Vol. 79 Friday, 

No. 244 December 19, 2014 

Part II 

EXECUTIVE OFFICE OF THE PRESIDENT 

Office of Management and Budget 

2 CFR Parts 1, 25, 170, et al. 

DEPARTMENT OF HEALTH AND HUMAN 

SERVICES 

2 CFR Part 300 

45 CFR Parts 74, 75, and 92 

DEPARTMENT OF AGRICULTURE 

2 CFR Parts 400, 415, 416, et al. 

Office of the Chief Financial Officer 

7 CFR Parts 3015, 3016, 3018, et al. 

Farm Service Agency 

7 CFR Parts 761 and 785 

Commodity Credit Corporation 

7 CFR Parts 1407 and 1485 

National Institute of Food and Agriculture 

7 CFR Parts 3400, 3401, 3402, et al. 


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Rural Utilities Service 

7 CFR Parts 1703, 1709, 1710, et al. 

Rural Business-Cooperative Service 

Rural Housing Service 

Rural Utilities Service 

Farm Service Agency 

7 CFR Parts 1942, 1944, 1951, et al. 

Rural Housing Service 

7 CFR Parts 3570 and 3575 

Rural Business-Cooperative Service 

Rural Utilities Service 

7 CFR Parts 4274, 4279, 4280, et al. 

DEPARTMENT OF STATE 

2 CFR Part 600 

22 CFR Parts 135 and 145 

AGENCY FOR INTERNATIONAL 

DEVELOPMENT 

2 CFR Part 700 

22 CFR Part 226 

DEPARTMENT OF VETERANS AFFAIRS 

2 CFR Part 802 

38 CFR Parts 41 and 43 

DEPARTMENT OF ENERGY 

2 CFR Part 910 

10 CFR Parts 602, 605, and 733 

DEPARTMENT OF TREASURY 

2 CFR Part 1000 

DEPARTMENT OF DEFENSE 

2 CFR Part 1103 

DEPARTMENT OF TRANSPORTATION 

2 CFR Part 1201 

49 CFR Parts 18 and 19 

DEPARTMENT OF COMMERCE 

2 CFR Part 1327 

15 CFR Parts 14 and 24 

DEPARTMENT OF THE INTERIOR 

2 CFR Part 1402 

43 CFR Part 12 


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ENVIRONMENTAL PROTECTION AGENCY 

2 CFR Part 1500 

40 CFR Parts 30, 31, 33, et al. 

NATIONAL AERONAUTICS AND SPACE 

ADMINISTRATION 

2 CFR Part 1800 

14 CFR Parts 1260 and 1273 

CORPORATION FOR NATIONAL AND 

COMMUNITY SERVICE 

2 CFR Part 2205 

45 CFR Parts 1235, 2510, 2520, et al. 

SOCIAL SECURITY ADMINISTRATION 

2 CFR Part 2300 

20 CFR Parts 435 and 437 

DEPARTMENT OF HOUSING AND URBAN 

DEVELOPMENT 

2 CFR Part 2400 

24 CFR Parts 84 and 85 

NATIONAL SCIENCE FOUNDATION 

2 CFR Part 2500 

45 CFR Part 602 

NATIONAL ARCHIVES AND RECORDS 

ADMINISTRATION 

2 CFR Part 2600 

36 CFR Parts 1206, 1207, and 1210 

SMALL BUSINESS ADMINISTRATION 

2 CFR Part 2701 

13 CFR Part 143 

DEPARTMENT OF JUSTICE 

2 CFR Part 2800 

28 CFR Parts 66 and 70 

DEPARTMENT OF LABOR 

2 CFR Part 2900 

DEPARTMENT OF HOMELAND SECURITY 

2 CFR Part 3002 


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Federal Emergency Management Agency 

44 CFR Parts 13, 78, 79, et al. 

INSTITUTE OF MUSEUM AND LIBRARY 

SERVICES 

2 CFR Part 3187 

45 CFR Parts 1180 and 1183 

NATIONAL ENDOWMENT FOR THE ARTS 

2 CFR Part 3255 

45 CFR Part 1157 

NATIONAL ENDOWMENT FOR THE 

HUMANITIES 

2 CFR Part 3374 

45 CFR Part 1174 

DEPARTMENT OF EDUCATION 

2 CFR Part 3474 

34 CFR Parts 74, 75, 76, et al. 

EXECUTIVE OFFICE OF THE PRESIDENT 

Office of National Drug Control Policy 

2 CFR Part 3603 

21 CFR Parts 1403, 1404, and 1405 

GULF COAST ECOSYSTEM RESTORATION 

COUNCIL 

2 CFR Part 5900 

Federal Awarding Agency Regulatory Implementation of Office of 

Management and Budget’s Uniform Administrative Requirements, Cost 

Principles, and Audit Requirements for Federal Awards; Final Rule 


tkelley on DSK3SPTVN1PROD with RULES2
Federal Register / Vol. 79, No. 244 / Friday, December 19, 2014 / Rules and Regulations 75871 

EXECUTIVE OFFICE OF THE 

PRESIDENT 

Office of Management and Budget 

2 CFR Parts 1, 25, 170, 180, and 200 

DEPARTMENT OF HEALTH AND 

HUMAN SERVICES 

2 CFR Part 300 

45 CFR Parts 74, 75, and 92 

RIN 0991–ZA46 

DEPARTMENT OF AGRICULTURE 

2 CFR Parts 400, 415, 416, 418, and 422 

Office of the Chief Financial Officer 

7 CFR Parts 3015, 3016, 3018, 3019, 

3022, and 3052 

Farm Service Agency 

7 CFR Parts 761 and 785 

Commodity Credit Corporation 

7 CFR Parts 1407 and 1485 

National Institute of Food and 

Agriculture 

7 CFR Parts 3400, 3401, 3402, 3403, 

3405, 3406, 3407, 3415, 3430, and 3431 

Rural Utilities Service 

7 CFR Parts 1703, 1709, 1710, 1717, 

1724, 1726, 1737, 1738, 1739, 1740, 

1773, 1774, 1775, 1776, 1778, 1779, 

1780, 1782, and 1783 

Rural Business-Cooperative Service 

Rural Housing Service 

Rural Utilities Service 

Farm Service Agency 

7 CFR Parts 1942, 1944, 1951, and 1980 

Rural Housing Service 

7 CFR Parts 3570 and 3575 

Rural Business-Cooperative Service 

Rural Utilities Service 

7 CFR Parts 4274, 4279, 4280, 4284, 

4285, and 4290 

RIN 0505–AA15 

DEPARTMENT OF STATE 

2 CFR Part 600 

22 CFR Parts 135 and 145 

RIN 1400–AD57 

AGENCY FOR INTERNATIONAL 

DEVELOPMENT 

2 CFR Part 700 

22 CFR Part 226 

RIN 0412–AA73 

DEPARTMENT OF VETERANS 

AFFAIRS 

2 CFR Part 802 

38 CFR Parts 41 and 43 

RIN 2900–AP03 

DEPARTMENT OF ENERGY 

2 CFR Part 910 

10 CFR Parts 602, 605, and 733 

RIN 1991–AB94 

DEPARTMENT OF TREASURY 

2 CFR Part 1000 

RIN 1505–AC48 

DEPARTMENT OF DEFENSE 

2 CFR Part 1103 

RIN 0790–AJ25 

DEPARTMENT OF TRANSPORTATION 

2 CFR Part 1201 

49 CFR Parts 18 and 19 

RIN 2105–AE33 

DEPARTMENT OF COMMERCE 

2 CFR Part 1327 

15 CFR Parts 14 and 24 

RIN 0605–AA34 

DEPARTMENT OF THE INTERIOR 

2 CFR Part 1402 

43 CFR Part 12 

RIN 1090–AB08 

ENVIRONMENTAL PROTECTION 

AGENCY 

2 CFR Part 1500 

40 CFR Parts 30, 31, 33, 35, 40, 45, 46, 

and 47 

RIN 2030–AA99 

NATIONAL AERONAUTICS AND 

SPACE ADMINISTRATION 

2 CFR Part 1800 

14 CFR Parts 1260 and 1273 

RIN 2700–AE94 

CORPORATION FOR NATIONAL AND 

COMMUNITY SERVICE 

2 CFR Part 2205 

45 CFR Parts 1235, 2510, 2520, 2541, 

2543, 2551, 2552, and 2553 

RIN 3045–AA61 

SOCIAL SECURITY ADMINISTRATION 

2 CFR Part 2300 

20 CFR Parts 435 and 437 

RIN 0960–0960–AH73 

DEPARTMENT OF HOUSING AND 

URBAN DEVELOPMENT 

2 CFR Part 2400 

24 CFR Parts 84 and 85 

RIN 2501–AD54 

NATIONAL SCIENCE FOUNDATION 

2 CFR Part 2500 

45 CFR Part 602 

RIN 3145–AA57 


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75872 Federal Register / Vol. 79, No. 244 / Friday, December 19, 2014 / Rules and Regulations 

NATIONAL ARCHIVES AND RECORDS 

ADMINISTRATION 

2 CFR Part 2600 

36 CFR Parts 1206, 1207, and 1210 

RIN 3095–AB83 

SMALL BUSINESS ADMINISTRATION 

2 CFR Part 2701 

13 CFR Part 143 

RIN 3245–AG62 

DEPARTMENT OF JUSTICE 

2 CFR Part 2800 

28 CFR Parts 66 and 70 

RIN 1121–AA81 

DEPARTMENT OF LABOR 

2 CFR Part 2900 

RIN 1205–AB71 

DEPARTMENT OF HOMELAND 

SECURITY 

2 CFR Part 3002 

Federal Emergency Management 

Agency 

44 CFR Parts 13, 78, 79, 152, 201, 204, 

206, 207, 208, 304, 360, and 361 

RIN 1601–AA70 

INSTITUTE OF MUSEUM AND 

LIBRARY SERVICES 

2 CFR Part 3187 

45 CFR Parts 1180 and 1183 

RIN 3137–AA24 

NATIONAL ENDOWMENT FOR THE 

ARTS 

2 CFR Part 3255 

45 CFR Part 1157 

RIN 3135–AA32 

NATIONAL ENDOWMENT FOR THE 

HUMANITIES 

2 CFR Part 3374 

45 CFR Part 1174 

RIN 3136–AA35 

DEPARTMENT OF EDUCATION 

2 CFR Part 3474 

34 CFR Parts 74, 75, 76, 77, 80, 101, 

206, 222, 225, 226, 270, 280, 299, 300, 

303, 350, 361, 363, 364, 365, 367, 369, 

370, 373, 377, 380, 381, 385, 396, 400, 

426, 460, 464, 491, 535, 606, 607, 608, 

609, 611, 614, 628, 636, 637, 642, 643, 

644, 645, 646, 647, 648, 650, 654, 655, 

661, 662, 663, 664, 682, 692, 694, and 

1100 

RIN 1890–AA19 

EXECUTIVE OFFICE OF THE 

PRESIDENT 

Office of National Drug Control Policy 

2 CFR Part 3603 

21 CFR Parts 1403, 1404, and 1405 

RIN 3201–AA00 

GULF COAST ECOSYSTEM 

RESTORATION COUNCIL 

2 CFR Part 5900 

RIN 3600–AA03 

Federal Awarding Agency Regulatory 

Implementation of Office of 

Management and Budget’s Uniform 

Administrative Requirements, Cost 

Principles, and Audit Requirements for 

Federal Awards 

AGENCY: Office of Management and 

Budget, Executive Office of the 

President; Department of Health And 

Human Services; Farm Service Agency, 

Commodity Credit Corporation, 

National Institute of Food and 

Agriculture, Rural Utilities Service, 

Rural Business-Cooperative Service, 

Rural Housing Service, Rural Utilities 

Service, Farm Service Agency, 

Department of Agriculture; Department 

of State; Agency for International 

Development; Department of Veterans 

Affairs; Department of Energy; 

Department of Treasury; Department of 

Defense; Department of Transportation; 

Department of Commerce; Department 

of the Interior; Environmental 

Protection Agency; National 

Aeronautics and Space Administration; 

Corporation for National and 

Community Service; Social Security 

Administration; Department of Housing 

And Urban Development; National 

Science Foundation; National Archives 

and Records Administration; Small 

Business Administration; Department of 

Justice; Department of Labor; Federal 

Emergency Management Agency, 

Department of Homeland Security; 

Institute of Museum and Library 

Services; National Endowment for the 

Arts; National Endowment for the 

Humanities; Department of Education;, 

Office of National Drug Control Policy, 

Executive Office of the President; Gulf 

Coast Ecosystem Restoration Council. 

ACTION: Interim final rule. 

SUMMARY: This joint interim final rule 

implements for all Federal awardmaking agencies the final guidance 

Uniform Administrative Requirements, 

Cost Principles, and Audit 

Requirements for Federal Awards 

(Uniform Guidance) published by the 

Office of Management and Budget 

(OMB) on December 26, 2013. This rule 

is necessary in order to incorporate into 

regulation and thus bring into effect the 

Uniform Guidance as required by OMB. 

Implementation of this guidance will 

reduce administrative burden and risk 

of waste, fraud, and abuse for the 

approximately $600 billion per year 

awarded in Federal financial assistance. 

The result will be more Federal dollars 

reprogrammed to support the mission, 

new entities able to compete and win 

awards, and ultimately a stronger 

framework to provide key services to 

American citizens and support the basic 

research that underpins the United 

States economy. 

DATES: Effective date: This interim final 

rule is effective on December 26, 2014. 

The incorporation by reference of 

certain publications listed in the rule is 

approved by the Director of the Federal 

Register as of December 26, 2014. 

Implementation dates: For grants 

authorized under the Robert T. Stafford 

Disaster Relief and Emergency 

Assistance Act, this rule is applicable 

for emergency or major disaster 

declarations issued on or after December 

26, 2014. For non-Federal entities that 

are nonprofit organizations or 

institutions of higher education (IHEs), 

there is a one-year grace period for 

implementation of the procurement 

standards in 2 CFR 200.317 through 

200.326. As will be detailed in the 2015 

OMB Compliance Supplement, nonFederal entities choosing to delay 

implementation for the procurement 

standards will need to specify in their 

documented policies and procedures 

that they continue to comply with OMB 

circular A–110 for one additional fiscal 

year which begins after December 26, 

2014. 

Comment date: To be assured of 

consideration, comments must be 

received by OMB electronically through 


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Federal Register / Vol. 79, No. 244 / Friday, December 19, 2014 / Rules and Regulations 75873 

www.regulations.gov no later than 

midnight Eastern Standard Time (E.S.T.) 

on February 17, 2015. 

ADDRESSES: Comments should be 

submitted to www.regulations.gov. 

FOR FURTHER INFORMATION CONTACT: For 

general information, please contact 

Victoria Collin or Gil Tran at the OMB 

Office of Federal Financial 

Management, 175 17th St. NW., 

Washington, DC 20500, or via telephone 

at (202) 395–3993. You may submit 

comments via the Federal eRulemaking 

Portal at www.regulations.gov, Docket 

Number OMB–2014–0006. Follow the 

instructions for submitting comments. 

SUPPLEMENTARY INFORMATION: 

Background 

This joint interim final rule 

implements for all Federal awardmaking agencies the final guidance 

Uniform Administrative Requirements, 

Cost Principles, and Audit 

Requirements for Federal Awards 

published by the Office of Management 

and Budget (OMB) on December 26, 

2013 in 2 CFR part 200 (Uniform 

Guidance—available at 78 FR 78589). 

The Uniform Guidance followed on a 

Notice of Proposed Guidance issued 

February 1, 2013 (available at 78 FR 

7282), and an Advanced Notice of 

Proposed Guidance issued February 28, 

2012 (available at 77 FR 11778). The 

final guidance incorporated feedback 

received from the public in response to 

those earlier issuances. Additional 

supporting resources are available from 

the Council on Financial Assistance 

Reform at www.cfo.gov/COFAR. 

The Uniform Guidance delivered on 

two presidential directives; Executive 

Order 13520 on Reducing Improper 

Payments (74 FR 62201; November 15, 

20019), and February 28, 2011 

Presidential Memorandum on 

Administrative Flexibility, Lower Costs, 

and Better Results for State, Local, and 

Tribal Governments, (Daily Comp. Pres. 

Docs.; http://www.gpo.gov/fdsys/pkg/

DCPD-201100123/pdf/DCPD201100123.pdf). It reflected more than 

two years of work by the Council on 

Financial Assistance Reform to improve 

the efficiency and effectiveness of 

Federal financial assistance. For a 

detailed discussion of the reform and its 

impacts, please see the Federal Register 

notice for the issuance of the final 

guidance (78 FR 78589). 

With this interim final rule, OMB is 

amending the uniform guidance to make 

technical corrections where needed, and 

Federal awarding agencies are joining 

together to implement the Uniform 

Guidance in their respective chapters of 

title 2 of the CFR. With respect to the 

technical corrections that OMB is 

issuing, these corrections are included 

only where it has come to the attention 

of the COFAR that particular language 

in the final guidance did not match with 

the COFAR’s intent and would result in 

an erroneous implementation of the 

guidance. These technical corrections 

will go into effect at the time of the 

effective date of this interim final rule. 

Among these technical corrections, 

please note in particular, parts 25, 170, 

and 180 are amended to reflect that the 

Central Contractor Registration (CCR) 

and Excluded Parties List System 

(EPLS) no longer exist as stand-alone 

systems; their functionalities are now 

available in the System of Award 

Management (SAM). 

2 CFR parts 25, 180 and, 200 are 

revised to remove references to the Dun 

and Bradstreet (D&B) Data Universal 

Numbering System (DUNS) and replace 

them with the term ‘unique entity 

identifier’. This change is consistent 

with Administration priorities to 

technically refine existing regulations. 

The specific standard for this unique 

entity identifier will be in accordance 

with the requirements of SAM. This 

revision does not indicate a change in 

current policy. 

References to the Federal Awardee 

Performance and Integrity Information 

System (FAPIIS) remain in 2 CFR part 

200 reflecting that final guidance for 

Federal grants and cooperative 

agreements will be published following 

the issuance of this interim final rule. 

2 CFR 200.110 Effective/applicability 

date is revised to allow a grace period 

of one fiscal year for non-Federal 

entities to implement changes to their 

procurement policies and procedures in 

accordance with sections 200.317 

through 200.336 Procurement 

Standards. 

Finally, 2 CFR 200.320 Methods of 

Procurement paragraph (c), the 

requirement for sealed bids to be 

advertised and opened ‘‘publicly’’ is 

limited as was originally intended to 

state, local and tribal entities. Other 

requirements in the section remain as 

originally published. 

In addition, throughout the guidance, 

the COFAR changed the word ‘‘should’’ 

to ‘‘must’’ to reflect longstanding 

policies that have been requirements in 

practice, but which may have been 

misinterpreted as optional with the 

usage of the word ‘‘should’’. Other 

technical corrections are made to 

eliminate conflicting or unclear 

language and grammatical 

inconsistencies or citation errors 

throughout. 

With respect to the implementing 

regulations that Federal awarding 

agencies are issuing, any agencies that 

have received OMB approval for an 

exception to the Uniform Guidance have 

included the resulting language in their 

regulations. OMB has only approved 

exceptions to the Uniform Guidance 

where they are consistent with existing 

policy. Further, agencies are providing 

additional language beyond that 

included in 2 CFR part 200, consistent 

with their existing policy, to provide 

more detail with respect to how they 

intend to implement the policy, where 

appropriate. Agencies are not making 

new policy with this interim final rule; 

all regulatory language included here 

should be consistent with either the 

policies in the Uniform Guidance or the 

agencies’ existing policies and practices. 

Three agencies have requested special 

accommodation with respect to the 

format of their implementing language. 

The National Science Foundation, the 

Department of Education, and the 

Department of Health and Human 

Services have included agency-specific 

preamble language as follows: 

National Science Foundation 

The National Science Foundation 

(NSF) has received approval from OMB 

to implement 2 CFR part 200 via use of 

a policy, rather than a regulation. In the 

interest of establishing a single location 

for each of the Departments’ and 

Agencies’ implementation of the 

Uniform Guidance, per OMB’s request, 

NSF has provided a link to its policy 

implementation of OMB’s Uniform 

Guidance in 2 CFR part 2500 for 

inclusion in this issuance. 

Department of Education 

The Secretary of the Department of 

Education takes one exception from the 

Uniform Guidance and makes one 

clarification regarding another section of 

the Uniform Guidance (discussed more 

fully later in this section of the 

preamble). The Secretary also describes 

the technical amendments needed to 

conform to the guidance in 2 CFR part 

200. The Secretary publishes this 

special section of the joint preamble to 

provide the basis and purpose for the 

exception and clarification. 

The Secretary also seeks comments on 

whether any of the requirements 

imposed under our adoption of the 

Uniform Guidance conflict with any of 

the requirements in the Department’s 

statutes and regulations. 

Exception and Clarification 

An exception to the Uniform 

Guidance is required because the 

Secretary lacks authority to delegate 

functions to the Office of Management 

and Budget (OMB), as contemplated by 


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75874 Federal Register / Vol. 79, No. 244 / Friday, December 19, 2014 / Rules and Regulations 

the Uniform Guidance. In particular, 2 

CFR 200.102(a) would effectively 

delegate one of the Secretary’s 

functions—granting exceptions to the 

regulations as promulgated by the 

Department—to employees of OMB. 

Section 412 of the Department of 

Education Organization Act (20 U.S.C. 

3472) permits the Secretary to delegate 

functions of the Department to officers 

and employees of the Department, but 

neither that section or any other statute 

permits the Secretary to delegate to 

OMB the authority to grant exceptions 

to the Department’s regulations. The 

Secretary is therefore modifying the 

regulation in 2 CFR 200.102(a) to 

authorize the Secretary to grant 

exceptions to the regulations after 

consultation with appropriate officials 

at OMB. This exception is stated in 2 

CFR 3474.5. 

The Secretary also clarifies that the 

Department’s authority under 2 CFR 

200.207, Specific conditions, also 

permits the Department to designate 

grants and grantees as high risk. The 

Department has long used the authority 

under 34 CFR 74.14, Special award 

conditions, and 80.12, Special grant or 

subgrant conditions for ‘‘high-risk’’ 

grantees, to impose high-risk conditions 

on both individual grants and 

individual grantees. While these two 

sections did not both use the term 

‘‘high-risk,’’ they established identical 

standards for imposing special 

conditions on grantees. Under these 

regulations, the Department has 

imposed high-risk conditions on 

specific grants and grantees in 

appropriate circumstances regardless of 

whether the grantee was subject to part 

74 or part 80. The guidance in 2 CFR 

200.205 and 200.207 replaces the 

requirements in 34 CFR 74.14 and 80.12 

and authorizes specific conditions 

under virtually identical standards to 

those formerly in parts 74 and 80. 

Because the standards in 2 CFR 200.207 

are virtually identical to those in former 

34 CFR parts 74 and 80, the Secretary 

clarifies that the Department will now 

use the standards in 2 CFR 200.205 and 

the procedures in 2 CFR 200.207 to 

impose specific or high risk conditions 

on grants and grantees, depending on 

the circumstances in each case. 

The current regulations in parts 74 

and 80 contain provisions that authorize 

the Department to impose conditions on 

grants or grantees if an applicant or 

grantee (1) Has a history of poor 

performance; (2) Is not financially 

stable; (3) Has a management system 

that does not meet the standards 

prescribed in this part; (4) Has not 

conformed to the terms and conditions 

of a previous award; or (5) Is not 

otherwise responsible. 

The guidance in 2 CFR 200.205 

requires agencies to conduct a risk 

evaluation whenever making new 

awards, authorizing agencies to use a 

risk-based approach, and may consider 

any items such as the following: (1) 

Financial stability; (2) Quality of 

management systems and ability to meet 

the management standards prescribed in 

Part 200; (3) History of performance. 

The applicant’s record in managing 

Federal awards, if it is a prior recipient 

of Federal awards, including timeliness 

of compliance with applicable reporting 

requirements, conformance to the terms 

and conditions of previous Federal 

awards and, if applicable, the extent to 

which any previously awarded amounts 

will be expended prior to future awards; 

(4) Reports and findings from audits 

performed under Subpart F—Audit 

Requirements of Part 200 or the reports 

and findings of any other available 

audits; and (5) The applicant’s ability to 

effectively implement statutory, 

regulatory, or other requirements 

imposed on non-Federal entities. 

The standards identified in 2 CFR 

200.205 may be used both at the time of 

the award or after an award is made if 

the Department discovers new risks 

posed under a particular grant or by a 

particular grantee. While the standards 

in 2 CFR 200.205 provide more detail 

and are stated in neutral terms, the same 

underlying reasons apply to the 

standards used by the Department to 

impose high-risk conditions under 34 

CFR 74.14 and 80.12. Therefore, the 

Secretary clarifies that the standards in 

2 CFR 200.205, which do not mention 

‘‘high-risk’’ conditions, can be used in 

appropriate cases by Department 

officials to impose high-risk conditions 

on individual grants or on specific 

grantees. 

Technical Amendments and Removal of 

Obsolete Parts 

These interim final regulations also 

make technical changes: (1) To the 

Department’s regulations in the 

Education Department General 

Administrative Regulations (EDGAR), 

34 CFR parts 75, 76, and 77, to conform 

to the Uniform Guidance in part 2 CFR 

part 200; and (2) to update program 

regulations that currently reference 34 

CFR parts 74 and 80 or specific sections 

in those parts. In addition, the 

Department is removing, rather than 

updating, the following parts of title 34 

of the CFR that reference parts 74 and 

80 but that are no longer authorized by 

statute: 

Part 380, Special Projects and 

Demonstrations for Providing Supported 

Employment Services to Individuals 

with the Most Severe Disabilities and 

Technical Assistance Projects: 

previously authorized by section 311(c) 

of the Rehabilitation Act of 1973 (former 

29 U.S.C. 777a(c)); the authority for this 

program was not retained when 

Congress reauthorized the Act in 1998 

(P.L. 105–220). 

Part 426, Cooperative Demonstration 

Program: previously authorized by 

section 420A of the Carl D. Perkins 

Vocational and Applied Technology Act 

(former 20 U.S.C. 2420a); the authority 

for this program was not retained when 

Congress reauthorized the Perkins Act 

in 1998 (Pub. L. 105–332). 

Part 460, Adult Education—General 

Provisions: previously authorized by the 

Adult Education Act (former 20 U.S.C. 

1201 et seq.), which was repealed by 

section 251(a)(1) of Pub. L. 105–220 

(1998). 

Part 464, State Literacy Resource 

Centers Program: previously authorized 

by section 356 of the Adult Education 

Act (former 20 U.S.C. 1208aa), which 

was repealed by section 251(a)(1) of 

Pub. L. 105–220 (1998). 

Part 491, Adult Education for the 

Homeless Program: previously 

authorized by section 701 of the 

McKinney-Vento Homeless Assistance 

Act (former 42 U.S.C. 11421), which 

was repealed by section 199(b)(1) of P.L. 

105–220 (1998). 

Part 535, Bilingual Education: 

Graduate Fellowship Program: 

previously authorized by section 7145 

of the Elementary and Secondary 

Education Act of 1965 (ESEA) (former 

20 U.S.C. 7475), which was not retained 

in the 2002 reauthorization of the ESEA 

(P.L. 107–110). 

Part 636, Urban Community Service 

Program: previously authorized by title 

XI, part A of the Higher Education Act 

of 1965 (HEA) (former 20 U.S.C. 1136– 

1136h), which was repealed by section 

202 of P.L. 105–244 (1998). 

Part 1100, National Institute for 

Literacy: Literacy Leader Fellowship 

Program: previously authorized by 

section 384(e) of the Adult Education 

Act (former 20 U.S.C. 1213c(e)), which 

was repealed by section 251(a)(1) of 

Pub. L. 105–220 (1998). 

Definition of ‘‘Grant’’ 

Two of the technical amendments 

relate to the definitions of ‘‘grant’’ and 

‘‘award.’’ These terms are defined in 34 

CFR parts 74 and 80, as equivalent 

terms for financial assistance awarded 

by the Department. The guidance in 2 

CFR 200.24 and 200.51 defines 

‘‘cooperative agreement’’ and ‘‘grant 

agreement’’, respectively, and these 

definitions follow the Federal Grant and 


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Federal Register / Vol. 79, No. 244 / Friday, December 19, 2014 / Rules and Regulations 75875 

Cooperative Agreement Act (31 U.S.C. 

6303–6305) language closely for the 

treatment of grants and cooperative 

agreements. However, because 

Department regulations use the terms 

‘‘grant’’ and ‘‘award’’ to refer generally 

to both grants and cooperative 

agreements, the Department cannot rely 

on the definition of ‘‘grant agreement’’ 

in part 200. Instead, we establish 

definitions of ‘‘grant’’ and ‘‘award’’ in 

34 CFR 77.1(c) to include within their 

scope cooperative agreements as well as 

grants. Because part 77 defines terms 

applicable to all programs of the 

Department, program regulations can 

continue to use these terms to refer to 

both types of awards. 

General Education Provisions Act 

Requirements 

Section 437(b) of the General 

Education Provisions Act (GEPA), 20 

U.S.C. 1232(b), provides that, 

immediately following each substantive 

provision of the Department’s 

regulations, the Department must 

provide the citations to the particular 

section or sections of statutory law or 

other legal authority on which that 

provision is based. The substantive 

provision in these interim final 

regulations that adopts the guidance in 

2 CFR part 200 is 2 CFR 3474.1. Because 

the authority citations for all of the 

sections adopted by the Department are 

the same (unless noted otherwise), the 

Department provides the authority 

citation for all of the adopted guidance 

in paragraph (b) of 3474.1. For other 

sections in Part 3474, the authority 

citations are provided at the end of each 

of those sections. 

Rulemaking Considerations 

The Department is generally required, 

under the General Education Provisions 

Act (GEPA), section 437 (20 U.S.C. 

1232) and the APA to take comment on 

proposed rules before they become 

effective. Also, under the Higher 

Education Act of 1965 (HEA), section 

492, (20 U.S.C. 1098a), all Department 

regulations for programs authorized 

under title IV of the HEA are subject to 

negotiated rulemaking requirements 

and, under section 482 of the HEA, any 

title IV regulations that have not been 

published in final form by November 1 

prior to the start of an award year 

cannot become effective until the 

beginning of the second award year 

following the November 1 date. The 

joint preamble includes waivers of 

proposed rulemaking and delayed 

effective date with respect to the APA. 

For the same reasons included in the 

joint preamble, the Secretary has 

determined that there is good cause to 

waive proposed rulemaking and delayed 

effective date under both GEPA and the 

HEA. 

Assessment of Educational Impact 

In accordance with section 411 of the 

General Education Provisions Act, 20 

U.S.C. 1221e–4, the Secretary 

particularly requests comments on 

whether these interim final regulations 

would require transmission of 

information that any other agency or 

authority of the United States gathers or 

makes available. 

Department of Health and Human 

Services 

The Department of Health and Human 

Services (HHS) is adapting OMB’s final 

guidance with certain amendments, 

based on existing HHS regulations, to 

supplement the guidance as needed for 

the Department. HHS’ amendments are 

described below, and incorporated into 

HHS’ implementing regulations at 45 

CFR part 75. As with NSF, HHS has, in 

the interest of establishing a single 

location for each Department’s 

implementation of the uniform 

guidance, provided a link to its policy 

implementation of OMB’s uniform 

guidance in 2 CFR part 300. The 

changes described below are categorized 

as regulation-wide formatting changes, 

additions, or revisions. The items 

described as formatting changes have 

been made throughout the text of the 

HHS regulation to accommodate the 

structure and content of the HHS 

guidance. All other changes are listed in 

order by section. 

As indicated in the common 

preamble, OMB has afforded ample 

opportunity for notice and an 

opportunity for comment on the 

provisions contained therein. In 

addition, HHS finds that there is good 

cause under 5 U.S.C. 553(b)(B) and 

(d)(3) to dispense with the opportunity 

for advance notice and opportunity for 

public comment and good cause to 

publish this rule with an effective date 

of December 26, 2014. All of the 

additions and modifications listed 

below already exist in codified 

regulations (45 CFR part 74 or part 92), 

and thus are currently applicable to 

HHS grantees. As such, all HHS grantees 

should already be in compliance with 

these provisions. Consequently, no 

changes on the part of grantees are 

expected. In order to comport with 

OMB’s timeframe for Federal agency 

adoption of these regulations, it is 

impracticable and contrary to the public 

interest to delay this rule for the 

purpose of soliciting advance public 

comment or to have a delayed effective 

date for these minor changes that reflect 

current HHS rules and practice. 

HHS is making the rule effective on 

December 26, 2014, in order to comport 

with all other Federal agency adoption, 

and to ensure consistency in all grantmaking procedures. Failure to do so 

could have unpredictable negative 

effects on grants implementation. 

For the above reasons, the Secretary 

issues this rule as an interim final rule. 

However, HHS will consider and 

address comments that are received 

within 60 days of the date this interim 

final rule is published in the Federal 

Register. 

In 45 CFR part 75, HHS incorporates 

the guidance in 2 CFR part 200 with the 

following adjustments: 

1. Changes ‘‘Federal Awarding 

Agency’’ to ‘‘HHS Awarding Agency’’ 

where applicable. 

2. Removes titles of sections within 

the regulatory text to improve 

readability. 

3. Revises the numbering schema to 

facilitate the inclusion of additional 

definitions and to facilitate the 

inclusion of material specific to HHS 

awards. All such numbering changes are 

updated throughout the document, 

including internal references. 

4. Includes Appendix IX, ‘‘Principles 

for Determining Costs Applicable to 

Research and Development Under 

Grants and Contracts with Hospitals,’’ 

with appropriate numbering schema. 

5. Renumber sections, especially 

Subpart D, to facilitate the inclusion of 

material specific to HHS awards. 

6. Changes citations to reflect location 

in 45 CFR part 75. 

7. Inserts reserved sections 

throughout the regulation to 

accommodate future changes. 

(a) HHS adopts 2 CFR 200.0 in 45 CFR 

75.1, with the following additional 

acronyms, added to existing list in 

appropriate alphabetical order: 

(1) HHS U.S. Department of Health 

and Human Services 

(2) SF 424 Standard Form 424 series 

and Form Families Application for 

Federal Assistance 

(b) HHS adopts the definitions found 

in 2 CFR 200.2–200.99 in 45 CFR 75.2 

with the following changes. 

(1) Adds the following new 

definitions: 

(i) ‘‘Awardee.’’ 

(ii) ‘‘Commercial organization.’’ 

(iii) ‘‘Departmental Appeals Board.’’ 

(iv) ‘‘Excess property.’’ 

(v) ‘‘Expenditure report.’’ 

(vi) ‘‘Grantee.’’ 

(vii) ‘‘HHS awarding agency.’’ 

(viii) ‘‘Principal Investigator/Program 

Director/(PI/PD).’’ 


tkelley on DSK3SPTVN1PROD with RULES2
75876 Federal Register / Vol. 79, No. 244 / Friday, December 19, 2014 / Rules and Regulations 

(ix) ‘‘Prior approval.’’ 

(x) ‘‘Project period.’’ 

(xi) ‘‘Surplus property.’’ 

(xii) ‘‘Suspension of award activities.’’ 

(xiii) ‘‘Total Costs.’’ 

(2) Revises the following specific 

definitions as described below: 

(i) Cost sharing or matching to add 

‘‘This may include the value of 

allowable third party in-kind 

contributions, as well as expenditures 

by the recipient.’’ after the first 

sentence. 

(ii) Indirect cost rate proposal to add 

‘‘and Appendix IX’’ after ‘‘Appendix 

VII’’. 

(iii) Personal property to add ‘‘such as 

copyrights, patents, or securities’’ at the 

end of the definition. 

(iv) Recipient to add ‘‘usually but not 

limited to non-Federal entities,’’ in the 

first sentence, after ‘‘entity,’’. 

(v) Research and Development to 

replace ‘‘non-Federal entities’’ with 

‘‘HHS award recipients’’. 

(3) All definitions, including the HHS 

additions, are in alphabetical order. 

(c) HHS adopts 2 CFR 200.104 in 45 

CFR 75.104 by adding a new subsection 

to note the supersession of 45 CFR parts 

74 and 92 and renumbers accordingly. 

(d) HHS adopts 2 CFR 200.106 in 45 

CFR 75.106 and articulates HHS 

implementation of 2 CFR part 200. 

(e) HHS adopts 2 CFR 200.108 in 45 

CFR 75.108 and articulates to whom 

changes for HHS regulations should be 

addressed. 

(f) HHS adopts 2 CFR 200.109 in 45 

CFR 75.109 to articulate HHS’ review 

period for its regulations. 

(h) HHS adopts 2 CFR 200.112 in 45 

CFR 75.112 and articulates HHS’ 

establishment of conflict of interest 

policies and disclosure criteria. 

(i) HHS adopts 2 CFR 200.205 in 45 

CFR 75.205 and adds text at the end of 

subsection (a) to reference suspension 

and debarment regulations. 

(j) HHS adopts 2 CFR 200.206 in 45 

CFR 75.206 and amends the section 

heading and adds new subsections (c) 

and (d) to specify the forms required. 

(k) HHS adopts 2 CFR 200.208 in 45 

CFR 75.208 and adds after the 

introductory language new subsections 

(a) and (b) to reference 45 CFR part 87 

and § 75.206(d)(2). 

(l) HHS adopts 2 CFR 200.212 in 45 

CFR 75.212 and changes ‘‘2 CFR part 

180’’ to read ‘‘2 CFR parts 180 and 376’’. 

(m) HHS adds new 45 CFR 75.213 to 

reference The Metric Conversion Act 

and HHS’ use of Executive Order 12770. 

(n) HHS adds new 45 CFR 75.214 to 

reference lobbying restrictions in 45 

CFR part 93. 

(o) HHS adds new 45 CFR 75.215 to 

reference provisions for awards to 

Commercial Organizations. 

(p) HHS adds new 45 CFR 75.216 to 

reference provisions for awards to 

Federal Agencies. 

(q) HHS adds new 45 CFR 75.217 to 

reference standards for faith-based 

organizations in 45 CFR part 87. 

(r) HHS adopts 2 CFR 200.305 in 45 

CFR 75.305 and adds at the end of 

subsection (b)(5)(ii) ‘‘(See 45 CFR part 

30).’’. 

(s) HHS adopts 2 CFR 200.307 in 45 

CFR 75.307 with the following changes: 

(1) revise subsection (c) to include 

details concerning the Patent and 

Trademark Laws Amendments, 34 

U.S.C. 200–212, and conditions 

described under § 75.207 or § 75.215.’’. 

(t) HHS adopts 2 CFR 200.308 in 45 

CFR 75.308 with the following changes: 

(1) Add subsections (c)(9) through 

(11) to include research patient care 

costs, subaward relations to Simplified 

Acquisition Threshold, and the 

disposition of property and equipment. 

(2) add at the end, new subsection (j) 

to detail the appropriate authorizing 

personnel for revisions. 

(u) HHS adopts 2 CFR 200.309 in 45 

CFR 75.309 to articulate the use of funds 

within the period of performance. 

(v) HHS adds 45 CFR 75.316 to 

articulate HHS’ policy on property 

management standards and procedures. 

(w) HHS adopts 2 CFR 200.310 in 45 

CFR 75.317 with the insertion of 

‘‘other’’ preceding ‘‘property owned’’ in 

the first sentence. 

(x) HHS adopts 2 CFR 200.311 in 45 

CFR 75.318 by revising subsection (b): 

(1) in subparagraph (b), by inserting 

subparagraph (1) following ‘‘Use.’’; 

(2) by adding subparagraph (b)(2) to 

articulate the use of real property in 

other federally-sponsored projects. 

(3) in subparagraph (c), after ‘‘is no 

longer needed’’, adding the phrase ‘‘as 

provided in subsection (b).’’. 

(y) HHS adopts 2 CFR 200.313 in 45 

CFR 75.320, by adding, at the end of 

subsection (c)(4), ‘‘subject to the 

approval of the HHS awarding agency.’’. 

(z) HHS adopts 2 CFR 200.315 in 45 

CFR 75.322 with the following changes: 

(1) The title is amended to read 

‘‘Intangible property and copyrights.’’; 

(2) Add new subsection (f) to exclude 

commercial organizations from 

paragraph (e)(1). 

(aa) HHS adopts 2 CFR 200.318 in 45 

CFR 75.327, with the following changes: 

(1) Add, ‘‘In certain circumstances, 

contracts with certain parties are 

restricted by agencies’ implementation 

of Executive Orders 12549 and 12689. 

(See 2 CFR part 376.)’’ at the end of 

subparagraph (h). 

(2) Add, new subparagraph (l) to 

articulate the appropriateness of the 

procurement instrument. 

(bb) HHS adopts 2 CFR 200.320 in 45 

CFR 75.329 and changes the title. 

(cc) HHS adopts 2 CFR 200.325 in 45 

CFR 75.334, and adds new 

subparagraph (d) to reference 

certificates of authority pursuant to 31 

CFR part 223. 

(dd) HHS adopts 2 CFR 200.338 in 45 

CFR 75.371, with the following changes: 

(1) in subparagraph (c), add 

‘‘(suspension of award activities)’’ after 

‘‘suspend’’. 

(2) in subparagraph (d) add ‘‘at 2 CFR 

part 376’’ after ‘‘regulations’’. 

(ee) HHS adopts 2 CFR 200.341 in 45 

CFR 75.374, with an additional 

subparagraph (b) to reference additional 

appeals procedures. 

(ff) HHS adopts 2 CFR 200.343 in 45 

CFR 75.381, and, in subparagraph (g), 

changes ‘‘one year’’ to ‘‘180 calendar 

days’’. 

(gg) HHS adopts 2 CFR 200.345 in 45 

CFR 75.391, and adds, at the end of 

subparagraph (b), ‘‘(See also HHS 

Claims Collection regulations at 45 CFR 

part 30.)’’. 

(hh) HHS adopts 2 CFR 200.407 in 45 

CFR 75.407, with the additional 

subparagraphs (b) and (c) to articulate 

additional prior approval conditions. 

(ii) HHS adopts 2 CFR200.439 in 45 

CFR 75.439, and amend subsection (a) 

to remove definition numbers. 

(jj) HHS adds new 45 CFR 75.476 to 

articulate independent research and 

development costs. 

(kk) HHS adopts 2 CFR 200.501 in 45 

CFR 75.501, by adding new 

subparagraphs (i) and (j) to articulate the 

audit options and exemptions for 

commercial organizations. 

Additional Outreach and Training 

Since the issuance of the Uniform 

Guidance on December 26, 2013, the 

COFAR has developed and provided 

numerous additional resources to assist 

stakeholders in learning about the 

guidance. For a complete list and access 

to these resources, please visit the 

COFAR Web site at cfo.gov/COFAR. 

Resources available include a 

Frequently Asked Questions document, 

as well as several training webcasts. 

Please note that the Frequently Asked 

Questions document will be referenced 

as additional guidance in the 2015 

issuance of Appendix XI to Part 200— 

Compliance Supplement. 

Regulatory Analysis 

Paperwork Reduction Act 

In accordance with the Paperwork 

Reduction Act of 1995 (44 U.S.C. Ch. 

3506; 5 CFR 1320 Appendix A.1) (PRA), 

each agency reviewed its final rule and 

determined that there are no new 


tkelley on DSK3SPTVN1PROD with RULES2
Federal Register / Vol. 79, No. 244 / Friday, December 19, 2014 / Rules and Regulations 75877 

collections of information contained 

therein. However, the OMB uniform 

guidance in 2 CFR 200 may have a 

negligible effect on burden estimates for 

existing information collections, 

including recordkeeping requirements 

for non-Federal entities that receive 

Federal awards. 

Regulatory Flexibility Act 

The Regulatory Flexibility Act (RFA) 

requires an agency that is issuing a final 

rule to provide a final regulatory 

flexibility analysis or to certify that the 

rule will not have a significant 

economic impact on a substantial 

number of small entities. This common 

interim final rule implements OMB final 

guidance issued on December 26, 2013, 

and will not have a significant economic 

impact beyond the impact of the 

December 2013 guidance. 

Executive Order 12866 Determination 

Pursuant to Executive Order 12866, 

OMB’s Office of Information and 

Regulatory Affairs (OIRA) has 

designated this joint interim final rule to 

be not significant. 

Administrative Procedure Act (5 U.S.C. 

553) 

Waiver of Proposed Rulemaking 

In General 

Under the Administrative Procedure 

Act (APA), some of the agencies joining 

in this issuance are generally required to 

publish a notice of proposed rulemaking 

and provide the public with an 

opportunity to comment on proposed 

regulations prior to establishing a final 

rule. However, as noted earlier in the 

joint preamble, OMB offered the public 

two opportunities to comment on the 

Uniform Guidance, first through an 

advanced notice of proposed guidance 

and, second, through a notice of 

proposed guidance. OMB considered 

over 300 comments submitted in 

response to each of these notices. OMB 

has directed agencies to adopt the 

uniform guidance in part 200 without 

change, except to the extent that an 

agency can demonstrate that any 

conflicting agency requirements are 

required by statute or regulations, or 

consistent with longstanding practice 

and approved by OMB. Finally, OMB 

made clear that the requirements in 2 

CFR part 200, including the audit 

requirements in subpart F, will apply, 

starting on December 26, 2014, giving 

recipients of all types of financial 

assistance advance notice of when the 

regulations would become effective. 

Therefore, under 5 U.S.C. 553(b)(B), 

there is good cause for waiving 

proposed rulemaking as unnecessary. 

Department of Justice 

The rule issued by the Department of 

Justice concerns matters relating to 

‘‘grants, benefits, or contracts,’’ 5 U.S.C. 

553(a)(2), and is therefore exempt from 

the requirement of prior notice and 

comment. 

Waiver of Delayed Effective Date 

In General 

Generally, those agencies that are 

subject to the APA are required to delay 

the effective date of their final 

regulations by 30 days after publication, 

as required under 5 U.S.C. 553(d), 

unless an exception under subsection 

(d) applies. 

Under 5 U.S.C. 553(d), these agencies 

may waive the delayed effective date 

requirement if the they find good cause 

and explain the basis for the waiver in 

the final rulemaking document or if the 

regulations grant or recognize an 

exemption or relieve a restriction. In the 

present case, there is good cause to 

waive the delayed effective date for two 

reasons. 

First, OMB informed the public on 

December 26, 2013, that agencies would 

be required to adopt the Uniform 

Guidance and make it effective by 

December 26, 2014. The public has had 

significant time to prepare for the 

promulgation of these interim final 

regulations. 

Second, while these interim final 

regulations are based on a new, more 

effective method for establishing 

government-wide requirements, the 

substance of the regulations are, in most 

cases, virtually identical to the 

requirements that exist in current 

agency regulations. In virtually all cases 

where the new regulations depart from 

prior OMB guidance to agencies, the 

new regulations reduce burdens on the 

public, for example, by increasing the 

threshold for single audits from 

$500,000 to $750,000. 

Based on these considerations, those 

agencies subject to the APA have 

determined that there is good cause to 

waive the delayed effective date for 

these interim final regulations. 

Department of Justice 

The rule issued by the Department of 

Justice concerns matters relating to 

‘‘grants, benefits, or contracts,’’ 5 U.S.C. 

553(a)(2), and is therefore exempt from 

the requirement of a 30-day delay in the 

effective date of this rule. 

Unfunded Mandates Reform Act of 1995 

Determination 

Section 202 of the Unfunded 

Mandates Reform Act of 1995 

(Unfunded Mandates Act) (2 U.S.C. 

1532) requires that covered agencies 

prepare a budgetary impact statement 

before promulgating a rule that includes 

any Federal mandate that may result in 

the expenditure by State, local, and 

tribal governments, in the aggregate, or 

by the private sector, of $100 million or 

more in any one year. If a budgetary 

impact statement is required, section 

205 of the Unfunded Mandates Act also 

requires covered agencies to identify 

and consider a reasonable number of 

regulatory alternatives before 

promulgating a rule. OMB has 

determined that this joint interim final 

rule will not result in expenditures by 

State, local, and tribal governments, or 

by the private sector, of $100 million or 

more in any one year. Accordingly, the 

Federal agencies participating in this 

joint interim final rule have not 

prepared a budgetary impact statement 

or specifically addressed the regulatory 

alternatives considered. 

Executive Order 13132 Determination 

OMB has determined that this joint 

interim final rule does not have any 

Federalism implications, as required by 

Executive Order 13132. 


tkelley on DSK3SPTVN1PROD with RULES2
75878 Federal Register / Vol. 79, No. 244 / Friday, December 19, 2014 / Rules and Regulations 

List of Subjects 

2 CFR Parts 1, 25, 170, 180, 200, 300, 

400, 415, 416, 418, 422, 600, 700, 802, 

910, 1000, 1103, 1201, 1327, 1402, 1800, 

2205, 2300, 2400, 2500, 2600, 2701, 

2800, 2900, 3002, 3187, 3255, 3374, 

3474, 3603, and 5900; CFR Parts 761, 

785, 1407, 1485, 1703, 1709, 1710, 1717, 

1724, 1726, 1737, 1738, 1739, 1740, 

1773, 1774, 1775, 1776, 1778, 1779, 

1780, 1782, 1783, 1942, 1944, 1951, 

1980, 3015, 3016, 3018, 3019, 3022, 

3052, 3400, 3401, 3402, 3403, 3405, 

3406, 3407, 3415, 3430, 3431, 3570, 

3575, 4274, 4279, 4280, 4284, 4285, and 

4290; 10 CFR Parts 600, 602, 605, and 

733; 13 CFR Part 143; 14 CFR Parts 1260 

and 1273; 15 CFR Parts 14 and 24; 20 

CFR Parts 435 and 437; 21 CFR Parts 

1403–1405; 22 CFR Parts 135, 145, and 

226; 24 CFR Parts 84 and 85; 28 CFR 

Parts 66 and 70; 34 CFR Parts 74, 75, 

76, 77, 80, 101, 206, 222, 225, 226, 270, 

280, 299, 300, 303, 350, 361, 363, 364, 

365, 367, 369, 370, 373, 377, 380, 381, 

385, 396, 400, 426, 460, 464, 491, 535, 

606, 607, 608, 609, 611, 614, 628, 636, 

637, 642, 643, 644, 645, 646, 647, 648, 

650, 654, 655, 661, 662, 663, 664, 682, 

692, 694, and 1100; 36 CFR Parts 1206, 

1207, and 1210; 38 CFR Parts 41 and 43; 

40 CFR Parts 30, 31, 33, 35, 40, 45, 46, 

and 47; 43 CFR Part 12; 44 CFR Parts 

13, 78, 79, 152, 201, 204, 206, 207, 208, 

304, 360, and 361; 45 CFR Parts 74, 75, 

92, 1235, 2510, 2520, 2541, 2543, 2551, 

2552, and 2553; 45 CFR Parts 75, 602, 

1157, 1174, 1180, and 1183; 49 CFR 

Parts 18 and 19 

Accounting, Administrative practice 

and procedure, Adult education, Aged, 

Agriculture, Appeal procedures, 

American Samoa, Auditing, Audit 

requirements, Bilingual education, 

Blind, Business and Industry, 

Broadband, Charter schools, Civil rights, 

Colleges and universities, Community 

development, Community facilities, 

Communications, Copyright, Cost 

principles, Cooperative agreements, 

Credit, Credit enhancement, Cultural 

exchange programs, Direct loan 

programs, Economic development, 

Education, Education of disadvantaged, 

Education of individuals with 

disabilities, Educational facilities, 

Educational research, Educational study 

programs, Elementary and secondary 

education, Employment, Equal 

educational opportunity, Electric power, 

Electric power rates, Electric utilities, 

Energy efficiency improvements, 

Federally affected areas, Farmers, 

Federal aid programs, Government 

contracts, Guam, Home improvement, 

Homeless, Human research subjects, 

Hospitals, Indians, Industrial park, 

Indians—education, Infants and 

children, Insurance, Intergovernmental 

relations, International organizations, 

Manpower training programs, Nonprofit 

organizations, State and local 

governments, Grant programs, Grant 

programs—digital televisions, Grant 

programs—education, Grant programs— 

health, Grant programs housing and 

community development, Grant 

programs—social programs, Grants 

administration, Guaranteed loans, 

Homeless, Intergovernmental relations, 

Inventions and patents, Loan programs, 

Loan programs—agriculture, Loan 

program—business and industry, Loan 

programs—communications, Loan 

programs—energy, Loan programs— 

housing and community development, 

Loan security, Migrant labor, Mortgage 

insurance, Mortgages, Nonprofit 

organizations, Northern Mariana 

Islands, Pacific Islands Trust Territory, 

Privacy, Private schools, Renewable 

energy systems, Reporting and 

recordkeeping requirements, Research 

misconduct, Rural areas, Rural housing, 

Scholarships and fellowships, School 

construction, Schools, Science and 

technology, Securities, Small business, 

State and local governments, Student 

aid, Subsidies, Telecommunications, 

Teachers, Urban areas, Veterans, Virgin 

Islands, Vocational education, 

Vocational rehabilitation, Telephone, 

Waste treatment and disposal, Waste 

treatment and disposal—domestic, 

Water pollution control, Water 

resources, Water supply, Water 

supply—domestic, Watersheds, Women. 

2 CFR Part 1500 

Accounting, Administrative practice 

and procedure, Adult education, Aged, 

Agriculture, Appeal procedures, 

American Samoa, Auditing, Audit 

requirements, Bilingual education, 

Blind, Business and Industry, 

Broadband, Charter schools, Civil rights, 

Colleges and universities, Community 

development, Community facilities, 

Communications, Copyright, Cost 

principles, Cooperative agreements, 

Credit, Credit enhancement, Cultural 

exchange programs, Direct loan 

programs, Economic development, 

Education, Education of disadvantaged, 

Education of individuals with 

disabilities, Educational facilities, 

Educational research, Educational study 

programs, Elementary and secondary 

education, Employment, Equal 

educational opportunity, Electric power, 

Electric power rates, Electric utilities, 

Energy efficiency improvements, 

Federally affected areas, Farmers, 

Federal aid programs, Government 

contracts, Guam, Home improvement, 

Homeless, Human research subjects, 

Hospitals, Indians, Industrial park, 

Indians—education, Infants and 

children, Insurance, Intergovernmental 

relations, International organizations, 

Manpower training programs, Nonprofit 

organizations, State and local 

governments, Grant programs, Grant 

programs-—digital televisions, Grant 

programs—education, Grant programs— 

health, Grant programs housing and 

community development, Grant 

programs—social programs, Grants 

administration, Guaranteed loans, 

Homeless, Incorporation by reference, 

Intergovernmental relations, Inventions 

and patents, Loan programs, Loan 

programs—agriculture, Loan programs— 

business and industry, Loan programs— 

communications, Loan programs— 

energy, Loan programs—housing and 

community development, Loan security, 

Migrant labor, Mortgage insurance, 

Mortgages, Nonprofit organizations, 

Northern Mariana Islands, Pacific 

Islands Trust Territory, Privacy, Private 

schools, Renewable energy systems, 

Reporting and recordkeeping 

requirements, Research misconduct, 

Rural areas, Rural housing, Scholarships 

and fellowships, School construction, 

Schools, Science and technology, 

Securities, Small business, State and 

local governments, Student aid, 

Subsidies, Telecommunications, 

Teachers, Urban areas, Veterans, Virgin 

Islands, Vocational education, 

Vocational rehabilitation, Telephone, 

Waste treatment and disposal, Waste 

treatment and disposal—domestic, 

Water pollution control, Water 

resources, Water supply, Water 

supply—domestic, Watersheds, Women. 

Executive Office of the President, Office 

of Management and Budget 

Under the authority of the Chief 

Financial Officer Act of 1990 (31 U.S.C. 

503), the Office of Management and 

Budget amends 2 CFR parts 1, 25, 170, 

180, and 200 by making the following 

correcting amendments: 

TITLE 2 —GRANTS AND 

AGREEMENTS 

CHAPTER I —OFFICE OF MANAGEMENT 

AND BUDGET GOVERNMENTWIDE 

GUIDANCE FOR GRANTS AND 

AGREEMENTS 

PART 1—ABOUT TITLE 2 OF THE 

CODE OF FEDERAL REGULATIONS 

AND SUBTITLE A 

■ 1. The authority citation for part 1 

continues to read as follows: 

Authority: 31 U.S.C. 503; 31 U.S.C. 1111; 

41 U.S.C. 405; Reorganization Plan No. 2 of 

1970; E.O. 11541, 35 FR 10737, 3 CFR, 1966– 

1970, p. 939. 

■ 2. Revise § 1.215 to read as follows: 


tkelley on DSK3SPTVN1PROD with RULES2
Federal Register / Vol. 79, No. 244 / Friday, December 19, 2014 / Rules and Regulations 75879 

§ 1.215 Relationship to previous 

issuances. 

Although some of the guidance was 

organized differently within OMB 

circulars or other documents, much of 

the guidance in this subtitle existed 

prior to the establishment of title 2 of 

the CFR. Specifically: 

Guidance 

in * * * 

On 

* * * 

Previously 

was in * * * 

(a) Chapter I, part 180 Nonprocurement debarment and suspension .. OMB guidance that conforms with the government-wide common rule

(see 60 FR 33036, June 26, 1995). 

(b) Chapter I, part 182 Drug-free workplace requirements ................... OMB guidance (54 FR 4946, January 31, 1989) and a governmentwide common rule (as amended at 68 FR 66534, November 26, 

2003). 

(c) Chapter II, part 200 Uniform administrative requirements, cost 

principles, and audit requirements for federal awards.

OMB Circulars A–21, ‘‘Cost Principles for Educational Institutions’’ 

(Chapter II, part 225); A–87, ‘‘Cost Principles for State, Local and 

Indian Tribal Governments’’ (Chapter II, part 225); A–89, ‘‘Federal 

Domestic Assistance Program Information’’; ’’; A–102 and a government-wide common rule (53 FR 8034, March 11, 1988); A–110, 

‘‘Uniform Administrative Requirements for Awards and Other 

Agreements with Institutions of Higher Education, Hospitals, and 

Other Nonprofit Organizations’’ (Chapter II, part 215); A–122, ‘‘Cost 

Principles for Non-Profit Organizations’’ (Chapter II, part 230); and 

A–133 ‘‘Audits of States, Local Governments and Non-Profit Organizations’’. 

PART 25—UNIVERSAL IDENTIFIER 

AND SYSTEM OF AWARD 

MANAGEMENT 

■ 3. The authority citation for part 25 

continues to read as follows: 

Authority: Pub. L. 109–282; 31 U.S.C. 

6102. 

■ 4. Revise the heading of 2 CFR part 25 

to read as set forth above. 

§§ 25.100 and 25.310 [Amended] 

■ 5. Amend §§ 25.100 and 25.310 and 

Appendix A to Part 25 by removing 

references to ‘‘Central Contractor 

Registration’’ wherever they appear, and 

adding, in their place, ‘‘System of 

Award Management’’. 

§§ 25.100, 25.110, 25.200, 25.205, 25.310, 

and Appendix A to Part 25 [Amended] 

■ 6. Amend §§ 25.100, 25.110, 25.200, 

25.205, 25.310, and Appendix A to Part 

25 by removing references to ‘‘CCR’’ 

wherever they appear, and adding, in 

their place, ‘‘SAM’’. 

§§ 25.100, 25.110, 25.200, 25.205, 25.210, 

25.215, 25.315, and Appendix A to 

Part 25 [Amended] 

■ 7. Amend §§ 25.100, 25.110, 25.200, 

25.205, 25.210, 25.215, 25.315, and 

Appendix A to Part 25 by removing 

references to ‘‘Dun and Bradstreet (D&B) 

Data Universal Numbering System 

(DUNS) number’’, ‘‘Data Universal 

Numbering System (DUNS) Number’’, 

‘‘DUNS’’ or ‘‘DUNS number’’ wherever 

they appear, and adding, in their place, 

‘‘unique entity identifier’’. 

Appendix A to Part 25 [Amended] 

■ 8. Revise Appendix A to Part 25, 

section I, paragraph c.2. and c.4.b. as 

follows: 

Appendix A to Part 25—Award Term 

I. * * * 

C. * * * 

2. Unique entity identifier means the 

identifier required for SAM registration to 

uniquely identify business entities. 

* * * * * 

4. * * * 

4.b. The term does not include your 

procurement of property and services needed 

to carry out the project or program (for 

further explanation, see 2 CFR 200.330). 

PART 170—REPORTING SUBAWARD 

AND EXECUTIVE COMPENSATION 

INFORMATION 

■ 9. The authority citation for part 170 

continues to read as follows: 

Authority: Pub. L. 109–282; 31 U.S.C. 

6102. 

Appendix A to Part 170—[Amended] 

■ 10. Amend Appendix A to Part 170— 

Award Term, section I, paragraph b.2.i. 

by removing ‘‘http://www.ccr.gov’’ and 

add, in its place, ‘‘https://

www.sam.gov’’. 

PART 180—OMB GUIDELINES TO 

AGENCIES ON GOVERNMENTWIDE 

DEBARMENT AND SUSPENSION 

(NONPROCUREMENT) 

■ 11. The authority citation for part 180 

continues to read as follows: 

Authority: Sec. 2455, Pub. L. 103–355, 108 

Stat. 3327; E.O. 12549, 3 CFR, 1986 Comp., 

p. 189; E.O. 12689, 3 CFR, 1989 Comp., p. 

235. 

§ 180.25 [Amended] 

■ 12. Amend § 180.25 paragraph (a), 

second sentence by removing ‘‘has’’ and 

adding, in its place ‘‘have’’. 

§§ 180.45, 180.100, 180.155, 180.300, 

180.320, 180.430, 180.500, 180.505, 

180.510, 180.515, 180.520, 180.525, and 

180.645 [Amended] 

■ 13. Amend §§ 180.45, 180.100, 

180.155, 180.300, 180.320, 180.430, 

180.500, 180.505, 180.510, 180.515, 

180.520, 180.525, and 180.645 by 

removing references to ‘‘the EPLS’’, 

wherever they appear, and adding, in 

their place ‘‘SAM Exclusions’’. 

§ 180.155 and 180.500 [Amended] 

■ 14. Amend §§ 180.155 and 180.500 by 

removing, wherever they appear ‘‘EPLS’’ 

and adding, in their place ‘‘SAM 

Exclusions’’. 

■ 15. Amend §§ 180.155 and 180.500 by 

removing, wherever they appear 

‘‘Excluded Parties List System’’ and 

adding, in their place, ‘‘System for 

Award Management Exclusions’’. 

■ 16. Revise the heading of Subpart E to 

read as follows: 

Subpart E—System for Award 

Management Exclusions 

§ 180.505 [Amended] 

■ 17. Amend § 180.505 paragraph (c) by 

removing ‘‘is’’ and adding, in its place 

‘‘are’’. 

§ 180.515 [Amended] 

■ 18. Amend § 180.515 paragraph (a)(7) 

by removing ‘‘Dun and Bradstreet 

Number (DUNS), or other similar code’’ 

and adding, in its place, ‘‘unique entity 

identifier’’. 

■ 19. Revise § 180.530 to read as 

follows: 


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§ 180.530 Where can I find SAM 

Exclusions? 

You may access SAM Exclusions 

through the Internet, currently at 

https://www.sam.gov. 

■ 20. Revise § 180.945 to read as 

follows: 

§ 180.945 System for Award Management 

Exclusions (SAM Exclusions). 

System for Award Management 

Exclusions (SAM Exclusions) means the 

list maintained and disseminated by the 

General Services Administration (GSA) 

containing the names and other 

information about persons who are 

ineligible. 

CHAPTER II—OFFICE OF MANAGEMENT 

AND BUDGET GUIDANCE 

PART 200—UNIFORM 

ADMINISTRATIVE REQUIREMENTS, 

COST PRINCIPLES, AND AUDIT 

REQUIREMENTS FOR FEDERAL 

AWARDS 

■ 21. The authority citation for part 200 

continues to read as follows: 

Authority: 31 U.S.C. 503. 

§ 200.0 [Amended] 

■ 22. Amend § 200.0 as follows: 

(a) Remove the acronyms, ‘‘D&B Dun 

and Bradstreet’’ and ‘‘DUNS Data 

Universal Numbering System’’. 

(b) Correct the text ‘‘Generally 

Accepted Government Accounting 

Standards’’ to read ‘‘Generally Accepted 

Government Auditing Standards’’. 

(c) Correct the text ‘‘General 

Accounting Office’’ to read 

‘‘Government Accountability Office’’. 

(d) Add the acronym, ‘‘PMS Payment 

Management System’’ after the acronym 

‘‘PII Personally Identifiable 

Information’’. 

■ 23. Revise § 200.7 to read as follows: 

§ 200.7 Auditor. 

Auditor means an auditor who is a 

public accountant or a Federal, state, 

local government, or Indian tribe audit 

organization, which meets the general 

standards specified for external auditors 

in generally accepted government 

auditing standards (GAGAS). The term 

auditor does not include internal 

auditors of nonprofit organizations. 

■ 24. Revise § 200.19 paragraphs (a), (b), 

(c) and add a new paragraph (d) to read 

as follows: 

§ 200.19 Cognizant agency for indirect 

costs. 

* * * * * 

(a) For IHEs: Appendix III to Part 

200—Indirect (F&A) Costs Identification 

and Assignment, and Rate 

Determination for Institutions of Higher 

Education (IHEs), paragraph C.11. 

(b) For nonprofit organizations: 

Appendix IV to Part 200—Indirect 

(F&A) Costs Identification and 

Assignment, and Rate Determination for 

Nonprofit Organizations, paragraph 

C.12. 

(c) For state and local governments: 

Appendix V to Part 200—State/Local 

Governmentwide Central Service Cost 

Allocation Plans, paragraph F.1. 

(d) For Indian tribes: Appendix VII to 

Part 200—States and Local Government 

and Indian Tribe Indirect Cost Proposal, 

paragraph D.1. 

§ 200.32 [Removed and Reserved] 

■ 25. Remove and reserve § 200.32. 

§ 200.42 [Amended] 

■ 26. In § 200.42, paragraph (b), remove 

‘‘should’’ and add, in its place, ‘‘must’’. 

§ 200.47 [Amended] 

■ 27. In § 200.47, paragraph (a), remove 

‘‘are’’ and add, in its place, ‘‘is’’. 

§ 200.50 [Amended] 

■ 28. In § 200.50, add ‘‘, also known as 

the Yellow Book,’’ after ‘‘GAGAS’’. 

§ 200.56 [Amended] 

■ 29. In § 200.56, third sentence, remove 

‘‘should’’ and add, in its place, ‘‘must’’. 

§ 200.57 [Amended] 

■ 30. Amend § 200.57 by adding ‘‘, and 

Appendix IX to Part 200—Hospital Cost 

Principles’’ after ‘‘this part’’ at the end 

of the paragraph. 

■ 31. Revise § 200.68 to read as follows: 

§ 200.68 Modified Total Direct Cost 

(MTDC). 

MTDC means all direct salaries and 

wages, applicable fringe benefits, 

materials and supplies, services, travel, 

and up to the first $25,000 of each 

subaward (regardless of the period of 

performance of the subawards under the 

award). MTDC excludes equipment, 

capital expenditures, charges for patient 

care, rental costs, tuition remission, 

scholarships and fellowships, 

participant support costs and the 

portion of each subaward in excess of 

$25,000. Other items may only be 

excluded when necessary to avoid a 

serious inequity in the distribution of 

indirect costs, and with the approval of 

the cognizant agency for indirect costs. 

■ 32. In § 200.80, revise the first 

sentence to read as follows: 

§ 200.80 Program income. 

Program income means gross income 

earned by the non-Federal entity that is 

directly generated by a supported 

activity or earned as a result of the 

Federal award during the period of 

performance except as provided in 

§ 200.307 paragraph (f).*** 

§ 200.90 [Amended] 

■ 33. In § 200.90, correct the text 

‘‘Virgin Islands’’ to read ‘‘U.S. Virgin 

Islands’’. 

■ 34. In § 200.101, revise the table in 

paragraph (b)(1), paragraph (c), the first 

sentence of paragraph (d)(1), and 

paragraphs (e)(1)(iv) through (v); and 

add paragraph (e)(1)(vi) to read as 

follows: 

§ 200.101 Applicability. 

* * * * * 

(b) *** 

(1) *** 


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(c) Federal awarding agencies may 

apply subparts A through E of this part 

to for-profit entities, foreign public 

entities, or foreign organizations, except 

where the Federal awarding agency 

determines that the application of these 

subparts would be inconsistent with the 

international obligations of the United 

States or the statutes or regulations of a 

foreign government. 

(d) * * * 

(1) The block grant awards authorized 

by the Omnibus Budget Reconciliation 

Act of 1981 (including Community 

Services, except to the extent that the 

cost and accounting standards of OMB 

apply to subrecipients of Community 

Services Block Grant funds pursuant to 

42 U.S.C. 9916(a)(1)(B); * * * 

* * * * * 

(e) * * * 

(1) * * * 

(iv) Aid to the Aged, Blind, and 

Disabled (titles I, X, XIV, and XVI– 

AABD of the Act, as amended); 

(v) Medical Assistance (Medicaid) 

(title XIX of the Act, 42 U.S.C. 1396– 

1396w–5) not including the State 

Medicaid Fraud Control program 

authorized by section 1903(a)(6)(B) of 

the Social Security Act (42 U.S.C. 

1396b(a)(6)(B)); and 

(vi) Children’s Health Insurance 

Program (title XXI of the Act, 42 U.S.C. 

1397aa–1397mm). 

* * * * * 

■ 35. In § 200.102, revise paragraph (b) 

and the first sentence of paragraph (c) to 

read as follows: 

§ 200.102 Exceptions. 

* * * * * 


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(b) Exceptions on a case-by-case basis 

for individual non-Federal entities may 

be authorized by the Federal awarding 

agency or cognizant agency for indirect 

costs, except where otherwise required 

by law or where OMB or other approval 

is expressly required by this part. 

(c) The Federal awarding agency may 

apply more restrictive requirements to a 

class of Federal awards or non-Federal 

entities when approved by OMB, or 

when, required by Federal statutes or 

regulations, except for the requirements 

in Subpart F—Audit Requirements of 

this part. * * * 

* * * * * 

§ 200.104 [Amended] 

■ 36. Amend § 200.104 paragraph (g) by 

removing ‘‘,’’ after ‘‘Organizations’’. 

■ 37. In § 200.110, revise paragraph (a) 

to read as follows: 

§ 200.110 Effective/applicability date. 

(a) The standards set forth in this part 

which affect administration of Federal 

awards issued by Federal awarding 

agencies become effective once 

implemented by Federal awarding 

agencies or when any future amendment 

to this part becomes final. Federal 

awarding agencies must implement the 

policies and procedures applicable to 

Federal awards by promulgating a 

regulation to be effective by December 

26, 2014 unless different provisions are 

required by statute or approved by 

OMB. For the procurement standards in 

§§ 200.317–200.326, non-Federal 

entities may continue to comply with 

the procurement standards in previous 

OMB guidance (superseded by this part 

as described in § 200.104) for one 

additional fiscal year after this part goes 

into effect. If a non-Federal entity 

chooses to use the previous 

procurement standards for an additional 

fiscal year before adopting the 

procurement standards in this part, the 

non-Federal entity must document this 

decision in their internal procurement 

policies. 

* * * * * 

■ 38. In § 200.200, revise paragraph (a) 

to read as follows: 

§ 200.200 Purpose. 

(a) Sections 200.201 Use of grant 

agreements (including fixed amount 

awards), cooperative agreements, and 

contracts through 200.208 Certifications 

and representations prescribe 

instructions and other pre-award 

matters to be used in the announcement 

and application process. 

* * * * * 

■ 39. In § 200.201, revise paragraph 

(b)(1) to read as follows: 

§ 200.201 Use of grant agreements 

(including fixed amount awards), 

cooperative agreements, and contracts. 

* * * * * 

(b) * * * 

(1) The Federal award amount is 

negotiated using the cost principles (or 

other pricing information) as a guide. 

The Federal awarding agency or passthrough entity may use fixed amount 

awards if the project scope is specific 

and if adequate cost, historical, or unit 

pricing data is available to establish a 

fixed amount award based on a 

reasonable estimate of actual cost. 

Payments are based on meeting specific 

requirements of the Federal award. 

Accountability is based on performance 

and results. Except in the case of 

termination before completion of the 

Federal award, there is no governmental 

review of the actual costs incurred by 

the non-Federal entity in performance of 

the award. Some of the ways in which 

the Federal award may be paid include, 

but are not limited to: 

* * * * * 

■ 40. In § 200.203, amend paragraph 

(c)(2) by removing the reference to 

‘‘paragraph (b)’’ and adding in its place 

‘‘paragraph (c)(4)’’, and revise paragraph 

(c)(5) to read as follows: 

§ 200.203 Notices of funding 

opportunities. 

* * * * * 

(c) * * * 

(5) Application Review Information 

including the criteria and process to be 

used to evaluate applications. See also 

§§ 200.204 Federal awarding agency 

review of merit proposals and 200.205 

Federal awarding agency review of risk 

posed by applicants. See also 2 CFR part 

27 (forthcoming at time of publication). 

■ 41. In § 200.205, revise paragraph (a) 

to read as follows: 

§ 200.205 Federal awarding agency review 

of risk posed by applicants. 

(a) Prior to making a Federal award, 

the Federal awarding agency is required 

by 31 U.S.C. 3321 and 41 U.S.C. 2313 

note to review information available 

through any OMB-designated 

repositories of governmentwide 

eligibility qualification or financial 

integrity information, such as SAM 

Exclusions and ‘‘Do Not Pay’’. See also 

suspension and debarment requirements 

at 2 CFR part 180 as well as individual 

Federal agency suspension and 

debarment regulations in title 2 of the 

Code of Federal Regulations. 

* * * * * 

■ 42. Revise § 200.207 to read as 

follows: 

§ 200.207 Specific conditions. 

(a) The Federal awarding agency or 

pass-through entity may impose 

additional specific award conditions as 

needed, in accordance with paragraphs 

(b) and (c) of this section, under the 

following circumstances: 

(1) Based on the criteria set forth in 

§ 200.205 Federal awarding agency 

review of risk posed by applicants; 

(2) When an applicant or recipient has 

a history of failure to comply with the 

general or specific terms and conditions 

of a Federal award; 

(3) When an applicant or recipient 

fails to meet expected performance goals 

as described in § 200.210 Information 

contained in a Federal award; or 

(4) When an applicant or recipient is 

not otherwise responsible. 

(b) These additional Federal award 

conditions may include items such as 

the following: 

(1) Requiring payments as 

reimbursements rather than advance 

payments; 

(2) Withholding authority to proceed 

to the next phase until receipt of 

evidence of acceptable performance 

within a given period of performance; 

(3) Requiring additional, more 

detailed financial reports; 

(4) Requiring additional project 

monitoring; 

(5) Requiring the non-Federal entity to 

obtain technical or management 

assistance; or 

(6) Establishing additional prior 

approvals. 

(c) The Federal awarding agency or 

pass-through entity must notify the 

applicant or non-Federal entity as to: 

(1) The nature of the additional 

requirements; 

(2) The reason why the additional 

requirements are being imposed; 

(3) The nature of the action needed to 

remove the additional requirement, if 

applicable; 

(4) The time allowed for completing 

the actions if applicable, and 

(5) The method for requesting 

reconsideration of the additional 

requirements imposed. 

(d) Any specific conditions must be 

promptly removed once the conditions 

that prompted them have been 

corrected. 

■ 43. In § 200.210. revise paragraphs 

(a)(1) and (a)(2) to read as follows: 

§ 200.210 Information contained in a 

federal award. 

* * * * * 

(a) * * * 

(1) Recipient name (which must 

match the name associated with its 

unique entity identifier as defined at 2 

CFR 25.315); 


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(2) Recipient’s unique entity 

identifier; 

* * * * * 

■ 44. Add § 200.212 to subpart C to read 

as follows: 

§ 200.212 Suspension and debarment. 

Non-federal entities and contractors 

are subject to the non-procurement 

debarment and suspension regulations 

implementing Executive Orders 12549 

and 12689, 2 CFR part 180. These 

regulations restrict awards, subawards, 

and contracts with certain parties that 

are debarred, suspended, or otherwise 

excluded from or ineligible for 

participation in Federal assistance 

programs or activities. 

■ 45. Amend § 200.301, the first and 

third sentence, by removing 

‘‘governmentwide’’. 

■ 46. In § 200.303, revise the second 

sentence of paragraph (a) and revise 

paragraphs (c) and (e) to read as follows: 

§ 200.303 Internal controls. 

* * * * * 

(a) * * * These internal controls 

should be in compliance with guidance 

in ‘‘Standards for Internal Control in the 

Federal Government’’ issued by the 

Comptroller General of the United 

States or the ‘‘Internal Control 

Integrated Framework’’, issued by the 

Committee of Sponsoring Organizations 

of the Treadway Commission (COSO). 

* * * * * 

(c) Evaluate and monitor the nonFederal entity’s compliance with 

statutes, regulations and the terms and 

conditions of Federal awards. 

* * * * * 

(e) Take reasonable measures to 

safeguard protected personally 

identifiable information and other 

information the Federal awarding 

agency or pass-through entity designates 

as sensitive or the non-Federal entity 

considers sensitive consistent with 

applicable Federal, state, local, and 

tribal laws regarding privacy and 

obligations of confidentiality. 

■ 47. In § 200.305, revise paragraphs (b) 

introductory text, (b)(2)(i), (b)(2)(ii), 

(b)(6), and (b)(9) to read as follows: 

§ 200.305 Payment. 

* * * * * 

(b) For non-Federal entities other than 

states, payments methods must 

minimize the time elapsing between the 

transfer of funds from the United States 

Treasury or the pass-through entity and 

the disbursement by the non-Federal 

entity whether the payment is made by 

electronic funds transfer, or issuance or 

redemption of checks, warrants, or 

payment by other means. See also 

§ 200.302 Financial management 

paragraph (b)(6). Except as noted 

elsewhere in this part, Federal agencies 

must require recipients to use only 

OMB-approved standard 

governmentwide information collection 

requests to request payment. 

(2) * * * 

(i) Advance payment mechanisms 

include, but are not limited to, Treasury 

check and electronic funds transfer and 

must comply with applicable guidance 

in 31 CFR part 208. 

(ii) Non-Federal entities must be 

authorized to submit requests for 

advance payments and reimbursements 

at least monthly when electronic fund 

transfers are not used, and as often as 

they like when electronic transfers are 

used, in accordance with the provisions 

of the Electronic Fund Transfer Act (15 

U.S.C. 1693–1693r). 

* * * * * 

(6) Unless otherwise required by 

Federal statutes, payments for allowable 

costs by non-Federal entities must not 

be withheld at any time during the 

period of performance unless the 

conditions of §§ 200.207 Specific 

conditions, Subpart D—Post Federal 

Award Requirements of this part, 

200.338 Remedies for Noncompliance, 

or one or more of the following applies: 

* * * * * 

(9) Interest earned amounts up to 

$500 per year may be retained by the 

non-Federal entity for administrative 

expense. Any additional interest earned 

on Federal advance payments deposited 

in interest-bearing accounts must be 

remitted annually to the Department of 

Health and Human Services Payment 

Management System (PMS) through an 

electronic medium using either 

Automated Clearing House (ACH) 

network or a Fedwire Funds Service 

payment. Remittances must include 

pertinent information of the payee and 

nature of payment in the memo area 

(often referred to as ‘‘addenda records’’ 

by Financial Institutions) as that will 

assist in the timely posting of interested 

earned on federal funds. Pertinent 

details include the Payee Account 

Number (PAN) if the payment 

originated from PMS, or Agency 

information if the payment originated 

from ASAP, NSF or another federal 

agency payment system. The remittance 

must be submitted as follows: 

(i) For ACH Returns: 

Routing Number: 051036706 

Account number: 303000 

Bank Name and Location: Credit 

Gateway—ACH Receiver St. Paul, MN 

(ii) For Fedwire Returns*: 

Routing Number: 021030004 

Account number: 75010501 

Bank Name and Location: Federal 

Reserve Bank Treas NYC/Funds 

Transfer Division New York, NY 

(* Please note organization initiating 

payment is likely to incur a charge from 

your Financial Institution for this type 

of payment) 

(iii) For International ACH Returns: 

Beneficiary Account: Federal Reserve 

Bank of New York/ITS (FRBNY/ITS) 

Bank: Citibank N.A. (New York) 

Swift Code: CITIUS33 

Account Number: 36838868 

Bank Address: 388 Greenwich Street, 

New York, NY 10013 USA 

Payment Details (Line 70): Agency 

Name (abbreviated when possible) and 

ALC Agency POC: Michelle Haney, 

(301) 492–5065 

(iv) For recipients that do not have 

electronic remittance capability, please 

make check** payable to: ‘‘The 

Department of Health and Human 

Services.’’ 

Mail Check to Treasury approved 

lockbox: 

HHS Program Support Center, P.O. Box 

530231, Atlanta, GA 30353–0231 

(** Please allow 4–6 weeks for 

processing of a payment by check to be 

applied to the appropriate PMS account) 

(v) Any additional information/ 

instructions may be found on the PMS 

Web site at http://www.dpm.psc.gov/. 

■ 48. In § 200.306, revise paragraphs (a), 

(c), and (d) and add paragraph (k) to 

read as follows: 

§ 200.306 Cost sharing or matching. 

(a) Under Federal research proposals, 

voluntary committed cost sharing is not 

expected. It cannot be used as a factor 

during the merit review of applications 

or proposals, but may be considered if 

it is both in accordance with Federal 

awarding agency regulations and 

specified in a notice of funding 

opportunity. Criteria for considering 

voluntary committed cost sharing and 

any other program policy factors that 

may be used to determine who may 

receive a Federal award must be 

explicitly described in the notice of 

funding opportunity. See also 

§§ 200.414 Indirect (F&A) costs, 200.203 

Notices of funding opportunities, and 

Appendix I to Part 200—Full Text of 

Notice of Funding Opportunity. 

* * * * * 

(c) Unrecovered indirect costs, 

including indirect costs on cost sharing 

or matching may be included as part of 

cost sharing or matching only with the 

prior approval of the Federal awarding 

agency. Unrecovered indirect cost 

means the difference between the 

amount charged to the Federal award 

and the amount which could have been 


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charged to the Federal award under the 

non-Federal entity’s approved 

negotiated indirect cost rate. 

(d) Values for non-Federal entity 

contributions of services and property 

must be established in accordance with 

the cost principles in Subpart E—Cost 

Principles. If a Federal awarding agency 

authorizes the non-Federal entity 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 must be the lesser of 

paragraphs (d)(1) or (2) of this section. 

* * * * * 

(k) For IHEs, see also OMB 

memorandum M–01–06, dated January 

5, 2001, Clarification of OMB A–21 

Treatment of Voluntary Uncommitted 

Cost Sharing and Tuition Remission 

Costs. 

■ 49. In § 200.307, revise paragraphs (d) 

and (e)(2) and add paragraph (g) to read 

as follows: 

§ 200.307 Program income. 

* * * * * 

(d) Property. Proceeds from the sale of 

real property, equipment, or supplies 

are not program income; such proceeds 

will be handled in accordance with the 

requirements of Subpart D—Post 

Federal Award Requirements of this 

part, Property Standards §§ 200.311 Real 

property, 200.313 Equipment, and 

200.314 Supplies, or as specifically 

identified in Federal statutes, 

regulations, or the terms and conditions 

of the Federal award. 

(e) * * * 

(2) Addition. With prior approval of 

the Federal awarding agency (except for 

IHEs and nonprofit research 

institutions, as described in paragraph 

(e) of this section) program income may 

be added to the Federal award by the 

Federal agency and the non-Federal 

entity. The program income must be 

used for the purposes and under the 

conditions of the Federal award. 

* * * * * 

(g) Unless the Federal statute, 

regulations, or terms and conditions for 

the Federal award provide otherwise, 

the non-Federal entity has no obligation 

to the Federal awarding agency with 

respect to program income earned from 

license fees and royalties for 

copyrighted material, patents, patent 

applications, trademarks, and 

inventions made under a Federal award 

to which 37 CFR part 401,’’Rights to 

Inventions Made by Nonprofit 

Organizations and Small Business Firms 

Under Government Awards, Contracts 

and Cooperative Agreements’’ is 

applicable. 

■ 50. In § 200.308, revise paragraphs 

(c)(4), (c)(6), and (c)(7); add paragraph 

(c)(8); and revise paragraphs (d) and 

(g)(4) to read as follows: 

§ 200.308 Revision of budget and program 

plans. 

* * * * * 

(c) * * * 

(4) The inclusion, unless waived by 

the Federal awarding agency, of costs 

that require prior approval in 

accordance with Subpart E—Cost 

Principles of this part or 45 CFR part 75 

Appendix IX, ‘‘Principles for 

Determining Costs Applicable to 

Research and Development under 

Awards and Contracts with Hospitals,’’ 

or 48 CFR part 31, ‘‘Contract Cost 

Principles and Procedures,’’ as 

applicable. 

* * * * * 

(6) Unless described in the 

application and funded in the approved 

Federal awards, the subawarding, 

transferring or contracting out of any 

work under a Federal award, including 

fixed amount subawards as described in 

§ 200.332 Fixed amount subawards. 

This provision does not apply to the 

acquisition of supplies, material, 

equipment or general support services. 

(7) Changes in the approved costsharing or matching provided by the 

non-Federal entity. No other prior 

approval requirements for specific items 

may be imposed unless an exception 

has been approved by OMB. See also 

§§ 200.102 Exceptions and 200.407 Prior 

written approval (prior approval). 

(8) The need arises for additional 

Federal funds to complete the project. 

(d) Except for requirements listed in 

paragraph (c)(1) of this section, the 

Federal awarding agency is authorized, 

at its option, to waive prior written 

approvals required by paragraph (c) this 

section. Such waivers may include 

authorizing recipients to do any one or 

more of the following: 

* * * * * 

(g) * * * 

(4) No other prior approval 

requirements for budget revisions may 

be imposed unless an exception has 

been approved by OMB. 

§ 200.309 [Amended] 

■ 51. Amend § 200.309, by adding 

‘‘(except as described in § 200.461 

Publication and printing costs)’’ after 

‘‘performance’’. 

§ 200.311 [Amended] 

■ 52. Amend § 200.311, paragraphs 

(c)(1) and (c)(2) by adding ‘‘the’’ before 

‘‘non-Federal entity’’. 

■ 53. In § 200.312, revise the first 

sentence of paragraph (c) to read as 

follows: 

§ 200.312 Federally-owned and exempt 

property. 

* * * * * 

(c) Exempt federally-owned property 

means property acquired under a 

Federal award where the Federal 

awarding agency has chosen to vest title 

to the property to the non-Federal entity 

without further obligation to the Federal 

Government, based upon the explicit 

terms and conditions of the Federal 

award.* * * 

§ 200.313 [Amended] 

■ 54. Amend § 200.313, paragraph (a)(1) 

by removing ‘‘until funding for the 

project ceases’’ and adding, in its place, 

‘‘during the period of performance’’. 

§ 200.315 [Amended] 

■ 55. Amend § 200.315, paragraph 

(e)(1), first sentence by removing 

‘‘addition, in’’. 

■ 56. Revise § 200.318, paragraphs (a), 

(c)(1), (h), and (j)(1) to read as follows: 

§ 200.318 General procurement standards. 

* * * * * 

(a) The non-Federal entity must use 

its own documented procurement 

procedures which reflect applicable 

State, local, and tribal laws and 

regulations, provided that the 

procurements conform to applicable 

Federal law and the standards identified 

in this part. 

* * * * * 

(c) * * * 

(1) The non-Federal entity must 

maintain written standards of conduct 

covering conflicts of interest and 

governing the actions of its employees 

engaged in the selection, award and 

administration of contracts. No 

employee, officer, or agent may 

participate in the selection, award, or 

administration of a contract supported 

by a Federal award if he or she has a real 

or apparent conflict of interest. Such a 

conflict of interest 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 or a 

tangible personal benefit from a firm 

considered for a contract. The officers, 

employees, and agents of the nonFederal entity may neither solicit nor 

accept gratuities, favors, or anything of 

monetary value from contractors or 

parties to subcontracts. However, nonFederal entities may set standards for 

situations in which the financial interest 


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is not substantial or the gift is an 

unsolicited item of nominal value. The 

standards of conduct must provide for 

disciplinary actions to be applied for 

violations of such standards by officers, 

employees, or agents of the non-Federal 

entity. 

* * * * * 

(h) The non-Federal entity must 

award contracts only to responsible 

contractors possessing the ability to 

perform successfully under the terms 

and conditions of a proposed 

procurement. Consideration will be 

given to such matters as contractor 

integrity, compliance with public 

policy, record of past performance, and 

financial and technical resources. See 

also § 200.212 Suspension and 

debarment. 

* * * * * 

(j) * * * 

(1) The non-Federal entity may use a 

time and materials type contract only 

after a determination that no other 

contract is suitable and if the contract 

includes a ceiling price that the 

contractor exceeds at its own risk. Time 

and materials type contract means a 

contract whose cost to a non-Federal 

entity is the sum of: 

* * * * * 

§ 200.319 [Amended] 

■ 57. Amend § 200.319, paragraph (a) by 

removing ‘‘and invitations’’ and adding, 

in its place ‘‘or invitations’’; and 

paragraph (b) by removing ‘‘state or 

local’’ and adding, in its place ‘‘state, 

local, or tribal’’. 

■ 58. Revise § 200.320, paragraphs (a), 

(c)(2)(i), and (c)(2)(iii) to read as follows: 

§ 200.320 Methods of procurement to be 

followed. 

* * * * * 

(a) Procurement by micro-purchases. 

Procurement by micro-purchase is the 

acquisition of supplies or services, the 

aggregate dollar amount of which does 

not exceed the micro-purchase 

threshold (§ 200.67 Micro-purchase). To 

the extent practicable, the non-Federal 

entity must distribute micro-purchases 

equitably among qualified suppliers. 

Micro-purchases may be awarded 

without soliciting competitive 

quotations if the non-Federal entity 

considers the price to be reasonable. 

* * * * * 

(c) * * * 

(2) * * * 

(i) Bids must be solicited from an 

adequate number of known suppliers, 

providing them sufficient response time 

prior to the date set for opening the 

bids, for state, local, and tribal 

governments, the invitation for bids 

must be publically advertised; 

* * * * * 

(iii) All bids will be opened at the 

time and place prescribed in the 

invitation for bids, and for local and 

tribal governments, the bids must be 

opened publicly; 

* * * * * 

§ 200.322 [Amended] 

■ 59. Amend § 200.322, by removing 

‘‘acquired by’’ and adding, in its place 

‘‘acquired during’’. 

■ 60. In § 200.331, revise paragraphs 

(a)(1)(i), (a)(1)(ii), (a)(4), (a)(5), (b), and 

(d)(1) to read as follows: 

§ 200.331 Requirements for pass-through 

entities. 

* * * * * 

(a) * * * 

(1) * * * 

(i) Subrecipient name (which must 

match the name associated with its 

unique entity identifier); 

(ii) Subrecipient’s unique entity 

identifier; 

* * * * * 

(4) An approved federally recognized 

indirect cost rate negotiated between the 

subrecipient and the Federal 

government or, if no such rate exists, 

either a rate negotiated between the 

pass-through entity and the subrecipient 

(in compliance with this part), or a de 

minimis indirect cost rate as defined in 

§ 200.414 Indirect (F&A) costs, 

paragraph (f) of this part. 

(5) A requirement that the 

subrecipient permit the pass-through 

entity and auditors to have access to the 

subrecipient’s records and financial 

statements as necessary for the passthrough entity to meet the requirements 

of this part; and 

* * * * * 

(b) Evaluate each subrecipient’s risk 

of noncompliance with Federal statutes, 

regulations, and the terms and 

conditions of the subaward for purposes 

of determining the appropriate 

subrecipient monitoring described in 

paragraphs (d) and (e) of this section, 

which may include consideration of 

such factors as: 

* * * * * 

(d) * * * 

(1) Reviewing financial and 

performance reports required by the 

pass-through entity. 

* * * * * 

§ 200.337 [Amended] 

■ 61. Amend § 200.337 by removing 

‘‘state or local’’ and adding, in its place 

‘‘state, local, and tribal’’. 

§ 200.340 [Amended] 

■ 62. Amend § 200.340(c) by adding ’’ 

(forthcoming at time of publication)’’ 

after ‘‘2 CFR part 77’’. 

§ 200.341 [Amended] 

■ 63. Amend § 200.341 by removing 

‘‘proceedings which’’ and adding, in its 

place ‘‘proceedings to which’’. 

§ 200.343 [Amended] 

■ 64. Amend § 200.343 by removing 

‘‘Federal agency’’ from the introductory 

text and adding, in its place ‘‘Federal 

awarding agency’’; in paragraph (a) by 

removing ‘‘by or the’’ and adding, in its 

place ‘‘by the’’; and paragraph (d) by 

removing ‘‘that is’’ and adding, in its 

place ‘‘that are’’, and adding ‘‘,’’ after 

due. 

§ 200.344 [Amended] 

■ 65. Amend § 200.344, paragraph (a) 

introductory text by removing ‘‘.’’ and 

adding, in its place ‘‘;’’ and paragraph 

(b) by adding ‘‘,’’ after section. 

§ 200.400 [Amended] 

■ 66. Amend § 200.400, paragraph (f) by 

adding ‘‘(including pre- and postdoctoral staff)’’ after ‘‘employees’’ and 

paragraph (g) by removing ‘‘expressly’’ 

and adding, in its place ‘‘explicitly’’. 

§ 200.404 [Amended] 

■ 67. Amend § 200.404, paragraph (b) by 

adding ‘‘, local, tribal,’’ after ‘‘state’’. 

§ 200.405 [Amended] 

■ 68. Amend § 200.405, paragraph (d) 

by removing ‘‘should’’ and adding, in its 

place ‘‘must’’. 

§ 200.406 [Amended] 

■ 69. Amend § 200.406, paragraph (b) 

second sentence by removing ‘‘should’’ 

and adding, in its place ‘‘must’’. 

■ 70. In § 200.407, revise paragraphs (e) 

through (v) and add paragraphs (w), (x) 

and (y) to read as follows: 

§ 200.407 Prior written approval (prior 

approval). 

* * * * * 

(e) § 200.311 Real property; 

(f) § 200.313 Equipment; 

(g) § 200.332 Fixed amount 

subawards; 

(h) § 200.413 Direct costs, paragraph 

(c); 

(i) § 200.430 Compensation—personal 

services, paragraph (h); 

(j) § 200.431 Compensation—fringe 

benefits; 

(k) § 200.438 Entertainment costs; 

(l) § 200.439 Equipment and other 

capital expenditures; 

(m) § 200.440 Exchange rates; 

(n) § 200.441 Fines, penalties, 

damages and other settlements; 


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(o) § 200.442 Fund raising and 

investment management costs; 

(p) § 200.445 Goods or services for 

personal use; 

(q) § 200.447 Insurance and 

indemnification; 

(r) § 200.454 Memberships, 

subscriptions, and professional activity 

costs, paragraph (c); 

(s) § 200.455 Organization costs; 

(t) § 200.456 Participant support costs; 

(u) § 200.458 Pre-award costs; 

(v) § 200.462 Rearrangement and 

reconversion costs; 

(w) § 200.467 Selling and marketing 

costs; 

(x) § 200.470 Taxes (including Value 

Added Tax); and 

(y) § 200.474 Travel costs. 

§ 200.413 [Amended] 

■ 71. Amend § 200.413, paragraph (f)(5) 

by adding ‘‘See also § 200.442 Fund 

raising and investment management 

costs.’’ after the first sentence. 

■ 72. In § 200.414, revise paragraphs (e) 

introductory text, (e)(1), (e)(3), (e)(4), 

(e)(5); add new paragraph (e)(6); revise 

the first sentence of paragraph (f); and 

revise paragraph (g) to read as follows: 

§ 200.414 Indirect (F&A) costs. 

* * * * * 

(e) Requirements for development and 

submission of indirect (F&A) cost rate 

proposals and cost allocation plans are 

contained in Appendices III–VII and 

Appendix IX as follows: 

(1) Appendix III to Part 200—Indirect 

(F&A) Costs Identification and 

Assignment, and Rate Determination for 

Institutions of Higher Education (IHEs); 

* * * * * 

(3) Appendix V to Part 200—State/

Local Governmentwide Central Service 

Cost Allocation Plans; 

(4) Appendix VI to Part 200—Public 

Assistance Cost Allocation Plans; 

(5) Appendix VII to Part 200—States 

and Local Government and Indian Tribe 

Indirect Cost Proposals; and 

(6) Appendix IX to Part 200—Hospital 

Cost Principles. 

(f) In addition to the procedures 

outlined in the appendices in paragraph 

(e) of this section, any non-Federal 

entity that has never received a 

negotiated indirect cost rate, except for 

those non-Federal entities described in 

Appendix VII to Part 200—States and 

Local Government and Indian Tribe 

Indirect Cost Proposals, paragraph 

D.1.b, may elect to charge a de minimis 

rate of 10% of modified total direct 

costs (MTDC) which may be used 

indefinitely.*** 

(g) Any non-Federal entity that has a 

current federally negotiated indirect 

cost rate may apply for a one-time 

extension of the rates in that agreement 

for a period of up to four years. This 

extension will be subject to the review 

and approval of the cognizant agency for 

indirect costs. If an extension is granted 

the non-Federal entity may not request 

a rate review until the extension period 

ends. At the end of the 4-year extension, 

the non-Federal entity must re-apply to 

negotiate a rate. Subsequent one-time 

extensions (up to four years) are 

permitted if a renegotiation is 

completed between each extension 

request. 

§ 200.415 [Amended] 

■ 73. Amend § 200.415, paragraph (b)(1) 

by adding ‘‘, and Appendix IX’’ after 

‘‘Appendices III through VII’’; and 

paragraph (c) by removing 

‘‘corporation’’ and adding, in its place 

‘‘nonprofit organization’’. 

■ 74. In § 200.419, revise the second 

sentence of paragraph (b)(2) to read as 

follows: 

§ 200.419 Cost accounting standards and 

disclosure statement. 

* * * * * 

(b) * * * 

(2) * * * An IHE must file 

amendments to the DS–2 to the 

cognizant agency for indirect costs six 

months in advance of a disclosed 

practice being changed to comply with 

a new or modified standard, or when a 

practice is changed for other 

reasons.* * * 

* * * * * 

§ 200.430 [Amended] 

■ 75. Amend § 200.430, paragraph (g) by 

removing ‘‘should’’ and adding, in its 

place ‘‘must’’; and paragraph (h)(1)(ii) 

by removing ‘‘(h)(9)’’ and adding, in its 

place ‘‘(i)’’. 

§ 200.431 [Amended] 

■ 76. Amend § 200.431, paragraph 

(b)(3)(i) by removing ‘‘as indirect costs’’; 

paragraph (e)(3) by removing ‘‘and they 

are allocated as indirect costs’’; and 

paragraph (h)(6) by adding ‘‘nonFederal’’ before ‘‘entity’’. 

§ 200.433 [Amended] 

■ 77. Amend § 200.433, paragraph (b) by 

removing ‘‘(b)(1)’’ and adding, in its 

place ‘‘(a)’’. 

§ 200.434 [Amended] 

■ 78. Amend § 200.434, paragraph (c) by 

removing ‘‘is no allowable’’ and adding, 

in its place ‘‘may not be charged to the 

Federal award’’; and paragraph (g)(1) by 

removing ‘‘is not reimbursable’’ and 

adding, in its place ‘‘may not be charged 

to the Federal award’’. 

§ 200.435 [Amended] 

■ 79. Amend § 200.435, paragraph 

(b)(1)(ii)(D) by removing ‘‘for default’’. 

§ 200.436 [Amended] 

■ 80. Amend § 200.436, paragraph (b) by 

removing ‘‘Appendices IV through VIII’’ 

and adding, in its place ‘‘Appendices III 

through IX’’; paragraph (c) introductory 

text by removing ‘‘For this purpose’’ and 

adding, in its place ‘‘For the purpose of 

computing depreciation’’; and 

paragraph (c)(3) by removing ‘‘entity, or 

where’’ and adding, in its place ‘‘entity 

where’’. 

■ 81. In § 200.439, add a new paragraph 

(b)(7) to read as follows: 

§ 200.439 Equipment and other capital 

expenditures. 

* * * * * 

(b) * * * 

(7) Equipment and other capital 

expenditures are unallowable as 

indirect costs. See § 200.436 

Depreciation. 

■ 82. In § 200.440, revise paragraph (a) 

to read as follows: 

§ 200.440 Exchange rates. 

(a) Cost increases for fluctuations in 

exchange rates are allowable costs 

subject to the availability of funding. 

Prior approval of exchange rate 

fluctuations is required only when the 

change results in the need for additional 

Federal funding, or the increased costs 

result in the need to significantly reduce 

the scope of the project. The Federal 

awarding agency must however ensure 

that adequate funds are available to 

cover currency fluctuations in order to 

avoid a violation of the Anti-Deficiency 

Act. 

* * * * * 

§ 200.443 [Amended] 

■ 83. Amend § 200.443, paragraph (b)(3) 

by removing ‘‘46*’’. 

■ 84. In § 200.444, revise paragraph (b) 

to read as follows: 

§ 200.444 General costs of government. 

* * * * * 

(b) For Indian tribes and Councils of 

Governments (COGs) (see § 200.64 Local 

government), up to 50% of salaries and 

expenses directly attributable to 

managing and operating Federal 

programs by the chief executive and his 

or her staff can be included in the 

indirect cost calculation without 

documentation. 

§ 200.448 [Amended] 

■ 85. In § 200.448, amend paragraph 

(b)(3) by removing the word ‘‘should’’ 

and adding in its place ‘‘must’’. 


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§ 200.453 [Amended] 

■ 86. In § 200.453, amend paragraph (b) 

by removing the word ‘‘should’’ and 

adding in its place ‘‘must’’. 

§ 200.457 [Amended] 

■ 87. Amend the first sentence of 

§ 200.457 by removing the text ‘‘routine 

and security to protect’’ and adding, in 

its place ‘‘protection and security of’’. 

§ 200.463 [Amended] 

■ 88. Amend § 200.463, paragraph (c), 

the first sentence by removing ‘‘as a 

direct cost’’. 

§ 200.464 [Amended] 

■ 89. Amend § 200.464, paragraph (c), 

the second sentence by removing 

‘‘allowed either as a direct or indirect 

cost’’ and adding, in its place ‘‘charged 

to a Federal award’’. 

■ 90. In § 200.474, remove paragraph 

(c)(3), revise paragraphs (d) and (e), and 

add paragraph (f) to read as follows: 

§ 200.474 Travel costs. 

* * * * * 

(d) In the absence of an acceptable, 

written non-Federal entity policy 

regarding travel costs, the rates and 

amounts established under 5 U.S.C. 

5701–11, (‘‘Travel and Subsistence 

Expenses; Mileage Allowances’’), or by 

the Administrator of General Services, 

or by the President (or his or her 

designee) pursuant to any provisions of 

such subchapter must apply to travel 

under Federal awards (48 CFR 31.205– 

46(a)). 

(e) Commercial air travel. (1) Airfare 

costs in excess of the basic least 

expensive unrestricted accommodations 

class offered by commercial airlines are 

unallowable except when such 

accommodations would: 

(i) Require circuitous routing; 

(ii) Require travel during 

unreasonable hours; 

(iii) Excessively prolong travel; 

(iv) Result in additional costs that 

would offset the transportation savings; 

or 

(v) Offer accommodations not 

reasonably adequate for the traveler’s 

medical needs. The non-Federal entity 

must justify and document these 

conditions on a case-by-case basis in 

order for the use of first-class or 

business-class airfare to be allowable in 

such cases. 

(2) Unless a pattern of avoidance is 

detected, the Federal government will 

generally not question a non-Federal 

entity’s determinations that customary 

standard airfare or other discount airfare 

is unavailable for specific trips if the 

non-Federal entity can demonstrate that 

such airfare was not available in the 

specific case. 

(f) Air travel by other than 

commercial carrier. Costs of travel by 

non-Federal entity-owned, -leased, or 

-chartered aircraft include the cost of 

lease, charter, operation (including 

personnel costs), maintenance, 

depreciation, insurance, and other 

related costs. The portion of such costs 

that exceeds the cost of airfare as 

provided for in paragraph (d) of this 

section, is unallowable. 

§ 200.501 [Amended] 

■ 91. Amend § 200.501, paragraph (f), 

by removing ‘‘should be considered’’ 

and adding, in its place ‘‘sets forth the 

considerations’’; and paragraph (h), by 

removing ‘‘should describe’’ with ‘‘must 

describe’’. 

§ 200.502 [Amended] 

■ 92. Amend § 200.502, paragraph (a), 

by removing ‘‘should be based’’ and 

adding, in its place ‘‘must be based.’’ 

§ 200.507 [Amended] 

■ 93. Amend § 200.507, paragraph 

(b)(1), by adding ‘‘current ’’ before 

‘‘program-specific audit guide’’. 

§ 200.510 [Amended] 

■ 94. Amend § 200.510, paragraph 

(b)(6), by removing ‘‘non-Federal entity’’ 

and adding, in its place ‘‘auditee.’’ 

■ 95. In § 200.512, revise the heading 

and first sentence of paragraph (b)(2) to 

read as follows: 

§ 200.512 Report submission. 

* * * * * 

(b) * * * 

(2) Exception for Indian Tribes and 

Tribal Organizations. An auditee that is 

an Indian tribe or a tribal organization 

(as defined in the Indian SelfDetermination, Education and 

Assistance Act (ISDEAA), 25 U.S.C. 

450b(l)) may opt not to authorize the 

FAC to make the reporting package 

publicly available on a Web site, by 

excluding the authorization for the FAC 

publication in the statement described 

in paragraph (b)(1) of this section.*** 

* * * * * 

§ 200.513 [Amended] 

■ 96. Amend § 200.513, paragraph 

(c)(5)(i), by removing ‘‘requirement of 

§ 200.513 Responsibilities’’ and adding, 

in its place ‘‘requirements of paragraph 

(c) of this section’’. 

§ 200.514 [Amended] 

■ 97. Amend § 200.514, paragraph 

(d)(3), by removing ‘‘the auditor should’’ 

and adding, in its place ‘‘the auditor 

must’’. 

§ 200.515 [Amended] 

■ 98. Amend § 200.515 as follows: 

■ (a) In paragraph (b), remove ‘‘Federal 

statutes, regulations, and the terms and 

conditions of the Federal award’’ and 

add, in its place ‘‘provisions of laws, 

regulations, contracts, and award 

agreements’’. 

■ (b) In paragraph (c), remove ‘‘report 

and internal control’’ and add, in its 

place ‘‘a report on internal control’’ in 

the first sentence; and remove 

‘‘modified opinion’’ and add, in its 

place ‘‘disclaimer of opinion’’ in the 

second sentence. 

■ (c) In paragraph (d) (3) (i), remove 

‘‘should be presented’’ and add, in its 

place ‘‘must be presented’’. 

■ (d) In paragraph (d) (3) (ii), remove 

‘‘should be reported’’ and add, in its 

place ‘‘must be reported’’. 

§ 200.518 [Amended] 

■ 99. Amend § 200.518 as follows: 

■ (a) In paragraph (a), remove 

‘‘paragraphs (b) through (i)’’ and add, in 

its place ‘‘paragraphs (b) through (h)’’. 

■ (b) In paragraph (b)(1), in the table, 

remove ‘‘Equal to $750,000’’ and add, in 

its place ‘‘Equal to or exceed $750,000’’. 

■ (c) In paragraph (b)(3), remove ‘‘loan 

guarantees (loans) should not result’’ 

with ‘‘loan guarantees (loans) must not 

result’’. 

Appendix I to Part 200 [Amended] 

■ 100. Amend Appendix I to Part 200— 

Full Text of Notice of Funding 

Opportunity as follows: 

■ (a) In the general discussion section, 

amend the second sentence of the third 

paragraph by removing ‘‘to include in 

Section I information’’ and adding, in its 

place ‘‘to include Section A 

information’’. 

■ (b) In the general discussion section, 

amend the last sentence of third 

paragraph by removing ‘‘The format 

specifies a standard location for that 

information in Section III.1 but that 

does not preclude repeating the 

information in Section I or creating a 

cross reference between Sections I and 

III.1’’ and adding, in its place ‘‘The 

format specifies a standard location for 

that information in Section C.1 but does 

not preclude repeating the information 

in Section A or creating a cross 

reference between Section A and C.1’’. 

■ (c) In Section B, second paragraph, 

remove ‘‘section D’’ and add, in its place 

‘‘Section D’’. 

■ (d) In Section C.1, fifth sentence, 

remove ‘‘Section IV’’ and add, in its 

place ‘‘Section D’’. 

■ (e) In Section C.1, last sentence, 

remove references, wherever they 

appear to ‘‘Section IV.5’’ and add, in 

their place ‘‘Section D.6’’. 

■ (f) In Section D.2.i, remove ‘‘Section 

IV.3’’ and add, in its place ‘‘Section 

D.4’’. 


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■ (g) In the heading of Section D.3, 

remove ‘‘Dun and Bradstreet Universal 

Numbering System (DUNS) number’’ 

and add, in its place ‘‘Unique entity 

identifier’’. 

■ (h) In Section D.3, item (ii), remove ‘‘a 

valid DUNS number’’ and add, in its 

place ‘‘a valid unique entity identifier’’. 

■ (i) In Section D.3, item (iii), remove 

‘‘all applicable DUNS’’ and add, in its 

place ‘‘all applicable unique entity 

identifier’’. 

■ (j) In Section E.1, second paragraph, 

remove ‘‘Section III.2’’ and add, in its 

place ‘‘Section C.2’’. 

■ 101. In Appendix II to Part 200— 

Contract Provisions for Non-Federal 

Entity Contracts Under Federal Awards, 

revise paragraphs (H), (I) and (J); and 

remove paragraph (K) to read as follows: 

Appendix II to Part 200—Contract 

Provisions for Non-Federal Entity 

Contracts Under Federal Awards 

* * * * * 

(H) Debarment and Suspension (Executive 

Orders 12549 and 12689)—A contract award 

(see 2 CFR 180.220) must not be made to 

parties listed on the governmentwide 

exclusions in the System for Award 

Management (SAM), in accordance with the 

OMB guidelines at 2 CFR 180 that implement 

Executive Orders 12549 (3 CFR part 1986 

Comp., p. 189) and 12689 (3 CFR part 1989 

Comp., p. 235), ‘‘Debarment and 

Suspension.’’ SAM Exclusions contains the 

names of parties debarred, suspended, or 

otherwise excluded by agencies, as well as 

parties declared ineligible under statutory or 

regulatory authority other than Executive 

Order 12549. 

(I) Byrd Anti-Lobbying Amendment (31 

U.S.C. 1352)—Contractors that apply or bid 

for an award exceeding $100,000 must 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 must 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 nonFederal award. 

(J) See § 200.322 Procurement of recovered 

materials. 

■ 102. Amend Appendix III to Part 

200—Indirect (F&A) Costs Identification 

and Assignment, and Rate 

Determination for Institutions of Higher 

Education (IHEs) as follows: 

■ (a) In Section A.1.a, add paragraph (3) 

as set forth below. 

■ (b) In Section B.1., remove ‘‘this 

indirect cost requirements’’ and add, in 

its place ‘‘these indirect cost 

requirements’’. 

■ (c) In Section C.2., remove ‘‘subgrants 

and subcontracts’’. 

■ (d) In Section C.7.a, first sentence, 

remove ‘‘Federal agencies must use the 

negotiated rates except as provided in 

paragraph (e) of § 200.414 Indirect 

(F&A) costs, must paragraph (b) (1) for 

indirect (F&A) costs’’ and add, in its 

place ‘‘Except as provided in paragraph 

(c)(1) of § 200.414 Indirect (F&A) costs, 

Federal agencies must use the 

negotiated rates’’ 

■ (e) In Section C.9.a, remove 

‘‘subsection 1.a’’ and add, in its place 

‘‘subsection C.1.a’’ 

■ (f) In Section C.10, remove ‘‘shall 

include’’ and add, in its place ‘‘must 

include’’. 

■ (g) In Section C.11.a.(1), add ‘‘Where 

a non-Federal entity only receives funds 

as a subrecipient, § 200.331 

Requirements for pass-through entities.’’ 

after the last sentence. 

■ (h) In Section C.11.f(1), second 

sentence, remove ‘‘Non-cognizant 

Federal agencies for indirect costs, 

which make Federal awards to an 

educational institution,’’ and add, in its 

place ‘‘Federal awarding agencies that 

do not have cognizance for indirect 

costs’’. 

■ (i) In Section C.12, second paragraph, 

remove ‘‘In order to provide mutually 

agreed upon information for 

management purposes’’ and add, in its 

place ‘‘As provided in section C.10 of 

this appendix’’. 

■ (j) In Section F.2.a, remove ‘‘must’’ 

after ‘‘a proposed indirect cost rate’’. 

■ (k) Revise F.2.b as set forth below. 

Appendix III to Part 200—Indirect 

(F&A) Costs Identification and 

Assignment, and Rate Determination 

for Institutions of Higher Education 

(IHEs) 

* * * * * 

A. * * * 

1. * * * 

a. * * * 

(3) Only mandatory cost sharing or cost 

sharing specifically committed in the project 

budget must be included in the organized 

research base for computing the indirect 

(F&A) cost rate or reflected in any allocation 

of indirect costs. Salary costs above statutory 

limits are not considered cost sharing. 

* * * * * 

F. * * * 

2. * * * 

b. The certificate must be signed on behalf 

of the institution by the chief financial officer 

or an individual designated by an individual 

at a level no lower than vice president or 

chief financial officer. 

An indirect (F&A) cost rate is not binding 

upon the Federal Government if the most 

recent required proposal from the institution 

has not been certified. Where it is necessary 

to establish indirect (F&A) cost rates, and the 

institution has not submitted a certified 

proposal for establishing such rates in 

accordance with the requirements of this 

section, the Federal Government must 

unilaterally establish such rates. Such rates 

may be based upon audited historical data or 

such other data that have been furnished to 

the cognizant agency for indirect costs and 

for which it can be demonstrated that all 

unallowable costs have been excluded. When 

indirect (F&A) cost rates are unilaterally 

established by the Federal Government 

because of failure of the institution to submit 

a certified proposal for establishing such 

rates in accordance with this section, the 

rates established will be set at a level low 

enough to ensure that potentially 

unallowable costs will not be reimbursed. 

* * * * * 

Appendix IV to Part 200 [Amended] 

■ 103. Amend Appendix IV to Part 

200—Indirect (F&A) Costs Identification 

and Assignment, and Rate 

Determination for Nonprofit 

Organizations as follows: 

■ (a) In Section B.2.c, remove ‘‘such 

contracts or subawards’’ and add, in its 

place ‘‘such as subawards’’. 

■ (b) In Section B.3.b.(4), sentence prior 

to last sentence, remove ’’ where a major 

project or activity explicitly requires 

and budgets for administrative or 

clerical services and other individuals 

involved can be identified with the 

program or activity’’ and add, in its 

place ‘‘as described in § 200.413 Direct 

Costs’’. 

■ (c) In Section C.2.a., add ‘‘Where a 

non-Federal entity only receives funds 

as a subrecipient, see the requirements 

of § 200.331 Requirements for passthrough entities.’’ after the last sentence. 

■ (d) In Section D, add section number 

‘‘1.’’ before ‘‘Required Certification.’’ 

and remove ‘‘j’’ in front of ‘‘Each 

indirect cost rate’’ and add, in its place 

‘‘2.’’. 

■ 104. In Appendix V to Part 200— 

State/Local Government and Indian 

Tribe-Wide Central Service Cost 

Allocation Plans, revise the heading to 

read as follows: 

Appendix V to Part 200—State/Local 

Governmentwide Central Service Cost 

Allocation Plans 

* * * * * 

■ 105. Amend Appendix V to Part 200— 

State/Local Governmentwide Central 

Service Cost Allocation Plans as 

follows: 

■ (a) In Section A.2, the last sentence 

remove ‘‘the Superintendent of 

Documents, U.S. Government Printing 

Office’’ and add, in its place ‘‘HHS Cost 

Allocation Services or at their Web site 

at https://rates.psc.gov’’. 

■ (b) In Section E.2, the first sentence, 

remove ‘‘allocated central service’’ and 

add, in its place ‘‘allocation central 

service*’’. 


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■ 106. Amend Appendix VI to Part 

200—Public Assistance Cost Allocation 

Plans as follows: 

■ (a) In Section A, third sentence, 

remove ‘‘Federal agencies’’ and add, in 

its place ‘‘Federal awarding agencies’’. 

■ (b) In Section E.1, remove ‘‘the 

funding agencies’’ and add, in its place 

‘‘Federal awarding agencies’’; and 

remove ‘‘the cognizant audit agency’’ 

and add, in its place ‘‘the cognizant 

agency for indirect costs’’. 

■ (c) In Section E.2, remove ‘‘one 

funding agency’’ and add, in its place 

‘‘one Federal awarding agency’’. 

■ (d) In Section E.3, remove ‘‘two or 

more funding agencies’’ and add, in its 

place ‘‘two or more Federal awarding 

agencies’’; and remove ‘‘one funding 

agency’’ and add, in its place ‘‘one 

Federal awarding agency’’. 

■ (e) In Section E.4, remove ‘‘the Federal 

agencies’’ and add, in its place ‘‘the 

Federal awarding agencies’’. 

Appendix VII to Part 200 [Amended] 

■ 107. Amend Appendix VII to Part 

200—States and Local Government and 

Indian Tribe Indirect Cost Proposals as 

follows: 

■ (a) In Section A.3, remove ‘‘the 

Superintendent of Documents, U.S. 

Government Printing Office’’ and add, 

in its place ‘‘HHS Cost Allocation 

Services or at their Web site at https:// 

rates.psc.gov’’. 

■ (b) In Section A.5, remove ‘‘Appendix 

VII to Part 200—States and Local 

Government and Indian Tribe Indirect 

Cost Proposals’’ and add, in its place 

‘‘Appendix VI to Part 200—Public 

Assistance Cost Allocation Plans’’. 

■ (c) In Section B.3, second sentence, 

remove ‘‘Appendix VI’’ add, in its place 

‘‘Appendix V.’’ 

■ (d) In Section C.3.e, remove 

‘‘subcontracts’’ and add, in its place 

‘‘subawards’’. 

■ (e) In Section D.1.a, last sentence, 

remove ‘‘the Common Rule’’ and add, in 

its place ‘‘§ 200.333 Retention 

Requirements for Records’’. 

■ (f) In Section F.2, second sentence, 

remove ‘‘Appendix VI’’ and add, in its 

place ‘‘Appendix V’’. 

Appendix IX to Part 200 [Amended] 

■ 108. Amend Appendix IX to Part 

200—Hospital Cost Principles by 

removing ‘‘Part 74’’ and adding, in its 

place ‘‘Part 75’’. 

David Mader, 

Controller. 

Department of Health and Human 

Services 

For the reasons set forth in the 

common preamble, under the authority 

of 5 U.S.C. 301 and the authorities listed 

below, Part 200 of Title 2, Chapter III is 

added and 45 CFR subtitle A is 

amended as follows: 

TITLE 2—GRANTS AND 

AGREEMENTS 

CHAPTER III—DEPARTMENT OF HEALTH 

AND HUMAN SERVICES 

■ 1. Add part 300 to read as follows: 

PART 300—UNIFORM 

ADMINISTRATIVE REQUIREMENTS, 

COST PRINCIPLES, AND AUDIT 

REQUIREMENTS FOR FEDERAL 

AWARDS 

Authority: 5 U.S.C. 301, 2 CFR part 200. 

§ 300.1 Adoption of 2 CFR Part 200. 

Under the authority listed above, the 

Department of Health and Human 

Services adopts the Office of 

Management and Budget (OMB) 

Guidance in 2 CFR part 200, and has 

codified the text, with HHS-specific 

amendments in 45 CFR part 75. Thus, 

this part gives regulatory effect to the 

OMB guidance and supplements the 

guidance as needed for the Department. 

TITLE 45—PUBLIC WELFARE 

■ Subtitle A—Department of Health and 

Human Services 

PART 74 [REMOVED AND RESERVED] 

■ 2. Remove and reserve 45 CFR part 74. 

■ 3. Part 75 is added to title 45 to read 

as follows: 

PART 75—UNIFORM ADMINISTRATIVE 

REQUIREMENTS, COST PRINCIPLES, 

AND AUDIT REQUIREMENTS FOR HHS 

AWARDS 

Subpart A—Acronyms and Definitions 

Sec. 

75.1 Acronyms. 

75.2 Definitions. 

Subpart B—General Provisions 

75.100 Purpose. 

75.101 Applicability. 

75.102 Exceptions. 

75.103 Authorities. 

75.104 Supersession. 

75.105 Effects on other issuances. 

75.106 Agency implementation. 

75.107 OMB responsibilities. 

75.108 Inquiries. 

75.109 Review date. 

75.110 Effective/Applicability date. 

75.111 English language. 

75.112 Conflict of interest. 

75.113 Mandatory disclosures. 

Subpart C—Pre-Federal Award 

Requirements and Contents of Federal 

Awards. 

75.200 Purpose. 

75.201 Use of grant agreements (including 

fixed amount awards), cooperative 

agreements, and contracts. 

75.202 Requirement to provide public 

notice of Federal financial assistance 

programs. 

75.203 Notices of funding opportunities. 

75.204 HHS funding agency review of 

merit of proposals. 

75.205 HHS awarding agency review of 

risk posed by applicants. 

75.206 Standard application requirements, 

including forms for applying for HHS 

financial assistance, and state plans. 

75.207 Specific award conditions. 

75.208 Certifications and Representations. 

75.209 Pre-award costs. 

75.210 Information contained in a Federal 

award. 

75.211 Public access to Federal award 

information. 

75.212 Suspension and Debarment. 

75.213 Metric system of measurement. 

75.214 Disclosure of Lobbying Activities. 

75.215 Special Provisions for Awards to 

Commercial Organizations. 

75.216 Special Provisions for Awards to 

Federal Agencies. 

75.217 Participation by faith-based 

organizations. 

Subpart D—Post Federal Award 

Requirements 

Standards for Financial and Program 

Management 

75.300 Statutory and national policy 

requirements. 

75.301 Performance measurement. 

75.302 Financial management and 

standards for financial management 

systems. 

75.303 Internal controls. 

75.304 Bonds. 

75.305 Payment. 

75.306 Cost sharing or matching. 

75.307 Program income. 

75.308 Revision of budget and program 

plans. 

75.309 Period of performance and 

availability of funds. 

75.310–75.315 [Reserved] 

Property Standards 

75.316 Purpose of property standards. 

75.317 Insurance coverage. 

75.318 Real property. 

75.319 Federally-owned and exempt 

property. 

75.320 Equipment. 

75.321 Supplies. 

75.322 Intangible property and copyrights. 

75.323 Property trust relationship. 

75.324–75.325 [Reserved] 

Procurement Standards 

75.326 Procurements by states. 

75.327 General procurement standards. 

75.328 Competition. 

75.329 Procurement procedures. 

75.330 Contracting with small and 

minority businesses, women’s business 

enterprises, and labor surplus area firms. 

75.331 Procurement of recovered materials. 

75.332 Contract cost and price. 

75.333 HHS awarding agency or passthrough entity review. 


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75.334 Bonding requirements. 

75.335 Contract provisions. 

75.336–75.340 [Reserved] 

Performance and Financial Monitoring and 

Reporting 

75.341 Financial reporting. 

75.342 Monitoring and reporting program 

performance. 

75.343 Reporting on real property. 

75.344–75.350 [Reserved] 

Subrecipient Monitoring and Management 

75.351 Subrecipient and contractor 

determinations. 

75.352 Requirements for pass-through 

entities. 

75.353 Fixed amount subawards. 

75.354–75.360 [Reserved] 

Record Retention and Access 

75.361 Retention requirements for records. 

75.362 Requests for transfer or records. 

75.363 Methods for collection, 

transmission and storage of information. 

75.364 Access to records. 

75.365 Restrictions on public access to 

records. 

75.366–75.370 [Reserved] 

Remedies for Noncompliance 

75.371 Remedies for noncompliance. 

75.372 Termination. 

75.373 Notification of termination 

requirement. 

75.374 Opportunities to object, hearings, 

and appeals. 

75.375 Effects of suspension and 

termination. 

75.376–75.380 [Reserved] 

Closeout 

75.381 Closeout. 

75.382–75.385 [Reserved] 

Post-Closeout Adjustments and Continuing 

Responsibilities 

75.386 Post-Closeout Adjustments and 

Continuing Responsibilities. 

75.387–75.390 [Reserved] 

Collection of Amounts Due 

75.391 Collection of amounts due. 

Subpart E—Cost Principles 

General Provisions 

75.400 Policy guide 

75.401 Application 

Basic Considerations 

75.402 Composition of Costs. 

75.403 Factors affecting allowability of 

costs. 

75.404 Reasonable costs. 

75.405 Allocable costs. 

75.406 Applicable credits. 

75.407 Prior written approval (prior 

approval). 

75.408 Limitation on allowance of costs. 

75.409 Special considerations. 

75.410 Collection of unallowable costs. 

75.411 Adjustment of previously 

negotiated indirect (F&A) cost rates 

containing unallowable costs. 

Direct and Indirect (F&A) Costs 

75.412 Classification of costs. 

75.413 Direct costs. 

75.414 Indirect (F&A) costs. 

75.415 Required certifications. 

Special Considerations for States, Local 

Governments and Indian Tribes 

75.416 Cost allocation plans and indirect 

cost proposals. 

75.417 Interagency service. 

Special Considerations for Institutions of 

Higher Education 

75.418 Costs incurred by states and local 

governments. 

75.419 Cost accounting standards and 

disclosure statement. 

General Provisions for Selected Items of Cost 

75.420 Considerations for selected items of 

cost. 

75.421 Advertising and public relations. 

75.422 Advisory councils. 

75.423 Alcoholic beverages. 

75.424 Alumni/ae activities. 

75.425 Audit services. 

75.426 Bad debts. 

75.427 Bonding costs. 

75.428 Collections of improper payments. 

75.429 Commencement and convocation 

costs. 

75.430 Compensation—personal services. 

75.431 Compensation—fringe benefits. 

75.432 Conferences. 

75.433 Contingency provisions. 

75.434 Contributions and donations. 

75.435 Defense and prosecution of criminal 

and civil proceedings, claims, appeals, 

and patent infringements. 

75.436 Depreciation. 

75.437 Employee health and welfare costs. 

75.438 Entertainment costs. 

75.439 Equipment and other capital 

expenditures. 

75.440 Exchange rates. 

75.441 Fines, penalties, damages and other 

settlements. 

75.442 Fund raising and investment 

management costs. 

75.443 Gains and losses on disposition of 

depreciable assets. 

75.444 General costs of government. 

75.445 Goods or services for personal use. 

75.446 Idle facilities and idle capacity. 

75.447 Insurance and indemnification. 

75.448 Intellectual Property. 

75.449 Interest. 

75.450 Lobbying. 

75.451 Losses on other awards or contracts. 

75.452 Maintenance and repair costs. 

75.453 Materials and supplies costs, 

including costs of computing devices. 

75.454 Memberships, subscriptions, and 

professional activity costs. 

75.455 Organization costs. 

75.456 Participant support costs. 

75.457 Plant and security costs. 

75.458 Pre-award costs. 

75.459 Professional services costs. 

75.460 Proposal costs. 

75.461 Publication and printing costs. 

75.462 Rearrangement and reconversion 

costs. 

75.463 Recruiting costs. 

75.464 Relocation costs of employees. 

75.465 Rental costs of real property and 

equipment. 

75.466 Scholarships and student aid costs. 

75.467 Selling and marketing costs. 

75.468 Specialized service facilities. 

75.469 Student activity costs. 

75.470 Taxes (including Value Added Tax). 

75.471 Termination costs. 

75.472 Training and education costs. 

75.473 Transportation costs. 

75.474 Travel costs. 

75.475 Trustees. 

HHS Specific Selected Items of Cost 

75.476 Independent research and 

development costs. 

Subpart F—Audit Requirements 

General 

75.500 Purpose. 

Audits 

75.501 Audit requirements. 

75.502 Basis for determining Federal 

awards expended. 

75.503 Relation to other audit 

requirements. 

75.504 Frequency of audits. 

75.505 Sanctions. 

75.506 Audit costs. 

75.507 Program-specific audits. 

Auditees 

75.508 Auditee responsibilities. 

75.509 Auditor selection. 

75.510 Financial statements. 

75.511 Audit findings follow-up. 

75.512 Report submission. 

Federal Agencies 

75.513 Responsibilities. 

Auditors 

75.514 Scope of audit. 

75.515 Audit reporting. 

75.516 Audit findings. 

75.517 Audit documentation. 

75.518 Major program determination. 

75.519 Criteria for Federal program risk. 

75.520 Criteria for a low-risk auditee. 

Management Decisions 

75.521 Management Decision. 

Appendix I to Part 75—Full Text of Notice 

of Funding Opportunity 

Appendix II to Part 75—Contract Provisions 

for Non-Federal Entity Contracts Under 

Federal Awards 

Appendix III to Part 75—Indirect (F&A) Costs 

Identification and Assignment, and Rate 

Determination for Institutions of Higher 

Education 

Appendix IV to Part 75—Indirect (F&A) Costs 

Identification and Assignment, and Rate 

Determination for Nonprofit 

Organizations 

Appendix V to Part 75—State/Local 

Governments-Wide Central Service Cost 

Allocation Plans 

Appendix VI to Part 75—Public Assistance 

Cost Allocation Plans 

Appendix VII to Part 75—States and Local 

Government and Indian Tribe Indirect 

Cost Proposals 

Appendix VIII to Part 75—Nonprofit 

Organizations Exempted from Subpart E 

of Part 75 

Appendix IX to Part 75—Principles for 

Determining Costs Applicable to 


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Research and Development Under Grants 

and Contracts with Hospitals 

Appendix X to Part 75—Data Collection 

Form (SF-SAC) 

Appendix XI to Part 75—Compliance 

Supplement 

Authority: 5 U.S.C. 301. 

Subpart A—Acronyms and Definitions 

§ 75.1 Acronyms. 

The following acronyms apply to this 

part: 

CAS Cost Accounting Standards 

CFDA Catalog of Federal Domestic 

Assistance 

CFR Code of Federal Regulations 

CMIA Cash Management Improvement Act 

COG Councils of Governments 

COSO Committee of Sponsoring 

Organizations of the Treadway 

Commission 

EPA Environmental Protection Agency 

ERISA Employee Retirement Income 

Security Act of 1974 (29 U.S.C. 1301–1461) 

EUI Energy Usage Index 

F&A Facilities and Administration 

FAC Federal Audit Clearinghouse 

FAIN Federal Award Identification Number 

FAR Federal Acquisition Regulation 

FFATA Federal Funding Accountability 

and Transparency Act of 2006 or 

Transparency Act—Public Law 109–282, as 

amended by § 6202(a) of Public Law 110– 

252 (31 U.S.C. 6101) 

FICA Federal Insurance Contributions Act 

FOIA Freedom of Information Act 

FR Federal Register 

FTE Full-time equivalent 

GAAP Generally Accepted Accounting 

Principles 

GAGAS Generally Accepted Government 

Auditing Standards 

GAO Government Accountability Office 

GOCO Government owned, contractor 

operated 

GSA General Services Administration 

HHS U.S. Department of Health and Human 

Services 

IBS Institutional Base Salary 

IHE Institutions of Higher Education 

IRC Internal Revenue Code 

ISDEAA Indian Self-Determination and 

Education and Assistance Act 

MTC Modified Total Cost 

MTDC Modified Total Direct Cost 

OMB Office of Management and Budget 

PII Personally Identifiable Information 

PMS Payment Management System 

PRHP Post-retirement Health Plans 

PTE Pass-through Entity 

REUI Relative Energy Usage Index 

SAM System for Award Management 

SF 424 Standard Form 424 series and Form 

Families Application for Federal 

Assistance 

SFA Student Financial Aid 

SNAP Supplemental Nutrition Assistance 

Program 

SPOC Single Point of Contact 

TANF Temporary Assistance for Needy 

Families 

TFM Treasury Financial Manual 

U.S.C. United States Code 

VAT Value Added Tax 

§ 75.2 Definitions. 

These are the definitions for terms 

used in this part. Different definitions 

may be found in Federal statutes or 

regulations that apply more specifically 

to particular program or activities. 

These definitions could be 

supplemented by additional 

instructional information provided in in 

governmentwide standard information 

collections. 

Acquisition cost means the cost of the 

asset including the cost to ready the 

asset for its intended use. Acquisition 

cost for equipment, for example, means 

the net invoice price of the equipment, 

including the cost of any modifications, 

attachments, accessories, or auxiliary 

apparatus necessary to make it usable 

for the purpose for which it is acquired. 

Acquisition costs for software includes 

those development costs capitalized in 

accordance with generally accepted 

accounting principles (GAAP). 

Ancillary charges, such as taxes, duty, 

protective in transit insurance, freight, 

and installation may be included in or 

excluded from the acquisition cost in 

accordance with the non-Federal 

entity’s regular accounting practices. 

Advance payment means a payment 

that a Federal awarding agency or passthrough entity makes by any appropriate 

payment mechanism, including a 

predetermined payment schedule, 

before the non-Federal entity disburses 

the funds for program purposes. 

Allocation means the process of 

assigning a cost, or a group of costs, to 

one or more cost objective(s), in 

reasonable proportion to the benefit 

provided or other equitable relationship. 

The process may entail assigning a 

cost(s) directly to a final cost objective 

or through one or more intermediate 

cost objectives. 

Audit finding means deficiencies 

which the auditor is required by 

§ 75.516(a) to report in the schedule of 

findings and questioned costs. 

Auditee means any non-Federal entity 

that expends Federal awards which 

must be audited under Subpart F-of this 

part. 

Auditor means an auditor who is a 

public accountant, or a Federal, state, 

local government, or Indian Tribe audit 

organization, which meets the general 

standards specified for external auditors 

in generally accepted government 

auditing standards (GAGAS). The term 

auditor does not include internal 

auditors of nonprofit organizations. 

Awardee (see Non-Federal entity). 

Budget means the financial plan for 

the project or program that the Federal 

awarding agency or pass-through entity 

approves during the Federal award 

process or in subsequent amendments to 

the Federal award. It may include the 

Federal and non-Federal share or only 

the Federal share, as determined by the 

Federal awarding agency or passthrough entity. 

Capital assets means tangible or 

intangible assets used in operations 

having a useful life of more than one 

year which are capitalized in 

accordance with GAAP. Capital assets 

include: 

(1) Land, buildings (facilities), 

equipment, and intellectual property 

(including software) whether acquired 

by purchase, construction, manufacture, 

lease-purchase, exchange, or through 

capital leases; and 

(2) Additions, improvements, 

modifications, replacements, 

rearrangements, reinstallations, 

renovations or alterations to capital 

assets that materially increase their 

value or useful life (not ordinary repairs 

and maintenance). 

Capital expenditures means 

expenditures to acquire capital assets or 

expenditures to make additions, 

improvements, modifications, 

replacements, rearrangements, 

reinstallations, renovations, or 

alterations to capital assets that 

materially increase their value or useful 

life. 

Catalog of Federal Domestic 

Assistance (CFDA) number means the 

number assigned to a Federal program 

in the CFDA. 

CFDA program title means the title of 

the program under which the Federal 

award was funded in the CFDA. 

Central service cost allocation plan 

means the documentation identifying, 

accumulating, and allocating or 

developing billing rates based on the 

allowable costs of services provided by 

a state, local government, or Indian tribe 

on a centralized basis to its departments 

and agencies. The costs of these services 

may be allocated or billed to users. 

Claim means, depending on the 

context, either: 

(1) A written demand or written 

assertion by one of the parties to a 

Federal award seeking as a matter of 

right: 

(i) The payment of money in a sum 

certain; 

(ii) The adjustment or interpretation 

of the terms and conditions of the 

Federal award; or 

(iii) Other relief arising under or 

relating to a Federal award. 

(2) A request for payment that is not 

in dispute when submitted. 

Class of Federal awards means a 

group of Federal awards either awarded 

under a specific program or group of 

programs or to a specific type of nonFederal entity or group of non-Federal 


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entities to which specific provisions or 

exceptions may apply. 

Closeout means the process by which 

the Federal awarding agency or passthrough entity determines that all 

applicable administrative actions and 

all required work of the Federal award 

have been completed and takes actions 

as described in § 75.381. 

Cluster of programs means a grouping 

of closely related programs that share 

common compliance requirements. The 

types of clusters of programs are 

research and development (R&D), 

student financial aid (SFA), and other 

clusters. ‘‘Other clusters’’ are as defined 

by OMB in the compliance supplement 

or as designated by a state for Federal 

awards the state provides to its 

subrecipients that meet the definition of 

a cluster of programs. When designating 

an ‘‘other cluster,’’ a state must identify 

the Federal awards included in the 

cluster and advise the subrecipients of 

compliance requirements applicable to 

the cluster, consistent with § 75.352(a). 

A cluster of programs must be 

considered as one program for 

determining major programs, as 

described in § 75.518, and, with the 

exception of R&D as described in 

§ 75.501(c), whether a program-specific 

audit may be elected. 

Cognizant agency for audit means the 

Federal agency designated to carry out 

the responsibilities described in 

§ 75.513(a). The cognizant agency for 

audit is not necessarily the same as the 

cognizant agency for indirect costs. A 

list of cognizant agencies for audit may 

be found at the FAC Web site. 

Cognizant agency for indirect costs 

means the Federal agency responsible 

for reviewing, negotiating, and 

approving cost allocation plans or 

indirect cost proposals developed under 

this part on behalf of all Federal 

agencies. The cognizant agency for 

indirect cost is not necessarily the same 

as the cognizant agency for audit. For 

assignments of cognizant agencies see 

the following: 

(1) For IHEs: Appendix III to Part 75 

C.11. 

(2) For nonprofit organizations: 

Appendix IV to Part 75 C.1. 

(3) For state and local governments: 

Appendix V to Part 75 F.1. 

(4) For Indian tribes: Appendix VII to 

Part 75 D.1. 

Commercial organization means an 

organization, institution, corporation, or 

other legal entity, including, but not 

limited to, partnerships, sole 

proprietorships, and limited liability 

companies, that is organized or operated 

for the profit or benefit of its 

shareholders or other owners. The term 

includes small and large businesses and 

is used interchangeably with ‘‘for-profit 

organization.’’ 

Compliance supplement means 

Appendix XI to Part 75 (previously 

known as the Circular A–133 

Compliance Supplement). 

Computing devices means machines 

used to acquire, store, analyze, process, 

and publish data and other information 

electronically, including accessories (or 

‘‘peripherals’’) for printing, transmitting 

and receiving, or storing electronic 

information. See also Supplies and 

Information technology systems. 

Contract means a legal instrument by 

which a non-Federal entity purchases 

property or services needed to carry out 

the project or program under a Federal 

award. The term as used in this part 

does not include a legal instrument, 

even if the non-Federal entity considers 

it a contract, when the substance of the 

transaction meets the definition of a 

Federal award or subaward (see 

Subaward). 

Contractor means an entity that 

receives a contract as defined in 

Contract. 

Cooperative agreement means a legal 

instrument of financial assistance 

between a Federal awarding agency or 

pass-through entity and a non-Federal 

entity that, consistent with 31 U.S.C. 

6302–6305: 

(1) Is used to enter into a relationship 

the principal purpose of which is to 

transfer anything of value from the 

Federal awarding agency or passthrough entity to the non-Federal entity 

to carry out a public purpose authorized 

by a law of the United States (see 31 

U.S.C. 6101(3)); and not to acquire 

property or services for the Federal 

Government or pass-through entity’s 

direct benefit or use; 

(2) Is distinguished from a grant in 

that it provides for substantial 

involvement between the Federal 

awarding agency or pass-through entity 

and the non-Federal entity in carrying 

out the activity contemplated by the 

Federal award. 

(3) The term does not include: 

(i) A cooperative research and 

development agreement as defined in 15 

U.S.C. 3710a; or 

(ii) An agreement that provides only: 

(a) Direct United States Government 

cash assistance to an individual; 

(B) A subsidy; 

(C) A loan; 

(D) A loan guarantee; or 

(E) Insurance 

Cooperative audit resolution means 

the use of audit follow-up techniques 

which promote prompt corrective action 

by improving communication, fostering 

collaboration, promoting trust, and 

developing an understanding between 

the Federal agency and the non-Federal 

entity. This approach is based upon: 

(1) A strong commitment by Federal 

agency and non-Federal entity 

leadership to program integrity; 

(2) Federal agencies strengthening 

partnerships and working cooperatively 

with non-Federal entities and their 

auditors; and non-Federal entities and 

their auditors working cooperatively 

with Federal agencies; 

(3) A focus on current conditions and 

corrective action going forward; 

(4) Federal agencies offering 

appropriate relief for past 

noncompliance when audits show 

prompt corrective action has occurred; 

and 

(5) Federal agency leadership sending 

a clear message that continued failure to 

correct conditions identified by audits 

which are likely to cause improper 

payments, fraud, waste, or abuse is 

unacceptable and will result in 

sanctions. 

Corrective action means action taken 

by the auditee that: 

(1) Corrects identified deficiencies; 

(2) Produces recommended 

improvements; or 

(3) Demonstrates that audit findings 

are either invalid or do not warrant 

auditee action. 

Cost allocation plan means central 

service cost allocation plan or public 

assistance cost allocation plan. 

Cost objective means a program, 

function, activity, award, organizational 

subdivision, contract, or work unit for 

which cost data are desired and for 

which provision is made to accumulate 

and measure the cost of processes, 

products, jobs, capital projects, etc. A 

cost objective may be a major function 

of the non-Federal entity, a particular 

service or project, a Federal award, or an 

indirect (Facilities & Administrative 

(F&A)) cost activity, as described in 

Subpart E of this part. See also Final 

cost objective and Intermediate cost 

objective. 

Cost sharing or matching means the 

portion of project costs not paid by 

Federal funds (unless otherwise 

authorized by Federal statute). This may 

include the value of allowable third 

party in-kind contributions, as well as 

expenditures by the recipient. See also 

§ 75.306. 

Cross-cutting audit finding means an 

audit finding where the same 

underlying condition or issue affects 

Federal awards of more than one 

Federal awarding agency or passthrough entity. 

Departmental Appeals Board means 

the independent office established in 

the Office of the Secretary with 

delegated authority from the Secretary 


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to review and decide certain disputes 

between recipients of HHS funds and 

HHS awarding agencies under 45 CFR 

part 16 and to perform other review, 

adjudication and mediation services as 

assigned. 

Disallowed costs means those charges 

to a Federal award that the Federal 

awarding agency or pass-through entity 

determines to be unallowable, in 

accordance with the applicable Federal 

statutes, regulations, or the terms and 

conditions of the Federal award. 

Equipment means tangible personal 

property (including information 

technology systems) having a useful life 

of more than one year and a per-unit 

acquisition cost which equals or 

exceeds the lesser of the capitalization 

level established by the non-Federal 

entity for financial statement purposes, 

or $5,000. See also Capital assets, 

Computing devices, General purpose 

equipment, Information technology 

systems, Special purpose equipment, 

and Supplies. 

Excess property means property 

acquired in whole or in part under the 

control of any Federal awarding agency 

that, as determined by the head of the 

awarding agency or his/her delegate, is 

no longer required for the agency’s 

needs or the discharge of its 

responsibilities. 

Expenditure report means: 

(1) For non-construction awards, the 

SF–425 Federal Financial Report (FFR) 

(or other OMB-approved equivalent 

report); 

(2) For construction awards, the SF– 

271 ‘‘Outlay Report and Request for 

Reimbursement’’ (or other OMBapproved equivalent report). 

Expenditures means charges made by 

a non-Federal entity to a project or 

program for which a Federal award was 

received. 

(1) The charges may be reported on a 

cash or accrual basis, as long as the 

methodology is disclosed and is 

consistently applied. 

(2) For reports prepared on a cash 

basis, expenditures are the sum of: 

(i) Cash disbursements for direct 

charges for property and services; 

(ii) The amount of indirect expense 

charged; 

(iii) The value of third-party in-kind 

contributions applied; and 

(iv) The amount of cash advance 

payments and payments made to 

subrecipients. 

(3) For reports prepared on an accrual 

basis, expenditures are the sum of: 

(i) Cash disbursements for direct 

charges for property and services; 

(ii) The amount of indirect expense 

incurred; 

(iii) The value of third-party in-kind 

contributions applied; and 

(iv) The net increase or decrease in 

the amounts owed by the non-Federal 

entity for: 

(A) Goods and other property 

received; 

(B) Services performed by employees, 

contractors, subrecipients, and other 

payees; 

(C) Programs for which no current 

services or performance are required 

such as annuities, insurance claims, or 

other benefit payments. 

Federal agency means an ‘‘agency’’ as 

defined at 5 U.S.C. 551(1) and further 

clarified by 5 U.S.C. 552(f). 

Federal Audit Clearinghouse FAC 

means the clearinghouse designated by 

OMB as the repository of record where 

non-Federal entities are required to 

transmit the reporting packages required 

by Subpart F of this part. The mailing 

address of the FAC is Federal Audit 

Clearinghouse, Bureau of the Census, 

1201 E. 10th Street, Jeffersonville, IN 

47132 and the web address is: http:// 

harvester.census.gov/sac/. Any future 

updates to the location of the FAC may 

be found at the OMB Web site. 

Federal award has the meaning, 

depending on the context, in either 

paragraph (1) or (2) of this definition: 

(1)(i) The Federal financial assistance 

that a non-Federal entity receives 

directly from a Federal awarding agency 

or indirectly from a pass-through entity, 

as described in § 75.101; or 

(ii) The cost-reimbursement contract 

under the Federal Acquisition 

Regulations that a non-Federal entity 

receives directly from a Federal 

awarding agency or indirectly from a 

pass-through entity, as described in 

§ 75.101. 

(2) The instrument setting forth the 

terms and conditions. The instrument is 

the grant agreement, cooperative 

agreement, other agreement for 

assistance covered in paragraph (2) of 

Federal financial assistance, or the costreimbursement contract awarded under 

the Federal Acquisition Regulations. 

(3) Federal award does not include 

other contracts that a Federal agency 

uses to buy goods or services from a 

contractor or a contract to operate 

Federal Government owned, contractor 

operated facilities (GOCOs). 

(4) See also definitions of Federal 

financial assistance, grant agreement, 

and cooperative agreement. 

Federal award date means the date 

when the Federal award is signed by the 

authorized official of the Federal 

awarding agency. 

Federal awarding agency means the 

Federal agency that provides a Federal 

award directly to a non-Federal entity. 

Federal financial assistance: 

(1) For grants and cooperative 

agreements, Federal financial assistance 

means assistance that non-Federal 

entities receive or administer in the 

form of: 

(1) Grants; 

(ii) Cooperative agreements; 

(iii) Non-cash contributions or 

donations of property (including 

donated surplus property); 

(iv) Direct appropriations; 

(v) Food commodities; and 

(vi) Other financial assistance (except 

assistance listed in paragraph (b) of this 

section). 

(2) For Subpart F of this part, Federal 

financial assistance also includes 

assistance that non-Federal entities 

receive or administer in the form of: 

(i) Loans; 

(ii) Loan Guarantees; 

(iii) Interest subsidies; and 

(iv) Insurance. 

(c) Federal financial assistance does 

not include amounts received as 

reimbursement for services rendered to 

individuals as described in § 75.502(h) 

and (i). 

Federal interest means, for purposes 

of § 75.343 or when used in connection 

with the acquisition or improvement of 

real property, equipment, or supplies 

under a Federal award, the dollar 

amount that is the product of the: 

(1) Federal share of total project costs; 

and 

(2) Current fair market value of the 

property, improvements, or both, to the 

extent the costs of acquiring or 

improving the property were included 

as project costs. 

Federal program means: 

(1) All Federal awards which are 

assigned a single number in the CFDA. 

(2) When no CFDA number is 

assigned, all Federal awards to nonFederal entities from the same agency 

made for the same purpose must be 

combined and considered one program. 

(3) Notwithstanding paragraphs (1) 

and (2) of this definition, a cluster of 

programs. The types of clusters of 

programs are: 

(i) Research and development (R&D); 

(ii) Student financial aid (SFA); and 

(iii) ‘‘Other clusters,’’ as described in 

the definition of Cluster of Programs 

Federal share means the portion of 

total project costs that are paid by 

Federal funds. 

Final cost objective means a cost 

objective which has allocated to it both 

direct and indirect costs and, in the 

non-Federal entity’s accumulation 

system, is one of the final accumulation 

points, such as a particular award, 

internal project, or other direct activity 

of a non-Federal entity. See also Cost 

objective and Intermediate cost 

objective. 


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Fixed amount awards means a type of 

grant agreement under which the 

Federal awarding agency or passthrough entity provides a specific level 

of support without regard to actual costs 

incurred under the Federal award. This 

type of Federal award reduces some of 

the administrative burden and recordkeeping requirements for both the nonFederal entity and Federal awarding 

agency or pass-through entity. 

Accountability is based primarily on 

performance and results. See 

§§ 75.201(b) and 75.353. 

Foreign organization means an entity 

that is: 

(1) A public or private organization 

located in a country other than the 

United States and its territories that is 

subject to the laws of the country in 

which it is located, irrespective of the 

citizenship of project staff or place of 

performance; 

(2) A private nongovernmental 

organization located in a country other 

than the United States that solicits and 

receives cash contributions from the 

general public; 

(3) A charitable organization located 

in a country other than the United 

States that is nonprofit and tax exempt 

under the laws of its country of 

domicile and operation, and is not a 

university, college, accredited degreegranting institution of education, private 

foundation, hospital, organization 

engaged exclusively in research or 

scientific activities, church, synagogue, 

mosque or other similar entities 

organized primarily for religious 

purposes; or 

(4) An organization located in a 

country other than the United States not 

recognized as a Foreign Public Entity. 

Foreign public entity means: 

(1) A foreign government or foreign 

governmental entity; 

(2) A public international 

organization, which is an organization 

entitled to enjoy privileges, exemptions, 

and immunities as an international 

organization under the International 

Organizations Immunities Act (22 

U.S.C. 288–288f); 

(3) An entity owned (in whole or in 

part) or controlled by a foreign 

government; or 

(4) Any other entity consisting wholly 

or partially of one or more foreign 

governments or foreign governmental 

entities. 

General purpose equipment means 

equipment which is not limited to 

research, medical, scientific or other 

technical activities. Examples include 

office equipment and furnishings, 

modular offices, telephone networks, 

information technology equipment and 

systems, air conditioning equipment, 

reproduction and printing equipment, 

and motor vehicles. See also Equipment 

and Special Purpose Equipment. 

GAAP has the meaning specified in 

accounting standards issued by the 

Government Accounting Standards 

Board (GASB) and the Financial 

Accounting Standards Board (FASB). 

GAGAS, also known as the Yellow 

Book, means generally accepted 

government auditing standards issued 

by the Comptroller General of the 

United States, which are applicable to 

financial audits. 

Grant agreement means a legal 

instrument of financial assistance 

between a Federal awarding agency or 

pass-through entity and a non-Federal 

entity that, consistent with 31 U.S.C. 

6302, 6304: 

(1) Is used to enter into a relationship 

the principal purpose of which is to 

transfer anything of value from the 

Federal awarding agency or passthrough entity to the non-Federal entity 

to carry out a public purpose authorized 

by a law of the United States (see 31 

U.S.C. 6101(3)); and not to acquire 

property or services for the Federal 

awarding agency or pass-through 

entity’s direct benefit or use; 

(2) Is distinguished from a cooperative 

agreement in that it does not provide for 

substantial involvement between the 

Federal awarding agency or passthrough entity and the non-Federal 

entity in carrying out the activity 

contemplated by the Federal award. 

(3) Does not include an agreement 

that provides only: 

(i) Direct United States Government 

cash assistance to an individual; 

(ii) A subsidy; 

(iii) A loan; 

(iv) A loan guarantee; or 

(v) Insurance. 

Grantee (see Recipient) 

HHS awarding agency means any 

organization component of HHS that is 

authorized to make and administer 

awards. 

Hospital means a facility licensed as 

a hospital under the law of any state or 

a facility operated as a hospital by the 

United States, a state, or a subdivision 

of a state. 

Improper payment: 

(1) Means any payment that should 

not have been made or that was made 

in an incorrect amount (including 

overpayments and underpayments) 

under statutory, contractual, 

administrative, or other legally 

applicable requirements; and 

(b) Includes any payment to an 

ineligible party, any payment for an 

ineligible good or service, any duplicate 

payment, any payment for a good or 

service not received (except for such 

payments where authorized by law), any 

payment that does not account for credit 

for applicable discounts, and any 

payment where insufficient or lack of 

documentation prevents a reviewer from 

discerning whether a payment was 

proper. 

Indian tribe means any Indian tribe, 

band, nation, or other organized group 

or community, including any Alaska 

Native village or regional or village 

corporation as defined in or established 

pursuant to the Alaska Native Claims 

Settlement Act (43 U.S.C. Chapter 33), 

which is recognized as eligible for the 

special programs and services provided 

by the United States to Indians because 

of their status as Indians (25 U.S.C. 

450b(e)). See annually published Bureau 

of Indian Affairs list of Indian Entities 

Recognized and Eligible to Receive 

Services. 

Indirect (Facilities and 

Administration or F&A) costs means 

costs incurred for a common or joint 

purpose benefitting more than one cost 

objective, and not readily assignable to 

the cost objectives specifically 

benefitted, without effort 

disproportionate to the results achieved. 

To facilitate equitable distribution of 

indirect expenses to the cost objectives 

served, it may be necessary to establish 

a number of pools of indirect (F&A) 

costs. Indirect (F&A) cost pools must be 

distributed to benefitted cost objectives 

on bases that will produce an equitable 

result in consideration of relative 

benefits derived. 

Indirect cost rate proposal means the 

documentation prepared by a nonFederal entity to substantiate its request 

for the establishment of an indirect cost 

rate as described in Appendix III 

through Appendix VII, and Appendix IX 

of this part. 

Information technology systems 

means computing devices, ancillary 

equipment, software, firmware, and 

similar procedures, services (including 

support services), and related resources. 

See also Computing devices and 

Equipment. 

Institution of Higher Education (IHE) 

is defined at 20 U.S.C. 1001. 

Intangible property means property 

having no physical existence, such as 

trademarks, copyrights, patents and 

patent applications and property, such 

as loans, notes and other debt 

instruments, lease agreements, stock 

and other instruments of property 

ownership (whether the property is 

tangible or intangible). 

Intermediate cost objective means a 

cost objective that is used to accumulate 

indirect costs or service center costs that 

are subsequently allocated to one or 

more indirect cost pools or final cost 


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objectives. See also Cost objective and 

Final cost objective. 

Internal controls means a process, 

implemented by a non-Federal entity, 

designed to provide reasonable 

assurance regarding the achievement of 

objectives in the following categories: 

(1) Effectiveness and efficiency of 

operations; 

(2) Reliability of reporting for internal 

and external use; and 

(3) Compliance with applicable laws 

and regulations. 

Internal control over compliance 

requirements for Federal awards means 

a process implemented by a non-Federal 

entity designed to provide reasonable 

assurance regarding the achievement of 

the following objectives for Federal 

awards: 

(1) Transactions are properly recorded 

and accounted for, in order to: 

(i) Permit the preparation of reliable 

financial statements and Federal 

reports; 

(ii) Maintain accountability over 

assets; and 

(iii) Demonstrate compliance with 

Federal statutes, regulations, and the 

terms and conditions of the Federal 

award; 

(2) Transactions are executed in 

compliance with: 

(i) Federal statutes, regulations, and 

the terms and conditions of the Federal 

award that could have a direct and 

material effect on a Federal program; 

and 

(ii) Any other Federal statutes and 

regulations that are identified in the 

Compliance Supplement; and 

(3) Funds, property, and other assets 

are safeguarded against loss from 

unauthorized use or disposition. 

Loan means a Federal loan or loan 

guarantee received or administered by a 

non-Federal entity, except as used in the 

definition of Program income. 

(1) The term ‘‘direct loan’’ means a 

disbursement of funds by the Federal 

Government to a non-Federal borrower 

under a contract that requires the 

repayment of such funds with or 

without interest. The term includes the 

purchase of, or participation in, a loan 

made by another lender and financing 

arrangements that defer payment for 

more than 90 days, including the sale of 

a Federal Government asset on credit 

terms. The term does not include the 

acquisition of a federally guaranteed 

loan in satisfaction of default claims or 

the price support loans of the 

Commodity Credit Corporation. 

(2) The term ‘‘direct loan obligation’’ 

means a binding agreement by a Federal 

awarding agency to make a direct loan 

when specified conditions are fulfilled 

by the borrower. 

(3) The term ‘‘loan guarantee’’ means 

any Federal Government guarantee, 

insurance, or other pledge with respect 

to the payment of all or a part of the 

principal or interest on any debt 

obligation of a non-Federal borrower to 

a non-Federal lender, but does not 

include the insurance of deposits, 

shares, or other withdrawable accounts 

in financial institutions. 

(4) The term ‘‘loan guarantee 

commitment’’ means a binding 

agreement by a Federal awarding agency 

to make a loan guarantee when specified 

conditions are fulfilled by the borrower, 

the lender, or any other party to the 

guarantee agreement. 

Local government means any unit of 

government within a state, including a: 

(1) County; 

(2) Borough; 

(3) Municipality; 

(4) City; 

(5) Town; 

(6) Township; 

(7) Parish; 

(8) Local public authority, including 

any public housing agency under the 

United States Housing Act of 1937; 

(9) Special district; 

(10) School district; 

(11) Intrastate district; 

(12) Council of governments, whether 

or not incorporated as a nonprofit 

corporation under state law; and 

(13) Any other agency or 

instrumentality of a multi-, regional, or 

intra-state or local government. 

Major program means a Federal 

program determined by the auditor to be 

a major program in accordance with 

§ 75.518 or a program identified as a 

major program by a Federal awarding 

agency or pass-through entity in 

accordance with § 75.503(e). 

Management decision means the 

evaluation by the Federal awarding 

agency or pass-through entity of the 

audit findings and corrective action 

plan and the issuance of a written 

decision to the auditee as to what 

corrective action is necessary. 

Micro-purchase means a purchase of 

supplies or services using simplified 

acquisition procedures, the aggregate 

amount of which does not exceed the 

micro-purchase threshold. Micropurchase procedures comprise a subset 

of a non-Federal entity’s small purchase 

procedures. The non-Federal entity uses 

such procedures in order to expedite the 

completion of its lowest-dollar small 

purchase transactions and minimize the 

associated administrative burden and 

cost. The micro-purchase threshold is 

set by the Federal Acquisition 

Regulation at 48 CFR Subpart 2.1 

(Definitions). It is $3,000 except as 

otherwise discussed in Subpart 2.1 of 

that regulation, but this threshold is 

periodically adjusted for inflation. 

Modified Total Direct Cost (MTDC) 

means all direct salaries and wages, 

applicable fringe benefits, materials and 

supplies, services, travel, and up to the 

first $25,000 of each subaward 

(regardless of the period of performance 

of the subawards under the award). 

MTDC excludes equipment, capital 

expenditures, charges for patient care, 

rental costs, tuition remission, 

scholarships and fellowships, 

participant support costs and the 

portion of each subaward in excess of 

$25,000. Other items may only be 

excluded when necessary to avoid a 

serious inequity in the distribution of 

indirect costs, and with the approval of 

the cognizant agency for indirect costs. 

Non-Federal entity means a state, 

local government, Indian tribe, 

institution of higher education (IHE), or 

nonprofit organization that carries out a 

Federal award as a recipient or 

subrecipient. 

Nonprofit organization means any 

corporation, trust, association, 

cooperative, or other organization, not 

including IHEs, that: 

(1) Is operated primarily for scientific, 

educational, service, charitable, or 

similar purposes in the public interest; 

(2) Is not organized primarily for 

profit; and 

(3) Uses net proceeds to maintain, 

improve, or expand the operations of 

the organization. 

Obligations means orders placed for 

property and services, contracts and 

subawards made, and similar 

transactions during a given period that 

require payment by the non-Federal 

entity during the same or a future 

period. 

Office of Management and Budget 

(OMB) means the Executive Office of 

the President, Office of Management 

and Budget. 

Oversight agency for audit means the 

Federal awarding agency that provides 

the predominant amount of funding 

directly to a non-Federal entity not 

assigned a cognizant agency for audit. 

When there is no direct funding, the 

Federal awarding agency which is the 

predominant source of pass-through 

funding must assume the oversight 

responsibilities. The duties of the 

oversight agency for audit and the 

process for any reassignments are 

described in § 75.513(b). 

Participant support costs means direct 

costs for items such as stipends or 

subsistence allowances, travel 

allowances, and registration fees paid to 

or on behalf of participants or trainees 

(but not employees) in connection with 

conferences, or training projects. 


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Pass-through entity means a nonFederal entity that provides a subaward 

to a subrecipient to carry out part of a 

Federal program. 

Performance goal means a target level 

of performance expressed as a tangible, 

measurable objective, against which 

actual achievement can be compared, 

including a goal expressed as a 

quantitative standard, value, or rate. In 

some instances (e.g., discretionary 

research awards), this may be limited to 

the requirement to submit technical 

performance reports (to be evaluated in 

accordance with agency policy). 

Period of performance means the time 

during which the non-Federal entity 

may incur new obligations to carry out 

the work authorized under the Federal 

award. The Federal awarding agency or 

pass-through entity must include start 

and end dates of the period of 

performance in the Federal award (see 

§§ 75.210(a)(5) and 75.352(a)(1)(v)). 

Personal property means property of 

any kind except real property. It may be 

tangible, having physical existence, or 

intangible, such as copyrights, patents, 

or securities. 

Personally Identifiable Information 

(PII) means information that can be used 

to distinguish or trace an individual’s 

identity, either alone or when combined 

with other personal or identifying 

information that is linked or linkable to 

a specific individual. Some information 

that is considered to be PII is available 

in public sources such as telephone 

books, public Web sites, and university 

listings. This type of information is 

considered to be Public PII and 

includes, for example, first and last 

name, address, work telephone number, 

email address, home telephone number, 

and general educational credentials. The 

definition of PII is not anchored to any 

single category of information or 

technology. Rather, it requires a case-bycase assessment of the specific risk that 

an individual can be identified. Non-PII 

can become PII whenever additional 

information is made publicly available, 

in any medium and from any source, 

that, when combined with other 

available information, could be used to 

identify an individual. 

Principal Investigator/Program 

Director (PI/PD) means the individual 

(s) designated by the recipient to direct 

the project or program being supported 

by the grant. The PI/PD is responsible 

and accountable to officials of the 

recipient organization for the proper 

conduct of the project, program, or 

activity. 

Prior approval means written 

approval by an authorized HHS official 

evidencing prior consent before a 

recipient undertakes certain activities or 

incurs specific costs. 

Program income means gross income 

earned by the non-Federal entity that is 

directly generated by a supported 

activity or earned as a result of the 

Federal award during the period of 

performance except as provided in 

§ 75.307(f). (See Period of performance.) 

Program income includes but is not 

limited to income from fees for services 

performed, the use or rental or real or 

personal property acquired under 

Federal awards, the sale of commodities 

or items fabricated under a Federal 

award, license fees and royalties on 

patents and copyrights, and principal 

and interest on loans made with Federal 

award funds. Interest earned on 

advances of Federal funds is not 

program income. Except as otherwise 

provided in Federal statutes, 

regulations, or the terms and conditions 

of the Federal award, program income 

does not include rebates, credits, 

discounts, and interest earned on any of 

them. See also § 75.307, § 75.407 and 35 

U.S.C. 200–212 (applies to inventions 

made under Federal awards). 

Project costs means total allowable 

costs incurred under a Federal award 

and all required cost sharing and 

voluntary committed cost sharing, 

including third-party contributions. 

Project period (see Period of 

performance). 

Property means real property or 

personal property. 

Protected Personally Identifiable 

Information (Protected PII) Protected PII 

means an individual’s first name or first 

initial and last name in combination 

with any one or more of types of 

information, including, but not limited 

to, social security number, passport 

number, credit card numbers, 

clearances, bank numbers, biometrics, 

date and place of birth, mother’s maiden 

name, criminal, medical and financial 

records, educational transcripts. This 

does not include PII that is required by 

law to be disclosed. (See also Personally 

Identifiable Information (PII)). 

Questioned cost means a cost that is 

questioned by the auditor because of an 

audit finding: 

(1) Which resulted from a violation or 

possible violation of a statute, 

regulation, or the terms and conditions 

of a Federal award, including for funds 

used to match Federal funds; 

(2) Where the costs, at the time of the 

audit, are not supported by adequate 

documentation; or 

(3) Where the costs incurred appear 

unreasonable and do not reflect the 

actions a prudent person would take in 

the circumstances. 

Real property means land, including 

land improvements, structures and 

appurtenances thereto, but excludes 

moveable machinery and equipment. 

Recipient means an entity, usually but 

not limited to non-Federal entities, that 

receives a Federal award directly from 

a Federal awarding agency to carry out 

an activity under a Federal program. 

The term recipient does not include 

subrecipients. See also Non-Federal 

entity. 

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. 

Research and Development (R&D) 

means all research activities, both basic 

and applied, and all development 

activities that are performed by HHS 

award recipients. 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. 

Simplified acquisition threshold 

means the dollar amount below which 

a non-Federal entity may purchase 

property or services using small 

purchase methods. Non-Federal entities 

adopt small purchase procedures in 

order to expedite the purchase of items 

costing less than the simplified 

acquisition threshold. The simplified 

acquisition threshold is set by the 

Federal Acquisition Regulation at 48 

CFR Subpart 2.1 and in accordance with 

41 U.S.C. 1908. See also Micro-purchase 

Special purpose equipment means 

equipment which is used only for 

research, medical, scientific, or other 

technical activities. Examples of special 

purpose equipment include 

microscopes, x-ray machines, surgical 

instruments, and spectrometers. See 

also Equipment and General purpose 

equipment. 

State means any state of the United 

States, the District of Columbia, the 

Commonwealth of Puerto Rico, the U.S. 

Virgin Islands, Guam, American Samoa, 

the Commonwealth of the Northern 

Mariana Islands, and any agency or 

instrumentality thereof exclusive of 

local governments. 

Student Financial Aid (SFA) means 

Federal awards under those programs of 

general student assistance, such as those 

authorized by Title IV of the Higher 

Education Act of 1965, as amended, (20 


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U.S.C. 1070–1099d), which are 

administered by the U.S. Department of 

Education, and similar programs 

provided by other Federal agencies. It 

does not include Federal awards under 

programs that provide fellowships or 

similar Federal awards to students on a 

competitive basis, or for specified 

studies or research. 

Subaward means an award provided 

by a pass-through entity to a 

subrecipient for the subrecipient to 

carry out part of a Federal award 

received by the pass-through entity. It 

does not include payments to a 

contractor or payments to an individual 

that is a beneficiary of a Federal 

program. A subaward may be provided 

through any form of legal agreement, 

including an agreement that the passthrough entity considers a contract. 

Subrecipient means a non-Federal 

entity that receives a subaward from a 

pass-through entity to carry out part of 

a Federal program; but does not include 

an individual that is a beneficiary of 

such program. A subrecipient may also 

be a recipient of other Federal awards 

directly from a Federal awarding 

agency. 

Supplies means all tangible personal 

property other than those described in 

Equipment. A computing device is a 

supply if the acquisition cost is less 

than the lesser of the capitalization level 

established by the non-Federal entity for 

financial statement purposes or $5,000, 

regardless of the length of its useful life. 

See also Computing devices and 

Equipment. 

Surplus property (see Excess property) 

Suspension of award activities means 

an action by the HHS awarding agency 

requiring the recipient to cease all 

activities on the award pending 

corrective action by the recipient. It is 

a separate action from suspension under 

HHS regulations (2 CFR part 376) 

implementing Executive Orders 12549 

and 12689. 

Termination means the ending of a 

Federal award, in whole or in part at 

any time prior to the planned end of 

period of performance. 

Third-party in-kind contributions 

means the value of non-cash 

contributions (i.e., property or services) 

that: 

(1) Benefit a federally assisted project 

or program; and 

(2) Are contributed by non-Federal 

third parties, without charge, to a nonFederal entity under a Federal award. 

Total Costs (see § 75.402). 

Unliquidated obligations means, for 

financial reports prepared on a cash 

basis, obligations incurred by the nonFederal entity that have not been paid 

(liquidated). For reports prepared on an 

accrual expenditure basis, these are 

obligations incurred by the non-Federal 

entity for which an expenditure has not 

been recorded. 

Unobligated balance means the 

amount of funds authorized under a 

Federal award that the non-Federal 

entity has not obligated. The amount is 

computed by subtracting the cumulative 

amount of the non-Federal entity’s 

unliquidated obligations and 

expenditures of funds under the Federal 

award from the cumulative amount of 

the funds that the Federal awarding 

agency or pass-through entity 

authorized the non-Federal entity to 

obligate. 

Voluntary committed cost sharing 

means cost sharing specifically pledged 

on a voluntary basis in the proposal’s 

budget or the Federal award on the part 

of the non-Federal entity and that 

becomes a binding requirement of 

Federal award. 

Subpart B—General Provisions 

§ 75.100 Purpose. 

(a)(1) This part establishes uniform 

administrative requirements, cost 

principles, and audit requirements for 

Federal awards to non-Federal entities, 

as described in § 75.101. HHS awarding 

agencies must not impose additional or 

inconsistent requirements, except as 

provided in §§ 75.102 and 75.210, or 

unless specifically required by Federal 

statute, regulation, or Executive Order. 

(2) This part provides the basis for a 

systematic and periodic collection and 

uniform submission by Federal agencies 

of information on all Federal financial 

assistance programs to the Office of 

Management and Budget (OMB). It also 

establishes Federal policies related to 

the delivery of this information to the 

public, including through the use of 

electronic media. It prescribes the 

manner in which General Services 

Administration (GSA), OMB, and 

Federal agencies that administer Federal 

financial assistance programs are to 

carry out their statutory responsibilities 

under the Federal Program Information 

Act (31 U.S.C. 6101–6106). 

(b) Administrative requirements. 

Subparts B through D of this part set 

forth the uniform administrative 

requirements for grant and cooperative 

agreements, including the requirements 

for HHS awarding agency management 

of Federal grant programs before the 

Federal award has been made, and the 

requirements HHS awarding agencies 

may impose on non-Federal entities in 

the Federal award. 

(c) Cost Principles. Subpart E of this 

part establishes principles for 

determining the allowable costs 

incurred by non-Federal entities under 

Federal awards. The principles are for 

the purpose of cost determination and 

are not intended to identify the 

circumstances or dictate the extent of 

Federal Government participation in the 

financing of a particular program or 

project. The principles are designed to 

provide that Federal awards bear their 

fair share of cost recognized under these 

principles except where restricted or 

prohibited by statute. 

(d) Single Audit Requirements and 

Audit Follow-up. Subpart F of this part 

is issued pursuant to the Single Audit 

Act Amendments of 1996, (31 U.S.C. 

7501–7507). It sets forth standards for 

obtaining consistency and uniformity 

among Federal agencies for the audit of 

non-Federal entities expending Federal 

awards. These provisions also provide 

the policies and procedures for HHS 

awarding agencies and pass-through 

entities when using the results of these 

audits. 

(e) For OMB guidance to Federal 

awarding agencies on Challenges and 

Prizes, please see M–10–11 Guidance on 

the Use of Challenges and Prizes to 

Promote Open Government, issued 

March 8, 2010, or its successor. 

§ 75.101 Applicability. 

(a) General applicability to Federal 

agencies. The requirements established 

in this part apply to Federal agencies 

that make Federal awards to nonFederal entities. These requirements are 

applicable to all costs related to Federal 

awards. 

(b)(1) Applicability to different types 

of Federal awards. The following table 

describes what portions of this part 

apply to which types of Federal awards. 

The terms and conditions of Federalawards (including this part) flow down 

to subawards to subrecipients unless a 

particular section of this part or the 

terms and conditions of the Federal 

award specifically indicate otherwise. 

This means that non-Federal entities 

must comply with requirements in this 

part regardless of whether the nonFederal entity is a recipient or 

subrecipient of a Federal award. Passthrough entities must comply with the 

requirements described in Subpart D of 

this part, §§ 75.351 through 75.353, but 

not any requirements in this part 

directed towards Federal awarding 

agencies unless the requirements of this 

part or the terms and conditions of the 

Federal award indicate otherwise. 

This table must be read along with the 

other provisions in this section 


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The following portions of the 

Part: 

Are applicable to the following types of Federal Awards 

(except as noted in paragraphs (d) and (e)) below: 

Are NOT applicable to the following types of Federal 

Awards: 

Subpart A—Acronyms and 

Definitions.

—All .................................................................................

Subpart B—General Provisions, except for 

§§ 75.111, 75.112. and 

75.113..

—All .................................................................................

Sections 75.111, 75.112, 

and 75.113.

—Grant agreements and cooperative agreements ........ —Agreements for: loans, loan guarantees, interest subsidies and insurance 

—Cost-reimbursement contracts awarded under the 

Federal Acquisition Regulations and cost-reimbursement and subcontracts under these contracts 

—Fixed-price contracts and subcontracts awarded 

under the Federal Acquisition Regulation whenever 

cost analysis is performed or the contract requires 

the determination or negotiation of costs 

Subparts C–D, except for 

Subrecipient Monitoring 

and Management.

—Grant agreements and cooperative agreements ........ —Agreements for: loans, loan guarantees, interest subsidies and insurance 

—Cost-reimbursement contracts awarded under the 

Federal Acquisition Regulations and cost-reimbursement and subcontracts under these contracts 

—Fixed-price contracts and subcontracts awarded 

under the Federal Acquisition Regulation whenever 

cost analysis is performed or the contract requires 

the determination or negotiation of costs 

Subpart D—Post Federal 

Award Requirements, 

Subrecipient Monitoring 

and Management.

—All .................................................................................

Subpart E—Cost Principles —Grant agreements and cooperative agreements, except those providing food commodities.

—Cost-reimbursement contracts awarded under the 

Federal Acquisition Regulations and cost-reimbursement and subcontracts under these contracts in accordance with the FAR.

—Fixed-price contracts and subcontracts awarded 

under the Federal Acquisition Regulation whenever 

cost analysis is performed or the contract requires 

the determination or negotiation of costs.

—Grant agreements and cooperative agreements providing food commodities 

—Fixed amount awards 

—Agreements for: loans, loan guarantees, interest subsidies and insurance 

—Federal awards to hospitals (See Appendix IX) 

Subpart F—Audit Requirements.—All .................................................................................

(2) Federal award of costreimbursement contract under the FAR 

to a non-Federal entity. When a nonFederal entity is awarded a costreimbursement contract, only Subpart D 

of this part, §§ 75.351 through 75.353 (in 

addition to any FAR related 

requirements for monitoring Subpart E 

of this part and Subpart F of this part 

are incorporated by reference into the 

contract. However, when the Cost 

Accounting Standards (CAS) are 

applicable to the contract, they take 

precedence over the requirements of 

this part except for Subpart F of this 

part when they are in conflict. In 

addition, costs that are made 

unallowable under 10 U.S.C. 2324(e) 

and 41 U.S.C. 4304(a) as described in 

the FAR subpart 31.2 and subpart 

31.603 are always unallowable. For 

requirements other than those covered 

in Subpart D of this part, §§ 75.351 

through 75.353, Subpart E of this partand Subpart F of this part, the terms of 

the contract and the FAR apply. 

(3) With the exception of Subpart F of 

this part, which is required by the 

Single Audit Act, in any circumstances 

where the provisions of Federal statutes 

or regulations differ from the provisions 

of this part, the provision of the Federal 

statutes or regulations govern. This 

includes, for agreements with Indian 

tribes, the provisions of the Indian SelfDetermination and Education and 

Assistance Act (ISDEAA), as amended, 

25 U.S.C. 450–458ddd–2. 

(c) HHS awarding agencies may apply 

subparts A through E of this part to 

Federal agencies (see § 75.215), forprofit entities, foreign public entities, or 

foreign organizations, except where the 

HHS awarding agency determines that 

the application of these subparts would 

be inconsistent with the international 

obligations of the United States or the 

statutes or regulations of a foreign 

government. 

(d) Except for § 75.202 and §§ 75.351 

through 75.353 of Subpart D of this part, 

the requirements in Subpart C of this 

part, Subpart D of this part, and Subpart 

E of this part do not apply to the 

following programs: 

(1) The block grant awards authorized 

by the Omnibus Budget Reconciliation 

Act of 1981 (including Community 

Services, except to the extent that the 

cost and accounting standards of OMB 

apply to subrecipients of Community 

Services Block Grant funds pursuant to 

42 U.S.C. 9916(a)(1)(B); Preventive 

Health and Health Services; Alcohol, 

Drug Abuse, and Mental Health 

Services; Maternal and Child Health 

Services; Social Services; Low-Income 

Home Energy Assistance; States’ 

Program of Community Development 

Block Grant Awards for Small Cities; 

and Elementary and Secondary 

Education other than programs 

administered by the Secretary of 

Education under title V, subtitle D, 

chapter 2, section 583—the Secretary’s 

discretionary award program) and both 

the Alcohol and Drug Abuse Treatment 

and Rehabilitation Block Grant Award 

(42 U.S.C. 300x–21 to 300x–35 and 42 

U.S.C. 300x–51 to 300x64) and the 


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Mental Health Service for the Homeless 

Block Grant Award (42 U.S.C. 300x to 

300x–9) under the Public Health Service 

Act. 

(2) Federal awards to local education 

agencies under 20 U.S.C. 7702–7703b, 

(portions of the Impact Aid program); 

(3) Payments under the Department of 

Veterans Affairs’ State Home Per Diem 

Program (38 U.S.C. 1741); and 

(4) Federal awards authorized under 

the Child Care and Development Block 

Grant Act of 1990, as amended: 

(i) Child Care and Development Block 

Grant (42 U.S.C. 9858) 

(ii) Child Care Mandatory and 

Matching Funds of the Child Care and 

Development Fund (42 U.S.C. 9858) 

(e) Except for § 75.202, the guidance 

in Subpart C of this part does not apply 

to the following programs: 

(1) Federal awards to carry out the 

following programs of the Social 

Security Act: 

(i) Temporary Assistance for Needy 

Families (title IV–A of the Social 

Security Act, 42 U.S.C. 601–619); 

(ii) Child Support Enforcement and 

Establishment of Paternity (title IV–D of 

the Social Security Act, 42 U.S.C. 651– 

669b); 

(iii) Foster Care and Adoption 

Assistance (title IV–E of the Act, 42 

U.S.C. 670–679c); 

(iv) Aid to the Aged, Blind, and 

Disabled (titles I, X, XIV, and XVI– 

AABD of the Act, as amended); 

(v) Medical Assistance (Medicaid) 

(title XIX of the Act, 42 U.S.C. 1396– 

1396w–5) not including the State 

Medicaid Fraud Control program 

authorized by § 1903(a)(6)(B) of the 

Social Security Act (42 U.S.C. 

1396b(a)(6)(B)); and 

(vi) Children’s Health Insurance 

Program (title XXI of the Act, 42 U.S.C. 

1397aa–1397mm). 

(2) A Federal award for an 

experimental, pilot, or demonstration 

project that is also supported by a 

Federal award listed in paragraph (e)(1) 

of this section; 

(3) Federal awards under subsection 

412(e) of the Immigration and 

Nationality Act and subsection 501(a) of 

the Refugee Education Assistance Act of 

1980 (Pub. L. 96–422, 94 Stat. 1809), for 

cash assistance, medical assistance, and 

supplemental security income benefits 

to refugees and entrants and the 

administrative costs of providing the 

assistance and benefits (8 U.S.C. 

1522(e)); 

(4) Entitlement awards under the 

following programs of The National 

School Lunch Act: 

(i) National School Lunch Program 

(section 4 of the Act, 42 U.S.C. 1753), 

(ii) Commodity Assistance (section 6 

of the Act, 42 U.S.C. 1755), 

(iii) Special Meal Assistance (section 

11 of the Act, 42 U.S.C. 1759a), 

(iv) Summer Food Service Program for 

Children (section 13 of the Act, 42 

U.S.C. 1761), and 

(v) Child and Adult Care Food 

Program (section 17 of the Act, 42 

U.S.C. 1766). 

(5) Entitlement awards under the 

following programs of The Child 

Nutrition Act of 1966: 

(i) Special Milk Program (section 3 of 

the Act, 42 U.S.C. 1772), 

(ii) School Breakfast Program (section 

4 of the Act, 42 U.S.C. 1773), and 

(iii) State Administrative Expenses 

(section 7 of the Act, 42 U.S.C. 1776). 

(6) Entitlement awards for State 

Administrative Expenses under The 

Food and Nutrition Act of 2008 (section 

16 of the Act, 7 U.S.C. 2025). 

(7) Non-discretionary Federal awards 

under the following non-entitlement 

programs: 

(i) Special Supplemental Nutrition 

Program for Women, Infants and 

Children (section 17 of the Child 

Nutrition Act of 1966) 42 U.S.C. 1786; 

(ii) The Emergency Food Assistance 

Programs (Emergency Food Assistance 

Act of 1983) 7 U.S.C. 7501 note; and 

(iii) Commodity Supplemental Food 

Program (section 5 of the Agriculture 

and Consumer Protection Act of 1973) 7 

U.S.C. 612c note. 

§ 75.102 Exceptions. 

(a) With the exception of Subpart F of 

this part, OMB may allow exceptions for 

classes of Federal awards or non-Federal 

entities subject to the requirements of 

this part when exceptions are not 

prohibited by statute. However, in the 

interest of maximum uniformity, 

exceptions from the requirements of this 

part will be permitted only in unusual 

circumstances. Exceptions for classes of 

Federal awards or non-Federal entities 

will be published on the OMB Web site 

at www.whitehouse.gov/omb. 

(b) Exceptions on a case-by-case basis 

for individual non-Federal entities may 

be authorized by the HHS awarding 

agency or cognizant agency for indirect 

costs except where otherwise required 

by law or where OMB or other approval 

is expressly required by this part. No 

case-by-case exceptions may be granted 

to the provisions of Subpart F of this 

part. 

(c) The HHS awarding agency may 

apply more restrictive requirements to a 

class of Federal awards or non-Federal 

entities when approved by OMB, or 

when required by Federal statutes or 

regulations, except for the requirements 

in Subpart F of this part. An HHS 

awarding agency may apply less 

restrictive requirements when making 

fixed amount awards as defined in 

Subpart A of this part, except for those 

requirements imposed by statute or in 

Subpart F of this part. 

(d) On a case-by-case basis, OMB will 

approve new strategies for Federal 

awards when proposed by the HHS 

awarding agency in accordance with 

OMB guidance (such as M–13–17) to 

develop additional evidence relevant to 

addressing important policy challenges 

or to promote cost-effectiveness in and 

across Federal programs. Proposals may 

draw on the innovative program designs 

discussed in M–13–17 to expand or 

improve the use of effective practices in 

delivering Federal financial assistance 

while also encouraging innovation in 

service delivery. Proposals submitted to 

OMB in accordance with M–13–17 may 

include requests to waive requirements 

other than those in Subpart F of this 

part. 

§ 75.103 Authorities. 

This part is issued under the 

following authorities. 

(a) Subpart B of this part through 

Subpart D of this part are authorized 

under 31 U.S.C. 503 (the Chief Financial 

Officers Act, Functions of the Deputy 

Director for Management), 31 U.S.C. 

1111 (Improving Economy and 

Efficiency of the United States 

Government), 41 U.S.C. 1101–1131 (the 

Office of Federal Procurement Policy 

Act), Reorganization Plan No. 2 of 1970, 

and Executive Order 11541, the Single 

Audit Act Amendments of 1996, (31 

U.S.C. 7501–7507), as well as The 

Federal Program Information Act 

(Public Law 95–220 and Public Law 98– 

169, as amended, codified at 31 U.S.C. 

6101–6106). 

(b) Subpart E of this part is authorized 

under the Budget and Accounting Act of 

1921, as amended; the Budget and 

Accounting Procedures Act of 1950, as 

amended (31 U.S.C. 1101–1125); the 

Chief Financial Officers Act of 1990 (31 

U.S.C. 503–504); Reorganization Plan 

No. 2 of 1970; and Executive Order No. 

11541. 

(c) Subpart F of this part is authorized 

under the Single Audit Act 

Amendments of 1996, (31 U.S.C. 7501– 

7507). 

§ 75.104 Supersession. 

As described in § 75.110, this part 

supersedes: 

(a) The following OMB guidance 

documents and regulations under Title 

2 of the Code of Federal Regulations: 

(1) A–21, ‘‘Cost Principles for 

Educational Institutions’’ (2 CFR part 

220); 

(2) A–87, ‘‘Cost Principles for State, 

Local and Indian Tribal Governments’’ 


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(2 CFR part 225) and also Federal 

Register notice 51 FR 552 (January 6, 

1986); 

(3) A–89, ‘‘Federal Domestic 

Assistance Program Information’’; 

(4) A–102, ‘‘Grant Awards and 

Cooperative Agreements with State and 

Local Governments’’; 

(5) A–110, ‘‘Uniform Administrative 

Requirements for Awards and Other 

Agreements with Institutions of Higher 

Education, Hospitals, and Other 

Nonprofit Organizations’’ (codified at 2 

CFR 215); 

(6) A–122, ‘‘Cost Principles for NonProfit Organizations’’ (2 CFR part 230); 

(7) A–133, ‘‘Audits of States, Local 

Governments and Non-Profit 

Organizations, and 

(8) Those sections of A–50 related to 

audits performed under Subpart F of 

this part. 

(b) This part also supersedes HHS’ 

regulations at 45 CFR parts 74 and 92. 

§ 75.105 Effect on other issuances. 

For Federal awards subject to this 

part, all administrative requirements, 

program manuals, handbooks and other 

non-regulatory materials that are 

inconsistent with the requirements of 

this part are superseded upon 

implementation of this part by the HHS 

awarding agency, except to the extent 

they are required by statute or 

authorized in accordance with the 

provisions in § 75.102. 

§ 75.106 Agency implementation. 

HHS is implementing the language in 

2 CFR part 200 in these codified 

regulations. 

§ 75.107 OMB responsibilities. 

OMB will review HHS agency 

regulations and implementation of 2 

CFR part 200, and will provide 

interpretations of policy requirements 

and assistance to ensure effective and 

efficient implementation. Any 

exceptions will be subject to approval 

by OMB. Exceptions will only be made 

in particular cases where adequate 

justification is presented. 

§ 75.108 Inquiries. 

Inquiries concerning 2 CFR part 200 

may be directed to the Office of Federal 

Financial Management, Office of 

Management and Budget, in 

Washington, DC. Inquiries concerning 

45 CFR part 75 should be addressed to 

the HHS awarding agency, cognizant 

agency for indirect costs, cognizant or 

oversight agency for audit, or passthrough entity as appropriate. 

§ 75.109 Review date. 

OMB will review 2 CFR part 200 and 

HHS will review 45 Part 75 at least 

every five years after December 26, 

2013. 

§ 75.110 Effective/Applicability date. 

(a) The standards set forth in this part 

which affect administration of Federal 

awards issued by Federal agencies 

become effective December 26, 2014. 

For the procurement standards in 2 CFR 

200.317–200.326, non-Federal entities 

previously subject to OMB Circular A– 

110 may continue to comply with the 

procurement standards in previous 

OMB guidance (superseded by this part 

as described in 2 CFR 200.104) for one 

additional fiscal year after this part goes 

into effect. If an entity chooses to 

remain with the previous procurement 

standards for an additional fiscal year 

before adopting the procurement 

standards in this part, they must 

document this decision in their internal 

procurement policies, in accordance 

with the guidance in Appendix XI to 

this part. 

(b) The standards set forth in Subpart 

F of this part and any other standards 

which apply directly to HHS agencies 

will be effective December 26, 2013, and 

will apply to audits of fiscal years 

beginning on or after December 26, 

2014. 

§ 75.111 English language. 

(a) All Federal financial assistance 

announcements and Federal award 

information must be in the English 

language. Applications must be 

submitted in the English language and 

must be in the terms of U.S. dollars. If 

the HHS awarding agency receives 

applications in another currency, the 

HHS awarding agency will evaluate the 

application by converting the foreign 

currency to United States currency 

using the date specified for receipt of 

the application. 

(b) Non-Federal entities may translate 

the Federal award and other documents 

into another language. In the event of 

inconsistency between any terms and 

conditions of the Federal award and any 

translation into another language, the 

English language meaning will control. 

Where a significant portion of the nonFederal entity’s employees who are 

working on the Federal award are not 

fluent in English, the non-Federal entity 

must provide the Federal award in 

English and the language(s) with which 

employees are more familiar. 

§ 75.112 Conflict of interest. 

(a) HHS awarding agencies must 

establish conflict of interest policies for 

Federal awards. The non-Federal entity 

must disclose in writing any potential 

conflict of interest to the respective HHS 

awarding agency or pass-through entity 

in accordance with applicable HHS 

awarding agency’s policy. As a general 

matter, HHS awarding agencies’ conflict 

of interest policies must: 

(1) Address conditions under which 

outside activities, relationships, or 

financial interests are proper or 

improper; 

(2) Provide for advance notification of 

outside activities, relationships, or 

financial interests, and a process of 

review as appropriate; and 

(3) Outline how financial conflicts of 

interest may be addressed. 

(b) Agencies with Public Health 

Service (PHS) funded research will 

ensure that any conflict of interest 

policies are aligned with the 

requirements of 42 CFR part 50, subpart 

F. 

§ 75.113 Mandatory disclosures. 

The non-Federal entity or applicant 

for a Federal award must disclose, in a 

timely manner, in writing to the HHS 

awarding agency or pass-through entity 

all violations of Federal criminal law 

involving fraud, bribery, or gratuity 

violations potentially affecting the 

Federal award. Failure to make required 

disclosures can result in any of the 

remedies described in § 75.371, 

including suspension or debarment. 

(See also 2 CFR parts 180 and 376, and 

31 U.S.C. 3321). 

Subpart C—Pre-Federal Award 

Requirements and Contents of Federal 

Awards 

§ 75.200 Purpose. 

(a) Sections 75.201 through 75.208 

prescribe instructions and other preaward matters to be used in the 

announcement and application process. 

(b) Use of §§ 75.203, 75.204, 75.205, 

and 75.207, is required only for 

competitive Federal awards, but may 

also be used by the HHS awarding 

agency for non-competitive awards 

where appropriate or where required by 

Federal statute. 

§ 75.201 Use of grant agreements 

(including fixed amount awards), 

cooperative agreements, and contracts. 

(a) The HHS awarding agency or passthrough entity must decide on the 

appropriate instrument for the Federal 

award (i.e., grant agreement, cooperative 

agreement, or contract) in accordance 

with the Federal Grant and Cooperative 

Agreement Act (31 U.S.C. 6301–08). 

(b) Fixed Amount Awards. In addition 

to the options described in paragraph (a) 

of this section, HHS awarding agencies, 

or pass-through entities as permitted in 

§ 75.353, may use fixed amount awards 

(see § 75.2 Fixed amount awards) to 

which the following conditions apply: 


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(1) The Federal award amount is 

negotiated using the cost principles (or 

other pricing information) as a guide. 

The HHS awarding agency or passthrough entity may use fixed amount 

awards if the project scope is specific 

and if adequate cost, historical, or unit 

pricing data is available to establish a 

fixed amount award based on a 

reasonable estimate of actual cost. 

Payments are based on meeting specific 

requirements of the Federal award. 

Accountability is based on performance 

and results. Except in the case of 

termination before completion of the 

Federal award, there is no governmental 

review of the actual costs incurred by 

the non-Federal entity in performance of 

the award. Some of the ways in which 

the Federal award may be paid include, 

but are not limited to: 

(i) 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 Federal 

award; 

(ii) On a unit price basis, for a defined 

unit or units, at a defined price or 

prices, agreed to in advance of 

performance of the Federal award and 

set forth in the Federal award; or, 

(iii) In one payment at Federal award 

completion. 

(2) A fixed amount award cannot be 

used in programs which require 

mandatory cost sharing or match. 

(3) The non-Federal entity must 

certify in writing to the HHS awarding 

agency or pass-through entity at the end 

of the Federal award that the project or 

activity was completed or the level of 

effort was expended. If the required 

level of activity or effort was not carried 

out, the amount of the Federal award 

must be adjusted. 

(4) Periodic reports may be 

established for each Federal award. 

(5) Changes in principal investigator, 

project leader, project partner, or scope 

of effort must receive the prior written 

approval of the HHS awarding agency or 

pass-through entity. 

§ 75.202 Requirement to provide public 

notice of Federal financial assistance 

programs. 

(a) The HHS awarding agency must 

notify the public of Federal programs in 

the Catalog of Federal Domestic 

Assistance (CFDA), maintained by the 

General Services Administration (GSA). 

(1) The CFDA, or any OMBdesignated replacement, is the single, 

authoritative, government-wide 

comprehensive source of Federal 

financial assistance program 

information produced by the executive 

branch of the Federal Government. 

(2) The information that the HHS 

awarding agency must submit to GSA 

for approval by OMB is listed in 

paragraph (b) of this section. GSA must 

prescribe the format for the submission. 

(3) The HHS awarding agency may 

not award Federal financial assistance 

without assigning it to a program that 

has been included in the CFDA as 

required in this section unless there are 

exigent circumstances requiring 

otherwise, such as timing requirements 

imposed by statute. 

(b) For each program that awards 

discretionary Federal awards, nondiscretionary Federal awards, loans, 

insurance, or any other type of Federal 

financial assistance, the HHS awarding 

agency must submit the following 

information to GSA: 

(1) Program Description, Purpose, 

Goals and Measurement. A brief 

summary of the statutory or regulatory 

requirements of the program and its 

intended outcome. Where appropriate, 

the Program Description, Purpose, 

Goals, and Measurement should align 

with the strategic goals and objectives 

within the HHS awarding agency’s 

performance plan and should support 

the HHS awarding agency’s performance 

measurement, management, and 

reporting as required by Part 6 of OMB 

Circular A–11; 

(2) Identification of whether the 

program makes Federal awards on a 

discretionary basis or the Federal 

awards are prescribed by Federal 

statute, such as in the case of formula 

grants. 

(3) Projected total amount of funds 

available for the program. Estimates 

based on previous year funding are 

acceptable if current appropriations are 

not available at the time of the 

submission; 

(4) Anticipated Source of Available 

Funds: The statutory authority for 

funding the program and, to the extent 

possible, agency, sub-agency, or, if 

known, the specific program unit that 

will issue the Federal awards, and 

associated funding identifier (e.g., 

Treasury Account Symbol(s)); 

(5) General Eligibility Requirements: 

The statutory, regulatory or other 

eligibility factors or considerations that 

determine the applicant’s qualification 

for Federal awards under the program 

(e.g., type of non-Federal entity); and 

(6) Applicability of Single Audit 

Requirements as required by Subpart F 

of this part. 

§ 75.203 Notices of funding opportunities. 

For competitive grants and 

cooperative agreements, the HHS 

awarding agency must announce 

specific funding opportunities by 

providing the following information in 

a public notice: 

(a) Summary Information in Notices 

of Funding Opportunities. The HHS 

awarding agency must display the 

following information posted on the 

OMB-designated government-wide Web 

site for finding and applying for Federal 

financial assistance, in a location 

preceding the full text of the 

announcement: 

(1) HHS Awarding Agency Name; 

(2) Funding Opportunity Title; 

(3) Announcement Type (whether the 

funding opportunity is the initial 

announcement of this funding 

opportunity or a modification of a 

previously announced opportunity); 

(4) Funding Opportunity Number 

(required, if applicable). If the HHS 

awarding agency has assigned or will 

assign a number to the funding 

opportunity announcement, this 

number must be provided; 

(5) Catalog of Federal Domestic 

Assistance (CFDA) Number(s); 

(6) Key Dates. Key dates include due 

dates for applications or Executive 

Order 12372 submissions, as well as for 

any letters of intent or pre-applications. 

For any announcement issued before a 

program’s application materials are 

available, key dates also include the 

date on which those materials will be 

released; and any other additional 

information, as deemed applicable by 

the relevant HHS awarding agency. 

(b) The HHS awarding agency must 

generally make all funding 

opportunities available for application 

for at least 60 calendar days. The HHS 

awarding agency may make a 

determination to have a less than 60 

calendar day availability period but no 

funding opportunity should be available 

for less than 30 calendar days unless 

exigent circumstances require as 

determined by the HHS awarding 

agency head or delegate. 

(c) Full Text of Funding 

Opportunities. The HHS awarding 

agency must include the following 

information in the full text of each 

funding opportunity. For specific 

instructions on the content required in 

this section, refer to Appendix I of this 

part. 

(1) Full programmatic description of 

the funding opportunity. 

(2) Federal award information, 

including sufficient information to help 

an applicant make an informed decision 

about whether to submit an application. 

(See also § 75.414(c)(4)). 

(3) Specific eligibility information, 

including any factors or priorities that 

affect an applicant’s or its application’s 

eligibility for selection. 


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(4) Application Preparation and 

Submission Information, including the 

applicable submission dates and time. 

(5) Application Review Information 

including the criteria and process to be 

used to evaluate applications. See also 

§§ 75.204 and 75.205. See also 2 CFR 

part 27 (forthcoming at time of 

publication). 

(6) Federal Award Administration 

Information. See also § 75.210. 

§ 75.204 HHS funding agency review of 

merit of proposals. 

For competitive grants or cooperative 

agreements, unless prohibited by 

Federal statute, the HHS awarding 

agency must design and execute a merit 

review process for applications. This 

process must be described or 

incorporated by reference in the 

applicable funding opportunity (see 

Appendix I to this part.) See also 

§ 75.203. 

§ 75.205 HHS awarding agency review of 

risk posed by applicants. 

(a) Prior to making a Federal award, 

the HHS awarding agency is required by 

31 U.S.C. 3321 and 41 U.S.C. 2313 note 

to review information available through 

any OMB-designated repositories of 

government-wide eligibility 

qualification or financial integrity 

information, such as SAM Exclusions, 

and ‘‘Do Not Pay.’’ See also suspension 

and debarment requirements at 2 CFR 

part 180 as well as HHS suspension and 

debarment regulations at 2 CFR part 

376. 

(b) In addition, for competitive grants 

or cooperative agreements, the HHS 

awarding agency must have in place a 

framework for evaluating the risks 

posed by applicants before they receive 

Federal awards. This evaluation may 

incorporate results of the evaluation of 

the applicant’s eligibility or the quality 

of its application. If the HHS awarding 

agency determines that a Federal award 

will be made, special conditions that 

correspond to the degree of risk assessed 

may be applied to the Federal award. 

Criteria to be evaluated must be 

described in the announcement of 

funding opportunity described in 

§ 75.203. 

(c) In evaluating risks posed by 

applicants, the HHS awarding agency 

may use a risk-based approach and may 

consider any items such as the 

following: 

(1) Financial stability; 

(2) Quality of management systems 

and ability to meet the management 

standards prescribed in this part; 

(3) History of performance. The 

applicant’s record in managing Federal 

awards, if it is a prior recipient of 

Federal awards, including timeliness of 

compliance with applicable reporting 

requirements, conformance to the terms 

and conditions of previous Federal 

awards, and if applicable, the extent to 

which any previously awarded amounts 

will be expended prior to future awards; 

(4) Reports and findings from audits 

performed under Subpart F of this part 

or the reports and findings of any other 

available audits; and 

(5) The applicant’s ability to 

effectively implement statutory, 

regulatory, or other requirements 

imposed on non-Federal entities. 

(d) In addition to this review, the HHS 

awarding agency must comply with the 

guidelines on government-wide 

suspension and debarment in 2 CFR 

part 180, and must require non-Federal 

entities to comply with these 

provisions. These provisions restrict 

Federal awards, subawards and 

contracts with certain parties that are 

debarred, suspended or otherwise 

excluded from or ineligible for 

participation in Federal programs or 

activities. 

§ 75.206 Standard application 

requirements, including forms for applying 

for HHS financial assistance, and state 

plans. 

(a) Paperwork clearances. The HHS 

awarding agency may only use 

application information collections 

approved by OMB under the Paperwork 

Reduction Act of 1995 and OMB’s 

implementing regulations in 5 CFR part 

1320. Consistent with these 

requirements, OMB will authorize 

additional information collections only 

on a limited basis. 

(b) If applicable, the HHS awarding 

agency may inform applicants and 

recipients that they do not need to 

provide certain information otherwise 

required by the relevant information 

collection. 

(c) Forms for applying for HHS 

financial assistance. HHS awarding 

agencies should use the Standard Form 

424 (SF–424 Application for Federal 

Assistance) series (or its successor) and 

its program narrative whenever 

possible. Alternative mechanisms may 

be used for formula grant programs 

which do not require applicants to 

apply for funds on a project basis. 

(1) Applicants shall use the SF–424 

series or those forms and instructions 

prescribed by the HHS awarding agency. 

(2) For Federal programs covered by 

Executive Order 12372, as amended by 

Executive Order 12416, the applicant 

shall complete the appropriate sections 

of the SF–424 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 HHS awarding agency or 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. (See also 45 

CFR part 100.) 

(3) HHS awarding agencies that do not 

use the SF–424 series will indicate on 

the application form they prescribe 

whether the application is subject to 

review by the State under Executive 

Order 12372. 

(4) This section does not apply to 

applications for subawards. 

(5) Except where otherwise noted, or 

granted by HHS deviation, HHS 

awarding agencies shall direct 

applicants to apply for HHS financial 

assistance through Grants.gov, an OMBdesignated Web site for Find and Apply. 

(d) State plans. The statutes for some 

programs require States to submit plans 

before receiving grants. Under 

regulations implementing Executive 

Order 12372, States are allowed to 

simplify, consolidate and substitute 

plans. This section contains additional 

provisions for plans that are subject to 

regulations implementing Executive 

Order 12372. 

(1) Requirements. A State need meet 

only Federal administrative or 

programmatic requirements for a plan 

that are in statutes or codified 

regulations. 

(2) Assurances. In each plan, the State 

will include an assurance that the State 

will comply with all applicable Federal 

statutes and regulations in effect with 

respect to the periods for which it 

receives grant funding. For this 

assurance and other assurances required 

in this plan, the State may: 

(i) Cite by number the statutory or 

regulatory provisions requiring the 

assurances and affirm that it gives the 

assurances required by those provisions, 

(ii) Repeat the assurance language in 

the statutes or regulations, or 

(iii) Develop its own language to the 

extent permitted by law. 

(3) Amendments. A State will amend 

a plan whenever necessary to reflect: 

(i) New or revised Federal statutes or 

regulations, or 

(ii) A material change in any State 

law, organization, policy, or State 

agency operation. The State will obtain 

approval for the amendment and its 

effective date but need submit for 

approval only the amended portions of 

the plan. 

§ 75.207 Specific award conditions. 

(a) The HHS awarding agency or passthrough entity may impose additional 


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specific award conditions as needed in 

accordance with paragraphs (b) and (c) 

of this section, under the following 

circumstances: 

(1) Based on the criteria set forth in 

§ 75.205; 

(2) When an applicant or recipient has 

a history of failure to comply with the 

general or specific terms and conditions 

of a Federal award; 

(3) When an applicant or recipient 

fails to meet expected performance goals 

as described in § 75.210, or; 

(4) When the applicant or recipient is 

not otherwise responsible. 

(b) These additional Federal award 

conditions may include items such as 

the following: 

(1) Requiring payments as 

reimbursements rather than advance 

payments; 

(2) Withholding authority to proceed 

to the next phase until receipt of 

evidence of acceptable performance 

within a given period of performance; 

(3) Requiring additional, more 

detailed financial reports; 

(4) Requiring additional project 

monitoring; 

(5) Requiring the non-Federal entity to 

obtain technical or management 

assistance; or 

(6) Establishing additional prior 

approvals. 

(c) The HHS awarding agency or passthrough entity must notify the applicant 

or non-Federal entity as to: 

(1) The nature of the additional 

requirements; 

(2) The reason why the additional 

requirements are being imposed; 

(3) The nature of the action needed to 

remove the additional requirement, if 

applicable; 

(4) The time allowed for completing 

the actions if applicable, and 

(5) The method for requesting 

reconsideration of the additional 

requirements imposed. 

(d) Any specific conditions must be 

promptly removed once the conditions 

that prompted them have been 

corrected. 

§ 75.208 Certifications and 

Representations. 

Unless prohibited by Federal statutes 

or regulations, each HHS awarding 

agency or pass-through entity is 

authorized to require the non-Federal 

entity to submit certifications and 

representations required by Federal 

statutes, or regulations on an annual 

basis. Submission may be required more 

frequently if the non-Federal entity fails 

to meet a requirement of a Federal 

award. 

(a) The funds governed under this 

part shall be administered in 

compliance with the standards set forth 

in 45 CFR part 87. 

(b) For assurances under State plans, 

see § 75.206(d)(2). 

§ 75.209 Pre-award costs. 

For requirements on costs incurred by 

the applicant prior to the start date of 

the period of performance of the Federal 

award, see § 75.458. 

§ 75.210 Information contained in a 

Federal award. 

A Federal award must include the 

following information: 

(a) General Federal Award 

Information. The HHS awarding agency 

must include the following general 

Federal award information in each 

Federal award: 

(1) Recipient name (which must 

match the name associated with their 

unique entity identifier as defined in 2 

CFR 25.315); 

(2) Recipient’s unique entity 

identifier; 

(3) Unique Federal Award 

Identification Number (FAIN); 

(4) Federal Award Date (see § 75.2 

Federal award date); 

(5) Period of Performance Start and 

End Date; 

(6) Amount of Federal Funds 

Obligated by this action, 

(7) Total Amount of Federal Funds 

Obligated; 

(8) Total Amount of the Federal 

Award; 

(9) Budget Approved by the HHS 

Awarding Agency; 

(10) Total Approved Cost Sharing or 

Matching, where applicable; 

(11) Federal award project description 

(to comply with statutory requirements 

(e.g., FFATA)); 

(12) Name of HHS awarding agency 

and contact information for awarding 

official, 

(13) CFDA Number and Program 

Name; 

(14) Identification of whether the 

award is R&D; and 

(15) Indirect cost rate for the Federal 

award (including if the de minimis rate 

is charged per § 75.414). 

(b) General Terms and Conditions (1) 

HHS awarding agencies must 

incorporate the following general terms 

and conditions either in the Federal 

award or by reference, as applicable: 

(i) Administrative requirements 

implemented by the HHS awarding 

agency as specified in this part. 

(ii) National policy requirements. 

These include statutory, executive 

order, other Presidential directive, or 

regulatory requirements that apply by 

specific reference and are not programspecific. See § 75.300. 

(2) The Federal award must include 

wording to incorporate, by reference, 

the applicable set of general terms and 

conditions, The reference must be to the 

Web site at which the HHS awarding 

agency maintains the general terms and 

conditions. 

(3) If a non-Federal entity requests a 

copy of the full text of the general terms 

and conditions, the HHS awarding 

agency must provide it. 

(4) Wherever the general terms and 

conditions are publicly available, the 

HHS awarding agency must maintain an 

archive of previous versions of the 

general terms and conditions, with 

effective dates, for use by the nonFederal entity, auditors, or others. 

(c) HHS Awarding Agency, Program, 

or Federal Award Specific Terms and 

Conditions. The HHS awarding agency 

may include with each Federal award 

any terms and conditions necessary to 

communicate requirements that are in 

addition to the requirements outlined in 

the HHS awarding agency’s general 

terms and conditions. Whenever 

practicable, these specific terms and 

conditions also should be shared on a 

public Web site and in notices of 

funding opportunities (as outlined in 

§ 75.203) in addition to being included 

in a Federal award. See also § 75.206. 

(d) Federal Award Performance Goals. 

The HHS awarding agency must include 

in the Federal award an indication of 

the timing and scope of expected 

performance by the non-Federal entity 

as related to the outcomes intended to 

be achieved by the program. In some 

instances (e.g., discretionary research 

awards), this may be limited to the 

requirement to submit technical 

performance reports (to be evaluated in 

accordance with HHS awarding agency 

policy). Where appropriate, the Federal 

award may include specific 

performance goals, indicators, 

milestones, or expected outcomes (such 

as outputs, or services performed or 

public impacts of any of these) with an 

expected timeline for accomplishment. 

Reporting requirements must be clearly 

articulated such that, where 

appropriate, performance during the 

execution of the Federal award has a 

standard against which non-Federal 

entity performance can be measured. 

The HHS awarding agency may include 

program-specific requirements, as 

applicable. These requirements should 

be aligned with agency strategic goals, 

strategic objectives or performance goals 

that are relevant to the program. See 

also OMB Circular A–11, Part 6 for 

definitions of strategic objectives and 

performance goals. 

(e) Any other information required by 

the HHS awarding agency. 


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§ 75.211 Public access to Federal award 

information. 

(a) In accordance with statutory 

requirements for Federal spending 

transparency (e.g., FFATA), except as 

noted in this section, for applicable 

Federal awards the HHS awarding 

agency must announce all Federal 

awards publicly and publish the 

required information on a publicly 

available OMB-designated governmentwide Web site (at time of publication, 

www.USAspending.gov). 

(b) Nothing in this section may be 

construed as requiring the publication 

of information otherwise exempt under 

the Freedom of Information Act (5 

U.S.C. 552), or controlled unclassified 

information pursuant to Executive 

Order 13556. 

§ 75.212 Suspension and Debarment. 

Non-federal entities and contractors 

are subject to the non-procurement 

debarment and suspension regulations 

implementing Executive Orders 12549 

and 12689, 2 CFR parts 180 and 376. 

These regulations restrict awards, 

subawards and contracts with certain 

parties that are debarred, suspended or 

otherwise excluded from or ineligible 

for participation in Federal assistance 

programs or activities. 

§ 75.213 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 

United States trade and commerce. HHS 

awarding agencies will follow the 

provisions of Executive Order 12770. 

§ 75.214 Disclosure of Lobbying Activities. 

Recipients are subject to the 

restrictions on lobbying as set forth in 

45 CFR part 93. 

§ 75.215 Special Provisions for Awards to 

Commercial Organizations as Recipients. 

(a) This section contains provisions 

that apply to awards to commercial 

organizations. These provisions are in 

addition to other applicable provisions 

of this part, or they make exceptions 

from other provisions of this part for 

awards to commercial organizations. 

(b) Prohibition against profit. Except 

for awards under the Small Business 

Innovation Research (SBIR) and Small 

Business Technology Transfer Research 

(STTR) programs (15 U.S.C. 638), no 

HHS funds may be paid as profit to any 

recipient even if the recipient is a 

commercial organization. Profit is any 

amount in excess of allowable direct 

and indirect costs. 

(c) Program Income. Except for grants 

for research, program income earned by 

a commercial organization may not be 

used to further eligible project or 

program objectives except in the SBIR 

and STTR programs. 

(d)(1) Commercial organizations that 

receive awards (including for-profit 

hospitals) have two options regarding 

audits: 

(i) A financial related audit of a 

particular award in accordance with 

Generally Accepted Government 

Auditing Standards issued by the 

Comptroller General of the United 

States, in those cases where the 

commercial organization receives 

awards under only one HHS program; 

or, if awards are received under 

multiple HHS programs, a financial 

related audit of all awards in accordance 

with Generally Accepted Government 

Auditing Standards issued by the 

Comptroller General of the United 

States; or 

(ii) An audit that meets the 

requirements contained in subpart F. 

(2) Commercial organizations that 

receive annual awards totaling less than 

the audit requirement threshold in 

subpart F are exempt from HHS audit 

requirements for that year, but records 

must be available for review by 

appropriate officials of Federal agencies 

or the Government Accountability 

Office. (See § 75.501). 

§ 75.216 Special Provisions for Awards to 

Federal Agencies. 

(a) In order for an HHS awarding 

agency to make a Federal award to a 

Federal agency, the HHS awarding 

agency must have statutory authority 

that makes such Federal agency 

explicitly eligible for a Federal award. 

(b) All provisions of this part and 

other HHS regulations apply to Federal 

entities receiving Federal awards, 

except for the following: 

(1) Except for grants for research, any 

program income earned by a Federal 

institution must be used under the 

deduction alternative. Any program 

income earned after the end of grant 

support should be returned to the 

United States Treasury. 

(2) No salary or fringe benefit 

payments may be made from HHS 

awarding agency grant funds to support 

career, career-conditional, or other 

Federal employees (civilian or 

uniformed services) without permanent 

appointments at a Federal institution 

receiving a grant. While the level of 

effort required for the project must be 

allowed by the recipient as part of each 

individual’s official duties, salary costs 

associated with an individual 

participating in an official capacity as a 

Federal employee under a grant to that 

Federal institution are not allowable 

costs under an HHS awarding agency 

grant. 

(3) Federal agencies may not be 

reimbursed for indirect costs under 

Federal awards. 

§ 75.217 Participation by faith-based 

organizations. 

The funds provided under this part 

must be administered in compliance 

with the standards set forth in 45 CFR 

part 87. 

Subpart D—Post Federal Award 

Requirements 

Standards for Financial and Program 

Management 

§ 75.300 Statutory and national policy 

requirements. 

(a) The Federal awarding agency must 

manage and administer the Federal 

award in a manner so as to ensure that 

Federal funding is expended and 

associated programs are implemented in 

full accordance with U.S. statutory and 

public policy requirements: Including, 

but not limited to, those protecting 

public welfare, the environment, and 

prohibiting discrimination. The Federal 

awarding agency must communicate to 

the non-Federal entity all relevant 

public policy requirements, including 

those in general appropriations 

provisions, and incorporate them either 

directly or by reference in the terms and 

conditions of the Federal award. 

(b) The non-Federal entity is 

responsible for complying with all 

requirements of the Federal award. For 

all Federal awards, this includes the 

provisions of FFATA, which includes 

requirements on executive 

compensation, and also requirements 

implementing the Act for the nonFederal entity at 2 CFR part 25 and 2 

CFR part 170. See also statutory 

requirements for whistleblower 

protections at 10 U.S.C. 2324 and 2409, 

and 41 U.S.C. 4304, 4310, and 4712. 

§ 75.301 Performance measurement. 

The HHS awarding agency must 

require the recipient to use OMB 

approved standard information 

collections when providing financial 

and performance information. As 

appropriate and in accordance with 

above mentioned information 

collections, the HHS awarding agency 

must require the recipient to relate 

financial data to performance 

accomplishments of the Federal award. 

Also, in accordance with above 

mentioned standard information 

collections, and when applicable, 

recipients must also provide cost 

information to demonstrate cost 

effective practices (e.g., through unit 


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cost data). The recipient’s performance 

should be measured in a way that will 

help the HHS awarding agency and 

other non-Federal entities to improve 

program outcomes, share lessons 

learned, and spread the adoption of 

promising practices. The HHS awarding 

agency should provide recipients with 

clear performance goals, indicators, and 

milestones as described in § 75.210. 

Performance reporting frequency and 

content should be established to not 

only allow the HHS awarding agency to 

understand the recipient progress but 

also to facilitate identification of 

promising practices among recipients 

and build the evidence upon which the 

HHS awarding agency’s program and 

performance decisions are made. 

§ 75.302 Financial management and 

standards for financial management 

systems. 

(a) Each state must expend and 

account for the Federal award in 

accordance with state laws and 

procedures for expending and 

accounting for the state’s own funds. In 

addition, the state’s and the other nonFederal entity’s financial management 

systems, including records documenting 

compliance with Federal statutes, 

regulations, and the terms and 

conditions of the Federal award, must 

be sufficient to permit the preparation of 

reports required by general and 

program-specific terms and conditions; 

and the tracing of funds to a level of 

expenditures adequate to establish that 

such funds have been used according to 

the Federal statutes, regulations, and the 

terms and conditions of the Federal 

award. See also § 75.450. 

(b) The financial management system 

of each non-Federal entity must provide 

for the following (see also §§ 75.361, 

75.362, 75.363, 75.364, and 75.365): 

(1) Identification, in its accounts, of 

all Federal awards received and 

expended and the Federal programs 

under which they were received. 

Federal program and Federal award 

identification must include, as 

applicable, the CFDA title and number, 

Federal award identification number 

and year, name of the HHS awarding 

agency, and name of the pass-through 

entity, if any. 

(2) Accurate, current, and complete 

disclosure of the financial results of 

each Federal award or program in 

accordance with the reporting 

requirements set forth in §§ 75.341 and 

75.342. If an HHS awarding agency 

requires reporting on an accrual basis 

from a recipient that maintains its 

records on other than an accrual basis, 

the recipient must not be required to 

establish an accrual accounting system. 

This recipient may develop accrual data 

for its reports on the basis of an analysis 

of the documentation on hand. 

Similarly, a pass-through entity must 

not require a subrecipient to establish 

an accrual accounting system and must 

allow the subrecipient to develop 

accrual data for its reports on the basis 

of an analysis of the documentation on 

hand. 

(3) Records that identify adequately 

the source and application of funds for 

federally-funded activities. These 

records must contain information 

pertaining to Federal awards, 

authorizations, obligations, unobligated 

balances, assets, expenditures, income 

and interest and be supported by source 

documentation. 

(4) Effective control over, and 

accountability for, all funds, property, 

and other assets. The non-Federal entity 

must adequately safeguard all assets and 

assure that they are used solely for 

authorized purposes. See § 75.303. 

(5) Comparison of expenditures with 

budget amounts for each Federal award. 

(6) Written procedures to implement 

the requirements of § 75.305. 

(7) Written procedures for 

determining the allowability of costs in 

accordance with Subpart E of this part 

and the terms and conditions of the 

Federal award. 

§ 75.303 Internal controls. 

The non-Federal entity must: 

(a) Establish and maintain effective 

internal control over the Federal award 

that provides reasonable assurance that 

the non-Federal entity is managing the 

Federal award in compliance with 

Federal statutes, regulations, and the 

terms and conditions of the Federal 

award. These internal controls should 

be in compliance with guidance in 

‘‘Standards for Internal Control in the 

Federal Government,’’ issued by the 

Comptroller General of the United 

States or the ‘‘Internal Control 

Integrated Framework,’’ issued by the 

Committee of Sponsoring Organizations 

of the Treadway Commission (COSO). 

(b) Comply with Federal statutes, 

regulations, and the terms and 

conditions of the Federal awards. 

(c) Evaluate and monitor the nonFederal entity’s compliance with 

statutes, regulations and the terms and 

conditions of Federal awards. 

(d) Take prompt action when 

instances of noncompliance are 

identified including noncompliance 

identified in audit findings. 

(e) Take reasonable measures to 

safeguard protected personally 

identifiable information and other 

information the HHS awarding agency 

or pass-through entity designates as 

sensitive or the non-Federal entity 

considers sensitive consistent with 

applicable Federal, state, local, and 

tribal laws regarding privacy and 

obligations of confidentiality. 

§ 75.304 Bonds. 

The HHS awarding agency may 

include a provision on bonding, 

insurance, or both in the following 

circumstances: 

(a) Where the Federal Government 

guarantees or insures the repayment of 

money borrowed by the recipient, the 

HHS awarding agency, at its discretion, 

may require adequate bonding and 

insurance if the bonding and insurance 

requirements of the non-Federal entity 

are not deemed adequate to protect the 

interest of the Federal Government. 

(b) The HHS awarding agency may 

require adequate fidelity bond coverage 

where the non-Federal entity lacks 

sufficient coverage to protect the 

Federal Government’s interest. 

(c) Where bonds are required in the 

situations described above, the bonds 

must be obtained from companies 

holding certificates of authority as 

acceptable sureties, as prescribed in 31 

CFR part 223. 

§ 75.305 Payment. 

(a) For states, payments are governed 

by Treasury-State CMIA agreements and 

default procedures codified at 31 CFR 

part 205 and TFM 4A–2000 Overall 

Disbursing Rules for All Federal 

Agencies. 

(b) For non-Federal entities other than 

states, payments methods must 

minimize the time elapsing between the 

transfer of funds from the United States 

Treasury or the pass-through entity and 

the disbursement by the non-Federal 

entity whether the payment is made by 

electronic funds transfer, or issuance or 

redemption of checks, warrants, or 

payment by other means. See also 

§ 75.302(b)(6). Except as noted 

elsewhere in these part, Federal 

agencies must require recipients to use 

only OMB-approved standard 

government-wide information collection 

requests to request payment. 

(1) The non-Federal entity must be 

paid in advance, provided it maintains 

or demonstrates the willingness to 

maintain both written procedures that 

minimize the time elapsing between the 

transfer of funds and disbursement by 

the non-Federal entity, and financial 

management systems that meet the 

standards for fund control and 

accountability as established in this 

part. Advance payments to a nonFederal entity must be limited to the 

minimum amounts needed and be timed 

to be in accordance with the actual, 


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immediate cash requirements of the 

non-Federal entity in carrying out the 

purpose of the approved program or 

project. The timing and amount of 

advance payments must be as close as 

is administratively feasible to the actual 

disbursements by the non-Federal entity 

for direct program or project costs and 

the proportionate share of any allowable 

indirect costs. The non-Federal entity 

must make timely payment to 

contractors in accordance with the 

contract provisions. 

(2) Whenever possible, advance 

payments must be consolidated to cover 

anticipated cash needs for all Federal 

awards made by the HHS awarding 

agency to the recipient. 

(i) Advance payment mechanisms 

include, but are not limited to, Treasury 

check and electronic funds transfer and 

must comply with applicable guidance 

in 31 CFR part 208. 

(ii) Non-Federal entities must be 

authorized to submit requests for 

advance payments and reimbursements 

at least monthly when electronic fund 

transfers are not used, and as often as 

they like when electronic transfers are 

used, in accordance with the provisions 

of the Electronic Fund Transfer Act (15 

U.S.C. 1693–1693r). 

(3) Reimbursement is the preferred 

method when the requirements in 

paragraph (b) cannot be met, when the 

HHS awarding agency sets a specific 

condition per § 75.207, or when the 

non-Federal entity requests payment by 

reimbursement. This method may be 

used on any Federal award for 

construction, or if the major portion of 

the construction project is accomplished 

through private market financing or 

Federal loans, and the Federal award 

constitutes a minor portion of the 

project. When the reimbursement 

method is used, the HHS awarding 

agency or pass-through entity must 

make payment within 30 calendar days 

after receipt of the billing, unless the 

HHS awarding agency or pass-through 

entity reasonably believes the request to 

be improper. 

(4) If the non-Federal entity cannot 

meet the criteria for advance payments 

and the HHS awarding agency or passthrough entity has determined that 

reimbursement is not feasible because 

the non-Federal entity lacks sufficient 

working capital, the HHS awarding 

agency or pass-through entity may 

provide cash on a working capital 

advance basis. Under this procedure, 

the HHS awarding agency or passthrough entity must advance cash 

payments to the non-Federal entity to 

cover its estimated disbursement needs 

for an initial period generally geared to 

the non-Federal entity’s disbursing 

cycle. Thereafter, the HHS awarding 

agency or pass-through entity must 

reimburse the non-Federal entity for its 

actual cash disbursements. Use of the 

working capital advance method of 

payment requires that the pass-through 

entity provide timely advance payments 

to any subrecipients in order to meet the 

subrecipient’s actual cash 

disbursements. The working capital 

advance method of payment must not be 

used by the pass-through entity if the 

reason for using this method is the 

unwillingness or inability of the passthrough entity to provide timely 

advance payments to the subrecipient to 

meet the subrecipient’s actual cash 

disbursements. 

(5) Use of resources before requesting 

cash advance payments. To the extent 

available, the non-Federal entity must 

disburse funds available from program 

income (including repayments to a 

revolving fund), rebates, refunds, 

contract settlements, audit recoveries, 

and interest earned on such funds 

before requesting additional cash 

payments. 

(6) Unless otherwise required by 

Federal statutes, payments for allowable 

costs by non-Federal entities must not 

be withheld at any time during the 

period of performance unless the 

conditions of §§ 75.207, Subpart D of 

this part, 75.371, or one or more of the 

following applies: 

(i) The non-Federal entity has failed 

to comply with the project objectives, 

Federal statutes, regulations, or the 

terms and conditions of the Federal 

award. 

(ii) The non-Federal entity is 

delinquent in a debt to the United States 

as defined in OMB Guidance A–129. 

Under such conditions, the HHS 

awarding agency or pass-through entity 

may, upon reasonable notice, inform the 

non-Federal entity that payments must 

not be made for obligations incurred 

after a specified date until the 

conditions are corrected or the 

indebtedness to the Federal Government 

is liquidated. (See 45 CFR part 30). 

(iii) A payment withheld for failure to 

comply with Federal award conditions, 

but without suspension of the Federal 

award, must be released to the nonFederal entity upon subsequent 

compliance. When a Federal award is 

suspended, payment adjustments will 

be made in accordance with § 75.375. 

(iv) A payment must not be made to 

a non-Federal entity for amounts that 

are withheld by the non-Federal entity 

from payment to contractors to assure 

satisfactory completion of work. A 

payment must be made when the nonFederal entity actually disburses the 

withheld funds to the contractors or to 

escrow accounts established to assure 

satisfactory completion of work. 

(7) Standards governing the use of 

banks and other institutions as 

depositories of advance payments under 

Federal awards are as follows: 

(i) The HHS awarding agency and 

pass-through entity must not require 

separate depository accounts for funds 

provided to a non-Federal entity or 

establish any eligibility requirements for 

depositories for funds provided to the 

non-Federal entity. However, the nonFederal entity must be able to account 

for the receipt, obligation and 

expenditure of funds. 

(ii) Advance payments of Federal 

funds must be deposited and 

maintained in insured accounts 

whenever possible. 

(8) The non-Federal entity must 

maintain advance payments of Federal 

awards in interest-bearing accounts, 

unless the following apply: 

(i) The non-Federal entity receives 

less than $120,000 in Federal awards 

per year. 

(ii) The best reasonably available 

interest-bearing account would not be 

expected to earn interest in excess of 

$500 per year on Federal cash balances. 

(iii) 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. 

(iv) A foreign government or banking 

system prohibits or precludes interest 

bearing accounts. 

(9) Interest earned amounts up to 

$500 per year may be retained by the 

non-Federal entity for administrative 

expense. Any additional interest earned 

on Federal advance payments deposited 

in interest-bearing accounts must be 

remitted annually to the Department of 

Health and Human Services Payment 

Management System through an 

electronic medium using either 

Automated Clearing House (ACH) 

network or a Fedwire Funds Service 

payment. Remittances must include 

pertinent information of the payee and 

nature of payment in the memo area 

(often referred to as ‘‘addenda records’’ 

by Financial Institutions) as that will 

assist in the timely posting of interest 

earned on federal funds. Pertinent 

details include the Payee Account 

Number (PAN) if the payment 

originated from PMS, or Agency 

information if the payment originated 

from ASAP, NSF or another federal 

agency payment system. The remittance 

must be submitted as follows: 

For ACH Returns: 

Routing Number: 051036706 

Account number: 303000 


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Bank Name and Location: Credit 

Gateway—ACH Receiver St. Paul, MN 

For Fedwire Returns*: 

Routing Number: 021030004 

Account number: 75010501 

Bank Name and Location: Federal 

Reserve Bank Treas NYC/Funds 

Transfer Division New York, NY 

(* Please note organization initiating 

payment is likely to incur a charge 

from your Financial Institution for 

this type of payment) 

For International ACH Returns: 

Beneficiary Account: Federal Reserve 

Bank of New York/ITS (FRBNY/ITS) 

Bank: Citibank N.A. (New York) 

Swift Code: CITIUS33 

Account Number: 36838868 

Bank Address: 388 Greenwich Street, 

New York, NY 10013 USA 

Payment Details (Line 70): Agency 

Name (abbreviated when possible) 

and ALC Agency POC: Michelle 

Haney, (301) 492–5065 

For recipients that do not have 

electronic remittance capability, please 

make check** payable to: 

‘‘The Department of Health and Human 

Services’’ 

Mail Check to Treasury approved 

lockbox: 

HHS Program Support Center 

P.O. Box 530231 

Atlanta, GA 30353–0231 

(** Please allow 4–6 weeks for 

processing of a payment by check to 

be applied to the appropriate PMS 

account) 

Any additional information/instructions 

may be found on the PMS Web site at 

http://www.dpm.psc.gov/. 

§ 75.306 Cost sharing or matching. 

(a) Under Federal research proposals, 

voluntary committed cost sharing is not 

expected. It cannot be used as a factor 

during the merit review of applications 

or proposals, but may be considered if 

it is both in accordance with HHS 

awarding agency regulations and 

specified in a notice of funding 

opportunity. Criteria for considering 

voluntary committed cost sharing and 

any other program policy factors that 

may be used to determine who may 

receive a Federal award must be 

explicitly described in the notice of 

funding opportunity. Furthermore, only 

mandatory cost sharing or cost sharing 

specifically committed in the project 

budget must be included in the 

organized research base for computing 

the indirect (F&A) cost rate or reflected 

in any allocation of indirect costs. See 

also §§ 75.414, 75.203, and Appendix I 

to this part. 

(b) For all Federal awards, any shared 

costs or matching funds and all 

contributions, including cash and third 

party in-kind contributions, must be 

accepted as part of the non-Federal 

entity’s cost sharing or matching when 

such contributions meet all of the 

following criteria: 

(1) Are verifiable from the nonFederal entity’s records; 

(2) Are not included as contributions 

for any other Federal award; 

(3) Are necessary and reasonable for 

accomplishment of project or program 

objectives; 

(4) Are allowable under Subpart E of 

this part; 

(5) Are not paid by the Federal 

Government under another Federal 

award, except where the Federal statute 

authorizing a program specifically 

provides that Federal funds made 

available for such program can be 

applied to matching or cost sharing 

requirements of other Federal programs; 

(6) Are provided for in the approved 

budget when required by the HHS 

awarding agency; and 

(7) Conform to other provisions of this 

part, as applicable. 

(c) Unrecovered indirect costs, 

including indirect costs on cost sharing 

or matching may be included as part of 

cost sharing or matching. Unrecovered 

indirect cost means the difference 

between the amount charged to the 

Federal award and the amount which 

could have been charged to the Federal 

award under the non-Federal entity’s 

approved negotiated indirect cost rate. 

(d) Values for non-Federal entity 

contributions of services and property 

must be established in accordance with 

the cost principles in Subpart E. If an 

HHS awarding agency authorizes the 

non-Federal entity 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 must be the 

lesser of paragraphs (d)(1) or (2) of this 

section. 

(1) The value of the remaining life of 

the property recorded in the nonFederal entity’s accounting records at 

the time of donation. 

(2) The current fair market value. 

However, when there is sufficient 

justification, the HHS awarding agency 

may approve the use of the current fair 

market value of the donated property, 

even if it exceeds the value described in 

paragraph (1) of this section at the time 

of donation. 

(e) Volunteer services furnished by 

third-party 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 third-party volunteer services 

must be consistent with those paid for 

similar work by the non-Federal entity. 

In those instances in which the required 

skills are not found in the non-Federal 

entity, rates must be consistent with 

those paid for similar work in the labor 

market in which the non-Federal entity 

competes for the kind of services 

involved. In either case, paid fringe 

benefits that are reasonable, necessary, 

allocable, and otherwise allowable may 

be included in the valuation. 

(f) When a third-party organization 

furnishes the services of an employee, 

these services must be valued at the 

employee’s regular rate of pay plus an 

amount of fringe benefits that is 

reasonable, necessary, allocable, and 

otherwise allowable, and indirect costs 

at either the third-party organization’s 

approved federally negotiated indirect 

cost rate or, a rate in accordance with 

§ 75.414(f), provided these services 

employ the same skill(s) for which the 

employee is normally paid. Where 

donated services are treated as indirect 

costs, indirect cost rates will separate 

the value of the donated services so that 

reimbursement for the donated services 

will not be made. 

(g) Donated property from third 

parties may include such items as 

equipment, office supplies, laboratory 

supplies, or workshop and classroom 

supplies. Value assessed to donated 

property included in the cost sharing or 

matching share must not exceed the fair 

market value of the property at the time 

of the donation. 

(h) The method used for determining 

cost sharing or matching for third-partydonated equipment, buildings and land 

for which title passes to the non-Federal 

entity may differ according to the 

purpose of the Federal award, if 

paragraph (h)(1) or (2) of this section 

applies. 

(1) If the purpose of the Federal award 

is to assist the non-Federal entity in the 

acquisition of equipment, buildings or 

land, the aggregate value of the donated 

property may be claimed as cost sharing 

or matching. 

(2) If the purpose of the Federal award 

is to support activities that require the 

use of equipment, buildings or land, 

normally only depreciation charges for 

equipment and buildings may be made. 

However, the fair market value of 

equipment or other capital assets and 

fair rental charges for land may be 

allowed, provided that the HHS 

awarding agency has approved the 

charges. See also § 75.420. 

(i) The value of donated property 

must be determined in accordance with 

the usual accounting policies of the 


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non-Federal entity, with the following 

qualifications: 

(1) The value of donated land and 

buildings must not exceed its fair 

market value at the time of donation to 

the non-Federal entity 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 non-Federal entity as required by 

the Uniform Relocation Assistance and 

Real Property Acquisition Policies Act 

of 1970, as amended, (42 U.S.C. 4601– 

4655) (Uniform Act) except as provided 

in the implementing regulations at 49 

CFR part 24. 

(2) The value of donated equipment 

must 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 must 

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 

must not exceed its fair rental value. 

(j) For third-party in-kind 

contributions, the fair market value of 

goods and services must be documented 

and to the extent feasible supported by 

the same methods used internally by the 

non-Federal entity. 

(k) For IHEs, see also OMB 

memorandum M–01–06, dated January 

5, 2001, Clarification of OMB A–21 

Treatment of Voluntary Uncommitted 

Cost Sharing and Tuition Remission 

Costs. 

§ 75.307 Program income. 

(a) General. Non-Federal entities are 

encouraged to earn income to defray 

program costs where appropriate. 

(b) Cost of generating program 

income. If authorized by Federal 

regulations or the Federal award, costs 

incidental 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 Federal award. 

(c) Governmental revenues. Taxes, 

special assessments, levies, fines, and 

other such revenues raised by a nonFederal entity are not program income 

unless the revenues are specifically 

identified in the Federal award or HHS 

awarding agency regulations as program 

income. 

(1) The Patent and Trademark Laws 

Amendments, 34 U.S.C. 200–212, apply 

to inventions made under an award for 

performance of experimental, 

developmental, or research work. 

(2) Unless the terms and conditions 

for the Federal award provide 

otherwise, recipients shall have no 

obligation to HHS with respect to 

program income earned from license 

fees and royalties for copyrighted 

material, patents, patent applications, 

trademarks, and inventions made under 

a Federal award. However, no 

scholarship, fellowship, training grant, 

or other funding agreement made 

primarily to a recipient for educational 

purposes will contain any provision 

giving the HHS awarding agency rights 

to inventions made by the recipient. 

(d) Property. Proceeds from the sale of 

real property, equipment, or supplies, 

are not program income; such proceeds 

will be handled in accordance with the 

requirements of Subpart D of this part, 

§§ 75.318, 75.320, and 75.321, or as 

specifically identified in Federal 

statutes, regulations, or the terms and 

conditions of the Federal award. 

(e) Use of program income. If the HHS 

awarding agency does not specify in its 

regulations or the terms and conditions 

of the Federal award, or give prior 

approval for how program income is to 

be used, paragraph (e)(1) of this section 

must apply. For Federal awards made to 

IHEs and nonprofit research 

institutions, if the HHS awarding agency 

does not specify in its regulations or the 

terms and conditions of the Federal 

award how program income is to be 

used, paragraph (e)(2) of this section 

must apply unless the recipient is 

subject to conditions under § 75.207 or 

§ 75.215. In specifying alternatives to 

paragraphs (e)(1) and (2) of this section, 

the HHS awarding agency may 

distinguish between income earned by 

the recipient and income earned by 

subrecipients and between the sources, 

kinds, or amounts of income. When the 

HHS awarding agency authorizes the 

approaches in paragraphs (e)(2) and (3) 

of this section, program income in 

excess of any amounts specified must 

also be deducted from expenditures. 

(1) Deduction. Ordinarily program 

income must be deducted from total 

allowable costs to determine the net 

allowable costs. Program income must 

be used for current costs unless the HHS 

awarding agency authorizes otherwise. 

Program income that the non-Federal 

entity did not anticipate at the time of 

the Federal award must be used to 

reduce the Federal award and nonFederal entity contributions rather than 

to increase the funds committed to the 

project. 

(2) Addition. With prior approval of 

the HHS awarding agency (except for 

IHEs and nonprofit research 

institutions, as described in paragraph 

(e) of this section), program income may 

be added to the Federal award by the 

Federal agency and the non-Federal 

entity. The program income must be 

used for the purposes and under the 

conditions of the Federal award. 

(3) Cost sharing or matching. With 

prior approval of the HHS awarding 

agency, program income may be used to 

meet the cost sharing or matching 

requirement of the Federal award. The 

amount of the Federal award remains 

the same. 

(f) Income after the period of 

performance. There are no Federal 

requirements governing the disposition 

of income earned after the end of the 

period of performance for the Federal 

award, unless the HHS awarding agency 

regulations or the terms and conditions 

of the award provide otherwise. The 

HHS awarding agency may negotiate 

agreements with recipients regarding 

appropriate uses of income earned after 

the period of performance as part of the 

grant closeout process. See also 

§ 75.381. 

(g) Unless the Federal statute, 

regulations, or terms and conditions for 

the Federal award provide otherwise, 

the non-Federal entity has no obligation 

to the HHS awarding agency with 

respect to program income earned from 

license fees and royalties for 

copyrighted material, patents, patent 

applications, trademarks, and 

inventions made under a Federal award 

to which 37 CFR part 401, ‘‘Rights to 

Inventions Made by Nonprofit 

Organizations and Small Business Firms 

under Government Awards, Contracts 

and Cooperative Agreements’’ is 

applicable. 

§ 75.308 Revision of budget and program 

plans. 

(a) The approved budget for the 

Federal award summarizes the financial 

aspects of the project or program as 

approved during the Federal award 

process. It may include either the 

Federal and non-Federal share (see 

§ 75.2 Federal share) or only the Federal 

share, depending upon HHS awarding 

agency requirements. It must be related 

to performance for program evaluation 

purposes whenever appropriate. 

(b) Recipients are required to report 

deviations from budget or project scope 

or objective, and request prior approvals 

from HHS awarding agencies for budget 

and program plan revisions, in 

accordance with this section. 

(c) For non-construction Federal 

awards, recipients must request prior 

approvals from HHS awarding agencies 

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). 


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(2) Change in a key person specified 

in the application or the Federal award. 

(3) The disengagement from the 

project 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 inclusion, unless waived by 

the HHS awarding agency, of costs that 

require prior approval in accordance 

with Subpart E of this part or Appendix 

IX of this part, or 48 CFR part 31, as 

applicable. 

(5) The transfer of funds budgeted for 

participant support costs as defined in 

§ 75.2 Participant support costs to other 

categories of expense. 

(6) Unless described in the 

application and funded in the approved 

Federal awards, the subawarding, 

transferring or contracting out of any 

work under a Federal award. This 

provision does not apply to the 

acquisition of supplies, material, 

equipment or general support services. 

(7) Changes in the approved costsharing or matching provided by the 

non-Federal entity. No other prior 

approval requirements for specific items 

may be imposed unless an exception 

has been approved by OMB. See also 

§§ 75.102 and 75.407. 

(8) A fixed amount subaward as 

described in § 75.353. 

(9) The inclusion of research patient 

care costs in research awards made for 

the performance of research work. 

(10) The provision of subawards by a 

pass-through entity on fixed amounts up 

to the Simplified Acquisition 

Threshold, provided that the subawards 

meet the requirements for fixed amount 

awards in § 75.201. See § 75.353. 

(11) The recipient wishes to dispose 

of, replace, or encumber title to real 

property, equipment, or intangible 

property that are acquired or improved 

with a Federal award. See §§ 75.318, 

75.320, 75.322, and 75.323. 

(12) The need arises for additional 

Federal funds to complete the project. 

(d) Except for requirements listed in 

paragraph (c)(1) of this section, the HHS 

awarding agencies are authorized, at 

their option, to waive prior written 

approvals required by paragraph (c) this 

section. Such waivers may include 

authorizing recipients to do any one or 

more of the following: 

(1) Incur project costs 90 calendar 

days before the HHS awarding agency 

makes the Federal award. Expenses 

more than 90 calendar days pre-award 

require prior approval of the HHS 

awarding agency. All costs incurred 

before the HHS awarding agency makes 

the Federal award are at the recipient’s 

risk (i.e., the HHS awarding agency is 

under no obligation to reimburse such 

costs if for any reason the recipient does 

not receive a Federal award or if the 

Federal award is less than anticipated 

and inadequate to cover such costs). See 

also § 75.458. 

(2) Initiate a one-time extension of the 

period of performance by up to 12 

months unless one or more of the 

conditions outlined in paragraphs 

(d)(2)(i) through (iii) of this section 

apply. For one-time extensions, the 

recipient must notify the HHS awarding 

agency in writing with the supporting 

reasons and revised period of 

performance at least 10 calendar days 

before the end of the period of 

performance specified in the Federal 

award. This one-time extension may not 

be exercised merely for the purpose of 

using unobligated balances. Extensions 

require explicit prior HHS awarding 

agency approval when: 

(i) The terms and conditions of the 

Federal 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 periods of 

performance. 

(4) For Federal awards that support 

research, unless the HHS awarding 

agency provides otherwise in the 

Federal award or in the HHS awarding 

agency’s regulations, the prior approval 

requirements described in paragraph (d) 

are automatically waived (i.e., recipients 

need not obtain such prior approvals) 

unless one of the conditions included in 

paragraph (d)(2) applies. 

(e) The HHS awarding agency may, at 

its option, restrict the transfer of funds 

among direct cost categories or 

programs, functions and activities for 

Federal awards in which the Federal 

share of the project exceeds the 

Simplified Acquisition Threshold and 

the cumulative amount of such transfers 

exceeds or is expected to exceed 10 

percent of the total budget as last 

approved by the HHS awarding agency. 

The HHS awarding agency cannot 

permit a transfer that would cause any 

Federal appropriation to be used for 

purposes other than those consistent 

with the appropriation. 

(f) All other changes to nonconstruction budgets, except for the 

changes described in paragraph (c) of 

this section, do not require prior 

approval (see also § 75.407). 

(g) For construction Federal awards, 

the recipient must request prior written 

approval promptly from the HHS 

awarding agency for budget revisions 

whenever paragraph (g)(1), (2), or (3) of 

this section applies. 

(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 Subpart E 

of this part. 

(4) No other prior approval 

requirements for budget revisions may 

be imposed unless an exception has 

been approved by OMB. 

(5) When an HHS awarding agency 

makes a Federal award that provides 

support for construction and nonconstruction work, the HHS awarding 

agency may require the recipient to 

obtain prior approval from the HHS 

awarding agency before making any 

fund or budget transfers between the 

two types of work supported. 

(h) When requesting approval for 

budget revisions, the recipient must use 

the same format for budget information 

that was used in the application, unless 

the HHS awarding agency indicates a 

letter of request suffices. 

(i) Within 30 calendar days from the 

date of receipt of the request for budget 

revisions, the HHS awarding agency 

must 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, the HHS awarding 

agency must inform the recipient in 

writing of the date when the recipient 

may expect the decision. 

(j) All approvals granted in keeping 

with the provisions of this section shall 

not be valid unless they are in writing, 

and signed by at least one of the 

following HHS officials: 

(1) The Head of the HHS awarding 

agency that made the award or 

subordinate official with proper 

delegated authority from the Head, 

including the Head of the Regional 

Office of the HHS awarding agency that 

made the award; or 

(2) The responsible Grants Officer of 

the HHS awarding agency that made the 

award or an individual duly authorized 

by the Grants Officer. 

§ 75.309 Period of performance and 

availability of funds. 

(a) A non-Federal entity may charge to 

the Federal award only allowable costs 

incurred during the period of 

performance (except as described in 

§ 75.461) and any costs incurred before 

the HHS awarding agency or passthrough entity made the Federal award 

that were authorized by the Federal 

awarding agency or pass-through entity. 


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Funds available to pay allowable costs 

during the period of performance 

include both Federal funds awarded and 

carryover balances. 

(b) A non-Federal entity must 

liquidate all obligations incurred under 

the award not later than 90 days after 

the end of the funding period (or as 

specified in a program regulation) to 

coincide with the submission of the 

final Federal Financial Report (FFR). 

This deadline may be extended with 

prior written approval from the HHS 

awarding agency. 

§ 75.310–§ 75.315 [Reserved] 

Property Standards 

§ 75.316 Purpose of property standards. 

Sections 75.317 through 75.323 set 

forth uniform standards governing 

management and disposition of property 

furnished by HHS or whose cost was 

charged directly to a project supported 

by an HHS award. The HHS awarding 

agency may not impose additional 

requirements, unless specifically 

required to do so by Federal statute. The 

recipient may use its own property 

management standards and procedures 

provided they meet the provisions of 

these sections. 

§ 75.317 Insurance coverage. 

The non-Federal entity must, at a 

minimum, provide the equivalent 

insurance coverage for real property and 

equipment acquired or improved with 

Federal funds as provided to other 

property owned by the non-Federal 

entity. Federally-owned property need 

not be insured unless required by the 

terms and conditions of the Federal 

award. 

§ 75.318 Real property. 

(a) Title. Subject to the obligations 

and conditions set forth in this section, 

title to real property acquired or 

improved under a Federal award will 

vest upon acquisition in the non-Federal 

entity. 

(b) Use. (1) Except as otherwise 

provided by Federal statutes or by the 

HHS awarding agency, real property 

will be used for the originally 

authorized purpose as long as needed 

for that purpose, during which time the 

non-Federal entity must not dispose of 

or encumber its title or other interests. 

(2) The non-Federal entity shall 

obtain written approval from the HHS 

awarding agency 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 purpose consistent with those 

authorized for support by the HHS 

awarding agency. 

(c) Disposition. When real property is 

no longer needed as provided in 

subsection (b), the non-Federal entity 

must obtain disposition instructions 

from the HHS awarding agency or passthrough entity. The instructions must 

provide for one of the following 

alternatives: 

(1) Retain title after compensating the 

HHS awarding agency. The amount paid 

to the HHS awarding agency will be 

computed by applying the HHS 

awarding agency’s percentage of 

participation in the cost of the original 

purchase (and costs of any 

improvements) to the fair market value 

of the property. However, in those 

situations where the non-Federal entity 

is disposing of real property acquired or 

improved with a Federal award and 

acquiring replacement real property 

under the same Federal award, the net 

proceeds from the disposition may be 

used as an offset to the cost of the 

replacement property. 

(2) Sell the property and compensate 

the HHS awarding agency. The amount 

due to the HHS awarding agency will be 

calculated by applying the HHS 

awarding agency’s percentage of 

participation in the cost of the original 

purchase (and cost of any 

improvements) to the proceeds of the 

sale after deduction of any actual and 

reasonable selling and fixing-up 

expenses. If the Federal award has not 

been closed out, the net proceeds from 

sale may be offset against the original 

cost of the property. When the nonFederal entity is directed to sell 

property, sales procedures must be 

followed that provide for competition to 

the extent practicable and result in the 

highest possible return. 

(3) Transfer title to the HHS awarding 

agency or to a third party designated/

approved by the HHS awarding agency. 

The non-Federal entity is entitled to be 

paid an amount calculated by applying 

the non-Federal entity’s percentage of 

participation in the purchase of the real 

property (and cost of any 

improvements) to the current fair 

market value of the property. 

§ 75.319 Federally-owned and exempt 

property. 

(a) Title to Federally-owned property 

remains vested in the Federal 

Government. The non-Federal entity 

must submit annually an inventory 

listing of Federally-owned property in 

its custody to the HHS awarding agency. 

Upon completion of the Federal award 

or when the property is no longer 

needed, the non-Federal entity must 

report the property to the HHS awarding 

agency for further Federal agency 

utilization. 

(b) If the HHS awarding agency has no 

further need for the property, it must 

declare the property excess and report it 

for disposal to the appropriate Federal 

disposal authority, unless the HHS 

awarding agency 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 nonprofit organizations in accordance with 

Executive Order 12999). The HHS 

awarding agency must issue appropriate 

instructions to the non-Federal entity. 

(c) Exempt Federally-owned property 

means property acquired under a 

Federal award where the HHS awarding 

agency has chosen to vest title to the 

property to the non-Federal entity 

without further obligation to the Federal 

Government, based upon the explicit 

terms and conditions of the Federal 

award. The HHS awarding agency may 

exercise this option when statutory 

authority exists. Absent statutory 

authority and specific terms and 

conditions of the Federal award, title to 

exempt Federally-owned property 

acquired under the Federal award 

remains with the Federal Government. 

§ 75.320 Equipment. 

See also § 75.439. 

(a) Title. Subject to the obligations 

and conditions set forth in this section, 

title to equipment acquired under a 

Federal award will vest upon 

acquisition in the non-Federal entity. 

Unless a statute specifically authorizes 

the Federal agency to vest title in the 

non-Federal entity without further 

obligation to the Federal Government, 

and the Federal agency elects to do so, 

the title must be a conditional title. Title 

must vest in the non-Federal entity 

subject to the following conditions: 

(1) Use the equipment for the 

authorized purposes of the project 

during the period of performance, or 

until the property is no longer needed 

for the purposes of the project. 

(2) Not encumber the property 

without approval of the HHS awarding 

agency or pass-through entity. 

(3) Use and dispose of the property in 

accordance with paragraphs (b), (c) and 

(e) of this section. 

(b) A state must use, manage and 

dispose of equipment acquired under a 

Federal award by the state in 

accordance with state laws and 

procedures. Other non-Federal entities 

must follow paragraphs (c) through (e) 

of this section. 


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(c) Use. (1) Equipment must be used 

by the non-Federal entity in the program 

or project for which it was acquired as 

long as needed, whether or not the 

project or program continues to be 

supported by the Federal award, and the 

non-Federal entity must not encumber 

the property without prior approval of 

the HHS awarding agency. When no 

longer needed for the original program 

or project, the equipment may be used 

in other activities supported by the HHS 

awarding agency, in the following order 

of priority: 

(i) Activities under a Federal award 

from the HHS awarding agency which 

funded the original program or project, 

then 

(ii) Activities under Federal awards 

from other HHS awarding agencies. This 

includes consolidated equipment for 

information technology systems. 

(2) During the time that equipment is 

used on the project or program for 

which it was acquired, the non-Federal 

entity must also make the equipment 

available for use on other projects or 

programs currently or previously 

supported by the Federal Government, 

provided that such use will not interfere 

with the work on the projects or 

program for which it was originally 

acquired. First preference for other use 

must be given to other programs or 

projects supported by the HHS awarding 

agency that financed the equipment and 

second preference must be given to 

programs or projects under Federal 

awards from other Federal awarding 

agencies. Use for non-federally-funded 

programs or projects is also permissible. 

User fees should be considered if 

appropriate. 

(3) Notwithstanding the 

encouragement in § 75.307 to earn 

program income, the non-Federal entity 

must not use equipment acquired with 

the Federal award to provide services 

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. 

(4) When acquiring replacement 

equipment, the non-Federal entity may 

use the equipment to be replaced as a 

trade-in or sell the property and use the 

proceeds to offset the cost of the 

replacement property subject to the 

approval of the HHS awarding agency. 

(d) Management requirements. 

Procedures for managing equipment 

(including replacement equipment), 

whether acquired in whole or in part 

under a Federal award, until disposition 

takes place will, as a minimum, meet 

the following requirements: 

(1) Property records must be 

maintained that include a description of 

the property, a serial number or other 

identification number, the source of 

funding for the property (including the 

FAIN), who holds title, the acquisition 

date, and cost of the property, 

percentage of Federal participation in 

the project costs for the Federal award 

under which the property was acquired, 

the location, use and condition of the 

property, and any ultimate disposition 

data including the date of disposal and 

sale price of the property. 

(2) A physical inventory of the 

property must be taken and the results 

reconciled with the property records at 

least once every two years. 

(3) A control system must be 

developed to ensure adequate 

safeguards to prevent loss, damage, or 

theft of the property. Any loss, damage, 

or theft must be investigated. 

(4) Adequate maintenance procedures 

must be developed to keep the property 

in good condition. 

(5) If the non-Federal entity is 

authorized or required to sell the 

property, proper sales procedures must 

be established to ensure the highest 

possible return. 

(e) Disposition. When original or 

replacement equipment acquired under 

a Federal award is no longer needed for 

the original project or program or for 

other activities currently or previously 

supported by a HHS awarding agency, 

except as otherwise provided in Federal 

statutes, regulations, or HHS awarding 

agency disposition instructions, the 

non-Federal entity must request 

disposition instructions from the HHS 

awarding agency if required by the 

terms and conditions of the Federal 

award. Disposition of the equipment 

will be made as follows, in accordance 

with HHS awarding agency disposition 

instructions: 

(1) Items of equipment with a current 

per unit fair market value of $5,000 or 

less may be retained, sold or otherwise 

disposed of with no further obligation to 

the HHS awarding agency. 

(2) Except as provided in § 75.319(b), 

or if the HHS awarding agency fails to 

provide requested disposition 

instructions within 120 days, items of 

equipment with a current per-unit fairmarket value in excess of $5,000 may be 

retained by the non-Federal entity or 

sold. The HHS awarding agency is 

entitled to an amount calculated by 

multiplying the current market value or 

proceeds from sale by the HHS 

awarding agency’s percentage of 

participation in the cost of the original 

purchase. If the equipment is sold, the 

HHS awarding agency may permit the 

non-Federal entity to deduct and retain 

from the Federal share $500 or ten 

percent of the proceeds, whichever is 

less, for its selling and handling 

expenses. 

(3) The non-Federal entity may 

transfer title to the property to the 

Federal Government or to an eligible 

third party provided that, in such cases, 

the non-Federal entity must be entitled 

to compensation for its attributable 

percentage of the current fair market 

value of the property. 

(4) In cases where a non-Federal 

entity fails to take appropriate 

disposition actions, the HHS awarding 

agency may direct the non-Federal 

entity to take disposition actions. 

§ 75.321 Supplies. 

See also § 75.453. 

(a) Title to supplies will vest in the 

non-Federal entity upon acquisition. If 

there is a residual inventory of unused 

supplies exceeding $5,000 in total 

aggregate value upon termination or 

completion of the project or program 

and the supplies are not needed for any 

other Federal award, the non-Federal 

entity must retain the supplies for use 

on other activities or sell them, but 

must, in either case, compensate the 

Federal Government for its share. The 

amount of compensation must be 

computed in the same manner as for 

equipment. See § 75.320(e)(2) for the 

calculation methodology. 

(b) As long as the Federal Government 

retains an interest in the supplies, the 

non-Federal entity must not use 

supplies acquired under a Federal 

award to provide services to other 

organizations for a fee that is less than 

private companies charge for equivalent 

services, unless specifically authorized 

by Federal statute. 

§ 75.322 Intangible property and 

copyrights. 

(a) Title to intangible property (see 

§ 75.2 Intangible property) acquired 

under a Federal award vests upon 

acquisition in the non-Federal entity. 

The non-Federal entity must use that 

property for the originally-authorized 

purpose, and must not encumber the 

property without approval of the HHS 

awarding agency. When no longer 

needed for the originally authorized 

purpose, disposition of the intangible 

property must occur in accordance with 

the provisions in § 75.320(e). 

(b) The non-Federal entity may 

copyright any work that is subject to 

copyright and was developed, or for 

which ownership was acquired, under a 

Federal award. The HHS awarding 

agency reserves a royalty-free, 

nonexclusive and irrevocable right to 

reproduce, publish, or otherwise use the 


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work for Federal purposes, and to 

authorize others to do so. 

(c) The non-Federal entity is subject 

to applicable regulations governing 

patents and inventions, including 

government-wide regulations issued by 

the Department of Commerce at 37 CFR 

part 401. 

(d) The Federal Government has the 

right to: 

(1) Obtain, reproduce, publish, or 

otherwise use the data produced under 

a Federal award; and 

(2) Authorize others to receive, 

reproduce, publish, or otherwise use 

such data 

(e) Freedom of Information Act 

(FOIA). 

(1) In response to a Freedom of 

Information Act (FOIA) request for 

research data relating to published 

research findings produced under a 

Federal award that were used by the 

Federal Government in developing an 

agency action that has the force and 

effect of law, the HHS awarding agency 

must request, and the non-Federal entity 

must 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 the HHS awarding agency obtains the 

research data solely in response to a 

FOIA request, the HHS awarding agency 

may charge the requester a reasonable 

fee equaling the full incremental cost of 

obtaining the research data. This fee 

should reflect costs incurred by the 

Federal agency and the non-Federal 

entity. This fee is in addition to any fees 

the HHS awarding agency may assess 

under the FOIA (5 U.S.C. 552(a)(4)(A)). 

(2) Published research findings means 

when: 

(i) Research findings are published in 

a peer-reviewed scientific or technical 

journal; or 

(ii) A Federal agency publicly and 

officially cites the research findings in 

support of an agency action that has the 

force and effect of law. ‘‘Used by the 

Federal Government in developing an 

agency action that has the force and 

effect of law’’ is defined as when an 

agency publicly and officially cites the 

research findings in support of an 

agency action that has the force and 

effect of law. 

(3) Research data means 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: 

(i) 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 

(ii) 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. 

(f) The requirements set forth in 

paragraph (e)(1) of this section do not 

apply to commercial organizations 

§ 75.323 Property trust relationship. 

Real property, equipment, and 

intangible property, that are acquired or 

improved with a Federal award must be 

held in trust by the non-Federal entity 

as trustee for the beneficiaries of the 

project or program under which the 

property was acquired or improved. The 

HHS awarding agency may require the 

non-Federal entity to record liens or 

other appropriate notices of record to 

indicate that personal or real property 

has been acquired or improved with a 

Federal award and that use and 

disposition conditions apply to the 

property. 

§ 75.324—§ 75.325 [Reserved] 

Procurement Standards 

§ 75.326 Procurements by states. 

When procuring property and services 

under a Federal award, a state must 

follow the same policies and procedures 

it uses for procurements from its nonFederal funds. The state will comply 

with § 75.331 and ensure that every 

purchase order or other contract 

includes any clauses required by 

§ 75.335. All other non-Federal entities, 

including subrecipients of a state, will 

follow §§ 75.327 through 75.335. 

§ 75.327 General procurement standards. 

(a) The non-Federal entity must use 

its own documented procurement 

procedures which reflect applicable 

State, local, and tribal laws and 

regulations, provided that the 

procurements conform to applicable 

Federal law and the standards identified 

in this part. 

(b) Non-Federal entities must 

maintain oversight to ensure that 

contractors perform in accordance with 

the terms, conditions, and specifications 

of their contracts or purchase orders. 

(c)(1) The non-Federal entity must 

maintain written standards of conduct 

covering conflicts of interest and 

governing the actions of its employees 

engaged in the selection, award and 

administration of contracts. No 

employee, officer, or agent may 

participate in the selection, award, or 

administration of a contract supported 

by a Federal award if he or she has a real 

or apparent conflict of interest. Such a 

conflict of interest 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 or a 

tangible personal benefit from a firm 

considered for a contract. The officers, 

employees, and agents of the nonFederal entity may neither solicit nor 

accept gratuities, favors, or anything of 

monetary value from contractors or 

parties to subcontracts. However, nonFederal entities may set standards for 

situations in which the financial interest 

is not substantial or the gift is an 

unsolicited item of nominal value. The 

standards of conduct must provide for 

disciplinary actions to be applied for 

violations of such standards by officers, 

employees, or agents of the non-Federal 

entity. 

(2) If the non-Federal entity has a 

parent, affiliate, or subsidiary 

organization that is not a state, local 

government, or Indian tribe, the nonFederal entity must also maintain 

written standards of conduct covering 

organizational conflicts of interest. 

Organizational conflicts of interest 

means that because of relationships 

with a parent company, affiliate, or 

subsidiary organization, the non-Federal 

entity is unable or appears to be unable 

to be impartial in conducting a 

procurement action involving a related 

organization. 

(d) The non-Federal entity’s 

procedures must avoid acquisition of 

unnecessary or duplicative items. 

Consideration should be given to 

consolidating or breaking out 

procurements to obtain a more 

economical purchase. Where 

appropriate, an analysis will be made of 

lease versus purchase alternatives, and 

any other appropriate analysis to 

determine the most economical 

approach. 

(e) To foster greater economy and 

efficiency, and in accordance with 

efforts to promote cost-effective use of 

shared services across the Federal 

Government, the non-Federal entity is 

encouraged to enter into state and local 

intergovernmental agreements or interentity agreements where appropriate for 

procurement or use of common or 

shared goods and services. 

(f) The non-Federal entity is 

encouraged to use Federal excess and 

surplus property in lieu of purchasing 


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new equipment and property whenever 

such use is feasible and reduces project 

costs. 

(g) The non-Federal entity is 

encouraged to use value engineering 

clauses in contracts for construction 

projects of sufficient size to offer 

reasonable opportunities for cost 

reductions. Value engineering is a 

systematic and creative analysis of each 

contract item or task to ensure that its 

essential function is provided at the 

overall lower cost. 

(h) The non-Federal entity must 

award contracts only to responsible 

contractors possessing the ability to 

perform successfully under the terms 

and conditions of a proposed 

procurement. Consideration will be 

given to such matters as contractor 

integrity, compliance with public 

policy, record of past performance, and 

financial and technical resources. In 

certain circumstances, contracts with 

certain parties are restricted by agencies’ 

implementation of Executive Orders 

12549 and 12689. (See 2 CFR part 376.) 

(i) The non-Federal entity must 

maintain records sufficient to detail the 

history of procurement. These records 

will include, but are not necessarily 

limited to the following: rationale for 

the method of procurement, selection of 

contract type, contractor selection or 

rejection, and the basis for the contract 

price. 

(j)(1) The non-Federal entity may use 

a time and materials type contract only 

after a determination that no other 

contract is suitable and if the contract 

includes a ceiling price that the 

contractor exceeds at its own risk. Time 

and materials type contract means a 

contract whose cost to a non-Federal 

entity is the sum of: 

(i) The actual cost of materials; and 

(ii) Direct labor hours charged at fixed 

hourly rates that reflect wages, general 

and administrative expenses, and profit. 

(2) Since this formula generates an 

open-ended contract price, a time-andmaterials contract provides no positive 

profit incentive to the contractor for cost 

control or labor efficiency. Therefore, 

each contract must set a ceiling price 

that the contractor exceeds at its own 

risk. Further, the non-Federal entity 

awarding such a contract must assert a 

high degree of oversight in order to 

obtain reasonable assurance that the 

contractor is using efficient methods 

and effective cost controls. 

(k) The non-Federal entity alone must 

be responsible, in accordance with good 

administrative practice and sound 

business judgment, for the settlement of 

all contractual and administrative issues 

arising out of procurements. These 

issues include, but are not limited to, 

source evaluation, protests, disputes, 

and claims. These standards do not 

relieve the non-Federal entity of any 

contractual responsibilities under its 

contracts. The HHS awarding agency 

will not substitute its judgment for that 

of the non-Federal entity unless the 

matter is primarily a Federal concern. 

Violations of law will be referred to the 

local, tribal, state, or Federal authority 

having proper jurisdiction. 

(l) The type of procuring instruments 

used must 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. 

§ 75.328 Competition. 

(a) All procurement transactions must 

be conducted in a manner providing full 

and open competition consistent with 

the standards of this section. In order to 

ensure objective contractor performance 

and eliminate unfair competitive 

advantage, contractors that develop or 

draft specifications, requirements, 

statements of work, or invitations for 

bids or requests for proposals must be 

excluded from competing for such 

procurements. Some of the situations 

considered to be restrictive of 

competition include but are not limited 

to: 

(1) Placing unreasonable requirements 

on firms in order for them to qualify to 

do business; 

(2) Requiring unnecessary experience 

and excessive bonding; 

(3) Noncompetitive pricing practices 

between firms or between affiliated 

companies; 

(4) Noncompetitive contracts to 

consultants that are on retainer 

contracts; 

(5) Organizational conflicts of interest; 

(6) Specifying only a ‘‘brand name’’ 

product instead of allowing ‘‘an equal’’ 

product to be offered and describing the 

performance or other relevant 

requirements of the procurement; and 

(7) Any arbitrary action in the 

procurement process. 

(b) The non-Federal entity must 

conduct procurements in a manner that 

prohibits the use of statutorily or 

administratively imposed state, local, or 

tribal geographical preferences in the 

evaluation of bids or proposals, except 

in those cases where applicable Federal 

statutes expressly mandate or encourage 

geographic preference. Nothing in this 

section preempts state licensing laws. 

When contracting for architectural and 

engineering (A/E) services, geographic 

location may be a selection criterion 

provided its application leaves an 

appropriate number of qualified firms, 

given the nature and size of the project, 

to compete for the contract. 

(c) The non-Federal entity must have 

written procedures for procurement 

transactions. These procedures must 

ensure that all solicitations: 

(1) Incorporate a clear and accurate 

description of the technical 

requirements for the material, product, 

or service to be procured. Such 

description must not, in competitive 

procurements, contain features which 

unduly restrict competition. The 

description may include a statement of 

the qualitative nature of the material, 

product or service to be procured and, 

when necessary, must set forth those 

minimum essential characteristics and 

standards to which it must conform if it 

is to satisfy its intended use. Detailed 

product specifications should be 

avoided if at all possible. When it is 

impractical or uneconomical to make a 

clear and accurate description of the 

technical requirements, a ‘‘brand name 

or equivalent’’ description may be used 

as a means to define the performance or 

other salient requirements of 

procurement. The specific features of 

the named brand which must be met by 

offers must be clearly stated; and 

(2) Identify all requirements which 

the offerors must fulfill and all other 

factors to be used in evaluating bids or 

proposals. 

(d) The non-Federal entity must 

ensure that all prequalified lists of 

persons, firms, or products which are 

used in acquiring goods and services are 

current and include enough qualified 

sources to ensure maximum open and 

free competition. Also, the non-Federal 

entity must not preclude potential 

bidders from qualifying during the 

solicitation period. 

§ 75.329 Procurement procedures. 

The non-Federal entity must use one 

of the following methods of 

procurement. 

(a) Procurement by micro-purchases. 

Procurement by micro-purchase is the 

acquisition of supplies or services, the 

aggregate dollar amount of which does 

not exceed the micro-purchase 

threshold (See micro-purchase). To the 

extent practicable, the non-Federal 

entity must distribute micro-purchases 

equitably among qualified suppliers. 

Micro-purchases may be awarded 

without soliciting competitive 

quotations if the non-Federal entity 

considers the price to be reasonable. 

(b) Procurement by small purchase 

procedures. Small purchase procedures 

are those relatively simple and informal 

procurement methods for securing 

services, supplies, or other property that 

do not cost more than the Simplified 


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Acquisition Threshold. If small 

purchase procedures are used, price or 

rate quotations must be obtained from 

an adequate number of qualified 

sources. 

(c) Procurement by sealed bids 

(formal advertising). Bids are publicly 

solicited and a firm fixed price contract 

(lump sum or unit price) is awarded to 

the responsible bidder whose bid, 

conforming with all the material terms 

and conditions of the invitation for bids, 

is the lowest in price. The sealed bid 

method is the preferred method for 

procuring construction, if the conditions 

in paragraph (c)(1) of this section apply. 

(1) In order for sealed bidding to be 

feasible, the following conditions 

should be present: 

(i) A complete, adequate, and realistic 

specification or purchase description is 

available; 

(ii) Two or more responsible bidders 

are willing and able to compete 

effectively for the business; and 

(iii) The procurement lends itself to a 

firm fixed price contract and the 

selection of the successful bidder can be 

made principally on the basis of price. 

(2) If sealed bids are used, the 

following requirements apply: 

(i) Bids must be solicited from an 

adequate number of known suppliers, 

providing them sufficient response time 

prior to the date set for opening the 

bids, for state, local, and tribal 

governments, the invitation for bids 

must be publically advertised; 

(ii) The invitation for bids, which will 

include any specifications and pertinent 

attachments, must define the items or 

services in order for the bidder to 

properly respond; 

(iii) All bids will be opened at the 

time and place prescribed in the 

invitation for bids, for state, local, and 

tribal governments, the bids must be 

opened publically; 

(iv) A firm fixed price contract award 

will be made in writing to the lowest 

responsive and responsible bidder. 

Where specified in bidding documents, 

factors such as discounts, transportation 

cost, and life cycle costs must be 

considered in determining which bid is 

lowest. Payment discounts will only be 

used to determine the low bid when 

prior experience indicates that such 

discounts are usually taken advantage 

of; and 

(v) Any or all bids may be rejected if 

there is a sound documented reason. 

(d) Procurement by competitive 

proposals. The technique of competitive 

proposals is normally conducted with 

more than one source submitting an 

offer, and either a fixed price or costreimbursement type contract is 

awarded. It is generally used when 

conditions are not appropriate for the 

use of sealed bids. If this method is 

used, the following requirements apply: 

(1) Requests for proposals must be 

publicized and identify all evaluation 

factors and their relative importance. 

Any response to publicized requests for 

proposals must be considered to the 

maximum extent practical; 

(2) Proposals must be solicited from 

an adequate number of qualified 

sources; 

(3) The non-Federal entity must have 

a written method for conducting 

technical evaluations of the proposals 

received and for selecting recipients; 

(4) Contracts must be awarded to the 

responsible firm whose proposal is most 

advantageous to the program, with price 

and other factors considered; and 

(5) The non-Federal entity may use 

competitive proposal procedures for 

qualifications-based procurement of 

architectural/engineering (A/E) 

professional services whereby 

competitors’ qualifications are evaluated 

and the most qualified competitor is 

selected, subject to negotiation of fair 

and reasonable compensation. The 

method, where price is not used as a 

selection factor, can only be used in 

procurement of A/E professional 

services. It cannot be used to purchase 

other types of services though A/E firms 

are a potential source to perform the 

proposed effort. 

(e) [Reserved] 

(f) Procurement by noncompetitive 

proposals. Procurement by 

noncompetitive proposals is 

procurement through solicitation of a 

proposal from only one source and may 

be used only when one or more of the 

following circumstances apply: 

(1) The item is available only from a 

single source; 

(2) The public exigency or emergency 

for the requirement will not permit a 

delay resulting from competitive 

solicitation; 

(3) The HHS awarding agency or passthrough entity expressly authorizes 

noncompetitive proposals in response to 

a written request from the non-Federal 

entity; or 

(4) After solicitation of a number of 

sources, competition is determined 

inadequate. 

§ 75.330 Contracting with small and 

minority businesses, women’s business 

enterprises, and labor surplus area firms. 

(a) The non-Federal entity must take 

all necessary affirmative steps to assure 

that minority businesses, women’s 

business enterprises, and labor surplus 

area firms are used when possible. 

(b) Affirmative steps must include: 

(1) Placing qualified small and 

minority businesses and women’s 

business enterprises on solicitation lists; 

(2) Assuring that small and minority 

businesses, and women’s business 

enterprises are solicited whenever they 

are potential sources; 

(3) Dividing total requirements, when 

economically feasible, into smaller tasks 

or quantities to permit maximum 

participation by small and minority 

businesses, and women’s business 

enterprises; 

(4) Establishing delivery schedules, 

where the requirement permits, which 

encourage participation by small and 

minority businesses, and women’s 

business enterprises; 

(5) Using the services and assistance, 

as appropriate, of such organizations as 

the Small Business Administration and 

the Minority Business Development 

Agency of the Department of Commerce; 

and 

(6) Requiring the prime contractor, if 

subcontracts are to be let, to take the 

affirmative steps listed in paragraphs 

(b)(1) through (5) of this section. 

§ 75.331 Procurement of recovered 

materials. 

A non-Federal entity that is a state 

agency or agency of a political 

subdivision of a state and its contractors 

must comply with section 6002 of the 

Solid Waste Disposal Act, as amended 

by the Resource Conservation and 

Recovery Act. The requirements of 

Section 6002 include procuring only 

items designated in guidelines of the 

Environmental Protection Agency (EPA) 

at 40 CFR part 247 that contain the 

highest percentage of recovered 

materials practicable, consistent with 

maintaining a satisfactory level of 

competition, where the purchase price 

of the item exceeds $10,000 or the value 

of the quantity acquired during the 

preceding fiscal year exceeded $10,000; 

procuring solid waste management 

services in a manner that maximizes 

energy and resource recovery; and 

establishing an affirmative procurement 

program for procurement of recovered 

materials identified in the EPA 

guidelines. 

§ 75.332 Contract cost and price. 

(a) The non-Federal entity must 

perform a cost or price analysis in 

connection with every procurement 

action in excess of the Simplified 

Acquisition Threshold including 

contract modifications. The method and 

degree of analysis is dependent on the 

facts surrounding the particular 

procurement situation, but as a starting 

point, the non-Federal entity must make 


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independent estimates before receiving 

bids or proposals. 

(b) The non-Federal entity must 

negotiate profit as a separate element of 

the price for each contract in which 

there is no price competition and in all 

cases where cost analysis is performed. 

To establish a fair and reasonable profit, 

consideration must be given to the 

complexity of the work to be performed, 

the risk borne by the contractor, the 

contractor’s investment, the amount of 

subcontracting, the quality of its record 

of past performance, and industry profit 

rates in the surrounding geographical 

area for similar work. 

(c) Costs or prices based on estimated 

costs for contracts under the Federal 

award are allowable only to the extent 

that costs incurred or cost estimates 

included in negotiated prices would be 

allowable for the non-Federal entity 

under Subpart E of this part. The nonFederal entity may reference its own 

cost principles that comply with the 

Federal cost principles. 

(d) The cost plus a percentage of cost 

and percentage of construction cost 

methods of contracting must not be 

used. 

§ 75.333 HHS awarding agency or passthrough entity review. 

(a) The non-Federal entity must make 

available, upon request of the HHS 

awarding agency or pass-through entity, 

technical specifications on proposed 

procurements where the HHS awarding 

agency or pass-through entity believes 

such review is needed to ensure that the 

item or service specified is the one 

being proposed for acquisition. This 

review generally will take place prior to 

the time the specification is 

incorporated into a solicitation 

document. However, if the non-Federal 

entity desires to have the review 

accomplished after a solicitation has 

been developed, the HHS awarding 

agency or pass-through entity may still 

review the specifications, with such 

review usually limited to the technical 

aspects of the proposed purchase. 

(b) The non-Federal entity must make 

available upon request, for the HHS 

awarding agency or pass-through entity 

pre-procurement review, procurement 

documents, such as requests for 

proposals or invitations for bids, or 

independent cost estimates, when: 

(1) The non-Federal entity’s 

procurement procedures or operation 

fails to comply with the procurement 

standards in this part; 

(2) The procurement is expected to 

exceed the Simplified Acquisition 

Threshold and is to be awarded without 

competition or only one bid or offer is 

received in response to a solicitation; 

(3) The procurement, which is 

expected to exceed the Simplified 

Acquisition Threshold, specifies a 

‘‘brand name’’ product; 

(4) The proposed contract is more 

than the Simplified Acquisition 

Threshold and is to be awarded to other 

than the apparent low bidder under a 

sealed bid procurement; or 

(5) A proposed contract modification 

changes the scope of a contract or 

increases the contract amount by more 

than the Simplified Acquisition 

Threshold. 

(c) The non-Federal entity is exempt 

from the pre-procurement review in 

paragraph (b) of this section if the HHS 

awarding agency or pass-through entity 

determines that its procurement systems 

comply with the standards of this part. 

(1) The non-Federal entity may 

request that its procurement system be 

reviewed by the HHS awarding agency 

or pass-through entity to determine 

whether its system meets these 

standards in order for its system to be 

certified. Generally, these reviews must 

occur where there is continuous highdollar funding, and third party contracts 

are awarded on a regular basis; 

(2) The non-Federal entity may selfcertify its procurement system. Such 

self-certification must not limit the HHS 

awarding agency’s right to survey the 

system. Under a self-certification 

procedure, the HHS awarding agency 

may rely on written assurances from the 

non-Federal entity that it is complying 

with these standards. The non-Federal 

entity must cite specific policies, 

procedures, regulations, or standards as 

being in compliance with these 

requirements and have its system 

available for review. 

§ 75.334 Bonding requirements. 

For construction or facility 

improvement contracts or subcontracts 

exceeding the Simplified Acquisition 

Threshold, the HHS awarding agency or 

pass-through entity may accept the 

bonding policy and requirements of the 

non-Federal entity provided that the 

HHS awarding agency or pass-through 

entity has made a determination that the 

Federal interest is adequately protected. 

If such a determination has not been 

made, the minimum requirements must 

be as follows: 

(a) A bid guarantee from each bidder 

equivalent to five percent of the bid 

price. The ‘‘bid guarantee’’ must consist 

of a firm commitment such as a bid 

bond, certified check, or other 

negotiable instrument accompanying a 

bid as assurance that the bidder will, 

upon acceptance of the bid, execute 

such contractual documents as may be 

required within the time specified. 

(b) 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. 

(c) A payment bond on the part of the 

contractor for 100 percent of the 

contract price. A ‘‘payment bond’’ is one 

executed in connection with a contract 

to assure payment as required by law of 

all persons supplying labor and material 

in the execution of the work provided 

for in the contract. 

(d) 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. 

§ 75.335 Contract provisions. 

The non-Federal entity’s contracts 

must contain the applicable provisions 

described in Appendix II to this part. 

§ 75.336–§ 75.340 [Reserved] 

Performance and Financial Monitoring 

and Reporting 

§ 75.341 Financial reporting. 

Unless otherwise approved by OMB, 

the HHS awarding agency may solicit 

only the standard, OMB-approved 

government-wide data elements for 

collection of financial information (at 

time of publication the Federal 

Financial Report or such future 

collections as may be approved by OMB 

and listed on the OMB Web site). This 

information must be collected with the 

frequency required by the terms and 

conditions of the Federal award, but no 

less frequently than annually nor more 

frequently than quarterly except in 

unusual circumstances, for example 

where more frequent reporting is 

necessary for the effective monitoring of 

the Federal award or could significantly 

affect program outcomes, and preferably 

in coordination with performance 

reporting. 

§ 75.342 Monitoring and reporting program 

performance. 

(a) Monitoring by the non-Federal 

entity. The non-Federal entity is 

responsible for oversight of the 

operations of the Federal award 

supported activities. The non-Federal 

entity must monitor its activities under 

Federal awards to assure compliance 

with applicable Federal requirements 

and performance expectations are being 

achieved. Monitoring by the nonFederal entity must cover each program, 

function or activity. See also § 75.352. 


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(b) Non-construction performance 

reports. The HHS awarding agency must 

use standard, OMB-approved data 

elements for collection of performance 

information (including performance 

progress reports, Research Performance 

Progress Report, or such future 

collections as may be approved by OMB 

and listed on the OMB Web site). 

(1) The non-Federal entity must 

submit performance reports at the 

interval required by the HHS awarding 

agency or pass-through entity to best 

inform improvements in program 

outcomes and productivity. Intervals 

must be no less frequent than annually 

nor more frequent than quarterly except 

in unusual circumstances, for example 

where more frequent reporting is 

necessary for the effective monitoring of 

the Federal award or could significantly 

affect program outcomes. Annual 

reports must be due 90 calendar days 

after the reporting period; quarterly or 

semiannual reports must be due 30 

calendar days after the reporting period. 

Alternatively, the HHS awarding agency 

or pass-through entity may require 

annual reports before the anniversary 

dates of multiple year Federal awards. 

The final performance report will be 

due 90 calendar days after the period of 

performance end date. If a justified 

request is submitted by a non-Federal 

entity, the HHS awarding agency may 

extend the due date for any performance 

report. 

(2) The non-Federal entity must 

submit performance reports using OMBapproved government-wide standard 

information collections when providing 

performance information. As 

appropriate in accordance with the 

above-mentioned information 

collections, these reports will contain, 

for each Federal award, brief 

information on the following unless 

other collections are approved by OMB: 

(i) A comparison of actual 

accomplishments to the objectives of the 

Federal award established for the 

period. Where the accomplishments of 

the Federal award can be quantified, a 

computation of the cost (for example, 

related to units of accomplishment) may 

be required if that information will be 

useful. Where performance trend data 

and analysis would be informative to 

the HHS awarding agency program, the 

HHS awarding agency should include 

this as a performance reporting 

requirement. 

(ii) The reasons why established goals 

were not met, if appropriate. 

(iii) Additional pertinent information 

including, when appropriate, analysis 

and explanation of cost overruns or high 

unit costs. 

(c) Construction performance reports. 

For the most part, onsite technical 

inspections and certified percentage of 

completion data are relied on heavily by 

HHS awarding agencies and passthrough entities to monitor progress 

under Federal awards and subawards 

for construction. The HHS awarding 

agency may require additional 

performance reports only when 

considered necessary. 

(d) Significant developments. Events 

may occur between the scheduled 

performance reporting dates that have 

significant impact upon the supported 

activity. In such cases, the non-Federal 

entity must inform the HHS awarding 

agency or pass-through entity as soon as 

the following types of conditions 

become known: 

(1) Problems, delays, or adverse 

conditions which will materially impair 

the ability to meet the objective of the 

Federal award. This disclosure must 

include a statement of the action taken, 

or contemplated, and any assistance 

needed to resolve the situation. 

(2) Favorable developments which 

enable meeting time schedules and 

objectives sooner or at less cost than 

anticipated or producing more or 

different beneficial results than 

originally planned. 

(e) The HHS awarding agency may 

make site visits as warranted by 

program needs. 

(f) The HHS awarding agency may 

waive any performance report required 

by this part if not needed. 

§ 75.343 Reporting on real property. 

The HHS awarding agency or passthrough entity must require a nonFederal entity to submit reports at least 

annually on the status of real property 

in which the Federal Government 

retains an interest, unless the Federal 

interest in the real property extends 15 

years or longer. In those instances where 

the Federal interest attached is for a 

period of 15 years or more, the HHS 

awarding agency or pass-through entity, 

at its option, may require the nonFederal entity to report at various multiyear frequencies (e.g., every two years or 

every three years, not to exceed a fiveyear reporting period; or an HHS 

awarding agency or pass-through entity 

may require annual reporting for the 

first three years of a Federal award and 

thereafter require reporting every five 

years). 

§ 75.344–§ 75.350 [Reserved] 

Subrecipient Monitoring and 

Management 

§ 75.351 Subrecipient and contractor 

determinations. 

The non-Federal entity may 

concurrently receive Federal awards as 

a recipient, a subrecipient, and a 

contractor, depending on the substance 

of its agreements with HHS awarding 

agencies and pass-through entities. 

Therefore, a pass-through entity must 

make case-by-case determinations 

whether each agreement it makes for the 

disbursement of Federal program funds 

casts the party receiving the funds in the 

role of a subrecipient or a contractor. 

The HHS awarding agency may supply 

and require recipients to comply with 

additional guidance to support these 

determinations provided such guidance 

does not conflict with this section. 

(a) Subrecipients. A subaward is for 

the purpose of carrying out a portion of 

a Federal award and creates a Federal 

assistance relationship with the 

subrecipient. See § 75.2 Subaward. 

Characteristics which support the 

classification of the non-Federal entity 

as a subrecipient include when the nonFederal entity: 

(1) Determines who is eligible to 

receive what Federal assistance; 

(2) Has its performance measured in 

relation to whether objectives of a 

Federal program were met; 

(3) Has responsibility for 

programmatic decision making; 

(4) Is responsible for adherence to 

applicable Federal program 

requirements specified in the Federal 

award; and 

(5) In accordance with its agreement, 

uses the Federal funds to carry out a 

program for a public purpose specified 

in authorizing statute, as opposed to 

providing goods or services for the 

benefit of the pass-through entity. 

(b) Contractors. A contract is for the 

purpose of obtaining goods and services 

for the non-Federal entity’s own use and 

creates a procurement relationship with 

the contractor. See § 75.2 Contract. 

Characteristics indicative of a 

procurement relationship between the 

non-Federal entity and a contractor are 

when the non-Federal entity receiving 

the Federal funds: 

(1) Provides the goods and services 

within normal business operations; 

(2) Provides similar goods or services 

to many different purchasers; 

(3) Normally operates in a competitive 

environment; 

(4) Provides goods or services that are 

ancillary to the operation of the Federal 

program; and 


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(5) Is not subject to compliance 

requirements of the Federal program as 

a result of the agreement, though similar 

requirements may apply for other 

reasons. 

(c) Use of judgment in making 

determination. In determining whether 

an agreement between a pass-through 

entity and another non-Federal entity 

casts the latter as a subrecipient or a 

contractor, the substance of the 

relationship is more important than the 

form of the agreement. All of the 

characteristics listed above may not be 

present in all cases, and the passthrough entity must use judgment in 

classifying each agreement as a 

subaward or a procurement contract. 

§ 75.352 Requirements for pass-through 

entities. 

All pass-through entities must: 

(a) Ensure that every subaward is 

clearly identified to the subrecipient as 

a subaward and includes the following 

information at the time of the subaward 

and if any of these data elements 

change, include the changes in 

subsequent subaward modification. 

When some of this information is not 

available, the pass-through entity must 

provide the best information available to 

describe the Federal award and 

subaward. Required information 

includes: 

(1) Federal Award Identification. 

(i) Subrecipient name (which must 

match the name associated with their 

unique entity identifier); 

(ii) Subrecipient’s unique entity 

identifier; 

(iii) Federal Award Identification 

Number (FAIN); 

(iv) Federal Award Date (see § 75.2 

Federal award date); 

(v) Subaward Period of Performance 

Start and End Date; 

(vi) Amount of Federal Funds 

Obligated by this action; 

(vii) Total Amount of Federal Funds 

Obligated to the subrecipient; 

(viii) Total Amount of the Federal 

Award; 

(ix) Federal award project description, 

as required to be responsive to the 

Federal Funding Accountability and 

Transparency Act (FFATA); 

(x) Name of HHS awarding agency, 

pass-through entity, and contact 

information for awarding official, 

(xi) CFDA Number and Name; the 

pass-through entity must identify the 

dollar amount made available under 

each Federal award and the CFDA 

number at time of disbursement; 

(xii) Identification of whether the 

award is R&D; and 

(xiii) Indirect cost rate for the Federal 

award (including if the de minimis rate 

is charged per § 75.414). 

(2) All requirements imposed by the 

pass-through entity on the subrecipient 

so that the Federal award is used in 

accordance with Federal statutes, 

regulations and the terms and 

conditions of the Federal award. 

(3) Any additional requirements that 

the pass-through entity imposes on the 

subrecipient in order for the passthrough entity to meet its own 

responsibility to the HHS awarding 

agency including identification of any 

required financial and performance 

reports; 

(4) An approved federally recognized 

indirect cost rate negotiated between the 

subrecipient and the Federal 

Government or, if no such rate exists, 

either a rate negotiated between the 

pass-through entity and the subrecipient 

(in compliance with this part), or a de 

minimis indirect cost rate as defined in 

§ 75.414(f). 

(5) A requirement that the 

subrecipient permit the pass-through 

entity and auditors to have access to the 

subrecipient’s records and financial 

statements as necessary for the passthrough entity to meet the requirements 

of this part; and 

(6) Appropriate terms and conditions 

concerning closeout of the subaward. 

(b) Evaluate each subrecipient’s risk 

of noncompliance with Federal statutes, 

regulations, and the terms and 

conditions of the subaward for purposes 

of determining the appropriate 

subrecipient monitoring described in 

paragraphs (d) and (e) of this section, 

which may include consideration of 

such factors as: 

(1) The subrecipient’s prior 

experience with the same or similar 

subawards; 

(2) The results of previous audits 

including whether or not the 

subrecipient receives a Single Audit in 

accordance with Subpart F, and the 

extent to which the same or similar 

subaward has been audited as a major 

program; 

(3) Whether the subrecipient has new 

personnel or new or substantially 

changed systems; and 

(4) The extent and results of HHS 

awarding agency monitoring (e.g., if the 

subrecipient also receives Federal 

awards directly from a HHS awarding 

agency). 

(c) Consider imposing specific 

subaward conditions upon a 

subrecipient if appropriate as described 

in § 75.207. 

(d) Monitor the activities of the 

subrecipient as necessary to ensure that 

the subaward is used for authorized 

purposes, in compliance with Federal 

statutes, regulations, and the terms and 

conditions of the subaward; and that 

subaward performance goals are 

achieved. Pass-through entity 

monitoring of the subrecipient must 

include: 

(1) Reviewing financial and 

performance reports required by the 

pass-through entity. 

(2) Following-up and ensuring that 

the subrecipient takes timely and 

appropriate action on all deficiencies 

pertaining to the Federal award 

provided to the subrecipient from the 

pass-through entity detected through 

audits, on-site reviews, and other 

means. 

(3) Issuing a management decision for 

audit findings pertaining to the Federal 

award provided to the subrecipient from 

the pass-through entity as required by 

§ 75.521. 

(e) Depending upon the pass-through 

entity’s assessment of risk posed by the 

subrecipient (as described in paragraph 

(b) of this section), the following 

monitoring tools may be useful for the 

pass-through entity to ensure proper 

accountability and compliance with 

program requirements and achievement 

of performance goals: 

(1) Providing subrecipients with 

training and technical assistance on 

program-related matters; and 

(2) Performing on-site reviews of the 

subrecipient’s program operations; 

(3) Arranging for agreed-uponprocedures engagements as described in 

§ 75.425. 

(f) Verify that every subrecipient is 

audited as required by Subpart F of this 

part when it is expected that the 

subrecipient’s Federal awards expended 

during the respective fiscal year equaled 

or exceeded the threshold set forth in 

§ 75.501. 

(g) Consider whether the results of the 

subrecipient’s audits, on-site reviews, or 

other monitoring indicate conditions 

that necessitate adjustments to the passthrough entity’s own records. 

(h) Consider taking enforcement 

action against noncompliant 

subrecipients as described in § 75.371 

and in program regulations. 

§ 75.353 Fixed amount subawards. 

With prior written approval from the 

HHS awarding agency, a pass-through 

entity may provide subawards based on 

fixed amounts up to the Simplified 

Acquisition Threshold, provided that 

the subawards meet the requirements 

for fixed amount awards in § 75.201. 

§ 75.354–§ 75.360 [Reserved] 

Record Retention and Access 

§ 75.361 Retention requirements for 

records. 

Financial records, supporting 

documents, statistical records, and all 


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other non-Federal entity records 

pertinent to a Federal award must be 

retained for a period of three years from 

the date of submission of the final 

expenditure report or, for Federal 

awards that are renewed quarterly or 

annually, from the date of the 

submission of the quarterly or annual 

financial report, respectively, as 

reported to the HHS awarding agency or 

pass-through entity in the case of a 

subrecipient. HHS awarding agencies 

and pass-through entities must not 

impose any other record retention 

requirements upon non-Federal entities. 

The only exceptions are the following: 

(a) If any litigation, claim, or audit is 

started before the expiration of the 3- 

year period, the records must be 

retained until all litigation, claims, or 

audit findings involving the records 

have been resolved and final action 

taken. 

(b) When the non-Federal entity is 

notified in writing by the HHS awarding 

agency, cognizant agency for audit, 

oversight agency for audit, cognizant 

agency for indirect costs, or passthrough entity to extend the retention 

period. 

(c) Records for real property and 

equipment acquired with Federal funds 

must be retained for 3 years after final 

disposition. 

(d) When records are transferred to or 

maintained by the HHS awarding 

agency or pass-through entity, the 3-year 

retention requirement is not applicable 

to the non-Federal entity. 

(e) Records for program income 

transactions after the period of 

performance. In some cases, recipients 

must report program income after the 

period of performance. Where there is 

such a requirement, the retention period 

for the records pertaining to the earning 

of the program income starts from the 

end of the non-Federal entity’s fiscal 

year in which the program income is 

earned. 

(f) Indirect cost rate proposals and 

cost allocations plans. This paragraph 

applies to the following types of 

documents and their supporting 

records: Indirect cost rate computations 

or proposals, cost allocation plans, and 

any similar accounting computations of 

the rate at which a particular group of 

costs is chargeable (such as computer 

usage chargeback rates or composite 

fringe benefit rates). 

(1) If submitted for negotiation. If the 

proposal, plan, or other computation is 

required to be submitted to the Federal 

Government (or to the pass-through 

entity) to form the basis for negotiation 

of the rate, then the 3-year retention 

period for its supporting records starts 

from the date of such submission. 

(2) If not submitted for negotiation. If 

the proposal, plan, or other computation 

is not required to be submitted to the 

Federal Government (or to the passthrough entity) for negotiation purposes, 

then the 3-year retention period for the 

proposal, plan, or computation and its 

supporting records starts from the end 

of the fiscal year (or other accounting 

period) covered by the proposal, plan, 

or other computation. 

§ 75.362 Requests for transfer or records. 

The HHS awarding agency must 

request transfer of certain records to its 

custody from the non-Federal entity 

when it determines that the records 

possess long-term retention value. 

However, in order to avoid duplicate 

recordkeeping, the HHS awarding 

agency may make arrangements for the 

non-Federal entity to retain any records 

that are continuously needed for joint 

use. 

§ 75.363 Methods for collection, 

transmission and storage of information. 

In accordance with Executive Order 

13642, the HHS awarding agency and 

the non-Federal entity should, 

whenever practicable, collect, transmit, 

and store Federal award-related 

information in open and machine 

readable formats rather than in closed 

formats or on paper. The HHS awarding 

agency or pass-through entity must 

always provide or accept paper versions 

of Federal award-related information to 

and from the non-Federal entity upon 

request. If paper copies are submitted, 

the HHS awarding agency or passthrough entity must not require more 

than an original and two copies. When 

original records are electronic and 

cannot be altered, there is no need to 

create and retain paper copies. When 

original records are paper, electronic 

versions may be substituted through the 

use of duplication or other forms of 

electronic media provided that they are 

subject to periodic quality control 

reviews, provide reasonable safeguards 

against alteration, and remain readable. 

§ 75.364 Access to records. 

(a) Records of non-Federal entities. 

The HHS awarding agency, Inspectors 

General, the Comptroller General of the 

United States, and the pass-through 

entity, or any of their authorized 

representatives, must have the right of 

access to any documents, papers, or 

other records of the non-Federal entity 

which are pertinent to the Federal 

award, in order to make audits, 

examinations, excerpts, and transcripts. 

The right also includes timely and 

reasonable access to the non-Federal 

entity’s personnel for the purpose of 

interview and discussion related to such 

documents. 

(b) Only under extraordinary and rare 

circumstances would such access 

include review of the true name of 

victims of a crime. Routine monitoring 

cannot be considered extraordinary and 

rare circumstances that would 

necessitate access to this information. 

When access to the true name of victims 

of a crime is necessary, appropriate 

steps to protect this sensitive 

information must be taken by both the 

non-Federal entity and the HHS 

awarding agency. Any such access, 

other than under a court order or 

subpoena pursuant to a bona fide 

confidential investigation, must be 

approved by the head of the HHS 

awarding agency or delegate. 

(c) Expiration of right of access. The 

rights of access in this section are not 

limited to the required retention period 

but last as long as the records are 

retained. HHS awarding agencies and 

pass-through entities must not impose 

any other access requirements upon 

non-Federal entities. 

§ 75.365 Restrictions on public access to 

records. 

No HHS awarding agency may place 

restrictions on the non-Federal entity 

that limit public access to the records of 

the non-Federal entity pertinent to a 

Federal award, except for protected 

personally identifiable information (PII) 

or when the HHS awarding agency can 

demonstrate that such records will be 

kept confidential and would have been 

exempted from disclosure pursuant to 

the Freedom of Information Act (5 

U.S.C. 552) or controlled unclassified 

information pursuant to Executive 

Order 13556 if the records had belonged 

to the HHS awarding agency. The 

Freedom of Information Act (5 U.S.C. 

552) (FOIA) does not apply to those 

records that remain under a non-Federal 

entity’s control except as required under 

§ 75.322. Unless required by Federal, 

state, local, or tribal statute, non-Federal 

entities are not required to permit 

public access to their records. The nonFederal entity’s records provided to a 

Federal agency generally will be subject 

to FOIA and applicable exemptions. 

§ 75.366–§ 75.370 [Reserved] 

Remedies for Noncompliance 

§ 75.371 Remedies for noncompliance. 

If a non-Federal entity fails to comply 

with Federal statutes, regulations, or the 

terms and conditions of a Federal 

award, the HHS awarding agency or 

pass-through entity may impose 

additional conditions, as described in 

§ 75.207. If the HHS awarding agency or 


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pass-through entity determines that 

noncompliance cannot be remedied by 

imposing additional conditions, the 

HHS awarding agency or pass-through 

entity may take one or more of the 

following actions, as appropriate in the 

circumstances: 

(a) Temporarily withhold cash 

payments pending correction of the 

deficiency by the non-Federal entity or 

more severe enforcement action by the 

HHS awarding agency or pass-through 

entity. 

(b) 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. 

(c) Wholly or partly suspend 

(suspension of award activities) or 

terminate the Federal award. 

(d) Initiate suspension or debarment 

proceedings as authorized under 2 CFR 

part 180 and HHS awarding agency 

regulations at 2 CFR part 376 (or in the 

case of a pass-through entity, 

recommend such a proceeding be 

initiated by a HHS awarding agency). 

(e) Withhold further Federal awards 

for the project or program. 

(f) Take other remedies that may be 

legally available. 

§ 75.372 Termination. 

(a) The Federal award may be 

terminated in whole or in part as 

follows: 

(1) By the HHS awarding agency or 

pass-through entity, if a non-Federal 

entity fails to comply with terms and 

conditions of a Federal award; 

(2) By the HHS awarding agency or 

pass-through entity for cause; 

(3) By the HHS awarding agency or 

pass-through entity with the consent of 

the non-Federal entity, in which case 

the two parties must agree upon the 

termination conditions, including the 

effective date and, in the case of partial 

termination, the portion to be 

terminated; or 

(4) By the non-Federal entity upon 

sending to the HHS awarding agency or 

pass-through entity 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 

the HHS awarding agency or passthrough entity determines in the case of 

partial termination that the reduced or 

modified portion of the Federal award 

or subaward will not accomplish the 

purposes for which the Federal award 

was made, the HHS awarding agency or 

pass-through entity may terminate the 

Federal award in its entirety. 

(b) When a Federal award is 

terminated or partially terminated, both 

the HHS awarding agency or passthrough entity and the non-Federal 

entity remain responsible for 

compliance with the requirements in 

§§ 75.381and 75.386. 

§ 75.373 Notification of termination 

requirement. 

(a) The HHS awarding agency or passthrough entity must provide to the nonFederal entity a notice of termination. 

(b) If the Federal award is terminated 

for the non-Federal entity’s failure to 

comply with the Federal statutes, 

regulations, or terms and conditions of 

the Federal award, the notification must 

state that the termination decision may 

be considered in evaluating future 

applications received from the nonFederal entity. 

(c) Upon termination of a Federal 

award, the HHS awarding agency must 

provide the information required under 

FFATA to the Federal Web site 

established to fulfill the requirements of 

FFATA, and update or notify any other 

relevant government-wide systems or 

entities of any indications of poor 

performance as required by 41 U.S.C. 

417b and 31 U.S.C. 3321 and 

implementing guidance at 2 CFR part 77 

(forthcoming at time of publication). See 

also the requirements for Suspension 

and Debarment at 2 CFR part 180. 

§ 75.374 Opportunities to object, hearings, 

and appeals. 

(a) Upon taking any remedy for noncompliance, the HHS awarding agency 

must provide the non-Federal entity an 

opportunity to object and provide 

information and documentation 

challenging the suspension or 

termination action, in accordance with 

written processes and procedures 

published by the HHS awarding agency. 

The HHS awarding agency or passthrough entity must comply with any 

requirements for hearings, appeals or 

other administrative proceedings to 

which the non-Federal entity is entitled 

under any statute or regulation 

applicable to the action involved. 

(b) See also: 

(1) 42 CFR part 50, subpart D for the 

Public Health Service Appeals 

Procedures, 

(2) 45 CFR part 16 for the Procedures 

of the Departmental Appeals Board, and 

(3) 45 CFR part 95, subpart A for the 

time limits for states to file claims. 

(4) 45 CFR part 95, subpart E for the 

State cost allocation plan disapprovals. 

§ 75.375 Effects of suspension and 

termination. 

Costs to the non-Federal entity 

resulting from obligations incurred by 

the non-Federal entity during a 

suspension or after termination of a 

Federal award or subaward are not 

allowable unless the HHS awarding 

agency or pass-through entity expressly 

authorizes them in the notice of 

suspension or termination or 

subsequently. However, costs during 

suspension or after termination are 

allowable if: 

(a) The costs result from obligations 

which were properly incurred by the 

non-Federal entity before the effective 

date of suspension or termination, are 

not in anticipation of it; and 

(b) The costs would be allowable if 

the Federal award was not suspended or 

expired normally at the end of the 

period of performance in which the 

termination takes effect. 

§ 75.376–§ 75.380 [Reserved] 

Closeout 

§ 75.381 Closeout. 

The HHS awarding agency or passthrough entity will close-out the Federal 

award when it determines that all 

applicable administrative actions and 

all required work of the Federal award 

have been completed by the non-Federal 

entity. This section specifies the actions 

the non-Federal entity and HHS 

awarding agency or pass-through entity 

must take to complete this process at the 

end of the period of performance. 

(a) The non-Federal entity must 

submit, no later than 90 calendar days 

after the end date of the period of 

performance, all financial, performance, 

and other reports as required by the 

terms and conditions of the Federal 

award. The HHS awarding agency or 

pass-through entity may approve 

extensions when requested by the nonFederal entity. 

(b) Unless the HHS awarding agency 

or pass-through entity authorizes an 

extension, a non-Federal entity must 

liquidate all obligations incurred under 

the Federal award not later than 90 

calendar days after the end date of the 

period of performance as specified in 

the terms and conditions of the Federal 

award. 

(c) The HHS awarding agency or passthrough entity must make prompt 

payments to the non-Federal entity for 

allowable reimbursable costs under the 

Federal award being closed out. 

(d) The non-Federal entity must 

promptly refund any balances of 

unobligated cash that the HHS awarding 

agency or pass-through entity paid in 

advance or paid and that are not 

authorized to be retained by the nonFederal entity for use in other projects. 

See OMB Circular A–129 and see 

§ 75.391 for requirements regarding 

unreturned amounts that become 

delinquent debts. 


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(e) Consistent with the terms and 

conditions of the Federal award, the 

HHS awarding agency or pass-through 

entity must make a settlement for any 

upward or downward adjustments to 

the Federal share of costs after closeout 

reports are received. 

(f) The non-Federal entity must 

account for any real and personal 

property acquired with Federal funds or 

received from the Federal Government 

in accordance with §§ 75.317 through 

75.323 and 75.343. 

(g) The HHS awarding agency or passthrough entity should complete all 

closeout actions for Federal awards no 

later than 180 calendar days after 

receipt and acceptance of all required 

final reports. 

§ 75.382–§ 75.385 [Reserved] 

Post-Closeout Adjustments and 

Continuing Responsibilities 

§ 75.386 Post-Closeout Adjustments and 

Continuing Responsibilities. 

(a) The closeout of a Federal award 

does not affect any of the following: 

(1) The right of the HHS awarding 

agency or pass-through entity to 

disallow costs and recover funds on the 

basis of a later audit or other review. 

The HHS awarding agency or passthrough entity must make any cost 

disallowance determination and notify 

the non-Federal entity within the record 

retention period. 

(2) The obligation of the non-Federal 

entity to return any funds due as a result 

of later refunds, corrections, or other 

transactions including final indirect cost 

rate adjustments. 

(3) Audit requirements in Subpart F of 

this part. 

(4) Property management and 

disposition requirements in §§ 75.317 

through 75.323. 

(5) Records retention as required in 

§§ 75.361 through 75.365. 

(b) After closeout of the Federal 

award, a relationship created under the 

Federal award may be modified or 

ended in whole or in part with the 

consent of the HHS awarding agency or 

pass-through entity and the non-Federal 

entity, provided the responsibilities of 

the non-Federal entity referred to in 

paragraph (a) of this section, including 

those for property management as 

applicable, are considered and 

provisions made for continuing 

responsibilities of the non-Federal 

entity, as appropriate. 

§ 75.387–§ 75.390 [Reserved] 

Collection of Amounts Due 

§ 75.391 Collection of amounts due. 

(a) Any funds paid to the non-Federal 

entity in excess of the amount to which 

the non-Federal entity is finally 

determined to be entitled under the 

terms of the Federal award constitute a 

debt to the Federal Government. If not 

paid within 90 calendar days after 

demand, the HHS awarding agency may 

reduce the debt by: 

(1) Making an administrative offset 

against other requests for 

reimbursements; 

(2) Withholding advance payments 

otherwise due to the non-Federal entity; 

or 

(3) Other action permitted by Federal 

statute. 

(b) Except where otherwise provided 

by statutes or regulations, the HHS 

awarding agency will charge interest on 

an overdue debt in accordance with the 

Federal Claims Collection Standards (31 

CFR parts 900 through 999). The date 

from which interest is computed is not 

extended by litigation or the filing of 

any form of appeal. (See also HHS 

Claims Collection regulations at 45 CFR 

part 30.) 

Subpart E—Cost Principles 

General Provisions 

§ 75.400 Policy guide. 

The application of these cost 

principles is based on the fundamental 

premises that: 

(a) The non-Federal entity is 

responsible for the efficient and 

effective administration of the Federal 

award through the application of sound 

management practices. 

(b) The non-Federal entity assumes 

responsibility for administering Federal 

funds in a manner consistent with 

underlying agreements, program 

objectives, and the terms and conditions 

of the Federal award. 

(c) The non-Federal entity, in 

recognition of its own unique 

combination of staff, facilities, and 

experience, has the primary 

responsibility for employing whatever 

form of sound organization and 

management techniques may be 

necessary in order to assure proper and 

efficient administration of the Federalaward. 

(d) The application of these cost 

principles should require no significant 

changes in the internal accounting 

policies and practices of the nonFederal entity. However, the accounting 

practices of the non-Federal entity must 

be consistent with these cost principles 

and support the accumulation of costs 

as required by the principles, and must 

provide for adequate documentation to 

support costs charged to the Federal 

award. 

(e) In reviewing, negotiating and 

approving cost allocation plans or 

indirect cost proposals, the cognizant 

agency for indirect costs should 

generally assure that the non-Federal 

entity is applying these cost accounting 

principles on a consistent basis during 

their review and negotiation of indirect 

cost proposals. Where wide variations 

exist in the treatment of a given cost 

item by the non-Federal entity, the 

reasonableness and equity of such 

treatments should be fully considered. 

See § 75.2 Indirect (facilities & 

administrative (F&A)) costs. 

(f) For non-Federal entities that 

educate and engage students in 

research, the dual role of students as 

both trainees and employees (including 

pre- and post-doctoral staff) contributing 

to the completion of Federal awards for 

research must be recognized in the 

application of these principles. 

(g) The non-Federal entity may not 

earn or keep any profit resulting from 

Federal financial assistance, unless 

explicitly authorized by the terms and 

conditions of the Federal award. See 

also § 75.307. 

§ 75.401 Application. 

(a) General. These principles must be 

used in determining the allowable costs 

of work performed by the non-Federal 

entity under Federal awards. These 

principles also must be used by the nonFederal entity as a guide in the pricing 

of fixed-price contracts and subcontracts 

where costs are used in determining the 

appropriate price. The principles do not 

apply to: 

(1) Arrangements under which 

Federal financing is in the form of loans, 

scholarships, fellowships, traineeships, 

or other fixed amounts based on such 

items as education allowance or 

published tuition rates and fees. 

(2) For IHEs, capitation awards, which 

are awards based on case counts or 

number of beneficiaries according to the 

terms and conditions of the Federal 

award. 

(3) Fixed amount awards. See also 

§§ 75.2 Fixed amount awards and 

75.201. 

(4) Federal awards to hospitals (see 

Appendix IX to Part 75). 

(5) Other awards under which the 

non-Federal entity is not required to 

account to the Federal Government for 

actual costs incurred. 

(b) Federal Contract. Where a Federal 

contract awarded to a non-Federal entity 

is subject to the Cost Accounting 


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Standards (CAS), it incorporates the 

applicable CAS clauses, Standards, and 

CAS administration requirements per 

the 48 CFR Chapter 99 and 48 CFR part 

30 (FAR Part 30). CAS applies directly 

to the CAS-covered contract and the 

Cost Accounting Standards at 48 CFR 

parts 9904 or 9905 takes precedence 

over the cost principles in this Subpart 

E with respect to the allocation of costs. 

When a contract with a non-Federal 

entity is subject to full CAS coverage, 

the allowability of certain costs under 

the cost principles will be affected by 

the allocation provisions of the Cost 

Accounting Standards (e.g., CAS 414–48 

CFR 9904.414, and CAS 417–48 CFR 

9904.417), apply rather the allowability 

provisions of § 75.449. In complying 

with those requirements, the nonFederal entity’s application of cost 

accounting practices for estimating, 

accumulating, and reporting costs for 

other Federal awards and other cost 

objectives under the CAS-covered 

contract still must be consistent with its 

cost accounting practices for the CAScovered contracts. In all cases, only one 

set of accounting records needs to be 

maintained for the allocation of costs by 

the non-Federal entity. 

(c) Exemptions. Some nonprofit 

organizations, because of their size and 

nature of operations, can be considered 

to be similar to for-profit entities for 

purpose of applicability of cost 

principles. Such nonprofit organizations 

must operate under Federal cost 

principles applicable to for-profit 

entities located at 48 CFR 31.2. A listing 

of these organizations is contained in 

Appendix VIII to Part 75. Other 

organizations, as approved by the 

cognizant agency for indirect costs, may 

be added from time to time. 

Basic Considerations 

§ 75.402 Composition of Costs. 

Total cost. The total cost of a Federal 

award is the sum of the allowable direct 

and allocable indirect costs less any 

applicable credits. 

§ 75.403 Factors affecting allowability of 

costs. 

Except where otherwise authorized by 

statute, costs must meet the following 

general criteria in order to be allowable 

under Federal awards: 

(a) Be necessary and reasonable for 

the performance of the Federal award 

and be allocable thereto under these 

principles. 

(b) Conform to any limitations or 

exclusions set forth in these principles 

or in the Federal award as to types or 

amount of cost items. 

(c) Be consistent with policies and 

procedures that apply uniformly to both 

federally-financed and other activities of 

the non-Federal entity. 

(d) Be accorded consistent treatment. 

A cost may not be assigned to a Federal 

award as a direct cost if any other cost 

incurred for the same purpose in like 

circumstances has been allocated to the 

Federal award as an indirect cost. 

(e) Be determined in accordance with 

generally accepted accounting 

principles (GAAP), except, for state and 

local governments and Indian tribes 

only, as otherwise provided for in this 

part. 

(f) Not be included as a cost or used 

to meet cost sharing or matching 

requirements of any other federallyfinanced program in either the current 

or a prior period. See also § 75.306(b). 

(g) Be adequately documented. See 

also §§ 75.300 through 75.309. 

§ 75.404 Reasonable costs. 

A cost is reasonable if, in its nature 

and amount, it does not exceed that 

which would be incurred by a prudent 

person under the circumstances 

prevailing at the time the decision was 

made to incur the cost. The question of 

reasonableness is particularly important 

when the non-Federal entity is 

predominantly federally-funded. In 

determining reasonableness of a given 

cost, consideration must be given to: 

(a) Whether the cost is of a type 

generally recognized as ordinary and 

necessary for the operation of the nonFederal entity or the proper and 

efficient performance of the Federal 

award. 

(b) The restraints or requirements 

imposed by such factors as: Sound 

business practices; arm’s-length 

bargaining; Federal, state, local, tribal, 

and other laws and regulations; and 

terms and conditions of the Federal 

award. 

(c) Market prices for comparable 

goods or services for the geographic 

area. 

(d) Whether the individuals 

concerned acted with prudence in the 

circumstances considering their 

responsibilities to the non-Federal 

entity, its employees, where applicable 

its students or membership, the public 

at large, and the Federal Government. 

(e) Whether the non-Federal entity 

significantly deviates from its 

established practices and policies 

regarding the incurrence of costs, which 

may unjustifiably increase the Federal 

award’s cost. 

§ 75.405 Allocable costs. 

(a) A cost is allocable to a particular 

Federal award or other cost objective if 

the goods or services involved are 

chargeable or assignable to that Federal 

award or cost objective in accordance 

with relative benefits received. This 

standard is met if the cost: 

(1) Is incurred specifically for the 

Federal award; 

(2) Benefits both the Federal award 

and other work of the non-Federal entity 

and can be distributed in proportions 

that may be approximated using 

reasonable methods; and 

(3) Is necessary to the overall 

operation of the non-Federal entity and 

is assignable in part to the Federal 

award in accordance with the principles 

in this subpart. 

(b) All activities which benefit from 

the non-Federal entity’s indirect (F&A) 

cost, including unallowable activities 

and donated services by the non-Federal 

entity or third parties, will receive an 

appropriate allocation of indirect costs. 

(c) Any cost allocable to a particular 

Federal award under the principles 

provided for in this part may not be 

charged to other Federal awards to 

overcome fund deficiencies, to avoid 

restrictions imposed by Federal statutes, 

regulations, or terms and conditions of 

the Federal awards, or for other reasons. 

However, this prohibition would not 

preclude the non-Federal entity from 

shifting costs that are allowable under 

two or more Federal awards in 

accordance with existing Federal 

statutes, regulations, or the terms and 

conditions of the Federal awards. 

(d) Direct cost allocation principles. If 

a cost benefits two or more projects or 

activities in proportions that can be 

determined without undue effort or 

cost, the cost must be allocated to the 

projects based on the proportional 

benefit. If a cost benefits two or more 

projects or activities in proportions that 

cannot be determined because of the 

interrelationship of the work involved, 

then, notwithstanding paragraph (c) of 

this section, the costs may be allocated 

or transferred to benefitted projects on 

any reasonable documented basis. 

Where the purchase of equipment or 

other capital asset is specifically 

authorized under a Federal award, the 

costs are assignable to the Federal award 

regardless of the use that may be made 

of the equipment or other capital asset 

involved when no longer needed for the 

purpose for which it was originally 

required. See also §§ 75.317 through 

75.323 and 75.439. 

(e) If the contract is subject to CAS, 

costs must be allocated to the contract 

pursuant to the Cost Accounting 

Standards. To the extent that CAS is 

applicable, the allocation of costs in 

accordance with CAS takes precedence 

over the allocation provisions in this 

part. 


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§ 75.406 Applicable credits. 

(a) Applicable credits refer to those 

receipts or reduction-of-expendituretype transactions that offset or reduce 

expense items allocable to the Federal 

award as direct or indirect (F&A) costs. 

Examples of such transactions are: 

Purchase discounts, rebates or 

allowances, recoveries or indemnities 

on losses, insurance refunds or rebates, 

and adjustments of overpayments or 

erroneous charges. To the extent that 

such credits accruing to or received by 

the non-Federal entity relate to 

allowable costs, they must be credited to 

the Federal award either as a cost 

reduction or cash refund, as 

appropriate. 

(b) In some instances, the amounts 

received from the Federal Government 

to finance activities or service 

operations of the non-Federal entity 

should be treated as applicable credits. 

Specifically, the concept of netting such 

credit items (including any amounts 

used to meet cost sharing or matching 

requirements) must be recognized in 

determining the rates or amounts to be 

charged to the Federal award. (See 

§§ 75.436 and 75.468, for areas of 

potential application in the matter of 

Federal financing of activities.) 

§ 75.407 Prior written approval (prior 

approval). 

(a) Under any given Federal award, 

the reasonableness and allocability of 

certain items of costs may be difficult to 

determine. In order to avoid subsequent 

disallowance or dispute based on 

unreasonableness or non-allocability, 

the non-Federal entity may seek the 

prior written approval of the cognizant 

agency for indirect costs or the HHS 

awarding agency in advance of the 

incurrence of special or unusual costs. 

Prior written approval should include 

the timeframe or scope of the agreement. 

The absence of prior written approval 

on any element of cost will not, in itself, 

affect the reasonableness or allocability 

of that element, unless prior approval is 

specifically required for allowability as 

described under certain circumstances 

in the following sections of this part: 

(1) § 75.201 Use of grant agreements 

(including fixed amount awards), 

cooperative agreements, and contracts, 

paragraph (b)(5); 

(2) § 75.306 Cost sharing or matching; 

(3) § 75.307 Program income; 

(4) § 75.308 Revision of budget and 

program plans; 

(5) § 75.309 Period of performance 

and availability of funds; 

(6) § 75.318 Real property; 

(7) § 75.320 Equipment; 

(8) § 75.353 Fixed amount subawards; 

(9) § 75.413 Direct costs, paragraph 

(c); 

(10) § 75.430 Compensation—personal 

services, paragraph (h); 

(11) § 75.431 Compensation—fringe 

benefits; 

(12) § 75.438 Entertainment costs; 

(13) § 75.439 Equipment and other 

capital expenditures; 

(14) § 75.440 Exchange rates; 

(15) § 75.441 Fines, penalties, 

damages and other settlements; 

(16) § 75.442 Fund raising and 

investment management costs; 

(17) § 75.445 Goods or services for 

personal use; 

(18) § 75.447 Insurance and 

indemnification; 

(19) § 75.454 Memberships, 

subscriptions, and professional activity 

costs, paragraph (c); 

(20) § 75.455 Organization costs; 

(21) § 75.456 Participant support 

costs; 

(22) § 75.458 Pre-award costs; 

(23) § 75.462 Rearrangement and 

reconversion costs; 

(24) § 75.467 Selling and marketing 

costs; 

(25) § 75.470 Taxes (including Value 

Added Tax) paragraph (c); and 

(26) § 75.474 Travel costs. 

(b) A request by a subrecipient for 

prior approval will be addressed in 

writing to the recipient. The recipient 

will promptly review such request and 

shall approve or disapprove the request 

in writing. A recipient will not approve 

any budget or project revision which is 

inconsistent with the purpose or terms 

and conditions of the Federal-award to 

the recipient. If the revision, requested 

by the subrecipient would result in a 

change to the recipient’s approved 

project which requires Federal prior 

approval, the recipient will obtain the 

HHS awarding agency’s approval before 

approving the subrecipient’s request. 

(c) For cost-reimbursement contracts 

under the FAR, the recipient shall 

obtain prior written approval in 

accordance with FAR 52.244–2. 

§ 75.408 Limitation on allowance of costs. 

The Federal award may be subject to 

statutory requirements that limit the 

allowability of costs. When the 

maximum amount allowable under a 

limitation is less than the total amount 

determined in accordance with the 

principles in this part, the amount not 

recoverable under the Federal award 

may not be charged to the Federal 

award. 

§ 75.409 Special considerations. 

In addition to the basic considerations 

regarding the allowability of costs 

highlighted in this subpart, certain 

sections in this subpart describe special 

considerations and requirements 

applicable to states, local governments, 

Indian tribes, and IHEs. In addition, 

certain provisions among the items of 

cost in this subpart are only applicable 

to certain types of non-Federal entities, 

as specified in the following sections: 

(a) Direct and Indirect (F&A) Costs 

(§§ 75.412 through 75.415); 

(b) Special Considerations for States, 

Local Governments and Indian Tribes 

(§§ 75.416 and 75.417); and 

(c) Special Considerations for 

Institutions of Higher Education 

(§§ 75.418 and 75.419). 

§ 75.410 Collection of unallowable costs. 

Payments made for costs determined 

to be unallowable by either the HHS 

awarding agency, cognizant agency for 

indirect costs, or pass-through entity, 

either as direct or indirect costs, must be 

refunded (including interest) to the 

Federal Government in accordance with 

instructions from the Federal agency 

that determined the costs are 

unallowable unless Federal statute or 

regulation directs otherwise. See also 

Subpart D of this part, §§ 75.300 through 

75.309. 

§ 75.411 Adjustment of previously 

negotiated indirect (F&A) cost rates 

containing unallowable costs. 

(a) Negotiated indirect (F&A) cost 

rates based on a proposal later found to 

have included costs that: 

(1) Are unallowable as specified by 

Federal statutes, regulations or the terms 

and conditions of a Federal award; or 

(2) Are unallowable because they are 

not allocable to the Federal award(s), 

must be adjusted, or a refund must be 

made, in accordance with the 

requirements of this section. These 

adjustments or refunds are designed to 

correct the proposals used to establish 

the rates and do not constitute a 

reopening of the rate negotiation. The 

adjustments or refunds will be made 

regardless of the type of rate negotiated 

(predetermined, final, fixed, or 

provisional). 

(b) For rates covering a future fiscal 

year of the non-Federal entity, the 

unallowable costs will be removed from 

the indirect (F&A) cost pools and the 

rates appropriately adjusted. 

(c) For rates covering a past period, 

the Federal share of the unallowable 

costs will be computed for each year 

involved and a cash refund (including 

interest chargeable in accordance with 

applicable regulations) will be made to 

the Federal Government. If cash refunds 

are made for past periods covered by 

provisional or fixed rates, appropriate 

adjustments will be made when the 


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rates are finalized to avoid duplicate 

recovery of the unallowable costs by the 

Federal Government. 

(d) For rates covering the current 

period, either a rate adjustment or a 

refund, as described in paragraphs (b) 

and (c) of this section, must be required 

by the cognizant agency for indirect 

costs. The choice of method must be at 

the discretion of the cognizant agency 

for indirect costs, based on its judgment 

as to which method would be most 

practical. 

(e) The amount or proportion of 

unallowable costs included in each 

year’s rate will be assumed to be the 

same as the amount or proportion of 

unallowable costs included in the base 

year proposal used to establish the rate. 

Direct and Indirect (F&A) Costs 

§ 75.412 Classification of costs. 

There is no universal rule for 

classifying certain costs as either direct 

or indirect (F&A) under every 

accounting system. A cost may be direct 

with respect to some specific service or 

function, but indirect with respect to the 

Federal award or other final cost 

objective. Therefore, it is essential that 

each item of cost incurred for the same 

purpose be treated consistently in like 

circumstances either as a direct or an 

indirect (F&A) cost in order to avoid 

possible double-charging of Federal 

awards. Guidelines for determining 

direct and indirect (F&A) costs charged 

to Federal awards are provided in this 

subpart. 

§ 75.413 Direct costs. 

(a) General. Direct costs are those 

costs that can be identified specifically 

with a particular final cost objective, 

such as a Federal award, or other 

internally or externally funded activity, 

or that can be directly assigned to such 

activities relatively easily with a high 

degree of accuracy. Costs incurred for 

the same purpose in like circumstances 

must be treated consistently as either 

direct or indirect (F&A) costs. See also 

§ 75.405. 

(b) Application to Federal awards. 

Identification with the Federal award 

rather than the nature of the goods and 

services involved is the determining 

factor in distinguishing direct from 

indirect (F&A) costs of Federal awards. 

Typical costs charged directly to a 

Federal award are the compensation of 

employees who work on that award, 

their related fringe benefit costs, the 

costs of materials and other items of 

expense incurred for the Federal award. 

If directly related to a specific award, 

certain costs that otherwise would be 

treated as indirect costs may also 

include extraordinary utility 

consumption, the cost of materials 

supplied from stock or services 

rendered by specialized facilities or 

other institutional service operations. 

(c) The salaries of administrative and 

clerical staff should normally be treated 

as indirect (F&A) costs. Direct charging 

of these costs may be appropriate only 

if all of the following conditions are 

met: 

(1) Administrative or clerical services 

are integral to a project or activity; 

(2) Individuals involved can be 

specifically identified with the project 

or activity; 

(3) Such costs are explicitly included 

in the budget or have the prior written 

approval of the Federal awarding 

agency; and 

(4) The costs are not also recovered as 

indirect costs. 

(d) Minor items. Any direct cost of 

minor amount may be treated as an 

indirect (F&A) cost for reasons of 

practicality where such accounting 

treatment for that item of cost is 

consistently applied to all Federal and 

non-Federal cost objectives. 

(e) The costs of certain activities are 

not allowable as charges to Federal 

awards. However, even though these 

costs are unallowable for purposes of 

computing charges to Federal awards, 

they nonetheless must be treated as 

direct costs for purposes of determining 

indirect (F&A) cost rates and be 

allocated their equitable share of the 

non-Federal entity’s indirect costs if 

they represent activities which: 

(1) Include the salaries of personnel, 

(2) Occupy space, and 

(3) Benefit from the non-Federal 

entity’s indirect (F&A) costs. 

(f) For nonprofit organizations, the 

costs of activities performed by the nonFederal entity primarily as a service to 

members, clients, or the general public 

when significant and necessary to the 

non-Federal entity’s mission must be 

treated as direct costs whether or not 

allowable, and be allocated an equitable 

share of indirect (F&A) costs. Some 

examples of these types of activities 

include: 

(1) Maintenance of membership rolls, 

subscriptions, publications, and related 

functions. See also § 75.454. 

(2) Providing services and information 

to members, legislative or 

administrative bodies, or the public. See 

also §§ 75.454 and 75.450. 

(3) Promotion, lobbying, and other 

forms of public relations. See also 

§§ 75.421 and 75.450. 

(4) Conferences except those held to 

conduct the general administration of 

the non-Federal entity. See also 

§ 75.432. 

(5) Maintenance, protection, and 

investment of special funds not used in 

operation of the non-Federal entity. See 

also § 75.442. 

(6) Administration of group benefits 

on behalf of members or clients, 

including life and hospital insurance, 

annuity or retirement plans, and 

financial aid. See also § 75.431. 

§ 75.414 Indirect (F&A) costs. 

(a) Facilities and Administration 

Classification. For major IHEs and major 

nonprofit organizations, indirect (F&A) 

costs must be classified within two 

broad categories: ‘‘Facilities’’ and 

‘‘Administration.’’ ‘‘Facilities’’ is 

defined as depreciation on buildings, 

equipment and capital improvement, 

interest on debt associated with certain 

buildings, equipment and capital 

improvements, and operations and 

maintenance expenses. 

‘‘Administration’’ is defined as general 

administration and general expenses 

such as the director’s office, accounting, 

personnel and all other types of 

expenditures not listed specifically 

under one of the subcategories of 

‘‘Facilities’’ (including cross allocations 

from other pools, where applicable). For 

nonprofit organizations, library 

expenses are included in the 

‘‘Administration’’ category; for 

institutions of higher education, they 

are included in the ‘‘Facilities’’ 

category. Major IHEs are defined as 

those required to use the Standard 

Format for Submission as noted in 

Appendix III to Part 75.C. 11. Major 

nonprofit organizations are those which 

receive more than $10 million dollars in 

direct Federal funding. 

(b) Diversity of nonprofit 

organizations. Because of the diverse 

characteristics and accounting practices 

of nonprofit organizations, it is not 

possible to specify the types of cost 

which may be classified as indirect 

(F&A) cost in all situations. 

Identification with a Federal award 

rather than the nature of the goods and 

services involved is the determining 

factor in distinguishing direct from 

indirect (F&A) costs of Federal awards. 

However, typical examples of indirect 

(F&A) cost for many nonprofit 

organizations may include depreciation 

on buildings and equipment, the costs 

of operating and maintaining facilities, 

and general administration and general 

expenses, such as the salaries and 

expenses of executive officers, 

personnel administration, and 

accounting. 

(c) Federal Agency Acceptance of 

Negotiated Indirect Cost Rates. (See also 

§ 75.306.) 

(1) The negotiated rates must be 

accepted by all Federal awarding 

agencies. An HHS awarding agency may 


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use a rate different from the negotiated 

rate for a class of Federal awards or a 

single Federal award only when 

required by Federal statute or 

regulation, or when approved by a 

Federal awarding agency head or 

delegate based on documented 

justification as described in paragraph 

(c)(3) of this section. 

(2) The HHS awarding agency head or 

delegate must notify OMB of any 

approved deviations. 

(3) The HHS awarding agency must 

implement, and make publicly 

available, the policies, procedures and 

general decision making criteria that 

their programs will follow to seek and 

justify deviations from negotiated rates. 

(4) As required under § 75.203(c), the 

HHS awarding agency must include in 

the notice of funding opportunity the 

policies relating to indirect cost rate 

reimbursement, matching, or cost share 

as approved. See also Appendix I.C.2 

and D.6 of this part. As appropriate, the 

HHS agency should incorporate 

discussion of these policies into their 

outreach activities with non-Federal 

entities prior to the posting of a notice 

of funding opportunity. 

(d) Pass-through entities are subject to 

the requirements in § 75.352(a)(4). 

(e) Requirements for development and 

submission of indirect (F&A) cost rate 

proposals and cost allocation plans are 

contained in Appendices III–VII, and 

Appendix IX as follows: 

(1) Appendix III to Part 75—Indirect 

(F&A) Costs Identification and 

Assignment, and Rate Determination for 

Institutions of Higher Education (IHEs); 

(2) Appendix IV to Part 75—Indirect 

(F&A) Costs Identification and 

Assignment, and Rate Determination for 

Nonprofit Organizations; 

(3) Appendix V to Part 75—State/

Local Government and Indian TribeWide Central Service Cost Allocation 

Plans; 

(4) Appendix VI to Part 75—Public 

Assistance Cost Allocation Plans; 

(5) Appendix VII to Part 75—States 

and Local Government and Indian Tribe 

Indirect Cost Proposals; and 

(6) Appendix IX to Part 75— 

Principles for Determining Costs 

Applicable to Research and 

Development Under Grants and 

Contracts with Hospitals. 

(f) In addition to the procedures 

outlined in the appendices in paragraph 

(e) of this section, any non-Federal 

entity that has never received a 

negotiated indirect cost rate, except for 

those non-Federal entities described in 

Appendix VII to part 75 (D)(1)(b) may 

elect to charge a de minimis rate of 10% 

of modified total direct costs (MTDC) 

which may be used indefinitely. As 

described in § 75.403, costs must be 

consistently charged as either indirect 

or direct costs, but may not be double 

charged or inconsistently charged as 

both. If chosen, this methodology once 

elected must be used consistently for all 

Federal awards until such time as a nonFederal entity chooses to negotiate for a 

rate, which the non-Federal entity may 

apply to do at any time. 

(g) Any non-Federal entity that has a 

current federally negotiated indirect 

cost rate may apply for a one-time 

extension of the rates in that agreement 

for a period of up to four years. This 

extension will be subject to the review 

and approval of the cognizant agency for 

indirect costs. If an extension is granted 

the non-Federal entity may not request 

a rate review until the extension period 

ends. At the end of the 4-year extension, 

the non-Federal entity must re-apply to 

negotiate a rate. Subsequent one-time 

extensions (up to four years) are 

permitted if a renegotiation is 

completed between each extension 

request. 

§ 75.415 Required certifications. 

Required certifications include: 

(a) To assure that expenditures are 

proper and in accordance with the terms 

and conditions of the Federal award and 

approved project budgets, the annual 

and final fiscal reports or vouchers 

requesting payment under the 

agreements must include a certification, 

signed by an official who is authorized 

to legally bind the non-Federal entity, 

which reads as follows: ‘‘By signing this 

report, I certify to the best of my 

knowledge and belief that the report is 

true, complete, and accurate, and the 

expenditures, disbursements and cash 

receipts are for the purposes and 

objectives set forth in the terms and 

conditions of the Federal award. I am 

aware that any false, fictitious, or 

fraudulent information, or the omission 

of any material fact, may subject me to 

criminal, civil or administrative 

penalties for fraud, false statements, 

false claims or otherwise. (U.S. Code 

Title 18, Section 1001 and Title 31, 

Sections 3729–3730 and 3801–3812).’’ 

(b) Certification of cost allocation plan 

or indirect (F&A) cost rate proposal. 

Each cost allocation plan or indirect 

(F&A) cost rate proposal must comply 

with the following: 

(1) A proposal to establish a cost 

allocation plan or an indirect (F&A) cost 

rate, whether submitted to a Federal 

cognizant agency for indirect costs or 

maintained on file by the non-Federal 

entity, must be certified by the nonFederal entity using the Certificate of 

Cost Allocation Plan or Certificate of 

Indirect Costs as set forth in Appendices 

III through VII, and Appendix IX. The 

certificate must be signed on behalf of 

the non-Federal entity by an individual 

at a level no lower than vice president 

or chief financial officer of the nonFederal entity that submits the proposal. 

(2) Unless the non-Federal entity has 

elected the option under § 75.414(f), the 

Federal Government may either 

disallow all indirect (F&A) costs or 

unilaterally establish such a plan or rate 

when the non-Federal entity fails to 

submit a certified proposal for 

establishing such a plan or rate in 

accordance with the requirements. Such 

a plan or rate may be based upon 

audited historical data or such other 

data that have been furnished to the 

cognizant agency for indirect costs and 

for which it can be demonstrated that all 

unallowable costs have been excluded. 

When a cost allocation plan or indirect 

cost rate is unilaterally established by 

the Federal Government because the 

non-Federal entity failed to submit a 

certified proposal, the plan or rate 

established will be set to ensure that 

potentially unallowable costs will not 

be reimbursed. 

(c) Certifications by non-profit 

organizations as appropriate that they 

did not meet the definition of a major 

non-profit organization as defined in 

§ 75.414(a). 

(d) See also § 75.450 for another 

required certification. 

Special Considerations for States, Local 

Governments and Indian Tribes 

§ 75.416 Cost allocation plans and indirect 

cost proposals. 

(a) For states, local governments and 

Indian tribes, certain services, such as 

motor pools, computer centers, 

purchasing, accounting, etc., are 

provided to operating agencies on a 

centralized basis. Since Federal awards 

are performed within the individual 

operating agencies, there needs to be a 

process whereby these central service 

costs can be identified and assigned to 

benefitted activities on a reasonable and 

consistent basis. The central service cost 

allocation plan provides that process. 

(b) Individual operating agencies 

(governmental department or agency), 

normally charge Federal awards for 

indirect costs through an indirect cost 

rate. A separate indirect cost rate(s) 

proposal for each operating agency is 

usually necessary to claim indirect costs 

under Federal-awards. Indirect costs 

include: 

(1) The indirect costs originating in 

each department or agency of the 

governmental unit carrying out Federal 

awards; and 

(2) The costs of central governmental 

services distributed through the central 


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service cost allocation plan and not 

otherwise treated as direct costs. 

(c) The requirements for development 

and submission of cost allocation plans 

(for central service costs and public 

assistance programs) and indirect cost 

rate proposals are contained in 

appendices IV, V and VI to this part. 

§ 75.417 Interagency service. 

The cost of services provided by one 

agency to another within the 

governmental unit may include 

allowable direct costs of the service plus 

a pro-rated share of indirect costs. A 

standard indirect cost allowance equal 

to ten percent of the direct salary and 

wage cost of providing the service 

(excluding overtime, shift premiums, 

and fringe benefits) may be used in lieu 

of determining the actual indirect costs 

of the service. These services do not 

include centralized services included in 

central service cost allocation plans as 

described in Appendix V to this part. 

Special Considerations for Institutions 

of Higher Education 

§ 75.418 Costs incurred by states and 

local governments. 

Costs incurred or paid by a state or 

local government on behalf of its IHEs 

for fringe benefit programs, such as 

pension costs and FICA and any other 

costs specifically incurred on behalf of, 

and in direct benefit to, the IHEs, are 

allowable costs of such IHEs whether or 

not these costs are recorded in the 

accounting records of the institutions, 

subject to the following: 

(a) The costs meet the requirements of 

§§ 75.402 through 75.411; 

(b) The costs are properly supported 

by approved cost allocation plans in 

accordance with applicable Federal cost 

accounting principles in this part; and 

(c) The costs are not otherwise borne 

directly or indirectly by the Federal 

Government. 

§ 75.419 Cost accounting standards and 

disclosure statement. 

(a) An IHE that receives aggregate 

Federal awards totaling $50 million or 

more in Federal awards subject to this 

part in its most recently completed 

fiscal year must comply with the Cost 

Accounting Standards Board’s cost 

accounting standards located at 48 CFR 

9905.501, 9905.502, 9905.505, and 

9905.506. CAS-covered contracts 

awarded to the IHEs are subject to the 

CAS requirements at 48 CFR parts 9900 

through 9999 and 48 CFR part 30 (FAR 

Part 30). 

(b) Disclosure statement. An IHE that 

receives aggregate Federal awards 

totaling $50 million or more subject to 

this part during its most recently 

completed fiscal year must disclose its 

cost accounting practices by filing a 

Disclosure Statement (DS–2), which is 

reproduced in Appendix III to part 75. 

With the approval of the cognizant 

agency for indirect costs, an IHE may 

meet the DS–2 submission by 

submitting the DS–2 for each business 

unit that received $50 million or more 

in Federal awards. 

(1) The DS–2 must be submitted to the 

cognizant agency for indirect costs with 

a copy to the IHE’s cognizant agency for 

audit. 

(2) An IHE is responsible for 

maintaining an accurate DS–2 and 

complying with disclosed cost 

accounting practices. An IHE must file 

amendments to the DS–2 to the 

cognizant agency for indirect costs six 

months in advance of a disclosed 

practice being changed to comply with 

a new or modified standard, or when a 

practice is changed for other reasons. 

An IHE may proceed with implementing 

the change only if it has not been 

notified by the Federal cognizant agency 

for indirect costs that either a longer 

period will be needed for review or 

there are concerns with the potential 

change within the six months period. 

Amendments of a DS–2 may be 

submitted at any time. Resubmission of 

a complete, updated DS–2 is 

discouraged except when there are 

extensive changes to disclosed 

practices. 

(3) Cost and funding adjustments. 

Cost adjustments must be made by the 

cognizant agency for indirect costs if an 

IHE fails to comply with the cost 

policies in this part or fails to 

consistently follow its established or 

disclosed cost accounting practices 

when estimating, accumulating or 

reporting the costs of Federal awards, 

and the aggregate cost impact on Federal 

awards is material. The cost adjustment 

must normally be made on an aggregate 

basis for all affected Federal awards 

through an adjustment of the IHE’s 

future F&A costs rates or other means 

considered appropriate by the cognizant 

agency for indirect costs. Under the 

terms of CAS covered contracts, 

adjustments in the amount of funding 

provided may also be required when the 

estimated proposal costs were not 

determined in accordance with 

established cost accounting practices. 

(4) Overpayments. Excess amounts 

paid in the aggregate by the Federal 

Government under Federal awards due 

to a noncompliant cost accounting 

practice used to estimate, accumulate, 

or report costs must be credited or 

refunded, as deemed appropriate by the 

cognizant agency for indirect costs. 

Interest applicable to the excess 

amounts paid in the aggregate during 

the period of noncompliance must also 

be determined and collected in 

accordance with applicable HHS agency 

regulations. 

(5) Compliant cost accounting 

practice changes. Changes from one 

compliant cost accounting practice to 

another compliant practice that are 

approved by the cognizant agency for 

indirect costs may require cost 

adjustments if the change has a material 

effect on Federal awards and the 

changes are deemed appropriate by the 

cognizant agency for indirect costs. 

(6) Responsibilities. The cognizant 

agency for indirect cost must: 

(i) Determine cost adjustments for all 

Federal awards in the aggregate on 

behalf of the Federal Government. 

Actions of the cognizant agency for 

indirect cost in making cost adjustment 

determinations must be coordinated 

with all affected HHS awarding agencies 

to the extent necessary. 

(ii) Prescribe guidelines and establish 

internal procedures to promptly 

determine on behalf of the Federal 

Government that a DS–2 adequately 

discloses the IHE’s cost accounting 

practices and that the disclosed 

practices are compliant with applicable 

CAS and the requirements of this part. 

(iii) Distribute to all affected Federal 

awarding agencies any DS–2 

determination of adequacy or 

noncompliance. 

General Provisions for Selected Items of 

Cost 

§ 75.420 Considerations for selected items 

of cost. 

This section provides principles to be 

applied in establishing the allowability 

of certain items involved in determining 

cost, in addition to the requirements of 

§§ 75.402 through 75.411. These 

principles apply whether or not a 

particular item of cost is properly 

treated as direct cost or indirect (F&A) 

cost. Failure to mention a particular 

item of cost is not intended to imply 

that it is either allowable or 

unallowable; rather, determination as to 

allowability in each case should be 

based on the treatment provided for 

similar or related items of cost, and 

based on the principles described in 

§§ 75.402 through 75.411. In case of a 

discrepancy between the provisions of a 

specific Federal award and the 

provisions below, the Federal award 

governs. Criteria outlined in § 75.403 

must be applied in determining 

allowability. See also § 75.102. 

§ 75.421 Advertising and public relations. 

(a) The term advertising costs means 

the costs of advertising media and 


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corollary administrative costs. 

Advertising media include magazines, 

newspapers, radio and television, direct 

mail, exhibits, electronic or computer 

transmittals, and the like. 

(b) The only allowable advertising 

costs are those which are solely for: 

(1) The recruitment of personnel 

required by the non-Federal entity for 

performance of a Federal award (See 

also § 75.463); 

(2) The procurement of goods and 

services for the performance of a Federal 

award; 

(3) The disposal of scrap or surplus 

materials acquired in the performance of 

a Federal award except when nonFederal entities are reimbursed for 

disposal costs at a predetermined 

amount; or 

(4) Program outreach and other 

specific purposes necessary to meet the 

requirements of the Federal award. 

(c) The term ‘‘public relations’’ 

includes community relations and 

means those activities dedicated to 

maintaining the image of the nonFederal entity or maintaining or 

promoting understanding and favorable 

relations with the community or public 

at large or any segment of the public. 

(d) The only allowable public 

relations costs are: 

(1) Costs specifically required by the 

Federal award; 

(2) Costs of communicating with the 

public and press pertaining to specific 

activities or accomplishments which 

result from performance of the Federal 

award (these costs are considered 

necessary as part of the outreach effort 

for the Federal award); or 

(3) Costs of conducting general liaison 

with news media and government 

public relations officers, to the extent 

that such activities are limited to 

communication and liaison necessary to 

keep the public informed on matters of 

public concern, such as notices of 

funding opportunities, financial matters, 

etc. 

(e) Unallowable advertising and 

public relations costs include the 

following: 

(1) All advertising and public 

relations costs other than as specified in 

paragraphs (b) and (d) of this section; 

(2) Costs of meetings, conventions, 

convocations, or other events related to 

other activities of the entity (see also 

§ 75.432), including: 

(i) Costs of displays, demonstrations, 

and exhibits; 

(ii) Costs of meeting rooms, 

hospitality suites, and other special 

facilities used in conjunction with 

shows and other special events; and 

(iii) Salaries and wages of employees 

engaged in setting up and displaying 

exhibits, making demonstrations, and 

providing briefings; 

(3) Costs of promotional items and 

memorabilia, including models, gifts, 

and souvenirs; 

(4) Costs of advertising and public 

relations designed solely to promote the 

non-Federal entity. 

§ 75.422 Advisory councils. 

Costs incurred by advisory councils or 

committees are unallowable unless 

authorized by statute, the HHS awarding 

agency or as an indirect cost where 

allocable to Federal awards. See 

§ 75.444, applicable to states, local 

governments and Indian tribes. 

§ 75.423 Alcoholic beverages. 

Costs of alcoholic beverages are 

unallowable. 

§ 75.424 Alumni/ae activities. 

Costs incurred by IHEs for, or in 

support of, alumni/ae activities are 

unallowable. 

§ 75.425 Audit services. 

(a) A reasonably proportionate share 

of the costs of audits required by, and 

performed in accordance with, the 

Single Audit Act Amendments of 1996 

(31 U.S.C. 7501–7507), as implemented 

by requirements of this part, are 

allowable. However, the following audit 

costs are unallowable: 

(1) Any costs when audits required by 

the Single Audit Act and Subpart F of 

this part—have not been conducted or 

have been conducted but not in 

accordance therewith; and 

(2) Any costs of auditing a nonFederal entity that is exempted from 

having an audit conducted under the 

Single Audit Act and Subpart F of this 

part because its expenditures under 

Federal awards are less than $750,000 

during the non-Federal entity’s fiscal 

year. 

(b) The costs of a financial statement 

audit of a non-Federal entity that does 

not currently have a Federal award may 

be included in the indirect cost pool for 

a cost allocation plan or indirect cost 

proposal. 

(c) Pass-through entities may charge 

Federal awards for the cost of agreedupon-procedures engagements to 

monitor subrecipients (in accordance 

with Subpart D of this part, §§ 75.351 

through 75.353) which are exempted 

from the requirements of the Single 

Audit Act and Subpart F of this part. 

This cost is allowable only if the agreedupon-procedures engagements are: 

(1) Conducted in accordance with 

GAGAS attestation standards; 

(2) Paid for and arranged by the passthrough entity; and 

(3) Limited in scope to one or more 

of the following types of compliance 

requirements: activities allowed or 

unallowed; allowable costs/cost 

principles; eligibility; and reporting. 

§ 75.426 Bad debts. 

Bad debts (debts which have been 

determined to be uncollectable), 

including losses (whether actual or 

estimated) arising from uncollectable 

accounts and other claims, are 

unallowable. Related collection costs, 

and related legal costs, arising from 

such debts after they have been 

determined to be uncollectable are also 

unallowable. See also § 75.428. 

§ 75.427 Bonding costs. 

(a) Bonding costs arise when the HHS 

awarding agency requires assurance 

against financial loss to itself or others 

by reason of the act or default of the 

non-Federal entity. They arise also in 

instances where the non-Federal entity 

requires similar assurance, including: 

Bonds as bid, performance, payment, 

advance payment, infringement, and 

fidelity bonds for employees and 

officials. 

(b) Costs of bonding required 

pursuant to the terms and conditions of 

the Federal award are allowable. 

(c) Costs of bonding required by the 

non-Federal entity in the general 

conduct of its operations are allowable 

as an indirect cost to the extent that 

such bonding is in accordance with 

sound business practice and the rates 

and premiums are reasonable under the 

circumstances. 

§ 75.428 Collections of improper 

payments. 

The costs incurred by a non-Federal 

entity to recover improper payments are 

allowable as either direct or indirect 

costs, as appropriate. Amounts collected 

may be used by the non-Federal entity 

in accordance with cash management 

standards set forth in § 75.305. 

§ 75.429 Commencement and convocation 

costs. 

For IHEs, costs incurred for 

commencements and convocations are 

unallowable, except as provided for in 

Appendix III.B.9, as student activity 

costs. 

§ 75.430 Compensation—personal 

services. 

(a) General. Compensation for 

personal services includes all 

remuneration, paid currently or 

accrued, for services of employees 

rendered during the period of 

performance under the Federal award, 

including but not necessarily limited to 

wages and salaries. Compensation for 


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personal services may also include 

fringe benefits which are addressed in 

§ 75.431. Costs of compensation are 

allowable to the extent that they satisfy 

the specific requirements of this part, 

and that the total compensation for 

individual employees: 

(1) Is reasonable for the services 

rendered and conforms to the 

established written policy of the nonFederal entity consistently applied to 

both Federal and non-Federal activities; 

(2) Follows an appointment made in 

accordance with a non-Federal entity’s 

laws and/or rules or written policies 

and meets the requirements of Federal 

statute, where applicable; and 

(3) Is determined and supported as 

provided in paragraph (i) of this section, 

when applicable. 

(b) Reasonableness. Compensation for 

employees engaged in work on Federal 

awards will be considered reasonable to 

the extent that it is consistent with that 

paid for similar work in other activities 

of the non-Federal entity. In cases where 

the kinds of employees required for 

Federal awards are not found in the 

other activities of the non-Federal 

entity, compensation will be considered 

reasonable to the extent that it is 

comparable to that paid for similar work 

in the labor market in which the nonFederal entity competes for the kind of 

employees involved. 

(c) Professional activities outside the 

non-Federal entity. Unless an 

arrangement is specifically authorized 

by an HHS awarding agency, a nonFederal entity must follow its written 

non-Federal entity-wide policies and 

practices concerning the permissible 

extent of professional services that can 

be provided outside the non-Federal 

entity for non-organizational 

compensation. Where such non-Federal 

entity-wide written policies do not exist 

or do not adequately define the 

permissible extent of consulting or other 

non-organizational activities undertaken 

for extra outside pay, the Federal 

Government may require that the effort 

of professional staff working on Federal 

awards be allocated between: 

(1) Non-Federal entity activities, and 

(2) Non-organizational professional 

activities. If the HHS awarding agency 

considers the extent of nonorganizational professional effort 

excessive or inconsistent with the 

conflicts-of-interest terms and 

conditions of the Federal award, 

appropriate arrangements governing 

compensation will be negotiated on a 

case-by-case basis. 

(d) Unallowable costs. (1) Costs which 

are unallowable under other sections of 

these principles must not be allowable 

under this section solely on the basis 

that they constitute personnel 

compensation. 

(2) The allowable compensation for 

certain employees is subject to a ceiling 

in accordance with statute. For the 

amount of the ceiling for costreimbursement contracts, the covered 

compensation subject to the ceiling, the 

covered employees, and other relevant 

provisions, see 10 U.S.C. 2324(e)(1)(P), 

and 41 U.S.C. 1127 and 4304(a)(16). For 

other types of Federal awards, other 

statutory ceilings may apply. 

(e) Special considerations. Special 

considerations in determining 

allowability of compensation will be 

given to any change in a non-Federal 

entity’s compensation policy resulting 

in a substantial increase in its 

employees’ level of compensation 

(particularly when the change was 

concurrent with an increase in the ratio 

of Federal awards to other activities) or 

any change in the treatment of 

allowability of specific types of 

compensation due to changes in Federal 

policy. 

(f) Incentive compensation. Incentive 

compensation to employees based on 

cost reduction, or efficient performance, 

suggestion awards, safety awards, etc., is 

allowable to the extent that the overall 

compensation is determined to be 

reasonable and such costs are paid or 

accrued pursuant to an agreement 

entered into in good faith between the 

non-Federal entity and the employees 

before the services were rendered, or 

pursuant to an established plan 

followed by the non-Federal entity so 

consistently as to imply, in effect, an 

agreement to make such payment. 

(g) Nonprofit organizations. For 

compensation to members of nonprofit 

organizations, trustees, directors, 

associates, officers, or the immediate 

families thereof, determination must be 

made that such compensation is 

reasonable for the actual personal 

services rendered rather than a 

distribution of earnings in excess of 

costs. This may include director’s and 

executive committee member’s fees, 

incentive awards, allowances for off-site 

pay, incentive pay, location allowances, 

hardship pay, and cost-of-living 

differentials. 

(h) Institutions of higher education 

(IHEs). (1) Certain conditions require 

special consideration and possible 

limitations in determining allowable 

personnel compensation costs under 

Federal awards. Among such conditions 

are the following: 

(i) Allowable activities. Charges to 

Federal awards may include reasonable 

amounts for activities contributing and 

directly related to work under an 

agreement, such as delivering special 

lectures about specific aspects of the 

ongoing activity, writing reports and 

articles, developing and maintaining 

protocols (human, animals, etc.), 

managing substances/chemicals, 

managing and securing project-specific 

data, coordinating research subjects, 

participating in appropriate seminars, 

consulting with colleagues and graduate 

students, and attending meetings and 

conferences. 

(ii) Incidental activities. Incidental 

activities for which supplemental 

compensation is allowable under 

written institutional policy (at a rate not 

to exceed institutional base salary) need 

not be included in the records described 

in paragraph (i) of this section to 

directly charge payments of incidental 

activities, such activities must either be 

specifically provided for in the Federal 

award budget or receive prior written 

approval by the HHS awarding agency. 

(2) Salary basis. Charges for work 

performed on Federal awards by faculty 

members during the academic year are 

allowable at the IBS rate. Except as 

noted in paragraph (h)(1)(ii) of this 

section, in no event will charges to 

Federal awards, irrespective of the basis 

of computation, exceed the 

proportionate share of the IBS for that 

period. This principle applies to all 

members of faculty at an institution. IBS 

is defined as the annual compensation 

paid by an IHE for an individual’s 

appointment, whether that individual’s 

time is spent on research, instruction, 

administration, or other activities. IBS 

excludes any income that an individual 

earns outside of duties performed for 

the IHE. Unless there is prior approval 

by the HHS awarding agency, charges of 

a faculty member’s salary to a Federal 

award must not exceed the 

proportionate share of the IBS for the 

period during which the faculty member 

worked on the award. 

(3) Intra-Institution of Higher 

Education (IHE) consulting. Intra-IHE 

consulting by faculty is assumed to be 

undertaken as an IHE obligation 

requiring no compensation in addition 

to IBS. However, in unusual cases 

where consultation is across 

departmental lines or involves a 

separate or remote operation, and the 

work performed by the faculty member 

is in addition to his or her regular 

responsibilities, any charges for such 

work representing additional 

compensation above IBS are allowable 

provided that such consulting 

arrangements are specifically provided 

for in the Federal award or approved in 

writing by the HHS awarding agency. 

(4) Extra Service Pay normally 

represents overload compensation, 

subject to institutional compensation 


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policies for services above and beyond 

IBS. Where extra service pay is a result 

of Intra-IHE consulting, it is subject to 

the same requirements of paragraph (b) 

above. It is allowable if all of the 

following conditions are met: 

(i) The non-Federal entity establishes 

consistent written policies which apply 

uniformly to all faculty members, not 

just those working on Federal awards. 

(ii) The non-Federal entity establishes 

a consistent written definition of work 

covered by IBS which is specific enough 

to determine conclusively when work 

beyond that level has occurred. This 

may be described in appointment letters 

or other documentations. 

(iii) The supplementation amount 

paid is commensurate with the IBS rate 

of pay and the amount of additional 

work performed. See paragraph (h)(2) of 

this section. 

(iv) The salaries, as supplemented, 

fall within the salary structure and pay 

ranges established by and documented 

in writing or otherwise applicable to the 

non-Federal entity. 

(v) The total salaries charged to 

Federal awards including extra service 

pay are subject to the Standards of 

Documentation as described in 

paragraph (i) of this section. 

(5) Periods outside the academic year. 

(i) Except as specified for teaching 

activity in paragraph (h)(5)(ii) of this 

section, charges for work performed by 

faculty members on Federal awards 

during periods not included in the base 

salary period will be at a rate not in 

excess of the IBS. 

(ii) Charges for teaching activities 

performed by faculty members on 

Federal awards during periods not 

included in IBS period will be based on 

the normal written policy of the IHE 

governing compensation to faculty 

members for teaching assignments 

during such periods. 

(6) Part-time faculty. Charges for work 

performed on Federal awards by faculty 

members having only part-time 

appointments will be determined at a 

rate not in excess of that regularly paid 

for part-time assignments. 

(7) Sabbatical leave costs. Rules for 

sabbatical leave are as follow: 

(i) Costs of leaves of absence by 

employees for performance of graduate 

work or sabbatical study, travel, or 

research are allowable provided the IHE 

has a uniform written policy on 

sabbatical leave for persons engaged in 

instruction and persons engaged in 

research. Such costs will be allocated on 

an equitable basis among all related 

activities of the IHE. 

(ii) Where sabbatical leave is included 

in fringe benefits for which a cost is 

determined for assessment as a direct 

charge, the aggregate amount of such 

assessments applicable to all work of 

the institution during the base period 

must be reasonable in relation to the 

IHE’s actual experience under its 

sabbatical leave policy. 

(8) Salary rates for non-faculty 

members. Non-faculty full-time 

professional personnel may also earn 

‘‘extra service pay’’ in accordance with 

the non-Federal entity’s written policy 

and consistent with paragraph (h)(1)(i) 

of this section. 

(i) Standards for Documentation of 

Personnel Expenses (1) Charges to 

Federal awards for salaries and wages 

must be based on records that accurately 

reflect the work performed. These 

records must: 

(i) Be supported by a system of 

internal control which provides 

reasonable assurance that the charges 

are accurate, allowable, and properly 

allocated; 

(ii) Be incorporated into the official 

records of the non-Federal entity; 

(iii) Reasonably reflect the total 

activity for which the employee is 

compensated by the non-Federal entity, 

not exceeding 100% of compensated 

activities (for IHE, this per the IHE’s 

definition of IBS); 

(iv) Encompass both federally assisted 

and all other activities compensated by 

the non-Federal entity on an integrated 

basis, but may include the use of 

subsidiary records as defined in the 

non-Federal entity’s written policy; 

(v) Comply with the established 

accounting policies and practices of the 

non-Federal entity (See paragraph 

(h)(1)(ii) of this section for treatment of 

incidental work for IHEs.); and 

(vi) [Reserved] 

(vii) Support the distribution of the 

employee’s salary or wages among 

specific activities or cost objectives if 

the employee works on more than one 

Federal award; a Federal award and 

non-Federal award; an indirect cost 

activity and a direct cost activity; two or 

more indirect activities which are 

allocated using different allocation 

bases; or an unallowable activity and a 

direct or indirect cost activity. 

(viii) Budget estimates (i.e., estimates 

determined before the services are 

performed) alone do not qualify as 

support for charges to Federal awards, 

but may be used for interim accounting 

purposes, provided that: 

(A) The system for establishing the 

estimates produces reasonable 

approximations of the activity actually 

performed; 

(B) Significant changes in the 

corresponding work activity (as defined 

by the non-Federal entity’s written 

policies) are identified and entered into 

the records in a timely manner. Short 

term (such as one or two months) 

fluctuation between workload categories 

need not be considered as long as the 

distribution of salaries and wages is 

reasonable over the longer term; and 

(C) The non-Federal entity’s system of 

internal controls includes processes to 

review after-the-fact interim charges 

made to a Federal awards based on 

budget estimates. All necessary 

adjustment must be made such that the 

final amount charged to the Federal 

award is accurate, allowable, and 

properly allocated. 

(ix) Because practices vary as to the 

activity constituting a full workload (for 

IHEs, IBS), records may reflect 

categories of activities expressed as a 

percentage distribution of total 

activities. 

(x) It is recognized that teaching, 

research, service, and administration are 

often inextricably intermingled in an 

academic setting. When recording 

salaries and wages charged to Federal 

awards for IHEs, a precise assessment of 

factors that contribute to costs is 

therefore not always feasible, nor is it 

expected. 

(2) For records which meet the 

standards required in paragraph (i)(1) of 

this section, the non-Federal entity will 

not be required to provide additional 

support or documentation for the work 

performed, other than that referenced in 

paragraph (i)(3) of this section. 

(3) In accordance with Department of 

Labor regulations implementing the Fair 

Labor Standards Act (FLSA) (29 CFR 

part 516), charges for the salaries and 

wages of nonexempt employees, in 

addition to the supporting 

documentation described in this 

section, must also be supported by 

records indicating the total number of 

hours worked each day. 

(4) Salaries and wages of employees 

used in meeting cost sharing or 

matching requirements on Federal 

awards must be supported in the same 

manner as salaries and wages claimed 

for reimbursement from Federal awards. 

(5) For states, local governments and 

Indian tribes, substitute processes or 

systems for allocating salaries and 

wages to Federal awards may be used in 

place of or in addition to the records 

described in paragraph (i)(1) of this 

section if approved by the cognizant 

agency for indirect cost. Such systems 

may include, but are not limited to, 

random moment sampling, ‘‘rolling’’ 

time studies, case counts, or other 

quantifiable measures of work 

performed. 

(i) Substitute systems which use 

sampling methods (primarily for 

Temporary Assistance for Needy 


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Families (TANF), the Supplemental 

Nutrition Assistance Program (SNAP), 

Medicaid, and other public assistance 

programs) must meet acceptable 

statistical sampling standards including: 

(A) The sampling universe must 

include all of the employees whose 

salaries and wages are to be allocated 

based on sample results except as 

provided in paragraph (i)(5)(iii) of this 

section; 

(B) The entire time period involved 

must be covered by the sample; and 

(C) The results must be statistically 

valid and applied to the period being 

sampled. 

(ii) Allocating charges for the sampled 

employees’ supervisors, clerical and 

support staffs, based on the results of 

the sampled employees, will be 

acceptable. 

(iii) Less than full compliance with 

the statistical sampling standards noted 

in paragraph (i)(5)(i) of this section may 

be accepted by the cognizant agency for 

indirect costs if it concludes that the 

amounts to be allocated to Federal 

awards will be minimal, or if it 

concludes that the system proposed by 

the non-Federal entity will result in 

lower costs to Federal awards than a 

system which complies with the 

standards. 

(6) Cognizant agencies for indirect 

costs are encouraged to approve 

alternative proposals based on outcomes 

and milestones for program performance 

where these are clearly documented. 

Where approved by the Federal 

cognizant agency for indirect costs, 

these plans are acceptable as an 

alternative to the requirements of 

paragraph (i)(1) of this section. 

(7) For Federal awards of similar 

purpose activity or instances of 

approved blended funding, a nonFederal entity may submit performance 

plans that incorporate funds from 

multiple Federal awards and account for 

their combined use based on 

performance-oriented metrics, provided 

that such plans are approved in advance 

by all involved HHS awarding agencies. 

In these instances, the non-Federal 

entity must submit a request for waiver 

of the requirements based on 

documentation that describes the 

method of charging costs, relates the 

charging of costs to the specific activity 

that is applicable to all fund sources, 

and is based on quantifiable measures of 

the activity in relation to time charged. 

(8) For a non-Federal entity where the 

records do not meet the standards 

described in this section, the Federal 

Government may require personnel 

activity reports, including prescribed 

certifications, or equivalent 

documentation that support the records 

as required in this section. 

§ 75.431 Compensation—fringe benefits. 

(a) Fringe benefits are allowances and 

services provided by employers to their 

employees as compensation in addition 

to regular salaries and wages. Fringe 

benefits include, but are not limited to, 

the costs of leave (vacation, familyrelated, sick or military), employee 

insurance, pensions, and 

unemployment benefit plans. Except as 

provided elsewhere in these principles, 

the costs of fringe benefits are allowable 

provided that the benefits are reasonable 

and are required by law, non-Federal 

entity-employee agreement, or an 

established policy of the non-Federal 

entity. 

(b) Leave. The cost of fringe benefits 

in the form of regular compensation 

paid to employees during periods of 

authorized absences from the job, such 

as for annual leave, family-related leave, 

sick leave, holidays, court leave, 

military leave, administrative leave, and 

other similar benefits, are allowable if 

all of the following criteria are met: 

(1) They are provided under 

established written leave policies; 

(2) The costs are equitably allocated to 

all related activities, including Federal 

awards; and, 

(3) The accounting basis (cash or 

accrual) selected for costing each type of 

leave is consistently followed by the 

non-Federal entity or specified grouping 

of employees. 

(i) When a non-Federal entity uses the 

cash basis of accounting, the cost of 

leave is recognized in the period that 

the leave is taken and paid for. 

Payments for unused leave when an 

employee retires or terminates 

employment are allowable in the year of 

payment. 

(ii) The accrual basis may be only 

used for those types of leave for which 

a liability as defined by GAAP exists 

when the leave is earned. When a nonFederal entity uses the accrual basis of 

accounting, allowable leave costs are the 

lesser of the amount accrued or funded. 

(c) The cost of fringe benefits in the 

form of employer contributions or 

expenses for social security; employee 

life, health, unemployment, and 

worker’s compensation insurance 

(except as indicated in § 75.447); 

pension plan costs (see paragraph (i) of 

this section); and other similar benefits 

are allowable, provided such benefits 

are granted under established written 

policies. Such benefits, must be 

allocated to Federal awards and all 

other activities in a manner consistent 

with the pattern of benefits attributable 

to the individuals or group(s) of 

employees whose salaries and wages are 

chargeable to such Federal awards and 

other activities, and charged as direct or 

indirect costs in accordance with the 

non-Federal entity’s accounting 

practices. 

(d) Fringe benefits may be assigned to 

cost objectives by identifying specific 

benefits to specific individual 

employees or by allocating on the basis 

of entity-wide salaries and wages of the 

employees receiving the benefits. When 

the allocation method is used, separate 

allocations must be made to selective 

groupings of employees, unless the nonFederal entity demonstrates that costs in 

relationship to salaries and wages do 

not differ significantly for different 

groups of employees. 

(e) Insurance. See also § 75.447(d)(1) 

and (2). 

(1) Provisions for a reserve under a 

self-insurance program for 

unemployment compensation or 

workers’ compensation are allowable to 

the extent that the provisions represent 

reasonable estimates of the liabilities for 

such compensation, and the types of 

coverage, extent of coverage, and rates 

and premiums would have been 

allowable had insurance been 

purchased to cover the risks. However, 

provisions for self-insured liabilities 

which do not become payable for more 

than one year after the provision is 

made must not exceed the present value 

of the liability. 

(2) Costs of insurance on the lives of 

trustees, officers, or other employees 

holding positions of similar 

responsibility are allowable only to the 

extent that the insurance represents 

additional compensation. The costs of 

such insurance when the non-Federal 

entity is named as beneficiary are 

unallowable. 

(3) Actual claims paid to or on behalf 

of employees or former employees for 

workers’ compensation, unemployment 

compensation, severance pay, and 

similar employee benefits (e.g., postretirement health benefits), are 

allowable in the year of payment 

provided that the non-Federal entity 

follows a consistent costing policy. 

(f) Automobiles. That portion of 

automobile costs furnished by the entity 

that relates to personal use by 

employees (including transportation to 

and from work) is unallowable as fringe 

benefit or indirect (F&A) costs 

regardless of whether the cost is 

reported as taxable income to the 

employees. 

(g) Pension Plan Costs. Pension plan 

costs which are incurred in accordance 

with the established policies of the nonFederal entity are allowable, provided 

that: 


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(1) Such policies meet the test of 

reasonableness. 

(2) The methods of cost allocation are 

not discriminatory. 

(3) For entities using accrual based 

accounting, the cost assigned to each 

fiscal year is determined in accordance 

with GAAP. 

(4) The costs assigned to a given fiscal 

year are funded for all plan participants 

within six months after the end of that 

year. However, increases to normal and 

past service pension costs caused by a 

delay in funding the actuarial liability 

beyond 30 calendar days after each 

quarter of the year to which such costs 

are assignable are unallowable. NonFederal entity may elect to follow the 

‘‘Cost Accounting Standard for 

Composition and Measurement of 

Pension Costs’’ (48 CFR 9904.412). 

(5) Pension plan termination 

insurance premiums paid pursuant to 

the Employee Retirement Income 

Security Act (ERISA) of 1974 (29 U.S.C. 

1301–1461) are allowable. Late payment 

charges on such premiums are 

unallowable. Excise taxes on 

accumulated funding deficiencies and 

other penalties imposed under ERISA 

are unallowable. 

(6) Pension plan costs may be 

computed using a pay-as-you-go method 

or an acceptable actuarial cost method 

in accordance with established written 

policies of the non-Federal entity. 

(i) For pension plans financed on a 

pay-as-you-go method, allowable costs 

will be limited to those representing 

actual payments to retirees or their 

beneficiaries. 

(ii) Pension costs calculated using an 

actuarial cost-based method recognized 

by GAAP are allowable for a given fiscal 

year if they are funded for that year 

within six months after the end of that 

year. Costs funded after the six month 

period (or a later period agreed to by the 

cognizant agency for indirect costs) are 

allowable in the year funded. The 

cognizant agency for indirect costs may 

agree to an extension of the six month 

period if an appropriate adjustment is 

made to compensate for the timing of 

the charges to the Federal Government 

and related Federal reimbursement and 

the non-Federal entity’s contribution to 

the pension fund. Adjustments may be 

made by cash refund or other equitable 

procedures to compensate the Federal 

Government for the time value of 

Federal reimbursements in excess of 

contributions to the pension fund. 

(iii) Amounts funded by the nonFederal entity in excess of the 

actuarially determined amount for a 

fiscal year may be used as the nonFederal entity’s contribution in future 

periods. 

(iv) When a non-Federal entity 

converts to an acceptable actuarial cost 

method, as defined by GAAP, and funds 

pension costs in accordance with this 

method, the unfunded liability at the 

time of conversion is allowable if 

amortized over a period of years in 

accordance with GAAP. 

(v) The Federal Government must 

receive an equitable share of any 

previously allowed pension costs 

(including earnings thereon) which 

revert or inure to the non-Federal entity 

in the form of a refund, withdrawal, or 

other credit. 

(h) Post-Retirement Health. Postretirement health plans (PRHP) refers to 

costs of health insurance or health 

services not included in a pension plan 

covered by paragraph (g) of this section 

for retirees and their spouses, 

dependents, and survivors. PRHP costs 

may be computed using a pay-as-you-go 

method or an acceptable actuarial cost 

method in accordance with established 

written policies of the non-Federal 

entity. 

(1) For PRHP financed on a pay-asyou-go method, allowable costs will be 

limited to those representing actual 

payments to retirees or their 

beneficiaries. 

(2) PRHP costs calculated using an 

actuarial cost method recognized by 

GAAP are allowable if they are funded 

for that year within six months after the 

end of that year. Costs funded after the 

six month period (or a later period 

agreed to by the cognizant agency) are 

allowable in the year funded. The 

Federal cognizant agency for indirect 

costs may agree to an extension of the 

six month period if an appropriate 

adjustment is made to compensate for 

the timing of the charges to the Federal 

Government and related Federal 

reimbursements and the non-Federal 

entity’s contributions to the PRHP fund. 

Adjustments may be made by cash 

refund, reduction in current year’s 

PRHP costs, or other equitable 

procedures to compensate the Federal 

Government for the time value of 

Federal reimbursements in excess of 

contributions to the PRHP fund. 

(3) Amounts funded in excess of the 

actuarially determined amount for a 

fiscal year may be used as the Federal 

Government’s contribution in a future 

period. 

(4) When a non-Federal entity 

converts to an acceptable actuarial cost 

method and funds PRHP costs in 

accordance with this method, the initial 

unfunded liability attributable to prior 

years is allowable if amortized over a 

period of years in accordance with 

GAAP, or, if no such GAAP period 

exists, over a period negotiated with the 

cognizant agency for indirect costs. 

(5) To be allowable in the current 

year, the PRHP costs must be paid either 

to: 

(i) An insurer or other benefit 

provider as current year costs or 

premiums, or 

(ii) An insurer or trustee to maintain 

a trust fund or reserve for the sole 

purpose of providing post-retirement 

benefits to retirees and other 

beneficiaries. 

(6) The Federal Government must 

receive an equitable share of any 

amounts of previously allowed postretirement benefit costs (including 

earnings thereon) which revert or inure 

to the non-Federal entity in the form of 

a refund, withdrawal, or other credit. 

(i) Severance Pay. (1) Severance pay, 

also commonly referred to as dismissal 

wages, is a payment in addition to 

regular salaries and wages, by nonFederal entities to workers whose 

employment is being terminated. Costs 

of severance pay are allowable only to 

the extent that in each case, it is 

required by law, employer-employee 

agreement, established policy that 

constitutes, in effect, an implied 

agreement on the non-Federal entity’s 

part, or circumstances of the particular 

employment. 

(2) Costs of severance payments are 

divided into two categories as follows: 

(i) Actual normal turnover severance 

payments must be allocated to all 

activities; or, where the non-Federal 

entity provides for a reserve for normal 

severances, such method will be 

acceptable if the charge to current 

operations is reasonable in light of 

payments actually made for normal 

severances over a representative past 

period, and if amounts charged are 

allocated to all activities of the nonFederal entity. 

(ii) Measurement of costs of abnormal 

or mass severance pay by means of an 

accrual will not achieve equity to both 

parties. Thus, accruals for this purpose 

are not allowable. However, the Federal 

Government recognizes its obligation to 

participate, to the extent of its fair share, 

in any specific payment. Prior approval 

by the Federal awarding agency or 

cognizant agency for indirect cost, as 

appropriate, is required. 

(3) Costs incurred in certain severance 

pay packages which are in an amount in 

excess of the normal severance pay paid 

by the non-Federal entity to an 

employee upon termination of 

employment and are paid to the 

employee contingent upon a change in 

management control over, or ownership 

of, the non-Federal entity’s assets, are 

unallowable. 


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(4) Severance payments to foreign 

nationals employed by the non-Federal 

entity outside the United States, to the 

extent that the amount exceeds the 

customary or prevailing practices for the 

non-Federal entity in the United States, 

are unallowable, unless they are 

necessary for the performance of Federal 

programs and approved by the HHS 

awarding agency. 

(5) Severance payments to foreign 

nationals employed by the non-Federal 

entity outside the United States due to 

the termination of the foreign national 

as a result of the closing of, or 

curtailment of activities by, the nonFederal entity in that country, are 

unallowable, unless they are necessary 

for the performance of Federal programs 

and approved by the HHS awarding 

agency. 

(j)(1) For IHEs only. Fringe benefits in 

the form of tuition or remission of 

tuition for individual employees are 

allowable, provided such benefits are 

granted in accordance with established 

non-Federal entity policies, and are 

distributed to all non-Federal entity 

activities on an equitable basis. Tuition 

benefits for family members other than 

the employee are unallowable. 

(2) Fringe benefits in the form of 

tuition or remission of tuition for 

individual employees not employed by 

IHEs are limited to the tax-free amount 

allowed per section 127 of the Internal 

Revenue Code as amended. 

(3) IHEs may offer employees tuition 

waivers or tuition reductions for 

undergraduate education under IRC 

Section 117(d) as amended, provided 

that the benefit does not discriminate in 

favor of highly compensated employees. 

Federal reimbursement of tuition or 

remission of tuition is also limited to 

the institution for which the employee 

works. See § 75.466, for treatment of 

tuition remission provided to students. 

(k) For IHEs whose costs are paid by 

state or local governments, fringe benefit 

programs (such as pension costs and 

FICA) and any other benefits costs 

specifically incurred on behalf of, and 

in direct benefit to, the non-Federal 

entity, are allowable costs of such nonFederal entities whether or not these 

costs are recorded in the accounting 

records of the non-Federal entities, 

subject to the following: 

(1) The costs meet the requirements of 

Basic Considerations in §§ 75.402 

through 75.411; 

(2) The costs are properly supported 

by approved cost allocation plans in 

accordance with applicable Federal cost 

accounting principles; and 

(3) The costs are not otherwise borne 

directly or indirectly by the Federal 

Government. 

§ 75.432 Conferences. 

A conference is defined as a meeting, 

retreat, seminar, symposium, workshop 

or event whose primary purpose is the 

dissemination of technical information 

beyond the non-Federal entity and is 

necessary and reasonable for successful 

performance under the Federal award. 

Allowable conference costs paid by the 

non-Federal entity as a sponsor or host 

of the conference may include rental of 

facilities, speakers’ fees, costs of meals 

and refreshments, local transportation, 

and other items incidental to such 

conferences unless further restricted by 

the terms and conditions of the Federal 

award. As needed, the costs of 

identifying, but not providing, locally 

available dependent-care resources are 

allowable. Conference hosts/sponsors 

must exercise discretion and judgment 

in ensuring that conference costs are 

appropriate, necessary and managed in 

a manner that minimizes costs to the 

Federal award. The HHS awarding 

agency may authorize exceptions where 

appropriate for programs including 

Indian tribes, children, and the elderly. 

See also §§ 75.438, 75.456, 75.474, and 

75.475. 

§ 75.433 Contingency provisions. 

(a) Contingency is that part of a 

budget estimate of future costs (typically 

of large construction projects, IT 

systems, or other items as approved by 

the HHS awarding agency) which is 

associated with possible events or 

conditions arising from causes the 

precise outcome of which is 

indeterminable at the time of estimate, 

and that experience shows will likely 

result, in aggregate, in additional costs 

for the approved activity or project. 

Amounts for major project scope 

changes, unforeseen risks, or 

extraordinary events may not be 

included. 

(b) It is permissible for contingency 

amounts other than those excluded in 

paragraph (a) of this section to be 

explicitly included in budget estimates, 

to the extent they are necessary to 

improve the precision of those 

estimates. Amounts must be estimated 

using broadly-accepted cost estimating 

methodologies, specified in the budget 

documentation of the Federal award, 

and accepted by the HHS awarding 

agency. As such, contingency amounts 

are to be included in the Federal award. 

In order for actual costs incurred to be 

allowable, they must comply with the 

cost principles and other requirements 

in this part (see also §§ 75.300 through 

75.309 of Subpart D of this part and 

75.403); be necessary and reasonable for 

proper and efficient accomplishment of 

project or program objectives, and be 

verifiable from the non-Federal entity’s 

records. 

(c) Payments made by the HHS 

awarding agency to the non-Federal 

entity’s ‘‘contingency reserve’’ or any 

similar payment made for events the 

occurrence of which cannot be foretold 

with certainty as to the time or 

intensity, or with an assurance of their 

happening, are unallowable, except as 

noted in §§ 75.431 and 75.447. 

§ 75.434 Contributions and donations. 

(a) Costs of contributions and 

donations, including cash, property, and 

services, from the non-Federal entity to 

other entities, are unallowable. 

(b) The value of services and property 

donated to the non-Federal entity may 

not be charged to the Federal award 

either as a direct or indirect (F&A) cost. 

The value of donated services and 

property may be used to meet cost 

sharing or matching requirements (see 

§ 75.306). Depreciation on donated 

assets is permitted in accordance with 

§ 75.436, as long as the donated 

property is not counted towards cost 

sharing or matching requirements. 

(c) Services donated or volunteered to 

the non-Federal entity may be furnished 

to a non-Federal entity by professional 

and technical personnel, consultants, 

and other skilled and unskilled labor. 

The value of these services may not be 

charged to the Federal award either as 

a direct or indirect cost. However, the 

value of donated services may be used 

to meet cost sharing or matching 

requirements in accordance with the 

provisions of § 75.306. 

(d) To the extent feasible, services 

donated to the non-Federal entity will 

be supported by the same methods used 

to support the allocability of regular 

personnel services. 

(e) The following provisions apply to 

nonprofit organizations. The value of 

services donated to the nonprofit 

organization utilized in the performance 

of a direct cost activity must be 

considered in the determination of the 

non-Federal entity’s indirect cost rate(s) 

and, accordingly, must be allocated a 

proportionate share of applicable 

indirect costs when the following 

circumstances exist: 

(1) The aggregate value of the services 

is material; 

(2) The services are supported by a 

significant amount of the indirect costs 

incurred by the non-Federal entity; 

(i) In those instances where there is 

no basis for determining the fair market 

value of the services rendered, the nonFederal entity and the cognizant agency 

for indirect costs must negotiate an 

appropriate allocation of indirect cost to 

the services. 


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(ii) Where donated services directly 

benefit a project supported by the 

Federal award, the indirect costs 

allocated to the services will be 

considered as a part of the total costs of 

the project. Such indirect costs may be 

reimbursed under the Federal award or 

used to meet cost sharing or matching 

requirements. 

(f) Fair market value of donated 

services must be computed as described 

in § 75.306. 

(g) Personal Property and Use of 

Space. 

(1) Donated personal property and use 

of space may be furnished to a nonFederal entity. The value of the personal 

property and space may not be charged 

to the Federal award either as a direct 

or indirect cost. 

(2) The value of the donations may be 

used to meet cost sharing or matching 

share requirements under the conditions 

described in §§ 75.300 through 75.309 of 

subpart D of this part. The value of the 

donations must be determined in 

accordance with §§ 75.300 through 

75.309. Where donations are treated as 

indirect costs, indirect cost rates will 

separate the value of the donations so 

that reimbursement will not be made. 

§ 75.435 Defense and prosecution of 

criminal and civil proceedings, claims, 

appeals, and patent infringements. 

(a) Definitions for the purposes of this 

section. 

(1) Conviction means a judgment or 

conviction of a criminal offense by any 

court of competent jurisdiction, whether 

entered upon verdict or a plea, 

including a conviction due to a plea of 

nolo contendere. 

(2) Costs include the services of inhouse or private counsel, accountants, 

consultants, or others engaged to assist 

the non-Federal entity before, during, 

and after commencement of a judicial or 

administrative proceeding, that bear a 

direct relationship to the proceeding. 

(3) Fraud means: 

(i) Acts of fraud or corruption or 

attempts to defraud the Federal 

Government or to corrupt its agents, 

(ii) Acts that constitute a cause for 

debarment or suspension (as specified 

in agency regulations), and 

(iii) Acts which violate the False 

Claims Act (31 U.S.C. 3729–3732) or the 

Anti-kickback Act (41 U.S.C. 1320a– 

7b(b)). 

(4) Penalty does not include 

restitution, reimbursement, or 

compensatory damages. 

(5) Proceeding includes an 

investigation. 

(b) Costs. (1) Except as otherwise 

described herein, costs incurred in 

connection with any criminal, civil or 

administrative proceeding (including 

filing of a false certification) 

commenced by the Federal Government, 

a state, local government, or foreign 

government, or joined by the Federal 

Government (including a proceeding 

under the False Claims Act), against the 

non-Federal entity, (or commenced by 

third parties or a current or former 

employee of the non-Federal entity who 

submits a whistleblower complaint of 

reprisal in accordance with 10 U.S.C. 

2409 or 41 U.S.C. 4712), are not 

allowable if the proceeding: 

(i) Relates to a violation of, or failure 

to comply with, a Federal, state, local or 

foreign statute, regulation or the terms 

and conditions of the Federal award, by 

the non-Federal entity (including its 

agents and employees); and 

(ii) Results in any of the following 

dispositions: 

(A) In a criminal proceeding, a 

conviction. 

(B) In a civil or administrative 

proceeding involving an allegation of 

fraud or similar misconduct, a 

determination of non-Federal entity 

liability. 

(C) In the case of any civil or 

administrative proceeding, the 

disallowance of costs or the imposition 

of a monetary penalty, or an order 

issued by the HHS awarding agency 

head or delegate to the non-Federal 

entity to take corrective action under 10 

U.S.C. 2409 or 41 U.S.C. 4712. 

(D) A final decision by an appropriate 

Federal official to debar or suspend the 

non-Federal entity, to rescind or void a 

Federal award, or to terminate a Federal 

award by reason of a violation or failure 

to comply with a statute, regulation, or 

the terms and conditions of the Federal 

award. 

(E) A disposition by consent or 

compromise, if the action could have 

resulted in any of the dispositions 

described in paragraphs (b)(1)(ii)(A) 

through (D) of this section. 

(2) If more than one proceeding 

involves the same alleged misconduct, 

the costs of all such proceedings are 

unallowable if any results in one of the 

dispositions shown in paragraph (b) of 

this section. 

(c) If a proceeding referred to in 

paragraph (b) of this section is 

commenced by the Federal Government 

and is resolved by consent or 

compromise pursuant to an agreement 

by the non-Federal entity and the 

Federal Government, then the costs 

incurred may be allowed to the extent 

specifically provided in such agreement. 

(d) If a proceeding referred to in 

paragraph (b) of this section is 

commenced by a state, local or foreign 

government, the authorized Federal 

official may allow the costs incurred if 

such authorized official determines that 

the costs were incurred as a result of: 

(1) A specific term or condition of the 

Federal award, or 

(2) Specific written direction of an 

authorized official of the HHS awarding 

agency. 

(e) Costs incurred in connection with 

proceedings described in paragraph (b) 

of this section, which are not made 

unallowable by that subsection, may be 

allowed but only to the extent that: 

(1) The costs are reasonable and 

necessary in relation to the 

administration of the Federal award and 

activities required to deal with the 

proceeding and the underlying cause of 

action; 

(2) Payment of the reasonable, 

necessary, allocable and otherwise 

allowable costs incurred is not 

prohibited by any other provision(s) of 

the Federal award; 

(3) The costs are not recovered from 

the Federal Government or a third party, 

either directly as a result of the 

proceeding or otherwise; and, 

(4) An authorized Federal official 

must determine the percentage of costs 

allowed considering the complexity of 

litigation, generally accepted principles 

governing the award of legal fees in civil 

actions involving the United States, and 

such other factors as may be 

appropriate. Such percentage must not 

exceed 80 percent. However, if an 

agreement reached under paragraph (c) 

of this section has explicitly considered 

this 80 percent limitation and permitted 

a higher percentage, then the full 

amount of costs resulting from that 

agreement are allowable. 

(f) Costs incurred by the non-Federal 

entity in connection with the defense of 

suits brought by its employees or exemployees under section 2 of the Major 

Fraud Act of 1988 (18 U.S.C. 1031), 

including the cost of all relief necessary 

to make such employee whole, where 

the non-Federal entity was found liable 

or settled, are unallowable. 

(g) Costs of prosecution of claims 

against the Federal Government, 

including appeals of final HHS agency 

decisions, are unallowable. 

(h) Costs of legal, accounting, and 

consultant services, and related costs, 

incurred in connection with patent 

infringement litigation, are unallowable 

unless otherwise provided for in the 

Federal award. 

(i) Costs which may be unallowable 

under this section, including directly 

associated costs, must be segregated and 

accounted for separately. During the 

pendency of any proceeding covered by 

paragraphs (b) and (f) of this section, the 

Federal Government must generally 


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withhold payment of such costs. 

However, if in its best interests, the 

Federal Government may provide for 

conditional payment upon provision of 

adequate security, or other adequate 

assurance, and agreement to repay all 

unallowable costs, plus interest, if the 

costs are subsequently determined to be 

unallowable. 

§ 75.436 Depreciation. 

(a) Depreciation is the method for 

allocating the cost of fixed assets to 

periods benefitting from asset use. The 

non-Federal entity may be compensated 

for the use of its buildings, capital 

improvements, equipment, and software 

projects capitalized in accordance with 

GAAP, provided that they are used, 

needed in the non-Federal entity’s 

activities, and properly allocated to 

Federal awards. Such compensation 

must be made by computing 

depreciation. 

(b) The allocation for depreciation 

must be made in accordance with 

Appendices III through IX. 

(c) Depreciation is computed applying 

the following rules. The computation of 

depreciation must be based on the 

acquisition cost of the assets involved. 

For an asset donated to the non-Federal 

entity by a third party, its fair market 

value at the time of the donation must 

be considered as the acquisition cost. 

Such assets may be depreciated or 

claimed as matching but not both. For 

the purpose of computing depreciation, 

the acquisition cost will exclude: 

(1) The cost of land; 

(2) Any portion of the cost of 

buildings and equipment borne by or 

donated by the Federal Government, 

irrespective of where title was originally 

vested or where it is presently located; 

(3) Any portion of the cost of 

buildings and equipment contributed by 

or for the non-Federal entity, where law 

or agreement prohibits recovery; and 

(4) Any asset acquired solely for the 

performance of a non-Federal award. 

(d) When computing depreciation 

charges, the following must be observed: 

(1) The period of useful service or 

useful life established in each case for 

usable capital assets must take into 

consideration such factors as type of 

construction, nature of the equipment, 

technological developments in the 

particular area, historical data, and the 

renewal and replacement policies 

followed for the individual items or 

classes of assets involved. 

(2) The depreciation method used to 

charge the cost of an asset (or group of 

assets) to accounting periods must 

reflect the pattern of consumption of the 

asset during its useful life. In the 

absence of clear evidence indicating that 

the expected consumption of the asset 

will be significantly greater in the early 

portions than in the later portions of its 

useful life, the straight-line method 

must be presumed to be the appropriate 

method. Depreciation methods once 

used may not be changed unless 

approved in advance by the cognizant 

agency. The depreciation methods used 

to calculate the depreciation amounts 

for indirect (F&A) rate purposes must be 

the same methods used by the nonFederal entity for its financial 

statements. 

(3) The entire building, including the 

shell and all components, may be 

treated as a single asset and depreciated 

over a single useful life. A building may 

also be divided into multiple 

components. Each component item may 

then be depreciated over its estimated 

useful life. The building components 

must be grouped into three general 

components of a building: building shell 

(including construction and design 

costs), building services systems (e.g., 

elevators, HVAC, plumbing system and 

heating and air-conditioning system) 

and fixed equipment (e.g., sterilizers, 

casework, fume hoods, cold rooms and 

glassware/washers). In exceptional 

cases, a cognizant agency may authorize 

a non-Federal entity to use more than 

these three groupings. When a nonFederal entity elects to depreciate its 

buildings by its components, the same 

depreciation methods must be used for 

indirect (F&A) purposes and financial 

statements purposes, as described in 

paragraphs (d)(1) and (2) of this section. 

(4) No depreciation may be allowed 

on any assets that have outlived their 

depreciable lives. 

(5) Where the depreciation method is 

introduced to replace the use allowance 

method, depreciation must be computed 

as if the asset had been depreciated over 

its entire life (i.e., from the date the asset 

was acquired and ready for use to the 

date of disposal or withdrawal from 

service). The total amount of use 

allowance and depreciation for an asset 

(including imputed depreciation 

applicable to periods prior to the 

conversion from the use allowance 

method as well as depreciation after the 

conversion) may not exceed the total 

acquisition cost of the asset. 

(e) Charges for depreciation must be 

supported by adequate property records, 

and physical inventories must be taken 

at least once every two years to ensure 

that the assets exist and are usable, 

used, and needed. Statistical sampling 

techniques may be used in taking these 

inventories. In addition, adequate 

depreciation records showing the 

amount of depreciation taken each 

period must also be maintained. 

§ 75.437 Employee health and welfare 

costs. 

(a) Costs incurred in accordance with 

the non-Federal entity’s documented 

policies for the improvement of working 

conditions, employer-employee 

relations, employee health, and 

employee performance are allowable. 

(b) Such costs will be equitably 

apportioned to all activities of the nonFederal entity. Income generated from 

any of these activities will be credited 

to the cost thereof unless such income 

has been irrevocably sent to employee 

welfare organizations. 

(c) Losses resulting from operating 

food services are allowable only if the 

non-Federal entity’s objective is to 

operate such services on a break-even 

basis. Losses sustained because of 

operating objectives other than the 

above are allowable only: 

(1) Where the non-Federal entity can 

demonstrate unusual circumstances; 

and 

(2) With the approval of the cognizant 

agency for indirect costs. 

§ 75.438 Entertainment costs. 

Costs of entertainment, including 

amusement, diversion, and social 

activities and any associated costs are 

unallowable, except where specific 

costs that might otherwise be 

considered entertainment have a 

programmatic purpose and are 

authorized either in the approved 

budget for the Federal award or with 

prior written approval of the HHS 

awarding agency. 

§ 75.439 Equipment and other capital 

expenditures. 

(a) See § 75.2 for the definitions of 

Capital expenditures, Equipment, 

Special purpose equipment, General 

purpose equipment, Acquisition cost, 

and Capital assets. 

(b) The following rules of allowability 

must apply to equipment and other 

capital expenditures: 

(1) Capital expenditures for general 

purpose equipment, buildings, and land 

are unallowable as direct charges, 

except with the prior written approval 

of the HHS awarding agency or passthrough entity. 

(2) Capital expenditures for special 

purpose equipment are allowable as 

direct costs, provided that items with a 

unit cost of $5,000 or more have the 

prior written approval of the HHS 

awarding agency or pass-through entity. 

(3) Capital expenditures for 

improvements to land, buildings, or 

equipment which materially increase 

their value or useful life are unallowable 

as a direct cost except with the prior 

written approval of the HHS awarding 


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agency, or pass-through entity. See 

§ 75.436 for rules on the allowability of 

depreciation on buildings, capital 

improvements, and equipment. See also 

§ 75.465. 

(4) When approved as a direct charge 

pursuant to paragraphs (b)(1) through 

(3) of this section, capital expenditures 

will be charged in the period in which 

the expenditure is incurred, or as 

otherwise determined appropriate and 

negotiated with the HHS awarding 

agency. 

(5) The unamortized portion of any 

equipment written off as a result of a 

change in capitalization levels may be 

recovered by continuing to claim the 

otherwise allowable depreciation on the 

equipment, or by amortizing the amount 

to be written off over a period of years 

negotiated with the Federal cognizant 

agency for indirect cost. 

(6) Cost of equipment disposal. If the 

non-Federal entity is instructed by the 

HHS awarding agency to otherwise 

dispose of or transfer the equipment the 

costs of such disposal or transfer are 

allowable. 

§ 75.440 Exchange rates. 

(a) Cost increases for fluctuations in 

exchange rates are allowable costs 

subject to the availability of funding. 

Prior approval of exchange rate 

fluctuations is required only when the 

change results in the need for additional 

Federal funding, or the increased costs 

result in the need to significantly reduce 

the scope of the project. The HHS 

awarding agency must however ensure 

that adequate funds are available to 

cover currency fluctuations in order to 

avoid a violation of the Anti-Deficiency 

Act. 

(b) The non-Federal entity is required 

to make reviews of local currency gains 

to determine the need for additional 

federal funding before the expiration 

date of the Federal award. Subsequent 

adjustments for currency increases may 

be allowable only when the non-Federal 

entity provides the HHS awarding 

agency with adequate source 

documentation from a commonly used 

source in effect at the time the expense 

was made, and to the extent that 

sufficient Federal funds are available. 

§ 75.441 Fines, penalties, damages and 

other settlements. 

Costs resulting from non-Federal 

entity violations of, alleged violations 

of, or failure to comply with, Federal, 

state, tribal, local or foreign laws and 

regulations are unallowable, except 

when incurred as a result of compliance 

with specific provisions of the Federal 

award, or with prior written approval of 

the HHS awarding agency. See also 

§ 75.435. 

§ 75.442 Fund raising and investment 

management costs. 

(a) Costs of organized fund raising, 

including financial campaigns, 

endowment drives, solicitation of gifts 

and bequests, and similar expenses 

incurred to raise capital or obtain 

contributions are unallowable. Fund 

raising costs for the purposes of meeting 

the Federal program objectives are 

allowable with prior written approval 

from the Federal awarding agency. 

Proposal costs are covered in § 75.460. 

(b) Costs of investment counsel and 

staff and similar expenses incurred to 

enhance income from investments are 

unallowable except when associated 

with investments covering pension, selfinsurance, or other funds which include 

Federal participation allowed by this 

part. 

(c) Costs related to the physical 

custody and control of monies and 

securities are allowable. 

(d) Both allowable and unallowable 

fund raising and investment activities 

must be allocated an appropriate share 

of indirect costs under the conditions 

described in § 75.413. 

§ 75.443 Gains and losses on disposition 

of depreciable assets. 

(a) Gains and losses on the sale, 

retirement, or other disposition of 

depreciable property must be included 

in the year in which they occur as 

credits or charges to the asset cost 

grouping(s) in which the property was 

included. The amount of the gain or loss 

to be included as a credit or charge to 

the appropriate asset cost grouping(s) is 

the difference between the amount 

realized on the property and the 

undepreciated basis of the property. 

(b) Gains and losses from the 

disposition of depreciable property 

must not be recognized as a separate 

credit or charge under the following 

conditions: 

(1) The gain or loss is processed 

through a depreciation account and is 

reflected in the depreciation allowable 

under §§ 75.436 and 75.439. 

(2) The property is given in exchange 

as part of the purchase price of a similar 

item and the gain or loss is taken into 

account in determining the depreciation 

cost basis of the new item. 

(3) A loss results from the failure to 

maintain permissible insurance, except 

as otherwise provided in § 75.447. 

(4) Compensation for the use of the 

property was provided through use 

allowances in lieu of depreciation. 

(5) Gains and losses arising from mass 

or extraordinary sales, retirements, or 

other dispositions must be considered 

on a case-by-case basis. 

(c) Gains or losses of any nature 

arising from the sale or exchange of 

property other than the property 

covered in paragraph (a) of this section, 

e.g., land, must be excluded in 

computing Federal award costs. 

(d) When assets acquired with Federal 

funds, in part or wholly, are disposed 

of, the distribution of the proceeds must 

be made in accordance with §§ 75.317 

through 75.323. 

§ 75.444 General costs of government. 

(a) For states, local governments, and 

Indian Tribes, the general costs of 

government are unallowable (except as 

provided in § 75.474). Unallowable 

costs include: 

(1) Salaries and expenses of the Office 

of the Governor of a state or the chief 

executive of a local government or the 

chief executive of an Indian tribe; 

(2) Salaries and other expenses of a 

state legislature, tribal council, or 

similar local governmental body, such 

as a county supervisor, city council, 

school board, etc., whether incurred for 

purposes of legislation or executive 

direction; 

(3) Costs of the judicial branch of a 

government; 

(4) Costs of prosecutorial activities 

unless treated as a direct cost to a 

specific program if authorized by statute 

or regulation (however, this does not 

preclude the allowability of other legal 

activities of the Attorney General as 

described in § 75.435); and 

(5) Costs of other general types of 

government services normally provided 

to the general public, such as fire and 

police, unless provided for as a direct 

cost under a program statute or 

regulation. 

(b) For Indian tribes and Councils of 

Governments (COGs) (see § 75.2 Local 

government), up to 50% of salaries and 

expenses directly attributable to 

managing and operating Federal 

programs by the chief executive and his 

or her staff can be included in the 

indirect cost calculation without 

documentation. 

§ 75.445 Goods or services for personal 

use. 

(a) Costs of goods or services for 

personal use of the non-Federal entity’s 

employees are unallowable regardless of 

whether the cost is reported as taxable 

income to the employees. 

(b) Costs of housing (e.g., 

depreciation, maintenance, utilities, 

furnishings, rent), housing allowances 

and personal living expenses are only 

allowable as direct costs regardless of 

whether reported as taxable income to 


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the employees. In addition, to be 

allowable direct costs must be approved 

in advance by an HHS awarding agency. 

§ 75.446 Idle facilities and idle capacity. 

(a) As used in this section the 

following terms have the meanings set 

forth in this section: 

(1) Facilities means land and 

buildings or any portion thereof, 

equipment individually or collectively, 

or any other tangible capital asset, 

wherever located, and whether owned 

or leased by the non-Federal entity. 

(2) Idle facilities means completely 

unused facilities that are excess to the 

non-Federal entity’s current needs. 

(3) Idle capacity means the unused 

capacity of partially used facilities. It is 

the difference between: 

(i) That which a facility could achieve 

under 100 percent operating time on a 

one-shift basis less operating 

interruptions resulting from time lost for 

repairs, setups, unsatisfactory materials, 

and other normal delays and; 

(ii) The extent to which the facility 

was actually used to meet demands 

during the accounting period. A multishift basis should be used if it can be 

shown that this amount of usage would 

normally be expected for the type of 

facility involved. 

(4) Cost of idle facilities or idle 

capacity means costs such as 

maintenance, repair, housing, rent, and 

other related costs, e.g., insurance, 

interest, and depreciation. These costs 

could include the costs of idle public 

safety emergency facilities, 

telecommunications, or information 

technology system capacity that is built 

to withstand major fluctuations in load, 

e.g., consolidated data centers. 

(b) The costs of idle facilities are 

unallowable except to the extent that: 

(1) They are necessary to meet 

workload requirements which may 

fluctuate and are allocated appropriately 

to all benefiting programs; or 

(2) Although not necessary to meet 

fluctuations in workload, they were 

necessary when acquired and are now 

idle because of changes in program 

requirements, efforts to achieve more 

economical operations, reorganization, 

termination, or other causes which 

could not have been reasonably 

foreseen. Under the exception stated in 

this subsection, costs of idle facilities 

are allowable for a reasonable period of 

time, ordinarily not to exceed one year, 

depending on the initiative taken to use, 

lease, or dispose of such facilities. 

(c) The costs of idle capacity are 

normal costs of doing business and are 

a factor in the normal fluctuations of 

usage or indirect cost rates from period 

to period. Such costs are allowable, 

provided that the capacity is reasonably 

anticipated to be necessary to carry out 

the purpose of the Federal award or was 

originally reasonable and is not subject 

to reduction or elimination by use on 

other Federal awards, subletting, 

renting, or sale, in accordance with 

sound business, economic, or security 

practices. Widespread idle capacity 

throughout an entire facility or among a 

group of assets having substantially the 

same function may be considered idle 

facilities. 

§ 75.447 Insurance and indemnification. 

(a) Costs of insurance required or 

approved and maintained, pursuant to 

the Federal award, are allowable. 

(b) Costs of other insurance in 

connection with the general conduct of 

activities are allowable subject to the 

following limitations: 

(1) Types and extent and cost of 

coverage are in accordance with the 

non-Federal entity’s policy and sound 

business practice. 

(2) Costs of insurance or of 

contributions to any reserve covering 

the risk of loss of, or damage to, Federal 

Government property are unallowable 

except to the extent that the HHS 

awarding agency has specifically 

required or approved such costs. 

(3) Costs allowed for business 

interruption or other similar insurance 

must exclude coverage of management 

fees. 

(4) Costs of insurance on the lives of 

trustees, officers, or other employees 

holding positions of similar 

responsibilities are allowable only to the 

extent that the insurance represents 

additional compensation (see § 75.431). 

The cost of such insurance when the 

non-Federal entity is identified as the 

beneficiary is unallowable. 

(5) Insurance against defects. Costs of 

insurance with respect to any costs 

incurred to correct defects in the nonFederal entity’s materials or 

workmanship are unallowable. 

(6) Medical liability (malpractice) 

insurance. Medical liability insurance is 

an allowable cost of Federal research 

programs only to the extent that the 

Federal research programs involve 

human subjects or training of 

participants in research techniques. 

Medical liability insurance costs must 

be treated as a direct cost and must be 

assigned to individual projects based on 

the manner in which the insurer 

allocates the risk to the population 

covered by the insurance. 

(c) Actual losses which could have 

been covered by permissible insurance 

(through a self-insurance program or 

otherwise) are unallowable, unless 

expressly provided for in the Federal 

award. However, costs incurred because 

of losses not covered under nominal 

deductible insurance coverage provided 

in keeping with sound management 

practice, and minor losses not covered 

by insurance, such as spoilage, 

breakage, and disappearance of small 

hand tools, which occur in the ordinary 

course of operations, are allowable. 

(d) Contributions to a reserve for 

certain self-insurance programs 

including workers’ compensation, 

unemployment compensation, and 

severance pay are allowable subject to 

the following provisions: 

(1) The type of coverage and the 

extent of coverage and the rates and 

premiums would have been allowed 

had insurance (including reinsurance) 

been purchased to cover the risks. 

However, provision for known or 

reasonably estimated self-insured 

liabilities, which do not become payable 

for more than one year after the 

provision is made, must not exceed the 

discounted present value of the liability. 

The rate used for discounting the 

liability must be determined by giving 

consideration to such factors as the nonFederal entity’s settlement rate for those 

liabilities and its investment rate of 

return. 

(2) Earnings or investment income on 

reserves must be credited to those 

reserves. 

(3)(i) Contributions to reserves must 

be based on sound actuarial principles 

using historical experience and 

reasonable assumptions. Reserve levels 

must be analyzed and updated at least 

biennially for each major risk being 

insured and take into account any 

reinsurance, coinsurance, etc. Reserve 

levels related to employee-related 

coverages will normally be limited to 

the value of claims: 

(A) Submitted and adjudicated but 

not paid; 

(B) Submitted but not adjudicated; 

and 

(C) Incurred but not submitted. 

(ii) Reserve levels in excess of the 

amounts based on the above must be 

identified and justified in the cost 

allocation plan or indirect cost rate 

proposal. 

(4) Accounting records, actuarial 

studies, and cost allocations (or billings) 

must recognize any significant 

differences due to types of insured risk 

and losses generated by the various 

insured activities or agencies of the nonFederal entity. If individual 

departments or agencies of the nonFederal entity experience significantly 

different levels of claims for a particular 

risk, those differences are to be 

recognized by the use of separate 


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allocations or other techniques resulting 

in an equitable allocation. 

(5) Whenever funds are transferred 

from a self-insurance reserve to other 

accounts (e.g., general fund or 

unrestricted account), refunds must be 

made to the Federal Government for its 

share of funds transferred, including 

earned or imputed interest from the date 

of transfer and debt interest, if 

applicable, chargeable in accordance 

with applicable Federal cognizant 

agency for indirect cost, claims 

collection regulations. 

(e) Insurance refunds must be credited 

against insurance costs in the year the 

refund is received. 

(f) Indemnification includes securing 

the non-Federal entity against liabilities 

to third persons and other losses not 

compensated by insurance or otherwise. 

The Federal Government is obligated to 

indemnify the non-Federal entity only 

to the extent expressly provided for in 

the Federal award, except as provided 

in paragraph (c) of this section. 

§ 75.448 Intellectual Property. 

(a) Patent costs. (1) The following 

costs related to securing patents and 

copyrights are allowable: 

(i) Costs of preparing disclosures, 

reports, and other documents required 

by the Federal award, and of searching 

the art to the extent necessary to make 

such disclosures; 

(ii) Costs of preparing documents and 

any other patent costs in connection 

with the filing and prosecution of a 

United States patent application where 

title or royalty-free license is required 

by the Federal Government to be 

conveyed to the Federal Government; 

and 

(iii) General counseling services 

relating to patent and copyright matters, 

such as advice on patent and copyright 

laws, regulations, clauses, and employee 

intellectual property agreements (See 

also § 75.459). 

(2) The following costs related to 

securing patents and copyrights are 

unallowable: 

(i) Costs of preparing disclosures, 

reports, and other documents, and of 

searching the art to make disclosures 

not required by the Federal award; 

(ii) Costs in connection with filing 

and prosecuting any foreign patent 

application, or any United States patent 

application, where the Federal award 

does not require conveying title or a 

royalty-free license to the Federal 

Government. 

(b) Royalties and other costs for use of 

patents and copyrights. (1) Royalties on 

a patent or copyright or amortization of 

the cost of acquiring by purchase a 

copyright, patent, or rights thereto, 

necessary for the proper performance of 

the Federal award are allowable unless: 

(i) The Federal Government already 

has a license or the right to free use of 

the patent or copyright. 

(ii) The patent or copyright has been 

adjudicated to be invalid, or has been 

administratively determined to be 

invalid. 

(iii) The patent or copyright is 

considered to be unenforceable. 

(iv) The patent or copyright is 

expired. 

(2) Special care should be exercised in 

determining reasonableness where the 

royalties may have been arrived at as a 

result of less-than-arm’s-length 

bargaining, such as: 

(i) Royalties paid to persons, 

including corporations, affiliated with 

the non-Federal entity. 

(ii) Royalties paid to unaffiliated 

parties, including corporations, under 

an agreement entered into in 

contemplation that a Federal award 

would be made. 

(iii) Royalties paid under an 

agreement entered into after a Federal 

award is made to a non-Federal entity. 

(3) In any case involving a patent or 

copyright formerly owned by the nonFederal entity, the amount of royalty 

allowed must not exceed the cost which 

would have been allowed had the nonFederal entity retained title there. 

§ 75.449 Interest. 

(a) General. Costs incurred for interest 

on borrowed capital, temporary use of 

endowment funds, or the use of the nonFederal entity’s own funds, however 

represented, are unallowable. Financing 

costs (including interest) to acquire, 

construct, or replace capital assets are 

allowable, subject to the conditions in 

this section. 

(b)(1) Capital assets are defined in 

§ 75.2 Capital assets. An asset cost 

includes (as applicable) acquisition 

costs, construction costs, and other costs 

capitalized in accordance with GAAP. 

(2) For non-Federal entity fiscal years 

beginning on or after January 1, 2016, 

intangible assets include patents and 

computer software. For software 

development projects, only interest 

attributable to the portion of the project 

costs capitalized in accordance with 

GAAP is allowable. 

(c) Conditions for all non-Federal 

entities. (1) The non-Federal entity uses 

the capital assets in support of Federal 

awards; 

(2) The allowable asset costs to 

acquire facilities and equipment are 

limited to a fair market value available 

to the non-Federal entity from an 

unrelated (arm’s length) third party. 

(3) The non-Federal entity obtains the 

financing via an arm’s-length 

transaction (that is, a transaction with 

an unrelated third party); or claims 

reimbursement of actual interest cost at 

a rate available via such a transaction. 

(4) The non-Federal entity limits 

claims for Federal reimbursement of 

interest costs to the least expensive 

alternative. For example, a capital lease 

may be determined less costly than 

purchasing through debt financing, in 

which case reimbursement must be 

limited to the amount of interest 

determined if leasing had been used. 

(5) The non-Federal entity expenses 

or capitalizes allowable interest cost in 

accordance with GAAP. 

(6) Earnings generated by the 

investment of borrowed funds pending 

their disbursement for the asset costs are 

used to offset the current period’s 

allowable interest cost, whether that 

cost is expensed or capitalized. Earnings 

subject to being reported to the Federal 

Internal Revenue Service under 

arbitrage requirements are excludable. 

(7) The following conditions must 

apply to debt arrangements over $1 

million to purchase or construct 

facilities, unless the non-Federal entity 

makes an initial equity contribution to 

the purchase of 25 percent or more. For 

this purpose, ‘‘initial equity 

contribution’’ means the amount or 

value of contributions made by the nonFederal entity for the acquisition of 

facilities prior to occupancy. 

(i) The non-Federal entity must 

reduce claims for reimbursement of 

interest cost by an amount equal to 

imputed interest earnings on excess 

cash flow attributable to the portion of 

the facility used for Federal awards. 

(ii) The non-Federal entity must 

impute interest on excess cash flow as 

follows: 

(A) Annually, the non-Federal entity 

must prepare a cumulative (from the 

inception of the project) report of 

monthly cash inflows and outflows, 

regardless of the funding source. For 

this purpose, inflows consist of Federal 

reimbursement for depreciation, 

amortization of capitalized construction 

interest, and annual interest cost. 

Outflows consist of initial equity 

contributions, debt principal payments 

(less the pro-rata share attributable to 

the cost of land), and interest payments. 

(B) To compute monthly cash inflows 

and outflows, the non-Federal entity 

must divide the annual amounts 

determined in step (i) by the number of 

months in the year (usually 12) that the 

building is in service. 

(C) For any month in which 

cumulative cash inflows exceed 

cumulative outflows, interest must be 

calculated on the excess inflows for that 

month and be treated as a reduction to 


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allowable interest cost. The rate of 

interest to be used must be the threemonth Treasury bill closing rate as of 

the last business day of that month. 

(8) Interest attributable to a fully 

depreciated asset is unallowable. 

(d) Additional conditions for states, 

local governments and Indian tribes. For 

costs to be allowable, the non-Federal 

entity must have incurred the interest 

costs for buildings after October 1, 1980, 

or for land and equipment after 

September 1, 1995. 

(1) The requirement to offset interest 

earned on borrowed funds against 

current allowable interest cost 

(paragraph (c)(5) of this section) also 

applies to earnings on debt service 

reserve funds. 

(2) The non-Federal entity will 

negotiate the amount of allowable 

interest cost related to the acquisition of 

facilities with asset costs of $1 million 

or more, as outlined in paragraph (c)(7) 

of this section. For this purpose, a nonFederal entity must consider only cash 

inflows and outflows attributable to that 

portion of the real property used for 

Federal awards. 

(e) Additional conditions for IHEs. 

For costs to be allowable, the IHE must 

have incurred the interest costs after 

September 23, 1982, in connection with 

acquisitions of capital assets that 

occurred after that date. 

(f) Additional condition for nonprofit 

organizations. For costs to be allowable, 

the nonprofit organization incurred the 

interest costs after September 29, 1995, 

in connection with acquisitions of 

capital assets that occurred after that 

date. 

(g) The interest allowability 

provisions of this section do not apply 

to a nonprofit organization subject to 

‘‘full coverage’’ under the Cost 

Accounting Standards (CAS), as defined 

at 48 CFR 9903.201–2(a). The nonFederal entity’s Federal awards are 

instead subject to CAS 414 (48 CFR 

9904.414), and CAS 417 (48 CFR 

9904.417). 

§ 75.450 Lobbying. 

(a) The cost of certain influencing 

activities associated with obtaining 

grants, contracts, cooperative 

agreements, or loans is an unallowable 

cost. Lobbying with respect to certain 

grants, contracts, cooperative 

agreements, and loans is governed by 

relevant statutes, including among 

others, the provisions of 31 U.S.C. 1352, 

as well as the common rule, ‘‘New 

Restrictions on Lobbying’’ published at 

55 FR 6736 (February 26, 1990), 

including definitions, and the Office of 

Management and Budget ‘‘Governmentwide Guidance for New Restrictions on 

Lobbying’’ and notices published at 54 

FR 52306 (December 20, 1989), 55 FR 

24540 (June 15, 1990), 57 FR 1772 

(January 15, 1992), and 61 FR 1412 

(January 19, 1996). 

(b) Executive lobbying costs. Costs 

incurred in attempting to improperly 

influence either directly or indirectly, 

an employee or officer of the executive 

branch of the Federal Government to 

give consideration or to act regarding a 

Federal award or a regulatory matter are 

unallowable. Improper influence means 

any influence that induces or tends to 

induce a Federal employee or officer to 

give consideration or to act regarding a 

Federal award or regulatory matter on 

any basis other than the merits of the 

matter. 

(c) In addition to the above, the 

following restrictions are applicable to 

nonprofit organizations and IHEs: 

(1) Costs associated with the 

following activities are unallowable: 

(i) Attempts to influence the outcomes 

of any Federal, state, or local election, 

referendum, initiative, or similar 

procedure, through in-kind or cash 

contributions, endorsements, publicity, 

or similar activity; 

(ii) Establishing, administering, 

contributing to, or paying the expenses 

of a political party, campaign, political 

action committee, or other organization 

established for the purpose of 

influencing the outcomes of elections in 

the United States; 

(iii) Any attempt to influence: 

(A) The introduction of Federal or 

state legislation; 

(B) The enactment or modification of 

any pending Federal or state legislation 

through communication with any 

member or employee of the Congress or 

state legislature (including efforts to 

influence state or local officials to 

engage in similar lobbying activity); 

(C) The enactment or modification of 

any pending Federal or state legislation 

by preparing, distributing, or using 

publicity or propaganda, or by urging 

members of the general public, or any 

segment thereof, to contribute to or 

participate in any mass demonstration, 

march, rally, fund raising drive, 

lobbying campaign or letter writing or 

telephone campaign; or 

(D) Any government official or 

employee in connection with a decision 

to sign or veto enrolled legislation; 

(iv) Legislative liaison activities, 

including attendance at legislative 

sessions or committee hearings, 

gathering information regarding 

legislation, and analyzing the effect of 

legislation, when such activities are 

carried on in support of or in knowing 

preparation for an effort to engage in 

unallowable lobbying. 

(2) The following activities are 

excepted from the coverage of paragraph 

(c)(1) of this section: 

(i) Technical and factual presentations 

on topics directly related to the 

performance of a grant, contract, or 

other agreement (through hearing 

testimony, statements, or letters to the 

Congress or a state legislature, or 

subdivision, member, or cognizant staff 

member thereof), in response to a 

documented request (including a 

Congressional Record notice requesting 

testimony or statements for the record at 

a regularly scheduled hearing) made by 

the non-Federal entity’s member of 

congress, legislative body or a 

subdivision, or a cognizant staff member 

thereof, provided such information is 

readily obtainable and can be readily 

put in deliverable form, and further 

provided that costs under this section 

for travel, lodging or meals are 

unallowable unless incurred to offer 

testimony at a regularly scheduled 

Congressional hearing pursuant to a 

written request for such presentation 

made by the Chairman or Ranking 

Minority Member of the Committee or 

Subcommittee conducting such 

hearings; 

(ii) Any lobbying made unallowable 

by paragraph (c)(1)(iii) of this section to 

influence state legislation in order to 

directly reduce the cost, or to avoid 

material impairment of the non-Federal 

entity’s authority to perform the grant, 

contract, or other agreement; or 

(iii) Any activity specifically 

authorized by statute to be undertaken 

with funds from the Federal award. 

(iv) Any activity excepted from the 

definitions of ‘‘lobbying’’ or 

‘‘influencing legislation’’ by the Internal 

Revenue Code provisions that require 

nonprofit organizations to limit their 

participation in direct and ‘‘grass roots’’ 

lobbying activities in order to retain 

their charitable deduction status and 

avoid punitive excise taxes, IRC 

secs.501(c)(3), 501(h), 4911(a), 

including: 

(A) Nonpartisan analysis, study, or 

research reports; 

(B) Examinations and discussions of 

broad social, economic, and similar 

problems; and 

(C) Information provided upon 

request by a legislator for technical 

advice and assistance, as defined by IRC 

sec. 4911(d)(2) and 26 CFR 56.4911– 

2(c)(1)–(c)(3). 

(v) When a non-Federal entity seeks 

reimbursement for indirect (F&A) costs, 

total lobbying costs must be separately 

identified in the indirect (F&A) cost rate 

proposal, and thereafter treated as other 

unallowable activity costs in accordance 

with the procedures of § 75.413. 


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(vi) The non-Federal entity must 

submit as part of its annual indirect 

(F&A) cost rate proposal a certification 

that the requirements and standards of 

this section have been complied with. 

(See also § 75.415.) 

(vii)(A) Time logs, calendars, or 

similar records are not required to be 

created for purposes of complying with 

the record keeping requirements in 

§ 75.302 with respect to lobbying costs 

during any particular calendar month 

when: 

(1) The employee engages in lobbying 

(as defined in paragraphs (c)(1) and 

(c)(2) of this section) 25 percent or less 

of the employee’s compensated hours of 

employment during that calendar 

month; and 

(2) Within the preceding five-year 

period, the non-Federal entity has not 

materially misstated allowable or 

unallowable costs of any nature, 

including legislative lobbying costs. 

(B) When conditions in paragraph 

(c)(2)(vii)(A)(1) and (2) of this section 

are met, non-Federal entities are not 

required to establish records to support 

the allowability of claimed costs in 

addition to records already required or 

maintained. Also, when conditions in 

paragraphs (c)(2)(vii)(A)(1) and (2) of 

this section are met, the absence of time 

logs, calendars, or similar records will 

not serve as a basis for disallowing costs 

by contesting estimates of lobbying time 

spent by employees during a calendar 

month. 

(viii) The HHS awarding agency must 

establish procedures for resolving in 

advance, in consultation with OMB, any 

significant questions or disagreements 

concerning the interpretation or 

application of this section. Any such 

advance resolutions must be binding in 

any subsequent settlements, audits, or 

investigations with respect to that grant 

or contract for purposes of 

interpretation of this part, provided, 

however, that this must not be 

construed to prevent a contractor or 

non-Federal entity from contesting the 

lawfulness of such a determination. 

§ 75.451 Losses on other awards or 

contracts. 

Any excess of costs over income 

under any other award or contract of 

any nature is unallowable. This 

includes, but is not limited to, the nonFederal entity’s contributed portion by 

reason of cost-sharing agreements or any 

under-recoveries through negotiation of 

flat amounts for indirect (F&A) costs. 

Also, any excess of costs over 

authorized funding levels transferred 

from any award or contract to another 

award or contract is unallowable. All 

losses are not allowable indirect (F&A) 

costs and are required to be included in 

the appropriate indirect cost rate base 

for allocation of indirect costs. 

§ 75.452 Maintenance and repair costs. 

Costs incurred for utilities, insurance, 

security, necessary maintenance, 

janitorial services, repair, or upkeep of 

buildings and equipment (including 

Federal property unless otherwise 

provided for) which neither add to the 

permanent value of the property nor 

appreciably prolong its intended life, 

but keep it in an efficient operating 

condition, are allowable. Costs incurred 

for improvements which add to the 

permanent value of the buildings and 

equipment or appreciably prolong their 

intended life must be treated as capital 

expenditures (see § 75.439). These costs 

are only allowable to the extent not paid 

through rental or other agreements. 

§ 75.453 Materials and supplies costs, 

including costs of computing devices. 

(a) Costs incurred for materials, 

supplies, and fabricated parts necessary 

to carry out a Federal award are 

allowable. 

(b) Purchased materials and supplies 

must be charged at their actual prices, 

net of applicable credits. Withdrawals 

from general stores or stockrooms must 

be charged at their actual net cost under 

any recognized method of pricing 

inventory withdrawals, consistently 

applied. Incoming transportation 

charges are a proper part of materials 

and supplies costs. 

(c) Materials and supplies used for the 

performance of a Federal award may be 

charged as direct costs. In the specific 

case of computing devices, charging as 

direct costs is allowable for devices that 

are essential and allocable, but not 

solely dedicated, to the performance of 

a Federal award. 

(d) Where federally-donated or 

furnished materials are used in 

performing the Federal award, such 

materials will be used without charge. 

§ 75.454 Memberships, subscriptions, and 

professional activity costs. 

(a) Costs of the non-Federal entity’s 

membership in business, technical, and 

professional organizations are 

allowable. 

(b) Costs of the non-Federal entity’s 

subscriptions to business, professional, 

and technical periodicals are allowable. 

(c) Costs of membership in any civic 

or community organization are 

allowable with prior approval by the 

HHS awarding agency or pass-through 

entity. 

(d) Costs of membership in any 

country club or social or dining club or 

organization are unallowable. 

(e) Costs of membership in 

organizations whose primary purpose is 

lobbying are unallowable. See also 

§ 75.450. 

§ 75.455 Organization costs. 

Costs such as incorporation fees, 

brokers’ fees, fees to promoters, 

organizers or management consultants, 

attorneys, accountants, or investment 

counselor, whether or not employees of 

the non-Federal entity in connection 

with establishment or reorganization of 

an organization, are unallowable except 

with prior approval of the HHS 

awarding agency. 

§ 75.456 Participant support costs. 

Participant support costs are defined 

in § 75.2. Participant support costs are 

allowable with the prior approval of the 

HHS awarding agency. 

§ 75.457 Plant and security costs. 

Necessary and reasonable expenses 

incurred for protection and security of 

facilities, personnel, and work products 

are allowable. Such costs include, but 

are not limited to, wages and uniforms 

of personnel engaged in security 

activities; equipment; barriers; 

protective (non-military) gear, devices, 

and equipment; contractual security 

services; and consultants. Capital 

expenditures for plant security purposes 

are subject to § 75.439. 

§ 75.458 Pre-award costs. 

Pre-award costs are those incurred 

prior to the effective date of the Federal 

award directly pursuant to the 

negotiation and in anticipation of the 

Federal award where such costs are 

necessary for efficient and timely 

performance of the scope of work. Such 

costs are allowable only to the extent 

that they would have been allowable if 

incurred after the date of the Federal 

award and only with the written 

approval of the HHS awarding agency. 

§ 75.459 Professional services costs. 

(a) Costs of professional and 

consultant services rendered by persons 

who are members of a particular 

profession or possess a special skill, and 

who are not officers or employees of the 

non-Federal entity, are allowable, 

subject to paragraphs (b) and (c) of this 

section when reasonable in relation to 

the services rendered and when not 

contingent upon recovery of the costs 

from the Federal Government. In 

addition, legal and related services are 

limited under § 75.435. 

(b) In determining the allowability of 

costs in a particular case, no single 

factor or any special combination of 

factors is necessarily determinative. 


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However, the following factors are 

relevant: 

(1) The nature and scope of the 

service rendered in relation to the 

service required. 

(2) The necessity of contracting for the 

service, considering the non-Federal 

entity’s capability in the particular area. 

(3) The past pattern of such costs, 

particularly in the years prior to Federal 

awards. 

(4) The impact of Federal awards on 

the non-Federal entity’s business (i.e., 

what new problems have arisen). 

(5) Whether the proportion of Federal 

work to the non-Federal entity’s total 

business is such as to influence the nonFederal entity in favor of incurring the 

cost, particularly where the services 

rendered are not of a continuing nature 

and have little relationship to work 

under Federal awards. 

(6) Whether the service can be 

performed more economically by direct 

employment rather than contracting. 

(7) The qualifications of the 

individual or concern rendering the 

service and the customary fees charged, 

especially on non-federally funded 

activities. 

(8) Adequacy of the contractual 

agreement for the service (e.g., 

description of the service, estimate of 

time required, rate of compensation, and 

termination provisions). 

(c) In addition to the factors in 

paragraph (b) of this section, to be 

allowable, retainer fees must be 

supported by evidence of bona fide 

services available or rendered. 

§ 75.460 Proposal costs. 

Proposal costs are the costs of 

preparing bids, proposals, or 

applications on potential Federal and 

non-Federal awards or projects, 

including the development of data 

necessary to support the non-Federal 

entity’s bids or proposals. Proposal costs 

of the current accounting period of both 

successful and unsuccessful bids and 

proposals normally should be treated as 

indirect (F&A) costs and allocated 

currently to all activities of the nonFederal entity. No proposal costs of past 

accounting periods will be allocable to 

the current period. 

§ 75.461 Publication and printing costs. 

(a) Publication costs for electronic and 

print media, including distribution, 

promotion, and general handling are 

allowable. If these costs are not 

identifiable with a particular cost 

objective, they should be allocated as 

indirect costs to all benefiting activities 

of the non-Federal entity. 

(b) Page charges for professional 

journal publications are allowable 

where: 

(1) The publications report work 

supported by the Federal Government; 

and 

(2) The charges are levied impartially 

on all items published by the journal, 

whether or not under a Federal award. 

(c) The non-Federal entity may charge 

the Federal award before closeout for 

the costs of publication as prescribed in 

paragraphs (a) or (b) of this section or 

sharing of research results if the costs 

are not incurred during the period of 

performance of the Federal award. 

§ 75.462 Rearrangement and reconversion 

costs. 

(a) Costs incurred for ordinary and 

normal rearrangement and alteration of 

facilities are allowable as indirect costs. 

Special arrangements and alterations 

costs incurred specifically for a Federal 

award are allowable as a direct cost with 

the prior approval of the HHS awarding 

agency or pass-through entity. 

(b) Costs incurred in the restoration or 

rehabilitation of the non-Federal entity’s 

facilities to approximately the same 

condition existing immediately prior to 

commencement of Federal awards, less 

costs related to normal wear and tear, 

are allowable. 

§ 75.463 Recruiting costs. 

(a) Subject to paragraphs (b) and (c) of 

this section, and provided that the size 

of the staff recruited and maintained is 

in keeping with workload requirements, 

costs of ‘‘help wanted’’ advertising, 

operating costs of an employment office 

necessary to secure and maintain an 

adequate staff, costs of operating an 

aptitude and educational testing 

program, travel costs of employees 

while engaged in recruiting personnel, 

travel costs of applicants for interviews 

for prospective employment, and 

relocation costs incurred incident to 

recruitment of new employees, are 

allowable to the extent that such costs 

are incurred pursuant to the nonFederal entity’s standard recruitment 

program. Where the non-Federal entity 

uses employment agencies, costs not in 

excess of standard commercial rates for 

such services are allowable. 

(b) Special emoluments, fringe 

benefits, and salary allowances incurred 

to attract professional personnel that do 

not meet the test of reasonableness or do 

not conform with the established 

practices of the non-Federal entity, are 

unallowable. 

(c) Where relocation costs incurred 

incident to recruitment of a new 

employee have been funded in whole or 

in part to a Federal award, and the 

newly hired employee resigns for 

reasons within the employee’s control 

within 12 months after hire, the nonFederal entity will be required to refund 

or credit the Federal share of such 

relocation costs to the Federal 

Government. See also § 75.464. 

(d) Short-term, travel visa costs (as 

opposed to longer-term, immigration 

visas) are generally allowable expenses 

that may be proposed as a direct cost. 

Since short-term visas are issued for a 

specific period and purpose, they can be 

clearly identified as directly connected 

to work performed on a Federal award. 

For these costs to be directly charged to 

a Federal award, they must: 

(1) Be critical and necessary for the 

conduct of the project; 

(2) Be allowable under the applicable 

cost principles; 

(3) Be consistent with the non-Federal 

entity’s cost accounting practices and 

non-Federal entity policy; and 

(4) Meet the definition of ‘‘direct cost’’ 

as described in the applicable cost 

principles. 

§ 75.464 Relocation costs of employees. 

(a) Relocation costs are costs incident 

to the permanent change of duty 

assignment (for an indefinite period or 

for a stated period of not less than 12 

months) of an existing employee or 

upon recruitment of a new employee. 

Relocation costs are allowable, subject 

to the limitations described in 

paragraphs (b), (c), and (d) of this 

section, provided that: 

(1) The move is for the benefit of the 

employer. 

(2) Reimbursement to the employee is 

in accordance with an established 

written policy consistently followed by 

the employer. 

(3) The reimbursement does not 

exceed the employee’s actual (or 

reasonably estimated) expenses. 

(b) Allowable relocation costs for 

current employees are limited to the 

following: 

(1) The costs of transportation of the 

employee, members of his or her 

immediate family and his household, 

and personal effects to the new location. 

(2) The costs of finding a new home, 

such as advance trips by employees and 

spouses to locate living quarters and 

temporary lodging during the transition 

period, up to maximum period of 30 

calendar days. 

(3) Closing costs, such as brokerage, 

legal, and appraisal fees, incident to the 

disposition of the employee’s former 

home. These costs, together with those 

described in (4), are limited to 8 per 

cent of the sales price of the employee’s 

former home. 

(4) The continuing costs of ownership 

(for up to six months) of the vacant 

former home after the settlement or 

lease date of the employee’s new 


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permanent home, such as maintenance 

of buildings and grounds (exclusive of 

fixing-up expenses), utilities, taxes, and 

property insurance. 

(5) Other necessary and reasonable 

expenses normally incident to 

relocation, such as the costs of canceling 

an unexpired lease, transportation of 

personal property, and purchasing 

insurance against loss of or damages to 

personal property. The cost of canceling 

an unexpired lease is limited to three 

times the monthly rental. 

(c) Allowable relocation costs for new 

employees are limited to those 

described in paragraphs (b)(1) and (2) of 

this section. When relocation costs 

incurred incident to the recruitment of 

new employees have been charged to a 

Federal award and the employee resigns 

for reasons within the employee’s 

control within 12 months after hire, the 

non-Federal entity must refund or credit 

the Federal Government for its share of 

the cost. However, the costs of travel to 

an overseas location must be considered 

travel costs in accordance with § 75.474, 

and not § 75.464, for the purpose of this 

paragraph if dependents are not 

permitted at the location for any reason 

and the costs do not include costs of 

transporting household goods. 

(d) The following costs related to 

relocation are unallowable: 

(1) Fees and other costs associated 

with acquiring a new home. 

(2) A loss on the sale of a former 

home. 

(3) Continuing mortgage principal and 

interest payments on a home being sold. 

(4) Income taxes paid by an employee 

related to reimbursed relocation costs. 

§ 75.465 Rental costs of real property and 

equipment. 

(a) Subject to the limitations 

described in paragraphs (b) and (c) of 

this section, rental costs are allowable to 

the extent that the rates are reasonable 

in light of such factors as: Rental costs 

of comparable property, if any; market 

conditions in the area; alternatives 

available; and the type, life expectancy, 

condition, and value of the property 

leased. Rental arrangements should be 

reviewed periodically to determine if 

circumstances have changed and other 

options are available. 

(b) Rental costs under ‘‘sale and lease 

back’’ arrangements are allowable only 

up to the amount that would be allowed 

had the non-Federal entity continued to 

own the property. This amount would 

include expenses such as depreciation, 

maintenance, taxes, and insurance. 

(c) Rental costs under ‘‘less-thanarm’s-length’’ leases are allowable only 

up to the amount (as explained in 

paragraph (b) of this section). For this 

purpose, a less-than-arm’s-length lease 

is one under which one party to the 

lease agreement is able to control or 

substantially influence the actions of the 

other. Such leases include, but are not 

limited to those between: 

(1) Divisions of the non-Federal 

entity; 

(2) The non-Federal entity under 

common control through common 

officers, directors, or members; and 

(3) The non-Federal entity and a 

director, trustee, officer, or key 

employee of the non-Federal entity or 

an immediate family member, either 

directly or through corporations, trusts, 

or similar arrangements in which they 

hold a controlling interest. For example, 

the non-Federal entity may establish a 

separate corporation for the sole 

purpose of owning property and leasing 

it back to the non-Federal entity. 

(4) Family members include one party 

with any of the following relationships 

to another party: 

(i) Spouse, and parents thereof; 

(ii) Children, and spouses thereof; 

(iii) Parents, and spouses thereof; 

(iv) Siblings, and spouses thereof; 

(v) Grandparents and grandchildren, 

and spouses thereof; 

(vi) Domestic partner and parents 

thereof, including domestic partners of 

any individual in 2 through 5 of this 

definition; and 

(vii) Any individual related by blood 

or affinity whose close association with 

the employee is the equivalent of a 

family relationship. 

(5) Rental costs under leases which 

are required to be treated as capital 

leases under GAAP are allowable only 

up to the amount (as explained in 

paragraph (b) of this section) that would 

be allowed had the non-Federal entity 

purchased the property on the date the 

lease agreement was executed. The 

provisions of GAAP must be used to 

determine whether a lease is a capital 

lease. Interest costs related to capital 

leases are allowable to the extent they 

meet the criteria in § 75.449. 

Unallowable costs include amounts 

paid for profit, management fees, and 

taxes that would not have been incurred 

had the non-Federal entity purchased 

the property. 

(6) The rental of any property owned 

by any individuals or entities affiliated 

with the non-Federal entity, to include 

commercial or residential real estate, for 

purposes such as the home office 

workspace is unallowable. 

§ 75.466 Scholarships and student aid 

costs. 

(a) Costs of scholarships, fellowships, 

and other programs of student aid at 

IHEs are allowable only when the 

purpose of the Federal award is to 

provide training to selected participants 

and the charge is approved by the HHS 

awarding agency. However, tuition 

remission and other forms of 

compensation paid as, or in lieu of, 

wages to students performing necessary 

work are allowable provided that: 

(1) The individual is conducting 

activities necessary to the Federal 

award; 

(2) Tuition remission and other 

support are provided in accordance 

with established policy of the IHE and 

consistently provided in a like manner 

to students in return for similar 

activities conducted under Federal 

awards as well as other activities; and 

(3) During the academic period, the 

student is enrolled in an advanced 

degree program at a non-Federal entity 

or affiliated institution and the activities 

of the student in relation to the Federal 

award are related to the degree program; 

(4) The tuition or other payments are 

reasonable compensation for the work 

performed and are conditioned 

explicitly upon the performance of 

necessary work; and 

(5) It is the IHE’s practice to similarly 

compensate students under Federal 

awards as well as other activities. 

(b) Charges for tuition remission and 

other forms of compensation paid to 

students as, or in lieu of, salaries and 

wages must be subject to the reporting 

requirements in § 75.430, and must be 

treated as direct or indirect cost in 

accordance with the actual work being 

performed. Tuition remission may be 

charged on an average rate basis. See 

also § 75.431. 

§ 75.467 Selling and marketing costs. 

Costs of selling and marketing any 

products or services of the non-Federal 

entity (unless allowed under § 75.421) 

are unallowable, except as direct costs, 

with prior approval by the HHS 

awarding agency when necessary for the 

performance of the Federal award. 

§ 75.468 Specialized service facilities. 

(a) The costs of services provided by 

highly complex or specialized facilities 

operated by the non-Federal entity, such 

as computing facilities, wind tunnels, 

and reactors are allowable, provided the 

charges for the services meet the 

conditions of either paragraphs (b) or (c) 

of this section, and, in addition, take 

into account any items of income or 

Federal financing that qualify as 

applicable credits under § 75.406. 

(b) The costs of such services, when 

material, must be charged directly to 

applicable awards based on actual usage 

of the services on the basis of a schedule 

of rates or established methodology that: 


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(1) Does not discriminate between 

activities under Federal awards and 

other activities of the non-Federal 

entity, including usage by the nonFederal entity for internal purposes, and 

(2) Is designed to recover only the 

aggregate costs of the services. The costs 

of each service must consist normally of 

both its direct costs and its allocable 

share of all indirect (F&A) costs. Rates 

must be adjusted at least biennially, and 

must take into consideration over/under 

applied costs of the previous period(s). 

(c) Where the costs incurred for a 

service are not material, they may be 

allocated as indirect (F&A) costs. 

(d) Under some extraordinary 

circumstances, where it is in the best 

interest of the Federal Government and 

the non-Federal entity to establish 

alternative costing arrangements, such 

arrangements may be worked out with 

the Federal cognizant agency for 

indirect costs. 

§ 75.469 Student activity costs. 

Costs incurred for intramural 

activities, student publications, student 

clubs, and other student activities, are 

unallowable, unless specifically 

provided for in the Federal award. 

§ 75.470 Taxes (including Value Added 

Tax). 

(a) For states, local governments and 

Indian tribes: 

(1) Taxes that a governmental unit is 

legally required to pay are allowable, 

except for self-assessed taxes that 

disproportionately affect Federal 

programs or changes in tax policies that 

disproportionately affect Federal 

programs. 

(2) Gasoline taxes, motor vehicle fees, 

and other taxes that are in effect user 

fees for benefits provided to the Federal 

Government are allowable. 

(3) This provision does not restrict the 

authority of the HHS awarding agency 

to identify taxes where Federal 

participation is inappropriate. Where 

the identification of the amount of 

unallowable taxes would require an 

inordinate amount of effort, the 

cognizant agency for indirect costs may 

accept a reasonable approximation 

thereof. 

(b) For nonprofit organizations and 

IHEs: 

(1) In general, taxes which the nonFederal entity is required to pay and 

which are paid or accrued in accordance 

with GAAP, and payments made to 

local governments in lieu of taxes which 

are commensurate with the local 

government services received are 

allowable, except for: 

(i) Taxes from which exemptions are 

available to the non-Federal entity 

directly or which are available to the 

non-Federal entity based on an 

exemption afforded the Federal 

Government and, in the latter case, 

when the HHS awarding agency makes 

available the necessary exemption 

certificates, 

(ii) Special assessments on land 

which represent capital improvements, 

and 

(iii) Federal income taxes. 

(2) Any refund of taxes, and any 

payment to the non-Federal entity of 

interest thereon, which were allowed as 

Federal award costs, will be credited 

either as a cost reduction or cash refund, 

as appropriate, to the Federal 

Government. However, any interest 

actually paid or credited to an nonFederal entity incident to a refund of 

tax, interest, and penalty will be paid or 

credited to the Federal Government only 

to the extent that such interest accrued 

over the period during which the nonFederal entity has been reimbursed by 

the Federal Government for the taxes, 

interest, and penalties. 

(c) Value Added Tax (VAT) Foreign 

taxes charged for the purchase of goods 

or services that a non-Federal entity is 

legally required to pay in country is an 

allowable expense under Federal 

awards. Foreign tax refunds or 

applicable credits under Federal awards 

refer to receipts, or reduction of 

expenditures, which operate to offset or 

reduce expense items that are allocable 

to Federal awards as direct or indirect 

costs. To the extent that such credits 

accrued or received by the non-Federal 

entity relate to allowable cost, these 

costs must be credited to the HHS 

awarding agency either as costs or cash 

refunds. If the costs are credited back to 

the Federal award, the non-Federal 

entity may reduce the Federal share of 

costs by the amount of the foreign tax 

reimbursement, or where Federal award 

has not expired, use the foreign 

government tax refund for approved 

activities under the Federal award with 

prior approval of the HHS awarding 

agency. 

§ 75.471 Termination costs. 

Termination of a Federal award 

generally gives rise to the incurrence of 

costs, or the need for special treatment 

of costs, which would not have arisen 

had the Federal award not been 

terminated. Cost principles covering 

these items are set forth in this section. 

They are to be used in conjunction with 

the other provisions of this part in 

termination situations. 

(a) The cost of items reasonably 

usable on the non-Federal entity’s other 

work must not be allowable unless the 

non-Federal entity submits evidence 

that it would not retain such items at 

cost without sustaining a loss. In 

deciding whether such items are 

reasonably usable on other work of the 

non-Federal entity, the HHS awarding 

agency should consider the non-Federal 

entity’s plans and orders for current and 

scheduled activity. Contemporaneous 

purchases of common items by the nonFederal entity must be regarded as 

evidence that such items are reasonably 

usable on the non-Federal entity’s other 

work. Any acceptance of common items 

as allocable to the terminated portion of 

the Federal award must be limited to the 

extent that the quantities of such items 

on hand, in transit, and on order are in 

excess of the reasonable quantitative 

requirements of other work. 

(b) If in a particular case, despite all 

reasonable efforts by the non-Federal 

entity, certain costs cannot be 

discontinued immediately after the 

effective date of termination, such costs 

are generally allowable within the 

limitations set forth in this part, except 

that any such costs continuing after 

termination due to the negligent or 

willful failure of the non-Federal entity 

to discontinue such costs must be 

unallowable. 

(c) Loss of useful value of special 

tooling, machinery, and equipment is 

generally allowable if: 

(1) Such special tooling, special 

machinery, or equipment is not 

reasonably capable of use in the other 

work of the non-Federal entity, 

(2) The interest of the Federal 

Government is protected by transfer of 

title or by other means deemed 

appropriate by the HHS awarding 

agency (see also § 75.320(d)), and 

(3) The loss of useful value for any 

one terminated Federal award is limited 

to that portion of the acquisition cost 

which bears the same ratio to the total 

acquisition cost as the terminated 

portion of the Federal award bears to the 

entire terminated Federal award and 

other Federal awards for which the 

special tooling, machinery, or 

equipment was acquired. 

(d) Rental costs under unexpired 

leases are generally allowable where 

clearly shown to have been reasonably 

necessary for the performance of the 

terminated Federal award less the 

residual value of such leases, if: 

(1) The amount of such rental claimed 

does not exceed the reasonable use 

value of the property leased for the 

period of the Federal award and such 

further period as may be reasonable, and 

(2) The non-Federal entity makes all 

reasonable efforts to terminate, assign, 

settle, or otherwise reduce the cost of 

such lease. There also may be included 

the cost of alterations of such leased 


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property, provided such alterations 

were necessary for the performance of 

the Federal award, and of reasonable 

restoration required by the provisions of 

the lease. 

(e) Settlement expenses including the 

following are generally allowable: 

(1) Accounting, legal, clerical, and 

similar costs reasonably necessary for: 

(i) The preparation and presentation 

to the Federal awarding agency of 

settlement claims and supporting data 

with respect to the terminated portion of 

the Federal award, unless the 

termination is for cause (see Subpart D 

of this part, §§ 75.371 through 75.375); 

and 

(ii) The termination and settlement of 

subawards. 

(2) Reasonable costs for the storage, 

transportation, protection, and 

disposition of property provided by the 

Federal Government or acquired or 

produced for the Federal award. 

(f) Claims under subawards, including 

the allocable portion of claims which 

are common to the Federal award and 

to other work of the non-Federal entity, 

are generally allowable. An appropriate 

share of the non-Federal entity’s 

indirect costs may be allocated to the 

amount of settlements with contractors 

and/or subrecipients, provided that the 

amount allocated is otherwise 

consistent with the basic guidelines 

contained in § 75.414. The indirect costs 

so allocated must exclude the same and 

similar costs claimed directly or 

indirectly as settlement expenses. 

§ 75.472 Training and education costs. 

The cost of training and education 

provided for employee development is 

allowable. 

§ 75.473 Transportation costs. 

Costs incurred for freight, express, 

cartage, postage, and other 

transportation services relating either to 

goods purchased, in process, or 

delivered, are allowable. When such 

costs can readily be identified with the 

items involved, they may be charged 

directly as transportation costs or added 

to the cost of such items. Where 

identification with the materials 

received cannot readily be made, 

inbound transportation cost may be 

charged to the appropriate indirect 

(F&A) cost accounts if the non-Federal 

entity follows a consistent, equitable 

procedure in this respect. Outbound 

freight, if reimbursable under the terms 

and conditions of the Federal award, 

should be treated as a direct cost. 

§ 75.474 Travel costs. 

(a) General. Travel costs are the 

expenses for transportation, lodging, 

subsistence, and related items incurred 

by employees who are in travel status 

on official business of the non-Federal 

entity. Such costs may be charged on an 

actual cost basis, on a per diem or 

mileage basis in lieu of actual costs 

incurred, or on a combination of the 

two, provided the method used is 

applied to an entire trip and not to 

selected days of the trip, and results in 

charges consistent with those normally 

allowed in like circumstances in the 

non-Federal entity’s non-federallyfunded activities and in accordance 

with non-Federal entity’s written travel 

reimbursement policies. 

Notwithstanding the provisions of 

§ 75.444, travel costs of officials covered 

by that section are allowable with the 

prior written approval of the Federal 

awarding agency or pass-through entity 

when they are specifically related to the 

Federal award. 

(b) Lodging and subsistence. Costs 

incurred by employees and officers for 

travel, including costs of lodging, other 

subsistence, and incidental expenses, 

must be considered reasonable and 

otherwise allowable only to the extent 

such costs do not exceed charges 

normally allowed by the non-Federal 

entity in its regular operations as the 

result of the non-Federal entity’s written 

travel policy. In addition, if these costs 

are charged directly to the Federal 

award documentation must justify that: 

(1) Participation of the individual is 

necessary to the Federal award; and 

(2) The costs are reasonable and 

consistent with non-Federal entity’s 

established travel policy. 

(c)(1) Temporary dependent care costs 

(as dependent is defined in 26 U.S.C. 

152) above and beyond regular 

dependent care that directly results 

from travel to conferences is allowable 

provided that: 

(i) The costs are a direct result of the 

individual’s travel for the Federal 

award; 

(ii) The costs are consistent with the 

non-Federal entity’s documented travel 

policy for all entity travel; and 

(iii) Are only temporary during the 

travel period. 

(2) Travel costs for dependents are 

unallowable, except for travel of 

duration of six months or more with 

prior approval of the HHS awarding 

agency. See also § 75.432. 

(d) In the absence of an acceptable, 

written non-Federal entity policy 

regarding travel costs, the rates and 

amounts established under 5 U.S.C. 

5701–11, or by the Administrator of 

General Services, or by the President (or 

his or her designee) pursuant to any 

provisions of such subchapter must 

apply to travel under Federal awards (48 

CFR 31.205–46(a)). 

(e) Commercial air travel. (1) Airfare 

costs in excess of the basic least 

expensive unrestricted accommodations 

class offered by commercial airlines are 

unallowable except when such 

accommodations would: 

(i) Require circuitous routing; 

(ii) Require travel during 

unreasonable hours; 

(iii) Excessively prolong travel; 

(iv) Result in additional costs that 

would offset the transportation savings; 

or 

(v) Offer accommodations not 

reasonably adequate for the traveler’s 

medical needs. The non-Federal entity 

must justify and document these 

conditions on a case-by-case basis in 

order for the use of first-class or 

business-class airfare to be allowable in 

such cases. 

(2) Unless a pattern of avoidance is 

detected, the Federal Government will 

generally not question a non-Federal 

entity’s determinations that customary 

standard airfare or other discount airfare 

is unavailable for specific trips if the 

non-Federal entity can demonstrate that 

such airfare was not available in the 

specific case. 

(f) Air travel by other than 

commercial carrier. Costs of travel by 

non-Federal entity-owned, -leased, or 

-chartered aircraft include the cost of 

lease, charter, operation (including 

personnel costs), maintenance, 

depreciation, insurance, and other 

related costs. The portion of such costs 

that exceeds the cost of airfare as 

provided for in paragraph (d) of this 

section, is unallowable. 

§ 75.475 Trustees. 

Travel and subsistence costs of 

trustees (or directors) at IHEs and 

nonprofit organizations are allowable. 

See also § 75.474. 

HHS Selected Items of Cost 

§ 75.476 Independent research and 

development costs. 

Independent research and 

development is research and 

development which is conducted by an 

organization, and which is not 

sponsored by Federal or non-Federal 

awards, contracts, or other agreements. 

Independent research and development 

shall be allocated its proportionate share 

of indirect costs on the same basis as the 

allocation of indirect costs to sponsored 

research and development. The cost of 

independent research and development, 

including their proportionate share of 

indirect costs, are unallowable. 


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Subpart F—Audit Requirements 

General 

§ 75.500 Purpose. 

This part sets forth standards for 

obtaining consistency and uniformity 

among HHS agencies for the audit of 

non-Federal entities expending Federal 

awards. 

Audits 

§ 75.501 Audit requirements. 

(a) Audit required. A non-Federal 

entity that expends $750,000 or more 

during the non-Federal entity’s fiscal 

year in Federal awards must have a 

single or program-specific audit 

conducted for that year in accordance 

with the provisions of this part. 

(b) Single audit. A non-Federal entity 

that expends $750,000 or more during 

the non-Federal entity’s fiscal year in 

Federal awards must have a single audit 

conducted in accordance with § 75.514 

except when it elects to have a programspecific audit conducted in accordance 

with paragraph (c) of this section. 

(c) Program-specific audit election. 

When an auditee expends Federal 

awards under only one Federal program 

(excluding R&D) and the Federal 

program’s statutes, regulations, or the 

terms and conditions of the Federal 

award do not require a financial 

statement audit of the auditee, the 

auditee may elect to have a programspecific audit conducted in accordance 

with § 75.507. A program-specific audit 

may not be elected for R&D unless all 

of the Federal awards expended were 

received from the same Federal agency, 

or the same Federal agency and the 

same pass-through entity, and that 

Federal agency, or pass-through entity 

in the case of a subrecipient, approves 

in advance a program-specific audit. 

(d) Exemption when Federal awards 

expended are less than $750,000. A 

non-Federal entity that expends less 

than $750,000 during the non-Federal 

entity’s fiscal year in Federal awards is 

exempt from Federal audit requirements 

for that year, except as noted in 

§ 75.503, but records must be available 

for review or audit by appropriate 

officials of the Federal agency, passthrough entity, and Government 

Accountability Office (GAO). 

(e) Federally Funded Research and 

Development Centers (FFRDC). 

Management of an auditee that owns or 

operates a FFRDC may elect to treat the 

FFRDC as a separate entity for purposes 

of this part. 

(f) Subrecipients and Contractors. An 

auditee may simultaneously be a 

recipient, a subrecipient, and a 

contractor. Federal awards expended as 

a recipient or a subrecipient are subject 

to audit under this part. The payments 

received for goods or services provided 

as a contractor are not Federal awards. 

Section 75.351 sets forth the 

considerations in determining whether 

payments constitute a Federal award or 

a payment for goods or services 

provided as a contractor. 

(g) Compliance responsibility for 

contractors. In most cases, the auditee’s 

compliance responsibility for 

contractors is only to ensure that the 

procurement, receipt, and payment for 

goods and services comply with Federal 

statutes, regulations, and the terms and 

conditions of Federal awards. Federal 

award compliance requirements 

normally do not pass through to 

contractors. However, the auditee is 

responsible for ensuring compliance for 

procurement transactions which are 

structured such that the contractor is 

responsible for program compliance or 

the contractor’s records must be 

reviewed to determine program 

compliance. Also, when these 

procurement transactions relate to a 

major program, the scope of the audit 

must include determining whether these 

transactions are in compliance with 

Federal statutes, regulations, and the 

terms and conditions of Federal awards. 

(h) For-profit subrecipient. Since this 

part does not apply to for-profit 

subrecipients, the pass-through entity is 

responsible for establishing 

requirements, as necessary, to ensure 

compliance by for-profit subrecipients. 

The agreement with the for-profit 

subrecipient must describe applicable 

compliance requirements and the forprofit subrecipient’s compliance 

responsibility. Methods to ensure 

compliance for Federal awards made to 

for-profit subrecipients may include 

pre-award audits, monitoring during the 

agreement, and post-award audits. See 

also § 75.352. 

(i) Recipients and subrecipients that 

are commercial organizations (including 

for-profit hospitals) have two options 

regarding audits: 

(1) A financial related audit (as 

defined in the Government Auditing 

Standards, GPO Stock #020–000–00– 

265–4) of a particular award in 

accordance with Government Auditing 

Standards, in those cases where the 

recipient receives awards under only 

one HHS program; or, if awards are 

received under multiple HHS programs, 

a financial related audit of all HHS 

awards in accordance with Government 

Auditing Standards; or 

(2) An audit that meets the 

requirements contained in this subpart. 

(j) Commercial organizations that 

receive annual HHS awards totaling less 

than $750,000 are exempt from 

requirements for a non-Federal audit for 

that year, but records must be available 

for review by appropriate officials of 

Federal agencies. 

(k) See also § 75.215. 

§ 75.502 Basis for determining Federal 

awards expended. 

(a) Determining Federal awards 

expended. The determination of when a 

Federal award is expended must be 

based on when the activity related to the 

Federal award occurs. Generally, the 

activity pertains to events that require 

the non-Federal entity to comply with 

Federal statutes, regulations, and the 

terms and conditions of Federal awards, 

such as: expenditure/expense 

transactions associated with awards 

including grants, cost-reimbursement 

contracts under the FAR, compacts with 

Indian Tribes, cooperative agreements, 

and direct appropriations; the 

disbursement of funds to subrecipients; 

the use of loan proceeds under loan and 

loan guarantee programs; the receipt of 

property; the receipt of surplus 

property; the receipt or use of program 

income; the distribution or use of food 

commodities; the disbursement of 

amounts entitling the non-Federal entity 

to an interest subsidy; and the period 

when insurance is in force. 

(b) Loan and loan guarantees (loans). 

Since the Federal Government is at risk 

for loans until the debt is repaid, the 

following guidelines must be used to 

calculate the value of Federal awards 

expended under loan programs, except 

as noted in paragraphs (c) and (d) of this 

section: 

(1) Value of new loans made or 

received during the audit period; plus 

(2) Beginning of the audit period 

balance of loans from previous years for 

which the Federal Government imposes 

continuing compliance requirements; 

plus 

(3) Any interest subsidy, cash, or 

administrative cost allowance received. 

(c) Loan and loan guarantees (loans) 

at IHEs. When loans are made to 

students of an IHE but the IHE does not 

make the loans, then only the value of 

loans made during the audit period 

must be considered Federal awards 

expended in that audit period. The 

balance of loans for previous audit 

periods is not included as Federal 

awards expended because the lender 

accounts for the prior balances. 

(d) Prior loan and loan guarantees 

(loans). Loans, the proceeds of which 

were received and expended in prior 

years, are not considered Federal 

awards expended under this part when 

the Federal statutes, regulations, and the 

terms and conditions of Federal awards 


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pertaining to such loans impose no 

continuing compliance requirements 

other than to repay the loans. 

(e) Endowment funds. The cumulative 

balance of Federal awards for 

endowment funds that are federally 

restricted are considered Federal awards 

expended in each audit period in which 

the funds are still restricted. 

(f) Free rent. Free rent received by 

itself is not considered a Federal award 

expended under this part. However, free 

rent received as part of a Federal award 

to carry out a Federal program must be 

included in determining Federal awards 

expended and subject to audit under 

this part. 

(g) Valuing non-cash assistance. 

Federal non-cash assistance, such as 

free rent, food commodities, donated 

property, or donated surplus property, 

must be valued at fair market value at 

the time of receipt or the assessed value 

provided by the HHS agency. 

(h) Medicare. Medicare payments to a 

non-Federal entity for providing patient 

care services to Medicare-eligible 

individuals are not considered Federal 

awards expended under this part. 

(i) Medicaid. Medicaid payments to a 

subrecipient for providing patient care 

services to Medicaid-eligible 

individuals are not considered Federal 

awards expended under this part unless 

a state requires the funds to be treated 

as Federal awards expended because 

reimbursement is on a costreimbursement basis. 

(j) Certain loans provided by the 

National Credit Union Administration. 

For purposes of this part, loans made 

from the National Credit Union Share 

Insurance Fund and the Central 

Liquidity Facility that are funded by 

contributions from insured non-Federal 

entities are not considered Federal 

awards expended. 

§ 75.503 Relation to other audit 

requirements. 

(a) An audit conducted in accordance 

with this part must be in lieu of any 

financial audit of Federal awards which 

a non-Federal entity is required to 

undergo under any other Federal statute 

or regulation. To the extent that such 

audit provides a Federal agency with 

the information it requires to carry out 

its responsibilities under Federal statute 

or regulation, a Federal agency must 

rely upon and use that information. 

(b) Notwithstanding paragraph (a) of 

this section, a Federal agency, 

Inspectors General, or GAO may 

conduct or arrange for additional audits 

which are necessary to carry out its 

responsibilities under Federal statute or 

regulation. The provisions of this part 

do not authorize any non-Federal entity 

to constrain, in any manner, such 

Federal agency from carrying out or 

arranging for such additional audits, 

except that the Federal agency must 

plan such audits to not be duplicative 

of other audits of Federal awards. Prior 

to commencing such an audit, the 

Federal agency or pass-through entity 

must review the FAC for recent audits 

submitted by the non-Federal entity, 

and to the extent such audits meet a 

Federal agency or pass-through entity’s 

needs, the Federal agency or passthrough entity must rely upon and use 

such audits. Any additional audits must 

be planned and performed in such a 

way as to build upon work performed, 

including the audit documentation, 

sampling, and testing already 

performed, by other auditors. 

(c) The provisions of this part do not 

limit the authority of Federal agencies to 

conduct, or arrange for the conduct of, 

audits and evaluations of Federal 

awards, nor limit the authority of any 

Federal agency Inspector General or 

other Federal official. For example, 

requirements that may be applicable 

under the FAR or CAS and the terms 

and conditions of a cost-reimbursement 

contract may include additional 

applicable audits to be conducted or 

arranged for by Federal agencies. 

(d) Federal agency to pay for 

additional audits. A Federal agency that 

conducts or arranges for additional 

audits must, consistent with other 

applicable Federal statutes and 

regulations, arrange for funding the full 

cost of such additional audits. 

(e) Request for a program to be 

audited as a major program. An HHS 

awarding agency may request that an 

auditee have a particular Federal 

program audited as a major program in 

lieu of the HHS awarding agency 

conducting or arranging for the 

additional audits. To allow for planning, 

such requests should be made at least 

180 calendar days prior to the end of the 

fiscal year to be audited. The auditee, 

after consultation with its auditor, 

should promptly respond to such a 

request by informing the HHS awarding 

agency whether the program would 

otherwise be audited as a major program 

using the risk-based audit approach 

described in § 75.518 and, if not, the 

estimated incremental cost. The HHS 

awarding agency must then promptly 

confirm to the auditee whether it wants 

the program audited as a major program. 

If the program is to be audited as a 

major program based upon this HHS 

awarding agency request, and the HHS 

awarding agency agrees to pay the full 

incremental costs, then the auditee must 

have the program audited as a major 

program. A pass-through entity may use 

the provisions of this paragraph for a 

subrecipient. 

§ 75.504 Frequency of audits. 

Except for the provisions for biennial 

audits provided in paragraphs (a) and 

(b) of this section, audits required by 

this part must be performed annually. 

Any biennial audit must cover both 

years within the biennial period. 

(a) A state, local government, or 

Indian tribe that is required by 

constitution or statute, in effect on 

January 1, 1987, to undergo its audits 

less frequently than annually, is 

permitted to undergo its audits pursuant 

to this part biennially. This requirement 

must still be in effect for the biennial 

period. 

(b) Any nonprofit organization that 

had biennial audits for all biennial 

periods ending between July 1, 1992, 

and January 1, 1995, is permitted to 

undergo its audits pursuant to this part 

biennially. 

§ 75.505 Sanctions. 

In cases of continued inability or 

unwillingness to have an audit 

conducted in accordance with this part, 

Federal agencies and pass-through 

entities must take appropriate action as 

provided in § 75.371. 

§ 75.506 Audit costs. 

See § 75.425. 

§ 75.507 Program-specific audits. 

(a) Program-specific audit guide 

available. In many cases, a programspecific audit guide will be available to 

provide specific guidance to the auditor 

with respect to internal controls, 

compliance requirements, suggested 

audit procedures, and audit reporting 

requirements. A listing of current 

program-specific audit guides can be 

found in the compliance supplement 

beginning with the 2014 supplement 

including HHS awarding agency contact 

information and a Web site where a 

copy of the guide can be obtained. 

When a current program-specific audit 

guide is available, the auditor must 

follow GAGAS and the guide when 

performing a program-specific audit. 

(b) Program-specific audit guide not 

available. (1) When a current programspecific audit guide is not available, the 

auditee and auditor must have basically 

the same responsibilities for the Federal 

program as they would have for an audit 

of a major program in a single audit. 

(2) The auditee must prepare the 

financial statement(s) for the Federal 

program that includes, at a minimum, a 

schedule of expenditures of Federal 

awards for the program and notes that 

describe the significant accounting 


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policies used in preparing the schedule, 

a summary schedule of prior audit 

findings consistent with the 

requirements of § 75.511(b), and a 

corrective action plan consistent with 

the requirements of § 75.511(c). 

(3) The auditor must: 

(i) Perform an audit of the financial 

statement(s) for the Federal program in 

accordance with GAGAS; 

(ii) Obtain an understanding of 

internal controls and perform tests of 

internal controls over the Federal 

program consistent with the 

requirements of § 75.514(c) for a major 

program; 

(iii) Perform procedures to determine 

whether the auditee has complied with 

Federal statutes, regulations, and the 

terms and conditions of Federal awards 

that could have a direct and material 

effect on the Federal program consistent 

with the requirements of § 75.514(d) for 

a major program; 

(iv) Follow up on prior audit findings, 

perform procedures to assess the 

reasonableness of the summary 

schedule of prior audit findings 

prepared by the auditee in accordance 

with the requirements of § 75.511, and 

report, as a current year audit finding, 

when the auditor concludes that the 

summary schedule of prior audit 

findings materially misrepresents the 

status of any prior audit finding; and 

(v) Report any audit findings 

consistent with the requirements of 

§ 75.516. 

(4) The auditor’s report(s) may be in 

the form of either combined or separate 

reports and may be organized differently 

from the manner presented in this 

section. The auditor’s report(s) must 

state that the audit was conducted in 

accordance with this part and include 

the following: 

(i) An opinion (or disclaimer of 

opinion) as to whether the financial 

statement(s) of the Federal program is 

presented fairly in all material respects 

in accordance with the stated 

accounting policies; 

(ii) A report on internal control 

related to the Federal program, which 

must describe the scope of testing of 

internal control and the results of the 

tests; 

(iii) A report on compliance which 

includes an opinion (or disclaimer of 

opinion) as to whether the auditee 

complied with laws, regulations, and 

the terms and conditions of Federal 

awards which could have a direct and 

material effect on the Federal program; 

and 

(iv) A schedule of findings and 

questioned costs for the Federal 

program that includes a summary of the 

auditor’s results relative to the Federal 

program in a format consistent with 

§ 75.515(d)(1) and findings and 

questioned costs consistent with the 

requirements of § 75.515(d)(3). 

(c) Report submission for programspecific audits. (1) The audit must be 

completed and the reporting required by 

paragraph (c)(2) or (c)(3) of this section 

submitted within the earlier of 30 

calendar days after receipt of the 

auditor’s report(s), or nine months after 

the end of the audit period, unless a 

different period is specified in a 

program-specific audit guide. Unless 

restricted by Federal law or regulation, 

the auditee must make report copies 

available for public inspection. Auditees 

and auditors must ensure that their 

respective parts of the reporting package 

do not include protected personally 

identifiable information. 

(2) When a program-specific audit 

guide is available, the auditee must 

electronically submit to the FAC the 

data collection form prepared in 

accordance with § 75.512(b), as 

applicable to a program-specific audit, 

and the reporting required by the 

program-specific audit guide. 

(3) When a program-specific audit 

guide is not available, the reporting 

package for a program-specific audit 

must consist of the financial 

statement(s) of the Federal program, a 

summary schedule of prior audit 

findings, and a corrective action plan as 

described in paragraph (b)(2) of this 

section, and the auditor’s report(s) 

described in paragraph (b)(4) of this 

section. The data collection form 

prepared in accordance with 

§ 75.512(b), as applicable to a programspecific audit, and one copy of this 

reporting package must be electronically 

submitted to the FAC. 

(d) Other sections of this part may 

apply. Program-specific audits are 

subject to: 

(1) § 75.500 through § 75.503(d); 

(2) § 75.504 through § 75.506; 

(3) § 75.508 through § 75.509; 

(4) § 75.511; 

(5) § 75.512(e) through (h); 

(6) § 75.513; 

(7) § 75.516 through § 75.517; 

(8) § 75.521, and 

(9) Other referenced provisions of this 

part unless contrary to the provisions of 

this section, a program-specific audit 

guide, or program statutes and 

regulations. 

Auditees 

§ 75.508 Auditee responsibilities. 

The auditee must: 

(a) Procure or otherwise arrange for 

the audit required by this part in 

accordance with § 75.509, and ensure it 

is properly performed and submitted 

when due in accordance with § 75.512. 

(b) Prepare appropriate financial 

statements, including the schedule of 

expenditures of Federal awards in 

accordance with § 75.510. 

(c) Promptly follow up and take 

corrective action on audit findings, 

including preparation of a summary 

schedule of prior audit findings and a 

corrective action plan in accordance 

with § 75.511(b) and § 75.511(c), 

respectively. 

(d) Provide the auditor with access to 

personnel, accounts, books, records, 

supporting documentation, and other 

information as needed for the auditor to 

perform the audit required by this part. 

§ 75.509 Auditor selection. 

(a) Auditor procurement. In procuring 

audit services, the auditee must follow 

the procurement standards prescribed 

by the Procurement Standards in 

§§ 75.326 through 75.335 of Subpart D 

of this part or the FAR (48 CFR part 42), 

as applicable. When procuring audit 

services, the objective is to obtain highquality audits. In requesting proposals 

for audit services, the objectives and 

scope of the audit must be made clear 

and the non-Federal entity must request 

a copy of the audit organization’s peer 

review report which the auditor is 

required to provide under GAGAS. 

Factors to be considered in evaluating 

each proposal for audit services include 

the responsiveness to the request for 

proposal, relevant experience, 

availability of staff with professional 

qualifications and technical abilities, 

the results of peer and external quality 

control reviews, and price. Whenever 

possible, the auditee must make positive 

efforts to utilize small businesses, 

minority-owned firms, and women’s 

business enterprises, in procuring audit 

services as stated in § 75.330, or the 

FAR (48 CFR part 42), as applicable. 

(b) Restriction on auditor preparing 

indirect cost proposals. An auditor who 

prepares the indirect cost proposal or 

cost allocation plan may not also be 

selected to perform the audit required 

by this part when the indirect costs 

recovered by the auditee during the 

prior year exceeded $1 million. This 

restriction applies to the base year used 

in the preparation of the indirect cost 

proposal or cost allocation plan and any 

subsequent years in which the resulting 

indirect cost agreement or cost 

allocation plan is used to recover costs. 

(c) Use of Federal auditors. Federal 

auditors may perform all or part of the 

work required under this part if they 

comply fully with the requirements of 

this part. 


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§ 75.510 Financial statements. 

(a) Financial statements. The auditee 

must prepare financial statements that 

reflect its financial position, results of 

operations or changes in net assets, and, 

where appropriate, cash flows for the 

fiscal year audited. The financial 

statements must be for the same 

organizational unit and fiscal year that 

is chosen to meet the requirements of 

this part. However, non-Federal entitywide financial statements may also 

include departments, agencies, and 

other organizational units that have 

separate audits in accordance with 

§ 75.514(a) and prepare separate 

financial statements. 

(b) Schedule of expenditures of 

Federal awards. The auditee must also 

prepare a schedule of expenditures of 

Federal awards for the period covered 

by the auditee’s financial statements 

which must include the total Federal 

awards expended as determined in 

accordance with § 75.502. While not 

required, the auditee may choose to 

provide information requested by HHS 

awarding agencies and pass-through 

entities to make the schedule easier to 

use. For example, when a Federal 

program has multiple Federal award 

years, the auditee may list the amount 

of Federal awards expended for each 

Federal award year separately. At a 

minimum, the schedule must: 

(1) List individual Federal programs 

by Federal agency. For a cluster of 

programs, provide the cluster name, list 

individual Federal programs within the 

cluster of programs, and provide the 

applicable Federal agency name. For 

R&D, total Federal awards expended 

must be shown either by individual 

Federal award or by Federal agency and 

major subdivision within the Federal 

agency. For example, the National 

Institutes of Health is a major 

subdivision in the Department of Health 

and Human Services. 

(2) For Federal awards received as a 

subrecipient, the name of the passthrough entity and identifying number 

assigned by the pass-through entity 

must be included. 

(3) Provide total Federal awards 

expended for each individual Federal 

program and the CFDA number or other 

identifying number when the CFDA 

information is not available. For a 

cluster of programs also provide the 

total for the cluster. 

(4) Include the total amount provided 

to subrecipients from each Federal 

program. 

(5) For loan or loan guarantee 

programs described in § 75.502(b), 

identify in the notes to the schedule the 

balances outstanding at the end of the 

audit period. This is in addition to 

including the total Federal awards 

expended for loan or loan guarantee 

programs in the schedule. 

(6) Include notes that describe that 

significant accounting policies used in 

preparing the schedule, and note 

whether or not the auditee elected to 

use the 10% de minimis cost rate as 

covered in § 75.414. 

§ 75.511 Audit findings follow-up. 

(a) General. The auditee is responsible 

for follow-up and corrective action on 

all audit findings. As part of this 

responsibility, the auditee must prepare 

a summary schedule of prior audit 

findings. The auditee must also prepare 

a corrective action plan for current year 

audit findings. The summary schedule 

of prior audit findings and the 

corrective action plan must include the 

reference numbers the auditor assigns to 

audit findings under § 75.516(c). Since 

the summary schedule may include 

audit findings from multiple years, it 

must include the fiscal year in which 

the finding initially occurred. The 

corrective action plan and summary 

schedule of prior audit findings must 

include findings relating to the financial 

statements which are required to be 

reported in accordance with GAGAS. 

(b) Summary schedule of prior audit 

findings. The summary schedule of 

prior audit findings must report the 

status of all audit findings included in 

the prior audit’s schedule of findings 

and questioned costs. The summary 

schedule must also include audit 

findings reported in the prior audit’s 

summary schedule of prior audit 

findings except audit findings listed as 

corrected in accordance with paragraph 

(b)(1) of this section, or no longer valid 

or not warranting further action in 

accordance with paragraph (b)(3) of this 

section. 

(1) When audit findings were fully 

corrected, the summary schedule need 

only list the audit findings and state that 

corrective action was taken. 

(2) When audit findings were not 

corrected or were only partially 

corrected, the summary schedule must 

describe the reasons for the finding’s 

recurrence and planned corrective 

action, and any partial corrective action 

taken. When corrective action taken is 

significantly different from corrective 

action previously reported in a 

corrective action plan or in the Federal 

agency’s or pass-through entity’s 

management decision, the summary 

schedule must provide an explanation. 

(3) When the auditee believes the 

audit findings are no longer valid or do 

not warrant further action, the reasons 

for this position must be described in 

the summary schedule. A valid reason 

for considering an audit finding as not 

warranting further action is that all of 

the following have occurred: 

(i) Two years have passed since the 

audit report in which the finding 

occurred was submitted to the FAC; 

(ii) The Federal agency or passthrough entity is not currently following 

up with the auditee on the audit 

finding; and 

(iii) A management decision was not 

issued. 

(c) Corrective action plan. At the 

completion of the audit, the auditee 

must prepare, in a document separate 

from the auditor’s findings described in 

§ 75.516, a corrective action plan to 

address each audit finding included in 

the current year auditor’s reports. The 

corrective action plan must provide the 

name(s) of the contact person(s) 

responsible for corrective action, the 

corrective action planned, and the 

anticipated completion date. If the 

auditee does not agree with the audit 

findings or believes corrective action is 

not required, then the corrective action 

plan must include an explanation and 

specific reasons. 

§ 75.512 Report submission. 

(a) General. (1) The audit must be 

completed and the data collection form 

described in paragraph (b) of this 

section and reporting package described 

in paragraph (c) of this section must be 

submitted within the earlier of 30 

calendar days after receipt of the 

auditor’s report(s), or nine months after 

the end of the audit period. If the due 

date falls on a Saturday, Sunday, or 

Federal holiday, the reporting package 

is due the next business day. 

(2) Unless restricted by Federal 

statutes or regulations, the auditee must 

make copies available for public 

inspection. Auditees and auditors must 

ensure that their respective parts of the 

reporting package do not include 

protected personally identifiable 

information. 

(b) Data Collection. The FAC is the 

repository of record for Subpart F of this 

part reporting packages and the data 

collection form. All Federal agencies, 

pass-through entities and others 

interested in a reporting package and 

data collection form must obtain it by 

accessing the FAC. 

(1) The auditee must submit required 

data elements described in Appendix X 

to part 75, which state whether the audit 

was completed in accordance with this 

part and provides information about the 

auditee, its Federal programs, and the 

results of the audit. The data must 

include information available from the 

audit required by this part that is 

necessary for Federal agencies to use the 


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audit to ensure integrity for Federal 

programs. The data elements and format 

must be approved by OMB, available 

from the FAC, and include collections 

of information from the reporting 

package described in paragraph (c) of 

this section. A senior level 

representative of the auditee (e.g., state 

controller, director of finance, chief 

executive officer, or chief financial 

officer) must sign a statement to be 

included as part of the data collection 

that says that the auditee complied with 

the requirements of this part, the data 

were prepared in accordance with this 

part (and the instructions accompanying 

the form), the reporting package does 

not include protected personally 

identifiable information, the 

information included in its entirety is 

accurate and complete, and that the 

FAC is authorized to make the reporting 

package and the form publicly available 

on a Web site. 

(2) Exception for Indian Tribes and 

Tribal Organizations. An auditee that is 

an Indian tribe or a tribal organization 

(as defined in the Indian SelfDetermination, Education and 

Assistance Act (ISDEAA), 25 U.S.C. 

450b(l)) may opt not to authorize the 

FAC to make the reporting package 

publicly available on a Web site, by 

excluding the authorization for the FAC 

publication in the statement described 

in paragraph (b)(1) of this section. If this 

option is exercised, the auditee becomes 

responsible for submitting the reporting 

package directly to any pass-through 

entities through which it has received a 

Federal award and to pass-through 

entities for which the summary 

schedule of prior audit findings 

reported the status of any findings 

related to Federal awards that the passthrough entity provided. Unless 

restricted by Federal statute or 

regulation, if the auditee opts not to 

authorize publication, it must make 

copies of the reporting package available 

for public inspection. 

(3) Using the information included in 

the reporting package described in 

paragraph (c) of this section, the auditor 

must complete the applicable data 

elements of the data collection form. 

The auditor must sign a statement to be 

included as part of the data collection 

form that indicates, at a minimum, the 

source of the information included in 

the form, the auditor’s responsibility for 

the information, that the form is not a 

substitute for the reporting package 

described in paragraph (c) of this 

section, and that the content of the form 

is limited to the collection of 

information prescribed by OMB. 

(c) Reporting package. The reporting 

package must include the: 

(1) Financial statements and schedule 

of expenditures of Federal awards 

discussed in § 75.510(a) and (b), 

respectively; 

(2) Summary schedule of prior audit 

findings discussed in § 75.511(b); 

(3) Auditor’s report(s) discussed in 

§ 75.515; and 

(4) Corrective action plan discussed in 

§ 75.511(c). 

(d) Submission to FAC. The auditee 

must electronically submit to the FAC 

the data collection form described in 

paragraph (b) of this section and the 

reporting package described in 

paragraph (c) of this section. 

(e) Requests for management letters 

issued by the auditor. In response to 

requests by a Federal agency or passthrough entity, auditees must submit a 

copy of any management letters issued 

by the auditor. 

(f) Report retention requirements. 

Auditees must keep one copy of the data 

collection form described in paragraph 

(b) of this section and one copy of the 

reporting package described in 

paragraph (c) of this section on file for 

three years from the date of submission 

to the FAC. 

(g) FAC responsibilities. The FAC 

must make available the reporting 

packages received in accordance with 

paragraph (c) of this section and 

§ 75.507(c) to the public, except for 

Indian tribes exercising the option in 

(b)(2) of this section, and maintain a 

data base of completed audits, provide 

appropriate information to Federal 

agencies, and follow up with known 

auditees that have not submitted the 

required data collection forms and 

reporting packages. 

(h) Electronic filing. Nothing in this 

part must preclude electronic 

submissions to the FAC in such manner 

as may be approved by OMB. 

Federal Agencies 

§ 75.513 Responsibilities. 

(a)(1) Cognizant agency for audit 

responsibilities. A non-Federal entity 

expending more than $50 million a year 

in Federal awards must have a 

cognizant agency for audit. The 

designated cognizant agency for audit 

must be the Federal awarding agency 

that provides the predominant amount 

of direct funding to a non-Federal entity 

unless OMB designates a specific 

cognizant agency for audit. 

(2) To provide for continuity of 

cognizance, the determination of the 

predominant amount of direct funding 

must be based upon direct Federal 

awards expended in the non-Federal 

entity’s fiscal years ending in 2009, 

2014, 2019 and every fifth year 

thereafter. For example, audit 

cognizance for periods ending in 2011 

through 2015 will be determined based 

on Federal awards expended in 2009. 

(3) Notwithstanding the manner in 

which audit cognizance is determined, 

a Federal awarding agency with 

cognizance for an auditee may reassign 

cognizance to another Federal awarding 

agency that provides substantial funding 

and agrees to be the cognizant agency 

for audit. Within 30 calendar days after 

any reassignment, both the old and the 

new cognizant agency for audit must 

provide notice of the change to the FAC, 

the auditee, and, if known, the auditor. 

The cognizant agency for audit must: 

(i) Provide technical audit advice and 

liaison assistance to auditees and 

auditors. 

(ii) Obtain or conduct quality control 

reviews on selected audits made by nonFederal auditors, and provide the results 

to other interested organizations. 

Cooperate and provide support to the 

Federal agency designated by OMB to 

lead a government-wide project to 

determine the quality of single audits by 

providing a statistically reliable estimate 

of the extent that single audits conform 

to applicable requirements, standards, 

and procedures; and to make 

recommendations to address noted 

audit quality issues, including 

recommendations for any changes to 

applicable requirements, standards and 

procedures indicated by the results of 

the project. This government-wide audit 

quality project must be performed once 

every 6 years beginning in 2018 or at 

such other interval as determined by 

OMB, and the results must be public. 

(iii) Promptly inform other affected 

Federal agencies and appropriate 

Federal law enforcement officials of any 

direct reporting by the auditee or its 

auditor required by GAGAS or statutes 

and regulations. 

(iv) Advise the community of 

independent auditors of any noteworthy 

or important factual trends related to the 

quality of audits stemming from quality 

control reviews. Significant problems or 

quality issues consistently identified 

through quality control reviews of audit 

reports must be referred to appropriate 

state licensing agencies and professional 

bodies. 

(v) Advise the auditor, HHS awarding 

agencies, and, where appropriate, the 

auditee of any deficiencies found in the 

audits when the deficiencies require 

corrective action by the auditor. When 

advised of deficiencies, the auditee 

must work with the auditor to take 

corrective action. If corrective action is 

not taken, the cognizant agency for audit 

must notify the auditor, the auditee, and 

applicable HHS awarding agencies and 


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pass-through entities of the facts and 

make recommendations for follow-up 

action. Major inadequacies or repetitive 

substandard performance by auditors 

must be referred to appropriate state 

licensing agencies and professional 

bodies for disciplinary action. 

(vi) Coordinate, to the extent 

practical, audits or reviews made by or 

for Federal agencies that are in addition 

to the audits made pursuant to this part, 

so that the additional audits or reviews 

build upon rather than duplicate audits 

performed in accordance with this part. 

(vii) Coordinate a management 

decision for cross-cutting audit findings 

(as defined in § 75.2 Cross-cutting audit 

finding) that affect the Federal programs 

of more than one agency when 

requested by any Federal awarding 

agency whose awards are included in 

the audit finding of the auditee. 

(viii) Coordinate the audit work and 

reporting responsibilities among 

auditors to achieve the most costeffective audit. 

(ix) Provide advice to auditees as to 

how to handle changes in fiscal years. 

(b) Oversight agency for audit 

responsibilities. An auditee who does 

not have a designated cognizant agency 

for audit will be under the general 

oversight of the Federal agency 

determined in accordance with § 75.2 

Oversight agency for audit. A Federal 

agency with oversight for an auditee 

may reassign oversight to another 

Federal agency that agrees to be the 

oversight agency for audit. Within 30 

calendar days after any reassignment, 

both the old and the new oversight 

agency for audit must provide notice of 

the change to the FAC, the auditee, and, 

if known, the auditor. The oversight 

agency for audit: 

(1) Must provide technical advice to 

auditees and auditors as requested. 

(2) May assume all or some of the 

responsibilities normally performed by 

a cognizant agency for audit. 

(c) HHS awarding agency 

responsibilities. The HHS awarding 

agency must perform the following for 

the Federal awards it makes (See also 

the requirements of § 75.210): 

(1) Ensure that audits are completed 

and reports are received in a timely 

manner and in accordance with the 

requirements of this part. 

(2) Provide technical advice and 

counsel to auditees and auditors as 

requested. 

(3) Follow-up on audit findings to 

ensure that the recipient takes 

appropriate and timely corrective 

action. As part of audit follow-up, the 

HHS awarding agency must: 

(i) Issue a management decision as 

prescribed in § 75.521; 

(ii) Monitor the recipient taking 

appropriate and timely corrective 

action; 

(iii) Use cooperative audit resolution 

mechanisms (see § 75.2 Cooperative 

audit resolution) to improve Federal 

program outcomes through better audit 

resolution, follow-up, and corrective 

action; and 

(iv) Develop a baseline, metrics, and 

targets to track, over time, the 

effectiveness of the Federal agency’s 

process to follow-up on audit findings 

and on the effectiveness of Single 

Audits in improving non-Federal entity 

accountability and their use by HHS 

awarding agencies in making award 

decisions. 

(4) Provide OMB annual updates to 

the compliance supplement and work 

with OMB to ensure that the compliance 

supplement focuses the auditor to test 

the compliance requirements most 

likely to cause improper payments, 

fraud, waste, abuse or generate audit 

finding for which the Federal awarding 

agency will take sanctions. 

(5) Provide OMB with the name of a 

single audit accountable official from 

among the senior policy officials of the 

HHS awarding agency who must be: 

(i) Responsible for ensuring that the 

agency fulfills all the requirements of 

paragraph (c) of this section and 

effectively uses the single audit process 

to reduce improper payments and 

improve Federal program outcomes. 

(ii) Held accountable to improve the 

effectiveness of the single audit process 

based upon metrics as described in 

paragraph (c)(3)(iv) of this section. 

(iii) Responsible for designating the 

Federal agency’s key management single 

audit liaison. 

(6) Provide OMB with the name of a 

key management single audit liaison 

who must: 

(i) Serve as the Federal awarding 

agency’s management point of contact 

for the single audit process both within 

and outside the Federal Government. 

(ii) Promote interagency coordination, 

consistency, and sharing in areas such 

as coordinating audit follow-up; 

identifying higher-risk non-Federal 

entities; providing input on single audit 

and follow-up policy; enhancing the 

utility of the FAC; and studying ways to 

use single audit results to improve 

Federal award accountability and best 

practices. 

(iii) Oversee training for the HHS 

awarding agency’s program management 

personnel related to the single audit 

process. 

(iv) Promote the HHS awarding 

agency’s use of cooperative audit 

resolution mechanisms. 

(v) Coordinate the HHS awarding 

agency’s activities to ensure appropriate 

and timely follow-up and corrective 

action on audit findings. 

(vi) Organize the Federal cognizant 

agency for audit’s follow-up on crosscutting audit findings that affect the 

Federal programs of more than one HHS 

awarding agency. 

(vii) Ensure the HHS awarding agency 

provides annual updates of the 

compliance supplement to OMB. 

(viii) Support the HHS awarding 

agency’s single audit accountable 

official’s mission. 

Auditors 

§ 75.514 Scope of audit. 

(a) General. The audit must be 

conducted in accordance with GAGAS. 

The audit must cover the entire 

operations of the auditee, or, at the 

option of the auditee, such audit must 

include a series of audits that cover 

departments, agencies, and other 

organizational units that expended or 

otherwise administered Federal awards 

during such audit period, provided that 

each such audit must encompass the 

financial statements and schedule of 

expenditures of Federal awards for each 

such department, agency, and other 

organizational unit, which must be 

considered to be a non-Federal entity. 

The financial statements and schedule 

of expenditures of Federal awards must 

be for the same audit period. 

(b) Financial statements. The auditor 

must determine whether the financial 

statements of the auditee are presented 

fairly in all material respects in 

accordance with generally accepted 

accounting principles. The auditor must 

also determine whether the schedule of 

expenditures of Federal awards is stated 

fairly in all material respects in relation 

to the auditee’s financial statements as 

a whole. 

(c) Internal control. (1) The 

compliance supplement provides 

guidance on internal controls over 

Federal programs based upon the 

guidance in Standards for Internal 

Control in the Federal Government 

issued by the Comptroller General of the 

United States and the Internal Control— 

Integrated Framework, issued by the 

Committee of Sponsoring Organizations 

of the Treadway Commission (COSO). 

(2) In addition to the requirements of 

GAGAS, the auditor must perform 

procedures to obtain an understanding 

of internal control over Federal 

programs sufficient to plan the audit to 

support a low assessed level of control 

risk of noncompliance for major 

programs. 

(3) Except as provided in paragraph 

(c)(4) of this section, the auditor must: 


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(i) Plan the testing of internal control 

over compliance for major programs to 

support a low assessed level of control 

risk for the assertions relevant to the 

compliance requirements for each major 

program; and 

(ii) Perform testing of internal control 

as planned in paragraph (c)(3)(i) of this 

section. 

(4) When internal control over some 

or all of the compliance requirements 

for a major program are likely to be 

ineffective in preventing or detecting 

noncompliance, the planning and 

performing of testing described in 

paragraph (c)(3) of this section are not 

required for those compliance 

requirements. However, the auditor 

must report a significant deficiency or 

material weakness in accordance with 

§ 75.516, assess the related control risk 

at the maximum, and consider whether 

additional compliance tests are required 

because of ineffective internal control. 

(d) Compliance. (1) In addition to the 

requirements of GAGAS, the auditor 

must determine whether the auditee has 

complied with Federal statutes, 

regulations, and the terms and 

conditions of Federal awards that may 

have a direct and material effect on each 

of its major programs. 

(2) The principal compliance 

requirements applicable to most Federal 

programs and the compliance 

requirements of the largest Federal 

programs are included in the 

compliance supplement. 

(3) For the compliance requirements 

related to Federal programs contained in 

the compliance supplement, an audit of 

these compliance requirements will 

meet the requirements of this part. 

Where there have been changes to the 

compliance requirements and the 

changes are not reflected in the 

compliance supplement, the auditor 

must determine the current compliance 

requirements and modify the audit 

procedures accordingly. For those 

Federal programs not covered in the 

compliance supplement, the auditor 

must follow the compliance 

supplement’s guidance for programs not 

included in the supplement. 

(4) The compliance testing must 

include tests of transactions and such 

other auditing procedures necessary to 

provide the auditor sufficient 

appropriate audit evidence to support 

an opinion on compliance. 

(e) Audit follow-up. The auditor must 

follow-up on prior audit findings, 

perform procedures to assess the 

reasonableness of the summary 

schedule of prior audit findings 

prepared by the auditee in accordance 

with § 75.511(b), and report, as a current 

year audit finding, when the auditor 

concludes that the summary schedule of 

prior audit findings materially 

misrepresents the status of any prior 

audit finding. The auditor must perform 

audit follow-up procedures regardless of 

whether a prior audit finding relates to 

a major program in the current year. 

(f) Data Collection Form. As required 

in § 75.512(b)(3), the auditor must 

complete and sign specified sections of 

the data collection form. 

§ 75.515 Audit reporting. 

The auditor’s report(s) may be in the 

form of either combined or separate 

reports and may be organized differently 

from the manner presented in this 

section. The auditor’s report(s) must 

state that the audit was conducted in 

accordance with this part and include 

the following: 

(a) An opinion (or disclaimer of 

opinion) as to whether the financial 

statements are presented fairly in all 

material respects in accordance with 

generally accepted accounting 

principles and an opinion (or disclaimer 

of opinion) as to whether the schedule 

of expenditures of Federal awards is 

fairly stated in all material respects in 

relation to the financial statements as a 

whole. 

(b) A report on internal control over 

financial reporting and compliance with 

provisions of laws, regulations, 

contracts, or award agreements, 

noncompliance with which could have 

a material effect on the financial 

statements. This report must describe 

the scope of testing of internal control 

and compliance and the results of the 

tests, and, where applicable, it will refer 

to the separate schedule of findings and 

questioned costs described in paragraph 

(d) of this section. 

(c) A report on compliance for each 

major program and a report on internal 

control over compliance. This report 

must describe the scope of testing of 

internal control over compliance, 

include an opinion or disclaimer of 

opinion as to whether the auditee 

complied with Federal statutes, 

regulations, and the terms and 

conditions of Federal awards which 

could have a direct and material effect 

on each major program and refer to the 

separate schedule of findings and 

questioned costs described in paragraph 

(d) of this section. 

(d) A schedule of findings and 

questioned costs which must include 

the following three components: 

(1) A summary of the auditor’s results, 

which must include: 

(i) The type of report the auditor 

issued on whether the financial 

statements audited were prepared in 

accordance with GAAP (i.e., unmodified 

opinion, qualified opinion, adverse 

opinion, or disclaimer of opinion); 

(ii) Where applicable, a statement 

about whether significant deficiencies 

or material weaknesses in internal 

control were disclosed by the audit of 

the financial statements; 

(iii) A statement as to whether the 

audit disclosed any noncompliance that 

is material to the financial statements of 

the auditee; 

(iv) Where applicable, a statement 

about whether significant deficiencies 

or material weaknesses in internal 

control over major programs were 

disclosed by the audit; 

(v) The type of report the auditor 

issued on compliance for major 

programs (i.e., unmodified opinion, 

qualified opinion, adverse opinion, or 

disclaimer of opinion); 

(vi) A statement as to whether the 

audit disclosed any audit findings that 

the auditor is required to report under 

§ 75.516(a); 

(vii) An identification of major 

programs by listing each individual 

major program; however in the case of 

a cluster of programs only the cluster 

name as shown on the Schedule of 

Expenditures of Federal Awards is 

required; 

(viii) The dollar threshold used to 

distinguish between Type A and Type B 

programs, as described in § 75.518(b)(1), 

or (b)(3) when a recalculation of the 

Type A threshold is required for large 

loan or loan guarantees; and 

(ix) A statement as to whether the 

auditee qualified as a low-risk auditee 

under § 75.520. 

(2) Findings relating to the financial 

statements which are required to be 

reported in accordance with GAGAS. 

(3) Findings and questioned costs for 

Federal awards which must include 

audit findings as defined in § 75.516(a). 

(i) Audit findings (e.g., internal 

control findings, compliance findings, 

questioned costs, or fraud) that relate to 

the same issue must be presented as a 

single audit finding. Where practical, 

audit findings should be organized by 

Federal agency or pass-through entity. 

(ii) Audit findings that relate to both 

the financial statements and Federal 

awards, as reported under paragraphs 

(d)(2) and (d)(3) of this section, 

respectively, must be reported in both 

sections of the schedule. However, the 

reporting in one section of the schedule 

may be in summary form with a 

reference to a detailed reporting in the 

other section of the schedule. 

(e) Nothing in this part precludes 

combining of the audit reporting 

required by this section with the 

reporting required by § 75.512(b) when 


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allowed by GAGAS and Appendix X to 

Part 75. 

§ 75.516 Audit findings. 

(a) Audit findings reported. The 

auditor must report the following as 

audit findings in a schedule of findings 

and questioned costs: 

(1) Significant deficiencies and 

material weaknesses in internal control 

over major programs and significant 

instances of abuse relating to major 

programs. The auditor’s determination 

of whether a deficiency in internal 

control is a significant deficiency or 

material weakness for the purpose of 

reporting an audit finding is in relation 

to a type of compliance requirement for 

a major program identified in the 

Compliance Supplement. 

(2) Material noncompliance with the 

provisions of Federal statutes, 

regulations, or the terms and conditions 

of Federal awards related to a major 

program. The auditor’s determination of 

whether a noncompliance with the 

provisions of Federal statutes, 

regulations, or the terms and conditions 

of Federal awards is material for the 

purpose of reporting an audit finding is 

in relation to a type of compliance 

requirement for a major program 

identified in the compliance 

supplement. 

(3) Known questioned costs that are 

greater than $25,000 for a type of 

compliance requirement for a major 

program. Known questioned costs are 

those specifically identified by the 

auditor. In evaluating the effect of 

questioned costs on the opinion on 

compliance, the auditor considers the 

best estimate of total costs questioned 

(likely questioned costs), not just the 

questioned costs specifically identified 

(known questioned costs). The auditor 

must also report known questioned 

costs when likely questioned costs are 

greater than $25,000 for a type of 

compliance requirement for a major 

program. In reporting questioned costs, 

the auditor must include information to 

provide proper perspective for judging 

the prevalence and consequences of the 

questioned costs. 

(4) Known questioned costs that are 

greater than $25,000 for a Federal 

program which is not audited as a major 

program. Except for audit follow-up, the 

auditor is not required under this part 

to perform audit procedures for such a 

Federal program; therefore, the auditor 

will normally not find questioned costs 

for a program that is not audited as a 

major program. However, if the auditor 

does become aware of questioned costs 

for a Federal program that is not audited 

as a major program (e.g., as part of audit 

follow-up or other audit procedures) 

and the known questioned costs are 

greater than $25,000, then the auditor 

must report this as an audit finding. 

(5) The circumstances concerning 

why the auditor’s report on compliance 

for each major program is other than an 

unmodified opinion, unless such 

circumstances are otherwise reported as 

audit findings in the schedule of 

findings and questioned costs for 

Federal awards. 

(6) Known or likely fraud affecting a 

Federal award, unless such fraud is 

otherwise reported as an audit finding 

in the schedule of findings and 

questioned costs for Federal awards. 

This paragraph does not require the 

auditor to report publicly information 

which could compromise investigative 

or legal proceedings or to make an 

additional reporting when the auditor 

confirms that the fraud was reported 

outside the auditor’s reports under the 

direct reporting requirements of 

GAGAS. 

(7) Instances where the results of 

audit follow-up procedures disclosed 

that the summary schedule of prior 

audit findings prepared by the auditee 

in accordance with § 75.511(b) 

materially misrepresents the status of 

any prior audit finding. 

(b) Audit finding detail and clarity. 

Audit findings must be presented in 

sufficient detail and clarity for the 

auditee to prepare a corrective action 

plan and take corrective action, and for 

Federal agencies and pass-through 

entities to arrive at a management 

decision. The following specific 

information must be included, as 

applicable, in audit findings: 

(1) Federal program and specific 

Federal award identification including 

the CFDA title and number, Federal 

award identification number and year, 

name of Federal agency, and name of 

the applicable pass-through entity. 

When information, such as the CFDA 

title and number or Federal award 

identification number, is not available, 

the auditor must provide the best 

information available to describe the 

Federal award. 

(2) The criteria or specific 

requirement upon which the audit 

finding is based, including the Federal 

statutes, regulations, or the terms and 

conditions of the Federal awards. 

Criteria generally identify the required 

or desired state or expectation with 

respect to the program or operation. 

Criteria provide a context for evaluating 

evidence and understanding findings. 

(3) The condition found, including 

facts that support the deficiency 

identified in the audit finding. 

(4) A statement of cause that identifies 

the reason or explanation for the 

condition or the factors responsible for 

the difference between the situation that 

exists (condition) and the required or 

desired state (criteria), which may also 

serve as a basis for recommendations for 

corrective action. 

(5) The possible asserted effect to 

provide sufficient information to the 

auditee and Federal agency, or passthrough entity in the case of a 

subrecipient, to permit them to 

determine the cause and effect to 

facilitate prompt and proper corrective 

action. A statement of the effect or 

potential effect should provide a clear, 

logical link to establish the impact or 

potential impact of the difference 

between the condition and the criteria. 

(6) Identification of questioned costs 

and how they were computed. Known 

questioned costs must be identified by 

applicable CFDA number(s) and 

applicable Federal award identification 

number(s). 

(7) Information to provide proper 

perspective for judging the prevalence 

and consequences of the audit findings, 

such as whether the audit findings 

represent an isolated instance or a 

systemic problem. Where appropriate, 

instances identified must be related to 

the universe and the number of cases 

examined and be quantified in terms of 

dollar value. The auditor should report 

whether the sampling was a statistically 

valid sample. 

(8) Identification of whether the audit 

finding was a repeat of a finding in the 

immediately prior audit and if so any 

applicable prior year audit finding 

numbers. 

(9) Recommendations to prevent 

future occurrences of the deficiency 

identified in the audit finding. 

(10) Views of responsible officials of 

the auditee. 

(c) Reference numbers. Each audit 

finding in the schedule of findings and 

questioned costs must include a 

reference number in the format meeting 

the requirements of the data collection 

form submission required by § 75.512(b) 

to allow for easy referencing of the audit 

findings during follow-up. 

§ 75.517 Audit documentation. 

(a) Retention of audit documentation. 

The auditor must retain audit 

documentation and reports for a 

minimum of three years after the date of 

issuance of the auditor’s report(s) to the 

auditee, unless the auditor is notified in 

writing by the cognizant agency for 

audit, oversight agency for audit, 

cognizant agency for indirect costs, or 

pass-through entity to extend the 

retention period. When the auditor is 

aware that the Federal agency, passthrough entity, or auditee is contesting 


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an audit finding, the auditor must 

contact the parties contesting the audit 

finding for guidance prior to destruction 

of the audit documentation and reports. 

(b) Access to audit documentation. 

Audit documentation must be made 

available upon request to the cognizant 

or oversight agency for audit or its 

designee, cognizant agency for indirect 

cost, a Federal agency, or GAO at the 

completion of the audit, as part of a 

quality review, to resolve audit findings, 

or to carry out oversight responsibilities 

consistent with the purposes of this 

part. Access to audit documentation 

includes the right of Federal agencies to 

obtain copies of audit documentation, as 

is reasonable and necessary. 

§ 75.518 Major program determination. 

(a) General. The auditor must use a 

risk-based approach to determine which 

Federal programs are major programs. 

This risk-based approach must include 

consideration of: Current and prior 

audit experience, oversight by Federal 

agencies and pass-through entities, and 

the inherent risk of the Federal this 

program. The process in paragraphs (b) 

through (h) of this section must be 

followed. 

(b) Step one. (1) The auditor must 

identify the larger Federal programs, 

which must be labeled Type A 

programs. Type A programs are defined 

as Federal programs with Federal 

awards expended during the audit 

period exceeding the levels outlined in 

the table in this paragraph (b)(1): 

Total Federal awards expended Type A/B threshold 

(i) Equal to or exceed $750,000 but less than or equal to $25 million ... $750,000. 

(ii) Exceed $25 million but less than or equal to $100 million ................. Total Federal awards expended times .03. 

(iii) Exceed $100 million but less than or equal to $1 billion ................... $3 million. 

(iv) Exceed $1 billion but less than or equal to $10 billion ...................... Total Federal awards expended times .003. 

(v) Exceed $10 billion but less than or equal to $20 billion ..................... $30 million. 

(vi) Exceed $20 billion .............................................................................. Total Federal awards expended times .0015. 

(2) Federal programs not labeled Type 

A under paragraph (b)(1) of this section 

must be labeled Type B programs. 

(3) The inclusion of large loan and 

loan guarantees (loans) must not result 

in the exclusion of other programs as 

Type A programs. When a Federal 

program providing loans exceeds four 

times the largest non-loan program it is 

considered a large loan program, and 

the auditor must consider this Federal 

program as a Type A program and 

exclude its values in determining other 

Type A programs. This recalculation of 

the Type A program is performed after 

removing the total of all large loan 

programs. For the purposes of this 

paragraph a program is only considered 

to be a Federal program providing loans 

if the value of Federal awards expended 

for loans within the program comprises 

fifty percent or more of the total Federal 

awards expended for the program. A 

cluster of programs is treated as one 

program and the value of Federal 

awards expended under a loan program 

is determined as described in § 75.502. 

(4) For biennial audits permitted 

under § 75.504, the determination of 

Type A and Type B programs must be 

based upon the Federal awards 

expended during the two-year period. 

(c) Step two. (1) The auditor must 

identify Type A programs which are 

low-risk. In making this determination, 

the auditor must consider whether the 

requirements in § 75.519(c), the results 

of audit follow-up, or any changes in 

personnel or systems affecting the 

program indicate significantly increased 

risk and preclude the program from 

being low risk. For a Type A program 

to be considered low-risk, it must have 

been audited as a major program in at 

least one of the two most recent audit 

periods (in the most recent audit period 

in the case of a biennial audit), and, in 

the most recent audit period, the 

program must have not had: 

(i) Internal control deficiencies which 

were identified as material weaknesses 

in the auditor’s report on internal 

control for major programs as required 

under § 75.515(c); 

(ii) A modified opinion on the 

program in the auditor’s report on major 

programs as required under § 75.515(c); 

or 

(iii) Known or likely questioned costs 

that exceed five percent of the total 

Federal awards expended for the 

program. 

(2) Notwithstanding paragraph (c)(1) 

of this section, OMB may approve an 

HHS awarding agency’s request that a 

Type A program may not be considered 

low risk for a certain recipient. For 

example, it may be necessary for a large 

Type A program to be audited as a major 

program each year at a particular 

recipient to allow the HHS awarding 

agency to comply with 31 U.S.C. 3515. 

The HHS awarding agency must notify 

the recipient and, if known, the auditor 

of OMB’s approval at least 180 calendar 

days prior to the end of the fiscal year 

to be audited. 

(d) Step three. (1) The auditor must 

identify Type B programs which are 

high-risk using professional judgment 

and the criteria in § 75.519. However, 

the auditor is not required to identify 

more high-risk Type B programs than at 

least one fourth the number of low-risk 

Type A programs identified as low-risk 

under Step 2 (paragraph (c) of this 

section). Except for known material 

weakness in internal control or 

compliance problems as discussed in 

§ 75.519(b)(1), (b)(2), and (c)(1), a single 

criteria in risk would seldom cause a 

Type B program to be considered highrisk. When identifying which Type B 

programs to risk assess, the auditor is 

encouraged to use an approach which 

provides an opportunity for different 

high-risk Type B programs to be audited 

as major over a period of time. 

(2) The auditor is not expected to 

perform risk assessments on relatively 

small Federal programs. Therefore, the 

auditor is only required to perform risk 

assessments on Type B programs that 

exceed twenty-five percent (0.25) of the 

Type A threshold determined in Step 1 

(paragraph (b) of this section). 

(e) Step four. At a minimum, the 

auditor must audit all of the following 

as major programs: 

(1) All Type A programs not 

identified as low risk under step two 

(paragraph (c)(1) of this section). 

(2) All Type B programs identified as 

high-risk under step three (paragraph (d) 

of this section). 

(3) Such additional programs as may 

be necessary to comply with the 

percentage of coverage rule discussed in 

paragraph (f) of this section. This may 

require the auditor to audit more 

programs as major programs than the 

number of Type A programs. 

(f) Percentage of coverage rule. If the 

auditee meets the criteria in § 75.520, 

the auditor need only audit the major 

programs identified in Step 4 (paragraph 

(e)(1) and (2) of this section) and such 

additional Federal programs with 

Federal awards expended that, in 

aggregate, all major programs 

encompass at least 20 percent (0.20) of 

total Federal awards expended. 

Otherwise, the auditor must audit the 

major programs identified in Step 4 

(paragraphs (e)(1) and (2) of this section) 


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and such additional Federal programs 

with Federal awards expended that, in 

aggregate, all major programs 

encompass at least 40 percent (0.40) of 

total Federal awards expended. 

(g) Documentation of risk. The auditor 

must include in the audit 

documentation the risk analysis process 

used in determining major programs. 

(h) Auditor’s judgment. When the 

major program determination was 

performed and documented in 

accordance with this Subpart, the 

auditor’s judgment in applying the riskbased approach to determine major 

programs must be presumed correct. 

Challenges by Federal agencies and 

pass-through entities must only be for 

clearly improper use of the 

requirements in this part. However, 

Federal agencies and pass-through 

entities may provide auditors guidance 

about the risk of a particular Federal 

program and the auditor must consider 

this guidance in determining major 

programs in audits not yet completed. 

§ 75.519 Criteria for Federal program risk. 

(a) General. The auditor’s 

determination should be based on an 

overall evaluation of the risk of 

noncompliance occurring that could be 

material to the Federal program. The 

auditor must consider criteria, such as 

described in paragraphs (b), (c), and (d) 

of this section, to identify risk in 

Federal programs. Also, as part of the 

risk analysis, the auditor may wish to 

discuss a particular Federal program 

with auditee management and the 

Federal agency or pass-through entity. 

(b) Current and prior audit 

experience. (1) Weaknesses in internal 

control over Federal programs would 

indicate higher risk. Consideration 

should be given to the control 

environment over Federal programs and 

such factors as the expectation of 

management’s adherence to Federal 

statutes, regulations, and the terms and 

conditions of Federal awards and the 

competence and experience of 

personnel who administer the Federal 

programs. 

(i) A Federal program administered 

under multiple internal control 

structures may have higher risk. When 

assessing risk in a large single audit, the 

auditor must consider whether 

weaknesses are isolated in a single 

operating unit (e.g., one college campus) 

or pervasive throughout the entity. 

(ii) When significant parts of a Federal 

program are passed through to 

subrecipients, a weak system for 

monitoring subrecipients would 

indicate higher risk. 

(2) Prior audit findings would 

indicate higher risk, particularly when 

the situations identified in the audit 

findings could have a significant impact 

on a Federal program or have not been 

corrected. 

(3) Federal programs not recently 

audited as major programs may be of 

higher risk than Federal programs 

recently audited as major programs 

without audit findings. 

(c) Oversight exercised by Federal 

agencies and pass-through entities. (1) 

Oversight exercised by Federal agencies 

or pass-through entities could be used to 

assess risk. For example, recent 

monitoring or other reviews performed 

by an oversight entity that disclosed no 

significant problems would indicate 

lower risk, whereas monitoring that 

disclosed significant problems would 

indicate higher risk. 

(2) Federal agencies, with the 

concurrence of OMB, may identify 

Federal programs that are higher risk. 

OMB will provide this identification in 

the compliance supplement. 

(d) Inherent risk of the Federal 

program. (1) The nature of a Federal 

program may indicate risk. 

Consideration should be given to the 

complexity of the program and the 

extent to which the Federal program 

contracts for goods and services. For 

example, Federal programs that disburse 

funds through third party contracts or 

have eligibility criteria may be of higher 

risk. Federal programs primarily 

involving staff payroll costs may have 

high risk for noncompliance with 

requirements of § 75.430, but otherwise 

be at low risk. 

(2) The phase of a Federal program in 

its life cycle at the Federal agency may 

indicate risk. For example, a new 

Federal program with new or interim 

regulations may have higher risk than 

an established program with time-tested 

regulations. Also, significant changes in 

Federal programs, statutes, regulations, 

or the terms and conditions of Federal 

awards may increase risk. 

(3) The phase of a Federal program in 

its life cycle at the auditee may indicate 

risk. For example, during the first and 

last years that an auditee participates in 

a Federal program, the risk may be 

higher due to start-up or closeout of 

program activities and staff. 

(4) Type B programs with larger 

Federal awards expended would be of 

higher risk than programs with 

substantially smaller Federal awards 

expended. 

§ 75.520 Criteria for a low-risk auditee. 

An auditee that meets all of the 

following conditions for each of the 

preceding two audit periods must 

qualify as a low-risk auditee and be 

eligible for reduced audit coverage in 

accordance with § 75.518. 

(a) Single audits were performed on 

an annual basis in accordance with the 

provisions of this Subpart, including 

submitting the data collection form and 

the reporting package to the FAC within 

the timeframe specified in § 75.512 . A 

non-Federal entity that has biennial 

audits does not qualify as a low-risk 

auditee. 

(b) The auditor’s opinion on whether 

the financial statements were prepared 

in accordance with GAAP, or a basis of 

accounting required by state law, and 

the auditor’s in relation to opinion on 

the schedule of expenditures of Federal 

awards were unmodified. 

(c) There were no deficiencies in 

internal control which were identified 

as material weaknesses under the 

requirements of GAGAS. 

(d) The auditor did not report a 

substantial doubt about the auditee’s 

ability to continue as a going concern. 

(e) None of the Federal programs had 

audit findings from any of the following 

in either of the preceding two audit 

periods in which they were classified as 

Type A programs: 

(1) Internal control deficiencies that 

were identified as material weaknesses 

in the auditor’s report on internal 

control for major programs as required 

under § 75.515(c); 

(2) A modified opinion on a major 

program in the auditor’s report on major 

programs as required under § 75.515(c); 

or 

(3) Known or likely questioned costs 

that exceeded five percent of the total 

Federal awards expended for a Type A 

program during the audit period. 

Management Decisions 

§ 75.521 Management Decision. 

(a) General. The management decision 

must clearly state whether or not the 

audit finding is sustained, the reasons 

for the decision, and the expected 

auditee action to repay disallowed costs, 

make financial adjustments, or take 

other action. If the auditee has not 

completed corrective action, a timetable 

for follow-up should be given. Prior to 

issuing the management decision, the 

Federal agency or pass-through entity 

may request additional information or 

documentation from the auditee, 

including a request for auditor 

assurance related to the documentation, 

as a way of mitigating disallowed costs. 

The management decision should 

describe any appeal process available to 

the auditee. While not required, the 

Federal agency or pass-through entity 

may also issue a management decision 

on findings relating to the financial 


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statements which are required to be 

reported in accordance with GAGAS. 

(b) Federal agency. As provided in 

§ 75.513(a)(3)(vii), the cognizant agency 

for audit must be responsible for 

coordinating a management decision for 

audit findings that affect the programs 

of more than one Federal agency. As 

provided in § 75.513(c)(3), a Federal 

awarding agency is responsible for 

issuing a management decision for 

findings that relate to Federal awards it 

makes to non-Federal entities. 

(c) Pass-through entity. As provided 

in § 75.352(d), the pass-through entity 

must be responsible for issuing a 

management decision for audit findings 

that relate to Federal awards it makes to 

subrecipients. 

(d) Time requirements. The HHS 

awarding agency or pass-through entity 

responsible for issuing a management 

decision must do so within six months 

of acceptance of the audit report by the 

FAC. The auditee must initiate and 

proceed with corrective action as 

rapidly as possible and corrective action 

should begin no later than upon receipt 

of the audit report. 

(e) Reference numbers. Management 

decisions must include the reference 

numbers the auditor assigned to each 

audit finding in accordance with 

§ 75.516(c). 

Appendix I to Part 75—Full Text of 

Notice of Funding Opportunity 

The full text of the notice of funding 

opportunity is organized in sections. The 

required format outlined in this appendix 

indicates immediately following the title of 

each section whether that section is required 

in every announcement or is an HHS 

awarding agency option. The format is 

designed so that similar types of information 

will appear in the same sections in 

announcements of different Federal funding 

opportunities. Toward that end, there is text 

in each of the following sections to describe 

the types of information that an HHS 

awarding agency would include in that 

section of an actual announcement. 

An HHS awarding agency that wishes to 

include information that the format does not 

specifically discuss may address that subject 

in whatever section(s) is most appropriate. 

For example, if an HHS awarding agency 

chooses to address performance goals in the 

announcement, it might do so in the funding 

opportunity description, the application 

content, or the reporting requirements. 

Similarly, when this format calls for a type 

of information to be in a particular section, 

an HHS awarding agency wishing to address 

that subject in other sections may elect to 

repeat the information in those sections or 

use cross references between the sections 

(there should be hyperlinks for crossreferences in any electronic versions of the 

announcement). For example, an HHS 

awarding agency may want to include in 

Section A information about the types of 

non-Federal entities who are eligible to 

apply. The format specifies a standard 

location for that information in Section C.1 

but that does not preclude repeating the 

information in Section I or creating a cross 

reference between Sections A and C.1, as 

long as a potential applicant can find the 

information quickly and easily from the 

standard location. 

The sections of the full text of the 

announcement are described in the following 

paragraphs. 

A. Program Description—Required 

This section contains the full program 

description of the funding opportunity. It 

may be as long as needed to adequately 

communicate to potential applicants the 

areas in which funding may be provided. It 

describes the HHS awarding agency’s 

funding priorities or the technical or focus 

areas in which the HHS awarding agency 

intends to provide assistance. As appropriate, 

it may include any program history (e.g., 

whether this is a new program or a new or 

changed area of program emphasis). This 

section may communicate indicators of 

successful projects (e.g., if the program 

encourages collaborative efforts) and may 

include examples of projects that have been 

funded previously. This section also may 

include other information the HHS awarding 

agency deems necessary, and must at a 

minimum include citations for authorizing 

statutes and regulations for the funding 

opportunity. 

B. Federal Award Information—Required 

This section provides sufficient 

information to help an applicant make an 

informed decision about whether to submit a 

proposal. Relevant information could include 

the total amount of funding that the HHS 

awarding agency expects to award through 

the announcement; the anticipated number of 

Federal awards; the expected amounts of 

individual Federal awards (which may be a 

range); the amount of funding per Federal 

award, on average, experienced in previous 

years; and the anticipated start dates and 

periods of performance for new Federal 

awards. This section also should address 

whether applications for renewal or 

supplementation of existing projects are 

eligible to compete with applications for new 

Federal awards. 

This section also must indicate the type(s) 

of assistance instrument (e.g., grant, 

cooperative agreement) that may be awarded 

if applications are successful. If cooperative 

agreements may be awarded, this section 

either should describe the ‘‘substantial 

involvement’’ that the HHS awarding agency 

expects to have or should reference where 

the potential applicant can find that 

information (e.g., in the funding opportunity 

description in section A. or Federal award 

administration information in Section D. If 

procurement contracts also may be awarded, 

this must be stated. 

C. Eligibility Information 

This section addresses the considerations 

or factors that determine applicant or 

application eligibility. This includes the 

eligibility of particular types of applicant 

organizations, any factors affecting the 

eligibility of the principal investigator or 

project director, and any criteria that make 

particular projects ineligible. HHS agencies 

should make clear whether an applicant’s 

failure to meet an eligibility criterion by the 

time of an application deadline will result in 

the HHS awarding agency returning the 

application without review or, even though 

an application may be reviewed, will 

preclude the HHS awarding agency from 

making a Federal award. Key elements to be 

addressed are: 

1. Eligible Applicants—Required. 

Announcements must clearly identify the 

types of entities that are eligible to apply. If 

there are no restrictions on eligibility, this 

section may simply indicate that all potential 

applicants are eligible. If there are 

restrictions on eligibility, it is important to be 

clear about the specific types of entities that 

are eligible, not just the types that are 

ineligible. For example, if the program is 

limited to nonprofit organizations subject to 

26 U.S.C. 501(c)(3) of the tax code (26 U.S.C. 

501(c)(3)), the announcement should say so. 

Similarly, it is better to state explicitly that 

Native American tribal organizations are 

eligible than to assume that they can 

unambiguously infer that from a statement 

that nonprofit organizations may apply. 

Eligibility also can be expressed by 

exception, (e.g., open to all types of domestic 

applicants other than individuals). This 

section should refer to any portion of Section 

D. specifying documentation that must be 

submitted to support an eligibility 

determination (e.g., proof of 501(c)(3) status 

as determined by the Internal Revenue 

Service or an authorizing tribal resolution). 

To the extent that any funding restriction in 

Section D.6 could affect the eligibility of an 

applicant or project, the announcement must 

either restate that restriction in this section 

or provide a cross-reference to its description 

in Section D.6. 

2. Cost Sharing or Matching—Required. 

Announcements must state whether there is 

required cost sharing, matching, or cost 

participation without which an application 

would be ineligible (if cost sharing is not 

required, the announcement must explicitly 

say so). Required cost sharing may be a 

certain percentage or amount, or may be in 

the form of contributions of specified items 

or activities (e.g., provision of equipment). It 

is important that the announcement be clear 

about any restrictions on the types of cost 

(e.g., in-kind contributions) that are 

acceptable as cost sharing. Cost sharing as an 

eligibility criterion includes requirements 

based in statute or regulation, as described in 

§ 75.306. This section should refer to the 

appropriate portion(s) of section D. stating 

any pre-award requirements for submission 

of letters or other documentation to verify 

commitments to meet cost-sharing 

requirements if a Federal award is made. 

3. Other—Required, if applicable. If there 

are other eligibility criteria (i.e., criteria that 

have the effect of making an application or 

project ineligible for Federal awards, whether 

referred to as ‘‘responsiveness’’ criteria, ‘‘gono go’’ criteria, ‘‘threshold’’ criteria, or in 

other ways), must be clearly stated and must 

include a reference to the regulation of 

requirement that describes the restriction, as 


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applicable. For example, if entities that have 

been found to be in violation of a particular 

Federal statute are ineligible, it is important 

to say so. This section must also state any 

limit on the number of applications an 

applicant may submit under the 

announcement and make clear whether the 

limitation is on the submitting organization, 

individual investigator/program director, or 

both. This section should also address any 

eligibility criteria for beneficiaries or for 

program participants other than Federal 

award recipients. 

D. Application and Submission Information 

1. Address to Request Application 

Package—Required. Potential applicants 

must be told how to get application forms, 

kits, or other materials needed to apply (if 

this announcement contains everything 

needed, this section need only say so). An 

Internet address where the materials can be 

accessed is acceptable. However, since highspeed Internet access is not yet universally 

available for downloading documents, and 

applicants may have additional accessibility 

requirements, there also should be a way for 

potential applicants to request paper copies 

of materials, such as a U.S. Postal Service 

mailing address, telephone or FAX number, 

Telephone Device for the Deaf (TDD), Text 

Telephone (TTY) number, and/or Federal 

Information Relay Service (FIRS) number. 

2. Content and Form of Application 

Submission—Required. This section must 

identify the required content of an 

application and the forms or formats that an 

applicant must use to submit it. If any 

requirements are stated elsewhere because 

they are general requirements that apply to 

multiple programs or funding opportunities, 

this section should refer to where those 

requirements may be found. This section also 

should include required forms or formats as 

part of the announcement or state where the 

applicant may obtain them. 

This section should specifically address 

content and form or format requirements for: 

i. Pre-applications, letters of intent, or 

white papers required or encouraged (see 

Section D.4), including any limitations on the 

number of pages or other formatting 

requirements similar to those for full 

applications. 

ii. The application as a whole. For all 

submissions, this would include any 

limitations on the number of pages, font size 

and typeface, margins, paper size, number of 

copies, and sequence or assembly 

requirements. If electronic submission is 

permitted or required, this could include 

special requirements for formatting or 

signatures. 

iii. Component pieces of the application 

(e.g., if all copies of the application must bear 

original signatures on the face page or the 

program narrative may not exceed 10 pages). 

This includes any pieces that may be 

submitted separately by third parties (e.g., 

references or letters confirming commitments 

from third parties that will be contributing a 

portion of any required cost sharing). 

iv. Information that successful applicants 

must submit after notification of intent to 

make a Federal award, but prior to a Federal 

award. This could include evidence of 

compliance with requirements relating to 

human subjects or information needed to 

comply with the National Environmental 

Policy Act (NEPA) (42 U.S.C. 4321–4370h). 

3. Unique Entity Identifier and System for 

Award Management (SAM)—Required. 

This paragraph must state clearly that each 

applicant (unless the applicant is an 

individual or Federal awarding agency that is 

excepted from those requirements under 2 

CFR 25.110(b) or (c), or has an exception 

approved by the Federal awarding agency 

under 2 CFR 25.110(d)) is required to: 

(i) Be registered in SAM before submitting 

its application; 

(ii) provide a valid unique entity identifier 

in its application; and 

(iii) continue to maintain an active SAM 

registration with current information at all 

times during which it has an active Federal 

award or an application or plan under 

consideration by a Federal awarding agency. 

It also must state that the Federal awarding 

agency may not make a Federal award to an 

applicant until the applicant has complied 

with all applicable unique entity identifier 

and SAM requirements and, if an applicant 

has not fully complied with the requirements 

by the time the Federal awarding agency is 

ready to make a Federal award, the Federal 

awarding agency may determine that the 

applicant is not qualified to receive a Federal 

award and use that determination as a basis 

for making a Federal award to another 

applicant. 

4. Submission Dates and Times—Required. 

Announcements must identify due dates and 

times for all submissions. This includes not 

only the full applications but also any 

preliminary submissions (e.g., letters of 

intent, white papers, or pre-applications). It 

also includes any other submissions of 

information before Federal award that are 

separate from the full application. If the 

funding opportunity is a general 

announcement that is open for a period of 

time with no specific due dates for 

applications, this section should say so. Note 

that the information on dates that is included 

in this section also must appear with other 

overview information in a location preceding 

the full text of the announcement (see 

§ 75.203). 

Each type of submission should be 

designated as encouraged or required and, if 

required, any deadline date (or dates, if the 

Federal awarding agency plans more than 

one cycle of application submission, review, 

and Federal award under the announcement) 

should be specified. The announcement must 

state (or provide a reference to another 

document that states): 

i. Any deadline in terms of a date and local 

time. If the due date falls on a Saturday, 

Sunday, or Federal holiday, the reporting 

package is due the next business day. 

ii. What the deadline means (e.g., whether 

it is the date and time by which the Federal 

awarding agency must receive the 

application, the date by which the 

application must be postmarked, or 

something else) and how that depends, if at 

all, on the submission method (e.g., mail, 

electronic, or personal/courier delivery). 

iii. The effect of missing a deadline (e.g., 

whether late applications are neither 

reviewed nor considered or are reviewed and 

considered under some circumstances). 

iv. How the receiving Federal office 

determines whether an application or preapplication has been submitted before the 

deadline. This includes the form of 

acceptable proof of mailing or systemgenerated documentation of receipt date and 

time. 

This section also may indicate whether, 

when, and in what form the applicant will 

receive an acknowledgement of receipt. This 

information should be displayed in ways that 

will be easy to understand and use. It can be 

difficult to extract all needed information 

from narrative paragraphs, even when they 

are well written. A tabular form for providing 

a summary of the information may help 

applicants for some programs and give them 

what effectively could be a checklist to verify 

the completeness of their application package 

before submission. 

5. Intergovernmental Review—Required, if 

applicable. If the funding opportunity is 

subject to Executive Order 12372, 

‘‘Intergovernmental Review of Federal 

Programs,’’ the notice must say so. In alerting 

applicants that they must contact their state’s 

Single Point of Contact (SPOC) to find out 

about and comply with the state’s process 

under Executive Order 12372, it may be 

useful to inform potential applicants that the 

names and addresses of the SPOCs are listed 

in the Office of Management and Budget’s 

Web site. www.whitehouse.gov/omb/grants/

spoc.html. 

6. Funding Restrictions—Required. Notices 

must include information on funding 

restrictions in order to allow an applicant to 

develop an application and budget consistent 

with program requirements. Examples are 

whether construction is an allowable activity, 

if there are any limitations on direct costs 

such as foreign travel or equipment 

purchases, and if there are any limits on 

indirect costs (or facilities and administrative 

costs). Applicants must be advised if Federal 

awards will not allow reimbursement of preFederal award costs. 

7. Other Submission Requirements— 

Required. This section must address any 

other submission requirements not included 

in the other paragraphs of this section. This 

might include the format of submission, i.e., 

paper or electronic, for each type of required 

submission. Applicants should not be 

required to submit in more than one format 

and this section should indicate whether 

they may choose whether to submit 

applications in hard copy or electronically, 

may submit only in hard copy, or may submit 

only electronically. 

This section also must indicate where 

applications (and any pre-applications) must 

be submitted if sent by postal mail, electronic 

means, or hand-delivery. For postal mail 

submission, this must include the name of an 

office, official, individual or function (e.g., 

application receipt center) and a complete 

mailing address. For electronic submission, 

this must include the URL or email address; 

whether a password(s) is required; whether 

particular software or other electronic 

capabilities are required; what to do in the 

event of system problems and a point of 

contact who will be available in the event the 

applicant experiences technical difficulties.1

1With respect to electronic methods for 

providing information about funding 


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opportunities or accepting applicants’ 

submissions of information, each HHS 

awarding agency is responsible for 

compliance with Section 508 of the 

Rehabilitation Act of 1973 (29 U.S.C. 794d). 

E. Application Review Information 

1. Criteria—Required. This section must 

address the criteria that the Federal awarding 

agency will use to evaluate applications. This 

includes the merit and other review criteria 

that evaluators will use to judge applications, 

including any statutory, regulatory, or other 

preferences (e.g., minority status or Native 

American tribal preferences) that will be 

applied in the review process. These criteria 

are distinct from eligibility criteria that are 

addressed before an application is accepted 

for review and any program policy or other 

factors that are applied during the selection 

process, after the review process is 

completed. The intent is to make the 

application process transparent so applicants 

can make informed decisions when preparing 

their applications to maximize fairness of the 

process. The announcement should clearly 

describe all criteria, including any subcriteria. If criteria vary in importance, the 

announcement should specify the relative 

percentages, weights, or other means used to 

distinguish among them. For statutory, 

regulatory, or other preferences, the 

announcement should provide a detailed 

explanation of those preferences with an 

explicit indication of their effect (e.g., 

whether they result in additional points 

being assigned). 

If an applicant’s proposed cost sharing will 

be considered in the review process (as 

opposed to being an eligibility criterion 

described in Section C.2), the announcement 

must specifically address how it will be 

considered (e.g., to assign a certain number 

of additional points to applicants who offer 

cost sharing, or to break ties among 

applications with equivalent scores after 

evaluation against all other factors). If cost 

sharing will not be considered in the 

evaluation, the announcement should say so, 

so that there is no ambiguity for potential 

applicants. Vague statements that cost 

sharing is encouraged, without clarification 

as to what that means, are unhelpful to 

applicants. It also is important that the 

announcement be clear about any restrictions 

on the types of cost (e.g., in-kind 

contributions) that are acceptable as cost 

sharing. 

2. Review and Selection Process— 

Required. This section may vary in the level 

of detail provided. The announcement must 

list any program policy or other factors or 

elements, other than merit criteria, that the 

selecting official may use in selecting 

applications for Federal award (e.g., 

geographical dispersion, program balance, or 

diversity). The HHS awarding agency may 

also include other appropriate details. For 

example, this section may indicate who is 

responsible for evaluation against the merit 

criteria (e.g., peers external to the HHS 

awarding agency or HHS awarding agency 

personnel) and/or who makes the final 

selections for Federal awards. If there is a 

multi-phase review process (e.g., an external 

panel advising internal HHS awarding 

agency personnel who make final 

recommendations to the deciding official), 

the announcement may describe the phases. 

It also may include: the number of people on 

an evaluation panel and how it operates, the 

way reviewers are selected, reviewer 

qualifications, and the way that conflicts of 

interest are avoided. With respect to 

electronic methods for providing information 

about funding opportunities or accepting 

applicants’ submissions of information, each 

HHS awarding agency is responsible for 

compliance with Section 508 of the 

Rehabilitation Act of 1973 (29 U.S.C. 794d). 

In addition, if the HHS awarding agency 

permits applicants to nominate suggested 

reviewers of their applications or suggest 

those they feel may be inappropriate due to 

a conflict of interest, that information should 

be included in this section. 

3. Anticipated Announcement and Federal 

Award Dates—Optional. This section is 

intended to provide applicants with 

information they can use for planning 

purposes. If there is a single application 

deadline followed by the simultaneous 

review of all applications, the HHS awarding 

agency can include in this section 

information about the anticipated dates for 

announcing or notifying successful and 

unsuccessful applicants and for having 

Federal awards in place. If applications are 

received and evaluated on a ‘‘rolling’’ basis 

at different times during an extended period, 

it may be appropriate to give applicants an 

estimate of the time needed to process an 

application and notify the applicant of the 

Federal awarding agency’s decision. 

F. Federal Award Administration 

Information 

1. Federal Award Notices—Required. This 

section must address what a successful 

applicant can expect to receive following 

selection. If the HHS awarding agency’s 

practice is to provide a separate notice stating 

that an application has been selected before 

it actually makes the Federal award, this 

section would be the place to indicate that 

the letter is not an authorization to begin 

performance (to the extent that it allows 

charging to Federal awards of pre-award 

costs at the non-Federal entity’s own risk). 

This section should indicate that the notice 

of Federal award signed by the grants officer 

(or equivalent) is the authorizing document, 

and whether it is provided through postal 

mail or by electronic means and to whom. It 

also may address the timing, form, and 

content of notifications to unsuccessful 

applicants. See also § 75.210. 

2. Administrative and National Policy 

Requirements—Required. This section must 

identify the usual administrative and 

national policy requirements the HHS 

awarding agency’s Federal awards may 

include. Providing this information lets a 

potential applicant identify any requirements 

with which it would have difficulty 

complying if its application is successful. In 

those cases, early notification about the 

requirements allows the potential applicant 

to decide not to apply or to take needed 

actions before receiving the Federal award. 

The announcement need not include all of 

the terms and conditions of the Federalaward, but may refer to a document (with 

information about how to obtain it) or 

Internet site where applicants can see the 

terms and conditions. If this funding 

opportunity will lead to Federal awards with 

some specific terms and conditions that 

differ from the HHS awarding agency’s usual 

(sometimes called ‘‘general’’) terms and 

conditions, this section should highlight 

those specific terms and conditions. Doing so 

will alert applicants that have received 

Federal awards from the HHS awarding 

agency previously and might not otherwise 

expect different terms and conditions. For 

the same reason, the announcement should 

inform potential applicants about special 

requirements that could apply to particular 

Federal awards after the review of 

applications and other information, based on 

the particular circumstances of the effort to 

be supported (e.g., if human subjects were to 

be involved or if some situations may justify 

special terms on intellectual property, data 

sharing or security requirements). 

3. Reporting—Required. This section must 

include general information about the type 

(e.g., financial or performance), frequency, 

and means of submission (paper or 

electronic) of post-Federal award reporting 

requirements. Highlight any special reporting 

requirements for Federal awards under this 

funding opportunity that differ (e.g., by 

report type, frequency, form/format, or 

circumstances for use) from what the HHS 

awarding agency’s Federal awards usually 

require. 

G. HHS Awarding Agency Contact(s)— 

Required 

The announcement must give potential 

applicants a point(s) of contact for answering 

questions or helping with problems while the 

funding opportunity is open. The intent of 

this requirement is to be as helpful as 

possible to potential applicants, so the HHS 

awarding agency should consider approaches 

such as giving: 

1. Points of contact who may be reached 

in multiple ways (e.g., by telephone, FAX, 

and/or email, as well as regular mail). 

2. A fax or email address that multiple 

people access, so that someone will respond 

even if others are unexpectedly absent during 

critical periods. 

3. Different contacts for distinct kinds of 

help (e.g., one for questions of programmatic 

content and a second for administrative 

questions). 

H. Other Information—Optional 

This section may include any additional 

information that will assist a potential 

applicant. For example, the section might: 

1. Indicate whether this is a new program 

or a one-time initiative. 

2. Mention related programs or other 

upcoming or ongoing HHS awarding agency 

funding opportunities for similar activities. 

3. Include current Internet addresses for 

the HHS awarding agency Web sites that may 

be useful to an applicant in understanding 

the program. 

4. Alert applicants to the need to identify 

proprietary information and inform them 

about the way the HHS awarding agency will 

handle it. 

5. Include certain routine notices to 

applicants (e.g., that the Federal Government 

is not obligated to make any Federal award 


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as a result of the announcement or that only 

grants officers can bind the Federal 

Government to the expenditure of funds). 

Appendix II to Part 75—Contract 

Provisions for Non-Federal Entity 

Contracts Under Federal Awards 

In addition to other provisions required by 

the HHS agency or non-Federal entity, all 

contracts made by the non-Federal entity 

under the Federal award must contain 

provisions covering the following, as 

applicable. 

A. Contracts for more than the simplified 

acquisition threshold currently set at 

$150,000, which is the inflation adjusted 

amount determined by the Civilian Agency 

Acquisition Council and the Defense 

Acquisition Regulations Council (Councils) 

as authorized by 41 U.S.C. 1908, must 

address administrative, contractual, or legal 

remedies in instances where contractors 

violate or breach contract terms, and provide 

for such sanctions and penalties as 

appropriate. 

B. All contracts in excess of $10,000 must 

address termination for cause and for 

convenience by the non-Federal entity 

including the manner by which it will be 

effected and the basis for settlement. 

C. Equal Employment Opportunity. Except 

as otherwise provided under 41 CFR part 60, 

all contracts that meet the definition of 

‘‘federally assisted construction contract’’ in 

41 CFR part 60–1.3 must include the equal 

opportunity clause provided under 41 CFR 

60–1.4(b), in accordance with Executive 

Order 11246, as amended by Executive Order 

11375, and implementing regulations at 41 

CFR part 60. 

D. Davis-Bacon Act, as amended (40 U.S.C. 

3141–3148). When required by Federal 

program legislation, all prime construction 

contracts in excess of $2,000 awarded by 

non-Federal entities must include a provision 

for compliance with the Davis-Bacon Act (40 

U.S.C. 3141–3144, and 3146–3148) as 

supplemented by Department of Labor 

regulations (29 CFR part 5). In accordance 

with the statute, contractors must be required 

to pay wages to laborers and mechanics at a 

rate not less than the prevailing wages 

specified in a wage determination made by 

the Secretary of Labor. In addition, 

contractors must be required to pay wages 

not less than once a week. The non-Federal 

entity must place a copy of the current 

prevailing wage determination issued by the 

Department of Labor in each solicitation. The 

decision to award a contract or subcontract 

must be conditioned upon the acceptance of 

the wage determination. The non-Federal 

entity must report all suspected or reported 

violations to the Federal awarding agency. 

The contracts must also include a provision 

for compliance with the Copeland ‘‘AntiKickback’’ Act (40 U.S.C. 3145), as 

supplemented by Department of Labor 

regulations (29 CFR part 3). The Act provides 

that each contractor or subrecipient must 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 

or she is otherwise entitled. The non-Federal 

entity must report all suspected or reported 

violations to the Federal awarding agency. 

E. Contract Work Hours and Safety 

Standards Act (40 U.S.C. 3701–3708). Where 

applicable, all contracts awarded by the nonFederal entity in excess of $100,000 that 

involve the employment of mechanics or 

laborers must include a provision for 

compliance with 40 U.S.C. 3702 and 3704, as 

supplemented by Department of Labor 

regulations (29 CFR part 5). Under 40 U.S.C. 

3702 of the Act, each contractor must be 

required to compute the wages of every 

mechanic and laborer on the basis of a 

standard work week of 40 hours. Work in 

excess of the standard work week is 

permissible provided that the worker is 

compensated at a rate of not less than one 

and a half times the basic rate of pay for all 

hours worked in excess of 40 hours in the 

work week. The requirements of 40 U.S.C. 

3704 are applicable to construction work and 

provide that no laborer or mechanic must 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. 

F. Rights to Inventions Made Under a 

Contract or Agreement. If the Federal award 

meets the definition of ‘‘funding agreement’’ 

under 37 CFR 401.2 (a) and the recipient or 

subrecipient wishes to enter into a contract 

with a small business firm or nonprofit 

organization regarding the substitution of 

parties, assignment or performance of 

experimental, developmental, or research 

work under that ‘‘funding agreement,’’ the 

recipient or subrecipient must comply with 

the requirements of 37 CFR part 401 and any 

implementing regulations issued by the 

awarding agency. 

G. Clean Air Act (42 U.S.C. 7401–7671q.) 

and the Federal Water Pollution Control Act 

(33 U.S.C. 1251–1387), as amended— 

Contracts and subgrants of amounts in excess 

of $150,000 must contain a provision that 

requires the non-Federal award to agree to 

comply with all applicable standards, orders 

or regulations issued pursuant to the Clean 

Air Act (42 U.S.C. 7401–7671q) and the 

Federal Water Pollution Control Act as 

amended (33 U.S.C. 1251–1387). Violations 

must be reported to the Federal awarding 

agency and the Regional Office of the 

Environmental Protection Agency (EPA). 

H. Debarment and Suspension (Executive 

Orders 12549 and 12689)—A contract award 

(see 2 CFR 180.220) must not be made to 

parties listed on the government-wide 

exclusions in the System for Award 

Management (SAM), in accordance with the 

OMB guidelines at 2 CFR part 180 that 

implement Executive Orders 12549 (3 CFR 

part 1986 Comp., p. 189) and 12689 (3 CFR 

part 1989 Comp., p. 235), ‘‘Debarment and 

Suspension.’’ SAM Exclusions contains the 

names of parties debarred, suspended, or 

otherwise excluded by agencies, as well as 

parties declared ineligible under statutory or 

regulatory authority other than Executive 

Order 12549. 

I. Byrd Anti-Lobbying Amendment (31 

U.S.C. 1352)—Contractors that apply or bid 

for an award exceeding $100,000 must 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 must 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 nonFederal award. 

J. See § 75.331 Procurement of recovered 

materials. 

Appendix III to Part 75—Indirect (F&A) 

Costs Identification and Assignment, 

and Rate Determination for Institutions 

of Higher Education 

A. General 

This appendix provides criteria for 

identifying and computing indirect (or 

indirect (F&A)) rates at IHEs (institutions). 

Indirect (F&A) costs are those that are 

incurred for common or joint objectives and 

therefore cannot be identified readily and 

specifically with a particular sponsored 

project, an instructional activity, or any other 

institutional activity. See subsection B.1, for 

a discussion of the components of indirect 

(F&A) costs. 

1. Major Functions of an Institution 

Refers to instruction, organized research, 

other sponsored activities and other 

institutional activities as defined in this 

section: 

a. Instruction means the teaching and 

training activities of an institution. Except for 

research training as provided in subsection b, 

this term includes all teaching and training 

activities, whether they are offered for credits 

toward a degree or certificate or on a noncredit basis, and whether they are offered 

through regular academic departments or 

separate divisions, such as a summer school 

division or an extension division. Also 

considered part of this major function are 

departmental research, and, where agreed to, 

university research. 

(1) Sponsored instruction and training 

means specific instructional or training 

activity established by grant, contract, or 

cooperative agreement. For purposes of the 

cost principles, this activity may be 

considered a major function even though an 

institution’s accounting treatment may 

include it in the instruction function. 

(2) Departmental research means research, 

development and scholarly activities that are 

not organized research and, consequently, are 

not separately budgeted and accounted for. 

Departmental research, for purposes of this 

document, is not considered as a major 

function, but as a part of the instruction 

function of the institution. 

b. Organized research means all research 

and development activities of an institution 

that are separately budgeted and accounted 

for. It includes: 


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(1) Sponsored research means all research 

and development activities that are 

sponsored by Federal and non-Federal 

agencies and organizations. This term 

includes activities involving the training of 

individuals in research techniques 

(commonly called research training) where 

such activities utilize the same facilities as 

other research and development activities 

and where such activities are not included in 

the instruction function. 

(2) University research means all research 

and development activities that are 

separately budgeted and accounted for by the 

institution under an internal application of 

institutional funds. University research, for 

purposes of this document, must be 

combined with sponsored research under the 

function of organized research. 

(3) Only mandatory cost sharing or cost 

sharing specifically committed in the project 

budget must be included in the organized 

research base for computing the indirect 

(F&A) cost rate or reflected in any allocation 

of indirect costs. Salary costs above statutory 

limits are not considered cost sharing. 

c. Other sponsored activities means 

programs and projects financed by Federal 

and non-Federal agencies and organizations 

which involve the performance of work other 

than instruction and organized research. 

Examples of such programs and projects are 

health service projects and community 

service programs. However, when any of 

these activities are undertaken by the 

institution without outside support, they may 

be classified as other institutional activities. 

d. Other institutional activities means all 

activities of an institution except for 

instruction, departmental research, organized 

research, and other sponsored activities, as 

defined in this section; indirect (F&A) cost 

activities identified in this Appendix 

paragraph B, Identification and assignment of 

indirect (F&A) costs; and specialized services 

facilities described in § 75.468 of this part. 

Examples of other institutional activities 

include operation of residence halls, dining 

halls, hospitals and clinics, student unions, 

intercollegiate athletics, bookstores, faculty 

housing, student apartments, guest houses, 

chapels, theaters, public museums, and other 

similar auxiliary enterprises. This definition 

also includes any other categories of 

activities, costs of which are ‘‘unallowable’’ 

to Federal awards, unless otherwise 

indicated in an award. 

2. Criteria for Distribution 

a. Base period. A base period for 

distribution of indirect (F&A) costs is the 

period during which the costs are incurred. 

The base period normally should coincide 

with the fiscal year established by the 

institution, but in any event the base period 

should be so selected as to avoid inequities 

in the distribution of costs. 

b. Need for cost groupings. The overall 

objective of the indirect (F&A) cost allocation 

process is to distribute the indirect (F&A) 

costs described in Section B, Identification 

and assignment of indirect (F&A) costs, to the 

major functions of the institution in 

proportions reasonably consistent with the 

nature and extent of their use of the 

institution’s resources. In order to achieve 

this objective, it may be necessary to provide 

for selective distribution by establishing 

separate groupings of cost within one or more 

of the indirect (F&A) cost categories referred 

to in subsection B.1. In general, the cost 

groupings established within a category 

should constitute, in each case, a pool of 

those items of expense that are considered to 

be of like nature in terms of their relative 

contribution to (or degree of remoteness 

from) the particular cost objectives to which 

distribution is appropriate. Cost groupings 

should be established considering the general 

guides provided in subsection c of this 

section. Each such pool or cost grouping 

should then be distributed individually to 

the related cost objectives, using the 

distribution base or method most appropriate 

in light of the guidelines set forth in 

subsection d of this section. 

c. General considerations on cost 

groupings. The extent to which separate cost 

groupings and selective distribution would 

be appropriate at an institution is a matter of 

judgment to be determined on a case-by-case 

basis. Typical situations which may warrant 

the establishment of two or more separate 

cost groupings (based on account 

classification or analysis) within an indirect 

(F&A) cost category include but are not 

limited to the following: 

(1) If certain items or categories of expense 

relate solely to one of the major functions of 

the institution or to less than all functions, 

such expenses should be set aside as a 

separate cost grouping for direct assignment 

or selective allocation in accordance with the 

guides provided in subsections b and d. 

(2) If any types of expense ordinarily 

treated as general administration or 

departmental administration are charged to 

Federal awards as direct costs, expenses 

applicable to other activities of the 

institution when incurred for the same 

purposes in like circumstances must, through 

separate cost groupings, be excluded from the 

indirect (F&A) costs allocable to those 

Federal awards and included in the direct 

cost of other activities for cost allocation 

purposes. 

(3) If it is determined that certain expenses 

are for the support of a service unit or facility 

whose output is susceptible of measurement 

on a workload or other quantitative basis, 

such expenses should be set aside as a 

separate cost grouping for distribution on 

such basis to organized research, 

instructional, and other activities at the 

institution or within the department. 

(4) If activities provide their own 

purchasing, personnel administration, 

building maintenance or similar service, the 

distribution of general administration and 

general expenses, or operation and 

maintenance expenses to such activities 

should be accomplished through cost 

groupings which include only that portion of 

central indirect (F&A) costs (such as for 

overall management) which are properly 

allocable to such activities. 

(5) If the institution elects to treat fringe 

benefits as indirect (F&A) charges, such costs 

should be set aside as a separate cost 

grouping for selective distribution to related 

cost objectives. 

(6) The number of separate cost groupings 

within a category should be held within 

practical limits, after taking into 

consideration the materiality of the amounts 

involved and the degree of precision 

attainable through less selective methods of 

distribution. 

d. Selection of distribution method. 

(1) Actual conditions must be taken into 

account in selecting the method or base to be 

used in distributing individual cost 

groupings. The essential consideration in 

selecting a base is that it be the one best 

suited for assigning the pool of costs to cost 

objectives in accordance with benefits 

derived; with a traceable cause-and-effect 

relationship; or with logic and reason, where 

neither benefit nor a cause-and-effect 

relationship is determinable. 

(2) If a cost grouping can be identified 

directly with the cost objective benefitted, it 

should be assigned to that cost objective. 

(3) If the expenses in a cost grouping are 

more general in nature, the distribution may 

be based on a cost analysis study which 

results in an equitable distribution of the 

costs. Such cost analysis studies may take 

into consideration weighting factors, 

population, or space occupied if appropriate. 

Cost analysis studies, however, must (a) be 

appropriately documented in sufficient detail 

for subsequent review by the cognizant 

agency for indirect costs, (b) distribute the 

costs to the related cost objectives in 

accordance with the relative benefits derived, 

(c) be statistically sound, (d) be performed 

specifically at the institution at which the 

results are to be used, and (e) be reviewed 

periodically, but not less frequently than rate 

negotiations, updated if necessary, and used 

consistently. Any assumptions made in the 

study must be stated and explained. The use 

of cost analysis studies and periodic changes 

in the method of cost distribution must be 

fully justified. 

(4) If a cost analysis study is not 

performed, or if the study does not result in 

an equitable distribution of the costs, the 

distribution must be made in accordance 

with the appropriate base cited in Section B, 

unless one of the following conditions is met: 

(a) It can be demonstrated that the use of 

a different base would result in a more 

equitable allocation of the costs, or that a 

more readily available base would not 

increase the costs charged to Federal awards, 

or 

(b) The institution qualifies for, and elects 

to use, the simplified method for computing 

indirect (F&A) cost rates described in Section 

D. 

(5) Notwithstanding subsection (3), 

effective July 1, 1998, a cost analysis or base 

other than that in Section B must not be used 

to distribute utility or student services costs. 

Instead, subsections B.4.c may be used in the 

recovery of utility costs. 

e. Order of distribution. 

(1) Indirect (F&A) costs are the broad 

categories of costs discussed in Section B.1. 

(2) Depreciation, interest expenses, 

operation and maintenance expenses, and 

general administrative and general expenses 

should be allocated in that order to the 

remaining indirect (F&A) cost categories as 

well as to the major functions and 

specialized service facilities of the 

institution. Other cost categories may be 


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allocated in the order determined to be most 

appropriate by the institutions. When cross 

allocation of costs is made as provided in 

subsection (3), this order of allocation does 

not apply. 

(3) Normally an indirect (F&A) cost 

category will be considered closed once it 

has been allocated to other cost objectives, 

and costs may not be subsequently allocated 

to it. However, a cross allocation of costs 

between two or more indirect (F&A) cost 

categories may be used if such allocation will 

result in a more equitable allocation of costs. 

If a cross allocation is used, an appropriate 

modification to the composition of the 

indirect (F&A) cost categories described in 

Section B is required. 

B. Identification and Assignment of Indirect 

(F&A) Costs 

1. Definition of Facilities and Administration 

See § 75.414 which provides the basis for 

these indirect cost requirements. 

2. Depreciation 

a. The expenses under this heading are the 

portion of the costs of the institution’s 

buildings, capital improvements to land and 

buildings, and equipment which are 

computed in accordance with § 75.436. 

b. In the absence of the alternatives 

provided for in Section A.2.d, the expenses 

included in this category must be allocated 

in the following manner: 

(1) Depreciation on buildings used 

exclusively in the conduct of a single 

function, and on capital improvements and 

equipment used in such buildings, must be 

assigned to that function. 

(2) Depreciation on buildings used for 

more than one function, and on capital 

improvements and equipment used in such 

buildings, must be allocated to the individual 

functions performed in each building on the 

basis of usable square feet of space, excluding 

common areas such as hallways, stairwells, 

and rest rooms. 

(3) Depreciation on buildings, capital 

improvements and equipment related to 

space (e.g., individual rooms, laboratories) 

used jointly by more than one function (as 

determined by the users of the space) must 

be treated as follows. The cost of each jointly 

used unit of space must be allocated to 

benefitting functions on the basis of: 

(a) The employee full-time equivalents 

(FTEs) or salaries and wages of those 

individual functions benefitting from the use 

of that space; or 

(b) Institution-wide employee FTEs or 

salaries and wages applicable to the 

benefitting major functions (see Section A.1) 

of the institution. 

(4) Depreciation on certain capital 

improvements to land, such as paved parking 

areas, fences, sidewalks, and the like, not 

included in the cost of buildings, must be 

allocated to user categories of students and 

employees on a full-time equivalent basis. 

The amount allocated to the student category 

must be assigned to the instruction function 

of the institution. The amount allocated to 

the employee category must be further 

allocated to the major functions of the 

institution in proportion to the salaries and 

wages of all employees applicable to those 

functions. 

3. Interest 

Interest on debt associated with certain 

buildings, equipment and capital 

improvements, as defined in § 75.449, must 

be classified as an expenditure under the 

category Facilities. These costs must be 

allocated in the same manner as the 

depreciation on the buildings, equipment 

and capital improvements to which the 

interest relates. 

4. Operation and Maintenance Expenses 

a. The expenses under this heading are 

those that have been incurred for the 

administration, supervision, operation, 

maintenance, preservation, and protection of 

the institution’s physical plant. They include 

expenses normally incurred for such items as 

janitorial and utility services; repairs and 

ordinary or normal alterations of buildings, 

furniture and equipment; care of grounds; 

maintenance and operation of buildings and 

other plant facilities; security; earthquake 

and disaster preparedness; environmental 

safety; hazardous waste disposal; property, 

liability and all other insurance relating to 

property; space and capital leasing; facility 

planning and management; and central 

receiving. The operation and maintenance 

expense category should also include its 

allocable share of fringe benefit costs, 

depreciation, and interest costs. 

b. In the absence of the alternatives 

provided for in Section A.2.d, the expenses 

included in this category must be allocated 

in the same manner as described in 

subsection 2.b for depreciation. 

c. A utility cost adjustment of up to 1.3 

percentage points may be included in the 

negotiated indirect cost rate of the IHE for 

organized research, per the computation 

alternatives in paragraphs (c)(1) and (2) of 

this section: 

(1) Where space is devoted to a single 

function and metering allows unambiguous 

measurement of usage related to that space, 

costs must be assigned to the function 

located in that space. 

(2) Where space is allocated to different 

functions and metering does not allow 

unambiguous measurement of usage by 

function, costs must be allocated as follows: 

(i) Utilities costs should be apportioned to 

functions in the same manner as 

depreciation, based on the calculated 

difference between the site or building actual 

square footage for monitored research 

laboratory space (site, building, floor, or 

room), and a separate calculation prepared by 

the IHE using the ‘‘effective square footage’’ 

described in subsection (c)(2)(ii) of this 

section. 

(ii) ‘‘Effective square footage’’ allocated to 

research laboratory space must be calculated 

as the actual square footage times the relative 

energy utilization index (REUI) posted on the 

OMB Web site at the time of a rate 

determination. 

A. This index is the ratio of a laboratory 

energy use index (lab EUI) to the 

corresponding index for overall average 

college or university space (college EUI). 

B. In July 2012, values for these two 

indices (taken respectively from the 

Lawrence Berkeley Laboratory ‘‘Labs for the 

21st Century’’ benchmarking tool http://

labs21benchmarking.lbl.gov/

CompareData.php and the US Department of 

Energy ‘‘Buildings Energy Databook’’ and 

http://buildingsdatabook.eren.doe.gov/

CBECS.aspx) were 310 kBtu/sq ft-yr. and 155 

kBtu/sq ft-yr., so that the adjustment ratio is 

2.0 by this methodology. To retain currency, 

OMB will adjust the EUI numbers from time 

to time (no more often than annually nor less 

often than every 5 years), using reliable and 

publicly disclosed data. Current values of 

both the EUIs and the REUI will be posted 

on the OMB Web site. 

5. General Administration and General 

Expenses 

a. The expenses under this heading are 

those that have been incurred for the general 

executive and administrative offices of 

educational institutions and other expenses 

of a general character which do not relate 

solely to any major function of the 

institution; i.e., solely to (1) instruction, (2) 

organized research, (3) other sponsored 

activities, or (4) other institutional activities. 

The general administration and general 

expense category should also include its 

allocable share of fringe benefit costs, 

operation and maintenance expense, 

depreciation, and interest costs. Examples of 

general administration and general expenses 

include: Those expenses incurred by 

administrative offices that serve the entire 

university system of which the institution is 

a part; central offices of the institution such 

as the President’s or Chancellor’s office, the 

offices for institution-wide financial 

management, business services, budget and 

planning, personnel management, and safety 

and risk management; the office of the 

General Counsel; and the operations of the 

central administrative management 

information systems. General administration 

and general expenses must not include 

expenses incurred within non-universitywide deans’ offices, academic departments, 

organized research units, or similar 

organizational units. (See subsection 6.) 

b. In the absence of the alternatives 

provided for in Section A.2.d, the expenses 

included in this category must be grouped 

first according to common major functions of 

the institution to which they render services 

or provide benefits. The aggregate expenses 

of each group must then be allocated to 

serviced or benefitted functions on the 

modified total cost basis. Modified total costs 

consist of the same elements as those in 

Section C.2. When an activity included in 

this indirect (F&A) cost category provides a 

service or product to another institution or 

organization, an appropriate adjustment must 

be made to either the expenses or the basis 

of allocation or both, to assure a proper 

allocation of costs. 

6. Departmental Administration Expenses 

a. The expenses under this heading are 

those that have been incurred for 

administrative and supporting services that 

benefit common or joint departmental 

activities or objectives in academic deans’ 

offices, academic departments and divisions, 

and organized research units. Organized 

research units include such units as 

institutes, study centers, and research 

centers. Departmental administration 


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expenses are subject to the following 

limitations. 

(1) Academic deans’ offices. Salaries and 

operating expenses are limited to those 

attributable to administrative functions. 

(2) Academic departments: 

(a) Salaries and fringe benefits attributable 

to the administrative work (including bid and 

proposal preparation) of faculty (including 

department heads) and other professional 

personnel conducting research and/or 

instruction, must be allowed at a rate of 3.6 

percent of modified total direct costs. This 

category does not include professional 

business or professional administrative 

officers. This allowance must be added to the 

computation of the indirect (F&A) cost rate 

for major functions in Section C; the 

expenses covered by the allowance must be 

excluded from the departmental 

administration cost pool. No documentation 

is required to support this allowance. 

(b) Other administrative and supporting 

expenses incurred within academic 

departments are allowable provided they are 

treated consistently in like circumstances. 

This would include expenses such as the 

salaries of secretarial and clerical staffs, the 

salaries of administrative officers and 

assistants, travel, office supplies, stockrooms, 

and the like. 

(3) Other fringe benefit costs applicable to 

the salaries and wages included in 

subsections (1) and (2) are allowable, as well 

as an appropriate share of general 

administration and general expenses, 

operation and maintenance expenses, and 

depreciation. 

(4) Federal agencies may authorize 

reimbursement of additional costs for 

department heads and faculty only in 

exceptional cases where an institution can 

demonstrate undue hardship or detriment to 

project performance. 

b. The following guidelines apply to the 

determination of departmental administrative 

costs as direct or indirect (F&A) costs. 

(1) In developing the departmental 

administration cost pool, special care should 

be exercised to ensure that costs incurred for 

the same purpose in like circumstances are 

treated consistently as either direct or 

indirect (F&A) costs. For example, salaries of 

technical staff, laboratory supplies (e.g., 

chemicals), telephone toll charges, animals, 

animal care costs, computer costs, travel 

costs, and specialized shop costs must be 

treated as direct costs wherever identifiable 

to a particular cost objective. Direct charging 

of these costs may be accomplished through 

specific identification of individual costs to 

benefitting cost objectives, or through 

recharge centers or specialized service 

facilities, as appropriate under the 

circumstances. See §§ 75.413(c) and 75.468. 

(2) Items such as office supplies, postage, 

local telephone costs, and memberships must 

normally be treated as indirect (F&A) costs. 

c. In the absence of the alternatives 

provided for in Section A.2.d, the expenses 

included in this category must be allocated 

as follows: 

(1) The administrative expenses of the 

dean’s office of each college and school must 

be allocated to the academic departments 

within that college or school on the modified 

total cost basis. 

(2) The administrative expenses of each 

academic department, and the department’s 

share of the expenses allocated in subsection 

(1) must be allocated to the appropriate 

functions of the department on the modified 

total cost basis. 

7. Sponsored Projects Administration 

a. The expenses under this heading are 

limited to those incurred by a separate 

organization(s) established primarily to 

administer sponsored projects, including 

such functions as grant and contract 

administration (Federal and non-Federal), 

special security, purchasing, personnel, 

administration, and editing and publishing of 

research and other reports. They include the 

salaries and expenses of the head of such 

organization, assistants, and immediate staff, 

together with the salaries and expenses of 

personnel engaged in supporting activities 

maintained by the organization, such as stock 

rooms, print shops, and the like. This 

category also includes an allocable share of 

fringe benefit costs, general administration 

and general expenses, operation and 

maintenance expenses, and depreciation. 

Appropriate adjustments will be made for 

services provided to other functions or 

organizations. 

b. In the absence of the alternatives 

provided for in Section A.2.d, the expenses 

included in this category must be allocated 

to the major functions of the institution 

under which the sponsored projects are 

conducted on the basis of the modified total 

cost of sponsored projects. 

c. An appropriate adjustment must be 

made to eliminate any duplicate charges to 

Federal awards when this category includes 

similar or identical activities as those 

included in the general administration and 

general expense category or other indirect 

(F&A) cost items, such as accounting, 

procurement, or personnel administration. 

8. Library Expenses 

a. The expenses under this heading are 

those that have been incurred for the 

operation of the library, including the cost of 

books and library materials purchased for the 

library, less any items of library income that 

qualify as applicable credits under § 75.406. 

The library expense category should also 

include the fringe benefits applicable to the 

salaries and wages included therein, an 

appropriate share of general administration 

and general expense, operation and 

maintenance expense, and depreciation. 

Costs incurred in the purchases of rare books 

(museum-type books) with no value to 

Federal awards should not be allocated to 

them. 

b. In the absence of the alternatives 

provided for in Section A.2.d, the expenses 

included in this category must be allocated 

first on the basis of primary categories of 

users, including students, professional 

employees, and other users. 

(1) The student category must consist of 

full-time equivalent students enrolled at the 

institution, regardless of whether they earn 

credits toward a degree or certificate. 

(2) The professional employee category 

must consist of all faculty members and other 

professional employees of the institution, on 

a full-time equivalent basis. This category 

may also include post-doctorate fellows and 

graduate students. 

(3) The other users category must consist 

of a reasonable factor as determined by 

institutional records to account for all other 

users of library facilities. 

c. Amount allocated in paragraph b of this 

section must be assigned further as follows: 

(1) The amount in the student category 

must be assigned to the instruction function 

of the institution. 

(2) The amount in the professional 

employee category must be assigned to the 

major functions of the institution in 

proportion to the salaries and wages of all 

faculty members and other professional 

employees applicable to those functions. 

(3) The amount in the other users category 

must be assigned to the other institutional 

activities function of the institution. 

9. Student Administration and Services 

a. The expenses under this heading are 

those that have been incurred for the 

administration of student affairs and for 

services to students, including expenses of 

such activities as deans of students, 

admissions, registrar, counseling and 

placement services, student advisers, student 

health and infirmary services, catalogs, and 

commencements and convocations. The 

salaries of members of the academic staff 

whose responsibilities to the institution 

require administrative work that benefits 

sponsored projects may also be included to 

the extent that the portion charged to student 

administration is determined in accordance 

with Subpart E of this part. This expense 

category also includes the fringe benefit costs 

applicable to the salaries and wages included 

therein, an appropriate share of general 

administration and general expenses, 

operation and maintenance, interest expense, 

and depreciation. 

b. In the absence of the alternatives 

provided for in Section A.2.d, the expenses 

in this category must be allocated to the 

instruction function, and subsequently to 

Federal awards in that function. 

10. Offset for Indirect (F&A) Expenses 

Otherwise Provided for by the Federal 

Government 

a. The items to be accumulated under this 

heading are the reimbursements and other 

payments from the Federal Government 

which are made to the institution to support 

solely, specifically, and directly, in whole or 

in part, any of the administrative or service 

activities described in subsections 2 through 

9. 

b. The items in this group must be treated 

as a credit to the affected individual indirect 

(F&A) cost category before that category is 

allocated to benefitting functions. 

C. Determination and Application of Indirect 

(F&A) Cost Rate or Rates 

1. Indirect (F&A) Cost Pools 

a. (1) Subject to subsection b, the separate 

categories of indirect (F&A) costs allocated to 

each major function of the institution as 

prescribed in Section B of this paragraph 

C.1-, must be aggregated and treated as a 

common pool for that function. The amount 

in each pool must be divided by the 

distribution base described in subsection 2 to 


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arrive at a single indirect (F&A) cost rate for 

each function. 

(2) The rate for each function is used to 

distribute indirect (F&A) costs to individual 

Federal awards of that function. Since a 

common pool is established for each major 

function of the institution, a separate indirect 

(F&A) cost rate would be established for each 

of the major functions described in Section 

A.1 under which Federal awards are carried 

out. 

(3) Each institution’s indirect (F&A) cost 

rate process must be appropriately designed 

to ensure that Federal sponsors do not in any 

way subsidize the indirect (F&A) costs of 

other sponsors, specifically activities 

sponsored by industry and foreign 

governments. Accordingly, each allocation 

method used to identify and allocate the 

indirect (F&A) cost pools, as described in 

Sections A.2, and B.2 through B.9, must 

contain the full amount of the institution’s 

modified total costs or other appropriate 

units of measurement used to make the 

computations. In addition, the final rate 

distribution base (as defined in subsection 2) 

for each major function (organized research, 

instruction, etc., as described in Section A.1) 

must contain all the programs or activities 

which utilize the indirect (F&A) costs 

allocated to that major function. At the time 

an indirect (F&A) cost proposal is submitted 

to a cognizant agency for indirect costs, each 

institution must describe the process it uses 

to ensure that Federal funds are not used to 

subsidize industry and foreign government 

funded programs. 

b. In some instances a single rate basis for 

use across the board on all work within a 

major function at an institution may not be 

appropriate. A single rate for research, for 

example, might not take into account those 

different environmental factors and other 

conditions which may affect substantially the 

indirect (F&A) costs applicable to a particular 

segment of research at the institution. A 

particular segment of research may be that 

performed under a single sponsored 

agreement or it may consist of research under 

a group of Federal awards performed in a 

common environment. The environmental 

factors are not limited to the physical 

location of the work. Other important factors 

are the level of the administrative support 

required, the nature of the facilities or other 

resources employed, the scientific disciplines 

or technical skills involved, the 

organizational arrangements used, or any 

combination thereof. If a particular segment 

of a sponsored agreement is performed 

within an environment which appears to 

generate a significantly different level of 

indirect (F&A) costs, provisions should be 

made for a separate indirect (F&A) cost pool 

applicable to such work. The separate 

indirect (F&A) cost pool should be developed 

during the regular course of the rate 

determination process and the separate 

indirect (F&A) cost rate resulting therefrom 

should be utilized; provided it is determined 

that (1) such indirect (F&A) cost rate differs 

significantly from that which would have 

been obtained under subsection a, and (2) the 

volume of work to which such rate would 

apply is material in relation to other Federal 

awards at the institution. 

2. The Distribution Basis 

Indirect (F&A) costs must be distributed to 

applicable Federal awards and other 

benefitting activities within each major 

function (see section A.1, Major functions of 

an institution) on the basis of modified total 

direct costs (MTDC), consisting of all salaries 

and wages, fringe benefits, materials and 

supplies, services, travel, and up to the first 

$25,000 of each subaward (regardless of the 

period covered by the subaward). MTDC is 

defined in § 75.2. For this purpose, an 

indirect (F&A) cost rate should be 

determined for each of the separate indirect 

(F&A) cost pools developed pursuant to 

subsection 1. The rate in each case should be 

stated as the percentage which the amount of 

the particular indirect (F&A) cost pool is of 

the modified total direct costs identified with 

such pool. 

3. Negotiated Lump Sum for Indirect (F&A) 

Costs 

A negotiated fixed amount in lieu of 

indirect (F&A) costs may be appropriate for 

self-contained, off-campus, or primarily 

subcontracted activities where the benefits 

derived from an institution’s indirect (F&A) 

services cannot be readily determined. Such 

negotiated indirect (F&A) costs will be 

treated as an offset before allocation to 

instruction, organized research, other 

sponsored activities, and other institutional 

activities. The base on which such remaining 

expenses are allocated should be 

appropriately adjusted. 

4. Predetermined Rates for Indirect (F&A) 

Costs 

Public Law 87–638 (76 Stat. 437) as 

amended (41 U.S.C. 4708) authorizes the use 

of predetermined rates in determining the 

‘‘indirect costs’’ (indirect (F&A) costs) 

applicable under research agreements with 

educational institutions. The stated 

objectives of the law are to simplify the 

administration of cost-type research and 

development contracts (including grants) 

with educational institutions, to facilitate the 

preparation of their budgets, and to permit 

more expeditious closeout of such contracts 

when the work is completed. In view of the 

potential advantages offered by this 

procedure, negotiation of predetermined 

rates for indirect (F&A) costs for a period of 

two to four years should be the norm in those 

situations where the cost experience and 

other pertinent facts available are deemed 

sufficient to enable the parties involved to 

reach an informed judgment as to the 

probable level of indirect (F&A) costs during 

the ensuing accounting periods. 

5. Negotiated Fixed Rates and Carry-Forward 

Provisions 

When a fixed rate is negotiated in advance 

for a fiscal year (or other time period), the 

over- or under-recovery for that year may be 

included as an adjustment to the indirect 

(F&A) cost for the next rate negotiation. 

When the rate is negotiated before the carryforward adjustment is determined, the carryforward amount may be applied to the next 

subsequent rate negotiation. When such 

adjustments are to be made, each fixed rate 

negotiated in advance for a given period will 

be computed by applying the expected 

indirect (F&A) costs allocable to Federal 

awards for the forecast period plus or minus 

the carry-forward adjustment (over- or underrecovery) from the prior period, to the 

forecast distribution base. Unrecovered 

amounts under lump-sum agreements or 

cost-sharing provisions of prior years must 

not be carried forward for consideration in 

the new rate negotiation. There must, 

however, be an advance understanding in 

each case between the institution and the 

cognizant agency for indirect costs as to 

whether these differences will be considered 

in the rate negotiation rather than making the 

determination after the differences are 

known. Further, institutions electing to use 

this carry-forward provision may not 

subsequently change without prior approval 

of the cognizant agency for indirect costs. In 

the event that an institution returns to a postdetermined rate, any over- or under-recovery 

during the period in which negotiated fixed 

rates and carry-forward provisions were 

followed will be included in the subsequent 

post-determined rates. Where multiple rates 

are used, the same procedure will be 

applicable for determining each rate. 

6. Provisional and Final Rates for Indirect 

(F&A) Costs 

Where the cognizant agency for indirect 

costs determines that cost experience and 

other pertinent facts do not justify the use of 

predetermined rates, or a fixed rate with a 

carry-forward, or if the parties cannot agree 

on an equitable rate, a provisional rate must 

be established. To prevent substantial 

overpayment or underpayment, the 

provisional rate may be adjusted by the 

cognizant agency for indirect costs during the 

institution’s fiscal year. Predetermined or 

fixed rates may replace provisional rates at 

any time prior to the close of the institution’s 

fiscal year. If a provisional rate is not 

replaced by a predetermined or fixed rate 

prior to the end of the institution’s fiscal 

year, a final rate will be established and 

upward or downward adjustments will be 

made based on the actual allowable costs 

incurred for the period involved. 

7. Fixed Rates for the Life of the Sponsored 

Agreement 

a. Except as provided in paragraph (c)(1) of 

§ 75.414 Federal agencies must use the 

negotiated rates for indirect (F&A) costs in 

effect at the time of the initial award 

throughout the life of the Federal award. 

Award levels for Federal awards may not be 

adjusted in future years as a result of changes 

in negotiated rates. ‘‘Negotiated rates’’ per the 

rate agreement include final, fixed, and 

predetermined rates and exclude provisional 

rates. ‘‘Life’’ for the purpose of this 

subsection means each competitive segment 

of a project. A competitive segment is a 

period of years approved by the Federal 

awarding agency at the time of the Federal 

award. If negotiated rate agreements do not 

extend through the life of the Federal award 

at the time of the initial award, then the 

negotiated rate for the last year of the Federal 

award must be extended through the end of 

the life of the Federal award. 

b. Except as provided in § 75.414, when an 

educational institution does not have a 

negotiated rate with the Federal Government 


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at the time of an award (because the 

educational institution is a new recipient or 

the parties cannot reach agreement on a rate), 

the provisional rate used at the time of the 

award must be adjusted once a rate is 

negotiated and approved by the cognizant 

agency for indirect costs. 

8. Limitation on Reimbursement of 

Administrative Costs 

a. Notwithstanding the provisions of 

subsection C.1.a, the administrative costs 

charged to Federal awards awarded or 

amended (including continuation and 

renewal awards) with effective dates 

beginning on or after the start of the 

institution’s first fiscal year which begins on 

or after October 1, 1991, must be limited to 

26% of modified total direct costs (as defined 

in subsection 2) for the total of General 

Administration and General Expenses, 

Departmental Administration, Sponsored 

Projects Administration, and Student 

Administration and Services (including their 

allocable share of depreciation, interest costs, 

operation and maintenance expenses, and 

fringe benefits costs, as provided by Section 

B, Identification and assignment of indirect 

(F&A) costs, and all other types of 

expenditures not listed specifically under 

one of the subcategories of facilities in 

Section B. 

b. Institutions should not change their 

accounting or cost allocation methods if the 

effect is to change the charging of a particular 

type of cost from F&A to direct, or to 

reclassify costs, or increase allocations from 

the administrative pools identified in 

paragraph B.1 of this Appendix to the other 

F&A cost pools or fringe benefits. Cognizant 

agencies for indirect cost are authorized to 

allow changes where an institution’s 

charging practices are at variance with 

acceptable practices followed by a substantial 

majority of other institutions. 

9. Alternative Method for Administrative 

Costs 

a. Notwithstanding the provisions of 

subsection C.1.a, an institution may elect to 

claim a fixed allowance for the 

‘‘Administration’’ portion of indirect (F&A) 

costs. The allowance could be either 24% of 

modified total direct costs or a percentage 

equal to 95% of the most recently negotiated 

fixed or predetermined rate for the cost pools 

included under ‘‘Administration’’ as defined 

in Section B.1, whichever is less. Under this 

alternative, no cost proposal need be 

prepared for the ‘‘Administration’’ portion of 

the indirect (F&A) cost rate nor is further 

identification or documentation of these 

costs required (see subsection c). Where a 

negotiated indirect (F&A) cost agreement 

includes this alternative, an institution must 

make no further charges for the expenditure 

categories described in Section B.5, Section 

B.6, Section B.7, and Section B.9. 

b. In negotiations of rates for subsequent 

periods, an institution that has elected the 

option of subsection a may continue to 

exercise it at the same rate without further 

identification or documentation of costs. 

c. If an institution elects to accept a 

threshold rate as defined in subsection a of 

this section, it is not required to perform a 

detailed analysis of its administrative costs. 

However, in order to compute the facilities 

components of its indirect (F&A) cost rate, 

the institution must reconcile its indirect 

(F&A) cost proposal to its financial 

statements and make appropriate 

adjustments and reclassifications to identify 

the costs of each major function as defined 

in Section A.1, as well as to identify and 

allocate the facilities components. 

Administrative costs that are not identified as 

such by the institution’s accounting system 

(such as those incurred in academic 

departments) will be classified as 

instructional costs for purposes of 

reconciling indirect (F&A) cost proposals to 

financial statements and allocating facilities 

costs. 

10. Individual Rate Components 

In order to provide mutually agreed-upon 

information for management purposes, each 

indirect (F&A) cost rate negotiation or 

determination must include development of 

a rate for each indirect (F&A) cost pool as 

well as the overall indirect (F&A) cost rate. 

11. Negotiation and Approval of Indirect 

(F&A) Rate 

a. Cognizant agency for indirect costs is 

defined in § 75.2. 

(1) Cost negotiation cognizance is assigned 

to the Department of Health and Human 

Services (HHS) or the Department of 

Defense’s Office of Naval Research (DOD), 

normally depending on which of the two 

agencies (HHS or DOD) provides more funds 

to the educational institution for the most 

recent three years. Information on funding 

must be derived from relevant data gathered 

by the National Science Foundation. In cases 

where neither HHS nor DOD provides 

Federal funding to an educational institution, 

the cognizant agency for indirect costs 

assignment must default to HHS. 

Notwithstanding the method for cognizance 

determination described in this section, other 

arrangements for cognizance of a particular 

educational institution may also be based in 

part on the types of research performed at the 

educational institution and must be decided 

based on mutual agreement between HHS 

and DOD. Where a non-Federal entity only 

receives funds as a subrecipient, see the 

requirements of § 75.352. 

(2) After cognizance is established, it must 

continue for a five-year period. 

b. Acceptance of rates. See § 75.414. 

c. Correcting deficiencies. The cognizant 

agency for indirect costs must negotiate 

changes needed to correct systems 

deficiencies relating to accountability for 

Federal awards. Cognizant agencies for 

indirect costs must address the concerns of 

other affected agencies, as appropriate, and 

must negotiate special rates for Federal 

agencies that are required to limit recovery of 

indirect costs by statute. 

d. Resolving questioned costs. The 

cognizant agency for indirect costs must 

conduct any necessary negotiations with an 

educational institution regarding amounts 

questioned by audit that are due the Federal 

Government related to costs covered by a 

negotiated agreement. 

e. Reimbursement. Reimbursement to 

cognizant agencies for indirect costs for work 

performed under this Part may be made by 

reimbursement billing under the Economy 

Act, 31 U.S.C. 1535. 

f. Procedure for establishing facilities and 

administrative rates must be established by 

one of the following methods: 

(1) Formal negotiation. The cognizant 

agency for indirect costs is responsible for 

negotiating and approving rates for an 

educational institution on behalf of all 

Federal agencies. Federal awarding agencies 

that do not have cognizance for indirect costs 

must notify the cognizant agency for indirect 

costs of specific concerns (i.e., a need to 

establish special cost rates) which could 

affect the negotiation process. The cognizant 

agency for indirect costs must address the 

concerns of all interested agencies, as 

appropriate. A pre-negotiation conference 

may be scheduled among all interested 

agencies, if necessary. The cognizant agency 

for indirect costs must then arrange a 

negotiation conference with the educational 

institution. 

(2) Other than formal negotiation. The 

cognizant agency for indirect costs and 

educational institution may reach an 

agreement on rates without a formal 

negotiation conference; for example, through 

correspondence or use of the simplified 

method described in this section D of this 

Appendix. 

g. Formalizing determinations and 

agreements. The cognizant agency for 

indirect costs must formalize all 

determinations or agreements reached with 

an educational institution and provide copies 

to other agencies having an interest. 

Determinations should include a description 

of any adjustments, the actual amount, both 

dollar and percentage adjusted, and the 

reason for making adjustments. 

h. Disputes and disagreements. Where the 

cognizant agency for indirect costs is unable 

to reach agreement with an educational 

institution with regard to rates or audit 

resolution, the appeal system of the 

cognizant agency for indirect costs must be 

followed for resolution of the disagreement. 

12. Standard Format for Submission 

For facilities and administrative (indirect 

(F&A)) rate proposals, educational 

institutions must use the standard format, 

shown in section E of this appendix, to 

submit their indirect (F&A) rate proposal to 

the cognizant agency for indirect costs. The 

cognizant agency for indirect costs may, on 

an institution-by-institution basis, grant 

exceptions from all or portions of Part II of 

the standard format requirement. This 

requirement does not apply to educational 

institutions that use the simplified method 

for calculating indirect (F&A) rates, as 

described in Section D of this Appendix. 

As provided in section C.10, each F&A cost 

rate negotiation or determination must 

include development of a rate for each F&A 

cost pool as well as the overall F&A rate. 

D. Simplified Method for Small Institutions 

1. General 

a. Where the total direct cost of work 

covered by this part 75 at an institution does 

not exceed $10 million in a fiscal year, the 

simplified procedure described in 

subsections 2 or 3 may be used in 


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determining allowable indirect (F&A) costs. 

Under this simplified procedure, the 

institution’s most recent annual financial 

report and immediately available supporting 

information must be utilized as a basis for 

determining the indirect (F&A) cost rate 

applicable to all Federal awards. The 

institution may use either the salaries and 

wages (see subsection 2) or modified total 

direct costs (see subsection 3) as the 

distribution basis. 

b. The simplified procedure should not be 

used where it produces results which appear 

inequitable to the Federal Government or the 

institution. In any such case, indirect (F&A) 

costs should be determined through use of 

the regular procedure. 

2. Simplified Procedure—Salaries and Wages 

Base 

a. Establish the total amount of salaries and 

wages paid to all employees of the 

institution. 

b. Establish an indirect (F&A) cost pool 

consisting of the expenditures (exclusive of 

capital items and other costs specifically 

identified as unallowable) which customarily 

are classified under the following titles or 

their equivalents: 

(1) General administration and general 

expenses (exclusive of costs of student 

administration and services, student 

activities, student aid, and scholarships). 

(2) Operation and maintenance of physical 

plant and depreciation (after appropriate 

adjustment for costs applicable to other 

institutional activities). 

(3) Library. 

(4) Department administration expenses, 

which will be computed as 20 percent of the 

salaries and expenses of deans and heads of 

departments. 

In those cases where expenditures 

classified under subsection (1) have 

previously been allocated to other 

institutional activities, they may be included 

in the indirect (F&A) cost pool. The total 

amount of salaries and wages included in the 

indirect (F&A) cost pool must be separately 

identified. 

c. Establish a salary and wage distribution 

base, determined by deducting from the total 

of salaries and wages as established in 

subsection a. from the amount of salaries and 

wages included under subsection b. 

d. Establish the indirect (F&A) cost rate, 

determined by dividing the amount in the 

indirect (F&A) cost pool, subsection b, by the 

amount of the distribution base, subsection c. 

e. Apply the indirect (F&A) cost rate to 

direct salaries and wages for individual 

agreements to determine the amount of 

indirect (F&A) costs allocable to such 

agreements. 

3. Simplified Procedure—Modified Total 

Direct Cost Base 

a. Establish the total costs incurred by the 

institution for the base period. 

b. Establish an indirect (F&A) cost pool 

consisting of the expenditures (exclusive of 

capital items and other costs specifically 

identified as unallowable) which customarily 

are classified under the following titles or 

their equivalents: 

(1) General administration and general 

expenses (exclusive of costs of student 

administration and services, student 

activities, student aid, and scholarships). 

(2) Operation and maintenance of physical 

plant and depreciation (after appropriate 

adjustment for costs applicable to other 

institutional activities). 

(3) Library. 

(4) Department administration expenses, 

which will be computed as 20 percent of the 

salaries and expenses of deans and heads of 

departments. In those cases where 

expenditures classified under subsection (1) 

have previously been allocated to other 

institutional activities, they may be included 

in the indirect (F&A) cost pool. The modified 

total direct costs amount included in the 

indirect (F&A) cost pool must be separately 

identified. 

c. Establish a modified total direct cost 

distribution base, as defined in Section C.2, 

that consists of all institution’s direct 

functions. 

d. Establish the indirect (F&A) cost rate, 

determined by dividing the amount in the 

indirect (F&A) cost pool, subsection b, by the 

amount of the distribution base, subsection c. 

e. Apply the indirect (F&A) cost rate to the 

modified total direct costs for individual 

agreements to determine the amount of 

indirect (F&A) costs allocable to such 

agreements. 

E. Documentation Requirements 

The standard format for documentation 

requirements for indirect (indirect (F&A)) 

rate proposals for claiming costs under the 

regular method is available on the OMB Web 

site here: http://www.whitehouse.gov/omb/

grants_forms. 

F. Certification 

1. Certification of Charges 

To assure that expenditures for Federal 

awards are proper and in accordance with 

the agreement documents and approved 

project budgets, the annual and/or final fiscal 

reports or vouchers requesting payment 

under the agreements will include a 

certification, signed by an authorized official 

of the university, which reads ‘‘By signing 

this report, I certify to the best of my 

knowledge and belief that the report is true, 

complete, and accurate, and the 

expenditures, disbursements and cash 

receipts are for the purposes and intent set 

forth in the award documents. I am aware 

that any false, fictitious, or fraudulent 

information, or the omission of any material 

fact, may subject me to criminal, civil or 

administrative penalties for fraud, false 

statements, false claims or otherwise. (U.S. 

Code, Title 18, Section 1001 and Title 31, 

Sections 3729–3733 and 3801–3812)’’. 

2. Certification of Indirect (F&A) Costs 

a. Policy. Cognizant agencies must not 

accept a proposed indirect cost rate unless 

such costs have been certified by the 

educational institution using the Certificate 

of indirect (F&A) Costs set forth in subsection 

F.2.c 

b. The certificate must be signed on behalf 

of the institution by the chief financial officer 

or an individual designated by an individual 

at a level no lower than vice president or 

chief financial officer. 

An indirect (F&A) cost rate is not binding 

upon the Federal Government if the most 

recent required proposal from the institution 

has not been certified. Where it is necessary 

to establish indirect (F&A) cost rates, and the 

institution has not submitted a certified 

proposal for establishing such rates in 

accordance with the requirements of this 

section, the Federal Government must 

unilaterally establish such rates. Such rates 

may be based upon audited historical data or 

such other data that have been furnished to 

the cognizant agency for indirect costs and 

for which it can be demonstrated that all 

unallowable costs have been excluded. When 

indirect (F&A) cost rates are unilaterally 

established by the Federal Government 

because of failure of the institution to submit 

a certified proposal for establishing such 

rates in accordance with this section, the 

rates established will be set at a level low 

enough to ensure that potentially 

unallowable costs will not be reimbursed. 

c. Certificate. The certificate required by 

this section must be in the following form: 

Certificate of Indirect (F&A) Costs 

This is to certify that to the best of my 

knowledge and belief: 

(1) I have reviewed the indirect (F&A) cost 

proposal submitted herewith; 

(2) All costs included in this proposal 

[identify date] to establish billing or final 

indirect (F&A) costs rate for [identify period 

covered by rate] are allowable in accordance 

with the requirements of the Federal 

agreement(s) to which they apply and with 

the cost principles applicable to those 

agreements. 

(3) This proposal does not include any 

costs which are unallowable under 

applicable cost principles such as (without 

limitation): public relations costs, 

contributions and donations, entertainment 

costs, fines and penalties, lobbying costs, and 

defense of fraud proceedings; and 

(4) All costs included in this proposal are 

properly allocable to Federal agreements on 

the basis of a beneficial or causal relationship 

between the expenses incurred and the 

agreements to which they are allocated in 

accordance with applicable requirements. 

I declare that the foregoing is true and 

correct. 

Institution of Higher Education: 

Signature: 

Name of Official: 

Title: 

Date of Execution: 

Appendix IV to Part 75—Indirect (F&A) 

Costs Identification and Assignment, 

and Rate Determination for Nonprofit 

Organizations 

A. General 

1. Indirect costs are those that have been 

incurred for common or joint objectives and 

cannot be readily identified with a particular 

final cost objective. Direct cost of minor 

amounts may be treated as indirect costs 

under the conditions described in 

§ 75.413(d). After direct costs have been 

determined and assigned directly to awards 

or other work as appropriate, indirect costs 

are those remaining to be allocated to 

benefitting cost objectives. A cost may not be 


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allocated to a Federal award as an indirect 

cost if any other cost incurred for the same 

purpose, in like circumstances, has been 

assigned to a Federal award as a direct cost. 

‘‘Major nonprofit organizations’’ are 

defined in § 75.414. See indirect cost rate 

reporting requirements in sections B.2.e and 

B.3.g of this Appendix. 

B. Allocation of Indirect Costs and 

Determination of Indirect Cost Rates 

1. General 

a. If a nonprofit organization has only one 

major function, or where all its major 

functions benefit from its indirect costs to 

approximately the same degree, the 

allocation of indirect costs and the 

computation of an indirect cost rate may be 

accomplished through simplified allocation 

procedures, as described in section B.2 of 

this Appendix. 

b. If an organization has several major 

functions which benefit from its indirect 

costs in varying degrees, allocation of 

indirect costs may require the accumulation 

of such costs into separate cost groupings 

which then are allocated individually to 

benefitting functions by means of a base 

which best measures the relative degree of 

benefit. The indirect costs allocated to each 

function are then distributed to individual 

Federal awards and other activities included 

in that function by means of an indirect cost 

rate(s). 

c. The determination of what constitutes an 

organization’s major functions will depend 

on its purpose in being; the types of services 

it renders to the public, its clients, and its 

members; and the amount of effort it devotes 

to such activities as fundraising, public 

information and membership activities. 

d. Specific methods for allocating indirect 

costs and computing indirect cost rates along 

with the conditions under which each 

method should be used are described in 

section B.2 through B.5 of this Appendix. 

e. The base period for the allocation of 

indirect costs is the period in which such 

costs are incurred and accumulated for 

allocation to work performed in that period. 

The base period normally should coincide 

with the organization’s fiscal year but, in any 

event, must be so selected as to avoid 

inequities in the allocation of the costs. 

2. Simplified Allocation Method 

a. Where an organization’s major functions 

benefit from its indirect costs to 

approximately the same degree, the 

allocation of indirect costs may be 

accomplished by (i) separating the 

organization’s total costs for the base period 

as either direct or indirect, and (ii) dividing 

the total allowable indirect costs (net of 

applicable credits) by an equitable 

distribution base. The result of this process 

is an indirect cost rate which is used to 

distribute indirect costs to individual Federal 

awards. The rate should be expressed as the 

percentage which the total amount of 

allowable indirect costs bears to the base 

selected. This method should also be used 

where an organization has only one major 

function encompassing a number of 

individual projects or activities, and may be 

used where the level of Federal awards to an 

organization is relatively small. 

b. Both the direct costs and the indirect 

costs must exclude capital expenditures and 

unallowable costs. However, unallowable 

costs which represent activities must be 

included in the direct costs under the 

conditions described in § 75.413(e). 

c. The distribution base may be total direct 

costs (excluding capital expenditures and 

other distorting items, such contracts or 

subawards for $25,000 or more), direct 

salaries and wages, or other base which 

results in an equitable distribution. The 

distribution base must exclude participant 

support costs as defined in § 75.2. 

d. Except where a special rate(s) is required 

in accordance with section B.5 of this 

Appendix, the indirect cost rate developed 

under the above principles is applicable to 

all Federal awards of the organization. If a 

special rate(s) is required, appropriate 

modifications must be made in order to 

develop the special rate(s). 

e. For an organization that receives more 

than $10 million in Federal funding of direct 

costs in a fiscal year, a breakout of the 

indirect cost component into two broad 

categories, Facilities and Administration as 

defined in section A.3 of this Appendix, is 

required. The rate in each case must be stated 

as the percentage which the amount of the 

particular indirect cost category (i.e., 

Facilities or Administration) is of the 

distribution base identified with that 

category. 

3. Multiple Allocation Base Method 

a. General. Where an organization’s 

indirect costs benefit its major functions in 

varying degrees, indirect costs must be 

accumulated into separate cost groupings, as 

described in subparagraph b. Each grouping 

must then be allocated individually to 

benefitting functions by means of a base 

which best measures the relative benefits. 

The default allocation bases by cost pool are 

described in section B.3.c of this Appendix. 

b. Identification of indirect costs. Cost 

groupings must be established so as to permit 

the allocation of each grouping on the basis 

of benefits provided to the major functions. 

Each grouping must constitute a pool of 

expenses that are of like character in terms 

of functions they benefit and in terms of the 

allocation base which best measures the 

relative benefits provided to each function. 

The groupings are classified within the two 

broad categories: ‘‘Facilities’’ and 

‘‘Administration,’’ as described in section 

A.3 of this Appendix. The indirect cost pools 

are defined as follows: 

(1) Depreciation. The expenses under this 

heading are the portion of the costs of the 

organization’s buildings, capital 

improvements to land and buildings, and 

equipment which are computed in 

accordance with § 75.436 . 

(2) Interest. Interest on debt associated 

with certain buildings, equipment and 

capital improvements are computed in 

accordance with § 75.449. 

(3) Operation and maintenance expenses. 

The expenses under this heading are those 

that have been incurred for the 

administration, operation, maintenance, 

preservation, and protection of the 

organization’s physical plant. They include 

expenses normally incurred for such items 

as: janitorial and utility services; repairs and 

ordinary or normal alterations of buildings, 

furniture and equipment; care of grounds; 

maintenance and operation of buildings and 

other plant facilities; security; earthquake 

and disaster preparedness; environmental 

safety; hazardous waste disposal; property, 

liability and other insurance relating to 

property; space and capital leasing; facility 

planning and management; and central 

receiving. The operation and maintenance 

expenses category must also include its 

allocable share of fringe benefit costs, 

depreciation, and interest costs. 

(4) General administration and general 

expenses. The expenses under this heading 

are those that have been incurred for the 

overall general executive and administrative 

offices of the organization and other expenses 

of a general nature which do not relate solely 

to any major function of the organization. 

This category must also include its allocable 

share of fringe benefit costs, operation and 

maintenance expense, depreciation, and 

interest costs. Examples of this category 

include central offices, such as the director’s 

office, the office of finance, business services, 

budget and planning, personnel, safety and 

risk management, general counsel, 

management information systems, and 

library costs. 

In developing this cost pool, special care 

should be exercised to ensure that costs 

incurred for the same purpose in like 

circumstances are treated consistently as 

either direct or indirect costs. For example, 

salaries of technical staff, project supplies, 

project publication, telephone toll charges, 

computer costs, travel costs, and specialized 

services costs must be treated as direct costs 

wherever identifiable to a particular program. 

The salaries and wages of administrative and 

pooled clerical staff should normally be 

treated as indirect costs. Direct charging of 

these costs may be appropriate as described 

in § 75.413. Items such as office supplies, 

postage, local telephone costs, periodicals 

and memberships should normally be treated 

as indirect costs. 

c. Allocation bases. Actual conditions must 

be taken into account in selecting the base to 

be used in allocating the expenses in each 

grouping to benefitting functions. The 

essential consideration in selecting a method 

or a base is that it is the one best suited for 

assigning the pool of costs to cost objectives 

in accordance with benefits derived; a 

traceable cause and effect relationship; or 

logic and reason, where neither the cause nor 

the effect of the relationship is determinable. 

When an allocation can be made by 

assignment of a cost grouping directly to the 

function benefitted, the allocation must be 

made in that manner. When the expenses in 

a cost grouping are more general in nature, 

the allocation must be made through the use 

of a selected base which produces results that 

are equitable to both the Federal Government 

and the organization. The distribution must 

be made in accordance with the bases 

described herein unless it can be 

demonstrated that the use of a different base 

would result in a more equitable allocation 

of the costs, or that a more readily available 

base would not increase the costs charged to 

Federal awards. The results of special cost 


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studies (such as an engineering utility study) 

must not be used to determine and allocate 

the indirect costs to Federal awards. 

(1) Depreciation. Depreciation expenses 

must be allocated in the following manner: 

(a) Depreciation on buildings used 

exclusively in the conduct of a single 

function, and on capital improvements and 

equipment used in such buildings, must be 

assigned to that function. 

(b) Depreciation on buildings used for 

more than one function, and on capital 

improvements and equipment used in such 

buildings, must be allocated to the individual 

functions performed in each building on the 

basis of usable square feet of space, excluding 

common areas, such as hallways, stairwells, 

and restrooms. 

(c) Depreciation on buildings, capital 

improvements and equipment related space 

(e.g., individual rooms, and laboratories) 

used jointly by more than one function (as 

determined by the users of the space) must 

be treated as follows. The cost of each jointly 

used unit of space must be allocated to the 

benefitting functions on the basis of: 

(i) the employees and other users on a fulltime equivalent (FTE) basis or salaries and 

wages of those individual functions 

benefitting from the use of that space; or 

(ii) organization-wide employee FTEs or 

salaries and wages applicable to the 

benefitting functions of the organization. 

(d) Depreciation on certain capital 

improvements to land, such as paved parking 

areas, fences, sidewalks, and the like, not 

included in the cost of buildings, must be 

allocated to user categories on a FTE basis 

and distributed to major functions in 

proportion to the salaries and wages of all 

employees applicable to the functions. 

(2) Interest. Interest costs must be allocated 

in the same manner as the depreciation on 

the buildings, equipment and capital 

equipment to which the interest relates. 

(3) Operation and maintenance expenses. 

Operation and maintenance expenses must 

be allocated in the same manner as the 

depreciation. 

(4) General administration and general 

expenses. General administration and general 

expenses must be allocated to benefitting 

functions based on modified total costs 

(MTC). The MTC is the modified total direct 

costs (MTDC), as described in § 75.2, plus the 

allocated indirect cost proportion. The 

expenses included in this category could be 

grouped first according to major functions of 

the organization to which they render 

services or provide benefits. The aggregate 

expenses of each group must then be 

allocated to benefitting functions based on 

MTC. 

d. Order of distribution. 

(1) Indirect cost categories consisting of 

depreciation, interest, operation and 

maintenance, and general administration and 

general expenses must be allocated in that 

order to the remaining indirect cost 

categories as well as to the major functions 

of the organization. Other cost categories 

should be allocated in the order determined 

to be most appropriate by the organization. 

This order of allocation does not apply if 

cross allocation of costs is made as provided 

in section B.3.d.2 of this Appendix. 

(2) Normally, an indirect cost category will 

be considered closed once it has been 

allocated to other cost objectives, and costs 

must not be subsequently allocated to it. 

However, a cross allocation of costs between 

two or more indirect costs categories could 

be used if such allocation will result in a 

more equitable allocation of costs. If a cross 

allocation is used, an appropriate 

modification to the composition of the 

indirect cost categories is required. 

e. Application of indirect cost rate or rates. 

Except where a special indirect cost rate(s) is 

required in accordance with section B.5 of 

this Appendix, the separate groupings of 

indirect costs allocated to each major 

function must be aggregated and treated as a 

common pool for that function. The costs in 

the common pool must then be distributed to 

individual Federal awards included in that 

function by use of a single indirect cost rate. 

f. Distribution basis. Indirect costs must be 

distributed to applicable Federal awards and 

other benefitting activities within each major 

function on the basis of MTDC (see definition 

in § 75.2). 

g. Individual Rate Components. An 

indirect cost rate must be determined for 

each separate indirect cost pool developed. 

The rate in each case must be stated as the 

percentage which the amount of the 

particular indirect cost pool is of the 

distribution base identified with that pool. 

Each indirect cost rate negotiation or 

determination agreement must include 

development of the rate for each indirect cost 

pool as well as the overall indirect cost rate. 

The indirect cost pools must be classified 

within two broad categories: ‘‘Facilities’’ and 

‘‘Administration,’’ as described in section 

A.3 of this Appendix. 

4. Direct Allocation Method 

a. Some nonprofit organizations treat all 

costs as direct costs except general 

administration and general expenses. These 

organizations generally separate their costs 

into three basic categories: (i) General 

administration and general expenses, (ii) 

fundraising, and (iii) other direct functions 

(including projects performed under Federal 

awards). Joint costs, such as depreciation, 

rental costs, operation and maintenance of 

facilities, telephone expenses, and the like 

are prorated individually as direct costs to 

each category and to each Federal award or 

other activity using a base most appropriate 

to the particular cost being prorated. 

b. This method is acceptable, provided 

each joint cost is prorated using a base which 

accurately measures the benefits provided to 

each Federal award or other activity. The 

bases must be established in accordance with 

reasonable criteria, and be supported by 

current data. This method is compatible with 

the Standards of Accounting and Financial 

Reporting for Voluntary Health and Welfare 

Organizations issued jointly by the National 

Health Council, Inc., the National Assembly 

of Voluntary Health and Social Welfare 

Organizations, and the United Way of 

America. 

c. Under this method, indirect costs consist 

exclusively of general administration and 

general expenses. In all other respects, the 

organization’s indirect cost rates must be 

computed in the same manner as that 

described in section B.2 of this Appendix. 

5. Special Indirect Cost Rates 

In some instances, a single indirect cost 

rate for all activities of an organization or for 

each major function of the organization may 

not be appropriate, since it would not take 

into account those different factors which 

may substantially affect the indirect costs 

applicable to a particular segment of work. 

For this purpose, a particular segment of 

work may be that performed under a single 

Federal award or it may consist of work 

under a group of Federal awards performed 

in a common environment. These factors may 

include the physical location of the work, the 

level of administrative support required, the 

nature of the facilities or other resources 

employed, the scientific disciplines or 

technical skills involved, the organizational 

arrangements used, or any combination 

thereof. When a particular segment of work 

is performed in an environment which 

appears to generate a significantly different 

level of indirect costs, provisions should be 

made for a separate indirect cost pool 

applicable to such work. The separate 

indirect cost pool should be developed 

during the course of the regular allocation 

process, and the separate indirect cost rate 

resulting therefrom should be used, provided 

it is determined that (i) the rate differs 

significantly from that which would have 

been obtained under sections B.2, B.3, and 

B.4 of this Appendix, and (ii) the volume of 

work to which the rate would apply is 

material. 

C. Negotiation and Approval of Indirect Cost 

Rates 

1. Definitions 

As used in this section, the following terms 

have the meanings set forth in this section: 

a. Cognizant agency for indirect costs 

means the Federal agency responsible for 

negotiating and approving indirect cost rates 

for a nonprofit organization on behalf of all 

Federal agencies. 

b. Predetermined rate means an indirect 

cost rate, applicable to a specified current or 

future period, usually the organization’s 

fiscal year. The rate is based on an estimate 

of the costs to be incurred during the period. 

A predetermined rate is not subject to 

adjustment. 

c. Fixed rate means an indirect cost rate 

which has the same characteristics as a 

predetermined rate, except that the difference 

between the estimated costs and the actual 

costs of the period covered by the rate is 

carried forward as an adjustment to the rate 

computation of a subsequent period. 

d. Final rate means an indirect cost rate 

applicable to a specified past period which 

is based on the actual costs of the period. A 

final rate is not subject to adjustment. 

e. Provisional rate or billing rate means a 

temporary indirect cost rate applicable to a 

specified period which is used for funding, 

interim reimbursement, and reporting 

indirect costs on Federal awards pending the 

establishment of a final rate for the period. 

f. Indirect cost proposal means the 

documentation prepared by an organization 

to substantiate its claim for the 


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reimbursement of indirect costs. This 

proposal provides the basis for the review 

and negotiation leading to the establishment 

of an organization’s indirect cost rate. 

g. Cost objective means a function, 

organizational subdivision, contract, Federal 

award, or other work unit for which cost data 

are desired and for which provision is made 

to accumulate and measure the cost of 

processes, projects, jobs and capitalized 

projects. 

2. Negotiation and Approval of Rates 

a. Unless different arrangements are agreed 

to by the Federal agencies concerned, the 

Federal agency with the largest dollar value 

of Federal awards with an organization will 

be designated as the cognizant agency for 

indirect costs for the negotiation and 

approval of the indirect cost rates and, where 

necessary, other rates such as fringe benefit 

and computer charge-out rates. Once an 

agency is assigned cognizance for a particular 

nonprofit organization, the assignment will 

not be changed unless there is a shift in the 

dollar volume of the Federal awards to the 

organization for at least three years. All 

concerned Federal agencies must be given 

the opportunity to participate in the 

negotiation process but, after a rate has been 

agreed upon, it will be accepted by all 

Federal agencies. When a Federal agency has 

reason to believe that special operating 

factors affecting its Federal awards 

necessitate special indirect cost rates in 

accordance with section B.5 of this 

Appendix, it will, prior to the time the rates 

are negotiated, notify the cognizant agency 

for indirect costs. (See also § 75.414.) Where 

a non-Federal entity only receives funds as 

a subrecipient, see the requirements of 

§ 75.352. 

b. Except as otherwise provided in 

§ 75.414(e), a nonprofit organization which 

has not previously established an indirect 

cost rate with a Federal agency must submit 

its initial indirect cost proposal immediately 

after the organization is advised that a 

Federal award will be made and, in no event, 

later than three months after the effective 

date of the Federal award. 

c. Unless approved by the cognizant 

agency for indirect costs in accordance with 

§ 75.414(f), organizations that have 

previously established indirect cost rates 

must submit a new indirect cost proposal to 

the cognizant agency for indirect costs within 

six months after the close of each fiscal year. 

d. A predetermined rate may be negotiated 

for use on Federal awards where there is 

reasonable assurance, based on past 

experience and reliable projection of the 

organization’s costs, that the rate is not likely 

to exceed a rate based on the organization’s 

actual costs. 

e. Fixed rates may be negotiated where 

predetermined rates are not considered 

appropriate. A fixed rate, however, must not 

be negotiated if (i) all or a substantial portion 

of the organization’s Federal awards are 

expected to expire before the carry-forward 

adjustment can be made; (ii) the mix of 

Federal and non-Federal work at the 

organization is too erratic to permit an 

equitable carry-forward adjustment; or (iii) 

the organization’s operations fluctuate 

significantly from year to year. 

f. Provisional and final rates must be 

negotiated where neither predetermined nor 

fixed rates are appropriate. Predetermined or 

fixed rates may replace provisional rates at 

any time prior to the close of the 

organization’s fiscal year. If that event does 

not occur, a final rate will be established and 

upward or downward adjustments will be 

made based on the actual allowable costs 

incurred for the period involved. 

g. The results of each negotiation must be 

formalized in a written agreement between 

the cognizant agency for indirect costs and 

the nonprofit organization. The cognizant 

agency for indirect costs must make available 

copies of the agreement to all concerned 

Federal agencies. 

h. If a dispute arises in a negotiation of an 

indirect cost rate between the cognizant 

agency for indirect costs and the nonprofit 

organization, the dispute must be resolved in 

accordance with the appeals procedures of 

the cognizant agency for indirect costs. 

i. To the extent that problems are 

encountered among the Federal agencies in 

connection with the negotiation and approval 

process, OMB will lend assistance as 

required to resolve such problems in a timely 

manner. 

D. Certification of Indirect (F&A) Costs 

1. Required Certification. No proposal to 

establish indirect (F&A) cost rates must be 

acceptable unless such costs have been 

certified by the non-profit organization using 

the Certificate of Indirect (F&A) Costs set 

forth in subsection b., below. The certificate 

must be signed on behalf of the organization 

by an individual at a level no lower than vice 

president or chief financial officer for the 

organization. 

2. Certificate. Each indirect cost rate 

proposal must be accompanied by a 

certification in the following form: 

Certificate of Indirect (F&A) Costs 

This is to certify that to the best of my 

knowledge and belief: 

(1) I have reviewed the indirect (F&A) cost 

proposal submitted herewith; 

(2) All costs included in this proposal 

[identify date] to establish billing or final 

indirect (F&A) costs rate for [identify period 

covered by rate] are allowable in accordance 

with the requirements of the Federal awards 

to which they apply and with Subpart E of 

part 75. 

(3) This proposal does not include any 

costs which are unallowable under Subpart 

E of part 75 such as (without limitation): 

public relations costs, contributions and 

donations, entertainment costs, fines and 

penalties, lobbying costs, and defense of 

fraud proceedings; and 

(4) All costs included in this proposal are 

properly allocable to Federal awards on the 

basis of a beneficial or causal relationship 

between the expenses incurred and the 

Federal awards to which they are allocated 

in accordance with applicable requirements. 

I declare that the foregoing is true and 

correct. 

Nonprofit Organization: 

Signature: 

Name of Official: 

Title: 

Date of Execution: 

Appendix V to Part 75—State/Local 

Governmentwide Central Service Cost 

Allocation Plans 

A. General 

1. Most governmental units provide certain 

services, such as motor pools, computer 

centers, purchasing, accounting, etc., to 

operating agencies on a centralized basis. 

Since federally-supported awards are 

performed within the individual operating 

agencies, there needs to be a process whereby 

these central service costs can be identified 

and assigned to benefitted activities on a 

reasonable and consistent basis. The central 

service cost allocation plan provides that 

process. All costs and other data used to 

distribute the costs included in the plan 

should be supported by formal accounting 

and other records that will support the 

propriety of the costs assigned to Federal 

awards. 

2. Guidelines and illustrations of central 

service cost allocation plans are provided in 

a brochure published by the Department of 

Health and Human Services entitled ‘‘A 

Guide for State, Local and Indian Tribal 

Governments: Cost Principles and Procedures 

for Developing Cost Allocation Plans and 

Indirect Cost Rates for Agreements with the 

Federal Government.’’ A copy of this 

brochure may be obtained from the HHS’ 

Cost Allocation Services at https://

rates.psc.gov. 

B. Definitions 

1. Agency or operating agency means an 

organizational unit or sub-division within a 

governmental unit that is responsible for the 

performance or administration of Federal 

awards or activities of the governmental unit. 

2. Allocated central services means central 

services that benefit operating agencies but 

are not billed to the agencies on a fee-forservice or similar basis. These costs are 

allocated to benefitted agencies on some 

reasonable basis. Examples of such services 

might include general accounting, personnel 

administration, purchasing, etc. 

3. Billed central services means central 

services that are billed to benefitted agencies 

or programs on an individual fee-for-service 

or similar basis. Typical examples of billed 

central services include computer services, 

transportation services, insurance, and fringe 

benefits. 

4. Cognizant agency for indirect costs is 

defined in § 75.2. The determination of 

cognizant agency for indirect costs for states 

and local governments is described in section 

F.1. 

5. Major local government means local 

government that receives more than $100 

million in direct Federal awards subject to 

this part. 

C. Scope of the Central Service Cost 

Allocation Plans 

The central service cost allocation plan 

will include all central service costs that will 

be claimed (either as a billed or an allocated 

cost) under Federal awards and will be 

documented as described in section E. Costs 

of central services omitted from the plan will 

not be reimbursed. 


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D. Submission Requirements 

1. Each state will submit a plan to the 

Department of Health and Human Services 

for each year in which it claims central 

service costs under Federal awards. The plan 

should include (a) a projection of the next 

year’s allocated central service cost (based 

either on actual costs for the most recently 

completed year or the budget projection for 

the coming year), and (b) a reconciliation of 

actual allocated central service costs to the 

estimated costs used for either the most 

recently completed year or the year 

immediately preceding the most recently 

completed year. 

2. Each major local government is also 

required to submit a plan to its cognizant 

agency for indirect costs annually. 

3. All other local governments claiming 

central service costs must develop a plan in 

accordance with the requirements described 

in this Part and maintain the plan and related 

supporting documentation for audit. These 

local governments are not required to submit 

their plans for Federal approval unless they 

are specifically requested to do so by the 

cognizant agency for indirect costs. Where a 

local government only receives funds as a 

subrecipient, the pass-through entity will be 

responsible for monitoring the subrecipient’s 

plan. 

4. All central service cost allocation plans 

will be prepared and, when required, 

submitted within six months prior to the 

beginning of each of the governmental unit’s 

fiscal years in which it proposes to claim 

central service costs. Extensions may be 

granted by the cognizant agency for indirect 

costs on a case-by-case basis. 

E. Documentation Requirements for 

Submitted Plans 

The documentation requirements 

described in this section may be modified, 

expanded, or reduced by the cognizant 

agency for indirect costs on a case-by-case 

basis. For example, the requirements may be 

reduced for those central services which have 

little or no impact on Federal awards. 

Conversely, if a review of a plan indicates 

that certain additional information is needed, 

and will likely be needed in future years, it 

may be routinely requested in future plan 

submissions. Items marked with an asterisk 

(*) should be submitted only once; 

subsequent plans should merely indicate any 

changes since the last plan. 

1. General 

All proposed plans must be accompanied 

by the following: An organization chart 

sufficiently detailed to show operations 

including the central service activities of the 

state/local government whether or not they 

are shown as benefitting from central service 

functions; a copy of the Comprehensive 

Annual Financial Report (or a copy of the 

Executive Budget if budgeted costs are being 

proposed) to support the allowable costs of 

each central service activity included in the 

plan; and, a certification (see subsection 4.) 

that the plan was prepared in accordance 

with this Part, contains only allowable costs, 

and was prepared in a manner that treated 

similar costs consistently among the various 

Federal awards and between Federal and 

non-Federal awards/activities. 

2. Allocated Central Services 

For each allocated central service, the plan 

must also include the following: A brief 

description of the service,* an identification 

of the unit rendering the service and the 

operating agencies receiving the service, the 

items of expense included in the cost of the 

service, the method used to distribute the 

cost of the service to benefitted agencies, and 

a summary schedule showing the allocation 

of each service to the specific benefitted 

agencies. If any self-insurance funds or fringe 

benefits costs are treated as allocated (rather 

than billed) central services, documentation 

discussed in subsections 3.b. and c. must also 

be included. 

3. Billed Services 

a. General. The information described in 

this section must be provided for all billed 

central services, including internal service 

funds, self-insurance funds, and fringe 

benefit funds. 

b. Internal service funds. 

(1) For each internal service fund or similar 

activity with an operating budget of $5 

million or more, the plan must include: A 

brief description of each service; a balance 

sheet for each fund based on individual 

accounts contained in the governmental 

unit’s accounting system; a revenue/expenses 

statement, with revenues broken out by 

source, e.g., regular billings, interest earned, 

etc.; a listing of all non-operating transfers (as 

defined by Generally Accepted Accounting 

Principles (GAAP)) into and out of the fund; 

a description of the procedures 

(methodology) used to charge the costs of 

each service to users, including how billing 

rates are determined; a schedule of current 

rates; and, a schedule comparing total 

revenues (including imputed revenues) 

generated by the service to the allowable 

costs of the service, as determined under this 

Part, with an explanation of how variances 

will be handled. 

(2) Revenues must consist of all revenues 

generated by the service, including unbilled 

and uncollected revenues. If some users were 

not billed for the services (or were not billed 

at the full rate for that class of users), a 

schedule showing the full imputed revenues 

associated with these users must be 

provided. Expenses must be broken out by 

object cost categories (e.g., salaries, supplies, 

etc.). 

c. Self-insurance funds. For each selfinsurance fund, the plan must include: The 

fund balance sheet; a statement of revenue 

and expenses including a summary of 

billings and claims paid by agency; a listing 

of all non-operating transfers into and out of 

the fund; the type(s) of risk(s) covered by the 

fund (e.g., automobile liability, workers’ 

compensation, etc.); an explanation of how 

the level of fund contributions are 

determined, including a copy of the current 

actuarial report (with the actuarial 

assumptions used) if the contributions are 

determined on an actuarial basis; and, a 

description of the procedures used to charge 

or allocate fund contributions to benefitted 

activities. Reserve levels in excess of claims 

(1) submitted and adjudicated but not paid, 

(2) submitted but not adjudicated, and (3) 

incurred but not submitted must be 

identified and explained. 

d. Fringe benefits. For fringe benefit costs, 

the plan must include: A listing of fringe 

benefits provided to covered employees, and 

the overall annual cost of each type of 

benefit; current fringe benefit policies; and 

procedures used to charge or allocate the 

costs of the benefits to benefitted activities. 

In addition, for pension and post-retirement 

health insurance plans, the following 

information must be provided: the 

governmental unit’s funding policies, e.g., 

legislative bills, trust agreements, or statemandated contribution rules, if different from 

actuarially determined rates; the pension 

plan’s costs accrued for the year; the amount 

funded, and date(s) of funding; a copy of the 

current actuarial report (including the 

actuarial assumptions); the plan trustee’s 

report; and, a schedule from the activity 

showing the value of the interest cost 

associated with late funding. 

4. Required Certification 

Each central service cost allocation plan 

will be accompanied by a certification in the 

following form: 

Certificate of Cost Allocation Plan 

This is to certify that I have reviewed the 

cost allocation plan submitted herewith and 

to the best of my knowledge and belief: 

(1) All costs included in this proposal 

[identify date] to establish cost allocations or 

billings for [identify period covered by plan] 

are allowable in accordance with the 

requirements of this Part and the Federal 

award(s) to which they apply. Unallowable 

costs have been adjusted for in allocating 

costs as indicated in the cost allocation plan. 

(2) All costs included in this proposal are 

properly allocable to Federal awards on the 

basis of a beneficial or causal relationship 

between the expenses incurred and the 

Federal awards to which they are allocated 

in accordance with applicable requirements. 

Further, the same costs that have been treated 

as indirect costs have not been claimed as 

direct costs. Similar types of costs have been 

accounted for consistently. 

I declare that the foregoing is true and 

correct. 

Governmental Unit: 

Signature: 

Name of Official: 

Title: 

Date of Execution: 

F. Negotiation and Approval of Central 

Service Plans 

1. Federal Cognizant Agency for Indirect 

Costs Assignments for Cost Negotiation 

In general, unless different arrangements 

are agreed to by the concerned Federal 

agencies, for central service cost allocation 

plans, the cognizant agency responsible for 

review and approval is the Federal agency 

with the largest dollar value of total Federal 

awards with a governmental unit. For 

indirect cost rates and departmental indirect 

cost allocation plans, the cognizant agency is 

the Federal agency with the largest dollar 

value of direct Federal awards with a 

governmental unit or component, as 

appropriate. Once designated as the 

cognizant agency for indirect costs, the 

Federal agency must remain so for a period 

of five years. In addition, the following 


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Federal agencies continue to be responsible 

for the indicated governmental entities: 

Department of Health and Human 

Services—Public assistance and state-wide 

cost allocation plans for all states (including 

the District of Columbia and Puerto Rico), 

state and local hospitals, libraries and health 

districts. 

Department of the Interior—Indian tribal 

governments, territorial governments, and 

state and local park and recreational districts. 

Department of Labor—State and local labor 

departments. 

Department of Education—School districts 

and state and local education agencies. 

Department of Agriculture—State and local 

agriculture departments. 

Department of Transportation—State and 

local airport and port authorities and transit 

districts. 

Department of Commerce—State and local 

economic development districts. 

Department of Housing and Urban 

Development—State and local housing and 

development districts. 

Environmental Protection Agency—State 

and local water and sewer districts. 

2. Review 

All proposed central service cost allocation 

plans that are required to be submitted will 

be reviewed, negotiated, and approved by the 

cognizant agency for indirect costs on a 

timely basis. The cognizant agency for 

indirect costs will review the proposal within 

six months of receipt of the proposal and 

either negotiate/approve the proposal or 

advise the governmental unit of the 

additional documentation needed to support/ 

evaluate the proposed plan or the changes 

required to make the proposal acceptable. 

Once an agreement with the governmental 

unit has been reached, the agreement will be 

accepted and used by all Federal agencies, 

unless prohibited or limited by statute. 

Where a Federal awarding agency has reason 

to believe that special operating factors 

affecting its Federal awards necessitate 

special consideration, the funding agency 

will, prior to the time the plans are 

negotiated, notify the cognizant agency for 

indirect costs. 

3. Agreement 

The results of each negotiation must be 

formalized in a written agreement between 

the cognizant agency for indirect costs and 

the governmental unit. This agreement will 

be subject to re-opening if the agreement is 

subsequently found to violate a statute or the 

information upon which the plan was 

negotiated is later found to be materially 

incomplete or inaccurate. The results of the 

negotiation must be made available to all 

Federal agencies for their use. 

4. Adjustments 

Negotiated cost allocation plans based on 

a proposal later found to have included costs 

that: (a) Are unallowable (i) as specified by 

law or regulation, (ii) as identified in subpart 

F, General Provisions for selected Items of 

Cost of this Part, or (iii) by the terms and 

conditions of Federal awards, or (b) are 

unallowable because they are clearly not 

allocable to Federal awards, must be 

adjusted, or a refund must be made at the 

option of the cognizant agency for indirect 

costs, including earned or imputed interest 

from the date of transfer and debt interest, if 

applicable, chargeable in accordance with 

applicable Federal cognizant agency for 

indirect costs regulations. Adjustments or 

cash refunds may include, at the option of 

the cognizant agency for indirect costs, 

earned or imputed interest from the date of 

expenditure and delinquent debt interest, if 

applicable, chargeable in accordance with 

applicable cognizant agency claims 

collection regulations. These adjustments or 

refunds are designed to correct the plans and 

do not constitute a reopening of the 

negotiation. 

G. Other Policies 

1. Billed Central Service Activities 

Each billed central service activity must 

separately account for all revenues (including 

imputed revenues) generated by the service, 

expenses incurred to furnish the service, and 

profit/loss. 

2. Working Capital Reserves 

Internal service funds are dependent upon 

a reasonable level of working capital reserve 

to operate from one billing cycle to the next. 

Charges by an internal service activity to 

provide for the establishment and 

maintenance of a reasonable level of working 

capital reserve, in addition to the full 

recovery of costs, are allowable. A working 

capital reserve as part of retained earnings of 

up to 60 calendar days cash expenses for 

normal operating purposes is considered 

reasonable. A working capital reserve 

exceeding 60 calendar days may be approved 

by the cognizant agency for indirect costs in 

exceptional cases. 

3. Carry-Forward Adjustments of Allocated 

Central Service Costs 

Allocated central service costs are usually 

negotiated and approved for a future fiscal 

year on a ‘‘fixed with carry-forward’’ basis. 

Under this procedure, the fixed amounts for 

the future year covered by agreement are not 

subject to adjustment for that year. However, 

when the actual costs of the year involved 

become known, the differences between the 

fixed amounts previously approved and the 

actual costs will be carried forward and used 

as an adjustment to the fixed amounts 

established for a later year. This ‘‘carryforward’’ procedure applies to all central 

services whose costs were fixed in the 

approved plan. However, a carry-forward 

adjustment is not permitted, for a central 

service activity that was not included in the 

approved plan, or for unallowable costs that 

must be reimbursed immediately. 

4. Adjustments of Billed Central Services 

Billing rates used to charge Federal awards 

must be based on the estimated costs of 

providing the services, including an estimate 

of the allocable central service costs. A 

comparison of the revenue generated by each 

billed service (including total revenues 

whether or not billed or collected) to the 

actual allowable costs of the service will be 

made at least annually, and an adjustment 

will be made for the difference between the 

revenue and the allowable costs. These 

adjustments will be made through one of the 

following adjustment methods: (a) A cash 

refund including earned or imputed interest 

from the date of transfer and debt interest, if 

applicable, chargeable in accordance with 

applicable Federal cognizant agency for 

indirect costs regulations to the Federal 

Government for the Federal share of the 

adjustment, (b) credits to the amounts 

charged to the individual programs, (c) 

adjustments to future billing rates, or (d) 

adjustments to allocated central service costs. 

Adjustments to allocated central services will 

not be permitted where the total amount of 

the adjustment for a particular service 

(Federal share and non-Federal) share 

exceeds $500,000. Adjustment methods may 

include, at the option of the cognizant 

agency, earned or imputed interest from the 

date of expenditure and delinquent debt 

interest, if applicable, chargeable in 

accordance with applicable cognizant agency 

claims collection regulations. 

5. Records Retention 

All central service cost allocation plans 

and related documentation used as a basis for 

claiming costs under Federal awards must be 

retained for audit in accordance with the 

records retention requirements contained in 

Subpart D of part 75. 

6. Appeals 

If a dispute arises in the negotiation of a 

plan between the cognizant agency for 

indirect costs and the governmental unit, the 

dispute must be resolved in accordance with 

the appeals procedures of the cognizant 

agency for indirect costs. 

7. OMB Assistance 

To the extent that problems are 

encountered among the Federal agencies or 

governmental units in connection with the 

negotiation and approval process, OMB will 

lend assistance, as required, to resolve such 

problems in a timely manner. 

Appendix VI to Part 75—Public 

Assistance Cost Allocation Plans 

A. General 

Federally-financed programs administered 

by state public assistance agencies are funded 

predominately by the Department of Health 

and Human Services (HHS). In support of its 

stewardship requirements, HHS has 

published requirements for the development, 

documentation, submission, negotiation, and 

approval of public assistance cost allocation 

plans in Subpart E of 45 CFR part 95. All 

administrative costs (direct and indirect) are 

normally charged to Federal awards by 

implementing the public assistance cost 

allocation plan. This Appendix extends these 

requirements to all Federal awarding 

agencies whose programs are administered 

by a state public assistance agency. Major 

federally-financed programs typically 

administered by state public assistance 

agencies include: Temporary Aid for Needy 

Families (TANF), Medicaid, Food Stamps, 

Child Support Enforcement, Adoption 

Assistance and Foster Care, and Social 

Services Block Grant. 

B. Definitions 

1. State public assistance agency means a 

state agency administering or supervising the 


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administration of one or more public 

assistance programs operated by the state as 

identified in Subpart E of 45 CFR part 95. For 

the purpose of this Appendix, these programs 

include all programs administered by the 

state public assistance agency. 

2. State public assistance agency costs 

means all costs incurred by, or allocable to, 

the state public assistance agency, except 

expenditures for financial assistance, medical 

contractor payments, food stamps, and 

payments for services and goods provided 

directly to program recipients. 

C. Policy 

State public assistance agencies will 

develop, document and implement, and the 

Federal Government will review, negotiate, 

and approve, public assistance cost 

allocation plans in accordance with Subpart 

E of 45 CFR part 95. The plan will include 

all programs administered by the state public 

assistance agency. Where a letter of approval 

or disapproval is transmitted to a state public 

assistance agency in accordance with Subpart 

E, the letter will apply to all Federal agencies 

and programs. The remaining sections of this 

Appendix (except for the requirement for 

certification) summarize the provisions of 

Subpart E of 45 CFR part 95. 

D. Submission, Documentation, and 

Approval of Public Assistance Cost 

Allocation Plans 

1. State public assistance agencies are 

required to promptly submit amendments to 

the cost allocation plan to HHS for review 

and approval. 

2. Under the coordination process outlined 

in section E, Review of Implementation of 

Approved Plans, affected Federal agencies 

will review all new plans and plan 

amendments and provide comments, as 

appropriate, to HHS. The effective date of the 

plan or plan amendment will be the first day 

of the calendar quarter following the event 

that required the amendment, unless another 

date is specifically approved by HHS. HHS, 

as the cognizant agency for indirect costs 

acting on behalf of all affected Federal 

agencies, will, as necessary, conduct 

negotiations with the state public assistance 

agency and will inform the state agency of 

the action taken on the plan or plan 

amendment. 

E. Review of Implementation of Approved 

Plans 

1. Since public assistance cost allocation 

plans are of a narrative nature, the review 

during the plan approval process consists of 

evaluating the appropriateness of the 

proposed groupings of costs (cost centers) 

and the related allocation bases. As such, the 

Federal Government needs some assurance 

that the cost allocation plan has been 

implemented as approved. This is 

accomplished by reviews by the Federal 

awarding agencies, single audits, or audits 

conducted by the cognizant agency for 

indirect costs. 

2. Where inappropriate charges affecting 

more than one Federal awarding agency are 

identified, the cognizant HHS cost 

negotiation office will be advised and will 

take the lead in resolving the issue(s) as 

provided for in Subpart E of 45 CFR part 95. 

3. If a dispute arises in the negotiation of 

a plan or from a disallowance involving two 

or more Federal awarding agencies, the 

dispute must be resolved in accordance with 

the appeals procedures set out in 45 CFR part 

16. Disputes involving only one Federal 

awarding agency will be resolved in 

accordance with the Federal awarding 

agency’s appeal process. 

4. To the extent that problems are 

encountered among the Federal awarding 

agencies or governmental units in connection 

with the negotiation and approval process, 

the Office of Management and Budget will 

lend assistance, as required, to resolve such 

problems in a timely manner. 

F. Unallowable Costs 

Claims developed under approved cost 

allocation plans will be based on allowable 

costs as identified in this Part. Where 

unallowable costs have been claimed and 

reimbursed, they will be refunded to the 

program that reimbursed the unallowable 

cost using one of the following methods: (a) 

A cash refund, (b) offset to a subsequent 

claim, or (c) credits to the amounts charged 

to individual Federal awards. Cash refunds, 

offsets, and credits may include at the option 

of the cognizant agency for indirect cost, 

earned or imputed interest from the date of 

expenditure and delinquent debt interest, if 

applicable, chargeable in accordance with 

applicable cognizant agency for indirect cost 

claims collection regulations. 

Appendix VII to Part 75—States and 

Local Government and Indian Tribe 

Indirect Cost Proposals 

A. General 

1. Indirect costs are those that have been 

incurred for common or joint purposes. 

These costs benefit more than one cost 

objective and cannot be readily identified 

with a particular final cost objective without 

effort disproportionate to the results 

achieved. After direct costs have been 

determined and assigned directly to Federal 

awards and other activities as appropriate, 

indirect costs are those remaining to be 

allocated to benefitted cost objectives. A cost 

may not be allocated to a Federal award as 

an indirect cost if any other cost incurred for 

the same purpose, in like circumstances, has 

been assigned to a Federal award as a direct 

cost. 

2. Indirect costs include (a) the indirect 

costs originating in each department or 

agency of the governmental unit carrying out 

Federal awards and (b) the costs of central 

governmental services distributed through 

the central service cost allocation plan (as 

described in Appendix V to part) and not 

otherwise treated as direct costs. 

3. Indirect costs are normally charged to 

Federal awards by the use of an indirect cost 

rate. A separate indirect cost rate(s) is usually 

necessary for each department or agency of 

the governmental unit claiming indirect costs 

under Federal awards. Guidelines and 

illustrations of indirect cost proposals are 

provided in a brochure published by the 

Department of Health and Human Services 

entitled ‘‘A Guide for States and Local 

Government Agencies: Cost Principles and 

Procedures for Establishing Cost Allocation 

Plans and Indirect Cost Rates for Grants and 

Contracts with the Federal Government.’’ A 

copy of this brochure may be obtained from 

the HHS’ Cost Allocation Services at 

https://rates.psc.gov. 

4. Because of the diverse characteristics 

and accounting practices of governmental 

units, the types of costs which may be 

classified as indirect costs cannot be 

specified in all situations. However, typical 

examples of indirect costs may include 

certain state/local-wide central service costs, 

general administration of the non-Federal 

entity accounting and personnel services 

performed within the non-Federal entity, 

depreciation on buildings and equipment, 

the costs of operating and maintaining 

facilities. 

5. This Appendix does not apply to state 

public assistance agencies. These agencies 

should refer instead to Appendix VI to part 

75. 

B. Definitions 

1. Base means the accumulated direct costs 

(normally either total direct salaries and 

wages or total direct costs exclusive of any 

extraordinary or distorting expenditures) 

used to distribute indirect costs to individual 

Federal awards. The direct cost base selected 

should result in each Federal award bearing 

a fair share of the indirect costs in reasonable 

relation to the benefits received from the 

costs. 

2. Base period for the allocation of indirect 

costs is the period in which such costs are 

incurred and accumulated for allocation to 

activities performed in that period. The base 

period normally should coincide with the 

governmental unit’s fiscal year, but in any 

event, must be so selected as to avoid 

inequities in the allocation of costs. 

3. Cognizant agency for indirect costs 

means the Federal agency responsible for 

reviewing and approving the governmental 

unit’s indirect cost rate(s) on the behalf of the 

Federal Government. The cognizant agency 

for indirect costs assignment is described in 

Appendix V, section F. 

4. Final rate means an indirect cost rate 

applicable to a specified past period which 

is based on the actual allowable costs of the 

period. A final audited rate is not subject to 

adjustment. 

5. Fixed rate means an indirect cost rate 

which has the same characteristics as a 

predetermined rate, except that the difference 

between the estimated costs and the actual, 

allowable costs of the period covered by the 

rate is carried forward as an adjustment to 

the rate computation of a subsequent period. 

6. Indirect cost pool is the accumulated 

costs that jointly benefit two or more 

programs or other cost objectives. 

7. Indirect cost rate is a device for 

determining in a reasonable manner the 

proportion of indirect costs each program 

should bear. It is the ratio (expressed as a 

percentage) of the indirect costs to a direct 

cost base. 

8. Indirect cost rate proposal means the 

documentation prepared by a governmental 

unit or subdivision thereof to substantiate its 

request for the establishment of an indirect 

cost rate. 

9. Predetermined rate means an indirect 

cost rate, applicable to a specified current or 


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future period, usually the governmental 

unit’s fiscal year. This rate is based on an 

estimate of the costs to be incurred during 

the period. Except under very unusual 

circumstances, a predetermined rate is not 

subject to adjustment. (Because of legal 

constraints, predetermined rates are not 

permitted for Federal contracts; they may, 

however, be used for grants or cooperative 

agreements.) Predetermined rates may not be 

used by governmental units that have not 

submitted and negotiated the rate with the 

cognizant agency for indirect costs. In view 

of the potential advantages offered by this 

procedure, negotiation of predetermined 

rates for indirect costs for a period of two to 

four years should be the norm in those 

situations where the cost experience and 

other pertinent facts available are deemed 

sufficient to enable the parties involved to 

reach an informed judgment as to the 

probable level of indirect costs during the 

ensuing accounting periods. 

10. Provisional rate means a temporary 

indirect cost rate applicable to a specified 

period which is used for funding, interim 

reimbursement, and reporting indirect costs 

on Federal awards pending the establishment 

of a ‘‘final’’ rate for that period. 

C. Allocation of Indirect Costs and 

Determination of Indirect Cost Rates 

1. General 

a. Where a governmental unit’s department 

or agency has only one major function, or 

where all its major functions benefit from the 

indirect costs to approximately the same 

degree, the allocation of indirect costs and 

the computation of an indirect cost rate may 

be accomplished through simplified 

allocation procedures as described in 

subsection 2. 

b. Where a governmental unit’s department 

or agency has several major functions which 

benefit from its indirect costs in varying 

degrees, the allocation of indirect costs may 

require the accumulation of such costs into 

separate cost groupings which then are 

allocated individually to benefitted functions 

by means of a base which best measures the 

relative degree of benefit. The indirect costs 

allocated to each function are then 

distributed to individual Federal awards and 

other activities included in that function by 

means of an indirect cost rate(s). 

c. Specific methods for allocating indirect 

costs and computing indirect cost rates along 

with the conditions under which each 

method should be used are described in 

subsections 2, 3 and 4. 

2. Simplified Method 

a. Where a non-Federal entity’s major 

functions benefit from its indirect costs to 

approximately the same degree, the 

allocation of indirect costs may be 

accomplished by (1) classifying the nonFederal entity’s total costs for the base period 

as either direct or indirect, and (2) dividing 

the total allowable indirect costs (net of 

applicable credits) by an equitable 

distribution base. The result of this process 

is an indirect cost rate which is used to 

distribute indirect costs to individual Federal 

awards. The rate should be expressed as the 

percentage which the total amount of 

allowable indirect costs bears to the base 

selected. This method should also be used 

where a governmental unit’s department or 

agency has only one major function 

encompassing a number of individual 

projects or activities, and may be used where 

the level of Federal awards to that 

department or agency is relatively small. 

b. Both the direct costs and the indirect 

costs must exclude capital expenditures and 

unallowable costs. However, unallowable 

costs must be included in the direct costs if 

they represent activities to which indirect 

costs are properly allocable. 

c. The distribution base may be (1) total 

direct costs (excluding capital expenditures 

and other distorting items, such as passthrough funds, subawards in excess of 

$25,000, participant support costs, etc.), (2) 

direct salaries and wages, or (3) another base 

which results in an equitable distribution. 

3. Multiple Allocation Base Method 

a. Where a non-Federal entity’s indirect 

costs benefit its major functions in varying 

degrees, such costs must be accumulated into 

separate cost groupings. Each grouping must 

then be allocated individually to benefitted 

functions by means of a base which best 

measures the relative benefits. 

b. The cost groupings should be 

established so as to permit the allocation of 

each grouping on the basis of benefits 

provided to the major functions. Each 

grouping should constitute a pool of 

expenses that are of like character in terms 

of the functions they benefit and in terms of 

the allocation base which best measures the 

relative benefits provided to each function. 

The number of separate groupings should be 

held within practical limits, taking into 

consideration the materiality of the amounts 

involved and the degree of precision needed. 

c. Actual conditions must be taken into 

account in selecting the base to be used in 

allocating the expenses in each grouping to 

benefitted functions. When an allocation can 

be made by assignment of a cost grouping 

directly to the function benefitted, the 

allocation must be made in that manner. 

When the expenses in a grouping are more 

general in nature, the allocation should be 

made through the use of a selected base 

which produces results that are equitable to 

both the Federal Government and the 

governmental unit. In general, any cost 

element or related factor associated with the 

governmental unit’s activities is potentially 

adaptable for use as an allocation base 

provided that: (1) It can readily be expressed 

in terms of dollars or other quantitative 

measures (total direct costs, direct salaries 

and wages, staff hours applied, square feet 

used, hours of usage, number of documents 

processed, population served, and the like), 

and (2) it is common to the benefitted 

functions during the base period. 

d. Except where a special indirect cost 

rate(s) is required in accordance with 

paragraph (C)(4) of this Appendix, the 

separate groupings of indirect costs allocated 

to each major function must be aggregated 

and treated as a common pool for that 

function. The costs in the common pool must 

then be distributed to individual Federal 

awards included in that function by use of 

a single indirect cost rate. 

e. The distribution base used in computing 

the indirect cost rate for each function may 

be (1) total direct costs (excluding capital 

expenditures and other distorting items such 

as pass-through funds, subawards in excess 

of $25,000, participant support costs, etc.), 

(2) direct salaries and wages, or (3) another 

base which results in an equitable 

distribution. An indirect cost rate should be 

developed for each separate indirect cost 

pool developed. The rate in each case should 

be stated as the percentage relationship 

between the particular indirect cost pool and 

the distribution base identified with that 

pool. 

4. Special Indirect Cost Rates 

a. In some instances, a single indirect cost 

rate for all activities of a non-Federal entity 

or for each major function of the agency may 

not be appropriate. It may not take into 

account those different factors which may 

substantially affect the indirect costs 

applicable to a particular program or group 

of programs. The factors may include the 

physical location of the work, the level of 

administrative support required, the nature 

of the facilities or other resources employed, 

the organizational arrangements used, or any 

combination thereof. When a particular 

Federal award is carried out in an 

environment which appears to generate a 

significantly different level of indirect costs, 

provisions should be made for a separate 

indirect cost pool applicable to that Federal 

award. The separate indirect cost pool should 

be developed during the course of the regular 

allocation process, and the separate indirect 

cost rate resulting therefrom should be used, 

provided that: (1) The rate differs 

significantly from the rate which would have 

been developed under paragraphs (C)(2) and 

(C)(3) of this Appendix, and (2) the Federal 

award to which the rate would apply is 

material in amount. 

b. Where Federal statutes restrict the 

reimbursement of certain indirect costs, it 

may be necessary to develop a special rate for 

the affected Federal award. Where a 

‘‘restricted rate’’ is required, the same 

procedure for developing a non-restricted 

rate will be used except for the additional 

step of the elimination from the indirect cost 

pool those costs for which the law prohibits 

reimbursement. 

D. Submission and Documentation of 

Proposals 

1. Submission of Indirect Cost Rate Proposals 

a. All departments or agencies of the 

governmental unit desiring to claim indirect 

costs under Federal awards must prepare an 

indirect cost rate proposal and related 

documentation to support those costs. The 

proposal and related documentation must be 

retained for audit in accordance with the 

records retention requirements contained in 

§ 75.361. 

b. A governmental department or agency 

unit that receives more than $35 million in 

direct Federal funding must submit its 

indirect cost rate proposal to its cognizant 

agency for indirect costs. Other governmental 

department or agency must develop an 

indirect cost proposal in accordance with the 

requirements of this Part and maintain the 


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proposal and related supporting 

documentation for audit. These governmental 

departments or agencies are not required to 

submit their proposals unless they are 

specifically requested to do so by the 

cognizant agency for indirect costs. Where a 

non-Federal entity only receives funds as a 

subrecipient, the pass-through entity will be 

responsible for negotiating and/or monitoring 

the subrecipient’s indirect costs. 

c. Each Indian tribal government desiring 

reimbursement of indirect costs must submit 

its indirect cost proposal to the Department 

of the Interior (its cognizant agency for 

indirect costs). 

d. Indirect cost proposals must be 

developed (and, when required, submitted) 

within six months after the close of the 

governmental unit’s fiscal year, unless an 

exception is approved by the cognizant 

agency for indirect costs. If the proposed 

central service cost allocation plan for the 

same period has not been approved by that 

time, the indirect cost proposal may be 

prepared including an amount for central 

services that is based on the latest federallyapproved central service cost allocation plan. 

The difference between these central service 

amounts and the amounts ultimately 

approved will be compensated for by an 

adjustment in a subsequent period. 

2. Documentation of Proposals 

The following must be included with each 

indirect cost proposal: 

a. The rates proposed, including subsidiary 

work sheets and other relevant data, cross 

referenced and reconciled to the financial 

data noted in subsection b. Allocated central 

service costs will be supported by the 

summary table included in the approved 

central service cost allocation plan. This 

summary table is not required to be 

submitted with the indirect cost proposal if 

the central service cost allocation plan for the 

same fiscal year has been approved by the 

cognizant agency for indirect costs and is 

available to the funding agency. 

b. A copy of the financial data (financial 

statements, comprehensive annual financial 

report, executive budgets, accounting reports, 

etc.) upon which the rate is based. 

Adjustments resulting from the use of 

unaudited data will be recognized, where 

appropriate, by the Federal cognizant agency 

for indirect costs in a subsequent proposal. 

c. The approximate amount of direct base 

costs incurred under Federal awards. These 

costs should be broken out between salaries 

and wages and other direct costs. 

d. A chart showing the organizational 

structure of the agency during the period for 

which the proposal applies, along with a 

functional statement(s) noting the duties and/ 

or responsibilities of all units that comprise 

the agency. (Once this is submitted, only 

revisions need be submitted with subsequent 

proposals.) 

3. Required Certification. 

Each indirect cost rate proposal must be 

accompanied by a certification in the 

following form: 

Certificate of Indirect Costs 

This is to certify that I have reviewed the 

indirect cost rate proposal submitted 

herewith and to the best of my knowledge 

and belief: 

(1) All costs included in this proposal 

[identify date] to establish billing or final 

indirect costs rates for [identify period 

covered by rate] are allowable in accordance 

with the requirements of the Federal award(s) 

to which they apply and the provisions of 

this 45 CFR part 75. Unallowable costs have 

been adjusted for in allocating costs as 

indicated in the indirect cost proposal. 

(2) All costs included in this proposal are 

properly allocable to Federal awards on the 

basis of a beneficial or causal relationship 

between the expenses incurred and the 

agreements to which they are allocated in 

accordance with applicable requirements. 

Further, the same costs that have been treated 

as indirect costs have not been claimed as 

direct costs. Similar types of costs have been 

accounted for consistently and the Federal 

Government will be notified of any 

accounting changes that would affect the 

predetermined rate. 

I declare that the foregoing is true and 

correct. 

Governmental Unit: 

Signature: 

Name of Official: 

Title: 

Date of Execution: 

E. Negotiation and Approval of Rates 

1. Indirect cost rates will be reviewed, 

negotiated, and approved by the cognizant 

agency on a timely basis. Once a rate has 

been agreed upon, it will be accepted and 

used by all Federal agencies unless 

prohibited or limited by statute. Where a 

Federal awarding agency has reason to 

believe that special operating factors affecting 

its Federal awards necessitate special 

indirect cost rates, the funding agency will, 

prior to the time the rates are negotiated, 

notify the cognizant agency for indirect costs. 

2. The use of predetermined rates, if 

allowed, is encouraged where the cognizant 

agency for indirect costs has reasonable 

assurance based on past experience and 

reliable projection of the non-Federal entity’s 

costs, that the rate is not likely to exceed a 

rate based on actual costs. Long-term 

agreements utilizing predetermined rates 

extending over two or more years are 

encouraged, where appropriate. 

3. The results of each negotiation must be 

formalized in a written agreement between 

the cognizant agency for indirect costs and 

the governmental unit. This agreement will 

be subject to re-opening if the agreement is 

subsequently found to violate a statute, or the 

information upon which the plan was 

negotiated is later found to be materially 

incomplete or inaccurate. The agreed upon 

rates must be made available to all Federal 

agencies for their use. 

4. Refunds must be made if proposals are 

later found to have included costs that (a) are 

unallowable (i) as specified by law or 

regulation, (ii) as identified in § 75.420 of this 

part, or (iii) by the terms and conditions of 

Federal awards, or (b) are unallowable 

because they are clearly not allocable to 

Federal awards. These adjustments or 

refunds will be made regardless of the type 

of rate negotiated (predetermined, final, 

fixed, or provisional). 

F. Other Policies 

1. Fringe Benefit Rates 

If overall fringe benefit rates are not 

approved for the governmental unit as part of 

the central service cost allocation plan, these 

rates will be reviewed, negotiated and 

approved for individual recipient agencies 

during the indirect cost negotiation process. 

In these cases, a proposed fringe benefit rate 

computation should accompany the indirect 

cost proposal. If fringe benefit rates are not 

used at the recipient agency level (i.e., the 

agency specifically identifies fringe benefit 

costs to individual employees), the 

governmental unit should so advise the 

cognizant agency for indirect costs. 

2. Billed Services Provided by the Recipient 

Agency 

In some cases, governmental departments 

or agencies (components of the governmental 

unit) provide and bill for services similar to 

those covered by central service cost 

allocation plans (e.g., computer centers). 

Where this occurs, the governmental 

departments or agencies (components of the 

governmental unit) should be guided by the 

requirements in Appendix V relating to the 

development of billing rates and 

documentation requirements, and should 

advise the cognizant agency for indirect costs 

of any billed services. Reviews of these types 

of services (including reviews of costing/

billing methodology, profits or losses, etc.) 

will be made on a case-by-case basis as 

warranted by the circumstances involved. 

3. Indirect Cost Allocations Not Using Rates 

In certain situations, governmental 

departments or agencies (components of the 

governmental unit), because of the nature of 

their Federal awards, may be required to 

develop a cost allocation plan that distributes 

indirect (and, in some cases, direct) costs to 

the specific funding sources. In these cases, 

a narrative cost allocation methodology 

should be developed, documented, 

maintained for audit, or submitted, as 

appropriate, to the cognizant agency for 

indirect costs for review, negotiation, and 

approval. 

4. Appeals 

If a dispute arises in a negotiation of an 

indirect cost rate (or other rate) between the 

cognizant agency for indirect costs and the 

governmental unit, the dispute must be 

resolved in accordance with the appeals 

procedures of the cognizant agency for 

indirect costs. 

5. Collection of Unallowable Costs and 

Erroneous Payments 

Costs specifically identified as unallowable 

and charged to Federal awards either directly 

or indirectly will be refunded (including 

interest chargeable in accordance with 

applicable Federal cognizant agency for 

indirect costs regulations). 

6. OMB Assistance 

To the extent that problems are 

encountered among the Federal agencies or 

governmental units in connection with the 

negotiation and approval process, OMB will 

lend assistance, as required, to resolve such 

problems in a timely manner. 


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Appendix VIII to Part 75—Nonprofit 

Organizations Exempted from Subpart 

E of Part 75 

Advance Technology Institute (ATI), 

Charleston, South Carolina 

Aerospace Corporation, El Segundo, 

California 

American Institutes of Research (AIR), 

Washington, DC 

Argonne National Laboratory, Chicago, 

Illinois 

Atomic Casualty Commission, Washington, 

DC 

Battelle Memorial Institute, Headquartered in 

Columbus, Ohio 

Brookhaven National Laboratory, Upton, 

New York 

Charles Stark Draper Laboratory, 

Incorporated, Cambridge, Massachusetts 

CNA Corporation (CNAC), Alexandria, 

Virginia 

Environmental Institute of Michigan, Ann 

Arbor, Michigan 

Georgia Institute of Technology/Georgia Tech 

Applied Research Corporation/Georgia 

Tech Research Institute, Atlanta, Georgia 

Hanford Environmental Health Foundation, 

Richland, Washington 

IIT Research Institute, Chicago, Illinois 

Institute of Gas Technology, Chicago, Illinois 

Institute for Defense Analysis, Alexandria, 

Virginia 

LMI, McLean, Virginia 

Mitre Corporation, Bedford, Massachusetts 

Noblis, Inc., Falls Church, Virginia 

National Radiological Astronomy 

Observatory, Green Bank, West Virginia 

National Renewable Energy Laboratory, 

Golden, Colorado 

Oak Ridge Associated Universities, Oak 

Ridge, Tennessee 

Rand Corporation, Santa Monica, California 

Research Triangle Institute, Research 

Triangle Park, North Carolina 

Riverside Research Institute, New York, New 

York 

South Carolina Research Authority (SCRA), 

Charleston, South Carolina 

Southern Research Institute, Birmingham, 

Alabama 

Southwest Research Institute, San Antonio, 

Texas 

SRI International, Menlo Park, California 

Syracuse Research Corporation, Syracuse, 

New York 

Universities Research Association, 

Incorporated (National Acceleration Lab), 

Argonne, Illinois 

Urban Institute, Washington DC 

Non-profit insurance companies, such as 

Blue Cross and Blue Shield Organizations 

Other non-profit organizations as negotiated 

with Federal awarding agencies 

Appendix IX to Part 75—Principles for 

Determining Costs Applicable to 

Research and Development Under 

Grants and Contracts with Hospitals 

A. Purpose and Scope 

1. Objectives 

This appendix provides principles for 

determining the costs applicable to research 

and development work performed by 

hospitals under grants and contracts with the 

Department of Health and Human Services. 

These principles are confined to the subject 

of cost determination and make no attempt 

to identify the circumstances or dictate the 

extent of hospital participation in the 

financing of a particular research or 

development project. The principles are 

designed to provide recognition of the full 

allocated costs of such research work under 

generally accepted accounting principles. 

These principles will be applicable to both 

proprietary and non-profit hospitals. No 

provision for profit or other increment above 

cost is provided for in these principles. 

However, this is not to be interpreted as 

precluding a negotiated fee between 

contracting parties when a fee is appropriate. 

2. Policy Guides 

The successful application of these 

principles requires development of mutual 

understanding between representatives of 

hospitals and of the Department of Health 

and Human Services as to their scope, 

applicability and interpretation. It is 

recognized that: 

a. The arrangements for hospital 

participation in the financing of a research 

and development project are properly subject 

to negotiation between the agency and the 

hospital concerned in accordance with such 

Government-wide criteria as may be 

applicable. 

b. Each hospital, possessing its own unique 

combination of staff, facilities and 

experience, should be encouraged to conduct 

research in a manner consonant with its own 

institutional philosophies and objectives. 

c. Each hospital in the fulfillment of its 

contractual obligations should be expected to 

employ sound management practices. 

d. The application of the principles 

established herein shall be in conformance 

with the generally accepted accounting 

practices of hospitals. 

e. Hospitals receive reimbursements from 

the Federal Government for differing types of 

services under various programs such as 

support of Research and Development 

(including discrete clinical centers) Health 

Services Projects, Medicare, etc. It is essential 

that consistent procedures for determining 

reimbursable costs for similar services be 

employed without regard to program 

differences. Therefore, both the direct and 

indirect costs of research programs must be 

identified as a cost center(s) for the cost 

finding and step-down requirements of the 

Medicare program, or in its absence the 

Medicaid program. 

3. Application 

All operating agencies within the 

Department of Health and Human Services 

that sponsor research and development work 

in hospitals will apply these principles and 

related policy guides in determining the costs 

incurred for such work under grants and 

cost-reimbursement type contracts and 

subcontracts. These principles will also be 

used as a guide in the pricing of fixed-price 

contracts and subcontracts. 

B. Definition of Terms 

1. Organized research means all research 

activities of a hospital that may be identified 

whether the support for such research is from 

a federal, non-federal or internal source. 

2. Departmental research means research 

activities that are not separately budgeted 

and accounted for. Such work, which 

includes all research activities not 

encompassed under the term organized 

research, is regarded for purposes of this 

document as a part of the patient care 

activities of the hospital. 

3. Research agreement means any valid 

arrangement to perform federally-sponsored 

research or development including grants, 

cost-reimbursement type contracts, costreimbursement type subcontracts, and fixedprice contracts and subcontracts. 

4. Instruction and training means the 

formal or informal programs of educating and 

training technical and professional health 

services personnel, primarily medical and 

nursing training. This activity, if separately 

budgeted or identifiable with specific costs, 

should be considered as a cost objective for 

purposes of indirect cost allocations and the 

development of patient care costs. 

5. Other hospital activities means all 

organized activities of a hospital not 

immediately related to the patient care, 

research, and instructional and training 

functions which produce identifiable 

revenue from the performance of these 

activities. If a non-related activity does not 

produce identifiable revenue, it may be 

necessary to allocate this expense using an 

appropriate basis. In such a case, the activity 

may be included as an allocable cost (See 

paragraph C.4 below.) Also included under 

this definition is any category of cost treated 

as ‘‘Unallowable,’’ provided such category of 

cost identifies a function or activity to which 

a portion of the institution’s indirect cost (as 

defined in paragraph E.1.) are properly 

allocable. 

6. Patient care means those departments or 

cost centers which render routine or ancillary 

services to in-patients and/or out-patients. As 

used in paragraph I.2.w, it means the cost of 

these services applicable to patients involved 

in research programs. 

7. Allocation means the process by which 

the indirect costs are assigned as between: 

a. Organized research, 

b. Patient care including departmental 

research. 

c. Instruction and training, and 

d. Other hospital activities. 

8. Cost center means an identifiable 

department or area (including research) 

within the hospital which has been assigned 

an account number in the hospital 

accounting system for the purpose of 

accumulating expense by department or area. 

9. Cost finding is the process of recasting 

the data derived from the accounts ordinarily 

kept by a hospital to ascertain costs of the 

various types of services rendered. It is the 

determination of direct costs by specific 

identification and the proration of indirect 

costs by allocation. 

10. Step down is a cost finding method that 

recognizes that services rendered by certain 

nonrevenue-producing departments or 

centers are utilized by certain other 

nonrevenue producing centers as well as by 

the revenue-producing centers. All costs of 

nonrevenue-producing centers are allocated 

to all centers which they serve, regardless of 

whether or not these centers produce 


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revenue. Following the apportionment of the 

cost of the nonrevenue-producing center, that 

center will be considered closed and no 

further costs are apportioned to that center. 

11. Scatter bed is a bed assigned to a 

research patient based on availability. 

Research patients occupying these beds are 

not physically segregated from nonresearch 

patients occupying beds. Scatter beds are 

geographically dispersed among all the beds 

available for use in the hospital. There are no 

special features attendant to a scatter bed that 

distinguishes it from others that could just as 

well have been occupied. 

12. Discrete bed is a bed or beds that have 

been set aside for occupancy by research 

patients and are physically segregated from 

other hospital beds in an environment that 

permits an easily ascertainable allocation of 

costs associated with the space they occupy 

and the services they generate. 

C. Basic Considerations 

1. Composition of Total Costs 

The cost of a research agreement is 

comprised of the allowable direct costs 

incident to its performance plus the allocable 

portion of the allowable indirect costs of the 

hospital less applicable credits. (See 

paragraph C.5.) 

2. Factors Affecting Allowability of Costs 

The tests of allowability of costs under 

these principles are: 

a. They must be reasonable. 

b. They must be assigned to research 

agreements under the standards and methods 

provided herein. 

c. They must be accorded consistent 

treatment through application of those 

generally accepted accounting principles 

appropriate to the circumstances (See 

paragraph A.2.e.) and 

d. They must conform to any limitations or 

exclusions set forth in these principles or in 

the research agreement as to types or 

amounts of cost items. 

3. Reasonable Costs 

A cost may be considered reasonable if the 

nature of the goods or services acquired or 

applied, and the amount involved therefor 

reflect the action that a prudent person 

would have taken under the circumstances 

prevailing at the time the decision to incur 

the cost was made. Major considerations 

involved in the determination of the 

reasonableness of a cost are: 

a. Whether or not the cost is of a type 

generally recognized as necessary for the 

operation of the hospital or the performance 

of the research agreement, 

b. The restraints or requirements imposed 

by such factors as arm’s length bargaining, 

federal and state laws and regulations, and 

research agreement terms and conditions, 

c. Whether or not the individuals 

concerned acted with due prudence in the 

circumstances, considering their 

responsibilities to the hospital, its patients, 

its employees, its students, the Government, 

and the public at large, and 

d. The extent to which the actions taken 

with respect to the incurrence of the cost are 

consistent with established hospital policies 

and practices applicable to the work of the 

hospital generally, including Government 

research. 

4. Allocable Costs 

a. A cost is allocable to a particular cost 

center (i.e., a specific function, project, 

research agreement, department, or the like) 

if the goods or services involved are 

chargeable or assignable to such cost center 

in accordance with relative benefits received 

or other equitable relationship. Subject to the 

foregoing, a cost is allocable to a research 

agreement if it is incurred solely to advance 

the work under the research agreement; or it 

benefits both the research agreement and 

other work of the hospital in proportions that 

can be approximated through use of 

reasonable methods; or it is necessary to the 

overall operation of the hospital and, in light 

of the standards provided in this chapter, is 

deemed to be assignable in part to organized 

research. Where the purchase of equipment 

or other capital items are specifically 

authorized under a research agreement, the 

amounts thus authorized for such purchases 

are allocable to the research agreement 

regardless of the use that may subsequently 

be made of the equipment or other capital 

items involved. 

b. Any costs allocable to a particular 

research agreement under the standards 

provided in these principles may not be 

shifted to other research agreements in order 

to meet deficiencies caused by overruns or 

other fund considerations, to avoid 

restrictions imposed by law or by terms of 

the research agreement, or for other reasons 

of convenience. 

5. Applicable Credits 

a. The term applicable credits refers to 

those receipts or negative expenditure types 

of transactions which operate to offset or 

reduce expense items that are allocable to 

research agreements as direct or indirect 

costs as outlined in paragraph E.1. Typical 

examples of such transactions are: Purchase 

discounts, rebates, or allowances; recoveries 

or indemnities on losses; sales of scrap or 

incidental services; tuition; adjustments of 

overpayments or erroneous charges; and 

services rendered to patients admitted to 

federally funded clinical research centers, 

primarily for care though also participating 

in research protocols. 

b. In some instances, the amounts received 

from the Federal Government to finance 

hospital activities or service operations 

should be treated as applicable credits. 

Specifically, the concept of netting such 

credit items against related expenditures 

should be applied by the hospital in 

determining the rates or amounts to be 

charged to government research for services 

rendered whenever the facilities or other 

resources used in providing such services 

have been financed directly, in whole or in 

part, by federal funds. Thus, where such 

items are provided for or benefit a particular 

hospital activity, i.e., patient care, research, 

instruction and training, or other, they 

should be treated as an offset to the indirect 

costs apportioned to that activity. Where the 

benefits are common to all hospital activities 

they should be treated as a credit to the total 

indirect cost pool before allocation to the 

various cost objectives. 

D. Direct Costs 

1. General 

Direct costs are those that can be identified 

specifically with a particular cost center. For 

this purpose, the term cost center refers not 

only to the ultimate centers against which 

costs are finally lodged such as research 

agreements, but also to other established cost 

centers such as the individual accounts for 

recording particular objects or items of 

expense, and the separate account groupings 

designed to record the expenses incurred by 

individual organizational units, functions, 

projects and the like. In general, the 

administrative functions and service 

activities described in paragraph VI are 

identifiable as separate cost centers, and the 

expenses associated with such centers 

become eligible in due course for distribution 

as indirect costs of research agreements and 

other ultimate cost centers. 

2. Application to Research Agreements 

Identifiable benefit to the research work 

rather than the nature of the goods and 

services involved is the determining factor in 

distinguishing direct from indirect costs of 

research agreements. Typical of transactions 

chargeable to a research agreement as direct 

costs are the compensation of employees for 

the time or effort devoted to the performance 

of work under the research agreement, 

including related staff benefit and pension 

plan costs to the extent that such items are 

consistently accorded to all employees and 

treated by the hospital as direct rather than 

indirect costs (see paragraph E.2.d(2)); the 

costs of materials consumed or expended in 

the performance of such work; and other 

items of expense incurred for the research 

agreement, such as extraordinary utility 

consumption. The cost of materials supplied 

from stock or services rendered by 

specialized facilities or other institutional 

service operations may be included as direct 

costs of research agreements provided such 

items are consistently treated by the 

institution as direct rather than indirect costs 

and are charged under a recognized method 

of costing or pricing designed to recover only 

the actual direct and indirect costs of such 

material or service and conforming to 

generally accepted cost accounting practices 

consistently followed by the institution. 

E. Indirect Costs 

1. General 

Indirect costs are those that have been 

incurred for common or joint objectives, and 

thus are not readily subject to treatment as 

direct costs of research agreements or other 

ultimate or revenue producing cost centers. 

In hospitals such costs normally are 

classified but not necessarily restricted to the 

following functional categories: Depreciation; 

Administrative and General (including fringe 

benefits if not charged directly); Operation of 

Plant; Maintenance of Plant; Laundry and 

Linen Service; Housekeeping; Dietary; 

Maintenance of Personnel; and Medical 

Records and Library. 

2. Criteria for Distribution 

a. Base period. 

A base period for distribution of indirect 

costs is the period during which such costs 


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are incurred and accumulated for 

distribution to work performed within that 

period. The base period normally should 

coincide with the fiscal year established by 

the hospital, but in any event the base period 

should be so selected as to avoid inequities 

in the distribution of costs. 

b. Need for cost groupings. 

The overall objective of the allocation 

process is to distribute the indirect costs 

described in paragraph F. to organized 

research, patient care, instruction and 

training, and other hospital activities in 

reasonable proportions consistent with the 

nature and extent of the use of the hospital’s 

resources by research personnel, medical 

staff, patients, students, and other personnel 

or organizations. In order to achieve this 

objective with reasonable precision, it may be 

necessary to provide for selective distribution 

by establishing separate groupings of cost 

within one or more of the functional 

categories of indirect costs referred to in 

paragraph E.1. In general, the cost groupings 

established within a functional category 

should constitute, in each case, a pool of 

those items of expense that are considered to 

be of like character in terms of their relative 

contribution to (or degree of remoteness 

from) the particular cost centers to which 

distribution is appropriate. Each such pool or 

cost grouping should then be distributed 

individually to the related cost centers, using 

the distribution base or method most 

appropriate in the light of the guides set out 

in 2.c. below. While this paragraph places 

primary emphasis on a step-down method of 

indirect cost computation, paragraph H. 

provides an alternate method which may be 

used under certain conditions. 

c. Selection of distribution method. 

Actual conditions must be taken into 

account in selecting the method or base to be 

used in distributing to related cost centers 

the expenses assembled under each of the 

individual cost groups established as 

indicated under 2.b. above. Where a 

distribution can be made by assignment of a 

cost grouping directly to the area benefited, 

the distribution should be made in that 

manner. Care should be given, however, to 

eliminate similar or duplicative costs from 

any other distribution made to this area. 

Where the expenses under a cost grouping 

are more general in nature, the distribution 

to related cost centers should be made 

through use of a selected base which will 

produce results which are equitable to both 

the Government and the hospital. In general, 

any cost element or cost-related factor 

associated with the hospital’s work is 

potentially adaptable for use as a distribution 

base provided: 

(1) It can readily be expressed in terms of 

dollars or other quantitative measure (total 

direct expenditures, direct salaries, manhours applied, square feet utilized, hours of 

usage, number of documents processed, 

population served, and the like); and 

(2) It is common to the related cost centers 

during the base period. The essential 

consideration in selection of the distribution 

base in each instance is that it be the one best 

suited for assigning the pool of costs to 

related cost centers in accord with the 

relative benefits derived; the traceable cause 

and effect relationship; or logic and reason, 

where neither benefit nor cause and effect 

relationship is determinable. 

d. General consideration on cost groupings. 

The extent to which separate cost 

groupings and selective distribution would 

be appropriate at a hospital is a matter of 

judgment to be determined on a case-by-case 

basis. Typical situations which may warrant 

the establishment of two or more separate 

cost groups (based on account classification 

or analysis) within a functional category 

include but are not limited to the following: 

(1) Where certain items or categories of 

expense relate solely to one of the major 

divisions of the hospital (patient care, 

sponsored research, instruction and training, 

or other hospital activities) or to any two but 

not all, such expenses should be set aside as 

a separate cost grouping for direct assignment 

or selective distribution in accordance with 

the guides provided in 2.b. and 2.c.above. 

(2) Where any types of expense ordinary 

treated as indirect cost as outlined in 

paragraph are charged to research agreements 

as direct costs, the similar type expenses 

applicable to other activities of the 

institution must through separate cost 

grouping be excluded from the indirect costs 

allocable to research agreements. 

(3) Where it is determined that certain 

expenses are for the support of a service unit 

or facility whose output is susceptible of 

measurement on a workload or other 

quantitative basis, such expenses should be 

set aside as a separate cost grouping for 

distribution on such basis to organized 

research and other hospital activities. 

(4) Where organized activities (including 

identifiable segments of organized research 

as well as the activities cited inB.5.) provide 

their own purchasing, personnel 

administration, building maintenance, or 

housekeeping or similar service, the 

distribution of such elements of indirect cost 

to such activities should be accomplished 

through cost grouping which includes only 

that portion of central indirect costs (such as 

for overall management) which are properly 

allocable to such activities. 

(5) Where the hospital elects to treat as 

indirect charges the costs of pension plans 

and other staff benefits, such costs should be 

set aside as a separate cost grouping for 

selective distribution to related cost centers, 

including organized research. 

(6) Where the hospital is affiliated with a 

medical school or some other institution 

which performs organized research on the 

hospital’s premises, every effort should be 

made to establish separate cost groupings in 

the Administrative and General or other 

applicable category which will reasonably 

reflect the use of services and facilities by 

such research. (See also paragraph.) 

e. Materiality. 

Where it is determined that the use of 

separate cost groupings and selective 

distribution are necessary to produce 

equitable results, the number of such 

separate cost groupings within a functional 

category should be held within practical 

limits, after taking into consideration the 

materiality of the amounts involved and the 

degree of precision attainable through less 

selective methods of distribution. 

3. Administration of Limitations on 

Allowances for Indirect Costs 

a. Research grants may be subject to laws 

and/or administrative regulations that limit 

the allowance for indirect costs under each 

such grant to a stated percentage of the direct 

costs allowed. Agencies that sponsor such 

grants will establish procedures which will 

assure that: 

(1) The terms and amount authorized in 

each case conform with the provisions of 

paragraphs C, E, and I of these principles as 

they apply to matters involving the 

consistent treatment and allowability of 

individual items of cost; and 

(2) The amount actually allowed for 

indirect costs under each such research grant 

does not exceed the maximum allowable 

under the limitation or the amount otherwise 

allowable under these principles, whichever 

is the smaller. 

b. Where the actual allowance for indirect 

costs on any research grant must be restricted 

to the smaller of the two alternative amounts 

referred to in 3.a. above, such alternative 

amounts should be determined in accordance 

with the following guides: 

(1) The maximum allowable under the 

limitation should be established by applying 

the stated percentage to a direct cost base 

which shall include all items of expenditure 

authorized by the sponsoring agency for 

inclusion as part of the total cost for the 

direct benefit of the work under the grant; 

and 

(2) The amount otherwise allowable under 

these principles should be established by 

applying the current institutional indirect 

cost rate to those elements of direct cost 

which were included in the base on which 

the rate was computed. 

c. When the maximum amount allowable 

under a statutory limitation or the terms of 

a research agreement is less than the amount 

otherwise allocable as indirect costs under 

these principles, the amount not recoverable 

as indirect costs under the research 

agreement involved may not be shifted to 

other research agreements. 

F. Identification and Assignment of Indirect 

Costs 

1. Depreciation or Use Charge 

a. The expenses under this heading should 

include depreciation (as defined in paragraph 

I.2.i(1)) on buildings, fixed equipment, and 

movable equipment, except to the extent 

purchased through federal funds. Where 

adequate records for the recording of 

depreciation are not available, a use charge 

may be substituted for depreciation (See 

paragraph I.2.) 

b. The expenses included in this category 

should be allocated to applicable cost centers 

in a manner consistent with the guides set 

forth in paragraph E.2., on a basis that gives 

primary emphasis to (a) space utilization 

with respect to depreciation on buildings and 

fixed equipment; and (b) specific 

identification of assets and their use with 

respect to movable equipment as it relates to 

patient care, organized research, instruction 

and training, and other hospital activities. 

Where such records are not sufficient for the 

purpose of the foregoing, reasonable 


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estimates will suffice as a means for effecting 

distribution of the amounts involved. 

2. Administration and General Expenses 

a. The expenses under this heading are 

those that have been incurred for the 

administrative offices of the hospital 

including accounting, personnel, purchasing, 

information centers, telephone expense, and 

the like which do not relate solely to any 

major division of the institution, i.e., solely 

to patient care, organized research, 

instruction and training, or other hospital 

activities. 

b. The expenses included in this category 

may be allocated on the basis of total 

expenditures exclusive of capital 

expenditures, or salaries and wages in 

situations where the results of the 

distribution made on this basis are deemed 

to be equitable both to the Government and 

the hospital; otherwise the distribution of 

Administration and General expenses should 

be made through use of selected bases, 

applied to separate cost groupings 

established within this category of expenses 

in accordance with the guides set out in 

paragraph E.2. 

3. Operation of Plant 

a. The expenses under this heading are 

those that have been incurred by a central 

service organization or at the departmental 

level for the administration, supervision, and 

provision of utilities (exclusive of telephone 

expense) and protective services to the 

physical plant. They include expenses 

incurred for such items as power plant 

operations, general utility costs, elevator 

operations, protection services, and general 

parking lots. 

b. The expenses included in this category 

should be allocated to applicable cost centers 

in a manner consistent with the guides 

provided in paragraph E.2., on a basis that 

gives primary emphasis to space utilization. 

The allocations should be developed as 

follows: 

(1) Where actual space and related cost 

records are available or can readily be 

developed and maintained without 

significant change in the accounting 

practices, the amount distributed should be 

based on such records; 

(2) Where the space and related cost 

records maintained are not sufficient for 

purposes of the foregoing, a reasonable 

estimate of the proportion of total space 

assigned to the various costs centers 

normally will suffice as a means for effecting 

distribution of the amounts involved; or 

(3) Where it can be demonstrated that an 

area or volume or space basis of allocation is 

impractical or inequitable, other bases may 

be used provided consideration is given to 

the use of facilities by research personnel and 

others, including patients. 

4. Maintenance of Plant 

a. The expenses under this heading should 

include: 

(1) All salaries and wages pertaining to 

ordinary repair and maintenance work 

performed by employees on the payroll of the 

hospital; 

(2) All supplies and parts used in the 

ordinary repairing and maintaining of 

buildings and general equipment; and 

(3) Amounts paid to outside concerns for 

the ordinary repairing and maintaining of 

buildings and general equipment. 

b. The expenses included in this category 

should be allocated to applicable cost centers 

in a manner consistent with the guides 

provided in paragraph E.2. on a basis that 

gives primary emphasis to space utilization. 

The allocations and apportionments should 

be developed as follows: 

(1) Where actual space and related cost 

records are available and can readily be 

developed and maintained without 

significant change in the accounting 

practices, the amount distributed should be 

based on such records; 

(2) Where the space and related cost 

records maintained are not sufficient for 

purposes of the foregoing, a reasonable 

estimate of the proportion of total space 

assigned to the various cost centers normally 

will suffice as a means for effecting 

distribution of the amounts involved; or 

(3) Where it can be demonstrated that an 

area or volume of space basis of allocation is 

impractical or inequitable, other basis may be 

used provided consideration is given to the 

use of facilities by research personnel and 

others, including patients. 

5. Laundry and Linen 

a. The expenses under this heading should 

include: 

(1) Salaries and wages of laundry 

department employees, seamstresses, clean 

linen handlers, linen delivery men, etc.; 

(2) Supplies used in connection with the 

laundry operation and all linens purchased; 

and 

(3) Amounts paid to outside concerns for 

purchased laundry and/or linen service. 

b. The expense included in this category 

should be allocated to related cost centers in 

a manner consistent with the guides 

provided in paragraph E.2. on a basis that 

gives primary emphasis to actual pounds of 

linen used. The allocations should be 

developed as follows: 

(1) Where actual poundage and related cost 

records are available or can readily be 

developed and maintained without 

significant change in the accounting 

practices, the amount distributed should be 

based on such records; 

(2) Where it can be demonstrated that a 

poundage basis of allocation is impractical or 

inequitable other bases may be used provided 

consideration is given to the use of linen by 

research personnel and others, including 

patients. 

6. Housekeeping 

a. The expenses under this heading should 

include: 

(1) All salaries and wages of the 

department head, foreman, maids, porters, 

janitors, wall washers, and other 

housekeeping employees; 

(2) All supplies used in carrying out the 

housekeeping functions; and 

(3) Amounts paid to outside concerns for 

purchased services such as window washing, 

insect extermination, etc. 

b. The expenses included in this category 

should be allocated to related cost centers in 

a manner consistent with the guides 

provided in paragraph E.2. on a basis that 

gives primary emphasis to space actually 

serviced by the housekeeping department. 

The allocations and apportionments should 

be developed as follows: 

(1) Where actual space serviced and related 

cost records are available or can readily be 

developed and maintained without 

significant change in the accounting 

practices, the amount distributed should be 

based on such records; 

(2) Where the space serviced and related 

cost records maintained are not sufficient for 

purposes of the foregoing, a reasonable 

estimate of the proportion of total space 

assigned to the various cost centers normally 

will suffice as a means for effecting 

distribution of the amounts of housekeeping 

expenses involved; or 

(3) Where it can be demonstrated that the 

space serviced basis of allocation is 

impractical or inequitable, other bases may 

be used provided consideration is given to 

the use of housekeeping services by research 

personnel and others, including patients. 

7. Dietary 

a. These expenses, as used herein, shall 

mean only the subsidy provided by the 

hospital to its employees including research 

personnel through its cafeteria operation. The 

hospital must be able to demonstrate through 

the use of proper cost accounting techniques 

that the cafeteria operates at a loss to the 

benefit of employees. 

b. The reasonable operating loss of a 

subsidized cafeteria operation should be 

allocated to related cost centers in a manner 

consistent with the guides provided in 

paragraph E.2. on a basis that gives primary 

emphasis to number of employees. 

8. Maintenance (Housing) of Personnel 

a. The expenses under this heading should 

include: 

(1) The salaries and wages of matrons, 

clerks, and other employees engaged in work 

in nurses’ residences and other employees’ 

quarters; 

(2) All supplies used in connection with 

the operation of such dormitories; and 

(3) Payments to outside agencies for the 

rental of houses, apartments, or rooms used 

by hospital personnel. 

b. The expenses included in this category 

should be allocated to related cost centers in 

a manner consistent with the guides 

provided in paragraph E.2. on a basis that 

gives primary emphasis to employee 

utilization of housing facilities. The 

allocation should be developed as follows: 

(1) Appropriate credit should be given for 

all payments received from employees or 

otherwise to reduce the expense to be 

allocated; 

(2) A net cost per housed employee may 

then be computed; and 

(3) Allocation should be made on a 

departmental basis based on the number of 

housed employees in each respective 

department. 

9. Medical Records and Library 

a. The expenses under this heading should 

include: 

(1) The salaries and wages of the records 

librarian, medical librarian, clerks, 

stenographers, etc.; and 


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(2) All supplies such as medical record 

forms, chart covers, filing supplies, 

stationery, medical library books, periodicals, 

etc. 

b. The expenses included in this category 

should be allocated to related cost centers in 

a manner consistent with the guides 

provided in paragraph E.2. on a basis that 

gives primary emphasis to a special time 

survey of medical records personnel. If this 

appears to be impractical or inequitable, 

other bases may be used provided 

consideration is given to the use of these 

facilities by research personnel and others, 

including patients. 

G. Determination and Application of Indirect 

Cost Rate or Rates 

1. Indirect Cost Pools 

a. Subject to b. below, indirect costs 

allocated to organized research should be 

treated as a common pool, and the costs in 

such common pool should be distributed to 

individual research agreements benefiting 

therefrom on a single rate basis. 

b. In some instances a single rate basis for 

use on all government research at a hospital 

may not be appropriate since it would not 

take into account those different 

environmental factors which may affect 

substantially the indirect costs applicable to 

a particular segment of government research 

at the institution. For this purpose, a 

particular segment of government research 

may be that performed under a single 

research agreement or it may consist of 

research under a group of research 

agreements performed in a common 

environment. The environmental factors are 

not limited to the physical location of the 

work. Other important factors are the level of 

the administrative support required, the 

nature of the facilities or other resources 

employed, the scientific disciplines or 

technical skills involved, the organizational 

arrangements used, or any combination 

thereof. Where a particular segment of 

government research is performed within an 

environment which appears to generate a 

significantly different level of indirect costs, 

provision should be made for a separate 

indirect cost pool applicable to such work. 

An example of this differential may be in the 

development of a separate indirect cost pool 

for a clinical research center grant. The 

separate indirect cost pool should be 

developed during the course of the regular 

distribution process, and the separate 

indirect cost rate resulting therefrom should 

be utilized provided it is determined that: 

(1) Such indirect cost rate differs 

significantly from that which would have 

obtained under a. above; and 

(2) The volume of research work to which 

such rate would apply is material in relation 

to other government research at the 

institution. 

c. It is a common practice for grants or 

contracts awarded to other institutions, 

typically University Schools of Medicine, to 

be performed on hospital premises. In these 

cases the hospital should develop a separate 

indirect cost pool applicable to the work 

under such grants or contracts. This pool 

should be developed by a selective 

distribution of only those indirect cost 

categories which benefit the work performed 

by the other institution, within the practical 

limits dictated by available data and the 

materiality of the amounts involved. Hospital 

costs determined to be allocable to grants or 

contracts awarded to another institution may 

not be recovered as a cost of grants or 

contracts awarded directly to the hospital. 

2. The Distribution Base 

Preferably, indirect costs allocated to 

organized research should be distributed to 

applicable research agreements on the basis 

of direct salaries and wages. However, where 

the use of salaries and wages results in an 

inequitable allocation of costs to the research 

agreements, total direct costs or a variation 

thereof, may be used in lieu of salaries and 

wages. Regardless of the base used, an 

indirect cost rate should be determined for 

each of the separate indirect cost pools 

developed pursuant to paragraph G.1. The 

rate in each case should be stated as the 

percentage which the amount of the 

particular indirect cost pool is of the total 

direct salaries and wages (or other base 

selected) for all research agreements 

identified with such a pool. 

3. Negotiated Lump Sum for Overhead 

A negotiated fixed amount in lieu of 

indirect costs may be appropriate for selfcontained or off-campus research activities 

where the benefits derived from a hospital’s 

indirect services cannot be readily 

determined. Such amount negotiated in lieu 

of indirect costs will be treated as an offset 

to the appropriate indirect cost pool after 

allocation to patient care, organized research, 

instruction and training, and other hospital 

activities. The base on which such remaining 

expenses are allocated should be 

appropriately adjusted. 

4. Predetermined Overhead Rates 

The utilization of predetermined fixed 

overhead rates may offer potential advantages 

in the administration of research agreements 

by facilitating the preparation of research 

budgets and permitting more expeditious 

close out of the agreements when the work 

is completed. Therefore, to the extent 

allowed by law, consideration may be given 

to the negotiation of predetermined fixed 

rates in those situations where the cost 

experience and other pertinent factors 

available are deemed sufficient to enable the 

Government and the hospital to reach a 

reasonable conclusion as to the probable 

level of the indirect cost rate for the ensuing 

accounting period. 

H. Simplified Method for Small Institutions 

1. General 

a. Where the total direct cost of all 

government-sponsored research and 

development work at a hospital in a year is 

minimal, the use of the abbreviated 

procedure described in paragraph H.2. below 

may be acceptable in the determination of 

allowable indirect costs. This method may 

also be used to initially determine a 

provisional indirect cost rate for hospitals 

that have not previously established a rate. 

Under this abbreviated procedure, data taken 

directly from the institution’s most recent 

annual financial report and immediately 

available supporting information will be 

utilized as a basis for determining the 

indirect cost rate applicable to research 

agreements at the institution. 

b. The rigid formula approach provided 

under the abbreviated procedure has 

limitations which may preclude its use at 

some hospitals either because the minimum 

data required for this purpose are not readily 

available or because the application of the 

abbreviated procedure to the available data 

produces results which appear inequitable to 

the Government or the hospital. In any such 

case, indirect costs should be determined 

through use of the regular procedure rather 

than the abbreviated procedure. 

c. In certain instances where the total 

direct cost of all government-sponsored 

research and development work at the 

hospital is more than minimal, the 

abbreviated procedure may be used if prior 

permission is obtained. This alternative will 

be granted only in those cases where it can 

be demonstrated that the step-down 

technique cannot be followed. 

2. Abbreviated Procedure 

a. Total expenditures as taken from the 

most recent annual financial report will be 

adjusted by eliminating from further 

consideration expenditures for capital items 

as defined in paragraph I.2.d. and 

unallowable costs as defined under various 

headings in paragraph I. and paragraph C.5. 

b. Total expenditures as adjusted under the 

foregoing will then be distributed among (1) 

expenditures applicable to administrative 

and general overhead functions, (2) 

expenditures applicable to all other overhead 

functions, and (3) expenditures for all other 

purposes. The first group shall include 

amounts associated with the functional 

categories, Administration and General, and 

Dietary, as defined in paragraphs F.2. and 7. 

The second group shall include Depreciation, 

Operation of Plant, Maintenance of Plant, 

and Housekeeping. The third group— 

expenditures for all other purposes—shall 

include the amounts applicable to all other 

activities, namely, patient care, organized 

research, instruction and training, and other 

hospital activities as defined under 

paragraph B.5. For the purposes of this 

section, the functional categories of Laundry 

and Linen, Maintenance of Personnel, and 

Medical Records and Library as defined in 

paragraph E. shall be considered as 

expenditures for all other purposes. 

c. The expenditures distributed to the first 

two groups in paragraph H.2.b. should then 

be adjusted by those receipts or negative 

expenditure types of transactions which tend 

to reduce expense items allocable to research 

agreements as indirect costs. Examples of 

such receipts or negative expenditures are 

itemized in paragraph C.5.a. 

d. In applying the procedures in 

paragraphs H.2.a and 2.b, the cost of 

unallowable activities such as Gift Shop, 

Investment Property Management, Fund 

Raising, and Public Relations, when they 

benefit from the hospital’s indirect cost 

services, should be treated as expenditures 

for all other purposes. Such activities are 

presumed to benefit from the hospital’s 

indirect cost services when they include 

salaries of personnel working in the hospital. 


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When they do not include such salaries, they 

should be eliminated from the indirect cost 

rate computation. 

e. The indirect cost rate will then be 

computed in two stages. The first stage 

requires the computation of an 

Administrative and General rate component. 

This is done by applying a ratio of research 

direct costs over total direct costs to the 

Administrative and General pool developed 

under paragraphs H.2.b and 2.c. above. The 

resultant amount—that which is allocable to 

research—is divided by the direct research 

cost base. The second stage requires the 

computation of an All Other Indirect Cost 

rate component. This is done by applying a 

ratio of research direct space over total direct 

space to All Other Indirect Cost pool 

developed under paragraphs H.2.b. and 2.c. 

above. The resultant amount—that which is 

allocable to research—is divided by the 

direct research cost base. 

The total of the two rate components will 

be the institution’s indirect cost rate. For the 

purposes of this section, the research direct 

cost or space and total direct cost or space 

will be that cost or space identified with the 

functional categories classified under 

Expenditures for all other purposes under 

paragraph H.2.b. 

I. General Standards for Selected Items of 

Cost 

1. General 

This section provides standards to be 

applied in establishing the allowability of 

certain items involved in determining cost. 

These standards should apply irrespective of 

whether a particular item of cost is properly 

treated as direct cost or indirect cost. Failure 

to mention a particular item of cost in the 

standards is not intended to imply that it is 

either allowable or unallowable; rather, 

determination as to allowability in each case 

should be based on the treatment or 

standards provided for similar or related 

items of cost. In case of discrepancy between 

the provisions of a specific research 

agreement and the applicable standards 

provided, the provisions of the research 

agreement should govern. However, in some 

cases advance understandings should be 

reached on particular cost items in order that 

the full costs of research be supported. The 

extent of allowability of the selected items of 

cost covered in this section has been stated 

to apply broadly to many accounting systems 

in varying environmental situations. Thus, as 

to any given research agreement, the 

reasonableness and allocability of certain 

items of costs may be difficult to determine, 

particularly in connection with hospitals 

which have medical school or other 

affiliations. In order to avoid possible 

subsequent disallowance or dispute based on 

unreasonableness or nonallocability, it is 

important that prospective recipients of 

federal funds, particularly those whose work 

is predominantly or substantially with the 

Government, seek agreement with the 

Government in advance of the incurrence of 

special or unusual costs in categories where 

reasonableness or allocability are difficult to 

determine. Such agreement may also be 

initiated by the Government. Any such 

agreement should be incorporated in the 

research agreement itself. However, the 

absence of such an advance agreement on 

any element of cost will not in itself serve to 

make that element either allowable or 

unallowable. Examples of costs on which 

advance agreements may be particularly 

important are: 

a. Facilities costs, such as; 

(1) Depreciation 

(2) Rental 

(3) Use charges for fully depreciated assets 

(4) Idle facilities and idle capacity 

(5) Plant reconversion 

(6) Extraordinary or deferred maintenance 

and repair 

(7) Acquisition of automatic data 

processing equipment. 

b. Pre-award costs 

c. Non-hospital professional activities 

d. Self-insurance 

e. Support services charged directly 

(computer services, printing and duplicating 

services, etc.) 

f. Employee compensation, travel, and 

other personnel costs, including: 

(1) Compensation for personal service, 

including wages and salaries, bonuses and 

incentives, premium payments, pay for time 

not worked, and supplementary 

compensation and benefits, such as pension 

and retirement, group insurance, severance 

pay plans, and other forms of compensation; 

(2) Morale, health, welfare, and food 

service and dormitory costs. 

(3) Training and education costs. 

(4) Relocation costs, including special or 

mass personnel movement. 

2. Selected Items 

a. Advertising costs. The term advertising 

costs means the costs of advertising media 

and corollary administrative costs. 

Advertising media include magazines, 

newspapers, radio and television programs, 

direct mail, exhibits, and the like. The only 

advertising costs allowable are those which 

are solely for: 

(1) The recruitment of persons required for 

the performance by the institution of 

obligations arising under the research 

agreement, when considered in conjunction 

with all other recruitment costs as set forth 

in paragraph I.2.hh; 

(2) The procurement of scarce items for the 

performance of the research agreement; or 

(3) The disposal of scrap or surplus 

materials acquired in the performance of the 

research agreement. 

Costs of this nature, if incurred for more 

than one research agreement or for both 

research agreement work and other work of 

the institution, are allowable to the extent 

that the principles in paragraphs D. and E. 

are observed. 

b. Bad debts. Losses arising from 

uncollectible accounts and other claims and 

related collection and legal costs are 

unallowable except that a bad debt may be 

included as a direct cost of the research 

agreement to the extent that it is caused by 

a research patient and approved by the 

awarding agency. This inclusion is only 

intended to cover the situation of the patient 

admitted for research purposes who 

subsequently or in conjunction with the 

research receives clinical care for which a 

charge is made to the patient. If, after 

exhausting all means of collecting these 

charges, a bad debt results, it may be 

considered an appropriate charge to the 

research agreement. 

c. Bonding costs. 

(1) Bonding costs arise when the 

Government requires assurance against 

financial loss to itself or others by reason of 

the act or default of the hospital. They arise 

also in instances where the hospital requires 

similar assurance. 

Included are such types as bid, 

performance, payment, advance payment, 

infringement, and fidelity bonds. 

(2) Costs of bonding required pursuant to 

the terms of the research agreement are 

allowable. 

(3) Costs of bonding required by the 

hospital in the general conduct of its 

business are allowable to the extent that such 

bonding is in accordance with sound 

business practice and the rates and premiums 

are reasonable under the circumstances. 

d. Capital expenditures. The costs of 

equipment, buildings, and repairs which 

materially increase the value or useful life of 

buildings or equipment should be capitalized 

and are unallowable except as provided for 

in the research agreement. 

e. Civil defense costs. Civil defense costs 

are those incurred in planning for, and the 

protection of life and property against the 

possible effects of enemy attack. Reasonable 

costs of civil defense measures (including 

costs in excess of normal plant protection 

costs, first-aid training and supplies, firefighting training, posting of additional exit 

notices and directions, and other approved 

civil defense measures) undertaken on the 

institution’s premises pursuant to 

suggestions or requirements of civil defense 

authorities are allowable when distributed to 

all activities of the institution. Capital 

expenditures for civil defense purposes will 

not be allowed, but a use allowance or 

depreciation may be permitted in accordance 

with provisions set forth elsewhere. Costs of 

local civil defense projects not on the 

institution’s premises are unallowable. 

f. Communication costs. Costs incurred for 

telephone services, local and long distance 

telephone calls, telegrams, radiograms, 

postage, and the like are allowable. 

g. Compensation for personal services. 

(1) General 

Compensation for personal services covers 

all remuneration paid currently or accrued to 

employees of the hospital for services 

rendered during the period of performance 

under government research agreements. Such 

remuneration includes salaries, wages, staff 

benefits (see paragraph I.2.j.), and pension 

plan costs (see paragraph I.2.y.). The costs of 

such remuneration are allowable to the 

extent that the total compensation to 

individual employees is reasonable for the 

services rendered and conforms to the 

established policy of the institution 

consistently applied, and provided that the 

charges for work performed directly on 

government research agreements and for 

other work allocable as indirect costs to 

sponsored research are determined and 

supported as hereinafter provided. For nonprofit, non-proprietary institutions, where 

federally supported programs constitute less 


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than a preponderance of the activity at the 

institution the primary test of reasonableness 

will be to require that the institution’s 

compensation policies be applied 

consistently both to federally-sponsored and 

non-sponsored activities alike. However, 

where special circumstances so dictate a 

contractual clause may be utilized which 

calls for application of the test of 

comparability in determining the 

reasonableness of compensation. 

(2) Payroll Distribution 

Amounts charged to organized research for 

personal services, regardless of whether 

treated as direct costs or allocated as indirect 

costs, will be based on hospital payrolls 

which have been approved and documented 

in accordance with generally accepted 

hospital practices. In order to develop 

necessary direct and indirect allocations of 

cost, supplementary data on time or effort as 

provided in paragraph (3) below, normally 

need be required only for individuals whose 

compensation is properly chargeable to two 

or more research agreements or to two or 

more of the following broad functional 

categories: (i) Patient care; (ii) organized 

research; (iii) instruction and training; (iv) 

indirect activities as defined in paragraph 

E.1.; or (v) other hospital activities as defined 

in paragraph B.5. 

(3) Reporting Time or Effort 

Charges for salaries and wages of 

individuals other than members of the 

professional staff will be supported by daily 

time and attendance and payroll distribution 

records. For members of the professional 

staff, current and reasonable estimates of the 

percentage distribution of their total effort 

may be used as support in the absence of 

actual time records. The term professional 

staff for purposes of this section includes 

physicians, research associates, and other 

personnel performing work at responsible 

levels of activities. These personnel normally 

fulfill duties, the competent performance of 

which usually requires persons possessing 

degrees from accredited institutions of higher 

learning and/or state licensure. In order to 

qualify as current and reasonable, estimates 

must be made no later than one month 

(though not necessarily a calendar month) 

after the month in which the services were 

performed. 

(4) Preparation of Estimates of Effort 

Where required under paragraph (3) above, 

estimates of effort spent by a member of the 

professional staff on each research agreement 

should be prepared by the individual who 

performed the services or by a responsible 

individual such as a department head or 

supervisor having first-hand knowledge of 

the services performed on each research 

agreement. Estimates must show the 

allocation of effort between organized 

research and all other hospital activities in 

terms of the percentage of total effort devoted 

to each of the broad functional categories 

referred to in (2) above. The estimate of effort 

spent on a research agreement may include 

a reasonable amount of time spent in 

activities contributing and intimately related 

to work under the agreement, such as 

preparing and delivering special lectures 

about specific aspects of the ongoing 

research, writing research reports and 

articles, participating in appropriate research 

seminars, consulting with colleagues with 

respect to related research, and attending 

appropriate scientific meetings and 

conferences. The term ‘‘all other hospital 

activities’’ would include departmental 

research, administration, committee work, 

and public services undertaken on behalf of 

the hospital. 

(5) Application of Budget Estimates 

Estimates determined before the 

performance of services, such as budget 

estimates on a monthly, quarterly, or yearly 

basis do not qualify as estimates of effort 

spent. 

(6) Non-Hospital Professional Activities 

A hospital must not alter or waive hospitalwide policies and practices dealing with the 

permissible extent of professional services 

over and above those traditionally performed 

without extra hospital compensation, unless 

such arrangements are specifically 

authorized by the sponsoring agency. Where 

hospital-wide policies do not adequately 

define the permissible extent of 

consultantships or other non-hospital 

activities undertaken for extra pay, the 

Government may require that the effort of 

professional staff working under research 

agreements be allocated as between (i) 

hospital activities, and (ii) non-hospital 

professional activities. If the sponsoring 

agency should consider the extent of nonhospital professional effort excessive, 

appropriate arrangements governing 

compensation will be negotiated on a case by 

case basis. 

(7) Salary Rates for Part-Time Appointments 

Charges for work performed on government 

research by staff members having only parttime appointments will be determined at a 

rate not in excess of that for which he is 

regularly paid for his part-time staff 

assignment. 

h. Contingency provisions. 

Contributions to a contingency reserve or 

any similar provisions made for events the 

occurrence of which cannot be foretold with 

certainty as to time, intensity, or with an 

assurance of their happening, are 

unallowable. 

i. Depreciation and use allowances. 

(1) Hospitals may be compensated for the 

use of buildings, capital improvements and 

usable equipment on hand through 

depreciation or use allowances. Depreciation 

is a charge to current operations which 

distributes the cost of a tangible capital asset, 

less estimated residual value, over the 

estimated useful life of the asset in a 

systematic and logical manner. It does not 

involve a process of valuation. Useful life has 

reference to the prospective period of 

economic usefulness in the particular 

hospital’s operations as distinguished from 

physical life. Use allowances are the means 

of allowing compensation when depreciation 

or other equivalent costs are not considered. 

(2) Due consideration will be given to 

government-furnished research facilities 

utilized by the institution when computing 

use allowances and/or depreciation if the 

government-furnished research facilities are 

material in amount. Computation of the use 

allowance and/or depreciation will exclude 

both the cost or any portion of the cost of 

grounds, buildings and equipment borne by 

or donated by the Federal Government, 

irrespective of where title was originally 

vested or where it presently resides, and 

secondly, the cost of grounds. Capital 

expenditures for land improvements (paved 

areas, fences, streets, sidewalks, utility 

conduits, and similar improvements not 

already included in the cost of buildings) are 

allowable provided the systematic 

amortization of such capital expenditures has 

been provided in the institution’s books of 

accounts, based on reasonable 

determinations of the probable useful lives of 

the individual items involved, and the share 

allocated to organized research is developed 

from the amount thus amortized for the base 

period involved. 

(3) Normal depreciation on a hospital’s 

plant, equipment, and other capital facilities, 

except as excluded by (4) below, is an 

allowable element of research cost provided 

that the amount thereof is computed: 

i. Upon the property cost basis used by the 

hospital for Federal Income Tax purposes 

(See section 167 of the Internal Revenue 

Code of 1954); or 

ii. In the case of non-profit or tax exempt 

organizations, upon a property cost basis 

which could have been used by the hospital 

for Federal Income Tax purposes, had such 

hospital been subject to the payment of 

income tax; and in either case 

iii. By the consistent application to the 

assets concerned of any generally accepted 

accounting method, and subject to the 

limitations of the Internal Revenue Code of 

1954 as amended, including— 

(a) The straight line method; 

(b) The declining balance method, using a 

rate not exceeding twice the rate which 

would have been used had the annual 

allowance been computed under the method 

described in (a) above; 

(c) The sum of the years-digits method; and 

(d) Any other consistent method 

productive of an annual allowance which, 

when added to all allowances for the period 

commencing with the use of the property and 

including the current year, does not during 

the first two-thirds of the useful life of the 

property exceed the total of such allowances 

which would have been used had such 

allowances been computed under the method 

described in (b) above. 

(4) Where the depreciation method is 

followed, adequate property records must be 

maintained. The period of useful service 

(service life) established in each case for 

usable capital assets must be determined on 

a realistic basis which takes into 

consideration such factors as type of 

construction, nature of the equipment used, 

technological developments in the particular 

research area, and the renewal and 

replacement policies followed for the 

individual items or classes of assets involved. 

Where the depreciation method is introduced 

for application to assets acquired in prior 

years, the annual charges therefrom must not 

exceed the amounts that would have resulted 

had the depreciation method been in effect 

from the date of acquisition of such assets. 


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(5) Depreciation on idle or excess facilities 

shall not be allowed except on such facilities 

as are reasonably necessary for standby 

purposes. 

(6) Where an institution elects to go on a 

depreciation basis for a particular class of 

assets, no depreciation, rental or use charge 

may be allowed on any such assets that 

would be viewed as fully depreciated; 

provided, however, that reasonable use 

charges may be negotiated for any such assets 

if warranted after taking into consideration 

the cost of the facility or item involved, the 

estimated useful life remaining at time of 

negotiation, the actual replacement policy 

followed in the light of service lives used for 

calculating depreciation, the effect of any 

increased maintenance charges or decreased 

efficiency due to age, and any other factors 

pertinent to the utilization of the facility or 

item for the purpose contemplated. 

(7) Hospitals which choose a depreciation 

allowance for assets purchased prior to 1966 

based on a percentage of operating costs in 

lieu of normal depreciation for purposes of 

reimbursement under Pub. L. 89–97 

(Medicare) shall utilize that method for 

determining depreciation applicable to 

organized research. 

The operating costs to be used are the 

lower of the hospital’s 1965 operating costs 

or the hospital’s current year’s allowable 

costs. The percent to be applied is 5 percent 

starting with the year 1966–67, with such 

percentage being uniformity reduced by onehalf percent each succeeding year. The 

allowance based on operating costs is in 

addition to regular depreciation on assets 

acquired after 1965. However, the combined 

amount of such allowance on pre-1966 assets 

and the allowance for actual depreciation on 

assets acquired after 1965 may not exceed 6 

percent of the hospital’s allowable cost for 

the current year. After total depreciation has 

been computed, allocation methods are used 

to determine the share attributable to 

organized research. 

For purposes of this section, Operating 

Costs means the total costs incurred by the 

hospital in operating the institution, and 

includes patient care, research, and other 

activities. Allowable Costs means operating 

costs less unallowable costs as defined in 

these principles; by the application of 

allocation methods to the total amount of 

such allowable costs, the share attributable to 

Federally-sponsored research is determined. 

A hospital which elects to use this 

procedure under Pub. L. 89–97 and 

subsequently changes to an actual 

depreciation basis on pre-1966 assets in 

accordance with the option afforded under 

the Medicare program shall simultaneously 

change to an actual depreciation basis for 

organized research. 

Where the hospital desires to change to 

actual depreciation but either has no 

historical cost records or has incomplete 

records, the determination of historical cost 

could be made through appropriate means 

involving expert consultation with the 

determination being subject to review and 

approval by the Department of Health and 

Human Services. 

(8) Where the use allowance method is 

followed, the use allowance for buildings and 

improvements will be computed at an annual 

rate not exceeding two percent of acquisition 

cost. The use allowance for equipment will 

be computed at an annual rate not exceeding 

six and two-thirds percent of acquisition cost 

of usable equipment in those cases where the 

institution maintains current records with 

respect to such equipment on hand. Where 

the institution’s records reflect only the cost 

(actual or estimated) of the original 

complement of equipment, the use allowance 

will be computed at an annual rate not 

exceeding ten percent of such cost. Original 

complement for this purpose means the 

complement of equipment initially placed in 

buildings to perform the functions currently 

being performed in such buildings; however, 

where a permanent change in the function of 

a building takes place, a redetermination of 

the original complement of equipment may 

be made at that time to establish a new 

original complement. In those cases where no 

equipment records are maintained, the 

institution will justify a reasonable estimate 

of the acquisition cost of usable equipment 

which may be used to compute the use 

allowance at an annual rate not exceeding six 

and two-thirds percent of such estimate. 

(9) Depreciation and/or use charges should 

usually be allocated to research and other 

activities as an indirect cost. 

j. Employee morale, health, and welfare 

costs and credits. 

The costs of house publications, health or 

first-aid benefits, recreational activities, 

employees’ counseling services, and other 

expenses incurred in accordance with the 

hospital’s established practice or custom for 

the improvement of working conditions, 

employer-employee relations, employee 

morale, and employee performance, are 

allowable. Such costs will be equitably 

apportioned to all activities of the hospital. 

Income generated from any of these activities 

will be credited to the cost thereof unless 

such income has been irrevocably set over to 

employee welfare organizations. 

k. Entertainment costs. 

Except as pertains to j. above, costs 

incurred for amusement, social activities, 

entertainment, and any items relating thereto, 

such as meals, lodging, rentals, 

transportation, and gratuities are 

unallowable. 

l. Equipment and other facilities. 

The cost of equipment or other facilities 

are allowable on a direct charge basis where 

such purchases are approved by the 

sponsoring agency concerned or provided for 

by the terms of the research agreement. 

m. Fines and penalties. 

Costs resulting from violations of, or failure 

of the institution to comply with federal, 

state and local laws and regulations are 

unallowable except when incurred as a result 

of compliance with specific provisions of the 

research agreement, or instructions in writing 

from the awarding agency. 

n. Insurance and indemnification. 

(1) Costs of insurance required or approved 

and maintained pursuant to the research 

agreement are allowable. 

(2) Costs of other insurance maintained by 

the hospital in connection with the general 

conduct of its activities are allowable subject 

to the following limitations: (i) Types and 

extent and cost of coverage must be in 

accordance with sound institutional practice; 

(ii) costs of insurance or of any contributions 

to any reserve covering the risk of loss of or 

damage to government owned property are 

unallowable except to the extent that the 

Government has specifically required or 

approved such costs; and (iii) costs of 

insurance on the lives of officers or trustees 

are unallowable except where such insurance 

is part of an employee plan which is not 

unduly restricted. 

(3) Contributions to a reserve for an 

approved self-insurance program are 

allowable to the extent that the types of 

coverage, extent of coverage, and the rates 

and premiums would have been allowed had 

insurance been purchased to cover the risks. 

Such contributions are subject to prior 

approval of the Government. 

(4) Actual losses which could have been 

covered by permissible insurance (through an 

approved self-insurance program or 

otherwise) are unallowable unless expressly 

provided for in the research agreement, 

except that costs incurred because of losses 

not covered under nominal deductible 

insurance coverage provided in keeping with 

sound management practice as well as minor 

losses not covered by insurance such as 

spoilage, breakage and disappearance of 

small hand tools which occur in the ordinary 

course of operations are allowable. 

o. Interest, fund raising and investment 

management costs. 

(1) Costs incurred for interest on borrowed 

capital or temporary use of endowment 

funds, however represented, are unallowable. 

(2) Costs of organized fund raising, 

including financial campaigns, endowment 

drives, solicitation of gifts and bequests, and 

similar expenses incurred solely to raise 

capital or obtain contributions are not 

allowable. 

(3) Costs of investment counsel and staff 

and similar expenses incurred solely to 

enhance income from investments are not 

allowable. 

(4) Costs related to the physical custody 

and control of monies and securities are 

allowable. 

p. Labor relations costs. 

Costs incurred in maintaining satisfactory 

relations between the hospital and its 

employees, including costs of labor 

management committees, employees’ 

publications, and other related activities are 

allowable. 

q. Losses on research agreements or 

contracts. 

Any excess of costs over income under any 

agreement or contract of any nature is 

unallowable. This includes, but is not limited 

to, the hospital’s contributed portion by 

reason of cost-sharing agreements, underrecoveries through negotiation of flat 

amounts for overhead, or legal or 

administrative limitations. 

r. Maintenance and repair costs. 

(1) Costs necessary for the upkeep of 

property (including government property 

unless otherwise provided for), which 

neither add to the permanent value of the 

property nor appreciably prolong its 

intended life, but keep it in an efficient 

operating condition, are to be treated as 

follows: 


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i. Normal maintenance and repair costs are 

allowable; 

ii. Extraordinary maintenance and repair 

costs are allowable, provided they are 

allocated to the periods to which applicable 

for purposes of determining research costs. 

(2) Expenditures for plant and equipment, 

including rehabilitation thereof, which 

according to generally accepted accounting 

principles as applied under the hospital’s 

established policy, should be capitalized and 

subjected to depreciation, are allowable only 

on a depreciation basis. 

s. Material costs. 

Costs incurred for purchased materials, 

supplies and fabricated parts directly or 

indirectly related to the research agreement, 

are allowable. Purchases made specifically 

for the research agreement should be charged 

thereto at their actual prices after deducting 

all cash discounts, trade discounts, rebates, 

and allowances received by the institution. 

Withdrawals from general stores or 

stockrooms should be charged at their cost 

under any recognized method of pricing 

stores withdrawals conforming to sound 

accounting practices consistently followed by 

the hospital. Incoming transportation charges 

are a proper part of material cost. Direct 

material cost should include only the 

materials and supplies actually used for the 

performance of the research agreement, and 

due credit should be given for any excess 

materials retained or returned to vendors. 

Due credit should be given for all proceeds 

or value received for any scrap resulting from 

work under the research agreement. Where 

government donated or furnished material is 

used in performing the research agreement, 

such material will be used without charge. 

t. Memberships, subscriptions and 

professional activity costs. 

(1) Costs of the hospital’s membership in 

civic, business, technical and professional 

organizations are allowable. 

(2) Costs of the hospital’s subscriptions to 

civic, business, professional and technical 

periodicals are allowable. 

(3) Costs of meetings and conferences, 

when the primary purpose is the 

dissemination of technical information, are 

allowable. This includes costs of meals, 

transportation, rental of facilities, and other 

items incidental to such meetings or 

conferences. 

u. Organization costs. 

Expenditures such as incorporation fees, 

attorneys’ fees, accountants’ fees, brokers’ 

fees, fees to promoters and organizers in 

connection with (1) organization or 

reorganization of a hospital, or (2) raising 

capital, are unallowable. 

v. Other business expenses. 

Included in this item are such recurring 

expenses as registry and transfer charges 

resulting from changes in ownership of 

securities issued by the hospital, cost of 

shareholders meetings preparation and 

publication of reports to shareholders, 

preparation and submission of required 

reports and forms to taxing and other 

regulatory bodies, and incidental costs of 

directors and committee meetings. The above 

and similar costs are allowable when 

allocated on an equitable basis. 

w. Patient care. 

The cost of routine and ancillary or special 

services to research patients is an allowable 

direct cost of research agreements. 

(1) Routine services shall include the costs 

of the regular room, dietary and nursing 

services, minor medical and surgical supplies 

and the use of equipment and facilities for 

which a separate charge is not customarily 

made. 

(2) Ancillary or special services are the 

services for which charges are customarily 

made in addition to routine services, such as 

operating rooms, anesthesia, laboratory, 

BMR–EKG, etc. 

(3) Patient care, whether expressed as a 

rate or an amount, shall be computed in a 

manner consistent with the procedures used 

to determine reimbursable costs under Pub. 

L. 89–97 (Medicare Program) as defined 

under the ‘‘Principles of Reimbursement For 

Provider Costs’’ published by the Social 

Security Administration of the Department of 

Health and Human Services. The allowability 

of specific categories of cost shall be in 

accordance with those principles rather than 

the principles for research contained herein. 

In the absence of participation in the 

Medicare program by a hospital, all 

references to the Medicare program in these 

principles shall be construed as meaning the 

Medicaid program. 

i. Once costs have been recognized as 

allowable, the indirect costs or general 

service center’s cost shall be allocated 

(stepped-down) to special service centers, 

and all patient and nonpatient costs centers 

based upon actual services received or 

benefiting these centers. 

ii. After allocation, routine and ancillary 

costs shall be apportioned to scatter-bed 

research patients on the same basis as is used 

to apportion costs to Medicare patients, i.e. 

using either the departmental method or the 

combination method, as those methods are 

defined by the Social Security 

Administration; except that final settlement 

shall be on a grant-by-grant basis. However, 

to the extent that the Social Security 

Administration has recognized any other 

method of cost apportionment, that method 

generally shall also be recognized as 

applicable to the determination of research 

patient care costs. 

iii. A cost center must be established on 

Medicare reimbursement forms for each 

discrete-bed unit grant award received by a 

hospital. Routine costs should be steppeddown to this line item(s) in the normal 

course of stepping-down costs under 

Medicare/Medicaid requirements. However, 

in stepping-down routine costs, 

consideration must be given to preventing a 

step-down of those costs to discrete-bed unit 

line items that have already been paid for 

directly by the grant, such as bedside nursing 

costs. Ancillary costs allocable to research 

discrete-bed units shall be determined and 

proposed in accordance with paragraph 

w.(3).ii. 

(4) Where federally sponsored research 

programs provide specifically for the direct 

reimbursement of nursing, dietary, and other 

services, appropriate adjustment must be 

made to patient care costs to preclude 

duplication and/or misallocation of costs. 

x. Patent costs. 

Costs of preparing disclosures, reports and 

other documents required by the research 

agreement and of searching the art to the 

extent necessary to make such invention 

disclosures are allowable. In accordance with 

the clauses of the research agreement relating 

to patents, costs of preparing documents and 

any other patent costs, in connection with 

the filing of a patent application where title 

is conveyed to the Government, are 

allowable. (See also paragraph I.2.jj.) 

y. Pension plan costs. 

Costs of the hospital’s pension plan which 

are incurred in accordance with the 

established policies of the institution are 

allowable, provided such policies meet the 

test of reasonableness and the methods of 

cost allocation are not discriminatory, and 

provided appropriate adjustments are made 

for credits or gains arising out of normal and 

abnormal employee turnover or any other 

contingencies that can result in forfeitures by 

employees which inure to the benefit of the 

hospital. 

z. Plan security costs. 

Necessary expenses incurred to comply 

with government security requirements 

including wages, uniforms and equipment of 

personnel engaged in plant protection are 

allowable. 

aa. Pre-research agreement costs. 

Costs incurred prior to the effective date of 

the research agreement, whether or not they 

would have been allowable thereunder if 

incurred after such date, are unallowable 

unless specifically set forth and identified in 

the research agreement. 

bb. Professional services costs. 

(1) Costs of professional services rendered 

by the members of a particular profession 

who are not employees of the hospital are 

allowable subject to (2) and (3) below when 

reasonable in relation to the services 

rendered and when not contingent upon 

recovery of the costs from the Government. 

Retainer fees to be allowable must be 

reasonably supported by evidence of services 

rendered. 

(2) Factors to be considered in determining 

the allowability of costs in a particular case 

include (i) the past pattern of such costs, 

particularly in the years prior to the award 

of government research agreements on the 

institution’s total activity; (ii) the nature and 

scope of managerial services expected of the 

institution’s own organizations; and (iii) 

whether the proportion of government work 

to the hospital’s total activity is such as to 

influence the institution in favor of incurring 

the cost, particularly where the services 

rendered are not of a continuing nature and 

have little relationship to work under 

government research agreements. 

(3) Costs of legal, accounting and 

consulting services, and related costs 

incurred in connection with organization and 

reorganization or the prosecution of claims 

against the Government are unallowable. 

Costs of legal, accounting and consulting 

services, and related costs incurred in 

connection with patent infringement 

litigation are unallowable unless otherwise 

provided for in the research agreement. 

cc. Profits and losses on disposition of 

plant equipment, or other assets. 

Profits or losses of any nature arising from 

the sale or exchange of plant, equipment, or 


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other capital assets, including sales or 

exchange of either short- or long-term 

investments, shall be excluded in computing 

research agreement costs. 

dd. Proposal costs. 

Proposal costs are the costs of preparing 

bids or proposals on potential government 

and non-government research agreements or 

projects, including the development of 

technical data and cost data necessary to 

support the institution’s bids or proposals. 

Proposal costs of the current accounting 

period of both successful and unsuccessful 

bids and proposals normally should be 

treated as indirect costs and allocated 

currently to all activities of the institution, 

and no proposal costs of past accounting 

periods will be allocable in the current 

period to the government research agreement. 

However, the institution’s established 

practices may be to treat proposal costs by 

some other recognized method. Regardless of 

the methods used, the results obtained may 

be accepted only if found to be reasonable 

and equitable. 

ee. Public information services costs. 

Costs of news releases pertaining to 

specific research or scientific 

accomplishment are unallowable unless 

specifically authorized by the sponsoring 

agency. 

ff. Rearrangement and alteration costs. 

Costs incurred for ordinary or normal 

rearrangement and alteration of facilities are 

allowable. Special rearrangement and 

alteration costs incurred specifically for a 

project are allowable only as a direct charge 

when such work has been approved in 

advance by the sponsoring agency concerned. 

gg. Reconversion costs. 

Costs incurred in the restoration or 

rehabilitation of the institution’s facilities to 

approximately the same condition existing 

immediately prior to commencement of 

government research agreement work, fair 

wear and tear excepted, are allowable. 

hh. Recruiting costs. 

(1) Subject to (2), (3), and (4) below, and 

provided that the size of the staff recruited 

and maintained is in keeping with workload 

requirements, costs of ‘‘help wanted’’ 

advertising, operating costs of an 

employment office necessary to secure and 

maintain an adequate staff, costs of operating 

an aptitude and educational testing program, 

travel costs of employees while engaged in 

recruiting personnel, travel costs of 

applicants for interviews for prospective 

employment, and relocation costs incurred 

incident to recruitment of new employees are 

allowable to the extent that such costs are 

incurred pursuant to a well-managed 

recruitment program. Where an institution 

uses employment agencies, costs not in 

excess of standard commercial rates for such 

services are allowable. 

(2) In publications, costs of help wanted 

advertising that includes color, includes 

advertising material for other than 

recruitment purposes, or is excessive in size 

(taking into consideration recruitment 

purposes for which intended and normal 

institutional practices in this respect) are 

unallowable. 

(3) Costs of help wanted advertising, 

special emoluments; fringe benefits, and 

salary allowances incurred to attract 

professional personnel from other 

institutions that do not meet the test of 

reasonableness or do not conform with the 

established practices of the institution are 

unallowable. 

(4) Where relocation costs incurred 

incident to recruitment of a new employee 

have been allowed either as an allocable 

direct or indirect cost, and the newly hired 

employee resigns for reasons within his 

control within twelve months after hire, the 

institution will be required to refund or 

credit such relocations costs as were charged 

to the Government. 

ii. Rental costs (including sale and leaseback of facilities). 

(1) Rental costs of land, building, and 

equipment and other personal property are 

allowable if the rates are reasonable in light 

of such factors as rental costs of comparable 

facilities and market conditions in the area, 

the type, life expectancy, condition, and 

value of the facilities leased, options 

available, and other provisions of the rental 

agreement. Application of these factors, in 

situations where rentals are extensively used, 

may involve among other considerations 

comparison of rental costs with the amount 

which the hospital would have received had 

it owned the facilities. 

(2) Charges in the nature of rent between 

organizations having a legal or other 

affiliation or arrangement such as hospitals, 

medical schools, foundations, etc., are 

allowable to the extent such charges do not 

exceed the normal costs of ownership such 

as depreciation, taxes, insurance, and 

maintenance, provided that no part of such 

costs shall duplicate any other allowed costs. 

(3) Unless otherwise specifically provided 

in the agreement, rental costs specified in 

sale and lease-back agreements incurred by 

hospitals through selling plant facilities to 

investment organizations such as insurance 

companies or to private investors, and 

concurrently leasing back the same facilities 

are allowable only to the extent that such 

rentals do not exceed the amount which the 

hospital would have received had it retained 

legal title to the facilities. 

jj. Royalties and other costs for use of 

patents. 

Royalties on a patent or amortization of the 

cost of acquiring a patent or invention or 

rights thereto necessary for the proper 

performance of the research agreement and 

applicable to tasks or processes thereunder 

are allowable unless the Government has a 

license or the right to free use of the patent, 

the patent has been adjudicated to be invalid, 

or has been administratively determined to 

be invalid, the patent is considered to be 

unenforceable, or the patent has expired. 

kk. Severance pay. 

(1) Severance pay is compensation in 

addition to regular salaries and wages which 

is paid by a hospital to employees whose 

services are being terminated. Costs of 

severance pay are allowable only to the 

extent that such payments are required by 

law, by employer-employee agreement, by 

established policy that constitutes in effect 

an implied agreement on the institution’s 

part, or by circumstances of the particular 

employment. 

(2) Severance payments that are due to 

normal, recurring turnover, and which 

otherwise meet the conditions of (a) above 

may be allowed provided the actual costs of 

such severance payments are regarded as 

expenses applicable to the current fiscal year 

and are equitably distributed among the 

institution’s activities during that period. 

(3) Severance payments that are due to 

abnormal or mass terminations are of such 

conjectural nature that allowability must be 

determined on a case-by-case basis. However, 

the Government recognizes its obligation to 

participate to the extent of its fair share in 

any specific payment. 

ll. Specialized service facilities operated by 

a hospital. 

(1) The costs of institutional services 

involving the use of highly complex and 

specialized facilities such as electronic 

computers and reactors are allowable 

provided the charges therefor meet the 

conditions of (2) or (3) below, and otherwise 

take into account any items of income or 

federal financing that qualify as applicable 

credits under paragraph C.5. 

(2) The costs of such hospital services 

normally will be charged directly to 

applicable research agreements based on 

actual usage or occupancy of the facilities at 

rates that (i) are designed to recover only 

actual costs of providing such services, and 

(ii) are applied on a nondiscriminatory basis 

as between organized research and other 

work of the hospital including commercial or 

accommodation sales and usage by the 

hospital for internal purposes. This would 

include use of such facilities as radiology, 

laboratories, maintenance men used for a 

special purpose, medical art, photography, 

etc. 

(3) In the absence of an acceptable 

arrangement for direct costing as provided in 

(2) above, the costs incurred for such 

institutional services may be assigned to 

research agreements as indirect costs, 

provided the methods used achieve 

substantially the same results. Such 

arrangements should be worked out in 

coordination with all government users of the 

facilities in order to assure equitable 

distribution of the indirect costs. 

mm. Special administrative costs. 

Costs incurred for general public relations 

activities, catalogs, alumni activities, and 

similar services are unallowable. 

nn. Staff and/or employee benefits. 

(1) Staff and/or employee benefits in the 

form of regular compensation paid to 

employees during periods of authorized 

absences from the job such as for annual 

leave, sick leave, military leave and the like 

are allowable provided such costs are 

absorbed by all hospital activities including 

organized research in proportion to the 

relative amount of time or effort actually 

devoted to each. 

(2) Staff benefits in the form of employer 

contributions or expenses for Social Security 

taxes, employee insurance, Workmen’s 

Compensation insurance, the Pension Plan 

(see paragraph I.2.y.), hospital costs or 

remission of hospital charges to the extent of 

costs for individual employees or their 

families, and the like are allowable provided 

such benefits are granted in accordance with 


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established hospital policies, and provided 

such contributions and other expenses 

whether treated as indirect costs or an 

increment of direct labor costs are distributed 

to particular research agreements and other 

activities in a manner consistent with the 

pattern of benefits accruing to the individuals 

or groups of employees whose salaries and 

wages are chargeable to such research 

agreements and other activities. 

oo. Taxes. 

(1) In general, taxes which the hospital is 

required to pay and which are paid or 

accrued in accordance with generally 

accepted accounting principles, and 

payments made to local governments in lieu 

of taxes which are commensurate with the 

local government services received are 

allowable except for (i) taxes from which 

exemptions are available to the hospital 

directly or which are available to the hospital 

based on an exemption afforded the 

Government and in the latter case when the 

sponsoring agency makes available the 

necessary exemption certificates, (ii) special 

assessments on land which represent capital 

improvements, and (iii) Federal Income 

Taxes. 

(2) Any refund of taxes, interest, or 

penalties, and any payment to the hospital of 

interest thereon attributable to taxes, interest 

or penalties, which were allowed as research 

agreement costs will be credited or paid to 

the Government in the manner directed by 

the Government provided any interest 

actually paid or credited to a hospital 

incident to a refund of tax, interest, and 

penalty will be paid or credited to the 

Government only to the extent that such 

interest accrued over the period during 

which the hospital had been reimbursed by 

the Government for the taxes, interest, and 

penalties. 

pp. Transportation costs. 

Costs incurred for inbound freight, express, 

cartage, postage and other transportation 

services relating either to goods purchased, 

in process, or delivered are allowable. When 

such costs can readily be identified with the 

items involved, they may be charged directly 

as transportation costs or added to the cost 

of such items. Where identification with the 

material received cannot readily be made, 

inbound transportation costs may be charged 

to the appropriate indirect cost accounts if 

the institution follows a consistent equitable 

procedure in this respect. Outbound freight, 

if reimbursable under the terms of the 

research agreement, should be treated as a 

direct cost. 

qq. Travel costs. 

(1) Travel costs are the expenses for 

transportation, lodging, subsistence, and 

related items incurred by employees who are 

in travel status on official business of the 

hospital. Such costs may be charged on an 

actual basis, on a per diem or mileage basis 

in lieu of actual costs incurred, or on a 

combination of the two provided the method 

used is applied to an entire trip and not to 

selected days of the trip, and results in 

charges consistent with those normally 

allowed by the institution in its regular 

operations. 

(2) Travel costs are allowable subject to (3) 

and (4) below when they are directly 

attributable to specific work under a research 

agreement or when they are incurred in the 

normal course of administration of the 

hospital or a department or research program 

thereof. 

(3) The difference in cost between first 

class air accommodations and less than first 

class air accommodations is unallowable 

except when less than first class air 

accommodations are not reasonably available 

to meet necessary mission requirements such 

as where less than first class 

accommodations would (i) require circuitous 

routing, (ii) require travel during 

unreasonable hours, (iii) greatly increase the 

duration of the flight, (iv) result in additional 

costs which would offset the transportation 

savings, or (v) offer accommodations which 

are not reasonably adequate for the medical 

needs of the traveler. 

(4) Costs of personnel movements of a 

special or mass nature are allowable only 

when authorized or approved in writing by 

the sponsoring agency or its authorized 

representative. 

rr. Termination costs applicable to 

contracts. 

(1) Contract terminations generally give 

rise to the incurrence of costs or to the need 

for special treatment of costs which would 

not have arisen had the contract not been 

terminated. Items peculiar to termination are 

set forth below. They are to be used in 

conjunction with all other provisions of these 

principles in the case of contract termination. 

(2) The cost of common items of material 

reasonably usable on the hospital’s other 

work will not be allowable unless the 

hospital submits evidence that it could not 

retain such items at cost without sustaining 

a loss. In deciding whether such items are 

reasonably usable on other work of the 

institution, consideration should be given to 

the hospital’s plans for current scheduled 

work or activities including other research 

agreements. Contemporaneous purchases of 

common items by the hospital will be 

regarded as evidence that such items are 

reasonably usable on the hospital’s other 

work. Any acceptance of common items as 

allowable to the terminated portion of the 

contract should be limited to the extent that 

the quantities of such items on hand, in 

transit, and on order are in excess of the 

reasonable quantitative requirement of other 

work. 

(3) If in a particular case, despite all 

reasonable efforts by the hospital, certain 

costs cannot be discontinued immediately 

after the effective date of termination, such 

costs are generally allowable within the 

limitations set forth in these principles, 

except that any such costs continuing after 

termination due to the negligent or willful 

failure of the hospital to discontinue such 

costs will be considered unacceptable. 

(4) Loss of useful value of special tooling 

and special machinery and equipment is 

generally allowable, provided (i) such special 

tooling, machinery or equipment is not 

reasonably capable of use in the other work 

of the hospital; (ii) the interest of the 

Government is protected by transfer of title 

or by other means deemed appropriate by the 

contracting officer; and (iii) the loss of useful 

value as to any one terminated contract is 

limited to that portion of the acquisition cost 

which bears the same ratio to the total 

acquisition cost as the terminated portion of 

the contract bears to the entire terminated 

contract and other government contracts for 

which the special tooling, special machinery 

or equipment was acquired. 

(5) Rental costs under unexpired leases are 

generally allowable where clearly shown to 

have been reasonably necessary for the 

performance of the terminated contract, less 

the residual value of such leases, if (i) the 

amount of such rental claimed does not 

exceed the reasonable use value of the 

property leased for the period of the contract 

and such further period as may be 

reasonable; and (ii) the hospital makes all 

reasonable efforts to terminate, assign, settle, 

or otherwise reduce the cost of such lease. 

There also may be included the cost of 

alterations of such leased property, provided 

such alterations were necessary for the 

performance of the contract and of reasonable 

restoration required by the provisions of the 

lease. 

(6) Settlement expenses including the 

following are generally allowable: (i) 

Accounting, legal, clerical, and similar costs 

reasonably necessary for the preparation and 

presentation to contracting officers of 

settlement claims and supporting data with 

respect to the terminated portion of the 

contract and the termination and settlement 

of subcontracts; and (ii) reasonable costs for 

the storage, transportation, protection, and 

disposition of property provided by the 

Government or acquired or produced by the 

institution for the contract. 

(7) Subcontractor claims including the 

allocable portion of claims which are 

common to the contract and to other work of 

the contractor are generally allowable. 

ss. Voluntary services. 

The value of voluntary services provided 

by sisters or other members of religious 

orders is allowable provided that amounts do 

not exceed that paid other employees for 

similar work. Such amounts must be 

identifiable in the records of the hospital as 

a legal obligation of the hospital. This may 

be reflected by an agreement between the 

religious order and the hospital supported by 

evidence of payments to the order. 

Appendix X to Part 75—Data Collection 

Form (SF–SAC) 

The Data Collection Form SF–SAC is 

available on the FAC Web site https://

harvester.census.gov/facweb/Default.aspx. 

Appendix XI to Part 75—Compliance 

Supplement 

The compliance supplement is available on 

the OMB Web site: (http:// 

www.whitehouse.gov/omb/circulars/) 

PART 92 [REMOVED AND RESERVED] 

■ 4. Remove and reserve 45 CFR part 92. 

Ellen Murray, 

Assistant Secretary for Financial Resources. 

Department of Agriculture 

For the reasons stated in the common 

preamble, under the authority of 5 


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U.S.C. 301, 7 CFR 2.28(a)(13)(iii), and 

the authorities listed below, USDA adds 

Parts 400, 415, 416, 418 and 422 to Title 

2 of the CFR and removes Parts 3015, 

3016, 3018, 3019, 3022 and 3052 from 

Title 7 of the CFR as follows: 

TITLE 2—GRANTS AND 

AGREEMENTS 

CHAPTER IV—DEPARTMENT OF 

AGRICULTURE 

■ 1. Title 2 of the Code of Federal 

Regulations is amended by adding Part 

400 to read as follows: 

PART 400—UNIFORM 

ADMINISTRATIVE REQUIREMENTS, 

COST PRINCIPLES, AND AUDIT 

REQUIREMENTS FOR FEDERAL 

AWARDS 

400.1 What does this part do? 

400.2 Conflict of interest. 

Authority: 31 U.S.C. 503. 

PART 400—UNIFORM 

ADMINISTRATIVE REQUIREMENTS, 

COST PRINCIPLES, AND AUDIT 

REQUIREMENTS FOR FEDERAL 

AWARDS 

§ 400.1 What does this part do? 

This part adopts the OMB guidance in 

subparts A through F of 2 CFR part 200, 

as supplemented by this part, as USDA 

policies and procedures for uniform 

administrative requirements, cost 

principles, and audit requirements for 

Federal awards. It thereby gives 

regulatory effect for the USDA to the 

OMB guidance, as supplemented by this 

part. 

§ 400.2 Conflict of interest. 

(a) Each USDA awarding agency must 

establish conflict of interest policies for 

its Federal awards. 

(b) Non-Federal entities must disclose 

in writing any potential conflicts of 

interest to the USDA awarding agency 

or pass-through entity. 

(1) The non-Federal entity must 

maintain written standards of conduct 

covering conflicts of interest and 

governing the performance of its 

employees in the selection, award and 

administration of Federal awards. No 

employee, officer or agent may 

participate in the selection, award, or 

administration of a Federal award if he 

or she has a real or apparent conflict of 

interest. Such a conflict of interest 

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 or a tangible personal benefit 

from a non-Federal entity considered for 

a Federal award. The non-Federal entity 

may set standards for situations in 

which the financial interest is not 

substantial or the gift is an unsolicited 

item of nominal value. The standards of 

conduct must provide for disciplinary 

actions to be applied for violations of 

such standards by officers, employees, 

or agents of the non-Federal entity. 

(2) If the non-Federal entity has a 

parent, affiliate, or subsidiary 

organization that is not a state, local 

government, or Indian tribe, the nonFederal entity must also maintain 

written standards of conduct covering 

organizational conflicts of interest. 

Organizational conflicts of interest 

means that because of the relationships 

with a parent company, affiliate, or 

subsidiary organization, is unable or 

appears to be unable to be impartial in 

conducting a Federal award action 

involving a related organization. 

■ 2. Title 2 of the Code of Federal 

Regulations is amended by adding Part 

415 to read as follows: 

PART 415—GENERAL PROGRAM 

ADMINISTRATIVE REGULATIONS 

Subpart A—Application for Federal 

Assistance 

Sec. 

415.1 Competition in the awarding of 

discretionary grants and cooperative 

agreements. 

Subpart B—Miscellaneous 

415.2 Acknowledgement of Support on 

Publications and Audiovisuals. 

Subpart C—Intergovernmental Review of 

Department of Agriculture Programs and 

Activities 

415.3 Purpose. 

415.4 Definitions. 

415.5 Applicability. 

415.6 Secretary’s general responsibilities. 

415.7 Federal interagency coordination. 

415.8 State selection of programs and 

activities. 

415.9 Communication with State and local 

elected officials. 

415.10 State comments on proposed 

Federal financial assistance and direct 

Federal development. 

415.11 Processing comments. 

415.12 Accommodation of 

intergovernmental concerns. 

415.13 Interstate situations. 

415.14 Simplification, consolidation, or 

substitution of State plans. 

415.15 Waivers. 

Authority: 5 U.S.C. 301. 

Subpart A—Application for Federal 

Assistance 

§ 415.1 Competition in the awarding of 

discretionary grants and cooperative 

agreements. 

(a) Standards for competition. Except 

as provided in paragraph (d) of this 

section, awarding agencies shall enter 

into discretionary grants and 

cooperative agreements only after 

competition. An awarding agency’s 

competitive award process shall adhere 

to the following standards: 

(1) Potential applicants must be 

invited to submit proposals through 

publications such as the Federal 

Register, OMB-designated 

governmentwide Web site as described 

in 2 CFR 200.203, professional trade 

journals, agency or program handbooks, 

the Catalog of Federal Domestic 

Assistance, or any other appropriate 

means of solicitation. In so doing, 

awarding agencies should consider the 

broadest dissemination of project 

solicitations in order to reach the 

highest number of potential applicants. 

(2) Proposals are to be evaluated 

objectively by independent reviewers in 

accordance with written criteria set 

forth by the awarding agency. Reviewers 

should make written comments, as 

appropriate, on each application. 

Independent reviewers may be from the 

private sector, another agency, or within 

the awarding agency, as long as they do 

not include anyone who has approval 

authority for the applications being 

reviewed or anyone who might appear 

to have a conflict of interest in the role 

of reviewer of applications. A conflict of 

interest might arise when the reviewer 

or the reviewer’s immediate family 

members have been associated with the 

applicant or applicant organization 

within the past two years as an owner, 

partner, officer, director, employee, or 

consultant; has any financial interest in 

the applicant or applicant organization; 

or is negotiating for, or has any 

arrangement, concerning prospective 

employment. 

(3) An unsolicited application, which 

is not unique and innovative, shall be 

competed under the project solicitation 

it comes closest to fitting. Awarding 

agency officials will determine the 

solicitation under which the application 

is to be evaluated. When the awarding 

agency official decides that the 

unsolicited application does not fall 

under a recent, current, or planned 

solicitation, a noncompetitive award 

may be made, if appropriate to do so 

under the criteria of this section. 

Otherwise, the application should be 

returned to the applicant. 


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(b) Project solicitations. A project 

solicitation by the awarding agency 

shall include or reference the following, 

as appropriate: 

(1) A description of the eligible 

activities which the awarding agency 

proposes to support and the program 

priorities; 

(2) Eligible applicants; 

(3) The dates and amounts of funds 

expected to be available for awards; 

(4) Evaluation criteria and weights, if 

appropriate, assigned to each; 

(5) Methods for evaluating and 

ranking applications; 

(6) Name and address where 

proposals should be mailed or emailed 

and submission deadline(s); 

(7) Any required forms and how to 

obtain them; 

(8) Applicable cost principles and 

administrative requirements; 

(9) Type of funding instrument 

intended to be used (grant or 

cooperative agreement); and 

(10) The Catalog of Federal Domestic 

Assistance number and title. 

(c) Approval of applications. The final 

decision to award is at the discretion of 

the awarding/approving official in each 

agency. The awarding/approving official 

shall consider the ranking, comments, 

and recommendations from the 

independent review group, and any 

other pertinent information before 

deciding which applications to approve 

and their order of approval. Any appeals 

by applicants regarding the award 

decision shall be handled by the 

awarding agency using existing agency 

appeal procedures or good 

administrative practice and sound 

business judgment. 

(d) Exceptions. The awarding/

approving official may make a 

determination in writing that 

competition is not deemed appropriate 

for a particular transaction. Such 

determination shall be limited to 

transactions where it can be adequately 

justified that a noncompetitive award is 

in the best interest of the Government 

and necessary to the accomplishment of 

the goals of the program. Reasons for 

considering noncompetitive awards may 

include, but are not necessarily limited 

to, the following: 

(1) Nonmonetary awards of property 

or services; 

(2) Awards of less than $75,000; 

(3) Awards to fund continuing work 

already started under a previous award; 

(4) Awards which cannot be delayed 

due to an emergency or a substantial 

danger to health or safety; 

(5) Awards when it is impracticable to 

secure competition; or 

(6) Awards to fund unique and 

innovative unsolicited applications. 

Subpart B—Miscellaneous 

§ 415.2 Acknowledgement of USDA 

Support on Publications and Audiovisuals. 

(a) Definitions. 

(1) ‘‘Audiovisual’’ means a product 

containing visual imagery or sound or 

both. Examples of audiovisuals are 

motion pictures, live or prerecorded 

radio or television programs, slide 

shows, filmstrips, audio recordings, and 

multimedia presentations. 

(2) ‘‘Production of an audiovisual’’ 

means any of the steps that lead to a 

finished audiovisual, including design, 

layout, script-writing, filming, editing, 

fabrication, sound recording or taping. 

The term does not include the placing 

of captions for the hearing impaired on 

films or videotapes not originally 

produced for use with the hearing 

impaired. 

(3) ‘‘Publication’’ means a published 

book, periodical, pamphlet, brochure, 

flier, or similar item. It does not include 

any audiovisuals. 

(b) Publications. Recipients shall have 

an acknowledgement of USDA awarding 

agency support placed on any 

publications written or published with 

grant support and, if feasible, on any 

publication reporting the results of, or 

describing, a grant-supported activity. 

(c) Audiovisuals. Recipients shall 

have an acknowledgement of USDA 

awarding agency support placed on any 

audiovisual which is produced with 

grant support and which has a direct 

production cost to the recipient of over 

$5,000. Unless the other provisions of 

the grant award make it apply, this 

requirement does not apply to: 

(1) Audiovisuals produced as research 

instruments or for documenting 

experimentation or findings and not 

intended for presentation or distribution 

to the general public. 

(2) [Reserved] 

(d) Waivers. USDA awarding agencies 

may waive any requirement of this 

section. 

Subpart C—Intergovernmental Review 

of Department of Agriculture Programs 

and Activities 

§ 415.3 Purpose. 

(a) The regulations in this part 

implement Executive Order 12372, 

‘‘Intergovernmental Review of Federal 

Programs’’, issued July 14, 1982, and 

amended on April 8, 1983. These 

regulations also implement applicable 

provisions of section 401 of the 

Intergovernmental Cooperation Act of 

1968 and section 204 of the 

Demonstration Cities and Metropolitan 

Development Act of 1966. 

(b) These regulations are intended to 

foster an intergovernmental partnership 

and a strengthened Federalism by 

relying on State processes and on State, 

areawide, regional and local 

coordination for review of proposed 

Federal financial assistance and direct 

Federal development. 

(c) The regulations are intended to aid 

the internal management of the 

Department, and are not intended to 

create any right or benefit enforceable at 

law by a party against the Department 

or its officers. 

§ 415.4 Definitions. 

As used in this part, the following 

definitions apply: 

Department means the U.S. 

Department of Agriculture. 

Order means Executive Order 12372, 

issued July 14, 1982, and amended 

April 8, 1983, and titled 

Intergovernmental Review of Federal 

Programs. 

Secretary means the Secretary of the 

U.S. Department of Agriculture or an 

official or employee of the Department 

acting for the Secretary under a 

delegation of authority. 

State means any of the 50 states, the 

District of Columbia, the 

Commonwealth of Puerto Rico, the 

Commonwealth of the Northern Mariana 

Islands, Guam, American Samoa, and 

the U.S. Virgin Islands. 

§ 415.5 Applicability. 

The Secretary publishes in the 

Federal Register a list of the 

Department’s programs and activities 

that are subject to these regulations and 

identifies which of these are subject to 

the requirements of section 204 of the 

Demonstration Cities and Metropolitan 

Development Act. 

§ 415.6 Secretary’s general 

responsibilities. 

(a) The Secretary provides 

opportunities for consultation by 

elected officials of those State and local 

governments that would provide the 

non-Federal funds for, or that would be 

directly affected by, proposed Federal 

financial assistance from, or direct 

Federal development by, the 

Department. 

(b) If a State adopts a process under 

the Order to review and coordinate 

proposed Federal financial assistance 

and direct Federal development, the 

Secretary, to the extent permitted by 

law: 

(1) Uses the State process to 

determine official views of State and 

local elected officials; 

(2) Communicates with State and 

local elected officials as early in a 

program planning cycle as is reasonably 

feasible to explain specific plans and 

actions; 


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(3) Makes efforts to accommodate 

State and local elected officials’ 

concerns with proposed Federal 

financial assistance and direct Federal 

development that are communicated 

through the State process; 

(4) Allows the States to simplify and 

consolidate existing Federally required 

State plan submissions; 

(5) Where State planning and 

budgeting systems are sufficient and 

where permitted by law, encourages the 

substitution of State plans for Federally 

required State plans; 

(6) Seeks the coordination of views of 

affected State and local elected officials 

in one State with those of another State 

when proposed Federal financial 

assistance or direct Federal 

development has an impact on interstate 

metropolitan urban centers or other 

interstate areas; and 

(7) Supports State and local 

governments by discouraging the 

reauthorization or creation of any 

planning organization which is 

Federally-funded, which has a limited 

purpose, and which is not adequately 

representative of, or accountable to, 

State or local elected officials. 

§ 415.7 Federal interagency coordination. 

The Secretary, to the extent 

practicable, consults with and seeks 

advice from all other substantially 

affected Federal departments and 

agencies in an effort to assure full 

coordination between such agencies and 

the Department regarding programs and 

activities covered under these 

regulations. 

§ 415.8 State selection of programs and 

activities. 

(a) A State may select any program or 

activity published in the Federal 

Register in accordance with § 415.5 for 

intergovernmental review under these 

regulations. Each State, before selecting 

programs and activities, shall consult 

with local elected officials. 

(b) Each State that adopts a process 

shall notify the secretary of the 

Department’s programs and activities 

selected for that process. 

(c) A State may notify the Secretary of 

changes in its selections at any time. For 

each change, the State shall submit to 

the Secretary an assurance that the State 

has consulted with elected local 

officials regarding the change. The 

Department may establish deadlines by 

which States are required to inform the 

Secretary of changes in their program 

selections. 

(d) The Secretary uses a State’s 

process as soon as feasible, depending 

on individual programs and activities, 

after the Secretary is notified of its 

selections. 

§ 415.9 Communication with State and 

local elected officials. 

(a) The Secretary provides notice to 

directly affected State, areawide, 

regional, and local entities in a State of 

proposed Federal financial assistance or 

direct Federal development if: 

(1) The State has not adopted a 

process under the Order; or 

(2) The assistance or development 

involves a program or an activity that is 

not covered under the State process. 

(b) This notice may be made by 

publication in the Federal Register or 

other appropriate means, which the 

Department in its discretion deems 

appropriate. 

(c) In order to facilitate 

communication with State and local 

officials the Secretary has established an 

office within the Department to receive 

all communications pertinent to this 

Order. All communications should be 

sent to the Office of the Chief Financial 

Officer, Room 143–W, 1400 

Independence Avenue SW., 

Washington, DC 20250, Attention: E.O. 

12372. 

§ 415.10 State comments on proposed 

Federal financial assistance and direct 

Federal development. 

(a) Except in unusual circumstances, 

the Secretary gives State processes or 

directly affected State, areawide, 

regional, and local officials and entities: 

(1) At least 30 days from the date 

established by the Secretary to comment 

on proposed Federal financial assistance 

in the form of noncompeting 

continuation awards; and 

(2) At least 60 days from the date 

established by the Secretary to comment 

on proposed direct Federal development 

or Federal financial assistance other 

than noncompeting continuation 

awards. 

(b) This section also applies to 

comments in cases in which the review, 

coordination and communication with 

the Department have been delegated. 

(c) Applicants for programs and 

activities subject to section 204 of the 

Demonstration Cities and Metropolitan 

Development Act shall allow areawide 

agencies a 60-day opportunity for 

review and comment. 

§ 415.11 Processing comments. 

(a) The Secretary follows the 

procedures in § 415.12 if: 

(1) A State office or official is 

designated to act as a single point of 

contact between a State process and all 

Federal agencies; and 

(2) That office or official transmits a 

State process recommendation for a 

program selected under § 415.8. 

(b)(1) The single point of contact is 

not obligated to transmit comments 

from State, areawide, regional or local 

officials and entities where there is no 

State process recommendation. 

(2) If a State process recommendation 

is transmitted by a single point of 

contact, all comments from State, 

areawide, regional and local officials 

and entities that differ from it must also 

be transmitted. 

(c) If a State has not established a 

process, or is unable to submit a State 

process recommendation, State, 

areawide, regional and local officials 

and entities may submit comments 

either to the applicant or to the 

Department. 

(d) If a program or activity is not 

selected by a State process, State, 

areawide, regional and local officials 

and entities may submit comments 

either to the applicant or to the 

Department. In addition, if a State 

process recommendation for a nonselected program or activity is 

transmitted to the Department by the 

single point of contact, the Secretary 

follows the procedures of § 415.12. 

(e) The Secretary considers comments 

which do not constitute a State process 

recommendation submitted under these 

regulations and for which the Secretary 

is not required to apply the procedures 

of § 415.12, when such comments are 

provided by a single point of contact by 

the applicant, or directly to the 

Department by a commenting party. 

§ 415.12 Accommodation of 

intergovernmental concerns. 

(a) If a State process provides a State 

process recommendation to the 

Department through its single point of 

contact, the Secretary either— 

(1) Accepts the recommendations; 

(2) Reaches a mutually agreeable 

solution with the State process; or 

(3) Provides the single point of 

contact with a written explanation of 

the decision, as the Secretary in his or 

her discretion deems appropriate. The 

Secretary may also supplement the 

written explanation by also providing 

the explanation to the single point of 

contact by telephone, other 

telecommunication, or other means. 

(b) In any explanation under 

paragraph (a)(3) of this section, the 

Secretary informs the single point of 

contact that: 

(1) The Department will not 

implement its decision for at least ten 

days after the single point of contact 

receives the explanation; or 

(2) The Secretary has reviewed the 

decision and determined that, because 

of unusual circumstances, the waiting 

period of at least ten days is not feasible. 

(c) For purposes of computing the 

waiting period under paragraph (b)(1) of 


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this section, a single point of contact is 

presumed to have received written 

notification five days after the date of 

mailing of such notification. 

§ 415.13 Interstate situations. 

(a) The Secretary is responsible for: 

(1) Identifying proposed Federal 

financial assistance and direct Federal 

development that have an impact on 

interstate areas; 

(2) Notifying appropriate officials in 

States which have adopted a process 

and which selected the Department’s 

program or activity; 

(3) Making efforts to identify and 

notify the affected State, areawide, 

regional and local officials and entities 

in those States that have not adopted a 

process under the Order or do not select 

the Department’s program or activity; 

and 

(4) Responding, pursuant to § 415.12, 

if the Secretary receives a 

recommendation from a designated 

areawide agency transmitted by a single 

point of contact, in cases in which the 

review, coordination, and 

communication with the Department 

have been delegated. 

(b) The Secretary uses the procedures 

in § 415.12 if a State process provides a 

State process recommendation to the 

Department through a single point of 

contact. 

§ 415.14 Simplification, consolidation, or 

substitution of State plans. 

(a) As used in this section: 

(1) Simplify means that a State may 

develop its own format, choose its own 

submission date, and select the 

planning period for a State plan. 

(2) Consolidate means that a State 

may meet statutory and regulatory 

requirements by combining two or more 

plans into one document and that the 

State can select the format, submission 

date, and the planning period for the 

consolidated plan. 

(3) Substitute means that a State may 

use a plan or other document that it has 

developed for its own purposes to meet 

Federal requirements. 

(b) If not inconsistent with law, a 

State may decide to try to simplify, 

consolidate, or substitute Federally 

required State plans without prior 

approval by the Secretary. 

(c) The Secretary reviews each State 

plan a State has simplified, consolidated 

or substituted and accepts the plan only 

if its contents meet Federal 

requirements. 

§ 415.15 Waivers. 

In an emergency, the Secretary may 

waive any provision in Subpart C— 

Intergovernmental Review of 

Department of Agriculture Programs and 

Activities, 2 CFR 415.3 to 415.14. 

■ 3. Title 2 of the Code of Federal 

Regulations is amended by adding Part 

416 to read as follows: 

PART 416—GENERAL PROGRAM 

ADMINISTRATIVE REGULATIONS FOR 

GRANTS AND COOPERATIVE 

AGREEMENTS TO STATE AND LOCAL 

GOVERNMENTS 

Authority: 5 U.S.C. 301. 

§ 416.1 Special Procurement Provisions. 

(a) In order to ensure objective 

contractor performance and eliminate 

unfair competitive advantage, a 

prospective contractor that develops or 

drafts specifications, requirements, 

statements of work, invitations for bids, 

request for proposals, contract term and 

conditions or other documents for use 

by a State in conducting a procurement 

under the USDA entitlement programs 

specified in 2 CFR 200.101(e)(4) through 

(6) shall be excluded from competing for 

such procurements. Such prospective 

contractors are ineligible for contract 

awards resulting from such 

procurements regardless of the 

procurement method used. However, 

prospective contractors may provide 

States with specification information 

related to a State procurement under the 

USDA entitlement programs specified in 

2 CFR 200.101(e)(4) through (6) and still 

compete for the procurement if the 

State, and not the prospective 

contractor, develops or drafts the 

specifications, requirements, statements 

of work, invitations for bid, and/or 

requests for proposals used to conduct 

the procurement. 

(b) Procurements by States under 

USDA entitlement programs specified in 

2 CFR 200.101(e)(4) through (6) shall be 

conducted in a manner that prohibits 

the use of statutorily or administratively 

imposed in-State or local geographic 

preferences except as provided for in 2 

CFR 200.319(b). 

■ 4. Title 2 of the Code of Federal 

Regulations is amended by adding part 

418 to read as follows: 

PART 418—NEW RESTRICTIONS ON 

LOBBYING 

Sec. 

Subpart A—General 

418.100 Conditions on use of funds. 

418.105 Definitions. 

418.110 Certification and disclosure. 

Subpart B—Activities by Own Employees 

418.200 Agency and legislative liaison. 

418.205 Professional and technical services. 

418.210 Reporting. 

Subpart C—Activities by Other Than Own 

Employees 

418.300 Professional and technical services. 

Subpart D—Penalties and Enforcement 

418.400 Penalties. 

418.405 Penalty procedures. 

418.410 Enforcement. 

Subpart E—Exemptions 

418.500 Secretary of Defense. 

Subpart F—Agency Reports 

418.600 Semi-annual compilation. 

418.605 Inspector General report. 

APPENDIX A TO PART 418—CERTIFICATION

REGARDING LOBBYING

APPENDIX B TO PART 418—DISCLOSURE FORM TO

REPORT LOBBYING

Authority: 31 U.S.C. 1352; 5 U.S.C. 301. 

Subpart A—General 

§ 418.100 Conditions on use of funds. 

(a) No appropriated funds may be 

expended by the recipient of a Federal 

contract, grant, loan, or cooperative 

agreement to pay any person for 

influencing or attempting to influence 

an officer or employee of any agency, a 

Member of Congress, an officer or 

employee of Congress, or an employee 

of a Member of Congress in connection 

with any of the following covered 

Federal actions: the awarding of any 

Federal contract, the making of any 

Federal grant, the making of any Federal 

loan, the entering into of any 

cooperative agreement, and the 

extension, continuation, renewal, 

amendment, or modification of any 

Federal contract, grant, loan, or 

cooperative agreement. 

(b) Each person who requests or 

receives from an agency a Federal 

contract, grant, loan, or cooperative 

agreement shall file with that agency a 

certification, set forth in Appendix A, 

that the person has not made, and will 

not make, any payment prohibited by 

paragraph (a) of this section. 

(c) Each person who requests or 

receives from an agency a Federal 

contract, grant, loan, or a cooperative 

agreement shall file with that agency a 

disclosure form, set forth in Appendix 

B, if such person has made or has agreed 

to make any payment using 

nonappropriated funds (to include 

profits from any covered Federal 

action), which would be prohibited 

under paragraph (a) of this section if 

paid for with appropriated funds. 

(d) Each person who requests or 

receives from an agency a commitment 

providing for the United States to insure 

or guarantee a loan shall file with that 

agency a statement, set forth in 

Appendix A, whether that person has 

made or has agreed to make any 


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payment to influence or attempt to 

influence an officer or employee of any 

agency, a Member of Congress, an 

officer or employee of Congress, or an 

employee of a Member of Congress in 

connection with that loan insurance or 

guarantee. 

(e) Each person who requests or 

receives from an agency a commitment 

providing for the United States to insure 

or guarantee a loan shall file with that 

agency a disclosure form, set forth in 

Appendix B, if that person has made or 

has agreed to make any payment to 

influence or attempt to influence an 

officer or employee of any agency, a 

Member of Congress, an officer or 

employee of Congress, or an employee 

of a Member of Congress in connection 

with that loan insurance or guarantee. 

§ 418.105 Definitions. 

For purposes of this part: 

(a) Agency, as defined in 5 U.S.C. 

552(f), includes Federal executive 

departments and agencies as well as 

independent regulatory commissions 

and Government corporations, as 

defined in 31 U.S.C. 9101(1). 

(b) Covered Federal action. (1) 

Covered Federal action means any of the 

following Federal actions: 

(i) The awarding of any Federal 

contract; 

(ii) The making of any Federal grant; 

(iii) The making of any Federal loan; 

(iv) The entering into of any 

cooperative agreement; and, 

(v) The extension, continuation, 

renewal, amendment, or modification of 

any Federal contract, grant, loan, or 

cooperative agreement. 

(2) Covered Federal action does not 

include receiving from an agency a 

commitment providing for the United 

States to insure or guarantee a loan. 

Loan guarantees and loan insurance are 

addressed independently within this 

part. 

(c) Federal contract means an 

acquisition contract awarded by an 

agency, including those subject to the 

Federal Acquisition Regulation (FAR), 

and any other acquisition contract for 

real or personal property or services not 

subject to the FAR. 

(d) Federal cooperative agreement 

means a cooperative agreement entered 

into by an agency. 

(e) Federal grant means an award of 

financial assistance in the form of 

money, or property in lieu of money, by 

the Federal Government or a direct 

appropriation made by law to any 

person. The term does not include 

technical assistance which provides 

services instead of money, or other 

assistance in the form of revenue 

sharing, loans, loan guarantees, loan 

insurance, interest subsidies, insurance, 

or direct United States cash assistance 

to an individual. 

(f) Federal loan means a loan made by 

an agency. The term does not include 

loan guarantee or loan insurance. 

(g) Indian tribe and tribal organization 

have the meaning provided in section 4 

of the Indian Self-Determination and 

Education Assistance Act (25 U.S.C. 

450B). Alaskan Natives are included 

under the definitions of Indian tribes in 

that Act. 

(h) Influencing or attempting to 

influence means making, with the intent 

to influence, any communication to or 

appearance before an officer or 

employee or any agency, a Member of 

Congress, an officer or employee of 

Congress, or an employee of a Member 

of Congress in connection with any 

covered Federal action. 

(i) Loan guarantee and loan insurance 

means an agency’s guarantee or 

insurance of a loan made by a person. 

(j) Local government means a unit of 

government in a State and, if chartered, 

established, or otherwise recognized by 

a State for the performance of a 

governmental duty, including a local 

public authority, a special district, an 

intrastate district, a council of 

governments, a sponsor group 

representative organization, and any 

other instrumentality of a local 

government. 

(k) Officer or employee of an agency 

includes the following individuals who 

are employed by an agency: 

(1) An individual who is appointed to 

a position in the Government under title 

5, U.S. Code, including a position under 

a temporary appointment; 

(2) A member of the uniformed 

services as defined in section 101(3), 

title 37, U.S. Code; 

(3) A special Government employee as 

defined in section 202, title 18, U.S. 

Code; and, 

(4) An individual who is a member of 

a Federal advisory committee, as 

defined by the Federal Advisory 

Committee Act, title 5, U.S. Code 

appendix 2. 

(l) Person means an individual, 

corporation, company, association, 

authority, firm, partnership, society, 

State, and local government, regardless 

of whether such entity is operated for 

profit or not for profit. This term 

excludes an Indian tribe, tribal 

organization, or any other Indian 

organization with respect to 

expenditures specifically permitted by 

other Federal law. 

(m) Reasonable compensation means, 

with respect to a regularly employed 

officer or employee of any person, 

compensation that is consistent with the 

normal compensation for such officer or 

employee for work that is not furnished 

to, not funded by, or not furnished in 

cooperation with the Federal 

Government. 

(n) Reasonable payment means, with 

respect to professional and other 

technical services, a payment in an 

amount that is consistent with the 

amount normally paid for such services 

in the private sector. 

(o) Recipient includes all contractors, 

subcontractors at any tier, and 

subgrantees at any tier of the recipient 

of funds received in connection with a 

Federal contract, grant, loan, or 

cooperative agreement. The term 

excludes an Indian tribe, tribal 

organization, or any other Indian 

organization with respect to 

expenditures specifically permitted by 

other Federal law. 

(p) Regularly employed means, with 

respect to an officer or employee of a 

person requesting or receiving a Federal 

contract, grant, loan, or cooperative 

agreement or a commitment providing 

for the United States to insure or 

guarantee a loan, an officer or employee 

who is employed by such person for at 

least 130 working days within one year 

immediately preceding the date of the 

submission that initiates agency 

consideration of such person for receipt 

of such contract, grant, loan, cooperative 

agreement, loan insurance commitment, 

or loan guarantee commitment. An 

officer or employee who is employed by 

such person for less than 130 working 

days within one year immediately 

preceding the date of the submission 

that initiates agency consideration of 

such person shall be considered to be 

regularly employed as soon as he or she 

is employed by such person for 130 

working days. 

(q) State means a State of the United 

States, the District of Columbia, the 

Commonwealth of Puerto Rico, a 

territory or possession of the United 

States, an agency or instrumentality of 

a State, and a multi-State, regional, or 

interstate entity having governmental 

duties and powers. 

§ 418.110 Certification and disclosure. 

(a) Each person shall file a 

certification, and a disclosure form, if 

required, with each submission that 

initiates agency consideration of such 

person for: 

(1) Award of a Federal contract, grant, 

or cooperative agreement exceeding 

$100,000; or 

(2) An award of a Federal loan or a 

commitment providing for the United 

States to insure or guarantee a loan 

exceeding $150,000. 


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(b)(1) Each person shall file a 

certification, and a disclosure form, if 

required, upon receipt by such person 

of: 

(i) A Federal contract, grant, or 

cooperative agreement exceeding 

$100,000; or 

(ii) A Federal loan or a commitment 

providing for the United States to insure 

or guarantee a loan exceeding $150,000, 

(2) Unless such person previously 

filed a certification, and a disclosure 

form, if required, under paragraph (a) of 

this section. 

(c) Each person shall file a disclosure 

form at the end of each calendar quarter 

in which there occurs any event that 

requires disclosure or that materially 

affects the accuracy of the information 

contained in any disclosure form 

previously filed by such person under 

paragraphs (a) or (b) of this section. An 

event that materially affects the 

accuracy of the information reported 

includes: 

(1) A cumulative increase of $25,000 

or more in the amount paid or expected 

to be paid for influencing or attempting 

to influence a covered Federal action; or 

(2) A change in the person(s) or 

individual(s) influencing or attempting 

to influence a covered Federal action; 

or, 

(3) A change in the officer(s), 

employee(s), or Member(s) contacted to 

influence or attempt to influence a 

covered Federal action. 

(d) Any person shall file a 

certification, and a disclosure form, if 

required, to the next tier above who 

requests or receives from a person 

referred to in paragraphs (a) or (b) of this 

section: 

(1) A subcontract exceeding $100,000 

at any tier under a Federal contract; 

(2) A subgrant, contract, or 

subcontract exceeding $100,000 at any 

tier under a Federal grant; 

(3) A contract or subcontract 

exceeding $100,000 at any tier under a 

Federal loan exceeding $150,000; or, 

(4) A contract or subcontract 

exceeding $100,000 at any tier under a 

Federal cooperative agreement. 

(e) All disclosure forms, but not 

certifications, shall be forwarded from 

tier to tier until received by the person 

referred to in paragraphs (a) or (b) of this 

section. That person shall forward all 

disclosure forms to the agency. 

(f) Any certification or disclosure 

form filed under paragraph (e) of this 

section shall be treated as a material 

representation of fact upon which all 

receiving tiers shall rely. All liability 

arising from an erroneous representation 

shall be borne solely by the tier filing 

that representation and shall not be 

shared by any tier to which the 

erroneous representation is forwarded. 

Submitting an erroneous certification or 

disclosure constitutes a failure to file 

the required certification or disclosure, 

respectively. If a person fails to file a 

required certification or disclosure, the 

United States may pursue all available 

remedies, including those authorized by 

section 1352, title 31, U.S. Code. 

(g) For awards and commitments in 

process prior to December 23, 1989, but 

not made before that date, certifications 

shall be required at award or 

commitment, covering activities 

occurring between December 23, 1989, 

and the date of award or commitment. 

However, for awards and commitments 

in process prior to the December 23, 

1989 effective date of these provisions, 

but not made before December 23, 1989, 

disclosure forms shall not be required at 

time of award or commitment but shall 

be filed within 30 days. 

(h) No reporting is required for an 

activity paid for with appropriated 

funds if that activity is allowable under 

either Subpart B or C of this part. 

Subpart B—Activities by Own 

Employees 

§ 418.200 Agency and legislative liaison. 

(a) The prohibition on the use of 

appropriated funds, in § 418.100 (a), 

does not apply in the case of a payment 

of reasonable compensation made to an 

officer or employee of a person 

requesting or receiving a Federal 

contract, grant, loan, or cooperative 

agreement if the payment is for agency 

and legislative liaison activities not 

directly related to a covered Federal 

action. 

(b) For purposes of paragraph (a) of 

this section, providing any information 

specifically requested by an agency or 

Congress is allowable at any time. 

(c) For purposes of paragraph (a) of 

this section, the following agency and 

legislative liaison activities are 

allowable at any time only where they 

are not related to a specific solicitation 

for any covered Federal action: 

(1) Discussing with an agency 

(including individual demonstrations) 

the qualities and characteristics of the 

person’s products or services, 

conditions or terms of sale, and service 

capabilities; and, 

(2) Technical discussions and other 

activities regarding the application or 

adaptation of the person’s products or 

services for an agency’s use. 

(d) For purposes of paragraph (a) of 

this section, the following agencies and 

legislative liaison activities are 

allowable only where they are prior to 

formal solicitation of any covered 

Federal action: 

(1) Providing any information not 

specifically requested but necessary for 

an agency to make an informed decision 

about initiation of a covered Federal 

action; 

(2) Technical discussions regarding 

the preparation of an unsolicited 

proposal prior to its official submission; 

and, 

(3) Capability presentations by 

persons seeking awards from an agency 

pursuant to the provisions of the Small 

Business Act, as amended by Public 

Law 95–507 and other subsequent 

amendments. 

(e) Only those activities expressly 

authorized by this section are allowable 

under this section. 

§ 418.205 Professional and technical 

services. 

(a) The prohibition on the use of 

appropriated funds, in § 418.100 (a), 

does not apply in the case of a payment 

of reasonable compensation made to an 

officer or employee of a person 

requesting or receiving a Federal 

contract, grant, loan, or cooperative 

agreement or an extension, 

continuation, renewal, amendment, or 

modification of a Federal contract, 

grant, loan, or cooperative agreement if 

payment is for professional or technical 

services rendered directly in the 

preparation, submission, or negotiation 

of any bid, proposal, or application for 

that Federal contract, grant, loan, or 

cooperative agreement or for meeting 

requirements imposed by or pursuant to 

law as a condition for receiving that 

Federal contract, grant, loan, or 

cooperative agreement. 

(b) For purposes of paragraph (a) of 

this section, ‘‘professional and technical 

services’’ shall be limited to advice and 

analysis directly applying any 

professional or technical discipline. For 

example, drafting of a legal document 

accompanying a bid or proposal by a 

lawyer is allowable. Similarly, technical 

advice provided by an engineer on the 

performance or operational capability of 

a piece of equipment rendered directly 

in the negotiation of a contract is 

allowable. However, communications 

with the intent to influence made by a 

professional (such as a licensed lawyer) 

or a technical person (such as a licensed 

accountant) are not allowable under this 

section unless they provide advice and 

analysis directly applying their 

professional or technical expertise and 

unless the advice or analysis is rendered 

directly and solely in the preparation, 

submission or negotiation of a covered 

Federal action. Thus, for example, 

communications with the intent to 

influence made by a lawyer that do not 

provide legal advice or analysis directly 


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and solely related to the legal aspects of 

his or her client’s proposal, but 

generally advocate one proposal over 

another are not allowable under this 

section because the lawyer is not 

providing professional legal services. 

Similarly, communications with the 

intent to influence made by an engineer 

providing an engineering analysis prior 

to the preparation or submission of a bid 

or proposal are not allowable under this 

section since the engineer is providing 

technical services but not directly in the 

preparation, submission or negotiation 

of a covered Federal action. 

(c) Requirements imposed by or 

pursuant to law as a condition for 

receiving a covered Federal award 

include those required by law or 

regulation, or reasonably expected to be 

required by law or regulation, and any 

other requirements in the actual award 

documents. 

(d) Only those services expressly 

authorized by this section are allowable 

under this section. 

§ 418.210 Reporting. 

No reporting is required with respect 

to payments of reasonable compensation 

made to regularly employed officers or 

employees of a person. 

Subpart C—Activities by Other Than 

Own Employees 

§ 418.300 Professional and technical 

services. 

(a) The prohibition on the use of 

appropriated funds, in § 418.100 (a), 

does not apply in the case of any 

reasonable payment to a person, other 

than an officer or employee of a person 

requesting or receiving a covered 

Federal action, if the payment is for 

professional or technical services 

rendered directly in the preparation, 

submission, or negotiation of any bid, 

proposal, or application for that Federal 

contract, grant, loan, or cooperative 

agreement or for meeting requirements 

imposed by or pursuant to law as a 

condition for receiving that Federal 

contract, grant, loan, or cooperative 

agreement. 

(b) The reporting requirements in 

§ 418.110 (a) and (b) regarding filing a 

disclosure form by each person, if 

required, shall not apply with respect to 

professional or technical services 

rendered directly in the preparation, 

submission, or negotiation of any 

commitment providing for the United 

States to insure or guarantee a loan. 

(c) For purposes of paragraph (a) of 

this section, ‘‘professional and technical 

services’’ shall be limited to advice and 

analysis directly applying any 

professional or technical discipline. For 

example, drafting of a legal document 

accompanying a bid or proposal by a 

lawyer is allowable. Similarly, technical 

advice provided by an engineer on the 

performance or operational capability of 

a piece of equipment rendered directly 

in the negotiation of a contract is 

allowable. However, communications 

with the intent to influence made by a 

professional (such as a licensed lawyer) 

or a technical person (such as a licensed 

accountant) are not allowable under this 

section unless they provide advice and 

analysis directly applying their 

professional or technical expertise and 

unless the advice or analysis is rendered 

directly and solely in the preparation, 

submission or negotiation of a covered 

Federal action. Thus, for example, 

communications with the intent to 

influence made by a lawyer that do not 

provide legal advice or analysis directly 

and solely related to the legal aspects of 

his or her client’s proposal, but 

generally advocate one proposal over 

another are not allowable under this 

section because the lawyer is not 

providing professional legal services. 

Similarly, communications with the 

intent to influence made by an engineer 

providing an engineering analysis prior 

to the preparation or submission of a bid 

or proposal are not allowable under this 

section since the engineer is providing 

technical services but not directly in the 

preparation, submission or negotiation 

of a covered Federal action. 

(d) Requirements imposed by or 

pursuant to law as a condition for 

receiving a covered Federal award 

include those required by law or 

regulation, or reasonably expected to be 

required by law or regulation, and any 

other requirements in the actual award 

documents. 

(e) Persons other than officers or 

employees of a person requesting or 

receiving a covered Federal action 

include consultants and trade 

associations. 

(f) Only those services expressly 

authorized by this section are allowable 

under this section. 

Subpart D—Penalties and Enforcement 

§ 418.400 Penalties. 

(a) Any person who makes an 

expenditure prohibited herein shall be 

subject to a civil penalty of not less than 

$10,000 and not more than $100,000 for 

each such expenditure. 

(b) Any person who fails to file or 

amend the disclosure form (see 

Appendix B) to be filed or amended if 

required herein, shall be subject to a 

civil penalty of not less than $10,000 

and not more than $100,000 for each 

such failure. 

(c) A filing or amended filing on or 

after the date on which an 

administrative action for the imposition 

of a civil penalty is commenced does 

not prevent the imposition of such civil 

penalty for a failure occurring before 

that date. An administrative action is 

commenced with respect to a failure 

when an investigating official 

determines in writing to commence an 

investigation of an allegation of such 

failure. 

(d) In determining whether to impose 

a civil penalty, and the amount of any 

such penalty, by reason of a violation by 

any person, the agency shall consider 

the nature, circumstances, extent, and 

gravity of the violation, the effect on the 

ability of such person to continue in 

business, any prior violations by such 

person, the degree of culpability of such 

person, the ability of the person to pay 

the penalty, and such other matters as 

may be appropriate. 

(e) First offenders under paragraphs 

(a) or (b) of this section shall be subject 

to a civil penalty of $10,000, absent 

aggravating circumstances. Second and 

subsequent offenses by persons shall be 

subject to an appropriate civil penalty 

between $10,000 and $100,000, as 

determined by the agency head or his or 

her designee. 

(f) An imposition of a civil penalty 

under this section does not prevent the 

United States from seeking any other 

remedy that may apply to the same 

conduct that is the basis for the 

imposition of such civil penalty. 

§ 418.405 Penalty procedures. 

Agencies shall impose and collect 

civil penalties pursuant to the 

provisions of the Program Fraud and 

Civil Remedies Act, 31 U.S.C.s 3803 

(except subsection (c)), 3804, 3805, 

3806, 3807, 3808, and 3812, insofar as 

these provisions are not inconsistent 

with the requirements herein. 

§ 418.410 Enforcement. 

The head of each agency shall take 

such actions as are necessary to ensure 

that the provisions herein are vigorously 

implemented and enforced in that 

agency.’ 

Subpart E—Exemptions 

§ 418.500 Secretary of Defense. 

(a) The Secretary of Defense may 

exempt, on a case-by-case basis, a 

covered Federal action from the 

prohibition whenever the Secretary 

determines, in writing, that such an 

exemption is in the national interest. 

The Secretary shall transmit a copy of 

each such written exemption to 

Congress immediately after making such 

a determination. 


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(b) The Department of Defense may 

issue supplemental regulations to 

implement paragraph (a) of this section. 

Subpart F—Agency Reports 

§ 418.600 Semi-annual compilation. 

(a) The head of each agency shall 

collect and compile the disclosure 

reports (see appendix B) and, on May 31 

and November 30 of each year, submit 

to the Secretary of the Senate and the 

Clerk of the House of Representatives a 

report containing a compilation of the 

information contained in the disclosure 

reports received during the six-month 

period ending on March 31 or 

September 30, respectively, of that year. 

(b) The report, including the 

compilation, shall be available for 

public inspection 30 days after receipt 

of the report by the Secretary and the 

Clerk. 

(c) Information that involves 

intelligence matters shall be reported 

only to the Select Committee on 

Intelligence of the Senate, the 

Permanent Select Committee on 

Intelligence of the House of 

Representatives, and the Committees on 

Appropriations of the Senate and the 

House of Representatives in accordance 

with procedures agreed to by such 

committees. Such information shall not 

be available for public inspection. 

(d) Information that is classified 

under Executive Order 12356 or any 

successor order shall be reported only to 

the Committee on Foreign Relations of 

the Senate and the Committee on 

Foreign Affairs of the House of 

Representatives or the Committees on 

Armed Services of the Senate and the 

House of Representatives (whichever 

such committees have jurisdiction of 

matters involving such information) and 

to the Committees on Appropriations of 

the Senate and the House of 

Representatives in accordance with 

procedures agreed to by such 

committees. Such information shall not 

be available for public inspection. 

(e) The first semi-annual compilation 

shall be submitted on May 31, 1990, and 

shall contain a compilation of the 

disclosure reports received from 

December 23, 1989 to March 31, 1990. 

(f) Major agencies, designated by the 

Office of Management and Budget 

(OMB), are required to provide 

machine-readable compilations to the 

Secretary of the Senate and the Clerk of 

the House of Representatives no later 

than with the compilations due on May 

31, 1991. OMB shall provide detailed 

specifications in a memorandum to 

these agencies. 

(g) Non-major agencies are requested 

to provide machine-readable 

compilations to the Secretary of the 

Senate and the Clerk of the House of 

Representatives. 

(h) Agencies shall keep the originals 

of all disclosure reports in the official 

files of the agency. 

§ 418.605 Inspector General report. 

(a) The Inspector General, or other 

official as specified in paragraph (b) of 

this section, of each agency shall 

prepare and submit to Congress each 

year, commencing with submission of 

the President’s Budget in 1991, an 

evaluation of the compliance of that 

agency with, and the effectiveness of, 

the requirements herein. The evaluation 

may include any recommended changes 

that may be necessary to strengthen or 

improve the requirements. 

(b) In the case of an agency that does 

not have an Inspector General, the 

agency official comparable to an 

Inspector General shall prepare and 

submit the annual report, or, if there is 

no such comparable official, the head of 

the agency shall prepare and submit the 

annual report. 

(c) The annual report shall be 

submitted at the same time the agency 

submits its annual budget justifications 

to Congress. 

(d) The annual report shall include 

the following: All alleged violations 

relating to the agency’s covered Federal 

actions during the year covered by the 

report, the actions taken by the head of 

the agency in the year covered by the 

report with respect to those alleged 

violations and alleged violations in 

previous years, and the amounts of civil 

penalties imposed by the agency in the 

year covered by the report. 

Appendix A to Part 418—Certification 

Regarding Lobbying 

Certification for Contracts, Grants, Loans, 

and Cooperative Agreements 

The undersigned certifies, to the best of his 

or her knowledge and belief, that: 

(1) No Federal appropriated funds have 

been paid or will be paid, by or on behalf of 

the undersigned, to any person for 

influencing or attempting to influence an 

officer or employee of an agency, a Member 

of Congress, an officer or employee of 

Congress, or an employee of a Member of 

Congress in connection with the awarding of 

any Federal contract, the making of any 

Federal grant, the making of any Federal 

loan, the entering into of any cooperative 

agreement, and the extension, continuation, 

renewal, amendment, or modification of any 

Federal contract, grant, loan, or cooperative 

agreement. 

(2) If any funds other than Federal 

appropriated funds have been paid or will be 

paid to any person for influencing or 

attempting to influence an officer or 

employee of any agency, a Member of 

Congress, an officer or employee of Congress, 

or an employee of a Member of Congress in 

connection with this Federal contract, grant, 

loan, or cooperative agreement, the 

undersigned shall complete and submit 

Standard Form-LLL, ‘‘Disclosure Form to 

Report Lobbying,’’ in accordance with its 

instructions. 

(3) The undersigned shall require that the 

language of this certification be included in 

the award documents for all subawards at all 

tiers (including subcontracts, subgrants, and 

contracts under grants, loans, and 

cooperative agreements) and that all 

subrecipients shall certify and disclose 

accordingly. 

This certification is a material 

representation of fact upon which reliance 

was placed when this transaction was made 

or entered into. Submission of this 

certification is a prerequisite for making or 

entering into this transaction imposed by 

section 1352, title 31, U.S. Code. Any person 

who fails to file the required certification 

shall be subject to a civil penalty of not less 

than $10,000 and not more than $100,000 for 

each such failure. 

Statement for Loan Guarantees and Loan 

Insurance 

The undersigned states, to the best of his 

or her knowledge and belief, that: 

If any funds have been paid or will be paid 

to any person for influencing or attempting 

to influence an officer or employee of any 

agency, a Member of Congress, an officer or 

employee of Congress, or an employee of a 

Member of Congress in connection with this 

commitment providing for the United States 

to insure or guarantee a loan, the 

undersigned shall complete and submit 

Standard Form-LLL, ‘‘Disclosure Form to 

Report Lobbying,’’ in accordance with its 

instructions. 

Submission of this statement is a 

prerequisite for making or entering into this 

transaction imposed by section 1352, title 31, 

U.S. Code. Any person who fails to file the 

required statement shall be subject to a civil 

penalty of not less than $10,000 and not more 

than $100,000 for each such failure. 

Appendix B to Part 418—Disclosure 

Form To Report Lobbying 

BILLING CODE 6050–28–4210–67–4910–9X–3280–F5– 

4410–18–4710–24–3510–17–9110–9J–9111–23–6450–01– 

7537–01–6560–50–6560–58–7036–01–7515–01–7536–01– 

6116–01–4334–12–8320–01–4150–24–7555–01–5001–06– 

7510–13–8025–01–4191–02–4810–25–3410–KS–3410–22– 

3410–15–3410–05–4000–01–4510–FM–3110–01–P 


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DISClOSURE OF LOBBYING ACTIVITIES 

Complete this fr;rm to ctlsciose lobbying actlvi!ies pursuant to 31 U.S.C 1352 

0Frime 0 Subaward<l" 

Tier ..... ~--~-' if known: 

(if individual. last name, first name, M!): 

12. form of Payment 

Oa.cash 

0 b. 111-l<lhd; specify: nature ·-···~---·-~· 

value--·~-·-

or 

and Address of Prim&: 

different from No. 1 Oa) 

(last name, first name, Ml): 

0 a. retainer 

0 b. one~ tim~ fae 

0 c. commiasJon 

0 d. GOrltlngenl loa 

0 Q, daf.,rrod 

0 f. oth&t; .sp<>Cify: ------·------

employee(s), or Member(s) contacted, for Payment Indicated inltem 11: 

Appmvt-:uj by, ()f,1B 

0348·0046 
Federal Register / Vol. 79, No. 244 / Friday, December 19, 2014 / Rules and Regulations 75991 


tkelley on DSK3SPTVN1PROD with RULES2ER19DE14.002</GPH>

INSTRUCTIONS FORCOMPLETION OF SF-LLL, DISCLOSURE OF LOBBYING ACTIVITIES 

This disclosure form shaH be completed by the !GPorting entlly, whether svbawal'lleeor prime Federal nsciplent, at the initiation or nscefpl of a covered Federal 

aclion, or a metertalchange to a pnsviovsfiling, pursuant to title 31 U.S.C. section 1352. The filing of e form Is requinsd Tor each payment or agnsementto mains 

paymentto any lobbying entity for influencing. or attempting to lnlluence an oflicer or emptoyeeof any agency, a Member of Congnsss, an oflicer or employee of 

Coognsss, or an emptoyeeo! a Member of Congress In connection with a covensdFedenslacHon. U118the SF-LLLA ConHnuationSheetfof additiOnalinTormalion if 

the space on the form Is inadequate. Complete all items that apply for both the Jnitia filing and metertal change nsport. Rater to the implementing guidance 

published by the Offica of Management and BudlJel for additional information. 

1. Identify the type of covensd Faders! aCtiOn for Which lobbying aCtivity Is and/or has been secuf8G to lntluenca lha wtooma o! a covensd Fllderst action. 

i!. Identify the Slaws o! the covensd Federal aclion. 

3. Identify the appropriataclall$illealion of this report. If this is a foHowup report cavslld by a meterial change to the information previovslynsportlld, enter 

the year and quarter in which the chang&oc:cw-red. Enter the dele of the last previously submitted report by this reporting entity for this covensd Flldersl 

aclion. 

4. Entsr the fUll nama, address, cily, Stele and zip code of the reportingentity.lnclude CongreSsiona!Districf. if known. Check the appropriilleclassilk:alion 

of the reportingenlily that designetes if it is, or expecls to be, a prime or SUba'NIII'd recipient. Identify the tier of the SUbawardee; e.g., the first subawel'llee 

of the priri'l& is the 1st tier. Suba'NIII'ds include but are not limited to suil<:onli'acts, subgiants and. contrsct awards under grsnts. 

5. If the organization filing the report in item 4 checks "Subawardee,•thBn enter the full name, addnsss, City, State and zip code of the prime Fedeml 

recipient. Include Congressional DiStriCt, if known. 

6. Enter the name of the Federslagencymakingthe award or loan commitment. Include atleast oneorganizatlonallevalbelowagency name. if known. For 

example, Department of Trsnsportetlon, United Sillies Coast Guard. 

1. Enter the Fedeml progrsm name or description for the covered Federsl action (item 1). If known, enter the full Catalog of Federal Domestic Assistance 

(CFDA) number for grsnts, cooperative llgreements, loans, and loan commitments. 

8. &Iter the most appropriate Fellers! idenllfying m.lmber availl!blel'or the Federal aclion identified in itern 1 (e.g~ ReqiJesl for Proposal (RFP) number; 

lnvllellon for Bid (IFB) number; gmnt announcement number; the contract, grant, or loan award number; the appllcatior!lproposel control number 

-igned by the federal agency). l!lclude pnsfixes, e.g., "RFP.Oe.9Q.001.' 

9. For a covered federal aclion Where there hes: been an award or loail commitment by the Federal agency, enter the Federal amount o! the award/loan 

coinmilment for the prime entity Identified In Item 4 or 5. 

10. (a) Enter the full name, addnsss, clfy, Slate and zip code of the lobbying entity engaged by the reporting entity ldenlilled in item 4 to inluenoe ihe covensd 

Fedensl action. 

(b) Enter the fUll names of the inlli\fidual(s} perforn\ing Services, and Include fuR address if diflerent from 10 (a). Enter Last Name, First Name, and 

Middle Initial (MI). 

11. Enter the amount of compensation paid or reesonablyexpacladto be paid by the nsportlngentity(item4) to the lObbyingenlity(itern 10). Indicate Whether 

the payment has been made (actual) or will be made (planned). Check all boxes that apply. If this Is a material change report, enter the cumulative 

amount of payment made or planned to be made. 

12. Check the appropriSlabox(es). Check all boXeS that apply.lf payment iS made through an in-kind contribution, specify thenaue and value of the in-kind 

payment. 

13. Check the apprOpriate box(es). Cheek all boXeS that apply. If other, speclfy nature. 

14. Provideiupecilic and detailed description o! the setvices that the lobbyist hes performed, orwiH be exp6¢tad to perform, and the date( II} o! any ilervices 

rendered. Include all preparstory and related aCtivity, not just time spent In actual contact with Federal ofliciets. Identify the Federal oflicial(s) or 

empioyee(s) contacted or the olficer(s), employell(s), or Mambe!(s) of Congnsss that were contaclad. 

15. Check whether or not a Sf-LLLA Continuation Sheel(s) is attached. 

16. The certifYing oflicial shall sign and dale the forrn, print his/her nema, tllla. and telephone number. 

According to the Paperwork Reduction Act. as aml!nded, no parsons are required to rsspond to a collection of information unless it displays a valid OMB Contro 

Number. The valid OMB control number for this illformalicn collection Is OMS No. 0348-0046. Public nsporting bvrden for this collection of Information is 

estimated to aversge3D minutes par response, including lime for reviewing instruCtions, searching existing data sources, gathering and maintaining the data 

needed, and completing and reviewing the colleCtion of informe\lon, Send comments nsgarding the burden estlmeta or any o!har aspect of this collection 01 

information, including suggestions for nsduc:ing this. burden, to the Office of Management and Budget, Paperwcrk Reduction Project (0348-0046), Washington, 

DC20503. 
75992 Federal Register / Vol. 79, No. 244 / Friday, December 19, 2014 / Rules and Regulations 

BILLING CODE 6050–28–4210–67–4910–9X–3280–F5– 

4410–18–4710–24–3510–17–9110–9J–9111–23–6450–01– 

7537–01–6560–50–6560–58–7036–01–7515–01–7536–01– 

6116–01–4334–12–8320–01–4150–24–7555–01–5001–06– 

7510–13–8025–01–4191–02–4810–25–3410–KS–3410–22– 

3410–15–3410–05–4000–01–4510–FM–3110–01–C 

■ 5. Title 2 of the Code of Federal 

Regulations is amended by adding part 

422 to read as follows: 

CHAPTER IV 

PART 422—RESEARCH INSTITUTIONS 

CONDUCTING USDA-FUNDED 

EXTRAMURAL RESEARCH; 

RESEARCH MISCONDUCTS 

Sec. 

422.1 Definitions. 

422.2 Procedures. 

422.3 Inquiry, investigation, and 

adjudication. 

422.4 USDA Panel to determine 

appropriateness of research misconduct 

policy. 

422.5 Reservation of right to conduct 

subsequent inquiry, investigation, and 

adjudication. 

422.6 Notification of USDA of allegations of 

research misconduct. 

422.7 Notification of ARIO during an 

inquiry of investigation. 

422.8 Communication of research 

misconduct policies and procedures. 

422.9 Documents required. 


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Federal Register / Vol. 79, No. 244 / Friday, December 19, 2014 / Rules and Regulations 75993 

422.10 Reporting to USDA. 

422.11 Research records and evidence. 

422.12 Remedies for noncompliance. 

422.13 Appeals. 

422.14 Relationship to other requirements. 

Authority: 5 U.S.C. 301; Office of Science 

and Technology Policy (65 FR 76260); USDA 

Secretary’s Memorandum (SM) 2400–007; 

and USDA OIG, 7 CFR 2610.1(c)(4)(ix). 

PART 422—RESEARCH INSTITUTIONS 

CONDUCTING USDA FUNDED 

EXTRAMURAL RESEARCH; 

RESEARCH MISCONDUCT 

§ 422.1 Definitions. 

The following definitions apply to 

this part: 

Adjudication. The stage in response to 

an allegation of research misconduct 

when the outcome of the investigation 

is reviewed, and appropriate corrective 

actions, if any, are determined. 

Corrective actions generally will be 

administrative in nature, such as 

termination of an award, debarment, 

award restrictions, recovery of funds, or 

correction of the research record. 

However, if there is an indication of 

violation of civil or criminal statutes, 

civil or criminal sanctions may be 

pursued. 

Agency Research Integrity Officer 

(ARIO). The individual appointed by a 

USDA agency that conducts research 

and who is responsible for: 

(1) Receiving and processing 

allegations of research misconduct as 

assigned by the USDA RIO; 

(2) Informing OIG and the USDA RIO 

and the research institution associated 

with the alleged research misconduct, of 

allegations of research misconduct in 

the event it is reported to the USDA 

agency; 

(3) Ensuring that any records, 

documents and other materials relating 

to a research misconduct allegation are 

provided to OIG when requested; 

(4) Coordinating actions taken to 

address allegations of research 

misconduct with respect to extramural 

research with the research institution(s) 

at which time the research misconduct 

is alleged to have occurred, and with the 

USDA RIO; 

(5) Overseeing proceedings to address 

allegations of extramurally funded 

research misconduct at intramural 

research institutions and research 

institutions where extramural research 

occurs; 

(6) Ensuring that agency action to 

address allegations of research 

misconduct at USDA agencies 

performing extramurally funded 

research is performed at an 

organizational level that allows an 

independent, unbiased, and equitable 

process; 

(7) Immediately notifying OIG, the 

USDA RIO, and the applicable research 

institution if: 

(i) Public health or safety is at risk; 

(ii) USDA’s resources, reputation, or 

other interests need protecting; 

(iii) Research activities should be 

suspended; 

(iv) Federal action may be needed to 

protect the interest of a subject of the 

investigation or of others potentially 

affected; 

(v) A premature public disclosure of 

the inquiry into or investigation of the 

allegation may compromise the process; 

(vi) The scientific community or the 

public should be informed; or 

(vii) Behavior that is or may be 

criminal in nature is discovered at any 

point during the inquiry, investigation, 

or adjudication phases of the research 

misconduct proceedings; 

(8) Documenting the dismissal of the 

allegation, and ensuring that the name 

of the accused individual and/or 

institution is cleared if an allegation of 

research misconduct is dismissed at any 

point during the inquiry or investigation 

phase of the proceedings; 

(9) Other duties relating to research 

misconduct proceedings as assigned. 

Allegation. A disclosure of possible 

research misconduct through any means 

of communication. The disclosure may 

be by written or oral statement, or by 

other means of communication to an 

institutional or USDA official. 

Applied research. Systematic study to 

gain knowledge or understanding 

necessary to determine the means by 

which a recognized and specific need 

may be met. 

Assistant Inspector General for 

Investigations. The individual in OIG 

who is responsible for OIG’s domestic 

and foreign investigative operations 

through a headquarters office and the 

six regional offices. 

Basic research. Systematic study 

directed toward fuller knowledge or 

understanding of the fundamental 

aspects of phenomena and of observable 

facts without specific applications 

towards processes or products in mind. 

Extramural research. Research 

conducted by any research institution 

other than the Federal agency to which 

the funds supporting the research were 

appropriated. Research institutions 

conducting extramural research may 

include Federal research facilities. 

Fabrication. Making up data or results 

and recording or reporting them. 

Falsification. Manipulating research 

materials, equipment, or processes, or 

changing or omitting data or results 

such that the research is not accurately 

represented in the research record. 

Finding of research misconduct. The 

conclusion, proven by a preponderance 

of the evidence, that research 

misconduct occurred, that such research 

misconduct represented a significant 

departure from accepted practices of the 

relevant research community, and that 

such research misconduct was 

committed intentionally, knowingly, or 

recklessly. 

Inquiry. The stage in the response to 

an allegation of research misconduct 

when an assessment is made to 

determine whether the allegation has 

substance and whether an investigation 

is warranted. 

Intramural research. Research 

conducted by a Federal Agency, to 

which funds were appropriated for the 

purpose of conducting research. 

Investigation. The stage in the 

response to an allegation of research 

misconduct when the factual record is 

formally developed and examined to 

determine whether to dismiss the case, 

recommend a finding of research 

misconduct, and/or take other 

appropriate remedies. 

Office of Inspector General (OIG). The 

Office of Inspector General of the United 

States Department of Agriculture. 

Office of Science and Technology 

Policy (OSTP). The Office of Science 

and Technology Policy of the Executive 

Office of the President. 

Plagiarism. The appropriation of 

another person’s ideas, processes, 

results, or words without giving 

appropriate credit. 

Preponderance of the evidence. Proof 

by information that, compared with that 

opposing it, leads to the conclusion that 

the fact at issue is more probably true 

than not. 

Research. All basic, applied, and 

demonstration research in all fields of 

science, engineering, and mathematics. 

This includes, but is not limited to, 

research in economics, education, 

linguistics, medicine, psychology, social 

sciences, statistics, and research 

involving human subjects or animals 

regardless of the funding mechanism 

used to support it. 

Research institution. All organizations 

using Federal funds for research, 

including, for example, colleges and 

universities, Federally funded research 

and development centers, national user 

facilities, industrial laboratories, or 

other research institutes. 

Research misconduct. Fabrication, 

falsification, or plagiarism in proposing, 

performing, or reviewing research, or in 

reporting research results. Research 

misconduct does not include honest 

error or differences of opinion. 

Research record. The record of data or 

results that embody the facts resulting 

from scientific inquiry, and includes, 

but is not limited to, research proposals, 


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75994 Federal Register / Vol. 79, No. 244 / Friday, December 19, 2014 / Rules and Regulations 

research records (including data, notes, 

journals, laboratory records (both 

physical and electronic)), progress 

reports, abstracts, theses, oral 

presentations, internal reports, and 

journal articles. 

USDA. United States Department of 

Agriculture. 

USDA Research Integrity Officer 

(USDA RIO). The individual designated 

by the Office of the Under Secretary for 

Research, Education, and Economics 

(REE) who is responsible for: 

(1) Overseeing USDA agency 

responses to allegations of research 

misconduct; 

(2) Ensuring that agency research 

misconduct procedures are consistent 

with this part; 

(3) Receiving and assigning 

allegations of research misconduct 

reported by the public; 

(4) Developing Memoranda of 

Understanding with agencies that elect 

not to develop their own research 

misconduct procedures; 

(5) Monitoring the progress of all 

research misconduct cases; and 

(6) Serving as liaison with OIG to 

receive allegations of research 

misconduct when they are received via 

the OIG Hotline. 

§ 422.2 Procedures. 

Research institutions that conduct 

extramural research funded by USDA 

must foster an atmosphere conducive to 

research integrity. They must develop or 

have procedures in place to respond to 

allegations of research misconduct that 

ensure: 

(a) Appropriate separations of 

responsibility for inquiry, investigation, 

and adjudication; 

(b) Objectivity; 

(c) Due process; 

(d) Whistleblower protection; 

(e) Confidentiality. To the extent 

possible and consistent with a fair and 

thorough investigation and as allowed 

by law, knowledge about the identity of 

subjects and informants is limited to 

those who need to know; and 

(f) Timely resolution. 

§ 422.3 Inquiry, investigation, and 

adjudication. 

A research institution that conducts 

extramural research funded by USDA 

bears primary responsibility for 

prevention and detection of research 

misconduct and for the inquiry, 

investigation, and adjudication of 

research misconduct allegations 

reported directly to it. The research 

institution must perform an inquiry in 

response to an allegation, and must 

follow the inquiry with an investigation 

if the inquiry determines that the 

allegation or apparent instance of 

research misconduct has substance. The 

responsibilities for adjudication must be 

separate from those for inquiry and 

investigation. In most instances, USDA 

will rely on a research institution 

conducting extramural research to 

promptly: 

(a) Initiate an inquiry into any 

suspected or alleged research 

misconduct; 

(b) Conduct a subsequent 

investigation, if warranted; 

(c) Acquire, prepare, and maintain 

appropriate records of allegations of 

extramural research misconduct and all 

related inquiries, investigations, and 

findings; and 

(d) Take action to ensure the 

following: 

(1) The integrity of research; 

(2) The rights and interests of the 

subject of the investigation and the 

public are protected; 

(3) The observance of legal 

requirements or responsibilities 

including cooperation with criminal 

investigations; and 

(4) Appropriate safeguards for 

subjects of allegations, as well as 

informants (see § 422.6). These 

safeguards should include timely 

written notification of subjects regarding 

substantive allegations made against 

them; a description of all such 

allegations; reasonable access to the data 

and other evidence supporting the 

allegations; and the opportunity to 

respond to allegations, the supporting 

evidence and the proposed findings of 

research misconduct, if any. 

§ 422.4 USDA Panel to determine 

appropriateness of research misconduct 

policy. 

Before USDA will rely on a research 

institution to conduct an inquiry, 

investigation, and adjudication of an 

allegation in accordance with this part, 

the research institution where the 

research misconduct is alleged must 

provide the ARIO its policies and 

procedures related to research 

misconduct at the institution. The 

research institution has the option of 

providing either a written copy of such 

policies and procedures or a Web site 

address where such policies and 

procedures can be accessed. The ARIO 

to whom the policies and procedures 

were made available shall convene a 

panel comprised of the USDA RIO and 

ARIOs from the Forest Service, the 

Agricultural Research Service, and the 

National Institute of Food and 

Agriculture. The Panel will review the 

research institution’s policies and 

procedures for compliance with the 

OSTP Policy and render a decision 

regarding the research institution’s 

ability to adequately resolve research 

misconduct allegations. The ARIO will 

inform the research institution of the 

Panel’s determination that its inquiry, 

investigation, and adjudication 

procedures are sufficient. If the Panel 

determines that the research institution 

does not have sufficient policies and 

procedures in place to conduct inquiry, 

investigation, and adjudication 

proceedings, or that the research 

institution is in any way unfit or 

unprepared to handle the inquiry, 

investigation, and adjudication in a 

prompt, unbiased, fair, and independent 

manner, the ARIO will inform the 

research institution in writing of the 

Panel’s decision. An appropriate USDA 

agency, as determined by the Panel, will 

then conduct the inquiry, investigation, 

and adjudication of research 

misconduct in accordance with this 

part. If an allegation of research 

misconduct is made regarding 

extramural research conducted at a 

Federal research institution (whether 

USDA or not), it is presumed that the 

Federal research institution has research 

misconduct procedures consistent with 

the OSTP Policy. USDA reserves the 

right to convene the Panel to assess the 

sufficiency of a Federal agency’s 

research misconduct procedures, should 

there be any question whether the 

agency’s procedures will ensure a fair, 

unbiased, equitable, and independent 

inquiry, investigation, and adjudication 

process. 

§ 422.5 Reservation of right to conduct 

subsequent inquiry, investigation, and 

adjudication. 

(a) USDA reserves the right to conduct 

its own inquiry, investigation, and 

adjudication into allegations of research 

misconduct at a research institution 

conducting extramural research 

subsequent to the proceedings of the 

research institution related to the same 

allegation. This may be necessary if the 

USDA RIO or ARIO believes, in his or 

her sound discretion, that despite the 

Panel’s finding that the research 

institution in question had appropriate 

and OSTP-compliant research 

misconduct procedures in place, the 

research institution conducting the 

extramural research at issue: 

(1) Did not adhere to its own research 

misconduct procedures; 

(2) Did not conduct research 

misconduct proceedings in a fair, 

unbiased, or independent manner; or 

(3) Has not completed research 

misconduct inquiry, investigation, or 

adjudication in a timely manner. 

(b) Additionally, USDA reserves the 

right to conduct its own inquiry, 


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investigation, and adjudication into 

allegations of research misconduct at a 

research institution conducting 

extramural research subsequent to the 

proceedings of the research institution 

related to the same allegation for any 

other reason that the USDA RIO or 

ARIO considers it appropriate to 

conduct research misconduct 

proceedings in lieu of the research 

institution’s conducting the extramural 

research at issue. This right is subject to 

paragraph (c) of this section. 

(c) In cases where the USDA RIO or 

ARIO believes it is necessary for USDA 

to conduct its own inquiry, 

investigation, and adjudication 

subsequent to the proceedings of the 

research institution related to the same 

allegation, the USDA RIO or ARIO shall 

reconvene the Panel, which will 

determine whether it is appropriate for 

the relevant USDA agency to conduct 

the research misconduct proceedings 

related to the allegation(s) of research 

misconduct. If the Panel determines that 

it is appropriate for a USDA agency to 

conduct the proceedings, the ARIO will 

immediately notify the research 

institution in question. The research 

institution must then promptly provide 

the relevant USDA agency with 

documentation of the research 

misconduct proceedings the research 

institution has conducted to that point, 

and the USDA agency will conduct 

research misconduct proceedings in 

accordance with the Agency research 

misconduct procedures. 

§ 422.6 Notification of USDA of allegations 

of research misconduct. 

(a) Research institutions that conduct 

USDA-funded extramural research must 

promptly notify OIG and the USDA RIO 

of all allegations of research misconduct 

involving USDA funds when the 

institution inquiry into the allegation 

warrants the institution moving on to an 

investigation. 

(b) Individuals at research institutions 

who suspect research misconduct at the 

institution should report allegations in 

accordance with the institution’s 

research misconduct policies and 

procedures. Anyone else who suspects 

that researchers or research institutions 

performing Federally-funded research 

may have engaged in research 

misconduct is encouraged to make a 

formal allegation of research 

misconduct to OIG. 

(1) OIG may be notified using any of 

the following methods: 

(i) Via the OIG Hotline: Telephone: 

(202) 690–1622, (800) 424–9121, (202) 

690–1202 (TDD). 

(ii) Email: usda_hotline@oig.usda.gov. 

(iii) U.S. Mail: United States 

Department of Agriculture, Office of 

Inspector General, P.O. Box 23399, 

Washington, DC 20026–3399. 

(2) The USDA RIO may be reached at: 

USDA Research Integrity Officer, 214W 

Whitten Building, Washington, DC 

20250; telephone: 202–720–5923; Email: 

researchintegrity@usda.gov. 

(c) To the extent known, the following 

details should be included in any formal 

allegation: 

(1) The name of the research projects 

involved, the nature of the alleged 

misconduct, and the names of the 

individual or individuals alleged to be 

involved in the misconduct; 

(2) The source or sources of funding 

for the research project or research 

projects involved in the alleged 

misconduct; 

(3) Important dates; 

(4) Any documentation that bears 

upon the allegation; and 

(5) Any other potentially relevant 

information. 

(d) Safeguards for informants give 

individuals the confidence that they can 

bring allegations of research misconduct 

made in good faith to the attention of 

appropriate authorities or serve as 

informants to an inquiry or an 

investigation without suffering 

retribution. Safeguards include 

protection against retaliation for 

informants who make good faith 

allegations, fair and objective 

procedures for the examination and 

resolution of allegations of research 

misconduct, and diligence in protecting 

the positions and reputations of those 

persons who make allegations of 

research misconduct in good faith. The 

identity of informants who wish to 

remain anonymous will be kept 

confidential to the extent permitted by 

law or regulation. 

§ 422.7 Notification of ARIO during an 

inquiry or investigation. 

(a) Research institutions that conduct 

USDA-funded extramural research must 

promptly notify the ARIO should the 

institution become aware during an 

inquiry or investigation that: 

(1) Public health or safety is at risk; 

(2) The resources, reputation, or other 

interests of USDA are in need of 

protection; 

(3) Research activities should be 

suspended; 

(4) Federal action may be needed to 

protect the interest of a subject of the 

investigation or of others potentially 

affected; 

(5) A premature public disclosure of 

the inquiry into or investigation of the 

allegation may compromise the process; 

(6) The scientific community or the 

public should be informed; or 

(7) There is reasonable indication of 

possible violations of civil or criminal 

law. 

(b) If research misconduct 

proceedings reveal behavior that may be 

criminal in nature at any point during 

the proceedings, the institution must 

promptly notify the ARIO. 

§ 422.8 Communication of research 

misconduct policies and procedures. 

Institutions that conduct USDAfunded extramural research are to 

maintain and effectively communicate 

to their staffs policies and procedures 

relating to research misconduct, 

including the guidelines in this part. 

The institution is to inform their 

researchers and staff members who 

conduct USDA-funded extramural 

research when and under what 

circumstances USDA is to be notified of 

allegations of research misconduct, and 

when and under what circumstances 

USDA is to be updated on research 

misconduct proceedings. 

§ 422.9 Documents required. 

(a) A research institution that 

conducts USDA-funded extramural 

research must maintain the following 

documents related to an allegation of 

research misconduct at the research 

institution: 

(1) A written statement describing the 

original allegation; 

(2) A copy of the formal notification 

presented to the subject of the 

allegation; 

(3) A written report describing the 

inquiry stage and its outcome including 

copies of all supporting documentation; 

(4) A description of the methods and 

procedures used to gather and evaluate 

information pertinent to the alleged 

misconduct during inquiry and 

investigation stages; 

(5) A written report of the 

investigation, including the evidentiary 

record and supporting documentation; 

(6) A written statement of the 

findings; and 

(7) If applicable, a statement of 

recommended corrective actions, and 

any response to such a statement by the 

subject of the original allegation, and/or 

other interested parties, including any 

corrective action plan. 

(b) The research institution must 

retain the documents specified in 

paragraph (a) of this section for at least 

3 years following the final adjudication 

of the alleged research misconduct. 

§ 422.10 Reporting to USDA. 

Following completion of an 

investigation into allegations of research 

misconduct, the institution conducting 

extramural research must provide to the 


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ARIO a copy of the evidentiary record, 

the report of the investigation, 

recommendations made to the 

institution’s adjudicating official, the 

adjudicating official’s determination, 

the institution’s corrective action taken 

or planned, and the written response of 

the individual who is the subject of the 

allegation to any recommendations. 

§ 422.11 Research records and evidence. 

(a) A research institution that 

conducts extramural research supported 

by USDA funds, as the responsible legal 

entity for the USDA-supported research, 

has a continuing obligation to create and 

maintain adequate records (including 

documents and other evidentiary 

matter) as may be required by any 

subsequent inquiry, investigation, 

finding, adjudication, or other 

proceeding. 

(b) Whenever an investigation is 

initiated, the research institution must 

promptly take all reasonable and 

practical steps to obtain custody of all 

relevant research records and evidence 

as may be necessary to conduct the 

research misconduct proceedings. This 

must be accomplished before the 

research institution notifies the 

researcher/respondent of the allegation, 

or immediately thereafter. 

(c) The original research records and 

evidence taken into custody by the 

research institution shall be inventoried 

and stored in a secure place and 

manner. Research records involving raw 

data shall include the devices or 

instruments on which they reside. 

However, if deemed appropriate by the 

research institution or investigator, 

research data or records that reside on 

or in instruments or devices may be 

copied and removed from those 

instruments or devices as long as the 

copies are complete, accurate, and have 

substantially equivalent evidentiary 

value as the data or records have when 

the data or records reside on the 

instruments or devices. Such copies of 

data or records shall be made by a 

disinterested, qualified technician and 

not by the subject of the original 

allegation or other interested parties. 

When the relevant data or records have 

been removed from the devices or 

instruments, the instruments or devices 

need not be maintained as evidence. 

§ 422.12 Remedies for noncompliance. 

USDA agencies’ implementation 

procedures identify the administrative 

actions available to remedy a finding of 

research misconduct. Such actions may 

include the recovery of funds, 

correction of the research record, 

debarment of the researcher(s) that 

engaged in the research misconduct, 

proper attribution, or any other action 

deemed appropriate to remedy the 

instance(s) of research misconduct. The 

agency should consider the seriousness 

of the misconduct, including, but not 

limited to, the degree to which the 

misconduct was knowingly conducted, 

intentional, or reckless; was an isolated 

event or part of a pattern; or had 

significant impact on the research 

record, research subjects, other 

researchers, institutions, or the public 

welfare. In determining the appropriate 

administrative action, the appropriate 

agency must impose a remedy that is 

commensurate with the infraction as 

described in the finding of research 

misconduct. 

§ 422.13 Appeals. 

(a) If USDA relied on an institution to 

conduct an inquiry, investigation, and 

adjudication, the alleged person(s) 

should first follow the institution’s 

appeal policy and procedures. 

(b) USDA agencies’ implementation 

procedures identify the appeal process 

when a finding of research misconduct 

is elevated to the agency. 

§ 422.14 Relationship to other 

requirements. 

Some of the research covered by this 

part also may be subject to regulations 

of other governmental agencies (e.g., a 

university that receives funding from a 

USDA agency and also under a grant 

from another Federal agency). If more 

than one agency of the Federal 

Government has jurisdiction, USDA will 

cooperate with the other agency(ies) in 

designating a lead agency. When USDA 

is not the lead agency, it will rely on the 

lead agency following its policies and 

procedures in determining whether 

there is a finding of research 

misconduct. Further, USDA may, in 

consultation with the lead agency, take 

action to protect the health and safety of 

the public, to promote the integrity of 

the USDA-supported research and 

research process, or to conserve public 

funds. When appropriate, USDA will 

seek to resolve allegations jointly with 

the other agency or agencies. 

TITLE 7—Agriculture 

CHAPTER XXX—OFFICE OF THE CHIEF 

FINANCIAL OFFICER, DEPARTMENT OF 

AGRICULTURE 

PARTS 3015, 3016, 3018, 3019, 3022, 

and 3052—[REMOVED] 

■ 6. Remove 7 CFR parts 3015, 3016, 

3018, 3019, 3022, and 3052. 

Farm Service Agency 

For the reasons discussed above in the 

common preamble, FSA amends 7 CFR 

chapter VII and CCC amends 7 CFR 

chapter XIV as follows: 

CHAPTER VII—FARM SERVICE AGENCY, 

DEPARTMENT OF AGRICULTURE 

PART 761—GENERAL PROGRAM 

ADMINISTRATION 

■ 1. The authority citation for 7 CFR 761 

continues to read as follows: 

Authority: 5 U.S.C. 301 and 7 U.S.C. 1989. 

§ 761.5 [Amended] 

■ 2. Amend 761.5 by removing the 

reference to ‘‘7 CFR part 3018’’ and 

adding the reference to ‘‘2 CFR part 

418’’ in its place. 

PART 785—CERTIFIED STATE 

MEDIATION PROGRAM 

■ 3. The authority citation for 7 CFR 785 

continues to read as follows: 

Authority: 5 U.S.C. 301; 7 as follows: 

U.S.C. 1989; and 7 U.S.C. 5104. 

§ 785.4 [Amended] 

■ 4. Amend § 785.4 as follows: 

■ a. In paragraph (c)(1), remove ‘‘as set 

forth or referenced in § 3016.22 of this 

title’’ and add ‘‘in 2 CFR part 200, 

subpart E’’ in its place, and 

■ b. In paragraph (c)(2)(iii), remove 

‘‘OMB Cost Principles found in part 

3015, subpart T, of this title and OMB 

Circular No. A–87’’ and add ‘‘2 CFR part 

200, subpart E’’ in its place. 

■ 5. Revise § 785.8(b) to read 

§ 785.8 Reports by qualifying States 

receiving mediation grants. 

* * * * * 

(b) Audits. Any qualifying State 

receiving a grant under this part is 

required to submit an audit report in 

compliance with 2 CFR part 200, 

subpart F. 

■ 6. In § 785.9, revise the introductory 

text to read as follows: 

§ 785.9 Access to program records. 

The regulations in 2 CFR 200.333 

through 200.337 provide general record 

retention and access requirements for 

records pertaining to grants. In addition, 

the State must maintain and provide the 

Government access to pertinent records 

regarding services delivered by the 

certified State mediation program for 

purposes of evaluation, audit and 

monitoring of the certified State 

mediation program as follows: 

* * * * * 

§ 785.11 [Amended] 

■ 7. Amend § 785.11(b) by removing 

‘‘part 3017 of this title’’ and adding ‘‘2 

CFR parts 180 and 417’’ in its place. 


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CHAPTER XIV—COMMODITY CREDIT 

CORPORATION, DEPARTMENT OF 

AGRICULTURE 

PART 1407—DEBARMENT AND 

SUSPENSION 

■ 8. The authority citation for 7 CFR 

1407 continues to read as follows: 

Authority: 15 U.S.C. 714b. 

§ 1407.2 [Amended] 

■ 9. Amend § 1407.2(a) by removing ‘‘7 

CFR part 3017’’ and adding ‘‘2 CFR 

parts 180 and 417’’ in its place. 

PART 1485—GRANT AGREEMENTS 

FOR THE DEVELOPMENT OF 

FOREIGN MARKETS FOR U.S. 

AGRICULTURAL COMMODITIES 

■ 10. The authority citation for 7 CFR 

1485 continues to read as follows: 

Authority: 7 U.S.C. 5623, 5662–5664 and 

sec. 1302, Pub. L. 103–66, 107 Stat. 330. 

■ 11. Amend § 1485.10 as follows: 

■ a. Revise paragraph (b)(1)(iv); 

■ b. Remove paragraphs (b)(1)(v) and 

(vii) through (x); 

■ c. Redesignate paragraph (b)(1)(vi) and 

(xi) as (b)(1)(v) and (viii) respectively; 

and 

■ d. Add paragraphs (b)(1)(vi) and (vii). 

The revision and additions read as 

follows: 

§ 1485.10 General purpose and scope. 

* * * * * 

(b)(1) * * * 

(iv) 2 CFR part 200—Uniform 

Administrative Requirements, Cost 

Principles, and Audit Requirements for 

Federal Awards 

* * * * * 

(vi) 2 CFR part 418—New Restrictions 

on Lobbying 

(vii) 2 CFR part 421—Requirements 

for Drug-Free Workplace (Financial 

Assistance) 

* * * * * 

§ 1485.19 [Amended] 

■ 12. Amend § 1485.19 as follows: 

■ a. In paragraph (b), first sentence, by 

removing ‘‘set forth in the applicable 

parts of this title (e.g., 7 CFR parts 3015, 

3016, and 3019)’’ and adding ‘‘in 2 CFR 

part 200’’ in their place. 

■ b. In paragraph (c), second sentence, 

by removing ‘‘in the applicable parts of 

this title apply (e.g., 7 CFR parts 3015, 

3016, and 3019)’’ and adding ‘‘in 2 CFR 

part 200’’ in their place. 

§ 1485.21 [Amended] 

■ 13. Amend § 1485.21(a) by removing 

‘‘set forth in the applicable parts of this 

title (e.g., 7 CFR parts 3015, 3016, and 

3019)’’ and adding ‘‘in 2 CFR part 200’’ 

in its place. 

§ 1485.22 [Amended] 

■ 14. Amend § 1485.22(e), first 

sentence, by removing ‘‘OMB Circular 

A–133 audit in accordance with 7 CFR 

part 3052’’ and adding ‘‘audit in 

accordance with 2 CFR part 200’’ in its 

place. 

§ 1485.23 [Amended] 

■ 15. Amend § 1485.23(d), introductory 

text, fifth sentence, by removing ‘‘e.g., 7 

CFR parts 3015, 3016, and 3019’’ and 

adding ‘‘for example, 2 CFR part 200’’ 

in its place. 

§ 1485.27 [Amended] 

■ 16. Amend § 1485.27(b) by removing 

‘‘in the applicable parts of this title (e.g., 

7 CFR parts 3015, 3016, and 3019)’’ and 

adding ‘‘in 2 CFR part 200’’ in its place. 

§ 1485.28 [Amended] 

■ 17. Amend § 1485.28(a), third 

sentence, by removing ‘‘in the 

applicable parts of this title (e.g., 7 CFR 

parts 1485, 3015, 3016, 3018, 3021, 

3019, and 3052)’’ and adding ‘‘in 2 CFR 

parts 200 and 421 and this part’’ in its 

place. 

§ 1485.29 [Amended] 

■ 18. Amend § 1485.29 as follows: 

■ a. In paragraph (b), first sentence, 

remove ‘‘e.g., 7 CFR parts 3015, 3016, 

and 3019’’ and add ‘‘for example, 2 CFR 

part 200’’ in its place, and in the second 

sentence, remove ‘‘7 CFR part 3019’’ 

and add ‘‘2 CFR part 200’’ in its place, 

and 

b. In paragraph (d), seventh sentence, 

remove ‘‘set forth in the applicable parts 

of this title (e.g., 7 CFR parts 3015, 306, 

3019)’’ and add ‘‘in 2 CFR part 200’’ in 

its place. 

§ 1485.34 [Amended] 

■ 19. Amend § 1485.34, first sentence by 

removing ‘‘set forth in the applicable 

parts of this title (e.g., 7 CFR parts 3015, 

3016, and 3019)’’ and adding ‘‘in 2 CFR 

part 200’’ in their place. 

■ 20. Revise § 1485.35 to read as 

follows: 

§ 1485.35 Suspension, termination, and 

closeout of agreements. 

A program agreement may be 

suspended or terminated in accordance 

with the suspension and termination 

procedures in 2 CFR part 200. If an 

agreement is terminated, the applicable 

regulations in 2 CFR part 200 will apply 

to the closeout of the agreement. 

Department of Agriculture 

National Institute of Food and 

Agriculture (NIFA) 

For the reasons stated in the 

preamble, NIFA amends 7 CFR Part 

Chapter XXXIV as follows: 

TITLE 7—AGRICULTURE 

CHAPTER XXXIV—NATIONAL INSTITUTE 

OF FOOD AND AGRICULTURE 

PART 3400—SPECIAL RESEARCH 

GRANTS PROGRAM 

■ 1. The authority for part 3400 

continues to read as follows: 

Authority: 7 U.S.C. 450i(c). 

§ 3400.6 [Amended] 

■ 2. In § 3400.6(a) remove the words 

‘‘the Department’s Uniform Federal 

Assistance Regulations’’ and add in 

their place ‘‘2 CFR part 200.’’ 

■ 3. Revise § 3400.8 to read as follows: 

§ 3400.8 Other Federal statutes and 

regulations that apply. 

(a) The Office of Management and 

Budget (‘‘OMB’’) issued guidance on 

Uniform Administrative Requirements, 

Cost Principles, and Audit 

Requirements for Federal Awards at 2 

CFR part 200 on December 26, 2013. In 

2 CFR 400.1, the Department adopted 

OMB’s guidance in subparts A through 

F of 2 CFR part 200, as supplemented 

by 2 CFR part 400, as the Department’s 

policies and procedures for uniform 

administrative requirements, cost 

principles, and audit requirements for 

federal awards. As a result, this 

regulation contains references to 2 CFR 

part 200 as it has regulatory effect for 

the Department’s programs and 

activities.’’ 

(b) Several other Federal statutes and/ 

or regulations apply to grant proposals 

considered for review or to research 

project grants awarded under this part. 

These include but are not limited to: 

2 CFR part 200—Uniform 

Administrative Requirements, Cost 

Principles, and Audit Requirements for 

Federal Awards. 

2 CFR part 180 and Part 417—OMB 

Guidelines to Agencies on GovernmentWide Debarment and Suspension 

(Nonprocurement) and USDA 

Nonprocurement Debarment and 

Suspension. 

7 CFR part 1c—USDA 

Implementation of the Federal Policy for 

the Protection of Human Subjects. 

7 CFR 1.1—USDA Implementation of 

Freedom of Information Act. 

7 CFR part 3—USDA Implementation 

of OMB Circular A–129 Regarding Debt 

Collection. 

7 CFR part 15, subpart A—USDA 

Implementation of Title VI of the Civil 

Rights Act of 1964. 

7 CFR part 3407—NIFA procedures to 

implement the National Environmental 

Policy Act. 

29 U.S.C. 794, section 504— 

Rehabilitation Act of 1973, and 7 CFR 


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part 15B (USDA implementation of 

statute), prohibiting discrimination 

based upon physical or mental handicap 

in Federally assisted programs. 

35 U.S.C. 200 et seq.—Bayh-Dole Act, 

controlling allocation of rights to 

inventions made by employees of small 

business firms and domestic nonprofit 

organizations, including universities, in 

Federally assisted programs 

(implementing regulations are contained 

in 37 CFR part 401). 

PART 3401—RANGELAND RESEARCH 

GRANTS PROGRAM 

■ 4. The authority citation for part 3401 

continues to read as follows: 

Authority: Section 1470 of the National 

Agricultural Research, Extension and 

Teaching Policy Act of 1977 (7 U.S.C. 3316). 

§ 3401.8 [Amended] 

■ 5. In the last sentence of § 3401.8(a) 

remove the words ‘‘the Department’s 

Uniform Federal Assistance 

Regulations’’ and add in their place ‘‘2 

CFR part 200.’’ 

■ 6. Revise § 3401.10 to read as follows: 

§ 3401.10 Other Federal Statutes and 

Regulations that Apply. 

(a) The Office of Management and 

Budget (‘‘OMB’’) issued guidance on 

Uniform Administrative Requirements, 

Cost Principles, and Audit 

Requirements for Federal Awards at 2 

CFR part 200 on December 26, 2013. In 

2 CFR 400.1, the Department adopted 

OMB’s guidance in subparts A through 

F of 2 CFR part 200, as supplemented 

by 2 CFR part 400, as the Department’s 

policies and procedures for uniform 

administrative requirements, cost 

principles, and audit requirements for 

federal awards. As a result, this 

regulation contains references to 2 CFR 

part 200 as it has regulatory effect for 

the Department’s programs and 

activities.’’ 

(b) Several other Federal statutes and/ 

or regulations apply to grant proposals 

considered for review or to research 

project grants awarded under this part. 

These include but are not limited to: 

2 CFR part 200—Uniform 

Administrative Requirements, Cost 

Principles, And Audit Requirements For 

Federal Awards. 

2 CFR part 180 and Part 417—OMB 

Guidelines To Agencies On 

Government-Wide Debarment And 

Suspension (Nonprocurement) And 

USDA Nonprocurement Debarment And 

Suspension 

7 CFR part 1c—USDA 

implementation of the Federal Policy for 

the Protection of Human Subjects. 

7 CFR 1.1—USDA implementation of 

Freedom of Information Act. 

7 CFR part 3—USDA implementation 

of OMB Circular A–129 regarding debt 

collection. 

7 CFR part 15, subpart A—USDA 

implementation of Title VI of the Civil 

Rights Act of 1964. 

7 CFR part 3407—NIFA procedures to 

implement the National Environmental 

Policy Act; 

29 U.S.C. 794 (section 504, 

Rehabilitation Act of 1973) and 7 CFR 

part 15B (USDA implementation of 

statute)—prohibiting discrimination 

based upon physical or mental handicap 

in Federally assisted programs; and 

35 U.S.C. 200 et seq.—Bayh-Dole Act, 

controlling allocation of rights to 

inventions made by employees of small 

business firms and domestic nonprofit 

organizations, including universities, in 

Federally assisted programs 

(implementing regulations are contained 

in 37 CFR part 401). 

■ 7. In § 3401.14, add a sentence at the 

end of the section to read as follows: 

§ 3401.14 Conflicts of interest. 

* * * Administration of the peer 

review group must be in accordance 

with the Department’s conflict of 

interest policy, 2 CFR 400.2. 

PART 3402—FOOD AND 

AGRICULTURAL SCIENCES 

NATIONAL NEEDS GRADUATE AND 

POSTGRADUATE FELLOWSHIP 

GRANTS PROGRAM 

■ 8. The authority citation for part 3402 

continues to read as follows: 

Authority: 7 U.S.C. 3316. 

§ 3402.19 [Amended] 

■ 9. In the last sentence of § 3402.19, 

remove the words ‘‘the Department’s 

Uniform Federal assistance regulations 

(parts 3015 and 3019 of 7 CFR)’’ and 

add in their place ‘‘2 CFR part 200.’’ 

■ 10. Revise § 3402.20 to read as 

follows: 

§ 3402.20 Other Federal Statutes and 

Regulations that Apply. 

(a) The Office of Management and 

Budget (‘‘OMB’’) issued guidance on 

Uniform Administrative Requirements, 

Cost Principles, and Audit 

Requirements for Federal Awards at 2 

CFR part 200 on December 26, 2013. In 

2 CFR 400.1, the Department adopted 

OMB’s guidance in subparts A through 

F of 2 CFR part 200, as supplemented 

by 2 CFR part 400, as the Department’s 

policies and procedures for uniform 

administrative requirements, cost 

principles, and audit requirements for 

federal awards. As a result, this 

regulation contains references to 2 CFR 

part 200 as it has regulatory effect for 

the Department’s programs and 

activities. 

(b) Several other Federal statutes and/ 

or regulations apply to grant proposals 

considered for review or to research 

project grants awarded under this part. 

These include but are not limited to: 

2 CFR part 200—Uniform 

Administrative Requirements, Cost 

Principles, and Audit Requirements for 

Federal Awards. 

2 CFR part 180 and Part 417—OMB 

Guidelines to Agencies on GovernmentWide Debarment And Suspension 

(Nonprocurement) And USDA 

Nonprocurement Debarment And 

Suspension 

7 CFR part 1c—USDA 

Implementation of the Federal Policy for 

the Protection of Human Subjects. 

7 CFR 1.1—USDA Implementation of 

Freedom of Information Act. 

7 CFR part 3—USDA Implementation 

of OMB Circular A–129 Regarding Debt 

Collection. 

7 CFR part 15, subpart A—USDA 

Implementation of Title VI of the Civil 

Rights Act of 1964. 

7 CFR part 3407—NIFA procedures to 

implement the National Environmental 

Policy Act; 

29 U.S.C. 794 (section 504, 

Rehabilitation Act of 1973) and 7 CFR 

part 15B (USDA implementation of 

statute)—prohibiting discrimination 

based upon physical or mental handicap 

in Federally assisted programs; and 

35 U.S.C. 200 et seq.—Bayh-Dole Act, 

controlling allocation of rights to 

inventions made by employees of small 

business firms and domestic nonprofit 

organizations, including universities, in 

Federally assisted programs 

(implementing regulations are contained 

in 37 CFR part 401). 

PART 3403—SMALL BUSINESS 

INNOVATION RESEARCH GRANTS 

PROGRAM 

■ 11. The authority citation for part 

3403 continues to read as follows: 

Authority: 15 U.S.C. 638. 

§ 3403.1 [Amended] 

■ 12. In the last sentence of § 3403.1(a), 

remove the words ‘‘the Office of 

Extramural Programs,’’ before ‘‘NIFA.’’ 

§ 3403.12 [Amended] 

■ 13. In the last sentence of § 3403.12, 

remove the words ‘‘the Department’s 

Uniform Federal Assistance Regulations 

(7 CFR part 3015)’’ and add in their 

place ‘‘2 CFR part 200.’’ 

■ 14. Revise § 3403.15 to read as 

follows: 


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§ 3403.15 Other Federal statutes and 

regulations that apply. 

(a) The Office of Management and 

Budget (‘‘OMB’’) issued guidance on 

Uniform Administrative Requirements, 

Cost Principles, and Audit 

Requirements for Federal Awards at 2 

CFR part 200 on December 26, 2013. In 

2 CFR 400.1, the Department adopted 

OMB’s guidance in subparts A through 

F of 2 CFR part 200, as supplemented 

by 2 CFR part 400, as the Department’s 

policies and procedures for uniform 

administrative requirements, cost 

principles, and audit requirements for 

federal awards. As a result, this 

regulation contains references to 2 CFR 

part 200 as it has regulatory effect for 

the Department’s programs and 

activities.’’ 

(b) Several other Federal statutes and/ 

or regulations apply to grant proposals 

considered for review or to research 

project grants awarded under this part. 

These include but are not limited to: 

2 CFR part 200—Uniform 

Administrative Requirements, Cost 

Principles, and Audit Requirements for 

Federal Awards. 

2 CFR part 180 and Part 417—OMB 

Guidelines to Agencies on GovernmentWide Debarment and Suspension 

(Nonprocurement) and USDA 

Nonprocurement Debarment And 

Suspension 

7 CFR part 1c—USDA 

Implementation of the Federal Policy for 

the Protection of Human Subjects. 

7 CFR 1.1—USDA Implementation of 

Freedom of Information Act. 

7 CFR part 3—USDA Implementation 

of OMB Circular A–129 Regarding Debt 

Collection. 

7 CFR part 15, subpart A—USDA 

Implementation of Title VI of the Civil 

Rights Act of 1964. 

7 CFR part 3407—NIFA Procedures to 

Implement the National Environmental 

Policy Act; 

29 U.S.C. 794 (section 504, 

Rehabilitation Act of 1973) and 7 CFR 

part 15B (USDA implementation of 

statute)—prohibiting discrimination 

based upon physical or mental handicap 

in Federally assisted programs; and 

35 U.S.C. 200 et seq.—Bayh-Dole Act, 

controlling allocation of rights to 

inventions made by employees of small 

business firms and domestic nonprofit 

organizations, including universities, in 

Federally assisted programs 

(implementing regulations are contained 

in 37 CFR part 401). 

PART 3405—HIGHER EDUCATION 

CHALLENGE GRANTS PROGRAM 

■ 15. The authority citation for part 

3405 continues to read as follows: 

Authority: Sec. 1470, National Agricultural 

Research, Extension, and Teaching Policy 

Act of 1977, as amended (7 U.S.C. 3316). 

§ 3405.9 [Amended] 

■ 16. In the second sentence of § 3405.9, 

remove the words ‘‘OMB Circular No. 

A–21’’ and add in their place ‘‘2 CFR 

part 200.’’ 

§ 3405.11 [Amended] 

■ 17. In § 3405.11(g)(2)(v), remove the 

words ‘‘OMB Circulars A–110, ‘Uniform 

Administrative Requirements for Grants 

and Agreements with Institutions of 

Higher Education, Hospitals and Other 

Non-Profit Organizations,’ and A–21 

‘Cost Principles for Educational 

Institutions’’’ and add in their place 

‘‘2 CFR part 200 and Part 400.’’ 

§ 3405.17 [Amended] 

■ 18. In § 3405.17(a), remove the words 

‘‘the Department’s Uniform 

Administrative Requirements for Grants 

and Agreements with Institutions of 

Higher Education, Hospitals and Other 

Non-Profit Organizations (7CFR part 

3019)’’ and replace with ‘‘2 CFR part 

200.’’ 

■ 19. Revise § 3405.20 to read as 

follows: 

§ 3405.20 Other Federal statutes and 

regulations that apply. 

(a) The Office of Management and 

Budget (‘‘OMB’’) issued guidance on 

Uniform Administrative Requirements, 

Cost Principles, and Audit 

Requirements for Federal Awards at 2 

CFR part 200 on December 26, 2013. In 

2 CFR 400.1, the Department adopted 

OMB’s guidance in subparts A through 

F of 2 CFR part 200, as supplemented 

by 2 CFR part 400, as the Department’s 

policies and procedures for uniform 

administrative requirements, cost 

principles, and audit requirements for 

federal awards. As a result, this 

regulation contains references to 2 CFR 

part 200 as it has regulatory effect for 

the Department’s programs and 

activities.’’ 

(b) Several other Federal statutes and/ 

or regulations apply to grant proposals 

considered for review or to research 

project grants awarded under this part. 

These include but are not limited to: 

2 CFR part 200—Uniform 

Administrative Requirements, Cost 

Principles, and Audit Requirements for 

Federal Awards. 

2 CFR part 180 and Part 417—OMB 

Guidelines to Agencies on GovernmentWide Debarment and Suspension 

(Nonprocurement) and USDA 

Nonprocurement Debarment and 

Suspension 

7 CFR part 1c—USDA 

Implementation of the Federal Policy for 

the Protection of Human Subjects. 

7 CFR 1.1—USDA Implementation of 

Freedom of Information Act. 

7 CFR part 3—USDA Implementation 

of OMB Circular A–129 Regarding Debt 

Collection. 

7 CFR part 15, subpart A—USDA 

Implementation of Title VI of the Civil 

Rights Act of 1964. 

7 CFR part 3407—NIFA Procedures 

To Implement The National 

Environmental Policy Act; 

29 U.S.C. 794 (section 504, 

Rehabilitation Act of 1973) and 7 CFR 

part 15B (USDA implementation of 

statute)—prohibiting discrimination 

based upon physical or mental handicap 

in Federally assisted programs; and 

35 U.S.C. 200 et seq.—Bayh-Dole Act, 

controlling allocation of rights to 

inventions made by employees of small 

business firms and domestic nonprofit 

organizations, including universities, in 

Federally assisted programs 

(implementing regulations are contained 

in 37 CFR part 401). 

PART 3406—1890 INSTITUTION 

CAPACITY BUILDING GRANTS 

PROGRAM 

■ 20. The authority citation for part 

3406 continues to read as follows: 

Authority: Sec. 1470, National 

Agricultural Research, Extension, and 

Teaching Policy Act of 1977, as amended (7 

U.S.C. 3316). 

§ 3406.10 [Amended] 

■ 21. In § 3406.10, remove the words 

‘‘OMB Circular No. A–21’’ and add in 

their place ‘‘2 CFR part 200’’. 

§ 3406.24 [Amended] 

■ 22. In § 3406.24(a), remove the words 

‘‘the Department’s Uniform 

Administrative Requirements for Grants 

and Agreements with Institutions of 

Higher Education, Hospitals and Other 

Non-Profit Organizations(7 CFR part 

3019)’’ and add in their place ‘‘2 CFR 

part 200 and Part 400.’’ 

■ 23. Revise § 3406.27 to read as 

follows: 

§ 3406.27 Other Federal Statutes and 

Regulations that Apply. 

(a) The Office of Management and 

Budget (‘‘OMB’’) issued guidance on 

Uniform Administrative Requirements, 

Cost Principles, and Audit 

Requirements for Federal Awards at 2 

CFR part 200 on December 26, 2013. In 

2 CFR 400.1, the Department adopted 

OMB’s guidance in subparts A through 

F of 2 CFR part 200, as supplemented 

by 2 CFR part 400, as the Department’s 

policies and procedures for uniform 


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administrative requirements, cost 

principles, and audit requirements for 

federal awards. As a result, this 

regulation contains references to 2 CFR 

part 200 as it has regulatory effect for 

the Department’s programs and 

activities.’’ 

(b) Several other Federal statutes and/ 

or regulations apply to grant proposals 

considered for review or to research 

project grants awarded under this part. 

These include but are not limited to: 

2 CFR part 200—Uniform 

Administrative Requirements, Cost 

Principles, And Audit Requirements For 

Federal Awards. 

2 CFR part 180 and Part 417—OMB 

Guidelines To Agencies On 

Government-Wide Debarment And 

Suspension (Nonprocurement) And 

USDA Nonprocurement Debarment And 

Suspension 

7 CFR part 1c—USDA 

implementation of the Federal Policy for 

the Protection of Human Subjects. 

7 CFR 1.1—USDA implementation of 

Freedom of Information Act. 

7 CFR part 3—USDA implementation 

of OMB Circular A–129 regarding debt 

collection. 

7 CFR part 15, subpart A—USDA 

implementation of Title VI of the Civil 

Rights Act of 1964. 

7 CFR part 3407—NIFA procedures to 

implement the National Environmental 

Policy Act; 

29 U.S.C. 794 (section 504, 

Rehabilitation Act of 1973) and 7 CFR 

part 15B (USDA implementation of 

statute)—prohibiting discrimination 

based upon physical or mental handicap 

in Federally assisted programs; and 

35 U.S.C. 200 et seq.—Bayh-Dole Act, 

controlling allocation of rights to 

inventions made by employees of small 

business firms and domestic nonprofit 

organizations, including universities, in 

Federally assisted programs 

(implementing regulations are contained 

in 37 CFR part 401). 

PART 3407—IMPLEMENTATION OF 

NATIONAL ENVIRONMENTAL POLICY 

ACT 

■ 24. The authority citation for part 

3407 continues to read as follows: 

Authority: National Environmental Policy 

Act of 1969, as amended, 42 U.S.C. 4321 et 

seq.; E.O. 11514, 34 FR 4247, as amended by 

E.O. 11991, 42 FR 26927; E.O. 12144, 44 FR 

11957; 5 U.S.C. 301; 40 CFR parts 1500–1508; 

and 7 CFR part 1b. 

§ 3407.4 [Amended] 

■ 25. In the introductory text of 

§ 3407.4, correct the word ‘‘responsibe’’ 

to read ‘‘responsible’’. 

PART 3415—BIOTECHNOLOGY RISK 

ASSESSMENT RESEARCH GRANTS 

PROGRAM 

■ 26. The authority citation for part 

3415 continues to read as follows: 

Authority: 5 U.S.C. 301 and 7 U.S.C. 5921. 

§ 3415.6 [Amended] 

■ 27. In § 3415.6(a), remove the words 

‘‘and the Department’s assistance 

regulations (part 3015 and part 3016 of 

this title)’’ and add in their place ‘‘2 

CFR part 200.’’ 

■ 28. Revise § 3415.8 to read as follows: 

§ 3415.8 Other Federal statutes and 

regulations that apply. 

(a) The Office of Management and 

Budget (‘‘OMB’’) issued guidance on 

Uniform Administrative Requirements, 

Cost Principles, and Audit 

Requirements for Federal Awards at 2 

CFR part 200 on December 26, 2013. In 

2 CFR 400.1, the Department adopted 

OMB’s guidance in subparts A through 

F of 2 CFR part 200, as supplemented 

by 2 CFR part 400, as the Department’s 

policies and procedures for uniform 

administrative requirements, cost 

principles, and audit requirements for 

federal awards. As a result, this 

regulation contains references to 2 CFR 

part 200 as it has regulatory effect for 

the Department’s programs and 

activities.’’ 

(b) Several other Federal statutes and/ 

or regulations apply to grant proposals 

considered for review or to research 

project grants awarded under this part. 

These include but are not limited to: 

2 CFR part 200—Uniform 

Administrative Requirements, Cost 

Principles, and Audit Requirements for 

Federal Awards. 

2 CFR part 180 and Part 417—OMB 

Guidelines to Agencies on GovernmentWide Debarment And Suspension 

(Nonprocurement) and USDA 

Nonprocurement Debarment And 

Suspension 

7 CFR part 1c—USDA 

Implementation of the Federal Policy for 

the Protection of Human Subjects. 

7 CFR 1.1—USDA Implementation of 

Freedom of Information Act. 

7 CFR part 3—USDA Implementation 

of OMB Circular A–129 Regarding Debt 

Collection. 

7 CFR part 15, subpart A—USDA 

Implementation of Title VI of the Civil 

Rights Act of 1964. 

7 CFR part 3407—NIFA Procedures 

To Implement the National 

Environmental Policy Act; 

29 U.S.C. 794 (section 504, 

Rehabilitation Act of 1973) and 7 CFR 

part 15B (USDA implementation of 

statute)—prohibiting discrimination 

based upon physical or mental handicap 

in Federally assisted programs; and 

35 U.S.C. 200 et seq.—Bayh-Dole Act, 

controlling allocation of rights to 

inventions made by employees of small 

business firms and domestic nonprofit 

organizations, including universities, in 

Federally assisted programs 

(implementing regulations are contained 

in 37 CFR part 401). 

PART 3430—COMPETITIVE AND 

NONCOMPETITIVE NON-FORMULA 

FEDERAL ASSISTANCE PROGRAMS— 

GENERAL AWARD ADMINISTRATIVE 

PROVISIONS 

■ 29. The authority citation for part 

3430 continues to read as follows: 

Authority: 7 U.S.C. 3316; Pub. L. 106–107 

(31 U.S.C. 6101 note). 

§ 3430.1 [Amended] 

■ 30. In § 3430.1(a), remove the words 

‘‘7 CFR parts 3016 (State, local, and 

tribal governments), 3019 (institutions 

of higher education, hospitals, and 

nonprofits), and 3015 (all others)’’ and 

add in their place ‘‘2 CFR part 200, 

Uniform Administrative Requirements, 

Cost Principles, and Audit 

Requirements for Federal Awards.’’ 

§ 3430.2 [Amended] 

■ 31. In § 3430.2, remove the definitions 

of the terms ‘‘State’’ and ‘‘Third party 

in-kind contributions.’’ 

■ 32. Revise § 3430.4 to read as follows: 

§ 3430.4 Other Federal statutes and 

regulations that apply. 

(a) The Office of Management and 

Budget (‘‘OMB’’) issued guidance on 

Uniform Administrative Requirements, 

Cost Principles, and Audit 

Requirements for Federal Awards at 2 

CFR part 200 on December 26, 2013. In 

2 CFR 400.1, the Department adopted 

OMB’s guidance in subparts A through 

F of 2 CFR part 200, as supplemented 

by 2 CFR part 400, as the Department’s 

policies and procedures for uniform 

administrative requirements, cost 

principles, and audit requirements for 

federal awards. As a result, this 

regulation contains references to 2 CFR 

part 200 as it has regulatory effect for 

the Department’s programs and 

activities.’’ 

(b) Several other Federal statutes and/ 

or regulations apply to grant proposals 

considered for review or to research 

project grants awarded under this part. 

These include but are not limited to: 

2 CFR part 200—Uniform 

Administrative Requirements, Cost 

Principles, And Audit Requirements For 

Federal Awards. 

2 CFR part 180 and Part 417—OMB 

Guidelines to Agencies on GovernmentVerDate Sep<11>2014 20:19 Dec 18, 2014 Jkt 235001 PO 00000 Frm 00134 Fmt 4701 Sfmt 4700 E:\FR\FM\19DER2.SGM 19DER2

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Wide Debarment and Suspension 

(Nonprocurement) and USDA 

Nonprocurement Debarment and 

Suspension 

7 CFR part 1c—USDA 

Implementation of the Federal Policy for 

the Protection of Human Subjects. 

7 CFR 1.1—USDA Implementation of 

Freedom of Information Act. 

7 CFR part 3—USDA Implementation 

of OMB Circular A–129 Regarding Debt 

Collection. 

7 CFR part 15, subpart A—USDA 

implementation of Title VI of the Civil 

Rights Act of 1964. 

7 CFR part 3407—NIFA Procedures to 

Implement the National Environmental 

Policy Act; 

29 U.S.C. 794 (section 504, 

Rehabilitation Act of 1973) and 7 CFR 

part 15B (USDA implementation of 

statute)—prohibiting discrimination 

based upon physical or mental handicap 

in Federally assisted programs; and 

35 U.S.C. 200 et seq.—Bayh-Dole Act, 

controlling allocation of rights to 

inventions made by employees of small 

business firms and domestic nonprofit 

organizations, including universities, in 

Federally assisted programs 

(implementing regulations are contained 

in 37 CFR part 401). 

§ 3430.12 [Amended] 

■ 33. In § 3430.12(a), remove the words 

‘‘the Office of Management and Budget 

(OMB) policy directive 68 FR 37370– 

37379 (June 23, 2003)’’ and replace with 

‘‘Appendix I to 2 CFR part 200’’. 

§ 3430.41 [Amended] 

■ 34. In § 3430.41: 

■ a. In paragraph (a), remove the words 

‘‘parts 3015, 3016, 3019 of 7 CFR’’ and 

add in their place‘‘2 CFR part 200.’’ 

■ b. In paragraph (b) introductory text, 

remove ‘‘including, at a minimum, the 

following:’’ and add in its place ‘‘noted 

in section 210 of 2 CFR part 200.’’ 

■ c. Remove paragraphs (b)(1) through 

(10). 

§ 3430.54 [Amended] 

■ 35. In § 3430.54, remove the words 

‘‘the applicable assistance regulations 

and cost principles’’ and add in their 

place ‘‘2 CFR part 200’’. 

§ 3430.59 [Amended] 

■ 36. Amend § 3430.59 as follows: 

■ a. Remove all references to ‘‘the Office 

of Extramural Programs’’ or ‘‘OEP’’ and 

add in their place ‘‘NIFA.’’ 

■ b. In the last sentence of paragraph (c), 

remove the words ‘‘subject to 7 CFR part 

3052’’ and add in their place ‘‘2 CFR 

200.521.’’ 

■ c. In paragraph (e), remove all 

references to ‘‘OEP Assistant Director’’ 

and add in their place ‘‘Office of Grants 

and Financial Management (OGFM) 

Deputy Director.’’ 

§ 3430.62 [Amended] 

■ 37. In § 3430.62(c), remove all 

references to ‘‘OEP Assistant Director’’ 

and add in their place ‘‘Office of Grants 

and Financial Management (OGFM) 

Deputy Director.’’ 

PART 3431—VETERINARY MEDICINE 

LOAN REPAYMENT PROGRAM 

■ 38. The authority citation for part 

3431 continues to read as follows: 

Authority: 7 U.S.C. 3151a; Pub. L. 106– 

107 (31 U.S.C. 6101 note). 

§ 3431.20 [Amended] 

■ 39. In § 3431.20, in the first sentence 

remove the words ‘‘Office of Extramural 

Programs (OEP)’’ after ‘‘NIFA,’’ and in 

the second sentence remove ‘‘OEP’’ and 

add in its place ‘‘NIFA.’’ 

Department of Agriculture 

Rural Development 

For the reasons set forth in the 

common preamble, chapters XVII, XVIII, 

XXXV and XLII of Subtitle B, title 7, 

Code of Federal Regulations are 

amended as follows: 

CHAPTER XVII—RURAL UTILITIES 

SERVICE, DEPARTMENT OF 

AGRICULTURE 

PART 1703—RURAL DEVELOPMENT 

■ 1. The authority citation for part 1703 

continues to read as follows: 

Authority: 7 U.S.C. 901 et seq. and 950aaa 

et seq. 

Subpart D—Distance Learning and 

Telemedicine Loan and Grant 

Program—General 

■ 2. Amend § 1703.106 by revising 

paragraph (a) to read as follows: 

§ 1703.106 Disbursement of loans and 

grants. 

(a) For financial assistance of 

$100,000 or greater, prior to the 

disbursement of a grant and a loan, the 

recipient, if it is not a unit of 

government, will provide evidence of 

fidelity bond coverage as required by 2 

CFR part 200, which is adopted by 

USDA through 2 CFR part 400. 

* * * * * 

■ 3. Amend § 1703.108 by revising 

paragraph (b) to read as follows: 

§ 1703.108 Audit requirements. 

* * * * * 

(b) If the recipient is a State or local 

government, or non-profit organization, 

the recipient shall provide an audit in 

accordance with subpart F of 2 CFR part 

200, as adopted by USDA through 2 CFR 

part 400. 

Subpart E—Distance Learning and 

Telemedicine Grant Program 

■ 4. Amend § 1703.125 by revising 

paragraphs (i)(5), (i)(6), (i)(7) and (l) to 

read as follows: 

§ 1703.125 Completed application. 

(i) * * * 

(5) Drug-Free Workplace Act of 1998 

(41 U.S.C. 8101 et. seq.), 2 CFR part 421; 

(6) E.O.s 12549 and 12689, Debarment 

and Suspension, 2 CFR part 180, which 

is adopted by USDA through 2 CFR part 

417; 

(7) Byrd Anti-Lobbying Amendment 

(31 U.S.C. 1352), 2 CFR part 418. 

* * * * * 

(l) Federal debt certification. The 

applicant must provide a certification 

that it is not delinquent on any 

obligation owed to the government (31 

U.S.C. 3720B). 

* * * * * 

■ 5. Amend § 1703.127 by revising 

paragraph (g) to read as follows: 

§ 1703.127 Application selection 

provisions. 

* * * * * 

(g) Grantees shall comply with all 

applicable provisions of 2 CFR part 200, 

as adopted by USDA through 2 CFR part 

400. 

Subpart F—Distance Learning and 

Telemedicine Combination Loan and 

Grant Program 

■ 6. Amend § 1703.134 by revising 

paragraphs (g)(5), (g)(6), (g)(7) and (j) to 

read as follows: 

§ 1703.134 Completed application. 

* * * * * 

(g) * * * 

(5) Drug-Free Workplace Act of 1998 

(41 U.S.C. 8101 et. seq.), 2 CFR part 421; 

(6) E.O.s 12549 and 12689, Debarment 

and Suspension, 2 CFR part 180, which 

is adopted by USDA through 2 CFR part 

417; 

(7) Byrd Anti-Lobbying Amendment 

(31 U.S.C. 1352), 2 CFR part 418. 

* * * * * 

(j) Federal debt certification. The 

applicant must provide evidence that it 

is not delinquent on any obligation 

owed to the government (31 U.S.C. 

3720B). 

* * * * * 


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Subpart G—Distance Learning and 

Telemedicine Loan Program 

■ 7. Amend § 1703.144 by revising 

paragraphs (g)(5), (g)(6), (g)(7) and (j) to 

read as follows: 

§ 1703.144 Completed application. 

* * * * * 

(g) * * * 

(5) Drug-Free Workplace Act of 1998 

(41 U.S.C. 8101 et. seq.), 2 CFR part 421; 

(6) E.O.s 12549 and 12689, Debarment 

and Suspension, 2 CFR part 180, which 

is adopted by USDA through 2 CFR part 

417; 

(7) Byrd Anti-Lobbying Amendment 

(31 U.S.C. 1352), 2 CFR part 418. 

* * * * * 

(j) Federal debt certification. The 

applicants must provide a certification 

that it is not delinquent on any 

obligation owed to the government (31 

U.S.C. 3720B). 

* * * * * 

PART 1709—ASSISTANCE TO HIGH 

ENERGY COST COMMUNITIES 

■ 8. The authority citation for part 1709 

continues to read as follows: 

Authority: 5 U.S.C. 301, 7 U.S.C. 901 et 

seq. 

Subpart A—General Requirements 

■ 9. Amend § 1709.12 by revising the 

introductory text to read as follows: 

§ 1709.12 Reporting requirements. 

To support Agency monitoring of 

project performance and use of grant 

funds, Grantees shall file periodic 

reports, required under 2 CFR part 200, 

as adopted by USDA through 2 CFR part 

400, as provided in this part, and the 

grant agreement as follows: 

* * * * * 

■ 10. Amend § 1709.13 by revising the 

second sentence to read as follows: 

§ 1709.13 Grant administration. 

* * * Administration of RUS grants 

is governed by the provisions of this 

subpart and subpart B of this part, the 

terms of the grant agreement and, as 

applicable, the provisions of 2 CFR part 

200, as adopted by USDA through 2 CFR 

part 400. 

■ 11. Amend § 1709.16 by revising the 

second sentence to read as follows: 

§ 1709.16 Performance reviews. 

* * * If the grantee does not comply 

with or does not meet the performance 

criteria set out in the grant agreement, 

the Administrator may require 

amendment of the grant agreement, or 

may suspend or terminate the grant 

pursuant to 2 CFR part 200, as adopted 

by USDA through 2 CFR part 400. 

■ 12. Amend § 1709.19 by revising 

paragraph (a) through (e) and removing 

paragraph (f), to read as follows: 

§ 1709.19 Other USDA regulations. 

* * * * * 

(a) Uniform Administrative 

Requirements, Cost Principles, and 

Audit Requirements for Federal Awards, 

2 CFR part 200, as adopted by USDA 

through 2 CFR part 400; 

(b) Drug-Free Workplace Act of 1998 

(41 U.S.C. 8101 et. seq.), 2 CFR part 421; 

(c) E.O.s 12549 and 12689, Debarment 

and Suspension, 2 CFR part 180, which 

is adopted by USDA through 2 CFR part 

417; 

(d) Byrd Anti-Lobbying Amendment 

(31 U.S.C. 1352), 2 CFR part 418; and 

(e) Subpart F of 2 CFR 200, as adopted 

by USDA through 2 CFR 400. 

■ 13. Amend § 1709.21 by revising 

paragraph (b) to read as follows: 

§ 1709.21 Audit requirements. 

* * * * * 

(b) If the grantee is a State or local 

government, or a non-profit corporation 

(other than an RUS Electric or 

Telecommunication Borrower), the 

recipient shall provide an audit in 

accordance with subpart F of 2 CFR part 

200, as adopted by USDA through 2 CFR 

part 400. 

Subpart B—RUS High Cost Energy 

Grant Program 

■ 14. Amend § 1709.102 by revising 

paragraph (a) to read as follows: 

§ 1709.102 Policy. 

(a) All high energy cost grants will be 

awarded competitively subject to the 

limited exceptions in 2 CFR 415.1(d). 

* * * * * 

Subpart G—Recovery of Financial 

Assistance Used for Unauthorized 

Purposes 

■ 15. Amend § 1709.601 by revising the 

last sentence to read as follows: 

§ 1709.601 Policy. 

* * * The Agency shall make full use 

of available authority and procedures, 

including but not limited to those 

available under 2 CFR part 200, as 

adopted by USDA through 2 CFR part 

400. 

PART 1710—GENERAL AND PRE– 

LOAN POLICIES AND PROCEDURES 

COMMON TO ELECTRIC LOANS AND 

GUARANTEES 

■ 16. The authority citation for part 

1710 continues to read as follows: 

Authority: 7 U.S.C. 901 et seq., 1921 et 

seq., 6941 et seq. 

Subpart C—Loan Purposes and Basic 

Policies 

■ 17. Revise § 1710.123 to read as 

follows: 

§ 1710.123 Debarment and Suspension. 

Borrowers are required to comply 

with certain requirements on debarment 

and suspension as set forth in 2 CFR 

part 180, as adopted by USDA through 

2 CFR part 417. 

■ 18. Revise § 1710.125 to read as 

follows: 

§ 1710.125 Restrictions on lobbying. 

Borrowers are required to comply 

with certain requirements with respect 

to restrictions on lobbying activities. See 

2 CFR part 418. 

■ 19. Revise § 1710.127 to read as 

follows: 

§ 1710.127 Drug free workplace. 

Borrowers are required to comply 

with the Drug Free Workplace Act of 

1988 (41 U.S.C. 8101 et. seq.) and the 

Act’s implementing regulations (2 CFR 

part 421) when a borrower receives a 

Federal grant or enters into a 

procurement contract awarded pursuant 

to the provisions of the Federal 

Acquisition Regulation (title 48 CFR) to 

sell to a Federal agency property or 

services having a value of $25,000 or 

more. 

Subpart I—Application Requirements 

and Procedures for Loans 

■ 20. Amend § 1710.501 by revising 

paragraphs (a)(10) and (a)(12) to read as 

follows: 

§ 1710.501 Loan applications documents. 

(a) * * * 

(10) Form AD–1047, Certification 

Regarding Debarment, Suspension, and 

Other Responsibility Matters—Primary 

Covered Transactions. This statement 

certifies that the borrower will comply 

with certain regulations on debarment 

and suspension required by Executive 

Order 12549, Debarment and 

Suspension (3 CFR, 1986 Comp., p. 

189). See 2 CFR 417, and § 1710.123. 

* * * * * 

(12) Lobbying. The following 

information on lobbying is required 

pursuant to 2 CFR 418, and § 1710.125. 

Borrowers applying for both insured 

and guaranteed financing should 

consult RUS before submitting this 

information. 


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PART 1717—POST–LOAN POLICIES 

AND PROCEDURES COMMON TO 

INSURED AND GUARANTEED 

ELECTRIC LOANS 

■ 21. The authority citation for part 

1717 continues to read as follows: 

Authority: 7 U.S.C. 901 et seq., 1921 et 

seq., 6941 et seq. 

Subpart R—Lien Accommodations and 

Subordinations for 100 Percent Private 

Financing 

■ 22. Amend § 1717.855 by revising 

paragraph (k) to read as follows: 

§ 1717.855 Application contents: Advance 

approval—100 percent private financing of 

distribution, sub-transmission and 

headquarters facilities, and certain other 

community infrastructure. 

* * * * * 

(k) Form AD–1047, Certification 

Regarding Debarment, Suspension, and 

Other Responsibility Matters—Primary 

Covered Transactions, as required by 2 

CFR part 180, as adopted by USDA 

through 2 CFR part 417; 

* * * * * 

■ 23. Amend § 1717.857 by revising 

paragraph (c)(7) to read as follows: 

§ 1717.857 Refinancing of existing secured 

debt—distribution and power supply 

borrowers. 

(c) * * * 

(7) Form AD–1047, Certification 

Regarding Debarment, Suspension, and 

Other Responsibility Matters—Primary 

Covered Transactions, as required by 2 

CFR part 417: 

* * * * * 

■ 24. Amend § 1717.858 by revising 

paragraph (c)(9) to read as follows: 

§ 1717.858 Lien subordination for rural 

development investments. 

(c) * * * 

(9) Form AD–1047, Certification 

Regarding Debarment, Suspension, and 

Other Responsibility Matters—Primary 

Covered Transactions, as required by 2 

CFR part 180, as adopted by USDA 

through 2 CFR part 417; 

* * * * * 

■ 25. Amend § 1717.860 by revising 

paragraph (c)(2)(vi)(C) to read as 

follows: 

§ 1717.860 Lien accommodations and 

subordinations under section 306E of the 

RE Act. 

(c) * * * 

(2) * * * 

(vi) * * * 

(C) Form AD–1047, Certification 

Regarding Debarment, Suspension, and 

Other Responsibility Matters—Primary 

Covered Transactions, as required by 2 

CFR part 180, adopted by USDA 

through 2 CFR part 417; 

* * * * * 

PART 1724—ELECTRIC 

ENGINEERING, ARCHITECTURAL 

SERVICES AND DESIGN POLICIES 

AND PROCEDURES 

■ 26. The authority citation for part 

1724 continues to read as follows: 

Authority: 7 U.S.C. 901 et seq., 1921 et 

seq., 6941 et seq. 

Subpart A—General 

■ 27. Revise § 1724.7 to read as follows: 

§ 1724.7 Debarment and suspension. 

Borrowers shall comply with the 

requirements on debarment and 

suspension in connection with 

procurement activities set forth in 2 CFR 

part 180, as adopted by USDA through 

2 CFR part 417, particularly with 

respect to lower tier transactions, e.g., 

procurement contracts for goods or 

services. 

■ 28. Revise § 1724.8 to read as follows: 

§ 1724.8 Restrictions on lobbying. 

Borrowers shall comply with the 

restrictions and requirements in 

connection with procurement activities 

as set forth in 2 CFR part 418. 

PART 1726—ELECTRIC SYSTEM 

CONSTRUCTION POLICIES AND 

PROCEDURES 

■ 29. The authority citation for part 

1726 continues to read as follows: 

Authority: 7 U.S.C. 901 et seq., 1921 et 

seq., 6941 et seq. 

■ 30. Revise § 1726.16 to read as 

follows: 

§ 1726.16 Debarment and suspension. 

Borrowers are required to comply 

with certain requirements on debarment 

and suspension in connection with 

procurement activities set forth in 2 CFR 

part 180, as adopted by USDA through 

2 CFR part 417, particularly with 

respect to lower tier transactions, e.g., 

procurement contracts for goods or 

services. 

■ 31. Revise § 1726.17 to read as 

follows: 

§ 1726.17 Restrictions on lobbying. 

Borrowers are required to comply 

with certain restrictions and 

requirements in connection with 

procurement activities as set forth in 2 

CFR part 418. 

PART 1737—PRE-LOAN POLICIES 

AND PROCEDURES COMMON TO 

INSURED AND GUARANTEED 

TELECOMMUNICATIONS LOANS 

■ 32. The authority citation for part 

1737 continues to read as follows: 

Authority: 7 U.S.C. 901 et seq., 1921 et 

seq.; Pub. L. 103–354, 108 Stat. 3178 (7 

U.S.C. 6941 et seq.). 

Subpart C—The Loan Application 

■ 33. Amend § 1737.22 by revising 

paragraph (b)(6) to read as follows: 

§ 1737.22 Supplementary information. 

* * * * * 

(b) * * * 

(6) Executed copy of Form AD–1047, 

‘‘Certification Regarding Debarment, 

Suspension, and Other Responsibility 

Matters—Primary Covered 

Transactions.’’ 

* * * * * 

Subpart E—Interim Financing of 

Construction of Telephone Facilities 

■ 34. Amend § 1737.41 by revising 

paragraph (b)(2)(vi) to read as follows: 

§ 1737.41 Procedure for obtaining 

approval. 

* * * * * 

(b) * * * 

(2) * * * 

(vi) Executed copy of Form AD–1047, 

‘‘Certification Regarding Debarment, 

Suspension, and Other Responsibility 

Matters—Primary Covered 

Transactions.’’ 

* * * * * 

Subpart F—Review of Application 

Procedures 

■ 35. Amend § 1737.50 by revising 

paragraphs (a)(2) and (b) to read as 

follows: 

§ 1737.50 Loan approval requirements. 

(a) * * * 

(2) A completed certification Form 

AD–1047, ‘‘Certification Regarding 

Debarment, Suspension, and Other 

Responsibility Matters—Primary 

Covered Transactions;’’ 

* * * * * 

(b) RUS shall review the completed 

loan application, particularly noting 

subscriber data, grades of service, 

extended area service (EAS), connecting 

company commitments, commercial 

facilities, system and exchange 

boundaries, and proposed acquisitions. 

RUS shall review the LD to determine 

that the system design is acceptable to 

RUS, that the design is technically 

correct, that the cost estimates are 

reasonable, and that the design provides 


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for area coverage service. RUS shall also 

review the population and 

incorporation status of all communities 

served or to be served by the borrower 

to determine if any nonrural areas are 

served and if municipal franchises are 

required. Any RUS lending for nonrural 

areas must be in accordance with 7 CFR 

part 1735. RUS shall also check the 

‘‘List of Parties Excluded from Federal 

Procurement of Nonprocurement 

Programs’’, compiled, maintained and 

distributed by General Services 

Administration, to determine whether 

the borrower is debarred, suspended, 

ineligible, or voluntarily excluded (see 2 

CFR 180.430). 

* * * * * 

PART 1738—RURAL BROADBAND 

ACCESS LOANS AND LOAN 

GUARANTEES 

■ 36. The authority citation for part 

1738 continues to read as follows: 

Authority: Pub. L. 107–171, 7 U.S.C. 901 

et seq. 

Subpart D—Direct Loan Terms 

■ 37. Amend § 1738.156 to revise 

paragraphs (a)(10) and (11) to read as 

follows: 

§ 1738.156 Other Federal requirements. 

* * * * * 

(a) * * * 

(10) The regulations implementing 

E.O. 12549, Debarment and Suspension 

(2 CFR part 180, which is adopted by 

USDA through 2 CFR part 417, 

including subpart C of 2 CFR part 417, 

‘‘Responsibilities of Participants 

Regarding Transactions,’’ and 2 CFR 

417.332. 

(11) The requirements regarding 

lobbying for Contracts, Grants, Loans 

and Cooperative Agreements in 31 

U.S.C. 1352 (2 CFR part 418). 

* * * * * 

PART 1739—BROADBAND GRANT 

PROGRAM 

■ 38. The authority citation for part 

1739 continues to read as follows: 

Authority: Title III, Pub. L. 108–199, 118 

Stat. 3. 

Subpart A—Community Connect Grant 

Program 

■ 39. Amend § 1739.15 as follows: 

■ a. Revise the first sentence of the 

introductory text; 

■ b. Revise paragraph (l)(2); 

■ c. Revise paragraph (l)(4); 

The revisions read as follows: 

§ 1739.15 Completed application. 

Applications should be prepared in 

conformance with the provisions of this 

part and all applicable regulations, 

including 2 CFR part 200, as adopted by 

USDA through 2 CFR part 400. 

* * * * * 

(l) * * * 

(2) 2 CFR part 200, as adopted by 

USDA through 2 CFR part 400. 

* * * * * 

(4) 2 CFR part 418—New Restrictions 

on Lobbying; 

* * * * * 

■ 40. Amend § 1739.20 by revising 

paragraph (b) to read as follows: 

§ 1739.20 Audit requirements. 

* * * * * 

(b) If the recipient is a Tribal, State or 

local government, or non-profit 

organization, the recipient shall provide 

an audit in accordance with subpart F 

of 2 CFR part 200, as adopted by USDA 

through 2 CFR part 400. 

PART 1740—PUBLIC TELEVISION 

STATION DIGITAL TRANSITION 

GRANT PROGRAM 

■ 41. The authority citation for part 

1740 continues to read as follows: 

Authority: Consolidated Appropriations 

Act, 2005; Title III: Rural Development 

Programs; Rural Utilities Service; Distance 

Learning, Telemedicine, and Broadband 

Program; Public Law 108–447. 

Subpart A—Public Television Station 

Digital Transition Grant Program 

■ 42. Amend § 1740.9 by revising 

paragraphs (j)(5), (j)(6), and (j)(7) to read 

as follows: 

§ 1740.9 Grant application. 

* * * * * 

(j) * * * 

(5) Drug-Free Workplace Act of 1998 

(41 U.S.C. 8101 et. seq.), 2 CFR part 421; 

(6) Executive Orders 12549 and 

12689, Debarment and Suspension, 2 

CFR part 180, which is adopted by 

USDA through 2 CFR part 417; and 

(7) Byrd Anti-Lobbying Amendment 

(31 U.S.C. 1352), 2 CFR part 418. 

* * * * * 

PART 1773—POLICY ON AUDITS OF 

RUS BORROWERS 

■ 43. The authority citation for part 

1773 continues to read as follows: 

Authority: 7 U.S.C. 901 et seq., 1921 et 

seq., 6941 et seq. 

Subpart B—RUS Audit Requirements 

■ 44. Amend § 1773.3 by revising 

paragraphs (d) and (e) to read as follows: 

§ 1773.3 Annual audit. 

* * * * * 

(d) A borrower that qualifies as a unit 

of state or local government or Indian 

tribe as such terms are defined in the 

Single Audit Act of 1984 (31 U.S.C. 

7501 et seq.), the Single Audit Act 

Amendments of 1996 (31 U.S.C. 7505 et 

seq.) and OMB Circular A–133, Audits 

of States and Local Government, and 

Non Profit Organizations (which applies 

for audits of fiscal years beginning prior 

to December 26, 2014) and Subpart F of 

2 CFR 200, Uniform Administrative 

Requirements, Cost Principles, and 

Audit Requirements, as adopted by 

USDA though 2 CFR 400 (which applies 

for fiscal years beginning on or after 

December 26, 2014) must comply with 

this part as follows: 

(1) A borrower that expends $500,000 

under OMB Circular A–133 (for audits 

of fiscal years beginning prior to 

December 26, 2014) and $750,000 under 

Subpart F of 2 CFR part 200, as adopted 

by USDA through 2 CFR part 400 (for 

audits for fiscal years beginning after 

December 26, 2014) or more in a year in 

Federal awards must have an audit 

performed and submit an auditor’s 

report meeting the requirements of the 

respective Single Audit Act 

requirements 

(2) An entity with loans less than 

$500,000 under OMB Circular A–133 

(for audits of fiscal years beginning prior 

to December 26, 2014) and $750,000 

under Subpart F of 2 CFR part 200, as 

adopted by USDA through 2 CFR part 

400 (for audits for fiscal years beginning 

on or after December 26, 2014) in 

Federal awards during the year must 

have an audit performed in accordance 

with the requirements of this part. 

(3) A borrower must notify RUS, in 

writing, within 30 days of the as of audit 

date, of the total Federal awards 

expended during the year and must 

state whether it will have an audit 

performed in accordance with OMB 

Circular A–133 (for audits of fiscal years 

beginning prior to December 26, 2014) 

or Subpart F of 2 CFR part 200, as 

adopted by USDA through 2 CFR part 

400 (for audits for fiscal years beginning 

on or after December 26, 2014) or this 

part. 

(i) A borrower that elects to comply 

with this part must select a CPA that 

meets the qualifications set forth in 

§ 1773.5. 

(ii) If an audit is performed in 

accordance with OMB Circular A–133 

(for audits of fiscal years beginning prior 

to December 26, 2014) or Subpart F of 

2 CFR part 200, as adopted by USDA 

through 2 CFR part 400 (for audits for 

fiscal years beginning after December 

26, 2014, an auditor’s report that meets 


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the requirements of the respective single 

Audit Act requirements, will be 

sufficient to satisfy that borrower’s 

obligations under this part. 

(e) OMB Circular A–133 and Subpart 

F of 2 CFR part 200, as adopted by 

USDA through 2 CFR part 400 do not 

apply to audits of RUS electric and 

telecommunications cooperatives and 

commercial telecommunications 

borrowers. 

PART 1774—SPECIAL EVALUATION 

ASSISTANCE FOR RURAL 

COMMUNITIES AND HOUSEHOLDS 

PROGRAM (SEARCH) 

■ 45. The authority citation for part 

1774 continues to read as follows: 

Authority: 7 U.S.C. 1926(a)(2)(C) 

Subpart A—General Provisions 

■ 46. Amend § 1774.8 by revising 

paragraphs (f) through (j) and removing 

paragraphs (k) and (l) to read as follows: 

§ 1774.8 Other Federal Statutes. 

* * * * * 

(f) 2 CFR part 200, as adopted by 

USDA through 2 CFR part 400, Uniform 

Administrative Requirements, Cost 

Principles, and Audit Requirements for 

Federal. 

(g) 2 CFR part 180, as adopted by 

USDA through 2 CFR part 417, 

Nonprocurement Debarment and 

Suspension, implementing Executive 

Order 12549 on debarment and 

suspension. 

(h) 2 CFR part 418, New Restrictions 

on Lobbying, prohibiting the use of 

appropriated funds to influence 

Congress or a Federal agency in 

connection with the making of any 

Federal grant and other Federal 

contracting and financial transactions. 

(i) 2 CFR part 421, Requirements for 

Drug-Free Workplace (Financial 

Assistance), implementing the DrugFree Workplace Act of 1988 (41 U.S.C 

8101 et. seq.). 

(j) 29 U.S.C. 794, section 504— 

Rehabilitation Act of 1973, and 7 CFR 

part 15B (USDA implementation of 

statute), prohibiting discrimination 

based upon physical or mental handicap 

in Federally assisted programs. 

Subpart B—Grant Application 

Processing 

■ 47. Amend § 1774.13 by revising 

paragraph (g) to read as follows: 

§ 1774.13 Limitations. 

* * * * * 

(g) Pay for any other costs that are not 

allowable under 2 CFR part 200, as 

adopted by USDA through 2 CFR part 

400. 

* * * * * 

PART 1775—TECHNICAL 

ASSISTANCE GRANTS 

■ 48A. The authority citation for part 

1775 continues to read as follows: 

Authority: 5 U.S.C. 301; 7 U.S.C. 1989; 16 

U.S.C. 1005. 

Subpart A—General Provisions 

■ 48B. Amend § 1775.5 by revising 

paragraph (h) to read as follows: 

§ 1775.5 Limitations. 

* * * * * 

(h) Pay for any other costs that are not 

allowable under 2 CFR part 200, as 

adopted by USDA through 2 CFR part 

400. 

* * * * * 

■ 49. Amend § 1775.8 by revising 

paragraphs (f) and (h) through (j), and by 

removing and reserving paragraphs (g) 

and (k) to read as follows: 

§ 1775. 8 Other Federal statutes. 

(f) 2 CFR part 200, as adopted by 

USDA through 2 CFR part 400, Uniform 

Administrative Requirements, Cost 

Principles, and Audit Requirements for 

Federal. 

(g) [Reserved] 

(h) 2 CFR part 180, as implemented by 

USDA through 2 CFR part 417, 

Nonprocurement Debarment and 

Suspension, implementing Executive 

Order 12549 on debarment and 

suspension. 

(i) 2 CFR part 418, New Restrictions 

on Lobbying, prohibiting the use of 

appropriated funds to influence 

Congress or a Federal agency in 

connection with the making of any 

Federal grant and other Federal 

contracting and financial transactions. 

(j) 2 CFR 421, Requirements for DrugFree Workplace (Financial Assistance), 

implementing the Drug-Free Workplace 

Act of 1988 (41 U.S.C 701). 

(k) [Reserved] 

* * * * * 

Subpart B—Grant Application 

Processing 

■ 50. Amend § 1775.10 by revising 

paragraph (c)(9) to read as follows: 

§ 1775.10 Applications. 

* * * * * 

(c) * * * 

(9) Indirect cost documentation such 

as cost rate proposals, cost allocation 

plans, or other election for indirect costs 

and appropriate certification of indirect 

costs in accordance with Cost Principles 

in 2 CFR 200, subpart E, as adopted by 

USDA through 2 CFR part 400. 

* * * * * 

■ 51. Amend § 1775.20 by revising 

paragraphs (b) and (c) to read as follows: 

§ 1775.20 Reporting. 

* * * * * 

(b) SF–425,’’ Federal Financial 

Report,’’ and a project performance 

activity report will be required of all 

grantees on a quarterly basis, due 30 

days after the end of each calendar 

quarter. 

(c) A final project performance report 

will be required with the last SF–425 

due 90 days after the end of the last 

quarter in which the project is 

completed. The final report may serve 

as the last quarterly report. 

* * * * * 

■ 52. Amend § 1775.21 by revising 

paragraphs (a) and (b) as follows: 

§ 1775.21 Audit or financial statement. 

* * * * * 

(a) Grantees expending $750,000 or 

more Federal funds per fiscal year will 

submit an audit conducted in 

accordance with Subpart F of 2 CFR part 

200, as adopted by USDA through 2 CFR 

part 400. The audit will be submitted 

with 9 months of the grantee’s fiscal 

year. Additional audits may be required 

if the project period covers more than 

one fiscal year. 

(b) Grantees expending less than 

$750,000 will provide annual financial 

statement covering the grant period, 

consisting of the organization’s 

statement of income and expense and 

balance sheet signed by an appropriate 

official of the organization. Financial 

statement will be submitted within 90 

days after the grantees fiscal year. 

PART 1776—HOUSEHOLD WATER 

WELL SYSTEM GRANT PROGRAM 

■ 53. The authority citation for part 

1776 continues to read as follows: 

Authority: 7 U.S.C. 1926e. 

■ 54. Revise § 1776.2 to read as follows: 

§ 1776.2 Uniform Federal Assistance 

Provisions. 

This program is subject to the general 

provisions that apply to all grants made 

by USDA and that are set forth in 2 CFR 

part 200, Uniform Administrative 

Requirements, Cost Principles, and 

Audit Requirements for Federal Awards, 

as adopted by USDA through 2 CFR part 

400. 

■ 55. Amend § 1776.13 by revising 

paragraph (d) to read as follows: 

§ 1776.13 Administrative expenses. 

* * * * * 


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(d) Allowability of administrative 

expense costs shall be determined in 

accordance with 2 CFR part 200, as 

adopted by USDA through 2 CFR part 

400. 

PART 1778—EMERGENCY AND 

IMMINENT COMMUNITY WATER 

ASSISTANCE GRANTS 

■ 56. The authority citation for part 

1778 continues to read as follows: 

Authority: 5 U.S.C. 301; 7 U.S.C. 1989; 16 

U.S.C. 1005. 

■ 57. Amend § 1778.14 by revising 

paragraphs (e) and (f) to read as follows: 

§ 1778.14 Other considerations. 

* * * * * 

(e) Governmentwide debarment and 

suspension (nonprocurement) and 

requirements for drug-free work place. 

All projects must comply with the 

requirements set forth in the U.S. 

Department of Agriculture regulations 2 

CFR part 417, 2 CFR part 421, and RD 

Instruction 1940–M. 

(f) Intergovernmental review. All 

projects funded under this part are 

subject to Executive Order 12372 (3 

CFR, 1983 Comp., p. 197), which 

requires intergovernmental consultation 

with State and local officials. These 

requirements are found at 2 CFR part 

415, subpart C, ‘‘Intergovernmental 

Review of Department of Agriculture 

Programs and Activities’’ and RD 

Instruction 1970–I, ‘Intergovernmental 

Review,’ available in any Agency office 

or on the Agency’s Web site. 

PART 1779—WATER AND WASTE 

DISPOSAL PROGRAMS GUARANTEE 

LOANS 

■ 58. The authority citation for part 

1779 continues to read as follows: 

Authority: 5 U.S.C. 301; 7 U.S.C. 1989; 16 

U.S.C. 1005. 

■ 59. Amend § 1779.42 by revising 

paragraph (e) to read as follows: 

§ 1779.42 Design and construction 

requirements. 

* * * * * 

(e) Administrative. When the Agency 

reviews the preliminary architectural 

and engineering reports or plans, they 

must also consider all applicable 

Federal laws such as the seismic 

requirements of Executive Order 12699 

(55 FR 835, 3 CFR, 1990 Comp., p. 269), 

the debarment requirements of 2 CFR 

part 417, and the Copeland AntiKickback Act (18 U.S.C. 874). 

■ 60. Amend § 1779.63 by adding a 

sentence to the end of paragraph (b) to 

read as follows: 

§ 1779.69 Loan servicing. 

* * * * * 

(b) * * * Additionally, when 

applicable, the lender will require an 

audit in accordance with subpart F of 2 

CFR part 200, as adopted by USDA 

through 2 CFR part 400. 

PART 1780—WATER AND WASTE 

LOANS AND GRANTS 

■ 61. The authority citation for part 

1780 continues to read as follows: 

Authority: 5 U.S.C. 301; 7 U.S.C. 1989; 16 

U.S.C. 1005. 

Subpart A—General Policies and 

Requirements 

■ 62. Amend § 1780.1 by adding 

paragraph (l) and (m) to read as follows: 

§ 1780.1 General. 

* * * * * 

(l) Applicants for grant assistance will 

be required to comply with the 

following requirements as applicable: 

(1) 2 CFR part 200, as adopted by 

USDA through 2 CFR part 400, ’’ 

Uniform Administrative Requirements, 

Cost Principles, and Audit 

Requirements for Federal Awards’’. 

(2) 2 CFR part 415—General Program 

Administrative Regulations. 

(3) 2 CFR part 416– General Program 

Administrative Regulations for Grants 

and Cooperative Agreements to State 

and Local Governments. 

(4) 2 CFR part 417—Nonprocurement 

Debarment and Suspension. 

(5) 2 CFR part 418—New Restrictions 

on Lobbying. 

(m) Applicants for loan assistance 

will be required to comply with Subpart 

F of 2 CFR part 200, ‘‘Audit 

Requirements.’’ 

■ 63. Amend § 1780.47 by revising 

paragraphs (d) and (g) as follows: 

§ 1780.47 Borrower accounting methods, 

management reporting and audits. 

* * * * * 

(d) Audits. All audits are to be 

performed in accordance with the latest 

revision of the generally accepted 

government auditing standards 

(GAGAS), issued by the Comptroller 

General of the United States. In 

addition, the audits are also to be 

performed in accordance with subpart F 

of 2 CFR part 200, as adopted by USDA 

through 2 CFR part 400. The type of 

audit each borrower is required to 

submit will be designated by RUS. 

Further guidance on preparing an 

acceptable audit can be obtained from 

RUS. It is not intended that audits 

required by this part be separate and 

apart from audits performed in 

accordance with State and local laws. 

To the extent feasible, the audit work 

should be done in conjunction with 

those audits. Audits must be performed 

annually except as allowed under the 

provisions for biennial audits provided 

in subpart F of 2 CFR part 200. Audits 

are to be submitted to the processing 

office as soon as possible after receipt of 

the auditor’s report but no later than 

nine months after the end of the audit 

period 

* * * * * 

(g) Substitute for management reports. 

When RUS loans are secured by the 

general obligation of the public body or 

tax assessments which total 100 percent 

of the debt service requirements, the 

State program official may authorize an 

annual audit to substitute for other 

management reports if the audit is 

received within nine months after the 

end of the audit period. 

PART 1782—SERVICING OF WATER 

AND WASTE PROGRAMS 

■ 64. The authority citation for part 

1782 continues to read as follows: 

Authority: 5 U.S.C. 301; 7 U.S.C. 1989; 16 

U.S.C. 1005. 

■ 65. Revise § 1782.7 to read as follows: 

§ 1782.7 Grants. 

Servicing actions relating to Agency 

grants are governed by the provisions of 

several regulations and executive 

orders, including, but not limited to, 2 

CFR part 200 as adopted by 2 CFR part 

400, and 2 CFR parts 415, 416, 417, and 

418 and Executive Order (E.O.) 12803. 

Grantees remain responsible for 

property acquired with grant funds in 

accordance with terms of a grant 

agreement and applicable regulations. 

■ 66. Revise § 1782.10 to read as 

follows: 

§ 1782.10 Audit requirements. 

Audits for loans will be required in 

accordance with § 1780.47 of this 

chapter. If the borrower becomes 

delinquent or is experiencing problems, 

the servicing official will require an 

audit or other documentation deemed 

necessary to resolve the delinquency. 

The provisions of Subpart F of 2 CFR 

part 200, as adopted by USDA through 

2 CFR part 400, address audit 

requirements for recipients of Federal 

assistance. 

PART 1783—REVOLVING FUNDS FOR 

FINANCING WATER AND 

WASTEWATER PROJECTS 

(REVOLVING FUND PROGRAM) 

■ 67. The authority citation for part 

1783 continues to read as follows: 

Authority: 7 U.S.C. 1926 (a)(2)(B). 


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■ 68. Revise § 1783.2 to read as follows: 

§ 1783.2 What Uniform Federal Assistance 

Provisions apply to the Revolving Fund 

Program? 

(a) This program is subject to the 

general provisions that apply to all 

grants made by USDA and that are set 

forth in 2 CFR part 200, as adopted by 

USDA through 2 CFR part 400. 

(b) This program is subject to the 

uniform administrative requirements 

that apply to all grants made by USDA 

to non-profit organizations and that are 

set forth in 2 CFR part 415. 

CHAPTER XVIII—RURAL HOUSING 

SERVICE, RURAL BUSINESSCOOPERATIVES SERVICE, RURAL 

UTILITIES SERVICE AND FARM SERVICE 

AGENCY 

PART 1942—ASSOCIATIONS 

■ 69. The authority citation for part 

1942 continues to read as follows: 

Authority: 5 U.S.C. 301; 7 U.S.C. 1989. 

Subpart A—Community Facility Loans 

■ 70. Amend § 1942.1 by adding 

paragraph (e) to read as follows: 

§ 1942.1 General. 

* * * * * 

(e) The Office of Management and 

Budget (OMB) issued guidance on 

Uniform Administrative Requirements, 

Cost Principles, and Audit 

Requirements for Federal Awards at 2 

CFR part 200 on December 26, 2013. In 

2 CFR 400.1, the Department adopted 

OMB’s guidance in subparts A through 

F of 2 CFR part 200 as the Department’s 

policies and procedures for uniform 

administrative requirements, cost 

principles, and audit requirements for 

federal awards. As a result, this 

regulation contains references to 2 CFR 

part 200 as it has regulatory effect for 

the Department’s programs and 

activities. 

■ 71. Amend § 1942.2 by revising the 

paragraph (a)(1)(iii) to read as follows: 

§ 1942.2 Processing applications. 

(a) * * * 

(1) * * * 

(iii) State intergovernmental review 

comments and recommendations 

(clearinghouse comments), as outlined 

in 2 CFR part 400, if applicable. 

* * * * * 

■ 72. Amend § 1942.5 by revising 

paragraph (b)(1)(ii)(B) to read as follows: 

§ 1942.5 Application review and approval. 

* * * * * 

(b) * * * 

(1) * * * 

(ii) * * * 

(B) Applicable State 

Intergovernmental Review comments, if 

the program or activity has been 

selected under the State. RD Instruction 

1970–I, available in any Rural 

Development office. 

* * * * * 

■ 73. Amend § 1942.17 by revising 

paragraphs (j)(3)(iii) and (n)(2)(xi); 

adding paragraph (j)(3)(ii)(C); and 

revising paragraph (q) to read as follows: 

§ 1942.17 Community facilities. 

* * * * * 

(j) * * * 

(3) * * * 

(ii) * * * 

(C) Fidelity bonds must 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.’’ 

(iii) Insurance. The following types of 

coverage must be maintained if 

appropriate for the type of project and 

entity involved. Insurance must be in 

amounts acceptable to the Agency and 

at least equivalent to coverage for real 

property and equipment acquired 

without Federal funds. 

* * * * * 

(n) * * * 

(2) * * * 

(xi)(A) To place the proceeds of the 

loan on deposit in a manner approved 

by the Government. Funds must be 

deposited and maintained in insured 

accounts whenever possible. Funds 

must be maintained in interest bearing 

accounts, unless the following apply: 

(1) The borrower 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 

$500 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; and, 

(4) A foreign government or banking 

system prohibits or precludes interest 

bearing accounts. 

(B) Interest earned on Federal 

payments deposited in interest-bearing 

accounts must be remitted annually to 

the Department of Health and Human 

Services, Payment Management System, 

Rockville, MD 20852. Interest amounts 

up to $500 per year may be retained by 

the non-Federal entity for 

administrative expense. 

* * * * * 

(q) Borrower accounting methods, 

management reporting and audits. (1) 

Annual financial statements. Borrowers 

are required to provide the Agency with 

annual financial statements for the life 

of the loan as outlined in the Letter of 

Conditions issued by the Agency. The 

financial statements are the 

responsibility of the borrower’s 

governing body. The type of statement 

required is dependent on the amount of 

Federal financial assistance received 

during the borrower’s fiscal year. 

Federal financial assistance includes 

Federal assistance that a non-Federal 

entity received or administered during 

the entity’s fiscal year in the form of 

grants, loans, and loan guarantees. A 

Federal award is Federal financial 

assistance a non-Federal entity received 

directly from Federal awarding agencies 

or indirectly from pass-through entities. 

Federal awards expended generally 

pertain to events that require the nonFederal entity to comply with Federal 

Statues, regulations, and terms and 

conditions of federal awards, such as: 

expenditure/expense transactions 

associated with grants, costreimbursement contracts, cooperative 

agreements, and direct appropriations; 

the disbursement of funds passed 

through to sub-recipients; the use of 

loan proceeds under loan and loan 

guarantee programs; the receipt of 

property; the receipt of surplus 

property; the receipt or use of program 

income; the distribution or consumption 

of food commodities; the disbursement 

of amounts entitling the non-Federal 

entity to an interest subsidy; and, the 

period when insurance is in force. 

(2) Method of accounting and 

preparation of financial statements. 

Annual organization-wide financial 

statements must be prepared on the 

accrual basis of accounting, in 

accordance with Generally Accepted 

Accounting Principles (GAAP), unless 

State statute, tribal law or regulatory 

agencies provide otherwise, or an 

exception is granted by the Agency. An 

organization may maintain its 

accounting records on a basis other than 

accrual accounting, and make the 

necessary adjustments so that annual 

financial statements are presented on 

the accrual basis. 

(3) Record retention. Each Applicant 

will retain all records, books, and 

supporting material for 3 years after the 

issuance of the audit or management 

reports, or for a time period required by 

other agencies or common business 

practice, whichever is longer. Upon 

request, this material will be made 

available to Rural Development, OIG, 

USDA, the Comptroller General, or to 

their assignees. 

(4) Audits. Any applicant that 

expends $750,000 or more in Federal 

financial assistance during their fiscal 


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year must submit an audit report 

conducted in accordance with 2 CFR 

part 200, subpart F, ‘‘Audit 

Requirements.’’ Applicants expending 

less than $750,000 in Federal financial 

assistance per fiscal year are exempt 

from 2 CFR part 200 audit requirements. 

All audits are to be performed in 

accordance with the latest revision of 

the Generally Accepted Government 

Accounting Standards (GAGAS), 

developed by the Comptroller General 

of the United States. Further guidance 

on preparing an acceptable audit can be 

obtained from any Agency office. It is 

not intended that audits required by this 

part be separate and apart from audits 

performed in accordance with State and 

local laws. To the extent feasible, the 

audit work should be done in 

conjunction with those audits. Audits 

should be supplied to the Processing 

Official within the timeframes stated in 

paragraph (f) of this section. OMB 

Circulars and Agency Compliance 

Supplements are available in any 

USDA/Agency office or OMB’s Web site. 

Any state, local government, or Indian 

tribe that is required by constitution or 

state statute, in effect on January 1, 

1987, to undergo its audits less 

frequently than annually, is permitted to 

undergo its audits biennially, pursuant 

to 2 CFR 200.504(a). This requirement 

must still be in effect for the biennial 

period. Any nonprofit organization that 

had biennial audits for all biennial 

periods ending between July 1, 1992, 

and January 1, 1995, is permitted to 

undergo its audits biennially, pursuant 

to 2 CFR 200.504(b). All biennial audits 

must cover both years within the 

biennial period. 

(5) Exemption from audits. Except as 

noted in 2 CFR 200.503, Relation to 

other audit requirement, public bodies 

or nonprofits expending less than 

$750,000 in Federal awards during its 

fiscal year, whose payments are current, 

and are having no signs of operational 

or financial difficulty may submit a 

management report. A management 

report, at a minimum, will include a 

balance sheet and income and expense 

statement. Financial information may be 

reported on Form RD 442–2, ‘‘Statement 

of Budget, Income and Equity’’ and RD 

Form 442–3, ‘‘Balance Sheet’’, or 

similar. The following management data 

will be submitted by the borrower to the 

servicing office. Records must be 

available for review or audit by 

appropriate officials of the Federal 

agency, pass-through entity, and 

Government Accountability Office 

(GAO). 

(i) Annual management reports. 

Thirty days prior to the beginning of 

each fiscal year the following will be 

submitted to the Servicing Official: 

(A) One copy of the proposed annual 

budget. The borrower will submit two 

copies of Form RD 442–2, or equivalent, 

Statement of Budget, Income and 

Equity, Schedule 1, page 1; and 

Schedule 2, Projected Cash Flow. The 

only data required at this time is 

Schedule 1, page 1, Column 3, annual 

budget, and all of Schedule 2, Projected 

Cash Flow. 

(B) An annual audit report may be 

submitted in lieu of Forms RD 442–2 

and 442–3. 

(ii) [Reserved] 

(6) Deadlines for submitting audits 

and management reports. In accordance 

with 2 CFR part 200, audits must be 

submitted no later than 9 months after 

the end of the fiscal year or 30 days after 

the borrower’s receipt of the auditor’s 

reports, whichever is earlier. 

Management reports must be submitted 

no later than 2 months after the end of 

the borrower’s fiscal year. 

(7) Additional information to be 

submitted with audits and management 

reports. (i) Insurance. Agency borrowers 

will maintain adequate insurance 

coverage as required by the loan 

resolution and § 1942.17(j)(3). The 

servicing official is required to monitor 

insurance annually after the initial 

insurance verification. 

(ii) Reserve account(s). Borrowers will 

provide documentation that the Agency 

required reserve account(s) is properly 

funded; 

(iii) Property tax information. If 

applicable, documentation that property 

taxes have been paid and are current. 

(iv) A list of directors and officers. 

(8) Quarterly reports. A quarterly 

management report will be required for 

the first full year of operations for new 

borrowers, and existing borrowers 

operating a new facility, starting a new 

type of operation or proposing a 

significant expansion of an existing 

facility. Borrowers should submit the 

following to the Servicing Official: 

(i) One copy of Form RD 442–2, or 

equivalent, Schedule 1, page 1, columns 

4–6, as appropriate, and page 2. This 

information should be received in the 

Servicing Office 30 days after the end of 

each of the first three quarters of the 

fiscal year. 

(ii) The Servicing Office may request 

a borrower experiencing financial or 

management problems to submit 

quarterly copies of Form RD 442–2, or 

equivalent, Schedule 1, pages 1 and 2. 

■ 74A. Amend § 1942.18 by revising 

paragraph (k)(1) to read as follows: 

§ 1942.18 Community Facilities—Planning, 

Bidding, Contracting, Constructing. 

* * * * * 

(k) * * * 

(1) Small purchase procedures. Small 

purchase procedures are those relatively 

simple and informal procurement 

methods for securing services, supplies 

or other property, costing in the 

aggregate not more than the Simplified 

Acquisition Threshold. If small 

purchase procedures are used for a 

procurement, written price or rate 

quotations shall be obtained from an 

adequate number of qualified sources. 

* * * * * 

Subpart B—Housing Application 

Packaging Grants 

■ 74B. Amend § 1944.66 by revising 

paragraphs (b), (d), (e)(1), (e)(2), and (f) 

to read as follows: 

§ 1944.66 Administrative requirements. 

* * * * * 

(b) The policies and regulations 

contained in RD Instruction 1940–Q 

(available in any Agency office), 

Departmental Regulation 2400–5, 2 CFR 

part 200 as adopted by USDA through 

2 CFR part 400 apply to grantees under 

this subpart. 

* * * * * 

(d) The grantee will retain records for 

3 years from the date Standard Form 

(SF)-269A, ‘‘Financial Status Report 

(Short Form),’’ is submitted. These 

records will be accessible to RHS and 

other Federal officials in accordance 

with 2 CFR part 200 as adopted by 

USDA through 2 CFR part 400. 

(e) * * * 

(1) States, State agencies, or units of 

general local government will complete 

an audit in accordance with 2 CFR part 

200 as adopted by USDA through 2 CFR 

part 400 and OMB Circular A–128. 

(2) Nonprofit organizations will 

complete an audit in accordance with 2 

CFR part 200 as adopted by USDA 

through 2 CFR part 400. 

(f) Performance reports, as required, 

will be submitted in accordance with 2 

CFR part 200 as adopted by USDA 

through 2 CFR part 400. 

Subpart G—RBEG and Television 

Demonstration Grants 

■ 75. Amend § 1942.304 by adding the 

definition for ‘‘Conflict of interest’’ in 

alphabetical order to read as follows: 

§ 1942.304 Definitions. 

Conflict of interest. A situation in 

which a person or entity has competing 

personal, professional, or financial 

interests that make it difficult for the 

person or business to act impartially. 

Regarding use of both grant and 

matching funds, Federal procurement 

standards prohibit transactions that 


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involve a real or apparent conflict of 

interest for owners, employees, officers, 

agents, their immediate family 

members, partners, or an organization 

which is about to employ any of the 

parties indicated herein, having a 

financial or other interest in or tangible 

personal benefit from the outcome of the 

project; or that restrict open and free 

competition for unrestrained trade. 

Specifically, project funds may not be 

used for services or goods going to, or 

coming from, a person or entity with a 

real or apparent conflict of interest, 

including, but not limited to, owner(s) 

and their immediate family members. 

* * * * * 

■ 76. Amend § 1942.310 by revising 

paragraphs (d), (f), and (i) and adding 

paragraphs (j) and (k) to read as follows: 

§ 1942.310 Other considerations. 

* * * * * 

(d) Project Management. Grant 

recipients will be supervised as 

necessary to assure that projects are 

completed in accordance with approved 

plans and specifications and that funds 

are expended for approved purposes. 

Grants made under this subpart will be 

administered under and are subject to 2 

CFR part 200, subpart D, as codified in 

2 CFR 400.1 and established Rural 

Development guidelines. 

* * * * * 

(f) Uniform Relocation and Real 

Property Acquisition Policies Act. All 

projects must comply with the 

requirements set forth in Title 49 CFR 

part 24, which are the implementing 

regulations for the Uniform Relocation 

Assistance and Real Property 

Acquisition Policies Act of 1970, as 

amended (42 U.S.C. 4601 et seq.) and 

are referenced by 7 CFR part 21. 

* * * * * 

(i) Close Out. The award will be 

closed out in accordance with 2 CFR 

part 200 as codified in 2 CFR part 400. 

When the project purpose is for 

revolving loan funds, the grantee must 

maintain the fund into perpetuity. Once 

the grantee has provided loan assistance 

to projects, in an amount equal to the 

grant provided by Rural Development, 

the Agency will no longer consider the 

eligibility of new projects thereafter 

financed from the revolving fund as 

required by § 1942.313(b). 

(j) Intergovernmental Review. RBE/

Television Demonstration grant projects 

are subject to the provisions of 

Executive Order 12372 and 2 CFR 415, 

Subpart C, which requires 

intergovernmental consultation with 

State and local officials. 

(k) Conflict of Interest Policy for NonFederal Entities. In accordance with 2 

CFR 400.2 (b), the non-Federal entities 

(recipients) must disclose in writing any 

potential conflicts of interest to the 

USDA awarding agency or pass-through 

entity and maintain written standards of 

conduct covering conflicts of interest, 

including organizational conflicts of 

interest. 

■ 77. Amend § 1942.311 by revising 

paragraph (a)(1) to read as follows: 

§ 1942.311 Application processing. 

(a) * * * 

(1) The application review and 

approval procedures outlined in 

§ 1942.2 will be followed as appropriate. 

The applicant shall use Standard Form 

(SF) 424, ‘‘Application for Federal 

Assistance,’’ and SF 424–A, ‘‘Budget 

Information for Non-Construction 

Programs,’’ and SF 424–B, ‘‘Assurance 

Agreement for Non-Construction 

Programs,’’ or SF 424–C, ‘‘Budget 

Information for Construction Programs,’’ 

and SF 424–D, ‘‘Assurance Agreement 

for Construction Programs,’’ as 

applicable, when requesting financial 

assistance under this program. 

* * * * * 

■ 78. Amend § 1942.314 by adding 

paragraphs (f)(4) and (f)(5) to read as 

follows: 

§ 1942.314 Grants to provide financial 

assistance to third parties, television 

demonstration projects, and technical 

assistance programs. 

* * * * * 

(f) * * * 

(4) Form RD 400–1, ‘‘Equal 

Opportunity Agreement.’’ 

(5) Form RD 400–4, ‘‘Assurance 

Agreement (Under Title VI, Civil Rights 

Act of 1966).’’ 

* * * * * 

■ 79. Amend § 1942.315 by revising 

paragraph (b) to read as follows: 

§ 1942.315 Docket preparation and Letter 

of Conditions. 

* * * * * 

(b) The State Director or the State 

Director’s designated representative will 

prepare a Letter of Conditions outlining 

the conditions under which the grant 

will be made. It will include those 

matters necessary to assure that the 

proposed development is completed in 

accordance with approved plans and 

specifications, that grant funds are 

expended for authorized purposes, and 

that the terms of the Scope of Work and 

requirements as prescribed in the Grant 

Agreement and Departmental 

Regulations, as currently codified in 2 

CFR parts 400, 415, 417, 418, and 421 

are complied with. The Letter of 

Conditions will be addressed to the 

applicant, signed by the State Director 

or other designated Rural Development 

representative, and mailed or handed to 

appropriate applicant officials. Each 

Letter of Conditions will contain the 

following paragraphs. 

‘‘This letter establishes conditions 

which must be understood and agreed 

to by you before further consideration 

may be given to the application.’’ 

‘‘This letter is not to be considered as 

grant approval nor as a representation as 

to the availability of funds. The docket 

may be completed on the basis of a grant 

not to exceed $_________.’’ 

‘‘Please complete and return the 

attached Form RD 1942–46, ‘Letter of 

Intent to Meet Conditions,’ if you desire 

further consideration be given your 

application.’’ 

Form RD 400–1, ‘‘Equal Opportunity 

Agreement,’’ if applicable. 

Form RD 400–4, ‘‘Assurance 

Agreement (Under Title VI, Civil Rights 

Act of 1966).’’ 

■ 80. Amend § 1942.316 by revising the 

section heading and adding paragraph 

(d) to read as follows: 

§ 1942.316 Grant approval, fund 

obligation, third party financial assistance 

and grant servicing. 

* * * * * 

(d) Grant servicing. Grants will be 

serviced in accordance with 7 CFR part 

1951, subparts E and O and the 

Departmental Grants and Agreements 

Regulations as currently codified in 2 

CFR parts 400, 415, 417, 418, and 421. 

The only exception is that the 

delegation of post-award servicing does 

not require the prior approval of the 

Administrator. 

PART 1944—HOUSING 

■ 81. The authority citation for part 

1944 continues to read as follows: 

Authority: 5 U.S.C. 301; 42 U.S.C 1480. 

Subpart I—Self-Help Technical 

Assistance Grants 

■ 82. Amend § 1944.406 by revising 

paragraph (d) to read as follows: 

§ 1944.406 Prohibited use of grant funds. 

* * * * * 

(d) Paying for training of an employee 

as authorized by 2 CFR part 200 as 

adopted by USDA through 2 CFR part 

400. 

* * * * * 

■ 83. Amend § 1944.410 by revising 

paragraphs (a)(6) and (e)(8) to read as 

follows: 

§ 1944.410 Processing preapplications, 

applications, and completing grant dockets. 

(a) * * * 

(6) A proposed budget which will be 

prepared on SF–424A, ‘‘Budget 


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Information (Non-Construction 

Programs)’’ will be completed to address 

applicable assurances as outlined in 2 

CFR part 200 as adopted by USDA 

through 2 CFR part 400. State and local 

Government will include an assurance 

that the grantee shall comply with all 

applicable Federal statutes and 

regulations in effect with respect to the 

periods for which it receives grant 

funding. The State and local 

governments shall also comply with 2 

CFR part 200 as adopted by USDA 

through 2 CFR part 400. 

* * * * * 

(e) * * * 

(8) Indirect or direct cost policy and 

proposed indirect cost rate developed in 

accordance with 2 CFR part 200 as 

adopted by USDA through 2 CFR part 

400. 

* * * * * 

■ 84. Amend § 1944.411 by revising 

paragraphs (c) and (e) to read as follows: 

§ 1944.411 Conditions for approving a 

grant. 

* * * * * 

(c) The grantee furnishes a signed 

statement that it complies with the 

requirements of the Departmental 

Regulations found in 2 CFR part 200 as 

adopted by USDA through 2 CFR part 

400. 

(d) * * * 

(e) The grantee has fidelity bonding as 

covered in 2 CFR part 200 as adopted 

by USDA through 2 CFR part 400 if a 

nonprofit organization or, if a State or 

local government, to the extent required 

in 2 CFR part 200 as adopted by USDA 

through 2 CFR part 400. 

* * * * * 

■ 85. Amend § 1944.422 by revising the 

introductory text and paragraphs (a), (b) 

introductory text, (b)(1) and (b)(2) to 

read as follows: 

§ 1944.422 Audit and other report 

requirements. 

The grantee must submit an audit to 

the appropriate Rural Development 

District Office annually (or biennially if 

a State or local government with 

authority to do a less frequent audit 

requests it) and within 90 days of the 

end of the grantee’s fiscal year, grant 

period, or termination of the grant. The 

audit, conducted by the grantee’s 

auditors, is to be performed in 

accordance with Generally Accepted 

Government Auditing Standards 

(GAGAS), using the publication 

‘‘Standards for Audit of Governmental 

Organizations, Programs, Activities and 

Functions’’ developed by the 

Comptroller General of the United 

States in 1981, and any subsequent 

revisions. In addition, the audits are 

also to be performed in accordance with 

2 CFR part 200 as adopted by USDA 

through 2 CFR part 400 and Rural 

Development requirements as specified 

in this subpart. Audits of borrower loan 

funds will be required. The number of 

borrower accounts audited will be 

determined by the auditor. In 

incidences where it is difficult to 

determine the appropriate number of 

accounts to be audited, auditors should 

be authorized by the State Director to 

audit the lesser of 10 loans or 10 percent 

of total loans. 

(a) Nonprofit organizations and 

others. If determined necessary, these 

organizations are to be audited in 

accordance with Rural Development 

requirements in accordance with 2 CFR 

part 200 as adopted by USDA through 

2 CFR part 400. These requirements also 

apply to public hospitals, public 

colleges, and universities if they are 

excluded from the audit requirements of 

paragraph (b) of this section. 

* * * * * 

(b) State and local governments and 

Indian tribes. These organizations are to 

be audited in accordance with this 

subpart and 2 CFR part 200 as adopted 

by USDA through 2 CFR part 400. The 

grantee will forward completed audits 

to the appropriate Federal Cognizant 

agency and a copy to the Rural 

Development District Director. 

‘‘Cognizant agency’’ for audits is defined 

at 2 CFR 200.18 as the Federal agency 

designated to carry out the 

responsibilities described in § 200.513 

Responsibilities, paragraph (a). The 

cognizant agency for audit is not 

necessarily the same as the cognizant 

agency for indirect costs. A list of 

cognizant agencies for audit may be 

found at the FAC Web site. Within 

USDA, the OIG shall fulfill cognizant 

agency responsibilities. Smaller grantees 

not assigned a cognizant agency by 

OMB should contact the Federal agency 

that provided the most funds. When 

USDA is designated as the cognizant 

agency or when it has been determined 

by the borrower that Rural Development 

provided the major portion of Federal 

financial assistance, the State Director 

will contact the appropriate USDA OIG 

Regional Inspector General. Rural 

Development and the borrower shall 

coordinate all proposed audit plans 

with the appropriate USDA OIG. 

(1) State and local governments and 

Indian tribes that receive $25,000 or 

more a year in Federal financial 

assistance shall have an audit made in 

accordance with 2 CFR part 200 as 

adopted by USDA through 2 CFR part 

400. 

(2) State and local and Indian tribes 

that receive less than $25,000 a year in 

Federal financial assistance shall be 

exempt from 2 CFR part 200 as adopted 

by USDA through 2 CFR part 400. 

* * * * * 

■ 86. Amend § 1944.426 by revising 

paragraph (c) to read as follows: 

§ 1944.426 Grant closeout. 

* * * * * 

(c) Grant suspension. When the 

grantee has failed to comply with the 

terms of the agreement, the District 

Director will promptly report the facts 

to the State Director. The State Director 

will consider termination or suspension 

of the grant usually only after a Grantee 

has been classified as ‘‘high risk’’ in 

accordance with § 1944.417(b)(2). When 

the State Director determines that the 

grantee has a reasonable potential to 

correct deficiencies the grant may be 

suspended. The State Director will 

request written authorization from the 

National Office to suspend a grantee. 

The suspension will adhere to 2 CFR 

part 200 as adopted by USDA through 

2 CFR part 400. The grantee will be 

notified of the grant suspension in 

writing by the State Director. The State 

Director will also promptly inform the 

grantee of its rights to appeal the 

decision by use of Exhibit B–3 of 

Subpart B of part 1900 of this chapter. 

* * * * * 

■ 87. Amend Exhibit A to subpart I of 

part 1944 by revising paragraph (i) to 

read as follows: 

Exhibit A to Subpart I of Part 1944— 

Self-Help Technical Assistance Grant 

Agreement. 

* * * * * 

(i) Acquisition and disposal of personal, 

equipment and supplies should comply with 

Subpart R of 2 CFR part 200 as adopted by 

USDA through 2 CFR part 400. 

* * * * * 

Subpart K—Technical and Supervisory 

Assistance Grants 

■ 88. Amend § 1944.526 by revising 

paragraph (c)(2) to read as follows: 

§ 1944.526 Preapplication procedure. 

(c) * * * 

(2) Within 30 days of the closing date 

for receipt of preapplications as 

published in the Federal Register, the 

State Director will forward to the 

National Office the original 

preapplication(s) and supporting 

documents of the selected applicant(s), 

including any comments received in 

accordance with 2 CFR part 200 as 

adopted by USDA through 2 CFR part 

400. See RD Instruction 1970–I available 

in any Rural Development Office and 


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the comments and recommendations of 

the County Office(s), District Office(s), 

and the State Office. The State Office 

will submit the preapplication(s) in 

accordance with the annual notice 

provided for by § 1944.525 (b). 

* * * * * 

■ 89. Amend § 1944.529 by revising 

paragraph (b)(9) to read as follows: 

§ 1944.529 Project selection. 

(b) * * * 

(9) Any comments received in 

accordance with 2 CFR part 200 as 

adopted by USDA through 2 CFR part 

400. See RD Instruction 1970–I, 

available in any Rural Development 

Office. 

* * * * * 

■ 90. Amend § 1944.531 by revising 

paragraph (c)(3) to read as follows: 

§ 1944.531 Applications submission. 

(c) * * * 

(3) Any comments received in 

accordance with 2 CFR part 200 as 

adopted by USDA through 2 CFR part 

400. See RD Instruction 1970–I, 

available in any Rural Development 

Office. 

* * * * * 

■ 91. Amend Exhibit A to subpart K of 

part 1944 by revising paragraph (Part 

B)(8)(a), (Part C) (1), and (Part C) (14) to 

read as follows: 

Exhibit A to Subpart K of Part 1944— 

Grant Agreement—Technical and 

Supervisory Assistance 

Part-B Terms of agreement. 

* * * * * 

(8) * * * 

(a) In accordance with Treasury Circular 

1075 (fourth revision) Part 205, Chapter II of 

title 31 of the Code of Federal Regulations, 

grant funds will be provided by Rural 

Development as cash advances on an as 

needed basis not to exceed one advance 

every 30 days. The advance will be made by 

direct Treasury check to the Grantee. The 

financial management system of the recipient 

organization shall provide for effective 

control over and accountability for all 

Federal funds as stated in 2 CFR part 200 as 

adopted by USDA through 2 CFR part 400 for 

State and local governments and 2 CFR part 

200 as adopted by USDA through 2 CFR part 

400 for nonprofit organizations. 

* * * * * 

Part—C Grantee Agrees. 

(1) To comply with property management 

standards for expendable and nonexpendable 

personal property established by Attachment 

N of OMB Circular A–102 or Attachment N 

of 2 CFR part 200 as adopted by USDA 

through 2 CFR part 400 for State and local 

governments or nonprofit organizations 

respectively. ‘‘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 patents, inventions, and 

copyrights. ‘‘Nonexpendable personal 

property’’ means tangible personal property 

having a useful life of more than one year 

and an acquisition cost of $300 or more per 

unit. A Grantee may use its own definition 

of nonexpendable personal property 

provided that such definition would at least 

include all tangible personal property as 

defined above. ‘‘Expendable personal 

property’’ refers to all tangible personal 

property other than nonexpendable personal 

property. When nonexpendable tangible 

personal property is acquired by a Grantee 

with project funds, title shall not be taken by 

the Federal Government but shall vest in the 

Grantee subject to the following conditions: 

* * * * * 

(14) That the Grantee shall abide by the 

policies promulgated in 2 CFR part 200 as 

adopted by USDA through 2 CFR part 400 

which provides standards for use by Grantees 

in establishing procedures for the 

procurement of supplies, equipment and 

other services with Federal grant funds. 

* * * * * 

Subpart N—Housing Preservation 

Grants 

■ 92–93. Amend § 1944.658 by revising 

paragraph (a)(3) to read as follows: 

§ 1944.658 Applicant eligibility. 

(a) * * * 

(3) Legally obligate itself to administer 

HPG funds, provide an adequate 

accounting of the expenditure of such 

funds in compliance with the terms of 

this regulation, the grant agreement, and 

2 CFR part 200 as adopted by USDA 

through 2 CFR part 400 (available in any 

Rural Development or its successor 

agency under Public Law 103–354 

office), as appropriate, and comply with 

the grant agreement and Rural 

Development or its successor agency 

under Public Law 103–354 regulations; 

and 

* * * * * 

■ 94. Amend § 1944.666 by revising 

paragraph (e) to read as follows: 

§ 1944.666 Administrative activities and 

policies. 

* * * * * 

(e) The policies, guidelines and 

requirements of 2 CFR part 200, as 

adopted by USDA through 2 CFR part 

400, apply to the acceptance and use of 

HPG funds. 

■ 95. Amend § 1944.670 by revising 

paragraph (a) to read as follows: 

§ 1944.670 Project income. 

(a) Project income during the grant 

period from loans made to homeowners, 

owners of rental properties, and co-ops 

is governed by 2 CFR part 200 as 

adopted by USDA through 2 CFR part 

400. All income during the grant period, 

including amounts recovered by the 

grantee due to breach of agreements 

between the grantee and the HPG 

recipient, must be used under (and in 

accordance with) the requirements of 

the HPG program. 

* * * * * 

■ 96. Amend § 1944.676 by revising 

paragraph (b)(1)(x) to read as follows: 

§ 1944.676 Preapplication procedures. 

* * * * * 

(b) * * * 

(1) * * * 

(x) A copy of an indirect cost proposal 

as required in 2 CFR part 200 as adopted 

by USDA through 2 CFR part 400, when 

the applicant has another source of 

federal funding in addition to the Rural 

Development or its successor agency 

under Public Law 103–354 HPG 

program; 

* * * * * 

■ 97. Amend § 1944.688 by revising 

paragraph (e) to read as follows: 

§ 1944.688 Grant evaluation, closeout, 

suspension, and termination. 

* * * * * 

(e) The grantee will have an audit 

performed upon termination or 

completion of the project in accordance 

with 2 CFR part 200 as adopted by 

USDA through 2 CFR part 400, as 

applicable. As part of its final report, the 

grantee will address and resolve all 

audit findings. 

■ 98. Amend § 1944.689 by revising 

paragraph (a)(3) to read as follows: 

§ 1944.689 Long-term monitoring by 

grantee. 

(a) * * * 

(3) All requirements noted in 2 CFR 

part 200 as adopted by USDA through 

2 CFR part 400 during the effective 

period of the grant agreement. 

* * * * * 

■ 99. Amend Exhibit A of subpart N of 

part 1944 by revising paragraphs (Part 

A)(3), (Part B)(9), (Part B)(18)(a)(ii), and 

(Part C)(13) to read as follows: 

Exhibit A to Subpart N of Part 1944— 

Housing Preservation Grant Agreement 

* * * * * 

Part A * * * 

(3) Disallowed costs are those charges to a 

grant which Rural Development or its 

successor agency under Public Law 103–354 

determines cannot be authorized in 

accordance with applicable Federal cost 

principles contained in Treasury Circular 74– 

4, ‘‘Cost Principles Applicable to Grants and 

Contracts with State and Local 

Governments,’’ OMB Circular A–87, ‘‘Cost 

Principles for State and Local Governments,’’ 

OMB Circular A–122, ‘‘Cost Principles for 

Nonprofit Organizations,’’ and other 

conditions contained in this Agreement and 

OMB Circular A–102 ‘‘Uniform Requirements 


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for Grants to State and Local Governments,’’ 

and OMB Circular A–110, ‘‘Grants and 

Agreements with Institutions of Higher 

Education, Hospitals and Other Nonprofit 

Organizations, Uniform Administrative 

Requirements,’’ as appropriate, and 2 CFR 

part 200, as adopted by USDA through 2 CFR 

part 400. 

* * * * * 

Part B * * * 

(9) In accordance with Treasury Circular 

1075 (fourth revision) part 205, chapter II of 

title 31 of the Code of Federal Regulations, 

grant funds will be provided by Rural 

Development or its successor agency under 

Public Law 103–354 as cash advances on an 

as needed basis not to exceed one advance 

every 30 days. The advance will be made by 

direct Treasury check to the grantee. The 

financial management system of the recipient 

organization shall provide for effective 

control over and accountability for all 

Federal funds as stated to OMB Circular A– 

102 (42 FR 45828, September 12, 1977) for 

State and local governments and OMB 

Circular A–110 (41 FR 32016, July 30, 1976) 

for nonprofit organizations. 

* * * * * 

(18) * * * 

(a) * * * 

(ii) The grantee will furnish to Rural 

Development or its successor agency under 

Public Law 103– 354 within 90 calendar days 

after the date of completion of the grant an 

SF–269 and all financial, performance, and 

other reports required as a condition of the 

grant, including an audit report. 

* * * * * 

Part C * * * 

* * * * * 

(13) That the grantee shall abide by the 

policies promulgated in OMB Circular A– 

102, Attachment O, or OMB Circular A–110, 

Attachment O, as applicable, which provides 

standards for use by Grantees in establishing 

procedures for the procurement of supplies, 

equipment, and other services with Federal 

grant funds. 

PART 1951—SERVICING AND 

COLLECTIONS 

■ 100. The authority citation for part 

1951 continues to read as follows: 

Authority: 5 U.S.C. 301; 7 U.S.C. 1932 

Note; 7 U.S.C. 1989; 31 U.S.C. 3716; 42 

U.S.C. 1480. 

Subpart E—Servicing of Community 

and Insured Business Program Loans 

and Grants 

■ 101. Amend § 1951.215 by revising 

paragraph (a) introductory text and 

removing paragraph (a)(3) to read as 

follows: 

§ 1951.215 Grants. 

* * * * * 

(a) Applicability of requirements. 

Servicing actions relating to Rural 

Development or its successor agency 

under Public Law 103–354 grants are 

governed by the provisions of this 

subpart, the terms of the Grant 

Agreement and, if applicable, the 

provisions of 2 CFR parts 200, 400, 415, 

417, 418, and 421. 

* * * * * 

Subpart R—Rural Development Loan 

Servicing 

■ 102. Add § 1951.872 to read as 

follows: 

§ 1951.872 Other regulatory requirements. 

Intergovernmental consultation. The 

RDLF program is subject to the 

provisions of Executive Order 12372 

which requires intergovernmental 

consultation with State and local 

officials. For each ultimate recipient to 

be assisted with a loan under this 

subpart and for which the State in 

which the ultimate recipient is to be 

located has elected to review the 

program under their intergovernmental 

review process, the State Point of 

Contact must be notified. Notification, 

in the form of a project description, can 

be initiated by the intermediary or the 

ultimate recipient. Any comments from 

the State must be included with the 

intermediary’s request to use the loan 

funds for the ultimate recipient. Prior to 

Rural Development’s decision on the 

request, compliance with the 

requirements of intergovernmental 

consultation must be demonstrated for 

each ultimate recipient. These 

requirements should be carried out in 

accordance with the requirements set 

forth in U.S. Department of Agriculture 

regulations 2 CFR part 415, subpart C, 

and RD Instruction 1970–I, 

‘Intergovernmental Review,’ available in 

any Agency office or on the Agency’s 

Web site. 

PART 1980—GENERAL 

■ 103. The authority citation for part 

1980 continues to read as follows: 

Authority: 5 U.S.C. 301 and 7 U.S.C. 1989. 

Subpart E also issued under 7 U.S.C. 1932(a). 

Subpart E—Business and Industrial 

Loan Program 

■ 104. Amend § 1980.445 by revising 

paragraphs (a) and (e) to read as follows: 

§ 1980.445 Periodic financial statements 

and audits. 

* * * * * 

(a) Audited financial statements. 

Except as provided in paragraphs (d) 

and (e) of this section, all borrowers 

with a total principal and interest loan 

balance for loans under this subpart, at 

the end of the borrower’s fiscal year, of 

more than $1 million must submit 

annual audited financial statements. 

The audit must be performed in 

accordance with generally accepted 

accounting principles (GAAP) and any 

other requirements specified in this 

subpart. 

* * * * * 

(e) Public bodies and nonprofit 

corporations. Notwithstanding other 

provisions of this section, any public 

body or nonprofit corporation that 

receives a guarantee of a loan that meets 

the thresholds established by 2 CFR part 

200, subpart F, as codified by 2 CFR 

400.1, must provide an audit for the 

fiscal year of the borrower in which the 

Loan Note Guarantee is issued. If the 

loan is for development or purchases 

made in a previous fiscal year through 

interim financing, an audit will also be 

provided for the fiscal year in which the 

development or purchases occurred. 

Any audit provided by a public body or 

nonprofit corporation required by this 

paragraph will be considered adequate 

to meet the requirements of this section 

for that year. 

■ 105. Amend § 1980.451 by revising 

paragraph (f)(8) to read as follows: 

§ 1980.451 Filing and processing 

applications. 

* * * * * 

(f) * * * 

(8) Intergovernmental consultation 

should be carried out in accordance 

with 2 CFR part 415, subpart C, 

‘‘Intergovernmental Review of 

Department of Agriculture Programs and 

Activities.’’ 

* * * * * 

CHAPTER XXXV—RURAL HOUSING 

SERVICE, DEPARTMENT OF 

AGRICULTURE 

PART 3570—COMMUNITY PROGRAMS 

■ 106. The authority citation for part 

3570 continues to read as follows: 

Authority: 5 U.S.C. 301; 7 U.S.C. 1989. 

Subpart B—Community Facilities 

Grant Program 

■ 107. Amend § 3570.51 by revising 

paragraph (g) and adding paragraph (j) 

to read as follows: 

§ 3570.51 General. 

* * * * * 

(g). Grants made under this subpart 

will be administered under, and are 

subject to, 2 CFR part 200 as adopted by 

USDA through 2 CFR part 400, as 

appropriate. 

* * * * * 

(j). The Office of Management and 

Budget (OMB) issued guidance on 

Uniform Administrative Requirements, 

Cost Principles, and Audit 

Requirements for Federal Awards at 2 


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CFR part 200 on December 26, 2013. In 

2 CFR part 400.1, the Department 

adopted OMB’s guidance in subparts A 

through F of 2 CFR part 200, as 

supplemented by 2 CFR part 400, as the 

Departments’ policies and procedures 

for uniform administrative 

requirements, cost principles, and audit 

requirements for federal awards. As a 

result this regulation contains references 

to 2 CFR part 200 as it has regulatory 

effect for the Department’s programs 

and activities. 

* * * * * 

■ 108–109. Amend § 3570.70 by 

revising paragraphs (b) and (c) to read 

as follows: 

§ 3570.70 Other considerations. 

* * * * * 

(b). Governmentwide debarment and 

suspension (nonprocurement) and 

requirements for drug-free workplace 

are applicable to CFG grants and 

grantees. See 2 CFR part 180, as 

implemented by USDA through 2 CFR 

part 417, and RD Instruction 1940–M for 

further guidance. 

(c). Restrictions on lobbying. Grantees 

must comply with the lobbying 

restrictions set forth in 2 CFR part 418 

subpart A. 

* * * * * 

■ 110. Amend § 3570.80 by revising 

paragraph (c) to read as follows: 

§ 3570.80 Grant closing and delivery of 

funds. 

* * * * * 

(c) Approval officials may require 

applicants to record liens or other 

appropriate notices of record to indicate 

that personal or real property has been 

acquired or improved with Federal grant 

funds and that use and disposition 

conditions apply to the property as 

provided by 2 CFR part 200 as adopted 

by USDA through 2 CFR part 400 as 

subsequently modified. 

* * * * * 

■ 111. Amend § 3570.83 by revising 

paragraph (a) to read as follows: 

§ 3570.83 Audits. 

(a). An audit will be conducted in 

accordance with 2 CFR part 200 subpart 

F, as adopted by USDA through 2 CFR 

part 400, except as provided in this 

section. The audit requirements apply 

only to the years in which grant funds 

are expended. 

* * * * * 

■ 112. Revise § 3570.84 to read as 

follows: 

§ 3570.84 Grant servicing. 

Grants will be serviced in accordance 

with RD Instructions 1951–E and 1951– 

O and 2 CFR part 200 as applicable. 

■ 113. Revise § 3570.87 to read as 

follows: 

§ 3570.87 Grant suspension, termination, 

and cancellation. 

Grants may be suspended or 

terminated for cause or convenience in 

accordance with 2 CFR part 200 as 

adopted by USDA through 2 CFR part 

400, as applicable. 

■ 114. Revise § 3570. 91 to read as 

follows: 

§ 3570.91 Regulations. 

Grants under this part will be in 

accordance with 2 CFR part 200 as 

adopted by USDA through 2 CFR part 

400, as applicable, and any conflicts 

between those parts and this part will be 

resolved in favor of applicable 2 CFR 

part 200 as adopted by USDA through 

2 CFR part 400. 

■ 115. Add § 3570.92 to read as follows: 

§ 3570.92 Grant agreement. 

Form RD 3570–3 is a Grant Agreement 

which contains the procedures for 

making and servicing grants made under 

this part. Any property acquired or 

improved with CFG funds may have use 

and disposition conditions which apply 

to the property as provided by 2 CFR 

200 as adopted by USDA through 2 CFR 

part 400 in effect at this time and as may 

be subsequently modified. 

PART 3575—GENERAL 

■ 116. The authority citation for part 

3575 continues to read as follows: 

Authority: 5 U.S.C. 301, 7 U.S.C. 1989. 

Subpart A—Community Programs 

Guaranteed Loans 

■ 117. Amend § 3575.1 by adding 

paragraph (c) to read as follows: 

§ 3575.1 General. 

* * * * * 

(c) The Office of Management and 

Budget (OMB) issued guidance on 

Uniform Administrative Requirements, 

Cost Principles, and Audit 

Requirements for Federal Awards at 2 

CFR part 200 on December 26, 2013. In 

2 CFR part 400, the Department adopted 

OMB’s guidance in subparts A through 

F of 2 CFR part 200, as supplemented 

by 2 CFR part 400, as the Departments’ 

policies and procedures for uniform 

administrative requirement, cost 

principles, and audit requirements for 

federal awards. As a result, this 

regulation contains references to 2 CFR 

part 200 as it has regulatory effect for 

the Department’s programs and 

activities. 

■ 118. Amend § 3575.2 by revising the 

definition of ‘‘State’’ to read as follows: 

§ 3575.2 Definitions. 

* * * * * 

State. Any state of the United States, 

the District of Columbia, the 

Commonwealth of Puerto Rico, the 

Virgin Islands, Guam, American Samoa, 

the Commonwealth of the Northern 

Mariana Islands, and an agency or 

instrumentality thereof exclusive of 

local governments. 

* * * * * 

■ 119. Amend § 3575.27 by revising 

paragraph (b) to read as follows: 

§ 3575.27 Eligible lenders. 

* * * * * 

(b) Conflict of interest. The lender and 

borrower must maintain written 

standards of conduct covering conflicts 

of interest and governing the 

performance of its employees in the 

selection, award and administration of 

Federal awards. No employee, officer or 

agent may participate in the selection, 

award or administration of a Federal 

award if they have a real or apparent 

conflict of interest. Such a conflict of 

interest 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, has a financial or 

other interest in or a tangible personal 

benefit from a non-Federal entity 

considered for a Federal award. The 

lender 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 

must provide for disciplinary actions to 

be applied for violations of such 

standards. If the lender has a parent, 

affiliate, or subsidiary organization that 

is not a state, local government, or 

Indian tribe, the lender or borrower, 

written standards of conduct covering 

organizational conflict of interest must 

also be maintained. Organizational 

conflicts of interest means that because 

of the relationships with a parent 

company, affiliate, or subsidiary 

organization, the lender or borrower is 

unable or appears to be unable to be 

impartial in conducting a Federal award 

action involving a related organization. 

The lender or borrower must disclose 

such business or ownership 

relationships in writing. The Agency 

will determine if such relationships are 

likely to result in a conflict of interest. 

This does not preclude lender officials 

from being on the borrower’s board of 

directors. 

* * * * * 

■ 120. Revise § 3575.37 to read as 

follows: 


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§ 3575.37 Insurance and fidelity bonds. 

The lender must provide evidence 

that the borrower has adequate 

insurance and fidelity bond coverage by 

loan closing or start of construction, 

whichever occurs first. Adequate 

coverage must be maintained for the life 

of the loan and is subject to Agency 

review and approval. Insurance is 

required in amounts at least equal to 

coverage for real property and 

equipment that was obtained without an 

Agency guarantee. 

■ 121. Amend § 3575.64 by adding 

paragraph (f) to read as follows: 

§ 3575.64 Issuance of Lender’s 

Agreement, Loan Note Guarantee, and 

Assignment Guarantee Agreement. 

* * * * * 

(f) Cancellation of obligation. If the 

conditions for the loan are rejected, 

cannot be met after completion of any 

appeal, or funds are, in whole or in part, 

no longer needed, the State Director will 

cancel the obligation. This can be done 

using the State Office terminal. Requests 

for partial cancellation must be in 

writing and include a reason for the 

partial cancellation, the effective date, 

and the portion to be cancelled. 

* * * * * 

CHAPTER XLII—RURAL BUSINESS– 

COOPERATIVE SERVICE AND RURAL 

UTILITIES SERVICE, DEPARTMENT OF 

AGRICULTURE 

PART 4274—DIRECT AND INSURED 

LOANMAKING 

■ 122. The authority citation for part 

4274 continues to read as follows: 

Authority: 5 U.S.C. 301; 7 U.S.C. 1932 

note; 7 U.S.C. 1989. 

Subpart D—Intermediary Relending 

Program 

■ 123. Amend § 4274.302 by adding a 

definition for ‘‘Conflict of interest’’ in 

alphabetical order to read as follows: 

§ 4274.302 Definitions and abbreviations. 

* * * * * 

Conflict of interest. A situation in 

which a person or entity has competing 

personal, professional, or financial 

interests that make it difficult for the 

person or business to act impartially. 

Regarding use of both grant and 

matching funds, Federal procurement 

standards prohibit transactions that 

involve a real or apparent conflict of 

interest for owners, employees, officers, 

agents, their immediate family 

members, partners, or an organization 

which is about to employ any of the 

parties indicated herein, having a 

financial or other interest in or tangible 

personal benefit from the outcome of the 

project; or that restrict open and free 

competition for unrestrained trade. 

Specifically, project funds may not be 

used for services or goods going to, or 

coming from, a person or entity with a 

real or apparent conflict of interest, 

including, but not limited to, owner(s) 

and their immediate family members. 

* * * * * 

■ 124. Amend § 4274.338 by revising 

paragraphs (b)(4)(i)(B) and (b)(4)(ii)(C) to 

read as follows: 

§ 4274.338 Loan Agreements between the 

Agency and the intermediary. 

* * * * * 

(b) * * * 

(4) * * * 

(i) * * * 

(B) It is not intended that audits 

required by this subpart be separate and 

apart from audits performed in 

accordance with State and local laws or 

for other purposes. To the extent 

feasible, the audit work should be done 

in connection with these audits. 

Intermediaries covered by 2 CFR part 

200, subpart F, as codified in 2 CFR 

400.1, should submit audits made in 

accordance with that regulation. 

(ii) * * * 

(C) The reports will be submitted 

through the Agency approved electronic 

system and includes information on the 

intermediary’s lending activity, income 

and expenses, financial condition and a 

summary of applicable information of 

the ultimate recipients the intermediary 

has financed. 

* * * * * 

■ 125. Amend § 4274.343 by revising 

paragraph (a)(13) to read as follows: 

§ 4274.343 Applications. 

(a) * * * 

(13) A statement on a form provided 

by the Agency (Appendix B to Part 

418—Disclosure Form to Report 

Lobbying) regarding lobbying, as 

required by 2 CFR part 418. 

* * * * * 

PART 4279—GUARANTEED 

LOANMAKING 

■ 126. The authority citation for part 

4279 continues to read as follows: 

Authority: 5 U.S.C. 301; 7 U.S.C. 1932(a); 

and 7 U.S.C. 1989. 

Subpart A—General 

■ 127. Amend § 4279.43 by revising 

paragraph (g)(1)(v) to read as follows: 

§ 4279.43 Certified Lender Program. 

* * * * * 

(g) * * * 

(1) * * * 

(v) Intergovernmental consultation 

comments in accordance with 2 CFR 

part 415, subpart C; and 

* * * * * 

■ 128. Revise § 4279.71 to read as 

follows: 

§ 4279.71 Public bodies and nonprofit 

corporations. 

Any public body or nonprofit 

corporation that receives a guaranteed 

loan that meets the thresholds 

established by 2 CFR part 200, subpart 

F, as codified by 2 CFR 400.1, must 

provide an audit for the fiscal year (of 

the borrower) in which the Loan Note 

Guarantee is issued. If the loan is for 

development or purchases made in a 

previous fiscal year through interim 

financing, an audit will also be provided 

for the fiscal year in which the 

development or purchases occurred. 

Any audit provided by a public body or 

nonprofit corporation in compliance 

with paragraph will be considered 

adequate to meet the audit requirements 

of the B&I program for that year. 

Subpart B—Business and Industry 

Loans 

■ 129. Amend § 4279.161 by revising 

paragraph (b)(5) to read as follows: 

§ 4279.161 Filing preapplications and 

applications. 

* * * * * 

(b) * * * 

(5) Intergovernmental consultation 

comments in accordance with 2 CFR 

part 415, subpart C. 

* * * * * 

Subpart C—Biorefinery Assistance 

Loans 

■ 130. Amend § 4279.261 by revising 

paragraph (l) to read as follows: 

§ 4279.261 Application for loan guarantee 

content. 

* * * * * 

(l) Intergovernmental consultation. 

Intergovernmental consultation 

comments in accordance with RD 

Instruction 1940–J and 7 CFR part 415, 

subpart C. 

* * * * * 

PART 4280—LOANS AND GRANTS 

■ 131. The authority citation for part 

4280 continues to read as follows: 

Authority: 5 U.S.C. 301; 7 U.S.C. 940c; 7 

U.S.C. 8107. 


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Subpart A—Rural Economic 

Development Loan and Grant 

Programs 

■ 132. Amend § 4280.3 by adding a 

definition of ‘‘Conflict of interest’’ in 

alphabetical order to read as follows: 

§ 4280.3 Definitions. 

* * * * * 

Conflict of interest. A situation in 

which a person or entity has competing 

personal, professional, or financial 

interests that make it difficult for the 

person or business to act impartially. 

Regarding use of both grant and 

matching funds, Federal procurement 

standards prohibit transactions that 

involve a real or apparent conflict of 

interest for owners, employees, officers, 

agents, their immediate family 

members, partners, or an organization 

which is about to employ any of the 

parties indicated herein, having a 

financial or other interest in or tangible 

personal benefit from the outcome of the 

project; or that restrict open and free 

competition for unrestrained trade. 

Specifically, project funds may not be 

used for services or goods going to, or 

coming from, a person or entity with a 

real or apparent conflict of interest, 

including, but not limited to, owner(s) 

and their immediate family members. 

* * * * * 

■ 133. Revise § 4280.19 to read as 

follows: 

§ 4280.19 REDG Grants. 

Intermediaries receiving Grants must 

partially finance a Revolving Loan Fund 

that the Intermediary will operate and 

administer, by providing supplemental 

funds of at least 20 percent of the Grant. 

Grants are subject to 2 CFR parts 200, 

400, 415, 417, 418, 421 as applicable. 

■ 134. Amend § 4280.23 by revising 

paragraph (f) to read as follows: 

§ 4280.23 Requirements for lending from 

Revolving Loan Fund. 

* * * * * 

(f) Termination for cause. Rural 

Development will terminate the Fund 

and require repayment of the Grant 

funds if Rural Development determines 

that the Fund is not being operated 

according to the approved Revolving 

Loan Fund Plan, this subpart, or for 

other good cause determined by Rural 

Development, such as questionable 

prepayment of initial loans. As 

applicable, Rural Development will 

follow remedies for noncompliance, 

closeout and post-closeout adjustments 

and continuing responsibilities in 

accordance with 2 CFR 200.338–200.344 

as codified by 2 CFR 400.1. 

* * * * * 

■ 135. Amend § 4280.30 by revising 

paragraph (a) to read as follows: 

§ 4280.30 Restrictions on the use of REDL 

or REDG funds. 

(a) Conflict of interest. The 

Intermediary must not own or manage 

any Ultimate Recipient Project, unless 

the Project is acquired as a result of 

servicing a loan made from the 

Revolving Loan Fund. Conflicts of 

interest and all appearances of a conflict 

of interest are not permitted. The 

intermediary must also disclose in 

writing any potential conflicts of 

interest to the USDA awarding agency 

and maintain written standards of 

conduct covering conflicts of interest, 

including organizational conflicts of 

interest in accordance with 2 CFR 

400.2(b). 

* * * * * 

■ 136. Amend § 4280.36 by revising 

paragraphs (f), (g), (h), (i) and (n) to read 

as follows: 

§ 4280.36 Other laws that contain 

compliance requirements for these 

Programs. 

* * * * * 

(f) Drug-free workplace. Grants made 

under these Programs are subject to the 

requirements contained in 2 CFR part 

421 which implements the Drug-Free 

Workplace Act of 1988 (41 U.S.C. 8101 

et seq.). An Intermediary requesting a 

REDG Grant will be required to certify 

that it will establish and make a good 

faith effort to maintain a drug-free 

workplace program. 

(g) Debarment and suspension. The 

requirements of 2 CFR part 180 and 

Departmental Regulations 2 CFR part 

417, Nonprocurement Debarment, and 

Suspension are applicable to these 

Programs. 

(h) Intergovernmental review of 

Federal programs. These Programs are 

subject to the requirements of Executive 

Order 12372 (3 CFR 1982 Comp., p. 197) 

and 2 CFR part 415, subpart C, which 

implements Executive Order 12372. 

Proposed Projects are subject to the 

State and local government review 

process contained in 2 CFR part 415, 

subpart C. 

(i) Restrictions on lobbying. The 

restrictions and requirements imposed 

by 31 U.S.C. 1352, and 2 CFR part 418, 

are applicable to these Programs. 

* * * * * 

(n) Audits. These Programs are subject 

to 2 CFR part 200, subpart F, as codified 

in 2 CFR part 400.1. 

* * * * * 

■ 137. Amend § 4280.50 by revising 

paragraphs (c) introductory text and 

(c)(2) to read as follows: 

§ 4280.50 Disbursement of Zero-Interest 

Loan funds. 

* * * * * 

(c) For a REDG loan, Rural 

Development will disburse Grant funds 

to the Intermediary in accordance with 

2 CFR 200 as adopted by USDA in 2 

CFR part 400 as applicable. Specifically, 

Rural Development will disburse the 

Grant funds in advance if the following 

requirements are met: 

* * * * * 

(2) The management system of the 

Intermediary meets the requirements of 

2 CFR part 200 as adopted by USDA in 

2 CFR part 400, as applicable; 

* * * * * 

■ 138. Amend § 4280.55 by revising 

paragraph (c) to read as follows: 

§ 4280.55 Monitoring responsibilities. 

* * * * * 

(c) Rural Development will review 

and monitor Grants in accordance with 

2 CFR part 200, as adopted by USDA in 

2 CFR parts 400, 415, 417, 418, and 421 

as applicable. 

* * * * * 

■ 139. Amend § 4280.56 by revising 

paragraphs (a) introductory text, (b) and 

(c) to read as follows: 

§ 4280.56 Submission of reports and 

audits. 

* * * * * 

(a) In addition to any reports and 

audits required by 2 CFR part 200 and 

Subpart F as adopted by USDA in 2 CFR 

part 400, the Intermediary must submit 

the following monitoring reports to 

Rural Development: 

* * * * * 

(b) If the Intermediary does not have 

an existing loan with RUS, the 

Intermediary will submit a copy of its 

annual audit to Rural Development 

within 90 days of its completion. All 

REDL audits must be conducted in 

accordance with Generally Accepted 

Government Auditing Standards or 

Generally Accepted Accounting 

Principles and REDG audits in 

accordance with 2 CFR part 200 as 

adopted by USDA in 2 CFR part 400. 

(c) Rural Development may require 

Ultimate Recipients that receive loans 

financed with Grant funds provided 

under the REDG Program to submit 

annual audits to comply with Federal 

audit regulations. In accordance with 2 

CFR part 200, as adopted by USDA in 

2 CFR part 400, Ultimate Recipients that 

are nonprofit entities, or a State or local 

government, may be required to submit 

an audit subject to the threshold 

established in 2 CFR part 200, as 

adopted by in 2 CFR part 400. 


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Subpart B—Rural Energy for America 

Program 

■ 140. Amend § 4280.103 by revising 

the definition of ‘‘Departmental 

regulations’’ to read as follows: 

§ 4280.103 Definitions. 

* * * * * 

Departmental regulations. The Grants 

and Agreements regulations of the 

Department of Agriculture as currently 

codified in 2 CFR parts 400, 415, 417, 

418, 421,. 

* * * * * 

Subpart D—Rural Microentrepreneur 

Assistance Program 

■ 141. Amend § 4280.302 by adding the 

definition of ‘‘Conflict of interest’’ in 

alphabetical order to read as follows: 

§ 4280.302 Definitions and abbreviations. 

* * * * * 

Conflict of interest. A situation in 

which a person or entity has competing 

personal, professional, or financial 

interests that make it difficult for the 

person or business to act impartially. 

Regarding use of both grant and 

matching funds, Federal procurement 

standards prohibit transactions that 

involve a real or apparent conflict of 

interest for owners, employees, officers, 

agents, their immediate family 

members, partners, or an organization 

which is about to employ any of the 

parties indicated herein, having a 

financial or other interest in or a 

tangible personal benefit from the 

outcome of the project; or that restrict 

open and free competition for 

unrestrained trade. Specifically, project 

funds may not be used for services or 

goods going to, or coming from, a person 

or entity with a real or apparent conflict 

of interest, including, but not limited to, 

owner(s) and their immediate family 

members. 

* * * * * 

■ 142. Amend § 4280.311 by revising 

paragraph (h)(1)(i), removing paragraph 

(h)(1)(ii), and redesignating paragraph 

(h)(1)(iii) as paragraph (h)(1)(ii) to read 

as follows: 

§ 4280.311 Loan provisions for Agency 

loans to microlenders. 

* * * * * 

(h) * * * 

(1) * * * 

(i) Quarterly reports, using an Agencyapproved automation system, 

containing such information as the 

Agency may require, and in accordance 

with 2 CFR part 200 as adopted by 

USDA in 2 CFR part 400, to ensure that 

funds provided are being used for the 

purposes for which the loan to the 

microlender was made. At a minimum, 

these reports must identify each 

microborrower under this program and 

should include a discussion reconciling 

the microlender’s actual results for the 

period against its goals, milestones, and 

objectives as provided in the application 

package; and 

* * * * * 

■ 143. Amend § 4280.320 by revising 

paragraphs (a)(1)(i) and (a)(1)(ii) to read 

as follows and remove (a)(1)(iii): 

§ 4280.320 Grant administration. 

* * * * * 

(a) * * * 

(1) * * * 

(i) A program performance report 

required by 2 CFR part 200 as adopted 

by USDA in 2 CFR part 400. This report 

will include information on the 

microlender’s technical assistance, 

training, and/or enhancement activity, 

and grant expenses, milestones met, or 

unmet, explanation of difficulties, 

observations and other such 

information; and 

(ii) As appropriate, SF–270. 

* * * * * 

■ 144. Amend § 4280.321 by revising 

paragraph (a) to read as follows: 

§ 4280.321 Grant and loan servicing. 

* * * * * 

(a) Grants. Grants will be serviced in 

accordance with the Department of 

Agriculture regulations including, but 

not limited to 7 CFR part 1951, subparts 

E and O and 2 CFR parts 400, 415, 417, 

418, and 421; and 

* * * * * 

■ 145. Amend § 4280.323 by revising 

paragraph (m) to read as follows: 

§ 4280.323 Ineligible microloan purposes 

and uses. 

* * * * * 

(m) Any lobbying activities as 

described in 2 CFR part 418. 

* * * * * 

PART 4284—GRANTS 

■ 146. The authority citation for part 

4284 continues to read as follows: 

Authority: 5 U.S.C. 301 and 7 U.S.C. 1989. 

Subpart F also issued under 7 U.S.C. 1932(e). 

Subpart G also issued under 7 U.S.C. 

1926(a)(11). Subpart J also issued under 7 

U.S.C. 1621 note. Subpart K also issued 

under 7 U.S.C. 1621 note. 

Subpart A—General Requirements for 

Cooperative Services Grant Program 

■ 147. Amend § 4284.3 by removing the 

defi1nition ‘‘Agriculture Producer 

Group,’’ adding the definition ‘‘Conflict 

of Interest’’ in alphabetical order, 

revising the definition ‘‘Matching 

Funds,’’ and removing the definition 

‘‘Emerging Markets,’’ to read as follows: 

§ 4284.3 Definitions. 

* * * * * 

Conflict of interest—A situation in 

which a person or entity has competing 

personal, professional, or financial 

interests that make it difficult for the 

person or business to act impartially. 

Regarding use of both grant and 

matching funds, Federal procurement 

standards prohibit transactions that 

involve a real or apparent conflict of 

interest for owners, employees, officers, 

agents, their immediate family 

members, partners, or an organization 

which is about to employ any of the 

parties indicated herein, having a 

financial or other interest in or a 

tangible personal benefit from the 

outcome of the project; or that restrict 

open and free competition for 

unrestrained trade. Specifically, project 

funds may not be used for services or 

goods going to, or coming from, a person 

or entity with a real or apparent conflict 

of interest, including, but not limited to, 

owner(s) and their immediate family 

members. In cases of tribally-owned 

businesses, to avoid a conflict of 

interest, any business assisted by a tribe 

must be held through a separate entity, 

such as a tribal corporation. The 

separate entity may be owned by the 

tribe and distribute profits to the tribe. 

However, the entity’s governing board 

must be independent from the tribal 

government and be elected or appointed 

for a specific time period. These board 

members must not be subject to removal 

without cause by the tribal government. 

The entity’s board members must not, 

now or in the future, make up the 

majority of members of the tribal 

council or be members of the tribal 

council or other governing board of the 

tribe. 

* * * * * 

Matching Funds—Cash or confirmed 

funding commitments from non-Federal 

sources unless otherwise provided by 

law. Unless otherwise provided, in-kind 

contributions that conform to the 

provisions of 2 CFR part 200 as adopted 

by USDA in 2 CFR part 400 can be used 

as matching funds. Examples of in-kind 

contributions include volunteer services 

furnished by professional and technical 

personnel, donated supplies and 

equipment, and donated office space. 

Matching funds must be provided in 

advance of grant funding, such that for 

every dollar of grant that is advanced, 

not less than the pro-rata portion of 

matching funds shall have been 

expended prior to submitting the 

request for reimbursement. Matching 


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funds are subject to the same use 

restrictions as grant funds. 

* * * * * 

■ 148. Revise § 4284.8 to read as 

follows: 

§ 4284.8 Grant approval and obligation of 

funds. 

The following statement will be 

entered in the comment section of the 

Request for Obligation of Funds, which 

must be signed by the grantee: 

The grantee certifies that it is in 

compliance with and will continue to 

comply with all applicable laws, 

regulations, Executive Orders and other 

generally applicable requirements, 

including those contained in the 

applicable 7 CFR part 4284 and the 

Grants and Agreements Departmental 

Regulations as currently codified in 2 

CFR parts 400, 415, 417, 418, and 421, 

in effect on the date of grant approval, 

and the approved Letter of Conditions. 

■ 149. Revise § 4284.9 to read as 

follows: 

§ 4284.9 Grant disbursement. 

The Agency will determine, based on 

2 CFR part 200 as adopted by USDA in 

2 CFR part 400 whether disbursement of 

a grant will be by advance or 

reimbursement. 

■ 150. Amend § 4284.11 by revising 

paragraphs (a) and (b) to read as follows: 

§ 4284.11 Award requirements. 

* * * * * 

(a) Enter into an Agency-approved 

grant agreement with RBS; 

(b) Disclose in writing any potential 

conflicts of interest and maintain 

written standards of conduct covering 

conflicts of interest, including 

organizational conflicts of interest in 

accordance with 2 CFR 400.2; 

* * * * * 

■ 151. Amend § 4284.12 by revising 

paragraph (a) to read as follows: 

§ 4284.12 Reporting requirements. 

* * * * * 

(a) A ‘‘Financial Status Report’’ listing 

expenditures according to agreed upon 

budget categories, on a semi-annual 

basis. Reporting periods end as 

identified in the grant agreement or 

applicable program attachment. Reports 

are due 30 days after the reporting 

period ends. Failure to submit the 

required reports within the specified 

time frame is considered cause for 

suspension or termination of the grant. 

* * * * * 

■ 152. Revise § 4284.14 to read as 

follows: 

§ 4284.14 Grant servicing. 

Grants will be serviced in accordance 

with 7 CFR part 1951, subparts E and O 

and the Departmental Grants and 

Agreements Regulations as currently 

codified in 2 CFR parts 400, 415, 417, 

418, and 421. The only exception is that 

the delegation of post-award servicing 

does not require the prior approval of 

the Administrator. Grantees will permit 

periodic inspection of the program 

operations by a representative of the 

Agency. All non-confidential 

information resulting from the Grantee’s 

activities shall be made available to the 

general public on an equal basis. 

■ 153. Amend § 4284.16 by revising 

paragraph (c) to read as follows: 

§ 4284.16 Other considerations. 

* * * * * 

(c) Other USDA regulations. The grant 

programs under this part are subject to 

the provisions of the following 

regulations, as applicable: 

(1) 2 CFR part 400, Uniform 

Administrative Requirements, Cost 

Principles, and Audit Requirements for 

Federal Awards; 

(2) 2 CFR part 415, General Program 

Administrative Regulations; 

(3) 2 CFR part 417, Nonprocurement 

Debarment and Suspension; 

(4) 2 CFR part 418, New Restrictions 

on Lobbying; and 

(5) 2 CFR part 421, Requirements for 

Drug-Free Workplace (Financial 

Assistance). 

■ 154. Revise § 4284.18 to read as 

follows: 

§ 4284.18 Audit requirements. 

Grantees must comply with the audit 

requirements of 2 CFR part 200 as 

adopted by USDA in 2 CFR part 400. 

The audit requirements apply to the 

years in which grant funds are received 

and years in which work is 

accomplished using grant funds. 

Subpart G—Rural Business 

Opportunity Grants 

■ 155. Amend § 4284.630 by revising 

paragraph (c) to read as follows: 

§ 4284.630 Other considerations. 

* * * * * 

(c) Other USDA regulations. This 

program is subject to the provisions of 

the following regulations, as applicable; 

(1) 2 CFR part 400, Uniform 

Administrative Requirements, Cost 

Principles, and Audit Requirements for 

Federal Awards; 

(2) 2 CFR part 415, General Program 

Administrative Regulations; 

(3) 2 CFR part 417, Nonprocurement 

Debarment and Suspension; 

(4) 2 CFR part 418, New Restrictions 

on Lobbying; and 

(5) 2 CFR part 421, Requirements for 

Drug-Free Workplace (Financial 

Assistance). 

■ 156. Amend § 4284.638 by revising 

paragraph (a)(2)(vi) to read as follows: 

§ 4284.638 Application processing. 

(a) * * * 

(2) * * * 

(vi) Intergovernmental review 

comments from the State Single Point of 

Contact, or evidence that the State has 

elected not to review the program under 

Executive Order 12372 and 2 CFR part 

415, subpart C. 

* * * * * 

■ 157. Revise § 4284.647 to read as 

follows: 

§ 4284.647 Grant approval and obligation 

of funds. 

(a) The following statement will be 

entered in the comment section of the 

Request For Obligation of Funds, which 

must be signed by the grantee: 

The grantee certifies that it is in 

compliance with and will continue to 

comply with all applicable laws; 

regulations; Executive Orders; and other 

generally applicable requirements, 

including those contained in 7 CFR part 

4284, subparts A and G, and the Grants 

and Agreements Departmental 

Regulations as currently codified in 2 

CFR parts 400, 415, 417, 418, and 421, 

in effect on the date of grant approval; 

and the approved Letter of Conditions. 

(b) The Agency and the grantee must 

enter into an Agency-approved grant 

agreement prior to the advance of funds. 

■ 158. Revise § 4284.648 to read as 

follows: 

§ 4284.648 Fund disbursement. 

The Agency will determine, based on 

2 CFR part 200 as adopted by USDA in 

2 CFR part 400, whether disbursement 

of a grant will be by advance or 

reimbursement. A Request for Advance 

or Reimbursement, (available in any 

Agency office) must be completed by 

the grantee and submitted to the Agency 

no more often than monthly to request 

either advance or reimbursement of 

funds. 

■ 159. Revise § 4284.657 to read as 

follows: 

§ 4284.657 Audit requirements. 

Grantees must provide an annual 

audit in accordance with 2 CFR part 

200, as adopted by USDA in 2 CFR part 

400. The audit requirements apply to 

the years in which grant funds are 

received and years in which work is 

accomplished that will be paid for with 

grant funds. 

Subpart J—Value-Added Producer 

Grant Program 

■ 160. Amend § 4284.902 by revising 

the definition for ‘‘Departmental 

regulations’’ to read as follows: 


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§ 4284.902 Definitions. 

* * * * * 

Departmental regulations. The Grants 

and Agreements regulations of the 

Department of Agriculture as currently 

codified in 2 CFR parts 400, 415, 417, 

418, and 421. 

* * * * * 

■ 161. Revise § 4284.908 to read as 

follows: 

§ 4284.908 Compliance with other 

regulations. 

(a) Departmental regulations. 

Applicants must comply with the 

Grants and Agreements regulations of 

the Department of Agriculture as 

currently codified in 2 CFR parts 400, 

415, 417, 418, and 421. 

(b) Cost principles. Applicants must 

comply with the applicable cost 

principles found in 2 CFR part 200, as 

adopted by USDA in 2 CFR part 400 and 

in 48 CFR 31.2. 

(c) Definitions. If a term is defined 

differently in the Departmental 

Regulations, 2 CFR part 200, or 48 CFR 

31.2 and in this subpart, such term shall 

have the meaning as found in this 

subpart. 

■ 162. Amend § 4284.921 by revising 

paragraph (a) to read as follows: 

§ 4284.921 Ineligible applicants. 

(a) Consistent with the Departmental 

regulations, an applicant is ineligible if 

the applicant is debarred or suspended 

or is otherwise excluded from or 

ineligible for participation in Federal 

assistance programs under Executive 

Order 12549, ‘‘Debarment and 

Suspension,’’ and 2 CFR part 180, as 

adopted by USDA in 2 CFR part 417. 

* * * * * 

■ 163. Amend § 4284.924 by revising 

paragraph (j) to read as follows: 

§ 4284.924 Ineligible uses of grant and 

matching funds. 

* * * * * 

(j) Fund any activities prohibited by 

the Departmental Regulations, 2 CFR 

part 200, as adopted by USDA in 2 CFR 

part 400 and 48 CFR 31.2. 

* * * * * 

PART 4285—COOPERATIVE 

AGREEMENTS 

■ 164. The authority citation for part 

4285 continues to read as follows: 

Authority: 7 U.S.C. 1623; Public Law 103– 

111, 107 Stat. 1046; 7 U.S.C. 2201; USDA 

Secretary’s Memorandum 1020–39, dated 

September 30, 1993; and Public Law 103– 

211, 108 Stat. 3. 

Subpart A—Federal-State Research on 

Cooperatives Program 

■ 165. Amend § 4285.81 by revising 

paragraph (a) to read as follows: 

§ 4285.81 Cooperative agreement awards. 

(a) General. Within the limit of funds 

available for such purpose, the awarding 

official shall make awards for 

cooperative agreements to those 

applicants whose proposals are judged 

most meritorious in the announced 

program areas under the evaluation 

criteria and procedures set forth in this 

part. The date specified by the Assistant 

Administrator for Cooperative Services 

as the beginning of the project period 

shall be no later than September 30 of 

the Federal fiscal year in which the 

project is approved and funds are 

appropriated for such purpose, unless 

otherwise permitted by law. All funds 

awarded under this part shall be 

expended solely in accordance with the 

methods identified in approved 

application and budget, the regulations 

of this part, the terms and conditions of 

the award, the Grants and Agreements 

regulations of the Department of 

Agriculture as currently codified in 2 

CFR parts 400, 415, 417, 418, and 421. 

* * * * * 

■ 166. Amend § 4285.93 by revising 

paragraphs (e), (f), (g), (h), (i), (j), and (k) 

to read as follows: 

§ 4285.93 Other Federal statutes and 

regulations that apply. 

* * * * * 

(e) 2 CFR part 400, Uniform 

Administrative Requirements, Cost 

Principles, and Audit Requirements for 

Federal Awards; 

(f) 2 CFR part 415, General Program 

Administrative Regulations; 

(g) 2 CFR part 417, Nonprocurement 

Debarment and Suspension; 

(h) 2 CFR part 418, New Restrictions 

on Lobbying; 

(i) 2 CFR part 421, Requirements for 

Drug-Free Workplace (Financial 

Assistance); 

(j) 7 CFR part 3051—Audits of 

Institutions of Higher Education and 

Other Nonprofit Institutions; 29 U.S.C. 

794, section 504—Rehabilitation Act of 

1973, and 7 CFR part 15B prohibiting 

discrimination based upon physical or 

mental handicap in Federally assisted 

programs; and 

(k) 35 U.S.C. 200 et seq.—Bayh-Dole 

Act, controlling allocation of rights to 

inventions made by employees of small 

business firms and domestic nonprofit 

organizations, including universities, in 

Federally assisted programs 

(implementing regulations are contained 

in 37 CFR part 401). 

■ 167. Revise § 4285.94 to read as 

follows: 

§ 4285.94 Other conditions. 

Post-award requirements. Upon 

awarding the cooperative agreement, the 

post-award and audit requirements of 2 

CFR part 200, as adopted by USDA in 

2 CFR part 400 apply. 

PART 4290—RURAL BUSINESS 

INVESTMENT COMPANY (‘‘RBIC’’) 

PROGRAM 

■ 168. The authority citation for part 

4290 continues to read as follows: 

Authority: 7 U.S.C. 1989 and 2009cc et 

seq. 

Subpart B—Definition of Terms Used 

in Part 4290 

■ 169. Amend § 4290.50 by adding the 

definition for ‘‘Conflict of interest’’ in 

alphabetical order to read as follows: 

§ 4290.50 Definition of terms. 

* * * * * 

Conflict of interest means a situation 

in which a person or entity has 

competing personal, professional, or 

financial interests that make it difficult 

for the person or business to act 

impartially. Regarding use of both grant 

and matching funds, Federal 

procurement standards prohibit 

transactions that involve a real or 

apparent conflict of interest for owners, 

employees, officers, agents, their 

immediate family members, partners or 

an organization which is about to 

employ any of the parties indicated 

herein, having a financial or other 

interest in or a tangible personal benefit 

from the outcome of the project; or that 

restrict open and free competition for 

unrestrained trade. Specifically, project 

funds may not be used for services or 

goods going to, or coming from, a person 

or entity with a real or apparent conflict 

of interest, including, but not limited to, 

owner(s) and their immediate family 

members. 

* * * * * 

Subpart H—Recordkeeping, Reporting, 

and Examination Requirements for 

RBICs 

■ 170. Amend § 4290.600 by revising 

paragraph (d) to read as follows: 

§ 4290.600 General requirement for RBIC 

to maintain and preserve records. 

* * * * * 

(d) Additional requirement. You must 

comply with the recordkeeping and 

record retention requirements set forth 

in 2 CFR part 200, as adopted by USDA 

in 2 CFR part 400. 


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■ 171. Amend § 4290.660 by revising 

paragraph (e) to read as follows: 

§ 4290.660 Other items required to be filed 

by RBIC with the Secretary. 

* * * * * 

(e) Reports concerning Operational 

Assistance grant funds. You must 

comply with all reporting requirements 

set forth in 2 CFR part 200, subpart D, 

as codified in 2 CFR 400.1 and any grant 

award document executed between you 

and the Secretary. 

* * * * * 

Subpart M—Miscellaneous 

■ 172. Amend § 4290.1940 by revising 

paragraphs (a) and (f) to read as follows: 

§ 4290.1940 Integration of this part with 

other regulations applicable to USDA’s 

programs. 

(a) Intergovernmental review. To the 

extent applicable to this part, the 

Secretary will comply with 2 CFR part 

415, subpart C, ‘‘Intergovernmental 

Review of Department of Agriculture 

Programs and Activities.’’ The Secretary 

has not delegated this responsibility to 

SBA pursuant to § 4290.45. 

* * * * * 

(f) Conflict of interest. To the extent 

applicable to this part, the Secretary 

will comply with 2 CFR 400.2, subpart 

D of 7 CFR part 1900, and RD 

Instruction 2045–BB. The Secretary has 

not delegated this responsibility to SBA 

pursuant to § 4290.45. 

* * * * * 

Jon M. Holladay, 

Chief Financial Officer. 

Department of State 

For the reasons set forth in the 

common preamble, under the authority 

of 5 U.S.C. 301 and the authorities listed 

below, 2 CFR Chapter VI and 22 CFR 

Chapter I are amended as follows: 

Title 2—Grants and Agreements 

CHAPTER VI—DEPARTMENT OF STATE 

■ 1. Part 600 is added to Title 2, Chapter 

XI of the Code of Federal Regulations to 

read as follows: 

PART 600—THE UNIFORM 

ADMINISTRATIVE REQUIREMENTS, 

COST PRINCIPLES, AND AUDIT 

REQUIREMENTS FOR FEDERAL 

AWARDS 

Sec. 

600.101 Applicability. 

600.205 Federal awarding agency review of 

risk posed by applicants. 

600.315 Intangible property. 

600.407 Prior written approval (prior 

approval). 

Authority: 5 U.S.C. 301; 22 U.S.C 2651a, 22 

U.S.C. 2151, 22 U.S.C. 2451, 22 U.S.C. 1461, 

2 CFR part 200. 

§ 600.101 Applicability. 

Under the authority listed above, the 

Department of State adopts the Office of 

Management and Budget (OMB) 

Guidance in 2 CFR part 200, except for: 

(a) The Uniform Administrative 

Requirements, Cost Principles, and 

Audit Requirements for Federal Awards 

set forth in 2 CFR part 200 (Subparts A 

through F) shall apply to all non-Federal 

entities, except as noted below. 

(b) Subparts A through E of 2 CFR 

part 200 shall apply to all foreign 

organizations not recognized as Foreign 

Public Entities and Subparts A through 

D of 2 CFR part 200 shall apply to all 

U.S. and foreign for-profit entities, 

except where the Federal awarding 

agency determines that the application 

of these subparts would be inconsistent 

with the international obligations of the 

United States or the statute or 

regulations of a foreign government. The 

Federal Acquisition Regulation (FAR) at 

48 CFR part 30, Cost Accounting 

Standards, and Part 31 Contract Cost 

Principles and Procedures takes 

precedence over the cost principles in 

Subpart E for Federal awards to U.S. 

and foreign for-profit entities. Thus, this 

part gives regulatory effect to the OMB 

guidance and supplements the guidance 

as needed for the Department. 

§ 600.205 Federal awarding agency review 

of risk posed by applicants. 

Use of 2 CFR 200.205 (the DOS review 

of risk posed by applicants) is required 

for all selected competitive and noncompetitive awards. 

§ 600.315 Intangible property. 

If the DOS obtains research data 

solely in response to a FOIA request, the 

DOS may charge the requester fees 

consistent with the FOIA and applicable 

DOS regulations and policies. 

§ 600.407 Prior written approval (prior 

approval). 

The non-Federal entity must seek the 

prior written approval for indirect or 

special or unusual costs prior to 

incurring such costs where DOS is the 

cognizant agency. 

Title 22—Foreign Relations 

CHAPTER I—DEPARTMENT OF STATE 

PART 135—[REMOVED] 

■ 2. 22 CFR part 135 is removed. 

PART 145—[REMOVED] 

■ 3. 22 CFR part 145 is removed. 

Corey Rindner, 

Procurement Executive. 

Agency for International Development 

For the reasons stated in the common 

preamble, and under the authority of 5 

U.S.C. 301 and the authorities listed 

below Title 2, Chapter VII and Title 22, 

Chapter II of the Code of Federal 

Regulations are amended as follows: 

Title 2—Grants and Agreements 

CHAPTER VII—AGENCY FOR 

INTERNATIONAL DEVELOPMENT 

■ 1. Part 700 is added to read as follows: 

PART 700—UNIFORM 

ADMINISTRATIVE REQUIREMENTS, 

COST PRINCIPLES, AND AUDIT 

REQUIREMENTS FOR FEDERAL 

AWARDS 

Sec. 

Subpart A—Acronyms and Definitions 

700.1 Definitions 

Subpart B—General Provisions 

700.2 Adoption of 2 CFR part 200 

700.3 Applicability 

700.4 Exceptions 

700.5 Supersession 

Subpart C—Pre-Federal Award 

Requirements and Contents of Federal 

Awards 

700.6 Metric system of measurement 

700.7 Advance Payment 

Subpart D—Post Federal Award 

Requirements 

700.8 Payment. 

700.9 Property standards. 

700.10 Cost sharing or matching. 

700.11 Contracting with small and minority 

businesses, women’s business 

enterprises, and labor surplus area firms. 

700.12 Contract provisions. 

700.13 Additional Provisions for Awards to 

Commercial Organizations. 

Remedies for Noncompliance 

700.14 Termination. 

700.15 Disputes. 

USAID-Specific Requirements 

700.16 Marking. 

Authority: Sec. 621, Pub. L. 87–195, 75 

Stat 445, (22 U.S.C. 2381) as amended, E.O. 

12163, Sept 29, 1979, 44 FR 56673; 2 CFR 

1979 Comp., p. 435. 

Subpart A—Acronyms and Definitions 

§ 700.1 Definitions. 

These are the definitions for terms 

used in this part. Different definitions 

may be found in Federal statutes or 

regulations that apply more specifically 

to particular programs or activities. 


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(a) Activity mean a set of actions 

through which inputs—such as 

commodities, technical assistance, 

training, or resource transfers—are 

mobilized to produce specific outputs, 

such as vaccinations given, schools 

built, microenterprise loans issued, or 

policies changed. Activities are 

undertaken to achieve objectives that 

have been formally approved and 

notified to Congress. 

(b) Agreement Officer means a person 

with the authority to enter into, 

administer, terminate and/or closeout 

assistance agreements subject to this 

part, and make related determinations 

and findings on behalf of USAID. An 

Agreement Officer can only act within 

the scope of a duly authorized warrant 

or other valid delegation of authority. 

The term ‘‘Agreement Officer’’ includes 

persons warranted as ‘‘Grant Officers.’’ 

It also includes certain authorized 

representatives of the Agreement Officer 

acting within the limits of their 

authority as delegated by the Agreement 

Officer. 

(c) Apparently successful applicant(s) 

means the applicant(s) for USAID 

funding recommended for an award 

after technical evaluation, but who has 

not yet been awarded a grant, 

cooperative agreement or other 

assistance award by the Agreement 

Officer. Apparently successful 

applicants will be requested by the 

Agreement Officer to submit a Branding 

Strategy and Marking Plan. Apparently 

successful applicant status confers no 

right and constitutes no USAID 

commitment to an award, which still 

must be executed by the Agreement 

Officer. 

(d) Award means financial assistance 

that provides support or stimulation to 

accomplish a public purpose. Awards 

include grants, cooperative agreements 

and other agreements in the form of 

money or property in lieu of money, by 

the Federal Government to an eligible 

recipient. The term does not include: 

Technical assistance, which provides 

services instead of money; other 

assistance in the form of loans, loan 

guarantees, interest 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. 

(e) Branding strategy means a strategy 

the apparently successful applicant 

submits at the specific request of a 

USAID Agreement Officer after 

technical evaluation of an application 

for USAID funding, describing how the 

program, project, or activity is named 

and positioned, as well as how it is 

promoted and communicated to 

beneficiaries and cooperating country 

citizens. It identifies all donors and 

explains how they will be 

acknowledged. A Branding Strategy is 

required even if a Presumptive 

Exception is approved in the Marking 

Plan. 

(f) Commodities mean any material, 

article, supply, goods or equipment, 

excluding recipient offices, vehicles, 

and non-deliverable items for recipient’s 

internal use in administration of the 

USAID funded grant, cooperative 

agreement, or other agreement or 

subagreement. 

(g) 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 USAID 

sponsorship ends. 

(h) Marking plan means a plan that 

the apparently successful applicant 

submits at the specific request of a 

USAID Agreement Officer after 

technical evaluation of an application 

for USAID funding, detailing the public 

communications, commodities, and 

program materials and other items that 

will visibly bear the USAID Identity. 

Recipients may request approval of 

Presumptive Exceptions to marking 

requirements in the Marking Plan. 

(i) Program mean an organized set of 

activities and allocation of resources 

directed toward a common purpose, 

objective, or goal undertaken or 

proposed by an organization to carry out 

the responsibilities assigned to it. 

Projects include all the marginal costs 

of inputs (including the proposed 

investment) technically required to 

produce a discrete marketable output or 

a desired result (for example, services 

from a fully functional water/sewage 

treatment facility). 

(j) Public communications are 

documents and messages intended for 

distribution to audiences external to the 

recipient’s organization. They include, 

but are not limited to, correspondence, 

publications, studies, reports, audio 

visual productions, and other 

informational products; applications, 

forms, press and promotional materials 

used in connection with USAID funded 

programs, projects or activities, 

including signage and plaques; Web 

sites/Internet activities; and events such 

as training courses, conferences, 

seminars, press conferences and the 

like. 

(k) Suspension means an action by 

USAID that temporarily withdraws 

Federal sponsorship under an award, 

pending corrective action by the 

recipient or pending a decision to 

terminate the award. Suspension of an 

award is a separate action from 

suspension under USAID regulations 

implementing E.O’s 12549 and 12689, 

‘‘Debarment and Suspension.’’ See 2 

CFR part 780. 

(l) 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. 

(m) USAID means the United States 

Agency for International Development. 

(n) USAID Identity (Identity) means 

the official marking for the United 

States Agency for International 

Development (USAID) comprised of the 

USAID logo or seal and new brandmark 

with the tagline that clearly 

communicates our assistance is ‘‘from 

the American people.’’ In exceptional 

circumstances, upon a written 

determination by the USAID 

Administrator, the definition of the 

USAID Identity may be amended to 

include additional or substitute use of a 

logo or seal and tagline representing a 

presidential initiative or other high level 

interagency federal initiative that 

requires consistent and uniform 

branding and marking by all 

participating agencies. The USAID 

Identity (including any required 

presidential initiative or related 

identity) is available on the USAID Web 

site at http://www.usaid.gov/branding 

and is provided without royalty, license 

or other fee to recipients of USAID 

funded grants or cooperative agreements 

or other assistance awards. 

Subpart B—General Provisions 

§ 700.2 Adoption of 2 CFR part 200. 

Under the authority listed above the 

Agency for International Development 

adopts the Office of Management and 

Budget (OMB) guidance Uniform 

Administrative Requirements, Cost 

Principles, and Audit Requirements for 

Federal Awards to Non-Federal Entities 

(subparts A through F of 2 CFR 200), as 

supplemented by this part, as the 

Agency for International Development 

(USAID) policies and procedures for 

financial assistance administration. This 

part satisfies the requirements of 2 CFR 

200.110(a) and gives regulatory effect to 

the OMB guidance as supplemented by 

this part. 

§ 700.3 Applicability. 

Uniform administrative requirements 

and cost principles (Subparts A through 

E of 2 CFR part 200 as supplemented by 

this part) apply to for-profit entities. 

§ 700.4 Exceptions. 

(a) Consistent with 2 CFR 200.102(b): 

(1) Exceptions on a case-by-case basis 

for individual non-Federal entities may 


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be authorized by USAID’s Senior 

Deputy Assistant Administrator, Bureau 

for Management, except where 

otherwise required by law or where 

OMB or other approval is expressly 

required by this Part. No case-by-case 

exceptions may be granted to the 

provisions of Subpart F—Audit 

Requirements of this Part. 

(2) USAID’s Senior Deputy Assistant 

Administrator, Bureau for Management 

is also authorized to approve 

exceptions, on a class or an individual 

case basis, to USAID program specific 

assistance regulations other than those 

which implement statutory and 

executive order requirements. 

(3) The Federal awarding agency may 

apply more restrictive requirements to a 

class of Federal awards or non-Federal 

entities when approved by OMB, 

required by Federal statutes or 

regulations except for the requirements 

in Subpart F—Audit Requirements of 

this part. A Federal awarding agency 

may apply less restrictive requirements 

when making awards at or below the 

simplified acquisition threshold, or 

when making fixed amount awards as 

defined in Subpart A—Acronyms and 

Definitions of this part, except for those 

requirements imposed by statute or in 

Subpart F—Audit Requirements of this 

part. 

§ 700.5 Supersession. 

Effective December 26, 2014, this part 

supersedes the following regulations 

under Title 22 of the Code of Federal 

Regulations: 22 CFR part 226, 

‘‘Administration of Assistance Awards 

To U.S. Non-Governmental 

Organizations.’’ 

Subpart C—Pre-Federal Award 

Requirements and Contents of Federal 

Awards 

§ 700.6 Metric system of measurement. 

(a) 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. 

(b) Wherever measurements are 

required or authorized, they must be 

made, computed, and recorded in 

metric system units of measurement, 

unless otherwise authorized by the 

agreement officer in writing when it has 

been found that such usage is 

impractical or is likely to cause U.S. 

firms to experience significant 

inefficiencies or the loss of markets. 

Where the metric system is not the 

predominant standard for a particular 

application, measurements may be 

expressed in both the metric and the 

traditional equivalent units, provided 

the metric units are listed first. 

§ 700.7 Advance payment. 

(a) Advance payment mechanisms 

include, but are not limited to, Letter of 

Credit, Treasury check and electronic 

funds transfer and should comply with 

applicable guidance in 31 CFR part 208. 

Subpart D—Post Federal Award 

Requirements 

§ 700.8 Payment. 

(a) Use of resources before requesting 

advance payments. To the extent 

available, the non-Federal entity must 

disburse funds available from program 

income (including repayments to a 

revolving fund), rebates, refunds, 

contract settlements, audit recoveries, 

and interest earned on such funds 

before requesting additional cash 

payments. This paragraph is not 

applicable to such earnings which are 

generated as foreign currencies. 

(b) Standards governing the use of 

banks and other institutions as 

depositories of advance payments under 

Federal awards are as follows: 

(1) Except for situations described in 

paragraph (b)(2) of this section, USAID 

does not require separate depository 

accounts for funds provided to a nonFederal entity or establish any eligibility 

requirements for depositories for funds 

provided to the non-Federal entity. 

However, the non-Federal entity must 

be able to account for receipt, obligation 

and expenditure of funds. 

(2) Advance payments of Federal 

funds must be deposited and 

maintained in insured accounts 

whenever possible. 

§ 700.9 Property standards. 

(a) Real property. Unless the 

agreement provides otherwise, title to 

real property will vest in accordance 

with 2 CFR 200.311. 

(b) Equipment. Unless the agreement 

provides otherwise, title to equipment 

will vest in accordance with 2 CFR 

200.313. 

§ 700.10 Cost sharing or matching. 

Unrecovered indirect costs, including 

indirect costs on cost sharing or 

matching may be included as part of 

cost sharing or matching. Unrecovered 

indirect cost means the difference 

between the amount charged to the 

Federal award and the amount which 

would have been charged to the Federal 

award under the non-Federal entity’s 

approved negotiated indirect cost rate. 

§ 700.11 Contracting with small and 

minority businesses, women’s business 

enterprises, and labor surplus area firms. 

(a) 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. To 

permit USAID, in accordance with the 

small business provisions of the Foreign 

Assistance Act of 1961, as amended, to 

give United States small business firms 

an opportunity to participate in 

supplying commodities and services 

procured under the award, the recipient 

must to the maximum extent possible 

provide the following information to the 

Office of Small Disadvantaged Business 

Utilization (OSDBU), USAID 

Washington, DC 20523, at least 45 days 

prior to placing any order or contract in 

excess of the simplified acquisition 

threshold: 

(1) Brief general description and 

quantity of goods or services; 

(2) Closing date for receiving 

quotations, proposals or bids; and 

(3) Address where solicitations or 

specifications can be obtained. 

(b) [Reserved] 

§ 700.12 Contract provisions. 

(a) The non-Federal entity’s contracts 

must contain the applicable provisions 

described in Appendix II to Part 200— 

Contract Provisions for non-Federal 

Entity Contracts Under Federal Awards. 

(b) All negotiated contracts (except 

those for less than the simplified 

acquisition threshold) awarded by the 

non-Federal entity must include a 

provision to the effect that the nonFederal Entity, USAID, the Comptroller 

General of the United States, or any of 

their duly authorized representatives, 

must 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. 

§ 700.13 Additional Provisions for Awards 

to Commercial Organizations. 

(a) This paragraph contains additional 

provisions that apply to awards to 

commercial organizations. These 

provisions supplement and make 

exceptions for awards to commercial 

organizations from other provisions of 

this part. 

(1) Prohibition against profit. No 

funds will be paid as profit to any nonFederal entity that is a commercial 

organization. Profit is any amount in 

excess of allowable direct and indirect 

costs. 

(2) [Reserved] 


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(b) [Reserved] 

Remedies for Noncompliance 

§ 700.14 Termination. 

If at any time USAID determines that 

continuation of all or part of the funding 

for a program should be suspended or 

terminated because such assistance 

would not be in the national interest of 

the United States or would be in 

violation of an applicable law, then 

USAID may, following notice to the 

recipient, suspend or terminate the 

award in whole or in part and prohibit 

the recipient from incurring additional 

obligations chargeable to the award 

other than those costs specified in the 

notice of suspension. If a suspension is 

put into effect and the situation causing 

the suspension continues for 60 

calendar days or more, then USAID may 

terminate the award in whole or in part 

on written notice to the recipient and 

cancel any portion of the award which 

has not been disbursed or irrevocably 

committed to third parties. 

§ 700.15 Disputes. 

(a) Any dispute under or relating to a 

grant or agreement will be decided by 

the USAID Agreement Officer. The 

Agreement Officer must furnish the 

recipient a written copy of the decision. 

(b) Decisions of the USAID Agreement 

Officer will be final unless, within 30 

calendar days of receipt of the decision, 

the recipient appeals the decision to 

USAID’s Senior Deputy Assistant 

Administrator, Bureau for Management. 

Appeals must be in writing with a copy 

concurrently furnished to the 

Agreement Officer. 

(c) In order to facilitate review of the 

record by the USAID’s Senior Deputy 

Assistant Administrator, Bureau for 

Management, the recipient will be given 

an opportunity to submit written 

evidence in support of its appeal. No 

hearing will be provided. 

(d) Decisions by the Senior Deputy 

Assistant Administrator, Bureau for 

Management, will be final. 

USAID—Specific Requirements 

§ 700.16 Marking. 

(a) USAID policy is that all programs, 

projects, activities, public 

communications, and commodities, 

specified further at paragraphs (c)–(f) of 

this section, partially or fully funded by 

a USAID grant or cooperative agreement 

or other assistance award or subaward 

must be marked appropriately overseas 

with the USAID Identity, of a size and 

prominence equivalent to or greater 

than the recipient’s, other donor’s or 

any other third party’s identity or logo. 

(1) USAID reserves the right to require 

the USAID Identity to be larger and 

more prominent if it is the majority 

donor, or to require that a cooperating 

country government’s identity be larger 

and more prominent if circumstances 

warrant; any such requirement will be 

on a case-by-case basis depending on 

the audience, program goals and 

materials produced. 

(2) USAID reserves the right to request 

pre-production review of USAID funded 

public communications and program 

materials for compliance with the 

approved Marking Plan. 

(3) USAID reserves the right to require 

marking with the USAID Identity in the 

event the recipient does not choose to 

mark with its own identity or logo. 

(4) To ensure that the marking 

requirements ‘‘flow down’’ to 

subrecipients of subawards, recipients 

of USAID funded grants and cooperative 

agreements or other assistance awards 

are required to include a USAIDapproved marking provision in any 

USAID funded subaward, as follows: As 

a condition of receipt of this subaward, 

marking with the USAID Identity of a 

size and prominence equivalent to or 

greater than the recipient’s, 

subrecipient’s, other donor’s or third 

party’s is required. In the event the 

recipient chooses not to require marking 

with its own identity or logo by the 

subrecipient, USAID may, at its 

discretion, require marking by the 

subrecipient with the USAID Identity. 

(b) Subject to § 700.15 (a), (h), and (j), 

program, project, or activity sites funded 

by USAID, including visible 

infrastructure projects (for example, 

roads, bridges, buildings) or other 

programs, projects, or activities that are 

physical in nature (for example, 

agriculture, forestry, water 

management), must be marked with the 

USAID Identity. Temporary signs or 

plaques should be erected early in the 

construction or implementation phase. 

When construction or implementation is 

complete, a permanent, durable sign, 

plaque or other marking must be 

installed. 

(c) Subject to § 700.15 (a), (h), and (j), 

technical assistance, studies, reports, 

papers, publications, audio-visual 

productions, public service 

announcements, Web sites/Internet 

activities and other promotional, 

informational, media, or 

communications products funded by 

USAID must be marked with the USAID 

Identity. 

(1) Any ‘‘public communications’’ as 

defined in § 700.1, funded by USAID, in 

which the content has not been 

approved by USAID, must contain the 

following disclaimer: 

This study/report/audio/visual/other 

information/media product (specify) is made 

possible by the generous support of the 

American people through the United States 

Agency for International Development 

(USAID). The contents are the responsibility 

of [insert recipient name] and do not 

necessarily reflect the views of USAID or the 

United States Government. 

(2) The recipient must provide the 

Agreement Officer’s Representative 

(AOR) or other USAID personnel 

designated in the grant or cooperative 

agreement with at least two copies of all 

program and communications materials 

produced under the award. In addition, 

the recipient must submit one electronic 

and/or one hard copy of all final 

documents to USAID’s Development 

Experience Clearinghouse. 

(d) Subject to § 700.15(a), (h), and (j), 

events financed by USAID such as 

training courses, conferences, seminars, 

exhibitions, fairs, workshops, press 

conferences and other public activities, 

must be marked appropriately with the 

USAID Identity. Unless directly 

prohibited and as appropriate to the 

surroundings, recipients should display 

additional materials such as signs and 

banners with the USAID Identity. In 

circumstances in which the USAID 

Identity cannot be displayed visually, 

recipients are encouraged otherwise to 

acknowledge USAID and the American 

people’s support. 

(e) Subject to § 700.15(a), (h), and (j), 

all commodities financed by USAID, 

including commodities or equipment 

provided under humanitarian assistance 

or disaster relief programs, and all other 

equipment, supplies and other materials 

funded by USAID, and their export 

packaging, must be marked with the 

USAID Identity. 

(f) After technical evaluation of 

applications for USAID funding, USAID 

Agreement Officers will request 

apparently successful applicants to 

submit a Branding Strategy, defined in 

§ 700.1. The proposed Branding Strategy 

will not be evaluated competitively. The 

Agreement Officer will review for 

adequacy the proposed Branding 

Strategy, and will negotiate, approve 

and include the Branding Strategy in the 

award. Failure to submit or negotiate a 

Branding Strategy within the time 

specified by the Agreement Officer will 

make the apparently successful 

applicant ineligible for award. 

(g) After technical evaluation of 

applications for USAID funding, USAID 

Agreement Officers will request 

apparently successful applicants to 

submit a Marking Plan, defined in 

§ 700.1. The Marking Plan may include 

requests for approval of Presumptive 

Exceptions, paragraph (h) of this 


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Federal Register / Vol. 79, No. 244 / Friday, December 19, 2014 / Rules and Regulations 76023 

section. All estimated costs associated 

with branding and marking USAID 

programs, such as plaques, labels, 

banners, press events, promotional 

materials, and the like, must be 

included in the total cost estimate of the 

grant or cooperative agreement or other 

assistance award, and are subject to 

revision and negotiation with the 

Agreement Officer upon submission of 

the Marking Plan. The Marking Plan 

will not be evaluated competitively. The 

Agreement Officer will review for 

adequacy the proposed Marking Plan, 

and will negotiate, approve and include 

the Marking Plan in the award. Failure 

to submit or negotiate a Marking Plan 

within the time specified by the 

Agreement Officer will make the 

apparently successful applicant 

ineligible for award. Agreement Officers 

have the discretion to suspend the 

implementation requirements of the 

Marking Plan if circumstances warrant. 

Recipients of USAID funded grant or 

cooperative agreement or other 

assistance award or subaward should 

retain copies of any specific marking 

instructions or waivers in their project, 

program or activity files. Agreement 

Officer’s Representatives will be 

assigned responsibility to monitor 

marking requirements on the basis of 

the approved Marking Plan. 

(h) Presumptive exceptions: (1) The 

above marking requirements in 

§ 700.15(a) through (e) may not apply if 

marking would: 

(i) Compromise the intrinsic 

independence or neutrality of a program 

or materials where independence or 

neutrality is an inherent aspect of the 

program and materials, such as election 

monitoring or ballots, and voter 

information literature; political party 

support or public policy advocacy or 

reform; independent media, such as 

television and radio broadcasts, 

newspaper articles and editorials; 

public service announcements or public 

opinion polls and surveys. 

(ii) Diminish the credibility of audits, 

reports, analyses, studies, or policy 

recommendations whose data or 

findings must be seen as independent. 

(iii) Undercut host-country 

government ‘‘ownership’’ of 

constitutions, laws, regulations, 

policies, studies, assessments, reports, 

publications, surveys or audits, public 

service announcements, or other 

communications better positioned as 

‘‘by’’ or ‘‘from’’ a cooperating country 

ministry or government official. 

(iv) Impair the functionality of an 

item, such as sterilized equipment or 

spare parts. 

(v) Incur substantial costs or be 

impractical, such as items too small or 

other otherwise unsuited for individual 

marking, such as food in bulk. 

(vi) Offend local cultural or social 

norms, or be considered inappropriate 

on such items as condoms, toilets, bed 

pans, or similar commodities. 

(vii) Conflict with international law. 

(2) These exceptions are presumptive, 

not automatic and must be approved by 

the Agreement Officer. Apparently 

successful applicants may request 

approval of one or more of the 

presumptive exceptions, depending on 

the circumstances, in their Marking 

Plan. The Agreement Officer will review 

requests for presumptive exceptions for 

adequacy, along with the rest of the 

Marking Plan. When reviewing a request 

for approval of a presumptive exception, 

the Agreement Officer may review how 

program materials will be marked (if at 

all) if the USAID identity is removed. 

Exceptions approved will apply to 

subrecipients unless otherwise provided 

by USAID. 

(i) In cases where the Marking Plan 

has not been complied with, the 

Agreement Officer will initiate 

corrective action. Such action may 

involve informing the recipient of a 

USAID grant or cooperative agreement 

or other assistance award or subaward 

of instances of noncompliance and 

requesting that the recipient carry out 

its responsibilities as set forth in the 

Marking Plan and award. Major or 

repeated non-compliance with the 

Marking Plan will be governed by the 

uniform suspension and termination 

procedures set forth at 2 CFR 200.338 

through 2 CFR 200.342, and 2 CFR 

700.13. 

(j)(1) USAID Principal Officers, 

defined for purposes of this provision at 

§ 700.1, may at any time after award 

waive in whole or in part the USAID 

approved Marking Plan, including 

USAID marking requirements for each 

USAID funded program, project, 

activity, public communication or 

commodity, or in exceptional 

circumstances may make a waiver by 

region or country, if the Principal 

Officer determines that otherwise 

USAID required marking would pose 

compelling political, safety, or security 

concerns, or marking would have an 

adverse impact in the cooperating 

country. USAID recipients may request 

waivers of the Marking Plan in whole or 

in part, through the AOR. No marking 

is required while a waiver 

determination is pending. The waiver 

determination on safety or security 

grounds must be made in consultation 

with U.S. Government security 

personnel if available, and must 

consider the same information that 

applies to determinations of the safety 

and security of U.S. Government 

employees in the cooperating country, 

as well as any information supplied by 

the AOR or the recipient for whom the 

waiver is sought. When reviewing a 

request for approval of a waiver, the 

Principal Officer may review how 

program materials will be marked (if at 

all) if the USAID Identity is removed. 

Approved waivers are not limited in 

duration but are subject to Principal 

Officer review at any time due to 

changed circumstances. Approved 

waivers ‘‘flow down’’ to recipients of 

subawards unless specified otherwise. 

Principal Officers may also authorize 

the removal of USAID markings already 

affixed if circumstances warrant. 

Principal Officers’ determinations 

regarding waiver requests are subject to 

appeal to the Principal Officer’s 

cognizant Assistant Administrator. 

Recipients may appeal by submitting a 

written request to reconsider the 

Principal Officer’s waiver determination 

to the cognizant Assistant 

Administrator. 

(2) Non-retroactivity. Marking 

requirements apply to any obligation of 

USAID funds for new awards as of 

January 2, 2006. Marking requirements 

also will apply to new obligations under 

existing awards, such as incremental 

funding actions, as of January 2, 2006, 

when the total estimated cost of the 

existing award has been increased by 

USAID or the scope of effort is changed 

to accommodate any costs associated 

with marking. In the event a waiver is 

rescinded, the marking requirements 

will apply from the date forward that 

the waiver is rescinded. In the event a 

waiver is rescinded after the period of 

performance as defined in 2 CFR 200.77 

but before closeout as defined in 2 CFR 

200.16., the USAID mission or operating 

unit with initial responsibility to 

administer the marking requirements 

must make a cost benefit analysis as to 

requiring USAID marking requirements 

after the date of completion of the 

affected programs, projects, activities, 

public communications or commodities. 

(k) The USAID Identity and other 

guidance will be provided at no cost or 

fee to recipients of USAID grants, 

cooperative agreements or other 

assistance awards or subawards. 

Additional costs associated with 

marking requirements will be met by 

USAID if reasonable, allowable, and 

allocable under 2 CFR part 200, subpart 

E. The standard cost reimbursement 

provisions of the grant, cooperative 

agreement, other assistance award or 

subaward must be followed when 

applying for reimbursement of 

additional marking costs. 


tkelley on DSK3SPTVN1PROD with RULES2
76024 Federal Register / Vol. 79, No. 244 / Friday, December 19, 2014 / Rules and Regulations 

Title 22—Foreign Relations 

CHAPTER II—AGENCY FOR 

INTERNATIONAL DEVELOPMENT 

PART 226—[REMOVED] 

■ 1. Remove part 226. 

Angelique M. Crumbly, 

Agency Regulatory Official. 

Department of Veterans Affairs 

For the reasons set out in the 

preamble, under the authority of 5 

U.S.C. 301; 38 U.S.C. 501, the 

Department of Veterans Affairs amends 

2 CFR part 802 and 38 CFR parts 41 and 

43 as follows: 

Title 2—Grants and Agreements 

CHAPTER VIII—DEPARTMENT OF 

VETERANS AFFAIRS 

■ 1. Add 2 CFR part 802 to read as 

follows: 

PART 802—UNIFORM 

ADMINISTRATIVE REQUIREMENTS, 

COST PRINCIPLES, AND AUDIT 

REQUIREMENTS FOR FEDERAL 

AWARDS 

Authority: 5 U.S.C. 301; 38 U.S.C. 501, 2 

CFR part 200, and as noted in specific 

sections. 

§ 802.101 Applicable regulations. 

The Uniform Administrative 

Requirements, Cost Principles, and 

Audit Requirements for Federal Awards 

set forth in 2 CFR part 200 shall apply 

to the Department of Veterans Affairs. 

Title 38—Pensions, Bonuses, and 

Veterans’ Relief 

CHAPTER I—DEPARTMENT OF VETERANS 

AFFAIRS 

PART 41—[REMOVED] 

■ 1. Remove Part 41. 

PART 43—[REMOVED] 

■ 2. Remove Part 43. 

Jose D. Riojas, 

Chief of Staff. 

Department of Energy 

For the reasons set forth in the 

common preamble, under the authority 

of 5 U.S.C. 301 and the authorities listed 

below, 2 CFR chapter IX and 10 CFR 

chapters II and III are amended as 

follows: 

■ 1. Part 910 of Title 2, Chapter IX of the 

Code of Federal Regulations is added to 

read as follows: 

PART 910—UNIFORM 

ADMINISTRATIVE REQUIREMENTS, 

COST PRINCIPLES, AND AUDIT 

REQUIREMENTS FOR FEDERAL 

AWARDS 

Subpart A—[Reserved] 

Subpart B—General Provisions 

Sec. 

910.120 Adoption of 2 CFR part 200. 

910.122 Applicability. 

910.124 Eligibility. 

910.126 Competition. 

910.128 Disputes and appeals. 

910.130 Cost sharing (EPACT). 

910.132 Research misconduct. 

Subpart C [Reserved] 

Subpart D—Post Award Federal 

Requirements for For-Profit Entities 

910.350 Applicability of 2 CFR part 200. 

910.352 Cost principles. 

910.354 Payments. 

910.356 Audits. 

910.358 Profit or fee for SBIR/STTR. 

910.360 Real property and equipment. 

910.362 Intellectual property. 

Appendix A to Subpart D—Patents and 

Data Provisions for For-Profit 

Organizations 

Subpart E—Cost Principles 

910.401 Application to M&O’s. 

Subpart F—Audit Requirements for ForProfit Entities 

General 

910.500 Purpose. 

Audits 

910.501 Audit requirements. 

910.502 Basis for determining DOE awards 

expended. 

910.503 Relation to other audit 

requirements. 

910.504 Frequency of audits. 

910.505 Sanctions. 

910.506 Audit costs. 

910.507 Program-specific audits. 

Auditees 

910.508 Auditee responsibilities. 

910.509 Auditor selection. 

910.510 Financial statements. 

910.511 Audit findings follow-up. 

910.512 Report submission. 

Federal Agencies 

910.513 Responsibilities. 

Auditors 

910.514 Scope of audit. 

910.515 Audit reporting. 

910.516 Audit findings. 

910.517 Audit documentation. 

910.518 Major program determination. (Not 

applicable). 

910.519 Criteria for Federal program risk. 

910.520 Criteria for a low-risk auditee. 

Management Decisions 

910.521 Management decision. 

Authority: 42 U.S.C. 7101, et seq.; 31 

U.S.C. 6301–6308; 50 U.S.C. 2401 et seq.; 2 

CFR part 200. 

Subpart A—[Reserved] 

Subpart B—General Provisions 

§ 910.120 Adoption of 2 CFR part 200. 

(a) Under the authority listed above, 

the Department of Energy adopts the 

Office of Management and Budget 

(OMB) Guidance in 2 CFR part 200, 

with the following additions. Thus, this 

part gives regulatory effect to the OMB 

guidance and supplements the guidance 

as needed for the Department. 

(b) The additions include: Expanding 

the definition of non-Federal entity for 

DOE to include For-profit entities; 

adding back additional coverage from 10 

CFR part 600 required by DOE statute; 

adding back coverage specific for ForProfit entities which existed in 10 CFR 

part 600 which still applies. 

§ 910.122 Applicability. 

(a) For DOE, unless otherwise noted 

in Part 910, the definition of NonFederal entity found in 2 CFR 200.69 is 

expanded to include for-profit 

organizations in addition to states, local 

governments, Indian tribes, institutions 

of higher education (IHE), and nonprofit 

organizations. 

(b) A for-profit organization is defined 

as one that distributes any profit not 

reinvested into the business as profit or 

dividends to its employees or 

shareholders. 

§ 910.124 Eligibility. 

(a) Purpose and scope. This section 

implements section 2306 of the Energy 

Policy Act of 1992, 42 U.S.C. 13525, and 

sets forth a general statement of policy, 

including procedures and 

interpretations, for the guidance of 

implementing DOE officials in making 

mandatory pre-award determinations of 

eligibility for financial assistance under 

Titles XX through XXIII of that Act. 

(b) Definitions. The definitions in 

Subpart A of 2 CFR part 200, including 

the definition of the term ‘‘Federal 

financial assistance,’’ are applicable to 

this section. In addition, as used in this 

section: 

Act means the Energy Policy Act of 

1992. 

Company means any business entity 

other than an organization of the type 

described in section 501(c) (3) of the 

Internal Revenue Code of 1954 (26 

U.S.C. 501(c)(3)). 

Covered program means a program 

under Titles XX through XXIII of the 

Act. (A list of covered programs, 

updated periodically as appropriate, is 


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maintained and published by the 

Department of Energy.) 

Parent company means a company 

that: 

(1) Exercises ultimate ownership of 

the applicant company either directly, 

by ownership of a majority of that 

company’s voting securities, or 

indirectly, by control over a majority of 

that company’s voting securities 

through one or more intermediate 

subsidiary companies or otherwise, and 

(2) Is not itself subject to the ultimate 

ownership control of another company. 

United States means the several 

States, the District of Columbia, and all 

commonwealths, territories, and 

possessions of the United States. 

United States-owned company means: 

(1) A company that has majority 

ownership by individuals who are 

citizens of the United States, or 

(2) A company organized under the 

laws of a State that either has no parent 

company or has a parent company 

organized under the laws of a State. 

Voting security has the meaning given 

the term in the Public Utility Holding 

Company Act (15 U.S.C. 15b(17)). 

(c) What must DOE determine. A 

company shall be eligible to receive an 

award of financial assistance under a 

covered program only if DOE finds 

that— 

(1) Consistent with § 910.124(d), the 

company’s participation in a covered 

program would be in the economic 

interest of the United States; and 

(2) The company is either— 

(i) A United States-owned company; 

or 

(ii) Incorporated or organized under 

the laws of any State and has a parent 

company which is incorporated or 

organized under the laws of a country 

which— 

(A) Affords to the United Statesowned companies opportunities, 

comparable to those afforded to any 

other company, to participate in any 

joint venture similar to those authorized 

under the Act; 

(B) Affords to United States-owned 

companies local investment 

opportunities comparable to those 

afforded to any other company; and 

(C) Affords adequate and effective 

protection for the intellectual property 

rights of United States-owned 

companies. 

(d) Determining the economic interest 

of the United States. In determining 

whether participation of an applicant 

company in a covered program would 

be in the economic interest of the 

United States under § 910.124(c)(1), 

DOE may consider any evidence 

showing that a financial assistance 

award would be in the economic 

interest of the United States including, 

but not limited to— 

(1) Investments by the applicant 

company and its affiliates in the United 

States in research, development, and 

manufacturing (including, for example, 

the manufacture of major components or 

subassemblies in the United States); 

(2) Significant contributions to 

employment in the United States by the 

applicant company and its affiliates; 

and 

(3) An agreement by the applicant 

company, with respect to any 

technology arising from the financial 

assistance being sought— 

(i) To promote the manufacture 

within the United States of products 

resulting from that technology (taking 

into account the goals of promoting the 

competitiveness of United States 

industry); and 

(ii) To procure parts and materials 

from competitive suppliers. 

(e) Information an applicant must 

submit. 

(1) Any applicant for Federal financial 

assistance under a covered program 

shall submit with the application for 

Federal financial assistance, or at such 

later time as may be specified by DOE, 

evidence for DOE to consider in making 

findings required under § 910.124 (c)(1) 

and findings concerning ownership 

status under § 910.124(c)(2). 

(2) If an applicant for Federal 

financial assistance is submitting 

evidence relating to future undertakings, 

such as an agreement under 

§ 910.124(d)(3) to promote manufacture 

in the United States of products 

resulting from a technology developed 

with financial assistance or to procure 

parts and materials from competitive 

suppliers, the applicant shall submit a 

representation affirming acceptance of 

these undertakings. The applicant 

should also briefly describe its plans, if 

any, for any manufacturing of products 

arising from the program-supported 

research and development, including 

the location where such manufacturing 

is expected to occur. 

(3) If an applicant for Federal 

financial assistance is claiming to be a 

United States-owned company, the 

applicant must submit a representation 

affirming that it falls within the 

definition of that term provided in 

§ 910.124(b). 

(4) DOE may require submission of 

additional information deemed 

necessary to make any portion of the 

determination required by § 910.124(b) 

2. 

(f) Other information DOE may 

consider. 

In making the determination under 

§ 910.124(c)(2)(ii), DOE may— 

(1) Consider information on the 

relevant international and domestic law 

obligations of the country of 

incorporation of the parent company of 

an applicant; 

(2) Consider information relating to 

the policies and practices of the country 

of incorporation of the parent company 

of an applicant with respect to: 

(i) The eligibility criteria for, and the 

experience of United States-owned 

company participation in, energyrelated research and development 

programs; 

(ii) Local investment opportunities 

afforded to United States-owned 

companies; and 

(iii) Protection of intellectual property 

rights of United States-owned 

companies; 

(3) Seek and consider advice from 

other federal agencies, as appropriate; 

and 

(4) Consider any publicly available 

information in addition to the 

information provided by the applicant. 

§ 910.126 Competition. 

(a) General. DOE shall solicit 

applications for Federal financial 

assistance in a manner which provides 

for the maximum amount of 

competition feasible. 

(b) Restricted eligibility. If DOE 

restricts eligibility, an explanation of 

why the restriction of eligibility is 

considered necessary shall be included 

in the notice of funding opportunity or, 

program rule. Such restriction of 

eligibility shall be: 

(1) Supported by a written 

determination initiated by the program 

office and; 

(2) Concurred in by legal counsel and 

the Contracting Officer. 

(c) Noncompetitive Federal financial 

assistance. DOE may award a grant or 

cooperative agreement on a 

noncompetitive basis only if the 

application satisfies one or more of the 

follow selection criteria: 

(1) The activity to be funded is 

necessary to the satisfactory completion 

of, or is a continuation or renewal of, an 

activity presently being funded by DOE 

or another Federal agency, and for 

which competition for support would 

have a significant adverse effect on 

continuity or completion of the activity. 

(2) The activity is being or would be 

conducted by the applicant using its 

own resources or those donated or 

provided by third parties; however, DOE 

support of that activity would enhance 

the public benefits to be derived and 

DOE knows of no other entity which is 

conducting or is planning to conduct 

such an activity. 

(3) The applicant is a unit of 

government and the activity to be 


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supported is related to performance of a 

governmental function within the 

subject jurisdiction, thereby precluding 

DOE provision of support to another 

entity. 

(4) The applicant has exclusive 

domestic capability to perform the 

activity successfully, based upon unique 

equipment, proprietary data, technical 

expertise, or other such unique 

qualifications. 

(5) The award implements an 

agreement between the United States 

Government and a foreign government 

to fund a foreign applicant. 

(6) Time constraints associated with a 

public health, safety, welfare or national 

security requirement preclude 

competition. 

(7) The proposed project was 

submitted as an unsolicited proposal 

and represents a unique or innovative 

idea, method, or approach that would 

not be eligible for financial assistance 

under a recent, current, or planned 

notice of funding opportunity, and if, as 

determined by DOE, a competitive 

notice of funding opportunity would not 

be appropriate. 

(d) Approval requirements. 

Determinations of noncompetitive 

awards shall be: 

(1) Documented in writing; 

(2) Concurred in by the responsible 

program technical official and local 

legal counsel; and 

(3) Approved, prior to award, by the 

Contracting Officer and an approver at 

least one level above the CO. 

(e) Definitions. For purposes of this 

section, the following definitions are 

applicable: 

Continuation Award—A financial 

assistance award authorizing a second 

or subsequent budget period within an 

existing project period. 

Renewal Award—A financial 

assistance award authorizing the first 

budget period of an extended project 

period. 

§ 910.128 Disputes and appeals. 

(a) Informal dispute resolution. 

Whenever practicable, DOE shall 

attempt to resolve informally any 

dispute over the award or 

administration of Federal financial 

assistance. Informal resolution, 

including resolution through an 

alternative dispute resolution 

mechanism, shall be preferred over 

formal procedures, to the extent 

practicable. 

(b) Alternative dispute resolution 

(ADR). Before issuing a final 

determination in any dispute in which 

informal resolution has not been 

achieved, the Contracting Officer shall 

suggest that the other party consider the 

use of voluntary consensual methods of 

dispute resolution, such as mediation. 

The DOE dispute resolution specialist is 

available to provide assistance for such 

disputes, as are trained mediators of 

other federal agencies. ADR may be 

used at any stage of a dispute. 

(c) Final determination. Whenever a 

dispute is not resolved informally or 

through an alternative dispute 

resolution process, DOE shall mail (by 

certified mail) a brief written 

determination signed by a Contracting 

Officer, setting forth DOE’s final 

disposition of such dispute. Such 

determination shall contain the 

following information: 

(1) A summary of the dispute, 

including a statement of the issues and 

of the positions taken by DOE and the 

party or parties to the dispute; and 

(2) The factual, legal and, if 

appropriate, policy reasons for DOE’s 

disposition of the dispute. 

(d) Right of appeal. Except as 

provided in paragraph (f)(1) of this 

section, the final determination under 

paragraph (c) of this section may be 

appealed to the cognizant Senior 

Procurement Executive (SPE) for either 

DOE or the National Nuclear Security 

Administration (NNSA). The appeal 

must be received by DOE within 90 days 

of the receipt of the final determination. 

The mailing address for the DOE SPE is 

Office of Acquisition and Project 

Management, 1000 Independence Ave., 

SW., Washington, DC 20585. The 

mailing address for the NNSA SPE is 

Office of Acquisition Management, 

National Nuclear Security 

Administration (NNSA), 1000 

Independence Ave. SW., Washington, 

DC 20585. 

(e) Effect of appeal. The filing of an 

appeal with the SPE shall not stay any 

determination or action taken by DOE 

which is the subject of the appeal. 

Consistent with its obligation to protect 

the interests of the Federal Government, 

DOE may take such authorized actions 

as may be necessary to preserve the 

status quo pending decision by the SPE, 

or to preserve its ability to provide relief 

in the event the SPE decides in favor of 

the appellant. 

(f) Review on appeal. (1) The SPE 

shall have no jurisdiction to review: 

(i) Any preaward dispute (except as 

provided in paragraph (f)(2)(ii) of this 

section), including use of any special 

restrictive condition pursuant to 2 CFR 

200.207 Specific Conditions ; 

(ii) DOE denial of a request for an 

Exception under 2 CFR 200.102; 

(iii) DOE denial of a request for a 

budget revision or other change in the 

approved project under 2 CFR 200.308 

or 200.403 or under another term or 

condition of the award; 

(iv) Any DOE action authorized under 

2 CFR 200.338, Remedies for 

Noncompliance, or such actions 

authorized by program rule; 

(v) Any DOE decision about an action 

requiring prior DOE approval under 2 

CFR 200.324 or under another term or 

condition of the award; 

(2) In addition to any right of appeal 

established by program rule, or by the 

terms and conditions (not inconsistent 

with paragraph (f)(1) of this section) of 

an award, the SPE shall have 

jurisdiction to review: 

(i) A DOE determination that the 

recipient has failed to comply with the 

applicable requirements of this part, the 

program statute or rules, or other terms 

and conditions of the award; 

(ii) A DOE decision not to make a 

continuation award based on any of the 

determinations described in paragraph 

(f)(2)(i) of this section; 

(iii) Termination of an award, in 

whole or in part, by DOE under 2 CFR 

200.339 (a)(1)–(2); 

(iv) A DOE determination that an 

award is void or invalid; 

(v) The application by DOE of an 

indirect cost rate; and 

(vi) DOE disallowance of costs. 

(3) In reviewing disputes authorized 

under paragraph (f)(2) of this section, 

the SPE shall be bound by the 

applicable law, statutes, and rules, 

including the requirements of this part, 

and by the terms and conditions of the 

award. 

(4) The decision of the SPE shall be 

the final decision of DOE. 

§ 910.130 Cost sharing (EPACT). 

In addition to the requirements of 2 

CFR 200.306 the following requirements 

apply to research, development, 

demonstration and commercial 

application activities: 

(a) Cost sharing is required for most 

financial assistance awards for research, 

development, demonstration and 

commercial applications activities 

initiated after the enactment of the 

Energy Policy Act of 2005 on August 8, 

2005. This requirement does not apply 

to: 

(1) An award under the small 

business innovation research program 

(SBIR) or the small business technology 

transfer program (STTR); or 

(2) A program with cost sharing 

requirements defined by other than 

Section 988 of the Energy Policy Act of 

2005 including other sections of the 

2005 Act and the Energy Policy Act of 

1992. 

(b) A cost share of at least 20 percent 

of the cost of the activity is required for 


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research and development except 

where: 

(1) A research or development activity 

of a basic or fundamental nature has 

been excluded by an appropriate officer 

of DOE, generally an Under Secretary; or 

(2) The Secretary has determined it is 

necessary and appropriate to reduce or 

eliminate the cost sharing requirement 

for a research and development activity 

of an applied nature. 

(c) A cost share of at least 50 percent 

of the cost of a demonstration or 

commercial application activity is 

required unless the Secretary has 

determined it is necessary and 

appropriate to reduce the cost sharing 

requirements, taking into consideration 

any technological risk relating to the 

activity. 

(d) Cost share shall be provided by 

non-Federal funds unless otherwise 

authorized by statute. In calculating the 

amount of the non-Federal contribution: 

(1) Base the non-Federal contribution 

on total project costs, including the cost 

of work where funds are provided 

directly to a partner, consortium 

member or subrecipient, such as a 

Federally Funded Research and 

Development Center; 

(2) Include the following costs as 

allowable in accordance with the 

applicable cost principles: 

(i) Cash; 

(ii) Personnel costs; 

(iii) The value of a service, other 

resource, or third party in-kind 

contribution determined in accordance 

with Subpart E—Cost Principles—of 2 

CFR part 200. For recipients that are forprofit organizations as defined by 2 CFR 

910.122, the Cost Principles which 

apply are contained in 48 CFR 31.2. See 

§ 910.352 for further information; 

(iv) Indirect costs or facilities and 

administrative costs; and/or 

(v) Any funds received under the 

power program of the Tennessee Valley 

Authority (except to the extent that such 

funds are made available under an 

annual appropriation Act); 

(3) Exclude the following costs: 

(i) Revenues or royalties from the 

prospective operation of an activity 

beyond the time considered in the 

award; 

(ii) Proceeds from the prospective sale 

of an asset of an activity; or 

(iii) Other appropriated Federal funds. 

(iv) Repayment of the Federal share of 

a cost-shared activity under Section 988 

of the Energy Policy Act of 2005 shall 

not be a condition of the award. 

(e) For purposes of this section, the 

following definitions are applicable: 

Demonstration means a project 

designed to determine the technical 

feasibility and economic potential of a 

technology on either a pilot or prototype 

scale. 

Development is defined in 2 CFR 

200.87. 

Research is also defined in 2 CFR 

200.87. 

§ 910.132 Research misconduct. 

(a) A recipient is responsible for 

maintaining the integrity of research of 

any kind under an award from DOE 

including the prevention, detection, and 

remediation of research misconduct, 

and the conduct of inquiries, 

investigations, and adjudication of 

allegations of research misconduct in 

accordance with the requirements of 

this section. 

(b) For purposes of this section, the 

following definitions are applicable: 

Adjudication means a formal review 

of a record of investigation of alleged 

research misconduct to determine 

whether and what corrective actions 

and sanctions should be taken. 

Fabrication means making up data or 

results and recording or reporting them. 

Falsification means manipulating 

research materials, equipment, or 

processes, or changing or omitting data 

or results such that the research is not 

accurately represented in the research 

record. 

Finding of Research Misconduct 

means a determination, based on a 

preponderance of the evidence, that 

research misconduct has occurred. Such 

a finding requires a conclusion that 

there has been a significant departure 

from accepted practices of the relevant 

research community and that it be 

knowingly, intentionally, or recklessly 

committed. 

Inquiry means information gathering 

and initial fact-finding to determine 

whether an allegation or apparent 

instance of misconduct warrants an 

investigation. 

Investigation means the formal 

examination and evaluation of the 

relevant facts. 

Plagiarism means the appropriation of 

another person’s ideas, processes, 

results, or words without giving 

appropriate credit. 

Research misconduct means 

fabrication, falsification, or plagiarism 

in proposing, performing, or reviewing 

research, or in reporting research 

results, but does not include honest 

error or differences of opinion. 

Research record means the record of 

all data or results that embody the facts 

resulting from scientists’ inquiries, 

including, but not limited to, research 

proposals, laboratory records, both 

physical and electronic, progress 

reports, abstracts, theses, oral 

presentations, internal reports, and 

journal articles. 

(c) Unless otherwise instructed by the 

Contracting Officer, the recipient must 

conduct an initial inquiry into any 

allegation of research misconduct. If the 

recipient determines that there is 

sufficient evidence to proceed to an 

investigation, it must notify the 

Contracting Officer and, unless 

otherwise instructed, the recipient must: 

(1) Conduct an investigation to 

develop a complete factual record and 

an examination of such record leading 

to either a finding of research 

misconduct and an identification of 

appropriate remedies or a determination 

that no further action is warranted; 

(2) Inform the Contracting Officer if 

an initial inquiry supports an 

investigation and, if requested by the 

Contracting Officer thereafter, keep the 

Contracting Officer informed of the 

results of the investigation and any 

subsequent adjudication. When an 

investigation is complete, the recipient 

will forward to the Contracting Officer 

a copy of the evidentiary record, the 

investigative report, any 

recommendations made to the 

recipient’s adjudicating official, and the 

adjudicating official’s decision and 

notification of any corrective action 

taken or planned, and the subject’s 

written response to the 

recommendations (if any). 

(3) If the investigation leads to a 

finding of research misconduct, conduct 

an adjudication by a responsible official 

who was not involved in the inquiry or 

investigation and is separated 

organizationally from the element 

which conducted the investigation. The 

adjudication must include a review of 

the investigative record and, as 

warranted, a determination of 

appropriate corrective actions and 

sanctions. 

(d) DOE may elect to act in lieu of the 

recipient in conducting an inquiry or 

investigation into an allegation of 

research misconduct if the Contracting 

Officer finds that: 

(1) The research organization is not 

prepared to handle the allegation in a 

manner consistent with this section; 

(2) The allegation involves an entity 

of sufficiently small size that it cannot 

reasonably conduct the inquiry; 

(3) DOE involvement is necessary to 

ensure the public health, safety, and 

security, or to prevent harm to the 

public interest; or, 

(4) The allegation involves possible 

criminal misconduct. 

(e) DOE reserves the right to pursue 

such remedies and other actions as it 

deems appropriate, consistent with the 

terms and conditions of the award 

instrument and applicable laws and 

regulations. However, the recipient’s 


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good faith administration of this section 

and the effectiveness of its remedial 

actions and sanctions shall be positive 

considerations and shall be taken into 

account as mitigating factors in 

assessing the need for such actions. If 

DOE pursues any such action, it will 

inform the subject of the action of the 

outcome and any applicable appeal 

procedures. 

(f) In conducting the activities in 

paragraph (c) of this section, the 

recipient and DOE, if it elects to 

conduct the inquiry or investigation, 

shall adhere to the following guidelines: 

(1) Safeguards for information and 

subjects of allegations. The recipient 

shall provide safeguards to ensure that 

individuals may bring allegations of 

research misconduct made in good faith 

to the attention of the recipient without 

suffering retribution. Safeguards 

include: Protection against retaliation; 

fair and objective procedures for 

examining and resolving allegations; 

and diligence in protecting positions 

and reputations. The recipient shall also 

provide the subjects of allegations 

confidence that their rights are 

protected and that the mere filing of an 

allegation of research misconduct will 

not result in an adverse action. 

Safeguards include timely written 

notice regarding substantive allegations 

against them, a description of the 

allegation and reasonable access to any 

evidence submitted to support the 

allegation or developed in response to 

an allegation and notice of any findings 

of research misconduct. 

(2) Objectivity and expertise. The 

recipient shall select individual(s) to 

inquire, investigate, and adjudicate 

allegations of research misconduct who 

have appropriate expertise and have no 

unresolved conflict of interest. The 

individual(s) who conducts an 

adjudication must not be the same 

individual(s) who conducted the 

inquiry or investigation, and must be 

separate organizationally from the 

element that conducted the inquiry or 

investigation. 

(3) Timeliness. The recipient shall 

coordinate, inquire, investigate and 

adjudicate allegations of research 

misconduct promptly, but thoroughly. 

Generally, an investigation should be 

completed within 120 days of initiation, 

and adjudication should be complete 

within 60 days of receipt of the record 

of investigation. 

(4) Confidentiality. To the extent 

possible, consistent with fair and 

thorough processing of allegations of 

research misconduct and applicable law 

and regulation, knowledge about the 

identity of the subjects of allegations 

and informants should be limited to 

those with a need to know. 

(5) Remediation and sanction. If the 

recipient finds that research misconduct 

has occurred, it shall assess the 

seriousness of the misconduct and its 

impact on the research completed or in 

process. The recipient must take all 

necessary corrective actions. Such 

action may include but are not limited 

to, correcting the research record and as 

appropriate imposing restrictions, 

controls, or other parameters on 

research in process or to be conducted 

in the future. The recipient must 

coordinate remedial actions with the 

Contracting Officer. The recipient must 

also consider whether personnel 

sanctions are appropriate. Any such 

sanction must be consistent with any 

applicable personnel laws, policies, and 

procedures, and must take into account 

the seriousness of the misconduct and 

its impact, whether it was done 

knowingly or intentionally, and whether 

it was an isolated event or pattern of 

conduct. 

(g) By executing this agreement, the 

recipient provides its assurance that it 

has established an administrative 

process for performing an inquiry, 

mediating if possible, investigating, and 

reporting allegations of research 

misconduct; and that it will comply 

with its own administrative process and 

the requirements and definitions of 10 

CFR part 733 for performing an inquiry, 

possible mediation, investigation and 

reporting of allegations of research 

misconduct. 

(h) The recipient must insert or have 

inserted the substance of this section, 

including paragraph (g), in subawards at 

all tiers that involve research. 

Subpart C—[RESERVED] 

Subpart D—Post Award Federal 

Requirements for For-Profit Entities 

§ 910.350 Applicability of 2 CFR part 200. 

(a) As stated in 2 CFR 910.122, unless 

otherwise noted in part 910, the 

definition of Non-Federal entity found 

in 2 CFR 200.69 is expanded for DOE to 

include for-profit organizations in 

addition to states, local governments, 

Indian tribes, institutions of higher 

education (IHE), and nonprofit 

organizations. 

(b) A for-profit organization is defined 

as one that distributes any profit not 

reinvested into the business as profit or 

dividends to its employees or 

shareholders. 

(c) Subpart D of 2 CFR part 910 

contains specific changes to 2 CFR part 

200 that apply only to For-Profit 

Recipients and, unless otherwise 

specified, subrecipients. In some cases, 

the coverage in Subpart D will replace 

the language in a specific section of 2 

CFR part 200. 

§ 910.352 Cost Principles. 

For For-Profit Entities, the Cost 

Principles contained in 48 CFR 31.2 

(Contracts with Commercial 

Organizations) must be followed in lieu 

of the Cost principles contained in 2 

CFR 200.400 through 200.475, except 

that patent prosecution costs are not 

allowable unless specifically authorized 

in the award document. This applies to 

For-Profit entities whether they are 

recipients or subrecipients. 

§ 910.354 Payment. 

(a) For-Profit Recipients are an 

exception to 2 CFR 200.305(b)(1) which 

requires that non-Federal entities be 

paid in advance as long as certain 

conditions are met. 

(b) For For-Profit Recipients who are 

paid directly by DOE, reimbursement is 

the preferred method of payment. Under 

the reimbursement method of payment, 

the Federal awarding agency must 

reimburse the non-Federal entity for its 

actual cash disbursements. When the 

reimbursement method is used, the 

Federal awarding agency must make 

payment within 30 calendar days after 

receipt of the billing, unless the Federal 

awarding agency reasonably believes the 

request to be improper. 

§ 910.356 Audits. 

See Subpart F of this part (Sections 

910.500 through 910.521) for specific 

DOE regulations which apply to audits 

of DOE’s For-Profit Recipients. ForProfit entities are an exception to the 

Single Audit requirements contained in 

Subpart F of 2 CFR 200 and therefore 

the regulations contained in 2 CFR 910 

Subpart F apply instead. 

§ 910.358 Profit or fee for SBIR/STTR. 

(a) As authorized by 2 CFR 200.400 

(g), DOE may expressly allow nonfederal entities to earn a profit or fee 

resulting from Federal financial 

assistance. 

(b) DOE allows a profit or fee to be 

paid under two of its financial 

assistance programs only: Small 

Business Innovation Research (SBIR) 

and Small Business Technology 

Transfer Research (STTR). 

(c) Awards under these programs will 

contain a specific provision which 

allows a profit or fee to be paid. 

(d) Profit or Fee is unallowable for all 

other DOE programs which award grants 

and cooperative agreements. 


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§ 910.360 Real property and equipment. 

(a) Prior approvals for acquisition 

with Federal funds. Recipients may 

purchase real property or equipment in 

whole or in part with Federal funds 

under an award only with the prior 

approval of the contracting officer. 

(b) Title. Unless a statute specifically 

authorizes and the award specifies that 

title to property vests unconditionally in 

the recipient, title to real property or 

equipment vests in the recipient subject 

to the conditions that the recipient: 

(1) Use the real property or equipment 

for the authorized purposes of the 

project until funding for the project 

ceases, or until the property is no longer 

needed for the purposes of the project; 

(2) Not encumber the property 

without approval of the contracting 

officer; and 

(3) Use and dispose of the property in 

accordance with paragraphs (d) and (e) 

of this section. 

(c) Federal interest in real property or 

equipment offered as cost-share. A 

recipient may offer the full value of real 

property or equipment that is purchased 

with recipient’s funds or that is donated 

by a third party to meet a portion of any 

required cost sharing or matching, 

subject to the requirements in 2 CFR 

200.306 and 2 CFR 910.360. If a 

resulting award includes such property 

as a portion of the recipient’s cost share, 

the Government has a financial interest 

in the property, (i.e., a share of the 

property value equal to the Federal 

participation in the project). The 

property is considered as if it had been 

acquired in part with Federal funds, and 

is subject to the provisions of 

paragraphs (b)(1), (b)(2), and (b)(3) of 

this section and to the provisions of 2 

CFR 200.313(d)(1) through (3). 

(d) Insurance. Recipients must, at a 

minimum, provide the equivalent 

insurance coverage for real property and 

equipment acquired with DOE funds as 

provided to property owned by the 

recipient. 

(e) Use. If real property or equipment 

is acquired in whole or in part with 

Federal funds under an award and the 

award does not specify that title vests 

unconditionally in the recipient, the 

real property or equipment is subject to 

the following: 

(1) During the time that the real 

property or equipment is used on the 

project or program for which it was 

acquired, the recipient must make it 

available for use on other projects or 

programs, if such other use does not 

interfere with the work on the project or 

program for which the real property or 

equipment was originally acquired. Use 

of the real property or equipment on 

other projects is subject to the following 

order of priority: 

(i) Activities sponsored by DOE 

grants, cooperative agreements, or other 

assistance awards; 

(ii) Activities sponsored by other 

Federal agencies’ grants, cooperative 

agreements, or other assistance awards; 

(iii) Activities under Federal 

procurement contracts or activities not 

sponsored by any Federal agency. If so 

used, use charges must be assessed to 

those activities. For real property or 

equipment, the use charges must be at 

rates equivalent to those for which 

comparable real property or equipment 

may be leased. 

(2) After Federal funding for the 

project ceases or if the real property or 

equipment is no longer needed for the 

purposes of the project, the recipient 

may use the real property or equipment 

for other projects, insofar as: 

(i) There are Federally sponsored 

projects for which the real property or 

equipment may be used. If the only use 

for the real property or equipment is for 

projects that have no Federal 

sponsorship, the receipt must proceed 

with disposition of the real property or 

equipment, in accordance with 

paragraph (f) of this section. 

(ii) The recipient obtains written 

approval from the contracting officer to 

do so. The contracting officer must 

ensure that there is a formal change of 

accountability for the real property or 

equipment to a currently funded, 

Federal award. 

(iii) The recipient’s use of the real 

property or equipment for other projects 

is in the same order of priority as 

described in paragraph (e)(1) of this 

section. 

(f) Disposition. If an item of real 

property or equipment is no longer 

needed for Federally sponsored projects, 

the recipient has the following options: 

(i) If the property is equipment with 

a current per unit fair market value of 

less than $5,000, it may be retained, 

sold, or otherwise disposed of with no 

further obligation to DOE. 

(ii) If the property that is no longer 

needed is equipment (rather than real 

property), the recipient may wish to 

replace it with an item that is needed 

currently for the project by trading in or 

selling to offset the costs of the 

replacement equipment, subject to the 

approval of the contracting officer. 

(iii) The recipient may elect to retain 

title, without further obligation to the 

Federal Government, by compensating 

the Federal Government for that 

percentage of the current fair market 

value of the real property or equipment 

that is attributable to the Federal 

participation in the project. 

(iv) If the recipient does not elect to 

retain title to real property or equipment 

or does not request approval to use 

equipment as trade-in or offset for 

replacement equipment, the recipient 

must request disposition instructions 

from the responsible agency. 

(2) If a recipient requests disposition 

instructions, the contracting officer 

must issue instructions to the recipient 

for disposition of the property no later 

than 120 calendar days after the 

recipient’s request. The contracting 

officer’s options for disposition are to 

direct the recipient to: 

(i) Transfer title to the real property or 

equipment to the Federal Government 

or to an eligible third party provided 

that, in such cases, the recipient is 

entitled to compensation for its 

attributable percentage of the current 

fair market value of the real property or 

equipment, plus any reasonable 

shipping or interim storage costs 

incurred. 

(ii) Sell the real property or 

equipment and pay the Federal 

Government for that percentage of the 

current fair market value of the property 

that is attributable to the Federal 

participation in the project (after 

deducting actual and reasonable selling 

and fix-up expenses, if any, from the 

sale proceeds). If the recipient is 

authorized or required to sell the real 

property or equipment, the recipient 

must use competitive procedures that 

result in the highest practicable return. 

(3) If the responsible agency fails to 

issue disposition instructions within 

120 calendar days of the recipient’s 

request, the recipient must dispose of 

the real property or equipment through 

the option described in paragraph 

(f)(2)(ii)(B) of this section. 

§ 910.362 Intellectual property. 

(a) Scope. This section sets forth the 

policies with regard to disposition of 

rights to data and to inventions 

conceived or first actually reduced to 

practice in the course of, or under, a 

grant or cooperative agreement made to 

a For-Profit entity by DOE. 

(b) Patents right—small business 

concerns. In accordance with 35 U.S.C. 

202, if the recipient is a small business 

concern and receives a grant, 

cooperative agreement, subaward, or 

contract for research, developmental, or 

demonstration activities, then, unless 

there are ‘‘exceptional circumstances’’ 

as described in 35 U.S.C. 202(e), the 

award must contain the standard clause 

in appendix A to this subpart, entitled 

‘‘Patents Rights (Small Business Firms 

and Nonprofit Organizations’’ which 

provides to the recipient the right to 


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elect ownership of inventions made 

under the award. 

(c) Patent rights—other than small 

business concerns, e.g., large 

businesses— 

(1) No Patent Waiver. Except as 

provided by paragraph (c)(2) of this 

section, if the recipient is a for-profit 

organization other than a small business 

concern, as defined in 35 U.S.C. 201(h) 

and receives an award or a subaward for 

research, development, and 

demonstration activities, then, pursuant 

to statute, the award must contain the 

standard clause in appendix A to this 

subpart, entitled ‘‘Patent Rights (Large 

Business Firms)—No Waiver’’ which 

provides that DOE owns the patent 

rights to inventions made under the 

award. 

(2) Patent Waiver Granted. Paragraph 

(c)(1) of this section does not apply if: 

(i) DOE grants a class waiver for a 

particular program under 10 CFR part 

784; 

(ii) The applicant requests and 

receives an advance patent waiver 

under 10 CFR part 784; or 

(iii) A subaward is covered by a 

waiver granted under the prime award. 

(3) Special Provision. Normally, an 

award will not include a background 

patent and data provision. However, 

under special circumstances, in order to 

provide heightened assurance of 

commercialization, a provision 

providing for a right to require licensing 

of third parties to background 

inventions, limited rights data and/or 

restricted computer software, may be 

included. Inclusion of a background 

patent and/or a data provision to assure 

commercialization will be done only 

with the written concurrence of the DOE 

program official setting forth the need 

for such assurance. An award may 

include the right to license the 

Government and third party contractors 

for special Government purposes when 

future availability of the technology 

would also benefit the government, e.g., 

clean-up of DOE facilities. The scope of 

any such background patent and/or data 

licensing provision is subject to 

negotiation. 

(d) Rights in data—general rule. (1) 

Subject to paragraphs (d)(2) and (3) of 

this section, and except as otherwise 

provided by paragraphs (e) and (f) of 

this section or other law, any award 

under this subpart must contain the 

standard clause in appendix A to this 

subpart, entitled ‘‘Rights in Data— 

General’’. 

(2) Normally, an award will not 

require the delivery of limited rights 

data or restricted computer software. 

However, if the contracting officer, in 

consultation with DOE patent counsel 

and the DOE program official, 

determines that delivery of limited 

rights data or restricted computer 

software is necessary, the contracting 

officer, after negotiation with the 

applicant, may insert in the award the 

standard clause as modified by 

Alternates I and/or II set forth in 

appendix A to this subpart. 

(3) If software is specified for delivery 

to DOE, or if other special 

circumstances exist, e.g., DOE 

specifying ‘‘open-source’’ treatment of 

software, then the contracting officer, 

after negotiation with the recipient, may 

include in the award special provisions 

requiring the recipient to obtain written 

approval of the contracting officer prior 

to asserting copyright in the software, 

modifying the retained Government 

license, and/or otherwise altering the 

copyright provisions. 

(e) Rights in data—programs covered 

under special protected data statutes. 

(1) If a statute, other than those 

providing for the Small Business 

Innovation Research (SBIR) and Small 

Business Technology Transfer Research 

(STTR) programs, provides for a period 

of time, typically up to five years, 

during which data produced under an 

award for research, development, and 

demonstration may be protected from 

public disclosure, then the contracting 

officer must insert in the award the 

standard clause in appendix A to this 

subpart entitled ‘‘Rights in Data— 

Programs Covered Under Special 

Protected Data Statutes’’ or, as 

determined in consultation with DOE 

patent counsel and the DOE program 

official, a modified version of such 

clause which may identify data or 

categories of data that the recipient must 

make available to the public. 

(2) An award under paragraph (e)(1) 

of this section is subject to the 

provisions of paragraphs (d)(2) and (3) 

of this section. 

(f) Rights in data—SBIR/STTR 

programs. If an applicant receives an 

award under the SBIR or STTR program, 

then the contracting officer must insert 

in the award the standard data clause in 

the General Terms and Conditions for 

SBIR Grants, entitled ‘‘Rights in Data— 

SBIR Program’’. 

(g) Authorization and consent. (1) 

Work performed by a recipient under a 

grant is not subject to authorization and 

consent to the use of a patented 

invention, and the Government assumes 

no liability for patent infringement by 

the recipient under 28 U.S.C. 1498. 

(2) Work performed by a recipient 

under a cooperative agreement is subject 

to authorization and consent to the use 

of a patented invention consistent with 

the principles set forth in 48 CFR 

27.201–1. 

(3) The contracting officer, in 

consultation with patent counsel, may 

also include clauses in the cooperative 

agreement addressing other patent 

matters related to authorization and 

consent, such as patent indemnification 

of the Government by recipient and 

notice and assistance regarding patent 

and copyright infringement. The 

policies and clauses for these other 

patent matters will be the same or 

consistent with those in 48 CFR part 

927. 

Appendix A to Subpart D—Patent and 

Data Provisions 

1. Patent Rights (Small Business Firms and 

Nonprofit Organizations) 

2. Patent Rights (Large Business Firms)—No 

Waiver 

3. Rights in Data—General 

4. Rights in Data—Programs Covered Under 

Special Protected Data Statutes 

1. Patent Rights (Small Business Firms and 

Nonprofit Organizations) 

(a) Definitions 

Invention means any invention or 

discovery which is or may be patentable or 

otherwise protectable under title 35 of the 

United States Code, or any novel variety of 

plant which is or may be protected under the 

Plant Variety Protection Act (7 U.S.C. 2321 

et seq.). 

Made when used in relation to any 

invention means the conception or first 

actual reduction to practice of such 

invention. 

Nonprofit organization is defined in 2 CFR 

200.70. 

Practical application means to 

manufacture in the case of a composition or 

product, to practice in the case of a process 

or method, or to operate in the case of a 

machine or system; and, in each case, under 

such conditions as to establish that the 

invention is being utilized and that its 

benefits are to the extent permitted by law or 

Government regulations available to the 

public on reasonable terms. 

Small business firm means a small 

business concern as defined at section 2 of 

Public Law 85–536 (16 U.S.C. 632) and 

implementing regulations of the 

Administrator of the Small Business 

Administration. For the purpose of this 

clause, the size standards for small business 

concerns involved in Government 

procurement and subcontracting at 13 CFR 

121.3 through 121.8 and 13 CFR 121.3 

through 121.12, respectively, will be used. 

Subject invention means any invention of 

the Recipient conceived or first actually 

reduced to practice in the performance of 

work under this award, provided that in the 

case of a variety of plant, the date of 

determination (as defined in section 41(d) of 

the Plant Variety Protection Act, 7 U.S.C. 

2401(d) must also occur during the period of 

award performance. 

(b) Allocation of Principal Rights 

The Recipient may retain the entire right, 

title, and interest throughout the world to 


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each subject invention subject to the 

provisions of this Patent Rights clause and 35 

U.S.C. 203. With respect to any subject 

invention in which the Recipient retains title, 

the Federal Government shall have a nonexclusive, nontransferable, irrevocable, paidup license to practice or have practiced for 

or on behalf of the U.S. the subject invention 

throughout the world. 

(c) Invention Disclosure, Election of Title 

and Filing of Patent Applications by 

Recipient 

(1) The Recipient will disclose each subject 

invention to DOE within two months after 

the inventor discloses it in writing to 

Recipient personnel responsible for the 

administration of patent matters. The 

disclosure to DOE shall be in the form of a 

written report and shall identify the award 

under which the invention was made and the 

inventor(s). It shall be sufficiently complete 

in technical detail to convey a clear 

understanding to the extent known at the 

time of disclosure, of the nature, purpose, 

operation, and the physical, chemical, 

biological or electrical characteristics of the 

invention. The disclosure shall also identify 

any publication, on sale or public use of the 

invention and whether a manuscript 

describing the invention has been submitted 

for publication and, if so, whether it has been 

accepted for publication at the time of 

disclosure. In addition, after disclosure to 

DOE, the Recipient will promptly notify DOE 

of the acceptance of any manuscript 

describing the invention for publication or of 

any on sale or public use planned by the 

Recipient. 

(2) The Recipient will elect in writing 

whether or not to retain title to any such 

invention by notifying DOE within two years 

of disclosure to DOE. However, in any case 

where publication, on sale, or public use has 

initiated the one-year statutory period 

wherein valid patent protection can still be 

obtained in the U.S., the period for election 

of title may be shortened by the agency to a 

date that is no more than 60 days prior to the 

end of the statutory period. 

(3) The Recipient will file its initial patent 

application on an invention to which it elects 

to retain title within one year after election 

of title or, if earlier, prior to the end of any 

statutory period wherein valid patent 

protection can be obtained in the U.S. after 

a publication, on sale, or public use. The 

Recipient will file patent applications in 

additional countries or international patent 

offices within either ten months of the 

corresponding initial patent application, or 

six months from the date when permission is 

granted by the Commissioner of Patents and 

Trademarks to file foreign patent applications 

when such filing has been prohibited by a 

Secrecy Order. 

(4) Requests for extension of the time for 

disclosure to DOE, election, and filing under 

subparagraphs (c)(1), (2), and (3) of this 

clause may, at the discretion of DOE, be 

granted. 

(d) Conditions When the Government May 

Obtain Title 

The Recipient will convey to DOE, upon 

written request, title to any subject invention: 

(1) If the Recipient fails to disclose or elect 

the subject invention within the times 

specified in paragraph (c) of this patent rights 

clause, or elects not to retain title; provided 

that DOE may only request title within 60 

days after learning of the failure of the 

Recipient to disclose or elect within the 

specified times; 

(2) In those countries in which the 

Recipient fails to file patent applications 

within the times specified in paragraph (c) of 

this Patent Rights clause; provided, however, 

that if the Recipient has filed a patent 

application in a country after the times 

specified in paragraph (c) of this Patent 

Rights clause, but prior to its receipt of the 

written request of DOE, the Recipient shall 

continue to retain title in that country; or 

(3) In any country in which the Recipient 

decides not to continue the prosecution of 

any application for, to pay the maintenance 

fees on, or defend in a reexamination or 

opposition proceeding on, a patent on a 

subject invention. 

(e) Minimum Rights to Recipient and 

Protection of the Recipient Right To File 

(1) The Recipient will retain a nonexclusive royalty-free license throughout the 

world in each subject invention to which the 

Government obtains title, except if the 

Recipient fails to disclose the subject 

invention within the times specified in 

paragraph (c) of this Patent Rights clause. 

The Recipient’s license extends to its 

domestic subsidiaries and affiliates, if any, 

within the corporate structure of which the 

Recipient is a party and includes the right to 

grant sublicenses of the same scope of the 

extent the Recipient was legally obligated to 

do so at the time the award was awarded. 

The license is transferable only with the 

approval of DOE except when transferred to 

the successor of that part of the Recipient’s 

business to which the invention pertains. 

(2) The Recipient’s domestic license may 

be revoked or modified by DOE to the extent 

necessary to achieve expeditious practical 

application of the subject invention pursuant 

to an application for an exclusive license 

submitted in accordance with applicable 

provisions at 37 CFR part 404 and the 

agency’s licensing regulation, if any. This 

license will not be revoked in that field of 

use or the geographical areas in which the 

Recipient has achieved practical application 

and continues to make the benefits of the 

invention reasonably accessible to the public. 

The license in any foreign country may be 

revoked or modified at discretion of the 

funding Federal agency to the extent the 

Recipient, its licensees, or its domestic 

subsidiaries or affiliates have failed to 

achieve practical application in that foreign 

country. 

(3) Before revocation or modification of the 

license, the funding Federal agency will 

furnish the Recipient a written notice of its 

intention to revoke or modify the license, and 

the Recipient will be allowed thirty days (or 

such other time as may be authorized by DOE 

for good cause shown by the Recipient) after 

the notice to show cause why the license 

should not be revoked or modified. The 

Recipient has the right to appeal, in 

accordance with applicable regulations in 37 

CFR part 404 and the agency’s licensing 

regulations, if any, concerning the licensing 

of Government-owned inventions, any 

decision concerning the revocation or 

modification of its license. 

(f) Recipient Action To Protect 

Government’s Interest 

(1) The Recipient agrees to execute or to 

have executed and promptly deliver to DOE 

all instruments necessary to: 

(i) Establish or confirm the rights the 

Government has throughout the world in 

those subject inventions for which the 

Recipient retains title; and 

(ii) Convey title to DOE when requested 

under paragraph (d) of this Patent Rights 

clause, and to enable the government to 

obtain patent protection throughout the 

world in that subject invention. 

(2) The Recipient agrees to require, by 

written agreement, its employees, other than 

clerical and non-technical employees, to 

disclose promptly in writing to personnel 

identified as responsible for the 

administration of patent matters and in a 

format suggested by the Recipient each 

subject invention made under this award in 

order that the Recipient can comply with the 

disclosure provisions of paragraph (c) of this 

Patent Rights clause, and to execute all 

papers necessary to file patent applications 

on subject inventions and to establish the 

Government’s rights in the subject 

inventions. The disclosure format should 

require, as a minimum, the information 

requested by paragraph (c)(1) of this Patent 

Rights clause. The Recipient shall instruct 

such employees through the employee 

agreements or other suitable educational 

programs on the importance of reporting 

inventions in sufficient time to permit the 

filing of patent applications prior to U.S. or 

foreign statutory bars. 

(3) The Recipient will notify DOE of any 

decision not to continue prosecution of a 

patent application, pay maintenance fees, or 

defend in a reexamination or opposition 

proceeding on a patent, in any country, not 

less than 30 days before the expiration of the 

response period required by the relevant 

patent office. 

(4) The Recipient agrees to include, within 

the specification of any U.S. patent 

application and any patent issuing thereon 

covering a subject invention, the following 

statement: ‘‘This invention was made with 

Government support under (identify the 

award) awarded by (identify DOE). The 

Government has certain rights in this 

invention.’’ 

(g) Subaward/Contract 

(1) The Recipient will include this Patent 

Rights clause, suitably modified to identify 

the parties, in all subawards/contracts, 

regardless of tier, for experimental, 

developmental or research work to be 

performed by a small business firm or 

nonprofit organization. The subrecipient/

contractor will retain all rights provided for 

the Recipient in this Patent Rights clause, 

and the Recipient will not, as part of the 

consideration for awarding the subcontract, 

obtain rights in the subcontractors’ subject 

inventions. 

(2) The Recipient will include in all other 

subawards/contracts, regardless of tier, for 

experimental, developmental or research 

work, the patent rights clause required by 2 

CFR 910.362(c). 


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(3) In the case of subawards/contracts at 

any tier, DOE, the Recipient, and the 

subrecipient/contractor agree that the mutual 

obligations of the parties created by this 

clause constitute a contract between the 

subrecipient/contractor and DOE with 

respect to those matters covered by the 

clause. 

(h) Reporting on Utilization of Subject 

Inventions 

The Recipient agrees to submit on request 

periodic reports no more frequently than 

annually on the utilization of a subject 

invention or on efforts at obtaining such 

utilization that are being made by the 

Recipient or its licensees or assignees. Such 

reports shall include information regarding 

the status of development, date of first 

commercial sale or use, gross royalties 

received by the Recipient and such other data 

and information as DOE may reasonably 

specify. The Recipient also agrees to provide 

additional reports in connection with any 

march-in proceeding undertaken by DOE in 

accordance with paragraph (j) of this Patent 

Rights clause. As required by 35 U.S.C. 

202(c)(5), DOE agrees it will not disclose 

such information to persons outside the 

Government without the permission of the 

Recipient. 

(i) Preference for United States Industry. 

Notwithstanding any other provision of 

this Patent Rights clause, the Recipient agrees 

that neither it nor any assignee will grant to 

any person the exclusive right to use or sell 

any subject invention in the U.S. unless such 

person agrees that any products embodying 

the subject invention or produced through 

the use of the subject invention will be 

manufactured substantially in the U.S. 

However, in individual cases, the 

requirement for such an agreement may be 

waived by DOE upon a showing by the 

Recipient or its assignee that reasonable but 

unsuccessful efforts have been made to grant 

licenses on similar terms to potential 

licensees that would be likely to manufacture 

substantially in the U.S. or that under the 

circumstances domestic manufacture is not 

commercially feasible. 

(j) March-in-Rights 

The Recipient agrees that with respect to 

any subject invention in which it has 

acquired title, DOE has the right in 

accordance with procedures at 37 CFR 401.6 

and any supplemental regulations of the 

Agency to require the Recipient, an assignee 

or exclusive licensee of a subject invention 

to grant a non-exclusive, partially exclusive, 

or exclusive license in any field of use to a 

responsible applicant or applicants, upon 

terms that are reasonable under the 

circumstances and if the Recipient, assignee, 

or exclusive licensee refuses such a request, 

DOE has the right to grant such a license 

itself if DOE determines that: 

(1) Such action is necessary because the 

Recipient or assignee has not taken or is not 

expected to take within a reasonable time, 

effective steps to achieve practical 

application of the subject invention in such 

field of use; 

(2) Such action is necessary to alleviate 

health or safety needs which are not 

reasonably satisfied by the Recipient, 

assignee, or their licensees; 

(3) Such action is necessary to meet 

requirements for public use specified by 

Federal regulations and such requirements 

are not reasonably satisfied by the Recipient, 

assignee, or licensee; or 

(4) Such action is necessary because the 

agreement required by paragraph (i) of this 

Patent Rights clause has not been obtained or 

waived or because a licensee of the exclusive 

right to use or sell any subject invention in 

the U.S. is in breach of such agreement. 

(k) Special Provisions for Awards With 

Nonprofit Organizations 

If the Recipient is a nonprofit organization, 

it agrees that: 

(1) Rights to a subject invention in the U.S. 

may not be assigned without the approval of 

DOE, except where such assignment is made 

to an organization which has as one of its 

primary functions the management of 

inventions, provided that such assignee will 

be subject to the same provisions as the 

Recipient; 

(2) The Recipient will share royalties 

collected on a subject invention with the 

inventor, including Federal employee coinventors (when DOE deems it appropriate) 

when the subject invention is assigned in 

accordance with 35 U.S.C. 202(e) and 37 CFR 

401.10; 

(3) The balance of any royalties or income 

earned by the Recipient with respect to 

subject inventions, after payment of expenses 

(including payments to inventors) incidental 

to the administration of subject inventions, 

will be utilized for the support of scientific 

or engineering research or education; and 

(4) It will make efforts that are reasonable 

under the circumstances to attract licensees 

of subject inventions that are small business 

firms and that it will give preference to a 

small business firm if the Recipient 

determines that the small business firm has 

a plan or proposal for marketing the 

invention which, if executed, is equally 

likely to bring the invention to practical 

application as any plans or proposals from 

applicants that are not small business firms; 

provided that the Recipient is also satisfied 

that the small business firm has the 

capability and resources to carry out its plan 

or proposal. The decision whether to give a 

preference in any specific case will be at the 

discretion of the Recipient. However, the 

Recipient agrees that the Secretary of 

Commerce may review the Recipient’s 

licensing program and decisions regarding 

small business applicants, and the Recipient 

will negotiate changes to its licensing 

policies, procedures or practices with the 

Secretary when the Secretary’s review 

discloses that the Recipient could take 

reasonable steps to implement more 

effectively the requirements of this paragraph 

(k)(4). 

(l) Communications 

All communications required by this 

Patent Rights clause should be sent to the 

DOE Patent Counsel address listed in the 

Award Document. 

(m) Electronic Filing 

Unless otherwise specified in the award, 

the information identified in paragraphs (f)(2) 

and (f)(3) may be electronically filed. 

(End of clause) 

2. Patent Rights (Large Business Firms)—No 

Waiver 

(a) Definitions 

DOE patent waiver regulations, as used in 

this clause, means the Department of Energy 

patent waiver regulations in effect on the 

date of award. See 10 CFR part 784. 

Invention, as used in this clause, means 

any invention or discovery which is or may 

be patentable of otherwise protectable under 

title 35 of the United States Code or any 

novel variety of plant that is or may be 

protectable under the Plant Variety 

Protection Act (7 U.S.C. 2321, et seq.). 

Patent Counsel, as used in this clause, 

means the Department of Energy Patent 

Counsel assisting the awarding activity. 

Subject invention, as used in this clause, 

means any invention of the Recipient 

conceived or first actually reduced to 

practice in the course of or under this 

agreement. 

(b) Allocations of Principal Rights 

(1) Assignment to the Government. The 

Recipient agrees to assign to the Government 

the entire right, title, and interest throughout 

the world in and to each subject invention, 

except to the extent that rights are retained 

by the Recipient under subparagraph (b)(2) 

and paragraph (d) of this clause. 

(2) Greater rights determinations. The 

Recipient, or an employee-inventor after 

consultation with the Recipient, may request 

greater rights than the nonexclusive license 

and the foreign patent rights provided in 

paragraph (d) of this clause on identified 

inventions in accordance with the DOE 

patent waiver regulation. Each determination 

of greater rights under this agreement shall be 

subject to paragraph (c) of this clause, unless 

otherwise provided in the greater rights 

determination, and to the reservations and 

conditions deemed to be appropriate by the 

Secretary of Energy or designee. 

(c) Minimum Rights Acquired by the 

Government 

With respect to each subject invention to 

which the Department of Energy grants the 

Recipient principal or exclusive rights, the 

Recipient agrees to grant to the Government: 

A nonexclusive, nontransferable, irrevocable, 

paid-up license to practice or have practiced 

each subject invention throughout the world 

by or on behalf of the Government of the 

United States (including any Government 

agency); ‘‘march-in rights’’ as set forth in 37 

CFR 401.14(a)(J)); preference for U.S. 

industry as set forth in 37 CFR 401.14(a)(I); 

periodic reports upon request, no more 

frequently than annually, on the utilization 

or intent of utilization of a subject invention 

in a manner consistent with 35 U.S.C. 

202(c)(50); and such Government rights in 

any instrument transferring rights in a subject 

invention. 

(d) Minimum Rights to the Recipient 

(1) The Recipient is hereby granted a 

revocable, nonexclusive, royalty-free license 

in each patent application filed in any 

country on a subject invention and any 

resulting patent in which the Government 

obtains title, unless the Recipient fails to 

disclose the subject invention within the 

times specified in subparagraph (e)(2) of this 

clause. The Recipient’s license extends to its 

domestic subsidiaries and affiliates, if any, 


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within the corporate structure of which the 

Recipient is a part and includes the right to 

grant sublicenses of the same scope to the 

extent the Recipient was legally obligated to 

do so at the time the agreement was awarded. 

The license is transferable only with the 

approval of DOE except when transferred to 

the successor of that part of the Recipient’s 

business to which the invention pertains. 

(2) The Recipient may request the right to 

acquire patent rights to a subject invention in 

any foreign country where the Government 

has elected not to secure such rights, subject 

to the minimum rights acquired by the 

Government similar to paragraph (c) of this 

clause. Such request must be made in 

writhing to the Patent Counsel as part of the 

disclosure required by subparagraph (e)(2) of 

this clause, with a copy to the DOE 

Contracting Officer. DOE approval, if given, 

will be based on a determination that this 

would best serve the national interest. 

(e) Invention Identification, Disclosures, 

and Reports 

(1) The Recipient shall establish and 

maintain active and effective procedures to 

assure that subject inventions are promptly 

identified and disclosed to Recipient 

personnel responsible for patent matters 

within 6 months of conception and/or first 

actual reduction to practice, whichever 

occurs first in the performance of work under 

this agreement. These procedures shall 

include the maintenance of laboratory 

notebooks or equivalent records and other 

records as are reasonably necessary to 

document the conception and/or the first 

actual reduction to practice of subject 

inventions, and records that show that the 

procedures for identifying and disclosing the 

inventions are followed. Upon request, the 

Recipient shall furnish the Contracting 

Officer a description of such procedures for 

evaluation and for determination as to their 

effectiveness. 

(2) The Recipient shall disclose each 

subject invention to the DOE Patent Counsel 

with a copy to the Contracting Officer within 

2 months after the inventor discloses it in 

writing to Recipient personnel responsible 

for patent matters or, if earlier, within 6 

months after the Recipient becomes aware 

that a subject invention has been made, but 

in any event before any on sale, public use, 

or publication of such invention known to 

the Recipient. The disclosure to DOE shall be 

in the form of a written report and shall 

identify the agreement under which the 

invention was made and the inventor(s). It 

shall be sufficiently complete in technical 

detail to convey a clear understanding, to the 

extent known at the time of the disclosure, 

of the nature, purpose, operation, and 

physical, chemical, biological, or electrical 

characteristics of the invention. The 

disclosure shall also identify any publication, 

on sale, or public use of the invention and 

whether a manuscript describing the 

invention has been submitted for publication 

and, if so, whether it has been accepted for 

publication at the time of disclosure. In 

addition, after disclosure to DOE, the 

Recipient shall promptly notify Patent 

Counsel of the acceptance of any manuscript 

describing the invention for publication or of 

any on sale or public use planned by the 

Recipient. The report should also include 

any request for a greater rights determination 

in accordance with subparagraph (b)(2) of 

this clause. When an invention is disclosed 

to DOE under this paragraph, it shall be 

deemed to have been made in the manner 

specified in Sections (a)(1) and (a)(2) of 42 

U.S.C. 5908, unless the Recipient contends in 

writing at the time the invention is disclosed 

that it was not so made. 

(3) The Recipient shall furnish the 

Contracting Officer a final report, within 3 

months after completion of the work listing 

all subject inventions or containing a 

statement that there were no such inventions, 

and listing all subawards/contracts at any tier 

containing a patent rights clause or 

containing a statement that there were no 

such subawards/contracts. 

(4) The Recipient agrees to require, by 

written agreement, its employees, other than 

clerical and nontechnical employees, to 

disclose promptly in writing to personnel 

identified as responsible for the 

administration of patent matters and in a 

format suggested by the Recipient each 

subject invention made under subaward/

contract in order that the Recipient can 

comply with the disclosure provisions of 

paragraph (c) of this clause, and to execute 

all papers necessary to file patent 

applications on subject inventions and to 

establish the Government’s rights in the 

subject inventions. This disclosure format 

should require, as a minimum, the 

information required by subparagraph (e)(2) 

of this clause. 

(5) The Recipient agrees, subject to FAR 

27.302(j), that the Government may duplicate 

and disclose subject invention disclosures 

and all other reports and papers furnished or 

required to be furnished pursuant to this 

clause. 

(f) Examination of Records Relating to 

Inventions 

(1) The Contracting Officer or any 

authorized representative shall, until 3 years 

after final payment under this agreement, 

have the right to examine any books 

(including laboratory notebooks), records, 

and documents of the Recipient relating to 

the conception or first actual reduction to 

practice of inventions in the same field of 

technology as the work under this agreement 

to determine whether—(i) Any such 

inventions are subject inventions; (ii) The 

Recipient has established and maintains the 

procedures required by subparagraphs (e)(1) 

and (4) of this clause; (iii) The Recipient and 

its inventors have complied with the 

procedures. 

(2) If the Contracting Officer learns of an 

unreported Recipient invention which the 

Contracting Officer believes may be a subject 

invention, the Recipient may be required to 

disclose the invention to DOE for a 

determination of ownership rights. 

(3) Any examination of records under this 

paragraph will be subject to appropriate 

conditions to protect the confidentiality of 

the information involved. 

(g) Subaward/Contract 

(1) The recipient shall include the clause 

PATENT RIGHTS (SMALL BUSINESS 

FIRMS AND NONPROFIT 

ORGANIZATIONS) (suitably modified to 

identify the parties) in all subawards/

contracts, regardless of tier, for experimental, 

developmental, demonstration, or research 

work to be performed by a small business 

firm or domestic nonprofit organization, 

except where the work of the subaward/

contract is subject to an Exceptional 

Circumstances Determination by DOE. In all 

other subawards/contracts, regardless of tier, 

for experimental, developmental, 

demonstration, or research work, the 

Recipient shall include this clause (suitably 

modified to identify the parties), or an 

alternate clause as directed by the contracting 

officer. The Recipient shall not, as part of the 

consideration for awarding the subaward/

contract, obtain rights in the subrecipient’s/ 

contractor’s subject inventions. 

(2) In the event of a refusal by a 

prospective subrecipient/contractor to accept 

such a clause the Recipient: (i) Shall 

promptly submit a written notice to the 

Contracting Officer setting forth the 

subrecipient/contractor’s reasons for such 

refusal and other pertinent information that 

may expedite disposition of the matter; and 

(ii) Shall not proceed with such subaward/

contract without the written authorization of 

the Contracting Officer. 

(3) In the case of subawards/contracts at 

any tier, DOE, the subrecipient/contractor, 

and Recipient agree that the mutual 

obligations of the parties created by this 

clause constitute a contract between the 

subrecipient/contractor and DOE with 

respect to those matters covered by this 

clause. 

(4) The Recipient shall promptly notify the 

Contracting Officer in writing upon the 

award of any subaward/contract at any tier 

containing a patent rights clause by 

identifying the subrecipient/contractor, the 

applicable patent rights clause, the work to 

be performed under the subaward/contract, 

and the dates of award and estimated 

completion. Upon request of the Contracting 

Officer, the Recipient shall furnish a copy of 

such subaward/contract, and, no more 

frequently than annually, a listing of the 

subawards/contracts that have been awarded. 

(5) The Recipient shall identify all subject 

inventions of a subrecipient/contractor of 

which it acquires knowledge in the 

performance of this agreement and shall 

notify the Patent Counsel, with a copy to the 

contracting officer, promptly upon 

identification of the inventions. 

(h) Atomic Energy 

(1) No claim for pecuniary award of 

compensation under the provisions of the 

Atomic Energy Act of 1954, as amended, 

shall be asserted with respect to any 

invention or discovery made or conceived in 

the course of or under this agreement. 

(2) Except as otherwise authorized in 

writing by the Contracting Officer, the 

Recipient will obtain patent agreements to 

effectuate the provisions of subparagraph 

(h)(1) of this clause from all persons who 

perform any part of the work under this 

agreement, except nontechnical personnel, 

such as clerical employees and manual 

laborers. 

(i) Publication 

It is recognized that during the course of 

the work under this agreement, the Recipient 


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or its employees may from time to time 

desire to release or publish information 

regarding scientific or technical 

developments conceived or first actually 

reduced to practice in the course of or under 

this agreement. In order that public 

disclosure of such information will not 

adversely affect the patent interests of DOE 

or the Recipient, patent approval for release 

of publication shall be secured from Patent 

Counsel prior to any such release or 

publication. 

(j) Forfeiture of Rights in Unreported 

Subject Inventions 

(1) The Recipient shall forfeit and assign to 

the Government, at the request of the 

Secretary of Energy or designee, all rights in 

any subject invention which the Recipient 

fails to report to Patent Counsel within six 

months after the time the Recipient: (i) Files 

or causes to be filed a United States or 

foreign patent application thereon; or (ii) 

Submits the final report required by 

subparagraph (e)(3) of this clause, whichever 

is later. 

(2) However, the Recipient shall not forfeit 

rights in a subject invention if, within the 

time specified in subparagraph (e)(2) of this 

clause, the Recipient: (i) Prepares a written 

decision based upon a review of the record 

that the invention was neither conceived nor 

first actually reduced to practice in the 

course of or under the agreement and 

delivers the decision to Patent Counsel, with 

a copy to the Contracting Officer, or (ii) 

Contending that the invention is not a subject 

invention, the Recipient nevertheless 

discloses the invention and all facts pertinent 

to this contention to the Patent Counsel, with 

a copy of the Contracting Officer; or (iii) 

Establishes that the failure to disclose did not 

result from the Recipient’s fault or 

negligence. 

(3) Pending written assignment of the 

patent application and patents on a subject 

invention determined by the Secretary of 

Energy or designee to be forfeited (such 

determination to be a final decision under 

the Disputes clause of this agreement), the 

Recipient shall be deemed to hold the 

invention and the patent applications and 

patents pertaining thereto in trust for the 

Government. The forfeiture provision of this 

paragraph (j) shall be in addition to and shall 

not supersede other rights and remedies 

which the Government may have with 

respect to subject inventions. 

(End of clause) 

3. Rights in Data—General 

(a) Definitions 

Computer Data Bases, as used in this 

clause, means a collection of data in a form 

capable of, and for the purpose of, being 

stored in, processed, and operated on by a 

computer. The term does not include 

computer software. 

Computer software, as used in this clause, 

means (i) computer programs which are data 

comprising a series of instructions, rules, 

routines or statements, regardless of the 

media in which recorded, that allow or cause 

a computer to perform a specific operation or 

series of operations and (ii) data comprising 

source code listings, design details, 

algorithms, processes, flow charts, formulae, 

and related material that would enable the 

computer program to be produced, created or 

compiled. The term does not include 

computer data bases. 

Data, as used in this clause, means 

recorded information, regardless of form or 

the media on which it may be recorded. The 

term includes technical data and computer 

software. The term does not include 

information incidental to administration, 

such as financial, administrative, cost or 

pricing, or management information. 

Form, fit, and function data, as used in this 

clause, means data relating to items, 

components, or processes that are sufficient 

to enable physical and functional 

interchangeability, as well as data identifying 

source, size, configuration, mating, and 

attachment characteristics, functional 

characteristics, and performance 

requirements; except that for computer 

software it means data identifying source, 

functional characteristics, and performance 

requirements but specifically excludes the 

source code, algorithm, process, formulae, 

and flow charts of the software. 

Limited rights, as used in this clause, 

means the rights of the Government in 

limited rights data as set forth in the Limited 

Rights Notice of subparagraph (g)(2) if 

included in this clause. 

Limited rights data, as used in this clause, 

means data (other than computer software) 

developed at private expense that embody 

trade secrets or are commercial or financial 

and confidential or privileged. 

Restricted computer software, as used in 

this clause, means computer software 

developed at private expense and that is a 

trade secret; is commercial or financial and 

is confidential or privileged; or is published 

copyrighted computer software; including 

minor modifications of such computer 

software. 

Restricted rights, as used in this clause, 

means the rights of the Government in 

restricted computer software, as set forth in 

a Restricted Rights Notice of subparagraph 

(g)(3) if included in this clause, or as 

otherwise may be provided in a collateral 

agreement incorporated in and made part of 

this contract, including minor modifications 

of such computer software. 

Technical data, as used in this clause, 

means data (other than computer software) 

which are of a scientific or technical nature. 

Technical data does not include computer 

software, but does include manuals and 

instructional materials and technical data 

formatted as a computer data base. 

Unlimited rights, as used in this clause, 

means the right of the Government to use, 

disclose, reproduce, prepare derivative 

works, distribute copies to the public, and 

perform publicly and display publicly, in any 

manner and for any purpose, and to have or 

permit others to do so. 

(b) Allocations of Rights 

(1) Except as provided in paragraph (c) of 

this clause regarding copyright, the 

Government shall have unlimited rights in— 

(i) Data first produced in the performance 

of this agreement; 

(ii) Form, fit, and function data delivered 

under this agreement; 

(iii) Data delivered under this agreement 

(except for restricted computer software) that 

constitute manuals or instructional and 

training material for installation, operation, 

or routine maintenance and repair of items, 

components, or processes delivered or 

furnished for use under this agreement; and 

(iv) All other data delivered under this 

agreement unless provided otherwise for 

limited rights data or restricted computer 

software in accordance with paragraph (g) of 

this clause. 

(2) The Recipient shall have the right to— 

(i) Use, release to others, reproduce, 

distribute, or publish any data first produced 

or specifically used by the Recipient in the 

performance of this agreement, unless 

provided otherwise in paragraph (d) of this 

clause; 

(ii) Protect from unauthorized disclosure 

and use those data which are limited rights 

data or restricted computer software to the 

extent provided in paragraph (g) of this 

clause; 

(iii) Substantiate use of, add or correct 

limited rights, restricted rights, or copyright 

notices and to take over appropriate action, 

in accordance with paragraphs (e) and (f) of 

this clause; and 

(iv) Establish claim to copyright subsisting 

in data first produced in the performance of 

this agreement to the extent provided in 

paragraph (c)(1) of this clause. 

(c) Copyright 

(1) Data first produced in the performance 

of this agreement. Unless provided otherwise 

in paragraph (d) of this clause, the Recipient 

may establish, without prior approval of the 

Contracting Officer, claim to copyright 

subsisting in data first produced in the 

performance of this agreement. When claim 

to copyright is made, the Recipient shall affix 

the applicable copyright notices of 17 U.S.C. 

401 or 402 and acknowledgement of 

Government sponsorship (including 

agreement number) to the data when such 

data are delivered to the Government, as well 

as when the data are published or deposited 

for registration as a published work in the 

U.S. Copyright Office. For such copyrighted 

data, including computer software, the 

Recipient grants to the Government, and 

others acting on its behalf, a paid-up 

nonexclusive, irrevocable worldwide license 

in such copyrighted data to reproduce, 

prepare derivative works, distribute copies to 

the public, and perform publicly and display 

publicly, by or on behalf of the Government. 

(2) Data not first produced in the 

performance of this agreement. The Recipient 

shall not, without prior written permission of 

the Contracting Officer, incorporate in data 

delivered under this agreement any data not 

first produced in the performance of this 

agreement and which contains the copyright 

notice of 17 U.S.C. 401 or 402, unless the 

Recipient identifies such data and grants to 

the Government, or acquires on its behalf, a 

license of the same scope as set forth in 

paragraph (c)(1) of this clause; provided, 

however, that if such data are computer 

software the Government shall acquire a 

copyright license as set forth in paragraph 

(g)(3) of this clause if included in this 

agreement or as otherwise may be provided 

in a collateral agreement incorporated in or 

made part of this agreement. 

(3) Removal of copyright notices. The 

Government agrees not to remove any 


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copyright notices placed on data pursuant to 

this paragraph (c), and to include such 

notices on all reproductions of the data. 

(d) Release, Publication and Use of Data 

(1) The Recipient shall have the right to 

use, release to others, reproduce, distribute, 

or publish any data first produced or 

specifically used by the Recipient in the 

performance of this agreement, except to the 

extent such data may be subject to the 

Federal export control or national security 

laws or regulations, or unless otherwise 

provided in this paragraph of this clause or 

expressly set forth in this agreement. 

(2) The Recipient agrees that to the extent 

it receives or is given access to data necessary 

for the performance of this award, which 

contain restrictive markings, the Recipient 

shall treat the data in accordance with such 

markings unless otherwise specifically 

authorized in writing by the contracting 

officer. 

(e) Unauthorized Marking of Data 

(1) Notwithstanding any other provisions 

of this agreement concerning inspection or 

acceptance, if any data delivered under this 

agreement are marked with the notices 

specified in paragraph (g)(2) or (g)(3) of this 

clause and use of such is not authorized by 

this clause, or if such data bears any other 

restrictive or limiting markings not 

authorized by this agreement, the Contracting 

Officer may at any time either return the data 

to the Recipient or cancel or ignore the 

markings. However, the following procedures 

shall apply prior to canceling or ignoring the 

markings. 

(i) The Contracting Officer shall make 

written inquiry to the Recipient affording the 

Recipient 30 days from receipt of the inquiry 

to provide written justification to 

substantiate the propriety of the markings; 

(ii) If the Recipient fails to respond or fails 

to provide written justification to 

substantiate the propriety of the markings 

within the 30-day period (or a longer time 

not exceeding 90 days approved in writing by 

the Contracting Officer for good cause 

shown), the Government shall have the right 

to cancel or ignore the markings at any time 

after said period and the data will no longer 

be made subject to any disclosure 

prohibitions. 

(iii) If the Recipient provides written 

justification to substantiate the propriety of 

the markings within the period set in 

paragraph (e)(1)(i) of this clause, the 

Contracting Officer shall consider such 

written justification and determine whether 

or not the markings are to be cancelled or 

ignored. If the Contracting Officer determines 

that the markings are authorized, the 

Recipient shall be so notified in writing. If 

the Contracting Officer determines, with 

concurrence of the head of the contracting 

activity, that the markings are not authorized, 

the Contracting Officer shall furnish the 

Recipient a written determination, which 

determination shall become the final agency 

decision regarding the appropriateness of the 

markings unless the Recipient files suit in a 

court of competent jurisdiction within 90 

days of receipt of the Contracting Officer’s 

decision. The Government shall continue to 

abide by the markings under this paragraph 

(e)(1)(iii) until final resolution of the matter 

either by the Contracting Officer’s 

determination becoming final (in which 

instance the Government shall thereafter 

have the right to cancel or ignore the 

markings at any time and the data will no 

longer be made subject to any disclosure 

prohibitions), or by final disposition of the 

matter by court decision if suit is filed. 

(2) The time limits in the procedures set 

forth in paragraph (e)(1) of this clause may 

be modified in accordance with agency 

regulations implementing the Freedom of 

Information Act (5 U.S.C. 552) if necessary to 

respond to a request thereunder. 

(f) Omitted or Incorrect Markings 

(1) Data delivered to the Government 

without either the limited rights or restricted 

rights notice as authorized by paragraph (g) 

of this clause, or the copyright notice 

required by paragraph (c) of this clause, shall 

be deemed to have been furnished with 

unlimited rights, and the Government 

assumes no liability for the disclosure, use, 

or reproduction of such data. However, to the 

extent the data has not been disclosed 

without restriction outside the Government, 

the Recipient may request, within 6 months 

(or a longer time approved by the Contracting 

Officer for good cause shown) after delivery 

or such data, permission to have notices 

placed on qualifying data at the Recipient’s 

expense, and the Contracting Officer may 

agree to do so if the Recipient: 

(i) Identifies the data to which the omitted 

notice is to be applied; 

(ii) Demonstrates that the omission of the 

notice was inadvertent; 

(iii) Establishes that the use of the 

proposed notice is authorized; and 

(iv) Acknowledges that the Government 

has no liability with respect to the disclosure, 

use, or reproduction of any such data made 

prior to the addition of the notice or resulting 

from the omission of the notice. 

(2) The Contracting Officer may also: 

(i) Permit correction at the Recipient’s 

expense of incorrect notices if the Recipient 

identifies the data on which correction of the 

notice is to be made, and demonstrates that 

the correct notice is authorized, or 

(ii) Correct any incorrect notices. 

(g) Protection of Limited Rights Data and 

Restricted Computer Software 

When data other than that listed in 

paragraphs (b)(1)(i), (ii), and (iii) of this 

clause are specified to be delivered under 

this agreement and qualify as either limited 

rights data or restricted computer software, if 

the Recipient desires to continue protection 

of such data, the Recipient shall withhold 

such data and not furnish them to the 

Government under this agreement. As a 

condition to this withholding, the Recipient 

shall identify the data being withheld and 

furnish form, fit, and function data in lieu 

thereof. Limited rights data that are formatted 

as a computer data base for delivery to the 

Government are to be treated as limited rights 

data and not restricted computer software. 

(h) Subaward/Contract 

The Recipient has the responsibility to 

obtain from its subrecipients/contractors all 

data and rights therein necessary to fulfill the 

Recipient’s obligations to the Government 

under this agreement. If a subrecipient/

contractor refuses to accept terms affording 

the Government such rights, the Recipient 

shall promptly bring such refusal to the 

attention of the Contracting Officer and not 

proceed with the subaward/contract award 

without further authorization. 

(i) Additional Data Requirements 

In addition to the data specified elsewhere 

in this agreement to be delivered, the 

Contracting Officer may, at any time during 

agreement performance or within a period of 

3 years after acceptance of all items to be 

delivered under this agreement, order any 

data first produced or specifically used in the 

performance of this agreement. This clause is 

applicable to all data ordered under this 

subparagraph. Nothing contained in this 

subparagraph shall require the Recipient to 

deliver any data the withholding of which is 

authorized by this clause, or data which are 

specifically identified in this agreement as 

not subject to this clause. When data are to 

be delivered under this subparagraph, the 

Recipient will be compensated for converting 

the data into the prescribed form, for 

reproduction, and for delivery. 

(j) The recipient agrees, except as may be 

otherwise specified in this award for specific 

data items listed as not subject to this 

paragraph, that the Contracting Officer or an 

authorized representative may, up to three 

years after acceptance of all items to be 

delivered under this award, inspect at the 

Recipient’s facility any data withheld 

pursuant to paragraph (g) of this clause, for 

purposes of verifying the Recipient’s 

assertion pertaining to the limited rights or 

restricted rights status of the data or for 

evaluating work performance. Where the 

Recipient whose data are to be inspected 

demonstrates to the Contracting Officer that 

there would be a possible conflict of interest 

if the inspection were made by a particular 

representative, the Contracting Officer shall 

designate an alternate inspector. 

As prescribed in 2 CFR 910.362(d)(1), the 

following Alternate I and/or II may be 

inserted in the clause in the award 

instrument. 

Alternate I: 

(g)(2) Notwithstanding paragraph (g)(1) of 

this clause, the agreement may identify and 

specify the delivery of limited rights data, or 

the Contracting Officer may require by 

written request the delivery of limited rights 

data that has been withheld or would 

otherwise be withholdable. If delivery of 

such data is so required, the Recipient may 

affix the following ‘‘Limited Rights Notice’’ 

to the data and the Government will 

thereafter treat the data, in accordance with 

such Notice: 

Limited Rights Notice 

(a) These data are submitted with limited 

rights under Government agreement No. __ 

(and subaward/contract No. ___, if 

appropriate). These data may be reproduced 

and used by the Government with the 

express limitation that they will not, without 

written permission of the Recipient, be used 

for purposes of manufacture nor disclosed 

outside the Government; except that the 

Government may disclose these data outside 

the Government for the following purposes, 

if any, provided that the Government makes 

such disclosure subject to prohibition against 

further use and disclosure: 


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(1) Use (except for manufacture) by Federal 

support services contractors within the scope 

of their contracts; 

(2) This ‘‘limited rights data’’ may be 

disclosed for evaluation purposes under the 

restriction that the ‘‘limited rights data’’ be 

retained in confidence and not be further 

disclosed; 

(3) This ‘‘limited rights data’’ may be 

disclosed to other contractors participating in 

the Government’s program of which this 

Recipient is a part for information or use 

(except for manufacture) in connection with 

the work performed under their awards and 

under the restriction that the ‘‘limited rights 

data’’ be retained in confidence and not be 

further disclosed; 

(4) This ‘‘limited rights data’’ may be used 

by the Government or others on its behalf for 

emergency repair or overhaul work under the 

restriction that the ‘‘limited rights data’’ be 

retained in confidence and not be further 

disclosed; and 

(5) Release to a foreign government, or 

instrumentality thereof, as the interests of the 

United States Government may require, for 

information or evaluation, or for emergency 

repair or overhaul work by such government. 

This Notice shall be marked on any 

reproduction of this data in whole or in part. 

(b) This Notice shall be marked on any 

reproduction of these data, in whole or in 

part. 

(End of notice) 

Alternate II: 

(g)(3)(i) Notwithstanding paragraph (g)(1) 

of this clause, the agreement may identify 

and specify the delivery of restricted 

computer software, or the Contracting Officer 

may require by written request the delivery 

of restricted computer software that has been 

withheld or would otherwise be 

withholdable. If delivery of such computer 

software is so required, the Recipient may 

affix the following ‘‘Restricted Rights Notice’’ 

to the computer software and the 

Government will thereafter treat the 

computer software, subject to paragraphs (e) 

and (f) of this clause, in accordance with the 

Notice. 

Restricted Rights Notice 

(a) This computer software is submitted 

with restricted rights under Government 

Agreement No.____ (and subaward/contract 

____, if appropriate). It may not be used, 

reproduced, or disclosed by the Government 

except as provided in paragraph (b) of this 

Notice or as otherwise expressly stated in the 

agreement. 

(b) This computer software may be— 

(1) Used or copies for use in or with the 

computer or computers for which it was 

acquired, including use at any Government 

installation to which such computer or 

computers may be transferred; 

(2) Used or copied for use in a backup 

computer if any computer or which it was 

acquired is inoperative; 

(3) Reproduced for safekeeping (archives) 

or backup purposes; 

(4) Modified, adapted, or combined with 

other computer software, provided that the 

modified, combined, or adapted portions of 

the derivative software are made subject to 

the same restricted rights; 

(5) Disclosed to and reproduced for use by 

support service Recipients in accordance 

with paragraph (b)(1) through (4) of this 

clause, provided the Government makes such 

disclosure or reproduction subject to these 

restricted rights; and 

(6) Used or copied for use in or transferred 

to a replacement computer. 

(c) Notwithstanding the foregoing, if this 

computer software is published copyrighted 

computer software, it is licensed to the 

Government, without disclosure 

prohibitions, with the minimum rights set 

forth in paragraph (b) of this clause. 

(d) Any other rights or limitations 

regarding the use, duplication, or disclosure 

of this computer software are to be expressly 

stated, in, or incorporated in, the agreement. 

(e) This Notice shall be marked on any 

reproduction of this computer software, in 

whole or in part. 

(End of notice) 

(ii) Where it is impractical to include the 

Restricted Rights Notice on restricted 

computer software, the following short-form 

Notice may be used in lieu thereof: 

Restricted Rights Notice 

Use, reproduction, or disclosure is subject 

to restrictions set forth in agreement No. 

lll (and subaward/contractlll, If 

appropriate) with lll(name of Recipient 

and subrecipient/contractor). 

(End of notice) 

(iii) If restricted computer software is 

delivered with the copyright notice of 17 

U.S.C. 401, it will be presumed to be 

published copyrighted computer software 

licensed to the government without 

disclosure prohibitions, with the minimum 

rights set forth in paragraph (b) of this clause, 

unless the Recipient includes the following 

statement with such copyright notice: 

‘‘Unpublished—rights reserved under the 

Copyright Laws of the United States.’’ 

(End of clause) 

4. Rights in Data—Programs Covered Under 

Special Data Statutes 

(a) Definitions 

Computer Data Bases, as used in this 

clause, means a collection of data in a form 

capable of, and for the purpose of, being 

stored in, processed, and operated on by a 

computer. The term does not include 

computer software. 

Computer software, as used in this clause, 

means 

(i) computer programs which are data 

comprising a series of instructions, rules, 

routines, or statements, regardless of the 

media in which recorded, that allow or cause 

a computer to perform a specific operation or 

series of operations and 

(ii) data comprising source code listings, 

design details, algorithms, processes, flow 

charts, formulae and related material that 

would enable the computer program to be 

produced, created or compiled. The term 

does not include computer data bases. 

Data, as used in this clause, means 

recorded information, regardless of form or 

the media on which it may be recorded. The 

term includes technical data and computer 

software. The term does not include 

information incidental to administration, 

such as financial, administrative, cost or 

pricing or management information. 

Form, fit, and function data, as used in this 

clause, means data relating to items, 

components, or processes that are sufficient 

to enable physical and functional 

interchangeability as well as data identifying 

source, size, configuration, mating and 

attachment characteristics, functional 

characteristics, and performance 

requirements except that for computer 

software it means data identifying source, 

functional characteristics, and performance 

requirements but specifically excludes the 

source code, algorithm, process, formulae, 

and flow charts of the software. 

Limited rights data, as used in this clause, 

means data (other than computer software) 

developed at private expense that embody 

trade secrets or are commercial or financial 

and confidential or privileged. 

Restricted computer software, as used in 

this clause, means computer software 

developed at private expense and that is a 

trade secret; is commercial or financial and 

confidential or privileged; or is published 

copyrighted computer software; including 

modifications of such computer software. 

Protected data, as used in this clause, 

means technical data or commercial or 

financial data first produced in the 

performance of the award which, if it had 

been obtained from and first produced by a 

non-federal party, would be a trade secret or 

commercial or financial information that is 

privileged or confidential under the meaning 

of 5 U.S.C. 552(b)(4) and which data is 

marked as being protected data by a party to 

the award. 

Protected rights, as used in this clause, 

mean the rights in protected data set forth in 

the Protected Rights Notice of paragraph (g) 

of this clause. 

Technical data, as used in this clause, 

means that data which are of a scientific or 

technical nature. Technical data does not 

include computer software, but does include 

manuals and instructional materials and 

technical data formatted as a computer data 

base. 

Unlimited rights, as used in this clause, 

means the right of the Government to use, 

disclose, reproduce, prepare derivative 

works, distribute copies to the public, and 

perform publicly and display publicly, in any 

manner and for any purpose whatsoever, and 

to have or permit others to do so. 

(b) Allocation of Rights 

(1) Except as provided in paragraph (c) of 

this clause regarding copyright, the 

Government shall have unlimited rights in— 

(i) Data specifically identified in this 

agreement as data to be delivered without 

restriction; 

(ii) Form, fit, and function data delivered 

under this agreement; 

(iii) Data delivered under this agreement 

(except for restricted computer software) that 

constitute manuals or instructional and 

training material for installation, operation, 

or routine maintenance and repair of items, 

components, or processes delivered or 

furnished for use under this agreement; and 

(iv) All other data delivered under this 

agreement unless provided otherwise for 

protected data in accordance with paragraph 

(g) of this clause or for limited rights data or 

restricted computer software in accordance 

with paragraph (h) of this clause. 


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(2) The Recipient shall have the right to— 

(i) Protect rights in protected data 

delivered under this agreement in the 

manner and to the extent provided in 

paragraph (g) of this clause; 

(ii) Withhold from delivery those data 

which are limited rights data or restricted 

computer software to the extent provided in 

paragraph (h) of this clause; 

(iii) Substantiate use of, add, or correct 

protected rights or copyrights notices and to 

take other appropriate action, in accordance 

with paragraph (e) of this clause; and 

(iv) Establish claim to copyright subsisting 

in data first produced in the performance of 

this agreement to the extent provided in 

paragraph (c)(1) of this clause. 

(c) Copyright 

(1) Data first produced in the performance 

of this agreement. Except as otherwise 

specifically provided in this agreement, the 

Recipient may establish, without the prior 

approval of the Contracting Officer, claim to 

copyright subsisting in any data first 

produced in the performance of this 

agreement. If claim to copyright is made, the 

Recipient shall affix the applicable copyright 

notice of 17 U.S.C. 401 or 402 and 

acknowledgment of Government sponsorship 

(including agreement number) to the data 

when such data are delivered to the 

Government, as well as when the data are 

published or deposited for registration as a 

published work in the U.S. Copyright Office. 

For such copyrighted data, including 

computer software, the Recipient grants to 

the Government, and others acting on its 

behalf, a paid-up nonexclusive, irrevocable, 

worldwide license to reproduce, prepare 

derivative works, distribute copies to the 

public, and perform publicly and display 

publicly, by or on behalf of the Government, 

for all such data. 

(2) Data not first produced in the 

performance of this agreement. The Recipient 

shall not, without prior written permission of 

the Contracting Officer, incorporate in data 

delivered under this agreement any data that 

are not first produced in the performance of 

this agreement and that contain the copyright 

notice of 17 U.S.C. 401 or 402, unless the 

Recipient identifies such data and grants to 

the Government, or acquires on its behalf, a 

license of the same scope as set forth in 

paragraph (c)(1) of this clause; provided, 

however, that if such data are computer 

software, the Government shall acquire a 

copyright license as set forth in paragraph 

(h)(3) of this clause if included in this 

agreement or as otherwise may be provided 

in a collateral agreement incorporated or 

made a part of this agreement. 

(3) Removal of copyright notices. The 

Government agrees not to remove any 

copyright notices placed on data pursuant to 

this paragraph (c), and to include such 

notices on all reproductions of the data. 

(d) Release, Publication and Use of Data 

(1) The Receipt shall have the right to use, 

release to others, reproduce, distribute, or 

publish any data first produced or 

specifically used by the Recipient in the 

performance of this contract, except to the 

extent such data may be subject to the 

Federal export control or national security 

laws or regulations, or unless otherwise 

provided in this paragraph of this clause or 

expressly set forth in this contract. 

(2) The Recipient agrees that to the extent 

it receives or is given access to data necessary 

for the performance of this agreement which 

contain restrictive markings, the Recipient 

shall treat the data in accordance with such 

markings unless otherwise specifically 

authorized in writing by the Contracting 

Officer. 

(e) Unauthorized Marking of Data 

(1) Notwithstanding any other provisions 

of this agreement concerning inspection or 

acceptance, if any data delivered under this 

agreement are marked with the notices 

specified in paragraph (g)(2) or (g)(3) of this 

clause and use of such is not authorized by 

this clause, or if such data bears any other 

restrictive or limiting markings not 

authorized by this agreement, the Contracting 

Officer may at any time either return the data 

to the Recipient or cancel or ignore the 

markings. However, the following procedures 

shall apply prior to canceling or ignoring the 

markings. 

(i) The Contracting Officer shall make 

written inquiry to the Recipient affording the 

Recipient 30 days from receipt of the inquiry 

to provide written justification to 

substantiate the propriety of the markings; 

(ii) If the Recipient fails to respond or fails 

to provide written justification to 

substantiate the propriety of the markings 

within the 30-day period (or a longer time 

not exceeding 90 days approved in writing by 

the Contracting Officer for good cause 

shown), the Government shall have the right 

to cancel or ignore the markings at any time 

after said period and the data will no longer 

be made subject to any disclosure 

prohibitions. 

(iii) If the Recipient provides written 

justification to substantiate the propriety of 

the markings within the period set in 

subdivision (e)(1)(i) of this clause, the 

Contracting Officer shall consider such 

written justification and determine whether 

or not the markings are to be cancelled or 

ignored. If the Contracting Officer determines 

that the markings are authorized, the 

Recipient shall be so notified in writing. If 

the Contracting Officer determines, with 

concurrence of the head of the contracting 

activity, that the markings are not authorized, 

the Contracting Officer shall furnish the 

Recipient a written determination, which 

determination shall become the final agency 

decision regarding the appropriateness of the 

markings unless the Recipient files suit in a 

court of competent jurisdiction within 90 

days of receipt of the Contracting Officer’s 

decision. The Government shall continue to 

abide by the markings under this subdivision 

(e)(1)(iii) until final resolution of the matter 

either by the Contracting Officer’s 

determination become final (in which 

instance the Government shall thereafter 

have the right to cancel or ignore the 

markings at any time and the data will no 

longer be made subject to any disclosure 

prohibitions), or by final disposition of the 

matter by court decision if suit is filed. 

(2) The time limits in the procedures set 

forth in paragraph (e)(1) of this clause may 

be modified in accordance with agency 

regulations implementing the Freedom of 

Information Act (5 U.S.C. 552) if necessary to 

respond to a request thereunder. 

(f) Omitted or Incorrect Markings 

(1) Data delivered to the Government 

without either the limited rights or restricted 

rights notice as authorized by paragraph (g) 

of this clause, or the copyright notice 

required by paragraph (c) of this clause, shall 

be deemed to have been furnished with 

unlimited rights, and the Government 

assumes no liability for the disclosure, use, 

or reproduction of such data. However, to the 

extent the data has not been disclosed 

without restriction outside the Government, 

the Recipient may request, within 6 months 

(or a longer time approved by the Contracting 

Officer for good cause shown) after delivery 

of such data, permission to have notices 

placed on qualifying data at the Recipient’s 

expense, and the Contracting Officer may 

agree to do so if the Recipient— 

(i) Identifies the data to which the omitted 

notice is to be applied; 

(ii) Demonstrates that the omission of the 

notice was inadvertent; 

(iii) Establishes that the use of the 

proposed notice is authorized; and 

(iv) Acknowledges that the Government 

has no liability with respect to the disclosure, 

use, or reproduction of any such data made 

prior to the addition of the notice or resulting 

from the omission of the notice. 

(2) The Contracting Officer may also: 

(i) Permit correction at the Recipient’s 

expense of incorrect notices if the Recipient 

identifies the data on which correction of the 

notice is to be made, and demonstrates that 

the correct notice is authorized; or 

(ii) Correct any incorrect notices. 

(g) Rights to Protected Data 

(1) The Recipient may, with the 

concurrence of DOE, claim and mark as 

protected data, any data first produced in the 

performance of this award that would have 

been treated as a trade secret if developed at 

private expense. Any such claimed 

‘‘protected data’’ will be clearly marked with 

the following Protected Rights Notice, and 

will be treated in accordance with such 

Notice, subject to the provisions of 

paragraphs (e) and (f) of this clause. 

Protected Rights Notice 

These protected data were produced under 

agreement no. lll with the U.S. 

Department of Energy and may not be 

published, disseminated, or disclosed to 

others outside the Government until (Note:) 

The period of protection of such data is fully 

negotiable, but cannot exceed the applicable 

statutorily authorized maximum), unless 

express written authorization is obtained 

from the recipient. Upon expiration of the 

period of protection set forth in this Notice, 

the Government shall have unlimited rights 

in this data. This Notice shall be marked on 

any reproduction of this data, in whole or in 

part. 

(End of notice) 

(2) Any such marked Protected Data may 

be disclosed under obligations of 

confidentiality for the following purposes: 

(a) For evaluation purposes under the 

restriction that the ‘‘Protected Data’’ be 

retained in confidence and not be further 

disclosed; or 


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(b) To subcontractors or other team 

members performing work under the 

Government’s (insert name of program or 

other applicable activity) program of which 

this award is a part, for information or use 

in connection with the work performed 

under their activity, and under the restriction 

that the Protected Data be retained in 

confidence and not be further disclosed. 

(3) The obligations of confidentiality and 

restrictions on publication and dissemination 

shall end for any Protected Data. 

(a) At the end of the protected period; 

(b) If the data becomes publicly known or 

available from other sources without a breach 

of the obligation of confidentiality with 

respect to the Protected Data; 

(c) If the same data is independently 

developed by someone who did not have 

access to the Protected Data and such data is 

made available without obligations of 

confidentiality; or 

(d) If the Recipient disseminates or 

authorizes another to disseminate such data 

without obligations of confidentiality. 

(4) However, the Recipient agrees that the 

following types of data are not considered to 

be protected and shall be provided to the 

Government when required by this award 

without any claim that the data are Protected 

Data. The parties agree that notwithstanding 

the following lists of types of data, nothing 

precludes the Government from seeking 

delivery of additional data in accordance 

with this award, or from making publicly 

available additional non-protected data, nor 

does the following list constitute any 

admission by the Government that technical 

data not on the list is Protected Data. (Note: 

It is expected that this paragraph will specify 

certain types of mutually agreed upon data 

that will be available to the public and will 

not be asserted by the recipient/contractor as 

limited rights or protected data). 

(5) The Government’s sole obligation with 

respect to any protected data shall be as set 

forth in this paragraph (g). 

(h) Protection of Limited Rights Data 

When data other than that listed in 

paragraphs (b)(1)(i), (ii), and (iii) of this 

clause are specified to be delivered under 

this agreement and such data qualify as 

either limited rights data or restricted 

computer software, the Recipient, if the 

Recipient desires to continue protection of 

such data, shall withhold such data and not 

furnish them to the Government under this 

agreement. As a condition to this 

withholding the Recipient shall identify the 

data being withheld and furnish form, fit, 

and function data in lieu thereof. 

(i) Subaward/Contract 

The Recipient has the responsibility to 

obtain from its subrecipients/contractors all 

data and rights therein necessary to fulfill the 

Recipient’s obligations to the Government 

under this agreement. If a subrecipient/

contractor refuses to accept terms affording 

the Government such rights, the Recipient 

shall promptly bring such refusal to the 

attention of the Contracting Officer and not 

proceed with subaward/contract award 

without further authorization. 

(j) Additional Data Requirements 

In addition to the data specified elsewhere 

in this agreement to be delivered, the 

Contracting Officer may, at any time during 

agreement performance or within a period of 

3 years after acceptance of all items to be 

delivered under this agreement, order any 

data first produced or specifically used in the 

performance of this agreement. This clause is 

applicable to all data ordered under this 

subparagraph. Nothing contained in this 

subparagraph shall require the Recipient to 

deliver any data the withholding of which is 

authorized by this clause or data which are 

specifically identified in this agreement as 

not subject to this clause. When data are to 

be delivered under this subparagraph, the 

Recipient will be compensated for converting 

the data into the prescribed form, for 

reproduction, and for delivery. 

(k) The Recipient agrees, except as may be 

otherwise specified in this agreement for 

specific data items listed as not subject to 

this paragraph, that the Contracting Officer or 

an authorized representative may, up to three 

years after acceptance of all items to be 

delivered under this contract, inspect at the 

Recipient’s facility any data withheld 

pursuant to paragraph (h) of this clause, for 

purposes of verifying the Recipient’s 

assertion pertaining to the limited rights or 

restricted rights status of the data or for 

evaluating work performance. Where the 

Recipient whose data are to be inspected 

demonstrates to the Contracting Officer that 

there would be a possible conflict of interest 

if the inspection were made by a particular 

representative, the Contracting Officer shall 

designate an alternate inspector. 

As prescribed in 2 CFR 910.362(e)(2), the 

following Alternate I and/or II may be 

inserted in the clause in the award 

instrument. 

Alternate I 

(h)(2) Notwithstanding paragraph (h)(1) of 

this clause, the agreement may identify and 

specify the delivery of limited rights data, or 

the Contracting Officer may require by 

written request the delivery of limited rights 

data that has been withheld or would 

otherwise be withholdable. If delivery of 

such data is so required, the Recipient may 

affix the following ‘‘Limited Rights Notice’’ 

to the data and the Government will 

thereafter treat the data, in accordance with 

such Notice: 

Limited Rights Notice 

(a) These data are submitted with limited 

rights under Government agreement No.___ 

(and subaward/contract No. _________, if 

appropriate). These data may be reproduced 

and used by the Government with the 

express limitation that they will not, without 

written permission of the Recipient, be used 

for purposes of manufacture nor disclosed 

outside the Government; except that the 

Government may disclose these data outside 

the Government for the following purposes, 

if any, provided that the Government makes 

such disclosure subject to prohibition against 

further use and disclosure: 

(1) Use (except for manufacture) by Federal 

support services contractors within the scope 

of their contracts; 

(2) This ‘‘limited rights data’’ may be 

disclosed for evaluation purposes under the 

restriction that the ‘‘limited rights data’’ be 

retained in confidence and not be further 

disclosed; 

(3) This ‘‘limited rights data’’ may be 

disclosed to other contractors participating in 

the Government’s program of which this 

Recipient is a part for information or use 

(except for manufacture) in connection with 

the work performed under their awards and 

under the restriction that the ‘‘limited rights 

data’’ be retained in confidence and not be 

further disclosed; 

(4) This ‘‘limited rights data’’ may be used 

by the Government or others on its behalf for 

emergency repair or overhaul work under the 

restriction that the ‘‘limited rights data’’ be 

retained in confidence and not be further 

disclosed; and 

(5) Release to a foreign government, or 

instrumentality thereof, as the interests of the 

United States Government may require, for 

information or evaluation, or for emergency 

repair or overhaul work by such government. 

This Notice shall be marked on any 

reproduction of this data in whole or in part. 

(b) This Notice shall be marked on any 

reproduction of these data, in whole or in 

part. 

(End of notice) 

Alternate II 

(h)(3)(i) Notwithstanding paragraph (h)(1) 

of this clause, the agreement may identify 

and specify the delivery of restricted 

computer software, or the Contracting Officer 

may require by written request the delivery 

of restricted computer software that has been 

withheld or would otherwise be 

withholdable. If delivery of such computer 

software is so required, the Recipient may 

affix the following ‘‘Restricted Rights Notice’’ 

to the computer software and the 

Government will thereafter treat the 

computer software, subject to paragraphs (d) 

and (e) of this clause, in accordance with the 

Notice: 

Restricted Rights Notice 

(a) This computer software is submitted 

with restricted rights under Government 

Agreement No._________ (and subaward/

contract _________, if appropriate). It may not 

be used, reproduced, or disclosed by the 

Government except as provided in paragraph 

(c) of this Notice or as otherwise expressly 

stated in the agreement. 

(b) This computer software may be— 

(1) Used or copied for use in or with the 

computer or computers for which it was 

acquired, including use at any Government 

installation to which such computer or 

computers may be transferred; 

(2) Used or copies for use in a backup 

computer if any computer for which it was 

acquired is inoperative 

(3) Reproduced for safekeeping (archives) 

or backup purposes; 

(4) Modified, adapted, or combined with 

other computer software, provided that the 

modified, combined, or adapted portions of 

the derivative software are made subject to 

the same restricted rights; 

(5) Disclosed to and reproduced for use by 

Federal support service Contractors in 

accordance with paragraphs (b)(1) through (4) 

of this clause, provided the Government 

makes such disclosure or reproduction 

subject to these restricted rights; and 

(6) Used or copies for use in or transferred 

to a replacement computer. 


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(c) Notwithstanding the foregoing, if this 

computer software is published copyrighted 

computer software, it is licensed to the 

Government, without disclosure 

prohibitions, with the minimum rights set 

forth in paragraph (b) of this clause. 

(d) Any other rights or limitations 

regarding the use, duplication, or disclosure 

of this computer software are to be expressly 

stated in, or incorporated in, the agreement. 

(e) This Notice shall be marked on any 

reproduction of this computer software, in 

whole or in part. 

(End of notice) 

(ii) Where it is impractical to include the 

Restricted Rights Notice on restricted 

computer software, the following short-form 

Notice may be used in lieu thereof: 

Restricted Rights Notice 

Use, reproduction, or disclosure is subject 

to restrictions set forth in Agreement 

No.______ (and subaward/contract_________, 

if appropriate) with______ (name of Recipient 

and subrecipient/contractor). 

(End of notice) 

(iii) If restricted computer software is 

delivered with the copyright notice of 17 

U.S.C. 401, it will be presumed to be 

published copyrighted computer software 

licensed to the Government without 

disclosure prohibitions, with the minimum 

rights set forth in paragraph (b) of this clause, 

unless the Recipient includes the following 

statement with such copyright notice: 

‘‘Unpublished—rights reserved under the 

Copyright Laws of the United States.’’ 

(End of clause) 

Subpart E—Cost Principles 

§ 910.401 Application to M&O’s. 

In accordance with 48 CFR 970.3002– 

1 and 970.3101–00–70, a Federally 

Funded Research Center (FFRDC) which 

is also a designated DOE Management 

and Operating (M&O) contract must 

follow the cost accounting standards 

(CAS) contained in 48 CFR part 30 and 

must follow the appropriate Cost 

Principles contained in 48 CFR part 31. 

Subpart F—Audit Requirements for 

For-Profit Entities 

General 

§ 910.500 Purpose. 

This Part follows the same format as 

2 CFR 200.500. We purposely did not 

renumber the paragraphs within this 

part so that auditors and recipients can 

compare this to the single audit 

requirements contained in 2 CFR 

200.500. 

Audits 

§ 910.501 Audit requirements. 

(a) Audit required. A for–profit entity 

that expends $750,000 or more during 

the non-Federal entity’s fiscal year in 

DOE awards must have a compliance 

audit conducted for that year in 

accordance with the provisions of this 

Part. 

(b) Compliance audit. (1) If a for-profit 

entity has one or more DOE awards with 

expenditures of $750,000 or more 

during the for-profit entity’s fiscal year, 

they must have a compliance audit for 

each of the awards with $750,000 or 

more in expenditures. The remaining 

awards do not require, individually or 

in the aggregate, a compliance audit. 

(2) If a for-profit entity receives more 

than one award from DOE with a sum 

total of expenditures of $750,000 or 

more, but does not have any single 

award with expenditures of $750,000 or 

more; the entity must determine 

whether any or all of the awards have 

common compliance requirements (i.e., 

are considered a cluster of awards) and 

determine the total expenditures of the 

awards with common compliance 

requirements. A compliance audit is 

required for the largest cluster of awards 

(if multiple clusters of awards exist) or 

the largest award not in a cluster of 

awards, whichever corresponding 

expenditure total is greater. The 

remaining awards do not require, 

individually or in the aggregate, a 

compliance audit; 

(3) If a for-profit entity receives one or 

more awards from DOE with a sum total 

of expenditures less than $750,000, no 

compliance audit is required; 

(4) If the for-profit entity is a subrecipient, 2 CFR 200.501(h) requires that 

the pass-through entity establish 

appropriate monitoring and controls to 

ensure the sub-recipient complies with 

award requirements. These compliance 

audits must be conducted in accordance 

with 2 CFR 200.514 Scope of audit 

(c) Program-specific audit election. 

Not applicable. 

(d) Exemption when Federal awards 

expended are less than $750,000. A forprofit entity that expends less than 

$750,000 during the for-profit’s fiscal 

year in DOE awards is exempt from DOE 

audit requirements for that year, except 

as noted in § 910.503 Relation to other 

audit requirements, but records must be 

available for review or audit by 

appropriate officials of the Federal 

agency, pass-through entity, and 

Government Accountability Office 

(GAO). 

(e) Federally Funded Research and 

Development Centers (FFRDC). 

Management of an auditee that owns or 

operates a FFRDC may elect to treat the 

FFRDC as a separate entity for purposes 

of this Part. 

(f) Subrecipients and Contractors. An 

auditee may simultaneously be a 

recipient, a subrecipient, and a 

contractor. Federal awards expended as 

a recipient are subject to audit under 

this Part. The payments received for 

goods or services provided as a 

contractor are not Federal awards. 

Section 2 CFR 200.330 Subrecipient and 

contractor determinations should be 

considered in determining whether 

payments constitute a Federal award or 

a payment for goods or services 

provided as a contractor. 

(g) Compliance responsibility for 

contractors. In most cases, the auditee’s 

compliance responsibility for 

contractors is only to ensure that the 

procurement, receipt, and payment for 

goods and services comply with Federal 

statutes, regulations, and the terms and 

conditions of Federal awards. Federal 

award compliance requirements 

normally do not pass through to 

contractors. However, the auditee is 

responsible for ensuring compliance for 

procurement transactions which are 

structured such that the contractor is 

responsible for program compliance or 

the contractor’s records must be 

reviewed to determine program 

compliance. Also, when these 

procurement transactions relate to a 

major program, the scope of the audit 

must include determining whether these 

transactions are in compliance with 

Federal statutes, regulations, and the 

terms and conditions of Federal awards. 

(h) For-profit subrecipient. Since this 

Part does not apply to for-profit 

subrecipients, the pass-through entity is 

responsible for establishing 

requirements, as necessary, to ensure 

compliance by for-profit subrecipients 

to DOE Federal award requirements. 

The agreement with the for-profit 

subrecipient should describe applicable 

compliance requirements and the forprofit subrecipient’s compliance 

responsibility. Methods to ensure 

compliance for Federal awards made to 

for-profit subrecipients may include 

pre-award audits, monitoring during the 

agreement, and post-award audits. See 

also 2 CFR 200.331 Requirements for 

pass- through entities. 

§ 910.502 Basis for determining DOE 

awards expended. 

Determining DOE awards expended. 

The determination of when a DOE 

award is expended should be based on 

when the activity related to the DOE 

award occurs. Generally, the activity 

pertains to events that require the nonFederal entity to comply with Federal 

statutes, regulations, and the terms and 

conditions of DOE awards, such as: 

expenditure/expense transactions 

associated with awards including 

grants, cost-reimbursement contracts 

under the FAR, compacts with Indian 

Tribes, cooperative agreements, and 

direct appropriations; the disbursement 


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of funds to subrecipients; the use of loan 

proceeds under loan and loan guarantee 

programs; the receipt of property; the 

receipt of surplus property; the receipt 

or use of program income; the 

distribution or use of food commodities; 

the disbursement of amounts entitling 

the for-profit entity to an interest 

subsidy; and the period when insurance 

is in force. 

(a) Loan and loan guarantees (loans). 

Loan and loan guarantees issued by the 

DOE Loan Program Office 

corresponding to Title XVII of the 

Energy Policy Act of 2005, as amended, 

42 U.S.C. 16511–16516 (‘‘Title XVII’’) 

are exempt from these provisions. 

(1) Not applicable. 

(2) Not applicable. 

(3) Not applicable. 

(b) Not applicable. 

(c) Not applicable. 

(d) Endowment funds. The 

cumulative balance of DOE awards for 

endowment funds that are federally 

restricted are considered DOE awards 

expended in each audit period in which 

the funds are still restricted. 

(e) Free rent. Free rent received by 

itself is not considered a DOE award 

expended under this Part. However, free 

rent received as part of a DOE award to 

carry out a DOE program must be 

included in determining DOE awards 

expended and subject to audit under 

this Part. 

(f) Valuing non-cash assistance. DOE 

non-cash assistance, such as free rent, 

food commodities, donated property, or 

donated surplus property, must be 

valued at fair market value at the time 

of receipt or the assessed value provided 

by DOE. 

(g) Not applicable. 

(h) Not applicable. 

(i) Not applicable. 

§ 910.503 Relation to other audit 

requirements. 

(a) An audit conducted in accordance 

with this Part must be in lieu of any 

financial audit of DOE awards which a 

for-profit entity is required to undergo 

under any other Federal statute or 

regulation. To the extent that such audit 

provides DOE with the information it 

requires to carry out its responsibilities 

under Federal statute or regulation, DOE 

must rely upon and use that 

information. 

(b) Notwithstanding paragraph (a) of 

this section, DOE, Inspectors General, or 

GAO may conduct or arrange for 

additional audits which are necessary to 

carry out its responsibilities under 

Federal statute or regulation. The 

provisions of this Part do not authorize 

any for-profit entity to constrain, in any 

manner, DOE from carrying out or 

arranging for such additional audits, 

except that DOE must plan such audits 

to not be duplicative of other audits of 

DOE. Any additional audits must be 

planned and performed in such a way 

as to build upon work performed, 

including the audit documentation, 

sampling, and testing already 

performed, by other auditors. 

(c) The provisions of this Part do not 

limit the authority of DOE to conduct, 

or arrange for the conduct of, audits and 

evaluations of DOE awards, nor limit 

the authority of any Federal agency 

Inspector General or other Federal 

official. 

(d) DOE to pay for additional audits. 

If DOE conducts or arranges for 

additional audits it must, consistent 

with other applicable Federal statutes 

and regulations, arrange for funding the 

full cost of such additional audits. 

(e) Not applicable. 

§ 910.504 Frequency of audits. 

Audits required by this Part must be 

performed annually. 

(a) Not applicable. 

(b) Not applicable. 

§ 910.505 Sanctions. 

In cases of continued inability or 

unwillingness to have an audit 

conducted in accordance with this Part, 

DOE and pass-through entities must 

take appropriate action as provided in 2 

CFR 200.338 Remedies for 

noncompliance. 

§ 910.506 Audit costs. 

See 2 CFR 200.425 Audit services. 

§ 910.507 Program-specific audits. 

(a) Program-specific audit guide 

available. In many cases, a programspecific audit guide will be available to 

provide specific guidance to the auditor 

with respect to internal controls, 

compliance requirements, suggested 

audit procedures, and audit reporting 

requirements. A listing of current 

program-specific audit guides can be 

found in the compliance supplement 

beginning with the 2014 supplement 

including Federal awarding agency 

contact information and a Web site 

where a copy of the guide can be 

obtained. When a current programspecific audit guide is available, the 

auditor must follow GAGAS and the 

guide when performing a programspecific audit. 

(1) Program-specific audit guide not 

available. When a program-specific 

audit guide is not available, the auditee 

and auditor must conduct the 

compliance audit in accordance with 

GAAS and GAGAS. 

(2) If audited financial statements are 

available, for-profit recipients should 

submit audited financial statements to 

DOE as a part of the compliance audit. 

(If the recipient is a subsidiary for 

which separate financial statements are 

not available, the recipient may submit 

the financial statements of the 

consolidated group.) 

(3) The auditor must: 

(i) Not applicable. 

(ii) Obtain an understanding of 

internal controls and perform tests of 

internal controls over the DOE program 

consistent with the requirements of 

§ 910.514 Scope of audit., 

(iii) Perform procedures to determine 

whether the auditee has complied with 

Federal statutes, regulations, and the 

terms and conditions of DOE awards 

that could have a direct and material 

effect on the DOE program consistent 

with the requirements of § 910.514 

Scope of audit. 

(iv) Follow up on prior audit findings, 

perform procedures to assess the 

reasonableness of the summary 

schedule of prior audit findings 

prepared by the auditee in accordance 

with the requirements of § 910.511 

Audit findings follow-up, and report, as 

a current year audit finding, when the 

auditor concludes that the summary 

schedule of prior audit findings 

materially misrepresents the status of 

any prior audit finding; and 

(v) Report any audit findings 

consistent with the requirements of 

§ 910.516 Audit findings. 

(4) The auditor’s report(s) may be in 

the form of either combined or separate 

reports and may be organized differently 

from the manner presented in this 

section. The auditor’s report(s) must 

state that the audit was conducted in 

accordance with this Part and include 

the following: 

(i) An opinion (or disclaimer of 

opinion) as to whether the financial 

statement(s) (if available) of the DOE 

program is presented fairly in all 

material respects in accordance with the 

stated accounting policies; 

(ii) A report on internal control 

related to the DOE program, which must 

describe the scope of testing of internal 

control and the results of the tests; 

(iii) A report on compliance which 

includes an opinion (or disclaimer of 

opinion) as to whether the auditee 

complied with laws, regulations, and 

the terms and conditions of DOE awards 

which could have a direct and material 

effect on the DOE program; and 

(iv) A schedule of findings and 

questioned costs for the DOE program 

that includes a summary of the auditor’s 

results relative to the DOE program in 

a format consistent with § 910.515 Audit 

reporting, paragraph (d)(1) and findings 

and questioned costs consistent with the 


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requirements of § 910.515 Audit 

reporting, paragraph (d)(3). 

(5) Report submission for programspecific audits. The audit must be 

completed and the reporting required by 

paragraph (c)(2) or (c)(3) of this section 

submitted within the earlier of 30 

calendar days after receipt of the 

auditor’s report(s), or nine months after 

the end of the audit period, unless a 

different period is specified in a 

program-specific audit guide. Unless 

restricted by Federal law or regulation, 

the auditee must make report copies 

available for public inspection. Auditees 

and auditors must ensure that their 

respective parts of the reporting package 

do not include protected personally 

identifiable information. 

(6) When a program-specific audit 

guide is available, the compliance 

audits must be submitted (along with 

audited financial statements if audited 

financial statements are available), to 

the appropriate DOE Contracting Officer 

as well as to the DOE Office of the Chief 

Financial Officer. 

(7) When a program-specific audit 

guide is not available, the reporting 

package for a program-specific audit 

must consist of, a summary schedule of 

prior audit findings, and a corrective 

action plan as described in paragraph 

(b)(2) of this section, and the auditor’s 

report(s) described in paragraph (b)(4) of 

this section. The compliance audit must 

be submitted (along with audited 

financial statements if audited financial 

statements are available), to the 

appropriate DOE Contracting Officer as 

well as to the DOE Office of the Chief 

Financial Officer. 

(b) Other sections of this Part may 

apply. Program-specific audits are 

subject to: 

(1) 910.500 Purpose through 910.503 

Relation to other audit requirements, 

paragraph (d); 

(2) 910.504 Frequency of audits 

through 910.506 Audit costs; 

(3) 910.508 Auditee responsibilities 

through 910.509 Auditor selection; 

(4) 910.511 Audit findings follow-up; 

(5) 910.512 Report submission, 

paragraphs (e) through (h); 

(6) 910.513 Responsibilities; 

(7) 910.516 Audit findings through 

910.517 Audit documentation; 

(8) 910.521 Management decision, 

and 

(9) Other referenced provisions of this 

Part unless contrary to the provisions of 

this section, a program-specific audit 

guide, or program statutes and 

regulations. 

Auditees 

§ 910.508 Auditee responsibilities. 

The auditee must: 

(a) Procure or otherwise arrange for 

the audit required by this Part in 

accordance with § 910.509 Auditor 

selection, and ensure it is properly 

performed and submitted when due in 

accordance with § 910.512 Report 

submission. 

(b) Submit appropriate financial 

statements (if available). 

(c) Submit the schedule of 

expenditures of DOE awards in 

accordance with § 910.510 Financial 

statements. 

(d) Promptly follow up and take 

corrective action on audit findings, 

including preparation of a summary 

schedule of prior audit findings and a 

corrective action plan in accordance 

with § 910.511 Audit findings followup, paragraph (b) and § 910.511 Audit 

findings follow-up, paragraph (c), 

respectively. 

(e) Provide the auditor with access to 

personnel, accounts, books, records, 

supporting documentation, and other 

information as needed for the auditor to 

perform the audit required by this Part. 

§ 910.509 Auditor selection. 

(a) Auditor procurement. When 

procuring audit services, the objective is 

to obtain high-quality audits. In 

requesting proposals for audit services, 

the objectives and scope of the audit 

must be made clear and the for-profit 

entity must request a copy of the audit 

organization’s peer review report which 

the auditor is required to provide under 

GAGAS. Factors to be considered in 

evaluating each proposal for audit 

services include the responsiveness to 

the request for proposal, relevant 

experience, availability of staff with 

professional qualifications and technical 

abilities, the results of peer and external 

quality control reviews, and price. 

Whenever possible, the auditee must 

make positive efforts to utilize small 

businesses, minority-owned firms, and 

women’s business enterprises, in 

procuring audit services as stated in 2 

CFR 200.321 Contracting with small and 

minority businesses, women’s business 

enterprises, and labor surplus area 

firms, or the FAR (48 CFR part 42), as 

applicable. 

(b) Restriction on auditor preparing 

indirect cost proposals. An auditor who 

prepares the indirect cost proposal or 

cost allocation plan may not also be 

selected to perform the audit required 

by this Part when the indirect costs 

recovered by the auditee during the 

prior year exceeded $1 million. This 

restriction applies to the base year used 

in the preparation of the indirect cost 

proposal or cost allocation plan and any 

subsequent years in which the resulting 

indirect cost agreement or cost 

allocation plan is used to recover costs. 

(c) Use of Federal auditors. Federal 

auditors may perform all or part of the 

work required under this Part if they 

comply fully with the requirements of 

this Part. 

§ 910.510 Financial statements. 

(a) Financial statements. If available, 

the auditee must submit financial 

statements that reflect its financial 

position, results of operations or 

changes in net assets, and, where 

appropriate, cash flows for the fiscal 

year audited. The financial statements 

must be for the same organizational unit 

and fiscal year that is chosen to meet the 

requirements of this Part. However, forprofit entity-wide financial statements 

may also include departments, agencies, 

and other organizational units that have 

separate audits in accordance with 

§ 910.514 Scope of audit, paragraph (a) 

and prepare separate financial 

statements. 

(b) Schedule of expenditures of DOE 

awards. The auditee must prepare a 

schedule of expenditures of DOE awards 

for the period covered by the auditee’s 

fiscal year which must include the total 

DOE awards expended as determined in 

accordance with § 910.502 Basis for 

determining DOE awards expended. 

While not required, the auditee may 

choose to provide information requested 

by DOE and pass- through entities to 

make the schedule easier to use. For 

example, when a DOE program has 

multiple DOE award years, the auditee 

may list the amount of DOE awards 

expended for each DOE award year 

separately. At a minimum, the schedule 

must: 

(1) List individual DOE programs. For 

a cluster of programs, provide the 

cluster name, list individual DOE 

programs within the cluster of 

programs. For R&D, total DOE awards 

expended must be shown by individual 

DOE award and major subdivision 

within DOE. For example, the National 

Institutes of Health is a major 

subdivision in the Department of Health 

and Human Services. 

(2) Not applicable. 

(3) Provide total DOE awards 

expended for each individual DOE 

program and the CFDA number For a 

cluster of programs also provide the 

total for the cluster. 

(4) Not applicable. 

(5) Not applicable. 

(6) Include notes that describe that 

significant accounting policies used in 

preparing the schedule, and note 

whether or not the for-profit entity 

elected to use the 10% de minimis cost 


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rate as covered in 2 CFR 200.414 

Indirect (F&A) costs. 

§ 910.511 Audit findings follow-up. 

(a) General. The auditee is responsible 

for follow-up and corrective action on 

all audit findings. As part of this 

responsibility, the auditee must prepare 

a summary schedule of prior audit 

findings. The auditee must also prepare 

a corrective action plan for current year 

audit findings. The summary schedule 

of prior audit findings and the 

corrective action plan must include the 

reference numbers the auditor assigns to 

audit findings under § 910.516 Audit 

findings, paragraph (c). Since the 

summary schedule may include audit 

findings from multiple years, it must 

include the fiscal year in which the 

finding initially occurred. The 

corrective action plan and summary 

schedule of prior audit findings must 

include findings relating to the financial 

statements which are required to be 

reported in accordance with GAGAS. 

(b) Summary schedule of prior audit 

findings. The summary schedule of 

prior audit findings must report the 

status of all audit findings included in 

the prior audit’s schedule of findings 

and questioned costs. The summary 

schedule must also include audit 

findings reported in the prior audit’s 

summary schedule of prior audit 

findings except audit findings listed as 

corrected in accordance with paragraph 

(b)(1) of this section, or no longer valid 

or not warranting further action in 

accordance with paragraph (b)(3) of this 

section. 

(1) When audit findings were fully 

corrected, the summary schedule need 

only list the audit findings and state that 

corrective action was taken. 

(2) When audit findings were not 

corrected or were only partially 

corrected, the summary schedule must 

describe the reasons for the finding’s 

recurrence and planned corrective 

action, and any partial corrective action 

taken. When corrective action taken is 

significantly different from corrective 

action previously reported in a 

corrective action plan or in DOE’s or 

pass-through entity’s management 

decision, the summary schedule must 

provide an explanation. 

(3) When the auditee believes the 

audit findings are no longer valid or do 

not warrant further action, the reasons 

for this position must be described in 

the summary schedule. A valid reason 

for considering an audit finding as not 

warranting further action is that all of 

the following have occurred: 

(i) Two years have passed since the 

audit report in which the finding 

occurred was submitted to DOE; 

(ii) DOE is not currently following up 

with the auditee on the audit finding; 

and 

(iii) A management decision was not 

issued. 

(c) Corrective action plan. At the 

completion of the audit, the auditee 

must prepare, in a document separate 

from the auditor’s findings described in 

§ 910.516 Audit findings, a corrective 

action plan to address each audit 

finding included in the current year 

auditor’s reports. The corrective action 

plan must provide the name(s) of the 

contact person(s) responsible for 

corrective action, the corrective action 

planned, and the anticipated 

completion date. If the auditee does not 

agree with the audit findings or believes 

corrective action is not required, then 

the corrective action plan must include 

an explanation and specific reasons. 

§ 910.512 Report submission. 

(a) General. (1) The audit must be 

completed and the reporting package 

described in paragraph (c) of this 

section must be submitted within the 

earlier of 30 calendar days after receipt 

of the auditor’s report(s), or nine months 

after the end of the audit period. If the 

due date falls on a Saturday, Sunday, or 

Federal holiday, the reporting package 

is due the next business day. 

(2) Unless restricted by Federal 

statutes or regulations, the auditee must 

make copies available for public 

inspection. Auditees and auditors must 

ensure that their respective parts of the 

reporting package do not include 

protected personally identifiable 

information. 

(b) Data collection. See paragraph 

(b)(1) of this section: 

(1) A senior level representative of the 

auditee (e.g., director of finance, chief 

executive officer, or chief financial 

officer) must sign a statement to be 

included as part of the reporting 

package that says that the auditee 

complied with the requirements of this 

Part, the reporting package does not 

include protected personally 

identifiable information, and the 

information included in its entirety is 

accurate and complete. 

(2) Not applicable. 

(3) Not applicable. 

(c) Reporting package. The reporting 

package must include the: 

(1) Financial statements (if available) 

and schedule of expenditures of DOE 

awards discussed in § 910.510 Financial 

statements, paragraphs (a) and (b), 

respectively; 

(2) Summary schedule of prior audit 

findings discussed in § 910.511 Audit 

findings follow-up, paragraph (b); 

(3) Auditor’s report(s) discussed in 

§ 910.515 Audit reporting; and 

(4) Corrective action plan discussed in 

§ 910.511 Audit findings follow-up, 

paragraph (c). 

(d) Submission to DOE. The auditee 

must electronically submit the 

compliance reporting package described 

in paragraph (c) of this section 

compliance audits must be submitted 

(along with audited financial statements 

if audited financial statements are 

available), to the appropriate DOE 

Contracting Officer as well as to the 

DOE Office of the Chief Financial 

Officer. 

(e) Requests for management letters 

issued by the auditor. In response to 

requests by a Federal agency, auditees 

must submit a copy of any management 

letters issued by the auditor. 

(f) Report retention requirements. 

Auditees must keep one copy of the 

reporting package described in 

paragraph (c) of this section on file for 

three years from the date of submission 

to DOE. 

(g) Not applicable. 

(h) Not applicable. 

Federal Agencies 

§ 910.513 Responsibilities. 

(a)(1) Not applicable. 

(2) Not applicable. 

(3) Not applicable. 

(i) Not applicable. 

(ii) Not applicable. 

(iii) Not applicable. 

(iv) Not applicable. 

(v) Not applicable. 

(vi) Not applicable. 

(vii) Not applicable. 

(viii) Not applicable. 

(ix) Not applicable. 

(b) Not applicable 

(1) Not applicable 

(2) Not applicable 

(c) DOE responsibilities. DOE must 

perform the following for the awards it 

makes (See also the requirements of 2 

CFR 200.210 Information contained in a 

Federal award): 

(1) Ensure that audits are completed 

and reports are received in a timely 

manner and in accordance with the 

requirements of this Part. 

(2) Provide technical advice and 

counsel to auditees and auditors as 

requested. 

(3) Follow-up on audit findings to 

ensure that the recipient takes 

appropriate and timely corrective 

action. As part of audit follow-up, the 

DOE must: 

(i) Issue a management decision as 

prescribed in § 910.521 Management 

decision; 

(ii) Monitor the recipient taking 

appropriate and timely corrective 

action; 


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(iii) Use cooperative audit resolution 

mechanisms (see 2 CFR 200.25 

Cooperative audit resolution) to 

improve DOE program outcomes 

through better audit resolution, followup, and corrective action; and 

(iv) Develop a baseline, metrics, and 

targets to track, over time, the 

effectiveness of the DOE’s process to 

follow-up on audit findings and on the 

effectiveness of Compliance Audits in 

improving non-Federal entity 

accountability and their use by DOE in 

making award decisions. 

(4) Not applicable. 

(5) Not applicable: 

(i) Not applicable 

(ii) Not applicable 

(6) Not applicable 

(7) Not applicable 

(i) Not applicable 

(ii) Not applicable. 

(iii) Not applicable. 

(iv) Not applicable 

(v) Not applicable 

(vi) Not applicable 

(vii) Not applicable. 

(viii) Not applicable 

Auditors 

§ 910.514 Scope of audit. 

(a) General. The audit must be 

conducted in accordance with GAGAS. 

The audit must cover the entire 

operations of the auditee, or, at the 

option of the auditee, such audit must 

include a series of audits that cover 

departments, agencies, and other 

organizational units that expended or 

otherwise administered DOE awards 

during such audit period, provided that 

each such audit must encompass the 

schedule of expenditures of DOE awards 

for each such department, agency, and 

other organizational unit, which must 

be considered to be a for-profit entity. 

The financial statements (if available) 

and schedule of expenditures of DOE 

awards must be for the same audit 

period. 

(b) Financial statements. If financial 

statements are available, the auditor 

must determine whether the schedule of 

expenditures of DOE awards is stated 

fairly in all material respects in relation 

to the auditee’s financial statements as 

a whole. 

(1) Internal control. The compliance 

supplement provides guidance on 

internal controls over Federal programs 

based upon the guidance in Standards 

for Internal Control in the Federal 

Government issued by the Comptroller 

General of the United States and the 

Internal Control— Integrated 

Framework, issued by the Committee of 

Sponsoring Organizations of the 

Treadway Commission (COSO). 

(2) In addition to the requirements of 

GAGAS the auditor must perform 

procedures to obtain an understanding 

of internal control over DOE programs 

sufficient to plan the audit to support a 

low assessed level of control risk of 

noncompliance for major programs. 

(3) Except as provided in paragraph 

(c)(4) of this section, the auditor must: 

(i) Plan the testing of internal control 

over compliance to support a low 

assessed level of control risk for the 

assertions relevant to the compliance 

requirements. 

(ii) Perform testing of internal control 

as planned in paragraph (c)(3)(i) of this 

section. 

(4) When internal control over some 

or all of the compliance requirements 

are likely to be ineffective in preventing 

or detecting noncompliance, the 

planning and performing of testing 

described in paragraph (c)(3) of this 

section are not required for those 

compliance requirements. However, the 

auditor must report a significant 

deficiency or material weakness in 

accordance with § 910.516 Audit 

findings, assess the related control risk 

at the maximum, and consider whether 

additional compliance tests are required 

because of ineffective internal control. 

(5) Compliance. In addition to the 

requirements of GAGAS, the auditor 

must determine whether the auditee has 

complied with Federal statutes, 

regulations, and the terms and 

conditions of Federal awards that may 

have a direct and material effect. 

(6) The principal compliance 

requirements applicable to most Federal 

programs and the compliance 

requirements of the largest Federal 

programs are included in the 

compliance supplement. 

(7) For the compliance requirements 

related to Federal programs contained in 

the compliance supplement, an audit of 

these compliance requirements will 

meet the requirements of this Part. 

Where there have been changes to the 

compliance requirements and the 

changes are not reflected in the 

compliance supplement, the auditor 

must determine the current compliance 

requirements and modify the audit 

procedures accordingly. For those 

Federal programs not covered in the 

compliance supplement, the auditor 

should follow the compliance 

supplement’s guidance for programs not 

included in the supplement. 

(8) The compliance testing must 

include tests of transactions and such 

other auditing procedures necessary to 

provide the auditor sufficient 

appropriate audit evidence to support 

an opinion on compliance. 

(c) Audit follow-up. The auditor must 

follow-up on prior audit findings, 

perform procedures to assess the 

reasonableness of the summary 

schedule of prior audit findings 

prepared by the auditee in accordance 

with § 910.511 Audit findings follow-up 

paragraph (b), and report, as a current 

year audit finding, when the auditor 

concludes that the summary schedule of 

prior audit findings materially 

misrepresents the status of any prior 

audit finding. The auditor must perform 

audit follow-up procedures. 

§ 910.515 Audit reporting. 

The auditor’s report(s) may be in the 

form of either combined or separate 

reports and may be organized differently 

from the manner presented in this 

section. The auditor’s report(s) must 

state that the audit was conducted in 

accordance with this Part and include 

the following: 

(a) An opinion (or disclaimer of 

opinion) as to whether the financial 

statements (if available) are presented 

fairly in all material respects in 

accordance with generally accepted 

accounting principles and an opinion 

(or disclaimer of opinion) as to whether 

the schedule of expenditures of DOE 

awards is fairly stated in all material 

respects in relation to the financial 

statements (if available) as a whole. 

(b) A report on internal control over 

financial reporting and compliance with 

Federal statutes, regulations, and the 

terms and conditions of the DOE award, 

noncompliance with which could have 

a material effect on the financial 

statements. This report must describe 

the scope of testing of internal control 

and compliance and the results of the 

tests, and, where applicable, it will refer 

to the separate schedule of findings and 

questioned costs described in paragraph 

(d) of this section. 

(c) A report on compliance and report 

and internal control over compliance. 

This report must describe the scope of 

testing of internal control over 

compliance, include an opinion or 

modified opinion as to whether the 

auditee complied with Federal statutes, 

regulations, and the terms and 

conditions of DOE awards which could 

have a direct and material effect and 

refer to the separate schedule of findings 

and questioned costs described in 

paragraph (d) of this section. 

(d) A schedule of findings and 

questioned costs which must include 

the following three components: 

(1) A summary of the auditor’s results, 

which must include: 

(i) The type of report the auditor 

issued (if applicable)on whether the 

financial statements (if available) 


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audited were prepared in accordance 

with GAAP (i.e., unmodified opinion, 

qualified opinion, adverse opinion, or 

disclaimer of opinion); 

(ii) Where applicable, a statement 

about whether significant deficiencies 

or material weaknesses in internal 

control were disclosed by the audit of 

the financial statements (if available); 

(iii) A statement (if applicable) as to 

whether the audit disclosed any 

noncompliance that is material to the 

financial statements (if available) of the 

auditee; 

(iv) Where applicable, a statement 

about whether significant deficiencies 

or material weaknesses in internal 

control over major programs were 

disclosed by the audit; 

(v) The type of report the auditor 

issued on compliance (i.e., unmodified 

opinion, qualified opinion, adverse 

opinion, or disclaimer of opinion); 

(vi) A statement as to whether the 

audit disclosed any audit findings that 

the auditor is required to report under 

§ 910.516 Audit findings paragraph (a); 

(vii) Not applicable. 

(viii) Not applicable. 

(ix) Not applicable. 

(2) Findings relating to the financial 

Statements (if available) which are 

required to be reported in accordance 

with GAGAS. 

(i) Findings and questioned costs for 

DOE awards which must include audit 

findings as defined in § 910.516 Audit 

findings, paragraph (a).Audit findings 

(e.g., internal control findings, 

compliance findings, questioned costs, 

or fraud) that relate to the same issue 

should be presented as a single audit 

finding. 

(ii) Audit findings that relate to both 

the financial statements (if available) 

and DOE awards, as reported under 

paragraphs (d)(2) and (d)(3) of this 

section, respectively, should be reported 

in both sections of the schedule. 

However, the reporting in one section of 

the schedule may be in summary form 

with a reference to a detailed reporting 

in the other section of the schedule. 

(e) Nothing in this Part precludes 

combining of the audit reporting 

required by this section with the 

reporting required by § 910.512 Report 

submission, paragraph (b) Data 

Collection when allowed by GAGAS. 

§ 910.516 Audit findings. 

(a) Audit findings reported. The 

auditor must report the following as 

audit findings in a schedule of findings 

and questioned costs: 

(1) Significant deficiencies and 

material weaknesses in internal control 

over major programs and significant 

instances of abuse relating to major 

programs. The auditor’s determination 

of whether a deficiency in internal 

control is a significant deficiency or 

material weakness for the purpose of 

reporting an audit finding is in relation 

to a type of compliance requirement for 

a major program identified in the 

Compliance Supplement. 

(2) Material noncompliance with the 

provisions of Federal statutes, 

regulations, or the terms and conditions 

of DOE awards related to a major 

program. The auditor’s determination of 

whether a noncompliance with the 

provisions of Federal statutes, 

regulations, or the terms and conditions 

of DOE awards is material for the 

purpose of reporting an audit finding is 

in relation to a type of compliance 

requirement for a major program 

identified in the compliance 

supplement. 

(3) Known questioned costs that are 

greater than $25,000 for a type of 

compliance requirement for a major 

program. Known questioned costs are 

those specifically identified by the 

auditor. In evaluating the effect of 

questioned costs on the opinion on 

compliance, the auditor considers the 

best estimate of total costs questioned 

(likely questioned costs), not just the 

questioned costs specifically identified 

(known questioned costs). The auditor 

must also report known questioned 

costs when likely questioned costs are 

greater than $25,000 for a type of 

compliance requirement for a major 

program. In reporting questioned costs, 

the auditor must include information to 

provide proper perspective for judging 

the prevalence and consequences of the 

questioned costs. 

(4) Known questioned costs that are 

greater than $25,000 for a DOE program. 

which is not audited as a major 

program. Except for audit follow-up, the 

auditor is not required under this Part 

to perform audit procedures for such a 

DOE program; therefore, the auditor will 

normally not find questioned costs for a 

program that is not audited as a major 

program. However, if the auditor does 

become aware of questioned costs for a 

DOE program that is not audited as a 

major program (e.g., as part of audit 

follow-up or other audit procedures) 

and the known questioned costs are 

greater than $25,000, then the auditor 

must report this as an audit finding. 

(5) Not applicable. 

(6) Known or likely fraud affecting a 

DOE award, unless such fraud is 

otherwise reported as an audit finding 

in the schedule of findings and 

questioned costs for DOE awards. This 

paragraph does not require the auditor 

to report publicly information which 

could compromise investigative or legal 

proceedings or to make an additional 

reporting when the auditor confirms 

that the fraud was reported outside the 

auditor’s reports under the direct 

reporting requirements of GAGAS. 

(7) Instances where the results of 

audit follow-up procedures disclosed 

that the summary schedule of prior 

audit findings prepared by the auditee 

in accordance with § 910.511 Audit 

findings follow-up, paragraph (b) 

materially misrepresents the status of 

any prior audit finding. 

(b) Audit finding detail and clarity. 

Audit findings must be presented in 

sufficient detail and clarity for the 

auditee to prepare a corrective action 

plan and take corrective action, and for 

DOE to arrive at a management decision. 

The following specific information must 

be included, as applicable, in audit 

findings: 

(1) Federal program and specific 

Federal award identification including 

the CFDA title and number, and Federal 

award identification number and year. 

When information, such as the CFDA 

title and number or DOE award 

identification number, is not available, 

the auditor must provide the best 

information available to describe the 

Federal award. 

(2) The criteria or specific 

requirement upon which the audit 

finding is based, including the Federal 

statutes, regulations, or the terms and 

conditions of the DOE awards. Criteria 

generally identify the required or 

desired state or expectation with respect 

to the program or operation. Criteria 

provide a context for evaluating 

evidence and understanding findings. 

(3) The condition found, including 

facts that support the deficiency 

identified in the audit finding. 

(4) A statement of cause that identifies 

the reason or explanation for the 

condition or the factors responsible for 

the difference between the situation that 

exists (condition) and the required or 

desired state (criteria), which may also 

serve as a basis for recommendations for 

corrective action. 

(5) The possible asserted effect to 

provide sufficient information to the 

auditee and DOE to permit them to 

determine the cause and effect to 

facilitate prompt and proper corrective 

action. A statement of the effect or 

potential effect should provide a clear, 

logical link to establish the impact or 

potential impact of the difference 

between the condition and the criteria. 

(6) Identification of questioned costs 

and how they were computed. Known 

questioned costs must be identified by 

applicable CFDA number(s) and 

applicable DOE award identification 

number(s). 


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(7) Information to provide proper 

perspective for judging the prevalence 

and consequences of the audit findings, 

such as whether the audit findings 

represent an isolated instance or a 

systemic problem. Where appropriate, 

instances identified must be related to 

the universe and the number of cases 

examined and be quantified in terms of 

dollar value. The auditor should report 

whether the sampling was a statistically 

valid sample. 

(8) Identification of whether the audit 

finding was a repeat of a finding in the 

immediately prior audit and if so any 

applicable prior year audit finding 

numbers. 

(9) Recommendations to prevent 

future occurrences of the deficiency 

identified in the audit finding. 

(10) Views of responsible officials of 

the auditee. 

(c) Reference numbers. Each audit 

finding in the schedule of findings and 

questioned costs must include a 

reference number in the format meeting 

the requirements of the data collection 

form submission required by § 910.512 

Report submission, paragraph (b) to 

allow for easy referencing of the audit 

findings during follow-up. 

§ 910.517 Audit documentation. 

(a) Retention of audit documentation. The 

auditor must retain audit documentation and 

reports for a minimum of three years after the 

date of issuance of the auditor’s report(s) to 

the auditee, unless the auditor is notified in 

writing by DOE or the cognizant agency for 

indirect costs to extend the retention period. 

When the auditor is aware that the Federal 

agency or auditee is contesting an audit 

finding, the auditor must contact the parties 

contesting the audit finding for guidance 

prior to destruction of the audit 

documentation and reports. 

(b) Access to audit documentation. Audit 

documentation must be made available upon 

request to the cognizant agency for indirect 

cost, DOE, or GAO at the completion of the 

audit, as part of a quality review, to resolve 

audit findings, or to carry out oversight 

responsibilities consistent with the purposes 

of this Part. Access to audit documentation 

includes the right of Federal agencies to 

obtain copies of audit documentation, as is 

reasonable and necessary. 

§ 910.518 [Reserved] 

§ 910.519 Criteria for Federal program risk. 

(a) General. The auditor’s 

determination should be based on an 

overall evaluation of the risk of 

noncompliance occurring that could be 

material to the DOE program. The 

auditor must consider criteria, such as 

described in paragraphs (b), (c), and (d) 

of this section, to identify risk in 

Federal programs. Also, as part of the 

risk analysis, the auditor may wish to 

discuss a particular DOE program with 

auditee management and DOE. 

(1) Current and prior audit 

experience. Weaknesses in internal 

control over DOE programs would 

indicate higher risk. Consideration 

should be given to the control 

environment over DOE programs and 

such factors as the expectation of 

management’s adherence to Federal 

statutes, regulations, and the terms and 

conditions of DOE awards and the 

competence and experience of 

personnel who administer the DOE 

programs. 

(i) A DOE program administered 

under multiple internal control 

structures may have higher risk. The 

auditor must consider whether 

weaknesses are isolated in a single 

operating unit (e.g., one college campus) 

or pervasive throughout the entity. 

(ii) When significant parts of a DOE 

program are passed through to 

subrecipients, a weak system for 

monitoring subrecipients would 

indicate higher risk. 

(2) Prior audit findings would 

indicate higher risk, particularly when 

the situations identified in the audit 

findings could have a significant impact 

on a DOE program or have not been 

corrected. 

(3) DOE programs not recently 

audited as major programs may be of 

higher risk than Federal programs 

recently audited as major programs 

without audit findings. 

(4) Oversight exercised by DOE. 

Oversight exercised by DOE could be 

used to assess risk. For example, recent 

monitoring or other reviews performed 

by an oversight entity that disclosed no 

significant problems would indicate 

lower risk, whereas monitoring that 

disclosed significant problems would 

indicate higher risk. 

(5) Federal agencies, with the 

concurrence of OMB, may identify 

Federal programs that are higher risk. 

OMB will provide this identification in 

the compliance supplement. 

(6) Inherent risk of the Federal 

program. The nature of a Federal 

program may indicate risk. 

Consideration should be given to the 

complexity of the program and the 

extent to which the Federal program 

contracts for goods and services. For 

example, Federal programs that disburse 

funds through third party contracts or 

have eligibility criteria may be of higher 

risk. Federal programs primarily 

involving staff payroll costs may have 

high risk for noncompliance with 

requirements of 2 CFR 200.430 

Compensation—personal services, but 

otherwise be at low risk. 

(7) The phase of a Federal program in 

its life cycle at the Federal agency may 

indicate risk. For example, a new 

Federal program with new or interim 

regulations may have higher risk than 

an established program with time-tested 

regulations. Also, significant changes in 

Federal programs, statutes, regulations, 

or the terms and conditions of Federal 

awards may increase risk. 

(8) The phase of a Federal program in 

its life cycle at the auditee may indicate 

risk. For example, during the first and 

last years that an auditee participates in 

a Federal program, the risk may be 

higher due to start-up or closeout of 

program activities and staff. 

(9) Programs with larger Federal 

awards expended would be of higher 

risk than programs with substantially 

smaller Federal awards expended. 

§ 910.520 Criteria for a low-risk auditee. 

(a) An auditee that meets all of the 

following conditions for each of the 

preceding two audit periods may qualify 

as a low-risk auditee and be eligible for 

reduced audit coverage. Compliance 

audits were performed on an annual 

basis in accordance with the provisions 

of this Subpart, including submitting 

the data collection form to DOE within 

the timeframe specified in § 910.512 

Report submission. A for-profit entity 

that has biennial audits does not qualify 

as a low-risk auditee. 

(b) The auditor’s opinion on whether 

the financial statements (if available) 

were prepared in accordance with 

GAAP, or a basis of accounting required 

by state law, and the auditor’s in 

relation to opinion on the schedule of 

expenditures of DOE awards were 

unmodified. 

(c) There were no deficiencies in 

internal control which were identified 

as material weaknesses under the 

requirements of GAGAS. 

(d) The auditor did not report a 

substantial doubt about the auditee’s 

ability to continue as a going concern. 

(e) None of the DOE programs had 

audit findings from any of the following 

in either of the preceding two audit 

periods: 

(1) Internal control deficiencies that 

were identified as material weaknesses 

in the auditor’s report on internal 

control as required under § 910.515 

Audit reporting, paragraph (c); 

(2) Not applicable. 

(3) Not applicable. 

Management Decisions 

§ 910.521 Management decision. 

(a) General. The management decision 

must clearly state whether or not the 

audit finding is sustained, the reasons 

for the decision, and the expected 


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auditee action to repay disallowed costs, 

make financial adjustments, or take 

other action. If the auditee has not 

completed corrective action, a timetable 

for follow-up should be given. Prior to 

issuing the management decision, the 

Federal agency may request additional 

information or documentation from the 

auditee, including a request for auditor 

assurance related to the documentation, 

as a way of mitigating disallowed costs. 

The management decision should 

describe any appeal process available to 

the auditee. While not required, DOE 

agency may also issue a management 

decision on findings relating to the 

financial statements (if they were 

available) which are required to be 

reported in accordance with GAGAS. 

(b) As provided in § 910.513 

Responsibilities, paragraph (c)(3), DOE 

is responsible for issuing a management 

decision for findings that relate to DOE 

awards it makes to for-profit entities. 

(c) Not applicable. 

(d) Time requirements. DOE must 

issue a management decision within six 

months of acceptance of the audit 

report. The auditee must initiate and 

proceed with corrective action as 

rapidly as possible and corrective action 

should begin no later than upon receipt 

of the audit report. 

(e) Reference numbers. Management 

decisions must include the reference 

numbers the auditor assigned to each 

audit finding in accordance with 

§ 910.516 Audit findings paragraph (c). 

Title 10—Energy 

CHAPTER II—DEPARTMENT OF ENERGY 

PART 602—EPIDEMIOLOGY AND 

OTHER HEALTH STUDIES FINANCIAL 

ASSISTANCE PROGRAM 

■ 1. The authority citation for part 602 

continues to read as follows: 

Authority: 42 U.S.C. 2051; 42 U.S.C. 5817; 

42 U.S.C. 5901–5920; 42 U.S.C. 7254 and 

7256; and 31 U.S.C. 6301–6308. 

§ 602.1 [Amended] 

■ 2. Section 602.1 is amended to remove 

‘‘Office of Health, Safety, and Security’’ 

in the first sentence and add in its place 

‘‘Office of Environment, Health, Safety, 

and Security’’. 

§ 602.2 [Amended] 

■ 3. Section 602.2 (b) is amended to 

remove ‘‘10 CFR part 600 (DOE 

Financial Assistance Rules)’’ and add in 

its place ‘‘2 CFR part 200 as amended 

by 2 CFR part 910 (DOE Financial 

Assistance Regulation)’’. 

§ 602.3 [Amended] 

■ 4. Section 602.3 is amended to remove 

‘‘10 CFR part 600’’ in the introductory 

text and add in its place ‘‘2 CFR part 200 

and 2 CFR part 910’’. 

■ 5. Amend § 602.4 as follows: 

■ a. Revise the section heading. 

■ b. Remove ‘‘deviations’’ from 

paragraph (a) and add in its place 

‘‘exceptions’’. 

■ c. Remove ‘‘Health, Safety, and 

Security’’ from paragraph (a) and add in 

its place ‘‘Environment, Health, Safety, 

and Security’’. 

■ d. Remove ‘‘10 CFR part 600’’ and add 

in its place ‘‘2 CFR part 200 as amended 

by 2 CFR part 910’’. 

The revision reads as follows: 

§ 602.4 Exceptions. 

* * * * * 

§ 602.5 [Amended] 

■ 6. Section 602.5(a) is amended to 

remove ‘‘Office of Health, Safety, and 

Security’’ in the first sentence and add 

in its place ‘‘Office of Environment, 

Health, Safety, and Security’’. 

§ 602.8 [Amended] 

■ 7. Section 602.8 (b)(4)(ii) is amended 

to remove ‘‘10 CFR part 600’’ and add 

in its place ‘‘2 CFR part 200 as amended 

by 2 CFR part 910’’. 

§ 602.9 [Amended] 

■ 8. Amend § 602.9 as follows: 

■ a. Remove ‘‘Office of Health, Safety, 

and Security’’ from paragraph (g) and 

add in its place ‘‘Office of Environment, 

Health, Safety, and Security’’. 

■ b. Remove ‘‘10 CFR part 600’’ from 

paragraph (b) and add in its place ‘‘2 

CFR 200 as amended by 2 CFR 910’’. 

■ c. Remove ‘‘Office of Health, Safety, 

and Security’’ from the second sentence 

of paragraph (b) and add in its place 

‘‘Office of Environment, Health, Safety, 

and Security’’. 

§ 602.14 [Amended] 

■ 9. Amend § 602.14 as follows: 

■ a. Remove ‘‘10 CFR part 600’’ 

wherever it appears and add in its place 

‘‘2 CFR part 200 as amended by 2 CFR 

part 910’’. 

§ 602.18 [Amended] 

■ 10. Section 602.18 (c) is amended to 

remove ‘‘in accordance with the 

applicable provisions of 10 CFR part 

600’’. 

PART 605—THE OFFICE OF SCIENCE 

FINANCIAL ASSISTANCE PROGRAM 

■ 11. The authority citation for part 605 

continues to read as follows: 

Authority: Section 31 of the Atomic Energy 

Act, as amended, Pub. L. 83–703, 68 Stat. 919 

(42 U.S.C. 2051); sec. 107 of the Energy 

Reorganization Act of 1974, Pub. L. 93–438, 

88 Stat. 1240 (42 U.S.C. 5817); Federal 

Nonnuclear Energy Research and 

Development Act of 1974, Pub. L. 93–577, 88 

Stat. 1878 (42 U.S.C. 5901 et seq.); secs. 644 

and 646 of the Department of Energy 

Organization Act, Pub. L. 95–91, 91 Stat. 599 

(42 U.S.C. 7254 and 7256); Federal Grant and 

Cooperative Agreement Act, as amended (31 

U.S.C. 6301 et seq.). 

■ 12. The heading of part 605 is revised 

to read as set forth above. 

§ 605.1 [Amended] 

■ 13. Section 605.1(d) is amended to 

remove ‘‘Office of Energy Research (ER) 

and the Science and Technology 

Advisor (STA) Organization’’ and add in 

its place ‘‘Office of Science (SC)’’. 

§ 605.2 [Amended] 

■ 14. Section 605.2(b) is amended to 

remove ‘‘10 CFR part 600’’ and add in 

its place ‘‘2 CFR part 200 as amended 

by 2 CFR part 910’’ 

§ 605.3 [Amended] 

■ 15. Amend § 605.3 as follows: 

■ a. Remove ‘‘10 CFR part 600’’ and add 

in its place ‘‘2 CFR part 200 as amended 

by 2 CFR part 910’’. 

■ b. Remove ‘‘ER/STA’’ in the definition 

of Related conference’’ and add in its 

place ‘‘SC’’. 

■ 16. Amend § 605.4 as follows: 

■ a. The section heading is revised. 

■ b. Remove ‘‘deviations’’ in the first 

sentence and add in its place 

‘‘exceptions’’. 

■ c. Remove ‘‘ER’’ in the first sentence 

and add in its place ‘‘SC’’. 

■ d. Remove ‘‘deviation’’ wherever it 

appears and add in its place 

‘‘exception’’. 

■ e. Remove ‘‘10 CFR part 600’’ in the 

third sentence and add in its place ‘‘2 

CFR part 200 as amended by 2 CFR part 

910’’. 

The revision reads as follows: 

§ 605.4 Exceptions. 

* * * * * 

■ 17. Amend § 605.5 as follows: 

■ a. Revise the section heading. 

■ b. Remove ‘‘Energy Research’’ in 

paragraph (a) and add in its place 

‘‘Science’’. 

■ c. Remove ‘‘ER’’ in paragraph (c) and 

add in its place ‘‘SC’’. 

The revision reads as follows: 

§ 605.5 The Office of Science Financial 

Assistance Program. 

* * * * * 

§ 605.8 [Amended] 

■ 18. Amend § 605.8 as follows: 

■ a. Remove ‘‘Energy Research, ER–64’’ 

in paragraph (c) and add in its place 

‘‘Science, SC’’. 

■ b. Remove ‘‘Energy Research’’ in the 

introductory text of paragraph (d) and 

add in its place ‘‘Science’’. 


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§ 605.9 [Amended] 

■ 19. Amend § 605.9 as follows: 

■ a. Remove ‘‘10 CFR part 600’’ 

wherever it appears and add in its place 

‘‘2 CFR part 200 as amended by 2 CFR 

part 910’’. 

■ b. Remove ‘‘10 CFR parts 600 and 

605’’ in paragraph (b)(5) and add in its 

place ‘‘2 CFR part 200 as amended by 

2 CFR part 910’’. 

§ 605.10 [Amended] 

■ 20. Amend § 605.10 as follows: 

■ a. Remove ‘‘10 CFR part 600’’ in 

paragraph (b) and add in its place ‘‘2 

CFR part 200 as amended by 2 CFR part 

910’’. 

■ b. Remove ‘‘ER’s’’ in the first sentence 

of paragraph (g) and add in its place 

‘‘SC’s’’. 

§ 605.12 [Amended] 

■ 21. Section 605.12(b) is amended to 

remove ‘‘ER’’ and add in its place ‘‘SC’’. 

§ 605.15 [Amended] 

■ 22. Amend § 605.15 as follows: 

■ a. Remove ‘‘10 CFR part 600’’ 

wherever it appears and add in its place 

‘‘2 CFR part 200 as amended by 2 CFR 

part 910’’. 

■ b. Remove ‘‘ER’’ in paragraph (a)(2) 

and add in its place ‘‘SC’’. 

■ c. Remove ‘‘deviation’’ in paragraph 

(a) introductory text and add in its place 

‘‘exception’’. 

§ 605.18 [Amended] 

■ 23. Section 605.18 is amended to 

remove ‘‘ER’s’’ in the first sentence and 

add in its place ‘‘SC’s’’. 

§ 605.19 [Amended] 

■ 24. Section 605.19(a)(1) is amended to 

remove ‘‘ER’’ in the second sentence 

and add in its place ‘‘SC’’. 

§ 605.20 [Amended] 

■ 25. Section 605.20(c) is amended to 

remove ‘‘10 CFR part 600’’ and add in 

its place ‘‘2 CFR part 200 as amended 

by 2 CFR part 910’’. 

Appendix A to Part 605 [Amended] 

■ 26. Amend Appendix A to Part 605 as 

follows: 

■ a. Remove ‘‘ER’’ in paragraph 2.(a) 

and add in its place ‘‘SC’’. 

■ b. Remove ‘‘Energy Research’’ in 

paragraph 2.(a) and add in its place 

‘‘Science’’. 

CHAPTER III—DEPARTMENT OF ENERGY 

PART 733—ALLEGATIONS OF 

RESEARCH MISCONDUCT 

■ 27. The authority citation for part 733 

continues to read as follows: 

Authority: 42 U.S.C. 2201; 7254; 7256; 

7101 et seq.; 50 U.S.C. 2401 et seq. 

■ 28. Amend § 733.3 as follows: 

■ a. Revise the definition for Contract. 

■ b. In the definition for Financial 

assistance agreement, remove ‘‘10 CFR 

part 600’’ and add in its place ‘‘2 CFR 

part 200 as amended by 2 CFR part 

910’’. 

The revision reads as follows: 

§ 733.3 Definitions. 

* * * * * 

Contract is defined in 2 CFR 200.22. 

* * * * * 

Paul Bosco, 

Director, Office of Acquisition and Project 

Management. 

Department of Treasury 

For the reasons stated in the 

preamble, the Department of the 

Treasury amends Title 2 to add chapter 

X of the Code of Federal Regulations to 

read: 

Title 2—Grants and Agreements 

CHAPTER X—DEPARTMENT OF 

TREASURY 

PART 1000—UNIFORM 

ADMINISTRATIVE REQUIREMENTS, 

COST PRINCIPLES, AND AUDIT 

REQUIREMENTS FOR FEDERAL 

AWARDS 

Sec. 

1000.10 Applicable regulations. 

1000.306 Cost sharing or matching. 

1000.336 Access to records. 

Authority: 5 U.S.C. 301; 31 U.S.C. 301; 2 

CFR part 200. 

§ 1000.10 Applicable regulations. 

Except for the deviations set forth 

elsewhere in this Part, the Department 

of the Treasury adopts the Uniform 

Administrative Requirements, Cost 

Principles, and Audit Requirements for 

Federal Awards, set forth at 2 CFR part 

200. 

§ 1000.306 Cost sharing or matching. 

Notwithstanding 2 CFR 200.306(e), 

Low Income Taxpayer Clinic grantees 

may use the rates found in 26 U.S.C. 

7430 so long as: 

(a) The grantee is funded to provide 

controversy representation; 

(b) The services are provided by a 

qualified representative, which includes 

any individual, whether or not an 

attorney, who is authorized to represent 

taxpayers before the Internal Revenue 

Service or an applicable court; 

(c) The qualified representative is not 

a student; and 

(d) The qualified representative is 

acting in a representative capacity and 

is advocating for a taxpayer. 

§ 1000.336 Access to records. 

The right of access under 2 CFR 

200.336 shall not extend to client 

information held by attorneys or 

federally authorized tax practitioners 

under the Low Income Taxpayer Clinic 

program. 

Nani Coloretti, 

Assistant Secretary for Management. 

Department of Defense, 

Office of the Secretary 

For the reasons set forth in the 

common preamble, Part 1103 of Title 2, 

Chapter XI of the Code of Federal 

Regulations is added to read as follows: 

PART 1103—INTERIM GRANTS AND 

COOPERATIVE AGREEMENTS 

IMPLEMENTATION OF GUIDANCE IN 2 

CFR PART 200, ‘‘UNIFORM 

ADMINISTRATIVE REQUIREMENTS, 

COST PRINCIPLES, AND AUDIT 

REQUIREMENTS FOR FEDERAL 

AWARDS’’ 

Subpart A—Interim Implementation of 

Guidance in 2 CFR Part 200 

Sec. 

1103.100 Applicability of 2 CFR part 200 to 

requirements for recipients in DoD 

Components’ terms and conditions. 

Subpart B—Pre-Existing Policies 

Continuing in Effect During Interim 

Implementation 

1103.200 Exception for small awards. 

1103.205 Timing of payments made using 

the reimbursement method. 

1103.210 Management of federally owned 

property for which a recipient is 

accountable. 

1103.215 Intangible property developed or 

produced under an award or subaward. 

1103.220 Debarment and suspension 

requirements related to recipients’ 

procurements. 

1103.225 Debt collection. 

Subpart C—Definitions of Terms Used in 

This Part 

1103.300 DoD Components. 

1103.305 DoD Grant and Agreement 

Regulations. 

1103.310 Small award. 

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

Subpart A—Interim Implementation of 

Guidance in 2 CFR Part 200 

§ 1103.100 Applicability of 2 CFR part 200 

to requirements for recipients in DoD 

Components’ terms and conditions. 

Effective December 26, 2014, and on 

an interim basis pending update of the 

DoD Grant and Agreement Regulations 

to implement Office of Management and 

Budget (OMB) guidance published in 2 

CFR part 200: 

(a) The guidance in 2 CFR part 200 as 

modified and supplemented by 


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provisions of Subpart B of this part 

governs the administrative 

requirements, cost principles, and audit 

requirements to be included in terms 

and conditions of DoD Components’ 

new grant and cooperative agreement 

awards to: 

(1) Institutions of higher education, 

hospitals, and other nonprofit 

organizations included in the definition 

of ‘‘recipient’’ in part 32 of the DoD 

Grant and Agreement Regulations (32 

CFR part 32). 

(2) States, local governments, and 

Indian tribal governments. 

(b) The following class deviations 

from selected provisions of the DoD 

Grant and Agreement Regulations 

therefore are approved for DoD 

Components’ new grant and cooperative 

agreement awards made on or after 

December 26, 2014: 

(1) Awards to institutions of higher 

education, hospitals, and other 

nonprofit organizations included in the 

definition of ‘‘recipient’’ in part 32 of 

the DoD Grant and Agreement 

Regulations (32 CFR part 32) are not 

subject to the administrative 

requirements, cost principles, and audit 

requirements specified in 32 CFR part 

32. 

(2) Awards to States, local 

governments, and Indian tribal 

governments are not subject to the 

administrative requirements, cost 

principles, and audit requirements 

specified in part 33 of the DoD Grant 

and Agreement Regulations (32 CFR 

part 33). 

(3) References in other parts of the 

DoD Grant and Agreement Regulations 

that cite part 32 or part 33 as the source 

of administrative requirements, cost 

principles, and audit requirements for 

awards to the types of recipient entities 

described in paragraphs (b)(1) and (2) of 

this section therefore do not apply to 

those new awards. 

(c) Provisions of the DoD Grant and 

Agreement Regulations other than those 

listed in paragraph (b) of this section 

continue to be in effect, with 

applicability as stated in those 

provisions. 

Subpart B—Pre-Existing Policies 

Continuing in Effect During Interim 

Implementation 

§ 1103.200 Exception for small awards. 

For small awards to institutions of 

higher education, hospitals, and other 

nonprofit organizations, DoD 

Components’ terms and conditions may 

apply less restrictive requirements to 

recipients than the OMB guidance in 2 

CFR part 200 specifies, except for 

requirements that are statutory. This 

exception maintains long-standing 

policy established in 32 CFR 32.4. 

§ 1103.205 Timing of payments made 

using the reimbursement method. 

In DoD Components’ awards to 

institutions of higher education, 

hospitals, and other nonprofit 

organizations, the terms and conditions 

implementing the provisions of 2 CFR 

200.305(b)(3) concerning timing of 

payments when the reimbursement 

method is used must specify that the 

DoD payment office generally makes 

payment within 30 calendar days after 

receipt of the request for reimbursement 

by the office designated to receive the 

request, unless the request is reasonably 

believed to be improper. This 

substitution of ‘‘generally makes 

payment’’ for ‘‘must make payment’’ 

maintains long-standing policy 

established in 32 CFR 32.22(e)(1). 

§ 1103.210 Management of federally 

owned property for which a recipient is 

accountable. 

In award terms and conditions 

implementing the guidance in 2 CFR 

200.313(d) on procedural requirements 

for a recipient’s equipment management 

system, DoD Components must: 

(a) For any award to an institution of 

higher education, hospital, or other 

nonprofit organization, broaden the 

requirements of 2 CFR 200.313(d) to 

also apply to any federally owned 

property for which the recipient is 

accountable under its award. Doing so 

maintains long-standing policy 

established in 32 CFR 32.34(f). 

(b) For any award to a State, local 

government, or Indian tribal government 

(as defined in 32 CFR part 33), specify 

that the recipient must manage federally 

owned equipment in accordance with 

the DoD Components’ rules and 

procedures. Doing so maintains longstanding policy established in 32 CFR 

33.32(f). 

§ 1103.215 Intangible property developed 

or produced under an award or subaward. 

In DoD Components’ awards to 

institutions of higher education, 

hospitals, and other nonprofit 

organizations, the award terms and 

conditions implementing the guidance 

in 2 CFR 200.315(a) on intangible 

property must exclude intangible 

property developed or produced under 

an award or subaward. Doing so 

maintains long-standing policy 

established in 32 CFR 32.36(e). 

§ 1103.220 Debarment and suspension 

requirements related to recipients’ 

procurements. 

In award terms and conditions 

implementing the guidance in 2 CFR 

200.318(h) on awarding contracts only 

to responsible entities, DoD 

Components must require recipients to 

comply with DoD’s implementation in 2 

CFR part 1125 of OMB guidance on 

nonprocurement debarment and 

suspension (2 CFR part 180). Doing so 

maintains long-standing policy 

established in 2 CFR parts 180 and 1125 

and in 32 CFR 32.44(d), as well as 

compliance with Executive Orders 

12549 and 12689. 

§ 1103.225 Debt collection. 

In award terms and conditions 

implementing the guidance in 2 CFR 

200.345 on collection of amounts due, 

DoD Components must inform 

recipients that DoD post-award 

administration offices follow procedures 

set forth in 32 CFR 22.820 for issuing 

demands for payment and transferring 

debts for collection, and that a recipient 

will be informed about specific 

procedures and timeframes affecting it 

through the written notices of grants 

officers’ decisions and demands for 

payment. Doing so maintains longstanding policy established in 32 CFR 

32.73(c). 

Subpart C—Definitions of Terms Used 

in This Part 

§ 1103.300 DoD Components. 

The Office of the Secretary of Defense, 

the Military Departments, and all 

Defense Agencies, DoD Field Activities, 

and other entities within the 

Department of Defense that are 

authorized to award or administer 

grants, cooperative agreements, and 

other non-procurement transactions 

subject to the DoD Grants and 

Agreement Regulations. 

§ 1103.305 DoD Grant and Agreement 

Regulations. 

The regulations in Chapter I, 

Subchapter C of Title 32, Code of 

Federal Regulations, and Chapter XI of 

Title 2, Code of Federal Regulations. 

§ 1103.310 Small award. 

An award not exceeding the 

simplified acquisition threshold. 

Patricia L. Toppings, 

Office of the Secretary of Defense, Federal 

Register Liaison Officer, Department of 

Defense. 

Department of Transportation 

Office of the Secretary 

For the reasons set forth in the 

preamble, and under the authority of 5 

U.S.C. 301, 49 U.S.C. 322, and the 

authorities listed below, Part 1201 of 

title 2 of the Code of Federal 

Regulations is added, and Parts 18 and 


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19 of title 49 of the Code of Federal 

Regulations are removed, as follows: 

Title 2—Grants and Agreements 

CHAPTER XII—DEPARTMENT OF 

TRANSPORTATION 

■ 1. Add Part 1201 to read as follows: 

PART 1201—UNIFORM 

ADMINISTRATIVE REQUIREMENTS, 

COST PRINCIPLES, AND AUDIT 

REQUIREMENTS FOR FEDERAL 

AWARDS 

Sec. 

1201.1 What does this part do? 

1201.2 Definitions. 

1201.80 Program income. 

1201.102 Exceptions. 

1201.106 DOT Component implementation. 

1201.107 DOT Headquarters 

responsibilities. 

1201.108 Inquiries. 

1201.109 Review date. 

1201.112 Conflict of interest. 

1201.206 Standard application 

requirements. 

1201.313 Equipment. 

1201.317 Procurements by States. 

1201.319 Competition. 

1201.327 Financial reporting. 

1201.330 Subrecipient and contractor 

determinations. 

Authority: 49 U.S.C. 322(a); 2 CFR 

200.106. 

§ 1201.1 What does this part do? 

Except as otherwise provided in this 

part, the Department of Transportation 

adopts the Office of Management and 

Budget Uniform Administrative 

Requirements, Cost Principles, and 

Audit Requirements for Federal Awards 

(2 CFR part 200). This part supersedes 

and repeals the requirements of the 

Department of Transportation Common 

Rules (49 CFR part 18—Uniform 

Administrative Requirements for Grants 

and Cooperative Agreements to State 

and Local Governments and 49 CFR part 

19—Uniform Administrative 

Requirements—Uniform Administrative 

Requirements for Grants and 

Agreements with Institutions of Higher 

Education, Hospitals, and other NonProfit Organizations), except that grants 

and cooperative agreements executed 

prior to December 26, 2014 shall 

continue to be subject to 49 CFR parts 

18 and 19 as in effect on the date of such 

grants or agreements. New parts with 

terminology specific to the Department 

of Transportation follow. 

§ 1201.2 Definitions. 

Throughout this part, the term ‘‘DOT 

Component’’ refers to any Division, 

Office, or Mode (e.g., the Federal 

Aviation Administration (FAA), Federal 

Highway Administration (FHWA), 

Federal Motor Carrier Safety 

Administration (FMCSA), Federal 

Railroad Administration (FRA), Federal 

Transit Administration (FTA), Maritime 

Administration (MARAD), National 

Highway Traffic Safety Administration 

(NHTSA), Office of Inspector General 

(OIG), Office of the Secretary of 

Transportation (OST), Pipeline and 

Hazardous Materials Safety 

Administration (PHMSA), St. Lawrence 

Seaway Development Corporation 

(SLSDC), and the Surface 

Transportation Board (STB)) within the 

Department of Transportation awarding 

Federal financial assistance. In addition, 

the term ‘‘DOT Headquarters’’ refers to 

the Secretary of Transportation or any 

office designated by the Secretary to 

fulfill headquarters’ functions within 

any office under the Secretary’s 

immediate supervision. 

§ 1201.80 Program income. 

Notwithstanding 2 CFR 200.80, 

program income means gross income 

earned by the non-Federal entity that is 

directly generated by a supported 

activity or earned as a result of the 

Federal award during the period of 

performance. (See 2 CFR 200.77 Period 

of performance.) Program income 

includes but is not limited to income 

from fees for services performed, the use 

or rental or real or personal property 

acquired under Federal awards, the sale 

of commodities or items fabricated 

under a Federal award, license fees and 

royalties on patents and copyrights, and 

principal and interest on loans made 

with Federal award funds. Interest 

earned on advances of Federal funds is 

not program income. Except as 

otherwise provided in Federal statutes, 

regulations, or the terms and conditions 

of the Federal award, program income 

does not include rebates, credits, 

discounts, taxes, special assessments, 

levies, and fines raised by a grantee and 

subgrantee, and interest earned on any 

of them. 

§ 1201.102 Exceptions. 

DOT Headquarters may grant 

exceptions to Part 1201 on a case-bycase basis. Such exceptions will be 

granted only as determined by the 

Secretary of Transportation. 

§ 1201.106 DOT Component 

implementation. 

The specific requirements and 

responsibilities for grant-making DOT 

Components are set forth in this part. 

DOT Components must implement the 

language in this part unless different 

provisions are required by Federal 

statute or are approved by DOT 

Headquarters. DOT Components making 

Federal awards to non-Federal entities 

must implement the language in the 

Subpart C—Pre-Federal Award 

Requirements and Contents of Federal 

Awards of this Part through Subpart F— 

Audit Requirements of this Part in 

codified regulations unless different 

provisions are required by Federal 

statute or are approved by DOT 

Headquarters. 

§ 1201.107 DOT Headquarters 

responsibilities. 

DOT Headquarters will review DOT 

Component implementation of this part, 

and will provide interpretations of 

policy requirements and assistance to 

ensure effective and efficient 

implementation. Any exceptions will be 

subject to approval by DOT 

Headquarters. Exceptions will only be 

made in particular cases where adequate 

justification is presented. 

§ 1201.108 Inquiries. 

Inquiries regarding Part 1201 should 

be addressed to the DOT Component 

making the award, cognizant agency for 

indirect costs, cognizant or oversight 

agency for audit, or pass-through 

entities as appropriate. DOT 

Components will, in turn, direct the 

inquiry to the Office of Chief Financial 

Officer, Department of Transportation. 

§ 1201.109 Review date. 

DOT Headquarters will review this 

part at least every five years after 

December 26, 2014. 

§ 1201.112 Conflict of interest. 

The DOT Component making a 

financial assistance award must 

establish conflict of interest policies for 

Federal awards, including policies from 

DOT Headquarters. The non-Federal 

entity must disclose in writing any 

potential conflict of interest to the DOT 

Component or pass-through entity in 

accordance with applicable Federal 

awarding agency policy. 

§ 1201.206 Standard application 

requirements. 

The requirements of 2 CFR 200.206 do 

not apply to formula grant programs, 

which do not require applicants to 

apply for funds on a project basis. 

§ 1201.313 Equipment. 

Notwithstanding 2 CFR 200.313, 

subrecipients of States shall follow such 

policies and procedures allowed by the 

State with respect to the use, 

management and disposal of equipment 

acquired under a Federal award. 

§ 1201.317 Procurements by States. 

Notwithstanding 2 CFR 200.317, 

subrecipients of States shall follow such 

policies and procedures allowed by the 


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State when procuring property and 

services under a Federal award. 

§ 1201.327 Financial reporting. 

Notwithstanding 2 CFR 200.327, 

recipients of FHWA and NHTSA 

financial assistance may use FHWA, 

NHTSA or State financial reports. 

Title 49—Transportation 

Subtitle A—Office of the Secretary of 

Transportation 

PART 18—[REMOVED AND 

RESERVED] 

■ 2. Remove and reserve part 18. 

PART 19—[REMOVED AND 

RESERVED] 

■ 3. Remove and reserve part 19. 

Anthony R. Foxx, 

Secretary of Transportation. 

Department of Commerce 

Office of the Secretary 

For the reasons set forth in the 

common preamble, and under the 

authority of 5 U.S.C. 301 and the 

authorities listed below, Part 1327 of 

Title 2, Chapter XIII of the Code of 

Federal Regulations is added, and Parts 

14 and 24 of Title 15, Subtitle A of the 

Code of Federal Regulations are 

amended, as follows: 

Title 2—Grants and Agreements 

CHAPTER XIII—DEPARTMENT OF 

COMMERCE 

■ 1. Add Part 1327, consisting of 

§ 1327.101, to Chapter XIII to read as 

follows: 

PART 1327—UNIFORM 

ADMINISTRATIVE REQUIREMENTS, 

COST PRINCIPLES, AND AUDIT 

REQUIREMENTS FOR FEDERAL 

AWARDS 

Authority: 5 U.S.C. 301; 38 U.S.C. 501; 2 

CFR part 200. 

§ 1327.101 Adoption of 2 CFR Part 200. 

Under the authority listed above, the 

Department of Commerce adopts the 

Office of Management and Budget 

(OMB) Guidance in 2 CFR part 200. 

Thus, this part gives regulatory effect to 

the OMB guidance and supplements the 

guidance as needed for the Department. 

Title 15—Commerce and Foreign Trade 

Subtitle A—Office of the Secretary of 

Commerce 

PART 14—[REMOVED AND 

RESERVED] 

■ 2. Remove and reserve part 14. 

PART 24—[REMOVED AND 

RESERVED] 

■ 3. Remove and reserve part 24. 

Barry Berkowitz, 

Director of Acquisition Management. 

Department of the Interior 

Office of the Secretary 

For the reasons set forth in the 

common preamble, and under the 

authority of 5 U.S.C. part 301 and the 

authorities listed below, part 1402 in 

Chapter XIV of title 2 is added, and part 

12 of title 43 of the Code of Federal 

Regulations is amended, as follows: 

Title 2—Grants and Agreements 

CHAPTER XIV—DEPARTMENT OF THE 

INTERIOR 

■ 1. Add Part 1402 to Chapter XIV to 

read as follows: 

PART 1402—UNIFORM 

ADMINISTRATIVE REQUIREMENTS, 

COST PRINCIPLES, AND AUDIT 

REQUIREMENTS FOR FEDERAL 

AWARDS 

Sec. 

1402.100 Purpose. 

1402.101 To whom does this part apply? 

1402.102 Do DOI financial assistance 

policies include any exceptions to 2 CFR 

part 200? 

1402.103 Does DOI have any other policies 

or procedures award recipients must 

follow? 

Authority: 5 U.S.C. 301; 38 U.S.C. 501, 2 

CFR part 200. 

§ 1402.100 Purpose. 

The Uniform Administrative 

Requirements, Cost Principles, and 

Audit Requirements for Federal Awards 

set forth in 2 CFR part 200 apply to the 

Department of the Interior. This part 

adopts, as the Department of the Interior 

(DOI) policies and procedures, the 

Office of Management and Budget’s 

(OMB) Uniform Administrative 

Requirements, Cost Principles, and 

Audit Requirements set forth in 2 CFR 

part 200. The Uniform guidance applies 

in full except as stated in §§ 1402.102 

and 1402.103. 

§ 1402.101 To whom does this part apply? 

This part, and through it 2 CFR part 

200, subparts A through E. applies to 

any non-Federal entity that applies for, 

receives, operates, or expends funds 

from a DOI Federal financial assistance 

award, cooperative agreement or grant 

after the effective date of December 26, 

2014. 

§ 1402.102 Do DOI financial assistance 

policies include any exceptions to 2 CFR 

part 200? 

This chapter applies to Federally 

recognized Indian tribal governments, 

except for those awards made pursuant 

to the authority of the Indian SelfDetermination and Education 

Assistance Act (P.L. 93–638, 88 Stat. 

2204), as amended. However, Sec. 9 of 

P.L. 93–638 does provide for use of a 

grant agreement or cooperative 

agreement when mutually agreed to by 

the Secretary of the Interior and the 

tribal organization involved. 

§ 1402.103 Does DOI have any other 

policies or procedures award recipients 

must follow? 

Award recipients must follow bureau/ 

office program specific or technical 

merit policies and procedures that will 

be published in the Federal Register, 

Grants.gov, or bureau Web site. 

Title 43—Public Lands: Interior 

Subtitle A—Office of the Secretary of 

the Interior 

PART 12—[REMOVED AND 

RESERVED] 

■ 2. Remove and reserve part 12. 

Kristen J. Sarri, 

Principal Assistant Secretary for Policy, 

Management and Budget. 

Environmental Protection Agency 

For the reasons stated in the 

preamble, under the authority of 5 

U.S.C. 301 and the authorities listed 

below, 2 CFR part 1500 and 40 CFR 

parts 33, 35, 40, 45, 46 and 47 are 

amended as follows: 

Title 2—Grants and Agreements 

CHAPTER XV—ENVIRONMENTAL 

PROTECTION AGENCY 

■ 1. Part 1500 is added to chapter XV to 

read as follows: 

PART 1500—UNIFORM 

ADMINISTRATIVE REQUIREMENTS, 

COST PRINCIPLES, AND AUDIT 

REQUIREMENTS FOR FEDERAL 

AWARDS 

Subpart A—Acronyms and Definitions 

[Reserved] 

Subpart B—General Provisions 

1500.1 Adoption of 2 CFR part 200. 

1500.2 Applicability. 

1500.3 Exceptions. 

1500.4 Supersession. 


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Subpart C—Pre-Federal Award 

Requirements and Contents of Federal 

Awards. 

1500.5 Fixed Amount Awards. 

Subpart D—Post Federal Award 

Requirements. 

Standards for Financial and Program 

Management 

1500.6 Retention requirements for records. 

1500.7 Program Income. 

1500.8 Revision of budget and program 

plans. 

Procurement Standards 

1500.9 General Procurement Standards. 

1500.10 Use of the same architect or 

engineer during construction. 

Performance and Financial Monitoring and 

Reporting 

1500.11 Quality Assurance. 

Subpart E—Disputes. 

1500.12 Purpose and scope of this subpart. 

1500.13 Definitions. 

1500.14 Submission of Appeal. 

1500.15 Notice of receipt of Appeal to 

Affected Entity. 

1500.16 Determination of Appeal. 

1500.17 Request for review. 

1500.18 Notice of receipt of request for 

review. 

1500.19 Determination of request for 

review. 

Authority: 42 U.S.C. 241, 242b, 243, 246, 

1857 et seq., 33 U.S.C. 1251 et seq., 42 U.S.C. 

7401 et seq., 42 U.S.C. 6901 et seq., 42 U.S.C. 

300f et seq., 7 U.S.C. 136 et seq., 15 U.S.C. 

2601 et seq., 42 U.S.C. 9601 et seq., 20 U.S.C. 

4011 et seq., and 33 U.S.C. 1401 et seq.; 2 

CFR 200. 

Subpart A—Acronyms and Definitions 

[Reserved] 

Subpart B—General Provisions 

§ 1500.1 Adoption of 2 CFR Part 200. 

Under the authority listed above the 

Environmental Protection Agency 

adopts the Office of Management and 

Budget (OMB) guidance Uniform 

Administrative Requirements, Cost 

Principles, and Audit Requirements for 

Federal Awards to Non-Federal Entities 

(subparts A through F of 2 CFR part 

200), as supplemented by this part, as 

the Environmental Protection Agency 

(EPA) policies and procedures for 

financial assistance administration. This 

part satisfies the requirements of 2 CFR 

200.110(a) and gives regulatory effect to 

the OMB guidance as supplemented by 

this part. EPA also has programmatic 

regulations located in 40 CFR Chapter 1 

Subchapter B. 

§ 1500.2 Applicability. 

Uniform administrative requirements 

and cost principles (Subparts A through 

E of 2 CFR part 200 as supplemented by 

this part) apply to foreign public entities 

or foreign organizations, except where 

EPA determines that the application of 

these subparts would be inconsistent 

with the international obligations of the 

United States or the statute or 

regulations of a foreign government. 

§ 1500.3 Exceptions. 

Consistent with 2 CFR 200.102(b): 

(a) In the EPA, the Director, Office of 

Grants and Debarment or designee, is 

authorized to grant exceptions on a 

case-by-case basis for non-Federal 

entities. 

(b) The EPA Director or designee is 

also authorized to approve exceptions, 

on a class or an individual case basis, 

to EPA program specific assistance 

regulations other than those which 

implement statutory and executive 

order requirements. 

§ 1500.4 Supersession. 

Effective December 26, 2014, this part 

supersedes the following regulations 

under Title 40 of the Code of Federal 

Regulations: 

(a) 40 CFR part 30, ‘‘Uniform 

Administrative Requirements for Grants 

and Agreements with Institutions of 

Higher Education, Hospitals, and other 

Non-profit Organizations.’’ 

(b) 40 CFR part 31, ‘‘Uniform 

Administrative Requirements for Grants 

and Cooperative Agreements to State 

and Local Governments.’’ 

Subpart C—Pre-Federal Award 

Requirements and Contents of Federal 

Awards 

§ 1500.5 Fixed Amount Awards. 

In the EPA, programs awarding fixed 

amount awards will do so in accordance 

with guidance issued from the Office of 

Grants and Debarment. (See 2 CFR 

200.201(b)). 

Subpart D—Post Federal Award 

Requirements. 

Standards for Financial and Program 

Management 

§ 1500.6 Retention requirements for 

records. 

(a) In the EPA, some programs require 

longer retention requirements for 

records by statute. 

(b) When there is a difference between 

the retention requirements for records of 

the Uniform Administrative 

Requirements, Cost Principles, and 

Audit Requirements for Federal Awards 

(2 CFR 200.333) and the applicable 

statute, the non-federal entity will 

follow to the retention requirements for 

records in the statute. 

§ 1500.7 Program Income. 

(a) Governmental revenues. Permit 

fees are governmental revenue and not 

program income. (See 2 CFR 200.307(c)) 

(b) Use of Program Income. The 

default use of program income for EPA 

awards is addition. The program income 

shall be used for the purposes and 

under the conditions of the assistance 

agreement. (See 2 CFR 200.307(e)(2)) 

(c) Brownfields Revolving Loan. To 

continue the mission of the Brownfields 

Revolving Loan fund, recipients may 

use grant funding prior to using program 

income funds generated by the 

revolving loan fund. Recipients may 

also keep program income at the end of 

the assistance agreement as long as they 

use these funds to continue to operate 

the revolving loan fund or some other 

brownfield purpose as outlined in their 

closeout agreement. 

§ 1500.8 Revision of budget and program 

plans. 

Pre-award Costs. EPA award 

recipients may incur allowable project 

costs 90 calendar days before the 

Federal awarding agency makes the 

Federal award. Expenses more than 90 

calendar days pre-award require prior 

approval of EPA. All costs incurred 

before EPA makes the award are at the 

recipient’s risk. EPA is under no 

obligation to reimburse such costs if for 

any reason the recipient does not 

receive a Federal award or if the Federal 

award is less than anticipated and 

inadequate to cover such costs. 

Procurement Standards 

§ 1500.9 General Procurement Standards. 

(a) Payment to consultants. EPA will 

limit its participation in the salary rate 

(excluding overhead) paid to individual 

consultants retained by recipients or by 

a recipient’s contractors or 

subcontractors to the maximum daily 

rate for level 4 of the Executive 

Schedule unless a greater amount is 

authorized by law. (Recipient’s may, 

however, pay consultants more than this 

amount with non EPA funds.) This 

limitation applies to consultation 

services of designated individuals with 

specialized skills who are paid at a daily 

or hourly rate. This rate does not 

include transportation and subsistence 

costs for travel performed; recipients 

will pay these in accordance with their 

normal travel reimbursement practices. 

Contracts with firms for services which 

are awarded using the procurement 

standards in Subpart D of 2 CFR part 

200 are not affected by this limitation. 

(b) Subawards with firms for services 

which are awarded using the 

procurement standards in 2 CFR 


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200.317 through 2 CFR 200.326 are not 

affected by this limitation. 

§ 1500.10 Use of the same architect or 

engineer during construction. 

(a) If the recipient is satisfied with the 

qualifications and performance of the 

architect or engineer who provided any 

or all of the facilities planning or design 

services for a waste-water treatment 

works project and wishes to retain that 

firm or individual during construction 

of the project, it may do so without 

further public notice and evaluation of 

qualifications, provided: 

(1) The recipient received a facilities 

planning (Step 1) or design grant (Step 

2), and selected the architect or engineer 

in accordance with EPA’s procurement 

regulations in effect when EPA awarded 

the grant; or 

(2) The award official approves 

noncompetitive procurement under 2 

CFR 200.320(f) for reasons other than 

simply using the same individual or 

firm that provided facilities planning or 

design services for the project; or 

(3) The recipient attests that: 

(i) The initial request for proposals 

clearly stated the possibility that the 

firm or individual selected could be 

awarded a subaward for services during 

construction; and 

(ii) The firm or individual was 

selected for facilities planning or design 

services in accordance with procedures 

specified in this section. 

(iii) No employee, officer or agent of 

the recipient, any member of their 

immediate families, or their partners 

have financial or other interest in the 

firm selected for award; and 

(iv) None of the recipient’s officers, 

employees or agents solicited or 

accepted gratuities, favors or anything of 

monetary value from contractors or 

other parties to subawards. 

(b) However, if the recipient uses the 

procedures in paragraph (a) of this 

section to retain an architect or 

engineer, any Step 3 subawards between 

the architect or engineer and the grantee 

must meet all of the other procurement 

provisions in 2 CFR 200.317 through 

200.326. 

Performance and Financial Monitoring 

and Reporting 

§ 1500.11 Quality Assurance. 

(a) Quality assurance applies to all 

assistance agreements that involve 

environmentally related data operations, 

including environmental data 

collection, production or use. 

(b) Recipients shall develop a written 

quality assurance system commensurate 

with the degree of confidence needed 

for the environmentally related data 

operations. 

(c) If the recipient complies with 

EPA’s quality policy, the system will be 

presumed to be in compliance with the 

quality assurance system requirement. 

The recipient may also comply with the 

quality assurance system requirement 

by complying with American National 

Standard ANSI/ASQ E4:2014: Quality 

management systems for environmental 

information and technology programs. 

(d) The recipient shall submit the 

written quality assurance system for 

EPA review. Upon EPA’s written 

approval, the recipient shall implement 

the EPA-approved quality assurance 

system. 

(e) EPA Quality Policy is available at: 

http://www.epa.gov/quality. 

(f) The standards required in this 

section are incorporated by reference 

into this section with the approval of 

the Director of the Federal Register 

under 5 U.S.C. 552(a) and 1 CFR part 51. 

The material is available for 

inspection at the Environmental 

Protection Agency’s Headquarters 

Library, Room 3340, EPA West 

Building, 1301 Constitution Avenue 

NW., Washington, DC 20004, (202) 566– 

0556. A copy is also available for 

inspection at the National Archives and 

Records Administration (NARA). For 

information on the availability of this 

material at NARA, call 202–741–6030, 

or go to: http://www.archives.gov/

federal_register/code_of_federal_

regulations/ibrlocations.html. 

(1) American Society for Quality, 600 

North Plankinton Avenue, Milwaukee, 

WI 53201, 1–800–248–1946, http://

asq.org. 

(i) American National Standard ANSI/ 

ASQ E4:2014: Quality management 

systems for environmental information 

and technology programs— 

Requirements with guidance for use, 

approved February 4, 2014. 

(ii) Reserved. 

(2) Reserved. 

Subpart E—Disputes 

§ 1500.12 Purpose and scope of this 

subpart. 

(a) This section provides the process 

for the resolution of pre-award and postaward assistance agreement disputes as 

described in § 1500.13, except for: 

(1) Assistance agreement competitionrelated disputes; and 

(2) Any appeal process relating to an 

award official’s determination that an 

entity is not qualified for award that 

may be developed pursuant to guidance 

implementing Section 872 of the 

Duncan Hunter National Defense 

Authorization Act for Fiscal Year 2009 

(Pub. L. 110–417, as amended). 

(b) Pre-award and post-award 

disagreements between affected entities 

and EPA related to an assistance 

agreement should be resolved at the 

lowest level possible. If an agreement 

cannot be reached, absent any other 

applicable statutory or regulatory 

dispute provisions, affected entities 

must follow the dispute procedures 

outlined in this subpart. 

(c) Determinations affecting assistance 

agreements made under other Agency 

decision-making processes are not 

subject to review under the procedures 

in this Subpart or the Agency’s 

procedures for resolving assistance 

agreement competition-related disputes. 

These determinations include, but are 

not limited to: 

(1) Decisions on requests for 

exceptions under § 1500.3; 

(2) Bid protest decisions under 2 CFR 

200.318(k) 

(3) National Environmental Policy Act 

decisions under 40 CFR part 6; 

(4) Policy decisions of the EPA 

Internal Audit Dispute Resolution 

Process (formerly known as Audit 

Resolution Board); and 

(5) Suspension and Debarment 

Decisions under 2 CFR parts 180 and 

1532. 

§ 1500.13 Definitions. 

As used in this subpart: 

(a) Action Official (AO) is the EPA 

official who authors the Agency 

Decision to the Affected Entity 

regarding a pre-award or post-award 

matter. 

(b) Affected Entity is an entity that 

applies for and/or receives Federal 

financial assistance from EPA including 

but not limited to: State and local 

governments, Indian Tribes, Intertribal 

Consortia, Institutions of Higher 

Education, Hospitals, and other Nonprofit Organizations, and Individuals. 

(c) Agency Decision is the Agency’s 

initial pre-award or post-award 

determination. The Agency Decision is 

sent by the Action Official (AO) to the 

Affected Entity electronically and 

informs them of their dispute rights 

including appealing the Agency 

Decision to the DDO. Assistance 

Agreement Appeal (or Appeal) is the 

letter an Affected Entity submits to the 

DDO to challenge an Agency Decision. 

(d) Dispute is a disagreement by an 

Affected Entity with a specific Agency 

Decision regarding a pre-award or postaward action. 

(e) Disputes Decision Official (DDO) is 

the designated agency official 

responsible for issuing a decision 

resolving an Appeal. 

(1) The DDO for a Headquarters 

Assistance Agreement Appeal is the 

Director of the Grants and Interagency 

Agreement Management Division in the 


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Office of Grants and Debarment or 

designee. To help provide for a fair and 

impartial review, the AO for the 

challenged Agency Decision may not 

serve as the Headquarters DDO and the 

DDO cannot serve as the Review Official 

for the Appeal decision. 

(2) The DDO for a Regional Assistance 

Agreement Appeal is the official 

designated by the Regional 

Administrator to issue the written 

decision resolving the Appeal. To help 

provide for a fair and impartial review, 

the AO for the challenged Agency 

Decision may not serve as the Regional 

DDO and the DDO cannot serve as the 

Review Official for the Appeal decision. 

Request for Review is the letter an 

Affected Entity submits to the 

designated Review Official to challenge 

the DDO’s Appeal decision. 

(f) Review Official is the EPA official 

responsible for issuing a decision 

resolving an Affected Entity’s request 

for review of a DDO’s Appeal decision. 

(1) For a Headquarters DDO Appeal 

decision, the Review Official is the 

Director of the Office of Grants and 

Debarment or designee. 

(2) For a Regional DDO Appeal 

decision, the Review Official is the 

Regional Administrator or designee. 

§ 1500.14 Submission of Appeal. 

An Affected Entity or its authorized 

representative may dispute an Agency 

Decision by electronically submitting an 

Appeal to the DDO identified in the 

Agency Decision. In order for the DDO 

to consider the Appeal, it must satisfy 

the following requirements: 

(a) Timeliness. The DDO must receive 

the Appeal no later than 30 calendar 

days from the date the Agency Decision 

is electronically sent to the Affected 

Entity. The DDO will dismiss any 

Appeal received after the 30-day period 

unless the DDO grants an extension of 

time to submit the Appeal. The Affected 

Entity must submit a written request for 

extension to the DDO before the 

expiration of the 30-day period. The 

DDO may grant a one-time extension of 

up to 30 calendar days when justified by 

the situation, which may include the 

unusual complexity of the Appeal or 

because of exigent circumstances. 

(b) Method of submission. The 

Affected Entity must submit the Appeal 

electronically via email to the DDO, 

with a copy to the AO, using the email 

addresses specified in the Agency 

Decision within the 30-day period 

stated in paragraph (a) of this section. 

(c) Contents of Appeal. The Appeal 

submitted to the DDO must include: 

(1) A copy of the disputed Agency 

Decision; 

(2) A detailed statement of the 

specific legal and factual grounds for the 

Appeal, including copies of any 

supporting documents; 

(3) The specific remedy or relief the 

Affected Entity seeks under the Appeal; 

and 

(4) The name and contact information, 

including email address, of the Affected 

Entity’s designated point of contact for 

the Appeal. 

§ 1500.15 Notice of receipt of Appeal to 

Affected Entity. 

Within 15 calendar days of receiving 

the Appeal, the DDO will provide the 

Affected Entity a written notice, sent 

electronically, acknowledging receipt of 

the Appeal. 

(a) Timely Appeals. If the Appeal was 

timely submitted, the notice of 

acknowledgement may identify any 

additional information or 

documentation that is required for a 

thorough consideration of the Appeal. 

The notice should provide no more than 

30 calendar days for the Affected Entity 

to provide the requested information. If 

it is not feasible to identify such 

information or documentation in the 

notice the DDO may request it at a later 

point in time prior to Appeal resolution. 

(b) Untimely Appeals. If the DDO did 

not receive the Appeal within the 

required 30-day period, or any 

extension of it, the DDO will notify the 

Affected Entity that the Appeal is being 

dismissed as untimely and the Agency 

Decision of the AO becomes final. The 

notification will also identify the 

Review Official. The dismissal of an 

untimely Appeal constitutes the final 

agency action, unless further review is 

sought in accordance with the 

requirements of § 1500.16. In limited 

circumstances, the DDO may, as a 

matter of discretion, consider an 

untimely Appeal if doing so would be 

in the interests of fairness and equity. 

§ 1500.16 Determination of Appeal. 

(a) Record on Appeal. In determining 

the merits of the Appeal, the DDO will 

consider the record related to the 

Agency Decision, any documentation 

that the Affected Entity submits with its 

Appeal, any additional documentation 

submitted by the Affected Entity in 

response to the DDO’s request under 

§ 1500.14(a), and any other information 

the DDO determines is relevant to the 

Appeal provided the DDO gives notice 

of that information to the Affected 

Entity. The Affected Entity may not on 

its own initiative submit any additional 

documents. 

(b) Appeal decision. The DDO will 

issue the Appeal decision within 180 

calendar days from the date the Appeal 

is received by the DDO unless a longer 

period is necessary based on the 

complexity of the legal, technical and 

factual issues presented. The DDO will 

notify the Affected Entity if the 

expected decision will not be issued 

within the 180 day period and if feasible 

will indicate when the decision is 

expected to be issued. The Appeal 

decision will also identify the Review 

Official. The DDO will issue the Appeal 

decision electronically. The DDO’s 

decision will constitute the final agency 

action unless the Affected Entity files a 

timely request for review in accordance 

with the Request for Review procedures 

in § 1500.17. 

§ 1500.17 Request for review. 

An Affected Entity may file an 

electronic written request for review of 

the DDO’s Appeal decision to the 

appropriate Review Official within 15 

calendar days from the date the Appeal 

decision is electronically sent to the 

Affected Entity. The request for review 

must comply with the following 

requirements: 

(a) Submission of request for review. 

The request must be submitted to the 

Review Official identified in the Appeal 

decision as follows: 

(1) If a Headquarters DDO issued the 

Appeal decision, the request must be 

electronically submitted to the Director 

of the Office of Grants and Debarment, 

or designee, at the email address 

identified in the Appeal decision, with 

a copy to the DDO. 

(2) If the Appeal decision was issued 

by a DDO located in an agency Regional 

Office, the request for review must be 

electronically submitted to the Regional 

Administrator, or designee, at the email 

address identified in the Appeal 

decision, with a copy to the DDO. 

(b) Contents and grounds of request 

for review. The request for review must 

include a copy of the DDO’s Appeal 

decision and provide a detailed 

statement of the factual and legal 

grounds warranting reversal or 

modification of the Appeal decision. 

The only ground for review of a DDO’s 

Appeal decision is that there was a clear 

and prejudicial error of law, fact or 

application of agency policy in deciding 

the Appeal. 

(c) Conducting the review. In 

reviewing the Appeal decision, the 

Review Official will only consider the 

information that was part of the Appeal 

decision unless: 

(1) The Affected Entity provides new 

information in the request for review 

that was not available to the DDO for the 

Appeal decision; and 

(2) The Review Official determines 

that the new information is relevant and 


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should be considered in the interests of 

fairness and equity. 

§ 1500.18 Notice of receipt of request for 

review. 

Timeliness. The Review Official will 

provide the Affected Entity electronic 

written notice acknowledging receipt of 

the review request within 15 calendar 

days of receiving the request. The 

Review Official will further provide a 

copy of the notice to the DDO. 

(a) If the request was submitted in 

accordance with § 1500.17, the notice of 

acknowledgment will also advise the 

Affected Entity that the Review Official 

expects to issue a decision within 45 

calendar days from the date they 

received the request. 

(b) If the request for review was not 

submitted within the required 15 

calendar day period, or does not allege 

reviewable grounds consistent with 

§ 1500.17, the Review Official will 

notify the Affected Entity that the 

request is denied as untimely and/or for 

failing to state a valid basis for review. 

In limited circumstances, the Review 

Official may, as a matter of discretion, 

consider an untimely review if doing so 

would be in the interest of fairness and 

equity. 

§ 1500.19 Determination of request for 

review. 

(a) Within 15 calendar days of 

receiving a copy of the notice 

acknowledging the receipt of a timely 

and reviewable Request for Review, the 

DDO will submit the Appeal record to 

the Review Official. 

(b) The Review Official will issue a 

final written decision within 45 

calendar days of the submission of the 

request for review unless a longer 

period is necessary based on the 

complexity of the legal, technical and 

factual issues presented. 

(1) The Review Official will notify the 

Affected Entity if the expected decision 

will not be issued within the 45-day 

period and if feasible will indicate when 

the decision is expected to be issued. 

(2) The Review Official’s decision 

constitutes the final agency action and 

is not subject to further review within 

the agency. 

Title 40—Environmental Protection 

CHAPTER I—ENVIRONMENTAL 

PROTECTION AGENCY 

PART 30—[Removed] 

■ 1. Remove part 30. 

PART 31—[Removed] 

■ 2. Remove part 31. 

PART 33—PARTICIPATION BY 

DISADVANTAGED BUSINESS 

ENTERPRISES IN UNITED STATES 

ENVIRONMENTAL PROTECTION 

AGENCY PROGRAMS 

■ 3. The authority citation for part 33 is 

revised to read as follows: 

Authority: 15 U.S.C. 637 note; 42 U.S.C. 

4370d, 7601 note, 9605(f); E.O. 11625, 36 FR 

19967, 3 CFR, 1971 Comp., p. 213; E.O. 

12138, 49 FR 29637, 3 CFR, 1979 Comp., p. 

393; E.O. 12432, 48 FR 32551, 3 CFR, 1983 

Comp., p. 198, 2 CFR part 200. 

■ 4. Section 33.103 is amended by 

revising the first sentence of the 

introductory text and the definition for 

‘‘Equipment’’ to read as follows: 

§ 33.103 What do the terms in this part 

mean? 

* * * Terms not defined below shall 

have the meaning given to them in 2 

CFR part 200 and 1500, and 40 CFR part 

35 as applicable. * * * 

* * * * * 

Equipment means items procured 

under a financial assistance agreement 

as defined by 2 CFR 200.33. 

* * * * * 

■ 5. Section 33.105 is amended by 

revising the introductory text to read as 

follows: 

§ 33.105 What are the compliance and 

enforcement provisions of this part? 

If a recipient fails to comply with any 

of the requirements of this part, EPA 

may take remedial action under 2 CFR 

200.338, Remedies for noncompliance, 

or 40 CFR part 35, as appropriate, or any 

other action authorized by law, 

including, but not limited to, 

enforcement under 18 U.S.C. 1001 and/ 

or the Program Fraud Civil Remedies 

Act of 1986 (31 U.S.C. 3801 et seq.). 

Examples of the remedial actions under 

2 CFR 200.338 or 40 CFR part 35 

include, but are not limited to: 

* * * * * 

■ 6. Section 33.303 is amended by 

revising the second sentence to read as 

follows: 

§ 33.303 Are there special rules for loans 

under EPA financial assistance 

agreements? 

* * * This provision does not require 

that such private and nonprofit 

borrowers expend identified loan funds 

in compliance with any other 

procurement procedures contained in 2 

CFR part 200 Subpart D—Post Federal 

Award Requirements, Procurement 

Standards, or 40 CFR part 35 subpart O, 

as applicable. 

■ 7. Section 33.502 is amended by 

revising the second sentence to read as 

follows: 

§ 33.502 What are the reporting 

requirements of this part? 

* * * Recipients of Continuing 

Environmental Program Grants under 40 

CFR part 35, subpart A, recipients of 

Performance Partnership Grants (PPGs) 

under 40 CFR part 35, subpart B; 

General Assistance Program (GAP) 

grants for tribal governments and 

intertribal consortia; and institutions of 

higher education, hospitals and other 

non-profit organizations receiving 

financial assistance agreements, will 

report on MBE and WBE participation 

on an annual basis. * * * 

PART 35—STATE AND LOCAL 

ASSISTANCE 

■ 8. The authority citation for part 35 is 

revised to read as follows: 

Authority: 42 U.S.C. 7401 et seq.; 33 U.S.C. 

1251 et seq.; 42 U.S.C. 300f et seq.; 42 U.S.C. 

6901 et seq.; 7 U.S.C. 136 et seq.; 15 U.S.C. 

2601 et seq.; 42 U.S.C. 13101 et seq.; Pub. L. 

104–134, 110 Stat. 1321, 1321–299 (1996); 

Pub. L. 105–65, 111 Stat. 1344, 1373 (1997), 

2 CFR 200. 

■ 9. Section 35.001 is amended by 

revising the second sentence to read as 

follows: 

§ 35.001 Applicability. 

* * * These provisions supplement 

the EPA general assistance regulations 

in 2 CFR parts 200 and 1500. 

Subpart A—Environmental Program 

Grants 

■ 10. Section 35.100 is amended by 

revising the second sentence to read as 

follows: 

§ 35.100 Purpose of the subpart. 

* * * These provisions supplement 

the EPA general assistance regulations 

in 2 CFR parts 200 and 1500. * * * 

■ 11. Section 35.104 is amended by 

revising paragraph (a) to read as follows: 

§ 35.104 Components of a complete 

application. 

* * * * * 

(a) Meet the requirements in 2 CFR 

part 200, subpart C. 

* * * * * 

■ 12. Section 35.111 is amended by 

revising paragraph (a)(1) to read as 

follows: 

§ 35.111 Criteria for approving an 

application. 

(a) * * * 

(1) The application meets the 

requirements of this subpart and 2 CFR 

part 200, subpart C. 

* * * * * 

■ 13. Section 35.113 is amended by 

revising paragraph (a) first sentence to 

read as follows: 


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§ 35.113 Reimbursement for pre-award 

costs. 

(a) Notwithstanding the requirements 

of 2 CFR parts 200 and 1500, EPA may 

reimburse recipients for pre-award costs 

incurred from the beginning of the 

funding period established in the grant 

agreement if such costs would have 

been allowable if incurred after the 

award and the recipients submitted 

complete grant applications before the 

beginning of the budget period. * * * 

* * * * * 

§ 35.114 [Amended] 

■ 14. Section 35.114 introductory text is 

amended by removing the first sentence. 

■ 15. Section 35.115 is amended by 

revising paragraph (a) third sentence 

and paragraph (c) to read as follows: 

§ 35.115 Evaluation of performance. 

(a) * * * The schedule must require 

the recipient to report at least annually 

and must satisfy the requirements for 

progress reporting under 2 CFR 200.328. 

* * * * * 

(c) Resolution of issues. If the joint 

evaluation reveals that the recipient has 

not made sufficient progress under the 

work plan, the Regional Administrator 

and the recipient will negotiate a 

resolution that addresses the issues. If 

the issues cannot be resolved through 

negotiation, the Regional Administrator 

may take appropriate measures under 2 

CFR 200.338. The recipient may request 

review of the Regional Administrator’s 

decision under the dispute processes in 

2 CFR part 1500, subpart E. 

* * * * * 

■ 16. Section 35.360 is amended by 

revising paragraph (a) second sentence 

to read as follows: 

§ 35.360 Purpose. 

(a)* * * These sections do not govern 

Water Quality Cooperative Agreements 

to other entities eligible under section 

104(b)(3). 

* * * * * 

■ 17. Section 35.380 is amended by 

revising paragraph (a) second sentence 

to read as follows: 

§ 35.380 Purpose. 

(a) * * * These sections do not 

govern Water Quality Cooperative 

Agreements to other entities eligible 

under section 104(b)(3). 

* * * * * 

Subpart B—Environmental Program 

Grants for Tribes 

■ 18. Section 35.500 is amended by 

revising the second sentence to read as 

follows: 

§ 35.500 Purpose of this subpart. 

* * * These provisions supplement 

the EPA general assistance regulations 

in 2 CFR parts 200 and 1500.* * * 

■ 19. Section 35.503 is revised to read 

as follows: 

§ 35.503 Deviation from this subpart. 

EPA will consider and may approve 

requests for an official deviation from 

non-statutory provisions of this 

regulation in accordance with 2 CFR 

1500.3. 

■ 20. Section 35.505 is amended by 

revising paragraph (a) to read as follows: 

§ 35.505 Components of a complete 

application. 

* * * * * 

(a) Meet the requirements in 2 CFR 

part 200, subpart C. 

* * * * * 

■ 21. Section 35.511 is amended by 

revising paragraph (a)(1) to read as 

follows: 

§ 35.511 Criteria for approving an 

application. 

(a) * * * 

(1) The application meets the 

requirements of this subpart and 2 CFR 

part 200, subpart C. 

* * * * * 

■ 22. Section 35.513 is amended by 

revising paragraph (a) first sentence to 

read as follows: 

§ 35.513 Reimbursement for pre-award 

costs. 

(a) Notwithstanding the requirements 

of 2 CFR parts 200 and 1500, EPA may 

reimburse recipients for pre-award costs 

incurred from the beginning of the 

funding period established in the grant 

agreement if such costs would have 

been allowable if incurred after the 

award and the recipients submitted 

complete grant applications before the 

beginning of the budget period.* * * 

* * * * * 

§ 35.514 [Amended] 

■ 23. Section 35.514 is amended by 

removing the first sentence of the 

introductory text. 

■ 24. Section 35.515 is amended by 

revising paragraph (a) third sentence, 

and paragraph (c) to read as follows: 

§ 35.515 Evaluation of performance. 

(a) * * * The schedule must require 

the recipient to report at least annually 

and must satisfy the requirements for 

progress reporting under 2 CFR 200.328. 

* * * * * 

(c) Resolution of issues. If the joint 

evaluation reveals that the recipient has 

not made sufficient progress under the 

work plan, the Regional Administrator 

and the recipient will negotiate a 

resolution that addresses the issues. If 

the issues cannot be resolved through 

negotiation, the Regional Administrator 

may take appropriate measures under 2 

CFR 200.338. The recipient may request 

review of the Regional Administrator’s 

decision under the dispute processes in 

2 CFR part 1500, subpart E. 

* * * * * 

■ 25. Section 35.588 is amended by 

revising paragraph (a)(1) to read as 

follows: 

§ 35.588 Award limitations. 

(a) * * * 

(1) All monitoring and analysis 

activities performed by the Tribe or 

Intertribal Consortium meets the 

applicable quality assurance and quality 

control requirements in 2 CFR 1500.11. 

* * * * * 

■ 26. Section 35.600 is amended by 

revising paragraph (a) second sentence 

to read as follows: 

§ 35.600 Purpose. 

(a) * * * These sections do not 

govern Water Quality Cooperative 

Agreements under section 104(b)(3) to 

organizations that do not meet the 

definitions of Tribe or Intertribal 

Consortium in § 35.502. 

* * * * * 

■ 27. Section 35.610 is amended by 

revising paragraph (a) to read as follows: 

§ 35.610 Purpose. 

(a) Purpose of section. Sections 35.610 

through 35.615 govern wetlands 

development grants to Tribes and 

Intertribal Consortia under section 

104(b)(3) of the Clean Water Act. These 

sections do not govern wetlands 

development grants under section 

104(b)(3) to organizations that do not 

meet the definitions of Tribe or 

Intertribal Consortium in § 35.502. 

* * * * * 

Subpart E—[RESERVED] 

■ 28. Remove and reserve part 35 

subpart E. 

Subpart H—[RESERVED] 

■ 29. Remove and reserve part 35 

subpart H. 

Subpart I—Grants for Construction of 

Treatment Works 

■ 30. Section 35.2000 is amended by 

revising paragraph (b) first sentence, 

and paragraph (c) to read as follows: 

§ 35.2000 Purpose and policy. 

* * * * * 

(b) This subpart supplements EPA’s 

Uniform Relocation and Real Property 


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Acquisition Policies Act regulation (part 

4 of this chapter), its National 

Environmental Policy Act (NEPA) 

regulation (part 6 of this chapter), its 

public participation regulation (part 25 

of this chapter), its intergovernmental 

review regulation (part 29 of this 

chapter), its general grant regulation (2 

CFR parts 200 and 1500), and its 

debarment regulation (2 CFR part 1532), 

and establishes requirements for Federal 

grant assistance for the building of 

wastewater treatment works. * * * 

(c) EPA’s policy is to delegate 

administration of the construction 

grants program on individual projects to 

State agencies to the maximum extent 

possible. Throughout this subpart we 

have used the term Regional 

Administrator. To the extent that the 

Regional Administrator delegates review 

of projects for compliance with the 

requirements of this subpart to a State 

agency under a delegation agreement 

(§ 35.1030), the term Regional 

Administrator may be read State agency. 

* * * * * 

■ 31. Section 35.2005 is amended by 

revising paragraph (a) to read as follows: 

§ 35.2005 Definitions. 

(a) Words and terms not defined 

below shall have the meaning given to 

them in 2 CFR part 200, subpart A— 

Acronyms and Definitions. 

* * * * * 

■ 32. Section 35.2035 is amended by 

revising paragraph (c) to read as follows: 

§ 35.2035 Rotating biological contractor 

(RBC) replacement grants. 

* * * * * 

(c) The modification/replacement 

project meets all requirements of EPA’s 

construction grant and other applicable 

regulations, including 40 CFR part 35, 

and 2 CFR parts 200, 1500 and 1532. 

* * * * * 

■ 33. Section 35.2036 is amended by 

revising paragraphs (a)(4), (b)(1) and 

(b)(3) to read as follows: 

§ 35.2036 Design/build project grants. 

(a) * * * 

(4) The grantee obtains bonds from 

the contractor in an amount the 

Regional Administrator determines 

adequate to protect the Federal interest 

in the treatment works (see 2 CFR 

200.325); 

* * * * * 

(b) * * *(1) Grantee procurement for 

developing or supplementing the 

facilities plan to prepare the pre-bid 

package, as well as for designing and 

building the project and performing 

construction management and contract 

administration, will be in accordance 

with the procurement standards at 2 

CFR 200.317 through 200.326 and 2 CFR 

1500.9 through 1500.10. 

* * * * * 

(3) The grantee may use the same 

architect or engineer that prepared the 

facilities plan to provide any or all of 

the pre-bid, construction management, 

and contract and/or project 

administration services provided the 

initial procurement met EPA 

requirements (see 2 CFR 1500.10). 

* * * * * 

■ 34. Section 35.2040 is amended by 

revising the second sentence of the 

introductory text, paragraphs (a) 

introductory text, (a)(1), (b) introductory 

text, (b)(1), (c) introductory text, (d) 

introductory text, (e) introductory text, 

(f) introductory text, and (g) 

introductory text to read as follows: 

§ 35.2040 Grant Application. 

* * * In addition to the information 

required in 2 CFR parts 200 and 1500, 

applicants shall provide the following 

information: 

* * * * * 

(a) Step 2+3: Combined design and 

building of a treatment works and 

building related services and supplies. 

An application for Step 2+3 grant 

assistance shall include: 

(1) A facilities plan prepared in 

accordance with this subpart; 

* * * * * 

(b) Step 3: Building of a treatment 

works and related services and supplies 

An application for Step 3 grant 

assistance shall include: 

(1) A facilities plan prepared in 

accordance with this subpart; 

* * * * * 

(c) Training facility project. An 

application for a grant for construction 

and support of a training facility, 

facilities or training programs under 

section 109(b) of the Act shall include: 

* * * * * 

(d) Advances of allowance. State 

applications for advances of allowance 

to small communities shall be on 

government wide Application for 

Federal Assistance (SF–424). The 

application shall include: 

* * * * * 

(e) Field Testing of Innovative and 

Alternative Technology. An application 

for field testing of I/A projects shall 

include a field testing plan containing: 

* * * * * 

(f) Marine CSO Fund Project. An 

application for marine CSO grant 

assistance under § 35.2024(b) shall 

include: 

* * * * * 

(g) Design/build project grant (Step 7). 

An application for a design/build 

project grant shall include: 

* * * * * 

■ 35. Section 35.2042 is amended by 

revising paragraph (c) to read as follows: 

§ 35.2042 Review of grant applications. 

* * * * * 

(c) Applications for assistance for 

training facilities funded under section 

109(b) and for State advances of 

allowance under section 201(l)(1) of the 

Act and § 35.2025 will be reviewed in 

accordance with 2 CFR parts 200 and 

1500. 

* * * * * 

■ 36. Section 35.2105 is revised to read 

as follows: 

§ 35.2105 Debarment and suspension. 

The applicant shall indicate whether 

it used the services of any individual, 

organization, or unit of government for 

facilities planning or design work whose 

name appears on the master list of 

debarments, suspensions, and voluntary 

exclusions. See 2 CFR 200.113 and 2 

CFR part 1532. If the applicant indicates 

it has used the services of a debarred 

individual or firm, EPA will closely 

examine the facilities plan, design 

drawings and specifications to 

determine whether to award a grant. 

EPA will also determine whether the 

applicant should be found nonresponsible under 2 CFR parts 200 and 

1500 or be the subject of possible 

debarment or suspension under 2 CFR 

part 1532. 

■ 37. Section 35.2200 is revised to read 

as follows: 

§ 35.2200 Grant conditions. 

In addition to the EPA General Grant 

Conditions (http://www.epa.gov/ogd/

tc.htm), each treatment works grant 

shall be subject to the conditions under 

§§ 35.2202 through 35.2218. 

■ 38. Section 35.2212 is amended by 

revising paragraph (a) second sentence, 

and paragraph (d) to read as follows: 

§ 35.2212 Project initiation. 

(a) * * * Failure to promptly initiate 

and complete a project may result in the 

imposition of sanctions under 2 CFR 

200.338. 

* * * * * 

(d) The grantee shall notify the 

Regional Administrator immediately 

upon award of the subagreement(s) for 

building all significant elements of the 

project. 

* * * * * 

■ 39. Section 35.2250 is revised to read 

as follows: 


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§ 35.2250 Determination of allowable 

costs. 

The Regional Administrator will 

determine the allowable costs of the 

project based on applicable provisions 

of laws and regulations, the scope of the 

approved project, 2 CFR part 200, 

subpart E—Cost Principles and 

Appendix A of this subpart. 

■ 40. Section 35.2300 is amended by 

revising paragraph (a) and paragraph (d) 

second sentence to read as follows: 

§ 35.2300 Grant payments. 

* * * * * 

(a) * * * The Regional Administrator 

may at any time review and audit 

request for payment and payments and 

make appropriate adjustments as 

provided in 2 CFR 200.305. 

* * * * * 

(d) * * * The requirements in 2 CFR 

200.305 apply to any advances of funds 

for assistance payments. 

* * * * * 

■ 41. Appendix A to Subpart I of Part 

35—Determination of Allowable Costs is 

amended by revising paragraphs (a), 

A.1.b., A.1.c., A.1.g.(2)(ii) and E.2.a to 

read as follows: 

Appendix A to Subpart I of Part 35— 

Determination of Allowable Costs 

(a) * * * The information in this appendix 

represents Agency policies and procedures 

for determining the allowability of project 

costs based on the Clean Water Act, EPA 

policy, appropriate Federal cost principles of 

2 CFR part 200 and reasonableness. 

* * * * * 

A. * * * 

1. * * * 

b. The costs of complying with the 

procurement standards in 2 CFR 200.317 

through 200.326 and 2 CFR 1500.9 and 

1500.10. 

c. The cost of legal and engineering 

services incurred by grantees in deciding 

procurement protests and defending their 

decisions in protest appeals in 2 CFR 

200.318. 

* * * * * 

g. * * * 

(2) * * * 

(ii) Costs of equitable adjustments under 

Clause 4, Differing Site Conditions, of the 

model subagreement clauses required under 

§ 33.1030 of this subchapter. 

* * * * * 

E. * * * 

2. * * * 

a. The costs of equipment or material 

procured in violation of the procurement 

standards in 2 CFR 200.317 through 2 CFR 

200.326 and 2 CFR 1500.9 and 1500.10. 

* * * * * 

Subpart J—Construction Grants 

Program Delegation to States 

■ 42. Section 35.3025 is amended by 

revising paragraph (c) sixth sentence to 

read as follows: 

§ 35.3025 Overview of State performance 

under delegation. 

(c) * * * The Regional Administrator 

may terminate or annual any section 

205(g) financial assistance for cause in 

accordance with 2 CFR 200.338 through 

2 CFR 200.342 Remedies for 

Noncompliance. 

* * * * * 

■ 43. Section 35.3030 is amended by 

revising paragraph (c) to read as follows: 

§ 35.3030 Right of review of State 

decision. 

* * * * * 

(c) The Region shall determine 

whether the State’s review is 

comparable to a dispute decision 

official’s (DDO) review pursuant to 2 

CFR part 1500, subpart E. If the State’s 

review is comparable, Regional review 

of the State’s decision will be conducted 

by the Regional Administrator. If the 

State’s review is not comparable, the 

DDO will review the State’s decision 

and issue a written decision. Review of 

either a Regional Administrator or DDO 

decision may be requested pursuant to 

2 CFR part 1500, subpart E. 

* * * * * 

Subpart K—State Water Pollution 

Control Revolving Funds 

■ 44. Section 35.3105 is amended by 

revising the introductory text to read as 

follows: 

§ 35.3105 Definitions. 

Words and terms that are not defined 

below and that are used in this rule 

shall have the same meaning they are 

given in 2 CFR part 200 Subpart A— 

Acronyms and Definitions and 40 CFR 

part 35, subpart I. 

* * * * * 

■ 45. Section 35.3140 is amended by 

revising paragraph (b) second sentence 

to read as follows: 

§ 35.3140 Environmental review 

requirements. 

* * * * * 

(b) * * * The State may elect to apply 

the procedures at 40 CFR part 6, subpart 

I and related subparts, or apply its own 

‘‘NEPA-like’’ SERP for conducting 

environmental reviews, provided that 

the following elements are met. 

* * * * * 

Subpart L—Drinking Water State 

Revolving Funds 

■ 46. Section 35.3500 is amended by 

revising paragraph (b) second sentence 

to read as follows: 

§ 35.3500 Purpose, policy, and 

applicability. 

* * * * * 

(b) * * * This subpart also 

supplements EPA general assistance 

regulations in 2 CFR parts 200 and 1500 

which contain administrative 

requirements that apply to 

governmental recipients of 

Environmental Protection Agency (EPA) 

grants and subgrants.* * * 

* * * * * 

■ 47. Section 35.3510 is amended by 

revising paragraph (b) second sentence 

to read as follows: 

§ 35.3510 Establishment of the DWSRF 

program. 

* * * * * 

(b) * * * The State agency that is 

awarded the capitalization grant (i.e., 

grantee) is accountable for the use of the 

funds provided in the capitalization 

grant agreement under 2 CFR part 200 

and the EPA general assistance 

regulations in 2 CFR part 1500. 

* * * * * 

■ 48. Section 35.3540 is amended by 

revising paragraph (a) to read as follows: 

§ 35.3540 Requirements for funding setaside activities. 

(a) * * * If a State makes a grant or 

enters into a cooperative agreement with 

an assistance recipient to conduct setaside activities, the recipient must 

comply with 2 CFR part 200 and the 

EPA general assistance regulations in 2 

CFR part 1500. 

* * * * * 

■ 49. Section 35.3550 is amended by 

revising paragraph (a) first sentence to 

read as follows: 

§ 35.3550 Specific capitalization grant 

agreement requirements. 

(a) * * * A State must agree to 

comply with this subpart, 2 CFR part 

200, the EPA general assistance 

regulations in 2 CFR part 1500 and the 

specific conditions of the grant.* * * 

* * * * * 

■ 50. Section 35.3570 is amended by 

revising paragraph (a)(3)(xiv) and (b)(1) 

to read as follows: 

§ 35.3570 Reports and audits. 

(a) * * * 

(3) * * * 

(xiv) Complied with 2 CFR part 200, 

the EPA general assistance regulations 


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in 2 CFR part 1500 and the specific 

conditions of the grant. 

* * * * * 

(b) * * * 

(1) A State must comply with the 

provisions of the Single Audit Act 

Amendments of 1996, 31 U.S.C. 7501– 

7, 2 CFR part 200 and the Office of 

Management and Budget’s Compliance 

Supplement. 

* * * * * 

■ 51. Section 35.3585 is amended by 

revising paragraphs (a) and (d) to read 

as follows: 

§ 35.3585 Compliance assurance 

procedures. 

(a) * * * The RA may take action 

under this section and the remedies of 

noncompliance of 2 CFR 200.338 

through 200.342, if a determination is 

made that a State has not complied with 

its capitalization grant agreement, other 

requirements under section 1452 of the 

Act, this subpart, 2 CFR parts 200 and 

1500, or has not managed the DWSRF 

program in a financially sound manner 

(e.g., allows consistent and substantial 

failures of loan repayments). 

* * * * * 

(d) * * * A State or an assistance 

recipient that has been adversely 

affected by an action or omission by 

EPA may request a review of the action 

or omission under 2 CFR part 1500, 

subpart E. 

Subpart M—Grants for Technical 

Assistance 

■ 52. Section 35.4011 is revised to read 

as follows: 

§ 35.4011 Do the general grant regulations 

apply to TAGs? 

Yes, the regulations at 2 CFR part 200 

and 2 CFR Part 1500 apply to TAGs. 2 

CFR part 200, as supplemented by 2 

CFR part 1500, establishes the uniform 

administrative requirements for Federal 

grants. 

■ 53. Section 35.4012 is revised to read 

as follows: 

§ 35.4012 If there appears to be a 

difference between the requirements of 2 

CFR Parts 200 and 1500 and this subpart, 

which regulations should my group follow? 

You should follow the regulations in 

2 CFR part 200 and 2 CFR part 1500, 

except for the following provisions from 

which this subpart deviates: 

(a) 2 CFR 200.305(b)(1) and (2), 

Payment 

(b) 2 CFR 200.324(b)(2), Federal 

awarding agency or pass-through entity 

review 

(c) 2 CFR part 1500 Subpart E— 

Disputes. 

■ 54. Section 35.4020 is amended by 

revising paragraph (a)(2) to read as 

follows: 

§ 35.4020 Is my community group eligible 

for a TAG? 

(a) * * * 

(2) Your group meets the minimum 

administrative and management 

capability requirements found in 2 CFR 

200.302 by demonstrating you have or 

will have reliable procedures for record 

keeping and financial accountability 

related to managing your TAG (you 

must have these procedures in place 

before your group incurs any expenses); 

and 

* * * * * 

■ 55. Section 35.4050 is amended by 

revising paragraph (b) first sentence to 

read as follows: 

§ 35.4050 Must my group contribute 

toward the cost of a TAG? 

* * * * * 

(b) Under 2 CFR 200.306, your group 

may use ‘‘cash’’ and/or ‘‘in-kind 

contributions’’ (for example, your board 

members can count their time toward 

your matching share) to meet the 

matching funds requirement. * * * 

■ 56. Section 35.4075 is amended by 

revising paragraphs (d), (e) and (i)(2) to 

read as follows: 

§ 35.4075 Are there things my group can’t 

spend TAG money for? 

* * * * * 

(d) Political activity and lobbying that 

is unallowable under 2 CFR part 200 

Subpart E—Cost Principles, (this 

restriction includes activities such as 

attempting to influence the outcomes of 

any Federal, State or local election, 

referendum, initiative, or similar 

procedure through in-kind or cash 

contributions, endorsements, or 

publicity, or attempting to influence the 

introduction or passage of Federal or 

state legislation; this regulation is 

available at http://www.ecfr.gov.) 

(e) Other activities that are 

unallowable under the cost principles 

stated in 2 CFR part 200 Subpart E— 

Cost Principles (such as costs of 

amusement, diversion, social activities, 

fund raising and ceremonials); 

* * * * * 

(i) * * * 

(2) Disputes with EPA under its 

dispute resolution procedures set forth 

2 CFR Part1500 Subpart E (see 

§ 35.4245); and 

* * * * * 

■ 57. Section 35.4125 is amended by 

revising paragraph (c) first sentence to 

read as follows: 

§ 35.4125 What else does my group need 

to do? 

* * * * * 

(c) Assurances, certifications and 

other preaward paperwork as 2 CFR part 

200 requires. * * * 

■ 58. Section 35.4175 is amended by 

revising paragraph (c) to read as follows: 

§ 35.4175 What other reporting and record 

keeping requirements are there? 

* * * * * 

(c) Comply with any reporting and 

record keeping requirements in 2 CFR 

parts 200 and 1500. 

■ 59. Section 35.4210, paragraph (a), is 

amended by revising entry (4) of the 

table to read as follows: 

§ 35.4210 Must my group solicit and 

document bids for our procurements? 

(a) * * * 

If the aggregate amount 

of the.

Then your group. 

***

* *

(4) proposed 

contract is 

greater than 

$100,000.

must follow the procurement 

regulations in 2 CFR Parts 

200 and 1500 (these regulations outline the standards for your group to use 

when contracting for services with Federal funds; 

they also contain provisions on: codes of conduct 

for the award and administration of contracts; competition; procurement procedures; cost and price 

analysis; procurement 

records; contract administration; and contracts generally). 

***

* *

* * * * * 

■ 60. Section 35.4230 is amended by 

revising the first sentence of paragraph 

(a) to read as follows: 

§ 35.4230 What are my group’s contractual 

responsibilities once we procure a 

contract? 

* * * * * 

(a) Is responsible for resolving all 

contractual and administrative issues 

arising out of contracts you enter into 

under a TAG; you must establish a 

procedure for resolving such issues with 

your contractor which complies with 

the provisions of 2 CFR 200.318 

(k).* * * 

* * * * * 


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■ 61. Section 35.4235 is amended by 

revising paragraphs (f) and (g) to read as 

follows: 

§ 35.4235 Are there specific provisions my 

group’s contract(s) must contain? 

* * * * * 

(f) The following clauses from 2 CFR 

part 200 Appendix II—Contract 

Provisions for Non-Federal Entity 

Contracts Under Federal Awards, which 

are available at http://www.ecfr.gov.): 

* * * * * 

(g) The following clauses from 2 CFR 

part 200: 

(1) Remedies for breaches of contract 

(2 CFR part 200 Appendix II—Contract 

Provisions for Non-Federal Entity 

Contracts Under Federal Awards) 

(2) Termination by the recipient (2 

CFR part 200 Appendix II—Contract 

Provisions for Non-Federal Entity 

Contracts Under Federal Awards); and 

(3) Access to records (2 CFR 200.336); 

and 

* * * * * 

■ 62. Section 35.4245 is revised to read 

as follows: 

§ 35.4245 How does my group resolve a 

disagreement with EPA regarding our TAG? 

The regulations at 2 CFR part 1500 

Subpart E will govern disputes except 

that, before you may obtain judicial 

review of the dispute, you must have 

requested the Regional Administrator to 

review the dispute decision official’s 

determination under 2 CFR 1500.17. 

■ 63. Section 35.4250 is amended by 

revising paragraph (b) to read as follows: 

§ 35.4250 Under what circumstances 

would EPA terminate my group’s TAG? 

* * * * * 

(b) EPA may also terminate your grant 

with your group’s consent in which case 

you and EPA must agree upon the 

termination conditions, including the 

effective date as 2 CFR 200.339 

describes. 

■ 64. Section 35.4260 is amended by 

revising the introductory text to read as 

follows: 

§ 35.4260 What other steps might EPA 

take if my group fails to comply with the 

terms and conditions of our award? 

EPA may take one or more of the 

following actions, under 2 CFR 200.338, 

depending on the circumstances: 

* * * * * 

■ 65. Section 35.4270 is amended by 

revising the definition ‘‘Allowable cost’’ 

to read as follows: 

§ 35.4270 Definitions. 

* * * * * 

Allowable cost means those project 

costs that are: eligible, reasonable, 

allocable to the project, and necessary to 

the operation of the organization or the 

performance of the award as provided in 

the appropriate Federal cost principles, 

in most cases 2 CFR part 200 Subpart 

E—Cost Principles, and approved by 

EPA in the assistance agreement. 

* * * * * 

■ 66. Section 35.4275 is amended by 

revising the section heading to read as 

follows: 

§ 35.4275 Where can my group get the 

documents this subpart references (for 

example Whitehouse OMB circulars, eCFR 

and tag Web site, EPA HQ/Regional offices, 

grant forms)? 

* * * * * 

Subpart O—Cooperative Agreements 

and Superfund State Contracts for 

Superfund Response Actions 

■ 67. Section 35.6005 is amended by 

revising paragraph (b) to read as follows: 

§ 35.6005 Purpose and scope. 

* * * * * 

(b) 2 CFR part 200, ‘‘Uniform 

Administrative Requirements, Cost 

Principles, and Audit Requirements for 

Federal Awards to Non-Federal 

Entities,’’ establishes consistency and 

uniformity among Federal agencies in 

the administration of grants and 

Cooperative Agreements to non-federal 

entities. For CERCLA-funded 

Cooperative Agreements, this subpart 

supplements the requirements 

contained in 2 CFR parts 200 and 1500 

for States, political subdivisions thereof, 

and Indian Tribes. This subpart 

references those sections of 2 CFR parts 

200 and 1500 that are applicable to 

CERCLA-funded Cooperative 

Agreements. 

* * * * * 

■ 68. Section 35.6015 is amended by 

revising paragraph (b) to read as follows: 

§ 35.6015 Definitions. 

* * * * * 

(b) Those terms not defined in this 

section shall have the meanings set forth 

in section 101 of CERCLA, 2 CFR part 

200, and 40 CFR part 300 (the National 

Contingency Plan). 

■ 69. Section 35.6020 is revised to read 

as follows: 

§ 35.6020 Requirements for both 

applicants and recipients. 

Applicants and recipients must 

comply with the applicable 

requirements of 2 CFR part 1532, 

‘‘Nonprocurement Debarment and 

Suspension and of 2 CFR part 1536, 

‘‘Requirements for Drug-Free Workplace 

(Financial Assistance).’’ 

■ 70. Section 35.6025 is amended by 

revising the second sentence to read as 

follows: 

§ 35.6025 Deviation from this subpart. 

* * * Refer to the requirements 

regarding additions and exceptions 

described in 2 CFR 1500.3. 

■ 71. Section 35.6055 is amended by 

revising paragraphs (a)(3) and (b)(2)(i) to 

read as follows: 

§ 35.6055 State-lead pre-remedial 

Cooperative Agreements. 

(a) * * * 

(3) Other applicable forms and 

information authorized by 2 CFR part 

200 Subpart C—Pre-Federal Award 

Requirements and Contents of Federal 

Awards. 

* * * * * 

(b) * * * 

(2) * * * 

(i) The recipient must comply with 

the quality assurance requirements 

described in 2 CFR 1500.11. 

* * * * * 

■ 72. Section 35.6105 is amended by 

revising paragraphs (a)(2)(vi)(A), (a)(3) 

and (b)(5) to read as follows: 

§ 35.6105 State-lead remedial Cooperative 

Agreements. 

* * * * * 

(a) * * * 

(2) * * * 

(vi) * * * (A) * * * If the project 

involves environmentally related 

measurements or data generation, the 

recipient must comply with the 

requirements regarding quality 

assurance described in 2 CFR 1500.11. 

* * * * * 

(3) Other applicable forms and 

information authorized by 2 CFR part 

200 Subpart C—Pre-Federal Award 

Requirements and Contents of Federal 

Awards. 

* * * * * 

(b) * * * 

(5) * * * If EPA determines in the 

remedy selection process that an 

interest in real property must be 

acquired in order to conduct a response 

action, such acquisition may be funded 

under a Cooperative Agreement. EPA 

may acquire an interest in real estate for 

the purpose of conducting a remedial 

action only if the State provides 

assurance that it will accept transfer of 

such interest in accordance with 40 CFR 

300.510(f) of the NCP. The State must 

provide this assurance even if it intends 

to transfer this interest to a third party, 

or to allow a political subdivision to 

accept transfer on behalf of the State. If 

the political subdivision is accepting the 

transferred interest in real property, the 

State must guarantee that it will accept 

transfer of such interest in the event of 

default by the political subdivision. If 

the State or political subdivision 


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disposes of the transferred real property, 

it shall comply with the requirements 

for real property in 2 CFR 200.311. (See 

§ 35.6400 for additional information on 

real property acquisition requirements.) 

■ 73. Section 35.6230 is amended by 

revising paragraph (d) to read as 

follows: 

§ 35.6230 Application requirements. 

* * * * * 

(d) Other applicable forms and 

information authorized by 2 CFR part 

200 Subpart C—Pre-Federal Award 

Requirements and Contents of Federal 

Awards. 

■ 74. Section 35.6270 is amended by 

revising paragraph (a)(1) third sentence, 

paragraph (a)(2) and paragraph (b)(3) 

second sentence to read as follows: 

§ 35.6270 Standards for financial 

management systems. 

(a)(1) * * * The recipient must allow 

an EPA review of the adequacy of the 

financial management system as 

described in 2 CFR 200.302. 

(2) * * * The recipient’s systems 

must comply with the appropriate 

allowable cost principles described in 2 

CFR part 200 Subpart E—Cost 

Principles. 

* * * * * 

(b) * * * 

(3)) * * * The recipient must comply 

with the requirements regarding source 

documentation described in 2 CFR 

200.302. 

* * * * * 

■ 75. Section 35.6275 is amended by 

revising paragraph (a) to read as follows: 

§ 35.6275 Period of availability of funds. 

The recipient must comply with the 

requirements regarding the availability 

of funds described in 2 CFR parts 200 

and 1500. 

* * * * * 

■ 76. Section 35.6280 is amended by 

revising paragraphs (a) introductory 

text, (a)(2), paragraph (b)(1) first 

sentence, paragraph (b)(2) second 

sentence and paragraph (b)(3) fourth 

sentence to read as follows: 

§ 35.6280 Payments. 

(a) * * * In addition to the following 

requirements, the recipient must 

comply with the requirements regarding 

payment described in 2 CFR 200.305. 

* * * * * 

(2) * * * The interest a recipient 

earns on an advance of EPA funds is 

subject to the requirements of 2 CFR 

200.305. 

(b) * * * 

(1) * * * In order to receive payment 

by the letter of credit method, the 

recipient must comply with the 

requirements regarding letter of credit 

described in 2 CFR 200.305.* * * 

(2) * * * The recipient must comply 

with the requirements regarding 

reimbursement described in 2 CFR 

200.305. 

(3) * * * In such cases, the recipient 

must comply with the requirements 

regarding working capital advances 

described in 2 CFR 200.305. 

■ 77. Section 35.6285 is amended by 

revising paragraph (b) second sentence 

and paragraph (e) first sentence to read 

as follows: 

§ 35.6285 Recipient payment of response 

costs. 

* * * * * 

(b) * * * The recipient must comply 

with the requirements regarding in-kind 

and donated services described in 2 CFR 

200.306. 

* * * * * 

(e) * * * The recipient must comply 

with the requirements regarding cost 

sharing described in 2 CFR 

200.306.* * * 

* * * * * 

■ 78. Section 35.6290 is amended by 

revising the first sentence to read as 

follows: 

§ 35.6290 Program income. 

The recipient must comply with the 

requirements regarding program income 

described in 2 CFR 200.307 and 2 CFR 

part 1500.* * * 

■ 79. Section 35.6405 is revised to read 

as follows: 

§ 35.6405 Use. 

The recipient must comply with the 

requirements regarding real property 

described in 2 CFR 200.311. 

■ 80. Section 35.6450 is amended by 

revising the first sentence to read as 

follows: 

§ 35.6450 General requirements. 

The recipient must comply with the 

requirements regarding copyrights 

described in 2 CFR part 200.315.* * * 

■ 81. Section 35.6550 is amended by 

revising paragraph (a)(1) first sentence, 

paragraph (a)(3), paragraph (a)(6) first 

sentence and paragraph (a)(7) to read as 

follows: 

§ 35.6550 Procurement system standards. 

(a)(1) * * * In addition to the 

procurement standards described in 2 

CFR 200.317 through 200.326 and 2 CFR 

part 1500, the State shall comply with 

the requirements in the following: 

Paragraphs (a)(5), (a)(9), and (b) of this 

section, §§ 35.6555(c), 35.6565 (the first 

sentence in this section, the first 

sentence in paragraph (b) of this section, 

and all of paragraph (d) of this section), 

35.6570, 35.6575, and 35.6600. 

* * * * * 

(3) * * * The recipient must comply 

with the requirements of 2 CFR 200.318 

(c)(1) which describes standards of 

conduct for employees, officers, and 

agents of the recipient. 

* * * * * 

(6) * * * The recipient may award a 

contract only to a responsible 

contractor, as described in 2 CFR 

200.318 (h) and must ensure that each 

contractor performs in accordance with 

all the provisions of the contract. (See 

also § 35.6020.) 

* * * * * 

(7) * * * The recipient must comply 

with the requirements described in 2 

CFR 200.318 (k) regarding protest 

procedures. 

* * * * * 

■ 82. Section 35.6555 is amended by 

revising paragraph (b)(2) to read as 

follows: 

§ 35.6555 Competition. 

* * * * * 

(b) * * * 

(2) * * * Any contract or subcontract 

awarded by an Indian Tribe or Indian 

intertribal consortium shall comply 

with the requirements of the Indian Self 

Determination Act. 

* * * * * 

■ 83. Section 35.6565 is amended by 

revising the first sentence of the 

introductory text to read as follows: 

§ 35.6565 Procurement methods. 

The recipient must comply with the 

requirements for payment to consultants 

described in 2 CFR 1500.9. * * * 

* * * * * 

■ 84. Section 35.6570 is amended by 

revising paragraph (b)(1)(i) to read as 

follows: 

§ 35.6570 Use of the same engineer during 

subsequent phases of response. 

* * * * * 

(b) * * * 

(1) * * * 

(i) That it complied with the 

procurement requirements in § 35.6565 

when it selected the engineer and the 

code of conduct requirements described 

in 2 CFR 200.318(c)(1). 

* * * * * 

■ 85. Section 35.6590 is amended by 

revising paragraph (a) first sentence to 

read as follows: 

§ 35.6590 Bonding and insurance. 

(a) * * * The recipient must meet the 

requirements regarding bonding 

described in 2 CFR 200.325. 

* * * * * 


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■ 86. Section 35.6595 is amended by 

revising paragraph (b)(2) second 

sentence and paragraph (b)(3) to read as 

follows: 

§ 35.6595 Contract provisions. 

* * * * * 

(b) * * * 

(2) * * * This notice shall also 

include EPA requirements and 

regulations pertaining to copyrights and 

rights to data contained in 2 CFR 

200.315. 

(3) * * * The recipient must comply 

with Appendix II to 2 CFR part 200— 

Contract Provisions for Non-Federal 

Entity Contracts Under Federal Awards. 

* * * * * 

■ 87. Section 35.6610 is amended by 

revising paragraph (e) to read as follows: 

§ 35.6610 Contracts awarded by a 

contractor. 

* * * * * 

(e) The Federal cost principles in 2 

CFR part 200 subpart E. 

* * * * * 

■ 88. Section 35.6650 is amended by 

revising paragraph (a) second sentence 

to read as follows: 

§ 35.6650 Progress reports. 

(a) * * * Notwithstanding the 

requirements of 2 CFR 200.327 and 

200.328, the reports shall be due within 

60 days after the reporting period. 

* * * * * 

■ 89. Section 35.6670 is amended by 

revising paragraph (a) and paragraph 

(b)(2)(i) second sentence to read as 

follows: 

§ 35.6670 Financial reports. 

(a) * * * The recipient must comply 

with the requirements regarding 

financial reporting described in 2 CFR 

200.327. 

(b) * * * 

(2) * * * 

(i) * * * If quarterly or semiannual 

Financial Status Reports are required, 

reports are due in accordance with 2 

CFR 200.327; 

* * * * * 

■ 90. Section 35.6705 is amended by 

revising paragraph (d) to read as 

follows: 

§ 35.6705 Records retention. 

* * * * * 

(d) * * * The recipient must comply 

with the requirements regarding the 

starting dates for records retention 

described in 2 CFR 1500.6. 

■ 91. Section 35.6710 is amended by 

revising paragraphs (a) and (c) to read as 

follows: 

§ 35.6710 Records access. 

(a) * * * The recipient must comply 

with the requirements regarding records 

access described in 2 CFR 200.336. 

* * * * * 

(c) * * * The recipient must require 

its contractor to comply with the 

requirements regarding records access 

described in 2 CFR 200.336. 

* * * * * 

■ 92. Section 35.6750 is revised to read 

as follows: 

§ 35.6750 Modifications. 

The recipient must comply with the 

requirements regarding changes to the 

Cooperative Agreement described by 

subject in 2 CFR part 200. 

■ 93. Section 35.6755 is revised to read 

as follows: 

§ 35.6755 Monitoring program 

performance. 

The recipient must comply with the 

requirements regarding program 

performance monitoring described in 2 

CFR 200.328. 

■ 94. Section 35.6760 is revised to read 

as follows: 

§ 35.6760 Enforcement and termination. 

The recipient must comply with all 

terms and conditions in the Cooperative 

Agreement, and is subject to the 

requirements regarding enforcement of 

the terms of an award and termination 

described in 2 CFR 200.338 and 

200.339. 

■ 95. Section 35.6765 is revised to read 

as follows: 

§ 35.6765 Non-Federal audit. 

The recipient must comply with the 

requirements regarding non-Federal 

audits described in 2 CFR part 200 

subpart F. 

■ 96. Section 35.6770 is revised to read 

as follows: 

§ 35.6770 Disputes. 

The recipient must comply with the 

requirements regarding dispute 

resolution procedures described in 2 

CFR part 1500 subpart E. 

■ 97. Section 35.6780 is amended by 

revising paragraph (b) to read as follows: 

§ 35.6780 Closeout. 

* * * * * 

(b) The recipient must comply with 

the closeout requirements described in 

2 CFR 200.343 and 200.344. 

* * * * * 

■ 98. Section 35.6785 is revised to read 

as follows: 

§ 35.6785 Collection of amounts due. 

The recipient must comply with the 

requirements described in 2 CFR 

200.345 regarding collection of amounts 

due. 

■ 99. Section 35.6790 is revised to read 

as follows: 

§ 35.6790 High risk recipients. 

If EPA determines that a recipient is 

not responsible, EPA may impose 

specific conditions on the award as 

described in 2 CFR 200.207 or 

restrictions on the award as described in 

2 CFR 200.338. 

■ 100. Section 35.6815 is amended by 

revising paragraph (a)(2) to read as 

follows: 

§ 35.6815 Administrative requirements. 

* * * * * 

(a) * * * 

(2) * * * The State and/or political 

subdivision must comply with the 

requirements described in 2 CFR 

200.345 regarding collection of amounts 

due. 

* * * * * 

Subpart P—Financial Assistance for 

the National Estuary Program 

■ 101. Section 35.9000 is amended by 

revising the second sentence to read as 

follows: 

§ 35.9000 Applicability. 

* * *These provisions supplement 

the EPA general assistance regulations 

in 2 CFR parts 200 and 1500. 

■ 102. Section 35.9040 is amended by 

revising the second sentence to read as 

follows: 

§ 35.9040 Application for assistance. 

* * *In addition to meeting 

applicable requirements contained in 2 

CFR parts 200 and 1500, a complete 

application must contain a discussion of 

performance to date under an existing 

award, the proposed work program, and 

a list of all applicable EPA-approved 

State strategies and program plans, with 

a statement certifying that the proposed 

work program is consistent with these 

elements.* * * 

■ 103. Section 35.9045 is amended by 

revising paragraph (a) first sentence to 

read as follows: 

§ 35.9045 EPA action on application. 

(a) * * * The Regional Administrator 

will approve the application only if it 

satisfies the requirements of CWA 

section 320; the terms, conditions, and 

limitations of this subpart; and the 

applicable provisions of 2 CFR parts 200 

and 1500, and other EPA assistance 

regulations. * * * 

* * * * * 

■ 104. Section 35.9055 is amended by 

revising the sixth sentence to read as 

follows: 


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§ 35.9055 Evaluation of recipient 

performance. 

* * *If agreement is not reached, the 

Regional Administrator may impose 

sanctions under the applicable 

provisions of 2 CFR parts 200 and 1500. 

PART 40— RESEARCH AND 

DEMONSTRATION GRANTS 

■ 105. The authority citation for part 40 

is revised to read as follows: 

Authority: 7 U.S.C. 136 et seq.; 15 U.S.C. 

2609 et seq.; 33 U.S.C. 1254 et seq. and 1443; 

42 U.S.C. 241 et seq., 300f et seq., 1857 et 

seq., 1891 et seq., and 6901 et seq., 2 CFR 

part 200. 

■ 106. Section 40.105 is revised to read 

as follows: 

§ 40.105 Applicability and scope. 

This part establishes mandatory 

policies and procedures for all EPA 

research and demonstration grants. The 

provisions of this part supplement the 

EPA general grant regulations and 

procedures in 2 CFR parts 200 and 1500. 

Accordingly, all EPA research and 

demonstration grants are awarded 

subject to the Uniform Administrative 

Requirements, Cost Principles, and 

Audit Requirements for Federal Awards 

to Non-Federal Entities (2 CFR part 200) 

and to the applicable provisions of this 

part 40. 

■ 107. Section 40.125–2 is amended by 

revising the introductory text to read as 

follows: 

§ 40.125–2 Limitations on assistance. 

In addition to the cost-sharing 

requirements pursuant to 2 CFR 

200.306, research and demonstration 

grants shall be governed by the specific 

assistance limitations listed below: 

* * * * * 

■ 108. Section 40.130 is amended by 

revising the introductory text to read as 

follows: 

§ 40.130 Eligibility. 

Except as otherwise provided below, 

grants for research and demonstration 

projects may be awarded to any 

responsible applicant in accordance 

with 2 CFR part 200. 

* * * * * 

■ 109. Section 40.135–2 is amended by 

revising the introductory text to read as 

follows: 

§ 40.135–2 Application requirements. 

All applications for research and 

demonstration grants shall be submitted 

to the Environmental Protection 

Agency, in accordance with 2 CFR 

200.206. 

* * * * * 

■ 110. Section 40.145 is amended by 

revising the introductory text and 

paragraph (b) to read as follows: 

§ 40.145 Supplemental grant conditions. 

In addition to the EPA General Grant 

Conditions (http://www.epa.gov/ogd/

tc.htm), all grants are awarded subject to 

the following requirements: 

* * * * * 

(b) In addition to the notification of 

project changes required pursuant to 2 

CFR 200.308, prior written approval by 

the grants officer is required for project 

changes which may alter the approved 

scope of the project, substantially alter 

the design of the project, or increase the 

amount of Federal funds needed to 

complete the project. No approval or 

disapproval of a project change 

pursuant to 2 CFR 200.308 or this 

section shall commit or obligate the 

United States to an increase in the 

amount of the grant or payments 

thereunder, but shall not preclude 

submission or consideration of a request 

for a grant amendment pursuant to 2 

CFR 200.308. 

* * * * * 

■ 111. Section 40.145–3 is amended by 

revising paragraph (k) to read as follows: 

§ 40.145–3 Projects involving 

construction. 

* * * * * 

(k) In addition to the notification of 

project changes pursuant to 2 CFR 

200.308, a copy of any construction 

contract or modifications thereof, and of 

revisions to plans and specifications 

must be submitted to the grants officer. 

■ 112. Section 40.155 is amended by 

revising paragraph (b) and (c) to read as 

follows: 

§ 40.155 Availability of information. 

* * * * * 

(b) An assertion of entitlement to 

confidential treatment of part or all of 

the information in an application may 

be made using the procedure described 

in 2 CFR 200.211. See also §§ 2.203 and 

2.204 of this chapter. 

(c) All information and data contained 

in the grant application will be subject 

to external review unless deviation is 

approved for good cause pursuant to 2 

CFR 1500.3. 

■ 113. Section 40.160–2 is revised to 

read as follows: 

§ 40.160–2 Financial status report. 

A financial status report must be 

prepared and submitted within 90 days 

after completion of the budget and 

project periods in accordance with 2 

CFR 200.327. 

■ 114. Section 40.160–3 is amended by 

revising introductory text to read as 

follows: 

§ 40.160–3 Reporting of inventions. 

Immediate and full reporting of all 

inventions to the Environmental 

Protection Agency is required. In 

addition: 

* * * * * 

PART 45—TRAINING ASSISTANCE 

■ 115. The authority citation for part 45 

is revised to read as follows: 

Authority: Sec. 103 of the Clean Air Act, 

as amended (42 U.S.C. 7403), secs. 104(g), 

109, and 111 of the Clean Water Act, as 

amended (33 U.S.C. 1254(g), 1259, and 1261), 

secs. 7007 and 8001 of the Solid Waste 

Disposal Act, as amended (42 U.S.C. 6977 

and 6981); sec. 1442 of the Safe Drinking 

Water Act, as amended (42 U.S.C. 300j–1). 2 

CFR 200. 

■ 116. Section 45.100 is revised to read 

as follows: 

§ 45.100 Purpose and scope. 

This part establishes the policies and 

procedures for the award of training 

assistance by the Environmental 

Protection Agency (EPA). The 

provisions of this part supplement 

EPA’s general grant regulations and 

procedures 2 CFR parts 200 and 1500. 

■ 117. Section 45.115 is amended by 

revising the introductory text to read as 

follows: 

§ 45.115 Definitions. 

The following definitions supplement 

the definitions in 2 CFR part 200, 

subpart A. 

* * * * * 

■ 118. Section 45.130 is amended by 

revising paragraph (a) introductory text 

to read as follows: 

§ 45.130 Evaluation of applications. 

(a) Consistent with 2 CFR 200.204, the 

appropriate EPA program office staff 

will review training applications in 

accordance with the following criteria: 

* * * * * 

■ 119. Section 45.145 is amended by 

revising paragraph (a) to read as follows: 

§ 45.145 Allocability and allowability of 

costs. 

(a) Allocability and allowability of 

costs will be determined in accordance 

with 2 CFR part 200, subpart E. 

* * * * * 

■ 120. Section 45.150 is amended by 

revising paragraph (a) to read as follows: 

§ 45.150 Reports. 

(a) Recipients must submit the reports 

required in 2 CFR 200.327 and 200.328. 

* * * * * 

PART 46—FELLOWSHIPS 

■ 121. The authority citation for part 46 

is revised to read as follows: 


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Authority: Section 103(b)(5) of the Clean 

Air Act, as amended (42 U.S.C. 7403(b)(5)); 

sections 104(b)(5) and (g)(3)(B) of the Clean 

Water Act, as amended (33 U.S.C. 1254(b)(5) 

and (g)(3)(B)); section 1442 of the Safe 

Drinking Water Act, as amended (42 U.S.C. 

300j–1); section 8001 of the Solid Waste 

Disposal Act, as amended (42 U.S.C. 6981); 

section 10 of the Toxic Substances Control 

Act, as amended (15 U.S.C. 2609); section 20 

of the Federal Insecticide, Fungicide, and 

Rodenticide Act, as amended (7 U.S.C. 136r); 

sections 104(k)(6) and 311 of the 

Comprehensive Environmental Response, 

Compensation, and Liability Act (42 U.S.C. 

9604(k)(6) and 42 U.S.C. 9660). 2 CFR part 

200. 

Subpart D—During the Fellowship 

■ 122. Section 46.205 is amended by 

revising the second sentence to read as 

follows: 

§ 46.205 Intangible property. 

* * * EPA’s requirements for dealing 

with such intangible property are found 

at 2 CFR 200.315. 

■ 123. Section 46.220 is amended by 

revising paragraph (b) third sentence to 

read as follows: 

§ 46.220 Disputes. 

* * * * * 

(b) * * * The dispute procedures 

outlined at 2 CFR part 1500 subpart E, 

will apply. 

PART 47—NATIONAL 

ENVIRONMENTAL EDUCATION ACT 

GRANTS 

■ 124. The authority citation for part 47 

is revised to read as follows: 

Authority: 20 U.S.C. 5505. 2 CFR part 200. 

■ 125. Section 47.100 is amended by 

revising the third sentence to read as 

follows: 

§ 47.100 Purpose and scope. 

* * * Projects funded under this part 

are also subject to 2 CFR parts 200 and 

1500. * * * 

■ 126. Section 47.105 is amended by 

revising paragraph (g) to read as follows: 

§ 47.105 Definitions. 

* * * * * 

(g) Refer to 2 CFR part 200, subpart A 

and 40 CFR 35.6015 for definitions for 

budget period, project period, 

cooperative agreement, grant agreement, 

and other Federal assistance terms. 

■ 127. Section 47.130 is amended by 

revising paragraph (c) to read as follows: 

§ 47.130 Performance of grant. 

* * * * * 

(c) Procurement procedures for all 

recipients are described in 2 CFR part 

200 subpart D—Post Federal Award 

Requirements, Procurement Standards 

(2 CFR 200.317 through 200.326). These 

procedures include provisions for small 

purchase procedures. 

■ 128. Section 47.135 is revised to read 

as follows: 

§ 47.135 Disputes. 

Disputes arising under these grants 

shall be governed by 2 CFR part 1500 

subpart E. 

Gina McCarthy, 

Administrator. 

National Aeronautics and Space 

Administration 

For the reasons set forth in the 

common preamble, Part 1800 of Title 2, 

Chapter XVIII of the Code of Federal 

Regulations is added and 14 CFR parts 

1260 and 1273 are removed to read as 

follows: 

Title 2—Grants and Agreements 

CHAPTER XVIII—NATIONAL 

AERONAUTICS AND SPACE 

ADMINISTRATION 

PART 1800—UNIFORM 

ADMINISTRATIVE REQUIREMENTS, 

COST PRINCIPLES, AND AUDIT 

REQUIREMENTS FOR FEDERAL 

AWARDS 

Sec. 

1800.1 Authority. 

1800.2 Purpose. 

1800.3 Applicability. 

1800.4 Amendment. 

1800.5 Publication. 

1800.6 Deviations. 

Subpart A—Acronyms and Definitions 

1800.10 Acronyms. 

1800.11 Definitions. 

Subpart B—Pre-Federal Award 

Requirements and Contents of Federal 

Awards 

1800.208 Certifications and representations. 

1800.209 Pre-award costs. 

1800.210 Information contained in a 

Federal award. 

Subpart C—Post Federal Award 

Requirements 

Standards for Financial and Program 

Management 

1800.305 Payment. 

1800.306 Cost sharing or matching. 

Property Standards 

1800.312 Federally-owned and exempt 

property. 

1800.315 Intangible property. 

Remedies for Noncompliance 

1800.339 Termination. 

1800.400 Policy guide. 

Appendix A to Part 1800—Certifications, 

Assurances, and Representations 

Appendix B to Part 1800—Terms and 

Conditions 

Authority: 51 U.S.C. 20113 (e), Pub. L. 97– 

258, 96 Stat. 1003 (31 U.S.C. 6301 et seq.), 

and 2 CFR part 200. 

§ 1800.1 Authority. 

The National Aeronautics and Space 

Administration (NASA) awards grants 

and cooperative agreements under the 

authority of 51 U.S.C. 20113 (e), the 

National Aeronautics and Space Act. 

This part 1800 is issued under the 

authority of 51 U.S.C. 20113 (e), Pub. L. 

97–258, 96 Stat. 1003 (31 U.S.C. 6301 et 

seq.), and 2 CFR part 200. 

§ 1800.2 Purpose. 

This part adopts the Office of 

Management and Budget (OMB) 

guidance in subparts A through F of 2 

CFR part 200, as supplemented by this 

part, as the NASA policies and 

procedures for uniform administrative 

requirements, cost principles, and audit 

requirements for Federal awards. It 

thereby gives regulatory effect for NASA 

to the OMB guidance as supplemented 

by this part. 

§ 1800.3 Applicability. 

(a) This part establishes policies and 

procedures for grants and cooperative 

agreements awarded by NASA to nonFederal entities, commercial firms 

(when cost sharing is not required), and 

foreign organizations as allowed by 2 

CFR 200.101 Applicability. 

(b) Throughout this Part, the term 

‘‘grant’’ includes ‘‘cooperative 

agreement’’ unless otherwise indicated. 

(c) When commercial firms are 

required to provide cost sharing 

pursuant to 2 CFR 200.306, Cost 

Sharing, the terms and conditions of 14 

CFR part 1274 apply. 

(d)(1) In general, research with foreign 

organizations will not be conducted 

through grants, but instead will be 

accomplished on a no-exchange-offunds basis. In these cases, NASA enters 

into agreements undertaking projects of 

international scientific collaboration. 

NASA policy on performing research 

with foreign organizations on a noexchange-of-funds basis is set forth at 

NASA FAR Supplement (NFS) 

1835.016–70. In rare instances, NASA 

may enter into an international 

agreement under which funds will be 

transferred to a foreign recipient. 

(2) Grants to foreign organizations are 

made on an exceptional basis only. 

Awards require the prior approval of the 

Headquarters Office of International and 

Interagency Relations and the 

Headquarters Office of the General 

Counsel. Requests to award grants to 

foreign organizations are to be 

coordinated through the Office of 

Procurement, Program Operations 

Division. 


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(3) The requirements of this section 

do not apply to the purchase of supplies 

or services from non-U.S. sources by 

grant to U.S. recipients, when necessary 

to support research efforts. 

(Authority: 14 CFR 1260.4(b), 14 CFR 

1260.12(e)(1), 14 CFR 1260.12(e)(2), 14 CFR 

1260.(e)(3), and 14 CFR 1260.(e)(5)) 

§ 1800.4 Amendment. 

This Part 1800 will be amended by 

publication of changes in the Federal 

Register. Changes will be issued as final 

rules. 

§ 1800.5 Publication. 

The official site for accessing the 

NASA Grant and Cooperative 

Agreement Regulation, including 

current Grant Notices and internal 

guidance, is on the internet at: http://

www.hq.nasa.gov/office/procurement/

grants/index.html. 

§ 1800.6 Deviations. 

(a) A deviation is required for any of 

the following: 

(1) When prescribed term or condition 

set forth verbatim in this Part 1800 is 

modified or omitted. 

(2) When a term or condition is set 

forth in this Part, but not for use 

verbatim, and the Center substitutes a 

term or condition which is inconsistent 

with the intent, principle, and substance 

of the term or condition. 

(3) When a form prescribed by this 

Part is altered or another form is used 

in its place. 

(4) When limitations, imposed by this 

regulation upon the use of a grant term 

or condition, form, procedure, or any 

other grant action, are changed. 

(5) When a form is created for 

recipient use that constitutes a 

‘‘Collection of Information’’ within the 

meaning of the Paperwork Reduction 

Act (44 U.S.C. 35) and its 

implementation in 5 CFR part 1320. 

(b) Requests for authority to deviate 

from this Part shall be submitted to the 

Office of Procurement, NASA 

Headquarters, Program Operations 

Division. Requests, signed by the 

procurement officer, shall contain: 

(1) A full description of the deviation, 

the circumstances in which it will be 

used, and identification of the 

requirement from which a deviation is 

sought; 

(2) The rationale for the request, 

pertinent background information, and 

the intended effect of the deviation; 

(3) The name of the recipient, 

identification of the grant affected, and 

the dollar value; 

(4) A statement as to whether the 

deviation has been requested 

previously, and, if so, details of that 

request; and 

(5) A copy of legal counsel’s 

concurrence or comments. 

(c) Where it is necessary to obtain an 

exception from 2 CFR part 200, the 

Program Operations Division will 

process all necessary documents. (See 2 

CFR 200.102.) 

(Authority: 14 CFR 1260.7) 

Subpart A—Acronyms and Definitions 

§ 1800.10 Acronyms. 

AO Announcement of Opportunity 

CAN Cooperative Agreement Notice 

HBCU Historically Black Colleges and 

Universities 

NASA National Aeronautics and 

Space Administration 

NFS NASA FAR Supplement 

NPR NASA Procedural Requirements 

NRA NASA Research Announcement 

OMB Office of Management and 

Budget 

ONR Office of Naval Research 

RPPR Research Performance Progress 

Report 

STI Program NASA Scientific and 

Technical Information Program 

§ 1800.11 Definitions. 

(a) The following definitions are a 

supplement to the subpart A definitions 

set forth at 2 CFR 200.2 through 200.99. 

Administrative grant officer means a 

Federal employee delegated 

responsibility for grant administration; 

e.g., a NASA grant officer who has 

retained grant administration 

responsibilities, or an Office of Naval 

Research (ONR) grant officer delegated 

grant administration by a NASA grant 

officer. 

Commercial firm means any 

corporation, trust or other organization 

which is organized primarily for profit. 

Effective date means the date work 

can begin. This date is the beginning of 

the period of performance and can be 

earlier or later than the date of signature 

on a basic award. Expenditures made 

prior to award of a grant are incurred at 

the recipient’s risk. 

Historically Black Colleges and 

Universities (HBCUs) means any 

historically Black college or university 

that was established prior to 1964, 

whose principal mission was, and is, 

the education of Black Americans, and 

that is accredited by a nationally 

recognized accrediting agency or 

association determined by the Secretary 

of Education to be a reliable authority as 

to the quality of training offered or is, 

according to such an agency or 

association, making reasonable progress 

toward accreditation. 

Minority Institutions (MIs) means an 

institution of higher education whose 

enrollment of a single minority or a 

combination of minorities (minority 

meaning American Indian, Alaskan 

Native, Black (not of Hispanic origin), 

Hispanic (including persons of Mexican, 

Puerto Rican, Cuban, and Central or 

South American origin), Pacific Islander 

or other ethnic group under-represented 

in science and engineering.) exceeds 50 

percent of the total enrollment. 

Research misconduct is defined in 14 

CFR 1275.101. NASA policies and 

procedures regarding Research 

misconduct are set out in 14 CFR part 

1275, ‘‘Investigation of Research 

Misconduct.’’ 

Summary of research means a 

document summarizing the results of 

the entire project, which includes 

bibliographies, abstracts, and lists of 

other media in which the research was 

discussed. 

Subpart B—Pre-Federal Award 

Requirements and Contents of Federal 

Awards 

§ 1800.208 Certifications and 

representations. 

The certifications and representations 

for NASA may be found at Appendix A 

of this Part and http://www.hq.nasa.gov/ 

office/procurement/grants/index.html. 

§ 1800.209 Pre-award costs. 

NASA waives the approval 

requirement for pre-award costs of 90 

days or less. 

(Authority: 14 CFR 1260.125(3)(1)) 

§ 1800.210 Information contained in a 

Federal award. 

The terms and conditions for NASA 

may be found at Appendix B of this Part 

and http://www.hq.nasa.gov/office/

procurement/grants/index.html. 

Subpart C—Post Federal Award 

Requirements 

Standards for Financial and Program 

Management 

§ 1800.305 Payment. 

Payments under grants with 

commercial firms will be made based on 

incurred costs. Standard Form 425 is 

not required. Commercial firms shall 

not submit invoices more frequently 

than quarterly. Payments to be made on 

a more frequent basis require the written 

approval of the grant officer. 

(Authority: 14 CFR 1260.4(b)(5)) 

§ 1800.306 Cost sharing or matching. 

Where statute or section of NASA’s 

Code of Federal Regulations requires 

cost sharing or matching, recipients 

must secure matching funds to receive 

the Federal award. 

(Authority: 14 CFR 1260.54) 


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Property Standards 

§ 1800.312 Federally owned and exempt 

property. 

Under the authority of the Childs Act, 

31 U.S.C. 6301 to 6308, NASA has 

determined to vest title to property 

acquired with Federal funds in the 

recipient without further obligation to 

NASA, including reporting 

requirements. 

(Authority: 14 CFR 1260.133(b)) 

§ 1800.315 Intangible property. 

Due to the substantial involvement on 

the part of NASA under a cooperative 

agreement, intellectual property may be 

produced by Federal employees and 

NASA contractors tasked to perform 

NASA assigned activities. Title to 

intellectual property created under the 

cooperative agreement by NASA or its 

contractors will initially vest with the 

creating party. Certain rights may be 

exchanged with the recipient. 

(Authority: 14 CFR 1260.136(f)) 

Remedies for Noncompliance 

§ 1800.339 Termination. 

NASA reserves the ability to 

terminate a Federal award in accordance 

with 2 CFR 1800.921, Incremental 

Funding. 

(Authority: 14 CFR 1260.52) 

§ 1800.400 Policy guide. 

Payment of fee or profit is consistent 

with an activity whose principal 

purpose is the acquisition of goods and 

services for the direct benefit or use of 

the United States Government, rather 

than an activity whose principal 

purpose is assistance. Therefore, the 

grants officer shall use a procurement 

contract, rather than assistance 

instrument, in all cases where fee or 

profit is to be paid to the recipient of the 

instrument or the instrument is to be 

used to carry out a program where fee 

or profit is necessary to achieving 

program objectives. Grants and 

cooperative agreements shall not 

provide for the payment of fee or profit 

to the recipient. 

(Authority: 14 CFR 1260.4(b)(2); 

1260.10(b)(1)(iv); 1260.14(e)) 

Appendix A to Part 1800— 

Certifications, Assurances, and 

Representations 

A.1 Certifications, assurances, and 

representations. 

A.2 Certification of Compliance on 

Proposal Cover Page. 

A.3 Assurance of Compliance with the 

National Aeronautics and Space 

Administration Regulations Pursuant to 

Nondiscrimination in Federally Assisted 

Programs. 

A.4 Certification Regarding Lobbying. 

A.5 Certification Regarding Debarment, 

Suspension, and Other Matters of 

Responsibility. 

A.6 Certifications to Implement 

Restrictions in Appropriations Acts. 

A.1 Certifications, assurances, and 

representations. 

Unless prohibited by statute or codified 

regulation, NASA will allow recipients to 

submit certain 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. Recipients 

determine how annual representations affect 

their responsibility to obtain required 

certifications from pass-through entities. 

A.2 Certification of Compliance on 

Proposal Cover Page. 

(This certification is required for all 

awards.) 

CERTIFICATION OF COMPLIANCE WITH 

APPLICABLE EXECUTIVE ORDERS AND 

U.S. CODE (MON/YEAR) 

By submitting the proposal identified in 

the Cover Sheet/Proposal Summary in 

response to this Research Announcement, the 

Authorizing Official of the proposing 

organization (or the individual Proposer if 

there is no proposing organization) as 

identified below: 

(a) Certifies that the statements made in 

this proposal are true and complete to the 

best of his/her knowledge; 

(b) agrees to accept the obligation to 

comply with NASA award terms and 

conditions if an award is made as a result of 

this proposal; and 

(c) confirms compliance with all applicable 

terms and conditions, rules, and stipulations 

set forth in the Certifications, Assurances, 

and Representations contained in this NRA 

or CAN. Willful terms and conditions of false 

information in this proposal and/or its 

supporting documents, or in reports required 

under an ensuing award, is a criminal offense 

(U.S. Code, Title 18, Section 1001). 

A.3 Assurance of Compliance with the 

National Aeronautics and Space 

Administration Regulations Pursuant to 

Nondiscrimination in Federally Assisted 

Programs. 

(This certification is required for all 

awards.) 

ASSURANCE OF COMPLIANCE WITH THE 

NATIONAL AERONAUTICS AND SPACE 

ADMINISTRATION REGULATIONS 

PURSUANT TO NONDISCRIMINATION IN 

FEDERALLY ASSISTED PROGRAMS (MON/ 

YEAR) 

‘‘The Organization, corporation, firm, or 

other organization on whose behalf this 

assurance is made, hereinafter called 

‘‘Applicant:’’ 

‘‘HEREBY acknowledges and agrees that it 

must comply (and require any subgrantees, 

contractors, successors, transferees, and 

assignees to comply) with applicable 

provisions of National laws and policies 

prohibiting discrimination, including but not 

limited to: 

1. Title VI of the Civil Rights Act of 1964, 

as amended, which prohibits recipients of 

Federal financial assistance from 

discriminating on the basis of race, color, or 

national origin (42 U.S.C. 2000d et seq.), as 

implemented by NASA Title VI regulations, 

14 CFR part 1250. As clarified by Executive 

Order 13166, Improving Access to Services 

for Persons with Limited English Proficiency, 

and resulting agency guidance, national 

origin discrimination includes 

discrimination on the basis of limited English 

proficiency (LEP). To ensure compliance 

with Title VI, the Applicant must take 

reasonable steps to ensure that LEP persons 

have meaningful access to its programs in 

accordance with NASA Title VI LEP 

Guidance to Grant Recipients (68 FR 70039). 

Meaningful access may entail providing 

language assistance services, including oral 

and written translation, where necessary. The 

Applicant is encouraged to consider the need 

for language services for LEP persons served 

or encountered both in developing budgets 

and in conducting programs and activities. 

Assistance and information regarding LEP 

obligations may be found at http://

www.lep.gov. 

2. Title IX of the Education Amendments 

of 1972, as amended, which prohibits 

discrimination on the basis of sex in 

education programs or activities (20 U.S.C. 

1681 et seq.) as implemented by NASA Title 

IX regulations, 14 CFR part 1253. If the 

Applicant is an educational institution: 

a. The Applicant is required to designate 

at least one employee to serve as its Title IX 

coordinator (14 CFR 1253.135(a)). 

b. The Applicant is required to notify all 

of its program beneficiaries of the name, 

office, address, and telephone number of the 

employee(s) designated to serve as the Title 

IX coordinators (14 CFR 1253.135(a)). 

c. The Applicant is required to publish 

internal grievance procedures to promptly 

and equitably resolve complaints alleging 

illegal discrimination in its programs or 

activities (14 CFR 1253.135(b). 

d. The Applicant is required to take 

specific steps to regularly and consistently 

notify program beneficiaries that The 

Applicant does not discriminate in the 

operation of its programs and activities (14 

CFR 1253.140). 

3. Section 504 of the Rehabilitation Act of 

1973, as amended, which prohibits The 

Applicant from discriminating on the basis of 

disability (29 U.S.C. 794) as implemented by 

NASA Section 504 regulations, 14 CFR part 

1251. 

a. The Applicant is required to designate 

at least one employee to serve as its Section 

504 coordinator (14 CFR 1251.106(a)). 

b. The Applicant is required to notify all 

its program beneficiaries of the name, office, 

address, and telephone number of the 

employee(s) designated to serve as the 

Section 504 coordinator (14 CFR 

1251.106(a)). 

c. The Applicant is required to publish 

internal grievance procedures to promptly 

and equitably resolve complaints alleging 

illegal discrimination in its programs or 

activities (14 CFR 1251.106(b)). 

d. The Applicant is required to take 

specific steps to regularly and consistently 


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notify program beneficiaries that the 

Applicant does not discriminate in the 

operation of its programs and activities (14 

CFR 1251.107). 

4. The Age Discrimination Act of 1975, as 

amended, which prohibits the Applicant 

from discriminating on the basis of age (42 

U.S.C. 6101 et seq.) as implemented by 

NASA Age Discrimination Act regulations, 

14 CFR part 1252. 

The Applicant also acknowledges and 

agrees that it must cooperate with any 

compliance review or complaint 

investigation conducted by NASA and 

comply (and require any subgrantees, 

contractors, successors, transferees, and 

assignees to comply) with applicable terms 

and conditions governing NASA access to 

records, accounts, documents, information, 

facilities, and staff. The Applicant must keep 

such records and submit to the responsible 

NASA official or designee timely, complete, 

and accurate compliance reports at such 

times, and in such form and containing such 

information, as the responsible NASA official 

or his designee may determine to be 

necessary to ascertain whether the Applicant 

has complied or is complying with relevant 

obligations and must immediately take any 

measure determined necessary to effectuate 

this agreement. The Applicant must comply 

with all other reporting, data collection, and 

evaluation requirements, as prescribed by 

law or detailed in program guidance. 

The United States shall have the right to 

seek judicial enforcement of these 

obligations. This assurance is binding on the 

Applicant, its successors, transferees, and 

assignees, and the person or persons whose 

signatures appear below are authorized to 

sign on behalf of the Applicant.’’ 

Under penalty of perjury, the undersigned 

officials certify that they have read and 

understand their obligations as herein 

described, that the information submitted in 

conjunction with this document is accurate 

and complete, and that the recipient is in 

compliance with the nondiscrimination 

requirements set out above. 

[End of Assurance] 

A.4 Certification Regarding Lobbying. 

(This certification is required for all 

awards.) 

CERTIFICATION REGARDING LOBBYING 

(MON/YEAR) 

No Federal appropriated funds have been 

paid or will be paid, by or on behalf of the 

undersigned, to any person for influencing or 

attempting to influence an officer or 

employee of any agency, a Member of 

Congress, an officer or employee of Congress, 

or an employee of a Member of Congress in 

connection with the awarding of any Federal 

contract, the making of any Federal grant, the 

making of any Federal loan, the entering into 

of any cooperative agreement, and the 

extension, continuation, renewal, 

amendment, or modification of any Federal 

contract, grant, loan, or cooperative 

agreement. 

If any funds other than Federal 

appropriated funds have been paid or will be 

paid to any person for influencing or 

attempting to influence an officer or 

employee of any agency, a Member of 

Congress, an officer or employee of Congress, 

or an employee of a Member of Congress in 

connection with this Federal contract, grant, 

loan, or cooperative agreement, the 

undersigned shall complete and submit 

Standard Form-LLL, ‘‘Disclosure Form to 

Report Lobbying,’’ in accordance with its 

instructions. 

The undersigned shall require that the 

language of this certification be included in 

the award documents for all subawards at all 

tiers (including subcontracts, subgrants, and 

contracts under grants, loans, and 

cooperative agreements) and that all 

subrecipients shall certify and disclose 

accordingly. 

This certification is a material 

representation of fact upon which reliance 

was placed when this transaction was made 

or entered into. Submission of this 

certification is a prerequisite for making or 

entering into this transaction imposed by 

section 1352, title 31, U.S. Code. Any person 

who fails to file the required certification 

shall be subject to a civil penalty of not less 

than $10,000, and not more than $100,000 for 

each such failure. 

[End of Certification] 

A.5 Certification Regarding Debarment, 

Suspension, and Other Matters of 

Responsibility. 

(This certification is required for all 

awards.) 

CERTIFICATION REGARDING 

DEBARMENT, SUSPENSION, AND OTHER 

MATTERS OF RESPONSIBILITY (MON/

YEAR) 

Pursuant to Executive Order 12549, 

Debarment and Suspension, and 

implemented at 2 CFR parts 180 and 1880: 

(1) The prospective primary participant 

certifies to the best of its knowledge and 

belief, that it and its principals: 

(a) Are not presently debarred, suspended, 

proposed for debarment, declared ineligible, 

or voluntarily excluded from covered 

transactions by any Federal department or 

agency; 

(b) Have not within a three-year period 

preceding this proposal been convicted of or 

had a civil judgment rendered against them 

for commission of fraud or a criminal offense 

in connection with obtaining, attempting to 

obtain, or performing a public (Federal, State, 

or local) transaction or contract under a 

public transaction; violation of Federal or 

State antitrust statues or commission of 

embezzlement theft, forgery, bribery, 

falsification or destruction of records, making 

false statements, or receiving stolen property; 

(c) Are not presently indicted for or 

otherwise criminally or civilly charged by a 

governmental entity (Federal, State or local) 

with commission of any of the offenses 

enumerated in paragraph (1)(b) of this 

certification; and 

(d) Have not within a three-year period 

preceding this application/proposal had one 

or more public transactions (Federal, State, or 

local) terminated for cause or default. 

(2) Where the prospective primary 

participant is unable to certify to any of the 

statements in this certification, such 

prospective participant shall attach an 

explanation to this proposal. 

[End of Certification] 

A.6 Certifications to Implement 

Restrictions in Appropriations Acts. The text 

of these certifications is found at http://

www.hq.nasa.gov/office/procurement/grants/

index.html. 

Appendix B to Part 1800—Terms and 

Conditions 

1800.900 Terms and Conditions. 

1800.901 Compliance with OMB Guidance 

on Uniform Administrative 

Requirements, Cost Principles, and 

Audit Requirements for Federal awards. 

1800.902 Technical publications and 

reports. 

1800.903 Extensions. 

1800.904 Termination and enforcement. 

1800.905 Change in principal investigator 

or scope. 

1800.906 Financial management. 

1800.907 Equipment and other property. 

1800.908 Patent rights. 

1800.909 Rights in data. 

1800.910 National security. 

1800.911 Nondiscrimination. 

1800.912 Clean air and water. 

1800.913 Investigative requirements. 

1800.914 Travel and transportation. 

1800.915 Safety. 

1800.916 Buy American encouragement. 

1800.917 Investigation of research 

misconduct. 

1800.918 Allocation of risk/liability. 

1800.919 Cooperative agreement special 

condition. 

1800.920 Multiple year grant. 

1800.921 Incremental funding. 

1800.922 Cost sharing. 

1800.923 New technology. 

1800.924 Designation of new technology 

representative and patent representative. 

1800.925 Invention reporting and rights. 

1800.926 Equipment and other property 

under grants with commercial firms. 

1800.927 Listing of reportable equipment 

and other property. 

1800.928 Invoices and payments under 

grants with commercial firms. 

1800.929 Electronic funds transfer payment 

methods. 

1800.900 Terms and Conditions 

(a) Unless otherwise noted in the 

prescriptive language grants with NonFederal entities shall incorporate by 

reference the terms and conditions set forth 

in sections 1800.901 through 1800.920 of this 

appendix. Certain of these terms and 

conditions are prescribed on a ‘‘substantially 

as’’ basis. For example, the grant officer shall 

substitute § 1800.902, Technical Publications 

and Reports, with reporting requirements 

specified by the program office. 

(b) Additional special terms and conditions 

may be included to the extent they are 

required and are not inconsistent with the 

other terms and conditions in this Appendix 

B. A deviation in accordance with 2 CFR 

1800.6 is required before an inconsistent new 

term and condition can be included in a 

grants. 

(c) Whenever the word ‘‘grant’’ appears in 

this Appendix, it shall be deemed to include, 

as appropriate, the term ‘‘cooperative 

agreement.’’ 


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(d) Terms and conditions for research 

grants awarded to foreign organizations, 

when approved by Headquarters, will be 

provided in full text. Referenced handbooks, 

statutes, or other regulations, which the 

recipient may not have access to, must be 

made available when requested by the 

foreign organization. 

(e) Grants awarded by NASA to 

commercial organizations where cost sharing 

is not required shall incorporate the terms 

and conditions set forth in this appendix. 

(Authority: 14 CFR 1260.20) 

1800.901 Compliance With OMB 

Guidance on Uniform Administrative 

Requirements, Cost Principles, and 

Audit Requirements for Federal Awards 

(This Term and Condition 

implements 2 CFR part 200, Uniform 

Administrative Requirements, Cost 

Principles, and Audit Requirements for 

Federal awards herein referred to as the 

‘‘OMB Uniform Guidance.’’ This term 

and condition shall be included in all 

grants with Recipients that are other 

than commercial firms. Alternate I to 

this term and condition shall be 

included in grants with commercial 

firms.) 

COMPLIANCE WITH OMB GUIDANCE 

(MON/YEAR) 

This grant is subject to the 

requirements set forth in 2 CFR part 

200, Uniform Administrative 

Requirements, Cost Principles, and 

Audit Requirements for Federal awards 

as adopted by NASA in Part 1800 of 

Title 2 of the Code of Federal 

Regulations. Specific terms and 

conditions set forth in this award 

document are provided to supplement 

and clarify, not replace, the OMB 

Uniform Guidance, except in 

circumstances where a waiver from 

OMB Uniform Guidance requirements 

has been obtained by NASA. 

(End of Term and Condition) 

COMPLIANCE WITH OMB GUIDANCE 

Alternate I 

(MON/YEAR) 

(a) With the exception of Subpart E 

and F, this grant is subject to the 

requirements set forth in OMB Guidance 

on Uniform Administrative 

Requirements, Cost Principles, and 

Audit Requirements for Federal awards 

at 2 CFR Chapter 1, and Chapter II Part 

200 as adopted by NASA in Part 1800 

of Title 2 of the Code of Federal 

Regulations. Specific terms and 

conditions set forth in this award 

document are provided to supplement 

and clarify, not replace, the Guidance, 

except in circumstances where a waiver 

from the Guidance requirements has 

been obtained by NASA. 

(b) In lieu of Subparts E and F of 2 

CFR part 200, the expenditure of 

Government funds by the Recipient and 

the allowability of costs recognized as a 

resource contribution by the Recipient 

shall be governed by the FAR cost 

principles implemented by FAR Parts 

30, 31, and 48 CFR part 99. (If the 

Recipient is a consortium which 

includes non-commercial firm members, 

cost allowability for those members will 

be determined by the OMB Guidance at 

Subpart E and F of 2 CFR 200.) 

(Authority: 14 CFR 1260.21) 

(End of Term and Condition) 

1800.902 Technical Publications and 

Reports 

(This Term and Condition 

implements paragraph (d) of § 200.210 

and shall be included on a 

‘‘substantially as’’ basis in all grants. 

The requirements set forth under this 

Term and Condition may be modified 

by the grant officer based on specific 

report needs for the grant.) 

TECHNICAL PUBLICATIONS AND 

REPORTS (MON/YEAR) 

(a) NASA encourages the widest 

practicable dissemination of research 

results at any time during the course of 

the investigation. 

(1) All information disseminated as a 

result of the grant shall contain a 

statement which acknowledges NASA’s 

support and identifies the grant by 

number (e.g., ‘‘the material is based 

upon work supported by NASA under 

award No(s) GRNASM99G000001, 

etc.’’). 

(2) Except for articles or papers 

published in scientific, technical, or 

professional journals, the exposition of 

results from NASA supported research 

should also include the following 

disclaimer: ‘‘Any opinions, findings, 

and conclusions or recommendations 

expressed in this material are those of 

the author(s) and do not necessarily 

reflect the views of the National 

Aeronautics and Space 

Administration.’’ 

(3) As a courtesy, any release of a 

NASA photograph or illustration should 

list NASA first on the credit line 

followed by the name of the Principal 

Investigator’s Institution. An example 

follows: ‘‘Photograph <or illustration, 

figure, etc.> courtesy of NASA <or 

NASA Center managing the mission or 

program> and the <Principal 

Investigator’s institution>.’’ 

(b) Reports shall be in the English 

language, informal in nature, and 

ordinarily not exceed three pages (not 

counting bibliographies, abstracts, and 

lists of other media). The recipient shall 

submit the following reports: 

(1) A Progress Report for all but the 

final year of the grant. Each report is 

due 60 days before the anniversary date 

of the grant and shall briefly describe 

what was accomplished during the 

reporting period. A term or condition 

specifying more frequent reporting may 

be required. 

(2) A Summary of Research or 

Educational Activity Report is due 

within 90 days after the expiration date 

of the grant, regardless of whether or not 

support is continued under another 

grant. This report shall be a 

comprehensive summary of significant 

accomplishments during the duration of 

the grant. 

(c) Progress Reports, Summaries of 

Research, and Educational Activity 

Reports shall include the following on 

the first page: 

(1) Title of the grant. 

(2) Type of report. 

(3) Name of the principal investigator. 

(4) Period covered by the report. 

(5) Name and address of the 

recipient’s institution. 

(6) Grant number. 

(d) Progress Reports, Summaries of 

Research, and Educational Activity 

Reports shall be distributed as follows: 

(1) The original report, in both hard 

copy and electronic format, to the 

Technical Officer. 

(2) One copy to the NASA Grant 

Officer, with a notice to the 

Administrative Grant Officer, (when 

administration of the grant has been 

delegated to ONR), that a report was 

sent. 

(Authority: 14 CFR 1260.23) 

(End of Term and Condition) 

1800.903 Extensions 

(This Term and Condition shall be 

included in all grants. This Term and 

Condition does not have to be included 

in grants with commercial firms, and if 

included it may be used on a 

substantially as basis.) 

EXTENSIONS (MON/YEAR) 

(a) It is NASA policy to provide 

maximum possible continuity in 

funding grant-supported research and 

educational activities, therefore, grants 

may be extended for additional periods 

of time when necessary to complete 

work that was part of the original award. 

NASA generally only approves such 

extensions within funds already made 

available. Any extension that would 

require additional funding must be 

supported by a proposal submitted at 

least three months in advance of the 

expiration date of the grant. 


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(b) Recipients may extend the 

expiration date of a grant if additional 

time beyond the established expiration 

date is required to assure adequate 

completion of the original scope of work 

within the funds already made 

available. For this purpose, the recipient 

may make a one-time no-cost extension, 

not to exceed 12 months, prior to the 

established expiration date. Written 

notification of such an extension, with 

the supporting reasons, must be 

received by the NASA Grant Officer at 

least ten days prior to the expiration of 

the award. A copy of the extension must 

also be forwarded to cognizant Office of 

Naval Research (ONR) office. NASA 

reserves the right to disapprove the 

extension if the requirements set forth at 

§ 200.308(d)(2) are not met. 

(c) Requests for approval for all other 

no-cost extensions must be submitted in 

writing to the NASA Grant Officer. 

Copies are to be forwarded to the 

cognizant ONR office. 

(Authority: 14 CFR 1260.23) 

(End of Term and Condition) 

1800.904 Termination and 

Enforcement 

(This Term and Condition 

implements § 200.338 through § 200.342 

and shall be included in all grants.) 

TERMINATION AND ENFORCEMENT 

(MON/YEAR) 

Termination and enforcement 

conditions of this award are specified in 

§§ 200.338 through 200.342. 

(Authority: 14 CFR 1260.24) 

(End of Term and Condition) 

1800.905 Change in Principal 

Investigator or Scope 

(This Term and Condition shall be 

used in all grants. The section regarding 

changes in scope may be used if the 

Recipient is a commercial firm.) 

CHANGE IN PRINCIPAL 

INVESTIGATOR OR SCOPE (MON/

YEAR) 

(a) The Recipient shall obtain the 

approval of the NASA Grant Officer for 

a change of the Principal Investigator, or 

for a significant absence of the Principal 

Investigator from the project, defined as 

a three month absence from the program 

or a 25 percent reduction in time 

devoted to the project. Significantly 

reduced availability of the services of 

the Principal Investigator(s) named in 

the grant instrument could be grounds 

for termination, unless alternative 

arrangements are made and approved in 

writing by the Grant Officer. 

(b) Prior written approval is required 

from NASA if there is to be a significant 

change in the objective or scope. 

(Authority: 14 CFR 1260.25) 

End of Term and Condition) 

1800.906 Financial Management 

(This Term and Condition 

implements § 200.302 and shall be 

included in all grants except when the 

recipient is a commercial firm.) 

FINANCIAL MANAGEMENT (MON/

YEAR) 

(a) Advance payments will be made 

by the Financial Management Office of 

the NASA Center assigned financial 

cognizance of the grant, using the 

Department of Health and Human 

Services’ Payment Management System 

(DHHS/PMS), in accordance with 

procedures provided to the Recipient. 

The Recipient shall submit a Federal 

Cash Transactions Report (SF 425), and, 

when applicable, a Continuation Sheet 

(SF 425) electronically to DHHS/PMS 

within 30 working days following the 

end of each Federal Fiscal quarter (i.e., 

December 31, March 31, June 30, and 

September 30). 

(b) In addition, the Recipient shall 

submit a final SF 425 in electronic or 

paper form to NASA within 90 calendar 

days after the expiration date of the 

grant. The final SF 425 shall pertain 

only to the completed grant and shall 

include total disbursements from 

inception through completion. The 

report shall be marked ‘‘Final.’’ The 

final SF 425 shall be submitted to NASA 

per Exhibit G, Required Publications 

and Reports. 

(c) By signing any report delivered 

under the grant, the authorizing official 

for the Recipient certifies to the best of 

his or her knowledge and belief that the 

report is true, complete, and accurate, 

and the expenditures, disbursements 

and cash receipts are for the purposes 

and intent set forth in the award 

documents. The authorizing official by 

signing the report also certified he or 

she is aware that any false, fictitious, or 

fraudulent information, or the omission 

of any material fact, may subject me to 

criminal, civil or administrative 

penalties for fraud, false statements, 

false claims or otherwise. (U.S. Code, 

Title 18, Section 1001 and Title 31 

Section 3729–3733 and 3801–3812.) 

(d) Unless otherwise directed by the 

Grant Officer, any unexpended balance 

of funds which remains at the end of 

any funding period, except the final 

funding period of the grant, shall be 

carried over to the next funding period, 

and may be used to defray costs of any 

funding period of the grant. This 

includes allowing the carryover of funds 

to the second and subsequent years of 

a multiple year grant. This Term and 

Condition also applies to subcontractors 

performing substantive work under the 

grant. For grant renewals, the estimated 

amount of unexpended funds shall be 

identified in the grant budget section of 

the Recipient’s renewal proposal. NASA 

reserves the right to remove 

unexpended balances from grants when 

insufficient efforts have been made by 

the grantee to liquidate funding 

balances in a timely fashion. 

(Authority: 14 CFR 1260.26, 2 CFR 200.415) 

(End of Term and Condition) 

1800.907 Equipment and Other 

Property 

(This Term and Condition shall be 

included in all grants except when 

recipient is a commercial firm.) 

EQUIPMENT AND OTHER PROPERTY 

(MON/YEAR) 

(a) NASA permits acquisition of 

special purpose and general purpose 

equipment specifically required for use 

exclusively for research activities. 

(1) Acquisition of special purpose or 

general purpose equipment costing in 

excess of $5,000 (unless a lower 

threshold has been established by the 

Recipient) and not included in the 

approved proposal budget, requires the 

prior approval of the NASA Grant 

Officer. Grant awards under the Federal 

Demonstration Partnership are exempt 

from this requirement. Requests to the 

NASA Grant Officer for the acquisition 

of equipment shall be supported by 

written documentation setting forth the 

description, purpose, and acquisition 

value of the equipment, and including 

a written certification that the 

equipment will be used exclusively for 

research, activities. (A change in the 

model number of a prior approved piece 

of equipment does not require 

resubmission for that item.) 

(2) Special purpose and general 

purpose equipment costing in excess of 

$5,000 (unless a lower threshold has 

been established by the Recipient) 

acquired by the recipient under a grant 

for the purpose of research shall be 

titled to the Recipient as ‘‘exempt’’ 

without further obligation to NASA, 

including reporting of the equipment, in 

accordance with § 200.312(c). Special 

purpose or general purpose equipment 

costing in excess of $5,000 (unless a 

lower threshold has been established by 

the Recipient) acquired by the Recipient 

under a grant for non-research work 

shall be titled to the Recipient in 

accordance with § 200.313. 


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(3) Special purpose or general 

purpose equipment acquired by the 

Recipient with grant funds, valued 

under $5,000 (unless a lower threshold 

is established by the Recipient) are 

classified as ‘‘supplies,’’ do not require 

the prior approval of the NASA Grant 

Officer, shall vest in the Recipient and 

will be titled to the Recipient in 

accordance with § 200.314. 

(4) Grant funds may be expended for 

the acquisition of land or interests 

therein or for the acquisition and 

construction of facilities only under a 

facilities grant. 

(b) The Recipient shall submit an 

annual Inventory Report, to be received 

no later than October 15 of each year, 

which lists all reportable (non-exempt 

equipment and/or Federally owned 

property) in its custody as of September 

30. Negative responses for annual 

Inventory Reports (when there is no 

reportable equipment) are not required. 

A Final Inventory Report of Federally 

Owned Property, including equipment 

where title was taken by the 

Government, will be submitted by the 

Recipient no later than 60 days after the 

expiration date of the grant. Negative 

responses for Final Inventory Reports 

are required. 

(1) All reports will include the 

information listed in paragraph (d)(1) of 

§ 200.313, Equipment. No specific 

report form or format is required, 

provided that all necessary information 

is provided. 

(2) The original of each report shall be 

submitted to the Deputy Chief Financial 

Officer (Finance). Copies shall be 

furnished to the Center Industrial 

Property Officer and to ONR. 

(Authority: 14 CFR 1260.27) 

(End of Term and Condition) 

1800.908 Patent Rights 

(This Term and Condition shall be 

included in all grants except grants with 

large businesses.) 

PATENT RIGHTS (MON/YEAR) 

As stated at § 200.315, this award is 

subject to the provisions of 37 CFR 

401.3(a) which requires use of the 

standard clause set out at 37 CFR 401.14 

‘‘Patent Rights (Small Business Firms 

and Nonprofit Organizations)’’ and the 

following: 

(a) Where the term ‘‘contract’’ or 

‘‘Contractor’’ is used in the ‘‘Patent 

Rights’’ clause, the term shall be 

replaced by the term ‘‘grant’’ or 

‘‘Recipient,’’ respectively. 

(b) In each instance where the term 

‘‘Federal Agency,’’ ‘‘agency,’’ or 

‘‘funding Federal agency’’ is used in the 

‘‘Patent Rights’’ clause, the term shall be 

replaced by the term ‘‘NASA.’’ 

(c) The following item is added to the 

end of paragraph (f) of the ‘‘Patent 

Rights’’ clause: ‘‘(5) The Recipient shall 

include a list of any Subject Inventions 

required to be disclosed during the 

preceding year in the performance 

report, technical report, or renewal 

proposal. A complete list (or a negative 

statement) for the entire award period 

shall be included in the summary of 

research.’’ 

(d) The term ‘‘subcontract’’ in 

paragraph (g) of the ‘‘Patent Rights’’ 

clause shall include purchase orders. 

(e) The NASA implementing 

regulation for paragraph (g)(2) of the 

‘‘Patent Rights’’ clause is at 48 CFR 

1827.304–3. 

(f) The following requirement 

constitutes paragraph (l) of the ‘‘Patent 

Rights’’ clause: 

‘‘(l) Communications. A copy of all 

submissions or requests required by this 

clause, plus a copy of any reports, 

manuscripts, publications or similar 

material bearing on patent matters, shall 

be sent to the Center Patent Counsel and 

the NASA Grant Officer in addition to 

any other submission requirements in 

the grant terms and conditions. If any 

reports contain information describing a 

‘‘subject invention’’ for which the 

recipient has elected or may elect to 

retain title, NASA will use reasonable 

efforts to delay public release by NASA 

or publication by NASA in a NASA 

technical series until an application 

filing date has been established, 

provided that the Recipient identify the 

information and the ‘‘subject invention’’ 

to which it relates at the time of 

submittal. If required by the NASA 

Grant Officer, the Recipient shall 

provide the filing date, serial number 

and title, a copy of the patent 

application, and a patent number and 

issue date for any ‘‘subject invention’’ in 

any country in which the Recipient has 

applied for patents.’’ 

(g) NASA Inventions. NASA will use 

reasonable efforts to report inventions 

made by NASA employees as a 

consequence of, or which bear a direct 

relation to, the performance of specified 

NASA activities under this agreement 

and, upon timely request, will use 

reasonable efforts to grant the Recipient 

an exclusive, or partially exclusive, 

revocable, royalty-bearing license, 

subject to the retention of a royalty-free 

right of the Government to practice or 

have practiced the invention by or on 

behalf of the Government. 

(h) In the event NASA contractors are 

tasked to perform work in support of 

specified activities under a cooperative 

agreement and inventions are made by 

Contractor employees, the Contractor 

will normally retain title to its employee 

inventions in accordance with 35 U.S.C. 

202, 14 CFR part 1245, and Executive 

Order 12591. In the event the Contractor 

decides not to pursue rights to title in 

any such invention and NASA obtains 

title to such inventions, NASA will use 

reasonable efforts to report such 

inventions and, upon timely request, 

will use reasonable efforts to grant the 

Recipient an exclusive, or partially 

exclusive, revocable, royalty-bearing 

license, subject to the retention of a 

royalty-free right of the Government to 

practice or have practiced the invention 

by or on behalf of the Government. 

(Authority: 14 CFR 1260.28) 

(End of Term and Condition) 

1800.909 Rights in Data 

(The grant officer may revise the 

language under this Term and Condition 

to modify each party’s rights based on 

the particular circumstances of the 

program and/or the recipient’s need to 

protect specific proprietary information. 

Any modification to the standard 

language set forth under the Term and 

Condition requires the concurrence of 

the Center’s Patent Counsel and that the 

Term and Condition be printed in full 

text.) 

RIGHTS IN DATA (MON/YEAR) 

(a) Fully funded efforts. 

(1) ‘‘Data’’ means recorded 

information, regardless of form, the 

media on which it may be recorded, or 

the method of recording, created under 

the grant. The term includes, but is not 

limited to, data of a scientific or 

technical nature, and any copyrightable 

work, including computer software and 

documentation thereof, in which the 

recipient asserts copyright, or for which 

copyright ownership was purchased, 

under the grant. 

(2) The Recipient grants to the Federal 

Government, a royalty-free, 

nonexclusive and irrevocable license to 

use, reproduce, distribute (including 

distribution by transmission) to the 

public, perform publicly, prepare 

derivative works, and display publicly, 

data in whole or in part and in any 

manner for Federal purposes and to 

have or permit others to do so for 

Federal purposes only. 

(3) In order that the Federal 

Government may exercise its license 

rights in data, the Federal Government, 

upon request to the Recipient, shall 

have the right to review and/or obtain 

delivery of data resulting from the 

performance of work under this grant, 

and authorize others to receive data to 

use for Federal purposes. 

(b) Cost Sharing and/or Matching 

Efforts. When the Recipient cost shares 


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with the Government on the effort, the 

following paragraph applies: 

‘‘(1) In the event data first produced 

by Recipient in carrying out Recipient’s 

responsibilities under an agreement is 

furnished to NASA, and Recipient 

considers such data to embody trade 

secrets or to comprise commercial or 

financial information which is 

privileged or confidential, and such data 

is so identified with a suitable notice or 

legend, the data will be maintained in 

confidence and disclosed and used by 

the Government and its Contractors 

(under suitable protective conditions) 

only for experimental, evaluation, 

research and development purposes, by 

or on behalf of the Government for an 

agreed to period of time, and thereafter 

for Federal purposes as defined in 

§ 1800.909(a)(2).’’ 

(c) For Cooperative Agreements the 

following paragraph applies: 

‘‘(1) As to data first produced by 

NASA in carrying out NASA’s 

responsibilities under a cooperative 

agreement and which data would 

embody trade secrets or would comprise 

commercial or financial information 

that is privileged or confidential if it has 

been obtained from the Recipient, such 

data will be marked with an appropriate 

legend and maintained in confidence for 

5 years (unless a shorter period has been 

agreed to between the Government and 

Recipient) after development of the 

information, with the express 

understanding that during the aforesaid 

period such data may be disclosed and 

used (under suitable protective 

conditions) by or on behalf of the 

Government for Government purposes 

only, and thereafter for any purpose 

whatsoever without restriction on 

disclosure and use. Recipient agrees not 

to disclose such data to any third party 

without NASA’s written approval until 

the aforementioned restricted period 

expires.’’ 

(Authority: 14 CFR 1260.30) 

(End of Term and Condition) 

1800.910 National Security 

(This Term and Condition 

implements Executive Order 12829 and 

shall be included in all grants.) 

NATIONAL SECURITY (MON/YEAR) 

NASA grants do not involve classified 

information. However, if it is known in 

advance that a grant involves classified 

information or if the work on the grant 

is likely to develop classified 

information, individuals performing on 

the grant who will have access to the 

information must obtain the appropriate 

security clearance in advance of 

performing on the grant, in accordance 

with NASA Procedural Requirements 

(NPR) 1600.1, NASA Classified National 

Security Information (CNSI) w/Change 

2. When access to classified information 

is not originally anticipated in the 

performance of a grant, but such 

information is subsequently sought or 

potentially developed by the grant 

Recipient, the NASA Grant Officer who 

issued the grant shall be notified 

immediately, and prior to work under 

the grant proceeding, to implement the 

appropriate clearance requirements. 

(Authority: 14 CFR 1260.31) 

(End of Term and Condition) 

1800.911 Nondiscrimination 

(This Term and Condition 

implements Executive Order 11246 and 

shall be included in all grants or awards 

with foreign recipients.) 

NONDISCRIMINATION (MON/YEAR) 

(a) To the extent provided by law and 

any applicable agency regulations, this 

award and any program assisted thereby 

are subject to the provisions of Title VI 

of the Civil Rights Act of 1964 (Pub. L. 

88–352), Title IX of the Education 

amendments of 1972 (Pub. L. 92–318, 20 

U.S.C. 1681 et seq.), section 504 of the 

Rehabilitation Act of 1973 (29 U.S.C. 

794), the Age Discrimination Act of 

1975 (Pub. L. 94–135), the 

implementing regulations issued 

pursuant thereto by NASA, and the 

assurance of compliance which the 

recipient has filed with NASA. 

(b) The Recipient shall obtain from 

each organization that applies or serves 

as a subrecipient, Contractor or 

subcontractor under this award (for 

other than the Term and Condition of 

commercially available supplies, 

materials, equipment, or general support 

services) an assurance of compliance as 

required by NASA regulations. 

(c) Work on NASA grants is subject to 

the provisions of Title VI of the Civil 

Rights Act of 1964 (Pub. L. 88–352; 42 

U.S.C. 2000d–1), Title IX of the 

Education Amendments of 1972 (20 

U.S.C. 1680 et seq.), section 504 of the 

Rehabilitation Act of 1973, as amended 

(29 U.S.C. 794), the Age Discrimination 

Act of 1975 (42 U.S.C. 6101 et seq.), and 

the NASA implementing regulations (14 

CFR parts 1250, 1251, 1252, and 1253). 

(Authority: 14 CFR 1260.32) 

(End of Term and Condition) 

1800.912 Clean Air and Water 

(This Term and Condition 

implements the Clean Air Act at 42 

U.S.C. 7401 et seq. It is applicable only 

if the award exceeds $150,000, or a 

facility to be used has been the subject 

of a conviction under the Clean Air Act 

(42 U.S.C. 1857c–8(c)(1) or the Federal 

Water Pollution Control Act (33 U.S.C. 

1319(c)), and is listed by EPA, or if the 

award is not otherwise exempt.) 

CLEAN AIR AND WATER (MON/YEAR) 

The Recipient agrees to the following: 

(a) Comply with applicable standards, 

orders or regulations issued pursuant to 

the Clean Air Act, as amended (42 

U.S.C. 7401 et seq.) and of the Federal 

Water Pollution Control Act (33 U.S.C. 

1251 et seq.). 

(b) Ensure that no portion of the work 

under this award will be performed in 

a facility listed on the Environmental 

Protection Agency (EPA) List of 

Violating Facilities on the date that this 

award was effective unless and until the 

EPA eliminates the name of such facility 

or facilities from such listings. 

(c) Use its best efforts to comply with 

clean air standards and clean water 

standards at the facility in which the 

award is being performed. 

(d) Insert the substance of the terms 

and conditions of this clause into any 

nonexempt subaward or contract under 

the award. 

(e) Report violations to NASA and to 

EPA. 

(Authority: 14 CFR 1260.34) 

(End of Term and Condition) 

1800.913 Investigative Requirements 

(This Term and Condition 

implements Executive Order 12829 and 

shall be included in all grants. The 

Term and Condition must be augmented 

to conform to the requirements of OMB 

Guidance M–05–24 ‘‘Implementation of 

Homeland Security Presidential 

Directive (HSPD) 12—Policy for a 

Common Identification Standard for 

Federal Employees and Contractors’’ 

when a Recipient will require routine 

access to a Federal-controlled facility 

and/or information system.) 

INVESTIGATIVE REQUIREMENTS 

(MON/YEAR) 

(a) NASA reserves the right to perform 

security checks and to deny or restrict 

access to a NASA Center, facility, or 

computer system, or to NASA technical 

information, as NASA deems 

appropriate. To the extent the Recipient 

needs such access for performance of 

the work; the Recipient shall ensure that 

individuals needing such access provide 

the personal background and 

biographical information requested by 

NASA. Individuals failing to provide 

the requested information may be 

denied such access. 

(b) All requests to visit a NASA 

Center or facility must be submitted in 

a timely manner in accordance with 


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instructions provided by that Center or 

facility. 

(Authority: 14 CFR 1260.35) 

(End of Term and Condition) 

1800.914 Travel and Transportation 

(This Term and Condition 

implements The Fly American Act, 49 

U.S.C. 1517 and the Department of 

Transportation regulations on 

Hazardous materials. This Term and 

Condition shall be included in all 

grants.) 

TRAVEL AND TRANSPORTATION 

(MON/YEAR) 

(a) The Fly American Act, 49 U.S.C. 

1517, requires the Recipient to use U.S. 

flag air carriers for international air 

transportation of personnel and 

property to the extent that service by 

those carriers is available. 

(b) Department of Transportation 

regulations, 49 CFR part 173, govern 

Recipient shipment of hazardous 

materials and other items. 

(Authority: 14 CFR 1260.36) 

(End of Term and Condition) 

1800.915 Safety 

(This Term and Condition 

implements NPR 8715.3C or its 

successor requirements document and 

shall be in all grants.) 

SAFETY (MON/YEAR) 

(a) The Recipient shall act responsibly 

in matters of safety and shall take all 

reasonable safety measures in 

performing under this grant. The 

Recipient shall comply with all 

applicable federal, state, and local laws 

relating to safety. The Recipient shall 

maintain a record of, and will notify the 

NASA Grant Officer immediately 

(within one workday) of any accident 

involving death, disabling injury or 

substantial loss of property in 

performing this grant. The Recipient 

will immediately (within one workday) 

advise NASA of hazards that come to its 

attention as a result of the work 

performed. 

(b) Where the work under this grant 

involves flight hardware, the hazardous 

aspects, if any, of such hardware will be 

identified, in writing, by the Recipient. 

Compliance with this Term and 

Condition by subcontractors shall be the 

responsibility of the Recipient. 

(Authority: 14 CFR 1260.37) 

(End of Term and Condition) 

1800.916 Buy American 

Encouragement 

(This Term and Condition 

implements section 319 of Public Law 

106–391, the NASA Authorization Act, 

and shall be included in all grants 

except awards with foreign recipients.) 

BUY AMERICAN ENCOURAGEMENT 

(MON/YEAR) 

As stated in Section 319 of Public 

Law 106–391, the NASA Authorization 

Act of 2000, Recipients are encouraged 

to purchase only American-made 

equipment and products. 

(Authority: 14 CFR 1260.39) 

(End of Term and Condition) 

1800.917 Investigation of Research 

Misconduct 

(This implements § 200.336 and shall 

be included in all grants.) 

INVESTIGATION OF RESEARCH 

MISCONDUCT (MON/YEAR) 

Recipients of this grant are subject to 

the requirements of 14 CFR part 1275, 

‘‘Investigation of Research Misconduct.’’ 

(Authority: 14 CFR 1260.40) 

(End of Term and Condition) 

1800.918 Allocation of Risk/Liability 

(This term and condition shall be 

included in all grants.) 

ALLOCATION OF RISK/LIABILITY 

(MON/YEAR) 

(a) With respect to activities 

undertaken under this agreement, the 

Recipient agrees not to make any claim 

against NASA or the U.S. Government 

with respect to the injury or death of its 

employees or its contractors and 

subcontractor employees, or to the loss 

of its property or that of its Contractors 

and subcontractors, whether such 

injury, death, damage or loss arises 

through negligence or otherwise, except 

in the case of willful misconduct. 

(b) In addition, the Recipient agrees to 

indemnify and hold the U.S. 

Government and its Contractors and 

subcontractors harmless from any third 

party claim, judgment, or cost arising 

from the injury to or death of any 

person, or for damage to or loss of any 

property, arising as a result of its 

possession or use of any U.S. 

Government property. 

(Authority: 14 CFR 1260.61) 

(End of Term and Condition) 

1800.919 Cooperative Agreement 

Special Condition 

(This special term and condition shall 

apply when NASA awards a cooperative 

agreement.) 

COOPERATIVE AGREEMENT SPECIAL 

CONDITION (MON/YEAR) 

(a) This award is a cooperative 

agreement as it is anticipated there will 

be substantial NASA involvement 

during performance of the effort. NASA 

and the Recipient mutually agree to the 

following statement of anticipated 

cooperative interactions which may 

occur during the performance of this 

effort: 

(Reference the approved proposal that 

contains a detailed description of the 

work and insert a concise statement of 

the exact nature of the cooperative 

interactions NASA will provide.) 

(b) The terms ‘‘grant’’ and ‘‘Recipient’’ 

mean ‘‘cooperative agreement’’ and 

‘‘Recipient of cooperative agreement,’’ 

respectively, wherever the language 

appears in terms and conditions 

included in this agreement. 

(c) NASA’s ability to participate and 

perform its collaborative effort under 

this cooperative agreement is subject to 

the availability of appropriated funds 

and nothing in this cooperative 

agreement commits the United States 

Congress to appropriate funds therefor. 

(Authority: 14 CFR 1260.51) 

(End of Term and Condition) 

1800.920 Multiple Year Grant 

(This term and condition shall be 

included when a multiple year grant is 

awarded. This term and conditions may 

be used on a ‘‘substantially as’’ basis.) 

MULTIPLE YEAR GRANT OR (MON/

YEAR) 

This is a multiple-year grant 

Contingent on the availability of funds, 

scientific progress of the project, and 

continued relevance to NASA programs, 

NASA anticipates continuing support at 

approximately the following levels: 

Second year $ll, Anticipated 

funding datell. 

Third year $ll, Anticipated funding 

datell. 

(Periods may be added or omitted, as 

applicable) 

(Authority: 14 CFR 1260.52) 

(End of Term and Condition) 

1800.921 Incremental Funding 

(This term and condition shall be 

included when incremental funding is 

used. This may be used on a 

substantially as basis.) 

INCREMENTAL FUNDING (MON/

YEAR) 

(a) Only $ll of the amount 

indicated on the face of this award is 

available for payment and allotted to 

this award. NASA contemplates making 

additional allotments of funds during 

performance of this effort. It is 

anticipated that these funds will be 

obligated as appropriated funds become 

available without any action required by 


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the Recipient. The Recipient will be 

given written notification by the NASA 

Grant Officer. 

(b) The recipient agrees to perform 

work up to the point at which the total 

amount paid or payable by the 

Government approximates but does not 

exceed the total amount actually 

allotted to this grant. NASA is not 

obligated to reimburse the Recipient for 

the expenditure of amounts in excess of 

the total funds allotted by NASA to this 

grant. The Recipient is not authorized to 

continue performance beyond the 

amount allotted to this award. 

(Authority: 14 CFR 1260.53) 

(End of Term and Condition) 

1800.922 Cost Sharing 

(This term and condition shall be 

included when a grant involves cost 

sharing. This may be used on a 

substantially as basis.) 

COST SHARING (MON/YEAR) 

(a) NASA and the Recipient will share 

in providing the resources necessary to 

perform the agreement. NASA funding 

and non-cash contributions (personnel, 

equipment, facilities, etc.) and the dollar 

value of the Recipient’s cash and/or 

non-cash contribution will be on a ll

percent Recipient basis. 

(b) The funding and non-cash 

contributions by both parties are 

represented by the following dollar 

amounts: 

Government Share 

llllllllllllllllllll 

Recipient Share 

llllllllllllllllllll 

Total Amount 

llllllllllllllllllll 

(c) Criteria and procedures for the 

allowability and allocability of cash and 

non-cash contributions shall be 

governed by § 200.306, Cost Sharing or 

Matching. The applicable Federal cost 

principles are cited in Subpart E. 

(d) The Recipient’s share shall not be 

charged to the Government under this 

agreement or under any other contract 

or grant. 

(Authority: 14 CFR 1260.54) 

(End of Term and Condition) 

1800.923 New Technology 

(This Term and Condition shall be 

inserted in all grants with commercial 

firms other than those with small 

businesses, in place of the term and 

condition at § 1800.908, Patent Rights.) 

NEW TECHNOLOGY (MON/YEAR) 

(a) Definitions. 

Administrator, as used in this term 

and condition, means the Administrator 

of the National Aeronautics and Space 

Administration (NASA) or duly 

authorized representative. 

Grant, as used in this term and 

condition, means any actual or 

proposed grant, cooperative agreement, 

understanding, or other arrangement, 

and includes any assignment, 

substitution of parties, or subcontract 

executed or entered into thereunder. 

Made, as used in this term and 

condition, means conception or first 

actual reduction to practice; provided, 

that in the case of a variety of plant, the 

date of determination (as defined in 

section 41(d) of the Plant Variety 

Protection Act, 7 U.S.C. 2401(d)) must 

also occur during the period of grant 

performance. 

Nonprofit organization, as used in this 

term and condition, means a domestic 

university or other institution of higher 

education or an organization of the type 

described in section 501(c)(3) of the 

Internal Revenue Code of 1954 (26 

U.S.C. 501(c)) and exempt from taxation 

under section 501(a) of the Internal 

Revenue Code (26 U.S.C. 501(a)), or any 

domestic nonprofit scientific or 

educational organization qualified 

under a State nonprofit organization 

statute. 

Practical application, as used in this 

term and condition, means to 

manufacture, in the case of a 

composition or product; to practice, in 

the case of a process or method; or to 

operate, in case of a machine or system; 

and, in each case, under such 

conditions as to establish that the 

invention is being utilized and that its 

benefits are, to the extent permitted by 

law or Government regulations, 

available to the public on reasonable 

terms. 

Reportable item, as used in this term 

and condition, means any invention, 

discovery, improvement, or innovation 

of the grantee, whether or not patentable 

or otherwise protectable under Title 35 

of the United States Code, made in the 

performance of any work under any 

NASA grant or in the performance of 

any work that is reimbursable under any 

Term and Condition in any NASA grant 

providing for reimbursement of costs 

incurred before the effective date of the 

grant. Reportable items include, but are 

not limited to, new processes, machines, 

manufactures, and compositions of 

matter, and improvements to, or new 

applications of, existing processes, 

machines, manufactures, and 

compositions of matter. Reportable 

items also include new computer 

programs, and improvements to, or new 

applications of, existing computer 

programs, whether or not copyrightable 

or otherwise protectable under Title 17 

of the United States Code. 

Small business firm, as used in this 

term and condition, means a domestic 

small business concern as defined at 15 

U.S.C. 632 and implementing 

regulations (see 13 CFR 121.401 et seq.) 

of the Administrator of the Small 

Business Administration. 

Subject invention, as used in this term 

and condition, means any reportable 

item which is or may be patentable or 

otherwise protectable under Title 35 of 

the United States Code, or any novel 

variety of plant that is or may be 

protectable under the Plant Variety 

Protection Act (7 U.S.C. 2321 et seq.). 

(b) Allocation of principal rights. 

(1) Presumption of title. 

(i) Any reportable item that the 

Administrator considers to be a subject 

invention shall be presumed to have 

been made in the manner specified in 

paragraph (A) or (B) of section 

20135(b)(1) of the National Aeronautics 

and Space Act of 1958 (51 U.S.C. 20135) 

(hereinafter called ‘‘the Act’’), and that 

presumption shall be conclusive unless 

at the time of reporting the reportable 

item the Recipient submits to the Grant 

Officer a written statement, containing 

supporting details, demonstrating that 

the reportable item was not made in the 

manner specified in paragraph (A) or (B) 

of section 20135(b)(1) of the Act. 

(ii) Regardless of whether title to a 

given subject invention would 

otherwise be subject to an advance 

waiver or is the subject of a petition for 

waiver, the Recipient may nevertheless 

file the statement described in 

paragraph (b)(1)(i) of this term and 

condition. The Administrator will 

review the information furnished by the 

Recipient in any such statement and any 

other available information relating to 

the circumstances surrounding the 

making of the subject invention and will 

notify the Recipient whether the 

Administrator has determined that the 

subject invention was made in the 

manner specified in paragraph (A) or (B) 

of section 20135(b)(1) of the Act. 

(2) Property rights in subject 

inventions. Each subject invention for 

which the presumption of paragraph 

(b)(1)(i) of this term and condition is 

conclusive or for which there has been 

a determination that it was made in the 

manner specified in paragraph (A) or (B) 

of section 20135(b)(1) of the Act shall be 

the exclusive property of the United 

States as represented by NASA unless 

the Administrator waives all or any part 

of the rights of the United States, as 

provided in paragraph (b)(3) of this term 

and condition. 

(3) Waiver of rights. 


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(i) Section 20135(g) of the Act 

provides for the promulgation of 

regulations by which the Administrator 

may waive the rights of the United 

States with respect to any invention or 

class of inventions made or that may be 

made under conditions specified in 

paragraph (A) or (B) of section 

20135(b)(1) of the Act. The promulgated 

NASA Patent Waiver Regulations, 14 

CFR part 1245, subpart 1, have adopted 

the Presidential Memorandum on 

Government Patent Policy of February 

18, 1983, as a guide in acting on 

petitions (requests) for such waiver of 

rights. 

(ii) As provided in 14 CFR part 1245, 

subpart 1, Recipients may petition, 

either prior to execution of the grant or 

within 30 days after execution of the 

grant, for advance waiver of rights to 

any or all of the inventions that may be 

made under a grant. If such a petition 

is not submitted, or if after submission 

it is denied, the Recipient (or an 

employee inventor of the Recipient) 

may petition for waiver of rights to an 

identified subject invention within eight 

months of first disclosure of the 

invention in accordance with paragraph 

(e)(2) of this term and condition, or 

within such longer period as may be 

authorized in accordance with 14 CFR 

1245.105. 

(c) Minimum rights reserved by the 

Government. 

(1) With respect to each subject 

invention for which a waiver of rights 

is applicable in accordance with 14 CFR 

part 1245, subpart 1, the Government 

reserves— 

(i) An irrevocable, nonexclusive, 

nontransferable, royalty-free license for 

the practice of such invention 

throughout the world by or on behalf of 

the United States or any foreign 

government in accordance with any 

treaty or agreement with the United 

States; and 

(ii) Such other rights as stated in 14 

CFR 1245.107. 

(2) Nothing contained in this 

paragraph (c) shall be considered to 

grant to the Government any rights with 

respect to any invention other than a 

subject invention. 

(d) Minimum rights to the Recipient. 

(1) The Recipient is hereby granted a 

revocable, nonexclusive, royalty-free 

license in each patent application filed 

in any country on a subject invention 

and any resulting patent in which the 

Government acquires title, unless the 

Recipient fails to disclose the subject 

invention within the times specified in 

paragraph (e)(2) of this term and 

condition. The Recipient’s license 

extends to its domestic subsidiaries and 

affiliates, if any, within the corporate 

structure of which the Recipient is a 

party and includes the right to grant 

sublicenses of the same scope to the 

extent the Recipient was legally 

obligated to do so at the time the grant 

was awarded. The license is transferable 

only with the approval of the 

Administrator except when transferred 

to the successor of that part of the 

Recipient’s business to which the 

invention pertains. 

(2) The Recipient’s domestic license 

may be revoked or modified by the 

Administrator to the extent necessary to 

achieve expeditious practical 

application of the subject invention 

pursuant to an application for an 

exclusive license submitted in 

accordance with 37 CFR part 404, 

Licensing of Government Owned 

Inventions. This license will not be 

revoked in that field of use or the 

geographical areas in which the 

Recipient has achieved practical 

application and continues to make the 

benefits of the invention reasonably 

accessible to the public. The license in 

any foreign country may be revoked or 

modified at the discretion of the 

Administrator to the extent the 

Recipient, its licensees, or its domestic 

subsidiaries or affiliates have failed to 

achieve practical application in that 

foreign country. 

(3) Before revocation or modification 

of the license, the Recipient will be 

provided a written notice of the 

Administrator’s intention to revoke or 

modify the license, and the Recipient 

will be allowed 30 days (or such other 

time as may be authorized by the 

Administrator for good cause shown by 

the Recipient) after the notice to show 

cause why the license should not be 

revoked or modified. The Recipient has 

the right to appeal to the Administrator 

any decision concerning the revocation 

or modification of its license. 

(e) Invention identification, 

disclosures, and reports. 

(1) The Recipient shall establish and 

maintain active and effective procedures 

to assure that reportable items are 

promptly identified and disclosed to 

Recipient personnel responsible for the 

administration of this New Technology 

term and condition within six months of 

conception and/or first actual reduction 

to practice, whichever occurs first in the 

performance of work under this grant. 

These procedures shall include the 

maintenance of laboratory notebooks or 

equivalent records and other records as 

are reasonably necessary to document 

the conception and/or the first actual 

reduction to practice of the reportable 

items, and records that show that the 

procedures for identifying and 

disclosing reportable items are followed. 

Upon request, the Recipient shall 

furnish the Grant Officer a description 

of such procedures for evaluation and 

for determination as to their 

effectiveness. 

(2) The Recipient will disclose each 

reportable item to the Grant Officer 

within two months after the inventor 

discloses it in writing to Recipient 

personnel responsible for the 

administration of this New Technology 

term and condition or, if earlier, within 

six months after the Recipient becomes 

aware that a reportable item has been 

made, but in any event for subject 

inventions before any on sale, public 

use, or publication of such invention 

known to the Recipient. The disclosure 

to the agency shall be in the form of a 

written report and shall identify the 

grant under which the reportable item 

was made and the inventor(s) or 

innovator(s). It shall be sufficiently 

complete in technical detail to convey a 

clear understanding, to the extent 

known at the time of the disclosure, of 

the nature, purpose, operation, and 

physical, chemical, biological, or 

electrical characteristics of the 

reportable item. The disclosure shall 

also identify any publication, on sale, or 

public use of any subject invention and 

whether a manuscript describing such 

invention has been submitted for 

publication and, if so, whether it has 

been accepted for publication at the 

time of disclosure. In addition, after 

disclosure to the agency, the Recipient 

will promptly notify the agency of the 

acceptance of any manuscript 

describing a subject invention for 

publication or of any on sale or public 

use planned by the Recipient for such 

invention. 

(3) The Recipient shall furnish the 

Grant Officer the following: 

(i) Interim reports every 12 months (or 

such longer period as may be specified 

by the Grant Officer) from the date of 

the grant, listing reportable items during 

that period, and certifying that all 

reportable items have been disclosed (or 

that there are no such inventions) and 

that the procedures required by 

paragraph (e)(1) of this term and 

condition have been followed. 

(ii) A final report, within 3 months 

after completion of the grant work, 

listing all reportable items or certifying 

that there were no such reportable 

items, and listing all subcontracts at any 

tier containing a patent rights clause or 

certifying that there were no such 

subcontracts. 

(4) The Recipient agrees, upon written 

request of the Grant Officer, to furnish 

additional technical and other 

information available to the Recipient as 

is necessary for the preparation of a 


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patent application on a subject 

invention and for the prosecution of the 

patent application, and to execute all 

papers necessary to file patent 

applications on subject inventions and 

to establish the Government’s rights in 

the subject inventions. 

(5) The Recipient agrees, subject to 

FAR 27.302(j), that the Government may 

duplicate and disclose subject invention 

disclosures and all other reports and 

papers furnished or required to be 

furnished pursuant to this term and 

condition. 

(f) Examination of records relating to 

inventions. 

(1) The Grant Officer or any 

authorized representative shall, until 3 

years after final payment under this 

grant, have the right to examine any 

books (including laboratory notebooks), 

records, and documents of the Recipient 

relating to the conception or first actual 

reduction to practice of inventions in 

the same field of technology as the work 

under this grant to determine whether— 

(i) Any such inventions are subject 

inventions; 

(ii) The Recipient has established and 

maintained the procedures required by 

paragraph (e)(1) of this term and 

condition; and 

(iii) The Recipient and its inventors 

have complied with the procedures. 

(2) If the Grant Officer learns of an 

unreported Recipient grantee invention 

that the Grant Officer believes may be a 

subject invention, the Recipient may be 

required to disclose the invention to the 

agency for a determination of ownership 

rights. 

(3) Any examination of records under 

this paragraph will be subject to 

appropriate conditions to protect the 

confidentiality of the information 

involved. 

(g) Withholding of payment (this 

paragraph does not apply to 

subcontracts). 

(1) Any time before final payment 

under this grant, the Grant Officer may, 

in the Government’s interest, withhold 

payment until a reserve not exceeding 

$50,000 or 5 percent of the amount of 

this grant, whichever is less, shall have 

been set aside if, in the Grant Officer’s 

opinion, the Recipient fails to— 

(i) Establish, maintain, and follow 

effective procedures for identifying and 

disclosing reportable items pursuant to 

paragraph (e)(1) of this term and 

condition; 

(ii) Disclose any reportable items 

pursuant to paragraph (e)(2) of this term 

and condition; 

(iii) Deliver acceptable interim reports 

pursuant to paragraph (e)(3)(i) of this 

term and condition; or 

(iv) Provide the information regarding 

subcontracts pursuant to paragraph 

(h)(4) of this term and condition. 

(2) Such reserve or balance shall be 

withheld until the Grant Officer has 

determined that the Recipient has 

rectified whatever deficiencies exist and 

has delivered all reports, disclosures, 

and other information required by the 

grant. 

(3) Final payment under the grant 

shall not be made before the Recipient 

delivers to the Grant Officer all 

disclosures of reportable items required 

by paragraph (e)(2) of this provision, 

and an acceptable final report pursuant 

to paragraph (e)(3)(ii) of this provision. 

(4) The Grant Officer may decrease or 

increase the sums withheld up to the 

maximum authorized in paragraph (g)(1) 

of this term and condition. No amount 

shall be withheld under this paragraph 

while the amount specified by this 

paragraph is being withheld under other 

terms and conditions of the grant. The 

withholding of any amount or the 

subsequent payment thereof shall not be 

construed as a waiver of any 

Government rights. 

(h) Subcontracts. 

(1) Unless otherwise authorized or 

directed by the Grant Officer, the 

Recipient shall— 

(i) Include the clause at NASA FAR 

Supplement (NFS) 1852.227–70, New 

Technology, (suitably modified to 

identify the parties) in any subcontract 

hereunder (regardless of tier) with other 

than a small business firm or nonprofit 

organization for the performance of 

experimental, developmental, or 

research work; and 

(ii) Include the clause at FAR 52.227– 

11 (suitably modified to identify the 

parties) in any subcontract hereunder 

(regardless of tier) with a small business 

firm or nonprofit organization for the 

performance of experimental, 

developmental, or research work. 

(2) In the event of a refusal by a 

prospective subcontractor to accept 

such a clause the Recipient— 

(i) Shall promptly submit a written 

notice to the Grant Officer setting forth 

the subcontractor’s reasons for such 

refusal and other pertinent information 

that may expedite disposition of the 

matter; and 

(ii) Shall not proceed with such 

subcontract without the written 

authorization of the Grant Officer. 

(3) In the case of subcontracts at any 

tier, the agency, subcontractor, and 

Recipient agree that the mutual 

obligations of the parties created by this 

term and condition constitute a contract 

between the subcontractor and NASA 

with respect to those matters covered by 

this grant. 

(4) The Recipient shall promptly 

notify the Grant Officer in writing upon 

the award of any subcontract at any tier 

containing a patent rights clause by 

identifying the subcontractor, the 

applicable patent rights clause, the work 

to be performed under the subcontract, 

and the dates of award and estimated 

completion. Upon request of the Grant 

Officer, the Recipient shall furnish a 

copy of such subcontract, and, no more 

frequently than annually, a listing of the 

subcontracts that have been awarded. 

(5) The subcontractor will retain all 

rights provided for the Recipient in 

paragraph (h)(1)(i) or (ii) of this term 

and condition, whichever is included in 

the subcontract, and the Recipient will 

not, as part of the consideration for 

awarding the subcontract, obtain rights 

in the subcontractor’s subject 

inventions. 

(i) Preference for United States 

industry. Unless provided otherwise, no 

Recipient that receives title to any 

subject invention and no assignee of any 

such Recipient shall grant to any person 

the exclusive right to use or sell any 

subject invention in the United States 

unless such person agrees that any 

products embodying the subject 

invention will be manufactured 

substantially in the United States. 

However, in individual cases, the 

requirement may be waived by the 

Administrator upon a showing by the 

Recipient or assignee that reasonable 

but unsuccessful efforts have been made 

to grant licenses on similar terms to 

potential licensees that would be likely 

to manufacture substantially in the 

United States or that under the 

circumstances domestic manufacture is 

not commercially feasible. 

(Authority: 14 CFR 1260.57) 

(End of Term and Condition) 

1800.924 Designation of New 

Technology Representative and Patent 

Representative 

(This Term and Condition shall be 

inserted in all grants with commercial 

firms other than those with small 

businesses, in place of the term and 

condition at § 1800.908, Patent Rights.) 

DESIGNATION OF NEW 

TECHNOLOGY REPRESENTATIVE 

AND PATENT REPRESENTATIVE 

(MON/YEAR) 

(a) For purposes of administration of 

the term and condition of this grant 

entitled ‘‘New Technology,’’ the 

following named representatives are 

hereby designated by the Grant Officer 

to administer such term and condition: 

Title, Office Code, Address (including 

zip code) 


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New Technology 

Representative 

Patent Representative 

(b) Reports of reportable items, and 

disclosure of subject inventions, interim 

reports, final reports, utilization reports, 

and other reports required by the term 

and condition, as well as any 

correspondence with respect to such 

matters, should be directed to the New 

Technology Representative unless 

transmitted in response to 

correspondence or request from the 

Patent Representative. Inquires or 

requests regarding disposition of rights, 

election of rights, or related matters 

should be directed to the Patent 

Representative. This term and condition 

shall be included in any subcontract 

hereunder requiring a ‘‘New 

Technology’’ Term and Condition or 

‘‘Patent Rights—Retention by the 

Contractor (Short Form)’’ clause, unless 

otherwise authorized or directed by the 

Grant Officer. The respective 

responsibilities and authorities of the 

above-named representatives are set 

forth in 1827.305–270 of the NASA FAR 

Supplement. 

(Authority: 14 CFR 1260.58) 

(End of Term and Condition) 

1800.925 Invention Reporting and 

Rights 

INVENTION REPORTING AND RIGHTS 

(MON/YEAR) 

(a) As used in this term and 

condition: 

(1) The term ‘‘invention’’ means any 

invention or discovery which is or may 

be patentable or otherwise protectable 

under Title 35 of the United States 

Code, or any novel variety of plant 

which is or may be protected under the 

Plant Variety Protection Act (7 U.S.C. 

2321 et seq.). 

(2) The term ‘‘made’’ when used in 

relation to any invention means the 

conception or first actual reduction to 

practice of such invention. 

(b) The Recipient shall report 

promptly to the grant officer each 

invention made in the performance of 

work under this grant. The report of 

such invention shall— 

(1) Identify the inventor(s) by full 

name; and 

(2) Include such full and complete 

technical information concerning the 

invention as is necessary to enable an 

understanding of the nature and 

operation thereof. 

(c) Reporting shall be made on NASA 

Form 1679 Disclosure of Invention and 

New Technology (Including Software). 

(d) The Recipient hereby grants to the 

Government of the United States of 

America, as represented by the 

Administrator of the National 

Aeronautics and Space Administration, 

the full rights, title, and interest in and 

to each such invention throughout the 

world. 

(Authority: 14 CFR 1260.59) 

(End of Term and Condition) 

1800.926 Equipment and Other 

Property Under Grants With 

Commercial Firms 

(This term and condition shall be 

included in grants with commercial 

firms that have property.) 

EQUIPMENT AND OTHER PROPERTY 

UNDER GRANTS WITH COMMERCIAL 

FIRMS (MON/YEAR) 

(a) This grant permits acquisition of 

special purpose equipment required for 

the conduct of research. Acquisition of 

special purpose equipment costing in 

excess of $5,000 and not included in the 

approved proposal budget requires the 

prior approval of the Grant Officer 

unless the item is merely a different 

model of an item shown in the approved 

proposal budget. 

(b) Recipients may not purchase, as a 

direct cost to the grant, items of general 

purpose equipment, examples of which 

include but are not limited to office 

equipment and furnishings, air 

conditioning equipment, reproduction 

and printing equipment, motor vehicles, 

and automatic data processing 

equipment. If the Recipient requests an 

exception, the Recipient shall submit a 

written request for Grant Officer 

approval, prior to purchase by the 

Recipient, stating why the Recipient 

cannot charge the general purpose 

equipment to indirect costs. 

(c) Under no circumstances shall 

grant funds be used to acquire land or 

any interest therein, to acquire or 

construct facilities (as defined in 48 CFR 

(FAR) 45.301), or to procure passenger 

carrying vehicles. 

(d) The Government shall have title to 

equipment and other personal property 

acquired with Government funds. Such 

property shall be disposed of pursuant 

to 48 CFR (FAR) 45.603. 

(e) Title to Government furnished 

equipment (including equipment, title 

to which has been transferred to the 

Government prior to completion of the 

work) will remain with the Government. 

(f) The Recipient shall establish and 

maintain property management 

standards for Government property and 

otherwise manage such property as set 

forth in 48 CFR (FAR) 45.5 and 48 CFR 

(NFS) 1845.5. 

(g) Recipients shall submit annually a 

NASA Form 1018, NASA Property in 

the Custody of Contractors, in 

accordance with the instructions on the 

form, the provisions of 48 CFR (NFS) 

1845.71 and any supplemental 

instructions that may be issued by 

NASA for the current reporting period. 

The original NF 1018 shall be submitted 

to the center Deputy Chief Financial 

Officer (Finance) with three copies sent 

concurrently to the center Industrial 

Property Officer. The annual reporting 

period shall be from October 1 of each 

year through September 30 of the 

following year. The report shall be 

submitted in time to be received by 

October 15. Negative reports (i.e. no 

reportable property) are required. The 

information contained in the reports is 

entered into the NASA accounting 

system to reflect current asset values for 

agency financial statement purposes. 

Therefore, it is essential that required 

reports be received no later than 

October 15. A final report is required 

within 30 days after expiration of the 

agreement. 

(h) The requirements set forth in this 

term and condition supersedes grant 

Term and Condition 1800.907, 

Equipment and Other Property. 

(Authority: 14 CFR 1260.67) 

(End of Term and Condition) 

1800.927 Listing of reportable 

equipment and other property. 

(This term and condition shall be 

included in grants with property.) 

LISTING OF REPORTABLE 

EQUIPMENT AND OTHER PROPERTY 

(MON/YEAR) 

(a) Title to federally-owned property 

provided to the Recipient remains 

vested in the Federal Government, and 

shall be managed in accordance with 

§ 200.312. The following items of 

federally-owned property are being 

provided to the recipient for use in 

performance of the work under this 

grant: 

{List property or state ‘‘not 

applicable.’’} 

(b) The following specific items of 

equipment acquired by the Recipient 

have been identified by NASA for 

transfer of title to the Government when 

no longer required for performance 

under this grant. This equipment will be 

managed in accordance with 200.313, 

and shall be transferred to NASA or 

NASA’s designee in accordance with 

the procedures set forth at 200.313(e): 

{List property or state ‘‘not 

applicable.’’} 

(Authority: 14 CFR 1260.66) 

(End of Term and Condition) 


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1800.928 Invoices and Payments 

Under Grants With Commercial Firms 

(This term and condition shall be 

included in all grants with commercial 

firms.) 

INVOICES AND PAYMENTS UNDER 

GRANTS WITH COMMERCIAL FIRMS 

(MON/YEAR) 

(a) Invoices for payment of actual 

incurred costs shall be submitted by the 

Recipient no more frequently than on 

a_XX__basis. 

(b) Invoices shall be submitted by the 

Recipient to the following offices: 

(1) The original invoice shall be sent 

directly to the payment office 

designated on the grant cover page. 

(2) Copies of the invoice shall be sent 

to the NASA Technical Officer and 

NASA Grant Officer. 

(c) All invoices shall reference the 

grant number. 

(d) The final invoice shall be marked 

‘‘Final’’ and shall be submitted within 

90 days of the expiration of the grant. 

(e) The requirements set forth in this 

term and condition supersedes grant 

Term and Condition 1800.906, Financial 

Management. 

(Authority: 14 CFR 1260.68) 

(End of Term and Condition) 

1800.929 Electronic Funds Transfer 

Payment Methods 

(This term and condition shall be 

included in all grants with commercial 

firms.) 

ELECTRONIC FUNDS TRANSFER 

PAYMENT METHODS (MON/YEAR) 

(a) Payments under this grant will be 

made by the Government by electronic 

funds transfer through the Treasury 

Fedline Payment System (FEDLINE) or 

the Automated Clearing House (ACH), at 

the option of the Government. After 

award, but no later than 14 days before 

an invoice is submitted, the Recipient 

shall designate a financial institution for 

receipt of electronic funds transfer 

payments, and shall submit this 

designation to the Grant Officer or other 

Government official, as directed. 

(b) For payment through FEDLINE, 

the Recipient shall provide the 

following information: 

(1) Name, address, and telegraphic 

abbreviation of the financial institution 

receiving payment. 

(2) The American Bankers Association 

9-digit identifying number for wire 

transfers of the financing institution 

receiving payment if the institution has 

access to the Federal Reserve 

Communication System. 

(3) Payee’s account number at the 

financial institution where funds are to 

be transferred. 

(4) If the financial institution does not 

have access to the Federal Reserve 

Communications System, name, 

address, and telegraphic abbreviation of 

the correspondent financial institution 

through which the financial institution 

receiving payment obtains wire transfer 

activity. Provide the telegraphic 

abbreviation and American Bankers 

Association identifying number for the 

correspondent institution. 

(c) For payment through ACH, the 

Recipient shall provide the following 

information: 

(1) Routing transit number of the 

financial institution receiving payment 

(same as American Bankers Association 

identifying number used for FEDLINE). 

(2) Number of account to which funds 

are to be deposited. 

(3) Type of depositor account (‘‘C’’ for 

checking, ‘‘S’’ for savings). 

(4) If the Recipient is a new enrollee 

to the ACH system, a ‘‘Payment 

Information Form,’’ SF 3881, must be 

completed before payment can be 

processed. 

(d) In the event the Recipient, during 

the performance of this grant, elects to 

designate a different financial 

institution for the receipt of any 

payment made using electronic funds 

transfer procedures, notification of such 

change and the required information 

specified above must be received by the 

appropriate Government official 30 days 

prior to the date such change is to 

become effective. 

(e) The documents furnishing the 

information required in this clause must 

be dated and contain the signature, title, 

and telephone number of the Recipient 

official authorized to provide it, as well 

as the Recipient’s name and grant 

number. 

(f) Failure to properly designate a 

financial institution or to provide 

appropriate payee bank account 

information may delay payments of 

amounts otherwise properly due. 

(g) The requirements set forth in this 

term and condition supersedes grant 

Term and Condition 1800.906, Financial 

Management. 

(Authority: 14 CFR 1260.69) 

(End of Term and Condition) 

Thus, this part gives regulatory effect 

to the OMB guidance and supplements 

the guidance as needed for the 

Department. 

Title 14—Aeronautics and Space 

CHAPTER V—NATIONAL AERONAUTICS 

AND SPACE ADMINISTRATION 

PART 1260 [REMOVED AND 

RESERVED] 

■ 1. Part 1260 is removed and reserved. 

PART 1273 [REMOVED AND 

RESERVED] 

■ 2. Part 1273 is removed and reserved. 

William P. McNally, 

Assistant Administrator for Procurement. 

Corporation for National and 

Community Service 

For the reasons set forth in the 

common preamble, under the authority 

of 5 U.S.C. 301 and the authorities listed 

below, 2 CFR Chapter XXII, and 45 CFR 

Chapters XII and XXV, are amended as 

follows: 

Title 2—Grants and Agreements 

CHAPTER XXII—CORPORATION FOR 

NATIONAL AND COMMUNITY SERVICE 

■ 1. Part 2205 is added to Title 2, 

Chapter XXII to read as follows: 

PART 2205—IMPLEMENTATION OF 

AND EXEMPTIONS TO 2 CFR 

PART 200 

Sec. 

2205.100 Adoption of 2 CFR part 200. 

2205.201 Use of grant agreements 

(including fixed amount awards), 

cooperative agreements, and contracts. 

2205.306 Cost sharing or matching. 

2205.332 Fixed amount subawards. 

2205.414 Indirect (F&A) costs. 

Authority: 42 U.S.C. 12571(d), 

12571(e)(2)(B), 12581(l), 12581a(a), 

12616(c)(2), 12651c(c), 12651d(h), 12651g(b), 

12653(a), 12653(h), 12653o(a), and 12657(a); 

2 CFR part 200; 45 CFR 2521.95, and 

2540.110. 

§ 2205.100 Adoption of 2 CFR Part 200. 

Under the authority listed above, the 

Corporation for National and 

Community Service adopts the Office of 

Management and Budget’s (OMB) 

Guidance in 2 CFR part 200, except as 

specified in this part. Thus, this part 

gives regulatory effect to the OMB 

guidance and supplements the guidance 

for recipients of awards from the 

Corporation. 

§ 2205.201 Use of grant agreements 

(including fixed amount awards), 

cooperative agreements, and contracts. 

(a) The Corporation will determine 

the appropriate instrument in 

accordance with its authorities under 

the national service laws, and in 

accordance with the Federal Grant and 

Cooperative Agreement Act (31 U.S.C. 

6301–6308), as appropriate. 

(b) The Corporation and pass through 

entities may also provide fixed amount 

awards in the manner and in the 

amounts permitted under the national 

service laws. 


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§ 2205.306 Cost sharing or matching. 

(a) Shared costs or matching funds 

must meet the criteria of 2 CFR 

200.306(b), with the exception of 2 CFR 

200.306(b)(5). Federal funds from other 

agencies may be used as match or cost 

sharing as authorized by 42 U.S.C. 

12571(e) under the national service 

laws. 

§ 2205.332 Fixed amount subawards. 

Fixed amount subawards may be 

made in the manner and in amounts 

determined under the national service 

laws, as authorized by the Corporation, 

without respect to the Simplified 

Acquisition Threshold. 

§ 2205.414 Indirect (F&A) costs. 

Administrative costs for programs 

funded under subtitles B and C of the 

National and Community Service Act of 

1990, as amended, shall be subject to 45 

CFR 2521.95 and 2540.110. 

Title 45—Public Welfare 

CHAPTER XII—CORPORATION FOR 

NATIONAL AND COMMUNITY SERVICE 

PART 1235—LOCALLY GENERATED 

CONTRIBUTIONS IN OLDER 

AMERICAN VOLUNTEER PROGRAMS 

■ 2. The authority citation for part 1235 

continues to read as follows: 

Authority: 42 U.S.C. 5024; 42 U.S.C. 5060. 

■ 3. Revise § 1235.2(c) to read as 

follows: 

§ 1235.2 Implementation guidance. 

* * * * * 

(c) That all expenditures in support of 

a Federal award can be audited by the 

responsible Federal Agency or by 

independent auditors performing audits 

pursuant to 2 CFR part 200. 

■ 4. Remove the Appendix to Part 1235 

CHAPTER XXV—CORPORATION FOR 

NATIONAL AND COMMUNITY SERVICE 

PART 2510—OVERALL PURPOSES 

AND DEFINITIONS 

■ 5. The authority citation for part 2510 

continues to read as follows: 

Authority: 42 U.S.C. 12511 

■ 6. Revise § 2510.20 revise the 

definition of ‘‘Administrative Costs’’ to 

read as follows: 

§ 2510.20 Definitions. 

* * * * * 

Administrative costs. The term 

administrative costs means general or 

centralized expenses of overall 

administration of an organization that 

receives assistance under the Act and 

does not include program costs. 

(1) For organizations that have an 

established indirect cost rate for Federal 

awards, administrative costs mean those 

costs that are included in the 

organization’s indirect cost rate. Such 

costs are generally identified with the 

organization’s overall operation and are 

further described in 2 CFR part 200. 

(2) For organizations that do not have 

an established indirect cost rate for 

Federal awards, administrative costs 

include: 

(i) Costs for financial, accounting, 

auditing, contracting, or general legal 

services except in unusual cases when 

they are specifically approved in writing 

by the Corporation as program costs. 

(ii) Costs for internal evaluation, 

including overall organizational 

management improvement costs (except 

for independent evaluations and 

internal evaluations of a program or 

project). 

(iii) Costs for general liability 

insurance that protects the 

organization(s) responsible for operating 

a program or project, other than 

insurance costs solely attributable to a 

program or project. 

* * * * * 

PART 2520—GENERAL PROVISIONS: 

AMERICORPS SUBTITLE C 

PROGRAMS 

■ 7. The authority citation for part 2520 

continues to read as follows: 

Authority: 42 U.S.C. 12571–12595. 

■ 8. Revise § 2520.60 to read as follows: 

§ 2520.60 What government-wide 

requirements apply to staff fundraising 

under my AmeriCorps grant? 

You must follow OMB Guidance 

published at 2 CFR part 200 and 

Corporation implementing regulations 

at 2 CFR Chapter XXII. In particular, see 

2 CFR 200.442—Fundraising and 

Investment Management Costs. 

PART 2541—[REMOVED AND 

RESERVED] 

■ 9. Remove and reserve Part 2541, 

consisting of §§ 2541.10 to 2541.520. 

PART 2543—[REMOVED AND 

RESERVED] 

■ 10. Remove and reserve Part 2543, 

consisting of §§ 2543.1 to 2543.88. 

PART 2551—SENIOR COMPANION 

PROGRAM 

■ 11. The authority citation for part 

2551 continues to read as follows: 

Authority: 42 U.S.C. 4950 et seq.; 42 U.S.C. 

12651b–12651d; E.O. 13331, 69 FR 9911. 

■ 12. Revise § 2551.93 to read as 

follows: 

§ 2551.93 What are grants management 

requirements? 

What rules govern a sponsor’s 

management of grants? 

(a) A sponsor shall manage a grant in 

accordance with: 

(1) The Act; 

(2) Regulations in this part; 

(3) 2 CFR part 200 and 2 CFR part 

2205; and 

(4) Other applicable Corporation 

requirements. 

(b) Project support provided under a 

Corporation grant shall be furnished at 

the lowest possible cost consistent with 

the effective operation of the project. 

(c) Volunteer expense items, 

including transportation, meals, 

recognition activities and items 

purchased at the volunteers’ own 

expense and which are not reimbursed, 

are not allowable as contributions to the 

non-Federal share of the budget. 

(d) Costs to bring a sponsor into basic 

compliance with accessibility 

requirements for individuals with 

disabilities are not allowable costs. 

(e) Payments to settle discrimination 

allegations, either informally through a 

settlement agreement or formally as a 

result of a decision finding 

discrimination, are not allowable costs. 

(f) Written Corporation approval/

concurrence is required for the 

following changes in the approved 

grant: 

(1) Reduction in budgeted volunteer 

service years. 

(2) Change in the service area. 

(3) Transfer of budgeted line items 

from Volunteer Expenses to Support 

Expenses. This requirement does not 

apply if the 80 percent volunteer cost 

reimbursement ratio is maintained. 

PART 2552—FOSTER GRANDPARENT 

PROGRAM 

■ 13. The authority citation for part 

2552 continues to read as follows: 

Authority: 42 U.S.C. 4950 et seq.; 42 U.S.C. 

12651b–12651d; E.O. 13331, 69 FR 9911. 

■ 14. Revise § 2552.93 to read as 

follows: 

§ 2552.93 What are grants management 

requirements? 

What rules govern a sponsor’s 

management of grants? 

(a) A sponsor shall manage a grant in 

accordance with: 

(1) The Act; 

(2) Regulations in this part; 

(3) 2 CFR part 200 and 2 CFR part 

2205; and 

(4) Other applicable Corporation 

requirements. 

(b) Project support provided under a 

Corporation grant shall be furnished at 


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the lowest possible cost consistent with 

the effective operation of the project. 

(c) Volunteer expense items, 

including transportation, meals, 

recognition activities and items 

purchased at the volunteers’ own 

expense and which are not reimbursed, 

are not allowable as contributions to the 

non-Federal share of the budget. 

(d) Costs to bring a sponsor into basic 

compliance with accessibility 

requirements for individuals with 

disabilities are not allowable costs. 

(e) Payments to settle discrimination 

allegations, either informally through a 

settlement agreement or formally as a 

result of a decision finding 

discrimination, are not allowable costs. 

(f) Written Corporation approval/

concurrence is required for the 

following changes in the approved 

grant: 

(1) Reduction in budgeted volunteer 

service years. 

(2) Change in the service area. 

(3) Transfer of budgeted line items 

from Volunteer Expenses to Support 

Expenses. This requirement does not 

apply if the 80 percent volunteer cost 

reimbursement ratio is maintained. 

PART 2553—THE RETIRED AND 

SENIOR VOLUNTEER PROGRAM 

■ 15. The authority citation for part 

2552 continues to read as follows: 

Authority: 42 U.S.C. 4950 et seq. 

■ 16. Revise § 2553.73 to read as 

follows: 

§ 2553.73 What are grants management 

requirements? 

What rules govern a sponsor’s 

management of grants? 

(a) A sponsor shall manage a grant in 

accordance with: 

(1) The Act; 

(2) Regulations in this part; 

(3) 2 CFR part 200 and 2 CFR part 

2205; and 

(4) Other applicable Corporation 

requirements. 

(b) Project support provided under a 

Corporation grant shall be furnished at 

the lowest possible cost consistent with 

the effective operation of the project. 

(c) Volunteer expense items, 

including transportation, meals, 

recognition activities and items 

purchased at the volunteers’ own 

expense and which are not reimbursed, 

are not allowable as contributions to the 

non-Federal share of the budget. 

(d) Costs to bring a sponsor into basic 

compliance with accessibility 

requirements for individuals with 

disabilities are not allowable costs. 

(e) Payments to settle discrimination 

allegations, either informally through a 

settlement agreement or formally as a 

result of a decision finding 

discrimination, are not allowable costs. 

(f) Written Corporation approval/

concurrence is required for a change in 

the approved service area. 

Valerie Green, 

General Counsel. 

Social Security Administration 

For the reasons set forth in the 

common preamble, 2 CFR chapter XXIII 

is amended and, under the authority of 

5 U.S.C. 301, parts 435 and 437 of title 

20, chapter III of the Code of Federal 

Regulations are removed to read as 

follows: 

Title 2—Grants and Agreements 

Subtitle B—Federal Agency Regulations 

for Grants and Agreements 

CHAPTER XXIII—SOCIAL SECURITY 

ADMINISTRATION 

■ 1. Part 2300 of title 2 of the Code of 

Federal Regulations is added to read as 

follows: 

PART 2300—UNIFORM 

ADMINISTRATIVE REQUIREMENTS, 

COST PRINCIPLES, AND AUDIT 

REQUIREMENTS FOR FEDERAL 

AWARDS 

Authority: 5 U.S.C. 301; 2 CFR part 200, 

and as noted in specific sections. 

§ 2300.10 Applicable regulations. 

The Uniform Administrative 

Requirements, Cost Principles, and 

Audit Requirements for Federal Awards 

set forth in 2 CFR part 200 shall apply 

to the Social Security Administration. 

§§ 2300.11–2300.2335 [Reserved] 

Title 20—Employee Benefits 

CHAPTER III—SOCIAL SECURITY 

ADMINISTRATION 

PART 435—[REMOVED AND 

RESERVED] 

■ 2. Remove and reserve part 435. 

PART 437—[REMOVED AND 

RESERVED] 

■ 3. Remove and reserve part 437. 

Carolyn W. Colvin, 

Acting Commissioner of Social Security. 

Department of Housing and Urban 

Development 

For the reasons described in the 

common preamble, and under the 

authority of 42 U.S.C. 3535(d), HUD 

amends the Code of Federal 

Regulations, Title 2, Subtitle B, chapter 

XXIV, and Title 24 CFR parts 84 and 85, 

as follows: 

Title 2—Grants and Agreements 

CHAPTER XXIV—DEPARTMENT OF 

HOUSING AND URBAN DEVELOPMENT 

■ 1. Add new part 2400 in Subtitle B, 

Chapter XXIV, to read as follows: 

PART 2400—UNIFORM 

ADMINISTRATIVE REQUIREMENTS, 

COST PRINCIPLES AND AUDIT 

REQUIRMENTS FOR FEDERAL 

AWARDS 

Authority: 42 U.S.C. 3535(d); 2 CFR part 

200. 

§ 2400.101 Applicable regulations. 

Unless excepted under 24 CFR 

chapters I through IX, the Uniform 

Administrative Requirements, Cost 

Principles, and Audit Requirements for 

Federal Awards, set forth in 2 CFR part 

200, shall apply to Federal Awards 

made by the Department of Housing and 

Urban Development to non-Federal 

entities. 

Title 24—Housing and Urban 

Development 

Subtitle A—Office of the Secretary, 

Department of Housing and Urban 

Development 

PART 84—UNIFORM ADMINISTRATIVE 

REQUIREMENTS FOR GRANTS AND 

AGREEMENTS WITH INSTITUTIONS 

OF HIGHER EDUCATION, HOSPITALS, 

AND OTHER NON-PROFIT 

ORGANIZATIONS 

■ 2. The authority citation for part 84 

continues to read as follows: 

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

■ 3. Remove the heading of subpart A. 

■ 4. Revise § 84.1 to read as follows: 

§ 84.1 Applicability of and cross reference 

to 2 CFR part 200. 

(a) Federal awards to institutions of 

higher education, hospitals and other 

non-profit organizations are subject to 

the Uniform Administrative 

Requirements, Cost Principles and 

Audit Requirements for Federal Awards 

at 2 CFR part 200. 

(b) Federal awards made prior to 

December 26, 2014 will continue to be 

governed by the regulations in effect 

and codified in 24 CFR part 84 (2013 

edition) or as provided under the terms 

of the Federal award. Where the terms 

of a Federal award made prior to 

December 26, 2014, state that the award 

will be subject to regulations as may be 

amended, the Federal award shall be 

subject to 2 CFR part 200. 

§§ 84.2 through 84.5 [Removed] 

■ 5. Remove §§ 84.2 to 84.5. 


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Subpart B [Removed] 

■ 6. Remove subpart B, consisting of 

§§ 84.10 through 84.17. 

Subpart C [Removed] 

■ 7. Remove subpart C, consisting of 

§§ 84.20 through 84.62. 

Subpart D [Removed] 

■ 8. Remove subpart D, consisting of 

§§ 84.70 through 84.73. 

Subpart E [Removed] 

■ 9. Remove subpart E, consisting of 

§§ 84.80 through 84.87. 

Appendix A to part 84 [Removed] 

■ 10. Remove Appendix A to part 84. 

PART 85—ADMINISTRATIVE 

REQUIREMENTS FOR GRANTS AND 

COOOPERATIVE AGREEMENTS TO 

STATE, LOCAL AND FEDERALLY 

RECOGNIZED INDIAN TRIBES 

■ 11. The authority citation for part 85 

continues to read as follows: 

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

■ 12. Remove the heading of subpart A. 

■ 13. Revise § 85.1 to read as follows: 

§ 85.1 Applicability of and cross reference 

to 2 CFR part 200. 

(a) Federal awards with State, local 

and Indian tribal governments are 

subject to the Uniform Administrative 

Requirements, Cost Principles and 

Audit Requirements for Federal Awards 

at 2 CFR part 200. 

(b) Federal awards made prior to 

December 26, 2014 will continue to be 

governed by the regulations in effect 

and codified in 24 CFR part 85 (2013 

edition) or as provided by the terms of 

the Federal award. Where the terms of 

a Federal award made prior to December 

26, 2014, state that the award will be 

subject to regulations as may be 

amended, the Federal award shall be 

subject to 2 CFR part 200. 

§§ 85.2 through 85.6 [Removed] 

■ 14. Remove §§ 85.2 to 84.6. 

Subpart B [Removed] 

■ 15. Remove subpart B, consisting of 

§§ 85.10 through 85.12. 

Subpart C [Removed] 

■ 16. Remove subpart C, consisting of 

§§ 85.20 through 85.44. 

Subpart D [Removed] 

■ 17. Remove subpart D, consisting of 

§§ 85.50 through 85.52. 

Subpart E [Removed] 

■ 18. Remove subpart E. 

Julia ́n Castro, 

Secretary. 

National Science Foundation 

For the reasons set forth in the 

common preamble, under the authority 

of 42 U.S.C. 1861, et seq. and 2 CFR part 

200, the National Science Foundation 

(NSF) amends Part 2500 of Title 2, 

Chapter XXV, and Part 602 of Title 45, 

chapter VI of the Code of Federal 

Regulations as follows: 

Title 2—Grants and Agreements 

CHAPTER XXV—NATIONAL SCIENCE 

FOUNDATION 

■ 1. Part 2500 is added to Title 2 

Chapter XXVI is revised to read as 

follows: 

PART 2500—UNIFORM 

ADMINISTRATIVE REQUIREMENTS, 

COST PRINCIPLES, AND AUDIT 

REQUIREMENTS FOR FEDERAL 

AWARDS 

2500.100 Adoption of 2 CFR Part 200. 

Authority: 42 U.S.C. 1861, et seq.; 2 CFR 

part 200. 

§ 2500.100 Adoption of 2 CFR Part 200. 

Under the Authority cited above, NSF 

has formally adopted 2 CFR part 200, 

Uniform Administrative Requirements, 

Cost Principles, and Audit 

Requirements for Federal Awards (‘‘the 

Uniform Guidance’’). The Foundation’s 

implementation document, the NSF 

Proposal & Award Policies & Procedures 

Guide, may be found at: http:// 

www.nsf.gov/publications/pub_

summ.jsp?ods_key=papp. 

NSF’s implementation includes the 

following deviation from the Uniform 

Guidance: 

Award Cash Management System— 

NSF is continuing collection of award 

financial information through the 

implementation of the Award Cash 

Management Service (ACM$) and the 

Program Income Worksheet. ACM$ 

replaced the NSF Federal Financial 

Report (FFR) and the NSF FastLane 

Cash Request process with a single web 

based user interface. ACM$ is used to 

collect award level detail financial 

information at the time of each payment 

request submitted by the awardee 

institution. The Program Income 

Worksheet is used to collect program 

income financial information from 

awardee institutions on an annual basis. 

ACM$ and the Program Income 

Worksheet utilize approved 

government-wide data elements from 

the FFR for the collection of financial 

information as provided for in the 

Uniform Guidance paragraph 505(c) and 

prescribed in 2 CFR 200.327. The 

requirement for Federal agencies to use 

the FFR data elements for cash 

management and financial reporting 

was publically announced in Federal 

Register on August 13, 2008. 

Title 45—Public Welfare 

CHAPTER VI—NATIONAL SCIENCE 

FOUNDATION 

PART 602—[Removed] 

■ 2. Remove 45 CFR part 602. 

Lawrence Rudolph, 

General Counsel. 

National Archives and Records 

Administration 

For the reasons set forth in the 

common preamble, NARA amends 2 

CFR Chapter XXVI and 36 CFR Chapter 

XII as follows: 

Title 2—Grants and Agreements 

CHAPTER XXVI—NATIONAL ARCHIVES 

AND RECORDS ADMINISTRATION 

■ 1. Part 2600 of Title 2, Chapter XXVI, 

is revised to read as follows: 

PART 2600—UNIFORM 

ADMINISTRATIVE REQUIREMENTS, 

COST PRINCIPLES, AND AUDIT 

REQUIREMENTS FOR FEDERAL 

AWARDS 

Sec. 

2600.100 Adoption of 2 CFR part 200. 

2600.101 Indirect costs exception to 2 CFR 

200.414. 

2620.102 Additional NARA grant 

administration policies. 

Authority: 5 U.S.C. 301; 44 U.S.C. 2104(a); 

44 U.S.C. 2501–2506; 75 FR 66317 (Oct. 28, 

2010); 2 CFR 200. 

§ 2600.100 Adoption of 2 CFR Part 200. 

Under the authority listed above, the 

National Archives and Records 

Administration (NARA), through its 

National Historical Publications and 

Records Commission (NHPRC), adopts 

the Office of Management and Budget 

(OMB) Guidance in 2 CFR part 200, 

except regarding indirect costs (see 

§ 2600.101). Thus, this part gives 

regulatory effect to the OMB guidance 

and supplements the guidance as 

needed for NARA and NHPRC. 

§ 2600.101 Indirect costs exception to 2 

CFR 200.414. 

As approved by the Archivist of the 

United States, the National Archives 

does not permit grant recipients to use 

allocated funds from NARA or NHPRC 

for indirect costs. Grant recipients may 

use cost sharing to cover indirect costs 


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instead. NARA’s policies on indirect 

costs are located at http://

www.archives.gov/nhprc, and are 

included in grant opportunity 

announcements. 

(Authority: 44 U.S.C. 2103–04, 2 CFR part 

200) 

§ 2600.102 Additional NARA grant 

administration policies. 

Grant recipients must also follow 

NARA grant administration policies and 

procedures set out in 36 CFR parts 1202, 

1206, 1208, 1211, and 1212. 

Title 36—Parks, Forests, and Public 

Property 

CHAPTER XII—NATIONAL ARCHIVES AND 

RECORDS ADMINISTRATION 

PART 1206—NATIONAL HISTORICAL 

PUBLICATIONS AND RECORDS 

COMMISSION 

■ 2. Revise the authority citation for part 

1206 to read as follows: 

Authority: 5 U.S.C. 301; 44 U.S.C. 2104(a); 

44 U.S.C. 2501–2506; 2 CFR 200, and as 

noted in specific sections. 

§ 1206.3 [Amended] 

■ 3. Amend § 1206.3 by adding the 

sentence ‘‘For a more detailed 

definition, see 2 CFR 306.’’ at the end 

of the definition paragraphs for ‘‘Cost 

sharing,’’ ‘‘Indirect costs,’’ and ‘‘State’’. 

§ 1206.8 [Amended] 

■ 4. Amend § 1206.8(c) by adding a 

comma and the words ‘‘available on the 

NHPRC Web site at http://

www.archives.gov/nhprc’’ to the end of 

the paragraph. 

§ 1206.12 [Amended] 

■ 5. Amend § 1206.12(a) by adding the 

phrase ‘‘and 2 CFR part 200’’ to the end 

of the sentence. 

§ 1206.24 [Amended] 

■ 6. Amend § 1206.24(b) by adding the 

phrase ‘‘and the NHPRC Web site’’ to 

the end of the sentence. 

§ 1206.45 [Amended] 

■ 7. Amend § 1206.45(b) by adding a 

comma and the words ‘‘including those 

in 2 CFR parts 230 and 2600’’ to the end 

of the sentence. 

§ 1206.50 [Amended] 

■ 8. Amend § 1206.50 by revising 

paragraph (b)(3) to read as follows: 

§ 1206.50 What types of funding and cost 

sharing arrangements does the 

Commission make? 

* * * * * 

(b) * * * 

(3) As indicated in 2 CFR part 2600, 

we do not pay indirect costs from grant 

funds, but allow indirect costs to be 

used for cost sharing. 

§ 1206.72 [Amended] 

■ 9. Revise § 1206.72 to read as follows: 

§ 1206.72 Where can I find the regulatory 

requirements that apply to NHPRC grants? 

(a) In addition to this Part 1206, 

NARA has issued other regulations that 

apply to NHPRC grants in 36 CFR parts 

1202, 1208, 1211, 1212 and 2 CFR part 

2600 (which incorporates OMB’s 

Uniform Administrative Requirements, 

Cost Principles, and Audit 

Requirements for Federal Awards 

guidance at 2 CFR part 200). 

(b) The Commission provides 

additional policy guidance related to 

Title VI of the Civil Rights Act of 1964, 

regarding persons with limited English 

proficiency, at http://www.archives.gov/ 

nhprc/ and from the NHPRC staff. 

PART 1207 [Removed] 

■ 10. Remove 36 CFR part 1207. 

PART 1210 [Removed] 

■ 11. Remove 36 CFR part 1210. 

David S. Ferriero, 

Archivist of the United States. 

Small Business Administration 

For the reasons set forth in the 

common preamble, and under the 

authority of 5 U.S.C. 301 and the 

authorities listed below, Part 2701 of 

Title 2, Chapter XXVII of the Code of 

Federal Regulations is added and 13 

CFR chapter I is amended to read as 

follows: 

Title 2—Grants and Agreements 

CHAPTER XXVII—SMALL BUSINESS 

ADMINISTRATION 

PART 2701—UNIFORM 

ADMINISTRATIVE REQUIREMENTS, 

COST PRINCIPLES, AND AUDIT 

REQUIREMENTS FOR FEDERAL 

AWARDS 

Sec. 

2701.1 Adoption of 2 CFR part 200. 

2701.74 Pass-through entity. 

2701.92 Subaward. 

2701.93 Subrecipient. 

2701.112 Conflict of Interest. 

2701.414 Indirect (F&A) Costs. 

2701.503 Relation to other audit 

requirements. 

2701.513 Responsibilities. 

2701.600 Other regulatory guidance. 

Authority: 15 U.S.C. 634(b)(6), 2 CFR part 

200. 

§ 2701.1 Adoption of 2 CFR Part 200. 

(a) Under the authority listed above, 

the U.S. Small Business Administration 

adopts the Office of Management and 

Budget (OMB) Guidance in 2 CFR part 

200, except for 2 CFR 200.74, 200.92, 

and 200.93. Thus, this part gives 

regulatory effect to the OMB guidance 

and supplements the guidance as 

needed for the Administration. 

§ 2701.74 Pass-through entity. 

SBA will only make awards to passthrough entities where expressly 

authorized by statute. 

§ 2701.92 Subaward. 

SBA will only permit pass-through 

entities to make awards to subrecipients 

where expressly authorized by statute. 

§ 2701.93 Subrecipient. 

SBA will only permit non-Federal 

entities to receive subawards where 

expressly authorized by statute. 

§ 2701.112 Conflict of Interest. 

The following conflict of interest 

policies apply to all SBA awards of 

financial assistance: 

(a) Where an employee or contractor 

of a non-Federal entity providing 

assistance under an SBA award also 

provides services in exchange for pay in 

her or his private capacity, that 

employee or contractor may not accept 

as a client for her or his private services 

any individual or firm she or he assists 

under an SBA award. 

(b) No non-Federal entity providing 

assistance under an SBA award (nor any 

subrecipient, employee, or contractor of 

such an entity) may give preferential 

treatment to any client referred to it by 

an organization with which it has a 

financial, business, or other 

relationship. 

(c) Except where otherwise provided 

for by law, no non-Federal entity may 

seek or accept an equity stake in any 

firm it assists under the auspices of an 

SBA award. Additionally, no principal, 

officer, employee, or contractor of such 

an entity (nor any of their Close or 

Secondary Relatives as those terms are 

defined by 13 CFR 108.50) may seek or 

accept an equity stake or paid position 

in any firm the entity assists under an 

SBA award. 

§ 2701.414 Indirect (F&A) Costs. 

(a) When determining whether a 

deviation from a negotiated indirect cost 

rate is justified, SBA will consider the 

following factors: 

(1) The degree to which a non-Federal 

entity has been able to defray its 

overhead expenses via those indirect 

costs it has recovered under other, 

concurrent SBA awards; 

(2) The amount of funding that must 

be devoted to conducting program 

activities in order for a project to result 

in meaningful outcomes; and 


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(3) The amount of project funds that 

will remain available for conducting 

program activities after a negotiated rate 

is applied. 

(b) After conducting the analysis 

required in paragraph (a) above, the 

head of each SBA grant program office 

will determine in writing whether there 

is sufficient justification to deviate from 

a negotiated indirect cost rate. 

(c) Where SBA determines that 

deviation from a negotiated rate is 

justified, it will provide a copy of that 

determination to OMB and will inform 

potential applicants of the deviation in 

the corresponding funding 

announcement. 

§ 2701.503 Relation to other audit 

requirements. 

Non-Federal entities that are not 

subject to the requirements of the Single 

Audit Act and that are performing 

projects under SBA awards will be 

required to submit copies of their 

audited financial statements for their 

most recently completed fiscal year. 

Costs associated with the auditing of a 

non-Federal entity’s financial 

statements may be included in its 

negotiations for an indirect cost rate 

agreement in accordance with 2 CFR 

200.425. 

§ 2701.513 Responsibilities. 

For SBA, the Single Audit Senior 

Accountable Official is the Chief 

Administrative Officer. The Single 

Audit Liaison is the Director, Office of 

Grants Management. 

§ 2701.600 Other regulatory guidance. 

(a) In addition to the general 

regulations set forth above and those 

contained in 2 CFR part 200, the 

program-specific regulations governing 

the operation of SBA’s individual grant 

programs may be found in title 13 of the 

Code of Federal Regulations beginning 

at the sections noted below: 

(1) New Markets Venture Capital 

program—13 CFR 108.2000. 

(2) Program for Investment in 

Microentrepreneurs (PRIME)—13 CFR 

119.1. 

(3) Microloan program—13 CFR 

120.700. 

(4) 7(j) Management and Technical 

Assistance program—13 CFR 124.701. 

(5) Small Business Development 

Center program—13 CFR 130.100. 

(b) [Reserved] 

Title 13—Business Credit and 

Assistance 

CHAPTER I—SMALL BUSINESS 

ADMINISTRATION 

PART 143—[REMOVED AND 

RESERVED] 

■ 2. Remove and reserve part 143. 

Maria Contreras-Sweet, 

Administrator, U.S. Small Business 

Administration. 

Department of Justice 

For the reasons set forth in the 

common preamble, and under the 

authority of 5 U.S.C. 301 and the 

authorities listed below, 2 CFR chapter 

XXVIII and 28 chapter I are amended as 

follows: 

Title 2—Grants and Agreements 

CHAPTER XXVIII—DEPARTMENT OF 

JUSTICE 

■ 1. Part 2800 is added to Title 2, 

Chapter XXVIII of the Code of Federal 

Regulations to read as follows: 

PART 2800—UNIFORM 

ADMINISTRATIVE REQUIREMENTS, 

COST PRINCIPLES, AND AUDIT 

REQUIREMENTS FOR FEDERAL 

AWARDS BY THE DEPARTMENT OF 

JUSTICE 

Sec. 

2800.101 Adoption of 2 CFR part 200. 

2800.313 Equipment. 

2800.314 Supplies. 

Authority: 5 U.S.C. 301; 28 U.S.C. 509; 28 

U.S.C. 530C(a)(4); 42 U.S.C. 3789; 2 CFR part 

200. 

§ 2800.101 Adoption of 2 CFR Part 200. 

Under the authority listed above, the 

Department of Justice adopts the Office 

of Management and Budget (OMB) 

Guidance in 2 CFR part 200, except for 

2 CFR 200.313 and 2 CFR 200.314, 

which are supplemented by the 

corresponding sections (e.g., § 2800.313 

supplements § 200.313) of this part. 

Thus, this part gives regulatory effect to 

the OMB guidance and supplements the 

guidance as needed for the Department. 

§ 2800.313 Equipment. 

Title I of the Omnibus Crime Control 

and Safe Streets Act of 1968, Public Law 

90–351, section 808 (42 U.S.C. 3789), 

creates a special rule for disposition and 

use of equipment and supplies 

purchased by funds made available 

under that Title, which rule, where 

applicable, supersedes any conflicting 

provisions of 2 CFR 200.313. Section 

808 currently provides that such 

equipment and supplies shall vest in the 

criminal justice agency or nonprofit 

organization that purchased the 

property if such agency or nonprofit 

certifies to the appropriate State office 

(as indicated in the statute) that it will 

use the property for criminal justice 

purposes, and further provides that, if 

such certification is not made, title to 

the property shall vest in the State 

office, which shall seek to have the 

property used for criminal justice 

purposes elsewhere in the State prior to 

using it or disposing of it in any other 

manner. 

§ 2800.314 Supplies. 

Title I of the Omnibus Crime Control 

and Safe Streets Act of 1968, Public Law 

90–351, section 808 (42 U.S.C. 3789) 

creates a special rule for disposition and 

use of equipment and supplies 

purchased by funds made available 

under that Title, which rule, where 

applicable, supersedes any conflicting 

provisions of § 200.314. Section 808 

currently provides that such equipment 

and supplies shall vest in the criminal 

justice agency or nonprofit organization 

that purchased the property if such 

agency or nonprofit certifies to the 

appropriate State office (as indicated in 

the statute) that it will use the property 

for criminal justice purposes, and 

further provides that, if such 

certification is not made, title to the 

property shall vest in the State office, 

which shall seek to have the property 

used for criminal justice purposes 

elsewhere in the State prior to using it 

or disposing of it in any other manner. 

Title 28—Judicial Administration 

CHAPTER I—DEPARTMENT OF JUSTICE 

PARTS 66 and 70 [Removed] 

■ 2. Remove Parts 66 and 70. 

James M. Cole, 

Deputy Attorney General. 

Department of Labor 

For the reasons set forth in the 

common preamble, the Department of 

Labor (DOL) establishes Chapter XXIX 

(consisting of Part 2900) in Title 2, of 

the Code of Federal Regulations to read 

as follows: 

CHAPTER XXIX—DEPARTMENT OF LABOR 

PART 2900—UNIFORM 

ADMINISTRATIVE REQUIREMENTS, 

COST PRINCIPLES, AND AUDIT 

REQUIREMENTS FOR FEDERAL 

AWARDS 

Subpart A—Acronyms and Definitions 

Sec. 

2900.1 Budget. 

2900.2 Non-Federal entity. 

2900.3 Questioned cost. 


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Subpart B—General Provisions 

2900.4 Adoption of 2 CFR part 200. 

Subpart C—Pre-Federal Award 

Requirements and Contents of Federal 

Awards 

2900.5 Federal awarding agency review of 

merit of proposals. 

Subpart D—Post Federal Award 

Requirements 

2900.6 Advance Payment. 

2900.7 Payment. 

2900.8 Cost sharing or matching. 

2900.9 Revision of budget and program 

plans. 

2900.10 Prior approval requests. 

2900.11 Revision of budget and program 

plans including extension of the period 

of performance. 

2900.12 Revision of budget and program 

plans approval from Grant Officers. 

2900.13 Intangible property. 

2900.14 Financial reporting. 

2900.15 Closeout. 

Subpart E—Cost Principles 

2900.16 Prior written approval (prior 

approval) 

2900.17 Adjustment of negotiated IDC 

rates. 

2900.18 Contingency provisions. 

2900.19 Student activity costs. 

Subpart F—Audit Requirements 

2900.20 Federal Agency Audit 

Responsibilities. 

2900.21 Management decision. 

2900.22 Audit Requirements, Appeal 

Process for Department of Labor 

Recipients. 

Authority: 5 U.S.C. 301; 2 CFR 200. 

Subpart A—Acronyms and Definitions 

§ 2900.1 Budget. 

In the DOL, approval of the budget as 

awarded does not constitute prior 

approval of those items requiring prior 

approval, including those items the 

Federal Awarding agency specifies as 

requiring prior approval. See § 200.407 

for more information about prior 

approval. (See 2 CFR 200.8) 

§ 2900.2 Non-Federal entity. 

In the DOL, Non-Federal entity means 

a state, local government, Indian tribe, 

institution of higher education (IHE), 

for-profit entity, foreign public entity, 

foreign organization or nonprofit 

organization that carries out a Federal 

award as a recipient or subrecipient. 

(See 2 CFR 200.69) 

§ 2900.3 Questioned cost. 

In the DOL, in addition to the 

guidance contained in 2 CFR 200.84, a 

Questioned cost means a cost that is 

questioned by an auditor, Federal 

Project Officer, Grant Officer, or other 

authorized Awarding agency 

representative because of an audit 

finding: 

(a) Which resulted from a violation or 

possible violation of a statute, 

regulation, or the terms and conditions 

of a Federal award, including for funds 

used to match Federal funds; 

(b) Where the costs, at the time of the 

audit, are not supported by adequate 

documentation; or 

(c) Where the costs incurred appear 

unreasonable and do not reflect the 

actions a prudent person would take in 

the circumstances. 

Subpart B—General Provisions 

§ 2900.4 Adoption of 2 CFR Part 200. 

Under the authority listed above, the 

Department of Labor adopts the Office 

of Management and Budget (OMB) 

Guidance in the Uniform 

Administrative Requirements, Cost 

Principles, and Audit Requirements for 

Federal Awards to Non-Federal Entities 

(subparts A through F of 2 CFR 200), as 

supplemented by this part, as the 

Department of Labor policies and 

procedures for financial assistance 

administration. This part satisfies the 

requirements of 2 CFR 200.110(a) and 

gives regulatory effect to the OMB 

guidance as supplemented by this part. 

The DOL also has programmatic and 

administrative regulations located in 20 

and 29 CFR. 

Subpart C—Pre-Federal Award 

Requirements and Contents of Federal 

Awards 

§ 2900.5 Federal awarding agency review 

of merit of proposals. 

In the DOL, audits and monitoring 

reports containing findings, issues of 

non-compliance or questioned costs are 

in addition to reports and findings from 

audits performed under Subpart F— 

Audit Requirements of this Part or the 

reports and findings of any other 

available audits; and (See 2 CFR 

200.205(c)(4)) 

Subpart D—Post Federal Award 

Requirements 

§ 2900.6 Advance Payment. 

In the DOL, except as authorized 

under 2 CFR 200.207, specific 

conditions, the non-Federal entity must 

be paid in advance. (See 2 CFR 

200.305(b)(1)) 

§ 2900.7 Payment. 

In addition to the guidance set forth 

in 2 CFR 200.305 (b)(2), for Federal 

awards from the Department of Labor, 

the non-Federal entity should liquidate 

existing advances before it requests 

additional advances. 

§ 2900.8 Cost sharing or matching. 

In addition to the guidance set forth 

in 2 CFR 200.306(b), for Federal awards 

from the Department of Labor, the nonFederal entity accounts for funds used 

for cost sharing or match within their 

accounting systems as the funds are 

expended. 

§ 2900.9 Revision of budget and program 

plans. 

In the DOL, approval of the budget as 

awarded does not constitute prior 

approval of those items requiring prior 

approval, including those items the 

Federal awarding agency specifies as 

requiring prior approval (see 2 CFR 

200.407 and 2 CFR 200.308(a)) 

§ 2900.10 Prior approval requests. 

In addition to the guidance set forth 

in 2 CFR 200.308(c), for Federal awards 

from the Department of Labor, the nonFederal entity must request prior 

approval actions at least 30 days prior 

to the effective date of the requested 

action. 

§ 2900.11 Revision of budget and program 

plans including extension of the period of 

performance. 

In addition to the guidance set forth 

in 2 CFR 200.308(c), for Federal awards 

from the Department of Labor, the nonFederal entity must request prior 

approval for an extension to the period 

of performance. 

§ 2900.12 Revision of budget and program 

plans approval from Grant Officers. 

In the DOL, unless otherwise noted in 

the Grant Agreement, prior written 

approval must come from the Grant 

Officer (See 2 CFR 200.308(d)) 

§ 2900.13 Intangible property. 

In addition to the guidance set forth 

in 2 CFR 200.315(d)(3), the Department 

of Labor requires intellectual property 

developed under a competitive Federal 

award process to be licensed under a 

Creative Commons Attribution license. 

This license allows subsequent users to 

copy, distribute, transmit and adapt the 

copyrighted work and requires such 

users to attribute the work in the 

manner specified by the grantee. 

§ 2900.14 Financial reporting. 

In addition to the guidance set forth 

in 2 CFR 200.327, for Federal awards 

from the Department of Labor, the DOL 

awarding agency will prescribe whether 

the report will be on a cash or an 

accrual basis. If the DOL awarding 

agency requires reporting on an accrual 

basis and the recipient’s accounting 

system is not on the accrual basis, the 

recipient will not be required to convert 

its accounting system, but must develop 


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and report such accrual information 

through best estimates based on an 

analysis of the documentation on hand. 

§ 2900.15 Closeout. 

In addition to the guidance set forth 

in 2 CFR 200.343(b), for Federal awards 

from the Department of Labor, the nonFederal entity must liquidate all 

obligations and/or accrued expenditures 

incurred under the Federal award. 

Subpart E—Cost Principles 

§ 2900.16 Prior written approval (prior 

approval). 

In addition to the guidance set forth 

in 2 CFR 200.407, for Federal awards 

from the Department of Labor, the nonFederal entity must request prior 

written approval which should include 

the timeframe or scope of the agreement 

and be submitted not less than 30 days 

before the requested action is to occur. 

Unless otherwise noted in the Grant 

Award, the Grant Officer is the only 

official with the authority to provide 

prior written approval (prior approval). 

Items included in the statement of work 

or budget as awarded does not 

constitute prior approval. 

§ 2900.17 Adjustment of negotiated IDC 

rates. 

In the DOL, in addition to the 

requirements under 2 CFR 200.411(a)(2), 

adjustments to indirect cost rates 

resulting from a determination of 

unallowable costs being included in the 

rate proposal may result in the 

reissuance of negotiated rate agreement. 

§ 2900.18 Contingency provisions. 

In addition to the guidance set forth 

in 2 CFR 200.433(c), for Federal awards 

from the Department of Labor, excepted 

citations include 2 CFR 200.333 

Retention requirements for records, and 

2 CFR 200.334 Requests for transfers of 

records. 

§ 2900.19 Student activity costs. 

In the Department of Labor, the 

provisions of 2 CFR 200.469 apply 

unless the activities meet a program 

requirement and have prior written 

approval from the Federal awarding 

agency. 

Subpart F—Audit Requirements 

§ 2900.20 Federal Agency Audit 

Responsibilities. 

In the DOL, in addition to 2 CFR 

200.513 the department employs a 

collaborative resolution process with 

non-federal entities. 

(a) Department of Labor Cooperative 

Audit Resolution Process. The DOL 

official(s) responsible for resolution 

shall promptly evaluate findings and 

recommendations reported by auditors 

and the corrective action plan 

developed by the recipient to determine 

proper actions in response to audit 

findings and recommendations. The 

process of audit resolution includes at a 

minimum an initial determination, an 

informal resolution period, and a final 

determination. 

(1) Initial determination. After the 

conclusion of any comment period for 

audits provided the recipient/

contractor, the responsible DOL 

official(s) shall make an initial 

determination on the allowability of 

questioned costs or activities, 

administrative or systemic findings, and 

the corrective actions outlined by the 

recipient. Such determination shall be 

based on applicable statutes, 

regulations, administrative directives, or 

terms and conditions of the grant/

contract award instrument. 

(2) Informal resolution. The recipient/ 

contractor shall have a reasonable 

period of time (as determined by the 

DOL official(s) responsible for audit 

resolution) from the date of issuance of 

the initial determination to informally 

resolve those matters in which the 

recipient/contractor disagrees with the 

decisions of the responsible DOL 

official(s). 

(3) Final determination. After the 

conclusion of the informal resolution 

period, the responsible DOL official(s) 

shall issue a final determination that: 

(i) As appropriate, indicate that efforts 

to informally resolve matters contained 

in the initial determination have either 

been successful or unsuccessful; 

(ii) Lists those matters upon which 

the parties continue to disagree; 

(iii) Lists any modifications to the 

factual findings and conclusions set 

forth in the initial determination; 

(iv) Lists any sanctions and required 

corrective actions; and 

(v) Sets forth any appeal rights. 

(4) Time limit. Insofar as possible, the 

requirements of this section should be 

met within 180 days of the date the final 

approved audit report is received by the 

DOL official(s) responsible for audit 

resolution. 

§ 2900.21 Management decision. 

In the DOL, ordinarily, a management 

decision is issued within six months of 

receipt of an audit from the audit liaison 

of the Office of the Inspector General. 

The pass-through entity responsible for 

issuing a management decision must do 

so within twelve months of acceptance 

of the audit report by the FAC. The 

auditee must initiate and proceed with 

corrective action as rapidly as possible 

and should begin corrective action no 

later than upon receipt of the audit 

report. (See 2 CFR 200.521(d)) 

§ 2900.22 Audit Requirements—Appeal 

Process for Department of Labor 

Recipients. 

In the DOL, the DOL grantor agencies 

shall determine which of the two appeal 

options set forth in paragraphs (a) and 

(b) of this section the recipient may use 

to appeal the final determination of the 

grant officer. All awards within the 

same Federal financial assistance 

program shall follow the same appeal 

procedure. 

(a) Appeal to the head of the grantor 

agency, or his/her designee, for which 

the audit was conducted. 

(1) Jurisdiction. (i) Request for 

hearing. Within 21 days of receipt of the 

grant officer’s final determination, the 

recipient may transmit, by certified 

mail, return receipt requested, a request 

for hearing to the head of the grantor 

agency, or his/her designee, as noted in 

the final determination. A copy must 

also be sent to the grant officer who 

signed the final determination. 

(ii) Statement of issues. The request 

for a hearing shall be accompanied by 

a copy of the final determination, if 

issued, and shall specifically state those 

portions of the final determination upon 

which review is requested. Those 

portions of the final determination not 

specified for review shall be considered 

resolved and not subject to further 

review. 

(iii) Failure to request review. When 

no timely request for a hearing is made, 

the final determination shall constitute 

final action by the Secretary of Labor 

and shall not be subject to further 

review. 

(2) Conduct of hearings. The grantor 

agency shall establish procedures for the 

conduct of hearings by the head of the 

grantor agency, or his/her designee. 

(3) Decision of the head of the grantor 

agency, or his/her designee. The head of 

the grantor agency, or his/her designee, 

should render a written decision no 

later than 90 days after the closing of the 

record. This decision constitutes final 

action of the Secretary. 

(b) Appeal to the DOL Office of 

Administrative Law Judges. (1) 

Jurisdiction. (i) Request for hearing. 

Within 21 days of receipt of the grant 

officer’s final determination, the 

recipient may transmit by certified mail, 

return receipt requested, a request for 

hearing to the Chief Administrative Law 

Judge, United States Department of 

Labor, 800 K Street NW., Suite 400, 

Washington, DC 20001, with a copy to 

the grant officer who signed the final 

determination. The Chief 

Administrative Law Judge shall 


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designate an administrative law judge to 

hear the appeal. 

(ii) Statement of issues. The request 

for a hearing shall be accompanied by 

a copy of the final determination, if 

issued, and shall specifically state those 

portions of the final determination upon 

which review is requested. Those 

portions of the final determination not 

specified for review shall be considered 

resolved and not subject to further 

review. 

(iii) Failure to request review. When 

no timely request for a hearing is made, 

the final determination shall constitute 

final action by the Secretary and shall 

not be subject to further review. 

(2) Conduct of hearings. The DOL 

Rules of Practice and Procedure for 

Administrative Hearings Before the 

Office of Administrative Law Judges, set 

forth at 29 CFR part 18, shall govern the 

conduct of hearings under paragraph (b) 

of this section. 

(3) Decision of the administrative law 

judge. The administrative law judge 

should render a written decision no 

later than 90 days after the closing of the 

record. 

(4) Filing exceptions to decision. The 

decision of the administrative law judge 

shall constitute final action by the 

Secretary of Labor, unless, within 21 

days after receipt of the decision of the 

administrative law judge, a party 

dissatisfied with the decision or any 

part thereof has filed exceptions with 

the Secretary, specifically identifying 

the procedure or finding of fact, law, or 

policy with which exception is taken. 

Any exceptions not specifically urged 

shall be deemed to have been waived. 

Thereafter, the decision of the 

administrative law judge shall become 

the decision of the Secretary, unless the 

Secretary, within 30 days of such filing, 

has notified the parties that the case has 

been accepted for review. 

(5) Review by the Secretary of Labor. 

Any case accepted for review by the 

Secretary shall be decided within 180 

days of such acceptance. If not so 

decided, the decision of the 

administrative law judge shall become 

the final decision of the Secretary. 

T. Michael Kerr, 

Assistant Secretary for Administration and 

Management. 

Department of Homeland Security 

For the reasons set forth in the 

common preamble, Part 3002 is added 

to Title 2, Subtitle B, Chapter XXX of 

the Code of Federal Regulations to read 

as follows: 

Title 2—Grants and Agreements 

CHAPTER XXX—DEPARTMENT OF 

HOMELAND SECURITY 

PART 3002—UNIFORM 

ADMINISTRATIVE REQUIREMENTS, 

COST PRINCIPLES, AND AUDIT 

REQUIREMENTS FOR FEDERAL 

AWARDS 

Authority: 31 U.S.C. 503, 2 CFR part 200, 

and as noted in specific sections. 

§ 3002.10 Adoption of 2 CFR Part 200. 

Under the authority listed above, the 

Department of Homeland Security 

adopts the Office of Management and 

Budget (OMB) Guidance in 2 CFR part 

200. Thus, this part gives regulatory 

effect to the OMB guidance and 

supplements the guidance as needed for 

the Department. 

Department of Homeland Security 

Federal Emergency Management Agency 

For the reasons discussed in the 

common preamble, and under the 

authority of 5 U.S.C. 301 and the 

authorities listed below, the Federal 

Emergency Management Agency 

amends 44 CFR Chapter I as follows: 

Title 44—Emergency Management and 

Assistance 

CHAPTER I—FEDERAL EMERGENCY 

MANAGEMENT AGENCY 

PART 13—[REMOVED AND 

RESERVED] 

■ 1. Remove and reserve part 13. 

PART 78—FLOOD MITIGATION 

ASSISTANCE 

■ 2. The authority citation for part 78 

continues to read as follows: 

Authority: 6 U.S.C. 101; 42 U.S.C. 4001 et 

seq.; 42 U.S.C. 4104c, 4104d; Reorganization 

Plan No. 3 of 1978, 43 FR 41943, 3 CFR, 1978 

Comp., p. 329; E.O. 12127, 44 FR 19367, 3 

CFR, 1979 Comp., p. 376; E.O. 12148, 44 FR 

43239, 3 CFR, 1979 Comp., p. 412; E.O. 

13286, 68 FR 10619, 3 CFR, 2003 Comp., p. 

166. 

■ 3. Section 78.3 is amended by revising 

paragraphs (b)(5) and (c)(4) as follows: 

§ 78.3 Responsibilities. 

(b) * * * 

(5) Submit performance and financial 

reports to FEMA in compliance with 2 

CFR 200.327 and 200.328. 

(c) * * * 

(4) Comply with FEMA requirements, 

2 CFR parts 200 and 3002, the grant 

agreement, applicable Federal, State and 

local laws and regulations (as 

applicable); and 

* * * * * 

■ 4. Section 78.13 is amended by 

revising the last sentence of paragraph 

(a) and revising paragraph (b) as follows: 

§ 78.13 Grant administration. 

(a) * * * Allowable costs will be 

governed by 2 CFR parts 200 and 3002. 

(b) The grantee must submit 

performance and financial reports to 

FEMA and must ensure that all 

subgrantees are aware of their 

responsibilities under 2 CFR parts 200 

and 3002. 

* * * * * 

PART 79—FLOOD MITIGATION 

GRANTS 

■ 5. The authority citation for part 79 

continues to read as follows: 

Authority: 6 U.S.C. 101; 42 U.S.C. 4001 et 

seq.; 42 U.S.C. 4104c, 4104d; Reorganization 

Plan No. 3 of 1978, 43 FR 41943, 3 CFR, 1978 

Comp., p. 329; E.O. 12127, 44 FR 19367, 3 

CFR, 1979 Comp., p. 376; E.O. 12148, 44 FR 

43239, 3 CFR, 1979 Comp., p. 412; E.O. 

13286, 68 FR 10619, 3 CFR, 2003 Comp., p. 

166. 

■ 6. Section 79.3 is amended by revising 

paragraphs (b)(6) and (d)(4) as follows: 

§ 79.3 Responsibilities. 

(b) * * * 

(6) Comply with program 

requirements under this part, grant 

management requirements identified 

under 2 CFR parts 200 and 3002, the 

grant agreement articles, and other 

applicable Federal, State, tribal and 

local laws and regulations. 

(d) * * * 

(4) Comply with program 

requirements under this part, grant 

management requirements identified 

under 2 CFR parts 200 and 3002, the 

grant agreement articles, and other 

applicable Federal, State, tribal and 

local laws and regulations. 

■ 7. Section 79.8 is amended by revising 

paragraph (a) introductory text and 

revising the last sentence of paragraph 

(a)(2) to read as follows: 

§ 79.8 Allowable costs. 

(a) General. General policies for 

allowable costs are addressed in 2 CFR 

200.101, 200.102, 200.400–200.475. 

* * * * * 

(2) * * * In addition, all costs must 

be in accordance with the provisions of 

2 CFR parts 200 and 3002. 

* * * * * 

■ 8. Section 79.9 is amended by revising 

the last sentence of paragraph (a) as 

follows: 

§ 79.9 Grant administration. 

(a) * * * In addition, grantees are 

responsible for ensuring that all 

subgrantees are aware of and follow the 


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requirements contained in 2 CFR parts 

200 and 3002. 

* * * * * 

PART 152—ASSISTANCE TO 

FIREFIGHTERS GRANT PROGRAM 

■ 9. The authority citation for part 152 

continues to read as follows: 

Authority: Federal Fire Protection and 

Control Act, 15 U.S.C. 2201 et seq. 

■ 10. Section 152.7 is amended by 

revising the third sentence of paragraph 

(a) and the first sentence of paragraph 

(c) to read as follows: 

§ 152.7 Grant payment, reporting and 

other requirements. 

(a) * * * Grantees may request funds 

from FEMA as reimbursement for 

expenditures made under the grant 

program or they may request funds for 

immediate cash needs under 2 CFR 

200.305. * * * 

(c) All grantees must follow their own 

established procurement process when 

buying anything with Federal grant 

funds as provided in 2 CFR 200.317– 

200.326. * * * 

* * * * * 

PART 201—MITIGATION PLANNING 

■ 11. The authority citation for part 201 

continues to read as follows: 

Authority: Robert T. Stafford Disaster 

Relief and Emergency Assistance Act, 42 

U.S.C. 5121 through 5207; Reorganization 

Plan No. 3 of 1978, 43 FR 41943, 3 CFR, 1978 

Comp., p. 329; Homeland Security Act of 

2002, 6 U.S.C. 101; E.O. 12127, 44 FR 19367, 

3 CFR, 1979 Comp., p. 376; E.O. 12148, 44 

FR 43239, 3 CFR, 1979 Comp., p. 412; E.O. 

13286, 68 FR 10619, 3 CFR, 2003 Comp., p. 

166. 

■ 12. Section 201.4 is amended by 

revising paragraph (c)(7) to read as 

follows: 

§ 201.4 Standard State Mitigation Plans. 

* * * * * 

(c) * * * 

(7) Assurances. The plan must 

include assurances that the State will 

comply with all applicable Federal 

statutes and regulations in effect with 

respect to the periods for which it 

receives grant funding, including 2 CFR 

parts 200 and 3002. 

* * * * * 

■ 13. Section 201.7 is amended by 

revising paragraph (c)(6) to read as 

follows: 

§ 201.7 Tribal Mitigation Plans. 

* * * * * 

(c) * * * 

(6) Assurances. The plan must 

include assurances that the Indian 

Tribal government will comply with all 

applicable Federal statutes and 

regulations in effect with respect to the 

periods for which it receives grant 

funding, including 2 CFR parts 200 and 

3002. 

* * * * * 

PART 204—FIRE MANAGEMENT 

ASSISTANCE GRANT PROGRAM 

■ 14. The authority citation for part 204 

continues to read as follows: 

Authority: 42 U.S.C. 5121 through 5207; 6 

U.S.C. 101 et seq.; Department of Homeland 

Security Delegation 9001.1. 

■ 15. Section 204.42 is amended by 

revising paragraph (a)(3) to read as 

follows: 

§ 204.42 Eligible Costs. 

(a) * * * 

(3) Grantees will award Federal funds 

to subgantees under State law and 

procedure and complying with 2 CFR 

parts 200 and 3002. 

* * * * * 

■ 16. Section 204.53 is amended by 

revising paragraph (b)(2) to read as 

follows: 

§ 204.53 Certifying costs and payments. 

(b) * * * 

(2) In compliance with 2 CFR 200.305 

and U.S. Treasury 31 CFR part 205, 

Cash Management Improvement Act. 

■ 17. Section 204.63 is revised to read 

as follows: 

§ 204.63 Allowable costs. 

2 CFR part 200, subpart E—Cost 

Principles establishes general policies 

for determining allowable costs. 

(a) FEMA will reimburse direct costs 

for the administration of a fire 

management assistance grant under 2 

CFR part 200. 

(b) FEMA will reimburse indirect 

costs for the administration of a fire 

management assistance grant in 

compliance with the Grantee’s approved 

indirect cost rate under 2 CFR part 200. 

(c) Management costs as defined in 44 

CFR part 207 do not apply to this 

section. 

■ 18. Section 204.64 is amended by 

revising paragraph (b)(1) to read as 

follows: 

§ 204.64 Reporting and audit 

requirements. 

(b) * * * 

(1) Audit. Audits will be performed, 

for both the Grantee and the 

subgrantees, under 2 CFR 200.500– 

200.520. 

* * * * * 

PART 206—FEDERAL DISASTER 

ASSISTANCE 

■ 19. The authority citation for part 206 

continues to read as follows: 

Authority: Robert T. Stafford Disaster 

Relief and Emergency Assistance Act, 42 

U.S.C. 5121 through 5207; Homeland 

Security Act of 2002, 6 U.S.C. 101 et seq.; 

Department of Homeland Security Delegation 

9001.1; sec. 1105, Pub. L. 113–2, 127 Stat. 43 

(42 U.S.C. 5189a note). 

■ 20. Section 206.16 is amended by 

revising paragraph (a) to read as follows: 

§ 206.16 Audit and investigations. 

(a) Subject to the provisions of 

chapter 75 of title 31, United States 

Code, and 2 CFR parts 200 and 3002, 

relating to requirements for single 

audits, the Administrator, the Assistant 

Administrator for the Disaster 

Operations Directorate, or the Regional 

Administrator shall conduct audits and 

investigations as necessary to assure 

compliance with the Stafford Act, and 

in connection therewith may question 

such persons as may be necessary to 

carry out such audits and investigations. 

* * * * * 

■ 21. Section 206.120 is amended by 

revising paragraphs (f)(2)(i), (f)(6), and 

the first sentence of paragraph (f)(7) to 

read as follows: 

§ 206.120 State administration of other 

needs assistance. 

* * * * * 

(f) * * * 

(2) Reporting requirements. (i) The 

State shall provide financial status 

reports as required by 2 CFR 200.327. 

* * * * * 

(6) Audit requirements. Pursuant to 2 

CFR 200.500–200.520, uniform audit 

requirements apply to all grants 

provided under this subpart. 

(7) Document retention. Pursuant to 2 

CFR 200.333–200.337, States are 

required to retain records, including 

source documentation, to support 

expenditures/costs incurred against the 

grant award, for 3 years from the date 

of submission to FEMA of the Financial 

Status Report. * * * 

■ 22. Section 206.171 is amended by 

revising paragraphs (f)(4)(v) and (g)(3) to 

read as follows: 

§ 206.171 Crisis counseling assistance 

and training. 

* * * * * 

(f) * * * 

(4) * * * 

(v) Any funds granted pursuant to an 

immediate services program, paragraph 

(f) of this section, shall be expended 

solely for the purposes specified in the 

approved application and budget, these 


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regulations, the terms and conditions of 

the award, and the applicable principles 

prescribed in 2 CFR parts 200 and 3002. 

* * * * * 

(g) * * * 

(3) Reporting requirements. The State 

shall submit the following reports to the 

Regional Administrator, the Secretary, 

and the State Coordinating Officer: 

(i) Quarterly progress reports, as 

required by the Regional Administrator 

or the Secretary, due 30 days after the 

end of the reporting period. This is 

consistent with 2 CFR 200.328, 

Monitoring and Reporting Program 

Performance; 

(ii) A final program report, to be 

submitted within 90 days after the end 

of the program period. This is also 

consistent with 2 CFR 200.328, 

Monitoring and Reporting Program 

Performance; 

(iii) An accounting of funds, in 

accordance with 2 CFR 200.327, 

Financial Reporting, to be submitted 

with the final program report; and 

(iv) Such additional reports as the 

Regional Administrator, Secretary, or 

SCO may require. 

* * * * * 

■ 23. Section 206.200 is amended by 

revising the first sentence of paragraph 

(b)(2) to read as follows: 

§ 206.200 General. 

* * * * * 

(b) * * * 

(2) The regulations entitled ‘‘Uniform 

Administrative Requirements, Cost 

Principles, and Audit Requirements for 

Federal Awards,’’ published at 2 CFR 

parts 200 and 3002, place requirements 

on the State in its role as Grantee and 

gives the Grantee discretion to 

administer federal programs under their 

own procedures. * * * 

■ 24. Section 206.202(a) is amended by 

revising the last sentence as follows: 

§ 206.202 General. 

(a) General. * * * As Grantee you are 

responsible for processing subgrants to 

applicants under 2 CFR parts 200 and 

3002, and 44 CFR part 206, and your 

own policies and procedures. 

* * * * * 

■ 25. Section 206.204(b) is revised to 

read as follows: 

§ 206.204 Project performance. 

* * * * * 

(b) Advances of funds. Advances of 

funds will be made in accordance with 

2 CFR 200.305. 

* * * * * 

■ 26. Section 206.205(b)(1) is amended 

by removing the second sentence and 

adding a sentence in its place to read as 

follows: 

§ 206.205 Payment of claims. 

* * * * * 

(b) Large projects. (1) * * * In 

submitting the accounting the Grantee 

shall certify that reported costs were 

incurred in the performance of eligible 

work, that the approved work was 

completed, that the project is in 

compliance with the provisions of the 

FEMA-State Agreement, and that 

payments for that project have been 

made in accordance with 2 CFR 

200.305. 

* * * * * 

■ 27. Section 206.207 is amended by 

revising paragraphs (a), (b)(1)(iii)(G) and 

(H), and (c) as follows: 

§ 206.207 Administrative and audit 

requirements. 

(a) General. Uniform administrative 

requirements which are set forth in 2 

CFR parts 200 and 3002 apply to all 

disaster assistance grants and subgrants. 

(b) * * * 

(1) * * * 

(iii) * * * 

(G) Compliance with the 

administrative requirements of 2 CFR 

parts 200 and 3002 and 44 CFR part 206; 

(H) Compliance with the audit 

requirements of 2 CFR parts 200 and 

3002; 

* * * * * 

(c) Audit—(1) Nonfederal audit. For 

grantees or subgrantees, requirements 

for nonfederal audit are contained in 2 

CFR parts 200 and 3002. 

(2) Federal audit. In accordance with 

2 CFR part 200 and 3002, FEMA may 

elect to conduct a Federal audit of the 

disaster assistance grant or any of the 

subgrants. 

■ 28. Section 206.436 is amended by 

revising the second sentence of 

paragraph (a) to read as follows: 

§ 206.436 Application procedures. 

(a) * * * Under the HMGP, the State 

or Indian tribal government is the 

grantee and is responsible for processing 

subgrants to applicants in accordance 

with 2 CFR parts 200 and 3002. * * * 

* * * * * 

■ 29. Section 206.437 is amended by 

revising paragraph (b)(4)(xi) as follows: 

§ 206.437 State administrative plan. 

* * * * * 

(b) * * * 

(4) * * * 

(xi) Comply with the administrative 

and audit requirements of 2 CFR parts 

200 and 3002 and 44 CFR part 206. 

* * * * * 

■ 30. Section 206.438 is amended by 

revising the first sentences of 

paragraphs (a) and (e) as follows: 

§ 206.438 Project management. 

(a) General. The State serving as 

grantee has primary responsibility for 

project management and accountability 

of funds as indicated in 2 CFR parts 200 

and 3002 and 44 CFR part 206. * * * 

(e) Audit requirements. Uniform audit 

requirements as set forth in 2 CFR parts 

200 and 3002 and 44 CFR part 206 

apply to all grant assistance provided 

under this subpart. * * * 

* * * * * 

■ 31. Section 206.439(a) is revised to 

read as follows: 

§ 206.439 Allowable costs. 

(a) General requirements for 

determining allowable costs are 

established in 2 CFR part 200, Cost 

Principles. Exceptions to those 

requirements as allowed in 2 CFR 

200.101 and 2 CFR 200.102 are 

explained in paragraph (b) of this 

section. 

* * * * * 

PART 207—MANAGEMENT COSTS 

■ 32. The authority citation for part 207 

continues to read as follows: 

Authority: Robert T. Stafford Disaster 

Relief and Emergency Assistance Act, 42 

U.S.C. 5121 through 5206; Reorganization 

Plan No. 3 of 1978, 43 FR 41943, 3 CFR, 1978 

Comp., p. 329; Homeland Security Act of 

2002, 6 U.S.C. 101; E.O. 12127, 44 FR 19367, 

3 CFR, 1979 Comp., p. 376; E.O. 12148, 44 

FR 43239, 3 CFR, 1979 Comp., p. 412; E.O. 

13286, 68 FR 10619, 3 CFR, 2003 Comp., p. 

166. 

■ 33. Section 207.4 is amended by 

revising the second sentence of 

paragraph (a) to read as follows: 

§ 207.4 Responsibilities. 

(a) * * * These responsibilities are 

unique to the administration of this part 

and are in addition to common Federal 

Government requirements of grantees 

and subgrantees, consistent with OMB 

circulars and other applicable 

requirements, such as 2 CFR parts 200 

and 3002. 

* * * * * 

■ 34. Section 207.6 is amended by 

revising the first sentence of paragraph 

(a) to read as follows: 

§ 207.6 Use of funds. 

(a) The grantee or subgrantee must use 

management cost funds provided under 

this part in accordance with 2 CFR part 

200, subpart E—Cost Principles, and 

only for costs related to administration 

of PA or HMGP, respectively. * * * 

* * * * * 

■ 35. Section 207.8 is amended by 

revising the first sentence of paragraph 

(a), the last sentence of (b)(3), (e), and 


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the first sentence of (f) to read as 

follows: 

§ 207.8 Management cost funding 

oversight. 

(a) General. The grantee has primary 

responsibility for grants management 

activities and accountability of funds 

provided for management costs as 

required by 2 CFR parts 200 and 3002, 

especially 2 CFR 200.301–200.304 and 

200.317–200.326. * * * 

(b) * * * 

(3) * * * FEMA will deobligate any 

funds not liquidated by the grantee in 

accordance with 2 CFR 200.309 and 

200.343(b). 

(e) Audit requirements. Uniform audit 

requirements in 2 CFR 200.500–200.520 

apply to all assistance provided under 

this part. 

(f) Document retention. In compliance 

with State law and procedures and with 

2 CFR 200.333–200.337, grantees must 

retain records, including source 

documentation to support expenditures/ 

costs incurred for management costs, for 

3 years from the date of submission of 

the final Financial Status Report to 

FEMA that is required for PA and 

HMGP. * * * 

■ 36. Section 207.9 is amended by 

revising the first sentences of paragraph 

(b) introductory text and (b)(1)(ii), and 

revising paragraph (c)(1) to read as 

follows: 

§ 207.9 Declarations before November 13, 

2007. 

* * * * * 

(b) Eligible direct costs. Eligible direct 

costs to complete approved activities are 

governed by 2 CFR parts 200 and 3002. 

* * * 

(1) * * * 

(ii) State management administrative 

costs. Except for the items listed in 

paragraph (b)(1)(i) of this section, other 

administrative costs will be paid in 

accordance with 2 CFR part 200, subpart 

E—Cost Principles. * * * 

(c) Eligible indirect costs: (1) Grantee. 

Indirect costs of administering the 

disaster program are eligible in 

accordance with the provisions of 2 CFR 

parts 200 and 3002 if the grantee 

provides FEMA with a current Indirect 

Cost Rate Agreement approved by its 

Cognizant Agency. 

* * * * * 

■ 37. Section 207.10 is amended by 

revising the first sentence of paragraph 

(b) to read as follows: 

§ 207.10 Review of management cost 

rates. 

* * * * * 

(b) In order for FEMA to review the 

management cost rates established, and 

in accordance with 2 CFR parts 200 and 

3002, the grantee and subgrantee must 

document all costs expended for 

management costs (including cost 

overruns). * * * 

PART 208—NATIONAL URBAN 

SEARCH AND RESCUE RESPONSE 

SYSTEM 

■ 38. The authority citation for part 208 

continues to read as follows: 

Authority: Robert T. Stafford Disaster 

Relief and Emergency Assistance Act, 42 

U.S.C. 5121 through 5206; Reorganization 

Plan No. 3 of 1978, 43 FR 41943, 3 CFR, 1978 

Comp., p. 329; Homeland Security Act of 

2002, 6 U.S.C. 101; E.O. 12127, 44 FR 19367, 

3 CFR, 1979 Comp., p. 376; E.O. 12148, 44 

FR 43239, 3 CFR, 1979 Comp., p. 412; E.O. 

13286, 68 FR 10619, 3 CFR, 2003 Comp., p. 

166. 

■ 39. Section 208.7 is amended by 

revising paragraphs (a) and (b) to read 

as follows: 

§ 208.7 Enforcement. 

(a) Remedies for noncompliance. In 

accordance with the provisions of 2 CFR 

200.338, 200.341, and 200.342, if a 

Sponsoring Agency, Participating 

Agency, Affiliated Personnel or other 

System Member materially fails to 

comply with a term of a Cooperative 

Agreement, Memorandum of 

Agreement, System directive or other 

Program Directive, the Assistant 

Administrator may take one or more of 

the actions provided in 2 CFR 

200.338(a)–(f). Any such enforcement 

action taken by the Assistant 

Administrator will be subject to the 

hearings, appeals, and effects of 

suspension and termination provisions 

of 2 CFR 200.341 and 200.342. 

(b) The enforcement remedies 

identified in this section, including 

suspension and termination, do not 

preclude a Sponsoring Agency, 

Participating Agency, Affiliated 

Personnel or other System Member from 

being subject to ‘‘Debarment and 

Suspension’’ under E.O. 12549, as 

amended, in accordance with 2 CFR 

200.338(d). 

* * * * * 

■ 40. Section 208.23 introductory text is 

revised to read as follows: 

§ 208.23 Allowable costs under 

Preparedness Cooperative Agreements. 

System Members may spend Federal 

funds that DHS provides under any 

Preparedness Cooperative Agreement 

and any required matching funds under 

2 CFR part 200, subpart E—Cost 

Principles, and this section to pay 

reasonable, allowable, necessary and 

allocable costs that directly support 

System activities, including the 

following: 

* * * * * 

■ 41. Section 208.26 is revised to read 

as follows: 

§ 208.26 Accountability for use of funds. 

The Sponsoring Agency is 

accountable for the use of funds as 

provided under the Preparedness 

Cooperative Agreement, including 

financial reporting and retention and 

access requirements according to 2 CFR 

200.327 and 200.333–200.337. 

■ 42. Section 208.27 is revised to read 

as follows: 

§ 208.27 Title to equipment. 

Title to equipment purchased by a 

Sponsoring Agency with funds provided 

under a DHS Preparedness Cooperative 

Agreement vests in the Sponsoring 

Agency, provided that DHS reserves the 

right to transfer title to the Federal 

Government or a third party that DHS 

may name, under 2 CFR 200.313(e)(3), 

for example, when a Sponsoring Agency 

indicates or demonstrates that it cannot 

fulfill its obligations under the 

Memorandum of Agreement. 

■ 43. Section 208.33(c) is revised to read 

as follows: 

§ 208.33 Allowable costs. 

* * * * * 

(c) Normal or predetermined 

practices. Consistent with 2 CFR parts 

200 and 3002, Sponsoring Agencies and 

Participating Agencies must adhere to 

their own normal and predetermined 

practices and policies of general 

application when requesting 

reimbursement from DHS except as it 

sets out in this subpart. 

* * * * * 

■ 44. Section 208.46 is revised to read 

as follows: 

§ 208.46 Title to equipment. 

Title to equipment purchased by a 

Sponsoring Agency with funds provided 

under a DHS Response Cooperative 

Agreement vests in the Sponsoring 

Agency, provided that DHS reserves the 

right to transfer title to the Federal 

Government or a third party that DHS 

may name, under 2 CFR 200.313(e)(3), 

when a Sponsoring Agency indicates or 

demonstrates that it cannot fulfill its 

obligations under the Memorandum of 

Agreement. 

PART 304—CONSOLIDATED GRANTS 

TO INSULAR AREAS 

■ 45. The authority citation for part 304 

continues to read as follows: 

Authority: 50 U.S.C. app. 2251 et seq.; 

Reorganization Plan No. 3 of 1978; E.O. 

12148. 


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■ 46. Section 304.5 is revised to read as 

follows: 

§ 304.5 Audits and records. 

(a) Audits. FEMA will maintain 

adequate auditing, accounting and 

review procedures as outlined in FEMA 

guidance material and 2 CFR parts 200 

and 3002. 

(b) Records. Financial records, 

supporting documents, statistical 

records, and all other records pertinent 

to a consolidated grant shall be retained 

for a period of three years from 

submission of final billing and shall be 

available to the Administrator, FEMA, 

and the Comptroller General of the 

United States, all as prescribed in FEMA 

guidance material and in accordance 

with 2 CFR parts 200 and 3002. 

PART 360—STATE ASSISTANCE 

PROGRAMS FOR TRAINING AND 

EDUCATION IN COMPREHENSIVE 

EMERGENCY MANAGEMENT 

■ 47. The authority citation for part 360 

continues to read as follows: 

Authority: Reorganization Plan No. 3 (3 

CFR, 1978 Comp., p. 329); E.O. 12127 (44 FR 

19367); E.O. 12148 (44 FR 43239). 

■ 48. Section 360.4(c)(3)(iii) is revised 

to read as follows: 

§ 360.4 Administrative procedures. 

* * * * * 

(c) * * * 

(3) * * * 

(iii) Standard Form 270 ‘‘Request for 

Advance or Reimbursement’’ as 

required by 2 CFR parts 200 and 3002 

and FEMA General Provisions for 

Cooperative Agreements. 

* * * * * 

PART 361—NATIONAL EARTHQUAKE 

HAZARDS REDUCTION ASSISTANCE 

TO STATE AND LOCAL 

GOVERNMENTS 

■ 49. The authority citation for part 361 

continues to read as follows: 

Authority: Reorganization Plan No. 3 of 

1978, 43 FR 41943, 3 CFR, 1978 Comp., p. 

329; Earthquake Hazards Reduction Act of 

1977, as amended, 42 U.S.C. 7701 et seq.; 

E.O. 12148, 44 FR 43239, 3 CFR, 1979 Comp., 

p. 412; and E.O. 12381, 47 FR 39795, 3 CFR, 

1982 Comp., p. 207. 

■ 50. Section 361.5(c)(8) is revised to 

read as follows: 

§ 361.5 Criteria for program assistance, 

matching contributions, and return of 

program assistance funds. 

* * * * * 

(c) * * * 

(8) Consistent with 2 CFR parts 200 

and 3002. 

* * * * * 

Jeh Charles Johnson, 

Secretary, Department of Homeland Security. 

Institute of Museum and Library 

Services 

For the reasons set forth in the 

common preamble, and under the 

authority of 5 U.S.C. 301, 20 U.S.C. 

9103(h), and the authorities listed 

below, 2 CFR chapter XXXI and 45 CFR 

chapter XI are amended as follows: 

Title 2—Grants and Agreements 

CHAPTER XXXI—INSTITUTE OF MUSEUM 

AND LIBRARY SERVICES 

■ 1. Part 3187 is added to Chapter XXXI 

to read as follows: 

PART 3187—UNIFORM 

ADMINISTRATIVE REQUIREMENTS, 

COST PRINCIPLES, AND AUDIT 

REQUIREMENTS FOR FEDERAL 

AWARDS 

Sec. 

3187.1 Adoption of 2 CFR part 200. 

Subpart A—Definitions and Eligibility 

3187.2 Applicable regulations and scope of 

this part. 

3187.3 Definition of a museum. 

3187.4 Other definitions. 

3187.5 Museum eligibility and burden of 

proof—Who may apply. 

3187.6 Related institutions. 

3187.7 Basic materials which an applicant 

must submit to be considered for 

funding. 

Subpart B—General Application, Selection 

and Award Procedures 

Applications 

3187.8 Deadline date and method for 

submitting applications. 

Selection and Award Procedures 

3187.9 Rejection of an application. 

3187.10 Rejection for technical deficiency— 

appeal. 

Subpart C—General Conditions Which Must 

Be Met 

Compliance with Legal Requirements 

3187.11 Compliance with statutes, 

regulations, approved application and 

Federal award. 

Nondiscrimination 

3187.12 Federal statutes and regulations on 

nondiscrimination. 

Evaluation 

3187.13 Federal evaluation—Cooperation 

by a non-Federal entity. 

Allowable Costs 

3187.14 Subawards 

3187.15 Allowable costs. 

Authority 20 U.S.C. 9101–9176, 9103(h); 

20 U.S.C. 80r–5; 2 CFR part 200. 

§ 3187.1 Adoption of 2 CFR Part 200. 

Under the authority listed above, the 

Institute of Museum and Library 

Services (IMLS) adopts the Office of 

Management and Budget (OMB) 

Guidance in 2 CFR part 200, with the 

additions that are provided below. 

Thus, this part gives regulatory effect to 

the OMB guidance and supplements the 

guidance as needed for IMLS. 

Subpart A—Scope, Definitions, and 

Eligibility 

§ 3187.2 Applicable regulations and scope 

of this part. 

(a) Except as set forth in this 2 CFR 

part 3187, the Uniform Administrative 

Requirements, Cost Principles, and 

Audit Requirements for Federal Awards 

set forth in 2 CFR part 200 shall apply 

to awards from funds appropriated to 

the Institute of Museum and Library 

Services (the ‘‘Institute’’ or ‘‘IMLS’’). 

(b) The IMLS authorizing statutes, 

including 20 U.S.C. 9101 et seq. and 20 

U.S.C. 80r–5, (‘‘IMLS Statutes’’) are 

controlling in the event of any conflict 

between the IMLS Statutes and the 

regulations in 2 CFR part 200. 

§ 3187.3 Definition of a museum. 

For the purpose of this part: 

(a) Museum means a public or private 

nonprofit institution which is organized 

on a permanent basis for essentially 

educational or aesthetic purposes and 

which, using a professional staff: 

(1) Owns or uses tangible objects, 

either animate or inanimate; 

(2) Cares for these objects; and 

(3) Exhibits them to the general public 

on a regular basis. 

(i) An institution that exhibits objects 

to the general public for at least 120 

days a year shall be deemed to meet this 

requirement. 

(ii) An institution that exhibits objects 

by appointment may meet this 

requirement if it can establish, in light 

of the facts under all the relevant 

circumstances, that this method of 

exhibition does not unreasonably 

restrict the accessibility of the 

institution’s exhibits to the general 

public. 

(b) The term ‘‘museum’’ in paragraph 

(a) of this section includes museums 

that have tangible and digital 

collections. Museums include, but are 

not limited to, the following types of 

institutions, if they otherwise satisfy the 

provisions of this section: 

(1) Aquariums; 

(2) Arboretums; 

(3) Botanical gardens; 

(4) Art museums; 

(5) Children’s museums; 

(6) General museums; 


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(7) Historic houses and sites; 

(8) History museums; 

(9) Nature centers; 

(10) Natural history and anthropology 

museums; 

(11) Planetariums; 

(12) Science and technology centers; 

(13) Specialized museums; and 

(14) Zoological parks. 

(c) For the purposes of this section, an 

institution uses a professional staff if it 

employs at least one staff member, or 

the fulltime equivalent, whether paid or 

unpaid primarily engaged in the 

acquisition, care, or exhibition to the 

public of objects owned or used by the 

institution. 

(d)(1) Except as set forth in paragraph 

(d)(2) of this section, an institution 

exhibits objects to the general public for 

the purposes of this section if such 

exhibition is a primary purpose of the 

institution. 

(2) An institution that does not have 

as a primary purpose the exhibition of 

objects to the general public but which 

can demonstrate that it exhibits objects 

to the general public on a regular basis 

as a significant, separate, distinct, and 

continuing portion of its activities, and 

that it otherwise meets the requirements 

of this section, may be determined to be 

a museum under this section. In order 

to establish its eligibility, such an 

institution must provide information 

regarding the following: 

(i) The number of staff members 

devoted to museum functions as 

described in paragraph (a) of this 

section. 

(ii) The period of time that such 

museum functions have been carried 

out by the institution over the course of 

the institution’s history. 

(iii) Appropriate financial information 

for such functions presented separately 

from the financial information of the 

institution as a whole. 

(iv) The percentage of the institution’s 

total space devoted to such museum 

functions. 

(v) Such other information as the 

Director requests. 

(3) The Director uses the information 

furnished under paragraph (d)(2) of this 

section in making a determination 

regarding the eligibility of such an 

institution under this section. 

(e) For the purpose of this section, an 

institution exhibits objects to the public 

if it exhibits the objects through 

facilities which it owns or operates. 

§ 3187.4 Other definitions. 

The following other definitions apply 

in this part: 

Act means The Museum and Library 

Services Act, Pub. L. 104–208 (20 U.S.C. 

9101–9176), as amended. 

Collection includes objects owned, 

used or loaned by a museum as well as 

those literary, archival and documentary 

resources specifically required for the 

study and interpretation of these 

objects. 

Director means the Director of the 

Institute of Museum and Library 

Services. 

Institute or IMLS means the Institute 

of Museum and Library Services 

established under Section 203 of the 

Act. 

Museum services means services 

provided by a museum, primarily 

exhibiting objects to the general public, 

and including but not limited to 

preserving and maintaining its 

collections, and providing educational 

and other programs to the public 

through the use of its collections and 

other resources. 

§ 3187.5 Museum eligibility and burden of 

proof—Who may apply. 

(a) A museum located in any of the 50 

States of the United States, the District 

of Columbia, the Commonwealth of 

Puerto Rico, the United States Virgin 

Islands, Guam, American Samoa, the 

Commonwealth of the Northern Mariana 

Islands, the Republic of the Marshall 

Islands, the Federated States of 

Micronesia, and the Republic of Palau 

may apply for a Federal award under 

the Act. 

(b) A public or private nonprofit 

agency which is responsible for the 

operation of a museum may, if 

necessary, apply on behalf of the 

museum. 

(c) A museum operated by a 

department or agency of the Federal 

Government is not eligible to apply. 

(d) An applicant has the burden of 

establishing that it is eligible for 

assistance under these regulations. 

§ 3187.6 Related institutions. 

(a) If two or more institutions are 

under the common control of one 

agency or institution or are otherwise 

organizationally related and apply for 

assistance under the Act, the Director 

determines under all the relevant 

circumstances whether they are separate 

museums for the purpose of establishing 

eligibility for assistance under these 

regulations. See § 3187.5 (Museum 

eligibility and burden of proof—Who 

may apply). 

(b) IMLS regards the following factors, 

among others, as showing that a related 

institution is a separate museum: 

(1) The institution has its own 

governing body; 

(2) The institution has budgetary 

autonomy; and 

(3) The institution has administrative 

autonomy. 

§ 3187.7 Basic materials which an 

applicant must submit to be considered for 

funding. 

(a) Application. To apply for an IMLS 

Federal award, an applicant must 

submit the designated application form 

containing all information requested. 

(b) IRS letter. An applicant applying 

as a private, nonprofit institution must 

submit a copy of the letter from the 

Internal Revenue Service indicating the 

applicant’s eligibility for nonprofit 

status under the applicable provision of 

the Internal Revenue Code of 1954, as 

amended. 

Subpart B—General Application, 

Selection and Award Procedures 

Applications 

§ 3187.8 Deadline date and method for 

submitting applications. 

(a) The notice of funding opportunity 

sets the deadline date and method(s) for 

applications to be submitted to the 

Institute. 

(b) If the application notice permits 

mailing of an application, an applicant 

must be prepared to show one of the 

following as proof of timely mailing: 

(1) A legibly dated U.S. Postal Service 

postmark. 

(2) A legible mail receipt with the 

date of mailing stamped by the U.S. 

Postal Service. 

(3) A dated shipping label, invoice, or 

receipt from a commercial carrier. 

(4) Any other dated proof of mailing 

acceptable to the Director. 

(c) If the application notice permits 

mailing of an application, and the 

application is mailed through the U.S. 

Postal Service, the Director does not 

accept either of the following as proof 

of mailing: 

(1) A private metered postmark. 

(2) A mail receipt that is not date 

cancelled by the U.S. Postal Service. 

Selection and Award Procedures 

§ 3187.9 Rejection of an application. 

(a) The Director rejects an application 

if: 

(1) The applicant is not eligible; 

(2) The applicant fails to comply with 

procedural rules that govern the 

submission of the application; 

(3) The application does not contain 

the information required; 

(4) The application cannot be funded 

under the authorizing statute or 

implementing regulations. 

(b) If the Director rejects an 

application under this section, the 

Director informs the applicant and 

explains why the application was 

rejected. 


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§ 3187.10 Rejection for technical 

deficiency—appeal. 

An applicant whose application is 

rejected because of technical deficiency 

may appeal such rejection in writing to 

the Director within 10 business days of 

electronic or postmarked notice of 

rejection, whichever is earlier. 

Subpart C—General Conditions Which 

Must Be Met 

Compliance With Legal Requirements 

§ 3187.11 Compliance with statutes, 

regulations, approved application and 

Federal award. 

(a) A recipient and subrecipient, as 

applicable, shall comply with the 

relevant statutes, regulations, and the 

approved application and Federal 

award, and shall use Federal funds in 

accordance therewith. 

(b) No act or failure to act by an 

official, agent, or employee of the 

Institute can affect the authority of the 

Director to enforce regulations. 

(c) In any circumstance for which 

waiver is provided, the determination of 

the Director shall be final. 

Nondiscrimination 

§ 3187.12 Federal statutes and regulations 

on nondiscrimination. 

(a) Each recipient and subrecipient, as 

applicable, shall comply with the 

relevant nondiscrimination statutes and 

public policy requirements including, 

but not limited to, the following: 

Subject Statute 

Discrimination on the basis of race, color or national origin .................... Title VI of the Civil Rights Act of 1964 (42 U.S.C. 2000d through 

2000d–4). 

Discrimination on the basis of sex ........................................................... Title IX of the Education Amendments of 1972 (20 U.S.C. 1681–1683). 

Discrimination on the basis of disability ................................................... Section 504 of the Rehabilitation Act of 1973 (29 U.S.C. 794). 

Discrimination on the basis of age ........................................................... The Age Discrimination Act (420 U.S.C. 8101 et. seq). 

(b) Regulations under section 504 of 

the Rehabilitation Act of 1973. The 

Institute applies the regulations in 45 

CFR part 1170, issued by the National 

Endowment for the Humanities and 

relating to nondiscrimination on the 

basis of handicap in federally assisted 

programs and activities, in determining 

the compliance with section 504 of the 

Rehabilitation Act of 1973 as it applies 

to recipients of Federal financial 

assistance from the Institute. These 

regulations apply to each program or 

activity that receives such assistance. In 

applying these regulations, references to 

the Endowment or the agency shall be 

deemed to be references to the Institute 

and references to the Chairman shall be 

deemed to be references to the Director. 

Evaluation 

§ 3187.13 Federal evaluation—Cooperation 

by a non-Federal entity. 

A non-Federal entity shall cooperate 

in any evaluation by the Director of the 

particular IMLS Federal financial 

assistance program in which the nonFederal entity has participated. 

Allowable Costs 

§ 3187.14 Subawards. 

(a) A recipient may not make a 

subaward unless expressly authorized 

by the Institute. In the event the 

Institute authorizes a subaward, the 

recipient shall: 

(1) Ensure that the subaward includes 

any clauses required by Federal law as 

well as any program-related conditions 

imposed by the Institute; 

(2) Ensure that the subrecipient is 

aware of the applicable legal and 

program requirements; and 

(3) Monitor the activities of the 

subrecipient as necessary to ensure 

compliance with Federal law and 

program requirements. 

(b) A recipient may contract for 

supplies, equipment, and services, 

subject to applicable law, including but 

not limited to applicable Office of 

Management and Budget (OMB) 

Uniform Administrative Requirements, 

Cost Principles, and Audit 

Requirements for Federal Awards set 

forth in 2 CFR part 200. 

§ 3187.15 Allowable costs. 

(a) Determination of costs allowable 

under a Federal award is made in 

accordance with the government-wide 

cost principles in the Office of 

Management and Budget (OMB) 

Uniform Administrative Requirements, 

Cost Principles, and Audit 

Requirements for Federal Awards set 

forth in 2 CFR part 200. 

(b) No costs shall be allowed for the 

purchase of any object to be included in 

the collection of a museum, except 

library, literary, or archival material 

specifically required for a designated 

activity under a Federal award under 

the Act. 

Title 45—Public Welfare 

CHAPTER XI—NATIONAL FOUNDATION ON 

THE ARTS AND THE HUMANITIES 

Subchapter E—Institute of Museum and 

Library Services 

PART 1180—[REMOVED AND 

RESERVED] 

■ 2. Remove and reserve part 1180. 

PART 1183—[REMOVED AND 

RESERVED] 

■ 2. Remove and reserve part 1183. 

Nancy E. Weiss, 

General Counsel. 

National Endowment for the Arts 

For the reasons set forth in the 

common preamble, and under the 

authority of 5 U.S.C. 301 and the 

authorities listed below, 2 CFR chapter 

XXXII and 45 CFR chapter XI are 

amended as follows: 

Title 2—Grants and Agreements 

CHAPTER XXXII—NATIONAL ENDOWMENT 

FOR THE ARTS 

■ 1. Part 3255 is added to Title 2, 

Chapter XXXII of the Code of Federal 

Regulations to read as follows: 

PART 3255—UNIFORM 

ADMINISTRATIVE REQUIREMENTS, 

COST PRINCIPLES, AND AUDIT 

REQUIREMENTS FOR FEDERAL 

AWARDS 

Authority: 5 U.S.C. 301, 20 U.S.C. 954, 2 

CFR part 200. 

§ 3255.1 Adoption of 2 CFR Part 200. 

Under the authority listed above, the 

National Endowment for the Arts (NEA) 

adopts the Office of Management and 

Budget (OMB) Guidance in 2 CFR part 

200. Thus, this part gives regulatory 

effect to the OMB guidance and 

supplements the guidance as needed for 

the NEA. 


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1C. Ref. 2 CFR 200.102. 2C. Ref. 2 CFR 200.205, 200.207. 

Title 45—Public Welfare 

CHAPTER XI—NATIONAL FOUNDATION ON 

THE ARTS AND HUMANITIES 

Subchapter B—National Foundation for the 

Arts 

PART 1157—[REMOVED AND 

RESERVED] 

■ 2. Remove and reserve 45 CFR part 

1157. 

India J. Pinkney, 

General Counsel. 

National Endowment for the 

Humanities 

For the reasons set forth in the 

common preamble, and under the 

authority of 5 U.S.C. 301 and the 

authorities listed below, 2 CFR chapter 

XXXIII and 45 CFR chapter XI are 

amended as follows: 

Title 2—Grants and Agreements 

CHAPTER XXXIII—NATIONAL 

ENDOWMENT FOR THE HUMANITIES 

■ 1. Part 3374 is added to Title 2, 

Chapter XXXIII to read as follows: 

PART 3374—UNIFORM 

ADMINISTRATIVE REQUIREMENTS, 

COST PRINCIPLES, AND AUDIT 

REQUIREMENTS FOR FEDERAL 

AWARDS 

Authority: 5 U.S.C. 301, 20 U.S.C. 956, 2 

CFR part 200. 

§ 3374.1 Adoption of 2 CFR Part 200. 

Under the authority listed above, the 

National Endowment for the Humanities 

(NEH) adopts the Office of Management 

and Budget (OMB) Guidance in 2 CFR 

part 200. Thus, this part gives regulatory 

effect to the OMB guidance and 

supplements the guidance as needed for 

NEH. 

Title 45—Public Welfare 

CHAPTER XI—NATIONAL FOUNDATION ON 

THE ARTS AND THE HUMANITIES 

Subchapter D—National Endowment for the 

Humanities 

PART 1174—[REMOVED AND 

RESERVED] 

■ 2. Remove and reserve 45 CFR part 

1174. 

Michael P. McDonald, 

General Counsel. 

Department of Education 

For the reasons discussed in the 

preamble, and under the authority of 5 

U.S.C. 301 and the authorities listed 

below, the Secretary amends chapter 

XXXIV of title 2 of the Code of Federal 

Regulations and amends subtitle A and 

chapters I, II, III, IV, V, and VI of title 

34 of the of the Code of Federal 

Regulations as follows. 

Title 2—Grants and Agreements 

Subtitle B—Federal Agency Regulations 

for Grants and Agreements 

CHAPTER XXXIV—DEPARTMENT OF 

EDUCATION 

■ 1. Part 3474 is added to read as 

follows. 

PART 3474—UNIFORM 

ADMINISTRATIVE REQUIREMENTS, 

COST PRINCIPLES, AND AUDIT 

REQUIREMENTS FOR FEDERAL 

AWARDS 

Sec. 

3474.1 Adoption of 2 CFR part 200. 

3474.5 How exceptions are made to 2 CFR 

part 200. 

3475.10 Clarification regarding 2 CFR 

200.207. 

Authority: 20 U.S.C. 1221e–3, 3474, and 

2 CFR part 200, unless otherwise noted. 

§ 3474.1 Adoption of 2 CFR part 200. 

(a) The Department of Education 

adopts the Office of Management and 

Budget (OMB) Guidance in 2 CFR part 

200, except for 2 CFR 200.102(a) and 2 

CFR 200.207(a). Thus, this part gives 

regulatory effect to the OMB guidance 

and supplements the guidance as 

needed for the Department. 

(b) The authority for all of the 

provisions in 2 CFR part 200 as adopted 

in this part is listed as follows. 

(Authority: 20 U.S.C. 1221e–3, 3474, and 2 

CFR part 200.) 

§ 3474.5 How exceptions are made to 2 

CFR part 200.1

(a) With the exception of Subpart F— 

Audit Requirements of 2 CFR part 200, 

the Secretary of Education, after 

consultation with OMB, may allow 

exceptions for classes of Federal awards 

or non-Federal entities subject to the 

requirements of this part when 

exceptions are not prohibited by statute. 

However, in the interest of maximum 

uniformity, exceptions from the 

requirements of this part will be 

permitted only in unusual 

circumstances. 

(b) Exceptions for classes of Federal 

awards or non-Federal entities will be 

published on the OMB Web site at 

www.whitehouse.gov/omb. 

(Authority: 20 U.S.C. 1221e–3, 3474, and 2 

CFR part 200) 

§ 3474.10 Clarification regarding 2 CFR 

200.207.2

The Secretary or a pass-through entity 

may, in appropriate circumstances, 

designate the specific conditions 

established under 2 CFR 200.207 as 

‘‘high-risk conditions’’ and designate a 

non-Federal entity subject to specific 

conditions established under § 200.207 

as ‘‘high–risk’’. 

(Authority: 20 U.S.C. 1221e–3, 3474, and 2 

CFR part 200) 

Title 34—Education 

Subtitle A—Office of the Secretary, 

Department of Education 

PART 74 [REMOVED] 

■ 2. Part 74 is removed. 

PART 75—DIRECT GRANT 

PROGRAMS 

■ 3–4. The authority citation for part 75 

continues to read as follows: 

Authority: 20 U.S.C. 1221e–3 and 3474, 

unless otherwise noted. 

■ 5. Section 75.118 is amended by: 

■ A. Revising paragraph (a). 

■ B. Revising the cross-reference at the 

end of the section. 

The revisions read as follows: 

§ 75.118 Requirements for a continuation 

award. 

(a) A recipient that wants to receive 

a continuation award shall submit a 

performance report that provides the 

most current performance and financial 

expenditure information, as directed by 

the Secretary, that is sufficient to meet 

the reporting requirements of 2 CFR 

200.327 and 200.328 and 34 CFR 75.590 

and 75.720. 

* * * * * 

CROSS-REFERENCE: See 2 CFR 

200.327, Financial reporting, and 

200.328, Monitoring and reporting 

program performance; and 34 CFR 

75.117, Information needed for a multiyear project, 75.250 through 75.253, 

Approval of multi-year projects, 75.590, 

Evaluation by the grantee, and 75.720, 

Financial and performance reports. 

■ 6. Section 75.135 is amended by: 

■ A. Revising the introductory text of 

paragraph (a). 

■ B. Revising paragraph (e). 

The revisions read as follows: 

§ 75.135 Competition exception for 

proposed implementation sites, 

implementation partners, or service 

providers. 

(a) When entering into a contract with 

implementation sites or partners, an 

applicant is not required to comply with 


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the competition requirements in 2 CFR 

200.320(c) and (d), if— 

* * * * * 

(e) The exceptions in paragraphs (a) 

and (b) of this section do not extend to 

the other procurement requirements in 

2 CFR part 200 regarding contracting by 

grantees and subgrantees. 

* * * * * 

■ 7. The cross-reference following 

§ 75.236 is revised to read as follows: 

§ 75.236 Effect of the grant. 

* * * * * 

CROSS-REFERENCE: See 2 CFR 

200.308, Revision of budget and 

program plans. 

■ 8. Section 75.253 is amended by: 

■ A. Revising paragraph (a)(5). 

■ B. Revising the introductory text to 

paragraph (d)(1). 

■ C. Revising paragraph (d)(1)(ii). 

■ D. Revising the Note that follows 

paragraph (d)(1)(ii). 

The revisions read as follows: 

§ 75.253 Continuation of a multi-year 

project after the first budget period. 

(a) * * * 

(5) The grantee has maintained 

financial and administrative 

management systems that meet the 

requirements in 2 CFR 200.302, 

Financial management, and 200.303, 

Internal controls. 

* * * * * 

(d)(1) Notwithstanding any regulatory 

requirements in 2 CFR part 200, a 

grantee may expend funds that have not 

been obligated at the end of a budget 

period for obligations of the subsequent 

budget period if— 

* * * * * 

(ii) ED regulations, including those in 

title 2 of the CFR, statutes, or the 

conditions of the grant do not prohibit 

the obligation. 

Note: See 2 CFR 200.308(d)(2). 

* * * * * 

■ 9. Section 75.261 is amended by: 

■ A. Revising paragraph (a). 

■ B. Revising the introductory text to 

paragraph (c). 

The revisions read as follows: 

§ 75.261 Extension of a project period. 

(a) General rule. A grantee may extend 

the project period of an award one time 

for a period up to twelve months 

without the prior approval of the 

Secretary, if— 

(1) The grantee meets the 

requirements for extension in 2 CFR 

200.308(d)(2); and 

(2) ED statutes, regulations other than 

those in 2 CFR part 200, or the 

conditions of an award do not prohibit 

the extension. 

* * * * * 

(c) Other regulations. If ED regulations 

other than the regulations in 2 CFR part 

200 or the conditions of the award 

require the grantee to obtain prior 

approval to extend the project period, 

the Secretary may permit the grantee to 

extend the project period if— 

* * * * * 

§ 75.263 [Removed and Reserved] 

■ 10. Section 75.263 is removed and 

reserved. 

■ 11. Section 75.264 is revised to read 

as follows: 

§ 75.264 Transfers among budget 

categories. 

A grantee may make transfers as 

specified in 2 CFR 200.308 unless— 

(a) ED regulations other than those in 

2 CFR part 200 or a statute prohibit 

these transfers; or 

(b) The conditions of the grant 

prohibit these transfers. 

(Authority 20 U.S.C. 1221e–3, 3474, 2 CFR 

part 200) 

■ 12. The cross-reference following 

§ 75.511 is revised to read as follows: 

§ 75.511 Waiver of requirement for a fulltime project director. 

* * * * * 

CROSS-REFERENCE: See 2 CFR 

200.308, Revision of budget and 

program plans. 

§ 75.517 [Removed and Reserved] 

■ 13. Section 75.517 is removed and 

reserved. 

■ 14. Section 75.524 is amended by 

revising paragraphs (b) and (c) to read 

as follows: 

§ 75.524 Conflict of interest: Purpose of 

§ 75.525. 

* * * * * 

(b) These conflict of interest 

regulations do not apply to a ‘‘local 

government,’’ as defined in 2 CFR 

200.64, or a ‘‘State,’’ as defined in 2 CFR 

200.90. 

(c) The regulations in § 75.525 do not 

apply to a grantee’s procurement 

contracts. The conflict of interest 

regulations that cover those 

procurement contracts are in 2 CFR part 

200. 

* * * * * 

■ 15. Section 75.530 and the crossreference that follows that section are 

revised to read as follows: 

§ 75.530 General cost principles. 

The general principles to be used in 

determining costs applicable to grants 

and cost-type contracts under grants are 

specified at 2 CFR part 200, subpart E— 

Cost Principles. 

(Authority: 20 U.S.C. 1221e–3 and 3474) 

CROSS-REFERENCE: See 2 CFR part 

200, subpart D—Post Federal Award 

Requirements. 

■ 16. Section 75.560 is amended by 

revising paragraph (a) to read as follows: 

§ 75.560 General indirect cost rates; 

exceptions. 

(a) The differences between direct and 

indirect costs and the principles for 

determining the general indirect cost 

rate that a grantee may use for grants 

under most programs are specified in 

the cost principles for— 

(1) All grantees, other than hospitals 

and commercial (for-profit) 

organizations, at 2 CFR part 200, subpart 

E—Cost Principles; 

(2) Hospitals, at 45 CFR part 75, 

Appendix XI—Principles for 

Determining Cost Applicable to 

Research and Development Under 

Awards and Contracts with Hospitals; 

and 

(3) Commercial (for-profit) 

organizations, at 48 CFR part 31 

Contract Cost Principles and 

Procedures. 

* * * * * 

■ 17. Section 75.562 is amended by 

revising paragraph (c)(2)(iv) and (c)(4) to 

read as follows: 

§ 75.562 Indirect cost rates for educational 

training projects. 

* * * * * 

(c) * * * 

(2) * * * 

* * * * * 

(iv) Equipment, as defined in 2 CFR 

200.33. 

* * * * * 

(4) The eight percent limit does not 

apply to agencies of Indian tribal 

governments, local governments, and 

States as defined in 2 CFR 200.54, 

200.200.64, and 200.90, respectively. 

* * * * * 

■ 18. The cross-reference that follows 

the undesignated center heading 

‘‘Construction’’ is revised to read as 

follows: 

CROSS-REFERENCE: See 2 CFR part 

200.317–200.326 for procurement 

requirements. 

■ 19. The cross-reference that follows 

the undesignated center heading 

‘‘Equipment and Supplies’’ and before 

§ 75.618 is revised to read as follows: 

CROSS-REFERENCE: See 2 CFR 

200.311, Real property; 200.313, 

Equipment; 200.314, Supplies; and 

200.59, Intangible property; and 

200.315, Intangible property. 

§ 75.621 [Removed and Reserved]. 

■ 20. Section 75.621 is removed and 

reserved. 


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■ 21. The cross-reference following 

former § 75.621 and before § 75.622 is 

revised to read as follows: 

CROSS-REFERENCE: See 2 CFR 

200.305, Payment; 200.307, Program 

income; and 200.315, Intangible 

property. 

■ 22. The cross-reference following the 

undesignated center heading 

‘‘Inventions and Patents’’ and before 

§ 75.626 is revised to read as follows: 

CROSS-REFERENCE: See 2 CFR 

200.307, Program income. 

■ 23. The cross-reference following the 

undesignated center heading ‘‘Other 

Requirements for Certain Projects’’ and 

before § 75.650 is revised to read as 

follows: 

CROSS-REFERENCE: See 2 CFR 

200.302, Financial management, and 

200.326, Contract provisions. 

■ 24. Section 75.702 is revised and the 

cross-reference that follows that section 

is removed to read as follows: 

§ 75.702 Fiscal control and fund 

accounting procedures. 

A grantee shall use fiscal control and 

fund accounting procedures that insure 

proper disbursement of, and accounting 

for, Federal funds as required in 2 CFR 

part 200, subpart D—Post Federal 

Award Requirements. 

(Authority: 20 U.S.C. 1221e–3 and 3474) 

■ 25. Section § 75.707 is amended by 

revising paragraph (h) to read as 

follows: 

§ 75.707 When obligations are made. 

* * * * * 

If the obligation is for— The obligation is made— 

*******

(h) A pre-agreement cost that was properly approved by the Secretary 

under the cost principles in 2 CFR part 200, Subpart E—Cost Principles.

On the first day of the project period. 

* * * * * 

■ 26. Section 75.708 is amended by 

revising paragraph (e) to read as follows: 

§ 75.708 Subgrants. 

* * * * * 

(e) A grantee may contract for 

supplies, equipment, construction, and 

other services, in accordance with 2 

CFR part 200, subpart D—Post Federal 

Award Requirements (2 CFR 200.317– 

200.326, Procurement Standards). 

* * * * * 

■ 27. The cross-reference after the 

undesignated center heading ‘‘Reports’’ 

and before § 75.720 is revised to read as 

follows: 

CROSS-REFERENCE: See 2 CFR 

200.327–200.337, which appear after the 

undesignated center heading 

‘‘Performance and Financial Monitoring 

and Reporting.’’ 

■ 28. Section 75.720 is revised to read 

as follows: 

§ 75.720 Financial and performance 

reports. 

(a) This section applies to the reports 

required under— 

(1) 2 CFR 200.327 (Financial 

reporting); and 

(2) 2 CFR 200.328 (Monitoring and 

reporting program performance). 

(b) A grantee shall submit these 

reports annually, unless the Secretary 

allows less frequent reporting. 

(c) The Secretary may require a 

grantee to report more frequently than 

annually, as authorized under 2 CFR 

200.207, Specific conditions, and may 

impose high-risk conditions in 

appropriate circumstances under 2 CFR 

3474.10. 

(Authority: 20 U.S.C. 1221e–3 and 3474) 

■ 29. The cross-reference after the 

undesignated center heading ‘‘Records’’ 

and before § 75.730 is revised to read as 

follows: 

CROSS-REFERENCE: See 2 CFR 

200.333–200.337, which follow the 

undesignated center heading ‘‘Record 

Retention and Access.’’ 

■ 30. The cross-reference after § 75.732 

is revised to read as follows: 

CROSS-REFERENCE: See 2 CFR 

200.308, Revision of budget and 

program plans. 

■ 31. The cross-reference after the 

heading for subpart G and before 

§ 75.900 is revised to read as follows: 

CROSS-REFERENCE: See 2 CFR 

200.338–200.342 which follow the 

undesignated center heading ‘‘Remedies 

for Noncompliance.’’ 

■ 32. Section 75.901 is revised to read 

as follows: 

§ 75.901 Suspension and termination. 

The Secretary may use the Office of 

Administrative Law Judges to resolve 

disputes that are not subject to other 

procedures. See, for cross-reference, the 

following: 

(a) 2 CFR 200.338 (Remedies for 

noncompliance). 

(b) 2 CFR 200.339 (Termination). 

(c) 2 CFR 200.340 (Notification of 

termination requirement). 

(d) 2 CFR 200.341 (Opportunities to 

object, hearings and appeals). 

(e) 2 CFR 200.342 (Effects of 

suspension and termination). 

(f) 2 CFR 200.344 (Post-closeout 

adjustments and continuing 

responsibilities). 

(Authority: 20 U.S.C. 1221e–3 and 3474) 

■ 33. Section 75.903 is amended by 

revising paragraph (c) to read as follows: 

§ 75.903 Effective date of termination. 

* * * * * 

(c) The date of a final decision of the 

Secretary under part 81 of this title. 

* * * * * 

§ 75.910 [Removed and Reserved]. 

■ 34. Section 75.910 is removed and 

reserved. 

PART 76—STATE-ADMINISTERED 

PROGRAMS 

■ 35. The authority citation for part 76 

continues to read as follows: 

Authority: 20 U.S.C. 1221e–3 and 3474, 

unless otherwise noted. 

■ 36. Section 76.132 is amended by 

revising paragraph (a)(5) to read as 

follows: 

§ 76.132 What assurances must be in a 

consolidated grant application? 

(a) * * * 

(5) Submit an annual report to the 

Secretary containing information 

covering the program or programs for 

which the grant is used and 

administered, including the financial 

and program performance information 

required under 2 CFR 200.327 and 

200.328. 

* * * * * 

■ 37. Section 76.530 is revised to read 

as follows: 

§ 76.530 General cost principles. 

The general principles to be used in 

determining costs applicable to grants, 

subgrants, and cost-type contracts under 

grants and subgrants are specified at 

2 CFR part 200, subpart E—Cost 

Principles. 

(Authority: 20 U.S.C. 1221e–3 and 3474) 


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■ 38. Section 76.560 is amended by 

revising paragraph (a) to read as follows: 

§ 76.560 General indirect cost rates; 

exceptions. 

(a) The differences between direct and 

indirect costs and the principles for 

determining the general indirect cost 

rate that a grantee may use for grants 

under most programs are specified in 

the cost principles for— 

(1) All grantees, other than hospitals 

and commercial (for-profit) 

organizations, at 2 CFR part 200, subpart 

E—Cost Principles; 

(2) Hospitals, at 45 CFR part 75, 

Appendix XI, Principles for 

Determining Costs Applicable to 

Research and Development Under 

Awards and Contracts With Hospitals; 

and 

(3) Commercial (for-profit) 

organizations, at 48 CFR part 31, 

Contract Cost Principles and 

Procedures. 

* * * * * 

■ 39. Section 76.564 is amended by 

revising the introductory text in 

paragraph (c) to read as follows: 

§ 76.564 Restricted indirect cost rate; 

formula. 

* * * * * 

(c) Under the programs covered by 

§ 76.563, a subgrantee of an agency of a 

State or a local government (as those 

terms are defined in 2 CFR 200.90 and 

200.64, respectively), or a grantee 

subject to 34 CFR 75.563 that is not a 

State or local government agency may 

use— 

* * * * * 

■ 40. Section § 76.707 is amended by 

revising paragraph (h) to read as 

follows: 

§ 76.707 When obligations are made. 

* * * * * 

If the obligation is for— The obligation is made— 

*******

(h) A pre-agreement cost that was properly approved by the Secretary 

under the cost principles in 2 CFR part 200, Subpart E—Cost Principles.

On the first day of the grant or subgrant performance period. 

* * * * * 

■ 41. Section 76.708 is amended by 

revising paragraph (c) to read as follows: 

§ 76.708 When certain subgrantees may 

begin to obligate funds. 

* * * * * 

(c) If the authorizing statute for a 

program gives the State discretion to 

select subgrantees, the State may not 

authorize an applicant for a subgrant to 

obligate funds until the subgrant is 

made. However, the State may approve 

pre-agreement costs in accordance with 

the cost principles in 2 CFR part 200, 

subpart E–Cost Principles. 

* * * * * 

■ 42. Section 76.720 is amended by: 

■ A. Revising paragraph (a). 

■ B. Revising paragraph (b)(2). 

The revisions read as follows: 

§ 76.720 State reporting requirements. 

(a) This section applies to a State’s 

reports required under 2 CFR 200.327 

(Financial reporting) and 2 CFR 200.328 

(Monitoring and reporting program 

performance), and other reports 

required by the Secretary and approved 

by the Office of Management and 

Budget (OMB) under the Paperwork 

Reduction Act of 1995, 44 U.S.C. 3501– 

3520. 

(b) * * * 

(2) The Secretary requires a State to 

report more frequently than annually, 

including reporting under 2 CFR 

3474.10 and 2 CFR 200.207 (Specific 

conditions) and 2 CFR 3474.10 

(Clarification regarding 2 CFR 200.207) 

or 2 CFR 200.302 Financial management 

and 200.303 Internal controls. 

* * * * * 

PART 77—DEFINITIONS THAT APPLY 

TO DEPARTMENT REGULATIONS 

■ 43. The authority citation for part 77 

continues to read as follows: 

Authority: 20 U.S.C. 1221e–3 and 3474, 

unless otherwise noted. 

■ 44. Section 77.1 is amended by: 

■ A. Revising paragraph (b). 

■ B. Revising, in paragraph (c), the 

definitions of ‘‘EDGAR’’ and ‘‘Grantee.’’ 

■ C. Adding to paragraph (c), in 

alphabetical order, the definitions of 

‘‘Award,’’ ‘‘Direct grant program.’’ 

‘‘Grant,’’ ‘‘Project Period,’’ ‘‘Subgrant,’’ 

and ‘‘Subgrantee.’’ 

§ 77.1 Definitions that apply to all 

Department programs. 

* * * * * 

(b) Unless a statute or regulation 

provides otherwise, the following 

definitions in 2 CFR part 200 apply to 

the regulations in title 34 of the Code of 

Federal Regulations. The section of 2 

CFR part 200 that contains the 

definition is given in parentheses as 

well as references to the term or terms 

used in title 34 that are consistent with 

the term defined in title 2. 

Contract (2 CFR 200.22). 

Equipment (2 CFR 200.33). 

Federal award (2 CFR 200.38) (The 

terms ‘‘award,’’ ‘‘grant,’’ and ‘‘subgrant’’, 

as defined in paragraph (c) of this 

section, have the same meaning, 

depending on the context, as ‘‘Federal 

award’’ in 2 CFR 200.38.). 

Period of performance (2 CFR 200.77) 

(For discretionary grants, ED uses the 

term ‘‘project period,’’ as defined in 

paragraph (c) of this section, instead of 

‘‘period of performance’’ to describe the 

period during which funds can be 

obligated.). 

Personal property (2 CFR 200.78). 

Real property (2 CFR 200.85). 

Recipient (2 CFR 200.86). 

Subaward (2 CFR 200.92) (The term 

‘‘subgrant,’’ as defined in paragraph (c) 

of this section, has the same meaning as 

‘‘subaward’’ in 2 CFR 200.92). 

Supplies (2 CFR 200.94). 

(c) * * * 

Award has the same meaning as the 

definition of ‘‘Grant’’ in this paragraph 

(c). 

Direct grant program means any grant 

program of the Department other than a 

program whose authorizing statute or 

implementing regulations provide a 

formula for allocating program funds 

among eligible States. 

CROSS-REFERENCE: See 34 CFR 

75.1(b). 

EDGAR means the Education 

Department General Administrative 

Regulations (34 CFR parts 75, 76, 77, 79, 

81, 82, 84, 86, 97, 98, and 99). 

* * * * * 

Grant means financial assistance, 

including cooperative agreements, that 

provides support or stimulation to 

accomplish a public purpose. 2 CFR 

part 200, as adopted in 2 CFR part 3474, 

uses the broader, undefined term 

‘‘Award’’ to cover grants, subgrants, and 

other agreements in the form of money 

or property, in lieu of money, by the 

Federal Government to an eligible 

recipient. The term does not include— 

(1) Technical assistance, which 

provides services instead of money; 

(2) Other assistance in the form of 

loans, loan guarantees, interest 

subsidies, or insurance; 


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(3) Direct payments of any kind to 

individuals; and 

(4) Contracts that are required to be 

entered into and administered under 

procurement laws and regulations. 

* * * * * 

Grantee means the legal entity to 

which a grant is awarded and that is 

accountable to the Federal Government 

for the use of the funds provided. The 

grantee is the entire legal entity even if 

only a particular component of the 

entity is designated in the grant award 

notice (GAN). For example, a GAN may 

name as the grantee one school or 

campus of a university. In this case, the 

granting agency usually intends, or 

actually intends, that the named 

component assume primary or sole 

responsibility for administering the 

grant-assisted project or program. 

Nevertheless, the naming of a 

component of a legal entity as the 

grantee in a grant award document shall 

not be construed as relieving the whole 

legal entity from accountability to the 

Federal Government for the use of the 

funds provided. (This definition is not 

intended to affect the eligibility 

provision of grant programs in which 

eligibility is limited to organizations 

that may be only components of a legal 

entity.) The term ‘‘grantee’’ does not 

include any secondary recipients, such 

as subgrantees and contractors, that may 

receive funds from a grantee pursuant to 

a subgrant or contract. 

* * * * * 

Project period means the period 

established in the award document 

during which Federal sponsorship 

begins and ends (See, 2 CFR 200.77 

Period of performance). 

* * * * * 

Subgrant means an award of financial 

assistance in the form of money, or 

property in lieu of money, made under 

a grant by a grantee to an eligible 

subgrantee. The term includes financial 

assistance when provided by 

contractual or any other form of legal 

agreement, but does not include 

procurement purchases, nor does it 

include any form of assistance that is 

excluded from the definition of ‘‘grant 

or award’’ in this part (See 2 CFR 

200.92, ‘‘Subaward’’). 

Subgrantee means the government or 

other legal entity to which a subgrant is 

awarded and that is accountable to the 

grantee for the use of the funds 

provided. 

* * * * * 

PART 80—[REMOVED AND 

RESERVED] 

■ 45. Part 80 is removed and reserved. 

Subtitle B—Regulations of the Offices of 

the Department of Education 

CHAPTER I—OFFICE FOR CIVIL RIGHTS, 

DEPARTMENT OF EDUCATION 

PART 101—PRACTICE AND 

PROCEDURE FOR HEARINGS UNDER 

PART 100 OF THIS TITLE 

§ 101.43 [Amended] 

■ 46. Section 101.43 is amended by 

removing the phrase ‘‘part 80 of this 

title’’ and adding, in its place, the 

phrase ‘‘part 100 of this chapter.’’ 

CHAPTER II—OFFICE OF ELEMENTARY 

AND SECONDARY EDUCATION, 

DEPARTMENT OF EDUCATION 

PART 206—SPECIAL EDUCATIONAL 

PROGRAMS FOR STUDENTS WHOSE 

FAMILIES ARE ENGAGED IN MIGRANT 

AND OTHER SEASONAL 

FARMWORK—HIGH SCHOOL 

EQUIVALENCY PROGRAM AND 

COLLEGE ASSISTANCE MIGRANT 

PROGRAM 

■ 47. The authority citation for part 206 

continues to read as follows: 

Authority: 20 U.S.C. 1070d–2, unless 

otherwise noted. 

■ 48. Section 206.4 is amended by: 

■ A. Removing and reserving 

paragraphs (a)(1) and (a)(7). 

■ B. Adding a new paragraph (c). 

The addition reads as follows: 

§ 206.4 What regulations apply to these 

programs? 

* * * * * 

(c) The Uniform Administrative 

Requirements, Cost Principles, and 

Audit Requirements for Federal Awards 

in 2 CFR part 200, as adopted in 2 CFR 

part 3474, and the OMB Guidelines to 

Agencies on Governmentwide 

Debarment and Suspension 

(Nonprocurement) in 2 CFR part 180, as 

adopted in 2 CFR part 3485. 

* * * * * 

■ 49. Section 206.5 is amended by: 

■ A. Revising paragraph (a). 

■ B. Revising paragraph (b). 

The revisions read as follows: 

§ 206.5 What definitions apply to these 

programs? 

(a) Definitions in EDGAR. The 

following terms used in this part are 

defined in 34 CFR 77.1(c) (EDGAR, 

Definitions): 

Applicant 

Application 

Award 

Elementary school 

EDGAR 

Facilities 

Grant 

Grantee 

Minor remodeling 

Nonprofit 

Private 

Project 

Public 

Secondary school 

Secretary 

State 

(b) Definitions in the grants 

administration regulations. The 

following terms used in this part are 

defined in 2 CFR part 200, as adopted 

in 2 CFR part 3474: 

Budget 

Equipment 

Supplies 

* * * * * 

PART 222—IMPACT AID PROGRAMS 

■ 50. The authority citation for part 222 

continues to read as follows: 

Authority: 20 U.S.C. 7701–7714, unless 

otherwise noted. 

■ 51. Section 222.19 is amended by: 

■ A. Removing and reserving 

paragraphs (b)(3) and (b)(5). 

■ B. Adding new paragraph (c). 

The addition reads as follows: 

§ 222.19 What other statutes and 

regulations apply to this part? 

* * * * * 

(c) The following regulations in title 

2 of the CFR: 

(1) 2 CFR part 200, as adopted in part 

3474 (Uniform Administrative 

Requirements, Cost Principles, and 

Audit Requirements for Federal 

Awards) for payments under sections 

8003(d) (payments for federally 

connected children with disabilities), 

8007 (construction), and 8008 (school 

facilities). 

(2) 2 CFR part 180, as adopted in 2 

CFR part 3485 (OMB Guidelines to 

Agencies on Governmentwide 

Debarment and Suspension 

(Nonprocurement)). 

* * * * * 

§ 222.194 [Amended] 

■ 52. Section 222.194, paragraph (c), is 

amended by removing the citation ‘‘34 

CFR 80.24’’ and adding, in its place, the 

citation ‘‘2 CFR 200.306.’’ 

PART 225—CREDIT ENHANCEMENT 

FOR CHARTER SCHOOL FACILITIES 

PROGRAM 

■ 53. The authority citation for part 225 

continues to read as follows: 

Authority: 20 U.S.C. 7223, unless 

otherwise noted. 

■ 54. Section 225.3 is amended by: 

■ A. Removing and reserving 

paragraphs (a)(1), (a)(5), and (a)(9). 

■ B. Adding a new paragraph (c). 


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The addition reads as follows: 

§ 225.3 What regulations apply to the 

Credit Enhancement for Charter School 

Facilities Program? 

* * * * * 

(c) The Uniform Administrative 

Requirements, Cost Principles, and 

Audit Requirements for Federal Awards 

in 2 CFR part 200, as adopted in 2 CFR 

part 3474 and OMB Guidelines to 

Agencies on Governmentwide 

Debarment and Suspension 

(Nonprocurement) in 2 CFR part 180, as 

adopted in 2 CFR part 3485. 

* * * * * 

PART 226—STATE CHARTER SCHOOL 

FACILITIES INCENTIVE PROGRAM 

■ 55. The authority citation for part 226 

continues to read as follows: 

Authority: 20 U.S.C. 1221e–3 and 

7221d(b), unless otherwise noted. 

■ 56. Section 226.3 is amended by: 

■ A. Removing and reserving 

paragraphs (a)(1), (a)(5), and (a)(9). 

■ B. Adding a new paragraph (c). 

The addition reads as follows: 

§ 226.3 What regulations apply to the State 

Charter School Facilities Incentive 

program? 

* * * * * 

(c) The Uniform Administrative 

Requirements, Cost Principles, and 

Audit Requirements for Federal Awards 

in 2 CFR part 200, as adopted in 2 CFR 

part 3474 and the OMB Guidelines to 

Agencies on Governmentwide 

Debarment and Suspension 

(Nonprocurement) in 2 CFR part 180, as 

adopted in 2 CFR part 3485. 

* * * * * 

PART 270—DESEGREGATION OF 

PUBLIC EDUCATION 

■ 57. The authority citation for part 270 

continues to read as follows: 

Authority: 42 U.S.C. 2000c–2000c–2 and 

2000–5, unless otherwise noted. 

■ 58. Section 270.2 is amended by: 

■ A. Revising paragraph (a). 

■ B. Adding a new paragraph (c). 

The revision and addition read as 

follows: 

§ 270.2 What regulations apply to these 

programs? 

* * * * * 

(a) The Education Department General 

Administrative Regulations (EDGAR) in 

34 CFR part 75 (Direct Grant Programs), 

part 77 (Definitions That Apply to 

Department Regulations), part 79 

(Intergovernmental Review of 

Department of Education Programs and 

Activities), and part 81 (General 

Education Provisions Act— 

Enforcement), except that 34 CFR 

75.200 through 75.217 (relating to the 

evaluation and competitive review of 

grants) do not apply to grants awarded 

under 34 CFR part 271 and 34 CFR 

75.232 (relating to the cost analysis) 

does not apply to grants under 34 CFR 

part 272. 

* * * * * 

(c) The Uniform Administrative 

Requirements, Cost Principles, and 

Audit Requirements for Federal Awards 

in 2 CFR part 200, as adopted in 2 CFR 

part 3474 and the OMB Guidelines to 

Agencies on Governmentwide 

Debarment and Suspension 

(Nonprocurement) in 2 CFR part 180, as 

adopted in 2 CFR part 3485. 

* * * * * 

PART 280—MAGNET SCHOOLS 

ASSISTANCE PROGRAM 

■ 59. The authority citation for part 280 

continues to read as follows: 

Authority: 20 U.S.C. 7231–7231j, unless 

otherwise noted. 

■ 60. Section 280.3 is amended by: 

■ A. Revising paragraph (a). 

■ B. Adding a new paragraph (c). 

The revision and addition read as 

follows: 

§ 280.3 What regulations apply to this 

program? 

* * * * * 

(a) The Education Department General 

Administrative Regulations (EDGAR), 

34 CFR parts 75 (Direct Grant Programs), 

77 (Definitions that Apply to 

Department Regulations), 79 

(Intergovernmental Review of 

Department of Education Programs and 

Activities) and 84 (Governmentwide 

Requirements for Drug-Free Workplace 

(Financial Assistance)). 

* * * * * 

(c) The Uniform Administrative 

Requirements, Cost Principles, and 

Audit Requirements for Federal Awards 

in 2 CFR part 200, as adopted in 2 CFR 

part 3474 and OMB Guidelines to 

Agencies on Governmentwide 

Debarment and Suspension 

(Nonprocurement) in 2 CFR part 180, as 

adopted in part 3485. 

* * * * * 

PART 299—GENERAL PROVISIONS 

■ 61. The authority citation for part 299 

continues to read as follows: 

Authority: 20 U.S.C. 1221e–3(a)(1), 

6511(a), and 7373(b), unless otherwise noted. 

■ 62. Section 299.1 is amended by 

revising paragraph (b) to read as follows: 

§ 299.1 What are the purpose and scope of 

these regulations? 

* * * * * 

(b) If an ESEA program does not have 

implementing regulations, the Secretary 

implements the program under the 

authorizing statute and, to the extent 

applicable, title IX of the ESEA, the 

General Education Provisions Act, the 

regulations in this part, EDGAR (34 CFR 

parts 75 through 99), and 2 CFR parts 

180, as adopted at 2 CFR part 3485, and 

200, as adopted at part 3474, that are not 

inconsistent with specific statutory 

provisions of the ESEA. 

* * * * * 

■ 63. Section 299.2 is amended by: 

■ A. Revising the introductory text of 

the section. 

■ B. Revising paragraph (a). 

■ C. Revising paragraph (b). 

The revisions read as follows: 

§ 299.2 What general administrative 

regulations apply to ESEA programs? 

Title 2 of the CFR, part 200, as 

adopted at 2 CFR part 3474, applies to 

the ESEA programs except for title VIII 

programs (Impact Aid) (in addition to 

any other specific implementing 

regulations) as follows: 

(a) 2 CFR part 200 applies to grantees 

under direct grant programs (as defined 

in 34 CFR 75.1(b)). 

(b) 2 CFR part 200 also applies to 

grantees under all other programs under 

the ESEA unless a State formally adopts 

its own written fiscal and administrative 

requirements for expending and 

accounting for all funds received by 

State educational agencies (SEAs) and 

local educational agencies (LEAs) under 

the ESEA. If a State adopts its own 

alternative requirements, the 

requirements must be available for 

inspection upon the request of the 

Secretary or the Secretary’s 

representatives and must— 

* * * * * 

CHAPTER III—OFFICE OF SPECIAL 

EDUCATION AND REHABILITATIVE 

SERVICES, DEPARTMENT OF EDUCATION 

PART 300—ASSISTANCE TO STATES 

FOR THE EDUCATION OF CHILDREN 

WITH DISABILITIES 

■ 64. The authority citation for part 300 

continues to read as follows: 

Authority: 20 U.S.C. 1221e-3, 1406, and 

1411–1419, unless otherwise noted. 

■ 65. Section 300.154 is amended by 

revising paragraph (g)(1) to read as 

follows: 

§ 300.154 Methods of ensuring services. 

* * * * * 

(g) * * * 

(1) Proceeds from public benefits or 

insurance or private insurance will not 


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be treated as program income for 

purposes of 2 CFR 200.307. 

* * * * * 

■ 66. Section 300.609 is revised to read 

as follows: 

§ 300.609 Rule of construction. 

Nothing in this subpart shall be 

construed to restrict the Secretary from 

utilizing any authority under GEPA, 

including the provisions in 34 CFR parts 

76, 77, and 81 and 2 CFR part 200 to 

monitor and enforce the requirements of 

the Act, including the imposition of 

special or high-risk conditions under 2 

CFR 200.207 and 3474.10. 

(Authority: 20 U.S.C. 1416(g)) 

PART 303—EARLY INTERVENTION 

PROGRAM FOR INFANTS AND 

TODDLERS WITH DISABILITIES 

■ 67. The authority citation for part 303 

continues to read as follows: 

Authority: 20 U.S.C. 1431–1444, unless 

otherwise noted. 

■ 68. Section 303.3 is amended by: 

■ A. Revising paragraph (a)(2). 

■ B. Adding a new paragraph (a)(3). 

The revision and addition read as 

follows: 

§ 303.3 Applicable regulations. 

(a) * * * 

(2) EDGAR, including 34 CFR parts 76 

(except for § 76.103), 77, 79, 81, 82, 84, 

and 86. 

(3) The Uniform Administrative 

Requirements, Cost Principles, and 

Audit Requirements for Federal Awards 

in 2 CFR part 200, as adopted in part 

3474, and the OMB Guidelines to 

Agencies on Governmentwide 

Debarment and Suspension 

(Nonprocurement) in 2 CFR part 180, as 

adopted in 2 CFR part 3485. 

* * * * * 

■ 69. Section 303.121 is amended by 

revising paragraph (b) to read as follows: 

§ 303.121 Policy for contracting or 

otherwise arranging for services. 

* * * * * 

(b) Be consistent with 2 CFR part 200, 

as adopted at 2 CFR part 3474. 

* * * * * 

■ 70. Section 303.416 is amended by 

revising paragraph (a) to read as follows: 

§ 303.416 Destruction of information. 

(a) The participating agency must 

inform parents when personally 

identifiable information collected, 

maintained, or used under this part is 

no longer needed to provide services to 

the child under Part C of the Act, the 

GEPA provisions in 20 U.S.C. 1232f, 

EDGAR, 34 CFR part 76, and 2 CFR part 

200, as adopted in 2 CFR part 3474. 

* * * * * 

■ 71. Section 303.520 is amended by: 

■ A. Revising paragraph (d)(1). 

■ B. Revising paragraph (e). 

The revisions read as follows: 

§ 303.520 Policies related to use of public 

benefits or insurance or private insurance 

to pay for Part C services. 

* * * * * 

(d) * * * 

(1) Proceeds or funds from public 

insurance or benefits or from private 

insurance are not treated as program 

income for purposes of 2 CFR 200.307. 

* * * * * 

(e) Funds received from a parent or 

family member under a State’s system of 

payments. Funds received by the State 

from a parent or family member under 

the State’s system of payments 

established under § 303.521 are 

considered program income under 2 

CFR 200.307. These funds— 

(1) Are not deducted from the total 

allowable costs charged under part C of 

the Act (as set forth in 2 CFR 

200.307(e)(1)); 

(2) Must be used for the State’s part 

C early intervention services program, 

consistent with 2 CFR 200.307(e)(2); and 

(3) Are considered neither State nor 

local funds under § 303.225(b). 

* * * * * 

§ 303.521 [Amended] 

■ 72. Section 303.521 is amended by 

removing the citation ‘‘34 CFR 80.25’’ in 

paragraph (d)(1) and adding, in its 

place, the citation ‘‘2 CFR 200.307.’’ 

■ 73. Section 303.707 is revised to read 

as follows: 

§ 303.707 Rule of construction. 

Nothing in this subpart may be 

construed to restrict the Secretary from 

utilizing any authority under GEPA, 20 

U.S.C. 1221 et seq., the regulations in 34 

CFR parts 76, 77, and 81, and 2 CFR part 

200, to monitor and enforce the 

requirements of the Act, including the 

imposition of special or high-risk 

conditions under 2 CFR 200.207 and 

3474.5(e). 

(Authority: 20 U.S.C. 1416(g), 1442) 

PART 350—DISABILITY AND 

REHABILITATION RESEARCH 

PROJECTS AND CENTERS PROGRAM 

■ 74. The authority citation for part 350 

continues to read as follows: 

Authority: Sec. 204; 29 U.S.C. 761–762, 

unless otherwise noted. 

■ 75. Section 350.4 is amended by: 

■ A. Removing and reserving 

paragraphs (a)(1), (a)(4), and (a)(7). 

■ B. Adding a new paragraph (d). 

The addition reads as follows: 

§ 350.4 What regulations apply? 

* * * * * 

(d) The Uniform Administrative 

Requirements, Cost Principles, and 

Audit Requirements for Federal Awards 

in 2 CFR part 200, as adopted in 2 CFR 

part 3474, and the OMB Guidelines to 

Agencies on Governmentwide 

Debarment and Suspension 

(Nonprocurement) in 2 CFR part 180, as 

adopted in 2 CFR part 3485. 

* * * * * 

PART 361—STATE VOCATIONAL 

REHABILITATION SERVICES 

PROGRAM 

■ 76. The authority citation for part 361 

continues to read as follows: 

Authority: 29 U.S.C. 709(c), unless 

otherwise noted. 

■ 77. Section 361.4 is amended by: 

■ A. Removing and reserving 

paragraphs (a)(1), (a)(5), and (a)(8). 

■ B. Adding a new paragraph (e). 

The addition reads as follows: 

§ 361.4 Applicable regulations. 

* * * * * 

(e)(1) 2 CFR part 180 (OMB 

Guidelines to Agencies on 

Governmentwide Debarment and 

Suspension (Nonprocurement)), as 

adopted at 2 CFR part 3485; and 

(2) 2 CFR part 200 (Uniform 

Administrative Requirements, Cost 

Principles, and Audit Requirements for 

Federal Awards) as adopted at 2 CFR 

part 3474. 

* * * * * 

§ 361.60 [Amended] 

■ 78. Section 361.60 is amended by: 

■ A. In paragraph (b)(1), removing the 

citation ‘‘34 CFR 80.24’’ and adding, in 

its place, the citation ‘‘2 CFR 200.306.’’ 

■ B. In paragraph (b)(2), removing the 

citation ‘‘34 CFR 80.24(a)(2)’’ and 

adding, in its place, the citation ‘‘2 CFR 

200.306(b).’’ 

■ 79. Section 361.63 is amended by: 

■ A. Revising paragraph (c)(3)(i). 

■ B. Revising paragraph (c)(3)(ii). 

■ C. Revising the authority citation. 

The revisions read as follows. 

§ 361.63 Program income. 

* * * * * 

(c) * * * 

(3) * * * 

(i) An addition to the grant funds to 

be used for additional allowable 

program expenditures, in accordance 

with 2 CFR 200.307(e)(2); or 


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(ii) A deduction from total allowable 

costs, in accordance with 2 CFR 

200.307(e)(1). 

* * * * * 

(Authority: Section 108 of the Act; 29 U.S.C. 

728) 

PART 363—THE STATE SUPPORTED 

EMPLOYMENT SERVICES PROGRAM 

■ 80. The authority citation for part 363 

continues to read as follows: 

Authority: 29 U.S.C. 795j–q, unless 

otherwise noted. 

■ 81. Section 363.5 is amended by: 

■ A. Removing and reserving 

paragraphs (a)(4) and (a)(7). 

■ B. Adding a new paragraph (d) after 

the note following paragraph (c). 

The addition reads as follows: 

§ 363.5 What regulations apply? 

* * * * * 

(d)(1) 2 CFR part 180 (OMB 

Guidelines to Agencies on 

Governmentwide Debarment and 

Suspension (Nonprocurement)), as 

adopted at 2 CFR part 3485; and 

(2) 2 CFR part 200 (Uniform 

Administrative Requirements, Cost 

Principles, and Audit Requirements for 

Federal Awards), as adopted at 2 CFR 

part 3474. 

* * * * * 

PART 364—STATE INDEPENDENT 

LIVING SERVICES PROGRAM AND 

CENTERS FOR INDEPENDENT LIVING 

PROGRAM: GENERAL PROVISIONS 

■ 82. The authority citation for part 364 

is revised to read as follows: 

Authority: 29 U.S.C. 796–796f–5, unless 

otherwise noted. 

■ 83. Section 364.3 is amended by: 

■ A. Removing and reserving 

paragraphs (a)(1), (a)(6), and (a)(9). 

■ B. Adding a new paragraph (d). 

The addition reads as follows: 

§ 364.3 What regulations apply? 

* * * * * 

(d)(1) 2 CFR part 180 (OMB 

Guidelines to Agencies on Debarment 

and Suspension (Nonprocurement)), as 

adopted at 2 CFR part 3485; and 

(2) 2 CFR part 200 (Uniform 

Administrative Requirements, Cost 

Principles, and Audit Requirements for 

Federal Awards) as adopted at 2 CFR 

part 3474. 

■ 84. Section 364.5 is amended by 

revising paragraph (c)(2) to read as 

follows: 

§ 364.5 What is program income and how 

may it be used? 

* * * * * 

(c) * * * 

(2) A service provider is authorized to 

treat program income as— 

(i) A deduction from total allowable 

costs charged to a Federal grant, in 

accordance with 2 CFR 200.307(e)(1); or 

(ii) An addition to the grant funds to 

be used for additional allowable 

program expenditures, in accordance 

with 2 CFR 200.307(e)(2) 

* * * * * 

■ 85. Section 364.21 is amended by 

revising paragraph (l) to read as follows: 

§ 364.21 What are the requirements for the 

Statewide Independent Living Council 

(SILC)? 

* * * * * 

(l) Conflict of interest. The code of 

conduct provisions in 2 CFR 200.318 

and the conflict of interest provisions in 

34 CFR 75.524 and 75.525 apply to 

members of the SILC. For purposes of 

this paragraph and 2 CFR 200.318 and 

34 CFR 75.524, and 75.525, a SILC is not 

considered a government, governmental 

entity, or governmental recipient. 

* * * * * 

§ 364.34 [Amended] 

■ 86. Section 364.34 is amended by 

removing from the introductory text the 

word ‘‘EDGAR’’ and adding in its place 

the citation ‘‘2 CFR part 200’’. 

§ 364.35 [Amended] 

■ 87. Section 364.35 is amended by 

removing from the introductory text the 

word ‘‘EDGAR’’ and adding in its place 

the citation ‘‘2 CFR part 200’’. 

PART 365—STATE INDEPENDENT 

LIVING SERVICES 

■ 88. The authority citation for part 365 

continues to read as follows: 

Authority: 29 U.S.C. 796e–796e–2, unless 

otherwise noted. 

■ 89. Section 365.13 is amended by 

revising the introductory text to 

paragraph (a) to read as follows: 

§ 365.13 What requirements apply if the 

State’s non-Federal share is in cash? 

(a) Except as further limited by 

paragraph (b) of this section, 

expenditures that meet the requirements 

of 2 CFR 200.306 may be used to meet 

the non-Federal share matching 

requirement under section 712(b) of the 

Act if— 

* * * * * 

■ 90. Section 365.15 is amended by 

revising paragraph (a) to read as follows: 

§ 365.15 What requirements apply if the 

State’s non-Federal share is in kind? 

* * * * * 

(a) Used to meet the matching 

requirement under section 712(b) of the 

Act if the in-kind contributions meet the 

requirements of 2 CFR 200.306 and if 

the in-kind contributions would be 

considered allowable costs under this 

part, as determined by the cost 

principles in 2 CFR part 200, subpart 

E—Cost Principles; and 

* * * * * 

■ 91. Section 365.23 is amended by: 

■ A. Revising paragraph (b). 

■ B. Revising paragraph (c). 

The revisions read as follows: 

§ 365.23 How does a State make a 

subgrant or enter into a contract? 

* * * * * 

(b) The provisions concerning the 

administration of subgrants and 

contracts in 34 CFR parts 76 and 2 CFR 

part200 apply to the State. 

(c) Cross-reference: See 34 CFR part 

76 and 2 CFR part 200. 

* * * * * 

PART 367—INDEPENDENT LIVING 

SERVICES FOR OLDER INDIVIDUALS 

WHO ARE BLIND 

■ 92. The authority citation for part 367 

continues to read as follows: 

Authority: 29 U.S.C. 796k, unless 

otherwise noted. 

■ 93. Section 367.4 is amended by: 

■ A. Removing and reserving 

paragraphs (a)(1), (a)(6), and (a)(9). 

■ B. Adding a new paragraph (e). 

The addition reads as follows: 

§ 367.4 What regulations apply? 

* * * * * 

(e)(1) 2 CFR part 180 (OMB 

Guidelines to Agencies on Debarment 

and Suspension (Nonprocurement)), as 

adopted at 2 CFR part 3485; and 

(2) 2 CFR part 200 (Uniform 

Administrative Requirements, Cost 

Principles, and Audit Requirements for 

Federal Awards) as adopted at 2 CFR 

part 3474. 

* * * * * 

PART 369—VOCATIONAL 

REHABILITATION SERVICE 

PROJECTS 

■ 94. The authority citation for part 369 

continues to read as follows: 

Authority: 29 U.S.C. 711(c), 732, 750, 

777(a)(1), 777b, 777f, and 795g, unless 

otherwise noted. 

■ 95. Section 369.3 is amended by: 

■ A. Removing and reserving 

paragraphs (a)(1), (a)(5), and (a)(8). 

■ B. Adding a new paragraph (d). 

The addition reads as follows. 

§ 369.3 What regulations apply? 

* * * * * 

(d)(1) 2 CFR part 180 (OMB 

Guidelines to Agencies on Debarment 


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and Suspension (Nonprocurement)), as 

adopted at 2 CFR part 3485; and 

(2) 2 CFR part 200 (Uniform 

Administrative Requirements, Cost 

Principles, and Audit Requirements for 

Federal Awards), as adopted at 2 CFR 

part 3474. 

* * * * * 

PART 370—CLIENT ASSISTANCE 

PROGRAM 

■ 96. The authority citation for part 370 

continues to read as follows: 

Authority: 29 U.S.C. 732, unless otherwise 

noted. 

■ 97. Section 370.5 is amended by: 

■ A. Removing and reserving 

paragraphs (a)(1), (a)(5), and (a)(8). 

■ B. Revising the note after paragraph 

(c). 

■ C. Adding a new paragraph (d), to 

follow the revised note. 

The revision and addition read as 

follows: 

§ 370.5 What regulations apply? 

* * * * * 

Note: Any funds made available to a State 

under this program that are transferred by a 

State to a designated agency do not constitute 

a subgrant, as that term is defined in 34 CFR 

77.1. The designated agency is not, therefore, 

in these circumstances a subgrantee, as that 

term is defined in that section and used in 

34 CFR part 76. 

(d)(1) 2 CFR part 180 (OMB 

Guidelines to Agencies on Debarment 

and Suspension (Nonprocurement)), as 

adopted at 2 CFR part 3485; and 

(2) 2 CFR part 200 (Uniform 

Administrative Requirements, Cost 

Principles, and Audit Requirements for 

Federal Awards) as adopted at 2 CFR 

part 3474. 

* * * * * 

■ 98. Section 370.30 is amended by 

revising paragraph (c) to read as follows: 

§ 370.30 How does the Secretary allocate 

funds? 

* * * * * 

(c) Unless prohibited or otherwise 

provided by State law, regulation, or 

policy, the Secretary pays to the 

designated agency, from the State 

allotment under paragraph (a) or (b) of 

this section, the amount specified in the 

State’s approved request. Because the 

designated agency is the eventual, if not 

the direct, recipient of the CAP funds, 

34 CFR part 81 applies to the designated 

agency, whether or not the designated 

agency is the actual recipient of the CAP 

grant. However, because it is the State 

that submits an application for and 

receives the CAP grant, the State 

remains the grantee for purposes of 34 

CFR parts 76 and 77 and the recipient 

under 2 CFR 200.86. In addition, both 

the State and the designated agency are 

considered recipients for purposes of 34 

CFR part 81. 

* * * * * 

■ 99. Section 370.40 is amended by: 

■ A. Revising paragraph (a). 

■ B. Removing and reserving paragraph 

(b). 

■ C. Revising paragraph (c). 

The revisions read as follows: 

§ 370.40 What are allowable costs? 

(a) The designated agency shall apply 

the cost principles in accordance with 2 

CFR part 200, subpart E—Cost 

Principles. 

* * * * * 

(c) In addition to those allowable 

costs established in 2 CFR part 200, and 

consistent with the program activities 

listed in § 370.4, the cost of travel in 

connection with the provision to a 

client or client applicant of assistance 

under this program is allowable. The 

cost of travel includes the cost of travel 

for an attendant if the attendant must 

accompany the client or client 

applicant. 

* * * * * 

§ 370.44 [Amended] 

■ 100. Section 370.44 is amended by 

removing from the introductory text, the 

term ‘‘EDGAR’’ and adding, in its place, 

the citation ‘‘2 CFR part 200.’’ 

PART 373—SPECIAL 

DEMONSTRATION PROGRAMS 

■ 101. The authority citation for part 

373 continues to read as follows: 

Authority: 29 U.S.C. 773(b), unless 

otherwise noted. 

■ 102. Section 373.3 is amended by: 

■ A. Removing and reserving 

paragraphs (a)(1), (a)(5), and (a)(8). 

■ B. Adding a new paragraph (d). 

The addition reads as follows: 

§ 373.3 What regulations apply? 

* * * * * 

(d)(1) 2 CFR part 180 (OMB 

Guidelines to Agencies on Debarment 

and Suspension (Nonprocurement)), as 

adopted at 2 CFR part 3485; and 

(2) 2 CFR part 200 (Uniform 

Administrative Requirements, Cost 

Principles, and Audit Requirements for 

Federal Awards), as adopted at 2 CFR 

part 3474. 

* * * * * 

■ 103. Section 373.23 is amended by 

revising paragraph (b) to read as follows: 

§ 373.23 What additional requirements 

must be met? 

* * * * * 

(b) A grantee may not make a subgrant 

under this part. However, a grantee may 

contract for supplies, equipment, and 

other services, in accordance with 2 

CFR part 200, subpart D—Post Federal 

Award Requirements, Procurement 

Standards. 

* * * * * 

PART 377—DEMONSTRATION 

PROJECTS TO INCREASE CLIENT 

CHOICE PROGRAM 

■ 104. The authority citation for part 

377 is revised to read to read as follows: 

Authority: 29 U.S.C. 773(a), unless 

otherwise noted. 

■ 105. Section 377.4 is amended by: 

■ A. Removing and reserving 

paragraphs (a)(1), (a)(5), and (a)(8). 

■ B. Adding a new paragraph (d). 

The addition reads as follows: 

§ 377.4 What regulations apply? 

* * * * * 

(d)(1) 2 CFR part 180 (OMB 

Guidelines to Agencies on Debarment 

and Suspension (Nonprocurement)), as 

adopted at 2 CFR part 3485; and 

(2) 2 CFR part 200 (Uniform 

Administrative Requirements, Cost 

Principles, and Audit Requirements for 

Federal Awards) as adopted at 2 CFR 

part 3474. 

* * * * * 

■ 106. Section 377.5 is amended by 

revising paragraph (b) to read as follows. 

§ 377.5 What definitions apply? 

* * * * * 

(b) Definitions in EDGAR and 2 CFR 

part 200. (1) The following terms used 

in this part are defined in 34 CFR 77.1: 

Applicant 

Application 

Award 

Budget period 

Department 

EDGAR 

Grant 

Grantee 

Nonprofit 

Project 

Public 

Secretary 

(2) The following terms used in this 

part are defined in 2 CFR part 200: 

Federal Award 

Recipient 

* * * * * 

PART 380—[REMOVED AND 

RESERVED] 

■ 107. Part 380 is removed and 

reserved. 

PART 381—PROTECTION AND 

ADVOCACY OF INDIVIDUAL RIGHTS 

■ 108. The authority citation for part 

381 continues to read as follows: 


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Authority: 29 U.S.C. 794e, unless 

otherwise noted. 

■ 109. Section 381.4 is amended by: 

■ A. Removing and reserving 

paragraphs (a)(1), (a)(6), and (a)(9). 

■ B. Adding a new paragraph (d). 

The addition reads as follows: 

§ 381.4 What regulations apply? 

* * * * * 

(d)(1) 2 CFR part 180 (OMB 

Guidelines to Agencies on Debarment 

and Suspension (Nonprocurement)), as 

adopted at 2 CFR part 3485; and 

(2) 2 CFR part 200 (Uniform 

Administrative Requirements, Cost 

Principles, and Audit Requirements for 

Federal Awards) as adopted at 2 CFR 

part 3474. 

* * * * * 

PART 385—REHABILITATION 

TRAINING 

■ 110. The authority citation for part 

385 is revised to read as follows: 

Authority: 29 U.S.C. 709(c) and 772, 

unless otherwise noted. 

■ 111. Section 385.3 is amended by: 

■ A. Removing and reserving 

paragraphs (a)(1), (a)(5), and (a)(8). 

■ B. Adding a new paragraph (d). 

The addition reads as follows: 

§ 385.3 What regulations apply to these 

programs? 

* * * * * 

(d)(1) 2 CFR part 180 (OMB 

Guidelines to Agencies on Debarment 

and Suspension (Nonprocurement)), as 

adopted at 2 CFR part 3485; and 

(2) 2 CFR part 200 (Uniform 

Administrative Requirements, Cost 

Principles, and Audit Requirements for 

Federal Awards), as adopted at 2 CFR 

part 3474. 

* * * * * 

PART 396—TRAINING OF 

INTERPRETERS FOR INDIVIDUALS 

WHO ARE DEAF AND INDIVIDUALS 

WHO ARE DEAF-BLIND 

■ 112. The authority citation for part 

396 is revised to read as follows: 

Authority: 29 U.S.C. 709(c) and 772(f), 

unless otherwise noted. 

■ 113. Section 396.3 is amended by: 

■ A. Removing and reserving 

paragraphs (a)(1), (a)(5), and (a)(8). 

■ B. Adding a new paragraph (d). 

The addition reads as follows: 

§ 396.3 What regulations apply? 

* * * * * 

(d)(1) 2 CFR part 180 (OMB 

Guidelines to Agencies on Debarment 

and Suspension (Nonprocurement)), as 

adopted at 2 CFR part 3485; and 

(2) 2 CFR part 200 (Uniform 

Administrative Requirements, Cost 

Principles, and Audit Requirements for 

Federal Awards) as adopted at 2 CFR 

part 3474. 

* * * * * 

■ 114. The heading of Chapter IV is 

revised to read as follows: 

CHAPTER IV—OFFICE OF CAREER, 

TECHNICAL, AND ADULT EDUCATION, 

DEPARTMENT OF EDUCATION 

PART 400—CAREER, TECHNICAL, 

AND APPLIED TECHNOLOGY 

EDUCATION PROGRAMS—GENERAL 

PROVISIONS 

■ 115. The authority citation for part 

400 continues to read as follows: 

Authority: 20 U.S.C. 2301 et seq., unless 

otherwise noted. 

■ 116. The heading of part 400 is 

revised to read as set forth above. 

■ 117. Section 400.3 is amended by: 

■ A. Removing and reserving 

paragraphs (a)(1), (a)(6), and (a)(9). 

■ B. Adding a new paragraph (e). 

The addition reads as follows: 

§ 400.3 What other regulations apply to the 

Vocational and Applied Technology 

Education Programs? 

* * * * * 

(e)(1) 2 CFR part 180 (OMB 

Guidelines to Agencies on Debarment 

and Suspension (Nonprocurement)), as 

adopted at 2 CFR part 3485; and 

(2) 2 CFR part 200 (Uniform 

Administrative Requirements, Cost 

Principles, and Audit Requirements for 

Federal Awards), as adopted at 2 CFR 

part 3474. 

* * * * * 

■ 118. Section 400.4 is amended by 

revising the introductory text to 

paragraph (a) to read as follows: 

§ 400.4 What definitions apply to the 

Vocational and Applied Technology 

Education Programs? 

(a) General definitions. The following 

terms used in regulations for the 

Vocational and Applied Technology 

Education Programs are defined in 2 

CFR part 200, subpart A, or 34 CFR 77.1: 

* * * * * 

PART 426—[REMOVED AND 

RESERVED] 

■ 119. Part 426 is removed and 

reserved. 

PART 460—[REMOVED AND 

RESERVED] 

■ 120. Part 460 is removed and 

reserved. 

PART 464—[REMOVED AND 

RESERVED] 

■ 121. Part 464 is removed and 

reserved. 

PART 491—[REMOVED AND 

RESERVED] 

■ 122. Part 491 is removed and 

reserved. 

CHAPTER V—OFFICE OF BILINGUAL 

EDUCATION AND MINORITY LANGUAGES 

AFFAIRS, DEPARTMENT OF EDUCATION 

PART 535—[REMOVED AND 

RESERVED] 

■ 123. Part 535 is removed and 

reserved. 

CHAPTER VI—OFFICE OF 

POSTSECONDARY EDUCATION, 

DEPARTMENT OF EDUCATION 

PART 606—DEVELOPING HISPANICSERVING INSTITUTIONS PROGRAM 

■ 124. The authority citation for part 

606 continues to read as follows: 

Authority: 20 U.S.C. 1101 et seq., unless 

otherwise noted. 

■ 125. Section 606.6 is amended by: 

■ A. Removing and reserving 

paragraphs (a)(1) and (a)(6). 

■ B. Adding a new paragraph (c). 

The addition reads as follows. 

§ 606.6 What regulations apply? 

* * * * * 

(c)(1) 2 CFR part 180 (OMB 

Guidelines to Agencies on 

Governmentwide Debarment and 

Suspension (Nonprocurement)), as 

adopted at 2 CFR part 3485; and 

(2) 2 CFR part 200 (Uniform 

Administrative Requirements, Cost 

Principles, and Audit Requirements for 

Federal Awards), as adopted at 2 CFR 

part 3474. 

* * * * * 

PART 607—STRENGTHENING 

INSTITUTIONS PROGRAM 

■ 126. The authority citation for part 

607 is revised to read as follows: 

Authority: 20 U.S.C. 1057–1059g, 1067q, 

1068–1068h unless otherwise noted. 

■ 127. Section 607.6 is amended by: 

■ A. Removing and reserving 

paragraphs (a)(1) and (a)(6). 

■ B. Adding a new paragraph (c). 

The addition reads as follows: 

§ 607.6 What regulations apply? 

* * * * * 

(c)(1) 2 CFR part 180 (OMB 

Guidelines to Agencies on 

Governmentwide Debarment and 

Suspension (Nonprocurement)), as 

adopted at 2 CFR part 3485; and 


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(2) 2 CFR part 200 (Uniform 

Administrative Requirements, Cost 

Principles, and Audit Requirements for 

Federal Awards), as adopted at 2 CFR 

part 3474. 

* * * * * 

PART 608—STRENGTHENING 

HISTORICALLY BLACK COLLEGES 

AND UNIVERSITIES PROGRAM 

■ 128. The authority citation for part 

608 is revised to read as follows: 

Authority: 20 U.S.C. 1060 through 1063a, 

1063c, 1067q and 1068–1068h, unless 

otherwise noted. 

■ 129. Section 608.3 is amended by: 

■ A. Removing and reserving 

paragraphs (a)(1) and (a)(6). 

■ B. Adding a new paragraph (c). 

The addition reads as follows. 

§ 608.3 What regulations apply? 

* * * * * 

(c)(1) 2 CFR part 180 (OMB 

Guidelines to Agencies on 

Governmentwide Debarment and 

Suspension (Nonprocurement)), as 

adopted at 2 CFR part 3485; and 

(2) 2 CFR part 200 (Uniform 

Administrative Requirements, Cost 

Principles, and Audit Requirements for 

Federal Awards), as adopted at 2 CFR 

part 3474. 

* * * * * 

■ 130. Section 608.4 is amended by 

revising the introductory text in 

paragraph (a) to read as follows: 

§ 608.4 What definitions apply? 

(a) General definitions. The following 

terms used in this part are defined in 2 

CFR part 200, subpart A, or 34 CFR 77.1: 

* * * * * 

PART 609—STRENGTHENING 

HISTORICALLY BLACK GRADUATE 

INSTITUTIONS PROGRAM 

■ 131. The authority citation for part 

609 continues to read as follows: 

Authority: 20 U.S.C. 1063b and 1063c, 

unless otherwise noted. 

■ 132. Section 609.3 is amended by: 

■ A. Removing and reserving 

paragraphs (a)(1) and (a)(6). 

■ B. Adding a new paragraph (c). 

The addition reads as follows: 

§ 609.3 What regulations apply? 

* * * * * 

(c)(1) 2 CFR part 180 (OMB 

Guidelines to Agencies on 

Governmentwide Debarment and 

Suspension (Nonprocurement)), as 

adopted at 2 CFR part 3485; and 

(2) 2 CFR part 200 (Uniform 

Administrative Requirements, Cost 

Principles, and Audit Requirements for 

Federal Awards), as adopted at 2 CFR 

part 3474. 

* * * * * 

■ 133. Section 609.4 is amended by 

revising the introductory text of 

paragraph (a) to reads as follows: 

§ 609.4 What definitions apply? 

(a) General definitions. The following 

terms used in this part are defined in 2 

CFR part 200, subpart A, or 34 CFR 77.1: 

* * * * * 

PART 611—TEACHER QUALITY 

ENHANCEMENT GRANTS PROGRAM 

■ 134. The authority citation for part 

611 continues to read as follows: 

Authority: 20 U.S.C. 1021 et seq. and 

1024(e), unless otherwise noted. 

■ 135. Section 611.61 is amended by 

revising the introductory text to read as 

follows: 

§ 611.61 What is the maximum indirect 

cost rate that applies to a recipient’s use of 

program funds? 

Notwithstanding 34 CFR 75.560– 

75.562 and 2 CFR 200.414, Indirect 

(F&A) costs, the maximum indirect cost 

rate that any recipient of funds under 

the Teacher Quality Enhancement 

Grants Program may use to charge 

indirect costs to these funds is the lesser 

of— 

* * * * * 

PART 614—PREPARING 

TOMORROW’S TEACHERS TO USE 

TECHNOLOGY 

■ 136. The authority citation for part 

614 continues to read as follows: 

Authority: 20 U.S.C. 6832, unless 

otherwise noted. 

■ 137. Section 614.3 is amended by: 

■ A. Removing and reserving 

paragraphs (a)(1), (a)(5), and (a) (8). 

■ B. Adding a new paragraph (c). 

The addition reads as follows: 

§ 614.3 What regulations apply to this 

program? 

* * * * * 

(c)(1) 2 CFR part 180 (OMB 

Guidelines to Agencies on 

Governmentwide Debarment and 

Suspension (Nonprocurement)), as 

adopted at 2 CFR part 3485; and 

(2) 2 CFR part 200 (Uniform 

Administrative Requirements, Cost 

Principles, and Audit Requirements for 

Federal Awards), as adopted at 2 CFR 

part 3474. 

* * * * * 

PART 628—ENDOWMENT 

CHALLENGE GRANT PROGRAM 

■ 138. The authority citation for part 

628 continues to read as follows: 

Authority: 20 U.S.C. 1065, unless 

otherwise noted. 

■ 139. Section 628.5 is amended by: 

■ A. Removing and reserving 

paragraphs (b)(1)(i) and (b)(1)(ii). 

■ B. Adding new paragraphs (b)(1)(v), 

(b)(1)(vi), and (b)(1)(vii). 

■ C. Revising paragraph (b)(2). 

■ D. Adding a new paragraph (c). 

The revision and additions read as 

follows: 

§ 628.5 What regulations apply to the 

Endowment Challenge Grant Program? 

* * * * * 

(b)(1) * * * 

(v) 34 CFR part 82 (New Restrictions 

on Lobbying). 

(vi) 34 CFR part 84 (Governmentwide 

Requirements For Drug-Free Workplace 

(Financial Assistance)). 

(vii) 34 CFR part 86 (Drug and 

Alcohol Abuse Prevention). 

(2) Except as specifically indicated in 

paragraph (b)(1) and (c) of this section, 

the Education Department General 

Administrative Regulations and the 

regulations in 2 CFR part 200 do not 

apply. 

(c) The following regulations in title 

2 of the CFR apply to the Endowment 

Challenge Grant Program: 

(1) 2 CFR part 180 (OMB Guidelines 

to Agencies on Governmentwide 

Debarment and Suspension 

(Nonprocurement)), as adopted at 2 CFR 

part 3485. 

(2) 2 CFR 200.328 (Monitoring and 

reporting program performance), as 

adopted at 2 CFR part 3474. 

(3) 2 CFR part 200, subpart F (Audit 

Requirements), as adopted by ED at 2 

CFR part 3474. 

* * * * * 

■ 140. Section 628.47 is amended by: 

■ A. Revising paragraph (d). 

■ B. Revising paragraph (e). 

The revisions read as follows: 

§ 628.47 What shall a grantee record and 

report? 

* * * * * 

(d) Carry out the audit required in 2 

CFR part 200, subpart F; 

(e) Comply with the reporting 

requirements in 2 CFR 200.512; and 

* * * * * 

PART 636—[REMOVED AND 

RESERVED] 

■ 141. Part 636 is removed and 

reserved. 


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PART 637—MINORITY SCIENCE AND 

ENGINEERING IMPROVEMENT 

PROGRAM 

■ 142. The authority citation for part 

637 continues to read as follows: 

Authority: 20 U.S.C. 1067–1067c, 1067g– 

1067k, 1068, and 1068b, unless otherwise 

noted. 

■ 143. Section 637.3 is amended by: 

■ A. Removing and reserving 

paragraphs (a)(1) and (a)(6). 

■ B. Adding a new paragraph (c). 

The addition reads as follows: 

§ 637.3 What regulations apply to the 

Minority Science and Engineering 

Improvement Program? 

* * * * * 

(c)(1) 2 CFR part 180 (OMB 

Guidelines to Agencies on 

Governmentwide Debarment and 

Suspension (Nonprocurement)), as 

adopted at 2 CFR part 3485; and 

(2) 2 CFR part 200 (Uniform 

Administrative Requirements, Cost 

Principles, and Audit Requirements for 

Federal Awards), as adopted at 2 CFR 

part 3474. 

* * * * * 

PART 642—TRAINING PROGRAM FOR 

FEDERAL TRIO PROGRAMS 

■ 144. The authority citation for part 

642 continues to read as follows: 

Authority: 20 U.S.C. 1070a–11 and 1070a– 

17, unless otherwise noted. 

■ 145. Section 642.5 is amended by: 

■ A. Revising paragraph (a). 

■ B. Adding a new paragraph (c). 

The addition and revision read as 

follows: 

§ 642.5 What regulations apply? 

* * * * * 

(a) The Education Department General 

Administrative Regulations (EDGAR) in 

34 CFR parts 75 (except for §§ 75.215 

through 75.221), 77, 79, 82, 84, 86, 97, 

98, and 99. 

* * * * * 

(c)(1) 2 CFR part 180 (OMB 

Guidelines to Agencies on 

Governmentwide Debarment and 

Suspension (Nonprocurement)), as 

adopted at 2 CFR part 3485; and 

(2) 2 CFR part 200 (Uniform 

Administrative Requirements, Cost 

Principles, and Audit Requirements for 

Federal Awards), as adopted at 2 CFR 

part 3474. 

* * * * * 

■ 146. Section 642.6 is amended by 

revising the heading and introductory 

text in paragraph (a) to read as follows: 

§ 642.6 What definitions apply? 

(a) General definitions. The following 

terms are defined in 2 CFR part 200, 

subpart A, or 34 CFR 77.1: 

* * * * * 

PART 643—TALENT SEARCH 

■ 147. The authority citation for part 

643 continues to read as follows: 

Authority: 20 U.S.C. 1070a–11 and 1070a– 

12, unless otherwise noted. 

■ 148. Section 643.6 is amended by: 

■ A. Revising paragraph (a). 

■ B. Adding a new paragraph (c). 

The revision and addition read as 

follows: 

§ 643.6 What regulations apply? 

* * * * * 

(a) The Education Department General 

Administrative Regulations (EDGAR) in 

34 CFR parts 75 (except for §§ 75.215 

through 75.221), 77, 79, 82, 84, 86, 97, 

98, and 99. 

* * * * * 

(c)(1) 2 CFR part 180 (OMB 

Guidelines to Agencies on Debarment 

and Suspension (Nonprocurement)), as 

adopted at 2 CFR part 3485; and 

(2) 2 CFR part 200 (Uniform 

Administrative Requirements, Cost 

Principles, and Audit Requirements for 

Federal Awards), as adopted at 2 CFR 

part 3474. 

* * * * * 

■ 149. Section 643.7 is amended by 

revising the heading and introductory 

text in paragraph (a) to read as follows: 

§ 643.7 What definitions apply? 

(a) General definitions. The following 

terms used in this part are defined in 2 

CFR part 200, subpart A, or in 34 CFR 

77.1: 

* * * * * 

■ 150. Section 643.30 is amended by 

revising the introductory text to read as 

follows: 

§ 643.30 What are allowable costs? 

The cost principles that apply to the 

Talent Search program are in 2 CFR part 

200, subpart E. Allowable costs include 

the following if they are reasonably 

related to the objectives of the project: 

* * * * * 

PART 644—EDUCATIONAL 

OPPORTUNITY CENTERS 

■ 151. The authority citation for part 

644 continues to read as follows: 

Authority: 20 U.S.C. 1070a–11 and 1070a– 

16, unless otherwise noted. 

■ 152. Section 644.6 is amended by: 

■ A. Revising paragraph (a). 

■ B. Adding a new paragraph (c). 

The addition and revision read as 

follows: 

§ 644.6 What regulations apply? 

* * * * * 

(a) The Education Department General 

Administrative Regulations (EDGAR) in 

34 CFR parts 75 (except for §§ 75.215 

through 75.221), 77, 79, 82, 84, 86, 97, 

98, and 99. 

* * * * * 

(c)(1) 2 CFR part 180 (OMB 

Guidelines to Agencies on 

Governmentwide Debarment and 

Suspension (Nonprocurement)), as 

adopted at 2 CFR part 3485; and 

(2) 2 CFR part 200 (Uniform 

Administrative Requirements, Cost 

Principles, and Audit Requirements for 

Federal Awards), as adopted at 2 CFR 

part 3474. 

* * * * * 

■ 153. Section 644.7 is amended by 

revising the heading and introductory 

text in paragraph (a) to read as follows: 

§ 644.7 What definitions apply? 

* * * * * 

(a) General definitions. The following 

terms used in this part are defined in 2 

CFR part 200, subpart A, or in 34 CFR 

77.1: 

* * * * * 

■ 154. Section 644.30 is amended by 

revising the introductory text to read as 

follows: 

§ 644.30 What are allowable costs? 

The cost principles that apply to the 

Educational Opportunity Centers 

program are in 2 CFR part 200, subpart 

E. Allowable costs include the following 

if they are reasonably related to the 

objectives of the project: 

* * * * * 

PART 645—UPWARD BOUND 

PROGRAM 

■ 155. The authority citation for part 

645 continues to read as follows: 

Authority: 20 U.S.C. 1070a–11 and 1070a– 

13, unless otherwise noted. 

■ 156. Section 645.5 is amended by: 

■ A. Revising paragraph (a). 

■ B. Adding a new paragraph (c). 

The revision and addition read as 

follows: 

§ 645.5 What regulations apply? 

* * * * * 

(a) The Education Department General 

Administrative Regulations (EDGAR) in 

34 CFR parts 75 (except for §§ 75.215 

through 75.221), 77, 79, 80, 82, 84, 85, 

86, 97, 98, and 99. 

* * * * * 

(c)(1) 2 CFR part 180 (OMB 

Guidelines to Agencies on 

Governmentwide Debarment and 

Suspension (Nonprocurement)), as 

adopted at 2 CFR part 3485; and 


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(2) 2 CFR part 200 (Uniform 

Administrative Requirements, Cost 

Principles, and Audit Requirements for 

Federal Awards), as adopted at 2 CFR 

part 3474. 

* * * * * 

■ 157. Section 645.6 is amended by 

revising the heading and introductory 

text in paragraph (a) to read as follows. 

§ 645.6 What definitions apply to the 

Upward Bound Program? 

* * * * * 

(a) General definitions. The following 

terms used in this part are defined in 2 

CFR part 200, subpart A, or 34 CFR 77.1: 

* * * * * 

■ 158. Section 645.40 is amended by 

revising the introductory text to read as 

follows: 

§ 645.40 What are allowable costs? 

The cost principles that apply to the 

Upward Bound Program are in 2 CFR 

part 200, subpart E. Allowable costs 

include the following if they are 

reasonably related to the objectives of 

the project: 

* * * * * 

PART 646—STUDENT SUPPORT 

SERVICES PROGRAM 

■ 159. The authority citation for part 

646 continues to read as follows: 

Authority: 20 U.S.C. 1070a–11 and 1070a– 

14, unless otherwise noted. 

■ 160. Section 646.6 is amended by: 

■ A. Revising paragraph (a). 

■ B. Adding a new paragraph (c). 

The revision and addition read as 

follows: 

§ 646.6 What regulations apply? 

* * * * * 

(a) The Education Department General 

Administrative Regulations (EDGAR) in 

34 CFR parts 75 (except for §§ 75.215 

through 75.221), 77, 79, 82, 84, 86, 97, 

98, and 99. 

* * * * * 

(c)(1) 2 CFR part 180 (OMB 

Guidelines to Agencies on 

Governmentwide Debarment and 

Suspension (Nonprocurement)), as 

adopted at 2 CFR part 3485; and 

(2) 2 CFR part 200 (Uniform 

Administrative Requirements, Cost 

Principles, and Audit Requirements for 

Federal Awards), as adopted at 2 CFR 

part 3474. 

* * * * * 

■ 161. Section 646.7 is amended by 

revising the heading and introductory 

text in paragraph (a) to read as follows: 

§ 646.7 What definitions apply? 

* * * * * 

(a) General definitions. The following 

terms used in this part are defined in 2 

CFR part 200, subpart A, or 34 CFR 77.1: 

* * * * * 

■ 162. Section 646.30 is amended by 

revising the introductory text to read as 

follows: 

§ 646.30 What are allowable costs? 

The cost principles that apply to the 

Student Support Services Program are 

in 2 CFR part 200, subpart E. Allowable 

costs include the following if they are 

reasonably related to the objectives of 

the project: 

* * * * * 

PART 647—RONALD E. MCNAIR 

POSTBACCALAUREATE 

ACHIEVEMENT PROGRAM 

■ 163. The authority citation for part 

647 continues to read as follows: 

Authority: 20 U.S.C. 1070a–11 and 1070a– 

15, unless otherwise noted. 

■ 164. Section 647.6 is amended by: 

■ A. Revising paragraph (a). 

■ B. Adding a new paragraph (c). 

The revision and addition read as 

follows: 

§ 647.6 What regulations apply? 

(a) The Education Department General 

Administrative Regulations (EDGAR) in 

34 CFR parts 75 (except for §§ 75.215 

through 75.221), 77, 79, 82, 84, 86, 97, 

98, and 99. 

* * * * * 

(c)(1) 2 CFR part 180 (OMB 

Guidelines to Agencies on 

Governmentwide Debarment and 

Suspension (Nonprocurement)), as 

adopted at 2 CFR part 3485; and 

(2) 2 CFR part 200 (Uniform 

Administrative Requirements, Cost 

Principles, and Audit Requirements for 

Federal Awards), as adopted at 2 CFR 

part 3474. 

* * * * * 

■ 165. Section 647.7 is amended by 

revising the heading and introductory 

text in paragraph (a) to read as follows: 

§ 647.7 What definitions apply? 

* * * * * 

(a) General definitions. The following 

terms used in this part are defined in 2 

CFR part 200, subpart A, or 34 CFR 77.1: 

* * * * * 

■ 166. Section 647.30 is amended by 

revising the introductory text to read as 

follows: 

§ 647.30 What are allowable costs? 

The cost principles in 2 CFR part 200, 

subpart E, may include the following 

costs reasonably related to carrying out 

a McNair project: 

* * * * * 

PART 648—GRADUATE ASSISTANCE 

IN AREAS OF NATIONAL NEED 

■ 167. The authority citation for part 

648 is revised to read as follows: 

Authority: 20 U.S.C. 1135–1135e, unless 

otherwise noted. 

■ 168. Section 648.8 is amended by: 

■ A. Removing and reserving 

paragraphs (a)(1) and (a)(6). 

■ B. Adding a new paragraph (c). 

The addition reads as follows: 

§ 648.8 What regulations apply? 

* * * * * 

(c)(1) 2 CFR part 180 (OMB 

Guidelines to Agencies on 

Governmentwide Debarment and 

Suspension (Nonprocurement)), as 

adopted at 2 CFR part 3485; and 

(2) 2 CFR part 200 (Uniform 

Administrative Requirements, Cost 

Principles, and Audit Requirements for 

Federal Awards), as adopted at 2 CFR 

part 3474. 

* * * * * 

■ 169. Section 648.9 is amended by 

revising the heading and introductory 

text in paragraph (a) to read as follows: 

§ 648.9 What definitions apply? 

(a) General definitions. The following 

terms used in this part are defined in 2 

CFR part 200, subpart A, or 34 CFR 77.1: 

* * * * * 

PART 650—JACOB K. JAVITS 

FELLOWSHIP PROGRAM 

■ 170. The authority citation for part 

650 continues to read as follows: 

Authority: 20 U.S.C. 1134–1134d, unless 

otherwise noted. 

■ 171. Section 650.3 is amended by: 

■ A. Removing and reserving 

paragraphs (b)(1) and (b)(5). 

■ B. Adding a new paragraph (c). 

The addition reads as follows: 

§ 650.3 What regulations apply to the 

Jacob K. Javits Fellowship Program? 

* * * * * 

(c)(1) 2 CFR part 180 (OMB 

Guidelines to Agencies on 

Governmentwide Debarment and 

Suspension (Nonprocurement)), as 

adopted at 2 CFR part 3485; and 

(2) 2 CFR part 200 (Uniform 

Administrative Requirements, Cost 

Principles, and Audit Requirements for 

Federal Awards), as adopted at 2 CFR 

part 3474. 

* * * * * 

PART 654—ROBERT C. BYRD 

HONORS SCHOLARSHIP PROGRAM 

■ 172. The authority citation for part 

654 continues to read as follows: 


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76104 Federal Register / Vol. 79, No. 244 / Friday, December 19, 2014 / Rules and Regulations 

Authority: 20 U.S.C. 1070d–31–1070d–41, 

unless otherwise noted. 

■ 173. Section 654.4 is amended by: 

■ A. Removing and reserving 

paragraphs (a)(5) and (a)(7). 

■ B. Adding a new paragraph (c). 

The addition reads as follows: 

§ 654.4 What regulations apply? 

* * * * * 

(c)(1) 2 CFR part 180 (OMB 

Guidelines to Agencies on 

Governmentwide Debarment and 

Suspension (Nonprocurement)), as 

adopted at 2 CFR part 3485; and 

(2) 2 CFR part 200 (Uniform 

Administrative Requirements, Cost 

Principles, and Audit Requirements for 

Federal Awards), as adopted at 2 CFR 

part 3474. 

* * * * * 

PART 655—INTERNATIONAL 

EDUCATION PROGRAMS—GENERAL 

PROVISIONS 

■ 174. The authority citation for part 

655 is revised to read as follows: 

Authority: 20 U.S.C 1132–1132–7, unless 

otherwise noted. 

■ 175. Section 655.3 is amended by: 

■ A. Removing and reserving 

paragraphs (a)(1) and (a)(6). 

■ B. Adding a new paragraph (d). 

The addition reads as follows: 

§ 655.3 What regulations apply to the 

International Education Programs? 

* * * * * 

(d)(1) 2 CFR part 180 (OMB 

Guidelines to Agencies on 

Governmentwide Debarment and 

Suspension (Nonprocurement)), as 

adopted at 2 CFR part 3485; and 

(2) 2 CFR part 200 (Uniform 

Administrative Requirements, Cost 

Principles, and Audit Requirements for 

Federal Awards), as adopted at 2 CFR 

part 3474. 

* * * * * 

■ 176. Section 655.4 is amended by 

revising the heading and introductory 

text in paragraph (a) to read as follows: 

§ 655.4 What definitions apply to the 

International Education Programs? 

(a) General definitions. The following 

terms used in this part and 34 CFR parts 

656, 657, 658, 660, 661, and 669 are 

defined in 2 CFR part 200, subpart A, 

or 34 CFR 77.1: 

* * * * * 

PART 661—BUSINESS AND 

INTERNATIONAL EDUCATION 

PROGRAM 

■ 177. The authority citation for part 

661 continues to read as follows: 

Authority: 20 U.S.C. 1130–1130b, unless 

otherwise noted. 

■ 178. Section 661.4 is amended by 

revising the heading and introductory 

text in paragraph (a) to read as follows: 

§ 661.4 What definitions apply to the 

Business and International Education 

Program? 

(a) General definitions. The following 

terms used in this part are defined in 2 

CFR part 200, subpart A, or 34 CFR 77.1: 

* * * * * 

PART 662—FULBRIGHT-HAYS 

DOCTORAL DISSERTATION 

RESEARCH ABROAD FELLOWSHIP 

PROGRAM 

■ 179. The authority citation for part 

662 continues to read as follows: 

Authority: Section 102(b)(6) of the Mutual 

Educational and Cultural Exchange Act of 

1961 (Fulbright-Hays Act), 22 U.S.C. 

2452(b)(6), unless otherwise noted. 

■ 180. Section 662.6 is amended by: 

■ A. Revising paragraph (b). 

■ B. Adding a new paragraph (c). 

The revision and addition read as 

follows: 

§ 662.6 What regulations apply to this 

program? 

* * * * * 

(b) The Education Department 

General Administrative Regulations 

(EDGAR) (34 CFR parts 75, 77, 81, 82, 

and 86). 

(c)(1) 2 CFR part 180 (OMB 

Guidelines to Agencies on 

Governmentwide Debarment and 

Suspension (Nonprocurement)), as 

adopted at 2 CFR part 3485; and 

(2) 2 CFR part 200 (Uniform 

Administrative Requirements, Cost 

Principles, and Audit Requirements for 

Federal Awards), as adopted at 2 CFR 

part 3474. 

* * * * * 

■ 181. Section 662.7 is amended by 

revising the introductory text in 

paragraph (a) to read as follows: 

§ 662.7 What definitions apply to this 

program? 

(a) Definitions of the following terms 

as used in this part are contained in 2 

CFR part 200, subpart A, or 34 CFR part 

77: 

* * * * * 

PART 663—FULBRIGHT-HAYS 

FACULTY RESEARCH ABROAD 

FELLOWSHIP PROGRAM 

■ 182. The authority citation for part 

663 continues to read as follows: 

Authority: Sec. 102(b)(6) of the Mutual 

Educational and Cultural Exchange Act of 

1961 (Fulbright-Hays Act), 22 U.S.C. 

2452(b)(6), unless otherwise noted. 

■ 183. Section 663.6 is amended by: 

■ A. Revising paragraph (b). 

■ B. Adding a new paragraph (c). 

The revision and addition read as 

follows: 

§ 663.6 What regulations apply to this 

program? 

* * * * * 

(b) The Education Department 

General Administrative Regulations 

(EDGAR) (34 CFR parts 75, 77, 81, 82, 

and 86). 

(c)(1) 2 CFR part 180 (OMB 

Guidelines to Agencies on 

Governmentwide Debarment and 

Suspension (Nonprocurement)), as 

adopted at 2 CFR part 3485; and 

(2) 2 CFR part 200 (Uniform 

Administrative Requirements, Cost 

Principles, and Audit Requirements for 

Federal Awards), as adopted at 2 CFR 

part 3474. 

* * * * * 

■ 184. Section 663.7 is amended by 

revising the introductory text in 

paragraph (a) to read as follows: 

§ 663.7 What definitions apply to this 

program? 

(a) Definitions of the following terms 

as used in this part are contained in 2 

CFR part 200, subpart A, or 34 CFR part 

77: 

* * * * * 

PART 664—FULBRIGHT-HAYS GROUP 

PROJECTS ABROAD PROGRAM 

■ 185. The authority citation for part 

664 continues to read as follows: 

Authority: 22 U.S.C. 2452(b)(6), unless 

otherwise noted. 

■ 186. Section 664.4 is amended by: 

■ A. Revising paragraph (b). 

■ B. Adding a new paragraph (c). 

The revision and addition read as 

follows: 

§ 664.4 What regulations apply to the 

Fulbright-Hays Group Projects Abroad 

Program? 

* * * * * 

(b) The Education Department 

General Administrative Regulations 

(EDGAR) (34 CFR parts 75, 77, 81, 82, 

and 86). 

(c)(1) 2 CFR part 180 (OMB 

Guidelines to Agencies on 

Governmentwide Debarment and 

Suspension (Nonprocurement)), as 

adopted at 2 CFR part 3485; and 

(2) 2 CFR part 200 (Uniform 

Administrative Requirements, Cost 

Principles, and Audit Requirements for 

Federal Awards), as adopted at 2 CFR 

part 3474. 

* * * * * 


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Federal Register / Vol. 79, No. 244 / Friday, December 19, 2014 / Rules and Regulations 76105 

1None of the other regulations in 2 CFR part 200 

apply to lenders. Only those requirements in 

subpart F-Audit Requirements, apply to lenders, as 

required under the Single Audit Act Amendments 

of 1996 (31 U.S.C. Chapter 75). 

2None of the other regulations in 2 CFR part 200 

apply to lenders. Only those requirements in 

subpart F-Audit Requirements, apply to lenders, as 

required under the Single Audit Act Amendments 

of 1996 (31 U.S.C. Chapter 75). 

3None of the other regulations in 2 CFR part 200 

apply to lenders. Only those requirements in 

subpart F-Audit Requirements, apply to lenders, as 

required under the Single Audit Act Amendments 

of 1996 (31 U.S.C. Chapter 75). 

■ 187. Section 664.5 is amended by 

revising the heading and introductory 

text in paragraph (a) to read as follows: 

§ 664.4 What definitions apply to the 

International Education Programs? 

(a) General definitions. The following 

terms used in this part are defined in 2 

CFR part 200, subpart A, or 34 CFR part 

77: 

* * * * * 

PART 682—FEDERAL FAMILY 

EDUCATION LOAN (FFEL) PROGRAM 

■ 188. The authority citation for part 

682 is revised to read as follows: 

Authority: 20 U.S.C. 1071–1087–4, unless 

otherwise noted. 

■ 189. Section 682.305 is amended by 

revising paragraph (c)(2)(v) to read as 

follows: 

§ 682.305 Procedures for payment of 

interest benefits and special allowance and 

collection of origination and loan fees. 

* * * * * 

(c) * * * 

(2) * * * 

(v) A lender must conduct the audit 

required by this paragraph in 

accordance with 31 U.S.C. 7502 and 2 

CFR part 200, subpart F—Audit 

Requirements.1

* * * * * 

■ 190. Section 682.410 is amended by: 

■ A. Removing and reserving paragraph 

(b)(1)(i). 

■ B. Revising paragraph (b)(1)(ii). 

The revision reads as follows: 

§ 682.410 Fiscal, administrative, and 

enforcement requirements. 

* * * * * 

(b) * * * 

(1) * * * 

(ii) A guaranty agency must conduct 

an audit in accordance with 31 U.S.C. 

7502 and 2 CFR part 200, subpart F— 

Audit Requirements.2 If a nonprofit 

guaranty agency meets the criteria in 2 

CFR part 200, subpart F—Audit 

Requirements to have a program specific 

audit, and chooses that option, the 

program-specific audit must meet the 

following requirements: 

* * * * * 

■ 191. Section 682.416 is amended by: 

■ A. Revising paragraph (e)(3). 

■ B. Removing and reserving paragraph 

(e)(4). 

The revision reads as follows: 

§ 682.416 Requirements for third-party 

servicers and lenders contracting with 

third-party servicers. 

* * * * * 

(e) * * * 

(3) A third-party servicer must 

conduct the audit required by this 

paragraph in accordance with 31 U.S.C. 

7502 and 2 CFR part 200, subpart F— 

Audit Requirements.3

* * * * * 

PART 692—LEVERAGING 

EDUCATIONAL ASSISTANCE 

PARTNERSHIP PROGRAM 

■ 192. The authority citation for part 

692 continues to read as follows: 

Authority: 20 U.S.C. 1070c–1070c–4, 

unless otherwise noted. 

■ 193. Section 692.3 is amended by: 

■ A. Removing and reserving paragraph 

(b)(5). 

■ B. Revising paragraph (b)(7). 

■ C. Adding a new paragraph (d). 

The revision and addition read as 

follows: 

§ 692.3 What regulations apply to the 

LEAP Program? 

* * * * * 

(b) * * * 

(7) 34 CFR part 84 (Governmentwide 

Requirements For Drug-Free Workplace 

(Financial Assistance)). 

* * * * * 

(d)(1) 2 CFR part 180 (OMB 

Guidelines to Agencies on 

Governmentwide Debarment and 

Suspension (Nonprocurement)), as 

adopted at 2 CFR part 3485; and 

(2) 2 CFR part 200 (Uniform 

Administrative Requirements, Cost 

Principles, and Audit Requirements for 

Federal Awards), as adopted at 2 CFR 

part 3474. 

* * * * * 

PART 694—GAINING EARLY 

AWARENESS AND READINESS FOR 

UNDERGRADUATE PROGRAMS 

(GEAR UP) 

■ 194. The authority citation for part 

692 continues to read as follows: 

Authority: 20 U.S.C. 1070a–21–1070a–28. 

■ 195. Section 694.11 is amended by 

revising the introductory text to read as 

follows: 

§ 694.11 What is the maximum indirect 

cost rate for an agency of a State or local 

government? 

Notwithstanding 34 CFR 75.560– 

75.562 and 2 CFR part 200, subpart E— 

Cost Principles, the maximum indirect 

cost rate that an agency of a State or 

local government receiving funds under 

GEAR UP may use to charge indirect 

costs to these funds is the lesser of— 

* * * * * 

Subtitle C—Regulations Relating to 

Education 

CHAPTER XI—[REMOVED AND RESERVED] 

■ 197. Chapter XI, consisting of Part 

1100, is removed and reserved. 

Arne Duncan, 

Secretary of Education. 

Executive Office of the President 

Office of National Drug Control Policy 

For the reasons set forth in the 

common preamble and under the 

authority of 5 U.S.C. 301 and the 

authorities listed below, 2 CFR chapter 

XXXVI is established and 21 CFR 

chapter III is amended as follows: 

Title 2—Grants and Agreements 

■ 1. In Title 2, Chapter XXXVI, 

consisting of part 3603, is established to 

read as follows: 

CHAPTER XXXVI—OFFICE OF NATIONAL 

DRUG CONTROL POLICY, EXECUTIVE 

OFFICE OF THE PRESIDENT 

PART 3603—UNIFORM 

ADMINISTRATIVE REQUIREMENTS, 

COST PRINCIPLES, AND AUDIT 

REQUIREMENTS FOR FEDERAL 

AWARDS 

Authority: 21 U.S.C. 1706; 21 U.S.C. 

1703(d), 1703(f), 21 U.S.C. 1701, 21 U.S.C. 

1521–1548, 21 U.S.C. 2001–2003, Office of 

National Drug Control Policy Reauthorization 

Act of 2006, P.L 109–469 (2006), 2 CFR part 

200. 

§ 3603.1 Adoption of 2 CFR Part 200. 

Under the authority listed above, the 

Executive Office of the President, Office 

of National Drug Control Policy 

(ONDCP) adopts the Office of 

Management and Budget (OMB) 

Guidance in 2 CFR part 200. Thus, this 

part gives regulatory effect to the OMB 

guidance and supplements the guidance 

as needed for ONDCP. 


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76106 Federal Register / Vol. 79, No. 244 / Friday, December 19, 2014 / Rules and Regulations 

Title 21—Food and Drugs 

CHAPTER III—OFFICE OF NATIONAL DRUG 

CONTROL POLICY 

PARTS 1403, 1404, AND 1405— 

[REMOVED AND RESERVED] 

■ 1. Remove and reserve parts 1403, 

1404 and 1405. 

Daniel S. Rader, 

Deputy General Counsel. 

Gulf Coast Ecosystem Restoration 

Council 

For the reasons set forth in the 

common preamble, Chapter LIX 

consisting of Part 5900 is established in 

Title 2 of the Code of Federal 

Regulations to read as follows: 

Title 2 Grants and Agreements 

CHAPTER LIX—GULF COAST ECOSYSTEM 

RESTORATION COUNCIL 

PART 5900—UNIFORM 

ADMINISTRATIVE REQUIREMENTS, 

COST PRINCIPLES, AND AUDIT 

REQUIREMENTS FOR FEDERAL 

AWARDS 

Authority: 5 U.S.C. 301; 33 U.S.C. 

1321(t)(2); 38 U.S.C. 501; 2 CFR part 200. 

§ 5900.101 Adoption of 2 CFR Part 200. 

Under the authority listed above, the 

Gulf Coast Ecosystem Restoration 

Council adopts the Office of 

Management and Budget (OMB) 

Guidance in 2 CFR part 200. Thus, this 

part gives regulatory effect to the OMB 

guidance and supplements the guidance 

as needed for the Council. 

Jeffrey K. Roberson, 

Senior Counsel, Department of Commerce. 

[FR Doc. 2014–28697 Filed 12–18–14; 8:45 am] 

BILLING CODE 6050–28–4210–67–4910–9X–3280–F5– 

4410–18–4710–24–3510–17–9110–9J–9111–23–6450–01– 

7537–01–6560–50–6560–58–7036–01–7515–01U–7536–01– 

6116–01–4334–12–8320–01–4150–24–7555–01–5001–06– 

7510–13–8025–01–4191–02–4810–25–3410–KS–3410–22– 

3410–15–3410–05–4000–01–4510–FM–3110–01–P 


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