HomeMy WebLinkAbout000271 Original ContractDear Rob,
WAS H I NGT.ON, U. S.A.
Police Department
January 30, 2012
NoaNet
Mr. William R. Kopp
Chief Technical Officer
5802 Overlook Avenue NE
Tacoma, WA 98422
Re: City of Port Angeles Participation Agreement
Please'find enclosed two originally signed Participation Agreements for the City's sub -grant
under the Broadband Technology Opportunities Program Cycle I1.
The City reviewed and understands the Participation Agreement and Exhibits A -E and M. We
further understand that Exhibits F -L and N (similar to Exhibit M) will be shared with the City
once they have been executed by all of the other sub participants.
Very Truly Yours,
Terry K. Gallagher
Chief of Police
Enclosure
Washington State Accredited
'Law Enforcement Agency
On March 15, 2011, the City Council authorized the City Manager to accept the Northwest Open
Access Network Participation Agreement for the Wireless Mobile Data System sub grant. As you
know the City Council awarded the contract for the City's Wireless Mobile Data System at its
December 20, 2011. meeting. Work has commenced during the last month on system design,
which we are pleased to share is ahead of schedule.
We sincerely appreciate the technical support we have received from NoaNet leading up to this
point. And we thank you again for your recent letter of support to proceed with the project.
321 East Fifth Street Port Angeles, WA 98362 -3206
Phone: 360- 452 -4545 Website' www.cityofpa.us Email: police @cityofpa.us
Fax: Operations /Communications: 360- 417 -4909 Records: 360 417 -4537 Administration: 360- 417 -4556
s
PARTICIPATION AGREEMENT— NTIA/BTOP ROUND 2
City of Port Angeles
Record #000271
This Participation Agreement is made as of 011a17 2012 by and between
Northwest Open Access Network, a Washington nonprofit mutual corporation
"NoaNet and City of Port Angeles,
a (collectively the
"Participants" and individually the "Participant As used herein, a "Party" means
NoaNet or any of the Participants.
Recitals
Prior to April 1, 2010, NoaNet, as the lead entity of a consortium of public,
private, and tribal entities (specifically, NoaNet and the Participants), submitted an
application for an award of federal stimulus funds from the United States
Department of Commerce under the American Recovery and Reinvestment Act, to be
funded by a grant by the National Telecommunications and Information
Administration "NTIA" or the "Agency an agency of the United States Department
of Commerce (the "Department pursuant to NTIA's Broadband Technology
Opportunities Program "NTIA /BTOP —Round 2
NoaNet has now received official notification that the grant contemplated by
the NTIA /BTOP —Round 2 grant application has been awarded to NoaNet, providing
federal funds in the amount of $54,452,347, subject to the terms and conditions
specified therein. The total project, over a three year period, will be funded at
$75,307,089, with required cash matching funds totaling $6,215,045, and in -kind
matching funds of $14,639,697. The grant is evidenced by the Financial Assistance
Award, Award No. NT1OBIX5570111, and the documents referred to or incorporated
by reference therein (collectively identified herein as the "Award" or "Grant and
attached hereto as Exhibit A. The terms and conditions of the Award are
incorporated herein by reference as if set forth herein. To the extent of any conflict
between the Award and the remaining terms of this Participation Agreement, the
Award shall control.
The purpose of the Award is to provide high capacity broadband access to
retail service providers to create new markets for businesses and citizens and to
improve internet and broadband capabilities into libraries, medical and education
centers, government and public safety agencies. To that end, the Parties intend to
use the Grant funds to build the so- called "middle mile" fiber optic infrastructure in
unserved and underserved areas of Washington State, and to perform related
activities, all as set forth in the Award (the "Project
Each of the Participants is one of the public, private, or tribal entities on
behalf of which NoaNet made the application for the Award.
Attached as Exhibit B is the BTOP Award Budget which sets forth the total
budget as well as the individual budgets for NoaNet and the other Participants for
this Project. The BTOP Award Budget includes the value of the in -kind matching
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services or in -kind contributions to be provided by the applicable Participant (the "In-
Kind Services and the matching cash contributions (the "Cash Contributions to be
provided by the applicable Participant.
In order to induce NoaNet to accept the Grant on behalf of itself and the other
Participants, the Parties agree as follows:
1. Acceptance. Each Participant does hereby agree to perform all
obligations applicable to its share of the Award and be subject to all of the terms and
conditions of the Award (to the extent pertaining to its share of the Award). Each
Participant further ratifies and confirms that it has and does hereby authorize
NoaNet to accept the award of the Grant on such Participant's behalf with respect to
such Participant's share of the Grant. Each of the Participants hereby acknowledges
receipt of Exhibit A attached hereto, which references the terms and conditions as
identified in the Award.
2. Parties' Performance.
Agreements
A. Each of the Parties agrees to construct the improvements and
to provide the services pertaining to it as more particularly described as to each
Party, respectively, on Exhibits F through N herein (herein the "Work Each Party
further agrees to provide the Cash Contributions and the In -Kind Services in an
amount at least equal to the respective amounts specified on Exhibit B hereto. The
In -Kind Services are also more fully described in May 7, 2011, attached as Exhibit C
hereto. Pursuant to Section 6C herein, each Party is contributing the equipment,
plants and buildings described therein.
B. The Parties' receipt of Grant funds, and use and disposition of
real and personal property acquired or improved through the use of Grant funds, are
subject to the terms and conditions of the Award, including those contained in 15
CFR Part 24 with respect to each Party that is a Government, as that term is defined
in 15 CFR 24.3 (herein referred as "Public Party or in 15 CFR Part 14 with respect
to each of the other Parties (herein the "Private Party (collectively, 15 CFR Parts 24
and 14 shall be referred to herein as the "Uniform Administrative Requirements
Each of the Participants acknowledges and agrees that it is a sub- recipient of the
funds under the applicable rules or regulations; and each Party acknowledges and
agrees that it holds title to all real and personal property acquired or improved with
the Grant funds, including the Cash Contributions and the In -Kind Services
(collectively, the "Property in trust for NTIA, to be used for the public purpose of the
Award. Among other things, the Award requires that the Parties shall use the
Property for the authorized purposes of the Project, as described in the Award, and
that, for the estimated useful life of the Property, no Party shall dispose of, assign, or
otherwise alienate its interest in such Property, or encumber any interest therein,
without the approval of the NTIA. As provided in Section 6 of this Participation
Agreement, each Party is obligated to file with the appropriate office in the applicable
jurisdiction a Covenant reflecting this Federal interest in such Property.
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C. The Uniform Administrative Requirements further require the
Parties to manage the Property in accord with the requirements set forth therein,
including a requirement to maintain the Property in good condition. The Parties
further agree to continuously operate and maintain all of the Property in a manner
consistent with the standards in the industry for the useful life of similar property.
3. Standby Letter of Credit. Each Participant shall within 15 days after
the applicable Participant has executed this Agreement, deliver a Standby Letter of
Credit "SLOC to NoaNet in form and content that is consistent with Article 5 of the
Uniform Commercial Code, as revised, and which is reasonably acceptable to
NoaNet, committing the issuing bank to pay to NoaNet the Participant's Cash
Contribution if the Participant fails to provide its share of the Cash Contribution when
otherwise required under the terms of the Award. The amount of the SLOC may
reduced from time to time to reflect the value of subsequent Cash Contributions. A
Participant may offer alternative security or assurances for its performance of its
Cash Contribution requirement. NoaNet may accept such alternative security or
assurances for Participant's performance of the Cash Contribution requirement as
NoaNet, in its sole discretion, may determine.
4. Administration. NoaNet will be the administrator of the Award for
NoaNet and on behalf of the Participants. Each Participant shall cooperate with
NoaNet in the administration of the Award and shall provide to NoaNet all records
and documents needed to apply for distributions of the Award funds and to otherwise
comply with the terms and conditions of the Award. In providing such information
and records to NoaNet, the Participant authorizes NoaNet to provide it to NTIA on its
behalf, and represents and warrants that the information submitted is true, correct,
and complete, and may be relied upon by NoaNet and NTIA.
A. Receipt and Disbursement of Funds. In its role as
administrator, NoaNet will receive funds from the Award and, subject to the terms
and conditions of the Award and any restrictions contained herein, and so long as
there is no outstanding Event of Default, as defined in Section 10 of this Participation
Agreement, or any act or omission, or condition which, with the passage of time,
would become an Event of Default, NoaNet will promptly disburse such funds to the
applicable Participants as they are earned, and subject to any applicable retainage or
other holdback.
B. Environmental Assessment. The Parties acknowledge that one
of the conditions precedent to receiving any funds under the Award is that an
environmental assessment for all properties affected thereby must be completed and
a finding of no significant impact made by NTIA. As administrator, NoaNet will
arrange for such an environmental assessment to be completed. Each of the
Participants agree to provide such information as may be requested of them with
respect to that environmental assessment and to otherwise cooperate with NTIA,
NoaNet and its agents in developing the environmental assessment. Each
Participant also agrees to pay NoaNet for that Participant's pro -rata share (based on
such factors as distance, time invested, and complexity) of the total costs of
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development and completion of the environmental assessment for the Project, as
reasonably determined by NoaNet.
C. Standard of Care with Respect to Participants. In performing its
role as administrator for the Participants, NoaNet will be held to a standard of good
faith and ordinary care. The ordinary care standard will be the same standard of care
that NoaNet would exercise as to its own funds and the administration of its portion
of the Award. In any case, with respect to the Participants, NoaNet will not be held to
the standard of a fiduciary or as a trustee.
D. Access and Inspection. NoaNet or the Department shall have
the right to enter any of the property being improved with funds from the Grant or any
other property upon which the broadband equipment or fixtures being acquired or
improved with Grant proceeds are located. Such right of access does not require
NoaNet or the Department to perform any inspections, repairs or alterations of the
Property. NoaNet shall give the applicable Participant reasonable advance notice of
any inspection except where, in NoaNet's or the Department's sole judgment, safety
considerations or an urgency justify the need for such entry without the delay of
providing the notice.
E. Audit. NoaNet shall have the same rights to audit Participant
and its activities under the Grant as the Department may have as to NoaNet under
the Grant.
5. Federal Requirements.
A. American Recovery and Reinvestment Act Award Terms. The
Award includes the American Recovery and Reinvestment Act "ARRA Award Terms
as identified in the Award. Without listing all of the ARRA Award Terms, each
Participant acknowledges that the ARRA Award terms include the following:
i. Central Contractor Registration. NoaNet and each
Participant will be required to maintain registration in the Federal Central Contractor
Registration and will need a Dun Bradstreet data universal numbering system
number.
ii. Reporting. NoaNet and each of the Participants will
comply with all applicable reporting requirements. NoaNet will comply as the
"Recipient" and each of the Participants will report as a "First Tier Recipient."
iii. Use of American Iron, Steel and Manufactured Goods.
The ARRA Award Terms requires that none of the funds made available under the
ARRA may be used for a project for the construction, alteration, maintenance or
repair of a public building or public works unless all of the iron, steel and
manufactured goods used in the project are produced in the United States, except as
exceptions are granted by the Federal Government. Pursuant to 74 FR 31410 (July
1, 2009), a copy of which is attached as Exhibit D, NTIA has granted a limited waiver
of this requirement.
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iv. Prevailing Wages. All laborers and mechanics employed
by contractors and subcontractors on the Work are to be paid wages at rates not less
than those prevailing of a character similar in the locality as determined by the
Secretary of Labor. Standard Davis -Bacon contract clauses found in 29 CFR 5.5(a)
are to be incorporated in any covered contracts in excess of $2,000:
v. Signage. All projects funded by the ARRA are to display
signage that features the Primary Emblem as set forth in the terms and conditions of
the Award at construction sites throughout the construction phase. This is to be
displayed in a prominent location on the construction site.
B. Governmentwide Debarment and Suspension Provisions. Each
Participant and all contracts and subcontracts pertaining to Participant's portion of
the Project are subject to subpart C of 2 CFR Part 1326, "Governmentwide
Debarment and Suspension (non procurement)."
C. New Restrictions on Lobbying. Each Participant and each sub
award, contract or subcontract is subject to 31 USC 1352, as implemented at 15
CFR Part 28, "New Restrictions on Lobbying." Each Participant and each contractor
or subcontractor must submit a completed "disclosure of lobbying activities" (Form
SF -LLL) regarding the use of non federal funds for lobbying. The form SF -LLL shall be
submitted within 15 days following the end of the calendar quarter in which there
occurs any event that requires disclosure or that materially affects the accuracy of
the information contained in any disclosure form previously filed. The form SF -LLL
shall be submitted from tier to tier until received by NoaNet, who will then submit the
disclosure form to the Agency within 30 days following the end of the calendar
quarter.
6. Covenant Regarding Federal Interest.
A. Pursuant to the terms and conditions of the Award, NoaNet and
each of the Participants will be required to execute and file for each parcel of real
Property owned by such Party, a complete and accurate "Covenant of Purpose, Use
and Ownership" in the form attached as Exhibit E hereto (the "Covenant Under the
terms of the Award, NoaNet or the Participant, as applicable, may not sell, lease,
transfer, convey, hypothecate, mortgage, or otherwise alienate any right to or interest
in the Property, or use the Property for purposes other than, and different from, those
purposes set forth in the Award and the application therefore (hereinafter called
"Project Purposes without the approval of NTIA, such alienation and use being
prohibited by 15 CFR Parts 14 or 24, as applicable. The Covenant will pertain to the
real Property owned by the Party in fee simple, an easement or right -of -way for the
benefit of that Party, a leasehold interest where the Party is a tenant, and other
property interests that were acquired or improved through the Grant funds or
contributed by the Party. Such Covenant is to be filed with the County Auditor where
the real Property is located. A conformed copy of such Covenant shall be provided to
and maintained by NoaNet. In instances where the improvement is upon land in
which the Party holds a leasehold, easement, right -of -way or similar interest, the
Party's interest must be for a term at least as long as the Federal interest under the
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Award, must allow the filing of the Covenant, and the Party's interest must be made
subject to the Federal interest.
B. In addition, NoaNet and each of the Participants agree that, if
required by the Agency, then it will permit the filing of a UCC -1 financing statement
and all applicable continuations thereof, with the Department of Licensing of the
State of Washington, which financing statement will give public notice of NTIA's
interest in the broadband fiber and equipment purchased or contributed to the
Project. This will be a notice filing and will not create a security interest in the assets
described in such financing statement.
C. In -Kind Contributions. Each of the Parties have identified
certain assets that are being contributed to the Project as its portion of the In -Kind
Services as specifically set forth in Exhibit C. Therefore, each Party does hereby
contribute such assets to the Project. Although each Party will retain ownership of
each of the assets so contributed, each of those assets will be bound by the terms of
and subject to the Covenant.
7. Insurance. Each Participant will maintain such insurance as NoaNet is
required to maintain under the Grant. NoaNet and each of the Participants will be
named as additional insureds under each of those policies. Each Participant will
cause its subcontractors and suppliers to maintain such insurance and in such
amounts as may be required of NoaNet's subcontractors and suppliers under the
Grant. Without limiting the foregoing, each Participant will maintain the following
insurance coverages:
A. Commercial general liability insurance covering claims for
personal injuries or damage to property of others with coverage of $1,000,000 per
occurrence and in the aggregate coverage.
B. Comprehensive automobile and vehicle liability insurance
covering claims for injuries to members of the public and /or damages to property of
others arising from use of motor vehicles, including onsite and offsite operations, and
owned, non owned, or hired vehicles, with $1,000,000 combined single limits.
law.
C. Workers' compensation insurance as required by applicable
D. If a Participant fails to procure and maintain such insurance,
NoaNet may, but shall not be required to, procure and maintain the same, but at the
expense of the applicable Participant.
E. Each Participant shall deliver to NoaNet, prior to
commencement of any Work on the project, a certificate of the insurance required
hereunder or the Award, as applicable. No policy shall be cancelable or subject to
reduction of coverage except after thirty (30) days prior written notice to NoaNet.
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8. Indemnity.
A. Each of the undersigned Participants "Indemnitor do hereby
agree, to the fullest extent permitted by law, to indemnify, defend and hold NoaNet,
and each of the -other Participants, and their members, directors, commissioners,
officers, employees, agents, and other representatives "Indemnitees harmless
from all claims, liabilities, damages, losses, and charges, including, without
limitation, attorneys' fees, costs and expert witness fees, arising from Participant's
performance or failure to perform the portion of the Grant and the terms and
conditions applicable thereto, pertaining to Participant's portion of the Project.
B. NoaNet hereby agrees, to the fullest extent permitted by law, to
indemnify, defend and hold Participant, and each of the other Participants, and their
members, directors, commissioners, officers, employees, agents, and other
representatives "Indemnitees harmless from all claims, liabilities, damages,
losses, and charges, including, without limitation, attorneys' fees, costs and expert
witness fees, arising from NoaNet's performance or failure to perform the portion of
the Grant and the terms and conditions applicable thereto, pertaining to NoaNet's
portion of the Project.
C. The Indemnity hereunder does not extend to losses resulting
from the sole negligence of the Indemnitees. With regard to any claim based on the
concurrent negligence of the Indemnitor, its agent or employee, and the indemnitee,
the Indemnitor's liability under this section shall apply to the full extent of the
negligence of the Indemnitor.
D. If any action or proceeding (including any appeal therefrom) is
brought against Indemnitee by reason of any claim described hereunder, Indemnitor,
upon notice from Indemnitee, shall defend the same at Indemnitor's expense by
counsel appointed by Indemnitor's insurance carrier (or other counsel reasonably
satisfactory to lndemnitee) and shall pay all other costs and expenses incident to the
defense of lndemnitee, including without limitation, reasonable attorneys' fees, costs
and expert witness fees.
E. Without limiting the foregoing, in any case, neither NoaNet nor
any of the Participants shall be liable to the other for consequential damages, lost
profits or punitive damages, regardless of the cause of loss or damage.
9. Assignment. In addition to any prohibition, restriction, limitation or
requirement of the Award or of Federal law, none of the rights, title or interest of
NoaNet or any of the Participants in this Agreement or in the Award, may be
assigned, transferred, sold or mortgaged without the prior written consent of NoaNet,
or in the case of an assignment by NoaNet, by all of the Participants.
10. Default. The occurrence of any one or more of the following events
shall constitute an Event of Default "Event of Default under this Agreement.
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A. The failure of NoaNet or a Participant to diligently and
continually proceed with and complete construction of the improvements in
accordance with the schedule approved by the Agency or, if there is no such
schedule, then in accordance with such schedule as will reasonably allow for
completion of the Party's portion of the work by the end of the term of the Grant.
B. The filing of a materialmen's lien against any of the property
which is to be improved with funds from the Award, and the applicable Party's failure
to obtain a release or post a bond or other security satisfactory to NoaNet within
twenty (20) days of the date the lien is filed.
C. The performance of any work pursuant to a material change
order without NoaNet's prior written approval and the approval of the Agency, if such
is required by the Award.
D. The failure to commence and diligently and continually pursue
any corrective work within fifteen (15) days of being required to do so by NoaNet or
the Agency pursuant to the terms and conditions of the Grant.
E. The failure of the Party to comply with the terms and conditions
of the Grant within the time period provided in the Grant, and if none, then within ten
(10) days of being notified of the violation in writing.
F. Any warranty or representation by a Party under this Agreement
that is materially false or inaccurate when given or at the time of any disbursement of
Grant proceeds.
G. The failure to perform any other covenant, agreement or
obligation under this Agreement or the Award if not cured within any applicable cure
period. If no cure period is otherwise specified, the cure period shall be within fifteen
(15) days after NoaNet's delivery of written demand to Participant.
H. The Party files a petition in bankruptcy or for an arrangement,
reorganization or any other form of debtor relief; or the petition is filed against the
Party, or any trustee of the Party, and the petition is not dismissed within forty -five
(45) days after filing.
I. A decree or order is entered for the appointment of a trustee,
receiver or liquidator of the Party and such decree or order is not vacated within forty
five (45) days after the date of entry.
J. The Party commences any proceeding for dissolution or
liquidation; or any such proceeding is commenced against the Party and the
proceedings are not dismissed within forty -five (45) days after the date of
commencement.
K. The Party makes an assignment for the benefit of its creditors,
or admits in writing of its inability to pay its debts generally as they become due.
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L. The attachment, execution or other judicial seizure of any
property of the Party and such seizure is not discharged within ten (10) days.
11. Inapplicability of Cure Periods. All cure periods provided in this
Agreement shall be inapplicable if the default is not capable of being cured within the
time allowed, or in NoaNet's reasonable judgment, a delay in NoaNet's enforcement
of its rights and remedies may result in a material impairment of NoaNet or the other
Participants from receiving their share of the Award or completing their share of the
work under the Award.
12. Remedies.
A. Right to Complete Construction. Upon the occurrence of an
Event of Default by a Participant, NoaNet shall have the right, in person or by agent
and in its own name or the name of Participant, to take possession of the
Participant's share of the Work and perform any and all work and labor necessary to
complete construction of the improvements in accordance with the Award and this
Agreement. Participant hereby irrevocably authorizes NoaNet (exercisable only after
an Event of Default) to complete the improvements in the name of Participant and to
(a) use the Grant funds and NoaNet's funds for the purpose of completing the
improvements; (b) make such additions, changes and corrections in the plans and
specifications and budget as NoaNet in its reasonable discretion deems desirable;
(c) employ such contractors, subcontracts, agents, architects and inspectors as shall
be required for such purposes; (d) pay, settle or compromise all bills and claims
which may be liens against the property (including those against any equipment that
is being acquired or improved pursuant to the Award) or as may be necessary or
desirable for the completion of the improvements, for operating the facilities pending
such completion, or for clearance of title; (e) execute all applications and certificates
in the name of Participant which may be required by any of the contract documents;
(f) prosecute and defend all actions or proceedings in connection with the property
being acquired or improved and take such action and require such performance as
NoaNet deems necessary with respect to any payment or performance bonds or
applicable guaranties; and (g) do any and every act which Participant might do in its
own behalf in order to complete the improvements pursuant to the Award. If NoaNet
advances its own funds to complete construction, Participant shall reimburse NoaNet
upon demand for such advances, together with interest at the default rate of twelve
(12 percent per annum. To the extent that NoaNet's employees spend time
performing or monitoring the performance of the Work under the subsection, then
NoaNet will also be entitled to be reimbursed for its time at reasonable rates, as
NoaNet may determine.
B. Right to Stop Payments. Upon the occurrence of an Event of
Default by a Participant, NoaNet shall have the right to withhold any further payments
to Participant until the Event of Default has been cured or the default has been
remedied by NoaNet and the expenses and damages incurred by NoaNet in
remedying the default have been reimbursed out of the funds being withheld or from
the Participant directly. NoaNet may use any portion of the funds being withheld to
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pay for the cost of completing the Work and performing any of the other actions as
described in Section 12.A above or obtaining insurance under Section 7.D.
C. Termination. Upon an Event of Default by a Participant, NoaNet
may, on thirty (30) days additional notice to the Participant, terminate Participant
from further participation in the Award and terminate that Participant's rights under
this Agreement, provided, however, that any such termination shall not alter or
alleviate any obligation or requirement of such Participant to meet all terms and
conditions of the Award, or release, modify or alter the Federal interest in the
Property, including any Property that forms any part of the Cash Contribution or In-
Kind Services such Participant has agreed to provide.
D. Default by NoaNet. Upon the occurrence of an Event of Default
by NoaNet that materially adversely affects the Participants, then, upon an
affirmative vote of two- thirds of the Participants (based upon their share of the
Award, disregarding NoaNet's share), the Participants shall have the right, subject to
applicable approval from the Agency, to appoint a new administrator (the "New
Administrator provided that the New Administrator is a Public Party. Upon that
event, the New Administrator will have all of the authority of NoaNet to administer the
Award and shall have the right in person or by agent and in its own name or the
name of NoaNet, to take possession of NoaNet's share of the Work and perform any
and all work and labor necessary to complete construction of the improvements in
accordance with the Award and this Agreement. NoaNet hereby irrevocably
authorizes New Administrator (exercisable only after an Event of Default) to complete
the improvements in the name of NoaNet and to (a) use the Grant funds and New
Administrator's funds for the purpose of completing the improvements; (b) make
such additions, changes and corrections in the plans and specifications and budget
as the New Administrator in its reasonable discretion deem desirable; (c) employ
such contractors, subcontracts, agents, architects and inspectors as shall be
required for such purposes; (d) pay, settle or compromise all bills and claims which
may be liens against the property (including those against any equipment that is
being acquired or improved pursuant to the Award) or as may be necessary or
desirable for the completion of the improvements, for operating the facilities pending
such completion, or for clearance of title; (e) execute all applications and certificates
in the name of NoaNet which may be required by any of the contract documents;
(f) prosecute and defend all actions or proceedings in connection with the property
being acquired or improved and take such action and require such performance as
the New Administrator deems necessary with respect to any payment or performance
bonds or applicable guaranties; and (g) do any and every act which NoaNet might do
in its own behalf in order to complete the improvements pursuant to the Award. If
the New Administrator advances its own funds to complete construction, NoaNet
shall reimburse the applicable New Administrator upon demand for such advances,
together with interest at the default rate of twelve (12 percent per annum. To the
extent that the New Administrator's employees spend time performing or monitoring
the performance of the Work under the subsection, then the New Administrator will
also be entitled to be reimbursed for its time at reasonable rates, as the New
Administrator may determine.
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E. Remedies Not Exclusive. No remedy conferred upon or
reserved to NoaNet herein shall be exclusive of any other remedy provided herein or
by law or in equity, and each shall be cumulative and shall be in addition to every
other remedy given NoaNet herein or now or hereafter existing at law or in equity or
by statute. NoaNet at its sole option, without limiting or affecting any rights and
remedies hereunder, may exercise any of the rights and remedies to which it may be
entitled hereunder concurrently or in such order as NoaNet may determine. The
exercise of any rights of NoaNet shall not in any way constitute a cure or waiver of an
Event of Default or invalidate any act done pursuant to any notice of default or
prejudice NoaNet in the exercise of any of its rights. No failure of NoaNet to enforce
its rights, remedies, or options shall be deemed to be a waiver of any such rights,
remedies or options.
13. No Partnership /Joint Venture. NoaNet and each of the Participants are
entering into this contract to facilitate independent work by each of the Parties. The
nature of the relationship among the Parties is contractual and this Agreement shall
not be construed as creating a joint venture or partnership. Instead, each Party
assumes its own risks and will be entitled to the benefits from its share of the work
contemplated by the Grant.
14. Representations.
A. NoaNet and each Participant hereby represents and warrants
that it has full power and authority to enter into and perform its obligations under this
Agreement and the Award and is duly and validly existing, and in good standing under
the laws of the State of Washington. For the purposes of this Agreement,
(the "Tribal Participant adopts the laws of the State of Washington
that pertain to the interpretation, performance, and enforcement of contracts and
commercial transactions.
B. The execution, delivery and performance of this Agreement by
the Party and the consummation of the transactions contemplated hereby have been
duly and effectively authorized by all necessary actions of the Party. This Agreement
has been duly and validly executed and delivered by the Party and constitutes the valid
and binding obligation of that Party, enforceable in accordance with its terms, subject to
(i) applicable bankruptcy, insolvency or other similar laws relating to creditors' rights
generally, and (ii) general principles of equity. Without limiting the foregoing, the Tribal
Participant expressly represents and warrants that its execution, delivery, and
performance of this Agreement have been duly and effectively authorized by its Tribal
Board of Directors or Council, as applicable, and no other tribal action is necessary,
including, without limitation, for the limited waiver of sovereign immunity set forth in
Section 18J. The Tribal Participant's Board of Directors' or Council's approval and
authorization of this Agreement and its adoption, for the purposes of this Agreement, of
the laws of the State of Washington that pertain to the interpretation, performance, and
enforcement of contracts and commercial transactions, shall be conclusively evidenced
by a written resolution of its Board of Directors or Council that is certified by the
Secretary of such Board of Directors or Council and provided to NoaNet within five (5)
days of such Tribal Participant's execution of this Agreement.
11 210384
C. The execution, delivery and performance by the applicable Party
of this Agreement and the consummation by that Party of the transactions
contemplated hereby will not (a) violate any provision of law, rule or regulation to which
the Party is subject, (b) violate any order, judgment or decree applicable to Each Party,
(c) constitute a breach of or a default under any constitutional, statutory or
administrative provision of the State of Washington applicable to such Party or any
judgment, decree, bond, note, resolution, indenture, contract or agreement or any
other instrument to which such Party is subject or bound, or (d) conflict with, or result
in a breach or default under, any term or condition of any agreement or other
instrument to which the Party is a party or by which the Party may be bound.
D. Each Party hereby represents and warrants that there is no
action, suit, proceeding, inquiry or investigation by or before any court, governmental
agency, public board or administrative body pending or threatened against such Party
that challenges, contests or questions the adoption or validity of the applicable
Party's decision to enter into this Agreement or to receive the Grant funds or do the
work contemplated by the Grant, that seeks to prohibit, restrain or enjoin such Party
from complying with this Agreement, that affects or questions the validity or
enforceability of this Agreement, or that challenges or affects the corporate existence
of such Party or the titles of its officers.
E. No warranty or representation by the Party contained in this
Agreement or in any writing furnished or to be furnished in connection with the Grant
hereto, contains or will contain any untrue statement of material fact or omits or will
omit to state any material facts required to make the statements herein contained
not misleading.
F. There is no litigation, proceeding, claim or investigation or other
legal or administrative proceeding (governmental or otherwise) pending or, to the
Party's actual knowledge, threatened against, by or relating to the Party, its assets,
business, or method of doing business that would preclude the Party from entering
into this Agreement or consummating the transactions contemplated by this
Agreement.
G. Each Party affirms that it has not been notified of any default
under any agreement or order, writ, injunction or decree of any governmental agency
or any court, to which it is a party or by which it is bound, and that Party is not aware
of any default by that Party under any of its contracts with governmental agencies.
H. During the past three (3) years, no contracts with a
governmental agency in which the Party was an active participant have been
terminated for cause relating to that Party.
15. Confidentiality. Each Party shall treat all information made available to
or disclosed to any other Party as a result of or related to this Agreement or the
Award which is either marked as confidential or is reasonably known by the Party to
contain confidential information, as confidential and shall not disclose or use such
confidential information for the benefit of any person other than the Parties. Without
12 210384
limiting the foregoing, the parties agree that any engineering data or formulas
exchanged between or among the parties will be deemed confidential information.
Further, each Party will receive such confidential information and use it for the sole
purpose of use in connection with the Work or the administration of the Award.
Except as required by law, each Party agrees not to disclose any such confidential
information to persons other than the Agency, or to employees, officers, directors,
attorneys or consultants who have a need to know this information and who will use
the information only for assisting that Party for the uses set forth herein. If a Party
that has received confidential information (the "Receiving Party is requested or
required to disclose any of the confidential information pursuant to law or legal
process, the Receiving Party will notify the Party from whom it received that
confidential information (the "Disclosing Party of such request or requirement as
soon as reasonably possible so that the Disclosing Party may, at its own expense,
pursue all available remedies to prevent such disclosure, including but not limited to,
a protective order. The Receiving Party shall cooperate with the Disclosing Party in
any attempt by the Disclosing Party to prevent such a disclosure and, if required to
disclose any of the confidential information despite attempts by the Disclosing Party
to prevent the same, will disclose only that part of the confidential information that it
is required to disclose. Regardless of the foregoing, however, if the confidential
information is subject to the public records law, Chapter 42.56 RCW, then the
Disclosing Party agrees to hold the Receiving Party harmless from any penalties,
attorneys' fees or costs that might be awarded to the applicable requesting party.
16. Further Services.
A. Services of NoaNet. NoaNet and each of the Participants have
discussed entering into agreements whereby NoaNet will provide certain services to
the Participants with respect to their facilities. These contracts may contain
provisions dealing, without limitation, with some or all of the following: procurement
of materials, equipment, and services; environmental studies; right -of- way /permit
acquisition; outside plant fiber plant design; construction management; facilities
maintenance; reporting requirements; compliance monitoring; payment application
recommendation; traffic planning; safety monitoring; construction monitoring and
reporting; and construction close -out. NoaNet and Participants agree to negotiate in
good faith towards any such agreements, but such agreements are not a condition to
this Agreement or to the Award. Regardless of the foregoing, a Participant may elect
not to negotiate such contracts with NoaNet.
B. Purchase and Use Agreements. NoaNet and each of the
Participants have discussed entering into future agreements whereby NoaNet will
purchase access to their respective telecommunication networks. NoaNet and
Participants agree to negotiate in good faith towards such agreements, but such
agreements are not a condition to this Agreement or to the Award.
17. Intellectual Property Rights. All reports, data, software, patents,
copyrights, trade secrets, trademarks or other intellectual property rights, or other
material given to, or prepared or assembled by a Party in connection with the Work or
the Award shall be and remain the property of the Party who prepared or otherwise
13 210384
owned the applicable reports, information, data or other intellectual property rights.
The Parties acknowledge, however, that these rights are subject to the Department's
rights in such intellectual property pursuant to 15 CFR 14.36 and 24.34, as
applicable, as well as those contained in Section M.04 of the Department of
Commerce Financial Assistance Standard Terms and Conditions, and the statutes
and rules incorporated therein.
18. General.
A. Entire Agreement. This Agreement sets forth the entire
agreement of the Parties and supersedes all prior agreements with respect to the
subject matter of this Agreement. Notwithstanding this provision, this Agreement is
not intended to be inconsistent with, nor to supersede, the terms of any other
agreement remaining in effect to which any Participant is a party.
B. Amendments. No change, amendment, or modification of any
provision of this Agreement shall be valid unless set forth in a written amendment to
this Agreement signed by all Parties.
C. No Unspecified Third Party Beneficiaries. There are no
unspecified third party beneficiaries of this Agreement.
D. Notices. All notices hereunder shall be in writing and shall be
deemed given: (a) on the date of delivery if delivered in person; (b) on the day after it
is placed with a nationally recognized overnight delivery service, such as FedEx or
UPS for delivery the next day; (c) three (3) days after the date deposited in the United
States mail if sent by registered or certified mail, postage prepaid; or (d) on the date
sent by electronically- confirmed facsimile or email transmission followed up with one
of the other delivery modes set forth herein. All such notices and communications
shall be properly addressed at the addresses below their signatures to this
Agreement, or to such other address as any Party may, in the future, designate in
writing.
E. Legal and Tax Review. NoaNet and each of the Participants
acknowledge that they have been advised by legal counsel regarding the legal
matters concerning this Agreement and by legal counsel and /or tax advisors
regarding the tax matters concerning this Agreement, and they have had a sufficient
opportunity to do so prior to execution hereof. Without limiting the foregoing, NoaNet
expressly disclaims any responsibility to provide legal advice to the Participants.
Each of the Participants further recognize that Gordon Thomas Honeywell LLP has
represented NoaNet and has not represented the Participants in this transaction.
F. Taxes. Each Party is responsible for determining what taxes the
Party will incur as a result of the transactions contemplated by this Agreement. Each
Party will pay their applicable taxes when such taxes are due.
G. Waiver. Except as otherwise provided in this Agreement, or as
agreed in writing by the Parties, no provision of this Agreement may be waived except
14 210384
as documented or confirmed in writing. Any waiver at any time by a Party of its right
with respect to a default under this Agreement, or with respect to any other matter
arising in connection therewith, shall not be deemed a waiver with respect to any
subsequent default or matter.
H. Headings. The headings in this Agreement are for convenience
only and do not in any way limit or affect the terms and provisions of this Agreement.
I. Governing Law. This Agreement shall be governed by and
interpreted in accordance with the laws of the State of Washington.
J. Venue/ Jurisdiction /Limited Waiver of Sovereign Immunity.
i. The Parties (other than the Tribal Participant) consent to
the personal jurisdiction of the courts of the State of Washington and the United
States District Court for the Western District or Eastern District of Washington with
respect to any lawsuit to interpret or enforce this Agreement, and agree that the
venue of any such lawsuit shall be King County, Washington or such United States
District Court unless otherwise agreed by such Parties.
ii. The Tribal Participant acknowledges and agrees that, in
entering into this Agreement, it may incur obligations to the other Parties and their
successors and assigns. The Tribal Participant further acknowledges that the other
Parties would not enter into this Agreement with the Tribal Participant if the Tribal
Participant could defeat enforcement of the Agreement against it by claiming or
asserting sovereign immunity from any action brought against it by any other Party
arising from this Agreement. The Tribal Participant expressly and irrevocably
consents to the personal jurisdiction of the United States District Court for the
Western District or Eastern District of Washington with respect to any lawsuit to
interpret or enforce this Agreement, and agrees that the venue of any such lawsuit
shall be such United States District Court. The Tribal Participant expressly and
irrevocably waives its sovereign immunity on a limited basis to make this Agreement
enforceable by any other Party and their successors and assigns in the United States
District Court for the Western District or Eastern District of Washington as provided
herein and to waive any requirement for exhaustion of tribal remedies and
jurisdiction in the tribal court of the Tribal Participant.
iii. The consents to jurisdiction and venue, and the limited
waiver of sovereign immunity, set forth in this Section 18J shall also apply to review
in any appellate court with jurisdiction over the applicable trial court decision.
K. Attorneys' Fees. In the event any Party to this Agreement finds
it necessary to bring any suit, action, or other proceeding at law or in equity to
interpret, enforce, or implement any of the terms, covenants, or conditions of this
Agreement, the Party prevailing in such action or proceeding shall be paid all of its
reasonable attorneys' fees, costs and expert witness fees by the losing Party or
Parties. If there is no prevailing party, the Parties to the dispute shall each bear their
own attorneys' fees and costs.
15 210384
L. Severability. If any term, covenant, or condition of this
Agreement is held to be invalid or unenforceable in any respect, such invalidity or
unenforceability shall not affect any other provision hereof and this Agreement shall
be construed as if such invalid or unenforceable provision had never been contained
in this Agreement.
M. Signature Clause. Each Party to this Agreement represents that
it has the authority to execute this Agreement and that it has been duly authorized to
enter into this Agreement. Without limiting the foregoing, each of the Tribal
Participants further expressly reaffirms its representations and warranties set forth in
Section 14 of this Agreement.
N. Counterparts. This Agreement may be executed in one or more
counterparts, and each shall be considered an original when the signatures of each
of the Parties has been obtained.
0. Effective Date. This Agreement shall be effective as of the date
first above written.
Northwest Open Access Network, a
Washington nonprofit mutual corporation
By: By:
Its: 1 Its:
Address: Address:
By: By:
Its: Its:
Address: Address:
By: By:
Its: Its:
16 210384
1
Address: Address:
By: By:
Its: Its:
Address: Address:
17 210384
EXHIBITS
Exhibit A Financial Assistance Award
Exhibit B Award Budget
Exhibit C Letter of 05/07/2011 re In -Kind Services
Exhibit D 74 FR 31410 (7/1/09)
Exhibit E Covenant of Purpose, Use and Ownership
Exhibits F -N Description of Work by NoaNet and the Participants
18 210384
N
FORM CD-450
(REV 01 /09)
U S DEPARTMENT OF COMMERCE
FINANCIAL ASSISTANCE AWARD
AGREEMENT
GRANT COOPERATIVE
AWARD NUMBER
NT1OBIX5570111
RECIPIENT NAME Northwest Open Access Network
STREET ADDRESS
FEDERAL SHARE OF COST
5802 Overlook Avenue NE
$54,452,347.00
CITY, STATE, ZIP CODE
98422
RECIPIENT SHARE OF COST
Tacoma WA -1435
$23,546,554.00
AWARD PERIOD
08/01/2010-07/31/2013
TOTAL ESTIMATED COST
$77,998,901.00
AUTHORITY The American Recovery and Reinvestment Act of 2009, Pub. L. 111 -5 (2009)
CFDA NO AND PROJECT TITLE
11.557 Recovery Act State of Washington Broadband Consortium
This award offer approved by the Grants Officer constitutes an obligation of Federal funding By accepting this award offer, the Recipient agrees to
comply with the award Terms and Conditions checked below. If this was a paper issued award offer, please send two signed documents to the Grants
Officer and retain one set of signed award documents for your files If this award offer is not accepted without modification within 30 days of receipt, the
Grants Officer may unilaterally withdraw this award offer and de- obligate the funds
MI Department of Commerce Financial Assistance Standard Terms and Conditions
Government Wide Research Terms and Conditions
Bureau Specific Administrative Standard Award Conditions
MI Award Specific Special Award Conditions
MI Line Item Budget
15 CFR Part 14, Uniform Administrative Requirements for Grants and Agreements
with Institutions of Higher Education, Hospitals, Other
Non Profit, Commercial Organizations
and
15 CFR Part 24, Uniform Administrative Requirements for Grants and Agreements to States and Local Govemments
OMB Circular A -21, Cost Principles for Educational Institutions
OMB Circular A -87, Cost Pnnciples for State, Local, and Indian Tribal Govemments
Q OMB Circular A -122, Cost Principles for Non Profit Organizations
48 CFR Part 31, Contract Cost Pnnciples and Procedures
Organizations
p OMB Circular A -133, Audits of States, Local Governments, and Non Profit
Department of Commerce Pre -Award Notification Requirements for Grants
and Cooperative Agreements
REF. 73 FR 7696 (February I I, 2008)
E3 Other(s)
Department of Commerce American Recovery and Reinvestment Act Award Terms:
75 FR 3792 January 22, 2010
SIGNATURE OF DEPARTMENT OF COMMERCE GRANTS OFFICER
TITLE
DATE
Sonja Wyatt
Grants Officer
07/29/2010
TYP E AN SIGNATURE OF AUTHORIZED RECIPIENT OFFICIAL
TITLE
DATE
/V
C 14-y l
0t a7/2.0
EXHIBIT A
1 of 21
EXHIBIT B
2of21
.BTOP Award Bu get
Budget
In -Kind Match
Cash Match
Total Match
Grant Request
Total Budget
75,307,089
14,639,697
6,215,045
20,854,742
54,452,347
NoaNet
39,095,607
2,480,071
124,974
2,605,045
36,490,562
Jefferson PUD
5,752,376
2,120,797
2,120,797
3,631,579
Kitsap PUD
8,514,741
5,080,238
302,569
5,382,807
3,131,934
Okanogan PUD
2,304,735
2,304,735
2,304,735
Pend Oreille
1,074,995
741,209
333,786
1,074,995
City of Port Angeles
3,655,765
1,096,729
1,096,729
2,559,036
Black Rock Cable
4,437,246
1,331,174
1,331,174
3,106,072
Tulalip Tribe WA -RBC
SawNet/Clark
1,310,975
205,000
95,000
300,000
1,010,975
ESD -105
Benton PUD
5,439,252
1,602,307
348,813
1,951,120
3,488,132
Kalispel Tribe
184,403
55,340
55,340
129,063
Stevens PUD
1,234,994
50,000
280,000
330,000
904,994
Application Prep support
802,000
802,000
802,000
Gates Foundation
1,500,000
1,500,000
1,500,000
Awarded 8/18/10
75,307,089
14,639,697
6,215,045
20,854,742
54,452,347
EXHIBIT B
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July 7, 2011
EXHIBIT C
&Noaffet.
Ms. Jean Rice, Federal Program Officer
DEPARTMENT OF COMMERCE
National Telecommunications and Information Administration
Broadband Technologies Opportunities Program (BTOP)
RIN: 0660 -ZA28
RE: BTOP 2 In -Kind Contributions of NoaNet, SawNet, Kalispell Tribe and Kitsap, Okanogan, Pend
Oreille, Benton, Jefferson and Stevens PUD's
Dear Ms. Rice:
Northwest Open Access Network (NoaNet) is the lead agency in the BTOP 2 grant awarded by the
National Telecommunications and Information Administration. NoaNet is participating as the project
lead and owner of fiber infrastructure and electronics across the State of Washington. The purpose of
this memo is to update the May 25, 2010 in -kind contributions memo submitted during due diligence
on BTOP round 2. The in -kind values reflected in this memo are based on a May 31, 2011 valuation
date.
In addition to NoaNet, four NoaNet investor members are contributing in -kind assets to the project.
These are the public utility districts (PUD's) of Benton, Okanogan, Pend Oreille and Kitsap Counties.
Like NoaNet, these PUD's have existing networks that contain middle mile segments that will be
utilized in implementation of the grant. In addition, Jefferson County, Sawtooth Technologies,
Stevens PUD and the Kalispell Tribe are contributing in -kind assets. In -kind depreciated capital assets
of NoaNet and these contributors will be utilized for successful project implementation.
In Kind Contribution Methodology
In determining eligible in -kind contributions for the grant application, NoaNet and the contributors
analyzed what portions of their existing network capital assets were impacted by middle mile builds
anticipated in the grant application. These assets are impacted because they are buildings, network
equipment and outside plant necessary to connect and integrate the new construction into the existing
networks. Only those existing eligible network assets that were required for connecting the new
network segments into NoaNet and member networks were selected. These middle mile assets do not
include customer drops or laterals, or other access technologies such as wireless access points.
For NoaNet and each contributor, existing network capital assets were reviewed for inclusion as
eligible in -kind contributions. Once selected as necessary for the successful implementation of the
project, the depreciated value of these assets were included as in -kind contributions. The depreciation
schedules used are according to GAAP. The assets were classified as networking equipment, outside
plant and buildings. Table 1 below summarizes the depreciated assets utilized by each contributor:
Financial address: 616 State Street, Centralia, WA 98531 Business address: 5802 Overlook Ave NE, Tacoma, Wa 98422
Telephone 206.219.3640 cellular 509.669.1742 e -mail gmarney[;}a,noanet.net www.noanet.net
3of21
Participant Detailed Budget Category Depreciated Value
NoaNet
Kitsap
Okanogan
Pend Oreille
Benton
Kalispell
,4?Ioaffet.
Network and Access Equipment $1,895,102
Buildings $584,969
Total $2,480,071
Network and Access Equipment $614,386
Outside Plant $4,268,532
Buildings $197,320
Total $5,080,238
Network and Access Equipment $372,872
Outside Plant $1,486,234
Buildings $445,629
Total $2,304,735
Network and Access Equipment $581,970
Buildings $165,289
Subtotal 4/30/11 $747,259
Total 5131111 (est.) $741,209
Outside Plant $1,602,307
Total $1,602,307
Jefferson Network and Access $510,636
County Equipment
Buildings and Structures $1,610,161
Total $2,120,797
Sawtooth Network and Access $65,000
Technologies Equipment
Outside Plant $105,000
Buildings $35,000
Total $205,000
Stevens PUD Buildings $50,000
Total $50,000
Network and Access
Equipment
Buildings
Total
Table 1
Financial address 616 State Street, Centralia, WA 98531 Business address: 5802 Overlook Ave NE, Tacoma, Wa 98422
Telephone: 206.219.3640 cellular: 509.669.1742 e -mail gmarnev�a,noanet.net www.noanet.net
4 of 21
$45,200
$10,140
$55,340
&NoaNeL
OireisAiiiii
The in -kind assets utilized by NoaNet and each contributor are described as follows:
NoaNet In Kind Contributions
NoaNet operates a sustainable wholesale open access interexchange network with over thirty points of
presence (PoP's) across Washington State, mainly in underserved areas. The grant funds from this
application will extend NoaNet infrastructure into those areas of the State where wholesale open access
PoP's currently do not exist. As part of the grant, NoaNet will create new open access wholesale PoP's
that tie into the existing network. This extension of the current network leverages the existing network
infrastructure to be able to deliver advanced services to these underserved areas. NoaNet is an
established wholesale carrier with a strong track record of providing carrier class high capacity
services. Existing operations, engineering, sales and administration resources will be utilized at the
onset of the grant funding to successfully implement and sustain broadband operations in these hard to
reach areas.
In determining capital assets utilized on the existing network, NoaNet created a list of existing points
of presence PoP's) impacted the network builds associated with the grant application. There are
thirty-two PoP's impacted by the grant.
Next, the capital asset value of the applicable equipment and structures associated with these PoP's
were retrieved from NoaNet's asset management system. Outside plant and fiber optic cable were not
considered capital assets for the purpose of the grant application. NoaNet has long -term (i.e. 20 year)
fiber optic leases and IRU's utilized by the grant that were not allocable for inclusion in the grant
application as in -kind contributions although the project still receives the benefit of these leases. Once
the relevant capital assets were determined, the depreciated value associated with these assets was
assigned for inclusion as in -kind contributions. Appendix 1 shows the PoP's utilized and their
associated assets as well as a summary of the types of eligible capital assets. The total in -kind
contribution by NoaNet is $2,480,071.
Kitsap PUD In Kind Contributions
Kitsap PUD is a named sub recipient and member investor in NoaNet. Kitsap has extensive middle
mile infrastructure utilized by the network extensions anticipated in the grant application. Kitsap
utilized only those assets related to the middle mile backbone which extends from the NoaNet PoP in
Bremerton. All service drops, laterals and wireless access points have been removed. Appendix 2
shows the Kitsap PUD network assets utilized in the BTOP project and the depreciated value utilized
as in -kind contributions as well as a summary of the types of eligible capital assets. The total in -kind
contribution by Kitsap is $5,080,238.
Okanogan PUD In Kind Contributions
Okanogan PUD is a third party contributor and member investor in NoaNet. Okanogan has middle
mile infrastructure utilized by the network extensions anticipated in the grant application. This middle
Financial address: 616 State Street, Centralia, WA 98531 Business address 5802 Overlook Ave NE, Tacoma, Wa 98422
Telephone: 206.219.3640 cellular. 509.669.1742 e -mail gmarnev@noanet.net www.noanet.net
5 of 21
J1.•: Northwest Open Acme Aktwork
111onNeto
mile infrastructure extends from the NoaNet Poi' in Bridgeport to Tonasket, which is the start of new
construction in Okanogan County. Okanogan retrieved all network assets and determined which
network assets were to be utilized by the project. By going through each set of assets, Okanogan
created the depreciated values shown in Appendix 3 relevant to the BTOP construction project as well
as a summary of the types of eligible capital assets. The total in -kind contribution by Okanogan is
$2,304,735.
Pend Oreille PUD In -Kind Contributions
Pend Oreille PUD is a third party contributor and member investor in NoaNet. Pend Oreille has
middle mile infrastructure utilized by the network extensions anticipated in the grant application. Pend
Oreille utilized only those assets related to the middle mile backbone which benefits this project. Pend
Oreille created the depreciated values shown in Appendix 4 relevant to the BTOP construction project
as well as a summary of the types of eligible capital assets. These values are for April 30, 2011. The
total in -kind contribution by Pend Oreille is estimated for May 31, 2011 to be $741,209.
Benton PUD In -Kind Contributions
Benton PUD is a named sub recipient and member investor in NoaNet. Benton has extensive middle
mile infrastructure utilized by the network extensions anticipated in the grant application. Benton has
constructed an extensive core backbone network through the City of Kennewick to where construction
begins on the BTOP 2 routes. Benton has also built out to the NoaNet point of presence in Franklin
County south of Pasco thereby linking the new anchor institutions back to the NoaNet network.
Benton identified fiber optic assets to be utilized by the project and determined the depreciated value
as shown in Appendix 5. The total in -kind contribution by Benton is $1,602,307.
Jefferson PUD County In -Kind Contributions
Jefferson is a third party contributor in the grant application. Jefferson is providing an eligible in -kind
contribution of new network equipment and buildings necessary for deployment of the project in
Jefferson County. The fair market values of this in -kind contribution are shown in Appendix 6
relevant to the BTOP construction project as well as the list of eligible assets. The total value of this
contribution is $2,120,797 and is anticipated to be booked to the project on or before October 1, 2011.
Sawtooth Technologies (SawNet) In -Kind Contributions
SawNet is a named sub recipient in the grant application. SawNet is providing an eligible in -kind
contribution of capitalized labor and rights of way related to network equipment, outside plant, and
buildings. Engineering design, construction management and easements are contributed at actual cost.
The total value of this contribution is $205,000.
Stevens PUD (Stevens) In -Kind Contributions
Stevens is a named sub recipient in the grant application. Stevens is providing an eligible in -kind
contribution of buildings. The total value of this contribution is $50,000.
Financial address 616 State Street, Centralia, WA 98531 Business address 5802 Overlook Ave NE, Tacoma, Wa 98422
Telephone 206.219.3640 cellular. 509.669.1742 e -mail gmarnev(&,noanet.net www.noanet.net
6 of21
Kalispell Tribe of Indians (Kalispell) In -Kind Contributions
The Kalispell Tribe is a named sub recipient in the grant application. The Tribe is providing an
eligible in -kind contribution of capitalized labor related to network equipment and buildings.
Engineering design, grant administration, and project management are contributed at actual cost. The
total value of this contribution is $55,340.
Conclusion
In conclusion, the in -kind contributions to the project total $14,639,697 from NoaNet, Jefferson
County, SawNet, the Kalispell Tribe and Kitsap, Okanogan, Pend Oreille, Benton, and Stevens PUD's.
NoaNet and the member networks included only those capital assets to be utilized in the grant.
Relevant structures, equipment and outside plant asset were identified and depreciated to reflect
current value according the standard depreciation schedules. The depreciated values were then
included as in -kind contributions. The use of NoaNet and member network depreciated capital assets
as well as in -kind contributions from Jefferson County, SawNet, the Kalispell Tribe and Stevens
PUD's serves as the foundation for the BTOP 2 project and enables more cost effective construction to
reach unserved and underserved areas of Washington State.
Sincerely,
Dave Spencer, COO/Treasurer
Northwest Open Access Network
,4ffoaffet.
Financial address: 616 State Street, Centralia, WA 98531 Business address: 5802 Overlook Ave NE, Tacoma, Wa 98422
Telephone 206.219.3640 cellular. 509.669.1742 e -mail gmarney(&,,noanet.net www.noanet.net
7of21
Appendix 1 Existing NoaNet Assets Utilized for BTOP 2 Project
PoP Location Address
1115 Washington St SE Room 25 Olympia, WA 98504
116 E. K St. Shelton, WA 98584
1178 Harbor Reach Dr Mukilteo, WA 98275
1301 Grove St Between Cedar Av Marysville, WA 98207
13294 Lincoln Park Road E Wenatchee, WA 98802
1431 NW Finn Hill Rd, Poulsbo, WA
1911 C St Bellingham, WA 98225
2.9 Miles West Of Hwy 240 Near Vernita Bridge Vernita, WA
2001 6th Ave Suite 3425 Floor 34 Seattle, WA 98121
20420 68th Ave West Lynnwood, WA 98036 -740
21341 E State Rte 3, Belfair, WA
22 Pasco Kahlotus Road Pasco, WA 99301
22752 Hwy 174 East Grand Coulee, WA 99133
2450 State Route 17 NE Bridgeport, WA 98813
2720 Sumner Ave Aberdeen, WA 98520
323 E. Fairhaven Avenue Burlington, WA 98233
401 Kirkland Parkplace Ste 313 Kirkland, WA 98801
405 Duryea St, Raymond, WA
422 West Riverside Spokane, WA
43411 SE North Bend Way North Bend, WA 98045
4519 SE Mile Hill Drive Port Orchard, WA 98366
471 Lambert Road Elma, WA 98541
48 BPA Substation Road Rock Island, WA 98850
5411NE Hwy 99 Vancouver, WA 98663
5420 Trosper St. Olympia, WA 98502
725 E. First St Port Angeles, WA 98362
7733 184th St NW Stanwood, WA 98292
802 Park Ave Bremerton, WA 98337
8102 Skansie Ave Switch Room Gig Harbor, WA 98332
8531 Bittner Road Yakima, WA 98901
921 SW Washington St Suite 350 -Turn L,2nd Cage R MMR T -250 Portland, OR 97205
McDougall 35th Street Everett, WA 98208
Asset Totals
Depreciated Value of BTOP 2 Assets
8of21
County
Thurston
Mason
Snohomish
Snohomish
Douglas
Kitsap
Whatcom
Benton
King
Snohomish
Mason
Franklin
Grant
Douglas
Grays Harbor
Skagit
King
Pacific
Spokane
King
Kitsap
Grays Harbor
Douglas
Clark
Thurston
Clallam
Snohomish
Kitsap
Pierce
Yakima
Multnomah
Snohomish
Equipment Structures Total
28,559.00 28,559.00
467,469.39 467,469.39
77,890.00 77,890.00
7,194.00 7,194.00
26,693.15 26,693.15
47,442.00 47,442.00
7,194.00 7,194.00
211,256.00 211,256.00
259,648.88 259,648.88
1,407.00 1,407.00
56,090.00 56,090.00
27,429.06 27,429.06
202,563.00 3,755.00 206,318.00
221,406.00 176,235.00 397,641.00
43,833.00 43,833.00
7,194.00 7,194.00
63,444.12 63,444.12
29,147.62 29,147.62
309,341.56 309,341.56
122,110.69 122,110.69
88,166.72 88,166.72
6,567.00 6,567.00
151,474.82 151,474.82
64,751.99 64,751.99
381,216.28 381,216.28
79, 263.43 79, 263.43
126,934.50 126,934.50
170,952.17 170,952.17
73,614.00 73,614.00
112, 214.51 112, 214.51
321,957.97 895,973.53 1,217,931.50
35,970.00 35,970.00
3,830,395.85 1,075,963.53 4,906,359.38
1,895,101.54 584,969.24 2,480,070.79
Appendix 1: NoaNet In -Kind Eligible
Buildings
Direct Capital Construction Costs
Andrew Hut 10x20 Original
Hut Generator and Tank
Capital Asset Summary
Networking and Access Equipment
Direct Capital Installation and Testing Costs
Cisco 15454
Argus DC Plant 600 AMP
Argus Rectifier
AODM Filter
OADMFILTER
XPRS2SheIf
Adva R7 Shelf 7HU w/ SCU w/ PSU
AIP
Fan Tray
ETH1000
OC48 Card
OC12 Card
TCC Card
AUXShelf
CoolingUnit
XPRS2SheIf
XPRS2SheIf
Adva RayExpressll
Cisco GSR chassis
8FE- FX -SC -B
GE- GBIC -SC -B
PWR- GSR12 -DC
PWR- GSR12 -DC
4OC3 /ATM -IR -SC
GSR12 -SFC
GE- GBIC -SC -B
OC12 /SRP- IR -SC -B
WS- C4507R
AUXILIARY CARD, ROADM
Integrated Line Amp -1
Power Supply Module /PM
SHELF ASSY, 1U, DCM, LC -UPC, S
EXTERNAL WAVELENGTH MODULE
ADAPTER, ID, MDM, SINGLE
9of21
GNB 12VDC 155 AH Battery
Environmental Control SL 81
IP Camera
Delta DC Plant 400 AMP
Environmental Control SL 60
POWER- FILTER A, RAYexpress 11
SHELF PROCESSOR, UNIV, CC, RE
XCVR, XFP,MR,SM, 11.1 Gb /s, 131
XPDR MTHBD,10G LAN/WAN /OTU -2,
ML1000
8FE- TX- RJ45 -B
Ciena Corestream Channel Shelf
WS -X4515
WS- X4418 -GB
WS- X4306 -GB
WS- C2950G- 24 -EI -DC
WS- C3550- 24- DC -SMI
WS- C3750G- 12S -SD
ME- C3750- 24TE -MA
ME- 3400G- 12CS -A
SHELF ASSY, 40 L MDM W /ID,AAWG
OPTICAL COUPLER /SPLITTER (OCS)
OLD,ULR, 3020 EDFA, MSA
POWER- FILTER A, RAYexpress II
FAN TRAY, RAYexpress II
UTILITY CARD, RAYexpress II
XCVR, SFP, MULTI -RATE, SM, 131
SIM MTHBD, DATA MUX, 2 PORT
XPDR MTHBD,10G LAN/WAN /OTU -2,
XPDR,2.5G,CH2O -59, 3R,DML,SR,R
XPDR PROTECTION MODULE,SM, 131
OC192 Card
I
I
Appendix 2: Kitsap PUD
Fixed Assets by
Account Number
Original
Account Number Description Cost
Accumulated Depr
as of 5/31/11
Net Book Value
as of 5/31/11
4 -00- 10127 -0 -0 TELECOM. ELECTRONIC EQUIPMENT 1,072,101.63 739,525.10 332,576.53
4 -00- 10128 -0 -0 POLES, TOWERS FIXTURES 109,421.95 964.72 401.97
4 -00- 10129 -0 -0 FIBER SYSTEMS 6,558,460.01 2,254,976.12 4,268,532.43
4 -00- 10131 -0 -0 SERVICES/TELCOM 335,993.74 66,949.60 269,044.14
4 -00- 10132 -0 -0 PLANT BUILDING/TELECOM 249,053.01 51,733.04 197,319.98
4 -00- 10133 -0 -0 COMMUNICATION EXP /TELECOM 28,695.58 23,349.82 5,345.76
4 -00- 10134 -0 -0 COMPUTER/TELECOM 29,005.97 21,989.18 7,016.79
10 of 21
8,382,731.89 3,159,487.57 5,080,237.59
Appendix 2: Kitsap PUD
'TELECOM ELECTRONIC EQUIPMENT
Fiber Optic Equipment Racks for Telecom
Transceiver/Laser/GBIC
Uninterruptible Power Supply
Network Sonet Cables Fiber
Pavis Site Monitoring Electronic Hardware
ElectncalLeadAcidGelElectrolyteBatteries
CiscoSoftwareforTelecom (CiscoWorksLanMgmt2 OWIN /SO
Catalyst 6509
Catalyst 6000 16 -port Gig -E
Catalyst 6000 48 -port 10/100
4 Port Gigabit Ethernet
OC12, IR, 1310 Card
Media Converter for Telecom
Power Cord, Catalysts, Software Support
DCPowerSystem -AEON AM 2 48/400
15454 NEBS3 Chassis
Shelf Fan Tray
Alarm Interface Control
Timing Communications Control Plus
XC 10G Card
OC48 Cards
48VDCPowerSupply System Card
Management Module for Telecom
48V Ext Battery Pack, Smart Pro Rack, Rails Etc
Catalysts,Cat4500 E- Senesl0- SlotChassis,PwrSupply
HSP 48 -21 R Power Supply w /Kit Cord &37Pos D -Conn
Port Curing Oven for making Fiber Termination
Radio Gear Wireless and Software
Catalyst 3560,Rackmount,& 100 Base -LXSFP
Power Strips
Agi lent ToolKit III for Fiber Testing
3550's and Software
10/100 Cards for Fiber Backbone
Virtual Private Network Security Device
Telecom Tools -Fiber Identifiers
Catalyst 3750 12SFP Standard Multilayer Image
KVM Switch for Bremerton Hut
Catalyst 6000 16 -port Gig -E
OC12 -4 Network Interface Card
Cisco Switch 3548 48 Port for Telecom
SNMP Toolkit for Labview (Software)
900Mhz Radio System
'TELECOM ELECTRONIC EQUIPMENT (continued)
SPerry power Edge R200 Computer Server
(2)NoyesPower meters w/ light source testing tool
Hand Design Connector Cleaner
Handheld Interregators
JDSU FBP -S303 Probe Kits
Noyes M200 Handheld OTDR
Pressure and Level Transmitter
Meter Registers for Souce Meters
Etherlogic Controller,UPSupply
Water Meter Register
Copper Wire, Connectors Trace Wire
Etherlogic Controller Port
Operator InterfaceTermmal,Ether LC Controller
Transducer
'POLES, TOWERS FIXTURES
Antennas Cable for Wireless Equipment
Fiber Optics Cabinet
Wall Rack Mt Patch Panel for Telecom
PSG Wattmeter Set for Wireless Project
Poles, Towers Fixtures for Pine Street
Telecom Switch WS- C2960- 24TC- L,WS -G5486 GLC -LH -S
(SERVICES /TELCOM
Access Kit, Card Kit, Adapter, Transmitter
Cable Assembly, Kit Cables &Power Supply
Wall Mount Duplex Panel for FiberOptic
High Density Rack Mt Panel,Sglmode Simplex 900um
CPE Mounting Brackets for Racks
Fiber Pigtails Jumper Cables
Customer Premise Switches Power Supplies
Standard Integrated FP Antenna for Bridge
Wireless ATF Site Cable Assembly /Amplifier
Catalyst 6500,16 PortageMod,
Software License Maintenance
'PLANT BUILDING/TELECOM
Labor Materials for Small Fiber Jobs
Bremerton Telecom Hut
Building Plant for Olhava /Pilot Project
11 of 21
(FIBER SYSTEMS
Fiber Hardware (Deadends)
Meter 900 Micron Pigtail
OVST Fiber
Heat Shrink Protectors -Fiber
Snap Around Marker /PVC
500' Roll of Tracing Wire for Telecom
Fiber Splice Case Hardware
Micro Conduit Splice /Storage Case
Aenal Fiber Work Parts
PVC Pipe
7 Meter Fiber Cable Assembly
Fiber Meter
SL RealChat Enterprise Edition, Unlimited Users
6 Fiber Singlemode Cable
Serialized Cable
Fiber Storage Splice Trays Hanger
144 Strand Fiber Optic Cable(240,000 ft)for Phasel
24 Strand Fiber Optic Cable
DeadendSupports, Storage Assembly Mounts
Fiber Cable Hardware Preformed
Figure 8 Aerial Duct
Fiber Pole Attachment Hardware
Fiber Vaults
Climate Control Enclosure /Mounting Pad
Underground Fiber Markers
Fusion Splicer Kit for Fiber Optic Cable
Emergency RepairKit -Fiber Terminations
Fiber Termination Connector
Fiber Splicer
Materials for Telecoms new Services
'COMMUNICATION EXP/TELECOM
Network 24 Port Switches
Network Interface Cards for Noanet
300 ft of RG59 Cable Telecom SOL Hardware
'COMPUTER /TELECOM
Laptops
Server
Roger Mills Building
Brewster Node Room
Fiber backbone Brew- Oroville
Network Hardware
Fiber Make Ready -Pole Fiber attach
1
Buildings
1
APW cabinets
Panel, patch panel
Fire protection system
capital construction remodeling costs
Security control system
Generator transfer switch
I
Fiber backbone
1
Engineering services
fiber optic cable
coyote closure kit, splice tray kit
fiberglass conduit, sweep
fiberlign dielect deadend
Okanogan County PUD In -Kind Contribution for NoaNet Grant 5376
As of May 2011
Appendix 3
ACCUM
PLANT VALUE DEPR
522,970.68
39,053.79
2,665,267.11
1,443,272.86
226,607.96
4,897,172.40 2,228,561.01
i
COMMUNICATIONS NETWORK GEAR
i
Power engineers professional services fibe
EES Consulting professional services
Howe attorney
Distribution panel pigtail rack
Rack mount panel
12 outdoor loose cable
Modular power cables
APW cabinet
Stationlink, cable
Concrete anchor floor
black rack
multilink two bay otn cabinet
48VDV Power
patch cord duplex meters
Two bay otn cabinets
antenna kit, supply unit
APW frame, side panels
fiber rack parts
Housed generator set
Simplex SM duplex, pigtail
fiber optic pads
Flame retardant batter
black panels
port patch panels
surge protectors
power links
12 of 21
108,178.34
8,216.82
988,417 54
1,070,401.11
53,347.20
Percentage
Attributed
100.0%
100.0%
78.3%
100.0%
100 0%
NET PLANT
VALUE
Patch cord duplex, panel 48 racks
relay panel inverter
network equipment installation
Patch cabinet, patch cord
ID grommet, diffuser
414,792.34
30,836.97
1,312,973.21
372,871.75
173,260 76
2,304,735.03
Optical power meters
Onsite installation &consulting services
Norte) equipment
Best power UPS
50 KM GBIC
Sonet Test set
Multifiber pigtail
media Converter chassis
passport routing switching module
GBIC baystock
Passport 8000 series, maintenance
contivity connection, RPR test setup
Inverters faceplates
power plant
Flame retardant batter
interface
configured bay and shelf equipment
pioneer cabinet, doors, latch
switch router SNMP setup
single mode media converter
tributary card
Total Optical Mileage 82.1 Miles
Brewster to Tonasket Optical Miles 64.3 Miles
in -kind contribution: 78.3%
Asset Description
397.01 Communication General
397.02 Communication Building
397.03 Communication Fiber Optic
397.04 Communication Electronics
1 Communication General
1
Fiber Optic Tools and Equipment
OTDR/LAN -WAN Tester
Cable Management Hardware
CNS Network Engineering and Deployment
Calispel Power Plant Communications
Cellular Tower
Hand Held Ethernet Tester Loopback
Communication Building
I
Comm Buildings Box, Cusick, Pine Subs
CERB Project
Fiber KQQB Radio
Cellular Tower
(Communication Fiber Optic
1
OPGW T Line Newport to Box C
Communication Buildings Cabling
Fiber Optic Deployment
Fiber Cutover
Geophysical Observatory
Cable Management Hardware
Network Electronics
Appendix 4: NoaNet BTOP Round 2
Pend Oreille PUD
In -Kind Match
4/30/2011
Totals
Capitalized
Cost
239,313 39
4,061,638 39 1,488,145 94
5,324,878.40 1,702,374.57
1Communication Electronics
Vaagen Bros Ext 07 -12 -106 Fiber
Optical Transport System
Fiber Optic Tools
Cable Management Hardware
Network Tools and Electronics
Communication Hut Trial
Gateway Units
Video Secunty System
Network Telephony
Wireless Deployment
Cellular Tower
Cable Tester
Handheld GPS
Cisco Port SFP Module
Fluxlights (5)
Cisco WS C2960
T1 Boxes
Catalyst POE
Transition Network
13 of 21
462,753 58
561,17304 71,80014
In Kind Bal In Kind 4/30/11
Depreciate Book -Value
19,777 13 5,092 23
122,651 36
165,288 56
516,415 36
60,463 27
747,259.42
Appendix 5: Benton PUD
Benton PUD In Kind Contributions for NoaNet BTOP 2 Grant
Asset Description
Outside Plant: Fiber Systems Installation 2002
Outside Plant: Fiber Systems Installation 2003
Outside Plant: Fiber Systems Installation 2004
Outside Plant: Fiber Systems Installation 2005
Outside Plant: Fiber Systems Installation 2006
Outside Plant: Fiber Systems Installation 2007
Outside Plant: Fiber Systems Installation 2008
Outside Plant: Fiber Systems Installation 2009
Outside Plant: Fiber Systems Installation 2010
Total In -kind Contribution
1
Types of fiber backbone assets
I
Engineering services
fiber optic cable
coyote closure kit, splice tray kit
fiberglass conduit, sweep
fiberlign dielect deadend
Fiberglass Xarm
PVC SCH 40
Vault Base /Lid
Fiberglass Loop Enc
Capitalized Cost
$54,935.22
$154,598.84
$670,597.60
$179,997.36
$300,659.44
$68,537.33
$264,874.58
$179,631.25
$249,715.70
Depreciation
$25,714.20
$63,254.94
$219,152.76
$51,768.97
$75,049.16
$14,007.90
$40,081.99
$19,738.47
$12,471.62
Splice Panel
Tray
Guys Down, Span
Direct Capital Construction Costs
Cabinet Base
PVC Split
PVC Riser
Anchors, Brackets
ADSS Fiber Cable
14 of 21
Value 5/31/11
$29,221.02
$91,343.90
$451,444.84
$128,228.39
$225,610.28
$54,529.43
$224,792.59
$159,892.78
$237,244.08
$1,602,307.30
Appendix 6: Jefferson County
Location Description Equipment Structure Totals
South Jefferson County New Cummins generator 24,255
Green Mountain Site
Structural Site Work and CMU Hut 99,015 123,270
New back -up Cummins Generator 19,539
Structural Site Work Tower
Extension 163,108
New CMU Hut 33,632 216,279
Maynard Peak Site New back -up Cummins Generator 19,539
Structural Site Work Tower
Extension 142,210
New CMU Hut 41,827
New Mcirowave Unit Rohn 10,558 214,134
Port Townsend Reservoir Site New Tower Valmont 77,002
New back -up Cummins Generator 24,410
Structural Site Work 439,428
New CMU Hut 51,988 592,828
Port Hadlock (Jeffco Sheriff) New MicroWave Rohn Equipment 37,897
New back -up Cummins Generator 24,410
Tower Extension of 38 feet 114,560
Structural Site Work 14,130 190,997
Teal Lake (Port Ludlow) New MicroWave Rohn Equipment 17,904
New back -up Cummins Generator 24,410
Upgrade of Interior Equipment 78,576
Structural Site Work 29,508 150,398
Prof Engineering Design Services 110,602 110,602
Prof Mgmnt Services (qualified)
August 2010 December 2010 47,319
January 2011- March 2011 8,205 55,524
Expenses not yet paid
Project Costs 177,150 67,000
Retainage 154,670
Professional Services 67,945 466,765
GRAND TOTALS
510,636 1,610,161 2,120,797
15 of 21
DEPARTMENT OF COMMERCE
National Telecommunications and
Information Administration
Broadband Technology Opportunities
Program
AGENCY: National Telecommunications
and Information Administration, U.S.
Department of Commerce.
ACTION: Buy American Exception under
the American Recovery and
Reinvestment Act of 2009.
SUMMARY: The National
Telecommunications and Information
Administration (NTIA) hereby provides
notice that on June 19, 2009, the
Secretary of Commerce granted a
limited waiver of section 1605 of the
American Recovery and Reinvestment
Act of 2009 (Recovery Act), Pub. L. No.
111 -5, 123 Stat. 115, 303 (2009) with
respect to certain broadband equipment
that will be used in projects funded
under the Broadband Technology
Opportunities Program (BTOP).
DATES: July 1, 2009.
ADDRESSES: Broadband Technology
Opportunities Program, Office of
Telecommunications and Information
Applications, National
Telecommunications and Information
Administration, U.S. Department of
Commerce, Room 4812, 1401
Constitution Avenue, NW, Washington,
DC 20230.
FOR FURTHER INFORMATION CONTACT:
Broadband Technology Opportunities
Program, telephone: (202) 482 -5032.
SUPPLEMENTARY INFORMATION: In
accordance with section 1605(c) of the
Recovery Act and section 176.80 of Title
2 of the Code of Federal Regulations,
NTIA hereby provides notice that on
June 19, 2009, the Secretary of
Commerce granted a limited waiver of
section 1605 of the Recovery Act (Buy
American provision) with respect to
certain broadband equipment that will
be used in projects funded under
BTOP. The basis for this waiver is a
public interest determination pursuant
to section 1605(b)(1) of the Recovery
Act.
I. BACKGROUND
The Recovery Act appropriates $4.7
billion to NTIA to establish BTOP,
through which NTIA will provide grants
for broadband initiatives throughout the
United States, including projects in
unserved and underserved areas.
Section 1605(a) of the Recovery Act, the
Buy American provision, states that
Recovery Act 1605, 123 Stat. at 303; 2 C.F.R.
§17880.
EXHIBIT D
31410 Federal Register/Vol, 74, No, 125 /Wednesday, July 1, 2009 /Notices
none of the funds appropriated by the
Act, including the funds that have been
dedicated to grants under BTOP, may
be used for a project for the
construction, alteration, maintenance, or
repair of a public building or public
work unless all of the iron, steel, and
manufactured goods used in the project
are produced in the United States,"
Subsections 1605(b) and (c) of the
Recovery Act authorize the head of a
Federal department or agency to waive
the Buy American provision by finding
that: (1) applying the provision would
be inconsistent with the public interest;
(2) the relevant goods are not produced
in the United States in sufficient and
reasonably available quantities and of a
satisfactory quality; or (3) the inclusion
of the goods produced in the United
States will increase the cost of the
project by more than 25 percent. If the
head of the Federal department or
agency waives the Buy American
provision, then the head of the
department or agency is required to
publish a detailed justification in the
Federal Register. Finally, section
1605(d) of the Recovery Act states that
the Buy American provision must be
applied in a manner consistent with the
United States' obligations under
international agreements.
II. PUBLIC INTEREST FINDING
The Secretary of Commerce has
determined that, as applied to certain
broadband equipment used in a BTOP
project, application of the Buy
American provision would be
inconsistent with the public interest. A
modern broadband network is generally
composed of the following components:
broadband switching, routing, transport,
access, customer premises equipment,
end -user devices, and billing /operations
systems. The Buy American provision
would prohibit NTIA from awarding a
BTOP grant to a public applicant unless
that applicant could certify that each
element of each broadband network
component containing iron, steel, and
manufactured goods are produced in the
United States. As explained more fully
below, it would be difficult, if not
impossible, for a BTOP applicant to
have certain knowledge of the
manufacturing origins of each
component of a broadband network and
the requirement to do so would be so
2 Because the Buy American limitation applies
only to public works and public buildings,
completely private projects need not obtain a
waiver to utilize iron, steel, and manufactured
goods produced outside of the United States. Note,
however, that public private partnerships are
considered public for purposes of the Buy
American limitation
3 See Recovery Act 1605(b)(1), 123 Stat. at 303.
16 of 21
overwhelmingly burdensome as to deter
participation in the program: Requiring
a BTOP applicant to request a waiver on
a case -by -case basis also would be such
an administrative burden on the
applicant as to discourage participation
in the program and would increase the
agency's time and costs for processing
BTOP applications for broadband
infrastructure projects. Thus,
implementing the BTOP without a
limited programmatic waiver
encompassing broadband network
components would jeopardize the
success of the program and undermine
the broadband initiative.
First, much of the finished products
used to manage and operate broadband
infrastructure and offer broadband
service are manufactured outside of the
United States The manufacturing
supply chain varies by product and
changes constantly due to the influence
of global supply and demand. The result
is a very competitive and complex
production landscape with components
and end products being manufactured
and assembled in a large number of
countries. While, arguably, the Secretary
of Commerce could have relied on the
"non- availability" exception for
granting a waiver, the burden placed on
the Department of Commerce in
sourcing and evaluating the availability
of each component of broadband
equipment would be significant, and the
task of sourcing and evaluating would
be difficult to complete given the speed
with which Congress has told NTIA to
allocate the BTOP funds. In addition,
requiring public entities to document
the origin of broadband equipment and
their components in order to determine
whether they fit within the scope of the
Buy American provision would severely
complicate those applicants' ability to
apply for funds and would place an
undue burden on State and local
governments. Taken as a whole, these
burdens would cause delays and would
likely thwart the goal of Congress to
"establish and implement the [BTOP]
grant program as expeditiously as
practicable," and the Recovery Act's
requirement that NTIA to obligate all
funds under BTOP by September 30,
2010.
Second, a limited waiver will help
facilitate the construction of modern
broadband networks an essential
component of the Recovery Act,
Applicants to BTOP must have the
flexibility to incorporate the most
technically- advanced components into
their infrastructure, and a limited
waiver gives them the ability to
4 See Recovery Act §6001(d)(1)-(2), 123 Stat. at
513.
incorporate the latest techn ologies_
Third, consistent with the Recovery Act,
a limited waiver will help stimulate job
growth for construction workers,
technicians, equipment designers,
engineers, and others who will operate
the broadband infrastructure. Fourth,
while the Office of Management and
Budget has clarified which countries
would be exempt from the Buy
American provision, some of the key
countries that produce broadband
equipment would not be exempt.
Finally, the broadband industry is very
dynamic and global, and equipment can
change over the course of a buildout.
Subjecting public applicants for BTOP
funds to the Buy American provision
ultimately would slow broadband
deployment and undermine the
broadband initiatives.
III. WAIVER
On June 19, 2009, based on the public
interest finding discussed above and
pursuant to section 1605(c), the
Secretary granted a limited waiver of the
Recovery Act's Buy American
requirements with respect to BTOP
funds used for the following essential
components of a modern broadband
infrastructure.
Broadband Switching Equipment
Equipment necessary to establish a
broadband communications path
between two points.
Broadband Routing Equipment
Equipment that routes data packets
throughout a broadband network.
Broadband Transport Equipment
Equipment for providing
interconnection within the broadband
provider's network.
Broadband Access Equipment
Equipment facilitating the last mile
connection to a broadband subscriber.
Broadband Customer Premises
Equipment and End User Devices
End -user equipment that connects to a
broadband network.
Billing /Operations Systems
Equipment that is used to manage and
operate a broadband network or offer a
broadband service.
Note that this list does not include
fiber optic cables, coaxial cables, cell
towers, and other facilities that are
produced in the United States in
sufficient quantities to be reasonably
available as end products. To the extent
that an applicant wishes to use
equipment that is not covered by this
waiver, it may seek a waiver on a case
by -case basis as part of its application
for BTOP funds, stating the statutory
exemption upon which it is relying and
its rationale for receiving a waiver.
Further information on how to apply for
Federal Register/ Vol. 74, No. 125 /Wednesday, July 1, 2009 Notices 31411
a waiver will be available in BTOP
Application Guidelines.
Dated: June 26, 2009.
Anna M. Gomez,
Acting Assistant Secretary for
Communications and Information.
(FR Doc. E9 -15514 Filed 6 -30-09; 8:45 am)
BILLING CODE 3510 -6O-S
DEPARTMENT OF COMMERCE
National Oceanic and Atmospheric
Administration
RIN 0648 -XPO4
Notice of Intent to Prepare an
Environmental Impact Statement for
Sea Turtle Conservation and Recovery
in Relation to the Atlantic Ocean and
Gulf of Mexico Trawl Fisheries and to
Conduct Public Scoping Meetings
AGENCY: National Marine Fisheries
Service (NMFS), National Oceanic and
Atmospheric Administration (NOAH),
Commerce.
ACTION: Notice; Extension of public
comment period.
SUMMARY: In response to requests from
members of the public, NMFS extends
the public comment period on the
notice of intent to prepare an
Environmental Impact Statement (EIS)
to comply with the National
Environmental Policy Act (NEPA) by
assessing potential impacts resulting
from the proposed implementation of
new sea turtle regulations in the
Atlantic and Gulf of Mexico trawl
fisheries. The comment period is now
extended for an additional 30 days until
August 10, 2009.
DATES: Comments will be accepted until
August 10, 2009. Comments received or
postmarked after that date will be
considered to the extent practicable.
ADDRESSES: Written comments on the
scope of the EIS should be sent to
Alexis.Gutierrez@noaa.gov, 1315 East
West Highway, Silver Spring, MD
20910; 301 713 -2322 or fax 301 713-
4060, Additional information, including
the Scoping document, can be found at:
http://www.nmfs.noaa.gov/pr/species/
turtles /strategy.htm.
FOR FURTHER INFORMATION CONTACT:
Dennis Klemm (ph. 727 B24 5312, fax
727 824 5309, email
Dennis.Klemm @noaa.gov), Pasquale
Scida (ph. 978 281 -9208, fax 978 -281-
9394, email Pasquale.Scidah?noaa.gov),
Alexis Gutierrez (ph. 301 713 -2322, fax
301 713 -4060, email
Alexis.Gutierrez@noaa.gov).
SUPPLEMENTARY INFORMATION:
17 of 21
Background
On May 8, 2009, NMFS published a
Notice of Intent to Prepare an
Environmental Impact Statement (EIS)
for Sea Turtle Conservation and
Recovery in Relation to the Atlantic
Ocean and Gulf of Mexico Trawl
Fisheries and to Conduct Public
Scoping Meetings (74 FR 21627). The
Notice announced that NMFS is
developing rulemaking to address sea
turtle bycatch in state and Federal trawl
fisheries under the Endangered Species
Act. The notice also announced that
NMFS would conduct five public
scoping meetings. NMFS has now
conducted those scoping meetings and
has been asked to extend the comment
period for an additional 30 days.
NMFS is asking for public comment
on the alternatives outlined in the
scoping document. NMFS will evaluate
a range of alternatives in the Draft EIS
for implementing phase one of the
Strategy to reduce sea turtle bycatch and
mortality in trawl fisheries along the
Atlantic Coast. In addition to evaluating
the status quo, NMFS will evaluate a
range of alternatives including which
Atlantic trawl fisheries will be
regulated, the temporal and spatial
aspects of the regulation and the
potential changes to the operation of
Atlantic trawl fisheries. These
alternatives could include time and area
closures, requiring the use of TEDs in
the summer flounder, whelk, croaker
and weakfish flynet and calico scallop
trawls for the entire Atlantic Coast, as
well as combination of spatial and
temporal options. In terms of spatial
options, sea turtles in U.S. waters range
as far North as Georges Bank and the
Gulf of Maine, but may be less likely to
interact with a fishery towards the
northern extent of this range. NMFSwill
likely evaluate several alternatives
related to the northern /northeastern
extent of any required gear modification
or other regulation. Similarly, several
alternatives will likely be evaluated for
the temporal extent of when a regulation
would be in effect, as sea turtles migrate
north along the Atlantic coast as waters
warm each year, and are only present in
more northern areas during the warmer
months. The public scoping document,
the powerpoint presentation and the
Notice of Intent can be found at http:
www.nmfs.noaa.gov/pr/species/turtles/
strategy.htm. The public comment
period is now extended 30 days and
will close on August 10, 2009.
THIS COVENANT OF PURPOSE, USE AND OWNERSHIP dated this day of
20 by and between whose address
is (hereinafter with its successors and assigns
called "Recipient and the National Telecommunications and Information Administration
"NTIA through the [National Oceanographic and Atmospheric Administration "NOAA
[National Institute of Standards and Technology "NIST in its capacity as the BTOP Grants
Office, UNITED STATES OF AMERICA, whose address is
(hereinafter with successors and assigns called "NOAA "NIST
WHEREAS, Northwest Open Access Network, a Washington non profit mutual
corporation "Applicant submitted an application to NTIA for financial assistance under the
Broadband Technology Opportunities Program "BTOP pursuant to the American Recovery
and Reinvestment Act of 2009, Pub. L. No. 111 -5, 123 Stat. 115 (Feb. 17, 2009)
(hereinafter the "Act and
WHEREAS, by offer of Award, dated NTIA offered to
Applicant a financial assistance award designated as Award No. (the
"Award in the amount of (hereinafter called "Award Amount to assist in
financing
(hereinafter called "Project and
EXHIBIT E
COVENANT OF PURPOSE, USE AND OWNERSHIP
RECITALS
WHEREAS, Recipient is the Applicant or a first tier recipient, that is, one of the parties
who will be receiving portions of the Award; and
WHEREAS, during the period of the Award, to execute such Project, Recipient has
acquired or improved real property using Award funds or the Recipient or a third party has
contributed real property to the Project a portion of which is described in Exhibit "A"
attached hereto and incorporated herein (hereinafter with all improvements thereto called
the "Property and
WHEREAS, Applicant accepted the Award by signing Form CD -450 (together with all
documents attached thereto or incorporated therein, the "Award Agreement issued in
connection with the above referenced Award Number, thereby binding itself and making
itself subject to the terms and conditions contained in the Award Agreement including,
without limitation, the applicable requirements of 15 C.F.R. Parts 14 or 24, as applicable,
and the terms of the Notice of Funding Availability, 74 Fed. Reg. 33104 (Jul. 9, 2009);
Recipient hereby ratifies that acceptance on its own behalf to the extent it receives portions
of the Award; and
18of21
WHEREAS, the Award Agreement provides the purposes for which the Award Amount
may be used and provides, inter alia, that Recipient holds title to the Property in trust for the
public pu"rpoges of the "Project; ari °rney lease,° transfer; convey; hypothecate;
mortgage, or otherwise alienate any right to or interest in the Property, or use the Property
for purposes other than, and different from, those purposes set forth in the Award
Agreement and the application made by Recipient therefore (hereinafter called "Project
Purposes without the approval of NTIA, such alienation and use being prohibited by 15
C.F.R. Parts 14 or 24, as applicable; and
WHEREAS, NTIA is not authorized to grant such approval unless NTIA is repaid its
share of the current fair market value of the Property, as set forth below;
WHEREAS, Recipient as owner of all or part of the Property, agreed to record this
Covenant in the appropriate office for the recording of public records affecting real property
in the jurisdiction where the Property is located so as to constitute notice to all persons of
the restrictions contained herein on title to and use of the Property for the benefit of the
public purposes of the Project; and
WHEREAS, the
located at
is the proper office to record this covenant:
NOW THEREFORE, in consideration of financial assistance rendered and /or to be
rendered by NTIA, and of other good and valuable consideration, the receipt and adequacy
of which is hereby acknowledged, and to assure that the benefits of the Project will accrue
to the public and be used as intended by both NTIA and Recipient, Recipient hereby
covenants and agrees as follows:
1. The estimated-useful life of each element of the Property as determined by the
BTOP Schedule of the Useful Life of Property, is set forth in Exhibit B hereto.
2. Recipient agrees that for the useful life set forth above, Recipient will not lease,
sell, transfer, convey, hypothecate, mortgage, or otherwise alienate any interest in the
Property, nor shall Recipient use the Property for purposes other than the Project Purposes
without the prior written approval of the [NTIA] Grants Officer, or his /her designee or
successor. Such approval may be withheld until such time as Recipient first pays to NTIA the
Federal Interest in the Property. The Federal Interest is that percentage of the current fair
market value of the Property attributable to the NTIA participation in the Project. NTIA's
percentage participation in the Project is hereby agreed to be (XX
percent. After the end of the useful life of an item, then Recipient may sell the item (or the
Property if the useful life of all elements of the Property) has expired, then this restriction will
no longer apply and Recipient will not be required to pay any portion of the fair market value
of the property to NTIA.
3. Recipient further covenants that, except as provided in Section 2 above, in the
19 of 21
event NTIA permits the Property to be used for purposes other than the Project Purposes, or
if the Property is sold, leased, transferred, conveyed, hypothecated, mortgaged, or otherwise
alienated, Recipient will compensate the Federal Government for the Federal Interest in the
Property.
4. Recipient further agrees that, as a prerequisite to [or condition of if the funds are
disbursed before recordation] accepting the disbursement of any portion of the Award
Amount, Recipient shall provide NTIA with evidence that it has executed and placed on
record against the Property, this Covenant of Purpose, Use and Ownership. Recipient further
agrees that until the end of the useful life of the Property as set forth on Exhibit
whenever the property is sold, leased, or otherwise conveyed pursuant to 15 C.F.R. Parts 14
or 24, as applicable, if Federal Government has not been fully compensated for the Federal
Interest in the Property, Recipient or the transferor shall add to the document conveying
such interest a statement that title is transferred subject to this Covenant of Purpose, Use
and Ownership. NTIA will in its sole discretion determine whether the Covenant is
satisfactory.
5. It is stipulated and agreed that the terms hereof constitute a reasonable restraint
on alienation of use, control, and possession of or title to the Property given the Federal
Interest expressed herein.
6. This covenant shall run with the land until the Federal Interest is discharged.
IN WITNESS WHEREOF, the recipient has hereunto set their hand as of the day and
year first above written by their duly authorized officer. A completed duly recorded copy of
this Covenant shall be forwarded to [operating unit]. (The appropriate acknowledgment must
be included for recording in Recipient's jurisdiction.)
ATTEST:
By:
Title:
Recipient:
By:
Title:
Exhibit A (Legal Description of the Property)
Exhibit B (BTOP Schedule of the Useful Life of Property)
20of21
Category
Buildings
Type
Construction of new buildings, prefabricated buildings, or
concrete pads
Estimated Useful life
20 years
Modification, rehabilitation, or outfitting of existing buildings
15 years
Outside
Plant
Aerial coaxial plant, aerial copper plant, aerial fiber plant,
buried copper plant, buried coaxial plant, buried fiber plant,
underground plant, taps, amplifiers, drops, NIDs, etc.
20 years
Towers and
Poles
Construction of new towers or poles or modifications of
existing towers or poles
20 years
Emergency power generation equipment at tower site
10 years
Network
and Access
Equipment
Broadband switching equipment, broadband routing
equipment, broadband transport equipment, network
broadband access equipment (e.g., CMTSs, DSLAMs, Radio
Network Controllers, etc.), wireless base stations, antennas,
emergency power supply equipment
10 years
Operating
Equipment
Billing /Operations systems
10 years
Office fumiture and fixtures
10 years
Work equipment and vehicles
Five years for non construction related
motor vehicles, 10 years for work
related motor vehicles
Customer
Premise
Equipment
Customer broadband access equipment (e.g., cable
modems, DSL modems, wireless modems, etc.), general
purpose computers and peripheral equipment, office
machinery
Five years
BR.OADBANDUSA
CONNECTING AMERICA'S COMMUNITIES
EXHIBIT B
(to EXHIBIT E)
FACT SHEET
Broadband Technology Opportunities Program
Useful Life Schedule
Fact Sheet Useful Life Schedule Version 1
August 25, 2010
21 of 21
4NoaNet
/t Northwest Open Access Networks
MEMORANDUM
TO: NoaNet BTOP Round 2 Participants
FROM: NoaNet BTOP Program Office William R. (Rob) Kopp
DATE: Originally sent January 28, 2011
RE: Participation Agreement and Related Documents Regarding BTOP Round 2
This memorandum, along with the other documents and other references being
distributed to you by e-mail, is intended to provide information regarding the PARTICIPATION
AGREEMENT NTIA /BTOP ROUND 2, a copy of which is enclosed.
As you know, NoaNet is the lead entity on BTOP Round 2. The parties to the
Participation Agreement will include NoaNet and those who have committed to move
forward with the NoaNet Round 2 Project, (the "Participants The Project is comprised of
multiple NoaNet and other Participant projects with defined budgets that include the Federal
contribution and "matching funds" that include in -kind and cash sources. The purpose of
the Participation Agreement is to set forth the roles and responsibilities of NoaNet and each
of the Participants. In addition to receiving portions of the Grant to improve its broadband
system, NoaNet will also be the administrator of the Project. The Participation Agreement
describes this role as well.
What follows is a description of the documents being distributed with this
memorandum, including a summary of some of their provisions.
1. Participation Agreement NTIA/BTOP Round 2.
This is the form of the Participation Agreement for Round 2. You will see references
to Exhibits A, B, C, D, and E in the Agreement, as well as a reference to "Exhibits F through Q
"(the Statements of Work specific to each party). Each Exhibit is described later on in this
memo.
Among the most significant provisions of the Participation Agreement is the
Participants' commitment to perform all their obligations (including construction of their
respective portions of the project), and to be subject to all of the terms and conditions
imposed by the federal government on the award, to the extent pertaining to each
Participant's share of the award [Sections 1 and 2(A)]. One of these conditions is the federal
requirement that, during the estimated useful life of property acquired or improved with the
grant funds, the Participants and NoaNet must use the property for the authorized purposes
of the award and may not dispose of, assign, or otherwise transfer the property (or any
1 -[NoaNet BTOP Round 11 Participant Agreement Memo 101011]
interest in it) without NTIA's approval. There are also provisions under which NTIA is entitled
to a share of the value of broadband equipment or property when sold or otherwise
transferred. This provision has been the subject of some discussion with NTIA.
Each party is required to file a "Covenant" whereby it agrees to these restrictions.
This Covenant is not a lien on any assets. Rather, it is notice to third parties that you have
agreed to restrict your use or the sale of the broadband facilities that are part of this Project.
Based on earlier communications from NTIA, we believed that this restriction would end with
the useful life of the item. More recent communications with NTIA were less clear on this
point. We are now in the process of confirming that the earlier NTIA assurances remain in
effect. Because this point is not formally resolved yet, we are still using the language that
had been approved for Round I (See Sections 2(B) and 6(A) and (B) of the Participation
Agreement).
A related issue pertains to restrictions on leasing Project equipment or property. The
Notice of Funds Availability "NOFA," 75 FR 3792) contains a restriction against the sale or
lease of the broadband facilities without the consent of NTIA. This is modified by another
provision in the NOFA allowing leases to another service provider of broadband services.
The question has now arisen as to what leases have to be approved by NTIA and which ones
do not. NoaNet is in the process of getting this formally clarified, and recent
communications seem favorable, suggesting that NTIA will not require its individual approval
of typical "operating leases" to other service providers (e.g., short -term, no right of purchase,
and not a predominant portion of the capacity).
You will also see in the Participation Agreement (Section 3) a requirement that each
Participant provide a letter of credit to NoaNet to secure payment of its cash contribution.
The Participation Agreement provides that NoaNet may accept alternative security or
assurances in lieu of an actual letter of credit. We are happy to work with each Participant
to find an arrangement that protects NoaNet and does not unnecessarily encumber the
Participant. For example, with sufficient documentation of reserves and other funding, a
board resolution confirming the agreement to provide the required contributions might be
acceptable.
Remedies in the event of default by any party are provided in Section 12 of the
Participation Agreement. These give NoaNet the right to complete a defaulting Participant's
portion of the work at that Participant's cost, to stop disbursements, to terminate the
Agreement, and other rights and remedies. There are similar provisions in the event NoaNet
defaults.
There are other provisions in the Participation Agreement regarding NoaNet's role as
administrator of the award (Section 4), some additional specific federal law requirements
(Section 5), as well as other more standard provisions (e.g., insurance; indemnifications)
that you will likely find more familiar than those described above.
2. Exhibit A to the Participation Agreement
NTIA Financial Assistance Award (Form CD -450)
This is the "Award" or "Grant." Various federal award terms and conditions are
"checked" in Exhibit A as ones with which NoaNet and the Participants must conform.
These are discussed individually below.
2 [NoaNet BTOP Round 11- Participant Agreement Memo 101011]
P
3. Exhibit B to the Participation Agreement.
Participant Budget Summary Federal Share Match
Exhibit B is not yet included in this package of materials. It will be the BTOP Award
Budget setting forth the total budget as well as each individual Participant budgets for
Round 2. This will include the value of the in -kind matching services and in -kind
contributions to be provided by each Participant (the "In -Kind Services and the matching
cash contributions (the "Cash Contributions to be provided by the applicable Participant.
In Section 2(A) of the Participation Agreement, you confirm that you will be providing these
In -Kind Services and Cash Contributions. NoaNet is awaiting final NTIA approval on budget
adjustments needed due to issues with in -kind contribution valuations that required re-
budgeting of matching funds. We will distribute Exhibit B when we receive that approval, at
which time you will want to review the figures to be sure they are correct.
4. Exhibit C to the Participation Agreement.
Details of Participant In -Kind Contribution
Exhibit C is included in this package of materials. It is a more detailed description of
the in -kind services each party is contributing to the project.
5. Exhibit D to the Participation Agreement.
Buy American Limited Waiver
One of the American Recovery and Reinvestment Act Award (ARRA) Terms is that
NoaNet and the Participants will comply with the "Buy America" regulations. A limited
waiver of this requirement is contained in the Federal Register of July 1, 2009
(74 FR 31410). That Federal Register provision is Exhibit D.
6. Exhibit E to the Participation Agreement.
Covenant of Purpose, Use and Ownership
Exhibit E is the "Covenant" referred to above. In reviewing this Exhibit, please
remember that this is a form that is being used for many projects in addition to this one.
Consequently, some of the wording is a little awkward.
An example of this is the percentage to be inserted in paragraph 2. Although the
form says the percentage is to be the NTIA's percentage interest in the Project, the NTIA
Grant Administrator has said that, for a Participant, the percentage should be the
Participant's share of the proceeds compared with the value of Participant's portion of the
Project. Thus, for example, if the Participant's portion of the Project was $1.0 million and
the Participant will be getting $600,000 of Grant funds, then the percentage to be inserted
is 60 This may (and likely will be) different from the percentage of the Grant to the overall
Project.
3 [NoaNet BTOP Round 11 Participant Agreement Memo 101011]
Note that the restrictions in the Covenant apply for the estimated useful life of the
Property. Exhibit B to the Covenant is the BTOP Useful Life Schedule.
These Covenants will need to be recorded in each county where the broadband
infrastructure is installed. The Covenant will need to be recorded for fixed assets funded by
federal contribution and on In -Kind contributions that are improved by the Project. As
infrastructure is installed or improvements made, the Covenants will need to be recorded as
the equipment is installed or the property is improved. In any case, NoaNet will work with
each Participant to coordinate the implementation of this process.
7. Exhibits F through N to the Participation Agreement.
These Exhibits are not yet included in this package of materials. They will be the
Statements of Work "SOW specific to NoaNet and each Participant. These exhibits will be
distributed individually to each Participant under separate cover for review and discussion
with the Participant until a final SOW is developed and agreed upon, after which those
exhibits will be included as an Exhibit to each party's Participation Agreement.
Additional Supporting Documents. The following documents (Items Nos. 8 -15 below)
are not exhibits to the Participation Agreement, but are the documents "checked" in the
Award (Exhibit A to the Participation Agreement). They are incorporated in the Award, and
NoaNet and the Participants must comply with them. We suggest that each Participant
review and familiarize itself with them.
8. Department of Commerce Financial Assistance Standard Terms and Conditions.
These are the Department of Commerce Financial Assistance Standard Terms and
Conditions "checked" in the Award (Exhibit A to the Participation Agreement).
9. Special Award Conditions.
These are the Special Award Conditions checked in the Award (Exhibit A to the
Participation Agreement).
10. 15 CFR Part 14.
This is 15 CFR Part 14 checked in the Award (Exhibit A to the Participation
Agreement). This includes uniform administrative requirements for non profit and
commercial organizations.
11. 15 CFR Part 24.
This is 15 CFR Part 24, which provides uniform administrative requirements for
grants to state and local governments. This is not checked in the Award (Exhibit A to the
Participation Agreement), but it is referenced in the Special Award Conditions and other
documents as being applicable to governmental entities that are Participants in the project.
12. OMB Circular A -122.
4 [NoaNet BTOP Round 11 Participant Agreement Memo 101011]
A
This is OMB Circular A -122 checked in the Award (Exhibit A to the Participation
Agreement). It relates to cost principles for non profit organizations.
13. OMB Circular A -133.
This is OMB Circular A -133 checked in the Award (Exhibit A to the Participation
Agreement). This relates to audits for the project.
14. Department of Commerce Pre -Award Notification Requirements 73 FR 7696
(February 11, 2008).
These are the February 11, 2008 Department of Commerce Pre -Award Notification
Requirements checked in the Award (Exhibit A to the Participation Agreement).
15. Department of Commerce ARRA Award Terms 75 FR 3792 (January 22, 2010).
This is the NOFA, referenced above. It consists of the January 22, 2010 Department
of Commerce American Recovery and Reinvestment Act Award terms. This is another one of
the documents that are made a part of the Award by reference in the Award itself.
We have also included a check list at the bottom of this memo that will summarize
the steps suggested and -or required.
Please provide any comments on the Participation Agreement no later than October
19, 2011.
Please contact me or Chantel DeMasters to discuss any of these or other issues
concerning the BTOP Round 2 project with you.
Rob Kopp
Office 208 585 -9698
CeI 208 863 -5346
Email rkopp @noanet.net
Chantel DeMasters
Office 208 866 -5723
Cel 208 392 -9547
cdemasters @noanet.net
Participation Agreement and Supporting Document
Checklist
Action
5 [NoaNet BTOP Round 11 Participant Agreement Memo 101011]
6 [NoaNet BTOP Round 11- Participant Agreement Memo 101011]
YjN
BTOP Round II Participant
Agreement Memo 101011
Review and Understand
BTOP Round II Participation
Agreement 100711
Fill in Participant organizational
information
Execute Signature Page
Provide SLOC or propose
alternative to SLOC
Provide copies of insurance
certificates
Exhibit A CD450
Filename NoaNet BTOP II
Exhibit A through E to
Participation Agreement 101011
(PDF page 1)
Review and Understand
Exhibit B Participant Budgets
Filename NoaNet BTOP II
Exhibit A through E to
Participation Agreement 101011
(PDF page 2)
Review and Concur
Exhibit C In -Kind Detail
Filename NoaNet BTOP II
Exhibit A through E to
Participation Agreement 101011
(PDF page 3 through 15
Review and Concur
Exhibit D ARRA Buy American
Waiver
Filename NoaNet BTOP II
Exhibit A through E to
Participation Agreement 101011
(PDF page 16 through 17)
Review and Understand
Exhibit E Covenant
File at a future date based on match
6 [NoaNet BTOP Round 11- Participant Agreement Memo 101011]
Filename NoaNet BTOP II
Exhibit A through E to
Participation Agreement 101011
(PDF page 18 through 21)
makeup and project schedule. NoaNet
to provide specific guidance document
in the near future.
BTOP Round II OMB Circular A-
122 011011
Review and Understand Additionally,
NoaNet will provide a "Cost Principles
Guidance" document based on entity
type following participants initial
document review and comment is
complete.
BTOP Round II OMB Circular A-
133 011011
Review and Understand Additionally,
NoaNet will provide a "Cost Principles
Guidance" document based on entity
type following participants initial
document review and comment is
complete.
BTOP Round II Special Award
Conditions (SAC) 011011
Review and Understand
BTOP Round II 15 CFR Part 14
011011
Review and Understand
BTOP Round II Commerce ARRA
Award Terms (75 FR 3792)
011011
Review and Understand
BTOP Round II Commerce Pre-
Award Notification Requirements
(73 FR 7679) 011011
Review and Understand
BTOP Round II Dept of
Commerce Standard T's and C's
011011
Review and Understand
t
7 [NoaNet BTOP Round 11 Participant Agreement Memo 101011]
SPECIAL AWARD CONDITIONS
Award Number:
Amendment Number:
Special Award Conditions
NT1OBIX5570111
0
1) ARRA Special Award Condition for Reporting Requirements
Reporting Requirements:
Pursuant to ARRA Special award conditions which are incorporated into this award. The recipient will report on the
progress of their approved projects as reflected in the description of work which is incorporated by reference. Information
from the progress reports will be available to the public.
The Recipient shall report the information described in section 1512(c) of the ARRA special award Condition using the
reporting instructions and data elements that are provided online at www.FederalReporting.gov and ensure that any
information that is pre filled is corrected or updated as needed. Note: This is the primary reporting requirement under
ARRA. Additional progress reports are needed for the program office which is identified in a separate special award
condition.
The ARRA report is due no later than 10 days following the end of each calendar reporting period For example, for the
period ending September 30, due October 10th, period ending December 31, due January 10th, period ending March 31,
due April 10th, period ending June 30, due July 10, following this pattern until the expiration date of the award is reached.
Failure to provide acceptable reporting by the due date may result in the suspension or termination of your award.
2) BTOP -Wide SACs
A. Guidelines for Matching Funds:
Recipient will provide, from non Federal sources, not less than 20 percent of the total project cost. Matching funds can be
in the form of either cash or in -kind contributions consistent with the 15 CFR 14.23, 24.3 and 24.24 as applicable. The
recipient may be asked to provide supporting documentation upon request from the Grants Officer or NTIA.
B. Incorporation of Requirements from the Notice of Funding Availability (NOFA):
The recipient shall comply with the requirements found in the Department of Commerce, National Telecommunications
and Information Administration Broadband Technology Opportunities Program, 75 FR 3792, January 22, 2010
(http://www.ntia.doc.gov/fmotices/2010/FR_BTOPNOFA_I 00115.pdf)
C. Notice of Limited Waiver of Section 1605 (Buy American Requirement) of the American Recovery and
Reinvestment Act of 2009 (ARRA)
In accordance with Section 1605 of the Recovery Act, the Secretary of Commerce has granted a limited waiver of the
Recovery Act's Buy American requirements with respect to certain broadband equipment that will be used in projects
funded under the BTOP. A description of this equipment is included in the notice of waiver published in the Federal
Register at 74 FR31410 (July 1, 2009).
D. Whistleblower Protection Act Requirement:
Page 1 of 8
The Recipient shall comply with the Whistleblower Protection requirements of the American Recovery and Reinvestment
Act (Recovery Act), Section 553 of Division A, Title XV, Public Law 111 -5 which provides protection for employees of
non federal employers including employees of state and local governments, contractors, subcontractors, recipients, and
any other non federal employers receiving Recovery Act fund recipients, making specified disclosures relating to possible
fraud, waste, or abuse of Recovery Act funds. The act requires any non federal employer receiving Recovery Act funds
to post a notice of the rights and remedies provided under the Act. The Recipient shall post notice of employees rights
and remedies for whistleblower protections provided under section 1553 of the American Recovery and Reinvestment Act
of 2009 (Pub. L. 111 -5) and shall include this notice requirement in all contracts with subrecipients, contractors, and
subcontractors
Recipients are reminded that the Office of Inspector General will verify the appropriate place of this poster as part of any
field work conducted. Failure to display the poster may result in an audit fmding. The poster can be downloaded from
the following web site: http /www.oig.doc.gov /recovery/whistleblower.html
E. Interest- Bearing Accounts
This award is subject to 15 CFR 14.22 requiring recipients of Federal financial assistance that receive more than $120,000
in Federal awards per year to maintain advances of Federal funds in interest bearing accounts. Interest earned on Federal
advances deposited in such accounts (with the exception of $250 per year, which may be retained for administrative
expenses) shall be remitted promptly.
The complete address for remitting checks for interest earned on Federal advances is Department of Health and Human
Services, Payment Management System, P.O. Box 6021, Rockville, MD 20852. Recipients that do not have electronic
remittance capability should send a check to this address. In keeping with Electronic Funds Transfer rules (31 USC part
206), interest should be remitted to the HHS Payment Management System through an electronic medium such as the
FEDWIR Deposit System. Electronic remittances should be in the format and should include any data that are specified
by the HHS as being necessary to facilitate direct deposit in HHS' account at the Department of Treasury.
F. Nondiscrimination and Interconnection
The recipient shall comply with the nondiscrimination and network interconnection obligations set forth in section
V.D.3.b of the NOFA and in Section 6001(j) of the Recovery Act. Recipients may be asked to provide supporting
documentation upon request from the Grants Officer. Failure to comply with this provision of the award may be
considered grounds for any or all of the following actions: establishment of an account receivable for affected BTOP
award, withholding payments under any and all BTOP awards to the recipient, changing the method of payment from
advance to reimbursement only, or the imposition of other special award conditions, suspension of any BTOP active
awards, and termination of any BTOP active awards.
G. Davis -Bacon Act
The Recipient shall obtain and maintain in its official records documentation of weekly certified payroll reports and the
Statement of Compliance from itself and all subrecipients, contractors, and subcontractor(s) in accordance with Section
1606 of the American Recovery and Reinvestment Act of 2009 and the Davis -Bacon Act and related acts.
The Recipient is not required to submit this documentation to the Grants Office except in response to a request for this
information from its Grants Officer. The authorized representatives and agents of the Grants Office shall be permitted to
Page 2 of 8
inspect all work, materials, payrolls, personnel records, invoices of materials, and other relevant data and records.
Ten days prior to bid opening, any party soliciting a subrecipient, contractor, or subcontractor for work under this Award
to which Davis -Bacon wage determinations apply must verify whether there have been any updates to the applicable
Davis -Bacon wage determinations by reviewing the Department of Labor Wage Determinations OnLine website, free of
charge, at www.wdol.gov. If there have been updates to the wage determinations, then these updated wage rates must be
issued in a bid addendum. The Davis Bacon wage rates that are current ten days prior to the bid opening are the wage
rates that will govern work performed under such solicitation.
3) Automated Standard Application for Payment System
Notwithstanding Section A.02 of the DoC Financial Assistance Standard Terms and Conditions, dated March 2008:
a. The advanced method of payment shall be authorized unless otherwise
specified in a special award condition.
b. Payments will be made through electronic funds transfers, using the
Department of Treasury's Automated Standard Application for Payment (ASAP) system and in accordance with the
requirements of the Debt Collection Improvement Act of 1996. The following information is required when making
withdrawals for this award: (1) ASAP account identification (id) award number found on the cover sheet of this award;
(2) Agency Location Code (ALC) 13060001; and (3) Region Code 02. Recipients do not need to submit a "Request
for Advance or Reimbursement" (SF -270) for payments relating to this award. All non -ASAP Recipient Organizations
must enroll electronically. The ASAP system no longer accepts paper forms for enrollment. If you are not currently
enrolled in the ASAP system you must provide the Federal Awarding Agency with a Point of Contact name, e-mail
address, mailing address, telephone number, EIN and DUNS numbers of your organization in order for the Federal
Awarding Agency Enrollment Initiator (El) to begin the on -line enrollment. If you have questions on this requirement
please contact the Grant Specialist responsible for this award. If you have questions on the electronic process step -by -step
instructions you may contact your responsible Regional Finance Center.
Advances taken through the ASAP shall be limited to the minimum amounts
necessary to meet immediate disbursement needs. Advanced funds not disbursed in a timely manner must be promptly
returned, via an ASAP credit, to the account from which the advanced funding was withdrawn. Advances shall be for
periods not to exceed 30 days.
c. This award has the following control or withdrawal limits set in ASAP:
x_ None
Agency Review required for all withdrawals (see explanation below)
Agency review required for all withdrawal requests over
(see explanation below)
Maximum Draw Amount controls (see explanation below)
each month
each quarter
Page 3 of 8
each year
d. Funds that have been withdrawn through ASAP may be returned to ASAP via the Automated Clearing House (ACH)
or via FEDWIRE. The ACH or FEDWIRE transaction may only be performed by the Recipient's financial institution.
Full or partial payments received by a Payment Requestor/Recipient Organization may be returned to ASAP. All funds
returned to the ASAP system will be credited to the ASAP Suspense Account. The Suspense Account allows the
Regional Financial Center to monitor returned funds and ensure that they are credited to the correct ASAP account.
Returned funds that cannot be identified and classified to an ASAP account will not be accepted and will be returned to
the originating depository financial institution (ODFI).
It is essential that the Payment Requestor/Recipient Organization provide its financial institution with ASAP account
information (ALC, Recipient ID and Account ID) to which the returned funds are to be credited. Additional detailed
information can be found at: http: /www.fms.treas.gov /asap /pay- return2.pdf
There is a 10 -day deadline for the head of the organization to initiate recipient enrollment upon receipt of ASAP
registration notification. Failure to comply could subject the award to a change in the method of payment to
reimbursement only.
4) Post -Award Reporting Requirements
The recipient shall submit a "Financial Status Report" (SF -425) on a quarterly basis for the periods ending March 31, June
30, September 30, and December 31 or any portion thereof. Reports are due no later than 30 days following the end of
each reporting period. A final SF-425 shall be submitted within 90 days after the expiration date of the award.
The recipient shall submit program specific quarterly performance reports electronically to the Federal Program Officer in
the same frequency as the Financial Status Report (SF- 425) unless otherwise authorized by the Grants Officer. The
Federal Program Officer will provide updated instructions for accurate report completion at least 30 days prior to
reporting period end date.
5) Infrastructure -Wide SACs
A. Sale or Lease of Real Property Purchased with Award Funds:
Recipients may not sell or lease any portion of the award funded broadband facilities or equipment during their life,
except as otherwise approved by NTIA. NTIA will consider a petition for waiver of the restriction if: (1) the transaction
is for adequate consideration; (2) the purchaser or lessee agrees to fulfill the terms and conditions relating to the project
after such sale or lease; and (3) the transaction would be in the best interests of those served by the project. The petition
for waiver may be submitted at Any time during the life of the award funded faculties and equipment, and it must include
supporting documentation and justification regarding why the petition should be granted. This requirement is not meant
to limit CCI awardees from leasing facilities to another service provider for the provision of broadband services, nor is
this section meant to restrict a transfer of control of the awardee (NOFA, Section IX.C.2).
B. Security Interest in Real Property including Broadband Facilities and Equipment
The recipient shall execute a security interest or other statement of NTIA's interest in real property including broadband
Page 4 of 8
facilities and equipment acquired or improved with Federal funds acceptable to NTIA, which must be perfected and
placed on record in accordance with local law. This security interest will provide that, for the estimated useful life of the
real property, facilities, or equipment, the recipient will not sell, transfer, convey, or mortgage any interest in the real
property including broadband equipment acquired or improved in whole or in part with Federal funds made available
under the award, nor shall the recipient use the real property including broadband facilities and equipment and for
purposes other than the purposes for which the award was made, without the prior written approval of the Grants Officer.
Such approval may be withheld until such time as the recipient first pays to NTIA the Federal share of the real property
including broadband facilities and equipment as provided in 15 CFR 14.32 (15 CFR 24.31 for state, local, or other
government entities). This security interest shall be executed in advance of any sale or lease and not later than closeout of
the grant.
C. Construction- Related Requirements
Maintenance. The recipient agrees that, for the estimated useful life of the facility funded with this award, the project
will be properly and efficiently administered, operated, and maintained for the purpose authorized by this award and in
accordance with the terms, conditions, requirements, and provisions of the award. If NTIA determines at any time during
the estimated useful life of the project, that the project and any project property is not being properly and efficiently
administered, operated, and maintained, NTIA shall have the right to terminate this award for cause and pursue any other
remedies allowed by law.
Compliance. The recipient shall comply, and must require each contractor or subcontractor to comply, with all
applicable Federal, state, and local laws and regulations.
Energy Efficiency. The recipient shall apply, where feasible, sustainable, and energy efficient, design principles for
the purpose of reducing pollution and energy costs and optimizing lifecycle costs associated with the construction.
Signs. The recipient is responsible for constructing, erecting, and maintaining in good condition throughout the
construction period a sign(s) satisfactory to NTIA that identifies the project and indicates that the project is Federally
funded. NTIA also may require that the recipient maintain a permanent plaque or sign at the project site with the same or
similar information.
Land, Easements, and Rights of Way. The recipient must disclose all encumbrances to the operating unit. The
operating unit will not accept any encumbrance that interferes with the construction, intended use, operation, or
maintenance of the project during its estimated useful life. Unless otherwise provided for in the award, prior to grant of
the award and commencement of construction, or when requested by the operating unit, the recipient must furnish
evidence, satisfactory in form and substance to the operating unit, that title to real property is vested in the recipient, and
that it has obtained any rights -of -way, easements, State and local government permits, long -term leases, or other property
interests.
Relocation Assistance. The provisions of the Uniform Relocation Assistance and Real Property Acquisition Policies
Act of 1970, as amended, (Pub. L. No. 91 -646; 42 U.S.C. 4601 et seq.), are applicable to each recipient of assistance from
an operating unit. This Act provides assistance to persons, businesses, or farm operations affected by the acquisition,
rehabilitation or demolition of real property acquired for a project financed wholly or in part with Federal assistance
funds. It also requires compliance with specific guidelines pertaining to reimbursable costs incidental to such land
Page 5 of 8
acquisition.
Tribal Employment Rights Ordinances. In accordance with Departmental policy, all operating units must recognize
Tribal Employment Rights Ordinances "TEROs which may provide for preferences in contracting and employment, in
connection with its financial assistance awards. Tribal ordinances requiring preference in contracting, hiring, and firing
and the payment of a TERO fee are allowable provisions under Federal awards and should be incorporated by the
operating unit under its grants and contracts with American Indian and Alaska Native tribal governments. The payment of
the TERO fee, which supports the tribal employment rights office to administer the preferences, should generally be
allowable as an expense that is "necessary and reasonable for proper and efficient performance and administration" of an
award, as provided under the applicable cost principles set out in 2 CFR 225.
6) New Award SAC
This award number NT10BIX5570111, to Northwest Open Access Network, supports the work described in the
Recipient's proposal entitled "Recovery Act State of Washington Broadband Consortium" dated 06/29/2010, revised
SF424C dated 06/21/2010, revised Budget Narrative dated 06/21/2010, revised Detail Budget dated 06 /21 /2010,which are
incorporated into the award by reference. Where the terms of the award and proposal differ, the terms
of the award shall prevail.
7) Matching Requirement
Since this award requires the Recipient to provide $23,546,554 in project related costs from non federal sources, the
Recipient must maintain it its official accounting records an accounting of $77,998,901.
8) Baseline Project Plan
Recipients shall submit baseline project plans and details regarding key outputs and outcomes from their projects within
45 days of the close of the first quarter. Federal Program Officers will provide guidance on the format and content of
these baseline plans and details for this one -time data gathering activity.
Due Date: 11/15/2010
9) Environmental Assessment SAC
The grantee may not expend any Federal funds other than Management and Administration (M &A) funds and limited,
preliminary procurement funds prior to the following:
The completion of an environmental assessment (EA) that meets the requirements of the National Environmental
Policy Act of 1969 (42 U.S.C. 4321 et seq.);
The completion of any required consultations, to include consultations with the State Historic Preservation Office
(SHPO) and the appropriate federally recognized Native American tribes, under Section 106 of the National Historic
Preservation Act of 1966 (16 U.S.C. 470 et seq.) (NHPA), and consultations with the U.S. Fish and Wildlife Service
Page 6 of 8
(USFWS) under Section 7 of the Endangered Species Act (16 U.S.C. 1531 et seq.);
Demonstration of compliance with all other applicable federal, state, and local environmental laws and regulations.
Project implementation (site preparation, demolition, construction, ground disturbance, or any other project
implementation activities) may not begin prior to the completion of the above activities. The completion of a draft EA,
and completion of any required consultations under Section 106 of the NHPA, must be completed no later than six months
after the award date unless a formal request for extension is submitted and approved by the Grants Officer. The grantee
must comply with all conditions placed on the project as the result of consultation processes.
The allowable use of M &A funds prior to beginning project implementation includes, but is not limited to, activities
necessary for the completion of the following:
Pre construction project planning, including collecting environmentally related information;
Applications for environmental permits;
Studies such as the EA, and any wetland delineations, biological assessments, archaeological surveys, or other
required analyses, and;
Required consultation activities.
The allowable use of funds for limited, preliminary procurements prior to beginning project implementation includes, but
is not limited to, the initiation of activities necessary to meet the project completion requirements as specified in the
award, including the following:
Purchase or lease of equipment, or entering into binding contracts to do so;
Purchase of applicable or conditional insurance;
Funds used to secure land or building leases, including right -of -way easements.
The allowable use of preliminary procurement funds is limited; must not result in an irrevocable commitment of
resources; and is only allowed after inclusion in and approval of a revised 6 -month expenditure plan. The revised 6-
month expenditure plan is due within 30 days of receipt of this Special Award Condition (SAC) and will be reviewed by
the Environmental Program Officer, who will make recommendations to the Federal Program Officer (who has final
approval authority) to ensure all proposed procurement funds are reasonable and necessary to ensure that the project
completion deadline requirements are met. All contracts must contain early termination clauses with termination costs
clearly specified. All equipment purchased or leased in advance of project implementation and before completion of the
EA and applicable consultations must be stored in locations other than the proposed project site and where there will be
no impact to the environment, human health, or cultural resources (in most cases, this means equipment must be stored in
existing warehouses). Under no circumstances will grant funds be drawn down for clearing or excavating land, or
demolition or construction of buildings or towers, before all environmental SACs are completed and cleared. This
limited, preliminary allowable use of funds for purchases and leases is designed for recipient flexibility and to streamline
preparation for project implementation simultaneously during development of the EA and conduct of consultations; the
clause, and all applicable restrictions, is lifted once the EA, applicable consultations, and Finding of No Significant
Impact (FONSI; if applicable) are complete and approved.
Page 7 of 8
While this Special Award Condition is in effect, the Recipient shall submit, in advance of any draw downs from
Automated Standard Application for Payments (ASAP), a revised 6 -month expenditure plan that presents the proposed
M &A and limited, preliminary procurement activities and costs. The revised 6 -month expenditure plan will be submitted
electronically to the Environmental Program Officer, who will review it and provide recommendations to Federal
Program Officer and the Grants Officer for fmal approval to ensure that the proposed activities and expenditures are
reasonable and necessary in the context of environmental compliance. The Environmental Program Officer and Federal
Program Officer must review and recommend and the Grants Officer must approve the revised 6 -month expenditure plan
prior to fund draw downs through ASAP.
Once the EA has been completed, NTIA will review all documentation and determine whether the EA sufficiently
addresses all resource areas and whether the project may qualify for a FONSI. Projects found to have significant impacts
to environmental or historic resources may face de- obligation of funding if impacts cannot be mitigated. The grantee is
required to provide any information requested by NTIA to ensure both initial and ongoing compliance with environmental
and historic preservation laws, regulations, and best practices. The grantee shall notify NTIA within twenty-four (24)
hours upon receipt of any notices of foreclosure; notices for continuing consultation received from the SHPO, Tribal
Historic Preservation Office (THPO), USFWS, or other consulting party; or notices of noncompliance received from
consulting authorities or regulatory agencies.
Any change to the approved project scope that has the potential for altering the nature or extent of environmental or
cultural resources impacts must be brought to the attention of NTIA and will be re- evaluated for compliance with
applicable regulatory requirements.
For all ground disturbing activities that occur during project implementation in the vicinity of known archaeological sites
or suspected or known burials, the grant recipient must ensure that an archaeologist who meets the Secretary of the
Interior ?s Professional Qualification Standards monitors ground disturbance, and if any potential archeological resources
or buried human remains are discovered, then the grantee must immediately cease construction in that area and notify
NTIA and the interested State Historic Preservation Offices, Tribal Historic Preservation Offices, and tribes. Such
construction activities may then only continue with the written approval of NTIA.
Due Date: 02/01/2011
Page 8 of 8
SPECIAL AWARD CONDITIONS
Award Number:
Amendment Number:
Special Award Conditions
NT1OBIX5570111
0
1) ARRA Special Award Condition for Reporting Requirements
Reporting Requirements:
Pursuant to ARRA Special award conditions which are incorporated into this award. The recipient will report on the
progress of their approved projects as reflected in the description of work which is incorporated by reference. Information
from the progress reports will be available to the public.
The Recipient shall report the information described in section 1512(c) of the ARRA special award Condition using the
reporting instructions and data elements that are provided online at www.FederalReporting.gov and ensure that any
information that is pre filled is corrected or updated as needed. Note: This is the primary reporting requirement under
ARRA. Additional progress reports are needed for the program office which is identified in a separate special award
condition.
The ARRA report is due no later than 10 days following the end of each calendar reporting period. For example, for the
period ending September 30, due October 10th, period ending December 31, due January 10th, period ending March 31,
due April 10th, period ending June 30, due July 10, following this pattern until the expiration date of the award is reached.
Failure to provide acceptable reporting by the due date may result in the suspension or termination of your award.
2) BTOP -Wide SACs
A. Guidelines for Matching Funds:
Recipient will provide, from non Federal sources, not less than 20 percent of the total project cost. Matching funds can be
in the form of either cash or in kind contributions consistent with the 15 CFR 14.23, 24.3 and 24.24 as applicable. The
recipient may be asked to provide supporting documentation upon request from the Grants Officer or NTIA.
B. Incorporation of Requirements from the Notice of Funding Availability (NOFA):
The recipient shall comply with the requirements found in the Department of Commerce, National Telecommunications
and Information Administration Broadband Technology Opportunities Program, 75 FR 3792, January 22, 2010
http:// www .ntia.doc.gov /frnotices /2010/FR BTOPNOFA_100115.pdf)
C. Notice of Limited Waiver of Section 1605 (Buy American Requirement) of the American Recovery and
Reinvestment Act of 2009 (ARRA)
In accordance with Section 1605 of the Recovery Act, the Secretary of Commerce has granted a limited waiver of the
Recovery Act's Buy American requirements with respect to certain broadband equipment that will be used in projects
funded under the BTOP. A description of this equipment is included in the notice of waiver published in the Federal
Register at 74 FR31410 (July 1, 2009).
D. Whistleblower Protection Act Requirement:
Page 1 of 8
The Recipient shall comply with the Whistleblower Protection requirements of the American Recovery and Reinvestment
Act (Recovery Act), Section 553 of Division A, Title XV, Public Law 111 -5 which provides protection for employees of
non federal employers including employees of state and local governments, contractors, subcontractors, recipients, and
any other non federal employers receiving Recovery Act fund recipients, making specified disclosures relating to possible
fraud, waste, or abuse of Recovery Act funds. The act requires any non federal employer receiving Recovery Act funds
to post a notice of the rights and remedies provided under the Act. The Recipient shall post notice of employees rights
and remedies for whistleblower protections provided under section 1553 of the American Recovery and Reinvestment Act
of 2009 (Pub. L. 111 -5) and shall include this notice requirement in all contracts with subrecipients, contractors, and
subcontractors
Recipients are reminded that the Office of Inspector General will verify the appropriate place of this poster as part of any
field work conducted. Failure to display the poster may result in an audit finding. The poster can be downloaded from
the following web site: http: /www.oig.doc.gov /recovery/whistieblower.html
E. Interest Bearing Accounts
This award is subject to 15 CFR 14.22 requiring recipients of Federal financial assistance that receive more than $120,000
in Federal awards per year to maintain advances of Federal funds in interest bearing accounts. Interest earned on Federal
advances deposited in such accounts (with the exception of $250 per year, which may be retained for administrative
expenses) shall be remitted promptly.
The complete address for remitting checks for interest eamed on Federal advances is Department of Health and Human
Services, Payment Management System, P.O. Box 6021, Rockville, MD 20852. Recipients that do not have electronic
remittance capability should send a check to this address. In keeping with Electronic Funds Transfer rules (31 USC part
206), interest should be remitted to the HHS Payment Management System through an electronic medium such as the
FEDWIR Deposit System. Electronic remittances should be in the format and should include any data that are specified
by the HHS as being necessary to facilitate direct deposit in HHS' account at the Department of Treasury.
F. Nondiscrimination and Interconnection
The recipient shall comply with the nondiscrimination and network interconnection obligations set forth in section
V.D.3.b of the NOFA and in Section 6001(j) of the Recovery Act. Recipients may be asked to provide supporting
documentation upon request from the Grants Officer. Failure to comply with this provision of the award may be
considered grounds for any or all of the following actions: establishment of an account receivable for affected BTOP
award, withholding payments under any and all BTOP awards to the recipient, changing the method of payment from
advance to reimbursement only, or the imposition of other special award conditions, suspension of any BTOP active
awards, and termination of any BTOP active awards.
G. Davis -Bacon Act
The Recipient shall obtain and maintain in its official records documentation of weekly certified payroll reports and the
Statement of Compliance from itself and all subrecipients, contractors, and subcontractor(s) in accordance with Section
1606 of the American Recovery and Reinvestment Act of 2009 and the Davis -Bacon Act and related acts.
The Recipient is not required to submit this documentation to the Grants Office except in response to a request for this
information from its Grants Officer. The authorized representatives and agents of the Grants Office shall be permitted to
Page 2 of 8
inspect all work, materials, payrolls, personnel records, invoices of materials, and other relevant data and records.
Ten days prior to bid opening, any party soliciting a subrecipient, contractor, or subcontractor for work under this Award
to which Davis -Bacon wage determinations apply must verify whether there have been any updates to the applicable
Davis -Bacon wage determinations by reviewing the Department of Labor Wage Determinations OnLine website, free of
charge, at www.wdol.gov. If there have been updates to the wage determinations, then these updated wage rates must be
issued in a bid addendum. The Davis Bacon wage rates that are current ten days prior to the bid opening are the wage
rates that will govern work performed under such solicitation.
3) Automated Standard Application for Payment System
Notwithstanding Section A.02 of the DoC Financial Assistance Standard Terms and Conditions, dated March 2008:
a. The advanced method of payment shall be authorized unless otherwise
specified in a special award condition.
b. Payments will be made through electronic funds transfers, using the
Department of Treasury's Automated Standard Application for Payment (ASAP) system and in accordance with the
requirements of the Debt Collection Improvement Act of 1996. The following information is required when making
withdrawals for this award: (1) ASAP account identification (id) award number found on the cover sheet of this award;
(2) Agency Location Code (ALC) 13060001; and (3) Region Code 02. Recipients do not need to submit a "Request
for Advance or Reimbursement" (SF -270) for payments relating to this award. All non -ASAP Recipient Organizations
must enroll electronically. The ASAP system no longer accepts paper forms for enrollment. If you are not currently
enrolled in the ASAP system you must provide the Federal Awarding Agency with a Point of Contact name, e-mail
address, mailing address, telephone number, EIN and DUNS numbers of your organization in order for the Federal
Awarding Agency Enrollment Initiator (El) to begin the on -line enrollment. If you have questions on this requirement
please contact the Grant Specialist responsible for this award. If you have questions on the electronic process step -by -step
instructions you may contact your responsible Regional Finance Center.
Advances taken through the ASAP shall be limited to the minimum amounts
necessary to meet immediate disbursement needs. Advanced funds not disbursed in a timely manner must be promptly
returned, via an ASAP credit, to the account from which the advanced funding was withdrawn. Advances shall be for
periods not to exceed 30 days.
c. This award has the following control or withdrawal limits set in ASAP:
x_ None
Agency Review required for all withdrawals (see explanation below)
Agency review required for all withdrawal requests over
(see explanation below)
Maximum Draw Amount controls (see explanation below)
each month
each quarter
Page 3 of 8
each year
d. Funds that have been withdrawn through ASAP may be returned to ASAP via the Automated Clearing House (ACH)
or via FEDWIRE. The ACH or FEDWIRE transaction may only be performed by the Recipient's financial institution.
Full or partial payments received by a Payment Requestor/Recipient Organization may be returned to ASAP. All funds
returned to the ASAP system will be credited to the ASAP Suspense Account. The Suspense Account allows the
Regional Financial Center to monitor returned funds and ensure that they are credited to the correct ASAP account.
Returned funds that cannot be identified and classified to an ASAP account will not be accepted and will be returned to
the originating depository financial institution (ODFI).
It is essential that the Payment Requestor/Recipient Organization provide its financial institution with ASAP account
information (ALC, Recipient ID and Account ID) to which the returned funds are to be credited. Additional detailed
information can be found at: http: /www.fms.treas.gov /asap /pay- return2.pdf
There is a 10 -day deadline for the head of the organization to initiate recipient enrollment upon receipt of ASAP
registration notification. Failure to comply could subject the award to a change in the method of payment to
reimbursement only.
4) Post -Award Reporting Requirements
The recipient shall submit a "Financial Status Report" (SF -425) on a quarterly basis for the periods ending March 31, June
30, September 30, and December 31 or any portion thereof. Reports are due no later than 30 days following the end of
each reporting period. A final SF-425 shall be submitted within 90 days after the expiration date of the award.
The recipient shall submit program specific quarterly performance reports electronically to the Federal Program Officer in
the same frequency as the Financial Status Report (SF- 425) unless otherwise authorized by the Grants Officer. The
Federal Program Officer will provide updated instructions for accurate report completion at least 30 days prior to
reporting period end date.
5) Infrastructure -Wide SACs
A. Sale or Lease of Real Property Purchased with Award Funds:
Recipients may not sell or lease any portion of the award funded broadband facilities or equipment during their life,
except as otherwise approved by NTIA. NTIA will consider a petition for waiver of the restriction if: (1) the transaction
is for adequate consideration; (2) the purchaser or lessee agrees to fulfill the terms and conditions relating to the project
after such sale or lease; and (3) the transaction would be in the best interests of those served by the project. The petition
for waiver may be submitted at any time during the life of the award funded faculties and equipment, and it must include
supporting documentation and justification regarding why the petition should be granted. This requirement is not meant
to limit CCI awardees from leasing facilities to another service provider for the provision of broadband services, nor is
this section meant to restrict a transfer of control of the awardee (NOFA, Section IX.C.2).
B. Security Interest in Real Property including Broadband Facilities and Equipment
The recipient shall execute a security interest or other statement of NTIA's interest in real property including broadband
Page 4 of 8
facilities and equipment acquired or improved with Federal funds acceptable to NTIA, which must be perfected and
placed on record in accordance with Local law. This security interest will provide that, for the estimated useful life of the
real property, facilities, or equipment, the recipient will not sell, transfer, convey, or mortgage any interest in the real
property including broadband equipment acquired or improved in whole or in part with Federal funds made available
under the award, nor shall the recipient use the real property including broadband facilities and equipment and for
purposes other than the purposes for which the award was made, without the prior written approval of the Grants Officer.
Such approval may be withheld until such time as the recipient first pays to NTIA the Federal share of the real property
including broadband facilities and equipment as provided in 15 CFR 14.32 (15 CFR 24.31 for state, local, or other
government entities). This security interest shall be executed in advance of any sale or lease and not later than closeout of
the grant.
C. Construction- Related Requirements
Maintenance. The recipient agrees that, for the estimated useful life of the facility funded with this award, the project
will be properly and efficiently administered, operated, and maintained for the purpose authorized by this award and in
accordance with the terms, conditions, requirements, and provisions of the award. If NTIA determines at any time during
the estimated useful life of the project, that the project and any project property is not being properly and efficiently
administered, operated, and maintained, NTIA shall have the right to terminate this award for cause and pursue any other
remedies allowed by law.
Compliance. The recipient shall comply, and must require each contractor or subcontractor to comply, with all
applicable Federal, state, and local laws and regulations.
Energy Efficiency. The recipient shall apply, where feasible, sustainable, and energy efficient, design principles for
the purpose of reducing pollution and energy costs and optimizing lifecycle costs associated with the construction.
Signs. The recipient is responsible for constructing, erecting, and maintaining in good condition throughout the
construction period a sign(s) satisfactory to NTIA that identifies the project and indicates that the project is Federally
funded. NTIA also may require that the recipient maintain a permanent plaque or sign at the project site with the same or
similar information.
Land, Easements, and Rights of Way. The recipient must disclose all encumbrances to the operating unit. The
operating unit will not accept any encumbrance that interferes with the construction, intended use, operation, or
maintenance of the project during its estimated useful life. Unless otherwise provided for in the award, prior to grant of
the award and commencement of construction, or when requested by the operating unit, the recipient must furnish
evidence, satisfactory in form and substance to the operating unit, that title to real property is vested in the recipient, and
that it has obtained any rights -of -way, easements, State and local government permits, long -term leases, or other property
interests.
Relocation Assistance. The provisions of the Uniform Relocation Assistance and Real Property Acquisition Policies
Act of 1970, as amended, (Pub. L. No. 91 -646; 42 U.S.C. 4601 et seq.), are applicable to each recipient of assistance from
an operating unit. This Act provides assistance to persons, businesses, or farm operations affected by the acquisition,
rehabilitation or demolition of real property acquired for a project financed wholly or in part with Federal assistance
funds. It also requires compliance with specific guidelines pertaining to reimbursable costs incidental to such land
Page 5 of 8
acquisition.
Tribal Employment Rights Ordinances. In accordance with Departmental policy, all operating units must recognize
Tribal Employment Rights Ordinances "TEROs which may provide for preferences in contracting and employment, in
connection with its financial assistance awards. Tribal ordinances requiring preference in contracting, hiring, and firing
and the payment of a TERO fee are allowable provisions under Federal awards and should be incorporated by the
operating unit under its grants and contracts with American Indian and Alaska Native tribal governments. The payment of
the TERO fee, which supports the tribal employment rights office to administer the preferences, should generally be
allowable as an expense that is "necessary and reasonable for proper and efficient performance and administration" of an
award, as provided under the applicable cost principles set out in 2 CFR 225.
6) New Award SAC
This award number NT1OBIX5570111, to Northwest Open Access Network, supports the work described in the
Recipient's proposal entitled "Recovery Act State of Washington Broadband Consortium" dated 06/29/2010, revised
SF424C dated 06/21/2010, revised Budget Narrative dated 06/21/2010, revised Detail Budget dated 06 /21 /2010,which are
incorporated into the award by reference. Where the terms of the award and proposal differ, the terms
of the award shall prevail.
7) Matching Requirement
Since this award requires the Recipient to provide $23,546,554 in project related costs from non federal sources, the
Recipient must maintain it its official accounting records an accounting of $77,998,901.
8) Baseline Project Plan
Recipients shall submit baseline project plans and details regarding key outputs and outcomes from their projects within
45 days of the close of the first quarter. Federal Program Officers will provide guidance on the format and content of
these baseline plans and details for this one -time data gathering activity.
Due Date: 11/15/2010
9) Environmental Assessment SAC
The grantee may not expend any Federal funds other than Management and Administration (M &A) funds and limited,
preliminary procurement funds prior to the following:
The completion of an environmental assessment (EA) that meets the requirements of the National Environmental
Policy Act of 1969 (42 U.S.C. 4321 et seq.);
The completion of any required consultations, to include consultations with the State Historic Preservation Office
(SHPO) and the appropriate federally recognized Native American tribes, under Section 106 of the National Historic
Preservation Act of 1966 (16 U.S.C. 470 et seq.) (NHPA), and consultations with the U.S. Fish and Wildlife Service
Page 6 of 8
(USFWS) under Section 7 of the Endangered Species Act (16 U.S.C. 1531 et seq.);
Demonstration of compliance with all other applicable federal, state, and local environmental laws and regulations.
Project implementation (site preparation, demolition, construction, ground disturbance, or any other project
implementation activities) may not begin prior to the completion of the above activities. The completion of a draft EA,
and completion of any required consultations under Section 106 of the NHPA, must be completed no later than six months
after the award date unless a formal request for extension is submitted and approved by the Grants Officer. The grantee
must comply with all conditions placed on the project as the result of consultation processes.
The allowable use of M &A funds prior to beginning project implementation includes, but is not limited to, activities
necessary for the completion of the following:
Pre- construction project planning, including collecting environmentally related information;
Applications for environmental permits;
Studies such as the EA, and any wetland delineations, biological assessments, archaeological surveys, or other
required analyses, and;
Required consultation activities.
The allowable use of funds for limited, preliminary procurements prior to beginning project implementation includes, but
is not limited to, the initiation of activities necessary to meet the project completion requirements as specified in the
award, including the following:
Purchase or lease of equipment, or entering into binding contracts to do so;
Purchase of applicable or conditional insurance;
Funds used to secure land or building leases, including right -of -way easements.
The allowable use of preliminary procurement funds is limited; must not result in an irrevocable commitment of
resources; and is only allowed after inclusion in and approval of a revised 6 -month expenditure plan. The revised 6-
month expenditure plan is due within 30 days of receipt of this Special Award Condition (SAC) and will be reviewed by
the Environmental Program Officer, who will make recommendations to the Federal Program Officer (who has final
approval authority) to ensure all proposed procurement funds are reasonable and necessary to ensure that the project
completion deadline requirements are met. All contracts must contain early termination clauses with termination costs
clearly specified. All equipment purchased or leased in advance of project implementation and before completion of the
EA and applicable consultations must be stored in locations other than the proposed project site and where there will be
no impact to the environment, human health, or cultural resources (in most cases, this means equipment must be stored in
existing warehouses). Under no circumstances will grant funds be drawn down for clearing or excavating land, or
demolition or construction of buildings or towers, before all environmental SACs are completed and cleared. This
limited, preliminary allowable use of funds for purchases and leases is designed for recipient flexibility and to streamline
preparation for project implementation simultaneously during development of the EA and conduct of consultations; the
clause, and all applicable restrictions, is lifted once the EA, applicable consultations, and Finding of No Significant
Impact (FONSI; if applicable) are complete and approved.
Page 7 of 8
While this Special Award Condition is in effect, the Recipient shall submit, in advance of any draw downs from
Automated Standard Application for Payments (ASAP), a revised 6 -month expenditure plan that presents the proposed
M &A and limited, preliminary procurement activities and costs. The revised 6 -month expenditure plan will be submitted
electronically to the Environmental Program Officer, who will review it and provide recommendations to Federal
Program Officer and the Grants Officer for fmal approval to ensure that the proposed activities and expenditures are
reasonable and necessary in the context of environmental compliance. The Environmental Program Officer and Federal
Program Officer must review and recommend and the Grants Officer must approve the revised 6 -month expenditure plan
prior to fund draw downs through ASAP.
Once the EA has been completed, NTIA will review all documentation and determine whether the EA sufficiently
addresses all resource areas and whether the project may qualify for a FONSI. Projects found to have significant impacts
to environmental or historic resources may face de- obligation of funding if impacts cannot be mitigated. The grantee is
required to provide any information requested by NTIA to ensure both initial and ongoing compliance with environmental
and historic preservation laws, regulations, and best practices. The grantee shall notify NTIA within twenty-four (24)
hours upon receipt of any notices of foreclosure; notices for continuing consultation received from the SHPO, Tribal
Historic Preservation Office (THPO), USFWS, or other consulting party; or notices of noncompliance received from
consulting authorities or regulatory agencies.
Any change to the approved project scope that has the potential for altering the nature or extent of environmental or
cultural resources impacts must be brought to the attention of NTIA and will be re- evaluated for compliance with
applicable regulatory requirements.
For all ground disturbing activities that occur during project implementation in the vicinity of known archaeological sites
or suspected or known burials, the grant recipient must ensure that an archaeologist who meets the Secretary of the
Interior ?s Professional Qualification Standards monitors ground disturbance, and if any potential archeological resources
or buried human remains are discovered, then the grantee must immediately cease construction in that area and notify
NTIA and the interested State Historic Preservation Offices, Tribal Historic Preservation Offices, and tribes. Such
construction activities may then only continue with the written approval of NTIA.
Due Date: 02/01/2011
Page 8 of 8
15 CFR PART 14
Office of the Secretary, Commerce
13.10 Accommodation of intergovern-
mental concerns.
(a) If a state process provides a state
process recommendation to the Depart-
ment through its single point of con-
tact, the Secretary either:
(1) Accepts the recommendation;
(2) Reaches a mutually agreeable so-
lution with the state process; or
(3) Provides the single point of con-
tact with a written explanation of the
decision in such form as the Secretary
in his or her discretion deems appro-
priate. The Secretary may also supple-
ment the written explanation by pro-
viding the explanation to the single
point of contact by telephone, other
telecommunication, or other means.
(b) In any explanation under para-
graph (a)(3) of this section, the Sec-
retary informs the single point of con-
tact that:
(1) The Department will not imple-
ment its decision for at least ten days
after the single point of contact re-
ceives the explanation; or
(2) The Secretary has reviewed the
decision and determined that, because
of unusual circumstances, the waiting
period of at least ten days is not fea-
sible.
(c) For purposes of computing the
waiting period under paragraph (b)(1)
of this section, a single point of con-
tact is presumed to have received writ-
ten notification 5 days after the date of
mailing of such notification.
;113.11 Obligations in interstate situa-
tions.
(a) The Secretary is responsible foi•:
(1) Identifying proposed Federal fi-
nancial assistance and direct Federal
development that have an impact on
interstate areas;
(2) Notifying appropriate officials
and entities in states which have
adopted a process and which select the
Department's program or activity.
(3) Making efforts to identify and no-
tify the affected state, areawide, re-
gional, and local officials and entities
in those states that have not adopted a
process under the Order or do not se-
lect the Department's program or ac-
tivity;
(4) Responding pursuant to §13.10 of
this part if the Secretary receives a
recommendation from a designated
135
areawide agency transmitted by a sin-
gle point of contact, in cases in which
the review, coordination, and commu-
nication with the Department have
been delegated.
(b) The Secretary uses the procedures
in §13 10 if a state process provides a
state process recommendation to the
Department through a single point of
contact.
PART 14— UNIFORM ADMINISTRA-
TIVE REQUIREMENTS FOR GRANTS
AND AGREEMENTS WITH INSTITU-
TIONS OF HIGHER EDUCATION,
HOSPITALS, OTHER NON PROFIT,
AND COMMERCIAL ORGANIZA-
TIONS
Sec
14.1
142
143
144
145
14.6
Subpart A General
Purpose
Definitions.
Effect on other issuances
Deviations
Subawards
Availability of OMB circulars.
Pt. 14
Subpart B —Pre -Award Requirements
14.10 Purpose.
14.11 Pre -award policies.
14.12 Forma for applying for Federal assist-
ance
14.13 Debarment and suspension.
14.14 High risk special award conditions.
14.15 Metric system of measurement.
1416 Resource Conservation and Recovery
Act (RCRA).
1417 Certification and representations.
14.18 Taxpayer identification number.
Subpart C—Post -Award Requirements
FINANCIAL AND PROGRAM MANAGEMENT
14.20 Purpose of financial and program man-
agement.
19.21 Standards for financial management
systems.
14.22 Payment.
19.23 Cost sharing or matching
14.24 Program income.
14.25 Revision of budget and program plans.
14.26 Non Federal audits.
14.27 Allowable costs.
14 28 Period of availability of funds.
PROPERTY STANDARDS
14.30 Purpose of property standards.
14.31 Insurance coverage.
14.32 Real property.
14.33 Federally -owned and exempt property.
14.1
14 34 Equipment.
14.35 Supplies and other expendable prop-
erty.
14.36 Intangible property.
14.37 Property trust relationship.
PROCUREMENT STANDARDS
14 40 Purpose of procurement standards.
14 41 Recipient responsibilities.
14 42 Codes of conduct.
14 43 Competition.
14 44 Procurement procedures.
19 45 Cost and price analysis.
14.46 Procurement records.
14.47 Contract administration.
14.48 Contract provisions.
REPORTS AND RECORDS
14.50 Purpose of reports and records.
14 51 Monitoring and reporting program
performance.
14 52 Financial reporting.
14.53 Retention and aocess requirements for
records.
TERMINATION AND ENFORCEMENT
14.60 Purpose of termination and enforce-
ment.
14.61 Termination.
14.62 Enforcement.
Subpart D After the Award Requirements
14.70 Purpose.
14.71 Closeout procedures.
14.72 Subsequent adjustments and con-
tinuing responsibilities.
14.73 Collection of amounts due.
APPENDIX A TO PART 14—CONTRACT PROVI-
SIONS
AUTHORrrT. 5 U.S.C. 301; OMB Circular A-
110 (64 FR 54926, October 8, 1999).
SOURCE: 63 FR 47156, Sept. 4, 1998, unless
otherwise noted.
EDITORIAL NOTE: Nomenclature changes to
part 14 appear at 66 FR 49828, Oct. 1, 2001.
Subpart A— General
14.1 Purpose.
This part establishes uniform admin-
istrative requirements for Department
of Commerce (DoC) grants and agree-
ments awarded to institutions of high-
er education, hospitals, other non -prof-
it, and commercial organizations. The
Grants Officer shall incorporate this
part by reference into financial assist-
ance awards made to organizations to
which it will be applied. The DoC shall
not impose additional or inconsistent
requirements, except as provided in
136
15 CFR Subtitle A (1 -1 -02 Edition)
§§14.4, and 14.14 or unless specifically
required by Federal statute or execu-
tive order. This part applies to grants
and agreements awarded to foreign
governments, organizations under the
jurisdiction of foreign governments,
and international organizations unless
otherwise determined by the Grants Of-
ficer after coordination with the appro-
priate program officials. Uniform re-
quirements for State, local, and tribal
governments are in 15 CFR part 24,
Uniform Administrative Requirements
for Grants and Cooperative Agreements
to State and Local Governments. Non-
profit organizations that implement
Federal programs for the States are
also subject to State requirements.
14.2 Definitions.
(a) Accrued expenditures means the
charges incurred by the recipient dur-
ing a given period requiring the provi-
sion of funds for:
(1) Goods and other tangible property
received:
(2) Services performed by employees,
contractors, subrecipients, and other
payees; and
(3) Other amounts becoming owed
under programs for which no current
services or performance is required.
(b) Accrued income means the sum of:
(1) Earnings during a given period
from services performed by the recipi-
ent, and goods and other tangible prop-
erty delivered to purchasers; and
(2) Amounts becoming owed to the
recipient for which no current services
or performance is required by the re-
cipient.
(C) Acquisition cost of equipment means
the net invoice price of the equipment,
including the cost of modifications, at-
tachments, accessories, or auxiliary
apparatus necessary to make the prop-
erty usable for the purpose for which it
was acquired. Other charges, such as
the cost of installation, transportation,
taxes, duty or protective in- transit in-
surance, shall be included or excluded
from the unit acquisition cost in ac-
cordance with the recipient's regular
accounting practices.
(d) Advance means a payment made
by electronic funds transfer, Treasury
check, or other appropriate payment
mechanism to a recipient upon its re-
quest either before outlays are made by
Office of the Secretary, Commerce
the recipient or through the use of pre-
determined payment schedules.
(e) Assistant Secretary means the DoC
Chief Financial Officer and Assistant
Secretary for Administration who has
been delegated by the Secretary of
Commerce the responsibility for devel-
oping and implementing policies,
standards, and procedures for the ad-
ministration of financial assistance
programs of the DoC.
(f) Award means financial assistance
that provides support or stimulation to
accomplish a public purpose. Awards
include grants and other agreements in
the form of money or property in lieu
of money, by the Federal Government
to an eligible recipient. The term does
not include: technical assistance,
which provides services instead of
money; other assistance in the form of
loans, loan guarantees, interest sub-
sidies, or insurance; direct payments of
any kind to individuals; and, contracts
which are required to be entered into
and administered under procurement
laws and regulations.
(g) Cash contributions means the re-
cipient's cash outlay, including the
outlay of money contributed to the re-
cipient by third parties.
(h) Closeout means the process by
which the Grants Officer determines
that all applicable administrative ac-
tions and all required work of the
award have been completed by the re-
cipient and the DoC.
(i) Contract means a procurement
contract under an award or subaward,
and a procurement subcontract under a
recipient's or subrecipient's contract
(j) Cost sharing or matching means
that portion of project or program
costs not borne by the Federal Govern-
ment.
(k) Date of completion means the date
on which all work under an award is
completed or the date on the award
document, or any supplement or
amendment thereto, on which Federal
sponsorship ends.
(1) Disallowed costs means those
charges to an award that the Grants
Officer determines to be unallowable,
in accordance with the applicable Fed-
eral cost principles or other terms and
conditions contained in the award.
(m) DoC operating unit means an or-
ganizational unit of the Department
137
14.2
that has the authority to fund finan-
cial assistance awards.
(n) Equipment means tangible non-
expendable personal property including
exempt property charged directly to
the award having a useful life of more
than one year and an acquisition cost
of $5000 or more per unit. However, con-
sistent with recipient policy, lower
limits may be established.
(o) Excess property means property
under the control of the DoC that, as
determined by the Grants Officer after
coordination with the authorized prop-
erty official, is no longer required for
DoC needs or the discharge of its re-
sponsibilities.
(p) Exempt property means tangible
personal property acquired in whole or
in part with Federal funds, where the
DoC has statutory authority to vest
title in the recipient without further
obligation to the Federal Government
An example of exempt property author-
ity is contained in the Federal Grant
and Cooperative Agreement Act (31
U.S.C, 6306), for property acquired
under an award to conduct basic or ap-
plied research by a non profit institu-
tion of higher education or non- profit
organization whose principal purpose is
conducting scientific research.
(q) Federal awarding agency means
the Federal agency that provides an
award to the recipient.
(r) Federal funds authorized means the
total amount of Federal funds obli-
gated by the Federal Government for
use by the recipient. This amount may
include any authorized carryover of un-
obligated funds from prior funding pe-
riods when permitted by agency regula-
tions or agency implementing instruc-
tions.
(s) Federal share of real property,
equipment, or supplies means that per-
centage of the property's acquisition
costs and any improvement expendi-
tures paid with Federal funds.
(t) Funding period means the period of
time when Federal funding is available
for obligation by the recipient.
(u) Grants Officer means the DoC offi-
cial with the delegated authority to
award, amend, administer, closeout,
suspend, and/or terminate grants and
cooperative agreements and make re-
lated determinations and findings.
14.2 15 CFR Subtitle A (1 -1 -02 Edition)
(v) Intangible property and debt instru-
ments means, but is not limited to,
trademarks, copyrights, patents and
patent applications and such property
as loans, notes and other debt instru-
ments, lease agreements, stock and
other instruments of property owner-
ship, whether considered tangible or in-
tangible.
(w) Obligations means the amounts of
orders placed, contracts and grants
awarded, services received and similar
transactions during a given period that
require payment by the recipient dur-
ing the same or a future period.
(x) Outlays or expenditures means
charges made to the project or pro-
gram. They may be reported on a cash
or accrual basis. For reports prepared
on a cash basis, outlays are the sum of
cash disbursements for direct charges
for goods and services, the amount of
indirect expense charged, the value of
third party in -kind contributions ap-
plied and the amount of cash advances
and payments made to subrecipients.
For reports prepared on an accrual
basis, outlays are the sum of cash dis-
bursements for direct charges for goods
and services, the amount of indirect ex-
pense incurred, the value of in -kind
contributions applied, and the net in-
crease (or decrease) in the amounts
owed by the recipient for goods and
other property received, for services
performed by employees, contractors,
subrecipients and other payees and
other amounts becoming owed under
programs for which no current services
or performance are required.
(y) Personal property means property
of any kind except real property. It
may be tangible, having physical exist-
ence, or intangible, having no physical
existence, such as copyrights, patents,
or securities.
(z) Prior approval means written ap-
proval by an authorized official evi-
dencing prior consent.
(aa) Program income means gross in-
come earned by the recipient that is di-
rectly generated by a supported activ-
ity or earned as a result of the award
(see exclusions in §14.24 (e) and (h)).
Program income includes, but is not
limited to, income from fees for serv-
ices performed, the use or rental of real
or personal property acquired under
federally- funded projects, the sale of
138
commodities or items fabricated under
an award, license fees and royalties on
patents and copyrights, and interest on
loans made with award funds. Interest
earned on advances of Federal funds is
not program income. Except as other-
wise provided in DoC regulations or the
terms and conditions of the award, pro-
gram income does not include the re-
ceipt of principal on loans, rebates,
credits, discounts, etc., or interest
earned on any of them.
(bb) Project costs means all allowable
costs, as set forth in the applicable
Federal cost principles, incurred by a
recipient and the value of the contribu-
tions made by third parties in accom-
plishing the objectives of the award
during the project period.
(cc) Project period means the period
established in the award document dur-
ing which Federal sponsorship begins
and ends.
(dd) Property means, unless otherwise
stated, real property, equipment, in-
tangible property and debt instru-
ments.
(ee) Real property means land, includ-
ing land improvements, structures and
appurtenances thereto, but excludes
movable machinery and equipment.
(ff) Recipient means an organization
receiving financial assistance directly
from the DoC to carry out a project or
program. The term includes public and
private institutions of higher edu-
cation, public and private hospitals,
and other quasi public and private non-
profit organizations such as, but not
limited to, community action agencies,
research institutes, educational asso-
ciations, and health centers. The term
may include commercial organizations,
foreign or international organizations
(such as agencies of the United Na-
tions) which are recipients, subrecipi-
ents, or contractors or subcontractors
of recipients or subrecipients at the
discretion of the DoC. The term does
not include government -owned con-
tractor- operated facilities or research
centers providing continued support for
mission oriented, large -scale programs
that are government -owned or con-
trolled, or are designated as federally
funded research and development cen-
ters.
(gg) Research and development means
all research activities, both basic and
Office of the Secretary, Commerce
applied, and all development activities
that are supported at universities, col-
leges, other non profit, and commercial
institutions. "Research" is defined as a
systematic study directed toward fuller
scientific knowledge or understanding
of the subject studied. "Development"
is the systematic use of knowledge and
understanding gained from research di-
rected toward the production of useful
materials, devices, systems, or meth-
ods, including design and development
of prototypes and processes. The term
research also includes activities in-
volving the training of individuals in
research techniques where such activi-
ties utilize the same facilities as other
research and development activities
and where such activities are not in-
cluded in the instruction function.
(hh) Small awards means a grant or
cooperative agreement not exceeding
the simplified acquisition threshold
fixed at 41 U.S.C. 403(11) (currently
$100,000).
(ii) Subaward means an award of fi-
nancial assistance in the form of
money, or property in lieu of money,
made under an award by a recipient to
an eligible subrecipient or by a sub
recipient to a lower tier subrecipient.
The term includes financial assistance
when provided by any legal agreement,
even if the agreement is called a con-
tract, but does not include procure-
ment of goods and services nor does it
include any form of assistance which is
excluded from the definition of
"award" in paragraph (f) of this sec-
tion.
(jj) Subreczpient means the legal enti-
ty to which a subaward is made and
which is accountable to the recipient
for the use of the funds provided. The
term may include foreign or inter-
national organizations (such as agen-
cies of the United Nations) at the dis-
cretion of the DoC.
(kk) Supplies means all personal prop-
erty excluding equipment, intangible
property, and debt instruments as de-
fined in this section, and inventions of
a contractor conceived or first actually
reduced to practice in the performance
of work under a funding agreement
"subject inventions as defined in 37
CFR part 401, "Rights to Inventions
Made by Nonprofit Organizations and
Small Business Firms Under Govern-
139
14.2
ment Grants, Contracts, and Coopera-
tive Agreements."
(11) Suspension means an action taken
by the Grants Officer after coordina-
tion with the DoC operating unit that
temporarily withdraws Federal spon-
sorship under an award, pending cor-
rective action by the recipient or pend-
ing a decision to terminate the award
by the Grants Officer. Suspension of an
award is a separate action from suspen-
sion under DoC regulations at 15 CFR
part 26 implementing E.O.s 12549 and
12689, "Debarment and Suspension."
(mm) Termination means the can-
cellation by the Grants Officer of Fed-
eral sponsorship, in whole or in part,
under an agreement at any time prior
to the date of completion.
(nn) Third party in -kind contributions
means the value of non -cash contribu-
tions provided by non Federal third
parties. Third party in -kind contribu-
tions may be in the form of real prop-
erty, equipment, supplies and other ex-
pendable property, and the value of
goods and services directly benefiting
and specifically identifiable to the
project or program.
(oo) Unliquidated obligations, for fi-
nancial reports prepared on a cash
basis, means the amount of obligations
incurred by the recipient that have not
been paid. For reports prepared on an
accrued expenditure basis, they rep-
resent the amount of obligations in-
curred by the recipient for which an
outlay has not been recorded.
(pp) Unobligated balance means the
portion of the funds authorized by the
DoC that has not been obligated by the
recipient and is determined by deduct-
ing the cumulative obligations from
the cumulative funds authorized.
(qq) Unrecovered indirect cost means
the difference between the amount
awarded and the amount which could
have been awarded under the recipi-
ent's approved negotiated indirect cost
rate.
(rr) Working capital advance means a
procedure whereby funds are advanced
to the recipient to cover its estimated
disbursement needs for a given initial
period.
14.3 15 CFR Subtitle A (1 -1 -02 Edition)
14.3 Effect on other issuances.
For awards subject to this part, all
administrative requirements of codi-
fied program regulations, program
manuals, handbooks and other non-
regulatory materials which are incon-
sistent with the requirements of this
part shall be superseded, except to the
extent they are required by statute, or
authorized in accordance with the devi-
ations provision in 14 4.
*14.4 Deviations.
The Office of Management and Budg-
et (OMB) may grant exceptions for
classes of grants or recipients subject
to the requirements of this part when
exceptions are not prohibited by stat-
ute. However, in the interest of max-
imum uniformity, exceptions from the
requirements of this part shall be per-
mitted only in unusual circumstances.
The Assistant Secretary may apply
more restrictive requirements to a
class of recipients when approved by
OMB. The Assistant Secretary may
apply less restrictive requirements
when awarding small awards, except
for those requirements which are stat-
utory. Exceptions on a case -by -case
basis may also be made by the Assist-
ant Secretary. An exception made on a
case -by -case basis will apply to a single
award.
14.5 Subawards.
Unless sections of this part specifi-
cally exclude subrecipients from cov-
erage, the provisions of this part shall
be applied to subrecipients performing
work under awards if such subrecipi-
ents are institutions of higher edu-
cation, hospitals, other non profit, or
commercial organizations. This part
also applies to subrecipients per-
forming work under awards if the sub
recipients are foreign governments, or-
ganizations under the jurisdiction of
foreign governments, and international
organizations unless otherwise deter-
mined by the Grants Officer. State and
local government subrecipients are
subject to the provisions of regulations
implementing the grants management
common rule, "Uniform Administra-
tive Requirements for Grants and Co-
operative Agreements to State and
Local Governments," (15 CFR part 24).
140
14.6 Availability of OMB circulars.
OMB circulars cited in this part are
available from the Office of Manage-
ment and Budget (OMB) by writing to
the Executive Office of the President,
Publications Service, 725 17th Street,
NW, Suite 200, Washington DC 20503.
Subpart B —Pre -Award
Requirements
14.10 Purpose.
Sections 14.11 through 14.18 prescribe
forms and instructions and other pre
award matters to be used in applying
for Federal awards.
*14.11 Pre•award policies.
(a) Use of grants and cooperative agree-
ments, and contracts. In each instance,
the Grants Officer after coordination
with the DoC operating unit shall de-
cide on the appropriate award instru-
ment (i.e., grant, cooperative agree-
ment, or contract). The Federal Grant
and Cooperative Agreement Act (31
U.S.C. 6301 -08) governs the use of
grants, cooperative agreements and
contracts. A grant or cooperative
agreement shall be used only when the
principal purpose of a transaction is to
accomplish a public purpose of support
or stimulation authorized by Federal
statute. The statutory criterion for
choosing between grants and coopera-
tive agreements is that for the latter,
"substantial involvement is expected
between the executive agency and the
State, local government, or other re-
cipient when carrying out the activity
contemplated in the agreement." Con-
tracts shall be used when the principal
purpose is acquisition of property or
services for the direct benefit or use of
the Federal Government.
(b) Public notice and priority setting.
The DoC operating units shall notify
the public of their intended funding
priorities for discretionary grant pro-
grams, unless funding priorities are es-
tablished by Federal statute. At a min-
imum, public notices shall be published
in the FEDERAL REGISTER.
14.12 Forms for applying for Federal
assistance.
(a) The DoC operating units shall
comply with the applicable report
Office of the Secretary, Commerce
clearance requirements of 5 CFR part
1320, "Controlling Paperwork Burdens
on the Public," with regard to all
forms used by the DoC operating units
in place of or as a supplement to the
Standard Form 424 (SF-424) series.
(b) Apphcants shall use the SF-424
series or those forms and instructions
prescribed by the DoC.
(c) For Federal programs covered by
E.O. 12372, "Intergovernmental Review
of Federal Programs," the applicant
shall complete the appropriate sections
of the SF-424 (Application for Federal
Assistance) indicating whether the ap-
plication was subject to review by the
State Single Point of Contact (SPOC).
The name and address of the SPOC for
a particular State can be obtained from
the DoC or the Catalog of Federal Do-
mestic Assistance. The SPOC shall ad-
vise the applicant whether the program
for which application is made has been
selected by that State for review.
(d) DoC operating units that do not
use the SF-424 form should indicate
whether the application is subject to
review by the State under E.O. 12372.
$14.13 Debarment and suspension.
The DoC and recipients shall comply
with the nonprocurement debarment
and suspension common rule imple-
menting E.O.s 12549 and 12689, "Debar-
ment and Suspension," which is imple-
mented by DoC at 15 CFR part 26. This
common rule restricts subawards and
contracts with certain parties that are
debarred, suspended or otherwise ex-
cluded from or ineligible for participa-
tion in Federal assistance programs or
activities.
14.14 High risk special award condi-
tions.
If an applicant or recipient: has a his-
tory of poor performance, is not finan-
cially stable, has a management sys-
tem that does not meet the standards
prescribed in this part, has not con-
formed to the terms and conditions of
a previous award, or is not otherwise
responsible, the Grants Officer may im-
pose additional requirements as need-
ed, provided that such applicant or re-
cipient is notified in writing as to: the
nature of the additional requirements,
the reason why the additional require-
ments are being imposed, the nature of
141
14.17
the corrective action needed, the time
allowed for completing the corrective
actions, and the method for requesting
reconsideration of the additional re-
quirements imposed. Any special con-
ditions shall be promptly removed once
the conditions that prompted them
have been corrected.
14.15 Metric system of measurement.
The Metric Conversion Act. as
amended by the Omnibus Trade and
Competitiveness Act (15 U.S.C. 205) de-
clares that the metric system is the
preferred measurement system for U.S.
trade and commerce. The Act requires
each Federal agency to establish a date
or dates in consultation with the Sec-
retary of Commerce, when the metric
system of measurement will be used in
the agency's procurements, grants, and
other business related activities Met-
ric implementation may take longer
where the use of the system is initially
impractical or likely to cause signifi-
cant inefficiencies in the accomplish-
ment of federally- funded activities.
The DoC shall follow the provisions of
E.O. 12770, "Metric Usage in Federal
Government Programs."
14.16 Resource Conservation and Re-
covery Act (RCRA).
Under RCRA (Pub. L. 94 -580, 42 U.S.C.
6962), any State agency or agency of a
political subdivision of a State which is
using appropriated Federal funds must
comply with section 6002. Section 6002
requires that preference be given in
procurement programs to the purchase
of specific products containing recy-
cled materials identified in guidelines
developed by the Environmental Pro-
tection Agency (EPA) (40 CFR parts
247 -254). Accordingly, State and local
institutions of higher education, hos-
pitals, non profit, and commercial or-
ganizations that receive direct Federal
awards or other Federal funds shall
give preference in their procurement
programs funded with Federal funds to
the purchase of recycled products pur-
suant to the EPA guidelines.
14.17 Certifications and representa-
tions.
Unless prohibited by statute or codi-
fied regulation, Grants Officers may
14.18
allow recipients to submit certifi-
cations and representations required
by statute, executive order, or regula-
tion on an annual basis, if the recipi-
ents have ongoing and continuing rela-
tionships with the agency. When au-
thorized, annual certifications and rep-
resentations shall be signed by respon-
sible officials with the authority to en-
sure recipients' compliance with the
pertinent requirements.
14.18 Taxpayer identification num-
ber.
In accordance with the provisions of
the Debt Collection Improvement Act
of 1996 (31 U.S.C. 7701), the taxpayer
identifying number will be required
from applicants for grants and coopera-
tive agreements funded by the DoC.
This number may be used for purposes
of collecting and reporting on any de-
linquent amounts arising from awards
made under this part.
Subpart C— Post -Award
Requirements
FINANCIAL AND PROGRAM MANAGEMENT
14.20 Purpose of financial and pro-
gram management.
Sections 14.21 through 14.28 prescribe
standards for financial management
systems, methods for making pay-
ments and rules for: satisfying cost
sharing and matching requirements,
accounting for program income, budget
revision approvals, conducting audits,
determining allowability of cost, and
establishing fund availability.
1421 Standards for financial man-
agement systems.
(a) The Grants Officer shall require
recipients to relate financial data to
performance data and develop unit cost
information whenever practical.
(b) Recipients' financial management
systems shall provide for the following:
(1) Accurate, current and complete
disclosure of the financial results of
each federally- sponsored project or
program in accordance with the report-
ing requirements set forth in §14.52. If
the Grants Officer requires reporting
on an accrual basis from a recipient
that maintains its records on other
than an accrual basis, the recipient
142
15 CFR Subtitle A (1 -1 -02 Edition)
shall not be required to establish an ac-
crual accounting system. These recipi-
ents may develop such accrual data for
its reports on the basis of an analysis
of the documentation on hand.
(2) Records that identify adequately
the source and application of funds for
federally- sponsored activities. These
records shall contain information per-
taining to Federal awards, authoriza-
tions, obligations, unobligated bal-
ances, assets, outlays, income and in-
terest.
(3) Effective control over and ac-
countability for all funds, property and
other assets. Recipients shall ade-
quately safeguard all such assets and
assure they are used solely for author-
ized purposes.
(4) Comparison of outlays with budg-
et amounts for each award. Whenever
appropriate, financial information
should be related to performance and
unit cost data.
(5) Written procedures to minimize
the time elapsing between the transfer
of funds to the recipient from the U.S.
Treasury and the issuance or redemp-
tion of checks, warrants or payments
by other means for program purposes
by the recipient. To the extent that the
provisions of the Cash Management Im-
provement Act (CMIA) (Pub. L. 101 -453)
govern, payment methods of State
agencies, instrumentalities, and fiscal
agents shall be consistent with CMIA
Treasury -State Agreements or the
CMIA default procedures codified at 31
CFR part 205, "Withdrawal of Cash
from the Treasury for Advances under
Federal Grant and Other Programs
(6) Written procedures for deter-
mining the reasonableness, allowability
and allowability of costs in accordance
with the provisions of the applicable
Federal cost principles and the terms
and conditions of the award.
(7) Accounting records including cost
accounting records that are supported
by source documentation.
(c) Where the DoC guarantees or in-
sures the repayment of money bor-
rowed by the recipient, the Grants Offi-
cer may require adequate bonding and
insurance if the bonding and insurance
requirements of the recipient are not
deemed adequate to protect the inter-
est of the Federal Government.
Office of the Secretary, Commerce
(d) The Grants Officer may require
adequate fidelity bond coverage where
the recipient lacks sufficient coverage
to protect the Federal Government's
interest.
(e) Where bonds are required in the
situations described above, the bonds
shall be obtained from companies hold-
ing certificates of authority as accept-
able sureties, as prescribed in 31 CFR
part 223, "Surety Companies Doing
Business with the United States."
14.22 Payment.
(a) Payment methods shall minimize
the time elapsing between the transfer
of funds from the United States Treas-
ury and the issuance or redemption of
checks, warrants, or payment by other
means by the recipients. Payment
methods of State agencies or instru-
mentalities shall be consistent with
Treasury -State CMIA agreements or
default procedures codified at 31 CFR
part 205. Federal payments to recipi-
ents shall be made by electronic funds
transfer in accordance with the Debt
Collection Improvement Act of 1996,
unless waived in accordance with the
provisions of this Act.
(b) Recipients are to be paid in ad-
vance, provided they maintain or dem-
onstrate the willingness to maintain:
written procedures that minimize the
time elapsing between the transfer of
funds and disbursement by the recipi-
ent, and financial management sys-
tems that meet the standards for fund
control and accountability as estab-
lished in 14.21. Advances of funds to a
recipient organization shall be limited
to the minimum amounts needed and
be timed to be in accordance with the
actual, immediate cash requirements
of the recipient organization in car-
rying out the purpose of the approved
program or project. The timing and
amount of advances of funds shall be as
close as is administratively feasible to
the actual disbursements by the recipi-
ent organization for direct program or
project costs and the proportionate
share of any allowable indirect costs.
(c) Whenever possible, advances may
be consolidated to cover anticipated
cash needs for all awards made by the
DoC operating unit to the recipient.
(1) Advance payment mechanisms in-
chide, but are not limited to, electronic
143
14.22
funds transfer and Treasury check
when the electronic funds transfer re-
quirement is waived.
(2) Advance payment mechanisms are
subject to 31 CFR part 205
(3) Recipients may submit requests
for advances and reimbursements on a
monthly basis.
(d) Requests for advance payment
shall be submitted on SF -270, "Request
for Advance or Reimbursement," or
other forms as may be authorized by
OMB. This form is not to be used when
advance payments are made to the re-
cipient automatically through the use
of a predetermined payment schedule
or if precluded by special DoC instruc-
tions for electronic funds transfer.
(e) Reimbursement is the preferred
method when the requirements in para-
graph (b) of this section cannot be met.
The Grants Officer may also use this
method on any construction agree-
ment, or if the major portion of the
construction project is accomplished
through private market financing or
Federal loans, and the Federal assist-
ance constitutes a minor portion of the
project.
(1) When the reimbursement method
is used, the DoC shall make payment
within 30 days after receipt of the bill-
ing, unless the billing is improper.
(2) Recipients are authorized to sub-
mit request for reimbursement at least
monthly when electronic funds trans-
fers are not used.
(f) If a recipient cannot meet the cri-
teria for advance payments and the
Grants Officer after coordination with
the operating unit has determined that
reimbursement is not feasible because
the recipient lacks sufficient working
capital, the Grants Officer may author-
ize payment on a working capital ad-
vance basis. Under this procedure, the
Grants Officer shall provide for advanc-
ing funds to the recipient to cover its
estimated disbursement needs for an
initial period generally geared to the
awardee's disbursing cycle. Thereafter,
payments shall be provided by reim-
bursing the recipient for its actual
cash disbursements. The working cap-
ital advance method of payment shall
not be used for recipients unwilling or
unable to provide timely advances to
their subrecipient to meet the sub
recipient's actual cash disbursements.
14.22
(g) To the extent available, recipi-
ents shall disburse funds available from
repayments to and interest earned an a
revolving fund, program income, re-
bates, refunds, contract settlements,
audit recoveries and interest earned on
such funds before requesting additional
payments.
(h) Unless otherwise required by stat-
ute, Grants Officers shall not withhold
payments for proper charges made by
recipients at any time during the
project period unless paragraph (h) (1)
or (2) of this section apply.
(1) A recipient has failed to comply
with the project objectives, the terms
and conditions of the award, or Federal
reporting requirements.
(2) The recipient or subrecipient is
delinquent in a debt to the United
States as defined in OMB Circular A-
129, "Managing Federal Credit Pro-
grams." Under such conditions, the
Grants Officer may, upon reasonable
notice, inform the recipient that pay-
ments shall not be made for obligations
incurred after a specified date until the
conditions are corrected or the indebt-
edness to the Federal Government is
liquidated.
(i) Standards governing the use of
banks and other institutions as deposi-
tories of funds advanced under awards
are as follows.
(1) Except for situations described in
paragraph (i)(2) of this section, the DoC
shall not require separate depository
accounts for funds provided to a recipi-
ent or establish any eligibility require-
ments for depositories for funds pro-
vided to a recipient. However, recipi-
ents must be able to account for the re-
ceipt, obligation and expenditure of
funds.
(2) Advances of Federal funds shall be
deposited and maintained in insured
accounts whenever possible.
(j) Consistent with the national goal
of expanding the opportunities for
women -owned and minority -owned
business enterprises, recipients shall be
encouraged to use women -owned and
minority -owned banks (a bank which is
owned at least 50 percent by women or
minority group members).
(k) Recipients shall maintain ad-
vances of Federal funds in interest
bearing accounts, unless paragraph (k)
(1), (2) or (3) of this section apply.
144
15 CFR Subtitle A (1 -1 -02 Edition)
(1) The recipient receives less than
$120,000 in Federal awards per year.
(2) The best reasonably available in-
terest bearing account would not be ex-
pected to earn interest in excess of $250
per year on Federal cash balances.
(3) The depository would require an
average or minimum balance so high
that it would not be feasible within the
expected Federal and non Federal cash
resources.
(1) For those entities where CMIA
and its implementing regulations do
not apply, interest earned on Federal
advances deposited in interest bearing
accounts shall be remitted annually to
Department of Health and Human
Services, Payment Management Sys-
tem, Rockville, MD 20852. Interest
amounts up to $250 per year may be re-
tained by the recipient for administra-
tive expense. State universities and
hospitals shall comply with CMIA, as it
pertains to interest. If an entity sub-
ject to CMIA uses its own funds to pay
pre -award costs for discretionary
awards without prior written approval
from the Grants Officer, it waives its
right to recover the interest under
CMIA.
(m) Except as noted elsewhere in this
part, only the following forms shall be
authorized for the recipients in re-
questing advances and reimburse-
ments. Grants Officers shall not re-
quire more than an original and two
copies of these forms.
(1) SF -270, Request for Advance or
Reimbursement. DoC has adopted the
SF -270 as a standard form for all non
construction programs when predeter-
mined advance methods are not used.
The Grants Officer, however, may
waive the requirement to use the SF-
270 for requesting funds under grants
and cooperative agreements. Grants Of-
ficers have the option of using this
form for construction programs in lieu
of the SF -271, "Outlay Report and Re-
quest for Reimbursement for Construc-
tion Programs."
(2) SF -271, Outlay Report and Re-
quest for Reimbursement for Construc-
tion Programs. DoC has adopted the
SF -271 as the standard form to be used
for requesting reimbursement for con-
struction programs. However, the
Grants Officer may substitute the SF-
270 when the Grants Officer determines
Office of the Secretary, Commerce
that the SF -270 provides adequate in-
formation to meet Federal needs.
$14.23 Cost sharing or matching.
(a) All contributions, including cash
and third party in -kind, shall be ac-
cepted as part of the recipient's cost
sharing or matching when such con-
tributions meet all of the following cri-
teria.
(1) Are verifiable from the recipient's
records.
(2) Are not included as contributions
for any other federally assisted project
or program.
(3) Are necessary and reasonable for
proper and efficient accomplishment of
project or program objectives.
(4) Are allowable under the applica-
ble cost principles.
(5) Are not paid by the Federal Gov-
ernment under another award, except
where authorized by Federal statute to
be used for cost sharing or matching.
(6) Are provided for in the approved
budget.
(7) Conform to other provisions of
this part, as applicable.
(b) Unrecovered indirect costs may be
included as part of cost sharing or
matching only with the prior approval
of the Grants Officer.
(c) Values for recipient contributions
of services and property shall be estab-
lished in accordance with the applica-
ble cost principles. If DoC authorizes
recipients to donate buildings or land
for construction/facilities acquisition
projects or long -term use, the value of
the donated property for cost sharing
or matching shall be the lesser of para-
graph (c) (1) or (2).
(1) The certified value of the remain-
ing life of the property recorded in the
recipient's accounting records at the
time of donation.
(2) The current fair market value.
However, when there is sufficient jus-
tification, the Grants Officer may ap-
prove the use of the current fair mar-
ket value of the donated property, even
if it exceeds the certified value at the
time of donation to the project
(d) Volunteer services furnished by
professional and technical personnel,
consultants, and other skilled and un-
skilled labor may be counted as cost
sharing or matching if the service is an
integral and necessary part of an ap-
145
14.23
proved project or program. Rates for
volunteer services shall be consistent
with those paid for similar work in the
recipient's organization. In those in-
stances in which the required skills are
not found in the recipient organization.
rates shall be consistent with those
paid for similar work in the labor mar-
ket in which the recipient competes for
the kind of services involved. In either
case, paid fringe benefits that are rea-
sonable, allowable, and allocable may
be included in the valuation.
(e) When an employer other than the
recipient furnishes the services of an
employee, these services shall be val-
ued at the employee's regular rate of
pay (plus an amount of fringe benefits
that are reasonable, allowable, and al-
locable, but exclusive of overhead
costs). provided these services are in
the same skill for which the employee
is normally paid.
(f) Donated supplies may include
such items as expendable equipment,
office supplies, laboratory supplies or
workshop and classroom supplies
Value assessed to donated supplies in-
cluded in the cost sharing or matching
share shall be reasonable and shall not
exceed the fair market value of the
property at the time of the donation.
(g) The method used for determining
cost sharing or matching for donated
equipment, buildings and land for
which title passes to the recipient may
differ according to the purpose of the
award, if paragraph (g) (1) or (2) of this
section applies.
(1) If the purpose of the award is to
assist the recipient in the acquisition
of equipment, buildings or land, the
total value of the donated property
may be claimed as cost sharing or
matching.
(2) If the purpose of the award is to
support activities that require the use
of equipment, buildings or land, nor-
mally only depreciation or use charges
for equipment and buildings may be
made. However, the full value of equip-
ment or other capital assets and fair
rental charges for land may be allowed,
provided that the Grants Officer has
approved the charges.
(h) The value of donated property
shall be determined in accordance with
14.24
the usual accounting policies of the re-
cipient, with the following qualifica-
tions.
(1) The value of donated land and
buildings shall not exceed its fair mar-
ket value at the time of donation to
the recipient as established by an inde-
pendent appraiser (e.g., certified real
property appraiser or General Services
Administration representative) and
certified by a responsible official of the
recipient
(2) The value of donated equipment
shall not exceed the fair market value
of equipment of the same age and con-
dition at the time of donation.
(3) The value of donated space shall
not exceed the fair rental value of com-
parable space as established by an inde-
pendent appraisal of comparable space
and facilities in a privately -owned
building in the same locality.
(4) The value of loaned equipment
shall not exceed its fair rental value.
(5) The following requirements per-
tain to the recipient's supporting
records for in -kind contributions from
third parties:
(i) Volunteer services shall be docu-
mented and, to the extent feasible, sup-
ported by the same methods used by
the recipient for its own employees.
(ii) The basis for determining the
valuation for personal service, mate-
rial, equipment, buildings and land
shall be documented.
*14.24 Program income.
(a) The standards set forth in this
section shall apply in requiring recipi-
ent organizations to account for pro-
gram income related to projects fi-
nanced in whole or in part with Federal
funds.
(b) Except as provided in paragraph
(h) of this section, program income
earned during the project period shall
be retained by the recipient and, in ac-
cordance with DoC regulations or the
terms and conditions of the award,
shall be used in one or more of the
ways listed in the following:
(1) Added to funds committed to the
project by the DoC and recipient and
used to further eligible project objec-
tives.
(2) Used to finance the non Federal
share of the project.
146
15 CFR Subtitle A (1 -1 -02 Edition)
(3) Deducted from the total project
allowable cost in determining the net
allowable costs on which the Federal
share of costs is based.
(c) When an agency authorizes the
disposition of program income as de-
scribed in paragraph (b)(1) or (b)(2) of
this section, program income in excess
of any limits stipulated shall be used in
accordance with paragraph (b)(3) of
this section.
(d) In the event that the DoC does
not specify in its regulations or the
terms and conditions of the award how
program income is to be used, para-
graph (b)(1) of this section shall apply
automatically to all projects or pro-
grams.
(e) Unless DoC regulations or the
terms and conditions of the award pro-
vide otherwise, recipients shall have no
obligation to the Federal Government
regarding program income earned after
the end of the project period.
(f) Costs incident to the generation of
program income may be deducted from
gross income to determine program in-
come, provided these costs have not
been charged to the award.
(g) Proceeds from the sale of property
shall be handled in accordance with the
requirements of the Property Stand-
ards (See §§14.30 through 14.37).
(h) Unless DoC regulations or the
terms and conditions of the award pro-
vide otherwise, recipients shall have no
obligation to the Federal Government
with respect to program income earned
from license fees and royalties for
copyrighted material, patents, patent
applications, trademarks, and inven-
tions produced under an award. How-
ever, Patent and Trademark Amend-
ments (35 U.S.C. 18) apply to inventions
made under an experimental, develop-
mental, or research award.
14.25 Revision of budget and pro-
gram plans.
(a) The budget plan is the financial
expression of the project or program as
approved during the award process. It
may include either the Federal and
non Federal share, or only the Federal
share, depending upon DoC require-
ments. It shall be related to perform-
ance for program evaluation purposes
whenever appropriate.
Office of the Secretary, Commerce
(b) Recipients are required to report
deviations from budget and program
plans, and request prior approvals for
budget and program plan revisions, in
accordance with this section.
(c) For nonconstruction awards, re-
cipients shall request prior approvals
from the Grants Officer for one or more
of the following program or budget re-
lated reasons Approvals will be pro-
vided in writing by the Grants Officer.
(1) Change in the scope or the objec-
tive of the project or program (even if
there is no associated budget revision
requiring prior written approval).
(2) Change in a key person specified
in the application or award document.
(3) The absence for more than three
months, or a 25 percent reduction in
time devoted to the project, by the ap-
proved project director or principal in-
vestigator.
(4) The need for additional Federal
funding,
(5) The transfer of amounts budgeted
for indirect costs to absorb increases in
direct costs, or vice versa, if approval
is required by the DoC.
(6) The inclusion, unless waived by
the DoC, of costs that require prior ap-
proval in accordance with OMB Cir-
cular A -21, "Cost Principles for Edu-
cational Institutions," OMB Circular
A -122, "Cost Principles for Non Profit
Organizations," 45 CFR part 74 Appen-
dix E, "Principles for Determining
Costs Applicable to Research and De-
velopment under Grants and Contracts
with Hospitals," or 48 CFR part 31,
"Contract Cost Principles and Proce-
dures," as applicable.
(7) The transfer of funds allotted for
training allowances (direct payment to
trainees) to other categories of ex-
pense.
(8) Unless described in the applica-
tion and funded in the approved
awards, the subaward, transfer or con-
tracting out of any work under an
award. This provision does not apply to
the purchase of supplies, material,
equipment or general support services.
(d) For nonconstruction awards, no
other prior approval requirements for
specific items may be imposed unless a
deviation has been approved by OMB.
(e) Except for requirements listed in
paragraphs (c)(1) and (c)(4) of this sec-
147
14.25
tion, the Grants Officer may waive
cost related and administrative prior
written approvals required by this part
and OMB Circulars A -21 and A -122.
Such waivers may include authorizing
recipients to do any one or more of the
following:
(1) Incur pre -award costs 90 calendar
days prior to award or more than 90
calendar days with the prior approval
of the Grants Officer after coordination
with the DoC operating unit. All pre
award costs are incurred at the recipi-
ent's risk (i.e., the DoC is under no ob-
ligation to reimburse such costs if for
any reason the recipient does not re-
ceive an award or if the award is less
than anticipated and inadequate to
cover such costs).
(2) Initiate a one -time extension of
the expiration date of the award of up
to 12 months unless one or more of the
following conditions apply. For one-
time extensions, the recipient must no-
tify the Grants Officer in writing with
the supporting reasons and revised ex-
piration date at least 10 days before the
expiration date specified in the award.
This one -time extension may not be ex-
ercised merely for the purpose of using
unobligated balances.
(i) The terms and conditions of award
prohibit the extension.
(1i) The extension requires additional
Federal funds.
(11i) The extension involves any
change in the approved objectives or
scope of the project.
(3) Carry forward unobligated bal-
ances to subsequent funding periods.
(4) For awards that support research,
unless the DoC provides otherwise in
the award or in the DoC regulations,
the prior approval requirements de-
scribed in paragraph (e) of this section
are automatically waived (i.e., recipi-
ents need not obtain such prior approv-
als) unless one of the conditions in-
cluded in paragraph (e)(2) of this sec-
tion applies.
(f) The recipient may not transfer
funds among direct cost categories or
programs, functions and activities for
awards in which the Federal share of
14.26
the project exceeds 3100,000 and the cu-
mulative amount of such transfers ex-
ceeds or is expected to exceed 10 per-
cent of the total Federal and non -Fed-
eral funds authorized by the Grants Of-
ficer. This does not prohibit the recipi-
ent from requesting Grants Officer ap-
proval for revisions to the budget. No
transfers are permitted that would
cause any Federal appropriation or
part thereof to be used for purposes
other than those consistent with the
original intent of the appropriation.
(g) All other changes to nonconstruc-
tion budgets, except for the changes de-
scribed in paragraph (j) of this section,
do not require prior approval.
(h) For construction awards, recipi-
ents shall request prior written ap-
proval promptly from the Grants Offi-
cer for budget revisions whenever para-
graph (h) (1), (2) or (3) apply. Approvals
will be provided in writing by the
Grants Officer.
(1) The revision results from changes
In the scope or the objective of the
project or program.
(2) The need arises for additional
Federal funds to complete the project.
(3) A revision is desired which in-
volves specific costs for which prior
written approval requirements may be
imposed consistent with applicable
OMB cost principles listed in §14.27.
(i) For construction awards, no other
prior approval requirements for spe-
cific items may be imposed unless a de-
viation has been approved by OMB.
(j) When the DoC makes an award
that provides support for both con-
struction and nonconstruction work,
the Grants Officer may require the re-
cipient to request prior approval from
the Grants Officer before making any
fund or budget transfers between the
two types of work supported. Approvals
will be provided in writing by the
Grants Officer.
(k) For both construction and non-
construction awards, the DoC shall re-
quire recipients to notify the Grants
Officer in writing promptly whenever
the amount of Federal authorized funds
is expected to exceed the needs of the
recipient for the project period by
more than 35000 or five percent of the
Federal award, whichever is greater.
This notification shall not be required
148
15 CFR Subtitle A (1 -1 -02 Edition)
if an application for additional funding
is submitted for a continuation award.
(1) When requesting approval for
budget revisions, recipients shall use
the budget forms that were used in the
application unless the Grants Officer
indicates a letter of request suffices.
(m) Within 30 calendar days from the
date of receipt of the request for budg-
et revisions, DoC shall review the re-
quest and the Grants Officer shall no-
tify the recipient in writing whether
the budget revisions have been ap-
proved. If the revision is still under
consideration at the end of 30 calendar
days, the Grants Officer shall inform
the recipient in writing of the date
when the recipient may expect the de-
cision.
63 FR 47156, Sept. 4, 1998, as amended at 66
FR 49828, Oct 1, 2001]
14.26 Non Federal audits.
(a) Recipients and subrecipients that
are institutions of higher education or
other non profit organizations (includ-
ing hospitals) shall be subject to the
audit requirements contained in the
Single Audit Act Amendments of 1996
(31 U.S.C. 7501 -7507) and revised OMB
Circular A -133, "Audits of States,
Local Governments, and Non Profit Or-
ganizations."
(b) State and local governments shall
be subject to the audit requirements
contained in the Single Audit Act
Amendments of 1996 (31 U.S.C. 7501-
7507) and revised OMB Circular A -133,
"Audits of States, Local Governments,
and Non Profit Organizations."
(c) For profit hospitals not covered
by the audit provisions of revised OMB
Circular A -133 shall be subject to the
audit requirements as stipulated in the
award document.
(d) Commercial and other organiza-
tions not covered by paragraph (a), (b),
or (c) of this section shall be subject to
the audit requirements as stipulated in
the award document or the prime re-
cipient as stipulated in the sub -award
document.
14.27 Allowable costs.
For each kind of recipient, there is a
set of Federal principles for deter-
mining allowable costs. Allowability of
costs shall be determined in accord-
ance with the cost principles applicable
Office of the Secretary, Commerce
to the entity incurring the costs. Thus,
aliowability of costs incurred by State,
local or federally- recognized Indian
tribal governments is determined in
accordance with the provisions of OMB
Circular A -87, "Cost Principles for
State, Local and Indian Tribal Govern-
ments." The aliowability of costs in-
curred by non- profit organizations is
determined in accordance with the pro-
visions of OMB Circular A -122, "Cost
Principles for Non- Profit Organiza-
tions The aliowability of costs in-
curred by institutions of higher edu-
cation is determined in accordance
with the provisions of OMB Circular A-
21, "Cost Principles for Educational In-
stitutions." The aliowability of costs
incurred by hospitals is determined in
accordance with the provisions of Ap-
pendix E of 45 CFR part 74, "Principles
for Determining Costs Applicable to
Research and Development Under
Grants and Contracts with Hospitals."
The aliowability of costs incurred by
commercial organizations and those
non profit organizations listed in At-
tachment C to Circular A -122 is deter-
mined in accordance with the provi-
sions of the Federal Acquisition Regu-
lation (FAR) at 48 CFR part 31.
14.28 Period of availability of funds.
Where a funding period is specified, a
recipient may charge to the grant only
allowable costs resulting from obliga-
tions incurred during the funding pe-
riod and any pre -award costs author-
ized by the Grants Officer.
PROPERTY STANDARDS
14.30 Purpose of property standards.
Sections 14.31 through 14.37 set forth
uniform standards governing manage-
ment and disposition of property fur-
nished by the Federal Government
whose cost was charged to a project
supported by a Federal award. The DoC
shall require recipients to observe
these standards under awards and shall
not impose additional requirements,
unless specifically required by Federal
statute. The recipient may use its own
property management standards and
procedures provided it observes the
provisions of §§14.31 through 14.37.
149
14.32
14.31 Insurance coverage.
Recipients shall, at a minimum, pro-
vide the equivalent insurance coverage
for real property and equipment ac-
quired with Federal funds as provided
to property owned by the recipient.
Federally -owned property need not be
insured unless required by the terms
and conditions of the award.
14.32 Real property.
The DoC award shall prescribe re-
quirements for recipients concerning
the use and disposition of real property
acquired in whole or in part under
awards. Unless otherwise provided by
statute, such requirements, at a min-
imum, shall contain the following:
(a) Title to real property shall vest in
the recipient subject to the condition
that the recipient shall use the real
property for the authorized purpose of
the project as long as it is needed, pro-
vided that, in lieu of title, with the ap-
proval of the Grants Officer, the recipi-
ent may hold a leasehold or other in-
terest in the property appropriate to
the project purpose. The recipient shall
not dispose of or encumber the prop-
erty or any interest therein without
approval of the Grants Officer.
(b) The recipient shall obtain written
approval by the Grants Officer for the
use of real property in other federally
sponsored projects when the recipient
determines that the property is no
longer needed for the purpose of the
original project. Use in other projects
shall be limited to those under feder-
ally- sponsored projects (i.e., awards) or
programs that have purposes con-
sistent with those authorized for sup-
port by the DoC.
(c) When the real property is no
longer needed as provided in para-
graphs (a) and (b) of this section, the
recipient shall request disposition in-
structions from the DoC or its suc-
cessor Federal awarding agency. The
responsible Federal agency shall ob-
serve one or more of the following dis-
position instructions:
(1) The recipient may be permitted to
retain title without further obligation
to the Federal Government after it
compensates the Federal Government
for that percentage of the current fair
14.33
market value of the property attrib-
utable to the Federal participation in
the project.
(2) The recipient may be directed to
sell the property under guidelines pro-
vided by the Grants Officer and pay the
Federal Government for that percent-
age of the current fair market value of
the property attributable to the Fed-
eral participation in the project (after
deducting actual and reasonable selling
and fix -up expenses, if any, from the
sales proceeds). When the recipient is
authorized or required to sell the prop-
erty, proper sales procedures shall be
established that provide for competi-
tion to the extent practicable and re-
sult in the highest possible return.
(3) The recipient may be directed to
transfer title to the property to the
Federal Government or to an eligible
third party provided that, in such
cases, the recipient shall be entitled to
compensation for its attributable per-
centage of the current fair market
value of the property.
$14.33 Federally -owned and exempt
property.
(a) Federally-owned property. (1) Title
to federally -owned property remains
vested in the Federal Government. Re-
cipients shall submit annually an in-
ventory listing of federally -owned
property in their custody to the DoC
operating unit. Upon completion of the
award or when the property is no
longer needed, the recipient shall re-
port the property to the DoC operating
unit for further Federal agency utiliza-
tion.
(2) If the DoC operating unit has no
further need for the property, it shall
be declared excess and reported to the
General Services Administration, un-
less the DoC has statutory authority to
dispose of the property by alternative
methods (e.g., the authority provided
by the Federal Technology Transfer
Act (15 U.S.C. 3710(1)) to donate re-
search equipment to educational and
non profit organizations in accordance
with E.O. 12821, "Improving Mathe-
matics and Science Education in Sup-
port of the National Education
Goals. Appropriate instructions shall
be issued to the recipient by the Grants
Officer.
150
15 CFR Subtitle A (1 -1 -02 Edition)
(b) Exempt property. When statutory
authority exists, the DoC has the op-
tion to vest title to property acquired
with Federal funds in the recipient
without further obligation to the Fed-
eral Government and under conditions
the DoC considers appropriate. Such
property is "exempt property." Should
the DoC not establish conditions, title
to exempt property upon acquisition
shall vest in the recipient without fur-
ther obligation to the Federal Govern-
ment.
$14.34 Equipment.
(a) Title to equipment acquired by a
recipient with Federal funds shall vest
in the recipient, subject to conditions
of this section.
(b) The recipient shall not use equip-
ment acquired with Federal funds to
provide services to non Federal outside
organizations for a fee that is less than
private companies charge for equiva-
lent services, unless specifically au-
thorized by Federal statute, for as long
as the Federal Government retains an
interest in the equipment.
(c) The recipient shall use the equip-
ment in the project or program for
which it was acquired as long as need-
ed, whether or not the project or pro-
gram continues to be supported by Fed-
eral funds and shall not encumber the
property without approval of the DoC.
When no longer needed for the original
project or program, the recipient shall
use the equipment in connection with
its other federally- sponsored activities,
in the following order of priority:
(1) Activities sponsored by the DoC
operating unit which funded the origi-
nal project;
(2) Activities sponsored by other DoC
operating units; then
(3) Activities sponsored by other Fed-
eral awarding agencies.
(d) During the time that equipment
is used on the project or program for
which it was acquired, the recipient
shall make it available for use on other
projects or programs if such other use
will not interfere with the work on the
project or program for which the equip-
ment was originally acquired. First
preference for such other use shall be
given to other projects or programs
sponsored by the DoC operating unit
that financed the equipment; second
Office of the Secretary, Commerce
preference shall be given to projects or
programs sponsored by other DoC oper-
ating units, and third preference shall
be given to projects or programs spon-
sored by other Federal awarding agen-
cies. If the equipment is owned by the
Federal Government, use an other ac-
tivities not sponsored by the Federal
Government shall be permissible if au-
thorized by the Grants Officer after co-
ordination with the DoC operating
unit. User charges shall be treated as
program income.
(e) When acquiring replacement
equipment, the recipient may use the
equipment to be replaced as trade -in or
sell the equipment and use the pro-
ceeds to offset the costs of the replace-
ment equipment subject to the ap-
proval of the Grants Officer after co-
ordination with the DoC operating
unit.
(f) The recipient's property manage-
ment standards for equipment acquired
with Federal funds and federally -owned
equipment shall include all of the fol-
lowing:
(1) Equipment records shall be main-
tained accurately and shall include the
following information:
(i) A description of the equipment.
(ii) Manufacturer's serial number,
model number, Federal stock number,
national stock number, or other identi-
fication number.
(iii) Source of the equipment, includ-
ing the award number.
(iv) Whether title vests in the recipi-
ent or the Federal Government.
(v) Acquisition date (or date re-
ceived, if the equipment was furnished
by the Federal Government) and cost.
(vi) Information from which one can
calculate the percentage of Federal
participation in the cost of the equip-
ment (not applicable to equipment fur-
nished by the Federal Government).
(vii) Location and condition of the
equipment and the date the informa-
tion was reported.
(viii) Unit acquisition cost.
(ix) Ultimate disposition data, in-
cluding date of disposal and sales price
or the method used to determine cur-
rent fair market value where a recipi-
ent compensates the DoC for its share.
(2) Equipment owned by the Federal
Government shall be identified to indi-
cate Federal ownership.
151
14.34
(3) A physical inventory of equipment
shall be taken and the results rec-
onciled with the equipment records at
least once every two years. Any dif-
ferences between quantities deter-
mined by the physical inspection and
those shown in the accounting records
shall be investigated to determine the
causes of the difference. The recipient
shall, in connection with the inven-
tory, verify the existence, current uti-
lization, and continued need for the
equipment.
(4) A control system shall be in effect
to insure adequate safeguards to pre-
vent loss, damage, or theft of the
equipment. Any loss, damage, or theft
of equipment shall be investigated and
fully documented; if the equipment was
owned by the Federal Government, the
recipient shall promptly notify the
Grants Officer.
(5) Adequate maintenance procedures
shall be implemented to keep the
equipment in good condition.
(6) Where the recipient is authorized
or required to sell the equipment, prop-
er sales procedures shall be established
which provide for competition to the
extent practicable and result in the
highest possible return.
(g) When the recipient no longer
needs the equipment, the equipment
may be used for other activities in ac-
cordance with the following standards
Equipment with a current per -unit fair
market value of less than $5000 may be
retained, sold, or otherwise disposed of
with no further obligation to the
awarding agency. For equipment with
a current per unit fair market value of
35000 or more, the recipient may retain
the equipment for other uses provided
that compensation is made to the DoC
operating unit or its successor. The
amount of compensation shall be com-
puted by applying the percentage of
Federal participation in the cost of the
original project or program to the cur-
rent fair market value of the equip-
ment. If the recipient has no need for
the equipment, the recipient shall re-
quest disposition instructions from the
Grants Officer. The Grants Officer shall
determine whether the equipment can
be used to meet the agency's require-
ments. If no requirement exists within
that agency, the availability of the
equipment shall be reported to the
14.35
General Services Administration by
the Grants Officer to determine wheth-
er a requirement for the equipment ex-
ists in other Federal agencies. The
Grants Officer shall issue instructions
to the recipient no later than 120 cal-
endar days after the recipient's request
and the following procedures shall gov-
ern:
(1) If so instructed or if disposition
instructions are not issued within 120
calendar days after the recipient's re-
quest, the recipient shall sell the
equipment and reimburse the DoC an
amount computed by applying to the
sales proceeds the percentage of Fed-
eral participation in the cost of the
original project or program. However,
the recipient shall be permitted to de-
duct and retain from the Federal share
$500 or ten percent of the proceeds,
whichever is less, for the recipient's
selling and handling expenses.
(2) If the recipient is instructed to
ship the equipment elsewhere, the re-
cipient shall be reimbursed by the Fed-
eral Government by an amount which
is computed by applying the percent-
age of the recipient's participation in
the cost of the original project or pro-
gram to the current fair market value
of the equipment, plus any reasonable
shipping or interim storage costs in-
curred.
(3) If the recipient is instructed to
otherwise dispose of the equipment, the
recipient shall be reimbursed by the
DoC for such costs incurred in its dis-
position.
(h) The DoC reserves the right to
transfer the title to the Federal Gov-
ernment or to a third party named by
the Federal Government when such
third party is otherwise eligible under
existing statutes. Such transfer shall
be subject to the following standards:
(1) The equipment shall be appro-
priately identified in the award or oth-
erwise made known to the recipient in
writing.
(2) The Grants Officer shall issue dis-
position instructions within 120 cal-
endar days after receipt of a final in-
ventory. The final inventory shall list
all equipment acquired with grant
funds and federally -owned equipment.
If the Grants Officer fails to issue writ-
ten disposition instructions within the
120 calendar day period, the recipient
152
15 CFR Subtitle A (1 -1 -02 Edition)
shall apply the standards of this sec-
tion, as appropriate.
(3) When the DoC exercises its right
to take title, the equipment shall be
subject to the provisions for federally
owned equipment.
14.35 Supplies and other expendable
property.
(a) Title to supplies and other ex-
pendable property shall vest in the re-
cipient upon acquisition. If there is a
residual inventory of supplies exceed-
ing $5000 in total aggregate value upon
termination or completion of the
project or program and the supplies are
not needed for any other federally
sponsored project or program, the re-
cipient shall retain the supplies for use
on non Federal sponsored activities or
sell them, but shall, in either case,
compensate the Federal Government
for its share. The amount of compensa-
tion shall be computed in the same
manner as for equipment.
(b) The recipient shall not use sup-
plies acquired with Federal funds to
provide services to non Federal outside
organizations for a fee that is less than
private companies charge for equiva-
lent services, unless specifically au-
thorized by Federal statute as long as
the Federal Government retains an in-
terest in the supplies.
14.36 Intangible property.
(a) The recipient may copyright any
work that is subject to copyright and
was developed, or for which ownership
was purchased, under an award. The
DoC reserves a royalty -free, nonexclu-
sive and irrevocable right to reproduce,
publish, or otherwise use the work for
Federal purposes, and to authorize oth-
ers to do so.
(b) Recipients are subject to applica-
ble regulations governing patents and
inventions, including government -wide
regulations issued by the DoC at 37
CFR part 401, "Rights to Inventions
Made by Nonprofit Organizations and
Small Business Firms Under Govern-
ment Grants, Contracts and Coopera-
tive Agreements."
(c) The Federal Government has the
right to:
(1) Obtain, reproduce, publish or oth-
erwise use the data first produced
under an award; and
Office of the Secretary, Commerce
(2) Authorize others to receive, repro-
duce, publish, or otherwise use such
data for Federal purposes.
(d)(1) In addition, in response to a
Freedom of Information Act (FOIA) re-
quest for research data relating to pub-
lished research findings produced under
an award that were used by the Federal
Government in developing an agency
action that has the force and effect of
law, the DoC shall request, and the re-
cipient shall provide, within a reason-
able time, the research data so that
they can be made available to the pub-
lic through the procedures established
under the FOIA. If the DoC obtains the
research data solely in response to a
FOIA request, the agency may charge
the requester a reasonable fee equaling
the full incremental cost of obtaining
the research data. This fee should re-
flect costs incurred by the agency, the
recipient, and applicable subrecipients.
This fee is in addition to any fees the
agency may assess under the FOIA (5
U.S.C. 552(a)(4)(A)).
(2) The following definitions apply
for purposes of this paragraph (d):
(1) Research data is defined as the re-
corded factual material commonly ac-
cepted in the scientific community as
necessary to validate research findings,
but not any of the following: prelimi-
nary analyses, drafts of scientific pa-
pers, plans for future research, peer re-
views, or communications with col-
leagues. This "recorded" material ex-
cludes physical objects (e.g., laboratory
samples). Research data also do not in-
clude:
(A) Trade secrets, commercial infor-
mation, materials necessary to be held
confidential by a researcher until they
are published, or similar information
which is protected under law; and
(B) Personnel and medical informa-
tion and similar information the dis-
closure of which would constitute a
clearly unwarranted invasion of per-
sonal privacy, such as information that
could be used to identify a particular
person in a research study.
(ii) Published is defined as either
when:
(A) Research findings are published
in a peer- reviewed scientific or tech-
nical journal; or
(B) A Federal agency publicly and of-
ficially cites the research findings in
153
PROCUREMENT STANDARDS
14.40
support of an agency action that has
the force and effect of law.
(iii) Used by the Federal Government in
developing an agency action that has the
force and effect of law is defined as when
an agency publicly and officially cites
the research findings in support of an
agency action that has the force and
effect of law.
(e) Title to intangible property and
debt instruments acquired under an
award or subaward vests upon acquisi-
tion in the recipient. The recipient
shall use that property for the origi-
nally- authorized purpose, and the re-
cipient shall not encumber the prop-
erty without written approval from the
Grants Officer. When no longer needed
for the originally authorized purpose,
disposition of the intangible property
shall occur in accordance with the pro-
visions of §14.34(g).
[63 FR 47156, Sept 4, 1998, as amended at 65
FR 14407, 14409. Mar. 16, 20001
14.37 Property trust relationship.
Real property, equipment, intangible
property and debt instruments that are
acquired or improved with Federal
Hinds shall be held in trust by the re-
cipient as trustee for the beneficiaries
of the project or program under which
the property was acquired or improved.
The Grants Officer may require recipi-
ents to record liens or other appro-
priate notices of record to indicate
that personal or real property has been
acquired or improved with Federal
Hinds and that use and disposition con-
ditions apply to the property.
*14.40 Purpose of procurement stand
4ds Sections 14.41 through 14 48 set forth
standards for use by recipients in es-
tablishing procedures for the procure-
ment of supplies and other expendable
property, equipment, real property and
other services with Federal funds.
These standards are furnished to en-
sure that such materials and services
are obtained in an effective manner
and in compliance with the provisions
of applicable Federal statutes and ex-
ecutive orders. No additional procure-
ment standards or requirements shall
be imposed by the DoC upon recipients,
14.41 15 CFR Subtitle A (1 -1 -02 Edition)
unless specifically required by Federal
statute or executive order or approved
by OMB
14.41 Recipient responsibilities.
The standards contained in this sec-
tion do not relieve the recipient of the
contractual responsibilities arising
under its contract(s). The recipient is
the responsible authority, without re-
course to the DoC, regarding the settle-
ment and satisfaction of all contrac-
tual and administrative issues arising
out of procurements entered into in
support of an award or other agree-
ment. This includes disputes, claims,
protests of award, source evaluation or
other matters of a contractual nature.
Matters concerning violation of statute
are to be referred to such Federal,
State or local authority as may have
proper jurisdiction.
14.42 Codes of conduct.
The recipient shall maintain written
standards of conduct governing the
performance of its employees engaged
in the award and administration of
contracts. No employee, officer, or
agent shall participate in the selection,
award, or administration of a contract
supported by Federal funds if a real or
apparent conflict of interest would be
involved. Such a conflict would arise
when the employee, officer, or agent,
any member of his or her immediate
family, his or her partner, or an orga-
nization which employs or is about to
employ any of the parties indicated
herein, has a financial or other interest
in the firm selected for an award. The
officers, employees, and agents of the
recipient shall neither solicit nor ac-
cept gratuities, favors, or anything of
monetary value from contractors, or
parties to subagreements. However, re-
cipients may set standards for situa-
tions in which the financial interest is
not substantial or the gift is an unso-
licited item of nominal value. The
standards of conduct shall provide for
disciplinary actions to be applied for
violations of such standards by offi-
cers, employees, or agents of the re-
cipient.
§14.43 Competition.
All procurement transactions shall
be conducted in a manner to provide,
154
to the maximum extent practical, open
and free competition. The recipient
shall be alert to organizational con-
flicts of interest as well as noncompeti-
tive practices among contractors that
may restrict or eliminate competition
or otherwise restrain trade. In order to
ensure objective contractor perform-
ance and eliminate unfair competitive
advantage, contractors that develop or
draft specifications, requirements,
statements of work, invitations for
bids and/or requests for proposals shall
be excluded from competing for such
procurements. Awards shall be made to
the bidder or offeror whose bid or offer
is responsive to the solicitation and is
most advantageous to the recipient,
price, quality and other factors consid-
ered. Solicitations shall clearly set
forth all requirements that the bidder
or offeror shall fulfill in order for the
bid or offer to be evaluated by the re-
cipient. Any and all bids or offers may
be rejected when it is in the recipient's
interest to do so.
*14.44 Procurement procedures.
(a) All recipients shall establish writ-
ten procurement procedures. These
procedures shall provide for, at a min-
imum, that:
(1) Recipients avoid purchasing un-
necessary items;
(2) Where appropriate, an analysis is
made of lease and purchase alter-
natives to determine which would be
the most economical and practical pro-
curement for the Federal Government,
and
(3) Solicitations for goods and serv-
ices provide for all of the following:
(1) A clear and accurate description
of the technical requirements for the
material, product or service to be pro-
cured. In competitive procurements,
such a description shall not contain
features which unduly restrict com-
petition.
(ii) Requirements which the bidder/
offeror must fulfill and all other fac-
tors to be used in evaluating bids or
proposals.
(111) A description, whenever prac-
ticable, of technical requirements in
terms of functions to be performed or
performance required, including the
range of acceptable characteristics or
minimum acceptable standards.
Office of the Secretary, Commerce
(iv) The specific features of "brand
name or equal" descriptions that bid-
ders are required to meet when such
items are included in the solicitation.
(v) The acceptance, to the extent
practicable and economically feasible,
of products and services dimensioned in
the metric system of measurement.
(vi) Preference, to the extent prac-
ticable and economically feasible, for
products and services that conserve
natural resources and protect the envi-
ronment and are energy efficient.
(b) Positive efforts shall be made by
recipients to utilize small businesses,
minority -owned firms, and women's
business enterprises, whenever pos-
sible. Recipients of Federal awards
shall take all of the following steps to
further this goal:
(1) Ensure that small businesses, mi-
nority -owned firms, and women's busi-
ness enterprises are used to the fullest
extent practicable.
(2) Make information on forthcoming
opportunities available and arrange
time frames for purchases and con-
tracts to encourage and facilitate par-
ticipation by small businesses, minor-
ity -owned firms, and women's business
enterprises
(3) Consider in the contract process
whether firms competing for larger
contracts intend to subcontract with
small businesses, minority -owned
firms, and women's business enter-
prises.
(4) Encourage contracting with con-
sortiums of small businesses, minority
owned firms and women's business en-
terprises when a contract is too large
for one of these firms to handle individ-
ually,
(5) Use the services and assistance, as
appropriate, of such organizations as
the Small Business Administration and
the DoC's Minority Business Develop-
ment Agency in the solicitation and
utilization of small businesses, minor-
ity -owned firms and women's business
enterprises.
(c) The type of procuring instruments
used (e.g., fixed price contracts, cost
reimbursable contracts, purchase or-
ders, and incentive contracts) shall be
determined by the recipient but shall
be appropriate for the particular pro-
curement and for promoting the best
interest of the program or project in-
155
14.45
volved. The "cost- plus -a- percentage -of-
cost" or "percentage of construction
cost" methods of contracting shall not
be used.
(d) Contracts shall be made only with
responsible contractors who possess
the potential ability to perform suc-
cessfully under the terms and condi-
tions of the proposed procurement
Consideration shall be given to such
matters as contractor integrity, record
of past performance, financial and
technical resources or accessibility to
other necessary resources. In certain
circumstances, contracts with certain
parties are restricted by agencies' im-
plementation of E.O.s 12549 and 12689,
"Debarment and Suspension," as im-
plemented by DoC regulations at 15
CFR part 26.
(e) Recipients shall, on request, make
available for the Grants Officer, pre
award review and procurement docu-
ments, such as request for proposals or
invitations for bids, independent cost
estimates, etc., when any of the fol-
lowing conditions apply:
(1) A recipient's procurement proce-
dures or operation fails to comply with
the procurement standards in this part.
(2) The procurement is expected to
exceed the simplified acquisition
threshold fixed at 41 U.S.C. 403 (11)
(currently 5100,000) and is to be award-
ed without competition or only one /bid
or offer is received in response to a so-
licitation.
(3) The procurement, which is ex-
pected to exceed the simplified acquisi-
tion threshold, specifies a "brand
name" product.
(4) The proposed award over the sim-
plified acquisition threshold is to be
awarded to other than the apparent
low bidder under a sealed bid procure-
ment.
(5) A proposed contract modification
changes the scope of a contract or in-
creases the contract amount by more
than the amount of the simplified ac-
quisition threshold.
414.45 Cost and price analysis.
Some form of cost or price analysis
shall be made and documented in the
procurement files in connection with
every procurement action. Price anal-
ysis may be accomplished in various
ways, including the comparison of
14.46
price quotations submitted, market
prices and similar indicia, together
with discounts. Cost analysis is the re-
view and evaluation of each element of
cost to determine reasonableness,
allocability and allowability.
§14.46 Procurement records.
Procurement records and files for
purchases in excess of the simplified
acquisition threshold shall include the
following at a minimum:
(a) Basis for contractor selection;
(b) Justification for lack of competi-
tion when competitive bids or offers
are not obtained; and
(c) Basis for award cost or price.
14.47 Contract administration.
A system for contract administration
shall be maintained to ensure con-
tractor conformance with the terms,
conditions and specifications of the
contract and to ensure adequate and
timely follow up of all purchases Re-
cipients shall evaluate contractor per-
formance and document, as appro-
priate, whether contractors have met
the terms, conditions and specifica-
tions of the contract.
14.48 Contract provisions.
The recipient shall include, in addi-
tion to provisions to define a sound and
complete agreement, the following pro-
visions in all contracts. The following
provisions shall also be applied to sub-
contracts:
(a) Contracts in excess of the sim-
plified acquisition threshold shall con-
tain contractual provisions or condi-
tions that allow for administrative,
contractual, or legal remedies in in-
stances in which a contractor violates
or breaches the contract terms, and
provide for such remedial actions as
may be appropriate.
(b) All contracts in excess of the sim-
plified acquisition threshold shall con-
tain suitable provisions for termi-
nation by the recipient, including the
manner by which termination shall be
effected and the basis for settlement.
In addition, such contracts shall de-
scribe conditions under which the con-
tract may be terminated for default as
well as conditions where the contract
may be terminated because of cir-
156
15 CFR Subtitle A (1 -1 -02 Edition)
curnstances beyond the control of the
contractor.
(c) Except as otherwise required by
statute, an award that requires the
contracting (or subcontracting) for
construction or facility improvements
shall provide for the recipient to follow
its own requirements relating to bid
guarantees, performance bonds, and
payment bonds unless the construction
contract or subcontract exceeds
3100,000. For those contracts or sub-
contracts exceeding S100,000, the DoC
may accept the bonding policy and re-
quirements of the recipient, provided
the Grants Officer has made a deter-
mination that the Federal Govern-
ment's interest is adequately pro-
tected. 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 con-
sist of a firm commitment such as a
bid bond, certified check, or other ne-
gotiable instrument accompanying a
bid as assurance that the bidder shall,
upon acceptance of his bid, execute
such contractual documents as may be
required within the time specified.
(2) A performance bond on the part of
the contractor for 100 percent of the
contract price. A "performance bond"
is one executed in connection with a
contract to secure fulfillment of all the
contractor's obligations under such
contract.
(3) A payment bond on the part of the
contractor for 100 percent of the con-
tract price. A "payment bond" is one
executed in connection with a contract
to assure payment as required by stat-
ute of all persons supplying labor and
material in the execution of the work
provided for in the contract.
(4) Where bonds are required in the
situations described in this part, the
bonds shall be obtained from compa-
nies holding certificates of authority
as acceptable sureties pursuant to 31
CFR part 223, "Surety Companies
Doing Business with the United
States."
(d) All negotiated contracts (except
those for less than the simplified ac-
quisition threshold) awarded by recipi-
ents shall include a provision to the ef-
fect that the recipient, the DoC, the
Office of the Secretary, Commerce
Comptroller General of the United
States, or any of their duly authorized
representatives, shall have access to
any books, documents, papers and
records of the contractor which are di-
rectly pertinent to a specific program
for the purpose of making audits, ex-
aminations, excerpts and tran-
scriptions.
(e) All contracts, including small
purchases, awarded by recipients and
their contractors shall contain the pro-
curement provisions of Appendix A to
this part, as applicable.
REPORTS AND RECORDS
14.50 Purpose of reports and records.
Sections 14.51 through 14.53 set forth
the procedures for monitoring and re-
porting on the recipient's financial and
program performance and the nec-
essary standard reporting forms. They
also set forth record retention require-
ments
14.51 Monitoring and reporting pro-
gram performance.
(a) Recipients are responsible for
managing and monitoring each project,
program, subaward, function or activ-
ity supported by the award. Recipients
shall monitor subawards to ensure sub
recipients have met the audit require-
ments as delineated in §14.26.
(b) The Grants Officer after coordina-
tion with the DoC operating unit shall
prescribe the frequency with which the
performance reports shall be sub-
mitted. Except as provided in para-
graph (f) of this section, performance
reports shall not be required more fre-
quently than quarterly or, less fre-
quently than annually. Annual reports
shall be due 90 calendar days after the
grant year; quarterly or semi annual
reports shall be due 30 days after the
reporting period. The Grants Officer
may require annual reports before the
anniversary dates of multiple year
awards in lieu of these requirements.
The final performance reports are due
90 calendar days after the expiration or
termination of the award.
(c) If inappropriate, a final technical
or performance report shall not be re-
quired after completion of the project.
(d) When required, performance re-
ports shall generally contain, for each
157
14.52
award, brief information on each of the
following:
(1) A comparison of actual accom-
plishments with the goals and objec-
tives established for the period, the
findings of the investigator, or both
Whenever appropriate and the output
of programs or projects can be readily
quantified, such quantitative data
should be related to cost data for com-
putation of unit costs.
(2) Reasons why established goals
were not met, if appropriate.
(3) Other pertinent information in-
cluding, when appropriate, analysis
and explanation of cost overruns or
high unit costs.
(e) Recipients shall not be required to
submit more than the original and two
copies of performance reports.
(f) Recipients shall immediately no-
tify the DoC operating unit of develop-
ments that have a significant impact
on the award- supported activities.
Also, notification shall be given in the
case of problems, delays, or adverse
conditions which materially impair the
ability to meet the objectives of the
award. This notification shall include a
statement of the action taken or con-
templated, and any assistance needed
to resolve the situation.
(g) The DoC may make site visits, as
needed.
(h) Federal awarding agencies shall
comply with clearance requirements of
5 CFR part 1320 when requesting per-
formance data from recipients.
14.52 Financial reporting.
(a) The following forms or such other
forms as may be approved by OMB are
authorized for obtaining financial in-
formation from recipients:
(1) SF -269 or SF -269A, Financial Sta-
tus Report.
(i) Each DoC award shall require re-
cipients to use the SF -269 or SF -269A
to report the status of funds for all
nonconstruction projects or programs.
The DoC, however, has the option of
not requiring the SF -269 or SF -269A
when the SF -270, Request for Advance
or Reimbursement, or SF-2'72, Report
of Federal Cash Transactions, is deter-
mined to provide adequate information
to meet its needs, except that a final
SF -269 or SF -269A shall be required at
14.53
the completion of the project when the
SF -270 is used only for advances.
(ii) The DoC shall prescribe whether
the report shall be on a cash or accrual
basis. If the DoC requires accrual infor-
mation and the recipient's accounting
records are not normally kept on the
accrual basis, the recipient shall not be
required to convert its accounting sys-
tem, but shall develop such accrual in-
formation through best estimates
based on an analysis of the documenta-
tion on hand.
(iii) The DoC shall determine the fre-
quency of the Financial Status Report
for each project or program, consid-
ering the size and complexity of the
particular project or program. How-
ever, the report shall not be required
more frequently than quarterly or less
frequently than annually. A final re-
port shall be required at the comple-
tion of the agreement.
(iv) The DoC shall require recipients
to submit the SF -269 or SF -269A (an
original and no more than two copies)
no later than 30 days after the end of
each specified reporting period for
quarterly and semi annual reports, and
90 calendar days for annual and final
reports. Extensions of reporting due
dates may be approved by the Grants
Officer upon request of the recipient.
(2) SF -272, Report of Federal Cash
Transactions.
(i) When funds are advanced to re-
cipients the DoC shall require each re-
cipient to submit the SF -272 and, when
necessary, its continuation sheet, SF-
272a. The DoC shall use this report to
monitor funds advanced to recipients
and to obtain disbursement informa-
tion for each agreement with the re-
cipients.
(ii) The DoC may require forecasts of
Federal funds requirements in the "Re-
marks" section of the report.
(iii) When practical and deemed nec-
essary, the DoC may require recipients
to report in the "Remarks" section the
amount of advances received in excess
of three days. Recipients shall provide
short narrative explanations of actions
taken to reduce the excess balances.
(iv) Recipients shall be required to
submit not more than the original and
two copies of the SF -272 15 calendar
days following the end of each quarter.
The Grants Officer may require a
158
15 CFR Subtitle A (1 -1 -02 Edition)
monthly report from those recipients
receiving advances totaling S1 million
or more per year.
(v) The Grants Officer may waive the
requirement for submission of the SF-
272 for any one of the following rea-
sons:
(A) When monthly advances do not
exceed 525,000 per recipient, provided
that such advances are monitored
through other forms contained in this
section;
(B) If, in the Grants Officer's opinion,
the recipient's accounting controls are
adequate to minimize excessive Fed-
eral advances; or
(C) When the electronic payment
mechanisms provide adequate data.
(b) When the DoC needs additional in-
formation or more frequent reports,
the following shall be observed:
(1) When additional information is
needed to comply with legislative re-
quirements, the Grants Officer shall
issue instructions to require recipients
to submit such information under the
"Remarks" section of the reports.
(2) When the DoC determines that a
recipient's accounting system does not
meet the standards in §14.21, additional
pertinent information to further mon-
itor awards may be obtained upon writ-
ten notice to the recipient until such
time as the system is brought up to
standard. The DoC, in obtaining this
information, shall comply with report
clearance requirements of 5 CFR part
1320.
(3) Grants Officers are encouraged to
shade out any line item on any report
if not necessary.
(4) The DoC may accept the identical
information from the recipients in ma-
chine readable format or computer
printouts or electronic outputs in lieu
of prescribed formats.
(5) The DoC may provide computer or
electronic outputs to recipients when
such expedites or contributes to the ac-
curacy of reporting.
14.53 Retention and access require-
ments for records.
(a) This section sets forth require-
ments for record retention and access
to records for awards to recipients. The
DoC shall not impose any other record
retention or access requirements upon
recipients.
Office of the Secretary, Commerce
(b) Financial records, supporting doc-
uments, statistical records, and all
other records pertinent to an award
shall be retained for a period of three
years from the date of submission of
the final expenditure report or, for
awards that are renewed quarterly or
annually, from the date of the submis-
sion of the quarterly or annual finan-
cial report, as authorized by the DoC.
The only exceptions are the following:
(1) If any litigation, claim, or audit is
started before the expiration of the 3-
year period, the records shall be re-
tained until all litigation, claims or
audit findings involving the records
have been resolved and final action
taken.
(2) Records for real property and
equipment acquired with Federal funds
shall be retained for 3 years after final
disposition
(3) When records are transferred to or
maintained by the DoC, the 3 -year re-
tention requirement is not applicable
to the recipient.
(4) Indirect cost rate proposals, cost
allocations plans, etc. as specified in
paragraph (g) of this section.
(c) Copies of original records may be
substituted for the original records if
authorized by the DoC.
(d) The Grants Officer after coordina-
tion with the DoC operating unit shall
request transfer of certain records to
its custody from recipients when it de-
termines that the records possess long
term retention value. However, in
order to avoid duplicate recordkeeping,
a DoC operating unit or Grants Officer
may make arrangements for recipients
to retain any records that are continu-
ously needed for joint use.
(e) The DoC, the Inspector General,
Comptroller General of the United
States, or any of their duly authorized
representatives, have the right of time-
ly and unrestricted access to any
books, documents, papers, or other
records of recipients that are pertinent
to the awards, in order to make audits,
examinations, excerpts, transcripts and
copies of such documents. This right
also includes timely and reasonable ac-
cess to a recipient's personnel for the
purpose of interview and discussion re-
lated to such documents. The rights of
access in this paragraph are not lim-
159
TERMINATION AND ENFORCEMENT
14.60
ited to the required retention period,
but shall last as long as records are re-
tained.
(f) Unless required by statute, no DoC
operating unit shall place restrictions
on recipients that limit public access
to the records of recipients that are
pertinent to an award, except when the
DoC operating unit can demonstrate
that such records shall be kept con-
fidential and would have been exempt-
ed from disclosure pursuant to the
Freedom of Information Act (5 U.S.C.
552) if the records had belonged to the
DoC operating unit.
(g) Paragraphs (g)(1) and (g)(2) of this
section apply to the following types of
documents, and their supporting
records: indirect cost rate computa-
tions or proposals, cost allocation
plans, and any similar accounting com-
putations of the rate at which a par-
ticular group of costs is chargeable
(such as computer usage chargeback
rates or composite fringe benefit
rates).
(1) If the recipient submits to the
Federal awarding agency responsible
for negotiating the recipient's indirect
cost rate or the subrecipient submits
to the recipient the proposal, plan, or
other computation to form the basis
for negotiation of the rate, then the 3-
year retention period for its supporting
records starts on the date of such sub-
mission.
(2) If the recipient is not required to
submit to the cognizant Federal award-
ing agency or the subrecipient is not
required to submit to the recipient the
proposal, plan, or other computation
for negotiation purposes, then the 3-
year retention period for the proposal,
plan, or other computation and its sup-
porting records starts at the end of the
fiscal year (or other accounting period)
covered by the proposal, plan, or other
computation.
14.60 Purpose of termination and en-
forcement.
Sections 14.61 and 14.62 set forth uni-
form suspension, termination and en-
forcement procedures.
14.61 15 CFR Subtitle A (1 -1-02 Edition)
14.61 Termination.
(a) Awards may be terminated in
whole or in part only if paragraph
(a)(1), (2) or (3) apply.
(1) By the Grants Officer, if a recipi-
ent materially fails to comply with the
terms and conditions of an award.
(2) By the Grants Officer with the
consent of the recipient, in which case
the two parties shall agree upon the
termination conditions, including the
effective date and, in the case of par-
tial termination, the portion to be ter-
minated.
(3) By the recipient upon sending to
the Grants Officer written notification
setting forth the reasons for such ter-
mination, the effective date, and, in
the case of partial termination, the
portion to be terminated. However, if
the Grants Officer determines in the
case of partial termination that the re-
duced or modified portion of the grant
will not accomplish the purposes for
which the grant was made, it may ter-
minate the grant in its entirety under
either paragraph (aX1) or (2).
(b) If costs are allowed under an
award, the responsibilities of the re-
cipient referred to in §14.71(a), includ-
ing those for property management as
applicable, shall be considered in the
termination of the award, and provi-
sion shall be made for continuing re-
sponsibilities of the recipient after ter-
mination, as appropriate.
14.62 Enforcement.
(a) Remedies for noncompliance. If a re-
cipient materially fails to comply with
the terms and conditions of an award,
whether stated in a Federal statute,
regulation, assurance, application, or
notice of award, the Grants Officer
may, in addition to imposing any of
the special conditions outlined in
14.14, take one or more of the fol-
lowing actions, as appropriate in the
circumstances:
(1) Temporarily withhold payments
of funds pending correction of the defi-
ciency by the recipient or more severe
enforcement action by the Grants Offi-
cer after coordination with the DoC op-
erating unit.
(2) Disallow (that is, deny both use of
funds and any applicable matching
credit for) all or part of the cost of the
activity or action not in compliance.
160
(3) Wholly or partly suspend or ter-
minate the current award.
(4) Withhold further awards for the
project or program.
(5) Take other remedies that may be
legally available.
(b) Hearings and appeals. In taking an
enforcement action, the awarding
agency shall provide the recipient an
opportunity for hearing, appeal, or
other administrative proceeding to
which the recipient is entitled under
any statute or regulation applicable to
the action involved.
(c) Effects of suspension and termi-
nation. Costs of a recipient resulting
from obligations incurred by the re-
cipient during a suspension or after
termination of an award are not allow-
able unless the awarding agency ex-
pressly authorizes them in the notice
of suspension or termination or subse-
quently. Other recipient costs during
suspension or after termination which
are necessary and not reasonably
avoidable are allowable if paragraphs
(c) (1) and (2) of this section apply.
(1) The costs result from obligations
which were properly incurred by the re-
cipient before the effective date of sus-
pension or termination, are not in an-
ticipation of it, and in the case of a ter-
mination, are noncancellable.
(2) The costs would be allowable if
the award were not suspended or ex-
pired normally at the end of the fund-
ing period in which the termination
takes effect.
(d) Relationship to debarment and sus-
pension. The enforcement remedies
identified in this section, including
suspension and termination, do not
preclude a recipient from being subject
to debarment and suspension under
E.O.s 12549 and 12689 and the DoC im-
plementing regulations (see 14.13) at
15 CFR part 26.
Subpart D —After- the -Award
Requirements
14.70 Purpose.
Sections 14.71 through 14.73 contain
closeout procedures and other proce-
dures for subsequent disallowances and
adjustments.
Office of the Secretary, Commerce
$14.71 Closeout procedures.
(a) Recipients shall submit, within 90
calendar days after the date of comple-
tion of the award, all financial, per-
formance, and other reports as required
by the terms and conditions of the
award. The Grants Officer may approve
extensions when requested by the re-
cipient.
(b) Unless the Grants Officer author-
izes an extension, a recipient shall liq-
uidate all obligations incurred under
the award not later than 90 calendar
days after the funding period or the
date of completion as specified in the
terms and conditions of the award or in
agency implementing instructions.
(c) The Grants Officer shall authorize
and the DoC shall make prompt pay-
ments to a recipient for allowable re-
imbursable costs under the award being
closed out.
(d) The recipient shall promptly re-
fund any balances of unobligated funds
that the DoC has advanced or paid and
that is not authorized to be retained by
the recipient for use in other projects.
OMB Circular A -129 governs
unreturned amounts that become de-
linquent debts.
(e) When authorized by the terms and
conditions of the award, the Grants Of-
ficer shall make a settlement for any
upward or downward adjustments to
the Federal share of costs after close-
out reports are received.
(f) The recipient shall account for
any real and personal property ac-
quired with Federal funds or received
from the Federal Government in ac-
cordance with §§14.31 through 14.37.
(g) In the event a final audit has not
been performed prior to the closeout of
an award, the DoC shall retain the
right to recover an appropriate amount
after fully considering the rec-
ommendations on disallowed costs re-
sulting from the final audit
$14.72 Subsequent adjustments and
continuing responsibilities.
(a) The closeout of an award does not
affect any of the following:
(1) The right of the DoC to disallow
costs and recover funds on the basis of
a later audit or other review.
(2) The obligation of the recipient to
return any funds due as a result of
161
Pt. 14, App. A
later refunds, corrections, or other
transactions.
(3) Audit requirements in 14.26.
(4) Property management require-
ments in §§14.31 through 14.37.
(5) Records retention as required in
14.53.
(b) After closeout of an award, a rela-
tionship created under an award may
be modified or ended in whole or in
part with the consent of the DoC and
the recipient, provided the responsibil-
ities of the recipient referred to in
§14.73(a), including those for property
management as applicable, are consid-
ered and provisions made for con-
tinuing responsibilities of the recipi-
ent, as appropriate.
14.73 Collection of amounts due.
(a) Any funds paid to a recipient in
excess of the amount to which the re-
cipient is finally determined to be enti-
tled under the terms and conditions of
the award constitute a debt to the Fed-
eral Government. If not paid within a
reasonable period after the demand for
payment, the Grants Officer may re-
duce the debt by.
(1) Making an administrative offset
against other requests for reimburse-
ments;
(2) Withholding advance payments
otherwise due to the recipient; or
(3) Taking other action permitted by
statute.
(b) Except as otherwise provided by
law, the DoC shall charge interest on
an overdue debt in accordance with 4
CFR Chapter II, "Federal Claims Col-
lection Standards."
APPENDIX A TO PART 14— CONTRACT
PROVISIONS
All contracts, awarded by a recipient in-
cluding small purchases, shall contain the
following provisions as applicable:
1. Equal Employment Opportunity —All con-
tracts shall contain a provision requiring
compliance with E O. 11246, "Equal Employ-
ment Opportunity," as amended by E.O.
11375, "Amending Executive Order 11246 Re-
lating to Equal Employment Opportunity,"
and as supplemented by regulations at 41
OFR part 60, "Office of Federal Contract
Compliance Programs, Equal Employment
Opportunity, Department of Labor."
2. Copeland "Anti Kickback" Act (18 U.S.0
874 and 40 U.S.C. 276c) —A11 contracts and sub
grants In excess of $2000 for construction or
Pt. 14, App. A
repair awarded by recipients and anbrecipi-
ents shall include a provision for compliance
with the Copeland "Anti Kickback" Act (18
U.S.0 874), as supplemented by Department
of Labor regulations (29 CFR part 3, "Con-
tractors and Subcontractors on Public Build-
ing or Public Work Financed in Whole or in
Part by Loans or Grants from the United
States The Act provides that each con-
tractor or aubrecipient shall be prohibited
from inducing, by any means, any person
employed in the construction, completion, or
repair of public work, to give up any part of
the compensation to which he is otherwise
entitled. The recipient shall report all sus-
pected or reported violations to the DoC op-
erating unit.
3. Davis -Bacon Act, as amended (40 U.S.C.
276a to a -7) —When required by Federal pro-
gram legislation, all construction contracts
awarded by the recipients and subrecipients
of more than 32000 shall include a provision
for compliance with the Davis -Bacon Act (40
U.S.C. 276a to a-7) and as supplemented by
Department of Labor regulations (29 CFR
part 5, "Labor Standards Provisions Applica-
ble to Contracts Governing Federally Fi-
nanced and Assisted Construction Under
this Act, contractors shall be required to pay
wages to laborers and mechanics at a rate
not less than the minimum wages specified
in a wage determination made by the Sec-
retary of Labor. In addition, contractors
shall be required to pay wages not less than
once a week. The recipient shall place a copy
of the current prevailing wage determination
issued by the Department of Labor in each
solicitation and the award of a contract shall
be conditioned upon the acceptance of the
wage determination. The recipient shall re-
port all suspected or reported violations to
the DoC operating unit
4. Contract Work Hours and Safety Standards
Act (40 U.S.C. 327 -333) —Where applioable, all
contracts awarded by recipients exceeding
3100,000 for construction contracts and for
other contracts that involve the employment
of mechanics or laborers shall include a pro-
vision for compliance with Sections 102 and
107 of the Contract Work Hours and Safety
Standards Act (40 U S.C. 327 -333). as supple-
mented by Department of Labor regulations
(29 CFR Part 5). Under Section 102 of the Act,
each contractor shall be required to compute
the wages of every mechanic and laborer on
the basis of a standard work week of 40
hours. Work in excess of the standard work
week is permissible provided that the worker
is compensated at a rate of not less than 1%
times the basic rate of pay for all hours
worked in excess of 40 hours in the work
week. Section 107 of the Act is applicable to
construction work and provides that no la-
borer or mechanic shall be required to work
in surroundings or under working conditions
which are unsanitary, hazardous or dan-
162
15 CFR Subtitle A (1 -1 -02 Edition)
gerous. These requirements do not apply to
the purchases of supplies or materials or ar-
ticles ordinarily available on the open mar-
ket, or contracts for transportation or trans-
mission of intelligence.
5. Rights to Inventions Made Under a Con-
tract or Agreement Contracts or agreements
for the performance of experimental, devel-
opmental, or research work shall provide for
the rights of the Federal Government and
the recipient in any resulting invention in
accordance with 37 CFR part 401, "Rights to
Inventions Made by Nonprofit Organizations
and Small Business Firms Under Govern-
ment Grants, Contracts and Cooperative
Agreements," and any implementing regula-
tions issued by the awarding agency.
6. Clean Air Act (42 U.S.C. 7401 et seq.) and
the Federal Water Pollution Control Act (33
U.S C. 1251 et seq.), as amended— Contracts
and subgrants of amounts in excess of
3100,000 shall contain a provision that re-
gaires the recipient to agree to comply with
all applicable standards, orders or regula-
tions issued pursuant to the Olean Air Act
(42 U.S.0 7401 et seq.) and the Federal Water
Pollution Control Act as amended (33 U.S C.
1251 et seq.). Violations shall be reported to
the DoC operating unit and the Regional Of-
fice of the Environmental Protection Agency
(EPA).
7. Byrd Ann Lobbytng Amendment (31 U.S.C.
1352) —Contractors who apply or bid for an
award exceeding 3100,000 shall file the re-
quired certification. Each tier certifies to
the tier above that it will not and has not
used Federal appropriated funds to pay any
person or organization for influencing or at-
tempting to influence an officer or employee
of any agency, a member of Congress, officer
or employee of Congress, or an employee of a
member of Congress in connection with ob-
taining any Federal contract, grant or any
other award covered by 31 U.S.C. 1352 Each
tier shall also disclose any lobbying with
non Federal funds that takes place In con-
nection with obtaining any Federal award
Such disclosures are forwarded from tier to
tier up to the recipient
8. Debarment and Suspension (S.O.s 12549
and 12689) —No contract shall be made to par-
ties listed on the General Services Adminis-
tration's List of Parties Excluded from Fed-
eral Procurement or Nonprocurement Pro-
grams In accordance with E.O.s 12549 and
12689, "Debarment and Suspension" as imple-
mented by DoC regulations at 15 CFR part
26. This list contains the names of parties
debarred, suspended, or otherwise excluded
by agencies, and contractors declared ineli-
gible under statutory or regulatory author-
ity other than E.O. 12549. Contractors with
Office of the Secretory, Commerce
awards that exceed the simplified acquisi-
tion threshold shall provide the required cer-
tification regarding its exclusion status and
that of Its principal employees.
[63 FR 47156, Sept. 4, 1998, as amended at 66
FR 49828, Oct 1, 2001]
PART 15 —LEGAL PROCEEDINGS
Subpart A— Service of Process
Sec.
15.1 Scope and purpose
15.2 Definitions
15.3 Acceptance of service of process
Subpart 5—Testimony by Employees and
the Production of Documents in Legal
Proceedings
15.11 Scope.
15.12 Definitions
15.13 Demands for testimony or production
of documents: Department policy.
15.14 Demand for testimony or production
of documents: Department procedures
15.15 Procedures when a Department em-
ployee receives a subpoena
15.16 Legal proceedings between private
litigants' Expert or opinion testimony.
15.17 Demands or requests in legal pro-
ceedings for records protected by con-
fidentiality statutes.
15.18 Testimony of Department employees
in proceedings involving the United
States.
Subpart C—Involuntary Child and Spousal
Support Allotments of NOAA Corps Officers
15.21 Purpose.
15.22 Applicability and scope.
15.23 Definitions.
15.24 Policy.
15.25 Procedures.
Subpart D— Statement of Policy and Proce-
dures Regarding Indemnification of
Department of Commerce Employees
15.31 Policy
15.32 Procedures for the handling of law-
suits against Department employees
arising within the scope of their office or
employment.
AuTSoRrrY: 5 U.S.C. 301; 15 U.S.C. 1501, 1512,
1513, 1515 and 1518; Reorganization Plan No. 5
of 1950; 3 CFR, 1949 -1953 Comp p. 1004, 44
U.S.C. 3101, subpart C la issued under 37
U.S.C. 101, 706; 15 U S.0 1673; 42 U.S.0 665.
EDITORIAL NOTE: Nomenclature changes to
part 15 appear at 62 FR 19669. Apr 23, 1997.
163
§15.2
Subpart A— Service of Process
SOURCE: 53 FR 41318, Oct 21, 1988, unless
otherwise noted Redesignated at 62 FR 19669.
Apr. 23, 1997.
15.1 Scope and purpose.
(a) This subpart sets forth the proce-
dures to be followed when a summons
or complaint is served on the Depart-
ment, a component, or the Secretary or
a Department employee in his or her
official capacity
(b) This subpart is intended to ensure
the orderly execution of the affairs of
the Department and not to impede any
legal proceeding.
(c) This subpart does not apply to
subpoenas. The procedures to be fol-
lowed with respect to subpoenas are set
out in subpart B.
(d) This subpart does not apply to
service of process made on a Depart-
ment employee personally on matters
not related to official business of the
Department or to the official respon-
sibilities of the Department employee.
[53 FR 41318, Oct. 21, 1988. Redesignated and
amended at 62 FR 19669, 19670, Apr. 23, 1997]
15.2 Definitions.
For the purpose of this subpart:
(a) General Counsel means the Gen-
eral Counsel of the United States De-
partment of Commerce or other De-
partment employee to whom the Gen-
eral Counsel has delegated authority to
act under this subpart, or the chief
legal officer (or designee) of the De-
partment of Commerce component con-
cerned.
(b) Component means Office of the
Secretary or an operating unit of the
Department as defined in Department
Organization Order 1 -1.
(c) Department means the Department
of Commerce.
(d) Department employee means any
officer or employee of the Department,
including commissioned officers of the
National Oceanic and Atmospheric Ad-
ministration.
(e) Legal proceeding means a pro-
ceeding before a tribunal constituted
by law, including a court, an adminis-
trative body or commission, or an ad-
ministrative law judge or hearing offi-
cer.
15 CFR PART 24
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e -CFR Data is current as of June 17, 2010
Title 15: Commerce and Foreign Trade
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PART 24— UNIFORM ADMINISTRATIVE REQUIREMENTS FOR GRANTS AND
COOPERATIVE AGREEMENTS TO STATE AND LOCAL GOVERNMENTS
Section Contents
24.1 Purpose and scope of this part.
24.2 Scope of subpart.
24.3 Definitions.
24.4 Applicability.
24.5 Effect on other issuances.
24.6 Additions and exceptions.
Subpart A— General
Subpart B —Pre -Award Requirements
24.10 Forms for applying for grants.
24.11 State plans.
24.12 Special grant or subgrant conditions for "high -risk" grantees.
Subpart C— Post -Award Requirements
Financial Administration
24.20 Standards for financial management systems.
24.21 Payment.
4 24.22 Allowable costs.
24.23 Period of availability of funds.
24.24 Matching or cost sharing.
24.25 Program income.
24.26 Non Federal audit.
Changes. Property. and Subawards
24.30 Changes.
24.31 Real property_
24.32 Equipment.
24.33 Supplies.
24.34_ _Other_property.
24.35 Subawards to debarred and suspended_par jes.
§24a6 Procurement.
24.37__Subgrants.
Reports, Records, Retention and Enforcement
24_40 Monitoring and reporting program _perf_ormance.
§_24.41 Financial reporting,
§.24A2 Retention and access requirements for records.
24.43 Enforcement.
24.44 Termination for convenience.
24.50 Closeout,
24.51 Later disallowances and adjustments
Subpart D— After the -Grant Requirements
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§._24.52 Collection of amounts due.
Authority: 5 U.S.C. 301.
Source: 53 FR 8048, 8087, Mar. 11, 1988, unless otherwise noted.
Subpart A— General
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24.1 Purpose and scope of this part.
top
This part establishes uniform administrative rules for Federal grants and cooperative agreements and
subawards to State, local and Indian tribal governments.
24.2 Scope of subpart.
top
This subpart contains general rules pertaining to this part and procedures for control of exceptions from
this part.
24.3 Definitions.
top
As used in this part:
Subpart E Entitlements !Reserved]
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 daims, 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
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subgrant, the party that awarded the subgrant.
Cash contributions means the grantee's cash outlay, including the 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 a procurement contract under a grant or subgrant, and means a
procurement subcontract under a contract.
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 govemment means the goveming 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.
Govemment means a State or local govemment or a federally recognized Indian tribal govemment.
Grant means an award of financial assistance, including cooperative agreements, 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 govemment 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 govemment 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,
special 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.
Obligations means the amounts of orders placed, contracts and subgrants awarded, goods and services
received, and similar transactions during a given penod 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 inkind contnbutions applied, and
the new increase (or decrease) in the amounts owed by the grantee for goods and other property
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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 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 exdusive of local govemments. 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
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 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.
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 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.
24.4 Applicability.
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[Plop
(a) General. Subparts A through 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 §24.6, or:
(1) Grants 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; Alcohol, 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 program) and Titles 1 -111 of the Job Training
Partnership Act of 1982 and under the Public Health Services Act (Section 1921), Alcohol and Drug
Abuse Treatment and Rehabilitation Block Grant and Part C of Title V, Mental Health Service for the
Homeless Block Grant).
(3) Entitlement grants to carry out the following programs of the Social Security Act:
(i) 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(G); HHS grants for WIN are subject to this part);
(ii) Child Support Enforcement and Establishment of Paternity (Title IV -D of the Act);
(iii) Foster Care and Adoption Assistance (Title IV -E of the Act);
(iv) Aid to the Aged, Blind, and Disabled (Titles I, 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)(B).
(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 1966:
(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. 1522
(e)) and subsection 501(a) of the Refugee Education Assistance Act of 1980 (Pub. L. 96-422, 94 Stat.
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;
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(9) Grants to local education agencies under 20 U.S.C. 236 through 241 -1(a), and 242 through 244
(portions of the Impact Aid program), except for 20 U.S.C. 238(d)(2)(c) and 240(f) (Entitlement Increase
for Handicapped Children); and
(10) Payments under the Veterans Administration's State Home Per Diem Program (38 U.S.C. 641(a)).
(b) Entitlement programs. Entitlement programs enumerated above in §24.4(a) (3) through (8) are
subject to subpart E.
24.5 Effect on other issuances.
All other grants administration provisions of codified program regulations, program manuals, handbooks
and other nonregulatory 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 §24.6.
24.6 Additions and exceptions.
n
(a) For classes of grants and grantees subject to this part, Federal agencies may not impose additional
administrative requirements except in codified regulations published in theFederal 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
24.10 Forms for applying for grants.
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too
top
(a) Scope. (1) This section prescribes forms and instructions to be used by govemmental 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 subgrants. However, grantees are encouraged to
avoid more detailed or burdensome application requirements for subgrants
(b) Authonzed forms and instructions for govemmental organizations. (1) In applying for grants,
applicants shall only use standard application forms or those prescribed by the granting agency with the
approval of OMB under the Paperwork Reduction Act of 1980.
(2) 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 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
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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.
24.11 State plans.
0
top
(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 State 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 State shall comply with all
applicable Federal statutes and regulations in effect with 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 State 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.
24.12 Special grant or subgrant conditions for "high- risk" grantees.
.top
(a) A grantee or subgrantee may be considered "high risk' if an awarding agency determines that a
grantee or subgrantee:
(1) Has a history of unsatisfactory performance, or
(2) Is not financially stable, or
(3) Has a management system which does 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,
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(3) Requiring additional, more detailed financial reports;
(4) Additional project monitoring;
(5) Requinng the grantee or subgrantee 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;
(3) The corrective actions which must be taken before they will be removed and the time allowed for
completing the corrective actions, and
(4) The method of requesting reconsideration of the conditions/restrictions imposed.
Subpart C— Post -Award Requirements
Financial Administration
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24.20 Standards for financial management systems.
top
(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—
(1) Permit preparation of reports required 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 violation 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 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) Intemal 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 or outlays must be compared with budgeted amounts for each
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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.
(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
altocability 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 letter -of- credit or electronic transfer of funds methods, the grantee must make drawdowns as
dose as possible to the time of making disbursements. Grantees 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.
24.21 Payment.
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(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 grantee's or subgrantee's 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 cash 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
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 disbursements.
(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 (0(1) of this section, grantees and subgrantees shall disburse
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For the costs of a—
Use the principles in—
State, local or Indian tribal govemment
OMB Circular A-87.
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 that circular
OMB Circular A -122.
Educational institutions.
OMB Circular A -21.
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program income, rebates, refunds, contract settlements, audit recoveries and interest earned on such
funds before requesting additional cash payments.
(g) Withholding payments. (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 §24.43(c).
(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 eamed on advances. Except for interest earned on advances of funds exempt under the
Intergovernmental Cooperation Act (31 U.S.C. 6501 et 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.
24.22 Allowable costs.
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(a) 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.
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For profit organization other than a
hospital and an organization named in
OBM Circular A -122 as not subject to
that circular
48 CFR Part 31. Contract Cost
Principles and Procedures, or uniform
cost accounting standards that
comply with cost principles
acceptable to the Federal agency.
24.23 Period of availability of funds.
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(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.
24.24 Matching or cost sharing.
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(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 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 period to which the cost sharing or
matching requirements applies.
(b) Qualifications and exceptions —(1) Costs bome 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 shanng 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 §24.25, 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 §24.25
(9).)
(5) Services or property financed by income eamed by contractors. Contractors under a grant may earn
income from the activities carried out under the contract in addition to the amounts eamed 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.
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(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.
(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
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 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
induded 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 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. 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) 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
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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
§24.22, 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), (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 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.
24.25 Program income.
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(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 eamed 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 eamed 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 of generating program income If authorized by Federal regulations or the grant agreement,
costs incident to the generation of program income may be deducted from gross income to determine
program income.
(d) Govemmental 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 §24.34.)
(f) Property. Proceeds from the sale of real property or equipment will be handled in accordance with the
requirements of §24.31 and 24.32.
(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 subgrantees and
between the sources, kinds, or amounts of income. When Federal agencies authorize the alternatives in
paragraphs (g) (2) and (3) of this section, program income in excess of any limits stipulated shall also be
deducted from outlays.
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(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.
24.26 Non Federal audit.
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(a) Basic rule. Grantees and subgrantees are responsible for obtaining audits in accordance with the
Single Audit Act Amendments of 1996 (31 U.S.C. 7501 -7507) and revised OMB Circular A -133, "Audits
of States, Local Governments, and Non -Profit Organizations." The audits shall be made by an
independent auditor in accordance with generally accepted government auditing standards covering
financial audits.
(b) Subgrantees. State or local govemments, as those terms are defined for purposes of the Single Audit
Act Amendments of 1996, that provide Federal awards to a subgrantee, which expends $300,000 or
more (or other amount as specified by OMB) in Federal awards in a fiscal year, 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 Administrative Requirements for Grants
and Agreements with Institutions of Higher Education, Hospitals, and Other Non -Profit Organizations,"
have met the audit requirements of the Act. 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 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.
(c) Auditor selection. In arranging for audit services, §24.36 shall be followed.
[53 FR 8048, 8087, Mar. 11, 1988, as amended at 62 FR 45939, 45940, Aug. 29, 1997]
Changes, Property, and Subawards
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24.30 Changes.
too
(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 §24.22) 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 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 ten 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).
(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 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 §24.36 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 (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.
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(2) A request for a prior approval under the applicable Federal cost principles (see §24.22) may be made
by letter.
(3) A request by a subgrantee for prior approval will be addressed in wnting 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.
24.31 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.
(1) The Federal awarding agency may require the placing of appropriate notices of record to advise that
property has been acquired or improved with Federal financial assistance, and that use and disposition
conditions apply to the property.
(2) [Reserved]
(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
[53 FR 8048, Mar. 11, 1988, as amended at 53 FR 8049, Mar. 11, 1988]
24.32 Equipment.
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(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
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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 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 §24.25(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 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 Toss, 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.
(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.
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(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 §24.32(e).
(3) When title to equipment is transferred, the grantee shall be paid an amount calculated by applying
the percentage of participation in the purchase to the current fair market value of the property.
24.33 Supplies.
(a) 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 $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.
24.34 Other property.
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(a) Copyrights The Federal awarding agency reserves a royalty -free, nonexdusive, and irrevocable
license to reproduce, publish or otherwise use, and to authorize others to use, for Federal Govemment
purposes:
(1) The copyright in any work developed under a grant, subgrant, or contract under a grant or subgrant,
and
(2) Any rights of copyright to which a grantee, subgrantee, or a contractor purchases ownership with
grant support.
(b) intangible property Title to such property as loans, notes, and other debt instruments (whether
considered tangible or intangible) acquired under a grant or subgrant will vest upon acquisition in the
grantee or subgrantee respectively. Such property will be used for the originally authorized purpose as
long as needed for that purpose, and the grantee or subgrantee shall not dispose of or encumber its title
or other interests When no longer needed for the originally authorized purpose, disposition of such
property will be made as provided in §24.32(e).
[53 FR 8049, Mar. 11, 1988]
24.35 Subawards to debarred and suspended parties.
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Grantees and subgrantees must not make any award or permit any award (subgrant or contract) at any
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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."
24.36 Procurement.
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(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
(1) 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 disc plenary 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 appropnate 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 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 anaylsis 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
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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 indudes 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 indude, but are not limited to source evaluation, protests,
disputes, and daims. 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 pnmarily 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:
(1) 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 §24.36. 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) Requinng 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 (NE) 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.
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(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 indude a statement of the qualitative nature of the
material, product or service to be procured, and when necessary, shall set forth those minimum
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 dearly
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 indude 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. (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 the simplified acquisition threshold fixed
at 41 U.S.C. 403(11) (currently set at $100,000). If small purchase procedures are used, price or rate
quotations shall 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
matenal 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 §24.36(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 and 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;
(B) The invitation for bids, which will indude 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
cyde 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
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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:
(1) 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 NE professional services. It cannot be used to purchase other types of services though
NE 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.
(i) 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 profits, 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;
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(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.
(f) 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 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
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 §24.22). 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 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:
(1) 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 the simplified acquisition threshold 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 the simplified acquisition threshold, specifies a "brand
name" product; or
(iv) The proposed award is more than the simplified acquisition threshold and 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 the simplified acquisition threshold.
(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.
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(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 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
the simplified acquisition threshold, 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 part of the contractor for 100 percent of the contract price. A
°performance bond" is one executed in connection with a contract to secure fulfillment of all the
contractor's obligations under such contract.
(3) A payment bond on the part of the contractor for 100 percent of the contract price. A "payment bond"
is one executed in connection with a contract to assure payment as required by 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 Federal
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 more
than the simplified acquisition threshold)
(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 chapter 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 276a -7) as supplemented by Department
of Labor regulations (29 CFR Part 5). (Construction contracts in excess of $2000 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 $2000, and in excess of $2500 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.
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(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 dosed.
(12) Compliance with all applicable standards, orders, or requirements issued under section 306 of the
Clean 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. L.
94 -163, 89 Stat. 871).
(53 FR 8048, 8087, Mar. 11, 1988, as amended at 60 FR 19639, 19642, Apr. 19, 1995]
24.37 Subgrants.
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(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
govemments. 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 §24.42 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 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.
(c) Exceptions. By their own terms, certain provisions of this part do not apply to the award and
administration of subgrants:
(1) Section 24.10;
(2) Section 24.11;
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(3) The letter -of credit procedures specified in Treasury Regulations at 31 CFR Part 205, cited in §24.21;
and
(4) Section 24.50.
Reports, Records, Retention, and Enforcement
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24.40 Monitoring and reporting program performance.
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(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 monitonng must cover each program, function or activity.
(b) Nonconstruction performance reports. The Federal agency may, if it derides 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 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.
(11) 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.
(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.
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(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.
24.41 Financial reporting.
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(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 the extend 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 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.
(5) 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
from 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 §24.41(e)(2)(iii) of 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 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.
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(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 Transactions Report —(1) Form. (i) For 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 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. Requests 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. 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.)
(3) The frequency for submitting payment requests is treated in §24.41(b)(3).
(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 §24.41(d), instead of
this form.
(ii) The frequency for submitting reimbursement requests is treated in §24.41(b)(3).
(2) Grants that support construction activities paid by letter of credit, electronic funds transfer or
Treasury check advance.
(1) 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 §24.41(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 §24.41(d).
(iii) The Federal agency may substitute the Financial Status Report specified in §24.41(b) for the Outlay
Report and Request for Reimbursement for Construction Programs.
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(3) Accounting basis. The accounting basis for the Outlay Report and Request for Reimbursement for
Construction Programs shall be governed by §24.41(b)(2).
24.42 Retention and access requirements for records.
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(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 §24.36(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 anse from it, or until 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 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 penod 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).
(1) If submitted for negotiation. If the proposal, plan, or other computation is required to be submitted to
the Federal Govemment (or to the grantee) to form the basis for negotiation of the rate, then the 3 -year
retention penod for its supporting records starts from the date of such submission.
(ii) If not submitted for negotiation. If the proposal, plan, or other computation is not required to be
submitted to the Federal Government (or to the grantee) for negotiation purposes, 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 other computation.
(d) Substitution of microfilm. Copies made by microfilming, photocopying, or similar methods may be
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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 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.
24.43 Enforcement.
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(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 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.
(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:
(1) The costs 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 §24.35).
24.44 Termination for convenience.
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Except as provided in §24.43 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 wntten 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 §24.43 or paragraph (a) of this
section.
Subpart D— After the -Grant Requirements
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24.50 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).
(3) Final request for payment (SF-270) (if applicable).
(4) Invention disclosure (if applicable).
(5) Federally -owned property report:
In accordance with §24.32(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.
24.51 Later disallowances and adjustments.
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The closeout of a grant does not affect:
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(a) The Federal agency's nght 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 §24.42;
(d) Property management requirements in §24.31 and 24.32; and
(e) Audit requirements in §24.26.
24.52 Collection of amounts due.
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(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 adminstrative offset against other requests for reimbursements,
(2) Withholding advance payments otherwise due to the grantee, or
(3) 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 Chapter II). The
date from which interest is computed is not extended by litigation or the filing of any form of appeal.
Subpart E— Entitlements [Reserved]
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DEPARTMENT OF COMMERCE ARRA AWARD
TERMS (75 FR 3792)
U.S. Department of Commerce
American Recovery and Reinvestment Act Award Terms
NOTE: This award is subject to the terms and conditions of the award, the requirements of federal law and
the provisions of the American Recovery and Reinvestment Act of 2009, Pub. L. No. 111 -5,123 STAT. 115,
including section 1553 of the Recovery Act, Protecting State and Local Government and Contractor
Whistleblowers (123 STAT. 297).
A. Award Terms Required Pursuant to 2 CFR Part 176
1. Reporting and Registration Requirements under Section 1512 of the American
Recovery and Reinvestment Act of 2009, Public Law 111 -5.
(a) This award requires the Recipient to complete projects or activities which are funded
under the American Recovery and Reinvestment Act of 2009 "Recovery Act and to report on
use of Recovery Act funds provided through this award. Information from these reports will be
made available to the public.
(b) The reports are due no later than ten calendar days after each calendar quarter in which
the Recipient receives the assistance award funded in whole or in part by the Recovery Act.
(c) Recipients and their first -tier Recipients must maintain current registrations in the Central
Contractor Registration (www.ccr.gov) at all times during which they have active federal awards
funded with Recovery Act funds. A Dun and Bradstreet Data Universal Numbering System
(DUNS) Number (www.dnb.com) is one of the requirements for registration in the Central
Contractor Registration.
(d) The Recipient shall report the information described in section 1512(c) using the
reporting instructions and data elements that will be provided online at
www.FederalReporting.gov and ensure that any information that is pre filled is corrected or
updated as needed.
2. Use of American Iron, Steel, and Manufactured Goods under Section 1605 of the
Recovery Act.
(a) None of the funds appropriated or otherwise made available by the Recovery Act may
be used for a project for the construction, alteration, maintenance, or repair of a public building
or public work unless all of the iron, steel, and manufactured goods used in the project are
produced in the United States.
(b) Subsection (a) shall not apply in any case or category of cases in which the head of
the Federal department or agency involved finds that-
(1) applying subsection (a) would be inconsistent with the public interest;
(2) iron, steel, and the relevant manufactured goods are not produced in the
United States in sufficient and reasonably available quantities and of a satisfactory
quality; or
(3) inclusion of iron, steel, and manufactured goods produced in the United States
will increase the cost of the overall project by more than 25 percent.
It
(c) If the head of a Federal department or agency determines that it is necessary to waive
the application of subsection (a) based on a finding under subsection (b), the head of the
department or agency shall publish in the Federal Register a detailed written justification as to
why the provision is being waived.
(d) This award term shall be applied in a manner consistent with United States
obligations under international agreements.
(e) AWARD TERM.- The award term required by 2 CFR Part 176, Subpart B is set out in
full as Recovery Act Award Terms Addendum to Award Term A.2 below.
(b) For additional guidance on the wage rate requirements of section 1606, contact your
awarding agency. Recipients of grants, cooperative agreements and loans should direct their
initial inquiries concerning the application of Davis -Bacon requirements to a particular federally
assisted project to the Federal agency funding the project. The Secretary of Labor retains final
coverage authority under Reorganization Plan Number 14.
4. Single Audit Requirements: Recovery Act Transactions listed in Schedule of
Expenditures of Federal Awards; Recipient Responsibilities for Informing Sub Recipients.
(a) To maximize the transparency and accountability of funds authorized under the Recovery
Act as required by Congress and in accordance with 2 CFR 215, subpart 21 "Uniform
Administrative Requirements for Grants and Agreements" and OMB A -102 Common Rules
provisions, Recipients agree to maintain records that identify adequately the source and application
of Recovery Act funds.
(b) For Recipients covered by the Single Audit Act Amendments of 1996 and OMB Circular
A -133, "Audits of States, Local Governments, and Non Profit Organizations," Recipients agree to
separately identify the expenditures for Federal awards under the Recovery Act on the Schedule of
Expenditures of Federal Awards (SEFA) and the Data Collection Form (SF -SAC) required by OMB
Circular A -133. This shall be accomplished by identifying expenditures for Federal awards made
2
3. Wage Rate Requirements under Section 1606 of the Recovery Act.
(a) Section 1606 of the Recovery Act requires that all laborers and mechanics employed
by contractors and subcontractors on projects funded directly by or assisted in whole or in part
by and through the Federal Government pursuant to the Recovery Act shall be paid wages at
rates not less than those prevailing on projects of a character similar in the locality as determined
by the Secretary of Labor in accordance with subchapter IV of chapter 31 of title 40, United
States Code. Pursuant to Reorganization Plan No. 14 and the Copeland Act, 40 U.S.C. 3145, the
Department of Labor has issued regulations at 29 CFR Parts 1, 3, and 5 to implement the Davis
Bacon and related Acts. Regulations in 29 CFR 5.5 instruct agencies concerning application of
the standard Davis -Bacon contract clauses set forth in that section. Federal agencies providing
grants, cooperative agreements, and loans under the Recovery Act shall ensure that the standard
Davis -Bacon contract clauses found in 29 CFR 5.5(a) are incorporated in any resultant covered
contracts that are in excess of $2,000 for construction, alteration or repair (including painting and
decorating).
under Recovery Act separately on the SEFA, and as separate rows under Item 9 of Part III on the SF-
SAC by CFDA number, and inclusion of the prefix "ARRA in identifying the name of the Federal
program on the SEFA and as the first characters in Item 9d of Part III on the SF -SAC.
(c) Recipients agree to separately identify to each sub recipient, and document at the time of
sub -award and at the time of disbursement of funds, the Federal award number, CFDA number, and
amount of Recovery Act funds. When a Recipient awards Recovery Act funds for an existing
program, the information furnished to sub recipients shall distinguish the sub awards of incremental
Recovery Act funds from regular sub awards under the existing program.
(d) Recipients agree to require their sub recipients to include on their SEFA information to
specifically identify Recovery Act funding similar to the requirements for the Recipient SEFA
described above. This information is needed to allow the Recipient to monitor sub recipient
expenditure of Recovery Act funds properly, and to allow oversight by the Federal awarding
agencies, Offices of Inspector General and the Government Accountability Office.
B. Additional Recovery Act Award Terms
1. Limitation on Expenditures Relating to Certain Activities.
Pursuant to section 1604 of the Recovery Act, expenses related to any casino or other gambling
establishment, aquarium, zoo, golf course, or swimming pool are not eligible expenses under this
award and will not be reimbursed.
2. Use of the American Recovery and Reinvestment Act Logo on Construction Signs.
All projects which are funded by the Recovery Act shall display signage that features the
Primary Emblem throughout the construction phase. The signage should be displayed in a
prominent location on site. Some exclusions may apply. The Primary Emblem should not be
displayed at a size less than 6 inches in diameter. The agency awarding funds will provide
additional instructions regarding specifications.
3. SEC. 1511 Certification.
Pursuant to section 1511 of the Recovery Act, with respect to funds made available to State or
local governments for infrastructure investments, the Governor, mayor, or other chief executive,
as appropriate, shall certify that the infrastructure investment has received the full review and
vetting required by law and that the chief executive accepts responsibility that the infrastructure
investment is an appropriate use of taxpayer dollars. Such certification shall include a
description of the investment, the estimated total cost, and the amount of covered funds to be
used, and shall be posted on a website and linked to the website established by section 1526. A
State or local agency may not receive a disbursement of infrastructure investment funding from
funds made available in this Act unless this certification is made and posted.
4. Quick Start Activities.
Pursuant to section 1602 of the Recovery Act, in using funds made available in this Act for
infrastructure investment, Recipient shall give preference to activities that can be started and
completed expeditiously, including a goal of using at least 50 percent of the funds for activities
that can be initiated not later than 120 days after the date of the award of fluids.' Recipients
In lieu of "within 120 days of enactment of this Act" as provided in section 1602.
3
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shall also use grant funds in a manner that maximizes job creation and economic benefit.
5. SEC. 1515 Access of Offices of Inspector General to Certain Records and Employees.
4
(a) Access- With respect to each contract or grant awarded using covered funds, any
representative of an appropriate inspector general appointed under section 3 or 8G of the
Inspector General Act of 1978 (5 U.S.C. App.), is authorized
(1) to examine any records of the contractor or grantee, any of its subcontractors
or subgrantees, or any State or local agency administering such contract, that
pertain to, and involve transactions relating to, the contract, subcontract, grant, or
subgrant; and
(2) to interview any officer or employee of the contractor, grantee, subgrantee, or
agency regarding such transactions.
6. First Tier Subrecipients' Planning Activities.
Recipients shall require first tier subrecipients to obtain a DUNS number (or update an existing
DUNS record), and to register with the Central Contractor Registration (CCR) no later than the
first time Recovery Act data requirements are due (October 10, 2009).
7. Referral of False Claims to Department of Commerce Inspector General.
Recipients and subrecipients awarded funds made available under the Recovery Act shall
promptly refer to the Department of Commerce Inspector General any credible evidence that a
principal, employee, agent, contractor, subrecipient, subcontractor, or other person has submitted
a false claim under the False Claims Act or has committed a criminal or civil violation of laws
pertaining to fraud, conflict of interest, bribery, gratuity, or similar misconduct involving those
funds. Referrals can be made online at http: /www.oig. doc.gov /oig/hotline /000016.html or by
calling 1- 800 424 -5197.
8. Recovery Act One -Time Funding.
This award is made with funds available under the Recovery Act and is intended to provide a
one -time injection of funds for purposes of stimulating the American economy.
Recovery Act Award Terms Addendum to Award Term A.2
2.01. Buy American: Projects Not Implicating International Agreements Funds Used
for Construction, Alteration, Maintenance, or Repair of a Public Building or Public Work
that Does NOT Involve Iron, Steel, or Manufactured Goods Covered under International
Agreement
REQUIRED USE OF AMERICAN IRON, STEEL, AND MANUFACTURED GOODS- .SECTION 1605 OF
THE AMERICAN RECOVERY AND REINVESTMENT ACT OF 2009 (RECOVERY ACT)
(a) Definitions. As used in this award term and condition—
"Manufactured good" means a good brought to the construction site for incorporation into the
building or work that has been-
(1) Processed into a specific form and shape; or
(2) Combined with other raw material to create a material that has different properties
than the properties of the individual raw materials.
"Public building" and "public work" means a public building of, and a public work of, a
governmental entity (the United States; the District of Columbia; commonwealths, territories, and
minor outlying islands of the United States; State and local governments; and multi- State, regional,
or interstate entities which have governmental functions). These buildings and works may include,
without limitation, bridges, dams, plants, highways, parkways, streets, subways, tunnels, sewers,
mains, power lines, pumping stations, heavy generators, railways, airports, terminals, docks, piers,
wharves, ways, Lighthouses, buoys, jetties, breakwaters, levees, and canals, and the construction,
alteration, maintenance, or repair of such buildings and works.
"Steel" means an alloy that includes at least 50 percent iron, between .02 and 2 percent carbon, and
may include other elements.
(b) Domestic preference. (1) This award term and condition implements Section 1605 of the
Recovery Act, by requiring that all iron, steel, and manufactured goods used in the project are
produced in the United States except as provided in paragraph (b)(3) and (bX4) of this term and
condition.
(2) This requirement does not apply to the material listed by the Federal Government
as follows:
[Award official to list applicable excepted materials or indicate "none
5
(3) The award official may add other iron, steel, and/or manufactured goods to the list
in paragraph (b)(2) of this term and condition if the Federal government determines that—
(i) The cost of the domestic iron, steel, and/or manufactured goods would be
unreasonable. The cost of domestic iron, steel, or manufactured goods used in the
project is unreasonable when the cumulative cost of such material will increase the
cost of the overall project by more than 25 percent;
(ii) The iron, steel, and/or manufactured good is not produced, or
manufactured in the United States in sufficient and reasonably available quantities
and of a satisfactory quality; or
(iii) The application of the restriction of section 1605 of the Recovery Act
would be inconsistent with the public interest.
(3) Unless the Federal Government determines that an exception to section 1605 of the
Recovery Act applies, use of foreign iron, steel, and/or manufactured goods is noncompliant
with section 1605 of the Recovery Act.
6
(c) Request for determination of inapplicability of Section 1605 of the Recovery Act.
(1)(i) Any Recipient request to use foreign iron, steel, and/or manufactured goods in
accordance with paragraph (b)(3) of this term and condition shall include adequate
information for Federal Government evaluation of the request, including—
(A) A description of the foreign and domestic iron, steel, and/or
manufactured goods;
(B) Unit of measure;
(C) Quantity;
(D) Cost;
(E) Time of delivery or availability;
(F) Location of the project;
(G) Name and address of the proposed supplier; and
(H) A detailed justification of the reason for use of foreign iron, steel,
and /or manufactured goods cited in accordance with paragraph (b)(3) of this
term and condition.
(ii) A request based on unreasonable cost shall include a reasonable survey of
the market and a completed cost comparison table in the format in paragraph (d) of
this term and condition.
(iii) The cost of iron, steel, and /or manufactured goods material shall include
all delivery costs to the construction site and any applicable duty.
(iv) Any Recipient request for a determination submitted after Recovery Act
funds have been obligated for a project for construction, alteration, maintenance, or
repair shall explain why the Recipient could not reasonably foresee the need for such
determination and could not have requested the determination before the funds were
obligated. If the Recipient does not submit a satisfactory explanation, the award
official need not make a determination.
(2) If the Federal government determines after funds have been obligated for a project
for construction, alteration, maintenance, or repair that an exception to section 1605 of the
Recovery Act applies, the award official will amend the award to allow use of the foreign
iron, steel, and/or relevant manufactured goods. When the basis for the exception is
nonavailability or public interest, the amended award shall reflect adjustment of the award
amount, redistribution of budgeted funds, and/or other actions taken to cover costs associated
with acquiring or using the foreign iron, steel, and/or relevant manufactured goods. When the
basis for the exception is the unreasonable cost of the domestic iron, steel, or manufactured
goods, the award official shall adjust the award amount or redistribute budgeted funds by at
least the differential established in 2 CFR 176.110(a).
(d) Data. To permit evaluation of requests under paragraph (b) of this term and condition
based on unreasonable cost, the Recipient shall include the following information and any applicable
supporting data based on the survey of suppliers:
FOREIGN AND DOMESTIC ITEMS COMPARISON
Description Unit of Measure Quantity Price (Dollars)*
Item 1:
Foreign steel, iron, or manufactured good
Domestic steel, iron, or manufactured good
Item 2:
Foreign steel, iron, or manufactured good
Domestic steel, iron, or manufactured good
[List name, address, telephone number, email address, and contact for suppliers surveyed
Attach copy of response; if oral, attach summary.]
[Include other applicable supporting information.]
Include all delivery costs to the construction site.]
7
l
2.02. Buy American: Projects Implicating International Agreements Funds Used for
Construction, Alteration, Maintenance, or Repair of a Public Building or Public Work that
DO Involve Iron, Steel, or Manufactured Goods Covered under International Agreement
(a) Definitions. As used in this award term and condition—
"Designated country"
(1) A World Trade Organization Government Procurement Agreement country
(Aruba, Austria, Belgium, Bulgaria, Canada, Cyprus, Czech Republic, Denmark, Estonia,
Finland, France, Germany, Greece, Hong Kong, Hungary, Iceland, Ireland, Israel, Italy,
Japan, Korea (Republic of), Latvia, Liechtenstein, Lithuania, Luxembourg, Malta,
Netherlands, Norway, Poland, Portugal, Romania, Singapore, Slovak Republic, Slovenia,
Spain, Sweden, Switzerland, and United Kingdom;
(2) A Free Trade Agreement (FTA) country (Australia, Bahrain, Canada, Chile, Costa
Rica, Dominican Republic, El Salvador, Guatemala, Honduras, Israel, Mexico, Morocco,
Nicaragua, Oman, Peru, or Singapore); or
(3) A United States European Communities Exchange of Letters (May 15, 1995)
country (Austria, Belgium, Bulgaria, Cyprus, Czech Republic, Denmark, Estonia, Finland,
France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta,
Netherlands, Poland, Portugal, Romania, Slovak Republic, Slovenia, Spain, Sweden, and
United Kingdom).
"Designated country iron, steel, and /or manufactured goods"
(1) Is wholly the growth, product, or manufacture of a designated country; or
(2) In the case of a manufactured good that consist in whole or in part of materials
from another country, has been substantially transformed in a designated country into a new
and different manufactured good distinct from the materials from which it was transformed.
"Domestic iron, steel, and/or manufactured good"
(1) Is wholly the growth, product, or manufacture of the United States; or
(2) In the case of a manufactured good that consists in whole or in part of materials
from another country, has been substantially transformed in the United States into a new and
different manufactured good distinct from the materials from which it was transformed.
There is no requirement with regard to the origin of components or subcomponents in
manufactured goods or products, as long as the manufacture of the goods occurs in the
United States.
"Public building" and "public work" means a public building of, and a public work of, a
governmental entity (the United States; the District of Columbia; commonwealths, territories, and
minor outlying islands of the United States; State and local governments; and multi State, regional,
8
"Foreign iron, steel, and/or manufactured good" means iron, steel and/or manufactured good that is
not domestic or designated country iron, steel, and/or manufactured good.
"Manufactured good" means a good brought to the construction site for incorporation into the
building or work that has been-
(1) Processed into a specific form and shape; or
(2) Combined with other raw material to create a material that has different properties
than the properties of the individual raw materials.
or interstate entities which have governmental functions). These buildings and works may include,
without limitation, bridges, dams, plants, highways, parkways, streets, subways, tunnels, sewers,
mains, power lines, pumping stations, heavy generators, railways, airports, terminals, docks, piers,
wharves, ways, lighthouses, buoys, jetties, breakwaters, levees, and canals, and the construction,
alteration, maintenance, or repair of such buildings and works.
"Steel" means an alloy that includes at least 50 percent iron, between .02 and 2 percent
carbon, and may include other elements.
(b) Iron, steel, and manufactured goods.
(1) This award term and condition implements
(i) Section 1605(a) of the Recovery, by requiring that all iron, steel, and
manufactured goods used in the project are produced in the United States; and
(ii) Section 1605(d), which requires application of the Buy American
requirement in a manner consistent with U.S. obligations under international
agreements. The restrictions of section 1605 of the Recovery Act do not apply to
designated country iron, steel, and/or manufactured goods. The Buy American
requirement in section 1605 shall not be applied where the iron, steel or manufactured
goods used in the project are from a Party to an international agreement that obligates
the Recipient to treat the goods and services of that Party the same as domestic goods
and services. This obligation shall only apply to projects with an estimated value of
$7,443,000 or more.
(2) The Recipient shall use only domestic or designated country iron, steel, and
manufactured goods in performing the work funded in whole or part with this award, except
as provided in paragraphs (b)(3) and (b)(4) of this term and condition.
(3) The requirement in paragraph (b)(2) of this term and condition does not apply to
the iron, steel, and manufactured goods listed by the Federal Government as follows:
[Award official to list applicable excepted materials or indicate "none
(c) Request for determination of inapplicability of section 1605 of the Recovery Act or the
Buy American Act
9
(4) The award official may add other iron, steel, and manufactured goods to the list in
paragraph (b)(3) of this award term and condition if the Federal government determines
that
(i) The cost of domestic iron, steel, and/or manufactured goods would be
unreasonable. The cost of domestic iron, steel, and/or manufactured goods used in the
project is unreasonable when the cumulative cost of such material will increase the
overall cost of the project by more than 25 percent;
(ii) The iron, steel, and /or manufactured goods is not produced, or
manufactured in the United States in sufficient and reasonably available commercial
quantities of a satisfactory quality; or
(iii) The application of the restriction of section 1605 of the Recovery Act
would be inconsistent with the public interest.
10
(1)(i) Any Recipient request to use foreign iron, steel, and/or manufactured goods in
accordance with paragraph(b)(4) of this term and condition shall include adequate
information for Federal Govemment evaluation of the request, including—
(A) A description of the foreign and domestic iron, steel, and/or manufactured
goods;
(B) Unit of measure;
(C) Quantity;
(D) Cost;
(E) Time of delivery or availability;
(F) Location of the project;
(G) Name and address of the proposed supplier; and
(H) A detailed justification of the reason for use of foreign iron, steel, and/or
manufactured goods cited in accordance with paragraph (b)(4) of this term and
condition.
(ii) A request based on unreasonable cost shall include a reasonable survey of
the market and a completed cost comparison table in the format in paragraph (d) of
this term and condition.
(iii) The cost of iron, steel, or manufactured goods shall include all delivery
costs to the construction site and any applicable duty.
(iv) Any Recipient request for a determination submitted after Recovery Act
funds have been obligated for a project for construction, alteration, maintenance, or
repair shall explain why the Recipient could not reasonably foresee the need for such
determination and could not have requested the determination before the funds were
obligated. If the Recipient does not submit a satisfactory explanation, the award
official need not make a determination.
(2) If the Federal government determines after funds have been obligated for a project
for construction, alteration, maintenance, or repair that an exception to section 1605 of the
Recovery Act applies, the award official will amend the award to allow use of the foreign
iron, steel, and/or relevant manufactured goods. When the basis for the exception is
nonavailability or public interest, the amended award shall reflect adjustment of the award
amount, redistribution of budgeted funds, and/or other appropriate actions taken to cover
costs associated with acquiring or using the foreign iron, steel, and/or relevant manufactured
goods.. When the basis for the exception is the unreasonable cost of the domestic iron, steel,
or manufactured goods, the award official shall adjust the award amount or redistribute
budgeted funds, as appropriate, by at least the differential established in 2 CFR 176.110(a).
(3) Unless the Federal Government determines that an exception to the section 1605
of the Recovery Act applies, use of foreign iron, steel, and/or manufactured goods other than
designated country iron, steel, and/or manufactured goods is noncompliant with the
applicable Act.
11
(d) Data. To permit evaluation of requests under paragraph (b) of this term and condition
based on unreasonable cost, the applicant shall include the following information and any applicable
supporting data based on the survey of suppliers:
FOREIGN AND DOMESTIC ITEMS COMPARISON
Description Unit of Measure Quantity Price (Dollars)*
Item 1:
Foreign steel, iron, or manufactured good
Domestic steel, iron, or manufactured good
Item 2:
Foreign steel, iron, or manufactured good
Domestic steel, iron, or manufactured good
[List name, address, telephone number, email address, and contact for suppliers surveyed.
Attach copy of response; if oral, attach summary.]
[Include other applicable supporting information.]
Include all delivery costs to the construction site.]
DEPARTMENT OF COMMERCE PRE -AWARD
NOTIFICATION REQUIREMENTS (73 FR 7696)
7696 Federal Register Vol. 73, No. 28 Monday, February 11, 2008 Notices
ADDRESSES: Copies of the ROD are
available upon request from the Field
Manager, Taos Field Office, Bureau of
Land Management, 226 Cruz Alta Road,
Taos, NM 87571, or via the internet on
the following Web site: http:
www.blm.gov /nm. Copies of the ROD
and approved Final Environmental
Impact Statement (FEIS) will also be
available at the following locations:
Forest Service, Santa Fe National Forest,
1474 Rodeo Road, Santa Fe, NM 87505,
and Forest Service, Espanola Ranger
District, 1710 North Riverside Dr.,
Espanola, NM 87533.
FOR FURTHER INFORMATION CONTACT: Sam
Des Georges, Field Office Manager,
Bureau of Land Management, Taos Field
Office, 226 Cruz Alta Rd., Taos, NM
87571, telephone —(505) 751 -4713; or
Sanford Hurlocker, District Ranger,
Forest Service, Espanola Ranger District,
P.O. Box 3307, Espanola, NM 87533;
telephone —(505) 753 -7331. Requests
for information may be submitted
electronically at http: /www.blm.gov/
nm.
SUPPLEMENTARY INFORMATION: The
Buckman Water Diversion Project (the
Project) is designed to address the
immediate need for accessing water
supplies for the Project Applicants. The
Forest Service and BLM are joint lead
agencies for this project, and the
Department of Interior, Bureau of
Reclamation, City of Santa Fe, and Santa
Fe County are cooperating agencies. The
City of Santa Fe, Santa Fe County, and
Las Campanas Limited Partnership are
the "Project Applicants."
The BLM's and Forest Service's
decision is to authorize rights -of -way
and easements to the Project Applicants
so that they may construct, operate, and
maintain the road improvements, major
facilities and associated infrastructure,
and their locations as described in the
Proposed Action. In addition, several
options have been selected for the
proposed sediment facility and sand
disposal systems; and for a section of
treated water pipeline. Power upgrades
to service the proposed facilities are also
described in the Final Environmental
Impact Statement (FEIS).
This decision conforms to existing
laws and regulations, provides for
resource protection and mitigation, and
is consistent with the Santa Fe National
Forest Plan and the Taos Resource
Management Plan. This decision is
based on a comparison of the potential
environmental effects of the Proposed
Action, other alternatives considered in
the FEIS, and comments received during
scoping and the 60 -day public comment
period on the Draft Environmental
Impact Statement
The decisions made by the Forest
Service and the BLM, respectively,
affect only those lands managed by each
agency. The decision related to National
Forest System lands is subject to
administrative review (appeal) in
accordance with 36 CFR 215 (June
2003). A written notice of appeal
clearly stating it is a notice of appeal
being filed pursuant to 36 CFR 215.14
must be filed within 45 days from the
date of publication of legal notice of this
decision in the Albuquerque Journal.
The publication date in the
Albuquerque Journal, newspaper of
record, is the exclusive means for
calculating the time to file an appeal.
Those wishing to appeal this decision
should not rely upon dates or timeframe
information provided by any other
source. Individuals or organizations that
submitted substantive comments during
the comment period specified at 36 CFR
215.6 may appeal this decision. The
notice of appeal must meet the appeal
content requirements at 36 CFR 215.14.
An appeal must be filed (regular mail,
fax, e-mail, hand delivery, or express
delivery) with the Appeal Deciding
Officer. Written appeals must be
submitted to: Deputy Regional Forester,
Southwestern Region Appeal Deciding
Officer, 333 Broadway Blvd., SE.,
Albuquerque, NM 87102. Appeals may
be faxed or e- mailed at Fax: (505) 842-
3173, and E -mail: appeals
southwesternQfsfed. us.
The Forest Service's office business
hours for those submitting hand
delivered appeals are: 8 a.m. to 4:30
p.m. Monday through Friday, excluding
holidays. Electronic comments must be
submitted in a format such as an e -mail
message, plain text (.txt), rich text
format (.rtf), Adobe (.pdf) and Word
(.doc) to appeals
southwestern@fs.fed.us. The appeal
must have an identifiable name attached
or verification of identity will be
required. A scanned signature may serve
as verification on electronic appeals.
The decision related to BLM managed
lands may be appealed to the Interior
Board of Land Appeals, Office of the
Secretary, in accordance with the
regulations contained in 43 CFR
2801.10(a). If an appeal is filed, the
notice of appeal must be filed with the
Bureau of Land Management, Taos Field
Office, Field Office Manager, 226 Cruz
Alta Road, Taos, NM 87571, within 30
days of the date the notice of the
decision appears in the Federal
Register. If you wish to file a petition
pursuant to 43 CFR 2801 10(b) for a stay
(suspension) of the effectiveness of this
decision during the time that your
appeal is being reviewed by the Board,
the petition for a stay must accompany
your notice of appeal. Copies of the
notice of appeal and petition for a stay
must also be submitted to the Interior
Board of Land Appeals and to the
Regional Office of the Solicitor at the
same time the original documents are
filed with this office.
Dated: January 15, 2008.
Sam Des Georges,
BLM —Taos Field Office Manager.
Dated: January 15, 2008.
Steve Romero,
Acting Forest Supervisor, Santa Fe National
Forest.
[FR Doc. E8 -2305 Filed 2-8 -08; 8:45 am]
BILLING CODE 4310-FB-P
DEPARTMENT OF COMMERCE
[Docket No. 080204117-8119-01]
Department of Commerce Pre -Award
Notification Requirements for Grants
and Cooperative Agreements
AGENCY: Department of Commerce
(DOC).
ACTION: Notice.
SUMMARY: This notice revises and
updates the Department of Commerce
(DOC) Pre -Award Notification
Requirements for Grants and
Cooperative Agreements, as published
in the Federal Register (66 FR 49917) on
October 1, 2001, as amended on October
30, 2002 (67 FR 66109) and on
December 30, 2004 (69 FR 78389). This
announcement constitutes a
recompilation of the Department of
Commerce pre -award requirements for
grants and cooperative agreements,
including all amendments and revisions
to date.
DATES: These provisions are effective
Feburary 11, 2008.
FOR FURTHER INFORMATION CONTACT: Gary
Johnson, Office of Acquisition
Management, Telephone Number -202-
482 -1679.
SUPPLEMENTARY INFORMATION: The DOC
is authorized to award grants and
cooperative agreements under a wide
range of programs that support
economic development; international
trade; minority businesses; standards
and technology; oceanic /atmospheric
services; and telecommunications and
information.
It is the policy of the DOC to seek full
and open competition for award of
discretionary financial assistance funds
whenever possible. Moreover, DOC
financial assistance must be awarded
through a merit -based review and
selection process. Notices announcing
the availability of Federal funds for new
awards for each DOC competitive
financial assistance program will be
published in the Federal Register and
posted on http: /www.grants.gov by the
sponsoring operating unit in the
uniform format for an announcement of
Federal Funding Opportunity (FFO)
mandated by the Office of Management
and Budget (OMB). These
announcements will reference or
include the DOC Pre -Award Notification
Requirements identified in sections A
and B of this notice, and the program
specific information identified in
section C of this notice, and will follow
the uniform format for announcements
of funding opportunities as identified in
section D.
This announcement provides notice
of the DOC Pre -Award Notification
Requirements that apply to all DOC-
sponsored grant and cooperative
agreement programs and that may
supplement those program
announcements which make reference
to this notice. Some of the DOC general
provisions published herein contain, by
reference or substance, a summary of
the pertinent statutes or regulations
published in the U.S. Code (U.S.C.),
Federal Register, or Code of Federal
Regulations (CFR), or requirements
provided in Executive Orders, OMB
Circulars (circulars), or Assurances
(Forms SF -424B and SF- 424D). This
notice does not intend to be a
derogation of, or amend, any statute,
regulation, Executive Order, circular, or
Standard Form.
Each individual award notice will
complete and include the relevant
analyses pursuant to the requirements
in Executive Order 12866, Executive
Order 13132, the Administrative
Procedure Act, the Regulatory
Flexibility Act, and the Paperwork
Reduction Act, as applicable.
A. The following pre-award notice
provisions will apply to all applicants
for and recipients of DOC grants and
cooperative agreements:
1. Federal Policies and Procedures.
Applicants, recipients and subrecipients
are subject to all Federal laws and
Federal and DOC policies, regulations,
and procedures applicable to Federal
financial assistance.
2. Debarment, Suspension, Drug -Free
Workplace, and Lobbying Provisions.
All applicants must comply with the
requirements of subpart C of 2 CFR part
1326, "Nonprocurement Debarment and
Suspension," 15 CFR part 29,
"Governmentwide Requirements for
Drug -Free Workplace (Financial
Assistance)" (November 26, 2003, 68 FR
66534), and 15 CFR part 28, "New
Restrictions on Lobbying," including
the submission of required forms and
Federal Register Vol. 73, No. 28 Monday, February 11, 2008 Notices 7697
obtaining certification from lower tier
applicants /bidders.
3. Pre -Award Screening of Applicant's
and Recipient's Management
Capabilities, Financial Condition, and
Present Responsibility. It is the policy of
the DOC to make awards to applicants
and recipients that are competently
managed, responsible, financially
capable and committed to achieving the
objectives of the award(s) they receive.
Therefore, pre -award screening may
include, but is not limited to, the
following reviews:
(a) Past Performance. Unsatisfactory
performance under prior Federal awards
may result in an application not being
considered for funding.
(b) Credit Checks. A credit check will
be performed on individuals, for profit,
and non profit organizations.
(c) Delinquent Federal Debts. No
award of Federal funds shall be made to
an applicant that has an outstanding
delinquent Federal debt until:
(1) The delinquent account is paid in
full;
(2) A negotiated repayment schedule
is established and at least one payment
is received; or
(3) Other arrangements satisfactory to
the DOC are made.
Pursuant to 31 U.S.C. 3720B, unless
waived, the DOC is not permitted to
extend financial assistance in the form
of a loan, loan guarantee, or loan
insurance to any person delinquent on
a nontax debt owed to a Federal agency.
This prohibition does not apply to
disaster loans.
Pursuant to 28 U.S.C. 3201(e), a
debtor who has a judgment lien against
the debtor's property for a debt to the
United States shall not be eligible to
receive any grant or loan which is made,
insured, guaranteed, or financed
directly or indirectly by the United
States or to receive funds directly from
the Federal Government in any program,
except funds to which the debtor is
entitled as beneficiary, until the
judgment is paid in full or otherwise
satisfied. The DOC sponsoring operating
units may promulgate regulations to
allow for waiver of this restriction on
eligibility for such grants and
cooperative agreements.
(d) Financial Pre -Award Screening.
The DOC's Office of Inspector General
(OIG) performs pre -award screening
procedures to review an applicant's
credit rating and related financial
information, the status of previous
Federal audit findings and
recommendations for the applicant, and
other relevant data. The following three
categories of applicants are exempt from
this review: (1) Applicants for awards in
amounts of $100,000 or less; (2)
applicants who have been recipients of
financial assistance from the DOC for
three or more consecutive years without
any adverse programmatic or audit
findings; and (3) applicants that are
units of a State or local government or
that are accredited colleges and
universities.
(e) Individual Background Screening.
Unless an exemption applies, an
individual background screening will be
performed by the OIG on key
individuals of organizational units
associated with the application at the
beginning of the award and at three year
intervals thereafter for the life of the
award. The exemptions are: the
proposed award amount is $100,000 or
less; applicants are accredited colleges
and universities; applicants are units of
a State or local government; applicants
are economic development districts
designated by EDA, including those
entities whose designations are pending,
and councils of governments; or the key
individual(s) is /are elected officials of
State and Local governments who are
serving in capacities other than their
elected capacities when applying for
assistance. In addition, if there is a
change in the status of the organization
and /or key individuals, or the program
officer, OIG, or Grants Officer believes
there is good reason to conduct a review
sooner, a background screening may be
requested more frequently. Individual
background screenings are conducted to
reveal if any key individuals associated
with the applicant have been convicted
of or are presently facing criminal
charges (e.g., fraud, theft, perjury), or
other matters which significantly reflect
on the applicant's business integrity,
responsibility, or financial integrity. If
any of the conditions listed below in
paragraphs (1), (2), or (3) occur, then the
DOC reserves the right to take one or
more of the following actions: consider
suspension/termination of an award
immediately for cause; require the
removal of any key individual from
association with management of and/or
implementation of the award and
require Grants Officer approval of
personnel replacements; require the
recipient to make other changes as
appropriate; and/or designate the
recipient as high risk and amend the
award to assign special award
conditions, as appropriate, including
making changes with respect to the
method of payment and /or financial
reporting requirements.
(1) A key individual fails to submit
the required Form CD -346, Applicant
for Funding Assistance within 30 days
of receipt of the award;
7698 Federal Register Vol. 73, No. 28 Monday, February 11, 2008 Notices
(2) A key individual makes a false
statement or omits a material fact on the
Form CD -346; or
(3) The individual background
screening reveals significant adverse
findings that reflect on the business
integrity, responsibility, or financial
integrity of the recipient and /or key
individual.
(f) List of Parties Excluded from
Procurement and Nonprocurement
Programs. The Excluded Parties Listing
System (EPLS) maintained by the
General Services Administration (GSA)
(found at http: /www.epls.gov) that lists
parties excluded from Federal
procurement and nonprocurement
programs will be checked to assure that
an applicant is not debarred or
suspended on a government -wide basis
from receiving financial assistance.
(g) Pre -Award Accounting System
Surveys. The Grants Office, in
cooperation with the OIG when
appropriate, may require a pre -award
survey of the applicant's financial
management system in cases where the
recommended applicant has had no
prior Federal support, the operating unit
has reason to question whether the
financial management system meets
Federal financial management
standards, or the applicant is being
considered for a high -risk designation.
4. No Obligation for Future Funding.
If an application is selected for funding,
the DOC has no obligation to provide
any additional future funding in
connection with that award. Any
amendment of an award to increase
funding or to extend the period of
performance is at the total discretion of
the DOC.
5. Pre -Award Activities. If an
applicant incurs any costs prior to
receiving an award, it does so solely at
its own risk of not being reimbursed by
the Government. Notwithstanding any
verbal or written assurance that may
have been received, there is no
obligation on the part of DOC to cover
pre -award costs unless approved by the
Grants Officer as part of the terms when
the award is made, or as authorized for
awards that support research by 15 CFR
14.25(e)(4).
6. Freedom of Information Act (FOIA)
Disclosure. The FOIA (5 U.S.C. 552 and
DOC regulations at 15 CFR part 4) sets
forth the process and procedure by
which the DOC follows to make
requested material, information, and
records publicly available. Unless
prohibited by law and to the extent
required under the FOIA, contents of
applications, proposals, and other
information submitted by applicants
may be released in response to FOIA
requests.
7. False Statements. A false statement
on an application is grounds for denial
or termination of an award, and /or
possible punishment by a fine or
imprisonment as provided in 18 U.S.C.
1001.
8. Application Forms. Unless the
individual programs specify differently
in their Federal Register notice of
availability of funding and/or in the
Federal Funding Opportunity
announcement, the following forms,
family of forms, and /or certifications are
required, as applicable, for DOC grants
and cooperative agreements: OMB
Standard Forms (SF) SF -424,
Application for Federal Assistance; SF-
424A, Budget Information—Non
Construction Programs; SF -424B,
Assurances Non Construction
Programs; SF-424C, Budget
Information Construction Programs;
SF -424D, Assurances —Construction
Programs; SF-424 Family of Forms for
Research and Related Programs; SF-424
Short Organizational Family; SF-424
Individual Form Family; and SF-424
Mandatory Family. In addition,
Commerce Department (CD) Forms CD-
346, Applicant for Funding Assistance;
CD -511, Certification Regarding
Lobbying; CD -512, Certification
Regarding Lobbying— Lower -Tier
Covered Transactions; and SF -LLL,
Disclosure of Lobbying Activities, will
be used as appropriate.
9. Environmental Requirements.
Environmental impacts must be
considered by Federal decision makers
in their decisions whether or not to (1)
approve a proposal for Federal
assistance; (2) approve the proposal
with mitigation; or (3) approve a
different proposal /grant having less
adverse environmental impacts. Federal
environmental laws require that the
funding agency initiate a planning
process with an early consideration of
potential environmental impacts that
projects funded with Federal assistance
may have on the environment.
Applicants, recipients and subrecipients
must comply with all environmental
standards, to include those prescribed
under the following statutes and
Executive Orders, and shall identify to
the awarding agency any impact the
award may have on the environment.
The failure to do so shall be grounds for
not selecting an application. In some
cases, if additional information is
required after an application is selected,
funds can be withheld by the Grants
Officer under a special award condition
requiring the recipient to submit
additional environmental compliance
information sufficient to enable the DOC
to make an assessment on any impacts
that a project may have on the
environment.
(a) The National Environmental
Policy Act of 1969 (42 U.S.C. 4321 et
seq.). Recipients of Federal assistance
are required to identify to the awarding
agency any impact an award will have
on the quality of the human
environment, and assist the agency to
comply with the National
Environmental Policy Act, when the
award activities remain subject to
Federal authority and control.
Applicants for assistance may be
required to prepare environmental
impact information as part of a
proposal.
(b) Floodplain Management,
Executive Order 11988 and, Protection
of Wetlands, Executive Order 11990,
May 24, 1977. Recipients must identify
proposed actions located in Federally
defined floodplains and wetlands to
enable the agency to make a
determination whether there is an
alternative to minimize any potential
harm.
(c) Clean Air Act, Clean Water Act,
and Executive Order 11738. Recipients
must comply with the provisions of the
Clean Air Act (42 U.S.C. 7401 et seq.),
Clean Water Act (33 U.S.C. §§1251 et
seq.), and Executive Order 11738.
Recipients shall not use a facility that
EPA has placed on the Excluded Parties
List System (EPLS) (http:
www.epls.gov) in performing any award
that is nonexempt under Subpart J of 2
CFR part 1532.
(d) The Flood Disaster Protection Act
of 1973 (42 U.S.C. 4002 et seq.). Flood
insurance, when available, is required
for Federally assisted construction or
acquisition in flood -prone areas.
(e) The Endangered Species Act of
1973, as amended (16 U.S.C. 1531 et
seq.). Recipients must identify any
impact or activities that may involve a
threatened or endangered species.
Federal agencies have the responsibility
for ensuring that a protected species or
habitat does not incur adverse effects
from actions under Federal assistance
awards, and for conducting the required
reviews under the Endangered Species
Act, as applicable.
(f) The Coastal Zone Management Act,
as amended (16 U.S.C. 1451 et seq.).
Funded projects must be consistent with
a coastal state's approved management
program for the coastal zone.
(g) The Coastal Barriers Resources Act
(16 U.S.C. 3501 et seq.). Restrictions are
placed on Federal funding for actions
within a Coastal Barrier System.
(h) The Wild and Scenic Rivers Act,
as amended (16 U.S.C. 1271 et seq.).
This Act applies to awards that may
affect existing or proposed components
of the National Wild and Scenic Rivers
system.
(i) The Safe Drinking Water Act of
1974, as amended (42 U.S.C. 300f —j).
This Act precludes Federal assistance
for any project that the EPA determines
may contaminate a sole source aquifer
so as to threaten public health.
(j) The Resource Conservation and
Recovery Act of 1976, as amended (42
U.S.C. 6901 et seq.). This act regulates
the generation, transportation,
treatment, and disposal of hazardous
wastes, and also provides that recipients
of Federal funds give preference in their
procurement programs to the purchase
of recycled products pursuant to EPA
guidelines.
(k) The Comprehensive
Environmental Response,
Compensation, and Liability Act of
1980, as amended, the Superfund
Amendments and Reauthorization Act
of 1986, and the Community
Environmental Response Facilitation
Act of 1992, as amended (42 U.S.C. 9601
et seq.). These requirements address
responsibilities for actual or threatened
hazardous substance releases and
environmental cleanup. There are also
requirements regarding reporting and
community involvement to ensure
disclosure of the release or disposal of
regulated substances and cleanup of
hazards.
(1) Environmental Justice in Minority
Populations and Low Income
Populations, Executive Order 12898,
February 11, 1994. This Order identifies
and addresses adverse human health or
environmental effects of programs,
policies and activities on low income
and minority populations.
10. Limitation of Liability. In no event
will the Department of Commerce be
responsible for proposal preparation
costs if a program fails to receive
funding or is cancelled because of other
agency priorities. The publication of an
announcement of funding availability
does not oblige the agency to award any
specific project or to obligate any
available funds.
B. The following general provisions
will apply to all DOC grant and
cooperative agreement awards:
1. Administrative Requirements and
Cost Principles. The uniform
administrative requirements for all DOC
grants and cooperative agreements are
codified at 15 CFR part 14, "Uniform
Administrative Requirements for Grants
and Agreements with Institutions of
Higher Education, Hospitals, Other Non
Profit, and Commercial Organizations,"
and at 15 CFR part 24, "Uniform
Administrative Requirements for Grants
and Agreements to State and Local
Governments." The following list of cost
Federal Register/Vol. 73, No. 28 /Monday, February 11, 2008 Notices 7699
principles, which are incorporated by
reference in 15 CFR parts 14 and 24, are
included in the DOC's grants and
cooperative agreements. OMB Circular
A -21 (2 CFR part 220), "Cost Principles
for Educational Institutions OMB
Circular A (2 CFR part 225), "Cost
Principles for State, Local and Indian
Tribal Governments OMB Circular A-
122 (2 CFR part 230), "Cost Principles
for Nonprofit Organizations and
Federal Acquisition Regulation subpart
31.2, "Contracts with Commercial
Organizations," codified at 48 CFR 31.2.
Applicable administrative requirements
and cost principles are identified in
each award and are incorporated by
reference into the award. Expenditures
for any financial assistance award must
be necessary to carry out the authorized
project and be consistent with the
applicable cost principles.
2. Award Payments. Advances will be
limited to the minimum amounts
necessary to meet immediate
disbursement needs, but in no case
should advances exceed the amount of
cash required for a 30-day period. Any
advanced funds that are not disbursed
in a timely manner must be returned
promptly to the DOC. Certain bureaus
within the DOC use the Department of
Treasury's Automated Standard
Application for Payment (ASAP)
system. In order to receive payments
under ASAP, recipients will be required
to enroll electronically in the ASAP
system by providing their Federal
Awarding Agency with pertinent
information to begin the enrollment
process, which allows them to use the
on -line and Voice Response System
(VRS) method of withdrawing funds
from their ASAP established accounts. It
is the recipient's responsibility to
ensure that its contact information is
correct. The funding agency must be
provided a Point of Contact name,
mailing address, e-mail address,
telephone number, DUNS and TIN
numbers to commence the enrollment
process. In order to be able to complete
the enrollment process, the recipient
will need to identify a Head of
Organization, an Authorizing Official,
and a Financial Officer. It is very
important that the recipient's banking
data be linked to the funding agency's
Agency Location Code in order to
ensure proper payment under an award.
For additional information on this
requirement, prospective applicants
should contact their Federal Awarding
Agency.
3. Federal and Non Federal Cost
Sharing.
(a) Awards that include Federal and
non Federal cost sharing will
incorporate a budget consisting of
shared allowable costs. If actual
allowable costs are less than the total
approved budget, the Federal and non-
Federal cost shares shall be calculated
by applying the approved Federal and
non Federal cost share ratios to actual
allowable costs. If actual allowable costs
are greater than the total approved
budget, the Federal share will not
exceed the total Federal dollar amount
authorized by the award.
(b) The non Federal share, whether in
cash or in -kind, will be expected to be
paid out at the same general rate as the
Federal share. Exceptions to this
requirement may be granted by the
Grants Officer based on sufficient
documentation demonstrating
previously determined plans for or later
commitment of cash or in -kind
contributions. In any case, recipients
must meet the cost share commitment
over the life of the award.
4. Budget Changes and Transfers
Among Cost Categories. When the terms
of an award allow the recipient to
transfer funds among approved direct
cost categories, the transfer authority
does not authorize the recipient to
create new budget categories within an
approved budget unless the Grants
Officer has provided prior approval. In
addition, the recipient will not be
authorized at any time to transfer
amounts budgeted for direct costs to the
indirect costs line item or vice versa,
without written prior approval of the
Grants Officer.
5. Indirect Costs.
(a) Indirect costs will not be allowable
charges against an award unless
specifically included as a line item in
the approved budget incorporated into
the award. (The term "indirect cost" has
been replaced with the term "facilities
and administrative costs" under OMB
Circular A -21 (2 CFR part 220), "Cost
Principles for Educational
Institutions.")
(b) Excess indirect costs may not be
used to offset unallowable direct costs.
(c) If the recipient has not previously
established an indirect cost rate with a
Federal agency, the negotiation and
approval of a rate will be subject to the
procedures in the applicable cost
principles and the following
subparagraphs:
(1) a. State, local, and Indian Tribal
Governments; Educational Institutions;
and Non -Profit Organizations (Non
Commercial Organizations).
For those organizations for which the
DOC is cognizant or has oversight, the
DOC or its designee will either negotiate
a fixed rate with carryforward
provisions or, in some instances, limit
its review to evaluating the procedures
described in the recipient's cost
7700 Federal Register Vol. 73, No. 28 Monday, February 11, 2008 Notices
allocation methodology plan. Indirect
cost rates and cost allocation
methodology reviews are subject to
future audits to determine actual
indirect costs.
b. Commercial Organizations.
For commercial organizations,
"cognizant federal agency" is defined as
the agency that provides the largest
dollar amount of negotiated contracts,
including options. If the only federal
funds received by a commercial
organization are DOC award funds, then
the DOC becomes the cognizant federal
agency for the purpose of indirect cost
negotiations. For those organizations for
which the DOC is cognizant, DOC or its
designee will negotiate a fixed rate with
carry forward provisions for the
recipient. "Fixed rate" means an
indirect cost rate which has the same
characteristics as a pre- determined rate,
except that the difference between the
estimated costs and the actual costs of
the period covered by the rate is carried
forward as an adjustment to the rate
computation of the subsequent period.
DOC or its designee will negotiate
indirect cost rates using the cost
principles found in 48 CFR part 31,
"Contract Cost Principles and
Procedures." For guidance on how to
put an indirect cost plan together go to:
http: /www.dol.gov /oasm /programs/
boc/costdeterminationguidelmain.htm.
(2) Within 90 days of the award start
date, the recipient shall submit to the
address listed below documentation
(indirect cost proposal, cost allocation
plan, etc.) necessary to perform the
review. The recipient shall provide the
Grants Officer with a copy of the
transmittal letter.
Office of Acquisition Management, U.S.
Department of Commerce, 14th Street
and Constitution Avenue, NW., Room
6054, Washington, DC 20230.
(3) The recipient can use the fixed
rate proposed in the indirect cost plan
until such time as the DOC provides a
response to the submitted plan. Actual
indirect costs must be calculated
annually and adjustments made through
the carryforward provision used in
calculating next year's rate. This
calculation of actual indirect costs and
the carryforward provision is subject to
audit. Indirect cost rate proposals must
be submitted annually. Organizations
that have previously established
indirect cost rates must submit a new
indirect cost proposal to the cognizant
agency within six months after the close
of each recipient's fiscal year.
(4) When the DOC is not the oversight
or cognizant Federal agency, the
recipient shall provide the Grants
Officer with a copy of a negotiated rate
agreement or a copy of the transmittal
letter submitted to the cognizant or
oversight Federal agency requesting a
negotiated rate agreement.
(5) If the recipient fails to submit the
required documentation to the DOC
within 90 days of the award start date,
the recipient may be precluded from
recovering any indirect costs under the
award. If the DOC, oversight, or
cognizant Federal agency determines
there is a finding of good cause to
excuse the recipient's delay in
submitting the documentation, an
extension of the 90 -day due date may be
approved by the Grants Officer.
(6) Regardless of any approved
indirect cost rate applicable to the
award, the maximum dollar amount of
allocable indirect costs for which the
DOC will reimburse the recipient shall
be the lesser of the line item amount for
the Federal share of indirect costs
contained in the approved budget of the
award, or the Federal share of the total
allocable indirect costs of the award
based on the indirect cost rate approved
by an oversight or cognizant Federal
agency and current at the time the cost
was incurred, provided the rate is
approved on or before the award end
date.
6. Tax Refunds. Refunds of FICA/
FUTA taxes received by a recipient
during or after an award period must be
refunded or credited to the DOC where
the benefits were financed with Federal
funds under the award. Recipients are
required to contact the Grants Officer
immediately upon receipt of these
refunds. Recipients are required to
refund portions of FICA/FUTA taxes
determined to belong to the Federal
Government, including refunds received
after the award end date.
7. Other Federal Awards with Similar
Programmatic Activities. Recipients will
be required to provide written
notification to the Federal Program
Officer and the Grants Officer in the
event that, subsequent to receipt of the
DOC award, other financial assistance is
received to support or fund any portion
of the scope of work incorporated into
the DOC award. The DOC will not pay
for costs that are funded by other
sources.
8. Non Compliance With Award
Provisions. Failure to comply with any
or all of the provisions of an award, or
the requirements of this notice, may
have a negative impact on future
funding by the DOC and may be
considered grounds for any or all of the
following enforcement actions:
Establishment of an account receivable,
withholding payments under any DOC
awards to the recipient, changing the
method of payment from advance to
reimbursement only, or the imposition
of other special award conditions,
suspension of any DOC active awards,
and termination of any DOC active
awards.
9. Prohibition Against Assignment by
the Recipient. Notwithstanding any
other provision of an award, recipients
may not transfer, pledge, mortgage, or
otherwise assign an award, or any
interest therein, or any claim arising
thereunder, to any party or parties,
banks, trust companies, or other
financing or financial institutions
without the express written approval of
the Grants Officer
10. Non Discrimination
Requirements. There are several Federal
statutes, regulations, Executive Orders,
and policies relating to
nondiscrimination. No person in the
United States shall, on the grounds of
race, color, national origin, handicap,
religion, age, or sex, be excluded from
participation in, be denied the benefits
of, or be subject to discrimination under
any program or activity receiving
Federal financial assistance. These
requirements include but are not limited
to:
(a) Title VI of the Civil Rights Act of
1964 (42 U.S.C. 2000d et seq.) and the
DOC's implementing regulations
published at 15 CFR part 8 prohibiting
discrimination on the grounds of race,
color, or national origin under programs
or activities receiving Federal financial
assistance;
(b) Title IX of the Education
Amendments of 1972 (20 U.S.C. 1681 et
seq.) and the DOC's implementing
regulations at 15 CFR part 8a
prohibiting discrimination on the basis
of sex under Federally assisted
education programs or activities;
(c) Section 504 of the Rehabilitation
Act of 1973, as amended (29 U.S.C. 794)
and the DOC's implementing
regulations published at 15 CFR part 8b
prohibiting discrimination on the basis
of handicap under any program or
activity receiving or benefiting from
Federal assistance;
(d) The Age Discrimination Act of
1975, as amended (42 U.S.C. 6101 et
seq.) and the DOC's implementing
regulations published at 15 CFR part 20
prohibiting discrimination on the basis
of age in programs or activities receiving
Federal financial assistance;
(e) The Americans with Disabilities
Act of 1990 (42 U.S.C. 12101 et seq.)
prohibiting discrimination on the basis
of disability under programs, activities,
and services provided or made available
by state and local governments or
instrumentalities or agencies thereto, as
well as public or private entities that
provide public transportation;
(f) Title VIII of the Civil Rights Act of
1968, as amended (42 U.S.C. 3601 et
seq.), relating to nondiscrimination in
the sale, rental or financing of housing;
(g) Parts 11 and III of Executive Order
11246, as amended by Executive Orders
11375 and 12086 requiring Federally
assisted construction contracts to
include the nondiscrimination
provisions of sections 202 and 203 of
that Executive Order and the
Department of Labor's regulations at 41
CFR 60- 1.4(b) implementing Executive
Order 11246;
(h) Executive Order 13166 (August 11,
2000), "Improving Access to Services
for Persons With Limited English
Proficiency," and DOC policy guidance
issued on March 24, 2003 (68 FR 14180)
to Federal financial assistance recipients
on the Title VI prohibition against
national origin discrimination affecting
Limited English Proficient (LEP)
persons; and
(i) In recognition of the
constitutionally protected interest of
religious organizations in making
religiously- motivated employment
decisions, Title VII of the Civil Rights
Act of 1964, 42 U.S.C. 2000e et seq.,
which expressly exempts religious
organizations from the prohibition
against discrimination on the basis of
religion. See 42 U.S.C. 2000e -1(a).
11. Audits of Organizations Covered
by OMB Circular A -133, "Audits of
States, Local Governments, and Non
Profit Organizations" and the related
Compliance Supplement. Recipients
that are subject to OMB Circular A -133,
and that expend $500,000 or more in
Federal awards in a fiscal year shall
have an audit conducted for that year in
accordance with the requirements of
OMB Circular A -133, issued pursuant
to the Single Audit Act of 1984 (Pub. L.
No. 98 -502), as amended by the Single
Audit Act Amendments of 1996 (Pub. L.
No. 104 156).
12. Unless otherwise specified in the
terms and conditions of the award, in
accordance with 15 CFR 14.26(c) and
(d), for -profit hospitals, commercial
entities, and other organizations not
required to follow the audit provisions
of OMB Circular A -133 shall have an
audit performed when the federal share
amount awarded is $500,000 or more
over the duration of the project period.
An audit is required at least once every
two years using the following schedule
for audit report submission.
(a) For awards less than 24 months, an
audit is required within 90 days from
the project expiration date, including
the close -out period for the award.
(b) For 2 or 3 -year awards, an audit
is required within 90 days after the end
of the first year and within 90 days from
Federal Register Vol. 73, No. 28 Monday, February 11, 2008 Notices 7701
the project expiration date including the
close -out period for the award.
(c) For 4 or 5 -year awards, an audit
is required within 90 days after the end
of the first year and third year, and
within 90 days from the project
expiration date including the close -out
period for the award.
Some DOC programs have specific
audit guidelines that will be
incorporated into the award. When DOC
does not have a program specific audit
guide available for the program, the
auditor will follow the requirements for
a program specific audit as described in
OMB Circular A -133, _.235. The
Recipient may include a line item in the
budget for the cost of the audit.
13. Policies and Procedures for
Resolution of Audit Related Debts. The
DOC has established policies and
procedures for handling the resolution
and reconsideration of financial
assistance audits which have resulted
in, or may result in, the establishment
of a debt (account receivable) for
financial assistance awards. These
policies and procedures are contained
in the Federal Register notice dated
January 27, 1989. See 54 FR 4053. The
policies and procedures also are
provided in more detail in the
Department of Commerce Financial
Assistance Standard Terms and
Conditions.
14. Debts. Any debts determined to be
owed the Federal Government shall be
paid promptly by the recipient. In
accordance with 15 CFR 21.4, a debt
will be considered delinquent if it is not
paid within 15 days of the due date, or
if there is no due date, within 30 days
of the billing date. Failure to pay a debt
by the due date, or if there is no due
date, within 30 days of the billing date,
shall result in the imposition of late
payment charges. In addition, failure to
pay the debt or establish a repayment
agreement by the due date, or if there is
no due date, within 30 days of the
billing date, will also result in the
referral of the debt for collection action
and may result in the DOC taking
further action as specified in the terms
of the award. Funds for payment of a
debt must not come from other federally
sponsored programs. Verification that
other Federal funds have not been used
will be made, e.g., during on -site visits
and audits.
15. Post -Award Discovery of Adverse
Information. After an award is made, if
adverse information on a recipient or
any key individual associated with a
recipient is discovered which reflects
significantly and adversely on the
recipient's responsibility, the Grants
Officer may take the following actions:
(a) Require the recipient to correct the
conditions.
(b) Consider the recipient to be "high
risk" and unilaterally impose special
award conditions to protect the Federal
Government's interest.
(c) Suspend or terminate an active
award. The recipient will be afforded
due process while effecting such
actions.
(d) Require the removal of personnel
from association with the management
of and /or implementation of the project
and require Grants Officer approval of
personnel replacements.
16. Competition and Codes of
Conduct.
(a) Pursuant to the certification in
Form SF -424B, paragraph 3, recipients
must maintain written standards of
conduct to establish safeguards to
prohibit employees from using their
positions for a purpose that constitutes
or presents the appearance of a personal
or organizational conflict of interest, or
personal gain in the administration of
this award and any subawards.
(b) Recipients must maintain written
standards of conduct governing the
performance of their employees engaged
in the award and administration of
subawards. No employee, officer, or
agent shall participate in the selection,
award, or administration of a subaward
supported by Federal funds if such
participation would cause a real or
apparent conflict of interest. Such a
conflict would arise when the
employee, officer, or agent, any member
of his or her immediate family, his or
her partner, or an organization in which
he /she serves as an officer or which
employs or is about to employ any of
the parties mentioned in this section,
has a financial or other interest in the
organization selected or to be selected
for a subaward. The officers, employees,
and agents of the recipient may not
solicit or accept anything of monetary
value from subrecipients However, the
recipient may set standards for
situations in which the financial interest
is not substantial or the gift is an
unsolicited item of nominal value. The
standards of conduct must provide for
disciplinary actions to be applied for
violations of such standards by officers,
employees, or agents of a recipient.
(c) All subawards will be made in a
manner to provide, to the maximum
extent practicable, open and free
competition. Recipients must be alert to
organizational conflicts of interest as
well as other practices among
subrecipients that may restrict or
eliminate competition. In order to
ensure objective subrecipient
performance and eliminate unfair
competitive advantage, subrecipients
7702 Federal Register Vol. 73, No. 28 Monday, February 11, 2008 Notices
that develop or draft work requirements,
statements of work, or requests for
proposals will be excluded from
competing for such subawards.
(d) For purposes of the award, a
financial interest may include
employment, stock ownership, a
creditor or debtor relationship, or
prospective employment with an
applicant. An appearance of impairment
of objectivity could result from an
organizational conflict where, because
of other activities or relationships with
other persons or entities, a person is
unable or potentially unable to act in an
impartial manner. It also could result
from non financial gain to the
individual, such as benefit to reputation
or prestige in a professional field.
17. Minority Owned Business
Enterprise. The DOC encourages
recipients to utilize minority and
women -owned firms and enterprises in
contracts under financial assistance
awards. The Minority Business
Development Agency can assist
recipients in matching qualified
minority owned enterprises with
contract opportunities.
18. Subaward and/or Contract to a
Federal Agency. Recipients,
subrecipients, contractors, and /or
subcontractors may not sub -grant or
sub contract any part of an approved
project to any Federal department,
agency, instrumentality, or employee
thereof, without the prior written
approval of the Grants Officer.
19. Foreign Travel. Recipients must
comply with the provisions of the Fly
America Act, 49 U.S.C. 40118. The Fly
America Act requires that Federal
travelers and others performing U.S.
Government financed foreign air travel
must use U.S. flag carriers, to the extent
that service by such carriers is available.
Foreign air carriers may be used only in
specific instances, such as when a U.S.
flag air carrier is unavailable, or use of
U.S. flag carrier service will not
accomplish the agency's mission. The
implementing Federal Travel
Regulations are found at 41 CFR 301-
10.131 through 301 10.143.
20. Purchase of American-Made
Equipment and Products. Recipients are
hereby notified that they are
encouraged, to the greatest extent
practicable, to purchase American -made
equipment and products with funding
provided under DOC financial
assistance awards.
21. Intellectual Property Rights.
(a) Inventions. The rights to any
invention made by a recipient under a
DOC financial assistance award are
determined by the Bayh -Dole Act, as
amended (Pub. L No. 96 -517), and
codified at 35 U.S.C. 200 et seq., except
as otherwise required by law. The
specific rights and responsibilities are
described in more detail in 37 CFR part
401 and in particular, in the standard
patent rights clause in 37 CFR 401.14,
which is incorporated by reference into
awards. Recipients of DOC financial
assistance awards are required to submit
their disclosures and elections
electronically using the Interagency
Edison extramural invention reporting
system (iEdison) at http:
www.iedison.gov. Recipients may obtain
a waiver of this electronic submission
requirement by providing to the DOC
compelling reasons for allowing the
submission of paper copies of reports
related to inventions.
(b) Patent Notification Procedures.
Pursuant to Executive Order 12889, the
DOC is required to notify the owner of
any valid patent covering technology
whenever the DOC or its financial
assistance recipients, without making a
patent search, knows (or has
demonstrable reasonable grounds to
know) that technology covered by a
valid United States patent has been or
will be used without a license from the
owner. To ensure proper notification, if
the recipient uses or has used patented
technology under this award without a
license or permission from the owner,
the recipient will be required to notify
the Grants Officer. This notice does not
necessarily mean that the government
authorizes and consents to any
copyright or patent infringement
occurring under the financial assistance.
(c) Data, Databases, and Software. The
rights to any work produced or
purchased under a DOC financial
assistance award are determined by 15
CFR 14.36 or 24.34, as applicable. Such
works may include data, databases or
software. The recipient owns any work
produced or purchased under a DOC
financial assistance award subject to
DOC's right to obtain, reproduce,
publish or otherwise use the work or
authorize others to receive, reproduce,
publish or otherwise use the data for
Federal Government purposes.
(d) Copyright. The recipient may
copyright any work produced under a
DOC financial assistance award subject
to the DOC's royalty -free nonexclusive
and irrevocable right to reproduce,
publish or otherwise use the work or
authorize others to do so for Federal
Government purposes. Works jointly
authored by the DOC and recipient
employees may be copyrighted but only
the part authored by the recipient is
protected because, under 17 U.S.C. 105,
works produced by Government
employees are not copyrightable in the
United States. On occasion, the DOC
may ask the recipient to transfer to DOC
its copyright in a particular work when
the DOC is undertaking the primary
dissemination of the work. Ownership
of copyright by the Federal Government
through assignment is permitted by 17
U.S.C. 105.
22. Seat Belt Use. Pursuant to
Executive Order 13043, recipients shall
seek to encourage employees and
contractors to enforce on -the -job seat
belt policies and programs when
operating recipient/company owned,
rented or personally owned vehicles.
23. Research Involving Human
Subjects. All proposed research
involving human subjects must be
conducted in accordance with 15 CFR
part 27, "Protection of Human Subject."
No research involving human subjects is
permitted under any DOC financial
assistance award unless expressly
authorized by the Grants Officer.
24. Federal Employee Expenses.
Federal agencies are generally barred
from accepting funds from a recipient to
pay transportation, travel, or other
expenses for any Federal employee
unless specifically approved in the
terms of the award. Use of award funds
(Federal or non Federal) or the
recipient's provision of in -kind goods or
services for the purposes of
transportation, travel, or any other
expenses for any Federal employee, may
raise appropriation augmentation issues.
In addition, DOC policy prohibits the
acceptance of gifts, including travel
payments for Federal employees, from
recipients or applicants regardless of the
,source.
25. Preservation of Open Competition
and Government Neutrality Towards
Government Contractors' Labor
Relations on Federal and Federally
Funded Construction Projects. Pursuant
to Executive Order 13202, "Preservation
of Open Competition and Government
Neutrality Towards Government
Contractors' Labor Relations on Federal
and Federally Funded Construction
Projects," as amended by Executive
Order 13208, unless the project is
exempted under section 5(c) of the
Order, bid specifications, project
agreements, or other controlling
documents for construction contracts
awarded by recipients of grants or
cooperative agreements, or those of any
construction manager acting on their
behalf, shall not: (1) Include any
requirement or prohibition on bidders,
offerors, contractors, or subcontractors
about entering into or adhering to
agreements with one or more labor
organizations on the same or related
construction project(s); or (2) otherwise
discriminate against bidders, offerors,
contractors, or subcontractors for
becoming or refusing to become or
remain signatories or otherwise
adhering to agreements with one or
more labor organizations, on the same or
other related construction project(s).
26. Minority Serving Institutions
(MSIs) Initiative. Pursuant to Executive
Orders 13256, 13230, and 13270, the
DOC is strongly committed to
broadening the participation of MSIs in
its financial assistance award programs.
The DOC's goals include achieving full
participation of MSIs in order to
advance the development of human
potential, strengthen the Nation's
capacity to provide high quality
education, and increase opportunities
for MSIs to participate in and benefit
from Federal financial assistance
programs. The DOC encourages all
applicants and recipients to include
meaningful participation of MSIs.
Institutions eligible to be considered
MSIs are listed on the Department of
Education's Web site at: http:
www.ed.gov /offices /OCR/
minorityinst.html.
27. Access to Records. The Inspector
General of the DOC, or any of his or her
duly authorized representatives, the
Comptroller of the United States and, if
appropriate, the State, shall have access
to any pertinent books, documents,
papers and records of the parties to a
grant or cooperative agreement, whether
written, printed, recorded, produced, or
reproduced by any electronic,
mechanical, magnetic or other process
or medium, in order to make audits,
inspections, excerpts, transcripts, or
other examinations as authorized by
law. An audit of an award may be
conducted at any time.
28. Scientific or Research Misconduct.
Scientific or research misconduct refers
to the fabrication, falsification, or
plagiarism in proposing, performing, or
reviewing research, or in reporting
research results. It does not include
honest errors or differences of opinion.
The recipient organization has the
primary responsibility to investigate
allegations and provide reports to the
Federal Government. Funds expended
on an activity that is determined to be
invalid or unreliable because of
scientific misconduct may result in a
disallowance of costs for which the
institution may be liable for repayment
to the awarding agency. The Office of
Science and Technology Policy at the
White House published in the Federal
Register on December 6, 2000, a final
policy that addressed research
misconduct. The policy was developed
by the National Science and Technology
Council (65 FR 76260). The DOC
requires that any allegation be
submitted to the Grants Officer, who
will also notify the OIG of such
Federal Register Vol. 73, No. 28 Monday, February 11, 2008 Notices 7703
allegation. Generally, the recipient
organization shall investigate the
allegation and submit its findings to the
Grants Officer. The DOC may accept the
recipient's findings or proceed with its
own investigation. The Grants Officer
shall inform the recipient of the DOC's
final determination.
29. Intergovernmental Personnel Act
of 1970 (42 U.S.C. 4728 4763).
Recipients must comply with this Act
relating to prescribed standards for
merit systems for programs funded
under one of the 19 statutes or
regulations specified in Appendix A of
the Office of Personnel Management
Standards for a Merit System of
Personnel Administration (5 CFR part
900, Subpart F).
30. Uniform Relocation Assistance
and Real Property Acquisition Policies
Act of 1970, as amended (42 U.S.C. 4601
et seq.) and the DOC's implementing
regulations issued at 15 CFR part 11.
These provide for fair and equitable
treatment of persons displaced or whose
property is acquired as a result of
Federal or Federally- assisted programs.
These requirements apply to all
interests in real property acquired for
project purposes regardless of Federal
participation in purchases.
31. Historic Preservation. Recipients
must assist the DOC in assuring
compliance with Section 106 of the
National Historic Preservation Act of
1966, as amended, and the Advisory
Council on Historic Preservation
Guidelines (16 U.S.C. 470 et seq.); the
Archaeological and Historic
Preservation Act of 1974 (16 U.S.C.
469a -1 et seq.); Protection and
Enhancement of the Cultural
Environment, Executive Order 11593;
Locating Federal Facilities on Historic
Properties in our Nation's Central Cities,
Executive Order 13006; and Indian
Sacred Sites, Executive Order 13007.
32. Lead -Based Paint Poisoning
Prevention Act (42 U.S.C. 4801 et seq.)
This Act prohibits the use of lead -based
paint in construction or rehabilitation of
residential structures.
33. Hatch Act (5 U.S.C. 1501 -1508
and 7324 7328). This Act limits the
political activities of employees or
officers of State or local governments
whose principal employment activities
are funded in whole or in part with
Federal funds.
34. Labor standards for Federally
assisted construction subagreements
(wage guarantees). Recipients must
comply, as applicable, with the
provisions of the Davis -Bacon Act (40
U.S.C. 276a to 276a -7); the Copeland
Act (40 U.S.C. 276c and 18 U.S.C. 874);
and the Contract Work Hours and Safety
Standards Act (40 U.S.C. 327 -333).
35. Care and Use of Live Vertebrate
Animals. Recipients must comply with
the Laboratory Animal Welfare Act of
1966 (Pub. L. No. 89 -544), as amended
(7 U.S.C. 2131 et seq.) (animal
acquisition, transport, care, handling,
and use in projects) and implementing
regulations, 9 CFR parts 1, 2, and 3; the
Endangered Species Act (16 U.S.C. 1531
et seq.); Marine Mammal Protection Act
(16 U.S.C. 1361 et seq.) (taking
possession, transport, purchase, sale,
export or import of wildlife and plants);
The Nonindigenous Aquatic Nuisance
Prevention and Control Act (16 U.S.C.
4701 et seq.) (ensure preventive
measures are taken or that probable
harm of using species is minimal if
there is an escape or release); and all
other applicable statutes pertaining to
the care, handling, and treatment of
warm blooded animals held for
research, teaching, or other activities
supported by Federal financial
assistance. No research involving
vertebrate animals is permitted under
any DOC financial assistance award
unless authorized by the Grants Officer.
36. Publications, Videos, and
Acknowledgment of Sponsorship.
Publication of the results of a research
project in appropriate professional
journals and production of videos or
other media is encouraged as an
important method of recording and
reporting scientific information. It is
also a constructive means to expand
access to federally funded research. The
recipient is required to submit a copy to
the funding agency and when releasing
information related to a funded project
include a statement that the project or
effort undertaken was or is sponsored by
DOC The recipient is also responsible
for assuring that every publication of
material (including Internet sites and
videos) based on or developed under an
award, except scientific articles or
papers appearing in scientific, technical
or professional journals, contains the
following disclaimer. "This [report/
video] was prepared by [recipient name)
under award [number] from [name of
operating unit), U.S. Department of
Commerce. The statements, findings,
conclusions, and recommendations are
those of the author(s) and do not
necessarily reflect the views of the
[name of operating unit] or the U.S.
Department of Commerce."
37. Homeland Security Presidential
Directive -12. If the performance of a
grant award requires recipient
organization personnel to have
unsupervised physical access to a
Federally controlled facility for more
than 180 days or access to a Federal
information system, such personnel
must undergo the personal identity
7704 Federal Register Vol. 73, No. 28 Monday, February 11, 2008 Notices
verification credential process. In the
case of foreign nationals, the DOC will
conduct a check with U.S. Citizenship
and Immigration Services' (USCIS)
Verification Division, a component of
the Department of Homeland Security
(DHS), to ensure the individual is in a
Lawful immigration status and that they
are eligible for employment within the
U.S. Any items or services delivered
under a financial assistance award shall
comply with the Department of
Commerce personal identity verification
procedures that implement Homeland
Security Presidential Directive -12,
FIPS PUB 201, and OMB Memorandum
M -05 -24. The recipient shall insert this
clause in all subawards or contracts
when the subaward recipient or
contractor is required to have physical
access to a Federally controlled facility
or access to a Federal information
system.
38. Compliance with Department of
Commerce Bureau of Industry and
Security Export Administration
Regulations
la) This clause applies to the extent
that a financial assistance award
involves access to export- controlled
information or technology.
(b) In performing a financial
assistance award, the recipient may gain
access to export- controlled information
or technology. The recipient is
responsible for compliance with all
applicable laws and regulations
regarding export- controlled information
and technology, including deemed
exports. The recipient shall establish
and maintain effective export
compliance procedures at non -DOC
facilities throughout performance of the
financial assistance award. At a
minimum, these export compliance
procedures must include adequate
controls relating to physical, verbal,
visual and electronic access to export-
controlled information and technology.
(c) Definitions
(1) Deemed Export. The Export
Administration Regulations (EAR)
define a deemed export as any release
of technology or source code subject to
the EAR to a foreign national, both in
the United States and abroad. Such
release is "deemed" to be an export to
the home country of the foreign
national. 15 CFR 734.2(b)(2)(ii).
(2) Export controlled information and
technology. Export- controlled
information and technology subject to
the EAR (15 CFR 730 -774),
implemented by the DOC's Bureau of
Industry and Security, or the
International Traffic In Arms
Regulations (ITAR) (22 CFR 120 -130),
implemented by the Department of
State, respectively. This includes, but is
not limited to, dual -use items, defense
articles and any related assistance,
services, software or technical data as
defined in the EAR and ITAR.
(d) The recipient shall control access
to all export- controlled information and
technology that it possesses or that
comes into its possession in
performance of a financial assistance
award, to ensure that access is
restricted, or licensed, as required by
applicable Federal laws, Executive
Orders, and/or regulations.
(e) Nothing in the terms of this
financial assistance award is intended to
change, supersede, or waive the
requirements of applicable Federal laws,
Executive Orders or regulations.
(f) The recipient shall include this
clause, including this paragraph (f), in
all lower tier transactions (subawards,
contracts, and subcontracts) under this
financial assistance award that may
involve access to export- controlled
information technology.
39. The Trafficking Victims Protection
Act of 2000 (22 U.S.C. 7104(g)), as
amended, and the implementing
regulations at 2 CFR part 175. This Act
authorizes termination of financial
assistance provided to a private entity,
without penalty to the Federal
Government, if the recipient or
subrecipient engages in certain activities
related to trafficking in persons.
40. The Federal Funding
Accountability and Transparency Act of
2006 (Pub. L. No. 109 -282). This Act
requires that the Federal government
establish a single searchable awards
Web site by January 1, 2008 to enable
the public to see where Federal funds
for grant and contract awards are being
spent. Subaward and subcontract data
will be required on the Web site by
January 1, 2009. Funding data
retroactive to October 1, 2006 must be
reported by all Federal agencies and
their recipient and subrecipient
organizations. Data elements will
include:
Name of entity receiving award;
Award amount;
Transaction type, funding agency,
Catalog of Federal Domestic Assistance
Number, and descriptive award title;
Location of: Entity, primary
location of performance (City/State/
Congressional District/Country); and
Unique identifier of entity.
The data will be required within 30
days of an award. The DOC will be
implementing this Act, which will
require recipients and subrecipients to
report the required data.
C. The Federal Register notice
announcing the availability of Federal
funds for each DOC competitive
financial assistance program will
contain only the following program
specific information: Summary
description of program; deadline date
for receipt of applications; addresses for
submission of applications; information
contacts (including electronic access);
the amount of funding available;
statutory authority; the applicable
Catalog of Federal Domestic Assistance
(CFDA) number(s); eligibility
requirements; cost sharing or matching
requirements; Intergovernmental
Review requirements; evaluation criteria
used by the merit reviewers; selection
procedures, including funding
priorities /selection factors /policy factors
to be applied by the selecting official;
and administrative and national policy
requirements.
D. The DOC follows the uniform
format for an announcement of Federal
Funding Opportunity (FFO) for
discretionary grants and cooperative
agreements established by OMB in a
policy letter published in the Federal
Register (68 FR 37370, June 23, 2003).
These FFOs are available at http:
www.grants.gov or from the information
contact listed in the Federal Register
notice. Applicants are strongly
encouraged to apply through http:
www.grants gov. It can take seven (7) to
ten (10) business days to register with
http: /www grants.gov, and registration
is required only once. Applicants
should consider the time needed to
register with http. /www.grants.gov, and
should begin the registration process
well in advance of the application due
date if they have never registered.
Applicants should allow themselves
adequate time to submit the proposal
through http: /www.grants.gov, as the
deadline for submission cannot be
extended and there is the potential for
human or computer error during the
electronic submission process.
E. Universal Identifier: Applicants
should be aware that they will be
required to provide a Dun and
Bradstreet Data Universal Numbering
System number during the application
process. See the June 27, 2003 Federal
Register notice (68 FR 38402) for
additional information. Organizations
can receive a DUNS number at no cost
by calling the dedicated toll -free Duns
number request line at 1 -866 -705 -5711
or by accessing the Grants.gov Web site
at: http: /www.grants.gov.
Executive Order 12866
This notice has been determined to be
"not significant" for purposes of
Executive Order 12866, "Regulatory
Planning and Review."
Administrative Procedure Act and
Regulatory Flexibility Act
Because notice and comment are not
required under 5 U.S.C. 553, or any
other law, for this notice relating to
public property, loans, grants benefits or
contracts (5 U.S.C. 553(a)), a Regulatory
Flexibility Analysis is not required and
has not been prepared for this notice.
Executive Order 13132 (Federalism)
It has been determined that this notice
does not contain policies with
Federalism implications as that term is
defined in Executive Order 13132.
Paperwork Reduction Act
These regulatory actions do not
impose any new reporting or
recordkeeping requirements under the
Paperwork Reduction Act.
Notwithstanding any other provisions of
the law, no person is required to
respond to, nor shall any person be
subject to a penalty for failure to comply
with a collection -of- information, subject
to the requirements of the Paperwork
Reduction Act (PRA), 44 U.S.C. 3501 et
seq., unless that collection of
information displays a currently valid
OMB control number. The use of the
following family of forms has been
approved by OMB under the following
control numbers: (1) SF-424 Family:
0348-0041, 0348 -0044, 4040-0003, and
4040-0004; (2) SF-424 Research and
Related Family: 4040 -0001; SF-424
Individual Family: 4040 -0005; (3) SF-
424 Mandatory Family: 4040 -0002; and
(4) SF-424 Short Organizational Family:
4040-0003. The use of Forms SF -LLL
and CD-346 are approved by OMB
under the control numbers 0348-0046
and 0805 -0001, respectively.
Catalog of Federal Domestic Assistance
This notice affects all of the grant and
cooperative agreement programs funded
by the DOC. The Catalog of Federal
Domestic Assistance can be accessed on
the Internet under the DOC Grants
Management Web site at http:
www.cfda.gov.
List of Subjects
Accounting, Administrative practice
and procedures, Grants administration,
Grant programs economic
development, Grant programs- oceans,
atmosphere and fisheries management,
Grant programs- minority businesses,
Grant programs technology, Grant
programs telecommunications, Grant
Federal Register /Vol. 73, No. 28 Monday, February 11, 2008 Notices 7705
programs- international, Reporting and
recordkeeping requirements.
Al Sligh, Jr.,
Director for Acquisition Management and
Procurement Executive.
[FR Doc. 28 -2482 Filed 2 -8 -08; 8:95 aml
BILLING CODE 3510 -FA-P
DEPARTMENT OF COMMERCE
International Trade Administration
1A- 821 -802j
Amendment to the Agreement
Suspending the Antidumping
Investigation on Uranium From the
Russian Federation
AGENCY: Import Administration,
International Trade Administration,
Department of Commerce.
EFFECTIVE DATE: February 1, 2008.
SUMMARY: The Department of Commerce
"the Department and the Russian
Federation's Federal Atomic Energy
Agency "Rosatom have signed an
amendment to the Agreement
Suspending the Antidumping
Investigation on Uranium from the
Russian Federation "Suspension
Agreement The amendment will
allow the Russian Federation "Russia
to export Russian uranium products to
the U.S. market in accordance with the
export limits and other terms detailed in
the amendment.
FOR FURTHER INFORMATION CONTACT:
Sally C. Gannon at (202) 482 -0162,
Import Administration, International
Trade Administration, U.S. Department
of Commerce, 14th Street Constitution
Avenue, NW., Washington, DC 20230.
Background
On October 30, 1992, the Department
suspended the antidumping duty
investigation involving uranium from
Russia on the basis of an agreement by
its government to restrict the volume of
direct or indirect exports to the United
States in order to prevent the
suppression or undercutting of price
levels of U.S. domestic uranium. See
Antidumping; Uranium from
Kazakhstan, Kyrgyzstan, Russia,
Tajikistan, Ukraine, and Uzbekistan;
Suspension of Investigations and
Amendment of Preliminary
Determinations, 57 FR 49220 (October
30, 1992).
The Suspension Agreement was
subsequently amended, by agreement of
both governments, on March 11, 1994,
October 3, 1996, and May 7, 1997. See,
respectively, Amendment to Agreement
Suspending the Antidumping
Investigation on Uranium from the
Russian Federation, 59 FR 15373 (April
1, 1994); Amendments to the Agreement
Suspending the Antidumping
Investigation on Uranium from the
Russian Federation, 61 FR 56665
(November 4, 1996); and Amendment to
Agreement Suspending the
Antidumping Investigation on Uranium
from the Russian Federation, 62 FR
37879 (July 15, 1997). On July 31, 1998,
the Department notified interested
parties of an administrative change with
respect to the Suspension Agreement.
See Agreement Suspending the
Antidumping Investigation on Uranium
from the Russian Federation, 63 FR
40879 (July 31, 1998).
On November 27, 2007, the United
States and Russia initialed a draft
amendment to the Suspension
Agreement. On December 4, 2007, the
Department published the draft
amendment in the Federal Register and
invited comments from interested
parties, to be submitted by January 3,
2008. See Initialed Draft Amendment to
the Agreement Suspending the
Antidumping Investigation on Uranium
from the Russian Federation; Request
for Comment, 72 FR 68124 (December 4,
2007). On December 17, 2007, the
Department received initial comments
on the draft amendment from Power
Resources, Inc. and Crow Butte
Resources, Inc. On December 31, 2007,
pursuant to a request by interested
parties, the Department extended the
comment period deadline until January
10, 2008. See Extension of Time to
Submit Comments Concerning the
Initialed Draft Amendment to the
Agreement Suspending the
Antidumping Investigation on Uranium
from the Russian Federation, 72 FR
74272 (December 31, 2007). The
Department received comments from
the following parties: Ad Hoc Utilities
Group; AREVA S.A. and its affiliated
entities; Fuelco LLC; General Electric;
Louisiana Energy Services, L.P.; Nuclear
Energy Institute; Nukem, Inc.; Power
Resources, Inc., Crow Butte Resources,
Inc., and Uranium Resources, Inc.;
Progress Energy; United Steel, Paper
and Forestry, Rubber, Manufacturing,
Energy, Allied Industrial and Service
Workers International Union; USEC Inc.
and United States Enrichment
Corporation; and Westinghouse Electric
Company LLC.
On February 1, 2008, after
consideration of the interested party
comments received, U.S. Secretary of
Commerce Carlos M. Gutierrez and the
Director of Russia's Federal Atomic
Energy Agency (Rosatom), S.V.
Kiriyenko, signed a finalized
amendment to the Suspension
Agreement. The amendment allows for
DEPARTMENT OF COMMERCE FINANCIAL ASSISTANCE
STANDARD TERMS AND CONDITIONS
DEPARTMENT OF COMMERCE
FINANCIAL ASSISTANCE
STANDARD TERMS AND CONDITIONS
W O F C
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4)• 4(?•()
S TATE S OF
March 2008
DEPARTMENT OF COMMERCE
FINANCIAL ASSISTANCE
STANDARD TERMS AND CONDITIONS
PREFACE 1
A. FINANCIAL REQUIREMENTS 1
.01 Financial Reports 1
.02 Award Payments 1
.03 Federal and Non Federal Sharing 2
.04 Budget Changes and Transfer of Funds Among Categories 3
.05 Indirect Costs 3
.06 Incurring Costs of Obligating Federal Funds Beyond the Expiration Date 5
.07 Tax Refunds 6
B. PROGRAMMATIC REQUIREMENTS 6
.01 Performance (Technical) Reports 6
.02 Unsatisfactory Performance 6
.03 Programmatic Changes 7
.04 Other Federal Awards with Similar Programmatic Activities 7
.05 Non Compliance With Award Provisions 7
.06 Prohibition Against Assignment by the Recipient 7
.07 Disclaimer Provisions 7
C. NON DISCRIMINATION REQUIRMENTS 8
.01 Statutory Provisions 8
.02 Other Provisions 8
.03 Title VII Exemption for Religious Organizations 9
D. AUDITS 9
.01 Organization -Wide, Program- Specific, and Project Audits 9
.02 Audit Resolution Process 10
E. DEBTS 11
.01 Payment of Debts Owed the Federal Government 11
.02 Late Payment Charges 12
.03 Barring Delinquent Federal Debtors From Obtaining Federal Loans or Loan Insurance
Guarantees 12
.04 Effect of Judgment Lien On Eligibility For Federal Grants, Loans, or Programs 12
F. INDIVIDUAL BACKGROUND SCREENING 13
.01 Results of Individual Background Screening 13
.02 Action(s) Taken as a Result of Individual Background Screening 13
G. GOVERNMENTWIDE DEBARMENT AND SUSPENSION (NONPROCUREMENT) 14
H. DRUG -FREE WORKPLACE 14
I. LOBBYING RESTRICTIONS 14
.01 Statutory Provisions 14
.02 Disclosure of Lobbying Activities 14
J CODES OF CONDUCT AND SUBAWARD, CONTRACT, AND SUBCONTRACT
PROVISIONS 15
.01 Code of Conduct for Recipients 15
.02 Applicability of Award Provisions to Subrecipients 15
.03 Competition and Codes of Conduct for Subawards 16
.04 Applicability of Provisions to Subawards, Contracts, and Subcontracts 16
.05 Minority Owned Business Enterprise 17
.06 Subaward and/or Contract to a Federal Agency 18
K. PROPERTY 18
.01 Standards 18
.02 Real Property 18
L. ENVIRONMENTAL REQUIREMENTS 19
.01 The National Environmental Policy Act of 1969 (42 U.S.C. 4321 -4327) 19
.02 Floodplain Management, EO 11988 and, Protection of Wetlands, EO 11990, May 24,
1977 19
.03 Clean Air Act, Clean Water Act, and EO 11738 20
.04 The Flood Disaster Protection Act of 1973 (42 U.S.C. 4002 et seq.) 20
.05 The Endangered Species Act of 1973, as amended, (16 U.S.C. 1531 et seq.) 20
.06 The Coastal Zone Management Act, as amended, (16 U.S.C. 1451 et seq.) 20
.07 The Coastal Barriers Resources Act, (16 U.S.C. 3501 et seq.) 20
.08 The Wild and Scenic Rivers Act, as amended (16 U.S.C. 1271 et seq.) 20
.09 The Safe Drinking Water Act of 1974, as amended (42 U.S.C. 300f -j) 21
.10 The Resource Conservation and Recovery Act of 1976, as amended, (42 U.S.C.
6901 et seq.) 21
.11 The Comprehensive Environmental Response, Compensation, and Liability Act of
1980, as amended, and the Superfund Amendments and Reauthorization Act of 1986, and the
Community Environmental Response Facilitation Act of 1992, as amended, (42 U.S.C.
9601 et seq.) 21
.12 Environmental Justice in Minority Populations and Low Income Populations, BO
12898, February 11, 1994. 21
M. MISCELLANEOUS REQUIREMENTS 21
.01 Criminal and Prohibited Activities 21
.02 Foreign Travel 22
.03 American-Made Equipment and Products 23
.04 Intellectual Property Rights 23
a. Inventions 23
1. Ownership 23
(a) Recipient 23
(b) Department 23
(c) Inventor/Employee 23
(d) Joint inventions 23
2. Responsibilities iEdison 24
b. Patent Notification Procedures 24
c. Data, Databases, and Software 24
d. Copyright 24
.05 Increasing Seat Belt Use in the United States 25
.06 Research Involving Human Subjects 25
.07 Federal Employee Expenses 26
.08 Preservation of Open Competition and Government Neutrality Towards Government
Contractors' Labor Relations on Federal and Federally Funded Construction Projects. 26
.09 Minority Serving Institutions (MSIs) Initiative 26
.10 Research Misconduct 27
.11 Publications, Videos and Acknowledgement of Sponsorship 27
.12 Care and Use of Live Vertebrate Animals 27
.13 Homeland Security Presidential Directive —12 28
.14 Compliance with Department of Commerce Bureau of Industry and Security Export
Administration Regulations 28
.15 The Trafficking Victims Protection Act of 2000 (22 U.S.C. 7104(g)), as amended,
and the implementing regulations at 2 CFR Part 175. 29
.16 The Federal Funding Accountability and Transparency Act of 2006 (Pub. L. No.
109 -282). 29
The recipient and any subrecipients must, in addition to the assurances made as part of the
application, comply and require each of its contractors and subcontractors employed in the
completion of the project to comply with all applicable statutes, regulations, executive orders
(EOs), Office of Management and Budget (OMB) circulars, terms and conditions, and approved
applications.
PREFACE
This award is subject to the laws and regulations of the United States. Any inconsistency or
conflict in terms and conditions specified in the award will be resolved according to the
following order of precedence: public laws, regulations, applicable notices published in the
Federal Register, EOs, OMB circulars, Department of Commerce (DOC) Financial Assistance
Standard Terms and Conditions, agency standard award conditions (if any), and special award
conditions. Special award conditions may amend or take precedence over DOC standard terms
and conditions, on a case -by -case basis, when allowed by the DOC standard term and condition.
Some of the DOC terms and conditions herein contain, by reference or substance, a summary of
the pertinent statutes, or regulations published in the Federal Register or Code of Federal
Regulations (CFR), EOs, OMB circulars or the assurances (Forms SF -424B, 424D). To the
extent that it is a summary, such provision is not in derogation of, or an amendment to, any such
statute, regulation, EO, or OMB circular.
A. FINANCIAL REQUIREMENTS
.01 Financial Reports
a. The recipient shall submit a "Financial Status Report" (SF 269) on a semi -annual
basis for the periods ending March 31 and September 30, or any portion thereof,
unless otherwise specified in a special award condition. Reports are due no later than
30 days following the end of each reporting period. A final SF -269 shall be
submitted within 90 days after the expiration date of the award.
b. The reports must be submitted to the Grants Officer in hard copy (no more than an
original and two copies), or electronically when specified in the special award
conditions.
.02 Award Payments
a. The advance method of payment shall be authorized unless otherwise specified in a
special award condition. The Grants Officer determines the appropriate method of
payment. Payments will be made through electronic funds transfers directly to the
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recipient's bank account and in accordance with the requirements of the Debt
Collection Improvement Act of 1996 and the Cash Management Improvement Act.
The DOC Award Number must be included on all payment related correspondence,
information, and forms.
b. When the "Request for Advance or Reimbursement" (SF -270) is used to request
payment, the recipient shall submit the request no more frequently than monthly, and
advances shall be approved for periods to cover only expenses anticipated over the
next 30 days. When the SF -270 is used, the recipient must complete the SF -3881,
"ACH Vendor Miscellaneous Payment Enrollment Form," and return it to the Grants
Officer.
c. Unless otherwise provided for in the award terms, payments under this award will be
made using the Department of Treasury's Automated Standard Application for
Payment (ASAP) system. Under the ASAP system, payments are made through
preauthorized electronic funds transfers, in accordance with the requirements of the
Debt Collection Improvement Act of 1996. In order to receive payments under
ASAP, recipients are required to enroll with the Department of Treasury, Financial
Management Service, Regional Financial Centers, which allows them to use the on-
line and Voice Response System (VRS) method of withdrawing funds from their
ASAP established accounts. The following information will be required to make
withdrawals under ASAP: (1) ASAP account number the award number found on
the cover sheet of the award; (2) Agency Location Code (ALC); and Region Code.
Recipients enrolled in the ASAP system do not need to submit a "Request for
Advance or Reimbursement" (SF -270), for payments relating to their award. Awards
paid under the ASAP system will contain a special award condition, clause, or
provision describing enrollment requirements and any controls or withdrawal limits
set in the ASAP system.
d. Advances shall be limited to the minimum amounts necessary to meet immediate
disbursement needs, but in no case should advances exceed the amount of cash
required for a 30 -day period. Advanced funds not disbursed in a timely manner and
any applicable interest must be promptly returned to DOC. If a recipient
demonstrates an unwillingness or inability to establish procedures which will
minimize the time elapsing between the transfer of funds and disbursement or if the
recipient otherwise fails to continue to qualify for the advance method of payment,
the Grants Officer may change the method of payment to reimbursement only.
.03 Federal and Non Federal Sharing
a. Awards which include Federal and non Federal sharing incorporate a budget
consisting of shared allowable costs. If actual allowable costs are less than the total
approved budget, the Federal and non Federal cost shares shall be calculated by
applying the approved Federal and non Federal cost share ratios to actual allowable
costs. If actual allowable costs are greater than the total approved budget, the Federal
2
share shall not exceed the total Federal dollar amount authorized by the award.
b. The non Federal share, whether in cash or in -kind, is expected to be paid out at the
same general rate as the Federal share. Exceptions to this requirement may be
granted by the Grants Officer based on sufficient documentation demonstrating
previously determined plans for, or later commitment of, cash or in -kind
contributions. In any case, the recipient must meet its cost share commitment over
the life of the award.
.04 Budget Changes and Transfer of Funds Among Categories
a. Requests for budget changes to the approved estimated budget in accordance with the
provision noted below must be submitted to the Grants Officer who shall make the
final determination on such requests and notify the recipient in writing.
b. Transfers of funds by the recipient among direct cost categories are permitted for
awards in which the Federal share of the project is $100,000 or less. For awards in
which the Federal share of the project exceeds $100,000, transfers of funds among
direct cost categories must be approved in writing by the Grants Officer when the
cumulative amount of such direct cost transfers exceed 10 percent of the total Federal
and non Federal funds authorized by the Grants Officer. The 10 percent threshold
applies to the total Federal and non Federal funds authorized by the Grants Officer at
the time of the transfer request. This is the accumulated amount of Federal funding
obligated to date by the Grants Officer along with any non Federal share. The same
criteria apply to the cumulative amount of transfer of funds among programs,
functions, and activities. Transfers will not be permitted if such transfers would
cause any Federal appropriation, or part thereof, to be used for purposes other than
those intended. This transfer authority does not authorize the recipient to create new
budget categories within an approved budget unless the Grants Officer has provided
prior approval. In addition, this does not prohibit the recipient from requesting
Grants Officer approval for revisions to the budget.
c. The recipient is not authorized at any time to transfer amounts budgeted for direct
costs to the indirect costs line item or vice versa, without written prior approval of the
Grants Officer.
.05 Indirect Costs
a. Indirect costs will not be allowable charges against the award unless specifically
included as a cost item in the approved budget incorporated into the award. (The
term "indirect cost" has been replaced with the term "facilities and administrative
costs" under OMB Circular A -21, "Cost Principles for Educational Institutions.
b. Excess indirect costs may not be used to offset unallowable direct costs.
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c. If the recipient has not previously established an indirect cost rate with a Federal
agency, the negotiation and approval of a rate is subject to the procedures in the
applicable cost principles and the following subparagraphs:
1. (a) State, Local, and Indian Tribal Governments; Educational Institutions; and
Non Profit Organizations (Non- Commercial Organizations)
For the above listed organizations, cognizant federal agency is generally
defined as the agency that provides the largest dollar amount of direct federal
funding. For those organizations for which DOC is cognizant or has
oversight, DOC or its designee will either negotiate a fixed rate with carry
forward provisions for the recipient or, in some instances, will limit its review
to evaluating the procedures described in the recipient's cost allocation
methodology plan. Indirect cost rates and cost allocation methodology
reviews are subject to future audits to determine actual indirect costs.
(b) Commercial Organizations
For commercial organizations, cognizant federal agency is defined as the
agency that provides the largest dollar amount of negotiated contracts,
including options. If the only federal funds received by a commercial
organization are DOC award funds, then DOC becomes the cognizant federal
agency for the purpose of indirect cost negotiations. For those organizations
for which DOC is cognizant, DOC or its designee will negotiate a fixed rate
with carryforward provisions for the recipient. Fixed rate means an indirect
cost rate which has the same characteristics as a pre determined rate, except
that the difference between the estimated costs and the actual costs of the
period covered by the rate is carried forward as an adjustment to the rate
computation of the subsequent period.
DOC or its designee will negotiate indirect cost rates using the cost principles
found in 48 CFR Part 31, "Contract Cost Principles and Procedures." For
guidance on how to put an indirect cost plan together go to:
http: /www.dol.gov /oasam/ programs/ boc/ costdeterminationguide /main.htm
2. Within 90 days of the award start date, the recipient shall submit to the address
listed below documentation (indirect cost proposal, cost allocation plan, etc.)
necessary to perform the review. The recipient shall provide the Grants Officer
with a copy of the transmittal letter.
Office of Acquisition Management
U.S. Department of Commerce
14th Street and Constitution Avenue, N.W., Room 6412
Washington, DC 20230
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3. The recipient can use the fixed rate proposed in the indirect cost plan until such
time as the DOC provides a response to the submitted plan. Actual indirect costs
must be calculated annually and adjustments made through the carryforward
provision used in calculating next year's rate. This calculation of actual indirect
costs and the carryforward provision is subject to audit. Indirect cost rate
proposals must be submitted annually. Organizations that have previously
established indirect cost rates must submit a new indirect cost proposal to the
cognizant agency within six months after the close of each of the recipients' fiscal
years.
d. When DOC is not the oversight or cognizant Federal agency, the recipient shall
provide the Grants Officer with a copy of a negotiated rate agreement or a copy of the
transmittal letter submitted to the cognizant or oversight Federal agency requesting a
negotiated rate agreement.
e. If the recipient fails to submit the required documentation to DOC within 90 days of
the award start date, the Grants Officer may amend the award to preclude the
recovery of any indirect costs under the award. If the DOC, oversight, or cognizant
Federal agency determines there is a finding of good and sufficient cause to excuse
the recipient's delay in submitting the documentation, an extension of the 90 -day due
date may be approved by the Grants Officer.
f. Regardless of any approved indirect cost rate applicable to the award, the maximum
dollar amount of allocable indirect costs for which DOC will reimburse the recipient
shall be the lesser of:
1. The line item amount for the Federal share of indirect costs contained in the
approved budget of the award; or
2. The Federal share of the total allocable indirect costs of the award based on the
indirect cost rate approved by a cognizant or oversight Federal agency and current
at the time the cost was incurred, provided the rate is approved on or before the
award end date.
.06 Incurring Costs of Obligating Federal Funds Beyond the Expiration Date
a. The recipient shall not incur costs or obligate funds for any purpose pertaining to the
operation of the project, program, or activities beyond the expiration date stipulated in
the award. The only costs which are authorized for a period of up to 90 days
following the award expiration date are those strictly associated with closeout
activities. Closeout activities are normally limited to the preparation of final
progress, financial, and required project audit reports unless otherwise approved in
writing by the Grants Officer.
b. Unless otherwise authorized in 15 CFR 14.25(e)(2) or a special award condition,
5
any extension of the award period can only be authorized by the Grants Officer in
writing. Verbal or written assurances of funding from other than the Grants Officer
shall not constitute authority to obligate funds for programmatic activities beyond the
expiration date.
c. The DOC has no obligation to provide any additional prospective funding. Any
amendment of the award to increase funding and to extend the period of performance
is at the sole discretion of DOC.
.07 Tax Refunds
Refunds of FICA/FUTA taxes received by the recipient during or after the award period
must be refunded or credited to DOC where the benefits were financed with Federal
funds under the award. The recipient agrees to contact the Grants Officer immediately
upon receipt of these refunds. The recipient further agrees to refund portions of
FICA/FUTA taxes determined to belong to the Federal Government, including refunds
received after the award end date.
B. PROGRAMMATIC REQUIREMENTS
.01 Performance (Technical) Reports
a. The recipient shall submit performance (technical) reports in triplicate (one original
and two copies) or electronically to the Federal Program Officer as specified in the
special award conditions in the same frequency as the Financial Status Report (SF-
269) unless otherwise authorized by the Grants Officer.
b. Unless otherwise specified in the award provisions, performance (technical) reports
shall contain brief information as prescribed in the applicable uniform administrative
requirements incorporated into the award.
.02 Unsatisfactory Performance
Failure to perform the work in accordance with the terms of the award and maintain at
least a satisfactory performance rating or equivalent evaluation may result in designation
of the recipient as high risk and assignment of special award conditions or other further
action as specified in the standard term and condition entitled "Non- Compliance With
Award Provisions."
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.03 Programmatic Changes
The recipient shall report programmatic changes to the Grants Officer, and shall request
prior approvals in accordance with 15 CFR 14.25 or 15 CFR 24.30.
.04 Other Federal Awards with Similar Programmatic Activities
The recipient shall immediately provide written notification to the Federal Program
Officer and the Grants Officer in the event that, subsequent to receipt of the DOC award,
other financial assistance is received to support or fund any portion of the scope of work
incorporated into the DOC award. DOC will not pay for costs that are funded by other
sources.
.05 Non- Compliance With Award Provisions
Failure to comply with any or all of the provisions of the award may have a negative
impact on future funding by DOC and may be considered grounds for any or all of the
following actions: establishment of an account receivable, withholding payments under
any DOC awards to the recipient, changing the method of payment from advance to
reimbursement only, or the imposition of other special award conditions, suspension of
any DOC active awards, and termination of any DOC active awards.
.06 Prohibition Against Assignment by the Recipient
The recipient shall not transfer, pledge, mortgage, or otherwise assign the award, or any
interest therein, or any claim arising thereunder, to any party or parties, banks, trust
companies, or other financing or financial institutions without the express written
approval of the Grants Officer.
.07 Disclaimer Provisions
a. The United States expressly disclaims any and all responsibility or liability to the
recipient or third persons for the actions of the recipient or third persons resulting in
death, bodily injury, property damages, or any other losses resulting in any way from
the performance of this award or any other losses resulting in any way from the
performance of this award or any subaward or subcontract under this award.
b. The acceptance of this award by the recipient does not in any way constitute an
agency relationship between the United States and the recipient.
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C. NON DISCRIMINATION REQUIRMENTS
No person in the United States shall, on the ground of race, color, national origin, handicap,
age, religion, or sex, be excluded from participation in, be denied the benefits of, or be
subject to discrimination under any program or activity receiving Federal financial
assistance. The recipient agrees to comply with the non discrimination requirements below:
.01 Statutory Provisions
a. Title VI of the Civil Rights Act of 1964 (42 USC 2000d et seq.) and DOC
implementing regulations published at 15 CFR Part 8 which prohibit discrimination
on the grounds of race, color, or national origin under programs or activities receiving
Federal financial assistance;
b. Title IX of the Education Amendments of 1972 (20 USC 1681 et seq.) prohibiting
discrimination on the basis of sex under Federally assisted education programs or
activities;
c. Section 504 of the Rehabilitation Act of 1973, as amended (29 USC 794) and DOC
implementing regulations published at 15 CFR Part 8b prohibiting discrimination on
the basis of handicap under any program or activity receiving or benefiting from
Federal assistance;
d. The Age Discrimination Act of 1975, as amended (42 USC 6101 et seq.) and DOC
implementing regulations published at 15 CFR Part 20 prohibiting discrimination on
the basis of age in programs or activities receiving Federal financial assistance;
e. The Americans with Disabilities Act of 1990 (42 USC 12101 et seq.) prohibiting
discrimination on the basis of disability under programs, activities, and services
provided or made available by state and local governments or instrumentalities or
agencies thereto, as well as public or private entities that provide public
transportation;
f. Any other applicable non discrimination law(s).
.02 Other Provisions
a. Parts II and III of EO 11246 (30 FR 12319, 1965), as amended by EO 11375 (32 FR
14303, 1967) and 12086 (43 FR 46501, 1978), require Federally assisted construction
contracts to include the nondiscrimination provisions of 202 and 203 of that EO
and Department of Labor regulations implementing EO 11246 (41 CFR 60- 1.4(b),
1991).
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.03 Title VII Exemption for Religious Organizations
D. AUDITS
b. E0 13166 (August 11, 2000), "Improving Access to Services for Persons With
Limited English Proficiency," and DOC policy guidance issued on March 24, 2003
(68 FR 14180) to Federal financial assistance recipients on the Title VI prohibition
against national origin discrimination affecting Limited English Proficient (LEP)
persons.
Generally, Title VII of the Civil Rights Act of 1964, 42 U.S.C. 2000e et seq., provides
that it shall be an unlawful employment practice for an employer to discharge any
individual or otherwise to discriminate against an individual with respect to
compensation, terms, conditions, or privileges of employment because of such
individual's race, color, religion, sex, or national origin. However, Title VII, 42 U.S.C.
2000e -1(a), expressly exempts from the prohibition against discrimination on the basis of
religion, a religious corporation, association, educational institution, or society with
respect to the employment of individuals of a particular religion to perform work
connected with the carrying on by such corporation, association, educational institution,
or society of its activities.
Under the Inspector General Act of 1978, as amended, 5 USC App. 3, 1 et seq., an audit of
the award may be conducted at any time. The Inspector General of the DOC, or any of his or
her duly authorized representatives, shall have access to any pertinent books, documents,
papers and records of the recipient, whether written, printed, recorded, produced or
reproduced by any electronic, mechanical, magnetic or other process or medium, in order to
make audits, inspections, excerpts, transcripts or other examinations as authorized by law.
When the OIG requires a program audit on a DOC award, the OIG will usually make the
arrangements to audit the award, whether the audit is performed by OIG personnel, an
independent accountant under contract with DOC, or any other Federal, state or local audit
entity.
.01 Organization -Wide, Program Specific, and Project Audits
a. Organization -wide or program specific audits shall be performed in accordance with
the Single Audit Act Amendments of 1996, as implemented by OMB Circular A -133,
"Audits of States, Local Governments, and Non Profit Organizations." Recipients
that are subject to the provisions of OMB Circular A -133 and that expend $500,000
or more in a year in Federal awards shall have an audit conducted for that year in
accordance with the requirements contained in OMB Circular A -133. A copy of the
audit shall be submitted to the Bureau of the Census, which has been designated by
9
OMB as a central clearinghouse. The address is:
Federal Audit Clearinghouse
Bureau of the Census
1201 E. 10th Street
Jeffersonville, IN 47132
b. Unless otherwise specified in the terms and conditions of the award, in accordance
with 15 CFR 14.26(c) and (d), for profit hospitals, commercial entities, and other
organizations not required to follow the audit provisions of OMB Circular A -133
shall have an audit performed when the federal share amount awarded is $500,000 or
more over the duration of the project period. An audit is required at least once every
two years using the following schedule for audit report submission.
1. For awards less than 24 months, an audit is required within 90 days from the
project expiration date, including the close -out period for the award.
2. For 2 or 3 -year awards, an audit is required within 90 days after the end of the
first year and within 90 days from the project expiration date including the close-
out period for the award.
3. For 4 or 5 -year awards, an audit is required within 90 days after the end of the
first year and third year, and within 90 days from the project expiration date
including the close -out period for the award.
c. Some DOC programs have specific audit guidelines that will be incorporated into the
award. When DOC does not have a program- specific audit guide available for the
program, the auditor will follow the requirements for a program specific audit as
described in OMB Circular A -133, .235. The Recipient may include a line item in
the budget for the cost of the audit. A copy of the program- specific audit shall be
submitted to the Grants Officer and to the OIG at the following address:
.02 Audit Resolution Process
Office of Inspector General
U.S. Department of Commerce
Atlanta Regional Office of Audits
401 West Peachtree Street, N.W., Suite 2742
Atlanta, GA 30308
a. An audit of the award may result in the disallowance of costs incurred by the
recipient and the establishment of a debt (account receivable) due DOC. For this
reason, the recipient should take seriously its responsibility to respond to all audit
findings and recommendations with adequate explanations and supporting evidence
10
E. DEBTS
whenever audit results are disputed.
b. In accordance with the Federal Register notice dated January 27, 1989 (54 FR 4053),
a recipient whose award is audited has the following opportunities to dispute the
proposed disallowance of costs and the establishment of a debt:
1. Unless the Inspector General determines otherwise, the recipient has 30 days from
the date of the transmittal of the draft audit report to submit written comments and
documentary evidence.
2. The recipient has 30 days from the date of the transmittal of the final audit report
to submit written comments and documentary evidence. There will be no
extension of this deadline.
3. The DOC shall review the documentary evidence submitted by the recipient and
shall notify the recipient of the results in an Audit Resolution Determination
Letter. The recipient has 30 days from the date of receipt of the Audit Resolution
Determination Letter to submit a written appeal. There will be no extension of
this deadline. The appeal is the last opportunity for the recipient to submit written
comments and documentary evidence that dispute the validity of the audit
resolution determination.
4. An appeal of the Audit Resolution Determination does not prevent the
establishment of the audit related debt nor does it prevent the accrual of interest
on the debt. If the Audit Resolution Determination is overruled or modified on
appeal, appropriate corrective action will be taken retroactively. An appeal will
stay the offset of funds owed by the auditee against funds due to the auditee.
5. The DOC shall review the recipient's appeal and notify the recipient of the results
in an Appeal Determination Letter. After the opportunity to appeal has expired or
after the appeal determination has been rendered, DOC will not accept any further
documentary evidence from the recipient. No other administrative appeals are
available in DOC.
.01 Payment of Debts Owed the Federal Government
Any debts determined to be owed the Federal Government shall be paid promptly by the
recipient. In accordance with 15 CFR 21.4, a debt will be considered delinquent if it is
not paid within 15 days of the due date, or if there is no due date, within 30 days of the
billing date. Failure to pay a debt by the due date, or if there is no due date, within 30
days of the billing date, shall result in the imposition of late payment charges as noted
11
below. In addition, failure to pay the debt or establish a repayment agreement by the due
date, or if there is no due date, within 30 days of the billing date, will also result in the
referral of the debt for collection action, including referral to the Treasury Offset
Program, 31 C.F.R. 285.5, and may result in DOC taking further action as specified in
the standard term and condition entitled "Non- Compliance With Award Provisions
Funds for payment of a debt must not come from other Federally sponsored programs.
Verification that other Federal funds have not been used will be made, e.g., during on -site
visits and audits.
.02 Late Payment Charges
a. An interest charge shall be assessed on the delinquent debt as established by the Debt
Collection Act (31 U.S.C. 3701 et seq.), as amended. The minimum annual interest
rate to be assessed is the Department of the Treasury's Current Value of Funds Rate.
This rate is published in the Federal Register by the Department of the Treasury. The
assessed rate shall remain fixed for the duration of the indebtedness.
b. A penalty charge shall be assessed on any portion of a debt that is delinquent for more
than 90 days, although the charge will accrue and be assessed from the date the debt
became delinquent.
c. An administrative charge shall be assessed to cover processing and handling the
amount due.
.03 Barring Delinquent Federal Debtors From Obtaining Federal Loans or Loan
Insurance Guarantees
Pursuant to 31 U.S.C. 3720B, unless waived, the DOC is not permitted to extend
financial assistance in the form of a loan, loan guarantee, or loan insurance to any person
delinquent on a nontax debt owed to a Federal agency. This prohibition does not apply to
disaster loans.
.04 Effect of Judgment Lien On Eligibility For Federal Grants, Loans, or Programs
Pursuant to 28 U.S.C. 3201(e), unless waived by the DOC, a debtor who has a
judgment lien against the debtor's property for a debt to the United States shall not be
eligible to receive any grant, or loan which is made, insured, guaranteed, or financed
directly or indirectly by the United States or to receive funds directly from the Federal
Government in any program, except funds to which the debtor is entitled as beneficiary,
until the judgment is paid in full or otherwise satisfied.
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F. INDIVIDUAL BACKGROUND SCREENING
An individual background screening will be performed by the OIG on key individuals of
organizational units associated with the application at the beginning of the award and at three
year intervals thereafter for the life of the award unless (1) the proposed award amount is
$100,000 or less; (2) applicants are accredited colleges and universities; (3) applicants are
units of a State or local government; (4) applicants are economic development districts
designated by EDA, including those entities whose designations are pending, and councils of
governments; or (5) the key individual(s) is /are elected officials of State and local
governments who are serving in capacities other than their elected capacities when applying
for assistance. In addition, if there is a change in the status of the organization and/or key
individuals, or the program officer, OIG, or Grants Officer believes there is good reason to
conduct a review sooner, a background screening may be required more frequently.
Individual background screenings are intended to reveal if any key individuals associated
with the applicant have been convicted of or are presently facing criminal charges (e.g.,
fraud, theft, perjury), or other matters which significantly reflect on the applicant's business
integrity, responsibility, or financial integrity. Key individuals of non exempt organizations
associated with this award shall complete Form CD -346, "Applicant for Funding
Assistance." An original signature is required. The form is to be submitted to the Grants
Specialist named in the award document within 30 days of receipt of this award.
.01 Results of Individual Background Screening
DOC reserves the right to take any of the actions described in section F.02 if any of the
following occurs as a result of the individual background screening:
a. A key individual fails to submit the required Form CD -346, "Applicant for Funding
Assistance" within 30 days of receipt of this award;
b. A key individual makes a false statement or omits a material fact on the Form
CD -346;
c. The individual background screening reveals significant adverse findings that reflect
on the business integrity or responsibility of the recipient and/or key individual.
.02 Action(s) Taken as a Result of Individual Background Screening
If any situation noted in F.01 occurs, DOC, at its discretion, may take one or more of the
following actions:
a. Consider suspension/termination of an award immediately for cause;
b. Require the removal of any key individual from association with management and/or
implementation of the award and require Grants Officer approval of personnel
13
replacements;
c. Require the recipient to make other changes as appropriate; and/or
d. Designate the recipient as high risk and amend the award to assign special award
conditions, as appropriate, including making changes with respect to the method of
payment and/or financial reporting requirements.
G. GOVERNMENTWIDE DEBARMENT AND SUSPENSION (NONPROCUREMENT)
The recipient shall comply with the provisions of Subpart C of 2 CFR Part 1326,
"Governmentwide Debarment and Suspension (Nonprocurement)" (published in the Federal
Register on December 21, 2006, 71 FR 76573), which generally prohibit entities that have
been debarred, suspended, or voluntarily excluded from participating in Federal
nonprocurement transactions either through primary or lower tier covered transactions.
H. DRUG -FREE WORKPLACE
The recipient shall comply with the provisions of the Drug -Free Workplace Act of 1988
(Public Law 100 -690, title V, Sec. 5153, as amended by Public Law 105 -85, Div. A, Title
VIII, Sec. 809, as codified at 41 U.S.C. 702) and DOC implementing regulations published
at 15 CFR Part 29, "Governmentwide Requirements for Drug -Free Workplace (Financial
Assistance)" (published in the Federal Register on November 26, 2003, 68 FR 66534), which
require that the recipient take steps to provide a drug -free workplace.
I. LOBBYING RESTRICTIONS
.01 Statutory Provisions
The recipient shall comply with the provisions of 31 U.S.C. 1352 and DOC
implementing regulations published at 15 CFR Part 28, "New Restrictions on Lobbying."
These provisions generally prohibit the use of Federal funds for lobbying the Executive
or Legislative Branches of the Federal government in connection with the award, and
require the disclosure of the use of non Federal funds for lobbying.
.02 Disclosure of Lobbying Activities
The recipient receiving in excess of $100,000 in Federal funding shall submit a
14
completed Form SF -LLL, "Disclosure of Lobbying Activities," regarding the use of non-
Federal funds for lobbying. The Form SF -LLL shall be submitted within 30 days
following the end of the calendar quarter in which there occurs any event that requires
disclosure or that materially affects the accuracy of the information contained in any
disclosure form previously filed. The recipient must submit the Forms SF -LLL,
including those received from subrecipients, contractors, and subcontractors, to the
Grants Officer.
J. CODES OF CONDUCT AND SUBAWARD, CONTRACT, AND SUBCONTRACT
PROVISIONS
.01 Code of Conduct for Recipients
Pursuant to the certification in SF -424B, paragraph 3, the recipient must maintain written
standards of conduct to establish safeguards to prohibit employees from using their
positions for a purpose that constitutes or presents the appearance of personal or
organizational conflict of interest, or personal gain in the administration of this award.
.02 Applicability of Award Provisions to Subrecipients
a. The recipient shall require all subrecipients, including lower tier subrecipients, under
the award to comply with the provisions of the award, including applicable cost
principles, administrative, and audit requirements.
b. A recipient is responsible for subrecipient monitoring, including the following:
1. Award Identification At the time of the award, identifying to the subrecipient the
Federal award information (e.g., CFDA title and number, award name, name of
Federal agency) and applicable compliance requirements.
2. During- the -Award Monitoring Monitoring the subrecipient's use of Federal
awards through reporting, site visits, regular contact, or other means to provide
reasonable assurance that the subrecipient administers Federal awards in
compliance with laws, regulations, and the provisions of contracts or grant
agreements and that performance goals are achieved.
3. Subrecipient Audits Ensuring that subrecipients expending $500,000 or more in
Federal awards during the subrecipient's fiscal year have met the audit
requirements of OMB Circular A -133, and that the required audits are completed
within 9 months of the end of the subrecipient's audit period. In addition, the
recipient is required to issue a management decision on audit findings within 6
months after receipt of the subrecipient's audit report, and ensuring that the
subrecipient takes timely and appropriate corrective action on all audit findings.
15
In cases of continued inability or unwillingness of a subrecipient to have the
required audits, the pass- through entity shall take appropriate action using
sanctions.
.03 Competition and Codes of Conduct for Subawards
a. All subawards will be made in a manner to provide, to the maximum extent
practicable, open and free competition. The recipient must be alert to organizational
conflicts of interest as well as other practices among subrecipients that may restrict or
eliminate competition. In order to ensure objective subrecipient performance and
eliminate unfair competitive advantage, subrecipients that develop or draft work
requirements, statements of work, or requests for proposals shall be excluded from
competing for such subawards.
b. The recipient shall maintain written standards of conduct governing the performance
of its employees engaged in the award and administration of subawards. No
employee, officer, or agent shall participate in the selection, award, or administration
of a subaward supported by Federal funds if a real or apparent conflict of interest
would be involved. Such a conflict would arise when the employee, officer, or agent,
any member of his or her immediate family, his or her partner, or an organization in
which he /she serves as an officer or which employs or is about to employ any of the
parties mentioned in this section, has a financial interest or other interest in the
organization selected or to be selected for a subaward. The officers, employees, and
agents of the recipient shall neither solicit nor accept anything of monetary value
from subrecipients. However, the recipient may set standards for situations in which
the financial interest is not substantial or the gift is an unsolicited item of nominal
value. The standards of conduct shall provide for disciplinary actions to be applied
for violations of such standards by officers, employees, or agents of the recipient.
c. A financial interest may include employment, stock ownership, a creditor or debtor
relationship, or prospective employment with the organization selected or to be
selected for a subaward. An appearance of impairment of objectivity could result
from an organizational conflict where, because of other activities or relationships with
other persons or entities, a person is unable or potentially unable to render impartial
assistance or advice. It could also result from non financial gain to the individual,
such as benefit to reputation or prestige in a professional field.
.04 Applicability of Provisions to Subawards, Contracts, and Subcontracts
a. The recipient shall include the following notice in each request for applications or
bids:
Applicants/bidders for a lower tier covered transaction (except procurement
contracts for goods and services under $25,000 not requiring the consent of a
16
DOC official) are subject to 2 CFR Part 1326, Subpart C "Governmentwide
Debarment and Suspension (Nonprocurement)." In addition, applicants/bidders
for a lower tier covered transaction for a subaward, contract, or subcontract
greater than $100,000 of Federal funds at any tier are subject to 15 CFR Part 28,
"New Restrictions on Lobbying." Applicants/bidders should familiarize
themselves with these provisions, including the certification requirement.
Therefore, applications for a lower tier covered transaction must include a Form
CD -512, "Certification Regarding Lobbying- -Lower Tier Covered Transactions,"
completed without modification.
b. The recipient shall include a term or condition in all lower tier covered transactions
(subawards, contracts, and subcontracts), that the award is subject to Subpart C of 2
CFR Part 1326, Governmentwide Debarment and Suspension (Nonprocurement)."
c. The recipient shall include a statement in all lower tier covered transactions
(subawards, contracts, and subcontracts) exceeding $100,000 in Federal funds, that
the subaward, contract, or subcontract is subject to 31 U.S.0 1352, as implemented
at 15 CFR Part 28, "New Restrictions on Lobbying." The recipient shall further
require the subrecipient, contractor, or subcontractor to submit a completed
"Disclosure of Lobbying Activities" (Form SF -LLL) regarding the use of non Federal
funds for lobbying. The Form SF -LLL shall be submitted within 15 days following
the end of the calendar quarter in which there occurs any event that requires
disclosure or that materially affects the accuracy of the information contained in any
disclosure form previously filed. The Form SF -LLL shall be submitted from tier to
tier until received by the recipient. The recipient must submit all disclosure forms
received, including those that report lobbying activity on its own behalf, to the Grants
Officer within 30 days following the end of the calendar quarter.
.05 Minority Owned Business Enterprise
DOC encourages recipients to utilize minority and women -owned firms and enterprises
in contracts under financial assistance awards. The Minority Business Development
Agency will assist recipients in matching qualified minority owned enterprises with
contract opportunities. For further information contact:
U.S. Department of Commerce
Minority Business Development Agency
Herbert C. Hoover Building
14th Street and Constitution Avenue, N.W.
Washington, D.C. 20230
17
.06 Subaward and /or Contract to a Federal Agency
a. The recipient, subrecipient, contractor, and /or subcontractor shall not sub -grant or
sub contract any part of the approved project to any agency or employee of DOC
and/or other Federal department, agency or instrumentality, without the prior written
approval of the Grants Officer.
b. Requests for approval of such action must be submitted to the Federal Program
Officer who shall review and make recommendation to the Grants Officer. The
Grants Officer shall make the final determination and will notify the recipient in
writing of the final determination.
K. PROPERTY
.01 Standards
The recipient shall comply with the property management standards as stipulated in the
applicable uniform administrative requirements.
.02 Real Property
The recipient shall execute a security interest or other statement of the Federal
Interest in real property acquired or improved with Federal funds, acceptable in
form and substance to the DOC, which statement must be perfected and placed of
record in accordance with local law, with continuances re -filed as appropriate.
The recipient must provide the DOC with a written statement from a licensed
attorney in the jurisdiction where the property is located certifying that the
Federal Interest has been protected, as required under the award and in
accordance with local law. The attorney's statement, along with a copy of the
instrument reflecting the recordation of the Federal Interest, shall be returned to
the Grants Officer. The recipient may not dispose of, modify the use of, or
change the terms of the real property title, or other interest in the project site and
facilities without permission and instructions from the Grants Officer. No funds
under this award shall be released until the recipient has complied with this
provision, unless other arrangements satisfactory to the DOC are made.
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L. ENVIRONMENTAL REQUIREMENTS
Environmental impacts must be considered by Federal decision makers in their
decisions whether or not to (1) approve a proposal for Federal assistance; (2) approve
the proposal with mitigation; or (3) approve a different proposal /grant having less
adverse environmental impacts. Federal environmental laws require that the funding
agency initiate a planning process with an early consideration of potential
environmental impacts that projects funded with Federal assistance may have on the
environment. The recipient and subrecipients must comply with all environmental
standards, to include those prescribed under the following statutes and Executive
Orders, and shall identify to the awarding agency any impact the award may have on
the environment. In some cases, award funds can be withheld by the Grants Officer
under a special award condition requiring the recipient to submit additional
environmental compliance information sufficient to enable the DOC to make an
assessment on any impacts that a project may have on the environment.
.01 The National Environmental Policy Act of 1969 (42 U.S.C. 4321 -4327)
The National Environmental Policy Act (NEPA) and the Council on
Environmental Quality (CEQ) implementing regulations (40 CFR parts 1500
through 1508) require that an environmental analysis be completed for all major
Federal actions significantly affecting the environment. NEPA applies to the
actions of Federal agencies and may include a Federal agency's decision to fund
non Federal projects under grants and cooperative agreements. Recipients of
Federal assistance are required to identify to the awarding agency any impact an
award will have on the quality of the human environment, and assist the agency to
comply with the National Environmental Policy Act. Recipients may also be
requested to assist NOAA in drafting of an environmental assessment, if the
Department determines an assessment is required, when the award activities
remain subject to Federal authority and control. If additional information is
required during the period of the award, funds can be withheld by the Grants
Officer under a special award condition requiring the recipient to submit
additional environmental compliance information sufficient to enable the
Department to make an assessment on any impacts that a project may have on the
environment.
.02 Floodplain Management, EO 11988 and, Protection of Wetlands, EO 11990,
May 24, 1977
Recipients must identify proposed actions in Federally defined floodplains and wetlands
to enable the agency to make a determination whether there is an alternative to minimize
any potential harm.
19
.03 Clean Air Act, Clean Water Act, and EO 11738
Recipients must comply with the provisions of the Clean Air Act (42 U.S.C. 7401 et
seq.), Clean Water Act (33 U.S.C. §1251 et seq.), and EO 11738, and shall not use a
facility on EPA's List of Violating Facilities in performing any award that is nonexempt
under 40 CFR 15.5, and shall notify the Program Officer in writing if it intends to use a
facility that is on the EPA List of Violating Facilities or knows that the facility has been
recommended to be placed on the List.
.04 The Flood Disaster Protection Act of 1973 (42 U.S.C. 4002 et seq.)
Flood insurance, when available, is required for Federally assisted construction or
acquisition in flood -prone areas.
.05 The Endangered Species Act of 1973, as amended, (16 U.S.C. 1531 et seq.)
Recipients must identify any impact or activities which may involve a threatened or
endangered species. Federal agencies have the responsibility to ensure that no adverse
effects to a protected species or habitat occur from actions under Federal assistance
awards and conduct the required reviews under the Endangered Species Act, as
applicable.
.06 The Coastal Zone Management Act, as amended, (16 U.S.C. 1451 et seq.)
Funded projects must be consistent with a coastal state's approved management program
for the coastal zone.
.07 The Coastal Barriers Resources Act, (16 U.S.C. 3501 et seq.)
Restrictions are placed on Federal Funding for actions within the Coastal Barrier System.
.08 The Wild and Scenic Rivers Act, as amended (16 U.S.C. 1271 et seq.)
This Act applies to awards that may affect existing or proposed components of the
National Wild and Scenic Rivers system.
20
.09 The Safe Drinking Water Act of 1974, as amended (42 U.S.C. 300f -j)
This Act precludes Federal assistance for any project that the EPA determines may
contaminate a sole source aquifer so as to threaten public health.
.10 The Resource Conservation and Recovery Act of 1976, as amended, (42 U.S.C.
6901 et seq.)
This Act regulates the generation, transportation, treatment, and disposal of hazardous
wastes, and also provides that recipients of Federal funds give preference in their
procurement programs to the purchase of recycled products pursuant to EPA guidelines.
.11 The Comprehensive Environmental Response, Compensation, and Liability Act of
1980, as amended, and the Superfund Amendments and Reauthorization Act of
1986, and the Community Environmental Response Facilitation Act of 1992, as
amended, (42 U.S.C. 9601 et seq.)
These requirements address responsibilities of hazardous substance releases, threatened
releases and environmental cleanup. There is also a requirement to impose reporting and
community involvement requirements to ensure disclosure of the release or disposal of
regulated substances and cleanup of hazards.
.12 Environmental Justice in Minority Populations and Low Income Populations, EO
12898, February 11, 1994.
This order identified and addresses adverse human health or environmental effects of
programs, policies and activities on low income and minority populations.
M. MISCELLANEOUS REQUIREMENTS
.01 Criminal and Prohibited Activities
a. The Program Fraud Civil Remedies Act (31 U.S.C. 3801 3812), provides for the
imposition of civil penalties against persons who make false, fictitious, or fraudulent
claims to the Federal government for money (including money representing grants,
loans or other benefits).
b. False statements (18 U.S.C. 287 and 1001), provides that whoever makes or
21
presents any false, fictitious, or fraudulent statements, representations, or claims
against the United States shall be subject to imprisonment of not more than five years
and shall be subject to a fine in the amount provided by 18 U.S.C. 287.
c. False Claims Act (31 U.S.C. 3729 et seq.), provides that suits under this act can be
brought by the government, or a person on behalf of the government, for false claims
under Federal assistance programs.
d. Copeland "Anti- Kickback" Act (18 U.S.C. 874 and 40 U.S.C. 276c), prohibits a
person or organization engaged in a Federally supported project from enticing an
employee working on the project from giving up a part of his compensation under an
employment contract.
.02 Foreign Travel
a. The recipient shall comply with the provisions of the Fly America Act (49 USC
40118). The implementing regulations of the Fly America Act are found at 41 CFR
301 10.131 through 301- 10.143.
b. The Fly America Act requires that Federal travelers and others performing U.S.
Government financed foreign air travel must use U.S. flag air carriers, to the extent
that service by such carriers is available. Foreign air carriers may be used only in
specific instances, such as when a U.S. flag air carrier is unavailable, or use of U.S.
flag air carrier service will not accomplish the agency's mission.
c. Use of foreign air carriers may also be used only if bilateral agreements permit such
travel pursuant to 49 USC 40118(b). DOC is not aware of any bilateral agreements
which meet these requirements. Therefore, it is the responsibility of the recipient to
provide the Grants Officer with a copy of the applicable bilateral agreement if use of
a foreign carrier under a bilateral agreement is anticipated.
d. If a foreign air carrier is anticipated to be used for any part of foreign travel, the
recipient must receive prior approval from the Grants Officer. When requesting such
approval, the recipient must provide a justification in accordance with guidance
provided by 41 CFR 301 10.142, which requires the recipient to provide the Grants
Officer with the following: name; dates of travel; origin and destination of travel;
detailed itinerary of travel, name of the air carrier and flight number for each leg of
the trip; and a statement explaining why the recipient meets one of the exceptions to
the regulations. If the use of a foreign air carrier is pursuant to a bilateral agreement,
the recipient must provide the Grants Officer with a copy of the agreement. The
Grants Officer shall make the final determination and notify the recipient in writing.
Failure to adhere to the provisions of the Fly America Act will result in the recipient
not being reimbursed for any transportation costs for which the recipient improperly
used a foreign air carrier.
22
.03 American -Made Equipment and Products
Recipients are hereby notified that they are encouraged, to the greatest extent practicable,
to purchase American -made equipment and products with funding provided under this
award.
.04 Intellectual Property Rights
a. Inventions. The rights to any invention made by a recipient under a DOC financial
assistance award are determined by the Bayh -Dole Act, Pub. L. 96 -517, as amended,
and codified in 35 U.S.C. 200 et seq., except as otherwise required by law. The
specific requirements governing the development, reporting, and disposition of rights
to inventions and patents resulting from financial assistance awards are described in
more detail in 37 CFR Part 401 and in particular, in the standard patent rights clause
in 37 CFR 401.14, which is hereby incorporated by reference into this award.
1. Ownership.
(a) Recipient. The recipient has the right to own any invention it makes
(conceived or first actually reduced to practice) or made by its employees. The
recipient may not assign its rights to a third party without the permission of
DOC unless it is to a patent management organization (i.e., a university's
Research Foundation.) The recipient's ownership rights are subject to the
Government's nonexclusive paid -up license and other rights.
(b) Department. If the recipient elects not to own or does not elect rights or file a
patent application within the time limits set forth in the standard patent rights
clause, DOC may request an assignment of all rights, which is normally
subject to a limited royalty free nonexclusive revocable license for the
recipient. DOC owns any invention made solely by its employees but may
license the recipient in accordance with the procedures in 37 CFR Part 404.
(c) Inventor/Employee. If neither the recipient nor the Department is interested in
owning an invention by a recipient employee, the recipient, with the written
concurrence of DOC, may allow the inventor /employee to own the invention
subject to certain restrictions as described in 37 CFR 401.9.
(d) Joint inventions. Inventions made jointly by a recipient and a DOC employee
will be owned jointly by the recipient and DOC. However, DOC may transfer
its rights to the recipient as authorized by 35 U.S.C. 202(e) and 37 CFR
401.10 if the recipient is willing to patent and license the invention usually in
exchange for a share of "net" royalties based on the number of inventors (e.g.,
50 -50 if there is one recipient and DOC employee). The agreement will be
prepared by DOC and may include other provisions, such as a royalty free
license to the Government and certain other entities. 35 U.S.C. 202(e) also
23
authorizes the recipient to transfer its rights to the Government which can
agree to share royalties similarly as described above.
2. Responsibilities iEdison. The recipient has responsibilities and duties set forth
in the standard patent rights clause, which are not described below. The recipient
is expected to comply with all the requirements of the standard patent rights
clause and 37 CFR Part 401. Recipients of DOC financial assistance awards are
required to submit their disclosures and elections electronically using the
Interagency Edison extramural invention reporting system (iEdison) at
www.iEdison.gov. Recipients may obtain a waiver of this electronic submission
requirement by providing to DOC compelling reasons for allowing the submission
of paper copies of reports related to inventions.
b. Patent Notification Procedures.
Pursuant to E.O. 12889, DOC is required to notify the owner of any valid patent
covering technology whenever the DOC or its financial assistance recipients, without
making a patent search, knows (or has demonstrable reasonable grounds to know)
that technology covered by a valid United States patent has been or will be used
without a license from the owner. To ensure proper notification, if the recipient uses
or has used patented technology under this award without a license or permission
from the owner, the recipient must notify the Grants Officer.
However, this notice does not necessarily mean that the Government authorizes and
consents to any copyright or patent infringement occurring under the financial
assistance.
c. Data, Databases, and Software.
The rights to any work produced or purchased under a DOC Federal financial
assistance award are determined by 15 CFR 24.34 and 15 CFR 14.36. Such
works may include data, databases or software. The recipient owns any work
produced or purchased under a DOC Federal financial assistance award subject to
DOC's right to obtain, reproduce, publish or otherwise use the work or authorize
others to receive, reproduce, publish or otherwise use the data for Government
purposes.
d. Copyright.
The recipient may copyright any work produced under a DOC Federal financial
assistance award subject to DOC's royalty -free nonexclusive and irrevocable right to
reproduce, publish or otherwise use the work or authorize others to do so for
Government purposes. Works jointly authored by DOC and recipient employees may
be copyrighted but only the part authored by the recipient is protected because, under
17 U.S.C. 105, works produced by Government employees are not copyrightable in
24
the United States. On occasion, DOC may ask the recipient to transfer to DOC its
copyright in a particular work when DOC is undertaking the primary dissemination of
the work. Ownership of copyright by the Government through assignment is
permitted by 17 U.S.C. 105.
.05 Increasing Seat Belt Use in the United States
Pursuant to EO 13043, recipients should encourage employees and contractors to enforce
on-the-job seat belt policies and programs when operating company- owned, rented or
personally -owned vehicles.
.06 Research Involving Human Subjects
a. All proposed research involving human subjects must be conducted in accordance
with 15 CFR Part 27, "Protection of Human Subjects." No research involving human
subjects is permitted under this award unless expressly authorized by Special Award
Condition, or otherwise in writing by the Grants Officer.
b. Federal policy defines a human subject as a living individual about whom an
investigator conducting research obtains (1) data through intervention or interaction
with the individual, or (2) identifiable private information. Research means a
systematic investigation, including research development, testing and evaluation,
designed to develop or contribute to generalizable knowledge.
c. DOC regulations, 15 CFR Part 27, require that recipients maintain appropriate
policies and procedures for the protection of human subjects. In the event it becomes
evident that human subjects may be involved in this project, the recipient shall submit
appropriate documentation to the Federal Program Officer for approval by the
appropriate DOC officials. This documentation may include:
1. Documentation establishing approval of the project by an institutional review
board (IRB) approved for Federal -wide use under Department of Health and
Human Services guidelines, see 15 CFR 27.103;
2. Documentation to support an exemption for the project under 15 CFR
27.101(b);
3. Documentation to support deferral for an exemption or IRB review under 15 CFR
27.118;
4. Documentation of IRB approval of any modification to a prior approved protocol
or to an informed consent form.
d. No work involving human subjects may be undertaken, conducted, or costs incurred
25
and /or charged for human subjects research, until the appropriate documentation is
approved in writing by the Grants Officer. Notwithstanding this prohibition, work
may be initiated or costs incurred and/or charged to the project for protocol or
instrument development related to human subjects research.
.07 Federal Employee Expenses
Federal agencies are generally barred from accepting funds from a recipient to pay
transportation, travel, or other expenses for any Federal employee unless specifically
approved in the terms of the award. Use of award funds (Federal or non Federal) or the
recipient's provision of in -kind goods or services, for the purposes of transportation,
travel, or any other expenses for any Federal employee may raise appropriation
augmentation issues. In addition, DOC policy prohibits the acceptance of gifts, including
travel payments for Federal employees, from recipients or applicants regardless of the
source.
.08 Preservation of Open Competition and Government Neutrality Towards
Government Contractors' Labor Relations on Federal and Federally Funded
Construction Projects.
Pursuant to EO 13202, "Preservation of Open Competition and Government Neutrality
Towards Government Contractors' Labor Relations on Federal and Federally Funded
Construction Projects," unless the project is exempted under section 5(c) of the order, bid
specifications, project agreements, or other controlling documents for construction
contracts awarded by recipients of grants or cooperative agreements, or those of any
construction manager acting on their behalf, shall not:
a. include any requirement or prohibition on bidders, offerors, contractors, or
subcontractors about entering into or adhering to agreements with one or more labor
organizations on the same or related construction project(s); or
b. otherwise discriminate against bidders, offerors, contractors, or subcontractors for
becoming or refusing to become or remain signatories or otherwise to adhere to
agreements with one or more labor organizations, on the same or other related
construction project(s).
.09 Minority Serving Institutions (MSIs) Initiative
Pursuant to Eos13256, 13230, and 13270, DOC is strongly committed to broadening the
participation of MSIs in its financial assistance programs. DOC's goals include
achieving full participation of MSIs in order to advance the development of human
potential, strengthen the Nation's capacity to provide high quality education, and increase
opportunities for MSIs to participate in and benefit from Federal financial assistance
26
programs. DOC encourages all applicants and recipients to include meaningful
participation of MSIs. Institutions eligible to be considered MSIs are listed on the
Department of Education website.
.10 Research Misconduct
Scientific or research misconduct refers to the fabrication, falsification, or plagiarism in
proposing, performing, or reviewing research, or in reporting research results. It does not
include honest errors or differences of opinion. The recipient organization has the
primary responsibility to investigate allegations and provide reports to the Federal
Government. Funds expended on an activity that is determined to be invalid or unreliable
because of scientific misconduct may result in a disallowance of costs for which the
institution may be liable for repayment to the awarding agency. The Office of Science
and Technology Policy at the White House published in the Federal Register on
December 6, 2000, a final policy that addressed research misconduct. The policy was
developed by the National Science and Technology Council (65 FR 76260). The DOC
requires that any allegation be submitted to the Grants Officer, who will also notify the
OIG of such allegation. Generally, the recipient organization shall investigate the
allegation and submit its findings to the Grants Officer. The DOC may accept the
recipient's findings or proceed with its own investigation. The Grants Officer shall
inform the recipient of the DOC's final determination.
.11 Publications, Videos and Acknowledgement of Sponsorship
Publication of the results or findings of a research project in appropriate professional
journals and production of video or other media is encouraged as an important method of
recording and reporting scientific information. It is also a constructive means to expand
access to federally funded research. The recipient is required to submit a copy to the
funding agency and when releasing information related to a funded project include a
statement that the project or effort undertaken was or is sponsored by DOC. The
recipient is also responsible for assuring that every publication of material (including
Internet sites and videos) based on or developed under an award, except scientific articles
or papers appearing in scientific, technical or professional journals, contains the
following disclaimer: "This [report/video] was prepared by [recipient name] under award
[number] from [name of operating unit], U.S. Department of Commerce. The statements,
findings, conclusions, and recommendations are those of the author(s) and do not
necessarily reflect the views of the [name of operating unit] or the U.S. Department of
Commerce." This also applies to videos produced under DOC financial assistance
awards.
.12 Care and Use of Live Vertebrate Animals
Recipients must comply with the Laboratory Animal Welfare Act of 1966 (Public Law
27
89 -544), as amended, (7 U.S.C. 2131 et seq.) (animal acquisition, transport, care,
handling, and use in projects), and implementing regulations, 9 CFR Parts 1, 2, and 3; the
Endangered Species Act (16 U.S.C. 1531 et seq.); Marine Mammal Protection Act (16
U.S.C. 1361 et seq.) (taking possession, transport, purchase, sale, export or import of
wildlife and plants); The Nonindigenous Aquatic Nuisance Prevention and Control Act
(16 U.S.C. 4701 et seq.) (ensure preventive measures are taken or that probable harm
of using species is minimal if there is an escape or release); and all other applicable
statutes pertaining to the care, handling, and treatment of warm blooded animals held for
research, teaching, or other activities supported by Federal financial assistance. No
research involving vertebrate animals is permitted under any DOC financial assistance
award unless authorized by the Grants Officer.
.13 Homeland Security Presidential Directive —12
If the performance of a grant award requires recipient organization personnel to have
unsupervised physical access to a Federally controlled facility for more than 180 days or
access to a Federal information system, such personnel must undergo the personal
identity verification credential process. In the case of foreign nationals, the DOC will
conduct a check with U.S. Citizenship and Immigration Services' (USCIS) Verification
Division, a component of the Department of Homeland Security (DUS), to ensure the
individual is in a lawful immigration status and that they are eligible for employment
within the US. Any items or services delivered under a financial assistance award shall
comply with the Department of Commerce personal identity verification procedures that
implement Homeland Security Presidential Directive -12, FIPS PUB 201, and OMB
Memorandum M- 05 -24. The recipient shall insert this clause in all subawards or
contracts when the subaward recipient or contractor is required to have physical access to
a Federally controlled facility or access to a Federal information system.
.14 Compliance with Department of Commerce Bureau of Industry and Security
Export Administration Regulations
a. This clause applies to the extent that this financial assistance award involves access to
export- controlled information or technology.
b. In performing this financial assistance award, the recipient may gain access to export-
controlled information or technology. The recipient is responsible for compliance
with all applicable laws and regulations regarding export- controlled information and
technology, including deemed exports. The recipient shall establish and maintain
throughout performance of the financial assistance award effective export compliance
procedures at non -DOC facilities. At a minimum, these export compliance
procedures must include adequate controls of physical, verbal, visual and electronic
access to export controlled information and technology.
28
c. Definitions
1. Deemed Export. The Export Administration Regulations (EAR) define a deemed
export as any release of technology or source code subject to the EAR to a foreign
national, both in the United States and abroad. Such release is "deemed" to be an
export to the home country of the foreign national. 15 CFR 734.2(b)(2)(ii).
2. Export- controlled information and technology. Export- controlled information and
technology subject to the EAR (15 CFR 730 -774), implemented by the DOC
Bureau of Industry and Security, or the International Traffic In Arms Regulations
(ITAR) (22 CFR 120 -130), implemented by the Department of State,
respectively. This includes, but is not limited to, dual -use items, defense articles
and any related assistance, services, software or technical data as defined in the
EAR and ITAR.
d. The recipient shall control access to all export- controlled information and technology
that it possesses or that comes into its possession in performance of this financial
assistance award, to ensure that access is restricted, or licensed, as required by
applicable Federal laws, Executive Orders, and/or regulations.
e. Nothing in the terms of this financial assistance award is intended to change,
supersede, or waive the requirements of applicable Federal laws, Executive Orders or
regulations.
f. The recipient shall include this clause, including this paragraph (f), in all lower tier
transactions (subawards, contracts, and subcontracts) under this financial assistance
award that may involve access to export- controlled information technology.
.15 The Trafficking Victims Protection Act of 2000 (22 U.S.C. 7104(g)), as amended,
and the implementing regulations at 2 CFR Part 175.
This Act authorizes termination of financial assistance provided to a private entity,
without penalty to the Federal Government, if the recipient or subrecipient engages in
certain activities related to trafficking in persons.
.16 The Federal Funding Accountability and Transparency Act of 2006 (Pub. L. No.
109 -282).
This Act requires that the Federal government establish a single searchable awards
website by January 1, 2008 to enable the public to see where Federal funds for grant
and contract awards are being spent. Subaward and subcontract data will be required
on the website by January 1, 2009. Funding data retroactive to October 1, 2006 must
be reported by all Federal agencies and their recipient and subrecipient organizations.
29
Data elements will include:
Name of entity receiving award;
Award amount;
Transaction type, funding agency, Catalog of Federal Domestic Assistance
Number, and descriptive award title;
Location of: entity, primary location of performance
(City/State /Congressional District/Country; and
Unique identifier of entity.
The data will be required within 30 days of an award. The DOC will be implementing
this Act, which will require recipients and subrecipients to report the required data.
30
v
OMB CIRCULAR A -122
TO THE HEADS OF EXECUTIVE DEPARTMENTS AND ESTABLISHMENTS
SUBJECT: Cost Principles for Non Profit Organizations
3. Applicability.
CIRCULAR NO. A -122
Revised May 10, 2004
1. Purpose. This Circular establishes principles for determining costs of
grants, contracts and other agreements with non profit organizations. It does
not apply to colleges and universities which are covered by Office of Management
and Budget (OMB) Circular A -21, "Cost Principles for Educational Institutions
State, local, and federally- recognized Indian tribal governments which are
covered by OMB Circular A -87, "Cost Principles for State, Local, and Indian
Tribal Governments or hospitals. The principles are designed to provide that
the Federal Government bear its fair share of costs except where restricted or
prohibited by law. The principles do not attempt to prescribe the extent of
cost sharing or matching on grants, contracts, or other agreements. However,
such cost sharing or matching shall not be accomplished through arbitrary
limitations on individual cost elements by Federal agencies. Provision for
profit or other increment above cost is outside the scope of this Circular.
2. Supersession. This Circular supersedes cost principles issued by individual
agencies for non profit organizations.
a. These principles shall be used by all Federal agencies in determining
the costs of work performed by non profit organizations under grants,
cooperative agreements, cost reimbursement contracts, and other contracts in
which costs are used in pricing, administration, or settlement. All of these
instruments are hereafter referred to as awards. The principles do not apply to
awards under which an organization is not required to account to the Federal
Government for actual costs incurred.
b. All cost reimbursement subawards (subgrants, subcontracts, etc.) are
subject to those Federal cost principles applicable to the particular
organization concerned. Thus, if a subaward is to a non profit organization,
this Circular shall apply; if a subaward is to a commercial organization, the
cost principles applicable to commercial concerns shall apply; if a subaward is
to a college or university, Circular A -21 shall apply; if a subaward is to a
State, local, or federally- recognized Indian tribal government, Circular A -87
shall apply.
1
4. Definitions.
a. Non profit organization means any corporation, trust, association,
cooperative, or other organization which:
(1) is operated primarily for scientific, educational, service,
charitable, or similar purposes in the public interest;
(2) is not organized primarily for profit; and
(3) uses its net proceeds to maintain, improve, and /or expand its
operations. For this purpose, the term "non- profit organization" excludes (i)
colleges and universities; (ii) hospitals; (iii) State, local, and federally
recognized Indian tribal governments; and (iv) those
non profit organizations which are excluded from coverage of this Circular in
accordance with paragraph 5.
b. Prior approval means securing the awarding agency's permission in
advance to incur cost for those items that are designated as requiring prior
approval by the Circular. Generally this permission will be in writing. Where
an item of cost requiring prior approval is specified in the budget of an award,
approval of the budget constitutes approval of that cost.
5. Exclusion of some non profit organizations. Some non profit organizations,
because of their size and nature of operations, can be considered to be similar
to commercial concerns for purpose of applicability of cost principles. Such
non profit organizations shall operate under Federal cost principles applicable
to commercial concerns. A listing of these organizations is contained in
Attachment C. Other organizations may be added from time to time.
6. Responsibilities. Agencies responsible for administering programs that
involve awards to non profit organizations shall implement the provisions of
this Circular. Upon request, implementing instruction shall be furnished to
OMB. Agencies shall designate a liaison official to serve as the agency
representative on matters relating to the implementation of this Circular. The
name and title of such representative shall be furnished to OMB within 30 days
of the date of this Circular.
7. Attachments. The principles and related policy guides are set forth in the
following Attachments:
Attachment A General Principles
Attachment B Selected Items of Cost
Attachment C Non Profit Organizations Not Subject To This Circular
8. Requests for exceptions. OMB may grant exceptions to the requirements of
this Circular when permissible under existing law. However, in the interest of
achieving maximum uniformity, exceptions will be permitted only in highly
unusual circumstances.
9. Effective Date. The provisions of this Circular are effective immediately.
Implementation shall be phased in by incorporating the provisions into new
awards made after the start of the organization's next fiscal year. For
existing awards, the new principles may be applied if an organization and the
cognizant Federal agency agree. Earlier implementation, or a delay in
implementation of individual provisions, is also permitted by mutual agreement
between an organization and the cognizant Federal agency.
10. Inquiries. Further information concerning this Circular may be obtained by
contacting the Office of Federal Financial Management, OMB, Washington, DC
20503, telephone (202) 395 -3993.
Attachments
3
ATTACHMENT A
Circular No. A -122
GENERAL PRINCIPLES
Table of Contents
A. Basic Considerations
1. Composition of total costs
2. Factors affecting allowability of costs
3. Reasonable costs
4. Allocable costs
5. Applicable credits
6. Advance understandings
7. Conditional exemptions
B. Direct Costs
C. Indirect Costs
D. Allocation of Indirect Costs and Determination of Indirect Cost Rates
1. General
2. Simplified allocation method
3. Multiple allocation base method
4. Direct allocation method
5. Special indirect cost rates
4
E. Negotiation and Approval of Indirect Cost Rates
1. Definitions
2. Negotiation and approval of rates
GENERAL PRINCIPLES
A. Basic Considerations
ATTACHMENT A
Circular No. A -122
1. Composition of total costs. The total cost of an award is the sum of
the allowable direct and allocable indirect costs less any applicable credits.
2. Factors affecting allowability of costs. To be allowable under an
award, costs must meet the following general criteria:
a. Be reasonable for the performance of the award and be allocable
thereto under these principles.
b. Conform to any limitations or exclusions set forth in these
principles or in the award as to types or amount of cost items.
c. Be consistent with policies and procedures that apply uniformly
to both federally- financed and other activities of the organization.
d. Be accorded consistent treatment.
e. Be determined in accordance with generally accepted accounting
principles (GAAP).
f. Not be included as a cost or used to meet cost sharing or
matching requirements of any other federally- financed program in either the
current or a prior period.
g. Be adequately documented.
3. Reasonable costs. A cost is reasonable if, in its nature or amount,
it does not exceed that which would be incurred by a prudent person under the
circumstances prevailing at the time the decision was made to incur the costs.
The question of the reasonableness of specific costs must be scrutinized with
particular care in connection with organizations or separate divisions thereof
which receive the preponderance of their support from awards made by Federal
agencies. In determining the reasonableness of a given cost, consideration
shall be given to:
a. Whether the cost is of a type generally recognized as ordinary
and necessary for the operation of the organization or the performance of the
award.
6
b. The restraints or requirements imposed by such factors as
generally accepted sound business practices, arms length bargaining, Federal and
State laws and regulations, and terms and conditions of the award.
c. Whether the individuals concerned acted with prudence in the
circumstances, considering their responsibilities to the organization, its
members, employees, and clients, the public at large, and the Federal
Government.
d. Significant deviations from the established practices of the
organization which may unjustifiably increase the award costs.
4. Allocable costs.
a. A cost is allocable to a particular cost objective, such as a
grant, contract, project, service, or other activity, in accordance with the
relative benefits received. A cost is allocable to a Federal award if it is
treated consistently with other costs incurred for the same purpose in like
circumstances and if it:
(1) Is incurred specifically for the award.
(2) Benefits both the award and other work and can be
distributed in reasonable proportion to the benefits received, or
(3) Is necessary to the overall operation of the organization,
although a direct relationship to any particular cost objective cannot be shown.
b. Any cost allocable to a particular award or other cost objective
under these principles may not be shifted to other Federal awards to overcome
funding deficiencies, or to avoid restrictions imposed by law or by the terms of
the award.
5. Applicable credits.
a. The term applicable credits refers to those receipts, or
reduction of expenditures which operate to offset or reduce expense items that
are allocable to awards as direct or indirect costs. Typical examples of such
transactions are: purchase discounts, rebates or allowances, recoveries or
indemnities on losses, insurance refunds, and adjustments of overpayments or
erroneous charges. To the extent that such credits accruing or received by the
organization relate to allowable cost, they shall be credited to the Federal
Government either as a cost reduction or cash refund, as appropriate.
b. In some instances, the amounts received from the Federal
Government to finance organizational activities or service operations should be
treated as applicable credits. Specifically, the concept of netting such credit
items against related expenditures should be applied by the organization in
determining the rates or amounts to be charged to Federal awards for services
rendered whenever the facilities or other resources used in providing such
services have been financed directly, in whole or in part, by Federal funds.
c. For rules covering program income (i.e., gross income earned
from federally- supported activities) see Sec. _.24 of Office of Management and
Budget (OMB) Circular A -110, "Uniform Administrative Requirements for Grants and
Agreements with Institutions of Higher Education, Hospitals, and Other Non
Profit Organizations."
7
6. Advance understandings. Under any given award, the reasonableness and
allocability of certain items of costs may be difficult to determine. This is
particularly true in connection with organizations that receive a preponderance
of their support from Federal agencies. In order to avoid subsequent
disallowance or dispute based on unreasonableness or nonallocability, it is
often desirable to seek a written agreement with the cognizant or awarding
agency in advance of the incurrence of special or unusual costs. The absence of
an advance agreement on any element of cost will not, in itself, affect the
reasonableness or allocability of that element.
7. Conditional exemptions.
a. OMB authorizes conditional exemption from OMB administrative
requirements and cost principles circulars for certain Federal programs with
statutorily- authorized consolidated planning and consolidated administrative
funding, that are identified by a Federal agency and approved by the head of
the Executive department or establishment. A Federal agency shall consult with
OMB during its consideration of whether to grant such an exemption.
b. To promote efficiency in State and local program administration,
when Federal non entitlement programs with common purposes have specific
statutorily- authorized consolidated planning and consolidated administrative
funding and where most of the State agency's resources come from non Federal
sources, Federal agencies may exempt these covered State administered, non
entitlement grant programs from certain OMB grants management requirements. The
exemptions would be from all but the allocability of costs provisions of OMB
Circulars A -87 (Attachment A, subsection C.3), "Cost Principles for State,
Local, and Indian Tribal Governments," A -21 (Section C, subpart 4), "Cost
Principles for Educational Institutions," and A -122 (Attachment A, subsection
A.4), "Cost Principles for Non Profit Organizations," and from all of the
administrative requirements provisions of OMB Circular A -110, "Uniform
Administrative Requirements for Grants and Agreements with Institutions of
Higher Education, Hospitals, and Other Non Profit Organizations," and the
agencies' grants management common rule.
c. When a Federal agency provides this flexibility, as a
prerequisite to a State's exercising this option, a State must adopt its own
written fiscal and administrative requirements for expending and accounting for
all funds, which are consistent with the provisions of OMB Circular A -87, and
extend such policies to all subrecipients. These fiscal and administrative
requirements must be sufficiently specific to ensure that: funds are used in
compliance with all applicable Federal statutory and regulatory provisions,
costs are reasonable and necessary for operating these programs, and funds are
not be used for general expenses required to carry out other responsibilities of
a State or its subrecipients.
B. Direct Costs
1. Direct costs are those that can be identified specifically with a
particular final cost objective, i.e., a particular award, project, service, or
other direct activity of an organization. However, a cost may not be assigned
to an award as a direct cost if any other cost incurred for the same purpose, in
like circumstance, has been allocated to an award as an indirect cost. Costs
identified specifically with awards are direct costs of the awards and are to be
assigned directly thereto. Costs identified specifically with other final cost
8
objectives of the organization are direct costs of those cost objectives and are
not to be assigned to other awards directly or indirectly.
2. Any direct cost of a minor amount may be treated as an indirect cost
for reasons of practicality where the accounting treatment for such cost is
consistently applied to all final cost objectives.
3. The cost of certain activities are not allowable as charges to Federal
awards (see, for example, fundraising costs in paragraph 17 of Attachment B).
However, even though these costs are unallowable for purposes of computing
charges to Federal awards, they nonetheless must be treated as direct costs for
purposes of determining indirect cost rates and be allocated their share of the
organization's indirect costs if they represent activities which (1) include the
salaries of personnel, (2) occupy space, and (3) benefit from the organization's
indirect costs.
4. The costs of activities performed primarily as a service to members,
clients, or the general public when significant and necessary to the
organization's mission must be treated as direct costs whether or not allowable
and be allocated an equitable share of indirect costs. Some examples of these
types of activities include:
a. Maintenance of membership rolls, subscriptions, publications,
and related functions.
b. Providing services and information to members, legislative or
administrative bodies, or the public.
C. Indirect Costs
c. Promotion, lobbying, and other forms of public relations.
d. Meetings and conferences except those held to conduct the
general administration of the organization.
e. Maintenance, protection, and investment of special funds not
used in operation of the organization.
f. Administration of group benefits on behalf of members or
clients, including life and hospital insurance, annuity or retirement plans,
financial aid, etc.
1. Indirect costs are those that have been incurred for common or joint
objectives and cannot be readily identified with a particular final cost
objective. Direct cost of minor amounts may be treated as indirect costs under
the conditions described in subparagraph B.2. After direct costs have been
determined and assigned directly to awards or other work as appropriate,
indirect costs are those remaining to be allocated to benefiting cost
objectives. A cost may not be allocated to an award as an indirect cost if any
other cost incurred for the same purpose, in like circumstances, has been
assigned to an award as a direct cost.
2. Because of the diverse characteristics and accounting practices of
non profit organizations, it is not possible to specify the types of cost which
may be classified as indirect cost in all situations. However, typical examples
of indirect cost for many non profit organizations may include depreciation or
9
use allowances on buildings and equipment, the costs of operating and
maintaining facilities, and general administration and general expenses, such as
the salaries and expenses of executive officers, personnel administration, and
accounting.
3. Indirect costs shall be classified within two broad categories:
"Facilities" and "Administration." "Facilities" is defined as depreciation and
use allowances on buildings, equipment and capital improvement, interest on debt
associated with certain buildings, equipment and capital improvements, and
operations and maintenance expenses. "Administration" is defined as general
administration and general expenses such as the director's office, accounting,
personnel, library expenses and all other types of expenditures not listed
specifically under one of the subcategories of "Facilities" (including cross
allocations from other pools, where applicable). See indirect cost rate
reporting requirements in subparagraphs D.2.e and D.3.g.
D. Allocation of Indirect Costs and Determination of Indirect Cost Rates
1. General.
a. Where a non profit organization has only one major function, or
where all its major functions benefit from its indirect costs to approximately
the same degree, the allocation of indirect costs and the computation of an
indirect cost rate may be accomplished through simplified allocation procedures,
as described in subparagraph 2.
b. Where an organization has several major functions which benefit
from its indirect costs in varying degrees, allocation of indirect costs may
require the accumulation of such costs into separate cost groupings which then
are allocated individually to benefiting functions by means of a base which best
measures the relative degree of benefit. The indirect costs allocated to each
function are then distributed to individual awards and other activities included
in that function by means of an indirect cost rate(s).
c. The determination of what constitutes an organization's major
functions will depend on its purpose in being; the types of services it renders
to the public, its clients, and its members; and the amount of effort it devotes
to such activities as fundraising, public information and membership activities.
d. Specific methods for allocating indirect costs and computing
indirect cost rates along with the conditions under which each method should be
used are described in subparagraphs 2 through 5.
e. The base period for the allocation of indirect costs is the
period in which such costs are incurred and accumulated for allocation to work
performed in that period. The base period normally should coincide with the
organization's fiscal year but, in any event, shall be so selected as to avoid
inequities in the allocation of the costs.
2. Simplified allocation method.
a. Where an organization's major functions benefit from its
indirect costs to approximately the same degree, the allocation of indirect
costs may be accomplished by (i) separating the organization's total costs for
the base period as either direct or indirect, and (ii) dividing the total
allowable indirect costs (net of applicable credits) by an equitable
10
distribution base. The result of this process is an indirect cost rate which is
used to distribute indirect costs to individual awards. The rate should be
expressed as the percentage which the total amount of allowable indirect costs
bears to the base selected. This method should also be used where an
organization has only one major function encompassing a number of individual
projects or activities, and may be used where the level of Federal awards to an
organization is relatively small.
b. Both the direct costs and the indirect costs shall exclude
capital expenditures and unallowable costs. However, unallowable costs which
represent activities must be included in the direct costs under the conditions
described in subparagraph B.3.
c. The distribution base may be total direct costs (excluding
capital expenditures and other distorting items, such as major subcontracts or
subgrants), direct salaries and wages, or other base which results in an
equitable distribution. The distribution base shall generally exclude
participant support costs as defined in paragraph 32 of Attachment B.
d. Except where a special rate(s) is required in accordance with
subparagraph 5, the indirect cost rate developed under the above principles is
applicable to all awards at the organization. If a special rate(s) is required,
appropriate modifications shall be made in order to develop the special rate(s).
e. For an organization that receives more than $10 million in
Federal funding of direct costs in a fiscal year, a breakout of the indirect
cost component into two broad categories, Facilities and Administration as
defined in subparagraph C.3, is required. The rate in each case shall be stated
as the percentage which the amount of the particular indirect cost category
(i.e., Facilities or Administration) is of the distribution base identified with
that category.
3. Multiple allocation base method
a. General. Where an organization's indirect costs benefit its
major functions in varying degrees, indirect costs shall be accumulated into
separate cost groupings, as described in subparagraph b. Each grouping shall
then be allocated individually to benefitting functions by means of a base which
best measures the relative benefits. The default allocation bases by cost pool
are described in subparagraph c.
b. Identification of indirect costs. Cost groupings shall be
established so as to permit the allocation of each grouping on the basis of
benefits provided to the major functions. Each grouping shall constitute a pool
of expenses that are of like character in terms of functions they benefit and in
terms of the allocation base which best measures the relative benefits provided
to each function. The groupings are classified within the two broad categories:
"Facilities" and "Administration," as described in subparagraph C.3. The
indirect cost pools are defined as follows:
(1) Depreciation and use allowances. The expenses under this
heading are the portion of the costs of the organization's buildings, capital
improvements to land and buildings, and equipment which are computed in
accordance with paragraph 11 of Attachment B "Depreciation and use
allowances
11
(2) Interest. Interest on debt associated with certain
buildings, equipment and capital improvements are computed in accordance with
paragraph 23 of Attachment B "Interest
(3) Operation and maintenance expenses. The expenses under
this heading are those that have been incurred for the administration,
operation, maintenance, preservation, and protection of the organization's
physical plant. They include expenses normally incurred for such items as:
janitorial and utility services; repairs and ordinary or normal alterations of
buildings, furniture and equipment; care of grounds; maintenance and operation
of buildings and other plant facilities; security; earthquake and disaster
preparedness; environmental safety; hazardous waste disposal; property,
liability and other insurance relating to property; space and capital leasing;
facility planning and management; and, central receiving. The operation and
maintenance expenses category shall also include its allocable share of fringe
benefit costs, depreciation and use allowances, and interest costs.
(4) General administration and general expenses. The expenses
under this heading are those that have been incurred for the overall general
executive and administrative offices of the organization and other expenses of a
general nature which do not relate solely to any major function of the
organization. This category shall also include its allocable share of fringe
benefit costs, operation and maintenance expense, depreciation and use
allowances, and interest costs. Examples of this category include central
offices, such as the director's office, the office of finance, business
services, budget and planning, personnel, safety and risk management, general
counsel, management information systems, and library costs.
In developing this cost pool, special care should be exercised to ensure that
costs incurred for the same purpose in like circumstances are treated
consistently as either direct or indirect costs. For example, salaries of
technical staff, project supplies, project publication, telephone toll charges,
computer costs, travel costs, and specialized services costs shall be treated as
direct costs wherever identifiable to a particular program. The salaries and
wages of administrative and pooled clerical staff should normally be treated as
indirect costs. Direct charging of these costs may be appropriate where a major
project or activity explicitly requires and budgets for administrative or
clerical services and other individuals involved can be identified with the
program or activity. Items such as office supplies, postage, local telephone
costs, periodicals and memberships should normally be treated as indirect costs.
c. Allocation bases. Actual conditions shall be taken into account
in selecting the base to be used in allocating the expenses in each grouping to
benefitting functions. The essential consideration in selecting a method or a
base is that it is the one best suited for assigning the pool of costs to cost
objectives in accordance with benefits derived; a traceable cause and effect
relationship; or logic and reason, where neither the cause nor the effect of the
relationship is determinable. When an allocation can be made by assignment of a
cost grouping directly to the function benefited, the allocation shall be made
in that manner. When the expenses in a cost grouping are more general in nature,
the allocation shall be made through the use of a selected base which produces
results that are equitable to both the Federal Government and the organization.
The distribution shall be made in accordance with the bases described herein
unless it can be demonstrated that the use of a different base would result in a
more equitable allocation of the costs, or that a more readily available base
would not increase the costs charged to sponsored awards. The results of
12
special cost studies (such as an engineering utility study) shall not be used to
determine and allocate the indirect costs to sponsored awards.
(1) Depreciation and use allowances. Depreciation and use
allowances expenses shall be allocated in the following manner:
(a) Depreciation or use allowances on buildings used
exclusively in the conduct of a single function, and on capital improvements and
equipment used in such buildings, shall be assigned to that function.
(b) Depreciation or use allowances on buildings used for
more than one function, and on capital improvements and equipment used in such
buildings, shall be allocated to the individual functions performed in each
building on the basis of usable square feet of space, excluding common areas,
such as hallways, stairwells, and restrooms.
(c) Depreciation or use allowances on buildings, capital
improvements and equipment related space (e.g., individual rooms, and
laboratories) used jointly by more than one function (as determined by the users
of the space) shall be treated as follows. The cost of each jointly used unit
of space shall be allocated to the benefitting functions on the basis of:
(i) the employees and other users on a full -time
equivalent (FTE) basis or salaries and wages of those individual functions
benefitting from the use of that space; or
(ii) organization -wide employee FTEs or salaries
and wages applicable to the benefitting functions of the organization.
(d) Depreciation or use allowances on certain capital
improvements to land, such as paved parking areas, fences, sidewalks, and the
like, not included in the cost of buildings, shall be allocated to user
categories on a FTE basis and distributed to major functions in proportion to
the salaries and wages of all employees applicable to the functions.
(2) Interest. Interest costs shall be allocated in the same
manner as the depreciation or use allowances on the buildings, equipment and
capital equipments to which the interest relates.
(3) Operation and maintenance expenses. Operation and
maintenance expenses shall be allocated in the same manner as the depreciation
and use allowances.
(4) General administration and general expenses. General
administration and general expenses shall be allocated to benefitting functions
based on modified total direct costs (MTDC), as described in subparagraph D.3.f.
The expenses included in this category could be grouped first according to major
functions of the organization to which they render services or provide benefits.
The aggregate expenses of each group shall then be allocated to benefitting
functions based on MTDC.
d. Order of distribution.
(1) Indirect cost categories consisting of depreciation and
use allowances, interest, operation and maintenance, and general administration
13
and general expenses shall be allocated in that order to the remaining indirect
cost categories as well as to the major functions of the organization. Other
cost categories could be allocated in the order determined to be most
appropriate by the organization. When cross allocation of costs is made as
provided in subparagraph (2), this order of allocation does not apply.
(2) Normally, an indirect cost category will be considered
closed once it has been allocated to other cost objectives, and costs shall not
be subsequently allocated to it. However, a cross allocation of costs between
two or more indirect costs categories could be used if such allocation will
result in a more equitable allocation of costs. If a cross allocation is used,
an appropriate modification to the composition of the indirect cost categories
is required.
e. Application of indirect cost rate or rates. Except where a
special indirect cost rate(s) is required in accordance with subparagraph D.5,
the separate groupings of indirect costs allocated to each major function shall
be aggregated and treated as a common pool for that function. The costs in the
common pool shall then be distributed to individual awards included in that
function by use of a single indirect cost rate.
f. Distribution basis. Indirect costs shall be distributed to
applicable sponsored awards and other benefitting activities within each major
function on the basis of MTDC. MTDC consists of all salaries and wages, fringe
benefits, materials and supplies, services, travel, and subgrants and
subcontracts up to the first $25,000 of each subgrant or subcontract (regardless
of the period covered by the subgrant or subcontract). Equipment, capital
expenditures, charges for patient care, rental costs and the portion in excess
of $25,000 shall be excluded from MTDC. Participant support costs shall
generally be excluded from MTDC. Other items may only be excluded when the
Federal cost cognizant agency determines that an exclusion is necessary to avoid
a serious inequity in the distribution of indirect costs.
g. Individual Rate Components. An indirect cost rate shall be
determined for each separate indirect cost pool developed. The rate in each
case shall be stated as the percentage which the amount of the particular
indirect cost pool is of the distribution base identified with that pool. Each
indirect cost rate negotiation or determination agreement shall include
development of the rate for each indirect cost pool as well as the overall
indirect cost rate. The indirect cost pools shall be classified within two
broad categories: "Facilities" and "Administration," as described in
subparagraph C.3.
4. Direct allocation method.
a. Some non profit organizations treat all costs as direct costs
except general administration and general expenses. These organizations
generally separate their costs into three basic categories: (1) General
administration and general expenses, (ii) fundraising, and (iii) other direct
functions (including projects performed under Federal awards) Joint costs,
such as depreciation, rental costs, operation and maintenance of facilities,
telephone expenses, and the like are prorated individually as direct costs to
each category and to each award or other activity using a base most appropriate
to the particular cost being prorated.
b. This method is acceptable, provided each point cost is prorated
using a base which accurately measures the benefits provided to each award or
14
other activity. The bases must be established in accordance with reasonable
criteria, and be supported by current data. This method is compatible with the
Standards of Accounting and Financial Reporting for Voluntary Health and Welfare
Organizations issued jointly by the National Health Council, Inc., the National
Assembly of Voluntary Health and Social Welfare Organizations, and the United
Way of America.
c. Under this method, indirect costs consist exclusively of general
administration and general expenses. In all other respects, the organization's
indirect cost rates shall be computed in the same manner as that described in
subparagraph 2.
5. Special indirect cost rates. In some instances, a single indirect
cost rate for all activities of an organization or for each major function of
the organization may not be appropriate, since it would not take into account
those different factors which may substantially affect the indirect costs
applicable to a particular segment of work. For this purpose, a particular
segment of work may be that performed under a single award or it may consist of
work under a group of awards performed in a common environment. These factors
may include the physical location of the work, the level of administrative
support required, the nature of the facilities or other resources employed, the
scientific disciplines or technical skills involved, the organizational
arrangements used, or any combination thereof. When a particular segment of
work is performed in an environment which appears to generate a significantly
different level of indirect costs, provisions should be made for a separate
indirect cost pool applicable to such work. The separate indirect cost pool
should be developed during the course of the regular allocation process, and the
separate indirect cost rate resulting therefrom should be used, provided it is
determined that (i) the rate differs significantly from that which would have
been obtained under subparagraphs 2, 3, and 4, and (ii) the volume of work to
which the rate would apply is material.
E. Negotiation and Approval of Indirect Cost Rates
1. Definitions. As used in this section, the following terms have the
meanings set
forth below:
a. Cognizant agency means the Federal agency responsible for
negotiating and approving indirect cost rates for a non profit organization on
behalf of all Federal agencies.
b. Predetermined rate means an indirect cost rate, applicable to a
specified current or future period, usually the organization's fiscal year. The
rate is based on an estimate of the costs to be incurred during the period. A
predetermined rate is not subject to adjustment.
c. Fixed rate means an indirect cost rate which has the same
characteristics as a predetermined rate, except that the difference between the
estimated costs and the actual costs of the period covered by the rate is
carried forward as an adjustment to the rate computation of a subsequent period.
d. Final rate means an indirect cost rate applicable to a specified
past period which is based on the actual costs of the period. A final rate is
not subject to adjustment.
15
e. Provisional rate or billing rate means a temporary indirect cost
rate applicable to a specified period which is used for funding, interim
reimbursement, and reporting indirect costs on awards pending the establishment
of a final rate for the period.
f. Indirect cost proposal means the documentation prepared by an
organization to substantiate its claim for the reimbursement of indirect costs.
This proposal provides the basis for the review and negotiation leading to the
establishment of an organization's indirect cost rate.
g. Cost objective means a function, organizational subdivision,
contract, grant, or other work unit for which cost data are desired and for
which provision is made to accumulate and measure the cost of processes,
projects, jobs and capitalized projects.
2. Negotiation and approval of rates.
a. Unless different arrangements are agreed to by the agencies
concerned, the Federal agency with the largest dollar value of awards with an
organization will be designated as the cognizant agency for the negotiation and
approval of the indirect cost rates and, where necessary, other rates such as
fringe benefit and computer charge -out rates. Once an agency is assigned
cognizance for a particular non profit organization, the assignment will not be
changed unless there is a major long -term shift in the dollar volume of the
Federal awards to the organization. All concerned Federal agencies shall be
given the opportunity to participate in the negotiation process but, after a
rate has been agreed upon, it will be accepted by all Federal agencies. When a
Federal agency has reason to believe that special operating factors affecting
its awards necessitate special indirect cost rates in accordance with
subparagraph D.5, it will, prior to the time the rates are negotiated, notify
the cognizant agency.
b. A non profit organization which has not previously established
an indirect cost rate with a Federal agency shall submit its initial indirect
cost proposal immediately after the organization is advised that an award will
be made and, in no event, later than three months after the effective date of
the award.
c. Organizations that have previously established indirect cost
rates must submit a new indirect cost proposal to the cognizant agency within
six months after the close of each fiscal year.
d. A predetermined rate may be negotiated for use on awards where
there is reasonable assurance, based on past experience and reliable projection
of the organization's costs, that the rate is not likely to exceed a rate based
on the organization's actual costs.
e. Fixed rates may be negotiated where predetermined rates are not
considered appropriate. A fixed rate, however, shall not be negotiated if (i)
all or a substantial portion of the organization's awards are expected to expire
before the carry- forward adjustment can be made; (ii) the mix of Federal and
non Federal work at the organization is too erratic to permit an equitable
carry- forward adjustment; or (iii) the organization's operations fluctuate
significantly from year to year.
f. Provisional and final rates shall be negotiated where neither
predetermined nor fixed rates are appropriate.
16
g. The results of each negotiation shall be formalized in a written
agreement between the cognizant agency and the non profit organization. The
cognizant agency shall distribute copies of the agreement to all concerned
Federal agencies.
h. If a dispute arises in a negotiation of an indirect cost rate
between the cognizant agency and the non profit organization, the dispute shall
be resolved in accordance with the appeals procedures of the cognizant agency.
i. To the extent that problems are encountered among the Federal
agencies in connection with the negotiation and approval process, OMB will lend
assistance as required to resolve such problems in a timely manner.
17
SELECTED ITEMS OF COST
Table of Contents
1. Advertising and public relations costs
2. Advisory councils
3. Alcoholic beverages
4. Audit costs and related services
5. Bad debts
6. Bonding costs
7. Communication costs
8 Compensation for personal services
9. Contingency provisions
10. Defense and prosecution of criminal and civil proceedings, claims, appeals
and patent infringement
11. Depreciation and use allowances
12. Donations and contributions
13. Employee morale, health, and welfare costs
14. Entertainment costs
15. Equipment and other capital expenditures
16. Fines and penalties
17. Fund raising and investment management costs
18. Gains and losses on depreciable assets
19. Goods or services for personal use
20. Housing and personal living expenses
21. Idle facilities and idle capacity
22. Insurance and indemnification
23. Interest
24. Labor relations costs
25. Lobbying
26. Losses on other sponsored agreements or contracts
27. Maintenance and repair costs
28. Materials and supplies costs
29. Meetings and conferences
30. Memberships, subscriptions, and professional activity costs
31. Organization costs
32. Page charges in professional Journals
33. Participant support costs
34. Patent costs
35. Plant and homeland security costs
36. Pre agreement costs
37. Professional services costs
38. Publication and printing costs
39. Rearrangement and alteration costs
40. Reconversion costs
41. Recruiting costs
42. Relocation costs
43. Rental costs of buildings and equipment
44. Royalties and other costs for use of patents and copyrights
45. Selling and marketing
46. Specialized service facilities
47. Taxes
48. Termination costs applicable to sponsored agreements
18
ATTACHMENT B
Circular No. A -122
49. Training costs
50. Transportation costs
51. Travel costs
52. Trustees
19
SELECTED ITEMS OF COST
1. Advertising and public relations costs.
ATTACHMENT B
Circular No. A -122
Paragraphs 1 through 53 provide principles to be applied in establishing the
allowability of certain items of cost. These principles apply whether a cost is
treated as direct or indirect. Failure to mention a particular item of cost is
not intended to imply that it is unallowable; rather, determination as to
allowability in each case should be based on the treatment or principles
provided for similar or related items of cost.
a. The term advertising costs means the costs of advertising media and
corollary administrative costs. Advertising media include magazines,
newspapers, radio and television, direct mail, exhibits, electronic or computer
transmittals, and the like.
b. The term public relations includes community relations and means those
activities dedicated to maintaining the image of the non profit organization or
maintaining or promoting understanding and favorable relations with the
community or public at large or any segment of the public.
c. The only allowable advertising costs are those which are solely for:
(1) The recruitment of personnel required for the performance by the
non profit organization of obligations arising under a Federal award (See also
Attachment B, paragraph 41, Recruiting costs, and paragraph 42, Relocation
costs);
(2) The procurement of goods and services for the performance of a
Federal award;
(3) The disposal of scrap or surplus materials acquired in the
performance of a Federal award except when non profit organizations are
reimbursed for disposal costs at a predetermined amount; or
(4) Other specific purposes necessary to meet the requirements of
the Federal award.
d. The only allowable public relations costs are:
(1) Costs specifically required by the Federal award;
(2) Costs of communicating with the public and press pertaining to
specific activities or accomplishments which result from performance of Federal
awards (these costs are considered necessary as part of the outreach effort for
the Federal award); or
(3) Costs of conducting general liaison with news media and
government public relations officers, to the extent that such activities are
limited to communication and liaison necessary keep the public informed on
matters of public concern, such as notices of Federal contract /grant awards,
financial matters, etc.
20
e. Costs identified in subparagraphs c and d if incurred for more than
one Federal award or for both sponsored work and other work of the non profit
organization, are allowable to the extent that the principles in Attachment A,
paragraphs B. "Direct Costs and C. "Indirect Costs are observed.
f. Unallowable advertising and public relations costs include the
following:
(1) All advertising and public relations costs other than as
specified in subparagraphs c, d, and e;
(2) Costs of meetings, conventions, convocations, or other events
related to other activities of the non profit organization, including:
(a) Costs of displays, demonstrations, and exhibits;
(b) Costs of meeting rooms, hospitality suites, and other
special facilities used in conjunction with shows and other special events; and
(c) Salaries and wages of employees engaged in setting up and
displaying exhibits, making demonstrations, and providing briefings;
(3) Costs of promotional items and memorabilia, including models,
gifts, and souvenirs;
(4) Costs of advertising and public relations designed solely to
promote the non profit organization.
2. Advisory Councils
Costs incurred by advisory councils or committees are allowable as a direct cost
where authorized by the Federal awarding agency or as an indirect cost where
allocable to Federal awards.
3. Alcoholic beverages. Costs of alcoholic beverages are unallowable.
4. Audit costs and related services
a The costs of audits required by and performed in accordance with, the
Single Audit Act, as implemented by Circular A -133, "Audits of States, Local
Governments, and Non Profit Organizations" are allowable. Also see 31 USC
7505(b) and section 230 "Audit Costs of Circular A -133.
b. Other audit costs are allowable if included in an indirect cost rate
proposal, or if specifically approved by the awarding agency as a direct cost to
an award.
c. The cost of agreed -upon procedures engagements to monitor subrecipients who
are exempted from A -133 under section 200(d) are allowable, subject to the
conditions listed in A -133, section 230 (b)(2).
21
5. Bad debts. Bad debts, including losses (whether actual or estimated)
arising from uncollectable accounts and other claims, related collection costs,
and related legal costs, are unallowable.
6. Bonding costs.
a. Bonding costs arise when the Federal Government requires assurance
against financial loss to itself or others by reason of the act or default of
the non profit organization. They arise also in instances where the non profit
organization requires similar assurance. Included are such bonds as bid,
performance, payment, advance payment, infringement, and fidelity bonds.
b. Costs of bonding required pursuant to the terms of the award are
allowable.
c. Costs of bonding required by the non profit organization in the
general conduct of its operations are allowable to the extent that such bonding
is in accordance with sound business practice and the rates and premiums are
reasonable under the circumstances.
7. Communication costs. Costs incurred for telephone services, local and long
distance telephone calls, telegrams, postage, messenger, electronic or computer
transmittal services and the like are allowable.
8. Compensation for personal services.
a. Definition. Compensation for personal services includes all
compensation paid currently or accrued by the organization for services of
employees rendered during the period of the award (except as otherwise provided
in subparagraph h). It includes, but is not limited to, salaries, wages,
director's and executive committee member's fees, incentive awards, fringe
benefits, pension plan costs, allowances for off -site pay, incentive pay,
location allowances, hardship pay, and cost of living differentials.
b. Allowability. Except as otherwise specifically provided in this
paragraph, the costs of such compensation are allowable to the extent that:
(1) Total compensation to individual employees is reasonable for the
services rendered and conforms to the established policy of the organization
consistently applied to both Federal and non Federal activities; and
(2) Charges to awards whether treated as direct or indirect costs
are determined and supported as required in this paragraph.
c. Reasonableness.
(1) When the organization is predominantly engaged in activities
other than those sponsored by the Federal Government, compensation for employees
on federally- sponsored work will be considered reasonable to the extent that it
is consistent with that paid for similar work in the organization's other
activities.
(2) When the organization is predominantly engaged in federally
sponsored activities and in cases where the kind of employees required for the
Federal activities are not found in the organization's other activities,
22
compensation for employees on federally- sponsored work will be considered
reasonable to the extent that it is comparable to that paid for similar work in
the labor markets in which the organization competes for the kind of employees
involved.
d. Special considerations in determining allowability. Certain
conditions require special consideration and possible limitations in determining
costs under Federal awards where amounts or types of compensation appear
unreasonable. Among such conditions are the following:
(1) Compensation to members of non profit organizations, trustees,
directors, associates, officers, or the immediate families thereof.
Determination should be made that such compensation is reasonable for the actual
personal services rendered rather than a distribution of earnings in excess of
costs.
(2) Any change in an organization's compensation policy resulting in
a substantial increase in the organization's level of compensation, particularly
when it was concurrent with an increase in the ratio of Federal awards to other
activities of the organization or any change in the treatment of allowability of
specific types of compensation due to changes in Federal policy.
e. Unallowable costs. Costs which are unallowable under other paragraphs
of this Attachment shall not be allowable under this paragraph solely on the
basis that they constitute personal compensation.
f. Overtime, extra -pay shift, and multi -shift premiums. Premiums for
overtime, extra -pay shifts, and multi -shift work are allowable only with the
prior approval of the awarding agency except:
(1) When necessary to cope with emergencies, such as those resulting
from accidents, natural disasters, breakdowns of equipment, or occasional
operational bottlenecks of a sporadic nature.
(2) When employees are performing indirect functions, such as
administration, maintenance, or accounting.
(3) In the performance of tests, laboratory procedures, or other
similar operations which are continuous in nature and cannot reasonably be
interrupted or otherwise completed.
g
(4) When lower overall cost to the Federal Government will result.
Fringe benefits.
(1) Fringe benefits in the form of regular compensation paid to
employees during periods of authorized absences from the job, such as vacation
leave, sick leave, military leave, and the like, are allowable, provided such
costs are absorbed by all organization activities in proportion to the relative
amount of time or effort actually devoted to each.
(2) Fringe benefits in the form of employer contributions or
expenses for social security, employee insurance, workmen's compensation
insurance, pension plan costs (see subparagraph h), and the like, are allowable,
provided such benefits are granted in accordance with established written
organization policies. Such benefits whether treated as indirect costs or as
direct costs, shall be distributed to particular awards and other activities in
23
a manner consistent with the pattern of benefits accruing to the individuals or
group of employees whose salaries and wages are chargeable to such awards and
other activities.
(3) (a) Provisions for a reserve under a self- insurance program
for unemployment compensation or workers' compensation are allowable to the
extent that the provisions represent reasonable estimates of the liabilities for
such compensation, and the types of coverage, extent of coverage, and rates and
premiums would have been allowable had insurance been purchased to cover the
risks. However, provisions for self- insured liabilities which do not become
payable for more than one year after the provision is made shall not exceed the
present value of the liability.
(b) Where an organization follows a consistent policy of
expensing actual payments to, or on behalf of, employees or former employees for
unemployment compensation or workers' compensation, such payments are allowable
in the year of payment with the prior approval of the awarding agency, provided
they are allocated to all activities of the organization.
(4) Costs of insurance on the lives of trustees, officers, or other
employees holding positions of similar responsibility are allowable only to the
extent that the insurance represents additional compensation. The costs of such
insurance when the organization is named as beneficiary are unallowable.
h. Organization- furnished automobiles. That portion of the cost of
organization- furnished automobiles that relates to personal use by employees
(including transportation to and from work) is unallowable as fringe benefit or
indirect costs regardless of whether the cost is reported as taxable income to
the employees. These costs are allowable as direct costs to sponsored award
when necessary for the performance of the sponsored award and approved by
awarding agencies.
1. Pension plan costs.
(1) Costs of the organization's pension plan which are incurred in
accordance with the established policies of the organization are allowable,
provided:
(a) Such policies meet the test of reasonableness;
(b) The methods of cost allocation are not discriminatory;
(c) The cost assigned to each fiscal year is determined in
accordance with generally accepted accounting principles (GAAP), as prescribed
in Accounting Principles Board Opinion No. 8 issued by the American Institute of
Certified Public Accountants; and
(d) The costs assigned to a given fiscal year are funded for
all plan participants within six months after the end of that year. However,
increases to normal and past service pension costs caused by a delay in funding
the actuarial liability beyond 30 days after each quarter of the year to which
such costs are assignable are unallowable.
(2) Pension plan termination insurance premiums paid pursuant to the
Employee Retirement Income Security Act (ERISA) of 1974 (Pub. L. 93 -406) are
allowable. Late payment charges on such premiums are unallowable.
24
(3) Excise taxes on accumulated funding deficiencies and other
penalties imposed under ERISA are unallowable.
j. Incentive compensation. Incentive compensation to employees based on
cost reduction, or efficient performance, suggestion awards, safety awards,
etc., are allowable to the extent that the overall compensation is determined to
be reasonable and such costs are paid or accrued pursuant to an agreement
entered into in good faith between the organization and the employees before the
services were rendered, or pursuant to an established plan followed by the
organization so consistently as to imply, in effect, an agreement to make such
payment.
k. Severance pay.
(1) Severance pay, also commonly referred to as dismissal wages, is
a payment in addition to regular salaries and wages, by organizations to workers
whose employment is being terminated. Costs of severance pay are allowable only
to the extent that in each case, it is required by
(a) law,
(b) employer employee agreement,
(c) established policy that constitutes, in effect, an implied
agreement on the organization's part, or
(d) circumstances of the particular employment.
(2) Costs of severance payments are divided into two categories as
(a) Actual normal turnover severance payments shall be
allocated to all activities; or, where the organization provides for a reserve
for normal severances, such method will be acceptable if the charge to current
operations is reasonable in light of payments actually made for normal
severances over a representative past period, and if amounts charged are
allocated to all activities of the organization.
follows:
(b) Abnormal or mass severance pay is of such a conjectural
nature that measurement of costs by means of an accrual will not achieve equity
to both parties. Thus, accruals for this purpose are not allowable. However, the
Federal Government recognizes its obligation to participate, to the extent of
its fair share, in any specific payment. Thus, allowability will be considered
on a case -by -case basis in the event or occurrence.
(c) Costs incurred in certain severance pay packages (commonly
known as "a golden parachute" payment) which are in an amount in excess of the
normal severance pay paid by the organization to an employee upon termination of
employment and are paid to the employee contingent upon a change in management
control over, or ownership of, the organization's assets are unallowable.
(d) Severance payments to foreign nationals employed by the
organization outside the United States, to the extent that the amount exceeds
the customary or prevailing practices for the organization in the United States
are unallowable, unless they are necessary for the performance of Federal
programs and approved by awarding agencies.
(e) Severance payments to foreign nationals employed by the
organization outside the United States due to the termination of the foreign
national as a result of the closing of, or curtailment of activities by, the
organization in that country, are unallowable, unless they are necessary for the
performance of Federal programs and approved by awarding agencies.
25
1. Training costs. See paragraph 49.
m. Support of salaries and wages.
(1) Charges to awards for salaries and wages, whether treated as
direct costs or indirect costs, will be based on documented payrolls approved by
a responsible official(s) of the organization. The distribution of salaries and
wages to awards must be supported by personnel activity reports, as prescribed
in subparagraph (2), except when a substitute system has been approved in
writing by the cognizant agency. (See subparagraph E.2 of Attachment A.)
(2) Reports reflecting the distribution of activity of each employee
must be maintained for all staff members (professionals and nonprofessionals)
whose compensation is charged, in whole or in part, directly to awards. In
addition, in order to support the allocation of indirect costs, such reports
must also be maintained for other employees whose work involves two or more
functions or activities if a distribution of their compensation between such
functions or activities is needed in the determination of the organization's
indirect cost rate(s) (e.g., an employee engaged part -time in indirect cost
activities and part -time in a direct function). Reports maintained by non-
profit organizations to satisfy these requirements must meet the following
standards:
(a) The reports must reflect an after the -fact determination
of the actual activity of each employee. Budget estimates (i.e., estimates
determined before the services are performed) do not qualify as support for
charges to awards.
(b) Each report must account for the total activity for which
employees are compensated and which is required in fulfillment of their
obligations to the organization.
(c) The reports must be signed by the individual employee, or
by a responsible supervisory official having first hand knowledge of the
activities performed by the employee, that the distribution of activity
represents a reasonable estimate of the actual work performed by the employee
during the periods covered by the reports.
(d) The reports must be prepared at least monthly and must
coincide with one or more pay periods.
(3) Charges for the salaries and wages of nonprofessional employees,
in addition to the supporting documentation described in subparagraphs (1) and
(2), must also be supported by records indicating the total number of hours
worked each day maintained in conformance with Department of Labor regulations
implementing the Fair Labor Standards Act (FLSA) (29 CFR Part 516). For this
purpose, the term "nonprofessional employee" shall have the same meaning as
"nonexempt employee," under FLSA.
(4) Salaries and wages of employees used in meeting cost sharing or
matching requirements on awards must be supported in the same manner as salaries
and wages claimed for reimbursement from awarding agencies.
9. Contingency provisions. Contributions to a contingency reserve or any
similar provision made for events the occurrence of which cannot be foretold
26
with certainty as to time, intensity, or with an assurance of their happening,
are unallowable.
The term "contingency reserve" excludes self- insurance reserves (see Attachment B,
paragraphs 8.g. (3) and 22.a(2)(d)); pension funds (see paragraph 8.i): and reserves
for normal severance pay (see paragraph 8.k.)
10. Defense and prosecution of criminal and civil proceedings, claims, appeals
and patent infringement.
a. Definitions.
(1) Conviction, as used herein, means a judgment or a conviction of
a criminal offense by any court of competent jurisdiction, whether entered upon
as a verdict or a plea, including a conviction due to a plea of nolo contendere.
(2) Costs include, but are not limited to, administrative and
clerical expenses; the cost of legal services, whether performed by in -house or
private counsel; and the costs of the services of accountants, consultants, or
others retained by the organization to assist it; costs of employees, officers
and trustees, and any similar costs incurred before, during, and after
commencement of a judicial or administrative proceeding that bears a direct
relationship to the proceedings.
(3) Fraud, as used herein, means (i) acts of fraud corruption or
attempts to defraud the Federal Government or to corrupt its agents, (ii) acts
that constitute a cause for debarment or suspension (as specified in agency
regulations), and (iii) acts which violate the False Claims Act, 31 U.S.C.,
sections 3729 -3731, or the Anti Kickback Act, 41 U.S.C., sections 51 and 54.
(4) Penalty does not include restitution, reimbursement, or
compensatory damages.
(5) Proceeding includes an investigation.
b. (1) Except as otherwise described herein, costs incurred in
connection with any criminal, civil or administrative proceeding (including
filing of a false certification) commenced by the Federal Government, or a
State, local or foreign government, are not allowable if the proceeding: (1)
relates to a violation of, or failure to comply with, a Federal, State, local or
foreign statute or regulation by the organization (including its agents and
employees), and (2) results in any of the following dispositions:
(a) In a criminal proceeding, a conviction.
(b) In a civil or administrative proceeding involving an
allegation of fraud or similar misconduct, a determination of organizational
liability.
(c) In the case of any civil or administrative proceeding, the
imposition of a monetary penalty.
(d) A final decision by an appropriate Federal official to
debar or suspend the organization, to rescind or void an award, or to terminate
27
an award for default by reason of a violation or failure to comply with a law or
regulation.
(e) A disposition by consent or compromise, if the action
could have resulted in any of the dispositions described in (a), (b), (c) or
(d)
(2) If more than one proceeding involves the same alleged
misconduct, the costs of all such proceedings shall be unallowable if any one of
them results in one of the dispositions shown in subparagraph b.(1).
c. If a proceeding referred to in subparagraph b is commenced by the
Federal Government and is resolved by consent or compromise pursuant to an
agreement entered into by the organization and the Federal Government, then the
costs incurred by the organization in connection with such proceedings that are
otherwise not allowable under subparagraph b may be allowed to the extent
specifically provided in such agreement.
d. If a proceeding referred to in subparagraph b is commenced by a State,
local or foreign government, the authorized Federal official may allow the costs
incurred by the organization for such proceedings, if such authorized official
determines that the costs were incurred as a result of (1) a specific term or
condition of a federally- sponsored award, or (2) specific written direction of
an authorized official of the sponsoring agency.
e. Costs incurred in connection with proceedings described in
subparagraph b, but which are not made unallowable by that subparagraph, may be
allowed by the Federal Government, but only to the extent that:
(1) The costs are reasonable in relation to the activities required
to deal with the proceeding and the underlying cause of action;
(2) Payment of the costs incurred, as allowable and allocable costs,
is not prohibited by any other provision(s) of the sponsored award;
(3) The costs are not otherwise recovered from the Federal
Government or a third party, either directly as a result of the proceeding or
otherwise; and,
(4) The percentage of costs allowed does not exceed the percentage
determined by an authorized Federal official to be appropriate, considering the
complexity of the litigation, generally accepted principles governing the award
of legal fees in civil actions involving the United States as a party, and such
other factors as may be appropriate. Such percentage shall not exceed 80
percent. However, if an agreement reached under subparagraph c has explicitly
considered this 80 percent limitation and permitted a higher percentage, then
the full amount of costs resulting from that agreement shall be allowable.
f. Costs incurred by the organization in connection with the defense of
suits brought by its employees or ex- employees under section 2 of the Major
Fraud Act of 1988 (Pub. L. 100 -700), including the cost of all relief necessary
to make such employee whole, where the organization was found liable or settled,
are unallowable.
g. Costs of legal, accounting, and consultant services, and related
costs, incurred in connection with defense against Federal Government claims or
28
appeals, antitrust suits, or the prosecution of claims or appeals against the
Federal Government, are unallowable.
h. Costs of legal, accounting, and consultant services, and related
costs, incurred in connection with patent infringement litigation, are
unallowable unless otherwise provided for in the sponsored awards.
i. Costs which may be unallowable under this paragraph, including
directly associated costs, shall be segregated and accounted for by the
organization separately. During the pendency of any proceeding covered by
subparagraphs b and f, the Federal Government shall generally withhold payment
of such costs. However, if in the best interests of the Federal Government, the
Federal Government may provide for conditional payment upon provision of
adequate security, or other adequate assurance, and agreements by the
organization to repay all unallowable costs, plus interest, if the costs are
subsequently determined to be unallowable.
11. Depreciation and use allowances.
a. Compensation for the use of buildings, other capital improvements, and
equipment on hand may be made through use allowance or depreciation. However,
except as provided in Attachment B, paragraph f, a combination of the two
methods may not be used in connection with a single class of fixed assets (e.g.,
buildings, office equipment, computer equipment, etc.).
b. The computation of use allowances or depreciation shall be based on the
acquisition cost of the assets involved. The acquisition cost of an asset
donated to the non profit organization by a third party shall be its fair market
value at the time of the donation.
c. The computation of use allowances or depreciation will exclude:
(1) The cost of land;
(2) Any portion of the cost of buildings and equipment borne by or
donated by the Federal Government irrespective of where title was originally
vested or where it presently resides; and
(3) Any portion of the cost of buildings and equipment contributed
by or for the non profit organization in satisfaction of a statutory matching
requirement.
d. Where depreciation method is followed, the period of useful service
(useful life) established in each case for usable capital assets must take into
consideration such factors as type of construction, nature of the equipment
used, technological developments in the particular program area, and the renewal
and replacement policies followed for the individual items or classes of assets
involved. The method of depreciation used to assign the cost of an asset (or
group of assets) to accounting periods shall reflect the pattern of consumption
of the asset during its useful life.
In the absence of clear evidence indicating that the expected consumption of the
asset will be significantly greater or lesser in the early portions of its
useful life than in the later portions, the straight -line method shall be
presumed to be the appropriate method.
Depreciation methods once used shall not be changed unless approved in advance
by the cognizant Federal agency. When the depreciation method is introduced for
29
application to assets previously subject to a use allowance, the combination of
use allowances and depreciation applicable to such assets must not exceed the
total acquisition cost of the assets.
e. When the depreciation method is used for buildings, a building's shell
may be segregated from each building component (e.g., plumbing system, heating,
and air conditioning system, etc.) and each item depreciated over its estimated
useful life; or the entire building (i.e., the shell and all components) may be
treated as a single asset and depreciated over a single useful life.
f. When the depreciation method is used for a particular class of assets,
no depreciation may be allowed on any such assets that, under subparagraph d,
would be viewed as fully depreciated. However, a reasonable use allowance may
be negotiated for such assets if warranted after taking into consideration the
amount of depreciation previously charged to the Federal Government, 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 asset for the purpose contemplated.
g. Where the use allowance method is followed, the use allowance for
buildings and improvement (including land improvements, such as paved parking
areas, fences, and sidewalks) will be computed at an annual rate not exceeding
two percent of acquisition cost.
The use allowance for equipment will be computed at an annual rate not exceeding
six and two thirds percent of acquisition cost. When the use allowance method is
used for buildings, the entire building must be treated as a single asset; the
building's components (e.g., plumbing system, heating and air conditioning,
etc.) cannot be segregated from the building's shell.
The two percent limitation, however, need not be applied to equipment which is
merely attached or fastened to the building but not permanently fixed to it and
which is used as furnishings or decorations or for specialized purposes (e.g.,
dentist chairs and dental treatment units, counters, laboratory benches bolted
to the floor, dishwashers, modular furniture, carpeting, etc.). Such equipment
will be considered as not being permanently fixed to the building if it can be
removed without the need for costly or extensive alterations or repairs to the
building or the equipment. Equipment that meets these criteria will be subject
to the 6 2/3 percent equipment use allowance limitation.
h. Charges for use allowances or depreciation must be supported by
adequate property records and physical inventories must be taken at least once
every two years (a statistical sampling basis is acceptable) to ensure that
assets exist and are usable and needed. When the depreciation method is
followed, adequate depreciation records indicating the amount of depreciation
taken each period must also be maintained.
12. Donations and contributions.
a. Contributions or donations rendered. Contributions or donations,
including cash, property, and services, made by the organization, regardless of
the recipient, are unallowable.
b. Donated services received:
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(1) Donated or volunteer services may be furnished to an
organization by professional and technical personnel, consultants, and other
skilled and unskilled labor. The value of these services is not reimbursable
either as a direct or indirect cost. However, the value of donated services may
be used to meet cost sharing or matching requirements in accordance with the
Common Rule.
(2)The value of donated services utilized in the performance of a
direct cost activity shall, when material in amount, be considered in the
determination of the non profit organization's indirect costs or rate(s) and,
accordingly, shall be allocated a proportionate share of applicable indirect
costs when the following exist:
(a) The aggregate value of the services is material;
(b) The services are supported by a significant amount of the
indirect costs incurred by the non profit organization; and
(c) The direct cost activity is not pursued primarily for the
benefit of the Federal Government.
(3) In those instances where there is no basis for determining the
fair market value of the services rendered, the recipient and the cognizant
agency shall negotiate an appropriate allocation of indirect cost to the
services.
(4) Where donated services directly benefit a project supported by
an award, the indirect costs allocated to the services will be considered as a
part of the total costs of the project. Such indirect costs may be reimbursed
under the award or used to meet cost sharing or matching requirements.
(5) The value of the donated services may be used to meet cost
sharing or matching requirements under conditions described in Sec. .23 of
Circular A -110. Where donated services are treated as indirect costs, indirect
cost rates will separate the value of the donations so that reimbursement will
not be made.
c. Donated goods or space.
(1) Donated goods; i.e., expendable personal property /supplies, and
donated use of space may be furnished to a non profit organization. The value of
the goods and space is not reimbursable either as a direct or indirect cost.
(2) The value of the donations may be used to meet cost sharing or
matching share requirements under the conditions described in Circular A -110.
Where donations are treated as indirect costs, indirect cost rates will separate
the value of the donations so that reimbursement will not be made.
13. Employee morale, health, and welfare costs.
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a. The costs of employee information publications, health or first -aid
clinics and /or infirmaries, recreational activities, employee counseling
services, and any other expenses incurred in accordance with the non profit
organization's established practice or custom for the improvement of working
conditions, employer employee relations, employee morale, and employee
performance are allowable.
b. Such costs will be equitably apportioned to all activities of the non-
profit organization. Income generated from any of these activities will be
credited to the cost thereof unless such income has been irrevocably set over to
employee welfare organizations.
14. Entertainment costs. Costs of entertainment, including amusement,
diversion, and social activities and any costs directly associated with such
costs (such as tickets to shows or sports events, meals, lodging, rentals,
transportation, and gratuities) are unallowable.
15. Equipment and other capital expenditures.
a. For purposes of this subparagraph, the following definitions apply:
(1) "Capital Expenditures" means expenditures for the acquisition
cost of capital assets (equipment, buildings, land), or expenditures to make
improvements to capital assets that materially increase their value or useful
life. Acquisition cost means the cost of the asset including the cost to put it
in place. Acquisition cost for equipment, for example, means the net invoice
price of the equipment, including the cost of any modifications, attachments,
accessories, or auxiliary apparatus necessary to make it usable for the purpose
for which it is acquired. Ancillary charges, such as taxes, duty, protective in
transit insurance, freight, and installation may be included in, or excluded
from the acquisition cost in accordance with the non profit organization's
regular accounting practices.
(2) "Equipment" means an article of nonexpendable, tangible personal
property having a useful life of more than one year and an acquisition cost
which equals or exceeds the lesser of the capitalization level established by
the non profit organization for financial statement purposes, or $5000.
(3) "Special purpose equipment" means equipment which is used only
for research, medical, scientific, or other technical activities. Examples of
special purpose equipment include microscopes, x -ray machines, surgical
instruments, and spectrometers.
(4) "General purpose equipment" means equipment, which is not
limited to research, medical, scientific or other technical activities. Examples
include office equipment and furnishings, modular offices, telephone networks,
information technology equipment and systems, air conditioning equipment,
reproduction and printing equipment, and motor vehicles.
b. The following rules of allowability shall apply to equipment and other
capital expenditures:
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(1) Capital expenditures for general purpose equipment, buildings,
and land are unallowable as direct charges, except where approved in advance by
the awarding agency.
(2) Capital expenditures for special purpose equipment are allowable
as direct costs, provided that items with a unit cost of $5000 or more have the
prior approval of the awarding agency.
(3) Capital expenditures for improvements to land, buildings, or
equipment which materially increase their value or useful life are unallowable
as a direct cost except with the prior approval of the awarding agency.
(4) When approved as a direct charge pursuant to paragraph 15.b.(1),
(2), and (3) above, capital expenditures will be charged in the period in which
the expenditure is incurred, or as otherwise determined appropriate by and
negotiated with the awarding agency.
(5) Equipment and other capital expenditures are unallowable as
indirect costs. However, see Attachment B, paragraph 11., Depreciation and use
allowance, for rules on the allowability of use allowances or depreciation on
buildings, capital improvements, and equipment. Also, see Attachment B,
paragraph 43., Rental costs of buildings and equipment, for rules on the
allowability of rental costs for land, buildings, and equipment.
(6) The unamortized portion of any equipment written off as a result
of a change in capitalization levels may be recovered by continuing to claim the
otherwise allowable use allowances or depreciation on the equipment, or by
amortizing the amount to be written off over a period of years negotiated with
the cognizant agency.
16. Fines and penalties. Costs of fines and penalties resulting from
violations of, or failure of the organization to comply with Federal, State, and
local laws and regulations are unallowable except when incurred as a result of
compliance with specific provisions of an award or instructions in writing from
the awarding agency.
17. Fund raising and investment management costs.
a. Costs of organized fund raising, including financial campaigns,
endowment drives, solicitation of gifts and bequests, and similar expenses
incurred solely to raise capital or obtain contributions are unallowable.
b. Costs of investment counsel and staff and similar expenses incurred
solely to enhance income from investments are unallowable.
c. Fund raising and investment activities shall be allocated an
appropriate share of indirect costs under the conditions described in
subparagraph B.3 of Attachment A.
18. Gains and losses on depreciable assets.
a. (1) Gains and losses on sale, retirement, or other disposition of
depreciable property shall be included in the year in which they occur as
credits or charges to cost grouping(s) in which the depreciation applicable to
33
such property was included. The amount of the gain or loss to be included as a
credit or charge to the appropriate cost grouping(s) shall be the difference
between the amount realized on the property and the undepreciated basis of the
property.
(2) Gains and losses on the disposition of depreciable property
shall not be recognized as a separate credit or charge under the following
conditions:
(a) The gain or loss is processed through a depreciation
account and is reflected in the depreciation allowable under paragraph 11.
(b) The property is given in exchange as part of the purchase
price of a similar item and the gain or loss is taken into account in
determining the depreciation cost basis of the new item.
(c) A loss results from the failure to maintain permissible
insurance, except as otherwise provided in Attachment B, paragraph 22.
(d) Compensation for the use of the property was provided
through use allowances in lieu of depreciation in accordance with paragraph 9.
(e) Gains and losses arising from mass or extraordinary sales,
retirements, or other dispositions shall be considered on a case -by -case basis.
b. Gains or losses of any nature arising from the sale or exchange of
property other than the property covered in subparagraph a shall be excluded in
computing award costs.
19. Goods or services for personal use. Costs of goods or services for
personal use of the organization's employees are unallowable regardless of
whether the cost is reported as taxable income to the employees.
20. Housing and personal living expenses.
a. Costs of housing (e.g., depreciation, maintenance, utilities,
furnishings, rent, etc.), housing allowances and personal living expenses for /of
the organization's officers are unallowable as fringe benefit or indirect costs
regardless of whether the cost is reported as taxable income to the employees.
These costs are allowable as direct costs to sponsored award when necessary for
the performance of the sponsored award and approved by awarding agencies.
b. The term "officers" includes current and past officers and employees.
21. Idle facilities and idle capacity.
below:
a. As used in this section the following terms have the meanings set forth
(1) "Facilities" means land and buildings or any portion thereof,
equipment individually or collectively, or any other tangible capital asset,
wherever located, and whether owned or leased by the non profit organization.
34
(2) "Idle facilities" means completely unused facilities that are
excess to the non profit organization's current needs.
(3) "Idle capacity" means the unused capacity of partially used
facilities. It is the difference between: (a) that which a facility could
achieve under 100 percent operating time on a one -shift basis less operating
interruptions resulting from time lost for repairs, setups, unsatisfactory
materials, and other normal delays; and (b) the extent to which the facility was
actually used to meet demands during the accounting period. A multi -shift basis
should be used if it can be shown that this amount of usage would normally be
expected for the type of facility involved.
(4) "Cost of idle facilities or idle capacity" means costs such as
maintenance, repair, housing, rent, and other related costs, e.g., insurance,
interest, property taxes and depreciation or use allowances.
b. The costs of idle facilities are unallowable except to the extent that:
(1) They are necessary to meet fluctuations in workload; or
(2) Although not necessary to meet fluctuations in workload, they
were necessary when acquired and are now idle because of changes in program
requirements, efforts to achieve more economical operations, reorganization,
termination, or other causes which could not have been reasonably foreseen.
Under the exception stated in this subparagraph, costs of idle facilities are
allowable for a reasonable period of time, ordinarily not to exceed one year,
depending on the initiative taken to use, lease, or dispose of such facilities.
c. The costs of idle capacity are normal costs of doing business and are a
factor in the normal fluctuations of usage or indirect cost rates from period to
period. Such costs are allowable, provided that the capacity is reasonably
anticipated to be necessary or was originally reasonable and is not subject to
reduction or elimination by use on other Federal awards, subletting, renting, or
sale, in accordance with sound business, economic, or security practices.
Widespread idle capacity throughout an entire facility or among a group of
assets having substantially the same function may be considered idle facilities.
22. Insurance and indemnification.
a. Insurance includes insurance which the organization is required to
carry, or which is approved, under the terms of the award and any other
insurance which the organization maintains in connection with the general
conduct of its operations. This paragraph does not apply to insurance which
represents fringe benefits for employees (see subparagraphs 8.g and 8.i(2)).
(1) Costs of insurance required or approved, and maintained,
pursuant to the award are allowable.
(2) Costs of other insurance maintained by the organization in
connection with the general conduct of its operations are allowable subject to
the following limitations:
(a) Types and extent of coverage shall be in accordance with
sound business practice and the rates and premiums shall be reasonable under the
circumstances.
35
(b) Costs allowed for business interruption or other similar
insurance shall be limited to exclude coverage of management fees.
(c) Costs of insurance or of any provisions for a reserve
covering the risk of loss or damage to Federal property are allowable only to
the extent that the organization is liable for such loss or damage.
(d) Provisions for a reserve under a self insurance program
are allowable to the extent that types of coverage, extent of coverage, rates,
and premiums would have been allowed had insurance been purchased to cover the
risks. However, provision for known or reasonably estimated self- insured
liabilities, which do not become payable for more than one year after the
provision is made, shall not exceed the present value of the liability.
(e) Costs of insurance on the lives of trustees, officers, or
other employees holding positions of similar responsibilities are allowable only
to the extent that the insurance represents additional compensation (see
subparagraph 8.g(4)). The cost of such insurance when the organization is
identified as the beneficiary is unallowable.
(f) Insurance against defects. Costs of insurance with
respect to any costs incurred to correct defects in the organization's materials
or workmanship are unallowable.
(g) Medical liability (malpractice) insurance. Medical
liability insurance is an allowable cost of Federal research programs only to
the extent that the Federal research programs involve human subjects or training
of participants in research techniques. Medical liability insurance costs shall
be treated as a direct cost and shall be assigned to individual projects based
on the manner in which the insurer allocates the risk to the population covered
by the insurance.
(3) Actual losses which could have been covered by permissible
insurance (through the purchase of insurance or a self- insurance program) are
unallowable unless expressly provided for in the award, except:
(a) Costs incurred because of losses not covered under nominal
deductible insurance coverage provided in keeping with sound business practice
are allowable.
(b) Minor losses not covered by insurance, such as spoilage,
breakage, and disappearance of supplies, which occur in the ordinary course of
operations, are allowable.
b. Indemnification includes securing the organization against liabilities
to third persons and any other loss or damage, not compensated by insurance or
otherwise. The Federal Government is obligated to indemnify the organization
only to the extent expressly provided in the award.
23. Interest.
a. Costs incurred for interest on borrowed capital, temporary use of
endowment funds, or the use of the non profit organization's own funds, however
represented, are unallowable. However, interest on debt incurred after
September 29, 1995 to acquire or replace capital assets (including
36
renovations, alterations, equipment, land, and capital assets acquired through
capital leases), acquired after September 29, 1995 and used in support of
Federal awards is allowable, provided that:
(1) For facilities acquisitions (excluding renovations and
alterations) costing over $10 million where the Federal Government's
reimbursement is expected to equal or exceed 40 percent of an asset's cost, the
non profit organization prepares, prior to the acquisition or replacement of the
capital asset(s), a justification that demonstrates the need for the facility in
the conduct of federally- sponsored activities. Upon request, the needs
justification must be provided to the Federal agency with cost cognizance
authority as a prerequisite to the continued allowability of interest on debt
and depreciation related to the facility. The needs justification for the
acquisition of a facility should include, at a minimum, the following:
(a) A statement of purpose and justification for facility
acquisition or replacement
for the facility
(b) A statement as to why current facilities are not adequate
(c) A statement of planned future use of the facility
(d) A description of the financing agreement to be arranged
(e) A summary of the building contract with estimated cost
information and statement of source and use of funds
(f) A schedule of planned occupancy dates
(2) For facilities costing over $500,000, the non profit
organization prepares, prior to the acquisition or replacement of the facility,
a lease /purchase analysis in accordance with the provisions of Sec. .30
through .37 of Circular A -110, which shows that a financed purchase or capital
lease is less costly to the organization than other leasing alternatives, on a
net present value basis. Discount rates used should be equal to the non profit
organization's anticipated interest rates and should be no higher than the fair
market rate available to the non profit organization from an unrelated "arm's
length third party. The lease /purchase analysis shall include a comparison of
the net present value of the projected total cost comparisons of both
alternatives over the period the asset is expected to be used by the non profit
organization. The cost comparisons associated with purchasing the facility shall
include the estimated purchase price, anticipated operating and maintenance
costs (including property taxes, if applicable) not included in the debt
financing, less any estimated asset salvage value at the end of the period
defined above. The cost comparison for a capital lease shall include the
estimated total lease payments, any estimated bargain purchase option, operating
and maintenance costs, and taxes not included in the capital leasing
arrangement, less any estimated credits due under the lease at the end of the
period defined above. Projected operating lease costs shall be based on the
anticipated cost of leasing comparable facilities at fair market rates under
rental agreements that would be renewed or reestablished over the period defined
above, and any expected maintenance costs and allowable property taxes to be
borne by the non profit organization directly or as part of the lease
arrangement.
37
(3) The actual interest cost claimed is predicated upon interest
rates that are no higher than the fair market rate available to the non profit
organization from an unrelated "arm's length third party.
(4) Investment earnings, including interest income, on bond or loan
principal, pending payment of the construction or acquisition costs, are used to
offset allowable interest cost. Arbitrage earnings reportable to the Internal
Revenue Service are not required to be offset against allowable interest costs.
(5) Reimbursements are limited to the least costly alternative based
on the total cost analysis required under subparagraph (b). For example, if an
operating lease is determined to be less costly than purchasing through debt
financing, then reimbursement is limited to the amount determined if leasing had
been used. In all cases where a lease /purchase analysis is performed, Federal
reimbursement shall be based upon the least expensive alternative.
conditions:
acquired before
unallowable.
(6) Non profit organizations are also subject to the following
(a) Interest on debt incurred to finance or refinance assets
or reacquired after September 29, 1995, is not allowable.
(b) Interest attributable to fully depreciated assets is
(c) For debt arrangements over $1 million, unless the non-
profit organization makes an initial equity contribution to the asset purchase
of 25 percent or more, non profit organizations shall reduce claims for interest
expense by an amount equal to imputed interest earnings on excess cash flow,
which is to be calculated as follows. Annually, non profit organizations shall
prepare a cumulative (from the inception of the project) report of monthly cash
flows that includes inflows and outflows, regardless of the funding source.
Inflows consist of depreciation expense, amortization of capitalized
construction interest, and annual interest expense. For cash flow calculations,
the annual inflow figures shall be divided by the number of months in the year
(usually 12) that the building is in service for monthly amounts. Outflows
consist of initial equity contributions, debt principal payments (less the pro
rata share attributable to the unallowable costs of land) and interest payments.
Where cumulative inflows exceed cumulative outflows, interest shall be
calculated on the excess inflows for that period and be treated as a reduction
to allowable interest expense. The rate of interest to be used to compute
earnings on excess cash flows shall be the three month Treasury Bill closing
rate as of the last business day of that month.
(d) Substantial relocation of federally- sponsored activities
from a facility financed by indebtedness, the cost of which was funded in whole
or part through Federal reimbursements, to another facility prior to the
expiration of a period of 20 years requires notice to the Federal cognizant
agency. The extent of the relocation, the amount of the Federal participation in
the financing, and the depreciation and interest charged to date may require
negotiation and /or downward adjustments of replacement space charged to Federal
programs in the future.
(e) The allowable costs to acquire facilities and equipment
are limited to a fair market value available to the non profit organization from
an unrelated "arm's length third party.
38
b. For non profit organizations subject to "full coverage under the Cost
Accounting Standards (CAS) as defined at 48 CFR 9903.201, the interest
allowability provisions of subparagraph a do not apply. Instead, these
organizations' sponsored agreements are subject to CAS 414 (48 CFR 9903.414),
cost of money as an element of the cost of facilities capital, and CAS 417 (48
CFR 9903.417), cost of money as an element of the cost of capital assets under
construction.
c. The following definitions are to be used for purposes of this
paragraph:
(1) Re- acquired assets means assets held by the non profit
organization prior to September 29, 1995 that have again come to be held by
the organization, whether through repurchase or refinancing. It does not include
assets acquired to replace older assets.
(2) Initial equity contribution means the amount or value of
contributions made by non profit organizations for the acquisition of the asset
or prior to occupancy of facilities.
(3) Asset costs means the capitalizable costs of an asset, including
construction costs, acquisition costs, and other such costs capitalized in
accordance with GAAP.
24. Labor relations costs. Costs incurred in maintaining satisfactory
relations between the organization and its employees, including costs of labor
management committees, employee publications, and other related activities are
allowable.
25. Lobbying.
a. Notwithstanding other provisions of this Circular, costs associated
with the following activities are unallowable:
(1) Attempts to influence the outcomes of any Federal, State, or
local election, referendum, initiative, or similar procedure, through in kind or
cash contributions, endorsements, publicity, or similar activity;
(2) Establishing, administering, contributing to, or paying the
expenses of a political party, campaign, political action committee, or other
organization established for the purpose of influencing the outcomes of
elections;
(3) Any attempt to influence: (i) The introduction of Federal or
State legislation; or (ii) the enactment or modification of any pending Federal
or State legislation through communication with any member or employee of the
Congress or State legislature (including efforts to influence State or local
officials to engage in similar lobbying activity), or with any Government
official or employee in connection with a decision to sign or veto enrolled
legislation;
(4) Any attempt to influence: (1) The introduction of Federal or
State legislation; or (ii) the enactment or modification of any pending Federal
or State legislation by preparing, distributing or using publicity or
39
propaganda, or by urging members of the general public or any segment thereof to
contribute to or participate in any mass demonstration, march, rally,
fundraising drive, lobbying campaign or letter writing or telephone campaign; or
(5) Legislative liaison activities, including attendance at
legislative sessions or committee hearings, gathering information regarding
legislation, and analyzing the effect of legislation, when such activities are
carried on in support of or in knowing preparation for an effort to engage in
unallowable lobbying.
b. The following activities are excepted from the coverage of
subparagraph a:
(1) Providing a technical and factual presentation of information on
a topic directly related to the performance of a grant, contract or other
agreement through hearing testimony, statements or letters to the Congress or a
State legislature, or subdivision, member, or cognizant staff member thereof, in
response to a documented request (including a Congressional Record notice
requesting testimony or statements for the record at a regularly scheduled
hearing) made by the recipient member, legislative body or subdivision, or a
cognizant staff member thereof; provided such information is readily obtainable
and can be readily put in deliverable form; and further provided that costs
under this section for travel, lodging or meals are unallowable unless incurred
to offer testimony at a regularly scheduled Congressional hearing pursuant to a
written request for such presentation made by the Chairman or Ranking Minority
Member of the Committee or Subcommittee conducting such hearing.
(2) Any lobbying made unallowable by subparagraph a(3) to influence
State legislation in order to directly reduce the cost, or to avoid material
impairment of the organization's authority to perform the grant, contract, or
other agreement.
(3) Any activity specifically authorized by statute to be undertaken
with funds from the grant, contract, or other agreement.
c. (1) When an organization seeks reimbursement for indirect costs,
total lobbying costs shall be separately identified in the indirect cost rate
proposal, and thereafter treated as other unallowable activity costs in
accordance with the procedures of subparagraph B.3 of Attachment A.
(2) Organizations shall submit, as part of the annual indirect cost
rate proposal, a certification that the requirements and standards of this
paragraph have been complied with.
(3) Organizations shall maintain adequate records to demonstrate
that the determination of costs as being allowable or unallowable pursuant to
paragraph 25 complies with the requirements of this Circular.
(4) Time logs, calendars, or similar records shall not be required
to be created for purposes of complying with this paragraph during any
particular calendar month when: (1) the employee engages in lobbying (as defined
in subparagraphs (a) and (b)) 25 percent or less of the employee's compensated
hours of employment during that calendar month, and (2) within the preceding
five -year period, the organization has not materially misstated allowable or
unallowable costs of any nature, including legislative lobbying costs. When
conditions (1) and (2) are met, organizations are not required to establish
records to support the allowabliliy of claimed costs in addition to records
40
already required or maintained. Also, when conditions (1) and (2) are met, the
absence of time logs, calendars, or similar records will not serve as a basis
for disallowing costs by contesting estimates of lobbying time spent by
employees during a calendar month.
(5) Agencies shall establish procedures for resolving in advance, in
consultation with OMB, any significant questions or disagreements concerning the
interpretation or application of paragraph 25. Any such advance resolution shall
be binding in any subsequent settlements, audits or investigations with respect
to that grant or contract for purposes of interpretation of this Circular;
provided, however, that this shall not be construed to prevent a contractor or
grantee from contesting the lawfulness of such a determination.
d. Executive lobbying costs. Costs incurred in attempting to
improperly influence either directly or indirectly, an employee or officer of
the Executive Branch of the Federal Government to give consideration or to act
regarding a sponsored agreement or a regulatory matter are unallowable. Improper
influence means any influence that induces or tends to induce a Federal employee
or officer to give consideration or to act regarding a federally- sponsored
agreement or regulatory matter on any basis other than the merits of the matter.
26. Losses on other sponsored agreements or contracts. Any excess of costs
over income on any award is unallowable as a cost of any other award. This
includes, but is not limited to, the organization's contributed portion by
reason of cost sharing agreements or any under recoveries through negotiation of
lump sums for, or ceilings on, indirect costs.
27. Maintenance and repair costs. Costs incurred for necessary maintenance,
repair, or upkeep of buildings and equipment (including Federal property unless
otherwise provided for) 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. Costs incurred for improvements which add to the
permanent value of the buildings and equipment or appreciably prolong their
intended life shall be treated as capital expenditures (see paragraph 15).
28. Materials and supplies costs.
a. Costs incurred for materials, supplies, and fabricated parts necessary
to carry out a Federal award are allowable.
b. Purchased materials and supplies shall be charged at their actual
prices, net of applicable credits. Withdrawals from general stores or
stockrooms should be charged at their actual net cost under any recognized
method of pricing inventory withdrawals, consistently applied. Incoming
transportation charges are a proper part of materials and supplies costs.
c. Only materials and supplies actually used for the performance of a
Federal award may be charged as direct costs.
d. Where federally- donated or furnished materials are used in performing
the Federal award, such materials will be used without charge.
41
29. Meetings and conferences. Costs of meetings and conferences, the primary
purpose of which is the dissemination of technical information, are allowable.
This includes costs of meals, transportation, rental of facilities, speakers'
fees, and other items incidental to such meetings or conferences. But see
Attachment B, paragraphs 14., Entertainment costs, and 33., Participant support
costs.
30. Memberships, subscriptions, and professional activity costs.
a. Costs of the non profit organization's membership in business,
technical, and professional organizations are allowable.
b. Costs of the non profit organization's subscriptions to business,
professional, and technical periodicals are allowable.
c. Costs of membership in any civic or community organization are
allowable with prior approval by Federal cognizant agency.
d. Costs of membership in any country club or social or dining club or
organization are unallowable.
31. Organization costs. Expenditures, such as incorporation fees, brokers'
fees, fees to promoters, organizers or management consultants, attorneys,
accountants, or investment counselors, whether or not employees of the
organization, in connection with establishment or reorganization of an
organization, are unallowable except with prior approval of the awarding agency.
32. Page charges in professional journals. Page charges for professional
journal publications are allowable as a necessary part of research costs, where:
and
a. The research papers report work supported by the Federal Government;
b. The charges are levied impartially on all research papers published by
the journal, whether or not by federally- sponsored authors.
33. Participant support costs. Participant support costs are direct costs for
items such as stipends or subsistence allowances, travel allowances, and
registration fees paid to or on behalf of participants or trainees (but not
employees) in connection with meetings, conferences, symposia, or training
projects. These costs are allowable with the prior approval of the awarding
agency.
34. Patent costs.
a. The following costs relating to patent and copyright matters are
allowable: (i) cost of preparing disclosures, reports, and other documents
required by the Federal award and of searching the art to the extent necessary
to make such disclosures; (ii) cost of preparing documents and any other patent
costs in connection with the filing and prosecution of a United States patent
application where title or royalty -free license is required by the Federal
Government to be conveyed to the Federal Government; and (iii) general
counseling services relating to patent and copyright matters, such as advice on
patent and copyright laws, regulations, clauses, and employee agreements (but
42
see paragraphs 37., Professional services costs, and 44., Royalties and other
costs for use of patents and copyrights).
b. The following costs related to patent and copyright matter are
unallowable:
(1) Cost of preparing disclosures, reports, and other documents and
of searching the art to the extent necessary to make disclosures not required by
the award
(2) Costs in connection with filing and prosecuting any foreign
patent application, or any United States patent application, where the Federal
award does not require conveying title or a royalty -free license to the Federal
Government (but see paragraph 45., Royalties and other costs for use of patents
and copyrights).
35. Plant and homeland security costs. Necessary and reasonable expenses
incurred for routine and homeland security to protect facilities, personnel, and
work products are allowable. Such costs include, but are not limited to, wages
and uniforms of personnel engaged in security activities; equipment; barriers;
contractual security services; consultants; etc. Capital expenditures for
homeland and plant security purposes are subject to paragraph 15., Equipment and
other capital expenditures, of this Circular.
36. Pre agreement costs. Pre -award costs are those incurred prior to the
effective date of the award directly pursuant to the negotiation and in
anticipation of the award where such costs are necessary to comply with the
proposed delivery schedule or period of performance. Such costs are allowable
only to the extent that they would have been allowable if incurred after the
date of the award and only with the written approval of the awarding agency.
37. Professional services costs.
a. Costs of professional and consultant services rendered by persons who
are members of a particular profession or possess a special skill, and who are
not officers or employees of the non profit organization, are allowable, subject
to subparagraphs b and c when reasonable in relation to the services rendered
and when not contingent upon recovery of the costs from the Federal Government.
In addition, legal and related services are limited under Attachment B,
paragraph 10.
b. In determining the allowability of costs in a particular case, no
single factor or any special combination of factors is necessarily
determinative. However, the following factors are relevant:
(1) The nature and scope of the service rendered in relation to the
service required.
(2) The necessity of contracting for the service, considering the
non profit organization's capability in the particular area.
(3) The past pattern of such costs, particularly in the years prior
to Federal awards.
43
(4) The impact of Federal awards on the non profit organization's
business (i.e., what new problems have arisen).
(5) Whether the proportion of Federal work to the non profit
organization's total business is such as to influence the non profit
organization in favor of incurring the cost, particularly where the services
rendered are not of a continuing nature and have little relationship to work
under Federal grants and contracts.
(6) Whether the service can be performed more economically by direct
employment rather than contracting.
(7) The qualifications of the individual or concern rendering the
the customary fees charged, especially on non Federal awards.
(8) Adequacy of the contractual agreement for the service (e.g.,
of the service, estimate of time required, rate of compensation, and
provisions).
service and
description
termination
c. In addition to the factors in subparagraph b, retainer fees to be
allowable must be supported by evidence of bona fide services available or
rendered
38. Publication and printing costs.
a. Publication costs include the costs of printing (including the
processes of composition, plate- making, press work, binding, and the end
products produced by such processes), distribution, promotion, mailing, and
general handling. Publication costs also include page charges in professional
publications.
b. If these costs are not identifiable with a particular cost objective,
they should be allocated as indirect costs to all benefiting activities of the
non profit organization.
c. Page charges for professional journal publications are allowable as a
necessary part of research costs where:
(1) The research papers report work supported by the Federal
Government: and
(2) The charges are levied impartially on all research papers
published by the journal, whether or not by federally- sponsored authors.
39. Rearrangement and alteration costs. Costs incurred for ordinary or normal
rearrangement and alteration of facilities are allowable. Special arrangement
and alteration costs incurred specifically for the project are allowable with
the prior approval of the awarding agency.
40. Reconversion costs. Costs incurred in the restoration or rehabilitation of
the non profit organization's facilities to approximately the same condition
existing immediately prior to commencement of Federal awards, less costs related
to normal wear and tear, are allowable.
44
41. Recruiting costs.
a. Subject to subparagraphs b, c, and d, and provided that the size of
the staff recruited and maintained is in keeping with workload requirements,
costs of "help wanted" advertising, operating costs of an employment office
necessary to secure and maintain an adequate staff, costs of operating an
aptitude and educational testing program, travel costs of employees while
engaged in recruiting personnel, travel costs of applicants for interviews for
prospective employment, and relocation costs incurred incident to recruitment of
new employees, are allowable to the extent that such costs are incurred pursuant
to a well managed recruitment program. Where the organization uses employment
agencies, costs that are not in excess of standard commercial rates for such
services are allowable.
b. In publications, costs of help wanted advertising that includes color,
includes advertising material for other than recruitment purposes, or is
excessive in size (taking into consideration recruitment purposes for which
intended and normal organizational practices in this respect), are unallowable.
c. Costs of help wanted advertising, special emoluments, fringe benefits,
and salary allowances incurred to attract professional personnel from other
organizations that do not meet the test of reasonableness or do not conform with
the established practices of the organization, are unallowable.
d. Where relocation costs incurred incident to recruitment of a new
employee have been allowed either as an allocable direct or indirect cost, and
the newly hired employee resigns for reasons within his control within twelve
months after being hired, the organization will be required to refund or credit
such relocation costs to the Federal Government.
42. Relocation costs.
a. Relocation costs are costs incident to the permanent change of duty
assignment (for an indefinite period or for a stated period of not less than 12
months) of an existing employee or upon recruitment of a new employee.
Relocation costs are allowable, subject to the limitation described in
subparagraphs b, c, and d, provided that:
(1) The move is for the benefit of the employer.
(2) Reimbursement to the employee is in accordance with an
established written policy consistently followed by the employer.
(3) The reimbursement does not exceed the employee's actual (or
reasonably estimated) expenses.
b. Allowable relocation costs for current employees are limited to the
following:
(1) The costs of transportation of the employee, members of his
immediate family and his household, and personal effects to the new location.
45
(2) The costs of finding a new home, such as advance trips by
employees and spouses to locate living quarters and temporary lodging during the
transition period, up to maximum period of 30 days, including advance trip time.
(3) Closing costs, such as brokerage, legal, and appraisal fees,
incident to the disposition of the employee's former home. These costs, together
with those described in (4), are limited to 8 percent of the sales price of the
employee's former home.
(4) The continuing costs of ownership of the vacant former home
after the settlement or lease date of the employee's new permanent home, such as
maintenance of buildings and grounds (exclusive of fixing up expenses),
utilities, taxes, and property insurance.
(5) Other necessary and reasonable expenses normally incident to
relocation, such as the costs of canceling an unexpired lease, disconnecting and
reinstalling household appliances, and purchasing insurance against loss of or
damages to personal property. The cost of canceling an unexpired lease is
limited to three times the monthly rental.
c. Allowable relocation costs for new employees are limited to those
described in (1) and (2) of subparagraph b. When relocation costs incurred
incident to the recruitment of new employees have been allowed either as a
direct or indirect cost and the employee resigns for reasons within his control
within 12 months after hire, the organization shall refund or credit the Federal
Government for its share of the cost. However, the costs of travel to an
overseas location shall be considered travel costs in accordance with paragraph
50 and not relocation costs for the purpose of this paragraph if dependents are
not permitted at the location for any reason and the costs do not include costs
of transporting household goods.
being sold.
d. The following costs related to relocation are unallowable:
(1) Fees and other costs associated with acquiring a new home.
(2) A loss on the sale of a former home.
(3) Continuing mortgage principal and interest payments on a home
(4) Income taxes paid by an employee related to reimbursed
relocation costs.
43. Rental costs of buildings and equipment.
a. Subject to the limitations described in subparagraphs b. through d. of
this paragraph 43, rental costs are allowable to the extent that the rates are
reasonable in light of such factors as: rental costs of comparable property, if
any; market conditions in the area; alternatives available; and, the type, life
expectancy, condition, and value of the property leased. Rental arrangements
should be reviewed periodically to determine if circumstances have changed and
other options are available.
b. Rental costs under "sale and lease back" arrangements are allowable
only up to the amount that would be allowed had the non profit organization
46
continued to own the property. This amount would include expenses such as
depreciation or use allowance, maintenance, taxes, and insurance.
c. Rental costs under "less- than arms length" leases are allowable only up
to the amount (as explained in subparagraph b. of this paragraph 43.) that would
be allowed had title to the property vested in the non profit organization. For
this purpose, a less- than -arms- length lease is one under which one party to the
lease agreement is able to control or substantially influence the actions of the
other. Such leases include, but are not limited to those between (1) divisions
of a non profit organization; (ii) non profit organizations under common control
through common officers, directors, or members; and (iii) a non profit
organization and a director, trustee, officer, or key employee of the non profit
organization or his immediate family, either directly or through corporations,
trusts, or similar arrangements in which they hold a controlling interest. For
example, a non profit organization may establish a separate corporation for the
sole purpose of owning property and leasing it back to the non profit
organization.
d. Rental costs under leases which are required to be treated as capital
leases under GAAP are allowable only up to the amount (as explained in
subparagraph b) that would be allowed had the non profit organization purchased
the property on the date the lease agreement was executed. The provisions of
Financial Accounting Standards Board Statement 13, Accounting for Leases, shall
be used to determine whether a lease is a capital lease. Interest costs related
to capital leases are allowable to the extent they meet the criteria in
subparagraph 23. Unallowable costs include amounts paid for profit, management
fees, and taxes that would not have been incurred had the non profit
organization purchased the facility.
44. Royalties and other costs for use of patents and copyrights.
a. Royalties on a patent or copyright or amortization of the cost of
acquiring by purchase a copyright, patent, or rights thereto, necessary for the
proper performance of the award are allowable unless:
(1) The Federal Government has a license or the right to free use of
the patent or copyright.
(2) The patent or copyright has been adjudicated to be invalid, or
has been administratively determined to be invalid.
(3) The patent or copyright is considered to be unenforceable.
(4) The patent or copyright is expired.
b. Special care should be exercised in determining reasonableness where
the royalties may have arrived at as a result of less than arm's length
bargaining, e.g.:
(1) Royalties paid to persons, including corporations, affiliated
with the non profit organization.
(2) Royalties paid to unaffiliated parties, including corporations,
under an agreement entered into in contemplation that a Federal award would be
made.
47
(3) Royalties paid under an agreement entered into after an award is
made to a non profit organization.
c. In any case involving a patent or copyright formerly owned by the non-
profit organization, the amount of royalty allowed should not exceed the cost
which would have been allowed had the non profit organization retained title
thereto.
45. Selling and marketing. Costs of selling and marketing any products or
services of the non profit organization are unallowable (unless allowed under
Attachment B, paragraph 1. as allowable public relations cost. However, these
costs are allowable as direct costs, with prior approval by awarding agencies,
when they are necessary for the performance of Federal programs.
46. Specialized service facilities.
a. The costs of services provided by highly complex or specialized
facilities operated by the non profit organization, such as computers, wind
tunnels, and reactors are allowable, provided the charges for the services meet
the conditions of either 46 b. or c. and, in addition, take into account any
items of income or Federal financing that qualify as applicable credits under
Attachment A, subparagraph A.5. of this Circular.
b. The costs of such services, when material, must be charged directly to
applicable awards based on actual usage of the services on the basis of a
schedule of rates or established methodology that (i) does not discriminate
against federally- supported activities of the non profit organization, including
usage by the non profit organization for internal purposes, and (ii) is designed
to recover only the aggregate costs of the services. The costs of each service
shall consist normally of both its direct costs and its allocable share of all
indirect costs. Rates shall be adjusted at least biennially, and shall take
into consideration over /under applied costs of the previous period(s).
c. Where the costs incurred for a service are not material, they may be
allocated as indirect costs.
d. Under some extraordinary circumstances, where it is in the best
interest of the Federal Government and the institution to establish alternative
costing arrangements, such arrangements may be worked out with the cognizant
Federal agency.
47. Taxes.
a. In general, taxes which the organization is required to pay and which
are paid or accrued in accordance with GAAP, and payments made to local
governments in lieu of taxes which are commensurate with the local government
services received are allowable, except for (i) taxes from which exemptions are
available to the organization directly or which are available to the
organization based on an exemption afforded the Federal Government and in the
latter case when the awarding agency makes available the necessary exemption
certificates, (ii) special assessments on land which represent capital
improvements, and (iii) Federal income taxes.
b. Any refund of taxes, and any payment to the organization of interest
thereon, which were allowed as award costs, will be credited either as a cost
reduction or cash refund, as appropriate, to the Federal Government.
48
48. Termination costs applicable to sponsored agreements.
Termination of awards generally gives rise to the incurrence of costs, or the
need for special treatment of costs, which would not have arisen had the Federal
award not been terminated. Cost principles covering these items are set forth
below. They are to be used in conjunction with the other provisions of this
Circular in termination situations.
a. The cost of items reasonably usable on the non profit organization's
other work shall not be allowable unless the non profit organization submits
evidence that it would not retain such items at cost without sustaining a loss.
In deciding whether such items are reasonably usable on other work of the non-
profit organization, the awarding agency should consider the non profit
organization's plans and orders for current and scheduled activity.
Contemporaneous purchases of common items by the non profit organization shall
be regarded as evidence that such items are reasonably usable on the non profit
organization's other work. Any acceptance of common items as allocable to the
terminated portion of the Federal award shall be limited to the extent that the
quantities of such items on hand, in transit, and on order are in excess of the
reasonable quantitative requirements of other work.
b. If in a particular case, despite all reasonable efforts by the non-
profit organization, certain costs cannot be discontinued immediately after the
effective date of termination, such costs are generally allowable within the
limitations set forth in this Circular, except that any such costs continuing
after termination due to the negligent or willful failure of the non profit
organization to discontinue such costs shall be unallowable.
c. Loss of useful value of special tooling, machinery, and is generally
allowable if:
(1) Such special tooling, special machinery, or equipment is not
reasonably capable of use in the other work of the non profit organization,
(2) The interest of the Federal Government is protected by transfer
of title or by other means deemed appropriate by the awarding agency, and
(3) The loss of useful value for any one terminated Federal award is
limited to that portion of the acquisition cost which bears the same ratio to
the total acquisition cost as the terminated portion of the Federal award bears
to the entire terminated Federal award and other Federal awards for which the
special tooling, special machinery, or equipment was acquired.
d. Rental costs under unexpired leases are generally allowable where
clearly shown to have been reasonably necessary for the performance of the
terminated Federal award less the residual value of such leases, if:
(1) the amount of such rental claimed does not exceed the reasonable
use value of the property leased for the period of the Federal award and such
further period as may be reasonable, and
(2) the non profit organization makes all reasonable efforts to
terminate, assign, settle, or otherwise reduce the cost of such lease. There
also may be included the cost of alterations of such leased property, provided
49
such alterations were necessary for the performance of the Federal award, and of
reasonable restoration required by the provisions of the lease.
e. Settlement expenses including the following are generally allowable:
(1) Accounting, legal, clerical, and similar costs reasonably
necessary for:
(a) The preparation and presentation to the awarding agency of
settlement claims and supporting data with respect to the terminated portion of
the Federal award, unless the termination is for default (see Subpart .61 of
Circular A -110); and
(b) The termination and settlement of subawards.
(2) Reasonable costs for the storage, transportation, protection,
and disposition of property provided by the Federal Government or acquired or
produced for the Federal award, except when grantees or contractors are
reimbursed for disposals at a predetermined amount in accordance with Subparts
_.32 through .37 of Circular A -110.
(3) Indirect costs related to salaries and wages incurred as
settlement expenses in subparagraphs (1) and (2). Normally, such indirect costs
shall be limited to fringe benefits, occupancy cost, and immediate supervision.
f. Claims under sub awards, including the allocable portion of claims
which are common to the Federal award, and to other work of the non profit
organization are generally allowable.
An appropriate share of the non profit organization's indirect expense may be
allocated to the amount of settlements with subcontractors and /or subgrantees,
provided that the amount allocated is otherwise consistent with the basic
guidelines contained in Attachment A. The indirect expense so allocated shall
exclude the same and similar costs claimed directly or indirectly as settlement
expenses.
49. Training costs.
a. Costs of preparation and maintenance of a program of instruction
including but not limited to on- the -job, classroom, and apprenticeship training,
designed to increase the vocational effectiveness of employees, including
training materials, textbooks, salaries or wages of trainees (excluding overtime
compensation which might arise therefrom), and (i) salaries of the director of
training and staff when the training program is conducted by the organization;
or (ii) tuition and fees when the training is in an institution not operated by
the organization, are allowable.
b. Costs of part -time education, at an undergraduate or post graduate
college level, including that provided at the organization's own facilities, are
allowable only when the course or degree pursued is relative to the field in
which the employee is now working or may reasonably be expected to work, and are
limited to:
(1) Training materials.
(2) Textbooks.
50
(3) Fees charges by the educational institution.
(4) Tuition charged by the educational institution or, in lieu of
tuition, instructors' salaries and the related share of indirect costs of the
educational institution to the extent that the sum thereof is not in excess of
the tuition which would have been paid to the participating educational
institution.
(5) Salaries and related costs of instructors who are employees of
the organization.
(6) Straight -time compensation of each employee for time spent
attending classes during working hours not in excess of 156 hours per year and
only to the extent that circumstances do not permit the operation of classes or
attendance at classes after regular working hours; otherwise, such compensation
is unallowable.
c. Costs of tuition, fees, training materials, and textbooks (but not
subsistence, salary, or any other emoluments) in connection with full -time
education, including that provided at the organization's own facilities, at a
post graduate (but not undergraduate) college level, are allowable only when the
course or degree pursued is related to the field in which the employee is now
working or may reasonably be expected to work, and only where the costs receive
the prior approval of the awarding agency. Such costs are limited to the costs
attributable to a total period not to exceed one school year for each employee
so trained. In unusual cases the period may be extended.
d. Costs of attendance of up to 16 weeks per employee per year at
specialized programs specifically designed to enhance the effectiveness of
executives or managers or to prepare employees for such positions are allowable.
Such costs include enrollment fees, training materials, textbooks and related
charges, employees' salaries, subsistence, and travel. Costs allowable under
this paragraph do not include those for courses that are part of a degree
oriented curriculum, which are allowable only to the extent set forth in
subparagraphs b and c.
e. Maintenance expense, and normal depreciation or fair rental, on
facilities owned or leased by the organization for training purposes are
allowable to the extent set forth in paragraphs 11, 27, and 50.
f. Contributions or donations to educational or training institutions,
including the donation of facilities or other properties, and scholarships or
fellowships, are unallowable.
g. Training and education costs in excess of those otherwise allowable
under subparagraphs b and c may be allowed with prior approval of the awarding
agency. To be considered for approval, the organization must demonstrate that
such costs are consistently incurred pursuant to an established training and
education program, and that the course or degree pursued is relative to the
field in which the employee is now working or may reasonably be expected to
work.
50. Transportation costs. Transportation costs include freight, express,
cartage, and postage charges relating either to goods purchased, in process, or
delivered. These costs are allowable. When such costs can readily be identified
with the items involved, they may be directly charged as transportation costs or
51
added to the cost of such items (see paragraph 28). Where identification with
the materials received cannot readily be made, transportation costs may be
charged to the appropriate indirect cost accounts if the organization follows a
consistent, equitable procedure in this respect.
51. Travel costs.
a. General. Travel costs are the expenses for transportation, lodging,
subsistence, and related items incurred by employees who are in travel status on
official business of the non profit organization. Such costs may be charged on
an actual cost 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 not to selected days of the trip, and results in charges
consistent with those normally allowed in like circumstances in the non profit
organization's non federally- sponsored activities.
b. Lodging and subsistence. Costs incurred by employees and officers for
travel, including costs of lodging, other subsistence, and incidental expenses,
shall be considered reasonable and allowable only to the extent such costs do
not exceed charges normally allowed by the non profit organization in its
regular operations as the result of the non profit organization's written travel
policy. In the absence of an acceptable, written non profit organization policy
regarding travel costs, the rates and amounts established under subchapter I of
Chapter 57, Title 5, United States Code "Travel and Subsistence Expenses;
Mileage Allowances or by the Administrator of General Services, or by the
President (or his or her designee) pursuant to any provisions of such subchapter
shall apply to travel under Federal awards (48 CFR 31.205- 46(a)).
c. Commercial air travel.
(1) Airfare costs in excess of the customary standard commercial
airfare (coach or equivalent), Federal Government contract airfare (where
authorized and available), or the lowest commercial discount airfare are
unallowable except when such accommodations would: (a) require circuitous
routing; (b) require travel during unreasonable hours; (c) excessively prolong
travel; (d) result in additional costs that would offset the transportation
savings; or (e) offer accommodations not reasonably adequate for the traveler's
medical needs. The non profit organization must justify and document these
conditions on a case -by -case basis in order for the use of first -class airfare
to be allowable in such cases.
(2) Unless a pattern of avoidance is detected, the Federal
Government will generally not question a non profit organization's
determinations that customary standard airfare or other discount airfare is
unavailable for specific trips if the non profit organization can demonstrate
either of the following: (a) that such airfare was not available in the
specific case; or (b) that it is the non profit organization's overall practice
to make routine use of such airfare.
d. Air travel by other than commercial carrier. Costs of travel by non-
profit organization- owned, leased, or chartered aircraft include the cost of
lease, charter, operation (including personnel costs), maintenance,
depreciation, insurance, and other related costs. The portion of such costs
that exceeds the cost of allowable commercial air travel, as provided for in
subparagraph) c., is unallowable.
52
e. Foreign travel. Direct charges for foreign travel costs are allowable
only when the travel has received prior approval of the awarding agency. Each
separate foreign trip must receive such approval. For purposes of this
provision, "foreign travel" includes any travel outside Canada, Mexico, the
United States, and any United States territories and possessions. However, the
term "foreign travel" for a non profit organization located in a foreign country
means travel outside that country.
52. Trustees. Travel and subsistence costs of trustees (or directors) are
allowable. The costs are subject to restrictions regarding lodging, subsistence
and air travel costs provided in paragraph 51.
53
ATTACHMENT C
Circular No. A -122
NON PROFIT ORGANIZATIONS NOT SUBJECT TO THIS CIRCULAR
Advance Technology Institute (ATI), Charleston, South Carolina
Aerospace Corporation, El Segundo, California
American Institutes of Research (AIR), Washington D.C.
Argonne National Laboratory, Chicago, Illinois
Atomic Casualty Commission, Washington, D.C.
Battelle Memorial Institute, Headquartered in Columbus, Ohio
Brookhaven National Laboratory, Upton, New York
Charles Stark Draper Laboratory, Incorporated, Cambridge, Massachusetts
CNA Corporation (CNAC), Alexandria, Virginia
Environmental Institute of Michigan, Ann Arbor, Michigan
Georgia Institute of Technology /Georgia Tech Applied Research
Georgia Tech Research Institute, Atlanta, Georgia
Hanford Environmental Health Foundation, Richland, Washington
IIT Research Institute, Chicago, Illinois
Institute of Gas Technology, Chicago, Illinois
Institute for Defense Analysis, Alexandria, Virginia
LMI, McLean, Virginia
Mitre Corporation, Bedford, Massachusetts
Mitretek Systems, Inc., Falls Church, Virginia
National Radiological Astronomy Observatory, Green Bank, West Virginia
National Renewable Energy Laboratory, Golden, Colorado
Oak Ridge Associated Universities, Oak Ridge, Tennessee
Rand Corporation, Santa Monica, California
Research Triangle Institute, Research Triangle Park, North Carolina
Riverside Research Institute, New York, New York
South Carolina Research Authority (SCRA), Charleston, South Carolina
54
Corporation/
Southern Research Institute, Birmingham, Alabama
Southwest Research Institute, San Antonio, Texas
SRI International, Menlo Park, California
Syracuse Research Corporation, Syracuse, New York
Universities Research Association, Incorporated (National Acceleration Lab),
Argonne, Illinois
Urban Institute, Washington D.C.
Non profit insurance companies, such as Blue Cross and Blue Shield Organizations
Other non profit organizations as negotiated with awarding agencies
55
OMB CIRCULAR A-133
Circular No. A -133
Revised to show changes published in the Federal Register June 27, 2003
Audits of States, Local Governments, and Non Profit Organizations
TO THE HEADS OF EXECUTIVE DEPARTMENTS AND ESTABLISHMENTS
SUBJECT: Audits of States, Local Governments, and Non Profit Organizations
1. Purpose. This Circular is issued pursuant to the Single Audit Act of
1984, P.L. 98 -502, and the Single Audit Act Amendments of 1996, P.L. 104 -156.
It sets forth standards for obtaining consistency and uniformity among Federal
agencies for the audit of States, local governments, and non profit
organizations expending Federal awards.
2. Authority. Circular A -133 is issued under the authority of sections
503, 1111, and 7501 et seq. of title 31, United States Code, and Executive
Orders 8248 and 11541.
3. Rescission and Supersession. This Circular rescinds Circular A -128,
"Audits of State and Local Governments," issued April 12, 1985, and supersedes
the prior Circular A -133, "Audits of Institutions of Higher Education and
Other Non Profit Institutions," issued April 22, 1996. For effective dates,
see paragraph 10.
4. Policy. Except as provided herein, the standards set forth in this
Circular shall be applied by all Federal agencies. If any statute
specifically prescribes policies or specific requirements that differ from the
standards provided herein, the provisions of the subsequent statute shall
govern.
Federal agencies shall apply the provisions of the sections of this
Circular to non Federal entities, whether they are recipients expending
Federal awards received directly from Federal awarding agencies, or are
subrecipients expending Federal awards received from a pass- through entity (a
recipient or another subrecipient).
This Circular does not apply to non -U.S. based entities expending
Federal awards received either directly as a recipient or indirectly as a
subrecipient.
S. Definitions. The definitions of key terms used in this Circular are
contained in .105 in the Attachment to this Circular.
6. Required Action. The specific requirements and responsibilities of
Federal agencies and non Federal entities are set forth in the Attachment to
this Circular. Federal agencies
making awards to non Federal entities, either directly or indirectly, shall
adopt the language in the Circular in codified regulations as provided in
Section 10 (below), unless different provisions are required by Federal
statute or are approved by the Office of Management and Budget (OMB).
7. OMB Responsibilities. OMB will review Federal agency regulations and
implementation of this Circular, and will provide interpretations of policy
requirements and assistance to ensure uniform, effective and efficient
implementation.
8. Information Contact. Further information concerning Circular A -133 may
be obtained by contacting the Financial Standards and Reporting Branch, Office
of Federal Financial Management, Office of Management and Budget, Washington,
DC 20503, telephone (202) 395 -3993.
1
9. Review Date. This Circular will have a policy review three years from
the date of issuance.
10. Effective Dates. The standards set forth in .400 of the Attachment
to this Circular, which apply directly to Federal agencies, shall be effective
July 1, 1996, and shall apply to audits of fiscal years beginning after June
30, 1996, except as otherwise specified in §_.400(a).
The standards set forth in this Circular that Federal agencies shall
apply to non Federal entities shall be adopted by Federal agencies in codified
regulations not later than 60 days after publication of this final revision
in the Federal Register, so that they will apply to audits of fiscal years
beginning after June 30, 1996, with the exception that .305(b) of the
Attachment applies to audits of fiscal years beginning after June 30, 1998.
The requirements of Circular A -128, although the Circular is rescinded, and
the 1990 version of Circular A -133 remain in effect for audits of fiscal years
beginning on or before June 30, 1996.
The revisions published in the Federal Register June 27, 2003, are
effective for fiscal years ending after December 31, 2003, and early
implementation is not permitted with the exception of the definition of
oversight agency for audit which is effective July 28, 2003.
Attachment
2
Augustine T. Smythe
Acting Director
PART_ AUDITS OF STATES, LOCAL GOVERNMENTS, AND NON- PROFIT
ORGANIZATIONS
Subpart A-- General
Sec.
.100 Purpose.
.105 Definitions.
Subpart B Audits
.200 Audit requirements.
.205 Basis for determining Federal awards expended.
.210 Subrecipient and vendor determinations.
.215 Relation to other audit requirements.
.220 Frequency of audits.
.225 Sanctions.
.230 Audit costs.
.235 Program- specific audits.
Subpart C-- Auditees
.300 Auditee responsibilities.
.305 Auditor selection.
.310 Financial statements.
.315 Audit findings follow -up.
.320 Report submission.
Subpart D-- Federal Agencies and Pass- Through Entities
.400 Responsibilities.
.405 Management decision.
Subpart E Auditors
.500 Scope of audit.
.505 Audit reporting.
.510 Audit findings.
.515 Audit working papers.
.520 Major program determination.
.525 Criteria for Federal program risk.
.530 Criteria for a low -risk auditee.
Appendix A to Part Data Collection Form (Form SF -SAC).
Appendix B to Part Circular A -133 Compliance Supplement.
Subpart A-- General
§.100 Purpose.
This part sets forth standards for obtaining consistency and uniformity
among Federal agencies for the audit of non Federal entities expending Federal
awards.
.105 Definitions.
Auditee means any non Federal entity that expends Federal awards which
must be audited under this part.
Auditor means an auditor, that is a public accountant or a Federal,
State or local government audit organization, which meets the general
standards specified in generally accepted government auditing standards
(GAGAS). The term auditor does not include internal auditors of non profit
organizations.
Audit finding means deficiencies which the auditor is required by
§.510(a) to report in the schedule of findings and questioned costs.
CFDA number means the number assigned to a Federal program in the
Catalog of Federal Domestic Assistance (CFDA).
Cluster of programs means a grouping of closely related programs that
share common compliance requirements. The types of clusters of programs are
research and development (R &D), student financial aid (SFA), and other
clusters. "Other clusters" are as defined by the Office of Management and
Budget (OMB) in the compliance supplement or as designated by a State for
Federal awards the State provides to its subrecipients that meet the
definition of a cluster of programs. When designating an "other cluster," a
State shall identify the Federal awards included in the cluster and advise the
subrecipients of compliance requirements applicable to the cluster, consistent
with .400(d)(1) and .400(d)(2), respectively. A cluster of programs
shall be considered as one program for determining major programs, as
described in _.520, and, with the exception of R &D as described in
§.200(c), whether a program- specific audit may be elected.
Cognizant agency for audit means the Federal agency designated to carry
out the responsibilities described in
Compliance supplement refers to the Circular A -133 Compliance
Supplement, included as Appendix B to Circular A -133, or such documents as
OMB or its designee may issue to replace it. This document is available from
the Government Printing Office, Superintendent of Documents, Washington, DC
20402 -9325.
Corrective action means action taken by the auditee that:
(1) Corrects identified deficiencies;
(2) Produces recommended improvements; or
(3) Demonstrates that audit findings are either invalid or do not
warrant auditee action.
Federal agency has the same meaning as the term agency in Section 551(1)
of title 5, United States Code.
Federal award means Federal financial assistance and Federal cost
reimbursement contracts that non Federal entities receive directly from
Federal awarding agencies or indirectly from pass- through entities. It does
4
not include procurement contracts, under grants or contracts, used to buy
goods or services from vendors. Any audits of such vendors shall be covered
by the terms and conditions of the contract. Contracts to operate Federal
Government owned, contractor operated facilities (GOCOs) are excluded from the
requirements of this part.
Federal awarding agency means the Federal agency that provides an award
directly to the recipient.
Federal financial assistance means assistance that non Federal entities
receive or administer in the form of grants, loans, loan guarantees, property
(including donated surplus property), cooperative agreements, interest
subsidies, insurance, food commodities, direct appropriations, and other
assistance, but does not include amounts received as reimbursement for
services rendered to individuals as described in 5 .205(h) and 5 .205(i).
Federal program means:
(1) All Federal awards to a non Federal entity assigned a single
number in the CFDA.
(2) When no CFDA number is assigned, all Federal awards from the same
agency made for the same purpose should be combined and considered one
program.
(3) Notwithstanding paragraphs (1) and (2) of this definition, a
cluster of programs. The types of clusters of programs are:
(i) Research and development (R
(ii) Student financial aid (SPA); and
(iii) "Other clusters," as described in the definition of cluster
of programs in this section.
GAGAS means generally accepted government auditing standards issued by
the Comptroller General of the United States, which are applicable to
financial audits.
Generally accepted accounting principles has the meaning specified in
generally accepted auditing standards issued by the American Institute of
Certified Public Accountants (AICPA).
Indian tribe means any Indian tribe, band, nation, or other organized
group or community, including any Alaskan Native village or regional or
village corporation (as defined in, or established under, the Alaskan Native
Claims Settlement Act) that is recognized by the United States as eligible for
the special programs and services provided by the United States to Indians
because of their status as Indians.
Internal control means a process, effected by an entity's management and
other personnel, designed to provide reasonable assurance regarding the
achievement of objectives in the following categories:
(1) Effectiveness and efficiency of operations;
(2) Reliability of financial reporting; and
(3) Compliance with applicable laws and regulations.
Internal control pertaining to the compliance requirements for Federal
programs (Internal control over Federal programs) means a process effected by
5
an entity's management and other personnel designed to provide reasonable
assurance regarding the achievement of the following objectives for Federal
programs:
(1) Transactions are properly recorded and accounted for to:
(i) Permit the preparation of reliable financial statements and
Federal reports;
(ii) Maintain accountability over assets; and
(iii) Demonstrate compliance with laws, regulations, and other
compliance requirements;
(2) Transactions are executed in compliance with:
(i) Laws, regulations, and the provisions of contracts or grant
agreements that could have a direct and material effect on a Federal program;
and
(ii) Any other laws and regulations that are identified in the
compliance supplement; and
(3) Funds, property, and other assets are safeguarded against loss
from unauthorized use or disposition.
Loan means a Federal loan or loan guarantee received or administered by
a non Federal entity.
Local government means any unit of local government within a State,
including a county, borough, municipality, city, town, township, parish, local
public authority, special district, school district, intrastate district,
council of governments, and any other instrumentality of local government.
Malor program means a Federal program determined by the auditor to be a
major program in accordance with 5 .520 or a program identified as a major
program by a Federal agency or pass- through entity in accordance with
5.215(c).
Management decision means the evaluation by the Federal awarding agency
or pass- through entity of the audit findings and corrective action plan and
the issuance of a written decision as to what corrective action is necessary.
Non Federal entity means a State, local government, or non profit
organization.
Non profit organization means:
(1) any corporation, trust, association, cooperative, or other
organization that:
(i) Is operated primarily for scientific, educational, service,
charitable, or similar purposes in the public interest;
(ii) Is not organized primarily for profit; and
(iii) Uses its net proceeds to maintain, improve, or expand its
operations; and
(2) The term non profit organization includes non profit institutions
of higher education and hospitals.
6
OMB means the Executive Office of the President, Office of Management
and Budget.
Oversight agency for audit means the Federal awarding agency that
provides the predominant amount of direct funding to a recipient not assigned
a cognizant agency for audit. When there is no direct funding, the Federal
agency with the predominant indirect funding shall assume the oversight
responsibilities. The duties of the oversight agency for audit are described
in .400(b).
Effective July 28, 2003, the following is added to this definition:
A Federal agency with oversight for an auditee may reassign oversight to
another Federal agency which provides substantial funding and agrees to
be the oversight agency for audit. Within 30 days after any
reassignment, both the old and the new oversight agency for audit shall
notify the auditee, and, if known, the auditor of the reassignment."
Pass through entity means a non Federal entity that provides a Federal
award to a subrecipient to carry out a Federal program.
Program- specific audit means an audit of one Federal program as provided
for in .200(c) and .235.
Questioned cost means a cost that is questioned by the auditor because
of an audit finding:
(1) Which resulted from a violation or possible violation of a
provision of a law, regulation, contract, grant, cooperative agreement, or
other agreement or document governing the use of Federal funds, including
funds used to match Federal funds;
(2) Where the costs, at the time of the audit, are not supported by
adequate documentation; or
(3) Where the costs incurred appear unreasonable and do not reflect
the actions a prudent person would take in the circumstances.
Recipient means a non Federal entity that expends Federal awards
received directly from a Federal awarding agency to carry out a Federal
program.
Research and development (R&D) means all research activities, both basic
and applied, and all development activities that are performed by a non
Federal entity. Research is defined as a systematic study directed toward
fuller scientific knowledge or understanding of the subject studied. The term
research also includes activities involving the training of individuals in
research techniques where such activities utilize the same facilities as other
research and development activities and where such activities are not included
in the instruction function. Development is the systematic use of knowledge
and understanding gained from research directed toward the production of
useful materials, devices, systems, or methods, including design and
development of prototypes and processes.
Single audit means an audit which includes both the entity's financial
statements and the Federal awards as described in .500.
State means any State of the United States, the District of Columbia,
the Commonwealth of Puerto Rico, the Virgin Islands, Guam, American Samoa, the
Commonwealth of the Northern Mariana Islands, and the Trust Territory of the
7
Pacific Islands, any instrumentality thereof, any multi- State, regional, or
interstate entity which has governmental functions, and any Indian tribe as
defined in this section.
Student Financial Aid (SFA) includes those programs of general student
assistance, such as those authorized by Title IV of the Higher Education Act
of 1965, as amended, (20 U.S.C. 1070 et sea.) which is administered by the
U.S. Department of Education, and similar programs provided by other Federal
agencies. It does not include programs which provide fellowships or similar
Federal awards to students on a competitive basis, or for specified studies or
research.
Subrecipient means a non Federal entity that expends Federal awards
received from a pass- through entity to carry out a Federal program, but does
not include an individual that is a beneficiary of such a program. A
subrecipient may also be a recipient of other Federal awards directly from a
Federal awarding agency. Guidance on distinguishing between a subrecipient
and a vendor is provided in §_.210.
Types of compliance requirements refers to the types of compliance
requirements listed in the compliance supplement. Examples include:
activities allowed or unallowed; allowable costs /cost principles; cash
management; eligibility; matching, level of effort, earmarking; and,
reporting.
Vendor means a dealer, distributor, merchant, or other seller providing
goods or services that are required for the conduct of a Federal program.
These goods or services may be for an organization's own use or for the use of
beneficiaries of the Federal program. Additional guidance on distinguishing
between a subrecipient and a vendor is provided in §_.210.
Subpart B Audits
.200 Audit requirements.
(a) Audit required. Non Federal entities that expend $300,000
($500,000 for fiscal years ending after December 31, 2003) or more in a year
in Federal awards shall have a single or program- specific audit conducted for
that year in accordance with the provisions of this part. Guidance on
determining Federal awards expended is provided in §_.205.
(b) Single audit. Non Federal entities that expend $300,000 ($500,000
for fiscal years ending after December 31, 2003) or more in a year in Federal
awards shall have a single audit conducted in accordance with §_.500 except
when they elect to have a program- specific audit conducted in accordance with
paragraph (c) of this section.
(c) Program- specific audit election. When an auditee expends Federal
awards under only one Federal program (excluding R&D) and the Federal
program's laws, regulations, or grant agreements do not require a financial
statement audit of the auditee, the auditee may elect to have a program
specific audit conducted in accordance with §_.235. A program- specific
audit may not be elected for R &D unless all of the Federal awards expended
were received from the same Federal agency, or the same Federal agency and the
same pass- through entity, and that Federal agency, or pass through entity in
the case of a subrecipient, approves in advance a program- specific audit.
(d) Exemption when Federal awards expended are less than $300,000
($500,000 for fiscal years ending after December 31, 2003). Non Federal
8
entities that expend less than $300,000 ($500,000 for fiscal years ending
after December 31, 2003) a year in Federal awards are exempt from Federal
audit requirements for that year, except as noted in §.215(a), but records
must be available for review or audit by appropriate officials of the Federal
agency, pass- through entity, and General Accounting Office (GAO).
(e) Federally Funded Research and Development Centers (FFRDC).
Management of an auditee that owns or operates a FFRDC may elect to treat the
FFRDC as a separate entity for purposes of this part.
.205 Basis for determining Federal awards expended.
(a) Determining Federal awards expended. The determination of when an
award is expended should be based on when the activity related to the award
occurs. Generally, the activity pertains to events that require the non-
Federal entity to comply with laws, regulations, and the provisions of
contracts or grant agreements, such as: expenditure /expense transactions
associated with grants, cost reimbursement contracts, cooperative agreements,
and direct appropriations; the disbursement of funds passed through to
subrecipients; the use of loan proceeds under loan and loan guarantee
programs; the receipt of property; the receipt of surplus property; the
receipt or use of program income; the distribution or consumption of food
commodities; the disbursement of amounts entitling the non Federal entity to
an interest subsidy; and, the period when insurance is in force.
(b) Loan and loan guarantees (loans). Since the Federal Government is
at risk for loans until the debt is repaid, the following guidelines shall be
used to calculate the value of Federal awards expended under _loan programs,
except as noted in paragraphs (c) and (d) of this section:
plus
received.
(1) Value of new loans made or received during the fiscal year;
(2) Balance of loans from previous years for which the Federal
Government imposes continuing compliance requirements; plus
(3) Any interest subsidy, cash, or administrative cost allowance
(c) Loan and loan guarantees (loans) at institutions of higher
education. When loans are made to students of an institution of higher
education but the institution does not make the loans, then only the value of
loans made during the year shall be considered Federal awards expended in that
year. The balance of loans for previous years is not included as Federal
awards expended because the lender accounts for the prior balances.
(d) Prior loan and loan guarantees (loans). Loans, the proceeds of
which were received and expended in prior years, are not considered Federal
awards expended under this part when the laws, regulations, and the provisions
of contracts or grant agreements pertaining to such loans impose no continuing
compliance requirements other than to repay the loans.
(e) Endowment funds. The cumulative balance of Federal awards for
endowment funds which are federally restricted are considered awards expended
in each year in which the funds are still restricted.
(f) Free rent. Free rent received by itself is not considered a
Federal award expended under this part. However, free rent received as part
9
of an award to carry out a Federal program shall be included in determining
Federal awards expended and subject to audit under this part.
(g) Valuing non -cash assistance. Federal non -cash assistance, such as
free rent, food stamps, food commodities, donated property, or donated surplus
property, shall be valued at fair market value at the time of receipt or the
assessed value provided by the Federal agency.
(h) Medicare. Medicare payments to a non Federal entity for providing
patient care services to Medicare eligible individuals are not considered
Federal awards expended under this part.
(i) Medicaid. Medicaid payments to a subrecipient for providing
patient care services to Medicaid eligible individuals are not considered
Federal awards expended under this part unless a State requires the funds to
be treated as Federal awards expended because reimbursement is on a cost
reimbursement basis.
(j) Certain loans provided by the National Credit Union
Administration. For purposes of this part, loans made from the National
Credit Union Share Insurance Fund and the Central Liquidity Facility that are
funded by contributions from insured institutions are not considered Federal
awards expended.
.210 Subrecipient and vendor determinations.
(a) General. An auditee may be a recipient, a subrecipient, and a
vendor. Federal awards expended as a recipient or a subrecipient would be
subject to audit under this part. The payments received for goods or services
provided as a vendor would not be considered Federal awards. The guidance in
paragraphs (b) and (c) of this section should be considered in determining
whether payments constitute a Federal award or a payment for goods and
services.
(b) Federal award. Characteristics indicative of a Federal award
received by a subrecipient are when the organization:
assistance;
(1) Determines who is eligible to receive what Federal financial
(2) Has its performance measured against whether the objectives
of the Federal program are met;
operations;
(3) Has responsibility for programmatic decision making;
(4) Has responsibility for adherence to applicable Federal
program compliance requirements; and
(5) Uses the Federal funds to carry out a program of the
organization as compared to providing goods or services for a program of the
pass- through entity.
(c) Payment for goods and services. Characteristics indicative of a
payment for goods and services received by a vendor are when the organization:
(1) Provides the goods and services within normal business
10
purchasers;
(3) Operates in a competitive environment;
(4) Provides goods or services that are ancillary to the
operation of the Federal program; and
program.
(2) Provides similar goods or services to many different
(5) Is not subject to compliance requirements of the Federal
(d) Use of iudgment in making determination. There may be unusual
circumstances or exceptions to the listed characteristics. In making the
determination of whether a subrecipient or vendor relationship exists, the
substance of the relationship is more important than the form of the
agreement. It is not expected that all of the characteristics will be present
and judgment should be used in determining whether an entity is a subrecipient
or vendor.
(e) For profit subrecipient. Since this part does not apply to for
profit subrecipients, the pass- through entity is responsible for establishing
requirements, as necessary, to ensure compliance by for profit subrecipients.
The contract with the for profit subrecipient should describe applicable
compliance requirements and the for profit subrecipient's compliance
responsibility. Methods to ensure compliance for Federal awards made to for
profit subrecipients may include pre -award audits, monitoring during the
contract, and post -award audits.
(f) Compliance responsibility for vendors. In most cases, the
auditee's compliance responsibility for vendors is only to ensure that the
procurement, receipt, and payment for goods and services comply with laws,
regulations, and the provisions of contracts or grant agreements. Program
compliance requirements normally do not pass through to vendors. However, the
auditee is responsible for ensuring compliance for vendor transactions which
are structured such that the vendor is responsible for program compliance or
the vendor's records must be reviewed to determine program compliance. Also,
when these vendor transactions relate to a major program, the scope of the
audit shall include determining whether these transactions are in compliance
with laws, regulations, and the provisions of contracts or grant agreements.
.215 Relation to other audit requirements.
(a) Audit under this part in lieu of other audits. An audit made in
accordance with this part shall be in lieu of any financial audit required
under individual Federal awards. To the extent this audit meets a Federal
agency's needs, it shall rely upon and use such audits. The provisions of
this part neither limit the authority of Federal agencies, including their
Inspectors General, or GAO to conduct or arrange for additional audits (e.g.,
financial audits, performance audits, evaluations, inspections, or reviews)
nor authorize any auditee to constrain Federal agencies from carrying out
additional audits. Any additional audits shall be planned and performed in
such a way as to build upon work performed by other auditors.
(b) Federal aaencv to pay for additional audits. A Federal agency
that conducts or contracts for additional audits shall, consistent with other
applicable laws and regulations, arrange for funding the full cost of such
additional audits.
11
(c) Request for a program to be audited as a major program. A Federal
agency may request an auditee to have a particular Federal program audited as
a major program in lieu of the Federal agency conducting or arranging for the
additional audits. To allow for planning, such requests should be made at
least 180 days prior to the end of the fiscal year to be audited. The
auditee, after consultation with its auditor, should promptly respond to such
request by informing the Federal agency whether the program would otherwise be
audited as a major program using the risk -based audit approach described in
§.520 and, if not, the estimated incremental cost. The Federal agency
shall then promptly confirm to the auditee whether it wants the program
audited as a major program. If the program is to be audited as a major
program based upon this Federal agency request, and the Federal agency agrees
to pay the full incremental costs, then the auditee shall have the program
audited as a major program. A pass- through entity may use the provisions of
this paragraph for a subrecipient.
.220 Frequency of audits.
Except for the provisions for biennial audits provided in paragraphs (a)
and (b) of this section, audits required by this part shall be performed
annually. Any biennial audit shall cover both years within the biennial
period.
(a) A State or local government that is required by constitution or
statute, in effect on January 1, 1987, to undergo its audits less frequently
than annually, is permitted to undergo its audits pursuant to this part
biennially. This requirement must still be in effect for the biennial period
under audit.
(b) Any non profit organization that had biennial audits for all
biennial periods ending between July 1, 1992, and January 1, 1995, is
permitted to undergo its audits pursuant to this part biennially.
.225 Sanctions.
No audit costs may be charged to Federal awards when audits required by
this part have not been made or have been made but not in accordance with this
part. In cases of continued inability or unwillingness to have an audit
conducted in accordance with this part, Federal agencies and pass- through
entities shall take appropriate action using sanctions such as:
(a) Withholding a percentage of Federal awards until the audit is
completed satisfactorily;
(b) Withholding or disallowing overhead costs;
(c) Suspending Federal awards until the audit is conducted; or
(d) Terminating the Federal award.
.230 Audit costs.
(a) Allowable costs. Unless prohibited by law, the cost of audits
made in accordance with the provisions of this part are allowable charges to
Federal awards. The charges may be considered a direct cost or an allocated
indirect cost, as determined in accordance with the provisions of applicable
OMB cost principles circulars, the Federal Acquisition Regulation (FAR) (48
CFR parts 30 and 31), or other applicable cost principles or regulations.
12
(b) Unallowable costs. A non Federal entity shall not charge the
following to a Federal award:
(1) The cost of any audit under the Single Audit Act Amendments
of 1996 (31 U.S.C. 7501 et seq.) not conducted in accordance with this part.
(2) The cost of auditing a non Federal entity which has Federal
awards expended of less than $300,000 ($500,000 for fiscal years ending after
December 31, 2003) per year and is thereby exempted under .200(d) from
having an audit conducted under this part. However, this does not prohibit a
pass- through entity from charging Federal awards for the cost of limited scope
audits to monitor its subrecipients in accordance with .400(d)(3),
provided the subrecipient does not have a single audit. For purposes of this
part, limited scope audits only include agreed -upon procedures engagements
conducted in accordance with either the AICPA's generally accepted auditing
standards or attestation standards, that are paid for and arranged by a pass
through entity and address only one or more of the following types of
compliance requirements: activities allowed or unallowed; allowable
costs /cost principles; eligibility; matching, level of effort, earmarking;
and, reporting.
.235 Program- specific audits.
(a) Program- specific audit guide available. In many cases, a program
specific audit guide will be available to provide specific guidance to the
auditor with respect to internal control, compliance requirements, suggested
audit procedures, and audit reporting requirements. The auditor should
contact the Office of Inspector General of the Federal agency to determine
whether such a guide is available. When a current program- specific audit
guide is available, the auditor shall follow GAGAS and the guide when
performing a program- specific audit.
(b) Program- specific audit guide not available. (1) When a program
specific audit guide is not available, the auditee and auditor shall have
basically the same responsibilities for the Federal program as they would have
for an audit of a major program in a single audit.
(2) The auditee shall prepare the financial statement(s) for the
Federal program that includes, at a minimum, a schedule of expenditures of
Federal awards for the program and notes that describe the significant
accounting policies used in preparing the schedule, a summary schedule of
prior audit findings consistent with the requirements of .315(b), and a
corrective action plan consistent with the requirements of .315(c).
(3) The auditor shall:
(i) Perform an audit of the financial statement(s) for the
Federal program in accordance with GAGAS;
(ii) Obtain an understanding of internal control and
perform tests of internal control over the Federal program consistent with the
requirements of .500(c) for a major program;
(iii) Perform procedures to determine whether the auditee
has complied with laws, regulations, and the provisions of contracts or grant
agreements that could have a direct and material effect on the Federal program
consistent with the requirements of .500(d) for a major program; and
13
(iv) Follow up on prior audit findings, perform procedures
to assess the reasonableness of the summary schedule of prior audit findings
prepared by the auditee, and report, as a current year audit finding, when the
auditor concludes that the summary schedule of prior audit findings materially
misrepresents the status of any prior audit finding in accordance with the
requirements of .500(e).
(4) The auditor's report(s) may be in the form of either
combined or separate reports and may be organized differently from the manner
presented in this section. The auditor's report(s) shall state that the audit
was conducted in accordance with this part and include the following:
(i) An opinion (or disclaimer of opinion) as to whether
the financial statement(s) of the Federal program is presented fairly in all
material respects in conformity with the stated accounting policies;
(ii) A report on internal control related to the Federal
program, which shall describe the scope of testing of internal control and the
results of the tests;
(iii) A report on compliance which includes an opinion (or
disclaimer of opinion) as to whether the auditee complied with laws,
regulations, and the provisions of contracts or grant agreements which could
have a direct and material effect on the Federal program; and
(iv) A schedule of findings and questioned costs for the
Federal program that includes a summary of the auditor's results relative to
the Federal program in a format consistent with .505(d)(1) and findings
and questioned costs consistent with the requirements of .505(d)(3).
(c) Report submission for program- specific audits.
(1) The audit shall be completed and the reporting required by paragraph
(c)(2) or (c)(3) of this section submitted within the earlier of 30 days after
receipt of the auditor's report(s), or nine months after the end of the audit
period, unless a longer period is agreed to in advance by the Federal agency
that provided the funding or a different period is specified in a program
specific audit guide. (However, for fiscal years beginning on or before June
30, 1998, the audit shall be completed and the required reporting shall be
submitted within the earlier of 30 days after receipt of the auditor's
report(s), or 13 months after the end of the audit period, unless a different
period is specified in a program- specific audit guide.) Unless restricted by
law or regulation, the auditee shall make report copies available for public
inspection.
(2) When a program- specific audit guide is available, the
auditee shall submit to the Federal clearinghouse designated by OMB the data
collection form prepared in accordance with .320(b), as applicable to a
program- specific audit, and the reporting required by the program- specific
audit guide to be retained as an archival copy. Also, the auditee shall
submit to the Federal awarding agency or pass- through entity the reporting
required by the program- specific audit guide.
(3) When a program- specific audit guide is not available, the
reporting package for a program- specific audit shall consist of the financial
statement(s) of the Federal program, a summary schedule of prior audit
findings, and a corrective action plan as described in paragraph (b)(2) of
this section, and the auditor's report(s) described in paragraph (b)(4) of
this section. The data collection form prepared in accordance with
14
.320(b), as applicable to a program- specific audit, and one copy of this
reporting package shall be submitted to the Federal clearinghouse designated
by OMB to be retained as an archival copy. Also, when the schedule of
findings and questioned costs disclosed audit findings or the summary schedule
of prior audit findings reported the status of any audit findings, the auditee
shall submit one copy of the reporting package to the Federal clearinghouse on
behalf of the Federal awarding agency, or directly to the pass- through entity
in the case of a subrecipient. Instead of submitting the reporting package to
the pass- through entity, when a subrecipient is not required to submit a
reporting package to the pass- through entity, the subrecipient shall provide
written notification to the pass- through entity, consistent with the
requirements of .320(e)(2). A subrecipient may submit a copy of the
reporting package to the pass through entity to comply with this notification
requirement.
(d) Other sections of this part may apply. Program- specific audits
are subject to §_.100 through §_.215(b), §.220 through §_.230,
§_.300 through §_.305, §.315, §_.320(f) through §_.320(j), §_.400
through §.405, §_.510 through §_.515, and other referenced provisions
of this part unless contrary to the provisions of this section, a program
specific audit guide, or program laws and regulations.
Subpart C-- Auditees
.300 Auditee responsibilities.
The auditee shall:
(a) Identify, in its accounts, all Federal awards received and
expended and the Federal programs under which they were received. Federal
program and award identification shall include, as applicable, the CFDA title
and number, award number and year, name of the Federal agency, and name of the
pass- through entity.
(b) Maintain internal control over Federal programs that provides
reasonable assurance that the auditee is managing
Federal awards in compliance with laws, regulations, and the provisions of
contracts or grant agreements that could have a material effect on each of its
Federal programs.
(c) Comply with laws, regulations, and the provisions of contracts or
grant agreements related to each of its Federal programs.
(d) Prepare appropriate financial statements, including the schedule
of expenditures of Federal awards in accordance with §_.310.
(e) Ensure that the audits required by this part are properly
performed and submitted when due. When extensions to the report submission
due date required by §_.320(a) are granted by the cognizant or oversight
agency for audit, promptly notify the Federal clearinghouse designated by OMB
and each pass- through entity providing Federal awards of the extension.
(f) Follow up and take corrective action on audit findings, including
preparation of a summary schedule of prior audit findings and a corrective
action plan in accordance with §_.315(b) and §_.315(c), respectively.
.305 Auditor selection.
15
(a) Auditor procurement. In procuring audit services, auditees shall
follow the procurement standards prescribed by the Grants Management Common
Rule (hereinafter referred to as the "A -102 Common Rule published March 11,
1988 and amended April 19, 1995 [insert appropriate CFR citation], Circular
A -110, "Uniform Administrative Requirements for Grants and Agreements with
Institutions of Higher Education, Hospitals and Other Non Profit
Organizations," or the FAR (48 CFR part 42), as applicable (OMB Circulars are
available from the Office of Administration, Publications Office, room 2200,
New Executive Office Building, Washington, DC 20503). Whenever possible,
auditees shall make positive efforts to utilize small businesses, minority
owned firms, and women's business enterprises, in procuring audit services as
stated in the A -102 Common Rule, OMB Circular A -110, or the FAR (48 CFR part
42), as applicable. In requesting proposals for audit services, the
objectives and scope of the audit should be made clear. Factors to be
considered in evaluating each proposal for audit services include the
responsiveness to the request for proposal, relevant experience, availability
of staff with professional qualifications and technical abilities, the results
of external quality control reviews, and price.
(b) Restriction on auditor preparing indirect cost proposals. An
auditor who prepares the indirect cost proposal or cost allocation plan may
not also be selected to perform the audit required by this part when the
indirect costs recovered by the auditee during the prior year exceeded $1
million. This restriction applies to the base year used in the preparation of
the indirect cost proposal or cost allocation plan and any subsequent years in
which the resulting indirect cost agreement or cost allocation plan is used to
recover costs. To minimize any disruption in existing contracts for audit
services, this paragraph applies to audits of fiscal years beginning after
June 30, 1998.
(c) Use of Federal auditors. Federal auditors may perform all or part
of the work required under this part if they comply fully with the
requirements of this part.
.310 Financial statements.
(a) Financial statements. The auditee shall prepare financial
statements that reflect its financial position, results of operations or
changes in net assets, and, where appropriate, cash flows for the fiscal year
audited. The financial statements shall be for the same organizational unit
and fiscal year that is chosen to meet the requirements of this part.
However, organization -wide financial statements may also include departments,
agencies, and other organizational units that have separate audits in
accordance with §_.500(a) and prepare separate financial statements.
(b) Schedule of expenditures of Federal awards. The auditee shall
also prepare a schedule of expenditures of Federal awards for the period
covered by the auditee's financial statements. While not required, the
auditee may choose to provide information requested by Federal awarding
agencies and pass- through entities to make the schedule easier to use. For
example, when a Federal program has multiple award years, the auditee may list
the amount of Federal awards expended for each award year separately. At a
minimum, the schedule shall:
(1) List individual Federal programs by Federal agency. For
Federal programs included in a cluster of programs, list individual Federal
programs within a cluster of programs. For R &D, total Federal awards expended
shall be shown either by individual award or by Federal agency and major
subdivision within the Federal agency. For example, the National Institutes
of Health is a major subdivision in the Department of Health and Human
Services.
16
(2) For Federal awards received as a subrecipient, the name of
the pass- through entity and identifying number assigned by the pass- through
entity shall be included.
(3) Provide total Federal awards expended for each individual
Federal program and the CFDA number or other identifying number when the CFDA
information is not available.
(4) Include notes that describe the significant accounting
policies used in preparing the schedule.
(5) To the extent practical, pass- through entities should
identify in the schedule the total amount provided to subrecipients from each
Federal program.
(6) Include, in either the schedule or a note to the schedule,
the value of the Federal awards expended in the form of non -cash assistance,
the amount of insurance in effect during the year, and loans or loan
guarantees outstanding at year end. While not required, it is preferable to
present this information in the schedule.
S.315 Audit findings follow -up.
(a) General. The auditee is responsible for follow -up and corrective
action on all audit findings. As part of this responsibility, the auditee
shall prepare a summary schedule of prior audit findings. The auditee shall
also prepare a corrective action plan for current year audit findings. The
summary schedule of prior audit findings and the corrective action plan shall
include the reference numbers the auditor assigns to audit findings under
S .510(c). Since the summary schedule may include audit findings from
multiple years, it shall include the fiscal year in which the finding
initially occurred.
(b) Summary schedule of prior audit findings. The summary schedule of
prior audit findings shall report the status of all audit findings included in
the prior audit's schedule of findings and questioned costs relative to
Federal awards. The summary schedule shall also include audit findings
reported in the prior audit's summary schedule of prior audit findings except
audit findings listed as corrected in accordance with paragraph (b)(1) of this
section, or no longer valid or not warranting further action in accordance
with paragraph (b)(4) of this section.
(1) When audit findings were fully corrected, the summary
schedule need only list the audit findings and state that corrective action
was taken.
(2) When audit findings were not corrected or were only
partially corrected, the summary schedule shall describe the planned
corrective action as well as any partial corrective action taken.
(3) When corrective action taken is significantly different from
corrective action previously reported in a corrective action plan or in the
Federal agency's or pass- through entity's management decision, the summary
schedule shall provide an explanation.
(4) When the auditee believes the audit findings are no longer
valid or do not warrant further action, the reasons for this position shall be
described in the summary schedule. A valid reason for considering an audit
finding as not warranting further action is that all of the following have
occurred:
(i) Two years have passed since the audit report in which
17
the finding occurred was submitted to the Federal clearinghouse;
(ii) The Federal agency or pass- through entity is not
currently following up with the auditee on the audit finding; and
(iii) A management decision was not issued.
(c) Corrective action plan. At the completion of the audit, the
auditee shall prepare a corrective action plan to address each audit finding
included in the current year auditor's reports. The corrective action plan
shall provide the name(s) of the contact person(s) responsible for corrective
action, the corrective action planned, and the anticipated completion date.
If the auditee does not agree with the audit findings or believes corrective
action is not required, then the corrective action plan shall include an
explanation and specific reasons.
6.320 Report submission.
(a) General. The audit shall be completed and the data collection
form described in paragraph (b) of this section and reporting package
described in paragraph (c) of this section shall be submitted within the
earlier of 30 days after receipt of the auditor's report(s), or nine months
after the end of the audit period, unless a longer period is agreed to in
advance by the cognizant or oversight agency for audit. (However, for fiscal
years beginning on or before June 30, 1998, the audit shall be completed and
the data collection form and reporting package shall be submitted within the
earlier of 30 days after receipt of the auditor's report(s), or 13 months
after the end of the audit period.) Unless restricted by law or regulation,
the auditee shall make copies available for public inspection.
(b) Data Collection. (1) The auditee shall submit a data collection
form which states whether the audit was completed in accordance with this part
and provides information about the auditee, its Federal programs, and the
results of the audit. The form shall be approved by OMB, available from the
Federal clearinghouse designated by OMB, and include data elements similar to
those presented in this paragraph. A senior level representative of the
auditee (e.g., State controller, director of finance, chief executive officer,
or chief financial officer) shall sign a statement to be included as part of
the form certifying that: the auditee complied with the requirements of this
part, the form was prepared in accordance with this part (and the instructions
accompanying the form), and the information included in the form, in its
entirety, are accurate and complete.
elements:
(2) The data collection form shall include the following data
(i) The type of report the auditor issued on the financial statements of
the auditee (i.e., unqualified opinion, qualified opinion, adverse
opinion, or disclaimer of opinion).
(ii) Where applicable, a statement that reportable conditions in internal
control were disclosed by the audit of the financial statements and
whether any such conditions were material weaknesses.
(iii) A statement as to whether the audit disclosed any noncompliance which
is material to the financial statements of the auditee.
(iv) Where applicable, a statement that reportable conditions in internal
control over major programs were disclosed by the audit and whether
any such conditions were material weaknesses.
(v) The type of report the auditor issued on compliance for major
18
programs (i.e., unqualified opinion, qualified opinion, adverse
opinion, or disclaimer of opinion).
A list of the Federal awarding agencies which will receive a copy of
the reporting package pursuant to §.320(d)(2) of OMB Circular
A -133.
A yes or no statement as to whether the auditee qualified as a low
risk auditee under .530 of OMB Circular A -133.
The dollar threshold used to distinguish between Type A and Type B
programs as defined in §_.520(b) of OMB Circular A -133.
The Catalog of Federal Domestic Assistance (CFDA) number for each
Federal program, as applicable.
The name of each Federal program and identification of each major
program. Individual programs within a cluster of programs should be
listed in the same level of detail as they are listed in the schedule
of expenditures of Federal awards.
The amount of expenditures in the schedule of expenditures of Federal
awards associated with each Federal program.
For each Federal program, a yes or no statement as to whether there
are audit findings in each of the following types of compliance
requirements and the total amount of any questioned costs:
(A) Activities allowed or unallowed.
(B) Allowable costs /cost principles.
(C) Cash management.
(D) Davis -Bacon Act.
(E) Eligibility.
(F) Equipment and real property management.
(G) Matching, level of effort, earmarking.
(11) Period of availability of Federal funds.
(I) Procurement and suspension and debarment.
(J) Program income.
(K) Real property acquisition and relocation assistance.
(L) Reporting.
(M) Subrecipient monitoring.
(N) Special tests and provisions.
(xiii) Auditee Name, Employer Identification Number(s), Name and Title of
Certifying Official, Telephone Number, Signature, and Date.
(xiv) Auditor Name, Name and Title of Contact Person, Auditor Address,
Auditor Telephone Number, Signature, and Date.
(xv) Whether the auditee has either a cognizant or oversight agency for
audit.
(xvi) The name of the cognizant or oversight agency for audit determined in
accordance with .400(a) and .400(b), respectively.
(3) Using the information included in the reporting package
described in paragraph (c) of this section, the auditor shall complete the
applicable sections of the form. The auditor shall sign a statement to be
included as part of the data collection form that indicates, at a minimum, the
source of the information included in the form, the auditor's responsibility
for the information, that the form is not a substitute for the reporting
package described in paragraph (c) of this section, and that the content of
19
the form is limited to the data elements prescribed by OMB.
(d) Submission to clearinghouse. All auditees shall submit to the
Federal clearinghouse designated by OMB the data collection form described in
paragraph (b) of this section and one copy of the reporting package described
in paragraph (c) of this section for:
(c) Reporting package. The reporting package shall include the:
(1) Financial statements and schedule of expenditures of
Federal awards discussed in 5 and S .310(b), respectively;
(2) Summary schedule of prior audit findings discussed in
.315(b);
(3) Auditor's report(s) discussed in .505; and
(4) Corrective action plan discussed in §.315(c).
and
(1) The Federal clearinghouse to retain as an archival copy;
(2) Each Federal awarding agency when the schedule of findings
and questioned costs disclosed audit findings relating to Federal awards that
the Federal awarding agency provided directly or the summary schedule of prior
audit findings reported the status of any audit findings relating to Federal
awards that the Federal awarding agency provided directly.
(e) Additional submission by subrecipients. (1) In addition to the
requirements discussed in paragraph (d) of this section, auditees that are
also subrecipients shall submit to each pass- through entity one copy of the
reporting package described in paragraph (c) of this section for each pass
through entity when the schedule of findings and questioned costs disclosed
audit findings relating to Federal awards that the pass- through entity
provided or the summary schedule of prior audit findings reported the status
of any audit findings relating to Federal awards that the pass- through entity
provided.
(2) Instead of submitting the reporting package to a pass
through entity, when a subrecipient is not required to submit a reporting
package to a pass- through entity pursuant to paragraph (e)(1) of this section,
the subrecipient shall provide written notification to the pass- through entity
that: an audit of the subrecipient was conducted in accordance with this part
(including the period covered by the audit and the name, amount, and CFDA
number of the Federal award(s) provided by the pass- through entity); the
schedule of findings and questioned costs disclosed no audit findings relating
to the Federal award(s) that the pass- through entity provided; and, the
summary schedule of prior audit findings did not report on the status of any
audit findings relating to the Federal award(s) that the pass- through entity
provided. A subrecipient may submit a copy of the reporting package described
in paragraph (c) of this section to a pass- through entity to comply with this
notification requirement.
(f) Requests for report copies. In response to requests by a Federal
agency or pass- through entity, auditees shall submit the appropriate copies of
the reporting package described in paragraph (c) of this section and, if
requested, a copy of any management letters issued by the auditor.
(g) Report retention requirements. Auditees shall keep one copy of
the data collection form described in paragraph (b) of this section and one
copy of the reporting package described in paragraph (c) of this section on
file for three years from the date of submission to the Federal clearinghouse
20
designated by OMB. Pass through entities shall keep subrecipients'
submissions on file for three years from date of receipt.
(h) Clearinghouse responsibilities. The Federal clearinghouse
designated by OMB shall distribute the reporting packages received in
accordance with paragraph (d)(2) of this section and §_.235(c)(3) to
applicable Federal awarding agencies, maintain a data base of completed
audits, provide appropriate information to Federal agencies, and follow up
with known auditees which have not submitted the required data collection
forms and reporting packages.
(i) Clearinghouse address. The address of the Federal clearinghouse
currently designated by OMB is Federal Audit Clearinghouse, Bureau of the
Census, 1201 E. 10th Street, Jeffersonville, IN 47132.
(j) Electronic filing. Nothing in this part shall preclude electronic
submissions to the Federal clearinghouse in such manner as may be approved by
OMB. With OMB approval, the Federal clearinghouse may pilot test methods of
electronic submissions.
Subpart D-- Federal Agencies and Pass- Through Entities
Responsibilities.
(a) Cognizant agency for audit responsibilities. Recipients expending
more than $25 million ($50 million for fiscal years ending after December 31,
2003) a year in Federal awards shall have a cognizant agency for audit. The
designated cognizant agency for audit shall be the Federal awarding agency
that provides the predominant amount of direct funding to a recipient unless
OMB makes a specific cognizant agency for audit assignment.
Following is effective for fiscal years ending on or before December 31, 2003:
To provide for continuity of cognizance, the determination of the predominant
amount of direct funding shall be based upon direct Federal awards expended in
the recipient's fiscal years ending in 1995, 2000, 2005, and every fifth year
thereafter. For example, audit cognizance for periods ending in 1997 through
2000 will be determined based on Federal awards expended in 1995. (However,
for States and local governments that expend more than $25 million a year in
Federal awards and have previously assigned cognizant agencies for audit, the
requirements of this paragraph are not effective until fiscal years beginning
after June 30, 2000.)
Following is effective for fiscal years ending after December 31, 2003:
The determination of the predominant amount of direct funding shall be based
upon direct Federal awards expended in the recipient's fiscal years ending in
2004, 2009, 2014, and every fifth year thereafter. For example, audit
cognizance for periods ending in 2006 through 2010 will be determined based on
Federal awards expended in 2004. (However, for 2001 through 2005,the
cognizant agency for audit is determined based on the predominant amount of
direct Federal awards expended in the recipient's fiscal year ending in 2000).
Notwithstanding the manner in which audit cognizance is determined, a Federal
awarding agency with cognizance for an auditee may reassign cognizance to
another Federal awarding agency which provides substantial direct funding and
agrees to be the cognizant agency for audit. Within 30 days after any
reassignment, both the old and the new cognizant agency for audit shall notify
the auditee, and, if known, the auditor of the reassignment. The cognizant
agency for audit shall:
auditors.
(1) Provide technical audit advice and liaison to auditees and
(2) Consider auditee requests for extensions to the report
21
submission due date required by §_.320(a). The cognizant agency for audit
may grant extensions for good cause.
(3) Obtain or conduct quality control reviews of selected
audits made by non Federal auditors, 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 direct reporting by the
auditee or its auditor of irregularities or illegal acts, as required by GAGAS
or laws and regulations.
(5) Advise the auditor and, where appropriate, the auditee of
any deficiencies found in the audits when the deficiencies require corrective
action by the auditor. When advised of deficiencies, the auditee shall work
with the auditor to take corrective action. If corrective action is not
taken, the cognizant agency for audit shall notify the auditor, the auditee,
and applicable Federal awarding agencies and pass- through entities of the
facts and make recommendations for follow -up action. Major inadequacies or
repetitive substandard performance by auditors shall be referred to
appropriate State licensing agencies and professional bodies for disciplinary
action.
(6) Coordinate, to the extent practical, audits or reviews
made by or for Federal agencies that are in addition to the audits made
pursuant to this part, so that the additional audits or reviews build upon
audits performed in accordance with this part.
(7) Coordinate a management decision for audit findings that
affect the Federal programs of more than one agency.
(8) Coordinate the audit work and reporting responsibilities
among auditors to achieve the most cost effective audit.
(9) For biennial audits permitted under .220, consider
auditee requests to qualify as a low -risk auditee under .530(a).
(b) Oversight agency for audit responsibilities. An auditee which
does not have a designated cognizant agency for audit will be under the
general oversight of the Federal agency determined in accordance with
§_.105. The oversight agency for audit:
requested.
(1) Shall provide technical advice to auditees and auditors as
(2) May assume all or some of the responsibilities normally
performed by a cognizant agency for audit.
(c) Federal awarding agency responsibilities. The Federal awarding
agency shall perform the following for the Federal awards it makes:
(1) Identify Federal awards made by informing each recipient
of the CFDA title and number, award name and number, award year, and if the
award is for R &D. When some of this information is not available, the Federal
agency shall provide information necessary to clearly describe the Federal
award.
(2) Advise recipients of requirements imposed on them by
Federal laws, regulations, and the provisions of contracts or grant
agreements.
(3) Ensure that audits are completed and reports are received
22
in a timely manner and in accordance with the requirements of this part.
(4) Provide technical advice and counsel to auditees and
auditors as requested.
(5) Issue a management decision on audit findings within six
months after receipt of the audit report and ensure that the recipient takes
appropriate and timely corrective action.
(6) Assign a person responsible for providing annual updates
of the compliance supplement to OMB.
(d) Pass through entity responsibilities. A pass- through entity shall
perform the following for the Federal awards it makes:
(1) Identify Federal awards made by informing each
subrecipient of CFDA title and number, award name and number, award year, if
the award is R &D, and name of Federal agency. When some of this information
is not available, the pass- through entity shall provide the best information
available to describe the Federal award.
(2) Advise subrecipients of requirements imposed on them by
Federal laws, regulations, and the provisions of contracts or grant agreements
as well as any supplemental requirements imposed by the pass- through entity.
(3) Monitor the activities of subrecipients as necessary to
ensure that Federal awards are used for authorized purposes in compliance with
laws, regulations, and the provisions of contracts or grant agreements and
that performance goals are achieved.
(4) Ensure that subrecipients expending $300,000 ($500,000 for
fiscal years ending after December 31, 2003) or more in Federal awards during
the subrecipient's fiscal year have met the audit requirements of this part
for that fiscal year.
(5) Issue a management decision on audit findings within six
months after receipt of the subrecipient's audit report and ensure that the
subrecipient takes appropriate and timely corrective action.
(6) Consider whether subrecipient audits necessitate
adjustment of the pass- through entity's own records.
(7) Require each subrecipient to permit the pass- through
entity and auditors to have access to the records and financial statements as
necessary for the pass- through entity to comply with this part.
.405 Management decision.
(a) General. The management decision shall clearly state whether or
not the audit finding is sustained, the reasons for the decision, and the
expected auditee action to repay disallowed costs, make financial adjustments,
or take other action. If the auditee has not completed corrective action, a
timetable for follow -up should be given. Prior to issuing the management
decision, the Federal agency or pass- through entity may request
additional information or documentation from the auditee, including a request
for auditor assurance related to the documentation, as a way of mitigating
disallowed costs. The management decision should describe any appeal process
available to the auditee.
(b) Federal agency. As provided in .400(a)(7), the cognizant
agency for audit shall be responsible for coordinating a management decision
for audit findings that affect the programs of more than one Federal agency.
23
As provided in 5 .400(c)(5), a Federal awarding agency is responsible for
issuing a management decision for findings that relate to Federal awards it
makes to recipients. Alternate arrangements may be made on a case -by -case
basis by agreement among the Federal agencies concerned.
(c) Pass through entity. As provided in 5 .400(d)(5), the pass
through entity shall be responsible for making the management decision for
audit findings that relate to Federal awards it makes to subrecipients.
(d) Time requirements. The entity responsible for making the
management decision shall do so within six months of receipt of the audit
report. Corrective action should be initiated within six months after receipt
of the audit report and proceed as rapidly as possible.
(e) Reference numbers. Management decisions shall include the
reference numbers the auditor assigned to each audit finding in accordance
with .510(n).
Subpart E-- Auditors
5 Scope of audit.
(a) General. The audit shall be conducted in accordance with GAGAS.
The audit shall cover the entire operations of the auditee; or, at the option
of the auditee, such audit shall include a series of audits that cover
departments, agencies, and other organizational units which expended or
otherwise administered Federal awards during such fiscal year, provided that
each such audit shall encompass the financial statements and schedule of
expenditures of Federal awards for each such department, agency, and other
organizational unit, which shall be considered to be a non Federal entity.
The financial statements and schedule of expenditures of Federal awards shall
be for the same fiscal year.
(b) Financial statements. The auditor shall determine whether the
financial statements of the auditee are presented fairly in all material
respects in conformity with generally accepted accounting principles. The
auditor shall also determine whether the schedule of expenditures of Federal
awards is presented fairly in all material respects in relation to the
auditee's financial statements taken as a whole.
(c) Internal control. (1) In addition to the requirements of GAGAS,
the auditor shall perform procedures to obtain an understanding of internal
control over Federal programs sufficient to plan the audit to support a low
assessed level of control risk for major programs.
(2) Except as provided in paragraph (c)(3) of this section,
shall:
the auditor
(i) Plan the testing of internal control over major
support a low assessed level of control risk for the assertions
the compliance requirements for each major program; and
(ii) Perform testing of internal control as planned in
paragraph (c)(2)(i) of this section.
programs to
relevant to
(3) When internal control over some or all of the compliance
requirements for a major program are likely to be ineffective in preventing or
detecting noncompliance, the planning and performing of testing described in
paragraph (c)(2) of this section are not required for those compliance
requirements. However, the auditor shall report a reportable condition
(including whether any such condition is a material weakness) in accordance
with 5 .510, assess the related control risk at the maximum, and consider
whether additional compliance tests are required because of ineffective
24
internal control.
(d) Compliance. (1) In addition to the requirements of GAGAS, the
auditor shall determine whether the auditee has complied with laws,
regulations, and the provisions of contracts or grant agreements that may have
a direct and material effect on each of its major programs.
(2) The principal compliance requirements applicable to most
Federal programs and the compliance requirements of the largest Federal
programs are included in the compliance supplement.
(3) For the compliance requirements related to Federal
programs contained in the compliance supplement, an audit of these compliance
requirements will meet the requirements of this part. Where there have been
changes to the compliance requirements and the changes are not reflected in
the compliance supplement, the auditor shall determine the current compliance
requirements and modify the audit procedures accordingly. For those Federal
programs not covered in the compliance supplement, the auditor should use the
types of compliance requirements contained in the compliance supplement as
guidance for identifying the types of compliance requirements to test, and
determine the requirements governing the Federal program by reviewing the
provisions of contracts and grant agreements and the laws and regulations
referred to in such contracts and grant agreements.
(4) The compliance testing shall include tests of transactions
and such other auditing procedures necessary to provide the auditor sufficient
evidence to support an opinion on compliance.
(e) Audit follow -up. The auditor shall follow -up on prior audit
findings, perform procedures to assess the reasonableness of the summary
schedule of prior audit findings prepared by the auditee in accordance with
.315(b), and report, as a current year audit finding, when the auditor
concludes that the summary schedule of prior audit findings materially
misrepresents the status of any prior audit finding. The auditor shall
perform audit follow -up procedures regardless of whether a prior audit finding
relates to a major program in the current year.
(f) Data Collection Form. As required in .320(b)(3), the auditor
shall complete and sign specified sections of the data collection form.
.505 Audit reporting.
The auditor's report(s) may be in the form of either combined or
separate reports and may be organized differently from the manner presented in
this section. The auditor's report(s) shall state that the audit was
conducted in accordance with this part and include the following:
(a) An opinion (or disclaimer of opinion) as to whether the financial
statements are presented fairly in all material respects in conformity with
generally accepted accounting principles and an opinion (or disclaimer of
opinion) as to whether the schedule of expenditures of Federal awards is
presented fairly in all material respects in relation to the financial
statements taken as a whole.
(b) A report on internal control related to the financial statements
and major programs. This report shall describe the scope of testing of
internal control and the results of the tests, and, where applicable, refer to
the separate schedule of findings and questioned costs described in paragraph
(d) of this section.
(c) A report on compliance with laws, regulations, and the provisions
of contracts or grant agreements, noncompliance with which could have a
25
material effect on the financial statements. This report shall also include
an opinion (or disclaimer of opinion) as to whether the auditee complied with
laws, regulations, and the provisions of contracts or grant agreements which
could have a direct and material effect on each major program, and, where
applicable, refer to the separate schedule of findings and questioned costs
described in paragraph (d) of this section.
(d) A schedule of findings and questioned costs which shall include
the following three components:
(1) A summary of the auditors results which shall include:
(i) The type of report the auditor issued on the
financial statements of the auditee (i.e., unqualified opinion, qualified
opinion, adverse opinion, or disclaimer of opinion);
(ii) Where applicable, a statement that reportable
conditions in internal control were disclosed by the audit of the financial
statements and whether any such conditions were material weaknesses;
(iii) A statement as to whether the audit disclosed any
noncompliance which is material to the financial statements of the auditee;
(iv) Where applicable, a statement that reportable
conditions in internal control over major programs were disclosed by the audit
and whether any such conditions were material weaknesses;
(v) The type of report the auditor issued on compliance
for major programs (i.e., unqualified opinion, qualified opinion, adverse
opinion, or disclaimer of opinion);
(vi) A statement as to whether the audit disclosed any
audit findings which the auditor is required to report under §.510(a);
(vii) An identification of major programs;
(viii)The dollar threshold used to distinguish between
Type A and Type B programs, as described in §.520(b); and
(ix) A statement as to whether the auditee qualified as
a low -risk auditee under .530.
(2) Findings relating to the financial statements which are
required to be reported in accordance with GAGAS.
(3) Findings and questioned costs for Federal awards which
shall include audit findings as defined in §_.510(a).
(i) Audit findings (e.g., internal control findings,
compliance findings, questioned costs, or fraud) which relate to the same
issue should be presented as a single audit finding. Where practical, audit
findings should be organized by Federal agency or pass- through entity.
(ii) Audit findings which relate to both the financial
statements and Federal awards, as reported under paragraphs (d)(2) and (d)(3)
of this section, respectively, should be reported in both sections of the
schedule. However, the reporting in one section of the schedule may be in
summary form with a reference to a detailed reporting in the other section of
the schedule.
.510 Audit findings.
26
(a) Audit findings reported. The auditor shall report the following
as audit findings in a schedule of findings and questioned costs:
(1) Reportable conditions in internal control over major
programs. The auditor's determination of whether a deficiency in internal
control is a reportable condition for the purpose of reporting an audit
finding is in relation to a type of compliance requirement for a major program
or an audit objective identified in the compliance supplement. The auditor
shall identify reportable conditions which are individually or cumulatively
material weaknesses.
(2) Material noncompliance with the provisions of laws,
regulations, contracts, or grant agreements related to a major program. The
auditor's determination of whether a noncompliance with the provisions of
laws, regulations, contracts, or grant agreements is material for the purpose
of reporting an audit finding is in relation to a type of compliance
requirement for a major program or an audit objective identified in the
compliance supplement.
(3) Known questioned costs which are greater than $10,000 for
a type of compliance requirement for a major program. Known questioned costs
are those specifically identified by the auditor. In evaluating the effect of
questioned costs on the opinion on compliance, the auditor considers the best
estimate of total costs questioned (likely questioned costs), not just the
questioned costs specifically identified (known questioned costs). The
auditor shall also report known questioned costs when likely questioned costs
are greater than $10,000 for a type of compliance requirement for a major
program. In reporting questioned costs, the auditor shall include information
to provide proper perspective for judging the prevalence and consequences of
the questioned costs.
(4) Known questioned costs which are greater than $10,000 for
a Federal program which is not audited as a major program. Except for audit
follow -up, the auditor is not required under this part to perform audit
procedures for such a Federal program; therefore, the auditor will normally
not find questioned costs for a program which is not audited as a major
program. However, if the auditor does become aware of questioned costs for a
Federal program which is not audited as a major program (e.g., as part of
audit follow -up or other audit procedures) and the known questioned costs are
greater than $10,000, then the auditor shall report this as an audit finding.
(5) The circumstances concerning why the auditor's report on
compliance for major programs is other than an unqualified opinion, unless
such circumstances are otherwise reported as audit findings in the schedule of
findings and questioned costs for Federal awards.
(6) Known fraud affecting a Federal award, unless such fraud
is otherwise reported as an audit finding in the schedule of findings and
questioned costs for Federal awards. This paragraph does not require the
auditor to make an additional reporting when the auditor confirms that the
fraud was reported outside of the auditor's reports under the direct reporting
requirements of GAGAS.
(7) Instances where the results of audit follow -up procedures
disclosed that the summary schedule of prior audit findings prepared by the
auditee in accordance with §.315(b) materially misrepresents the status of
any prior audit finding.
(b) Audit finding detail. Audit findings shall be presented in
sufficient detail for the auditee to prepare a corrective action plan and take
corrective action and for Federal agencies and pass- through entities to arrive
at a management decision. The following specific information shall be
27
included, as applicable, in audit findings:
(1) Federal program and specific Federal award identification
including the CFDA title and number, Federal award number and year, name of
Federal agency, and name of the applicable pass- through entity. When
information, such as the CFDA title and number or Federal award number, is not
available, the auditor shall provide the best information available to
describe the Federal award.
(2) The criteria or specific requirement upon which the audit
finding is based, including statutory, regulatory, or other citation.
(3) The condition found, including facts that support the
deficiency identified in the audit finding.
computed.
(4) Identification of questioned costs and how they were
(5) Information to provide proper perspective for judging the
prevalence and consequences of the audit findings, such as whether the audit
findings represent an isolated instance or a systemic problem. Where
appropriate, instances identified shall be related to the universe and the
number of cases examined and be quantified in terms of dollar value.
(6) The possible asserted effect to provide sufficient
information to the auditee and Federal agency, or pass- through entity in the
case of a subrecipient, to permit them to determine the cause and effect to
facilitate prompt and proper corrective action.
(7) Recommendations to prevent future occurrences of the
deficiency identified in the audit finding.
(8) Views of responsible officials of the auditee when there
is disagreement with the audit findings, to the extent practical.
(c) Reference numbers. Each audit finding in the schedule of findings
and questioned costs shall include a reference number to allow for easy
referencing of the audit findings during follow -up.
§.515 Audit working papers.
(a) Retention of working papers. The auditor shall retain working
papers and reports for a minimum of three years after the date of issuance of
the auditor's report(s) to the auditee, unless the auditor is notified in
writing by the cognizant agency for audit, oversight agency for audit, or
pass- through entity to extend the retention period. When the auditor is aware
that the Federal awarding agency, pass- through entity, or auditee is
contesting an audit finding, the auditor shall contact the parties contesting
the audit finding for guidance prior to destruction of the working papers and
reports.
(b) Access to working papers. Audit working papers shall be made
available upon request to the cognizant or oversight agency for audit or its
designee, a Federal agency providing direct or indirect funding, or GAO at the
completion of the audit, as part of a quality review, to resolve audit
findings, or to carry out oversight responsibilities consistent with the
purposes of this part. Access to working papers includes the right of Federal
agencies to obtain copies of working papers, as is reasonable and necessary.
28
§_.520 Major program determination.
(a) General. The auditor shall use a risk -based approach to determine
which Federal programs are major programs. This risk -based approach shall
include consideration of: Current and prior audit experience, oversight by
Federal agencies and pass- through entities, and the inherent risk of the
Federal program. The process in paragraphs (b) through (i) of this section
shall be followed.
(b) Step 1. (1) The auditor shall identify the larger Federal
programs, which shall be labeled Type A programs. Type A programs are defined
as Federal programs with Federal awards expended during the audit period
exceeding the larger of:
(i) $300,000 or three percent (.03) of total Federal
awards expended in the case of an auditee for which total Federal awards
expended equal or exceed $300,000 but are less than or equal to $100 million.
(ii) $3 million or three tenths of one percent (.003) of
total Federal awards expended in the case of an auditee for which total
Federal awards expended exceed $100 million but are less than or equal to $10
billion.
(iii) $30 million or 15 hundredths of one percent (.0015)
of total Federal awards expended in the case of an auditee for which total
Federal awards expended exceed $10 billion.
(2) Federal programs not labeled Type A under paragraph (b)(1)
of this section shall be labeled Type B programs.
(3) The inclusion of large loan and loan guarantees (loans)
should not result in the exclusion of other programs as Type A programs. When
a Federal program providing loans significantly affects the number or size of
Type A programs, the auditor shall consider this Federal program as a Type A
program and exclude its values in determining other Type A programs.
(4) For biennial audits permitted under .220, the
determination of Type A and Type B programs shall be based upon the Federal
awards expended during the two -year period.
(c) Step 2. (1) The auditor shall identify Type A programs which are
low -risk. For a Type A program to be considered low -risk, it shall have been
audited as a major program in at least one of the two most recent audit
periods (in the most recent audit period in the case of a biennial audit),
and, in the most recent audit period, it shall have had no audit findings
under .510(a). However, the auditor may use judgment and consider that
audit findings from questioned costs under .510(a)(3) and .510(a)(4),
fraud under .510(a)(6), and audit follow -up for the summary schedule of
prior audit findings under .510(a)(7) do not preclude the Type A program
from being low -risk. The auditor shall consider: the criteria in .525(c),
.525(d)(1), .525(d)(2), and .525(d)(3); the results of audit
follow -up; whether any changes in personnel or systems affecting a Type A
program have significantly increased risk; and apply professional judgment in
determining whether a Type A program is low -risk.
(2) Notwithstanding paragraph (c)(1) of this section, OMB may
approve a Federal awarding agency's request that a Type A program at certain
recipients may not be considered low -risk. For example, it may be necessary
for a large Type A program to be audited as major each year at particular
recipients to allow the Federal agency to comply with the Government
Management Reform Act of 1994 (31 U.S.C. 3S1S). The Federal agency shall
notify the recipient and, if known, the auditor at least 180 days prior to the
29
end of the fiscal year to be audited of OMB's approval.
(d) Step 3. (1) The auditor shall identify Type B programs which are
high -risk using professional judgment and the criteria in §.525. However,
should the auditor select Option 2 under Step 4 (paragraph (e)(2)(i)(B) of
this section), the auditor is not required to identify more high -risk Type B
programs than the number of low -risk Type A programs. Except for known
reportable conditions in internal control or compliance problems as discussed
in .525(b)(1), .525(b)(2), and .525(c)(1), a single criteria in
§_.525 would seldom cause a Type B program to be considered high -risk.
(2) The auditor is not expected to perform risk assessments on
relatively small Federal programs. Therefore, the auditor is only required to
perform risk assessments on Type B programs that exceed the larger of:
(i) $100,000 or three tenths of one percent (.003) of
total Federal awards expended when the auditee has less than or equal to $100
million in total Federal awards expended.
(ii) $300,000 or three hundredths of one percent (.0003)
of total Federal awards expended when the auditee has more than $100 million
in total Federal awards expended.
(e) Step 4. At a minimum, the auditor shall audit all of the
following as major programs:
(1) All Type A programs, except the auditor may exclude any
Type A programs identified as low -risk under Step 2 (paragraph (c)(1) of this
section).
(2) (i) High -risk Type B programs as identified under
either of the following two options:
(A) Option 1. At least one half of the Type B
programs identified as high -risk under Step 3 (paragraph (d) of this section),
except this paragraph (e)(2)(i)(A) does not require the auditor to audit more
high -risk Type B programs than the number of low -risk Type A programs
identified as low -risk under Step 2.
(B) Option 2. One high -risk Type B program for
each Type A program identified as low -risk under Step 2.
(ii) When identifying which high -risk Type B programs to
audit as major under either Option 1 or 2 in paragraph (e)(2)(i)(A) or (B),
the auditor is encouraged to use an approach which provides an opportunity for
different high -risk Type B programs to be audited as major over a period of
time.
(3) Such additional programs as may be necessary to comply
with the percentage of coverage rule discussed in paragraph (f) of this
section. This paragraph (e)(3) may require the auditor to audit more programs
as major than the number of Type A programs.
(f) Percentage of coverage rule. The auditor shall audit as major
programs Federal programs with Federal awards expended that, in the aggregate,
encompass at least 50 percent of total Federal awards expended. If the
auditee meets the criteria in .530 for a low -risk auditee, the auditor
need only audit as major programs Federal programs with Federal awards
expended that, in the aggregate, encompass at least 25 percent of total
Federal awards expended.
(g) Documentation of risk. The auditor shall document in the working
30
papers the risk analysis process used in determining major programs.
(h) Auditor's iudgment. When the major program determination was
performed and documented in accordance with this part, the auditor's judgment
in applying the risk -based approach to determine major programs shall be
presumed correct. Challenges by Federal agencies and pass- through entities
shall only be for clearly improper use of the guidance in this part. However,
Federal agencies and pass- through entities may provide auditors guidance about
the risk of a particular Federal program and the auditor shall consider this
guidance in determining major programs in audits not yet completed.
(i) Deviation from use of risk criteria. For first -year audits, the
auditor may elect to determine major programs as all Type A programs plus any
Type B programs as necessary to meet the percentage of coverage rule discussed
in paragraph (f) of this section. Under this option, the auditor would not be
required to perform the procedures discussed in paragraphs (c), (d), and (e)
of this section.
(1) A first -year audit is the first year the entity is audited
under this part or the first year of a change of auditors.
(2) To ensure that a frequent change of auditors would not
preclude audit of high -risk Type H programs, this election for first -year
audits may not be used by an auditee more than once in every three years.
§.525 Criteria for Federal program risk.
(a) General. The auditor's determination should be based on an
overall evaluation of the risk of noncompliance occurring which could be
material to the Federal program. The auditor shall use auditor judgment and
consider criteria, such as described in paragraphs (b), (c), and (d) of this
section, to identify risk in Federal programs. Also, as part of the risk
analysis, the auditor may wish to discuss a particular Federal program with
auditee management and the Federal agency or pass- through entity.
(b) Current and prior audit experience. (1) Weaknesses in internal
control over Federal programs would indicate higher risk. Consideration
should be given to the control environment over Federal programs and such
factors as the expectation of management's adherence to applicable laws and
regulations and the provisions of contracts and grant agreements and the
competence and experience of personnel who administer the Federal programs.
(i) A Federal program administered under multiple
internal control structures may have higher risk. When assessing risk in a
large single audit, the auditor shall consider whether weaknesses are isolated
in a single operating unit (e.g., one college campus) or pervasive throughout
the entity.
(ii) When significant parts of a Federal program are
passed through to subrecipients, a weak system for monitoring subrecipients
would indicate higher risk.
(iii) The extent to which computer processing is used to
administer Federal programs, as well as the complexity of that processing,
should be considered by the auditor in assessing risk. New and recently
modified computer systems may also indicate risk.
(2) Prior audit findings would indicate higher risk,
particularly when the situations identified in the audit findings could have a
significant impact on a Federal program or have not been corrected.
(3) Federal programs not recently audited as major programs
31
may be of higher risk than Federal programs recently audited as major programs
without audit findings.
(c) Oversight exercised by Federal agencies and pass through entities.
(1) Oversight exercised by Federal agencies or pass- through entities could
indicate risk. For example, recent monitoring or other reviews performed by
an oversight entity which disclosed no significant problems would indicate
lower risk. However, monitoring which disclosed significant problems would
indicate higher risk.
(2) Federal agencies, with the concurrence of OMB, may
identify Federal programs which are higher risk. OMB plans to provide this
identification in the compliance supplement.
(d) Inherent risk of the Federal program. (1) The nature of a
Federal program may indicate risk. Consideration should be given to the
complexity of the program and the extent to which the Federal program
contracts for goods and services. For example, Federal programs that disburse
funds through third party contracts or have eligibility criteria may be of
higher risk. Federal programs primarily involving staff payroll costs may
have a high -risk for time and effort reporting, but otherwise be at low -risk.
(2) The phase of a Federal program in its life cycle at the
Federal agency may indicate risk. For example, a new Federal program with new
or interim regulations may have higher risk than an established program with
time tested regulations. Also, significant changes in Federal programs, laws,
regulations, or the provisions of contracts or grant agreements may increase
risk.
(3) The phase of a Federal program in its life cycle at the
auditee may indicate risk. For example, during the first and last years that
an auditee participates in a Federal program, the risk may be higher due to
start -up or closeout of program activities and staff.
(4) Type B programs with larger Federal awards expended would
be of higher risk than programs with substantially smaller Federal awards
expended.
5 .530 Criteria for a low risk auditee.
An auditee which meets all of the following conditions for each of the
preceding two years (or, in the case of biennial audits, preceding two audit
periods) shall qualify as a low -risk auditee and be eligible for reduced audit
coverage in accordance with S_ .520:
(a) Single audits were performed on an annual basis in accordance with
the provisions of this part. A non Federal entity that has biennial audits
does not qualify as a low -risk auditee, unless agreed to in advance by the
cognizant or oversight agency for audit.
(b) The auditor's opinions on the financial statements and the
schedule of expenditures of Federal awards were unqualified. However, the
cognizant or oversight agency for audit may judge that an opinion
qualification does not affect the management of Federal awards and provide a
waiver.
(c) There were no deficiencies in internal control which were
identified as material weaknesses under the requirements of SAGAS. However,
the cognizant or oversight agency for audit may judge that any identified
material weaknesses do not affect the management of Federal awards and provide
a waiver.
32
(d) None of the Federal programs had audit findings from any of the
following in either of the preceding two years (or, in the case of biennial
audits, preceding two audit periods) in which they were classified as Type A
programs:
(1) Internal control deficiencies which were identified as
material weaknesses;
(2) Noncompliance with the provisions of laws, regulations,
contracts, or grant agreements which have a material effect on the Type A
program; or
(3) Known or likely questioned costs that exceed five percent
of the total Federal awards expended for a Type A program during the year.
Appendix A to Part Data Collection Form (Form SF -SAC)
[insert SF -SAC after finalized]
Appendix B to Part Circular A -133 Compliance Supplement
Note: Provisional OMB Circular A -133 Compliance Supplement is available
from the Office of Administration, Publications Office, room 2200, New
Executive Office Building, Washington, DC 20503.
33
End User Site
Address
City
State
City Hall Court House Sheriff
321 E Fifth St
Port Angeles
WA
PA Fire Station
102 E 5th St
Port Angeles
WA
Landfill
3501 W 18th
Port Angeles
WA
Corp Yard City Light
1703 S B St
Port Angeles
WA
WWTP
1509 Columbia
Port Angeles
WA
E street
1022 S E St
Port Angeles
WA
Senior Cntr
328 E 7th St
Port Angeles
WA
William Shore Pool
255 E. 5th St.
Port Angeles
WA
Parks Mntc
3127 W 18th St
Port Angeles
WA
Cemetery Chapel
2700 S Milwaukee Dr.
Port Angeles
WA
Light Operation
2007 S 0 St
Port Angeles
WA
P.A.H.S.
304 E Park Ave
Port Angeles
WA
Scrivner PS
300 E Scrivner
Port Angeles
WA
CSO P.S. 1
5th St N St
Port Angeles
WA
Wolverton Park
825 W 11th St
Port Angeles
WA
N Olympic Youth Cntr
201 W 1st St
Port Angeles
WA
Tribal Library
2851 Lower Elwha Rd
Port Angeles
WA
Some of the Anchor Tenant listed above above are City utility sites, ie pump stations etc Anchor Tenant List
Offered Customer Premise Equipment: Up to the first 100 anchor tenants will receive customer premise
equipment. An anchor tenant, for purposes of BTOP, is usually an organization which serves some common
good, provides a common service, etc. These organizations are not necessarily governmental or not for profit.
Examples of anchor tenants would be K -12 schools, higher education, community centers, senior centers,
hospitals, clinics, doctor's offices, emergency services, police departments, sheriffs offices, public safety
entities such as PSAPS, local /city/county/state government offices, workforce development offices, economic
development offices, utility companies, etc. Often, one anchor tenant serves as a gateway into a set of anchor
tenants, such as: school districts, regional hospital clinics, etc.
4
9.
NTIA BTOP ROUND 2 AWARD
EXHIBIT "M"
CITY OF PORT ANGELES
SUB PARTICIPANT SUMMARY SCOPE OF WORK (SOW)
Sub Participant Organization Name City of Port Angeles
Sub Participant DUNS Number
Project Title WRAP II NW -1A City of Port Angeles
Recipient DUNS Number- 127973282
NTIA Award Number NTI OBIX5570111
Project 1 Summary: Route NW -1A City of Port Angeles will provide access to high speed broadband in the
City of Port Angeles by installing wireless infrastructure on existing structures. This project will server a wider
area of rural northwestern Washington on the Olympic Peninsula. The wireless infrastructure will be co-
located on at least 41 fiber optic sites and at least 175 other sites all of which will be mounted on existing
streetlight standards or utility poles. These sites include primarily public and community facilities throughout
the project area and the work required includes installation of wireless antennas, overhead fiber optics and
electrical work.
Planned Project Completion Date:
Anchor Tenant List:
70 completed by 9/29/2012
Remainder 30% by 06/29/2013
Funding Description
Funding Value
Grant Request
2,559,036.00
In -Kind Match
Cash Match
1,096,729.00
Total Match
1,096,729.00
Total Project Budget
3,655,765.00
Funding Summary:
NoaNet.
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N earl et POP ere Wireless Range Er=r ESA lasted Plant S pee ies C Flood plain uS Hlglmaa
1-1- Exiskng NeN et Route En WA DNB M anagetl Lands Na4onal Histonc Place '�`wESP Critical Habttat�� WAStaRHlgfiway
rat) Naboeel Wiltllik Petuge Urban Area Streamifrner Arterial
ED WA State Park r County Boundary Lake
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