**DEPARTMENT OF COMMERCE**

**CFDA 11.300 GRANTS FOR PUBLIC WORKS AND ECONOMIC DEVELOPMENT
FACILITIES**

**CFDA 11.307 ECONOMIC ADJUSTMENT ASSISTANCE**

**I. PROGRAM OBJECTIVES**

The Economic Development Administration (EDA) awards grants through its
Public Works and Economic Development (Public Works) program to assist
the Nation's most distressed communities: (1) revitalize and expand
their physical and economic infrastructure and\
(2) provide support for the creation or retention of jobs for area
residents by helping eligible recipients with their efforts to promote
the economic development of their local economies. The primary goal of
these awards is the creation of new, or the retention of existing,
long-term private sector job opportunities in communities experiencing
significant economic distress as evidenced by high unemployment,
underemployment, low per capita income, outmigration, or a special need
arising from actual or threatened severe unemployment or severe changes
in local economic conditions. Public Works grants may include
construction and related activities, such as acquisition, design and
engineering, and related machinery and equipment.

The objective of EDA's Economic Adjustment Assistance program is to
address the needs of communities experiencing adverse economic changes
that may occur suddenly or over time, including, but not limited to,
those caused by military base closures or realignments, depletion of
natural resources, Presidentially-declared disasters or emergencies, or
international trade. Economic Adjustment Assistance awards may be used
to develop a comprehensive economic development strategy (CEDS) or other
strategy to alleviate long-term economic deterioration or a sudden and
severe economic dislocation, or to fund a project implementing that CEDS
or other strategy, including grants for construction and grants for
Revolving Loan Funds (RLFs). EDA grants to capitalize or recapitalize
RLFs are most commonly used for business lending, but may also fund
public infrastructure or other authorized purposes involving lending.

**II. PROGRAM PROCEDURES**

A recipient of a Public Works or Economic Adjustment Assistance grant is
required to provide a matching share. The required matching share varies
on a grant-by-grant basis and is set forth in the grant award. Prior to
EDA approving the matching share, the recipient must demonstrate to
EDA's satisfaction that the matching share is committed to the project,
available as needed, and not conditioned or encumbered in any way that
would preclude its use consistent with the requirements of the grant
award (42 USC 3144-3146; 13 CFR sections 300.3 and 301.5).

Section 302 (42 USC 3162) of the Public Works and Economic Development
Act of 1965, as amended (PWEDA, 42 USC 3121 *et seq*.), sets forth a
CEDS requirement for Public Works and Economic Adjustment Assistance
grants, except for planning projects (i.e., strategy grants) under the
Economic Adjustment Assistance program.

RLF recipients must manage RLFs in accordance with an RLF Plan approved
by EDA. The RLF Plan must be approved by the RLF recipient's governing
board prior to the initial disbursement of EDA funds. RLF recipients are
responsible for ensuring that borrowers are aware of and comply with
applicable Federal statutory and regulatory requirements.

**Source of Governing Requirements**

The programs are authorized by PWEDA, as amended by the Economic
Development Administration Reauthorization Act of 2004 (Pub. L. No.
108-373). All section citations contained herein refer to EDA's
regulations as codified at 13 CFR Chapter III.

**Availability of Other Program Information**

Other program information is available on the Internet at
[http://www.eda.gov](http://www.eda.gov/).

**III. COMPLIANCE REQUIREMENTS**

**In developing the audit procedures to test compliance with the
requirements for a Federal program, the auditor should first look to
Part 2, Matrix of Compliance Requirements, to identify which of the 14
types of compliance requirements described in Part 3 are applicable and
then look to Parts 3 and 4 for the details of the requirements.**

**A.** **Activities Allowed or Unallowed**

1\. *Activities Allowed*

> The grant budget and grant agreement will specify the purpose or use
> of funds which include the following:
>
> a\. Construction grants can be made for the acquisition or development
> of land and improvements for use for a public works, public service,
> or development facility. Construction grants can also be made for the
> acquisition, design and engineering, construction, rehabilitation,
> alteration, expansion, or improvement of such a facility, including
> related machinery and equipment (42 USC 3141; 42 USC 3149; and 13 CFR
> sections 305.2(a) and 307.3).
>
> b\. RLF grants may be made for the establishment or recapitalization
> of an RLF, usually for business development, but RLF grants may also
> fund public infrastructure or other authorized purposes involving
> lending\
> (42 USC 3149; and 13 CFR section 307.7).
>
> c\. Other activities that can be funded under the Economic Adjustment
> Assistance program (in addition to grants for construction and RLFs)
> are grants for CEDS (or other strategy) development and grants for
> CEDS (or other strategy) implementation, which include market or
> industry research and analysis, technical assistance, public services,
> training, and other activities as justified by the strategy which meet
> applicable statutory and regulatory requirements (42 USC 3149; and 13
> CFR section 307.3).
>
> d\. A recipient of a Public Works grant may directly expend the grant
> funds or, with prior EDA approval, may redistribute such grant
> assistance in the form of a subgrant to another eligible recipient to
> fund required components of the scope of work approved for the project
> (42 USC 3154c; 13 CFR section 309.1).
>
> e\. A recipient of an Economic Adjustment Assistance grant may
> directly expend the grant funds or, with prior EDA approval, may
> redistribute such grant assistance in the form of (i) a subgrant to
> another eligible recipient that qualifies for an Economic Adjustment
> Assistance award or (ii) a loan or other appropriate assistance to
> non-profit and private for-profit entities (42 USC 3154c; 13 CFR
> section 309.2).

2\. *Activities Unallowed*

> RLF capital (as defined in 13 CFR section 307.8) may not be used to:
>
> a\. Acquire an equity position in a private business (13 CFR section
> 307.17(b)(1)).
>
> b\. Subsidize interest payments on an existing RLF loan (13 CFR
> section 307.17(b)(2)).
>
> c\. Provide the equity contribution required of borrowers under other
> Federal loan programs (13 CFR section 307.17(b)(3)).
>
> d\. Enable an RLF borrower to acquire an interest in a business unless
> there is a sufficient justification and documentation showing the need
> for RLF financing (13 CFR section 307.17(b)(4)).
>
> e\. Provide RLF loans to a borrower for the purpose of investing in
> interest‑bearing accounts or other investments not related to the RLF\
> (13 CFR section 307.17(b)(5)).
>
> f\. Refinance existing debt unless (i) the RLF recipient sufficiently
> demonstrates in the loan documentation a "sound economic
> justification" for the refinancing (e.g., the refinancing will support
> additional capital investment intended to increase business
> activities); for this purpose, reducing the risk of loss to an
> existing lender(s) or lowering the cost of financing to a borrower
> shall not, without other indicia, constitute a "sound economic
> justification"; or (ii) RLF capital will finance the purchase of the
> rights of a prior lien holder during a foreclosure action which is
> necessary to preclude a significant loss on an RLF loan\
> (13 CFR section 307.17(b)(6)).

**C. Cash Management**

> 1\. Unless otherwise specified in a special award condition, the
> method of payment for an award for an infrastructure construction
> project is generally through reimbursement (using Form ED-113, *Outlay
> Report and Request for Reimbursement for Construction Programs*) for
> costs incurred. Prior to disbursing grant funds for an infrastructure
> construction project, EDA also must receive an invoice from the
> recipient. EDA may approve the disbursement of funds prior to the
> tender of all construction contracts if the recipient can demonstrate
> that a severe hardship will result without such approval\
> (13 CFR section 305.9(b)).
>
> 2\. Grant funds also are made available to RLF recipients on a
> reimbursement basis (when an obligation is incurred by the RLF
> recipient at the time of loan approval and loan announcement). An RLF
> recipient must request a disbursement only to close a loan or disburse
> RLF funds to a borrower (i.e., when the intent is to disburse the
> funds within fourteen (14) days of receipt). The RLF recipient must
> disburse the grant funds to a borrower within thirty (30) days of
> receipt of the funds. Any grant funds not disbursed within the thirty
> (30) day period must be returned to EDA. An RLF recipient is required
> to submit a written request for continued use of grant funds beyond a
> missed disbursement deadline. The amount of disbursed grant funds
> cannot exceed the difference, if any, between the RLF capital and the
> amount of a new loan, less the amount, if any, of the matching share
> required to be disbursed concurrent with the grant funds. However, RLF
> income held to cover eligible administrative expenses need not be
> disbursed in order to draw additional grant funds (13 CFR section
> 307.11).

**D. Davis-Bacon Act**

> All laborers and mechanics employed by contractors or subcontractors
> on construction projects receiving EDA grant assistance shall be paid
> at rates not less than those prevailing on similar construction in the
> locality, as determined by the Secretary of Labor in accordance with
> subchapter IV of chapter 31 of title 40, United States Code (42 USC
> 3212; 13 CFR section 302.13).

**F. Equipment and Real Property Management**

> Except as otherwise authorized by EDA, property acquired or improved
> with EDA grant assistance cannot be used to secure a mortgage or deed
> of trust or in any way collateralized or otherwise encumbered. An
> encumbrance includes but is not limited to easements, rights-of-way or
> other restrictions on the use of any property. (13 CFR section
> 314.6(a)).

**G. Matching, Level of Effort, Earmarking**

> **1. Matching**
>
> The required matching share varies on a grant-by-grant basis and is
> set forth in the grant award (42 USC 3144-3146; 13 CFR sections 300.3
> and 301.5).
>
> **2. Level of Effort** - Not Applicable
>
> **3. Earmarking** - Not Applicable

**L. Reporting**

> **1. Financial Reporting**
>
> a\. SF-269, *Financial Status Report* - Applicable
>
> b\. SF-270, *Request for Advance or Reimbursement* - Applicable
>
> c\. SF-271, *Outlay Report and Request for Reimbursement for
> Construction Programs* (ED-113) (*OMB No. 0610-0096*), which contains
> substantially the same information that is used in lieu of the SF-271.
>
> d\. SF-272, *Federal Cash Transactions Report* - Applicable
>
> **2. Performance Reporting** - Not Applicable
>
> **3. Special Reporting**
>
> a\. ED-209S, *Semi-Annual Report for EDA-Funded RLF Grants* and
> ED‑209A, *Annual Report for EDA-Funded RLF Grants* *(OMB No.
> 0610-0095)* -- All RLF recipients are required to submit Form ED-209S
> for the periods ending March 31and September 30, unless EDA has
> approved the substitution of an annual Form ED-209A (covering the
> period ending September 30) upon the written request of the RLF
> recipient (13 CFR section 307.14(a)).
>
> *Key Line Items* - The following line items contain critical
> information:
>
> [ED-209S]{.underline} [ED-209A]{.underline}
>
> \(1\) Line I-A-6 Line C-16 *Total Active Loans*
>
> \(2\) Line III-C-14 Line A-6 *Current Level or RLF Base Capital*
>
> \(3\) Line III-D-20 NA *Current Balance Available as a Percent of Base
> Capital*
>
> \(4\) NA Line A-11 *RLF Capital Utilization Rate*
>
> \(5\) Line V-C-9 NA *Amount of RLF Income Earned in the most recent
> 12-month period*
>
> \(6\) Line V-C-11 NA *Percentage of RLF Income used for Administrative
> Costs*
>
> b\. ED-209I, *RLF Income and Expense Statement* *(OMB No. 0610-0095)*
> -- RLF recipients electing to use either 50 percent or more (or more
> than \$100,000) of RLF income to cover all or part of an RLF's
> administrative expenses must submit annually a completed Form ED-209I
> (13 CFR section 307.14(c)) (see also III.N.1., "Increases to RLF
> Capital Base").

*Key Line Items* - The following line items contain critical
information:

\(1\) *RLF Income*

> \(2\) *Expenses Charged to RLF Income (2.a through 2.l)*
>
> \(3\) *Total Expenses (sum of 2.a through 2.l)*
>
> \(4\) *Net RLF Income (1 minus 3)*
>
> \(5\) *Cumulative Net RLF Income*
>
> \(6\) *Expenses as % of RLF Income (3/1)*
>
> \(7\) *For the current 12-month period, provide an estimate of
> projected RLF Income and the percentage expected to be used for RLF
> administrative expenses*.

**N. Special Tests and Provisions**

> **1. Increases to RLF Capital Base**
>
> **Compliance Requirements** - RLF income includes all interest earned
> on outstanding loan principal, interest earned on accounts holding
> idle RLF funds, loan fees and other loan-related earnings. RLF income
> does not include repayment of RLF loan principal and any interest
> remitted to the U.S. Treasury pursuant to a sequestration of excess
> funds. When an RLF recipient receives proceeds on a defaulted RLF
> loan, such proceeds shall be applied in the following order of
> priority: (1) first, towards any costs of collection;\
> (2) second, towards outstanding penalties and fees; (3) third, towards
> any accrued interest to the extent due and payable; and (4) fourth,
> towards any outstanding principal balance (13 CFR sections 307.8 and
> 307.12(c)).
>
> RLF income may fund administrative expenses, provided the following
> conditions are met: (1) the RLF income and the administrative expense
> are earned in the same 12-month reporting period; (2) RLF income that
> is not used for administrative expenses during the 12-month reporting
> period must be added to the RLF capital base and made available for
> lending activities; (3) RLF income cannot be withdrawn from the RLF
> capital base in a subsequent reporting period for any use other than
> lending without the prior written consent of EDA; and (4) the
> recipient completes an *RLF Income and Expense Statement* (13 CFR
> section 307.12(a)).
>
> RLF capital includes the aggregate amount of cash held by the RLF
> recipient from any of the following sources: grant funds, matching
> share, repayment of principal from RLF loans, and RLF income.
> Generally, RLF capital must be used for the purpose of making RLF
> loans that are consistent with an RLF Plan or other purposes approved
> by EDA\
> (13 CFR sections 307.8 and 307.17(a)).
>
> **Audit Objective** - Determine whether (1) all the conditions for RLF
> income to be used to fund administrative expenses were satisfied; (2)
> RLF income not used for administrative expenses was added to the RLF
> capital base for lending activities; and (3) repayments of principal
> on RLF loans were placed in the RLF capital base for re-lending.

**Suggested Audit Procedures**

> a\. Verify that the amounts recorded in the financial records include
> RLF income and repayments of principal on RLF loans.
>
> b\. Ascertain if RLF income not used for administrative expenses was
> added to the RLF capital base.
>
> c\. Ascertain if repayments of principal on RLF loans were placed into
> the RLF capital base.
>
> **2. Loan Requirements**
>
> **Compliance Requirements** - The following requirements apply to RLF
> loans:
>
> a\. RLFs must operate in accordance with generally accepted accounting
> principles (GAAP). Within sixty (60) days prior to the initial
> disbursement of EDA funds, an independent accountant familiar with the
> RLF recipient's accounting system must certify to EDA and the RLF
> recipient that such system is adequate to identify, safeguard and
> account for all RLF capital, outstanding RLF loans and other RLF
> operations (13 CFR sections 307.15(a) and (b)).
>
> b\. Prior to the disbursement of any EDA funds, the RLF recipient must
> certify that standard RLF loan documents necessary or advisable for
> lending are in place and that these documents have been reviewed by
> its legal counsel for adequacy and compliance with the terms and
> conditions of the grant and applicable State and local law. The
> standard loan documents include, at a minimum, the (1) loan
> application, (2) loan agreement, (3) promissory note, (4) security
> agreement(s), (5) deed of trust or mortgage (if applicable), (6)
> agreement of prior lien holder (if applicable), and (7) guaranty
> agreement (for officers or owners of corporate borrowers, if
> applicable) (13 CFR section 307.15(b)(2)).
>
> c\. An RLF recipient must make loans to implement and assist economic
> activity only within its EDA-approved lending area, as defined in the
> special terms and conditions of the grant award and the RLF Plan (13
> CFR section 307.18).
>
> d\. Unless otherwise provided in the grant agreement or modified in
> writing by EDA, a borrower is not eligible for RLF financing if credit
> is otherwise available on terms and conditions that permit the
> completion or successful operation of the activity to be financed. The
> RLF recipient is responsible for determining that each borrower meets
> this requirement and for documenting the basis for its determination
> in the loan documents for each RLF loan (13 CFR section 307.17(c)).
>
> **Audit Objective** - Determine whether (1) the required standard loan
> documents were completed for the RLF loans; (2) an independent
> accountant certified to EDA and to the RLF recipient that the
> accounting system is adequate to identify, safeguard and account for
> all RLF operations; (3) the financed activity is located in an
> EDA-approved lending area; and (4) there is loan documentation to
> support that credit was not otherwise available to the borrower.

**Suggested Audit Procedures**

> Test a sample of RLF loan files and ascertain if:
>
> a\. The standard loan documents were properly completed.
>
> b\. The financed activity is located in an EDA-approved lending area.
>
> c\. The RLF recipient documents in the RLF loan file that credit was
> not otherwise available to the borrower.
>
> **3. Addition of Lending Areas; Merger of RLFs**
>
> a\. An RLF recipient may add an additional lending area to its
> existing lending area to create a new lending area only with EDA's
> prior written approval and subject to the following conditions: (1)
> EDA has disbursed the full amount of the award to the RLF recipient;
> (2) the additional lending area must fulfill the economic distress
> criteria for Economic Adjustment Assistance grants; (3) prior to EDA's
> disbursement of additional funds to the RLF recipient, EDA determines
> a new grant rate for the new lending area; (4) the RLF recipient shows
> that the additional lending area is consistent with its CEDS, or
> modifies its CEDS for any additional lending area; (5) the RLF
> recipient modifies its RLF Plan to incorporate the additional lending
> area and revises its lending strategy; and (6) the RLF recipient
> fulfills any other conditions reasonably requested by EDA (42 USC
> 3149; and\
> 13 CFR section 307.18(a)).
>
> b\. EDA may provide written approval for a single RLF recipient to
> merge its RLFs, provided the following conditions are satisfied: (1)
> it meets the requirements to obtain annual report status; (2) it
> demonstrates a rational basis for undertaking the merger and the
> borrower criteria identified in the different RLF Plans are
> compatible, or will be compatible, for all RLFs to be consolidated;
> (3) it amends and consolidates its RLF Plan to account for the merger
> of RLFs; (4) it fulfills any other conditions reasonably requested by
> EDA; and (5) prior to EDA's disbursement of additional funds, EDA
> determines a new grant rate for the new lending area (42 USC 3149; and
> 13 CFR section 307.18(b)(1)).
>
> c\. EDA may provide written approval for multiple RLF recipients to
> merge their RLFs, provided the following conditions are satisfied: (1)
> the surviving RLF recipient meets the requirements to obtain annual
> report status; (2) the surviving RLF recipient amends and consolidates
> its RLF Plan to account for the merger of RLFs; (3) prior to EDA's
> disbursement of additional funds to the surviving RLF recipient, EDA
> determines a new grant rate for the new lending area; (4) EDA provides
> written approval of the merger agreement(s), modifications and
> revisions to the RLF Plans; (5) all applicable RLF grant assets of the
> discharging RLF recipient(s) transfer to the surviving RLF recipient
> as of the merger's effective date; and (6) the surviving RLF recipient
> becomes fully responsible for administration of the RLF grant assets
> transferred and fulfills all surviving RLF grant requirements and any
> other conditions reasonably requested by EDA\
> (42 USC 3149; and 13 CFR section 307.18(b)(2)).
>
> **Audit Objectives** - Determine whether (1) EDA has provided prior
> written approval to an RLF recipient, permitting it to (a) create a
> new lending area or (b) merge two or more of its EDA-funded RLFs into
> one surviving RLF; (2) the applicable preconditions have been
> fulfilled; and (3) EDA has provided prior written approval to two or
> more RLF recipients to consolidate their EDA-funded RLFs into one
> surviving RLF.

**Suggested Audit Procedures**

a.  Verify that the RLF recipient has evidence of EDA's prior written
    approval for the creation of a new lending area or the merger of
    RLFs.

b.  Ascertain if the RLF recipient has modified its CEDS to account for
    an additional lending area, if necessary.

c.  Ascertain if the RLF recipient has amended and/or consolidated, as
    necessary, its RLF Plan to account for a new lending area or merger
    of RLFs.

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4.  **RLF Loan Portfolio Sales and Securitizations**

> With prior approval from EDA, an RLF recipient may enter into a sale
> or a securitization of all or a portion of its RLF loan portfolio,
> provided it: (1) uses all the proceeds of any sale or a securitization
> to make additional RLF loans; and (2) requests EDA to subordinate its
> interest in all or a portion of any RLF loan portfolio sold or
> securitized (42 USC 3149; and 13 CFR section 307.19).
>
> **Audit Objectives** -- In the event an RLF recipient has sold or
> securitized RLF loans, verify whether it (1) requested EDA's prior
> approval and (2) used all the proceeds from the sale or securitization
> to make additional RLF loans.

**Suggested Audit Procedures**

a.  Verify that the RLF recipient has a written record demonstrating
    EDA's approval to sell or securitize all or a portion of its RLF
    loan portfolio.

b.  Ascertain that all the proceeds from the sale or securitization (net
    of reasonable transactions costs) were used to make additional RLF
    loans.

    **IV. OTHER INFORMATION**

> For an RLF grant under the Economic Adjustment Assistance program, the
> calculation of Federal awards expended for determining when an audit
> is required under OMB Circular A-133 and determining Type A programs
> shall consider the following:
>
> 1\. Balance of RLF loans outstanding at the end of the fiscal year,
> *plus*
>
> 2\. Cash and investment balance in the RLF at the end of the fiscal
> year, *plus*
>
> 3\. Administrative expenses paid out of RLF income during the fiscal
> year.
>
> Only the Federal share (which excludes the matching share) of the RLF
> shall be used in this determination. The Federal share of a
> recipient's RLF is calculated as follows: \[(sum of all EDA dollars
> from all of the grantee's RLF awards) ÷ (sum of all project dollars
> for all of the grantee's RLF awards)\] x recipient's RLF capital base.
> If this figure exceeds the OMB Circular A-133 audit threshold, or if
> this figure when accumulated with expenditures under other federal
> awards or programs exceeds that threshold, the recipient must have an
> audit conducted in accordance with OMB Circular A‑133 requirements.

**DEPARTMENT OF COMMERCE**

**CFDA 11.555 PUBLIC SAFETY INTEROPERABLE COMMUNICATIONS GRANT PROGRAM**

**I. PROGRAM OBJECTIVES**

The Public Safety Interoperable Communications (PSIC) Grant Program is a
one-time formula-based, 3-year matching grant program intended to
enhance interoperable communications for voice, data, and/or video
signals. This program provides public safety agencies with the
opportunity to achieve meaningful and measurable improvements to the
state of public safety communications interoperability through the full
and efficient use of all telecommunications resources.

**II. PROGRAM PROCEDURES**

Section 3006 of the Deficit Reduction Act of 2005 (Pub. L. No. 109-171),
as amended by Section 2201 of Pub. L. No. 110-53 and Section 4 of the
Call Home Act of 2006,\
Pub. L. No. 109-459, directed the National Telecommunications and
Information Administration (NTIA), in consultation with the Department
of Homeland Security (DHS), to establish and implement a grant program
to assist public safety agencies in the planning and coordination
associated with, the acquisition of, deployment of, or training for the
use of interoperable communications systems that:

-   utilize reallocated public safety spectrum for radio communications;

-   enable interoperability with communications systems that can utilize
    reallocated public safety spectrum for radio communication; or

-   otherwise improve or advance the interoperability of public safety
    communications systems that utilize other public safety spectrum
    bands.

States and Territories are required to submit an Investment
Justification (IJ) for each proposed PSIC Investment (project). Up to 10
Investment Justifications will be accepted per State or Territory. A
portfolio review of each State's or Territory's Investment
Justifications will include a statewide Investment summary, which will
include the following:

-   Summary of PSIC Investments;

-   Summary of how the Investments collectively relate to the statewide
    strategy/plan---the Statewide Communications Interoperability Plan
    (SCIP);

-   Description of the process used to identify, prioritize, and select
    Investments included in the Investment Justification; and

-   Description of the stakeholders involved in the evaluation and
    selection of proposals.

These Investments should strongly align with the goals and gaps set
forth in the SCIP and the PSIC criteria. The statewide Investment
summary of a State's or Territory's IJs must cumulatively account for
the total amount of PSIC funding allocated to the State or Territory,
not including any funds (up to 5 percent) already dedicated to statewide
planning efforts. Each IJ must be a separate and unique project from any
efforts currently under way. For example, a State may use its funding to
support an existing statewide communications system; however, this
funding must be a unique component of this system that does not receive
funding from another federal grant program.

The Department of Commerce, through the NTIA, is authorized to make
grants only through the end of fiscal year 2010. The PSIC grant has been
awarded to the 50 States, the District of Columbia, Puerto Rico,
American Samoa, Guam, the Commonwealth of the Northern Mariana Islands,
and the U.S. Virgin Islands. The Governor of each State and Territory
has designated a State Administrative Agency (SAA), which applied for
and administers the funds under the PSIC Grant Program. A recipient must
be a public safety agency that is a State, local, or tribal government
entity or nongovernmental organization authorized by such entity, whose
sole or principal purpose is to protect safety of life, health, or
property (Pub. L. No. 109-171, Section 3006(d)(1), 120 Stat. at 24).

The PSIC Grant Program period of performance began on October 1, 2007
and continues until September 30, 2010. A special condition has been
placed on each grant award indicating that the applicant cannot
drawdown, obligate, or expend Federal funds until approval of the SCIP
and IJs. From the period between October 1, 2007 and the approval in
early 2008, applicants can (at their own risk) incur matching costs
associated with the acquisition, deployment, and management and
administration (M&A) of the interoperability project. Applicants should
not obligate federal dollars prior to NTIA approval of the Investment.

The PSIC Grant Program encourages the development and implementation of
voluntary consensus standards for interoperable communications to the
greatest extent possible. Public safety agencies may also use PSIC funds
for interim- or long term Internet Protocol-based interoperable
solutions. (Pub. L. No. 110-53, Section 2201(a)(2), 121 Stat. 537).

**Source of Governing Requirements**

The PSIC Grant Program is authorized by Section 3006 of the Deficit
Reduction Act of 2005, Pub. L. No. 109-171, as amended by Section 2201
of Pub. L. No. 110-53, and Section 4 of the Call Home Act of 2006, Pub.
L. No. 109-459.

**Availability of Other Program Information**

Other program information is available on the Internet at
<http://www.ntia.doc.gov/psic>.

**III. COMPLIANCE REQUIREMENTS**

**In developing the audit procedures to test compliance with the
requirements for a Federal program, the auditor should first look to
Part 2, Matrix of Compliance Requirements, to identify which of the 14
types of compliance requirements described in Part 3 are applicable and
then look to Parts 3 and 4 for the details of the requirements.**

**A.** **Activities Allowed or Unallowed**

Funds may be used for the following activities:

1\. Planning and coordination associated with the use of interoperable
communications equipment, software and systems.

2\. Acquisition of interoperable communications equipment, software and
systems. Acquisition activities may also include technical and financial
planning, as well as procurement and system design activities.

3\. Deployment costs of interoperable communications equipment, software
and systems. Deployment activities may also include the development of
deployment procedures for use and the establishment of service level
agreements for its use.

4\. Training for the use of interoperable communications equipment,
software, and systems, both technical and operational (Pub. L. No.
109-171, Section 3006(a)(1), as amended by Section 2201 of Pub. L. No.
110-53, 121 Stat. 537).

**G. Matching, Level of Effort, Earmarking**

**1. Matching**

> SAAs must provide, from non-federal sources, not less than 20 percent
> of the costs of acquiring and deploying the interoperable
> communications systems funded under the grant program (Pub. L. No.
> 109-171, Section 3006(c), 120 Stat. at 24). The SAA is required to
> track and report the 20 percent matching requirement for acquisition,
> deployment, and management and administrative costs.
>
> a\. A match is not required for each Investment, as long as the
> aggregated State-level costs associated with the overall acquisition,
> deployment, and management and administrative cost categories have met
> the minimum 20 percent matching requirement.
>
> b\. Costs for planning and coordination and training activities do not
> require a match.
>
> c\. As provided in 48 USC 1469a, the requirement for local matching
> funds under \$200,000 (including in-kind contributions) is waived for
> the Territorial governments in Guam, American Samoa, the U.S. Virgin
> Islands, and the Commonwealth of the Northern Mariana Islands.
>
> **2. Level of Effort** -- Not Applicable
>
> **3**. **Earmarking** -- Not Applicable

**H. Period of Availability of Federal Funds**

> All PSIC grant funds that are not expended by September 30, 2010 must
> be returned to the U.S. Treasury (Section 3006 of the Deficit
> Reduction Act of 2005, Pub. L. No. 109-171, Section 3006(a)(2), 120
> Stat. at 24 (2006)).

**L. Reporting**

> **1. Financial Reporting**
>
> a\. SF-269, *Financial Status Report* due quarterly - Applicable
>
> b\. SF-270, *Request for Advance or Reimbursement* -- Not Applicable
>
> c\. SF-271, *Outlay Report and Request for Reimbursement for
> Construction Programs* -- Not Applicable
>
> d\. SF-272, *Federal Cash Transactions Report* -- Not Applicable
>
> **2. Performance Reporting** -- Not Applicable
>
> **3. Special Reporting** -- Not Applicable

IV. **OTHER INFORMATION**

> The PSIC Grant Program is closely related to the DHS Homeland Security
> Grant Program (CFDA 97.067). The auditor should be certain that the
> allowable expenditures under the awards for each of these grant
> programs are properly allocated and that the specific requirements of
> each program are followed.