan may simply require a borrower 
to have a certain net working capital position. Equity is defined as 
an amount or percentage of capital (or lien free assets) that is 
required to be added to a project from borrower or investor sources.
    7. Loan Write-up--indicate the items to be addressed in the RLF 
loan write-up. At a minimum, a loan write-up must discuss how the 
proposed RLF loan is not replacing private lender funding sources--
refer to Section IV.B.3. of the RLF Administrative Manual. Other 
items should include a summary of the firm's history, management, 
product, production capability, market conditions, financing, 
collateral, repayment ability, consistency with the RLF's financing 
policy and whether there are any environmental problems associated 
with the project. A Loan Write-up summarizes the key aspects of a 
loan; it is prepared by the RLF grant recipient and is usually 
provided to the RLF loan board prior to the loan decision.
    8. Procedures for loan approvals, documentation of loan board 
decisions, and notification of borrowers.

C. Loan Closing and Disbursement Procedures

    1. General Closing Requirements--include documentation required 
to confirm any needed equity injection and private lender financing.
    2. Loan Closing Documentation Requirements--provide a checklist 
of the standard documents that will be required for the types of 
loans to be made under the RLF. Indicate any special timing 
requirements, e.g., Uniform Commercial Code (UCC) searches prior to 
and/or subsequent to a UCC filing on personal property.
    3. Loan Disbursement Requirements--indicate borrower 
requirements for drawing loan funds, i.e., is a borrower required to 
provide any evidence (e.g., an invoice) that it has ordered an asset 
prior to receiving loan funds to ensure that funds are ordered only 
when actually needed and that they will be

[[Page 5433]]

used as agreed in the loan agreement, any pre-disbursement 
requirements for working capital loans, any special requirements for 
construction financing, and any other disbursement procedures that 
are necessary to protect RLF assets.

D. Loan Servicing Procedures

    1. Loan Payment and Collection Procedures--indicate the standard 
method(s) of loan payment by RLF borrowers, e.g., payment coupon 
books, automatic payment withdrawals, or other methods. Indicate any 
procedures for protection and timely deposit of RLF loan payments. 
Note that unused RLF funds must be Federally insured if deposited in 
a financial institution.
    2. Loan Monitoring Procedures--indicate the standard procedures 
for monitoring loan conditions, including requirements/procedures 
for financial statements, annual insurance renewals, UCC refilings, 
borrower site visits, tickler files, and compliance with any Federal 
requirements of the grant.
    3. Late Payment Follow-up Procedures--indicate the standard 
procedures for handling loans that are in arrears up to 90 days and 
discuss any late penalty requirements (which should be stated in the 
note).
    4. Procedures for Handling Loans over 90 days in arrears.
    5. Write-off Procedures--indicate how the RLF will account for 
loan write-offs.

E. Administrative Procedures

    1. Procedures for Loan Files and Loan Closing Documentation--
indicate what should be included in an RLF loan file, e.g., the 
application, loan commitment letters, copy of private lender loan 
agreement, financial statements, annual insurance certifications, 
annual site visit reports, general correspondence, job reports, etc. 
Indicate any procedures for safekeeping loan documents, particularly 
the loan closing documents. At a minimum, all original notes, loan 
agreements, personal guarantees and security agreements should be 
placed in a fireproof facility or container.
    2. Procedures for Complying with EDA Reporting Requirements--
provide an overview of how RLF loan payments and RLF Income sources 
will be tracked and accounted for in order to meet EDA reporting 
requirements. [RLF Income sources including interest from loans and 
from accounts holding idle RLF funds, loan fees, late payment fees, 
and any other sources of RLF revenue.]
    3. Grantee control procedures for ensuring compliance with all 
grant requirements and for monitoring the RLF portfolio.
    Prior to the initial grant disbursement, the grant recipient 
must also certify that the basic loan documents are in place and 
that these documents have been reviewed by counsel for adequacy to 
protect the interests of the RLF. The minimum documents required 
are:

--Note
--Loan Agreement
--Security Agreement(s)
--Deed of trust or Mortgage
--Agreement of Prior Lienholder

Appendix B to Part 308--Section 209 Economic Adjustment Program 
Revolving Loan Fund Grants; Standard Terms and Conditions

Approval expires 07/31/99.

Burden Statement for Revolving Loan Fund Standard Terms and 
Conditions

    Notwithstanding any other provision of the law, no person is 
required to respond to, nor shall any person be subject to a penalty 
for failure to comply with, a collection of information subject to 
the requirements of the Paperwork Reduction Act, unless that 
collection of information displays a currently valid OMB Control 
Number.
    The information is required to obtain or retain benefits from 
the Economic Development Administration pursuant to Economic 
Development Administration Reform Act, Public Law 105-393. No 
confidentiality for the information submitted is promised or 
provided except that which is exempt under 5 U.S.C. 552(b)(4) as 
confidential business information.
    The public reporting burden for this collection is estimated to 
average 12 hours per response including the time for reviewing 
instructions, searching existing data sources, gathering and 
maintaining the data needed, and completing and reviewing the 
collection of information. Send comments regarding this burden 
estimate or any other aspect of this collection of information, 
including suggestions for reducing this burden to: Economic 
Development Administration, Herbert C. Hoover Building, Washington, 
DC, 20230, and to the Office of Information and Regulatory Affairs, 
Office of Management and Budget, Washington, DC 20503.

Table of Contents

A. Program Statement
B. Overall Statutory and Executive Order Requirements
    .01  EDA Statute and Regulations
    .02  Administrative Requirements
    .03  Civil Rights Requirements
    .04  Hatch Act
C. General Requirements
    .01  Grant Terms and Conditions
    .02  Compliance with EDA Instructions
    .03  Exclusion from Certification and Disclosure requirements
    .04  Duplication of Work
    .05  Reimbursement of Costs Prior to Award
    .06  Other Funding Sources
    .07  Availability of Information
    .08  Procurement Standards & Use of Consultants/Contractors
    .09  Program Performance Notification
    .10  Attorney and Consultant Fees
    .11  Suspension and Termination of Grant
D. RLF Requirements for Recipients and Borrowers
    .01  Prudent Lending Practices
    .02  Inclusion of requirements in RLF Loan Documents
    .03  Annual RLF Plan Certifications
    .04  RLF Plan Modifications
    .05  Eligible Area
    .06  Relocation
    .07  Grant Disbursement Schedule
    .08  Capital Utilization Standard
    .09  Civil Rights
    .10  Environment
    .11  Earthquake Requirements
    .12  Flood Hazard Insurance
    .13  Davis-Bacon
    .14  Contract Work Hours and Safety Standards Act & Anti-
Kickback
    .15  Access for the Handicapped
    .16  Conflict of Interest
E. Financial Requirements
    .01  Budget
    .02  Method of Payment
    .03  Request For Budget Change
    .04  Matching and Cost Sharing
    .05  Program Income
    .06  RLF Income
    .07  Indirect Costs
    .08  Additional Funding and/or Extension of Award
    .09  Debts
    .10  Interest-Bearing Accounts
    .11  Bonding and Payment of Funds
    .12  Grant Violations and Ineligible Costs
F. Reporting Requirements
    .01  Financial and Performance Reports
    .02  Other Reports
    .03  Subcontracting Reports
G. Administrative Cost and Loan Records Retention
    .01  Administrative Cost Records
    .02  Loan Records:
    .03  General
H. Audit
    .01  Requirements
    .02  Establishment and Collection of Audit-Related Debts
I. Miscellaneous Items
    .01  Programmatic Changes
    .02  Name Check Review
    .03  Prohibition Against Assignment
    .04  Covenant Against Contingent Fees
    .05  Officials Not To Benefit
    .06  Sub-Award and/or Contract to Other Federal Agencies
    .07  Property Management
    .08  Rights to Inventions Made by Nonprofit Organizations and 
Small Business Firms
    .09  Executive Order 12432, Minority Business Enterprise
    .10  Internal Revenue Service (IRS) Information
    .11  Government wide Debarment, Suspension and Other 
Responsibility Matters (Nonprocurement)
    .12  Restrictions on Lobbying

A. Program Statement

    These Standard Terms and Conditions apply to all Economic 
Adjustment Program awards for revolving loan fund activities funded 
under Section 209 of the Public Works and Economic Development Act 
of 1965, P.L. 89-136, as amended (42 U.S.C. 3121, et seq.).
    For the purpose of these Standard Terms and Conditions, (a) the 
term ``Government'' refers to the Economic Development 
Administration (EDA); (b) the term ``Recipient'' refers to the 
undersigned recipient of Government funds under the Agreement to 
which this attachment is made a part;  the term 
``Department'' refers to the Department of Commerce; (d) the term 
``Regional Office'' refers to the appropriate Regional Office of the 
Economic

[[Page 5434]]

Development Administration; (e) the term ``Federal Program Officer'' 
refers to the Regional Director of the appropriate EDA Regional 
Office (the Federal Program Officer is responsible for programmatic 
and technical aspects of this award); (f) the term ``Grants 
Officer'' refers to the Assistant Secretary for Economic Development 
or his or her designated representative (the Grants Officer is 
responsible for all administrative aspects of this award and is 
authorized to award, amend, suspend, and terminate financial 
assistance awards); (g) the term ``Project'' refers to the activity 
for which the Government grant was awarded; and (h) ``RLF'' refers 
to this revolving loan fund grant project.

B. Overall Statutory and Executive Order Requirements

    Some of the terms and conditions herein contain, by reference or 
substance, a summary of the pertinent statutes or regulations issued 
by a Federal agency and published in the Code of Federal 
Regulations. To the extent that it is a summary, such term or 
condition is not in derogation of, or an amendment to, the statute 
or regulation.
    The Recipient shall comply, and require any contractor which 
provides services on behalf of the Recipient to comply with all 
applicable Federal, state, territorial, and local laws, in 
particular, the following Federal public laws, the regulations 
issued thereunder, Executive Orders and OMB Circulars, and the 
requirements listed in Section D. herein:
    .01  EDA Statute and Regulations: Applicable provisions of the 
Public Works and Economic Development Act of 1965, P.L. 89-136, as 
amended (42 U.S.C. 3121, et seq.)and regulations in 13 CFR, Chapter 
III.
    .02  Administrative Requirements: Administrative requirements 
for grants, OMB Circular No. A-110, ``Grants and Agreements with 
Institutions of Higher Education, Hospitals, and Other Nonprofit 
Organizations,'' and its attachments, as amended or as superseded in 
the Department's regulations, or those found in 15 CFR Part 24, 
``Uniform Administrative Requirements For Grants and Cooperative 
Agreements to State and Local Governments,'' as applicable. In the 
event of inconsistency or conflict between the administrative 
requirements and EDA's enabling legislation or regulations, the 
latter shall prevail;
    .03  Civil Rights Requirements: Title VI of the Civil Rights Act 
of l964, as amended (42 U.S.C. 2000d-2000d-4); 15 CFR Part 8; 
Executive Orders 11246 and 11375; 4l CFR Part 60-4; P.L. 92-65, 
Section 112, prohibiting sex discrimination on programs under the 
Public Works and Economic Development Act; 13 CFR Part 317 imposing 
civil rights requirements on recipients; regulations issued pursuant 
to the Age Discrimination Act of 1965 (42 U.S.C. 6101 et seq.) 15 
CFR Part 20; Section 504 of the Rehabilitation Act of 1973, as 
amended (29 U.S.C. 794), and the implementing regulations of the 
Department of Commerce in 15 CFR 8b, prohibiting discrimination 
against and providing fair and equitable treatment of the 
handicapped under programs or activities receiving Federal financial 
assistance; and such other civil rights legislation, regulations, 
and Executive Orders as applicable;
    .04  Hatch Act: Recipient will comply with the provisions of the 
Hatch Act (5 U.S.C. Section 1501-1508 and 7324-7328) which limit the 
political activities of employees whose principal employment is 
funded in whole or in part with Federal funds.

C. General Requirements

    .01  Grant Terms and Conditions: The Recipient and any 
consultant/contractor providing services on behalf of the Recipient 
shall comply with the Grant Award and all terms and conditions 
thereto. The decision of the Government in interpreting the terms 
and conditions of this grant shall be final.
    .02  Compliance with EDA Instructions: The Recipient shall 
comply with EDA Revolving Loan Fund guidelines, manuals and other 
instructions as may be issued from time to time by the Government in 
connection with the assistance herein offered. All such instructions 
are to be applied on the effective date of the award.
    .03  Exclusion from Certification and Disclosure requirements: 
An Indian tribe or organization that is seeking an exclusion from 
Certification and Disclosure requirements must provide (preferably 
in an attorney's opinion) the Government with the citation of the 
provision or provisions of Federal law upon which it relies to 
conduct lobbying activities that would otherwise be subject to the 
prohibitions in and to the Certification and Disclosure requirements 
of Section 319 of Public Law No. 101-121.
    .04  Duplication of Work: The purpose and scope of work for 
which this award is made shall not duplicate programs for which 
monies have been received, committed, or applied for from other 
sources, public or private. The Recipient shall submit full 
information about related programs that may be initiated within the 
award period. The Recipient shall immediately provide written 
notification to the Federal Program Officer in the event that other 
Federal financial assistance is received during the award period 
relative to the scope of work of this award.
    .05  Reimbursement of Costs Prior to Award: Funds provided under 
this award shall not be used to pay for the cost of any work started 
or completed prior to the effective date of this award.
    .06  Other Funding Sources: Federal-share funds budgeted or 
awarded for this Project shall not be used to replace any financial 
support previously provided or assured from any other source. The 
Recipient agrees that the general level of expenditure by the 
Recipient for the benefit of program area and/or program designated 
in the Special Terms and Conditions of this award, or any amendment 
or modification thereto, shall be maintained and not reduced as a 
result of the Federal-share funds received under this Project.
    .07  Availability of Information: The Recipient agrees that all 
information resulting from its activities and not exempt from 
disclosure under the Freedom of Information Act, 5 U.S.C. 522, shall 
be made freely available to the public. This requirement is 
exclusive to the Recipient and is not applicable to confidential 
information disclosed or obtained in the normal borrower/lender 
relationship.
    .08  Procurement Standards & Use of Consultants/Contractors: The 
procurement standards and procedures set forth in 15 CFR Part 24, 
``Uniform Administrative Requirements for Grants and Cooperative 
Agreements to State and Local Governments,'' Section 24.36 or OMB 
Circular No. A-110, ``Uniform Administrative Requirements for Grants 
and Agreements with Institutions of Higher Education, Hospitals, and 
Other Nonprofit Organizations,'' Attachment O or its implementing 
Department regulation, as appropriate, shall apply to all awards. 
For all proposals and contracts where costs are expected to exceed 
the simplified acquisition threshold, the scope of work (request for 
proposal) and the cost of such must be submitted to and approved by 
the Government prior to employment of such consultants or 
contractors. The Recipient shall ensure that any consultant or 
contractor paid from funds provided under this award either directly 
or through program income is bound by all applicable award terms and 
conditions. The Government shall not be liable hereunder to a third 
party nor to any party other than the Recipient.
    .09  Program Performance Notification: The Recipient shall 
inform the Government as soon as the following types of conditions 
become known:
    a. Problems, delays, or adverse conditions that materially 
affect the ability to attain program objectives, prevent the meeting 
of time schedules or goals, or preclude the attainment of project 
work units by established time periods. This disclosure shall be 
accompanied by a statement of the action taken, or contemplated, and 
any EDA assistance needed to resolve the situation.
    b. Favorable developments or events that enable meeting time 
schedules and goals sooner than anticipated or producing more work 
units than originally projected.
    .10  Attorney and Consultant Fees: The Recipient hereby agrees 
that no funds made available from this grant shall be used, directly 
or indirectly, for paying attorneys' or consultants' fees in 
connection with securing this grant or other grants or cooperative 
agreements from EDA.
    .11  Suspension and Termination of Grant:
    a. When a Recipient has failed to comply with the grant award 
stipulations, standards, or conditions, EDA may, on reasonable 
notice to the Recipient, suspend the grant and withhold further 
payments, or prohibit the Recipient from incurring additional 
obligations of grant funds, pending corrective action by the 
Recipient or a decision to terminate in accordance with the 
following paragraphs. EDA shall allow all necessary and proper costs 
which the Grantee could not reasonably avoid during the period of 
suspension, provided they meet the provisions of applicable OMB cost 
principles and the grant terms and conditions.
    b. Whenever the Recipient shall fail in its fiduciary 
responsibilities, or shall be unable

[[Page 5435]]

or unwilling to perform, as trustee of this grant to serve the 
purpose of the Economic Adjustment program for which it was made, 
EDA may suspend, terminate or transfer this grant to an eligible 
successor Recipient, with jurisdiction over the Project area, to 
administer it as such trustee. The Recipient shall cooperate with 
EDA in accomplishing the transfer of this grant to such successor 
Recipient.
    c. EDA may terminate any grant in whole, or in part, at any time 
before the date of completion, whenever it is determined that the 
Recipient has failed to comply with the conditions of the grant 
(termination for cause). EDA shall promptly notify the Recipient in 
writing of the determination and the reasons for the termination, 
together with the effective date. Payments made to recipients or 
recoveries by the Federal sponsoring agencies under grants or other 
agreements terminated for cause shall be in accordance with the 
legal rights and liabilities of the parties. Whenever EDA terminates 
any RLF grant for cause, in whole or in part, it has the right to 
recover residual funds and assets of the RLF grant in accordance 
with the legal rights of the parties.
    d. In accordance with subsections (a) (b) and (c) above, EDA may 
suspend or terminate any grant for cause based on, but not limited 
to, the following: (1) failure to make loans in accordance with the 
RLF Plan, including the time-schedule for loan closings; (2) failure 
to obtain prior EDA approval for such changes to the RLF Plan, 
including provisions for administering the RLF, as specified in the 
RLF Administrative Manual, as amended; (3) failure to submit 
progress, financial or audit reports as required by the terms and 
conditions of the grant agreement; (4) failure to comply with 
prohibitions against conflict-of-interest for any transactions 
involving the use of RLF funds; (5) failure to operate the RLF in 
accordance with the RLF Plan and the terms and conditions of the 
grant agreement.
    e. EDA or the Recipient may terminate this grant in whole or, in 
part, when the parties agree that the continuation of the project 
would not produce beneficial results commensurate with the further 
expenditure of funds (termination for convenience). The parties 
shall agree upon the termination conditions, including the effective 
date and, in the case of partial terminations, the portion to be 
terminated. The Recipient shall cancel as many outstanding 
obligations as possible. EDA shall allow full credit to the 
Recipient for the Federal share of the noncancelable obligations, 
properly incurred by the Recipient prior to termination.
    f. If there is a partial termination of the EDA grant, the full 
amount of the original nonfederal matching share is expected to be 
retained in the RLF for lending purposes unless otherwise provided 
for in the grant agreement or agreed to in writing by the 
Government.
    g. Other grant closeout procedures set forth in 15 CFR, Part 24, 
or OMB Circular No. A-110, or its implementing Department 
regulation, as applicable, shall also apply.

D. RLF Requirements for Recipients and Borrowers

    .01  Prudent Lending Practices: The Recipient agrees to 
administer the RLF in accordance with lending practices generally 
accepted as prudent for public loan programs. Such practices cover 
loan processing, documentation, loan approval, collections, 
servicing, administrative procedures and recovery actions. The 
Recipient agrees to follow local laws and filing requirements to 
perfect and maintain security interests in RLF collateral.
    .02  Inclusion of requirements in RLF Loan Documents: The 
Recipient agrees to incorporate applicable Federal requirements 
described herein in RLF loan agreements to ensure borrower 
compliance.
    .03  Annual RLF Plan Certifications: The Recipient agrees to 
certify annually to the Government that the RLF is being operated in 
accordance with the RLF Plan (as referenced in the Special Terms and 
Conditions of the grant, as amended); and that the RLF Plan is 
consistent with, and supports, implementation of the current 
Economic Adjustment Strategy for the project area.
    .04  RLF Plan Modifications: The Recipient agrees, because 
economic conditions change and new approaches to stimulating 
economic adjustment may be needed, to seek EDA approval of such 
modifications to the RLF Plan as may be required for the RLF to 
continue to be fully supportive of the area's Economic Adjustment 
Strategy, as updated and approved by EDA. The Recipient further 
agrees to request EDA approval of modifications to the Plan at any 
time there is evidence that such modifications are needed to ensure 
effective use of the RLF as a strategic financing tool.
    .05  Eligible Area: The Recipient shall use the RLF only in the 
areas eligible for Section 209 assistance as approved by the 
Government and defined in the Special Terms and Conditions of the 
grant. To add a new eligible area to a previously awarded RLF grant, 
the Recipient shall obtain the prior written approval of the 
Government. To ensure that the economic benefits of RLF loans remain 
within eligible lending areas, the Recipient shall include a 
provision in RLF loan documents to call loans if the economic 
activity financed is moved outside the eligible lending area.
    .06  Relocation: The Recipient agrees that RLF funds shall not 
be used to relocate jobs from one commuting area to another. The 
Recipient shall include a provision in RLF loan documents to call 
loans if it is determined that (a) the business used the RLF loan to 
relocate jobs from another commuting area or (b) the economic 
activity financed is moved to another commuting area to the 
detriment of local workers.
    .07  Grant Disbursement Schedule: The Recipient agrees, unless 
otherwise specified in the Special Terms and Conditions of the grant 
award, to make loans in the initial round of lending at a rate such 
that no less than 50 percent of the grant funds are disbursed within 
18 months, 80 percent within two years and 100 percent within three 
years of the date of the grant award. The Recipient acknowledges 
that if it fails to meet any of these disbursement deadlines, the 
Government will not disburse additional grant funds unless (1) the 
funds are required to close loans approved prior to the deadline and 
which will be fully disbursed to the borrower(s) within 45 days, or 
(2) the funds are required to meet continuing disbursement 
obligations on loans closed prior to the deadline, or (3) the 
Government has approved in writing an extension of the deadline. In 
no event, will the time permitted for full disbursement of the grant 
funds extend beyond September 30, of the fifth year after the fiscal 
year of the grant award. Funds not disbursed in accordance with the 
foregoing will automatically be retained by the Federal Government.
    .08  Capital Utilization Standard: Subsequent to full 
disbursement of the grant funds, the Recipient agrees to manage its 
repayment and lending activities to maintain 75 percent or more of 
the RLF capital loaned out or committed at all times, unless a 
different standard has been agreed to in writing by the Government. 
The Recipient agrees to comply with Government sanctions if the 
applicable capital utilization standard is not met within a 
reasonable time period.
    .09  Civil Rights: The Recipient agrees that RLF funds will be 
made available on a nondiscriminatory basis and that no applicant 
will be denied a loan on the basis of race, color, national origin, 
religion, age, handicap, or sex. The Recipient agrees to market the 
RLF program to prospective minority and women borrowers. The 
Recipient shall include a provision in the RLF loan documents that 
prohibits borrowers from discriminating against employees or 
applicants for employment or providers of goods and services. The 
Recipient agrees to monitor borrower compliance with civil rights 
laws.
    .10  Environment: The Recipient shall develop and implement an 
environmental review process in accordance with the intent of the 
National Environmental Policy Act of 1969, as amended (P.L. 91-190), 
as implemented by the ``Regulations'' of the President's Council on 
Environmental Quality (40 CFR Parts 1500-1508).
    In addition, the Recipient shall indemnify and hold the 
Government harmless from and against all liabilities that the 
Government may incur as a result of providing an award to assist, 
directly or indirectly, in the preparation of site(s) or 
construction, renovation or repair of any facility or site(s), if 
applicable, to the extent that such liabilities are incurred because 
of ground water, surface, soil or other conditions caused by 
operations of the Recipient or any of its predecessors on the 
property;
    The Recipient shall adopt procedures to review the impacts of 
prospective loan proposals on the physical environment. The RLF Plan 
shall provide for disapproval of any loan project which would 
adversely (without mitigation) impact flood plains, wetlands, 
significant historic or archeological properties, drinking water 
resources, or nonrenewable natural resources. In administering the 
RLF, the Recipient shall adopt procedures to comply with applicable 
laws and statutes including, but not limited to, the following:

[[Page 5436]]

    a. The Clean Air Act, as amended (42 U.S.C. 7401 et seq.);
    b. The Federal Water Pollution Control Act, as amended (33 
U.S.C. 1251, et seq.);
    c. The Coastal Zone Management Act of 1972, P.L. 92-583, as 
amended (16 U.S.C. 1451, et seq.);
    d. Executive Order 11988, Floodplain Management (May 24, 1977), 
and regulations and guidelines issued thereunder by the Economic 
Development Administration;
    e. Executive Order 11990, Protection of Wetlands (May 24, 1977);
    f. The Endangered Species Act of 1973 P.L. 93-205, as amended 
(16 U.S.C.1531, et seq.);
    g. The Safe Drinking Water Act, P.L. 93-523, as amended (42 
U.S.C. 300f-300j-9);
    h. The Wild and Scenic Rivers Act, as amended (16 U.S.C. 1271, 
et seq.);
    I. The Resource Conservation and Recovery Act of 1976, P.L. 94-
580, as amended (42 U.S.C. 6901);
    j. The Comprehensive Environmental Response, Compensation and 
Liability Act of 1980 (CERCLA), P.L. 96-510, as amended, by 
Superfund Amendments and Reauthorization Act of 1986 (SARA) (42 
U.S.C. 9601, et seq.) [As deemed necessary, the Recipient shall 
require compliance with EDA policy and procedures regarding the 
identification of hazardous and toxic waste on real property 
affected by RLF activities in accordance with EDA Directive 17.01, 
promulgated to reduce liabilities for environmental cleanup under 
CERCLA and SARA. This will require a certification to demonstrate a 
``due diligence'' examination of project site(s) and for any 
environmental contamination that may affect real property for which 
EDA might be placed in the chain of title, or that is affected by 
EDA assisted construction activities.];
    k. The National Historic Preservation Act P.L. 89-665 (16 U.S.C. 
470, et seq.), (36 CFR Part 800);
    l. Coastal Barriers Resources Act P.L. 97-348 (16 U.S.C. 3501, 
et seq.); and
    m. All state and local environmental review requirements with 
all applicable Federal, state and local standards. The Recipient 
shall ensure that potential borrowers' environmental submittal is 
reviewed. Should a proposed RLF project require the preparation of 
an Environmental Assessment (EA) or an Environmental Impact 
Statement/Report (EIS/EIR) in response to Federal, state or local 
requirements, the Recipient shall be responsible for ensuring 
compliance with the requirement prior to providing any loan 
assistance under the RLF.
    .11  Earthquake Requirements: For use in new building 
construction projects: The Recipient is aware of and intends to 
comply with one of three model Codes outlined by the Committee on 
Seismic Safety in Construction (ICSSC): 1991 ICBO Uniform Building 
Code; 1992 Supplement to the BUCA National Building Code; or 1991 
Amendments to the SBCC Standard Building Code.
    .12  Flood Hazard Insurance: Where applicable, the Recipient 
shall require RLF borrowers to obtain flood hazard insurance 
pursuant to the Flood Disaster Protection Act of 1973, P.L. 93-234, 
as amended (42 U.S.C. 4002, et seq.);
    .13  Davis-Bacon: The Recipient shall require borrowers to 
comply with the Davis-Bacon Act, as amended [40 U.S.C. 276a-276a-5); 
42 U.S.C. 3222], when construction is financed in whole or in part 
by the RLF and when any related construction contract exceeds 
$2,000.
    .14  Contract Work Hours and Safety Standards Act & Anti-
Kickback Act: The Recipient shall require borrowers to comply, where 
applicable, with the Contract Work Hours and Safety Standards Act, 
as amended (40 U.S.C. 327-333) and with the Anti-Kickback Act, as 
amended (40 U.S.C. 276(c); 18 U.S.C. 874);
    .15  Access for the Handicapped: The Recipient shall ensure that 
if the RLF is used in whole or in part to finance a building or 
facility intended for use by the public or for the employment of 
physically handicapped, it must be accessible to the physically 
handicapped, pursuant to Public Law 90-480, as amended (42 U.S. C. 
4151, et seq.), and the regulations issued thereunder;
    .16  Conflict of Interest:
    a. The Recipient shall not make RLF funds available to a 
business entity if the owner of such entity or any owner of an 
interest in such entity is related by blood, marriage, law or 
business arrangement to the Recipient or an employee of the 
Recipient or any member of the Recipient's Board of Directors, or a 
member of any other Board (hereinafter referred to as ``other 
Board'') which advises, approves, recommends or otherwise 
participates in decisions concerning loans or the use of grant 
funds.
    b. No officer, employee, or member of the Recipient's Board of 
Directors, or other Board, or person related to the officer, 
employee, or member of the Board by blood, marriage, law, or 
business arrangement shall receive any benefits resulting from the 
use of loan or grant funds, unless the officer, employee, or Board 
member affected first discloses to the Recipient on the public 
record the proposed or potential benefit and receives the 
Recipient's written determination that the benefit involved is not 
so substantial as to affect the integrity of the Recipient's 
decision process and of the services of the officer, employee or 
board member.
    c. An officer, employee or board member of the Recipient shall 
not solicit or accept, directly or indirectly, any gift, gratuity, 
favor, entertainment or any other thing of monetary value, for 
himself or for another person, from any person or organization 
seeking to obtain a loan or any portion of the grant funds.
    d. Former board members and/or officers are ineligible to apply 
for or receive loan or grant funds for a period of one year from the 
date of termination of his/her services.

E. Financial Requirements

    .01  Budget: The line item budget for this award is found in the 
budget summary of the grant award. Funds budgeted under the RLF 
portion of a grant shall be used for loan projects and, if 
specified, for audit costs related to the RLF, but shall not be used 
for other administrative costs related to the RLF.
    .02  Method of Payment: Payments will be made by the Automated 
Clearing House Electronic Funds Transfer (ACH/EFT) System which 
transfers funds directly to a Recipient's bank account without 
regard to dollar amount. Initially, the Recipient must complete the 
Payment Information Form ACH Vendor Payment System (SF 3881) and 
return it to the EDA Regional Office. The award number must be 
included on the first line of the COMPANY INFORMATION section. The 
SF 3881 should first be forwarded to the Recipient's bank so that 
the bank can fill in the FINANCIAL INSTITUTION INFORMATION section 
before returning the SF 3881 to the EDA Regional Office.
    The completed SF 3881 shall be submitted together with the 
completed Request for Advance or Reimbursement (SF 270), to the EDA 
Regional Office. Subsequently, only a completed SF 270 is necessary 
to request a transfer of funds unless information on the original SF 
3881 has changed. Note: When completing SF 270 for an ACH/EFT 
transfer of funds, type ``ACH/EFT'' in Item No. 10 of the form to 
indicate a transfer of funds through the Automated Clearing House 
Electronic Funds Transfer System.
    .03  Request For Budget Change: Request for budget changes must 
be submitted to the Federal Program Officer for approval. However, a 
budget change involving a reduction in the line item for audit costs 
for an equal increase in the RLF capital requires only written 
notification to the Government to be effective.
    .04  Matching and Cost Sharing: a. Local Share: In affirming 
this award, the Recipient certifies that the non-Federal share of 
project costs is committed and is available as needed for the 
project, that the non-Federal share is from sources which can be 
used as match for the EDA project and that the non-Federal share is 
not encumbered or otherwise conditional.
    b. To the extent applicable to this award, cash contributions by 
the Recipient are expected to be paid out at the same general rate 
as the Federal share, but in no event shall the Federal share be 
paid out at a faster rate than the Recipient's contribution. Any 
exceptions must be approved in writing by the Grants Officer based 
on sufficient documentation demonstrating previously determined 
plans for or later commitment of cash contributions.
    c. The approved budget for this award is predicated normally 
upon a sharing of allowable costs. In the event allowable costs are 
less than the approved budget, the Federal share of this award will 
be limited to the Federal pro-rata share of the total allowable 
costs not to exceed the total Federal dollar amount reflected on the 
award document. However, consistent with Section C.11.f, the full 
amount of the nonfederal matching share will be expected to remain 
for use in the RLF unless otherwise provided for.
    .05  Program Income: Program Income includes repayments of RLF 
loan principal and RLF Income (defined in Section E.06 below). 
Program Income, with the exception of current RLF Income, may be 
used only for relending and must be used by the Recipient (1) prior 
to requesting a disbursement of EDA grant funds, or (2) concurrently 
with the proceeds of such a disbursement.

[[Page 5437]]

    .06  RLF Income: RLF Income is defined as interest earned on 
outstanding loan principal, interest earned on accounts holding RLF 
funds not needed for immediate lending, all loan fees and loan-
related charges received from RLF borrowers, and other income 
generated from RLF operations. The Recipient may use RLF Income only 
to capitalize the RLF and/or to cover eligible and reasonable costs 
necessary to administer the RLF, unless otherwise provided for in 
the Special Terms and Conditions of the grant.
    If RLF Income will be used to pay for RLF administrative 
expenses, the Recipient agrees (1) to use RLF Income only for those 
administrative expenses incurred during the same twelve-month period 
in which it is earned, and (2) to add any RLF Income remaining 
unexpended at the end of each period to the RLF capital base. RLF 
Income added to the RLF capital base may not be withdrawn, other 
than for lending purposes, without the prior written consent of the 
Government. The Recipient should refer to current EDA administrative 
instructions regarding specification of the twelve-month accounting 
period, the format for documenting income and expenses and such 
reporting requirements as may be applicable.
    .07  Indirect Costs: a. The Recipient may use indirect costs as 
an eligible administrative expense chargeable against RLF Income if 
the indirect costs reflect an established indirect cost rate 
negotiated and approved by a cognizant Federal agency prior to the 
year end in which the costs are charged, subject to the limitation 
in subparagraph b. below.
    b. The Department's acceptance of negotiated rates as provided 
in this section is subject to total indirect costs not to exceed 100 
percent of total direct costs charged against RLF Income. Where the 
indirect cost rate exceeds 100 percent, a 100 percent rate shall be 
used to compute the dollar amount of indirect costs.
    c. Excess indirect costs will not be used to offset unallowable 
or disallowed direct costs when the total allowable costs are 
determined.
    d. If the Recipient has not previously established an indirect 
cost rate with a Federal agency, the negotiation and approval of a 
rate is subject to the procedures in the applicable OMB costs 
principles and the following subparagraphs:
    1. The Office of Inspector General (OIG) is authorized to 
negotiate indirect cost rates on behalf of the Department for those 
organizations which the Department is cognizant. The OIG will 
negotiate only fixed rates. The Recipient is required to submit to 
the OIG (with a copy of its transmittal letter provided to the 
Grants Officer) the documentation (indirect cost proposal, cost 
allocation plan, etc.) necessary to establish such rates 90 days 
prior to the year end in which indirect costs will be charged. If 
the documentation is not submitted during this time period, charges 
of indirect costs against RLF Income for that year will not be 
allowable and cannot be carried forward, unless the OIG determines 
there is a finding of good and sufficient cause to excuse the 
Recipient's delay in submitting the documents.
    2. When a Federal agency other than the Department of Commerce 
has responsibility for establishing an indirect cost rate, the 
Recipient is required to submit to that Federal agency (with a copy 
of its transmittal letter provided to the Grants Officer and the 
Department of Commerce OIG) the documentation (indirect cost 
proposal, cost allocation plan, etc.) necessary to establish such 
rates within the Recipient's fiscal year during which indirect costs 
will be charged against RLF Income. If the documentation is not 
submitted during this time period, charges of indirect costs against 
RLF Income will be unallowable and cannot be carried forward, unless 
the OIG determines there is a finding of good and sufficient cause 
to excuse the Recipient's delay in submitting the documents.
    .08  Additional Funding and/or Extension of Award: The 
Government has no obligation to provide any additional funding in 
connection with this award. Any renewal of this award to increase 
funding or to extend the period of performance is at the sole 
discretion of the Government.
    .09  Debts: a. Any debts determined to be owed the Federal 
Government shall be paid promptly by the Recipient. A debt will be 
considered delinquent if it is not paid within 30 days of the due 
date. If the debt is not paid by the stated due date, the Recipient 
shall be subject to late payment charges imposed by the Federal 
Government. The late payment charges are as follows:
    1. Interest charge on the delinquent debt. As established by the 
Debt Collection Act of 1982, the minimum annual rate to be assessed 
is the Department of the Treasury's Current Value of Funds Rate. The 
interest charge shall accrue from the date of the letter which 
notifies the debtor of the debt and the interest requirements. This 
rate is published in the Federal Register by the Department of the 
Treasury. The assessed rate shall remain fixed for the duration of 
the indebtedness;
    2. A penalty charge on any portion of a debt that is delinquent 
for more than 90 days, although the charge will accrue and be 
assessed from the date the debt became delinquent; and
    3. An administrative charge to cover processing and handling of 
the amount due.
    b. State and local governments are not subject to subparagraphs 
.11 a.2 and 3 above.
    c. Once an account receivable has been established or a 
repayment agreement to pay the debt has been approved, failure to 
pay the debt by the due date on the billing may result in the 
suspension of payments to the Recipient under any current Department 
of Commerce awards and/or placement of the Recipient on a 
Reimbursement Only by Treasury Check method of payment until the 
debt is paid.
    d. If a debt is over 30 days old, any Department of Commerce 
awards to the Recipient may be suspended and the Recipient may be 
suspended or debarred from further Federal financial and non 
financial assistance and benefits, as provided in 15 CFR Part 26, 
until the debt has been paid in full or until a repayment agreement 
has been approved and payments are made in accordance with the 
agreement. Failure to pay the debt or establish a repayment 
agreement by the due date will also result in the referral of the 
debt for collection action.
    e. Payment of the debt may not come from other Federally 
sponsored programs. Verification that other Federal funds have not 
been used will be made during future program visits and audits.
    .10  Interest-Bearing Accounts: All RLF grant funds disbursed to 
reimburse Recipients for loan obligations already incurred must be 
held in interest bearing accounts until disbursed to the borrower. 
In the event that a loan disbursement is delayed beyond 30 days from 
the date of receipt of the Federal disbursement, the undisbursed 
funds must be returned to the Government for credit to the 
Recipient's account. Interest earned on prematurely withdrawn funds 
must be returned to the Government (with the exception of $100 per 
year which may be retained for administrative expenses by states, 
local governments and Indian tribes per 15 CFR Part 24, and $250 for 
those subject to OMB Circular A-110 or its implementing Department 
regulation) and shall be remitted promptly, but no less frequently 
than quarterly. All checks submitted should state ``EDA'' on their 
face and the award number followed by the word INTEREST in order to 
identify the check in question as remittance of interest income. 
Checks will be sent to the address below: Economic Development 
Administration, P.O. Box 100202, Atlanta, Georgia 30384.
    .11  Bonding and Payment of Funds: Prior to payment of funds 
hereunder, the Recipient shall provide evidence to the Government 
that it has fidelity bond coverage of persons authorized to handle 
funds under this award in an amount determined by the Government 
sufficient to protect the interests of the RLF and the Government.
    .12  Grant Violations and Ineligible Costs: The Recipient hereby 
agrees that the Government may, at its option, withhold disbursement 
of any award funds if the Government learns, or has knowledge, that 
the Recipient has failed to comply in any manner with any provision 
of the award. The Government will withhold funds until the violation 
or violations have been corrected to the Government's satisfaction. 
The Recipient further agrees to reimburse the Government for any 
ineligible costs which were paid from award funds. If a violation 
occurs or an ineligible expenditure is made subsequent to full 
disbursement of the grant, the Government, at its option, may elect 
to have the Recipient repay the RLF for the amount of any ineligible 
cost incurred. Failure to remedy an ineligible expenditure or grant 
violation will be grounds for suspension and/or termination.

F. Reporting Requirements

    Financial and Performance Reports must be submitted according to 
the schedule indicated below. Failure to submit required reports in 
a timely manner may result in (1) withholding payments under this 
award, (2) deferring the processing of new awards, amendments, or 
supplemental funding pending the receipt of the overdue report(s), 
(3) establishing an account receivable for the difference between 
the total Federal share of Outlays last reported and the amount

[[Page 5438]]

disbursed, and/or, (4) suspending or terminating the grant in whole, 
or in part.
    .01  Financial and Performance Reports: The Recipient shall 
submit financial and status reports to the EDA Regional Office 
semiannually unless otherwise instructed by the Government. The 
reports will be in a form prescribed by the Government and shall be 
submitted for a minimum of one year following full disbursement of 
the grant. Subsequently, the Recipient may be eligible for 
graduation to a shortened, annual reporting format at the discretion 
of the Federal Program Officer. Graduation to the annual report will 
be based on an assessment of the Recipient's track record and on 
current RLF operations. The Recipient must obtain written 
authorization from the Government to convert to the annual reporting 
option.
    Subsequently, the Recipient shall submit annual reports for the 
duration of the RLF unless the Federal Program Officer determines 
that more frequent and/or detailed reporting is necessary due to 
grant violations or other problems. Following remedial action, the 
Recipient may request the Federal Program Officer to convert back to 
annual reporting.
    a. Initial Semiannual Report: Except for recapitalization 
awards, the Recipient shall submit the initial semiannual report on 
April 30, covering loan activity for the period ending March 31, (if 
the grant was awarded from April 1, through September 30), and on 
October 31, covering loan activity for the period ending September 
30, (if the grant was awarded from October 1, through March 31).
    b. Subsequent Semiannual Reports: Following the initial report, 
other than for recapitalization awards, the Recipient shall submit 
subsequent semiannual reports on either April 30, or October 31, 
covering RLF activity for the periods ending March 31, and September 
30, respectively.
    c. Annual Reports: If authorized by the Government, the 
Recipient shall submit annual reports in place of semiannual reports 
as instructed by the Government.
    d. Performance Measures: The Recipient agrees to submit to EDA 
as part of the semiannual or annual reports referenced in F.01. 
(a.), (b.) and (c.) above, the information identified as the Core 
Performance Measures listed below. EDA will advise the Recipient in 
writing, not less than 90 days prior to the time for submission, in 
the event there are any modifications in the information required to 
be submitted.

A. Performance and Outcomes at the Completion of the Initial Round 
of Funding 1
---------------------------------------------------------------------------

    \1\ Full disbursement of the grant award.
---------------------------------------------------------------------------

     Compliance with implementation schedule for 
disbursement of RLF dollars.
     Jobs created and saved (actual) through RLF loans.
     Number of loans made by the RLF.
     Non-RLF dollars leveraged by the RLF loan.
    1. Private sector dollars.
    2. Other dollars leveraged.
     RLF Capital Base (total RLF funding + program income - 
loan writeoffs).

B. Project Outcomes after Full Disbursement of Grant

     Jobs created and saved (actual) through RLF loans.
     Number of loans made by the RLF.
     Non-RLF dollars leveraged by the RLF loan.
    1. Private sector dollars.
    2. Other dollars leveraged.
     RLF Capital Base (total RLF funding + program income - 
loan writeoffs).
    .02  Other Reports: The Recipient agrees to submit other 
reports, as may be required from time to time, to the Government.
    .03  Subcontracting Reports: Recipients of awards which involve 
both Federal financial assistance valued at $500,000 or more and 
procurement of supplies, equipment, construction or services shall 
be required to submit the SF-334, ``MBE/WBE Utilization Under 
Federal Grants, Cooperative Agreements, and Other Federal Financial 
Assistance.'' Reports shall be submitted on a quarterly basis for 
the period ending March 31, June 30, September 30, and December 31. 
Reports are due no later than 30 days following the end of the 
reporting period during which any procurement in excess of $10,000 
is executed under this award. The report should be submitted in 
duplicate to the EDA Regional Office.

G. Administrative Cost and Loan Records Retention

    .01   Administrative Cost Records: Records of administrative 
costs incurred for activities relating to the operation of the RLF 
shall be retained for three years from the actual submission date of 
the last Semiannual or Annual Report which covers the period during 
which such costs were claimed, or for five years from the date the 
costs were claimed, whichever is less. The retention period for 
records of equipment acquired in connection with the RLF shall be 
three years from the date of disposition, replacement, or transfer 
of the equipment.
    .02  Loan Records: Loan files and related documents and records 
shall be retained over the life of the loan and for a three year 
period from the date of final disposition of the loan. The date of 
final disposition of the loan is defined as the date of: (1) full 
payment of the principal, interest, fees, penalties, and other fees 
or costs associated with the loan; or (2) final settlement or write-
off of any unpaid amounts associated with the loan.
    .03   General: If any litigation, claim, negotiation, audit or 
other action involving the RLF or its assets has commenced before 
the expiration of the three-year (or five-year) period, all 
administrative and program records pertaining to such matters shall 
be retained until completion of the action and the resolution of all 
issues which arise from it, or until the end of the regular three-
year (or five-year) period, whichever is later.
    The record retention periods described in this section 
(Administrative Cost and Loan Records Retention) are minimum periods 
and such prescription is not intended to limit any other record 
retention requirement of law or agreement. Any records retained for 
a period longer than so prescribed shall be available for inspection 
the same as records retained as prescribed. In any event, EDA will 
not question administrative costs claimed more than three years old, 
unless fraud is an issue.

H. Audit

    The Inspector General of the Department of Commerce, or any of 
his or her duly authorized representatives, shall have access to any 
pertinent books, documents, papers and records of the Recipient, 
whether written, printed, recorded, produced or reproduced by any 
mechanical, magnetic or other process or medium, in order to make 
audits, inspections, excerpts, transcripts or other examinations as 
authorized by law.
    .01  Requirements: a. Federal Audit: Under the Inspector General 
Act of 1978, as amended, 5 USC App. I, section 1 et seq., an audit 
of this award may be conducted at any time. The Office of Inspector 
General usually will make the arrangements to audit this award, 
whether the audit is performed by Inspector General personnel, an 
independent accountant under contract with the Department, or any 
other Federal, State or local audit entity.
    b. Recipient Audit: 1. For awards to institutions of higher 
education, and other nonprofit organizations, the Recipient is 
subject to the audit requirements found at 15 CFR Part 29b; for 
awards to governmental entities, the Recipient is subject to the 
audit requirements found at 15 CFR Part 29a.
    2. Any audit report performed in compliance with the 
requirements of 15 CFR Part 29a or Part 29b shall be sent to the 
cognizant Federal agency and to the Federal Program Officer. A copy 
of the transmittal letter to the cognizant Federal agency should be 
provided to the Grants Officer. If the Department of Commerce is the 
cognizant Federal agency, the audit report should be sent to the 
following address: Federal Audit Clearinghouse, Bureau of the 
Census, 1201 East 10th Street, Jeffersonville, Indiana 47132.
    c. For awards where a special award condition stipulates that an 
audit be conducted of this particular award, the Recipient shall 
arrange for an audit of the award in accordance with Governmental 
auditing standards.
    .02  Establishment and Collection of Audit-Related Debts: a. An 
audit of this award may result in the disallowance of costs incurred 
by the Recipient and the establishment of a debt (account 
receivable) due the Government. For this reason, a Recipient should 
take seriously its responsibility to respond to all audit findings 
and recommendations with adequate explanations and supporting 
evidence whenever audit results are disputed and the Recipient has 
the opportunity to comment.
    b. A Recipient whose award is audited has the following 
opportunities to dispute the proposed disallowance of costs and the 
establishment of a debt:
    1. Unless the Inspector General determines otherwise, the 
Recipient will be given 30 days from the transmittal of the draft 
audit report in which to submit written comments and documentary 
evidence.
    2. The Recipient will be given 30 days from the transmittal of 
the final audit report in which to submit written comments and 
documentary evidence. There will be no

[[Page 5439]]

extension of this deadline. Based on all of the evidence available 
at the expiration of this time period, the Department will make a 
decision on the actions it will take as a result of the final audit 
report.
    3. The Government's decisions to disallow costs under the award 
and to establish a debt (as well as its decisions on non financial 
issues) will be sent to the Recipient in an Audit Resolution 
Determination letter. The Recipient will be given 30 days from the 
transmittal of this letter in which to pay any debt. This letter 
will contain information on the procedures to be followed by the 
Recipient to appeal the Department's decisions. An appeal does not 
preclude the Recipient's obligation to pay the debt nor does the 
appeal preclude the accrual of interest on the debt. The appeal must 
be submitted to the Grants Officer and the Office of Inspector 
General within 30 days after receipt of the Audit Resolution 
Determination letter. There will be no extension of this deadline. 
This appeal is the last opportunity for the Recipient to submit to 
the Department arguments and evidence that dispute the validity of 
the audit-related debt.
    4. After the opportunity to appeal has expired, or after the 
final decision on reconsideration has been made, the Department will 
not accept any submissions from the Recipient concerning its dispute 
of the Department's decisions on the settlement of costs under the 
award. If the debt is not paid, the Department will undertake other 
collection action but will not thereafter reconsider the legal 
validity of the debt.
    c. There are no other administrative appeals available in the 
Department of Commerce concerning this matter.

I. Miscellaneous Items

    .01  Programmatic Changes: All requests by the Recipient for 
programmatic changes must be submitted to the Government which will 
notify the Recipient in writing of the determination.
    .02  Name Check Review:
    a. A name check review shall be performed by the Office of 
Inspector General on key individuals associated with non profit 
organizations. b. The Department reserves the right to take any of 
the actions described in subparagraph H.02 c. below if one of the 
following occurs as a result of the name check review:
    1. Any of the key individuals associated with non profit 
organizations who are not exempt from the name check review fails to 
submit the Form CD-346 and, if required, the Form FD-258;
    2. The Recipient, key individual, or any other person associated 
with this award made an incorrect statement or omitted a material 
fact on the Form CD-346 or Form FD-258; or
    3. Significant adverse findings result from the name check 
review that reflect on the integrity or responsibility of the 
Recipient and/or key individual.
    c. In the event of significant adverse findings from the name 
check review, the Government, at its discretion, may take one or 
more of the following actions:
    1. Terminate the award immediately for cause;
    2. Require the removal from association with the management of 
and/or implementation of the Project any person or persons and, if 
appropriate, require that the Grants Officer be afforded the right 
of final approval of any person or persons to replace any individual 
removed as a result of this condition; and/or
    3. Make appropriate provisions or revisions at the Government's 
discretion with respect to method of payment and/or financial 
reporting requirements.
    .03  Prohibition Against Assignment: Notwithstanding any other 
provision of this award, the Recipient shall not transfer, pledge, 
mortgage, or otherwise assign this award, or any interest therein, 
or any claim arising thereunder, to any party or parties, bank trust 
companies, or other financing or financial institutions.
    .04  Covenant Against Contingent Fees: Unless otherwise 
specified in the Special Award Conditions, the Recipient warrants 
that no person or selling agency has been employed or retained to 
solicit or secure this award upon an agreement or understanding for 
a commission, percentage, brokerage, or contingent fee, excepting 
bona fide employees, or bona fide established commercial, or selling 
agencies maintained by the Recipient for the purpose of securing 
business. For breach or violation of the warrant, the Government 
shall have the right to cancel this award without liability or, at 
its discretion, to deduct from the award sum, or otherwise recover, 
the full amount of such commission, percentage, brokerage, or 
contingent fee.
    .05  Officials Not To Benefit: No member of or delegate to 
Congress or resident Federal Commissioner shall be admitted to any 
share or part of this award or to any benefit that may arise 
therefrom; but this provision shall not be construed to extend to 
this award if made to a corporation, education, or nonprofit 
institution for its general benefit.
    .06  Sub-Award and/or Contract to Other Federal Agencies: a. The 
Recipient, subrecipient, contractor and/or subcontractor shall not 
sub-grant or subcontract the Project in whole or in any part to any 
agency of the Department of Commerce.
    b. The Recipient, subrecipient, contractor and/or subcontractor, 
shall not sub-grant or subcontract any part of the Project to any 
other Federal department, agency or instrumentality, without the 
advance written approval of the Grants Officer.
    .07  Property Management: The Recipient may utilize RLF Income 
generated from loan activities to acquire property necessary to 
administer the RLF. Neither grant funds nor match funds shall be 
used to purchase property for RLF administration. RLF Income 
(defined in Section E.06) can only be used to acquire necessary RLF 
property to the extent of the benefits received.
    Eligible property for RLF activities will normally include (1) 
Expendable Personal Property (which includes all tangible personal 
property, including supplies, other than nonexpendable property), 
and (2) Nonexpendable Personal Property (which includes tangible 
personal property, including equipment).
    Title to Expendable and Nonexpendable Personal Property acquired 
in whole or in part with RLF Income for use in the RLF shall vest 
with the Recipient. The Recipient shall not encumber its title or 
other interests in RLF property without prior written approval from 
the Government. The Recipient shall use and manage nonexpendable 
personal property as long as needed and shall maintain nonexpendable 
personal property records, control systems and physical inventories.
    a. Disposition of Personal Property: In the ordinary course of 
business, the Recipient may dispose of personal property for 
upgrading purposes or when no longer needed for the project 
activity. The RLFs share of the proceeds from any disposition shall 
be treated as a contribution to RLF Income and may be returned to 
the RLF for lending or used for RLF administrative expenses.
    b. Disposition of Expendable and Nonexpendable Property Under 
RLF Termination: If the RLF is terminated, the Recipient shall 
submit a request for disposition instructions to the Federal Program 
Officer who shall provide the Recipient with disposition 
instructions. Disposition may include one of the following:
    1. If the total aggregate fair market value of unused personal 
property at the termination of the RLF is $1,000 or less for awards 
subject to OMB Circular A-110 or any Department rule superseding 
such Circular, or $5,000 or less for awards subject to 15 CFR Part 
24 and is not needed for any other Federally-sponsored project or 
program, the Recipient may retain or sell the expendable personal 
property without compensating the Government.
    2. If the total aggregate fair market value of personal property 
at the termination of the award exceeds $1,000 for awards subject to 
OMB Circular A-110 or any Department rule superseding such Circular, 
or $5,000 for awards subject to 15 CFR Part 24 and is not needed for 
any other Federally-sponsored project or program, the Recipient may 
retain, sell, or otherwise dispose of the property and shall 
compensate the Government for its share.
    3. The following apply only to the disposition of nonexpendable 
personal property:
    (a) The Recipient shall submit a completed form CD-281, ``Report 
of Government Property in Possession of Contractor'' along with the 
request for disposition instructions.
    (b) The Government's disposition instructions may additionally 
include the following: (1) The Recipient may be instructed to ship 
the nonexpendable personal property elsewhere. The Recipient may 
receive the nonfederal share of the market value plus shipping 
costs; or (2) for awards subject to the provisions of OMB Circular 
A-110 or Department regulation superseding such Circular, the 
Government reserves the right to transfer title to the Federal 
Government or to a third party named by the awarding agency if the 
nonexpendable personal property had a unit acquisition cost of 
$1,000 or more. For awards subject to 15 CFR Part 24, the Government 
reserves the right to transfer title to the Federal Government or to 
a third party

[[Page 5440]]

named by the awarding agency for any nonexpendable personal 
property. When title is transferred, the Recipient shall be 
compensated for its share.
    c. Disposition of Real Property Under RLF Termination: If the 
RLF is terminated and the Recipient holds title to real property 
through foreclosure or other legal actions, the Recipient shall 
request disposition instructions from the Regional Program Officer. 
Disposition may include one of the following:
    1. The Recipient shall retain title after it compensates the 
Federal Government for its share;
    2. The Recipient shall sell the property and pay the Federal 
Government for its share after the deduction of any actual and 
reasonable selling and fix-up expenses, if any, from the sales 
proceeds; or
    3. The Recipient shall transfer title to the property to the 
Federal Government provided that in such cases the Recipient shall 
be entitled to compensation computed by applying the Recipient's 
percentage of participation in the cost of the project to the 
current fair market value of the property.
    d. Debt Instruments Under RLF Termination: If the RLF is 
terminated, the Recipient shall request disposition instructions 
from the Regional Program Officer for disposition of debt 
instruments in the RLF portfolio.
    .08  Rights to Inventions Made by Nonprofit Organizations and 
Small Business Firms: The policy and procedures set forth in 
Department of Commerce regulations 37 CFR Part 401, Rights to 
Inventions made by Nonprofit Organizations and Small Business Firms 
under Government Grants, Contracts, and Cooperative Agreements, 
published in the Federal Register on March 18, 1987, shall apply to 
all grants and cooperative agreements made where the purpose is 
experimental, developmental, or research work.
    Pursuant to Executive Order 12899, the Department is required to 
notify the owner of any valid patent covering technology whenever 
the Department or its financial assistance Recipients, without 
making a patent search, knows ( or has demonstrable reasonable 
grounds to know) that technology covered by a valid United States 
patent has been or will be used without a license from the owner.
    To ensure proper notification, if the Recipient uses or has used 
patented technology under this award without a license or permission 
from the owner, the Recipient must notify the Department Patent 
Counsel at the following address, with a copy to the Grants Officer: 
U.S. Department of Commerce, Office of Chief Counsel for Technology, 
Patent Counsel, 14th Street and Constitution Avenue, NW, Washington, 
D.C. 20230.
    The notification shall include the following information:
    a. The award number.
    b. The name of the Department awarding agency.
    c. A copy of the patent.
    d. A description of how the patented technology was used.
    e. The name of the Recipient contact, including an address and 
telephone number.
    .09  Executive Order 12432, Minority Business Enterprise: In 
support of Executive Order 12432, signed by the President on July 
14, 1983, the Department of Commerce encourages all Recipients to 
utilize minority firms and enterprises in contracts under grants and 
cooperative agreements. The Office of Program Development, Minority 
Business Development Agency, will assist Recipients in matching 
qualified minority enterprises with contract opportunities. For 
further information contact: U.S. Department of Commerce, Minority 
Business Development Agency, Office of Program Development, Herbert 
C. Hoover Building, 14th Street and Constitution Avenue, NW, 
Washington, D.C. 20230.
    .10  Internal Revenue Service (IRS) Information: a. A Recipient 
classified for tax purposes as an individual, partnership, 
proprietorship, or medical corporation is required to submit a 
taxpayer identification number (TIN) (either social security number 
or employer identification number as applicable) on Form W-9, 
``Payer's Request for Taxpayer Identification Number.''
    Tax-exempt organizations and corporations (with the exception of 
medical corporations) are excluded from this requirement. The 
Recipient should submit the form to the Grants Officer within 60 
days of the effective date of award.
    The Department provides the Recipient's TIN to the IRS on Form 
1099-G, ``Statement for Recipients of Certain Government Payments.'' 
Applicable Recipients who either fail to provide their taxpayer 
identification number or provide an incorrect number may not be 
eligible for funding or have funding suspended until the requirement 
is met.
    b. Privacy Act Statement--Mandatory Disclosure, Authority, 
Purpose, and Uses: Disclosure of your social security number or 
employer identification number is mandatory for Federal income tax 
reporting purposes under the authority of 26 U.S.C., Section 6011 
and 6109(d), and 26 CFR Part 301, Section 301.6109-1. This is to 
ensure the accuracy of income computation by the Internal Revenue 
Service. This information will be used to identify an individual who 
is compensated by funds of the Department of Commerce or paid 
interest under the Prompt Payment Act. A Recipient who either fails 
to provide the taxpayer identification number or provides an 
incorrect number may not be eligible for funding or have funding 
suspended until requirement is met. This information is being 
provided to the Internal Revenue Service on Form 1099.
    .11  Government wide Debarment, Suspension and Other 
Responsibility Matters (Nonprocurement): a. This award is subject to 
Executive Order 12549, Debarment and Suspension, and 15 CFR Part 26, 
``Government wide Debarment and Suspension (Nonprocurement).'' A 
person (as defined at 15 CFR Sec. 26.105(n)) who is debarred or 
suspended shall be excluded from Federal financial and nonfinancial 
assistance and benefits under Federal programs and activities except 
to the extent prohibited by law or authorized in writing by the 
Department.
    b. The Recipient shall provide immediate notification to the 
Grants Officer if at any time the Recipient learns that its 
certification, Form CD-511, ``Certifications Regarding Debarment, 
Suspension and Other Responsibility Matters; Drug-Free Workplace 
Requirements and Lobbying,'' was erroneous when submitted or has 
become erroneous by reason of changed circumstances. Subrecipients 
in lower tier transactions shall provide the same updated notice to 
the Recipient.
    c. Unless the Department authorizes in writing an exception in 
accordance with 15 CFR Secs. 26.215, 26.220, and/or 26.625, the 
Recipient of this award shall not knowingly do business under a 
covered transaction with a person who is debarred or suspended, or 
with a person who is ineligible for or voluntarily excluded from 
that covered transaction. The Recipient shall not renew or extend 
covered transactions (other than no-cost time extensions) with any 
person who is debarred, suspended, ineligible, or voluntarily 
excluded, except as provided in 15 CFR Part 26.215. Violation of 
this restriction may result in disallowance of costs, annulment or 
termination of award, issuance of a stop work order, debarment or 
suspension, or other remedies, as appropriate.
    d. The Recipient shall require each applicant/bidder for a lower 
tier covered transaction (except subcontracts for goods or services 
under the $100,000 small purchase threshold unless the subtier 
Recipient will have a critical influence on or substantive control 
over) at any tier under this award to file a certification, Form CD-
512, ``Certifications Regarding Debarment, Suspension, Ineligibility 
and Voluntary Exclusion--Lower Tier Covered Transactions and 
Lobbying,'' without modification, for it and its principals in any 
proposal/solicitation submitted in connection with the lower tier 
covered transaction. Certifications shall be retained by the 
Recipient.
    e. The Recipient shall include the following provisions 
regarding debarment and suspension in all subtier covered 
transactions:
    1. This lower tier covered transaction is subject to Executive 
Order 12549, ``Debarment and Suspension,'' and 15 CFR Part 26, 
``Government wide Debarment and Suspension (Nonprocurement).'' 
Unless authorized by the Department in writing, a person (as defined 
at 15 CFR Sec. 26.105(n)) who is debarred or suspended shall be 
excluded from Federal financial and nonfinancial assistance and 
benefits under Federal programs and activities except to the extent 
prohibited by law or authorized by the Department.
    2. Unless the Department authorizes in writing an exception in 
accordance with 15 CFR Secs. 26.215, 26.220, and/or 26.625, the 
Recipient of this lower tier covered transaction shall not knowingly 
do business under a covered transaction with a person who is 
debarred or suspended, or with a person who is ineligible for or 
voluntarily excluded from that covered transaction. The Recipient of 
this sub-award shall not renew or extend covered transactions (other 
than no-cost time extensions) with any person who is debarred, 
suspended, ineligible, or voluntarily excluded, except as provided 
in 15 CFR Sec. 26.215.

[[Page 5441]]

    f. The Recipient shall include the following provision in each 
application and in each bid for a lower tier covered transaction at 
any tier under this award:
    Each applicant/bidder for a lower tier covered transaction 
(except subcontracts for goods or services under the $100,000 small 
purchase threshold unless the subtier Recipient will have a critical 
influence on or substantive control over the award) at any tier 
under this Federal award must file Form CD-512, ``Certifications 
Regarding Debarment, Suspension, Ineligibility and Voluntary 
Exclusion--Lower Tier Covered Transactions and Lobbying,'' without 
modification, at the time of application/bid.
    Applicants/bidders should review the instructions for 
certification included in the regulations before completing the 
certification. The prospective lower tier participant shall provide 
immediate written notice to the person to whom this proposal is 
submitted if at any time the prospective lower tier participant 
learns that its certification was erroneous when submitted or has 
become erroneous by reason of changed circumstances. Certifications 
shall be retained by the Recipient.
    .12  Restrictions on Lobbying (applicable to awards exceeding 
$100,000 in Federal funding): a. This award is subject to Section 
319 of Public Law 101-121, which added Section 1352, regarding 
lobbying restrictions, to Chapter 13 of Title 31 of the United 
States Code as implemented by 15 CFR Part 28. The Recipient of this 
award and subrecipients are generally prohibited from using Federal 
funds for lobbying the Executive or Legislative Branches of the 
Federal Government in connection with this award.
    b. The Recipient shall require each person who requests or 
receives from the Recipient a sub-grant, contract, or subcontract 
exceeding $100,000 of Federal funds at any tier under this award, to 
file Form CD-512, ``Certifications Regarding Debarment, Suspension, 
Ineligibility and Voluntary Exclusion--Lower Tier Covered 
Transactions and Lobbying,'' without modification, and, if 
applicable, SF-LLL, ``Disclosure of Lobbying Activities,'' form 
regarding the use of any nonfederal funds for lobbying. 
Certifications shall be retained by the next higher tier. All 
disclosure forms, however, shall be forwarded from tier to tier 
until received by the Recipient, who shall forward all disclosure 
forms to the Grants Officer.
    c. The Recipient shall include the following provision in all 
contracts, subcontracts, or sub-grants:
    This contract, subcontract, or sub-grant is subject to Section 
319 of Public Law 101-121, which added Section 1352, regarding 
lobbying restrictions, to Chapter 13 of Title 31 of the United 
States Code as implemented by 15 CFR Part 28. Each bidder/applicant/
recipient of this contract, subcontract, or sub-grant and 
subrecipients are generally prohibited from using Federal funds for 
lobbying the Executive or Legislative Branches of the Federal 
Government in connection with this award.
    d. The Recipient shall include the following contract clauses 
regarding lobbying in each application for a sub-grant and in each 
bid for a contract or subcontract exceeding $100,000 of Federal 
funds at any tier under the Federal award:
    Each applicant/recipient of a subgrant and each bidder/
applicant/recipient of a contract or subcontract exceeding $100,000 
of Federal funds at any tier under the Federal award must file Form 
CD-512, ``Certifications Regarding Debarment, Suspension, 
Ineligibility and Voluntary Exclusion--Lower Tier Covered 
Transactions and Lobbying,'' and Standard Form-LLL, ``Disclosure of 
Lobbying Activities,'' regarding the use of any nonfederal funds for 
lobbying. Certifications shall be retained by the next higher tier. 
All disclosure forms, however, shall be forwarded from tier to tier 
until received by the Recipient of the Federal award, who shall 
forward all disclosure forms to the Grants Officer.
    Each subgrantee, contractor, or subcontractor that is subject to 
the Certification and Disclosure provision of this Contract Clause 
is required to file a disclosure form within 15 days of the end of 
each calendar quarter in which there occurs any event that requires 
disclosure or that materially affects the accuracy of the 
information contained in any disclosure form previously filed by 
such person. Disclosure forms shall be forwarded from tier to tier 
until received by the Recipient of the Federal award (grant), who 
shall forward all disclosure forms to the Grants Officer.

Appendix C to Part 308--Section 209 Economic Adjustment Program 
Revolving Loan Fund Grants; Administrative Manual

OMB Approval No. 0610-0095
Approval expires 07/31/99

Burden Statement for Revolving Loan Fund Administrative Manual:

    Notwithstanding any other provision of the law, no person is 
required to respond to, nor shall any person be subject to a penalty 
for failure to comply with, a collection of information subject to 
the requirements of the Paperwork Reduction Act, unless that 
collection of information displays a currently valid OMB Control 
Number.
    The information is required to obtain or retain benefits from 
the Economic Development Administration pursuant to Economic 
Development Administration Reform Act, Public Law 105-393. No 
confidentiality for the information submitted is promised or 
provided except that which is exempt under 5 U.S.C. 552(b)(4) as 
confidential business information.
    The public reporting burden for this collection is estimated to 
average 12 hours per response including the time for reviewing 
instructions, searching existing data sources, gathering and 
maintaining the data needed, and completing and reviewing the 
collection of information. Send comments regarding this burden 
estimate or any other aspect of this collection of information, 
including suggestions for reducing this burden to: Economic 
Development Administration, Herbert C. Hoover Building, Washington, 
DC, 20230, and to the Office of Information and Regulatory Affairs, 
Office of Management and Budget, Washington, DC 20503.

Table of Contents

I. Purpose
II. Authority
    A. Grant Recipients as Trustees
    B. Grantor Authority to Change Policies
    C. Precedence of Grant Documents and Published Regulations
III. Grantee Responsibilities
    A. Prudent Lending Practices
    B. Protection of RLF Assets
    C. Federal Requirements Applicable to Grant Recipients
    D. Federal Requirements Applicable to RLF Borrowers
IV. Revolving Loan Fund Restrictions
    A. Lending Area Restrictions
    1. Eligible Lending Area
    2. Modification of the Eligible Area
    3. Recapitalization Rule
    B. Borrower Restrictions
    1. Eligible Lending Area
    2. Relocation
    3. Credit Otherwise Available
    4. Public and Quasi-Public Borrowers
    5. Private Developers
    6. Other
    C. Financing Restrictions
    D. Interest Rates
    E. Private Leveraging
V. RLF Capital
    A. RLF Capitalization
    B. Nonfederal Matching Share
    C. Partial Termination and Deobligation
VI. RLF Administrative Costs
    A. General Requirements
    B. Auditing Costs
    C. Other Eligible RLF Administrative Costs
VII. RLF Income
    A. Definition
    B. Eligible Uses
    C. Administrative Requirements
    1. Accounting Records
    2. RLF Income and Expense Statement
    3. Reporting Requirements
    4. Ineligible Costs
VIII. Revolving Loan Fund Plan
    A. Purpose
    B. Format and Content
    C. EDA Approval
    D. Annual Plan Certification
    E. Plan Modifications
IX. Disbursement of Grant Funds
    A. Pre-Disbursement Requirements
    B. Disbursement Procedures
    C. Principal Repayments During Grant Disbursement Phase
    D. Loan Closing/Disbursement Schedule
    E. Time Schedule Extensions
X. Capital Utilization Standard
    A. Definition
    B. Deviation
    C. Sequestration of Excess Funds
    D. Persistent Noncompliance
XI. Monitoring
    A. Reports
    1. Grant Status Reports
    2. Financial and Performance Reports
    3. Annual Reports
    4. Special Reports
    B. Audits
    C. Site Visits
XII. Noncompliance With the Grant Terms
    A. Suspension
    B. Termination for Cause

[[Page 5442]]

    C. Partial Termination
XIII. Termination for Convenience
XIV. Recovery of EDA Interest in the RLF Assets
XV. Sale or Securitization of Loans
XVI. Appendix--Reference Material and Exhibits

I. Purpose

    This Manual describes the compliance, reporting, grant record 
keeping and other administrative requirements and procedures that 
apply to Revolving Loan Fund (RLF) grants funded by the Economic 
Development Administration (EDA) under Section 209 of the Public 
Works and Economic Development Act of 1965, as amended. These 
requirements apply to new RLFs and to the future actions of all RLFs 
funded prior to the Manual's effective date. The requirements apply 
to RLFs funded under the Sudden and Severe Economic Dislocation 
(SSED) and the Long-Term Economic Deterioration (LTED) components of 
Section 209. They also apply to the revolving phases of RLFs funded 
for the initial purpose of providing financing to one or more 
identified business firms.

II. Authority

    A. Grant Recipients as Trustees: Recipients of EDA grants to 
operate RLFs hold RLF funds in trust to serve the purpose of the 
Economic Adjustment program for which the grant award was made. The 
grant recipient's obligation to the Federal Government continues as 
long as the Federal interest in EDA RLF assets, in the form of cash, 
receivables, personal and real property, and notes or other 
financial instruments developed through the use of the funds, 
continues to exist. If EDA determines that a grant recipient is 
failing to meet this obligation, the Agency will assert its 
equitable reversionary interest in the RLF assets. However, EDA's 
nonassertion of its interest does not constitute a waiver thereof.
    B. Grantor Authority to Change Policies: EDA, as the Federal 
agency charged with implementing the program, is obligated to 
promulgate policies and procedures applicable to all RLF grant 
recipients to insure compliance with Federal requirements, to 
safeguard the public's interest in the grant assets, and to promote 
effective use of the funds in accomplishing the purpose for which 
they were granted.
    Pursuant to this obligation, grant terms and conditions require 
grant recipients to comply with changes in regulations and other 
requirements and policies that EDA may issue from time-to-time. Such 
changes apply to actions taken by all grant recipients, existing and 
prospective, after the effective date of the changes. Loans made by 
grant recipients prior to the effective date of the changes are not 
affected unless so required by law.
    As a matter of policy, EDA will subject proposed RLF changes to 
public review when practicable.
    EDA's policy is to administer RLF grants uniformly, but it is 
understood that there may be situations warranting a variance. To 
accommodate these situations and to encourage innovative and 
creative ways to address economic adjustment problems, requests for 
variances to the requirements of this Manual will be considered if 
they are consistent with the goals of the Section 209 program and 
with an RLF's strategy, make sound economic and financial sense, and 
do not conflict with applicable legal requirements.
    C. Precedence of Grant Documents and Published Regulations: The 
Grant Award, executed by EDA and the recipient, together with the 
Budget, Special Terms and Conditions and the Standard Terms and 
Conditions, as may be amended, and the current regulations, 
published at 13 CFR Part 308, constitute the requirements, 
hereinafter referred to as ``Terms and Conditions,'' applicable to 
an EDA RLF grant. This Manual is designed to clarify and 
administratively implement those requirements. In the event of 
conflict, the aforementioned documents take precedence over this 
Manual.

III. Grantee Responsibilities

    A. Prudent Lending Practices: RLF grant recipients are required 
to operate RLFs in accordance with lending practices generally 
accepted as prudent for public loan programs. Such practices cover 
loan processing, documentation, servicing and administrative 
procedures, as outlined in the current RLF Plan Guidelines.
    B. Protection of RLF Assets: RLF grant recipients are required 
(1) to obtain adequate and appropriate collateral from borrowers, 
and (2) to act diligently to protect the interests of the RLF, 
through collection, foreclosure, or other recovery actions on 
defaulted loans.
    C. Federal Requirements Applicable to Grant Recipients: Grant 
recipients are responsible for complying with the Federal laws and 
regulations, Executive Orders and Office of Management and Budget 
(OMB) Circulars which are referenced in the Terms and Conditions, as 
may be amended, for RLF grants. These include administrative and 
audit requirements, cost principles, and other laws, regulations and 
Executive Orders pertaining to requirements from civil rights to 
lobbying restrictions.
    D. Federal Requirements Applicable to RLF Borrowers: Grant 
recipients are responsible for ensuring that prospective borrowers 
are aware of, and comply with, the Federal statutory and regulatory 
requirements that apply to activities carried out with RLF loans. 
The most common of these requirements relate to environmental 
protection, civil rights, Davis-Bacon wage rates and handicap access 
on construction projects, and the prohibited use of RLF funds for 
businesses that relocate jobs from one commuting area to another.
    Grant recipients are responsible for developing an appropriate 
review process in accordance with the intent of the National 
Environmental Policy Act of 1969, (P.L. 91-190) as amended, as 
implemented by the ``Regulations'' of the President's Council on 
Environmental Quality. The process shall include disapproval of loan 
projects which would adversely (without mitigation) impact 
floodplains, wetlands, significant historic or archeological 
properties, drinking water resources, or nonrenewable natural 
resources. Grant recipients are also responsible for openly 
marketing the RLF to prospective minority and women borrowers, and 
monitoring borrower compliance with civil rights requirements that 
prohibit borrowers from discriminating against employees or 
applicants for employment, or providers of goods and services. These 
and the other Federal requirements described in the Terms and 
Conditions of each grant should be included, as applicable, in each 
RLF's standard loan agreement to ensure borrower compliance where 
necessary. Grant recipients are expected to act diligently to 
correct instances of noncompliance, including the recall of loans, 
if necessary.

IV. Revolving Loan Fund Restrictions

    The following restrictions apply generally to RLFs:

A. Lending Area Restrictions

    1. Eligible Lending Area: The economic activity and the benefits 
of RLF loans must be located within the eligible areas identified in 
the grant award.
    2. Modification of the Eligible Area: Areas within the 
operational jurisdiction of the grant recipient that were not 
identified in the grant award, but that meet or may subsequently 
meet the Agency's criteria for eligibility under Section 209, may 
qualify to be added to an RLF's eligible lending area. To ascertain 
qualification, a grant recipient must make a written request to EDA 
to determine whether a new area is eligible for assistance under 
existing grant terms. Area eligibility data are updated quarterly 
and eligibility lists are maintained by EDA's Regional Offices. 
Unless stipulated otherwise in the grant award, once an area's 
eligibility is approved by EDA, that area retains its eligibility 
indefinitely.
    3. Recapitalization Rule: If EDA funds are used to recapitalize 
an existing RLF, the new grant funds may be used only in areas 
eligible for assistance at the time the recapitalization grant is 
invited (and in areas that become eligible between the time of 
invitation and the grant award). Areas that were eligible under the 
previous EDA grant award but not under the new award may continue to 
receive RLF assistance under the previous grant award only. Areas 
which become eligible subsequent to the grant award require EDA 
approval as discussed above in Section IV.A.2.
    If a grant recipient has received EDA funds to recapitalize an 
existing RLF and the respective grants serve different eligible 
lending areas, the grant recipient is responsible for maintaining 
adequate accounting records to substantiate that each grant is being 
used in the appropriate eligible lending area.

B. Borrower Restrictions

    1. Eligible Lending Area: An RLF borrower must retain the 
activity financed in the eligible lending area for the term of the 
loan. The RLF's standard loan agreement should include a provision 
to call the loan if the activity financed is moved from the eligible 
lending area.
    2. Relocation: RLF financing may not be used by a borrower for 
any activity that serves to relocate jobs from one commuting area to 
another. This applies both to a

[[Page 5443]]

business which uses RLF financing to relocate jobs into an eligible 
area from a different commuting area, and to a business which 
relocates jobs, created as a result of RLF financing, to a different 
commuting area. An RLF's standard loan agreement should include a 
provision for calling the loan if it is determined that (a) the 
business used the RLF loan to relocate jobs from another commuting 
area, or (b) the activity financed was subsequently moved to a 
different commuting area to the detriment of local workers. The 
commuting area is that area defined by the distance people travel to 
work in the locality of the project receiving RLF financial 
assistance.
    3. Credit Otherwise Available: A borrower is not eligible for 
RLF financing if credit is otherwise available on terms and 
conditions which would permit completion and/or the successful 
operation or accomplishment of the project activities to be 
financed. The grant recipient is responsible for determining that 
each borrower meets this requirement and for documenting the basis 
for its determination in the loan write-up. A loan write-up must 
include a discussion of the particular features of the local capital 
market and/or of the individual borrower or project to be financed 
that result in the need for RLF financing. It should also briefly 
describe the key aspects of the business and the loan including a 
discussion of the prospective borrower's ability to repay.
    The grant recipient is also responsible for obtaining 
supplemental evidence, as appropriate, to support the need for RLF 
financing. This may include the following:
    a. A commitment letter from a participating bank stating the 
loan terms, the maximum amount to be extended by the bank, and the 
need for the RLF's participation; and/or
    b. Bank rejection letter(s), if obtainable, listing the proposed 
loan terms.
    Exception to Credit Test: RLF financing may also be used as an 
incentive, through favorable loan terms, to attract a new business 
or a business expansion into an eligible area. The business may be 
credit worthy but would otherwise not locate in the area without RLF 
financing as an incentive. To undertake this type of project, the 
grant recipient must sufficiently document the need for RLF 
assistance and should obtain certification from the company, stating 
that it would not locate the proposed project at the intended 
location without RLF assistance. Grant recipients are cautioned that 
failure to document adequately the need for an RLF loan may be 
grounds for declaring a loan ineligible and requiring the grant 
recipient to repay any outstanding loan balance to the RLF, or 
return the Federal share to EDA.
    4. Public and Quasi-Public Borrowers: A public or quasi-public 
organization is not eligible to receive RLF financial assistance 
unless (a) the activity financed directly benefits or will directly 
benefit identifiable business concerns, and (b) there is reasonable 
assurance that the activity financed will result in increased 
business activity in the near term.
    5. Private Developers: Private developers are not eligible for 
RLF assistance unless the activity financed is non-speculative, 
consistent with the strategic and lending objectives of the RLF, and 
directly benefits or will directly benefit identifiable business 
concerns.
    6. Other: A grant recipient shall not use its RLF to make a loan 
to itself or to a related organization.

C. Financing Restrictions

    1. Loans to a borrower for the purpose of investing in interest 
bearing accounts, certificates of deposit, or other investments not 
related to the objectives of the RLF are prohibited. To preclude 
ineligible uses of RLF funds, the purpose of each RLF loan should be 
clearly stated in the RLF loan agreement.
    2. For initial RLF grants, the total dollar amount of loans for 
working capital purposes may not exceed 50% of the total RLF capital 
prior to the full disbursement of grant funds, unless otherwise 
stipulated in the grant agreement. (``RLF capital'' consists of the 
funds which capitalized the RLF plus such earnings and fees 
generated by RLF activities as may be added to the RLF capital base 
to be used for lending.) For recapitalization grants and for initial 
grants after the grant funds are fully disbursed, the portfolio 
working capital percentage may, with EDA's prior written approval, 
exceed 50 percent. In reviewing requests to increase the 50 percent 
limit on working capital loans, EDA will consider, among other 
things, the grant recipient's experience with working capital loans 
and whether the request is consistent with the area's Economic 
Adjustment Strategy and the RLF Plan.
    3. RLF capital may not be used to:
    a. Acquire an equity position in a private business;
    b. Subsidize interest payments on an existing loan;
    c. Provide the equity contribution required of borrowers under 
other Federal loan programs;
    d. Enable an RLF borrower to acquire an interest in a business, 
either through the purchase of stock or through the acquisition of 
assets, unless the need for RLF financing is sufficiently justified, 
and documented in the loan write-up (referenced in IV.B.3 above). 
Acceptable justification could include acquiring a business to 
substantially save it from imminent foreclosure or acquiring it to 
expand it with increased investment. In any case, the resulting 
economic benefits should be demonstrably consistent with the 
strategic objectives of the RLF;
    e. Refinance existing debt unless:
    (1) There is sound economic justification and the grant 
recipient sufficiently documents in the loan write-up that the RLF 
is not replacing private capital solely for the purpose of reducing 
the risk of loss to an existing lender(s) or to lower the cost of 
financing to a borrower, or
    (2) An RLF uses RLF income sources and/or recycled RLF funds to 
purchase the rights of a prior lienholder during an in-process 
foreclosure action in order to preclude a significant loss on an RLF 
loan. This action may be undertaken only if there is a high 
probability of receiving compensation within a reasonable time 
period (18 months) from the sale of assets sufficient to cover an 
RLF's expenses plus a reasonable portion of the outstanding loan 
obligation.
    (Note: Since a grant recipient will be required to repay the 
amount of an ineligible loan, it is recommended that EDA be 
contacted for clarification or written confirmation if there is any 
question regarding either of the refinancing exceptions described 
above.)
    4. Prior to full disbursement of grant funds, the grant 
recipient may not use the RLF to guarantee loans made by other 
lenders. In the revolving phase, after the full disbursement of 
grant funds, the RLF may be used to guarantee loans of private 
lenders provided the Recipient has obtained EDA's prior written 
approval of its proposed loan guarantee activities. The plan for any 
loan guarantee activities should include the following information:
    a. The maximum guarantee percentage that will be offered;
    b. A certification from the RLF attorney that the guarantee 
agreement is acceptable by local standards. At minimum, the 
guarantee agreement must include the following: the maximum reserve 
requirement; the rights and duties of each party in regard to loan 
collections, servicing, delinquencies and defaults; foreclosures; 
bankruptcies; collateral disposition and the call provisions of the 
guarantee; and interest income and loan fees, if any, which will 
accrue to the RLF.

D. Interest Rates

    A grant recipient can make loans and loan guarantees to eligible 
borrowers at interest rates and under conditions determined by the 
Recipient to be most appropriate in achieving the goals of the RLF. 
However, the minimum interest rate an RLF can charge is four (4) 
percentage points below the current money center prime rate quoted 
in the Wall Street Journal or the maximum interest rate allowed 
under State law, whichever is lower, but in no event may the 
interest rate be less than four (4) percent. However, should the 
prime interest rate exceed fourteen (14) percent, the minimum RLF 
interest rate is not required to be raised above ten (10) percent if 
to do so would compromise the ability of the RLF to implement its 
financing strategy.

E. Private Leveraging

    Unless stipulated otherwise in the grant agreement, RLF loans 
must be used to leverage private investment of at least two dollars 
for every one dollar of RLF investment. This leveraging requirement 
applies to the portfolio as a whole rather than to individual loans 
and is effective for the life of the RLF. Private investment, to be 
classified as leveraged, must be made concurrently with an RLF loan 
as part of the same business development project and may include (1) 
capital invested by the borrower or others, (2) financing from 
private entities, and (3) 90 percent of the guaranteed portions of 
SBA 7(a) and SBA 504 debenture loans. Private investments do not 
include equity build-up in a borrower's assets or prior capital 
investments by the borrower unless made within nine months of the 
RLF loan and with the concurrence of the RLF Recipient. If a grant 
recipient can

[[Page 5444]]

demonstrate that the 2:1 leverage requirement is too restrictive for 
its lending area and that it impedes the purpose for which the grant 
was made, it may request EDA to waive or modify the grant agreement.

V. RLF Capital

A. RLF Capitalization

    The original sources of capital for EDA RLFs are normally EDA 
grant funds and a nonfederal cash matching share. The EDA grant 
funds and the nonfederal matching funds can be used only for the 
purpose of making loans under an RLF, unless otherwise provided for 
in the grant agreement and grant budget, e.g., budgeted audit costs. 
Costs associated with the preparation of the grant application are 
not eligible expenses and are not reimbursable from the funds 
invested as RLF capital.

B. Nonfederal Matching Share

    The grant agreement specifies the amount of nonfederal cash 
share required for an RLF grant. This is usually not less than 25% 
of the total RLF capital investment. The nonfederal share funds must 
be loaned either before or proportionately with EDA funds. Upon 
repayment, the nonfederal share funds are treated the same as EDA 
funds, repayments of principal must be placed in the RLF for 
relending and interest payments must be used either for relending or 
for eligible RLF administrative costs. The nonfederal matching share 
must be available when needed for lending and must be under the 
control of the grant recipient (or its designee) for the duration of 
the RLF for use in accordance with the terms of the grant.

C. Partial Termination and Deobligation

    In the event that a portion of the EDA grant is terminated and 
deobligated (refer to Section XII. below) and is no longer available 
to a grant recipient due to its failure to meet the terms of a 
grant, the nonfederal matching share shall remain in the RLF unless 
otherwise specified in the grant agreement or agreed to in writing 
by EDA.

VI. RLF Administrative Costs

A. General Requirements

    Grant recipients are responsible for the administrative costs 
associated with operating an RLF. Evidence of sufficient and 
reliable sources of funds to cover RLF administrative expenses is a 
key factor in project selection. As grant funds are disbursed for 
loans and an RLF begins to generate income from lending activities, 
such income (referred to as ``RLF Income'' and defined in Section 
VII.A.), as distinguished from principal repayments, may be used to 
cover eligible, reasonable, and documented administrative costs 
necessary to operate the RLF. When RLF Income is used for RLF 
administrative expenses, rather than added to the RLF capital base 
for lending, grant recipients are required to complete an RLF Income 
and Expense Statement as discussed in Section VII.C.2.

B. Auditing Costs

    The grant budget accompanying the grant award lists the maximum 
amount of grant funds that may be used to defray the costs of audits 
required under the terms of the grant. In addition to funds budgeted 
in the grant award, audit costs may be reimbursed from RLF Income 
and from resources of the grant recipient. Audit costs are 
chargeable against the grant award if permitted in the grant budget 
and RLF Income to the extent that the costs charged are equitably 
distributed and reflect the benefits received. Grant funds budgeted 
for audit costs that are unused may be reallocated to the RLF 
capital base without EDA's permission. Additional information on 
grant audits is discussed in Section XI.B. and in EDA's Revolving 
Loan Funds Grants Audit Guidelines (RLF Audit Guidelines).

C. Other Eligible RLF Administrative Costs

    Costs eligible for reimbursement from RLF Income must be 
consistent with the cost principles outlined in the appropriate OMB 
cost principle circular (OMB A-21, A-87 or A-122) and with the RLF 
Audit Guidelines. The requirements for using RLF Income are 
discussed in detail in Section VII.
    Some of the common administrative costs that may be charged 
against RLF Income include RLF staff salaries and fringe benefits, 
RLF-related training, travel, marketing, general administration, 
business counseling and management assistance, portfolio management, 
materials and supplies, equipment rental and acquisitions prorated 
based on RLF usage, building rent, outside professional services, 
insurance, loan closing costs and the costs to protect collateral 
subsequent to foreclosure.
    RLF administrative costs may be separated into direct and 
indirect costs. Direct costs are those that can be identified 
specifically with a particular cost objective, such as an RLF 
program; indirect costs are those that are incurred for a common or 
joint purpose benefitting more than one program or cost objective 
and are not readily assignable. All costs charged against RLF Income 
must be supported by formal accounting records and source 
documentation. All indirect and joint costs charged against RLF 
Income must additionally be supported by a cost allocation plan 
approved by the cognizant Federal agency.

VII. RLF Income

A. Definition

    RLF Income includes interest earned on outstanding loan 
principal, interest earned on accounts holding RLF funds not needed 
for immediate lending, all loan fees and loan-related charges 
received from RLF borrowers, and other income generated from RLF 
operations. (Note that the definition of RLF Income does not include 
repayments of loan principal because RLF principal repayments 
represent the return of capital and not ``income''. Consequently, 
RLF Income is a narrower definition of income than ``program 
income'' in the Uniform Administrative Requirements For Grants And 
Cooperative Agreements To State And Local Governments in 15 CFR Part 
24.25, which includes principal repayments).
    In accounting for RLF Income, any proceeds from the sale, 
collection, or liquidation of a defaulted loan, up to the amount of 
the unpaid principal, will be treated as repayments of RLF principal 
and placed in the RLF for lending purposes only. Any proceeds in 
excess of the unpaid principal will be treated as RLF Income.

B. Eligible Uses

    While RLF Income can be used to pay for eligible and reasonable 
administrative costs as discussed above, RLF grant recipients are 
expected to add a reasonable percentage of RLF Income to the RLF 
capital base to compensate not only for loan losses and the effects 
of inflation over time, but also to maintain a minimum funding level 
for the future borrowing needs within the eligible lending area. To 
determine the appropriate amount of RLF Income to return to an RLF, 
RLF operators should consider the costs necessary to operate an RLF 
program, the availability of other monetary resources, the portfolio 
risk level and projected capital erosions from loan losses and 
inflation, the community's (or area's) commitment to the RLF, and 
the anticipated demand for RLF loans.
    (Note: RLF Income that is not used for administrative purposes 
during the twelve month period in which it is earned must be added 
to the RLF capital base for lending purposes by the end of the 
twelve month period (see Section VII.C.2. below for selection of the 
twelve month period). Only RLF Income earned during a current period 
may be used for current administrative expenses. RLF Income may not 
be withdrawn from an RLF in a subsequent period for any uses, other 
than lending, without the written consent of EDA.)

C. Administrative Requirements

    Grant recipients electing to use RLF Income to cover all or part 
of a RLF's administrative costs must comply with the following 
provisions:
    1. Accounting Records: Grant recipients must (a) maintain 
adequate accounting records and source documentation to substantiate 
the amount and percent of RLF Income expended for eligible RLF 
administrative costs, and (b) comply with applicable OMB cost 
principles and with the RLF Audit Guidelines when charging costs 
against RLF Income. Records must be retained by grant recipients for 
at least three years. If fraud is an issue, records must be retained 
until the issue is resolved.
    2. RLF Income and Expense Statement: The Recipient must complete 
the RLF Income and Expense Statement (RLF Income Statement) located 
in Exhibit A, within 90 days of the twelve month period ending 
either September 30 or the Recipient's fiscal year end, whichever 
period is selected by the Recipient. The Recipient shall notify EDA 
of its selection in its first report to EDA. Once the period is 
selected, it may not be changed without prior written permission of 
EDA.
    In lieu of completing an RLF Income Statement, the grant 
recipient may substitute information contained in an independent 
audit report provided it is in substance and in detail comparable to 
that provided in the RLF Income Statement. Should an audit report be 
used, the grant recipient will have to provide additional 
information certifying certain employee information requested in the 
RLF Income Statement.

[[Page 5445]]

    3. Reporting Requirements: Grant recipients using fifty (50) 
percent or more or $100,000 or more of RLF Income for RLF 
administrative expenses during the selected twelve month period must 
submit the completed RLF Income Statement to the EDA Regional Office 
within 90 days of the period ending date. Grant recipients whose RLF 
Income usage is under 50 percent and less than $100,000 shall retain 
the RLF Income Statement for three years. The grant recipient shall 
make it available to EDA personnel upon request.
    4. Ineligible Costs: For any costs determined by EDA to have 
been an ineligible use of RLF Income, the grant recipient shall 
reimburse the RLF or EDA. EDA will notify the grant recipient of the 
time period allowed for, and the manner in which to make, 
reimbursement.

VIII. Revolving Loan Fund Plan

A. Purpose

    Grant recipients are required by the terms and conditions of the 
grant agreement to manage RLFs in accordance with an RLF Plan (Plan) 
generally approved prior to the grant award. The Plan serves two 
purposes. First, it summarizes how the RLF will be used to support 
implementation of the area's economic adjustment strategy, a 
statutory prerequisite to award of a Section 209 Implementation 
grant. Second, it documents the operating procedures established by 
the grant recipient to ensure consistent administration of the RLF 
in accordance with the Terms and Conditions of the grant and prudent 
public lending practices.

B. Format and Content

    The Plan has two distinct parts. Part I, ``The RLF Strategy,'' 
summarizes the area's economic adjustment strategy, including the 
business development objectives, and describes the RLF's financing 
strategy, policies and portfolio standards. Part II, ``RLF Operating 
Procedures,'' serves as the internal operating manual for the RLF. 
The grant recipient is required to address a number of topics 
specifically identified by EDA, but otherwise has considerable 
discretion in designing and documenting operating procedures 
appropriate to the relative scale and complexity of its financing 
function. The required format and content for the two parts of the 
Plan are described in EDA's RLF Plan Guidelines.

C. EDA Approval

    Unless specifically otherwise permitted by EDA, the Plan must be 
approved by EDA prior to the grant award.

D. Annual Plan Certification

    Grant recipients are required to certify annually with the 
submission of the program report for the period ending September 30 
(see Section XI.A), that the RLF loan board and the grant 
recipient's governing board have reviewed the RLF's performance for 
the preceding year relative to the area's adjustment strategy and 
the RLF Plan and have determined that:
    1. The RLF Plan is consistent with and supportive of the area's 
current economic adjustment strategy; and
    2. The RLF is being operated in accordance with the policies and 
procedures contained in the RLF Plan, and the loan portfolio meets 
the standards contained therein.
    With the exception of States, the certification should normally 
be in the form of a resolution passed by the grant recipient's 
governing board. Certification by State grantees should be by an 
authorized State official.

E. Plan Modifications

    Approval of modifications to Part I of the Plan may be requested 
at any time the grant recipient or EDA determines that the Plan is 
either outdated relative to the current adjustment needs and 
objectives of the area or specific lending policies and/or 
requirements are impeding effective use of the RLF as a strategic 
financing tool. Prerequisites for EDA's consideration of proposed 
modifications to Part I of the Plan include the following:
    1. When the modification request is based on a significant 
redirection of an area's economic adjustment strategy, it must be 
accompanied by a copy of the current strategy. The strategy 
submitted must:
    a. Have been prepared or reviewed and updated, as necessary and 
appropriate, within the last 12 months by the grant recipient or 
area organization responsible for its preparation and maintenance;
    b. Address, for the purposes of EDA, the same geographic/
jurisdictional area covered by the original strategy, unless the 
eligible area has been/is being expanded as provided for by the 
terms and conditions of the grant;
    c. Include the information specified in EDA's current guidelines 
for preparing and documenting an economic adjustment strategy, 
including evidence of the continuing need for the RLF; and
    d. Provide sufficient evidence that the proposed modifications 
are necessary and justified.
    2. When the proposed modification is designed to permit more 
effective use of RLF financing in support of its unchanged strategic 
objectives, the grant recipient must submit adequate written 
justification for the proposed change(s). Submission of a current 
adjustment strategy is not required.
    3. Certification that the proposed revisions are consistent with 
EDA policy and do not violate the terms and conditions of the grant.
    4. Certification that the purpose and scope of the RLF as a 
financing tool for supporting implementation of the area's economic 
adjustment strategy remain unchanged.
    5. Certification that prudent management of the RLF assets would 
not be compromised.
    Grant recipients funded prior to the effective date of this 
Manual are encouraged but not required, unless determined otherwise 
by EDA, to comply with the new RLF Plan format when modifying any 
part of their plan.
    Operational procedures, as documented in Part II of the Plan, so 
long as consistent with EDA requirements and the terms and 
conditions of the grant award, may be modified with the approval of 
the grant recipient's governing board. A copy of any revisions to 
Part II should be submitted for the EDA file within 30 days of 
approval. For grant recipients other than States, Plan modifications 
should be approved by resolution of the organization's governing 
board.

IX. Disbursement of Grant Funds

A. Pre-Disbursement Requirements

    1. The grant recipient is required to provide evidence that it 
has fidelity bond coverage for persons authorized to handle funds 
under the grant award in an amount sufficient to protect the 
interests of EDA and the RLF. Such insurance coverage must exist at 
all times during the life of the RLF.
    2. The grant recipient is required to provide a certification by 
an independent accountant familiar with the grant recipient's 
accounting system that its accounting system is adequate to 
identify, safeguard, and account for all RLF funds, including RLF 
Income.
    3. The grant recipient is required to certify that the standard 
RLF loan documents necessary for lending are in place and that these 
documents have been reviewed by legal counsel for adequacy and 
compliance with the terms and conditions of the grant. The standard 
loan documents must include at a minimum, the following: Loan 
Application, Loan Agreement, Promissory Note, Security Agreement(s), 
Deed of Trust or Mortgage, and Agreement of Prior Lien Holder.

B. Disbursement Procedures

    The grant recipient is required to draw grant funds 
electronically by the Automated Clearing House Electronic Funds 
Transfer (ACH/EFT) system. A grant recipient may request 
disbursements only at the time and in the amount immediately needed 
to close a loan or disburse funds to a borrower. RLF grant funds are 
considered to be made available to grant recipients on a 
reimbursement basis (as an obligation is incurred by the grant 
recipient at the time of loan approval and loan announcement). Grant 
funds should be requested only for immediate use, i.e., when the 
intent is to disburse the funds within 14 days of receipt. If grant 
funds are requested and the loan disbursement is subsequently 
delayed, a grant recipient may hold the funds up to 30 days from the 
date of receipt, but should return the funds if disbursement of the 
grant funds is unlikely within the 30 day period. Returned funds 
will be normally available to the grant recipient for future 
drawdown. When returning prematurely drawn funds, checks should 
identify on their face the name of the grantor agency--``EDA'' 
followed by the grant award number and the words ``Premature Draw.'' 
The grant recipient may also indicate, if a cover letter is sent, 
that a credit in the amount of the check is to be made to the grant 
award number for future drawdown. Checks should be submitted to: 
Economic Development Administration, P.O. Box 100202, Atlanta, 
Georgia 30384.
    As stated above, the nonfederal matching share must be disbursed 
either proportionately with the EDA grant funds or at a faster rate. 
Interest earned on prematurely drawn grant funds must be returned to 
EDA at least quarterly for deposit in the U.S. Treasury. (Note: 
Grantees may deduct and retain a portion of such earned

[[Page 5446]]

interest for administrative expenses up to the maximum amounts 
allowed under either 15 CFR Part 24 or OMB Circular A-110 or its 
implementing Department regulation, as applicable). Returned 
interest payments should indicate on the face of the check ``EDA'' 
followed by grant award number and the word ``Interest''. Checks for 
interest should be submitted to the same Atlanta, Georgia address as 
above.
    To request a grant disbursement by the ACH/EFT method, a grant 
recipient must submit a completed Request For Advance or 
Reimbursement, Standard Form 270 to the EDA Regional Office using 
the attached Special Instructions (Exhibit B) which are specific to 
RLF grants. Grant recipients may generally expect to have funds 
available for subsequent disbursement from five to ten working days 
after the EDA Regional Office receives the SF 270.

C. Principal Repayments During Grant Disbursement Phase

    Principal repayments from active RLF loans that are received by 
the grant recipient must be placed immediately in the loan fund to 
be available for relending only. As each new loan is made, the grant 
recipient may request a disbursement of grant funds only for the 
difference, if any, between the amount of funds available for 
relending (from repayments of loan principal and RLF Income) and the 
amount of the new loan, less an amount for local matching funds as 
may be required to be disbursed concurrent with the grant (refer to 
Section V.B. for matching fund requirements). However, RLF Income 
received during the current period (as defined in Section VII.C.2.) 
may be held for the duration of the period to cover eligible 
administrative expenses, and need not be disbursed in order to draw 
additional grant funds.

D. Loan Closing/Disbursement Schedule

    RLF loan activity must be sufficient to draw down grant funds in 
accordance with the prescribed time schedule for loan closings and 
disbursements to eligible RLF borrowers. Unless otherwise stated in 
the grant agreement, the time schedule requires that the initial 
round of lending (i.e., the grant disbursement phase) be completed 
within three (3) years of the grant award with no less than 50 
percent of the grant funds, and of the nonfederal matching share, 
disbursed within eighteen months and 80 percent within two years.
    Should the grant recipient substantially fail to meet any of the 
prescribed deadlines, additional grant funds will not be disbursed 
unless (1) funds are needed to close and disburse funds on loans 
approved prior to the deadline and will be disbursed within 45 days 
of the deadline, (2) funds are needed to meet continuing 
disbursement obligations on loans closed prior to the deadline, or 
(3) EDA has approved a time schedule extension.
    (Note: An approved loan is defined as a loan that has been 
approved by the RLF loan board but has not been closed. A loan is 
closed when the loan agreement and note have been signed by the 
borrower. The full amount of a loan may be disbursed to the borrower 
at the time of loan closing, or may be disbursed in installments and 
under conditions specified in the loan agreement.)

E. Time Schedule Extensions

    Grant recipients are responsible for contacting EDA as soon as 
conditions become known that may materially affect their ability to 
meet any of the required disbursement deadlines. Except under the 
conditions described, a grant recipient is required to submit a 
written request for continued use of grant funds beyond the missed 
deadline. Extension requests must provide good reason for the delay 
and demonstrate that (1) the delay was unforeseen or generally 
beyond the control of the Recipient, (2) the need for the RLF still 
exists, (3) the current or planned use, and anticipated benefits of 
the RLF remain consistent with the current adjustment strategy and 
RLF Plan, and (4) achievement of a new proposed time schedule is 
reasonably possible and why no further delays are foreseen. EDA is 
under no obligation to grant a time extension, and in the event an 
extension is denied, EDA will deobligate (terminate) all or part of 
the unused portion of grant.
    By law, grant funds remain available to EDA for disbursement 
only until September 30 of the fifth year after the fiscal year of 
the grant award. No time extensions will be granted beyond that time 
and any undisbursed funds remaining will be deobligated.

X. Capital Utilization Standard

A. Definition

    During the revolving phase, grant recipients are expected to 
manage their repayment and lending schedules to maximize the amount 
of capital loaned out or committed at all times. Under normal 
circumstances, at least 75 percent of an RLF's capital should be in 
use. [RLF Income earned during the current period (as defined in 
Section VII.C.2) is not included as RLF capital.] EDA may recognize 
exceptions for RLFs whose Plan calls for making loans that are large 
relative to the size of the capital base. RLFs with capital bases in 
excess of $4 million are expected to maintain a proportionately 
higher percentage of their funds loaned out. The percentage will be 
determined by EDA on a case-by-case basis.
    When the percentage of capital loaned out falls below the 
applicable standard, the dollar amount of the funds equivalent to 
the difference between the actual percentage of capital loaned out 
and the standard is referred to as ``excess funds.''

B. Deviation

    In the event that there are excess funds at the time a 
semiannual report is due, the grant recipient must submit an 
explanation of the situation with the report, and if there is a 
significant deviation from the standard, as determined by EDA, the 
grant recipient must describe the remedial action to be taken.

C. Sequestration of Excess Funds

    At any time subsequent to a second consecutive report showing 
that the applicable standard has not been met, EDA may require the 
grant recipient to deposit excess funds in an interest bearing 
account; that portion of the interest earned on that account, 
attributable to the EDA grant, will be remitted to the U.S. 
Treasury. EDA approval will be required to withdraw sequestered 
funds.

D. Persistent Noncompliance

    EDA will normally give the grant recipient a reasonable period 
of time to loan the excess funds and achieve the standard. However, 
when a grant recipient fails to achieve the applicable standard 
after a reasonable period of time, as determined by EDA, the grant 
will be subject to sanctions for suspension and/or termination as 
described in Section XII of this Manual.

XI. Monitoring

    EDA monitors grant recipients for compliance with the Terms and 
Conditions of the grant, for performance against national norms and 
individual portfolio standards, and for the contribution of the RLF 
to the area's economic adjustment process. Monitoring and 
performance assessments are based on periodic reports submitted by 
the grant recipients, organizational and Federal audits, and site 
visits by EDA staff.

A. Reports

    1. Grant Status Reports: Grant recipients are required to submit 
standard Federal grant status reports to EDA during the grant 
disbursement phase as specified in the Terms and Conditions of the 
grant agreement. These include: (a) Standard Form 270, Request for 
Advance or Reimbursement, which is submitted each time a grantee 
needs to draw Federal funds (see Section IX.B. and Exhibit B); and 
(b) Standard Form 272, Federal Cash Transactions Report (Exhibit C), 
which is due within 15 days following the end of each calendar 
quarter and shows the status of grant funds. Failure to submit a 
Standard Form 272, when due, will prevent a grant recipient from 
obtaining funds until the form is submitted.
    2. Financial and Performance Reports: All grant recipients are 
required to complete and submit Financial and Performance Reports 
(Exhibit D) semiannually unless otherwise notified by EDA.
    a. Initial Report: For grants, other than recapitalizations, 
awarded between October 1, and March 31, the initial report due date 
is the following October 31. For grants awarded between April 1 and 
September 30, the initial report due date is the following April 30.
    b. Subsequent Reports: After the initial report, the semiannual 
report is due on October 31, for the period of loan activity ending 
September 30, and April 30, for the period ending March 31.
    Generally, RLF grant recipients will be required to submit 
reports to the EDA Regional Office every six months for a minimum of 
one year after disbursement of all grant funds, after which a grant 
recipient may be eligible for ``graduation'' to a shorter, annual 
reporting format (Exhibit E). Grant recipients must request this in 
writing. Recipients of recapitalization grants shall report on the 
full amount of their RLF funds in each subsequent semiannual or 
annual report submitted.

[[Page 5447]]

    3. Annual Reports: For grant recipients graduated to an annual 
reporting schedule, the report covers the twelve month period ending 
September 30, and is due October 31. The annual reporting 
requirement continues through the life of an RLF unless EDA 
determines that more frequent or detailed reports are needed for 
closer monitoring of grant violations or other problems. Note that 
the annual report requires documentation of capital utilization at 
semiannual intervals pursuant to the requirements of Section X.
    4. Special Reports: Special reports to enable EDA monitoring of 
compliance issues arising from audits, site visits, or other reviews 
may be requested from the grant recipient in writing on a case by 
case basis.
    First time grant recipients may be required to submit periodic 
reports on their progress in initiating RLF activity, prior to the 
due date of the first semiannual report.

B. Audits

    Grant recipients are subject to the following audit requirements 
for the duration of the RLF.
    1. In accordance with the terms and conditions of the grant 
award, the grant recipient shall arrange for a Single Audit as 
referenced in the RLF Audit Guidelines and OMB Circular A-133. Such 
audits should be conducted by an independent auditor who meets the 
general standards specified in generally accepted government 
auditing standards. With the exception of newly awarded grants and 
limited circumstances described in the RLF Audit Guidelines, the 
majority of RLF grant recipients will require an annual audit.
    Pursuant to the Single Audit Act Amendments of 1996 (P.L. 104-
156), and OMB Circular A-133, as codified in DOC Regulations found 
at 15 CFR Part 29, audits are required of all State, local 
government and non-profit corporation RLF grant recipients that 
expended total Federal awards of at least $300,000 in a given fiscal 
year. For all RLF grants, the calculation of RLF expenditures will 
include the beginning balance of all outstanding loans plus the 
current year's loan and loan-related expenditures. The cost 
principles to be followed are contained in OMB Circulars A-21, A-87 
or A-122, as applicable.
    Audit requirements for RLF's are summarized in the EDA RLF Audit 
Guidelines which should be made available to the auditor prior to 
the audit engagement. Failure to comply with these requirements 
could result in an unacceptable audit.
    2. The U.S. Department of Commerce Office of Inspector General 
(OIG) may audit, inspect, or investigate an RLF grant at any time.

C. Site Visits

    EDA will periodically schedule site visits to review the grant 
recipient's operating procedures, monitor progress and evaluate the 
effectiveness of the RLF in supporting the area's economic 
adjustment process and strategic objectives.

XII. Noncompliance With the Grant Terms

A. Suspension

    EDA may suspend RLF lending activity when EDA determines that a 
grant recipient has failed to comply with the grant terms. Before 
suspending a grant, EDA may give the grant recipient a reasonable 
period of time in which to take the necessary corrective action to 
comply with the grant terms. However, should it appear that the 
grant recipient had not taken or will not take the necessary action, 
and/or that continued operation of the RLF would place the assets at 
risk, EDA may suspend the grant immediately. Upon suspension, the 
grant recipient will be prohibited from any new lending activity, 
although normal loan servicing and collection efforts will continue. 
In addition, the grant recipient may be subject to restrictions on 
the use of RLF Income and specific actions to protect the RLF assets 
may be required.
    In the event that the compliance problems are not resolved 
during the suspension period, EDA will attempt to resolve the issues 
through means including working with the Recipient to identify a 
successor to assume responsibility for administering the RLF in 
accordance with the terms of the original grant agreement. If issues 
cannot be resolved, EDA will initiate proceedings to terminate the 
grant for cause.

B. Termination for Cause

    EDA may terminate an RLF grant for cause with or without prior 
suspension of lending activity.

C. Partial Termination

    When EDA determines, after a reasonable period of time, that a 
grant recipient is unable or unwilling to use the full amount of the 
grant funds or of the RLF capital and RLF Income thereby generated, 
EDA may partially terminate the grant if EDA determines that the 
remaining capital is sufficient to support continuation of an 
effective RLF operation.
    When a grant recipient fails to complete the initial round of 
lending in the time schedule provided in the grant agreement, the 
unused grant funds may be deobligated and the grant award amended to 
reflect the reduced grant amount. The nonfederal matching share will 
be expected to remain in the RLF unless otherwise specified in the 
grant agreement or agreed to in writing by EDA.
    Grant recipients in the revolving phase who persistently fail to 
make maximum use of the available RLF capital, as defined by the 
applicable capital utilization standard in Section X, will be 
required to return excess funds, in an amount determined by EDA, to 
the U.S. Treasury. This amount will not be greater than EDA's 
proportionate share of the excess funds sequestered at the time. The 
grant award will be amended to reflect the reduced amount of EDA's 
participation.

XIII. Termination for Convenience

    A grant recipient has the right to request termination for 
convenience of the grant, in whole, or in part, at any time. 
Termination is undertaken without prejudice to the grant recipient 
upon agreement of both parties that the purpose of the grant would 
not be served by further expenditure of funds, and in the case of a 
partial termination, EDA determines that sufficient funds remain to 
permit an effective RLF operation. The Federal share of the funds 
must be returned to the U.S. Treasury as described below in Section 
XIV.

XIV. Recovery of EDA Interest in the RLF Assets

    In case of termination, for cause or convenience, EDA has the 
responsibility, on behalf of the Federal Government, to recover its 
fair share of the value of the RLF assets consisting of cash, 
receivables, personal and real property, and notes or other 
financial instruments developed through use of the funds. EDA's fair 
share is the amount computed by applying the percentage of EDA 
participation in the total capitalization of the RLF to the current 
fair market value of the assets thereof; provided that with EDA's 
approval the Recipient may use for other economic development 
purposes that portion of such RLF property which EDA determines is 
attributable to the payment of interest on RLF loans and not used by 
the Recipient for administrative or other allowable expenses. In 
addition, EDA has the right to compensation, over and above its 
share of the current fair market value of the assets, when it is 
determined that the value of such assets has been reduced by the 
improper/illegal use of grant funds.

XV. Sale or Securitization of Loans

    Grant recipients may, with EDA's prior written consent, further 
the objectives of the RLF through the sale of loans or 
securitization of the loan portfolio to generate money to be used 
for additional loans as part of the RLF. A grant recipient 
contemplating such an action is advised to consult with EDA prior to 
development of a formal proposal.
    In the event of the sale, collection, or liquidation of loans, 
any proceeds, net of repaid principal and reasonable administrative 
costs incurred, up to the amount of the outstanding loan principal, 
must be returned to the RLF for relending. Any net proceeds from 
loan sales above the outstanding loan principal is considered RLF 
Income and must either be added to the RLF capital base for lending 
or used to cover eligible costs for administering the RLF in 
accordance with the rules for use of RLF Income.

XVI. Appendix

    The following reference materials and required or sample 
reporting formats are available from EDA:

OMB Circulars and CFR'S (List of Reprints)

15 CFR Part 24, Uniform Administrative Requirements for Grants and 
Cooperative Agreements to State and Local Governments
OMB Circular A-87, Cost Principles for State and Local Governments
15 CFR Part 29a, Audit Requirements for State and Local Governments
15 CFR Part 29b, Audit Requirements for Institutions of Higher 
Education and Other Nonprofit Organizations
OMB Circular A-133, Audits of States, Local Governments and 
Nonprofit Organizations

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OMB Circular A-110, Grants and Agreements with Institutions of 
Higher Education, Hospitals, and Other Nonprofit Organizations 
Uniform Administrative Requirements
OMB Circular A-122, Cost Principles for Nonprofit Organizations
OMB Circular A-21, Cost Principles for Educational Institutions
48 CFR Part 31, Contract Cost Principles and Procedures
15 CFR Part 26, Governmentwide Debarment and Suspension and 
Governmentwide Requirements for Drug Free Workplace

EDA Reference Materials and Reporting Formats

EXHIBIT A: RLF Income and Expense Statement with Instructions
EXHIBIT B: Request for Advance or Reimbursement (SF-270) with EDA 
Special Instructions
EXHIBIT C: Federal Cash Transaction Report (SF-272)
EXHIBIT D: Semiannual Report for RLF Grants with Instructions
EXHIBIT E: Annual Report for RLF Grants with Instructions

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Exhibit A (back)--Instructions for RLF Income and Expense Statement

    The RLF INCOME AND EXPENSE STATEMENT is to be used by recipients 
of revolving loan fund (RLF) grants provided by the Economic 
Development Administration (EDA), U.S. Department of Commerce. The 
Statement is to be completed for each year in which a grantee uses 
income generated from RLF activities to pay for RLF administrative 
expenses. It should be completed within 90 days of a grant 
recipient's fiscal year end or September 30. The period will be 
selected by the grant recipient; once selected, it may not be 
changed without the prior approval of EDA. Instructions for 
submitting the Statement are included in the EDA Administrative 
Manual, Section VII. Expenses charged to RLF income sources must be 
eligible under the terms of the grant and must comply with 
applicable OMB cost principles and the EDA RLF Audit Guide. For 
grantees completing the Statement for the first time, or which did 
not charge any expenses against RLF income sources in a prior 
period, complete only the second column marked ``Most Recent 
Period'' and answer questions 7. And 8.
    Except for the items explained below, all items on the Statement 
are self-explanatory or are adequately addressed in the RLF Audit 
Guide and applicable OMB Cost Principles.

Item and Entry
1  ``RLF INCOME'' includes all interest earned on outstanding loan 
principal, interest earned on accounts holding idle RLF funds, and 
loan fees and other loan-related earnings.
2d  Enter the amount of grantee out-of-pocket costs which were 
necessary to process and close RLF loans. These costs may include 
such costs for credit reports, title insurance, Uniform Commercial 
Code searches, filing fees, appraisals, etc., which are recorded in 
the grantee's accounting records. Any costs not recorded in the 
grantee's accounting records, e.g., those paid directly by a 
borrower to a third party, or those that were netted against loan 
fees (thereby reducing reported income), need not be reported here.
2g  Enter the costs charged to RLF Income for RLF-related training 
for employees involved in RLF operations. These costs may include 
training materials, textbooks, tuition and registration fees. Any 
training-related travel costs should be reported in Item 2c.
5  ``Cumulative NET RLF INCOME'' includes all RLF Income earned 
during the life of the RLF that was not used for RLF administrative 
expenses. The amount reported should be inclusive of the NET RLF 
INCOME reported in Item 4. (The Cumulative NET RLF INCOME for the 
most recent period should equal the sum of the amounts in Item 5 for 
the prior period and in Item 4 for the most recent period.

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Exhibit B (Revised 12/98)--Special Instructions for Completion of 
Standard Form 270 for EDA Revolving Loan Fund Grants

    These instructions apply to revolving loan fund (RLF) grants 
funded by the Economic Development Administration (EDA). U.S. 
Department of Commerce, under Section 209 of the Public Works and 
Economic Development Act of 1965, as amended. RLF grant recipients 
are required to use Standard Form 270 to draw grant funds when 
needed to disburse to RLF borrowers. Funds may be drawn only for 
immediate use (i.e., when the intent is to disburse the funds within 
14 days of receipt), and only to the extent that the recipient does 
not have funds on hand from loan repayments and certain RLF income 
sources to cover the proposed disbursement request. (See below and 
EDA's RLF Administrative Manual, Section IX, for further details.) 
Grant funds not disbursed within 30 days of receipt must be returned 
to EDA. Items 1b, 3, 9, 11c, 11e, and 11i are self-explanatory; 
specific instructions for other items follow:

Item and Entry
1a  Indicate whether the request is for a reimbursement or an 
advance. (Note the RLF disbursements are normally considered 
reimbursement as a reimbursable obligation is created at the time of 
loan approval. A request for an advance may be requested under 
special circumstances.
2  Disregard.
4  Enter the Federal grant number or other identifying number 
assigned by EDA. If the reimbursement or advance is for more than 
one grant or other agreement, insert N/A; then show the aggregate 
amounts. On a separate sheet, list each grant or agreement number 
and the Federal share of outlays made against the grant or 
agreement.
5  Enter in numerical order the number of this disbursement request. 
Begin with the number ``1'' for each new grant.
6  Enter the employer identification number assigned by the US 
Internal Revenue Service, or the FICE (institution) code if 
requested by EDA.
7  This space is reserved for an account number or other identifying 
number that may be assigned by the grant recipient.
8  Disregard.
10  Enter ``ACH/EFT'' for funds disbursement by the Automated 
Clearing House Electronic Funds Transfer System. For further 
details, refer to Section E.02 of the RLF Standard Terms and 
Conditions.
11  The purpose of the vertical columns (a), (b), and (c) is to 
provide space for separate cost breakdowns when a project has been 
planned and budgeted by program, function, or activity. If 
additional columns are needed, use as many additional forms as 
needed and indicate the page number in the space provided in upper 
right; if more than one column is used, the summary totals of all 
programs, functions, or activities should be shown in the ``total'' 
column on the first page.
11a  Enter in ``as of date'', the month, day and year of the ending 
of the accounting period to which this amount applies. Enter the 
amount of cumulative outlays for RLF loans from the following 
sources: EDA RLF grant funds, matching funds, and program income 
(defined in Section VII.A of the RLF Administrative Manual).
    Include actual, pending (previous outlays requests that have not 
yet been disbursed) and proposed (those proposed under this request) 
outlays. For recapitalized RLF's--those where a subsequent EDA RLF 
grant was made to the same recipient--treat cumulative outlays as 
beginning with the inception of the RLF.
11b  Cumulative Program Income, as defined below, must be used 
before or concurrent with the disbursement of new grant funds 
(pursuant to Section IX of the RLF Administrative Manual). 
Cumulative Program Income is a net figure computed, as follows:
    +Cumulative Principal Repaid*
    +Cumulative RLF Income Received**
    -Cumulative Administrative Cost Expensed to RLF Income***
    Footnotes:
    *This is the cumulative RLF loan principal that has been repaid 
from inception of the RLF.
    **This includes all RLF Income earned and received from 
inception of the RLF. Current period RLF Income on hand may be 
excluded from this amount if any portion of it is anticipated to be 
used during the remainder of the current period. Note that failure 
to exclude these funds here will increase Cumulative Program Income 
(line 11b) which will lower the amount of grant funds to be 
requested for disbursement (line 11i). Any RLF Income available at 
the end of a period is required to be added to the RLF capital base 
for lending.
    ***Enter all administrative costs Expensed to RLF Income from 
Inception of the RLF.

Definitions

    Program Income--is the sum of all RLF principal repayments plus 
RLF Income (defined below).
    RLF Income--includes all RLF-generated income from loan fees, 
interest earned on loans and on accounts holding idle RLF funds, and 
other loan-related earnings.
    Period--refers to the 12-month reporting period by each grant 
recipient; it may end on either September 30 or the grantee's fiscal 
year-end date. (Refer to Section VII.C.2. of RLF Administrative 
Manual.
11d  Enter ``0'' unless an advance of grant funds is being 
requested--see Item 1a above.
11f  Enter the total amount of the matching funds previously 
expended plus matching funds to be disbursed as part of this request 
(and any previous pending request, if applicable). When calculating 
this amount, note that the matching funds amount in 11f as a percent 
of the amount on line 11c may not be less than the percentage 
relationship between the aggregate of matching funds and of total 
project costs indicated in the grant award(s). Matching funds must 
be expended either before or at least proportionately with EDA grant 
funds.
11g  Enter the EDA share of the amount on line 11e. This should be 
the difference between the amounts on lines 11e and 11f.
11h  Enter the amount of EDA funds previously requested. This should 
be equal to the amount reported in Item 11g of the previous SF 270 
submitted by the recipient.
12  Disregard.
13  In the space indicated for ``agency use'' or on a separate page, 
provide the following disbursement information:
    a. Indicate whether the RLF identified in Section 4 is an 
``initial'' or ``recapitalization'' RLF grant. If an initial grant, 
show the EDA grant funds expended as a percent of total expenditures 
by dividing the amount reported in Item 11g by the amount reported 
in Item 11e. If a recapitalization grant, show both the EDA and the 
matching fund dollar outlays (including actual and proposed outlays) 
for the grant disbursement; also show the percentage of EDA dollar 
outlays to total dollar outlays for the grant under disbursement.
    b. If any previously requested grant funds have been received 
but not disbursed, list the date of receipt and the amount remaining 
to be disbursed. If not applicable, type ``NA''.
    c. List the RLF borrowers and the respective RLF dollar amounts 
anticipated to be disbursed under this request.

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Instructions

    Public reporting burden for this collection of information is 
estimated to average 120 minutes per response, including timer for 
reviewing instructions, searching existing data sources, gathering 
and maintaining the data needed, and completing and reviewing the 
collection of information. Send comments regarding the burden 
estimate or any other aspect of this collection of information, 
including suggestions for reducing this burden, to the Office of 
Management and Budget, Paperwork Reduction Project (0348-0003), 
Washington, DC 20503.
    Please do not return your completed form to the Office of 
Management and Budget, send it to the address provided by the 
sponsoring agency.
    Please type of print legibly, Items 1, 2, 8, 9, 10, 11d, 11e, 
11h, and 15 are self explanatory, specific instructions for other 
items are as follows:

Item and Entry
3 Enter employer identification number assigned by the U.S. Internal 
Revenue Service or the FIC (institution) code.
  If this report covers more than one grant or other agreement, 
leave items 4 and 5 blank and provide the information on Standard 
Form 272-A, Report of federal Cash Transactions--Continued; 
otherwise;
4 Enter Federal grant number, agreement number, or other identifying 
numbers if requested by sponsoring agency.
5 This space reserved for an account number or other identifying 
number that may be assigned by the recipient.
6 Enter the letter of credit number that applies to this report. If 
all advances were made by Treasury check, enter ``NA'' for not 
applicable and leave items 7 and 8 blank.
7 Enter the voucher number of the last letter-of-credit payment 
voucher (Form TUS 5401) that was credited to your account.
11a Enter the total amount of Federal cash on hand at the beginning 
of the reporting period including all of the Federal funds on 
deposit, imprest funds, and undeposited Treasury checks.
11b Enter total amount of Federal funds received through payment 
vouchers (Form TUS 5401) that were credited to your account during 
the reporting period.
11c Enter the total amount of all Federal funds received during the 
reporting period through Treasury checks, whether or not deposited.
11f Enter the total Federal cash disbursements, made during the 
reporting period, including cash received as program income. 
Disbursements as used here also include the amount of advances and 
payments less refunds to subgrantees or contractors, the gross 
amount of direct salaries and wages, including the employee's Share 
of benefits if treated as a direct cost, interdepartmental charges 
for supplies and services, and the amount to which the recipient is 
entitled for indirect costs.
11g Enter the Federal share of program income that was required to 
be used on the project or program by the terms of the grant or 
agreement.
11i Enter the amount of all adjustments pertaining to prior periods 
affecting the ending balance that have not been included in any 
lines above. Identify each grant or agreement for which adjustment 
was made, and enter an explanation for each adjustment under 
``Remarks''. Use plain sheets of paper if additional space is 
required.
11j Enter the total amount of Federal cash on hand at the end of the 
reporting period. This amount should include all funds on deposit, 
imprest funds, and undeposited funds (line 3, less line h, plus or 
minus line I).
12 Enter the estimated number of days until the cash on hand, shown 
on line 11j, will be expended. If more than three days cash 
requirements are on hand, provide an explanation under ``Remarks'' 
as to why the drawdown was made prematurely, or other reasons for 
the excess cash. The requirement for the explanation does not apply 
to prescheduled or automatic advances.
13a Enter the amount of interest earned on advances of Federal funds 
but not remitted to the Federal agency. If this includes any amount 
earned and not remitted to the Federal sponsoring agency for over 60 
days, explain under ``Remarks''. Do not report interest earned on 
advances to States.
13b Enter amount of advance to secondary recipients included in item 
11h.
14 In addition to providing explanations as required above, give 
additional explanation deemed necessary by the recipient and for 
information required by the Federal sponsoring agency in compliance 
with governing legislation. Use plain sheets of paper if additional 
space is required.

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Instructions for Completion of EDA's Semiannual Reports for Revolving 
Loan Fund Grants

    The instructions below are in outline form and correspond to 
identical items in the Semiannual Report. Complete the Semiannual 
Report by filling in the spaces and responding to the questions. On 
page one of the Report, indicate the reporting period in the upper 
right hand corner. The reporting periods end on September 30 and 
March 31, and all data entries are to be effective with these ending 
dates. Submit completed Reports to the EDA regional office by 
November 1 and May 1, respectively. DO NOT INCLUDE IN PARTS 1-3 OF 
THE REPORT ANY DATA ON INITIAL LOANS UNDER A SECTION 209 SSED GRANT/
LOAN; LIST THESE ITEMS SEPARATELY IN PART 4 ONLY.

Part I: Portfolio Status

    A. Status of Direct Loans: Show the current status of all direct 
RLF loans that have been closed. DO NOT include approved loans that 
have not been closed. In column two, ``RLF $ Loaned,'' include only 
the funds loaned by the RLF, including EDA and grantee matching 
funds, NOT the financing provided by other lenders.
    1. Total Loans Made: Enter the total number and dollar amount of 
all RLF loans closed to date. Under column two, ``RLF $ Loaned,'' 
the amount should always represent the original loan amount.
    2. Fully Repaid: Enter the number and original dollar amount of 
RLF loans that have been fully repaid.
    3. Current Loans: Enter the number and original dollar amount of 
RLF loans that are current on RLF loan payments. In column three, 
``RLF Principal Outstanding,'' enter the principal balance 
outstanding for current RLF loans.
    4. Delinquent: Enter the number and original dollar amount of 
RLF loans that are delinquent. For this report, a ``delinquent'' 
loan is defined as one that is up to 60 days past due. Enter also 
the principal balance outstanding on the delinquent loans. (If a 
previously delinquent borrower is now current, or making payments in 
accordance with an amended note and payment schedule, show this loan 
as current).
    5. In Default: Enter the number and original dollar amount of 
RLF loans that are in default. For this report, a ``default'' is 
defined as any loan that is over 60 days past due but not written 
off. (An RLF grantee may, at its option, classify a loan as 
defaulted if it is under 60 days past due. If a previously defaulted 
loan has been rewritten and/or the borrower is now current, the loan 
should be shown as current). Enter the principal balance outstanding 
on defaulted loans.
    6. Total Active Loans: On line 6, enter the sum of lines 3, 4, 
and 5 to obtain the number, amount and principal outstanding for 
Total Active Loans. (Total Active Loans are defined as loans that 
are either current, delinquent or in default--exclusive of loans 
that have been fully repaid or written off).
    7. Total Written Off: Enter the aggregate number and original 
amounts of defaulted loans that have been written off. Enter also 
the principal balance outstanding on loans written off or the actual 
amount lost, whichever is smaller.
    B. Status of Loan Guarantees: The same criteria as above apply 
to the Status of Loan Guarantees. In column two, note that the ``RLF 
$ Reserved'' are the RLF dollars that are actually set aside and 
held in reserve to cover any losses on guaranteed loans. In column 
three, ``Total Amount Guaranteed'' is the amount of the original 
loan that is/was guaranteed by the RLF. In column four, ``Current 
Exposure'' is the dollar amount of the RLF's contingent liability as 
of the date of the current report; this amount is usually computed 
by multiplying the percent of the original guarantee by the 
outstanding loan balance.

Part II: Portfolio Summary

    A. Summary of Loan Activities: For each listed item, provide 
information on both Total and Active RLF loans closed to date. Total 
Loans include loans that are current, delinquent and in default, as 
well as those that have been fully repaid and written off. Active 
Loans include only current delinquent and defaulted loans, 
specifically those included in A.3-5. and B.3-5., Part I, page one, 
of the Semiannual Report.
    1. # RLF Loans: Enter the number of RLF loans closed for both 
Total Loan (I.A.6. and I.B.6., page one) categories. Be sure to 
include the number of both direct and guaranteed loans closed.
    2. RLF $$ Loaned: Enter the amount of RLF dollars loaned for 
both Total Loan (I.A.1. and I.B.1., page one) and Active Loan 
(I.A.6. and I.B.6., page one) categories. For loan guarantees, use 
column three, ``Total Amount Guaranteed,'' for the RLF dollar amount 
loaned.
    3. Non-RLF $$ Leveraged by RLF:
    a. Private: Enter the Private Dollars Leveraged for both Total 
and Active Loan categories. Unless stipulated otherwise in the grant 
agreement, RLF loans must be used to leverage private investment of 
at least two dollars for every one dollar of RLF investment. Private 
dollars leveraged include private financing and private investments 
provided to the ``project'' in which the RLF is an integral 
component. A ``project'' is defined as an activity consisting of 
interrelated components which share a common goal. Private 
investments include both cash provided to the project and donated 
assets which come from outside the borrowing enterprise. For donated 
assets, only the equity in the assets (defined as the assets' market 
value less any security interest) may be counted in the leverage 
ratio. For purposes of calculating private dollars invested, 90 
percent of the guaranteed portions of SBA 7(a) and SBA 504 debenture 
loans may be included. As a reminder, the RLF must fill a legitimate 
financing gap in the project for the private funds to be considered 
``leveraged dollars''.
    b. Other: Enter any Other investments Leveraged for both Total 
and Active Loan categories by the RLF loan in the ``project'', 
including other public financing (e.g., HUD-CDBG, USDA-IRP loans, 
etc.).
    4. Total Project Financing: Enter the sum of RLF dollars loaned 
and non-RLF dollars leveraged by the RLF, items II.A.2. plus 
II.A.3.c.
    5. Private Sector Jobs: Enter the number of jobs created and the 
number of saved jobs for both Total and Active loan categories. In 
tallying jobs, only permanent and direct jobs may be counted; part-
time jobs should be converted to full-time equivalents (by summing 
the total hours worked per week for all part-time employees and 
dividing by the standard hourly work week for full-time employees, 
normally 35-40 hours). Job information data should be collected at 
least annually. For seasonal businesses, more frequent collection of 
job data is usually necessary to obtain realistic employment figures 
for an annualized average.
    Grantees should use the following definitions in completing the 
job information section of this report:
    a. Actual Created Jobs: A job is counted as ``created (actual)'' 
if it was created as a result of and attributable to the RLF loan 
project, and has been verified by the borrower (or grantee) as 
actually created. Jobs are usually verified by requesting the 
borrower to complete a questionnaire at least on an annual basis 
indicating the number of jobs actually created and attributable to 
the RLF project, or by the grantee performing an on-site job count. 
Other job data should also be requested from the borrowers in order 
to complete Part IV of the Report. The documentation for job counts 
should be placed in the project files.
    Created jobs may be credited if the jobs were created within 
five years of loan disbursement or, if construction is involved, 
within five years after construction completion. All jobs credited 
must be attributable to the RLF project. A created job must be 
removed from the credited created jobs if the job fails to last at 
least 18 months. Any job which meets the creditable job created 
criteria is counted as part of the total actual jobs created 
permanently, regardless of the status of the loan.
    For loans that have been paid in full, grantees may use the job 
information data that is on file provided there is adequate 
confidence in the reliability of the data. If there is a question on 
the reliability, the data should be verified by the next semiannual 
reporting period.
    b. Saved Jobs are existing jobs where it can be documented that 
without the RLF assistance the jobs would have been lost.
    Exception--Created/Saved Jobs Subsequently Lost: If an RLF 
borrower subsequently ceases business (or closes a segment of its 
business) thereby eliminating previously created or saved jobs, 
these jobs may continue to be counted in the Semiannual Report only 
if they were maintained for a minimum of 18 months prior to the 
loss.
    6. RLF $$ Loaned for Fixed Assets: Enter for both Total and 
Active loan categories, the amount of closed RLF loans that were 
used for the purchase, installation or construction of fixed assets. 
If a single RLF loan was used jointly for fixed asset and working 
capital purposes, only the fixed asset amount should be reported on 
this line. For a guaranteed loan that was used jointly for fixed 
assets and working capital, multiply the percent of the original 
loan that is/was guaranteed by the amount of the loan that was used 
for fixed assets.

[[Page 5464]]

    7. RLF $$ Loaned for Working Capital: Enter for both Total and 
Active loan categories, the amount of closed RLF loans that were 
used for working capital purposes as defined by generally accepted 
accounting principles. Consistent with item II.A.6. above, include 
on this line only the amount or portion of a RLF loan that was 
actually used for working capital purposes. (The amounts on this 
line plus the amounts in II.A.6. should equal the total RLF dollars 
loaned in item II.A.2. for both Total and Active loans, 
respectively).
    8. RLF $$ Loaned for Start-up, Expansion & Retention: Enter for 
both Total and Active loan categories, the amount of RLF loans that 
were used for Start-up loans, Expansion loans and Retention loans. 
Each loan in the RLF portfolio is to be categorized as either a 
Start-up, an Expansion or a Retention loan. A Start-up loan is one 
to a new business that has limited or no prior operating history. An 
Expansion loan involves an existing operating company that will 
expand operations and create jobs. A Retention loan is where the 
existing jobs of the company are ``saved'' as a direct result of the 
RLF assistance. [The sums of these loan categories (8.a. + 8.b. + 
8.c.) should equal the total RLF dollars loaned in item II.A.2. for 
both Total and Active loans, respectively].
    9. RLF $$ Loaned for Industrial, Commercial & Service: Enter for 
both Total and Active loan categories, the dollar amount of closed 
RLF loans that went to Industrial, Commercial and Service projects. 
All RLF loans should be placed in one of these three categories, 
which are defined below and which utilized the Standard Industrial 
Classification (SIC) Manual as a guide:
    Industrial projects include manufacturing, agriculture, 
forestry, fishing, mining, and construction businesses--essentially 
businesses engaged in the production of a product.
    Commercial projects include retail and wholesale trade 
businesses.
    Service projects include businesses which provide a service to 
individuals or businesses, i.e., those not engaged in the production 
of a product or the sale of merchandise.
    10. RLF $$ Loaned for Minority Businesses: Enter for both Total 
and Active loan categories, the amount of closed RLF loans that went 
to minority-owned businesses. To be considered minority-owned, a 
company must be at least 51 percent owned by African-Americans, 
Hispanics, Asians and/or Indians.
    11. RLF $$ Loaned for Women-owned Businesses: Enter for both 
Total and Active loan categories, the amount of closed RLF loans 
that went to women-owned businesses. Include only firms with at 
least 51 percent ownership by women.
    12. Other: Enter for both Total and Active loan categories, the 
amount of closed RLF loans that went to a targeted use identified in 
the RLF Plan but not included above.
    B. Comparison of RLF Portfolio to RLF Plan: As indicated in the 
narrative in the Semiannual Report, use the RLF Plan to obtain the 
applicable ratios and percentages for completing the first column. 
For column two (Total Loans) and column three (Active Loans), use 
the appropriate figures from Part II.A. to compute the ratios and 
percentages requested. The formula for each item is listed in the 
brackets next to that item. [As an example, item #1--Cost per Job, 
is computed by dividing the figures on line A.2. by those on line 
A.5.d. (from Part II) for both Total and Active loans, 
respectively].

Part III: Portfolio Financial Status

    A. RLF Funding Sources:
    1.-3. Enter on lines one through three the total funds committed 
to the RLF by funding source, regardless of whether the funds have 
been drawn into the RLF. Outside of the EDA funds, the funding 
categories will include either funds provided solely by the grantee 
or from ``other'' sources, e.g., CDBG, state, or private donations 
for the specific use of the RLF. Specify the funding source if 
``other''.
    4. Enter the sum of all funding sources, items III.A.1. through 
III.A.3. inclusive.
    B. Program Income Earned to Date:
    5. Enter the total interest earned directly from RLF loans. This 
amount should equal the aggregate interest earned from individual 
loans which are listed in Part IV.
    6. Enter interest earned from deposits and investments of:
    a. RLF loan payments, including principal and interest;
    b. RLF loan fees, including origination, servicing and 
processing fees, late fees and penalties; and
    c. Advances of local matching funds and EDA funds. EDA funds 
must be timed to meet the actual, immediate disbursement needs of 
the RLF borrowers. Otherwise, grant funds plus any interest earned 
thereon must be returned to EDA. (Note that grantees may deduct and 
retain a portion of such earned interest for administrative expenses 
up to the maximum amounts allowed under either 15 CFR Part 24 or OMB 
Circular A-110 or its implementing Department regulation, as 
applicable).
    7. Enter the aggregate of all fees earned from RLF loans from 
processing, servicing, closing, late fees and any other loan-related 
earnings.
    8. Enter the sum of III.B.5. through III.B.7., inclusive.
    9. Enter the amount from III.B.8. that has been used to cover 
eligible RLF administrative expenses to date. (Time cards are to be 
maintained for all direct labor costs charged against RLF Program 
Income. If indirect costs are charged against the RLF, the grantee 
must have an indirect cost allocation plan). Inasmuch as RLF 
administrative costs can only be reimbursed from RLF income earned 
in the same accounting period, available RLF income earned in a 
current period may be set aside for administrative costs which will 
be incurred over the remainder of the period (Refer to Section VII. 
of the Administrative Manual for additional information).
    10. Subtract the amount on line III.B.9. from III.B.8. and enter 
the difference here. Do not deduct amounts set aside for future 
administrative expenses. Lines III.B.8 less line III.B.9. should 
equal the amount of line III.B.10; if not, explain on separate page. 
Note that if the grant recipient anticipates using any of the 
available RLF income earned in the current period during the 
remainder of the period, it may deduct this from the amount 
otherwise reported in the space. Conversely, if the recipient is 
certain that it will not need any of the available RLF income during 
the remainder of the period, it should include this amount in the 
figure reported as RLF Income added to the RLF for Lending. Any RLF 
income on hand at the end of a period must be added to the RLF 
Capital Base for lending purposes.
    (Note: References to Program Income in B.8. through B.10. should 
be interpreted to mean RLF Income as used in the RLF Administrative 
Manual).
    C. Status of RLF Capital:
    11. Self-explanatory (enter the amount from III.A.4.).
    12. Self-explanatory (enter the amount from III.B.10.).
    13. Self-explanatory (enter the sum of the amounts lost from 
direct loans and guaranteed loans, from I.A.7. and I.B.7., page 1 
respectively).
    14. Self-explanatory (enter the sum of III.C.11. and III.C.12., 
less III.C.13).
    D. Current Balance Available for New Loans:
    15. Self-explanatory (enter the RLF principal outstanding from 
I.A.6., page 1).
    16. Self-explanatory (enter the total RLF dollars reserved for 
loan guarantees, which are not available for lending, from I.B.6., 
page 1).
    17. Self-explanatory (deduct amounts shown in III.D.15. and 
III.D.16. from III.C.14.).
    18. Enter the aggregate amount of RLF funds that have been 
approved and committed but not closed nor disbursed.
    19. Self-explanatory (enter the amount in III.D.17. less 
III.D.18.).
    20. Current Balance Available Percentage--applies only to RLF's 
that have been fully disbursed. Enter the percent that is obtained 
by dividing the amount in III.D.19. by the amount in III.C.14.
    21. Insert the Current Balance Available Percentage (same 
calculation as in #20 above), but for the preceding six month period 
obtained from the previous Semiannual Report.
    (Note: The percentages obtained in III.D.20. and III.D.21. are 
used to evaluate compliance with EDA's Excess Retention Policy 
established in 1988. If the percentages in III.D.22. and in 
III.D.23. both exceed 25 percent, the grantee is in violation of the 
policy and is required to submit an addendum to the report 
explaining the reasons for the violation and the steps it proposes 
to take to reduce the percentage below 25 percent. Subsequently, the 
grantee may be required to submit the EDA share of any amount over 
25 percent, which normally will be made available to the grantee for 
a time period established by EDA. Funds not used during this time 
period may become permanently unavailable to the grantee).

Part IV: Portfolio Loan List

    Self-explanatory.

Part V: Miscellaneous Information & Certification

    A. Recent Loan Activity:

[[Page 5465]]

1.-4. Self-explanatory.
    B. Capital Utilization: (Section X. of RLF Administrative 
Manual)
    5.-7. Self-explanatory.
    C. RLF Income & Expenses: (Section VII. of RLF Administrative 
Plan)
    8.-12. Self-explanatory.
    D. Administration:
    13.-17. Self-explanatory.
    E. Annual RLF Plan Certification: (Section VIII. of the RLF 
Administrative Manual and Section D.03. of the Standard Terms and 
Conditions)
    18. Self-explanatory (Required only once a year).

BILLING CODE 3510-24-P

[[Page 5466]]

[GRAPHIC] [TIFF OMITTED] TR03FE99.037



[[Page 5467]]

[GRAPHIC] [TIFF OMITTED] TR03FE99.038



[[Page 5468]]

[GRAPHIC] [TIFF OMITTED] TR03FE99.039



BILLING CODE 3510-24-P

[[Page 5469]]

Instructions For Completion of EDA's Annual Reports For Revolving Loan 
Fund Grants

    These instructions are for completion of the Annual Report form 
for EDA revolving loan fund (RLF) grants. The Annual Report is an 
abbreviated version of the Semiannual Report. RLF grantees that are 
reporting on a semiannual basis are eligible to apply for graduation 
to this streamlined report one year after full disbursement of the 
initial round of RLF capital.

A. Portfolio Financial Status and Capital Utilization

    1. Enter the total funds committed to the RLF. Outside of EDA 
funds, matching funds may include funds provided solely by the 
grantee or from other sources, e.g., CDBG, state or private 
donations for the specific use of the RLF. Exclude any funding 
commitments that may have been removed from the RLF, as approved by 
EDA.
    2. Enter the Total RLF Income earned by the RLF to date. RLF 
Income, as defined in Section VII. of the RLF Administrative Manual, 
includes:
    a. Total interest earned directly from RLF loans.
    b. Interest earned from deposits and investments of:
     RLF loan payments, including principal and interest;
     RLF loan fees, including origination, servicing and 
processing fees. late fees and penalties; and
     Advances of local matching funds and EDA funds. EDA 
funds must be timed to meet the actual, immediate disbursement needs 
of the RLF borrowers. Otherwise, grant funds plus any interest 
earned therein must be returned to EDA. (Note that grantees may 
deduct and retain a portion of such earned interest for 
administrative expenses up to the maximum amounts allowed under 
either 15 CFR Part 24 or OMB Circular A-110 or its implementing 
Department regulation, as applicable.
    3. Enter the amount from A.2. that has been used to cover 
eligible RLF administrative expenses to date. (Time cards are to be 
maintained for all direct labor costs charged against RLF Program 
Income. If indirect costs are charged against the RLF, the grantee 
must have an indirect cost allocation plan). In as much as RLF 
administrative costs can only be reimbursed from RLF income earned 
in the same accounting period, available RLF income earned in a 
current period may be set aside for administrative costs which will 
be incurred over the remainder of the period (Refer to Section VII. 
of the Administrative Manual for additional information).
    4. Enter the amount of any available RLF Income earned in a 
current period which may be set aside for future administrative 
costs incurred over the remainder of the period. If, however, the 
selected period ends on September 30, funds can not be set aside 
without EDA approval since any RLF Income that is not used for 
administrative costs during the period in which it is earned must be 
added to the RLF Capital Base at the end of the period.
    5. Enter the cumulative Losses on Direct and Guaranteed Loans 
for those loans written-off.
    6. Calculate the current level of the RLF's Capital Base by 
adding the amounts entered in #1 and #2, and subtracting from this 
sum the amounts in #3, #4 and #5. The RLF Capital Base represents 
the aggregate amount of capital potentially available for lending.
    7. Enter the amount of Loan Principal Outstanding on Direct RLF 
Loans.
    8. Enter the amount of RLF dollars that are required to be set 
aside or reserved for RLF guarantees of other loans. If not 
applicable, enter N/A.
    9. Enter the aggregate amount of RLF funds that have been 
approved and committed but not closed nor disbursed.
    10. Calculate the amount of RLF Capital Utilized, i.e., RLF 
capital outstanding and committed, by summing the amounts in #7, #8 
and #9.
    11. Calculate the RLF Utilization Rate by dividing #10 (RLF 
Capital Utilized) by #6 (RLF Capital Base). This indicates the 
percentage of RLF capital in use for comparison with the Capital 
Utilization Standard as discussed in Section X. of the 
Administrative Manual. Persistent noncompliance with the Standard 
could require sequestration of excess funds, remittance of interest 
earned on sequestered funds, and eventual loss of excess funds if 
not placed in use within a reasonable period of time.
    12. The RLF Capital Utilization Rate is calculated every six 
months for the periods ending March 31 and September 30, in 
accordance with Section X.C. of the RLF Administrative Manual.

B. Recent Loan Activity

    13-16. As appropriate, enter the number of applications received 
and loans closed for the last 12 month period. Also enter the number 
of applications received and the number of loans closed from 
Minority-owned and Women-owned firms. Ownership is defined as 
controlling interest of 51% or more. A loan is considered closed 
when all loan documents have been signed.

C. Portfolio Status

    17. Enter the total number and original dollar amount of all RLF 
loans made to date.
    18. Enter the amount of principal outstanding for Total Active 
Loans. (Total Active Loans are defined as direct loans that are 
either current, delinquent or in default--exclusive of loans that 
have been fully repaid or written off).
    19. For active loans only, enter the principal outstanding on 
direct loans that are current and those that are delinquent. 
Segregate delinquent loans into two categories, those less than or 
equal to 60 days past due and those more than 60 days past due. For 
this report, a ``delinquent'' loan is defined as one that is up to 
60 days past due. (If a previously delinquent borrower is now 
current, or making payments in accordance with an amended note and 
payment schedule, show this loan as current).
    20. Enter the total principal balance outstanding on direct 
loans written-off or the actual amount lost, whichever is smaller.
    21. Enter the total non-RLF dollars leveraged (Private & Other) 
and corresponding leverage ratios in conjunction with the RLF direct 
loans. Unless stipulated otherwise in the grant agreement, RLF loans 
must be used to leverage private investment of at least two dollars 
for every one dollar of RLF investment. Private dollars leveraged 
include private financing and private investments provided to the 
``project'' in which the RLF is an integral component. A project is 
defined as an activity consisting of interrelated components which 
share a common goal. Private investments include both cash provided 
to the project and donated assets which come from outside the 
borrowing enterprise. For donated assets, only the equity in the 
assets (defined as the assets' market value less any security 
interest) may be counted in the leverage ratio. For purposes of 
calculating private dollars invested, 90 percent of the guaranteed 
portions of SBA 7 (a) and SBA 504 debenture loans may be included. 
As a reminder, the RLF must fill a legitimate financing gap in the 
project for the private funds to be considered ``leveraged dollars'.
    Other investments leveraged by the RLF in the project may 
include other non-RLF dollars such as HUD-CDBG, USDA-IRP loans, etc.
    22. For active loans provided by other lenders and guaranteed by 
the RLF, enter the contingent liability of the RLF on outstanding 
loan principal, i.e., the current RLF exposure on all active RLF 
guarantees. This amount is usually computed by multiplying the 
percent of the original guarantee by the outstanding loan balance.
    23. For active loans provided by other lenders and guaranteed by 
the RLF, enter any amounts of RLF funds that are actually set aside 
and held in reserve to cover any losses on guaranteed loans.
    24. Enter the total number of jobs created and saved over the 
life of the RLF. In tallying jobs, only permanent and direct jobs 
may be counted; part-time jobs should be converted to full-time 
equivalents (by summing the total hours worked per week for all 
part-time employees and dividing by the standard hourly work week 
for full-time employees, normally 35-40 hours). Job information data 
should be collected at least annually. For seasonal businesses, more 
frequent collection of job data is usually necessary to obtain 
realistic employment figures for an annualized average.
    Grantees should use the following definitions in completing the 
job information section of this report:
    a: Actual Created Jobs: A job is counted as ``created (actual)'' 
if it was created as a result of and attributable to the RLF loan 
project, and has been verified by the borrower (or grantee) to 
complete a questionnaire at least on an annual basis indicating the 
number of jobs actually created and attributable to the RLF project, 
or by the grantee performing an on-site job count. The documentation 
for job counts should be placed in the project files.
    Created jobs may be credited if the jobs were created within 
five years of loan disbursement or, if construction is involved, 
within five years after construction completion. All jobs credited 
must be attributable to the RLF project. A created job must be 
removed from the credited created jobs if the job fails to last at 
least 18 months.

[[Page 5470]]

Any job which meets the creditable job created criteria is counted 
as part of the total actual jobs created permanently, regardless of 
the status of the loan.
    For loans that have been paid in full, grantees may use the job 
information data that is on file provided there is adequate 
confidence in the reliability of the data. If there is a question on 
the reliability, the data should be verified by the next annual 
reporting period.
    b: Saved Jobs are existing jobs where it can be documented that 
without the RLF assistance the jobs would have been lost.
    Exception--Created/Saved Jobs Subsequently Lost: If an RLF 
borrower subsequently ceases business (or closes a segment of its 
business) thereby eliminating previously created or saved jobs, 
these jobs may continue to be counted in the Annual Report only if 
they were maintained for a minimum of 18 months prior to the loss.

D. Administration

    25-30. Self-explanatory.

E. Capital Utilization

    31-33. Self-explanatory (Refer to Section X. of the RLF 
Administrative Manual).

F. RLF Plan Certification

    34. Self-explanatory (See Section VIII. of the RLF 
Administrative Manual and Section D.03. of the RLF Standard Terms 
and Conditions for additional details).

Appendix D to Part 308--Section 209  Economic Adjustment Program 
Revolving Loan Fund Grants; Audit Guidelines

OMB Approval No. 0610-0095 Approval expires 07/31/99

Burden Statement for Revolving Loan Fund Audit Manual

    Notwithstanding any other provision of the law, no person is 
required to respond to, nor shall any person be subject to a penalty 
for failure to comply with, a collection of information subject to 
the requirements of the Paperwork Reduction Act, unless that 
collection of information displays a currently valid OMB Control 
Number.
    The information is required to obtain or retain benefits from 
the Economic Development Administration pursuant to Economic 
Development Administration Reform Act, Public Law 105-393. The 
reason for collecting this information is to enable the Economic 
Development Administration to monitor revolving loan fund projects 
for compliance with Federal and other requirements. No 
confidentiality for the information submitted is promised or 
provided except that which is exempt under 5 U.S.C. 552(b)(4) as 
confidential business information.
    The public reporting burden for this collection is estimated to 
average 12 hours per response including the time for reviewing 
instructions, searching existing data sources, gathering and 
maintaining the data needed, and completing and reviewing the 
collection of information. Send comments regarding this burden 
estimate or any other aspect of this collection of information, 
including suggestions for reducing this burden to: Economic 
Development Administration, Herbert C. Hoover Building, Washington, 
DC 20230, and to the Office of Information and Regulatory Affairs, 
Office of Management and Budget, Washington, DC 20503.

Table of Contents

I. Purpose
II. Program Objectives
III. Program Procedures
IV. Program History
V. Frequency of Audits
VI. When an Audit is Required
VII. Types of Audits
    A. Program Specific Audit
    B. Single Audit
VIII. Special Considerations for Single Audits of RLFs
    A. Schedule of Expenditures of Federal Awards
    B. Criteria For Determining Major Programs
    C. Calculating ``Total Federal Expenditures'' For RLF Grants
    D. Footnote Disclosure
IX. Use of Another Entity For Program Administration
X. Reporting Entity
XI. Audit Report Due Dates
XII. Distribution of the Audit Report
XIII. Auditor Selection
XIV. Compliance Guidelines
    A. Specific Compliance Requirements
    B. General Compliance Requirements
    1. Background
    2. Common RLF Administrative Costs
XV. Securitization
XVI. Administrative Cost and Loan Records Retention
    A. Administrative Cost Records
    B. Loan Records
    C. General
Attachment 1
Attachment 2

Section 209 Economic Adjustment Program Revolving Loan Fund Grants 
Audit Guidelines

I. Purpose

    This document describes the audit requirements for revolving 
loan fund (RLF) grants funded under the Section 209 Economic 
Adjustment Program of the Economic Development Administration (EDA). 
It provides an overview of relevant Office of Management and Budget 
(OMB) circulars and other Federal regulations as they relate to 
administrative and audit requirements for EDA RLF grants. It also 
discusses costs that may be eligible under an RLF grant program and 
requirements for records retention. It is intended to supplement 
applicable OMB circulars and Federal regulations. If there is a 
conflict between information contained in this document and the OMB 
circulars or Federal regulations, the latter shall prevail. In the 
absence of a conflict, EDA reserves the right to limit Federal 
standards.
    This document is intended for grant recipients and for 
independent auditors as an aid in understanding the audit and 
compliance requirements for EDA RLF grants. Each recipient of an EDA 
RLF grant is responsible for reading this document and providing it 
to the independent auditor prior to the start of an audit. Failure 
to make this information available to the independent auditor could 
result in an unacceptable audit report.

II. Program Objectives

    RLF grants are administered under EDA's Section 209 Program, 
which was created in 1974 by an amendment to the Public Works and 
Economic Development Act of 1965 (PWEDA), to provide grant 
assistance to help communities adjust to sudden and severe economic 
dislocations (SSED) and long-term economic deterioration (LTED). EDA 
Section 209 grants may be used for business development assistance, 
planning, research, technical assistance, training, infrastructure, 
and other development activities which meet the purpose of the 
program.
    RLF grants provide capital for loan pools which finance business 
development activities consistent with local economic development 
strategies. Loan repayments, plus interest and other related income, 
create a revolving source of capital to finance other business 
enterprises. RLF loans are used to stimulate economic activity and 
to provide financing to businesses when private credit is 
unavailable to complete a project.

III. Program Procedures

    Priority consideration for RLF funding is given to those 
proposals which have the greatest potential to benefit areas 
experiencing or threatened with substantial economic distress. 
Proposals are evaluated based on conformance with statutory and 
regulatory requirements, the economic adjustment needs of the area, 
the merits of the proposed project in addressing those needs, and 
the applicant's ability to manage the grant effectively. Each 
approved RLF grant is operated in accordance with an RLF Plan which 
is part of the grant agreement. The RLF Plan summarizes the RLF's 
strategic objectives and the operational procedures to carry out the 
purpose of the grant.

IV. Program History

    EDA awarded its first RLF grant in 1975. To date, the Agency has 
awarded more than 700 grants aggregating in excess of $500 million 
for the establishment or recapitalization of RLFs nationwide. In 
turn, RLF grantees have made more than 7,200 loans to private sector 
businesses, which loans have either leveraged or have the potential 
for leveraging in excess of $1.9 billion private capital based on a 
private investment to total RLF monies loaned ratio of 3.83:1. There 
are generally two types of RLF grants, those established as RLFs 
from the initial disbursement of grant funds, and those established 
only after repayments are received from business loans originally 
funded from grants. Most RLF grants are of the first type.
    RLF programs are operated by local governments, regional 
development corporations, States and other non-profit organizations. 
EDA RLF grants normally require a matching contribution from local 
sources. Historically, the local match contribution has averaged 25% 
of an RLF's capitalization, but waivers have been extended in 
special situations such as natural disasters. The average EDA RLF 
grant was

[[Page 5471]]

capitalized at just over $1 million in total assets. While the size 
of individual loans extended by these grant recipients vary 
markedly, the typical RLF loan has averaged $70,000 over time.

V. Frequency of Audits

    Each RLF grant recipient shall have an audit performed annually 
for the duration of the RLF program except in the following limited 
circumstances which may permit biennial audits:

--A state or local government recipient that adopted a mandatory, 
constitutional or statutory requirement for less frequent audits 
prior to January 1, 1987, which requirement still remains in effect; 
or
--A non-profit recipient that had biennial audits for all biennial 
periods ending between July 1, 1992 and January 1, 1995.

VI. When an Audit Is Required

    Pursuant to the Single Audit Act Amendments of 1996 (P.L 104-
156) and OMB Circular A-133, audits are required of all State, local 
government and non-profit corporation RLF grant recipients that 
expended total Federal awards of at least $300,000 in a given fiscal 
year. For all RLF grants, the calculation of RLF expenditures will 
include the beginning balance of all outstanding loans plus the 
current year's loan and loan-related expenditures. With the 
exception of newly awarded grants and limited circumstances listed 
in Paragraph V. herein, the majority of RLF grant recipients will 
require an annual audit.
    To calculate the total RLF expended, follow the information 
provided in the box below. Note that only the Federal share (exclude 
the matching fund share) of the amount calculated should be used for 
the determination of an audit. Audit procedures, however, must 
encompass both the Federal and any matching funds which comprise an 
RLF.

--The year's beginning balance of outstanding RLF loans; plus
--RLF loan expenditures during the fiscal year; plus
--The amount of RLF Income 1 earned and expended on 
eligible administrative expenses during the fiscal year.
---------------------------------------------------------------------------

    \1\ RLF Income includes interest earned on loans, interest 
earned on accounts holding RLF funds not needed for immediate 
lending, loan fees received from borrowers, and other income 
generated from RLF activities.
---------------------------------------------------------------------------

VII. Types of Audits

    Entities which spend $300,000 or more in Federal awards will be 
required to have either (I) a program-specific audit or (ii) a 
single audit. An entity can elect a program-specific audit if all 
funds expended come from only one Federal program. An entity must 
have a single audit in a fiscal year in which it spends funds from 
more than one Federal program. These guidelines are not intended to 
be a complete manual of procedures, nor are they intended to 
supplant the auditor's judgment of the work required for either the 
program-specific audit or a single audit which includes coverage of 
an EDA RLF. The auditor should refer to OMB Circular A-133 for a 
detailed listing of requirements for these types of audits. These 
guidelines are designed to discuss special considerations for audits 
of RLFs.

A. Program Specific Audit

    A program-specific audit is an audit of one program performed in 
accordance with Federal laws and regulations and any audit guides 
available for that program. There is not a program-specific audit 
guide written for the RLF program. Since a program-specific audit 
guide is not available, the auditee and auditor shall have basically 
the same responsibilities for the RLF program as they would have for 
an audit of a major program in a single audit. Section VIII of these 
guidelines describes some special considerations for auditing an EDA 
RLF. OMB Circular A-133, Section 235 provides instructions for 
completing a program-specific audit.

B. Single Audit

    A single audit covers all Federal awards received and expended 
during an organization's fiscal year. Unlike the program specific 
audit, this type of audit requires a financial statement audit of 
the grant recipient. A single audit is performed by an independent 
auditor who meets the general standards specified in generally 
accepted government auditing standards.
    Attachment I provides a current list of applicable audit-related 
documents with which the auditor should become familiar. Since 
accounting requirements and reference materials are subject to 
periodic revisions, grant recipients and auditors are responsible 
for utilizing the most current reference information available.

VIII. Special Considerations for Single Audits of RLFs

A. Schedule of Expenditures of Federal Awards

    The auditee is required to report certain information in this 
schedule including: (1) the identity of all Federal award programs 
by program title and by catalogue number listed in the Catalog of 
Federal Domestic Assistance (CFDA) and (2) the total expenditures 
for each Federal award program by grantor agency. For EDA RLF 
grants, the program title is ``Special Economic Development and 
Assistance Programs--[either Sudden and Severe Economic Dislocation 
(SSED) or Long-Term Economic Deterioration (LTED)] Revolving Loan 
Fund.'' The CFDA number is ``11.307'' for both SSED and LTED grants. 
To assist program officials, it is helpful to include the number of 
each EDA RLF grant in the schedule. The method for calculating the 
total Federal expenditure amount to be reported on the schedule is 
shown in Section VIII.C. below.
    Note that in the third and fourth digits of each grant number, 
an SSED grant is denoted by the number ``19'', and an LTED grant by 
the number ``39''. Exceptions include numerical identification of 
defense or disaster-related RLFs which may have several variations 
as determined by fiscal year or specific disaster program 
appropriations.

B. Criteria for Determining Major Programs

    Federal award programs must be identified as Major Programs 
through a risk-based approach described in OMB Circular A-133. Prior 
to the issuance of the revised OMB Circular A-133, a Major Program 
was defined solely in monetary terms. The new risk-based approach 
also requires that the auditor consider the current and prior audit 
results and the inherent risk of the program in making a 
determination of Major Programs subject to audit. Major Programs 
require more extensive audit procedures than Other Federal Programs.

C. Calculating ``Total Federal Expenditures'' For RLF Grants

    For RLF grants, ``Total Federal expenditures'' normally includes 
only the Federal share of an RLF's expenditures. It is calculated as 
shown in the box below using only the Federal share of each 
component.
    Determining Total Federal Expenditures 2:

    \2\ If the Federal share of an RLF's total expenditures cannot 
be readily determined, the total RLF expenditures (including both 
Federal and matching funds) may be used in lieu of ``total Federal 
expenditures'' provided the inclusion of matching funds is 
disclosed.
---------------------------------------------------------------------------

--The year's beginning balance of outstanding RLF loans; plus
--RLF loan expenditures during the fiscal year; plus
--The amount of RLF Income 3 earned and expended on 
eligible administrative expenses during the fiscal year.
---------------------------------------------------------------------------

    \3\ Defined in footnote 1, page 3.
---------------------------------------------------------------------------

D. Footnote Disclosure (Schedule)

    In addition to reporting the Federal expenditures for an RLF 
program on the schedule of expenditures of Federal awards, a 
footnote to the schedule should disclose the value of the loans 
outstanding at the end of the year.

IX. Use of Another Entity for Program Administration

    A grant recipient may employ the services of another 
organization to perform certain duties and responsibilities under a 
grant. In delegating responsibilities, the grant recipient may be 
responsible for ensuring that the other entity is audited in 
accordance with OMB Circular A-133 and complies with the grant terms 
and conditions. The degree of responsibility delegated is the key 
factor in determining whether another entity is a subrecipient or 
vendor (and whether an audit is required). Subrecipients are 
normally required to have an audit performed while vendors would not 
usually be audited unless program compliance requirements apply to 
the vendor.
    An organization is a subrecipient if it receives or is 
responsible for RLF funds, and some or all of the following 
characteristics exist. It is responsible for (I) applicable grant 
compliance requirements; (ii) programmatic decisions including, but 
not limited to, approving RLF lending policies, final lending 
decisions including eligibility determina-tions, major amendments to 
loans, and/or foreclosure actions; and/or (iii) its performance is 
measured against meeting objectives of the program.

[[Page 5472]]

    An organization is a vendor if it provides services in support 
of an RLF grant and has the following distinguishing 
characteristics. It provides agreed services within its normal 
business operations and provides similar services to other 
purchasers, it operates in a competitive environment, and program 
compliance requirements usually do not directly pertain to the 
services provided. If grant compliance requirements apply to the 
vendor's activities, the grant recipient is responsible for ensuring 
compliance by the vendor. This may require monitoring the vendor's 
activities or requiring an audit of vendor activities as may be 
appropriate under the circumstances. A vendor is normally 
responsible only for compliance within the terms of its contract.
    An example of a vendor would be a bank or collection company 
which provides services to the grant recipient merely for the 
collection of loan payments. This would be considered a vendor 
relationship because the entity under contract would not be involved 
with any major program decisions. However, if this entity had 
expanded responsibilities, such as the final approval authority for 
loans and foreclosure actions, it would be considered a subrecipient 
due to the nature and degree of its responsibilities. It would be 
required to be audited in accordance with OMB Circular A-133, and to 
comply with the terms and conditions of the grant.

X. Reporting Entity

    The definition of a financial reporting entity is based upon the 
concept of accountability. A reporting entity may consist of a 
primary unit and component units. The decision to include a 
component unit in the reporting entity is based on whether (1) the 
primary unit is financially accountable for the component unit, and 
(2) the nature and significance of the relationship between the 
primary unit and the component unit is such that exclusion would 
cause the reporting entity's financial statements to be misleading 
or incomplete.
    While it is management's responsibility to define the reporting 
entity, one of the initial tasks performed by the auditor is to 
independently determine whether management has properly defined the 
reporting entity, pursuant to the Government Accounting Standards 
Board's (GASB) Statement No. 14, The Financial Reporting Entity.

XI. Audit Report Due Dates

    The audit must be completed and the report package submitted 
within 9 months following the end of the period audited, unless a 
longer period has been agreed to in advance. However, for fiscal 
years ending on or before June 30, 1998, auditees shall have 13 
months after the end of the audit period to submit the reporting 
package. In either case, the required reporting package shall be 
submitted within 30 days after issuance of the auditor's report to 
the auditee.

XII. Distribution of the Audit Report

    The reporting package should be submitted to the Federal 
Clearinghouse in accordance with the requirements of OMB Circular A-
133, Section 320. In addition, an auditee shall submit the reporting 
package, leaving out the data collection form which is strictly for 
the Clearinghouse's use, to the EDA regional office responsible for 
monitoring the RLF.

XIII. Auditor Selection

    In arranging for audit services, grant recipients are required 
to follow the administrative requirements and procurement standards 
prescribed in the applicable Federal administrative document found 
at 15 CFR, Part 24, or OMB Circular A-110. In addition, guidance in 
selection of an auditor is available in a document entitled ``How to 
Avoid a Substandard Audit: Suggestions for Procuring an Audit.'' 
This document was developed by the National Intergovernmental Audit 
Forum and is available from the General Accounting Office at 
telephone number (202) 512-6000.

XIV. Compliance Guidelines

    For both program specific audits and single audits, the auditor 
is required to determine whether the grant recipient has complied 
with applicable laws and regulations. Compliance testing involves 
(1) the testing of specific requirements for individual Federal 
programs, as available, and (2) the testing of general requirements 
which are applicable to all Federal programs. In addition, there may 
be other laws and regulations listed in the grant terms which may 
apply to both the grant recipient and to the RLF loan recipients.
    OMB has issued a provisional compliance supplement for use with 
the revised OMB Circular A-133. The provisional compliance 
supplement addresses 14 types of compliance areas that are generic 
to all programs. It also addresses specific requirements for about 
100 programs. It is not clear whether the RLF program will be 
included in the compliance supplement.

A. Specific Compliance Requirements

    DOC's proposed compliance requirements and suggested audit 
procedures for EDA Section 209 RLF grants are provided in Attachment 
2. Independent auditors should follow these procedures in testing 
for specific compliance requirements for RLF grants. Comments and 
suggestions on this material are welcome and should be submitted to 
the U.S. Department of Commerce, Office of Inspector General, 401 W. 
Peachtree Street, N.W., Suite 2342, Atlanta, GA 30308.

B. General Compliance Requirements--Supplemental Information

    The OMB Compliance Supplements list fourteen general 
requirements and suggested auditing procedures which are applicable 
to all Federal assistance awards. For the general requirement listed 
as ``Allowable Costs And Cost Principles,'' supplemental information 
is provided below. This information should be considered when 
testing general compliance requirements.

1. Background

    Eligible Costs For RLF Grants: EDA grant funds and matching 
funds for an RLF must be used in accordance with the purposes 
specified in the grant agreement. Eligible uses generally include 
RLF loans and any specified costs listed in the grant agreement 
(e.g., budgeted audit costs). Unless specifically stated in the 
grant, the costs to administer an RLF program are not eligible for 
reimbursement from either the EDA grant or the matching funds.
    RLF Income: RLF Income includes interest earned on loans, 
interest earned on accounts holding RLF funds not needed for 
immediate lending, loan fees and other income generated from RLF 
activities. RLF Income may be used only for RLF loans or for 
eligible expenses necessary to operate an RLF program. RLF Income 
that is used for RLF administrative expenses is subject to 
applicable OMB cost principles and to the requirements described 
below.
    Only current period expenses may be expensed against current 
period RLF Income. Any exceptions to this require EDA approval. The 
accounting period for determining compliance with this requirement 
is selected by the grant recipient and may be either the recipient's 
or the Federal fiscal year. The accounting period selected is 
submitted to EDA in the annual or semiannual reports. (Refer to 
Section VII. of the prevailing EDA RLF Administrative Manual for 
additional details.)
    RLF program funds (including initial grant and matching funds 
and the repayments of loan principle and RLF Income) should be 
separately accounted for in the accounting system of each grant 
recipient. When possible, expenses charged to an RLF program should 
be categorized in detail at least at the level indicated in the RLF 
Income and Expense Statement (see Exhibit A of EDA's prevailing RLF 
Administrative Manual).
    Cost Principles: The applicable OMB Cost Principles are found in 
either OMB Circular A-21, A-87, or A-122. Administrative costs that 
may be charged against RLF Income will be classified as either 
direct or indirect costs. Direct costs include those that can be 
identified specifically with a particular cost objective, such as an 
RLF program. Indirect costs are those incurred for a common or joint 
purpose benefitting more than one program or cost objective and are 
not readily assignable.
    Cost Allocation Plans: Costs may be allocated against RLF Income 
only to the extent that they can be distributed in reasonable 
proportion to the benefits received, and are supported by a cost 
allocation plan and formal accounting records which will 
substantiate the propriety of charges. Indirect costs may not exceed 
100% of allowable direct costs as reflected in the cost allocation 
plan.
    Cost allocation plans, which include indirect cost rate 
proposals, normally must be approved by the cognizant Federal 
agency. Local governments (OMB Circular A-87 organizations) are 
required to retain cost allocation plans and/or indirect cost rate 
proposals at the local level unless the cognizant agency requests 
submittal for negotiation and approval. All cost allocation plans 
and/or indirect cost rate proposals must be approved at the local 
level and must be available to the cognizant agency, if requested. 
The independent auditor is responsible for reviewing cost allocation 
plans and/or indirect cost rate proposals to

[[Page 5473]]

determine the reasonableness and validity of costs charged against 
different cost objectives or programs.
    The Office of Inspector General, U.S. Department of Commerce 
(OIG), is designated the cognizant agency responsible for the audit, 
approval and negotiation of cost allocation plans and/or indirect 
cost rate proposals for most EDA economic development districts, as 
defined in Title IV of PWEDA. When an EDA district organization 
allocates costs requiring a cost allocation plan and/or an indirect 
cost rate proposal, the organization is not required to submit 
either of these to the OIG unless the OIG is the cognizant agency 
and requests submittal, or the cost allocation plan and/or the 
indirect cost rate proposal is the initial one for the organization. 
Cost allocation plans and indirect cost rate proposals must be 
available for review upon demand, if requested.

2. Common RLF Administrative Costs

    A description of common administrative costs that may be charged 
against RLF Income include, but are not limited to, the following:
    Advertising/Marketing: Allowable costs for advertising and 
marketing include costs for media services to recruit RLF personnel, 
market the RLF program, solicit RLF loan prospects, procure RLF-
related goods and services, and sell RLF assets. Eligible costs may 
also include the cost of printing RLF brochures and travel and other 
expenses directly related to the promotion of an RLF program.
    Audits: The costs of audits conducted in accordance with the 
grant audit requirements are allowable. The charges may be treated 
as either direct or indirect costs consistent with the applicable 
OMB cost principles. Grant and matching funds may be used for audit 
costs only to the extent listed in the approved grant budget or 
grant terms. In addition, auditing costs charged against an RLF 
program may not exceed an RLF's equitable share of the cost.
    Bonding: The costs of premiums for fidelity bonds covering 
employees who handle RLF funds are allowable to the extent that such 
costs are reasonable and distributed equitably in proportion to the 
RLF's share of the costs.
    Building Space: Rent for building space or the utilization of 
depreciation or use allowances is an allowable expense subject to 
the provisions of the applicable OMB cost principles. Maintenance 
costs are eligible expenses to the extent that they are not 
otherwise included in rental or other charges for space. See also 
``Lease Transactions'' below.
    Capital Expenditures: In accordance with current OMB cost 
principles, capital expenditures for equipment and other capital 
assets require prior EDA approval. For state and local governments 
(OMB Circular A-87), equipment is defined as tangible, personal 
property having a useful life of more than one year and an 
acquisition cost which equals the lesser of the capitalization level 
established by the organization or $5,000. For nonprofits (OMB 
Circular A-122 organizations), equipment is defined as tangible, 
personal property having a useful life of more than two years and an 
acquisition cost of more than $500 per unit. The dollar amount for 
nonprofits is expected to increase when OMB Circular A-122 is 
revised. In the interim, nonprofits may request EDA to approve an 
amendment to the grant terms to allow for purchases of capital 
equipment up to the lesser of the capitalization level established 
by the organization or $5,000.4
---------------------------------------------------------------------------

    \4\ A request for a grant amendment would allow the use of 
current period RLF Income for current purchases (up to $5,000 per 
unit) for equipment, other capital assets, and repairs which 
materially increase the value or useful life of capital assets and 
which are essential for the operations and administration of the 
grantee's RLF program.
---------------------------------------------------------------------------

    Where appropriate, an analysis should be made of lease vs. 
purchase alternatives to determine which would be the most 
economical and practical procurement method. To be an allowable 
charge against RLF Income, a capital expenditure must be reasonable 
and essential for the operation and administration of an RLF 
program. Such charges must reflect an RLF's use of the equipment 
based upon an equitable allocation method.
    Alternatively, grant recipients may be compensated for the use 
of equipment and other nonexpendable personal property through 
depreciation or use allowances subject to the provisions of the 
applicable OMB cost principles and the requirements herein.
    Procurement transactions must be conducted in a manner which 
provides, to the maximum extent practical, open and free competition 
consistent with the procurement standards published at 15 CFR Part 
24 or in OMB Circular A-110, as applicable. When acquired personal 
property is no longer needed for RLF activities or is disposed of 
for upgrading purposes, the RLF should be compensated for its share 
of the disposition proceeds. Procedures should be established and 
followed to provide for the highest possible return on property 
disposition.
    Employee Salaries & Fringe: Allowable employee salaries and 
fringe includes the compensation for personal services including, 
but not limited to salaries, wages and fringe benefits. Payrolls 
must be supportable by time and attendance or equivalent records for 
individual employees. Salaries, wages and fringe benefits of 
employees chargeable to more than one grant program or other cost 
objective must be supportable by appropriate time distribution 
records, or a cost allocation plan, and distributed equitably in 
reasonable proportion to the benefits received. Compensation for 
employee services may include only those services performed during 
the grant period.
    The salaries and expenses of the office of the Governor of a 
State or the chief executive of a political subdivisions thereof, 
are considered a cost of general government and are unallowable as 
an expense against RLF Income. The salary and expenses of an 
executive director of an EDA economic development district are 
allowable, provided such costs are allocated equitably relative to 
the benefits derived and the total costs charged against all grant 
programs does not exceed 100% of the cost item being allocated. 
Compensation of members of an RLF loan board is discussed under 
``RLF Loan Board Compensation'' below.
    Leasing Transactions: The accounting and financial reporting 
treatment for lease agreements depend on whether the lease is 
classified as a capital lease or an operating lease.
    An operating lease is a rental agreement requiring periodic 
payments for the use of an asset during a given period of time. An 
operating lease does not transfer a material equity in the property 
leased. The rent payments under an operating lease are allowable to 
the extent that the lease rate is reasonable when compared with area 
market conditions.
    A capital lease is a rental agreement where the lessee acquires 
a substantial portion of the rights to an asset. In substance, a 
capital lease represents the purchase of the asset. Financial 
Accounting Standards Board (FASB) Statement Number 13, Accounting 
for Leases, as amended, provides guidelines for capital lease 
transactions. The periodic payments under a capital lease are 
reimbursable up to the amount that would be allowed had the 
organization purchased the property on the date the lease agreement 
was executed. For example, reimbursable expenses could include 
depreciation or use allowances, maintenance, taxes and insurance, 
but excluding any unallowable costs.
    For lease agreements between related parties, a determination 
must be made whether the related parties are required to prepare 
financial reports as a single reporting entity. If reporting as a 
single entity is required for financial reporting purposes, the 
assets of the organizations shall be combined, and any reimbursable 
expenses between the parties shall be computed based upon the cost 
of ownership. Specific financial statement disclosures pertaining to 
related parties are required by FASB 57, Related Party Disclosures.
    Materials & Supplies: The costs of materials and supplies used 
during the accounting period for RLF-related activities are 
allowable expenses.
    Outside Professional Services: The costs of RLF-related services 
necessary and appropriate to prudently administer and protect RLF 
assets are allowable. Examples of professional service providers 
include independent accountants, attorneys, appraisers and others 
who advise RLF operators and who are not officers or employees of 
the grantee organization or part of the grantee's department (if the 
grantee is a governmental entity). Professional service providers 
generally include those who provide loan packaging, underwriting, 
closing, monitoring, collections, recovery, sale, and/or protection 
of collateral services. Costs for professional services are eligible 
for reimbursement provided they are consistent with the purpose of 
the grant and allocated equitably based on the benefits derived. 
(See applicable OMB cost principles for additional information on 
professional services.)
    RLF Loan Board Compensation: RLF loan board members, including 
advisory board members, who are not employees of the grant

[[Page 5474]]

recipient, are not eligible for compensation from RLF Income except 
as may be provided for in the reimbursement of travel costs 
consistent with the grant recipient's travel policies or in 
accordance with Federal Travel Regulations (see ``Travel'' below). 
Since RLF loan board members usually serve as representatives of 
their profession or employer organizations, compensation for other 
than travel-related expenses is not normally allowed. However, if 
there are exceptional circumstances that warrant consideration of a 
waiver, EDA approval may be requested.
    Training: The costs of training materials, textbooks, fees 
charged by educational institutions, and travel costs for part-time 
education of employees to improve their skills and performance in 
the management, administration and operation of an RLF are 
allowable. Extended or full-time training is unallowable except when 
specifically authorized by EDA in advance. Travel costs to attend 
meetings and professional conferences are allowable when the primary 
purpose of the meeting or conference is the dissemination of 
technical information relating to the grant program.
    Travel: The costs for transportation, lodging, subsistence and 
related items incurred by employees who are on travel status for 
official business related to RLF activities are allowable. Typical 
travel expenses might include the costs associated with visiting or 
meeting potential borrowers, servicing and monitoring loan projects, 
and meeting with bankers, accountants, attorneys and others 
affiliated with existing or potential RLF borrowers. It may also 
include the travel costs associated with marketing the RLF program 
or hiring RLF program personnel.
    Travel costs expensed to RLF Income must be applied consistent 
with the travel provisions established by the grant recipient in its 
regular operations and with the applicable OMB cost circular. 
Organizational travel provisions should be documented in a policy 
manual. In the absence of formal travel policies, the ``Federal 
Travel Regulations'' as published in the Code of Federal Regulations 
shall apply.
    For additional information on allowable costs, refer to 
applicable OMB cost principles or contact the Office of Inspector 
General, U.S. Department of Commerce, or EDA's Regional or 
Headquarter's Office.

XV. Securitization

    RLF grant recipients may, with EDA's prior written consent, 
further the objectives of the RLF through the sale of loans or 
Securitization 5 of its loan portfolio. Auditors should 
determine whether Securitization has occurred, and if so, whether 
EDA consent was obtained.
---------------------------------------------------------------------------

    \5\ Securitization is a financing technique of securing the 
investment of new capital with the stream of income generated by one 
or more (usually a large group of) existing loans. For EDA's 
purposes, the term intentionally encompasses a wide variety of 
techniques to access investor capital by securing those investments 
with the value of an existing RLF economic development loan 
portfolio. This deliberately broad definition covers a number of 
actual and potential schemes to access investor capital that appear 
to deviate from the more traditional definition and yet provide 
flexible alternatives to RLF operators for raising additional funds.
---------------------------------------------------------------------------

XVI. Administrative Cost and Loan Records Retention

A. Administrative Cost Records

    Records of administrative costs incurred for activities relating 
to the operation of the RLF shall be retained for three (3) years 
from the actual submission date of the last Semiannual or Annual 
Report which covers the period during which such costs were claimed, 
or for five (5) years from the date the costs were claimed, 
whichever is less. The retention period for records of equipment 
acquired in connection with the RLF shall be three (3) years from 
the date of disposition, replacement or transfer of the equipment.

B. Loan Records

    Loan files and related documents and records shall be retained 
over the life of the loan and for a three (3) year period from the 
date of final disposition of the loan. The date of final disposition 
of the loan is defined as the date of: (1) full payment of the 
principal, interest, fees, penalties and other fees or costs 
associated with the loan; or (2) final settlement or write-off of 
any unpaid amounts associated with the loan.

C. General

    If any litigation, claim, negotiation, audit or other action 
involving the RLF or its assets has commenced before the expiration 
of the three-year or five-year period, all administrative and 
program records pertaining to such matters shall be retained until 
completion of the action and the resolution of all issues which 
arise from it, or until the end of the regular three-year or five-
year period, whichever is later.
    The record retention periods described in this section are 
minimum periods and such prescription is not intended to limit any 
other record retention requirement of law or agreement. Any records 
retained for a period longer than so prescribed shall be available 
for inspection the same as records retained as prescribed. In any 
event, EDA will not question administrative costs claimed more than 
three (3) years old. However, if fraud is an issue, records must be 
retained until the issue is resolved.

Attachment 1--Circulars, Regulations & Other Documents For Audits of 
EDA RLF Grants

    The OMB circulars and Federal regulations relevant to RLF grant 
recipients are listed in the table below for the different types of 
RLF grant recipients, i.e., governments, nonprofits or universities. 
Since these and the other documents listed on page ii are updated 
periodically, users must be careful to utilize the most current 
version available.

----------------------------------------------------------------------------------------------------------------
                    Circular or regulation                        Government       Nonprofit        University
----------------------------------------------------------------------------------------------------------------
                                           Administrative Requirements
----------------------------------------------------------------------------------------------------------------
15 CFR Part 24...............................................               X
OMB Circular A-110...........................................  ...............               X                X
----------------------------------------------------------------------------------------------------------------
                                                 Cost Principles
----------------------------------------------------------------------------------------------------------------
OMB Circular A-21............................................  ...............  ...............               X
OMB Circular A-87............................................               X
OMB Circular A-122...........................................  ...............               X
----------------------------------------------------------------------------------------------------------------
                                                Audit Requirements
----------------------------------------------------------------------------------------------------------------
OMB Circular A-133...........................................               X                X                X
----------------------------------------------------------------------------------------------------------------

    The regulations for EDA Section 209 (RLF) grants are found in 
Title 13 of the Code of Federal Regulations (CFR), Part 308. The 
Department of Commerce regulations implementing the OMB audit 
requirements are found in 15 CFR, Part 29.
    Other duties and responsibilities of grant recipients are 
defined in the Special Terms and the Standard Terms and Conditions 
of each EDA RLF grant. Each RLF should have an RLF Plan which is 
included as part of the Special Terms and Conditions. The RLF Plan 
summarizes the RLF's lending strategy, the loan standards and the 
operational procedures under which an RLF will be administered.
    In addition, all RLF grant recipients are required to follow 
policies and procedures as prescribed by EDA. The most recent are 
included in the prevailing EDA RLF

[[Page 5475]]

Administrative Manual and in the RLF Standard Terms and Conditions. 
Both documents apply to all EDA RLF grants.

Additional Guidance for State and Local Governmental Entities 
Audits

American Institute of Certified Public Accountants (AICPA) Audit and 
Accounting Guide, Audits of State and Local Governmental Units, 
issued May 1, 1996.
AICPA Audit and Accounting Guide, The Not-for-Profit Organizations, 
issued June 1, 1996.
Government Auditing Standards, issued by the Comptroller General of 
the United States, 1994 revision (Yellow Book).
OMB Circular A-133, Audits of States, Local Governments and Non-
Profit Organizations, issued June 30, 1997.
OMB Provisional Compliance Supplement for Single Audits (expected to 
be issued in late 1997).

Additional Guidance for Non-Profit Entities Audits

AICPA, Statement of Position 92-9, Audits of Not-for-Profit 
Organizations Receiving Federal Awards, issued December 1992. (Note: 
Because of significant changes to Government Auditing Standards and 
OMB Circular A-133, much of this is outdated. AICPA is developing a 
new SOP to supersede SOP 92-9).
AICPA Statement of Auditing Standards No. 74, Compliance Auditing 
Applicable to Governmental Entities and Other Recipients of 
Governmental Financial Assistance, issued February 1995.

Attachment 2--Economic Development Administration Section 209 Revolving 
Loan Fund Grants (CFDA 11.307)

I. Program Objectives

    Revolving loan fund (RLF) grants for business development 
assistance are available under Section 209 of the Public Works and 
Economic Development Act of 1965 (PWEDA). These grants are 
administered by the Economic Development Administration (EDA) to 
help communities adjust to sudden and severe economic dislocations 
and long-term economic deterioration. RLF grants provide capital to 
establish loan pools which finance business activities and stimulate 
economic development in accordance with local development 
strategies. RLFs typically provide financing that is not otherwise 
available. Loan repayments plus interest and other income replenish 
RLF capital to provide a revolving resource for additional loans.

II. Program Procedures

    RLF grants are made to EDA designated economic development 
districts established under Title IV of PWEDA, Indian tribes, 
states, cities or other political subdivisions, consortia of 
political subdivisions, Community Development Corporations defined 
in 42 U.S.C. 9802, nonprofit organizations determined to be 
representative of a redevelopment area, and certain specified 
governments. Priority consideration for RLF funding is given to 
those proposals which have the greatest potential to benefit areas 
experiencing or threatened with substantial economic distress.

III. Compliance Requirements and Suggested Audit Procedures

A. Types of Services Allowed or Unallowed

Compliance Requirement

    Allowed Services: RLF grant and matching funds may be used only 
for purposes specified in the grant budget and grant agreement. 
Eligible uses normally include disbursements for RLF loans and the 
audit costs of RLF activities. Unlike grant and matching funds, RLF 
Income 1 may be used for RLF loans as well as for 
eligible RLF administrative expenses (see Section C. Earmarking 
below for additional details).
---------------------------------------------------------------------------

    \1\ RLF Income includes the interest earned on loans, interest 
earned on accounts holding RLF funds not needed for immediate 
lending, loan fees received from borrowers, and other income 
generated from RLF activities.
---------------------------------------------------------------------------

Suggested Audit Procedure

    Review grant budget and grant agreement, and determine whether 
RLF funds were used for specified purposes.

B. Eligibility

Compliance Requirement

    Eligibility: Eligibility for RLF assistance is based upon the 
following: (1) the activity financed being located in an eligible 
lending area (usually defined in the Special Terms and Conditions of 
the grant, as may be amended); and (2) the borrower being unable to 
obtain credit in the private capital market on terms and conditions 
which would permit the completion and/or successful operation of the 
project to be financed.
    Ineligible Recipients: The RLF grant recipient cannot make a 
loan to itself, to related parties, or to entities that would 
violate the conflict of interest provisions of the grant agreement 
(see Section D.16. of the Standard Terms and Conditions).

Suggested Audit Procedure

    Review the Special Terms and Conditions and any amendments 
thereto, and scan the current addresses of selected RLF borrowers to 
determine whether borrowers are located within the eligible lending 
area.
    On selected borrowers, test for borrower's inability to obtain 
private credit by verifying the existence of a loan write-up 
2 in the grant recipient's files. If there is a potential 
violation, check the RLF Administrative Manual, Section IV.B.3., for 
exceptions; this Section also discusses the loan write-up. No other 
tests are necessary.
---------------------------------------------------------------------------

    \2\ A loan write-up is a written record prepared by the RLF 
administrator which discusses, at a minimum, the need for providing 
RLF financing to a borrower. It may be supported by third party 
supplemental evidence as applicable and obtainable.
---------------------------------------------------------------------------

    Review the conflict of interest provisions in the Standard Terms 
and Conditions, review any procedures that the grant recipient may 
have to avoid conflicts of interest, scan loan documentation, and 
determine whether RLF loans were made to ineligible recipients as 
defined above.

C. Matching, Level of Effort, and/or Earmarking Requirements

Matching

Compliance Requirements

    A matching share of nonfederal funds required is specified in 
the grant agreement. Matching funds must be loaned either before or 
proportionately with EDA grant funds. When loans are repaid, both 
the matching and the EDA funds must remain in the control of the 
grant recipient (or subrecipient) for the duration of the RLF.

Suggested Audit Procedures

    Determine through the grant documents and recipient accounting 
records that required levels of matching were met.
    Determine that the funds used for matching have been retained in 
the RLF.

Level of Effort (Capital Utilization)

Compliance Requirements

    During the revolving phase 3 of an RLF grant, the 
grant recipient is expected to manage its RLF so at least 75 percent 
of the RLF's capital is in use. The size of the RLF may justify a 
variation from this standard percentage. Variations require EDA 
approval.
---------------------------------------------------------------------------

    \3\ The revolving phase begins after all available grant and 
matching funds have been initially disbursed.
---------------------------------------------------------------------------

Suggested Audit Procedures

    Determine that the percentage of outstanding loan dollars to 
total RLF capital complies with the prescribed usage level in the 
revolving phase. If the resultant percentage does not comply with 
the requirement, determine the duration or number of consecutive 
reporting periods of noncompliance. (See Section X., Capital 
Utilization Standard, of the EDA RLF Administrative Manual for 
details, and note that the reporting periods end on September 30 and 
March 31 of each year.)

Earmarking

Compliance Requirements

    Pursuant to the prevailing EDA RLF Administrative Manual, RLF 
Income 4 earned in a period may be used for lending or 
for RLF administrative expenses of the same period only. Any RLF 
Income remaining at the end of a period must be permanently added to 
the RLF's capital base to be used for lending. Any exceptions 
require EDA approval.
---------------------------------------------------------------------------

    \4\ Defined in Footnote 1, Page ii.
---------------------------------------------------------------------------

    (Note: Prior to March 15, 1993, RLF Income was not required to 
be added to the RLF capital base at the end of a period. The 
accounting period is selected by the grant recipient and ends on 
either its fiscal year end or the Federal fiscal year end. 
Repayments of loan principal may be used only for re-lending.)

Suggested Audit Procedures

    Verify that any RLF Income earned within the period has been 
used for such period's RLF administrative expenses, for loans, or 
that any unexpended RLF Income earned in the period has been added 
to the RLF capital base.

[[Page 5476]]

D. Special Reporting Requirements

Compliance Requirements

    Grant recipients electing to use RLF Income to cover all or part 
of an RLF's administrative expense must annually complete an ``RLF 
Income and Expense Statement.'' (If the grant recipient uses more 
than fifty percent or more than $100,000 of a period's RLF Income 
for RLF administrative expenses, the statement is submitted to EDA 
within 90 days of the period ending date.)

Suggested Audit Procedures

    Review the procedures for preparing the report (See Section VII. 
of EDA RLF Administrative Manual) and evaluate for adequacy.

E. Special Tests and Provisions

Compliance Requirements

    RLF grant recipients are expected to follow lending practices 
generally accepted as prudent for public lending programs.

Suggested Audit Procedures

    Review the grant recipient's RLF Plan for loan disbursement and 
collection procedures. Determine whether these procedures are being 
followed.
    During the Disbursement Phase 5 of an RLF grant, a 
grant recipient must demonstrate there is sufficient RLF loan 
activity to draw grant funds within the approved period allotted. 
This usually is in accordance with the following schedule: 50% of 
grant and matching funds disbursed within 18 months of the grant 
award, 80% within two (2) years, and 100% within three (3) years. 
Any time extensions require EDA's approval. By law, grant funds 
remain available for disbursement by EDA only until September 30 of 
the fifth year after the fiscal year of the grant award.
---------------------------------------------------------------------------

    \5\ The Disbursement Phase is defined as the approved time 
period for drawing all EDA grant funds.
---------------------------------------------------------------------------

F. Preservation of Government's Interest in Assets

Compliance Requirements

    In instances where RLF grant recipients elect to Securitize 
their loan portfolios, EDA's prior written consent must be obtained 
and the value of the Federal Government's reversionary interest in 
assets retained.

Suggested Audit Procedures

    Review grant recipients records where Securitization may have 
occurred and determine whether grantee obtained EDA's written 
consent as required.

PARTS 309-313--[RESERVED]

PART 314--PROPERTY

Subpart A--In General

Sec.
314.1  Federal interest, applicability.
314.2  Definitions.
314.3  Use of property.
314.4  Unauthorized use.
314.5  Federal share.
314.6  Encumbrances.

Subpart B--Real Property

314.7  Title.
314.8  Recorded statement.

Subpart C--Personal Property

314.9  Recorded statement--title.
314.10  Revolving loan funds.

Subpart D--Release of EDA's Property Interest

314.11  Procedures for release of EDA's property interest.

    Authority: 42 U.S.C. 3211; 19 U.S.C. 2341-2355; 42 U.S.C. 6701; 
42 U.S.C. 184; Department of Commerce Organization Order 10-4.

Subpart A--In General


Sec. 314.1  Federal interest, applicability.

    (a) Property that is acquired or improved with EDA grant assistance 
shall be held in trust by the recipient for the benefit of the purposes 
of the project under which the property was acquired or improved. 
Limited exceptions to this requirement are listed in Sec. 314.7(c).
    (b) During the estimated useful life of the project, EDA retains an 
undivided equitable reversionary interest in property acquired or 
improved with EDA grant assistance, except for the exceptions listed in 
Sec. 314.7(c).
    (c) EDA may approve the substitution of an eligible entity for a 
recipient. The original recipient remains responsible for the period it 
was the recipient, and the successor recipient holds the project 
property with the responsibilities of an original recipient under the 
award.


Sec. 314.2  Definitions.

    As used in this part 314 of this chapter:
    Dispose includes sell, lease, abandon, or use for a purpose or 
purposes not authorized under the grant award or this part.
    Estimated useful life means that period of years, determined by EDA 
as the expected lifespan of the project.
    Owner includes fee owner, transferee, lessee, or optionee of real 
property upon which project facilities or improvements are or will be 
located, or real property improved under a project which has as its 
purpose that the property be sold or leased.
    Personal Property means all property other than real property.
    Project means the activity and property acquired or improved for 
which a grant is awarded. When property is used in other programs as 
provided in Sec. 314.3(b), ``project'' includes such programs.
    Property includes all forms of property, real, personal (tangible 
and intangible), and mixed.
    Real property means any land, improved land, structures, 
appurtenances thereto, or other improvements, excluding movable 
machinery and equipment. Improved land also includes land which is 
improved by the construction of such project facilities as roads, 
sewers, and water lines which are not situated directly on the land but 
which contribute to the value of such land as a specific part of the 
project purpose.
    Recipient includes any recipient of grant assistance under the 
Public Works and Economic Development Act of 1965, as amended, prior to 
or as amended by Public Law 105-393, or under Title II, Chapters 3 and 
5 of the Trade Act of 1974, Title I of the Public Works Employment Act 
of 1976, the Public Works Employment Act of 1977, or the Community 
Emergency Drought Relief Act of 1977, and any EDA-approved successor to 
such recipient.


Sec. 314.3  Use of property.

    (a) The recipient or owner must use any property acquired or 
improved in whole or in part with grant assistance only for the 
authorized purpose of the project and such property must not be leased, 
sold, disposed of or encumbered without the written authorization of 
EDA.
    (b) However, in the event that EDA and the recipient determine that 
property acquired or improved in whole or in part with grant assistance 
is no longer needed for the original grant purpose, it may be used in 
other Federal grant programs, or programs that have purposes consistent 
with those authorized for support by EDA, but only if EDA approves such 
use.
    (c) When the authorized purpose of the EDA grant is to develop real 
property to be leased or sold, as determined by EDA, such sale or lease 
is permitted provided it is for adequate consideration and the sale is 
consistent with the authorized purpose of the grant and with applicable 
EDA requirements concerning, but not limited to, nondiscrimination and 
environmental compliance. The term ``adequate consideration'' means 
consideration that is fair and reasonable under the circumstances of 
the sale or lease, and may include money, services, property exchanges, 
contractual commitments, or acts of forbearance.
    (d) When acquiring replacement personal property of equal or 
greater value, the recipient may, with EDA's approval, trade-in the 
property originally acquired or sell the original property and use the 
proceeds in the acquisition of the replacement property, provided that 
the replacement property shall be used for the project and be

[[Page 5477]]

subject to the same requirements as the original property.


Sec. 314.4  Unauthorized use.

    (a) Except as provided in Secs. 314.3(b), (c) or (d), whenever, 
during the expected useful life of the project, any property acquired 
or improved in whole or in part with grant assistance is disposed of, 
or no longer used for the authorized purpose of the project, the 
Federal Government must be compensated by the recipient for the Federal 
share of the value of the property; provided that for equipment and 
supplies, the standards of the Uniform Administrative Requirements for 
Grants at 15 CFR parts 14 and 24 or any supplements or successors 
thereto, as applicable, shall apply.
    (b) If property is disposed of or encumbered without EDA approval, 
EDA may assert its interest in the property to recover the Federal 
share of the value of the property for the Federal Government. EDA may 
pursue its rights under both paragraphs (a) and (b) of this section to 
recover the Federal share, plus costs and interest.


Sec. 314.5  Federal share.

    (a) For purposes of this part, the Federal share of the value of 
property is that percentage of the current fair market value of the 
property attributable to the EDA participation in the project (after 
deducting actual and reasonable selling and fix-up expenses, if any, 
incurred to put the property into condition for sale). The Federal 
share excludes that value of the property attributable to acquisition 
or improvements before or after EDA's participation in the project and 
not included in project costs.
    (b) Where the recipient's interest in property is a leasehold for a 
term of years less than the depreciable remaining life of the property, 
that factor will be considered in determining the percentage of the 
Federal share.
    (c) If property is transferred from the recipient to another 
eligible entity, as provided in Sec. 314.1(c), the Federal Government 
must be compensated the Federal share of any money or money equivalent 
paid by or on behalf of the successor recipient to or for the benefit 
of the original recipient, provided that EDA may first permit the 
recovery by the original recipient of an amount not exceeding its 
investment in the project nor exceeding that percentage of the value of 
the property that is not attributable to the EDA participation in the 
project.
    (d) When the Federal Government is fully compensated for the 
Federal share of the value of property acquired or improved in whole or 
in part with grant assistance, EDA has no further interest in the 
ownership, use, or disposition of the property.


Sec. 314.6  Encumbrances.

    (a) Except as provided in Sec. 314.6(c), recipient-owned property 
acquired or improved in whole or in part with grant assistance may not 
be used to secure a mortgage or deed of trust or otherwise be used as 
collateral or encumbered except to secure a grant or loan made by a 
State or Federal agency or other public body participating in the same 
project. This provision does not prevent projects from being developed 
on previously encumbered property, if the requirements of Sec. 314.7(b) 
are met.
    (b) Encumbering project property other than as permitted in this 
section is an unauthorized use of the property requiring compensation 
to the Federal Government as provided in Secs. 314.4 and 314.5.
    (c) EDA may waive the provisions of Sec. 314.6(a) for good cause 
when EDA determines all of the following:
    (1) All proceeds from the grant/loan to be secured by the 
encumbrance on the property shall be available only to the recipient, 
and all proceeds from such secured grant/loan shall be used only on the 
project for which the EDA grant was awarded or on related activities of 
which the project is an essential part;
    (2) The grantor/lender would not provide funds without the security 
of a lien on the project property; and
    (3) There is a reasonable expectation that the borrower/recipient 
will not default on its obligation.
    (d) EDA may waive the provisions of Sec. 314.6(a) as to an 
encumbrance on property which is acquired and/or improved by an EDA 
grant when EDA determines that the encumbrance arises solely from the 
requirements of a pre-existing water or sewer facility or other utility 
encumbrance which by its terms extends to additional property connected 
to such facilities.

Subpart B--Real Property


Sec. 314.7  Title.

    (a) The recipient must hold title to the real property required for 
a project, except in limited cases as provided in paragraph 314.7(c) of 
this section. Except in those limited cases, the recipient must furnish 
evidence, satisfactory in form and substance to EDA, that title to real 
property required for a project (other than property of the United 
States) is vested in the recipient, and that such easements, rights-of-
way, State permits, or long-term leases as are required for the project 
have been or will be obtained by the recipient within an acceptable 
time as determined by EDA.
    (b)(1) The recipient must disclose to EDA all:
    (i) Liens,
    (ii) Mortgages,
    (iii) Other encumbrances,
    (iv) Reservations,
    (v) Reversionary interests, or
    (vi) Other restrictions on title or the recipient's interest in the 
property.
    (2) No such encumbrance or restriction will be acceptable if, as 
determined by EDA, the encumbrance or restriction will interfere with 
the construction, use, operation or maintenance of the project during 
its estimated useful life.
    (c) EDA may determine that a long-term leasehold interest for a 
period not less than the estimated useful life of the project, or an 
agreement for the recipient to purchase the property, will be 
acceptable, but only if fee title is not obtainable and the lease or 
purchase agreement provisions adequately safeguard the Federal 
Government's interest in the project. Also, EDA may permit the 
following exceptions to the requirement that the recipient hold title 
to the real property required for a project.
    (1) When a project includes construction within a railroad's right-
of-way or over a railroad crossing, it may be acceptable for the work 
to be completed by the railroad and for the railroad to continue to 
own, operate and maintain that portion of the project, if required by 
the railroad, and provided that this is a minor but essential component 
of the project.
    (2) When a project includes construction on a State-owned or local 
government-owned highway, it may be acceptable for the State or local 
government to own, operate and maintain that portion of the project, if 
required by the State or local government, provided that this is a 
minor but essential component of the project, the construction is 
completed in accordance with EDA requirements, and the State or local 
government provides assurances to EDA:
    (i) That the State or local government will operate and maintain 
the improvements for the useful life of the project as determined by 
EDA;
    (ii) That the State or local government will not sell the 
improvements for the useful life of the project, as determined by EDA; 
and
    (iii) That the use of the property will be consistent with the 
authorized purpose of the project.
    (3) When the authorized purpose of the project is to construct 
facilities to

[[Page 5478]]

serve industrial or commercial parks or sites owned by the recipient 
for sale or lease to private parties, such sale or lease is permitted 
so long as EDA requirements continue to be met. EDA may require 
evidence that the recipient has title to the park or site prior to such 
sale or lease.
    (4) When the authorized purpose of the project is to construct 
facilities to serve privately owned industrial or commercial parks or 
sites for sale or lease, such ownership, sale or lease is permitted so 
long as EDA requirements continue to be met. EDA may require evidence 
that the private party has title to the park or site prior to such sale 
or lease, and may condition the award of project assistance upon 
assurances by the private party relating to the sale or lease that EDA 
determines are necessary to assure consistency with the project 
purposes.


Sec. 314.8  Recorded statement.

    (a) For all projects involving the acquisition, construction or 
improvement of a building, as determined by EDA, the recipient shall 
execute a lien, covenant or other statement of EDA's interest in the 
property acquired or improved in whole or in part with the funds made 
available under the award. The statement shall specify in years the 
estimated useful life of the project and shall include, but not be 
limited to disposition, encumbrance, and compensation of Federal share 
requirements of this part 314. The statement shall be satisfactory in 
form and substance to EDA.
    (b) The statement of EDA's interest must be perfected and placed of 
record in the real property records of the jurisdiction in which the 
property is located, all in accordance with local law.
    (c) Facilities in which the EDA investment is only a small part of 
a large project, as determined by EDA, may be exempted from the 
requirements of this section.

Subpart C--Personal Property


Sec. 314.9  Recorded statement--Title.

    For all projects which EDA determines involve the acquisition or 
improvement of significant items of tangible personal property, 
including but not limited to ships, machinery, equipment, removable 
fixtures or structural components of buildings, the recipient shall 
execute a security interest or other statement of EDA's interest in the 
property, acceptable in form and substance to EDA, which statement must 
be perfected and placed of record in accordance with local law, with 
continuances refiled as appropriate. Whether or not a statement is 
required by EDA to be recorded, the recipient must hold title to the 
personal property acquired or improved as part of the project, except 
as otherwise provided in this part.


Sec. 314.10  Revolving loan funds.

    (a) With EDA's consent, recipients holding revolving loan fund 
(RLF) property (including but not limited to money, notes, and security 
interests) may sell such property or encumber such property as part of 
a securitization of the RLF portfolio. The net transaction proceeds 
must be used for additional loans as part of the RLF project;
    (b) When a recipient determines that it is no longer necessary or 
desirable to operate an RLF, the RLF may be terminated; provided that, 
unless otherwise stated in the award, the recipient must compensate the 
Federal Government for the Federal share of the value of the RLF 
property. The Federal share is that percentage of the capitalized RLF 
contributed by EDA applied to all RLF property, including the present 
value of all outstanding loans. However, with EDA's prior approval, 
upon termination the recipient may use for other economic development 
purposes that portion of such RLF property that EDA determines is 
attributable to the payment of interest.

Subpart D--Release of EDA's Property Interest


Sec. 314.11  Procedures for Release of EDA's Property Interest.

    (a) Before the expiration of the estimated useful life of the grant 
project, EDA may release, in whole or in part, any real property 
interest, or tangible personal property interest, in connection with a 
grant after the date that is 20 years after the date on which the grant 
was awarded. (The term ``tangible personal property'' excludes debt 
instruments, currency, and accounts in financial institutions.) Except 
as provided in paragraph (b) of this section, such release is not 
automatic; it requires EDA's approval, which will not be withheld 
except for good cause. The release may be unconditional, or may be 
conditioned upon some activity of the recipient intended to be pursued 
as a consequence of the release.
    (b) EDA hereby releases all of its real and tangible personal 
property interests in projects awarded under the Public Works 
Employment Act of 1976 (Pub. L. 94-369) and under that act as amended 
by the Public Works Employment Act of 1977 (Pub. L. 95-28).
    (c)(1) Notwithstanding Secs. 314.11(a) and (b), in no event, either 
before or after the release of EDA's interest, may project property be 
used:
    (i) In violation of the nondiscrimination requirements of the 
project award, or
    (ii) For religious purposes prohibited by the holding of the U.S. 
Supreme Court in Tilton v. Richardson, 403 U.S. 672 (1971).
    (2) Such use voids the release, and is an unauthorized use of the 
property, as provided in Sec. 314.4.

PART 315--CERTIFICATION AND ADJUSTMENT ASSISTANCE FOR FIRMS

Subpart A--General Provisions

Sec.
315.1  Purpose and scope.
315.2  Definitions.
315.3  Confidential business information.
315.4  Eligible applicants.
315.5  Selection process.
315.6  Evaluation criteria.
315.7  Award requirements.

Subpart B--Trade Adjustment Assistance Centers

315.8  Purpose and scope.

Subpart C--Certification of Firms

315.9  Certification requirements.
315.10  Processing petitions for certification.
315.11  Hearings, appeals and final determinations.
315.12  Termination of certification and procedure.
315.13  Loss of certification benefits.

Subpart D--Assistance to Industries

315.14  Assistance to firms in import-impacted industries.

    Authority: 42 U.S.C. 3211; 19 U.S.C. 2391, et seq.; 42 U.S.C. 
5141; E.O. 12372; Department of Commerce Organization Order 10-4.

Subpart A--General provisions


Sec. 315.1  Purpose and scope.

    The regulations in this part implement certain changes to 
responsibilities of the Secretary of Commerce under Chapter 3 of Title 
II of the Trade Act of 1974, as amended (19 U.S.C. 2341 et. seq.) 
(Trade Act), concerning adjustment assistance for firms. The statutory 
authority and responsibilities of the Secretary of Commerce relating to 
adjustment assistance are delegated to EDA. EDA has the duties of 
certifying firms as eligible to apply for adjustment assistance, 
providing technical adjustment assistance to eligible recipients, and 
providing assistance to organizations representing trade injured 
industries.

[[Page 5479]]

Sec. 315.2  Definitions.

    As used in this part 315 of this chapter:
    Adjustment assistance is technical assistance provided to firms or 
industries under Chapter 3 of Title II of the Trade Act.
    Adjustment proposal means a certified firm's plan for improving its 
economic situation.
    Certified firm means a firm which has been determined by EDA to be 
eligible to apply for adjustment assistance.
    Confidential business information means information submitted to 
EDA or TAACs by firms that concerns or relates to trade secrets for 
commercial or financial purposes which is exempt from public disclosure 
under 5 U.S.C. 552(b)(4), 5 U.S.C. 552b(c)(4) and 15 CFR part 4.
    Decreased absolutely means a firm's sales or production has 
declined:
    (1) Irrespective of industry or market fluctuations; and
    (2) Relative only to the previous performance of the firm.
    Directly competitive means:
    (1) Articles which are substantially equivalent for commercial 
purposes, i.e., are adapted to the same function or use and are 
essentially interchangeable; and
    (2) Oil or natural gas (exploration, drilling or otherwise 
produced).
    Firm means an individual proprietorship, partnership, joint 
venture, association, corporation (including a development 
corporation), business trust, cooperative, trustee in bankruptcy or 
receiver under court decree and including fishing, agricultural 
entities and those which explore, drill or otherwise produce oil or 
natural gas. When a firm owns or controls other firms as described 
below, for purposes of receiving benefits under this part, the firm and 
such other firms may be considered a single firm when they produce like 
or directly competitive articles or are exerting essential economic 
control over one or more production facilities. Such other firms 
include:
    (1) Predecessor;
    (2) Successor;
    (3) Affiliate; or
    (4) Subsidiary.
    A group of workers threatened with total or partial separation 
means there is reasonable evidence that such total or partial 
separation is imminent.
    Like articles means articles which are substantially identical in 
their intrinsic characteristics.
    Partial separation means either:
    (1) A reduction in an employee's work hours to 80 percent or less 
of the employee's average weekly hours during the year of such 
reductions as compared to the preceding year; or
    (2) A reduction in the employee's weekly wage to 80 percent or less 
of his/her average weekly wage during the year of such reduction as 
compared to the preceding year.
    Person means individual, organization or group.
    The record means:
    (1) A petition for certification of eligibility to qualify for 
adjustment assistance;
    (2) Any supporting information submitted by the petitioner;
    (3) Report of the EDA investigation in regard to the petition; and
    (4) Any information developed during the investigation or in 
connection with any public hearing held on the petition.
    Recipient means a firm, Trade Adjustment Assistance Center or other 
party receiving adjustment assistance or through which adjustment 
assistance is provided under the Trade Act.
    A significant number or proportion of workers means 5 percent of 
the firm's work force or 50 workers, whichever is less. An individual 
farmer is considered a significant number or proportion of workers.
    Substantial interest means a direct, material, economic interest in 
the certification or noncertification of the petitioner.
    Technical Assistance means assistance provided to firms or 
industries under Chapter 3 of Title II of the Trade Act.
    A totally separated worker means an employee who has been laid off 
or whose employment has been terminated by his/her employer for lack of 
work.


Sec. 315.3  Confidential business information.

    EDA will follow the procedures set forth in 15 CFR Sec. 4.7, and 
submitters should so designate any information they believe 
confidential.


Sec. 315.4  Eligible applicants.

    (a) Trade Adjustment Assistance Centers (TAACs) are eligible 
applicants. A TAAC can be:
    (1) A university affiliate;
    (2) State or local government affiliate;
    (3) Non-profit organization.
    (b) Firms;
    (c) Organizations assisting or representing industries in which a 
substantial number of firms or workers have been certified as eligible 
to apply for adjustment assistance under sections 223 or 251 of the 
Trade Act including the following:
    (1) Existing agencies;
    (2) Private individuals;
    (3) Firms;
    (4) Universities;
    (5) Institutions;
    (6) Associations;
    (7) Unions; or
    (8) Other non-profit industry organizations.


Sec. 315.5  Selection process.

    (a) TAACs are selected in accordance with the following:
    (1) Currently funded TAACs are invited by EDA to submit either new 
or amended applications, provided they have performed in a satisfactory 
manner and complied with previous and/or current conditions in their 
cooperative agreements with EDA and contingent upon availability of 
funds. Such TAACs shall submit an application on a form approved by 
OMB, as well as a proposed budget, narrative scope of work, and such 
other information as requested by EDA. Acceptance of an application or 
amended application for a cooperative agreement does not assure funding 
by EDA; and
    (2) New TAACs will be invited to submit proposals, and if they are 
acceptable, EDA will invite an application on a form approved by OMB. 
An application will be accompanied by a narrative scope of work, 
proposed budget and such other information as requested by EDA. 
Acceptance of an application does not assure funding by EDA.
    (b) Firms are selected in accordance with the following:
    (1) Firms may apply for certification generally through a TAAC by 
filling out a petition for certification. The TAAC will provide 
technical assistance to firms wishing to fill out such petitions;
    (2) Once firms are certified in accordance with the procedures 
described in Secs. 315.9 and 315.10, an adjustment proposal is usually 
prepared with technical assistance from a party independent of the 
firm, usually the TAAC, and submitted to EDA;
    (3) Certified firms which have submitted acceptable adjustment 
proposals within the time limits described in Sec. 315.13 below, may 
begin implementation of such proposal, generally through the TAAC and 
often with Technical Assistance from the TAAC, by submitting a request 
to the TAAC to provide assistance in implementing an accepted 
adjustment proposal; and
    (4) EDA determines whether or not to provide assistance for 
adjustment proposals based upon Sec. 315.6(c)(2).
    (c) Organizations representing trade injured industries must meet 
with an EDA representative to discuss the industry problems, 
opportunities and assistance needs, and if invited by EDA may then 
submit an application as

[[Page 5480]]

approved by OMB, as well as a scope of work and proposed budget.


Sec. 315.6  Evaluation criteria.

    (a) Currently funded TAACs are generally evaluated based on the 
following:
    (1) How well they have performed under cooperative agreements with 
EDA and if they are in compliance with the terms and conditions of such 
cooperative agreements;
    (2) Proposed scope of work, budget and application or amended 
application; and
    (3) The availability of funds.
    (b) New TAACs are generally evaluated on the following:
    (1) Demonstrates competence in administering business assistance 
programs;
    (2) Background and experience of staff;
    (3) Proposed scope of work, budget and application; and
    (4) The availability of funding.
    (c) Firms are generally evaluated based on the following:
    (1) For certification, firms' petitions are selected strictly on 
the basis of conformance with requirements set forth in Sec. 315.9 
below;
    (2) An adjustment proposal is evaluated on the basis of the 
following:
    (i) The proposal must be submitted to EDA within 2 years after the 
date of the certification of the firm; and
    (ii) The adjustment proposal must include a description of any 
technical assistance requested to implement such proposal including 
financial and other supporting documentation as EDA determines is 
necessary, based upon either:
    (A) An analysis of the firm's problems, strengths and weaknesses 
and an assessment of its prospects for recovery; or
    (B) If EDA so determines, an acceptable adjustment proposal can be 
prepared on the basis of other available information.
    (iii) The adjustment proposal must be evaluated to determine that 
it:
    (A) Is reasonably calculated to contribute materially to the 
economic adjustment of the firm, i.e., that such proposal will be a 
constructive aid to the firm in establishing a competitive position in 
the same or a different industry;
    (B) Gives adequate consideration to the interests of a sufficient 
number of separated workers of the firm, by providing for example that 
the firm will:
    (1) Give a rehiring preference to such workers;
    (2) Make efforts to find new work for a number of such workers; and
    (3) Assist such workers in obtaining benefits under available 
programs.
    (C) Demonstrates that the firm will make all reasonable efforts to 
use its own resources for economic development, though under certain 
circumstances, resources of related firms or major stockholders will 
also be considered.
    (d) Organizations representing trade injured industries must 
demonstrate that the industry is injured by increased imports and that 
the activities to be funded will yield some short-term actions that the 
industry itself (and individual firms) can and will take toward the 
restoration of the industry's international competitiveness.
    (1) The emphasis is on practical results that can be implemented in 
the near term, and long-term research and development activities are 
given low priority.
    (2) It is also expected that the industry will continue activities 
on its own without the need for continued Federal assistance.


Sec. 315.7  Award requirements.

    (a) Award periods are as follows:
    (1) TAACs are generally funded for 12 months;
    (2) Firms are generally provided assistance over a 2-year period; 
and
    (3) Organizations representing trade injured industries are 
generally funded for 12 months.
    (b) Matching requirements are as follows:
    (1) There are no matching requirements for certification assistance 
provided by the TAACs to firms or for administrative expenses for the 
TAACs;
    (2) All adjustment proposals and implementation assistance must 
include not less than 25% nonfederal match, provided to the extent 
practicable, by firms being assisted; and
    (3) Contributions of at least 50% of the total project cash cost, 
in addition to appropriate in kind contributions, are expected from 
organizations representing trade injured industries.

Subpart B--Trade Adjustment Assistance Centers


Sec. 315.8  Purpose and scope.

    (a) Trade Adjustment Assistance Centers (TAACs) are available to 
assist firms in all fifty states, the District of Columbia and the 
Commonwealth of Puerto Rico in obtaining adjustment assistance. TAACs 
provide technical assistance in accordance with this subpart either 
through their own staffs or by arrangements with outside consultants. 
Information concerning TAACs serving particular areas can be obtained 
from EDA. See the annual FY NOFA for the appropriate point of contact 
and address.
    (b) Prior to submitting a request for technical assistance to EDA, 
a firm should determine the extent to which the required technical 
assistance can be provided through a TAAC. EDA will provide technical 
assistance through TAACs whenever EDA determines that such assistance 
can be provided most effectively in this manner. Requests for technical 
assistance will normally be made through TAACs.
    (c) TAACs generally provide technical assistance to a firm by 
providing the following:
    (1) Assistance to a firm in preparing its petition for 
certification;
    (2) Assistance to a certified firm in diagnosing its strengths and 
weaknesses and developing an adjustment proposal for the firm; and
    (3) Assistance to a certified firm in the implementation of the 
adjustment proposal for the firm.

Subpart C--Certification of Firms


Sec. 315.9  Certification requirements.

    A firm will be certified eligible to apply for adjustment 
assistance based upon the petition for certification if EDA determines, 
under section 251(c) of the Trade Act, that:
    (a) A significant number or proportion of workers in such firm have 
become totally or partially separated, or are threatened to become 
totally or partially separated;
    (b) Either sales or production, or both of the firm have decreased 
absolutely; or sales or production, or both of any article that 
accounted for not less than 25 percent of the total production or sales 
of the firm during the 12-month period preceding the most recent 12-
month period for which data are available have decreased absolutely; 
and
    (c) Increases of imports (absolute or relative to domestic 
production) of articles like or directly competitive with articles 
produced by such firm contributed importantly to such total or partial 
separation or threat thereof, and to such decline in sales or 
production; provided that imports will not be considered to have 
contributed importantly if other factors were so dominant, acting 
singly or in combination, that the worker separation or threat thereof, 
or decline in sales or production would have been essentially the same 
irrespective of the influence of imports.


Sec. 315.10  Processing petitions for certification.

    (a) Firms are encouraged to consult with a TAAC or EDA for guidance 
and

[[Page 5481]]

assistance in the preparation of their petitions for certification.
    (b) A firm seeking certification shall complete a petition (OMB 
Control Number 0610-0091) in the form prescribed by EDA with the 
following information about such firm:
    (1) Identification and description of the firm, including legal 
form of organization, economic history, major ownership interests, 
officers, directors, management, parent company, subsidiaries or 
affiliates, and production and sales facilities;
    (2) Description of goods and services produced and sold;
    (3) Description of imported articles like or directly competitive 
with those produced;
    (4) Data on its sales, production and employment for the two most 
recent years;
    (5) Copies of its audited financial statements, or if not 
available, unaudited financial statements and Federal income tax 
returns for the two most recent years;
    (6) Copies of unemployment insurance reports for the two most 
recent years;
    (7) Information concerning its major customers and their purchases; 
and
    (8) Such other information as EDA may consider material.
    (c) EDA shall determine whether the petition has been properly 
prepared and can be accepted. Immediately thereafter, EDA shall notify 
the petitioner that the petition has been accepted or advise the 
petitioner that the petition has not been accepted, but may be 
resubmitted at any time without prejudice when the specified 
deficiencies have been corrected and the resubmission will be treated 
as a new petition.
    (d) A notice of acceptance of a petition shall be published in the 
Federal Register.
    (e) An investigation shall be initiated by EDA to determine whether 
the petitioner meets requirements set forth in section 251(c) of the 
Trade Act and Sec. 315.9 above. The investigation can be terminated at 
any time for failure to meet such requirements. A report of this 
investigation shall become part of the record upon which a 
determination of the petitioner's eligibility to apply for adjustment 
assistance shall be made.
    (f) A petitioner may withdraw a petition for certification if a 
request for withdrawal is received by EDA before a certification 
determination or denial is made. Such firm may submit a new petition at 
any time thereafter in accordance with the requirements of this section 
and Sec. 315.9.
    (g) Following acceptance, EDA shall decide what action to take on 
petitions for certification as follows:
    (1) Make a determination based on the record as soon as possible 
after all material has been submitted. In no event may the period 
exceed 60 days from the date on which the petition was accepted; and
    (2) Either certify the petitioner eligible to apply for adjustment 
assistance or deny the petition, and in either event EDA shall promptly 
give notice of the action in writing to the petitioner. A notice to the 
petitioner or any parties requesting notice as specified in 
Sec. 315.10(d) of a denial of a petition shall specify the reasons upon 
which the denial is based. If a petition is denied, the petitioner 
shall not be entitled to resubmit its petition within one year from the 
date of the denial. At the time of the denial of a petition EDA may 
waive the 1-year limitation for good cause.


Sec. 315.11  Hearings, appeals and final determinations.

    (a) Any petitioner may appeal to EDA from a denial of certification 
provided that the appeal is received by EDA in writing by personal 
delivery or by registered mail within 60 days from the date of notice 
of denial under Sec. 315.10(g). The appeal shall state the grounds on 
which the appeal is based, including a concise statement of the 
supporting facts and law. The decision of EDA on the appeal shall be 
the final determination within the Department of Commerce. In the 
absence of an appeal by the petitioner under this paragraph, such final 
determination shall be determined under Sec. 315.10(g).
    (b) A firm, its representative or any other interested domestic 
party aggrieved by a final determination under paragraph (a) of this 
section may, within 60 days after notice of such determination, begin a 
civil action in the United States Court of International Trade for 
review of such determination in accordance with section 284 of the 
Trade Act (19 U.S.C. 2395).
    (c) EDA will hold a public hearing on an accepted petition not 
later than 10 days after the date of publication of the Notice of 
Acceptance in the Federal Register if requested by either the 
petitioner or any other person found by EDA to have a substantial 
interest in the proceedings, under procedures, as follows:
    (1) The petitioner and other interested persons shall have an 
opportunity to be present, to produce evidence, and to be heard;
    (2) A request for public hearing must be delivered by hand or by 
registered mail to EDA. A request by a person other than the petitioner 
shall contain:
    (i) The name, address, and telephone number of the person 
requesting the hearing; and
    (ii) A complete statement of the relationship of the person 
requesting the hearing to the petitioner and the subject matter of the 
petition, and a statement of the nature of its interest in the 
proceedings.
    (3) If EDA determines that the requesting party does not have a 
substantial interest in the proceedings, a written notice of denial 
shall be sent to the requesting party. The notice shall specify the 
reasons for the denial;
    (4) EDA shall publish a notice of a public hearing in the Federal 
Register, containing the subject matter, name of petitioner, and date, 
time and place of hearing;
    (5) EDA shall appoint the presiding officer of the hearing who 
shall determine all procedural questions;
    (6) Procedures for requests to appear are as follows:
    (i) Within 5 days after publication of the Notice of Public Hearing 
in the Federal Register, each party wishing to be heard must file a 
request to appear with EDA. Such request may be filed by:
    (A) The party requesting such hearing;
    (B) Any other party with substantial interest; or
    (C) Any other party demonstrating to the satisfaction of the 
presiding officer that it should be allowed to be heard.
    (ii) The party filing the request shall submit the names of the 
witnesses and a summary of the evidence it wishes to present; and
    (iii) Such requests to appear may be approved as deemed appropriate 
by the presiding officer.
    (7) Witnesses will testify in the order and for the time designated 
by the presiding officer, except that the petitioner shall have the 
opportunity to make its presentation first. After testifying, a witness 
may be questioned by the presiding officer or his/her designee. The 
presiding officer may allow any person who has been granted permission 
to appear to question the witnesses for the purpose of assisting him/
her in obtaining relevant and material facts on the subject matter of 
the hearing;
    (8) The presiding officer may exclude evidence which s/he deems 
improper or irrelevant. Formal rules of evidence shall not be 
applicable. Documentary material must be of a size consistent with ease 
of handling, transportation, and filing. Large exhibits may be used 
during the hearing, but copies of such exhibits must be provided in 
reduced size for submission as evidence. Two

[[Page 5482]]

copies of all documentary evidence must be furnished to the presiding 
officer during the hearing;
    (9) Briefs may be presented to the presiding officer by parties who 
have entered an appearance. Three copies of such briefs shall be filed 
with the presiding officer within 10 days of the completion of the 
hearing; and
    (10) Procedures for transcripts are as follows:
    (i) All hearings will be transcribed. Persons interested in 
transcripts of the hearings may inspect them at the U.S. Department of 
Commerce in Washington, D.C., or purchase copies as provided in 15 CFR 
part 4, Public Information; and
    (ii) Confidential business information as determined by EDA shall 
not be a part of the transcripts. Any confidential business information 
may be submitted directly to the presiding officer prior to the 
hearing. Such information shall be labeled Confidential Business 
Information. For the purpose of the public record, a brief description 
of the nature of the information shall be submitted to the presiding 
officer during the hearing.


Sec. 315.12  Termination of certification and procedure.

    (a) Whenever EDA determines that a certified firm no longer 
requires adjustment assistance or for other good cause, EDA will 
terminate the certification and promptly publish notice of such 
termination in the Federal Register. The termination will take effect 
on the date specified in the Notice.
    (b) EDA shall immediately notify the petitioner and shall state the 
reasons for such termination.


Sec. 315.13  Loss of certification benefits.

    A firm may fail to obtain benefits of certification, regardless of 
whether its certification is terminated for any of the following 
reasons:
    (a) Failure to submit an acceptable adjustment proposal within 2 
years after date of certification. While approval of an adjustment 
proposal may occur after the expiration of such 2-year period, an 
acceptable adjustment proposal must be submitted before such 
expiration;
    (b) Failure to submit documentation necessary to start 
implementation or modify its request for adjustment assistance 
consistent with its adjustment proposal within 6 months after approval 
of the adjustment proposal and 2 years have elapsed since the date of 
certification. If the firm anticipates that a longer period will be 
required to submit documentation, such longer period should be 
indicated in its adjustment proposal. If the firm becomes unable to 
submit its documentation within the allowed time, it should notify EDA 
in writing of the reasons for the delay and submit a new schedule. EDA 
has the discretion to accept or refuse a new schedule;
    (c) If the firm's request for adjustment assistance has been 
denied, the time period allowed for the submission of any documentation 
in support of such request has expired, and 2 years have elapsed since 
the date of certification; or
    (d) Failure to diligently pursue an approved adjustment proposal, 
and 2 years have elapsed since the date of certification.

Subpart D--Assistance to Industries


Sec. 315.14  Assistance to firms in import-impacted industries.

    (a) Whenever the International Trade Commission makes an 
affirmative finding under section 202(B) of the Trade Act that 
increased imports are a substantial cause of serious injury or threat 
thereof with respect to an industry, EDA shall provide to the firms in 
such industry, assistance in the preparation and processing of 
petitions and applications for benefits under programs which may 
facilitate the orderly adjustment to import competition of such firms.
    (b) EDA may provide technical assistance, on such terms and 
conditions as EDA deems appropriate for the establishment of industry 
wide programs for new product development, new process development, 
export development or other uses consistent with the purposes of this 
part.
    (c) Expenditures for technical assistance under this section may be 
up to $10,000,000 annually per industry and shall be made under such 
terms and conditions as EDA deems appropriate.

PART 316--GENERAL REQUIREMENTS FOR FINANCIAL ASSISTANCE

Sec.
316.1  Environment.
316.2  Excess capacity.
316.3  Nonrelocation.
316.4  Procedures in disaster areas.
316.5  Project servicing for loans and loan guarantees.
316.6  Public information.
316.7  Relocation assistance and land acquisition policies.
316.8  Additional requirements; Federal policies and procedures.
316.9  Amendments and changes.
316.10  Preapproval award costs.
316.11  Intergovernmental review of projects under EDA's public 
works, economic adjustment, planning, local technical assistance, 
and university center programs.
316.12  Fees for paying attorneys and consultants.
316.13   Economic development information clearinghouse.
316.14  Project administration, operation, and maintenance.
316.15  Maintenance of standards.
316.16  Records and audits.
316.17  Acceptance of certifications by applicants.
316.18  Reports by recipients.
316.19  Project administration by districts.

    Authority: 42 U.S.C. 3211; 19 U.S.C. 2391, et seq.; Department 
of Commerce Organization Order 10-4.


Sec. 316.1  Environment.

    (a) The purpose of this section is to ensure proper environmental 
review of EDA's actions under PWEDA and the Trade Act and to comply 
with the Federal environmental statutes and regulations in making a 
determination that balances economic development and environmental 
enhancement and mitigates adverse environmental impacts to the extent 
possible.
    (b) Environmental assessments of EDA actions will be conducted in 
accordance with the statutes, regulations, and Executive Orders listed 
below. This list will be supplemented and modified, as applicable, in 
EDA's annual FY NOFA.
    (1) Requirements under the National Environmental Policy Act of 
1969 (NEPA), Pub. L. 91-190, as amended, 42 U.S.C. 4321 et seq. as 
implemented under 40 CFR parts 1500 et seq. including the following:
    (i) The implementing regulations of NEPA require EDA to provide 
public notice of the availability of project specific environmental 
documents such as environmental impact statements, environmental 
assessments, findings of no significant impact, records of decision 
etc., to the affected public as specified in 40 CFR 1506.6(b); and
    (ii) Depending on the project location, environmental information 
concerning specific projects can be obtained from the Environmental 
Officer in the appropriate Washington, D.C. or regional office listed 
in the NOFA;
    (2) Clean Air Act, Pub. L. 88-206 as amended, 42 U.S.C. 7401 et. 
seq.;
    (3) Clean Water Act (Federal Water Pollution Control Act), c. 758, 
62 Stat. 1152 as amended, 33 U.S.C. 1251 et. seq.;
    (4) Comprehensive Environmental Response, Compensation, and 
Liability Act of 1980 (CERCLA), Pub. L. 96-510, as amended, 42 U.S.C. 
9601 et. seq. and the Superfund Amendments and Reauthorization Act of 
1986 (SARA), Pub. L. 99-499, as amended;
    (5) Floodplain Management Executive Order 11988 (May 24, 1977);

[[Page 5483]]

    (6) Protection of Wetlands Executive Order 11990 (May 24, 1977);
    (7) Resource Conservation and Recovery Act of 1976, Pub.L. 94-580 
as amended, 42 U.S.C. 6901 et seq.;
    (8) Historical and Archeological Data Preservation Act, Pub. L. 86-
523, as amended, 16 U.S.C. Sec. 469a-1 et. seq.;
    (9) National Historic Preservation Act of 1966, Pub. L. 89-665, as 
amended, 16 U.S.C. Sec. 470 et. seq.;
    (10) Endangered Species Act of 1973, Pub. L. 93-205, as amended, 16 
U.S.C. Sec. 1531 et. seq.;
    (11) Coastal Zone Management Act of 1972, Pub. L. 92-583, as 
amended, 16 U.S.C. Sec. 1451 et. seq.;
    (12) Flood Disaster Protection Act of 1973, Pub. L. 93-234, as 
amended, 42 U.S.C. Sec. 4002 et seq.;
    (13) Safe Drinking Water Act of 1974, Pub. L. 92-523, as amended, 
42 U.S.C. Sec. 300f-j26;
    (14) Wild and Scenic Rivers Act, Pub. L. 90-542, as amended, 16 
U.S.C. Sec. 1271 et seq.;
    (15) Environmental Justice in Minority Populations and Low-Income 
Populations Executive Order 12898 (February 11, 1994);
    (16) Farmland Protection Policy Act, Pub. L. 97-98, as amended, 7 
U.S.C. Sec. 4201 et seq.; and
    (17) Other Federal Environmental Statutes and Executive Orders as 
applicable.


Sec. 316.2  Excess capacity.

    (a) Definitions. For purposes of this section only the following 
definitions apply:
    Beneficiary means a firm or group of firms, enterprise or 
organization (public or private) that provides a commercial product or 
service and that benefits from an EDA-assisted project.
    Capacity means the maximum amount of a product or service that can 
be supplied to the market area over a sustained period by existing 
enterprises through the use of present facilities and customary work 
schedules for the industry.
    Commercial product or service means a product or service that 
competes with other providers of the same kinds of product or service.
    Demand means the actual quantity of a commercial product or service 
that users are willing to purchase in the market area served by the 
intended beneficiary of the EDA assisted project.
    Efficient capacity means that part of capacity derived from the use 
of contemporary structures, machinery and equipment, designs, and 
technologies.
    Existing competitive enterprise means an established operation 
which either produces or delivers the same kind of commercial product 
or service to all or a substantial part of the market area served by 
the intended beneficiary of the EDA assisted project.
    Firm means any enterprise which produces or sells a commercial 
product or service.
    Market Area means the geographic area within which commercial 
products or services compete for purchase by customers.
    Product or service means a good, material, or commodity, or the 
availability of a service or facility.
    Section 208 means section 208 of PWEDA.
    (1) A section 208 study is a detailed economic analysis/evaluation 
of competitive impact.
    (2) A section 208 report is a summary of supply/demand factors.
    (3) A section 208 exemption may apply to a project having one or 
more of the characteristics listed in paragraph (e) of this section.
    (b) Under section 208:
    (1) No financial assistance under PWEDA shall be extended to any 
project when the result would be to increase the production of products 
or services when there is not sufficient demand for such products or 
services, to employ the efficient capacity of existing competitive 
commercial or industrial enterprises; and
    (2) When EDA considers extending assistance for a project that 
benefits a firm or industry that provides a commercial product or 
service, the beneficiary is subject to a 208 report, study, or 
exemption, resulting in a finding that the project will or will not 
violate section 208. A section 208 study or report is required, except 
as provided in paragraph (e) of this section.
    (c) The following procedures shall be followed to the extent 
necessary to provide EDA with sufficient information to prepare a 208 
study or report:
    (1) The beneficiary shall submit, as early as possible, the 
following information with regard to each commercial product or service 
affected by the project:
    (i) A detailed description of the commercial product or service;
    (ii) Current and projected amount and value of annual sales or 
receipts;
    (iii) Market area; and
    (iv) Name of other suppliers and amount of commercial product or 
service presently available in the market area.
    (2) If the beneficiary has conducted or commissioned a relevant 
market study, it shall be made available to EDA as early as possible, 
for possible use by EDA in the 208 study or report.
    (d) A section 208 report will form an acceptable basis on which to 
make a section 208 compliance finding when the beneficiary's projected 
new or additional annual output is less than one percent of the last 
recorded annual output in the market area, or when it is otherwise 
apparent that a 208 study is not required to determine that the project 
will not violate section 208.
    (e) Unless EDA determines that circumstances require a section 208 
study or report, EDA will make a finding of compliance with section 208 
without doing a section 208 report or study for those projects which 
have one or more of the following characteristics:
    (1) The project is primarily for the use and benefit of the 
community as a whole without contributing to a new or significantly 
expanded output of commercial products or services;
    (2) The project will not contribute directly to the production or 
distribution of new or expanded output of commercial products or 
services, to any significant degree;
    (3) The project will replace or restore capacity recently destroyed 
by flood, fire, wind, or other natural disaster, without contributing 
to significant expansion of the previously existing supply of the same 
kinds of commercial products or services;
    (4) The project will assure the retention of physical capacity and/
or employment without significantly expanding the existing supply of 
commercial products or services;
    (5) The project will assure the reopening of facilities closed 
within two years of the date of reopening, if the facility will provide 
the same kinds of products or services as previously provided, without 
a significant increase in output;
    (6) The project will replace, rebuild or modernize, within the same 
labor market area, facilities which within the previous two years have 
been, or are to be, displaced by official governmental action, without 
a change in the kind or significant increase in output of the 
commercial product or service previously provided;
    (7) The project assures completion of a project previously assisted 
by EDA, where further funding is required because of revised project 
cost estimates, rather than for additional productive capacity;
    (8) The project is wholly or primarily for planning, technical 
assistance, research, evaluation, other studies, or for the training of 
workers, and not for the benefit of a firm or industry that produces a 
commercial product or service; or
    (9) No firm benefitted by the project will use 50 percent or more 
of any EDA-financed service or facility.

[[Page 5484]]

Sec. 316.3  Nonrelocation.

    (a) General requirements for nonrelocation for funding under PWEDA 
are as follows:
    (1) EDA financial assistance will not be used to assist employers 
who transfer jobs from one commuting area to another. A commuting area 
(``area'') is that area defined by the distance people travel to work 
in the locality of the project receiving EDA financial assistance;
    (2) Every applicant for EDA financial assistance has an affirmative 
duty to inform EDA of any employer who will benefit from such 
assistance who will transfer jobs (not persons) in connection with the 
EDA grant;
    (3) EDA will determine compliance with this requirement prior to 
grant award based upon information provided by the applicant during the 
project selection process; and
    (4) Each applicant and identified primary beneficiary of EDA 
assistance, which for purposes of this section means an entity 
providing economic justification for the project, must submit its 
certification of compliance with this section, and other applicable 
information as determined by EDA.
    (b) The nonrelocation requirements stated in paragraph (a) of this 
section shall not apply to businesses which:
    (1) Relocated to the area prior to the date of the applicant's 
request for EDA assistance;
    (2) Have moved or will move into the area primarily for reasons 
which have no connection to the EDA assistance;
    (3) Will expand employment in the area where the project is to be 
located substantially beyond employment in the area in which the 
business had originally been located;
    (4) Are relocating from technologically obsolete facilities to be 
competitive;
    (5) Are expanding into the new area by adding a branch, affiliate, 
or subsidiary while maintaining employment levels in the old area or 
areas; or
    (6) Are determined by EDA to be exempt.


Sec. 316.4  Procedures in Disaster Areas.

    When non-statutory EDA administrative or procedural conditions for 
financial assistance awards cannot be met by applicants under PWEDA as 
the result of a disaster, EDA may waive such conditions.


Sec. 316.5  Project servicing for loans and loan guarantees.

    EDA will provide project servicing to borrowers and lenders who 
received EDA loans and/or guaranteed loans under any programs 
administered by EDA. This includes but is not limited to loans under 
PWEDA prior to the effective date of Public Law 105-393, the Trade Act 
and the Community Emergency Drought Relief Act of 1977.
    (a) EDA will continue to monitor such loans and guarantees in 
accordance with the loan or guarantee program.
    (b) Borrowers/lenders shall submit to EDA any requests for 
modifications of their agreements with EDA. EDA shall, in accordance 
with applicable laws and policies, including the Federal Credit Reform 
Act of 1990 (2 U.S.C. 661c(e)), consider and respond to such 
modification requests.
    (c) In the event that EDA determines it necessary or desirable to 
take actions to protect or further the interests of EDA in connection 
with loans or guarantees made or evidences of indebtedness purchased, 
EDA may:
    (1) Assign or sell at public or private sale, or otherwise dispose 
of for cash or credit, in its discretion and upon such terms and 
conditions as it shall determine to be reasonable, any evidence of 
debt, contract, claim, personal or real property, or security assigned 
to or held by it in connection with financial assistance extended;
    (2) Collect or compromise all obligations assigned to or held by it 
in connection with EDA financial assistance projects until such time as 
such obligations may be referred to the Attorney General for suit or 
collection; and
    (3) Take any and all other actions determined by it to be necessary 
or desirable in purchasing, servicing, compromising, modifying, 
liquidating, or otherwise administratively dealing with or realizing on 
loans or guaranties made or evidences of indebtedness purchased.


Sec. 316.6  Public information.

    The rules and procedures regarding public access to the records of 
the Economic Development Administration are found at 15 CFR part 4.


Sec. 316.7  Relocation assistance and land acquisition policies.

    Recipients of EDA financial assistance under PWEDA and the Trade 
Act (States and political subdivisions of States and non-profits as 
applicable) are subject to requirements set forth at 15 CFR part 11.


Sec. 316.8  Additional requirements; Federal policies and procedures.

    Recipients, as defined under Sec. 314.2 of this chapter, are 
subject to all Federal laws and to Federal, Department of Commerce, and 
EDA policies, regulations, and procedures applicable to Federal 
financial assistance awards, including 15 CFR part 24, Uniform 
Administrative Requirements for Grants and Cooperative Agreements to 
State and Local Governments, or 15 CFR part 14, Uniform Administrative 
Requirements for Grants and Agreements With Institutions of Higher 
Education, Other Non-Profit and Commercial Organizations, whichever is 
applicable.


Sec. 316.9  Amendments and changes.

    (a) Requests by recipients for amendments to a grant shall be 
submitted in writing to EDA for approval, and shall contain such 
information and documentation necessary to justify the request.
    (b) Any changes made without approval by EDA are made at grantee's 
own risk of suspension or termination of the project.
    (c) Changes of project scope after the time the project grant funds 
could be obligated will not be approved by EDA. In most cases, project 
grant funds cannot be obligated after September 30 of the fiscal year 
the grant is awarded.


Sec. 316.10  Preapproval award costs.

    Project activities carried out before approval of an application by 
EDA are carried out at the sole risk of the applicant. Such activity 
could result in rejection of such project application, the disallowance 
of costs, or other adverse consequences as a result of non-compliance 
with Federal requirements, including, but not limited to, civil rights 
requirements, Federal labor standards, or Federal environmental, 
historic preservation or related requirements.


Sec. 316.11  Intergovernmental review of projects under EDA's public 
works, economic adjustment, planning, local technical assistance, and 
university center programs.

    (a) When the applicant is not a State, Indian tribe or other 
general-purpose governmental authority, the applicant must afford the 
appropriate general purpose local governmental authority of the area a 
minimum of 15 days in which to review and comment on the proposed 
project. The applicant shall furnish with the application a copy of 
such comments, or a statement of the efforts made to obtain them 
together with an explanation of the actions taken to address any 
comments received.
    (b) Applicants as appropriate, must also give State and local 
governments a reasonable opportunity to review and comment on the 
proposed project if the State has a Single Point of Contact review 
process, including comments from areawide planning organizations in

[[Page 5485]]

metropolitan areas as provided for in 15 CFR part 13.


Sec. 316.12  Fees for paying attorneys and consultants.

    Grant funds must not be used directly or indirectly to pay for 
attorney's or consultant's fees in connection with obtaining grants and 
contracts for projects funded under PWEDA.


Sec. 316.13  Economic development information clearinghouse.

    EDA will provide assistance and information as follows:
    (a) Maintain a central information clearinghouse on matters 
relating to economic development, economic adjustment, disaster 
recovery, defense conversion, and trade adjustment programs and 
activities of the Federal and State governments, including political 
subdivisions of States;
    (b) Assist potential and actual applicants for economic 
development, economic adjustment, disaster recovery, defense 
conversion, and trade adjustment assistance under Federal, State, and 
local laws in locating and applying for the assistance; and
    (c) Assist areas described in Sec. 301.2(b) and other areas by 
providing to interested persons, communities, industries, and 
businesses in the areas any technical information, market research, or 
other forms of assistance, information, or advice that would be useful 
in alleviating or preventing conditions of excessive unemployment or 
underemployment in the areas.


Sec. 316.14  Project administration, operation, and maintenance.

    EDA shall approve Federal assistance under PWEDA only if satisfied 
that the project for which Federal assistance is granted will be 
properly and efficiently administered, operated, and maintained.


Sec. 316.15  Maintenance of standards.

    In accordance with sec. 602 of PWEDA all laborers and mechanics 
employed by contractors or subcontractors on public projects assisted 
by EDA under PWEDA shall be paid in accordance with the Davis-Bacon 
Act, as amended (40 U.S.C. 276a-276a-5).


Sec. 316.16  Records and audits.

    (a) Each recipient of Federal assistance under PWEDA shall keep 
such records as the Secretary shall require, including records that 
fully disclose--
    (1) The amount and the disposition by the recipient of the proceeds 
of the assistance;
    (2) The total cost of the project in connection with which the 
assistance is given or used;
    (3) The amount and nature of the portion of the cost of the project 
provided by other sources; and
    (4) Such other records as will facilitate an effective audit.
    (b) Access to books for examination and audit--The Secretary, the 
Inspector General of the Department, and the Comptroller General of the 
United States, or any duly authorized representative, shall have access 
for the purpose of audit and examination to any books, documents, 
papers, and records of the recipient that relate to assistance received 
under PWEDA.


Sec. 316.17  Acceptance of certifications by applicants.

    EDA will accept an applicant's certifications, accompanied by 
evidence satisfactory to EDA, that the applicant meets the requirements 
of PWEDA. Each applicant must include in such evidence satisfactory 
information that any non-Federal funds (or eligible Federal funds) 
required to match the EDA share of project costs are committed to the 
project and will be available as needed.


Sec. 316.18  Reports by recipients.

    (a) In general, each recipient of assistance under PWEDA must 
submit reports to EDA at such intervals and in such manner as EDA shall 
require, except that no report shall be required to be submitted more 
than 10 years after the date of closeout of the assistance award.
    (b) Each report must contain an evaluation of the effectiveness of 
the economic assistance provided in meeting the need that the 
assistance was designed to address and in meeting the objectives of 
PWEDA


Sec. 316.19  Project administration by District organization.

    When an Economic Development District is not a recipient or co-
recipient of an award for a project involving construction, the 
District organization may administer the project for such recipient if 
the following conditions are met, as determined by EDA:
    (a) The recipient has requested (either in the application or by 
separate written request) that the district organization for the area 
in which the project is located perform the project administration;
    (b) The recipient certifies and EDA finds that:
    (1) Administration of the project is beyond the capacity of the 
recipient's current staff to perform and would require hiring 
additional staff or contracting for such services,
    (2) No local organization/business exists that would be able to 
administer the project in a more efficient or cost-effective manner 
than the staff of the district, and
    (3) The staff of the district would administer the project 
themselves, without subcontracting the work out;
    (c) EDA approves the request either by approving the application in 
which the request is made, or by separate specific written approval; 
and
    (d) The allowable costs for the administration of the project by 
the district organization staff will not exceed the customary and 
reasonable amount that would be allowable if the district were the 
recipient.

PART 317--CIVIL RIGHTS

Sec.
317.1  Civil rights.

    Authority: 42 U.S.C. 3211; Department of Commerce Organization 
Order 10-4.


Sec. 317.1  Civil rights.

    (a) Discrimination is prohibited in programs receiving federal 
financial assistance from EDA in accordance with the following 
authorities:
    (1) Section 601 of Title VI of the Civil Rights Act of 1964, 
codified at 42 U.S.C. 2000d et seq. (proscribing discrimination on the 
basis of race, color, or national origin), and the Department of 
Commerce's implementing regulations found at 15 CFR part 8;
    (2) 42 U.S.C. 3123 (proscribing discrimination on the basis of 
sex);
    (3) 29 U.S.C. 794, as amended, and the Department of Commerce's 
implementing regulations found at 15 CFR part 8b (proscribing 
discrimination on the basis of disabilities);
    (4) 42 U.S.C. 6101, as amended, and the Department of Commerce's 
implementing regulations found at 15 CFR part 20; and
    (5) Other Federal statutes, regulations and Executive Orders as 
applicable.
    (b) Definitions:
    (1) Other Parties means, as an elaboration of the definition in 15 
CFR part 8, entities which, or which are intended to create and/or save 
15 or more permanent jobs as a result of EDA assistance provided that 
they are also either specifically named in the application as 
benefitting from the project, or are or will be located in an EDA 
building, port, facility, or industrial, commercial or business park 
prior to EDA's final disbursement of funds awarded for the project.
    (2) Additional definitions are provided in EDA's Civil Rights 
Guidelines and 15 CFR part 8.

[[Page 5486]]

    (c) All recipients of EDA financial assistance under PWEDA and the 
Trade Act, and Other Parties are required to submit the following to 
EDA:
    (1) Written assurances that they will comply with Department of 
Commerce and EDA regulations, and such other requirements as may be 
applicable, prohibiting discrimination;
    (2) Employment data in such form and manner as determined by EDA;
    (3) Information on civil rights status and involvement in charges 
of discrimination in employment or the provision of services during the 
2 years previous to the date of submission of such data as follows:
    (i) Description of the status of any lawsuits, complaints or the 
results of compliance reviews; and
    (ii) Statement indicating any administrative findings by a Federal 
or State agency.
    (4) Whenever deemed necessary by EDA to determine that applicants 
and other parties are in compliance with civil rights regulations, such 
applicants and other parties shall submit additional information in the 
form and manner requested by EDA; and
    (5) In addition to employment record requirements found in 15 CFR 
8.7, complete records on all employees and applicants for employment, 
including information on race, sex, national origin, age, education and 
job-related criteria must be retained by employers.
    (d) To enable EDA to determine that there is no discrimination in 
the distribution of benefits in projects which provide service 
benefits, in addition to requirements listed in paragraph (c) of this 
section, applicants are required to submit any other information EDA 
may deem necessary for such determination.
    (e) EDA assisted planning organizations must meet the following 
requirements:
    (1) For the selection of representatives, EDA expects planning 
organizations and OEDP Committees to take appropriate steps to ensure 
that there is adequate representation of minority and low-income 
populations, women, people with disabilities and Federal and State 
recognized American Indian tribes and that such representation is 
accomplished in a nondiscriminatory manner; and
    (2) EDA assisted planning organizations and OEDP Committees shall 
take appropriate steps to ensure that no individual will be subject to 
discrimination in employment because of their race, color, national 
origin, sex, age or disability.
    (f) Reporting and other procedural matters are set forth in 15 CFR 
parts 8, 8(b), 8(c), and 20 and the Civil Rights Guidelines which are 
available from EDA's Regional Offices. See part 300 of this chapter.

PART 318--EVALUATIONS OF UNIVERSITY CENTERS AND ECONOMIC 
DEVELOPMENT DISTRICTS

Sec.
318.1  University Center performance evaluations.
318.2  Economic Development District performance evaluations.

    Authority: 42 U.S.C. 3211; Department of Commerce Organization 
Order 10-4.


Sec. 318.1  University Center performance evaluations.

    (a) EDA will evaluate the performance of each University Center. 
EDA will:
    (1) Evaluate each University Center at least once every three 
years;
    (2) Assess the University Center's contribution to providing 
technical assistance, conducting applied research, and disseminating 
project results, in accordance with the scope(s) of work funded during 
the evaluation period; and
    (3) For peer review, ensure the participation of at least one other 
University Center, as appropriate, in the evaluation.
    (b) The purpose of the evaluations of University Centers is to 
determine which centers are performing well and are worthy of continued 
grant assistance from EDA, and which should not receive continued 
assistance, so that university centers that have not previously 
received assistance may receive EDA assistance.


Sec. 318.2  Economic Development District performance evaluations.

    EDA will evaluate the performance of each Economic Development 
District. EDA will:
    (a) Evaluate each Economic Development District at least once every 
three years;
    (b) Assess the Economic Development District's management 
standards, financial accountability, and program performance in 
accordance with the current instructions for Economic Development 
District performance appraisals; and
    (c) For peer review, ensure the participation of at least one other 
Economic Development District organization, as appropriate, in the 
evaluation.

    Dated: January 20, 1999.
Phillip A. Singerman,
Assistant Secretary, Economic Development Administration.
[FR Doc. 99-1983 Filed 1-26-99; 12:31 pm]
BILLING CODE 3510-24-P