Uniform Administrative Requirements for Awards and Subawards to Institutions of Higher Education, Hospitals, Other Non-Profit Organizations, and Commercial Organizations; and Certain Grants and Agreements with States, Local Governments, and Indian Tribal Governments
Federal RegisterAug 25, 1994
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DEPARTMENT OF HEALTH AND HUMAN SERVICES
45 CFR Part 74
RIN 0991-AA56
Uniform Administrative Requirements for Awards and Subawards to
Institutions of Higher Education, Hospitals, Other Non-Profit
Organizations, and Commercial Organizations; and Certain Grants and
Agreements with States, Local Governments, and Indian Tribal
Governments
AGENCY: Department of Health and Human Services, HHS.
ACTION: Interim final rule; Request for comments.
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SUMMARY: This interim final rule amends 45 CFR Part 74 to incorporate
the changes established by revised OMB Circular A-110, ``Uniform
Administrative Requirements for Grants and Agreements with Institutions
of Higher Education, Hospitals and Other Non-Profit Institutions,''
published by the Office of Management and Budget (OMB) on November 29,
1993 (58 FR 62992). Consistent with the Circular, this rule applies to
HHS awards to institutions of higher education, hospitals, other non-
profit organizations and commercial organizations, and to all subawards
to such entities including those that are made by States, local
governments, and Indian Tribal governments under HHS awards.
DATES: This interim final rule is effective August 25, 1994. Written
comments must be submitted on or before October 24, 1994.
ADDRESSES: Comments must be in writing and should be mailed or faxed to
Charles Gale, Director, Division of Grants Policy and Oversight, HHS,
Room 517-D, 200 Independence Avenue, SW., Washington, DC 20201; FAX
(202) 690-8772. Written comments may be inspected at the identified
address during agency business hours from 9:30 a.m. to 5:30 p.m. (EST).
FOR FURTHER INFORMATION CONTACT:
Charles Gale, Director, Division of Grants Policy and Oversight, HHS,
at the address above; telephone (202) 690-6377. For the hearing
impaired only: TDD, (202) 690-6415.
SUPPLEMENTARY INFORMATION:
I. Background and Purpose of the Interim Rule
Since it was first issued in 1976, HHS has applied the provisions
of OMB Circular A-110 in making awards to institutions of higher
education, hospitals and other non-profit organizations through its
regulations at 45 CFR part 74. Except for a minor change made in 1987,
the provisions of Circular A-110 remained intact until OMB published a
comprehensive revision on November 29, 1993 (58 FR 62992). OMB and
other executive agencies, including HHS, have expended considerable
effort over the years to produce an updated Circular.
In 1987, OMB organized an interagency task force to review the
Circular with a view toward its revision based on recommendations
solicited from affected organizations such as universities and other
non-profit groups. The work of that task force resulted in the
publication of a notice of a proposed common rule that would have
combined Circular A-110 with OMB Circular A-102, ``Uniform Requirements
for Grants and Agreements with State and Local Governments.'' (53 FR
44716 (Nov. 4, 1988)). The public response led to a decision to abandon
further efforts to bring that proposal to final rulemaking.
In November 1990, OMB established another interagency task force
with the same assignment--to revise Circular A-110. The task force
developed a proposed revision of the Circular, which OMB published with
a request for comments on August 27, 1992 (57 FR 39018). After
considering the over 200 comments from a wide variety of federal and
non-federal respondents, OMB published the final revised Circular in
the Federal Register on November 29, 1993 (58 FR 62992).
OMB Circular A-110 sets forth government-wide standards governing
Federal agency administration of grants and other agreements with
institutions of higher education, hospitals and other non-profit
organizations. Federal agencies must apply the provisions of the
Circular in making awards to the covered entities; all primary
recipients (including governments) of Federal awards must also apply
the Circular's provisions to any subawards they make to such entities.
Those provisions that affect Federal agencies were effective on
December 29, 1993 (58 FR 62992-93). With respect to the Circular's
application to recipients of Federal agency awards, OMB's notice
directed each affected agency to promulgate its own rules adopting the
provisions of the Circular (58 FR 62992-93).
Agency-specific rules must follow the provisions of the Circular
unless OMB has granted the agency an exception for classes of
recipients of awards from a particular requirement of the Circular (58
FR 62992, 62995). The terms of the Circular, however, permit Federal
awarding agencies to make exceptions on an award-by-award basis without
prior OMB approval and to apply less restrictive requirements in the
case of small awards. Where a conflict exists between a provision of
the Circular and a statute, the statute governs (58 FR 62992-93,
62995).
Accordingly, HHS is publishing this interim final rule whose
primary purpose is to incorporate the provisions of OMB Circular A-110
into HHS's grants administration regulation at 45 CFR part 74.
Consistent with the Circular, this rule applies to HHS awards made to
institutions of higher education, hospitals and other non-profit
organizations. It also applies to such entities if they are recipients
of subawards from States, and local and Indian Tribal governments
administering programs under HHS awards. In keeping with the
longstanding applicability of part 74, this rule also applies to awards
to commercial organizations.
The rule continues part 74's application to certain grants and
agreements that HHS has with State governments under programs commonly
referred to as ``entitlement programs.'' The specific programs covered
are identified at 45 CFR 92.4 (a)(3), (a)(7), and (a)(8).
To make part 74 consistent with the Circular, the amendments
eliminate those current part 74 provisions which have been superseded
by the standards established in the Circular. However, other
provisions, which have been part of HHS's longstanding grants policy,
are retained because of their continuing import to proper stewardship
of the award making administration and closeout process. These
provisions do not have their foundation in the Circular. Neither are
they inconsistent with it. In addition, the amended rule contains
provisions reflecting certain deviations from the Circular which OMB
has approved. All of these matters are discussed in further detail
below.
Although HHS is publishing this rule as an interim final rule with
an immediate effective date, it is also inviting comments from the
public. First, the rule is being published as an interim final because
we believe that OMB afforded the public ample opportunity to comment on
its proposed revision to Circular A-110 which resulted in the final
version of the Circular, on which this rule is chiefly based. However,
comments are being invited because of the relationship of this interim
final rule to our current part 74 and the discretion we exercised in
implementing the Circular.
Regarding our current part 74, we have retained in this interim
final rule certain of its longstanding provisions which have not been
subject to public comment for some time. We are deleting other of its
provisions which we believe have been overtaken by the Circular or by
other statutes (e.g., the Cash Management Improvement Act) or events
(e.g., changes in technology). Because of the varied interests and
perspectives of recipients of HHS awards, who operate under a broad
array of HHS-administered programs authorized under a variety of
different statutes, and comprise an extraordinarily diverse universe in
terms of size of operations, level of funding received and purpose of
award activity, we are inviting public comment on this aspect of the
rule.
With respect to our implementation of the Circular, in general, we
have faithfully followed its provisions. However, in several instances
we have either elaborated on a provision or modified it to make it
pertain more clearly to the HHS environment or for other reasons. Also,
we have exercised the discretion which the terms of the Circular
afforded federal agencies in deciding how to handle certain matters;
for example, whether unrecovered indirect costs may be included as part
of a recipient's matching contributions (Circular section ________.23
(b), (58 FR 62992, 62997)) or whether recipients should be subject to
certain prior approval requirements (Circular section ________.25 (c)
(2) and (5), (f) (58 FR 62992, 62998-99)). We are, therefore, inviting
public comment to determine whether any further substantive or other
changes to part 74 may be necessary.
II. Discussion of the Interim Final Rule
General
The amendments to part 74 revise the current subparts A through F;
remove current subparts G through AA; add a new appendix A; and delete
appendixes G and H, which contained procurement standards from previous
versions of OMB Circulars A-102 and A-110. No changes are made in
existing appendix E, concerning cost principles for hospitals, and
appendixes I and J, concerning audits; therefore, those provisions
continue as codified and are not republished here. Similarly, the
status of appendixes B through D and F remains ``reserved.'' The
Authority citation has been corrected.
Following OMB Circular A-110, we have organized the structure of
part 74 into a more ``user friendly'' format that follows the
sequential steps of the normal awards management cycle: Pre-award,
post-award, and after-the-award or closeout. In addition, HHS has
elected to continue to have special additional rules, which currently
appear at subpart AA, that apply only to awards to commercial
organizations. The amended part 74, therefore, has six subparts as
follows: subpart A--General; subpart B--Pre-Award Requirements; subpart
C--Post-Award Requirements; subpart D--After-The-Award Requirements;
subpart E--Special Provisions For Awards to Commercial Organizations;
and subpart F--Disputes. As noted above, a new appendix A has been
added to part 74--Contract Provisions. What follows is a general
presentation of the change from the current part 74 that have been made
to align the rule with the organization and standards of Circular A-
110.
Like its predecessor, the revised subpart A, General, includes
provisions covering Purpose and Applicability, Definitions, and
Deviations; however, these provisions have been revised pursuant to the
Circular. All references to ``OPAL'' here and elsewhere in the current
rule have been deleted since that Office no longer exists in HHS. The
current provision regarding Appeals, Sec. 74.5, is deleted as being
unnecessary in view of the provisions on Termination and Enforcement at
revised subpart C and the Dispute provisions at revised subpart F. The
current provision on special grant or subgrant conditions, Sec. 74.7,
is removed as modified by the Circular to the revised subpart B, Pre-
Award Requirements, Sec. 74.14.
The revised Sec. 74.1(a)(3), Purpose and Applicability, expressly
recognizes part 74's longstanding applicability to the entitlement
programs identified at 45 CFR 92.4 (a)(3), (a)(7) and (a)(8), subject
of course to any statutory provision that may preempt a particular part
74 regulation. (See e.g., 53 FR 8078, 8079 (Mar. 11, 1988).) Also, in
keeping with the current exemption of these programs at Sec. 74.100 (a)
and (b) from application of the existing subpart L, Programmatic
Changes and Budget Revisions, the revised Sec. 74.1(a)(3) makes clear
that Sec. 74.25, Revision of program and budget plans, of the revised
subpart C does not apply. In addition, because the government
recipients of entitlement program awards do not use the conventional
application forms when seeking HHS funds, we have also made Sec. 74.12
of the revised subpart B inapplicable to these programs. HHS, OMB, and
the Department of Agriculture intend in the future to propose either a
separate new regulation for the entitlement programs or a complete
revision of OMB Circular A-102 common rule (45 CFR part 92 for HHS).
When that effort is completed, either a new separate regulation or an
amended part 92, but not this part, will apply to the entitlement
programs; until that time, part 74 remains applicable.
The provisions of the current Sec. 74.4(a)(2), which make certain
provisions of part 74 applicable to grants made under programs other
than the entitlement programs, are eliminated because we have
determined that it is no longer necessary to make these provisions
applicable to governmental recipients of HHS funds. They are largely
out of date or their significance has diminished considerably from when
they were first promulgated.
A new provision is included at Sec. 74.5, Subawards, which
establishes the general rule that this part applies to all subawards
made under awards that are subject to this part unless a particular
provision specifically excludes subrecipients from coverage. This rule
departs from the current part 74 approach to identifying when
provisions apply to subrecipients. Whereas the current Sec. 74.4(b)
provides that the language of the various provisions that followed
would indicate whether a provision applied to subrecipients, the new
Sec. 74.5 serves as a single umbrella provision bringing all applicable
subawards under Part 74 coverage. The current Sec. 74.7(c), 74.24(b),
74.97, 74.100(c), 74.102(b), 74.116, 74.143, 74.163, and 74.176, which
contain specific rules regarding subgrants, are, therefore, eliminated.
Another new provision is added, Effect on other issuances, at
Sec. 74.3 to make clear that part 74, as amended herein, is the
authoritative statement of HHS award administration policy subject only
to any statutory overrides or deviations approved by OMB or deviations
applied on an award-by-award basis.
The revised subpart B sets forth the rules that apply in the pre-
award process covering pre-award policies, application forms, debarment
and suspension, special award conditions, and certifications and
representations. In keeping with the Circular, two new provisions have
been added covering application of the Metric Conversion Act, as
amended, and the Resource Conservation and Recovery Act, Secs. 74.15
and 74.16, respectively. Section 74.10, Physical segregation and
eligibility, of the current subpart B is removed as modified by the
Circular to the Financial and Program management provisions of the
Revised subpart C, Post-Award Requirements, Sec. 74.22(I). Major
changes have taken place in the method that the Federal government uses
to transfer Federal funds to recipients of Federal awards. Section
74.11, Checks-paid basis letter of credit, of the current subpart is
eliminated because it has been overtaken by these changes and thus, no
longer applies. Provisions that reflect the new payment methods and
systems appear at the revised subpart C, Sec. 74.22, Payment. Section.
74.12, Minority-owned banks of the current subpart B is removed as
modified by the Circular to add coverage of women-owned banks to the
revised subpart C, Sec. 74.22(j).
The revised subpart C, Post-Award Requirements, sets forth the
rules for financial and program management, property and procurement
standards, reports and records, and the termination of awards and
enforcement of their terms. Sections 74.15, 74.17 and 74.18 of the
current subpart C, Bonding and Insurance, are removed as modified by
the Circular to the revised subpart C, Secs. 74.21 (c) through (e),
Standards for financial management systems. The provisions which appear
at the current Sec. 74.16, Construction and facility improvement, are
removed as modified by the Circular to the revised Sec. 74.48, Contract
provisions.
The revised subpart D, After-The-Award Requirements, sets out the
procedures for closing out awards, including taking any disallowances
or making any adjustments. Sections 74.20 through 74.25 of the current
subpart D, Retention and Access Requirements for Records, are removed
as modified by the Circular to the revised subpart C, Sec. 74.53,
Retention and access requirements for records.
The revised subpart E, Special Provisions For Awards To Commercial
Organizations, contains the special additional provisions governing
awards to commercial organizations that are contained currently in
subpart AA. The provisions of the current subpart E, Waiver of Single
State Agency Requirements, are eliminated based on a determination that
the general statement of award administration rules is an inappropriate
locus for this type of a rule. Such a rule is better located in the
regulations promulgated to implement the particular federal program(s)
in question.
The revised subpart F, Disputes, contains the rules that apply in
resolving any formal disputes that may arise between HHS and the
recipient of an award, including a provision evidencing HHS's interest
in employing alternative dispute mechanisms to attempt to resolve
disagreements before the parties resort to formal adjudication
processes. The provisions of the current subpart T, Miscellaneous, are
removed to the revised subpart F, except that current Sec. 74.304(e) is
eliminated because it states a vague legal standard that unnecessarily
places recipients of awards in jeopardy of filing untimely appeals. HHS
awarding agencies are expected to observe the fundamentals of due
process by ensuring that their notices of adverse final decisions
clearly and adequately inform the recipient of the matter being decided
and the reasons for the decision, in keeping with the provisions of the
revised Sec. 74.90(c), Final decisions in disputes.
The provisions of Secs. 74.41 and 74.42(a) of the current subpart
F, Grant Related Income, are incorporated as modified by the Circular
in the revised subpart A, Definitions, Sec. 74.2. (See definitions for
``accrued income'' and ``program income'' in the revised Sec. 74.2.)
The remaining Secs. 74.42(b) through 74.47 are removed as modified by
the Circular to the revised subpart C, Sec. 74.24, Program Income. (See
also Sec. 74.82 of the revised subpart E regarding commercial
organizations, and Secs. 74.30 through 74.37 of the revised subpart C
concerning disposition of proceeds from the sale of property acquired
with HHS funds.)
Section 74.50 and Secs. 74.52 through 74.57 of the current rules
governing cost sharing, which appear at the current subpart G, Cost
Sharing or Matching, are removed as modified by the Circular to the
revised subpart C, Sec. 74.23, Cost sharing or matching. The provisions
of Sec. 74.51, Definitions, of the current subpart G are incorporated
as modified by the Circular in the revised subpart A, Definitions,
Sec. 74.2.
The provisions of Secs. 74.60 and 74.61 (b), (c), (g) and (h) of
the current subpart H, Standards for Grantee and Subgrantee Financial
Management Systems and Audits, are removed as modified by the Circular
to the Financial and Program Management provisions of the revised
subpart C, Secs. 74.21 through 74.28. The current Sec. 74.61(e) is
removed as modified by the Circular to the revised Sec. 74.22, Payment.
The current Sec. 74.61(a) is removed as modified by the Circular to the
revised Sec. 74.52, Financial reporting. The current Sec. 74.61(f) is
removed as modified by the Circular to the revised Sec. 74.27,
Allowable costs. The current Sec. 74.62 is removed as modified by the
Circular to the revised Sec. 74.26, Non-federal audits.
Except for Sec. 74.71, Definitions, the provisions of the current
subpart I, Financial Reporting Requirements, are removed as modified by
the Circular to the revised subpart C, Sec. 74.52, Financial reporting.
Section 74.71 is incorporated as modified by the Circular in the
revised subpart A, Sec. 74.2, Definitions.
The provisions of the current subpart J, Monitoring and Reporting
of Program Performance, are removed as modified by the Circular to the
revised subpart C, Sec. 74.51, Monitoring and reporting program
performance. We have eliminated the distinction which appears at the
current Secs. 74.82 and 74.83, between program performance reports
under construction awards and under non-construction awards. Identical
rules now apply to both types of awards under the revised subpart C.
Sections 74.90 and 74.91 of the current subpart K, Grant and
Subgrant Payment Requirements, are eliminated as being obsolete, having
been overtaken by the changes in the systems used to transfer Federal
funds to recipients of Federal awards. The remaining Secs. 74.92
through 74.97 are removed as modified by the Circular to Sec. 74.22 (a)
through (h), and (j) through (m) of the revised subpart C's Financial
and Program Management provisions.
The provisions of the current subpart L, Programmatic Changes and
Budget Revisions, are removed as modified by the Circular to
Sec. 74.25, Revision of budget and program plans, of the revised
subpart C with two exceptions. First, the intent of the current
provisions at Sec. 74.100 (b) and (c) exempting ``mandatory grants'' is
covered at Sec. 74.1 of the revised subpart A which, as discussed
above, sets forth the extent to which this part, as amended, applies to
the ``entitlement programs'' identified at 45 CFR 92 (a)(3), (a)(7),
and (a)(8). Second, Sec. 74.104 is eliminated because it is no longer
necessary in light of other provisions of the Circular as implemented
herein.
Section 74.110, Definitions, of the current subpart M, Grant and
Subgrant Closeout, Suspension, and Termination, is incorporated as
modified by the Circular in the revised subpart A, Sec. 74.2,
Definitions. Current subpart M Secs. 74.111, Closeout, and 74.112,
Amounts Payable to the Federal Government, are removed as modified by
the Circular to the revised subpart D. Current Secs. 74.113, Violation
of Terms; 74.114, Suspension; and 74.115, Termination, are removed as
modified by the Circular to the revised subpart C, Secs. 74.60 through
74.62, Termination and Enforcement.
The provisions at the current subpart N, Forms for Applying for
Grants, have been replaced in their entirety by Sec. 74.12, Forms for
applying for HHS financial assistance, as the revised subpart B.
Section 74.132, Definitions, of the current subpart O, Property, is
incorporated as modified by the Circular in Sec. 74.2, Definitions, of
the revised subpart A. The remaining Secs. 74.133 through 74.145 of the
current subpart are removed as modified by the Circular to Secs. 74.30
through 74.37 of the revised subpart C's Property Standards provisions.
Sections 74.160, 74.161 and 74.163 of the current subpart P,
Procurements by Grantees and Subgrantees, are removed as modified by
the Circular to the Procurement Standards of the revised subpart C at
Secs. 74.40 through 74.48. Section 74.162 of the current subpart is
eliminated as being obsolete. Section 74.164 of the current subpart is
incorporated as modified by the Circular in Sec. 74.53, Retention and
access requirements for records, of the revised subpart C.
The current subpart Q, Cost Principles, are removed as modified by
the Circular to Sec. 74.27, Allowable costs, of the revised subpart B,
except that current Secs. 74.171(b) and 74.172(b) are eliminated as
being obsolete; and Sec. 74.177 is eliminated as being redundant with
the cost principles of the applicable OMB Circulars.
Differences Between Part 74, as Amended and Circular A-110
1. Circular A-110 Options
Circular A-110 contains language that, expressly or by implication,
authorizes agencies to exercise discretion in how they choose to
implement a particular Circular provision so long as the exercise of
such discretion does not violate some applicable statute. Many of these
options will be administered on a program-by-program or an award-by-
award basis by HHS awarding agencies. However, to maintain maximum
consistency and uniformity in HHS award and administration policy and
practice, HHS has elected to regulate the following on a uniform basis:
The Circular (section ________. 23(b)) provides for
Federal agency prior approval when a recipient wishes to satisfy a
cost-sharing or matching requirement by not seeking Federal payment of
some or all of the indirect costs under the award. We are waiving this
prior approval requirement to minimize administrative burdens on HHS
recipients of funds. See Sec. 74.23(b).
The Circular (section ________. 24(f)) authorizes Federal
agencies, by regulation or by the terms and conditions of an award, to
allow recipients to deduct the costs of generating income under
federally-supported projects, in certain circumstances, when they
compute net program income. To facilitate uniformity of treatment in
HHS awards administration, we are persuaded that all recipients of HHS
funds subject to this part should operate under the same rule;
therefore, we have elected to exercise this authority by regulation.
See Sec. 74.24(f).
The Circular (section ________. 25(c)(2)) requires
recipients of non-construction awards to request prior Federal agency
approval for changes in key personnel working under the award. We have
elaborated on this fundamental requirement by specifying that the
project director or principal investigator is always such a key person
under HHS awards. This has been HHS policy for many years because we
believe that project direction and leadership are important bases upon
which HHS makes award decisions and decisions during the course of
award administration. See Sec. 74.25(c)(2).
The Circular (section ________. 25(c)(5)) authorizes
Federal agencies to impose a prior approval requirement on recipient
budget transfers between direct and indirect costs. HHS has not
previously required such prior approval, and we see no need to do so
now. Consequently, this provision of the Circular does not appear in
these amendments.
The Circular (section ________. 25(f)) authorizes Federal
agencies to impose a prior approval requirement on certain fund
transfers that exceed ten percent of an award's total budget. HHS has
not imposed this requirement in the past. Our long term experience
without such a requirement gives us no reason to establish one now.
Because award administration has worked well without a prior approval
requirement, we have elected to continue to refrain from imposing one.
Consequently, this provision of the Circular does not appear in these
amendments.
The Circular (section ______.26(d)) authorizes Federal
agencies to establish the audit requirements that will apply to awards
to commercial organizations. In the interests of simplicity and
uniformity, we have made commercial organizations subject to the audit
requirements of OMB Circular A-133, which applies to most other HHS
recipients of funds. See Sec. 74.26(a).
The Circular (section ______.33(f)) authorizes Federal
agencies to establish conditions under which title to exempt property
will be vested in recipients. (Exempt property is property for which a
Federal agency has statutory authority to vest title without further
obligation, e.g., research grants under 31 U.S.C. 6306.) HHS is
continuing its longstanding policy of only reserving the right to
require transfer of title to such exempt equipment. This policy gives
maximum flexibility to recipients of HHS funds, while protecting HHS's
ability to ensure continuity of resource application when
responsibility for a project is moved to a new or replacement
recipient. See Sec. 74.33(b).
The Circular (section ______.37) authorizes Federal
agencies to require that recipients record liens to indicate that
personal and real property was acquired or improved with Federal funds
and that the property disposition rules apply to it. We have done so
only with regard to real property in which a Federal interest has been
established. We believe that such a rule properly balances the desire
to minimize administrative burdens on grantees with the need to protect
critical HHS financial interests. See Sec. 74.37.
We have adopted the Circular provisions at sections
______.22 and ______.52(a)(2) to reflect the OMB-approved procedures of
the HHS Payment Management System (PMS). For example, PMS has adapted
the forms SF-270 and 272 and renumbered them as PMS-270 and 272,
respectively. See Secs. 74.22 and 74.52(a)(2).
2. ``Deviations'' Approved by OMB
Circular A-110 provides for a process whereby a Federal agency may
seek exceptions to provisions of the Circular. HHS sought and obtained
approval for the following deviations from the Circular's provisions.
Prior approval of research patient costs--Because of the
significant amount of, and sensitivity to, research patient care in
HHS, revised Sec. 74.25(c)(8) continues the requirement currently at
Sec. 74.103(d)(3) that recipients obtain prior approval for research
patient care costs in awards made for the performance of research work.
Bid and proposal costs, and independent research and
development costs of non-profit organizations--Revised Sec. 74.27(b)
carries over virtually intact the current provisions at Sec. 74.174(b)
(1) and (2) which address allowable bid and proposal costs, and
independent research and development costs. Because OMB Circular A-122
does not cover them, HHS has chosen to continue to address these
subjects in part 74 to fill an important policy gap, especially in view
of HHS's expansive funded research and development activity.
Application of part 74 to the ``entitlement programs''--
Part 74, as amended, continues to apply to grants to the States for the
programs listed in 45 CFR 92.4(a) (3), (7), and (8), which are commonly
referred to as the ``entitlement programs.'' As discussed under
General, above, this is a temporary provision until new policies are
developed, as indicated at 45 CFR 92.4(b), for subpart E of 45 CFR part
92, to cover those programs.
3. Retention of Longstanding HHS Policies
In addition to adopting the language of OMB Circular A-110, this
amendment of 45 CFR part 74 retains certain longstanding HHS policies
which neither are contained in nor conflict with the Circular, and
which we believe are necessary to continuing, sound administration of
the awards process.
Revised Sec. 74.22(h)(2) references the HHS claims
collection regulations in 45 CFR part 30 rather than OMB Circular A-129
because those regulations are more relevant to the delinquent debts of
recipients of HHS funds.
Revised Sec. 74.25(k) specifies which HHS officials have
the authority to grant requests for prior approvals of revisions in
budget or program plans under this Part. This provision is not changed
in any substantive way from the current provisions at Sec. 74.101(a).
Revised Sec. 74.26 defines the term ``affiliated'' in
relation to the applicability of OMB Circular A-133 to hospitals
affiliated with institutions of higher education. The revised section
also provides recipients of HHS awards with instructions on where to
submit copies of audit reports. This provision is changed from current
Sec. 74.62(c) only to update the location to which audit reports must
be sent.
Revised subpart E contains special additional requirements
for awards to commercial organizations. We have deleted the previous
requirement that property acquired by commercial organizations under an
HHS award becomes Government property. Experience has shown that no
need exists for this requirement; therefore, we believe the costs of
administering such a requirement cannot be justified. Henceforth,
property acquired by commercial organizations under an HHS award will
be treated in the same way as property acquired by other grantees as
provided at revised Secs. 74.30 through 74.37.
4. Other Changes
We have made a number of editorial and key technical clarifications
of the Circular's provisions throughout the rule as amended. They are
designed to make the rule more understandable to the many and varied
HHS awarding agencies and recipients. In some instances, we have
recognized some of the text in the longer sections of the Circular for
easier reading and reference. However, we have not deviated from the
substantive requirements of the Circular. In addition, we have made
changes related to the following provisions which do not vary in
substance from the intent or provisions of the Circular.
Definitions, revised Sec. 74.2--Following OMB's approval
to continue part 74's applicability to the ``entitlement programs,'' we
have added definitions of ``State,'' ``local government,'' ``Indian
Tribal government,'' and ``Government.'' These definitions are
consistent with the definitions set forth at 45 CFR part 92. We have
also expanded the definition of ``Recipient'' to embrace these
entities. We have added a definition of ``discretionary award'' to
distinguish these types of transactions from the ``entitlement
program'' type of award.
To improve the utility of the rule, we have added definitions for
the following organizational entities: the Office of Management and
Budget (OMB); the Office of Grants and Acquisition Management (OGAM) of
the Office of the Assistant Secretary for Management and Budget, which
replaces the OPAL of the current rule; and the Departmental Appeals
Board, which is responsible for adjudicating certain disputes that
arise between HHS and recipients of HHS funds (see revised subpart F).
The Circular defines the phrase ``Federal awarding agency'' at
________.2 as the Federal agency that provides an award to a recipient.
In making certain features of the Circular apply more particularly to
HHS, we have added a definition of ``HHS awarding agency'' to refer to
those organizational components of HHS with authority and
responsibility for making and administering HHS awards. Having
established this definition, we have replaced the term ``Federal
awarding agency,'' which appears throughout the Circular's provisions,
with the term ``HHS awarding agency,'' whenever we mean the HHS
organizational component making the award. In those places where we
have inserted the term ``HHS'' in place of ``Federal awarding agency,''
we mean to encompass not only the awarding agency, but also, other HHS
components; e.g., the Office of Inspector General.
Appendix A--The Circular inadvertently misstates the
applicability of the statute commonly know as the Bryd Anti-Lobbying
Amendment, 31 U.S.C. 1352. The statue applies to organizations which
apply or bid for an award exceeding $100,000, not $100,000 or more. We
have made the correction in Appendix A; we have also included a cross
reference to 45 CFR part 93 which contains the applicable HHS
regulations implementing the statute which were issued pursuant to an
OMB common rule promulgated in 1990.
Patent and Trademark Laws--We have corrected the citation
``35 U.S.C. Ch. 18'' which was inadvertently included in section
________.24(h) of the Circular. The correct citation is 35 U.S.C. 200-
212. We have also added a proscription on HHS awarding agencies from
employing terms and conditions of awards made for educational purposes
to assert Federal rights in inventions made thereunder, in keeping with
the provisions of 35 U.S.C. 212.
Insurance of Federally-owned Property--At the revised
Sec. 74.31, Insurance Coverage, we have not included the last sentence
of section ________.31 of Circular, ``Federally-owned property need not
be insured unless required by the terms and conditions of the award.''
We have determined that, since the Government is a self-insurer,
recipients should not dilute the effect of the assistance awarded by
expending appropriated funds on insuring Federally-owned property.
Because by its terms, the Circular's provision is discretionary with
the agency, our omission of it represents a policy choice effectively
to regulate against allowing HHS awarding agencies to exercise such
discretion. Therefore, the omission is consistent with the substance
and intent of the Circular.
III. Justification for Waiver of Proposed Rulemaking
As a matter of longstanding policy set forth at 36 FR 2532 (Feb. 5,
1971), the Department of Health and Human Services normally follows the
notice of proposed rulemaking and public comment (NPRM) procedures set
forth in the Administrative Procedure Act (APA), 5 U.S.C. 553, even
when it is not required by the APA to do so. The APA, however, provides
for an exception to the NPRM procedures when an agency finds that there
is good cause for dispensing with such procedures on the grounds that
they are impracticable, unnecessary or contrary to the public interest.
Pursuant to 5. U.S.C. 553, this rule is being published as an
interim final rule with an immediate effective date because HHS has
found good cause to dispense with both the prior notice and comment on
this rule, and the 30-day delay in its effective date. At the same
time, HHS encourages interested parties to comment on this rule so that
we may have the benefit of the public's reaction before publishing the
rule in final form.
As previously stated, the primary purpose of this rule is to
incorporate the provisions of the revised OMB Circular A-110 into HHS's
award administration regulations. The Circular was developed over a
period of several years by a Federal interagency task force and was
subject to public review and extensive public comment before OMB
published its final revised Circular on November 29, 1993. OMB in fact
received over 200 comments in response to its proposed Circular from a
wide array of Federal and non-Federal respondents, many of whom
included past and current recipients of HHS awards.
To expedite government-wide use of these uniform procedures, OMB
directed that Federal agencies responsible for awarding and
administering grants and other agreements covered by the Circular
publish agency-specific rules adopting the Circular's specific
language. OMB has allowed agencies little latitude to publish rules
that deviate from the Circular which, as stated, had been subject to
public comment. Unless a different provision is required by Federal
statute or an agency has obtained OMB's approval for a deviation, the
provisions of the Circular govern.
This interim final rule essentially adopts the provisions of the
Circular to the maximum extent possible. Some key technical
clarifications, which are detailed elsewhere in this Preamble, have
been made to enhance the rule's clarity and thus that ability of HHS
awarding agencies and recipients of HHS funds to comprehend and apply
its provisions. As also explained elsewhere in this Preamble, other
provisions of this rule that may differ from the precise language of
the Circular simply carry over longstanding HHS policies from the
current part 74. Some of these provisions neither derive from nor
conflict with the Circular. Concerning others, such as the rule
requiring prior approval of patient care costs in research awards, HHS
obtained OMB's approval to publish them under OMB's deviation
procedures. But even these ``deviation'' provisions have been reflected
for some time in HHS's regulations at part 74. For those provisions
where HHS has exercised the discretionary decisionmaking inherent in
the Circular's provisions, we have made choices that we believe inure
chiefly to the recipients's benefit by avoiding imposition of
additional or unnecessary administrative and other burdens.
Therefore, because this rule is (1) on a Federal policy which has
been subject to extensive public comment, (2) based in the main on
current regulations where it differs form that Federal policy, (3)
intended to benefit both affected Federal agencies and recipients of
Federal awards by removing unnecessary administrative and other
burdens, and thus facilitate sound award administration, HHS has
determined that publication of this rule as an NPRM is unnecessary,
impractical and contrary to the public interest. For these same
reasons, HHS finds that good cause exists to eliminate the 30-day delay
of the effective date of this rule.
IV. Regulatory Impact Analyses
Executive Order 12866
In accordance with the provisions of Executive Order 12866, this
rule was not reviewed by the Office of Management and Budget.
(Note: HHS had previously listed this rule as a significant rule
in its ``Semiannual Regulatory Agenda,'' published in the Federal
Register on April 25, 1994, 59 FR 20325. When OMB issued the revised
final Circular A-110 in November 1993, HHS originally considered the
possibility that its rule adopting the Circular's provisions might
constitute a ``significant regulatory action'' as defined in
Executive Order 12866, especially in view of HHS's general policy of
following the APA's notice and comment procedures even when that
statute does not require us to do so. Upon further review of the
Circular, this implementing rule and its long regulatory history,
and before the April 25, 1994 Federal Register notice, HHS had
determined that this rule is not ``significant'' because it
essentially updates HHS grant administration rules which have been
in place for many years. Regrettably, HHS was unable to delete this
item from the regulatory agenda before publication of the notice.
Notwithstanding its inclusion in that agenda, this rule is not a
``significant'' rule within the meaning of the Executive Order.)
Regulatory Flexibility Act
The Secretary, in accordance with the Regulatory Flexibility Act (5
U.S.C. 605(b)), has reviewed this interim final rule before publication
and, by approving it, certifies that it does not have a significant
impact on a substantial number of small entities.
Paperwork Reduction Act
In keeping with the requirements of 44 U.S.C. 3504(h), the
information collection requirements contained in this rule have been
approved by OMB as Standard Forms or HHS adaptations of Standard Forms
with the following assigned clearance numbers: SF-269: 0348-0039; SF-
424: 0348-0043; and PMS-270 and 272: 0937-0200.
List of Subjects in 45 CFR Part 74
Accounting, Administrative practice and procedures, Grant
programs--health, Grant programs--social programs, Grants
administration, Reporting and recordkeeping requirements.
(Catalog of Federal Domestic Assistance Number Does not Apply.)
Dated: August 17, 1994.
Donna E. Shalala,
Secretary of Health and Human Services.
Part 74 of Title 45 of the Code of Federal Regulations is amended
as follows:
PART 74--UNIFORM ADMINISTRATIVE REQUIREMENTS FOR AWARDS AND
SUBAWARDS TO INSTITUTIONS OF HIGHER EDUCATION, HOSPITALS, OTHER
NONPROFIT ORGANIZATIONS, AND COMMERCIAL ORGANIZATIONS; AND CERTAIN
GRANTS AND AGREEMENTS WITH STATES, LOCAL GOVERNMENTS AND INDIAN
TRIBAL GOVERNMENTS
1. The authority citation for part 74 is revised to read as
follows:
Authority: 5 U.S.C. section 301; Appendix J is also issued under
31 U.S.C. section 7505.
2. The heading for part 74 is revised to read as set forth above.
3. Subparts A-F are revised to read as follows:
Subpart A--General
Sec.
74.1 Purpose and applicability.
74.2 Definitions.
74.3 Effect on other issuances.
74.4 Deviations.
74.5 Subawards.
Subpart B--Pre-Award Requirements
74.10 Purpose.
74.11 Pre-award policies.
74.12 Forms for applying for HHS financial assistance.
74.13 Debarment and suspension.
74.14 Special award conditions.
74.15 Metric system of measurement.
74.16 Resource Conservation and Recovery Act (RCRA, Section 6002 of
Pub. L. No. 94-580 (Codified at 42 U.S.C. 6962)).
74.17 Certifications and representations.
Subpart C--Post-Award Requirements
Financial and Program Management
74.20 Purpose of financial and program management.
74.21 Standards for financial management systems.
74.22 Payment.
74.23 Cost sharing or matching.
74.24 Program income.
74.25 Revision of budget and program plans.
74.26 Non-Federal audits.
74.27 Allowable costs.
74.28 Period of availability of funds.
Property Standards
74.30 Purpose of property standards.
74.31 Insurance coverage.
74.32 Real property.
74.33 Federally-owned and exempt property.
74.34 Equipment.
74.35 Supplies.
74.36 Intangible property.
74.37 Property trust relationship.
Procurement Standards
74.40 Purpose of procurement standards.
74.41 Recipient responsibilities.
74.42 Codes of conduct.
74.43 Competition.
74.44 Procurement procedures.
74.45 Cost and price analysis.
74.46 Procurement records.
74.47 Contract administration.
74.48 Contract provisions.
Reports and Records
74.50 Purpose of reports and records.
74.51 Monitoring and reporting program performance.
74.52 Financial reporting.
74.53 Retention and access requirements for records.
Termination and Enforcement
74.60 Purpose of termination and enforcement.
74.61 Termination.
74.62 Enforcement.
Subpart D--After-the-Award Requirements
74.70 Purpose.
74.71 Closeout procedures.
74.72 Subsequent adjustments and continuing responsibilities.
74.73 Collection of amounts due.
Subpart E--Special Provisions for Awards to Commercial Organizations
74.80 Scope of subpart.
74.81 Prohibition against profit.
74.82 Program income.
Subpart F--Disputes
74.90 Final decisions in disputes.
74.91 Alternative dispute resolution.
Subpart A--General
Sec. 74.1 Purpose and applicability.
(a) Unless inconsistent with statutory requirements, this part
establishes uniform administrative requirements governing:
(1) Department of Health and Human Services' (HHS) grants and
agreements awarded to institutions of higher education, hospitals,
other nonprofit organizations and commercial organizations;
(2) Subgrants or other subawards awarded by recipients of HHS
grants and agreements to institutions of higher education, hospitals,
other nonprofit organizations and commercial organizations, including
subgrants or other subawards awarded under HHS grants and agreements
administered by State, local and Indian Tribal governments; and
(3) HHS grants and agreements, and any subawards under such grants
and agreements, awarded to carry out the entitlement programs
identified at 45 CFR part 92, Sec. 92.4(a)(3), (a)(7), and (a)(8),
except that Secs. 74.12 and 74.25 of this Part shall not apply.
(b) Nonprofit organizations that implement HHS programs for the
States are also subject to state requirements.
Sec. 74.2 Definitions.
Accrued expenditures mean the charges incurred by the recipient
during a given period requiring the provision of funds for: (1) Goods
and other tangible property received; (2) services performed by
employees, contractors, subrecipients, and other payees; and, (3) other
amounts becoming owed under programs for which no current services or
performance is required.
Accrued income means the sum of: (1) Earnings during a given period
from (i) services performed by the recipient, and (ii) goods and other
tangible property delivered to purchasers; and (2) amounts becoming
owed to the recipient for which no current services or performance is
required by the recipient.
Acquisition cost of equipment means the net invoice price of the
equipment, including the cost of modifications, attachments,
accessories, or auxiliary apparatus necessary to make the property
usable for the purpose for which it was acquired. Other charges, such
as the cost of installation, transportation, taxes, duty or protective
in-transit insurance, shall be included or excluded from the unit
acquisition cost in accordance with the recipient's regular accounting
practices.
Advance means a payment made by Treasury check or other appropriate
payment mechanism to a recipient upon its request either before outlays
are made by the recipient or through the use of predetermined payment
schedules.
Award means financial assistance that provides support or
stimulation to accomplish a public purpose. Awards include grants and
other agreements in the form of money or property in lieu of money, by
the Federal Government to an eligible recipient. The term does not
include: technical assistance, which provides services instead of
money; other assistance in the form of loans, loan guarantees, interest
subsidies, or insurance; direct payments of any kind to individuals;
and, contracts which are required to be entered into and administered
under Federal procurement laws and regulations.
Cash contributions mean the recipient's cash outlay, including the
outlay of money contributed to the recipient by third parties.
Closeout means the process by which the HHS awarding agency
determines that all applicable administrative actions and all required
work of the award have been completed by the recipient and HHS.
Contract means a procurement contract under an award or subaward,
and a procurement subcontract under a recipient's or subrecipient's
contract.
Cost sharing or matching means that portion of project or program
costs not borne by the Federal Government.
Current accounting period means, with respect to Sec. 74.27(b), the
period of time the recipient chooses for purposes of financial
statements and audits.
Date of completion means the date on which all work under an award
is completed or the date on the award document, or any supplement or
amendment thereto, on which HHS awarding agency sponsorship ends.
Departmental Appeals Board means the independent office established
in the Office of the Secretary with delegated authority from the
Secretary to review and decide certain disputes between recipients of
HHS funds and HHS awarding agencies under 45 CFR part 16 and to perform
other review, adjudication and mediation services as assigned.
Disallowed costs mean those charges to an award that the HHS
awarding agency determines to be unallowable, in accordance with the
applicable Federal cost principles or other terms and conditions
contained in the award.
Discretionary award means an award made by an HHS awarding agency
in keeping with specific statutory authority which enables the agency
to exercise judgment (``discretion'') in selecting the applicant/
recipient organization through a competitive award process.
Equipment means tangible nonexpendable personal property, including
exempt property, charged directly to the award having a useful life of
more than one year and an acquisition cost of $5000 or more per unit.
However, consistent with recipient policy, lower limits may be
established.
Excess property means property under the control of any HHS
awarding agency that, as determined by the head of the awarding agency
or his/her delegate, is no longer required for the agency's needs or
the discharge of its responsibilities.
Exempt property means tangible personal property acquired in whole
or in part with Federal funds, where the HHS awarding agency has
statutory authority to vest title in the recipient without further
obligation to the Federal Government. An example of exempt property
authority is contained in the Federal Grant and Cooperative Agreement
Act, 31 U.S.C. 6306, for property acquired under an award to conduct
basic or applied research by a nonprofit institution of higher
education or nonprofit organization whose principal purpose is
conducting scientific research.
Federal funds authorized mean the total amount of Federal funds
obligated by the HHS awarding agency for use by the recipient. This
amount may include any authorized carryover of unobligated funds from
prior funding periods when permitted by the HHS awarding agency's
implementing instructions or authorized by the terms and conditions of
the award.
Federal share of real property, equipment, or supplies means that
percentage of the property's or supplies' acquisition costs and any
improvement expenditures paid with Federal funds. This will be the same
percentage as the Federal share of the total costs under the award for
the funding period in which the property was acquired (excluding the
value of third party in-kind contributions). For property acquired on
an amortized basis over more than one funding period, the Federal share
will be the percentage of the amount of paid-in equity at the time of
disposition.
Federally recognized Indian Tribal government means the governing
body of any Indian tribe, band, nation, or other organized group or
community (including any Native village as defined in section 3 of the
Alaska Native Claims Settlement Act certified by the Secretary of the
Interior as eligible for the special programs and services provided by
him through the Bureau of Indian Affairs.
Funding period means the period of time when Federal funding is
available for obligation by the recipient.
Government means a State or local government or a federally
recognized Indian tribal government.
HHS means the U.S. Department of Health and Human Services.
HHS awarding agency means any organization component of HHS that is
authorized to make and administer awards.
Intangible property and debt instruments mean, but are not limited
to, trademarks, copyrights, patents and patent applications and such
property as loans, notes and other debt instruments, lease agreements,
stock and other instruments of property ownership, whether considered
tangible or intangible.
Local government means a local unit of government, including
specifically a county, municipality, city, town, township, local public
authority, school district, special district, intra-state district,
council of governments (whether or not incorporated as a nonprofit
corporation under State law), any other regional or interstate entity,
or any agency or instrumentality of local government.
Obligations mean the amounts of orders placed, contracts and grants
awarded, services received and similar transactions during a given
period that require payment by the recipient during the same or a
future period.
OGAM means the Office of Grants and Acquisition Management, which
is an organizational component within the Office of the Secretary, HHS,
and reports to the Assistant Secretary for Management and Budget.
OMB means the U.S. Office of Management and Budget.
Outlays or expenditures mean charges made to the project or
program. They may be reported on a cash or accrual basis. For reports
prepared on a cash basis, outlays are the sum of cash disbursements for
direct charges for goods and services, the amount of indirect expense
charged, the value of third party in-kind contributions applied and the
amount of cash advances and payments made to subrecipients. For reports
prepared on an accrual basis, outlays are the sum of cash disbursements
for direct charges for goods and services, the amount of indirect
expense incurred, the value of in-kind contributions applied, and the
net increase (or decrease) in the amounts owed by the recipient for
goods and other property received, for services performed by employees,
contractors, subrecipients and other payees and other amounts becoming
owed under programs for which no current services or performance are
required.
Personal property means property of any kind except real property.
It may be tangible, having physical existence, or intangible, having no
physical existence, such as copyrights, patents, or securities.
Prior approval means written approval by an authorized HHS official
evidencing prior consent.
Program income means gross income earned by the recipient that is
directly generated by a supported activity or earned as a result of the
award (see exclusions in Sec. 74.24 (e) and (h)). Program income
includes, but is not limited to, income from fees for services
performed, the use or rental of real or personal property acquired
under federally-funded projects, the sale of commodities or items
fabricated under an award, license fees and royalties on patents and
copyrights, and interest on loans made with award funds. Interest
earned on advances of Federal funds is not program income. Except as
otherwise provided in the terms and conditions of the award, program
income does not include the receipt of principal on loans, rebates,
credits, discounts, etc., or interest earned on any of them.
Project costs means all allowable costs, as set forth in the
applicable Federal cost principles (see Sec. 74.27), incurred by a
recipient and the value of the contributions made by third parties in
accomplishing the objectives of the award during the project period.
Project period means the period established in the award document
during which HHS awarding agency sponsorship begins and ends.
Property means, unless otherwise stated, real property, equipment,
intangible property and debt instruments.
Real property means land, including land improvements, structures
and appurtenances thereto, but excludes movable machinery and
equipment.
Recipient means an organization receiving financial assistance
directly from an HHS awarding agency to carry out a project or program.
The term includes public and private institutions of higher education,
public and private hospitals, commercial organizations, and other
quasi-public and private nonprofit organizations such as, but not
limited to, community action agencies, research institutes, educational
associations, and health centers. The term may include foreign or
international organizations (such as agencies of the United Nations)
which are recipients, subrecipients, or contractors or subcontractors
of recipients or subrecipients at the discretion of the HHS awarding
agency. The term does not include government-owned contractor-operated
facilities or research centers providing continued support for mission-
oriented, large-scale programs that are government-owned or controlled,
or are designated as federally-funded research and development centers.
For entitlement programs listed at 45 CFR 92.4(a)(3), (a)(7), and
(a)(8) ``recipient'' means the government to which an HHS awarding
agency awards funds and which is accountable for the use of the funds
provided. The recipient in this case is the entire legal entity even if
only a particular component of the entity is designated in the award
document.
Research and development means all research activities, both basic
and applied, and all development activities that are supported at
universities, colleges, hospitals, other nonprofit institutions, and
commercial organizations. ``Research'' is defined as a systematic study
directed toward fuller scientific knowledge or understanding of the
subject studied. ``Development'' is the systematic use of knowledge and
understanding gained from research directed toward the production of
useful materials, devices, systems, or methods, including design and
development of prototypes and processes. The term research also
includes activities involving the training of individuals in research
techniques where such activities utilize the same facilities as other
research and development activities and where such activities are not
included in the instruction function.
Small awards means a grant or cooperative agreement not exceeding
the small purchase threshold fixed at 41 U.S.C. 403(11) (currently
$25,000).
State means any of the several States of the United States, the
District of Columbia, the Commonwealth of Puerto Rico, any territory or
possession of the United States, or any agency or instrumentality of a
State exclusive of local governments.
Subaward means an award of financial assistance in the form of
money, or property in lieu of money, made under an award by a recipient
to an eligible subrecipient or by a subrecipient to a lower tier
subrecipient. The term includes financial assistance when provided by
any legal agreement, even if the agreement is called a contract, but
does not include procurement of goods and services nor does it include
any form of assistance which is excluded from the definition of
``award'' in this section.
Subrecipient means the legal entity to which a subaward is made and
which is accountable to the recipient for the use of the funds
provided. The term may include foreign or international organizations
(such as agencies of the United Nations) at the discretion of the HHS
awarding agency.
Supplies means all personal property excluding equipment,
intangible property, and debt instruments as defined in this section,
and inventions of a contractor conceived or first actually reduced to
practice in the performance of work under a funding agreement
(``subject inventions''), as defined in 37 CFR part 401, ``Rights to
Inventions Made by Nonprofit Organizations and Business Firms Under
Government Grants, Contracts, and Cooperative Agreements.''
Suspension means an action by the HHS awarding agency that
temporarily withdraws the agency's financial assistance sponsorship
under an award, pending corrective action by the recipient or pending a
decision to terminate the award.
Suspension of an award is a separate action from suspension under
HHS regulations (45 CFR part 76) implementing E.O.s 12549 and 12689,
``Debarment and Suspension.''
Termination means the cancellation of HHS awarding agency
sponsorship, in whole or in part, under an agreement at any time prior
to the date of completion. For the entitlement programs listed at 45
CFR 92.4 (a)(3), (a)(7), and (a)(8), ``termination'' shall have that
meaning assigned at 45 CFR 92.3.
Third party in-kind contributions means the value of non-cash
contributions provided by non-Federal third parties. Third party in-
kind contributions may be in the form of real property, equipment,
supplies and other expendable property, and the value of goods and
services directly benefiting and specifically identifiable to the
project or program.
Unliquidated obligations, for financial reports prepared on a cash
basis, mean the amount of obligations incurred by the recipient that
has not been paid. For reports prepared on an accrued expenditure
basis, they represent the amount of obligations incurred by the
recipient for which an outlay has not been recorded.
Unobligated balance means the portion of the funds authorized by
the HHS awarding agency that has not been obligated by the recipient
and is determined by deducting the cumulative obligations from the
cumulative funds authorized.
Unrecovered indirect cost means the difference between the amount
awarded and the amount which could have been awarded under the
recipient's approved negotiated indirect cost rate.
Working capital advance means a procedure whereby funds are
advanced to the recipient to cover its estimated disbursement needs for
a given initial period.
Sec. 74.3 Effect on other issuances.
This part supersedes all administrative requirements of codified
program regulations, program manuals, handbooks and other nonregulatory
materials which are inconsistent with the requirements of this part,
except to the extent they are required by statute, or authorized in
accordance with the deviations provision in Sec. 74.4.
Sec. 74.4 Deviations.
After consultation with OMB, the HHS OGAM may grant exceptions to
HHS awarding agencies for classes of awards or recipients subject to
the requirements of this part when exceptions are not prohibited by
statute. However, in the interest of maximum uniformity, exceptions
from the requirements of this part shall be permitted only in unusual
circumstances. HHS awarding agencies may apply more restrictive
requirements to a class of awards or recipients when approved by the
OGAM, after consultation with the OMB. HHS awarding agencies may apply
less restrictive requirements without approval by the OGAM when making
small awards except for those requirements which are statutory.
Exceptions on a case-by-case basis may also be made by HHS awarding
agencies without seeking prior approval from the OGAM. OGAM will
maintain a record of all requests for exceptions from the provisions of
this part that have been approved for classes of awards or recipients.
Sec. 74.5 Subawards.
(a) Unless inconsistent with statutory requirements, this part
shall apply to--
(1) All subawards received by institutions of higher education,
hospitals, other non-profit organizations, and commercial organizations
from any recipient of an HHS award, including any subawards received
from States, and local Indian Tribal governments; and
(2) All subawards received from States by any entity, including a
government entity, under the entitlement programs identified at 45 CFR
part 92, Sec. 92.4 (a), (a)(7), and (a)(8), except that Secs. 74.12 and
74.25 of this part shall not apply.
(b) Except as provided in paragraph (a)(2) of this section, when
State, local, and Indian Tribal government recipients of HHS awards
make subawards to a government entity, they shall apply the regulations
at 45 CFR part 92, ``Uniform Administrative Requirements for Grants and
Cooperative Agreements to State and Local Governments,'' or State
rules, whichever apply, to such awards.
Subpart B--Pre-Award Requirements
Sec. 74.10 Purpose.
Sections 74.11 through 74.17 prescribe forms and instructions and
other pre-award matters to be used in applying for HHS awards.
Sec. 74.11 Pre-award policies.
(a) Use of Grants and Cooperative Agreements, and Contracts. The
Federal Grant and Cooperative Agreement Act, 31 U.S.C. 6301-08, governs
the use of grants, cooperative agreements and contracts. A grant or
cooperative agreement shall be used only when the principal purpose of
a transaction is to accomplish a public purpose of support or
stimulation authorized by Federal statute. The statutory criterion for
choosing between grants and cooperative agreements is that for the
latter, ``substantial involvement is expected between the executive
agency and the State, local government, or other recipient when
carrying out the activity contemplated in the agreement.'' Contracts
shall be used when the principal purpose is acquisition of property or
services for the direct benefit or use of the HHS awarding agency.
(b) HHS awarding agencies shall notify the public of funding
priorities for discretionary grant programs, unless funding priorities
are established by Federal statute.
Sec. 74.12 Forms for applying for HHS financial assistance.
(a) HHS awarding agencies shall comply with the applicable report
clearance requirements of 5 CFR part 1320, ``Controlling Paperwork
Burdens on the Public,'' with regard to all forms used in place of or
as a supplement to the Standard Form 424 (SF-424) series. However, HHS
awarding agencies should use the SF-424 series and its program
narrative whenever possible.
(b) Applicants shall use the SF-424 series or those forms and
instructions prescribed by the HHS awarding agency. Applicants shall
submit the original and two copies of any applications unless
additional copies are required pursuant to 5 CFR part 1320.
(c) For Federal programs covered by E.O. 12372, as amended by E.O.
12416, ``Intergovernmental Review of Federal Programs,'' the applicant
shall complete the appropriate sections of the SF-424 (Application for
Federal Assistance) indicating whether the application was subject to
review by the State Single Point of Contact (SPOC). The name and
address of the SPOC for a particular State can be obtained from the HHS
awarding agency or the Catalog of Federal Domestic Assistance. The SPOC
shall advise the applicant whether the program for which application is
made has been selected by that State for review. (See also 45 CFR part
100.)
(d) HHS awarding agencies that do not use the SF-424 form will
indicate on the application form they prescribe whether the application
is subject to review by the State under E.O. 12372.
Sec. 74.13 Debarment and suspension.
Recipients are subject to the nonprocurement debarment and
suspension common rule implementing E.O.s 12549 and 12689, ``Debarment
and Suspension,'' 45 CFR part 76. This common rule restricts subawards
and contracts with certain parties that are debarred, suspended or
otherwise excluded from or ineligible for participation in Federal
assistance programs or activities.
Sec. 74.14 Special award conditions.
(a) The HHS awarding agency may impose additional requirements as
needed, without regard to Sec. 74.4, above, if an applicant or
recipient:
(1) Has a history of poor performance;
(2) Is not financially stable;
(3) Has a management system that does not meet the standards
prescribed in this part;
(4) Has not conformed to the terms and conditions of a previous
award; or
(5) Is not otherwise responsible.
(b) When it imposes any additional requirements, the HHS awarding
agency must notify the recipient in writing as to the following:
(1) The nature of the additional requirements;
(2) The reason why the additional requirements are being imposed;
(3) The nature of the corrective actions needed;
(4) The time allowed for completing the corrective actions; and
(5) The method for requesting reconsideration of the additional
requirements imposed.
(c) The HHS awarding agency will promptly remove any additional
requirements once the conditions that prompted them have been
corrected.
Sec. 74.15 Metric system of measurement.
The Metric Conversion Act, as amended by the Omnibus Trade and
Competitiveness Act, 15 U.S.C. 205, declares that the metric system is
the preferred measurement system for U.S. trade and commerce. The Act
requires each Federal agency to establish a date or dates in
consultation with the Secretary of Commerce, when the metric system of
measurement will be used in the agency's procurements, grants, and
other business-related activities. Metric implementation may take
longer where the use of the system is initially impractical or likely
to cause significant inefficiencies in the accomplishment of federally-
funded activities. HHS awarding agencies will follow the provisions of
E.O. 12770, ``Metric Usage in Federal Government Programs.''
Sec. 74.16 Resource Conservation and Recovery Act (RCRA), Section 6002
of Public Law 94-580 (codified at 42 U.S.C. 6962).
Under the Act, any State agency or agency of a political
subdivision of a State which is using appropriated Federal funds must
comply with section 6002 of the RCRA. This section requires that
preference be given in procurement programs to the purchase of specific
products containing recycled materials identified in guidelines
developed by the Environmental Protection Agency (EPA) (40 CFR parts
247-254). Accordingly, State and local institutions of higher
education, hospitals, and other nonprofit organizations that receive
direct HHS awards or other Federal funds shall give preference in their
procurement programs funded with Federal funds to the purchase of
recycled products pursuant to the EPA guidelines.
Sec. 74.17 Certifications and representations.
Unless prohibited by statute or codified regulation, each HHS
awarding agency is authorized and encouraged to allow recipients to
submit certifications and representations required by statute,
executive order, or regulation on an annual basis, if the recipients
have ongoing and continuing relationships with the HHS awarding agency.
Annual certifications and representations shall be signed by the
responsible HHS official(s) with the authority to ensure recipients'
compliance with the pertinent requirements.
Subpart C--Post-Award Requirements
Financial and Program Management
Sec. 74.20 Purpose of financial and program management.
Sections 74.21 through 74.28 prescribe standards for financial
management systems, methods for making payments, and rules for
satisfying cost sharing and matching requirements, accounting for
program income, budget revision approvals, making audits, determining
allowability of cost, and establishing fund availability.
Sec. 74.21 Standards for financial management systems.
(a) Recipients shall relate financial data to performance data and
develop unit cost information whenever practical. For awards that
support research, unit cost information is usually not appropriate.
(b) Recipients' financial management systems shall provide for the
following:
(1) Accurate, current and complete disclosure of the financial
results of each HHS-sponsored project or program in accordance with the
reporting requirements set forth in Sec. 74.52. If the HHS awarding
agency requires reporting on an accrual basis from a recipient that
maintains its records on other than an accrual basis, the recipient
shall not be required to establish an accrual accounting system. These
recipients may develop such accrual data for their reports on the basis
of an analysis of the documentation on hand.
(2) Records that identify adequately the source and application of
funds for HHS-sponsored activities. These records shall contain
information pertaining to Federal awards, authorizations, obligations,
unobligated balances, assets, outlays, income and interest.
(3) Effective control over and accountability for all funds,
property and other assets. Recipients shall adequately safeguard all
such assets and assure they are used solely for authorized purposes.
(4) Comparison of outlays with budget amounts for each award.
Whenever appropriate, financial information should be related to
performance and unit cost data. (Unit cost data are usually not
appropriate for awards that support research.)
(5) Written procedures to minimize the time elapsing between the
transfer of funds to the recipient from the U.S. Treasury and the
issuance or redemption of checks, warrants or payments by other means
for program purposes by the recipient. To the extent that the
provisions of the Cash Management Improvement Act (CMIA) (Pub. L. 101-
453) and its implementing regulations, ``Rules and Procedures for Funds
Transfers,'' (31 CFR part 205) apply, 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 205.9(f).
(6) Written procedures for determining the reasonableness,
allocability and allowability of costs in accordance with the
provisions of the applicable Federal cost principles and the terms and
conditions of the award.
(7) Accounting records, including cost accounting records, that are
supported by source documentation.
(c) Where the Federal Government guarantees or insures the
repayment of money borrowed by the recipient, the HHS awarding agency,
at its discretion, may require adequate bonding and insurance if the
bonding and insurance requirements of the recipient are not deemed
adequate to protect the interest of the Federal Government.
(d) The HHS awarding agency may require adequate fidelity bond
coverage where the recipient lacks sufficient coverage to protect the
Federal Government's interest.
(e) Where bonds are required in the situations described in
Sec. 74.21 (c) and (d), the bonds shall be obtained from companies
holding certificates of authority as acceptable sureties, as prescribed
in 31 CFR part 223, ``Surety Companies Doing Business with the United
States.''
Sec. 74.22 Payment.
(a) Unless inconsistent with statutory program purposes, payment
methods shall minimize the time elapsing between the transfer of funds
from the U.S. Treasury and the issuance or redemption of checks,
warrants, or payment by other means by the recipients. Payment methods
of State agencies or instrumentalities shall be consistent with
Treasury-State CMIA agreements, or the CMIA default procedures codified
at 31 CFR 205.9, to the extent that either applies.
(b) (1) Recipients will be paid in advance, provided they maintain
or demonstrate the willingness to maintain:
(i) Written procedures that minimize the time elapsing between the
transfer of funds and disbursement by the recipient; and
(ii) Financial management systems that meet the standards for fund
control and accountability as established in Sec. 74.21.
(2) Unless inconsistent with statutory program purposes, cash
advances to a recipient organization shall be limited to the minimum
amounts needed and be timed to be in accordance with the actual,
immediate cash requirements of the recipient organization in carrying
out the purpose of the approved program or project. The timing and
amount of cash advances shall be as close as is administratively
feasible to the actual disbursements by the recipient organization for
direct program or project costs and the proportionate share of any
allowable indirect costs.
(c) Whenever possible, advances will be consolidated to cover
anticipated cash needs for all awards made by all HHS awarding agencies
to the recipient.
(1) Advance payment mechanisms include electronic funds transfer,
with Treasury checks available on an exception basis.
(2) Advance payment mechanisms are subject to 31 CFR part 205.
(3) Recipients may submit requests for advances and reimbursements
at least monthly when electronic fund transfers are not used.
(d) Requests for Treasury check advance payment shall be submitted
on PMS-270, ``Request for Advance or Reimbursement,'' or other forms as
may be authorized by HHS. This form is not to be used when Treasury
check advance payments are made to the recipient automatically through
the use of a predetermined payment schedule or if precluded by special
HHS-wide instructions for electronic funds transfer.
(e) Reimbursement is the preferred method when the requirements in
paragraph (b) of this section cannot be met. The HHS awarding agency
may also use this method on any construction agreement, or if the major
portion of the construction project is accomplished through private
market financing or Federal loans, and the HHS assistance constitutes a
minor portion of the project.
(1) When the reimbursement method is used, HHS will make payment
within 30 days after receipt of the billing, unless the billing is
improper.
(2) Recipients may submit a request for reimbursement at least
monthly when electronic funds transfers are not used.
(f) If a recipient cannot meet the criteria for advance payments
and the HHS awarding agency has determined that reimbursement is not
feasible because the recipient lacks sufficient working capital, HHS
may provide cash on a working capital advance basis. Under this
procedure, HHS advances cash to the recipient to cover its estimated
disbursement needs for an initial period generally geared to the
recipient's disbursing cycle. Thereafter, HHS reimburses the recipient
for its actual cash disbursements. The working capital advance method
of payment will not be used for recipients unwilling or unable to
provide timely advances to their subrecipient to meet the
subrecipient's actual cash disbursements.
(g) Unless inconsistent with statutory program purposes, to the
extent available, recipients shall disburse funds available from
repayments to and interest earned on a revolving fund, program income,
rebates, refunds, contract settlements, audit recoveries and interest
earned on such funds before requesting additional cash payments.
(h) Unless otherwise required by statute, the HHS awarding agency
will not withhold payments for proper charges made by recipients at any
time during the project period unless paragraph (h) (1) or (2) of this
section applies:
(1) A recipient has failed to comply with the project objectives,
the terms and conditions of the award, or HHS awarding agency reporting
requirements.
(2) The recipient or subrecipient is delinquent in a debt to the
United States. Under such conditions, the HHS awarding agency may, upon
reasonable notice, inform the recipient that payments shall not be made
for obligations incurred after a specified date until the conditions
are corrected or the indebtedness to the Federal Government is
liquidated. (See 45 CFR part 30).
(i) Standards governing the use of banks and other institutions as
depositories of funds advanced under awards are as follows.
(1) Except for situations described in paragraph (i)(2) of this
section, HHS will not require separate depository accounts for funds
provided to a recipient or establish any eligibility requirements for
depositories for funds provided to a recipient. However, recipients
must be able to account for the receipt, obligation and expenditure of
funds.
(2) Advances of Federal funds shall be deposited and maintained in
insured accounts whenever possible.
(j) Consistent with the national goal of expanding the
opportunities for women-owned and minority-owned business enterprises,
recipients are encouraged to use women-owned and minority-owned banks
(a bank which is owned at least 50 percent by women or minority group
members).
(k) Recipients shall maintain advances of Federal funds in interest
bearing accounts, unless one of the following conditions apply:
(1) The recipient receives less than $120,000 in Federal awards per
year.
(2) The best reasonably available interest bearing account would
not be expected to earn interest in excess of $250 per year on Federal
cash balances.
(3) The depository would require an average or minimum balance so
high that it would not be feasible within the expected Federal and non-
Federal cash resources.
(l) For those entities where CMIA and its implementing regulations
do not apply (see 31 CFR part 205), interest earned on Federal advances
deposited in interest bearing accounts shall be remitted annually to
the Department of Health and Human Services, Payment Management System,
P.O. Box 6021, Rockville, MD 20852. Recipients with Electronic Funds
Transfer capability should use an electronic medium such as the FEDWIRE
Deposit System. Interest amounts up to $250 per year may be retained by
the recipient for administrative expense. 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 HHS
awarding agency, it waives its right to recover the interest under
CMIA. (See Sec. 74.25(d)).
(m) PMS-270, Request for Advance or Reimbursement. Recipients shall
use the PMS-270 to request advances or reimbursement for all programs
when electronic funds transfer or predetermined advance methods are not
used.
Sec. 74.23 Cost sharing or matching.
(a) To be accepted, all cost sharing or matching contributions,
including cash and third party in-kind, shall meet all of the following
criteria:
(1) Are verifiable from the recipient's records;
(2) Are not included as contributions for any other federally-
assisted project or program;
(3) Are necessary and reasonable for proper and efficient
accomplishment of project or program objectives;
(4) Are allowable under the applicable cost principles;
(5) Are not paid by the Federal Government under another award,
except where authorized by Federal statute to be used for cost sharing
or matching;
(6) Are provided for in the approved budget; and
(7) Conform to other provisions of this part, as applicable.
(b) Unrecovered indirect costs may be included as part of cost
sharing or matching.
(c) Values for recipient contributions of services and property
shall be established in accordance with the applicable cost principles.
If the HHS awarding agency authorizes recipients to donate buildings or
land for construction/facilities acquisition projects or long-term use,
the value of the donated property for cost sharing or matching shall be
the lesser of:
(1) The certified value of the remaining life of the property
recorded in the recipient's accounting records at the time of donation;
or
(2) The current fair market value. However, when there is
sufficient justification, the HHS awarding agency may approve the use
of the current fair market value of the donated property, even if it
exceeds the certified value at the time of donation to the project.
(d) Volunteer services furnished by professional and technical
personnel, consultants, and other skilled and unskilled labor may be
counted as cost sharing or matching if the service is an integral and
necessary part of an approved project or program. Rates for volunteer
services shall be consistent with those paid for similar work in the
recipient's organization. In those instances in which the required
skills are not found in the recipient's organization, rates shall be
consistent with those paid for similar work in the labor market in
which the recipient competes for the kind of services involved. In
either case, paid fringe benefits that are reasonable, allowable, and
allocable may be included in the valuation.
(e) When an employer other than the recipient furnishes the
services of an employee, these services shall be valued at the
employee's regular rate of pay (plus an amount of fringe benefits that
are reasonable, allowable, and allocable, but exclusive of overhead
costs), provided these services are in the same skill for which the
employee is normally paid.
(f) Donated supplies may include such items as expendable property,
office supplies, laboratory supplies or workshop and classroom
supplies. Value assessed to donated supplies included in the cost
sharing or matching share shall be reasonable and shall not exceed the
fair market value of the property at the time of the donation.
(g) The method used for determining cost sharing or matching for
donated equipment, buildings and land for which title passes to the
recipient may differ according to the purpose of the award, if
paragraph (g)(1) or (2) of this section applies:
(1) If the purpose of the award is to assist the recipient in the
acquisition of equipment, buildings or land, the total value of the
donated property may be claimed as cost sharing or matching.
(2) If the purpose of the award is to support activities that
require the use of equipment, buildings or land, normally only
depreciation or use charges for equipment and buildings may be made.
However, the full value of equipment or other capital assets and fair
rental charges for land may be allowed, provided that the HHS awarding
agency has approved the charges.
(h) The value of donated property shall be determined in accordance
with the usual accounting policies of the recipient, with the following
qualifications.
(1) The value of donated land and buildings shall not exceed its
fair market value at the time of donation to the recipient as
established by an independent appraiser (e.g., certified real property
appraiser or General Services Administration representative) and
certified by a responsible official of the recipient.
(2) The value of donated equipment shall not exceed the fair market
value of equipment of the same age and condition at the time of
donation.
(3) The value of donated space shall not exceed the fair rental
value of comparable space as established by an independent appraisal of
comparable space and facilities in a privately-owned building in the
same locality.
(4) The value of loaned equipment shall not exceed its fair rental
value.
(i) The following requirements pertain to the recipient's
supporting records for in-kind contributions from third parties.
(1) Volunteer services shall be documented and, to the extent
feasible, supported by the same methods used by the recipient for its
own employees, including time records.
(2) The basis for determining the valuation for personal service,
material, equipment, buildings and land shall be documented.
Sec. 74.24 Program income.
(a) The standards set forth in this section shall be used to
account for program income related to projects financed in whole or in
part with Federal funds.
(b) Except as provided below in paragraph (h) of this section,
program income earned during the project period shall be retained by
the recipient and, in accordance with the terms and conditions of the
award, shall be used in one or more of the following ways:
(1) Added to funds committed to the project or program, and used to
further eligible project or program objectives;
(2) Used to finance the non-Federal share of the project or
program; or
(3) Deducted from the total project or program allowable cost in
determining the net allowable costs on which the Federal share of costs
is based.
(c) When the HHS awarding agency authorizes the disposition of
program income as described in paragraph (b)(1) or (b)(2) of this
section, program income in excess of any limits stipulated shall be
used in accordance with paragraph (b)(3) of this section.
(d) In the event that the HHS awarding agency does not specify in
the terms and conditions of the award how program income is to be used,
paragraph (b)(3) of this section shall apply automatically to all
projects or programs except research. For awards that support
performance of research work, paragraph (b)(1) of this section shall
apply automatically unless:
(1) The HHS awarding agency indicates in the terms and conditions
of the award another alternative; or
(2) The recipient is subject to special award conditions under
Sec. 74.14; or
(3) The recipient is a commercial organization (see Sec. 74.82).
(e) Unless the terms and conditions of the award provide otherwise,
recipients shall have no obligation to the Federal Government regarding
program income earned after the end of the project period.
(f) Costs incident to the generation of program income may be
deducted from gross income to determine program income, provided these
costs have not been charged to the award.
(g) Proceeds from the sale of property shall be handled in
accordance with the requirements of the Property Standards. (See
Secs. 74.30 through 74.37, below).
(h) The Patent and Trademark Laws Amendments, 35 U.S.C. section
200-212, apply to inventions made under an award for performance of
experimental, developmental, or research work. Unless the terms and
conditions for the award provide otherwise, recipients shall have no
obligation to HHS with respect to program income earned from license
fees and royalties for copyrighted material, patents, patent
applications, trademarks, and inventions made under an award. However,
no scholarship, fellowship, training grant, or other funding agreement
made primarily to a recipient for educational purposes will contain any
provision giving the Federal agency rights to inventions made by the
recipient.
Sec. 74.25 Revision of budget and program plans.
(a) The budget plan is the financial expression of the project or
program as approved during the award process. It may include either the
sum of the Federal and non-Federal shares, or only the Federal share,
depending upon HHS awarding agency requirements. It shall be related to
performance for program evaluation purposes whenever appropriate.
(b) Recipients are required to report deviations from budget and
program plans, and request prior approvals for budget and program plan
revisions, in accordance with this section. Except as provided at
Secs. 74.4, 74.14, and this section, HHS awarding agencies may not
impose other prior approval requirements for specific items.
(c) For nonconstruction awards, recipients shall obtain prior
approvals from the HHS awarding agency for one or more of the following
program or budget related reasons.
(1) Change in the scope or the objective of the project or program
(even if there is no associated budget revision requiring prior written
approval).
(2) Change in the project director or principal investigator or
other key persons specified in the application or award document.
(3) The absence for more than three months, or a 25 percent
reduction in time devoted to the project, by the approved project
director or principal investigator.
(4) The need for additional Federal funding.
(5) The inclusion, unless waived by the HHS awarding agency, or
costs that require prior approval in accordance with OMB Circular A-21,
``Cost Principles for Educational Institutions;'' OMB Circular A-122,
``Cost Principles for Nonprofit Organizations;'' or appendix E of this
part, ``Principles for Determining Costs Applicable to Research and
Development under Grants and Contracts with Hospitals,'' or 48 CFR part
31, ``Contract Cost Principles and Procedures,'' as applicable.
(6) The transfer of funds allotted for training allowances (direct
payment to trainees) to other categories of expense.
(7) Unless described in the application and funded in the approved
award, the subaward, transfer or contracting out of any work under an
award. This provision does not apply to the purchase of supplies,
material, equipment or general support services.
(8) The inclusion of research patient care costs in research awards
made for the performance of research work.
(d) Except for requirements listed in paragraphs (c)(1) and (c)(4)
of this section, the HHS awarding agency is authorized, at its option,
to waive cost-related and administrative prior written approvals
required by this part and its appendixes. Additional waivers may be
granted authorizing recipients to do any one or more of the following:
(1) Incur pre-award costs up to 90 calendar days prior to award, or
more than 90 calendar days with the prior approval of the HHS awarding
agency. However, all pre-award costs are incurred at the recipient's
risk: the HHS awarding agency is under no obligation to reimburse such
costs if for any reason the applicant does not receive an award or if
the award to the recipient is less than anticipated and inadequate to
cover such costs.
(2) Initiate a one-time extension of the expiration date of the
award of up to 12 months unless one or more of the conditions
identified at paragraphs (d)(2)(i), (ii), and (iii) of this section
apply. For one-time extensions, the recipient must notify the HHS
awarding agency in writing, with the supporting reasons and revised
expiration date, at least 10 days before the date specified in the
award. This one-time extension may not be exercised either by
recipients or HHS awarding agencies merely for the purpose of using
unobligated balances. Such extensions are not permitted where:
(i) The terms and conditions of award prohibit the extension; or
(ii) The extension requires additional Federal funds; or
(iii) The extension involves any change in the approved objectives
or scope of the project.
(3) Carry forward unobligated balances to subsequent funding
periods.
(4) For awards that support performance of research work, unless
the HHS awarding agency provides otherwise in the award, or the award
is subject to Sec. 74.14 or subpart E of this Part, the prior approval
requirements described in paragraphs (d) (1)-(3) of this section are
automatically waived (i.e., recipients need not obtain such prior
approvals). However, extension of award expiration dates must be
approved by the HHS awarding agency if one of the conditions in
paragraph (d)(2) of this section applies.
(e) The HHS awarding agencies may not permit any budget changes in
a recipient's award that would cause any Federal appropriation to be
used for purposes other then those consistent with the original purpose
of the authorization and appropriation under which the award was
funded.
(f) For construction awards, recipients shall obtain prior written
approval promptly from the HHS awarding agency for budget revisions
whenever:
(1) The revision results from changes in the scope or the objective
of the project or program;
(2) The need arises for additional Federal funds to complete the
project; or
(3) A revision is desired which involves specific costs for which
prior written approval requirements apply in keeping with the
applicable cost principles listed in Sec. 74.27.
(g) When an HHS awarding agency makes an award that provides
support for both construction and nonconstruction work, it may require
the recipient to obtain prior approval before making any fund or budget
transfers between the two types of work supported.
(h) For both construction and nonconstruction awards, recipients
shall notify the HHS awarding agency in writing promptly whenever the
amount of Federal authorized funds is expected to exceed the needs of
the recipient for the project period by more than $5000 or five percent
of the Federal award, whichever is greater. This notification shall not
be required if an application for additional funding is submitted for a
continuation award.
(i) Within 30 calendar days from the date of receipt of the request
for budget revisions, HHS awarding agencies shall notify the recipient
whether its requested budget revisions have been approved. If the
requested revision is still under consideration at the end of 30
calendar days, the HHS awarding agency must inform the recipient in
writing of the date when the recipient may expect a decision.
(j) When requesting approval for budget changes, recipients shall
make their requests in writing.
(k) All approvals granted in keeping with the provisions of this
section shall not be valid unless they are in writing, and signed by at
least one of the following HHS officials:
(1) The Head of the HHS Operating or Staff Division that made the
award or subordinate official with proper delegated authority from the
Head, including the Head of the Regional Office of the HHS Operating or
Staff Division that made the award; or
(2) The responsible Grants Officer of the HHS Operating or Staff
Division that made the award or an individual duly authorized by the
Grants Officer.
Sec. 74.26 Non-Federal audits.
(a) Recipients and subrecipients that are institutions of higher
education, hospitals affiliated with institutions of higher education,
other nonprofit organizations, and commercial organizations shall be
subject to the audit requirements contained in OMB Circular A-133,
``Audits of Institutions of Higher Education and Other Non-Profit
Institutions.'' (See appendix I to this part.)
(b)(1) OMB Circular A-133 exempts hospitals not affiliated with an
institution of higher education. In determining whether this exemption
applies, the term affiliated includes all situations where:
(i) A hospital or an institution of higher education has an
ownership interest in the other entity or some other party (other than
a State or local unit of government) has an ownership interest in each
of them; or
(ii) An affiliation agreement exists; or
(iii) Federal research or training awards to a hospital or
institution of higher education are performed in whole or in part in
the facilities of, or involve the staff of, the other entity.
(2) Hospitals not covered by the audit provisions of OMB Circular
A-133 are subject to the audit requirements of the HHS awarding agency.
(c) State and local governments shall be subject to the audit
requirements contained in the Single Audit Act, 31 U.S.C. 7501-07, and
OMB Circular A-128, ``Audits of State and Local Governments.'' (See
appendix J to this part.)
(d) All copies of audit reports that a recipient is required, under
OMB Circulars A-128 or A-133, to submit to the HHS awarding agency
shall be addressed to the National External Audit Resources Unit, 323
West 8th St., Lucas Place--Rm. 514, Kansas City, MO 64105. The HHS
Office of Inspector General will distribute copies as appropriate
within HHS. Recipients, therefore, are not required to send their audit
reports to any other HHS official.
Sec. 74.27 Allowable costs.
(a) For each kind of recipient, there is a particular set of
Federal principles that applies in 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 and Local
Governments.'' The allowability of costs incurred by nonprofit
organizations (except for those listed in Attachment C of Circular A-
122) is determined in accordance with the provisions of OMB Circular A-
122, ``Cost Principles for Nonprofit Organizations'' and paragraph (b)
of this section. 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.'' The
allowability of costs incurred by hospitals is determined in accordance
with the provisions of appendix E of this part, ``Principles for
Determining Costs Applicable to Research and Development Under Grants
and Contracts with Hospitals.'' The allowability of costs incurred by
commercial organizations and those nonprofit organizations listed in
Attachment C to Circular A-122 is determined in accordance with the
provisions of the Federal Acquisition Regulation (FAR) at 48 CFR part
31, except that independent research and development costs are
unallowable.
(b) OMB Circular A-122 does not cover the treatment of bid and
proposal costs or independent research and development costs. The
following rules apply to these costs for nonprofit organizations
subject to that Circular.
(1) Bid and proposal costs. Bid and proposal costs are the
immediate costs of preparing bids, proposals, and applications for
Federal and non-Federal awards, contracts, and other agreements,
including the development of scientific, cost, and other data needed to
support the bids, proposals, and applications. Bid and proposal costs
of the current accounting period are allowable as indirect costs. Bid
and proposal costs of past accounting periods are unallowable in the
current period. However, if the recipient's established practice is to
treat these costs by some other method, they may be accepted if they
are found to be reasonable and equitable. Bid and proposal costs do not
include independent research and development costs covered by paragraph
(b)(2) of this section, or pre-award costs covered by OMB Circular A-
122, Attachment B, paragraph 33 and Sec. 74.25(d)(1).
(2) Independent Research and Development costs. Independent
research and development is research and development which is conducted
by an organization, and which is not sponsored by Federal or non-
Federal awards, contracts, or other agreements. Independent research
and development shall be allocated its proportionate share of indirect
costs on the same basis as the allocation of indirect costs to
sponsored research and development. The cost of independent research
and development, including their proportionate share of indirect costs,
are unallowable.
Sec. 74.28 Period of availability of funds.
Where a funding period is specified, a recipient may charge to the
award only allowable costs resulting from obligations incurred during
the funding period and any pre-award costs authorized by the HHS
awarding agency pursuant to Sec. 74.25(d)(1).
Property Standards
Sec. 74.30 Purpose of property standards.
Sections 74.31 through 74.37 set forth uniform standards governing
management and disposition of property furnished by HHS or whose cost
was charged directly to a project supported by an HHS award. The HHS
awarding agency may not impose additional requirements, unless
specifically required to do so by Federal statute. The recipient may
use its own property management standards and procedures provided they
meet the provisions of Secs. 74.31 through 74.37.
Sec. 74.31 Insurance coverage.
Recipients shall, at a minimum, provide the equivalent insurance
coverage for real property and equipment acquired with HHS funds as
provided to other property owned by the recipient.
Sec. 74.32 Real property.
(a) Title to real property shall vest in the recipient subject to
the condition that the recipient shall use the real property for the
authorized purpose of the project as long as it is needed and shall not
encumber the property without approval of the HHS awarding agency.
(b) The recipient shall obtain written approval from the HHS
awarding agency for the use of real property in other federally-
sponsored projects when the recipient determines that the property is
no longer needed for the purpose of the original project. Use in other
projects shall be limited to those under federally-sponsored projects
(i.e., awards) or programs that have purposes consistent with those
authorized for support by the HHS awarding agency.
(c) When the real property is no longer needed as provided in
paragraphs (a) and (b) of this section, the recipient shall request
disposition instructions from the HHS awarding agency or its successor.
The HHS awarding agency must provide one or more of the following
disposition instructions:
(1) The recipient may be permitted to retain title without further
obligation to the Federal Government after it compensates the Federal
Government for that percentage of the current fair market value of the
property attributable to the Federal share in the project.
(2) The recipient may be directed to sell the property under
guidelines provided by the HHS awarding agency and pay the Federal
Government for that percentage of the current fair market value of the
property attributable to the Federal share in the project (after
deducting actual and reasonable selling and fix-up expenses, if any,
from the sales proceeds). When the recipient is authorized or required
to sell the property, proper sales procedures shall be established that
provide for competition to the extent practicable and result in the
highest possible return.
(3) The recipient may be directed to transfer title to the property
to the Federal Government or to an eligible third party provided that,
in such cases, the recipient shall be entitled to compensation for its
attributable percentage of the current fair market value of the
property.
Sec. 74.33 Federally-owned and exempt property.
(a)(1) Title of federally-owned property remains vested in the
Federal Government. Recipients shall submit annually an inventory
listing of federally-owned property in their custody to the HHS
awarding agency. Upon completion of the award or when the property is
no longer needed, the recipient shall report the property to the HHS
awarding agency for further agency utilization.
(2) If the HHS awarding agency has no further need for the
property, it shall be declared excess and reported to the General
Services Administration, unless the HHS awarding agency has statutory
authority to dispose of the property by alternative methods (e.g., the
authority provided by the Federal Technology Transfer Act, 15 U.S.C.
3710(I), to donate research equipment to educational and nonprofit
organizations in accordance with E.O. 12821, ``Improving Mathematics
and Science Education in Support of the National Education Goals'').
Appropriate instructions shall be issued to the recipient by the HHS
awarding agency.
(b) Exempt property shall not be subject to the requirements of
Sec. 74.34, except that it shall be subject to paragraphs (h)(1), (2),
and (4) of that section concerning the HHS awarding agency's right to
require transfer.
Sec. 74.34 Equipment.
(a) Title to equipment acquired by a recipient with HHS funds shall
vest in the recipient, subject to the conditions of this section.
(b)(1) The recipient shall not use equipment acquired with HHS
funds to provide services to non-Federal organizations for a fee that
is less than private companies charge for equivalent services, unless
specifically authorized by Federal statute, for so long as the Federal
Government retains an interest in the equipment.
(2) If the equipment is owned by the Federal Government, use on
other activities not sponsored by the Federal Government shall be
permissible if authorized by the HHS awarding agency.
(3) User charges shall be treated as program income, in keeping
with the provisions of Sec. 74.24.
(c) The recipient shall use the equipment in the project or program
for which it was acquired as long as needed, whether or not the project
or program continues to be supported by Federal funds and shall not
encumber the property without approval of the HHS awarding agency. When
no longer needed for the original project or program, the recipient
shall use the equipment in connection with its other federally-
sponsored activities, if any, in the following order of priority:
(1) Programs, projects, or activities sponsored by the HHS awarding
agency;
(2) Programs, projects, or activities sponsored by other HHS
awarding agencies; then
(3) Programs, project, or activities sponsored by other Federal
agencies.
(d) During the time that equipment is used on the program, project,
or activity for which it was acquired, the recipient shall make it
available for use on other projects or programs if such other use will
not interfere with the work on the program, project, or activity for
which the equipment was originally acquired. First preference for such
other use shall be given to other programs, projects, or activities
sponsored by the HHS awarding agency. Second preference shall be given
to programs, projects, or activities sponsored by other HHS awarding
agencies. Third preference shall be given to programs, projects, or
activities sponsored by other Federal agencies.
(e) When acquiring replacement equipment, the recipient may use the
equipment to be replaced as trade-in or sell the equipment and use the
proceeds to offset the costs of the replacement equipment subject to
the approval of the HHS awarding agency.
(f) The recipient's property management standards for equipment
acquired with Federal funds and federally-owned equipment shall include
all of the following:
(1) Equipment records shall be maintained accurately and shall
include the following information:
(i) A description of the equipment;
(ii) Manufacturer's serial number, model number, Federal stock
number, national stock number, or other identification number;
(iii) Source of the equipment, including the award number;
(iv) Whether title vests in the recipient or the Federal
Government;
(v) Acquisition date (or date received, if the equipment was
furnished by the Federal Government) and cost;
(vi) Information from which one can calculate the percentage of
HHS's share 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 recipient compensates the HHS awarding agency for its share.
(2) Equipment owned by the Federal Government shall be identified
to indicate Federal ownership.
(3) The recipient shall take a physical inventory of equipment and
the results reconciled with the equipment records at least once every
two years. Any differences between quantities determined by the
physical inspection and those shown in the accounting records shall be
investigated to determine the causes of the difference. The recipient
shall, in connection with the inventory, verify the existence, current
utilization, and continued need for the equipment.
(4) recipient shall maintain a control system to insure adequate
safeguards to prevent loss, damage, or theft of the equipment. Any
loss, damage, or theft of equipment shall be investigated and fully
documented; if the equipment was owned by the Federal Government, the
recipient shall promptly notify the HHS awarding agency.
(5) The recipient shall implement adequate maintenance procedures
to keep the equipment in good condition.
(6) Where the recipient is authorized or required to sell the
equipment, proper sales procedures shall be established which provide
for competition to the extent practicable and result in the highest
possible return.
(g) When the recipient no longer needs the equipment, it may use
the equipment for other activities in accordance with the following
standards. For equipment with a current per unit fair market value of
$5000 or more, the recipient may retain the equipment for other uses
provided that compensation is made to the original HHS awarding agency
or its successor. The amount of compensation shall be computed by
applying the percentage of HHS's share in the cost of the original
project or program to the current fair market value of the equipment.
If the recipient has no need for the equipment, the recipient shall
request disposition instructions from the HHS awarding agency; such
instructions must be issued to the recipient no later than 120 calendar
days after the recipient's request and the following procedures shall
govern:
(1) If so instructed or if disposition instructions are not issued
within 120 calendar days after the recipient's request, the recipient
shall sell the equipment and reimburse the HHS awarding agency an
amount computed by applying to the sales proceeds the percentage of HHS
share in the cost of the original project or program. However, the
recipient shall be permitted to deduct and retain from the HHS share
$500 or ten percent of the proceeds, whichever is less, for the
recipient's selling and handling expenses.
(2) If the recipient is instructed to ship the equipment elsewhere,
the recipient shall be reimbursed by the HHS awarding agency by an
amount which is computed by applying the percentage of the recipient's
share in the cost of the original project or program to the current
fair market value of the equipment, plus any reasonable shipping or
interim storage costs incurred.
(3) If the recipient is instructed to otherwise dispose of the
equipment, the recipient will be reimbursed by the HHS awarding agency
for such costs incurred in its disposition.
(h) The HHS awarding agency reserves the right to order the
transfer of title to the Federal Government or to a third party named
by the awarding agency when such third party is otherwise eligible
under existing statutes. Such transfer shall be subject to the
following standards:
(1) The equipment shall be appropriately identified in the award or
otherwise made known to the recipient in writing.
(2) The HHS awarding agency may require submission of a final
inventory that lists all equipment acquired with HHS funds and
federally-owned equipment.
(3) If the HHS awarding agency fails to issue disposition
instructions within 120 calendar days after receipt of the inventory,
the recipient shall apply the standards of paragraph (g)(1) of this
section as appropriate.
(4) When the HHS awarding agency exercises its right to order the
transfer of title to the Federal Government, the equipment shall be
subject to the rules for federally-owned equipment. (See
Sec. 74.34(g)).
Sec. 74.35 Supplies.
(a) Title to supplies shall vest in the recipient upon acquisition.
If there is a residual inventory of unused supplies exceeding $5000 in
total aggregate value upon termination or completion of the project or
program and the supplies are not needed for any other federally-
sponsored project or program, the recipient shall retain the supplies
for use on non-federally 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. (See Sec. 74.34(g)).
(b)(1) The recipient shall not use supplies acquired with Federal
funds to provide services to non-Federal 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.
(2) If the supplies owned by the Federal Government, use on other
activities not sponsored by the Federal Government shall be permissible
if authorized by the HHS awarding agency.
(3) User charges shall be treated as program income, in keeping
with the provisions of Sec. 74.24.
Sec. 74.36 Intangible property.
(a) The recipient may copyright any work that is subject to
copyright and was developed, or for which ownership was purchased,
under an award. The HHS awarding agency reserves a royalty-free,
nonexclusive and irrevocable right to reproduce, publish, or otherwise
use the work for Federal purposes, and to authorize others to do so.
(b) Recipients are subject to applicable regulations governing
patents and inventions, including government-wide regulations issued by
the Department of Commerce at 37 CFR part 401, ``Rights to Inventions
Made by Nonprofit Organizations and Small Business Firms Under
Government Grants, Contracts and Cooperative Agreements.''
(c) The Federal Government has the right to:
(1) Obtain, reproduce, publish or otherwise use the data first
produced under an award; and
(2) Authorize others to receive, reproduce, publish, or otherwise
use such data for Federal purposes.
(d) Title to intangible property and debt instruments purchased or
otherwise acquired under an award or subaward vests upon acquisition in
the recipient. The recipient shall use that property for the
originally--authorized purpose, and the recipient shall not encumber
the property without approval of the HHS awarding agency. When no
longer needed for the originally authorized purpose, disposition of the
intangible property shall occur in accordance with the provisions of
Sec. 74.34 (g) and (h).
Sec. 74.37 Property trust relationship.
Real property, equipment, intangible property and debt instruments
that are acquired or improved with Federal funds shall be held in trust
by the recipients as trustee for the beneficiaries of the project or
program under which the property was acquired or improved, and shall
not be encumbered without the approval of the HHS awarding agency.
Recipients shall record liens or other appropriate notices of record to
indicate that real property has been acquired or constructed or, where
applicable, improved with Federal funds, and that use and disposition
conditions apply to the property.
Procurement Standards
Sec. 74.40 Purpose of procurement standards.
Sections 74.41 through 74.48 set forth standards for use by
recipients in establishing procedures for the procurement of supplies
and other expendable property, equipment, real property and other
services with Federal funds. These standards are established 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. The standards apply where the cost of the
procurement is treated as a direct cost of an award.
Sec. 74.41 Recipient responsibilities.
The standards contained in this section do not relieve the
recipients of the contractual responsibilities arising under its
contract(s). The recipient is the responsible authority, without
recourse to the HHS awarding agency, regarding the settlement and
satisfaction of all contractual and administrative issues arising out
of procurements entered into in support of an award or other agreement.
This includes disputes, claims, protests of award, source evaluation or
other matters of a contractual nature. Matters concerning violation of
statute are to be referred to such Federal, State or local authority as
may have proper jurisdiction.
Sec. 74.42 Codes of conduct.
The recipient shall maintain written standards of conduct governing
the performance of its employees engaged in the award and
administration of contracts. No employee, officer, or agent shall
participate in the selection, award, or administration of a contract
supported by Federal funds if a real or apparent conflict of interest
would be involved. Such a conflict would arise when the employee,
officer, or agent, or any member of his or her immediate family, his or
her partner, or an organization which employs or is about to employ any
of the parties indicated herein, has a financial or other interest in
the firm selected for an award. The officers, employees, and agents of
the recipient shall neither solicit nor accept gratuities, favors, or
anything of monetary value from contractors, or parties to
subagreements. However, recipients may set standards for situations in
which the financial interest is not substantial or the gift is an
unsolicited item of nominal value. The standards of conduct shall
provide for disciplinary actions to be applied for violations of such
standards by officers, employers, or agents of the recipients.
Sec. 74.43 Competition.
All procurement transactions shall be conducted in a manner to
provide, to the maximum extent practical, open and free competition.
The recipient shall be alert to organizational conflicts of interest as
well as noncompetitive practices among contractors that may restrict or
eliminate competition or otherwise restrain trade. In order to ensure
objective contractor performance and eliminate unfair competitive
advantage, contractors that develop or draft grant applications, or
contract 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 recipient, price, quality and other factors
considered. Solicitations shall clearly set forth all requirements that
the bidder or offeror shall fulfill in order for the bid or offer to be
evaluated by the recipient. Any and all bids or offers may be rejected
when it is in the recipient's interest to do so.
Sec. 74.44 Procurement procedures.
(a) All recipients shall establish written procurement procedures.
These procedures shall provide for, at a minimum, that:
(1) Recipients avoid purchasing unnecessary items;
(2) Where appropriate, an analysis is made of lease and purchase
alternatives to determine which would be the most economical and
practical procurement for the Federal Government; and
(3) Solicitations for goods and services provide for all of the
following:
(i) A clear and accurate description of the technical requirements
for the material, product or service to be procured. In competitive
procurements, such a description shall not contain features which
unduly restrict competition.
(ii) Requirements which the bidder/offeror must fulfill and all
other factors to be used in evaluating bids or proposals.
(iii) A description, whenever practicable, of technical
requirements in terms of functions to be performed or performance
required, including the range of acceptable characteristics or minimum
acceptable standards.
(iv) The specific features of ``brand name or equal'' descriptions
that bidders are required to meet when such items are included in the
solicitation.
(v) The acceptance, to the extent practicable and economically
feasible, of products and services dimensioned in the metric system of
measurement.
(vi) Preference, to the extent practicable and economically
feasible, for products and services that conserve natural resources and
protect the environment and are energy efficient.
(b) Positive efforts shall be made by recipients to utilize small
businesses, minority-owned firms, and women's business enterprises,
whenever possible. Recipients of HHS awards shall take all of the
following steps to further this goal.
(1) Ensure that small businesses, minority-owned firms, and women's
business enterprises are used to the fullest extent practicable.
(2) Make information on forthcoming opportunities available and
arrange time frames for purchases and contracts to encourage and
facilitate participation by small businesses, minority-owned firms, and
women's business enterprises.
(3) Consider in the contract process whether firms competing for
larger contracts intend to subcontract with small businesses, minority-
owned firms, and women's business enterprises.
(4) Encourage contracting with consortiums of small businesses,
minority-owned firms and women's business enterprises when a contract
is too large for one of these firms to handle individually.
(5) Use the services and assistance, as appropriate, of such
organizations as the Small Business Administration and the Department
of Commerce's Minority Business Development Agency in the solicitation
and utilization of small businesses, minority-owned firms and women's
business enterprises.
(c) The type of procuring instruments used (e.g., fixed price
contracts, cost reimbursable contracts, purchase orders, and incentive
contracts) shall be determined by the recipient but shall be
appropriate for the particular procurement and for promoting the best
interest of the program or project involved. The ``cost-plus-a-
percentage-of-cost'' or ``percentage of construction cost'' methods of
contracting shall not be used.
(d) Contracts shall be made only with responsible contractors who
possess the potential ability to perform successfully under the terms
and conditions of the proposed procurement. Consideration shall be
given to such matters as contractor integrity, record of past
performance, financial and technical resources or accessibility to
other necessary resources. In certain circumstances, contracts with
certain parties are restricted by agencies' implementation of E.O.s
12549 and 12689, ``Debarment and Suspension.'' (See 45 CFR part 76.)
(e) Recipients shall, on request, make available for the HHS
awarding agency, pre-award review and procurement documents, such as
request for proposals or invitations for bids, independent cost
estimates, etc., when any of the following conditions apply.
(1) A recipient's procurement procedures or operation fails to
comply with the procurement standards in this Part.
(2) The procurement is expected to exceed the small purchase
threshold fixed at 41 U.S.C. 403(11) (currently $25,000) and is to be
awarded without competition or only one bid or offer is received in
response to a solicitation.
(3) The procurement, which is expected to exceed the small purchase
threshold, specifies a ``brand name'' product.
(4) The proposed award over the small purchase threshold is to be
awarded to other than the apparent low bidder under a sealed bid
procurement.
(5) A proposed contract modification changes the scope of a
contract or increases the contract amount by more than the amount of
the small purchase threshold.
Sec. 74.45 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. 74.46 Procurement records.
Procurement records and files for purchases in excess of the small
purchase threshold shall include the following at a minimum: (a) Basis
for contractor selection, (b) justification for lack of competition
when competitive bids or offers are not obtained, and (c) basis for
award cost or price.
Sec. 74.47 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. 74.48 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 small purchase threshold shall
contain contractual provisions or conditions that allow for
administrative, contractual, or legal remedies in instances in which a
contractor violates or breaches the contract terms, and provide for
such remedial actions as may be appropriate.
(b) All contracts in excess of the small purchase threshold shall
contain suitable provisions for termination by the recipient, including
the manner by which termination shall be effected and the basis for
settlement. In addition, such contracts shall describe conditions under
which the contract may be terminated for default as well as conditions
where the contract may be terminated because of circumstances beyond
the control of the contractor.
(c) Except as otherwise required by statute, an award that requires
the contracting (or subcontracting) for construction or facility
improvements shall provide for the recipient to follow its own
requirements relating to bid guarantees, performance bonds, and payment
bonds unless the construction contract or subcontract exceeds $100,000.
For those contracts or subcontracts exceeding $100,000, the HHS
awarding agency may accept the bonding policy and requirements of the
recipient, provided the HHS awarding agency has made a determination
that the Federal Government's interest is adequately protected. If such
a determination has not been made, the minimum requirements shall be as
follows:
(1) A bid guarantee from each bidder equivalent to five percent of
the bid price. The ``bid guarantee'' shall consist of a firm commitment
such as a bid bond, certified check, or other negotiable instrument
accompanying a bid as assurance that the bidder shall, upon acceptance
of his bid, execute such contractual documents as may be required
within the time specified.
(2) A performance bond on the part of the contractor for 100
percent of the contract price. A ``performance bond'' is one executed
in connection with a contract to secure fulfillment of all the
contractor's obligations under such contract.
(3) A payment bond on the part of the contractor for 100 percent of
the contract price. A ``payment bond'' is one executed in connection
with a contract to assure payment as required by statute of all persons
supplying labor and material in the execution of the work provided for
in the contract.
(4) Where bonds are required in the situations described herein,
the bonds shall be obtained from companies holding certificates of
authority as acceptable sureties pursuant to 31 CFR part 223, ``Surety
Companies Doing Business with the United States.''
(d) All negotiated contracts (except those for less than the small
purchase threshold) awarded by recipients shall include a provision to
the effect that the recipient, the HHS awarding agency, the U.S.
Comptroller General, or any of their duly authorized representatives,
shall have access to any books, documents, papers and records of the
contractor which are directly pertinent to a specific program for the
purpose of making audits, examinations, excerpts and transcriptions.
(e) All contracts, including small purchases, awarded by recipients
and their contractors shall contain the procurement provisions of
appendix A to this part, as applicable.
Reports and Records
Sec. 74.50 Purpose of reports and records.
Sections 74.51 through 74.53 set forth the procedures for
monitoring and reporting on the recipient's financial and program
performance and the necessary standard reporting forms. They also set
forth record retention requirements.
Sec. 74.51 Monitoring and reporting program performance.
(a) Recipients are responsible for managing and monitoring each
project, program, subaward, function or activity supported by the
award. Recipients shall monitor subawards to ensure that subrecipients
have met the audit requirements as set forth in Sec. 74.26.
(b) The HHS awarding agency will prescribe the frequency with which
the performance reports shall be submitted. Except as provided in
paragraph (f) of this section, performance reports will not be required
more frequently than quarterly or, less frequently than annually.
Annual reports shall be due 90 calendar days after the award year;
quarterly or semi-annual reports shall be due 30 days after the
reporting period. The HHS awarding agency may require annual reports
before the anniversary dates of multiple year awards in lieu of these
requirements. The final performance reports are due 90 calendar days
after the expiration or termination of the award.
(c) If inappropriate, a final technical or performance report will
not be required after completion of the project.
(d) Performance reports shall generally contain, for each award,
brief information on each of the following:
(1) A comparison of actual accomplishments with the goals and
objectives established for the period, the findings of the
investigator, or both. Whenever appropriate and the output of programs
or projects can be readily quantified, such quantitative data should be
related to cost data for computation of unit costs.
(2) Reasons why established goals were not met, if appropriate.
(3) Other pertinent information including, when appropriate,
analysis and explanation of cost overruns or high unit costs.
(e) Recipients shall submit the original and two copies of
performance reports.
(f) Recipients shall immediately notify the HHS awarding agency of
developments that have a significant impact on the award-supported
activities. Also, notification shall be given in the case of problems,
delays, or adverse conditions which materially impair the ability to
meet the objectives of the award. This notification shall include a
statement of the action taken or contemplated, and any assistance
needed to resolve the situation.
(g) HHS may make site visits, as needed.
(h) The HHS awarding agency complies with the applicable report
clearance requirements of 5 CFR part 1320, ``Controlling Paperwork
Burdens on the Public,'' when requesting performance data from
recipients.
Sec. 74.52 Financial reporting.
(a) The following forms are used for obtaining financial
information from recipients:
(1) SF-269 or SF-269A, Financial Status Report.
(i) The HHS awarding agency will require recipients to use either
the SF-269 (long form) or SF-269A to report the status of funds for all
nonconstruction projects or programs. The SF-269 shall always be used
if income has been earned. The awarding agency may, however, waive the
SF-269 or SF-269A requirement when the PMS-270, Request for Advance or
Reimbursement, or PMS-272, Report of Federal Cash Transactions, will
provide adequate information to meet its needs, except that a final SF-
269 or SF-269A shall be required at the completion of the project when
the PMS-270 is used only for advances.
(ii) If the HHS awarding agency requires accrual information and
the recipient's accounting records are not normally kept on the accrual
basis, the recipient shall not be required to convert its accounting
system, but shall develop such accrual information through best
estimates based on an analysis of the documentation on hand.
(iii) The HHS awarding agency will determine the frequency of the
Financial Status Report for each project or program, considering the
size and complexity of the particular project or program. However, the
report will not be required more frequently than quarterly or less
frequently than annually except under Sec. 74.14. A final report shall
be required at the completion of the agreement.
(iv) Recipients shall submit the SF-269 and SF-269A (an original
and 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 HHS awarding agency upon request of the
recipient.
(2) PMS-272, Report of Federal Cash Transactions.
(i) When funds are advanced to recipients, the HHS awarding agency
requires each recipient to submit the PMS-272 and, when necessary, its
continuation sheet, PMS-272A through G. The HHS awarding agency uses
this report to monitor cash advanced to recipients and to obtain
disbursement information for each agreement with the recipients.
(ii) The HHS awarding agency may require forecasts of Federal cash
requirements in the ``Remarks'' section of the report.
(iii) Recipients shall submit the original and two copies of the
PMS-272 15 calendar days following the end of each quarter. The HHS
awarding agency may require a monthly report from those recipients
receiving advances totaling $1 million or more per year.
(iv) The HHS awarding agency may waive the requirement for
submission of the PMS-272 for any one of the following reasons: (A)
When monthly advances do not exceed $25,000 per recipient, provided
that such advances are monitored through other forms contained in this
section; (B) If, in HHS' opinion, the recipient's accounting controls
are adequate to minimize excessive Federal advances; or, (C) When the
electronic payment mechanisms provide adequate data.
(b) When the HHS awarding agency needs additional information or
more frequent reports, the following shall be observed.
(1) When additional information is needed to comply with
legislative requirements, the HHS awarding agency will issue
instructions to require recipients to submit that information under the
``Remarks'' section of the reports.
(2) When HHS determines that a recipient's accounting system does
not meet the standards in Sec. 74.21, additional pertinent information
to further monitor awards may be obtained, without regard to Sec. 74.4,
upon written notice to the recipient until such time as the system is
brought up to standard. In obtaining this information, the HHS awarding
agencies comply with report clearance requirements of 5 CFR part 1320,
``Controlling Paperwork Burdens on the Public.''
(3) The HHS awarding agency may accept the identical information
from a recipient in machine readable format or computer printouts or
electronic outputs in lieu of prescribed formats.
(4) The HHS awarding agency may provide computer or electronic
outputs to recipients when such action expedites or contributes to the
accuracy of reporting.
Sec. 74.53 Retention and access requirements for records.
(a) This section sets forth requirements for record retention and
access to records for awards to recipients.
(b) Financial records, supporting documents, statistical records,
and all other records pertinent to an award shall be retained for a
period of three years from the date of submission of the final
expenditure report or, for awards that are renewed quarterly or
annually, from the date of the submission of the quarterly or annual
financial report. The only exceptions are the following:
(1) If any litigation, claim, financial management review, or audit
is started before the expiration of the 3-year period, the records
shall be retained until all litigation, claims or audit findings
involving the records have been resolved and final action taken.
(2) Records for real property and equipment acquired with Federal
funds shall be retained for 3 years after final disposition.
(3) When records are transferred to or maintained by the HHS
awarding agency, the 3-year retention requirement is not applicable to
the recipient.
(4) Indirect cost rate proposals, cost allocations plans, etc., as
specified in Sec. 74.53(g).
(c) Copies of original records may be substituted for the original
records if authorized by the HHS awarding agency.
(d) The HHS awarding agency will request transfer of certain
records to its custody from recipients when it determines that the
records possess long term retention value. However, in order to avoid
duplicate recordkeeping, the HHS awarding agency may make arrangements
for recipients to retain any records that are continuously needed for
joint use.
(e) HHS awarding agencies, the HHS Inspector General, the U.S.
Comptroller General, or any of their duly authorized representatives,
have the right of timely and unrestricted access to any books,
documents, papers, or other records of recipients that are pertinent to
the awards, in order to make audits, examinations, excerpts,
transcripts and copies of such documents. This right also includes
timely and reasonable access to a recipient's personnel for the purpose
of interview and discussion related to such documents. The rights of
access in this paragraph are not limited to the required retention
period, but shall last as long as records are retained.
(f) Unless required by statute, the HHS awarding agency will not
place restrictions on recipients that limit public access to the
records of recipients that are pertinent to an award, except when the
HHS awarding agency can demonstrate that such records shall be kept
confidential and would have been exempted from disclosure pursuant to
the Freedom of Information Act, 5 U.S.C. 552, if the records had
belonged to the HHS awarding agency.
(g) Paragraphs (g)(1) and (g)(2) of this section apply to the
following types of documents, and their supporting records: Indirect
cost rate computations or proposals, cost allocation plans, and any
similar accounting computations of the rate at which a particular group
of costs is chargeable (such as computer usage chargeback rates or
composite fringe benefit rates).
(1) If the recipient submits to the Federal Government or the
subrecipient submits to the recipient the proposal, plan, or other
computation to form the basis for negotiation of the rate, then the 3-
year retention period for its supporting records starts on the date of
such submission.
(2) If the recipient is not required to submit to the Federal
Government or the subrecipient is not required to submit to the
recipient the proposal, plan, or other computation for negotiation
purposes, then the 3-year retention period for the proposal, plan, or
other computation and its supporting records starts at the end of the
fiscal year (or other accounting period) covered by the proposal, plan,
or other computation.
Termination and Enforcement
Sec. 74.60 Purpose of termination and enforcement.
Sections 74.61 and 74.62 set forth uniform suspension, termination
and enforcement procedures.
Sec. 74.61 Termination.
(a) Awards may be terminated in whole or in part only if paragraph
(a) (1), (2), or (3) of this section applies.
(1) By the HHS awarding agency, if a recipient materially fails to
comply with the terms and conditions of an award.
(2) By the HHS awarding agency with the consent of the recipient,
in which case the two parties shall agree upon the termination
conditions, including the effective date and, in the case of partial
termination, the portion to be terminated.
(3) By the recipient upon sending to the HHS awarding agency
written notification setting forth the reasons for such termination,
the effective date, and, in the case of partial termination, the
portion to be terminated. However, if the HHS awarding agency
determines in the case of partial termination that the reduced or
modified portion of the award will not accomplish the purposes for
which the award was made, it may terminate the award in its entirety.
(b) If costs are allowed under an award, the responsibilities of
the recipient referred to in Sec. 74.71(a), including those for
property management as applicable, shall be considered in the
termination of the award, and provision shall be made for continuing
responsibilities of the recipient after termination, as appropriate.
Sec. 74.62 Enforcement.
(a) If a recipient materially fails to comply with the terms and
conditions of an award, whether stated in a Federal statute or
regulation, an assurance, an application, or a notice of award, the HHS
awarding agency may, in addition to imposing any of the special
conditions outlined in Sec. 74.14, take one or more of the following
actions, as appropriate in the circumstances:
(1) Temporarily withhold cash payments pending correction of the
deficiency by the recipient or more severe enforcement action by the
HHS awarding agency.
(2) Disallow (that is, deny both use of funds and any applicable
matching credit for) all or part of the cost of the activity or action
not in compliance.
(3) Wholly or partly suspend or terminate the current award.
(4) Withhold further awards for the project or program.
(5) Take any other remedies that may be legally available.
(b) In taking an enforcement action, the HHS awarding agency will
provide the recipient or subrecipient an opportunity for such hearing,
appeal, or other administrative proceeding to which the recipient or
subrecipient is entitled under any statute or regulation applicable to
the action. (See also 45 CFR parts 16, 75, and 95.)
(c) Costs to a recipient resulting from obligations incurred by the
recipient during a suspension or after termination of an award are not
allowable unless the HHS awarding agency expressly authorizes them in
the notice of suspension or termination or subsequently. Other
recipient costs during suspension or after termination which are
necessary and not reasonably avoidable are allowable if:
(1) The costs result from obligations which were properly incurred
by the recipient before the effective date of suspension or
termination, are not in anticipation of it, and in the case of a
termination, are noncancellable; and
(2) The costs would be allowable if the award were not suspended or
expired normally at the end of the funding period in which the
termination takes effect.
(d) The enforcement remedies identified in this section, including
suspension and termination, do not preclude a recipient from being
subject to debarment and suspension under E.O.s 12549 and 12689 and the
HHS implementing regulations at Sec. 74.13 of this part and 45 CFR part
76.
Subpart D--After-the-Award Requirements
Sec. 74.70 Purpose.
Sections 74.71 through 74.73 contain closeout procedures and other
procedures for subsequent disallowances and adjustments.
Sec. 74.71 Closeout procedures.
(a) Recipients shall submit, within 90 calendar days after the date
of completion of the award, all financial, performance, and other
reports as required by the terms and conditions of the award. The HHS
awarding agency may approve extensions when requested by the recipient.
(b) Unless the HHS awarding agency authorizes an extension, a
recipient shall liquidate all obligations incurred under the award not
later than 90 calendar days after the funding period or the date of
completion as specified in the terms and conditions of the award or in
agency implementing instructions.
(c) HHS will make prompt payments to a recipient for allowable
reimbursable costs under the award being closed out.
(d) The recipient shall promptly refund any balances of unobligated
cash that HHS has advanced or paid and that is not authorized to be
retained by the recipient for use in other projects. 45 CFR part 30
governs unreturned amounts that become delinquent debts.
(e) When authorized by the terms and conditions of the award, HHS
will make a settlement for any upward or downward adjustments to the
Federal share of costs after closeout reports are received.
(f) The recipient shall account for any real and personal property
acquired with HHS funds or received from the Federal Government in
accordance with Secs. 74.31 through 74.37.
(g) In the event a final audit has not been performed prior to the
closeout of an award, HHS retains the right to recover an appropriate
amount after fully considering the recommendations on disallowed costs
resulting from the final audit.
Sec. 74.72 Subsequent adjustments and continuing responsibilities.
(a) The closeout of an award does not affect any of the following:
(1) The right of the HHS awarding agency to disallow costs and
recover funds on the basis of a later audit or other review.
(2) The obligation of the recipient to return any funds due as a
result of later refunds, corrections, or other transactions.
(3) Audit requirements in Sec. 74.26.
(4) Property management requirements in Secs. 74.31 through 74.37.
(5) Records retention requirements in Sec. 74.53.
(b) After closeout of an award, a relationship created under an
award may be modified or ended in whole or in part with the consent of
the HHS awarding agency and the recipient, provided the
responsibilities of the recipient referred to in Sec. 74.72(a),
including those for property management as applicable, are considered
and provisions made for continuing responsibilities of the recipient,
as appropriate.
Sec. 74.73 Collection of amounts due.
(a) Any funds paid to a recipient in excess of the amount to which
the recipient is finally determined to be entitled under the terms and
conditions of the award constitute a debt to the Federal Government. If
not paid within a reasonable period after the demand for payment, the
HHS awarding agency may reduce the debt by paragraph (a) (1), (2), or
(3) of this section:
(1) Making an administrative offset against other requests for
reimbursements.
(2) Withholding advance payments otherwise due the recipient.
(3) Taking other action permitted by statute.
(b) Except as otherwise provided by law, HHS awarding agencies will
charge interest on an overdue debt in accordance with 4 CFR ch. II,
``Federal Claims Collection Standards.'' (See 45 CFR part 30.)
Subpart E--Special Provisions for Awards to Commercial
Organizations
Sec. 74.80 Scope of subpart.
This subpart contains provisions that apply to awards to commercial
organizations. These provisions are in addition to other applicable
provisions of this part, or they make exceptions from other provisions
of this part for awards to commercial organizations.
Sec. 74.81 Prohibition against profit.
Except for awards under the Small Business Innovation Research
(SBIR) and Small Business Technology Research (STTR) programs (15
U.S.C. 638), no HHS funds may be paid as profit to any recipient even
if the recipient is a commercial organization. Profit is any amount in
excess of allowable direct and indirect costs.
Sec. 74.82 Program income.
The additional costs alternative described in Sec. 74.24(b)(1) may
not be applied to program income earned by a commercial organization
except in the SBIR and STTR programs.
Subpart F--Disputes
Sec. 74.90 Final decisions in disputes.
(a) HHS attempts to promptly issue final decisions in disputes and
in other matters affecting the interests of recipients. However, final
decisions adverse to the recipient are not issued until it is clear
that the matter cannot be resolved through further exchange of
information and views.
(b) Under various HHS statutes or regulations, recipients have the
right to appeal from, or to have a hearing on, certain final decisions
by HHS awarding agencies. (See, for example, subpart D of 42 CFR part
50, and 45 CFR parts 16 and 75). Paragraphs (c) and (d) of this section
set forth the standards HHS expects its member agencies to meet in
issuing a final decision covered by any of the statutes or regulations.
(c) The decision may be brief but must contain:
(1) A complete statement of the background and basis of the
awarding agency's decision, including reference to the pertinent
statutes, regulations, or other governing documents; and
(2) Enough information to enable the recipient to understand the
issues and the position of the HHS awarding agency.
(d) The following or similar language (consistent with the
terminology of the applicable statutes or regulations) should appear at
the end of the decision: ``This is the final decision of the (title of
grants officer or other official responsible for the decision). It
shall be the final decision of the Department unless, within 30 days
after receiving this decision, you deliver or mail (you should use
registered or certified mail to establish the date) a written notice of
appeal to (name and address of appropriate contact, e.g., the
Departmental Appeals Board, Department of Health and Human Services,
Washington, DC 20201). You shall attach to the notice a copy of this
decision, note that you intend an appeal, state the amount in dispute,
and briefly state why you think that this decision is wrong. You will
be notified of further procedures.''
Sec. 74.91 Alternative dispute resolution.
HHS encourages its awarding agencies and recipients to try to
resolve disputes by using alternative dispute resolution (ADR)
techniques. ADR often is effective in reducing the cost, delay and
contentiousness involved in appeals and other traditional ways of
handling disputes. ADR techniques include mediation, neutral evaluation
and other consensual methods. Information about ADR is available from
the HHS Dispute Resolution Specialist at the Departmental Appeals
Board, U.S. Department of Health and Human Services, Washington, DC
20201.
Subparts G-AA--[Removed]
4. Subparts G-AA of part 74 are removed.
5. Appendix A is added to part 74 to read as follows:
Appendix A to Part 74--Contract Provisions
All contracts awarded by a recipient, including small purchases,
shall contain the following provisions as applicable where the cost
of the contract is treated as a direct cost of an award:
1. Equal Employment Opportunity--All contracts shall contain a
provision requiring compliance with E.O. 11246, ``Equal Employment
Opportunity,'' as amended by E.O. 11375, ``Amending Executive Order
11246 Relating to Equal Employment Opportunity,'' and as
supplemented by regulations at 41 CFR part 60, ``Office of Federal
Contract Compliance Programs, Equal Employment Opportunity,
Department of Labor.''
2. Copeland ``Anti-Kickback'' Act (18 U.S.C. 874 and 40 U.S.C.
276c)--All contracts and subgrants in excess of $2000 for
construction or repair awarded by recipients and subrecipients shall
include a provision for compliance with the Copeland ``Anti-
Kickback'' Act, 18 U.S.C. 874, as supplemented by Department of
Labor regulations, 29 CFR part 3, ``Contractors and Subcontractors
on Public Building or Public Work Financed in Whole or in Part by
Loans or Grants from the United States.'' The Act provides that each
contractor or subrecipient shall be prohibited from inducing, by any
means, any person employed in the construction, completion, or
repair of public work, to give up any part of the compensation to
which he is otherwise entitled. The recipient shall report all
suspected or reported violations to the Federal awarding agency.
3. Davis-Bacon Act, as amended (40 U.S.C. 276a to a-7)--When
required by Federal program legislation, all construction contracts
awarded by the recipients and subrecipients of more than $2000 shall
include a provision for compliance with the Davis-Bacon Act, 40
U.S.C. 276a to a-7, and as supplemented by Department of Labor
regulations, 29 CFR part 5, ``Labor Standards Provisions Applicable
to Contracts Governing Federally Financed and Assisted
Construction.'' Under this Act, contractors shall be required to pay
wages to laborers and mechanics at a rate not less than the minimum
wages specified in a wage determination made by the Secretary of
Labor. In addition, contractors shall be required to pay wages not
less than once a week. The recipient shall place a copy of the
current prevailing wage determination issued by the Department of
Labor in each solicitation and the award of a contract shall be
conditioned upon the acceptance of the wage determination. The
recipient shall report all suspected or reported violations to the
HHS awarding agency.
4. Contract Work Hours and Safety Standards Act (40 U.S.C. 327-
333)--Where applicable, all contracts awarded by recipients in
excess of $2000 for construction contracts and in excess of $2500
for other contracts that involve the employment of mechanics or
laborers shall include a provision for compliance with sections 102
and 107 of the Contract Work Hours and Safety Standards Act, 40
U.S.C. 327-333, as supplemented by Department of Labor regulations,
29 CFR part 5. Under section 102 of the Act, each contractor shall
be required to compute the wages of every mechanic and laborer on
the basis of a standard work week of 40 hours. Work in excess of the
standard work week is permissible provided that the worker is
compensated at a rate of not less than 1\1/2\ times the basic rate
of pay for all hours worked in excess of 40 hours in the work week.
Section 107 of the Act is applicable to construction work and
provides that no laborer or mechanic shall be required to work in
surroundings or under working conditions which are unsanitary,
hazardous or dangerous. These requirements do not apply to the
purchases of supplies or materials or articles ordinarily available
on the open market, or contracts for transportation or transmission
of intelligence.
5. Rights to Inventions Made Under a Contract or Agreement--
Contracts or agreements for the performance of experimental,
developmental, or research work shall provide for the rights of the
Federal Government and the recipient in any resulting invention in
accordance with 37 CFR part 401, ``Rights to Inventions Made by
Nonprofit Organizations and Small Business Firms Under Government
Grants, Contracts and Cooperative Agreements,'' and any further
implementing regulations issued by HHS.
6. Clean Air Act (42 U.S.C. 7401 et seq.) and the Federal Water
Pollution Control Act as amended (33 U.S.C. 1251 et seq.)--Contracts
and subgrants of amounts in excess of $100,000 shall contain a
provision that requires the recipient to agree to comply with all
applicable standards, orders or regulations issued pursuant to the
Clean Air Act, 42 U.S.C. 7401 et seq., and the Federal Water
Pollution Control Act, as amended 33 U.S.C. 1251 et seq. Violations
shall be reported to the HHS and the appropriate Regional Office of
the Environmental Protection Agency.
7. Byrd Anti-Lobbying Amendment (31 U.S.C. 1352)--Contractors
who apply or bid for an award of more than $100,000 shall file the
required certification. Each tier certifies to the tier above that
it will not and has not used Federal appropriated funds to pay any
person or organization for influencing or attempting to influence an
officer or employee of any Federal agency, a member of Congress,
officer or employee of Congress, or an employee of a member of
Congress in connection with obtaining any Federal contract, grant or
any other award covered by 31 U.S.C. 1352. Each tier shall also
disclose any lobbying with non-Federal funds that takes place in
connection with obtaining any Federal award. Such disclosures are
forwarded from tier to tier up to the recipient. (See also 45 CFR
part 93).
8. Debarment and Suspension (E.O.s 12549 and 12689)--Certain
contracts shall not be made to parties listed on the nonprocurement
portion of the General Services Administration's ``Lists of Parties
Excluded from Federal Procurement or Nonprocurement Programs'' in
accordance with E.O.s 12549 and 12689, ``Debarment and Suspension.''
(See 45 C
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