Grants and Cooperative Agreements With Institutions of Higher Education, Hospitals, and Other Non-Profit Organizations

DEPARTMENT OF STATE

[Public Notice 1985]

22 CFR Part 145

Grants and Cooperative Agreements With Institutions of Higher

Education, Hospitals, and Other Non-Profit Organizations

ACTION: Final rule.

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SUMMARY: This final rule establishes regulations for grants and

cooperative agreements with insitutions of higher education, hospitals,

and other non-profit organizations.

DATES: This regulation is effective October 1, 1994.

FOR FURTHER INFORMATION CONTACT: Robert Lloyd, Office of the

Procurement Executive, room 603, SA-6, U.S. Department of State,

Washington, DC 20522-0602. Tel. (703) 516-1690.

SUPPLEMENTARY INFORMATION: The Department of State establishes this

final rule as part 145 of title 22 of the Code of Federal Regulations.

The regulation implements Office of Management and Budget Circular

A-110, published in the Federal Register on November 29, 1993 (58 FR

62992). The regulation is essentially the same as Circular A-110,

except for editorial changes, internal approval procedures, and

exclusion of foreign and international organizations and agreements

performed overseas. The Circular was published as a proposed rule in

the Federal Register, and the final version of the Circular published

on November 29, 1993 addressed the public comments received.

List of Subjects in 22 CFR Part 145

Administrative practices and procedure, Grant programs, Grants

administration, Reporting and recordkeeping requirements.

Title 22 of the Code of Federal Regulations, chapter I, is amended

as set forth below.

Lloyd W. Pratsch,

Procurement Executive.

Part 145 is added to subchapter O to read as follows:

PART 145--GRANTS AND AGREEMENTS WITH INSTITUTIONS OF HIGHER EDUCATION,

HOSPITALS, AND OTHER NON-PROFIT ORGANIZATIONS

Subpart A--General

Sec.

145.1 Purpose.

145.2 Definitions.

145.3 Effect on other issuances.

145.4 Deviations.

145.5 Subawards.

Subpart B--Pre-Award Requirements

145.10 Purpose.

145.11 Pre-award policies.

145.12 Forms for applying for Federal assistance.

145.13 Debarment and suspension.

145.14 Special award conditions.

145.15 Metric system of measurement.

145.16 Resource Conservation and Recovery Act.

145.17 Certifications and representations.

Subpart C--Post-Award Requirements

Financial and Program Management

145.20 Purpose of financial and program management.

145.21 Standards for financial management systems.

145.22 Payment.

145.23 Cost sharing or matching.

145.24 Program income.

145.25 Revision of budget and program plans.

145.26 Non-Federal audits.

145.27 Allowable costs.

145.28 Period of availability of funds.

Property Standards

145.30 Purpose of property standards.

145.31 Insurance coverage.

145.32 Real property.

145.33 Federally-owned and exempt property.

145.34 Equipment.

145.35 Supplies and other expendable property.

145.36 Intangible property.

145.37 Property trust relationship.

Procurement Standards

145.40 Purpose of procurement standards.

145.41 Recipient responsibilities.

145.42 Code of conduct.

145.43 Competition.

145.44 Procurement procedures.

145.45 Cost and price analysis.

145.46 Procurement records.

145.47 Contract administration.

145.48 Contract clauses.

Reports and Records

145.50 Purpose of reports and records.

145.51 Monitoring and reporting program performance.

145.52 Financial reporting.

145.53 Retention and access requirements for records.

Termination and Enforcement

145.60 Purpose of termination and enforcement.

145.61 Termination.

145.62 Enforcement.

Subpart D--After-the-Award Requirements

145.70 Purpose.

145.71 Closeout procedures.

145.72 Subsequent adjustments and continuing responsibilities.

145.73 Collection of amounts due.

Appendix A to Part 145--Clauses for Contracts and Small Purchases

Awarded by Recipient

Authority: 22 U.S.C. 2658.1

Subpart A--General

Sec. 145.1 Purpose.

This regulation establishes uniform administrative requirements for

Department of State grants and cooperative agreements awarded to

institutions of higher education, hospitals, and other non-profit

organizations pursuant to OMB Circular A-110. Non-profit organizations

that implement Federal programs for the States are also subject to

State requirements. Copies of the OMB circulars mentioned in this part

may be ordered from the Office of Management and Budget Publications

Office (202) 395-7000.

Sec. 145.2 Definitions.

(a) Accrued expenditures means the charges incurred by the

recipient during a given period requiring the provision of funds for:

(1) Goods and other tangible property received;

(2) Services performed by employees, contractors, subrecipients,

and other payees; and,

(3) Other amounts becoming owed under programs for which no current

services or performance is required.

(b) 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.

(c) 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.

(d) 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.

(e) Award means financial assistance that provides support or

stimulation to accomplish a public purpose. Awards include grants and

other agreements in the form of money or property in lieu of money, by

the Federal Government to an eligible recipient. The term does not

include: Technical assistance, which provides services instead of

money; other assistance in the form of loans, loan guarantees, interest

subsidies, or insurance; direct payments of any kind to individuals;

and, contracts which are required to be entered into and administered

under procurement laws and regulations.

(f) Cash contributions means the recipient's cash outlay, including

the outlay of money contributed to the recipient by third parties.

(g) Closeout means the process by which an awarding agency

determines that all applicable administrative actions and all required

work of the award have been completed by the recipient and awarding

agency.

(h) Contract means a procurement contract under an award or

subaward, and a procurement subcontract under a recipient's or

subrecipient's contract.

(i) Cooperative agreement, as defined in 31 U.S.C. 6305, means a

legal instrument reflecting a relationship between the United States

Government and a recipient when the principal purpose of the

relationship is to transfer a thing of value to the recipient to carry

out a public purpose of support or stimulation authorized by law,

instead of acquiring property or services for the direct use of the

United States Government, and substantial involvement is expected

between the awarding agency and the recipient when carrying out the

activity contemplated in the agreement.

(j) Cost sharing or matching means that portion of project or

program costs not borne by the Federal Government.

(k) 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 Federal sponsorship ends.

(l) Disallowed costs means those charges to an award that the

awarding agency determines to be unallowable, in accordance with the

applicable Federal cost principles or other terms and conditions

contained in the award.

(m) 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 $5,000 or more

per unit. However, consistent with recipient policy, lower limits may

be established.

(n) Excess property means property under the control of any

awarding agency that, as determined by the head thereof, is no longer

required for its needs or the discharge of its responsibilities.

(o) Exempt property means tangible personal property acquired in

whole or in part with Federal funds, where the 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 non-profit institution of higher

education or non-profit organization whose principal purpose is

conducting scientific research.

(p) Federal awarding agency or awarding agency means the Federal

agency that provides an award to the recipient.

(q) Federal funds authorized means the total amount of Federal

funds obligated by the Federal Government for use by the recipient.

This amount may include any authorized carryover of unobligated funds

from prior funding periods when permitted by agency regulations or

agency implementing instructions.

(r) Federal share of real property, equipment, or supplies means

that percentage of the property's acquisition costs and any improvement

expenditures paid with Federal funds.

(s) Funding period means the period of time when Federal funding is

available for obligation by the recipient.

(t) Grant, as defined in 31 U.S.C. 6304, means a legal instrument

reflecting a relationship between the United States Government and a

recipient when the principal purpose of the relationship is to transfer

a thing of value to the recipient to carry out a public purpose of

support or stimulation authorized by law, instead of acquiring property

or services for the direct use of the United States Government, and

substantial involvement is not expected between the awarding agency and

the recipient when carrying out the activity contemplated in the

agreement.

(u) Intangible property and debt instruments means, but is not

limited to, trademarks, copyrights, patents and patent applications and

such property as loans, notes and other debt instruments, lease

agreements, stock and other instruments of property ownership, whether

considered tangible or intangible.

(v) Obligations means the amounts of orders placed, contracts and

grants awarded, services received and similar transactions during a

given period that require payment by the recipient during the same or a

future period.

(w) Outlays or expenditures means 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.

(x) 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.

(y) Prior approval means written approval by an authorized official

evidencing prior consent.

(z) 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. 145.24 (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 awarding agency regulations or the terms and

conditions of the award, program income does not include the receipt of

principal on loans, rebates, credits, discounts, etc., or interest

earned on any of them.

(aa) Project costs means all allowable costs, as set forth in the

applicable Federal cost principles, incurred by a recipient and the

value of the contributions made by third parties in accomplishing the

objectives of the award during the project period.

(bb) Project period means the period established in the award

document during which Federal sponsorship begins and ends.

(cc) Property means, unless otherwise stated, real property,

equipment, intangible property and debt instruments.

(dd) Real property means land, including land improvements,

structures and appurtenances thereto, but excludes movable machinery

and equipment.

(ee) Recipient means an organization receiving financial assistance

directly from Federal awarding agencies to carry out a project or

program.

(1) The term includes public and private institutions of higher

education; public and private hospitals; other quasi-public and private

non-profit organizations such as, but not limited to, community action

agencies, research institutes, educational associations, and health

centers; and commercial organizations receiving grants or cooperative

agreements from the Department.

(2) The term does not include any of the following which are

recipients, subrecipients, or contractors or subcontractors of

recipients or subrecipients:

(i) Foreign organizations (governmental or non-governmental);

(ii) International organizations (such as agencies of the United

Nations); or

(iii) Organizations whose assistance agreement is for work to be

performed outside the United States.

(3) 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.

(ff) Research and development means all research activities, both

basic and applied, and all development activities that are supported at

universities, colleges, and other non-profit institutions. ``Research''

is defined as a systematic study directed toward fuller scientific

knowledge or understanding of the subject studied. ``Development'' is

the systematic use of knowledge and understanding gained from research

directed toward the production of useful materials, devices, systems,

or methods, including design and development of prototypes and

processes. The term research also includes activities involving the

training of individuals in research techniques where such activities

utilize the same facilities as other research and development

activities and where such activities are not included in the

instruction function.

(gg) Small awards means a grant or cooperative agreement not

exceeding $100,000 or the small purchase limitation fixed at 41 U.S.C.

403(11), whichever is greater.

(hh) Small purchase limitation, for procurements transactions

awarded by recipients, means $100,000 or the small purchase limitation

fixed at 41 U.S.C. 403(11), whichever is greater.

(ii) 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 Sec. 145.2(e).

(jj) 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

awarding agency.

(kk) Supplies means all personal property excluding equipment,

intangible property, and debt instruments as defined in this section,

and inventions of a contractor conceived or first actually reduced to

practice in the performance of work under a funding agreement

(``subject inventions''), as defined in 37 CFR part 401, ``Rights to

Inventions Made by Nonprofit Organizations and Small Business Firms

Under Government Grants, Contracts, and Cooperative Agreements.''

(ll) Suspension means an action by a awarding agency that

temporarily withdraws Federal sponsorship under an award, pending

corrective action by the recipient or pending a decision to terminate

the award by the awarding agency. Suspension of an award is a separate

action from suspension under Federal agency regulations implementing

E.O.s 12549 and 12689, ``Debarment and Suspension.''

(mm) Termination means the cancellation of Federal sponsorship, in

whole or in part, under an agreement at any time prior to the date of

completion.

(nn) 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.

(oo) Unliquidated obligations, for financial reports prepared on a

cash basis, means the amount of obligations incurred by the recipient

that have not been paid. For reports prepared on an accrued expenditure

basis, they represent the amount of obligations incurred by the

recipient for which an outlay has not been recorded.

(pp) Unobligated balance means the portion of the funds authorized

by the awarding agency that has not been obligated by the recipient and

is determined by deducting the cumulative obligations from the

cumulative funds authorized.

(qq) 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.

(rr) Working capital advance means a procedure where by funds are

advanced to the recipient to cover its estimated disbursement needs for

a given initial period.

Sec. 145.3 Effect on other issuances.

For awards subject to this regulation, all administrative

requirements of codified program regulations, program manuals,

handbooks and other nonregulatory materials which are inconsistent with

the requirements of this regulation are superseded, except to the

extent they are required by statute, or authorized in accordance with

the deviations provision in Sec. 145.4.

Sec. 145.4 Deviations.

The Office of Management and Budget (OMB) may grant exceptions for

classes of grants or recipients subject to the requirements of this

regulation when exceptions are not prohibited by statute. However, in

the interest of maximum uniformity, exceptions from the requirements of

this regulation shall be permitted only in unusual circumstances. The

Department may apply more restrictive requirements to a class of

recipients when approved by OMB. The Department may apply less

restrictive requirements when issuing small awards, except for those

requirements which are statutory. Exceptions on a case-by-case basis

may also be made by the Department. Deviation requests shall be

submitted to the Office of the Procurement Executive (A/OPE) for

approval or transmittal to OMB.

Sec. 145.5 Subawards.

Unless sections of this regulation specifically exclude

subrecipients from coverage, the provisions of this regulation shall be

applied to subrecipients performing work under awards if such

subrecipients are institutions of higher education, hospitals or other

non-profit organizations. State and local government subrecipients are

subject to the provisions of part 135 of this chapter implementing the

grants management common rule, ``Uniform Administrative Requirements

for Grants and Cooperative Agreements to State and Local Governments.''

Subpart B--Pre-Award Requirements

Sec. 145.10 Purpose.

Sections 145.11 through 145.17 prescribe forms and instructions and

other pre-award matters to be used in applying for Federal awards.

Sec. 145.11 Pre-award policies.

(a) Use of grants and cooperative agreements, and contracts. In

each instance, the awarding agency shall decide on the appropriate

award instrument (i.e., grant, cooperative agreement, or contract). The

Federal Grant and Cooperative Agreement Act (31 U.S.C. 6301-08) governs

the use of grants, cooperative agreements and contracts. 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 Federal Government. The

Department may not award grants or cooperative agreements unless

specific statutory authority exists for a program allowing the award of

Federal assistance.

(b) Public notice and priority setting.

(1) The Department shall notify the public of its intended funding

priorities for discretionary grant programs, except for:

(i) Awards for which funding priorities are established by Federal

statute,

(ii) Small awards, and

(iii) Awards for which program purposes would not be served by

public notice.

(2) In the case of the exception in paragraph (b)(1)(iii) of this

section, the award file shall be documented with the rationale for not

issuing a public notice.

Sec. 145.12 Forms for applying for Federal assistance.

(a) Department Grants Officers 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 by the

awarding agency in place of or as a supplement to the Standard Form 424

(SF-424) series.

(b) Applicants shall use the SF-424 series or those forms and

instructions prescribed by the Grants Officer and approved by the

Office of the Procurement Executive (A/OPE).

(c) For Federal programs covered by Executive Order 12372,

``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

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.

(d) Department Grants Officers who do not use the SF-424 form

should indicate whether the application is subject to review by the

State under Executive Order 12372.

Sec. 145.13 Debarment and suspension.

The Department and recipients shall comply with the nonprocurement

debarment and suspension common rule implementing Executive Orders

12549 and 12689, ``Debarment and Suspension,'' as implemented in 22 CFR

part 137. 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. 145.14 Special award conditions.

If an applicant or recipient: has a history of poor performance, is

not financially stable, has a management system that does not meet the

standards prescribed in this regulation, has not conformed to the terms

and conditions of a previous award, or is not otherwise responsible,

the Department may impose additional requirements as needed, provided

that such applicant or recipient is notified in writing as to: The

nature of the additional requirements, the reason why the additional

requirements are being imposed, the nature of the corrective action

needed, the time allowed for completing the corrective actions, and the

method for requesting reconsideration of the additional requirements

imposed. Any special conditions shall be promptly removed once the

conditions that prompted them have been corrected.

Sec. 145.15 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. Federal awarding agencies shall follow the

provisions of E.O. 12770, ``Metric Usage in Federal Government

Programs.''

Sec. 145.16 Resource Conservation and Recovery Act.

Under the Resource Conservation and Recovery Act (RCRA) (Pub. L.

94-580 codified at 42 U.S.C. 6962), any State agency or agency of a

political subdivision of a State which is using appropriated Federal

funds must comply with section 6002. Section 6002 requires that

preference be given in procurement programs to the purchase of specific

products containing recycled materials identified in guidelines

developed by the Environmental Protection Agency (EPA) (40 CFR parts

247-254). Accordingly, State and local institutions of higher

education, hospitals, and non-profit organizations that receive direct

Federal 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. 145.17 Certifications and representations.

Unless prohibited by statute or codified regulation, the Department

is authorized to accept and encourages 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 Department. Annual certifications

and representations shall be signed by responsible officials with the

authority to ensure recipients' compliance with the pertinent

requirements.

Subpart C--Post-Award Requirements

Financial and Program Management

Sec. 145.20 Purpose of financial and program management.

Sections 145.21 through 145.28 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. 145.21 Standards for financial management systems.

(a) The Department shall require recipients to relate financial

data to performance data and develop unit cost information whenever

practical.

(b) Recipients' financial management systems shall provide for the

following.

(1) Accurate, current and complete disclosure of the financial

results of each federally-sponsored project or program in accordance

with the reporting requirements set forth in Sec. 145.52. If the

Department 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 its reports on the basis

of an analysis of the documentation on hand.

(2) Records that identify adequately the source and application of

funds for federally-sponsored activities. These records 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.

(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) govern, payment methods of State agencies, instrumentalities, and

fiscal agents shall be consistent with CMIA Treasury-State Agreements

or the CMIA default procedures codified at 31 CFR part 205,

``Withdrawal of Cash from the Treasury for Advances under Federal Grant

and Other Programs.''

(6) Written procedures for determining the reasonableness,

allocability and allowability of costs in accordance with the

provisions of the applicable Federal cost principles and the terms and

conditions of the award.

(7) Accounting records including cost accounting records that are

supported by source documentation.

(c) Where the Federal Government guarantees or insures the

repayment of money borrowed by the recipient, the Department, 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 Department 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 above, the

bonds shall be obtained from companies holding certificates of

authority as acceptable sureties, as prescribed in 31 CFR part 223,

``Surety Companies Doing Business with the United States.''

Sec. 145.22 Payment.

(a) Payment methods shall minimize the time elapsing between the

transfer of funds from the United States Treasury and the issuance or

redemption of checks, warrants, or payment by other means by the

recipients. Payment methods of State agencies or instrumentalities

shall be consistent with Treasury-State CMIA agreements or default

procedures codified at 31 CFR part 205.

(b) Recipients are to be paid in advance, provided they maintain or

demonstrate the willingness to maintain: Written procedures that

minimize the time elapsing between the transfer of funds and

disbursement by the recipient, and financial management systems that

meet the standards for fund control and accountability as established

in Sec. 145.21. 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 shall be consolidated to cover

anticipated cash needs for all awards made by the Department to the

recipient.

(1) Advance payment mechanisms include, but are not limited to,

Treasury check and electronic funds transfer.

(2) Advance payment mechanisms are subject to 31 CFR part 205.

(3) Recipients shall be authorized to 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 SF-270, ``Request for Advance or Reimbursement,'' or other forms as

may be authorized by OMB (e.g., SF-1034). 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 Department instructions for electronic funds

transfer.

(e) Reimbursement is the preferred method when the requirements in

paragraph (b) cannot be met. The Department may also use this method on

any construction agreement, or if the major portion of the construction

project is accomplished through private market financing or Federal

loans, and the Federal assistance constitutes a minor portion of the

project.

(1) When the reimbursement method is used, the Department shall

make payment within 30 days after receipt of the billing, unless the

billing is improper.

(2) Recipients shall be authorized to submit 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 Department has determined that reimbursement is not feasible

because the recipient lacks sufficient working capital, the Department

may provide cash on a working capital advance basis. Under this

procedure, the Department shall advance cash to the recipient to cover

its estimated disbursement needs for an initial period generally geared

to the awardee's disbursing cycle. Thereafter, the Department shall

reimburse the recipient for its actual cash disbursements. The working

capital advance method of payment shall not be used for recipients

unwilling or unable to provide timely advances to their subrecipient to

meet the subrecipient's actual cash disbursements.

(g) 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 Department shall not

withhold payments for proper charges made by recipients at any time

during the project period unless paragraphs (h) (1) or (2) of this

section apply.

(1) A recipient has failed to comply with the project objectives,

the terms and conditions of the award, or Federal reporting

requirements.

(2) The recipient or subrecipient is delinquent in a debt to the

United States as defined in OMB Circular A-129, ``Managing Federal

Credit Programs.'' Under such conditions, the Department 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.

(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), the

Department shall 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 shall be 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 paragraphs (k) (1), (2) or (3) of this section

apply.

(1) The recipient receives less than $120,000 in Federal awards per

year.

(2) The best reasonably available interest bearing account would

not be expected to earn interest in excess of $250 per year on Federal

cash balances.

(3) The depository would require an average or minimum balance so

high that it would not be feasible within the expected Federal and non-

Federal cash resources.

(l) For those entities where CMIA and its implementing regulations

do not apply, interest earned on Federal advances deposited in interest

bearing accounts shall be remitted annually to the Department for

submission to Treasury. 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 Department, it waives its right to recover the interest under

CMIA.

(m) Except as noted elsewhere in this regulation, only the

following forms shall be authorized for the recipients in requesting

advances and reimbursements. The Department shall not require more than

an original and two copies of these forms except if OMB approval is

obtained.

(1) SF-270, Request for Advance or Reimbursement. The Department

shall use the SF-270 as a standard form for all nonconstruction

programs when electronic funds transfer or predetermined advance

methods are not used. Grants Officers may use forms equivalent to the

SF-270 if approved in writing by the Office of the Procurement

Executive (A/OPE). The Department has the option of using the SF-270

for construction programs in lieu of the SF-271, ``Outlay Report and

Request for Reimbursement for Construction Programs.''

(2) SF-271, Outlay Report and Request for Reimbursement for

Construction Programs. The Department shall use the SF-271 as the

standard form to be used for requesting reimbursement for construction

programs. However, the Department may substitute the SF-270 when the

Department determines that it provides adequate information to meet

Federal needs.

Sec. 145.23 Cost sharing or matching.

(a) All contributions, including cash and third party in-kind,

shall be accepted as part of the recipient's cost sharing or matching

when such contributions meet all of the following criteria.

(1) Are verifiable from the recipient's records.

(2) Are not included as contributions for any other Federally-

assisted project or program.

(3) Are necessary and reasonable for proper and efficient

accomplishment of project or program objectives.

(4) Are allowable under the applicable cost principles.

(5) Are not paid by the Federal Government under another award,

except where authorized by Federal statute to be used for cost sharing

or matching.

(6) Are provided for in the approved budget when required by the

Department.

(7) Conform to other provisions of this regulation, as applicable.

(b) Unrecovered indirect costs may be included as part of cost

sharing or matching only with the prior approval of the Department

Grants Officer.

(c) Values for recipient contributions of services and property

shall be established in accordance with the applicable cost principles.

If the Department 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 paragraphs (c) (1) or (2) of this section.

(1) The certified value of the remaining life of the property

recorded in the recipient's accounting records at the time of donation.

(2) The current fair market value. However, when there is

sufficient justification, the Department 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 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

equipment, office supplies, laboratory supplies or workshop and

classroom supplies. Value assessed to donated supplies included in the

cost sharing or matching share shall be reasonable and shall not exceed

the fair market value of the property at the time of the donation.

(g) The method used for determining cost sharing or matching for

donated equipment, buildings and land for which title passes to the

recipient may differ according to the purpose of the award, if

paragraph (g) (1) or (2) of this section apply.

(1) If the purpose of the award is to assist the recipient in the

acquisition of equipment, buildings or land, the total value of the

donated property may be claimed as cost sharing or matching.

(2) If the purpose of the award is to support activities that

require the use of equipment, buildings or land, normally only

depreciation or use charges for equipment and buildings may be made.

However, the full value of equipment or other capital assets and fair

rental charges for land may be allowed, provided that the Department

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.

(5) The following requirements pertain to the recipient's

supporting records for in-kind contributions from third parties.

(i) Volunteer services shall be documented and, to the extent

feasible, supported by the same methods used by the recipient for its

own employees.

(ii) The basis for determining the valuation for personal service,

material, equipment, buildings and land shall be documented.

Sec. 145.24 Program income.

(a) The Department shall apply the standards set forth in this

section in requiring recipient organizations to account for program

income related to projects financed in whole or in part with Federal

funds.

(b) Except as provided 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 ways listed in the

following.

(1) Added to funds committed to the project by the Department and

recipient and used to further eligible project or program objectives.

(2) Used to finance the non-Federal share of the project or

program.

(3) Deducted from the total project or program allowable cost in

determining the net allowable costs on which the Federal share of costs

is based.

(c) When the award authorizes the disposition of program income as

described in paragraphs (b)(1) or (b)(2), program income in excess of

any limits stipulated shall be used in accordance with paragraph

(b)(3).

(d) In the event that the Department does not specify in the terms

and conditions of the award how program income is to be used, paragraph

(b)(3) shall apply automatically to all projects or programs except

research. For awards that support research, paragraph (b)(1) shall

apply automatically unless the awarding agency indicates in the terms

and conditions another alternative on the award or the recipient is

subject to special award conditions, as indicated in Sec. 145.14.

(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) If authorized by the terms and conditions of the award, costs

incident to the generation of program income may be deducted from gross

income to determine program income, provided these costs have not been

charged to the award.

(g) Proceeds from the sale of property shall be handled in

accordance with the requirements of the Property Standards (See

Secs. 145.30 through 145.37).

(h) Unless the terms and condition of the award provide otherwise,

recipients shall have no obligation to the Federal Government with

respect to program income earned from license fees and royalties for

copyrighted material, patents, patent applications, trademarks, and

inventions produced under an award. However, Patent and Trademark

Amendments (35 U.S.C. 18) apply to inventions made under an

experimental, developmental, or research award.

Sec. 145.25 Revision of budget and program plans.

(a) The budget plan is the financial expression of the project or

program as approved during the award process. It may include either the

Federal and non-Federal share, or only the Federal share, depending

upon Department 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, unless, at the discretion

of the Grants Officer, a small percentage variance is allowed by the

terms of the grant or cooperative agreement.

(c) For nonconstruction awards, recipients shall request prior

approvals from the Department for one or more of the following program

or budget related reasons.

(1) Change in the scope or the objective of the project or program

(even if there is no associated budget revision requiring prior written

approval).

(2) Change in a key person specified in the application or award

document.

(3) The absence for more than three months, or a 25 percent

reduction in time devoted to the project, by the approved project

director or principal investigator.

(4) The need for additional Federal funding.

(5) The transfer of amounts budgeted for indirect costs to absorb

increases in direct costs, or vice versa, if approval is required by

the Department.

(6) The inclusion, unless waived by the Department, of costs that

require prior approval in accordance with OMB Circular A-21, ``Cost

Principles for Institutions of Higher Education,'' OMB Circular A-122,

``Cost Principles for Non-Profit Organizations,'' or 45 CFR part 74

appendix E, ``Principles for Determining Costs Applicable to Research

and Development under Grants and Contracts with Hospitals,'' or 48 CFR

part 31, ``Contract Cost Principles and Procedures,'' as applicable.

(7) The transfer of funds allotted for training allowances (direct

payment to trainees) to other categories of expense.

(8) Unless described in the application and funded in the approved

awards, the subaward, transfer or contracting out of any work under an

award. This provision does not apply to the purchase of supplies,

material, equipment or general support services.

(d) No other prior approval requirements for specific items

described by this regulation may be imposed unless a deviation has been

approved by OMB.

(e) Except for requirements listed in paragraphs (c)(1) and (c)(4)

of this section, Grants Officers are authorized, at their option, to

waive cost-related and administrative prior written approvals required

by this regulation and OMB Circulars A-21 and A-122. Such waivers may

include authorizing recipients to do any one or more of the following.

(1) Incur pre-award costs 90 calendar days prior to award or more

than 90 calendar days with the prior approval of the Department. All

pre-award costs are incurred at the recipient's risk (i.e., the

Department is under no obligation to reimburse such costs if for any

reason the recipient does not receive an award or if the award is less

than anticipated and inadequate to cover such costs).

(2) Initiate a one-time extension of the expiration date of the

award of up to 12 months unless one or more of the following conditions

apply. For one-time extensions, the recipient must notify the

Department in writing with the supporting reasons and revised

expiration date at least 10 days before the expiration date specified

in the award. This one-time extension may not be exercised merely for

the purpose of using unobligated balances.

(i) The terms and conditions of award prohibit the extension.

(ii) The extension requires additional Federal funds.

(iii) The extension involves any change in the approved objectives

or scope of the project.

(3) Carry forward unobligated balances to subsequent funding

periods.

(4) For awards that support research, unless the Department

provides otherwise in the award, the prior approval requirements

described in paragraph (e) are automatically waived (i.e., recipients

need not obtain such prior approvals) unless one of the conditions

included in paragraph (e)(2) applies.

(f) The Department may, at its option, restrict the transfer of

funds among direct cost categories or programs, functions and

activities for awards in which the Federal share of the project exceeds

$100,000 and the cumulative amount of such transfers exceeds or is

expected to exceed 10 percent of the total budget as last approved by

the Grants Officer. Grants Officers shall not permit a transfer that

would cause any Federal appropriation or part thereof to be used for

purposes other than those consistent with the original intent of the

appropriation.

(g) All other changes to nonconstruction budgets, except for the

changes described in paragraph (j), do not require prior approval.

(h) For construction awards, recipients shall request prior written

approval promptly from the Grants Officer for budget revisions whenever

paragraphs (h) (1), (2) or (3) of this section apply.

(1) The revision results from changes in the scope or the objective

of the project or program.

(2) The need arises for additional Federal funds to complete the

project.

(3) A revision is desired which involves specific costs for which

prior written approval requirements may be imposed consistent with

applicable OMB cost principles listed in Sec. 145.27.

(i) No other prior approval requirements for specific items may be

imposed unless a deviation has been approved by OMB.

(j) When the Department makes an award that provides support for

both construction and nonconstruction work, the Department may require

the recipient to request prior approval from the Department before

making any fund or budget transfers between the two types of work

supported.

(k) For both construction and nonconstruction awards, the

Department shall require recipients to notify the Department 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

$5,000 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.

(l) When requesting approval for budget revisions, recipients shall

use the budget forms that were used in the application unless the

Grants Officer indicates a letter of request suffices.

(m) Within 30 calendar days from the date of receipt of the request

for budget revisions, the Grants Officer shall review the request and

notify the recipient whether the budget revisions have been approved.

If the revision is still under consideration at the end of 30 calendar

days, the Grants Officer shall inform the recipient in writing of the

date when the recipient may expect the decision.

Sec. 145.26 Non-Federal audits.

(a) Recipients and subrecipients that are institutions of higher

education or other non-profit 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.''

(b) State and local governments shall be subject to the audit

requirements contained in the Single Audit Act (31 U.S.C. 7501-7) and

Department regulations at part 135 of this chapter implementing OMB

Circular A-128, ``Audits of State and Local Governments.''

(c) Hospitals not covered by the audit provisions of OMB Circular

A-133 shall be subject to the audit requirements of the Department.

(d) Commercial organizations shall be subject to the audit

requirements of the Department or the prime recipient as incorporated

into the award document.

Sec. 145.27 Allowable costs.

For each kind of recipient, there is a set of Federal principles

for determining allowable costs. Allowability of costs shall be

determined in accordance with the cost principles applicable to the

entity incurring the costs. Thus, allowability of costs incurred by

State, local or federally-recognized Indian tribal governments is

determined in accordance with the provisions of OMB Circular A-87,

``Cost Principles for State and Local Governments.'' The allowability

of costs incurred by non-profit organizations is determined in

accordance with the provisions of OMB Circular A-122, ``Cost Principles

for Non-Profit Organizations.'' 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 45 CFR

part 74, ``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

non-profit organizations listed in Attachment C to Circular A-122 is

determined in accordance with the provisions of the Federal Acquisition

Regulation (FAR) at 48 CFR part 31.

Sec. 145.28 Period of availability of funds.

Where a funding period is specified, a recipient may charge to the

grant only allowable costs resulting from obligations incurred during

the funding period and any pre-award costs authorized by the

Department, unless otherwise provided in the grant or cooperative

agreement.

Property Standards

Sec. 145.30 Purpose of property standards.

Sections 145.31 through 145.37 set forth uniform standards

governing management and disposition of property furnished by the

Federal Government whose cost was charged to a project supported by a

Federal award. The Department shall require recipients to observe these

standards under awards and shall not impose additional requirements,

unless specifically required by Federal statute. The recipient may use

its own property management standards and procedures provided it

observes the provisions of Secs. 145.31 through 145.37.

Sec. 145.31 Insurance coverage.

Recipients shall, at a minimum, provide the equivalent insurance

coverage for real property and equipment acquired with Federal funds as

provided to property owned by the recipient. Federally-owned property

need not be insured unless required by the terms and conditions of the

award.

Sec. 145.32 Real property.

Each award shall prescribe any applicable requirements for

recipients concerning the use and disposition of real property acquired

in whole or in part under awards. Unless otherwise provided by statute,

such requirements, at a minimum, shall contain the following:

(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 Department.

(b) The recipient shall obtain written approval by the Department

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

Department.

(c) When the real property is no longer needed as provided in

paragraphs (a) and (b), the recipient shall request disposition

instructions from the cognizant Grants Officer. The Department shall

observe one or more of the following disposition instructions.

(1) The recipient may be permitted to retain title without further

obligation to the Federal Government after it compensates the Federal

Government for that percentage of the current fair market value of the

property attributable to the Federal participation in the project.

(2) The recipient may be directed to sell the property under

guidelines provided by the Department and pay the Federal Government

for that percentage of the current fair market value of the property

attributable to the Federal participation in the project (after

deducting actual and reasonable selling and fix-up expenses, if any,

from the sales proceeds). When the recipient is authorized or required

to sell the property, proper sales procedures 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. 145.33 Federally-owned and exempt property.

(a) Federally-owned property. (1) Title to 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 Department. Upon completion of the award or when the

property is no longer needed, the recipient shall report the property

to the Department for further Federal agency utilization.

(2) If the Department has no further need for the property, it

shall be declared excess and reported to the General Services

Administration, unless the Department has statutory authority to

dispose of the property by alternative methods (e.g., the authority

provided by the Federal Technology Transfer Act (15 U.S.C. 3710 (I)) to

donate research equipment to educational and non-profit organizations

in accordance with Executive Order 12821, ``Improving Mathematics and

Science Education in Support of the National Education Goals.'')

Appropriate instructions shall be issued to the recipient by the

Department.

(b) Exempt property. When statutory authority exists, the

Department has the option to vest title to property acquired with

Federal funds in the recipient without further obligation to the

Federal Government and under conditions the Department considers

appropriate. Such property is ``exempt property.'' Should the

Department not establish conditions, title to exempt property upon

acquisition shall vest in the recipient without further obligation to

the Federal Government.

Sec. 145.34 Equipment.

(a) Title to equipment acquired by a recipient with Federal funds

shall vest in the recipient, subject to conditions of this section.

(b) The recipient shall not use equipment acquired with Federal

funds to provide services to non-Federal outside organizations for a

fee that is less than private companies charge for equivalent services,

unless specifically authorized by Federal statute, for as long as the

Federal Government retains an interest in the equipment.

(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 Department. When no

longer needed for the original project or program, the recipient shall

use the equipment in connection with its other federally-sponsored

activities, in the following order of priority: First, Activities

sponsored by the Department which funded the original project, then

activities sponsored by other the Department.

(d) During the time that equipment is used on the project or

program 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 project or program for which the

equipment was originally acquired. First preference for such other use

shall be given to other projects or programs sponsored by the

Department that financed the equipment; second preference shall be

given to projects or programs sponsored by other the Department. 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 Department. User charges shall be treated as program

income.

(e) When acquiring replacement equipment, the recipient may use the

equipment to be replaced as trade-in or sell the equipment and use the

proceeds to offset the costs of the replacement equipment subject to

the approval of the Department.

(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

Federal participation in the cost of the equipment (not applicable to

equipment furnished by the Federal Government).

(vii) Location and condition of the equipment and the date the

information was reported.

(viii) Unit acquisition cost.

(ix) Ultimate disposition data, including date of disposal and

sales price or the method used to determine current fair market value

where a recipient compensates the Department for its share.

(2) Equipment owned by the Federal Government shall be identified

to indicate Federal ownership.

(3) A physical inventory of equipment shall be taken and the

results reconciled with the equipment records at least once every two

years. 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) A control system shall be in effect to insure adequate

safeguards to prevent loss, damage, or theft of the equipment. Any

loss, damage, or theft of equipment shall be investigated and fully

documented; if the equipment was owned by the Federal Government, the

recipient shall promptly notify the Department.

(5) Adequate maintenance procedures shall be implemented 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, the equipment

may be used for other activities in accordance with the following

standards. For equipment with a current per unit fair market value of

$5,000 or more, the recipient may retain the equipment for other uses

provided that compensation is made to the original agency or its

successor. The amount of compensation shall be computed by applying the

percentage of Federal participation in the cost of the original project

or program to the current fair market value of the equipment. If the

recipient has no need for the equipment, the recipient shall request

disposition instructions from the Department. The Department shall

determine whether the equipment can be used to meet the agency's

requirements. If no requirement exists within that agency, the

availability of the equipment shall be reported to the General Services

Administration by the Department to determine whether a requirement for

the equipment exists in other Federal agencies. The Department shall

issue instructions 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 Department an amount

computed by applying to the sales proceeds the percentage of Federal

participation in the cost of the original project or program. However,

the recipient shall be permitted to deduct and retain from the Federal

share $500 or ten percent of the proceeds, whichever is less, for the

recipient's selling and handling expenses.

(2) If the recipient is instructed to ship the equipment elsewhere,

the recipient shall be reimbursed by the Federal Government by an

amount which is computed by applying the percentage of the recipient's

participation in the cost of the original project or program to the

current fair market value of the equipment, plus any reasonable

shipping or interim storage costs incurred.

(3) If the recipient is instructed to otherwise dispose of the

equipment, the recipient shall be reimbursed by the Department for such

costs incurred in its disposition.

(4) The Department may reserve the right to transfer the title to

the Federal Government or to a third party named by the Federal

Government when such third party is otherwise eligible under existing

statutes. Such transfer shall be subject to the following standards.

(i) The equipment shall be appropriately identified in the award or

otherwise made known to the recipient in writing.

(ii) The Department shall issue disposition instructions within 120

calendar days after receipt of a final inventory. The final inventory

shall list all equipment acquired with grant funds and federally-owned

equipment. If the Department fails to issue disposition instructions

within the 120 calendar day period, the recipient shall apply the

standards of this section, as appropriate.

(iii) When the Department exercises its right to take title, the

equipment shall be subject to the provisions for federally-owned

equipment.

Sec. 145.35 Supplies and other expendable property.

(a) Title to supplies and other expendable property shall vest in

the recipient upon acquisition. If there is a residual inventory of

unused supplies exceeding $5,000 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-Federal

sponsored activities or sell them, but shall, in either case,

compensate the Federal Government for its share. The amount of

compensation shall be computed in the same manner as for equipment.

(b) The recipient shall not use supplies acquired with Federal

funds to provide services to non-Federal outside organizations for a

fee that is less than private companies charge for equivalent services,

unless specifically authorized by Federal statute as long as the

Federal Government retains an interest in the supplies.

Sec. 145.36 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 Department 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) Unless waived by the Department, the Federal Government has the

right to:

(1) Obtain, reproduce, publish or otherwise use the data first

produced under an award.

(2) Authorize others to receive, reproduce, publish, or otherwise

use such data for Federal purposes.

(d) Title to intangible property and debt instruments 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 Department. When no longer needed for the originally

authorized purpose, disposition of the intangible property shall occur

in accordance with the provisions of Sec. 145.34(g).

Sec. 145.37 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 recipient as trustee for the beneficiaries of the project or

program under which the property was acquired or improved. Agencies may

require recipients to record liens or other appropriate notices of

record to indicate that personal or real property has been acquired or

improved with Federal funds and that use and disposition conditions

apply to the property.

Procurement Standards

Sec. 145.40 Purpose of procurement standards.

Sections 145.41 through 145.48 set forth standards for use by

recipients in establishing procedures for the procurement of supplies

and other expendable property, equipment, real property and other

services with Federal funds. These standards are furnished to ensure

that such materials and services are obtained in an effective manner

and in compliance with the provisions of applicable Federal statutes

and executive orders. No additional procurement standards or

requirements shall be imposed by the Department upon recipients, unless

specifically required by Federal statute or executive order or approved

by OMB. The standards in Secs. 145.1 through 145.48 do not apply to

small awards, except where imposed by Federal statute or Executive

Order.

Sec. 145.41 Recipient responsibilities.

The standards contained in this section do not relieve the

recipient of the contractual responsibilities arising under its

contract(s). The recipient is the responsible authority, without

recourse to the Department, 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. 145.42 Code 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, 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, employees, or agents of the recipient.

Sec. 145.43 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 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. 145.44 Procurement procedures.

(a) All recipients shall establish written procurement procedures.

These procedures shall provide for, at a minimum, that paragraphs

(a)(1), (2) and (3) of this section apply.

(1) Recipients avoid purchasing unnecessary items.

(2) Where appropriate, an analysis is made of lease and purchase

alternatives to determine which would be the most economical and

practical procurement for the Federal Government.

(3) Solicitations for goods and services provide for all of the

following:

(i) A clear and accurate description of the technical requirements

for the material, product or service to be procured. In competitive

procurements, such a description 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 Federal 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 procurement instruments used (e.g., fixed price

contracts, cost reimbursement 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 awarded only to 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 implementation of E.O.s 12549 and

12689, ``Debarment and Suspension,'' implemented at 22 CFR 137.

(e) Recipients shall, on request, make available for the

Department, 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 the Department's

implementation of this regulation.

(2) The procurement is expected to exceed the small purchase

limitation 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

limitation, specifies a ``brand name'' product.

(4) The proposed award over the small purchase limitation 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 limitation.

Sec. 145.45 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. 145.46 Procurement records.

Procurement records and files for purchases in excess of the small

purchase limitation 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. 145.47 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. 145.48 Contract clauses.

The recipient shall include, in addition to clauses to define a

sound and complete agreement, the following clauses in all contracts.

The following clauses shall also be applied to subcontracts.

(a) Contracts in excess of the small purchase limitation shall

contain contract clauses 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 limitation shall

contain suitable clauses for termination by the recipient, including

the manner by which termination shall be effected and the basis for

settlement. The clauses shall describe conditions under which the

contract may be terminated by the recipient for default of the

contractor as well as conditions where the contract may be terminated

for convenience 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 Department

may accept the bonding policy and requirements of the recipient,

provided the Department 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 or other amount approved by the Grants

Officer. 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 limitation) awarded by recipients shall include a provision to

the effect that the recipient, the Department, the Comptroller General

of the United States, or any of their duly authorized representatives,

shall have access to any books, documents, papers and records of the

contractor which are directly pertinent to a specific program for the

purpose of making audits, examinations, excerpts and transcriptions.

(e) All contracts, including small purchases, awarded by recipients

and their contractors shall contain the contract clauses in appendix A

to this regulation, as applicable.

Reports and Records

Sec. 145.50 Purpose of reports and records.

Sections 145.51 through 145.53 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. 145.51 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 subrecipients have

met the audit requirements as delineated in Sec. 145.26.

(b) The Department shall prescribe the frequency with which the

performance reports shall be submitted. Except as provided in

Sec. 145.51(f), performance reports shall not be required more

frequently than quarterly or, less frequently than annually. Annual

reports shall be due 90 calendar days after the grant year; quarterly

or semi-annual reports shall be due 30 days after the reporting period.

The Department 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 shall

not be required after completion of the project.

(d) When required, 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 not be required to submit more than the

original and two copies of performance reports.

(f) Recipients shall immediately notify the Department 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) The Department may make site visits, as needed.

(h) The Department shall comply with clearance requirements of 5

CFR part 1320 when requesting performance data from recipients.

Sec. 145.52 Financial reporting.

(a) The following forms or such other forms as may be approved by

OMB are authorized for obtaining financial information from recipients.

(1) SF-269 or SF-269A, Financial Status Report

(i) The Department shall require recipients to use the SF-269 or

SF-269A to report the status of funds for all nonconstruction projects

or programs, unless an equivalent form has been prescribed by the

Grants Officer and approved by the OMB and the Office of the

Procurement Executive (A/OPE), e.g., Form JF-61 for the Office of

Overseas Schools (A/OPR/OS). The Department may also have the option of

not requiring the SF-269 or SF-269A when the SF-270, Request for

Advance or Reimbursement, or SF-272, Report of Federal Cash

Transactions, is determined to provide adequate information to meet its

needs, except that a final SF-269 or SF-269A shall be required at the

completion of the project when the SF-270 is used only for advances.

(ii) The Grants Officer shall prescribe whether the report shall be

on a cash or accrual basis. If the Department 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 Department shall determine the frequency of the Financial

Status Report for each project or program, considering the size and

complexity of the particular project or program. However, the report

shall not be required more frequently than quarterly or less frequently

than annually. A final report shall be required at the completion of

the agreement.

(iv) The Department shall require recipients to submit the SF-269

or SF-269A (an original and no more than two copies) no later than 30

days after the end of each specified reporting period for quarterly and

semi-annual reports, and 90 calendar days for annual and final reports.

Extensions of reporting due dates may be approved by the Department

upon request of the recipient.

(2) SF-272, Report of Federal Cash Transactions

(i) When funds are advanced to recipients the Department shall

require each recipient to submit the SF-272 and, when necessary, its

continuation sheet, SF-272a. The Department shall use this report to

monitor cash advanced to recipients and to obtain disbursement

information for each agreement with the recipients.

(ii) The Department may require forecasts of Federal cash

requirements in the ``Remarks'' section of the report.

(iii) When practical and deemed necessary, the Department may

require recipients to report in the ``Remarks'' section the amount of

cash advances received in excess of three days. Recipients shall

provide short narrative explanations of actions taken to reduce the

excess balances.

(iv) Recipients shall be required to submit not more than the

original and two copies of the SF-272 15 calendar days following the

end of each quarter. The Department may require a monthly report from

those recipients receiving advances totaling $1 million or more per

year.

(v) The Grants Officer may waive the requirement for submission of

the SF-272 for any one of the following reasons:

(A) When monthly advances do not exceed $25,000 per recipient,

provided that such advances are monitored through other forms contained

in this section;

(B) If, in the Grants Officer's opinion, the recipient's accounting

controls are adequate to minimize excessive Federal advances; or

(C) When the electronic payment mechanisms provide adequate data.

(b) When the Department needs additional information or more

frequent reports, the following shall be observed.

(1) When additional information is needed to comply with

legislative requirements, the Department shall issue instructions to

require recipients to submit such information under the ``Remarks''

section of the reports.

(2) When the Department determines that a recipient's accounting

system does not meet the standards in Sec. 145.21, additional pertinent

information to further monitor awards may be obtained upon written

notice to the recipient until such time as the system is brought up to

standard. The Department, in obtaining this information, shall comply

with report clearance requirements of 5 CFR part 1320.

(3) The Grants Officer may ``shade out'' any line item on any

report if not necessary.

(4) The Department may accept the identical information from the

recipients in machine readable format or computer printouts or

electronic outputs in lieu of prescribed formats.

(5) The Department may provide computer or electronic outputs to

recipients when such expedites or contributes to the accuracy of

reporting.

Sec. 145.53 Retention and access requirements for records.

(a) This section sets forth requirements for record retention and

access to records for awards to recipients. The Department shall not

impose any other record retention or access requirements upon

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, as authorized by the Department. The only exceptions

are the following.

(1) If any litigation, claim, or audit is started before the

expiration of the 3-year period, the records 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

Department, the 3-year retention requirement is not applicable to the

recipient.

(4) Indirect cost rate proposals, cost allocations plans, etc. as

specified in Sec. 145.53(g).

(c) Copies of original records may be substituted for the original

records if authorized by the Department.

(d) The Department shall 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 Department may make arrangements for recipients to

retain any records that are continuously needed for joint use.

(e) The Department, the Inspector General, Comptroller General of

the United States, or any of their duly authorized representatives,

have the right of timely and unrestricted access to any books,

documents, papers, or other records of recipients that are pertinent to

the awards, in order to make audits, examinations, excerpts,

transcripts and copies of such 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, no Department shall place

restrictions on recipients that limit public access to the records of

recipients that are pertinent to an award, except when the Department

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

Department.

(g) Indirect cost rate proposals, cost allocations plans, etc.

Paragraphs (g)(1) and (g)(2) apply to the following types of documents,

and their supporting records: Indirect cost rate computations or

proposals, cost allocation plans, and any similar accounting

computations of the rate at which a particular group of costs is

chargeable (such as computer usage chargeback rates or composite fringe

benefit rates).

(1) If submitted for negotiation. If the recipient submits to the

Department or the subrecipient submits to the recipient the proposal,

plan, or other computation to form the basis for negotiation of the

rate, then the 3-year retention period for its supporting records

starts on the date of such submission.

(2) If not submitted for negotiation. If the recipient is not

required to submit to the Department 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. 145.60 Purpose of termination and enforcement.

Sections 145.61 and 145.62 set forth uniform suspension,

termination and enforcement procedures.

Sec. 145.61 Termination.

(a) Awards may be terminated in whole or in part only if paragraphs

(a) (1), (2) or (3) of this section apply.

(1) By the Department, if a recipient materially fails to comply

with the terms and conditions of an award.

(2) By the Department, 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 Department 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 Department determines in the case of

partial termination that the reduced or modified portion of the grant

will not accomplish the purposes for which the grant was made, it may

terminate the grant in its entirety under either paragraphs (a) (1) or

(2).

(b) If costs are allowed under an award, the responsibilities of

the recipient referred to in Sec. 145.71(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. 145.62 Enforcement.

(a) Remedies for noncompliance. If a recipient materially fails to

comply with the terms and conditions of an award, whether stated in a

Federal statute, regulation, assurance, application, or notice of

award, the Department may, in addition to imposing any of the special

conditions outlined in Sec. 145.14, 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

Department.

(2) Disallow (that is, deny both use of funds and any applicable

matching credit for) all or part of the cost of the activity or action

not in compliance.

(3) Wholly or partly suspend or terminate the current award.

(4) Withhold further awards for the project or program.

(5) Take other remedies that may be legally available.

(b) Hearings and appeals. In taking an enforcement action, the

awarding agency shall provide the recipient an opportunity for hearing,

appeal, or other administrative proceeding to which the recipient is

entitled under any statute or regulation applicable to the action

involved.

(c) Effects of suspension and termination. Costs of a recipient

resulting from obligations incurred by the recipient during a

suspension or after termination of an award are not allowable unless

the 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 paragraphs (c) (1) and (2) of this section

apply.

(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.

(2) The costs would be allowable if the award were not suspended or

expired normally at the end of the funding period in which the

termination takes effect.

(d) Relationship to debarment and suspension. The enforcement

remedies identified in this section, including suspension and

termination, do not preclude a recipient from being subject to

debarment and suspension under Executive Orders 12549 and 12689 and the

implementing regulations at 22 CFR part 137.

Subpart D--After-the-Award Requirements

Sec. 145.70 Purpose.

Sections 145.71 through 145.73 contain closeout procedures and

other procedures for subsequent disallowances and adjustments.

Sec. 145.71 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

Grants Officer may approve extensions when requested by the recipient.

(b) Unless the Grants Officer 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.

(c) The Department shall 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 the Department has advanced or paid and that is not

authorized to be retained by the recipient for use in other projects.

OMB Circular A-129 governs unreturned amounts that become delinquent

debts.

(e) When authorized by the terms and conditions of the award, the

Department shall 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 Federal funds or received from the Federal Government in

accordance with Secs. 145.31 through 145.37.

(g) In the event a final audit has not been performed prior to the

closeout of an award, the Department shall retain the right to recover

an appropriate amount after fully considering the recommendations on

disallowed costs resulting from the final audit.

Sec. 145.72 Subsequent adjustments and continuing responsibilities.

(a) The closeout of an award does not affect any of the following:

(1) The right of the Department 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. 145.26.

(4) Property management requirements in Secs. 145.31 through

145.37.

(5) Records retention as required in Sec. 145.53.

(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 Department and the recipient, provided the responsibilities of the

recipient referred to in Sec. 145.73(a), including those for property

management as applicable, are considered and provisions made for

continuing responsibilities of the recipient, as appropriate.

Sec. 145.73 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

Department may reduce the debt by:

(1) Making an administrative offset against other requests for

reimbursements.

(2) Withholding advance payments otherwise due to the recipient.

(3) Taking other action permitted by statute.

(b) Except as otherwise provided by law, the Department shall

charge interest on an overdue debt in accordance with 4 CFR Chapter II,

Federal Claims Collection Standards.

Appendix A to Part 145--Clauses for Contracts and Small Purchases

Awarded by Recipient

All contracts and small purchases, awarded by a recipient who is

subject to this regulation, shall contain the following clauses, as

applicable:

1. Equal Employment Opportunity--All contracts shall contain a

clause requiring compliance with Executive Order 11246, ``Equal

Employment Opportunity,'' as amended by Executive Order 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 clause 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 Department.

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 clause 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 Department.

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 clause 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 implementing

regulations issued by the Department.

6. Clean Air Act (42 U.S.C. 7401 et seq.) and the Federal Water

Pollution Control Act (33 U.S.C. 1251 et seq.), as amended--

Contracts and subgrants of amounts in excess of $100,000 shall

contain a clause 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 Department and the Regional

Office of the Environmental Protection Agency (EPA).

7. Byrd Anti-Lobbying Amendment (31 U.S.C. 1352)--Contractors

who apply or bid for an award of $100,000 or more 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 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.

8. Debarment and Suspension (Executive Orders 12549 and 12689)--

No contract shall be made to parties listed on the General Services

Administration's List of Parties Excluded from Federal Procurement

or Nonprocurement Programs in accordance with Executive Orders 12549

and 12689, ``Debarment and Suspension.'' This list contains the

names of parties debarred, suspended, or otherwise excluded by

agencies, and contractors declared ineligible under statutory or

regulatory authority other than Executive Order 12549. Contractors

with awards that exceed the small purchase limitation shall provide

the required certification regarding its exclusion status and that

of its principal employees.

[FR Doc. 94-9181 Filed 4-19-94; 8:45 am]

BILLING CODE 4710-24-P