Notice

AGENCY FOR INTERNATIONAL DEVELOPMENT

Notice

Pursuant to Section 207(d) of the Agricultural Trade and

Development and Assistance Act of 1954, as amended, (otherwise known as

Pub. L. 480), notice is hereby given that the Pub. L. 480 Title II

Draft Close-Out Guidance is being made available to interested parties

for the required thirty (30) day comment period.

Individuals who wish to receive a copy of the draft guidelines

should contact: Office of Food for Peace, Room 323, SA-8, Agency for

International Development, Washington, D.C. 20523-0809. Contact person:

Gwen Johnson, (703) 351-0110. Individuals who have questions or

comments on the draft guidelines, should contact Susan Morawetz at

(703) 351-0135.

The thirty day comment period will begin on the date that this

announcement is published in the Federal Register.

Dated: September 26, 1996.

William T. Oliver,

Director, Office of Food for Peace.

PUBLIC LAW 480, TITLE II CLOSE-OUT PLAN GUIDANCE

Background

This guidance should be used by all Title II projects that are in

the process of closing out, and the documents described below should be

used as a reference in preparing a close-out plan. Cooperating Sponsors

(CSs) should plan to submit close-up plans to the Office of Food for

Peace (FFP) six months prior to the expiration of the project/activity

authorization, unless there have been discussions with BHR/FFP

concerning continuation of the project.

I. Reference Documents

A. USAID Regulation 11, Section 211.11 Suspension, termination and

expiration of program.

This section states, in pertinent parts, that:

``(a) Termination or Suspension by A.I.D.* * * When a program is

terminated or suspended, title to commodities which have been

transferred to the cooperating sponsor, or monetized proceeds, program

income and real or personal property procured with monetized proceeds

or program income shall, at the written request of USAID, the

Diplomatic Post or AID/W, be transferred to the U.S. Government by the

cooperating sponsor or shall otherwise be transferred by the

cooperating sponsor as directed by A.I.D. Any then excess commodities

on hand at the time the program is terminated shall be disposed of in

accordance with Section 211.5 (o) and (p) or as otherwise instructed by

USAID or the Diplomatic Post.''

``(b) Expiration of Program. Upon expiration of the approved

program under circumstances other than those described in paragraph

(a), the cooperating sponsor shall deposit with the U.S. Disbursing

Officer, American Embassy, with instructions to credit the deposit to

CCC Account No. 20FT401, any remaining monetized proceeds or program

income, or the cooperating sponsor shall obtain approval from AID/W for

the use of such monetized proceeds or program income, or real or

personal property procured with such proceeds or income, for purposes

consistent with those authorized for support from A.I.D.''

Based on the above, all remaining property, funds and commodities

must be accounted for at the termination of the project and transferred

to the USG, unless USAID approves a plan to allow the Cooperating

Sponsor (CS) to use or dispose of the assets. Thus, the close-out plan

must be negotiated between USAID and the Cooperating Sponsor for the

disposition of all remaining assets.

B. OMB Circular A-110 and Handbook 13--Grants:

In preparing the guidance, BHR/FFP has followed the following:

(1) OMB Circular A-110;

(2) AID Handbook (HB) 13 for grants;

(3) AID's codification of OMB Circular A-110, called 22 CFR 226;

and

(4) AID's Automated Directives System (ADS) Chapter 591 on

Financial Audits of USAID Contractors, Grantees and Host Government

Recipients (which will soon be available on the Internet).

Note that Circular A-110 pertains to all U.S. Government-supported

grants and agreements, and HB 13 interprets sections of A-110 relevant

for AID-funded agreements. Per HB 13, close-out is defined as follows:

``The closeout of a grant or cooperative agreement is the process by

which AID determines that all applicable administrative actions and all

required work of the grant or cooperative agreement have been completed

by the recipient and AID * * *''

Handbook 13 also states that ``AID closeout procedures include the

following requirements:

a. Upon request, AID shall make prompt payments to a recipient for

allowable reimbursable costs under the grant or cooperative agreement

being closed out.

b. The recipient shall immediately refund any balance of

unobligated (unencumbered) cash that AID has advanced or paid and that

is not authorized to be retained by the recipient for use in other

grants or cooperative agreements.

c. AID shall obtain from the recipient within 90 calendar days

after the date of completion of the grant or cooperative agreement all

financial, performance, and other reports required as the condition of

the grant or cooperative agreement. AID may grant extensions when

requested by the recipient.

d. When authorized by the grant or cooperative agreements, AID

shall make a settlement for any upward or downward adjustments to AID's

share of costs after these reports are received.

e. The recipient shall account for any property acquired with AID

funds, or received from the Government in accordance with the

provisions of paragraph 1T of this chapter.

f. In the event a final audit has not been performed prior to the

closeout of the grant or cooperative agreement, AID shall retain the

right to recover an appropriate amount after fully considering the

recommendations on questioned costs resulting from the final audit.''

C. USAID Regulation 2, Overseas Shipments of Supplies by Voluntary Non-

Profit Relief Agencies

Cooperating Sponsors that received PL480 funds for Ocean, Inland,

Internal Transportation, Storage and Handling (ITSH) should also report

on the status of these funds in their close-out plans. ITSH would only

apply to CSs implementing emergency rather than development programs.

USAID

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Regulation 2 for Shipping should be referenced for this purpose.

II. Regulations and Sources of USAID Funds

Regulation 11 (22 CFR, Part 211) pertains to use and disposition of

Title II resources. However, because Reg. 11 does not contain specific

grant agreement language, AID's Handbook 13 is typically used as

guidance in the management of Section 202(e) grants. Thus, this

handbook, any provisions that are part of a CS's grant agreement, as

well as the 22 CFR (Part 226.71--Close Out Procedures) should be

referenced when closing out Section 202(e) grants and activities.

Likewise, if a CS has received Development Assistance (DA) resources

(most likely through a Mission-funded grant), the CS should use

Handbook 13 and 22. CFR, Sub-Part D for reference.

Note on Relationship of This Guidance to Other AID Regulations

and Instructions: Grants and cooperative agreements negotiated with

USAID frequently contain standard provisions for closing them out.

The close-out provisions in these grant agreements should be

consistent with provisions found in the regulations and handbooks

cited above. The food-aid related grants most likely to contain

close-out language include the following: Section 202(e),

Institutional Strengthening Grants (ISGs), and Development

Assistance Grants provided by the Mission for Title II program

support.

It is also important to note that because most food aid projects

receive more than one type of funding (e.g. Title II commodities,

202(e), ISGs, ITSH, etc.), CSs will be expected to follow the close-

out regulations associated with each of these resources (as

stipulated in the grant agreement or funding document). The guidance

contained herewith is not intended to replace any of the regulations

associated with specific funding sources, but rather to provide a

format in which CSs can report to BHR/FFP and USAID Missions their

overall plans for closing out a specific food aid program,

regardless of the source of funding.

III. Responsibilities Within USAID

Note that BHR/FFP serves as Grants Officer for Section 202(e)

grants and handles Title II-related issues; M/OP serves as Grants

Officer for Institutional Strengthening Grants, Matching Grants and

other DA-funded support from Washington. If grants were provided

directly by Missions to CSs, the Mission grants officer will need to be

consulted on termination of the grant during close out. Although

coordination with several offices could be required depending upon the

source of funds, in all cases, both the Mission and BHR/FFP should be

consulted during close out and receive copies of the CS's close-out

plans. The CS should also expect to work closely with the Mission in

determining the feasibility of various close-out options.

Although Missions and FFP should both be consulted during close-

out, note that final approval of close-out plans will be carried out in

accordance with the signed agreements between USAID and the Cooperating

Sponsors, and approved as follows:

Title II commodities, Section 202(e), monetization proceeds, and

ITSH: Final approval will be provided by BHR/FFP with Mission

concurrence.

Development Assistance Funds, Including FFP-provided Institutional

Strengthening Grants: Final approval will be provided by the cognizant

grants officer whose office awarded the grant. This would likely be the

Mission (if the funds were Mission provided) or the Office of

Procurement in AID/Washington.

Guidelines For Preparing Plan

To assist in preparation of close-out plans for submission to

Missions and USAID/W, BHR/FFP is providing the following guidance for

submission of closeout plans by all CSs:

I. Summary on Close-Out

(1) Provide a brief summary of why the project is being suspended/

terminated and the implications, if any, for the country and Title II

beneficiaries, the project, and the CS's in-country operations.

(2) Provide a brief summary of resources provided over the life of

the project by USAID, the CS, the host government, other donors and

beneficiaries. Also briefly summarize the sectors supported, and the

location in the country where investments were made.

(3) Provide a brief summary (by component if relevant) of where the

project is at this point in meeting its stated goals and objectives,

and where it will be at the date of close out.

(4) State whether there have been any recent audits of the project

(or will be) and the status of resolving outstanding audit

recommendations. Attach a copy of the audit to the close-out plan or

send separately to the USAID Mission and BHR/FFP (if this has not

already occurred).

(5) State whether there have been (or will be) a final or impact

evaluation of the project. If it has been completed, attach a copy of

the evaluation to the close-out plan or send separately to the USAID

Mission and BHR/FFP (if this has not already occurred). If an

evaluation has not been completed but is planned, discuss briefly plans

to carry out the evaluation and if possible, attach the evaluation

Scope of Work (SOW).

II. Lessons Learned

Provide a brief summary of lessons learned from the project that

might be relevant to design, implementation and evaluation of other

Title II projects, either in the present country or others.

III. Close-Out Schedule

Provide a detailed implementation plan and schedule for closing out

the project that details the disposition of property and equipment; the

termination of staff; the finalization of all audits, evaluations and

required reports; the settling of claims; and other critical

activities.

IV. Final Reports

Provide any reports (e.g. final report, Annual Results Report,

Final Evaluation) required either in the project agreement, or in

writing by USAID.

V. Disposition of Commodities, Assets, Equipment, and Funds

(1) Commodities: Prior to the project completion date, all

commodities should be distributed to the intended recipients. If this

is not possible, the CS should propose an alternative solution, and

advise the Mission and BHR/FFP of the quantities, location and

condition of the food.

(2) Non-expendable property/equipment procured through Section

202(e), monetization or other USAID-provided funds: The close-out plan

should include an inventory of all non-expendable property/equipment

procured with funds provided by USAID, or obtained through a

monetization of Title II commodities with a unit acquisition cost

exceeding $5000, and with a useful life estimated to exceed two years.

The CS should describe how it proposes to dispose of each piece of

property and what will be done with the proceeds if the items are sold.

(Note: For additional information on and definitions of non-

expendable property/equipment (as defined by the U.S. Government),

please check OMB Circular 110, Subpart A and/or USAID's 22 CFR,

sections 226.2, 226.34 and 226.71).

(3) Monetization-Generated Local Currency and Program Income

(a) The close-out plan should identify the balance of local

currency and program income that will remain at the date of close out.

Note that local currency and program income should include all

resources applied to implementation of the subject Title II

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project, including Title II and Title III monetization proceeds,

interest and reflows, container funds and beneficiary contributions. If

a balance is anticipated, the close-out plan should describe a proposed

use or transfer of the remaining monetization proceeds. Proposed uses

must be consistent with those authorized in USAID Regulation 11,

Section 211.5.

(b) If USAID authorizes use of remaining local currency and program

income by the cooperating sponsor, to ensure that the resources are

being used for the agreed-upon purpose, the CS will be expected to

report annually on how these funds, as well as any interest and

reflows, are being used. USAID and the CS will negotiate the length of

time this annual reporting shall continue, based upon what makes sense

given the agreed-upon activities. Use of the funds should also be

reflected in the CS's annual A-133 audit.

For use of local currencies and program income in revolving

accounts or similar mechanisms, in addition to the aforementioned

reports and audits, it is likely that the appropriate Food for Peace

Officer/USAID Food Aid manager will have to actually monitor the

account's first use of the post-program funds (one revolution or one

cycle of the revolving account after close-out).

(4) Dollar resources (from Section 202(e), Mission provided Development

Assistance (DA) funding, and Title II Transportation Funding)

(a) As stated in the background section, for any dollar resources

provided by USAID for support of food aid programs, the Cooperating

Sponsor should follow any close-out guidance attached as standard

provisions to its grant agreement.

(b) The CS should provide detailed information on all outstanding

invoices that will be submitted for ocean and inland transportation

charges applicable to the close-out project/activity. Only invoices for

reported charges can be honored.

(c) If there are ITSH resources remaining at the end of the

project, these funds can be used in other countries approved in the

Procurement Authorization and Purchase Request (PA/PR). Otherwise, the

ITSH funds will be deobligated and returned to the U.S. Government. In

all cases, the CS will need to submit a pipeline analysis and proposal

for using or returning remaining ITSH funds to FFP's Emergency Response

Division, prior to any movement of funds.

(d) As with remaining monetized funds, the close-out plan should

identify the source and balance of all dollar resources (including

interest and reflows) that will remain at the date of close out. If a

balance is anticipated, the close-out plan should include a proposed

use or transfer of the remaining dollar proceeds. Proposed uses must be

consistent with those authorized in USAID Regulation 11. Note that

because dollar resources require the greatest degree of monitoring by

the U.S. Government, USAID Offices and Missions will be encouraged not

to approve the reprogramming of remaining U.S. dollar resources after

close-out, but rather to have these funds returned to the U.S.

Government.

(e) If USAID should authorize the use of remaining dollar resources

by the cooperating sponsor, to ensure that the resources are being used

for the agreed-upon purposes, the CS will be expected to report

annually on how these funds, as well as any interest and reflows, are

being used. USAID and the CS will negotiate the length of time this

annual reporting shall continue, as well as the likelihood of on-site

monitoring by the appropriate regional or other Food For Peace Officer/

USAID Food Aid manager, based upon what makes sense given the agreed-

upon activities. Use of the funds should also be reflected in the CS's

annual A-133 audit.

VI. Outstanding Claims

(a) All outstanding claims resulting from damage, loss or improper

distribution of commodities must be completed prior to termination of

the Title II agreement. These must be done in accordance with section

211.9 of Regulation 11.

(b) It is recommended that before the close-out plan is submitted,

the CS notify USAID (the Mission and BHR/FFP) in writing if there are

losses for which it is directly responsible pursuant to Reg. 11,

Section 211.9(d). These cases will need to be individually reviewed by

USAID and by the U.S. Department of Agriculture's (USDA's) Office of

Debt Management, which should be contacted at the following: USDA

Office of Debt Management, Kansas City Management Office, P.O. Box

419205, Kansas City, MO 64141-6205, phone: (816) 926-6158.

(c) It is also advisable that before the close-out plan is

submitted, the CS notify the Mission and BHR/FFP if there are losses

due to the fault of others, pursuant to Reg. 11, Section 211.9(e), and

whether the CS has filed a claim, made demands for collection, and

pursued legal action. These cases will have to be individually reviewed

by USAID and by USDA.

VII. Audit

(a) A U.S.-based non-profit organization is required to submit its

OMB Circular A-133 Audits within 13 months after the close of its

fiscal year, which shall be accepted as fulfilling the close-out audit

requirements. Individual close-out audits (of specific country

projects) will only be requested when a specific need is identified by

USAID personnel, and coordinated with the Office of Procurement's

Contract Audit Management Branch (M/OP/PS/CAM). (Ref. ADS 591.5.8).

(b) For non-U.S.-based organizations, the contract/grant officer

shall determine whether a close-out audit shall be conducted based on a

review of the organization's audits covering all of the fiscal year

periods for the agreements to be closed out. A request for a specific

close-out audit shall be made by USAID personnel to the cognizant

Regional Inspector General's Office (Ref. ADS 591.5.8).

(c) Should an audit concern arise regarding receipt and

disbursement of Title II program and grant funds, such records shall be

retained for 3 years from the receipt by USAID of the audit report.

VIII. Personnel

To the extent that the CS must discharge and/or reassign staff as a

result of this program termination, the CS must comply with all

discharge, reassignment and severance laws of the host country. The

close-out plan should describe how this will be accomplished and the

associated costs.

IX. Close-Out Budget

The CS should provide a budget detailing all costs associated with

close-out (e.g. legal resolution of claims, payment of loans,

disposition of property, completion of audits and evaluations, and

termination of personnel). The plan should clearly identify whether

these expenditures were planned in the original program budget, or

whether additional resources will be needed to meet these expenses. If

the latter, the plan should describe how the CS plans to cover these

unanticipated expenses.

X. Other Relevant Information

If there is other information relevant to the close-out of this

Title II project which has not been requested in other parts of this

guidance, the CS should provide this information under item X.

[FR Doc. 96-26247 Filed 10-11-96; 8:45 am]

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