DoD Grant and Agreement Regulations

SUMMARY: The Department of Defense (DoD) is completing the

establishment of most of the DoD Grant and Agreement Regulations

(DoDGARs). The DoDGARs provide uniform policies and procedures for DoD

Components' award and administration of grants and cooperative

agreements.

DATES: These final rules are effective on April 13, 1998.

FOR FURTHER INFORMATION CONTACT: Mark Herbst; ODDR&E(R); 3080 Defense

Pentagon; Washington, DC 20301-3080.

SUPPLEMENTARY INFORMATION: The specific regulatory actions that are

being taken are to: (1) adopt four new parts of the DoDGARs (32 CFR

parts 21, 22, 32, and 34); (2) make minor amendments to update one of

the four existing parts of the DoDGARs (32 CFR part 28); and (3)

eliminate another of the existing parts (32 CFR part 23), by

incorporating its contents into one of the four new parts (32 CFR part

22).

The four new parts: address DoD Components' overall management of

grant and agreement functions; set forth DoD Components' and grants

officers' responsibilities related to the award and administration of

grants and agreements; implement administrative requirements in OMB

Circular A-110 for grants and agreements awarded to institutions of

higher education and other nonprofit organizations; and establish

administrative requirements for awards to for-profit organizations.

The minor amendments to the existing part provide DoD-specific

procedures related to Governmentwide restrictions on lobbying.

The part that is being removed, with its contents incorporated into

another part, is the rule implementing a law that prohibits the

Department of Defense from providing funds by grant to institutions of

higher education that have policies of denying, or that effectively

prevent, the Secretary of Defense from obtaining for military

recruiting purposes: entry to campuses; access to students on campuses;

or access to directory information pertaining to students.

A. Background

DoD published a notice in the Federal Register on August 26, 1996

(61 FR 43867) requesting comments on four new DoDGARs parts and updates

to two other parts. DoD received comments from: three universities; an

association of academic institutions; an industry association; an

attorneys' association; the Office of Management and Budget (OMB) and

one other non-DoD Federal agency; and several DoD Components. All

comments were considered in developing the final rule.

Some comments concerned a future DoDGARs part that was mentioned in

the Federal Register preamble to the proposed rules. That future part,

which is not included in this rulemaking, is being developed for a

class of research agreements with for-profit firms that is meant to

help integrate the defense and non-defense portions of the U.S.

technology and industrial bases. The future part therefore will provide

more flexible administrative requirements than those contained in part

34 of this rulemaking. Comments pertaining to that future part are

addressed herein only to the extent that they also relate to parts that

are included in this rulemaking.

The following sections present a summary of the major comments

grouped by subject, and the responses to the comments. Changes in the

rules are discussed in the responses to the comments. Other changes

were made to increase readability.

B. Comments and Responses

Comments on General Matters

Comment: The DoDGARs should be included as a supplement to the

rules for award and administration of procurement contracts, in the

Defense Federal Acquisition Regulation Supplement. That would give DoD

contracting officers a single source for rules on contracts, grants,

and cooperative agreements.

Response: No change. It would be inappropriate to merge regulations

for assistance instruments with the regulations for contracts, which

are used for the very different purpose of acquisition.

Comment: The DoDGARs should include a structured format for grants

and cooperative agreements, which could be similar to the uniform

contract format that is currently in 48 CFR part 15, in the Federal

Acquisition Regulations. The format could be an outline of major

topical headings and specific clauses and provisions that are either

mandatory or optional.

Response: No change. There are efforts currently among DoD

activities, some in coordination with other Federal agencies, to

maintain uniform formats for assistance instruments that are used for

similar purposes (e.g., research). Codifying a single standard format

in the DoDGARs at this time likely would hinder these efforts and also

could impede ongoing initiatives to streamline agency business

practices and eliminate unnecessary burdens on recipients.

Comments on Instrument Types, Authorities, and Applicability

Comment: The definition of the term ``contract'' in Sec. 21.130

should be expanded to include cooperative agreements, which also are

contracts. In some cases, even a grant is a contract.

Response: No change. Federal cooperative agreements and grants

often are viewed as ``contractual instruments'' because they are

binding agreements between two parties. However, under the Federal

Grant and Cooperative Agreement Act (31 U.S.C., Chapter 63), Federal

grants and cooperative agreements are assistance instruments that are

quite distinct from Federal procurement contracts, and the term

``contract'' is used widely to mean procurement contracts in Federal

statutes and rules for procurement instruments. If the DoD Grant and

Agreement Regulations were to define the term ``contract''

inconsistently with the predominant Federal usage, it would create

confusion for DoD Components, other Federal agencies, and Government

contractors.

Comment: The term ``assistance'' should be defined in Sec. 21.130

to exclude ``other transactions.'' ``Other transactions'' can be

written to be in the nature of assistance, but such legal instruments

should not be considered to be ``assistance'' for purposes of

applicable laws and regulations and should not be covered by the

DoDGARs.

Response: No change. ``Other transactions,'' as authorized by 10

U.S.C. 2371, are any transactions other than contracts, grants, and

cooperative agreements. DoD recognizes that there could be different

types of ``other transactions,'' including some for providing

assistance. Therefore, the rule can not state categorically that no

``other transactions'' are subject to the laws and regulations that

apply when a Federal agency provides assistance.

Comment: Paragraph (b) of Sec. 21.110 states that the DoDGARs in

certain situations may include rules that apply to other nonprocurement

instruments, in addition to grants and cooperative agreements. It

should expressly state

[[Page 12153]]

that the DoDGARs do not apply to ``other transactions.''

Response: No change. Depending on the type of instrument it is, a

particular ``other transaction'' may be subject to some DoDGARs rules--

such as the rule at 32 CFR part 25 on nonprocurement debarment and

suspension--that apply to more types of instruments than just

cooperative agreements and grants.

Comment: The title of subpart C, part 21, currently is ``Grants

Information,'' but it should be changed to recognize the applicability

of the subpart to cooperative agreements and other nonprocurement

instruments, as well as grants.

Response: Agree. Changed the title to ``Information Reporting on

Grants, Cooperative Agreements, and Other Nonprocurement Instruments.''

Comment: The use of the term ``transaction'' in Sec. 22.220,

``Exemptions,'' a section that otherwise addresses only grants and

cooperative agreements, may lead to confusion with the term ``other

transaction.''

Response: Revised the first sentence of Sec. 22.220 to make it

clear that the use of the term ``transaction'' in this case directly

follows from the section of the Federal Grant and Cooperative Agreement

Act (31 U.S.C. 6307) that authorizes the Director of the Office of

Management and Budget to exempt an agency transaction.

Comment: The wording of paragraph (b) of Sec. 21.205, on the need

for specific statutory authority to use a grant or cooperative

agreement, may cause confusion. It may cause a grants officer to

believe that an authorizing statute must specifically state that a

grant or cooperative agreement may be used. What is required is that

the intent of the authorizing statute must support the use of an

assistance instrument.

Response: Agree. Revised the paragraph to say that the intent of

the authorizing statute must support the use of an assistance

instrument.

Comment: The last sentence in paragraph (b)(2) of Sec. 21.205

should provide a more general statement about authorizing statutes that

do not require delegation by the Secretary of Defense, consistent with

the paragraph's heading, ``Authorities that rise indirectly as a result

of statute.'' The last sentence merely provides one example.

Response: Added a general statement to the paragraph.

Comment: Paragraph (a)(2) of Sec. 22.205 should be revised to

reflect the intent of 10 U.S.C. 2358, which allows the use of

cooperative agreements for some development projects.

Response: No change. Paragraph (a)(2) of Sec. 22.205 does permit

the use of a cooperative agreement for a development project, in

accordance with the Federal Grant and Cooperative Agreement Act (31

U.S.C., Chapter 63), if the principal purpose of that development

project is assistance. The paragraph correctly notes that the principal

purpose of almost all DoD development projects is acquisition, and that

it therefore is not appropriate to use assistance instruments for

carrying out those projects.

Comment: The last sentence of paragraph (a)(2) of Sec. 22.205

should be revised to recognize that there is statutory authority to use

``other transactions,'' as well as contracts, to carry out prototype

projects relevant to weapons or weapons systems.

Response: Agree. Revised the sentence to recognize the use of

acquisition transactions other than contracts.

Comment: Paragraph (b) of Sec. 22.210 broadens the applicability of

10 U.S.C. 2358. It requires that any research project carried out

through a grant or cooperative agreement must be relevant to defense

missions or interests, even if the grant or cooperative agreement is

awarded under a statutory authority other than 10 U.S.C. 2358. The

paragraph should be modified, to limit this requirement to grants and

cooperative agreements used to carry out research projects under the

authority of 10 U.S.C. 2358.

Response: The requirement for defense relevance in 10 U.S.C. 2358

applies to research projects carried out under other authorities.

Specifically, under paragraph (c) of 10 U.S.C. 2358, any research

project carried out with funds appropriated to a DoD Component must

comply with that requirement. Revised paragraph (b) of Sec. 22.210 to

clarify the broader applicability of the statute.

Comment: The DoD should clarify the relationship of part 32, which

implements OMB Circular A-110, to parts 21 and 22. Doing so will let

university and nonprofit recipients know the extent to which they must

be familiar with those parts.

Response: Agree. Added a new paragraph (b) to Sec. 32.1 to clarify

that parts 21 and 22 provide guidance to DoD Components and grants

officers and do not directly impose any requirements on recipients.

Because that guidance indirectly affects recipients, the information in

those parts concerning internal policies and procedures should be

helpful to recipients of DoD awards.

Comment: Part 34 imposes administrative requirements for awards to

commercial organizations that are burdensome, costly, and different

from normal commercial practice. Commercial firms that cannot meet the

requirements of part 34 should be made subject to the future DoDGARs

part on agreements with more flexible administrative requirements.

Response: Replaced the term ``commercial organization'' throughout

the rule with ``for-profit organization.'' A number of comments

revealed that the rule's use of the term ``commercial organizations''

to include all for-profit organizations confused the many people who

use the term ``commercial firms'' to mean the subset of for-profit

firms that have not traditionally performed under cost-type contracts

or assistance instruments from the Federal Government.

The future DoDGARs part, as described earlier in this preamble,

concerns a class of agreements for use in carrying out research

programs to help integrate the defense and non-defense portions of the

U.S. technology and industrial bases. A prime consideration in

preparing that part is removing obstructions to participation in

defense research by commercial firms that have not traditionally been

Government contractors, where consistent with proper stewardship of

Federal funds. That distinguishes the future DoDGARs part from part 34,

which is intended to apply to the more general case of awards for any

type of program performed by a for-profit firm.

Comments on Payments and Interest

Comment: Paragraph (b)(2) of Sec. 22.810, paragraph (e)(1) of

Sec. 32.22, and paragraph (e) of Sec. 34.12 address the

responsibilities of DoD disbursing officers, as well as grants

officers. The DoD Financial Management Regulation (the FMR, which is

DoD 7000.14-R) addresses DoD disbursing officers' responsibilities.

Therefore, these paragraphs of the DoDGARs should be revised to refer

to the pertinent portions of the FMR, rather than create a duplicative

set of rules.

Response: Agree. Reorganized and revised section 22.810 to specify

requirements only in areas that are grants officers' responsibilities

and refer to DoD 7000.14-R for requirements that are disbursing

officers' responsibilities. Similarly, revised paragraph (e)(1) of

Sec. 32.22 and paragraph (e) of Sec. 34.12 to refer to Sec. 22.810, and

thereby to DoD 7000.14-R.

Comment: Sections 32.21(b)(5) and 32.22(l) should be revised to

include references to the Cash Management Improvement Act (CMIA) that

are contained in the corresponding paragraphs of OMB Circular A-110.

[[Page 12154]]

Response: Agree in part. The final rule restores the Circular A-110

language in Sec. 32.21(b)(5), because some provisions of the CMIA may

apply in rare instances to universities or nonprofit organizations. The

reference to the CMIA in Sec. 32.22(l), however, is not restored; the

Circular should be amended to delete that reference, to conform to

updated Department of the Treasury regulations implementing the CMIA.

Comment: Paragraph (l) of Sec. 32.22 should be revised to provide

details about the data and format requirements for electronically

remitting interest earned on advance payments, to facilitate direct

deposit in the Department of the Treasury account for the Division of

Payment Management of the Department of Health and Human Services'

(DHHS/DPM).

Response: Revised this section to advise recipients that current

information on the format for electronic submissions of interest

payments should be obtained from the administrative grants officer.

This will help to ensure that recipients have up-to-date information.

If the information were codified in the DoDGARs, recipients would

experience delays due to the regulatory process each time that changes

were made in formats or data elements for electronic remittances.

Note: University and nonprofit recipients that are subject to

the DoDGARs part 32 are advised of the following details about the

current format for electronic submissions, to help ensure direct

deposit of electronic remittances to the account of the DHHS/DPM:

the preferred funds transfer format is CCD+; the American Banking

Association routing number 05103670 should appear in the third

field; the check digit in the fourth field is a six (6); and the

account number for the DHHS/DPM, which is 303000, should appear in

the fifth field.

Comment: The rules need to be revised to implement requirements in

the Debt Collection Improvement Act of 1996 (Title 31, Pub. L. 104-134)

to: obtain each recipient's Taxpayer Identification Number (TIN);

include the TIN with each payment authorization forwarded to the

disbursing office; and pay recipients by electronic funds transfer

(EFT).

Response: Paragraph (d) of Sec. 22.420, which contains the

requirement to obtain each recipient's TIN, is revised to conform to

the new law and refer to it. Revisions to Sec. 22.810 implement the

requirements for forwarding TINs with payment authorizations and for

payment by EFT. Section 22.605 and Appendix C to part 22 also are

revised, to ensure that award documents alert recipients and disbursing

officers to the requirement for payment by EFT.

Comment: Section 34.12, ``Payment,'' states that reimbursement is

the preferred method of payment and makes no provision for payments of

fixed amounts for accomplishment of technical milestones. Perhaps the

technical-milestone method of payment is intended to be covered in the

new DoDGARs part, still in draft, on flexible research agreements. Many

commercial companies are unable or unwilling to contract with DoD when

payments will be made on a cost reimbursement basis.

Response: No change. The milestone payment method is associated

with the new type of research agreement that will be covered by a

future DoDGARs part.

Comment: Under Sec. 34.12, for-profit recipients must remit any

interest earned to the DoD Component that made the award. It would be

better to have the recipient remit the interest to the Defense

Contracting Management Command (DCMC) office that has the

responsibility for administering the agreement, by delegation from the

DoD Component that awarded the agreement.

Response: Revised Sec. 34.12 to provide for remittance of interest

to the administrative grants officer that is responsible for post-award

administration of the agreement.

Comments on Debt Collection

Comment: Paragraph (c)(2)(iv) of section 22.820 does not state how

the interest rate will be determined, when a recipient owes the

Government interest on a debt. The paragraph should provide for simple

interest at the rate fixed by the Secretary of the Treasury under Pub.

L. 92-41.

Response: Added a reference in this section to the DoD Financial

Management Regulations (FMR) for rules covering interest costs. The FMR

explains how the interest rate is determined.

Comment: Section 22.820, ``Debt Collection,'' says that the

recipient still may elect to appeal after the grants officer turns over

a debt to the Defense Finance and Accounting Service (DFAS) for

collection. Once a debt is turned over to DFAS, the debt collection

rules in the Financial Management Regulation will apply, and DFAS may

not decide to defer the debt to allow an appeal.

Response: Revised this section to clarify that further action to

collect the debt is deferred, to allow time for an appeal, only when

the recipient notifies the grants officer within the 30-day prescribed

time period of its intent to appeal. If the recipient does not so

notify the grants officer within that period, the debt is transferred

to DFAS for collection.

Comments on Claims, Disputes, and Appeals

Comment: Section 22.815, ``Claims, disputes, and appeals,'' says

that a recipient's appeal of a grants officer's final decision is to be

based solely on the basis of the written record, unless the Grant

Appeal Authority decides to conduct fact-finding procedures or an oral

hearing on the appeal. It would be desirable to give the recipient the

right to a hearing before the Grant Appeal Authority, if requested.

Response: No change. The rules permit the Grant Appeal Authority to

conduct an oral hearing, and a reasonable request from a recipient

would be a basis for doing so. However, creating the right to a hearing

is a step toward instituting a more formal appeals process, and there

is no current problem that justifies the increased Government

administration, with attendant burdens and costs, that is associated

with a more formal process. Instituting a more formal process also runs

counter to the direction taken in the rule, to strongly encourage

Alternative Dispute Resolution and other less cumbersome means of

resolving disputes.

Comment: Under Sec. 22.820, ``Debt collection,'' a debt owed by a

recipient, based on a DoD Component's claim, bears interest and may

include penalties and other administrative costs. Recommend adding a

provision that recipient claims also bear interest.

Response: No change. A Federal agency may pay interest on claims

only when it has statutory authority to do so.

Comment: Paragraph (d)(2) of Sec. 22.815, ``Claims, disputes, and

appeals,'' states that a grants officer's decision is final, but then

goes on to say that it can be appealed. A decision that can be appealed

isn't final.

Response: Revised the paragraph to clarify that the decision is

final, unless the recipient decides to appeal.

Comments on Cost Sharing, Budget Revisions, and Other Cost-Related

Matters

Comment: Paragraph (b) of section 32.23, ``Cost sharing and

matching,'' requires the grants officer's prior approval for a

university's or nonprofit organization's use of unrecovered indirect

costs as cost sharing or matching. Recipients should be authorized, as

a matter of DoD policy, to so use unrecovered indirect costs.

Response: Revised this paragraph to remove the prior approval

requirement.

[[Page 12155]]

Comment: Paragraph (c)(2) of Sec. 32.23, ``Cost sharing and

matching,'' specifies ``current fair market value'' as one metric for

valuing buildings or land donated by a recipient as cost sharing or

matching. The paragraph should include a statement that the DoD

Component may use any reasonable basis for determining the fair market

value.

Response: Revised the paragraph to add the suggested statement.

Comment: Paragraph (d)(1) of Sec. 32.25, ``Revision of budget and

program plans,'' gives DoD Components the option to waive certain cost-

related and administrative prior approvals required by OMB Circulars A-

110, A-21, and A-122. It would be preferable for these waivers to be

made the standard practice, rather than optional.

Response: No change. DoD awards grants and agreements to university

and nonprofit recipients for various types of programs. Some recipients

and programs need more oversight than others. DoD Components therefore

need the flexibility provided by the OMB circulars to judge on a case-

by-case basis whether they can waive these prior approvals.

Furthermore, some of the prior approvals in the cost principles (OMB

Circulars A-21 and A-122) relate to system-wide methods for handling

indirect costs that should not be waived without first consulting with

the cognizant agency responsible for negotiating the recipient's

indirect cost rate.

Comment: Paragraph (d) of Sec. 32.25, ``Revision of budget and

program plans,'' does not include the language from the corresponding

section of OMB Circular A-110 that permits a university or nonprofit

recipient to initiate a one-time extension of the expiration date of an

award, without the Federal agency's prior approval, if the extension

requires no additional Federal funds (i.e., it is a ``no-cost

extension''). Recommend that DoD include language authorizing

recipients to initiate no-cost extensions, with the requirement that

the recipients notify DoD of the actions. Regardless of the final

resolution of the matter, Sec. 32.25 should clearly state whether DoD

requires prior approvals for no-cost extensions, rather than remaining

silent and leaving university and nonprofit recipients in doubt about

the policy.

Response: Revised the section to state that DoD Components may

waive the prior approval requirement on a case-by-case basis, when the

Components judge that doing so would not cause them to fail to comply

with DoD incremental programming and budgeting policies. Those policies

specify the period during which a given fiscal year's appropriations

are to be used (e.g., that one fiscal year's research funds usually are

to support effort only through the first three months of the next

fiscal year).

Comment: It is unnecessary to give DoD Components the option to

require university or nonprofit recipients to obtain the agency's prior

approval for rebudgeting between direct cost categories on awards in

excess of $100,000, as provided in paragraph (e) of Sec. 32.25,

``Revision of budget and program plans.'' Paragraph (e) even appears to

contradict paragraphs (c) (1) through (5) of Sec. 32.25, which specify

prior approval requirements for other budget revisions related to

nonconstruction awards.

Response: DoD Components need the flexibility provided by OMB

Circular A-110 to require prior approvals for such budget changes,

because some types of programs for which DoD Components use grants and

agreements require more oversight than others. Nonetheless, this prior

approval requirement generally is not appropriate for grants to support

research, the likely object of the comment. Paragraph (e) of Sec. 32.25

is revised to include a statement to that effect. While there are no

apparent contradictions between paragraphs (c) and (e) of Sec. 32.25,

also revised paragraph (c) to refer to paragraph (e), to help prevent

confusion about prior approval requirements for rebudgeting actions

related to nonconstruction awards.

Comment: The DoD should restore to paragraph (c) of Sec. 32.25 the

requirement in the corresponding paragraph of OMB Circular A-110 for

recipients to obtain prior approval before revising the budget in a way

that transfers amounts budgeted for indirect costs to absorb increases

in direct costs, or vice versa, if the awarding office wishes to

approve such transfers.

Response: Agree in part. The language is restored in that paragraph

of the final rule, but with a caveat that requiring prior approval for

such budget revisions should be required only in exceptional

circumstances. That change addresses the rare cases in which an

assistance program may require more Government oversight.

Comment: Section 34.13, ``Cost sharing or matching,'' should be

revised to address for-profit recipients' use of Independent Research

and Development (IR&D) costs to meet cost sharing or matching

requirements. The section should conform with Federal Acquisition

Regulation (FAR) coverage for procurement contracts, at 48 CFR 31.205-

18(e), which says that contributions of IR&D costs under certain types

of cooperative arrangements may be treated as allowable indirect costs,

if the work performed would have been allowed as IR&D had there been no

cooperative arrangement.

Response: Revised this section to provide coverage for assistance

instruments that conforms with the FAR coverage for procurement

contracts.

Comment: Section 34.16, ``Audits,'' should state that a for-profit

recipient's audit costs are allowable as direct charges to the

agreement. Also, the section should state whether audit costs are

subject to cost sharing requirements.

Response: Added language to clarify that audit costs are allowable

as direct or indirect costs, as appropriate. Cost sharing requirements

apply to total project costs, of which audit costs are an element;

there is no need to include language in the rule to specifically

address the applicability of cost sharing requirements to audit costs

or the many other specific types of direct or indirect cost that

comprise the total project costs.

Comment: Section 34.11, ``Standards for financial management

systems,'' seems to not require for-profit recipients to do employee

time reporting more frequently than monthly and permits reports to

coincide with one or more pay periods. Many firms keep daily records

for their DoD contract business--is the difference intended?

Response: The intent of the standards is to have records that

accurately reflect the distribution of the actual activity of each

employee that has salary or wages charged to DoD awards, and to keep

paperwork burdens to the minimum that is necessary for that purpose.

The rule provides flexibility for the recipient because the reporting

frequency needed to ensure accurate records may vary, depending upon

the circumstances. For example, if an employee works on just one

project, there probably is no need to record time spent on various

tasks more frequently than monthly. However, if an employee works on

many projects, it is likely that more frequent recording of time spent

on specific tasks is necessary.

Comment: Section 34.17, ``Allowable costs,'' provides that for-

profit recipients of prime awards, as well as for-profit subrecipients

under prime awards, determine the allowability of costs in accordance

with the Federal Acquisition Regulation (FAR). Section 32.27 similarly

requires university and nonprofit recipients to flow down the FAR cost

principles to for-profit subrecipients under their prime awards. Most

commercial firms are unable to comply with these requirements--

[[Page 12156]]

Generally Accepted Accounting Principles (GAAP) should be applied,

instead.

Response: DoD recognizes that alternatives to the FAR cost

principles may be appropriate for use with certain types of research

investment agreements that involve for-profit firms, due to cost

matching and other characteristics of the agreements--such agreements

will be covered by a future part of the DoDGARs. One change is made at

this time in Sec. 32.27 of the final rule. The provisions of part 34

will be revised, as needed, when that future part is adopted. At this

time, those provisions are appropriate because part 34 applies to any

type of program, not just research, that is performed by for-profit

firms, not just commercial firms that have not traditionally done

business with the Government.

Comment: Requirements for the allowability of costs for for-profit

firms appear in paragraph (f) of Sec. 32.27 in part 32, but part 32

applies to awards to universities and other nonprofit organizations,

rather than to awards to for-profit firms. This is confusing.

Response: For-profit firms are mentioned in part 32 because they

may be subawardees under prime awards to universities and nonprofit

organizations, and the prime awardees need to know which requirements

apply to those subawards.

Comment: The definition of ``third-party in-kind contributions'' in

Sec. 34.2, ``Definitions,'' is confusing to commercial firms. The rule

should clarify how third parties would contribute to the project and

what their rights and responsibilities are.

Response: No change. The definition relates to Sec. 34.13, ``Cost

sharing or matching,'' which specifies how one values third-party

contributions, which include services of others' employees, volunteer

services, and property donated by third parties. The definition and

rules in part 34 on valuing third-party in-kind contributions parallel

the Governmentwide guidance in OMB Circular A-110, as implemented in

part 32 of the DoDGARs, for university and nonprofit recipients. While

third-party contributions are not expected to be encountered as often

by for-profit recipients as they are by university and nonprofit

recipients, they can occur and it therefore is useful to include rules

on how to value the contributions. It would be inappropriate for DoD

rules to specify rights or responsibilities of third parties making

such contributions--those properly would be worked out by the

recipients and third parties.

Comments on Program Income and Revisions of Program Plans

Comment: The definition of ``program income'' in section 34.2 is

too broad because it includes gross income that is ``earned as a result

of the award,'' and not just income earned by a for-profit recipient

that is ``directly generated by a supported activity.'' This is

especially problematic when coupled with the requirement in paragraph

(b)(2) of Sec. 34.14 for the grants officer to consider whether the

recipient has any obligation for program income generated after the

project period is over. The purpose of many agreements is to stimulate

development of technology that will generate income into the U.S.

economy long after the project's end, thereby benefiting the

Government.

Response: No change. This section applies mainly to program income

earned during the project period. Any Federal interest in program

income earned after that period must be provided for in the award,

based on an understanding between the recipient and the Government at

the time the award is negotiated. These rules apply to various

programs, not just research; even for research, one can not rule out in

all cases the appropriateness of a recipient's obligation to the

Government with respect to program income that is generated after the

project period. In cases where it is appropriate, the grants officer

must have the same flexibility as a firm's representatives to negotiate

agreement terms that are fair and equitable to both the firm and the

Government.

Comment: The requirement in paragraph (c) of Sec. 34.15 to

immediately request and gain prior approval when making decisions

regarding key personnel exceeds the provisions of most procurement

contracts. The recipient should only have a requirement to promptly

notify the Government when a change in key personnel is made.

Response: No change. The prior approval requirement applies only to

key personnel specified in the application or award document. Usually,

the experience and qualifications of such key personnel are prime

considerations in making an assistance award, and the Government should

be consulted before the recipient makes changes in those personnel.

This is a standard requirement in Federal agency rules governing

assistance awards, providing one illustration of the ways in which

assistance relationships differ from acquisition relationships that are

consummated through procurement contracts.

Comments on Property

Comment: It is not clear why some of the terms related to property

in part 32, which implements OMB Circular A-110, are used or defined

differently than in the Circular.

Response: Part 32 of the proposed rule included some nonsubstantive

technical improvements to the language of the Circular. For example,

the proposed rule replaced the term ``supplies and other expendable

property'' with the term ``supplies'' in two places (in Sec. 32.35 and

in the definition in Sec. 32.2 of ``third party in-kind

contributions'') because the term ``supplies'' includes all expendable

property. Similarly, the proposed rule deleted the term ``expendable

equipment'' in Sec. 32.23(f) because the term is self-contradictory

(given that ``equipment,'' as defined, is nonexpendable property).

Comment: Paragraph (b) of Sec. 32.35, ``Supplies,'' states that

university and nonprofit recipients 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. Suggest adding another provision to address

recipients providing commercially acquired services.

Response: No change. DoD is not aware of any instance in which a

university or nonprofit recipient has provided to outside organizations

commercially acquired services that were obtained under a Federal

award. If a problem arises in this area, it should be addressed through

a revision to the Governmentwide guidance in OMB Circular A-110, so

that it will be implemented by all Federal agencies.

Comment: Paragraph (b) of Sec. 34.21 provides that for-profit

recipients receive only a conditional title to equipment purchased in

whole or in part with Federal funds. Among the conditions, which are

specified in Secs. 34.21 and 34.23, are that the recipient: Keep track

of real property or equipment for a project; make the property

available for use on other projects on a non-interfering basis and in a

certain order of priority; assess charges for the property's use to

Federal contracts or projects not supported by any Federal agency,

treating those use charges as program income; and handle the

disposition of the property at project's end, compensating the

Government for its share of the current fair market value. These are

burdensome requirements; the provisions of Sec. 34.23, for example,

will require commercial firms to establish costly property management

systems. Recommend

[[Page 12157]]

instead that recipients be given unconditional title to any equipment

purchased in part with recipient funds and in part with Federal funds.

Response: No change. A Federal agency needs specific authority to

vest title to equipment unconditionally. Therefore, the section

correctly states that the title shall be a conditional title unless a

statute specifically authorizes a DoD Component to vest title in the

recipient without further obligation to the Government, and the DoD

Component elects to do so. The conditions of the title are reasonable,

because they apply specifically to property in which the Federal

Government has a continuing financial interest. The provisions of

Sec. 34.23, for example, which are based on OMB Circular A-110's

Governmentwide guidance for assistance awards, maintain accountability

for Federally owned property and for equipment that is acquired with

Federal funds under an award.

Comment: Under paragraph (c) of Sec. 34.21, a for-profit recipient

may offer real property or equipment that is purchased with recipient

funds or donated by a third party to meet a portion of any required

cost share or match. However, the Government then has a financial

interest in the property, a share of the value attributable to the

Federal participation in the project. The property then is subject to

provisions of the rule concerning the property's encumbrance, disposal,

tracking, and use for projects other than the one for which it is being

used to meet cost sharing requirements. This policy is inequitable,

unnecessary, and will discourage commercial firms from entering into

cooperative arrangements with the Department of Defense. We are not

aware of any Federal agency taking this position for real property or

equipment purchased by recipients or donated by third parties.

Response: Revised the section to clarify that these provisions

apply to property acquired with recipient funds or donated by a third

party only when the full value of the property is accepted as the value

of the contribution toward cost sharing or matching. With that

clarification, the provisions of this section are based on

Governmentwide policies established by OMB Circulars A-110 and A-102

for assistance awards to universities and nonprofit organizations and

certain awards to State and local governments--Circular A-110 also

states that its provisions may be used for awards to for-profit

organizations, and DoD understands that other Federal agencies do so.

It is important to note that accepting the full value of property

as the value to be counted for purposes of cost sharing or matching is

the exception rather than the rule. Usually, one only would count the

depreciation of the property during the project period or the cost of

using the property, either of which normally is a fraction of the full

value. There is no issue with title in those cases, because the

recipient owns unconditionally any property purchased with its own

funds or donated to it by a third party.

In the exceptional cases where the full value is used for cost

sharing or matching purposes, the recipient is effectively donating the

property to a project that it and the Government are jointly

supporting. It would defeat the purpose of cost sharing in such cases

if the recipient kept the asset, free and clear, after contributing the

asset's full value toward its share of the support for the project. The

provisions of the rule to which the property is subject in those

exceptional cases (e.g., that the recipient keep track of the property

and not encumber it without the grants officer's approval) are

reasonable.

Comment: Upon completion of a project, if there is an inventory of

leftover unused supplies that are not needed for other Federal projects

and the inventory's value exceeds $5,000, Sec. 34.24 states that a for-

profit recipient is to reimburse the Federal Government for its share

of the value. This means that supplies will be subject to controls that

are very costly and administratively burdensome, such as the

requirements in Sec. 34.23 for the recipient's property management

system.

Response: No change. Normally, recipients should be buying supplies

as needed for the project and expensing them when used. Therefore,

large inventories of unused supplies should not be left over at the end

of the project. If the value of unused supplies equals that of an item

of equipment, it should reimburse the Government for its share of the

cost of those supplies. With respect to the applicability of the

specific requirements in Sec. 34.23 for the recipient's property

management system, that section applies to equipment acquired under the

award, but not supplies; the rule only states the requirement

concerning large inventories of unused supplies charged to the project,

and the recipient determines what system it will use to comply with the

requirement.

Comment: Section 34.25 states that the Government has the right,

unless it is waived by the DoD Component, to obtain, reproduce, publish

or otherwise use the data first produced under an award. This section

should be revised to state that the data may be used only for Federal

Government purposes.

Response: Revised this section to clarify that the data may be used

only for Federal Government purposes.

Comment: The intellectual property rights accorded the Government

under assistance awards to for-profit firms, in Sec. 34.25, are a

disincentive to industry to participate in cooperative agreements. The

regulations should not set a rigid minimum set of rights which the

Government must obtain in every case. Instead, the regulation should

state that the grants officer may negotiate an allocation of rights

that is fair and equitable depending upon the circumstances of the

particular agreement.

Response: No change other than the clarification on data rights

described in the response to the preceding comment. For patents, the

rule provides the grants officer with all of the flexibility in current

statute and executive order applicable to grants and cooperative

agreements. For copyrights, data, and software, the rule's provisions

are appropriate for intellectual property generated with Federal

support under most assistance awards, and grants officers can handle

the exceptional cases through the usual deviation procedure. One class

of instruments that DoD plans to handle differently is the class of

research investment agreements, with cost matching and other

distinguishing features, that will be the subject of a future DoDGARs

part.

Comment: Section 34.25 states that awards are to include the patent

clause specified by Department of Commerce (DoC) regulations at 37 CFR

401.14. The section should be modified to allow for-profit firms to

obtain rights in subject inventions of subawardees that are small

businesses or nonprofit organizations. Otherwise, the patent clause in

the DoC regulations will preclude a firm from doing so, even if the

for-profit awardee has paid in part for the subawardees' effort as part

of its cost share.

Response: No change. The comment relates primarily to the new class

of research investment agreements that will be the subject of a future

DoDGARs part. For cooperative agreements covered by part 34, grants

officers already can handle any individual cases where alternative

provisions are justified, by making determinations of exceptional

circumstances under 37 CFR 401.3(a)(2) in the DoC regulations.

Comment: Section 34.25 should be revised to provide an

``authorization and consent'' clause to be included in cooperative

agreements with for-profit

[[Page 12158]]

recipients. The clause would say that the Government authorizes and

consents to all use and manufacture by the recipient, in the

performance of the cooperative agreement or any subaward, of any

invention described in and covered by a United States patent.

Response: No change. It would not be appropriate to include a

clause in cooperative agreements authorizing a recipient's or

subrecipient's infringement of U.S. patents held by other parties.

Comments on Procurement

Comment: Section 34.31, which specifies requirements for

procurements made by for-profit recipients of DoD assistance awards,

contains requirements that often differ significantly from standard

commercial practices. For example, the section provides that preaward

documents may be subject to preaward review by the grants officer.

Also, this section requires certain Government flowdown and audit

provisions. The requirements will require commercial firms to draft

Government terms and conditions for subcontracts, and to establish

Government-unique purchasing requirements. Recommend these requirements

be eliminated.

Response: In response to the general comment, the few requirements

in this section were carefully selected from the much larger set of

requirements specified by OMB Circular A-110 for university and other

nonprofit recipients of Federal assistance. They are judged to be the

minimal set of requirements that are needed to ensure proper

stewardship of Federal assistance.

In response to the first specific comment on preaward review of a

recipient's procurement documents, the word ``exceptional'' was added

to the sentence that advises the grants officer that preaward review is

the exception rather than the rule. The sentence now states that

recipients will only be required to provide such documents for the

grants officer's pre-award review in exceptional cases where the grants

officer judges that there is a compelling need to do so. For those

projects where there is substantial involvement by the Government and a

procurement is central to the success of the project (e.g., the

purchase of a large computer to be used jointly by a recipient and

Government researchers), DoD believes that the Government's right to a

preaward review of the procurement documents can be essential.

With respect to the second specific comment on flowdown of

Government-unique requirements to contracts under assistance awards,

many of the requirements are required by law, regulation, or executive

order--DoD therefore cannot waive them and they must be included when

they are applicable, as the rule states. The few other requirements are

those carefully selected as the minimal set for proper stewardship for

most financial assistance, such as the standard access to records by

DoD, the Comptroller General, and their duly authorized

representatives. As it prepares the future DoDGARs part for a specific

class of research investment agreements, DoD will consider which

requirements might be waived in light of the substantial cost sharing

and other special features of that class of instruments.

Comment: The Office of Management and Budget expressed concern that

Sec. 32.44 included a $10 million threshold, below which a recipient

would not have to maintain its procurement procedures in writing. The

concern is that the threshold would create substantive differences

between requirements of the DoD and those in other Federal agencies'

implementation of OMB Circular A-110.

Response: The provision was revised, as requested. The Office of

Management and Budget has agreed to explore the possibility of amending

OMB Circular A-110 to establish for all Federal agencies' awards a

dollar threshold below which recipients would be relieved of the

requirement to maintain procurement procedures in writing.

Comment: The definition of ``contract'' in Sec. 21.130 refers to it

as an instrument reflecting a certain type of relationship between the

Federal Government and a State, a local government, or other person.

Suggest adding the words ``or entity'' after the word ``person.''

Response: Replaced the word ``person'' with ``recipient,'' which is

the term used at 31 U.S.C. 6303 in the Federal Grant and Cooperative

Agreement Act, the defining statute that specifies when it is

appropriate for Federal agencies to use contracts. The term

``recipient'' covers persons and other entities.

Comment: Change the wording of the definition of ``contract'' in

Sec. 34.2 to clarify that there can be subcontracts under a grant or

cooperative agreement.

Response: Revised the wording to clarify that the term ``contract''

includes: Recipients' procurement contracts under DoD assistance

awards; subrecipients' procurement contracts under assistance

subawards; and procurement subcontracts under contracts awarded by

recipients or subrecipients.

Comments on Records Retention

Comment: The first and second sentences in paragraph (e) of

Sec. 34.42 provide that: (1) DoD Components, 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 certain records of for-profit recipients that are pertinent

to awards; and (2) this right includes timely and reasonable access to

a recipient's personnel for the purpose of interview and discussion

related to such documents. In the first sentence, recommend replacing

the words ``duly authorized representatives'' and the words

``unrestricted access'' with ``duly authorized Government

representatives'' and ``access during normal working hours,''

respectively. Recommend deleting the second sentence, which goes beyond

what is authorized in existing law.

Response: No change. The wording of this section mirrors that of

the Governmentwide guidance in OMB Circular A-110 for assistance awards

to nonprofit organizations, guidance issued after legal review by all

major Federal agencies and with the benefit of public review and

comment. It is not necessary to add the words ``during normal working

hours'' to clarify what is meant by ``reasonable access to a

recipient's personnel,'' because it rarely would be reasonable to

insist upon access at other times. Adding the word ``Government'' to

``duly authorized representatives'' could be contrary to the increased

reliance upon non-Federal auditors that accompanies the Governmentwide

emphasis on the single-audit concept, which is broadened to for-profit

recipients by the rule's Sec. 34.16. Finally, there is no intent to

have the word ``interview'' interpreted in an extreme way that would

appear to give the Government access that exceeds its statutory

authority.

Comment: In light of the increasing transfer of records from hard

copy to electronic media, recommend including language similar to that

in the Federal Acquisition Regulation at 48 CFR 4.703(d), which

implemented Pub. L. 103-335's requirements concerning such transfers

for procurement contracts.

Response: Added new paragraphs to both Sec. 32.53, for awards to

university and other nonprofit recipients, and Sec. 34.42, for awards

to for-profit firms.

[[Page 12159]]

Comments on Termination and Enforcement

Comment: Paragraph (a)(1) of Sec. 34.51 provides that the grants

officer may terminate awards to a for-profit firm if the recipient

``fails to comply with the terms and conditions of an award.'' It

should be amended to say ``fails to comply with the material terms and

conditions.''

Response: No change. The provision already says ``materially fails

to comply with the terms and conditions.''

Comment: Section 34.51 should be revised to provide the Government

the same flexibility it has with procurement contracts to unilaterally

terminate awards to for-profit firms for reasons other than non-

performance or non-compliance.

Response: No change. This is an example of a basic difference

between procurement and assistance relationships. Other than

terminations for cause, the Government should be able to terminate

assistance awards only by mutual agreement with the recipient, as the

rule provides.

Comment: It should be expressly specified in paragraph (a) of

Sec. 34.52 that a for-profit recipient is to be paid all of the

allowable costs that it incurred prior to termination if the award is

terminated for failure to comply with a material provision of the

award.

Response: Revised paragraph (a)(3) of Sec. 34.52 to state that, in

the case of termination, the recipient will be reimbursed for allowable

costs it incurred prior to termination, with the possible exception of

costs for activities or actions not in compliance.

Comments on National Policy Requirements

Comment: Appendix B to part 22 contains a requirement for the

grants officer to include an award clause implementing the ``officials

not to benefit'' statute. That statute (41 U.S.C. 22) was amended by

section 6004 of the Federal Acquisition Streamlining Act (FASA), to

eliminate the requirement to include a clause. This is an unnecessary

clause and should be deleted.

Response: No change. Due to FASA's amendment of 41 U.S.C. 22, the

statute itself no longer requires an ``officials not to benefit''

clause in Federal awards. However, recipients of Federal awards still

must comply with the ``officials not to benefit'' requirement in 41

U.S.C. 22, just as they must comply with all other applicable U.S.

statutes and Federal regulations. Compliance with those requirements is

inherently a condition of the award; while a general award clause could

require compliance with all applicable Federal statutes and

regulations, without identifying any of them, fairness dictates that

recipients be informed about specific requirements whenever possible.

For that reason, Appendix B to part 22 offers clauses that the grants

officer may use to communicate the requirements to recipients.

Comment: Appendix B to part 22 flows down to subrecipients a number

of requirements for which that flowdown apparently is not required by

law. They include nondiscrimination items a., b., d., and e., as well

as the Cargo Preference and Clean Air and Water Acts.

Response: No change. Each of these requirements does flow down to

subrecipients, as stated in the appendix, due to the implementation of

the statute in Federal regulation. By helping to clarify the

applicability to awards and subawards of the most common national

policy requirements, the appendix should be useful to both grants

officers and recipients.

Comment: Appendix B to part 22 states that the Architectural

Barriers Act applies to awards for the construction or alteration of

buildings or facilities which will require public accessibility. There

is no basis in law or regulation for limiting the applicability of the

Act to buildings that require public accessibility (employees, for

example, may be disabled and usually are not considered members of the

public). The only statutory exemption is for certain types of

facilities that are restricted to use only by able-bodied military

personnel.

Response: Corrected the statement in the appendix on the

applicability of the Act.

Comment: Section 22.510(a)(2)(ii) states that grants officers may

allow recipients to incorporate certifications into a provision that

cites them by reference, rather than providing the full text of the

certification with each proposal or award document. In accordance with

statute or codified regulations, certain certifications cannot be

incorporated by reference.

Response: No substantive change. For the three certifications

(debarment and suspension, drug-free workplace, and lobbying) that

currently are required, the Department has concluded that the pertinent

statutes, Executive order, and DoD regulations (32 CFR parts 25 and 28)

do not presently preclude incorporation of the certifications by

reference. For clarity, the final rule includes additional statements

that certifications may be incorporated by reference to the extent

consistent with statute and codified regulation.

Comment: Section 22.510 states that Appendix A to part 22 includes

``suggested'' language for incorporating certifications by reference.

However, this is not permitted because the certification language is

required, not suggested.

Response: The language in Appendix A incorporates by reference the

exact certification language that is required to comply with statute

and codified regulation. To alleviate the confusion, the term

``suggested'' is removed from Sec. 22.510 and Appendix A. Section

22.510 now states that Appendix A ``includes language that may be used

for incorporating certifications by reference.''

Comment: Section 22.510(a)(2)(ii)(C) states that grants officers

may obtain the certification concerning debarment and suspension at the

time of award, notwithstanding the regulatory requirement at 32 CFR

25.510(a) to obtain that certification at the time of proposal

submission. The Office of Management and Budget is concerned that

adoption of this provision would grant the DoD a deviation from the

Governmentwide common rule on debarment and suspension, creating a

nonuniformity with other Federal agencies.

Response: The provision is revised, as suggested.

C. Other Changes

Changes for Audit Requirements and Conditional Exemptions

On August 29, 1997 (62 FR 45934 ff.), subsequent to the DoD's

proposal of these rules for comment, the Office of Management and

Budget made two changes to OMB Circular A-110. The first change was to

delete references to OMB Circular A-128, ``Audits of State and Local

Governments,'' which recently was rescinded, and to refer instead to

the revised OMB Circular A-133, ``Audits of States, Local Governments,

and Non-Profit Organizations.'' Part 32 in these final rules, which is

the DoD's implementation of OMB Circular A-110, includes this change.

Conforming changes also were made in part 22 of these final rules.

The second change made by the Office of Management and Budget to

OMB Circular A-110 was to add a new section that addresses conditional

exemptions. The applicability of that new section to the DoD is under

review and will be addressed in a future rulemaking action.

[[Page 12160]]

Deferral of Final Action on Proposed Changes to 32 CFR Part 33

As requested by the Office of Management and Budget, the DoD agreed

to defer final action on the two proposed amendments to part 33,

``Uniform Administrative Requirements for Grants and Cooperative

Agreements to State and Local Governments,'' which is the DoD's

implementation of a Governmentwide rule. Those two proposed changes

were to implement: (1) The Resource Conservation and Recovery Act (42

U.S.C. 6962); and (2) changes made by the Federal Acquisition

Streamlining Act of 1994 to the Contract Work Hours and Safety

Standards Act (40 U.S.C. 327-330, as amended). The deferral enables the

Office of Management and Budget to coordinate these amendments with

other Federal agencies and request that the agencies amend the

Governmentwide rule.

Changes for Military Recruiting

As stated in the DoD's preamble when these rules were proposed, the

rule previously codified at 32 CFR part 23, ``Grants and Agreements--

Military Recruiting on Campus,'' is moved by this final rulemaking to

section 22.520 in part 22. A few, nonsubstantive technical corrections

are made to the language that previously appeared in part 23, to allow

its incorporation into part 22.

Executive Order 12866

Part 32 was determined to be a ``significant regulatory action,''

as defined by Executive Order 12866, by the Administrator of the Office

of Management and Budget's Office of Information and Regulatory

Affairs. The Department of Defense believes that none of the rules

will: (1) Have an annual effect on the economy of $100 million or more

or adversely affect in a material way the economy, a sector of the

economy, productivity, competition, jobs, the environment, public

health or safety, or State, local, or tribal governments or

communities; (2) create a serious inconsistency or otherwise interfere

with an action taken or planned by another agency; (3) materially alter

the budgetary impact of entitlements, grants, user fees, or loan

programs or the rights and obligations of recipients thereof; or (4)

raise novel legal or policy issues arising out of legal mandates, the

President's priorities, or the principles set forth in Executive Order

12866.

Unfunded Mandates Reform Act (Sec. 202, Pub. L. 104-4)

These regulatory actions do not contain a Federal mandate that may

result in the expenditure by State, local and tribal governments, in

aggregate, or by the private sector, of $100 million or more in any one

year.

Regulatory Flexibility Act of 1980 (5 U.S.C. 605(b))

These regulatory actions will not have a significant adverse impact

on a substantial number of small entities.

Paperwork Reduction Act of 1995 (44 U.S.C. 3500 et seq.)

These regulatory actions will not impose any new reporting or

recordkeeping requirements under the Paperwork Reduction Act. Reporting

and recordkeeping requirements in parts 32 and 34 are those promulgated

by the updated OMB Circular A-110, which the Office of Management and

Budget proposed in August 1992 (57 FR 39018), asking for public

comments, and finalized in November 1993 (58 FR 62992).

List of Subjects

32 CFR Part 21

Grant programs, Grants administration.

32 CFR Part 22

Accounting, Grant programs, Grants administration,

Intergovernmental relations, Reporting and recordkeeping requirements.

32 CFR Part 23

Colleges and universities, Grant programs, Grants administration,

Penalties.

32 CFR Part 28

Grant programs, Loan programs, Lobbying, Penalties, Reporting and

recordkeeping requirements.

32 CFR Part 32

Accounting, Colleges and universities, Grant programs, Grants

administration, Hospitals, Nonprofit organizations, Reporting and

recordkeeping requirements.

32 CFR Part 34

Accounting, Business and industry, Grant programs, Grants

administration, Reporting and recordkeeping requirements.

Accordingly, title 32 of the Code of Federal Regulations, chapter

I, subchapter B, is revised as follows.

1. The heading of subchapter B is revised to read as follows:

SUBCHAPTER B--DoD GRANT AND AGREEMENT REGULATIONS

2. Part 21 is added to read as follows:

PART 21--DoD GRANTS AND AGREEMENTS--GENERAL MATTERS

Subpart A--Defense Grant and Agreement Regulatory System

Sec.

21.100 Scope.

21.105 Authority, purpose, and issuance.

21.110 Applicability and relationship to acquisition regulations.

21.115 Compliance and implementation.

21.120 Publication and maintenance.

21.125 Deviations.

21.130 Definitions.

Subpart B--Authorities and Responsibilities

21.200 Purpose.

21.205 DoD Components' authorities.

21.210 Vesting and delegation of authority.

21.215 Contracting activities.

21.220 Grants officers.

Subpart C--Information Reporting on Grants, Cooperative Agreements, and

Other Nonprocurement Instruments

21.300 Purpose.

21.305 Defense Assistance Awards Data System.

21.310 Catalog of Federal Domestic Assistance.

21.315 Uniform grants and agreements numbering system.

Authority: 5 U.S.C. 301 and 10 U.S.C. 113.

Subpart A--Defense Grant and Agreement Regulatory System

Sec. 21.100 Scope.

The purposes of this part, which is one portion of the DoD Grant

and Agreement Regulations (DoDGARs), are to:

(a) Provide general information about the DoDGARs.

(b) Set forth general policies and procedures related to DoD

Components' overall management of functions related to grants and

cooperative agreements.

Sec. 21.105 Authority, purpose, and issuance.

(a) DoD Directive 3210.6\1\ established the Defense Grant and

Agreement Regulatory System (DGARS). The directive authorized

publication of policies and procedures comprising the DGARS in the DoD

Grant and Agreement Regulations (DoDGARs), in DoD instructions, and in

other DoD publications, as appropriate. Thus, the

[[Page 12161]]

DoDGARs are one element of the DGARS.

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\1\ Copies may be obtained, at cost, from the National Technical

Information Service, 5285 Port Royal Road, Springfield, VA 22161.

Authorized users may also obtain copies from the Defense Technical

Information Center, 8725 John J. Kingman Rd., Suite 0944, Fort

Belvoir, VA 22060-6218.

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(b) The purposes of the DoDGARs, in conjunction with other elements

of the DGARS, are to provide uniform policies and procedures for grants

and cooperative agreements awarded by DoD Components, in order to meet

DoD needs for:

(1) Efficient program execution, effective program oversight, and

proper stewardship of Federal funds.

(2) Compliance with relevant statutes; Executive orders; and

applicable guidance, such as Office of Management and Budget (OMB)

circulars.

(3) Collection from DoD Components, retention, and dissemination of

management and fiscal data related to grants and agreements.

(c) The Director of Defense Research and Engineering, or his or her

designee:

(1) Develops and implements DGARS policies and procedures.

(2) Issues and maintains the DoD Grant and Agreement Regulations

and other DoD publications that comprise the DGARS.

Sec. 21.110 Applicability and relationship to acquisition regulations.

(a) Applicability to grants and cooperative agreements. The DoD

Grant and Agreement Regulations (DoDGARs) apply to all DoD grants and

cooperative agreements.

(b) Applicability to other nonprocurement instruments. (1) In

accordance with DoD Directive 3210.6, the DoDGARs may include rules

that apply to other nonprocurement instruments, when specifically

required in order to implement a statute, Executive order, or

Governmentwide rule that applies to other nonprocurement instruments,

as well as to grants and cooperative agreements. For example, the rule

on nonprocurement debarment and suspension in 32 CFR part 25, subparts

A through E, applies to all nonprocurement transactions, including

grants, cooperative agreements, contracts of assistance, loans and loan

guarantees (see definition of ``primary covered transaction'' at 32 CFR

25.110(a)(1)(i)).

(2) The following is a list of DoDGARs rules that apply not only to

grants and cooperative agreements, but also to other types of

nonprocurement instruments:

(i) Requirements for reporting to the Defense Assistance Award Data

System, in subpart C of this part.

(ii) The rule on nonprocurement debarment and suspension in 32 CFR

part 25, subparts A through E.

(iii) Drug-free workplace requirements in 32 CFR part 25, subpart

F.

(iv) Restrictions on lobbying in 32 CFR part 28.

(v) Administrative requirements for grants, cooperative agreements,

and other financial assistance to:

(A) Universities and other nonprofit organizations, in 32 CFR part

32.

(B) State and local governments, in 32 CFR part 33.

(3) Grants officers should be aware that each rule that applies to

other types of nonprocurement instruments (i.e., other than grants and

cooperative agreements) states its applicability to such instruments.

However, grants officers must exercise caution when determining the

applicability of some Governmentwide rules that are included in the

DoDGARs, because a term may be defined differently in a Governmentwide

rule than it is defined elsewhere in the DoDGARs. For example, the

Governmentwide implementation of the Drug-Free Workplace Act of 1988

(32 CFR part 25, subpart F) states that it applies to grants, but

defines ``grants'' to include cooperative agreements and other forms of

financial assistance.

(c) Relationship to acquisition regulations. The Federal

Acquisition Regulation (FAR) (48 CFR parts 1-53), the Defense Federal

Acquisition Regulation Supplement (DFARS) (48 CFR parts 201-270), and

DoD Component supplements to the FAR and DFARS apply to DoD Components'

procurement contracts used to acquire goods and services for the direct

benefit or use of the Federal Government. Policies and procedures in

the FAR and DFARS do not apply to grants, cooperative agreements, or

other nonprocurement transactions unless the DoDGARs specify that they

apply.

Sec. 21.115 Compliance and implementation.

The Head of each DoD Component that awards or administers grants

and cooperative agreements, or his or her designee:

(a) Is responsible for ensuring compliance with the DoDGARs within

that DoD Component.

(b) May authorize the issuance of regulations, procedures, or

instructions that are necessary to implement DGARS policies and

procedures within the DoD Component, or to supplement the DoDGARs to

satisfy needs that are specific to the DoD Component, as long as such

regulations, procedures, or instructions do not impose additional costs

or administrative burdens on recipients or potential recipients. Heads

of DoD Components or their designees shall establish policies and

procedures in areas where uniform policies and procedures throughout

the DoD Component are required, such as for:

(1) Requesting class deviations from the DoDGARs (see Sec. 21.125)

or exemptions from the provisions of 31 U.S.C. 6301 et seq., that

govern the appropriate use of contracts, grants, and cooperative

agreements (see 32 CFR 22.220).

(2) Designating one or more Grant Appeal Authorities to resolve

claims, disputes, and appeals (see 32 CFR 22.815).

(3) Reporting data on assistance awards and programs, as required

by 31 U.S.C. chapter 61 (see subpart C of this part).

(4) Prescribing requirements for use and disposition of real

property acquired under awards, if the DoD Component makes any awards

to institutions of higher education or to other nonprofit organizations

under which real property is acquired in whole or in part with Federal

funds (see 32 CFR 32.32).

Sec. 21.120 Publication and maintenance.

(a) The DoDGARs are published as chapter I, subchapter B, title 32

of the Code of Federal Regulations (CFR) and in a separate loose-leaf

edition. The loose-leaf edition is divided into parts, subparts, and

sections, to parallel the CFR publication. Cross-references within the

DoDGARs are stated as CFR citations (e.g., a reference to Sec. 21.115

in part 21 would be to 32 CFR 21.115).

(b) Updates to the DoDGARs are published in the Federal Register.

When finalized, updates also are published as Defense Grant and

Agreement Circulars, with revised pages for the separate, loose-leaf

edition.

(c) Revisions to the DoDGARs are recommended to the Director of

Defense Research and Engineering (DDR&E) by a standing working group.

The DDR&E, Director of Defense Procurement, and each Military

Department shall be represented on the working group. Other DoD

Components that use grants or cooperative agreements may also nominate

representatives. The working group meets when necessary.

Sec. 21.125 Deviations.

(a) The Head of the DoD Component or his or her designee may

authorize individual deviations from the DoDGARs, which are deviations

that affect only one grant or cooperative agreement, if such deviations

are not prohibited by statute, executive order or regulation.

(b) Class deviations that affect more than one grant or cooperative

agreement must be approved in advance by the Director, Defense Research

and

[[Page 12162]]

Engineering (DDR&E) or his or her designee. Note that OMB concurrence

also is required for deviations from two parts of the DoDGARs, 32 CFR

parts 32 and 33, in accordance with 32 CFR 32.4 and 33.6, respectively.

(c) Copies of justifications and agency approvals for individual

deviations and written requests for class deviations shall be submitted

to: Deputy Director, Defense Research and Engineering, ATTN: Research,

3080 Defense Pentagon, Washington DC 20301-3080.

(d) Copies of requests and approvals for individual and class

deviations shall be maintained in award files.

Sec. 21.130 Definitions.

Acquisition. The acquiring (by purchase, lease, or barter) of

property or services for the direct benefit or use of the United States

Government (see more detailed definition at 48 CFR 2.101). In

accordance with 31 U.S.C. 6303, procurement contracts are the

appropriate legal instruments for acquiring such property or services.

Assistance. The transfer of a thing of value to a recipient to

carry out a public purpose of support or stimulation authorized by a

law of the United States (see 31 U.S.C. 6101(3)). Grants and

cooperative agreements are examples of legal instruments used to

provide assistance.

Contract. See the definition for procurement contract in this

section.

Contracting activity. An activity to which the Head of a DoD

Component has delegated broad authority regarding acquisition

functions, pursuant to 48 CFR 1.601.

Contracting officer. A person with the authority to enter into,

administer, and/or terminate contracts and make related determinations

and findings. A more detailed definition of the term appears at 48 CFR

2.101.

Cooperative agreement. A legal instrument which, consistent with 31

U.S.C. 6305, is used to enter into the same kind of relationship as a

grant (see definition ``grant''), except that substantial involvement

is expected between the Department of Defense and the recipient when

carrying out the activity contemplated by the cooperative agreement.

The term does not include ``cooperative research and development

agreements'' as defined in 15 U.S.C. 3710a.

Deviation. The issuance or use of a policy or procedure that is

inconsistent with the DoDGARs.

DoD Components. The Office of the Secretary of Defense, the

Military Departments, the Defense Agencies, and DoD Field Activities.

Grant. A legal instrument which, consistent with 31 U.S.C. 6304, is

used to enter into a relationship:

(1) The principal purpose of which is to transfer a thing of value

to the recipient to carry out a public purpose of support or

stimulation authorized by a law of the United States, rather than to

acquire property or services for the Department of Defense's direct

benefit or use.

(2) In which substantial involvement is not expected between the

Department of Defense and the recipient when carrying out the activity

contemplated by the grant.

Grants officer. An official with the authority to enter into,

administer, and/or terminate grants or cooperative agreements.

Nonprocurement instrument. A legal instrument other than a

procurement contract. Examples include instruments of financial

assistance, such as grants or cooperative agreements, and those of

technical assistance, which provide services in lieu of money.

Procurement contract. A legal instrument which, consistent with 31

U.S.C. 6303, reflects a relationship between the Federal Government and

a State, a local government, or other recipient when the principal

purpose of the instrument is to acquire property or services for the

direct benefit or use of the Federal Government. See the more detailed

definition for contract at 48 CFR 2.101.

Recipient. An organization or other entity receiving a grant or

cooperative agreement from a DoD Component.

Subpart B--Authorities and Responsibilities

Sec. 21.200 Purpose.

This subpart describes the sources and flow of authority to use

grants and cooperative agreements, and assigns the broad

responsibilities associated with DoD Components' use of such

instruments.

Sec. 21.205 DoD Components' authorities.

(a) In accordance with 31 U.S.C. 6301 et seq., DoD Components shall

use grants and cooperative agreements as legal instruments reflecting

assistance relationships between the United States Government and

recipients.

(b) Unlike the use of a procurement contract (for which Federal

agencies have inherent, Constitutional authority), use of a grant or

cooperative agreement to carry out a program requires authorizing

legislation, the intent of which supports the use of an assistance

instrument (e.g., the intent of the legislation authorizing a program

supports a judgment that the principal purpose of the program is

assistance, rather than acquisition). DoD Components may award grants

and cooperative agreements under a number of statutory authorities that

fall into three categories:

(1) Authorities that statutes provide to the Secretary of Defense.

These authorities generally are delegated by the Secretary of Defense

to Heads of DoD Components, usually through DoD directives,

instructions, or policy memoranda that are not part of the Defense

Grant and Agreement Regulatory System. Examples of statutory

authorities in this category are:

(i) Authority under 10 U.S.C. 2391 to make grants or conclude

cooperative agreements to assist State and local governments in

planning and carrying out community adjustments and economic

diversification required by changes in military installations or in DoD

contracts or spending that may have a direct and significant adverse

consequence on the affected community.

(ii) Authority under 10 U.S.C. 2413 to enter into cooperative

agreements with entities that furnish procurement technical assistance

to businesses.

(2) Authorities that statutes may provide directly to Heads of DoD

Components. When a statute authorizes the head of a DoD Component to

use a grant or cooperative agreement or to carry out a program with a

principal purpose of assistance, use of that authority requires no

delegation by the Secretary of Defense. For example, 10 U.S.C. 2358

authorizes the Secretaries of the Military Departments, in addition to

the Secretary of Defense, to perform research and development projects

through grants and cooperative agreements. A Military Department's use

of the authority of 10 U.S.C. 2358 therefore requires no delegation by

the Secretary of Defense.

(3) Authorities that arise indirectly as the result of statute. For

example, authority to use a grant or cooperative agreement may result

from:

(i) A federal statute authorizing a program that is consistent with

an assistance relationship (i.e., the support or stimulation of a

public purpose, rather than the acquisition of a good or service for

the direct benefit of the Department of Defense). In accordance with 31

U.S.C. chapter 63, such a program would appropriately be carried out

through the use of grants or cooperative agreements.

(ii) Exemptions requested by the Department of Defense and granted

by the Office of Management and Budget

[[Page 12163]]

under 31 U.S.C. 6307, as described in 32 CFR 22.220.

Sec. 21.210 Vesting and delegation of authority.

(a) The authority and responsibility for awarding grants and

cooperative agreements is vested in the Head of each DoD Component that

has such authority.

(b) The Head of each such DoD Component, or his or her designee,

may delegate to the heads of contracting activities (HCAs) within that

Component, authority to award grants or cooperative agreements, to

appoint grants officers (see Sec. 21.220(c)), and to broadly manage the

DoD Component's functions related to grants and cooperative agreements.

An HCA is the same official (or officials) designated as the head of

the contracting activity for procurement contracts, as defined at 48

CFR 2.101--the intent is that overall management responsibilities for a

DoD Component's functions related to nonprocurement instruments be

assigned only to officials that have similar responsibilities for

procurement contracts.

Sec. 21.215 Contracting activities.

When designated by the Head of the DoD Component or his or her

designee (see 32 CFR 21.210(b)), the HCA is responsible for the grants

and cooperative agreements made by or assigned to that activity. He or

she shall supervise and establish internal policies and procedures for

that activity's assistance awards.

Sec. 21.220 Grants officers.

(a) Authority. Only grants officers are authorized to sign grants

or cooperative agreements, or to administer or terminate such legal

instruments on behalf of the Department of Defense. Grants officers may

bind the Government only to the extent of the authority delegated to

them.

(b) Responsibilities. Grants officers should be allowed wide

latitude to exercise judgment in performing their responsibilities.

Grants officers are responsible for ensuring that:

(1) Individual grants and cooperative agreements are used

effectively in the execution of DoD programs, and are awarded and

administered in accordance with applicable laws, Executive orders,

regulations, and DoD policies.

(2) Sufficient funds are available for obligation.

(3) Recipients of grants and cooperative agreements receive

impartial, fair, and equitable treatment.

(c) Selection, appointment and termination of appointment of grants

officers. Each DoD Component that awards grants or enters into

cooperative agreements shall have a formal process (see Sec. 21.210(b))

to select and appoint grants officers and terminate their appointments.

DoD Components are not required to maintain a selection process for

grants officers separate from the selection process for contracting

officers, and written statements of appointment or termination for

grants officers may be integrated into the necessary documentation for

contracting officers, as appropriate.

(1) Selection. In selecting grants officers, appointing officials

shall consider the complexity and dollar value of the grants and

cooperative agreements to be assigned and judge whether candidates

possess the necessary experience, training, education, business acumen,

judgment, and knowledge of contracts and assistance instruments to

function effectively as grants officers.

(2) Appointment. Statements of appointment shall be in writing and

shall clearly state the limits of grants officers' authority, other

than limits contained in applicable laws or regulations. Information on

the limits of a grants officer's authority shall be readily available

to the public and agency personnel.

(3) Termination. Written statements of termination are required,

unless the written statement of appointment provides for automatic

termination. No termination shall be retroactive.

Subpart C--Information Reporting on Grants, Cooperative Agreements,

and Other Nonprocurement Instruments

Sec. 21.300 Purpose.

This subpart prescribes policies and procedures for compiling and

reporting data related to grants, cooperative agreements, and other

nonprocurement instruments subject to information reporting

requirements of 31 U.S.C. chapter 61.

Sec. 21.305 Defense Assistance Awards Data System.

(a) Purposes of the system. Data from the Defense Assistance Awards

Data System (DAADS) are used to provide:

(1) DoD inputs to meet statutory requirements for Federal

Governmentwide reporting of data related to obligations of funds by

grant, cooperative agreement, or other nonprocurement instrument.

(2) A basis for meeting Governmentwide requirements to report to

the Federal Assistance Awards Data System maintained by the Department

of Commerce and for preparing other recurring and special reports to

the President, the Congress, the General Accounting Office, and the

public.

(3) Information to support policy formulation and implementation

and to meet management oversight requirements related to the use of

grants, cooperative agreements, and other nonprocurement instruments.

(b) Responsibilities. (1) The Deputy Director, Defense Research and

Engineering (DDDR&E), or his or her designee, shall issue the manual

described in paragraph (b)(2)(ii) of this section.

(2) The Director for Information Operations and Reports, Washington

Headquarters Services (DIOR, WHS) shall, consistent with guidance

issued by the DDDR&E:

(i) Process DAADS information on a quarterly basis and prepare

recurring and special reports using such information.

(ii) Prepare, update, and disseminate ``Department of Defense

Assistance Awards Data System,'' an instruction manual for reporting

information to DAADS. The manual, which shall be issued by the office

of the DDR&E, shall specify procedures, formats, and editing processes

to be used by DoD Components, including magnetic tape layout and error

correction schedules.

(3) The following offices shall serve as central points for

collecting DAADS information from contracting activities within the DoD

Components:

(i) For the Army: As directed by the U.S. Army Contracting Support

Agency.

(ii) For the Navy: As directed by the Office of Naval Research.

(iii) For the Air Force: As directed by SAF/AQCP.

(iv) For the Office of the Secretary of Defense, Defense Agencies,

and DoD Field Activities: Each Defense Agency shall identify a central

point for collecting and reporting DAADS information to the DIOR, WHS,

at the address given in paragraph (c)(2) of this section. DIOR, WHS

shall serve as the central point for offices and activities within the

Office of the Secretary of Defense and for DoD Field Activities.

(4) The office that serves, in accordance with paragraph (b)(3) of

this section, as the central point for collecting DAADS information

from contracting activities within each DoD Component shall:

(i) Establish internal procedures to ensure reporting by

contracting activities that use grants, cooperative agreements or other

nonprocurement instruments subject to 31 U.S.C. chapter 61.

(ii) Collect information required by DD Form 2566, ``DoD Assistance

Award

[[Page 12164]]

Action Report,'' from those contracting activities, and report it to

DIOR, WHS, in accordance with paragraph (d) of this section.

(iii) Submit to the DDDR&E, at the address given in Sec. 21.125(c),

any recommended changes to the DAADS or to the instruction manual

described in paragraph (b)(2)(ii) of this section.

(c) Reporting procedures. The data required by the DD Form 2566

shall be:

(1) Collected for each individual grant, cooperative agreement, or

other nonprocurement action that is subject to 31 U.S.C. chapter 61 and

involves the obligation or deobligation of Federal funds. Each action

is reported as an obligation under a specific program listed in the

Catalog of Federal Domestic Assistance (CFDA, see Sec. 21.310). The

program to be shown is the one that provided the funds being obligated

(i.e., if a grants officer in one DoD Component obligates

appropriations of a second DoD Component's program, the grants officer

would show the CFDA program of the second DoD Component on the DD Form

2566).

(2) Reported on a quarterly basis to DIOR, WHS by the offices that

are designated pursuant to paragraph (b)(3) of this section. For the

first three quarters of the Federal fiscal year, the data are due by

close-of-business (COB) on the 15th day after the end of the quarter

(i.e., first-quarter data are due by COB on January 15th, second-

quarter data by COB April 15th, and third-quarter data by COB July

15th). Fourth-quarter data are due by COB October 25th, the 25th day

after the end of the quarter. If any due date falls on a weekend or

holiday, the data are due on the next regular workday. The mailing

address for DIOR, WHS is 1215 Jefferson Davis Highway, Suite 1204,

Arlington, VA 22202-4302.

(3) Reported on a computer tape, floppy diskette or by other means

permitted by the instruction manual described in paragraph (b)(2)(ii)

of this section. The data shall be reported in the format specified in

the instruction manual.

(d) Report control symbol. DoD Components' reporting of DAADS data

is used by DoD to satisfy Governmentwide requirements to report to the

Federal Assistance Awards Data System, which is assigned Interagency

Report Control Number 0252-DOC-QU.

Sec. 21.310 Catalog of Federal Domestic Assistance.

(a) Purpose and scope of the reporting requirement. (1) Under the

Federal Program Information Act (31 U.S.C. 6101 et seq.), as

implemented through OMB Circular A-89,\2\ the Department of Defense is

required to provide certain information about its domestic assistance

programs to OMB and the General Services Administration (GSA). GSA

makes this information available to the public by publishing it in the

Catalog of Federal Domestic Assistance (CFDA) and maintaining the

Federal Assistance Programs Retrieval System, a computerized data base

of the information.

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\2\ Contact the Office of Management and Budget, EOP

Publications, 725 17th St. N.W., New Executive Office Building,

Washington, D.C. 20503.

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(2) The CFDA covers all domestic assistance programs and

activities, regardless of the number of awards made under the program,

the total dollar value of assistance provided, or the duration. In

addition to programs using grants and cooperative agreements, covered

programs include those providing assistance in other forms, such as

payments in lieu of taxes or indirect assistance resulting from Federal

operations.

(b) Responsibilities. (1) Each DoD Component that provides domestic

financial assistance shall:

(i) Report to the Director for Information Operations and Reports,

Washington Headquarters Services (DIOR, WHS) all new programs and

changes as they occur, or as DIOR, WHS requests annual updates to

existing CFDA information.

(ii) Identify to the DIOR, WHS a point-of-contact who will be

responsible for reporting such program information and for responding

to inquiries related to it.

(2) The DIOR, WHS shall act as the Department of Defense's single

office for collecting, compiling and reporting such program information

to OMB and GSA.

Sec. 21.315 Uniform grants and agreements numbering system.

DoD Components shall assign identifying numbers to all

nonprocurement instruments subject to this subpart, including grants

and cooperative agreements. The numbering system parallels the

procurement instrument identification (PII) numbering system specified

in 48 CFR 204.70 (in the ``Defense Federal Acquisition Regulation

Supplement''), as follows:

(a) The first six alphanumeric characters of the assigned number

shall be identical to those specified by 48 CFR 204.7003(a)(1) to

identify the DoD Component and contracting activity.

(b) The seventh and eighth positions shall be the last two digits

of the fiscal year in which the number is assigned to the grant,

cooperative agreement, or other nonprocurement instrument.

(c) The 9th position shall be a number: ``1'' for grants; ``2'' for

cooperative agreements; and ``3'' for other nonprocurement instruments.

(d) The 10th through 13th positions shall be the serial number of

the instrument. DoD Components and contracting activities need not

follow any specific pattern in assigning these numbers and may create

multiple series of letters and numbers to meet internal needs for

distinguishing between various sets of awards.

3. Part 22 is added to read as follows:

PART 22--DoD GRANTS AND AGREEMENTS--AWARD AND ADMINISTRATION

Subpart A--General

Sec.

22.100 Purpose, relation to other parts, and organization.

22.105 Definitions.

Subpart B--Selecting the Appropriate Instrument

22.200 Purpose.

22.205 Distinguishing assistance from procurement.

22.210 Authority for providing assistance.

22.215 Distinguishing grants and cooperative agreements.

22.220 Exemptions.

Subpart C--Competition

22.300 Purpose.

22.305 General policy and requirement for competition.

22.310 Statutes concerning certain research, development, and

facilities construction grants.

22.315 Merit-based, competitive procedures.

22.320 Special competitions.

22.325 Historically Black colleges and universities (HBCUs) and

other minority institutions (MIs).

Subpart D--Recipient Qualification Matters--General Policies and

Procedures

22.400 Purpose.

22.405 Policy.

22.410 Grants officers' responsibilities.

22.415 Standards.

22.420 Pre-award procedures.

Subpart E--National Policy Matters

22.505 Purpose.

22.510 Certifications, representations, and assurances.

22.515 Provisions of annual appropriations acts.

22.520 Military recruiting on campus.

22.525 Paperwork Reduction Act.

22.530 Metric system of measurement.

Subpart F--Award

22.600 Purpose.

22.605 Grants officers' responsibilities.

22.610 Award instruments.

Subpart G--Field Administration

22.700 Purpose.

22.705 Policy.

[[Page 12165]]

22.710 Assignment of grants administration offices.

22.715 Grants administration office functions.

Subpart H--Post-Award Administration

22.800 Purpose and relation to other parts.

22.805 Post-award requirements in other parts.

22.810 Payments.

22.815 Claims, disputes, and appeals.

22.820 Debt collection.

22.825 Closeout audits.

Appendix A to Part 22--Proposal Provision for Required

Certifications.

Appendix B to Part 22--Suggested Award Provisions for National

Policy Requirements That Often Apply.

Appendix C to Part 22--Administrative Requirements and Issues To Be

Addressed in Award Terms and Conditions.

Authority: 5 U.S.C. 301 and 10 U.S.C. 113.

Subpart A--General

Sec. 22.100 Purpose, relation to other parts, and organization.

(a) This part outlines grants officers' and DoD Components'

responsibilities related to the award and administration of grants and

cooperative agreements.

(b) In doing so, it also supplements other parts of the DoD Grant

and Agreement Regulations (DoDGARs) that are either Governmentwide

rules or DoD implementation of Governmentwide guidance in Office of

Management and Budget (OMB) Circulars. Those other parts of the

DoDGARs, which are referenced as appropriate in this part, are:

(1) Governmentwide rules on debarment, suspension and drug-free

workplace requirements, in 32 CFR part 25.

(2) The Governmentwide rule on lobbying restrictions, in 32 CFR

part 28.

(3) Administrative requirements for grants and agreements awarded

to specific types of recipients:

(i) For State and local governmental organizations, in the

Governmentwide rule at 32 CFR part 33.

(ii) For institutions of higher education and other nonprofit

organizations, at 32 CFR part 32.

(iii) For for-profit organizations, at 32 CFR part 34.

(c) The organization of this part parallels the award and

administration process, from pre-award through post-award matters. It

therefore is organized in the same manner as the parts of the DoDGARs

(32 CFR parts 32, 33, and 34) that prescribe administrative

requirements for specific types of recipients.

Sec. 22.105 Definitions.

Other than the terms defined in this section, terms used in this

part are defined in 32 CFR 21.130.

Administrative offset. An action whereby money payable by the

United States Government to, or held by the Government for, a recipient

is withheld to satisfy a delinquent debt the recipient owes the

Government.

Advanced research. Advanced technology development that creates new

technology or demonstrates the viability of applying existing

technology to new products and processes in a general way. Advanced

research is most closely analogous to precompetitive technology

development in the commercial sector (i.e., early phases of research

and development on which commercial competitors are willing to

collaborate, because the work is not so coupled to specific products

and processes that the results of the work must be proprietary). It

does not include development of military systems and hardware where

specific requirements have been defined. It is typically funded in

Advanced Technology Development (Budget Activity 3 and Research

Category 6.3A) programs within Research, Development, Test and

Evaluation (RDT&E).

Applied research. Efforts that attempt to determine and exploit the

potential of scientific discoveries or improvements in technology such

as new materials, devices, methods and processes. It typically is

funded in Applied Research (Budget Activity 2 and Research Category

6.2) programs within Research, Development, Test and Evaluation

(RDT&E). Applied research normally follows basic research but may not

be fully distinguishable from the related basic research. The term does

not include efforts whose principal aim is the design, development, or

testing of specific products, systems or processes to be considered for

sale or acquisition; these efforts are within the definition of

``development.''

Basic research. Efforts directed toward increasing knowledge and

understanding in science and engineering, rather than the practical

application of that knowledge and understanding. It typically is funded

within Basic Research (Budget Activity 1 and Research Category 6.1)

programs within Research, Development, Test and Evaluation (RDT&E). For

the purposes of this part, basic research includes:

(1) Research-related, science and engineering education, including

graduate fellowships and research traineeships.

(2) Research instrumentation and other activities designed to

enhance the infrastructure for science and engineering research.

Claim. A written demand or written assertion by one of the parties

to a grant or cooperative agreement seeking as a matter of right, the

payment of money in a sum certain, the adjustment or interpretation of

award terms, or other relief arising under or relating to a grant or

cooperative agreement. A routine request for payment that is not in

dispute when submitted is not a claim. The submission may be converted

to a claim by written notice to the grants officer if it is disputed

either as to liability or amount, or is not acted upon in a reasonable

time.

Debt. Any amount of money or any property owed to a Federal Agency

by any person, organization, or entity except another United States

Federal Agency. Debts include any amounts due from insured or

guaranteed loans, fees, leases, rents, royalties, services, sales of

real or personal property, or overpayments, penalties, damages,

interest, fines and forfeitures, and all other claims and similar

sources. Amounts due a nonappropriated fund instrumentality are not

debts owed the United States, for the purposes of this subchapter.

Delinquent debt. A debt:

(1) That the debtor fails to pay by the date specified in the

initial written notice from the agency owed the debt, normally within

30 calendar days, unless the debtor makes satisfactory payment

arrangements with the agency by that date; and

(2) With respect to which the debtor has elected not to exercise

any available appeals or has exhausted all agency appeal processes.

Development. The systematic use of scientific and technical

knowledge in the design, development, testing, or evaluation of

potential new products, processes, or services to meet specific

performance requirements or objectives. It includes the functions of

design engineering, prototyping, and engineering testing.

Electronic commerce. The conduct of business through the use of

automation and electronic media, in lieu of paper transactions, direct

personal contact, telephone, or other means. For grants and cooperative

agreements, electronic commerce can include the use of electronic data

interchange, electronic mail, electronic bulletin board systems, and

electronic funds transfer for: program announcements or solicitations;

applications or proposals; award documents; recipients' requests for

payment; payment authorizations; and payments.

[[Page 12166]]

Electronic data interchange. The exchange of standardized

information communicated electronically between business partners,

typically between computers. It is DoD policy that DoD Component EDI

applications conform to the American National Standards Institute

(ANSI), Accredited Standards Committee (ASC) X-12 standard.\1\

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\1\ Available from Accredited Standards Committee, X-12

Secretariat, Data Interchange Standards Association, 1800 Diagonal

Road, Suite 355, Alexandria, VA 22314-2852; Attention: Manager

Maintenance and Publications.

---------------------------------------------------------------------------

Electronic funds transfer. A system that provides the authority to

debit or credit accounts in financial institutions by electronic means

rather than source documents (e.g., paper checks). Processing typically

occurs through the Federal Reserve System and/or the Automated Clearing

House (ACH) computer network. It is DoD policy that DoD Component EFT

transmissions conform to the American National Standards Institute

(ANSI), Accredited Standards Committee (ASC) X-12 standard.

Historically Black colleges and universities. Institutions of

higher education determined by the Secretary of Education to meet the

requirements of 34 CFR 608.2. Each DoD Component's contracting

activities and grants officers may obtain a list of historically Black

colleges and universities from that DoD Component's Small and

Disadvantaged Business Utilization office.

Institution of higher education. An educational institution that

meets the criteria in section 1201(a) of the Higher Education Act of

1965 (20 U.S.C. 1141(a)). Note, however, that institution of higher

education has a different meaning in Sec. 22.520, as given at

Sec. 22.520(b)(2).

Minority institutions. Institutions of higher education that meet

the criteria for minority institutions specified in 10 U.S.C. 2323.

Each DoD Component's contracting activities and grants officers may

obtain copies of a current list of institutions that qualify as

minority institutions under 10 U.S.C. 2323 from that DoD Component's

Small and Disadvantaged Business Utilization office (the list of

minority institutions changes periodically, based on Department of

Education data on institutions' enrollments of minority students).

Research. Basic, applied, and advanced research, as defined in this

section.

Subaward. An award of financial assistance in the form of money, or

property in lieu of money, made under a DoD grant or cooperative

agreement by a recipient to an eligible subrecipient. The term includes

financial assistance for substantive program performance by the

subrecipient of a portion of the program for which the DoD grant or

cooperative agreement was made. It does not include the recipient's

procurement of goods and services needed to carry out the program.

Subpart B--Selecting the Appropriate Instrument

Sec. 22.200 Purpose.

This subpart provides the bases for determining the appropriate

type of instrument in a given situation.

Sec. 22.205 Distinguishing assistance from procurement.

Before using a grant or cooperative agreement, the grants officer

shall make a positive judgment that an assistance instrument, rather

than a procurement contract, is the appropriate instrument, based on

the following:

(a) Purpose. (1) The grants officer must judge that the principal

purpose of the activity to be carried out under the instrument is to

stimulate or support a public purpose (i.e., to provide assistance),

rather than acquisition (i.e., to acquire goods and services for the

direct benefit of the United States Government). If the principal

purpose is acquisition, then the grants officer shall judge that a

procurement contract is the appropriate instrument, in accordance with

31 U.S.C. chapter 63 (``Using Procurement Contracts and Grant and

Cooperative Agreements''). Assistance instruments shall not be used in

such situations, except:

(i) When a statute specifically provides otherwise; or

(ii) When an exemption is granted, in accordance with Sec. 22.220.

(2) For research and development, the appropriate use of grants and

cooperative agreements therefore is almost exclusively limited to the

performance of selected basic, applied, and advanced research projects.

Development projects nearly always shall be performed by contract or

other acquisition transaction because their principal purpose is the

acquisition of specific deliverable items (e.g., prototypes or other

hardware) for the benefit of the Department of Defense.

(b) Fee or profit. Payment of fee or profit is consistent with an

activity whose principal purpose is the acquisition of goods and

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

rather than an activity whose principal purpose is assistance.

Therefore, the grants officer shall use a procurement contract, rather

than an assistance instrument, in all cases where:

(1) Fee or profit is to be paid to the recipient of the instrument;

or

(2) The instrument is to be used to carry out a program where fee

or profit is necessary to achieving program objectives.

Sec. 22.210 Authority for providing assistance.

(a) Before a grant or cooperative agreement may be used, the grants

officer must:

(1) Identify the program statute, the statute that authorizes the

DoD Component to carry out the activity the principal purpose of which

is assistance (see 32 CFR 21.205(b)).

(2) Review the program statute to determine if it contains

requirements that affect the:

(i) Solicitation, selection, and award processes. For example,

program statutes may authorize assistance to be provided only to

certain types of recipients; may require that recipients meet certain

other criteria to be eligible to receive assistance; or require that a

specific process shall be used to review recipients' proposals.

(ii) Terms and conditions of the award. For example, some program

statutes require a specific level of cost sharing or matching.

(b) The grants officer shall ensure that the award of DoD

appropriations through a grant or cooperative agreement for a research

project meets the standards of 10 U.S.C. 2358, DoD's broad authority to

carry out research, even if the research project is authorized under a

statutory authority other than 10 U.S.C. 2358. The standards of 10

U.S.C. 2358 are that, in the opinion of the Head of the DoD Component

or his or her designee, the projects must be:

(1) Necessary to the responsibilities of the DoD Component.

(2) Related to weapons systems and other military needs or of

potential interest to the DoD Component.

Sec. 22.215 Distinguishing grants and cooperative agreements.

(a) Once a grants officer judges, in accordance with Secs. 22.205

and 22.210, that either a grant or cooperative agreement is the

appropriate instrument, the grants officer shall distinguish between

the two instruments as follows:

(1) Grants shall be used when the grants officer judges that

substantial involvement is not expected between the Department of

Defense and the recipient when carrying out the activity contemplated

in the agreement.

(2) Cooperative agreements shall be used when the grants officer

judges that substantial involvement is expected.

[[Page 12167]]

The grants officer should document the nature of the substantial

involvement that led to selection of a cooperative agreement. Under no

circumstances are cooperative agreements to be used solely to obtain

the stricter controls typical of a contract.

(b) In judging whether substantial involvement is expected, grants

officers should recognize that ``substantial involvement'' is a

relative, rather than an absolute, concept, and that it is primarily

based on programmatic factors, rather than requirements for grant or

cooperative agreement award or administration. For example, substantial

involvement may include collaboration, participation, or intervention

in the program or activity to be performed under the award.

Sec. 22.220 Exemptions.

Under 31 U.S.C. 6307, ``the Director of the Office of Management

and Budget may exempt an agency transaction or program'' from the

requirements of 31 U.S.C. chapter 63. Grants officers shall request

such exemptions only in exceptional circumstances. Each request shall

specify for which individual transaction or program the exemption is

sought; the reasons for requesting an exemption; the anticipated

consequences if the exemption is not granted; and the implications for

other agency transactions and programs if the exemption is granted. The

procedures for requesting exemptions shall be:

(a) In cases where 31 U.S.C. chapter 63 would require use of a

contract and an exemption from that requirement is desired:

(1) The grants officer shall submit a request for exemption,

through appropriate channels established by his or her DoD Component

(see 32 CFR 21.115(b)(1)), to the Director of Defense Procurement

(DDP).

(2) The DDP, after coordination with the Director of Defense

Research and Engineering (DDR&E), shall transmit the request to OMB or

notify the DoD Component that the request has been disapproved.

(b) In other cases, the DoD Component shall submit a request for

the exemption through appropriate channels to the DDR&E. The DDR&E

shall transmit the request to OMB or notify the DoD Component that the

request has been disapproved.

(c) Where an exemption is granted, documentation of the approval

shall be maintained in the award file.

Subpart C--Competition

Sec. 22.300 Purpose.

This subpart establishes DoD policy and implements statutes related

to the use of competitive procedures in the award of grants and

cooperative agreements.

Sec. 22.305 General policy and requirement for competition.

(a) It is DoD policy to maximize use of competition in the award of

grants and cooperative agreements. This also conforms with:

(1) 31 U.S.C. 6301(3), which encourages the use of competition in

awarding all grants and cooperative agreements.

(2) 10 U.S.C. 2374(a), which sets out Congressional policy that any

new grant for research, development, test, or evaluation be awarded

through merit-based selection procedures.

(b) Grants officers shall use merit-based, competitive procedures

(as defined by Sec. 22.315) to award grants and cooperative agreements:

(1) In every case where required by statute (e.g., 10 U.S.C. 2361,

as implemented in Sec. 22.310, for certain grants to institutions of

higher education).

(2) To the maximum extent practicable in all cases where not

required by statute.

Sec. 22.310 Statutes concerning certain research, development, and

facilities construction grants.

(a) Definitions specific to this section. For the purposes of

implementing the requirements of 10 U.S.C. 2374 in this section, the

following terms are defined:

(1) Follow-on grant. A grant that provides for continuation of

research and development performed by a recipient under a preceding

grant. Note that follow-on grants are distinct from incremental funding

actions during the period of execution of a multi-year award.

(2) New grant. A grant that is not a follow-on grant.

(b) Statutory requirement to use competitive procedures. (1) A

grants officer shall not award a grant by other than merit-based,

competitive procedures (as defined by Sec. 22.315) to an institution of

higher education for the performance of research and development or for

the construction of research or other facilities, unless:

(i) In the case of a new grant for research and development, there

is a statute meeting the criteria in paragraph (c)(1) of this section;

(ii) In the case of a follow-on grant for research and development,

or of a grant for the construction of research or other facilities,

there is a statute meeting the criteria in paragraph (c)(2) of this

section; and

(iii) The Secretary of Defense submits to Congress a written notice

of intent to make the grant. The grant may not be awarded until 180

calendar days have elapsed after the date on which Congress received

the notice of intent. Contracting activities must submit a draft notice

of intent with supporting documentation through channels to the Deputy

Director, Defense Research and Engineering.

(2) Because subsequently enacted statutes may, by their terms,

impose different requirements than set out in paragraph (b)(1) of this

section, grants officers shall consult legal counsel on a case-by-case

basis, when grants for the performance of research and development or

for the construction of research or other facilities are to be awarded

to institutions of higher education by other than merit-based

competitive procedures.

(c) Subsequent statutes. In accordance with 10 U.S.C. 2361 and 10

U.S.C. 2374, a provision of law may not be construed as requiring the

award of a grant through other than the merit-based, competitive

procedures described in Sec. 22.315, unless:

(1) Institutions of higher education--new grants for research and

development. In the case of a new grant for research and development to

an institution of higher education, such provision of law specifically:

(i) Identifies the particular institution of higher education

involved;

(ii) States that such provision of law modifies or supersedes the

provisions of 10 U.S.C. 2361 (a requirement that applies only if the

statute authorizing or requiring award by other than competitive

procedures was enacted after September 30, 1989); and

(iii) States that the award to the institution of higher education

involved is required by such provision of law to be made in

contravention of the policy set forth in 10 U.S.C. 2374(a).

(2) Institutions of higher education--follow-on grants for research

and development and grants for the construction of any research or

other facility. In the case of any such grant to an institution of

higher education, such provision of law specifically:

(i) Identifies the particular institution of higher education

involved; and

(ii) States that such provision of law modifies or supersedes the

provisions of 10 U.S.C. 2361 (a requirement that applies only if the

statute authorizing or requiring award by other than competitive

procedures was enacted after September 30, 1989).

(3) Other entities--new grants for research and development--(i)

General. In the case of a new grant for research and development to an

entity other than

[[Page 12168]]

an institution of higher education, such provision of law specifically:

(A) Identifies the particular entity involved;

(B) States that the award to that entity is required by such

provision of law to be made in contravention of the policy set forth in

10 U.S.C. 2374(a).

(ii) Exception. The requirement of paragraph (c)(3)(i) of this

section does not apply to any grant that calls upon the National

Academy of Sciences to:

(A) Investigate, examine, or experiment upon any subject of science

or art of significance to the Department of Defense or any Military

Department; and

(B) Report on such matters to the Congress or any agency of the

Federal Government.

Sec. 22.315 Merit-based, competitive procedures.

Competitive procedures are methods that encourage participation in

DoD programs by a broad base of the most highly qualified performers.

These procedures are characterized by competition among as many

eligible proposers as possible, with a published or widely disseminated

notice. Competitive procedures include, as a minimum:

(a) Notice to prospective proposers. The notice may be a notice of

funding availability or Broad Agency Announcement published in the

Federal Register or Commerce Business Daily, respectively, or a notice

that is made available broadly by electronic means. Alternatively, it

may take the form of a specific notice that is distributed to eligible

proposers (a specific notice must be distributed to at least two

eligible proposers to be considered as part of a competitive

procedure). Notices must include, as a minimum, the following

information:

(1) Programmatic area(s) of interest, in which proposals or

applications are sought.

(2) Eligibility criteria for potential recipients (see subpart D of

this part).

(3) Criteria that will be used to select the applications or

proposals that will be funded, and the method for conducting the

evaluation.

(4) The type(s) of funding instruments (e.g., grants, cooperative

agreements, other assistance instruments, or procurement contracts)

that are anticipated to be awarded pursuant to the announcement.

(5) Instructions for preparation and submission of a proposal or

application, including the time by which it must be submitted.

(b) At least two eligible, prospective proposers.

(c) Impartial review of the merits of applications or proposals

received in response to the notice, using the evaluation method and

selection criteria described in the notice. For research and

development awards, in order to be considered as part of a competitive

procedure, the two principal selection criteria, unless statute

provides otherwise, must be the:

(1) Technical merits of the proposed research and development; and

(2) Potential relationship of the proposed research and development

to Department of Defense missions.

Sec. 22.320 Special competitions.

Some programs may be competed for programmatic or policy reasons

among specific classes of potential recipients. An example would be a

program to enhance U.S. capabilities for academic research and

research-coupled graduate education in defense-critical, science and

engineering disciplines, a program that would be competed specifically

among institutions of higher education. All such special competitions

shall be consistent with program representations in the President's

budget submission to Congress and with subsequent Congressional

authorizations and appropriations for the programs.

Sec. 22.325 Historically Black colleges and universities (HBCUs) and

other minority institutions (MIs).

Increasing the ability of HBCUs and MIs to participate in federally

funded, university programs is an objective of Executive Order 12876 (3

CFR, 1993 Comp., p. 671) and 10 U.S.C. 2323. Grants officers shall

include appropriate provisions in Broad Agency Announcements (BAAs) or

other announcements for programs in which awards to institutions of

higher education are anticipated, in order to promote participation of

HBCUs and MIs in such programs. Also, whenever practicable, grants

officers shall reserve appropriate programmatic areas for exclusive

competition among HBCUs and MIs when preparing announcements for such

programs.

Subpart D--Recipient Qualification Matters--General Policies and

Procedures

Sec. 22.400 Purpose.

The purpose of this subpart is to specify policies and procedures

for grants officers' determination of recipient qualifications prior to

award.

Sec. 22.405 Policy.

(a) General. Grants officers normally shall award grants or

cooperative agreements only to qualified recipients that meet the

standards in Sec. 22.415. This practice conforms with the

Governmentwide policy, stated at 32 CFR 25.115(a), to do business only

with responsible persons.

(b) Exception. In exceptional circumstances, grants officers may

make awards to recipients that do not fully meet the standards in

Sec. 22.415 and include special award conditions that are appropriate

to the particular situation, in accordance with 32 CFR 32.14, 33.12, or

34.4.

Sec. 22.410 Grants officers' responsibilities.

The grants officer is responsible for determining a recipient's

qualification prior to award. The grants officer's signature on the

award document shall signify his or her determination that either:

(a) The potential recipient meets the standards in Sec. 22.415 and

is qualified to receive the grant or cooperative agreement; or

(b) An award is justified to a recipient that does not fully meet

the standards, pursuant to Sec. 22.405(b). In such cases, grants

officers shall document in the award file the rationale for making an

award to a recipient that does not fully meet the standards.

Sec. 22.415 Standards.

To be qualified, a potential recipient must:

(a) Have the management capability and adequate financial and

technical resources, given those that would be made available through

the grant or cooperative agreement, to execute the program of

activities envisioned under the grant or cooperative agreement.

(b) Have a satisfactory record of executing such programs or

activities (if a prior recipient of an award).

(c) Have a satisfactory record of integrity and business ethics.

(d) Be otherwise qualified and eligible to receive a grant or

cooperative agreement under applicable laws and regulations (see

Sec. 22.420(c)).

Sec. 22.420 Pre-award procedures.

(a) The appropriate method to be used and amount of effort to be

expended in deciding the qualification of a potential recipient will

vary. In deciding on the method and level of effort, the grants officer

should consider factors such as:

(1) DoD's past experience with the recipient;

(2) Whether the recipient has previously received cost-type

contracts, grants, or cooperative agreements from the Federal

Government; and

(3) The amount of the prospective award and complexity of the

project to be carried out under the award.

[[Page 12169]]

(b) There is no DoD-wide requirement to obtain a pre-award credit

report, audit, or any other specific piece of information. On a case-

by-case basis, the grants officer will decide whether there is a need

to obtain any such information to assist in deciding whether the

recipient meets the standards in Sec. 22.415 (a), (b), and (c).

(1) Should the grants officer in a particular case decide that a

pre-award credit report, audit, or survey is needed, he or she should

consult first with the appropriate grants administration office

(identified in Sec. 22.710), and decide whether pre-existing surveys or

audits of the recipient, such as those of the recipient's internal

control systems under OMB Circular A-133 \2\ will satisfy the need (see

Sec. 22.715(a)(1)).

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\2\ Contact the Office of Management and Budget, EOP

Publications, 725 17th St. NW, New Executive Office Building,

Washington, DC 20503.

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(2) If, after consulting with the grants administration office, the

grants officer decides to obtain a credit report, audit, or other

information, and the report or other information discloses that a

potential recipient is delinquent on a debt to an agency of the United

States Government, then:

(i) The grants officer shall take such information into account

when determining whether the potential recipient is qualified with

respect to the grant or cooperative agreement; and

(ii) If the grants officer decides to make the award to the

recipient, unless there are compelling reasons to do otherwise, the

grants officer shall delay the award of the grant or cooperative

agreement until payment is made or satisfactory arrangements are made

to repay the debt.

(c) In deciding whether a recipient is otherwise qualified and

eligible in accordance with the standard in Sec. 22.415(d), the grants

officer shall ensure that the potential recipient:

(1) Is not identified on the Governmentwide ``List of Parties

Excluded from Federal Procurement and Nonprocurement Programs'' as

being debarred, suspended, or otherwise ineligible to receive the

award. The grants officer shall check the list of such parties for:

(i) Potential recipients of prime awards, as described at 32 CFR

25.505(d);

(ii) A recipient's principals (e.g., officers, directors, or other

key employees, as defined at 32 CFR 25.105); and

(iii) Potential recipients of subawards, where DoD Component

approval of such principals or lower-tier recipients is required under

the terms of the award (see 32 CFR 25.505(e)).

(2) Has provided all certifications and assurances required by

Federal statute, Executive order, or codified regulation, unless they

are to be addressed in award terms and conditions at the time of award

(see Sec. 22.510).

(3) Meets any eligibility criteria that may be specified in the

statute authorizing the specific program under which the award is being

made (see Sec. 22.210(a)(2)).

(d) Grants officers shall obtain each recipient's Taxpayer

Identification Number (TIN, which may be the Social Security Number for

an individual and Employer Identification Number for a business or non-

profit entity) and notify the recipient that the TIN is being obtained

for purposes of collecting and reporting on any delinquent amounts that

may arise out of the recipient's relationship with the Government.

Obtaining the TIN and so notifying the recipient is a statutory

requirement of 31 U.S.C. 7701, as amended by the Debt Collection

Improvement Act of 1996 (section 31001(i)(1), Pub. L. 104-134).

Subpart E--National Policy Matters

Sec. 22.505 Purpose.

The purpose of this subpart is to supplement other regulations that

implement national policy requirements, to the extent that it is

necessary to provide additional guidance to DoD grants officers. The

other regulations that implement national policy requirements include:

(a) The other parts of the DoDGARs (32 CFR parts 32, 33, and 34)

that implement the Governmentwide guidance in OMB Circulars A-102 \3\

and A-110 \4\ on administrative requirements for grants and cooperative

agreements. Those parts address some national policy matters that

appear in the OMB Circulars.

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\3\ See footnote 2 to Sec. 22.420(b)(1).

\4\ See footnote 2 to Sec. 22.420(b)(1).

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(b) DoD regulations other than the DoDGARs.

(c) Other Federal agencies' regulations.

Sec. 22.510 Certifications, representations, and assurances.

(a) Certifications--(1) Policy. Certifications of compliance with

national policy requirements are to be obtained from recipients only

for those national policies where a statute, Executive order, or

codified regulation specifically states that a certification is

required. Other national policy requirements may be addressed by

obtaining representations or assurances (see paragraph (b) of this

section). Grants officers should utilize methods for obtaining

certifications, in accordance with Executive Order 12866 (3 CFR, 1993

Comp., p. 638), that minimize administration and paperwork.

(2) Procedures. (i) When necessary, grants officers may obtain

individual, written certifications.

(ii) Whenever possible, and to the extent consistent with statute

and codified regulation, grants officers should identify the

certifications that are required for the particular type of recipient

and program, and consolidate them into a single certification provision

that cites them by reference.

(A) Appendix A to this part lists the common certifications and

cites their applicability. Because some certifications (e.g., the

certification on lobbying in Appendix A to this part) are required by

law to be submitted at the time of proposal, rather than at the time of

award, Appendix A to this part includes language that may be used for

incorporating common certifications by reference into a proposal.

(B) If a grants officer elects to have proposers incorporate

certifications by reference into their proposals, he or she must do so

in one of the two following ways. When required by statute or codified

regulation, the solicitation must include the full text of the

certifications that proposers are to provide by reference. In other

cases, the grants officer may include language in the solicitation that

informs the proposers where the full text may be found (e.g., in

documents or computer network sites that are readily available to the

public) and offers to provide it to proposers upon request.

(C) Grants officers may incorporate certifications by reference in

award documents when doing so is consistent with statute and codified

regulation. Note that a statute requires submission of the lobbying

certification in Appendix A to this part at the time of proposal, and

that 32 CFR 25.510(a) requires submission of certifications regarding

debarment and suspension at the time of proposal. The provision that a

grants officer would use to incorporate certifications in award

documents, when consistent with statute and codified regulation, would

be similar to the provision in Appendix A to this part, except that it

would be modified to state that the recipient is providing the required

certifications by signing the award document or by accepting funds

under the award.

(b) Representations and assurances. Many national policies, either

in statute or in regulation, require recipients of grants and

cooperative agreements to make representations or provide

[[Page 12170]]

assurances (rather than certifications) that they are in compliance

with the policies. As discussed in Sec. 22.610(b), Appendix B to this

part suggests award terms and conditions that may be used to address

several of the more commonly applicable national policy requirements.

These terms and conditions may be used to obtain required assurances

and representations, if the grants officer wishes to do so at the time

of award, rather than through the use of the standard application form

(SF-424 \5\) or other means at the time of proposal.

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\5\ For copies of Standard Forms listed in this part, contact

regional grants administration offices of the Office of Naval

Research. Addresses for the offices are listed in the ``DoD

Directory of Contract Administration Services Components,'' DLAH

4105.4, which can be obtained either from: Defense Logistics Agency,

Publications Distribution Division (DASC-WDM), 8725 John J. Kingman

Rd., Suite 0119, Fort Belvoir, VA 22060-6220; or from the Defense

Contract Management Command home page at http://

www.dcmc.dcrb.dla.mil.''

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Sec. 22.515 Provisions of annual appropriations acts.

An annual appropriations act can include general provisions stating

national policy requirements that apply to the use of funds (e.g.,

obligation through a grant or cooperative agreement) appropriated by

the act. Because these requirements are of limited duration (the period

during which a given year's appropriations are available for

obligation), and because they can vary from year to year and from one

agency's appropriations act to another agency's, the grants officer

must know the agency(ies) and fiscal year(s) of the appropriations

being obligated by a given grant or cooperative agreement, and may need

to consult legal counsel if he or she does not know the requirements

applicable to those appropriations.

Sec. 22.520 Military recruiting on campus.

(a) Purpose. The purpose of this section is to implement section

558 of the National Defense Authorization Act for Fiscal Year 1995

(Pub. L. 103-337), as it specifically affects grants and cooperative

agreements (note that section 558 appears as a note to 10 U.S.C. 503).

This section thereby supplements DoD's primary implementation of

section 558, in 32 CFR part 216, ``Military Recruiting and Reserve

Officer Training Corps Program Access to Institutions of Higher

Education.''

(b) Definitions specific to this section. In this section:

(1) Directory information has the following meaning, given in

section 558(c) of Pub. L. 103-337. It means, with respect to a student,

the student's name, address, telephone listing, date and place of

birth, level of education, degrees received, and the most recent

previous educational institution enrolled in by the student.

(2) Institution of higher education has a different meaning in this

section than it does in the rest of this part. The meaning of the term

in other sections of this part is given at Sec. 22.105. In this

section, ``institution of higher education'' (IHE) has the following

meaning, given at 32 CFR 216.3. The term means a domestic college,

university, or subelement thereof providing postsecondary school

courses of study, including foreign campuses of such domestic

institutions. The term includes junior colleges, community colleges,

and institutions providing courses leading to undergraduate and post-

graduate degrees. The term does not include entities that operate

exclusively outside the United States, its territories, and

possessions. A subelement of an IHE is a discrete (although not

necessarily autonomous) organizational entity that may establish policy

or practices affecting military recruiting and related actions (e.g.,

an undergraduate school, law school, medical school, or other graduate

school).

(c) Statutory requirement. No funds available to the Department of

Defense may be provided by grant to any institution of higher education

that either has a policy of denying or that effectively prevents the

Secretary of Defense from obtaining, for military recruiting purposes,

entry to campuses or access to students on campuses or access to

directory information pertaining to students.

(d) Policy.--(1) Applicability to subordinate elements of

institutions of higher education. 32 CFR part 216, DoD's primary

implementation of section 558, establishes procedures by which the

Department of Defense identifies institutions of higher education that

have a policy or practice described in paragraph (c) of this section.

In cases where those procedures lead to a determination that specific

subordinate elements of an institution of higher education have such a

policy or practice, rather than the institution as a whole, 32 CFR part

216 provides that the prohibition on use of DoD funds applies only to

those subordinate elements.

(2) Applicability to cooperative agreements. As a matter of DoD

policy, the restrictions of section 558, as implemented by 32 CFR part

216, apply to cooperative agreements, as well as grants.

(3) Deviations. Grants officers may not deviate from any provision

of this section without obtaining the prior approval of the Director of

Defense Research and Engineering. Requests for deviations shall be

submitted, through appropriate channels, to: Director for Research,

ODDR&E(R), 3080 Defense Pentagon, Washington, DC 20301-3080.

(e) Grants officers' responsibilities. A grants officer shall:

(1) Not award any grant or cooperative agreement to an institution

of higher education that has been identified pursuant to the procedures

of 32 CFR part 216. Such institutions are identified on the

Governmentwide ``List of Parties Excluded from Federal Procurement and

Nonprocurement Programs,'' as being ineligible to receive awards of DoD

funds (note that 32 CFR 25.505(d) requires the grants officer to check

the list prior to determining that a recipient is qualified to receive

an award).

(2) [Reserved].

(3) Not consent to any subaward of DoD funds to such an

organization, under a grant or cooperative agreement to any recipient,

if such subaward requires the grants officer's consent.

(4) Include the clause in paragraph (f) of this section in each

grant or cooperative agreement with an institution of higher education.

Note that this requirement does not flow down (i.e., recipients are not

required to include the clause in subawards).

(5) If an institution of higher education refuses to accept the

clause in paragraph (f) of this section:

(i) Determine that the institution is not qualified with respect to

the award. The grants officer may award to an alternative recipient.

(ii) Transmit the name of the institution, through appropriate

channels, to the Director for Accession Policy, Office of the Assistant

Secretary of Defense for Force Management Policy, OASD(FMP), 4000

Defense Pentagon, Washington, DC 20301-4000. This will allow OASD(FMP)

to decide whether to initiate an evaluation of the institution under 32

CFR part 216, to determine whether it is an institution that has a

policy or practice described in paragraph (c) of this section.

(f) Clause for award documents. The following clause is to be

included in grants and cooperative agreements with institutions of

higher education:

``As a condition for receipt of funds available to the Department of

Defense (DoD) under this award, the recipient agrees that it is not

an institution of higher education (as defined in 32 CFR part 216)

that has a policy of denying, and that it is not an institution of

higher education that effectively prevents, the Secretary of Defense

from obtaining for

[[Page 12171]]

military recruiting purposes: (A) Entry to campuses or access to

students on campuses; or (B) access to directory information

pertaining to students. If the recipient is determined, using the

procedures in 32 CFR part 216, to be such an institution of higher

education during the period of performance of this agreement, and

therefore to be in breach of this clause, the Government will cease

all payments of DoD funds under this agreement and all other DoD

grants and cooperative agreements to the recipient, and it may

suspend or terminate such grants and agreements unilaterally for

material failure to comply with the terms and conditions of award.''

Sec. 22.525 Paperwork Reduction Act.

Grants officers shall include appropriate award terms or

conditions, if a recipient's activities under an award will be subject

to the Paperwork Reduction Act of 1995 (44 U.S.C. 3500, et seq.):

(a) Generally, the Act only applies to Federal agencies--it

requires agencies to obtain clearance from the Office of Management and

Budget before collecting information using forms, schedules,

questionnaires, or other methods calling either for answers to:

(1) Identical questions from ten or more persons other than

agencies, instrumentalities, or employees of the United States.

(2) Questions from agencies, instrumentalities, or employees of the

United States which are to be used for statistical compilations of

general public interest.

(b) The Act applies to similar collections of information by

recipients of grants or cooperative agreements only when:

(1) A recipient collects information at the specific request of the

awarding Federal agency; or

(2) The terms and conditions of the award require specific approval

by the agency of the information collection or the collection

procedures.

Sec. 22.530 Metric system of measurement.

(a) Statutory requirement. The Metric Conversion Act of 1975, as

amended by the Omnibus Trade and Competitiveness Act of 1988 (15 U.S.C.

205) and implemented by Executive Order 12770 (3 CFR, 1991 Comp., p.

343), states that:

(1) The metric system is the preferred measurement system for U.S.

trade and commerce.

(2) The metric system of measurement will be used, to the extent

economically feasible, in federal agencies' procurements, grants, and

other business-related activities.

(3) Metric implementation shall not be required to the extent that

such use is likely to cause significant inefficiencies or loss of

markets to United States firms.

(b) Responsibilities. DoD Components shall ensure that the metric

system is used, to the maximum extent practicable, in measurement-

sensitive activities supported by programs that use grants and

cooperative agreements, and in measurement-sensitive outputs of such

programs.

Subpart F--Award

Sec. 22.600 Purpose.

This subpart sets forth grants officers' responsibilities relating

to the award document and other actions at the time of award.

Sec. 22.605 Grants officers' responsibilities.

At the time of award, the grants officer is responsible for

ensuring that:

(a) The award instrument contains the appropriate terms and

conditions, in accordance with Sec. 22.610.

(b) Information about the award is provided to the office

responsible for preparing reports for the Defense Assistance Award Data

System (DAADS), to ensure timely and accurate reporting of data

required by 31 U.S.C. 6101-6106 (see 32 CFR part 21, subpart C).

(c)(1) In addition to the copy of the award document provided to

the recipient, a copy is forwarded to the office designated to

administer the grant or cooperative agreement, and another copy is

forwarded to the finance and accounting office designated to make the

payments to the recipient.

(2) For any award subject to the electronic funds transfer (EFT)

requirement described in Sec. 22.810(b)(2), the grants officer shall

include a prominent notification of that fact on the first page of the

copies forwarded to the recipient, the administrative grants officer,

and the finance and accounting office. On the first page of the copy

forwarded to the recipient, the grants officer also shall include a

prominent notification that the recipient, to be paid, must submit a

Payment Information Form (Standard Form SF-3881\6\) to the responsible

DoD payment office, if that payment office does not currently have the

information (e.g., bank name and account number) needed to pay the

recipient by EFT.

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\6\ See footnote 5 to Sec. 22.510(b).

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Sec. 22.610 Award instruments.

(a) Each award document shall include terms and conditions that:

(1) Address programmatic requirements (e.g., a statement of work or

other appropriate terms or conditions that describe the specific goals

and objectives of the project). The grants officer shall develop such

terms and conditions in coordination with program officials.

(2) Provide for the recipient's compliance with:

(i) Pertinent Federal statutes or Executive orders that apply

broadly to Federal or DoD assistance awards.

(ii) Any program-specific requirements that are prescribed in the

program statute (see Sec. 22.210(a)(2)), or appropriation-specific

requirements that are stated in the pertinent Congressional

appropriations (see Sec. 22.515).

(iii) Pertinent portions of the DoDGARs or other Federal

regulations, including those that implement the Federal statutes or

Executive orders described in paragraphs (a)(2) (i) and (ii) of this

section.

(3) Specify the grants officer's instructions for post-award

administration, for any matter where the post-award administration

provisions in 32 CFR part 32, 33, or 34 give the grants officer options

for handling the matter. For example, under 32 CFR 32.24(b), the grants

officers must choose among possible methods for the recipient's

disposition of program income. It is essential that the grants officer

identify the option selected in each case, to provide clear

instructions to the recipient and the grants officer responsible for

post-award administration of the grant or cooperative agreement.

(b) To assist grants officers:

(1) Appendix B to this part provides model clauses to implement

certain Federal statutes, Executive orders, and regulations (see

paragraph (a)(2)(i) of this section) that frequently apply to DoD

grants and cooperative agreements. Grants officers may incorporate the

model clauses into award terms and conditions, as appropriate. It

should be noted that Appendix B to this part is an aid, and not an

exhaustive list of all requirements that apply in all cases. Depending

on the circumstances of a given award, other statutes, Executive

orders, or codified regulations also may apply (e.g., Appendix B to

this part does not list program-specific requirements described in

paragraph (a)(2)(ii) of this section).

(2) Appendix C to this part is a list of administrative

requirements that apply to awards to different types of recipients. It

also identifies post-award administration issues that the grants

officer must address in the award terms and conditions.

[[Page 12172]]

Subpart G--Field Administration

Sec. 22.700 Purpose.

This subpart prescribes policies and procedures for administering

grants and cooperative agreements. It does so in conjunction with 32

CFR parts 32, 33, and 34, which prescribe administrative requirements

for particular types of recipients.

Sec. 22.705 Policy.

(a) DoD policy is to have each recipient deal with a single office,

to the maximum extent practicable, for post-award administration of its

grants and cooperative agreements. This reduces burdens on recipients

that can result when multiple DoD offices separately administer grants

and cooperative agreements they award to a given recipient. It also

minimizes unnecessary duplication of field administration services.

(b) To further reduce burdens on recipients, the office responsible

for performing field administration services for grants and cooperative

agreements to a particular recipient shall be, to the maximum extent

practicable, the same office that is assigned responsibility for

performing field administration services for contracts awarded to that

recipient.

(c) Contracting activities and grants officers therefore shall use

cross-servicing arrangements whenever practicable and, to the maximum

extent possible, delegate responsibility for post-award administration

to the cognizant grants administration offices identified in

Sec. 22.710.

Sec. 22.710 Assignment of grants administration offices.

In accordance with the policy stated in Sec. 22.705(b), the DoD

offices (referred to in this part as ``grants administration offices'')

that are assigned responsibility for performing field administration

services for grants and cooperative agreements are (see the ``DoD

Directory of Contract Administration Services Components,'' DLAH

4105.4,\7\ for specific addresses of administration offices):

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\7\ Copies may be obtained either from the Defense Logistics

Agency, Publications Distribution Division (DASC-WDM), 8725 John J.

Kingman Rd., Suite 0119, Fort Belvoir, VA 22060-6220, or from the

Defense Contract Management Command home page at http://

www.dcmc.dcrb.dla.mil.

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(a) Regional offices of the Office of Naval Research, for grants

and cooperative agreements with:

(1) Institutions of higher education and laboratories affiliated

with such institutions, to the extent that such organizations are

subject to the university cost principles in OMB Circular A-21.\8\

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\8\ See footnote 2 to Sec. 22.420(b)(1).

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(2) Nonprofit organizations that are subject to the cost principles

in OMB Circular A-122,\9\ if their principal business with the

Department of Defense is research and development.

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\9\ See footnote 2 to Sec. 22.420(b)(1).

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(b) Field offices of the Defense Contract Management Command, for

grants and cooperative agreements with all other entities, including:

(1) For-profit organizations.

(2) Nonprofit organizations identified in Attachment C of OMB

Circular A-122 that are subject to for-profit cost principles in 48 CFR

part 31.

(3) Nonprofit organizations subject to the cost principles in OMB

Circular A-122, if their principal business with the Department of

Defense is other than research and development.

(4) State and local governments.

Sec. 22.715 Grants administration office functions.

The primary responsibility of cognizant grants administration

offices shall be to advise and assist grants officers and recipients

prior to and after award, and to help ensure that recipients fulfill

all requirements in law, regulation, and award terms and conditions.

Specific functions include:

(a) Conducting reviews and coordinating reviews, audits, and audit

requests. This includes:

(1) Advising grants officers on the extent to which audits by

independent auditors (i.e., public accountants or Federal auditors)

have provided the information needed to carry out their

responsibilities. If a recipient has had an independent audit in

accordance with OMB Circular A-133, and the audit report disclosed no

material weaknesses in the recipient's financial management and other

management and control systems, additional preaward or closeout audits

usually will not be needed (see Secs. 22.420(b) and 22.825(b)).

(2) Performing pre-award surveys, when requested by a grants

officer, after providing advice described in paragraph (a)(1) of this

section.

(3) Reviewing recipients' systems and compliance with Federal

requirements, in coordination with any reviews and compliance audits

performed by independent auditors under OMB Circular A-133, or in

accordance with the terms and conditions of the award. This includes:

(i) Reviewing recipients' financial management, property

management, and purchasing systems, to determine the adequacy of such

systems.

(ii) Determining that recipients have drug-free workplace programs,

as required under 32 CFR part 25.

(4) Notifying the Office of the Assistant Inspector General for

Policy and Oversight (OAIG(P&O)), 400 Army-Navy Drive, Arlington, VA

22202, if either of the following is not available within a reasonable

period of time (e.g., six months) after the date on which a recipient

of DoD grants and agreements was to have submitted its audit report

under OMB Circular A-133 to the OAIG(P&O):

(i) The recipient's audit report under OMB Circular A-133.

(ii) The OAIG(P&O)'s desk review of the recipient's audit report,

or a letter stating that the OAIG(P&O) has decided not to conduct a

desk review.

(b) Performing property administration services for Government-

owned property, and for any property acquired by a recipient, with

respect to which the recipient has further obligations to the

Government.

(c) Ensuring timely submission of required reports.

(d) Executing administrative closeout procedures.

(e) Establishing recipients' indirect cost rates, where the

Department of Defense is the cognizant or oversight Federal agency with

the responsibility for doing so.

(f) Performing other administration functions (e.g., receiving

recipients' payment requests and transmitting approved payment

authorizations to payment offices) as delegated by applicable cross-

servicing agreements or letters of delegation.

Subpart H--Post-Award Administration

Sec. 22.800 Purpose and relation to other parts.

This subpart sets forth grants officers' and DoD Components'

responsibilities for post-award administration, by providing DoD-

specific requirements on payments; debt collection; claims, disputes

and appeals; and closeout audits.

Sec. 22.805 Post-award requirements in other parts.

Grants officers responsible for post-award administration of grants

and cooperative agreements shall administer such awards in accordance

with the following parts of the DoDGARs, as supplemented by this

subpart:

(a) Awards to domestic recipients. Standard administrative

requirements for grants and cooperative agreements with domestic

recipients are specified in other parts of the DoDGARs, as follows:

[[Page 12173]]

(1) For awards to domestic institutions of higher education and

other nonprofit organizations, requirements are specified in 32 CFR

part 32, which is the DoD implementation of OMB Circular A-110.

(2) For awards to State and local governments, requirements are

specified in 32 CFR part 33, which is the DoD codification of the

Governmentwide common rule to implement OMB Circular A-102.

(3) For awards to domestic for-profit organizations, requirements

are specified in 32 CFR part 34, which is modeled on the requirements

in OMB Circular A-110.

(b) Awards to foreign recipients. DoD Components shall use the

administrative requirements specified in paragraph (a) of this section,

to the maximum extent practicable, for grants and cooperative

agreements to foreign recipients.

Sec. 22.810 Payments.

(a) Purpose. This section prescribes policies and grants officers'

post-award responsibilities, with respect to payments to recipients of

grants and cooperative agreements.

(b) Policy. (1) It is Governmentwide policy to minimize the time

elapsing between any payment of funds to a recipient and the

recipient's disbursement of the funds for program purposes (see 32 CFR

32.22(a) and 33.21(b), and the implementation of the Cash Management

Improvement Act at 31 CFR part 205).

(2) It also is a Governmentwide requirement to use electronic funds

transfer (EFT) in the payment of any grant for which an application or

proposal was submitted or renewed on or after July 26, 1996, unless the

recipient has obtained a waiver by submitting to the head of the

pertinent Federal agency a certification that it has neither an account

with a financial institution nor an authorized payment agent. This

requirement is in 31 U.S.C. 3332, as amended by the Debt Collection

Improvement Act of 1996 (section 31001(x)(1)(A), Pub. L. 104-134), and

as implemented by Department of Treasury regulations at 31 CFR part

208. As a matter of DoD policy, this requirement applies to cooperative

agreements, as well as grants. Within the Department of Defense, the

Defense Finance and Accounting Service implements this EFT requirement,

and grants officers have collateral responsibilities at the time of

award, as described in Sec. 22.605(c), and in postaward administration,

as described in Sec. 22.810(c)(3)(iv).

(3) Expanding on these Governmentwide policies, DoD policy is for

DoD Components to use electronic commerce, to the maximum extent

practicable, in the portions of the payment process for grants and

cooperative agreements for which grants officers are responsible. In

cases where recipients submit each payment request to the grants

officer, this includes using electronic methods to receive recipients'

requests for payment and to transmit authorizations for payment to the

DoD payment office. Using electronic methods will improve timeliness

and accuracy of payments and reduce administrative burdens associated

with paper-based payments.

(c) Post-award responsibilities. In cases where the recipient

submits each payment request to the grants officer, the administrative

grants officer designated to handle payments for a grant or cooperative

agreement is responsible for:

(1) Handling the recipient's requests for payments in accordance

with DoD implementation of Governmentwide guidance (see 32 CFR 32.22,

33.21, or 34.12, as applicable).

(2) Reviewing each payment request to ensure that:

(i) The request complies with the award terms.

(ii) Available funds are adequate to pay the request.

(iii) The recipient will not have excess cash on hand, based on

expenditure patterns.

(3) Maintaining a close working relationship with the personnel in

the finance and accounting office responsible for making the payments.

A good working relationship is necessary, to ensure timely and accurate

handling of financial transactions for grants and cooperative

agreements. Administrative grants officers:

(i) Should be generally familiar with policies and procedures for

disbursing offices that are contained in Chapter 19 of Volume 10 of the

DoD Financial Management Regulation (the FMR, DoD 7000.14-R\10\).

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\10\ Copies may be obtained, at cost, from the National

Technical Information Service, 5285 Port Royal Road, Springfield, VA

22161. Authorized users may also obtain copies from the Defense

Technical Information Center, 8725 John J. Kingman Rd., Suite 0944,

Fort Belvoir, VA 22060-6218.

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(ii) Shall forward authorizations to the designated payment office

expeditiously, so that payments may be made in accordance with the

timely payment guidelines in Chapter 19 of Volume 10 of the FMR. Unless

alternative arrangements are made with the payment office,

authorizations should be forwarded to the payment office at least 3

working days before the end of the period specified in the FMR. The

period specified in the FMR is:

(A) No more than seven calendar days after receipt of the

recipient's request by the administrative grants officer, whenever

electronic commerce is used (i.e., EDI to request and authorize

payments and electronic funds transfer (EFT) to make payments).

(B) No more than thirty calendar days after receipt of the

recipient's request by the administrative grants officer, when it is

not possible to use electronic commerce and paper transactions are

used.

(C) No more than seven calendar days after each date specified,

when payments are authorized in advance based on a predetermined

payment schedule, provided that the payment schedule was received in

the disbursing office at least 30 calendar days in advance of the date

of the scheduled payment.

(iii) Shall ensure that the recipients' Taxpayer Identification

Number (TIN) is included with each payment authorization forwarded to

the payment office. This is a statutory requirement of 31 U.S.C. 3325,

as amended by the Debt Collection Improvement Act of 1996 (section

31001(y), Pub. L. 104-134).

(iv) For each award that is required to be paid by EFT (see

Sec. 22.605(c) and (Sec. 22.810(b)(2)), shall prominently indicate that

fact in the payment authorization.

Sec. 22.815 Claims, disputes, and appeals.

(a) Award terms. Grants officers shall include in grants and

cooperative agreements a term or condition that incorporates the

procedures of this section for:

(1) Processing recipient claims and disputes.

(2) Deciding appeals of grants officers' decisions.

(b) Submission of claims--(1) Recipient claims. If a recipient

wishes to submit a claim arising out of or relating to a grant or

cooperative agreement, the grants officer shall inform the recipient

that the claim must:

(i) Be submitted in writing to the grants officer for decision;

(ii) Specify the nature and basis for the relief requested; and

(iii) Include all data that supports the claim.

(2) DoD Component claims. Claims by a DoD Component shall be the

subject of a written decision by a grants officer.

(c) Alternative Dispute Resolution (ADR)--(1) Policy. DoD policy is

to try

[[Page 12174]]

to resolve all issues concerning grants and cooperative agreements by

mutual agreement at the grants officer's level. DoD Components

therefore are encouraged to use ADR procedures to the maximum extent

practicable. ADR procedures are any voluntary means (e.g., mini-trials

or mediation) used to resolve issues in controversy without resorting

to formal administrative appeals (see paragraph (e) of this section) or

to litigation.

(2) Procedures. (i) The ADR procedures or techniques to be used may

either be agreed upon by the Government and the recipient in advance

(e.g., when agreeing on the terms and conditions of the grant or

cooperative agreement), or may be agreed upon at the time the parties

determine to use ADR procedures.

(ii) If a grants officer and a recipient are not able to resolve an

issue through unassisted negotiations, the grants officer shall

encourage the recipient to enter into ADR procedures. ADR procedures

may be used prior to submission of a recipient's claim or at any time

prior to the Grant Appeal Authority's deci

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