[Federal Register Volume 68, Number 101 (Tuesday, May 27, 2003)]
[Rules and Regulations]
[Pages 28710-28727]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-11851]


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SOCIAL SECURITY ADMINISTRATION

20 CFR Part 435

RIN 0960-AE25


Uniform Administrative Requirements for Grants and Agreements 
With Institutions of Higher Education, Hospitals, Other Non-Profit 
Organizations, and Commercial Organizations

AGENCY: Social Security Administration (SSA).

ACTION: Final rules.

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SUMMARY: These final rules establish new regulations providing 
standards in the administration of SSA grants and agreements with 
institutions of higher education, hospitals, other non-profit 
organizations, and commercial organizations.
    The Social Security Independence and Program Improvements Act of 
1994, enacted August 15, 1994, established SSA as an independent agency 
separate from the Department of Health and Human Services (HHS), 
effective March 31, 1995. To implement its own set of grants 
administration regulations, we are codifying almost verbatim the text 
of the Office of Management and Budget (OMB) Circular Number A-110, 
``Uniform Administrative Requirements for Grants and Agreements with 
Institutions of Higher Education, Hospitals, and Other Non-profit 
Organizations.''
    These final rules codify in SSA regulations the requirements in OMB 
Circular A-110, and along with the final rules we are publishing 
elsewhere in today's Federal Register, establish SSA grants 
regulations, separate from the HHS regulations, effective upon 
publication.

EFFECTIVE DATE: These final rules are effective on May 27, 2003.

FOR FURTHER INFORMATION CONTACT: Phyllis Y. Smith, Chief Grants 
Management Officer, Office of Operations Contracts and Grants, Office 
of Acquisition and Grants, SSA, 1710 Gwynn Oak Ave., Baltimore, MD 
21207-5279; telephone (410) 965-9518; fax (410) 966-9310.

SUPPLEMENTARY INFORMATION:

I. Background

    OMB Circular A-110 (Circular) provides standards for obtaining 
consistency and uniformity among Federal agencies in the administration 
of grants and agreements with institutions of higher education, 
hospitals, and other non-profit organizations. The Circular was 
originally issued in 1976 and, except for a minor revision in 1987, it 
remained unchanged until it was revised by OMB in 1993 (58 FR 62992). 
It was subsequently amended in 1997 (62 FR 45934) and 1999 (64 FR 
54926).
    In 1987, OMB convened an interagency task force to update the 
Circular. The work of the task force resulted in the publication of a 
1988 notice in the Federal Register (53 FR 44716) proposing that the 
Circular be merged with OMB Circular A-102, ``Uniform Administrative 
Requirements for Grants and Cooperative Agreements to State and Local 
Governments'' as a consolidated ``common rule.'' The public response 
led to a decision by OMB to not finalize the proposal.
    In November 1990, another interagency task force was established to 
revise the Circular and develop a set of common principles for the 
administration of grants and agreements with institutions of higher 
education, hospitals and other non-profit organizations. The task force 
solicited suggestions for changes to the Circular from university 
groups, non-profit organizations and other interested parties and 
compared, for consistency, the provisions of similar provisions applied 
to State and local governments. As a result, in August 1992, OMB 
published a notice in the Federal Register (57 FR 39018) requesting 
comments on proposed revisions to the Circular. OMB received over 200 
comments from Federal agencies, non-profit organizations, professional 
organizations and others. OMB considered all comments in developing the 
final revision to the Circular. The Circular issued in 1993 reflects 
the results of these efforts. The revised Circular was developed in a 
model rule format to facilitate regulatory adoption by affected Federal 
agencies. OMB's notice directed each affected agency to promulgate its 
own rules adopting the language as it appears in the Circular unless 
different provisions are required by Federal statute or are approved by 
OMB (58 FR 62992-93). The notice states that OMB will review agency 
regulations and implementation of the Circular and will provide 
interpretations of policy requirements and assistance to insure 
effective and efficient implementation. Any exceptions will be subject 
to approval by OMB and will only be made in particular cases where 
adequate justification is presented.
    Except as provided therein, the standards set forth in the Circular 
are applicable to all Federal agencies. If any statute specifically 
prescribes policies or specific requirements that differ from the 
standards provided in the Circular, the provisions of the statute shall 
govern. Federal agencies must apply the provisions of the Circular in 
making awards to the covered entities. Recipients must apply the 
provisions of the Circular to subrecipients performing substantive work 
under grants and agreements that are passed through or awarded by the 
primary recipient, if such subrecipients are organizations that are 
covered entities. The Circular does not apply to grants, contracts, or 
other agreements between the Federal government and units of State or 
local governments covered by OMB Circular A-102, ``Grants and 
Cooperative Agreements with State and Local Governments,'' nor does it 
apply to the Federal agencies' grants management common rule that 
standardized and codified the administrative

[[Page 28711]]

requirements Federal agencies impose on State and local grantees. In 
addition, the Circular does not cover subawards and contracts to State 
or local governments. However, the Circular applies to subawards made 
by State and local governments to organizations covered by the 
Circular. Federal agencies may apply the provisions of the Circular to 
commercial organizations, foreign governments, organizations under the 
jurisdiction of foreign governments, and international organizations.
    HHS applies the provisions of Circular A-110 in making awards to 
institutions of higher education, hospitals, other non-profit 
organizations, and commercial organizations through its regulations at 
45 CFR part 74. Prior to March 31, 1995, SSA was an operating component 
of HHS. As a result of Public Law 103-296, SSA became an independent 
agency on March 31, 1995. However, pursuant to section 106(b) of that 
law, the HHS regulations at 45 CFR part 74 have remained applicable to 
SSA. As part of our effort to establish our own set of grant 
regulations, we are adopting almost verbatim the text of Circular A-
110. The result is the SSA grants administration regulations at 20 CFR 
part 435. HHS regulations at 45 CFR part 74 will cease to be applicable 
to SSA on the effective date of these regulations, in accordance with 
section 106(b) of Public Law 103-296.
    Consistent with the guidance provided in Circular A-110, this 
regulation applies to SSA awards made to institutions of higher 
education, hospitals, other non-profit organizations, and commercial 
organizations. Subpart E (Disputes) of this regulation applies to all 
SSA grant and cooperative agreement awards, including awards to the 
governmental organizations covered by the final rules we are publishing 
elsewhere in today's Federal Register that create a new part 437 in our 
regulations. When appropriate, this rule will also apply to foreign 
governments, organizations under the jurisdiction of foreign 
governments, and international organizations.
    As noted above, OMB directed each affected agency to promulgate its 
own rules adopting the provisions of the Circular. Any exceptions or 
deviations, unless required by Federal statute, require OMB approval. 
Therefore, in support of OMB's desired uniformity, this rule 
incorporates the provisions and language of revised Circular A-110, 
``Uniform Administrative Requirements for Grants and Agreements with 
Institutions of Higher Education, Hospitals, and Other Non-Profit 
Organizations,'' published by OMB on November 29, 1993 (58 FR 62992), 
as further amended August 29, 1997 (62 FR 45934), and October 8, 1999 
(64 FR 54926).
    On April 27, 2000, we published a notice of proposed rulemaking 
(NPRM) proposing establishment of a new part 435 in the Code of Federal 
Regulations (65 FR 24768) that would mirror the requirements of OMB 
Circular A-110 and be separate from the HHS regulations. The NPRM 
described proposed differences between part 435 and Circular A-110 and 
between part 435 and the HHS regulations at 45 CFR part 74. The April 
27, 2000, NPRM allowed a sixty-day period for public comments. We 
received no public comments. We are, therefore, adopting the proposed 
rules as final rules with the nonsubstantive changes noted below.

II. Differences Between Part 435 (Final Rule) and the NPRM

    A. In Sec.  435.1, we have added a sentence to reflect that the SSA 
appeal process for disputes arising under SSA awards that is described 
in subpart E of these rules applies to all SSA grants and cooperative 
agreements, including awards to the State, local and Indian tribal 
governments covered by the new part 437 rules (Uniform Administrative 
Requirements for Grants and Cooperative Agreements to State and Local 
Governments) we are publishing elsewhere in today's Federal Register.
    B. In Sec.  435.5, we have modified the last sentence to reflect 
that State and local subrecipients are subject to the new part 437 
rules.

Regulatory Procedures

Waiver of 30-Day Delay in Effective Date

    Section 702(a)(5) of the Social Security Act (Act) makes the 
regulations we prescribe subject to the rulemaking procedures 
established under section 553 of the Administrative Procedure Act 
(APA), 5 U.S.C. 553. Section 553(d) of the APA requires that the 
effective date of a substantive rule be no less than 30 days after its 
publication, except in cases of: Rules which grant or recognize an 
exemption or relieve a restriction; interpretative rules and statements 
of policy; or as otherwise provided by the agency for good cause found 
and published with the rule.
    Under 5 U.S.C. 553(d)(3), good cause exists for dispensing with the 
minimum 30-day period between publication date and effective date. As 
indicated above, these regulations adopt without change the substantive 
provisions of the OMB Circular A-110. Pursuant to section 106(b) of 
Public Law 103-296, the HHS regulations at 45 CFR part 74, which 
implement the provisions of OMB Circular A-110, remain applicable to 
SSA until such time as these regulations become effective. A 30-day 
delay in the effective date of these regulations would serve no purpose 
since, during such delay, the identical provisions of part 74, which 
implement the provisions of OMB Circular A-110, would remain 
applicable. Accordingly, these regulations are effective on 
publication.

Executive Order 12866

    We have consulted with the Office of Management and Budget (OMB) 
and have determined that these final rules do not meet the criteria for 
a significant regulatory action under Executive Order 12866, as amended 
by Executive Order 13258. Thus, they were not subject to OMB review. We 
have also determined that these rules meet the plain language 
requirement of Executive Order 12866, as amended by Executive Order 
13258.

Regulatory Flexibility Act

    We certify that these final rules will not have a significant 
economic impact on a substantial number of small entities because they 
merely reflect the adoption of existing grant policies and procedures 
by SSA and do not promulgate any new policies or procedures which would 
impact the public. Therefore, a regulatory flexibility analysis as 
provided in the Regulatory Flexibility Act, as amended, is not 
required.

Paperwork Reduction Act

    The Paperwork Reduction Act (PRA) of 1995 provided that no one is 
required to respond to a collection of information unless it displays a 
valid OMB control number. In accordance with the PRA, SSA is providing 
notice that the Office of Management and Budget has approved the 
information collection requirements contained in 20 CFR part 435 in 
Sec. Sec.  435.12, 435.22 and 435.52 of these final rules. The OMB 
Control Numbers for these collections are 0348-0039 (SF-269), 0348-0038 
(SF-269A), 0348-0043 (SF-424), 0348-0004 (SF-270), 0348-0002 (SF-271) 
and 0348-00030 (SF-272).

(Catalog of Federal Domestic Assistance: Program No. 96.007 Social 
Security--Research and Demonstration; and Program No. 96.008--Social 
Security Administration--Benefits Planning, Assistance, and Outreach 
Program.)

List of Subjects in 20 CFR Part 435

    Accounting, Administrative practice and procedure, Colleges and 
universities, Grant programs--health,

[[Page 28712]]

Grant programs--social programs, Hospitals, Nonprofit organizations, 
Reporting and recordkeeping requirements.

    Dated: April 25, 2003.
Jo Anne B. Barnhart,
Commissioner of Social Security.

0
For the reasons set out in the preamble, we are adding a new part 435 
to chapter III of title 20 of the Code of Federal Regulations to read 
as follows:

PART 435--UNIFORM ADMINISTRATIVE REQUIREMENTS FOR GRANTS AND 
AGREEMENTS WITH INSTITUTIONS OF HIGHER EDUCATION, HOSPITALS, OTHER 
NON-PROFIT ORGANIZATIONS, AND COMMERCIAL ORGANIZATIONS

Subpart A--General
Sec.
435.1 Purpose.
435.2 Definitions.
435.3 Effect on other issuances.
435.4 Deviations.
435.5 Subawards.
Subpart B--Pre-Award Requirements
435.10 Purpose.
435.11 Pre-award policies.
435.12 Forms for applying for Federal assistance.
435.13 Debarment and suspension. [Reserved]
435.14 Special award conditions.
435.15 Metric system of measurement.
435.16 Resource Conservation and Recovery Act.
435.17 Certifications and representations.
Subpart C--Post-Award Requirements

Financial and Program Management

435.20 Purpose of financial and program management.
435.21 Standards for financial management systems.
435.22 Payment.
435.23 Cost sharing or matching.
435.24 Program income.
435.25 Revision of budget and program plans.
435.26 Non-Federal audits.
435.27 Allowable costs.
435.28 Period of availability of funds.

Property Standards

435.30 Purpose of property standards.
435.31 Insurance coverage.
435.32 Real property.
435.33 Federally-owned and exempt property.
435.34 Equipment.
435.35 Supplies and other expendable property.
435.36 Intangible property.
435.37 Property trust relationship.

Procurement Standards

435.40 Purpose of procurement standards.
435.41 Recipient responsibilities.
435.42 Codes of conduct.
435.43 Competition.
435.44 Procurement procedures.
435.45 Cost and price analysis.
435.46 Procurement records.
435.47 Contract administration.
435.48 Contract provisions.

Reports and Records

435.50 Purpose of reports and records.
435.51 Monitoring and reporting program performance.
435.52 Financial reporting.
435.53 Retention and access requirements for records.

Termination and Enforcement

435.60 Purpose of termination and enforcement.
435.61 Termination.
435.62 Enforcement.
Subpart D--After-the-Award Requirements
435.70 Purpose.
435.71 Closeout procedures.
435.72 Subsequent adjustments and continuing responsibilities.
435.73 Collection of amounts due.
Subpart E--Disputes
435.80 Appeal process.
435.81 Initial appeal
435.82 Appeal of decision of ACOAG
Appendix A to Part 435--Contract Provisions

    Authority: 5 U.S.C. 301.

Subpart A--General


Sec.  435.1  Purpose.

    This part establishes the Social Security Administration (SSA) 
administrative requirements for grants and agreements awarded to 
institutions of higher education, hospitals, other non-profit 
organizations, and commercial organizations. Subpart E of this part, 
which sets forth the SSA appeal process for disputes arising under SSA 
awards, applies to all SSA grants and cooperative agreements, including 
awards to the State, local and Indian tribal governments covered by 20 
CFR part 437. SSA will not impose additional or inconsistent 
requirements, except as provided in Sec. Sec.  435.4 and 435.14. Non-
profit organizations that implement Federal programs for the States are 
also subject to State requirements. For availability of OMB circulars, 
see 5 CFR 1310.3.


Sec.  435.2  Definitions.

    Accrued expenditures means the charges incurred by the recipient 
during a given period requiring the provision of funds for:
    (1) Goods and other tangible property received;
    (2) Services performed by employees, contractors, subrecipients, 
and other payees; and,
    (3) Other amounts becoming owed under programs for which no current 
services or performance is required.
    Accrued income means the sum of:
    (1) Earnings during a given period from:
    (i) Services performed by the recipient, and
    (ii) Goods and other tangible property delivered to purchasers, and
    (2) Amounts becoming owed to the recipient for which no current 
services or performance is required by the recipient.
    Acquisition cost of equipment means the net invoice price of the 
equipment, including the cost of modifications, attachments, 
accessories, or auxiliary apparatus necessary to make the property 
usable for the purpose for which it was acquired. Other charges, such 
as the cost of installation, transportation, taxes, duty or protective 
in-transit insurance, must be included or excluded from the unit 
acquisition cost in accordance with the recipient's regular accounting 
practices.
    Advance means a payment made by Treasury check or other appropriate 
payment mechanism to a recipient upon its request either before outlays 
are made by the recipient or through the use of predetermined payment 
schedules.
    Award means financial assistance that provides support or 
stimulation to accomplish a public purpose. Awards include grants and 
other agreements in the form of money or property in lieu of money, by 
the Federal Government to an eligible recipient. The term does not 
include: technical assistance, which provides services instead of 
money; other assistance in the form of loans, loan guarantees, interest 
subsidies, or insurance; direct payments of any kind to individuals; 
and, contracts which are required to be entered into and administered 
under procurement laws and regulations.
    Cash contributions means the recipient's cash outlay, including the 
outlay of money contributed to the recipient by third parties.
    Closeout means the process by which SSA determines that all 
applicable administrative actions and all required work of the award 
have been completed by the recipient and SSA.
    Contract means a procurement contract under an award or subaward, 
and a procurement subcontract under a recipient's or subrecipient's 
contract.
    Cost sharing or matching means that portion of project or program 
costs not borne by the Federal government.
    Date of completion means the date on which all work under an award 
is completed or the date on the award document, or any supplement or 
amendment thereto, on which SSA sponsorship ends.
    Disallowed costs means those charges to an award that the Federal 
awarding

[[Page 28713]]

agency determines to be unallowable, in accordance with the applicable 
Federal cost principles or other terms and conditions contained in the 
award.
    Equipment means tangible nonexpendable personal property including 
exempt property charged directly to the award having a useful life of 
more than one year and an acquisition cost of $5000 or more per unit. 
However, consistent with recipient policy, lower limits may be 
established.
    Excess property means property under the control of SSA that, as 
determined by the head thereof, is no longer required for its needs or 
the discharge of its responsibilities.
    Exempt property means tangible personal property acquired in whole 
or in part with Federal funds, where SSA has statutory authority to 
vest title in the recipient without further obligation to the Federal 
Government. An example of exempt property authority is contained in the 
Federal Grant and Cooperative Agreement Act (31 U.S.C. 6306), for 
property acquired under an award to conduct basic or applied research 
by a non-profit institution of higher education or non-profit 
organization whose principal purpose is conducting scientific research.
    Federal funds authorized means the total amount of Federal funds 
obligated by the Federal Government for use by the recipient. This 
amount may include any authorized carryover of unobligated funds from 
prior funding periods when permitted by agency regulations or agency 
implementing instructions.
    Federal share of real property, equipment, or supplies means that 
percentage of the property's acquisition costs and any improvement 
expenditures paid with Federal funds.
    Funding period means the period of time when Federal funding is 
available for obligation by the recipient.
    Intangible property and debt instruments means, but is not limited 
to, trademarks, copyrights, patents and patent applications and such 
property as loans, notes and other debt instruments, lease agreements, 
stock and other instruments of property ownership, whether considered 
tangible or intangible.
    Obligations means the amounts of orders placed, contracts and 
grants awarded, services received and similar transactions during a 
given period that require payment by the recipient during the same or a 
future period.
    Outlays or expenditures mean charges made to the project or 
program. They may be reported on a cash or accrual basis.
    (1) Cash basis. For reports prepared on a cash basis, outlays are 
the sum of cash disbursements for direct charges for goods and 
services, the amount of indirect expense charged, the value of third 
party in-kind contributions applied and the amount of cash advances and 
payments made to subrecipients.
    (2) Accrual basis. For reports prepared on an accrual basis, 
outlays are the sum of cash disbursements for direct charges for goods 
and services, the amount of indirect expense incurred, the value of in-
kind contributions applied, and the net increase (or decrease) in the 
amounts owed by the recipient for goods and other property received, 
for services performed by employees, contractors, subrecipients and 
other payees and other amounts becoming owed under programs for which 
no current services or performance are required.
    Personal property means property of any kind except real property. 
It may be tangible, having physical existence, or intangible, having no 
physical existence, such as copyrights, patents, or securities.
    Prior approval means written approval by an authorized SSA official 
evidencing prior consent.
    Program income means gross income earned by the recipient that is 
directly generated by a supported activity or earned as a result of the 
award (see exclusions in Sec.  435.24 (e) and (h)). Program income 
includes, but is not limited to, income from fees for services 
performed, the use or rental of real or personal property acquired 
under federally-funded projects, the sale of commodities or items 
fabricated under an award, license fees and royalties on patents and 
copyrights, and interest on loans made with award funds. Interest 
earned on advances of Federal funds is not program income. Except as 
otherwise provided in SSA regulations or the terms and conditions of 
the award, program income does not include the receipt of principal on 
loans, rebates, credits, discounts, etc., or interest earned on any of 
them.
    Project costs means all allowable costs, as set forth in the 
applicable Federal cost principles, incurred by a recipient and the 
value of the contributions made by third parties in accomplishing the 
objectives of the award during the project period.
    Project period means the period established in the award document 
during which Federal sponsorship begins and ends.
    Property means, unless otherwise stated, real property, equipment, 
intangible property and debt instruments.
    Real property means land, including land improvements, structures 
and appurtenances thereto, but excludes movable machinery and 
equipment.
    Recipient means an organization receiving financial assistance 
directly from SSA to carry out a project or program. The term includes 
public and private institutions of higher education, public and private 
hospitals, and other quasi-public and private non-profit organizations 
such as, but not limited to, community action agencies, research 
institutes, educational associations, and health centers. The term may 
include commercial organizations, foreign or international 
organizations (such as agencies of the United Nations) which are 
recipients, subrecipients, or contractors or subcontractors of 
recipients or subrecipients at the discretion of SSA. The term does not 
include government-owned contractor-operated facilities or research 
centers providing continued support for mission-oriented, large-scale 
programs that are government-owned or controlled, or are designated as 
federally-funded research and development centers.
    Research and development means all research activities, both basic 
and applied, and all development activities that are supported at 
universities, colleges, and other non-profit institutions. ``Research'' 
is defined as a systematic study directed toward fuller scientific 
knowledge or understanding of the subject studied. ``Development'' is 
the systematic use of knowledge and understanding gained from research 
directed toward the production of useful materials, devices, systems, 
or methods, including design and development of prototypes and 
processes. The term research also includes activities involving the 
training of individuals in research techniques where such activities 
utilize the same facilities as other research and development 
activities and where such activities are not included in the 
instruction function.
    Small awards means a grant or cooperative agreement not exceeding 
the simplified acquisition threshold fixed at 41 U.S.C. 403(11) 
(currently $100,000).
    SSA means the Federal agency that provides an award to the 
recipient.
    Subaward means an award of financial assistance in the form of 
money, or property in lieu of money, made under an award by a recipient 
to an eligible subrecipient or by a subrecipient to a lower tier 
subrecipient. The term includes financial assistance when provided by 
any legal agreement, even if the agreement is called a contract, but 
does not include

[[Page 28714]]

procurement of goods and services nor does it include any form of 
assistance which is excluded from the definition of ``award'' in this 
section.
    Subrecipient means the legal entity to which a subaward is made and 
which is accountable to the recipient for the use of the funds 
provided. The term may include foreign or international organizations 
(such as agencies of the United Nations) at the discretion of the 
Federal awarding agency.
    Supplies means all personal property excluding equipment, 
intangible property, and debt instruments as defined in this section, 
and inventions of a contractor conceived or first actually reduced to 
practice in the performance of work under a funding agreement 
(``subject inventions''), as defined in 37 CFR part 401, ``Rights to 
Inventions Made by Nonprofit Organizations and Small Business Firms 
Under Government Grants, Contracts, and Cooperative Agreements.''
    Suspension means an action by SSA that temporarily withdraws 
Federal sponsorship under an award, pending corrective action by the 
recipient or pending a decision to terminate the award by SSA. 
Suspension of an award is a separate action from suspension under 
Federal agency regulations implementing Executive Orders 12549 and 
12689, ``Debarment and Suspension.''
    Termination means the cancellation of Federal sponsorship, in whole 
or in part, under an agreement at any time prior to the date of 
completion.
    Third party in-kind contributions mean the value of non-cash 
contributions provided by non-Federal third parties. Third party in-
kind contributions may be in the form of real property, equipment, 
supplies and other expendable property, and the value of goods and 
services directly benefiting and specifically identifiable to the 
project or program.
    Unliquidated obligations, for financial reports prepared on a cash 
basis, means the amount of obligations incurred by the recipient that 
have not been paid. For reports prepared on an accrued expenditure 
basis, they represent the amount of obligations incurred by the 
recipient for which an outlay has not been recorded.
    Unobligated balance means the portion of the funds authorized by 
SSA that has not been obligated by the recipient and is determined by 
deducting the cumulative obligations from the cumulative funds 
authorized.
    Unrecovered indirect cost means the difference between the amount 
awarded and the amount that could have been awarded under the 
recipient's approved negotiated indirect cost rate.
    Working capital advance means a procedure in which funds are 
advanced to the recipient to cover its estimated disbursement needs for 
a given initial period.


Sec.  435.3  Effect on other issuances.

    For awards subject to this part, the requirements of this part 
apply, rather than the administrative requirements of other codified 
program regulations, program manuals, handbooks and other nonregulatory 
materials, except to the extent they are required by statute, or 
authorized in accordance with the deviations provision in Sec.  435.4.


Sec.  435.4  Deviations.

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


Sec.  435.5  Subawards.

    Unless sections of this part specifically exclude subrecipients 
from coverage, the provisions of this part will be applied to 
subrecipients performing work under awards if such subrecipients are 
institutions of higher education, hospitals, other non-profit, or 
commercial organizations. State and local government subrecipients are 
subject to the provisions of 20 CFR Part 437, ``Uniform Administrative 
Requirements for Grants and Cooperative Agreements to State and Local 
Governments.''

Subpart B--Pre-Award Requirements


Sec.  435.10  Purpose.

    Sections 435.11 through 435.17 prescribe forms and instructions and 
other pre-award matters to be used in applying for Federal awards.


Sec.  435.11  Pre-award policies.

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


Sec.  435.12  Forms for applying for Federal assistance.

    (a) SSA must comply with the applicable report clearance 
requirements of 5 CFR part 1320, ``Controlling Paperwork Burdens on the 
Public,'' with regard to all forms used by SSA in place of or as a 
supplement to the Standard Form 424 (SF-424) series.
    (b) Applicants must use the SF-424 series or those forms and 
instructions prescribed by SSA.
    (c) For Federal programs covered by Executive Order 12372, 
``Intergovernmental Review of Federal Programs'' (3 CFR, 1982 Comp., p. 
197), the applicant must complete the appropriate sections of the SF-
424 (Application for Federal Assistance) indicating whether the 
application was subject to review by the State Single Point of Contact 
(SPOC). The name and address of the SPOC for a particular State can be 
obtained from SSA or the Catalog of Federal Domestic Assistance. The 
SPOC will advise the applicant whether the program for which 
application is made has been selected by that State for review.


Sec.  435.13  Debarment and suspension. [Reserved]


Sec.  435.14  Special award conditions.

    (a) When special conditions may apply. SSA may impose additional 
requirements, as needed, if an applicant or recipient:
    (1) Has a history of poor performance,
    (2) Is not financially stable,

[[Page 28715]]

    (3) Has a management system that does not meet the standards 
prescribed in this part,
    (4) Has not conformed to the terms and conditions of a previous 
award, or
    (5) Is not otherwise responsible.
    (b) Notice of special conditions. When imposing additional 
requirements, SSA will notify the recipient in writing as to:
    (1) The nature of the additional requirements,
    (2) The reason why the additional requirements are being imposed,
    (3) The nature of the corrective action needed,
    (4) The time allowed for completing the corrective actions, and
    (5) The method for requesting reconsideration of the additional 
requirements imposed.
    (c) Any special conditions will be promptly removed once the 
conditions that prompted them have been corrected.


Sec.  435.15  Metric system of measurement.

    The Metric Conversion Act, as amended by the Omnibus Trade and 
Competitiveness Act (15 U.S.C. 205) declares that the metric system is 
the preferred measurement system for U.S. trade and commerce. The Act 
requires each Federal agency to establish a date or dates, in 
consultation with the Secretary of Commerce, when the metric system of 
measurement will be used in the agency's procurements, grants, and 
other business-related activities. Metric implementation may take 
longer where the use of the system is initially impractical or likely 
to cause significant inefficiencies in the accomplishment of federally-
funded activities. SSA follows the provisions of Executive Order 12770, 
``Metric Usage in Federal Government Programs'' (3 CFR, 1991 Comp., p. 
343).


Sec.  435.16  Resource Conservation and Recovery Act.

    Any State agency or agency of a political subdivision of a State 
which is using appropriated Federal funds must comply with section 6002 
of the Resource Conservation and Recovery Act (Public Law 94-580; 42 
U.S.C. 6962). Section 6002 requires that preference be given in 
procurement programs to the purchase of specific products containing 
recycled materials identified in guidelines developed by the 
Environmental Protection Agency (EPA) (40 CFR parts 247 through 254). 
Accordingly, State and local institutions of higher education, 
hospitals, and non-profit organizations that receive direct Federal 
awards or other Federal funds must give preference in their procurement 
programs funded with Federal funds to the purchase of recycled products 
pursuant to the EPA guidelines.


Sec.  435.17  Certifications and representations.

    Unless prohibited by statute or codified regulation, SSA will allow 
recipients to submit certifications and representations required by 
statute, executive order, or regulation on an annual basis, if the 
recipients have ongoing and continuing relationships with the agency. 
Annual certifications and representations must be signed by responsible 
officials with the authority to ensure recipients' compliance with the 
pertinent requirements.

Subpart C--Post-Award Requirements

Financial and Program Management


Sec.  435.20  Purpose of financial and program management.

    Sections 435.21 through 435.28 prescribe standards for financial 
management systems, methods for making payments and rules for: 
satisfying cost sharing and matching requirements, accounting for 
program income, budget revision approvals, making audits, determining 
allowability of cost, and establishing fund availability.


Sec.  435.21  Standards for financial management systems.

    (a) Introduction. SSA requires recipients to relate financial data 
to performance data and develop unit cost information whenever 
practical.
    (b) Basic requirements. Recipients' financial management systems 
must provide for the following:
    (1) Accurate, current and complete disclosure of the financial 
results of each federally-sponsored project or program in accordance 
with the reporting requirements set forth in Sec.  435.52. If SSA 
requires reporting on an accrual basis from a recipient that maintains 
its records on other than an accrual basis, the recipient will not be 
required to establish an accrual accounting system. These recipients 
may develop such accrual data for its reports on the basis of an 
analysis of the documentation on hand.
    (2) Records that identify adequately the source and application of 
funds for federally-sponsored activities. These records must contain 
information pertaining to Federal awards, authorizations, obligations, 
unobligated balances, assets, outlays, income and interest.
    (3) Effective control over and accountability for all funds, 
property and other assets. Recipients must adequately safeguard all 
such assets and assure they are used solely for authorized purposes.
    (4) Comparison of outlays with budget amounts for each award. 
Whenever appropriate, financial information should be related to 
performance and unit cost data.
    (5) Written procedures to minimize the time elapsing between the 
transfer of funds to the recipient from the U.S. Treasury and the 
issuance or redemption of checks, warrants or payments by other means 
for program purposes by the recipient. To the extent that the 
provisions of the Cash Management Improvement Act (CMIA) (Public Law 
101-453; 31 U.S.C. 6501) govern, payment methods of State agencies, 
instrumentalities, and fiscal agents must be consistent with CMIA 
Treasury-State Agreements or the CMIA default procedures codified at 31 
CFR part 205, ``Withdrawal of Cash from the Treasury for Advances under 
Federal Grant and Other Programs.''
    (6) Written procedures for determining the reasonableness, 
allocability and allowability of costs in accordance with the 
provisions of the applicable Federal cost principles and the terms and 
conditions of the award.
    (7) Accounting records including cost accounting records that are 
supported by source documentation.
    (c) Bonding and insurance requirements. Where the Federal 
Government guarantees or insures the repayment of money borrowed by the 
recipient, SSA, at its discretion, may require adequate bonding and 
insurance if the bonding and insurance requirements of the recipient 
are not deemed adequate to protect the interest of the Federal 
Government.
    (d) Fidelity bond coverage requirements. SSA may require adequate 
fidelity bond coverage where the recipient lacks sufficient coverage to 
protect the Federal Government's interest.
    (e) Obtaining bonds. Where bonds are required in the situations 
described in paragraphs (c) and (d) of this section, the bonds must be 
obtained from companies holding certificates of authority as acceptable 
sureties, as prescribed in 31 CFR part 223, ``Surety Companies Doing 
Business with the United States.''


Sec.  435.22  Payment.

    (a) Introduction. Payment methods must minimize the time elapsing 
between the transfer of funds from the United States Treasury and the 
issuance or redemption of checks, warrants, or payment by other means 
by the recipients. Payment methods of State

[[Page 28716]]

agencies or instrumentalities must be consistent with Treasury-State 
CMIA agreements or default procedures codified at 31 CFR part 205.
    (b) Advance payment method and requirements. (1) Recipients will be 
paid in advance, provided they maintain or demonstrate the willingness 
to maintain:
    (i) Written procedures that minimize the time elapsing between the 
transfer of funds and disbursement by the recipient, and
    (ii) Financial management systems that meet the standards for fund 
control and accountability as established in Sec.  435.21.
    (2) Cash advances to a recipient organization will be limited to 
the minimum amounts needed and be timed to be in accordance with the 
actual, immediate cash requirements of the recipient organization in 
carrying out the purpose of the approved program or project. The timing 
and amount of cash advances must be as close as is administratively 
feasible to the actual disbursements by the recipient organization for 
direct program or project costs and the proportionate share of any 
allowable indirect costs.
    (c) Advance payment consolidation and mechanisms. Whenever 
possible, advances must be consolidated to cover anticipated cash needs 
for all awards made by SSA to the recipient.
    (1) Advance payment mechanisms include, but are not limited to, 
Treasury check and electronic funds transfer.
    (2) Advance payment mechanisms are subject to 31 CFR part 205.
    (3) Recipients are authorized to submit requests for advances and 
reimbursements at least monthly when electronic fund transfers are not 
used.
    (d) How to request advance payment. Requests for Treasury check 
advance payment must be submitted on SF-270, ``Request for Advance or 
Reimbursement,'' or other forms that may be authorized by OMB. This 
form is not to be used when Treasury check advance payments are made to 
the recipient automatically through the use of a predetermined payment 
schedule or if precluded by special SSA instructions for electronic 
funds transfer.
    (e) Reimbursement method. Reimbursement is the preferred method 
when the advance payment requirements in paragraph (b) of this section 
cannot be met. SSA may also use this method on any construction 
agreement, or if the major portion of the construction project is 
accomplished through private market financing or Federal loans, and the 
Federal assistance constitutes a minor portion of the project.
    (1) When the reimbursement method is used, SSA will make payment 
within 30 days after receipt of the billing, unless the billing is 
improper.
    (2) Recipients will be authorized to submit a request for 
reimbursement at least monthly when electronic funds transfers are not 
used.
    (f) Working capital advance method. If a recipient cannot meet the 
criteria for advance payments and SSA has determined that reimbursement 
is not feasible because the recipient lacks sufficient working capital, 
SSA may provide cash on a working capital advance basis. Under this 
procedure, SSA will advance cash to the recipient to cover its 
estimated disbursement needs for an initial period generally geared to 
the awardee's disbursing cycle. Thereafter, SSA will reimburse the 
recipient for its actual cash disbursements. The working capital 
advance method of payment will not be used for recipients unwilling or 
unable to provide timely advances to their subrecipient to meet the 
subrecipient's actual cash disbursements.
    (g) Requesting additional cash payments. To the extent available, 
recipients must disburse funds available from repayments to and 
interest earned on a revolving fund, program income, rebates, refunds, 
contract settlements, audit recoveries and interest earned on such 
funds before requesting additional cash payments.
    (h) Withholding of payments. Unless otherwise required by statute, 
SSA will not withhold payments for proper charges made by recipients at 
any time during the project period unless paragraph (h)(1) or (2) of 
this section apply.
    (1) A recipient has failed to comply with the project objectives, 
the terms and conditions of the award, or Federal reporting 
requirements.
    (2) The recipient or subrecipient is delinquent in a debt to the 
United States as defined in OMB Circular A-129, ``Managing Federal 
Credit Programs.'' Under such conditions, SSA may, upon reasonable 
notice, inform the recipient that payments will not be made for 
obligations incurred after a specified date until the conditions are 
corrected or the indebtedness to the Federal Government is liquidated.
    (i) Standards governing the use of banks and other institutions as 
depositories of funds advanced under awards. (1) Except for situations 
described in paragraph (i)(2) of this section, SSA will not require 
separate depository accounts for funds provided to a recipient or 
establish any eligibility requirements for depositories for funds 
provided to a recipient. However, recipients must be able to account 
for the receipt, obligation and expenditure of funds.
    (2) Advances of Federal funds must be deposited and maintained in 
insured accounts whenever possible.
    (j) Use of women-owned and minority-owned banks. Consistent with 
the national goal of expanding the opportunities for women-owned and 
minority-owned business enterprises, recipients will be encouraged to 
use women-owned and minority-owned banks (a bank that is owned at least 
50 percent by women or minority group members).
    (k) Use of interest bearing accounts. Recipients must maintain 
advances of Federal funds in interest bearing accounts, unless 
paragraph (k)(1), (2) or (3) of this section apply.
    (1) The recipient receives less than $120,000 in Federal awards per 
year.
    (2) The best reasonably available interest bearing account would 
not be expected to earn interest in excess of $250 per year on Federal 
cash balances.
    (3) The depository would require an average or minimum balance so 
high that it would not be feasible within the expected Federal and non-
Federal cash resources.
    (l) Remittance of interest earned. For those entities where CMIA 
and its implementing regulations do not apply, interest earned on 
Federal advances deposited in interest bearing accounts must be 
remitted annually to Department of Health and Human Services, Payment 
Management System, Rockville, MD 20852. Interest amounts up to $250 per 
year may be retained by the recipient for administrative expense. State 
universities and hospitals must comply with CMIA, as it pertains to 
interest. If an entity subject to CMIA uses its own funds to pay pre-
award costs for discretionary awards without prior written approval 
from SSA, it waives its right to recover the interest under CMIA.
    (m) Forms for requesting advances and reimbursements. Except as 
noted elsewhere in this part, only the following forms are authorized 
for the recipients in requesting advances and reimbursements. SSA will 
not require more than an original and two copies of these forms.
    (1) SF-270, Request for Advance or Reimbursement. SSA has adopted 
the SF-270 as a standard form for all nonconstruction programs when 
electronic funds transfer or predetermined advance methods are not 
used. SSA, however, has the option of using this form for construction 
programs in lieu of the SF-271, ``Outlay

[[Page 28717]]

Report and Request for Reimbursement for Construction Programs.''
    (2) SF-271, Outlay Report and Request for Reimbursement for 
Construction Programs. SSA has adopted the SF-271 as the standard form 
to be used for requesting reimbursement for construction programs. 
However, SSA may substitute the SF-270 when SSA determines that it 
provides adequate information to meet Federal needs.


Sec.  435.23  Cost sharing or matching.

    (a) All contributions, including cash and third party in-kind, will 
be accepted as part of the recipient's cost sharing or matching when 
such contributions meet all of the following criteria:
    (1) Are verifiable from the recipient's records.
    (2) Are not included as contributions for any other federally-
assisted project or program.
    (3) Are necessary and reasonable for proper and efficient 
accomplishment of project or program objectives.
    (4) Are allowable under the applicable cost principles.
    (5) Are not paid by the Federal Government under another award, 
except where authorized by Federal statute to be used for cost sharing 
or matching.
    (6) Are provided for in the approved budget when required by SSA.
    (7) Conform to other provisions of this part, as applicable.
    (b) Unrecovered indirect costs may be included as part of cost 
sharing or matching only with the prior approval of SSA.
    (c) Values for recipient contributions of services and property 
will be established in accordance with the applicable cost principles. 
If SSA authorizes recipients to donate buildings or land for 
construction/facilities acquisition projects or long-term use, the 
value of the donated property for cost sharing or matching will be the 
lesser of paragraph (c)(1) or (2) of this section.
    (1) The certified value of the remaining life of the property 
recorded in the recipient's accounting records at the time of donation.
    (2) The current fair market value. However, when there is 
sufficient justification, SSA may approve the use of the current fair 
market value of the donated property, even if it exceeds the certified 
value at the time of donation to the project.
    (d) Volunteer services furnished by professional and technical 
personnel, consultants, and other skilled and unskilled labor may be 
counted as cost sharing or matching if the service is an integral and 
necessary part of an approved project or program. Rates for volunteer 
services must be consistent with those paid for similar work in the 
recipient's organization. In those instances in which the required 
skills are not found in the recipient organization, rates must be 
consistent with those paid for similar work in the labor market in 
which the recipient competes for the kind of services involved. In 
either case, paid fringe benefits that are reasonable, allowable, and 
allocable may be included in the valuation.
    (e) When an employer other than the recipient furnishes the 
services of an employee, these services must be valued at the 
employee's regular rate of pay (plus an amount of fringe benefits that 
are reasonable, allowable, and allocable, but exclusive of overhead 
costs), provided these services are in the same skill for which the 
employee is normally paid.
    (f) Donated supplies may include such items as expendable 
equipment, office supplies, laboratory supplies or workshop and 
classroom supplies. Value assessed to donated supplies included in the 
cost sharing or matching share must be reasonable and may not exceed 
the fair market value of the property at the time of the donation.
    (g) The method used for determining cost sharing or matching for 
donated equipment, buildings and land for which title passes to the 
recipient may differ according to the purpose of the award, if 
paragraph (g)(1) or (2) of this section apply.
    (1) If the purpose of the award is to assist the recipient in the 
acquisition of equipment, buildings or land, the total value of the 
donated property may be claimed as cost sharing or matching.
    (2) If the purpose of the award is to support activities that 
require the use of equipment, buildings or land, normally only 
depreciation or use charges for equipment and buildings may be made. 
However, the full value of equipment or other capital assets and fair 
rental charges for land may be allowed, provided that SSA has approved 
the charges.
    (h) The value of donated property must be determined in accordance 
with the usual accounting policies of the recipient, with the following 
qualifications:
    (1) The value of donated land and buildings may not exceed its fair 
market value at the time of donation to the recipient as established by 
an independent appraiser (e.g., certified real property appraiser or 
General Services Administration representative) and certified by a 
responsible official of the recipient.
    (2) The value of donated equipment may not exceed the fair market 
value of equipment of the same age and condition at the time of 
donation.
    (3) The value of donated space may not exceed the fair rental value 
of comparable space as established by an independent appraisal of 
comparable space and facilities in a privately-owned building in the 
same locality.
    (4) The value of loaned equipment may not exceed its fair rental 
value.
    (5) The following requirements pertain to the recipient's 
supporting records for in-kind contributions from third parties:
    (i) Volunteer services must be documented and, to the extent 
feasible, supported by the same methods used by the recipient for its 
own employees.
    (ii) The basis for determining the valuation for personal service, 
material, equipment, buildings and land must be documented.


Sec.  435.24  Program income.

    (a) Introduction. SSA will apply the standards set forth in this 
section in requiring recipient organizations to account for program 
income related to projects financed in whole or in part with Federal 
funds.
    (b) Use of program income. Except as provided in paragraph (h) of 
this section, program income earned during the project period must be 
retained by the recipient and, in accordance with SSA regulations or 
the terms and conditions of the award, must be used in one or more of 
the following ways. Program income must be:
    (1) Added to funds committed to the project by the Federal awarding 
agency and recipient and used to further eligible project or program 
objectives.
    (2) Used to finance the non-Federal share of the project or 
program.
    (3) Deducted from the total project or program allowable cost in 
determining the net allowable costs on which the Federal share of costs 
is based.
    (c) Use of excess program income. When an agency authorizes the 
disposition of program income as described in paragraph (b)(1) or 
(b)(2) of this section, program income in excess of any limits 
stipulated must be used in accordance with paragraph (b)(3) of this 
section.
    (d) When the use of program income is not specified. In the event 
that SSA does not specify in its regulations or the terms and 
conditions of the award how program income is to be used, paragraph 
(b)(3) of this section will apply automatically to all projects or 
programs except research. For awards that support

[[Page 28718]]

research, paragraph (b)(1) of this section will apply automatically 
unless SSA indicates in the terms and conditions another alternative on 
the award or the recipient is subject to special award conditions, as 
indicated in Sec.  435.14.
    (e) Program income earned after end of project period. Unless SSA 
regulations or the terms and conditions of the award provide otherwise, 
recipients will have no obligation to the Federal Government regarding 
program income earned after the end of the project period.
    (f) Costs incident to generation of program income. If authorized 
by SSA regulations or the terms and conditions of the award, costs 
incident to the generation of program income may be deducted from gross 
income to determine program income, provided these costs have not been 
charged to the award.
    (g) Proceeds from sale of property. Proceeds from the sale of 
property must be handled in accordance with the requirements of the 
Property Standards (See Sec. Sec.  435.30 through 435.37).
    (h) Program income from license fees and royalties. Unless SSA 
regulations or the terms and condition of the award provide otherwise, 
recipients have no obligation to the Federal Government with respect to 
program income earned from license fees and royalties for copyrighted 
material, patents, patent applications, trademarks, and inventions 
produced under an award. However, Patent and Trademark Amendments (35 
U.S.C. 18) apply to inventions made under an experimental, 
developmental, or research award.


Sec.  435.25  Revision of budget and program plans.

    (a) The budget plan is the financial expression of the project or 
program as approved during the award process. It may include either the 
Federal and non-Federal share, or only the Federal share, depending 
upon SSA requirements. It must be related to performance for program 
evaluation purposes whenever appropriate.
    (b) Recipients are required to report deviations from budget and 
program plans, and request prior approvals for budget and program plan 
revisions, in accordance with this section.
    (c) For nonconstruction awards, recipients must request prior 
approvals from SSA for one or more of the following program or budget 
related reasons:
    (1) Change in the scope or the objective of the project or program 
(even if there is no associated budget revision requiring prior written 
approval).
    (2) Change in a key person specified in the application or award 
document.
    (3) The absence for more than three months, or a 25 percent 
reduction in time devoted to the project, by the approved project 
director or principal investigator.
    (4) The need for additional Federal funding.
    (5) The transfer of amounts budgeted for indirect costs to absorb 
increases in direct costs, or vice versa, if approval is required by 
SSA.
    (6) The inclusion, unless waived by SSA, of costs that require 
prior approval in accordance with OMB Circular A-21, ``Cost Principles 
for Educational Institutions,'' OMB Circular A-122, ``Cost Principles 
for Non-Profit Organizations,'' or 45 CFR part 74 Appendix E, 
``Principles for Determining Costs Applicable to Research and 
Development under Grants and Contracts with Hospitals,'' or 48 CFR part 
31, ``Contract Cost Principles and Procedures,'' as applicable.
    (7) The transfer of funds allotted for training allowances (direct 
payment to trainees) to other categories of expense.
    (8) Unless described in the application and funded in the approved 
awards, the subaward, transfer or contracting out of any work under an 
award. This provision does not apply to the purchase of supplies, 
material, equipment or general support services.
    (d) No other prior approval requirements for specific items may be 
imposed unless a deviation has been approved by OMB.
    (e) Except for requirements listed in paragraphs (c)(1) and (c)(4) 
of this section, SSA may waive cost-related and administrative prior 
written approvals required by this part and OMB Circulars A-21 and A-
122. Such waivers may include authorizing recipients to do any one or 
more of the following:
    (1) Incur pre-award costs 90 calendar days prior to award or more 
than 90 calendar days with the prior approval of SSA. All pre-award 
costs are incurred at the recipient's risk (i.e., SSA is under no 
obligation to reimburse such costs if for any reason the recipient does 
not receive an award or if the award is less than anticipated and 
inadequate to cover such costs).
    (2) Initiate a one-time extension of the expiration date of the 
award of up to 12 months unless one or more of the following conditions 
apply. For one-time extensions, the recipient must notify SSA in 
writing with the supporting reasons and revised expiration date at 
least 10 days before the expiration date specified in the award. This 
one-time extension may not be exercised merely for the purpose of using 
unobligated balances.
    (i) The terms and conditions of award prohibit the extension.
    (ii) The extension requires additional Federal funds.
    (iii) The extension involves any change in the approved objectives 
or scope of the project.
    (3) Carry forward unobligated balances to subsequent funding 
periods.
    (4) For awards that support research, unless SSA provides otherwise 
in the award or in the SSA regulations, the prior approval requirements 
described in paragraph (e) of this section are automatically waived 
(i.e., recipients need not obtain such prior approvals) unless one of 
the conditions included in paragraph (e)(2) applies.
    (f) SSA may, at its option, restrict the transfer of funds among 
direct cost categories or programs, functions and activities for awards 
in which the Federal share of the project exceeds $100,000 and the 
cumulative amount of such transfers exceeds or is expected to exceed 10 
percent of the total budget as last approved by SSA. No transfers are 
permitted that would cause any Federal appropriation or part thereof to 
be used for purposes other than those consistent with the original 
intent of the appropriation.
    (g) All other changes to nonconstruction budgets, except for the 
changes described in paragraph (j) of this section, do not require 
prior approval.
    (h) For construction awards, recipients must request prior written 
approval promptly from SSA for budget revisions whenever paragraph 
(h)(1), (2) or (3) of this section apply.
    (1) The revision results from changes in the scope or the objective 
of the project or program.
    (2) The need arises for additional Federal funds to complete the 
project.
    (3) A revision is desired which involves specific costs for which 
prior written approval requirements may be imposed consistent with 
applicable OMB cost principles listed in Sec.  435.27.
    (i) No other prior approval requirements for specific items will be 
imposed unless a deviation has been approved by OMB.
    (j) When SSA makes an award that provides support for both 
construction and nonconstruction work, SSA may require the recipient to 
request prior approval before making any fund or budget transfers 
between the two types of work supported.
    (k) For both construction and nonconstruction awards, recipients 
must notify SSA in writing promptly whenever the amount of Federal

[[Page 28719]]

authorized funds is expected to exceed the needs of the recipient for 
the project period by more than $5000 or five percent of the Federal 
award, whichever is greater. This notification is not required if an 
application for additional funding is submitted for a continuation 
award.
    (l) When requesting approval for budget revisions, recipients must 
use the budget forms that were used in the application unless SSA 
indicates a letter of request suffices.
    (m) Within 30 calendar days from the date of receipt of the request 
for budget revisions, SSA will review the request and notify the 
recipient whether the budget revisions have been approved. If the 
revision is still under consideration at the end of 30 calendar days, 
SSA will inform the recipient in writing of the date when the recipient 
may expect the decision.


Sec.  435.26  Non-Federal audits.

    (a) Recipients and subrecipients that are institutions of higher 
education or other non-profit organizations (including hospitals) are 
subject to the audit requirements contained in the Single Audit Act 
Amendments of 1996 (31 U.S.C. 7501-7507) and revised OMB Circular A-
133, ``Audits of States, Local Governments, and Non-Profit 
Organizations.''
    (b) State and local governments are subject to the audit 
requirements contained in the Single Audit Act Amendments of 1996 (31 
U.S.C. 7501-7507) and revised OMB Circular A-133, ``Audits of States, 
Local Governments, and Non-Profit Organizations.''
    (c) For-profit hospitals not covered by the audit provisions of 
revised OMB Circular A-133 are subject to the audit requirements of 
SSA.
    (d) Commercial organizations are subject to the audit requirements 
of SSA or the prime recipient as incorporated into the award document.


Sec.  435.27  Allowable costs.

    For each kind of recipient, there is a set of Federal principles 
for determining allowable costs. Allowability of costs will be 
determined in accordance with the cost principles applicable to the 
entity incurring the costs. Thus:
    (a) Allowability of costs incurred by State, local or federally-
recognized Indian tribal governments is determined in accordance with 
the provisions of OMB Circular A-87, ``Cost Principles for State, 
Local, and Indian Tribal Governments.''
    (b) Allowability of costs incurred by non-profit organizations is 
determined in accordance with the provisions of OMB Circular A-122, 
``Cost Principles for Non-Profit Organizations.''
    (c) Allowability of costs incurred by institutions of higher 
education is determined in accordance with the provisions of OMB 
Circular A-21, ``Cost Principles for Educational Institutions.''
    (d) Allowability of costs incurred by hospitals is determined in 
accordance with the provisions of Appendix E of 45 CFR part 74, 
``Principles for Determining Costs Applicable to Research and 
Development Under Grants and Contracts with Hospitals.''
    (e) Allowability of costs incurred by commercial organizations and 
those non-profit organizations listed in Attachment C to Circular A-122 
is determined in accordance with the provisions of the Federal 
Acquisition Regulation (FAR) at 48 CFR part 31.


Sec.  435.28  Period of availability of funds.

    Where a funding period is specified, a recipient may charge to the 
grant only allowable costs resulting from obligations incurred during 
the funding period and any pre-award costs authorized by SSA.

Property Standards


Sec.  435.30  Purpose of property standards.

    Sections 435.31 through 435.37 set forth uniform standards 
governing management and disposition of property furnished by the 
Federal Government whose cost was charged to a project supported by a 
Federal award. Recipients must observe these standards under awards and 
SSA may not impose additional requirements, unless specifically 
required by Federal statute. The recipient may use its own property 
management standards and procedures provided it observes the provisions 
of Sec. Sec.  435.31 through 435.37.


Sec.  435.31  Insurance coverage.

    Recipients must, at a minimum, provide the equivalent insurance 
coverage for real property and equipment acquired with Federal funds as 
provided to property owned by the recipient. Federally-owned property 
need not be insured unless required by the terms and conditions of the 
award.


Sec.  435.32  Real property.

    SSA will prescribe requirements for recipients concerning the use 
and disposition of real property acquired in whole or in part under 
awards. Unless otherwise provided by statute, such requirements, at a 
minimum, will contain the following.
    (a) Title. Title to real property will vest in the recipient 
subject to the condition that the recipient will use the real property 
for the authorized purpose of the project as long as it is needed and 
will not encumber the property without approval of SSA.
    (b) Use in other projects. The recipient must obtain written 
approval by SSA for the use of real property in other federally-
sponsored projects when the recipient determines that the property is 
no longer needed for the purpose of the original project. Use in other 
projects is limited to those under federally-sponsored projects (i.e., 
awards) or programs that have purposes consistent with those authorized 
for support by SSA.
    (c) Disposition. When the real property is no longer needed as 
provided in paragraphs (a) and (b) of this section, the recipient must 
request disposition instructions from SSA or its successor Federal 
awarding agency. SSA will observe one or more of the following 
disposition instructions:
    (1) The recipient may be permitted to retain title without further 
obligation to the Federal Government after it compensates the Federal 
Government for that percentage of the current fair market value of the 
property attributable to the Federal participation in the project.
    (2) The recipient may be directed to sell the property under 
guidelines provided by SSA and pay the Federal Government for that 
percentage of the current fair market value of the property 
attributable to the Federal participation in the project (after 
deducting actual and reasonable selling and fix-up expenses, if any, 
from the sales proceeds). When the recipient is authorized or required 
to sell the property, proper sales procedures will be established that 
provide for competition to the extent practicable and result in the 
highest possible return.
    (3) The recipient may be directed to transfer title to the property 
to the Federal Government or to an eligible third party provided that, 
in such cases, the recipient will be entitled to compensation for its 
attributable percentage of the current fair market value of the 
property.


Sec.  435.33  Federally-owned and exempt property.

    (a) Federally-owned property. (1) Title to federally-owned property 
remains vested in the Federal Government. Recipients must submit 
annually an inventory listing of federally-owned property in their 
custody to SSA. Upon completion of the award or when the property is no 
longer needed, the recipient must report the property to SSA for 
further Federal agency utilization.

[[Page 28720]]

    (2) If SSA has no further need for the property, it will be 
declared excess and reported to the General Services Administration, 
unless SSA has statutory authority to dispose of the property by 
alternative methods (e.g., the authority provided by the Federal 
Technology Transfer Act (15 U.S.C. 3710 (I)) to donate research 
equipment to educational and non-profit organizations in accordance 
with Executive Order 12821, ``Improving Mathematics and Science 
Education in Support of the National Education Goals'' (3 CFR, 1992 
Comp., p. 323). Appropriate instructions will be issued to the 
recipient by SSA.
    (b) Exempt property. When statutory authority exists, SSA has the 
option to vest title to property acquired with Federal funds in the 
recipient without further obligation to the Federal Government and 
under conditions SSA considers appropriate. Such property is ``exempt 
property.'' Should SSA not establish conditions, title to exempt 
property upon acquisition will vest in the recipient without further 
obligation to the Federal Government.


Sec.  435.34  Equipment.

    (a) Title to equipment acquired by a recipient with Federal funds 
will vest in the recipient, subject to conditions of this section.
    (b) The recipient may not use equipment acquired with Federal funds 
to provide services to non-Federal outside organizations for a fee that 
is less than private companies charge for equivalent services, unless 
specifically authorized by Federal statute, for as long as the Federal 
Government retains an interest in the equipment.
    (c) The recipient may use the equipment in the project or program 
for which it was acquired as long as needed, whether or not the project 
or program continues to be supported by Federal funds and may not 
encumber the property without approval of SSA. When no longer needed 
for the original project or program, the recipient must use the 
equipment in connection with its other federally-sponsored activities, 
in the following order of priority:
    (1) Activities sponsored by SSA, then
    (2) Activities sponsored by other Federal awarding agencies.
    (d) During the time that equipment is used on the project or 
program for which it was acquired, the recipient must make it available 
for use on other projects or programs if such other use will not 
interfere with the work on the project or program for which the 
equipment was originally acquired. First preference for such other use 
must be given to other projects or programs sponsored by SSA; second 
preference must be given to projects or programs sponsored by other 
Federal awarding agencies. If the equipment is owned by the Federal 
Government, use on other activities not sponsored by the Federal 
Government will be permissible if authorized by SSA. User charges will 
be treated as program income.
    (e) When acquiring replacement equipment, the recipient may use the 
equipment to be replaced as trade-in or sell the equipment and use the 
proceeds to offset the costs of the replacement equipment subject to 
the approval of SSA.
    (f) The recipient's property management standards for equipment 
acquired with Federal funds and federally-owned equipment must include 
all of the following:
    (1) Equipment records must be maintained accurately and must 
include the following information:
    (i) A description of the equipment.
    (ii) Manufacturer's serial number, model number, Federal stock 
number, national stock number, or other identification number.
    (iii) Source of the equipment, including the award number.
    (iv) Whether title vests in the recipient or the Federal 
Government.
    (v) Acquisition date (or date received, if the equipment was 
furnished by the Federal Government) and cost.
    (vi) Information from which one can calculate the percentage of 
Federal participation in the cost of the equipment (not applicable to 
equipment furnished by the Federal Government).
    (vii) Location and condition of the equipment and the date the 
information was reported.
    (viii) Unit acquisition cost.
    (ix) Ultimate disposition data, including date of disposal and 
sales price or the method used to determine current fair market value 
where a recipient compensates the Federal awarding agency for its 
share.
    (2) Equipment owned by the Federal Government must be identified to 
indicate Federal ownership.
    (3) A physical inventory of equipment must be taken and the results 
reconciled with the equipment records at least once every two years. 
Any differences between quantities determined by the physical 
inspection and those shown in the accounting records must be 
investigated to determine the causes of the difference. The recipient 
must, in connection with the inventory, verify the existence, current 
utilization, and continued need for the equipment.
    (4) A control system must be in effect to insure adequate 
safeguards to prevent loss, damage, or theft of the equipment. Any 
loss, damage, or theft of equipment must be investigated and fully 
documented; if the equipment was owned by the Federal Government, the 
recipient must promptly notify SSA.
    (5) Adequate maintenance procedures must be implemented to keep the 
equipment in good condition.
    (6) Where the recipient is authorized or required to sell the 
equipment, proper sales procedures must be established which provide 
for competition to the extent practicable and result in the highest 
possible return.
    (g) When the recipient no longer needs the equipment, the equipment 
may be used for other activities in accordance with the following 
standards. For equipment with a current per unit fair market value of 
$5000 or more, the recipient may retain the equipment for other uses 
provided that compensation is made to SSA or its successor. The amount 
of compensation will be computed by applying the percentage of Federal 
participation in the cost of the original project or program to the 
current fair market value of the equipment. If the recipient has no 
need for the equipment, the recipient must request disposition 
instructions from SSA. SSA will determine whether the equipment can be 
used to meet the agency's requirements. If no requirement exists within 
that agency, the availability of the equipment will be reported to the 
General Services Administration by SSA to determine whether a 
requirement for the equipment exists in other Federal agencies. SSA 
will issue instructions to the recipient no later than 120 calendar 
days after the recipient's request and the following procedures will 
govern:
    (1) If so instructed or if disposition instructions are not issued 
within 120 calendar days after the recipient's request, the recipient 
must sell the equipment and reimburse SSA an amount computed by 
applying to the sales proceeds the percentage of Federal participation 
in the cost of the original project or program. However, the recipient 
is permitted to deduct and retain from the Federal share $500 or ten 
percent of the proceeds, whichever is less, for the recipient's selling 
and handling expenses.
    (2) If the recipient is instructed to ship the equipment elsewhere, 
the recipient will be reimbursed by the Federal Government by an amount 
which is computed by applying the percentage of the recipient's 
participation in the cost of the original project or program to the 
current fair market value of the equipment, plus any reasonable 
shipping or interim storage costs incurred.

[[Page 28721]]

    (3) If the recipient is instructed to otherwise dispose of the 
equipment, SSA will reimburse the recipient for such costs incurred in 
its disposition.
    (4) SSA may reserve the right to transfer the title to the Federal 
Government or to a third party named by the Federal Government when 
such third party is otherwise eligible under existing statutes. Such a 
transfer will be subject to the following standards:
    (i) The equipment must be appropriately identified in the award or 
otherwise made known to the recipient in writing.
    (ii) SSA must issue disposition instructions within 120 calendar 
days after receipt of a final inventory. The final inventory must list 
all equipment acquired with grant funds and federally-owned equipment. 
If SSA fails to issue disposition instructions within the 120 calendar 
day period, the recipient must apply the standards of this section, as 
appropriate.
    (iii) When SSA exercises its right to take title, the equipment 
will be subject to the provisions for federally-owned equipment.


Sec.  435.35  Supplies and other expendable property.

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


Sec.  435.36  Intangible property.

    (a) Copyright. The recipient may copyright any work that is subject 
to copyright and was developed, or for which ownership was purchased, 
under an award. SSA reserves a royalty-free, nonexclusive and 
irrevocable right to reproduce, publish, or otherwise use the work for 
Federal purposes, and to authorize others to do so.
    (b) Patents and inventions. Recipients are subject to applicable 
regulations governing patents and inventions, including government-wide 
regulations issued by the Department of Commerce at 37 CFR part 401, 
``Rights to Inventions Made by Nonprofit Organizations and Small 
Business Firms Under Government Grants, Contracts and Cooperative 
Agreements.''
    (c) Rights of Federal Government. The Federal Government has the 
right to:
    (1) Obtain, reproduce, publish or otherwise use the data first 
produced under an award; and
    (2) Authorize others to receive, reproduce, publish, or otherwise 
use such data for Federal purposes.
    (d) FOIA requests for research data. (1) In addition, in response 
to a Freedom of Information Act (FOIA) request for research data 
relating to published research findings produced under an award that 
were used by the Federal Government in developing an agency action that 
has the force and effect of law, SSA shall request, and the recipient 
shall provide, within a reasonable time, the research data so that they 
can be made available to the public through the procedures established 
under the FOIA. If SSA obtains the research data solely in response to 
a FOIA request, SSA may charge the requester a reasonable fee equaling 
the full incremental cost of obtaining the research data. This fee 
should reflect costs incurred by SSA, the recipient, and applicable 
subrecipients. This fee is in addition to any fees SSA may assess under 
the FOIA (5 U.S.C. 552(a)(4)(A)).
    (2) The following definitions apply for purposes of this paragraph 
(d):
    (i) Research data is defined as the recorded factual material 
commonly accepted in the scientific community as necessary to validate 
research findings, but not any of the following: preliminary analyses, 
drafts of scientific papers, plans for future research, peer reviews, 
or communications with colleagues. This ``recorded'' material excludes 
physical objects (e.g., laboratory samples). Research data also do not 
include:
    (A) Trade secrets, commercial information, materials necessary to 
be held confidential by a researcher until they are published, or 
similar information which is protected under law; and
    (B) Personnel and medical information and similar information the 
disclosure of which would constitute a clearly unwarranted invasion of 
personal privacy, such as information that could be used to identify a 
particular person in a research study.
    (ii) Published is defined as either when:
    (A) Research findings are published in a peer-reviewed scientific 
or technical journal; or
    (B) A Federal agency publicly and officially cites the research 
findings in support of an agency action that has the force and effect 
of law.
    (iii) Used by the Federal Government in developing an agency action 
that has the force and effect of law is defined as when an agency 
publicly and officially cites the research findings in support of an 
agency action that has the force and effect of law.
    (e) Title to intangible property and debt instruments. Title to 
intangible property and debt instruments acquired under an award or 
subaward vests upon acquisition in the recipient. The recipient must 
use that property for the originally-authorized purpose, and the 
recipient may not encumber the property without approval of SSA. When 
no longer needed for the originally authorized purpose, disposition of 
the intangible property will occur in accordance with the provisions of 
Sec.  435.34(g).


Sec.  435.37  Property trust relationship.

    Real property, equipment, intangible property and debt instruments 
that are acquired or improved with Federal funds must be held in trust 
by the recipient as trustee for the beneficiaries of the project or 
program under which the property was acquired or improved. Agencies may 
require recipients to record liens or other appropriate notices of 
record to indicate that personal or real property has been acquired or 
improved with Federal funds and that use and disposition conditions 
apply to the property.

Procurement Standards


Sec.  435.40  Purpose of procurement standards.

    Sections 435.41 through 435.48 set forth standards for use by 
recipients in establishing procedures for the procurement of supplies 
and other expendable property, equipment, real property and other 
services with Federal funds. These standards are furnished to ensure 
that such materials and services are obtained in an effective manner 
and in compliance with the provisions of applicable Federal statutes 
and executive orders. SSA may impose no additional procurement 
standards or requirements upon recipients, unless specifically required 
by Federal statute or executive order or approved by OMB.

[[Page 28722]]

Sec.  435.41  Recipient responsibilities.

    The standards contained in this section do not relieve the 
recipient of the contractual responsibilities arising under its 
contract(s). The recipient is the responsible authority, without 
recourse to SSA, regarding the settlement and satisfaction of all 
contractual and administrative issues arising out of procurements 
entered into in support of an award or other agreement. This includes 
disputes, claims, protests of award, source evaluation or other matters 
of a contractual nature. Matters concerning violation of statute are to 
be referred to such Federal, State or local authority as may have 
proper jurisdiction.


Sec.  435.42  Codes of conduct.

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


Sec.  435.43  Competition.

    All procurement transactions must be conducted in a manner to 
provide, to the maximum extent practical, open and free competition. 
The recipient must be alert to organizational conflicts of interest as 
well as noncompetitive practices among contractors that may restrict or 
eliminate competition or otherwise restrain trade. In order to ensure 
objective contractor performance and eliminate unfair competitive 
advantage, contractors that develop or draft specifications, 
requirements, statements of work, invitations for bids and/or requests 
for proposals must be excluded from competing for such procurements. 
Awards must be made to the bidder or offeror whose bid or offer is 
responsive to the solicitation and is most advantageous to the 
recipient, price, quality and other factors considered. Solicitations 
must clearly set forth all requirements that the bidder or offeror must 
fulfill in order for the bid or offer to be evaluated by the recipient. 
Any and all bids or offers may be rejected when it is in the 
recipient's interest to do so.


Sec.  435.44  Procurement procedures.

    (a) All recipients must establish written procurement procedures. 
These procedures must provide, at a minimum, that paragraphs (a)(1), 
(2), and (3) of this section apply.
    (1) Recipients avoid purchasing unnecessary items.
    (2) Where appropriate, an analysis is made of lease and purchase 
alternatives to determine which would be the most economical and 
practical procurement for the Federal Government.
    (3) Solicitations for goods and services provide for all of the 
following:
    (i) A clear and accurate description of the technical requirements 
for the material, product or service to be procured. In competitive 
procurements, such a description may not contain features, which unduly 
restrict competition.
    (ii) Requirements which the bidder/offeror must fulfill and all 
other factors to be used in evaluating bids or proposals.
    (iii) A description, whenever practicable, of technical 
requirements in terms of functions to be performed or performance 
required, including the range of acceptable characteristics or minimum 
acceptable standards.
    (iv) The specific features of ``brand name or equal'' descriptions 
that bidders are required to meet when such items are included in the 
solicitation.
    (v) The acceptance, to the extent practicable and economically 
feasible, of products and services dimensioned in the metric system of 
measurement.
    (vi) Preference, to the extent practicable and economically 
feasible, for products and services that conserve natural resources and 
protect the environment and are energy efficient.
    (b) Positive efforts must be made by recipients to utilize small 
businesses, minority-owned firms, and women's business enterprises, 
whenever possible. Recipients of Federal awards must take all of the 
following steps to further this goal:
    (1) Ensure that small businesses, minority-owned firms, and women's 
business enterprises are used to the fullest extent practicable.
    (2) Make information on forthcoming opportunities available and 
arrange time frames for purchases and contracts to encourage and 
facilitate participation by small businesses, minority-owned firms, and 
women's business enterprises.
    (3) Consider in the contract process whether firms competing for 
larger contracts intend to subcontract with small businesses, minority-
owned firms, and women's business enterprises.
    (4) Encourage contracting with consortiums of small businesses, 
minority-owned firms and women's business enterprises when a contract 
is too large for one of these firms to handle individually.
    (5) Use the services and assistance, as appropriate, of such 
organizations as the Small Business Administration and the Department 
of Commerce's Minority Business Development Agency in the solicitation 
and utilization of small businesses, minority-owned firms and women's 
business enterprises.
    (c) The type of procuring instruments used (e.g., fixed price 
contracts, cost reimbursable contracts, purchase orders, and incentive 
contracts) may be determined by the recipient but must be appropriate 
for the particular procurement and for promoting the best interest of 
the program or project involved. The ``cost-plus-a-percentage-of-cost'' 
or ``percentage of construction cost'' methods of contracting may not 
be used.
    (d) Contracts may be made only with responsible contractors who 
possess the potential ability to perform successfully under the terms 
and conditions of the proposed procurement. Consideration must be given 
to such matters as contractor integrity, record of past performance, 
financial and technical resources or accessibility to other necessary 
resources. In certain circumstances, contracts with certain parties are 
restricted by agencies' implementation of Executive Orders 12549 and 
12689, ``Debarment and Suspension'' (3 CFR, 1986 Comp., p. 189 and 3 
CFR, 1989 Comp., p. 235).
    (e) Recipients must, on request, make available for SSA, pre-award 
review and procurement documents, such as request for proposals or 
invitations for bids, independent cost estimates, etc., when any of the 
following conditions apply:
    (1) A recipient's procurement procedures or operation fails to 
comply with the procurement standards in this part.
    (2) The procurement is expected to exceed the simplified 
acquisition threshold fixed at 41 U.S.C. 403(11) (currently $100,000) 
and is to be awarded without competition or only one bid or offer is 
received in response to a solicitation.

[[Page 28723]]

    (3) The procurement, which is expected to exceed the simplified 
acquisition threshold, specifies a ``brand name'' product.
    (4) The proposed award over the simplified acquisition threshold is 
to be awarded to other than the apparent low bidder under a sealed bid 
procurement.
    (5) A proposed contract modification changes the scope of a 
contract or increases the contract amount by more than the amount of 
the simplified acquisition threshold.


Sec.  435.45  Cost and price analysis.

    Some form of cost or price analysis must be made and documented in 
the procurement files in connection with every procurement action. 
Price analysis may be accomplished in various ways, including the 
comparison of price quotations submitted, market prices and similar 
indicia, together with discounts. Cost analysis is the review and 
evaluation of each element of cost to determine reasonableness, 
allocability and allowability.


Sec.  435.46  Procurement records.

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


Sec.  435.47  Contract administration.

    A system for contract administration must be maintained to ensure 
contractor conformance with the terms, conditions and specifications of 
the contract and to ensure adequate and timely follow up of all 
purchases. Recipients must evaluate contractor performance and 
document, as appropriate, whether contractors have met the terms, 
conditions and specifications of the contract.


Sec.  435.48  Contract provisions.

    The recipient must include, in addition to provisions to define a 
sound and complete agreement, the following provisions in all 
contracts. The following provisions must also be applied to 
subcontracts:
    (a) Contracts in excess of the simplified acquisition threshold 
must contain contractual provisions or conditions that allow for 
administrative, contractual, or legal remedies in instances in which a 
contractor violates or breaches the contract terms, and provide for 
such remedial actions as may be appropriate.
    (b) All contracts in excess of the simplified acquisition threshold 
must contain suitable provisions for termination by the recipient, 
including the manner by which termination will be effected and the 
basis for settlement. In addition, such contracts must describe 
conditions under which the contract may be terminated for default as 
well as conditions where the contract may be terminated because of 
circumstances beyond the control of the contractor.
    (c) Except as otherwise required by statute, an award that requires 
the contracting (or subcontracting) for construction or facility 
improvements must provide for the recipient to follow its own 
requirements relating to bid guarantees, performance bonds, and payment 
bonds unless the construction contract or subcontract exceeds $100,000. 
For those contracts or subcontracts exceeding $100,000, SSA may accept 
the bonding policy and requirements of the recipient, provided SSA has 
made a determination that the Federal Government's interest is 
adequately protected. If such a determination has not been made, the 
minimum requirements are as follows:
    (1) A bid guarantee from each bidder equivalent to five percent of 
the bid price. The ``bid guarantee'' must 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.
    (2) A performance bond on the part of the contractor for 100 
percent of the contract price. A ``performance bond'' is one executed 
in connection with a contract to secure fulfillment of all the 
contractor's obligations under such contract.
    (3) A payment bond on the part of the contractor for 100 percent of 
the contract price. A ``payment bond'' is one executed in connection 
with a contract to assure payment as required by statute of all persons 
supplying labor and material in the execution of the work provided for 
in the contract.
    (4) Where bonds are required in the situations described in this 
section, the bonds must be obtained from companies holding certificates 
of authority as acceptable sureties pursuant to 31 CFR part 223, 
``Surety Companies Doing Business with the United States.''
    (d) All negotiated contracts (except those for less than the 
simplified acquisition threshold) awarded by recipients must include a 
provision to the effect that the recipient, SSA, the Comptroller 
General of the United States, or any of their duly authorized 
representatives, will have access to any books, documents, papers and 
records of the contractor which are directly pertinent to a specific 
program for the purpose of making audits, examinations, excerpts and 
transcriptions.
    (e) All contracts, including small purchases, awarded by recipients 
and their contractors must contain the procurement provisions of 
Appendix A to this part, as applicable.

Reports and Records


Sec.  435.50  Purpose of reports and records.

    Sections 435.51 through 435.53 set forth the procedures for 
monitoring and reporting on the recipient's financial and program 
performance and the necessary standard reporting forms. They also set 
forth record retention requirements.


Sec.  435.51  Monitoring and reporting program performance.

    (a) Recipients are responsible for managing and monitoring each 
project, program, subaward, function or activity supported by the 
award. Recipients must monitor subawards to ensure subrecipients have 
met the audit requirements as delineated in Sec.  435.26.
    (b) SSA will prescribe the frequency with which the performance 
reports must be submitted. Except as provided in paragraph (f) of this 
section, performance reports will not be required more frequently than 
quarterly or, less frequently than annually. Annual reports are due 90 
calendar days after the grant year; quarterly or semi-annual reports 
are due 30 days after the reporting period. SSA may require annual 
reports before the anniversary dates of multiple year awards in lieu of 
these requirements. The final performance reports are due 90 calendar 
days after the expiration or termination of the award.
    (c) If inappropriate, a final technical or performance report will 
not be required after completion of the project.
    (d) When required, performance reports must generally contain, for 
each award, brief information on each of the following:
    (1) A comparison of actual accomplishments with the goals and 
objectives established for the period, the findings of the 
investigator, or both. Whenever appropriate and the output of programs 
or projects can be readily quantified, such quantitative data should be 
related to cost data for computation of unit costs.
    (2) Reasons why established goals were not met, if appropriate.
    (3) Other pertinent information including, when appropriate, 
analysis and explanation of cost overruns or high unit costs.

[[Page 28724]]

    (e) Recipients will not be required to submit more than the 
original and two copies of performance reports.
    (f) Recipients must immediately notify SSA of developments that 
have a significant impact on the award-supported activities. Also, 
notification must be given in the case of problems, delays, or adverse 
conditions, which materially impair the ability to meet the objectives 
of the award. This notification must include a statement of the action 
taken or contemplated, and any assistance needed to resolve the 
situation.
    (g) SSA may make site visits, as needed.
    (h) SSA will comply with clearance requirements of 5 CFR part 1320 
when requesting performance data from recipients.


Sec.  435.52  Financial reporting.

    (a) Authorized forms. The following forms or such other forms as 
may be approved by OMB are authorized for obtaining financial 
information from recipients:
    (1) SF-269 or SF-269A, Financial Status Report. (i) SSA requires 
recipients to use the SF-269 or SF-269A to report the status of funds 
for all nonconstruction projects or programs. However, SSA has the 
option of not requiring the SF-269 or SF-269A when the SF-270, Request 
for Advance or Reimbursement, or SF-272, Report of Federal Cash 
Transactions, is determined to provide adequate information to meet its 
needs, except that a final SF-269 or SF-269A will be required at the 
completion of the project when the SF-270 is used only for advances.
    (ii) SSA may prescribe whether the report will be on a cash or 
accrual basis. If SSA requires accrual information and the recipient's 
accounting records are not normally kept on the accrual basis, the 
recipient will not be required to convert its accounting system, but 
must develop such accrual information through best estimates based on 
an analysis of the documentation on hand.
    (iii) SSA will determine the frequency of the Financial Status 
Report for each project or program, considering the size and complexity 
of the particular project or program. However, the report will not be 
required more frequently than quarterly or less frequently than 
annually. A final report is required at the completion of the 
agreement.
    (iv) SSA will require recipients to submit the SF-269 or SF-269A 
(an original and no more than two copies) no later than 30 days after 
the end of each specified reporting period for quarterly and semi-
annual reports, and 90 calendar days for annual and final reports. 
Extensions of reporting due dates may be approved by SSA upon request 
of the recipient.
    (2) SF-272, Report of Federal Cash Transactions. (i) When funds are 
advanced to recipients, SSA will require each recipient to submit the 
SF-272 and, when necessary, its continuation sheet, SF-272a. SSA will 
use this report to monitor cash advanced to recipients and to obtain 
disbursement information for each agreement with the recipients.
    (ii) SSA may require forecasts of Federal cash requirements in the 
``Remarks'' section of the report.
    (iii) When practical and deemed necessary, SSA may require 
recipients to report in the ``Remarks'' section the amount of cash 
advances received in excess of three days. Recipients must provide 
short narrative explanations of actions taken to reduce the excess 
balances.
    (iv) Recipients are required to submit not more than the original 
and two copies of the SF-272 15 calendar days following the end of each 
quarter. SSA may require a monthly report from those recipients 
receiving advances totaling $1 million or more per year.
    (v) SSA may waive the requirement for submission of the SF-272 for 
any one of the following reasons:
    (A) When monthly advances do not exceed $25,000 per recipient, 
provided that such advances are monitored through other forms contained 
in this section;
    (B) If, in SSA's opinion, the recipient's accounting controls are 
adequate to minimize excessive Federal advances; or,
    (C) When the electronic payment mechanisms provide adequate data.
    (b) When SSA needs additional information or more frequent reports, 
the following will be observed:
    (1) When additional information is needed to comply with 
legislative requirements, SSA will issue instructions to require 
recipients to submit such information under the ``Remarks'' section of 
the reports.
    (2) When SSA determines that a recipient's accounting system does 
not meet the standards in Sec.  435.21, additional pertinent 
information to further monitor awards may be obtained upon written 
notice to the recipient until such time as the system is brought up to 
standard. SSA, in obtaining this information, will comply with report 
clearance requirements of 5 CFR part 1320.
    (3) SSA may shade out any line item on any report if not necessary.
    (4) SSA may accept the identical information from the recipients in 
machine-readable format or computer printouts or electronic outputs in 
lieu of prescribed formats.
    (5) SSA may provide computer or electronic outputs to recipients 
when such expedites or contributes to the accuracy of reporting.


Sec.  435.53  Retention and access requirements for records.

    (a) Purpose. This section sets forth the requirements for record 
retention and access to records for awards to recipients. SSA may not 
impose any other record retention or access requirements upon 
recipients.
    (b) Retention periods. Financial records, supporting documents, 
statistical records, and all other records pertinent to an award must 
be retained for a period of three years from the date of submission of 
the final expenditure report or, for awards that are renewed quarterly 
or annually, from the date of the submission of the quarterly or annual 
financial report, as authorized by SSA. The only exceptions are the 
following:
    (1) If any litigation, claim, or audit is started before the 
expiration of the 3-year period, the records must be retained until all 
litigation, claims or audit findings involving the records have been 
resolved and final action taken.
    (2) Records for real property and equipment acquired with Federal 
funds must be retained for 3 years after final disposition.
    (3) When records are transferred to or maintained by SSA, the 3-
year retention requirement is not applicable to the recipient.
    (4) Indirect cost rate proposals, cost allocations plans, etc. as 
specified in paragraph (g) of this section.
    (c) Use of copies. Copies of original records may be substituted 
for the original records if authorized by SSA.
    (d) Records with long term retention value. SSA will request 
transfer of certain records to its custody from recipients when it 
determines that the records possess long term retention value. However, 
in order to avoid duplicate recordkeeping, SSA may make arrangements 
for recipients to retain any records that are continuously needed for 
joint use.
    (e) Federal access to records. SSA, the Inspector General, 
Comptroller General of the United States, or any of their duly 
authorized representatives, have the right of timely and unrestricted 
access to any books, documents, papers, or other records of recipients 
that are pertinent to the awards, in order to make audits, 
examinations, excerpts, transcripts and copies of such

[[Page 28725]]

documents. This right also includes timely and reasonable access to a 
recipient's personnel for the purpose of interview and discussion 
related to such documents. The rights of access in this paragraph are 
not limited to the required retention period, but will last as long as 
records are retained.
    (f) Public access to records. Unless required by statute, SSA may 
not place restrictions on recipients that limit public access to the 
records of recipients that are pertinent to an award, except when SSA 
can demonstrate that such records will be kept confidential and would 
have been exempted from disclosure pursuant to the Freedom of 
Information Act (5 U.S.C. 552) if the records had belonged to SSA.
    (g) Retention of indirect cost rate proposals, cost allocations 
plans, etc. Paragraphs (g)(1) and (g)(2) of this section apply to the 
following types of documents, and their supporting records: indirect 
cost rate computations or proposals, cost allocation plans, and any 
similar accounting computations of the rate at which a particular group 
of costs is chargeable (such as computer usage chargeback rates or 
composite fringe benefit rates).
    (1) If submitted for negotiation. If the recipient submits to SSA 
or the subrecipient submits to the recipient the proposal, plan, or 
other computation to form the basis for negotiation of the rate, then 
the 3-year retention period for its supporting records starts on the 
date of such submission.
    (2) If not submitted for negotiation. If the recipient is not 
required to submit to SSA or the subrecipient is not required to submit 
to the recipient the proposal, plan, or other computation for 
negotiation purposes, then the 3-year retention period for the 
proposal, plan, or other computation and its supporting records starts 
at the end of the fiscal year (or other accounting period) covered by 
the proposal, plan, or other computation.

Termination and Enforcement


Sec.  435.60  Purpose of termination and enforcement.

    Sections 435.61 and 435.62 set forth uniform suspension, 
termination and enforcement procedures.


Sec.  435.61  Termination.

    (a) Awards may be terminated in whole or in part only if paragraphs 
(a)(1) through (a)(3) of this section apply.
    (1) By SSA, if a recipient materially fails to comply with the 
terms and conditions of an award.
    (2) By SSA with the consent of the recipient, in which case the two 
parties will agree upon the termination conditions, including the 
effective date and, in the case of partial termination, the portion to 
be terminated.
    (3) By the recipient upon sending to SSA written notification 
setting forth the reasons for such termination, the effective date, 
and, in the case of partial termination, the portion to be terminated. 
However, if SSA determines in the case of partial termination that the 
reduced or modified portion of the grant will not accomplish the 
purposes for which the grant was made, it may terminate the grant in 
its entirety under either paragraph (a)(1) or (a)(2) of this section.
    (b) If costs are allowed under an award, the responsibilities of 
the recipient referred to in Sec.  435.71(a), including those for 
property management as applicable, will be considered in the 
termination of the award, and provision will be made for continuing 
responsibilities of the recipient after termination, as appropriate.


Sec.  435.62  Enforcement.

    (a) Remedies for noncompliance. If a recipient materially fails to 
comply with the terms and conditions of an award, whether stated in a 
Federal statute, regulation, assurance, application, or notice of 
award, SSA may, in addition to imposing any of the special conditions 
outlined in Sec.  435.14, take one or more of the following actions, as 
appropriate in the circumstances:
    (1) Temporarily withhold cash payments pending correction of the 
deficiency by the recipient or more severe enforcement action by SSA.
    (2) Disallow (that is, deny both use of funds and any applicable 
matching credit for) all or part of the cost of the activity or action 
not in compliance.
    (3) Wholly or partly suspend or terminate the current award.
    (4) Withhold further awards for the project or program.
    (5) Take other remedies that may be legally available.
    (b) Hearings and appeals. In taking an enforcement action, SSA must 
provide the recipient an opportunity for hearing, appeal, or other 
administrative proceeding to which the recipient is entitled under any 
statute or regulation applicable to the action involved.
    (c) Effects of suspension and termination. Costs of a recipient 
resulting from obligations incurred by the recipient during a 
suspension or after termination of an award are not allowable unless 
SSA expressly authorizes them in the notice of suspension or 
termination or subsequently. Other recipient costs during suspension or 
after termination that are necessary and not reasonably avoidable are 
allowable if paragraphs (c)(1) and (2) of this section apply.
    (1) The costs result from obligations that were properly incurred 
by the recipient before the effective date of suspension or 
termination, are not in anticipation of it, and in the case of a 
termination, are noncancellable.
    (2) The costs would be allowable if the award were not suspended or 
expired normally at the end of the funding period in which the 
termination takes effect.
    (d) Relationship to debarment and suspension. The enforcement 
remedies identified in this section, including suspension and 
termination, do not preclude a recipient from being subject to 
debarment and suspension under Executive Orders 12549 and 12689.

Subpart D--After-the-Award Requirements


Sec.  435.70  Purpose.

    Sections 435.71 through 435.73 contain closeout procedures and 
other procedures for subsequent disallowances and adjustments.


Sec.  435.71  Closeout procedures.

    (a) Recipients must submit, within 90 calendar days after the date 
of completion of the award, all financial, performance, and other 
reports as required by the terms and conditions of the award. SSA may 
approve extensions when requested by the recipient.
    (b) Unless SSA authorizes an extension, a recipient must liquidate 
all obligations incurred under the award not later than 90 calendar 
days after the funding period or the date of completion as specified in 
the terms and conditions of the award or in agency implementing 
instructions.
    (c) SSA will make prompt payments to a recipient for allowable 
reimbursable costs under the award being closed out.
    (d) The recipient must promptly refund any balances of unobligated 
cash that SSA has advanced or paid and that is not authorized to be 
retained by the recipient for use in other projects. OMB Circular A-129 
governs unreturned amounts that become delinquent debts.
    (e) When authorized by the terms and conditions of the award, SSA 
will make a settlement for any upward or downward adjustments to the 
Federal share of costs after closeout reports are received.
    (f) The recipient must account for any real and personal property 
acquired with Federal funds or received from the Federal Government in 
accordance with Sec. Sec.  435.31 through 435.37.
    (g) In the event a final audit has not been performed prior to the 
closeout of

[[Page 28726]]

an award, SSA will retain the right to recover an appropriate amount 
after fully considering the recommendations on disallowed costs 
resulting from the final audit.


Sec.  435.72  Subsequent adjustments and continuing responsibilities.

    (a) The closeout of an award does not affect any of the following:
    (1) The right of SSA to disallow costs and recover funds on the 
basis of a later audit or other review.
    (2) The obligation of the recipient to return any funds due as a 
result of later refunds, corrections, or other transactions.
    (3) Audit requirements in Sec.  435.26.
    (4) Property management requirements in Sec. Sec.  435.31 through 
435.37.
    (5) Records retention as required in Sec.  435.53.
    (b) After closeout of an award, a relationship created under an 
award may be modified or ended in whole or in part with the consent of 
SSA and the recipient, provided the responsibilities of the recipient 
referred to in Sec.  435.73(a), including those for property management 
as applicable, are considered and provisions made for continuing 
responsibilities of the recipient, as appropriate.


Sec.  435.73  Collection of amounts due.

    (a) Methods of collection. Any funds paid to a recipient in excess 
of the amount to which the recipient is finally determined to be 
entitled under the terms and conditions of the award constitute a debt 
to the Federal Government. If not paid within a reasonable period after 
the demand for payment, SSA may reduce the debt by:
    (1) Making an administrative offset against other requests for 
reimbursements;
    (2) Withholding advance payments otherwise due to the recipient; or
    (3) Taking other action permitted by statute.
    (b) Charging of interest. Except as otherwise provided by law, SSA 
will charge interest on an overdue debt in accordance with 4 CFR 
Chapter II, ``Federal Claims Collection Standards.''

Subpart E--Disputes


Sec.  435.80  Appeal process.

    (a) Levels of appeal. Grantee institutions (grantees) may appeal 
certain post-award adverse grant administration decisions made by SSA 
officials in the administration of discretionary grant programs. SSA 
has two levels of appeal:
    (1) Initial appeal to the Associate Commissioner for the Office of 
Acquisition and Grants (ACOAG) from an adverse decision rendered by the 
Grant Management Officer (GMO); and
    (2) Final appeal to the Commissioner of Social Security from an 
adverse decision rendered by the ACOAG.
    (b) Decisions that may be appealed. The following types of adverse 
post-award written decisions by the GMO may be appealed:
    (1) A disallowance or other determination denying payment of an 
amount claimed under an award. This does not apply to determinations of 
award amount or disposition of unobligated balances, or selection in 
the award document of an option for disposition of program-related 
income.
    (2) A termination of an award for failure of the grantee to comply 
with any law, regulation, assurance, term, or condition applicable to 
the award.
    (3) A denial of a noncompeting continuation award under the project 
period system of funding where the denial is for failure to comply with 
the terms and conditions of a previous award.
    (4) A voiding of an award on the basis that it was fraudulently 
obtained or because the award was not authorized by statute or 
regulation.
    (c) Notice of adverse decision and requirements of grantee 
response. The Grants Management Officer's (GMO) adverse post-award 
written decision should include the following statement:
    This is the final decision of the Grants Management Officer. It 
will become the final decision of the Social Security Administration 
unless you submit a request for review of this decision to the 
Associate Commissioner for the Office of Acquisition and Grants, 
1710 Gwynn Oak Avenue, Baltimore, Maryland 21207-5279. Your request 
for review must be in writing, include a copy of this decision, and 
fully state why you disagree with it. The request for review must be 
received by the ACOAG no later than 30 calendar days after the date 
of this decision.


Sec.  435.81  Initial appeal.

    (a) Timeliness of appeal to ACOAG. A grantee may appeal an adverse 
decision rendered by the GMO by submitting to the ACOAG a written 
request for review of the adverse decision. The written request for 
review must be received by the ACOAG no later than 30 calendar days 
after the date of the GMO's adverse decision. Any request for review 
that is received after the thirtieth day will be dismissed as untimely.
    (b) Content of appeal to ACOAG. The written request for review 
should fully explain why the grantee disagrees with the GMO's decision, 
state the pertinent facts and law relied upon, and provide any relevant 
documentation in support of the grantee's position.
    (c) Decision of ACOAG. The ACOAG, or the ACOAG's delegate, will 
issue a written decision within 30 calendar days of the date of receipt 
of the written request for review. If the written decision is adverse 
to the grantee, the decision will include the following statement:

    This is the final decision of the Office of Acquisition and 
Grants. It will become the final decision of the Social Security 
Administration unless you submit a request for review of this 
decision to the Commissioner of Social Security, Social Security 
Administration, Baltimore, Maryland 21235-0001. Your request for 
review must be in writing, include a copy of this decision, and 
fully state why you disagree with it. The request for review must be 
received by the Commissioner no later than 15 calendar days after 
the date of this decision. You should also send a copy of the 
request for review to the ACOAG.


Sec.  435.82  Appeal of decision of ACOAG.

    (a) Timeliness of appeal to Commissioner. A grantee may appeal an 
adverse decision rendered by the ACOAG by submitting to the 
Commissioner of Social Security a written request for review of the 
ACOAG's decision. The written request for review must be received by 
the Commissioner no later than 15 calendar days after the date of the 
ACOAG's adverse decision. Any request for review that is filed after 
the fifteenth day will be dismissed as untimely. The grantee should 
also send a copy of the request for review to the ACOAG.
    (b) Content of appeal to Commissioner. The written request for 
review should fully explain why the grantee disagrees with the ACOAG's 
decision, state the pertinent facts and law relied upon, and provide 
any relevant documentation in support of the grantee's position. A copy 
of the ACOAG's decision should also be appended to the request for 
review.
    (c) Decision of Commissioner. The Commissioner, or the 
Commissioner's delegate, will issue a written decision on the request 
for review. Generally, the decision will be issued within 90 calendar 
days of the date of receipt of the request for review. If a decision is 
not issued within 90 days, the Commissioner, or the Commissioner's 
delegate, will inform the grantee in writing when a decision can be 
expected.
    (d) Final decision of SSA. The decision of the Commissioner, or of 
the Commissioner's delegate, shall be the final decision of the Social 
Security Administration on the matter(s) in dispute.

[[Page 28727]]

Appendix A to Part 435

Contract Provisions

    All contracts, awarded by a recipient including small purchases, 
must contain the following provisions as applicable:
    1. Equal Employment Opportunity--All contracts must contain a 
provision requiring compliance with E.O. 11246, ``Equal Employment 
Opportunity,'' as amended by E.O. 11375, ``Amending Executive Order 
11246 Relating to Equal Employment Opportunity,'' and as 
supplemented by regulations at 41 CFR part 60, ``Office of Federal 
Contract Compliance Programs, Equal Employment Opportunity, 
Department of Labor.''
    2. Copeland ``Anti-Kickback'' Act (18 U.S.C. 874 and 40 U.S.C. 
276c)--All contracts and subgrants in excess of $2000 for 
construction or repair awarded by recipients and subrecipients must 
include a provision for compliance with the Copeland ``Anti-
Kickback'' Act (18 U.S.C. 874), as supplemented by Department of 
Labor regulations (29 CFR part 3, ``Contractors and Subcontractors 
on Public Building or Public Work Financed in Whole or in Part by 
Loans or Grants from the United States''). The Act provides that 
each contractor or subrecipient will 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 must report all 
suspected or reported violations to the Federal awarding agency.
    3. Davis-Bacon Act, as amended (40 U.S.C. 276a to a-7)--When 
required by Federal program legislation, all construction contracts 
awarded by the recipients and subrecipients of more than $2000 must 
include a provision for compliance with the Davis-Bacon Act (40 
U.S.C. 276a to a-7) and as supplemented by Department of Labor 
regulations (29 CFR part 5, ``Labor Standards Provisions Applicable 
to Contracts Governing Federally Financed and Assisted 
Construction''). Under this Act, contractors are 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 are required to pay wages not less 
than once a week. The recipient must place a copy of the current 
prevailing wage determination issued by the Department of Labor in 
each solicitation and the award of a contract will be conditioned 
upon the acceptance of the wage determination. The recipient must 
report all suspected or reported violations to the Federal awarding 
agency.
    4. Contract Work Hours and Safety Standards Act (40 U.S.C. 327-
333)--Where applicable, all contracts awarded by recipients in 
excess of $100,000 for construction contracts and for other 
contracts that involve the employment of mechanics or laborers must 
include a provision for compliance with Sections 102 and 107 of the 
Contract Work Hours and Safety Standards Act (40 U.S.C. 327-333), as 
supplemented by Department of Labor regulations (29 CFR part 5). 
Under Section 102 of the Act, each contractor is required to compute 
the wages of every mechanic and laborer on the basis of a standard 
workweek of 40 hours. Work in excess of the standard workweek is 
permissible provided that the worker is compensated at a rate of not 
less than 1\1/2\ times the basic rate of pay for all hours worked in 
excess of 40 hours in the workweek. Section 107 of the Act is 
applicable to construction work and provides that no laborer or 
mechanic will be required to work in surroundings or under working 
conditions which are unsanitary, hazardous or dangerous. These 
requirements do not apply to the purchases of supplies or materials 
or articles ordinarily available on the open market, or contracts 
for transportation or transmission of intelligence.
    5. Rights to Inventions Made Under a Contract or Agreement--
Contracts or agreements for the performance of experimental, 
developmental, or research work must provide for the rights of the 
Federal Government and the recipient in any resulting invention in 
accordance with 37 CFR part 401, ``Rights to Inventions Made by 
Nonprofit Organizations and Small Business Firms Under Government 
Grants, Contracts and Cooperative Agreements,'' and any implementing 
regulations issued by the awarding agency.
    6. Clean Air Act (42 U.S.C. 7401 et seq.) and the Federal Water 
Pollution Control Act (33 U.S.C. 1251 et seq.), as amended--
Contracts and subgrants of amounts in excess of $100,000 must 
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 must be reported to the Federal awarding agency and the 
Regional Office of the Environmental Protection Agency (EPA).
    7. Byrd Anti-Lobbying Amendment (31 U.S.C. 1352)--Contractors 
who apply or bid for an award of more than $100,000 must file the 
required certification. Each tier certifies to the tier above that 
it will not and has not used Federal appropriated funds to pay any 
person or organization for influencing or attempting to influence an 
officer or employee of any agency, a member of Congress, officer or 
employee of Congress, or an employee of a member of Congress in 
connection with obtaining any Federal contract, grant or any other 
award covered by 31 U.S.C. 1352. Each tier must also disclose any 
lobbying with non-Federal funds that takes place in connection with 
obtaining any Federal award. Such disclosures are forwarded from 
tier to tier up to the recipient.
    8. Debarment and Suspension (Executive Orders 12549 and 12689)--
No contract will be made to parties listed on the General Services 
Administration's List of Parties Excluded from Federal Procurement 
or Nonprocurement Programs in accordance with Executive Orders 12549 
and 12689, ``Debarment and Suspension.'' This list contains the 
names of parties debarred, suspended, or otherwise excluded by 
agencies, and contractors declared ineligible under statutory or 
regulatory authority other than Executive Order 12549. Contractors 
with awards that exceed the simplified acquisition threshold must 
provide the required certification regarding its exclusion status 
and that of its principal employees.

[FR Doc. 03-11851 Filed 5-23-03; 8:45 am]
BILLING CODE 4191-02-P