## PART 84--- UNIFORM ADMINISTRATIVE REQUIREMENTS FOR GRANTS AND AGREEMENTS WITH INSTITUTIONS OF HIGHER EDUCATION, HOSPITALS, AND OTHER NON-PROFIT ORGANIZATIONS

  --------------------- -----------------------------------------------------------------
  **Subpart             
  A---General**         

  **Sec.**              

  84.1                  Purpose.

  84.2                  Definitions.

  84.3                  Effect on other issuances.

  84.4                  Deviations.

  84.5                  Subawards.

  **Subpart             
  B---Pre-Award         
  Requirements**        

  84.10                 Purpose.

  84.11                 Pre-award policies.

  84.12                 Forms for applying for Federal assistance.

  84.13                 Debarment and suspension; Drug-Free Workplace.

  84.14                 Special award conditions.

  84.15                 Metric system of measurement.

  84.16                 Resource Conservation and Recovery Act.

  84.17                 Certifications and representations.

  **Subpart             
  C---Post-Award        
  Requirements**        

  **Financial and       
  Program Management**  

  84.20                 Purpose of financial and program management.

  84.21                 Standards for financial management systems.

  84.22                 Payment.

  84.23                 Cost sharing or matching.

  84.24                 Program income.

  84.25                 Revision of budget and program plans.

  84.26                 Non-Federal audits.

  84.27                 Allowable costs.

  84.28                 Period of availability of funds.

  **Property            
  Standards**           

  84.30                 Purpose of property standards.

  84.31                 Insurance coverage.

  84.32                 Real property.

  84.33                 Federally-owned and exempt property.

  84.34                 Equipment.

  84.35                 Supplies and other expendable property.

  84.36                 Intangible property.

  84.37                 Property trust relationship.

  **Procurement         
  Standards**           

  84.40                 Purpose of procurement standards.

  84.41                 Recipient responsibilities.

  84.42                 Codes of conduct.

  84.43                 Competition.

  84.44                 Procurement procedures.

  84.45                 Cost and price analysis.

  84.46                 Procurement records.

  84.47                 Contract administration.

  84.48                 Contract provisions.

  **Reports and         
  Records**             

  84.50                 Purpose of reports and records.

  84.51                 Monitoring and reporting program performance.

  84.52                 Financial reporting.

  84.53                 Retention and access requirements for records.

  **Termination and     
  Enforcement**         

  84.60                 Purpose of termination and enforcement.

  84.61                 Termination.

  84.62                 Enforcement.

  **Subpart             
  D---After-the-Award   
  Requirements**        

  84.70                 Purpose.

  84.71                 Closeout procedures.

  84.72                 Subsequent adjustments and continuing responsibilities.

  84.73                 Collection of amounts due.

  **Subpart E---Use of  
  Lump Sum Grants**     

  84.80                 Conditions for use of Lump Sum (fixed price or fixed amount)
                        grants.

  84.81                 Definition.

  84.82                 Provisions applicable only to lump sum grants.

  84.83                 Property standards.

  84.84                 Procurement standards.

  84.85                 Reports and records.

  84.86                 Termination and enforcement.

  84.87                 Closeout procedures, subsequent adjustments and continuing
                        responsibilities.

  **Appendix A to Part  
  84---Contract         
  Provisions**          
  --------------------- -----------------------------------------------------------------

**Authority:**

42 U.S.C. 3535(d).

**Source:**

59 FR 47011, Sept. 13, 1994, unless otherwise noted.

### Subpart A---General

### §84.1 Purpose.

This part establishes uniform administrative requirements for Federal
grants and agreements awarded to institutions of higher education,
hospitals, and other non-profit organizations. Additional or
inconsistent requirements shall not be imposed, except as provided in
§§84.4, and 84.14 or unless specifically required by Federal statute or
executive order. Non-profit organizations that implement Federal
programs for the States are also subject to State requirements.

### §84.2 Definitions.

*Accrued expenditures* means the charges incurred by the recipient
during a given period requiring the provision 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.

*Accrued income* means the sum of:

\(1\) Earnings during a given period from:

\(i\) Services performed by the recipient; and

\(ii\) Goods and other tangible property delivered to purchasers; and

\(2\) Amounts becoming owed to the recipient for which no current
services or performance is required by the recipient.

*Acquisition cost of equipment* means the net invoice price of the
equipment, 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 recipient\'s regular accounting
practices.

*Advance* means a payment made by Treasury check or other appropriate
payment mechanism to a recipient upon its request either before outlays
are made by the recipient or through the use of predetermined payment
schedules.

*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 HUD 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, capital advances under the Sections 202 and
811 programs, interest subsidies, 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.

*Cash contributions* means the recipient\'s cash outlay, including the
outlay of money contributed to the recipient by third parties.

*Closeout* means the process by which HUD determines that all applicable
administrative actions and all required work of the award have been
completed by the recipient and HUD.

*Contract* means a procurement contract under an award or subaward, and
a procurement subcontract under a recipient\'s or subrecipient\'s
contract.

*Cost sharing or matching* means that portion of project or program
costs not borne by HUD.

*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 HUD sponsorship ends.

*Disallowed costs* means those charges to an award that HUD determines
to be unallowable, in accordance with the applicable Federal cost
principles or other terms and conditions contained in the award.

*Equipment* means tangible nonexpendable 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, consistent with recipient policy, lower limits may be
established.

*Excess property* means property under the control of HUD that, as
determined by the Secretary, is no longer required for its needs or the
discharge of its responsibilities.

*Exempt property* means tangible personal property acquired in whole or
in part with Federal funds, where HUD has statutory authority to vest
title in the recipient without further obligation to the Federal
Government. An example of exempt property authority 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 applied research by
a non-profit institution of higher education or non-profit organization
whose principal purpose is conducting scientific research.

*Federal awarding agency* means the Federal agency that provides an
award to the recipient.

*Federal funds authorized* means the total amount of Federal funds
obligated by HUD for use by the recipient. This amount may include any
authorized carryover of unobligated funds from prior funding periods
when permitted by HUD regulations or implementing instructions.

*Federal share* of real property, equipment, or supplies means that
percentage of the property\'s acquisition costs and any improvement
expenditures paid with Federal funds.

*Funding period* means the period of time when Federal funding is
available for obligation by the recipient.

*Intangible property and debt instruments* means, but is not limited to,
trademarks, copyrights, patents and patent applications and such
property as loans, notes and other debt instruments, lease agreements,
stock and other instruments of property ownership, whether considered
tangible or intangible.

*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 during the same or a future
period.

*Outlays or expenditures* means 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 cash disbursements for direct
charges for goods and services, the amount of indirect expense charged,
the value of third party in-kind contributions applied and the amount of
cash advances and payments made to subrecipients. For reports prepared
on an accrual basis, outlays are the sum of cash disbursements for
direct charges for goods and services, the amount of indirect expense
incurred, the value of in-kind contributions applied, and the net
increase (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.

*Personal property* means property of any kind except real property. It
may be tangible, having physical existence, or intangible, having no
physical existence, such as copyrights, patents, or securities.

*Prior approval* means written approval by an authorized official
evidencing prior consent.

*Program income* means gross income earned by the recipient that is
directly generated by a supported activity or earned as a result of the
award (see exclusions in §§84.24 (e) and (h)). Program income includes,
but is not limited to, income from fees for services performed, the use
or rental of real or personal property acquired under federally-funded
projects, the sale of 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 otherwise provided in HUD
regulations or the terms and conditions of the award, program income
does not include the receipt of principal on loans, rebates, credits,
discounts, etc., or interest earned on any of them.

*Project costs* means all allowable costs, as set forth in the
applicable Federal cost principles, incurred by a recipient and the
value of the contributions made by third parties in accomplishing the
objectives of the award during the project period.

*Project period* means the period established in the award document
during which HUD sponsorship begins and ends.

*Property* means, unless otherwise stated, real property, equipment,
intangible property and debt instruments.

*Real property* means land, including land improvements, structures and
appurtenances thereto, but excludes movable machinery and equipment.

*Recipient* means an organization receiving financial assistance
directly from HUD to carry out a project or program. The term includes
public and private institutions of higher education, 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 associations, and health centers. The term
includes commercial organizations, international organizations when
operating domestically (such as agencies of the United Nations) which
are recipients, subrecipients, or contractors or subcontractors of
recipients or subrecipients. The term does not include government-owned
contractor-operated facilities or research centers providing continued
support for mission-oriented, large-scale programs that are
government-owned or controlled, or are designated as federally-funded
research and development centers. The term does not include mortgagors
that receive mortgages insured or held by HUD or mortgagors or project
owners that receive capital advances from HUD under the Section 202 and
811 programs.

*Research and development* means all research activities, both basic and
applied, and all development activities that are supported at
universities, colleges, and other non-profit 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
directed toward the production of useful materials, devices, systems, or
methods, including design and development of prototypes and processes.
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.

*Small awards* means a grant or cooperative agreement not exceeding
\$100,000 or the small purchase threshold fixed at 41 U.S.C. 403(11),
whichever is greater.

*Subaward* means:

\(1\) An award of financial 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 subrecipient to a lower tier subrecipient. The term
includes financial assistance when provided by any legal agreement, even
if the agreement is called a contract, but does not include procurement
of goods and services nor does it include any form of assistance which
is excluded from the definition of "award".

\(2\) For Community Development Block Grants, the term "subaward" does
not include the arrangement whereby the prime recipient transfers funds
to another entity and that entity is the project. A distinction is made
between such a transfer for the furtherance of the prime recipient\'s
goals and the transfer of funds to a subrecipient who carries out
activities and is accountable to the prime recipient. For example, in a
CDBG award where a prime recipient has as its program goal the
revitalization of a downtown area, the funds transferred to a business
in the downtown area to remodel its store would not be considered a
subaward subject to this part 84.

*Subrecipient* means the legal entity to which a subaward is made and
which is accountable to the recipient for the use of the funds provided.
The term includes commercial organizations and international
organizations operating domestically (such as agencies of the United
Nations).

*Supplies* means all personal property excluding equipment, intangible
property, and debt instruments as defined 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 Government
Grants, Contracts, and Cooperative Agreements."

*Suspension* means an action by HUD that temporarily withdraws HUD
sponsorship under an award, pending corrective action by the recipient
or pending a decision to terminate the award by HUD. Suspension of an
award is a separate action from suspension under HUD regulations
implementing E.O. 12549 and E.O. 12689, "Debarment and Suspension," at
[24 CFR part
24](http://www.washingtonwatchdog.org/documents/cfr/title24/part24.html).

*Termination* means the cancellation of HUD sponsorship, in whole or in
part, under an agreement at any time prior to the date of completion.

*Third party in-kind contributions* means the value of non-cash
contributions provided by non-Federal third parties. Third party in-kind
contributions may be in the form of real property, equipment, supplies
and other expendable property, and the value of goods and services
directly benefiting and specifically identifiable to the project or
program.

*Unliquidated obligations,* for financial 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 represent the amount of obligations incurred by the
recipient for which an outlay has not been recorded.

*Unobligated balance* means the portion of the funds authorized by HUD
that has not been obligated by the recipient and is determined by
deducting the cumulative obligations from the cumulative funds
authorized.

*Unrecovered indirect cost* means the difference between the amount
awarded and the amount which could have been awarded under the
recipient\'s approved negotiated indirect cost rate.

*Working capital advance* means a procedure whereby funds are advanced
to the recipient to cover its estimated disbursement needs for a given
initial period.

### §84.3 Effect on other issuances.

For awards subject to this part, all administrative requirements of
codified program regulations, program manuals, handbooks and other
nonregulatory materials which are inconsistent with the requirements of
this part shall be superseded, except to the extent they are required by
statute, or authorized in accordance with the deviations provision in
§84.4.

### §84.4 Deviations.

The Office of Management and Budget (OMB) may grant exceptions for
classes of grants or recipients subject to the requirements of this rule
when exceptions are not prohibited by statute. However, in the interest
of maximum uniformity, exceptions from the requirements of this rule
shall be permitted only in unusual circumstances. HUD may apply more
restrictive requirements to a class of recipients when approved by OMB.
HUD may apply less restrictive requirements when awarding small awards
and when approved by OMB, except for those requirements which are
statutory. Exceptions on a case-by-case basis may also be made by HUD.

### §84.5 Subawards.

Unless sections of this part specifically exclude subrecipients from
coverage, the provisions of this part shall be applied to subrecipients
performing work under awards if such subrecipients are institutions of
higher education, hospitals, commercial organizations and international
organizations operating domestically, or other non-profit organizations.
State, local and Federally recognized Indian tribal government
subrecipients are subject to the provisions of regulations implementing
the grants management common rule, "Administrative Requirements for
Grants and Cooperative Agreements to State, Local and Federally
Recognized Indian Tribal Governments," (24 CFR part 85).

### Subpart B---Pre-Award Requirements

### §84.10 Purpose.

Sections 84.11 through 84.17 prescribe forms and instructions and other
pre-award matters to be used in applying for HUD awards.

### §84.11 Pre-award policies.

\(a\) *Use of Grants and Cooperative Agreements, and Contracts.* In each
instance, HUD shall decide on the appropriate award instrument (i.e.,
grant, cooperative agreement, 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
cooperative agreements is that for the latter, "substantial involvement
is expected between the executive agency and the State, local
government, or other recipient when carrying out the activity
contemplated in the agreement." Contracts 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.* HUD shall notify the public
of its intended funding priorities for discretionary grant programs,
unless funding priorities are established by Federal statute.

### §84.12 Forms for applying for Federal assistance.

\(a\) HUD shall comply with the applicable report clearance requirements
of 5 CFR part 1320, "Controlling Paperwork Burdens on the Public," with
regard to all forms used by HUD in place of or as a supplement to the
Standard Form 424 (SF-424) series.

\(b\) Applicants shall use the SF-424 series or those forms and
instructions prescribed by HUD.

\(c\) 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 application 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 *Catalog of Federal Domestic
Assistance*. The SPOC shall advise the applicant whether the program for
which application is made has been selected by that State for review.

### §84.13 Debarment and suspension; Drug-Free Workplace.

\(a\) HUD and its recipients and subrecipients shall comply with the
nonprocurement debarment and suspension common rule implementing E.O.s
12549 and 12689, "Debarment and Suspension," at 24 CFR part 24. This
common rule restricts subawards and contracts with certain parties that
are debarred, suspended or otherwise excluded from or ineligible for
participation in Federal assistance programs or activities.

\(b\) HUD and its recipients and subrecipients shall comply with the
certification requirements of the Drug-Free Workplace Act of 1988 (42
U.S.C. 701), as set forth at 24 CFR part 24, subpart F.

### §84.14 Special award conditions.

If an applicant or recipient:

\(a\) Has a history of poor performance;

\(b\) Is not financially stable;

\(c\) Has a management system that does not meet the standards
prescribed in this part;

\(d\) Has not conformed to the terms and conditions of a previous award;
or

\(e\) Is not otherwise responsible, HUD may impose additional
requirements as needed, provided that such applicant or recipient is
notified in writing as to: the nature of the additional requirements,
the reason why the additional requirements are being imposed, the nature
of the corrective action needed, the time allowed for completing the
corrective actions, and the method for requesting reconsideration of the
additional requirements imposed. Any special conditions shall be
promptly removed once the conditions that prompted them have been
corrected.

### §84.15 Metric system of measurement.

The Metric Conversion Act, as amended by the Omnibus Trade and
Competitiveness Act (15 U.S.C. 205) declares 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 Secretary of Commerce, when the metric system of
measurement will be used in the agency\'s procurements, grants, and
other business-related activities. Metric implementation may take longer
where the use of the system is initially impractical or likely to cause
significant inefficiencies in the accomplishment of federally-funded
activities. HUD shall follow the provisions of E.O. 12770, "Metric Usage
in Federal Government Programs."

### §84.16 Resource Conservation and Recovery Act.

Under the Resource Conservation and Recovery Act (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
recycled materials identified in guidelines developed by the
Environmental Protection Agency (EPA) (40 CFR parts 247 through 254).
Accordingly, State and local institutions of higher education,
hospitals, commercial organizations and international organizations when
operating domestically, and non-profit organizations 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 pursuant to the EPA guidelines.

### §84.17 Certifications and representations.

Unless prohibited by statute or codified regulation, HUD is authorized
and encouraged to allow recipients to submit certifications and
representations required by statute, executive order, or regulation on
an annual basis, if the recipients have ongoing and continuing
relationships with the agency. Annual certifications and representations
shall be signed by responsible officials with the authority to ensure
recipients' compliance with the pertinent requirements.

### Subpart C---Post-Award Requirements

### Financial and Program Management

### §84.20 Purpose of financial and program management.

Sections 84.21 through 84.28 prescribe standards for financial
management systems, methods for making payments and rules for:
satisfying cost sharing and matching requirements, accounting for
program income, budget revision approvals, making audits, determining
allowability of cost, and establishing fund availability.

### §84.21 Standards for financial management systems.

\(a\) HUD 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
reporting requirements set forth in §84.52. If a recipient maintains its
records on other than an accrual basis, the recipient shall not be
required to establish an accrual accounting system. These recipients may
develop such accrual data for their 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 pertaining to Federal awards, authorizations, obligations,
unobligated balances, assets, outlays, income and interest.

\(3\) Effective control over and accountability for all funds, property
and other assets. Recipients shall adequately safeguard all such assets
and assure they are used solely for authorized purposes.

\(4\) Comparison of outlays with budget 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 redemption of checks, warrants or payments by other means
for program purposes by the recipient. To the extent that the provisions
of the Cash Management Improvement 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 determining the reasonableness,
allocability 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 Federal Government guarantees or insures the repayment
of money borrowed by the recipient, HUD, at its discretion, may require
adequate bonding and insurance if the bonding and insurance requirements
of the recipient are not deemed adequate to protect the interest of the
Federal Government.

\(d\) HUD 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 holding certificates of authority
as acceptable sureties, as prescribed in 31 CFR part 223, "Surety
Companies Doing Business with the United States."

### §84.22 Payment.

\(a\) Payment methods shall minimize the time elapsing between the
transfer of funds from the United States Treasury and the issuance or
redemption of checks, warrants, or payment by other means by the
recipients. Payment methods of State agencies or instrumentalities shall
be consistent with Treasury-State CMIA agreements or default procedures
codified at 31 CFR part 205.

\(b\) Recipients are to be paid in advance, provided they maintain or
demonstrate the willingness to maintain:

\(1\) Written procedures that minimize the time elapsing between the
transfer of funds and disbursement by the recipient; and

\(2\) Financial management systems that meet the standards for fund
control and accountability as established in §84.21. Cash advances 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 carrying out the purpose
of the approved program or project. The timing and amount of cash
advances shall be as close as is administratively feasible to the actual
disbursements by the recipient organization for direct program or
project costs and the proportionate share of any allowable indirect
costs.

\(c\) Whenever possible, advances shall be consolidated to cover
anticipated cash needs for all awards made by HUD to the recipient.

\(1\) Advance payment mechanisms include, but are not limited to,
Treasury check and electronic funds transfer.

\(2\) Advance payment mechanisms are subject to 31 CFR part 205.

\(3\) Recipients shall be authorized to submit requests for advances and
reimbursements at least monthly when electronic fund transfers are not
used.

\(d\) Requests for Treasury check 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 Treasury check
advance payments are made to the recipient automatically through the use
of a predetermined payment schedule or if precluded by special HUD
instructions for electronic funds transfer.

\(e\) Reimbursement is the preferred method when the requirements in
paragraph (b) of this section cannot be met. HUD may also use this
method on any construction agreement, or if the major portion of the
construction project is accomplished through private market financing or
Federal loans, and the Federal assistance constitutes a minor portion of
the project.

\(1\) When the reimbursement method is used, HUD shall make payment
within 30 days after receipt of the billing, unless the billing is
improper.

\(2\) Recipients shall be authorized to submit request for reimbursement
at least monthly when electronic funds transfers are not used.

\(f\) If a recipient cannot meet the criteria for advance payments and
HUD has determined that reimbursement is not feasible because the
recipient lacks sufficient working capital, HUD may provide cash on a
working capital advance basis. Under this procedure, HUD shall advance
cash to the recipient to cover its estimated disbursement needs for an
initial period generally geared to the awardee\'s disbursing cycle.
Thereafter, HUD shall reimburse the recipient for its actual cash
disbursements. The working capital advance method of payment shall not
be used for recipients unwilling or unable to provide timely advances to
their subrecipient to meet the subrecipient\'s actual cash
disbursements.

\(g\) To the extent available, recipients shall disburse funds available
from repayments to and interest earned on a revolving fund, program
income, rebates, refunds, contract settlements, audit recoveries and
interest earned on such funds before requesting additional cash
payments.

\(h\) Unless otherwise required by statute, HUD shall not withhold
payments for proper charges made by recipients at any time during the
project period unless paragraphs (h)(1) or (h)(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 Programs." Under such conditions, HUD may, upon reasonable
notice, inform the recipient that payments shall not be made for
obligations incurred after a specified date until the conditions are
corrected or the indebtedness to the Federal Government is liquidated.

\(i\) Standards governing the use of banks and other institutions as
depositories of funds advanced under awards are as follows.

\(1\) Except for situations described in paragraph (i)(2) of this
section, HUD shall not require separate depository accounts for funds
provided to a recipient or establish any eligibility requirements for
depositories for funds provided to a recipient. However, recipients must
be able to account for the receipt, 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 advances of Federal funds in interest
bearing accounts, unless paragraphs (k)(1), (k)(2), or (k)(3) of this
section apply.

\(1\) The recipient receives less than \$120,000 in Federal awards per
year.

\(2\) The best reasonably available interest bearing account would not
be expected 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.

\(l\) 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 System, P.O. Box 6021, Rockville, MD
20852. In keeping with Electronic Funds Transfer rules (31 CFR part
206), interest should be remitted to the HHS Payment Management System
through an electronic medium such as the FEDWIRE Deposit system.
Recipients which do not have this capability should use a check.
Interest amounts up to \$250 per year may be retained by the recipient
for administrative expense. State universities and hospitals shall
comply with CMIA, as it pertains to interest. If an entity subject to
CMIA uses its own funds to pay pre-award costs for discretionary awards
without prior written approval from the Federal awarding agency, it
waives its right to recover the interest under CMIA.

\(m\) Except as noted elsewhere in this rule, only the following forms
shall be authorized for the recipients in requesting advances and
reimbursements. Federal agencies shall not require more than an original
and two copies of these forms.

\(1\) *SF--270, Request for Advance or Reimbursement.* HUD has adopted
the SF--270 as a standard form for all nonconstruction programs when
electronic funds transfer or predetermined advance methods are not used.
HUD has the option of using this form for construction programs in lieu
of the SF--271, "Outlay Report and Request for Reimbursement for
Construction Programs."

\(2\) *SF--271, Outlay Report and Request for Reimbursement for
Construction Programs.* HUD has adopted the SF--271 as the standard form
to be used for requesting reimbursement for construction programs.
However, HUD may substitute the SF--270 when HUD determines that it
provides adequate information to meet Federal needs.

### §84.23 Cost sharing or matching.

\(a\) All contributions, including cash and third party in-kind, shall
be accepted as part of the recipient\'s cost sharing or matching when
such contributions meet all of the following criteria.

\(1\) 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 applicable cost principles.

\(5\) Are not paid by the Federal Government 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 when required by HUD.

\(7\) 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 HUD.

\(c\) Values for recipient contributions of services and property shall
be established in accordance with the applicable cost principles. If HUD
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 paragraphs (c)(1) or (c)(2) of this section.

\(1\) The certified value of the remaining 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
justification, HUD may approve the use of the current fair market 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 unskilled labor may be
counted as cost sharing or matching if the service is an integral and
necessary part of an approved project or program. Rates for volunteer
services shall be consistent with those paid for similar work in the
recipient\'s organization. In those instances 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 market in which
the recipient competes for the kind of services involved. In either
case, paid fringe benefits that are reasonable, 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 valued at the employee\'s
regular rate of pay (plus an amount of fringe benefits that are
reasonable, allowable, and allocable, 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 included 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
paragraphs (g)(1) or (g)(2) of this section apply.

\(1\) 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, normally only depreciation or
use charges for equipment and buildings may be made. However, the full
value of equipment or other capital assets and fair rental charges for
land may be allowed, provided that HUD has approved the charges.

\(h\) The value of donated property shall be determined in accordance
with the usual accounting policies of the recipient, with the following
qualifications.

\(1\) The value of donated land and buildings shall not exceed its fair
market value at the time of donation to the recipient as established by
an independent 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 condition at the time of
donation.

\(3\) The value of donated space shall not exceed the fair rental value
of comparable space as established by an independent 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 pertain to the recipient\'s supporting
records for in-kind contributions from third parties.

\(i\) Volunteer services shall be documented and, to the extent
feasible, supported by the same methods used by the recipient for its
own employees.

\(ii\) The basis for determining the valuation for personal service,
material, equipment, buildings and land shall be documented.

### §84.24 Program income.

\(a\) HUD shall apply the standards set forth in this section in
requiring recipient organizations to account for program income related
to projects financed 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 accordance with HUD 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 HUD and recipient and
used to further eligible project or program objectives.

\(2\) Used to finance the non-Federal share of the project or program.

\(3\) Deducted from the total project or program allowable cost in
determining the net allowable costs on which the Federal share of costs
is based.

\(c\) When HUD authorizes the disposition of program income as described
in paragraphs (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 HUD does not specify in its regulations or the
terms and conditions of the award how program income is to be used,
paragraph (b)(3) of this section shall apply automatically to all
projects or programs except research. For awards that support research,
paragraph (b)(1) of this section shall apply automatically unless HUD
indicates in the terms and conditions another alternative on the award
or the recipient is subject to special award conditions, as indicated in
§84.14.

\(e\) Unless HUD regulations or the terms and conditions of the award
provide otherwise, recipients shall have no obligation to the Federal
Government regarding program income earned after the end of the project
period.

\(f\) If authorized by HUD regulations or the terms and conditions of
the award, costs incident to the generation of program income may be
deducted from gross income to determine program income, 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 Standards (See §§84.30 through
84.37).

\(h\) Unless HUD regulations or the terms and condition of the award
provide 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 inventions produced under an award. However, Patent and
Trademark Amendments (35 U.S.C. 18) apply to inventions made under an
experimental, developmental, or research award.

### §84.25 Revision of budget and program 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
HUD requirements. It shall be related to performance for program
evaluation purposes whenever appropriate.

\(b\) 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, recipients shall request prior
approvals from HUD for one or more of the following program or budget
related reasons.

\(1\) Change in the scope or the objective 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 approved project director or
principal investigator.

\(4\) 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
HUD.

\(6\) The inclusion, unless waived by HUD, of costs that require prior
approval in accordance with OMB Circular A--21, "Cost Principles for
Institutions of Higher Education," OMB Circular A--122, "Cost Principles
for Non-Profit Organizations," or 45 CFR part 74 Appendix E, "Principles
for Determining Costs Applicable to Research and Development under
Grants and Contracts with Hospitals," or 48 CFR part 31, "Contract Cost
Principles and Procedures," as applicable.

\(7\) The transfer of funds allotted for training allowances (direct
payment to trainees) to other categories of expense.

\(8\) Unless described in the application and funded in the approved
awards, the subaward, transfer or contracting out of any work under an
award. This provision does not apply to the purchase of supplies,
material, equipment or general support services.

\(d\) 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 section, HUD is authorized, at its option, to waive cost-related
and administrative prior written approvals required by Circular A--110
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 HUD. All pre-award costs are
incurred at the recipient\'s risk (i.e., HUD is under no obligation to
reimburse such costs if for any reason the recipient does not receive 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 notify HUD in writing with
the supporting reasons and revised expiration date at least 10 days
before the expiration date specified in the award. This one-time
extension may not be exercised merely for the purpose of using
unobligated balances.

\(i\) The terms and conditions of award prohibit the extension.

\(ii\) The extension requires additional Federal funds.

\(iii\) The extension involves any change in the approved objectives or
scope of the project.

\(3\) Carry forward unobligated balances to subsequent funding periods.

\(4\) For awards that support research, unless HUD provides otherwise in
HUD\'s regulations, the prior approval requirements described in
paragraph (e) of this section are automatically waived (i.e., recipients
need not obtain such prior approvals) unless one of the conditions
included in paragraph (e)(2) of this section applies.

\(f\) HUD may, at its option, restrict the transfer of funds among
direct cost categories or programs, functions and activities for awards
in which the Federal share of the project exceeds \$100,000 and the
cumulative amount of such transfers exceeds or is expected to exceed 10
percent of the total budget as last approved by HUD. HUD shall not
permit a transfer 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 nonconstruction budgets, except for the
changes described in paragraph (j) of this section, do not require prior
approval.

\(h\) For construction awards, recipients shall request prior written
approval promptly from HUD for budget revisions whenever paragraphs
(h)(1), (h)(2) or (h)(3) of this section apply.

\(1\) 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 involves specific costs for which
prior written approval requirements may be imposed consistent with
applicable OMB cost principles listed in §84.27.

\(i\) No other prior approval requirements for specific items may be
imposed unless a deviation has been approved by OMB.

\(j\) When HUD makes an award that provides support for both
construction and nonconstruction work, HUD may require the recipient to
request prior approval from HUD before making any fund or budget
transfers between the two types of work supported.

\(k\) For both construction and nonconstruction awards, HUD shall
require recipients to notify HUD 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 \$5000 or five percent of
the Federal award, whichever is greater. This notification shall not be
required if an application for additional funding is submitted for a
continuation award.

\(l\) When requesting approval for budget revisions, recipients shall
use the budget forms that were used in the application unless HUD
indicates a letter of request suffices.

\(m\) Within 30 calendar days from the date of receipt of the request
for budget revisions, HUD shall review the request and notify the
recipient whether the budget revisions have been approved. If the
revision is still under consideration at the end of 30 calendar days,
HUD shall inform the recipient in writing of the date when the recipient
may expect the decision.

### §84.26 Non-Federal audits.

\(a\) Recipients and subrecipients that are institutions of higher
education or other non-profit organization (including 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
Organizations."

\(1\) Non-profit organizations subject to regulations in the part 200
and part 800 series of this title which receive awards subject to part
84 shall comply with the audit requirements of revised OMB Circular
A--133, "Audits of States, Local Governments, and Non-Profit
Organizations." For HUD programs, a non-profit organization is the
mortgagor or owner (as these terms are defined in the regulations in the
part 200 and part 800 series) and not a related or affiliated
organization or entity.

\(2\) \[Reserved\]

\(b\) 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
of the Federal awarding agencies.

\(d\) Commercial organizations shall be subject to the audit
requirements of HUD or the prime recipient as incorporated into the
award document.

\[59 FR 47011, Sept. 13, 1994, as amended at 62 FR 61617, Nov. 18,
1997\]

### §84.27 Allowable costs.

For each kind of recipient, there is a set of Federal principles for
determining allowable costs. Allowability of costs shall be determined
in accordance with the cost principles applicable to the entity
incurring the costs. Thus, allowability 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 and Local Governments." The allowability of costs incurred by
non-profit organizations is determined in accordance with the provisions
of OMB Circular A--122, "Cost Principles for Non-Profit Organizations."
The allowability of costs incurred by institutions of higher education
is determined in accordance with the provisions of OMB Circular A--21,
"Cost Principles for Educational Institutions." The allowability of
costs incurred by hospitals is determined in accordance with the
provisions of Appendix E of 45 CFR part 74, "Principles for Determining
Costs Applicable to Research and Development Under Grants and Contracts
with Hospitals." The allowability of costs incurred by commercial
organizations and those non-profit organizations listed in Attachment C
to Circular A--122 is determined in accordance with the provisions of
the Federal Acquisition Regulation (FAR) at 48 CFR part 31.

### §84.28 Period of availability of funds.

Where a funding period is specified, a recipient may charge to the grant
only allowable costs resulting from obligations incurred during the
funding period and any pre-award costs authorized by HUD.

### Property Standards

### §84.30 Purpose of property standards.

Sections 84.31 through 84.37 set forth uniform standards governing
management and disposition of property furnished by the Federal
Government whose cost was charged to a project supported by a Federal
award. HUD 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 §§84.31 through 84.37.

### §84.31 Insurance coverage.

Recipients shall, at a minimum, provide the equivalent insurance
coverage for real property and equipment acquired 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.

### §84.32 Real property.

HUD prescribes the following requirements for recipients concerning the
use and disposition of real property acquired in whole or in part under
awards:

\(a\) 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 and shall not
encumber the property without approval of HUD.

\(b\) The recipient shall obtain written approval by HUD 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
federally-sponsored projects (i.e., awards) or programs that have
purposes consistent with those authorized for support by HUD.

\(c\) When the real property is no longer needed as provided in
paragraphs (a) and (b) of this section, the recipient shall request
disposition instructions from HUD or its successor Federal awarding
agency. HUD shall observe one or more of the following disposition
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 market value of the
property attributable to the Federal participation in the project.

\(2\) The recipient may be directed to sell the property under
guidelines provided by HUD and pay the Federal Government for that
percentage of the current fair market value of the property attributable
to the Federal 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
property, proper sales procedures shall be established that provide for
competition to the extent practicable and result 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 percentage of the current fair market value of the
property.

### §84.33 Federally-owned and exempt property.

\(a\) *Federally-owned property.* (1) Title to federally-owned property
remains vested in the Federal Government. Recipients shall submit
annually an inventory listing of federally-owned property in their
custody to HUD. Upon completion of the award or when the property is no
longer needed, the recipient shall report the property to HUD for
further HUD utilization.

\(2\) If HUD has no further need for the property, it shall be declared
excess and reported to the General Services Administration, unless HUD
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 (I)) to donate research equipment to educational and
non-profit organizations in accordance with E.O. 12821, "Improving
Mathematics and Science Education in Support of the National Education
Goals.") Appropriate instructions shall be issued to the recipient by
HUD.

\(b\) *Exempt property.* When statutory authority exists, HUD has the
option to vest title to property acquired with Federal funds in the
recipient without further obligation to the Federal Government and under
conditions HUD considers appropriate. Such property is "exempt
property." Should HUD not establish conditions, title to exempt property
upon acquisition shall vest in the recipient without further obligation
to the Federal Government.

### §84.34 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 equipment acquired with Federal funds
to provide services to non-Federal outside organizations for a fee that
is less than private companies charge for equivalent services, unless
specifically authorized by Federal statute, for as long as the Federal
Government retains an interest in the equipment.

\(c\) The recipient shall use the equipment in the project or program
for which it was acquired as long as needed, whether or not the project
or program continues to be supported by Federal funds and shall not
encumber the equipment without approval of HUD. When the equipment is 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 HUD which funded the original project;
then

\(2\) Activities sponsored by other Federal 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 equipment was
originally acquired. First preference for such other use shall be given
to other projects or programs sponsored by HUD that financed the
equipment; second preference shall be given to projects or programs
sponsored by other Federal awarding agencies. If the equipment is owned
by the Federal Government, use on other activities not sponsored by the
Federal Government shall be permissible if authorized by HUD. 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
proceeds to offset the costs of the replacement equipment subject to the
approval of HUD.

\(f\) The recipient\'s property management standards for equipment
acquired with Federal funds and federally-owned equipment shall include
all of the following.

\(1\) Equipment records shall be maintained 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 identification number.

\(iii\) Source of the equipment, including the award number.

\(iv\) Whether title vests in the recipient or the Federal Government.

\(v\) Acquisition date (or date received, 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 equipment (not applicable to
equipment furnished by the Federal Government).

\(vii\) Location and condition of the equipment and the date the
information was reported.

\(viii\) Unit acquisition cost.

\(ix\) Ultimate disposition data, including date of disposal and sales
price or the method used to determine current fair market value where a
recipient compensates HUD for its share.

\(2\) Equipment owned by the Federal Government shall be identified to
indicate Federal ownership.

\(3\) A physical inventory of equipment shall be taken and the results
reconciled with the equipment records at least once every two years. Any
differences between quantities determined 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 inventory, verify the existence, current utilization, and continued
need for the equipment.

\(4\) A control system shall be in effect to insure adequate safeguards
to prevent 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 HUD.

\(5\) 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, proper 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 accordance with the following
standards. For equipment with a current per unit fair market value of
\$5000 or more, the recipient may retain the equipment for other uses
provided that compensation is made to HUD or its successor. The amount
of compensation shall be computed by applying the percentage of Federal
participation in the cost of the original project or program to the
current fair market value of the equipment. If the recipient has no need
for the equipment, the recipient shall request disposition instructions
from HUD. HUD shall determine whether the equipment can be used to meet
HUD\'s requirements. If no requirement exists within HUD, the
availability of the equipment shall be reported to the General Services
Administration by HUD to determine whether a requirement for the
equipment exists in other Federal agencies. HUD shall issue instructions
to the recipient no later than 120 calendar days after the recipient\'s
request and the following procedures shall govern.

\(1\) If so instructed or if disposition instructions are not issued
within 120 calendar days after the recipient\'s request, the recipient
shall sell the equipment and reimburse HUD an amount computed by
applying to the sales proceeds the percentage of Federal participation
in the cost of the original project or program. However, the recipient
shall be permitted to deduct 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 recipient shall be reimbursed by the Federal Government by an amount
which is computed by applying the percentage of the recipient\'s
participation in the cost of the original project or program to the
current fair market value of the equipment, plus any reasonable shipping
or interim storage costs incurred.

\(3\) If the recipient is instructed to otherwise dispose of the
equipment, the recipient shall be reimbursed by HUD for such costs
incurred in its disposition.

\(4\) HUD may reserve the right to transfer the title to the Federal
Government 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.

\(i\) The equipment shall be appropriately identified in the award or
otherwise made known to the recipient in writing.

\(ii\) HUD shall issue disposition instructions within 120 calendar days
after receipt of a final inventory. The final inventory shall list all
equipment acquired with grant funds and federally-owned equipment. If
HUD fails to issue disposition instructions within the 120 calendar day
period, the recipient shall apply the standards of this section, as
appropriate.

\(iii\) When HUD exercises its right to take title, the equipment shall
be subject to the provisions for federally-owned equipment.

### §84.35 Supplies and other expendable property.

\(a\) Title to supplies and other expendable property shall vest in the
recipient upon acquisition. If there is a residual inventory of unused
supplies exceeding \$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 recipient 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 compensation shall be computed in the same
manner as for equipment.

\(b\) The recipient shall not use supplies acquired with Federal funds
to provide services to non-Federal outside organizations for a fee that
is less than private companies charge for equivalent services, unless
specifically authorized by Federal statute, as long as the Federal
Government retains an interest in the supplies.

### §84.36 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.
HUD reserves a royalty-free, nonexclusive and irrevocable right to
reproduce, publish, or otherwise use the work for Federal purposes, and
to authorize others to do so.

\(b\) Recipients are subject to applicable regulations governing patents
and inventions, including government-wide regulations issued by the
Department of Commerce at 37 CFR part 401, "Rights to Inventions Made by
Nonprofit Organizations and Small Business Firms Under Government
Grants, Contracts and Cooperative Agreements."

\(c\) HUD has the right to:

\(1\) Obtain, reproduce, publish or otherwise use the data first
produced under an award; and

\(2\) Authorize others to receive, reproduce, publish, or otherwise use
such data for HUD purposes.

(d)(1) In addition, in response to a Freedom of Information Act (FOIA)
request for research data relating to published research findings
produced under an award that were used by HUD in developing an agency
action that has the force and effect of law, HUD shall request, and the
recipient shall provide, within a reasonable time, the research data so
that they can be made available to the public through the procedures
established under the FOIA. If HUD obtains the research data solely in
response to a FOIA request, HUD may charge the requester a reasonable
fee equaling the full incremental cost of obtaining the research data.
This fee should reflect costs incurred by HUD, the recipient, and
applicable subrecipients. This fee is in addition to any fees HUD may
assess under the FOIA (5 U.S.C. 552(a)(4)(A)).

\(2\) The following definitions apply for purposes of this paragraph
(d):

\(i\) *Research data* is defined as the recorded factual material
commonly accepted in the scientific community as necessary to validate
research findings, but not any of the following: preliminary analyses,
drafts of scientific papers, plans for future research, peer reviews, or
communications with colleagues. This "recorded" material excludes
physical objects (e.g., laboratory samples). *Research data* also do not
include:

\(A\) Trade secrets, commercial information, 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 information and similar information the
disclosure of which would constitute a clearly unwarranted invasion of
personal 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
technical journal; or

\(B\) HUD publicly and officially cites the research findings in support
of an agency action that has the force and effect of law.

\(iii\) *Used by HUD in developing an agency action that has the force
and effect of law* is defined as when HUD 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 acquisition in the recipient. The
recipient shall use that property for the originally-authorized purpose,
and the recipient shall not encumber the property without approval of
HUD. When no longer needed for the originally authorized purpose,
disposition of the intangible property shall occur in accordance with
the provisions of §84.34(g).

\[59 FR 47011, Sept. 13, 1994, as amended at 65 FR 30499, May 11, 2000\]

### §84.37 Property trust relationship.

Real property, equipment, intangible property and debt instruments that
are acquired or improved with Federal funds shall be held in trust by
the recipient as trustee for the beneficiaries of the project or program
under which the property was acquired or improved. HUD may require
recipients to record liens or other appropriate notices of record to
indicate that personal or real property has been acquired or improved
with Federal funds and that use and disposition conditions apply to the
property.

### Procurement Standards

### §84.40 Purpose of procurement standards.

Sections 84.41 through 84.48 set forth standards for use by recipients
in establishing procedures for the procurement of supplies and other
expendable property, equipment, real property and other services with
Federal funds. These standards are furnished to ensure that such
materials and services are obtained in an effective manner and in
compliance with the provisions of applicable Federal statutes and
executive orders. No additional procurement standards or requirements
shall be imposed by HUD upon recipients, unless specifically required by
Federal statute or executive order or approved by OMB.

### §84.41 Recipient responsibilities.

The standards contained in this section do not relieve the recipient of
the contractual responsibilities arising under its contract(s). The
recipient is the responsible authority, without recourse to HUD,
regarding the settlement and satisfaction of all contractual and
administrative issues arising out of procurements entered into in
support of an award or other agreement. 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.

### §84.42 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 organization
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 accept gratuities, favors, or anything of monetary value from
contractors, or parties to subagreements. However, recipients 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.

### §84.43 Competition.

All procurement transactions shall be conducted in a manner to provide,
to the maximum extent practical, open and free competition. The
recipient shall be alert to organizational conflicts of interest as well
as noncompetitive practices among contractors that may restrict or
eliminate competition or otherwise restrain trade. In order to ensure
objective contractor performance 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 considered. The other
factors shall include the bidder\'s or offeror\'s compliance with
Section 3 of the Housing and Urban Development Act of 1968 (12 U.S.C.
1701u), hereafter referred to as "Section 3." Section 3 provides that,
to the greatest extent feasible, and consistent with existing Federal,
State, and local laws, and regulations, economic opportunities generated
by certain HUD financial assistance shall be directed to low- and very
low-income persons. 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 recipient. Any and all bids or
offers may be rejected when it is in the recipient\'s interest to do so.

### §84.44 Procurement procedures.

\(a\) All recipients shall establish written procurement procedures.
These procedures shall provide for, at a minimum, that paragraphs
(a)(1), (a)(2) and (a)(3) of this section apply.

\(1\) Recipients avoid purchasing unnecessary items.

\(2\) Where appropriate, an analysis is made of lease and purchase
alternatives to determine which would be the most economical and
practical procurement for the Federal Government.

\(3\) Solicitations for goods and services provide for all of the
following.

\(i\) A clear and accurate description of the technical requirements for
the material, product or service to be procured. In competitive
procurements, such a description shall not contain features which unduly
restrict competition.

\(ii\) Requirements which the bidder/offeror must fulfill and all other
factors to be used in evaluating bids or proposals.

\(iii\) A description, whenever practicable, of technical requirements
in terms of functions to be performed or performance required, including
the range of acceptable characteristics or minimum acceptable standards.

\(iv\) The specific features of "brand name or equal" descriptions that
bidders 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 practicable and economically feasible,
for products and services that conserve natural resources and protect
the environment 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 possible. Recipients of Federal awards shall take all of the
following steps to further this goal.

\(1\) Ensure that small businesses, minority-owned firms, and women\'s
business enterprises are used to the fullest extent practicable.

\(2\) Make information on forthcoming opportunities available and
arrange time frames for purchases and contracts to encourage and
facilitate participation by small businesses, minority-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 enterprises.

\(4\) Encourage contracting with consortiums of small businesses,
minority-owned firms and women\'s business enterprises when a contract
is too large for one of these firms to handle individually.

\(5\) Use the services and assistance, as appropriate, of such
organizations as the Small Business Administration and the Department of
Commerce\'s Minority Business Development Agency in the solicitation and
utilization of small businesses, minority-owned firms and women\'s
business enterprises.

\(c\) The type of procuring instruments used (e.g., fixed price
contracts, cost reimbursable contracts, purchase orders, and incentive
contracts) shall be determined by the recipient but shall be appropriate
for the particular procurement and for promoting the best interest of
the program or project involved. 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 successfully under the terms
and conditions of the proposed procurement. Consideration shall be given
to such matters as contractor integrity; compliance with public policy,
including, where applicable, Section 3 of the Housing and Urban
Development Act of 1968 (12 U.S.C. 1701u); record of past performance;
financial and technical resources or accessibility to other necessary
resources. In certain circumstances, contracts with certain parties are
restricted by implementation of E.O.s 12549 and 12689, "Debarment and
Suspension," at 24 CFR part 24.

\(e\) Recipients shall, on request, make available for the Federal
awarding agency, pre-award review and procurement documents, such as
requests for proposals or invitations for bids, independent cost
estimates, etc., when any of the following conditions apply.

\(1\) A recipient\'s procurement procedures or operation fails to comply
with the procurement standards in HUD\'s implementation of Circular
A--110.

\(2\) The procurement is expected to exceed \$100,000 or the small
purchase threshold fixed at 41 U.S.C. 403 (11), whichever is greater,
and is to be awarded without competition or only one bid or offer is
received in response to a solicitation.

\(3\) The procurement, which is expected to exceed the small purchase
threshold, specifies a "brand name" product.

\(4\) The proposed award over the small purchase threshold is to be
awarded to other than the apparent low bidder under a sealed bid
procurement.

\(5\) A proposed contract modification changes the scope of a contract
or increases the contract amount by more than the amount of the small
purchase threshold.

### §84.45 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
analysis may be accomplished in various ways, including the comparison
of price quotations submitted, market prices and similar indicia,
together with discounts. Cost analysis is the review and evaluation of
each element of cost to determine reasonableness, allocability and
allowability.

### §84.46 Procurement records.

Procurement records and files for purchases in excess of the small
purchase threshold shall include the following at a minimum:

\(a\) Basis for contractor selection;

\(b\) Justification for lack of competition when competitive bids or
offers are not obtained; and

\(c\) Basis for award cost or price.

### §84.47 Contract administration.

A system for contract administration shall be maintained to ensure
contractor conformance with the terms, conditions and specifications of
the contract and to ensure adequate and timely follow up of all
purchases. Recipients shall evaluate contractor performance and
document, as appropriate, whether contractors have met the terms,
conditions and specifications of the contract.

### §84.48 Contract provisions.

The recipient shall include, in addition to provisions to define a sound
and complete agreement, the following provisions in all contracts. The
following provisions shall also be applied to subcontracts.

\(a\) Contracts in excess of the small purchase threshold shall contain
contractual provisions or conditions that allow for administrative,
contractual, or legal remedies in instances 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 small purchase threshold shall
contain suitable provisions for termination by the recipient, including
the manner by which termination shall be effected and the basis for
settlement. In addition, such contracts shall describe conditions under
which the contract may be terminated for default as well as conditions
where the contract may be terminated because of circumstances 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 \$100,000.
For those contracts or subcontracts exceeding \$100,000, HUD may accept
the bonding policy and requirements of the recipient, provided HUD has
made a determination that the Federal Government\'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 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 contract price. A "payment bond" is one executed in connection with
a contract to assure payment as required by statute 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 herein, the
bonds shall be obtained from companies 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 small
purchase threshold) awarded by recipients shall include a provision to
the effect that the recipient, HUD, the 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 directly pertinent to a specific program for the
purpose of making audits, examinations, excerpts and transcriptions.

\(e\) All contracts, including small purchases, awarded by recipients
and their contractors shall contain the procurement provisions of
Appendix A to this rule, as applicable.

### Reports and Records

### §84.50 Purpose of reports and records.

Sections 84.51 through 84.53 set forth the procedures for monitoring and
reporting on the recipient\'s financial and program performance and the
necessary standard reporting forms. They also set forth record retention
requirements.

### §84.51 Monitoring and reporting program performance.

\(a\) Recipients are responsible for managing and monitoring each
project, program, subaward, function or activity supported by the award.
Recipients shall monitor subawards to ensure subrecipients have met the
audit requirements as delineated in §84.26.

\(b\) HUD shall prescribe the frequency with which the performance
reports shall be submitted. Except as provided in §84.51(f), performance
reports shall not be required more frequently than quarterly or less
frequently 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. HUD 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 required after completion of the project.

\(d\) When required, performance reports shall generally contain, for
each award, brief information on each of the following:

\(1\) A comparison of actual accomplishments with the goals and
objectives 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 computation of unit costs.

\(2\) Reasons why established goals were not met, if appropriate.

\(3\) Other pertinent information including, 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 notify HUD of developments 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 contemplated, and any assistance needed to resolve the
situation.

\(g\) HUD may make site visits, as needed.

\(h\) HUD shall comply with clearance requirements of 5 CFR part 1320
when requesting performance data from recipients.

### §84.52 Financial reporting.

\(a\) The following forms or such other forms as may be approved by OMB
are authorized for obtaining financial information from recipients.

\(1\) SF--269 or SF--269A, Financial Status Report.

\(i\) HUD requires recipients to use the SF--269 or SF--269A to report
the status of funds for all nonconstruction projects or programs. HUD
has the option of not requiring the SF--269 or SF--269A when the
SF--270, Request for Advance or Reimbursement, or SF--272, Report of
Federal Cash Transactions, is determined to provide adequate information
to meet its needs, except that a final SF--269 or SF--269A shall be
required at the completion of the project when the SF--270 is used only
for advances.

\(ii\) HUD shall prescribe whether the report shall be on a cash or
accrual basis. If HUD requires accrual information and the recipient\'s
accounting records are not normally kept on the accrual basis, the
recipient shall not be required to convert its accounting system, but
shall develop such accrual information through best estimates based on
an analysis of the documentation on hand.

\(iii\) HUD shall determine the frequency of the Financial Status Report
for each project or program, considering the size and complexity of the
particular project or program. However, the report shall not be required
more frequently than quarterly or less frequently than annually. A final
report shall be required at the completion of the agreement.

\(iv\) HUD requires 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 HUD upon request of the
recipient.

\(2\) SF--272, Report of Federal Cash Transactions.

\(i\) When funds are advanced to recipients HUD shall require each
recipient to submit the SF--272 and, when necessary, its continuation
sheet, SF--272a. HUD shall use this report to monitor cash advanced to
recipients and to obtain disbursement information for each agreement
with the recipients.

\(ii\) HUD may require forecasts of Federal cash requirements in the
"Remarks" section of the report.

\(iii\) When practical and deemed necessary, HUD may require recipients
to report in the "Remarks" section the amount of cash advances received
and retained 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. HUD may require a monthly report from those recipients
receiving advances totaling \$1 million or more per year.

\(v\) HUD may waive the requirement for submission of the SF--272 for
any one of the following reasons:

\(A\) When monthly advances do not exceed \$25,000 per recipient,
provided that such advances are monitored through other forms contained
in this section;

\(B\) If, in HUD\'s opinion, the recipient\'s accounting controls are
adequate to minimize excessive Federal advances; or

\(C\) When the electronic payment mechanisms provide adequate data.

\(b\) When HUD needs additional information or more frequent reports,
the following shall be observed.

\(1\) When additional information is needed to comply with legislative
requirements, HUD shall issue instructions to require recipients to
submit such information under the "Remarks" section of the reports.

\(2\) When HUD determines that a recipient\'s accounting system does not
meet the standards in §84.21, additional pertinent information to
further monitor awards may be obtained upon written notice to the
recipient until such time as the system is brought up to standard. HUD,
in obtaining this information, shall comply with report clearance
requirements of 5 CFR part 1320.

\(3\) HUD will shade out any line item on any report if not necessary.

\(4\) HUD may accept the identical information from the recipients in
machine readable format or computer printouts or electronic outputs in
lieu of prescribed formats.

\(5\) HUD may provide computer or electronic outputs to recipients when
such expedites or contributes to the accuracy of reporting.

### §84.53 Retention and access requirements for records.

\(a\) This section sets forth requirements for record retention and
access to records for awards to recipients. HUD shall not impose any
other record retention or access requirements upon recipients.

\(b\) Financial records, supporting documents, 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 submission of the quarterly or annual financial report, as
authorized by HUD. 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 retained 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 HUD, the 3-year
retention requirement is not applicable to the recipient.

\(4\) Indirect cost rate proposals, cost allocation plans, etc. as
specified in §84.53(g).

\(c\) Copies of original records may be substituted for the original
records if authorized by HUD.

\(d\) HUD shall request transfer of certain records to its custody from
recipients when it determines that the records possess long term
retention value. However, in order to avoid duplicate recordkeeping, HUD
may make arrangements for recipients to retain any records that are
continuously needed for joint use.

\(e\) HUD, the Inspector General, Comptroller General of the United
States, or any of their duly authorized representatives, have the right
of timely and unrestricted access to 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 access to a
recipient\'s personnel for the purpose of interview and discussion
related to such documents. The rights of access in this paragraph (e)
are not limited to the required retention period, but shall last as long
as records are retained.

\(f\) Unless required by statute, HUD shall not place restrictions on
recipients that limit public access to the records of recipients that
are pertinent to an award, except when HUD can demonstrate that such
records shall be kept confidential and would have been exempted from
disclosure pursuant to the Freedom of Information Act (5 U.S.C. 552) if
the records had belonged to HUD.

\(g\) *Indirect cost rate proposals, cost allocation plans, etc.*
Paragraphs (g)(1) and (g)(2) of this section apply 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 recipient submits to HUD 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 submission.

\(2\) *If not submitted for negotiation.* If the recipient is not
required to submit to HUD 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 supporting records starts at the end
of the fiscal year (or other accounting period) covered by the proposal,
plan, or other computation.

### Termination and Enforcement

### §84.60 Purpose of termination and enforcement.

Sections 84.61 and 84.62 set forth uniform suspension, termination and
enforcement procedures.

### §84.61 Termination.

\(a\) Awards may be terminated in whole or in part only if paragraphs
(a)(1), (a)(2) or (a)(3) of this section apply.

\(1\) By HUD, if a recipient materially fails to comply with the terms
and conditions of an award.

\(2\) By HUD 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 partial termination, the portion to
be terminated.

\(3\) By the recipient upon sending to HUD written notification setting
forth the reasons for such termination, the effective date, and, in the
case of partial termination, the portion to be terminated. However, if
HUD determines in the case of partial termination that the reduced or
modified portion of the grant will not accomplish the purposes for which
the grant was made, it may terminate the grant in its entirety under
either paragraphs (a)(1) or (a)(2) of this section.

\(b\) If costs are allowed under an award, the responsibilities of the
recipient referred to in §84.71(a), including those for property
management as applicable, shall be considered in the termination of the
award, and provision shall be made for continuing responsibilities of
the recipient after termination, as appropriate.

### §84.62 Enforcement.

\(a\) *Remedies for noncompliance*. If a recipient 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,
HUD may, in addition to imposing any of the special conditions outlined
in §84.14, 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 recipient or more severe enforcement action by HUD.

\(2\) 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.

\(3\) Wholly or partly suspend or terminate 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, HUD 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 termination*. Costs of a recipient
resulting from obligations incurred by the recipient during a suspension
or after termination of an award are not allowable unless HUD expressly
authorizes them in the notice of suspension or termination or
subsequently. Other recipient costs during suspension or after
termination which are necessary and not reasonably avoidable are
allowable if paragraphs (c)(1) and (c)(2) of this section apply.

\(1\) The costs result from obligations which were properly incurred by
the recipient before the effective date of suspension or termination,
are not in anticipation of it, and in the case of a termination, are
noncancellable.

\(2\) 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 a recipient from being subject to debarment
and suspension under E.O.s 12549 and 12689 and HUD\'s implementing
regulations at 24 CFR part 24 (see §84.13).

### Subpart D---After-the-Award Requirements

### §84.70 Purpose.

Sections 84.71 through 84.73 contain closeout procedures and other
procedures for subsequent disallowances and adjustments.

### §84.71 Closeout procedures.

\(a\) Recipients shall submit, within 90 calendar days after the date of
completion of the award, all financial, performance, and other reports
as required by the terms and conditions of the award. HUD may approve
extensions when requested by the recipient.

\(b\) Unless HUD authorizes an extension, a recipient shall liquidate
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 HUD instructions.

\(c\) HUD shall make prompt payments to a recipient for allowable
reimbursable costs under the award being closed out.

\(d\) The recipient shall promptly refund any balances of unobligated
cash that HUD 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 delinquent debts.

\(e\) When authorized by the terms and conditions of the award, HUD
shall make a settlement for any upward or downward adjustments to the
Federal share of costs after closeout reports are received.

\(f\) The recipient shall account for any real and personal property
acquired with Federal funds or received from the Federal Government in
accordance with §§84.31 through 84.37.

\(g\) In the event a final audit has not been performed prior to the
closeout of an award, HUD shall retain the right to recover an
appropriate amount after fully considering the recommendations on
disallowed costs resulting from the final audit.

### §84.72 Subsequent adjustments and continuing responsibilities.

\(a\) The closeout of an award does not affect any of the following.

\(1\) The right of HUD 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 later refunds, corrections, or other transactions.

\(3\) Audit requirements in §84.26.

\(4\) Property management requirements in §§84.31 through 84.37.

\(5\) Records retention as required in §84.53.

\(b\) After closeout of an award, a relationship created under an award
may be modified or ended in whole or in part with the consent of HUD and
the recipient, provided the responsibilities of the recipient referred
to in §84.73(a), including those for property management as applicable,
are considered and provisions made for continuing responsibilities of
the recipient, as appropriate.

### §84.73 Collection of amounts due.

\(a\) Any funds paid to a recipient in excess of the amount to which the
recipient is finally determined to be entitled under the terms and
conditions of the award constitute a debt to the Federal Government. If
not paid within a reasonable period after the demand for payment, HUD
may reduce the debt by paragraphs (a)(1), (a)(2) or (a)(3) of this
section.

\(1\) Making an administrative offset against other requests for
reimbursements.

\(2\) Withholding advance payments otherwise due to the recipient.

\(3\) Taking other action permitted by statute.

\(b\) Except as otherwise provided by law, HUD shall charge interest on
an overdue debt in accordance with 4 CFR Chapter II, "Federal Claims
Collection Standards."

### Subpart E---Use of Lump Sum Grants

### §84.80 Conditions for use of Lump Sum (fixed price or fixed amount) grants.

\(a\) Heads of awarding activities (HAAs) shall determine and publish
the funding arrangement for award programs having a published program
regulation or Notice of Funding Availability. For other awards,
discretion may be provided to Grant Officers to determine the funding
arrangement on a transaction basis. In such cases, Grant Officers shall
document the basis for selection of the funding arrangement in the
negotiation record. Appropriate consideration to fixed amount (lump sum)
awards shall be made if one or more of the following conditions are
present:

\(1\) The HUD funding amount is definitely less than the total actual
cost of the project.

\(2\) The HUD funding amount does not exceed \$100,000 or the small
purchase threshold fixed at 41 U.S.C. 403 (11), whichever is greater.

\(3\) The project scope is very specific and adequate cost, historical,
or unit pricing data is available to establish a fixed amount award with
assurance that the recipient will realize no increment above actual
cost.

\(b\) \[Reserved\]

### §84.81 Definition.

\(a\) A lump sum award is an award for a predetermined amount, as set
forth in the grant agreement, which amount does not vary with the amount
of the recipient\'s actual incurred costs. Under this type of award, HUD
does not pay the recipient for its incurred costs but rather for
completing certain defined events in the work or achievement of some
other well-defined milestone. Some of the ways in which the grant amount
may be paid are, but are not limited to:

\(1\) In several partial payments, the amount of each agreed upon in
advance, and the "milestone" or event triggering the payment also agreed
upon in advance, and set forth in the grant;

\(2\) On a unit price basis, for a defined unit or units (such as a
housing counseling unit), at a defined price or prices, agreed to in
advance of performance of the grant and set forth in the grant; or,

\(3\) In one payment at grant completion.

\(b\) The key distinction between a lump sum and a cost reimbursement
grant is the lack of a direct relationship between the costs incurred by
the recipient and the amount paid by HUD in the lump sum arrangement.

### §84.82 Provisions applicable only to lump sum grants.

In addition to the provisions of this subpart E, subparts A and B of
this part apply to lump sum grants.

\(a\) *Financial and program management.* Paragraphs (b) through (e) of
this section prescribe standards for financial management systems,
methods for making payments, budget revision approvals, and making
audits.

\(b\) *Standards for financial management systems.* (1) Records that
identify adequately the source and application of funds for
federally-sponsored activities are required. These records shall contain
information pertaining to Federal awards, authorizations, obligations,
unobligated balances, assets, outlays, income and interest.

\(2\) Effective control over and accountability for all funds, property
and other assets are required. Recipients shall adequately safeguard all
such assets and assure they are used solely for authorized purposes.

\(3\) Comparison of outlays with budget amounts for each award is
required. Whenever appropriate, financial information should be related
to performance and unit cost data.

\(4\) Where HUD guarantees or insures the repayment of money borrowed by
the recipient, HUD, at its discretion, may require adequate bonding and
insurance if the bonding and insurance requirements of the recipient are
not deemed adequate to protect the interest of the Federal Government.

\(5\) HUD may require adequate fidelity bond coverage where the
recipient lacks sufficient coverage to protect the Federal Government\'s
interest.

\(6\) Where bonds are required in the situations described above, the
bonds shall be obtained from companies holding certificates of authority
as acceptable sureties, as prescribed in 31 CFR part 223, "Surety
Companies Doing Business with the United States."

\(c\) *Payment.* (1) The standard governing the use of banks and other
institutions as depositories of funds advanced under awards is, HUD
shall not require separate depository accounts for funds provided to a
recipient or establish any eligibility requirements for depositories for
funds provided to a recipient. However, recipients must be able to
account for the receipt, obligation and expenditure of funds.

\(2\) 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).

\(3\) Except as noted elsewhere in this part, only the following forms
shall be authorized for the recipients in requesting payments. HUD shall
not require more than an original and two copies of these forms.

\(i\) *SF-270, Request for Advance or Reimbursement.* HUD has adopted
the SF-270 as a standard form for all nonconstruction programs when
electronic funds transfer or predetermined advance methods are not used.
The SF-270 shall also be used for lump sum payment requests. HUD,
however, has the option of using this form for construction programs in
lieu of the SF-271, "Outlay Report and Request for Reimbursement for
Construction Programs."

\(ii\) *SF-271, Outlay Report and Request for Reimbursement for
Construction Programs.* HUD has adopted the SF-271 as the standard form
to be used for requesting reimbursement for construction programs.
However, HUD may substitute the SF-270 when HUD determines that it
provides adequate information to meet HUD\'s needs.

\(d\) *Revision of budget and program plans.* (1) 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 HUD requirements. It shall be
related to performance for program evaluation purposes whenever
appropriate.

\(2\) Recipients are required to report deviations from program plans,
and request prior approvals for budget and program plan revisions, in
accordance with this section.

\(3\) For nonconstruction awards, recipients shall request prior
approvals from HUD for one or more of the following program or budget
related reasons.

\(i\) Change in the scope or the objective of the project or program
(even if there is no associated budget revision requiring prior written
approval).

\(ii\) The need for additional Federal funding.

\(iii\) Unless described in the application and funded in the approved
awards, the subaward, transfer or contracting out of any work under an
award. This provision does not apply to the purchase of supplies,
material, equipment or general support services.

\(4\) No other prior approval requirements for specific items may be
imposed unless a deviation has been approved by OMB.

\(5\) Except for requirements listed in paragraphs (d)(3)(i) and
(d)(3)(ii) of this section, HUD is authorized, at its option, to waive
cost-related and administrative prior written approvals required by
Circular A--110 and OMB Circulars A--21 and A--122. Such waivers may
include authorizing recipients to do any one or more of the following.

\(i\) 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 notify HUD in writing with
the supporting reasons and revised expiration date at least 10 days
before the expiration date specified in the award. This action may be
taken unless:

\(A\) The terms and conditions of award prohibit the extension.

\(B\) The extension requires additional Federal funds.

\(C\) The extension involves any change in the approved objectives or
scope of the project.

\(6\) For construction awards, recipients shall request prior written
approval promptly from HUD for budget revisions whenever paragraphs
(d)(6)(i) or (d)(6)(ii) of this section apply.

\(i\) The revision results from changes in the scope or the objective of
the project or program.

\(ii\) The need arises for additional Federal funds to complete the
project.

\(7\) No other prior approval requirements for specific items may be
imposed unless a deviation has been approved by OMB.

\(8\) When HUD makes an award that provides support for both
construction and nonconstruction work, HUD may require the recipient to
request prior approval from HUD before making any fund or budget
transfers between the two types of work supported.

\(e\) *Non-Federal audits.* (1) Recipients and subrecipients that are
institutions of higher education or other non-profit organizations
(including 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 Organizations."

\(i\) Non-profit organizations subject to regulations in the part 200
and part 800 series of this title which receive awards subject to part
84 shall comply with the audit requirements of revised OMB Circular
A--133, "Audits of States, Local Governments, and Non-Profit
Organizations." For HUD programs, a non-profit organization is the
mortgagor or owner (as these terms are defined in the regulations in the
part 200 and part 800 series) and not a related or affiliated
organization or entity.

\(ii\) \[Reserved\]

\(2\) 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."

\(3\) For-profit hospitals not covered by the audit provisions of
revised OMB Circular A--133 shall be subject to the audit requirements
of the Federal awarding agencies.

\(4\) Commercial organizations shall be subject to the audit
requirements of HUD or the prime recipient as incorporated into the
award document.

\[59 FR 47011, Sept. 13, 1994, as amended at 62 FR 61617, Nov. 18,
1997\]

### §84.83 Property standards.

\(a\) *Purpose of property standards.* Paragraphs (b) through (g) of
this section set forth uniform standards governing management and
disposition of property furnished by the Federal Government whose cost
was charged to a project supported by a Federal award. HUD 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 paragraphs (b) through
(g) of this section.

\(b\) *Insurance coverage.* Recipients shall, at a minimum, provide the
equivalent insurance coverage for real property and equipment acquired
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.

\(c\) *Real property.* HUD prescribes the following requirements for
recipients concerning the use and disposition of real property acquired
in whole or in part under awards:

\(1\) 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 and shall not
encumber the property without approval of HUD.

\(2\) The recipient shall obtain written approval by HUD 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
federally-sponsored projects (i.e., awards) or programs that have
purposes consistent with those authorized for support by HUD.

\(d\) *Federally-owned and exempt property*---(1) *Federally-owned
property*---(i) *Title to federally-owned property remains vested in the
Federal Government.* Recipients shall submit annually an inventory
listing of federally-owned property in their custody to HUD. Upon
completion of the award or when the property is no longer needed, the
recipient shall report the property to HUD for further HUD utilization.

\(ii\) If HUD has no further need for the property, it shall be declared
excess and reported to the General Services Administration, unless HUD
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 (I)) to donate research equipment to educational and
non-profit organizations in accordance with E.O. 12821, "Improving
Mathematics and Science Education in Support of the National Education
Goals.") Appropriate instructions shall be issued to the recipient by
HUD.

\(2\) *Exempt property.* When statutory authority exists, HUD has the
option to vest title to property acquired with Federal funds in the
recipient without further obligation to the Federal Government and under
conditions HUD considers appropriate. Such property is "exempt
property." Should HUD not establish conditions, title to exempt property
upon acquisition shall vest in the recipient without further obligation
to the Federal Government.

\(e\) *Equipment.* (1) Title to equipment acquired by a recipient with
Federal funds shall vest in the recipient, subject to conditions of this
section.

\(2\) The recipient shall use the equipment in the project or program
for which it was acquired as long as needed, whether or not the project
or program continues to be supported by Federal funds and shall not
encumber the equipment without approval of HUD. When the equipment is 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:

\(i\) Activities sponsored by HUD which funded the original project;
then

\(ii\) Activities sponsored by other Federal awarding agencies.

\(3\) 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 equipment was
originally acquired. First preference for such other use shall be given
to other projects or programs sponsored by HUD that financed the
equipment; second preference shall be given to projects or programs
sponsored by other Federal awarding agencies. If the equipment is owned
by the Federal Government, use on other activities not sponsored by the
Federal Government shall be permissible if authorized by HUD.

\(4\) The recipient\'s property management standards for equipment
acquired with Federal funds and federally-owned equipment shall include
all of the following.

\(i\) Equipment records shall be maintained accurately and shall include
the following information.

\(A\) A description of the equipment.

\(B\) Manufacturer\'s serial number, model number, Federal stock number,
national stock number, or other identification number.

\(C\) Source of the equipment, including the award number.

\(D\) Whether title vests in the recipient or the Federal Government.

\(E\) Acquisition date (or date received, if the equipment was furnished
by the Federal Government) and cost.

\(F\) Location and condition of the equipment and the date the
information was reported.

\(ii\) Equipment owned by the Federal Government shall be identified to
indicate Federal ownership.

\(iii\) A physical inventory of equipment shall be taken and the results
reconciled with the equipment records at least once every two years. Any
differences between quantities determined 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 inventory, verify the existence, current utilization, and continued
need for the equipment.

\(iv\) A control system shall be in effect to insure adequate safeguards
to prevent 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 HUD.

\(v\) Adequate maintenance procedures shall be implemented to keep the
equipment in good condition.

\(5\) HUD may reserve the right to transfer the title to the Federal
Government 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.

\(i\) The equipment shall be appropriately identified in the award or
otherwise made known to the recipient in writing.

\(ii\) HUD shall issue disposition instructions within 120 calendar days
after receipt of a final inventory. The final inventory shall list all
equipment acquired with grant funds and federally-owned equipment. If
HUD fails to issue disposition instructions within the 120 calendar day
period, the recipient shall apply the standards of this section, as
appropriate.

\(iii\) When HUD exercises its right to take title, the equipment shall
be subject to the provisions for federally-owned equipment.

\(f\) *Intangible property.* (1) The recipient may copyright any work
that is subject to copyright and was developed, or for which ownership
was purchased, under an award. HUD reserves a royalty-free, nonexclusive
and irrevocable right to reproduce, publish, or otherwise use the work
for Federal purposes, and to authorize others to do so.

\(2\) Recipients are subject to applicable regulations governing patents
and inventions, including government-wide regulations issued by the
Department of Commerce at 37 CFR part 401, "Rights to Inventions Made by
Nonprofit Organizations and Small Business Firms Under Government
Grants, Contracts and Cooperative Agreements."

\(3\) Unless waived by HUD, the Federal Government has the right to
paragraphs (f)(3)(i) and (f)(3)(ii) of this section.

\(i\) Obtain, reproduce, publish or otherwise use the data first
produced under an award.

\(ii\) Authorize others to receive, reproduce, publish, or otherwise use
such data for Federal purposes.

\(4\) Title to intangible property and debt instruments acquired under
an award or subaward vests upon acquisition in the recipient. The
recipient shall use that property for the originally-authorized purpose.

\(g\) *Property trust relationship.* Real property, equipment,
intangible property and debt instruments that are acquired or improved
with Federal funds shall be held in trust by the recipient as trustee
for the beneficiaries of the project or program under which the property
was acquired or improved. HUD may require recipients to record liens or
other appropriate notices of record to indicate that personal or real
property has been acquired or improved with Federal funds and that use
and disposition conditions apply to the property.

### §84.84 Procurement standards.

\(a\) *Purpose of procurement standards.* Paragraphs (b) through (i) of
this section set forth standards for use by recipients in establishing
procedures for the procurement of supplies and other expendable
property, equipment, real property and other services with Federal
funds. These standards are furnished to ensure that such materials and
services are obtained in an effective manner and in compliance with the
provisions of applicable Federal statutes and executive orders. No
additional procurement standards or requirements shall be imposed by HUD
upon recipients, unless specifically required by Federal statute or
executive order or approved by OMB.

\(b\) *Recipient responsibilities.* The standards contained in this
section do not relieve the recipient of the contractual responsibilities
arising under its contract(s). The recipient is the responsible
authority, without recourse to HUD, regarding the settlement and
satisfaction of all contractual and administrative issues arising out of
procurements entered into in support of an award or other agreement.
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.

\(c\) *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 organization 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 accept gratuities,
favors, or anything of monetary value from contractors, or parties to
subagreements. However, recipients 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.

\(d\) *Competition.* All procurement transactions shall be conducted in
a manner to provide, to the maximum extent practical, open and free
competition. The recipient shall be alert to organizational conflicts of
interest as well as noncompetitive practices among contractors that may
restrict or eliminate competition or otherwise restrain trade. In order
to ensure objective contractor performance 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 considered. The other
factors shall include the bidder\'s or offeror\'s compliance with
Section 3 of the Housing and Urban Development Act of 1968 (12 U.S.C.
1701u), hereafter referred to as "Section 3." Section 3 provides that,
to the greatest extent feasible, and consistent with existing Federal,
State, and local laws, and regulations, economic opportunities generated
by certain HUD financial assistance shall be directed to low- and very
low-income persons. 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 recipient. Any and all bids or
offers may be rejected when it is in the recipient\'s interest to do so.

\(e\) *Procurement procedures.* (1) All recipients shall establish
written procurement procedures. These procedures shall provide for, at a
minimum, that paragraphs (e)(1)(i), (e)(1)(ii) and (e)(1)(iii) of this
section apply.

\(i\) Recipients avoid purchasing unnecessary items.

\(ii\) Where appropriate, an analysis is made of lease and purchase
alternatives to determine which would be the most economical and
practical procurement for the recipient.

\(iii\) Solicitations for goods and services provide for all of the
following.

\(A\) A clear and accurate description of the technical requirements for
the material, product or service to be procured. In competitive
procurements, such a description shall not contain features which unduly
restrict competition.

\(B\) Requirements which the bidder/offeror must fulfill and all other
factors to be used in evaluating bids or proposals.

\(C\) A description, whenever practicable, of technical requirements in
terms of functions to be performed or performance required, including
the range of acceptable characteristics or minimum acceptable standards.

\(D\) The specific features of "brand name or equal" descriptions that
bidders are required to meet when such items are included in the
solicitation.

\(E\) The acceptance, to the extent practicable and economically
feasible, of products and services dimensioned in the metric system of
measurement.

\(F\) Preference, to the extent practicable and economically feasible,
for products and services that conserve natural resources and protect
the environment and are energy efficient.

\(2\) Positive efforts shall be made by recipients to utilize small
businesses, minority-owned firms, and women\'s business enterprises,
whenever possible. Recipients of Federal awards shall take all of the
following steps to further this goal.

\(i\) Ensure that small businesses, minority-owned firms, and women\'s
business enterprises are used to the fullest extent practicable.

\(ii\) Make information on forthcoming opportunities available and
arrange time frames for purchases and contracts to encourage and
facilitate participation by small businesses, minority-owned firms, and
women\'s business enterprises.

\(iii\) Consider in the contract process whether firms competing for
larger contracts intend to subcontract with small businesses,
minority-owned firms, and women\'s business enterprises.

\(iv\) Encourage contracting with consortiums of small businesses,
minority-owned firms and women\'s business enterprises when a contract
is too large for one of these firms to handle individually.

\(v\) Use the services and assistance, as appropriate, of such
organizations as the Small Business Administration and the Department of
Commerce\'s Minority Business Development Agency in the solicitation and
utilization of small businesses, minority-owned firms and women\'s
business enterprises.

\(3\) The type of procuring instruments used (e.g., fixed price
contracts, cost reimbursable contracts, purchase orders, and incentive
contracts) shall be determined by the recipient but shall be appropriate
for the particular procurement and for promoting the best interest of
the program or project involved. The "cost-plus-a-percentage-of-cost" or
"percentage of construction cost" methods of contracting shall not be
used.

\(4\) Contracts shall be made only with responsible contractors who
possess the potential ability to perform successfully under the terms
and conditions of the proposed procurement. Consideration shall be given
to such matters as contractor integrity; compliance with public policy,
including, where applicable, Section 3 of the Housing and Urban
Development Act of 1968 (12 U.S.C. 1701u); 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' implementation of E.O.\'s 12549 and 12689,
"Debarment and Suspension," as set forth at 24 CFR part 24.

\(5\) Recipients shall, on request, make available for the Federal
awarding agency, pre-award review and procurement documents, such as
requests for proposals or invitations for bids, independent cost
estimates, etc., when any of the following conditions apply.

\(i\) A recipient\'s procurement procedures or operation fails to comply
with the procurement standards in HUD\'s implementation of Circular
A--110.

\(ii\) The procurement is expected to exceed \$100,000 or the small
purchase threshold fixed at 41 U.S.C. 403 (11), whichever is greater,
and is to be awarded without competition or only one bid or offer is
received in response to a solicitation.

\(iii\) The procurement, which is expected to exceed the small purchase
threshold, specifies a "brand name" product.

\(iv\) The proposed award over the small purchase threshold is to be
awarded to other than the apparent low bidder under a sealed bid
procurement.

\(v\) A proposed contract modification changes the scope of a contract
or increases the contract amount by more than the amount of the small
purchase threshold.

\(f\) *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 analysis may be accomplished in various
ways, including the comparison of price quotations submitted, market
prices and similar indicia, together with discounts. Cost analysis is
the review and evaluation of each element of cost to determine
reasonableness, allocability and allowability.

\(g\) *Procurement records.* Procurement records and files for purchases
in excess of the small purchase threshold shall include the following at
a minimum:

\(1\) Basis for contractor selection;

\(2\) Justification for lack of competition when competitive bids or
offers are not obtained; and

\(3\) Basis for award cost or price.

\(h\) *Contract administration.* A system for contract administration
shall be maintained to ensure contractor conformance with the terms,
conditions and specifications of the contract and to ensure adequate and
timely follow up of all purchases. Recipients shall evaluate contractor
performance and document, as appropriate, whether contractors have met
the terms, conditions and specifications of the contract.

\(i\) *Contract provisions.* The recipient shall include, in addition to
provisions to define a sound and complete agreement, the following
provisions in all contracts. The following provisions shall also be
applied to subcontracts.

\(1\) Contracts in excess of the small purchase threshold shall contain
contractual provisions or conditions that allow for administrative,
contractual, or legal remedies in instances in which a contractor
violates or breaches the contract terms, and provide for such remedial
actions as may be appropriate.

\(2\) All contracts in excess of the small purchase threshold shall
contain suitable provisions for termination by the recipient, including
the manner by which termination shall be effected and the basis for
settlement. In addition, such contracts shall describe conditions under
which the contract may be terminated for default as well as conditions
where the contract may be terminated because of circumstances beyond the
control of the contractor.

\(3\) 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 \$100,000.
For those contracts or subcontracts exceeding \$100,000, HUD may accept
the bonding policy and requirements of the recipient, provided HUD has
made a determination that the Federal Government\'s interest is
adequately protected. If such a determination has not been made, the
minimum requirements shall be as follows:

\(i\) 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 shall, upon acceptance
of his bid, execute such contractual documents as may be required within
the time specified.

\(ii\) 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.

\(iii\) 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 statute of all persons
supplying labor and material in the execution of the work provided for
in the contract.

\(iv\) Where bonds are required in the situations described herein, the
bonds shall be obtained from companies holding certificates of authority
as acceptable sureties pursuant to 31 CFR part 223, "Surety Companies
Doing Business with the United States."

\(4\) All negotiated contracts (except those for less than the small
purchase threshold) awarded by recipients shall include a provision to
the effect that the recipient, HUD, the 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 directly pertinent to a specific program for the
purpose of making audits, examinations, excerpts and transcriptions.

\(5\) All contracts, including small purchases, awarded by recipients
and their contractors shall contain the procurement provisions of
Appendix A to this rule, as applicable.

### §84.85 Reports and records.

\(a\) *Purpose of reports and records.* Paragraphs (b) and (c) of this
section set forth the procedures for monitoring and reporting on the
recipient\'s financial and program performance and the necessary
standard reporting forms. They also set forth record retention
requirements.

\(b\) *Monitoring and reporting program performance.* (1) Recipients are
responsible for managing and monitoring each project, program, subaward,
function or activity supported by the award. Recipients shall monitor
subawards to ensure subrecipients have met the audit requirements as
delineated in §84.82(e).

\(2\) The Federal awarding agency shall prescribe the frequency with
which the performance reports shall be submitted. Except as provided in
paragraph (b)(6) of this section, performance reports shall not be
required more frequently than quarterly or less frequently 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 Federal awarding agency 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.

\(3\) If inappropriate, a final technical or performance report shall
not be required after completion of the project.

\(4\) When required, performance reports shall generally contain, for
each award, brief information on each of the following:

\(i\) A comparison of actual accomplishments with the goals and
objectives 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 computation of unit costs.

\(ii\) Reasons why established goals were not met, if appropriate.

\(5\) Recipients shall not be required to submit more than the original
and two copies of performance reports.

\(6\) Recipients shall immediately notify HUD of developments 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 contemplated, and any assistance needed to resolve the
situation.

\(7\) HUD may make site visits, as needed.

\(8\) HUD shall comply with clearance requirements of 5 CFR part 1320
when requesting performance data from recipients.

\(c\) *Retention and access requirements for records*. (1) This
paragraph (c) sets forth requirements for record retention and access to
records for awards to recipients. Federal awarding agencies shall not
impose any other record retention or access requirements upon
recipients.

\(2\) Financial records, supporting documents, 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 submission of the quarterly or annual financial report, as
authorized by HUD. The only exceptions are the following.

\(i\) If any litigation, claim, or audit is started before the
expiration of the 3-year period, the records shall be retained until all
litigation, claims or audit findings involving the records have been
resolved and final action taken.

\(ii\) Records for real property and equipment acquired with Federal
funds shall be retained for 3 years after final disposition.

\(iii\) When records are transferred to or maintained by the Federal
awarding agency, the 3-year retention requirement is not applicable to
the recipient.

\(3\) Copies of original records may be substituted for the original
records if authorized by HUD.

\(4\) HUD shall request transfer of certain records to its custody from
recipients when it determines that the records possess long term
retention value. However, in order to avoid duplicate recordkeeping, HUD
may make arrangements for recipients to retain any records that are
continuously needed for joint use.

\(5\) HUD, the Inspector General, Comptroller General of the United
States, or any of their duly authorized representatives, have the right
of timely and unrestricted access to 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 access to a
recipient\'s personnel for the purpose of interview and discussion
related to such documents. The rights of access in this paragraph (c)(5)
are not limited to the required retention period, but shall last as long
as records are retained.

\(6\) Unless required by statute, HUD shall not place restrictions on
recipients that limit public access to the records of recipients that
are pertinent to an award, except when HUD can demonstrate that such
records shall be kept confidential and would have been exempted from
disclosure pursuant to the Freedom of Information Act (5 U.S.C. 552) if
the records had belonged to HUD.

### §84.86 Termination and enforcement.

\(a\) *Termination*. (1) Awards may be terminated in whole or in part
only if paragraphs (a)(1)(i), (a)(1)(ii), or (a)(1)(iii) of this section
apply.

\(i\) By HUD, if a recipient materially fails to comply with the terms
and conditions of an award.

\(ii\) By HUD 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 partial termination, the portion to
be terminated.

\(iii\) By the recipient upon sending to HUD written notification
setting forth the reasons for such termination, the effective date, and,
in the case of partial termination, the portion to be terminated.
However, if HUD determines in the case of partial termination that the
reduced or modified portion of the grant will not accomplish the
purposes for which the grant was made, it may terminate the grant in its
entirety under either paragraphs (a)(1)(i) or (a)(1)(ii) of this
section.

\(2\) If costs are allowed under an award, the responsibilities of the
recipient referred to in §84.87(a)(1), including those for property
management as applicable, shall be considered in the termination of the
award, and provision shall be made for continuing responsibilities of
the recipient after termination, as appropriate.

\(3\) If costs are allowed, the cost principles in §84.27 apply, even
though the award was made on a lump-sum basis. Alternatively, a
termination settlement may be reached by prorating the grant amount
against the percentage of completion or by some other method as
determined by the Grant Officer, as long as the method used results in
an equitable settlement to both parties.

\(b\) *Enforcement*. (1) *Remedies for noncompliance*. If a recipient
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, HUD may, in addition to imposing any of the special
conditions outlined in §84.14, take one or more of the following
actions, as appropriate in the circumstances.

\(i\) Temporarily withhold cash payments pending correction of the
deficiency by the recipient or more severe enforcement action by HUD.

\(ii\) Wholly or partly suspend or terminate the current award.

\(iii\) Withhold further awards for the project or program.

\(iv\) Take other remedies that may be legally available.

\(2\) *Hearings and appeals*. In taking an enforcement action, HUD 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.

\(3\) *Effects of suspension and termination*. Costs of a recipient
resulting from obligations incurred by the recipient during a suspension
or after termination of an award are not allowable unless HUD expressly
authorizes them in the notice of suspension or termination or
subsequently. Other recipient costs during suspension or after
termination which are necessary and not reasonably avoidable are
allowable if paragraphs (b)(3)(i) and (b)(3)(ii) of this section apply.

\(i\) The costs result from obligations which were properly incurred by
the recipient before the effective date of suspension or termination,
are not in anticipation of it, and in the case of a termination, are
noncancellable.

\(ii\) 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.

\(4\) *Relationship to debarment and suspension*. 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 HUD\'s implementing
regulations at 24 CFR part 24 (see §84.13).

### §84.87 Closeout procedures, subsequent adjustments and continuing responsibilities.

\(a\) *Closeout procedures*. (1) Recipients shall submit, within 90
calendar days after the date of completion of the award, all financial,
performance, and other reports as required by the terms and conditions
of the award. HUD may approve extensions when requested by the
recipient.

\(2\) The recipient shall account for any real and personal property
acquired with Federal funds or received from the Federal Government in
accordance with §§84.83(b) through (g).

\(b\) *Subsequent adjustments and continuing responsibilities*. (1) The
closeout of an award does not affect any of the following:

\(i\) Audit requirements in §84.26.

\(ii\) Property management requirements in §§84.83(b) through (g).

\(iii\) Records retention as required in §84.53.

\(2\) After closeout of an award, a relationship created under an award
may be modified or ended in whole or in part with the consent of HUD and
the recipient, provided the responsibilities of the recipient are
considered and provisions made for continuing responsibilities of the
recipient, as appropriate.

### Appendix A to Part 84---Contract Provisions

All contracts, awarded by a recipient including small purchases, shall
contain the following provisions as applicable:

1\. *Equal Employment Opportunity*---All contracts shall contain a
provision requiring compliance with E.O. 11246, "Equal Employment
Opportunity," as amended by E.O. 11375, "Amending Executive Order 11246
Relating to Equal Employment Opportunity," and as supplemented by
regulations at 41 CFR part 60, "Office of Federal Contract Compliance
Programs, Equal Employment Opportunity, Department of Labor."

2\. *Copeland "Anti-Kickback" Act (18 U.S.C. 874 and 40 U.S.C.
276c)*---All contracts and subgrants in excess of \$2000 for
construction or repair awarded by recipients and subrecipients shall
include a provision for compliance with the Copeland "Anti-Kickback" Act
(18 U.S.C. 874), as supplemented by Department of Labor regulations (29
CFR part 3, "Contractors and Subcontractors on Public Building or Public
Work Financed in Whole or in Part by Loans or Grants from the United
States"). The Act provides that each contractor or subrecipient 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 suspected or reported violations to HUD.

3\. *Davis-Bacon Act, as amended (40 U.S.C. 276a to a-7)*---When
required by Federal program legislation, all construction contracts
awarded by the recipients and subrecipients of more than \$2000 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 Applicable to Contracts
Governing Federally Financed 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 Secretary 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 report all suspected or reported
violations to HUD.

4\. *Contract Work Hours and Safety Standards Act (40 U.S.C. 327 through
333)*---Where applicable, all contracts awarded by recipients in excess
of \$2000 for construction contracts and in excess of \$2500 for other
contracts that involve the employment of mechanics or laborers shall
include a provision for compliance with Sections 102 and 107 of the
Contract Work Hours and Safety Standards Act (40 U.S.C. 327--333), as
supplemented 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 workweek
of 40 hours. Work in excess of the standard workweek is permissible
provided that the worker is compensated at a rate of not less than 1 1/2
times the basic rate of pay for all hours worked in excess of 40 hours
in the workweek. Section 107 of the Act is applicable to construction
work and provides that no laborer or mechanic shall be required to work
in surroundings or under working conditions which are unsanitary,
hazardous or dangerous. These requirements do not apply to the purchases
of supplies or materials or articles ordinarily available on the open
market, or contracts for transportation or transmission of intelligence.

5\. *Rights to Inventions Made Under a Contract or Agreement---*
Contracts or agreements for the performance of experimental,
developmental, 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 Government Grants,
Contracts and Cooperative Agreements," and any implementing regulations
issued by HUD.

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 \$100,000 shall contain a
provision that requires the recipient to agree to comply with all
applicable standards, orders or regulations issued pursuant to the Clean
Air Act (42 U.S.C. 7401 *et seq*.) and the Federal Water Pollution
Control Act as amended (33 U.S.C. 1251 *et seq*.). Violations shall be
reported to HUD and the Regional Office of the Environmental Protection
Agency (EPA).

7\. *Byrd Anti-Lobbying Amendment (31 U.S.C. 1352)---* Contractors who
apply or bid for an award of \$100,000 or more shall file the required
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 attempting 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
obtaining 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 connection with obtaining any Federal award.
Such disclosures are forwarded from tier to tier up to the recipient.

8\. *Debarment and Suspension (E.O.s 12549 and 12689)*---No contract
shall be made to parties listed on the General Services
Administration\'s List of Parties Excluded from Federal Procurement or
Nonprocurement Programs in accordance with E.O.s 12549 and 12689,
"Debarment and Suspension," as set forth at 24 CFR part 24. This list
contains the names of parties debarred, suspended, or otherwise excluded
by agencies, and contractors declared ineligible under statutory or
regulatory authority other than E.O. 12549. Contractors with awards that
exceed the small purchase threshold shall provide the required
certification regarding its exclusion status and that of its principal
employees.

9\. *Drug-Free Workplace Requirements*---The Drug-Free Workplace Act of
1988 (42 U.S.C. 701) requires grantees (including individuals) of
federal agencies, as a prior condition of being awarded a grant, to
certify that they will provide drug-free workplaces. Each potential
recipient must certify that it will comply with drug-free workplace
requirements in accordance with the Act and with HUD\'s rules at 24 CFR
part 24, subpart F.