§ 1574 TITLE 29—LABOR Page 622

U.S.C. 49) (relating to the attendance of witnesses and the production of books, papers, and

documents) are made applicable to the Secretary.

(Pub. L. 97–300, title I, §163, Oct. 13, 1982, 96 Stat.

1348.)

§ 1574. Fiscal controls; sanctions

(a) Establishment of State controls; cost principles; procurement standards; monitoring;

noncompliance; certification to Secretary;

corrective action; report to Congress

(1) Each State shall establish such fiscal control and fund accounting procedures as may be

necessary to assure the proper disbursal of, and

accounting for, Federal funds paid to the recipient under subchapters II and III of this chapter.

Such procedures shall ensure that all financial

transactions are conducted and records maintained in accordance with generally accepted accounting principles applicable in each State.

(2) The Secretary shall prescribe regulations

establishing uniform cost principles substantially equivalent to such principles generally applicable to recipients of Federal grants funds. At

a minimum, such standards shall provide that,

to be allowable, costs must—

(A) be necessary and reasonable for proper

and efficient administration of the program

under this chapter;

(B) be allocable to the program under this

chapter; and

(C) not be a general expense required to

carry out the overall responsibilities of State,

local, or federally recognized Indian tribal

governments except as specifically provided by

this chapter.

(3) The Governor, in accordance with minimum requirements established by the Secretary

in regulations, shall prescribe and implement

procurement standards to ensure fiscal accountability and prevent fraud and abuse in programs

administered under this chapter. The Secretary,

in establishing such minimum requirements,

shall consult with the Inspector General of the

Department of Labor and take into consideration relevant aspects of the circulars issued by

the Director of the Office of Management and

Budget. Such minimum requirements shall include provisions to ensure that for States, substate areas, and service delivery areas—

(A) procurements shall be conducted in a

manner providing full and open competition;

(B) the use of sole source procurements shall

be minimized to the extent practicable, but in

every case shall be justified;

(C) procurements shall include an appropriate analysis of the reasonableness of costs

and prices;

(D) procurements shall not provide excess

program income (for nonprofit and governmental entities) or excess profit (for private

for-profit entities), and that appropriate factors shall be utilized in determining whether

such income or profit is excessive, such as—

(i) the complexity of the work to be performed;

(ii) the risk borne by the contractor; and

(iii) market conditions in the surrounding

geographical area;

(E) procurements shall clearly specify deliverables and the basis for payment;

(F) written procedures shall be established

for procurement transactions;

(G) no grantee, contractor, subgrantee, or

subcontractor shall engage in any conflict of

interest, actual or apparent, in the selection,

award, or administration of a contract or

grant under this chapter;

(H) all grantees and subgrantees shall conduct oversight to ensure compliance with procurement standards; and

(I) procurement transactions between units

of State or local governments, and any other

entities organized principally as the administrative entity for service delivery areas, shall

be conducted on a cost reimbursable basis.

(4) The Governor shall annually conduct onsite monitoring of each service delivery area and

substate area within the State to ensure compliance with the procurement standards established pursuant to paragraph (3).

(5) If the Governor determines that a service

delivery area or substate area is not in compliance with the procurement standards established pursuant to paragraph (3), the Governor

shall—

(A) require corrective action to secure

prompt compliance; and

(B) impose the sanctions provided under subsection (b) of this section in the event of failure to take the required corrective action.

(6) The Governor shall biennially certify to

the Secretary that—

(A) the State has implemented the procurement standards established under paragraph

(3);

(B) the State has monitored substate areas

and service delivery areas to ensure compliance with the procurement standards as required under paragraph (4); and

(C) the State has taken appropriate action

to secure compliance pursuant to paragraph

(5).

(7) If the Secretary determines that the Governor has not fulfilled the requirements of this

subsection, the Secretary shall—

(A) require corrective action to secure

prompt compliance; and

(B) impose the sanctions provided under subsection (f) of this section in the event of failure of the Governor to take the required corrective action.

(8) The Secretary, in consultation with the Inspector General, shall review the implementation of this subsection and submit a report to

the appropriate committees of the Congress, not

later than October 1, 1995, evaluating the effectiveness of this subsection in ensuring fiscal accountability and containing such recommendations as the Secretary determines to be appropriate.

(b) Noncompliance; action by Governor; appeal

to Secretary; action by Secretary

(1) If, as a result of financial and compliance

audits or otherwise, the Governor determines

that there is a substantial violation of a specific

provision of this chapter or the regulations

under this chapter, and corrective action has

not been taken, the Governor shall—
Page 623 TITLE 29—LABOR § 1574

(A) issue a notice of intent to revoke approval of all or part of the plan affected; or

(B) impose a reorganization plan, which may

include—

(i) restructuring the private industry

council involved;

(ii) prohibiting the use of designated service providers;

(iii) selecting an alternative entity to administer the program for the service delivery area involved;

(iv) merging the service delivery area into

1 or more other existing service delivery

areas; or

(v) other such changes as the Secretary or

Governor determines necessary to secure

compliance.

(2)(A) The actions taken by the Governor pursuant to paragraph (1)(A) may be appealed to

the Secretary under the same terms and conditions as the disapproval of the plan and shall not

become effective until—

(i) the time for appeal has expired; or

(ii) the Secretary has issued a decision.

(B) The actions taken by the Governor pursuant to paragraph (1)(B) may be appealed to the

Secretary, who shall make a final decision not

later than 60 days of the receipt of the appeal.

(3) If the Governor fails to promptly take the

actions required under paragraph (1), the Secretary shall take such actions.

(c) Comptroller General’s evaluation; report to

Congress; Comptroller’s access to records

(1) The Comptroller General of the United

States shall, on a selective basis, evaluate the

expenditures by the recipients of grants under

this chapter in order to assure that expenditures

are consistent with the provisions of this chapter and to determine the effectiveness of each

recipient in accomplishing the purposes of this

chapter. The Comptroller General shall conduct

the evaluations whenever he determines it necessary and he shall periodically report to the

Congress on the findings of such evaluations.

(2) Nothing in this chapter shall be deemed to

relieve the Inspector General of the Department

of Labor of his responsibilities under the Inspector General Act.

(3) For the purpose of evaluating and reviewing programs established or provided for by this

chapter, the Comptroller General shall have access to and the right to copy any books, accounts, records, correspondence, or other documents pertinent to such programs that are in

the possession, custody, or control of the State,

a private industry council established under section 1512 of this title, any recipient of funds

under this chapter, or any subgrantee or contractor of such recipients.

(d) Recipient’s liability for noncomplying expenditures

Every recipient shall repay to the United

States amounts found not to have been expended

in accordance with this chapter. The Secretary

may offset such amounts against any other

amount to which the recipient is or may be entitled under this chapter unless he determines

that such recipient should be held liable pursuant to subsection (e) of this section. No such action shall be taken except after notice and opportunity for a hearing have been given to the

recipient.

(e) Conditions for recipient’s liability; conditions

for recipient’s liability for subgrantee noncompliance; Secretary’s discretion

(1) Each recipient shall be liable to repay such

amounts, from funds other than funds received

under this chapter, upon a determination that

the misexpenditure of funds was due to willful

disregard of the requirements of this chapter,

gross negligence, or failure to observe accepted

standards of administration. No such finding

shall be made except after notice and opportunity for a fair hearing.

(2) In determining whether to impose any

sanction authorized by this section against a recipient for violations by a subgrantee of such recipient under this chapter or the regulations

under this chapter, the Secretary shall first determine whether such recipient has adequately

demonstrated that it has—

(A) established and adhered to an appropriate system for the award and monitoring of

contracts with subgrantees which contains acceptable standards for ensuring accountability;

(B) entered into a written contract with

such subgrantee which established clear goals

and obligations in unambiguous terms;

(C) acted with due diligence to monitor the

implementation of the subgrantee contract,

including the carrying out of the appropriate

monitoring activities (including audits) at

reasonable intervals; and

(D) taken prompt and appropriate corrective

action upon becoming aware of any evidence

of a violation of this chapter or the regulations under this chapter by such subgrantee.

(3) If the Secretary determines that the recipient has demonstrated substantial compliance

with the requirements of paragraph (2), the Secretary may waive the imposition of sanctions

authorized by this section upon such recipient.

The Secretary is authorized to impose any sanction consistent with the provisions of this chapter and any applicable Federal or State law directly against any subgrantee for violation of

this chapter or the regulations under this chapter.

(f) Emergency situations and immediate termination

In emergency situations, if the Secretary determines it is necessary to protect the integrity

of the funds or ensure the proper operation of

the program, the Secretary may immediately

terminate or suspend financial assistance, in

whole or in part, if the recipient is given prompt

notice and the opportunity for a subsequent

hearing within 30 days after such termination or

suspension. The Secretary shall not delegate

any of the functions or authority specified in

this subsection, other than to an officer whose

appointment was required to be made by and

with the advice and consent of the Senate.

(g) Secretary’s action against harassment of complainants

If the Secretary determines that any recipient

under this chapter has discharged or in any
§ 1575 TITLE 29—LABOR Page 624

other manner discriminated against a participant or against any individual in connection

with the administration of the program involved, or against any individual because such

individual has filed any complaint or instituted

or caused to be instituted any proceeding under

or related to this chapter, or has testified or is

about to testify in any such proceeding or investigation under or related to this chapter, or

otherwise unlawfully denied to any individual a

benefit to which that individual is entitled

under the provisions of this chapter or the Secretary’s regulations, the Secretary shall, within

thirty days, take such action or order such corrective measures, as necessary, with respect to

the recipient or the aggrieved individual, or

both.

(h) Remedies not exclusive

The remedies under this section shall not be

construed to be exclusive remedies.

(Pub. L. 97–300, title I, §164, Oct. 13, 1982, 96 Stat.

1348; Pub. L. 102–367, title I, §142, Sept. 7, 1992,

106 Stat. 1046.)

REFERENCES IN TEXT

The Inspector General Act, referred to in subsec.

(c)(2), probably means the Inspector General Act of

1978, Pub. L. 95–452, Oct. 12, 1978, 92 Stat. 1101, as

amended, which is set out in the Appendix to Title 5,

Government Organization and Employees.

AMENDMENTS

1992—Subsec. (a). Pub. L. 102–367, §142(a), amended

subsec. (a) generally. Prior to amendment, subsec. (a)

consisted of pars. (1) to (3) relating to State fiscal controls and fund accounting procedures, biennial audits,

and Federal audit standards.

Subsec. (b). Pub. L. 102–367, §142(b), amended subsec.

(b) generally. Prior to amendment, subsec. (b) read as

follows:

‘‘(1) Whenever, as a result of financial and compliance

audits or otherwise, the Governor determines that

there is a substantial violation of a specific provision

of this chapter or the regulations, and corrective action

has not been taken, the Governor may issue a notice of

intent to revoke approval of all or part of the plan affected. Such notice may be appealed to the Secretary

under the same terms and conditions as the disapproval

of the plan and shall not become effective until (A) the

time for appeal has expired or (B) the Secretary has issued a decision.

‘‘(2) The Governor shall withdraw the notice if the appropriate corrective action has been taken.’’

EFFECTIVE DATE OF 1992 AMENDMENT

Amendment by Pub. L. 102–367 effective July 1, 1993,

see section 701(a) of Pub. L. 102–367, set out as an Effective Date of 1992 Amendment; Transition Provisions

note under section 1501 of this title.

SECTION REFERRED TO IN OTHER SECTIONS

This section is referred to in sections 1511, 1514, 1517,

1551, 1578 of this title.

§ 1575. Reports, recordkeeping, and investigations

(a) Sufficiency of records; frequency; standardized records

(1) Recipients shall keep records that are sufficient to permit the preparation of reports required by this chapter and to permit the tracing

of funds to a level of expenditure adequate to insure that the funds have not been spent unlawfully.

(2) Every recipient shall maintain such records

and submit such reports, in such form and containing such information, as the Secretary requires regarding the performance of its programs. Such records and reports shall be submitted to the Secretary but shall not be required to be submitted more than once each

quarter unless specifically requested by the Congress or a committee thereof.

(3) In order to allow for the preparation of national estimates necessary to meet the requirements of subsection (c) of this section, recipients shall maintain standardized records for all

individual participants and provide to the Secretary a sufficient number of such records to

provide for an adequate analysis.

(4)(A) Except as provided in subparagraph (B),

records maintained by recipients pursuant to

this subsection shall be made available to the

public upon request.

(B) Subparagraph (A) shall not apply to—

(i) information, the disclosure of which

would constitute a clearly unwarranted invasion of personal privacy; and

(ii) trade secrets, or commercial or financial

information, obtained from a person and privileged or confidential.

(C) Recipients may charge fees sufficient to recover costs applicable to the processing of requests for records under subparagraph (A).

(b) Investigations; audit notice

(1)(A) In order to evaluate compliance with

the provisions of this chapter, the Secretary

shall conduct, in several States, in each fiscal

year investigations of the use of funds received

by recipients under this chapter.

(B) In order to insure compliance with the provisions of this chapter, the Comptroller General

of the United States may conduct investigations

of the use of funds received under this chapter

by any recipient.

(2) In conducting any investigation under this

chapter, the Secretary or the Comptroller General of the United States may not request the

compilation of any new information not readily

available to such recipient.

(3)(A) In carrying out any audit under this

chapter (other than any initial audit survey or

any audit investigating possible criminal or

fraudulent conduct), either directly or through

grant or contract, the Secretary, the Inspector

General, or the Comptroller General shall furnish to the State, administrative entity, recipient, or other entity to be audited, advance notification of the overall objectives and purposes of

the audit, and any extensive recordkeeping or

data requirements to be met, not fewer than 14

days (or as soon as practicable), prior to the

commencement of the audit.

(B) If the scope, objectives, or purposes of the

audit change substantially during the course of

the audit, the entity being audited shall be notified of the change as soon as practicable.

(C) The reports on the results of such audits

shall cite the law, regulation, policy, or other

criteria applicable to any finding.

(D) Nothing contained in this chapter shall be

construed so as to be inconsistent with the Inspector General Act of 1978 (5 U.S.C. App.) or

government auditing standards issued by the

Comptroller General.