1995-0914_METROPOLITAN / MWDOC_Letter Agr No. 4076 1st AmdI
1� MWD
METROPOLITAN WATER DISTRICT OF SOUTHERN CALIFORNIA
Office of the General Mana,i er
Municipal Water District
of Orange County
Post Office Box 20895
Fountain Valley, California 92728
Attention Mr. Stanley E. Sprague
General Manager
Capistrano Valley Water District
32450 Paseo Adelanto
San Juan Capistrano, California 92675
Attention Mr. Ray Auerbach
General Manager
Gentlemen:
40
August 9, 1996
First Amendment to Letter Agreement No. 4076 for Participation
in a Landscape Water Audit and Irrigation
Computer Control System Retrofit Project
This letter, when signed by all parties, shall serve as
the First Amendment (Amendment) to Letter Agreement No. 4076
(Agreement) between The Metropolitan Water District of Southern
California (Metropolitan), The Municipal Water District of Orange
County (MWDOC), and Capistrano Valley Water District (CVWD).
This Agreement is for CVWD to conduct large landscape water
audits, and to retrofit and connect seven landscape sites to the
City of Capistrano's existing central irrigation computer control
system.
1. This Amendment is necessary due to increases in the
cost of equipment that have occurred since the original proposal
was prepared.
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THE MFTROPOVTAN K'A7FR 07SMV OF SOUTHERN C411FORNIA
Municipal Water District
of Orange County -2- August 9, 1996
2. In lieu of terminating the Agreement and executing a
new agreement, the parties hereby amend the Agreement increasing
the maximum amount payable under the Agreement from $57,000 to
$77,000. The term of this Agreement remains unchanged.
Change from:
The total cost of the Project is estimated to be
$57,000. These costs will be shared with Metropolitan
contributing $28,500 or 50 percent of total Project costs, USBR
contributing $22,800 or 40 percent of total Project costs and
CVWD providing $5,700 or 10 percent of total Project costs.
Change to:
The total cost of the Project is estimated to be
$77,000. These costs will be shared with Metropolitan
contributing $38,500 or 50 percent of total Project costs, USBR
contributing $30,800 or 40 percent of total Project costs and
CVWD providing $7,700 or 10 percent of total Project costs.
shall
Except as hereby amended, Letter Agreement No. 4076
remain in full force and effect.
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THE MEMOROVTAN WATER XMICr OF SON71,68N C HORN/A
Municipal Water District
of Orange County -3- August 9, 1996
Metropolitan has fully executed three originals of this
Amendment. If the terms are acceptable to you, please sign all
three and forward to CVWD, who is to sign all three and return
one original each to Metropolitan, and MWDOC, and retain one for
their records.
PSS/dlh/as
In Triplicate
Municipal Water District
of Orange County
APPROVED AS TO FORM
BY ,aalZt
Title f
Date_ L�'L
Very truly yours,
John R. Wodraska
GeneralMa er
Salvador E. Vazquez
Acting Director,
Public Affairs
APPROVED AS TO FORM
N. Gregory Taylor
General Cou s
By .l ;
Deputy eneral Counsel
Capistrano Valley Water
District
By_-Z� - 4g ZZ
General Manager
Fagg UST40jewmim• •�
a
Title
OFFICE OF THE
CITY ATTORNEY
0
1� MWD
METROPOLITAN WATER DISTRICT OF SOUTHERN CALIFORNIA
Office of the General Manager
Municipal Water District
of Orange County
P.O. Box 20895
Fountain Valley, California 92728
Attention Mr. Stanley E. Sprague
General Manager
Capistrano Valley Water District
32450 Paseo Adelanto
San Juan Capistrano, California 92675
Attention Mr. Ray Auerbach
General Manager
Gentlemen:
0
September 8, 1995
Letter Agreement No. 4076 for Participation
in a Landscape Audit and Irrigation
Computer Control System Retrofit Project
When signed by all parties, this letter will serve as
an agreement (Agreement) among The Metropolitan Water District of
Southern California (Metropolitan), Municipal Water District of
Orange County (MWDOC), and Capistrano Valley Water
District (CVWD).
This Agreement is to be funded by Metropolitan and
CVWD, with additional funding provided by the United States
Bureau of Reclamation (USBR) under a grant agreement with
Metropolitan. Metropolitan's funding is provided through the
Conservation Credits Program which is designed to assist member
and subagencies in conserving Metropolitan's water supplies.
`�����wu, ushnge'E.�, Cabfomia • Ml� 1,g adJrL�xs Box 51153. Los Anycle,, Caii.on is 9001- • i. i.,,)M.,n: i. i'i I1 I(J011
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THE METROPOLITAN WATER 0/STRICT OF SOUTHERN CALIFORNIA
Municipal Water District
of Orange County _2_ September 8, 1995
1. CVWD has submitted a proposal to: (1) conduct
100 large landscape irrigation water audits with quarterly
follow-up visits; and (2) provide, install, and connect to the
City of San Juan Capistrano's central irrigation computer control
system seven radio -controlled satellite controllers in seven
additional landscape sites (Project). The Project description is
marked Exhibit A and attached hereto and incorporated herein by
this reference. Under the terms of this Agreement, CVWD will
perform tasks as outlined in Exhibit A.
2. This Agreement will be effective upon final execution.
CVWD will begin work on Project within 60 days after execution of
the Agreement. CVWD will complete all work and provide all final
verification to Metropolitan by September 30, 1996, or when all
work described in Exhibit A has been completed, whichever occurs
first.
3. If an extension is needed, CVWD will provide
Metropolitan with a written request and justification and
Metropolitan will request additional time for this Project from
USSR.
4. Mr. John Wiedmann is appointed Agreement Administrator
for Metropolitan for the purpose of administering this Agreement
and making any decisions in connection therewith on behalf of
Metropolitan. Metropolitan reserves the right to change the
designated Agreement Administrator upon providing written notice
to MWDOC and CVWD.
5. Mr. Joe Berg is appointed Agreement Administrator for
MWDOC for the purpose of administering this Agreement and making
decisions in connection therewith on behalf of MWDOC. MWDOC
reserves the right to change the designated Agreement
Administrator upon providing written notice to Metropolitan.
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THE METROPOLITAN WATER 9/STRICT Of SOUTHERN CAUEORNIA
0
Municipal Water District
of Orange County -3- September 8, 1995
6. Mr. Jim Widner is appointed Agreement Administrator for
CVWD for the purpose of administering this Agreement and making
decisions in connection therewith on behalf of CVWD. CVWD
reserves the right to change the designated Agreement
Administrator upon providing written notice to MWDOC and
Metropolitan.
Project Reporting Requirements
7. For USBR reporting compliance CVWD will be responsible
for providing Metropolitan with a Final Report and, if
applicable, an Interim Report. Both reports must use the format
shown in Exhibit B, which is attached hereto and incorporated
herein by reference. The Final Report is due 30 days after
Project completion. For any given year that the Project is
underway on September 30 (end of Federal fiscal year), an Interim
Report is due the following November 1 for Project activities
occurring through September 30.
Project Funding
8. The total cost of the Project is estimated to be
$57,000. These costs will be shared with Metropolitan
contributing $28,500 or 50 percent of total Project costs, USBR
contributing $22,800 or 40 percent of total Project costs, and
CVWD providing $5,700 or 10 percent of total Project costs.
9. Within 60 days after execution of this Agreement,
Metropolitan will provide $11,400 to MWDOC. This represents an
advance (Advance) of 20 percent of the total estimated funding.
These funds will be transferred by means of a credit on
Metropolitan's water service billing to MWDOC. MWDOC agrees to
pass on any credits for Project to CVWD for implementation of
this Project.
10. Payments thereafter will be made on a bimonthly
reimbursement basis for Project expenditures incurred. Bimonthly
requests for reimbursement must be accompanied by documentation
of expenditures listed in the invoice format specified in
Exhibit C, which is attached hereto and incorporated herein by
reference. Metropolitan will reimburse only invoices that are
signed and approved by CVWD's Agreement Administrator.
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TNF RfTROMMAN WATER OTSTRTCT Of SOUTHERN CA[TFORNIA
Municipal Water District
of Orange County -4- September 8, 1995
11. Each approved invoice will be reimbursed by
Metropolitan to CVWD at 60 percent of the total invoiced amount.
Payment of the remaining 40 percent will be withheld to reflect
CVWD's financial participation, graduated repayment of the
Advance, and monies withheld until all Project deliverables have
been received and approved by Metropolitan.
12. Upon receipt and approval by Metropolitan and USBR of
the Final Report (see Project Reporting Requirements,
Paragraph 7) a final expense reconciliation will occur. If upon
reconciliation, funds are due from Metropolitan and USER,
Metropolitan will credit these funds to MWDOC, who agrees to pass
the credit to CVWD within 60 days from date of receipt and
approval of the Final Report. If the reconciliation indicates
Metropolitan has remitted excess funds to MWDOC, Metropolitan
will invoice MWDOC, who will invoice CVWD for the excess funds.
MWDOC will remit payment to Metropolitan for the excess funds
within 40 days of the date of receipt of the invoice.
Installation Verification
13. During the Term of this Agreement, CVWD will provide to
Metropolitan and MWDOC written verification from the equipment
manufacturer that the satellite controllers have been properly
sited and installed.
Certifications
14. CVWD agrees to execute the following certifications
that are marked Exhibit D and are attached hereto and
incorporated herein by reference. These certifications are
required as outlined in Section 26.52.223-6 and 27.52.223-5 of
the General Provisions of the Cooperative Agreement No. 4 -FC -30-
00120 between Metropolitan and USER and include the following:
Drug Free Workplace; Lobbying Certification; and Certification
Regarding Debarment, Suspension, Ineligibility and Voluntary
Exclusion.
TRE METROPOLITAN WATER 0/STRICT OF SOUTHERN CA(6ORNTA
Municipal Water District
of Orange County -5- September 8, 1995
Access to Data
15. Metropolitan, MWDOC, CVWD, and their authorized
representatives agree to provide technical data and information
as required by the other parties to implement Project and
evaluate Project implementation, costs, and water savings.
Metropolitan, MWDOC, and CVWD will make available for inspection
to the other parties, upon reasonable advance notice, all
records, books, computer files, and other documents relating to
Project.
Compliance
16, CVWD will conduct Project in compliance with
requirements specified in, but not limited to, the General
Provisions of Cooperative Agreement No. 4 -FC -30-00120 between
Metropolitan and USBR, and as incorporated in the General
Provisions and in the following Office of Management and Budget
(OMB) Circulars: A-87 - Cost Principles for State and Local
Governments; A-102 (revised) - Grants and Cooperative Agreements
with Public organizations and State and Local Governments; A -128 -
Audits of State and Local Governments; and The Common Rule -
Uniform Administrative Requirements for Grants and Cooperative
Agreements to State and Local Governments. These documents are
incorporated by reference and included as Exhibit E.
Audit and Record Retention
17. Metropolitan, MWDOC, and CVWD agree to provide access
to any books, documents, papers, and records that are directly
pertinent to this Agreement for the purpose of making audit,
examination, excerpts, and transcriptions. CVWD will provide a
copy of its annual audit to Metropolitan. Metropolitan, MWDOC,
and CVWD will retain all required records for three years after
final payment has been made and all other pending matters have
been closed.
Termination
18. This Agreement may be terminated by any of the parties
hereto for any reason 30 days after notice in writing to the
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TRE MfTROP&MAN WATfR 0/STRICT OF SOUTHERN CALIFORNIA
Municipal Water District
of Orange County -6-
other parties. Upon such termination, CVWD will provide
Metropolitan with all documentation verifying the implementation
and costs of Project up to and including the date of termination.
The value of services performed up to and including the date of
termination will be determined in accordance with the rates for
services outlined in Attachment 6 of Exhibit A.
Responsibilities
19. MWDOC will pay invoiced amounts to Metropolitan within
40 days from the date of invoice. If payment is received after
the due date, but within the first 30 days after the due date, a
penalty will be assessed of one-half percent of the total invoice
amount. If payment is received more than 30 days after the due
date, a penalty of one-half percent of the total invoice amount
will be assessed each 30 days thereafter.
20. CVWD is responsible for the design, implementation,
personnel, equipment and supplies, and all capital and operating
costs related to and incurred by Project. All materials and
equipment necessary to implement Project are the exclusive
property of CVWD. Metropolitan and MWDOC have no ownership,
right, title, security interest, or other interest in any Project
facilities, materials, or equipment, nor any rights, duties, or
responsibilities for operation or maintenance thereof. Any
modifications to Project, which may alter the implementation,
effectiveness, and/or costs must be agreed to in writing by all
parties.
21. CVWD is responsible for assuring that Project complies
with requirements of California Environmental Quality Act (CEQA).
22. As lead Agency for Project, CVWD is responsible for
providing sufficient qualified personnel and/or selecting a
qualified independent contractor to implement Project.
23. Metropolitan, MWDOC, and CVWD each agrees that it is
responsible for its own actions under this Agreement and agrees
to indemnify and hold the other parties and their officers and
agents harmless, and agrees to defend the other parties against
any claim or asserted liability arising out of its actions,
9
THE METROROCITAN WATER 0/STRICT Of SOUTHERN CAUEORNIA
n
U
Municipal Water District
of Orange County -7- September 8, 1995
either willful or negligent, or its actions in implementing the
Project. Such indemnity will include any losses relating to any
claim made, whether or not a court action is filed, and will
include attorney fees and administrative and overhead costs
related to or arising out of such claim or asserted liability.
CVWD is responsible for any such actions arising under CEQA.
Notice
24. Any written communication required or permitted to be
given hereunder will be deemed received upon personal delivery or
48 hours after deposit in any United States mail depository,
first class postage prepaid, and addressed to the party for whom
intended, as follows:
If to Metropolitan: The Metropolitan Water District
of Southern California
P. O. Box 54153
Los Angeles, California 90054
Attention John P. Wiedmann
If to MWDOC: Municipal Water District
of Orange County
P. O. Box 20895
Fountain Valley, California 92728
Attention Mr. Stanley E. Sprague
If to CVWD: Capistrano Valley Water District
32450 Paseo Adelanto
San Juan Capistrano, California 92675
Attention Mr. Jim Widner
Any party may change such address by giving notice to the other
parties as provided herein.
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THE METROPOLITAN WATER DISTRICT Of SOUTHERN CAUPoRNIA
Municipal Water District
of Orange County _g_ September 8, 1995
Other Terms
25. Metropolitan may, at its own expense and discretion,
provide follow-up analysis and verification of actual results
achieved through Project implementation.
26. It is understood that any alteration or variation of
the terms of this Agreement will not be valid unless made in
writing and signed by all parties hereto, and that this Agreement
constitutes the entire agreement between all parties.
27. This Agreement will inure to the benefit of, and be
binding upon, Metropolitan, MWDOC, CVWD, and their respective
successors. This Agreement is not assignable by any party in
whole or in part.
28. The partial or total invalidity of one or more parts of
this Agreement will not affect the intent or validity of this
Agreement.
29. This Agreement will be deemed a contract under the laws
of the State of California, and for all purposes will be
interpreted in accordance with such laws. Metropolitan, MWDOC,
and CVWD hereby agree and consent to the exclusive jurisdiction
of the courts of the State of California and that the venue of
any action brought hereunder will be in Los Angeles County,
California.
TNF MfTROPOLITAN WATER 0/STRICT Of SOOTfIFRN CALIFORNIA
Municipal Water District
of Orange County -9- September 8, 1995
Metropolitan has fully executed all three originals of
this Agreement. If the terms are acceptable to you, please sign
all three originals and forward them on to CVWD. CVWD is to sign
and return one each to Metropolitan and MWDOC, and retain one
original for their records.
Very truly yours,
John
QI
J1y 14. Malinowski
Director, Public Affairs
APPROVED AS TO FORM
N. Gregory Taylor
General., Counsel
By ✓�
Deputy Genera Counsel
PSS:cl
Attachments
In Triplicate
Municipal Water District Capistrano Valley Water
of Orange County District
By By
General WnageGeneral Manager
APPROVED AS, TO FORM APPRO AS TO F�OR/M
By
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Date %J y�� Date `S/��
EXHIBIT A
CVWD LARGE LANDSCAPE IRRIGATION AUDIT PROGRAM
STATEMENT OF PURPOSE AND JUSTIFICATION
In FY 1992/93, 400 landscape accounts consumed 18% (558,000 hundred cubic feet
- ccf) of the water used in the Capistrano Valley Water District (CVWD). Over 30%
of that water was subject to penalty charges based on our tiered rate system
(Attachment 1).
The proposed Large Landscape Program expands the existing landscape water audit
program and includes two components:
A. In cooperation with the City of San Juan Capistrano, bring
seven large common -area landscapes on-line with the City's
existing radio -controlled irrigation system. The locations of
these controllers are listed in attachment 2 and installation
will be completed no later than the end of June, 1995. The
cost of the controllers will include hardware, installation,
and commissioning. In addition to providing a summary of
the past two years' water use for these accounts, CVWD
agrees to provide water consumption data for the next two
years on a quarterly basis.
B. Target 100 landscape accounts with use in Tier If and Tier
III, for selective audits of aging, inefficient irrigation
systems. By demonstrating water savings at selected sites,
homeowner associations and others will be encouraged to
invest in further system upgrades (see Attachment 3).
CVWD has a 3 -tier allocation system for all landscape accounts based on plant water
requirements as recommended by Metropolitan. The monthly allocations are tailored
for each account by its' square footage, and the monthly evapotranspiration (ET). By
evaluating the billing history, we can identify the water wasters and can help make
strides in curbing waste, while still keeping San Juan Capistrano green.
A preliminary sorting of landscape accounts reveals the accounts with use above Tier
1 (Attachment 3). Over the course of the audit process, comprehensive water
management plans will be developed to include all meters and controllers on a given
site.
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II. MAKE-UP OF TEAM EFFORT
A. Francie Kennedy, Conservation Coordinator, Capistrano Valley Water
District (2 years). Francie is a Certified Landscape Irrigation Auditor with
20 years experience in all phases of horticulture. She will oversee this
project, decide which accounts to audit, direct the audits, suggest
scheduling changes, edit reports, and monitor follow-up.
B. Intern (to be hired on receipt of funding). The intern will accompany the
Conservation Coordinator to audits and related site visits and meetings,
and assist in taking measurements and recording data. The ability to
take good quality field notes, maintain records and files, and type reports
is important. The ideal candidate will have a working knowledge of
irrigation systems, with trouble -shooting and repair experience. A
horticulture background would be a plus, as would bilingual ability.
C. Other CVWD office support staff will be called upon in the areas of
database management, engineering, and maintenance. Grant funding
will not be spent on these in-house staff persons who will help on an as -
needed, as -available basis.
D. Other Experts. Should any account or audit require specialized
knowledge or experience beyond that of CVWD staff, the intern, and the
irrigation supervisor of a given site, an outside contractor may be hired
for short-term work.
III. METHODS AND PROCEDURES
A. Tasks
1. Hire intern to assist CVWD Conservation Coordinator with the
following:
2. Refine list of target accounts (see "B" below).
3. Review history of consumption by Tier II and III accounts on the
target list (CVWD billing records).
4. Market the program to these target accounts (see "C" below).
5. Set appointments and begin performing audits per Irrigation
Training and Research Center (ITRC, San Luis Obispo), and
Irrigation Association (IA) methods and standards (see "D" below).
6. Write first audit reports.
7. Followup, monitoring both water consumption and any repairs or
retrofits suggested in the reports (see "F" below).
8. Review consumption and irrigation scheduling quarterly, or more
frequently if necessary, and generate followup reports.
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B. Target Participants
One hundred Tier II and III landscape accounts will be targeted for audits. The
choice will be based on several factors such as square footage of the
landscaped area served by each meter, total annual consumption, and most
importantly, the amount of water consumed over CVWD's base allocation for
the site which is subject to penalty charges.
We have access to billing records for the past four years. For most accounts,
we also have on file general site plans for the area served by each meter, with
descriptions of the associated plant material and square footage. These were
provided by customers when the tiered rate system, based on square footage,
was adopted in 1990-91. This information will be updated in the field as part
of the audit process. CVWD customer service and field work records will be
reviewed, noting any history of stuck meters, repairs or leaks.
As time permits between phases of the larger audits, other individual landscape
meters throughout the district with a history of Tier III consumption (assumed
to be wasteful), will also be targeted for investigation.
C. Marketing
In most cases, a working relationship has already been established between the
various management companies and CVWD. All management companies have
been willing to provide the name and number of their landscape maintenance
contractor, and several have invited CVWD representatives to meetings of their
landscape committee to offer suggestions on ways to conserve water. Further,
many of the landscape contractors sent workers to attend the recent session
of "Protector del Agua" offered through CVWD. An attitude of teamwork is
developing.
Each customer on the target list will be contacted by telephone and introduced
to the large audit program and it's potential to save them both water and
money. I anticipate a receptive attitude and invitations to attend their next
committee meeting. In conversation with management representatives, CVWD
hopes to elicit figures comparing their water bill with their total landscape
maintenance bill with an eye toward potential reduction of other maintenance
costs associated with overwatering.
At the landscape committee meeting, I will present the parameters of the grant
and it's implementation. I will review the history of water use on site, and
estimate potential savings, I will then set an appointment to meet with the
landscape site supervisor for the initial irrigation audit.
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Other marketing options include:
■ The inevitable "word travels fast" phone calls to CVWD from HOAs who
heard about it from their friends and wonder why they are not on the
first list of targets;
■ Attending one of the regularly scheduled meetings between the City of
San Juan Capistrano and representatives from each of the homeowners
associations (HOAs) and landscape districts within the City to introduce
the program as an item on their agenda;
■ The landscaper maintaining one landscape account on the target list may
also maintain other areas in the district. Knowledge of a particular
landscape company's style on one project may influence investigation of
others they maintain. Education of the gardeners will be a priority.
■ HOAs, commercial, industrial, and institutional customers may be
targeted for landscape audits in conjunction with comprehensive water -
use surveys of selected commercial and multi -family residential accounts,
most with separate landscape meters.
D. Auditing and Scheduling
Audits will be performed per the standards of the Irrigation Training and
Research Center (ITRC, San Luis Obispo), and the Irrigation Association, by a
certified landscape irrigation auditor along with the intern and landscape
maintenance staff familiar with the layout and operation of the irrigation
system. Also present may be other interested parties including members of an
association's landscape committee or board.
Audits will sample the variety of vegetation and irrigation types within a given
customer's landscape. For example, in a 10 -acre HOA common area, we may
sample one large flat lawn, one steep acacia -covered slope, and one median
strip to determine which type of irrigation within the HOA most merits
immediate attention and further audits of similar areas.
Wherever applicable, ITRC software will be utilized for auditing, scheduling and
budgeting water.
E. Follow-up
Follow-up on targeted, audited accounts will begin with their next water bill,
and continue with monitoring their progress as they adjust runtimes, install
uniform heads, repair leaks, etc., per initial audit findings.
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Quarterly review of the appearance of the landscape, water consumption
records by meter, and irrigation schedule records, will allow refinements to be
made. At this time, the next season's water budget and irrigation schedule will
be discussed,and further adjustments can be implemented when appropriate to
the weather.
When plant material needs replacement, customers will be encouraged to
reduce areas of turf and other thirsty plants, with drought -tolerant plants.
As a part of both the marketing and follow-up phases of these audits, letters
may be sent from CVWD to residents of an area being audited along with
graphs of water use in the common areas measured against the base allocation.
This will let them know of the mutual effort taking place between CVWD, their
own board, and their gardener, to save them money and conserve water. HOAs
with newsletters will be encouraged to publicize their efforts to keep water bills,
therefore dues, down. Residents will be urged to report leaks immediately to
minimize common -area water waste. Occasional reminders with updates and
progress reports on water saved will add to the area's generally heightened
awareness and observation of water and wasteful conditions.
Every landscape account will have its peculiarities and the follow-up process
will be tailored to each customer's needs and abilities.
IV. PROGRAM IMPLEMENTATION TIMELINE (Attachment 5)
■ Funds received; mobilization (February -March 1995)
Advertise, hire, and train intern to use computer system and help in
audits
■ Refine target list and set appointments (February -June 1995)
■ Perform audits (April -November 1995)
■ Followup (April 1995 -November 1996)
By July 1995, all 100 accounts will be in the process of marketing,
auditing, followup, seasonal scheduling, and further followup. Continue
this staggered/overlapping implementation until complete.
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V. DESCRIPTION AND TIMETABLE OF DELIVERABLES TO BE PROVIDED
A summary audit report for every account audited will be forwarded to
Metropolitan. This will include a history of consumption for that meter, major
findings during the audit, suggested scheduling changes and suggested repairs
and retrofits.
Quarterly progress reports will follow this initial audit report, summarizing
changes made to the irrigation schedule, and any hardware retrofits performed
by the landscaper.
Over the course of the year following the initial audit, a comparison of
consumption with previous years will be developed, and these figures will be
included in a final report to the customer and to Metropolitan.
11
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ATTACHMENT 2
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CENTRAL IRRIGATION CONTROLLER LOCATIONS
1. Belford Drive and Rosedale Drive - Belford Terrace Landscape District
2. La Novia and San Juan Creek Road - Los Corrales Landscape District
3. Royale Drive - Capistrano Royale Landscape District
4. Ortega Highway and Via Cuartel - All three Mission Woods Landscape District
Calle Arroyo and Via Parra
Calle Arroyo and Sundance
5. Paseo Activo - Seaview Landscape District
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ATTACHMENT 3
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TARGETING LANDSCAPE WATER
THE BIGGEST CONSUMERS
(other than the City)
CUSTOMER'S NAME
ACCOUNTS
TOTAL FY CONS
(in ccf)
Capistrano Business Plaza
6
9,908
Capistrano Royale HOA
11
12,907
Capo Villas HOAs 1, 2 & 3
13
13,575
Captain's Hill HOA
9
12,880
Hidden Mtn Estates
9
13,388
Hunt Club Comm Assn
10
14,667
Mariners Village HOA
8
10,172
Mesa Loma Vista Slope
1
8,622
Mesa Vista N HOA
6
16,555
Moreland -Connemara HOA
11
17,334
Rancho Mission Viejo
1
14,237
San Juan Hills East
17
18,762
San Juan Mesa Verde HOA
4
10,114
Sun Hallow HOA
8
13,150
Village San Juan
23
59,633
TOTAL
0
137
245,904 ccf/yr
0
ATTACHMENT 4
COST SUMMARY
AGENCY: Capistrano Valley Water District
32450 Paseo Adelanto
San Juan Capistrano, CA 92675
CONTACTS: Jim Widner, Administrative Services Manager
France Kennedy, Conservation Coordinator
PHONE: (714) 493-1515 FAX: (714) 493-3955
PROJECT
TITLE: Large Landscape Irrigation Program
(Best Management Practice #5)
PROJECT
TYPE: Expand existing landscape water audit program
WATER
SAVINGS: 142,500 ccf per year/327 of per year
TOTAL
COST: $57,000
Radio Controllers at 7 locations/$5,000 each ..... $35,000
Conservation Coordinator currently part-time -
additional time to implement project ............ $10,000
Intern to assist Conservation Coordinator -
at $1 2/hour/1 0 hours per account/100 accounts ... $12,000
TOTAL COST ...................... $57,000
AGENCY
SHARE: $5,700
IMPLEMENT: Within one month from receipt of funding
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EXfIIBIT B
USER CO -FUNDED CONSERVATION PROJECT REPORT
Date of Report:
Agreement No.:
Participants
Member Agency:
Subagency(ies):
Other:
Summary Overview
Project Type (circle all that apply)
General: 1) new 2) on-going 3) pilot
ULFT's: 1) rebate 2) direct install 3) voucher
4) CBO 5) high school 5) other
CII: 1) surveys 2) retrofits 3) research
Landscape: 1) audits 2) retrofits 3) research
Residential: 1) audits 2) retrofits (showerheads,
ULFT's) 3) research
Target Audience: 1) single-family 2) multi -family
2) low income 4) ethnic
5) educational 6) commercial
7) institutional 8) industrial
Applicable BMP(s):
Project Size
Dates
Total # of units:
Units completed to date (#):
Units completed to date (�):
Other (e.g., acres, dwellings, etc.):
Start data (month/year):
Completion date (month/year):
Duration (months):
Phase: of
Funding
Method (circle one):
1) 50/40/10 (USSR) 2) 50/51
Amounts ($)
USBR:
Metropolitan:
Agency:
Subagency:
End user:
Other:
Savings, Costs and Expenditures
Water Savings
AF savings (list assumptior
Costs
Equipment:
Labor:
In-kind services:
Total:
Cost/AF
Metropolitan cost/AF:
Agency/subagency cost/AF:
Regional cost/AF:
Expenditures
To date ($):
To date (% of total):
Narrative
Project description, including marketing strategies,
implementation methods, evaluation measures,
agency/customer benefits, challenges, successes, etc.:
Agency Address
City, State ZIP
phone FAX
• 0 EXHTFIT C
Metropolitan Water District
of Southern California
Attention: Accounts Payable
Los Angeles, California 90054
Period of performance:
—j—k— to �_
Classification # Emp Total Hourly Labor Cost
hours rate
Personnel subtotal
Materials and Supplies
Description Ori Unit cost Ext cost
Materials and Supplies subtotal
Description Otr Unit cost Ext Cost
Equipment subtotal
Other ExRjnses
Classification Qtr Unit cost Ext cost
Other Expenses subtotal
Approved by: Total Project Costs: $0.00
Name
Tide Less 40% MWD Withhold: $0.00
Date
Total Amount this Invoice: $0.00
Total Previous Invoices: $0.00
Total Invoices to Date: $0.00
Iructions for certifi#ion EXHIBIT o
*
'I. By signing and/or submitting this application or grant agreement, the grantee is
providing the Certification Regarding Drug -Free Workplace Requirements.
2. This Certification is a material representation of fact upon which reliance is
placed when the agency awards the grant. If it is later determined that the grantee
knowingly rendered a false certification, or otherwise violates the requirements of th
Drug -Free Workplace Act, the agency in addition to any other remedies available to the
Federal Government, may take action authorized under the Drug -Free Workplace Act.
For grantees other than individuals. Alternate I applies.
4 For grantees who are individuals. Alternate II applies.
S. Workplaces under grants, for grantees other than individuals, need not be
identified on the certification. If known, they may be identified in the grant
application. If the grantee does not identify the workplaces at the time of
application, or upon award, if there is no application, the grantee must keep the
identity of the workplace(s) on file in its office and make the information available
for Federal inspection. Failure to identify all known workplaces constitutes a
violation of the grantee's drug-free workplace requirements.
6. Workplace identifications must include the actual address of buildings (or parts
of buildings) or other sites where work under the grant takes place. Categorical
descriptions may be used (e.g., all vehicles of a mass transit authority or State
highway department while in operation. State employees in each local unemployment
office, performers in concert halls or radio studios).
7. If the workplace identified to the agency changes during the performance of the
grant, the grantee shall inform the agency of the change(s), if it previously
identified the workplaces in question (see paragraph five).
8. Definitions of terms in the Nonprocurement Suspension and Debarment common rule
and Drug -Free Workplace common rule apply to this justification. Grantees' attention
is called, in particular, to the following definitions from these rules:
"Controlled substance" means a controlled substance in Schedules I through V of
the Controlled Substances Act (21 U.S.C. 812) and as further defined by
regulation (21 CFR 1308.11 through 1308.15);
"Conviction" means a finding of guilt (including a plea of nolo contendere) or
imposition of sentence, or both, by any judicial body charged with the
responsibility to determine violations of the Federal or State criminal drug
statutes;
"Criminal drug statute" means a Federal or non -Federal criminal statute involving
the manufacture, distribution, dispensing, use, or possession of any controlled
substance;
"Employee" means the employee of a grantee directly engaged in the performance of
work under a grant, including (I) all "direct charge" employees; (ii) all
"indirect charge" employees unless their impact or involvement is insignificant
to the performance of the grant; and (iii) temporary personnel and consultants
who are directly engaged in the performance of work under the grant and who are
on the grantee's payroll. This definition does not include workers not on the
payroll of the grantee (e.g., volunteers, even if used to meet a matching
requirement; consultants or independent contractors not on the grantees payroll;
or employees of subrecipients or subcontractors in covered work places).
Signature
Name
Title
Date
EXHIBIT D
S. Department of the InW or
Certification Regarding
Debarment, Suspension, Ineligibility and
Voluntary Exclusion
Lower Tier Covered Transactions
N
This certification is required by the regulations implementing
Executive Order 12549, Debarment and Suspension, 43 CFR Part 12, Section
12.510, Participants, responsibilities. The regulations were published as
Part VII of the May 26, 1988 Federal Regis (pages 19160-19211). Copies
of the regulations are included in the proposal package. For further
assistance in obtaining a copy of the regulations, contact the U.S.
Department of the Interior, Acquisition and Assistance Division, Office of
Acquisition and Property Management, 18th and C Streets, N.W., Washington
D.C. 20240.
(BEFORE COMPLETING CERTIFICATION, READ INSTRUCTIONS ON REVERSE)
(1) The prospective lower tier participants certifies, by
submission of this proposal, that neither it nor its principals is
presently debarred, suspended, proposed for debarment, declared ineligible,
or voluntarily excluded from participation in this transaction by any
Federal department or agency.
(2) Where the prospective lower tier participant is unable to
certify to any of the statements in this certification, such prospective
participant shall attach an explanation to this proposal.
Name and Title of Authorized Representative
Signature Date
Name and Title of Authorized Representative
Signature Date
EXHIBIT D
S. Department of the Interior
Certification Regarding Lobbying
This certification is required by Section 1352, title 31, U.S. Code, entitled
"Limitation on use of appropriated funds to influence certain Federal contracting
and financial transactions."
(BEFORE COMPLETING CERTIFICATION, READ INSTRUCTIONS ON REVERSE)
Certification for Contracts, Grants, Loans and Cooperative Agreements.
The undersigned certifies, to the best of his or her knowledge and belief, that:
(1) No Federal appropriated funds have been paid or will be paid by or on the
behalf of the undersigned, to any person for influencing or attempting to
influence an officer or employee of any agency, a Member of Congress, and officer
or employee of Congress, or an employee of a Member of Congress in connection
with the awarding of any Federal contract, the making of any Federal grant, the
making of any Federal loan, the entering into of any cooperative agreement, and
the extension, continuation, renewal, amendment, or modification of any Federal
contract, grant, loan, or cooperative agreement.
(2) If any funds other than Federal appropriated funds have been paid or will be
paid to any person for influencing or attempting to influence an officer or
employee of any agency, a Member of Congress, an officer or employee of Congress,
or an employee of a Member of Congress in connection with this Federal contract,
grant, loan, or cooperative agreement, the undersigned shall complete and submit
Standard Form -LLL, "Disclosure Form to Report Lobbying," in accordance with its
instructions.
(3) The undersigned shall require that the language of this certification be
included in the award documents for all subawards at all tiers (including
subcontracts, subgrants, and contracts under grants, loans, and cooperative
agreements) and that all subrecipients shall certify accordingly.
This certification is a material representation of fact upon which reliance was
placed when this transaction was made or entered into. Submission of this
certification is a prerequisite for making or entering into this transaction
imposed by Section 1352, title 31, U.S. Code. Any person who fails to file
required certification shall be subject to a civil penalty of not less than
$10,000 and not more than $100,000 for each such failure.
Signature Date
• • Exhibit E
COOPERATIVE AGREEMENT
NO. 4 -FC -30-00120
BETWEEN
BUREAU OF RECLAMATION
AND
THE METROPOLITAN WATER DISTRICT OF SOUTHERN CALIFORNIA
This is a cooperative agreement (Agreement) between the United States Bureau
of Reclamation (Reclamation) and the Metropolitan Water District of Southern
California (Metropolitan) to financially co -participate in the implementation
of urban water conservation projects in the Metropolitan service area.
1. BACKGROUND
Reclamation has responsibility under Federal regulation (Title 43, Code of
Federal Regulations, Part 417.2) to ensure that "...deliveries of Colorado
River water to each Contractor will not exceed those reasonably required for
beneficial use."
Under the Reclamation Act of 1902 as amended and supplemented, Reclamation
Reform Act of 1982 (Public Law 97-923), the Water Resources Research Act
(Public Law 98-242, Title I, Section 10304 and 10305), Small Reclamation
Reform Act of 1956 (Public Law 984), and Code of Federal Regulations 43 Part
417.2 (Procedural Methods for Implementing Colorado River Water Conservation
Measures with Lower Basin Contractors and Others) Reclamation has authority
to enter into this Agreement for support of Metropolitan's water conservation
activities.
As part of a comprehensive water conservation program in Southern California
to assure beneficial water use, Metropolitan requested Federal funding
assistance to implement specific water conservation projects with its member
and subagencies (Agencies).
The specific projects proposed include, but are not limited to: retrofitting
ultra-low flush (ULF) toilets, low -flow showerheads, indoor and outdoor water
audits with residential, commercial, industrial, and institutional customers,
research landscaping water use and new technology applications, school and
industrial retrofits, and water distribution system leak detection and repair.
These projects are attached and incorporated herein by reference as Statement
of Work (SOW), entitled: "The Metropolitan Water District of Southern
California Supporting Implementation of Urban Water Conservation Best
Management Practices.
NO. 4 -FC -30-00120
Cooperative Agreement
2. OBJECTIVES AND NEED FOR THIS ASSISTANCE.
Implementation of urban water conservation programs, such as those proposed
here, are vital to achieving beneficial use and supply reliability goals.
Recently, Reclamation became a signatory to the Memorandum of Understanding
Regarding Urban Water Conservation in California (MOU) to implement best
management practices (BMP). Reclamation has also made the implementation of
BMP's a requirement of its water contractors as part of the contract renewal
process in the Western states. Financial participation with Metropolitan and
its member and subagencies that are also signatories to the MOU is part of
Reclamation's objective to fulfilling its obligations.
There is a need to implement innovative water projects, quantify water
savings, and assess the effectiveness of new technologies and marketing
methodologies as proposed by Metropolitan, which may be transferable
throughout Reclamation's contractors.
This funding assistance is necessary to encourage agencies that have not been
able to participate in projects before due to financial and technological
constraints. Co -participation with Metropolitan and its Agencies assures more
cost-effective implementation of conservation projects.
A joint water conservation program will evaluate water use in an consistent
manner, and will be of value to the local entities, the state, and the Nation.
3. RESULTS OR BENEFITS EXPECTED.
The results and benefits of the water conservation program are described in
the SOW.
4. RESPONSIBILITIES OF THE PARTIES.
4.1 Reclamation, MIM Responsibilities. Reclamation, MWD will':
4.1.1 Not be obligated to expend funds or to make any funds
available for the purpose herein stated in excess of appropriations authorized
by law and administratively allocated for this work, such appropriations shall
be used to calculate the maximum cost shared amounts using the proportions set
forth herein.
4.1.2 Meet at a mutually agreed time and place, to discuss
the progress and final product associated with the work herein described.
4.1.3 Acknowledge the other parties contributing to this
Agreement in any documents, reports, and dedications associated with the work
herein described.
4.1.4 Meet and confer as necessary to resolve any
differences with respect to the implementation of this Agreement.
0
9
NO. 4 -FC -30-00120
Cooperative Agreement
4.2 Reclamation Responsibilities. Reclamation will:
4.2.1 Contribute funds in an amount up to $1,000,000 for
work described in the attached SOW for this Agreement.
4.2.2 Assign a program coordinator to oversee the progress
of the project and to act as liaison with MWD toward the success of this
action. The expenses of such representative to be paid by Reclamation.
4.3 MWD Responsibilities. MWD will:
4.3.1 Establish a restricted cash general ledger account (Account)
to deposit Reclamation funds into for purposes of accepting and being
reimbursed by those funds as provided for the projects and purposes outlined
in the SOW and in accordance with Section 5.1.
4.3.2 Contribute funds in an amount not to exceed $2,359,791 to
implement projects described in the SOW. This contribution includes
Metropolitan's obligation of $1,359,791 and Reclamation's contribution of
$1,000,000 which Metropolitan is advancing for the implementation of the
projects in the SOW. This total contribution shall be held by Metropolitan
for purposes of distributing it among the projects in the SOW for
implementation, either by, with payments to its contractors or through water
billing credits to Agencies.
4.3.3 Execute agreements with each of the Agencies as included in
the SOW or as may be added or changed as allowed in the SOW. Those agreements
shall obligate those Agencies for a total combined amount not to exceed
$262,200. Agency funds shall either be held by themselves to fund the
execution of their particular projects or shall be obligated to reimburse
Metropolitan for implantation expenses by Metropolitan contractors.
4.3.4 Provide quarterly financial reports to Reclamation showing
expenditures and balance of project funds.
4.3.5 Assign Michael D. Moynahan as its representative to oversee
the progress of the project and to act as liaison with Reclamation toward the
success of this action, with expenses of such representative to be paid by
MWD.
N0. 4 -FC -30-00120
Cooperative Agreement
4.3.6 Provide the necessary personnel and equipment to conduct the
work described in the attached SOW of this Agreement or facilitate the
development of agreements with Agencies to assure that the work will be
conducted. Such work will be conducted utilizing contributed funds or by
providing services in-kind offsetting required contributed funds under Section
4.3.2.
4.3.7 Comply with the General Provisions for Agreements which are
marked Exhibit A and are attached hereto and incorporated herein with this
reference.
4.3.8 Comply with all local laws, ordinances, and building codes
in pursuing the work done under this Agreement.
4.3.9 Comply with the provisions of the National Environmental
Policy Act in performing all work.
4.3.10 Abide by the provisions of the following:
(I) Office of Management and Budget (OMB) Circulares which
are incorporated by reference and included in Exhibit A: OMB Circular A-102
(Revised) - Grants and Cooperative Agreements with public organizations and
state and local Governments; OMB Circular A-87 - Cost Principles for State and
local Governmets; OMB Circular A-128 - Audit Requirements for public
organizations and state and local Governments.
(2) If any subcontractors are utilized, the terms of the
clause, Utilization of Small Business Concerns and Small Disadvantaged
Business Concerns, shall apply, which is included in Exhibit A.
(3) Certification form DI -1953 Regarding Debarment,
Suspension, and Other Responsibility Matters, Certification form DI -1955
Regarding Drug -Free Workplace Requirements, Certification form 0I-1962
Statement for Loan Guarantees and Loan Insurance, Certification Regarding
Lobbying, and the Disclosure of Lobbying Activities are to be completed,
signed, and returned with the signed agreement.
(4) Standard Form 4240 Assurances -Construction Programs is
to be completed, signed, and returned with the signed agreement.
4.3.11 May provide funding only to water suppliers intending to
implement projects identified in the SOW who are signatories to the
"Memorandum of Understanding Regarding Urban Water Conservation in
California", dated September 1991. This requirement assures continuing water
conservation efforts by water purveyors in the Southern California area.
0
NO. 4 -FC -30-00120
Cooperative Agreement
4.3.12 Will provide Reclamation with annual reports regarding the
progress and findings on the projects listed in the SOW.
S. PAYMENT.
5.1 ADVANCE OF FUNDS
5.1.1 Metropolitan shall advance both its contribution and
Reclamations funds to Agencies as a water billing credit for project
implementation or to pay for consulting services for contractors under
agreement to Metropolitan.
5.1.2 Metropolitan shall submit a request for reimbursement
for project costs to Reclamation's Grants and Cooperative Agreement Officer
for reimbursement of Reclamation funds it advanced to agencies or as payment
to Metropolitan's contractors.
5.1.3 Request for reimbursement of funds will be timed to be
in accord with the cash requirements of the recipient organizations in
carrying out the purposes of the Agreement. Requests for reimbursement should
be sent to Reclamation 25 days prior to initiating the work program activities
to allow adequate time for review and processing of the reimbursement request.
5.1.4 Prerequisites for reimbursement from Reclamation are:
(1) A completed Standard Form 270 (SF -270). Request
for Advance of Reimbursement.
(2) Review and approval by designated Reclamation
Assistance Representative.
5.1.5 With theses prerequisites in place, Metropolitan will
be reimbursed in a timely manner to enable accomplishment of the work as
described in the SOW. The amount of each reimbursement will not be less than
the sum shown as the requirement on the approved SOW less an estimated balance
of funds available from the prior reimbursements for particular projects. All
payments are subject to appropriation and reservation of funds.
5.1.6 In the event reimbursement of funds available from
Reclamation are insufficient to complete the SOW additional funds may be made
available on the basis of a supplemental detailed SOW submitted and approved
in like manner as the first. Any additional funds made available by
Reclamation subsequent to the initial payment shall be dependent upon
performance by the recipients in a manner satisfactory to Reclamation's Grants
and Cooperative Agreements Officer, of all prior work, but availability of
such funds shall not commit the Grants and Cooperative Agreements Officer to
approval of performance of such prior work.
NO. 4 -FC -30-00120
Cooperative Agreement
5.1.7 The Grants and Cooperative Agreements Officer may, at
his election, withhold any funds contemplated hereunder at any time when, in
his opinion, Metropolitan is in default or delinquent with respect to
performance of any of the items or conditions of this Agreement.
5.2 USE AND REPORTING OF REIMBURSED FUNDS FROM RECLAMATION
5.2.1 Immediately upon receipt of reimbursed funds from
Reclamation, Metropolitan shall deposit said funds into the Account.
Thereafter, Metropolitan may draw upon this Account to finance or be
reimbursed for the work approved under the provisions of this Agreement. Each
withdrawal must be wholly attributable to expenditures approved by the SOW.
Interest earned on Account shall be used in accomplishing the work approved
herein.
5.2.2 The funds from Reclamation shall be used only for
costs and expenses incurred by the recipients for the performance of work
identified and approved in the SOW. If Metropolitan uses funds pursuant to
this Agreement for purposes other than authorized, as determined by the Grants
and Cooperative Agreements Officer, Metropolitan shall reimburse the Account
in the amount of funds so misused.
5.2.3 For each quarterly period, MWD shall provide the
following information to the Reclamation Assistant Representative:
(1) Verification of agency agreements and/or
authorizations of work to contractors
(2) Notices of receipt of Reclamation funds
(3) Records of disbursement of funds
(4) Reconciliation of receipts to disbursements
(5) Copies of checks, invoices, and enough other
supporting documentation to enable the
Assistance Representative to properly review and
approve the expenditures made from the Account.
The submittals required under this clause may change as regulations are
revised. MWD will be notified in writing of any revisions.
5.3 REQUEST FOR REIMBURSEMENT
5.3.1 In the event Metropolitan requires reimbursement for
expenditures not included in or covered by reimbursed funds, Metropolitan may
submit a request for additional reimbursement to Reclamation.
0
NO. 4 -FC -30-00120
Cooperative Agreement
5.4 COST BREAKDOWN FOR WORK INCURRED
5.4.1 Annually and upon completion of the water conservation
programs, Metropolitan shall submit to Reclamation a detailed cost breakdown
covering all actual costs incurred to date. This break down shall cover costs
included in the SOW and specific to those projects, which may also include,
but are not limited to, the following items:
(1) labor (salaries/wages, benefits, etc.)
(2) equipment
(1) currently owned by Metropolitan or agency
(2) rented
(3) purchased by Metropolitan or agency under this
Agreement
(3) materials
(4) inspection
(5) special services
(6) legal services
(7) general expenses
(8) subcontracts
(9) property damage payments (approved by Reclamation)
(10) travel expenses
(11) miscellaneous
(12) insurance
(13) general administrative and overhead
5.4.2 This detailed cost breakdown shall be applied against any
outstanding reimbursement of funds issued under the provisions of this
Agreement, in the following manner:
(1) If the detailed cost breakdown is more than the amount
of funds paid for that specific increment or work program, the remaining costs
shall be paid from the next request of funds. If the Agreement is complete,
Metropolitan may submit a request for reimbursement to Reclamation
proportionate to contributions.
(2) If the detailed cost breakdown is less than the amount
of funds advanced for that specific increment or work program, the remaining
funds shall be applied to the next request for funds. If the Agreement is
complete, remaining funds shall be promptly refunded to Reclamation.
NO. 4 -FC -30-00120
Cooperative Agreement
5.5 NOTIFICATIONS AND FILING FOR REIMBURSEMENT
5.5.1 To assist the Government in providing timely funding,
the recipients are requested to furnish an original SF -270, to the following
address:
Regional Director
Bureau of Reclamation
Attention: LC -120
P.O. Box 61470
Boulder City NY 89006-1470
5.5.2 Any notice and/or payment of funds to MWD shall be
sent post paid, or delivered to:
Michael D. Moynahan, Conservation Branch Manager
The Metropolitan Water District of Southern California
P.O. Box 54153
350 South Grand Ave.
Los Angeles CA 90054-0153
6. FUNDING.
6.1 AMOUNT OF OBLIGATION
6.1.1 The current total estimated cost for accomplishing the
scope of work as set forth herein is $2,621,990. The amount presently
obligated by Reclamation with respect to this Agreement, and hereby
established as a ceiling, is $1,000,000.:
3X0-1316-6000-700-02-0-0
6.1.2 If Metropolitan does not utilize the entire amount
allotted per fiscal year, the balance will be carried forward for use in the
next fiscal year. No legal liability on the part of Reclamation for any
payment may arise from performance under this Agreement until funds are made
available to the Grants and Cooperative Agreements Officer for performance,
and until Metropolitan receives notice of availability, to be confirmed in
writing.
7. TERM OF AGREEMENT. The term of this Agreement shall be from the
date of the award through September 30, 1995.
S. MODIFICATION. This Agreement may be modified through bi-lateral
agreement between the parties. Any modifications made to this Agreement shall
be confirmed in writing prior to performance of the change. Metropolitan
assumes all risks, liabilities, and consequences of performing additional work
outside the specified SOW without prior written approval from the Grants and
Cooperative Agreements Officer.
0 9
NO. 4 -FC -30-00120
Cooperative Agreement
9. TERMINATION. Either party may terminate this Agreement upon 30
days' written notice to the other party. Payments under this Agreement shall
not exceed the maximum amount specified elsewhere in the Agreement.
10. NOTICE OF COSTS APPROACHING TOTAL ESTIMATED COSTS. Whenever
Metropolitan has reason to believe that the total cost of the work under this
Agreement will be substantially greater or less than the presently estimated
cost of the work, Metropolitan shall promptly notify Reclamation in writing.
Metropolitan shall also notify Reclamation, in writing, when the aggregate of
costs incurred and outstanding commitments allowable under this Agreement is
equal to ninety percent (90X). When the costs incurred or outstanding
commitments equal one hundred percent (100%) of such estimated total costs,
Metropolitan shall make no further commitments or expenditures (except to meet
existing commitments) and shall be excused from further performance of the
work unless and until Reclamation and Metropolitan agree in writing to
increase the total estimated cost to be incurred with respect to this
Agreement.
11. CONTINGENT UPON APPROPRIATION. The commitment of Reclamation and
Metropolitan under this Agreement is contingent upon appropriation and
reservation of funds being made.
12. Liability. Metropolitan agrees that it will assume liability,
pursuant to California law, for the negligence of its employees or agents in
carrying out the provisions of the SOW. Metropolitan agrees to hold
Reclamation harmless.in regard to any damages caused by the employees or
agents of MWD in performing work financed under this agreement. Any liability
of the United States shall be limited to that allowed under the Federal Tort
Claims Act.
13. Dispute Resolutions
13.1 Any dispute among the assigned representatives
(Sections 4.3.5 and 4.2.2) relating to the authority and actions to reach a
unanimous decision shall be resolved in the following manner. (1) any entity
requesting resolution of a dispute shall send written notice to other assigned
representative which shall set forth in detail the position of the entity
requesting resolution. (2) within thirty (30) days of the sending of such
notice, the Conservation Branch Manager of Metropolitan and the Regional
Director of the Lower Colorado Region of the United States Bureau of
Reclamation shall have met and attempted to resolve the dispute. (3) any such
resolution shall be in writing and be binding on the actions of the Parties
under this Agreement.
NO. 4 -FC -30-00120
Cooperative Agreement
h M- :or
34. CIRCULARS BY REFERENCE . . . . . . . . . . . . . . . . . . . . . 51
35. UTILIZATION OF SHALL BUSINESS CONCERNS (SEP 1986) . . . . . . . . . . 52
36. RESOLVING DISAGREEMENTS (MAR 1993) . . . . . . . . . . . . . . . . . . 53
37. STEVENS AMENDMENT (SEP 1992) . . . . . . . . . . . . . . . . . . . . . 54
38. USE OF METRIC SYSTEM (MAR 1993) . . . . . . . . . . . . . . . . . . . 55
39. BUDGET (MAR 1993) . . . . . . . . . . . . . . . . . . . . . . . . . . 56
40. DATE OF INCURRENCE OF COSTS (MAR 1993) . . . . . . . . . . . . . . . . 56
2
GIC PROVISIONS FOR COOPERATIVEOREEMENTS
General Provisions for Grant and Cooperative Agreements. Although the clause
consistently uses "Grantee," "Cooperator" should be substituted in each case
if applicable.
1. DEFINITIONS
As used in this part: "Accrued expenditures" mean the charges incurred by the
grantee during a given period requiring the provision of funds for: (1) Goods
and other tangible property received; (2) services performed by employees,
contractors, subgrantees, subcontractors, and other payees; and (3) other
amounts becoming owed under programs for which no current services or
performance is required, such as annuities, insurance claims, and other
benefit payments.
"Accrued income" means the sum of: (1) Earnings during a given period from
services performed by the grantee and goods and other tangible property
delivered to purchasers, and (2) amounts becoming owed to the grantee for
which no current services or performance is required by the grantee.
"Acquisition cost" of an item of purchased equipment means the net invoice
unit price of the property including the cost of modifications, attachments,
accessories, or auxiliary apparatus necessary to make the property usable for
the purpose for which it was acquired. Other charges such as the cost of
installation, transportation, taxes, duty or protective in -transit insurance,
shall be included or excluded from the unit acquisition cost in accordance
with the grantee's regular accounting practices.
"Administrative" requirements mean those matters common to grants in general,
such as financial management, kinds, and frequency of reports, and retention
of records. These are distinguished from "programmatic" requirements which
concern matters that can be treated only on a program -by -program or grant -by -
grant basis, such as kinds of activities that can be supported by grants under
a particular program.
"Awarding agency" means (1) with respect to a grant, the Federal agency, and
(2) with respect to a subgrant, the party that awarded the subgrant.
"Cash contributions" means the grantee's cash outlay, including outlay of
money contributed to the grantee or subgrantee by other public agencies and
institutions, and private organizations and individuals. When authorized by
Federal legislation, Federal funds received from other assistance agreements
may be considered as grantee or subgrantee cash contributions.
"Contract" means (except as used in the definitions for "grant" and "subgrant"
in this section and except where qualified by "Federal") as procurement
contract under a grant or subgrant and means a procurement subcontract under a
contract.
3
"Cost sharing or matching" means the value of the third party in-kind
contributions and the portion of the costs of a federally assisted project or
program not borne by the Federal Government.
"Cost -type contract" means a contract or subcontract under a grant in which
the contractor or subcontractor is paid on the basis of the costs it incurs,
with or without a fee.
"Equipment" means tangible, nonexpendable, personal property having a useful
life of more than one year and an acquisition cost of $5,000 or more per unit.
A grantee may use its own definition of equipment provided that such
definition would at least include all equipment defined above.
"Expenditure report" means: (1) For nonconstruction grants, the SF -269
"Financial Status Report" (or other equivalent report); (2) for construction
grants, the SF -271 "Outlay Report and Request for Reimbursement" (or other
equivalent report).
"Federally recognized Indian tribal government" means the governing body or a
governmental agency of any Indian tribe, band, nation, or other organized
groups or community (including any Native village as defined in section 3 of
the Alaska Native Claims Settlement Act, 85 Stat 688) certified by the
Secretary of the Interiors eligible for the special programs and services
provided by him through the Bureau of Indian Affairs.
'Government' means a State or local government or a federally recognized
Indian tribal government.
"Grant" means an award of financial assistance, including cooperative
agreements, including cooperative agreement, in the form of money, or property
in lieu of money, by the Federal Government to an eligible grantee. The term
does not include technical assistance which provides services instead of
money, or other assistance in the form of revenue sharing, loans, loan
guarantees, interest subsidies, insurance, or direct appropriations. Also, the
term does not include assistance, such as a fellowship or other lump sum
award, which the grantee is not required to account for.
"Grantee" means the government to which a grant is awarded and which is
accountable for the use of the funds provided. The grantee is the entire
legal entity even if only a particular component of the entity is designated
in the grant award document.
"Local government" means a county, municipality, city, town, township, local
public authority (including any public and Indian housing agency under the
United States Housing Act of 1937), school district, intrastate district,
council of governments (whether or not incorporated as a nonprofit corporation
under state law), any other regional or interstate government entity, or any
agency or instrumentality of a local government.
4
"Obligations" mean*he amounts of orders placed. clllfcraccs and subgrants
awarded, goods and services received, and similar transactions during a given
period that will require payment by the grantee during the same or a future
period.
"OMB" means the United States Office of Management and Budget.
"Outlays" (expenditures) mean charges made to the project or program. They
may be reported on a cash or accrual basis. For reports prepared on a cash
basis, outlays are the sum of actual cash disbursement for direct charges for
goods and services, the amount of indirect expense incurred, the value of in-
kind contributions applied, and the amount of cash advances and payments made
to contractors and subgrantees. For reports prepared on an accrued
expenditure basis, outlays are the sum of actual cash disbursements, the
amount of indirect expense incurred, the value of in-kind contributions
applied, and the new increase (or decrease) in the amounts owed by the grantee
for goods and other property received for services performed by employees,
contractors, subgrantees, subcontractors, and other payees, and other amounts
becoming owed under programs for which no current services or performances are
required, such as annuities, insurance claims, and other benefits.
"Percentage of completion method" refers to a system under which payments are
made for construction work according to the percentage of completion of the
work, rather than to the grantee's cost incurred.
"Prior approval" means documentation evidencing consent prior to incurring
specific cost.
"Real property" means land, including land improvements, structures, and
appurtenances thereto, excluding movable machinery and equipment.
"Share," when referring to the awarding agency's portion of real property,
equipment, or supplies, means the same percentage as the awarding agency's
portion of the acquiring party's total costs under the grant to which the
acquisition costs under the grant to which the acquisition cost of the
property was charged. Only costs are to be counted --not the value of third -
party in-kind contributions.
"State" means any of the several States of the United States, the District of
Columbia, the Commonwealth of Puerto Rico, any territory or possession of the
United States, or any agency or instrumentality of a State exclusive of local
governments. The term does not include any public and Indian housing agency
under United States Housing Act of 1937.
"Subgrant" means an award of financial assistance in the form of money, or
property in lieu of money, made under a grant by a grantee to an eligible
subgrantee. The term includes financial assistance when provided by
contractual legal agreement, but does not include procurement.purchases, nor
does it include any form of assistance which is excluded from the definition
of "grant" in this part.
R
"Subgrantee" means the government or other legal entity to which a subgrant is
awarded and which is accountable to the grantee for the use of the funds
provided.
"Supplies" means all tangible personal property other than "equipment" as
defined in this part.
"Suspension" means depending on the context, either (1) temporary withdrawal
of the authority to obligate grant funds pending corrective action by the
grantee or subgrantee or a decision to terminate the grant, or (2) an action
taken by a suspending official in accordance with agency regulations
implementing E.O. 12549 to immediately exclude a person from participating in
grant transactions for a period, pending completion of an investigation and
such legal or debarment proceedings as may ensue.
.Termination" means permanent withdrawal of the authority to obligate
previously -awarded grant funds before that authority would otherwise expire.
It also means the voluntary relinquishment of that authority by the grantee or
subgrantee. "Termination• does not include: (1) Withdrawal of funds awarded
on the basis of the grantee's underestimate of the unobligated balance in a
prior period; (2) Withdrawal of the unobligated balance as a result of a
grant; (3) Refusal to extend a grant or award additional funds, to make a
competing or noncompating continuation, renewal, extension, or supplemental
award; or (4) voiding of a grant upon determination that the award was
obtained fraudulently, or was otherwise illegal or invalid from inception.
"Terms of a grant or subgrant" mean all requirements of the grant or subgrant,
whether in statute, regulations, or the award document.
"Third party in-kind contributions" mean property or services which benefit a
federally assisted project or program and which are contributed by non -Federal
third parties without charge to the grantee, or a cost -type contractor under
the grant agreement.
"Unliquidated obligations" for reports prepared on a cash basis mean the
amount of obligations incurred by the grantee that has not been paid. For
reports prepared on an accrued expenditures basis, they represent the amount
of obligations incurred by the grantee for which an outlay has not been
recorded.
"Unobligated balance" means the portion of the funds authorized by the Federal
agency that has not been obligated by the grantee and is determined by
deducting the cumulative obligations from the cumulative funds authorized.
SUBPART A. FINANCIAL ADMINISTRATION
2. STANDARDS FOR FINANCIAL MANAGEMENT SYSTEMS
(a) A state must expand and account for grant funds in accordance with
State laws and procedures for expending and accounting for its own funds.
Fiscal control and accounting procedures of the State, as well as its
subgrantees and cost -type contractors, must be sufficient to --
q
(1) PAR preparation of reports requirR by this part and the
statutes authorizing the grant and
(2) Permit the tracing of funds to a level of expenditures adequate
to establish that such funds have not been used in violations of the
restrictions and prohibitions of applicable statutes.
(b) The financial management systems of other grantees and subgrantees
must meet the following standards:
(1) Financial reporting. Accurate, current, and complete
disclosure of the financial results of financially assisted activities must be
made in accordance with the financial reporting of the grant or subgrant.
(2) Accounting records. Grantees and subgrantees must maintain
records which adequately identify the source and application of funds provided
for financially assisted activities. These records must contain information
pertaining to grant or subgrant awards and authorizations, obligations,
unobligated balances, assets, liabilities, outlays or expenditures, and
income.
(3) Internal control. Effective control and accountability must be
maintained for all grant and subgrant cash, real and personal property, and
other assets. Grantees and subgrantees must adequately safeguard all such
property and must assure that it is used solely for authorized purposes.
(4) Budget control. Actual expenditures and outlays must be
compared budgeted amounts for each grant and subgrant. Financial information
must be related to performance or productivity data, including the development
of unit cost information whenever appropriate or specifically required in the
grant or subgrant agreement. If unit cost data are required, estimates based
on available documentation will be accepted.
(5) Allowable cost. Applicable OMB cost principles, agency program
regulations, and the terms of grant and subgrant agreements will be followed
in determining the reasonableness, allowability, and allocability of costs.
(6) Source documentation. Accounting records must be supported by
such source documentation as cancelled check, paid bills, payrolls, time and
attendance records, contract and subgrant award documents, etc.
(7) Cash management. Procedures for minimizing the time elapsing
between the transfer of funds from the U.S. Treasury and disbursement by
grantees and subgrantees must be followed whenever advance payment procedures
are used. Grantees must establish reasonable procedures to ensure the receipt
of reports on subgrantees' cash balances and cash disbursements in sufficient
time to enable them to prepare complete and accurate cash transactions reports
to the awarding agency. When advances are made by letter -of -credit or
electronic transfer of funds methods, the grantee must make drawdowns as close
as possible to the time of making disbursements. Grantees must monitor case
drawdowns by their subgrantees to assure that they conform substantially to
the same standards of timing and amount as apply to advances to the grantees.
7
(c) An awarding agency may review the adequacy of the financial
management system of any applicant for financial assistance as part of a
preaward review or at any time subsequent to award.
3. PAYMENT
(a) Scope. This section prescribes the basic standard and the methods
under which a Federal agency will make payments to grantees, and grantees will
make payments to subgrantees and contractors.
(b) Basic standard. Methods and procedures for payment shall minimize
the time elapsing between the transfer of funds and disbursement by the
grantee or subgrantee, in accordance with Treasury regulations at 31 CFR Part
205.
(c) Advances. Grantees and subgrantees shall be paid in advance,
provided they maintain or demonstrate the willingness and ability to maintain
procedures to minimize the time elapsing between the transfer of the funds and
their disbursement by the grantee or subgrantee.
(d) Reimbursement. Reimbursement shall be the preferred method when the
requirements in paragraph (c) of this section are not met. Grantees and
subgrantees may also be paid by reimbursement for any construction grant.
Except as otherwise specified in regulation, Federal agencies shall not use
the percentage of completion method to pay construction grants. The grantee
or subgrantee may use that method to pay its construction contractor, and if
it does, the awarding agency's payments to the grantee or subgrantee will be t
based on the grantee's or subgrantee's actual rate of disbursement. 1
(e) Working capital advances. If a grantee cannot meet the criteria for
advance payments described in paragraph (c) of this section, and the Federal
agency has determined that reimbursement is not feasible because the grantee
lacks sufficient working capital, the awarding agency may provide cash or a
working capital advance basis. Under this procedure the awarding agency shall
advance cash to the grantee to cover its estimated disbursement needs for an
initial period generally geared to the grantees disbursing cycle. Thereafter,
the awarding agency shall reimburse the grantee for its actual cash
disbursements. The working capital advance method of payment shall not be
used by grantees or subgrantees if the reason for using such method is the
unwillingness or inability of the grantee to provide timely advances to the
subgrantee to meet the subgrantee's actual cash disbursement.
(f) Effect of program income refunds and audit recoveries on payment.
(1) Grantees and subgrantees shall disburse repayments to and
interest earned on a revolving fund before requesting additional cash payments
for the same activity.
(2) Except as provided in paragraph (f)(1) of this section,
grantees and subgrantees shall disburse program income, rebates, refunds,
contract settlements, audit recoveries, and interest earned on such funds
before requesting additional cash payments.
0
(g) Wichholdi[lpayments. •
(1) Unless otherwise required by Federal statute, awarding agencies
shall not withhold payments for proper charges incurred by grantees or
subgrantees unless --
(i) The grantee or subgrantee has failed to comply with grant
award conditions or
(ii) The grantee or subgrantee is indebted to the United
States.
(2) Cash withheld for failure to comply with grant award condition,
but without suspension of the grant, shall be released to the grantee upon
subsequent compliance. When a grant is suspended, payment adjustments will be
made in accordance with Section 20.
(3) A Federal agency shall not make payment to grantees for amounts
that are withheld by grantees or subgrantees from payment to contractors to
assure satisfactory completion of work. Payments shall be made by the Federal
agency when the grantees or subgrantees actually disburse the withheld funds
to the contractors or to escrow accounts established to assure satisfactory
completion of work.
(h) Cash depositories.
(1) Consistent with the national goal of expanding the
opportunities for minority business enterprises, grantees and subgrantees are
encouraged to use minority banks (a bank which is owned at least 50 percent by
minority group members). A list of minority owned banks can be obtained from
the Minority Business Development Agency, Department of Commerce, Washington,
DC 20230.
(2) A grantee or subgrantee shall maintain a separate bank account
only when required by Federal -State agreement.
(i) Interest earned on advances. Except for interest earned
on advances of funds exempt under the Intergovernmental Cooperation Act (31
U.S.C. 6501 at seq.) and the Indian Self -Determination Act (23 U.S.C. 450),
grantees and subgrantees shall promptly, but at least quarterly, remit
interest earned on advances to the Federal agency. The grantee or subgrantee
may keep interest amounts up to $100 per year for administrative expenses.
4. ALLOWABLE COSTS
(a) Limitation on use of funds. Grant funds may be used only for:
(1) The allowable cost of the grantees subgrantees.and cost -type
contractors, including allowable costs in the form of payments to fixed-price
contractors; and
E
(2) Reasonable fees or profit to cost type contractors but not any
fee or profit (or other increment above allowable costs) to the grantee or
subgrantee.
(b) Applicable cost principles. For each kind of organization there is
a set of Federal principles for determining allowable costs. Allowable costs
will be determined in accordance with the cost principles applicable to the
organization incurring the costs. The following chart lists the kinds of
organizations and the applicable cost principles.
State, local or Indian tribal
government.
OMB Circular A-87.
OMB Circular A-122
Private nonprofit organization other
than an (1) institution of higher
education, (2) hospital, or
(3) organization named in OMB
Circular A-122 as not subject to OMB Circular A-21.
that circular. 48 CFR Part 31.
Contract Cost Principles and
Educational institutions. Procedures, or uniform cost
accounting standards that
For-profit organization other than a comply with cost principles
hospital and an organization named acceptable to the Federal
in OMB Circular A-122 as not subject agency.
to that circular.
S. PERIOD TO AVAILABILITY OF FUNDS
(a) General. Where a funding period is specified, a grantee may charge
to the award only costs resulting from obligations of the funding period
unless carryover of unobligated balances is permitted, in which case the
carryover balances may be charged for costs resulting from obligations of the
subsequent funding period.
(b) Liquidation of obligations. A grantee must liquidate all
obligations incurred under the award not later than 90 days after the end of
the funding period (or as specified in a program regulation) to coincide with
the submission of the annual Financial Status Report (SF -269). The Federal
agency may extend this deadline at the request of the grantee,
10
6. MATCHING OR CO&HARING •
(a) Basic rule: Costs and contributions acceptable. With the
qualifications and exceptions listed in paragraph (b) of this section, a
matching or cost sharing requirement may be satisfied by either or both of the
following:
(1) Allowable cost incurred by the grantee, subgrantee or a cost -
type contractor under the assistance agreement, This includes allowable costs
borne by non -Federal grants or by other cash donations from non -Federal third
parties.
(2) The value of third party in-kind contributions applicable tot
he period to which the cost sharing or matching requirements applies.
(b) Qualifications and exceptions.
(1) Costs borne by other Federal grant agreements. Except as
provided by Federal statute, a cost sharing or matching requirement may not be
met by costs borne by another Federal grant. This prohibition does not apply
to income earned by a grantee or subgrantee from a contract awarded under
another Federal grant.
(2) General revenue sharing. For the purpose of this section,
general revenue sharing funds distributed under 31 U.S.C. 6702 are not
considered Federal grant funds.
(3) Cost or contributions counted towards other Federal costs -
sharing requirements. Neither costs nor the values of third party in-kind
contributions may count towards satisfying a cost sharing or matching
requirement of a grant agreement if they have been or will be counted towards
satisfying a cost sharing or matching requirement of another Federal grant
agreement, a Federal procurement contract, or any other award of Federal
funds.
(4) Costs financed by program income. Costs financed by program
income, as defined in Section VII, shall not count towards satisfying a cost
sharing or matching requirement unless they are expressly permitted in the
terms of the assistance agreement. (This use of general program income is
described in Section VII.)
(5) Services or property financed by income earned by contractors.
Contractors under a grant may earn income from the activities carried out
under the contract in addition to the amounts earned from the party awarding
the contract. No costs of services or property supported by this income may
count toward satisfying a cost sharing or matching requirement unless other
provisions of the grant agreement expressly permit this kind of income to be
used to meet the requirement.
(6) Records. Costs and third party in-kind contributions counting
towards satisfying a cost sharing or matching requirement must be verifiable
from the records of grantees and subgrantees or cost -type contractors. These
11
records must show how the value placed on third party in-kind contributions
was derived. To the extent feasible, volunteer services will be supported by
the same methods that the organization uses to support the allocability of
regular personnel costs.
(7) Special standards for third party in -.kind contributions.
(i) Third party in-kind contributions count towards
satisfying a cost sharing or matching requirement only where, if the party
receiving the contributions were to pay for them, the payments would be
allowable costs.
(ii) Some third party in-kind contributions are goods and
services that, if the grantee, subgrantee, or contractor receiving the
contribution had to pay for them, the payments would have been an indirect
cost. Costs sharing or matching credit for such contributions shall be given
only if the grantee, subgrantee, or contract has established, along with its
regular indirect cost rate, a special rate for allocating to individual
projects or programs the value of the contributions.
(iii) A third party in-kind contribution to a fixed-price
contract may count towards satisfying a cost sharing or matching requirement
only if it results in;
(A) An increase in the services or property provided
under the contract (without additional cost to the grantee or subgrantee) or
(B) A cost savings to the grantee or subgrantee. I
(iv) The values placed on third party in-kind contributions
for cost sharing or matching purposes will conform to the rules in the
succeeding sections of this part. If a third party in-kind contribution is a
type not treated in those sections, the value placed upon it shall be fair and
reasonable.
(c) Valuation of donated services --
(1) Volunteer services. Unpaid services provided to a grantee or
subgrantee by individuals will be valued at rates consistent with those
ordinarily paid for similar work in the grantee's or subgrantee's
organization. If the grantee or subgrantee does not have employees performing
similar work, the rates will be consistent with those ordinarily paid by other
employers for similar work in the same labor market. In either case, a
reasonable amount for fringe benefits may be included in the valuation.
(2) Employees of other organizations. When an employer other than
a grantee, subgrantee, or cost -type contractor furnishes free of charge the
services will be valued at the employee's regular rate of pay_exclusive of the
employee's fringe benefits and overhead costs. If services are in a different
line of work, paragraph c(1) of this section applies.
12
(d) Valuatioof third party donated suppliend loaned equipment or
space.
(1) If a third party donates supplies, the contribution will be
valued at the market value of the supplies at the time of donation.
(2) If a third party donates the use of equipment or space in a
building but retains title, the contribution will be valued at the fair rental
rate of the equipment or space.
(e) Valuation of third party donated equipment, buildings, and land, and
title passes to a grantee or subgrantee, the treatment of the donated property
will depend upon the purpose of the grant or subgrant, as follows:
(1) Awards for capital expenditures. If the purpose of the grant
or subgrant is to assist the grantee or subgrantee in the acquisition of
property, the market value of that property at the time of donation may be
counted as cost sharing or matching.
(2) Other awards. If assisting in the acquisition of property is
not the purpose of the grant or subgrant, paragraphs e(2)(i) and (ii) of this
section apply:
(i) If approval is obtained from the awarding agency, the
market value at the time of donation of the donated equipment or buildings and
the fair rental rate of the donated land may be counted as cost sharing or
matching. In the case of a subgrant, the terms of the grant agreement may
require that the approval be obtained from the Federal agency as well as the
grantee. In all cases, the approval may be given only if a purchase of the
equipment or rental of the land would be approved as an allowable direct cost.
If any part of the donated property was acquired with Federal funds, only the
non-federal share of the property may be counted as cost-sharing or matching.
(ii) If approval is not obtained under paragraph (e)(2)(i) of
this section, no amount may be counted for donated land, and only depreciation
or use allowances may be counted for donated equipment and buildings. The
depreciation or use allowances for this property are not treated as third
party in-kind contributions. Instead, they are treated as costs incurred by
the grantee or subgrantee. They are computed and allocated (usually as
indirect costs) in accordance with the cost principles specified in Section 4
in the same way as depreciation or use allowances for purchased equipment and
buildings. The amount of depreciation or use allowances for donated equipment
and buildings is based on the property's market value at the time it was
donated.
(f) Valuation of grantee or subgrantee donated real property for
construction/acquisition. If a grantee or subgrantee donates real property
for a construction or facilities acquisition project, the current market value
of that property may be counted as cost sharing or matching. If any part of
the donated property was acquired with Federal funds, only the non-federal
share of the property may be counted as cost sharing or matching.
13
(g) Appraisal of real property. In some cases under paragraph (d), (e),
and (f) of this section, it will be necessary to establish the market value of
land or a building or the fair rental rate of land or of space in a building.
In these cases the Federal agency may require the market value of fair rental
value be set by an independent appraiser, and that the value or rate be
certified by the grantee. This requirement will also be imposed by the
grantee on subgrantees.
7. PROGRAM INCOME
(a) General. Grantees are encouraged to earn income to defray program
costs. Program income includes income from fees for services performed, from
the use or rental of real or personal property acquired with grant funds, from
the sale of commodities or items fabricated under a grant agreement and from
payments of principal and interest on loans made with grant funds. Except as
otherwise provided in regulations of the Federal agency, program income does
not include interest on grant funds, rebates, credits, discounts, refunds,
etc. and interest earned on any of them.
(b) Definition of program income. Program income means gross income
received by the grantee or subgrantee directly generated by a grant supported
activity, or earned only as a result of the grant agreement during the grant
period. •During the grant period" is the time between the effective date of
the award and the ending date of the award reflected in the final financial
report.
(c) Cost generating program income. If authorized by Federal `
regulations or the grant agreement, costs incident to the generation of
program income may be may be deducted from gross income to determine program
income.
(d) Governmental revenues. Taxes, special assessments, levies,
fines,and other such revenues raised by a grantee or subgrantee are not
program income unless the revenues are specifically identified in the grant
agreement or Federal agency regulations as program income.
(e) Royalties. Income from royalties and license fees for copyrighted
material, patents, and inventions developed by a grantee or subgrantee is
program income only if the revenues are specifically identified in the grant
agreement or Federal agency regulations as program income. (see Section 13).
(f) Property. Proceeds from the sale of real property or equipment will
be handled in accordance with the requirements of Section 10 and 11.
(g) Use of program income. Program income shall be deducted from
outlays which may be both Federal and non -Federal as described below, unless
the Federal agency regulations or the grant agreement specify another
alternative (or a combination of the alternatives). In specifying
alternatives, the Federal agency may distinguish between income earned by the
grantee and income earned by the subgrantees and between the sources kinds, or
amounts of income. When Federal agencies authorize the alternatives in
14
paragraphs (g)(2) a*(3) of this section, program 19ome in excess of any
limits stipulated shall also be deducted from outlays.
(1) Deduction. Ordinarily program income shall be deducted from
total allowable costs to determine the net allowable costs. Program income
shall be used for current costs unless the Federal agency authorizes
otherwise. Program income which the grantee did not anticipate at the time of
the award shall be used to reduce the Federal agency and grantee contributions
rather than to increase the funds committed to the project.
(2) Addition. When authorized, program income may be added to the
funds committed to the grant agreement by.the Federal agency and the grantee.
The program income shall be used for the purposes and under the conditions of
the grant agreement.
(3) Cost sharing or matching. When authorized, program income may
be used to meet the cost sharing or matching requirement of the grant
agreement. The amount of the Federal grant award remains the same.
(h) Income after the award period. There are no Federal requirements
governing the disposition of program income earned after the end of the award
period (i.e., until the ending date of the final financial report, see
paragraph (a) of this section, unless the terms of the agreement or the
Federal agency regulations provide otherwise.
8. NON-FEDERAL AUDIT
(a) Basic Rule. Grantees and subgrantees are responsible for obtaining
audits in accordance with the Single Audit Act of 1984 (31 U.S.C. 7501-7) and
Federal agency implementing regulations. The audits shall be made by an
independent auditor in accordance with generally accepted government auditing
standards covering financial and compliance audits.
(b) Subgrantees. State and local governments, as those terms are
defined for purposes of the Single Audit Act, that receive Federal financial
assistance and provide $25,000 or more of it in a fiscal year to a subgrantee
shall:
(1) Determine whether State or local subgrantees have met the audit
requirements of the Act and whether subgrantees covered by OMB Circular A-110,
"Uniform Requirements for Grants and Other Agreements with Institutions of
Higher Education, Hospitals, and Other Nonprofit Organizations" have met the
audit requirement. Commercial contractors (private for-profit and private and
governmental organizations) providing goods and services to State and local
governments are not required to have a single audit performed. State and
local governments should use their own procedures to ensure that the
contractor has complied with laws and regulations affecting the expenditure of
Federal funds;
(2) Determine whether the subgrantee spent Federal assistance funds
provided in accordance with applicable laws and regulations. This may be
accomplished by reviewing an audit of the subgrantee made in accordance with
15
the Act, Circular A-1010, or through other means (e.g., program reviews) if
the subgrantee has not had such an audit;
(3) Ensure that appropriate corrective action is taken within six
months after receipt of the audit report in instance of noncompliance with
Federal laws and regulations;
(4) Consider whether subgrantee audits necessitate adjustment of
the grantees own records; and
(5) Require each subgrantee to permit independent auditors to have
access to the records and financial statements.
(c) Auditor selection. In arranging for audit services, Section 15
shall be followed.
SUBPART B. CHANGES, PROPERTY, AND SUBAAARDS
9. CHANGES
(a) General. Grantees and subgrantees are permitted to rebudget within
the approved direct cost budget to meet unanticipated requirements and may
make limited program changes to the approved project. However, unless waived
by the awarding agency, certain types of post -award changes in budgets and
projects shall require the prior written approval of the awarding agency.
(b) Relation to cost principles. The applicable cost principles
(see Section 4) contain requirements for prior approval of certain types of
costs. Except where waived, those requirements apply to all grants and
subgrants even if paragraphs (c) through (f) of this section do not.
(c) Budget changes.
(1) Nonconstruction projects. Except as stated in other
regulations or an award document, grantees or subgrantees shall obtain the
prior approval of the awarding agency whenever any of the following changes is
anticipated under a nonconstruction award:
(i) Any revision which would result in the need for
additional funding.
(ii) Unless waived by the awarding agency, cumulative
transfers among direct cost categories, or, if applicable, among separately
budgeted programs, projects, functions, or activities which exceed or are
expected to exceed 10 percent of the current total approved budget, whenever
the awarding agency's share exceeds $100,000.
(iii) Transfer of funds allotted for training allowances
(i.e., from direct payments to trainees to other expense categories).
16
(2) Confouction projects. Grantees and0bgrantees shall obtain
prior written approval for any budget revision which would result in the need
for additional funds.
(3) Combined construction and nonconstruction projects. When a
grant or subgrant provides funding for both construction and nonconstruction
activities, the grantee or subgrantee must obtain prior written approval from
the awarding agency before making any fund or budget transfer from
nonconstruction to construction or vice versa.
(d) Programmatic changes. Grantees or subgrantees must obtain the prior
approval of the awarding agency whenever any of the following actions is
anticipated:
(1) Any revision of the scope or objectives of the project
(regardless of whether there is an associated budget revision requiring prior
approval).
(2) Need to extend the period of availability of funds.
(3) Changes in key persons in cases where specified in an
application or a grant award. In research projects, a change in the project
director or principal investigator shall always require approval unless waived
by the awarding agency.
(4) Under nonconstruction projects, contracting out, subgranting
(if authorized by law) or otherwise obtaining the services of a third party to
perform activities which are central to the purposes of the award. This
approval requirement is in addition to the approval requirements of Section 15
but does not apply to the procurement of equipment, supplies, and general
support services.
(e) Additional prior approval requirement. The awarding agency may not
require prior approval for any budget revision which is not described in
paragraph (c) of this section.
(f) Requesting prior approval.
(1) A request for prior approval of any budget revision will be in
the same budget formal the grantee used in its application and shall be
accompanied by a narrative justification for the proposed revision.
(2) A request for a prior approval under the applicable Federal
cost principles (see Section 4) may be made by letter.
(3) A request by a subgrantee for prior approval will be addressed
in writing to the grantee. The grantee will promptly review such request and
shall approve or disapprove the request in writing. A grantee will not
approve any budget or project revision which is inconsistent with the purpose
or terms and conditions of the Federal grant to the grantee. If the revision,
requested by the subgrantee would result in a change to the grantee's approved
17
project which requires Federal prior approval, the grantee will obtain the
Federal agency's approval before approving the subgrantee's request.
10, REAL PROPERTY
(a) Title. Subject to the obligations and conditions set forth in this
section, title to real property acquired under a grant or subgrant will vest
upon acquisition in the grantee or subgrantee respectively.
(b) Use. Except as otherwise provided by Federal statutes, real
property will be used for the originally authorized purposes as long as needed
for those purposes, and the grantee or subgrantee shall not dispose of or
encumber its title or other interests.
(c) Disposition. When real property is no longer needed for the
originally authorized purpose, the grantee or subgrantee will request
disposition instructions from the awarding agency. The instructions will
provide for one of the following alternatives.
(1) Retention of title. Retain title after compensating the
awarding agency. The amount paid to the awarding agency will be computed by
applying the awarding agency's percentage of participation in the cost of the
original purchase to the fair market value of the property. However, in those
situations where a grantee or subgrantee is disposing of real property
acquired with grant funds and acquiring replacement real property under the
same program, the net proceeds from the disposition may be used as an offset
to the cost of the replacement property.
(2) Sale of property. Sell the property and compensate the
awarding agency. The amount due to the awarding agency will be calculated by
applying the awarding agency's percentage of participation in the cost of the
original purchase to the proceeds of the sale after deduction of any actual
and reasonable selling and fixing -up expenses. If the grant is still active,
the net proceeds from sale may be offset against the original cost of the
property. When a grantee or subgrantee is directed to sell property, sales
procedures shall be followed that provide for competition to the extent
practicable and result in the highest possible return.
(3) Transfer of title. Transfer title to the awarding agency or to
a third -party designated/approved by the awarding agency. The grantee or
subgrantee shall be paid an amount calculated by applying the grantee or
subgrantee's percentage of participation in the purchase of the real property
to the current fair market value of the property.
11. EQUIPMENT
(a) Title. Subject to the obligations and conditions set forth in this
section, title to equipment acquired under a grant or subgrant will vest upon
acquisition in the grantee or subgrantee respectively.
(b) States. A State will use, manage, and dispose of equipment
acquired under a grant by the State in accordance with State laws and
18
procedures. Other Vantees and subgrantees will follow paragraphs (c) through
(e) of this section.
(c) Use. (1) Equipment shall be used by the grantee or subgrantee in
the program or project for which it was acquired as long as needed, whether or
not the project or program continues to be supported by Federal funds. When
no longer needed for the original program or project, the equipment may be
used in other activities currently or previously supported by a Federal
agency.
(2) The grantee or subgrantee shall also make equipment available
for use on other projects or programs currently or previously supported by the
Federal Government, providing such use will not interfere with the work on the
projects or program for which it was originally acquired. First preference
for other use shall be given to other programs or projects supported by the
awarding agency. User fees should be considered if appropriate.
(3) Notwithstanding the encouragement in Section 7 (a) to earn
program income, the grantee or subgrantee must not use equipment acquired with
grant funds to provide services for a fee to compete unfairly with private
companies that provide equivalent services, unless specifically permitted or
contemplated by Federal statute.
(4) When acquiring replacement equipment, the grantee or subgrantee
may use the equipment to be replaced as a trade-in or sell the property and
use the proceeds to offset the cost of the replacement property, subject to
the approval of the awarding agency.
(d) Management requirements. Procedures for managing equipment
(including replacement equipment), whether acquired in whole or in part with
grant funds, until disposition takes place will, as a minimum, meet the
following requirements:
(1) Property records must be maintained that include a description
of the property, a serial number or other identification number, the source of
property, who holds title, the acquisition date, and cost of the property,
percentage of Federal participation in the cost of the property, the location,
use and condition of the property, and any ultimate disposition data including
the date of disposal and sale price of the property.
(2) A physical inventory of the property must be taken and the
results reconciled with the property records at least once every two years.
(3) A control system must be developed to ensure adequate
safeguards to prevent loss, damage, or theft of the property. Any loss,
damage, or theft shall be investigated.
(4) Adequate maintenance procedures must be developed to keep the
property in good condition.
19
(5) If the grantee or subgrantee is authorized or required to sell
the property, proper sales procedures must be established to ensure the
highest possible return.
(e) Disposition. When original or replacement equipment acquired under
a grant or subgrant is no longer needed for the original project or program or
for other activities currently or previously supported by a Federal agency,
disposition of the equipment will be made as follows:
(1) Items of equipment with a current per-unit fair market value of
less than $5,000 may be retained, sold or otherwise disposed of with no
further obligation to the awarding agency.
(2) Items of equipment with a current per-unit fair market value in
excess of $5,000 may be retained or sold and the awarding agency shall have a
right to an amount calculated by multiplying the current market value or
proceeds from sale by the awarding agency's share of the equipment.
(3) In cases where a grantee or subgrantee fails to take
appropriate disposition actions, the awarding agency may direct the grantee or
subgrantee to take excess and disposition actions.
(f) Federal equipment. In the event a grantee or subgrantee is
provided federally -owned equipment:
(1) Title will remain vested in the Federal Government.
(2) Grantees or subgrantees will manage the equipment in accordance
with Federal agency rules and procedures, and submit an annual inventory
listing.
(3) When the equipment is no longer needed, the grantee or
subgrantee will request disposition instructions from the Federal agency.
(g) Right to transfer title. The Federal awarding agency may reserve
the right to transfer title to the Federal Government or a third part named by
the awarding agency when such a third party is otherwise eligible under
existing statutes. Such transfers shall be subject to the following
standards:
(1) The property shall be identified in the grant or otherwise made
known to the grantee in writing.
(2) The Federal awarding agency shall issue disposition instruction
within 120 calendar days after the end of the Federal support of the project
for which it was acquired. If the Federal awarding agency fails to issue
disposition instructions within the 120 calendar -day period the grantee shall
follow Section 11(e).
(3) When title to equipment is transferred, the grantee shall be
paid an amount calculated by applying the percentage or participation in the
purchase to the current fair market value of the property.
20
12. SUPPLIES •
0
(a) Title. Title to supplies acquired under a grant or subgrant will
vast, upon acquisition, in the grantee or subgrantee respectively.
(b) Disposition. If there is a residual inventory of unused supplies
exceeding $5,000 in total aggregate fair market value upon termination or
completion of the award, and if the supplies are not needed for any other
federally sponsored programs or projects, the grantee or subgrantee shall
compensate the awarding agency for its share.
13. COPYRIGHTS
The federal awarding agency reserves a royalty -free, nonexclusive, and
irrevocable license to reproduce publish or otherwise use, and to authorize
others to use, for Federal Government purposes:
(a) The copyright in any work developed under a grant, subgrant, or
contract under a grant or subgrant; and
(b) Any rights of copyright to which a grantee, subgrantee or a
contractor purchases ownership with grant support.
14. SUBAWARDS TO DEBARRED AND SUSPENDED PARTIES
Grantees and subgrantees must not make any award or permit any award (subgrant
or contract) at any tier to any party which is debarred or suspended or is
otherwise excluded from or ineligible for participation in Federal assistance
programs under Executive Order 12549, "Debarment and Suspension."
21
15. PROCUREMENT
(a) States. When procuring property and services under a grant, a
State will follow the same policies and procedures it uses for procurements
from its non -Federal funds. The State will ensure that every purchase order
or other contract includes any clauses required by Federal statutes and
executive orders and their implementing regulations. Other grantees and
subgrantees will follow paragraphs (b) through (i) in this section.
(b) Procurement standards. (1) Grantees and subgrantees will use
their own procurement procedures which reflect applicable State and local laws
and regulations, provided that the procurements conform to applicable Federal
law and the standards identified in this section.
(2) Grantees and subgrantees will maintain a contract
administration system which ensures that contractors perform in accordance
with the terms, conditions, and specifications of their contracts or purchase
orders.
(3) Grantees and subgrantees will maintain a written code of
standards of conduct governing the performance of their employees engaged in
the award and administration of contracts. No employee, officer or agent of
the grantee or subgrantee shall participate in selection, or in the award or
administration of a contract supported by Federal funds if a conflict of
interest, real or apparent, would be involved. Such a conflict would arise
when:
(i) The employee, officer or agent,
(ii) Any member of his immediate family,
(iii) His or her partner, or
(iv) An organization which employs, or is about to employ,
any of the above, has a financial or other interest in the firm selected for
award. The grantee's or subgrantee's officers, employees or agents will
neither solicit nor accept gratuities, favors or anything of monetary value
from contractors, potential contractors, or parties to subagreements. Grantee
and subgrantees may set minimum rules where the financial interest is not
substantial or the gift is an unsolicited item of nominal intrinsic value. to
the extent permitted by State or local law or regulations, such standards or
conduct will provide for penalties, sanctions, or other disciplinary actions
for violations of such standards by the grantee's and subgrantee's officers,
employees, or agents, or by contractors or their agents. The awarding agency
may in regulation provide additional prohibitions relative to real, apparent,
or potential conflicts of interest.
(4) Grantee and subgrantee procedures will provide for a review of
proposed procurements to avoid purchase of unnecessary or duplicative items.
Consideration should be given to consolidating or breaking out procurements to
obtain a more economical purchase. Where appropriate, an analysis will be
made of lease versus purchase alternatives, and any other appropriate analysis
to determine the most economical approach.
22
(5) To foster greater economy and effici• y, grantees and
subgrantees are encouraged to enter into State and local intergovernmental
agreements for procurement or use of common goods and services.
(6) Grantees and subgrantees are encouraged to use Federal excess
and surplus property in lieu of purchasing new equipment and property whenever
such use is feasible and reduces project costs.
(7) Grantees and subgrantees are encouraged to use value
engineering clauses in contracts for construction projects of sufficient size
to offer reasonable opportunities for cost reductions. Value engineering is a
systematic and creative analysis of each contract item or task to ensure that
its essential function is provided at the overall lower cost.
(8) Grantees and subgrantees will make awards only to responsible
contractors possessing the ability to perform successfully under the terms and
conditions of a proposed procurement. Consideration will be given to such
matters as contractor integrity, compliance with public policy, record of past
performance, and financial and technical resources.
(9) Grantees and subgrantees will maintain records sufficient to
detail the significant history of a procurement, these records will include,
but are not necessarily limited to the following: rationale for the method of
procurement selection of contract type, contractor selection or rejection, and
the basis for the contract price.
(10) Grantees and subgrantees will use time and material type
contracts only --
(i) After a determination that no other contract is suitable,
and
(ii) If the contract includes a ceiling price that the
contractor exceeds at its own risk.
(11) Grantees and subgrantees alone will be responsible, in
accordance with good administrative practice and sound business judgment, for
the settlement of all contractual and administrative issues arising out of
procurements. These issues include, but are not limited to source evaluation,
protests, disputes, and claims. These standards do not relieve the grantee or
subgrantee of any contractual responsibilities under its contracts. Federal
agencies will not substitute their judgment for that of the grantee or
subgrantee unless the matter is primarily a Federal concern. Violations of
law will be referred to the local, State, or Federal authority having proper
jurisdiction.
(12) Grantees and subgrantees will have protest procedures to
handle and resolve disputes relating to their procurements and shall in all
instances disclose information regarding the protest to the awarding agency.
A protestor must exhaust all administrative remedies with the grantee and
subgrantee before pursuing a protest with the Federal agency. Reviews of
protests by the Federal agency will be limited to:
NO
(i) Violations of Federal law or regulations and the
standards of this section (violations of State or local law will be under the
jurisdiction of State or local authorities) and;
(ii) Violations of the grantee's or subgrantee's protest
procedures for failure to review a complaint or protest. Protests received by
the Federal agency other than those specified above will be referred to the
grantee or subgrantee.
(c) Competition. (1) All procurement transactions will be conducted in
a manner providing full and open competition consistent with the standards of
Section 15. Some of the situations considered to be restrictive of
competition include but are not limited to:
(i) Placing unreasonable requirements on firms in order for
them to qualify to do business,
(ii) Requiring unnecessary experience and excessive bonding,
(iii) Noncompetitive pricing practices between firms or
between affiliated companies,
(iv) Noncompetitive awards to consultants that are on
retainer contracts,
(v) Organizational conflicts of interest,
(vi) Specifying only a "brand name• product instead of
allowing "an equal" product to be offered and describing the performance of
other relevant requirements of the procurement, and
(vii) Any arbitrary action in the procurement process.
(2) Grantees and subgrantees will conduct procurements in a manner
that prohibits the use of statutorily or administratively imposed in -State or
local geographical preferences in the evaluation of bids or proposals, except
in those cases where applicable Federal statutes expressly mandate or
encourage geographic preference. Nothing in this section preempts State
licensing laws. When contracting for architectural and engineering (A/E)
services, geographic location may be a selection criteria provided its
application leaves an appropriate number of qualified firms, given the nature
and size of the project, to compete for the contract.
(3) Grantees will have written selection procedures for
procurement transactions. These procedures will ensure that all
solicitations:
(i) Incorporate a clear and accurate description of the
technical requirements for the material, product, or service to be procured.
Such description shall not, in competitive procurements, contain features
which unduly restrict competition. The description may include a statement of
the qualitative nature of the material, product or service to be procured, and
24
when necessary, sheset forth chose minimum essent• characteristics and
standards to which it must conform if it is to satisfy its intended use.
Detailed product specifications should be avoided if at all possible. When it
is impractical or uneconomical to make a clear and accurate description of the
technical requirements, a "brand name or equal" description may be used as a
means to define the performance or other salient requirements of a
procurement. The specific features of the named brand which must be met by
offerors shall be clearly stated; and
(ii) Identify all requirements which the offerors must fulfill
and all other factors to be used in evaluating bids or proposals.
(4) Grantees and subgrantses will ensure that all prequalified
lists of persons, firms, or products which are used in acquiring goods and
services are current and include enough qualified sources to ensure maximum
open and subgrantees will not preclude potential bidders from qualifying
during the solicitation period.
(d) Methods of procurement be followed. (1) Procurement by small
purchase procedures. Small purchase procedures are those relatively simple
and informal procurement methods for securing services, supplies, or other
property that do not cost more than $25,000 in the aggregate. If small
purchase procurements are used, price or rate quotations will be obtained from
an adequate number of qualified sources.
(2) Procurement by sealed bids (formal advertising). Bids are
publicly solicited and a firm -fixed-price contract (lump sum or unit price) is
awarded to the responsible bidder whose bid, conforming with all the material
terms and conditions of the invitation for bids, is the lowest in price. The
sealed bid method is the preferred method for procuring construction, if the
conditions in Section 15(d)(2)(i) apply.
(i) In order for sealed bidding to be feasible, the following
conditions should be present:
(A) A complete, adequate, and realistic specification
or purchase description is available;
(B) Two or more responsible bidders are willing and
able to compete effectively for the business; and
(C) The procurement lends itself to a firm -fixed-price
contract and the selection of the successful bidder can be made principally on
the basis of price.
(ii) If sealed bids are used, the following requirements
apply:
(A) The invitation for bids will be publicly advertised
and bids shall be solicited from an adequate number of known suppliers,
providing them sufficient time prior to the date set for opening the bids;
25
(B) The invitation for bids, which will include any
specifications and pertinent attachments, shall define the items or services
in order for the bidder to properly respond;
(C) All bids will be publicly opened at the time and
place prescribed in the invitation for bids;
(D) A firm -fixed-price contract award will be made in
writing to the lowest responsive and responsible bidder. Where specified in
bidding documents, factors such as discounts, transportation cost, and life
cycle costs shall be considered in determining which bid is lowest. Payment
discounts will only be used to determine the low bid when prior experience
indicates that such discounts are usually taken advantage of; and
(E) Any or all bids may be rejected if there is a sound
documented reason.
(3) Procurement by competitive proposals. The technique of
competitive proposals is normally conducted with more than one source
submitting an offer, and either a fixed-price or cost -reimbursement type
contract is awarded. It is generally used when conditions are not appropriate
for the use of sealed bids. If this method is used, the following
requirements apply:
(i) Requests for proposals will be publicized and identify
all evaluation factors and their relative importance. Any response to
publicized requests for proposals shall be honored to the maximum extent
practical;
(ii) Proposals will be solicited from an adequate number of
qualified sources;
(iii) Grantees and subgrantees will have a method for
conducting technical evaluations of the proposals received and for selecting
awardees;
(iv) Awards will be made to the responsible firm whose
proposal is most advantageous to the program, with price and other factors
considered; and
(v) Grantees and subgrantees may use competitive proposal
procedures for qualifications -based procurement of architectural/engineering
(A/E) professional services whereby competitors' qualifications are evaluated
and the most qualified competitor is selected, subject to negotiation of fair
and reasonable compensation. The method, where price is not used as a
selection factor, can only be used in procurement of A/E professional
services. It cannot be used to purchase other types of services though A/E
firms are a potential source to perform the proposed effort.
(4) Procurement by noncompetitive proposals is procurement through
solicitation of a proposal from only one source, or after solicitation of a
number of sources, competition is determined inadequate.
26
M0 Procurement by noncompetitive may be used only
when the award of a contract is infeasible under small purchase procedures,
sealed bids or competitive proposals and one of the following circumstances
applies:
(A) The item is available only from a single source;
(B) The public exigency or emergency for the
requirement will not permit a delay resulting from competitive solicitation;
(C) The awarding agency authorizes noncompetitive
proposals; or
(D) After solicitation of a number of sources,
competition is determined inadequate.
(ii) Cost analysis, ie.e, verifying the proposed cost data,
the projections of the data, and the evaluation of the specific elements of
costs and profit, is required.
(iii) Grantees and subgrantees may be required to submit the
proposed procurement to the awarding agency for pre -award review in accordance
with paragraph (g) of this section.
(e) Contracting with small and minority firms, women's business
enterprise and labor surplus area firms. (1) The grantee and subgrantee will
take all necessary affirmative steps to assure that minority firms, women's
business enterprises, and labor surplus area firms are used when possible.
(2) Affirmative steps shall include:
(i) Placing qualified small and minority businesses and
women's business enterprises on solicitation lists;
(ii) Assuring that small and minority businesses, and women's
business enterprises are solicited whenever they are potential sources;
(iii) Dividing total requirements, when economically feasible,
into smaller tasks or quantities to permit maximum participation by small and
minority business, and women's business enterprises;
(iv) Establishing delivery schedules, where the requirement
permits, which encourage participation by small and minority business, and
women's business enterprises;
(v) Using the services and assistance of the Small business
Administration and the Minority Business Development Agency of the Department
of Commerce; and
(vi) Requiring the prime contractor, if subcontracts are to
be let, to take the affirmative steps listed in paragraphs (e)(2)(i) through
(v) of this section.
27
M Contract cost and price. (1) Grantees and subgrantees must
perform a cost or price analysis in connection with every procurement action
including contract modifications. The method and degree of analysis is
dependent on the facts surrounding the particular procurement situation, but
as a starting point, grantees must make independent estimates before receiving
bids or proposals. A cost analysis must be performed when the offeror is
required to submit the elements of his estimated cost, e.g., under
professional, consulting, and architectural engineering services contracts. A
cost analysis will be necessary when adequate price competition is lacking,
and for sole source procurements, including contract modifications or change
orders, unless price reasonableness can be established on the basis of a
catalog or market price of a commercial product sold in substantial quantities
to the general public or based on prices set by law or regulation. A price
analysis will be used in all other instances to determine the reasonableness
of the proposed contract price.
(2) Grantees and subgrantees will negotiate profit as a separate
element of the price for each contract in which there is no price competition
and in all cases where cost analysis is performed. To establish a fair and
reasonable profit, consideration will be given to the complexity of the work
to be performed, the risk borne by the contractor, the contractor's
investment, the amount of subcontracting, the quality of its record of past
performance, and industry profit rates in the surrounding geographical area
for similar work.
(3) Costs or prices based on estimated costs for contracts under
grants will be allowable only to the extent that costs incurred or cost
estimates included in negotiated prices are consistent with Federal cost
principles (see Section 4). Grantees may reference their own cost principles
that comply with the applicable Federal cost principles.
(4) The cost plus a percentage of cost and percentage of
construction cost methods of contracting shall not be used.
(g) Awarding agency review. (1) Grantees and subgrantees must make
available, upon request of the awarding agency, technical specifications on
proposed procurements where the awarding agency believes such review is needed
to ensure that the item and/or service specified is the one being proposed for
purchase. This review generally will take place prior to the time the
specification is incorporated into a solicitation document. However, if the
grantee or subgrantee desires to have the review accomplished after a
solicitation has been developed, the awarding agency may still review the
specifications, with such review usually limited to the technical aspects of
the proposed purchase.
(2) Grantees and subgrantees must on request make available for
awarding agency pre -award review procurement documents, such as requests for
proposals or invitations for bids, independent cost estimates, etc., when:
(i) A grantee's or subgrantee's procurement procedures or
operation fails to comply with the procurement standards in this section; or
28
0
(ii) The procurement
be awarded without competition or only
response to a solicitation; or
0
is expected to exceed $25,000 and is to
one bid or offer is received in
(iii) The procurement, which is expected to exceed $25,000,
specifies a "brand name" product; or
(iv) The proposed award over $25,000 is to be awarded to
other than the apparent low bidder under a sealed bid procurement; or
(v) A proposed contract modification changes the scope of a
contract or increases the contract amount by more than $25,000.
(3) A grantee or -subgrantee will be exempt from the pre -award
review in paragraph (g)(2) of this section if the awarding agency determines
that its procurement systems comply with the standards of this section.
(i) A grantee or subgrantee may request that its procurement
system be reviewed by the awarding agency to determine whether its system
meets their standards in order for its system to be certified. Generally,
these reviews shall occur where there is a continuous high -dollar funding, and
third -party contracts are awarded on a regular basis;
(ii) A grantee or subgrantee may self -certify its procurement
system. Such self -certification shall not limit the awarding agency's right
to survey the system. Under a self -certification procedure, awarding agencies
may wish to rely on written assurances from the grantee or subgrantee that it
is complying with these standards. A grantee or subgrantee will cite specific
procedures, regulations, standards, etc., as being in compliance with these
requirements and have its system available for review.
(h) Bonding requirements. For construction or facility improvement
contracts or subcontracts exceeding $100,000, the awarding agency may accept
the bonding policy and requirements of the grantee or subgrantee provided the
awarding agency has made a determination that the awarding agency's interest
is adequately protected. If such a determination has not been made, the
minimum requirements shall be as follows:
(1) A bid guarantee for each bidder equivalent to five percent of
the bid price. The "bid guarantee" shall consist of a firm commitment such as
a bid bond, certified check, or other negotiable instrument accompanying a bid
as assurance that the bidder will, upon acceptance of his bid, execute such
contractual documents as may be required within the time specified.
(2) A performance bond on the part of the contractor 100 percent of
the contract price. A "performance bond is one executed in connection with a
contract to secure fulfillment of all the contracts obligations under such
contract.
(3) A payment bond on the part of the contractor for 100 percent of
the contract price. A "payment bond" is executed in connection with a
29
contract to assure payment as required by law of all persons supplying labor
and material in the execution of the work provided for in the contract.
(i) Contract provisions. A grantee's and subgrantee's contracts must
contain provisions in paragraph (i) of this section. Federal agencies are
permitted to require changes, remedies, changed conditions, access and records
retention, suspension of work, and other clauses approved by the Office of
Procurement Policy.
(1) Administrative, contractual, or legal remedies in instances
where contractor's violate or breach contract terms, and provide such
sanctions and penalties as may be appropriate. (Contracts other than small
purchases)
(2) Termination for cause and for convenience by the grantee or
subgrantee including the manner by which it will be effected and the basis for
settlement. (All contracts in excess of $10,000)
(3) Compliance with Executive Order 11246 of September 24, 1965,
entitled •Equal Employment Opportunity," as amended by Executive Order 11375
of October 13, 1967, and as supplemented in Department of Labor regulations
(41 CFR Part 60). (All construction contracts awarded in excess of $10,000 by
grantees and their contractors or subgrantees)
(4) Compliance with the Copeland "Anti -Kickback" Act
(18 U.S.C. 874) as supplemented in Department of Labor regulations
(29 CFR Part 3). (All contracts and subgrants for construction or repair)
(5) Compliance with the Davis -Bacon Act (40 U.S.C. 276a to a-7) as
supplemented by Department of Labor regulations (29 CFR Part 5).
(Construction contracts in excess of $2,000 awarded by grantees and
subgrantees when required by Federal grant program legislation)
(6) Compliance with Sections 103 and 107 of the Contract Work Hours
and Safety Standards Act (40 U.S.C. 327-330) as supplemented by Department of
Labor regulations (29 CFR Part 5). (Construction contracts awarded by
grantees and subgrantees in excess of $2,000 and in excess of $2,500 for other
contracts which involve the employment of mechanics or laborers)
(7) Notice of awarding agency requirements and regulations
pertaining to reporting.
(8) Notice of awarding agency requirements and regulations
pertaining to patent rights with respect to any discovery or invention which
arises or is developed in the course of or under such contract.
(9) Awarding agency requirements and regulations pertaining to
copyrights and rights in data.
(10) Access by the grantee, the subgrantee, the Federal grantor
agency, the Comptroller General of the United States, or any of their duly
authorized representatives to any books, documents, papers, and records of the
30
contractor which a9directly pertinent to that spe• is contract for the
purpose of making audit, examination, excerpts, and transcriptions.
(11) Retention of all required records for three years after
grantees or subgrantees make final payments and all other pending matters are
closed.
(12) Compliance with all applicable standards, orders, or
requirements issued under section 306 of the Clear Air Act
(42 U.S.C. 1857(h)), section 508 of the Clean Water Act (33 U.S.C. 1368),
Executive Order 11738, and Environmental Protection Agency regulations
(40 CFR Part 15). (Contracts, subcontracts, and subgrants of amounts in
excess of $100,000).
(13) Mandatory standards and policies relating to energy efficiency
which are contained in the state energy conservation plan issued in compliance
with the Energy Policy and Conservation Act (Pub. I. 94-163).
16. SUBGRANTS
(a) States. States shall follow state law and procedures when awarding
and administering subgrants (whether on a cost reimbursement or fixed amount
basis) of financial assistance to local and Indian tribal governments, States
shall:
(1) Ensure that every subgrant includes any clauses required by
Federal statute and executive orders and their implementing regulations;
(2) Ensure that subgrantees are award of requirements imposed upon
them by Federal statute and regulations;
(3) Ensure that a provision for compliance with Section 4 is placed
in every cost reimbursement subgrant; and
(4) Conform any advances of grant funds to subgrantees
substantially to the same standards of timing and amount that apply cash
advances by Federal agencies.
(b) All other grantees. All other grantees shall follow the provisions
of this part which are applicable to awarding agencies when awarding and
administering subgrants (whether on a cost reimbursement or fixed amount
basis) of financial assistance to local and Indian tribal governments.
Grantees shall:
(1) Ensure that every subgrant includes a provision for compliance
with this part;
(2) Ensure that every subgrant includes any clauses required by
Federal Statute and executive orders and their implementing regulations; and
(3) Ensure that subgrantees are aware of requirements imposed upon
them by Federal statutes and regulations.
31
SUBPART C. REPORTS, RECORDS, RETENTION, AND
17. MONITORING AND REPORTING PROGRAM PERFORMANCE
(a) Monitoring by grantees. Grantees are responsible for managing the
day-to-day operations of grant and subgrant supported activities. Grantees
must monitor grant and subgrant supported activities to assure compliance with
applicable Federal requirements and that performance goals are being achieved.
Grantee monitoring must cover each program, function, or activity.
(b) Nonconstruction performance reports. The Federal agency may, if it
decides that performance information available from subsequent applications
contains sufficient information to meet its programmatic needs, require the
grantee to submit a performance report only upon expiration or termination of
grant support. Unless waived by the Federal agency this report will be due on
the same date as the final Financial Status Report.
(1) Grantees shall submit annual performance reports unless the
awarding agency requires quarterly or semi-annual reports. However,
performance reports will not be required more frequently than quarterly.
Annual reports shall be due 90 days after the grant year, quarterly or semi-
annual reports shall be due 30 days after the reporting period. The final
performance report will be due 90 days after the expiration or termination of
grant support. If a justified request is submitted by a grantee, the Federal
agency may extend the due date for any performance report. Additionally,
requirements for unnecessary performance report may be waived by the Federal
agency.
(2) Performance reports will contain, for each grant, brief
information on the following:
(i) A comparison of actual accomplishments to the objectives
established for the period. Where the output of the project can be
quantified, a computation of the cost per unit of output may be required if
that information will be useful.
(ii) The reasons for slippage if established objectives were
not met.
(iii) Additional pertinent information including, when
appropriate, analysis and explanation of cost overruns or high unit costs.
(3) Grantees will not be required to submit more than the original
and two copies of performance reports.
(4) Grantees will adhere to the standards in this section in
prescribing performance reporting requirements for subgrantees.
(c) Construction performance reports. For the most part, on-site
technical inspections and certified percentage -of -completion data are relied
on heavily by Federal agencies to monitor progress under construction grants
32
and subgrants. The feral agency will require add• onal formal performance
reports only when considered necessary, and never more frequently than
quarterly.
(d) Significant developments. Events may occur between the scheduled
performance reporting dates which have significant impact upon the grant or
subgrant supported activity. In such cases, the grantee must inform the
Federal agency as soon as the following types of conditions become known:
(1) Problems, delays, or adverse conditions which will materially
impair the ability to meet the objective of the award. This disclosure must
include a statement of the action taken, or contemplated, and any assistance
needed to resolve the situation.
(2) Favorable developments which enable meeting time schedules and
objectives sooner or at less cost than anticipated or producing more
beneficial results than originally planned.
(e) Federal agencies may make site visits as warranted by program needs.
(f) Waivers, extensions.
(1) Federal agencies may waive any performance report required by
this part if not needed.
(2) The grantee may waive any performance report from a subgrantee
when not needed. The grantee may extend the due date for any performance
report from a subgrantee if the grantee will still be able to meet its
performance reporting obligations to the Federal agency.
18. FINANCIAL REPORTING
(a) General.
(1) Except as provided in paragraphs (a)(2) and (5) of this
section, grantees will use only the forms specified in paragraphs (a) through
(e) of this section, and such supplementary or other forms as may from time to
time be authorized by OMB, for:
(i) Submitting financial reports to Federal agencies, or
(ii) Requesting advances or reimbursements when letters of
credit are not used.
(2) Grantees need not apply the forms prescribed in this section in
dealing with their subgrantees. However, grantees shall not impose more
burdensome requirements on subgrantees.
(3) Grantees shall follow all applicable standard and supplemental
Federal agency instructions approved by OMB to extent required under the
Paperwork Reduction Act of 1980 for use in connection with forms specified in
paragraphs (b) through (e) of this section. Federal agencies may issue
33
substantive supplementary instructions only with the approval of OHB. Federal
agencies may shade out or instruct the grantee to disregard any line item that
the Federal agency finds unnecessary for its decisionmaking purposes.
(4) Grantees will not be required to submit more than the original
and two copies of forms required under this part.
(S) Federal agencies may provide computer outputs to grantees to
expedite or contribute to the accuracy of reporting. Federal agencies may
accept the required information from grantees in machine usable format or
computer printouts instead of prescribed forms.
(6) Federal agencies may waive any report required by this section
if not needed.
(7) Federal agencies may extend the due date of any financial
report upon receiving a justified request form a grantee.
(b) Financial Status Report.
(1) Form. Grantees will use Standard Form 269 or 269A, Financial
Status Report, to report the status of funds for all nonconstruction grants
and for construction grants when required in accordance with this section.
(2) Accounting basis. Each grantee will report program outlays and
program income on a cash or accrual basis as prescribed by the awarding
agency. If the Federal agency requires accrual information and the grantee's
accounting records are not normally kept on the accrual basis, the grantee
shall not be required to convert its accounting system but shall develop such
accrual information through analysis of the documentation on hand.
(3) Frequency. The Federal agency may prescribe the frequency of
the report for each project or program. However, the report will not be
required more frequently than quarterly. If the Federal agency does not
specify the frequency of the report, it will be submitted annually. A final
report will be required upon expiration or termination of grant support.
(4) Due date. When reports are required on a quarterly or semi-
annual basis, they will be due 30 days after the reporting period. When
required on an annual basis, they will be due 90 days after the grant year.
Final reports will be due 90 days after the expiration or termination of grant
support.
(c) Federal Cash Transactions Report.
(1) Form.
(i) For grants paid by letter of credit, Treasury check,
advances, or electronic transfer of funds, the grantee will submit the
Standard Form 272, Federal Cash Transactions Report, and when necessary, its
continuation sheet, Standard Form 272a, unless the terms of the award exempt
the grantee from this requirement.
34
(ii These reports will be used bye Federal agency to
monitor cash advanced to grantees and to obtain disbursement or outlay
information for each grant from grantees. The format of the report may be
adapted as appropriate when reporting is to be accomplished with the
assistance of automatic data processing equipment provided that the
information to be submitted is not changed in substance.
(2) Forecasts of Federal cash requirements. Forecasts of Federal
cash requirements may be required in the "Remarks" section of the report.
(3) Cash in hands of subgrantees. When considered necessary and
feasible by the Federal agency, grantees may be required to report the amount
of cash advances in excess of three days' needs in the hands of their
subgrantees or contractors and to provide short narrative explanations of
actions taken by the grantee to reduce the excess balances.
(4) Frequency and due date. Grantees must submit the report no
later than 15 working days following the end of each quarter. However, where
an advance either by letter of credit or electronic transfer of funds is
authorized at an annualized rate of one million dollars or more, the Federal
agency may require the report to be submitted within 15 working days following
the end of each month.
(d) Request for advance or reimbursement.
(1) Advance payments. Request for Treasury check advance payments
will be submitted on Standard Form 270, Request for Advance or Reimbursement.
(This form will not be used for drawdowns under a letter of credit, electronic
funds transfer, or when Treasury check advance payments are made to the
grantee automatically on a predetermined basis.)
(2) Reimbursements. Request for reimbursement under
nonconstruction grants will also be submitted on Standard Form 270. (For
reimbursement requests under construction grants, see paragraph (e)(1) of this
section.)
(3) The frequency for submitting payment requests is treated in
Section 18.
(e) Outlay report and request for reimbursement for construction
programs.
(1) Grants that support construction activities paid by
reimbursement method.
(i) Requests for reimbursement under construction grants
will be submitted on Standard Form 271, outlay Report and Request for
Reimbursement for Construction Programs. Federal agencies may, however,
prescribe the Request for Advance or Reimbursement form, specified in Section
18(d), instead of this form.
35
(ii) The frequency for submitting reimbursement requests is
treated in Section 18(b)(3).
(2) Grants that support construction activities paid by letter of
credit, electronic funds transfer, or Treasury check advance.
(i) When a construction grant is paid by letter of credit,
electronic funds transfer, or Treasury check advances, the grantee will report
its outlays to the Federal agency using Standard Form 271, Outlay Report and
Request for Reimbursement for Construction Programs. The Federal agency will
provide any necessary special instruction. However, frequency and due date
shall be governed by Section 18(b)(3) and (4).
(ii) When a construction grant is paid by Treasury check
advances based on periodic requests from the grantee, the advances will be
requested on the form specified in Section 18(d).
(iii) The Federal agency may substitute the Financial Status
Report specified in Section 18(b)(1) for the Outlay Report and Request for
Reimbursement for Construction Programs.
(3) Accounting basis. The accounting basis for the Outlay Report
and Request for Reimbursement for Construction Programs shall be governed by
Section 18(b)(2).
19. RETENTION AND ACCESS REQUIREMENTS FOR RECORDS.
(a) Applicability.
(1) This section applies to all financial and programmatic records,
supporting documents, statistical records, and other records of grantees or
subgrantees which are:
(i) Required to be maintained by the terms of this Part,
program regulations or the grant agreement, or
(ii) Otherwise reasonably considered as pertinent to program
regulations or the grant agreement.
(2) This section does not apply to records maintained by
contractors or subcontractors. For a requirement to place a provision
concerning records in certain kinds of contracts, see Section 15(i)(10).
(b) Length of retention period.
(1) Except as otherwise provided, records must be retained for
three years from the starting date specified in paragraph (c) of this section.
(2) If any litigation, claim, negotiation, audit, or other action
involving the records has been started before the expiration of the 3 -year
period, the records must be retained until completion of the action and
36
resolution of all Ques which arise from it, or All the end of the regular
3 -year period, whichever is later.
(3) To avoid duplicate recordkeeping, awarding agencies may make
special arrangements with grantees and subgrantees to retain any records which
are continuously needed for joint use. The awarding agency will request
transfer of records to its custody when it determines that the records possess
long-term retention value. When the records are transferred to or maintained
by the Federal agency, the 3 -year retention requirement is not applicable to
the grantee or subgrantee.
(c) Starting date of retention period.
(1) General. When grant support is continued or renewed at annual
or other intervals, the retention period for the records of each funding
period start on the day the grantee or subgrantee submits to the awarding
agency its single or last expenditure report for that period. However, if
grant support is continued or renewed quarterly, the retention period for each
year's records starts on the day the grantee submits its expenditure report
for the last quarter of the Federal fiscal year. In all other cases, the
retention period starts on the day the grantee submits its final expenditure
report, If an expenditure report has been waived, the retention period starts
on the day the report would have been due.
(2) Real property and equipment records. The retention period for
real property and equipment records starts from the date of the disposition or
replacement or transfer at the direction of the awarding agency.
(3) Records for income transactions after grant or subgrant
support. In some cases grantees must report income after the period of grant
support. Where there is such=a requirement, the retention period for the
records pertaining to the earning of the income starts from the end of the
grantee's fiscal year in which the income is earned.
(4) Indirect cost rate proposals, cost allocations plans, etc.
This paragraph applies to the following types of documents and their
supporting records: indirect cost rate computations or proposals, cost
allocations plans, and any similar accounting computation of the rate at which
a particular group of costs is chargeable (such as computer usage chargeback
rates or composite fringe benefit rates).
(i) If submitted for negotiation. If the proposal, plan, or
other computation is required to be submitted to the Federal Government (or to
the grantee) to form the basis for negotiation of the rate, then the 3 -year
retention period for the proposal, plan, or computation and its supporting
records starts from end of the fiscal year (or other accounting period)
covered by the proposal, plan, or computation.
(d) Substitution of microfilm. Copies made by microfilming,
photocopying, or similar methods may be substituted for the original records.
(e) Access to records.
MA
(1) Records of grantees and subgrantees. The awarding agency and
the Comptroller General of the United States, or any of their authorized
representatives shall have the right of access to any pertinent books,
documents, papers, or other records of grantees and subgrantees which are
pertinent to the grant, in order to make audits, examinations, excerpts, and
transcripts.
(2) Expiration of right of access. The rights of access in this
section must not be limited to the required retention period but shall last as
long as the records are retained.
(f) Restrictions on public access. The Federal Freedom of Information
Act (5 U.S.C. 552) does not apply to records. Unless required by Federal,
State, or local law, grantees and subgrantees are not required to permit
public access to their records.
20. ENFORCEMENT
(a) Remedies for noncompliance. If a grantee or subgrantee materially
fails to comply with any term of an award, whether stated in a Federal statute
or regulation, an assurance, in a State plan or application, a notice of
award, or elsewhere, the awarding agency may take one or more of the following
actions, as appropriate in the circumstances:
(1) Temporarily withhold cash payments pending correction of the
deficiency by the grantee or subgrantee or more severe enforcement action by
the awarding agency,
(2) Disallow (that is, deny both use of the funds and matching
credit for) all or part of the cost of the activity or action not in
compliance,
(3) Wholly or partly suspend or terminate the current award for the
grantee's or subgrantee's program.
(4) Withhold further awards for the program, or
(5) Take other remedies that may be legally available.
(b) Hearings, appeals. In taking an enforcement action, the awarding
agency will provided the grantee or subgrantee an opportunity for such
hearing, appeal, or other administrative proceeding to which the grantee or
subgrantee is entitled under any statute or regulation applicable to the
action involved.
(c) Effects of suspension and termination. Costs of grantee or
subgrantee resulting from obligations incurred by the grantee or subgrantee
during a suspension or after termination of an award are not allowable unless
the awarding agency expressly authorizes them in the notice of suspension or
termination or subsequently. Other grantee or subgrantee costs during
suspension or after termination which are necessary and not reasonably
avoidable are allowable if:
38
(1) The411sts result from obligations which were properly incurred
by the grantee or subgrantee before the effective date of suspension or
termination, are not in anticipation Of it, and, in the case of a termination,
are noncancellable, and,
(2) The costs would be allowable if the award were not suspended or
expired normally at the end of the funding period in which the termination
takes effect.
(d) Relationship to Debarment and Suspension. The enforcement remedies
identified in this section, including suspension and termination, do not
preclude grantee or subgrantee from being subject to "Debarment and
Suspension" under E.O. 12549 (see Section 14).
21. TERMINATION FOR CONVENIENCE
Except as provided in Section 20 awards may be terminated in whole or in part
only as follows:
(a) By the awarding agency with the consent of the grantee or subgrantee
in which case the two parties shall agree upon the termination conditions,
including the effective date and in the case of partial termination, the
portion to be terminated, or
(b) By the grantee or subgrantee upon written notification to the
awarding agency, setting forth the reasons for such termination, the effective
date, and in case of partial termination, the portion to be terminated.
However, if, in the case of a partial termination, the awarding agency
determines that the remaining portion of the award will not accomplish the
purposes for which the award was made, the awarding agency may terminate the
award in its entirety under either Section 20 or paragraph (a) of this
section.
SUBPART D. AFTER -THE -GRANT REQUIREMENTS
22. CLOSEOUT
(a) General. The Federal agency will close out the award when it
determines that all applicable administrative actions and all required work of
the grant has been completed.
(b) Reports. Within 90 days after the expiration or termination of the
grant, the grantee must submit all financial, performance, and other reports
required as a condition of the grant. Upon request by the grantee, Federal
agencies may extend this timeframe. These may include but are not limited to:
(1) Final performance or progress report.
(2) Financial Status Report (SF -269) or Outlay Report and Request
for Reimbursement for Construction Programs (SF -271) (as applicable).
39
(3) Final request for payment (SF -270) (if applicable).
(4) Invention disclosure (if applicable).
(5) Federally owned property report: In accordance with Section
11(f), a grantee must submit an inventory of all federally owned property (as
distinct from property acquired with grant funds) for which it is accountable
and request disposition instructions from the Federal agency of property no
longer needed.
(c) Cost adjustment. The Federal agency will, within 90 days after
receipt of reports in paragraph (b) of this section, make upward or downward
adjustments to the allowable costs.
(d) Cash adjustments.
(1) The Federal agency will make prompt payment to the grantee for
allowable reimbursable costs.
(2) The grantee must immediately refund to the Federal agency any
balance of unobligated (unencumbered) cash advanced that is not authorized to
be retained for use on other grants.
23. LATER DISALLOWANCES AND ADJUSTMENTS
The closeout of a grant does not affect:
(a) The Federal agency's right to disallow costs and recover funds on
the basis of a later audit or other review;
(b) The grantee's obligation to return any funds due as a result of
later refunds, corrections, or other transactions;
(c) Records retention as required in Section 19;
(d) Property management requirements in Section 10 and Section 11; and
(e) Audit requirements in Section 8.
24. COLLECTION OF AMOUNT DUE
(a) Any funds paid to a grantee in excess of the amount to which the
grantee is finally determined to be entitled under the terms of the award
constitute a debt to the Federal Government. If not paid within a reasonable
period after demand, the Federal agency may reduce the debt by:
(1) Making an administrative offset against other requests for
reimbursements,
(2) Withholding advance payments otherwise due to the grantee, or
(3) Other action permitted by law.
40
(b) Except wile otherwise provided by staturPor regulations, the
Federal agency will charge interest on an overdue debt in accordance with the
Federal Claims Collection Standards (4 CFR Ch. II). The date from which
interest is computed is not extended by litigation or the filing of any form
of appeal.
SUBPART E. OTHER CLAUSES, NOTICES, AND CERTIFICATIONS
25. 52.203-1 OFFICIALS NOT TO BENEFIT (APR 1984)
No member of or delegate to Congress, or resident commissioner, shall be
admitted to any share or part of this contract, or to any benefit arising from
it. However, this clause does not apply to this contract to the extent that
this contract is made with a corporation for the corporation's general
benefit.
26. 52.223-6 DRUG-FREE WORKPLACE (JUL 1990)
(a) Definitions. As used in this clause,
"Controlled substance" means a controlled substance in schedules I through V
of Section 202 of the Controlled Substances Act (21 U.S.C. 812) and as further
defined in regulation at 21 CFR 1308.11 - 1308.15.
"Conviction' means a finding of guilt (including a plea of nolo contendere) or
imposition of sentence, or both, by any judicial body charged with the
responsibility to determine violations of the Federal or State criminal drug
statutes.
"Criminal drug statute" means -a Federal or non -Federal criminal statute
involving the manufacture, distribution, dispensing, possession or use of any
controlled substance.
"Drug-free workplace" means a site for the performance of work done in
connection with a specific contract at which employees of the contractor are
prohibited from engaging in the unlawful manufacture, distribution,
dispensing, possession, or use of a controlled substance.
"Employee" means an employee of a contractor directly engaged in the
performance of work under a Government contract. "Directly engaged" is
defined to include all direct cost employees and any other Contractor employee
who has other than a minimal impact or involvement in contract performance.
"Individual" means an offeror/contractor that has no more than one employee
including the offeror/contractor.
(b) The Contractor, if other than an individual, shall --within 30 calendar
days after award (unless a longer period is agreed to in writing for contracts
of 30 calendar days or more performance duration); or as soon as possible for
contracts of less than 30 calendar days perform duration --
41
(1) Publish a statement notifying its employees that the unlawful
manufacture, distribution, dispensing, possession, or use of a controlled
substance is prohibited in the contractor's workplace and specifying the
actions that will be taken against employees for violations of such
prohibition;
(2) Establish a drug-free awareness program to inform such employees
about --
(i) The dangers of drug abuse in the workplace;
(ii) The contractor's policy of maintaining a drug-free
workplace;
(iii) Any available drug counseling, rehabilitation, and employee
assistance programs; and
(iv) The penalties that may be imposed upon employees for drug
abuse violations occurring in the workplace.
(3) Provide all employees engaged in performance of the contract with a
copy of the statement required by subparagraph (b)(1) of this clause;
(4) Notify such employees in the statement required by subparagraph
(b)(1) of this clause, that as a condition of continued employment on
this contract, the employee will --
(i) Abide by the terms of the statement; and
(ii) Notify the employer of any criminal drug statute conviction
for a violation occurring in the workplace no later than five (5)
days after such conviction.
(5) Notify the contracting officer within ten (10) days after receiving
notice under subdivision (b)(4)(ii) of this clause, from an employee
or otherwise receiving actual notice of such conviction;
(6) Within 30 days after receiving notice under subdivision (b)(4)(ii)
of this clause of a conviction, impose the following sanctions or
remedial measures on any employee who is convicted of drug abuse
violations occurring in the workplace:
(i) Taking appropriate personnel action against such employee, up
to and including termination; or
(ii) Require such employee to satisfactorily participate in a drug
abuse assistance or rehabilitation program approved for such
purposes by a Federal, State, or local health, law-enforcement, or
other appropriate agency.
(7) Make a good faith effort to maintain a drug-free workplace through
implementation of subparagraphs (b)(1) through (b)(6) of this clause.
42
0 0
(c) The Contractor, if an individual, agrees by award of the contract or
acceptance of a purchase order, not to engage in the unlawful manufacture,
distribution, dispensing, possession, or use of a controlled substance in the
performance of this contract.
(d) In addition to other remedies available to the Government, the
Contractor's failure to comply with the requirements of paragraphs (b) and (c)
of this clause may, pursuant to FAR 23.506, render the contractor subject to
suspension of contract payments, termination of the contract for default, and
suspension or debarment.
27. 52.223-5 CERTIFICATION REGARDING A DRUG-FREE WORKPIACE (NAR 1989)
(a) Definitions. As used in this provision,
"Controlled substance" means controlled substance in Schedules I
through V of Section 202 of the Controlled Substances Act (21 U.S.C. 812) and
as further defined in regulation at 21 CFR 1308.11-1308.15.
"Conviction" means a finding of guilt (including a plea of nolo
contendere) or imposition of sentence, or both, by any judicial body charged
with the responsibility to determine violations of the Federal or State
criminal drug statutes.
"Criminal drug statute" means a Federal or non -Federal criminal
statute involving the manufacture, distribution, dispensing, possession or use
of any controlled substance.
"Drug-free workplace" means a site for the performance of work
done in connection with a specific contract at which employees of the
Contractor are prohibited from engaging in the unlawful manufacture,
distribution, dispensing, possession, or use of a controlled substance.
"Employee" means an employee of a Contractor directly engaged in
the performance of work under a Government contract.
"Individual" means an offeror/contractor that has no more than one
employee including the offeror/contractor.
(b) By submission of its offer, the offeror, if other than an
individual, who is making an offer that equals or exceeds $25,000, certifies
and agrees, that with respect to all employees of the offeror to be employed
under a contract resulting from this solicitation, it will --no later than 30
calendar days after contract award (unless a longer period is agreed to in
writing), for contracts of 30 calendar days or more performance duration, or
as soon as possible for contracts of less than 30 calendar days performance
duration; but in any case, by a date prior to when performance is expected to
be completed --
(1) Publish a statement notifying such employees that the unlawful
manufacture, distribution, dispensing, possession or use of a controlled
substance is prohibited in the Contractor's workplace and specifying the
43
actions that will be taken against employees for violations of such
prohibition;
(2) Establish an ongoing drug-free awareness program to inform
such employees about --
(i) The dangers of drug abuse in the workplace;
(ii) The Contractor's policy of maintaining a drug-free workplace;
(iii)Any available drug counseling, rehabilitation, and employee
assistance programs; and
(iv) The penalties that may be imposed upon employees for drug
abuse violations occurring in the workplace;
(3) Provide all employees engaged in performance of the contract
with a copy of the statement required by subparagraph (b)(1) of this
provision;
(4) Notify such employees in the statement required by
subparagraph (b) (1) of this provision, that as a condition of continued
employment on the contract resulting from this solicitation, the employee
will -
(i) Abide by the terms of the statement; and
(ii) Notify the employer of any criminal drug statute conviction
for a violation occurring in the workplace no later than five (5) days after
such conviction;
(5) Notify the contracting officer within ten (10) days after
receiving notice under subdivision (b)(4)(ii) of this provision, from an
employee or otherwise receiving actual notice of such conviction; and
(6) Within 30 days after receiving notice under subdivision
(b)(4)(ii) of this provision of a conviction, impose the following sanctions
or remedial measures on any employee who is convicted of drug abuse violations
occurring in the workplace:
(i) Take appropriate personnel action against such employee, up to
and including termination; or
(ii) Require such employee to satisfactorily participate in a drug
abuse assistance or rehabilitation program approved for such purposes by a
Federal, State, or local health, law enforcement, or other appropriate agency.
(7) Make a good faith effort to maintain a drug-free workplace
through implementation of subparagraphs (b)(1) through (b)(6) of this
provision.
(c) By submission of its offer, the offeror, if an individual who is making
an offer of any dollar value, certifies and agrees that the offeror will not
engage in the unlawful manufacture, distribution, dispensing, possession, or
use of a controlled substance in the performance of the contract resulting
from this solicitation.
(d) Failure of the offeror to provide the certification required by
paragraphs (b) or (c) of this provision, renders the offeror unqualified and
ineligible for award. (See FAR 9.104(g) and 19.602-1(a)(2)(i).)
44
(e) In addition to other remedies available to the Government, the
certification in paragraphs (b) and (c) of this provision concerns a matter
within the jurisdiction of an agency of the United States and the making of a
false, fictitious, or fraudulent certification may render the maker subject to
prosecution under Title 18, United States Code, Section 1001.
28, 52.203-12 LIMITATION ON PAYMENTS TO INFLUENCE CERTAIN FEDERAL
TRANSACTIONS (JAN 1990)
(a) Definitions.
in 2.101.
"Agency," as used in this clause, means executive agency as defined
"Covered Federal action" means any of the following Federal
actions:
(a) The awarding of any Federal contract;
(b) The making of any Federal grant;
(c) The making of any Federal loan;
(d) The entering into of any cooperative agreement; and,
(e) The extension, continuation, renewal, amendment, or
modification of any Federal contract, grant, loan, or cooperative agreement.
"Indian tribe" and "tribal organization," as used in this clause, have
the meaning provided in section 4 of the Indian Self -Determination and
Education Assistance Act (25 U.S.C. 450B) and include Alaskan Natives.
"Influencing or attempting to influence," as used in this clause, means
making, with the intent to influence, any communication to or appearance
before an officer or employee of any agency, a Member of Congress, an officer
or employee of Congress, or an employee of a Member of Congress in connection
with any covered Federal action.
"Local government," as used in this clause, means a unit of government in
a State and, if chartered, established, or otherwise recognized by a State for
the performance of a governmental duty, including a local public authority, a
special district, an intrastate district, a council of governments, a sponsor
group representative organization, and any other instrumentality of a local
government.
"Officer or employee of an agency," as used in this clause, includes the
following individuals who are employed by an agency:
(a) An individual who is appointed to a position in the Government under
title 5, U.S. Code, including a position under a temporary appointment;
(b) A member of the uniformed services as defined in section 101(3),
title 37, U.S. Code;
(c) A special Government employee as defined in section 202, title 18,
U.S. Code; and,
45
(d) An individual who is a member of a Federal advisory committee, as
defined by the Federal Advisory Committee Act, title 5, U.S. Code
appendix 2.
"Person," as used in this clause, means an individual, corporation,
company, association, authority, firm, partnership, society, State, and local
government, regardless of whether such entity is operated for profit or not
for profit. This term excludes an Indian tribe, tribal organization, or any
other Indian organization with respect to expenditures specifically permitted
by other Federal law.
"Reasonable compensation," as used in this clause, means, with respect to
a regularly employed officer or employee of any person, compensation that is
consistent with the normal compensation for such officer or employee for work
that is not furnished to, not funded by, or not furnished in cooperation with
the Federal Government.
"Reasonable payment," as used in this clause, means, with respect to
professional and other technical services, a payment in an amount that is
consistent with the amount normally paid for such services in the private
sector.
"Recipient," as used in this clause, includes the contractor and all
subcontractors. This term excludes an Indian tribe, tribal organization, or
any other Indian organization with respect to expenditures specifically
permitted by other Federal law.
"Regularly employed," as used in this clause, means, with respect to an
officer or employee of a person requesting or receiving a Federal contract, an
officer or employee who is employed by such person for at least 130 working
days within one year immediately preceding the date of the submission that
initiates agency consideration of such person for receipt of such contract.
An officer or employee who is employed by such person for less than 130
working days within one year immediately preceding the date of the submission
that initiates agency consideration of such person shall be considered to be
regularly employed as soon as he or she is employed by such person for 130
working days.
"State," as used in this clause, means a State of the United States, the
District of Columbia, the Commonwealth of Puerto Rico, a territory or
possession of the United States, an agency or instrumentality of a State, and
a multi -State, regional, or interstate entity having governmental duties and
powers.
(b) Prohibitions.
(1) Section 1352 of title 31, United States Code, among other things,
prohibits a recipient of a Federal contract, grant, loan, or cooperative
agreement from using appropriated funds to pay any person for influencing or
attempting to influence an officer or employee of any agency, a Member of
Congress, an officer or employee of Congress, or an employee of a Member of
Congress in connection with any of the following covered Federal actions: the
46
awarding of any Federal contract, the making of any Federal grant, the making
of any Federal loan, the entering into of any cooperative agreement, or the
modification of any Federal contract, grant, loan, or cooperative agreement.
(2) The Act also requires Contractors to furnish a disclosure if any
funds other than Federal appropriated funds (including profit or fee received
under a covered Federal transaction) have been paid, or will be paid, to any
person for influencing or attempting to influence an officer or employee of an
agency, a Member of Congress, an officer or employee of Congress, or an
employee of a Member of Congress in connection with a Federal contract, grant,
loan, or cooperative agreement.
(3) The prohibitions of the Act do not apply under the following
conditions:
(i) Agency and legislative liaison by own employees.
(A) The prohibition on the use of appropriated funds, in
subparagraph (b)(1) of this clause, does not apply in the case of a payment of
reasonable compensation made to an officer or employee of a person requesting
or receiving a covered Federal action if the payment is for agency and
legislative liaison activities not directly related to a covered Federal
action.
(B) For purposes of subdivision (b)(3)(i)(A) of this clause,
providing any information specifically requested by an agency or Congress is
permitted at any time.
(C) The following agency and legislative liaison activities
are permitted at any time where they are not related to a specific
solicitation for any covered Federal action:
(1) Discussing with an agency the qualities and
characteristics (including individual demonstrations) of the person's products
or services, conditions or terms of sale, and service capabilities.
(2) Technical discussions and other activities
regarding the application or adaptation of the person's products or services
for an agency's use.
(D) The following agency and legislative liaison activities
are permitted where they are prior to formal solicitation of any covered
Federal action:
(1) Providing any information not specifically
requested but necessary for an agency to make an informed decision about
initiation of a covered Federal action;
(2) Technical discussions regarding the preparation of
an unsolicited proposal prior to its official submission; and,
47
(3) Capability presentations by persons seeking awards
from an agency pursuant to the provisions of the Small Business Act, as
amended by Public Law 95-507, and subsequent amendments.
(E) Only those activities expressly authorized by
subdivision (b)(3)(i)(A) of this clause are permitted under this clause.
(ii) Professional and technical services.
(A) The prohibition on the use of appropriated funds, in
subparagraph (b)(1) of this section, does not apply in the case of --
(1) A payment of reasonable compensation made to an
officer or employee of a person requesting or receiving a Federal action or an
extension, continuation, renewal, amendment, or modification of a covered
Federal action, if payment is for professional or technical services rendered
directly in the preparation, submission, or negotiation of any bid, proposal,
or application for that Federal action or for meeting requirements imposed by
or pursuant to law as a condition for receiving that Federal action.
(2) Any reasonable payment to a person, other than an
officer or employee of a person requesting or receiving a covered Federal
action or an extension, continuation, renewal, amendment, or modification of a
covered Federal action if the payment is for professional or technical
services rendered directly in the preparation, submission, or negotiation of
any bid, proposal, or application for that Federal action or for meeting
requirements imposed by or pursuant to law as a condition for receiving that
Federal action. Persons other than officers or employees of a person
requesting or receiving a covered Federal action include consultants and trade
associations.
(B) For purposes of paragraph (b)(3)(ii)(A) of this clause,
"professional and technical services" shall be limited to advice and analysis
directly applying any professional or technical discipline. For example,
drafting of a legal document accompanying a bid or proposal by a lawyer is
allowable.
Similarly, technical advice provided by an engineer on
the performance or operational capability of a piece of equipment rendered
directly in the negotiation of a contract is allowable. However,
communications with the intent to influence made by a professional (such as a
licensed lawyer) or a technical person (such as a licensed accountant) are not
allowable under this section unless they provide advice and analysis directly
applying their professional or technical expertise and unless the advice or
analysis is rendered directly and solely in the preparation, submission or
negotiation of a covered Federal action. Thus, for example, communications
with the intent to influence made by a lawyer that do not provide legal advice
or analysis directly and solely related to the legal aspects of his or her
client's proposal, but generally advocate one proposal over another are not
allowable under this section because the lawyer is not providing professional
legal services. Similarly, communications with the intent to influence made
by an engineer providing an engineering analysis prior to the preparation or
submission of a bid or proposal are not allowable under this section since the
48
0 0
engineer is providing technical services but not directly in the preparation,
submission or negotiation of a covered Federal action.
(C) Requirements imposed by or pursuant to law as a
condition for receiving a covered Federal award include those required by law
or regulation, and any other requirements in the actual award documents.
(D) Only those services expressly authorized by
subdivisions (b)(3)(ii)(A)(1) and (2) of this clause are permitted under this
clause.
(E) The reporting requirements of FAR 3.803(a) shall not
apply with respect to payments of reasonable compensation made to regularly
employed officers or employees of a person.
(iii) Disclosure.
(A) The Contractor who requests or receives from an agency
a Federal contract shall file with that agency a disclosure form, OMB Standard
Form -LLL "Disclosure of Lobbying Activities," if such person has made or has
agreed to make any payment using nonappropriated funds (to include profits
from any covered Federal action), which would be prohibited under subparagraph
(b)(1) of this clause, if paid for with appropriated funds.
(B) The Contractor shall file a disclosure form at the end
of each calendar quarter in which there occurs any event that materially
affects the accuracy of the information contained in any disclosure form
previously filed by such person under subparagraph (c)(1) of this clause. An
event that materially affects the accuracy of the information reported
includes:
(1) A cumulative increase of $25,000 or more in the
amount paid or expected to be paid for influencing or attempting to influence
a covered Federal action; or
(2) A change in the person(s) or individual(s)
influencing or attempting to influence a covered Federal action; or,
(3) A change in the officer(s), employee(s), or
Member(s) contacted to influence or attempt to influence a covered Federal
action.
(C) The Contractor shall require the submittal of a
certification, and if required, disclosure form by any person who requests or
received any subcontract exceeding $100,000 under the Federal contract.
(D) All subcontractor disclosure forms (but not
certifications) shall be forwarded from tier to tier until received by the
prime Contractor. The prime Contractor shall submit all disclosures to the
Contracting Officer at the end of the calendar quarter in which the disclosure
form is submitted by the subcontractor. Each subcontractor certification
shall be retained in the subcontract file of the awarding Contractor.
(iv) Agreement. The Contractor agrees not to make any payment
prohibited by this clause.
49
(v) Penalties.
(A) Any person who makes an expenditure prohibited under
paragraph (a) of this clause or who fails to file or amend the disclosure form
to be filed or amended by paragraph (b) of this clause shall be subject to
civil penalties as provided for by 31 U.S.C. 1352. An imposition of a civil
penalty does not prevent the Government from seeking any other remedy that may
be applicable.
(B) Contractors may rely without liability on the
representations made by their subcontractors in the certification and
disclosure form.
(vi) Cost allowability. Nothing in this clause makes allowable
or reasonable any costs which would otherwise be unallowable or unreasonable.
Conversely, costs made specifically unallowable by the requirements in this
clause will not be made allowable under any of the provision.
29. 52.203-11 CERTIFICATION AND DISCLOSURE REGARDING PAYMENTS TO INFLUENCE
CERTAIN FEDERAL TRANSACTIONS (APR 1991)
(a) The definitions and prohibitions contained in the clause at FAR 52.203-
12, Limitation on Payments to Influence Certain Federal Transactions, included
in this solicitation, are hereby incorporated by reference in paragraph (b) of
this certification.
(b) The offeror, by signing its offer, hereby certifies to the best of his or
her knowledge and belief as of December 23, 1989 that --
(1) No Federal appropriated funds have been paid or will be paid to any
person for influencing or attempting to influence an officer or employee of
any agency, a Member of Congress, an officer or employee of Congress, or an
employee of a Member of Congress on his or her behalf in connection with
the awarding of any Federal contract, the making of any Federal grant, the
making of any Federal loan, the entering into of any cooperative agreement,
and the extension, continuation, renewal, amendment or modification of any
Federal contract, grant, loan, or cooperative agreement.
(2) If any funds other than Federal appropriated funds (including profit
or fee received under a covered Federal transaction) have been paid, or
will be paid, to any person for influencing or attempting to influence an
officer or employee of any agency, a Member of Congress, an officer or
employee of Congress, or an employee of a Member of Congress on his or her
behalf in connection with this solicitation, the offeror shall complete and
submit, with its offer, OMB Standard Form LLL, Disclosure of Lobbying
Activities, to the Contracting Officer; and
(3) He or she will include the language of this certification in all
subcontract awards at any tier and require that all recipients of
subcontract awards in excess of $100,000 shall certify and disclose
accordingly.
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(c) Submission of this certification and disclosure is a prerequisite for
making or entering into this contract imposed by Section 1352, Title 31,
United States Code. Any person who makes an expenditure prohibited under this
provision or who fails to file or amend the disclosure form to be filed or
amended by this provision, shall be subject to a civil penalty of not less
than $10,000 and not more than $100,000 for each such failure.
30. DEPARTMENT OF THE INTERIOR CERTIFICATION REGARDING DRUG-FREE WORKPLACE
REQUIREMENTS (FORK DI -1955)
31. CERTIFICATION REGARDING DEBARMENT, SUSPENSION, AND OTHER RESPONSIBILITY
MATTERS (FORM DI -1953)
32. DISCLOSURE OF LOBBYING ACTIVITIES (FORM SF -LLL)
33. MINORITY BUSINESS ENTERPRISE DEVELOPMENT
It is a national policy to place a fair share of purchases with minority
business firms. The Department of the Interior is strongly committed to the
objectives of this policy and encourages all recipients of its grants and
cooperative agreements to take affirmative steps to ensure such fairness. In
particular, recipients should:
A. Place minority business firms on bidder's mailing list.
B. Solicit these firms whenever they are potential sources of supplies,
equipment, construction, or services.
C. Where feasible, divide total requirements into smaller needs, and set
delivery schedules that will encourage participation by these firms.
D. Use the assistance of the Minority Business Development Agency of the
Department of Commerce, the Small Business Administration, the Office
of Small and Disadvantaged Business Utilization, DOI, the Business
Utilization and Development Specialists who reside in each DOI bureau
and office, and similar State and local offices, where they exist.
34. CIRCULARS BY REFERENCE
The following circulars are included in this grant or cooperative agreement by
reference:
OMB -87 Costs Principles for State and Local Government
51
35. UTILIZATION OF SMALL BUSINESS CONCERNS AND SMALL DISADVANTAGED
BUSINESS CONCERNS - RECLAMATION (SEP 1986)
It is the policy of the United States that small business concerns and small
business concerns owned and controlled by socially and economically
disadvantaged individuals shall have the maximum practicable opportunity to
participate in performing grants and cooperative agreements awarded by any
Federal agency.
The recipient hereby agrees to carry out this policy in the awarding of
subagreements and contracts to the fullest extent consistent with efficient
grant/cooperative agreement performance. The recipient further agrees to
cooperate in any studies or surveys as may be conducted by the United States
Small Business Administration or the awarding agency of the United States as
may be necessary to determine the extent of the recipient's compliance with
this clause.
As used in this agreement, the term "small business concern" shall mean a
small business as defined pursuant to section 3 of the Small Business Act and
relevant regulations promulgated pursuant thereto. The term "small business
concern owned and controlled by socially and economically disadvantaged
individuals" shall mean a small business concern:
a. Which is at least 51 percent owned by one or more socially and
economically disadvantaged individuals; or in the case of any publicly owned
business, at least 51 per centum of the stock of which is owned by one or more
socially and economically disadvantaged individuals; and
b. Whose management and daily business operations are controlled by one
or more of such individuals.
The recipient shall presume that socially and economically disadvantaged
individuals include Black Americans, Hispanic Americans, Native Americans,
Asian -Pacific Americans, Asian -Indian Americans and other minorities, or any
other individual found to be disadvantaged by the Administration pursuant to
section 8(a) of the Small Business Act.
Recipients acting in good faith may rely on written representation by their
subrecipients or contractors regarding their status as either a small business
concern or a small business concern owned and controlled by socially and
economically disadvantaged individuals.
52
36. RESOLVING DISAGREEMENTS - RECLAMATION (NAR 1993)
When entering into a cooperative agreement with a recipient. Reclamation
commits itself to working with the recipient in a harmonious manner to achieve
the objectives of the project successfully. When disagreements arise between
the parties, they must be resolved according to the procedures discussed
below:
(a) Reclamation shall attempt first to resolve disagreements with the
recipient through informal discussion among the Grants or Contract Specialist
the Program Officer, and the recipient's Project Director.
(b) If the disagreement cannot be resolved through informal discussion
between these parties, the Grants Specialist and the Program Officer shall
document the nature of the disagreement and bring it to the attention of the
Grants Officer.
(c) After reviewing the facts of the disagreement, as presented by the
Grants and Program Offices, the Grants Officer will arrange a formal meeting.
If agreement still cannot be reached, the parties will collectively decide on
any varied approaches which might be used to resolve the disagreement. The
parties shall be responsible for their individual expenses related to any
approach utilized to resolve the disagreement.
(d) Ultimately, if all other attempts at resolving the disagreement fails,
a decision will be made by the Regional Director whose decision shall be final
and conclusive.
Any post award issue will be open for resolution in accordance with the above
procedures, with the exception of disagreements regarding continuation of the
agreement (since either party may terminate the agreement with the specified
notice), or other matters specifically addressed by the agreement itself.
53
37. STEVENS AMENDMENT - RECLAMATION (SEP 1992)
(a) No amount of any grant made by a Federal agency shall be used to
finance the acquisition of goods or services (including construction services)
unless the recipient of the grant agrees, as a condition for the receipt of
such grant, to -
(1) specify in any announcement of the awarding of a contract for the
procurement of goods or service (including construction services) the amount
of Federal funds that will be used to finance the acquisition; and
(2) express the amount announced pursuant to paragraph (1) as a percentage
of the total costs of the planned acquisition.
(b) The requirements of subsection (a) shall not apply to a procurement
for goods or services (including construction services) that has an aggregate
value of less than $500,000.
54
0
0
38. USE OF THE METRIC SYSTEM - RECLAMATION (MAR 1993)
Section 5163 of Public Law 100-418, the Omnibus Trade and Competitiveness Act
of 1988 (Trade Act), amended the Metric Conversion Act of 1975 and designated
the metric system of weights and measures for United States trade and
commerce.
As a result of the Trade Act, the President issued Executive Order 12770 dated
July 25, 1991, to implement the Congressional designation of the metric system
of measurement as the preferred system of weights and measures for United
States trade and commerce.
The metric system of measurement shall be used in grants and cooperative
agreements, except to the extent that such use is impractical or is likely to
cause significant inefficiencies, or is not economically feasible. To the
extent possible, scientific and technical reports and recipient -furnished
materials provided under the agreement, including computer programs, shall use
appropriate metric units.
55
39. BUDGET - RECLAMATION (MAR 1993)
Contingent upon availability of funds, the total amount of this cooperative
agreement S1.000.000 will be transferred from Reclamation to The Metropolitan
Water District of Southern California in accordance with the terms stated in
the attached agreement (see Cooperative Agreement No. 4 -FC -30-00120; Item 5.1
[Advance of Funds]).
56
n
n
L�
40. DATE OF INCURRENCE OF COSTS - RECIANATION (MAR 1993)
The Recipient shall be entitled to reimbursement of costs incurred in an
amount not to exceed $1.000.000 on or after eon block 16 on Assistance
Arreement form, which if incurred after this agreement had been entered into,
would have been reimbursable under the provisions of the agreement.
57
0
Wednesday
January 28, 1981
A-87
Part X
Office of
Management and
Budget
Cost Principles for State and Local
Governments
9548 Federal Register , Vol. 46, No. 18 / Wednesday. January 981 / Notices
OFFICE OF MANAGEMENT AND
BUDGET
Cost Principles for State and Local
Govemments
AGENCY: Office of Management and
Budget.
ACTION: Final policy.
SUMMARY; This notice advises that
Federal Management Circular 74-4
(Revised), dated July 1& 1974, is
reissued under its original designation of
Office of Management and Budget
Circular No. A-87. No substantive
changes are made in the Circular. The
Circular is set forth below in its entirety.
EFFECTIVE DATE: The revision was
effective January 15. 1961.
FOR FURTHER INFORMATION CONTACT:
Palmer Marcantonio. Deputy Chief.
Financial Management Branch. Budget
Review Division, 6002 New Executive
Office Building, Washington, D.C. 20503,
202/395-4773.
TO OBTAIN SINGLE COPIES OF THE
CIRCULAR, CONTACT. Document
Distribution Center. Office of
Administration. C-236 New Executive
Office Building, Washington, D.C. 20503.
TO OBTAIN MULTIPLE COPIES, CONTACT:
Superintendent of Documents. U.S.
Government Printing Office.
Washington, D.C. 20402.
Daniel F. Macro. _
Budget and Management Officer.
January 15. 1991.
To: The Heads of Executive Departments and
Establishments.
Subject: Cost principles for State and local
governments.
1. Purpose. This Circular establishes
principles and standards for determining
costs applicable to grants, contracts, and
other agreements with State and local
governments and federally -recognized Indian
tribal. governments.
2. Supersession. This Circular supersedes
Federal Management Circular 74-4 as
revised. The Circular is reissued under its
original designation of OMB Circular A-97.
3. Summary of changes. No substantive
changes arc made in the Circular.
4. Policy intent. This Circular provides
principles for determining the allowable costs
of programa administered by State, local, and
federally -recognized Indian tribal
governments under grants from and convects
with the Federal Government. They arc
designed to provide the basis for a uniform
approach to the problem of determining costs
and to promote efficiency and better
relationships between grantees and the
Federal Government. The principles are for
determining costs only and am not intended
to identify the circumstances nor to dictate
-he extent of Federal and State or local
participation in the financing of a particular
:roject. They are designed to provide that
ederafly-asaieted programa bear their fair
share of costs recognized under these
principles except where restricted or
prohibited by law. No provision for profit or
other increment above cost is intended.
5. Applicability and scope.
a. The provisions of this Circular apply to
all Federal agencies responsible for
administering programs that involve grants
and contracts with Stare, loin and federally -
recognized Indian tribal governments.
b'Its provisions do not apply to grants and
contracts with:
III Publicly -financed educational
institutions subject to Office of Management
and Budget Circular A-21. and
(2) Publicly owned hospitals and other
providers of medical care subject to
requirements promulgated by the sponsoring
Federal agencies.
Any other exceptions will be approved by
the Office of Management and Budget in
particular cases where adequate justification
is presented.
6. Attachments. The principles and related
policy guides are set forth in the attachments.
which arc:
Attachment A -Principles for deterrnfnirrg
costs applicable to grants and contracts
with Slate, local. and federally -recognized
Indian tribal governments.
Attachment B -Standards for selected items
of cost.
7. Inquiries. Further information concerning
this Circular may be obtained by contacting
the Financial Management Branch. Budget
Review Division. Office of Management and
Budget. Washington, D.C. 20503, telephone
202-395-4773.
James T. McIntyre. Jr.
Director'
[Circular No. A-87]
Attachment A -Principles for
Determining Costs Applicable to Grants
and Contracts With State, local. and
Federally Recognized Indian Tribal
Governments
TABLE OF CONTENTS.
A. Purpose and scope
1. Objectives
2 policy guides
3. Application
B. Definitions
1. Approval or authorization of the grantor
Federal agency
2. Coat allocation plan
3. Cost
4. Cost objective
5. Federal agency
6. Federally -recognized Indian tribal
governments
7. Grant
e. Grant program
9. Grantee
10. Local unit
11. Other State or local agencies
12. Services
13. Supporting services
C. Basic guidelines
1. Factors affecting allowability of costs
2 Allocable costs
3. Applicable credits
D. Composition of cost
1. Total war
2 Classification of costs
E. Direct costs
1. General
2. Application
F. Indirect costs
1. General
2. Grantee departmental indirect costs
3. Limitation on indirect costs
C. Cost incurred by agencies other than the
grantee
1. General
2 Alternative methods of determining
indirect cost
H. Cort incurred bygmntee department Jar
othen
1. General
I. Cost allocation plan
1. General
2. Requirements
3. Instructions for preparation of cost
allocation plans
4. Negotiation and approval of indirect war
proposals for States
5. Negotiation and approval of indirect cost
propossls for local governments
a. Negotiation and approval of indirect wit
proposals for federally -recognized Indian
tribal governments
7. Resolution of problems
A. Purpose and scope.
1. Objectives. This Attachment sets
forth principles for determining the
allowable costs of programs
administered by State, local, and
federally -recognized Indian tribal
governments under grants from and
contracts with the Federal Government.
The principles are for the purpose of
cost determination and are not intended
to identify the circumstances or dictate
the extent of Federal and State or local
participation in the financing of a
particular grant. They are designed to
provide that federally -assisted programs
bear their fair share of costs recognized
under these principles, except where
restricted or prohibited by law. No
provision for profit or other increment
above cost is intended.
2. Policygaides. The application of
these principles is based on the
fundamental premises that:
a. State, local, and federally
recognized Indian tribal governments
are responsible for the efficient and
effective administration of grant and
contract programs through the
application of sound management
practices.
b. The grantee or contractor assumes
the responsibility for seeing that
federally -assisted program funds have
been expended and accounted for
consistent with underlying agreements
and program objectives.
c. Each grantee or contractor
organization, in recognition of its own
unique combination of staff facilities
and experience, will have the primary
responsibility for employing whatever
form of organization and management
Federas.�atar / Vol. 46. No. 18 / Wednesdaysuary 28. 1981 / Notices 99
techniques may be necessary to assure
proper and efficient administration.
3. Application. These principles will
be applied by all Federal agencies in
determining costs incurred by Slate,
local, and federally recognized Indian
tribal governments under Federal grants
and cost reimbursement type contracts
(including subgranta and subcontracts)
except those with (a) publicly -financed
educational institutions subject to Office
of Management and Budget Circular A-
21, and (b) publicly -owned hospitals and
other providers of medical care subject
to requirements promulgated by the
sponsoring Federal agencies.
B. Definitions.
1. Approval or authorization of the
grantor federal agency means
documentation evidencing consent prior
to incurring specific cost.
2. Cost allocation plan means the
documentation identifying,
accumulating, and distributing
allowable costs under grants and
contracts together with the allocation
methods used.
3. Cost, as used herein, means cost as
determined on a cash, accrual, or other
basis acceptable to the Federal grantor
agency as a discharge of the grantee's
accountability for Federal funds.
4. Cost objective means a pool. center.
or area established for the accumulation
of cost. Such areas Include
organizational units, functions, objects
or items of expense, as well as ultimate
cost objectives including specific grants.
projects, contracts, and other activities.
5. Federal agency means any
department, agency, commission. or
instrumentality in the executive branch
of the Federal Government which makes
grants to or contracts with State, local,
or federally -recognized Indian tribal
governments.
.6. Federally -recognized Indian tribal
governments means the governing body
or a governmental agency of any Indian
tribe, band, nation. or other organized
group or community (including any
native village as defined in Section 3 of
the Alaska Native Claims Settlement
Act. 85 Stat. 688) certified by the
Secretary of the Interior as eligible for
the special programs and services
provided by him through the Bureau of
Indian Affairs.
7. Grant means an agreement between
the Federal Government and a State.
local, or federally -recognized Indian
tribal government whereby the Federal
Government provides funds or aid in
kind to carry out specified programs.
services. or activities. The principles
and policies stated in this Circular as
applicable to grants in general also
apply to any federally -sponsored cost
reimbursement -type of agreement
performed by a State, local, or federally -
recognized Indian tribal government.
a. G,ant program means those
activities and operations of the grantee
which are necessary to carry out the
purposes of the grant, including any
portion of the program financed by the
grantee.
9. Grantee means the department or
agency of State. local, or federally '
recognized Indian tribal government
which is responsible for administration
of the grant.
10. Local unit means any political
subdivision of gavernment below the
State level.
11. other State or local agencies
means department or agencies of the
State or local unit which provide goods.
facilities, and services to a grantee.
12. Services, as used herein. means
goods and facilities, as well as services.
13. and
services means
auxiliary functions necessary to sustain
the direct effort involved in
administering a grant program or an
activity providing service to the grant
program. These services may be
centralized in the grantee department or
in some other agency, and inlcude
procurement, payroll, personnel
functions. maintenance and operation of
space. data processing, accounting.
budgeting, auditing, mail and messenger
service. and the like.
C. Basic guidelines.
1. Factors affecting allowability of
costs. To allowable under a grant
program. costs must meet the following
general criteria:
a. Be necessary and reasonable for
proper and efficient administration of
the grant programs. be allocable thereto
under these principles. and except as
specifically provided herein, not be a
general expense required to carry out
the overall responsibilities of State,
local or federally -recognized Indian
tribal governments.
b. Be authorized or not prohibited
under State or local laws or regulations.
c. Conform to any limitations or
exclusions set forth in these principles.
Federal laws, or other governing
limitations as to types or amounts of
cost items.
d. Be consistent with policies,
regulations. and procedures that apply
uniformly to both federally assisted and
other activities of the unit of government
of which the grantee is a part.
e. Be accorded consistent treatment
through application of generally
accepted accounting principles
appropriate to the circumstances.
I. Not be allocable to or included as a
cost of any other federally financed
program in either the current or a prior
period.
g. Be net of all applicable credits.
2. Allocable costs.
a. A cost is allocable to a particular
cost objective to the extent of benefit:
received by such objective.
b. Any cost allocable to a particular
grant or cost objective under the
principles provided for in this Circular
may not be shifted to other Federal
grant programs to overcome fund
deficiencies, avoid restrictions impose
by law or grant agreements. or for oth
reasons.
c. Where an allocation of joint cost
will ultimately result in charges to a
grant program, an allocation plan will
required as prescribed in Section 1.
3. Applicable credits.
a. Applicable credits refer to those
receipts or reduction of expenditure -
type transactions which offset or redu
expense items allocable to grants as
direct or indirect costs. Examples of
such transactions are: purchase
discounts; rebates or allowances,
recoveries or indeminties on losses; as
of publications, equipment, and scrap;
income from personal or incidental
services; and adjustments of
overpayments or erroneous charges.
b. Applicable credits may also arise
when Federal funds are received or ar
available from sources other than the
grant program involved to finance
operations or capital items of the
grantee. This includes costs arising fro
the use or depreciation of items donatr
or financed by the Federal Governer
to fulfill matching requirments under
another grant program. These types of
credits should likewise be used to
reduce related expenditures in
determining the rates or amounts
applicable to a given grant.
D. Composition of Cost
1. Total cost. The total cost of a grar
program is comprised of the allowable
direct cost incident to its performance
plus its allocable portion of allowable
indirect costs, less applicable credits.
2. Classification of costs. There is n(
universal rule for classifying certain
costs as either direct or indirect under
every accounting system. A cost may 1
direct with respect to some specific
service or function, but indirect with
respect to the grant or other ultimate
cost objective. It is essential, therefore
that each item of cost be treated
consistently either as a direct or an
indirect cost. Specific guides for
determining direct and indirect costs
allocable under grant programs are
provided in the sections which follow:
E. Direct Costs
1. General. Direct costs are those th
can be identified specifically with a
9550 Federal Registat , Vol. 48. No. 18 / Wednesday. January 1981 / Notices
particular cost objective. These costs
may be charged directly to grants.
contracts, or to other programs against
which costs are finally lodged. Direct
costs may also be charged to cost
objectives used for the accumulation of
costs pending distribution in due course
to grants and other ultimate cost
objectives.
2. Application. Typical direct costs
chargeable to grant programs are:
a. Compensation of employees for the
time and efforts devoted specifically to
the execution of grant programs.
b. Cost of materials acquired,
consumed, or expended specifically for
the purpose of the grant.
c. Equipment and other approved
capital expenditures.
d. Other items of expense incurred
specifically to carry out the grant
agreement.
e. Services furnished specifically for
the grant program by other agencies,
provided such charges are consistent
with criteria outlined in Section G of
these principles.
F. Indirect Costs -
1. General. Indirect costs are those (a)
incurred for a common or joint purpose
benefiting more than one cost objective,
and (b) not readily assignable to the cost
objectives specifically benefited.
without effort disproportionate to the
results achieved. The term "indirect
costs," as used herein, applies to costs
of this type originating in the grantee
department, as well as those incurred by
other departments in supplying goods,
services, and facilities, to the grantee
department. To facilitate equitable
distribution of indirect expenses to the
cost objectives served, it may be
necessary to establish a number of pools
of indirect cost within a grantee
department or in other agencies
providing services to a grantee
department. indirect cost pools should
be distributed to benefiting cost
objectives on bases which will produce
an equitable result in consideration of
relative benefits derived.
2. Grantee departmental indirect
costs. All grantee departmental indirect
costs, including the various levels of
supervision, are eligible for allocation to
grant programs provided they meet the
conditions set forth in this Circular. In
lieu of determining the actual amount of
grantee departmental indirect cost
allocable to a grant program, the
following methods may be used.
a. Predetermined fixed rates for
indirect costs. A predetermined fixed
rate for computing indirect costs
applicable to a grant may be negotiated
annually in situations where the cost
experience and other pertinent facts
available are deemed sufficient to
enable the contracting parties to reach
an informed judgment (1) as to the
probable level of indirect costs in the
grantee department during the period to
be covered by the negotiated rate, and
(2) that the amount allowable under the
predetermined rate would not exceed
actual indirect cost,
b. Negotiated lump sum for overhead.
A negotiated fixed amount in lieu of
indirect costs may be appropriate under
circumstances where the benefits
derived from a grantee department's
indirect services cannot be readily
determined as in the case of small, self-
contained or isolated activity. When this
method is used, a determination should
be made that the amount negotiated will
be approximately the same as the actual
indirect cost that may be incurred. Such
amounts negotiated in lieu of indirect
costs will be treated as an offset to total
indirect expenses of the grantee
department before allocation to
remaining activities. The base on which
such remaining expenses are allocated
should be appropriately adjusted.
3. Limitation on indirect costs.
a. Federal grants may be subject to
laws that limit the amount of indirect
costs that maybe allowed. Agencies
that sponsor grants of this type will
establish procedures which will assure
that the amount actually allowed for
indirect costs under each such grant
does not exceed the maximum
allowable under the statutory limitation
or the amount otherwise allowable
under this Circular, whichever is the
smaller.
b. When the amount allowable under
a statutory limitation is less than the
amount otherwise allocable as indirect
costs under this Circular, the amount not
recoverable as indirect costs under a
grant not be shifted to another federally -
sponsored grant program or contract.
G. Cost Incurred by Agencies Other
Than the Grantee
1. General. The cost of service
provided by other agencies may only
include allowable direct costs of the
service plus a pro rate share of
allowable supporting costs (Section
8.12.) and supervision directly required
in performing the service, but not
supervision of a general nature such as
that provided by the head of a
department and his staff assistants not
directly involved in operations.
However, supervision by the head of a
department or agency whose sole
function is providing the service
furnished would be an eligible cost.
Supporting costs include those furnished
by other units of the supplying
department or by other agencies.
2. Alternative methods of determining
indirect cost. In lieu of determining
actual indirect cost related to a
particular service furnished by another
agency, either of the following
alternative methods may be used
provided only one method is used for a
specific service during the fiscal year
involved.
a. Standout indirect tate. An amount
equal to ten percent of direct labor cost
in providing the service performed by
another State agency (excluding
overtime, shift. or holiday premiums and
fringe benefits) may be allowed in lieu
of actual allowable indirect cost for that
service.
b. Predetermined fixed rote. A
predetermined fixed rate for indirect
cost of the unit or activity providing
service may be negotiated as set forth in
Section F.2.a.
H. Cost Incurred by Grantee
Department for Others
1. General. The principles provided in
Section G will also be used in
determining the cost of services
provided by the grantee department to
another agency.
f. Cost Allocation Plan
1. General. A plan for allocation of
costs will be required to support the
distribution of any joint costs related to
the grant program. All costs included in
the plan will be supported by formal
accounting records which will
substantiate the propriety of eventual
charges.
2• Requirements. The allocation plan
of the grantee department should cover
all joint costs of the department as well
as costs to be allocated under plans of
other agencies or organizational units
which are to be included in the costs of
federally -sponsored programs. The cost
allocation plans of all the agencies
rendering services to the grantee
department, to the extent feasible,
should be presented in a single
document: The allocation plan should
contain, but not necessarily be limited
to, the following:
a. The nature and extent of services
provided and their relevance to the
federally -sponsored programs.
b. The items of expense to be
included.
c. The methods to be used in
distributing cost.
3. Instructions for preparation of cost
allocation plans. The Department of
Health and Human Services in
consultation with the other Federal
agencies concerned, will be responsible
for developing and issuing the
instructions for use by grantees in
preparation of cost allocation plans.
Feder-egfster / Vol. 4e. No. 18 / Wedrlesdam�nuary 28. 1961 / Notices 9
This responsibility applies to both
central support services at the State,
local. and Indian tribal level and
indirect cost proposals of individual
grantee departments.
4. Negotiation and approval of
indirect cost proposals for States.
a. The Department of Health and
Human Services, in collaboration with
the other Federal agencies concerned,
will be responsible for negotiation.
approval, and audit of cost allocation
plans. which will be submitted to it by
the States. These plans will cover
central support service costs of the
State.
b. At the grantee department level in a
State. a single cognizant Federal agency
will have responsibility similar to that
set forth in a. above, for the negotiation.
approval, and audit of the indirect cost
proposal. A current list of agency
assignments is maintained by the Office
of Management and Budget.
c. Questions concerning the cost
allocation plans approved under a. and
b. above, should be directed to the
agency responsible for such approvals.
5. Negotiation and approval of
indirect cost proposals for local
governments.
a. Cost allocation plans will be
retained at the local government level
for audit by a designated Federal agency
except in those cases where that agency
requests that cost allocation plans be
submitted to it for negotiation and
approval.
b. A list of cognizant Federal agencies
assigned responsibility for negotiation,
approval and audit of central support
service cost allocation plans at the local
government level is maintained by the
the Office of Management and Budget.
c. At the grantee department level of
local governments, the Federal agency
with the predominant interest in the
work of the grantee department will be
responsible for necessary negotiation.
approval and audit of the indirect cost
proposal.
6. Negotiation and approval of
indirect cost proposals for federally
recognized Indian tribal governments.
The Federal agency with the
predominant interest in the work of the
grantee department will be responsible
for necessary negotiation, approval and
audit of the indirect cost proposal.
7. Resolution of problems. To the
extent that problems are encountered
among the Federal agencies in
connection with 4 and 5 above, the
Office of Management and Budget will
lend assistance as required.
(Circular No. A-471
Attachment B -Standards for Selected
Items of Costs
Table of Contents
A. Purpose and applicability
1. Objective
2. Application
B. Allowable costs
1. Accounting
2. Advertising
3. Advisory councils
4. Audit service
5. Bonding
6. Budgeting
7. Building lease management
e. Central stores
9. Communications
10. Compensation for personal services
11. Depredation and use allowances
12. Disbursing service
13. Employee fringe benefits
14. Employee morale, health and welfare
costs
15. Exhibits
1& Legal expenses
17. Maintenance and repair
1& Materials and supplies
ig. Memberships. subscriptions and
professional activites
2o. Motor pools
21. Payroll preparation
22. Personnel administration
23. Printing and reproduction
24. Procurement service
25. Taxes
25. Training and education
27. Transportation
26. Travel
C. Costs allowable with approval of grantor
agency
1. Automatic data processing
2. Building space and related facilities
3. Capital expenditures
4. Insurance and indemnification
5. Management studies
6. Preagreement costs
7. Professional services
e. Proposal costa
D. Unallowable costs
1. Bad debts
2. Contingencies
3. Contributions and donations
4. Entertainment
5. Fines and penalties
e. Govemor's expenses
7. Interest and other financial costs
a. Legislative expenses
9. Underrecovery of costs under grant
agreements
A. Purpose and applicability.
1. Objective. This Attachment
provides standards for determining the
allowability of selected items of cost.
2 Application. These standards will
apply irrespective of whether a
particular item of cost is treated as
direct or indirect cost. Failure to
mention a particular item of cost in the
standards is not intended to imply that it
is either allowable or unallowable,
rather determination of allowability in
each case should be based on the
treatment of standards provided for
similar or related items of cost. The
allowability of the selected items of t
is subject to the general policies and
principles slated in Attachment A of
Circular.
B. Allowable costs.
1. Accounting. The cost of establisl
and maintaining accounting and othe
information systems required for the
management of grant programs is
allowable. This includes costs idcurn
by central service agencies for these
purposes. The cost of maintaining
central accounting records required 1,
overall State or Indian tribal
government purposes. such es
appropriation and fund accounts by t
Treasurer. Comptroller, or similar
officials. is considered to be a genera.
expense of government and is not
allowable.
2. Advertising. Advertising media
includes newspapers, magazines. redi
and television programs, direct mail.
trade papers, and the like. The
advertising costs allowable are those
which are solely for.
a. Recruitment of personnel require.
for the grant program.
b. solicitation of bids for the
procurement of goods and services
required.
c. disposal of scrap or surplus
materials acquired in the performance
the grant agreement.
d. Other purposes specifically
provided for in the grant agreement.
3. Advisory councils. Costs fncurrec
by State advisory councils or
committees established pursuant to
Federal requirements to carry out grist
programs are allowable. The cost of li
organizations is allowable when
provided for in the grant agreement.
4. Audit service. The cost of audit&
necessary for the administration and
management of functions related to
grant programs is allowable.
S. Bonding. Costs of premiums on
bonds covering employees who handl,
grantee agency funds are allowable.
6. Budgeting. Costs incurred for the
development. preparation, presentatio
and execution of budgets are allowabl
Costs for services of a central budget
office are generally not allowable sinc
these are costs of general government.
However, where employees of the
central budget office actively partieipe
in the grantee agency's budget procese
the cost of identifiable services is
allowable.
7. Building lease management. The
administrative cost for lease
management which includes review of
lease proposals, maintenance of a list
available property for lease, and relati
activities is allowable.
9552 Federal Register / Vol. 46. No. 16 / Wednesday. January 1981 / Notices
B. Central stores. The cost of
maintaining and operating a central
stores organization for supplies.
equipment. and materials used either
directly or indirectly for grant programs
is allowable.
9. Communications. Communication
costs incurred for telephone calls or
service, teletype service, wide area
telephone service (WATS), Centrex.
telpak (tie lines), postage, messenger
service and similar expenses are
allowable.
10. Compensation far personal
services.
a. General. Compensation for
personal services includes all
remuneration, paid currently or accrued.
for services rendered during the period
of performance under the grant
agreement, including but not necessarily
limited to wages, salaries, and
supplementary compensation and
benefits (Section B.13.). The costs of
such compensation are allowable to the
extent that total compensation for
individual employees: (1) is reasonable
for the services rendered; (2) follows an
appointment made in accordance with
State, local, or Indian tribal government
laws and rules and which meets Federal
merit system or other requirements,
where applicable; and (3) is determined
and supported as provided in b. below.
Compensation for employees engaged in
federally -assisted activities will be.
considered reasonable to the extent that
it is consistent with that paid for similar
work in other activities of the State,
local. or Indian tribal government. In
cases where the kinds of employees
required for the federally -assisted
activities are not found in the other
activities of the State, local, or Indian
tribal government, compensation will be
considered reasonable to the extent that
It is comparable to that paid for similar
work in the labor market in which the
employing government competes for the
kind of employees involved.
Compensation surveys providing data
representative of the labor market
involved will be an acceptable basis for,
evaluating reasonableness.
b. Payroll and distribution of time.
Amounts charged to grant programs for
personal services, regardless of whether
treated as direct or indirect costs, will
be based on payrolls documented and
provided in accordance with generally
accepted practice of the State. local, or
Indian tribal government. Payrolls must
be supported by time and attendance or
equivalent records for individual
employees. Salaries and wages of
employees chargeable to more than one
grant program or other cost objective
will be supported by appropriate time
distribution records. The method used
should produce an equitable distribution
of time and effort.
11. Depreciation and use allowances.
a. Grantees may be compensated for
the use of buildings, capital
improvements. and equipment through
use allowances or depreciation. Use
allowances are the means of providing
compensation in lieu of depreciation or
other equivalent costs. However. a
combination of the two methods may
not be used in connection with a single
class of fixed assets.
b. The computation of depreciation or
use allowance will be based on
acquisition cost. Where actual cost
records have not been maintained. a
reasonable estimate of the original
acquisition cost may be used in the
computation. The computation will
exclude the cost or any portion of the
cost of buildings and equipment donated
or home directly or indirectly by the
Federal Government through charges to
Federal grant propgrams or otherwise.
irrespective of where title was originally
vested or where it presently resides. In
addition, the computation will also
exclude the cost of land. Depreciation or
a use allowance on idle or excess
facilities is not allowable, except when
specifically authorized by the grantor
Federalagency.
c. Where the depreciation method is
followed, adequate property records
must be maintained, and any generally -
accepted method of computing
depreciation may be used. However, the
method of computing depreciation must
be consistently applied for any specific
asset or class of assets for all affected
federally -sponsored programs and must
result in equitable charges considering
the extent of the use of the assets for the
benefit of such programs.
d. In lieu of depreciation. a use
allowance for buildings and
improvements may be computed at an
annual rate not exceeding two percent
of acquisition cost. Theuseallowance
for equipment (excluding items properly
capitalized as building cost) will be
computed at an annual rate not
exceeding six and two-thirds percent of
acquisition cost of usuable equipment.
e. No depreciation or use charge may
be allowed on any assets that would be
considered as fully depreciated.
provided, however, that reasonable use
charges may be negotiated for any such
assets if warranted after taking into
consideration the cost of the facility or
item involved, the estimated useful life
remaining at time of negotiation, the
effect of any increased maintenance
charges or decreased efficiency due to
age, and any other factors pertinent to
the utilization of the facility or item for
the purpose contemplated.
12. Disbursing service. The cost of
disbursing grant program funds by the
Treasurer or other designated officer is
allowable. Disbursing services cover the
processing of checks or warrants, from
preparation to redemption. including the
necessary records of accountability and
reconciliation of such records with
related cash accounts.
13. Employee fringe benefits. Costs
identified under a. and b. below are
allowable to the extent that total
compensation for employees is
reasonable as defined in Section B.10.
a. Employee benefits in the form of
regular compensation paid to employees
during periods of authorized absences
from the job, such as for annual leave.
sick leave. court leave. military leave.
and the like, if they are: (1) provided
prusuant to an approved leave system;
and (2) the cost thereof is equitably
allocated to all related activities.
including grant programs.
b. Employee benefits in the form of
employers' contribution or expenses for
social security, employees' life and
health insurance plans. unemployment
insurance coverage, workmen's
compensation insurance. pension plans.
severance pay, and the like, provided
such benefits are granted under
approved plans and are distributed
equitably to grant programs and to other
activities.
14. Employee morale. health and
welfare costs. The costs of health or
first-aid clinics and/or infirmaries.
recreational facilities. employees'
counseling services, employee
information publications, and any
related expenses incurred in accordance
with general State. local or Indian tribal
policy. are allowable. Income generated
from any of these activities will be
offset against expenses.
15. Exhibits. Costs of exhibits relating
specifically to the grant programs are
allowable.
16. Legal expenses. The cost of legal
expenses required in the administration
of grant programs is allowable. Legal
services furnished by the chief legal
officer of a State. local or Indian tribal
government or his staff solely for the
purpose of discharging his general
responsibilities as legal officer are
unallowable. Legal expenses for the
prosecution of claims against the
Federal Government are unallowable.
17. Maintenance and repair. Costs
incurred for necessary maintenance.
repair, or upkeep of property which
neither add to the permanent value of
the property nor appreciably prolong its
intended life, but keep it in an efficient
operating condition, are allowable.
18. Materials and supplies. The cost of
materials and supplies necessary to
Federajokpgistee / Vol. 46. No. 18 / Wednesdary 28. 1981 / Notices 95
carry out the grant programs is
allowable. Purchases made specifically
for the grant program should be charged
thereto at their actual prices after
deducting all cash discounts, trade
discounts, rebates, and allowances
received by the grantee. Withdrawals
from general stores or stockrooms
should be charged at cost under any
recognized method of pricing
consistently applied. Incoming
transportation charges are a proper part
of material cost.
19. Memberships. subscriptions and
professional activities.
a. Memberships. The cost of
membership in civic, business, technical
and professional organizations is
allowable provided: (1) the benefit from
the membership is related to the grant
program: (2) the expenditure is for
agency membership: (3) the cost of the
membership is reasonably related to the
value of the services or benefits
received; and (4) the expenditure is not
for membership in an organization
which devotes a substantial part of its
activities to influencing legislation.
b. Reference material. The cost of
books, and subscriptions to civic.
business. professional, and technical
periodicals is allowable when related to
the grant program.
c. Meetings and conferences. Costs
are allowable when the primary purpose
of the meeting is the dissemination of
technical information relating to the
grant program and they are consistent
with regular practices followed for other
activities of the grantee.
20. Motorpools. The costs of a service
organization which provides
automobiles to user grantee agencies at
a mileage or fixed rate and/or provides
vehicle maintenance, inspection and
repair services are allowable.
21. Payroll preparation. The cost of
preparing payrolls and maintaining
necessary related wage records is
allowable.
22. Personnel administration. Costs
for the recruitment, examination.
certification. classification, training.
establishment of pay standards, and
related activities for grant programs, are
allowable.
23. Printing and reproduction. Costs
for printing and reproduction services
necessary for grant administration.
including but not limited to forms.
reports. manuals. and informational
literature, are allowable. Publication
costs of reports or other media relating
to grant program accomplishments or
results are allowable when provided for
in the grant agreement.
24. Procurement service. The cost of
procurement service. including
solicitation of bids. preparation and
award of contracts, and all phases of
contract admmi]tration in providing
goods, facilities and services for grant
programs. is allowable.
25. Taxes. In general. taxes or
payments in lieu of taxes which the
grantee agency is legally required to pay
are allowable.
25. Training and education. The cost
of in-service training, customarily
provided for employee development.
which directly or indirectly benefits
grant programs is allowable. Out -of -
service training involving extended
periods of time is allowable only when
specifically authorized by the grantor
agency.
27. Transportation. Costs incurred for
freight, cartage, express, postage and
other transportation costs relating either
to goods purchased. delivered, or moved
from one location to another are
allowable.
Ze. Travel. Travel costs are allowable
for expenses for transportation. lodging,
subsistence, and related items incurred
by employees who are in travel status
on official business incident to a grant
program. Such costs may be charged on
an actual basis, on a per diem or
mileage basis in lieu of actual costs
incurred, or on a combination of the
two, provided the method used is
applied to an entire trip, and results in
charges consistent with those normally
allowed in like circumstances in non -
federally sponsored activities. The
difference in cost between first-class air
accommodations and less -than -first-
class air accommodations are not is
unallowable except when leas -than -
first -class air accommodations
reasonably available. Notwithstanding
the provisions of paragraphs D.6. and 8..
travel costs of officials covered by those
paragraphs. when specifically related to
grant programs. are allowable with the
prior approval of a grantor agency.
C. Costs Allowable With Approval of
Grantor Agency
1. Automatic data processing. The
cost of data processing services to grant
programs is allowable. This cost may
include rental of equipment or
depreciation on grantee -owned
equipment. The acquisition of
equipment, whether by outright
purchase, rental -purchase agreement or
other method of purchase, is allowable
only upon specific prior approval of the
grantor Federal agency as provided
under the selected item for capital
expenditures.
2. Building space and related
facilities. The cost of space in privately
or publicly owned buildings used for the
benefit of the grant program is allowable
subject to the conditions stated below.
The total cost of space. whether in a
privately or publicly owned building,
may not exceed the rental cost of
comparable space and facilities in a
privately -owned building in the same
locality. The cost of space procured fin
grant program usage may not be charg
to the program for periods of
nonoccupancy, without authorization c
the grantor Federal agency.
a. Rental cost. The rental cost of
space in a privately -owned building is
allowable. Similar costs for publicly
owned buildings newly occupied on or
after October 1, 1980. are allowable
where "rental rate" systems, or
equivalent systems that adequately
reflect actual costs, are employed. Sad
charges must be determined on the has
of actual cost (including depreciation
based on the useful life of the building,
interest paid or accrued, operation and
maintenance, and other allowable
costs). Where these costs are included
in rental charges, they may not be
charged elsewhere. No costs will be
included for purchases or construction
that were originally financed by the
Federal Government.
b. Maintenance and operation. The
cost of utilities, insurance, security,
janitorial services, elevator service,
upkeep of grounds, normal repairs and
alterations and the like, are allowable t
the extent they are not otherwise
included in rental or other charges for
space.
c. Rearrangements and alterations.
Costs incurred for rearrangement and
alteration of facilities required
specifically for the grant program or
those that materially increase the value
or useful life of the facilities (Section
C.3.) are allowable when specifically
approved by the grantor agency.
d. Depreciation and just allowances
on publicly -owned buildings. The costs
are allowable as provided in Section
B.11.
e. Occupancy of space under rental -
purchase or a lease with option -to -
purchase agreement. The cost of space
procured under such arrangements is
allowable when specifically approved
by the Federal grantor agency.
3. Captial expenditures. The cost of
facilities, equipment, other capital
assets, and repairs which materially
increase the value or useful life of
capital assets is allowable when such
procurement is specifically approved by
the Federal grantor agency. When asset
acquired with Federal grant funds are
is) sold: (b) no longer available for use
in a federally -sponsored program: or (c)
used for purposes not authorized by the
grantor agency, the Federal grantor
agency's equity in the asset will be
refunded in the.same proportion as
9SS4 Federal Register / Vol. 48. No. 18 / Wednesday, January 28. 1.._. / Notices
Federal participation in its cost. In case
any assets are traded on new items,
only the net cost of the newly -acquired
assets is allowable.
4. Insurance and indemnification.
a. Costs of insurance required, or
approved and maintained pursuant to
the grant agreement. are allowable.
b. Costs of other insurance in
connection with the general conduct of
activities are allowable subject to the
following limitations:
(1) types and extent and cost of
coverage will be in accordance with
general State or local government policy
and sound business practice.
(2) Costs of insurance or of
contributions to any reserve covering
the risk of loss of, or damage to. Federal
Government property are unallowable
except to the extent that the grantor
agency has specifically requited or
approved such costs.
c. Contributions to a reserve for a self-
insurance program approved by the
Federal grantor agency are allowable to
the extent that the type of coverage,
extent of coverage, and the rates and
premiums would have been allowed had
insurance been purchased to cover the
risks.
d. Actual losses which could have
been covered by permissible insurance
(through an approved self-insurance
program or otherwise) are unallowable
unless expressly provided for in the
grant agreement. However. costs
incurred because of losses not covered
under nominal deductible insurance
coverage provided in keeping with
sound management practice, and minor
losses not covered by insurance. such as
spoilage, breakage and disappearance of
small hand tools which occur in the
ordinary course of operations, are
allowable.
e. Indemnification. Includes securing
the grantee against liabilities to third
persons and other losses not
compensated by insurance or otherwise.
The Government is obligated to
indemnify the grantee only to the extent
expressly provided for in the grant
agreement, except as provided in d.
above.
5. Management studies. The cost of
management studies to improve the
effectiveness and efficiency of grant
management for ongoing programs is
allowable except that the cost of studies
performed by agencies other than the
grantee department or outside
consultants is allowable only when
authorized by the Federal grantor
agency.
a. Preagreement costs. Costs incurred
prior to the effective date of the grant or
contract, whether or not they would
have been allowable thereunder if
incurred after such date, are allowable
when specifically provided for in the
grant agreement.
7. Professional services. Costs of
professional services rendered by
individuals or organizations not a part
of the grantee department.are allowable
subject to such prior authorization as
may be required by the Federal grantor
agency.
a. Proposal costs. Costs of preparing
proposals on potential Federal
Government grant agreements are
allowable when specifically provided
for in the grant agreement.
D. Unallowable Costs
1. Bad debts. Any losses arising from
uncollectible accounts and other claims.
and related costs. are unallowable.
2. Contingencies. Contributions to a
contingency reserve or any similar
provision for unforeseen events are
unallowable.
3. Contributions and donations.
Unallowable.
4. Entertainment. Costs of
amusements. social activities. and
incidental costs relating thereto, such as
meals, beverages, lodgings, rentals.
transportation, and gratuities. are
unallowable.
5. Fines and penalties. Costs resulting
from violations of, or failure to comply
with Federal. State and local laws and
regulations are unallowable.
6. Governor's expenses. The salaries
and expenses of the Office of the
Governor of a State. or the chief
executive of a political subdivision, are
considered a cost of general State or
local government and are unallowable.
However, for a federally -recognized
Indian tribal government, only that
portion of the salaries and expenses of
the office of the chief executive that is a
cost of general government is
unallowable. Theportion of salaries and
expenses directly attributable to
managing and operating programs by
the chief executive and his staff is
allowable. The allowable portion shall
be determined by the Federal cognizant
agency and the Indian government
representative on a reasonable basis.
7. Interest and other financial costs.
Interest on borrowings (however
represented), bond discounts, cost of
financing and refinancing operations.
and legal and professional fees paid in
connection therewith, are unallowable
except when authorized by Federal
legislation and except as provided for in
paragraph C.2.a of this Attachment.
8. Legislative expenses. Salaries and
other expenses of the State legislature or
similar local governmental bodies such
as county supervisors, city councils.
school boards. etc., whether incurred for
purposes of legislation or executive
direction, are unallowable.
9. Underrecovery of costs under grant
agreements. Any excess of cost over the
Federal contribution under one grant
agreement is unallowable under other
grant agreements.
Ra Dsn naso iiMd t-rral: aN.m�
saaaw COOK stisoI-r
IOXECUTIVE OFFICE OF THE PRESIDAR
�. OFFICE OF MANAGEMENT AND BUDGET
WASPVYGTON. D.C. 20503
March 3, 1988
CIRCULAR NO. A-102
(Revised)
TO THE HEADS OF EXECUTIVE DEPARTMENTS AND ESTABLISHMENTS
SUBJECT: Grants and Cooperative Agreements with State and Local
Governments
1. purpose. This Circular establishes consistency and
uniformity among Federal agencies in the management of grants
and cooperative agreements with State, local, and federally
recognized Indian tribal governments. This revision supersedes
Office of Management and Budget (OMB) Circular No. A-102, dated
January 1981.
2. Authority. This Circular is issued under the authority of
the Budget and Accounting Act of 1921, as amended; the Budget and
Accounting Procedures Act of 1950, as amended; Reorganization
Plan No. 2 of 1970; and Executive Order 11541. Also included in
the Circular are standards to ensure consistent implementation of
sections 202, 203, and 204 of the Intergovernmental Cooperation
Act of 1968, the Office of Federal Procurement Policy Act
Amendments of 1983, and sections 6301-08, title 31, United States
Code.
3. Background. On March 12, 1987, the President directed all
affected agencies to issue a grants management common rule to
adopt government -wide terms and conditions for grants to State
and local governments. This revised Circular provides guidance
to Federal agencies on business -like management of grant programs
and other matters not covered in the common rule. The revision
replaces and rescinds Circular A-102, dated January 1981,
including Attachments A - P.
4. Coverage. Consistent with their legal obligations, all
Federal agencies administering programs that involve grants and
cooperative agreements with State, local and Indian tribal
governments (grantees) shall follow the policies in this Circular
and issue a common grants management rule (common rule). If the
enabling legislation for a specific grant program prescribes
policies or requirements that differ from those in this Circular,
the provisions of the enabling legislation shall govern.
5. Deviations. The Office of Management and Budget may grant
deviations from the requirements of this Circular when
permissible under existing law. However, in the interest of
uniformity and consistency, deviations will be permitted only in
exceptional circumstances.
6. Pre -Award Policies.
a. Use of grants and cooperative agreements. Sections
6301-08, title 31, United States Code govern the use of grants,
contracts and cooperative agreements. A grant or cooperative
agreement shall be used only when the principal purpose of a
transaction is to accomplish a public purpose of support or
stimulation authorized by Federal statute. Contracts shall be
used when the principal purpose is acquisition of property or
services for the direct benefit or use of the Federal Government.
The statutory criterion for choosing between grants and
cooperative agreements is that for the latter, "substantial
involvement is expected between the executive agency and the
State, local government, or other recipient when carrying out the
activity contemplated in the agreement."
(1) Federal agencies shall provide the public with an
advance notice in the Federal Resister, or by other appropriate
means, of intended funding priorities for discretionary
assistance programs, unless funding priorities are established by
Federal statute. These priorities shall be approved by a policy
level official.
(2) Whenever time permits, agencies shall provide the
public an opportunity to comment on intended funding priorities.
(3) All discretionary grant awards in excess of
$25,000 shall be reviewed for consistency with agency priorities
by a policy level official.
c. Standard Forms for Applying for Grants and Cooperative
• _
(1) Agencies shall use the following standard
application forms unless they obtain OMB approval under the
Paperwork Reduction Act of 1980 (44 U.S.C. 35) and the 5 CFR Part
1320, "Controlling Paperwork Burdens on the Public":
o SF -424 Facesheet
o SF -424a Budget Information (Non -Construction)
o SF -424b Budget Information (Construction)
o SF -424c Standard Assurances (Non -Construction)
o SF -424d Standard Assurances (Construction)
9 •
when different or additional information is needed to comply
with legislative requirements or to meet specific program needs,
agencies shall also obtain prior OMB approval.
(2) A preapplication shall be used for all
construction, land acquisition and land development projects or
programs when the need for Federal funding exceeds $100,000,
unless the Federal agency determines that a preapplication is not
needed. A preapplication is used to:
(a) Establish communication between the agency
and the applicant,
(b) Determine the applicant's eligibility,
(c) Determine how well the project can compete
with similar projects from others, and
(d) Discourage any proposals that have little or
no chance for Federal funding before applicants incur significant
costs in preparing detailed applications.
(3) Agencies shall use the Budget Information
(Construction) and Standard Assurances (Construction) when the
major purpose of the project or program is construction, land
acquisition or land development.
(4) Agencies may specify how and whether budgets shall
be shown by functions or activities within the program or
project.
(5) Agencies should generally include a request for a
program narrative statement which is based on the following
instructions:
(a) Objectives and need for assistance.
Pinpoint any relevant physical, economic, social, financial,
institutional, or other problems requiring a solution.
Demonstrate the need for the assistance and state the principal
and subordinate objectives of the project. Supporting
documentation or other testimonies from concerned interests other
than the applicant may be used. Any relevant data based on
planning studies should be included or footnoted.
(b) Results or Benefits Expected. Identify
results and benefits to be derived. For example, show how the
facility will be used. For land acquisition or development
projects, explain how the project will benefit the public.
(c) Approach. Outline a plan of action
pertaining to the scope and detail how the proposed work will be
accomplished for each assistance program. Cite factors which
might accelerate or decelerate the work and your reasons for
taking this approach as opposed to others. Describe any unusual
M
features of the project, such as design or technological
innovations, reductions in cost or time, or extraordinary social
and community involvements. Provide for each assistance program
quantitative projections of the accomplishments to be achieved,
if possible. When accomplishments cannot be quantified, list
the activities in chronological order to show the schedule of
accomplishments and their target dates. Identify the kinds of
data to be collected and maintained, and discuss the criteria to
be used to evaluate the results and success of the project.
Explain the methodology that will be used to determine if the
needs identified and discussed are being met and if the results
and benefits identified are being achieved. List each
organization, cooperator, consultant, or other key individuals
who will work on the project along with a short description of
the nature of their effort or contribution.
(d) Geographic Location. Give a precise location
of the project and area to be served by the proposed project.
Maps or other graphic aids may be attached.
(e) If applicable, provide the following
information: for research and demonstration assistance
requests, present a biographical sketch of the program director
with the following information: name, address, telephone number,
background, and other qualifying experience for the project.
Also, list the name, training and background for other key
personnel engaged in the project. Describe the relationship
between this project and other work planned, anticipated, or
underway under Federal assistance. Explain the reason for all
requests for supplemental assistance and justify the need for
additional funding. Discuss accomplishments to date and list in
chronological order a schedule of accomplishments, progress or
milestones anticipated with the new funding request. If there
have been significant changes in the project objectives,
location, approach or time delays, explain and justify. For
other requests for changes, or amendments, explain the reason for
the change(s). If the scope or objectives have changed or an
extension of time is necessary, explain the circumstances and
justify. If the total budget has been exceeded or if the
individual budget items have changes more than the prescribed
limits, explain and justify the change and its effect on the
project.
(6) Additional assurances shall not be added to those
contained on the standard forms, unless specifically required by
statute.
d. Debarment and Suspension. Federal agencies shall not
award assistance to applicants that are debarred or suspended, or
otherwise excluded from or ineligible for participation in
Federal assistance programs under Executive Order 12549.
4
0 0
Agencies shall establish procedures for the effective use of the
Consolidated List of Debarred, Suspended, voluntarily Excluded
and Ineligible Assistance Participants to assure that they do not
award assistance to listed parties in violation of the Executive
Order. Agencies shall also establish procedures to provide for
effective use and/or dissemination of the list to assure that
their grantees and subgrantees (including contractors) at any
tier do not make awards in violation of implementing regulations.
e. Awards and Adiustments.
(1) Ordinarily awards shall be made at least ten days
prior to the beginning of the grant period.
(2) Agencies shall notify grantees immediately of any
anticipated adjustments in the amount of an award. This notice
shall be provided as early as possible in the funding period.
Reductions in funding shall apply only to periods after notice is
provided. Whenever an agency adjusts the amount of an award, it
shall also make an appropriate adjustment to the amount of any
required matching or cost sharing.
f. Carryover Balances. Agencies shall be prepared to
identify to OMB the amounts of carryover balances (e.g., the
amounts of estimated, grantee unobligated balances available for
carryover into subsequent grant periods). This presentation
shall detail the fiscal and programmatic (level of effort) impact
in the following period.
g. Special Conditions or Restrictions. Agencies may impose
special conditions or restrictions on awards to "high risk"
applicants/grantees in accordance with section .12 of the
common rule. Agencies shall document use of the "Exception"
provisions of section .6 and "High-risk" provisions of section
12 of the common rule.
h. waiver of Single State Agency Requirements.
(1) Requests to agencies from the Governors, or other
duly constituted State authorities, for waiver of "single" State
agency requirements in accordance with section 6504, title 31,
United States Code, shall be given expeditious handling and,
whenever possible, an affirmative response.
(2) When it is necessary to refuse a request for
waiver of "single" State agency requirements under section 204,
the Federal grantor agency shall advise the Office of Management
and Budget prior to informing the State that the request cannot
be granted. The agency shall indicate to OMB the reasons for the
denial of the request.
(7) Legislative proposals embracing grant-in-aid
3
programs shall avoid inclusion of proposals for "single" State
agencies in the absence of compelling reasons to do otherwise.
In addition, existing requirements in present grant-in-aid
programs shall be reviewed and legislative proposals developed
for the removal of these restrictive provisions.
i. Patent Rights. Agencies shall use the standard patent
rights clause specified in "Rights to Inventions made by
Nonprofit Organizations and Small Business Firms" (37 CFR Part
401), when providing support for research and development.
7. post -award Policies.
a. Cash Management. Agency methods and procedures for
transferring funds shall minimize the time elapsing between the
transfer to recipients of grants and cooperative agreements and
the recipient's need for the funds.
(1) Such transfers shall be made consistent with
program purpose, applicable law and Treasury regulations at 31
CFR Part 205.
(2) Where letters -of -credit are used to provide funds,
they shall be in the same amount as the award.
b. Grantee Financial Management Systems. In assessing the
adequacy of an applicant's financial management system, the
awarding agency shall rely on readily available sources of
information such as audit reports to the maximum extent possible.
If additional information is necessary to assure prudent
management of agency funds, it shall be obtained from the
applicant or from an on-site review.
C. Financial Status Reports.
(1) Federal agencies shall require grantees to use the
SF -269, Financial Status Report -Long Form, or SF -269a, Financial
Status Report -Short Form, to report the status of funds for all
nonconstruction projects or programs. Federal agencies need not
require the Financial Status Report when the SF -270, Request for
Advance or Reimbursement, or SF -272, Report of Federal Cash
Transactions, is determined to provide adequate information.
(2) Federal agencies shall not require grantees to
report on the status of funds by object class category of
expenditure (e.g., personnel, travel, equipment).
(3) If reporting on the status of funds by programs,
functions or activities within the project or program is required
by statute or regulation, Federal agencies shall instruct
grantees to use block 12, Remarks, on the SF -269 or a
supplementary form approved by the OMB under the Paperwork
2
0 .
Reduction Act of 1980.
(4) Federal agencies shall prescribe whether the
reporting shall be on a cash or an accrual basis. If the Federal
agency requires accrual information and the grantee's accounting
records are not normally kept on an accrual basis, the grantee
shall not be required to convert its accounting system but shall
develop such accrual information through an analysis of the
documentation on hand.
d.
Business Enterprise and Labor Surplus Area Firms. It is national
policy to award a fair share of contracts to small and minority
business firms. Grantees shall take similar appropriate
affirmative action to support of women's enterprises and are
encouraged to procure goods and services from labor surplus
areas.
(1) Agencies shall encourage grantees to generate
program income to help defray program costs. However, Federal
agencies shall not permit grantees to use grant -acquired
equipment to compete unfairly with the private sector.
(2) Federal agencies shall instruct grantees to
deduct program income from total program costs as specified in
the common rule at paragraph ,.25(g)(1), unless agency
regulations or the terms of the grant award state otherwise.
Authorization for recipients to follow the other alternatives in
paragraph _.25(g)(2) and (3) shall be granted sparingly.
f. Site Visits and Technical Assistance. Agencies shall
conduct site visits only as warranted by program or project
needs. Technical assistance site visits shall be provided only
(1) in response to requests from grantees, (2) based on
demonstrated program need, or (3) when recipients are designated
"high risk" under section `.12 of the common rule.
8. After -the -grant Policies.
a. Closeout. Federal agencies shall notify grantees in
writing before the end of the grant period of final reports that
shall be due, the dates by which they must be received, and where
they must be submitted. Copies of any required forms and
instructions for their completion shall be included with this
notification. The Federal actions that must precede closeout
are:
(1) Receipt of all required reports,
(2) Disposition or recovery of federally -owned assets
(as distinct from property acquired under the grant), and
(3) Adjustment of the award amount and the amount of
Federal cash paid the recipient.
(b) Annual Reconciliation of Continuing Assistance Awards,
Federal agencies *hall reconcile continuing awards at least
annually and evaluate program performance and financial reports.
Items to be reviewed include:
(1) A comparison of the recipient's work plan to its
progress reports and project outputs,
(2) the Financial Status Report (SF -269),
(3) Request(s) for payment,.
(4) Compliance with any matching, level of effort or
maintenance of effort requirement, and
(5) A review of federally -owned property (as distinct
from property acquired under the grant).
(
9. fttitlements (Raservedl
lo. p2ligy Review (cunseti. The Circular will have a policy
review three years from the date of issuance.
11. Effective Date. The Circular is effective on publication.
12. Inauiries, Further information concerning this Circular may
be obtained from:
Financial Management Division
Now E7Cecutive Office Building, Room 10215
Office of Management and Budget
Washington, D.C. 20503
(202) 398-3050
J 1R'LI
irec r
a
i
0
0
COMMON RULE
CbmmoN Rule
Text of the Common Rule
The text of the common rule as
adopted by the agencies in this
document appears below.
PART UNIFORM
ADMINISTRATIVE REQUIREMENTS
FOR GRANTS AND COOPERATIVE
AGREEMENTS TO STATE AND LOCAL
Suborn A—General
Sec
_.1 Purpose and scope of this par.
_2 Scope of subpart.
__3 Definitions.
._.a Applicability.
__S Effect on other Issuances.
_e Additions and exceptions.
Subpart 6—Pre-Awn, tl Requirements
_10 Forma for applying fm grants.
__11 Stole ptana.
_12 Special grant or subgrant conditions
for "high-risk" grantees.
Subpart C—Post-Award RegWrmants
Fm acial Administration,
__20 Standards for financial management
systemr.
_21 Payment.
_.22 Allowable costs.
_23 Period of availability of (undo.
.-24 Matching of coal sharing.
.__.25 Program income.
_. _26 Non -Federal audit.
Changes. Property. and Subawards
__30 Changes.
__31 Real property.
_.__32 Fquipment.
._.33 Supplivs.
—_34 Copyrights.
... .35 Subawards to debarred and
saspendcd parties.
_._30 Proaaretnent.
.._..37 Subgranls.
Reports. Records. Retention. and
Enforcement
_ .. _40 Manitnring and reporting pragram
performance.
._ _41 Financial reporting.
_. _42 Retention and access requirements
for records.
_ _..73 Enforcement.
. __ Aa 1'crmination for Wna'enicrtcr.
Subpart 0—Atter•tna-Grant Re"i emer•ts
_. _SO Closeout.
.._ ..51 Mur disallowances and
adjustments.
.... _52. Collcctinn of .m0un:s du•-.
Subpart E—Entidements (Reserved)
SINGLE AUDIT GUIDE / 22.163
. •
Subpart A—General
1 . t purpose and scope of this part
This part establishes uniform
ddmmistrauve rules for Federal grants
and coopersuve agreemeals and
subawards to Slate. local and Indian
tribal governments.
4 .2 Soap. of sutitiert
This subpart contains general nils
pertaining to this part and procedures
for control of exceptions from this part.
g _.3 wnnutens.
As used in this para
"Acorued expenditures' mean the
charges inatrred by the grantee during a
given period requiring the provision of
funds far. (1) Goods and other tangible
property received: (2) services
performed by employees. contrsetors.
subgreniees. subcontractors. and other
payees. and (3) other amounts becoming
owed under programs for which no
current services or performance is
required. such as annwbes. insurance
claims. and other benefit payments.
"Accrued income" means the sum of:
(1) Earnings during a given period from
services performed by the grantee and
goods and other tangible property
delivered to purchasers. and (2) amounts
becoming owed to the grantee for which
no current services or performance is
required by the grantee.
"Acquisition cost" of an item of
purchased equipment means the net
invoice unit price of the property
including the cost of modifications.
attachments. accessories. or auxiliary
apparatus necessary to make the
property usable for the purpose for
which it was acquired. Other charges
such as the cost of installation.
transportation. taxes. duty or protective
in -transit insurance. shall be included or
excluded from the unit acquisition cost
in accordance with the grantee's regular
accounting practices.
"Administrative" requirements mean
those matters common to grants in
general. such as financial management.
kinds and frequency of reports. and
retention of records. These are
distinguished from "programmatic'
requirements. which concern matters
that can be treated only on a program-
by -program or grant -by -grant basis. such
as kinds of activities that can be
supported by grants under a particular
program.
"Awarding agency" means (i) with
respect to a grant. the Federal agency.
and (2) with respect to a subgrant. the
party that awarded the subgrant.
"Cash contributions" means the
grantees cash outlay. mcludma the
22.164 / SINGLE AUDIT GUIDE
outlav of munry Conrribuied to the
grantee or subgrantee by other public
agencies and institutions. and private
orgamzatioos and individuals. When
authorized by Federal legislation.
Federal funds received from other
assistance agreements may be
considered as grantee or subgrantee
cash contributions.
"Contract" means (except as used in
the definitions for "grant" and
"subgrent" in this section and except
where qualified by "Federal") a
procurement contract tinder a grant or
subgrant. and means a procurement
subcontract under s contract.
"Cost sharing or matching" memos the
value of the third party to kind
contributions and the portion of the
costs of a federally assisted project or
program not borne by the Federal
Government.
`Cost -type contract" means a contract
or subcontract under a grant in which
the Contractor or subcontractor is paid
on the basis of the coats it incurs, with
or without a fee.
"Equipment" means tangible.
nonexpendable. personal property
having a useful life of more than one
year and an acquisition mat of 55.000 or
more per unit. A grantee may use its
own definition of equipment provided
that such definition would at least
include all equipment defined above.
"Expenditure report" means: (1) For
nonconstruction grants. the SF -289
"Financial Status Report" (or other
equivalent report{: (2) for construction
grants. the SF -271 "Outlay Report and
Request for Reimbursement" (or other
equivalent report).
"Federally recognized Indian tribal
government" means the governing body
or a governmental agency of any Indian
tribe, band, nation. or other organized
group or community (including any
Native village as defined in section 3 of
the Alaska Native Claims Settlement
Act. 85 Stat 8881 certified by the
Secretary of the Interior as eligible for
the special programa and services
provided by him through the Bureau of
Indian Affairs.
"Government" means a Slate or local
government or a federally recognized
Indian tribal government.
"Grant" means an award of financial
assistance. including cooperative
agreements. to the form of money, or
property in lieu of money. by the Federal
Government to an eligible grantee. The
term does not include technical
assistance which provides services
instead of money. or other assistance in
the form of revenue sharing. loans. loan
guarantees. interest subsidies.
insurance. or direct appropriations.
Also. the term does not include
.usestance, Burn as a fellowship or other
lump gum award. which the grantee is
not required to account for.
"Grantee" means the government to
which a grant is awarded and which is
accountable for the use of the funds
provided. The grantee is the entire legal
entity even if only a particular
component of the entity is designated in
the grant award document.
"Local government" means • county.
municipality. city, town. township. local
public authority (including any public
and Indian housing agency under the
United States Housing Act of 1937)
school district. special district intrastate
district. council of governments
(whether or not incorporated as a
nonprofit corporation under stale law),
any other regional or interstate
government entity, or any agency or
instrumentality of a local government
"Obligations" means the amounts of
orders placed. contracts and subgrants
awarded. goods and services received
and similar transactions during a given
period that will requite payment by the
grantee during the same or a future
period.
"OMB" means the United States
Office of Management and Budget
"Outlays" (expenditures) mean
charges made to the project or programa
They may be reported on a cash or
accrual basis. For reports prepared on a
cash basis. outlays are the sum of actual
cash disbursement for direct charges for
goods and services. the amount of
indirect expense incurred. the value of
in-kind contributions applied. and the
amount of cash advances and payments
made to contractors and subgranlees.
For reports prepared on an accrued
expenditure basis. outlays are the sum
of actual cash disbursements. the
amount of indirect expense incurred. the
value of inkind contributions applied.
and the new increase (or decrease) in
the amounts owed by the grantee for
goods and other property received. for
services performed by employees.
contractors. subgrantees.
subcontractors. and other payees. and
other amounts becoming owed under
programs for which no current services
or performance are required. such as
annuities. insurance claims. and other
benefit payments.
"Percentage of completion method"
refers to a system under which
payments are made for construction
work according to the percentage of
completion of the work, rather than ro
the grantee s cost incurred.
"Prior approval" means
documentation evidencing consent prior
to incurring specific cost.
"Real property" means land. including
land improvements. structures and
appurtenances thereto. excluding
movable machinery and equipment.
"Share". when referring to the
awarding agency's portion of real
property, equipment or supplies, means
the same percentage as the awarding
agency's portion of the acquiring party's
total costs under the grant to which the
acquisition costs under the grant to
which the acquisition cost of the
property was charged. Only costs are to
be counted—not the value of third -party
in-kind contributions.
"State" means any of the several
States of the United Slates. the District
of Columbia, the Commonwealth of
Puerto Rico, any territory or possession
of the United States. or any agency or
instrumentality of a State exclusive of
local governments. The term does not
include any public and Indian housing
agency under United States Housing Act
of 1937.
"Subgrant" means an award of
financial assistance in the form of
money, or property in lieu of money.
made under a grant by a grantee to an
eligible subgrantee. The term includes
financial assistance when provided by
contractual legal agreement. but does
nut include procurement purchases. nor
does it include any form of assistance
which is excluded from the definition of
"grant" in this part.
"Subgrantee" means the government
or other legal entity to which a subgrant
is awarded and which is accountable to
the grantee for the use of the funds
provided.
"Supplies" means all tangible
personal property other than
"equipment' as defined in this part.
"Suspension" means depending on the
context, either (1) temporary withdrawal
of the authority to obligate grant funds
pending corrective action by the grantee
or subgrantee or a decision to terminate
the grant. or (2) an action taken by a
suspending official in accordance with
agency regulations implementing E.O.
12549 to immediately exclude a person
from participating to grant transactions
for a period. pending completion of ar,
investigation and such legal or
debarment proceedings as may ensue.
"Termination" means permanent
withdrawal of the authority to obligate
previously -awarded grant funds before
that authority would otherwise expire. It
also means the voluntary relinquishment
of that authority by the grantee or
subgrantee. "rernnnation'- does not
include: (1) Withdrawal of funds
awarded on the basis of the grantee's
underestimate of the unobligated
balance in a prior period: (2)
Withdrawal of the unobligated balance
as of the expiration of a grant: (3)
Refusal to extend a grant or award
additional funds. to make a competing
or noncompeting continuation. renewal.
extension. or supplemental award: or (4)
voiding of a grant upon determination
that the award was obtained
fraudulently, or was otherwise illegal or
invalid from inception.
"Terns of a grant or subgrant" mean'
all requirements of the grant or
subgrant. whether in statute,
regulations, or the award document.
"Third party in-kind contributions"
mean property or services which benefit
a federally assisted project or program
and which are contributed by non.
Federal third parties without charge to
the grantee. or a cost -type contractor
under the grant agreement.
"Unliquidated obligations" for reports
prepared on a cash basis mean the
amount of obligations incurred by the
grantee that has not been paid. For
reports prepared on an accrued
expenditure basis, they represent the
amount of obligations incurred by the
grantee for which an outlay has not
been recorded.
"Unobligated balance' means the
portion of the funds authorized by the
Federal agency that has not been
obligated by the grantee and is
determined by deducting the cumulative
obligations from the cumulative funds
authorized.
§ _4 ADplleablltty.
(a) General. Subparts A -D of this part
apply to all grants and subgrants to
governments. except where inconsistent
with Federal statutes or with regulations
authorized in accordance with the
exception provision of 1-6. or.
(1) Crania and subgrants to State and
local institutions of higher education or
State and local hospitals.
(2) The block grants authorized by the
Omnibus Budget Reconciliation Act of
1981 (Community Services: Preventive
Health and Health Services; IAlcohol.
Drug Abuse. and Mental Health
Services: Maternal and Child Health
Services: Social Services: Low-income
Home Energy Assistance: States'
Program of Community Development
Block Grants for Small Cities: and
Elementary and Secondary Education
other than programs administered by the
Secretary of Education under Title V.
Subtitle D. Chapter 2. Section 583—the
Secretary's discretionary grant programl
and Titles 1-111 of the fob Training
Partnership Act of 1982 and under the
Public Health Services Act (Section
1921). Alcohol and Drug Abuse
Treatment and Rehabilitation Block
Grunt and Part C of Title V. Slental
t iiuunuq Ride
I lealth Service for the Homeless Block
Grant).
(3) Entitlement grants to carry out the
following programs of the Social
Security Act:
(il Aid to Needy Families with
Dependent Children (Title IV -A of the
Act, not including the Work Incentive
Program (WIN) authorized by section
402(a)19(C): HHS grants for WIN are
subject to this part):
(ii) Child Support Enforcement and
Establishment of Paternity (Title IV -D of
the Act):
(III) Faster Care and Adoption
Assistance (Title IV -E of the Act):
(iv) Aid to the Aged Blind. and
Disabled (Titles 1. X, XIV, and XVI-
AABD of the Act): and
(v) Medical Assistance (Medicaid)
(Title XIX of the Act) not including the
State Medicaid Fraud Control program
authorized by section 1903(a)(6)(8).
(4) Entitlement grants under the
following programs of The National
School Lunch. Act:
(i) School Lunch (section 4 of the Act).
(ii) Commodity Assistance (section 6
of the Act).
(iii) Special Meal Assistance (section
11 of the Act).
(iv) Summer Food Service for Children
(section 13 of the Act), and
(v) Child Care Food Program (section
17 of the Act).
(5) Entitlement grants under the
following programs of The Child
Nutrition Act of 1906:
(i) Special Milk (section 3 of the Act).
and
(ii) School Breakfast (section 4 of the
Act).
(6) Entitlement grants for State
Administrative expenses under The
Food Stamp Act of 1977 (section 16 of
the Act).
(7) A grant for an experimental. pilot.
or demonstration project that is also
supported by a grant listed in paragraph
(a)(3) of this section:
(8) Grant funds awarded under
subsection 412(e) of the Immigration and
Nationality Act (8 U.S.C. 15221e)) and
subsection 501(a)ofthe Refugee
Education Assistance Act of 19M (Pub.
L 96-422. 94 Stal. 1809), for cash
assistance. medical assistance. and
supplemental security income benefits
to refugees and entrants and the
administrative costs of providing the
assistance and benefits:
(ell Grants to local education agencies
under 20 U.S.C. 236 through 241-1(a).
and 242 through 244 (portions of the
Impact Aid programl, except for 20
U.S.C. 238(d)(2)(c) and 240(f)
(Entitlement Increase for Handicapped
Childrenl: and
SINCH .-11101i (:UII11- / 22.165
'. rr)rf rl i-rn r'rtl.
1101 Pavments under the Veterans
Administrations State Home Per Diem
Program (18 U.S.C.641(al)•
Ibl Entitlement programs. Entitlement
programs enumerated above in
§ _.4(a) (11-(61 are subject to Subpart
E.
§ _5 Effect on airier lurraneea.
All other grants administration
provisions of codified program
regulations. program manuals.
handbooks and other nonregulalory
materials which are inconsistent with
this part are superseded. except to the
extent they are required by statute, or
authorized in accordance with the
exception provision in § _.8.
§ __.6 Additions and exceptions
(al For classes of grants and grantees
subject to this pan. Federal agencies
may not impose additional
administrative requirements except in
codified regulations published in the
Federal Register.
(b) Exceptions for classes of grants or
grantees may be authorized only by
OMB.
(c) Exceptions on a case-by-case basis
and for subgrantees may be authorized
by the affected Federal agencies.
Subpart B—Pre-Award Requirements
§__10 Forms for apptying for grants
(a) Scope. (1) This section prescribes
forms and instructions to be used by
governmental organizations (except
hospitals and institutions of higher
education operated by a government) in
applying for grants. This section is not
applicable. however. to formula grant
programs which do not require
applicants to apply for funds on a
project basis.
(2) This section applies only to
applications to Federal agencies for
grants. and is not required to be applied
by grantees in dealing with applicants
for subgranls. However. grantees are
encouraged to avoid more detailed or
burdensome application requirements
for subgrants.
(b) Authorizedforms and instructions
for governmental organizations (1) In
applying for grants. applicants shall only
use standard application forms or those
prescribed by the granling agency with
the approval of OMB under the
Paperwork Reduction Act of 1960.
('t) Applicants are not required to
submit more than the original and two
copies of preapplications or
applications.
(3) Applicants must follow all
applicable instructions that bear OMB
clearance numbers. Federal agencies
may specify and describe the programs.
functions. or activities that will be used
22.166 / SINGLE AUDIT GUIDE
to plan. budget, and evaluate the work
under a grant. Other supplementary
instructions may be issued only with the
approval of OMB to the extent required
under the Paperwork Reduction Act of
1980. For any standard form, except the
SF -424 facesheet. Federal agencies may
shade out or instruct the applicant to
disregard any line item that is not
needed.
(4) When a grantee applies for
additional funding (such as a
continuation or supplemental award( or
amends a previously submitted
application. only the affected pages
need be submitted. Previously submitted
pages with information that is still
current need not be resubmitted.
J__11 State plans
(a) Scope. The statutes for some
programs require States to submit plans
before receiving grants. Under
regulations implementing Executive
Order 12372. "Intergovernmental Review
of Federal Programs:' States are
allowed to simplify, consolidate and
substitute plans. This section contains
additional provisions for plans that are
subject to regulations implementing the
Executive Order.
(b) Requirements. A Slate need meet
only Federal administrative or
programmatic requirements for a plan
that are in statutes or codified
regulations.
(c) Assurances. In each plan the State
will include an assurance that the Slate
shall comply with all applicable Federal
statutes and regulations in effect wi!h
respect to the periods for which it
receives grant funding. For this
assurance and other assurances
required in the plan. the State may:
(1) Cite by number the statutory or
regulatory provisions requiring the
assurances and affirm that it gives the
assurances required by those provisions.
(2)Repeat the assurance language in
the statutes or regulations, or
(3) Develop its own language to the
extent permitted by law.
(d) Amendments. A Stale will amend
a plan whenever necessary to reflect: (1)
New or revised Federal statutes or
regulations or (2) a material change in
any State law, organization. policy. or
State agency operation. The State will
obtain approval for the amendment and
its effective date but need submit for
approval only the amended portions of
the plan.
§ ._ _ .12 Special grant or wbgrant
conditions for "Ing"Isk" grantees
(a) A grantee or subgrantee may he
considered "high risk" if an awarding
agency determines that a grantee or
subgrantee:
(1) 1 Las a hutnry of unsatislactory
performance. or
(2) Is not financially stable. or
131 Has a management system which
dues not meet the management
standards set forth in this part, or
(4) Has not conformed to terms :and
conditions of previous awards. or
(5) Is otherwise not responsible: and if
the awarding agency determines that an
award will be made. special conditions
and/or restrictions shall correspond to
the high risk condition and shall be
included in the award.
(b) Special conditions or restrictions
may include:
(1) Payment on a reimbursement
basis:
(2) Withholding authority to proceed
to the next phase until receipt of
evidence of acceptable performance
within a given funding period:
(3) Requiring additional. more detailed
financial reports:
(4) Additional project monitoring:
(5) Requiring the grante or subgrunice
to obtain technical or management
assistance: or
(6) Establishing additional prior
approvals.
(c) If an awarding agency decides to
impose such conditions. the awarding
official will notify the grantee or
subgrantee as early as possible. in
writing. of:
(1) The nature of the special
conditions/restrictions:
(2) The reason(s) for imposing them:
(1) The corrective actions which most
be taken before they will tie removed
and the time allowed for completing the
corrective actions and
(4) The method of requesting
reconsideration of the.runditiors/
restrictions imposed.
Subpart C—Post-Award Requirements
Financial Administration
§ _...20 Standards for financial
management systems.
(a) A Stale must expand and accrianl
for grant funds in accordance with Siatar
laws and procedures for expending uud
accounting for its own funds. Fiscal
control and accounting procedures of
the State. as well as its subgrantees and
cast -type contractors. must be sufficient
tui
(1) Permit preparation of report♦
required by this part and the swut %
authorizing the grant. and
(21 Permit the tracing of funds to .a
Icvel of expenditures adequa:u to
establish that such funds !ta•. c no; Luc::
used in violation of the rrstriwnurs and
prn6ibitinns of apphcabie st..;ctes.
h
Id
311
(hl The financial management systems
of other grantees and subgrantees must
meet the following standards:
11) Financial reporting. Accurate.
current. and complete disclosure of the
financial results of financially assisted
activities must be made in accordance
with the financial reporting
requirements of the grant or subgrant.
(2) Accounting records. Grantees and
subgrantees must maintain records
which adequately identify the source
and application of funds provided for
financially -assisted activities. These
records must contain information
pertaining to grant or subgrant awards
and authorizations, obligations.
unobligated balances. assets. liabilities.
outlays or expenditures. and income.
(3) Internal contral. Effective control
and accountability must be maintained
for all grant and subgrant cash. real and
personal property, and other assets.
Grantees and subgrantees must
adequately safeguard all such property
and must assure that it is used solely for
authorized purposes.
(4) Budget control. Actual
expenditures or outlays must be
compared with budgeted amounts for
each grant or subgrant. Financial
information must be related to
performance or productivity data.
including the development of unit cost
information whenever appropriate or
specifically required in the grant or
subgrant agreement. If unit cost data are
required, estimates based on available
documentation will be accepted
whenever possible.
(51 Allowable cost. Applicable OMB
cost principles, agency program
regulations, and the terms of grant and
subgrant agreements will be followed in
determining the reasonableness.
allowability, and allocabifity of costs.
(6) Source documentation. Accounting
records must be supported by such
source documentation as cancelled
checks. paid bills, payrolls. time and
attendance records. contract and
subgrant award documents. etc.
(7) Cash management. Procedures for
minimizing the time elapsing between
the transfer of funds from the U.S.
Treasury and disbursement by grantees
and subgrantees must be followed
whenever advance payment procedures
are used. Grantees must establish
reasonable procedures to ensure the
receipt of reports on subgrantees' cash
balances and cash disbursements in
sufficient time to enable them to prepare
complete and accurate cash transactions
reports to the awarding agency. When
advances are made by fetter -of -credit or
electronic transfer of funds methods. the
grantee must make drawdowns as close
as possible to the time of making
disbursements. Grant^es must monitor
cash drawdowns by their subgrantees to
assure that they conform substantially
to the same standards of timing and
amount as apply to advances to the
grantees.
(c) An awarding agency may review
the adequacy of the financial
management system of any applicant for
financial assistance as part of a
preaward review or at any time
subsequent to award.
f —.21 Payment
(a) Scope. This section prescribes the
basic standard and the methods under
which a Federal agency will make
payments to grantees. and grantees will
make payments to subgrantees and
contractors.
(b) Basic standard. Methods and
procedures for payment shall minimize
the time elapsing between the transfer
of funds and disbursement by the
grantee or subgrantee, in accordance
with Treasury regulations at 31 CFR Part
205.
(c) Advances. Grantees and
subgrantees shall be paid in advance.
provided they maintain or demonstrate
the willingness and ability to maintain
procedures to minimize the time
elapsing between the transfer of the
funds and their disbursement by the
grantee or subgrantee.
(d) Reimbursement. Reimbursement
shall be the preferred method when the
requirements in paragraph (c) of this
section are not met. Grantees and
subgrantees may also be paid by
reimbursement for any construction
grant. Except as otherwise specified in
regulation. Federal agencies shall not
use the percentage of completion
method to pay construction grants. The
grantee or subgrantee may use that
method to pay its construction
contractor, and if it does, the awarding
agency's payments to the grantee or
subgrantee will be based on the
grantees or subgrantee'y actual rate of
disbursement.
(e) Working capital advances. If a
grantee cannot meet the criteria for
advance payments described in
paragraph (c) of this section, and the
Federal agency has determined that
reimbursement is not feasible because
the grantee lacks sufficient working
capital, the awarding agency may
provide cash or a working capital
advance basis. Under this procedure the
awarding agency shall advance rash to
the grantee to cover its estimated
disbursement needs for an initial period
generally geared to the grantee's
disbursing cycle. Thereafter. the
awarding agency shall reimburse the
grantee for its actual cash
COMmon Ruli
disbursements. The working cap
advance method of payment shd,
used by grantees or subgrantees
reason for using such method is t
unwillingness or inability of the g
to provide timely advances to the
subgrantee to meet the subgrante,
actual cash disbursements.
(0 Effect of program income. re,
and audit recoveries on payment.
Grantees and subgrantees shall di
repayments to and interest earned
revolving fund before requesting
additional cash payments for the s
activity.
(2) Except as provided in paragr.
(f)(1) of this section, grantees and
subgrantees shall disburse progron
income. rebates. refunds, contract
settlements, audit recoveries and
interest earned on such funds befor
requesting additional cash paymen
(g) Withholding payments. (1) Un
otherwise required by Federal statu
awarding agencies shall not withho
payments for proper charges incurrt
grantees or subgrantees unless—
(i) The grantee or subgrantee has
failed to comply with grant award
conditions or
(ii) The grantee or subgrantee is
indebted to the United States.
(2) Cash withheld for failure to car
with grant award condition. but with
suspension of the grant, shall be
released to the grantee upon subaegt
compliance. When a grant is suspenc
payment adjustments will be made it
accordance with f _.43(c).
(3) A Federal agency shall not mak
payment to grantees for amounts that
are withheld by grantees or subgranif
from payment to contractors to assure
satisfactory completion of work.
Payments shall be made by the Feder,
agency when the grantees or
subgrantees actually disburse the
withheld funds to the contractors or tc
escrow accounts established to assure
satisfactory completion of work.
(h) Cash depositories. 11) Consistent
with the national goal of expanding the
opportunities (or minority business
enterprises, grantees and subgrantees
are encouraged to use minority banks 1
bank which is owned at least So perces
by minorit, group members). A list of
minority owned batiks can be obtained
from the Minority Business Devetopme.
Agency. Department of Commerce.
Washington. DC 20230.
(2) A grantee or subgrantee shall
maintain a separate bank account unly
when required by Federal -State
agreement.
(i) Interest earned on advances.
Except for interest earned on advances
of funds exempt under the
SINGLC ALJOIT Gt HO[ / 22.167
"gPYI r nr... it, 0
Interguvernmental Cooperation Act (31
U S.C. 6501 et seq.) and the Indian Self.
Determination Act 123 U.S.C. 4501.
grantees and suhgrantees shall
promptly. but at least quarterly. remil
interest earned on advances to the
Federal agency. The grantee or
subgrantee may keep interest amounts
up to 5100 per year for administrative
expenses.
§ _.22 Allowable Costs.
(al Limitation on use of funds. Grant
funds may be used only for:
(1) The allowable costs of the
grantees. subgrantees and cost -type
contractors, including allowable costs In
the form of payments to fixed-price
contractors: and
(2) Reasonable fees or profit to cost -
type contractors but not any fee or profit
(or other increment above allowable
costs) to the grantee or subgrantee.
(b) Applicable cost principles. For
each kind of organization. there is a set
of Federal principles for determining
allowable costs. Allowable costs will be
determined in accordance with the cost
principles applicable to the organization
incurring the costs. The following chart
lists the kinds of organizations and the
applicable cost principles.
For the Cosrs of a— I use rile Onnooies n --
State. local or irlOan
OMB Gcular A -a7
trgal govenatwN.
p.ata nonpo6l
OBM WaAar A -t22
I
aganzalpn inner than
an (1) nseM,pl of
tagher edreaoon. 121
hoatatal. or (3)
pganzalan named n
OMB C+c,Aw A-122
as not suotact as east
cra/ar.
Educau0rtal nsNUWns......1
OMB CrMar A-21.
Fw-wola w9arszaeon
40 CFF Part 31.
olner than a llospaal
CMVM Cost
and an w9notaton
PrncWes and
named n OBM
Procal"es. W taefornl
GrcWw A-122 as rol
Will accounting
wlxecl to mat cveviSi.
standards trial con"
.en Coal pnooles
=41,14ere to the
Federal agency.
§ _23 Period to availability or funds.
(a) Ceneral. Where a funding period is
specified. a grantee may charge to the
award only costs resulting from
obligations of the funding period unless
carryover of unobligated balances is
permitted. in which case the carryover
balances may be charged for costs
resulting from obligations of the
subsequent funding period.
(b) Liquidation of obligations. A
grantee must liquidate all obligations
incurred under the award not later than
22.168 / SINGLE AUDIT GUIDE
•
1111 days .liter the end of the funding
period Iur is specified to a program
regulatulnl to coincide with the
submission of the annual Financial
Siatus Report ISF-269). The Federal
axenry may extend this deadline at the
request of the grantee.
§ —.24 Matching or cost Sharing.
(a) Basic rule: Costs and contributions
orceptable. With the qualifications and
exceptions listed in paragraph (b) of this
section. a matching or cost sharing
requirement may be satisfied by either
or both of the following:
(1) Allowable costs incurred by the
grantee. subgrantee or a cost -type
contractor under the assistance
agreement. This includes allowable
costs borne by non -Federal grants or by
others cash donations from non -Federal
third parties.
(2) The value of third party in-kind
contributions applicable to the penod to
which the cost sharing or matching
requirements applies.
(b) Qualifications and exceptions—(1)
Costs borne by other Federal grant
agreements. Except as provided by
Federal statute. a cost sharing or
matching requirement may not be met
by costs borne by another Federal grant.
This prohibition does not apply to
income earned by a grantee or
subgrantee from a contract awarded
under another Federal grant.
(2) General revenue sharing. For the
purpose of this section, general revenue
sharing funds distributed under 31
U.S.C. 6702 are not considered Federal
grant funds.
(3) Cost or contributions counted
towards other Federal costs -sharing
requirements. Neither costs nor the
values of third party in-kind
contributions may count towards
satisfying a cost sharing or matching
requirement of a grant agreement if they
have been or will be counted towards
satisfying a cost sharing or matching
requirement of another Federal grant
agreement, a Federal procurement
contract, or any other award of Federal
funds.
(4) Costs financed by program income.
Costs financed by program income. as
defined in § _.25. shall not count
towards satisfying a cost sharing or
matching requirement unless they are
expressly permitted in the terms of the
assistance agreement. (This use of
general program income is described in
§ _...-.25(g)d
151 Services or property financed by
income earned by contractors.
Contractors under a grant may earn
income from the activities carried out
under the contract in addition to the
amounts earned from the party
aw.adow lh,, contract No costs of
services or property supported by this
Income may count toward satisfying a
cost sharing or matching requirement
unless other provisions of the grant
agreement express) ' y permit this kind of
Income to he used tmeet the
requirement.
(6) Records. Costs and third party in-
kind contributions counting towards
satisfying a cost sharing or matching
requirement must be verifiable from the
records of grantees and subgrantee or
cost -type contractors. These records
must show how the value placed on
third party in-kind contributions was
derived. To the extent feasible.
volunteer services will be supported by
the same methods that the organization
uses to support the allocability of
regular personnel costs.
(7) Special standards for third party
in-kind contributions. (i) Third party in-
kind contributions count towards
satisfying a cost sharing or matching
requirement only where, if the party
receiving the contributions were to pay
for them. the payments would be
allowable costs.
(if) Some third party in-kind
contributions are goods and services
that, if the grantee. subgrantee, or
contractor receiving the contribution
had to pay for them, the payments
would have been an indirect costs.
Costs sharing or matching credit for
such contributions shall be given only if
the grantee. subgrantee. or contractor
has established. along with its regular
indirect cost rate. a special rate for
allocating to individual projects or
programs the value of the contributions.
(iii) A third party in-kind contribution
to a fixed-price contract may count
towards satisfying a cost sharing or
matching requirement only if it results
in:
(A) An increase in the services or
property provided under the contract
(without additional cost to the grantee
or subgrantee) or
(B) A cost savings to the grantee or
subgrantee.
(iv) The values placed on third party
in-kind contributions for cost sharing or
matching purposes will conform to the
rules in the succeeding sections of this
part. If a third party in-kind contribution
is a type not treated in those sections.
the value placed upon it shall be fair
and reasonable.
(c) Valuation of donated servires—(11
bolunteerservrces. Unpaid services
provided to a grantee or subgrantee by
individuals will he valued at rates
consistent with those ord,nartiv paid fur
similar work in the grantee's or
subgrantre's organization. If the grantee
or subgrantee does not have employees
performing similar work, the rates will
be consistent with those ordinarily paid
by other employers for similar work in
the same labor market. In either rase. a
reasonable amount for fringe benefits
may be included in the valuation.
(2) Employees of other organizations.
When an employer other than a grantee.
subgrantee. or cost -type contractor
furnishes free of charge the services of
an employee in the employee's normal
line of work, the services will be valued
at the employee's regular rate of pay
exclusive of the employee's fringe
benefits and overhead costs. if the
services are in a different line of work.
paragraph (c)(1) of this section applies.
(d) Valuation of third party donated
supplies and loaned equipment or space.
(1) if a third party donates supplies, the
contribution will be valued at the
market value of the supplies at the time
of donation.
(2) If a third party donates the use of
equipment or space in it building but
retains title, the contribution will be
valued at the fair rental rate of the
equipment or space.
(e) Valuation of third party donated
equipment, buildings. and land. If a third
party donates equipment. buildings, or
land, and title passes to a grantee or
subgrantee, the treatment of the donated
property will depend upon the purpose
of the grant or subgrant. as follows:
(1) A wards for capital expenditures. 1f
the purpose of the grant or subgrant is to
assist the grantee or subgrantee in the
acquisition of property, the market value
of that property at the time of donation
may be counted as cost sharing or
matching.
(2) Other awards. If assisting in the
acquisition of property is not the
purpose of the grant or subgrant.
paragraphs (e)(2) (i) and (if) of this
section apply:
(i) If approval is obtained from the
awarding agenrv. the market value at
the time of do: ••n of the donated
equipment or .',ngs and the fair
rental rate of a-naled land may be
counted as ct... ': ring or matching. In
the case of a ,nt. the terms of the
grant agreern. --Av require that the
approval be o:,c-:ued from the Federal
agency as well as the grantee. In all
cases, the approval may be given only if
a purchase of the equipment or rental of
the land would be approved as an
allowable direct cost. If any part of the
donated property was acquired with
Federal funds. only the non-federal
share of the property may be counted as
coat-shanng or matching.
(ii) If approval is not obtained under
paragraph (e)(2)(i) of this section, no
amount may be counted for donated
land. and only depreciation or use
allowances may be counted for donated
equipment and buildings. The
depreciation or use allowances for this
property are not treated as third party
in-kind contributions. Instead. they are
treated as costs incurred by the grantee
or subgrantee. They are computed and
allocated (usually as indirect costs) in
accordance with the cost principles
specified in § _.22. in the same way as
depreciation or use allowances for
purchased equipment and buildings. The
amount of depreciation or use
allowances for donated equipment and
buildings is based on the property's
market value at the time it was donated.
(f) Valuation of grantee or subgrantee
donated real property for construction/
acquisition. If a grantee or subgrantee
donates real property for a construction
or facilities acquisition project, the
current market value of that property
may be counted as cost sharing or
matching. If any part of the donated
property was acquired with Federal
funds, only the non-federal share of the
property may be counted as cost sharing
or matching.
(g) Appraisal of real property. In some
cases under paragraphs (d), (el and (f) of
this section, it will be necessary to
establish the market value of land or a
building or the fair rental rate of land or
of space in a building. In these cases. the
Federal agency may require the market
value or fair rental value be set by an
independent appraiser. and that the
value or rate be certified by the grantee.
This requirement will also be imposed
by the grantee on subgrantees.
§ .25 Program Income.
(a) General. Grantees are encouraged
to earn income to defray program costs.
Program income includes income from
fees for services performed, from rhe use
or rental of real or personal property
acquired with grant funds. from the sale
of commodities or items fabricated
under a grant agreement. and from
payments of principal and interest on
loans made with grant funds. Except as
otherwise provided in regulations of the
Federal agency. program income does
not include interest on grant funds.
rebates, credits. discounts. refunds, eta
and interest earned on any of them.
(b) Definition of program income.
Program income means gross income
received by the grantee or subgrantee
directly generated by a grant supported
activity, or earned only as a result of the
grant agreement during the grant period.
"During the grant period" is the time
between the effective date of the award
and the ending date of the award
reflected in the final financial report.
t 0unrn,at Rule
(c) Cast ofgeneranm; program
income. If authorized by Federal
regulations or the grant agreement. r.
incident to the generation of program
income may be deducted from gross
income to determine program income
Idl Governmental revenues. Taxes
special assessments. levies. fines. am
other such revenues raised by a gran
or subgrantee are not program incom
unless the revenues are specifically
identified in the grant agreement or
Federal agency regulations as progra:
income.
(e) Royalties. Income from royalties
and license fees for copyrighted
material. patents, and inventions
developed by a grantee or subgrantee
program income only if the revenues
specifically identified in the grant
agreement or Federal agency regulaw
as program income. (See 1 _.74.)
(f) Property. Proceeds from the sale
real property or equipment will be
handled in accordance with the
requirements of 11 __.JS and —.]
(g) Use of program income. Program
income shall be deducted from outldv
which may be both Federal and non:
Federal as described below. unless th
Federal agency regulations or the grit
agreement specify another alternative
(or a combination of the alternative%(.
specifying alternatives. the Federal
agency may distinguish between incor
earned by the granteq and income
earned by subgrantees and between it
sources. kinds. or amounts of income.
When Federal agencies authorize the
alternatives in paragraphs (g) (2) and I
of this section. program income in
excess of any limits stipulated shall al
be deducted from outlays.
(1) Deduction. Ordinarily program
income shall be deducted from total
allowable costs to determine the net
allowable costs. Program income shall
be used for current costs unless the
Federal agency authorizes otherwise.
Program income which the grantee did
not anticipate at the lime of the award
shall be used to reduce the Federal
agency and grantee contributions rash
than to increase the fords committed I
the project.
(21 Addaion. When authorized.
program income may be added to the
funds committed to the grant agreemer
by the Federal agency and the grantee
The program income shall be used for
the purposes And under the condiuon.,
the gr.,m azn:_ment.
(7) Cost shnr+ng or matching. When
author -zed. procram income may bw
used to meet the cost sharing or
matching requirement of the grant
agreement. The amnont of the Federal
grant award remains the same
SINGII A111)17 6U/01' / 22.169
tits; -r,1, ,rr,'r 11. • •
(lit Incoare alter the award period.
Then- are no Federal requirements
govemmg the disposition of program
income earned after the end of the
award period (i.e.. until the ending date
of the final financial report. see
paragraph (a) of this section). unless the
terms of the agreement or the Federal
agency regulations provide otherwise.
1 --26 Non-Fedanl audU.
(a) Basic Rule. Grantees and
aubgrantees are responsible for
obtaining audits in accordance with the
Single Audit Act of 1984 (31 U.S.C. 7501-
7) and Federal agency implementing
regulations. The audits shall be made by
an independent auditor in accordance
with generally accepted government
auditing standards covering financial
and compliance audits.
(b) Subgrontees. State or local
governments. as those terms are defined
for purposes of the Single Audit Act.
that receive Federal financial assistance
and provide $25.000 or more of it in e
fiscal year to a subgrantee shall:
(1) Determine whether State or local
subgrantees have met the audit
requirements of the Act and whether
subgrantees covered by OMB Circular
A-110. "Uniform Requirements for
Grants and Other Agreements with
Institutions of Higher Education.
Hospitals and Other Nonprofit
Organizations" have met the audit
requirement. Commercial contractors
(private forprofit and private and
governmental organizations) providing
goads and services to State and focal
governments are not required to have a
single audit performed. State and local
govenments should use their own
procedures to ensure that the contractor
has complied with jaws and regulations
affecting the expenditure of Federal
funds:
(2) Determine whether the subgrantee
spent Federal assistance funds provided
in accordance with applicable laws and
regulations. This may be accomplished
by reviewing an audit of the subgrantee
made in accordance with the Act.
Circular A-110. or through other means
(e.g.. program reviews) if the subgrantee
has not had such an audit:
(3) Ensure that appropriate corrective
action is taken within six months after
receipt of the audit report in instance of
noncompliance with Federal laws and
regulations:
(4) Consider whether subgrantee
audits necessitate adjustment of the
grantee's own records: and
(5) Require each subgrantee to permit
independent auditors to have access to
the records and financial statements.
(cl Auditor selection. In arranging for
audit services. § __26 shall be
followed.
Changes. Property, and Subawards
§ _.30 Changes
(a) General. Grantees and subgrantees
are permitted to rebudget within the
approved direct cost budget to meet
unanticipated requirements and may
make limited program changes to the
approved project. However, unless
waived by the awarding agency. certain
types of post -award changes in budgets
and projects shall require the prior
written approval of the awarding
agency.
(b) Relation to cost principles. The
applicable cost principles (see § —22)
contain requirements for prior approval
of certain types of costs. Except where
waived those requirements apply to all
grants and subgrants even If paragraphs
(c) through (f) of this section do not.
(c) Budget changes. (1)
Nonconstruction projects. Except as
staled in other regulations or an award
document. grantees or subgrantees shall
obtain the prior approval of the
awarding agency whenever any of the
following changes is anticipated under a
nonconstruction award:
(f) Any revision which would result in
the need for additional funding.
(ii) Unless waived by the awarding
agency, cumulative transfers among
direct Cost categories, or. if applicable.
among separately budgeted programs.
projects. functions, or activities which
exceed or are expected to exceed ten
percent of the current total approved
budget. whenever the awarding agency's
share exceeds 5100.000.
(ii() Transfer of funds allotted for
training allowances (i.e.. from direct
payments to trainees to other expense
categories).
(2) Construction projects. Grantees
and subgrantees shall obtain prior
written approval for any budget revision
which would result in the need for
additional funds.
(3) Combined construction and
nonconstruction projects. When a grant
or subgrant provides funding for both
Construction and nonconatruction
activities. the grantee or subgrantee
must obtain prior written approval from
the awarding agency before making any
fund or budget transfer from
nonconstruction to construction or vice
versa.
(d) Programmatic changes. Granters
or subgrantees must obtain the prior
approval of the awarding agency
whenever any of the following actions is
anticipated:
22.170 / SINGLE AUDIT GUIDE
( I I Any revision of the scope or
objectives of the protect (regardless of
whether there is an associated budget
revision requiring prior approval).
(2) Need to extend the period of
availability of funds.
(3) Changes in key persons in cases
where specified in an application or a
grant award. In research projects, a
change in the project director or
principal investigator shall always
require approval unless waived by the
awarding agency.
(4) Under nonconstruction projects,
contracting out. subgranting (if
authorized by law) or otherwise
obtaining the services of a third party to
perform activities which are centra( to
the purposes of the award. This
approval requirement is in addition to
the approval requirements of 1--36
but does not apply to the procurement of
equipment. supplies. and general
support services.
(e) Additional prior approval
requirements. The awarding agency may
not require prior approval for any
budget revision which is not described
in paragraph (cj of this section.
(0 Requesting prior approval (1) A
request for prior approval of any budget
revision will be in the same budget
formal the grantee used in its
application and shall be accompanied
by a narrative justification for the
proposed revision.
(2) A request for a prior approval .
under the applicable Federal coal
principles (see § _.22) may be made
by letter.
(3) A request by a subgrantee for prior
approval will be addressed in writing to
the grantee. The grantee will promptly
review such request and shall approve
or disapprove the request in writing. A
grantee will not approve any budget or
project revision which is inconsistent
with the purpose or terms and
conditions of the Federal grant to the
grantee. If the revision. requested by the
subgrantee would result in a change to
the grantee's approved project which
requires Federal prior approval. the
grantee will obtain the Federal agency's
approval before approving the
subgrantee's request.
1-31 Real property.
(a) Title. Subject to the obligations
and conditions set forth in this section.
title to real property acquired under a
grant or subgrant will vest upon
acquisition in the grantee or subgrantee
respectively.
(b) Use. Except as otherwise provided
by Federal statutes. real property will be
used for the originally authorized
purposes as long as needed for that
purposes. and the grantee or subgrantee
shall not dispose of or encumber its title
or other interests.
(c) Disposition. When real property is
no longer needed for the originally
authorized purpose. the grantee or
subgrantee will request disposition
instructions from the awarding agency.
The instructions will provide for one of
the following alternatives:
(1) Retention of title. Retain title after
compensating the awarding agency. The
amount paid to the awarding agency
will be computed by applying the
awarding agency's percentage of
participation in the cost of the original
purchase to the fair market value of the
property. However. in those situations
where a grantee or subgrantee is
disposing of real property acquired with
grant funds and acquiring replacement
real property under the same program4
the net proceeds from the disposition
may be used as an offset to the cost of
the replacement property.
(2) Sale of property. Sell the property
and compensate the awarding agency.
The amount due to the awarding agency
will be calculated by applying the
awarding agency's percentage of
participation in the cost of the original
purchase to the proceeds of the sale
after deduction of any actual and
reasonable selling and fixing -up
expenses. If the grant is still active. the
net proceeds from sale may be offset
against the original cost of the property.
When a grantee or subgrantee is
directed to sell property. sales
procedures shall be followed that
provide for competition to the extent
practicable and result in the highest
possible return.
(3) Transfer o/title. Transfer title to
the awarding agency or to a third -party
designated/approved by the awarding
agency. The grantee -or subgrantee shall
be paid an amount calculated by
applying the grantee or subgrantee's
percentage of participation in the
purchase of the real property to the
current fair market value of the
property.
§_32 Equipment
(a) Title. Subject to the obligations
and conditions set forth in this section.
title to equipment acquired under a
grant or subgrant will vest upon
acquisition in the grantee or subgrantee
respectively.
(b) States. A State will use. manage.
and dispose of equipment acquired
under a grant by the State in accordance
with State laws and procedures. Other
grantees and subgrantees will follow
paragraphs (c) through (e) of this
section.
(c) Use. (1) Equipment shall be used
by the grantee or subgrantee in the
program or protect for which it was
acquired as long as needed. whether or
not the protect or program continues to
be supported by Federal funds. When no
longer needed for the original program
or project. the equipment may be used in
other activities currently or previously
supported by a Federal agency.
(2) The grantee or subgrantee shall
also make equipment available for use
an other projects or programs currently
or previously supported by the Federal
Government. providing such use will not
interfere with the work on the projects
or program for which it was originally
acquired. First preference for other use
shall be given to other programs or
projects supported by the awarding
agency. User fees should be considered
if appropriate.
(3) Notwithstanding the
encouragement in §-25(a) to earn
program income. the grantee or
subgrantee must not use equipment
acquired with grant funds to provide
services for a fee to compete unfairly
with private companies that provide
equivalent services. unless specifically
permitted or contemplated by Federal
statute.
(4) When acquiring replacement
equipment, the grantee or subgrantee
may use the equipment to be replaced as
a trade-in or sell the property and use
the proceeds to offset the cost of the
replacement property. subject to the
approval of the awarding agency.
(d) Management requirements.
Procedures for managing equipment
(including replacement equipment).
whether acquired in whole or in part
with grant funds. until disposition lakes
place will. as a minimum. meet the
following requirements:
(1) Property records must be
maintained that include a description of
the property. a serial number or other
identification number. the source of
property. who holds title. the acquisition
date. and cost of the property.
percentage of Federal participation in
the cost of the property. the location. use
and condition of the property. and any
ultimate disposition data including the
date of disposal and sale price of the
property.
(2) A physical inventory of the
property must be taken and the results
reconciled with the property records at
least once every two years.
(31 A control system must be
de% eloped to ensure adequate
safeguards to prevent loss. damage. or
theft of the property. Any loss. damage.
or theft shall be investigated.
l -nnmq hitt,
(4) Adequate maintenance proc
must be developed to keep the prt
in good condition.
(5) It the grantee or subgrantee
authorized or required to sell the
property. proper Sales procedures
be established to ensure the highe
Possible return.
(e) Disposition. When original o
replacement equipment acquired u
a grant or subgranl is no longer ne
for the original project or program
other activities currently or previo-
supported by a Federal agency.
disposition of the equipment will b
made as follows:
(1) Items of equipment with a cut
per-unit fair market value of less tl
SS.00n may be retained. sold or
otherwise disposed of with no furl
obligation to the awarding agency.
(21 Items of equipment with a cur
per unit fair market value in excess
55.000 may be retained or sold and
awarding agency shall have a right
amount calculated by multiplying tl
current market value or proceeds fr
sale by the awarding agency's shay
the equipment.
(3) In cases where a grantee or
subgrantee fails to take appropriate
disposition actions. the awarding aE
may direct the grantee or subgrante
take excess and disposition actions
(f) Federal equipment. In the even
grantee or subgrantee is provided
federally -owned equipment:
(1) Title will remain vested in the
Federal Government.
(2) Grantees or subgrantees will
manage the equipment in accordant
with Federal agency rules and
procedures. and submit an annual
inventory listing.
(3) When the equipment is no long
needed. the grantee or subgrantee w
request disposition instructions from
Federal agency.
(g) Right to transfer title. The Fedc
awarding agency may reserve the ril
to transfer title to the Federal
Government or a third part named b
the awarding agency when such a th
party is otherwise eligible under exis
statutes. Such transfers shall be subj
to the following standards:
(1) The property shall be identified
the grant or otherwise made known i
the grantee in writing.
(2) The Federal awarding agency s
issue disposition instruction within 1
calendar days after the end of the
Federal support of the project for wh
it was acquired. If the Federal aw.vd
agency fads to issue disposition
instructions within the 120 calendar-�
period :he grantee shall follow
_.32(e)
SINGII ;1111)11 (,UIDI: / 22.171
',uppl� rnrrrr.
•
(3) When title to equipment is
transferred. the grantee shall be paid an
amount calculated by applying the
percentage of participation to the
purchase to the current fair market
value of the property.
4 —33 suppoes
(al Title. Title to supplies acquired
under a grant or subgrant will vest. upon
acquisition. in the grantee or subgrantee
respectively.
(b) Disposition. If there is a residual
inventory of unused supplies exceeding
55.000 in total aggregate fair market
value upon termination orcompletion of
the award, and if the supplies are not
needed for any other federally
sponsored programs or projects. the
grantee or subgrantee shall compensate
the awarding agency for its share.
J __34 copyrights.
The Federal awarding agency
reserves a royalty -free. nonexclusive.
and irrevocable license to reproduce.
publish or otherwise use. and to
authonze others to use. for Federal
Government purposes:
(a) The copyright in any work
developed under a grant. subgrant. or
contract under a grant or subgrant: and
(b) Any rights of copyright to which a
grantee. subgrantee or a contractor
purchases ownership with grant support.
6 _35 Subawards to debarred and
suspended parties.
Grantees and subgrantees must not
make any award or permit any award
(subgrant or contract) at any tier to any
party which is debarred or suspended or
is otherwise excluded from or ineligible
for participation in Federal assistance
programs under Executive Order 12549.
"Debarment and Suspension."
4 _34 Procurement
(a) States. When procuring property
and services under a grant. a State will
follow the same policies and procedures
it uses for procurements from its non -
Federal funds. The State will ensure that
every purchase order or other contract
includes any clauses required by
Federal statutes and executive orders
and their implementing regulations.
Other grantee@ and subgrantees will
follow paragraphs (b) through (i) in this
section.
(b) Procurement standards. (1)
Grantees and subgrantees will use their
own procurement procedures which
reflect applicable Slate and local laws
and regulations, provided that the
procurements conform to applicable
Federal law and the standards identified
in this section.
22.172 / SINGLE AUDITGUIDE
I_j Gnunces .ind subgruntees will
maintain a contract administration
system which ensures that contractors
perform in accordance with the terms.
cundmuns, and specifications of their
contracts or purchase orders.
(71 Grantees and subgrantees will
maintain a written code of standards of
conduct govemrng the performance of
their employees engaged in the award
and administration of contracts. No
employee. officer or agent of the grantee
or subgrantee shall participate in
selection. or in the award or
administration of a contract supported
by Federal funds if a conflict of interest.
real or apparent, would be involved.
Such a conflict would arise when:
(i) The employee. officer or agent.
(it) Any member of his immediate
family.
(iii) His or her partner. or
(iv) An organization which employs.
or to about to employ, any of the above,
hag a financial or other interest in the
firm selected for award. The grantee'9 or
subgrantee's officers. employees or
agents will neither solicit nor accept
gratuities, favors or anything of
monetary value from contractors.
potential contractors, or parties to
subagreements. Grantee and
subgrantees may set minimum rules
where the financial interest is not
substantial or the gift is an unsolicited
item of nominal intrinsic value. To the
extent permitted by State or local law or
regulations, such standards or conduct
will provide for penalties. sanctions. or
other disciplinary actions for violations
of such standards by the grantee's and
subgrantee's officers. employees. or
agents. or by contractors or their agents.
The awarding agency may in regulation
provide additional prohibitions relative
to real, apparent. or potential conflicts
of interest.
(41 Grantee and subgrantee
procedures will provide for a review of
proposed procurements to avoid
purchase of unnecessary br duplicative
items. Consideration should be given to
consolidating or breaking out
procurements to obtain a more
economical purchase. Where
appropriate, an analysis will be made of
lease versus purchase alternatives. and
any other appropriate analysis to
determine the most economical
approach.
(5) To foster greater economy and
efficiency. grantees and subgrantees are
encouraged to enter into State and local
intergovernmental agreements for
procurement or use of common goods
and services.
(6) Grantees and subgrantees are
encouraged to use Federal excess and
surplus property in lieu of purchasing
r�L
new equrpmrnt and property whenever
such use is feasible and reduces project
costs,
(7) Grantees and subgrantees are
encouraged to use value engineering
clauses in contracts for construction
projects of sufficient size to offer
reasonable opportunities for cost
reductions, Value engineering is a
systematic and creative ansylsis of each
contract item or task to ensure that its
essential function is provided at the
overall lower cost.
(6) Grantees and subgrantees will
make awards only to responsible
contractors possessing the ability to
perform successfully under the terms
and conditions of a proposed
procurement. Consideration will be
given to such matters as contractor
integrity. compliance with public polity.
record of past performance, and
financial and technical resources.
(9) Grantees and subgrantees will
maintain records sufficient to detail the
significant history of a procurement.
These records will include, but are not
necessarily limited to the following:
rationale for the method of procurement.
selection of contract type. contractor
selection or rejection, and the basis for
the contract price.
(lo) Grantees and subgranteeg will
use time and material type contracts
only—
(i) After a determination that no other
contract is suitable, and
(ii) If the contract includes a ceiling
price that the contractor exceeds at its
own risk.
(11) Grantees and subgrantees alone
will be responsible, in accordance with
good administrative practice and sound
business judgment, for the settlement of
all contractual and administrative issues
arising out of procurements. These
issues include, but are not limilerl to
source evaluation. protests, disputes.
and claims. These standards do not
relieve the grantee or subgrantee of any
contractual responsibilities under its
contracts. Federal agencies will not
substitute their judgment for that of the
grantee or subgrantee unless the matter
is primarily a Federal concern.
Violations of law will be referred to the
local. State. or Federal authority having
proper jurisdiction.
(12) Grantees and guhgrantees will
have protest procedures to handle and
resolve disputes relating to their
procurements and shall in all instances
disclose information regarding the
protest to the awarding agerrv. A
protestor must exhaust all
administrative remedies with the
grantee and subgrantee before pursuing
a protest with the Federal agency.
Reviews of protests by the Federal
agency will be limited to:
p) Violations of Federal law or
regulations and the standards of this
section (violations of State or local law
will be under the jurisdiction of State or
local authorities) and
(ii) Violations of the grantee's or
subgrantee's protest procedures for
failure to review a complaint or protest.
Protests received by the Federal agency
other than those specified above will be
referred to the grantee or subgrantee.
(c) Competition. (1) All procurement
transactions will be conducted in a
manner providing full and open
competition consistent with the
standards of 1_.36. Some of the
situations considered to be restrictive of
competition include but are not limited
to:
(i) Placing unreasonable requirements
on firms in order for them to qualify to
do business.
(ii) Requiring unnecessary experience
and excessive bonding.
tui) Noncompetitive pricing practices
between firma or between affiliated
companies.
(iv) Noncompetitive awards to
consultants that are on retainer
contracts.
(v) Organizational conflicts of
interest.
(vi) Specifying only a "brand name"
product instead of allowing "an equal"
product to be offered and describing the
performance of other relevant
requirements of the procurement. and
(vii) Any arbitrary action in the
procurement process.
(2) Grantees and subgrantees will
conduct procurements in a manner that
prohibits the use of statutorily or
administratively imposed in -State or
local geographical preferences in the
evaluation of bids or proposals. except
in those cases where applicable Federal
statutes expressly mandate or
encourage geographic preference.
Nothing in this section preempts Slate
licensing laws. When contracting for
architectural and engineering (A/E)
services. geographic location may be a
selection criteria provided its
application leaves an appropriate
number of qualified firms. given the
nature and size of the project. to
compete for the contract.
(3) Grantees will have written
selection procedures for procurement
transactions. These procedures will
ensure that all solicitations:
(i) Incorporate a clear and accurate
description of the technical
requirements for the material, product.
or service to be procured. Such
description shall not. in competitive
procurements. contain features which
unduly restrict competition. The
description may include a statement of
the qualitative nature of the material.
product or service to I;e procured. and
when necessary. shall set forth those
muumum essential characteristics and
standards to which it must conform if it
is to satisfy its intended use. Detailed
product specifications should be
avoided if at all possible. When it is
impractical or uneconomical to make a
clear and accurate description of the
technical requirements. a "brand name
or equal" description may be used as a
means to define the performance or
other salient requirements of a
procurement. The specific features of the
named brand which must be met by
offerors shall be clearly stated: and
(ii) Identify all requirements which the
offerors must fulfill and all other factors
to be used in evaluating bids or
proposals.
(4) Grantees and subgrantees will
ensure that all prequalified lists of
persons. firms. or products which are
used in acquiring goods and services are
current and include enough qualified
sources to ensure maximum open and
free competition. Also. grantees and
subgrantees will not preclude potential
bidders from qualifying during the
solicitation period.
(d) Methods of procurement to be
followed. 11) Procurement by small
purchase procedures. Small purchase
procedures are those relatively simple
and informal procurement methods for
securing services. supplies. or other
property that do not coat more than
525.0W in the aggregate. If small
purchase procurements are used. price
or rate quotations will be obtained from
an adequate number of qualified
sources.
(2) Procurement by sealed bids
(formal advertising). Bids are publicly
solicited and a firm -fixed-price contract
(lump sum or unit price) is awarded to
the responsible bidder whose bid.
conforming with all the material terms
and conditions of the invitation for bids.
is the lowest in price. The sealed bid
method is the preferred method for
procuring construction. if the conditions
in 1 _36(d)(21(i) apply.
(i) In order for sealed bidding to be
feasible. the following conditions should
be present:
(A) A complete. adequate. and
realistic specification or purchase
description is available:
(BI Two or more responsible bidders
are willing and able to compete
effectively for the business: and
(C) The procurement lends itself to a
firm fixed price contract and the
selection of the successful bidder can be
made principally on the basis of price.
lul If sealed bids .ire used, the
following requirements apply.
(A) The invitation for bids will be
publicly advertised and bids shall be
solicited from an adequate number of
known suppliers. providing them
sufficient time prior to the date set for
opening the bids:
(B) The invitation for bids. which will
include any speciftcattons and pertinent
attachments. shall define the items or
services in order for the bidder to
properly respond:
(C) All bids will be publicly opened at
the time and place prescribed in the
invitation for bids:
(D) A firm fixed-price contract award
will be made in writing to the lowest
responsive and responsible bidder.
Where specified in bidding documents.
factors such as discounts. transportation
cost. and life cycle costs shall be
considered in determining which bid is
lowest. Payment discounts will only be
used to determine the low bid when
prior experience indicates that such
discounts are usually taken advantage
oh and
(E) Any or all bids may be rejected if
there is a sound documented reason.
(3) Procurement by competitive
proposals. The technique of competitive
proposals is normally conducted with
more than one source submitting an
offer. and either a fixed-price or cost -
reimbursement type contract is
awarded. It is generally used when -
conditions are not appropriate for the
use of sealed bids. If this method is
used. the following requirements apply:
(i) Requests for proposals will be
publicized and identify all evaluation
factors and their relative importance.
Any response to publicized requests for
proposals shall be honored to the
maximum extent practical:
(it) Proposals will be solicited from au
adequate number of qualified sources:
(iii) Grantees and subgrantees will
have a method for conducting technical
evaluations of the proposals received
and for selecting awardees:
(iv) Awards will be made to the
responsible firm whose proposal is most
advantageous to the program. with price
and other factors considered: and
(v) Grantees and subgrantees may use
competitive proposal procedures for
qualifications -based procurement of
architectural/engineering (A/E)
professional services whereby
competitors' qualifications are
evaluated and the most qualified
competitor is selected. subject to
ne:;otiatmn of fair and reasonable
compensation. The method. where price
is not used as a selection factor. can
oniP he used in procurement of A/F.
SINGLE AUDIT GUIDE / 22.173
v�lyd,'�m'rt:
protrssum.d services. It cannot be used
to pun. hale other types of services
though A/E firms are a potential source
to perform the proposed effort.
(4) Procurement by noncompetitive
proposals is procurement through
solicitation of a proposal from only one
source. or after solicitation of a number
of sources. competition is determined
inadequate.
(tl Procurement by noncompetitive
proposals may be used only when the
award of a contract is infeasible under
small purchase procedures. sealed bids
or competitive proposals and one of the
following circumstances applies:
(A) The item is available only from a
single source:
(B) The public exigency or emergency
for the requirement will not permit a
delay resulting from competitive
solicitation.
(C) The awarding agency authorizes
noncompetitive proposals: or
(D) After solicitation of a number of
sources. competition is determined
inadequate.
(ii) Cost analysis. i.e.. verifying the
proposed cost data. the projections of
the data. and the evaluation of the
specific elements of costs and proft is
required.
(iii) Grantees and subgrantees may be
required to submit the proposed
procurement to the awarding agency for
pre -award review in accordance with
paragraph (g) of this section.
(e) Contracting with small and
minority firms. women's business
enterprise and laborsurplus area firms.
(1) The grantee and subgrantee will take
all necessary affirmative steps to assure
that minority firms. women's business
enterprises. and labor surplus area firms
are used when possible.
(2) Affirmative steps shall include:
(i) Placing qualified small and
minority businesses and women's
business enterprises on solicitation lists:
(ii) Assuring that small and minority
businesses. and women's business
enterprises are solicited whenever they
are potential sources:
(iii) Dividing total requirements. when
economically feasible. into smaller tasks
or quantities to permit maximum
participation by small and minority
business. and women's business
enterprises:
(iv) Establishing delivery schedules.
where the requirement permits. which
encourage participation by small and
minority business. and women's
business enterprises:
(v) Using the services and assistance
of the Small Business Administration.
and the Minority Business Development
Agency of the Department of Commerce:
and
22.174 / SINGLE AUDITGUIDE
Ivt) Requtnng the prime contractor. if
subcontracts are to be let. to take the
Affirmative steps listed in paragraphs
(el(ZI (il through (v) of this section.
(f) Contract cast and price. (11
Grantees and subgrantees must perform
a cost or price analysis to connection
with every procurement action including
contract modifications. The method and
degree of analysis is dependent on the
facts surrounding the particular
procurement situation. but as a starting
point. grantees must make independent
estimates before receiving bids or
proposals. A cast analysis must be
performed when the offeror is required
to submit the elements of his estimated
cost. e.g., under professional. consulting.
and architectural engineering services
contracts. A cost analysis will be
necessary when adequate price
competition is tacking. and for sole
source procurements. including contract
modifications or change orders. unless
price resonableness can be established
on the basis of a catalog or market price
of a commercial product sold in
substantial quantities to the general
public or based on prices set by law or
regulation. A price analysis will be used
in all other instances to determine the
reasonableness of the proposed contract
price.
(2) Grantees and subgrantees will
negotiate profit as a separate element of
the price for each contract in which
there is no price competition and in all
cases where cost analysis is performed.
To establish a fair and reasonable profit.
consideration will be given to the
complexity of the work to be performed.
the risk home by the contractor. the
contractors investment. the amount of
subcontracting, the quality of its record
of past performance. and industry profit
rates in the surrounding geographical
area for similar work.
(3) Costs or prices based on estimated
costs for contracts under grants will be
allowable only to the extent that costs
incurred.occost estimates included in
negotiated prices are consistent with
Federal cost principles (see § _.22).
Grantees may reference their own cost
principles that comply with the
applicable Federal cost principles.
(4) The cost plus a percentage of cost
and percentage of construction cost
methods of contracting shall not be
used.
(g) Awarding agency review. (1)
Grantees and subgrantees must make
available. upon request of the awarding
agency. technical specifications on
proposed procurements where the
awarding agency believes such review
is needed to ensure that the item and/or
service specified is the one being
proposed for purchase. This review
•
generally will take place prior to the
time the specification is incorporated
into a solicitation document. However. if
the grantee or subgrantee desires to
have the review accomplished after a
sohcatton has been developed. the
awarding agency may still review the
specifications. with such review usually
limited to the technical aspects of the
proposed purchase.
(2) Grantees and subgrantees must on
request make available for awarding
agency pre -award review ( delete'
procurement documents. such as
requests for proposals or invitations for
bids. independent cost estimates. etc..
when:
(i) A grantee's or subgrantee's
procurement procedures or operation
fails to comply with the procurement
standards in this section: or
(ii) The procurement is expected to
exceed 525.000 and is to be awarded
without competition or only one bid or
offer is received in response to a
solicitation: or
(iii) The procurement. which is
expected to exceed $25.000. specifies a
"brand name" product; or
(iv) The proposed award over 525.000
is to be awarded to other than the
apparent low bidder under a sealed bid
procurement: or
(v) A proposed contract modification
changes the scope of a contract or
increases the contract amount by more
than s25.000.
(3) A grantee or subgrantee will be
exempt from the pre -award review in
paragraph (g)(2) of this section if the
awarding agency determines that its
procurement systems comply with the
standards of this section.
(i) A grantee or subgrantee may
request that its procurement system be
reviewed by the awarding agency to
determine whether its system meets
these standards in order for its system
to be certified. Generally. these reviews
shall occur where there is a continuous
high -dollar funding. and third -party
contracts are awarded on a regular
basis:
(ii) A grantee or subgrantee may self -
certify its procurement system. Such
self -certification shall not limit the
awarding agency's right to survey the
system. Under a self -certification
procedure. awarding agencies may wish
to rely on written assurances from the
grantee or subgrantee that it is
complying with these standard
grantee or subgrantee wiI1tT1 .,,,,..s.
procedures. regulations. standards.
as being in compliance with these
requirements and have its system
available for review
(h) Bonding requirements. For
construction or facility improvement
contracts or subconstracts exceeding
5100.000, the awarding agency may
accept the bonding policy and
requirements of the grantee or
subgrantee provided the awarding
agency has made a determination that
the awarding agency's interest is
adequately protected. If such a
determination has not been made. the
minimum requirements shall be as
follows:
(1) A bid guarantee from each bidder
equivalent to five percent of the bid
price. The "bid guarantee" shall consist
of a firm commitment such as a bid
bond. certified check, or other
negotiable instrument accompanying a
bid as assurance that the bidder will,
upon acceptance of his bid. execute
such contractual documents as may be
required within the time specified.
(2) A performance bond on the port of
the contractor for too percent of the
contract price. A "performance bond" is
one executed in connection with a
contract to secure fulfillment of all the
contractor's obligations under such
contract.
(3) A payment bond On the part of the
contractor for too percent of the
contract price. A "payment bond" is one
executed in connection with a contract
to assure payment as required by law of
all persons supplying labor and material
in the execution of the work provided
for in the contract.
(i) Contract provisions. A grantee's
and subgrantee's contracts must contain
provisions in paragraph (i) of this
Section. Federal agencies are permitted
to require changes, remedies, changed
conditions. access and records
retention, suspension of work. and other
clauses approved by the Office of
Procurement Policy.
(1) Administrative. contractual. or
legal remedies in instances where
contractors violate or breach contract
terms, and provide for such sanctions
and penalties as may be appropriate.
(Contracts other than small purchases)
(2) Termination for cause and for
convenience by the grantee or
subgrantee including the manner by
which it will be effected and the basis
for settlement. (All contracts in excess
of 510.000)
(3) Compliance with Executive Order
11246 of September 24. 1965 entitled
"Equal Employment Opportunity." as
amended by Executive Order 11375 of
October 13. 1967 and as supplemented in
Department of Labor regulations (41
CFR Part 60). (All construction contracts
awarded in excess of 510.000 by
grantees and their contractors or
subgrantees)
(4) Compliance with the Copeland
"Ann -Kickback" Act (18 U.S.C. 874) as
supplemented in Department of labor
regulations (29 CFR Part 3). (All
contracts and subgrants for construction
or repair)
(5) Compliance with the Davis -Bacon
Act (40 U.S.C. 276a to a-71 as
supplemented by Department of Labor
regulations (29 CFR Part 5).
(Construction contracts in excess of
S2.o00 awarded by grantees and
subgrantees when required by Federal
grant program legislation)
(6) Compliance with Sections 103 and
107 of the Contract Work Hours and
Safety Standards Act (40 U.S.C. 327-330)
as supplemented by Department of
Labor regulations (29 CFR Part 5).
(Construction contracts awarded by
grantees and subgrantees in excess of
SZOOO, and in excess of 52.5011 for other
contracts which involve the employment
of mechanics or laborers)
(7) Notice of awarding agency
requirements and regulations pertaining
to reporting.
(8) Notice of awarding agency
requirements and regulations pertaining
to patent rights with respect to any
discovery or invention which arises or is
developed in the course of or under such
contract.
(9) Awarding agency requirements
and regulations pertaining to copyrights
and rights in data.
(10) Access by the grantee. the
subgrantee. the Federal grantor agency.
the Comptroller General of the United
States. or any of their duly authorized
representatives to any books.
documents, papers, and records of the
contractor which are directly pertinent
to that specific contract for the purpose
of making audit. examination. excerpts.
and transcriptions.
(11) Retention of all required records
for three years after grantees or
subgrantees make final payments and
all other pending matters are closed.
(12) Compliance with all applicable
standards, orders, or requirements
issued under section 306 of the Clear Air
Act (42 U.S.C. 1857(h)). section 508 of the
Clean Water Act (33 U.S.C. 1368).
Executive Order 11738, and
Environmental Protection Agency
regulations (40 CFR Part 15). (Contracts.
subcontracts. and subgrants of amounts
in excess of 5100.000)
(13) Mandatory standards and policies
relating to energy efficiency which are
contained in the state energy
conservation plan issued in compliance
with the Energy Policy and
Conservation Act (Pub. L.94-163).
t ,yin rui vt Ro6•
§ _.37 Suogrants.
Jai States. States shall follow state
law and procedures when awarding and
administering subgrants (whether on a
cost reimbursement or fixed amount
basis) of financial assistance to local
and Indian tribal governments. States
shall:
(1) Ensure that every subgrant
includes any clauses required by
Federal statute and executive orders
and their implementing regulations:
(2) Ensure that subgrantees are aware
of requirements imposed upon them by
Federal statute and regulation:
(3) Ensure that a provision for
compliance with Section _.42 is
placed in every cost reimbursement
subgrant: and
(4) Conform any advances of grant
funds to subgrantees substantially to the
same standards of timing and amount
that apply to cash advances by Federal
agencies.
(b) All othergrontees. All other
grantees shall follow the provisions of
this part which are applicable to
awarding agencies when awarding and
administering subgrants (whether on a
cost reimbursement or fixed amount
basis) of financial assistance to local
and Indian tribal governments. Grantees
shall:
(1) Ensure that every subgrant
includes a provision for compliance with
this part:
(2) Ensure that every subgrant
includes any clauses required by
Federal statute and executive orders
and their implementing regulations: and
(3) Ensure that subgrantees are aware
of requirements imposed upon them by
Federal statutes and regulations.
(c) Exceptions. By their own terms.
certain provisions of this part do not
apply to the award and administration
of subgrants:
(1) Section _.10:
(2) Section _.11:
(3) The letter -of -credit procedures
specified in Treasury Regulations at 31
CFR Part 205, cited in § __.21: and
(4) Section _.SO.
Reports. Records. Retention, and
Enforcement
1 _.40 Monitoring and reporting
program performance.
(a) ,ttunitoring by grantees. Grantees
are responsible for managing the day-lo-
day
ay-lmday operations of grant and subgrant
supported activities. Grantees must
monitor grant and subgrant supported
activities to assure compliance with
applicable Federal requirements and
that perfnrmunce goals are being
SINGLE AUDIT GUIDE / 22.175
ae.hu•ced Grauhtee munrtoring must
cover each program. function or aenvuv
Ih) Nonconsunrctron performance
rt -ports. The Federal agency may. if it
decides that performance information
wadable from subsequent applications
contains sufficient information to meet
its programmatic needs. require the
grantee to submit a performance report
only upon expiration or termination of
grant support. Unless waived by the
Federal agency this report will be due
on the same date as the final Financial
Status Report.
(1) Grantees &hull submit annual
performance reports unless the
awarding agency requires quarterly or
semi-annual reports. However.
performance reports will not be required
more frequently than quarterly. Annual
reports shall be due 90 days after the
grant year. quarterly or semi-annual
reports shall be due 30 days after the
reporting period. The final performance
report will be due 90 days after the
expiration or termination of grant
support. If a justified request is
submitted by a grantee. the Federal
agency may extend the due date for any
performance report. Additionally.
requirements for unnecessary
perfotmmnoe reports may be waived by
the Federal agency.
(2) Performance reports will contain.
for each grant. brief information on the
following:
(i) A comparison of actual
accomplishments to the objectives
established for the period. Where the
output of the project can be quantified a
computation of the cost per unit of
output may be required if that
information will be useful.
(ii) The reasons for slippage if
established objectives were not met.
(iii) Additional pertinent information
including. when appropriate. analysis
and explanation of cost overruns or high
unit costs.
(3) Grantees will not be required to
submit more than the original and two
copies of performance reports.
(4) Grantees will adhere to the
standards in this section in prescribing
performance reporting requirements for
subgrantees.
(c) Construction performance reports.
For the most part. on-site technical
inspections and certified percentage -of -
completion data are relied on heavily by
Federal agencies to monitor progress
under construction grants and
subgrants. The Federal agency will
require additional formal performance
reports only when considered
necessary. and never more frequently
than quarterly.
(dl Significant developments. Events
may occur between the scheduled
22.176 / SINGLE AUDIT GUIDE
performance reporting dates which have
significant impact upon the grant or
subgrant supported activity. In such
cases. the grantee must inform the
Federal agency as soon as the following
types of conditions become known:
(11 Problems. delays. or adverse
conditions which will materially fmpatr
the ability to meet the objective of the
award. This disclosure must include a
statement of the action taken. or
contemplated. and any assistance
needed to resolve the: situation.
(2) Favorable developments which
enable meeting time schedules and
objectives sooner or at less cost than
anticipated orproducing more beneficial
results wthan orfgitut planned.
(o) Federal agerroies may make site
visits as warranted by program needs.
(f) Waivers. extensions. (1) Federal
agencies may waive any performance
report required by this part if not
needed.
(2) The.grantee may waive any
performance report from a subgrantee
when not needed. The grantee may
extend the due date for any performance
report from a subgrantee if the grantee
will still be able to meet its performance
reporting obligations to the Federal
agency.
g _41 Financial Reporting.
(a) GeneraL (1) Except as provided in
paragraphs (a) (2) and (5) of this section.
grantees will use only the forms
specified in -paragraphs is) through (e) of
this section. and such supplementary or
other forms •e may from time to time be
authorized by OMB. for.
(i) Submitting finencial reports to
Federal agencies. or
(ii) Requesting advances or
reimbursements when letters of credit
are not used.
(2) Grantees need not apply the forms
prescribed in this section in dealing with
their subgrantees. Howeyer. grantees
shall not impose more burdensome
requirements on subgrantees.
(3) Grantees shall follow all
applicable standard and supplemental
Federal agency instructions approved by
OMB to the extend required under the
Paperwork Reduction Act of 19M for use
in connection with forms specified in
paragraphs (b) through (e) of this
section. Federal agencies may issue
substantive supplementary instructions
only with the approval of OMB. Federal
agencies may shade out or instruct the
grantee to disregard any line item that
the Federal agency finds unnecessary
for its decisionmaking purposes.
(4) Grantees will not be required to
submit more than the original and two
copies of forms required under this part.
0
151 Federal ngencies may provide
computer outputs to grantees to expedite
or contribute to the accuracy of
reporting. Federal agencies may accept
the required information from grantees
in machine usable format or computer
printouts instead of prescribed forms.
(6) Federal agencies may waive any
report required by this section if not
needed.
(7) Federal agencies may extend the
due date of any financial report upon
receiving a justified request from a
grantee.
(b) Financial Staters Report. ---(i )
Form. Grantees will use Standard Form
269 or 269A. Financial Status Report. to
report the status of funds for all
nonconstrvction grants and for
construction grants when required in
accordance with paragraph
I _41(e)(2)(iii) of this section.
(2)Accounting basis. Each grantee
will report program outlays and program
income on a rash or accrual basis as
prescribed by the awarding agency. If
the Federal agency requires accrual
information and the grantee's
accounting records are not normally
kept on the accural basis. the grantee
shall not be required to convert its
accounting system but shall develop
such accrual information through and
analysis of the documentation on hand.
(3) Frequency. The Federal agency
may prescribe the frequency of the
report for each project or program.
However. the report will not be required
more frequently than quarterly. if the
Federal agency does not specify the
frequency of the report. it will be
submitted annually. A final report will
be required upon expiration or
termination of grant support.
(4) Due date. When reports are
required on a quarterly or semiannual
basis. they will be due 30 days after the
reporting period. When required on an
annual basis. they will be due 90 days
after the grant year. Final reports will be
due 90 days after the expiration or
termination of grant support.
(c) Federal Cash Transore,nos
Report—(1) Form. (i) Fur grants paid by
letter or credit. Treasury check
advances or electronic transfer of funds.
the grantee will submit the Standard
Form 272. Federal Cash Transactions
Report. and when necessary. its
continuation sheet. Standard Form 272a.
unless the terms of the award exempt
the grantee from this requirement.
(ii) These reports will be used by the
Federal agency to monitor cash
advanced to grantees and to obtain
disbursement or outlay information fur
each grant from grantees. The formal of
the report may be adapted as
appropriate when reporting is to be
accomplished with the assistance of
automatic data processing equipment
provided that the information to be
submitted is not changed in substance.
(2) Forecasts of Federal cash
requirements. Forecasts of Federal cash
requirements may be required in the
-Remarks" section of the report.
(31 Cash in hands of subgrantees.
When considered necessary and
fusible by the Federal agency. grantees
may be required to report the amount of
cash advances in excess of three days'
needs in the hands of their subgrantees
air contractors and to provide short
narrative explanations of actions taken
by the grantee to reduce the excess
balances.
(4) Frequency and due dote. Grantees
must submit the report no later than 15
working days following the end of each
quarter. However. where an advance
either by letter of credit or electronic
transfer of funds is authorized at an
annualized rate of one million dollars or
more. the Federal agency may require
the report to be submitted within 15
working days following the end of each
month.
(d) Request for advance or
r>eerbursement—(1) Advance payments.
Requests for Treasury check advance
payments will be submitted on Standard
Farm 270. Request for Advance or
Reimbursement. (This form will not be
used for drawdowns under a letter of
credit. electronic funds transfer or when
Treasury check advance payments are
rade to the grantee automatically ors a
predetermined basis.)
12) Reimbursements. Requests for
reimbursement under nonconstruction
grants will also be submitted on
Standard Form 270. (For reimbursement
requests under construction grants. see
paragraph (e)(1) of this section.)
131 The frequency for submitting
payment requests is treated in
§ _.41(b)(3).
le) Outlay report and request for
r>:rbursenient for construction
programs. (1) Grants that support
construction activities paid by
reimbursement method.
IQ Requests for reimbursement under
construction grants will be submitted on
Standard Form 271. Outlay Report and
Request for Reimbursement for
Construction Programs. Federal agencies
nay. however. prescribe the Request for
Advance or Reimbursement form.
specified in § _.41(d). instead of this
fam.
(ri) The frequency for submitting
rmbursement requests is treated in
§ _.41(b)(3).
RI Grants that support construction
activities paid by letter of credit.
clertromc funds transfer or Treasury
check advance.
(i) When a construction grant is paid
by letter of credit. electronic funds
transfer or Treasury check advances.
the grantee will report its outlays to the
Federal agency using Standard Form
271. Outlay Report and Request for
Reimbursement for Construction
Programs. The Federal agency will
provide any necessary special
instruction. However. frequency and due
date shall be governed by § _41(b)
(3) and (4).
(ii) When a construction grant is paid
by Treasury check advances based on
periodic requests from the grantee. the
advances will be requested on the form
specified in § —41(d).
(iii) The Federal agency may
substitute the Financial Status Report
specified in § _.41(b) for the Outlay
Report and Request for Reimbursement
for Construction Programs.
(3) Accounting basis. The accounting
basis for the Outlay Report and Request
for Reimbursement for Construction
Programs shall be governed by
§ _.41(b)(2).
§ _42 Retention and access
requirements for records.
(a) Applicability. (1) This section
applies to all financial and
programmatic records. supporting
documents. statistical records. and other
records of grantees or subgrantees
which are:
(i) Required to be maintained by the
terms of this Part. program regulations
or the grant agreement. or
(fi) Otherwise reasonably considered
as pertinent to program regulations or
the grant agreement.
(2) This section does not apply to
records maintained by contractors or
subcontractors. For a requirement to
place a provision concerning records in
certain kinds of contracts. see
§ _.36(i)(10).
(b) Length of retention period. (1)
Except as otherwise provided. records
must be retained for three years from
the starting date specified in paragraph
(c) of this section.
(2) If any litigation. claim. negotiation.
audit or other action involving the
records has been started before the
expiration of the 3 -year period. the
records must be retained until
completion of the action and resolution
of all issues which arise from it. or until
the end of the regular 3 -year period.
whichever is later.
(3) To avoid duplicate recordkeepmg.
awarding ageneses may make special
arrangements with grantees and
subgrantees to retain any records which
are continuously needed fur joint use.
.— I � "It Mini l:nlr
The awarding agency will request
transfer of records to its custody when it
determines that the records possess
long-term retention value. When the
records are transferred to or maintained
by the Federal agency. the 3 -year
retention requirement is not applicable
to the grantee or subgrantee.
(c) Starting date of retention period—
(1) General When grant support is
continued or renewed at annual or other
intervals. the retention period for the
records of each funding period starts on
the day the grantee or subgrantee
submits to the awarding agency its
single or last expenditure report for that
period. However. if grant support is
continued or renewed quarterly. the
retention period for each year's records
starts on the day the grantee submits its
expenditure report for the last quarter of
the Federal fiscal year. In all other
cases, the retention period starts on the
day the grantee submits its final
expenditure report. If an expenditure
report has been waived. the retention
period starts on the day the report
would have been due.
(2) Real property and equipment
records. The retention period for real
property and equipment records starts
from the date of the disposition or
replacement or transfer at the direction
of the awarding agency.
(3) Records for income transactions
after grant or subgrant support In some
cases grantees must report income after
the period of grant support. Where there
is such a requirement. the retention
period for the records pertaining to the
earning of the income starts from the
end of the grantee's fiscal year in which
the income is earned.
(4) indirect cost rate proposals. cost
allocations plans. etc. This paragraph
applies to the following types of
documents. and their supporting records:
indirect cost rate computations or
proposals. cost allocation plans. and any
similar accounting computations of the
rate at which a particular group of costs
is chargeable (such as computer usage
chargeback rates or composite fringe
benefit rates).
(i) if submitted for negotiation. If the
proposal. plan. or other computation is
required to be submitted to the Federal
Government for to the grantee) to form
the basis for negotiation of the rate. then
the 3 -year retention period for its
supporting records starts from the date
of such submission.
(is I If nut submitted for negotiatiwi. If
the p, oposal. plan. or other computalwo
is nut required to be submitted !n the
Fed«rat Government (or to the graoir-11
for negotiation purposes. then the 3 -year
rrrciwon period for the proposal plan. nr
SINGLE AUDIT GUIDE / 22.177
vdrinrnr.
•
co.mpuratmn and its supporting records
starts from end of the fiscal year (or
other accounting period) covered by the
proposal. plan, or other computation.
Idl Substitution of microfilm. Copies
made by microfilming, photocopying. or
similar methods may be substituted for
the original records.
(e) Access to records—(1) Records of
grantees and subgrantees. The awarding
agency and the Comptroller General of
the United Stateor any of their
authorized representatives, shall have
the right of access to any pertinent
books. documents. papers. or other
records of grantees and subgrantees
which we.pertfnent to the grant. in order
to make audits. examinations, excerpts.
and transcripts.
(2) Errpiration of right of access. The
rights of access is this section must not
be limited to the required retention
period but shall last as longas she
records are retained.
!Q Restrictions on public ace&&& The
Federal Freedom of Information Act (5
U.S.C. S52) does not apply to records
Unless required by Federal. State. or
local law, grantees and subgrantees are
Dot required to permit public access to
their moords.
§_47 E loveement.
(a) Remedies for noncompliance. If a
grantee or subgrantee materially fails to
comply with any term of an award.
whether stated in a Federal statute or
regulation, an assurance. in a State plan
w application. a notice of award. or
elsewhere. the awarding agency may
take one or more of the following
actions. as appropriate in the
circumstances:
(l) Temporarily withhold cash
payments pending correction of the
deficiency by the grantee or subgrantee
at more severe enforcement action by
the awarding agency.
(2) Disallow (that is. deny both use of
funds and matching credit for) all or part
of the cost of the activity or action not in
compliance.
(3) Wholly or partly suspend or
terminate the current award for the
grantee's or subgrantee's program.
(4) Withhold further awards for the
program. or
(5) Take other remedies that may be
legally available.
(b) Hearings. appeals. In taking an
enforcement action, the awarding
agency will provide the grantee or
subgrantee an opportunity for such
hearing. appeal. or other administrative
proceeding to which the grantee or
subgrantee is entitled under any statute
or regulation applicable to the action
involved.
22.178 / SINGLE AUDIT GUIDE
(c) Effects of suspension and
termination. Casts of grantee or
subgrantee resulting from obligations
incurred by the grantee or subgrantee
during a suspension or after termination
of an award are not allowable unless
the awarding agency expressly
authorizes them in the notice of
suspension or termination or
subsequently. Other grantee or
subgransee costs during suspension or
after termination which are necessary
and not reasonably avoidable are
allowable if:
(1) The torts result from obligations
which were properfy incurred by the
grantee -or subgrantee before the
effective date of:auapertsion cir
termination. are not in anticipation of It.
and. in the rase of a termination. are
nuseancellable, and.
(2) The costs would be allowable if
the award were not suspended or
expired normally at the end of the
funding period in which the termination
takes effect.
(d) Relationship to Debarment and
Suspension. The enforcement remedies
identified in this section. including
suspension and termination. do not
preclude grantee or subgrantee from
being subject to "Debarment and
Suspension" under ED. 12549 (see
§ —35).
§_44 Terminanon for convenience.
Except as provided in § 43
awards may be terminated in whole or
in part only as follows:
(a) By the awarding agency with the
consent of the grantee or subgrantee in
which case the two parties shall agree
upon the termination conditions.
including the effective date and in the
case of partial termination. the portion
to be terminated. or
(b) By the grantee or subgrantee upon
written notification to the awarding
agency. setting forth the reasons for
such termination, the effective date: and
in the case of partial termination, the
portion to be terminated. However. if, in
the case of a partial termination. the
awarding agency determines that the
remaining portion of the award will not
accomplish the purposes for which the
award was made, the awarding agency
may terminate the award in its entirety
under either §.—.43 or paragraph (a)
of this section.
Subpart D—After-The-Grant
Requirements
§.._.50 CloseouL
(a) General. The Federal agency will
close out the award when it determines
that all applicable administrative
•
actions and all required work of the
grant has been completed.
(b) Reporis. Within 90 days after the
expiration or tecounation of the grant,
the grantee must submit all financial.
performance. and other reports required
as a condition of the grant. Upon request
by the gramee. Federal agencies may
extend this timeframe. These may
include but are not limited to:
(1) Final performance or progress
report
(21 Financial Status Report (SF20W or
Outlay Report and Request for
Reimbursement for Construction
programs (SF -2711 (as applicable./
13) Final request for payment (SF -2701
(if applicable).
(4) Invention disclosure (if
applicable).
(5) Federallyowned property report
In accordance with § _32(f), a
grantee must submit an ifwentory of all
federally owned property (as distinct
from property acquired with grant
funds) for which it is accountable and
request disposition instructions from the
Federal agency of property no longer
needed.
(c) Cost adjustment. The Federal
agency will. within 90 days after receipt
of reports in paragraph (b) of this
section. make upward or downward
adjustments to the allowable costa.
(d) Cash adjustments. (1) The Federal
agency will make prompt payment to the
grantee for allowable reimbursable
coats.
(2) The grantee must immediately
refund to the Federal agency any
balance of unobligated (unencumbered)
cash advanced that is not authorized to
be retained for use on other grants.
§ .___.51 Later disallowances and
adjustments.
The closeout of a grant docs not
affect:
(a) The Federal agency's right to
disallow costs and recover funds un. the
basis of a later audit or other review:
(b) The grantee's obligation to return
any funds due as a result of later
refunds, corrections. or other
transactions:
(c) Records retention as required in
1-42'.
(d)Property management
requirements in If _31 and
§ _32: and
(e) Audit requirements in §
§ __ _ .52 Collection of amounts due.
(a) Any funds paid to a grantee in
excess of the amount to which the
grantee is finally determined to be
entitled under the terms of the swurd
constitute a debt to the Federal
Coveroment. If not paid within a
reasonable period after demand. the
Federal agency may reduce the debt by:
(1) Making an adminstrattve offset
against other requests for
reimbursements.
(2) Withholding advance payments
otherwise due to the grantee. or
(7) Other action permitted by law.
(b) Except where otherwise provided
by statutes or regulations. the Federal
agency will charge interest on an
overdue debt in accordance with the
Federal Claims Collection Standards (4
CFR Ch. Il). The date from which
interest is computed is not extended by
litigation or the fling of any form of
appeal.
Common Rule
Subpart E—Entittement I Reserved I
IFR Doc. 88-SZSI Filed 3 -I0 -0a: SAS anfl
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SINGLE AUDIT GUIDE / 22.179
Office of ManagemeAnd Budget Circular A-128 (4/12/85)
OFFICE OF MANAGEMENT AND
BUDGET
Issuance of Circular A-128 "Audits of
State and Local Governments"
AGENCY: Office of Managenlrn! turd
Fludget.
ACTION: Final Issuance of OMB Circular
A-128. "Audits of State and Loral
Governments."
SUMMARY: This OPIS Circular Provides
pulley guidance to Federal c,gencies in
d,e implcmenta!iun of the Single Audit
Art of 1984 (Pub. L. 9P SOZI. It
estaldishes uniform requirements for
audits of Federal financial assistance
provided to Stade and local governments
and promotes the efficient and effective
use of audit services.
EFFECTIVE DATE: This Circuldtwas
effective April 12. 1985, and shall apply
to fiscal years of State and local
guvernments that began after December
31, 1984. Earlier implementation is
encouraged. However. until it is
imn!emenled, the audit provisions of
Attachment P to Circular A-102 shall
continue to be observed.
FOR FURTHER INFORMATION CONTACT:
Palmer A. Marcantonio, Financial
Management Divisinn. Office of
Slanogement and Budget, Washington.
U.C. 20503. (202) 395-3993.
EXECUTIVE OFFICE OF THE
PRESIDENT
O,!7ire ojhlanagement and Budget
CIRCULAR NO. A-129
Ap"! 12.1985
to the Heads of Executive Departments and
F.stdhlishments.
9ubi-ct: Audits of State and Local
1:ovemments.
1. Purpose This Circular is issued
p;:rsuanl to (fie Single Audi! Act of 1984.
Pub. L. 98-502. It establishes audit
n: g,nremects for Slade and Inca)
gusernments that rcrrwe Federal aid.
and defines Federal responsibilities fur
implementing and monitoring Ihuse
rccunremenls.
uperses.siom The Circular
supersedes Attachment P. "Audit
Rrquiremenln," of Circular A-102,
`Uniform requirements for grants to
St.,te and local governments.'
u. Unckground. The Single: Audit Acl
builds upon earlier efforts to improve
audits of Federal acd programs. The Act
requires State or local governments that
receive $100.000 ar more it year in
Federal funds to have an audit made fat
that year. Section 7505 of the Art
requires the Director of the Office of
61,m.igemcat :and Budget to pr( -scribe
policies, procedures and guidelines to
implement the Act. It speates that the
Director shall designate "cognizant'
Federal agencies. determine criteria for
making appropriate charges to Federal
programs for the cost of audits. and
provide procedures to assure that small
firms or firms owned and controlled by
disadvantaged individuals have the
opportunity to participate in conlnccIs
for single audits.
4. Policy. The Single Audit Act
requires the following:
a. State or local governments that
rccei ce $100.000 or more a year in
Federal financial assistance shall have
an audit made in accordance with this
Circular.
h. State or local governments that
receive between $25.000 and $100.0001 a
year shall have an audit made in
accordance with this Circular. or in
accordance with Federal laws and
regulations governing the programs they
participate in.
c. State or local governments that
receive less than $25.000 a year shall be
exempt from compliance with the Ar.!
and other Federal audit requirements.
These Stale and local governments shall
be governed by audit requirements
prescribed by Slate or local law or
regulation.
d. Nothing in this paragraph exempts
Slate or local governments from
maintaining records of Federal financial
assistance or from providing access to
such records to Federal agencies. as
provided for in Federal law or in
Circular A-102. "Uniform requirements
for grants to Stale or local
governments."
5. Definitions. For the purposes of this
Clre.ulur the following definitions fium
the Single Audit Act apply:
a. "Cognizant agency" means the
Federal agency assigned by the Office of
\1an.tgeinenl and Budget to carry out the
responsibilities described in paragraph
17 of this Circular.
h. "Federal financial assistance-
mcams assistance provided by a Federal
agency in the form of grants, contracts.
cmwprralive agreements. loans. loan
;_carmtee& property, interest subsidies.
insurance. or direct appropriations, but
dors not include direct Federal crash
asstslonce to individuals. it includes
awards received directly from Federal
agencies, or indirectly through other
units of State and local governments.
r.. "Federal agency" has the same
meaning as the term "agency" in section
551(1( of Title 5. United Slates Code.
d. "Generally accepted accounting
principles- has the meaning specified in
lh,• generally accepted government
auditing standards.
F.:Jerdi GrJntti M,u a.utrnrem Handnuak June 1985
A-128:1
e. "Generally accepted government
auditing standards" means the
Sln.whjrds Far Audit o/Curernment
Or;,crnizntii,ns. Prggrun,s. Activities. and
Fuuctw rs. developed by the Comptroller
General. dated Febuary 27. 1981.
f. "Independent auditor" means:
(1) it State or local government auditor
who meets the independence standards
specified in generally accepted
government auditing standards: or
(21 a public accountant who meets
such independence standards.
g. "Internal controls- means the plan
of organization and methods and
procedures adopted by management to
ensure that:
(1) resource use is consistent with
laws. regulations. and policies:
(2)resources are safeguarded against
":isle. loss, and misuse: and
(3) reliable data are obtained.
maintained, and fairly disclosed in
reports.
It. 'Indian tribe" means any Indian
tribe. band, nations. or other organized
group or community, including any
Alaskan Native village or regional or
v illage. corporations (as defined in. or
established under, the Alaskan Native
Claims Settlement Act( that is
recognized by the United Stales its
eligible for the special programs and
services provided by the United Slates
to Indians because of their status as
Indians.
i. "Local government" means any unit
of local government within a State.
including a county, a borough.
municipality,. city, town. township.
perish. local public authority, special
district, school district. intrastate
district, council of governments. and any
other instrumentality of local
government.
j. ' Major Federal Assistance
Program." as defined by Pub. L. 98-502.
is des,:ribed in the Attachment to this
Circular.
k. "Public accuuntanis" means lh,.,sc
individuals who meet the qualdi(ation
standards included in generally
accepted government auditing standards
for personnel performing government
audits.
I. " Sl,:td' means anv Slate of the
United States. the District of Columb i a.
the Commonwealth of Puerto Rico, the
Virgin Islands. Guam. American Samoa.
the Commonwealth of the Northern
Mariana Islands. and the Trust Territury
of the Pacific Islands. any
instrumentality thereof. and any multi
Stale. regional. or interstate entity that
has governmental functionsand any
Indian tribe..
in "Subrecipient- means any person
nr government department, agency. OF
Appendix I
Office of Management and Budget Circular A-128 (4/12/85)
establishment that reccrvvs Federal
ianrial assistance to carry out a
ogram through a Slate or local
government, but does not include an
individual that is a beneficiary of such it
program. A subrecipient may also be it
direct recipient of Federal financial
assistance.
6. Scope of audit. The Single Audit
Act provides that:
a. The audit shall be made by an
independent auditor in accordance with
gaoerally accepted government auditing
standards covering financial and
compliance audits.
b. The audit shall cover the entire
operations of a State or local
government or, at the option of that
government. it may cover departments.
agencies or establishments that
received, expended, or otherwise
administered Federal financial
assistance duringthe year. However, if
a State or local government receives
S25,000 or more in General Revenue
Sharing Funds in a fiscal year. it shall
have an audit of its entire operations. A
series of audits of individural
departments, agencies, and
establishments for the same fiscal year
may be considered a single audit.
c. Public hospitals and public colleges
d universities may be excluded from
.le and local audits and the
,quirements of this Circular. However.
if such entities are excluded. audits of
these entities shall be made in
accordance with statutory requirements
and the provisions of Circular A-110.
"Uniform requirements for grants to
universities. hospitals, and other
nonprofit organizations"
d. The auditor shall determine
whether:
(1) the financial statements of the
government. department. agency or
establishment present fairly its financial
position and the results of its financial
operations in accordanre with generally
,u:cepted accounting principles:
(2) the organization has internal
acruunting and other control systems to
provide reasonable assurance that it is
managing Federal financial assistance
programs in compliance with applicable
Lows and regulations: and
(3) the organization has complied with
laws and regulations that may have
material effect on its financial
statements and on each major Federal
assistance program.
7. Freyuencv of oudiL Audits shall be
made annually unless the State or local
government has, by January 1, 1987. a
sstitutional or statutory requirement
less frequent audits. For lbose
vernmenls, the cognizant agency shall
permit biennial audits, covering both
years. if the government so requests. It
shall also honor requests for biennial
audits by governments that have an
nlnimistralive polies' calling for audits
Icss frequent than annual, bill only for
fiscal years beginning before January 1,
1987.
8. 1wenml control and compliance
reviews. The Single Audit Act requires
!hat the independent auditor determine
and report on whether the organization
has internal control systems to provide
reasonable assurance that it is managing
Federal assistance programs in
compliance with applicable laws and
regulations.
a. Internal control review. In order to
provide this assurance the auditor must
make a study and evaluation of internal
control systems used in administering
Federal assistance programs. The study
and evaluation must be made whether
or not the auditor intends to plane
reliance on such systems. As part of this
review, the auditor shall:
(1) Test whether these internal control
systems are functioning in accordance
with prescribed procedures.
121 Examine the recipient's system for
monitoring subrecipients and obtaining
and acting on subrecipient audit reports.
b. Compliance review. The law also
requites the auditor to determine
whether the organization has complied
with laws and regulations that may have
a material effect on each major Federal
assistance program.
(1) In order to determine which major
programs are to be tested fur
compliance. State and local
governments shall identify in their
accounts all Federal funds received and
expended and the programs under
which they were received. This shall
include funds received directly from
Federal agencies and through other
Slate and local governments.
(2) The review must include the
selection and testing of a representative
number of charges from each major
Federal assistance program. The
selection and testing of transactions
shall be based on the auditor's
professional judgment considering such
factors as the amount of expeditures for
the program and the individual awards;
the newness of the program or changes
in its conditions: prior experience with
the program, particularly as revealed in
audits and other evaluations (e.g..
inspections. program reviews); the
extent to which the program is carried
out through subrecipients; the extent to
which the program contracts for goods
or services: the level to which the
program is already subject to program
reviews or other forms of independent
oversiehL the adequacy of the controls
A-128:2
for ensuring compliance: the expectation
of adherence or lack of adherence to the
applicable laws and regulations; and the
potential impact of adverse findings.
(a) In making the test of transactions,
the auditor shall determine whether:
—The amounts reported as expenditures
were for allowable services, and
—The records show that those who
received services or benefits were
eligible to receive them.
(b) In addition to transaction testing.
the auditor shall determine whether:
—Matching requirements. levels of
effort and earmarking limitations
were met,
—Federal financial reports and claims
for advances and reimbursements
contain information that is supported
by the books and records from which
the basic financial statements have
been prepared, and
—Amounts claimed or used for
matching were determined in
accordance with OMB Circular AA7,
"Cost principles for State and local
governments," and Attachment F of
Circular A-102, "Uniform
requirements for grants to State and
local governments."
(c) The principal compliance
requirements of the largest Federal aid
programs may be ascertained by
referring to the Compliance Supplement
lar Single Audits of State and Laval
Governments, issued by OMB and
available from the Government Printing
Office. For those programs not covered
in the Compliance Supplement. the
auditor may ascertain compliance
requirements by researching the
sWu:es, regulations, and agreements
governing individual programs.
(3) Transactions related to other
Fedvrdl assistance programs that are
sale.,;ted in connection with
examimt tions of financial statements
and evaluations of internal controls
shall be tested for compliance with
Federal laws and regulations that apply
to such transactions.
9. Subrecipients. State or local
gmernments that receive Federal
financial assistance and provide $25.000
or more of it in a fiscal year to a
subrecipient shall:
;1. Determine whether Stale or local
subrecipients have mel the audit
requirements of this Circular and
whether subrecipients covered by
Circular A-110, "Uniform requirements
for grants to universities. hospitals, and
other nonprofit organizations." have met
that requirement;
b. determine whether the subrecipient
spent Federal assistance funds provided
in accordance with applicable laws and
regulations. This may he accomplished
Federal Grants Management Handbook June 1985 Appendix I
Office of Managemened Budget Circular A-128 (4/085)
by reviewing an audit of the
subrecipient made in accordance with
this Circular. Circular A-110, or through
other means (e.g.. program reviews) if
the subrecipient has not yet had such an
audit:
c. ensure that appropriate corrective
action is taken within six months after
receipt of the audit report in instances of
noncompliance with Federal laws and
regulations;
d. consider whether subrecipient
audits necessitate adjustment of the
recipient's own records; and
e. require each subrecipient to permit
independent auditors to have access to
the records and financial statements as
necessary to comply with this Circular.
10. Relation to other audit
requirements. The Single Audit Act
provides that an audit made in
accordance with this Circular shall be ire
lieu of any financial or financial
compliance audit required under
individual Federal assistance programs..
To the extent that a single audit
provides Federal agencies with
information and assurances they need to
ra rry out their overall responsibilities,
they shall rely upon and use such
information. However, a Federal agency
shall make any additional audits which
are necessary to carry out its
responsibilities under Federal law and
regulation. Any additional Federal audit
effort shall be planned and carried out
in such a way as to avoid duplication.
a. The provisions of this Circular do
not limit the authority of Federal
agencies to make. or contract for audits
and evaluations of Federal financial
assistance programs, nor do they limit
the authority of any Federal agency
inspector General or other Federal audit
official.
h. The provisions of this Circular do
11011 auth•rrize any State or local
government or subrecipient thereof to
constrain Federal agencies, in any
manner. from carrying out additional
audits.
c. A Federal agency that makes or
contracts for audits in addition to the
audits made by recipients pursuant to
this Circular shall, consistent with other
applicable laws and regulations, arrange
for funding the cost of such additional
,:udi(s. Such additional audits include
ccunomy and efficiency audits. In igram
results audits, and program evaluations.
111. Cnqnizant agency responsibilities.
The Single Audit Act provides for
cognizant Federal agencies to oversee
the implementation of this Circular.
a. The Office of Management and
Budget will assign cognizant agencies
for States and their subdivisions and
I,irger local governments and their
subdivisions. Other Federal agencies
may participate with an assigned
cognizant agency, in order to fulfill the
cognizant responsibilities. Smaller
governments not assigned a cognizant
agency will be under the general
oversight of the Federal agency that
provides them the most funds whether
directly or indirectly.
b. A cognizant agency shall have the
following responsibilities:
(1) Ensure that audits are made and
reports are received in a timely manner
and in accordance with the
requirements of this Circular.
(2) Provide technical advice and
liaison to State and focal governments
and independent auditors.
(3) Obtain or make quality control
reviews of selected audits made by non -
Federal audit organizations, and provide
the results, when appropriate, to other
interested organizations.
(4) Promptly inform other affected
Federal agencies and appropriate
Federal law enforcement officials of any
reported illegal acts or irregularities.
They should also inform State or local
law enforcement and prosecuting
authorities, if not advised by the
recipient, of any violation of law within
their jurisdiction.
(5) Advise the recipient of audits that
have been found not to have met the
requirements set forth in this Circular. In
such instances, the recipient will be
expected to work with the auditor to
lake corrective action. If corrective
action is not taken, the cognizant agency
shall notify the recipient and Federal
awarding agencies of the facts and make
recommendations for followup action.
Major inadequacies or repetitive
substandard performance of
.rdependent auditors shall he referred
to appropriate professional bodies for
disciplinary action.
(e) Coordinate, to the extent
practicable, audits made by or for
Federal agencies that are in addition to
the audits made pursuant to this
Circular: so that the additional audits
build upon such audits.
(7) Oversee the resolution of audit
findings that affect the programs of more
than one agency.
12. illegal acts or irregularities. If the
auditor becomes aware of illegal acts or
other irregularities, prompt notice shall
be given to recipient management
officials above the level of involvement.
(See also paragraph 13(x)(3) below for
the auditor's reporting responsibilities.)
The recipient, in turn, shall promptly
notify the cognizant agency of the illegal
acts or irregularities and of proposed
arid actual actions, if any. Illegal acts
and irregularities include such matters
A-128:3
as conflicts of interest. falsification of
records or reports. and
misappropriations of funds or other
assets.
13. Audit Reports. Audit reports must
be prepared at the completion of the
audit. Reports serve many needs of
Slate and local governments as well as
meeting the requirements of the Single
Audit Act.
a. The audit report shall state that the
audit was made in accordance with the
provisions of this Circular. The report
shall be made up of at least:
(1) The auditor's report on financial
statements and on a schedule of Federal
assistance: the financial statements; and
a schedule of Federal assistance,
showing the total expenditures for each
Federal assistance program as identified
in the Catalog of Federal Domestic
Assistance. Federal programs or grants
that have not been assigned a catalog
number shall be identified under the
caption "other Federal assistance."
(2) The auditor's report on the study
and evaluation of internal control
systems must identify the organization's
significant internal accounting controls.
and those controls designed to provide
reasonable assurance that Federal
programs are being managed in
compliance with laws and regulations. It
must also identify the controls that were
evaluated, the controls that were not
evaluated, and the material weaknesses
identified as a result of the evaluation.
(3) The auditor's report on compliance
containing:
—A statement of positive assurance
with respect to those items tested for
compliance, including compliance
with law and regulations pertaining to
financial reports and claims for
advances and reimbursements;
—Negative assurance pn those items not
tested:
—A summary of all instances of
noncompliance: and
—An identification of total amounts
questioned. if any, for each Federal
assistance award, as a result of
noncompliance.
b. The three parts of the audit report
may be bound into a single report. or
presented at the same time as separate
ducuments.
c. All fraud abuse. or illegal acts or
indications of such acts. including all
questioned costs found as the result of
these acts that auditors become aw.m.
of, should normally be covered in a
separate written report submitted in
accordance with paragraph 13f.
d. In addition to the audit report, the
recipient shall provide comments on the
findings and recummenda t ions in the
I epnrt. ciduding a plan for corrective
Fctei.a Gl.nl5 Maneycnwnl Handbook June 1985 Appendix
Office of Management aa1d Budget Circular A-128 (4l1k,dS)
action taken or planned and comments
.a the status of corrective action taken
prior findings. If corrective action is
+t necessary. a statement describing
the reason it is not should accompany
the audit report.
e. The reports shall be made available
by the State or local government for
public inspection within 30 days after
the completion of the audit.
f. In accordance with generally
accepted government audit standards,
reports shall be submitted by the auditor
to the organization audited and to those
requiring or arranging for the audit. In
addition, the recipient shall submit
copies of the reports to each Federal
department or agency that provided
Federal assistance funds to the
recipient. Subreciptents shall submit
copies to recipients that provided them
Federal assistance funds. The reports
shall be sent within 30 days after the
completion of the audit. but no later
than one year after the end of the audit
period unless a longer period is agreed
to with the cognizant agency.
g. Recipients of more than $100,000 in
Federal funds shall submit one copy of
the audit report within 30 days after
issuance to a central clearinghouse to be
designated by the Office of Management
-•nd Budget. The clearinghouse will keep
mpleted audits on file and follow up
.Ih State and local governments that
nave not submitted required audit.
reports.
h. Recipients shall keep audit reports
on file for three years from their
issuance.
14. Audit Resolution. As provided in
paragraph 11, the cognizant agency shall
be responsible for monitoring the
resolution of audit findings that affect
the programs of more than one Federal
agency. Resolution of findings that
relate to the programs of a single
Fe•dond ag•:ncy will be the responsibibly
,if the w6piont and that agency.
Alternate arrangements may be mmdc
on n case -by -rase basis by agreement
among the agencies concerned.
Rcsoinliun shall be made within six
months :offer receipt of the report by the.
Foderal departmenls and agencies.
Corrective action should proceed as
r.rpidty as possible.
15. ri�•dit wurApup'ns nerd reports.
Workpapers and reports shall be
retained for a minimum of three years
fvm the date of the audit report, unless
Ili(! auditor is notified in writing by the
,:ugniz,rnl agency it) extend the retention
I;.•riud. Audit workpapers shall be made
,nribrhlc upon request to the cognizant
•ncy or its designee or the General
counting Office. if the cumpleliun of
oc audit.
Ili.:ludit Chats. 'I he oust of audits
made in accordance with the provisions
of this Circular are allowable charges to
I'rderd assisLmre programs.
a. The charges may be considered a
direct rust or an allocated indirect cost.
determined in accordance with the
provision of Circular A-87, "Cost
principles for State and local
governments.—
b. Generally, the percentage of costs
charged to Federal assistance programs
for a single audit shall not exceed the
percentage that Federal funds expended
represent of total funds expended by the
recipient during the fiscal year. The
percentage may be exceeded, however.
if appropriate documentation
demonstrates higher actual cost.
17. Sanctions. The Single Audit Act
provides that no cost may be charged to
Federal assistance programs for audits
required by the Act that are not made in
accordance with this Circular. In cases
of continued inability or unwillingness
to have a proper audit. Federal agencies
must consider other appropriate
sanctions including:
—Withholding a percentage of
assistance payments until the audit is
completed satisfactorily,
—Withholding or disallowing overhead
costs. and
—Suspending the Federal assistance
agreement until the audit is made.
10. Auditor S•electiarl. In arranging for
audit services State :and local
governments shall follow the
procurement standards prescribed by
Attachment O of Circular A-102,
"Uniform requirements fur grants to
State and local governments." The
standards provide that while recipients
are encouraged to enter into
intergovernmental agreements for audit
and other services, analysis should be
made to determine whether it would be
more economical to purr-hase the
services from private firms. In instances
where use of such intergovernmental
agreements are required by State
statutes (e.g.. audit services) these
statutes will take precedence.
19. Small and Minority Audit Firms.
Small audit firms and audit firms owned
and controlled by socially and
economically disadvantaged individuals
shall have the maximum practicable
opportunity to participate in contra cls
awarded to fulfill the requirements of
this Circular. Recipients of Federal
assistance shall take the following stens
to further this goal:
a. Assure that small audit firms and
audit firms owned and controlled by
sorialiy and economically
disadvantaged individuals are used to
the fullest extent practicable.
b. Aiuke information on forthcoming
A-128:4
opuurtunities available and arrange
timeframes for the audit so as to
encourage and facilitate participation by
small audit firms and audit firms owned
and controlled by socially and
economically disadvantaged
individuals.
c. Consider in the. contract process
whether firms competing for larger
audits intend to subcontract with small
audit firms arid audit firms owned and
controlled by socially and economically
disadvantaged individuals.
d. Encourage contracting with small
audit firms or audit firms owned and
controlled by socially and economically
disadvantaged individuals which have
traditionally audited government
programs and, in such cases where this
is rut possible, assure that these firms
are given consideration for audit
subcontracting opportunities.
e. Encourage contracting with
consortiums of small audit firms as
described in paragraph (a) above when
a rontract is too large for an individual
small audit firm or audit firm owned and
controlled by socially and economically
disadvantaged individuals.
f. Use the services and assistance, as
appropriate, of such organizations as the
Small Business Administration in the
solicitation and utilization of small audit
firms oe audit firms owned and
controlled by socially and economically
disadvantaged individuals.
20. Repurting. Each Federal agency
will report to the Director of OMB on or
before March 1, 1987, and annually
thereafter on the effectiveness of Slaw
and local governments in carrying oat
die provisions of this Circular. The
report must identify each State or local
government or Indian tribe that. in the
opinion of the agency. is failing to
comply with the Circular.
21. Regulations. Each Federal agency
shall include the provisions of this
Circular in its regulations implementing
the Single Audit Act.
22. Effective dote. This Circular is
effective upon publication and shall
apply to fiscal years of State and local
governments that begin after December
31. 1904. Earlier implementation is
encouraged. However, until it is
implemented. the audit provisions of
Attachment P to Circular A-102 shall
continue to be observed.
23. Inquiries. All questions or
inquiries should be addressed to
Financial Management Division. Office
of Management and Budget, telephone
number 2021395-3993.
24. Sunset review date. This Circular
shall have an independent policy review
to ascertain its effectiveness three years
from the date of issuance.
Oavnl A. Sin, kman, Orr, v:bm
F ericraI GranT% Ma nag Pn n•nl Hnnrtboolt lune 1985 Appendix I
Office of Managemeand Budget Circular A-128 (4*185) A-128:5
Atmchment—Circular A-128
Definition of Afajor Program as
Procuh?d in Pub. L. 98-502
-Major Federal Assistance Program,"
for State and local governments having
Federal assistance expenditures
between $100.000 and $100.000.000.
means any program for which Federal
expenditures during the applicable year
exceed the larger of $300,000. or 3
percent of such total expenditures.
where total expenditures of Federal
assistance exceed $100.000.000. the
followine criteria apply:
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IFR floc. 85-10877 Filed 5-3-85: 8:45 aml
BILIAMa coo af,a-B,-M
Fed,r.11 (irenls Man.lyemenl Handbook June 1985
Appendix I