[Federal Register Volume 72, Number 143 (Thursday, July 26, 2007)]
[Proposed Rules]
[Pages 41027-41042]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E7-13550]


 ========================================================================
 Proposed Rules
                                                 Federal Register
 ________________________________________________________________________
 
 This section of the FEDERAL REGISTER contains notices to the public of 
 the proposed issuance of rules and regulations. The purpose of these 
 notices is to give interested persons an opportunity to participate in 
 the rule making prior to the adoption of the final rules.
 
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 

  Federal Register / Vol. 72, No. 143 / Thursday, July 26, 2007 / 
Proposed Rules  

[[Page 41027]]



DEPARTMENT OF AGRICULTURE

Agricultural Research Service

7 CFR Part 550

RIN 0518-AA03


General Administrative Policy for Non-Assistance Cooperative 
Agreements

AGENCY: Agricultural Research Service, Education, and Economics; USDA.

ACTION: Proposed rule.

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SUMMARY: This Part establishes uniform guidelines within the Research, 
Education, and Economics (REE) mission area on the use, award, and 
administration of cooperative agreements awarded under the authority of 
7 U.S.C. 3318(b).

DATES: Submit comments on or before September 24, 2007.

ADDRESSES: Send comments to Kim Hicks, Agricultural Research Service, 
Extramural Agreements Division, MS-5110, 5601 Sunnyside Ave., 
Beltsville, MD 20705-5110.

FOR FURTHER INFORMATION CONTACT: Kim Hicks, Chief, Grants & Agreements 
Management Staff, ARS 5601 Sunnyside Ave., Beltsville, MD 20705-5110; 
Telephone: (301) 504-1141, Fax: (301) 504-1262; E-mail: 
[email protected].

SUPPLEMENTARY INFORMATION:

Background

    Section 1424 of the Food Security Act of 1985, Public Law 99-198, 
amended Section 1472(b) of the National Agricultural Research, 
Extension, and Teaching Policy Act of 1977 (7 U.S.C. 3318(b)) to 
authorize the Secretary to use a cooperative agreement as a legal 
instrument reflecting a relationship between the Secretary and a State 
cooperative institution, State department of agriculture, college, 
university, other research or educational institution or organization, 
Federal or private agency or organization, individual, or any other 
party, if the Secretary determines (a) The objectives of the agreement 
will serve a mutual interest of the parties to the agreement in 
agricultural research, extension, and teaching activities, including 
statistical reporting; and (b) all parties will contribute resources to 
the accomplishment of those objectives.
    The cooperative agreements authorized by 7 U.S.C. 3318(b) have been 
determined to be neither procurement nor assistance in nature and, 
therefore, not subject to the provisions of Federal Grant and 
Cooperative Agreement Act of 1977. These cooperative agreements are 
exempt from Department of Agriculture (USDA) rules and regulations 
promulgated at 7 CFR parts 3015, 3016, and 3019. The agreements covered 
by this Part are characterized by mutual interest and benefit to both 
parties, and reflect the unique cooperative relationship that exists 
between the REE agencies and the various public and private 
organizations engaged in the conduct of agricultural research, 
extension, and teaching activities.
    Although the nonassistance cooperative agreements described in this 
Rule are substantively different than the Federal assistance-type 
cooperative agreements used by most Federal awarding agencies and are 
not subject to the grants management Common Rule found at 2 CFR part 
215, ``Uniform Administrative Requirements for Grants and Agreements 
With Institutions of Higher Education, Hospitals and Other Non-profit 
Organizations,'' REE has decided to apply many of the provisions of the 
Common Rule as a matter of good business practice. Many of the 
standards and provisions of the Common Rule have been adopted in whole 
or in part in the proposed rule because they embody principles of good 
management and sound financial stewardship important to all Federal 
assistance and nonassistance awards. Additionally, we have included by 
reference specific provisions of other Federal assistance-type or 
procurement guidance documents such as 7 CFR 3052, 42 U.S.C. 6962, and 
the Cash Management Improvement Act, codified at 31 CFR part 205, for 
the same reasons.

Summary of Proposed Rule

    This part provides a summary of some of the more significant 
sections of the rule as well as background information that will be 
used in reading and interpreting it. Sections on Definitions, 
Applicability, Competition policy, Duration of the agreement, Special 
Award Conditions and others, provide general information on REE 
requirements and expectations. Some of the sections contain provisions 
that apply only to statutes authorizing nonassistance cooperative 
agreements and may be unfamiliar to those that normally work under 
Federal assistance-type cooperative agreements and grants.
    We are providing an analysis of some of the specific provisions of 
the sections in this part in an attempt to provide the commenter with a 
better understanding of their context in the rule and the reasons that 
they were written. Although commenters may offer comments on all 
aspects of this proposed rule there are a number of areas that are 
required by statute and therefore cannot be changed.
    We offer additional explanation and information on the following 
sections of this Part:

Subpart A--General

Definitions
    The definitions used in this Part are derived from several sources. 
They include USDA's implementation of Office of Management and Budget 
(OMB) Circular A-110 at 7 CFR part 3019 (2 CFR part 215), certain REE 
statutes authorizing the use of non-assistance agreements and other 
terms and definitions that have been commonly used in conjunction with 
REE's non-assistance agreement programs.
Eligibility
    The eligibility standards referenced in this section were 
determined by statute. (7 U.S.C. 3318(b)(1)).
Competition
    The non-assistance agreements awarded under this authority can be 
made without regard to any requirements for competition. The policy 
regarding competition referenced in this section was determined by 
statute. (7 U.S.C. 3318(e))
Duration
    REE Agencies may enter into non-assistance cooperative agreements 
for a period not to exceed 5 years.

[[Page 41028]]

Subpart B--Formation of Agreements

Mutuality of Interest
    The principle of mutuality of interest is extremely important in 
REE programs in which non-assistance agreements are used. Mutuality of 
interest is the cornerstone upon which decisions to enter into specific 
relationships with cooperators, on specific projects, are based. The 
statute authorizing the use of nonassistance cooperative agreements 
has, as one of the two principles for its use, the following provision: 
``* * * the objectives of the agreement will serve a mutual interest of 
the parties to the agreement * * *''
Indirect Cost
    The prohibitions and restrictions on payment of indirect costs on 
non-assistance cooperative agreements are based in statute (7 U.S.C. 
3319).
    Payment of indirect costs to State Cooperative Institutions 
referenced in the Definitions section of this document is prohibited. 
This prohibition does not apply to funds for international agricultural 
programs conducted by a State cooperative institution and administered 
by the Secretary or to funds provided by a Federal agency for such 
cooperative program or project through a fund transfer, advance or 
reimbursement (7 U.S.C. 3319). Payment of indirect costs to non-profit 
organizations is limited to 10 percent of the total direct cost of the 
project.
    In accordance with the annual appropriations language as specified 
in the cooperative agreement General Provisions, payment of indirect 
costs on REE nonassistance cooperative agreements with all other 
cooperating organizations is limited to the percentage(s) established 
in the Cooperator's negotiated indirect cost rate schedule.
Resource Contribution
    This section details the resource contributions that are required 
of Cooperators when participating in REE non-assistance cooperative 
agreements. Historically, there were no firm guidelines or requirements 
regarding the minimum contribution of resources on REE projects 
documented by non-assistance cooperative agreements. Contributions were 
expected to be ``* * * more than nominal.'' This vague guidance led to 
disparities among the contributions put forward by various 
organizations, confusion and a lack of direction among all parties 
charged with negotiating these awards and, in some cases a lack of true 
commitment to the project objectives on the part of the cooperator.
    In a 1993 USDA, Office of General Counsel (OGC) opinion it was 
noted that the contributions that are required under the statute ``* * 
* must be substantial enough to evoke a partnership type relationship 
such that all parties to the agreement have a real stake in the 
activity * * *'' and that ``* * * the exact amount that each party must 
contribute is a policy decision best left to the discretion of the 
agency.''
    REE Agencies have now established a minimum resource contribution 
of no less than 20 percent of the funded amount of the agreement. This 
decision was made after consultation with other USDA agencies and other 
Federal agencies. While it was noted during this consultation process 
that some other agencies had higher minimums of resource contributions, 
REE Agencies decided that a 20 percent minimum was reasonable and 
efficacious.
    Further, REE Agencies decided that the contribution required of 
cooperators could consist of ``in kind'' contributions and 
unrecoverable indirect costs. The section goes on to cite and define 
these in kind contributions in a manner that is consistent with the 
standard practices found in Federal agencies' implementation of OMB's 
guidance to Federal agencies found at 2 CFR part 215.
    As Federal resources become more scarce due to budget limitations 
it may become necessary to make changes to the way in which these costs 
are calculated. REE Agencies reserve the right and authority to 
increase the amount of the minimum contribution if and when it is 
necessary to do so.
Payment
    Due to the true collaborative nature of the research and other 
projects that REE Agencies enter into with their cooperators REE has 
determined that the reimbursement method of payment is the preferred 
method of payment for nonassistance cooperative agreements. While 
advance payment has proven to be the most reasonable approach for 
payments to grantees under grant programs, REE Agencies have determined 
that the most effective method of payment under nonassistance 
cooperative agreements is the reimbursement method of payment. The 
reimbursement method of payment utilizes Electronic Fund Transfers 
which are common to most recipient organizations and the technology has 
been in use for many years with nearly seamless efficiency.

Subpart C--Management of Agreements

    The Management of Agreements sections of this rule closely parallel 
the provisions of OMB's Circular A-110, codified as 2 CFR part 215 and 
other provisions previously published in USDA regulations found at 7 
CFR part 3015 and successor regulations. Because most educational 
institutions and other organizations covered by this rule are already 
subject to these provisions, and because the provisions have been 
previously approved under other Federal rulemaking efforts, we believe 
it unnecessary to further explain their purpose or place in this rule.
    We will review other aspects of the rule that differ due either to 
statutory exception or Agency discretion.
    Section 550.29 Press Releases. REE agencies are involved in a wide 
variety of research projects in many different areas of research. Some 
of these projects involve national security concerns or classified 
areas of research and are performed in cooperation with the Department 
of Homeland Security or other Federal protection agencies.
    This section was added to assure that only appropriate information 
is released to the public on REE projects.
    Section 550.30 Advertising. This section was developed in order to 
preclude Cooperators from claiming the endorsement of USDA on products 
or research results that were funded either directly, or indirectly, by 
the Federal government.
    Statements that include references to the REE agency in advertising 
media can imply the endorsement of the Federal government at large. 
This provision would not preclude such references but would require 
prior approval for their use.
    Section 550.32 Project Supervision and Responsibilities and Section 
550.33 Administrative Supervision were included here to assist in the 
delineation of duties between the Cooperator and the REE agency. This 
is necessary due to the extremely close collaboration between agency 
employees and the employees of the Cooperator. In many cases the 
employees of both entities work side-by-side often causing difficult 
work situations when it comes to matters such as overtime and holiday 
hours, and other common workplace and workday rules. The provisions of 
this section are an attempt to clarify some of the roles and rules that 
have historically presented challenges to administrators and program 
leaders of both entities.

Procurement Standards

    The Procurement Standards established in this Part are consistent 
with the standards set out in 2 CFR part 215 and USDA's Federal 
assistance regulations at 7 CFR part 3019.

[[Page 41029]]

Executive Order 12866 and Regulatory Flexibility Act

    This proposed rule has been reviewed under Executive Order 12866. 
The rule has been determined to be not significant for the purposes of 
Executive Order 12866.

Executive Order 12372

    The programs covered by these regulations are listed in the Catalog 
of Federal Domestic Assistance (CFDA) under the following CFDA numbers: 
the Agricultural Research Service found at 10.001; the Economics 
Research Service found at 10.250; and the National Agricultural 
Statistics Service found at 10.950.
    Because this proposed regulation does not authorize any programs or 
program expenditures, this notice is not subject to Executive Order 
12372, which requires intergovernmental consultation with State and 
local officials. (See 7 CFR Part 3015, subpart V.)

Executive Order 12988--Civil Justice Reform

    This proposed rule has been reviewed under Executive Order 12988, 
Civil Justice Reform. If this proposed rule is adopted: (1) State and 
local laws and regulations will not be preempted; (2) no retroactive 
effect will be given to this rule; and (3) administrative proceedings 
will not be required before parties may file suit in court challenging 
this rule.

Paperwork Reduction Act

    In accordance with section 3507(d) of the Paperwork Reduction Act 
of 1995 (44 U.S.C. 3501 et seq.), the information collection or 
recordkeeping requirements included in this proposed rule will be 
submitted for approval to the Office of Management and Budget (OMB).

List of Subjects in Part 550

    Agricultural research, Non-assistance, Procedural rules, Research, 
Science and technology.

    For the reasons stated in the preamble, the Department of 
Agriculture, Agriculture Research Service, proposes to amend 7 CFR 
chapter V by adding part 550 as set forth below.

PART 550--GENERAL ADMINISTRATIVE POLICY FOR NON-ASSISTANCE 
COOPERATIVE AGREEMENTS

Subpart A--General
Sec.
550.1 Purpose and scope.
550.2 Definitions.
550.3 Applicability.
550.4 Eligibility.
550.5 Competition.
550.6 Duration.
550.7 Exceptions.
550.8 Conflicting policies and deviations.
550.9 Other applicable regulations.
550.10 Special Award Conditions.
Subpart B--Formation of Agreements
550.11 Purpose.
550.12 Statutory authorization required (REE Agency).
550.13 Mutuality of interest.
550.14 Indirect costs/tuition remission.
550.15 Resource contribution.
550.16 Project development.
550.17 Peer review.
550.18 Assurances/certifications.
Subpart C--Management of Agreements

Financial Management

550.19 Purpose.
550.20 Standards for financial management systems.
550.21 Funding availability.
550.22 Payment.
550.23 Program income.
550.24 Non-Federal audits.
550.25 Allowable costs.

Program Management

550.26 Monitoring program performance.
550.27 Prior approvals.
550.28 Publications and acknowledgement of support.
550.29 Press releases.
550.30 Advertising.
550.31 Questionnaires and survey plans.
550.32 Project supervision and responsibilities.
550.33 Administrative supervision.
550.34 Research misconduct.
550.35 Rules of the workplace.

Equipment/Property Standards

550.36 Purpose of equipment/property standards.
550.37 Title to equipment.
550.38 Equipment.
550.39 Equipment replacement insurance
550.40 Supplies and other expendable property.
550.41 Federally owned property.
550.42 Intangible property.

Procurement Standards

550.43 Purpose of procurement standards.
550.44 Cooperator responsibilities.
550.45 Standards of conduct.
550.46 Competition.
550.47 Cost and price analysis.
550.48 Procurement records.
550.49 Contract administration.
550.50 Contract provisions.

Reports and Records

550.51 Purpose of reports and records.
550.52 Reporting program performance.
550.53 Financial reporting.
550.54 Invention disclosure and utilization reporting.
550.55 Retention and access requirements for records.

Suspension, Termination and Enforcement

550.56 Purpose of suspension, termination, and enforcement.
550.57 Suspension and termination.
550.58 Enforcement.
Subpart D--Close Out
550.59 Purpose.
550.60 Closeout procedures.
550.61 Subsequent adjustments and continuing responsibilities.
550.62 Collection of amounts due.

    Authority: Section 1472(b) of the National Agricultural 
Research, Extension, and Teaching Policy Act of 1977, as amended. (7 
U.S.C 3318(b).

Subpart A--General


Sec.  550.1  Purpose and scope.

    This Part establishes REE-wide standards of USDA's award and 
administration of non-assistance cooperative agreements executed under 
the authority of Section 1472(b) of the National Agricultural Research, 
Extension, and Teaching Policy Act of 1977, as amended. (7 U.S.C. 
3318(b)). These agreements are neither procurement nor assistance in 
nature, and therefore, are not subject to the Federal Grant and 
Cooperative Agreements Act of 1977. Accordingly, proper use of these 
cooperative agreements will promote and facilitate partnerships between 
the REE Agency and the Cooperator in support of research, extension and 
education projects of mutual benefit to each party.


Sec.  550.2  Definitions.

    Accrued expenditures means the charges incurred by the Cooperator 
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.
    Acquisition cost of equipment means the net invoice price of the 
equipment, including the cost of modifications, attachments, 
accessories, or auxiliary apparatus necessary to make the property 
usable for the purpose for which it was acquired. Other charges, such 
as the cost of installation, transportation, taxes, duty or protective 
in-transit insurance, shall be included or excluded from the unit 
acquisition cost in accordance with the Cooperator's regular accounting 
practices.
    Advance means a payment made to a Cooperator upon its request 
either before outlays are made by the Cooperator or through the use of 
predetermined payment schedules.
    Authorized Departmental Officer (ADO) means the REE Agency's 
official

[[Page 41030]]

delegated authority to negotiate, award, administer, suspend, and 
terminate non-assistance cooperative agreements.
    Authorized Departmental Officer's Designated Representative (ADODR) 
means the REE Agency's technical representative, acting within the 
scope of delegated authority, who is responsible for participating with 
the Cooperator in the accomplishment of a cooperative agreement's 
objectives and monitoring and evaluating the Cooperator's performance.
    Award means a nonassistance cooperative agreement which provides 
money or in-kind services or property in lieu of money, to an eligible 
Cooperator. The term does not include: financial assistance awards in 
the form of grants, cooperative agreements, 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.
    CFR means the Code of Federal Regulations.
    Closeout means the process by which an REE Agency determines that 
all applicable administrative actions and all required work under the 
agreement have been completed by the Cooperator and REE Agency.
    Contract means a procurement contract entered into by the 
Cooperator or a subcontractor of the cooperator pursuant to the 
cooperative agreement.
    Cooperator means any State agricultural experiment station, State 
cooperative extension service, all colleges and universities, other 
research or education institutions and organizations, Federal and 
private agencies and organizations, individuals, and any other party, 
either foreign or domestic, receiving an award from an REE Agency.
    Disallowed costs means those charges incurred under the cooperative 
agreement that REE determines to be unallowable, in accordance with the 
applicable Federal cost principles or other terms and conditions 
contained in the cooperative agreement.
    Electronic Funds Transfer (EFT) means electronic payment methods 
used to transfer funds to a Cooperator's bank account. (Including HHS/
PMS)
    Equipment means tangible nonexpendable personal property 
contributed or acquired by either an REE Agency or by the Cooperator, 
having a useful life of more than one year and an acquisition cost of 
$5000 or more per unit. However, consistent with Cooperator policy, 
lower limits may be established.
    Funding period means the period of time when Federal funding is 
available for obligation by the Cooperator.
    HHS-PMS means the Department of Health and Human Services/Payment 
Management System (also see EFT).
    i-Edison (Interagency Edison) is a database, which provides Federal 
grantee/Cooperator organizations and participating Federal agencies 
with the technology to electronically manage extramural invention 
portfolios in compliance with Federal reporting requirements.
    Intangible property means trademarks, copyrights, patents and 
patent applications.
    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 Cooperator during the same or 
a future period.
    OMB means the Office of Management and Budget.
    Outlays or expenditures means charges made to the project or 
program. Outlays and expenditures also include 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 Cooperator 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.
    Peer Review is a process utilized by REE Agencies to:
    (1) Determine if agency sponsored research projects have scientific 
merit and program relevance;
    (2) Provide peer input and make improvements to project design and 
technical approaches;
    (3) Provide insight on how to conduct the highest quality research 
in support of Agency missions and programs.
    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.
    Principle Investigator (PI) means the individual, designated by the 
Cooperator, responsible for directing and monitoring the performance, 
the day-to-day activities, and the scientific and technical aspects of 
the Cooperator's portion of an REE funded project. The PI works jointly 
with the ADODR in the development of project objectives and all other 
technical and performance related aspects of the program or project. 
See additional responsibilities of PI in Sec.  550.32.
    Prior approval means written approval by an ADO evidencing prior 
consent.
    Program income means gross income earned by the Cooperator that is 
directly generated by a supported activity or earned as a result of the 
award. 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, and license fees and royalties on 
patents and copyrights. Program income does not include the receipt of 
principal on loans, rebates, credits, discounts, etc., or interest 
earned on any of them, or interest earned on advances of Federal funds.
    Project costs means all allowable costs, incurred by the Cooperator 
and the REE Agency toward the completion of the project.
    Project period means the period established in the cooperative 
agreement during which Federal contributions begin and end.
    Property means, unless otherwise stated, personal property, 
equipment, intangible property.
    Publications mean all types of paper based media including 
electronic and audio media.
    Real property means land, including land improvements, structures 
and appurtenances thereto, but excludes movable machinery and 
equipment.
    REE Agency means the USDA Agency that enters into a cooperative 
agreement with the cooperator.
    State Cooperative Institutions are defined in statute as 
institutions designated or receiving funds pursuant to:
    (1) The First Morrill Act--The Land Grant Institutions.
    (2) The Second Morrill Act--The 1890 Institutions.
    (3) The Hatch Act of 1887--The State Agricultural Experiment 
Stations.
    (4) The Smith-Lever Act--The State Extension Services.
    (5) The McIntire-Stennis Act of 1962--The Cooperating Forestry 
Schools.
    (6) Public Law 95-113, Section 1430--A college or university having 
an accredited college of veterinary medicine or a department of 
veterinary science or animal pathology or similar unit conducting 
animal health and disease research in a State Agricultural Experiment 
Station.
    (7) Public Law 97-98, Section 1475b--Colleges, universities, and 
Federal laboratories having a

[[Page 41031]]

demonstrated capacity in aquaculture research.
    (8) Public Law 97-98, Section 1480--Colleges, universities, and 
Federal laboratories having a demonstrated capacity of rangeland 
research.
    (9) Equity in Educational Land--Grant Status Act of 1994 (7 U.S.C. 
301 note) 1994 Institutions.
    Subaward means an award in the form of money or in-kind services or 
property in lieu of money, made under an award by a Cooperator to an 
eligible subrecipient or by a subrecipient to a lower tier 
subrecipient.
    Subrecipient means the legal entity to which a subaward is made and 
which is accountable to the Cooperator 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 REE 
Agency.
    Supplies means all personal property excluding equipment, 
intangible property, as defined in this section, and inventions of a 
contractor conceived or first actually reduced to practice in the 
performance of work under a funding agreement (``subject inventions''), 
as defined in 37 CFR Part 401, ``Rights to Inventions Made by Nonprofit 
Organizations and Small Business Firms Under Government Grants, 
Contracts, and Cooperative Agreements.''
    Suspension means an action by a REE Agency that temporarily 
withdraws Federal sponsorship under an award, pending corrective action 
by the Cooperator or pending a decision to terminate the award by the 
REE Agency. 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.
    Unliquidated obligations are the amount of obligations incurred by 
the Cooperator for which an outlay has not been recorded.
    Unobligated balance means the portion of the funds authorized by 
the REE Agency that has not been obligated by the Cooperator and is 
determined by deducting the cumulative obligations from the cumulative 
funds authorized.
    Unrecovered indirect cost means the difference between the amount 
awarded and the amount, which could have been awarded under the 
Cooperator's approved negotiated indirect cost rate.
    U.S.C. means the United States Code.
    USDA means the United States Department of Agriculture.


Sec.  550.3  Applicability.

    This Part applies to all REE non-assistance cooperative agreements 
awarded under the authority of 7 U.S.C. 3318(b).


Sec.  550.4  Eligibility.

    REE agencies may enter into non-assistance cooperative agreements 
with State agricultural experiment stations, State cooperative 
extension services, all colleges and universities, other research or 
education institutions and organizations, Federal and private agencies 
and organizations, individuals, and any other party, either foreign or 
domestic, to further research, extension, or teaching programs in the 
food and agricultural sciences. (7 U.S.C. 3318(b)(1)).


Sec.  550.5  Competition.

    REE agencies may enter into non-assistance cooperative agreements, 
as authorized by this Part, without regard to any requirements for 
competition. (7 U.S.C. 3318(e)).


Sec.  550.6  Duration.

    REE may enter into non-assistance cooperative agreements for a 
period not to exceed five years.


Sec.  550.7  Exceptions.

    This Part does not apply to:
    USDA Federal Financial Assistance agreements subject to 7 CFR parts 
3015, 3016, or 3019;
    Procurement contracts or other agreements subject to the Federal 
Acquisition Regulation (FAR) or the Agriculture Acquisition Regulation 
(AgAR); or Agreements providing loans or insurance directly to an 
individual.


Sec.  550.8  Conflicting policies and deviations.

    This Part supersedes and takes precedence over any individual REE 
regulations and directives dealing with the award and administration of 
non-assistance cooperative agreements entered into under the delegated 
authority of 7 U.S.C. 3318(b). This Part may only be superseded, in 
whole or in part, by either a specifically worded statutory provision 
or a waiver authorized by the USDA-REE--Administrative and Financial 
Management (AFM)--Extramural Agreements Division (EAD) or any successor 
organization. Responsibility for developing, interpreting, and updating 
this Part is assigned to the USDA-REE-AFM-EAD or any successor 
organization.


Sec.  550.9  Other applicable regulations.

    Related issuances are in other Parts of the CFR and the U.S.C. as 
follows:
    (a) 7 CFR Part 3017 ``Governmentwide Debarment and Suspension'';
    (b) 7 CFR Part 3018 ``New Restrictions on Lobbying'';
    (c) 7 CFR Part 3052 ``Audits of States, Local Governments, and 
Nonprofit Organizations'';
    (d) 7 CFR 3015.175 (b) ``Copyrights'';
    (e) 37 CFR 401.14 ``Standard Patent Rights Clause'';
    (f) 15 U.S.C. 205a et seq.--``The Metric Conversion Act, as amended 
by the Omnibus Trade and Competitiveness Act'';
    (g) 42 U.S.C. 6962 ``Resource Conservation and Recovery Act 
(RCRA)''.


Sec.  550.10  Special award conditions.

    (a) REE Agencies may impose special conditions and/or additional 
requirements to a nonassistance agreement if a Cooperator:
    (1) Has a history of poor performance,
    (2) Is not financially stable,
    (3) Has a management system that does not meet the standards 
prescribed in this Part,
    (4) Has not conformed to the terms and conditions of a previous 
award, or
    (5) Is not otherwise responsible.
    (b) Special conditions and/or additional requirements may be added 
to an award provided that the Cooperator is notified in writing as to: 
the nature of the additional requirements, the reason why the 
additional requirements are being imposed, the nature of the corrective 
action needed, the time allowed for completing the corrective actions, 
and the method for requesting reconsideration of the additional 
requirements imposed.
    Any special conditions shall be promptly removed once the 
conditions that prompted them have been corrected.

Subpart B--Formation of Agreements


Sec.  550.11  Purpose.

    Sections 12 through 18 prescribe instructions and other pre-award 
matters to be used in establishing a non-assistance cooperative 
agreement.


Sec.  550.12  Statutory authorization required (REE Agency).

    REE Agencies must have programmatic statutory authority for the 
proposed project prior to entering into any non-assistance cooperative 
agreement.


Sec.  550.13  Mutuality of interest.

    The REE Agency shall document both parties' interest in the 
project. Mutual interest exists when both parties benefit in the same 
qualitative way from the

[[Page 41032]]

objectives of the agreement. If one party to the agreement would 
independently have an interest in the project, which is shared by the 
other party, and both parties' pool resources to obtain the end result 
of the project, mutual interest exists.


Sec.  550.14  Indirect cost/tuition remission.

    (a) Indirect Cost:
    (1) State Cooperative Institutions.
    Payment of indirect costs to State Cooperative Institutions in 
connection with non-assistance cooperative agreements awarded under the 
authority of 7 U.S.C. 3318(b) is prohibited. This prohibition does not 
apply to funds for international agricultural programs conducted by a 
State cooperative institution and administered by the Secretary or to 
funds provided by a Federal agency for such cooperative program or 
project through a fund transfer, advance or reimbursement. (7 U.S.C. 
3319)
    (2) Non-Profit Organizations:
    Payment of indirect costs to non-profit institutions in connection 
with USDA cooperative agreement, under the authority of 7 U.S.C. 
3318(b), is limited to 10 percent of the total direct cost of the 
project. (Annual Appropriations Bill for Agriculture and Related 
agencies, General Provisions)
    (3) All other cooperating organizations:
    With the exception of Sec. Sec.  550.14(a)(1) and 550.14(a)(2), 
above, payment of indirect costs is allowable in connection with REE 
non-assistance cooperative agreements. Reimbursement of indirect costs 
is limited to the percentage(s) established in the Cooperator's 
negotiated indirect cost rate schedule.
    (4) In any case, the REE Agency shall not reimburse indirect costs 
prior to receipt of the Cooperator's negotiated indirect cost rate 
schedule.
    (b) Tuition Remission.
    (1) State Cooperative Institutions.
    Reimbursement of tuition expenses to State Cooperative Institutions 
in connection with REE non-assistance cooperative agreements is 
prohibited. (7 U.S.C 3319)
    (2) All other cooperating organizations:
    Except for Sec.  550.14(b)(1), tuition remission is an allowable 
expense as determined in accordance with the cost principles applicable 
to the Cooperator. REE agencies shall negotiate and approve such 
payments as related to the scope and objectives of the non-assistance 
agreement.


Sec.  550.15  Resource contribution.

    Each party must contribute resources towards the successful 
completion of the project. Required resource contributions must be 
substantial enough to substantiate a true stake in the project as 
determined by the ADO.
    (a) REE Agency's Contribution.
    (1) The REE Agency's contribution must consist of the total in-
house costs to the REE Agency and the total amount to be reimbursed by 
the REE Agency to the Cooperator for all allowable costs agreed to in 
advance as reflected in the cooperative agreement.
    (b) Cooperator's Contribution.
    (1) The Cooperator's contribution must be no less than 20 percent 
of the total of the resource contributions under the cooperative 
agreement. Resource contributions of the Cooperator must consist of a 
sufficient amount of itemized direct costs to substantiate a true stake 
in the project as determined by the ADO. The Cooperator's contribution 
must be maintained at 20 percent of Federal funding throughout the life 
of the cooperative agreement.
    (2) Cooperators share of contributions may consist of ``in-kind'' 
contributions and may also include unrecoverable indirect costs. Such 
costs may be accepted as part of the Cooperator's resource contribution 
when all of the following criteria are met:
    (i) Costs are verifiable from the Cooperator's records.
    (ii) Costs are not included as contributions for any other 
federally assisted project or program.
    (iii) Costs are necessary and reasonable for proper and efficient 
accomplishment of project or program objectives.
    (iv) Costs are allowable under the applicable cost principles.
    (v) Costs are not paid by the Federal Government under another 
award, except where authorized by Federal statute to be used for cost 
sharing or matching.
    (vi) Costs conform to other provisions of this Part, as applicable.
    (3) Volunteer services furnished by professional and technical 
personnel, consultants, and other skilled and unskilled labor may be 
counted as resource contributions if the service is an integral and 
necessary part of an approved project or program. Rates for volunteer 
services shall be consistent with those paid for similar work in the 
Cooperator's organization. In those instances in which the required 
skills are not found in the Cooperator organization, rates shall be 
consistent with those paid for similar work in the labor market in 
which the Cooperator 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.
    (4) When an employer other than the Cooperator furnishes the 
services of an employee, these services shall be valued at the 
employee's regular rate of pay (plus an amount of fringe benefits that 
are reasonable, allowable, and allocable, but exclusive of overhead 
costs), provided these services are in the same skill for which the 
employee is normally paid.
    (5) Donated supplies may include such items as expendable 
equipment, office supplies, laboratory supplies or workshop and 
classroom supplies. Value assessed to donated supplies included in the 
cost sharing or matching share shall be reasonable and shall not exceed 
the fair market value of the property at the time of the donation.
    (6) The value of donated property shall be determined in accordance 
with the usual accounting policies of the Cooperator, with the 
following qualifications.
    (i) The value of donated land and buildings shall not exceed its 
fair market value at the time of donation to the Cooperator 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 Cooperator.
    (ii) The value of donated equipment shall not exceed the fair 
market value of equipment of the same age and condition at the time of 
donation.
    (iii) The value of donated space shall not exceed the fair rental 
value of comparable space as established by an independent appraisal of 
comparable space and facilities in a privately owned building in the 
same locality.
    (iv) The value of loaned equipment shall not exceed its fair rental 
value.
    (v) The following requirements pertain to the Cooperator's 
supporting records for in-kind contributions from third parties.
    (A) Volunteer services shall be documented and, to the extent 
feasible, supported by the same methods used by the Cooperator for its 
own employees.
    (B) The basis for determining the valuation for personal service, 
material, equipment, buildings, and land shall be documented.


Sec.  550.16  Project Development.

    REE provides partial funding to Cooperators to support research 
projects that contribute to REE program objectives and help carry out 
the REE mission. The Cooperator's PI and the REE Agency's ADODR shall 
jointly develop the following documentation:

[[Page 41033]]

    (a) Project Plan--A plan that shall be jointly developed by the REE 
ADODR and the Cooperator that is compliant with an REE program 
requirement. The project plan will utilize the REE provided format for 
external peer review.
    (b) Statement of Work--A detailed statement of work shall be 
jointly planned, developed and prepared by the Cooperator's PI and the 
awarding Agency's ADODR consisting of the following:

(1) Objective
(2) Approach
(3) Statement of Mutual Interest
(4) Performance Responsibilities
(5) Mutual Agreements

    (c) Budget--A plan that shall be jointly developed by the REE ADODR 
and the Cooperator PI outlining the following resource contributions:
    (1) Total amount to be reimbursed by the REE Agency to the 
Cooperator. (Direct and Indirect Costs as applicable)
    (2) Total in-house costs to the REE Agency. (Direct and indirect 
costs)
    (3) Total in-house costs to the Cooperator. (Direct and indirect 
costs)


Sec.  550.17  Peer review.

    Upon request of the REE Agency, cooperators may be requested to 
provide documentation in support of peer review activities and 
cooperator personnel may be requested to participate in peer review 
forums to assist the REE Agency in their reviews.


Sec.  550.18  Assurances/certifications.

    (a) Governmentwide Debarment and Suspension (Non procurement)--7 
CFR part 3017;
    (b) Governmentwide requirements for Drug-Free Workplace--7 CFR part 
3021;
    (c) Non-discrimination. The Cooperator assures compliance with the 
following requirement: No person in the United States shall, on the 
grounds of race, color, national origin, sex, age, religion, political 
beliefs, or disability, be excluded from participation in, be denied 
the benefits of, or be otherwise subjected to discrimination under any 
project or activity under a non-assistance cooperative agreement.
    (d) Protection of Human Subjects Requirements: The Cooperator 
assures compliance with the following provisions regarding the rights 
and welfare of human subjects:
    (1) The Cooperator is responsible for safeguarding the rights and 
welfare of any human subjects involved in research, development, and 
related activities supported by this Agreement. The Cooperator may 
conduct research involving human subjects only as prescribed in the 
statement of work and as approved by the Cooperator's Cognizant 
Institutional Review Board. Prior to conducting such research, the 
Cooperator shall obtain and document a legally sufficient informed 
consent from each human subject involved. No such informed consent 
shall include any exculpatory language through which the subject is 
made to waive, or to appear to waive, any of his or her legal rights, 
including any release of the Cooperator or its agents from liability 
for negligence.
    (2) The Cooperator agrees to comply with U.S. Department of Health 
and Human Services' regulations regarding human subjects, appearing in 
45 CFR Part 46 (as amended).
    (3) It will comply with REE policy, which is to assure that the 
risks do not outweigh either potential benefits to the subjects or the 
expected value of the knowledge sought.
    (4) Selection of subject or groups of subjects shall be made 
without regard to sex, race, color, religion, or national origin unless 
these characteristics are factors to be studied.
    (e) Animal Welfare Act Requirements: The Cooperator assures 
compliance with the Animal Welfare Act, as amended, 7 U.S.C. 2131, et 
seq., and the regulations promulgated thereunder by the Secretary of 
Agriculture (9 CFR, Subchapter A) pertaining to the care, handling, and 
treatment of warm-blooded animals held or used for research, teaching, 
or other activities supported by Federal funds. The Cooperator may 
request registration of facilities and a current listing of licensed 
dealers from the Regional Office of the Animal and Plant Health 
Inspection Service (APHIS), USDA, for the Region in which their 
facility is located. The location of the appropriate APHIS Regional 
Office, as well as information concerning this requirement, may be 
obtained by contacting the Senior Staff Officer, Animal Care Staff, 
USDA/APHIS, 4700 River Road, Riverdale, Maryland 20737.
    (f) Recombinant DNA Research Requirements: The Cooperator assures 
that it will assume primary responsibility for implementing proper 
conduct on recombinant DNA research and it will comply with the 
National Institute of Health Guidelines for Recombinant DNA Research, 
as revised.
    (1) If the Cooperator wishes to send or receive registered 
recombinant DNA material which is subject to quarantine laws, permits 
to transfer this material into the U.S. or across state lines may be 
obtained by contacting USDA/APHIS/PPQ, Scientific Services-
Biotechnology Permits, 4700 River Road, Unit 133, Riverdale, Maryland 
20737. In the event that the Cooperator has not established the 
necessary biosafety committee, a request for guidance or assistance may 
be made to the USDA Recombinant DNA Research Officer.
    (g) Agriculture Bioterrorism Protection Act Requirements: The 
Cooperator assures compliance with the Agriculture Bioterrorism 
Protection Act of 2002, as implemented at 7 CFR Part 331 and 9 CFR Part 
121, by agreeing that it will not possess, use, or transfer any select 
agent or toxin without a certificate of registration issued by the 
Agency.

Subpart C--Management of Agreements

Financial Management


Sec.  550.19  Purpose.

    Sections 550.20 through 550.25 of this subpart prescribe standards 
for financial management systems and program management requirements.


Sec.  550.20  Standards for financial management systems.

    (a) REE agencies shall require Cooperators to relate financial data 
to performance data.
    (b) Cooperators' financial management systems shall provide for the 
following.
    (1) Accurate, current, and complete disclosure of the financial 
results of each REE sponsored project or program in accordance with the 
reporting requirements set forth in Sec.  550.53 of this part. REE 
requires financial reporting on an accrual basis; however, the 
Cooperator shall not be required to establish an accrual accounting 
system. These Cooperators shall develop such accrual data through best 
estimated for their reports on the basis of an analysis of the 
documentation on hand.
    (2) Records that identify the source and application of funds for 
federally sponsored activities. These records shall contain information 
pertaining to Federal awards, authorizations, obligations, unobligated 
balances, assets, outlays, income and interest.
    (3) Effective control over and accountability for all funds, 
property and other assets. Cooperators shall adequately safeguard all 
such assets and assure they are used solely for authorized purposes.
    (4) Comparison of outlays with budget amounts for each award. 
Whenever appropriate, financial information should be related to 
performance and unit cost data.
    (5) Written procedures to minimize the time elapsing between the 
transfer of funds to the Cooperator from the U.S.

[[Page 41034]]

Treasury and the issuance or redemption of a check, warrant or payment 
by other means for program purposes by the Cooperator. To the extent 
that the provisions of the Cash Management Improvement Act (CMIA) (Pub. 
L. 101-453) govern, payment methods of State agencies, 
instrumentalities, and fiscal agents shall be consistent with CMIA 
Treasury-State Agreements or the CMIA default procedures codified at 31 
CFR Part 205, ``Rules and procedures for efficient Federal State funds 
transfer.''
    (6) Written procedures for determining the reasonableness, 
allocability and allowability of costs in accordance with the 
provisions of the applicable Federal cost principles and the terms and 
conditions of the award.
    (7) Accounting records including cost accounting records that are 
supported by source documentation.
    (c) Where bonds are required in the situations described above, the 
bonds shall be obtained from companies holding certificates of 
authority as acceptable sureties, as prescribed in 31 CFR Part 223, 
``Surety Companies Doing Business with the United States.''


Sec.  550.21  Funding availability.

    The funding period will begin on the date of final signature, 
unless otherwise stated on the agreement, and continue for the project 
period specified on the cover page of the cooperative agreement.


Sec.  550.22  Payment.

    (a) Payment methods shall minimize the time elapsing between the 
transfer of funds from the U.S. Treasury and the issuance or redemption 
of a check, warrant, or payment by other means by the Cooperators. 
Payment methods of State agencies or instrumentalities shall be 
consistent with Treasury-State CMIA agreements or default procedures 
codified at 31 CFR Part 205.
    (b) Reimbursement is the preferred method of payment. All payments 
to the Cooperator shall be made via EFT.
    (1) When the reimbursement method is used, the REE Agency shall 
make payment within 30 days after receipt of the billing, unless the 
billing is improper.
    (2) Cooperators shall be authorized to submit requests for payment 
not more than quarterly and not less frequently than annually.
    (3) Content of Invoice.
    At a minimum, the Cooperator's invoice shall state the following:
    (i) The name and address of the Cooperator;
    (ii) The name and address of the PI;
    (iii) The name and address of the financial officer to whom 
payments shall be sent;
    (iv) A reference to the cooperative agreement number;
    (v) The invoice date;
    (vi) The time period covered by the invoice; and
    (vii) Total dollar amount itemized by budget categories (labor, 
direct costs, and indirect costs, etc).
    (4) To facilitate the EFT process, the Cooperator shall provide the 
following information:
    (i) The name, addresses, and telephone number of the financial 
institution receiving payment;
    (ii) The routing transit number of the financial institution 
receiving payment;
    (iii) The account to which funds are to be deposited; and
    (iv) The type of depositor account (checking or savings).
    (c) If the REE Agency has determined that reimbursement is not 
feasible because the Cooperator lacks sufficient working capital, the 
REE Agency may provide cash on an advance basis provided the Cooperator 
maintains or demonstrates the willingness to maintain: (1) Written 
procedures that minimize the time elapsing between the transfer of 
funds and disbursement by the Cooperator, and (2) financial management 
systems that meet the standards for fund control and accountability as 
established in Sec.  550.20. Under this procedure, the REE Agency shall 
advance cash to the Cooperator to cover its estimated disbursement 
needs for an initial period. The timing and amount of cash advances 
shall be as close as is administratively feasible to the actual 
disbursements by the Cooperator organization for direct program or 
project costs and the proportionate share of any allowable indirect 
costs.
    (1) Advance payment mechanisms include, but are not limited to, 
Treasury check and electronic funds transfer.
    (2) Advance payment mechanisms are subject to the requirements of 
31 CFR Part 205.
    (3) Requests for advance payment shall be submitted on SF-270, 
``Request for Advance or Reimbursement.'' This form is not to be used 
when advance payments are made to the Cooperator automatically through 
the use of a predetermined payment schedule or if precluded by special 
REE Agency instructions for electronic funds transfer.
    (4) Cooperators shall maintain advances of Federal funds in 
interest bearing accounts, unless Sec.  550.22(c)(4)(i), (ii), or (iii) 
applies.
    (i) The Cooperator receives less than $120,000 in Federal awards 
per year.
    (ii) The best reasonably available interest bearing account would 
not be expected to earn interest in excess of $250 per year on Federal 
cash balances.
    (iii) 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.
    (5) For those entities where CMIA and its implementing regulations 
do not apply, interest earned on Federal advances deposited in interest 
bearing accounts shall be remitted annually to Department of Health and 
Human Services, Payment Management System, Rockville, MD 20852. The 
Cooperator for administrative expense may retain interest amounts up to 
$250 per year. State universities and hospitals shall comply with CMIA, 
as it pertains to interest. If an entity subject to CMIA uses its own 
funds to pay pre-award costs for discretionary awards without prior 
written approval from the REE Agency, it waives its right to recover 
the interest under CMIA. Thereafter, the REE Agency shall reimburse the 
Cooperator for its actual cash disbursements.
    (6) Whenever possible, advances shall be consolidated to cover 
anticipated cash needs for all awards made by the REE Agency to the 
Cooperator. The working capital advance method of payment shall not be 
used for Cooperators unwilling or unable to provide timely advances to 
their subrecipient to meet the subrecipient's actual cash 
disbursements.
    (d) To the extent available, Cooperators shall disburse funds 
available from repayments to and interest earned on program income, 
rebates, refunds, contract settlements, audit recoveries and interest 
earned on such funds before requesting additional cash payments.
    (e) Unless otherwise required by statute, REE Agencies shall not 
withhold payments for proper charges made by Cooperators at any time 
during the project period unless (1) or (2) apply.
    (1) A Cooperator has failed to comply with the project objectives, 
the terms and conditions of the award, or REE reporting requirements.
    (2) The Cooperator owes a debt to the United States which is 
subject to offset pursuant to 7 CFR Part 3 and Federal Clause 
Collection Standard; 31 CFR Parts 901-904.
    (f) Standards governing the use of banks and other institutions as 
depositories of funds advanced or reimbursed under awards are as 
follows.
    (1) Except for situations described in Sec.  550.22(f)(2), REE 
Agencies shall not require separate depository accounts for funds 
provided to a Cooperator or

[[Page 41035]]

establish any eligibility requirements for depositories for funds 
provided to a Cooperator. However, Cooperators must be able to account 
for the receipt, obligation and expenditure of funds.
    (2) Advances of Federal funds shall be deposited and maintained in 
insured accounts whenever possible.


Sec.  550.23  Program income.

    (a) REE Agencies shall apply the standards set forth in this 
section in requiring Cooperator organizations to account for program 
income related to projects financed in whole or in part with Federal 
funds.
    (b) Except as provided in Sec.  550.23(f), program income earned 
during the project period shall be retained by the Cooperator and shall 
be added to funds committed to the project by the REE Agency and 
Cooperator and used to further eligible project or program objectives.
    (c) Cooperators shall have no obligation to the Federal Government 
regarding program income earned after the end of the project period.
    (d) 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.
    (e) Proceeds from the sale of property shall be handled in 
accordance with the requirements of the Property Standards (See 
Sec. Sec.  550.36 through 550.42).
    (f) Cooperators shall have no obligation to the Federal Government 
with respect to program income earned from license fees and royalties 
for copyrighted material, patents, patent applications, trademarks, and 
inventions produced under an award. However, Patent and Trademark 
Amendments (35 U.S.C. Chapter 25) apply to inventions made under an 
experimental, developmental, or research award.


Sec.  550.24  Non-Federal audits.

    (a) Cooperators and subrecipients that are institutions of higher 
education or other non-profit organizations (including hospitals) shall 
be 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 shall be 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 shall be subject to the audit requirements 
of the REE agencies.
    (d) Commercial organizations shall be subject to the audit 
requirements of the REE Agency or the prime recipient as incorporated 
into the award document.


Sec.  550.25  Allowable costs.

    For each kind of Cooperator, there is a set of Federal principles 
for determining allowable costs. Allowability of costs shall be 
determined in accordance with the cost principles applicable to the 
entity incurring the costs. Thus, allowability of costs incurred by 
State, local or federally recognized Indian tribal governments is 
determined in accordance with the provisions of OMB Circular A-87, 
``Cost Principles for State, Local, and Indian Tribal Governments'' 
codified at 2 CFR Part 225. The allowability of costs incurred by non-
profit organizations is determined in accordance with the provisions of 
OMB Circular A-122, ``Cost Principles for Non-Profit Organizations'' 
codified at 2 CFR Part 230. The allowability of costs incurred by 
institutions of higher education is determined in accordance with the 
provisions of OMB Circular A-21, ``Cost Principles for Educational 
Institutions'' codified at 2 CFR part 220. The allowability of costs 
incurred by hospitals is determined in accordance with the provisions 
of Subpart E of 45 CFR Part 74. The allowability of costs incurred by 
commercial organizations and those non-profit organizations listed in 
Appendix C to Circular A-122 (2 CFR part 230) is determined in 
accordance with the contract cost principles and procedures of the 
Federal Acquisition Regulation (FAR) at 48 CFR Part 31.

Program Management


Sec.  550.26  Monitoring program performance.

    (a) Cooperators are responsible for managing the day-to-day 
operations of REE nonassistance awards using their established controls 
and policies, as long as they are consistent with REE requirements. 
However, in order to fulfill their role in regard to the stewardship of 
Federal funds, REE Agencies monitor their agreements to identify 
potential problems and areas where technical assistance might be 
necessary. This active monitoring is accomplished through review of 
reports and correspondence from the cooperator, audit reports, site 
visits, and other information available to the REE Agency. It is the 
responsibility of the Cooperator to ensure that the project is being 
performed in compliance with the terms and conditions of the award.
    (b) Monitoring of a project or activity will continue for as long 
as the REE Agency retains a financial interest in the project or 
activity. REE agencies reserve the right to monitor a project after it 
has been administratively closed out and no longer providing active 
support in order to resolve issues of accountability and other 
administrative requirements. Additional requirements regarding 
reporting and program performance can be found in Sec. Sec.  550.51 
through 550.55 of this part.
    (c) The REE Agency reserves the right to perform site visits at 
Cooperator locations. Access to project or program records shall be 
provided in accordance with the provisions of Sec.  550.55 ``Retention 
and access requirements for records.''


Sec.  550.27  Prior approvals.

    (a) The budget is the financial expression of the project or 
program as approved during the award process. REE agencies require that 
all Federal costs be itemized on the approved budget. The budget shall 
be related to performance for program evaluation purposes.
    (b) Cooperators are required to report deviations from budget and 
program plans, and request prior approvals for budget and program plan 
revisions.
    (c) Cooperators shall request prior approvals from REE Agencies for 
one or more of the following program or budget related reasons.
    (1) Incur pre-award costs up to 90 days prior to award date. All 
pre-award costs are incurred at the Cooperator's risk (i.e., the REE 
Agency is under no obligation to reimburse such costs if for any reason 
the Cooperator does not receive an award or if the award is less than 
anticipated and inadequate to cover such costs).
    (2) Change in the scope or the objective of the project or program 
(even if there is no associated budget revision requiring prior written 
approval).
    (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) Extensions of time, within statutory limitations, to complete 
project objectives. This extension may not be requested merely for the 
purpose of using unobligated balances. The Cooperator shall request the 
extension in writing with supporting reasons.
    (5) The transfer of amounts budgeted for indirect costs to absorb 
increases in direct costs, or vice versa.
    (6) The inclusion of costs that require prior approval in 
accordance with OMB

[[Page 41036]]

Circular A-21, ``Cost Principles for Educational Institutions,'' (2 CFR 
Part 220), OMB Circular A-122, ``Cost Principles for Non-Profit 
Organizations'' (2 CFR Part 230) or 45 CFR Part 74 Appendix E, or 48 
CFR Part 31, ``Contract Cost Principles and Procedures,'' as 
applicable.
    (7) Unless described in the agreement and funded in the approved 
awards, the sub award, 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) When requesting approval for budget revisions, Cooperators 
shall use the budget form used in the cooperative agreement.
    (e) Within 30 calendar days from the date of receipt of the request 
for budget revisions, the ADO shall review the request and notify the 
Cooperator whether the budget revisions have been approved.


Sec.  550.28  Publications and Acknowledgment of Support.

    (a) Publications. REE Agencies and the Federal Government shall 
enjoy a royalty-free, nonexclusive, and irrevocable right to reproduce, 
publish or otherwise use, and to authorize others to use, any materials 
developed in conjunction with a nonassistance cooperative agreement or 
contract under such an agreement.
    (b)(1) Cooperators shall acknowledge ARS, Economics Research 
Service (ERS), National Agricultural Statistics Service (NASS), and the 
Cooperative State Research, Education, and Extension Service (CSREES) 
support, whether cash or in-kind, in any publications written or 
published with Federal support and, if feasible, on any publication 
reporting the results of, or describing, a Federally supported activity 
as follows:
    ``This material is based upon work supported by the U.S. Department 
of Agriculture, (insert Agency name) under Agreement No. (Cooperator 
should enter the applicable agreement number here).''
    (2) All such material must also contain the following disclaimer 
unless the publication is formally cleared by the awarding agency:
    ``Any opinions, findings, conclusion, or recommendations expressed 
in this publication are those of the author(s) and do not necessarily 
reflect the view of the U.S. Department of Agriculture.''
    (3) Any public or technical information related to work carried out 
under a non-assistance cooperative agreement shall be submitted by the 
developing party to the other for advice and comment. Information 
released to the public shall describe the contributions of both parties 
to the work effort. In the event of a dispute, a separate publication 
may be made with effective statements of acknowledgment and disclaimer.
    (c) Media. Cooperators shall acknowledge awarding Agency support, 
as indicated in Sec.  550.28 (b) above, in any form of media (print, 
DVD, audio production, etc.) produced with Federal support that has a 
direct production cost to the Cooperator of over $5,000. Unless the 
terms of the Federal award provide otherwise, this requirement does not 
apply to:
    (1) Media produced under mandatory or formula grants or under sub 
awards.
    (2) Media produced as research instruments or for documenting 
experimentation or findings and intended for presentation or 
distribution to a USDA/REE audience.


Sec.  550.29  Press Releases.

    Press releases or other forms of public notification will be 
submitted to the REE agency for review prior to release to the public.
    The REE Agency will be given the opportunity to review, in advance, 
all written press releases and any other written information to be 
released to the public by the Cooperator, and require changes as deemed 
necessary, if the material mentions by name the REE Agency or the USDA, 
or any USDA employee or research unit or location.


Sec.  550.30  Advertising.

    The Cooperator will not refer in any manner to the USDA or agencies 
thereof in connection with the use of the results of the project 
without prior specific written authorization by the awarding Agency. 
Information obtained as a result of the project will be made available 
to the public in printed or other forms by the awarding Agency at its 
discretion. The Cooperator will be given due credit for its cooperation 
in the project. Prior approval is required.


Sec.  550.31  Questionnaires and survey plans.

    The Cooperator is required to submit to the REE Agency copies of 
questionnaires and other forms for clearance in accordance with the 
Paperwork Reduction Act of 1980 and 5 CFR part 1320.


Sec.  550.32  Project supervision and responsibilities.

    (a) The Cooperator is responsible and accountable for the 
performance and conduct of all Cooperator employees assigned to the 
project. The REE Agency does not have authority to supervise Cooperator 
employees or engage in the employer employee relationship.
    (b) The PI shall:
    (1) Work jointly with the ADODR in the development of the project 
statement of work;
    (2) Work jointly with the ADODR in the development of the project 
budget;
    (3) Report, and obtain approval for, any change in the project 
budget;
    (4) Report, and obtain approval for, any change in the scope or 
objectives of the project;
    (5) Assure that technical project performance and financial status 
reports are submitted on a timely basis in accordance with the terms 
and conditions of the award;
    (6) Advise the ADODR of any issues that may affect the timely 
completion of the project;
    (7) Assure that the Cooperator meets its commitments under the 
terms and conditions of the non-assistance agreement;
    (8) Assure that appropriate acknowledgements of support are 
included in all publications, in accordance with Sec.  550.28 of this 
Part.
    (9) Assure that inventions are appropriately reported in accordance 
with Sec.  550.54 of this Part; and
    (10) Upon request, provide the REE Agency with a project plan for 
use in for external peer review.


Sec.  550.33  Administrative supervision.

    REE employees are prohibited from engaging in matters related to 
cooperator employer/employee relations such as personnel, performance 
and time management issues. The cooperator is solely responsible for 
the administrative supervision of its employees.


Sec.  550.34  Research misconduct.

    (a) The Cooperator bears the primary responsibility for prevention 
and detection of research misconduct and for the inquiry, investigation 
and adjudication of research misconduct alleged to have occurred in 
association with their own institution.
    (b) The Cooperator shall:
    (1) Maintain procedures for responding to allegations or instances 
of research misconduct that has the following components:

(i) Objectivity
(ii) Due process
(iii) Whistle blower protection
(iv) Confidentiality
(v) Timely resolution;

    (2) Promptly conduct an inquiry into any allegation of research 
misconduct;
    (3) Conduct an investigation if an inquiry determines that the 
allegation or apparent instance of research misconduct has substance;

[[Page 41037]]

    (4) Provide appropriate separation of responsibilities between 
those responsible for inquiry and investigation, and those responsible 
for adjudication;
    (5) Advise REE Agency of outcome at end of inquiries and 
investigations into allegations or instances of research misconduct; 
and
    (6) Upon request, provide the REE Agency, upon request, hard copy 
(or Web site address) of their policies and procedures related to 
research misconduct.
    (c) Research misconduct or allegations of research misconduct shall 
be reported to the USDA Research Integrity Officer (RIO) and/or to the 
USDA, Office of Inspector General (OIG) Hotline.
    (1) The USDA RIO can be reached at: USDA Research Integrity 
Officer, 214-W Whitten Building, Washington, DC 20250, Telephone: 202-
720-5923, E-mail: [email protected].
    (2) The USDA OIG Hotline can be reached on: 1-800-424-9121.


Sec.  550.35  Rules of the workplace.

    Cooperator employees, while engaged in work at the REE Agency's 
facilities, will abide by the Agency's standard operating procedures 
regarding the maintenance of laboratory notebooks, dissemination of 
information, equipment operation standards, hours of work, conduct, and 
other incidental matters stated in the rules and regulations of the 
Agency.

Equipment/Property Standards


Sec.  550.36  Purpose of equipment/property standards.

    Sections 550.37 through 550.42 of this part set forth uniform 
standards governing management and disposition of property furnished by 
the Federal Government or acquired by the Cooperator with funds 
provided by the Federal Government. The Cooperator may use its own 
property management standards and procedures provided it observes other 
applicable provisions of this Part.


Sec.  550.37  Title to equipment.

    (a) As authorized by 7 U.S.C. 3318(d), title to expendable and 
nonexpendable equipment, supplies, and other tangible personal property 
purchased with Federal funding in connection with a non assistance 
cooperative agreement shall vest in the Cooperator from date of 
acquisition unless otherwise stated in the cooperative agreement.
    (b) Notwithstanding any other provision of this rule the REE Agency 
may, at its discretion, retain title to equipment described in 
Paragraph (a) of this section that is or may be purchased with Federal 
funds when the REE agency determines that it is in the best interest of 
the Federal government.


Sec.  550.38  Equipment.

    (a) The Cooperator shall not use equipment acquired with Federal 
funds to provide services to non-Federal outside organizations for a 
fee that is less than private companies charge for equivalent services, 
unless specifically authorized by Federal statute, for as long as the 
Federal Government retains an interest in the equipment.
    (b) The Cooperator shall use the equipment in the project or 
program for which it was acquired as long as needed, whether or not the 
project or program continues to be supported by Federal funds and shall 
not encumber the property without approval of the REE Agency. When no 
longer needed for the original project or program, the Cooperator shall 
use the equipment in connection with its' other federally-sponsored 
activities, in the following order of priority: (a) Activities 
sponsored by the REE Agency which funded the original project, then (b) 
activities sponsored by other Federal awarding agencies.
    (c) During the time that equipment is used on the project or 
program for which it was acquired, the Cooperator shall make it 
available for use on other projects or programs if such other use will 
not interfere with the work on the project or program for which the 
equipment was originally acquired as may be determined by the REE 
Agency. First preference for such other use shall be given to other 
projects or programs sponsored by the REE Agency that financed the 
equipment; second preference shall be given to projects or programs 
sponsored by other Federal awarding agencies. If equipment is owned by 
the Federal Government, use on other activities not sponsored by the 
Federal Government shall be permissible if authorized by the REE 
Agency. User charges shall be treated as program income.
    (d) When acquiring replacement equipment, unless otherwise directed 
by the REE Agency, the Cooperator shall use the equipment to be 
replaced as trade-in or sell the equipment and use the proceeds to 
offset the costs of the replacement equipment subject to the approval 
of the REE Agency.
    (e) The Cooperator's property management standards for equipment 
acquired with Federal funds and federally owned equipment shall include 
all of the following.
    (1) Equipment records shall be maintained accurately and shall 
include the following information:
    (i) A description of the equipment;
    (ii) Manufacturer's serial number, model number, Federal stock 
number, national stock number, or other identification number;
    (iii) Source of the equipment, including the award number;
    (iv) Whether title vests in the Cooperator 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; and
    (ix) Ultimate disposition data, including date of disposal and 
sales price or the method used to determine current fair market value 
where a Cooperator compensates the REE Agency for its share.
    (2) Equipment owned by the Federal Government shall be identified 
to indicate Federal ownership.
    (3) A physical inventory of equipment shall be taken and the 
results reconciled with the equipment records at least once every two 
years and a copy provided to the ADO responsible for the agreement. Any 
differences between quantities determined by the physical inspection 
and those shown in the accounting records shall be investigated to 
determine the causes of the difference. The Cooperator shall, in 
connection with the inventory, verify the existence, current 
utilization, and continued need for the equipment.
    (4) A control system shall be in effect to insure adequate 
safeguards to prevent loss, damage, or theft of the equipment. Any 
loss, damage, or theft of equipment shall be investigated and fully 
documented. If the Federal Government owns the equipment, the 
Cooperator shall promptly notify the REE Agency.
    (5) Adequate maintenance procedures shall be implemented to keep 
the equipment in good condition.
    (6) Where the Cooperator is authorized or required to sell the 
equipment, proper sales procedures shall be established which provide 
for competition to the extent practicable and result in the highest 
possible return.
    (f) When the Cooperator no longer needs the equipment, the 
equipment shall 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 Cooperator may retain the equipment for 
other uses provided that

[[Page 41038]]

compensation is made to the original REE Agency or its successor. The 
amount of compensation shall be computed by applying the percentage of 
Federal participation in the cost of the original project or program to 
the current fair market value of the equipment. If the Cooperator has 
no need for the equipment, the Cooperator shall request disposition 
instructions from the REE Agency. The REE Agency shall determine 
whether the equipment can be used to meet the Agency's requirements. If 
no requirement exists within that Agency, the availability of the 
equipment shall be reported to the General Services Administration 
(GSA) by the REE Agency to determine whether a requirement for the 
equipment exists in other Federal agencies. The REE Agency shall issue 
instructions to the Cooperator no later than 120 calendar days after 
the Cooperator's request and the following procedures shall govern.
    (1) If so instructed or if disposition instructions are not issued 
within 120 calendar days after the Cooperator's request, the Cooperator 
shall sell the equipment and reimburse the REE Agency an amount 
computed by applying to the sales proceeds the percentage of Federal 
participation in the cost of the original project or program. However, 
the Cooperator shall be permitted to deduct and retain from the Federal 
share $500 or ten percent of the proceeds, whichever is less, for the 
Cooperator's selling and handling expenses.
    (2) If the Cooperator is instructed to ship the equipment 
elsewhere, the Cooperator shall be reimbursed by the Federal Government 
by an amount which is computed by applying the percentage of the 
Cooperator's participation in the cost of the original project or 
program to the current fair market value of the equipment, plus any 
reasonable shipping or interim storage costs incurred.
    (3) If the Cooperator is instructed to otherwise dispose of the 
equipment, the Cooperator shall be reimbursed by the REE Agency for 
such costs incurred in its disposition.
    (4) The REE Agency 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 transfer shall be subject to the following standards.
    (i) The equipment shall be appropriately identified in the award or 
otherwise made known to the Cooperator in writing.
    (ii) The REE Agency shall issue disposition instructions within 120 
calendar days after receipt of a final inventory. The final inventory 
shall list all equipment acquired with Federal funds and federally 
owned equipment. If the REE Agency fails to issue disposition 
instructions within the 120 calendar days, the Cooperator shall apply 
the standards of this section, as appropriate.
    (iii) When the REE Agency exercises its right to take title, the 
equipment shall be subject to the provisions for federally owned 
equipment.


Sec.  550.39  Equipment replacement insurance.

    If required by the terms and conditions of the award, the 
Cooperator shall provide adequate insurance coverage for replacement of 
equipment acquired with Federal funds in the event of loss or damage to 
such equipment.


Sec.  550.40  Supplies and other expendable property.

    (a) Title to supplies and other expendable property shall vest in 
the Cooperator 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 Cooperator shall retain the supplies for use on non-Federal 
sponsored activities or sell them, but shall, in either case, 
compensate the Federal Government for its share. The amount of 
compensation shall be computed in the same manner as for equipment.
    (b) The Cooperator shall not use supplies acquired with Federal 
funds to provide services to non-Federal outside organizations for a 
fee that is less than private companies charge for equivalent services, 
unless specifically authorized by Federal statute as long as the 
Federal Government retains an interest in the supplies.


Sec.  550.41  Federally-owned property.

    Title to federally-owned property remains vested in the Federal 
Government. Cooperators shall submit annually an inventory listing of 
federally-owned property in their custody to the REE Agency. Upon 
completion of the award or when the property is no longer needed, the 
Cooperator shall report the property to the REE Agency for further 
Federal Agency utilization.
    If the REE Agency has no further need for the property, it shall be 
declared excess and reported to the GSA, unless the REE Agency has 
statutory authority to dispose of the property by alternative methods 
(e.g., the authority provided by the Federal Technology Transfer Act 
(15 U.S.C. 3710 (i)) to donate research equipment to educational and 
non-profit organizations in accordance with Executive Order 12999, 
``Education technology: ensuring Opportunity for all children in the 
next century.'' Appropriate instructions shall be issued to the 
Cooperator by the REE Agency.


Sec.  550.42  Intangible property.

    (a) The Cooperator may copyright any work that is subject to 
copyright and was developed, by the Cooperator, or jointly by the 
Federal Government and the Cooperator, or for which ownership was 
purchased, under a cooperative agreement REE Agencies reserve 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 for Federal purposes.
    (b) Cooperators 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) The REE Agency has the right to:
    (1) Obtain, reproduce, publish or otherwise use the data first 
produced under a cooperative agreement; and
    (2) Authorize others to receive, reproduce, publish, or otherwise 
use such data for Federal purposes.
    (d)(1) In addition, in response to a Freedom of Information Act 
(FOIA) request for research data relating to published research 
findings produced under a cooperative agreement that were used by the 
Federal Government in developing an Agency action that has the force 
and effect of law, the REE Agency shall request, and the Cooperator 
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 the REE Agency obtains the research data solely in 
response to a FOIA request, the Agency may charge the requester a 
reasonable fee equaling the full incremental cost of obtaining the 
research data. This fee should reflect costs incurred by the Agency, 
the Cooperator, and applicable subrecipients. This fee is in addition 
to any fees the Agency may assess under the FOIA (5 U.S.C. 
552(a)(4)(A)).
    (2) The following definitions apply for purposes of paragraph (d) 
of this section:

[[Page 41039]]

    (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;
    (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; or
    (C) 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) All rights, title, and interest in any Subject Invention made 
solely by employee(s) of the REE Agency shall be owned by the REE 
Agency. All rights, title, and interest in any Subject Invention made 
solely by at least one (1) Employee of the REE Agency and at least one 
(1) employee of the Cooperator shall be jointly owned by the Agency and 
the Cooperator, subject to the provisions of 37 CFR part 401.
    (f) REE Agencies shall have a nonexclusive, nontransferable, 
irrevocable, paid-up license to practice or have practiced for or on 
behalf of the United States the subject invention throughout the world.

Procurement Standards


Sec.  550.43  Purpose of procurement standards.

    Sections 44 through 50 set forth standards for use by Cooperators 
in establishing procedures for the procurement of supplies and other 
expendable property, equipment and other services with Federal funds. 
These standards are furnished to ensure that such materials and 
services are obtained in an effective manner and in compliance with the 
provisions of applicable Federal statutes and executive orders. No 
additional procurement standards or requirements shall be imposed by 
the Federal awarding agencies upon Cooperators, unless specifically 
required by Federal statute or executive order or approved by OMB.


Sec.  550.44  Cooperator responsibilities.

    The standards contained in this section do not relieve the 
Cooperator of the contractual responsibilities arising under its' 
contract(s). The Cooperator is the responsible authority, without 
recourse to the REE Agency, regarding the settlement and satisfaction 
of all contractual and administrative issues arising out of 
procurements entered into in support of a nonassistance agreement. This 
includes disputes, claims, award protests, 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.  550.45  Standards of conduct.

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


Sec.  550.46  Competition.

    (a) All procurement transactions shall be conducted in a manner to 
provide, to the maximum extent practical, open and free competition. 
The Cooperator shall be alert to organizational conflicts of interest 
as well as noncompetitive practices among contractors that may restrict 
or eliminate competition or otherwise restrain trade. In order to 
ensure objective contractor performance and eliminate unfair 
competitive advantage, contractors that develop or draft 
specifications, requirements, statements of work, invitations for bids 
and/or requests for proposals shall be excluded from competing for such 
procurements. Awards shall be made to the bidder or offeror whose bid 
or offer is responsive to the solicitation and is most advantageous to 
the Cooperator, price, quality and other factors considered. 
Solicitations shall clearly set forth all requirements that the bidder 
or offer shall fulfill in order for the bid or offer to be evaluated by 
the Cooperator. Any and all bids or offers may be rejected when it is 
in the Cooperator's interest to do so.
    (b) Contracts shall be made only with responsible contractors who 
possess the potential ability to perform successfully under the terms 
and conditions of the proposed procurement. Consideration shall be 
given to such matters as contractor integrity, record of past 
performance, financial and technical resources or accessibility to 
other necessary resources. In certain circumstances, contracts with 
certain parties are restricted by agencies' implementation of Executive 
Orders 12549 and 12689, ``Debarment and Suspension.''
    (c) Recipients shall, on request, make available for the REE 
Agency, pre-award review and procurement documents, such as request for 
proposals or invitations for bids, independent cost estimates, etc.


Sec.  550.47  Cost and price analysis.

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


Sec.  550.48  Procurement records.

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

[[Page 41040]]

Sec.  550.49  Contract administration.

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


Sec.  550.50  Contract provisions.

    The recipient shall include, in addition to provisions to define a 
sound and complete agreement, the following provisions in all 
contracts. The following provisions shall also be applied to 
subcontracts.
    (a) Contracts in excess of the simplified acquisition threshold 
shall contain contractual provisions or conditions that allow for 
administrative, contractual, or legal remedies in instances in which a 
contractor violates or breaches the contract terms, and provide for 
such remedial actions as may be appropriate.
    (b) All contracts in excess of the simplified acquisition threshold 
shall contain suitable provisions for termination by the cooperator, 
including the manner by which termination shall be effected and the 
basis for settlement. In addition, such contracts shall describe 
conditions under which the contract may be terminated for default as 
well as conditions where the contract may be terminated because of 
circumstances beyond the control of the contractor.
    (c) All negotiated contracts (except those for less than the 
simplified acquisition threshold) awarded by recipients shall include a 
provision to the effect that the recipient, the REE Agency, the 
Comptroller General of the United States, or any of their duly 
authorized representatives, shall have access to any books, documents, 
papers and records of the contractor which are directly pertinent to a 
specific program for the purpose of making audits, examinations, 
excerpts and transcriptions.
    (d) All contracts, including small purchases, awarded by recipients 
and their contractors shall contain the procurement provisions of 
Appendix A, 2 CFR part 215, as applicable.

Reports and Records


Sec.  550.51  Purpose of reports and records.

    Sections 550.52 through 550.55 of this part set forth the 
procedures for monitoring and reporting on the Cooperator's financial 
and program performance and the necessary reporting format. They also 
set forth record retention requirements, and property and equipment 
inventory reporting requirements.


Sec.  550.52  Reporting program performance.

    (a) The REE Agency shall prescribe the frequency with which 
performance reports shall be submitted. Performance reports shall not 
be required more frequently than quarterly or, less frequently than 
annually. Annual reports shall be due 90 calendar days after the grant 
year; quarterly or semi-annual reports shall be due 30 days after the 
reporting period. The REE Agency may require annual reports before the 
anniversary dates of multiple year agreements in lieu of these 
requirements. The final performance reports are due 90 calendar days 
after the expiration or termination of the period of agreement.
    (b) When required, performance reports shall contain, for each 
award, detailed information on each of the following.
    (1) A comparison of actual accomplishments with the goals and 
objectives established for the period and the findings of the 
investigator. 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.
    (c) Cooperators shall not be required to submit more than the 
original and two copies of performance reports.
    (d) Cooperators shall immediately notify the REE Agency of 
developments that have a significant impact on the award-supported 
activities. Also, notification shall be given in the case of problems, 
delays, or adverse conditions which materially impair the ability to 
meet the objectives of the award. This notification shall include a 
statement of the action taken or contemplated, and any assistance 
needed to resolve the situation.


Sec.  550.53  Financial reporting.

    Financial Status Report.
    (a) Each REE Agency shall require Cooperators to report the status 
of funds as approved in the budget for the cooperative agreement. A 
financial status report shall consist of the following information:
    (1) The name and address of the Cooperator.
    (2) The name and address of the PI.
    (3) The name, address, and signature of the financial officer 
submitting the report.
    (4) A reference to the cooperative agreement.
    (5) Period covered by the report.
    (6) An itemization of actual dollar amounts expended on the project 
during the reporting period (in line with the approved budget) and 
cumulative totals expended for each budget category from the starting 
date of the cooperative agreement.
    (b) The REE Agency shall determine the frequency of the Financial 
Status Report for each project or program, considering the size and 
complexity of the particular project or program. However, the report 
shall not be required more frequently than quarterly or less frequently 
than annually. A final report shall be required at the completion of 
the agreement.
    (c) The REE Agency shall require Cooperators to submit the 
financial status report (an original and no more than two copies) no 
later than 30 days after the end of each specified reporting period for 
quarterly and semi-annual reports, and 90 calendar days for annual and 
final reports. Extensions of reporting due dates may be approved by the 
REE Agency upon request of the Cooperator.


Sec.  550.54  Invention disclosure and utilization reporting.

    (a) The Cooperator shall report Invention Disclosures and 
Utilization information electronically via i-Edison Web Interface at: 
www.iedison.gov.
    (b) If access to InterAgency Edison is unavailable, the invention 
disclosure should be sent directly to: DEITR, National Institutes of 
Health, 6701 Rockledge Drive, Room 3175, MSC 7750, Bethesda, Maryland 
20892-7750.


Sec.  550.55  Retention and access requirements for records.

    (a) This section sets forth requirements for record retention and 
access to records for awards to Cooperators. REE agencies shall not 
impose any other record retention or access requirements upon 
Cooperators, excepting as set out in 550.42(d).
    (b) Financial records, supporting documents, statistical records, 
and all other records pertinent to an award shall be retained for a 
period of 3 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 the REE Agency. The only exceptions are the following:
    (1) If any litigation, claim, or audit is started before the 
expiration of the 3-

[[Page 41041]]

year period, the records shall be retained until all litigation, claims 
or audit findings involving the records have been resolved and final 
action taken;
    (2) Records for real property and equipment acquired with Federal 
funds shall be retained for 3 years after final disposition;
    (3) When records are transferred to or maintained by the REE 
Agency, the 3-year retention requirement is not applicable to the 
Cooperator;
    (4) Indirect cost rate proposals, cost allocations plans, etc. as 
specified in paragraph (f) of this section.
    (c) Copies of original records may be substituted for the original 
records if authorized by the REE Agency.
    (d) The REE Agency shall request transfer of certain records to its 
custody from Cooperators when it determines that the records possess 
long-term retention value. However, in order to avoid duplicate record 
keeping, a REE Agency may make arrangements for Cooperators to retain 
any records that are continuously needed for joint use.
    (e) The REE Agency, the Inspector General, Comptroller General of 
the United States, or any of their duly authorized representatives, 
have the right of timely and unrestricted access to any books, 
documents, papers, or other records of Cooperators that are pertinent 
to the awards, in order to make audits, examinations, excerpts, 
transcripts and copies of such documents. This right also includes 
timely and reasonable access to a Cooperator's personnel for the 
purpose of interview and discussion related to such documents. The 
rights of access in this paragraph are not limited to the required 
retention period, but shall last as long as records are retained.
    (f) No cooperator shall disclose its records that are pertinent to 
an award until the cooperator provides notice of the intended 
disclosure with copies of the relevant records to the REE Agency.
    (g) Indirect cost rate proposals, cost allocations plans, etc. 
Paragraphs (g)(1) and (g)(2) of this section apply to the following 
types of documents, and their supporting records: indirect cost rate 
computations or proposals, cost allocation plans, and any similar 
accounting computations of the rate at which a particular group of 
costs is chargeable (such as computer usage charge back rates or 
composite fringe benefit rates).
    (1) If submitted for negotiation. If the Cooperator submits to the 
REE Agency or the subrecipient submits to the Cooperator 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 Cooperator is not 
required to submit to the REE Agency or the subrecipient is not 
required to submit to the Cooperator the proposal, plan, or other 
computation for negotiation purposes, then the 3-year retention period 
for the proposal, plan, or other computation and its supporting records 
starts at the end of the fiscal year (or other accounting period) 
covered by the proposal, plan, or other computation.

Suspension, Termination, and Enforcement


Sec.  550.56  Purpose of suspension, termination, and enforcement.

    Sections 550.57 and 550.58 of this part set forth uniform 
suspension, termination, and enforcement procedures.


Sec.  550.57  Suspension and termination.

    Awards may be suspended or terminated in whole or in part if 
550.57(a), (b), or (c) apply.
    (a) The REE Agency may terminate the award, if a Cooperator 
materially fails to comply with the provisions of this rule or the 
terms and conditions of an award.
    (b) The REE Agency with the consent of the Cooperator, in which 
case the two parties shall agree upon the termination conditions, 
including the effective date and, in the case of partial termination, 
the portion to be terminated.
    (c) If costs are allowed under an award, the responsibilities of 
the Cooperator referred to in Sec.  550.32, including those for 
property management as applicable, shall be considered in the 
termination of the award, and provision shall be made for continuing 
responsibilities of the Cooperator after termination, as appropriate.


Sec.  550.58  Enforcement.

    (a) Remedies for noncompliance. If a Cooperator materially fails to 
comply with the terms and conditions of an award, whether stated in a 
Federal statute, regulation, assurance, application, or notice of 
award, the REE Agency may, in addition to imposing any of the special 
conditions outlined in Sec.  550.10, take one or more of the following 
actions.
    (1) Temporarily withhold cash payments pending correction of the 
deficiency by the Cooperator or more severe enforcement action by the 
REE Agency.
    (2) Disallow 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) Effects of suspension and termination. Costs of a Cooperator 
resulting from obligations incurred by the Cooperator during a 
suspension or after termination of an award are not allowable unless 
the REE Agency expressly authorizes them in the notice of suspension or 
termination or thereafter. Other Cooperator costs during suspension or 
after termination which are necessary and not reasonably avoidable are 
allowable if Sec.  550.58 (1) and (2) apply.
    (1) The costs result from obligations which were properly incurred 
by the Cooperator before the effective date of suspension or 
termination, are not in anticipation of it, and in the case of a 
termination, are non-cancellable.
    (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.
    (3) Relationship to debarment and suspension. The enforcement 
remedies identified in this section, including suspension and 
termination, do not preclude a Cooperator from being subject to 
debarment and suspension under Executive Orders 12549 and 12689 and 
USDA implementing regulations (7 CFR Part 3017).

Subpart D--Close Out


Sec.  550.59  Purpose.

    Sections 550.60 through 550.62 of this part contain closeout 
procedures and other procedures for subsequent disallowances and 
adjustments.


Sec.  550.60  Closeout procedures.

    (a) Cooperators shall submit, within 90 calendar days after the 
date of completion of the award, all financial, performance, and other 
reports as required by the terms and conditions of the award. The REE 
Agency may approve extensions to the reporting period when requested by 
the Cooperator.
    (b) Unless the REE Agency authorizes an extension, a Cooperator 
shall liquidate all obligations incurred under the award not later than 
90 calendar days after the funding period or the date of completion as 
specified in the terms and conditions of the award or in Agency 
implementing instructions.
    (c) The REE Agency shall make prompt payments to a Cooperator for 
allowable reimbursable costs under the award being closed out.

[[Page 41042]]

    (d) The Cooperator shall promptly refund any balance of unobligated 
cash advanced or paid by the REE Agency that it is not authorized to 
retain for use in other projects. OMB Circular A-129 governs unreturned 
amounts that become delinquent debts.
    (e) When authorized by the terms and conditions of the award, the 
REE Agency shall make a settlement for any upward or downward 
adjustments to the Federal share of costs after closeout reports are 
received.
    (f) The Cooperator shall account for any personal property acquired 
with Federal funds or received from the Federal Government in 
accordance with Sec.  550.36 through Sec.  550.42.
    (g) In the event a final audit has not been performed prior to the 
closeout of an award, the REE Agency shall retain the right to recover 
an appropriate amount after fully considering the recommendations on 
disallowed costs resulting from the final audit.


Sec.  550.61  Subsequent adjustments and continuing responsibilities.

    The closeout of an award does not affect any of the following.
    (a) The right of the REE Agency to disallow costs and recover funds 
on the basis of a later audit or other review.
    (b) The obligation of the Cooperator to return any funds due as a 
result of later refunds, corrections, or other transactions.
    (c) Audit requirements in Sec.  550.24.
    (d) Property management requirements in Sec.  550.36 through Sec.  
550.42.
    (e) Records retention as required in Sec.  550.56.


Sec.  550.62  Collection of amounts due.

    (a) Any funds paid to a Cooperator in excess of the amount to which 
the Cooperator is finally determined to be entitled under the terms and 
conditions of the award constitute a debt to the Federal Government. If 
not paid within a reasonable period after the demand for payment, the 
REE Agency may in accordance with 7 CFR Part 3, reduce the debt by--
    (1) Making an administrative offset against other requests for 
reimbursements or
    (2) Withholding advance payments otherwise due to the Cooperator, 
or
    (3) Taking other action permitted by statute.
    (b) Except as otherwise provided by law, the REE Agency shall 
charge interest on an overdue debt in accordance with 31 CFR Part 900, 
``Federal Claims Collection Standards.''

    Dated: July 5, 2007.
Edward B. Knipling,
Administrator, Agricultural Research Service.
 [FR Doc. E7-13550 Filed 7-25-07; 8:45 am]
BILLING CODE 3410-03-P