69390 Federal Register / Vol. 88, No. 192 / Thursday, October 5, 2023 / Proposed Rules 

OFFICE OF MANAGEMENT AND 

BUDGET 

2 CFR Parts 1, 25, 175, 180, 182, 183, 

184, 200 

Guidance for Grants and Agreements 

AGENCY: Office of Federal Financial 

Management, Office of Management and 

Budget. 

ACTION: Proposed rule; notification of 

proposed guidance. 

SUMMARY: The Office of Management 

and Budget (OMB) is proposing to revise 

sections of OMB Guidance for Grants 

and Agreements. This proposed revision 

reflects comments received from Federal 

agencies and those received in response 

to the OMB Notice of Request for 

Information published in the Federal 

Register in February 2023. In response 

to Federal agency and public input, 

OMB is proposing revisions intended in 

many cases to reduce agency and 

recipient burden. OMB proposes both 

policy changes and clarifications to 

existing guidance including plain 

language revisions. OMB also proposes 

to update the guidance to reflect recent 

OMB priorities related to Federal 

financial assistance. Finally, OMB is 

proposing revisions to improve Federal 

financial assistance management, 

transparency, and oversight through 

more accessible and readily 

comprehensible guidance. 

DATES: OMB invites interested persons 

and organizations to submit comments 

on or before December 4, 2023. 

ADDRESSES: Comments on this proposal 

must be submitted electronically before 

the comment closing date to 

www.regulations.gov. In submitting 

comments, please search for recent 

submissions by OMB to find docket 

OMB–2023–0017, which includes the 

full text of the proposed revisions and 

submit comments there. Please provide 

clarity as to the section of the guidance 

that each comment is referencing by 

beginning each comment with the 

section number in brackets. For 

example; if the comment is on 2 CFR 

200.1 include the following before the 

comment [200.1]. The public comments 

received by OMB will be posted at 

http://www.regulations.gov and be a 

matter of public record. Accordingly, 

please do not include in your comments 

any confidential business information or 

information of a personal-privacy 

nature. In general, responses to the 

comments will be summarized and 

included in the preamble of the final 

guidance. 

FOR FURTHER INFORMATION CONTACT: 

Andrew Reisig or Steven Mackey at the 

OMB Office of Federal Financial 

Management via email at 

MBX.OMB.OFFM.Grants@OMB.eop.gov. 

SUPPLEMENTARY INFORMATION: 

Executive Summary 

The Office of Management and Budget 

(OMB) proposes to revise several parts 

of the OMB Guidance for Grants and 

Agreements located in title 2 of the 

Code of Federal Regulations (CFR) to 

further clarify and update guidance to 

Federal agencies on the consistent and 

efficient use of Federal financial 

assistance. This document includes 

proposed revisions to Part 1 (About 

Title 2 of the Code of Federal 

Regulations and Subtitle A); Part 25 

(Universal Identifier and System for 

Award Management); Part 170 

(Reporting Subaward and Executive 

Compensation Information), Part 175 

(Award Term for Trafficking in 

Persons); Part 180 (OMB Guidelines to 

Agencies on Governmentwide 

Debarment and Suspension (Nonprocurement)); Part 182 

(Governmentwide Requirements for 

Drug-Free Workplace (Financial 

Assistance)); Part 183 (Never Contract 

with the Enemy); and Part 200 (Uniform 

Administrative Requirements, Cost 

Principles, and Audit Requirements for 

Federal Awards). 

As explained in further detail below, 

OMB proposes revising 2 CFR for 

reasons including: (1) incorporating 

statutory requirements and 

administration priorities; (2) reducing 

agency and recipient burden; (3) 

clarifying sections that recipients or 

agencies have interpreted in different 

ways; and (4) rewriting applicable 

sections in plain language, improving 

flow, and addressing inconsistent use of 

terms. Consistent with these objectives, 

OMB proposes both policy changes and 

clarifications to existing guidance 

including plain language revisions. 

OMB also proposes to update the 

guidance to reflect recent OMB 

priorities related to Federal financial 

assistance. Finally, OMB’s proposed 

revisions are also intended to improve 

Federal financial assistance 

management, transparency, and 

oversight through more accessible and 

readily comprehensible guidance. 

OMB summarizes its proposals for 

policy changes in this document below. 

OMB also explains its general 

methodology for plain language 

revisions. OMB sought to maintain the 

existing structure of the 2 CFR guidance, 

which remains generally intact and 

mostly consistent with earlier iterations 

of the guidance—for example, in terms 

of the structure of parts, structure of 

subparts, and section numbering. Except 

in cases where OMB proposes policy 

changes or other edits for consistency 

with statutory requirements, OMB also 

generally sought to maintain the 

existing content of the 2 CFR guidance. 

In many cases throughout the guidance, 

however, OMB proposes plain language 

revisions to simplify the guidance text, 

avoid or reduce technical jargon where 

feasible, provide greater consistency, 

and make the text more succinct. 

The proposed revisions align with 

OMB’s authority to: (i) issue guidance 

promoting consistent and efficient use 

of Federal financial assistance 

instruments; and (ii) provide overall 

direction and leadership to Federal 

agencies on policies and requirements 

related to Federal financial assistance. 

See 31 U.S.C. 6307 and 31 U.S.C. 

503(a)(2). Additional authorities for the 

proposed revisions are set forth below. 

Many of the proposed revisions reflect 

comments received from Federal 

agencies and those received from the 

public in response to the OMB Notice of 

Request for Information published in 

the Federal Register in February 2023. 

See 88 FR 8480 (Feb. 9, 2023). 

Background 

Between 2012 and 2013, OMB worked 

with Federal agencies to revise and 

streamline existing guidance to develop 

the Uniform Administrative 

Requirements, Cost Principles, and 

Audit Requirements for Federal Awards 

(Uniform Guidance) located in part 200 

of 2 CFR. 79 FR 78589 (Dec. 26, 2013). 

This effort was intended to assist 

programs in delivering better outcomes 

on behalf of the American people while 

simultaneously reducing administrative 

burden and the risk of fraud, waste, and 

abuse. The Uniform Guidance in part 

200, which OMB established in 2013, 

consolidated, streamlined, and 

superseded requirements from several 

earlier OMB Circulars and guidance 

documents related to grants 

management and implementation of the 

Single Audit Act. OMB explained in 

2013 that its guidance intended to 

improve both the clarity and 

accessibility of these requirements 

across the Federal government. Federal 

award-making agencies implemented 

the Uniform Guidance through an 

interim final rule, which became 

effective on December 26, 2014. 79 FR 

75867 (Dec. 19, 2014). 

OMB generally reviews the Uniform 

Guidance every five years in accordance 

with 2 CFR 200.109. OMB made further 

revisions to the Uniform Guidance in 

2020. 85 FR 49506 (Aug. 13, 2020). The 

2020 revisions addressed topics 

including program development and 

design, as well as measuring recipient 


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performance to assist Federal awarding 

agencies and non-Federal entities to 

improve program goals and objectives, 

share lessons learned, and adopt of 

promising performance practices. 

Based on feedback and ongoing 

engagement with Federal agencies and 

the broader Federal financial assistance 

community, OMB believes that 

additional revisions are now warranted 

to the Uniform Guidance in part 200 to 

further streamline, clarify, and update 

the guidance, including raising certain 

thresholds, where permissible under 

law, in recognition of inflation over 

time. Further information on OMB’s 

objectives for the proposed revisions is 

provided below. 

In addition to proposed revisions in 

part 200, OMB also proposes revisions 

to other parts in subtitle A of 2 CFR for 

similar reasons, including parts 1, 25, 

170, 175, 180, 182, and 183. OMB 

established these parts at different times 

in the last 20 years. See, for example, 69 

FR 26276 (May, 11, 2004) (establishing 

2 CFR for guidance on grants and other 

financial assistance and 

nonprocurement agreements); 70 FR 

51863 (Aug. 31, 2005) (establishing part 

180); 75 FR 55671 (Sep. 14, 2010) 

(establishing part 25); and 75 FR 55663 

(Sep. 14, 2010) (establishing part 170). 

OMB Objectives 

OMB’s objectives for the current 

proposed revisions to several parts of 

subtitle A of 2 CFR include: (1) 

incorporating statutory requirements 

and administration priorities; (2) 

reducing agency and recipient burden; 

(3) clarifying sections that recipients or 

agencies have interpreted in different 

ways; and (4) rewriting applicable 

sections in plain language, improving 

flow, and addressing inconsistent use of 

terms. 

The proposed revisions to the 

Uniform Guidance in part 200 and other 

parts of 2 CFR generally support these 

four objectives. In support of objective 

(1), OMB proposes to implement 

changes throughout the Uniform 

Guidance and other parts to ensure 

consistency with statutory authorities. 

For example, OMB proposes to revise 

Parts 25, 170, and 175 to ensure its 

guidance properly aligns with 

underlying statutes, as amended. These 

potential revisions would reduce 

inconsistencies between OMB’s 

guidance and authorizing statutes to 

ensure proper implementation. OMB 

has also made several structural changes 

to individual parts within Chapter I to 

provide further structural consistency 

throughout OMB’s guidance in 2 CFR. 

In support of objective (2), OMB 

proposes to increase several monetary 

thresholds that have not been updated 

for many years. For example, OMB 

proposes increasing the single audit 

threshold from $750,000 to $1,000,000 

and increasing the threshold from 

$5,000 to $10,000 for determining items 

that are considered to be equipment. 

OMB reviewed previous increases to the 

thresholds and considered current 

economic data when making its 

determinations. In further support of 

reducing burden, OMB is proposing a 

complete revision to the template text 

for a Notice of Funding Opportunity 

(NOFO) located in Appendix I of the 

Uniform Guidance in part 200. With this 

revision, OMB intends to reduce 

administrative burden and unnecessary 

obstacles for applying to Federal 

financial assistance. 

In support of objective (3), OMB 

proposes revisions to 2 CFR to clarify 

areas of misinterpretation. Many of 

these clarifications do not represent a 

change in policy but serve to explain the 

intent of specific sections of the 

Uniform Guidance in part 200, and 

other parts in 2 CFR, with greater 

precision and clarity. OMB received 

feedback from Federal agencies and the 

public stating that Federal agencies and 

the recipient community interpret many 

sections differently. As one example, 

OMB clarifies that Federal agencies 

approve costs requiring prior approval 

when the Federal award is issued if the 

costs were included in the recipient’s 

proposal, and do not require subsequent 

approval prior to expenditure. 

In support of objective (4), OMB 

proposes to revise the guidance to 

follow plain language principles. Plain 

language principles OMB focused on 

included using simple words and 

phrases, avoiding jargon, using terms 

consistently, and being concise. 

Related to OMB’s plain language 

revisions, throughout subparts A to E of 

part 200, OMB proposes to use the terms 

‘‘recipient,’’ ‘‘subrecipient,’’ or both in 

place of ‘‘non-Federal entity.’’ OMB 

believes that the existing usage of ‘‘nonFederal entity’’ in subparts A through E 

of the existing CFR text in part 200 

presents challenges to readers and 

makes it difficult to quickly understand 

what entity is being addressed, 

especially in situations in which 

Federal agencies apply part 200 to 

Federal agencies, for-profit 

organizations, foreign public entities, or 

foreign organizations under 2 CFR 

200.101. In the revisions to part 200, 

OMB uses the term ‘‘non-Federal 

entity,’’ as defined in section 200.1, only 

when that entity is specifically 

intended, such as in subpart F 

implementing the Single Audit Act. In 

many cases in part 200 OMB proposes 

to replace ‘‘non-Federal entity’’ with 

either ‘‘recipient and subrecipient’’ or 

‘‘recipient or subrecipient.’’ In cases 

where the guidance in part 200 relates 

specifically to only either ‘‘recipients’’ 

or ‘‘subrecipients,’’ but not both, OMB 

refers specifically to the applicable 

entity. OMB invites comments on this 

proposal and any effects it may have on 

specific sections or paragraphs of the 

guidance in part 200. 

OMB notes that these revisions 

related to the use of the terms ‘‘nonFederal entity,’’ ‘‘recipient,’’ and 

‘‘subrecipient’’ do not directly change 

the existing scope of applicability of the 

guidance. The applicability provision 

for part 200 at section 200.101, 

continues to provide Federal agencies 

with discretion on whether to apply 

subparts A through E of part 200 to 

Federal agencies, for-profit entities, 

foreign public entities, or foreign 

organizations. In the same section, OMB 

proposes to encourage Federal agencies 

to apply the requirements in subparts A 

to E of part 200 to all recipients in a 

consistent and equitable manner, but 

does not require them to do so. In cases 

in which Federal agencies apply part 

200 to such entities, OMB’s proposal 

further clarifies how the guidance 

applies to those entities as either 

recipients or subrecipients. 

As another example of plain language 

revisions, OMB proposes to replace the 

use of the general term ‘‘OMB 

designated governmentwide systems’’ 

with more specific terms to reduce 

ambiguity for those unfamiliar with the 

Uniform Guidance. In this proposed 

revisions OMB specifically mentions the 

appropriate system, such as SAM.gov, 

USASpending.gov, the Contractor 

Performance Assessment Reporting 

System (CPARS), or Grants.gov. 

The overall goal of OMB’s plain 

language revision effort is to make the 

Uniform Guidance more accessible to 

the general public and ensure more 

equitable access to Federal funding 

opportunities by making the guidance 

on that topic easier to understand. OMB 

does not directly address the proposed 

plain language revisions in this 

preamble unless a revision represents a 

material change to the Uniform 

Guidance. However, OMB invites 

comment on whether any of its plain 

language revisions in part 200, or other 

parts, may have unintended 

consequences. OMB also invites 

comments on whether further 

modifications or additional precision is 

needed in any specific instance, such as 

in the case of OMB’s proposed use of 

the terms ‘‘recipient,’’ ‘‘subrecipient,’’ or 

both in particular sections of the 

guidance. 


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Statutory Authority for OMB Guidance 

for Grants and Agreements 

The Director of OMB is authorized 

under 31 U.S.C. 6307 to ‘‘issue 

supplementary interpretative guidelines 

to promote consistent and efficient use 

of . . . grant agreements . . . and 

cooperative agreements.’’ The Deputy 

Director for Management of OMB is 

authorized under 31 U.S.C. 503 to, 

among other things, provide ‘‘overall 

direction and leadership to the 

executive branch on financial 

management matters by establishing 

financial management policies and 

requirements.’’ 31 U.S.C. 503(a)(2). 

OMB also relies on authorities 

including the Single Audit Act 

Amendments of 1996 (Pub. L. 104–156, 

as amended, codified at 31 U.S.C. 7501– 

7507); the Federal Funding 

Accountability and Transparency Act of 

2006 (FFATA or the Transparency Act) 

(Pub. L. 109–282), as amended; the 

Digital Accountability and 

Transparency Act of 2014 (DATA Act of 

2014) (Pub. L. 113–101), as amended; 

the Federal Program Information Act 

(Pub. L. 95–220 and Pub. L. 98–169, as 

amended, codified at 31 U.S.C. 6101– 

6106); the Federal Grant and 

Cooperative Agreement Act of 1977 

(Pub. L. 95–224, as amended, codified at 

31 U.S.C. 6301–6309); the Office of 

Federal Procurement Policy Act 

(codified at 41 U.S.C. 1101–1131); the 

Budget and Accounting Procedures Act 

of 1950, as amended (codified at 31 

U.S.C. 1101–1126); the Chief Financial 

Officers Act of 1990 (codified at 31 

U.S.C. 503–504); the Trafficking Victims 

Protection Act of 2000 (TVPA), as 

amended (codified at 22 U.S.C. 7101– 

7115); and Executive Order 11541, 

‘‘Prescribing the Duties of the Office of 

Management and Budget and the 

Domestic Policy Council in the 

Executive Office of the President.’’ 

Request for Information Issued by OMB 

in February 2023 

On February 9, 2023, OMB published 

a Notice of Request for Information (RFI) 

in the Federal Register. 88 FR 8480 

(Feb. 9, 2023). OMB received 

approximately 1,250 individual 

comments from all sources, including 

113 submissions from the public 

containing multiple comments in each. 

In response to Federal agency and 

public input, OMB is proposing the 

revisions discussed below. 

Part-by-Part Discussion of the Proposed 

Revisions 

OMB invites comments on the 

proposed revisions throughout subtitle 

A of 2 CFR. OMB identifies areas below 

where comments may be particularly 

useful. 

Part 1—About Title 2 of the Code of 

Federal Regulations and Subtitle A 

OMB proposes to revise the headings 

of title of 2 CFR and Subtitle A and 

Chapter I to replace ‘‘Grants and 

Agreements’’ with ‘‘Federal Financial 

Assistance.’’ This revision will help to 

ensure that the Uniform Guidance is 

understood to be applicable beyond just 

grants and cooperative agreements, 

unless noted differently in the 

applicability provision for the Uniform 

Guidance at section 200.101 or relevant 

provisions in others parts in chapter I. 

OMB proposes to revise section 1.200 

to remove paragraphs (b) and (c), which 

are no longer accurate. When OMB first 

established part 1 in 2004, see 69 FR 

26276 (May 11, 2004), it implemented 

the Federal Financial Assistance 

Management Improvement Act of 1999 

(Pub. L. 106–107). That legislation 

ceased to be effective on November 20, 

2007 based on a sunset date included in 

the law. In addition, chapter II of 

subtitle A in 2 CFR, which now contains 

part 200, was initially intended to 

contain OMB guidance in its ‘‘initial 

form’’ before it was ‘‘finalized.’’ That 

statement no longer accurately reflects 

the structure of subtitle A of 2 CFR nor 

status of the OMB guidance in part 200. 

OMB proposes to provide a more 

succinct statement in section 1.215 

explaining that some of the guidance 

was organized differently within 

previous OMB circulars or other 

guidance documents before 

establishment of title 2 of the CFR. 

Because 2 CFR has now existed for 

almost 20 years in its current format and 

location, OMB does not believe it is 

necessary to continue to include the 

table showing earlier sources of certain 

elements of the OMB guidance in 2 CFR. 

The Federal Register notice establishing 

2 CFR in 2004, see 69 FR 26276 (May, 

11, 2004), and other subsequent Federal 

Register notices establishing and 

revising particular parts and provisions 

of subtitle A in 2 CFR, include that 

information. 

OMB also proposes to revise section 

1.305 to further clarify Federal agency 

responsibilities, such as coordinating 

with the Council on Federal Financial 

Assistance (see OMB Memorandum M– 

23–19), the Grants Quality Service 

Management Office (QSMO), and other 

governance committees. 

OMB also proposes to add section 

1.231 to clarify its intent that if any 

provision of this guidance, as finalized, 

were held to be invalid or 

unenforceable, such provision, or 

combination of provisions, are severable 

from the remaining provisions of the 

guidance, as finalized. 

Part 25—Unique Entity Identifier and 

System for Award Management 

OMB proposes to revise the guidance 

in this part to ensure it properly aligns 

with the authorizing statutes, as 

amended, including the Transparency 

Act and the DATA Act of 2014. OMB 

first revises the title of Part 25 to replace 

‘‘universal identifier’’ with ‘‘unique 

entity identifier.’’ In section 25.105, 

which is renamed ‘‘Applicability,’’ OMB 

proposes to clarify that the requirement 

to obtain a Unique Entity Identifier 

(UEI) and register in SAM.gov does not 

apply to second-tier subrecipients or 

contractors. In support of Federal 

agency requests, OMB proposes to 

clarify that recipients of loan guarantees 

must obtain a UEI and register in 

SAM.gov, while a Federal agency may 

use discretion when determining to 

apply the requirements to beneficiary 

borrowers. 

In section 25.110, OMB proposes to 

clarify that, even if an exception is 

granted, a Federal agency remains 

responsible for reporting data to comply 

with the Transparency Act, as amended, 

except that it may use a generic entity 

identifier in the circumstances 

described. 

Although not included in the 

proposed guidance in this document, 

OMB is also considering other ways of 

reducing the administrative burden 

associated with obtaining a UEI and 

registering in SAM.gov for foreign 

organizations or foreign public entity 

receiving Federal awards between 

$25,000 (the Transparency Act 

threshold for a ‘‘Federal award’’) and 

$250,000 (the simplified acquisition 

threshold). Federal agencies have 

explained to OMB that the process for 

obtaining a UEI and registering in 

SAM.gov can present significant 

challenges for some of their applicants 

for, and recipients of, awards in this 

limited category. Based on this 

feedback, OMB is considering 

establishing a new exception in section 

25.110 that would allow an agency to 

grant a one-time exception from the 

requirement to obtain a UEI, register in 

SAM.gov, or both for foreign 

organizations or foreign public entities 

applying for or receiving an award 

between $25,000 and $250,000 for a 

project or program performed outside 

the U.S. OMB will work with Federal 

agency partners to determine if this 

proposal can be implemented in a way 

that is consistent with Transparency Act 

reporting requirements. If included in 

the final revisions to the guidance, OMB 

will also consider incorporating further 


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limits or safeguards in this exception to 

mitigate risk, such as not allowing its 

application to awards that will include 

subawards above $30,000—the 

threshold for subaward reporting 

established based on the pilot program 

in section 5(b) of the Transparency Act, 

as amended by the Data Act of 2014. 

Public Law 113–101; 85 FR 49506 (Aug. 

13, 2020); 2 CFR 170.220. This proposed 

change would provide more flexibility— 

as needed—to agencies operating in 

overseas environments where SAM.gov 

registration presents particular 

challenges. If finalized, the exception 

would only be available on a case-bycase basis in situations in which the 

agency has conducted a risk-based 

analysis and deemed it impractical for 

the entity to comply with the 

requirements(s). This proposed change 

would only be finalized in a way that 

would allow agencies to continue 

following Transparency Act reporting 

requirements for this limited category of 

awards. 

Related to the above analysis, OMB is 

also considering expanding the exigent 

circumstances exception in section 

25.110 to provide recipients with 

additional time to obtain a UEI and 

complete SAM.gov registration if exigent 

circumstances persist beyond 30 days. 

This proposal is not included in the 

proposed guidance in this document, 

but OMB is considering ways to provide 

this additional flexibility in the final 

guidance. When exigent circumstances 

exist, the current guidance at section 

25.110 allows agencies to provide 

recipients up to 30 days after the 

Federal award date to obtain a UEI and 

complete SAM.gov registration. In 

recognition of the issues that sometimes 

arise when organizations attempt to 

register in SAM.gov, particularly for 

new or inexperienced applicants, 

OMB’s proposal would provide Federal 

agencies with the option to provide 

recipients an additional 90 days if 

exigent circumstances persist. OMB will 

work with Federal agency partners to 

determine if this proposal can be 

implemented in a way that is consistent 

with Transparency Act reporting 

requirements. If included in the final 

revisions to the guidance, OMB 

proposes to further clarify that Federal 

agencies should not issue payments to 

a recipient that is unable to obtain a UEI 

or complete registration in SAM.gov. 

OMB also proposes to clarify that 

Federal agencies should include an 

award term expressly providing that the 

recipient’s eligibility to receive any 

future payments under the award (such 

as outlays of cash) would be contingent 

on the recipient receiving a UEI and 

completing registration. Again, this 

proposed change would only be 

finalized in a way that would allow 

agencies to continue following 

Transparency Act reporting 

requirements for this limited category of 

awards. 

OMB also proposes several 

clarifications in the part, such as a 

proposed revision in section 25.205 

explaining that the requirement to have 

an active UEI does not apply to 

amendments to terminate or close a 

Federal award. 

Part 170—Reporting Subaward and 

Executive Compensation Information 

OMB proposes to revise the guidance 

in this part to ensure it properly aligns 

with the authorizing statutes, as 

amended, including the Transparency 

Act and the DATA Act of 2014. OMB 

proposes to clarify the specific Federal 

agency reporting requirements and to 

revise the award term to resolve issues 

related to which entities the award term 

applies to. OMB also proposes to revise 

certain sections to clarify their intended 

meaning. For example, OMB proposes 

to move certain requirements currently 

contained in section 170.110 to section 

170.105, which OMB proposes to 

rename ‘‘Applicability.’’ 

Part 175—Award Term for Trafficking 

in Persons 

OMB proposes to revise the guidance 

in part 175 to ensure it properly aligns 

with the authorizing statutes that have 

been amended since it was published. 

See the TVPA of 2000, as codified at 22 

U.S.C. 7101 to 7115. OMB proposes to 

update the policy and Award Term to 

ensure alignment with the current 

statute and to further align with the 

format of the CFR. For example, at 

section 175.105, OMB proposes adding 

provisions related to a compliance plan 

and requiring notification to Inspectors 

Generals under certain circumstances to 

further align with statute. 

Part 180—OMB Guidelines to Agencies 

on Government-Wide Debarment and 

Suspension (Nonprocurement) 

OMB proposes minimal revisions to 

this part based on feedback received 

from the Interagency Suspension and 

Debarment Committee (ISDC) in 

accordance with section 180.40. 

Considering the role of the ISDC in 

recommending changes, OMB does not 

propose extensive plain language 

revisions through this document in part 

180. Sections in part 180 that OMB 

proposes to revise include sections 

180.635 and 180.640 to clarify available 

administrative actions in lieu of 

debarment. OMB proposes amending 

section 180.705 to include ‘‘other 

indicators of adequate evidence that 

may include, but are not limited to, 

warrants and their accompanying 

affidavits’’ for officials to consider 

before initiating a suspension. OMB 

proposes additional clarifying edits to 

sections 180.710, 180.815, and 180.860, 

including adding text to section 180.860 

to address factors influencing a 

debarment decision; this revision 

proposes to add text on ‘‘whether your 

business, technical, or professional 

license(s) has been suspended, 

terminated, or revoked.’’ OMB proposes 

changes to this part generally in 

response to an ISDC recommendation to 

provide additional clarifications to 2 

CFR to reflect current practice. OMB is 

not proposing to establish new policy in 

part 180 that would negatively impact 

the ability of Federal agencies or 

recipients to adhere to this guidance. 

Part 182—Government-Wide 

Requirements for Drug-Free Workplace 

(Financial Assistance) 

OMB proposes limited plain language 

revisions to this part. 

Part 183—Never Contract With The 

Enemy 

OMB proposes limited plain language 

revisions to this part. 

Part 184—Buy America Preferences for 

Infrastructure Projects 

OMB established this part on Buy 

America preferences for infrastructure 

projects through a separate process. 88 

FR 57750 (Aug. 23, 2023). OMB does 

not propose changes to part 184 through 

this document. OMB notes, however, 

that it may potentially make minor, nonsubstantive changes to part 184 through 

its final guidance if necessary to ensure 

consistency with any changes to the 

definitions in section 200.1. OMB notes 

that part 184, at section 184.3, states 

that acronyms and terms not defined in 

part 184 have the same meaning as 

provided in section 200.1. Certain terms 

used in part 184, such as ‘‘Federal 

awarding agency,’’ may be affected by 

OMB’s proposed changes under this 

notice. Thus, it may be necessary to 

make minor conforming changes to part 

184 to ensure consistent use of terms. 

Part 200—Uniform Administrative 

Requirements, Cost Principles, and 

Audit Requirements for Federal 

Awards 

In the paragraphs below, OMB 

discusses proposed changes to each 

subpart of the Uniform Guidance in 2 

CFR part 200. 


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Subpart A—Acronyms and Definitions 

OMB proposes to update section 

200.0 to remove acronyms that either 

appear only once or are used 

infrequently in the Uniform Guidance. 

At the same time, OMB proposes to add 

several acronyms that are used more 

frequently, but have been omitted from 

this section in past updates, such as 

Unique Entity Identifier (UEI). 

In section 200.1, OMB proposes to 

remove several definitions that were 

used only once or on a limited basis and 

instead move such definitions to the 

appropriate section of the Uniform 

Guidance where they appear. OMB 

proposes this change to ease the 

experience of the reader and avoid the 

need to review Subpart A for an 

understanding of a single section or 

small set of sections. For example, OMB 

proposes moving the definition of 

‘‘Cooperative audit resolution’’ to the 

text of Subpart F. OMB also proposes 

deleting the definition of ‘‘Federal 

awarding agency,’’ which OMB now 

proposes to incorporate within the 

definition of ‘‘Federal agency.’’ 

OMB also proposes adding several 

new definitions of commonly used 

terms based on feedback from agencies 

and the RFI. Proposed new definitions 

include ‘‘continuation funding,’’ ‘‘forprofit organization,’’ ‘‘key personnel,’’ 

‘‘participant,’’ and ‘‘prior approval.’’ 

OMB proposes to revise several 

definitions to incorporate threshold 

increases referenced in other sections, 

such as the threshold increase for 

‘‘equipment’’ to $10,000, the threshold 

for ‘‘supply’’ to $10,000, and the 

definition of ‘‘Modified Total Direct 

Costs,’’ which now proposes to exclude 

subaward costs above $50,000, as 

compared to $25,000 in the existing 

guidance. 

OMB also proposes to revise several 

definitions for other reasons. For 

example, OMB proposes to shorten the 

definition of ‘‘improper payment’’ to 

ensure that the definition references the 

appropriate source in Appendix C to 

OMB Circular A–123, Requirements for 

Payment Integrity Improvement. OMB 

proposes to update the definition of 

‘‘intangible property’’ to include more 

information related to date and licenses. 

OMB also proposes to clarify 

‘‘participant support costs’’ with 

additional explanatory information and 

expand the definition of ‘‘questioned 

costs’’ to provide greater understanding 

of the terms throughout the Uniform 

Guidance. In addition, other definitions 

that OMB proposes altering include 

‘‘cost sharing’’ (discussed below under 

section 200.306), ‘‘Federal agency,’’ 

‘‘Federal award date,’’ ‘‘financial 

obligations,’’ ‘‘Indian tribe,’’ ‘‘period of 

performance,’’ ‘‘prior approval,’’ ‘‘real 

property’’, ‘‘recipient,’’ ‘‘special purpose 

equipment,’’ ‘‘subaward,’’ and 

‘‘termination.’’ 

OMB also proposes a minor change to 

the definition of the term ‘‘Federal 

financial assistance.’’ OMB proposes the 

term to include assistance received or 

administered by ‘‘recipients or 

subrecipients’’—as compared to 

assistance received or administered by 

‘‘non-Federal entities’’ in the existing 

guidance. In cases in which Federal 

agencies apply subparts A through E of 

part 200 to for-profit organizations, use 

of the terms ‘‘recipients or 

subrecipients’’ in this definition may 

provide further clarity on the 

applicability of the Build America, Buy 

America Act (BABA) (Pub. L. 117–58, 

135 Stat. 429, 70901–70927, Nov. 15, 

2021) to Federal awards made by that 

agency to for-profit organizations. 

Section 70912(4) of BABA incorporates 

the definition of Federal financial 

assistance from 2 CFR 200.1 or 

successor regulations. For additional 

information on BABA and OMB’s 

guidance in 2 CFR part 184, see 88 FR 

55750 (Aug. 23, 2023). OMB does not, 

however, propose to materially change 

the sentence in the applicability section 

at 200.101(a)(2) providing Federal 

agencies with discretion on whether to 

apply the guidance to for-profit 

organizations. 

Subpart B—General Provisions 

OMB proposes to revise this subpart, 

in section 200.101, to clarify the 

applicability of the Uniform Guidance. 

In OMB’s proposal, all subparts of part 

200 continue to apply to Federal 

agencies that make Federal awards to 

‘‘non-Federal entities.’’ Federal agencies 

also retain discretion on whether to 

apply subparts A through E of part 200 

to Federal agencies, for-profit entities, 

foreign public entities, or foreign 

organizations—which are not included 

in the definition of the term ‘‘nonFederal entity.’’ OMB proposes to add 

language encouraging agencies to apply 

the requirements in subparts A through 

E of part 200 to all recipients in a 

consistent and equitable manner to the 

extent permitted within applicable 

statutes, regulations, and policies. 

In support of plain language 

principles, OMB proposes to convert the 

applicability table in paragraph (b) of 

section 200.101 into paragraph form. 

OMB proposes multiple clarifying 

revisions in section 200.102 to improve 

agency and recipient understanding of 

the availability and use of exceptions to, 

or deviations from, OMB’s Uniform 

Guidance in part 200. 

In section 200.104, OMB proposes to 

provide a more succinct statement that 

part 200 supersedes previous OMB 

guidance issued in 2 CFR on topics 

including cost principles and audits for 

Federal financial assistance. Because 

part 200 has now existed for 10 years in 

its current format and location, OMB 

does not believe it is necessary to 

continue to include the detailed list 

identifying elements of the Uniform 

Guidance in part 200 previously 

contained in OMB Circulars or other 

parts of 2 CFR, subtitle A, chapter II. 

In section 200.111 OMB proposes new 

guidance to permit Federal agencies to 

request, receive, and distribute Federal 

award information in a language other 

than English when it is appropriate for 

a specific program or Federal award. 

This proposal would allow for more 

flexibility when working in 

international environments or in 

communities where English is the not 

the primary language. 

Finally, based on feedback from the 

oversight community, OMB proposes to 

revise the section on mandatory 

disclosure to clarify that recipients and 

subrecipients must promptly disclose 

any credible evidence of a violation of 

Federal criminal law potentially 

affecting the Federal award. OMB also 

proposes to revise this section to require 

recipients and subrecipients to provide 

written disclosure to the agency’s Office 

of Inspector General. OMB believes the 

proposed ‘‘credible evidence’’ standard 

is more appropriate because it would 

not require recipients, subrecipients, 

and applicants to make a legal 

determination that a criminal law has 

been violated before they are required to 

make a disclosure of ‘‘credible 

evidence’’ of such a violation to the 

Federal agency, pass-through entity (if 

applicable), and the agency’s Office of 

Inspector General. 

Subpart C—Pre-Federal Award 

Requirements and Contents of Federal 

Awards 

OMB proposes to revise this subpart 

to clarify certain requirements for fixed 

amount awards. For example, OMB 

proposes to clarify in section 200.201 

that recipients are entitled to any 

unexpended funds under a fixed 

amount award if the required activities 

were completed in accordance with the 

terms and conditions of the award. In 

the same section, OMB also proposes to 

clarify record retention and post award 

certification requirements. In addition— 

although no specific language is 

proposed in this document—OMB is 

considering requiring additional preaward certifications for fixed amount 

awards to address the potential 


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increased risk of fraud under fixed 

amount awards. OMB invites comments 

on appropriate pre-award certifications 

for fixed amount awards and notes that 

it may include a requirement for such 

certifications in the final guidance 

document. OMB also proposes to more 

specifically identify certain prior 

approval requirements that specifically 

relate to fixed amount awards. 

OMB also proposes to expand section 

200.202 on program planning and 

design to encourage agencies to 

encourage recipients to engage members 

of the community that will benefit from 

or be impacted by a Federal financial 

assistance program. OMB also proposes 

to encourage Federal agencies to 

develop programs in consultation with 

the communities that will benefit from 

or be impacted by a program. In section 

200.202, OMB also proposes to 

underscore that Federal agencies should 

consider all available data and 

evaluation results from past programs 

and coordinate with other agencies 

during program planning and design. 

OMB proposes to revise section 

200.203 on Assistance Listings to 

reinforce the importance of 

communicating in plain language and 

highlighting any program-related 

customer service initiatives. 

OMB proposes to revise section 

200.204 on notices of funding 

opportunities in a number of ways to 

encourage Federal agencies to focus 

more on communicating requirements 

to the public in an accessible and 

comprehensible manner. For example, 

OMB proposes to include an Executive 

Summary requirement and to encourage 

agencies to use plain language when 

publishing opportunities. OMB also 

proposes that agencies should 

communicate program requirements 

specifically and clearly, as well as limit 

the length of program announcements. 

As noted in the proposed changes to the 

guidance, this is particularly important 

in consideration of applicants with less 

experience applying for Federal 

financial assistance, such as applicants 

from underserved communities. OMB 

also proposes to encourage Federal 

agencies to identify all eligible 

applicants in the funding opportunity— 

for example, by providing greater 

specificity on different types of 

nonprofit organizations such as labor 

unions. In proposing these revisions, 

OMB aims to make notices of funding 

opportunities more consistent and 

transparent. OMB also aims to ensure 

that applicants are not unintentionally 

excluded from funding opportunities. 

OMB also proposes additional 

changes in section 200.204, such as 

encouraging agencies to provide an 

anticipated award date and providing 

additional clarifying guidance on the 

availability period for funding 

opportunities. 

In section 200.205 OMB proposes to 

clarify that a Federal agency should 

consider diversity when developing 

policies and procedures for merit review 

panels. 

In section 200.206 OMB proposes to 

revise the section regarding risk 

evaluation by using the term risk 

assessment as a standard term and 

clarifying agency requirements to 

appropriately review eligibility 

qualifications and financial integrity 

information. OMB also proposes to 

clarify that agency processes may 

consider any risk criteria pertinent to a 

program, such as cybersecurity risk or 

impacts on local jobs and the 

community. OMB further proposes to 

clarify that an agency may modify its 

risk assessment at any time during the 

lifecycle of an award. 

OMB also proposes to clarify in 

section 200.209 that those entities who 

are exempt from the requirements of 2 

CFR part 25 must still complete the 

certifications and representations by 

submitting the appropriate assurance 

form. 

OMB also proposes to include several 

additions to section 200.216 on the 

prohibition of certain 

telecommunications and video 

surveillance services or equipment to 

expand the guidance by incorporating 

additional information from OMB’s 

Frequently Asked Questions document. 

Lastly, OMB proposes to include a 

new section 200.217 to expand on the 

whistleblower protections and 

requirements for recipients of Federal 

financial assistance, which had 

previously been referenced in section 

200.300. 

Subpart D—Post Federal Award 

Requirements 

OMB proposes to retain the guidance 

in section 200.300 on statutory and 

national policy requirements, which 

explains the need to administer Federal 

awards in full accordance with the U.S. 

Constitution, applicable Federal statutes 

and regulations, and requirements of 

part 200. OMB proposes to streamline 

section 200.300 and to reinforce existing 

nondiscrimination requirements under 

the Constitution and other applicable 

law, consistent with Executive Order 

13988 of January 20, 2021 (‘‘Preventing 

and Combating Discrimination on the 

Basis of Gender Identity or Sexual 

Orientation’’), and Executive Order 

14075 of June 15, 2022 (‘‘Advancing 

Equality for Lesbian, Gay, Bisexual, 

Transgender, Queer, and Intersex 

Individuals’’). 

In section 200.305 on Federal 

payment, OMB proposes to provide 

additional flexibilities for recipients 

when interest bearing accounts are not 

accessible in a foreign country; and to 

provide a specific link for returning 

funds to the Payment Management 

System, rather than including the more 

extensive instructions in the guidance 

itself. 

OMB proposes to revise section 

200.306 on cost sharing, as well as the 

definition of cost sharing itself, to 

clarify that ‘‘matching’’ is one category 

of cost sharing overall—thus eliminating 

the need to repeat the term ‘‘matching’’ 

throughout. In the same section, OMB 

also proposes to provide additional 

guidance on voluntary uncommitted 

cost sharing for institutes of higher 

education. 

OMB proposes to revise section 

200.307 on program income by 

providing clarifications in paragraph (a) 

regarding use and expenditure of 

program income, including allowing 

program income for certain closeout 

costs. OMB also proposes to revise and 

provide further clarifying guidance in 

paragraph (b) for each of the three 

methods for use of program income. 

OMB proposes changes to section 

200.308 on revision of budget and 

program plans by combining the 

requirements for construction and nonconstruction awards to provide greater 

uniformity in the requirements for all 

award types. OMB proposes to clarify 

that recipients do not need approval of 

individual subrecipients under all 

circumstances, but only when making 

subawards of programmatic activities 

not proposed by the recipient in the 

application for an award. A Federal 

agency may also require prior approval 

of subrecipients through the terms and 

conditions of a Federal award. OMB 

proposes to further clarify that agencies 

should not require approval of a change 

in a proposed subrecipient unless the 

initial inclusion of a subrecipient was a 

determining factor in the agency’s merit 

review process. This change is proposed 

to reinforce the role of the recipient as 

responsible for the efficient and 

effective administration of the Federal 

award including the selection of a 

qualified and capable subrecipient. 

OMB also proposes to identify other 

items requiring prior approval, 

including requesting additional funds, 

transferring funds, and no-cost 

extensions. OMB proposes to clarify that 

no-cost extensions are different from 

one-time extensions, which an agency is 

permitted to authorize a recipient to do 

without prior approval. 


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In section 200.309 on modification to 

the period of performance, OMB 

proposes to provide additional 

clarification that when an agency 

decides not to continue an award with 

multiple budget periods, the period of 

performance should be amended to end 

at the completion of the currently 

authorized budget period. OMB also 

proposes to incorporate the definition of 

‘‘renewal award’’ in this section. 

In section 200.311, addressing real 

property, OMB proposes to include a 

new paragraph on appraisals to 

introduce additional guidance on 

standards for conducting independent 

appraisals consistent with the Uniform 

Relocation Assistance and Real Property 

Acquisition Policies Act of 1970, as 

amended, (42 U.S.C. 4601–4655) except 

as provided in the implementing 

regulations at 49 CFR part 24, ‘‘Uniform 

Relocation Assistance And Real 

Property Acquisition For Federal And 

Federally-Assisted Programs.’’ OMB 

also proposes to include a definition of 

the term ‘‘encumbrance’’ in sections 

200.311, 200.313, and 200.315. 

In section 200.313, relating to 

equipment, OMB proposes to increase 

the threshold value for equipment from 

$5,000 to $10,000 and to provide 

additional guidance on the meaning of 

a ‘‘conditional title.’’ Consistent with 

proposals in sections 200.311 and 

200.315, OMB also proposes a definition 

of the term ‘‘encumbrance.’’ Consistent 

with the existing requirements for 

States, OMB also proposes to allow 

Indian Tribe to dispose of equipment in 

accordance with tribal law. OMB also 

proposes to clarify that agencies may 

permit the recipient to retain equipment 

with no further obligation to the Federal 

government when it is not prohibited by 

Federal statue or regulation. OMB also 

proposes to reinforce the responsibility 

of recipients to maintain updated 

records regarding equipment. 

OMB proposes to revise section 

200.314 on supplies to raise the 

threshold from $5,000 to $10,000. OMB 

also proposes to clarify that the 

requirements for unused supplies apply 

to the aggregate value of all supply 

types, and not just like-item supplies. 

OMB also proposes to include a 

definition of ‘‘unused supplies’’ in 

section 200.314. 

In section 200.315 on intangible 

property, OMB proposes to reinforce the 

potential requirement for recipients and 

subrecipients to make intangible 

property publicly available on agencydesignated websites. Consistent with 

proposals in sections 200.311 and 

200.313, OMB also proposes a definition 

of the term ‘‘encumbrance.’’ 

OMB proposes several revisions to the 

procurement standards in the Uniform 

Guidance. In recognition of Tribal 

sovereignty, and consistent with the 

existing requirements for States, in 

section 200.317 OMB proposes to allow 

Indian tribes to follow their own 

policies and procedures. 

OMB also proposes to revise the 

procurement standards in section 

200.318. These proposed revisions 

include providing additional guidance 

that contractors appropriately classify 

employees consistent with the Fair 

Labor Standards Act. See the Fair Labor 

Standards Act at 29 U.S.C. chapter 8. 

OMB also proposes adding a new 

paragraph (l) in section 200.318 to 

clarify that that the procurement 

standards in part 200 do not prohibit 

recipients or subrecipients from using 

Project Labor Agreements or similar 

forms of pre-hire collective bargaining 

agreements; requiring commitments or 

goals to hire people residing in highpoverty areas, disadvantaged 

communities as defined by the Justice40 

Initiative OMB Memorandum M–21–28, 

or high-unemployment census tracts 

within a region no smaller than the 

county where a federally funded 

construction project is located, 

consistent with the policies and 

procedures of the recipient or 

subrecipient, provided that a recipient 

or subrecipient may not prohibit 

interstate hiring; requiring commitments 

or goals to individuals with barriers to 

employment (as defined in section 3 of 

the Workforce Innovation and 

Opportunity Act (29 U.S.C. 3102(24)), 

including women and people from 

underserved communities as defined by 

Executive Order 13985; using 

agreements intended to ensure 

uninterrupted delivery of services; using 

agreements intended to ensure 

community benefits; or offering 

employees of a predecessor contractor 

rights of first refusal under a new 

contract. The proposed paragraph 

explains that Federal agencies may 

consider allowing recipients or 

subrecipients to use such practices if 

consistent with the U.S. Constitution, 

applicable Federal statutes and 

regulations, the objectives and purposes 

of the Federal financial assistance 

program, and other requirements of part 

200. For example, any hiring preference 

for a class or groups of persons would 

be permissible only to the extent that it 

is consistent with the equal protection 

requirement of the U.S. Constitution. 

In section 200.319, OMB proposes to 

remove the prohibition in the Uniform 

Guidance on using geographic 

preference requirements. In the same 

section, OMB also proposes to state that 

subpart D does not prohibit recipients 

and subrecipients from incorporating a 

scoring mechanism that rewards bidders 

committing to specific numbers and 

types of U.S. jobs, as well as certain 

compensation and benefits. OMB 

cautions, however, that any geographic 

preferences or scoring mechanisms must 

be consistent with the U.S. Constitution, 

applicable Federal statutes and 

regulations, and the terms and 

conditions of the Federal award. OMB 

also proposes to clarify that any such 

scoring mechanism must be consistent 

with established practices and legal 

requirements applicable to the recipient 

or subrecipient. 

In section 200.320 on procurement 

methods, OMB proposes to change 

‘‘small purchases’’ to ‘‘simplified 

acquisitions’’ to further align with 

standard terminology. In paragraph (a), 

OMB proposes to clarify that ‘‘micropurchases’’ and ‘‘simplified 

acquisitions’’ are types of ‘‘informal 

procurement methods for small 

purchases.’’ OMB also proposes to 

remove the requirements that local and 

tribal governments must open sealed 

bids in public; this requirement may be 

inconsistent with State or tribal policies 

and procedures. 

In section 200.321, OMB proposes to 

add ‘‘veteran-owned business’’ to the 

types of businesses that recipients and 

subrecipients are encouraged to 

consider for procurement contracts 

under a Federal award. 

OMB proposes to add a new 

paragraph (b) in section 200.323. 

Executive Order 14057 of December 8, 

2021 (‘‘Catalyzing Clean Energy 

Industries and Jobs Through Federal 

Sustainability’’) establishes that it is the 

policy of this Administration to lead by 

example and pursue a whole-ofgovernment approach on sustainability 

and expanding American technologies, 

industries, and jobs that support 

sustainability and climate resilience. 

The Executive Order tasks the Federal 

government with pursuing new 

strategies to improve the Nation’s 

preparedness and resilience to the 

effects of a changing climate, including 

financial management strategies. In 

support of this policy, OMB proposes to 

add a new paragraph (b) in section 

200.323 encouraging Federal award 

recipients, to the extent permitted by 

law, to purchase, acquire, or use 

products and services that can be 

reused, refurbished, or recycled; contain 

recycled content, are biobased, or are 

energy and water efficient; and are 

sustainable. 

OMB proposes to add additional 

language to section 200.324 on contract 

cost and price to establish that the 


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recipient or subrecipient may consider 

potential workforce impacts in their 

procurement analysis if the 

procurement transaction will potentially 

displace public sector employees. OMB 

also seeks comment on its proposal to 

delete the existing paragraph (b) in 2 

CFR 200.324, requiring the recipient to 

negotiate profit as a separate element of 

the price for each contract in which 

there is no price competition. 

In section 200.328, OMB proposes to 

provide additional clarity on required 

deadlines for financial reporting to align 

with progress reporting requirements. 

In section 200.329, OMB proposes to 

revise the reporting of program 

performance section to remind agencies 

of the importance of not requiring 

information in programmatic reports 

that is not necessary for the effective 

monitoring of the award. OMB also 

proposes additional language that 

emphasizes the importance of 

measuring customer experience as well 

as considering evaluation plans when 

outlining reporting requirements. OMB 

further proposes to clarify that 

programmatic reporting may not be 

required more frequently than quarterly 

unless specific conditions have been 

applied to the award in accordance with 

section 200.208. 

In section 200.331 on subrecipient 

and contractor determinations, OMB 

proposes additional language to 

emphasize that Federal agencies do not 

have a direct legal relationship with 

subrecipients and contractors of passthrough entities. OMB also proposes to 

clarify that the characteristics indicative 

of a subrecipient or contractor 

determination are not limited to the 

sample characteristics currently 

provided in the guidance. 

Based on feedback from the Federal 

financial assistance community, OMB 

proposes to include in section 200.332 

the requirement for pass-through 

entities to confirm that potential 

subrecipients are not suspended, 

debarred, or otherwise excluded from 

receiving Federal funds. 

In section 200.333, OMB proposes 

removing the current Simplified 

Acquisition Threshold limit for fixed 

amount subawards to provide agencies 

and recipients with increased flexibility 

in making programmatic and budgetary 

decisions, while still allowing recipients 

to establish their own award-specific 

thresholds with the prior written 

approval of the Federal agency. Under 

the proposed revision, a recipient’s use 

of fixed amount subawards remains 

subject to the prior written approval of 

the Federal agency. 

OMB also proposes to revise and 

clarify the guidance pertaining to 

termination and closeout requirements 

in sections 200.340 through 200.344. On 

termination, in section 200.340 OMB 

proposes to remove language that allows 

a Federal agency or pass-through entity 

to terminate an award ‘‘if an award no 

longer effectuates the program goals or 

agency priorities.’’ This revision is 

proposed only for the purpose of 

clarifying the guidance; the proposed 

guidance still allows agencies to 

terminate a Federal award according to 

the terms and condition of the award. 

OMB also proposes to clarify that a 

termination does not include a Federal 

agency’s decision to not provide 

continuation funding. In section 

200.341, OMB also proposes to clarify 

requirements that must be included in 

a notice of termination. 

In section 200.344 on closeout, OMB 

proposes to revise closeout guidance to 

clarify that recipients must still submit 

a final financial report even when the 

recipient does not have a final indirect 

cost rate; and proposes to clarify that an 

additional final report must be 

submitted when the indirect cost rate is 

finalized. In the same section, OMB also 

proposes to provide additional 

flexibilities for agencies and recipients 

to closeout Federal awards in a timely 

manner. OMB proposes to allow an 

agency and recipient to mutually agree 

upon a final indirect cost rate for an 

individual award. This proposed 

revision is not intended to grant 

agencies additional authorities to 

negotiate rates over cognizant agencies 

for indirect rates; rather, it simply 

proposes to affirm the Federal agency’s 

right to negotiate with the recipient or 

subrecipient on a case-by-case basis 

with the goal of closing out specific 

awards in a timely manner. 

Subpart E—Cost Principles 

In section 200.401 on applicability, 

OMB proposes to clarify that the cost 

principles in subpart E do not apply to 

grants and cooperative agreements for 

food commodities. 

In section 200.403, OMB proposes to 

add language clarifying when allowable 

administrative closeout costs may be 

incurred in paragraph (h). 

In section 200.407, OMB has removed 

ten items from the prior written 

approval requirements to reduce Federal 

agency and recipient burden. These 

proposed revisions include no longer 

requiring prior written approval for 

such items as, real property, equipment, 

direct costs, entertainment costs, 

exchange rates, memberships, 

participant support costs, selling and 

marketing costs, and taxes. In this 

section, OMB also proposes to remove 

the reference to requiring prior written 

approval for use of grants agreements, 

cooperative agreements, and contracts, 

but other requirements throughout the 

Uniform Guidance in part 200 would 

continue to apply to use of these 

instruments. 

In section 200.414, OMB proposes to 

revise several aspects of the guidance 

pertaining to indirect costs. OMB 

proposes to clarify that recipients and 

subrecipients may notify OMB of any 

disputes with regards to a Federal 

agency’s application or acceptance of a 

federally negotiated indirect cost rates. 

OMB also proposes to revise the 

guidance to clarify that pass-through 

entities must accept all federally 

negotiated indirect cost rates for 

subrecipients. 

In the same section, in response to 

feedback from the Federal financial 

assistance community, OMB proposes to 

raise the de minimis rate from 10 

percent to 15 percent. This change 

would allow for a more reasonable and 

realistic recovery of indirect costs, 

particularly for new or inexperienced 

organizations that may not have the 

capacity to undergo a formal rate 

negotiation, but still deserve to be fully 

compensated for their overhead costs. 

The proposed changes still allow 

recipients and subrecipients to apply a 

rate lower than 15 percent at their own 

discretion. At the same time, the 

proposed guidance clarifies that Federal 

agencies may not compel recipients and 

subrecipients to use an indirect rate 

lower than the proposed 15 percent rate, 

unless required by statute. OMB also 

proposes to clarify that the de minimis 

rate may not be applied to cost 

reimbursement contracts and recipients 

and subrecipients are not required to 

use the de minimis rate. 

Finally, OMB also proposes to remove 

the existing requirement in paragraph 

(h) of section 200.414 for all indirect 

cost rates to be publicly available on a 

government-wide website—but this may 

be revisited when applicable systems 

are updated to allow for the posting of 

indirect cost rates. OMB seeks 

comments that include analysis on the 

advantages and disadvantages of raising 

the de minimis rate in the way 

proposed. 

Based on feedback from the oversight 

community, in section 200.415 OMB 

proposes to require subrecipients to 

certify to pass-through entities that 

financial information submitted to the 

pass-through entity is complete and 

accurate. 

Based on feedback from both 

Institutions of Higher Education (IHE) 

and Federal agencies, OMB also 

proposes to remove the requirement in 

section 200.419 for an IHE that receives 


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an aggregate total $50 million or more 

in Federal awards and instruments 

subject to subpart E to submit a 

disclosure statement form (DS–2) 

containing information on cost 

accounting standards. This proposed 

change, if finalized, would likely reduce 

Federal agency and recipient burden. 

OMB received a comment indicating 

that the DS–2 is outdated, not needed 

for ensuring compliance with statutory 

authorities related to Federal financial 

assistance, and not universally 

implemented across the IHE 

community. The commenter also 

indicated that the DS–2 is not used as 

regular tool by the audit or oversight 

community to enhance compliance or 

oversight. This commenter also stated 

that information contained in the DS–2 

is readily available in numerous policy 

portals at research universities and 

creates unnecessary administrative and 

cost burden to research universities and 

Federal agencies. 

If finalized, this proposed change 

would not impact the requirement for 

IHEs receiving Federal awards above the 

threshold to comply with the Cost 

Accounting Standards Board’s cost 

accounting standards. It would only no 

longer require use of the DS–2 form. 

This proposed change also is not 

intended to impact any FAR-based 

requirements related to disclosure of 

cost accounting practices. 

OMB seeks comments on the potential 

impact of this proposed change to 

section 200.419, including analysis on 

the advantages and disadvantages of 

removing the requirement for use of the 

DS–2 form. For example, are there any 

advantages in retaining consistency and 

uniformity in accounting practices 

followed by educational institutions for 

both contracts under the FAR and 

Federal financial assistance under part 

200, which are achieved through use of 

the DS–2? For additional background, 

see, for example, 58 FR 39996, at 39997 

(Jul. 26, 1993) (explaining OMB’s initial 

plans to expand the Cost Accounting 

Standards Board’s regulations and 

standards for educational institutions to 

Federal grants). Does the requirement to 

use the DS–2 at section 200.419 help 

ensure that each IHE’s practices used in 

estimating costs for a proposal are 

consistent with cost accounting 

practices used by the institution in 

accumulating and reporting costs or 

serve other functions? See 48 CFR 

9905.501–20. How, if at all, could 

removing the requirement to use the 

DS–2 from section 200.419 impact 

compliance by research universities 

with the requirements of 41 U.S.C. 1502 

or the implementing regulations at FAR, 

Chapter 99 for government contracts? To 

what extent would removing the 

requirement to use the DS–2 at section 

200.419 reduce burden if the statutory 

and FAR-based requirements remain in 

effect? 

OMB proposes to require several 

revisions to the general provisions for 

items of costs. Specifically, in section 

200.420, OMB proposes to add further 

clarifying text explaining that the listed 

items of cost are not intended to provide 

a comprehensive list and that failure to 

mention an item, even as an example, is 

not intended to imply that is allowable 

or unallowable. OMB proposes this 

clarification to address numerous 

questions about allowability of costs 

that arise in the Federal financial 

assistance community. 

In section 200.422, OMB proposes to 

incorporate the definition of an 

‘‘advisory council or committee.’’ 

At section 200.431, OMB proposes to 

revise the section on fringe benefits to 

require recipients and subrecipients to 

allocate payments for unused leave as 

general administrative expenses or 

include them in a fringe benefit rate 

with cognizant agency approval. Based 

on feedback from the oversight 

community, OMB also proposes in 

section 200.431 to clarify that recipients 

and subrecipients may not charge 

unfunded pension and post-retirement 

health benefits to an award in a manner 

that is inconsistent with the allocation 

principles of Subpart E. Also in section 

200.431, OMB proposes additional 

clarifying guidance on pension plan 

costs and post-retirement health plans. 

OMB proposes to clarify the 

description of conferences in section 

200.432 to remove any limitations 

provided by the specific types of events 

listed in the guidance currently. OMB 

also proposes to allow for dependentcare costs associated with participants’ 

attending or partaking in programrelated conferences. 

OMB proposes to revise section 

200.438 entertainment costs to include 

prizes, which currently reside in 

Subpart B, despite the fact that prizes 

are an item of cost. 

In section 200.440, OMB removed the 

requirement for prior approval of 

fluctuations of exchange rates. While a 

recipient or subrecipient needs prior 

approval for additional Federal funding, 

no approval is required because an 

exchange rate has fluctuated and 

resulted in a necessary charge to 

available funding. 

In section 200.454, OMB proposes to 

remove prior approval requirements for 

the cost of membership in any civic or 

community organization. 

In section 200.455 on organization 

costs, OMB proposes to clarify that any 

costs associated with either persuading 

or dissuading employees from collective 

bargaining and related activities are not 

allowable under Federal awards. OMB 

also proposes to add clarifying language 

that certain costs related to data, 

evaluation, and other related 

organization costs are allowable. 

In section 200.456, OMB proposes to 

remove the prior approval requirement 

of participant support costs. OMB 

proposes to clarify, however, that the 

treatment of participant costs is 

ultimately the responsibility of the 

recipient or subrecipient to determine, 

document, and treat consistently across 

all Federal awards (and when 

negotiating indirect rates). 

In section 200.461, OMB proposes 

additional clarifying guidance on 

publication and printing costs by adding 

reference to ‘‘article processing charges’’ 

or ‘‘similar open access fees.’’ 

In section 200.467, OMB also 

proposes to remove the prior approval 

option for selling and marketing costs, 

clarifying selling and marketing costs 

are unallowable unless they meet the 

requirements in section 200.421 and are 

required to meet the requirements of the 

award. 

Finally, OMB proposes to revise the 

section on termination costs at section 

200.472 to also include closeout costs. 

Specifically, OMB proposes to include 

guidance for recipients and 

subrecipients to charge administrative 

costs specifically associated with the 

closeout of a Federal award. OMB 

received feedback from the Federal 

financial assistance community that the 

exclusion of closeout costs in the 

Uniform Guidance has been problematic 

as recipients and subrecipients have 

been unable to charge actual costs 

associated with closeout actions, such 

as certain administrative or staff costs 

not covered through indirect cost 

recoveries. 

Subpart F—Audit Requirements 

In this subpart, OMB proposes to raise 

the audit threshold from $750,000 to 

$1,000,000 in section 200.501. OMB 

reviewed audit submission data as well 

as economic data when determining the 

increase to this threshold. Every two 

years, the Director of OMB is authorized 

to adjust the dollar amount of this 

threshold consistent with the purposes 

of the Single Audit Act, provided the 

Director does not make such 

adjustments below $300,000. 31 U.S.C. 

7502. 

In section 200.502 OMB also proposes 

to clarify that, in determining Federal 

awards expended, loan and loan 

guarantees retain their Federal character 

through the end of the Federal award 


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Federal Register / Vol. 88, No. 192 / Thursday, October 5, 2023 / Proposed Rules 69399 

period of performance unless otherwise 

specified in statute or Federal agency 

regulations. In response to feedback 

from Federal agencies, OMB proposes to 

revise the guidance to require that the 

schedule of expenditures of Federal 

awards for comprehensive annual 

financial reports identify the State, 

municipal, or local entity recipient or 

subrecipient of a Federal award. This 

change is necessary to provide greater 

transparency and understanding of the 

information provided in the schedule. 

In section 200.510, at paragraph (b), 

OMB proposes additional guidance 

explaining that, for audits covering 

multiple recipients (such as 

departments, agencies, IHEs, and other 

organizational units), the schedule of 

expenditures must identify the recipient 

of the Federal award. 

In section 200.513, OMB proposes to 

revise the responsibilities of Federal 

agencies. Specifically, OMB proposes to 

encourage Federal agencies to engage 

with external audit stakeholders and the 

Federal agency’s Office of Inspector 

General National Single Audit 

Coordinator (NSAC) prior to submitting 

compliance supplement drafts to OMB. 

In the same section OMB also proposes 

to clarify that a Federal agency’s key 

management single audit liaison must 

also coordinate with the agency’s Office 

of Inspector General NSAC when 

appropriate. 

In section 200.514, on scope of audit, 

OMB proposes to revise compliance 

requirements to specify that compliance 

testing must include a test of 

transactions and other auditing 

procedures necessary to provide the 

auditor with sufficient evidence to 

support an opinion on compliance. 

In section 200.516, based on feedback 

OMB received from the Federal 

financial assistance community, OMB 

proposes to revise in the definitions of 

known questioned costs and likely 

questioned costs and provide further 

clarity on how they are identified in an 

audit report. 

Appendix I to Part 200—Full Text of 

Notice of Funding Opportunity 

OMB proposes to revise this appendix 

in its entirety in support of the goal of 

simplifying and clarifying the grant 

solicitation and application process, 

which is a key objective under 

Executive Order 14058 on Transforming 

Federal Customer Experience and 

Service Delivery to Rebuild Trust in 

Government. The proposed changes to 

the notice of funding opportunity in 

Appendix I are intended to improve the 

quality and accessibility of funding 

opportunities. Specifically, the 

proposed revisions to Appendix I intend 

to: (1) follow plain language principles; 

(2) group similar items together to 

streamline content; (3) align sections 

more closely to the application process; 

(4) include basic information at the top 

of a funding opportunity so that 

applicants can more easily make 

decisions about whether or not to apply; 

(5) clearly define what must be included 

in a section of the funding opportunity 

versus what is at an agency’s discretion; 

and (6) provide flexibility to agencies 

while also giving applicants a common 

way to find information in every 

funding opportunity. 

Appendix III to Part 200—Indirect 

(F&A) Costs Identification and 

Assignment, and Rate Determination for 

Institutions of Higher Education (IHEs) 

OMB proposes to update this 

appendix to adjust the exclusion 

threshold of subawards from $25,000 to 

$50,000 for modified total direct costs. 

Appendix IV to Part 200—Indirect 

(F&A) Costs Identification and 

Assignment, and Rate Determination for 

Nonprofit Organizations 

OMB proposes to update this 

appendix to adjust the exclusion 

threshold of subawards from $25,000 to 

$50,000 for modified total direct costs. 

OMB also proposes to clarify that under 

the direct cost allocation method, joint 

costs include costs for information 

technology. 

Appendix VII to Part 200—States and 

Local Government and Indian Tribe 

Indirect Cost Proposals 

OMB proposes to update this 

appendix to adjust the exclusion 

threshold of subawards from $25,000 to 

$50,000 under modified total direct 

costs (MTDC). OMB also proposes to 

clarify the meaning of ‘‘department or 

agency’’ for State and local 

governments. 

OMB also proposes a revision to 

underscore that Federal agencies must 

accept indirect cost proposals 

developed by State or local departments 

or agencies receiving less than $35 

million in their fiscal year. The 

proposed revision to this appendix also 

provides that Federal agencies cannot 

compel these State or local 

governmental departments or agencies 

to accept the de minimis rate, or any 

other rate established by the Federal 

agency, in place of their indirect cost 

proposals. OMB emphasizes, however, 

that any such indirect cost proposals 

must be developed in accordance with 

the requirements of part 200 and 

maintained for audit—along with 

related supporting documentation. 

Appendix X to Part 200—Data 

Collection Form (Form SF–SAC) 

OMB proposes to revise this appendix 

to clarify where audit submission 

instructions are located. 

Appendix XII to Part 200—Award Term 

and Condition for Recipient Integrity 

and Performance Matters 

OMB proposes to revise this award 

term to be consistent with the statutory 

obligation and to reflect the appropriate 

location (responsibility and 

qualification records) in SAM.gov for 

reporting integrity and performance 

matters. OMB proposes to renumber the 

award term to align to the requirements 

of the standard organization of the Code 

of Federal Regulations. 

Other Revisions Under Consideration 

for Future Updates 

OMB may consider additional 

revisions for potential future updates. 

Specifically, OMB welcomes additional 

comments from the public on the 

following topics for consideration in 

possible additional revisions in the 

future: 

• Establishing specific audit 

requirements for for-profit entities, 

which are not subject to the 

requirements of Subpart F; 

• Incorporating the requirements of 

National Security Presidential 

Management (NSPM)–33 on research 

security requirements; 

• Providing additional guidance in 2 

CFR concerning the relationship of 

specific aspects of the guidance to loans 

and loan guarantees; 

• Establishing mechanisms to 

automatically adjust certain thresholds 

due to inflation or other triggering 

events (where permitted by law). 

• Removing additional prior approval 

requirements. 

• Challenges related to negotiating 

indirect costs, working with cognizant 

agencies, or any other topics related to 

indirect costs that could be addressed in 

future updates; and 

• Expanding the guidance in Subpart 

F to include more specific requirements 

on the scope of an audit (‘‘proper 

perspective’’) so that agencies have 

additional contextual information to 

guide them in resolving audit findings. 

Request for Comments 

OMB requests comments on all 

aspects of the propose guidance in this 

document, including on any reliance 

interests that commenters may have 

based on the existing text of 2 CFR, 

subtitle A that OMB’s proposal may 

affect, and that OMB should consider in 

deciding whether or how to finalize this 

guidance. 


ddrumheller on DSK120RN23PROD with PROPOSALS2
69400 Federal Register / Vol. 88, No. 192 / Thursday, October 5, 2023 / Proposed Rules 

Executive Order 12866 (Regulatory 

Planning and Review), Executive Order 

13563 (Improving Regulation and 

Regulatory Review), and Executive 

Order 14094 (Modernizing Regulatory 

Review) 

Executive Orders (E.O.s) 12866, 

13563, and 14094 direct agencies to 

assess all costs and benefits of available 

regulatory alternatives, and, if 

regulation is necessary, to select 

regulatory approaches that maximize 

net benefits (including potential 

economic, environmental, public health 

and safety effects, distributive impacts, 

and equity). The OMB Guidance for 

Grants and Agreements published in 

subtitle A of 2 CFR is guidance to 

Federal agencies and not regulation. 2 

CFR 1.100(b). OMB has thus determined 

that the revision of 2 CFR is not a 

significant regulatory action under E.O. 

12866, as amended. 

Regulatory Flexibility Act 

This proposed guidance is exempt 

from the notice and comment 

requirements of the Administrative 

Procedure Act (APA) because it is 

guidance to Federal agencies and not 

regulation. See 5 U.S.C. 553(b). 

Moreover, even if this proposed 

guidance were otherwise subject to 5 

U.S.C. 553, it would be exempt from the 

notice and comment requirement as a 

matter related to grants. See 5 U.S.C. 

553(a)(2). OMB nonetheless provides 

the following information for the 

information of the public. For a rule 

subject to the notice-and-comment 

provisions of the APA, the Regulatory 

Flexibility Act 5 U.S.C. 601, et seq., 

requires that an agency 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. 

Based on the nature of the revisions 

proposed in this notice, OMB does not 

expect this guidance to have a 

significant economic impact on a 

substantial number of small entities 

within the meaning of the Regulatory 

Flexibility Act. There are some 

proposed revisions that may impose a 

non-significant burden; however, there 

are more proposed revisions that reduce 

burden to small entities. When 

reviewing all proposed revisions, the 

burden that will be reduced for 

recipients is much greater than the 

burden imposed. 

Unfunded Mandates Reform Act of 

1995 

The proposed guidance would not 

impose unfunded mandates as defined 

by the Unfunded Mandates Reform Act 

of 1995 (Pub. L. 104–4, 109 Stat. 48). 

The proposed guidance would not result 

in the expenditure by State, local, and 

Tribal governments, in the aggregate, or 

by the private sector, of $168 million or 

more in any one year (2 U.S.C. 1532). 

Executive Order 13132 (Federalism 

Assessment) 

This proposed guidance has been 

analyzed in accordance with the 

principles and criteria contained in E.O. 

13132, ‘‘Federalism,’’ 64 FR 43255 (Aug. 

10, 1999). OMB has determined that this 

proposed guidance would not have 

sufficient federalism implications to 

warrant the preparation of a federalism 

assessment. The guidance in 2 CFR is 

inherently national in scope and 

significance. Regardless, in accordance 

with section 4(d) of E.O. 13132, OMB 

consulted with appropriate State and 

local officials that may be affected by 

Federal agencies’ implementation of 

OMB’s revised guidance by means of 

posting the RFI prior to proposing 

revisions. OMB weighed carefully the 

interests of those who submitted 

comments in response to the RFI in 

proposing revisions to the guidance, 

which balance the State interests with 

the need to provide Federal agencies 

with consistent, uniform, efficient, and 

transparent guidance, which is 

consistent with authorizing law. 

Paperwork Reduction Act 

This guidance does not contain a new 

requirement for information collection. 

Rather, it streamlines requirements in 

specific sections. Thus, the Paperwork 

Reduction Act does not apply. 

Executive Order 13175 (Tribal 

Consultation) 

OMB has analyzed this revised 

guidance in accordance with the 

principles and criteria contained in E.O. 

13175, ‘‘Consultation and Coordination 

with Indian Tribal Governments’’ 65 FR 

67249 (Nov. 9, 2000). On March 7, 2023, 

OMB held a two-hour Tribal 

consultation to solicit feedback from 

Tribal representatives. OMB also 

proposes providing greater flexibility to 

Tribal governments in the proposed 

guidance centered on procurement 

standards and disposition of equipment. 

OMB also proposes to clarify the 

definition of Indian Tribes. 

List of Subjects 

2 CFR Part 1 

Administration of Federal financial 

assistance, Administrative practice and 

procedure, Federal financial assistance 

programs. 

2 CFR Part 25 

Administrative practice and 

procedure; Grant programs; Grants 

administration; Loan programs. 

2 CFR Part 170 

Colleges and universities; Grant 

programs; Hospitals; International 

organizations; Loan programs; Reporting 

and recordkeeping requirements. 

2 CFR Part 175 

Administrative practice and 

procedures; Grant programs; Indians— 

tribal government; Nonprofit 

organizations; State and local 

governments. 

2 CFR Part 180 

Administrative practice and 

procedure; Grant programs; Loan 

programs; Reporting and recordkeeping 

requirements. 

2 CFR Part 182 

Administrative practice and 

procedure; Drug abuse; Grant programs; 

Reporting and recordkeeping 

requirements. 

2 CFR Part 183 

Foreign aid; Grants administration; 

Grant programs; International 

organizations; Reporting and 

recordkeeping requirements. 

2 CFR Part 200 

Administration of Federal financial 

assistance, Administrative practice and 

procedure, Federal financial assistance 

programs. 

For the reasons stated in the 

preamble, the Office of Management and 

Budget proposes to amend title 2, 

subtitle A, chapters I and II of the Code 

of Federal Regulations as follows: 

■ 1. Revise the heading of title 2 to read 

as follows: 

Title 2—Federal Financial Assistance 

■ 2. Revise the heading of subtitle A of 

title 2 to read as follows: 

Subtitle A—Office of Management and 

Budget Guidance for Federal Financial 

Assistance 

■ 3. Revise part 1, consisting of §§ 1.100 

through 1.305, to read as follows: 

PART 1—ABOUT TITLE 2 OF THE 

CODE OF FEDERAL REGULATIONS 

AND SUBTITLE A 

Sec. 

Subpart A—Introduction to Title 2 of the 

CFR 

1.100 Content of this title. 

1.105 Organization and subtitle content. 

1.110 Issuing authorities. 


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Subpart B—Introduction to Subtitle A 

1.200 Purpose of chapters I and II. 

1.205 Applicability to Federal financial 

assistance. 

1.210 Applicability to Federal agencies and 

others. 

1.215 Relationship to previous issuances. 

1.220 Federal agency implementation of 

this subtitle. 

1.230 Maintenance of this subtitle. 

1.231 Severability. 

Subpart C—Responsibilities of OMB and 

Federal Agencies 

1.300 OMB responsibilities. 

1.305 Federal agency responsibilities. 

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

31 U.S.C. 6307; 41 U.S.C. 1121; 

Reorganization Plan No. 2 of 1970; E.O. 

11541, 35 FR 10737. 

Subpart A—Introduction to Title 2 of 

the CFR 

§ 1.100 Content of this title. 

This title contains: 

(a) Office of Management and Budget 

(OMB) guidance to Federal agencies on 

governmentwide policies for the award 

and administration of Federal financial 

assistance; and 

(b) Federal agency regulations 

implementing that OMB guidance. 

§ 1.105 Organization and subtitle content. 

(a) This title is organized into two 

subtitles. 

(b) The OMB guidance described in 

§ 1.100(a) is published in subtitle A. 

Publication of the OMB guidance in the 

CFR does not change its nature—it is 

guidance, not regulation. 

(c) Each Federal agency that awards 

Federal financial assistance has a 

chapter in subtitle B in which it issues 

those regulations. The Federal agency 

regulations in subtitle B differ in nature 

from the OMB guidance in subtitle A 

because the OMB guidance is not 

regulatory. Federal agency regulations 

in subtitle B may give regulatory effect 

to the OMB guidance, to the extent that 

the agency regulations require 

compliance with all or portions of the 

OMB guidance. See also § 1.220. 

§ 1.110 Issuing authorities. 

OMB issues this subtitle. Each Federal 

agency that has a chapter in subtitle B 

of this title issues that chapter. 

Subpart B—Introduction to Subtitle A 

§ 1.200 Purpose of chapters I and II. 

Chapters I and II of subtitle A provide 

OMB guidance to Federal agencies that 

helps ensure consistent and uniform 

governmentwide policies and 

procedures for the management of the 

agencies’ Federal financial assistance. 

§ 1.205 Applicability to Federal financial 

assistance. 

The types of instruments that are 

subject to the guidance in this subtitle 

vary from one portion of the guidance 

to another. All portions of the guidance 

apply to grants and cooperative 

agreements, and some portions also 

apply to other types of Federal financial 

assistance. For example, the: 

(a) Guidance on debarment and 

suspension in part 180 of this subtitle 

applies broadly to all Federal financial 

assistance, and not just to grants and 

cooperative agreements. 

(b) Cost principles in subpart E of part 

200 of this subtitle apply to 

procurement contracts issued under a 

Federal award, as well as to Federal 

financial assistance. Cost principles are 

implemented for Federal agencies’ 

direct procurement contracts through 

the Federal Acquisition Regulation in 

title 48 of the CFR, rather than through 

Federal agency regulations on Federal 

financial assistance in this title. 

§ 1.210 Applicability to Federal agencies 

and others. 

(a) This subtitle contains guidance 

that directly applies only to Federal 

agencies. 

(b) The guidance in this subtitle may 

affect other entities through each 

Federal agency’s implementation of the 

guidance, portions of which may apply 

to: 

(1) The agency’s awarding or 

administering officials; 

(2) Recipients and subrecipients that 

receive or apply for the agency’s Federal 

financial assistance or receive 

subawards under grants or cooperative 

agreements; or 

(3) Any other entities involved in 

agency transactions subject to the 

guidance in this chapter. 

§ 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. 

§ 1.220 Federal agency implementation of 

this subtitle. 

A Federal agency that awards Federal 

financial assistance subject to the OMB 

guidance in this subtitle implements the 

guidance in agency regulations in 

subtitle B of this title and in guidance 

documents, policy documents, and 

procedural issuances, such as internal 

instructions to the agency’s awarding 

and administering officials. An 

applicant, recipient, or subrecipient 

would see the effect of that 

implementation in the organization and 

content of the agency’s announcements 

of funding opportunities and in its 

award terms and conditions. 

§ 1.230 Maintenance of this subtitle. 

OMB issues guidance in this subtitle 

after publication in the Federal 

Register. Any portion of the guidance 

that has a potential impact on the public 

is published with an opportunity for 

public comment. 

§ 1.231 Severability. 

The provisions of this subtitle are 

separate and severable from one 

another. If any provision of this subtitle 

is held invalid or unenforceable as 

applied to a particular person or 

circumstance, the provision should be 

construed so as to continue to give the 

maximum effect permitted by law as 

applied to other persons not similarly 

situated or to dissimilar circumstances. 

If any provision is determined to be 

wholly invalid and unenforceable, it 

should be severed from the remaining 

provisions of this part, which should 

remain in effect. 

Subpart C—Responsibilities of OMB 

and Federal Agencies 

§ 1.300 OMB responsibilities. 

OMB is responsible for: 

(a) Issuing and maintaining the 

guidance in this subtitle, as described in 

§ 1.230; 

(b) Interpreting the policy 

requirements in this subtitle; 

(c) Reviewing Federal agency 

regulations implementing the 

requirements of this subtitle, as required 

by Executive Order 12866; 

(d) Conducting broad oversight of 

governmentwide compliance with the 

guidance in this subtitle; and 

(e) Performing other OMB functions 

specified in this subtitle. 

§ 1.305 Federal agency responsibilities. 

The head of each Federal agency that 

awards and administers Federal 

financial assistance subject to the 

guidance in this subtitle is responsible 

for: 

(a) Implementing the guidance in this 

subtitle; 

(b) Ensuring that the Federal agency 

complies with their implementation of 

the guidance; 

(c) Coordinating with the Council on 

Federal Financial Assistance, the Grants 

Quality Service Management Office, and 

other governance committees as 

appropriate; and 

(d) Performing other functions 

specified in this subtitle. 


ddrumheller on DSK120RN23PROD with PROPOSALS2
69402 Federal Register / Vol. 88, No. 192 / Thursday, October 5, 2023 / Proposed Rules 

■ 4. Revise part 25, consisting of 

§ 25.100 through appendix A to part 25, 

to read as follows: 

PART 25—UNIQUE ENTITY IDENTIFIER 

AND SYSTEM FOR AWARD 

MANAGEMENT 

Sec. 

Subpart A—General 

25.100 Purpose of this part. 

25.105 Applicability. 

25.110 Exceptions to this part. 

Subpart B—Policy 

25.200 Requirements for notice of funding 

opportunities, regulations, and 

application instructions. 

25.205 Effect of noncompliance with a 

requirement to obtain a UEI or register in 

SAM.gov. 

25.210 Authority to modify agency 

application forms or formats. 

25.215 Requirements for agency 

information systems. 

25.220 Use of award term. 

Subpart C—Recipient Requirements of 

Subrecipients 

25.300 Requirement for recipients to ensure 

subrecipients have a unique entity 

identifier. 

Subpart D—Definitions 

25.400 Definitions. 

Appendix A to Part 25 

Award Term 

Authority: 31 U.S.C. 503; 31 U.S.C. 6102; 

31 U.S.C. 6307; Pub. L. 109–282; Pub. L. 110– 

252, Pub. L. 113–101, Pub. L. 117–40. 

Subpart A—General 

§ 25.100 Purpose of this part. 

This part provides guidance to 

Federal agencies that: 

(a) The unique entity identifier (UEI) 

is the universal identifier for Federal 

financial assistance applicants, as well 

as recipients and their direct 

subrecipients, and; 

(b) The System for Award 

Management (SAM.gov) is the repository 

for standard information about 

applicants and recipients. 

§ 25.105 Applicability. 

(a) This part applies to a Federal 

agency’s Federal financial assistance as 

defined in § 25.400. This part applies to 

all applicants for and recipients of 

Federal financial assistance unless 

exempted by Federal statute or § 25.110. 

(b) Subrecipients are required to 

obtain a UEI in accordance with subpart 

C. This part does not apply to 

subrecipients of subrecipients (secondtier subrecipients) or contractors under 

Federal awards. 

(c) This part does not apply to an 

individual who applies for or receives 

Federal financial assistance as a natural 

person (unrelated to any business or 

nonprofit organization an individual 

owns or operates). 

(d) Because this part applies to loan 

guarantees and other guaranteed 

programs, recipients of the guarantee 

from the Federal agency (for example, 

lenders of guaranteed loans) are 

required to complete entity validations 

and acquire a UEI. Additionally, at the 

Federal agency’s discretion, nonindividual beneficiary borrowers (for 

example, small businesses or 

corporations) may be required by the 

Federal agency to obtain a UEI or 

register in SAM.gov. 

§ 25.110 Exceptions to this part. 

(a) General exceptions. (1) Under a 

condition identified in paragraph (a)(2) 

of this section, a Federal agency may 

exempt an applicant or recipient of 

Federal financial assistance from the 

requirement to obtain a UEI, register in 

SAM.gov, or both. 

(i) If a Federal agency grants an 

exception under paragraph (a)(2) of this 

section, it must use a generic entity 

identifier in the data it reports to 

USAspending.gov if reporting for a 

prime award of Federal financial 

assistance to the recipient is required by 

the Federal Funding Accountability and 

Transparency Act (Pub. L. 109–282, as 

amended, hereafter cited as 

‘‘Transparency Act’’). Granting an 

exception under paragraph (a)(2) of this 

section does not impact a Federal 

agency’s responsibility for reporting 

under the Transparency Act, except that 

it may use a generic entity identifier in 

the circumstances described. 

(ii) Federal agencies should use 

generic entity identifiers rarely as it 

prevents recipients from fulfilling 

reporting requirements such as 

subaward or executive compensation 

reporting required by the Transparency 

Act. 

(2) A Federal agency may exempt 

either an applicant or recipient when: 

(i) The Federal agency determines that 

it must protect information about the 

entity from disclosure in the national 

security or foreign policy interests of the 

United States or to avoid jeopardizing 

the personal safety of the entity’s staff, 

partners, beneficiaries, and participants; 

(ii) (A) All of the following conditions 

are met: 

(1) the entity is a foreign organization 

or foreign public entity; 

(2) the Federal award or subaward 

will be performed outside the United 

States; 

(3) the Federal award or subaward 

will be less than $25,000; and 

(5) the Federal agency deems it to be 

impractical for the entity to comply 

with the requirements of this part. 

(B) The Federal agency must 

determine this exemption on a case-bycase basis while utilizing a risk-based 

approach; or 

(iii) For applicants, the Federal 

agency determines that there are exigent 

circumstances that prohibit the 

applicant from receiving a UEI and 

registering in SAM.gov before receiving 

a Federal award. In these instances, 

Federal agencies must require the 

recipient to obtain a UEI and complete 

registration in SAM.gov within 30 days 

of the Federal award date. 

(b) Class exceptions. OMB may 

approve additional exceptions for 

classes of Federal awards, applicants, or 

recipients subject to the requirements of 

this part when exceptions are not 

prohibited by statute. 

Subpart B—Policy 

§ 25.200 Requirements for notice of 

funding opportunities, regulations, and 

application instructions. 

(a) A Federal agency that issues 

Federal financial assistance (see 

§ 25.400) must include the requirements 

of paragraph (b) of this section in each 

notice of funding opportunity, 

regulation, or other issuance containing 

instructions for applicants that is issued 

on or after the effective date of this 

guidance. A notice of funding 

opportunity is any paper or electronic 

issuance that a Federal agency uses to 

announce a funding opportunity, 

whether it is called a ‘‘program 

announcement,’’ ‘‘notice of funding 

availability,’’ ‘‘broad agency 

announcement,’’ ‘‘research 

announcement,’’ ‘‘solicitation,’’ or any 

other term. 

(b) The notice of funding opportunity, 

regulation, or other issuance must 

require each applicant that does not 

have an exemption under § 25.110 to: 

(1) Be registered in SAM.gov before 

submitting an application; 

(2) Maintain a current and active 

registration in SAM.gov at all times 

during which it has an active Federal 

award or an application under 

consideration by a Federal agency. The 

applicant must review and update its 

information in SAM.gov annually from 

the date of initial registration or 

subsequent updates to ensure it is 

current, accurate, and complete. If 

applicable, this includes identifying the 

applicant’s immediate and highest-level 

owner and subsidiaries, as well as 

providing information on all 

predecessors that have received a 


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Federal award or contract within the 

last three years; and 

(3) Include its UEI in each application 

it submits to the Federal agency. 

(c) For the purposes of this policy: the 

applicant meets the Federal agency’s 

eligibility criteria and has the legal 

authority to apply and receive the 

Federal award. For example, if a 

consortium applies for a Federal award 

to be made to the consortium as the 

recipient, the consortium must have a 

UEI. If a consortium is eligible to receive 

funding under a Federal agency 

program, but the agency’s policy is to 

make the Federal award to a lead entity 

for the consortium, the UEI of the lead 

applicant must be used. 

§ 25.205 Effect of noncompliance with a 

requirement to obtain a UEI or register in 

SAM.gov. 

(a) Unless an entity is exempt under 

§ 25.110, a Federal agency may not issue 

a Federal award or amend an existing 

Federal award if the entity is not in 

compliance with the requirements of 

this part. This does not apply to 

amendments to terminate or close out a 

Federal award. 

(b) At the time a Federal agency is 

ready to make a Federal award, if the 

intended recipient has not complied 

with the requirements to obtain a UEI 

and maintain an active registration in 

SAM.gov with current information, the 

Federal agency may make a Federal 

award to another applicant. 

§ 25.210 Authority to modify agency 

application forms or formats. 

To implement the policies in 

§§ 25.200 and 25.205, a Federal agency 

may add a UEI field to information 

collections previously approved by 

OMB, with no further approval 

required. 

§ 25.215 Requirements for agency 

information systems. 

Each Federal agency that awards 

Federal financial assistance (see 

§ 25.400) must ensure that its 

information systems are able to both 

accept and transmit the UEI as the 

universal identifier for Federal financial 

assistance applicants and recipients. 

§ 25.220 Use of award term. 

(a) A Federal agency must include the 

award term in Appendix A in all 

Federal financial assistance agreements 

(see § 25.400) to accomplish the purpose 

of § 25.100. 

(b) A Federal agency may use 

different letters and numbers than those 

in Appendix A to designate the 

paragraphs of the award term. 

Subpart C—Recipient Requirements of 

Subrecipients 

§ 25.300 Requirement for recipients to 

ensure subrecipients have a unique entity 

identifier. 

(a) A recipient may not make a 

subaward to a subrecipient that has not 

obtained a UEI and provided it to the 

recipient. Subrecipients are not required 

to complete full registration in SAM.gov 

to obtain a UEI. 

(b) A recipient must notify any 

potential subrecipients that the 

recipient cannot make a subaward 

unless the subrecipient obtains and 

provides a UEI to the recipient. 

Subpart D—Definitions 

§ 25.400 Definitions. 

Terms not defined in this part shall 

have the same meaning as provided in 

2 CFR part 200, subpart A. As used in 

this part: 

Applicant means any entity that 

applies for a Federal award directly to 

a Federal agency. 

Entity includes: 

(1) Whether for profit or nonprofit: 

(i) A corporation; 

(ii) An association; 

(iii) A partnership; 

(iv) A limited liability company; 

(v) A limited liability partnership; 

(vi) A sole proprietorship; 

(vii) Any other legal business entity; 

(viii) Another grantee or contractor 

that is not excluded by subparagraph 

(b); and 

(ix) Any State or locality; 

(2) Does not include: 

(i) An individual recipient of Federal 

financial assistance; or 

(ii) A Federal employee. 

Federal Award means an award of 

Federal financial assistance that an 

entity receives from a Federal agency. 

Federal financial assistance: 

(1) Means assistance that entities 

receive or administer in the form of a: 

(i) Grant; 

(ii) Cooperative agreement (which 

does not include a cooperative research 

and development agreement pursuant to 

the Federal Technology Transfer Act of 

1986, as amended (15 U.S.C. 3710a); 

(iii) Loan; 

(iv) Loan guarantee; 

(v) Subsidy; 

(vi) Insurance; 

(vii) Food commodity; 

(viii) Direct appropriation; 

(ix) Assessed or voluntary 

contribution; or 

(x) Any other financial assistance 

transaction that authorizes the entity’s 

expenditure of Federal funds. 

(2) For the purposes of this part, the 

term ‘‘Federal financial assistance’’ does 

not include: 

(i) Technical assistance that provides 

services in lieu of money; and 

(ii) A transfer of title to federallyowned property provided in lieu of 

money, even if the award is called a 

grant. 

Recipient means an entity that 

receives or administers a Federal Award 

directly from a Federal agency. 

System for Award Management 

(SAM.gov) means the Federal repository 

into which an entity must provide the 

information required for the conduct of 

business as a recipient. 

Unique entity identifier means the 

universal identifier assigned by 

SAM.gov to uniquely identify an entity. 

Appendix A to Part 25—Award Term 

I. System for Award Management (SAM.gov) 

and Universal Identifier Requirements 

(a) Requirement for System for Award 

Management. 

(1) Unless exempt from this requirement 

under 2 CFR 25.110, you must maintain a 

current and active registration in SAM.gov. 

Your registration must always be current and 

active until you submit all final reports 

required under this Federal award or receive 

the final payment, whichever is later. You 

must review and update your information in 

SAM.gov at least annually from the date of 

your initial registration or any subsequent 

updates to ensure it is current, accurate, and 

complete. If applicable, this includes 

identifying your immediate and highest-level 

owner and subsidiaries and providing 

information about your predecessors that 

have received a Federal award or contract 

within the last three years. 

(b) Requirement for Unique Entity 

Identifier (UEI). (1) If you are authorized to 

make subawards under this Federal award, 

you: 

(i) Must notify potential subrecipients that 

no entity may receive a subaward from you 

until the entity has provided its UEI to you. 

(ii) May not make a subaward to an entity 

unless the entity has provided its UEI to you. 

Subrecipients are not required to complete 

full registration in SAM.gov to obtain a UEI. 

(c) Definitions. For the purposes of this 

award term: 

System for Award Management (SAM.gov) 

means the Federal repository into which a 

recipient must provide the information 

required for the conduct of business as a 

recipient. Additional information about 

registration procedures may be found in 

SAM.gov (currently at https://www.sam.gov). 

Unique entity identifier means the 

universal identifier assigned by SAM.gov to 

uniquely identify an entity. 

Entity is defined at 25 CFR 400 and 

includes all of the following types as defined 

in 2 CFR 200.1: 

(1) Non-Federal entity; 

(2) Foreign organization; 

(3) Foreign public entity; 

(4) Domestic for-profit organization; and 

(5) Federal agency. 

Subaward has the meaning given in 2 CFR 

200.1. 

Subrecipient has the meaning given in 2 

CFR 200.1. 


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■ 5. Revise part 170 to read as follows: 

PART 170—REPORTING SUBAWARD 

AND EXECUTIVE COMPENSATION 

INFORMATION 

Sec. 

Subpart A—General 

170.100 Purpose of this part. 

170.105 Applicability. 

Subpart B—Policy 

170.200 Federal agency reporting 

requirements. 

170.210 Requirements for notices of 

funding opportunities, regulations, and 

application instructions. 

170.220 Use of award term. 

Subpart C—Definitions 

170.300 Definitions. 

Appendix A to Part 170 

Award term 

Authority: 31 U.S.C. 503; 31 U.S.C. 6102; 

31 U.S.C. 6307; Pub. L. 109–282; Pub. L. 110– 

252, Pub. L. 113–101, Pub. L. 117–40. 

Subpart A—General 

§ 170.100 Purpose of this part. 

This part provides guidance to 

Federal agencies on establishing 

requirements for recipients of Federal 

awards to report information on 

subawards and executive total 

compensation, as required by the 

Federal Funding Accountability and 

Transparency Act of 2006 (Public Law 

109–282), as amended by the Digital 

Accountability and Transparency Act of 

2014 (Public Law 113–101), hereafter 

referred to as the ‘‘Transparency Act.’’ 

§ 170.105 Applicability. 

(a) This part applies to a Federal 

agency’s Federal financial assistance as 

defined in § 170.300. This part applies 

to all recipients and subrecipients of 

Federal awards who meet the reporting 

requirements of paragraph (c) of this 

section, unless exempt under Federal 

statute or by paragraph (d) of this 

section. 

(b) This part does not apply to an 

individual who applies for or receives 

Federal financial assistance as a natural 

person (that is, unrelated to any 

business or nonprofit organization an 

individual owns or operates). 

(c) Reporting Requirements. (1) The 

names and total compensation of an 

entity’s five most highly compensated 

executives must be reported if: 

(i) In the entity’s preceding fiscal year, 

it received: 

(A) 80 percent or more of its annual 

gross revenue in Federal procurement 

contracts (and subcontracts) and Federal 

awards (and subawards) subject to the 

Transparency Act, as defined at 

§ 170.300; and 

(B) $25,000,000 or more in annual 

gross revenue from Federal procurement 

contracts (and subcontracts) and Federal 

awards (and subawards) subject to the 

Transparency Act, as defined at 

§ 170.300; and 

(ii) The public does not have access 

to information about the compensation 

of senior executives of the entity 

through periodic reports filed under 

section 13(a) or 15(d) of the Securities 

Exchange Act of 1934 (15 U.S.C. 78m(a), 

78o(d)) or section 6104 of the Internal 

Revenue Code of 1986. 

(d) Class exceptions. OMB may 

approve additional exceptions for 

classes of Federal awards or recipients 

when not prohibited by Federal statute. 

Subpart B—Policy 

§ 170.200 Federal agency reporting 

requirements. 

(a) Federal agencies must publicly 

report Federal awards that equal or 

exceed the micro-purchase threshold 

(see 2 CFR 200.1). Federal agencies must 

publish the required Federal award 

information on USAspending.gov in 

accordance with the guidance provided 

by OMB and the U.S. Department of the 

Treasury’s DATA Act Information 

Model Schema (DAIMS). 

(b) Federal agencies should ensure 

that their agency-specific requirements 

do not require recipients to submit data 

that is the same as or similar to data 

required by the Transparency Act 

during a given reporting period. 

§ 170.210 Requirements for notices of 

funding opportunities, regulations, and 

application instructions. 

(a) A Federal agency that makes 

Federal awards subject to the 

Transparency Act must include the 

requirements of paragraph (b) of this 

section in each notice of funding 

opportunity, regulation, or other 

issuance containing instructions for 

applicants under which Federal awards 

may be made that are subject to 

Transparency Act reporting 

requirements. A notice of funding 

opportunity is any paper or electronic 

issuance that a Federal agency uses to 

announce a funding opportunity, 

whether it is called a ‘‘program 

announcement,’’ ‘‘notice of funding 

availability,’’ ‘‘broad agency 

announcement,’’ ‘‘research 

announcement,’’ ‘‘solicitation,’’ or any 

other term. 

(b) The notice of funding opportunity, 

regulation, or other issuance must 

require each applicant, to which this 

part applies, to have the necessary 

processes and systems in place to 

comply with this part if they receive a 

Federal award. 

§ 170.220 Use of award term. 

(a) A Federal agency must include the 

award term in Appendix A to this part 

in each Federal award to a recipient 

under which the total funding is 

anticipated to equal or exceed $30,000 

in Federal funding. 

(b) Consistent with paragraph (a) of 

this section, a Federal agency is not 

required to include the award term in 

Appendix A of this part if the total 

amount of Federal funding under the 

Federal award will not equal or exceed 

$30,000. However, the Federal agency 

must subsequently add the award term 

if increases to the Federal funding result 

in the award equaling or exceeding 

$30,000. 

(c) A Federal agency may use different 

letters and numbers than those in 

Appendix A to designate the paragraphs 

of the award term. 

Subpart C—Definitions 

§ 170.300 Definitions 

Terms not defined in this part shall 

have the same meaning as provided in 

2 CFR part 200, subpart A. As used in 

this part: 

Applicant means any entity that 

applies for a Federal award directly 

from a Federal agency. 

Entity includes: 

(1) Whether for profit or nonprofit: 

(i) A corporation; 

(ii) An association; 

(iii) A partnership; 

(iv) A limited liability company; 

(v) A limited liability partnership; 

(vi) A sole proprietorship; 

(vii) Any other legal business entity; 

(viii) Another grantee or contractor 

that is not excluded by subparagraph (2) 

or (3); and 

(ix) Any State or locality; 

(2) Does not include: 

(i) An individual recipient of Federal 

financial assistance; or 

(ii) A Federal employee. 

Federal Award means an award of 

Federal financial assistance that an 

entity receives from a Federal agency. 

Executive means an officer, managing 

partner, or any other employee holding 

a management position. 

Federal financial assistance: 

(1) Means assistance that entities 

receive or administer in the form of a: 

(i) Grant; 

(ii) Cooperative agreement (which 

does not include a cooperative research 

and development agreement pursuant to 

the Federal Technology Transfer Act of 

1986, as amended (15 U.S.C. 3710a); 

(iii) Loan; 


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(iv) Loan guarantee; 

(v) Subsidy; 

(vi) Insurance; 

(vii) Food commodity; 

(viii) Direct appropriation; 

(ix) Assessed or voluntary 

contribution; or 

(x) Any other financial assistance 

transaction that authorizes the entity’s 

expenditure of Federal funds. 

(2) For the purposes of this part, the 

term ‘‘Federal financial assistance’’ does 

not include: 

(i) Technical assistance that provides 

services in lieu of money; 

(ii) A transfer of title to federallyowned property provided in lieu of 

money, even if the award is called a 

grant; 

(iii) Any classified Federal award; or 

(iv) Any award funded in whole or in 

part with Recovery funds, as defined in 

section 1512 of the American Recovery 

and Reinvestment Act of 2009 (Pub. L. 

111–5). 

Recipient means an entity that 

receives or administers a Federal Award 

directly from a Federal agency. 

Total Compensation means the cash 

and noncash dollar value an executive 

earns during an entity’s preceding fiscal 

year. This includes all items of 

compensation as prescribed in 17 CFR 

29.402(c)(2). 

Appendix A to Part 170—Award Term 

I. Reporting Subawards and Executive 

Compensation 

(a) Reporting of first-tier subawards—(1) 

Applicability. Unless you are exempt as 

provided in paragraph (d) of this award term, 

you must report each action that equals or 

exceeds $30,000 in Federal funds for a 

subaward to an entity or Federal agency. You 

must subsequently report an action if 

increases to the Federal funding results in the 

subaward equaling or exceeding $30,000. 

(2) Reporting Requirements. (i) The entity 

or Federal agency must report each subaward 

described in paragraph (a)(1) of this award 

term to the Federal Funding Accountability 

and Transparency Act Subaward Reporting 

System (FSRS) at http://www.fsrs.gov. 

(ii) For subaward information, report no 

later than the end of the month following the 

month in which the subaward was made. 

(For example, if the subaward was made on 

November 7, 2025, the subaward must be 

reported by no later than December 31, 2025). 

(b) Reporting total compensation of 

recipient executives for entities—(1) 

Applicability. You must report the total 

compensation for each of your five most 

highly compensated executives for the 

preceding completed fiscal year if: 

(i) The total Federal funding authorized to 

date under this Federal award equals or 

exceeds $30,000; 

(ii) in the preceding fiscal year, you 

received: 

(A) 80 percent or more of your annual gross 

revenues from Federal procurement contracts 

(and subcontracts) and Federal awards (and 

subawards) subject to the Transparency Act; 

and 

(B) $25,000,000 or more in annual gross 

revenues from Federal procurement contracts 

(and subcontracts) and Federal awards (and 

subawards) subject to the Transparency Act; 

and, 

(iii) The public does not have access to 

information about the compensation of the 

executives through periodic reports filed 

under section 13(a) or 15(d) of the Securities 

Exchange Act of 1934 (15 U.S.C. 78m(a), 

78o(d)) or section 6104 of the Internal 

Revenue Code of 1986 after receiving this 

subaward. (To determine if the public has 

access to the compensation information, see 

the U.S. Security and Exchange Commission 

total compensation filings at http://

www.sec.gov/answers/execomp.htm.) 

(2) Reporting Requirements. You must 

report executive total compensation 

described in paragraph (b)(1) of this 

appendix: 

(i) As part of your registration profile at 

https://www.sam.gov. 

(ii) No later than the month following the 

month in which this Federal award is made, 

and annually after that. (For example, if this 

Federal award was made on November 7, 

2025, the executive total compensation must 

be reported by no later than December 31, 

2025.) 

(c) Reporting of total compensation of 

subrecipient executives—(1) Applicability. 

Unless a first-tier subrecipient is exempt as 

provided in paragraph (d) of this appendix, 

you must report the executive total 

compensation of each of the subrecipient’s 

five most highly compensated executives for 

the subrecipient’s preceding completed fiscal 

year, if: 

(i) The total Federal funding authorized to 

date under the subaward equals or exceeds 

$30,000; 

(ii) In the subrecipient’s preceding fiscal 

year, the subrecipient received: 

(A) 80 percent or more of its annual gross 

revenues from Federal procurement contracts 

(and subcontracts) and Federal awards (and 

subawards) subject to the Transparency Act; 

and, 

(B) $25,000,000 or more in annual gross 

revenues from Federal procurement contracts 

(and subcontracts), and Federal awards (and 

subawards) subject to the Transparency Act; 

and 

(iii) The public does not have access to 

information about the compensation of the 

executives through periodic reports filed 

under section 13(a) or 15(d) of the Securities 

Exchange Act of 1934 (15 U.S.C. 78m(a), 

78o(d)) or section 6104 of the Internal 

Revenue Code of 1986 after receiving this 

subaward. (To determine if the public has 

access to the compensation information, see 

the U.S. Security and Exchange Commission 

total compensation filings at http://

www.sec.gov/answers/execomp.htm.) 

(2) Reporting Requirements. Subrecipients 

must report to you, the recipient, their 

executive total compensation described in 

paragraph (c)(1) of this appendix. You are 

required to submit this information to the 

Federal Funding Accountability and 

Transparency Act Subaward Reporting 

System (FSRS) at http://www.fsrs.gov no later 

than the end of the month following the 

month in which the subaward was made. 

(For example, if the subaward was made on 

November 7, 2025, the subaward must be 

reported by no later than December 31, 2025). 

(d) Exemptions. (1) If in the previous tax 

year you had gross income under $300,000, 

you are exempt from the requirements to 

report: 

(i) Subawards, and 

(ii) The total compensation of the five most 

highly compensated executives of any 

subrecipient. 

(e) Definitions. 

For purposes of this award term: 

Entity includes: 

(1) Whether for profit or nonprofit: 

(i) A corporation; 

(ii) An association; 

(iii) A partnership; 

(iv) A limited liability company; 

(v) A limited liability partnership; 

(vi) A sole proprietorship; 

(vii) Any other legal business entity; 

(viii) Another grantee or contractor that is 

not excluded by subparagraph (2); and 

(ix) Any State or locality; 

(2) Does not include: 

(i) An individual recipient of Federal 

financial assistance; or 

(ii) A Federal employee. 

Executive means an officer, managing 

partner, or any other employee holding a 

management position. 

Subaward has the meaning given in 2 CFR 

200.1. 

Subrecipient has the meaning given in 2 

CFR 200.1. 

Total Compensation means the cash and 

noncash dollar value an executive earns 

during an entity’s preceding fiscal year. This 

includes all items of compensation as 

prescribed in 17 CFR 229.402(c)(2). 

■ 6. Revise part 175 to read as follows: 

PART 175—AWARD TERM FOR 

TRAFFICKING IN PERSONS 

Sec. 

Subpart A—General 

175.100 Purpose of this part. 

175.105 Statutory requirement. 

Subpart B—Guidance 

175.200 Use of award term. 

175.205 Referral. 

Subpart C—Definitions 

175.300 Definitions. 

Appendix A to Part 175 

Award term 

Authority: 22 U.S.C. 7104(g); 22 U.S.C. 

7104a; 22 U.S.C. 7104b; 22 U.S.C. 7104c; 31 

U.S.C. 503; 31 U.S.C. 6307; 31 U.S.C. 1111; 

41 U.S.C. 1121; Reorganization Plan No. 2 of 

1970; E.O. 11541, 35 FR 10737. 

Subpart A—General 

§ 175.100 Purpose of this part. 

This part establishes a Federal award 

term for grants and cooperative 


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agreements to implement the 

requirements in 22 U.S.C. 7104(g). 

§ 175.105 Statutory requirement. 

(a) Federal agencies are required to 

include in each Federal grant or 

cooperative agreement a condition that 

authorizes the Federal agency to 

terminate the award, without penalty, if 

a private entity receiving funds under 

the award as a recipient or subrecipient 

engages in: 

(1) Severe forms of trafficking in 

persons; 

(2) The procurement of a commercial 

sex act during the period of time that 

the grant or cooperative agreement is in 

effect; 

(3) The use of forced labor in the 

performance of the grant or cooperative 

agreement; or 

(4) Acts that directly support or 

advance trafficking in persons, 

including the following acts: 

(i) Destroying, concealing, removing, 

confiscating, or otherwise denying an 

employee access to that employee’s 

identity or immigration documents; 

(ii) Failing to provide return 

transportation or pay for return 

transportation costs to an employee 

from a country outside the United States 

to the country from which the employee 

was recruited upon the end of 

employment if requested by the 

employee, unless: 

(A) exempted from the requirement to 

provide or pay for such return 

transportation by the Federal 

department or agency providing or 

entering into the grant or cooperative 

agreement; or 

(B) the employee is a victim of human 

trafficking seeking victim services or 

legal redress in the country of 

employment or a witness in a human 

trafficking enforcement action; 

(iii) Soliciting a person for the 

purpose of employment, or offering 

employment, by means of materially 

false or fraudulent pretenses, 

representations, or promises regarding 

that employment; 

(iv) Charging recruited employees a 

placement or recruitment fee; or 

(v) Providing or arranging housing 

that fails to meet the host country’s 

housing and safety standards. 

(b) Compliance plan and certification 

requirement. 

(1) Certification. Prior to receiving a 

grant or cooperative agreement, if the 

estimated value of services required to 

be performed under the grant or 

cooperative agreement outside the 

United States exceeds $500,000, a 

recipient must certify that: 

(i) The recipient has implemented a 

plan to prevent the activities described 

in paragraph (a) of this section, and is 

in compliance with this plan; 

(ii) The recipient has implemented 

procedures to prevent any activities 

described in paragraph (a) of this 

section and to monitor, detect, and 

terminate any subcontractor, subgrantee, 

or employee of the recipient engaging in 

any activities described in paragraph (a) 

of this section; and 

(iii) To the best of the recipient’s 

knowledge, neither the recipient, nor 

any subcontractor or subgrantee of the 

recipient or any agent of the recipient or 

of such a subcontractor or subgrantee, is 

engaged in any of the activities 

described in paragraph (a) of this 

section. 

(2) Annual certification. If the 

recipient receives the award, it must 

submit an annual certification 

consistent with paragraph (b)(1) of this 

section for each year the award is in 

effect. 

(3) Compliance plan. Any plan or 

procedures implemented pursuant to 

paragraph (b) must be appropriate to the 

size and complexity of the grant or 

cooperative agreement and to the nature 

and scope of its activities, including the 

number of non-United States citizens 

expected to be employed. 

(4) Copies of the compliance plan. 

The recipient must provide a copy of 

the plan to the grant officer upon 

request, and as appropriate, must post 

the useful and relevant contents of the 

plan or related materials on its website 

and at the workplace. 

(5) Minimum requirements of the 

compliance plan. The compliance plan 

must include, at a minimum, the 

following: 

(i) An awareness program to inform 

recipient employees about the 

Government’s policy prohibiting 

trafficking-related activities described in 

paragraph (a) of this section, the 

activities prohibited, and the actions 

that will be taken against the employee 

for violations. Additional information 

about Trafficking in Persons and 

examples of awareness programs can be 

found at the website for the Department 

of State’s Office to Monitor and Combat 

Trafficking in Persons at http://

www.state.gov/j/tip/. 

(ii) A process for employees to report, 

without fear of retaliation, activity 

inconsistent with the policy prohibiting 

trafficking in persons. 

(iii) A recruitment and wage plan that 

only permits the use of recruitment 

companies with trained employees, 

prohibits charging recruitment fees to 

the employees or potential employees 

and ensures that wages meet applicable 

host-country legal requirements or 

explains any variance. 

(iv) A housing plan, if the recipient, 

subrecipient, contractor, or 

subcontractor intends to provide or 

arrange housing, that ensures that the 

housing meets host-country housing and 

safety standards. 

(v) Procedures to prevent agents, 

subrecipients, contractors, or 

subcontractors at any tier and at any 

dollar value from engaging in trafficking 

in persons, including activities in 

paragraph (a) of this section, and to 

monitor, detect, and terminate any 

agents, subgrants, or subrecipient, 

contractor, or subcontractor employees 

that have engaged in such activities. 

(c) Notification to Inspectors General 

and cooperation with government. The 

head of a Federal agency making or 

awarding a grant or cooperative 

agreement must require that the 

recipient of the grant or cooperative 

agreement: 

(1) Immediately inform the Inspector 

General of the Federal agency of any 

information it receives from any source 

that alleges credible information that the 

recipient, any subcontractor or 

subgrantee of the recipient, or any agent 

of the recipient or of such a 

subcontractor or subgrantee, has 

engaged in conduct described in 

paragraph (a) of this section; and 

(2) Fully cooperate with any Federal 

agencies responsible for audits, 

investigations, or corrective actions 

relating to trafficking in persons. 

Subpart B—Guidance 

§ 175.200 Use of award term. 

(a) To implement the requirements of 

22 U.S.C. 7104(g) a Federal agency must 

include the award term in Appendix A 

of this part for the following Federal 

awards: 

(1) A grant or cooperative agreement 

to a private entity, as defined in 

§ 175.300; and 

(2) A grant or cooperative agreement 

to a State, local government, Indian 

Tribe, foreign public entity, or any other 

recipient if funding under the award 

could be provided to a subrecipient that 

is a private entity. 

(b) A Federal agency may use 

different letters and numbers than those 

in Appendix A to designate the 

paragraphs of the award term. 

§ 175.205 Referral. 

A Federal agency official should 

inform the agency’s suspension and 

debarment official if an award is 

terminated based on a violation of a 

prohibition in the award term under 

Appendix A. 


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Subpart C—Definitions 

§ 175.300 Definitions. 

Terms not defined in this part shall 

have the same meaning as provided in 

2 CFR part 200, subpart A. As used in 

this part: 

Abuse or threatened abuse of law or 

legal process means the use or 

threatened use of a law or legal process, 

whether administrative, civil, or 

criminal, in any manner or for any 

purpose for which the law was not 

designed, in order to exert pressure on 

another person to cause that person to 

take some action or refrain from taking 

some action. 

Coercion means: 

(1) Threats of serious harm to or 

physical restraint against any person; 

(2) Any scheme, plan, or pattern 

intended to cause a person to believe 

that failure to perform an act would 

result in serious harm to or physical 

restraint against any person; or 

(3) The abuse or threatened abuse of 

the legal process. 

Commercial sex act means any sex act 

on account of which anything of value 

is given to or received by any person. 

Debt bondage means the status or 

condition of a debtor arising from a 

pledge by the debtor of his or her 

personal services or of those of a person 

under his or her control as a security for 

debt, if the value of those services as 

reasonably assessed is not applied 

toward the liquidation of the debt or the 

length and nature of those services are 

not respectively limited and defined. 

Involuntary servitude includes a 

condition of servitude induced by 

means of: 

(1) Any scheme, plan, or pattern 

intended to cause a person to believe 

that, if the person did not enter into or 

continue in such condition, that person 

or another person would suffer serious 

harm or physical restraint; or 

(2) The abuse or threatened abuse of 

the legal process. 

Private Entity means any entity, 

including for-profit organizations, 

nonprofit organizations, institutes of 

higher education, and hospitals. The 

term does not include foreign public 

entities, Indian Tribes, local 

governments, or states as defined in 2 

CFR 200.1. 

Recruitment Fee means fees of any 

type, including charges, costs, 

assessments, or other financial 

obligations, that are associated with the 

recruiting process, regardless of the 

time, manner, or location of imposition 

or collection of the fee. 

(1) Recruitment fees include, but are 

not limited to, the following fees (when 

they are associated with the recruiting 

process) for: 

(i) Advertising; 

(ii) Obtaining permanent or temporary 

labor certification, including any 

associated fees; 

(iii) Processing applications and 

petitions; 

(iv) Acquiring visas, including any 

associated fees; 

(v) Acquiring photographs and 

identity or immigration documents, 

such as passports, including any 

associated fees; 

(vi) Accessing the job opportunity, 

including required medical 

examinations and immunizations; 

background, reference, and security 

clearance checks and examinations; and 

additional certifications; 

(vii) An employer’s recruiters, agents 

or attorneys, or other notary or legal 

fees; 

(viii) Language interpretation or 

translation, arranging for or 

accompanying on travel, or providing 

other advice to employees or potential 

employees; 

(ix) Government-mandated fees, such 

as border crossing fees, levies, or worker 

welfare fund; 

(x) Transportation and subsistence 

costs: 

(A) While in transit, including, but 

not limited to, airfare or costs of other 

modes of transportation, terminal fees, 

and travel taxes associated with travel 

from the country of origin to the country 

of performance and the return journey 

upon the end of employment; and 

(B) From the airport or 

disembarkation point to the worksite; 

(xi) Security deposits, bonds, and 

insurance; and 

(xii) Equipment charges. 

(2) A recruitment fee, as described in 

the introductory text of this definition, 

is a recruitment fee, regardless of 

whether the payment is: 

(i) Paid in property or money; 

(ii) Deducted from wages; 

(iii) Paid back in wage or benefit 

concessions; 

(iv) Paid back as a kickback, bribe, inkind payment, free labor, tip, or tribute; 

or 

(v) Collected by an employer or a 

third party, whether licensed or 

unlicensed, including, but not limited 

to: 

(A) Agents; 

(B) Labor brokers; 

(C) Recruiters; 

(D) Staffing firms (including private 

employment and placement firms); 

(E) Subsidiaries/affiliates of the 

employer; 

(F) Any agent or employee of such 

entities; and 

(G) Subcontractors at all tiers. 

Severe forms of trafficking in persons 

means: 

(1) Sex trafficking in which a 

commercial sex act is induced by force, 

fraud, or coercion or in which the 

person induced to perform such act has 

not attained 18 years of age; or 

(2) The recruitment, harboring, 

transportation, provision, or obtaining 

of a person for labor or services, through 

the use of force, fraud, or coercion for 

the purpose of subjection to involuntary 

servitude, peonage, debt bondage or 

slavery. 

Sex trafficking means the recruitment, 

harboring, transportation, provision, 

obtaining, patronizing, or soliciting of a 

person for the purpose of a commercial 

sex act. 

Appendix A to Part 175—Award Term 

I. Trafficking in persons. 

(a) Provisions applicable to a recipient that 

is a private entity. (1) Under this award, you 

as the recipient, your employees, 

subrecipients under this award, and 

subrecipient’s employees may not engage in: 

(i) Severe forms of trafficking in persons; 

(ii) The procurement of a commercial sex 

act during the period of time that this award 

or any subaward is in effect; 

(iii) The use of forced labor in the 

performance of this award or any subaward; 

or 

(iv) Acts that directly support or advance 

trafficking in persons, including the 

following acts: 

(A) Destroying, concealing, removing, 

confiscating, or otherwise denying an 

employee access to that employee’s identity 

or immigration documents; 

(B) Failing to provide return transportation 

or pay for return transportation costs to an 

employee from a country outside the United 

States to the country from which the 

employee was recruited upon the end of 

employment if requested by the employee, 

unless: 

(1) Exempted from the requirement to 

provide or pay for such return transportation 

by the Federal department or agency 

providing or entering into the grant or 

cooperative agreement; or 

(2) The employee is a victim of human 

trafficking seeking victim services or legal 

redress in the country of employment or a 

witness in a human trafficking enforcement 

action; 

(C) Soliciting a person for the purpose of 

employment, or offering employment, by 

means of materially false or fraudulent 

pretenses, representations, or promises 

regarding that employment; 

(D) Charging recruited employees a 

placement or recruitment fee; or 

(E) Providing or arranging housing that 

fails to meet the host country’s housing and 

safety standards. 

(2) We as the awarding Federal agency may 

unilaterally terminate this award, without 

penalty, if any private entity under this 

award: 


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(i) Is determined to have violated a 

prohibition in paragraph (a)(1) of this 

appendix; or 

(ii) Has an employee that is determined to 

have violated a prohibition in paragraph 

(a)(1) of this this appendix through conduct 

that is either: 

(A) Associated with the performance under 

this award; or 

(B) Imputed to you or the subrecipient 

using the standards and due process for 

imputing the conduct of an individual to an 

organization that are provided in 2 CFR part 

180, ‘‘OMB Guidelines to Agencies on 

Government-wide Debarment and 

Suspension (Nonprocurement),’’ as 

implemented by our agency at [agency must 

insert reference here to its regulatory 

implementation of the OMB guidelines in 2 

CFR part 180 (for example, ‘‘2 CFR part 

XX’’)]. 

(b) Provision applicable to a recipient other 

than a private entity. (1) We as the awarding 

Federal agency may unilaterally terminate 

this award, without penalty, if a subrecipient 

that is a private entity under this award: 

(i) Is determined to have violated a 

prohibition in paragraph (a)(1) of this 

appendix; or 

(ii) Has an employee that is determined to 

have violated a prohibition in paragraph 

(a)(1) of this appendix through conduct that 

is either: 

(A) Associated with the performance under 

this award; or 

(B) Imputed to the subrecipient using the 

standards and due process for imputing the 

conduct of an individual to an organization 

that are provided in 2 CFR part 180, ‘‘OMB 

Guidelines to Agencies on Government-wide 

Debarment and Suspension 

(Nonprocurement),’’ as implemented by our 

agency at [agency must insert reference here 

to its regulatory implementation of the OMB 

guidelines in 2 CFR part 180 (for example, ‘‘2 

CFR part XX’’)]. 

(c) Provisions applicable to any recipient. 

(1) You must inform us immediately of any 

information you receive from any source 

alleging a violation of a prohibition in 

paragraph (a)(1) of this appendix. 

(2) Our right to unilaterally terminate this 

award as described in paragraphs (a)(2) or 

(b)(1) of this appendix: 

(i) Implements the requirements of 22 

U.S.C. 78, and 

(ii) Is in addition to all other remedies for 

noncompliance that are available to us under 

this award. 

(3) You must include the requirements of 

paragraph (a)(1) of this award term in any 

subaward you make to a private entity. 

(d) Definitions. For purposes of this award 

term: 

Employee means either: 

(1) An individual employed by you or a 

subrecipient who is engaged in the 

performance of the project or program under 

this award; or 

(2) Another person engaged in the 

performance of the project or program under 

this award and not compensated by you 

including, but not limited to, a volunteer or 

individual whose services are contributed by 

a third party as an in-kind contribution 

toward cost sharing requirements. 

Private Entity means any entity, including 

for-profit organizations, nonprofit 

organizations, institutions of higher 

education, and hospitals. The term does not 

include foreign public entities, Indian Tribes, 

local governments, or states as defined in 2 

CFR 200.1. 

The terms ‘‘severe forms of trafficking in 

persons,’’ ‘‘commercial sex act,’’ ‘‘sex 

trafficking,’’ ‘‘Abuse or threatened abuse of 

law or legal process,’’ ‘‘coercion,’’ ‘‘debt 

bondage,’’ and ‘‘involuntary servitude’’ have 

the meanings given at section 103 of the 

TVPA, as amended (22 U.S.C. 7102). 

■ 7. Revise part 180 to read as follows: 

PART 180—OMB GUIDELINES TO 

AGENCIES ON GOVERNMENT-WIDE 

DEBARMENT AND SUSPENSION 

(NONPROCUREMENT) 

Sec. 

180.5 What does this part do? 

180.10 How is this part organized? 

180.15 To whom does the guidance apply? 

180.20 What must a Federal agency do to 

implement these guidelines? 

180.25 What must a Federal agency address 

in its implementation of the guidance? 

180.30 Where does a Federal agency 

implement these guidelines? 

180.40 How are these guidelines 

maintained? 

180.45 Do these guidelines cover persons 

who are disqualified, as well as those 

who are excluded from nonprocurement 

transactions? 

Subpart A—General 

180.100 How are subparts A through I 

organized? 

180.105 How is this part written? 

180.110 Do terms in this part have special 

meanings? 

180.115 What do subparts A through I of 

this part do? 

180.120 Do subparts A through I of this part 

apply to me? 

180.125 What is the purpose of the 

nonprocurement debarment and 

suspension system? 

180.130 How does an exclusion restrict a 

person’s involvement in covered 

transactions? 

180.135 May a Federal agency grant an 

exception to let an excluded person 

participate in a covered transaction? 

180.140 Does an exclusion under the 

nonprocurement system affect a person’s 

eligibility for Federal procurement 

contracts? 

180.145 Does an exclusion under the 

Federal procurement system affect a 

person’s eligibility to participate in 

nonprocurement transactions? 

180.150 Against whom may a Federal 

agency take an exclusion action? 

180.155 How do I know if a person is 

excluded? 

Subpart B—Covered Transactions 

180.200 What is a covered transaction? 

180.205 Why is it important if a particular 

transaction is a covered transaction? 

180.210 Which nonprocurement 

transactions are covered transactions? 

180.215 Which nonprocurement 

transactions are not covered 

transactions? 

180.220 Are any procurement contracts 

included as covered transactions? 

180.225 How do I know if a transaction in 

which I may participate is a covered 

transaction? 

Subpart C—Responsibilities of Participants 

Regarding Transactions Doing Business 

With Other Persons 

180.300 What must I do before I enter into 

a covered transaction with another 

person at the next lower tier? 

180.305 May I enter into a covered 

transaction with an excluded or 

disqualified person? 

180.310 What must I do if a Federal agency 

excludes a person with whom I am 

already doing business in a covered 

transaction? 

180.315 May I use the services of an 

excluded person as a principal under a 

covered transaction? 

180.320 Must I verify that principals of my 

covered transactions are eligible to 

participate? 

180.325 What happens if I do business with 

an excluded person in a covered 

transaction? 

180.330 What requirements must I pass 

down to persons at lower tiers with 

whom I intend to do business? 

Disclosing Information—Primary Tier 

Participants 

180.335 What information must I provide 

before entering into a covered 

transaction with a Federal agency? 

180.340 If I disclose unfavorable 

information required under § 180.335, 

will I be prevented from participating in 

the transaction? 

180.345 What happens if I fail to disclose 

information required under § 180.335? 

180.350 What must I do if I learn of 

information required under § 180.335 

after entering into a covered transaction 

with a Federal agency? 

Disclosing Information—Lower Tier 

Participants 

180.355 What information must I provide to 

a higher tier participant before entering 

into a covered transaction with that 

participant? 

180.360 What happens if I fail to disclose 

information required under § 180.355? 

180.365 What must I do if I learn of 

information required under § 180.355 

after entering into a covered transaction 

with a higher tier participant? 

Subpart D—Responsibilities of Federal 

Agency Officials Regarding Transactions 

180.400 May I enter into a transaction with 

an excluded or disqualified person? 

180.405 May I enter into a covered 

transaction with a participant if a 

principal of the transaction is excluded? 

180.410 May I approve a participant’s use 

of the services of an excluded person? 

180.415 What must I do if a Federal agency 

excludes the participant or a principal 

after I enter into a covered transaction? 


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180.420 May I approve a transaction with 

an excluded or disqualified person at a 

lower tier? 

180.425 When do I check to see if a person 

is excluded or disqualified? 

180.430 How do I check to see if a person 

is excluded or disqualified? 

180.435 What must I require of a primary 

tier participant? 

180.440 What action may I take if a primary 

tier participant knowingly does business 

with an excluded or disqualified person? 

180.445 What action may I take if a primary 

tier participant fails to disclose the 

information required under § 180.335? 

180.450 What action may I take if a lower 

tier participant fails to disclose the 

information required under § 180.355 to 

the next higher tier? 

Subpart E—System for Award Management 

(SAM.gov) Exclusions 

180.500 What is the purpose of the System 

for Award Management (SAM.gov) 

Exclusions? 

180.505 Who uses SAM.gov Exclusions? 

180.510 Who maintains SAM.gov 

Exclusions? 

180.515 What specific information is in 

SAM.gov Exclusions? 

180.520 Who places the information into 

SAM.gov Exclusions? 

180.525 Whom do I ask if I have questions 

about a person in SAM.gov Exclusions? 

180.530 Where can I find SAM.gov 

Exclusions? 

Subpart F—General Principles Relating to 

Suspension and Debarment Actions 

180.600 How do suspension and debarment 

actions start? 

180.605 How does suspension differ from 

debarment? 

180.610 What procedures does a Federal 

agency use in suspension and debarment 

actions? 

180.615 How does a Federal agency notify 

a person of a suspension or debarment 

action? 

180.620 Do Federal agencies coordinate 

suspension and debarment actions? 

180.625 What is the scope of a suspension 

or debarment? 

180.630 May a Federal agency impute the 

conduct of one person to another? 

180.635 May a Federal agency resolve an 

administrative action in lieu of 

debarment or suspension? 

180.640 May a settlement include a 

voluntary exclusion? 

180.645 Do other Federal agencies know if 

an agency agrees to a voluntary 

exclusion? 

180.650 May an administrative agreement 

be the result of a settlement? 

180.655 How will other Federal awarding 

agencies know about an administrative 

agreement that is the result of a 

settlement? 

180.660 Will administrative agreement 

information about me in SAM.gov be 

corrected or updated? 

Subpart G—Suspension 

180.700 When may the suspending official 

issue a suspension? 

180.705 What does the suspending official 

consider in issuing a suspension? 

180.710 When does a suspension take 

effect? 

180.715 What notice does the suspending 

official give me if I am suspended? 

180.720 How may I contest a suspension? 

180.725 How much time do I have to 

contest a suspension? 

180.730 What information must I provide to 

the suspending official if I contest the 

suspension? 

180.735 Under what conditions do I get an 

additional opportunity to challenge the 

facts on which the suspension is based? 

180.740 Are suspension proceedings 

formal? 

180.745 How is fact-finding conducted? 

180.750 What does the suspending official 

consider in deciding whether to continue 

or terminate my suspension? 

180.755 When will I know whether the 

suspension is continued or terminated? 

180.760 How long may my suspension last? 

Subpart H—Debarment 

180.800 What are the causes for debarment? 

180.805 What notice does the debarring 

official give me if I am proposed for 

debarment? 

180.810 When does a debarment take 

effect? 

180.815 How may I contest a proposed 

debarment? 

180.820 How much time do I have to 

contest a proposed debarment? 

180.825 What information must I provide to 

the debarring official if I contest the 

proposed debarment? 

180.830 Under what conditions do I get an 

additional opportunity to challenge the 

facts on which the proposed debarment 

is based? 

180.835 Are debarment proceedings formal? 

180.840 How is fact-finding conducted? 

180.845 What does the debarring official 

consider in deciding whether to debar 

me? 

180.850 What is the standard of proof in a 

debarment action? 

180.855 Who has the burden of proof in a 

debarment action? 

180.860 What factors may influence the 

debarring official’s decision? 

180.865 How long may my debarment last? 

180.870 When do I know if the debarring 

official debars me? 

180.875 May I ask the debarring official to 

reconsider a decision to debar me? 

180.880 What factors may influence the 

debarring official during 

reconsideration? 

180.885 May the debarring official extend a 

debarment? 

Subpart I—Definitions 

180.900 Adequate evidence. 

180.905 Affiliate. 

180.910 Agent or representative. 

180.915 Civil judgment. 

180.920 Conviction. 

180.925 Debarment. 

180.930 Debarring official. 

180.935 Disqualified. 

180.940 Excluded or exclusion. 

180.945 System for Award Management 

Exclusions (SAM.gov) Exclusions. 

180.950 Federal agency. 

180.955 Indictment. 

180.960 Ineligible or ineligibility. 

180.965 Legal proceedings. 

180.970 Nonprocurement transaction. 

180.975 Notice. 

180.980 Participant. 

180.985 Person. 

180.990 Preponderance of the evidence. 

180.995 Principal. 

180.1000 Respondent. 

180.1005 State. 

180.1010 Suspending official. 

180.1015 Suspension. 

180.1020 Voluntary exclusion or 

voluntarily excluded. 

Appendix A to Part 180 

Covered Transactions 

Authority: 31 U.S.C. 503; 31 U.S.C. 6102; 

31 U.S.C. 6307; Pub. L. 103–355; Pub. L. 109– 

282; Pub. L. 110–252; Pub. L. 111–84; Pub. 

L. 113–101; Pub. L. 115–232; Pub. L. 117–40; 

E.O. 12549; E.O. 12689. 

§ 180.5 What does this part do? 

This part provides guidance for 

Federal agencies on how to implement 

the government-wide debarment and 

suspension system for nonprocurement 

programs and activities. 

§ 180.10 How is this part organized? 

This part is organized into two 

segments. 

(a) Sections 180.5 through 180.45 

contain general policy direction for 

Federal agencies’ use of the standards in 

subparts A through I. 

(b) Subparts A through I contain 

uniform government-wide standards 

that Federal agencies are to use to 

specify: 

(1) The types of transactions that are 

covered by the nonprocurement 

debarment and suspension system; 

(2) The effects of an exclusion under 

that nonprocurement system, including 

reciprocal effects with the governmentwide debarment and suspension system 

for procurement; 

(3) The criteria and minimum due 

process to be used in nonprocurement 

debarment and suspension actions; and 

(4) Related policies and procedures to 

ensure the effectiveness of those actions. 

§ 180.15 To whom does the guidance 

apply? 

This part provides guidance to 

Federal agencies. Publication of this 

guidance in the Code of Federal 

Regulations (CFR) does not change its 

nature—it is guidance and not 

regulation. Federal agencies’ 

implementation of this guidance 

governs the rights and responsibilities of 

other persons affected by the 

nonprocurement debarment and 

suspension system. 


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§ 180.20 What must a Federal agency do to 

implement these guidelines? 

As Section 3 of Executive Order 

12549 requires, each Federal agency 

with nonprocurement programs and 

activities covered by subparts A through 

I of the guidance must issue regulations 

consistent with those subparts. 

§ 180.25 What must a Federal agency 

address in its implementation of the 

guidance? 

Each Federal agency’s implementing 

regulation: 

(a) Must establish policies and 

procedures for that Federal agency’s 

nonprocurement debarment and 

suspension programs and activities 

consistent with this guidance. When 

adopted by a Federal agency, the 

provisions of the guidance have a 

regulatory effect on that Federal 

agency’s programs and activities. 

(b) Must address some matters for 

which these guidelines give each 

Federal agency some discretion. 

Specifically, the regulation must: 

(1) Identify either the Federal agency 

head or the title of the designated 

official who is authorized to grant 

exceptions under § 180.135 to let an 

excluded person participate in a 

covered transaction. 

(2) State whether the Federal agency 

includes as covered transactions an 

additional tier of contracts awarded 

under covered nonprocurement 

transactions, as permitted under 

§ 180.220(c). 

(3) Identify the method(s) a Federal 

agency official may use when entering 

into a covered transaction with a 

primary tier participant to communicate 

to the participant the requirements 

described in § 180.435. Examples of 

methods are an award term that requires 

compliance as a condition of the award, 

an assurance of compliance obtained at 

the time of application, or a 

certification. 

(4) State whether the Federal agency 

specifies a particular method that 

participants must use to communicate 

compliance requirements to lower tier 

participants, as described in 

§ 180.330(a). If there is a specified 

method, the regulation must require 

Federal agency officials to communicate 

that requirement when entering into 

covered transactions with primary tier 

participants. 

(c) May also, at the Federal agency’s 

option: 

(1) Identify any specific types of 

transactions the Federal agency includes 

as ‘‘nonprocurement transactions’’ in 

addition to the examples provided in 

§ 180.970. 

(2) Identify any types of 

nonprocurement transactions that the 

Federal agency exempts from coverage 

under these guidelines, as authorized 

under § 180.215(g)(2). 

(3) Identify specific examples of types 

of individuals who would be 

‘‘principals’’ under the Federal agency’s 

nonprocurement programs and 

transactions, in addition to the types of 

individuals described in § 180.995. 

(4) Specify the Federal agency’s 

procedures, if any, by which a 

respondent may appeal a suspension or 

debarment decision. 

(5) Identify by title the officials 

designated by the Federal agency head 

as debarring officials under § 180.930 or 

suspending officials under § 180.1010. 

(6) Include a subpart covering 

disqualifications, as authorized in 

§ 180.45. 

(7) Include any provisions authorized 

by OMB. 

§ 180.30 Where does a Federal agency 

implement these guidelines? 

Each Federal agency that participates 

in the government-wide 

nonprocurement debarment and 

suspension system must issue a 

regulation implementing these 

guidelines within its chapter in subtitle 

B of this title. 

§ 180.40 How are these guidelines 

maintained? 

The Interagency Committee on 

Debarment and Suspension, established 

by section 4 of Executive Order 12549, 

recommends to the OMB any needed 

revisions to the guidelines in this part. 

The OMB publishes proposed changes 

to the guidelines in the Federal Register 

for public comment, considers 

comments with the help of the 

Interagency Committee on Debarment 

and Suspension, and issues the final 

guidelines. 

§ 180.45 Do these guidelines cover 

persons who are disqualified, as well as 

those who are excluded from 

nonprocurement transactions? 

A Federal agency may add a subpart 

covering disqualifications to its 

regulation implementing these 

guidelines, but the guidelines in 

subparts A through I: 

(a) Address disqualified persons only 

to: 

(1) Provide for their inclusion in the 

System for Award Management 

(SAM.gov) Exclusions; and 

(2) State the responsibilities of 

Federal agencies and participants to 

check for disqualified persons before 

entering into covered transactions. 

(b) Do not specify the: 

(1) Transactions for which a 

disqualified person is ineligible. Those 

transactions vary on a case-by-case basis 

because they depend on the language of 

the specific statute, Executive order, or 

regulation that caused the 

disqualification; 

(2) Entities to which a disqualification 

applies; or 

(3) Process that a Federal agency uses 

to disqualify a person. Unlike exclusion 

under subparts A through I of this part, 

disqualification is frequently not a 

discretionary action that a Federal 

agency takes and may include special 

procedures. 

Subpart A—General 

§ 180.100 How are subparts A through I 

organized? 

(a) Each subpart contains information 

related to a broad topic or specific 

audience with special responsibilities, 

as shown in table 1: 

TABLE 1 TO PARAGRAPH (a) 

In subpart . . . You will find provisions related to . . . 

A ................................ general information about Subparts A through I. 

B ................................ the types of transactions that are covered by the government-wide nonprocurement suspension and debarment system. 

C ................................ the responsibilities of persons who participate in covered transactions. 

D ................................ the responsibilities of Federal agency officials who are authorized to enter into covered transactions. 

E ................................ the responsibilities of Federal agencies for entering information into SAM.gov Exclusions. 

F ................................ the general principles governing suspension, debarment, voluntary exclusion and settlement. 

G ................................ suspension actions. 

H ................................ debarment actions. 

I .................................. definitions of terms used in this part. 


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(b) Table 2 shows which subparts may 

be of special interest to you, depending 

on who you are: 

TABLE 2 TO PARAGRAPH (b) 

If you are . . . See subpart(s) . . . 

(1) a participant or principal in a nonprocurement transaction ........................................................................................... A, B, C and I. 

(2) a respondent in a suspension action ............................................................................................................................ A, B, F, G and I. 

(3) a respondent in a debarment action ............................................................................................................................. A, B, F, H and I. 

(4) a suspending official ...................................................................................................................................................... A, B, E, F, G and I. 

(5) a debarring official ......................................................................................................................................................... A, B, D, F, H and I. 

(6) a Federal agency official authorized to enter into a covered transaction ..................................................................... A, B, D, E and I. 

§ 180.105 How is this part written? 

(a) This part uses a ‘‘plain language’’ 

format to make it easier for the general 

public and business community. The 

section headings and text must be read 

together, as they are often in the form 

of questions and answers. 

(b) Pronouns used within this part, 

such as ‘‘I’’ and ‘‘you,’’ change from 

subpart to subpart depending on the 

audience being addressed. 

(c) The ‘‘Covered Transactions’’ 

diagram in the appendix to this part 

shows the levels or ‘‘tiers’’ at which a 

Federal agency may enforce an 

exclusion. 

§ 180.110 Do terms in this part have 

special meanings? 

This part uses terms throughout the 

text that have special meanings. Those 

terms are defined in subpart I. For 

example, three important terms are: 

(a) Exclusion or excluded, which 

refers only to discretionary actions 

taken by a suspending or debarring 

official under Executive Order 12549 

and Executive Order 12689 or under the 

Federal Acquisition Regulations (48 

CFR part 9, subpart 9.4); 

(b) Disqualification or disqualified, 

which refers to prohibitions under 

specific statutes, executive orders (other 

than Executive Order 12549 and 

Executive Order 12689), or other 

authorities. Disqualifications frequently 

are not subject to the discretion of a 

Federal agency official, may have a 

different scope than exclusions, or have 

special conditions that apply to the 

disqualification; and 

(c) Ineligibility or ineligible, which 

generally refers to a person who is either 

excluded or disqualified. 

§ 180.115 What do subparts A through I of 

this part do? 

Subparts A through I provide for the 

reciprocal exclusion of persons who 

have been excluded under the Federal 

Acquisition Regulations and provide for 

the consolidated listing of all persons 

who are excluded, or disqualified by 

statute, executive order or other legal 

authority. 

§ 180.120 Do subparts A through I of this 

part apply to me? 

Portions of subparts A through I (see 

table at § 180.100(b)) apply to you if you 

are a: 

(a) Person who has been, is, or may 

reasonably be expected to be, a 

participant or principal in a covered 

transaction; 

(b) Respondent (a person against 

whom a Federal agency has initiated a 

debarment for suspension action); 

(c) Federal agency debarring or 

suspending official; or 

(d) Federal agency official who is 

authorized to enter into covered 

transactions with non-Federal parties. 

§ 180.125 What is the purpose of the 

nonprocurement debarment and 

suspension system? 

(a) To protect the public interest, the 

Federal Government ensures the 

integrity of Federal programs by 

conducting business only with 

responsible persons. 

(b) A Federal agency uses the 

nonprocurement debarment and 

suspension system to exclude persons 

who are not presently responsible from 

Federal programs. 

(c) An exclusion is a serious action 

that a Federal agency may take only to 

protect the public interest. A Federal 

agency may not exclude a person or 

commodity for the purposes of 

punishment. 

§ 180.130 How does an exclusion restrict a 

person’s involvement in covered 

transactions? 

With the exceptions stated in 

§§ 180.135, 315, and 420, a person who 

is excluded by any Federal agency may 

not: 

(a) Be a participant in a Federal 

agency transaction that is a covered 

transaction; or 

(b) Act as a principal of a person 

participating in one of those covered 

transactions. 

§ 180.135 May a Federal agency grant an 

exception to let an excluded person 

participate in a covered transaction? 

(a) A Federal agency head or designee 

may grant an exception permitting an 

excluded person to participate in a 

particular covered transaction. If the 

Federal agency head or designee grants 

an exception, the exception must be in 

writing and state the reason(s) for 

deviating from the government-wide 

policy in Executive Order 12549. 

(b) An exception granted by one 

Federal agency for an excluded person 

does not extend to the covered 

transactions of another Federal agency. 

§ 180.140 Does an exclusion under the 

nonprocurement system affect a person’s 

eligibility for Federal procurement 

contracts? 

When a Federal agency excludes a 

person under Executive Order 12549 or 

Executive Order 12689 on or after 

August 25, 1995, the excluded person is 

also ineligible for Federal procurement 

transactions under the Federal 

Acquisition Regulations. Therefore, an 

exclusion under this part has a 

reciprocal effect on Federal 

procurement transactions. 

§ 180.145 Does an exclusion under the 

Federal procurement system affect a 

person’s eligibility to participate in 

nonprocurement transactions? 

When a Federal agency excludes a 

person under the Federal Acquisition 

Regulations (FAR) on or after August 25, 

1995, the excluded person is also 

ineligible to participate in Federal 

agencies’ nonprocurement covered 

transactions. Therefore, an exclusion 

under the FAR has a reciprocal effect on 

Federal nonprocurement transactions. 

§ 180.150 Against whom may a Federal 

agency take an exclusion action? 

Given a cause that justifies an 

exclusion under this part, a Federal 

agency may exclude any person who 

has been, is, or may reasonably be 

expected to be a participant or principal 

in a covered transaction. 


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§ 180.155 How do I know if a person is 

excluded? 

Check the System for Award 

Management (SAM.gov) Exclusions to 

determine whether a person is 

excluded. The General Services 

Administration (GSA) maintains 

SAM.gov Exclusions and makes it 

available, as detailed in subpart E. 

When a Federal agency takes action to 

exclude a person under the 

nonprocurement or procurement 

debarment and suspension system, the 

agency enters the information about the 

excluded person into SAM.gov 

Exclusions. 

Subpart B—Covered Transactions 

§ 180.200 What is a covered transaction? 

A covered transaction is a 

nonprocurement or procurement 

transaction subject to this part’s 

prohibitions. It may be a transaction at: 

(a) The primary tier, between a 

Federal agency and a person (see 

Appendix to this part); or 

(b) A lower tier between a participant 

in a covered transaction and another 

person. 

§ 180.205 Why is it important if a particular 

transaction is a covered transaction? 

The importance of whether a 

transaction is a covered transaction 

depends upon who you are. 

(a) As a participant in the transaction, 

you have the responsibilities laid out in 

subpart C of this part. Those include 

responsibilities to the person or Federal 

agency at the next higher tier from 

whom you received the transaction, if 

any. They also include responsibilities 

if you subsequently enter into other 

covered transactions with persons at the 

next lower tier. 

(b) As a Federal official who enters 

into a primary tier transaction, you have 

the responsibilities laid out in subpart D 

of this part. 

(c) As an excluded person, you may 

not be a participant or principal in the 

transaction unless: 

(1) The person who entered into the 

transaction with you allows you to 

continue your involvement in a 

transaction that predates your 

exclusion, as permitted under § 180.310 

or § 180.415; or 

(2) A Federal agency official obtains 

an exception from the agency head or 

designee to allow you to be involved in 

the transaction, as permitted under 

§ 180.135. 

§ 180.210 Which nonprocurement 

transactions are covered transactions? 

All nonprocurement transactions, as 

defined in § 180.970, are covered 

transactions unless listed in the 

exemptions under § 180.215. 

§ 180.215 Which nonprocurement 

transactions are not covered transactions? 

The following types of 

nonprocurement transactions are not 

covered transactions: 

(a) A direct award to: 

(1) A foreign government or foreign 

governmental entity; 

(2) A public international 

organization; 

(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. 

(b) A benefit to an individual as a 

personal entitlement without regard to 

the individual’s present responsibility 

(but benefits received in an individual’s 

business capacity are not excepted). For 

example, when a person receives social 

security benefits under the 

Supplemental Security Income 

provisions of the Social Security Act, 42 

U.S.C. 1301 et seq., those benefits are 

not covered transactions and, therefore, 

are not affected if the person is 

excluded. 

(c) Federal employment. 

(d) A transaction that a Federal 

agency needs to respond to a national or 

agency recognized emergency or 

disaster. 

(e) A permit, license, certificate, or 

similar instrument issued as a means to 

regulate public health, safety, or the 

environment, unless a Federal agency 

specifically designates it to be a covered 

transaction. 

(f) An incidental benefit that results 

from ordinary governmental operations. 

(g) Any other transaction if: 

(1) The application of an exclusion to 

the transaction is prohibited by law; or 

(2) A Federal agency’s regulation 

exempts it from coverage under this 

part. 

(h) Notwithstanding paragraph (a) of 

this section, covered transactions must 

include non-procurement and 

procurement transactions involving 

entities engaged in activity that 

contributed to or is a significant factor 

in a country’s non-compliance with its 

obligations under arms control, 

nonproliferation or disarmament 

agreements, or commitments with the 

United States. Federal agencies and 

primary tier non-procurement recipients 

must not award, renew, or extend a nonprocurement transaction or procurement 

transaction, regardless of amount or tier, 

with any entity listed in SAM.gov 

Exclusions on the basis of involvement 

in activities that violate arms control, 

nonproliferation or disarmament 

agreements, or commitments with the 

United States (see section 1290 of the 

National Defense Authorization Act for 

Fiscal Year 2017). The head of a Federal 

agency may grant an exception to this 

requirement under 2 CFR 180.135 and 

with the concurrence of the OMB 

Director. 

§ 180.220 Are any procurement contracts 

included as covered transactions? 

(a) Covered transactions under this 

part: 

(1) Do not include any procurement 

contracts awarded directly by a Federal 

agency; but 

(2) Do include some procurement 

contracts awarded under 

nonprocurement covered transactions. 

(b) Specifically, a contract for goods 

or services is a covered transaction if 

any of the following applies: 

(1) The contract is awarded by a 

participant in a nonprocurement 

transaction covered under § 180.210, 

and the contract amount is expected to 

equal or exceed $25,000. 

(2) The contract requires the consent 

of an official of a Federal agency. In that 

case, the contract is always a covered 

transaction regardless of the amount or 

who awarded it. For example, it could 

be a subcontract awarded by a 

contractor at a tier below a 

nonprocurement transaction, as shown 

in the Appendix to this part. 

(3) The contract is for Federallyrequired audit services. 

(c) A subcontract also is a covered 

transaction if: 

(1) It is awarded by a participant in a 

procurement transaction under a 

nonprocurement transaction of a 

Federal agency that extends the 

coverage of paragraph (b)(1) of this 

section to additional tiers of contracts 

(see the diagram in the Appendix to this 

part showing that optional lower tier 

coverage); and 

(2) The value of the subcontract is 

expected to equal or exceed $25,000. 

§ 180.225 How do I know if a transaction 

in which I may participate is a covered 

transaction? 

As a participant in a transaction, you 

will know that it is a covered 

transaction because of the Federal 

agency regulations governing the 

transaction. The appropriate Federal 

agency official or participant at the next 

higher tier who enters into the 

transaction with you will tell you that 

you must comply with applicable 

portions of this part. 


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Subpart C—Responsibilities of 

Participants Regarding Transactions 

Doing Business With Other Persons 

§ 180.300 What must I do before I enter 

into a covered transaction with another 

person at the next lower tier? 

When you enter into a covered 

transaction with another person at the 

next lower tier, you must verify that the 

person with whom you intend to do 

business is not excluded or disqualified. 

You do this by: 

(a) Checking SAM.gov Exclusions; or 

(b) Collecting a certification from that 

person; or 

(c) Adding a clause or condition to the 

covered transaction with that person. 

§ 180.305 May I enter into a covered 

transaction with an excluded or disqualified 

person? 

(a) As a participant, you may not enter 

into a covered transaction with an 

excluded person unless the Federal 

agency responsible for the transaction 

grants an exception under § 180.135. 

(b) You may not enter into any 

transaction with a person who is 

disqualified from that transaction unless 

you have obtained an exception under 

the disqualifying statute, Executive 

Order, or regulation. 

§ 180.310 What must I do if a Federal 

agency excludes a person with whom I am 

already doing business in a covered 

transaction? 

(a) As a participant, you may continue 

covered transactions with an excluded 

person if the transactions were in 

existence when the Federal agency 

excluded the person. However, you are 

not required to continue the 

transactions, and you may consider 

termination. You should decide whether 

to terminate and the type of termination 

action, if any, only after a thorough 

review to ensure that the action is 

proper and appropriate. 

(b) You may not renew or extend 

covered transactions (other than no-cost 

time extensions) with any excluded 

person unless the Federal agency 

responsible for the transaction grants an 

exception under § 180.135. 

§ 180.315 May I use the services of an 

excluded person as a principal under a 

covered transaction? 

(a) As a participant, you may continue 

to use the services of an excluded 

person as a principal under a covered 

transaction if you were using that 

person’s services in the transaction 

before the person was excluded. 

However, you are not required to 

continue using that person’s services as 

a principal. You should decide whether 

to discontinue that person’s services 

only after a thorough review to ensure 

that the action is proper and 

appropriate. 

(b) You may not begin to use the 

services of an excluded person as a 

principal under a covered transaction 

unless the Federal agency responsible 

for the transaction grants an exception 

under § 180.135. 

§ 180.320 Must I verify that principals of 

my covered transactions are eligible to 

participate? 

(a) Yes. As a participant, you are 

responsible for determining whether 

your principals of your covered 

transactions are excluded or 

disqualified from participating in the 

transaction. 

(b) You may decide the method and 

frequency by which you do so. You 

may, but are not required to check 

SAM.gov Exclusions. 

§ 180.325 What happens if I do business 

with an excluded person in a covered 

transaction? 

As a participant, if you knowingly do 

business with an excluded person, the 

Federal agency responsible for your 

transaction may disallow costs, annul or 

terminate the transaction, issue a stop 

work order, debar or suspend you, or 

take other remedies as appropriate. 

§ 180.330 What requirements must I pass 

down to persons at lower tiers with whom 

I intend to do business? 

Before entering into a covered 

transaction with a participant at the 

next lower tier, you must require that 

participant to: 

(a) Comply with this subpart as a 

condition of participating in the 

transaction. You may do so using any 

method(s) unless the regulation of the 

Federal agency responsible for the 

transaction requires you to use specific 

methods. 

(b) Pass the requirement to comply 

with this subpart to each person the 

participant enters into a covered 

transaction at the next lower tier. 

Disclosing Information—Primary Tier 

Participants 

§ 180.335 What information must I provide 

before entering into a covered transaction 

with a Federal agency? 

Before you enter into a covered 

transaction at the primary tier, you, as 

the participant, must notify the Federal 

agency office that is entering into the 

transaction with you if you know that 

you or any of the principals for that 

covered transaction: 

(a) Are presently excluded or 

disqualified; 

(b) Have been convicted within the 

preceding three years of any of the 

offenses listed in § 180.800(a) or had a 

civil judgment rendered against you for 

one of those offenses within that time 

period; 

(c) Are presently indicted for or 

otherwise criminally or civilly charged 

by a governmental entity (Federal, State, 

or local) with the commission of any of 

the offenses listed in § 180.800(a); or 

(d) Have had one or more public 

transactions (Federal, State, or local) 

terminated within the preceding three 

years for cause or default. 

§ 180.340 If I disclose unfavorable 

information required under § 180.335, will I 

be prevented from participating in the 

transaction? 

As a primary tier participant, 

disclosing unfavorable information 

about yourself or a principal under 

§ 180.335 will not necessarily cause a 

Federal agency to deny your 

participation in the covered transaction. 

The Federal agency will consider the 

information when determining whether 

to enter into the covered transaction. 

The Federal agency will also consider 

any additional information or 

explanation you elect to submit with the 

disclosed information. 

§ 180.345 What happens if I fail to disclose 

information required under § 180.335? 

If a Federal agency later determines 

that you failed to disclose information 

under § 180.335 that you knew at the 

time you entered into the covered 

transaction, the Federal agency may: 

(a) Terminate the transaction for 

material failure to comply with the 

terms and conditions of the transaction; 

or 

(b) Pursue any other available 

remedies, including suspension and 

debarment. 

§ 180.350 What must I do if I learn of 

information required under § 180.335 after 

entering into a covered transaction with a 

Federal agency? 

At any time after you enter into a 

covered transaction, you must give 

immediate written notice to the Federal 

agency office with which you entered 

into the transaction if you learn either 

that: 

(a) You failed to disclose information 

earlier, as required by § 180.335; or 

(b) Due to changed circumstances, 

you or any of the principals for the 

transaction now meet any of the criteria 

in § 180.335. 


ddrumheller on DSK120RN23PROD with PROPOSALS2
69414 Federal Register / Vol. 88, No. 192 / Thursday, October 5, 2023 / Proposed Rules 

Disclosing Information—Lower Tier 

Participants 

§ 180.355 What information must I provide 

to a higher tier participant before entering 

into a covered transaction with that 

participant? 

Before you enter into a covered 

transaction with a person at the next 

higher tier, you, as a lower tier 

participant, must notify that person if 

you know that you or any of the 

principals are presently excluded or 

disqualified. 

§ 180.360 What happens if I fail to disclose 

information required under § 180.355? 

When a Federal agency later 

determines that you failed to tell the 

person at the higher tier that you were 

excluded or disqualified at the time you 

entered into the covered transaction 

with that person, the agency may pursue 

any available remedies, including 

suspension and debarment. 

§ 180.365 What must I do if I learn of 

information required under § 180.355 after 

entering into a covered transaction with a 

higher tier participant? 

At any time after you enter into a 

lower tier covered transaction with a 

person at a higher tier, you must 

provide immediate written notice to that 

person if you learn either that: 

(a) You failed to disclose information 

earlier, as required by § 180.355; or 

(b) Due to changed circumstances, 

you or any of the principals for the 

transaction now meet any of the criteria 

in § 180.355. 

Subpart D—Responsibilities of Federal 

Agency Officials Regarding 

Transactions 

§ 180.400 May I enter into a transaction 

with an excluded or disqualified person? 

(a) As a Federal agency official, you 

may not enter into a covered transaction 

with an excluded person unless you 

obtain an exception under § 180.135. 

(b) You may not enter into any 

transaction with a person disqualified 

from that transaction unless you obtain 

a waiver or exception under the statute, 

Executive Order, or regulation that is 

the basis for the person’s 

disqualification. 

§ 180.405 May I enter into a covered 

transaction with a participant if a principal 

of the transaction is excluded? 

As a Federal agency official, you may 

not enter into a covered transaction with 

a participant if you know that a 

principal of the transaction is excluded 

unless you obtain an exception under 

§ 180.135. 

§ 180.410 May I approve a participant’s 

use of the services of an excluded person? 

After entering into a covered 

transaction with a participant, you, as a 

Federal agency official, may not approve 

a participant’s use of an excluded 

person as a principal under that 

transaction unless you obtain an 

exception under § 180.135. 

§ 180.415 What must I do if a Federal 

agency excludes the participant or a 

principal after I enter into a covered 

transaction? 

(a) As a Federal agency official, you 

may continue covered transactions with 

an excluded person or under which an 

excluded person is a principal if the 

transactions were in existence when the 

person was excluded. However, you are 

not required to continue the 

transactions, and you may consider 

termination. You should decide whether 

to terminate and the type of termination 

action, if any, only after a thorough 

review to ensure that the action is 

proper and appropriate. 

(b) You may not renew or extend 

covered transactions (other than no-cost 

time extensions) with any excluded 

person or under which an excluded 

person is a principal unless you obtain 

an exception under § 180.135. 

§ 180.420 May I approve a transaction with 

an excluded or disqualified person at a 

lower tier? 

If a transaction at a lower tier is 

subject to your approval, you, as a 

Federal agency official, may not 

approve: 

(a) A covered transaction with a 

person who is currently excluded unless 

you obtain an exception under 

§ 180.135; or 

(b) A transaction with a person who 

is disqualified from that transaction 

unless you obtain a waiver or exception 

under the statute, Executive Order, or 

regulation that is the basis for the 

person’s disqualification. 

§ 180.425 When do I check to see if a 

person is excluded or disqualified? 

As a Federal agency official, you must 

check to see if a person is excluded or 

disqualified before you: 

(a) Enter into a primary tier covered 

transaction; 

(b) Approve a principal in a primary 

tier covered transaction; 

(c) Approve a lower tier participant if 

your Federal agency’s approval of the 

lower tier participant is required; or 

(d) Approve a principal in connection 

with a lower tier transaction if your 

Federal agency’s approval of the 

principal is required. 

§ 180.430 How do I check to see if a 

person is excluded or disqualified? 

You check to see if a person is 

excluded or disqualified in two ways: 

(a) As a Federal agency official, you 

must check SAM.gov Exclusions when 

you take any action listed in § 180.425. 

(b) You must review the information 

that a participant gives you, as required 

by § 180.335, about its status or the 

status of the principals of a transaction. 

§ 180.435 What must I require of a primary 

tier participant? 

As a Federal agency official, you must 

require each participant in a primary 

tier covered transaction to: 

(a) Comply with subpart C as a 

condition of participation in the 

transaction; and 

(b) Communicate the requirement to 

comply with subpart C to persons at the 

next lower tier with whom the primary 

tier participant enters into covered 

transactions. 

§ 180.440 What action may I take if a 

primary tier participant knowingly does 

business with an excluded or disqualified 

person? 

If a participant knowingly does 

business with an excluded or 

disqualified person, you, as a Federal 

agency official, may refer the matter for 

suspension and debarment 

consideration. You may also disallow 

costs, annul or terminate the 

transaction, issue a stop work order, or 

take any other appropriate remedy. 

§ 180.445 What action may I take if a 

primary tier participant fails to disclose the 

information required under § 180.335? 

As a Federal agency official, if you 

determine that a participant failed to 

disclose information, as required by 

§ 180.335, at the time it entered into a 

covered transaction with you, you may: 

(a) Terminate the transaction for 

material failure to comply with the 

terms and conditions of the transaction; 

or 

(b) Pursue any other available 

remedies, including suspension and 

debarment. 

§ 180.450 What action may I take if a lower 

tier participant fails to disclose the 

information required under § 180.355 to the 

next higher tier? 

As a Federal agency official, if you 

determine that a lower tier participant 

failed to disclose information, as 

required by § 180.355, at the time it 

entered into a covered transaction with 

a participant at the next higher tier, you 

may pursue any remedies available to 

you, including the initiation of a 

suspension or debarment action. 


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Subpart E—System for Award 

Management (SAM.gov) Exclusions 

§ 180.500 What is the purpose of the 

System for Award Management (SAM.gov) 

Exclusions? 

The SAM.gov Exclusions is a widely 

available source of the most current 

information about persons who are 

excluded or disqualified from covered 

transactions. 

§ 180.505 Who uses SAM.gov Exclusions? 

(a) Federal agency officials use 

SAM.gov Exclusions to determine 

whether to enter into a transaction with 

a person, as required under § 180.430. 

(b) Participants also may, but are not 

required to, use SAM.gov Exclusions to 

determine if: 

(1) Principals of their transactions are 

excluded or disqualified, as required 

under § 180.320; or 

(2) Persons with whom they are 

entering into covered transactions at the 

next lower tier are excluded or 

disqualified. 

(c) The SAM.gov Exclusions are 

available to the general public. 

§ 180.510 Who maintains SAM.gov 

Exclusions? 

GSA maintains SAM.gov Exclusions. 

When a Federal agency takes an action 

to exclude a person under the 

nonprocurement or procurement 

debarment and suspension system, the 

agency enters the information about the 

excluded person into SAM.gov 

Exclusions. 

§ 180.515 What specific information is in 

SAM.gov Exclusions? 

(a) At a minimum, SAM.gov 

Exclusions indicate: 

(1) The full name (where available) 

and address of each excluded and 

disqualified person, in alphabetical 

order, with cross-references if more than 

one name is involved in a single action; 

(2) The type of action; 

(3) The cause for the action; 

(4) The scope of the action; 

(5) Any termination date for the 

action; 

(6) The Federal agency and name and 

telephone number of the agency point of 

contact for the action; and 

(7) The unique entity identifier 

approved by the GSA of the excluded or 

disqualified person, if available. 

(b)(1) The SAM.gov Exclusions 

includes a field for the Taxpayer 

Identification Number (TIN), or the 

Social Security Number (SSN) for an 

individual, of an excluded or 

disqualified person. 

(2) Agencies disclose an individual’s 

SSN to verify an individual’s identity 

only if permitted under the Privacy Act 

of 1974 and, if appropriate, the 

Computer Matching and Privacy 

Protection Act of 1988, as codified in 5 

U.S.C. 552(a). 

§ 180.520 Who places the information into 

SAM.gov Exclusions? 

Federal agency officials who take 

actions to exclude persons under this 

part or officials who are responsible for 

identifying disqualified persons must 

enter the following information about 

those persons into SAM.gov Exclusions: 

(a) Information required by 

§ 180.515(a); 

(b) The Taxpayer Identification 

Number (TIN) of the excluded or 

disqualified person, including the 

Social Security Number (SSN) for an 

individual, if the number is available 

and may be disclosed under the law; 

(c) Information about an excluded or 

disqualified person, within three 

business days, after: 

(1) Taking an exclusion action; 

(2) Modifying or rescinding an 

exclusion action; 

(3) Finding that a person is 

disqualified; or 

(4) Finding that there has been a 

change in the status of a person who is 

listed as disqualified. 

§ 180.525 Whom do I ask if I have 

questions about a person in SAM.gov 

Exclusions? 

If you have questions about a listed 

person in SAM.gov Exclusions, ask the 

point of contact for the Federal agency 

that placed the person’s name into 

SAM.gov Exclusions. You may find the 

Federal agency point of contact from 

SAM.gov Exclusions. 

§ 180.530 Where can I find SAM.gov 

Exclusions? 

You may access SAM.gov Exclusions 

through the internet, currently at 

https://www.sam.gov. 

Subpart F—General Principles Relating 

to Suspension and Debarment Actions 

§ 180.600 How do suspension and 

debarment actions start? 

When Federal agency officials receive 

information from any source concerning 

a cause for suspension or debarment, 

they will promptly report it, and the 

agency will investigate. The officials 

refer the question of whether to suspend 

or debar you to their suspending or 

debarring official for consideration, if 

appropriate. 

§ 180.605 How does suspension differ 

from debarment? 

Suspension differs from debarment in 

that: 

A suspending official . . . A debarring official . . . 

(a) Imposes suspension as a temporary status of ineligibility for procurement and 

nonprocurement transactions, pending completion of an investigation or legal or 

debarment proceeding.

Imposes debarment for a specified period as a final determination that a person is not presently responsible. 

(b) Must: 

(1) Have adequate evidence that there may be a cause for debarment of a person; and 

(2) Conclude that immediate action is necessary to protect the Federal interest .... Must conclude, based on a preponderance of the evidence, 

that the person has engaged in conduct that warrants debarment. 

(c) Usually imposes the suspension first, and then promptly notifies the suspended person, giving the person an opportunity to contest the suspension and 

have it lifted.

Imposes debarment after giving the respondent notice of the 

action and an opportunity to contest the proposed debarment. 

§ 180.610 What procedures does a Federal 

agency use in suspension and debarment 

actions? 

In deciding whether to suspend or 

debar you, a Federal agency handles the 

actions as informally as practicable, 

consistent with principles of 

fundamental fairness. 

(a) For suspension actions, a Federal 

agency uses the procedures in this 

subpart and subpart G. 

(b) For debarment actions, a Federal 

agency uses the procedures in this 

subpart and subpart H. 


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§ 180.615 How does a Federal agency 

notify a person of a suspension or 

debarment action? 

(a) The suspending or debarring 

official sends a written notice to the last 

known street address, facsimile number, 

or email address of: 

(1) You or your identified counsel; or 

(2) Your agent for service of process, 

or any of your partners, officers, 

directors, owners, or joint venturers. 

(b) The notice is effective if sent to 

any of these persons. 

§ 180.620 Do Federal agencies coordinate 

suspension and debarment actions? 

Yes, when more than one Federal 

agency has an interest in a suspension 

or debarment, the agencies may 

consider designating one Federal agency 

as the lead agency for making the 

decision. Agencies are encouraged to 

establish methods and procedures for 

coordinating their suspension and 

debarment actions. 

§ 180.625 What is the scope of a 

suspension or debarment? 

If you are suspended or debarred, the 

suspension or debarment is effective as 

follows: 

(a) Your suspension or debarment 

constitutes suspension or debarment of 

all of your divisions and other 

organizational elements from all 

covered transactions unless the 

suspension or debarment decision is 

limited: 

(1) By its terms to one or more 

specifically identified individuals, 

divisions, or other organizational 

elements; or 

(2) To specific types of transactions. 

(b) Any affiliate of a participant may 

be included in a suspension or 

debarment action if the suspending or 

debarring official: 

(1) Officially names the affiliate in the 

notice; and 

(2) Gives the affiliate an opportunity 

to contest the action. 

§ 180.630 May a Federal agency impute the 

conduct of one person to another? 

For purposes of actions taken under 

this part, a Federal agency may impute 

conduct as follows: 

(a) Conduct imputed from an 

individual to an organization. A Federal 

agency may impute the fraudulent, 

criminal, or other improper conduct of 

any officer, director, shareholder, 

partner, employee, or other individual 

associated with an organization to that 

organization when the improper 

conduct occurred in connection with 

the individual’s performance of duties 

for or on behalf of that organization, or 

with the organization’s knowledge, 

approval or acquiescence. The 

organization’s acceptance of the benefits 

derived from the conduct is evidence of 

knowledge, approval, or acquiescence. 

(b) Conduct imputed from an 

organization to an individual or 

between individuals. A Federal agency 

may impute the fraudulent, criminal, or 

other improper conduct of any 

organization to an individual, or from 

one individual to another individual, if 

the individual to whom the improper 

conduct is imputed either participated 

in, had knowledge of, or reason to know 

of the improper conduct. 

(c) Conduct imputed from one 

organization to another organization. A 

Federal agency may impute the 

fraudulent, criminal, or other improper 

conduct of one organization to another 

organization when the improper 

conduct occurred in connection with a 

partnership, joint venture, joint 

application, association, corporation, 

company, or similar arrangement or 

with the organization’s knowledge, 

approval, or acquiescence, or when the 

organization to whom the improper 

conduct is imputed has the power to 

direct, manage, control or influence the 

activities of the organization responsible 

for the improper conduct. Acceptance of 

the benefits derived from the conduct is 

evidence of knowledge, approval, or 

acquiescence. 

§ 180.635 May a Federal agency resolve an 

administrative action in lieu of debarment 

or suspension? 

Yes. A Federal agency may resolve an 

administrative action in lieu of 

debarment or suspension by entering 

into an agreement at any time if it is in 

the Federal Government’s best interest. 

§ 180.640 May an agreement to resolve an 

administrative action include a voluntary 

exclusion? 

Yes. If a Federal agency enters into an 

agreement to resolve an administrative 

action with you in which you agree to 

be excluded, it is called a voluntary 

exclusion and has a government-wide 

effect. 

§ 180.645 Do other Federal agencies know 

if an agency agrees to a voluntary 

exclusion? 

(a) Yes. The Federal agency agreeing 

to the voluntary exclusion enters 

information about it into SAM.gov 

Exclusions. 

(b) Also, any agency or person may 

contact the Federal agency that agreed 

to the voluntary exclusion to find out 

the details of the voluntary exclusion. 

§ 180.650 May an administrative 

agreement be the result of a settlement? 

Yes. A Federal agency may enter into 

an administrative agreement with you as 

part of the settlement of a debarment or 

suspension action. 

§ 180.655 How will other Federal awarding 

agencies know about an administrative 

agreement that is the result of a settlement? 

The suspending or debarring official 

who enters into an administrative 

agreement with you must report 

information about the agreement in 

SAM.gov within three business days 

after entering into the agreement. The 

suspending and debarring official must 

use the Contractor Performance 

Assessment Reporting System (CPARS) 

to enter or amend information in 

SAM.gov. This information is required 

by section 872 of the Duncan Hunter 

National Defense Authorization Act for 

Fiscal Year 2009 (41 U.S.C. 2313). 

§ 180.660 Will administrative agreement 

information about me in SAM.gov be 

corrected or updated? 

Yes. The suspending or debarring 

official who entered information into 

SAM.gov about an administrative 

agreement with you: 

(a) Must correct the information 

within three business days if the official 

subsequently learn that any information 

is erroneous. 

(b) Must correct in SAM.gov, within 

three business days, the ending date of 

the period during which the agreement 

is in effect if the agreement is amended 

to extend that period. 

(c) Must report any other modification 

to the administrative agreement in 

SAM.gov within three business days. 

(d) Is strongly encouraged to amend 

the information in SAM.gov in a timely 

way to incorporate any update that the 

official obtains and that could be 

helpful to Federal agencies who must 

use the system. 

Subpart G—Suspension 

§ 180.700 When may the suspending 

official issue a suspension? 

Suspension is a serious action. Using 

the procedures of this subpart and 

subpart F of this part, the suspending 

official may impose suspension only 

when that official determines that: 

(a) There exists an indictment for, or 

other adequate evidence to suspect, an 

offense listed under § 180.800(a), or 

(b) There exists adequate evidence to 

suspect any other cause for debarment 

listed under § 180.800(b) through (d); 

and 

(c) Immediate action is necessary to 

protect the public interest. 

§ 180.705 What does the suspending 

official consider in issuing a suspension? 

(a) In determining the adequacy of the 

evidence to support the suspension, the 


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suspending official considers how much 

information is available, how credible it 

is given the circumstances, whether or 

not important allegations are 

corroborated, and what inferences can 

reasonably be drawn as a result. 

(b) In making this determination, the 

suspending official may examine: 

(1) The basic documents, including 

grants, cooperative agreements, loan 

authorizations, contracts, and other 

relevant documents; 

(2) An indictment, criminal 

information, conviction, civil judgment, 

or other official findings by Federal, 

State, or local bodies that determine 

factual or legal matters constitutes 

adequate evidence for purposes of 

suspension actions; and 

(3) Other indicators of adequate 

evidence that may include, but are not 

limited to, warrants and their 

accompanying affidavits. 

(c) In deciding whether immediate 

action is needed to protect the public 

interest, the suspending official has 

wide discretion. For example, the 

suspending official may infer the 

necessity for immediate action to 

protect the public interest either from 

the nature of the circumstances giving 

rise to a cause for suspension or from 

potential business relationships or 

involvement with a program of the 

Federal Government. 

§ 180.710 When does a suspension take 

effect? 

A suspension is effective when the 

suspending official signs the decision to 

suspend. 

§ 180.715 What notice does the 

suspending official give me if I am 

suspended? 

After deciding to suspend you, the 

suspending official promptly sends you 

a Notice of Suspension advising you: 

(a) That you have been suspended; 

(b) That your suspension is based on: 

(1) An indictment; 

(2) A criminal information; 

(3) A conviction; 

(4) A civil judgment; 

(5) Other adequate evidence that you 

have committed irregularities that 

seriously reflect on the propriety of 

further Federal Government dealings 

with you; or 

(6) Conduct of another person that has 

been imputed to you or your affiliation 

with a suspended or debarred person; 

(c) Of any other irregularities 

supporting your suspension in terms 

sufficient to put you on notice without 

disclosing certain evidence in the 

Federal Government’s pending or 

contemplated legal proceedings; 

(d) Of the cause(s) upon which the 

suspending official relied under 

§ 180.700 for imposing suspension; 

(e) That your suspension is for a 

temporary period pending the 

completion of an investigation or 

resulting legal or debarment 

proceedings; 

(f) Of the applicable provisions of this 

subpart, subpart F, and any other 

Federal agency procedures governing 

suspension decision-making; and 

(g) Of the government-wide effect of 

your suspension from procurement and 

nonprocurement programs and 

activities. 

§ 180.720 How may I contest a 

suspension? 

As a respondent, if you wish to 

contest a suspension, you or your 

representative must provide the 

suspending official with information in 

opposition to the suspension. You may 

do this orally or in writing. While oral 

statements may be a part of the official 

record, any information provided orally 

that you consider important must also 

be submitted in writing for the official 

record. 

§ 180.725 How much time do I have to 

contest a suspension? 

(a) As a respondent, you or your 

representative must either send or make 

arrangements to appear and present the 

information and argument to the 

suspending official within 30 days after 

you receive the Notice of Suspension. 

(b) The Federal agency taking the 

action considers the notice to be 

received by you: 

(1) When delivered, if the Federal 

agency mails the notice to the last 

known street address, or five days after 

the agency sends it if the letter is 

undeliverable; 

(2) When sent, if the Federal agency 

sends the notice by facsimile or five 

days after the agency sends it if the 

facsimile is undeliverable; or 

(3) When delivered, if the Federal 

agency sends the notice by email or five 

days after the agency sends it if the 

email is undeliverable. 

§ 180.730 What information must I provide 

to the suspending official if I contest the 

suspension? 

(a) In addition to any information and 

argument in opposition, as a 

respondent, your submission to the 

suspending official must identify: 

(1) Specific facts that contradict the 

statements contained in the Notice of 

Suspension. A general denial is 

insufficient to raise a genuine dispute 

over facts material to the suspension; 

(2) All existing, proposed, or prior 

exclusions under regulations 

implementing Executive Order 12549 

and all similar actions taken by Federal, 

State, or local agencies, including 

administrative agreements that affect 

only those agencies; 

(3) All criminal and civil proceedings 

not included in the Notice of 

Suspension that grew out of facts 

relevant to the cause(s) stated in the 

notice; and 

(4) All of your affiliates. 

(b) Your submission must also 

identify any of the paragraphs in 

§ 180.730(a) that do not apply to you. 

(c) If you fail to disclose this 

information or provide false 

information, the Federal agency taking 

the action may seek further criminal, 

civil, or administrative action against 

you, as appropriate. 

§ 180.735 Under what conditions do I get 

an additional opportunity to challenge the 

facts on which the suspension is based? 

(a) As a respondent, you will not have 

an additional opportunity to challenge 

the facts if the suspending official 

determines that: 

(1) Your suspension is based upon an 

indictment, conviction, civil judgment, 

or other findings by a Federal, State, or 

local body for which an opportunity to 

contest the facts was provided; 

(2) Your presentation in opposition 

contains only general denials to the 

information contained in the Notice of 

Suspension; 

(3) The issues raised in your 

presentation in opposition to the 

suspension are not factual in nature, or 

are no material to the suspending 

official’s initial decision to suspend, or 

the official’s decision whether to 

continue the suspension; or 

(4) On the basis of advice from the 

Department of Justice, an office of the 

United States Attorney, a State attorney 

general’s office, or a State or local 

prosecutor’s office, that substantial 

interests of the government in pending 

or contemplated legal proceedings based 

on the same facts as the suspension 

would be prejudiced by conducting factfinding. 

(b) You will have an opportunity to 

challenge the facts if the suspending 

official determines that: 

(1) The conditions in paragraph (a) of 

this section do not exist; and 

(2) Your presentation in opposition 

raises a genuine dispute over facts 

material to the suspension. 

(c) If you have an opportunity to 

challenge disputed material facts under 

this section, the suspending official or 

designee must conduct additional 

proceedings to resolve those facts. 


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§ 180.740 Are suspension proceedings 

formal? 

(a) Suspension proceedings are 

conducted in a fair and informal 

manner. The suspending official may 

use flexible procedures to allow you to 

present matters in opposition. In so 

doing, the suspending official is not 

required to follow formal rules of 

evidence or procedure in creating an 

official record upon which the official 

will base a final suspension decision. 

(b) As a respondent, you or your 

representative must submit any 

documentary evidence you want the 

suspending official to consider. 

§ 180.745 How is fact-finding conducted? 

(a) If fact-finding is conducted: 

(1) You may present witnesses and 

other evidence and confront any witness 

presented; and 

(2) The fact-finder must prepare 

written findings of fact for the record. 

(b) A transcribed record of factfinding proceedings must be made, 

unless you, as a respondent, and the 

Federal agency agree to waive it in 

advance. If you want a copy of the 

transcribed record, you may purchase it. 

§ 180.750 What does the suspending 

official consider in deciding whether to 

continue or terminate my suspension? 

(a) The suspending official bases the 

decision on all information contained in 

the official record. The record includes: 

(1) All information in support of the 

suspending official’s initial decision to 

suspend you; 

(2) Any further information and 

argument presented in support of, or 

opposition to, the suspension; and 

(3) Any transcribed record of factfinding proceedings. 

(b) The suspending official may refer 

disputed material facts to another 

official for findings of fact. The 

suspending official may reject any 

resulting findings, in whole or in part, 

only after specifically determining them 

to be arbitrary, capricious, or clearly 

erroneous. 

§ 180.755 When will I know whether the 

suspension is continued or terminated? 

The suspending official must make a 

written decision whether to continue, 

modify, or terminate your suspension 

within 45 days of closing the official 

record. The official record closes upon 

the suspending official’s receipt of final 

submissions, information, and findings 

of fact, if any. The suspending official 

may extend that period for good cause. 

§ 180.760 How long may my suspension 

last? 

(a) If legal or debarment proceedings 

are initiated at the time of or during 

your suspension, the suspension may 

continue until the conclusion of those 

proceedings. However, a suspension 

may not exceed 12 months if 

proceedings are not initiated. 

(b) The suspending official may 

extend the 12-month limit under 

paragraph (a) of this section for an 

additional 6 months if an office of a U.S. 

Assistant Attorney General, U.S. 

Attorney, or other Federal, State, or 

local responsible prosecuting official 

requests an extension in writing. In no 

event may a suspension exceed 18 

months without initiating proceedings 

under paragraph (a) of this section. 

(c) The suspending official must 

notify the appropriate officials under 

paragraph (b) of this section of an 

impending termination of a suspension 

at least 30 days before the 12-month 

period expires to allow the officials an 

opportunity to request an extension. 

Subpart H—Debarment 

§ 180.800 What are the causes for 

debarment? 

A Federal agency may debar a person 

for: 

(a) Conviction of or civil judgment for: 

(1) Commission of fraud or a criminal 

offense in connection with obtaining, 

attempting to obtain, or performing a 

public or private agreement or 

transaction; 

(2) Violation of Federal or State 

antitrust statutes, including those 

proscribing price fixing between 

competitors, allocation of customers 

between competitors, and bid rigging; 

(3) Commission of embezzlement, 

theft, forgery, bribery, falsification, or 

destruction of records, making false 

statements, violating Federal criminal 

tax laws, receiving stolen property, 

making false claims, or obstruction of 

justice; or 

(4) Commission of any other offense 

indicating a lack of business integrity or 

business honesty that seriously and 

directly affects your present 

responsibility; 

(b) Violation of the terms of a public 

agreement or transaction so serious as to 

affect the integrity of a Federal agency 

program, such as: 

(1) A willful failure to perform in 

accordance with the terms of one or 

more public agreements or transactions; 

(2) A history of failure to perform or 

of unsatisfactory performance of one or 

more public agreements or transactions; 

or 

(3) A willful violation of a statutory or 

regulatory provision or requirement 

applicable to a public agreement or 

transaction; 

(c) Any of the following causes: 

(1) A nonprocurement debarment by 

any Federal agency taken before October 

1, 1988, or a procurement debarment by 

any Federal agency taken pursuant to 48 

CFR part 9, subpart 9.4, before August 

25, 1995; 

(2) Knowingly doing business with an 

ineligible person, except as permitted 

under § 180.135; 

(3) Failure to pay a single substantial 

debt, or a number of outstanding debts 

(including disallowed costs and 

overpayments, but not including sums 

owed the Federal Government under the 

Internal Revenue Code) owed to any 

Federal agency or instrumentality, 

provided the debt is uncontested by the 

debtor or, if contested, provided that the 

debtor’s legal and administrative 

remedies have been exhausted; 

(4) Violation of a material provision of 

a voluntary exclusion agreement entered 

into under § 180.640 or of any other 

agreement that resolves a debarment or 

suspension action; or 

(5) Violation of the provisions of the 

Drug-Free Workplace Act of 1988 (41 

U.S.C. 701); or 

(d) Any other cause that is so serious 

or compelling in nature that it affects 

your present responsibility. 

§ 180.805 What notice does the debarring 

official give me if I am proposed for 

debarment? 

After consideration of the causes in 

§ 180.800, if the debarring official 

proposes to debar you, the official sends 

you a Notice of Proposed Debarment, 

pursuant to § 180.615, advising you: 

(a) That the debarring official is 

considering debarring you; 

(b) The reasons for proposing to debar 

you in terms sufficient to put you on 

notice of the conduct or transactions 

upon which the proposed debarment is 

based; 

(c) The cause(s) under § 180.800 upon 

which the debarring official relied for 

proposing your debarment; 

(d) The applicable provisions of this 

subpart, subpart F of this part, and any 

other Federal agency procedures 

governing debarment; and 

(e) The government-wide effect of a 

debarment from procurement and 

nonprocurement programs and 

activities. 

§ 180.810 When does a debarment take 

effect? 

Unlike a suspension, a debarment is 

not effective until the debarring official 

issues a decision. The debarring official 

does not issue a decision until the 

respondent has had an opportunity to 

contest the proposed debarment. 


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§ 180.815 How may I contest a proposed 

debarment? 

As a respondent, if you wish to 

contest a proposed debarment, you or 

your representative must provide the 

debarring official with information in 

opposition to the proposed debarment. 

You may do this orally or in writing. 

While oral statements may be a part of 

the official record, any information 

provided orally that you consider 

important must also be submitted in 

writing for the official record. 

§ 180.820 How much time do I have to 

contest a proposed debarment? 

(a) As a respondent, you or your 

representative must either send or make 

arrangements to appear and present the 

information and argument to the 

debarring official within 30 days after 

you receive the Notice of Proposed 

Debarment. 

(b) The Federal agency taking the 

action considers the Notice of Proposed 

Debarment to be received by you: 

(1) When delivered, if the Federal 

agency mails the notice to the last 

known street address, or five days after 

the agency sends it if the letter is 

undeliverable; 

(2) When sent, if the Federal agency 

sends the notice by facsimile or five 

days after the agency sends it if the 

facsimile is undeliverable; or 

(3) When delivered, if the Federal 

agency sends the notice by email or five 

days after the agency sends it if the 

email is undeliverable. 

§ 180.825 What information must I provide 

to the debarring official if I contest the 

proposed debarment? 

(a) In addition to any information and 

argument in opposition, as a 

respondent, your submission to the 

debarring official must identify: 

(1) Specific facts that contradict the 

statements contained in the Notice of 

Proposed Debarment. Include any 

information about any of the factors 

listed in § 180.860. A general denial is 

insufficient to raise a genuine dispute 

over facts material to the debarment; 

(2) All existing, proposed, or prior 

exclusions under regulations 

implementing Executive Order 12549 

and all similar actions taken by Federal, 

State, or local agencies, including 

administrative agreements that affect 

only those agencies; 

(3) All criminal and civil proceedings 

not included in the Notice of Proposed 

Debarment that grew out of facts 

relevant to the cause(s) stated in the 

notice; and 

(4) All of your affiliates. 

(b) If you fail to disclose this 

information or provide false 

information, the Federal agency taking 

the action may seek further criminal, 

civil, or administrative action against 

you, as appropriate. 

§ 180.830 Under what conditions do I get 

an additional opportunity to challenge the 

facts on which the proposed debarment is 

based? 

(a) As a respondent, you will not have 

an additional opportunity to challenge 

the facts if the debarring official 

determines that: 

(1) Your debarment is based upon a 

conviction or civil judgment; 

(2) Your presentation in opposition 

contains only general denials to the 

information contained in the Notice of 

Proposed Debarment; or 

(3) The issues raised in your 

presentation in opposition to the 

proposed debarment are not factual in 

nature, or are not material to the 

debarring official’s decision whether to 

debar. 

(b) You will have an additional 

opportunity to challenge the facts if the 

debarring official determines that: 

(1) The conditions in paragraph (a) of 

this section do not exist; and 

(2) Your presentation in opposition 

raises a genuine dispute over facts 

material to the proposed debarment. 

(c) If you have an opportunity to 

challenge disputed material facts under 

this section, the debarring official or 

designee must conduct additional 

proceedings to resolve those facts. 

§ 180.835 Are debarment proceedings 

formal? 

(a) Debarment proceedings are 

conducted in a fair and informal 

manner. The debarring official may use 

flexible procedures to allow you, as a 

respondent, to present matters in 

opposition. In so doing, the debarring 

official is not required to follow formal 

rules of evidence or procedure in 

creating an official record upon which 

the official will base the decision on 

whether to debar. 

(b) You or your representative must 

submit any documentary evidence you 

want the debarring official to consider. 

§ 180.840 How is fact-finding conducted? 

(a) If fact-finding is conducted: 

(1) You may present witnesses and 

other evidence and confront any witness 

presented; and 

(2) The fact-finder must prepare 

written findings of fact for the record. 

(b) A transcribed record of factfinding proceedings must be made 

unless you, as a respondent, and the 

Federal agency agree to waive it in 

advance. If you want a copy of the 

transcribed record, you may purchase it. 

§ 180.845 What does the debarring official 

consider in deciding whether to debar me? 

(a) The debarring official may debar 

you for any of the causes in § 180.800. 

However, the official need not debar 

you even if a cause for debarment exists. 

The official may consider the 

seriousness of your acts or omissions 

and the mitigating or aggravating factors 

set forth at § 180.860. 

(b) The debarring official bases the 

decision on all information contained in 

the official record. The record includes: 

(1) All information in support of the 

debarring official’s proposed debarment; 

(2) Any further information and 

argument presented in support of, or in 

opposition to, the proposed debarment; 

and 

(3) Any transcribed record of factfinding proceedings. 

(c) The debarring official may refer 

disputed material facts to another 

official for findings of fact. The 

debarring official may reject any 

resultant findings, in whole or in part, 

only after specifically determining them 

to be arbitrary, capricious, or clearly 

erroneous. 

§ 180.850 What is the standard of proof in 

a debarment action? 

(a) In any debarment action, the 

Federal agency must establish the cause 

for debarment by a preponderance of the 

evidence. 

(b) If the proposed debarment is based 

upon a conviction or civil judgment, the 

standard of proof is met. 

§ 180.855 Who has the burden of proof in 

a debarment action? 

(a) The Federal agency has the burden 

to prove that a cause for debarment 

exists. 

(b) Once a cause for debarment is 

established, you as a respondent have 

the burden of demonstrating to the 

satisfaction of the debarring official that 

you are presently responsible and that 

debarment is not necessary. 

§ 180.860 What factors may influence the 

debarring official’s decision? 

This section lists the mitigating and 

aggravating factors that the debarring 

official may consider in determining 

whether to debar you and the length of 

your debarment period. The debarring 

official may consider other factors if 

appropriate in light of the circumstances 

of a particular case. The existence or 

nonexistence of any factor, such as one 

of those set forth in this section, is not 

necessarily determinative of your 

present responsibility. In making a 

debarment decision, the debarring 

official may consider the following 

factors: 


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(a) The actual or potential harm or 

impact that results or may result from 

the wrongdoing. 

(b) The frequency of incidents or 

duration of the wrongdoing. 

(c) Whether there is a pattern or prior 

history of wrongdoing. For example, if 

you have been found by another Federal 

agency or a State agency to have 

engaged in wrongdoing similar to that 

found in the debarment action, the 

existence of this fact may be used by the 

debarring official in determining that 

you have a pattern or prior history of 

wrongdoing. 

(d) Whether you are or have been 

excluded or disqualified by an agency of 

the Federal Government or have not 

been allowed to participate in State or 

local contracts or assistance agreements 

on a basis of conduct similar to one or 

more of the causes for debarment 

specified in this part. 

(e) Whether you have entered into an 

administrative agreement with a Federal 

agency or a State or local government 

that is not government-wide but is based 

on conduct similar to one or more of the 

causes for debarment specified in this 

part. 

(f) Whether and to what extent you 

planned, initiated, or carried out the 

wrongdoing. 

(g) Whether you have accepted 

responsibility for the wrongdoing and 

recognize the seriousness of the 

misconduct that led to the cause for 

debarment. 

(h) Whether you have paid or agreed 

to pay all criminal, civil, and 

administrative liabilities for the 

improper activity, including any 

investigative or administrative costs 

incurred by the government, and have 

made or agreed to make full restitution. 

(i) Whether you have cooperated fully 

with the government agencies during 

the investigation and any court or 

administrative action. In determining 

the extent of cooperation, the debarring 

official may consider when the 

cooperation began and whether you 

disclosed all pertinent information 

known to you. 

(j) Whether the wrongdoing was 

pervasive within your organization. 

(k) The kind of positions held by the 

individuals involved in the wrongdoing. 

(l) Whether your organization took 

appropriate corrective action or 

implemented remedial or protective 

measures in the form of procedures, 

policies, and programs to effectively 

address the activity cited as a basis for 

the debarment. 

(m) Whether your principals tolerated 

the offense. 

(n) Whether you brought the activity 

cited as a basis for the debarment to the 

attention of the appropriate government 

agency in a timely manner. 

(o) Whether you have fully 

investigated the circumstances 

surrounding the cause for debarment 

and, if so, made the result of the 

investigation available to the debarring 

official. 

(p) Whether you had effective 

standards of conduct and internal 

control systems in place at the time the 

questioned conduct occurred. 

(q) Whether you have taken 

appropriate disciplinary action against 

the individuals responsible for the 

activity which constitutes the cause for 

debarment. 

(r) Whether you have had adequate 

time to eliminate the circumstances 

within your organization that led to the 

cause for the debarment. 

(s) Whether your business, technical, 

or professional license(s) has been 

suspended, terminated, or revoked. 

(t) Other factors that are appropriate 

to the circumstances of a particular case. 

§ 180.865 How long may my debarment 

last? 

(a) If the debarring official decides to 

debar you, your period of debarment 

will be based on the seriousness of the 

cause(s) upon which your debarment is 

based. Generally, debarment should not 

exceed three years. However, if 

circumstances warrant, the debarring 

official may impose a longer period of 

debarment. 

(b) In determining the period of 

debarment, the debarring official may 

consider the factors in § 180.860. If a 

suspension has preceded your 

debarment, the debarring official must 

consider the time you were suspended. 

(c) If the debarment is for a violation 

of the provisions of the Drug-Free 

Workplace Act of 1988, your period of 

debarment may not exceed five years. 

§ 180.870 When do I know if the debarring 

official debars me? 

(a) The debarring official must make 

a written decision whether to debar 

within 45 days of closing the official 

record. The official record closes upon 

the debarring official’s receipt of final 

submissions, information, and findings 

of fact, if any. The debarring official 

may extend that period for good cause. 

(b) The debarring official sends you 

written notice, pursuant to § 180.615, 

that the official decided either: 

(1) Not to debar you; or 

(2) To debar you. In this event, the 

notice: 

(i) Refers to the Notice of Proposed 

Debarment; 

(ii) Specifies the reasons for your 

debarment; 

(iii) States the period of your 

debarment, including the effective 

dates; and 

(iv) Advises you that your debarment 

is effective for covered transactions and 

contracts that are subject to the Federal 

Acquisition Regulations (48 CFR 

chapter 1) throughout the executive 

branch of the Federal Government 

unless an agency head or an authorized 

designee grants an exception. 

§ 180.875 May I ask the debarring official 

to reconsider a decision to debar me? 

Yes. As a debarred person, you may 

ask the debarring official to reconsider 

the debarment decision or to reduce the 

time period or scope of the debarment. 

However, you must submit your request 

in writing and support it with 

documentation. 

§ 180.880 What factors may influence the 

debarring official during reconsideration? 

The debarring official may reduce or 

terminate your debarment based on: 

(a) Newly discovered material 

evidence; 

(b) A reversal of the conviction or 

civil judgment upon which your 

debarment was based; 

(c) A bona fide change in ownership 

or management; 

(d) Elimination of other causes for 

which the debarment was imposed; or 

(e) Other reasons the debarring official 

finds appropriate. 

§ 180.885 May the debarring official extend 

a debarment? 

(a) Yes. The debarring official may 

extend a debarment for an additional 

period if that official determines that an 

extension is necessary to protect the 

public interest. 

(b) However, the debarring official 

may not extend a debarment solely on 

the basis of the facts and circumstances 

upon which the initial debarment action 

was based. 

(c) If the debarring official decides 

that a debarment for an additional 

period is necessary, the debarring 

official must follow the applicable 

procedures in this subpart, and subpart 

F, to extend the debarment. 

Subpart I—Definitions 

§ 180.900 Adequate evidence. 

Adequate evidence means 

information sufficient to support the 

reasonable belief that a particular act or 

omission has occurred. 

§ 180.905 Affiliate. 

Persons are affiliates of each other if, 

directly or indirectly, either one 

controls or has the power to control the 

other or a third person controls or has 


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the power to control both. The ways a 

Federal agency may determine control 

include, but are not limited to: 

(a) Interlocking management or 

ownership; 

(b) Identity of interests among family 

members; 

(c) Shared facilities and equipment; 

(d) Common use of employees; or 

(e) A business entity organized 

following the exclusion of a person with 

the same or similar management, 

ownership, or principal employees as 

the excluded person. 

§ 180.910 Agent or representative. 

Agent or representative means any 

person who acts on behalf of or who is 

authorized to commit a participant in a 

covered transaction. 

§ 180.915 Civil judgment. 

Civil judgment means the disposition 

of a civil action by any court of 

competent jurisdiction, whether by 

verdict, decision, settlement, 

stipulation, or other disposition which 

creates a civil liability for the 

complained of wrongful acts or a final 

determination of liability under the 

Program Fraud Civil Remedies Act of 

1986 (31 U.S.C. 3801–3812). 

§ 180.920 Conviction. 

Conviction means: 

(a) A judgment or any other 

determination of guilt of a criminal 

offense by any court of competent 

jurisdiction, whether entered upon a 

verdict or plea, including a plea of nolo 

contendere; or 

(b) Any other resolution that is the 

functional equivalent of a judgment, 

including probation before judgment 

and deferred prosecution. A disposition 

without the participation of the court is 

the functional equivalent of a judgment 

only if it includes an admission of guilt. 

§ 180.925 Debarment. 

Debarment means an action taken by 

a debarring official under Subpart H to 

exclude a person from participating in 

covered transactions and transactions 

covered under the Federal Acquisition 

Regulations (48 CFR chapter 1). A 

person so excluded is debarred. 

§ 180.930 Debarring official. 

Debarring official means a Federal 

agency official who is authorized to 

impose debarment. A debarring official 

is either: 

(a) The agency head; or 

(b) An official designated by the 

agency head. 

§ 180.935 Disqualified. 

Disqualified means that a person is 

prohibited from participating in 

specified Federal procurement or 

nonprocurement transactions as 

required under a statute, Executive 

order (other than Executive Orders 

12549 and 12689), or other authority. 

Examples of disqualifications include 

persons prohibited under— 

(a) The Davis-Bacon Act (40 U.S.C. 

3142); 

(b) The equal employment 

opportunity acts and Executive orders; 

or 

(c) The Clean Air Act (42 U.S.C. 

7606), Clean Water Act (33 U.S.C. 1368), 

and Executive Order 11738 (38 FR 

25161). 

§ 180.940 Excluded or exclusion. 

Excluded or exclusion means: 

(a) That a person or commodity is 

prohibited from being a participant in 

covered transactions, whether the 

person has been suspended; debarred; 

proposed for debarment under 48 CFR 

part 9, subpart 9.4; voluntarily 

excluded; or 

(b) The act of excluding a person. 

§ 180.945 System for Award Management 

(SAM.gov) Exclusions. 

System for Award Management 

(SAM.gov) Exclusions means the list 

maintained and disseminated by the 

General Services Administration (GSA) 

containing the names and other 

information about ineligible persons. 

§ 180.950 Federal agency. 

Federal agency means any United 

States executive department, military 

department, defense agency, or any 

other executive branch agency. For the 

purposes of this part, other agencies of 

the Federal Government are not 

considered ‘‘agencies’’ unless they issue 

regulations adopting the governmentwide Debarment and Suspension system 

under Executive Orders 12549 and 

12689. 

§ 180.955 Indictment. 

Indictment means an indictment for a 

criminal offense. A presentment, 

information, or other filing by a 

competent authority charging a criminal 

offense will be given the same effect as 

an indictment. 

§ 180.960 Ineligible or ineligibility. 

Ineligible or ineligibility means that a 

person or commodity is prohibited from 

covered transactions because of an 

exclusion or disqualification. 

§ 180.965 Legal proceedings. 

Legal proceeding means any criminal 

proceeding or any civil judicial 

proceeding, including a proceeding 

under the Program Fraud Civil 

Remedies Act of 1986 (31 U.S.C. 3801– 

3812), to which the Federal Government 

or a State or local government or quasigovernmental authority is a party. The 

term also includes appeals from those 

proceedings. 

§ 180.970 Nonprocurement transaction. 

(a) Nonprocurement transaction 

means any transaction, regardless of 

type (except procurement contracts), 

including, but not limited to, the 

following: 

(1) Grants; 

(2) Cooperative agreements; 

(3) Scholarships; 

(4) Fellowships; 

(5) Contracts of assistance; 

(6) Loans; 

(7) Loan guarantees; 

(8) Subsidies; 

(9) Insurances; 

(10) Payments for specified uses; and 

(11) Donation agreements. 

(b) A nonprocurement transaction at 

any tier does not require the transfer of 

Federal funds. 

§ 180.975 Notice. 

Notice means a written 

communication served in person, sent 

by certified mail or its equivalent, or 

sent electronically by email or facsimile. 

(See § 180.615.) 

§ 180.980 Participant. 

Participant means any person who 

submits a proposal for or enters into a 

covered transaction, including an agent 

or representative of a participant. 

§ 180.985 Person. 

Person means any individual, 

corporation, partnership, association, 

unit of government, or legal entity, 

regardless of how organized. 

§ 180.990 Preponderance of the evidence. 

Preponderance of the evidence means 

proof by information that, compared 

with information opposing it, leads to 

the conclusion that the fact at issue is 

more probably true than not. 

§ 180.995 Principal. 

Principal means: 

(a) An officer, director, owner, 

partner, principal investigator, or 

another person within a participant 

with management or supervisory 

responsibilities related to a covered 

transaction; or 

(b) A consultant or other person, 

whether or not employed by the 

participant or paid with Federal funds, 

who: 

(1) Is in a position to handle Federal 

funds; 

(2) Is in a position to influence or 

control the use of those funds; or, 

(3) Occupies a technical or 

professional position capable of 


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69422 Federal Register / Vol. 88, No. 192 / Thursday, October 5, 2023 / Proposed Rules 

substantially influencing the 

development or outcome of an activity 

required to perform the covered 

transaction. 

§ 180.1000 Respondent. 

Respondent means a person against 

whom a Federal agency has initiated a 

debarment or suspension action. 

§ 180.1005 State. 

(a) State means: 

(1) Any of the states of the United 

States; 

(2) The District of Columbia; 

(3) The Commonwealth of Puerto 

Rico; 

(4) Any territory or possession of the 

United States; or 

(5) Any agency or instrumentality of 

a State. 

(b) For purposes of this part, State 

does not include institutions of higher 

education, hospitals, or units of local 

government. 

§ 180.1010 Suspending official. 

(a) Suspending official means a 

Federal agency official authorized to 

impose suspension. The suspending 

official is either: 

(1) The agency head; or 

(2) An official designated by the 

agency head. 

§ 180.1015 Suspension. 

Suspension is an action taken by a 

suspending official under subpart G of 

this part that immediately prohibits a 

person from participating in covered 

transactions and transactions covered 

under the Federal Acquisition 

Regulations (48 CFR chapter 1) for a 

temporary period, pending completion 

of a Federal agency investigation and 

any judicial or administrative 

proceedings that may ensue. A person 

so excluded is suspended. 

§ 180.1020 Voluntary exclusion or 

voluntarily excluded. 

(a) Voluntary exclusion means a 

person’s agreement to be excluded 

under the terms of a settlement between 

the person and one or more agencies. 

Voluntary exclusion must have a 

government-wide effect. 

(b) Voluntarily excluded means the 

status of a person who has agreed to a 

voluntary exclusion. 

Appendix A to Part 180—Covered 

Transactions 

BILLING CODE 3110–01–P 


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BILLING CODE 3110–01–C 

■ 8. Revise part 182 to read as follows: 

PART 182—GOVERNMENT-WIDE 

REQUIREMENTS FOR DRUG-FREE 

WORKPLACE (FINANCIAL 

ASSISTANCE) 

Sec. 

182.5 What does this part do? 

182.10 How is this part organized? 

182.15 To whom does the guidance apply? 

182.20 What must a Federal agency do to 

implement the guidance? 

182.25 What must a Federal agency address 

in its implementation of the guidance? 

182.30 Where does a Federal agency 

implement the guidance? 

182.40 How is the guidance maintained? 

Subpart A—Purpose and Coverage 

182.100 How is this part written? 

182.105 Do terms in this part have special 

meanings? 

182.110 What do subparts A through F of 

this part do? 

182.115 Does this part apply to me? 

182.120 Are any of my Federal assistance 

awards exempt from this part? 

182.125 Does this part affect the Federal 

contracts that I receive? 

Subpart B—Requirements for Recipients 

Other Than Individuals 

182.200 What must I do to comply with this 

part? 

182.205 What must I include in my drugfree workplace statement? 

182.210 To whom must I distribute my 

drug-free workplace statement? 

182.215 What must I include in my drugfree awareness program? 


ddrumheller on DSK120RN23PROD with PROPOSALS2EP05OC23.078</GPH>

COVIIUD ~%ORS 

Federal Agency 

All Primary Tier 

Nonproeurement Transaefloas 

AU Lower Tier 

Nonproeurement Transactions 

AU First Tier 

Procurement C&ntraets 

.~25,000 

AD First Tier Procurement 

Contracts Subject to 

Aaeney Consent 

All Lower Tier Subcontraets 

Subject to 

Agency Consent 
69424 Federal Register / Vol. 88, No. 192 / Thursday, October 5, 2023 / Proposed Rules 

182.220 By when must I publish my drugfree workplace statement and establish 

my drug-free awareness program? 

182.225 What actions must I take 

concerning employees who are convicted 

of drug violations in the workplace? 

182.230 How and when must I identify 

workplaces? 

Subpart C—Requirements for Recipients 

Who Are Individuals 

182.300 What must I do to comply with this 

part if I am an individual recipient? 

Subpart D—Responsibilities of Agency 

Awarding Officials 

182.400 What are my responsibilities as an 

agency awarding official? 

Subpart E—Violations of This Part and 

Consequences 

182.500 How are violations of this part 

determined for recipients other than 

individuals? 

182.505 How are violations of this part 

determined for recipients who are 

individuals? 

182.510 What actions will the Federal 

Government take against a recipient 

determined to have violated this part? 

182.515 Are there any exceptions to those 

actions? 

Subpart F—Definitions 

182.605 Award. 

182.610 Controlled substance. 

182.615 Conviction. 

182.620 Cooperative agreement. 

182.625 Criminal drug statute. 

182.630 Debarment. 

182.635 Drug-free workplace. 

182.640 Employee. 

182.645 Federal agency or agency. 

182.650 Grant. 

182.655 Individual. 

182.660 Recipient. 

182.665 State. 

182.670 Suspension. 

Authority: 41 U.S.C. 8101–8106; 31 U.S.C. 

503; 31 U.S.C. 6307. 

§ 182.5 What does this part do? 

This part provides guidance for 

Federal agencies on the portion of the 

Drug-Free Workplace Act of 1988 (41 

U.S.C. 8101–8106, as amended) that 

applies to grants. It also applies the 

provisions of the Act to cooperative 

agreements and other financial 

assistance awards, as a matter of Federal 

Government policy. 

§ 182.10 How is this part organized? 

This part is organized into two 

segments. 

(a) Sections 182.5 through 182.40 

contain general policy direction for 

Federal agencies’ use of the uniform 

policies and procedures in subparts A 

through F. 

(b) Subparts A through F contain 

uniform government-wide policies and 

procedures for Federal agency use to 

specify the: 

(1) Types of awards that are covered 

by drug-free workplace requirements; 

(2) Drug-free workplace requirements 

with which a recipient must comply; 

(3) Actions required of a Federal 

agency awarding official; and 

(4) Consequences of a violation of 

drug-free workplace requirements. 

§ 182.15 To whom does the guidance 

apply? 

This part provides guidance to 

Federal agencies. Publication of this 

guidance in the Code of Federal 

Regulations (CFR) does not change its 

nature—it is guidance and not 

regulation. Federal agencies’ 

implementation of this guidance 

governs the rights and responsibilities of 

other persons affected by the drug-free 

workplace requirements. 

§ 182.20 What must a Federal agency do to 

implement the guidance? 

To comply with the requirement in 41 

U.S.C. 8106 for government-wide 

regulations, each Federal agency that 

awards grants or cooperative agreements 

or makes other financial assistance 

awards that are subject to the drug-free 

workplace requirements in subparts A 

through F of the guidance must issue a 

regulation consistent with those 

subparts. 

§ 182.25 What must a Federal agency 

address in its implementation of the 

guidance? 

Each Federal agency’s implementing 

regulation: 

(a) Must establish drug-free workplace 

policies and procedures for that Federal 

agency’s Federal awards consistent with 

this guidance. When adopted by a 

Federal agency, the provisions of the 

guidance have a regulatory effect on that 

Federal agency’s awards. 

(b) Must address some matters for 

which the guidance in this part gives 

the Federal agency discretion. 

Specifically, the regulation must: 

(1) State whether the Federal agency: 

(i) Has a central point to which a 

recipient may send the notification of a 

conviction that is required under 

§ 182.225(a) or § 182.300(b); or 

(ii) Requires the recipient to send the 

notification to the Federal agency 

awarding official or their designee for 

each Federal award. 

(2) Either: 

(i) State that the Federal agency head 

is the official authorized to determine 

under § 182.500 or § 182.505 that a 

recipient has violated the drug-free 

workplace requirements; or 

(ii) Provide the title of the official 

designated to make that determination. 

(c) May also, at the Federal agency’s 

option, identify any specific types of 

financial assistance awards, in addition 

to grants and cooperative agreements, to 

which the Federal agency makes this 

guidance applicable. 

§ 182.30 Where does a Federal agency 

implement the guidance? 

Each Federal agency that awards 

grants or cooperative agreements or 

makes other financial assistance awards 

that are subject to the drug-free 

workplace guidance in this part must 

issue a regulation implementing the 

guidance within its chapter in subtitle B 

of this title of the Code of Federal 

Regulations. 

§ 182.40 How is the guidance maintained? 

The OMB publishes proposed changes 

to the guidance in the Federal Register 

for public comment, considers 

comments with the help of appropriate 

interagency working groups, and then 

issues any changes to the guidance in 

final form. 

Subpart A—Purpose and Coverage 

§ 182.100 How is this part written? 

(a) This part uses a ‘‘plain language’’ 

format to make it easier for the general 

public and business community to use 

and understand. The section headings 

and text must be read together, as they 

are often in the form of questions and 

answers. 

(b) Pronouns used within this part, 

such as ‘‘I’’ and ‘‘you,’’ change from 

subpart to subpart depending on the 

audience being addressed. 

§ 182.105 Do terms in this part have 

special meanings? 

This part uses terms that have special 

meanings. Those terms are defined in 

subpart F. 

§ 182.110 What do subparts A through F of 

this part do? 

Subparts A through F specify 

standard policies and procedures to 

carry out the Drug-Free Workplace Act 

of 1988 for financial assistance awards. 

§ 182.115 Does this part apply to me? 

(a) Portions of this part apply to you 

if you are either: 

(1) A recipient of a Federal assistance 

award (see definitions of award and 

recipient in §§ 182.605 and 182.660, 

respectively); or 

(2) A Federal agency awarding 

official. 

(b) The following table shows the 

subparts that apply to you: 

If you are * * * See subparts * * * 

(1) a recipient who is not 

an individual.

A, B and E. 

(2) a recipient who is an individual.A, C and E. 


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If you are * * * See subparts * * * 

(3) a Federal agency 

awarding official.

A, D and E. 

§ 182.120 Are any of my Federal 

assistance awards exempt from this part? 

This part does not apply to any award 

to which the Federal agency head, or 

their designee, determines that the 

application of this part would be 

inconsistent with the international 

obligations of the United States or the 

laws or regulations of a foreign 

government. 

§ 182.125 Does this part affect the Federal 

contracts that I receive? 

This part will affect future contract 

awards indirectly if you are debarred or 

suspended for a violation of the 

requirements of this part, as described 

in § 182.510(c). However, this part does 

not apply directly to procurement 

contracts. The portion of the Drug-Free 

Workplace Act of 1988 that applies to 

Federal procurement contracts is carried 

out through the Federal Acquisition 

Regulation in Chapter 1 of Title 48 of 

the Code of Federal Regulations (the 

drug-free workplace coverage currently 

is in 48 CFR part 23, subpart 23.5). 

Subpart B—Requirements for 

Recipients Other Than Individuals 

§ 182.200 What must I do to comply with 

this part? 

There are two general requirements if 

you are a recipient other than an 

individual. 

(a) First, you must make a good faith 

effort, on a continuing basis, to maintain 

a drug-free workplace. You must agree 

to do so as a condition for receiving any 

award covered by this part. The specific 

measures that you must take in this 

regard are described in more detail in 

subsequent sections of this subpart. 

Briefly, those measures are to: 

(1) Publish a drug-free workplace 

statement and establish a drug-free 

awareness program for your employees 

(see §§ 182.205 through 182.220); and 

(2) Take actions concerning 

employees convicted of violating drug 

statutes in the workplace (see 

§ 182.225). 

(b) Second, you must identify all 

known workplaces under your Federal 

awards (see § 182.230). 

§ 182.205 What must I include in my drugfree workplace statement? 

You must publish a statement that— 

(a) Tells your employees that the 

unlawful manufacture, distribution, 

dispensing, possession, or use of a 

controlled substance is prohibited in 

your workplace; 

(b) Specifies the actions that you will 

take against employees for violating that 

prohibition; and 

(c) Lets each employee know that, as 

a condition of employment under any 

award, the employee: 

(1) Will abide by the terms of the 

statement; and 

(2) Must notify you in writing if the 

employee is convicted for a violation of 

a criminal drug statute occurring in the 

workplace and must do so no more than 

five calendar days after the conviction. 

§ 182.210 To whom must I distribute my 

drug-free workplace statement? 

You must require that a copy of the 

statement described in § 182.205 be 

given to each employee who will be 

engaged in the performance of any 

Federal award. 

§ 182.215 What must I include in my drugfree awareness program? 

You must establish an ongoing drugfree awareness program to inform 

employees about: 

(a) The dangers of drug abuse in the 

workplace; 

(b) Your policy of maintaining a drugfree workplace; 

(c) Any available drug counseling, 

rehabilitation, and employee assistance 

programs; and 

(d) The penalties that you may impose 

upon them for drug abuse violations 

occurring in the workplace. 

§ 182.220 By when must I publish my 

drug-free workplace statement and 

establish my drug-free awareness 

program? 

If you are a new recipient that does 

not already have a policy statement as 

described in § 182.205 and an ongoing 

awareness program as described in 

§ 182.215, you must publish the 

statement and establish the program by 

the time given in the following table: 

If * * * Then you * * * 

(a) The performance period of the award is less than 30 days .............. Must have the policy statement and program in place as soon as possible, but before the date on which performance is expected to be 

completed. 

(b) The performance period of the award is 30 days or more ................ Must have the policy statement and program in place within 30 days 

after award. 

(c) You believe there are extraordinary circumstances that will require 

more than 30 days for you to publish the policy statement and establish the awareness program.

May ask the Federal agency awarding official to give you more time to 

do so. The amount of additional time, if any, to be given is at the discretion of the Federal agency awarding official. 

§ 182.225 What actions must I take 

concerning employees who are convicted 

of drug violations in the workplace? 

There are two actions you must take 

if an employee is convicted of a drug 

violation in the workplace: 

(a) First, you must notify Federal 

agencies if an employee who is engaged 

in the performance of an award informs 

you about a conviction, as required by 

§ 182.205(c)(2), or you otherwise learn 

of the conviction. Your notification to 

the Federal agencies must: 

(1) Be in writing; 

(2) Include the employee’s position 

title; 

(3) Include the identification 

number(s) of each affected award; 

(4) Be sent within ten calendar days 

after you learn of the conviction; and 

(5) Be sent to every Federal agency on 

whose award the convicted employee 

was working. It must be sent to every 

Federal agency awarding official or their 

designee, unless the Federal agency has 

specified a central point for the receipt 

of the notices. 

(b) Second, within 30 calendar days of 

learning about an employee’s 

conviction, you must either: 

(1) Take appropriate personnel action 

against the employee, up to and 

including termination, consistent with 

the requirements of the Rehabilitation 

Act of 1973 (29 U.S.C. 794), as 

amended; or 

(2) Require the employee to 

participate satisfactorily in a drug abuse 

assistance or rehabilitation program 

approved for these purposes by a 

Federal, State, or local health, law 

enforcement, or another appropriate 

agency. 

§ 182.230 How and when must I identify 

workplaces? 

(a) You must identify all known 

workplaces under each Federal agency 

award. A failure to do so is a violation 

of your drug-free workplace 


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69426 Federal Register / Vol. 88, No. 192 / Thursday, October 5, 2023 / Proposed Rules 

requirements. You may identify the 

workplaces: 

(1) To the Federal agency awarding 

official that is making the Federal 

award, either at the time of application 

or upon award; or 

(2) In documents that you keep on file 

in your offices during the performance 

of the Federal award, in which case you 

must make the information available for 

inspection upon request by agency 

officials or their designated 

representatives. 

(b) Your workplace identification for 

a Federal award must include the actual 

address of buildings (or parts of 

buildings) or other sites where work 

under the award takes place. Categorical 

descriptions may be used (for example, 

all vehicles of a mass transit authority 

or State highway department while in 

operation, State employees in each local 

unemployment office, performers in 

concert halls or radio studios). 

(c) If you identified workplaces to the 

Federal agency awarding official at the 

time of application or award, as 

described in paragraph (a)(1) of this 

section, and any workplace that you 

identified changes during the 

performance of the Federal award, you 

must inform the Federal agency 

awarding official. 

Subpart C—Requirements for 

Recipients Who Are Individuals 

§ 182.300 What must I do to comply with 

this part if I am an individual recipient? 

As a condition of receiving a Federal 

award, if you are an individual 

recipient, you must agree that: 

(a) You will not engage in the 

unlawful manufacture, distribution, 

dispensing, possession, or use of a 

controlled substance in conducting any 

activity related to the Federal award; 

and 

(b) If you are convicted of a criminal 

drug offense resulting from a violation 

occurring during the conduct of any 

Federal award activity, you will report 

the conviction: 

(1) In writing. 

(2) Within 10 calendar days of the 

conviction. 

(3) To the Federal agency awarding 

official or their designee for each 

Federal award that you currently have, 

unless the agency designates a central 

point for the receipt of the notices, 

either in the award document or its 

regulation implementing the guidance 

in this part. When notice is made to a 

central point, it must include the 

identification number(s) of each affected 

Federal award. 

Subpart D—Responsibilities of Federal 

Agency Awarding Officials 

§ 182.400 What are my responsibilities as 

a Federal agency awarding official? 

As a Federal agency awarding official, 

you must obtain each recipient’s 

agreement, as a condition of the award, 

to comply with the requirements in: 

(a) Subpart B, if the recipient is not an 

individual; or 

(b) Subpart C, if the recipient is an 

individual. 

Subpart E—Violations of This Part and 

Consequences 

§ 182.500 How are violations of this part 

determined for recipients other than 

individuals? 

A recipient other than an individual 

is in violation of the requirements of 

this part if the Federal agency head or 

their designee determines, in writing, 

that: 

(a) The recipient has violated the 

requirements of subpart B; or 

(b) The number of convictions of the 

recipient’s employees for violating 

criminal drug statutes in the workplace 

is large enough to indicate that the 

recipient has failed to make a good-faith 

effort to provide a drug-free workplace. 

§ 182.505 How are violations of this part 

determined for recipients who are 

individuals? 

A recipient who is an individual is in 

violation of the requirements of this part 

if the Federal agency head or their 

designee determines, in writing, that: 

(a) The recipient has violated the 

requirements of subpart C; or 

(b) The recipient is convicted of a 

criminal drug offense resulting from a 

violation occurring during the conduct 

of any award activity. 

§ 182.510 What actions will the Federal 

Government take against a recipient 

determined to have violated this part? 

If a recipient is determined to have 

violated this part, as described in 

§ 182.500 or § 182.505, the Federal 

agency may take one or more of the 

following actions: 

(a) Suspension of payments under the 

award; 

(b) Suspension or termination of the 

award; and 

(c) Suspension or debarment of the 

recipient under the Federal agency’s 

regulation implementing the OMB 

guidance on nonprocurement 

debarment and suspension (2 CFR part 

180) for a period not to exceed five 

years. 

§ 182.515 Are there any exceptions to 

those actions? 

For a particular award, the Federal 

agency head may waive, in writing, a 

suspension of payments under an 

award, suspension or termination of an 

award, or suspension or debarment of a 

recipient if the agency head determines 

that such a waiver would be in the 

public interest. This exception authority 

cannot be delegated to any other official. 

Subpart F—Definitions 

§ 182.605 Award. 

Award means an award of financial 

assistance by a Federal agency directly 

to a recipient. 

(a) The term award includes: 

(1) A Federal grant or cooperative 

agreement, in the form of money or 

property in lieu of money. 

(2) A block grant or a grant in an 

entitlement program, whether or not the 

grant is exempted from coverage under 

the government-wide rule that 

implements OMB Circular A–102 (for 

availability of OMB circulars, see 5 CFR 

1310.3) and specifies uniform 

administrative requirements. 

(b) The term award does not include: 

(1) Technical assistance that provides 

services instead of money. 

(2) Loans. 

(3) Loan guarantees. 

(4) Interest subsidies. 

(5) Insurance. 

(6) Direct appropriations. 

(7) Veterans’ benefits to individuals 

(that is, any benefit to veterans, their 

families, or survivors by virtue of the 

service of a veteran in the Armed Forces 

of the United States). 

§ 182.610 Controlled substance. 

Controlled substance means a 

controlled substance in schedules I 

through V of the Controlled Substances 

Act (21 U.S.C. 812), and as further 

defined by regulation at 21 CFR 1308.11 

through 1308.15. 

§ 182.615 Conviction. 

Conviction means a finding of guilt 

(including a plea of nolo contendere) or 

imposition of sentence, or both, by any 

judicial body charged with the 

responsibility to determine violations of 

the Federal or State criminal drug 

statutes. 

§ 182.620 Cooperative agreement. 

Cooperative agreement means an 

award of financial assistance that, 

consistent with 31 U.S.C. 6305, is used 

to enter into the same kind of 

relationship as a grant (see definition of 

grant in § 182.650), except that 

substantial involvement is expected 

between the Federal agency and the 


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recipient when carrying out the activity 

contemplated by the award. The term 

does not include cooperative research 

and development agreements as defined 

in 15 U.S.C. 3710a. 

§ 182.625 Criminal drug statute. 

Criminal drug statute means a Federal 

or non-Federal criminal statute 

involving the manufacture, distribution, 

dispensing, use, or possession of any 

controlled substance. 

§ 182.630 Debarment. 

Debarment means an action taken by 

a Federal agency to prohibit a recipient 

from participating in Federal 

Government procurement contracts and 

covered nonprocurement transactions. 

A recipient so prohibited is debarred, in 

accordance with the Federal Acquisition 

Regulation for procurement contracts 

(48 CFR part 9, subpart 9.4) and Federal 

agency regulations implementing the 

OMB guidance on nonprocurement 

debarment and suspension (2 CFR part 

180, which implements Executive 

Orders 12549 and 12689). 

§ 182.635 Drug-free workplace. 

Drug-free workplace means a site for 

the performance of work done in 

connection with a specific award at 

which employees of the recipient are 

prohibited from engaging in the 

unlawful manufacture, distribution, 

dispensing, possession, or use of a 

controlled substance. 

§ 182.640 Employee. 

(a) Employee means the employee of 

a recipient directly engaged in the 

performance of work under the award, 

including: 

(1) All direct charge employees; 

(2) All indirect charge employees, 

unless their impact or involvement in 

the performance of work under the 

award is insignificant to the 

performance o’ the award; and 

(3) Temporary personnel and 

consultants who are directly engaged in 

the performance of work under the 

award and who are on the recipient’s 

payroll. 

(b) This definition does not include 

workers not on the payroll of the 

recipient (for example, volunteers, even 

if used to meet a cost sharing 

requirement; consultants or 

independent contractors not on the 

payroll; or employees of subrecipients 

or subcontractors in covered 

workplaces). 

§ 182.645 Federal agency or agency. 

Federal agency or agency means any 

United States executive department, 

military department, government 

corporation, government-controlled 

corporation, any other establishment in 

the executive branch (including the 

Executive Office of the President), or 

any independent regulatory agency. 

§ 182.650 Grant. 

Grant means an award of financial 

assistance that, consistent with 31 

U.S.C. 6304, is used to enter into a 

relationship: 

(a) The principal purpose of which is 

to transfer a thing of value to the 

recipient to carry out a public purpose 

of support or stimulation authorized by 

a law of the United States rather than to 

acquire property or services for the 

Federal Government’s direct benefit or 

use; and 

(b) In which substantial involvement 

is not expected between the Federal 

agency and the recipient when carrying 

out the activity contemplated by the 

award. 

§ 182.655 Individual. 

Individual means a natural person. 

§ 182.660 Recipient. 

Recipient means any individual, 

corporation, partnership, association, 

unit of government (except a Federal 

agency), or legal entity, regardless of 

how it is organized, that receives an 

award directly from a Federal agency. 

§ 182.665 State. 

State means any of the States of the 

United States, the District of Columbia, 

the Commonwealth of Puerto Rico, or 

any territory or possession of the United 

States. 

§ 182.670 Suspension. 

Suspension means an action taken by 

a Federal agency that immediately 

prohibits a recipient from participating 

in Federal Government procurement 

contracts and covered nonprocurement 

transactions for a temporary period, 

pending completion of an investigation 

and any judicial or administrative 

proceedings that may ensue. A recipient 

so prohibited is suspended in 

accordance with the Federal Acquisition 

Regulation for procurement contracts 

(48 CFR part 9, subpart 9.4) and Federal 

agency regulations implementing the 

OMB guidance on nonprocurement 

debarment and suspension (2 CFR part 

180, which implements Executive 

Orders 12549 and 12689). Suspension of 

a recipient is a distinct and separate 

action from suspension of an award or 

suspension of payments under an 

award. 

■ 9. Revise part 183 to read as follows: 

PART 183—NEVER CONTRACT WITH 

THE ENEMY 

Sec. 

183.5 Purpose of this part. 

183.10 Applicability. 

183.15 Responsibilities of Federal agencies. 

183.20 Reporting responsibilities of Federal 

agencies. 

183.25 Responsibilities of recipients. 

183.30 Access to records. 

183.35 Definitions. 

Appendix A to Part 183 

Award Terms for Never Contract With the 

Enemy 

Authority: Pub. L. 113–291, as amended by 

Pub. L. 115–232, Pub. L. 116–92, Pub. L. 

116–283, Pub. L. 117–263; 31 U.S.C. 503; 31 

U.S.C. 6307. 

§ 183.5 Purpose of this part. 

This part provides guidance to 

Federal agencies on the implementation 

of the Never Contract with the Enemy 

requirements applicable to certain 

grants and cooperative agreements, as 

specified in subtitle E, title VIII of the 

National Defense Authorization Act 

(NDAA) for Fiscal Year (FY) 2015 (Pub. 

L. 113–291), as amended by Sec. 820 of 

the National Defense Authorization Act 

for Fiscal Year 2023 (Pub. L. 117–263), 

hereafter cited as ‘‘Never Contract with 

the Enemy’’). 

§ 183.10 Applicability. 

(a) This part applies only to grants 

and cooperative agreements that are 

expected to exceed $50,000 and that are 

performed outside the United States, 

including U.S. territories, and that are in 

support of a contingency operation in 

which members of the Armed Forces are 

actively engaged in hostilities. It does 

not apply to the authorized intelligence 

or law enforcement activities of the 

Federal Government. 

(b) All elements of this part are 

applicable until the date of expiration as 

provided in law. 

§ 183.15 Responsibilities of Federal 

agencies. 

(a) Prior to making an award for a 

covered grant or cooperative agreement 

(see also § 183.35), the Federal agency 

must check the current list of prohibited 

or restricted persons or entities in the 

System for Award Management 

(SAM.gov) Exclusions. 

(b) The Federal agency may include 

the award term provided in appendix A 

in all covered grant and cooperative 

agreement awards in accordance with 

Never Contract with the Enemy. 

(c) A Federal agency may become 

aware of a person or entity that: 

(1) Provides funds, including goods 

and services, received under a covered 

grant or cooperative agreement of an 

executive agency directly or indirectly 

to covered persons or entities; or 

(2) Fails to exercise due diligence to 

ensure that no funds, including goods 


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and services, received under an 

executive agency’s covered grant or 

cooperative agreement are provided 

directly or indirectly to covered persons 

or entities. 

(d) When a Federal agency becomes 

aware of such a person or entity, it may 

do any of the following actions: 

(1) Restrict the future award of all 

Federal contracts, grants, and 

cooperative agreements to the person or 

entity based upon concerns that Federal 

awards to the entity would provide 

grant funds directly or indirectly to a 

covered person or entity. 

(2) Terminate any grant, cooperative 

agreement, or contract to a covered 

person or entity upon becoming aware 

that the recipient has failed to exercise 

due diligence to ensure that no award 

funds are provided directly or indirectly 

to a covered person or entity. 

(3) Void in whole or in part any grant, 

cooperative agreement, or contracts of 

the executive agency concerned upon a 

written determination by the head of 

contracting activity or another 

appropriate official that the grant or 

cooperative agreement provides funds 

directly or indirectly to a covered 

person or entity. 

(e) The Federal agency must notify 

recipients in writing regarding its 

decision to restrict all future awards, 

terminate or void a grant or cooperative 

agreement, or both. The agency must 

also notify the recipient in writing about 

the recipient’s right to request an 

administrative review (using the 

agency’s procedures) of the restriction, 

termination, or void of the grant or 

cooperative agreement within 30 days of 

receiving notification. 

§ 183.20 Reporting responsibilities of 

Federal agencies. 

(a) If a Federal agency restricts all 

future awards to a covered person or 

entity, it must enter information on the 

ineligible person or entity into SAM.gov 

Exclusions as a prohibited or restricted 

source pursuant to Never Contract with 

the Enemy. 

(b) When a Federal agency terminates 

or voids a grant or cooperative 

agreement due to Never Contract with 

the Enemy, it must report the action as 

a termination for material failure to 

comply in SAM.gov. Federal agencies 

must use the Contractor Performance 

Assessment Reporting System (CPARS) 

to enter or amend information in 

SAM.gov. 

(c) The Federal agency must 

document and report to the head of the 

executive agency concerned (or the 

designee of such head) and the 

commander of the covered combatant 

command concerned (or specific 

deputies): 

(1) Any action to restrict all future 

awards or to terminate or void an award 

with a covered person or entity. 

(2) Any decision not to restrict all 

future awards, terminate, or void an 

award along with the agency’s reasoning 

for not taking one of these actions after 

the agency became aware that a person 

or entity is a prohibited or restricted 

source. 

(d) Each report referenced in 

paragraph (c)(1) of this section must 

include the following: 

(1) The executive agency taking such 

action. 

(2) An explanation of the basis for the 

action taken. 

(3) The value of the terminated or 

voided grant or cooperative agreement. 

(4) The value of all grants and 

cooperative agreements of the executive 

agency with the person or entity 

concerned at the time the grant or 

cooperative agreement was terminated 

or voided. 

(e) Each report referenced in 

paragraph (c)(2) of this section must 

include the following: 

(1) The executive agency concerned. 

(2) An explanation of the basis for not 

taking the action. 

(f) For each instance in which an 

executive agency exercised the 

additional authority to examine 

recipient and lower tier entity (for 

example, subrecipient or contractor) 

records, the agency must report in 

writing to the head of the executive 

agency concerned (or the designee of 

such head) and the commander of the 

covered combatant command concerned 

(or specific deputies) the following: 

(1) An explanation of the basis for the 

action taken; and 

(2) A summary of the results of any 

examination of records. 

§ 183.25 Responsibilities of recipients. 

(a) Recipients of covered grants or 

cooperative agreements must fulfill the 

requirements outlined in the award term 

provided in Appendix A to this part. 

(b) Recipients must also flow down 

the provisions in award terms covered 

in Appendix A to this part to all 

contracts and subawards under the 

award. 

§ 183.30 Access to records. 

In addition to any other existing 

examination-of-records authority, the 

Federal Government is authorized to 

examine any records of the recipient 

and its subawards, to the extent 

necessary, to ensure that funds, 

including supplies and services, 

received under a covered grant or 

cooperative agreement (see § 183.35) are 

not provided directly or indirectly to a 

covered person or entity in accordance 

with Never Contract with the Enemy. 

The Federal agency may only exercise 

this authority upon a written 

determination by the Federal agency 

that relies on a finding by the 

commander of a covered combatant 

command that there is reason to believe 

that funds, including supplies and 

services, received under the grant or 

cooperative agreement may have been 

provided directly or indirectly to a 

covered person or entity. 

§ 183.35 Definitions. 

Terms used in this part are defined as 

follows: 

Contingency operation, as defined in 

10 U.S.C. 101(a)(13), means a military 

operation that: 

(1) Is designated by the Secretary of 

Defense as an operation in which 

members of the armed forces are or may 

become involved in military actions, 

operations, or hostilities against an 

enemy of the United States or against an 

opposing military force; or 

(2) Results in the call or order to, or 

retention on, active duty of members of 

the uniformed services under 10 U.S.C. 

688, 12301(a), 12302, 12304, 12304a, 

12305, 12406 of 10 U.S.C. chapter 15, 14 

U.S.C. 3713 or any other provision of 

law during a war or during a national 

emergency declared by the President or 

Congress. 

Covered combatant command means 

the following: 

(1) The United States Africa 

Command. 

(2) The United States Central 

Command. 

(3) The United States European 

Command. 

(4) The United States Pacific 

Command. 

(5) The United States Southern 

Command. 

(6) The United States Transportation 

Command. 

Covered grant or cooperative 

agreement means a grant or cooperative 

agreement, as defined in 2 CFR 200.1 

with an estimated value in excess of 

$50,000 that is performed outside the 

United States, including its possessions 

and territories, in support of a 

contingency operation in which 

members of the Armed Forces are 

actively engaged in hostilities. Except 

for U.S. Department of Defense grants 

and cooperative agreements that were 

awarded on or before December 19, 

2017, that will be performed in the 

United States Central Command, where 

the estimated value is in excess of 

$100,000. 


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Covered person or entity means a 

person or entity that is actively 

opposing United States or coalition 

forces involved in a contingency 

operation in which members of the 

Armed Forces are actively engaged in 

hostilities. 

Appendix A to Part 183—Award Terms 

for Never Contract With the Enemy 

Federal agencies may include the following 

award terms in all awards for covered grants 

and cooperative agreements in accordance 

with Never Contract with the Enemy: 

I. Term 1—Prohibition on Providing Funds 

to the Enemy 

(a) You must: 

(1) Exercise due diligence to ensure that no 

funds, including supplies and services, 

received under this grant or cooperative 

agreement are provided directly or indirectly 

(including through subawards or contracts) to 

a person or entity who is actively opposing 

the United States or coalition forces involved 

in a contingency operation in which 

members of the Armed Forces are actively 

engaged in hostilities, which must be 

completed through 2 CFR 180.300 prior to 

issuing a subaward or contract and; 

(2) Terminate or void in whole or in part 

any subaward or contract with a person or 

entity listed in the System for Award 

Management (SAM.gov) as a prohibited or 

restricted source pursuant to subtitle E of 

Title VIII of the NDAA for FY 2015, unless 

the Federal agency provides written approval 

to continue the subaward or contract. 

(b) You may include the substance of this 

clause, including paragraph (a) of this clause, 

in subawards under this grant or cooperative 

agreement that have an estimated value over 

$50,000 and will be performed outside the 

United States, including its outlying areas. 

(c) The Federal agency has the authority to 

terminate or void this grant or cooperative 

agreement, in whole or in part, if the Federal 

agency becomes aware that you have failed 

to exercise due diligence as required by 

paragraph (a) of this clause or if the Federal 

agency becomes aware that any funds 

received under this grant or cooperative 

agreement have been provided directly or 

indirectly to a person or entity who is 

actively opposing coalition forces involved in 

a contingency operation in which members 

of the Armed Forces are actively engaged in 

hostilities. 

(End of term) 

II. Term 2—Additional Access to Recipient 

Records 

(a) In addition to any other existing 

examination-of-records authority, the Federal 

Government is authorized to examine any of 

your records and the records of your 

subawards or contracts to the extent 

necessary to ensure that funds, including 

supplies and services, available under this 

grant or cooperative agreement are not 

provided, directly or indirectly, to a person 

or entity that is actively opposing the United 

States or coalition forces involved in a 

contingency operation in which members of 

the Armed Forces are actively engaged in 

hostilities, except for awards awarded by the 

Department of Defense on or before Dec 19, 

2017, that will be performed in the United 

States Central Command (USCENTCOM) 

theater of operations. 

(b) The substance of this clause, including 

this paragraph (b), must be included in 

subawards or contracts under this grant or 

cooperative agreement that have an estimated 

value over $50,000 and will be performed 

outside the United States, including its 

outlying areas. 

(End of term) 

■ 10. Revise the authority citation for 

part 200 to read as follows: 

Authority: 31 U.S.C. 503; 31 U.S.C. 6101– 

6106; 31 U.S.C. 6307; 31 U.S.C. 7501–7507. 

■ 11. Amend part 200 by revising 

subparts A through F to read as follows: 

PART 200—UNIFORM 

ADMINISTRATIVE REQUIREMENTS, 

COST PRINCIPLES, AND AUDIT 

REQUIREMENTS FOR FEDERAL 

AWARDS 

Subpart A—Acronyms and Definitions 

Acronyms 

Sec. 

200.0 Acronyms. 

200.1 Definitions. 

Subpart B—General Provisions 

200.100 Purpose. 

200.101 Applicability. 

200.102 Exceptions. 

200.103 Authorities. 

200.104 Supersession. 

200.105 Effect on other issuances. 

200.106 Agency implementation. 

200.107 OMB responsibilities. 

200.108 Inquiries. 

200.109 Review date. 

200.110 Effective date. 

200.111 English language. 

200.112 Conflict of interest. 

200.113 Mandatory disclosures. 

Subpart C—Pre-Federal Award 

Requirements and Contents of Federal 

Awards 

200.200 Purpose. 

200.201 Use of grants, cooperative 

agreements, fixed amount awards, and 

contracts. 

200.202 Program planning and design. 

200.203 Requirement to provide public 

notice of Federal financial assistance 

programs. 

200.204 Notices of funding opportunities. 

200.205 Federal agency review of merit of 

proposals. 

200.206 Federal agency review of risk 

posed by applicants. 

200.207 Standard application requirements. 

200.208 Specific conditions. 

200.209 Certifications and representations. 

200.210 Pre-award costs. 

200.211 Information contained in a Federal 

award. 

200.212 Public access to Federal award 

information. 

200.213 Reporting a determination that an 

applicant is not qualified for a Federal 

award. 

200.214 Suspension and debarment. 

200.215 Never contract with the enemy. 

200.216 Prohibition on certain 

telecommunications and video 

surveillance services or equipment. 

200.217 Whistleblower Protections 

Subpart D—Post Federal Award 

Requirements 

200.300 Statutory and national policy 

requirements. 

200.301 Performance measurement. 

200.302 Financial management. 

200.303 Internal controls. 

200.304 Bonds. 

200.305 Federal payment. 

200.306 Cost sharing. 

200.307 Program income. 

200.308 Revision of budget and program 

plans. 

200.309 Modifications to Period of 

Performance. 

Property Standards 

200.310 Insurance coverage. 

200.311 Real property. 

200.312 Federally-owned and exempt 

property. 

200.313 Equipment. 

200.314 Supplies. 

200.315 Intangible property. 

200.316 Property trust relationship. 

Procurement Standards 

200.317 Procurements by states and Indian 

Tribes. 

200.318 General procurement standards. 

200.319 Competition. 

200.320 Procurement Methods. 

200.321 Contracting with small businesses, 

minority businesses, women’s business 

enterprises, veteran-owned businesses, 

and labor surplus area firms. 

200.322 Domestic preferences for 

procurements. 

200.323 Procurement of recovered 

materials. 

200.324 Contract cost and price. 

200.325 Federal awarding agency or passthrough entity review. 

200.326 Bonding requirements. 

200.327 Contract provisions. 

Performance and Financial Monitoring and 

Reporting 

200.328 Financial reporting. 

200.329 Monitoring and reporting program 

performance. 

200.330 Reporting on real property. 

Subrecipient Monitoring and Management 

200.331 Subrecipient and contractor 

determinations. 

200.332 Requirements for pass-through 

entities. 

200.333 Fixed amount subawards. 

Record Retention and Access 

200.334 Record retention requirements. 

200.335 Requests for transfer of records. 

200.336 Methods for collection, 

transmission, and storage of information. 

200.337 Access to records. 

200.338 Restrictions on public access to 

records. 


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Remedies for Noncompliance 

200.339 Remedies for noncompliance. 

200.340 Termination. 

200.341 Notification of termination 

requirement. 

200.342 Opportunities to object, hearings, 

and appeals. 

200.343 Effects of suspension and 

termination. 

Closeout 

200.344 Closeout. 

Post-Closeout Adjustments and Continuing 

Responsibilities 

200.345 Post-closeout adjustments and 

continuing responsibilities. 

Collection of Amounts Due 

200.346 Collection of amounts due. 

Subpart E—Cost Principles 

General Provisions 

200.400 Policy guide. 

200.401 Application. 

Basic Considerations 

200.402 Composition of costs. 

200.403 Factors affecting allowability of 

costs. 

200.404 Reasonable costs. 

200.405 Allocable costs. 

200.406 Applicable credits. 

200.407 Prior written approval (prior 

approval). 

200.408 Limitation on allowance of costs. 

200.409 Special considerations. 

200.410 Collection of unallowable costs. 

200.411 Adjustment of previously 

negotiated indirect cost rates containing 

unallowable costs. 

Direct and Indirect Costs 

200.412 Classification of costs. 

200.413 Direct costs. 

200.414 Indirect costs. 

200.415 Required certifications. 

Special Considerations for States, Local 

Governments and Indian Tribes 

200.416 Cost allocation plans and indirect 

cost proposals. 

200.417 Interagency service. 

Special Considerations for Institutions of 

Higher Education 

200.418 Costs incurred by states and local 

governments. 

200.419 Cost accounting standards. 

General Provisions for Selected Items of Cost 

200.420 Considerations for selected items of 

cost. 

200.421 Advertising and public relations. 

200.422 Advisory councils. 

200.423 Alcoholic beverages. 

200.424 Alumni activities. 

200.425 Audits conducted in accordance 

with the Single Audit Act. 

200.426 Bad debts. 

200.427 Bonding costs. 

200.428 Collections of improper payments. 

200.429 Commencement and convocation 

costs. 

200.430 Compensation—personal services. 

200.431 Compensation—fringe benefits. 

200.432 Conferences. 

200.433 Contingency provisions. 

200.434 Contributions and donations. 

200.435 Defense and prosecution of 

criminal and civil proceedings, claims, 

appeals and patent infringements. 

200.436 Depreciation. 

200.437 Employee health and welfare costs. 

200.438 Entertainment and prizes. 

200.439 Equipment and other capital 

expenditures. 

200.440 Exchange rates. 

200.441 Fines, penalties, damages and other 

settlements. 

200.442 Fund raising and investment 

management costs. 

200.443 Gains and losses on the disposition 

of depreciable assets. 

200.444 General costs of government. 

200.445 Goods or services for personal use. 

200.446 Idle facilities and idle capacity. 

200.447 Insurance and indemnification. 

200.448 Intellectual property. 

200.449 Interest. 

200.450 Lobbying. 

200.451 Losses on other awards or 

contracts. 

200.452 Maintenance and repair costs. 

200.453 Materials and supplies costs, 

including costs of computing devices. 

200.454 Memberships, subscriptions, and 

professional activity costs. 

200.455 Organization costs. 

200.456 Participant support costs. 

200.457 Plant and security costs. 

200.458 Pre-award costs. 

200.459 Professional service costs. 

200.460 Proposal costs. 

200.461 Publication and printing costs. 

200.462 Rearrangement and reconversion 

costs. 

200.463 Recruiting costs. 

200.464 Relocation costs of employees. 

200.465 Rental costs of real property and 

equipment. 

200.466 Scholarships and student aid costs. 

200.467 Selling and marketing costs. 

200.468 Specialized service facilities. 

200.469 Student activity costs. 

200.470 Taxes (including Value Added 

Tax). 

200.471 Telecommunication and video 

surveillance costs. 

200.472 Termination and standard closeout 

costs. 

200.473 Training and education costs. 

200.474 Transportation costs. 

200.475 Travel costs. 

200.476 Trustees. 

Subpart F—Audit Requirements 

General 

200.500 Purpose. 

Audits 

200.501 Audit requirements. 

200.502 Basis for determining Federal 

awards expended. 

200.503 Relation to other audit 

requirements. 

200.504 Frequency of audits. 

200.505 Remedies for noncompliance. 

200.506 Audit costs. 

200.507 Program-specific audits. 

Auditees 

200.508 Auditee responsibilities. 

200.509 Auditor selection. 

200.510 Financial statements. 

200.511 Audit findings follow-up. 

200.512 Report submission. 

Federal Agencies 

200.513 Responsibilities. 

Auditors 

200.514 Scope of audit. 

200.515 Audit reporting. 

200.516 Audit findings. 

200.517 Audit documentation. 

200.518 Major program determination. 

200.519 Criteria for Federal program risk. 

200.520 Criteria for a low-risk auditee. 

Management Decisions 

200.521 Management decisions. 

Subpart A—Acronyms and Definitions 

Acronyms 

§ 200.0 Acronyms. 

(a) CAS Cost Accounting Standards 

(b) CFR Code of Federal Regulations 

(c) F&A Facilities and Administration 

(d) FAC Federal Audit Clearinghouse 

(e) FAIN Federal Award Identification 

Number 

(f) FAR Federal Acquisition Regulation 

(g) FASB Financial Accounting 

Standards Board 

(h) FFATA Federal Funding 

Accountability and Transparency 

Act of 2006 or Transparency Act— 

Public Law 109–282, as amended 

by section 6202(a) of Public Law 

110–252; section 3 of Public Law 

113–101; section 2(a) of Public Law 

117–40 (See 31 U.S.C. 6101, 

statutory note) 

(i) FOIA Freedom of Information Act 

(j) FR Federal Register 

(k) GAAP Generally Accepted 

Accounting Principles 

(l) GAGAS Generally Accepted 

Government Auditing Standards 

(m) GASB Government Accounting 

Standards Board 

(n) GAO Government Accountability 

Office 

(o) GSA General Services 

Administration 

(p) IBS Institutional Base Salary 

(q) IHE Institutions of Higher Education 

(r) IRC Internal Revenue Code 

(s) ISDEAA Indian Self-Determination 

and Education and Assistance Act 

(t) MTC Modified Total Cost 

(u) MTDC Modified Total Direct Cost 

(v) NFE Non-Federal Entity 

(w) NOFO Notice of Funding 

Opportunity 

(x) OMB Office of Management and 

Budget 

(y) PII Personally Identifiable 

Information 

(z) PMS Payment Management System 

(aa) SAM System for Award 

Management (SAM.gov) 


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(bb) UEI Unique Entity Identifier 

(cc) U.S.C. United States Code 

(dd) VAT Value Added Tax 

§ 200.1 Definitions. 

The following is a list of definitions 

of key terms frequently used in 2 CFR 

part 200. Definitions found in Federal 

statutes or regulations that apply to 

particular programs take precedence 

over the following definitions. However, 

where the following definitions 

implement specific statutory 

requirements that apply governmentwide, such as the Single Audit Act, the 

following definitions take precedence 

over Federal regulations. For purposes 

of this part, the following definitions 

apply— 

Acquisition cost means the (total) cost 

of the asset including the cost to ready 

the asset for its intended use. For 

example, acquisition cost for equipment 

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 include 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 

recipient’s or subrecipient’s regular 

accounting practices. 

Advance payment means a payment 

that a Federal agency or pass-through 

entity makes by any appropriate 

payment mechanism and payment 

method before the recipient or 

subrecipient 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. 

Assistance Listings refer to the 

publicly available listing of Federal 

assistance programs managed and 

administered by the General Services 

Administration (GSA) at SAM.gov. 

Assistance Listing number means a 

unique number assigned to identify an 

Assistance Listing. 

Assistance Listing program title 

means the title that corresponds to the 

Assistance Listing number. 

Audit finding means deficiencies 

which the auditor is required to report 

in the schedule of findings and 

questioned costs. (See § 200.516(a)) 

Auditee means any non-Federal entity 

that must be audited under this part. 

(See § 200.501) 

Auditor means an auditor who is a 

public accountant or a Federal, State, 

local government, or Indian Tribe audit 

organization that 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. 

Budget means the financial plan for 

the Federal award that the Federal 

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 

agency or pass-through entity. 

Budget period means the time interval 

from the start date of a funded portion 

of an award to the end date of that 

funded portion, during which recipients 

and subrecipients are authorized to 

incur financial obligations of the funds 

awarded, including any funds carried 

forward or other revisions pursuant to 

§ 200.308. 

Capital assets means: 

(1) 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: 

(i) Land, buildings (facilities), 

equipment, and intellectual property 

(including software), whether acquired 

by purchase, construction, manufacture, 

exchange, or through a lease accounted 

for as financed purchase under 

Government Accounting Standards 

Board (GASB) standards or a finance 

lease under Financial Accounting 

Standards Board (FASB) standards; and 

(ii) 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). 

(2) For purpose of this part, capital 

assets do not include intangible right-touse assets (per GASB) and right-to-use 

operating lease assets (per FASB). For 

example, assets capitalized that 

recognize a lessee’s right to control the 

use of property or equipment for a 

period of time under a lease contract. 

See § 200.465. 

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. 

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 to its departments and agencies on 

a centralized basis. The costs of these 

services may be allocated or billed to 

users. 

Claim means, depending on the 

context, either: 

(1) A written demand or assertion by 

one of the parties to a Federal award 

seeking as a matter of right: 

(i) The payment of money; 

(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 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 

recipient or group of recipients to which 

specific provisions or exceptions may 

apply. 

Closeout means the process by which 

the Federal agency or pass-through 

entity determines that all applicable 

administrative actions and all required 

work of the Federal award have been 

completed and takes actions as 

described in § 200.344. 

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 defined by 

OMB in the compliance supplement or 

designated by a State for Federal awards 

the State provides to its subrecipients 

that meet the definition of a cluster of 

programs. When designating ‘‘other 

clusters,’’ a State must identify the 

Federal awards included in the cluster 

and advise the subrecipients of 

compliance requirements applicable to 

the cluster, consistent with § 200.332. A 

cluster of programs must be considered 

one program when determining major 

programs as described in § 200.518, and 

with the exception of R&D as described 

in § 200.501(d), whether a programspecific audit may be elected. 

Cognizant agency for audit means the 

Federal agency designated to carry out 

the responsibilities described in 

§ 200.513(a). The cognizant agency for 

audit is not necessarily the same as the 


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cognizant agency for indirect costs. A 

list of cognizant agencies for audit can 

be found on the Federal Audit 

Clearinghouse (FAC) website. 

Cognizant agency for indirect costs 

means the Federal agency responsible 

for reviewing, negotiating and 

approving cost allocation plans or 

indirect cost proposals 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 Institutions of Higher 

Education (IHEs): Appendix III, 

paragraph C.11. 

(2) For nonprofit organizations: 

Appendix IV, paragraph C.2.a. 

(3) For State and local governments: 

Appendix V, paragraph F.1. 

(4) For Indian Tribes: Appendix VII, 

paragraph D.1. 

Compliance supplement means an 

annually updated authoritative source 

of information for auditors that 

identifies existing important compliance 

requirements that the Federal 

Government expects to be considered as 

part of an audit. Auditors use it to 

understand the Federal program’s 

objectives, procedures, and compliance 

requirements, as well as audit objectives 

and suggested audit procedures for 

determining compliance with the 

relevant Federal program. 

Computing devices means machines 

that 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 the definitions of 

supplies and information technology 

systems in this section. 

Contract means, for the purpose of 

Federal financial assistance, a legal 

instrument by which a recipient or 

subrecipient purchases property or 

services under a Federal award. For 

additional information on subrecipient 

and contractor determinations, see 

§ 200.331. See also the definition of 

subaward in this section. 

Contractor means an entity that 

receives a contract. 

Continuation funding means a 

discretionary decision by a Federal 

agency to fund a second or subsequent 

budget period within the period of 

performance. 

Cooperative agreement means a legal 

instrument of financial assistance 

between a Federal agency or passthrough entity and a recipient or 

subrecipient 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 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 of the Federal agency 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. 

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 a central 

service 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, and capital projects. A 

cost objective may be a major function 

of the recipient or subrecipient, a 

particular service or project, a Federal 

award, or an indirect (Facilities & 

Administrative (F&A)) cost activity, as 

described in subpart E. See also the 

definitions of final cost objective and 

intermediate cost objective in this 

section. 

Cost sharing means the portion of 

project costs not paid by Federal funds 

or contributions (unless authorized by 

Federal statute). This term includes 

matching, which refers to required 

levels of cost share that must be 

provided. See § 200.306. 

Disallowed cost means charges to a 

Federal award that the Federal agency 

or pass-through entity determines to be 

unallowable. 

Discretionary award means an award 

in which the Federal agency, in keeping 

with specific statutory authority that 

enables the agency to exercise judgment 

(‘‘discretion’’), selects the recipient or 

the amount of Federal funding awarded 

through a competitive process or based 

on merit of proposals. A discretionary 

award may be selected on a noncompetitive basis, as appropriate. 

Equipment means tangible personal 

property (including information 

technology systems) having a useful life 

of more than one year and a per-unit 

acquisition cost that equals or exceeds 

the lesser of the capitalization level 

established by the recipient or 

subrecipient for financial statement 

purposes, or $10,000. See this section’s 

definitions of capital assets, computing 

devices, general purpose equipment, 

information technology systems, special 

purpose equipment, and supplies. 

Expenditures means charges made by 

a recipient or subrecipient to a Federal 

award. 

(1) The charges may be reported on a 

cash or accrual basis as long as the 

methodology is disclosed and 

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 recipient or 

subrecipient for: 

(A) Goods and other property 

received; 

(B) Services performed by employees, 

contractors, subrecipients, and other 

payees; and 

(C) Programs for which no current 

services or performance are required, 

such as annuities, insurance claims, or 

other benefit payments. 

Federal agency has the meaning in 

paragraph (2) of this definition unless 

the context clearly indicates that the 

more general meaning in paragraph (1) 

of this definition is intended: 

(1) An ‘‘agency’’ as defined at 5 U.S.C. 

551(1) and further clarified by 5 U.S.C. 

552(f); or 

(2) An ‘‘agency’’ as defined at 5 U.S.C. 

551(1) and further clarified by 5 U.S.C. 

552(f) that provides a Federal award 

directly to a recipient. 

See also definitions of Federal award 

and recipient. 

Federal Audit Clearinghouse (FAC) 

means the repository of record 


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designated by OMB where non-Federal 

entities must transmit the information 

required by subpart F. 

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 recipient receives directly from a 

Federal agency or indirectly from a 

pass-through entity, as described in 

§ 200.101; or 

(ii) The cost-reimbursement contract 

under the Federal Acquisition 

Regulations that a non-Federal entity 

receives directly from a Federal agency 

or indirectly from a pass-through entity, 

as described in § 200.101. 

(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 

the definition of Federal financial 

assistance in this section, 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 

government-owned, contractoroperated (GOCO) facilities. 

(4) See also definitions of Federal 

financial assistance, grant agreement, 

and cooperative agreement. 

Federal award date means the date 

when the authorized official of the 

Federal agency signed (physically or 

digitally) the Federal award or when an 

alternative binding agreement, 

consistent with the requirements of 31 

U.S.C. 1501, is reached with the 

recipient. 

Federal financial assistance means: 

(1) Assistance that recipients or 

subrecipients receive or administer in 

the form of: 

(i) 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 (2) of this 

definition). 

(2) For § 200.203 and subpart F of this 

part, Federal financial assistance also 

includes assistance that recipients or 

subrecipients receive or administer in 

the form of: 

(i) Loans; 

(ii) Loan Guarantees; 

(iii) Interest subsidies; and 

(iv) Insurance. 

(3) For § 200.216, Federal financial 

assistance includes assistance that 

recipients or subrecipients receive or 

administer in the form of: 

(i) Grants; 

(ii) Cooperative agreements; 

(iii) Loans; and 

(iv) Loan Guarantees. 

(4) Federal financial assistance does 

not include amounts received as 

reimbursement for services rendered to 

individuals as described in § 200.502(h) 

and (i). 

Federal interest means, for purposes 

of § 200.330 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) The percentage of Federal 

participation in the total cost of the real 

property, equipment, or supplies; 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 Assistance Listings 

Number. 

(2) When no Assistance Listings 

Number is assigned, all Federal awards 

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 in 

this section. Federal share means the 

portion of the Federal award costs paid 

using Federal funds. 

Final cost objective means a cost 

objective that has allocated to it both 

direct and indirect costs and, in the 

recipient’s or subrecipient’s 

accumulation system, is one of the final 

accumulation points, such as a 

particular award, internal project, or 

other direct activity of a recipient or 

subrecipient. See also the definitions of 

cost objective and intermediate cost 

objective in this section. 

Financial obligations means orders 

placed for property and services, 

contracts and subawards made, and 

similar transactions that require 

payment by a recipient or subrecipient 

under a Federal award that result in 

expenditures by a recipient or 

subrecipient under a Federal award. 

Fixed amount award means a type of 

grant or cooperative agreement pursuant 

to which the Federal agency or passthrough entity provides a specific 

amount of funding without regard to 

actual costs incurred under the Federal 

award. This type of Federal award 

reduces some of the administrative 

burden and record-keeping 

requirements for both the recipient or 

subrecipient and the Federal agency or 

pass-through entity. Accountability is 

based primarily on performance and 

results. See §§ 200.102(c), 200.201(b), 

and 200.333. 

For-profit organization generally 

means an organization or entity 

organized for the purpose of earning a 

profit. The term includes but is not 

limited to: 

(1) An ‘‘S corporation’’ incorporated 

under Subchapter S of the Internal 

Revenue Code; 

(2) A corporation incorporated under 

another authority; 

(3) A partnership; 

(4) A limited liability company or 

partnership; and 

(5) A sole proprietorship. 

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 the country where it 

is registered and is not a university, 

college, accredited degree-granting 

institution of education, private 

foundation, hospital, an 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. 


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General purpose equipment means 

equipment that 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 the 

definitions of equipment and special 

purpose equipment in this section. 

Generally accepted accounting 

principles (GAAP) has the meaning 

specified in accounting standards issued 

by the Government Accounting 

Standards Board (GASB) and the 

Financial Accounting Standards Board 

(FASB). 

Generally accepted government 

auditing standards (GAGAS), also 

known as the Yellow Book, means 

generally accepted government auditing 

standards issued by the Comptroller 

General of the United States, which 

apply to financial audits. 

Grant agreement or grant means a 

legal instrument of financial assistance 

between a Federal agency or passthrough entity and a recipient or 

subrecipient 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 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 agency or passthrough entity’s direct benefit or use; 

(2) Is distinguished from a cooperative 

agreement in that it does not provide for 

substantial involvement of the Federal 

agency 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; 

(vi) A loan guarantee; or 

(v) Insurance. 

Highest-level owner means the entity 

that owns or controls an immediate 

owner of an applicant or that owns or 

controls one or more entities that 

control an immediate owner of an 

applicant. No entity owns or exercises 

control of the highest-level owner as 

defined in the Federal Acquisition 

Regulations (FAR) (48 CFR 52.204–17). 

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 means a payment 

that should not have been made or that 

was made in an incorrect amount under 

statutory, contractual, administrative, or 

other legally applicable requirements. 

The term improper payment includes: 

any payment to an ineligible recipient; 

any payment for an ineligible good or 

service; any duplicate payment; any 

payment for a good or service not 

received, except for those payments 

where authorized by law; any payment 

that is not authorized by law; and any 

payment that does not account for credit 

for applicable discounts. See OMB 

Circular A–123 Appendix C, 

Requirements for Payment Integrity 

Improvement for additional definitions 

and guidance on the requirements for 

payment integrity. 

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. See 25 U.S.C. 

5304(e). This includes any Indian Tribe 

identified in the annually published 

Bureau of Indian Affairs list of ‘‘Indian 

Entities Recognized and Eligible to 

Receive Services’’ and other entities that 

qualify as an Alaska Native village or 

regional village corporation as defined 

in or established pursuant to the Alaska 

Native Claims Settlement Act. 

Indirect (facilities & administrative 

(F&A)) cost means those 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. It may be necessary to 

establish multiple pools of indirect costs 

to facilitate equitable distribution of 

indirect expenses to the cost objectives 

served. Indirect 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 recipient 

to substantiate its request to establish an 

indirect cost rate as described in 

appendices III through VII and 

Appendix IX to this part. 

Information technology systems 

means computing devices, ancillary 

equipment, software, firmware, and 

similar procedures, services (including 

support services), and related resources. 

See also the definitions of computing 

devices and equipment in this section. 

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, data (including 

data licenses), websites, IP licenses, 

trade secrets, patents, patent 

applications, and property such as 

loans, notes and other debt instruments, 

lease agreements, stocks and other 

instruments of property ownership of 

either tangible or intangible property 

ownership, such as intellectual 

property, software, or software 

subscriptions/licenses. 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 

objectives. See this section’s definitions 

of cost objective and final cost objective. 

Internal control for recipients and 

subrecipients means: 

(1) Processes designed and 

implemented by recipients and 

subrecipients to provide reasonable 

assurance regarding the achievement of 

objectives in the following categories: 

(i) Effectiveness and efficiency of 

operations; 

(ii) Reliability of reporting for internal 

and external use; and 

(iii) Compliance with applicable laws 

and regulations. 

Key Personnel means any individuals 

(including employees and contractors) 

working under a Federal award that are 

designated in the Federal award as 

being particularly integral or meaningful 

to the program. 

Loan means a Federal loan or loan 

guarantee received or administered by a 

recipient, except as used in this 

section’s 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 

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 pledges for the 

payment of all or a part of the principal 

or interest on any debt obligation of a 


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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 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 

§ 200.518 or a program identified as a 

major program by a Federal agency or 

pass-through entity in accordance with 

§ 200.503(e). 

Management decision means the 

Federal agency’s or pass-through 

entity’s written determination, provided 

to the auditee, of the adequacy of the 

auditee’s proposed corrective actions to 

address the findings based on its 

evaluation of the audit findings and 

proposed corrective actions. 

Micro-purchase means an individual 

procurement transaction for supplies or 

services, the aggregate amount of which 

does not exceed the micro-purchase 

threshold. Micro-purchases comprise a 

subset of a recipient’s or subrecipient’s 

small purchases using informal 

procurement methods as set forth in 

§ 200.320. 

Micro-purchase threshold means the 

dollar amount at or below which a 

recipient or subrecipient may purchase 

property, or services using micropurchase procedures (see § 200.320). 

Generally, the micro-purchase threshold 

for procurement activities administered 

under Federal awards is not to exceed 

the amount set by the FAR at 48 CFR 

part 2, subpart 2.1, unless a higher 

threshold is requested by the recipient 

or subrecipient and approved by the 

cognizant agency for indirect costs. 

Modified Total Direct Cost (MTDC) 

means all direct salaries and wages, 

applicable fringe benefits, materials and 

supplies, services, travel, and up to the 

first $50,000 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 

$50,000. 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-discretionary award means an 

award made by the Federal agency to 

specific recipients in accordance with 

statutory, eligibility, and compliance 

requirements, such that in keeping with 

specific statutory authority, the Federal 

agency has cannot exercise judgment 

(‘‘discretion’’). A non-discretionary 

award amount could be specifically 

determined or by formula. 

Non-Federal entity (NFE) 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 

organization that: 

(1) Is operated primarily for scientific, 

educational, service, charitable, or 

similar purposes in the public interest; 

(2) Is not organized primarily for 

profit; 

(3) Uses net proceeds to maintain, 

improve, or expand the organization’s 

operations; and 

(4) Is not an IHE. 

Notice of funding opportunity means 

a formal announcement of the 

availability of Federal funding through 

a financial assistance program from a 

Federal agency. The notice of funding 

opportunity provides information on the 

award, such as who is eligible to apply, 

the evaluation criteria for selecting a 

recipient or subrecipient, the required 

components of an application, and how 

to submit the application. The notice of 

funding opportunity is any paper or 

electronic issuance that an agency uses 

to announce a funding opportunity, 

whether it is called a ‘‘program 

announcement,’’ ‘‘notice of funding 

availability,’’ ‘‘broad agency 

announcement,’’ ‘‘research 

announcement,’’ ‘‘solicitation,’’ or some 

other term. 

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 agency that provides the 

predominant amount of funding directly 

(direct funding) (as listed on the 

schedule of expenditures of Federal 

awards, see § 200.510(b)) to a recipient 

or subrecipient unless OMB designates 

a specific cognizant agency for audit. 

When the direct funding represents less 

than 25 percent of the total Federal 

expenditures (as direct and sub-awards) 

by the recipient or subrecipient, then 

the Federal agency with the 

predominant amount of total funding is 

the designated oversight agency for 

audit. When there is no direct funding, 

the Federal agency that 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 § 200.513(b). 

Participant generally means an 

individual who is not a recipient or 

subrecipient staff member or consultant, 

or an individual who is developing or 

leading the implementation of the 

Federal award; but rather attending, 

benefitting from, or is otherwise playing 

a role in the overall program activities. 

Examples include, community members 

participating in a community outreach 

program, members of the public whose 

perspectives or input are sought as part 

of a program, exchange students, or 

conference attendees. 

Participant support costs means direct 

costs that support participants and their 

involvement in a Federal award, such as 

stipends, subsistence allowances, travel 

allowances, registration fees, dependent 

care, and per diem paid directly to or on 

behalf of participants. 

Pass-through entity means a recipient 

or subrecipient that provides a 

subaward to a subrecipient (including 

lower tier subrecipients) to carry out 

part of a Federal program. 

Performance goal means a measurable 

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 (for example, 

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 recipient and 

subrecipient must perform and 

complete the work authorized under the 

Federal award. It is the time interval 

between the start and end date of a 

Federal award, which may include one 

or more funded portions or budget 


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periods. The period of performance does 

not commit the Federal agency to fund 

the award beyond the currently 

approved budget period. 

Personal property means property 

other than real property. It may be 

tangible or intangible. 

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 PII is 

available in public sources such as 

telephone books, websites, and 

university listings. This type of 

information is considered Public PII. 

Public PII 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 

attached to any single category of 

information or technology. Instead, it 

requires a case-by-case 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 could be used 

to identify an individual when 

combined with other available 

information. 

Prior approval means the written 

approval by an authorized official of a 

Federal agency or pass-through entity of 

certain costs or programmatic decisions. 

Program income means gross income 

earned by the recipient or subrecipient 

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(c). Program income includes 

but is not limited to income from fees 

for services performed, the use or rental 

of real or personal property acquired 

under 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 § 200.407. See also 35 U.S.C. 

200–212 ‘‘Disposition of Rights in 

Educational Awards,’’ which applies to 

inventions made under Federal awards. 

Project cost means total allowable 

costs incurred under a Federal award 

and all cost sharing, including thirdparty contributions. 

Property means real property or 

personal property. See this section’s 

definitions of real property and personal 

property. 

Protected Personally Identifiable 

Information (Protected PII) means an 

individual’s first name or first initial 

and last name in combination with any 

one or more type 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 definition 

does not include PII that must be 

disclosed by law. See this section’s 

definition of Personally Identifiable 

Information (PII). 

Questioned cost has the meaning 

given in paragraphs (1) through (3). 

(1) Questioned cost means an amount, 

expended or received from a Federal 

award, that in the auditor’s judgment: 

(i) Is noncompliant or suspected 

noncompliant with Federal statutes, 

regulations, or the terms and conditions 

of the Federal award; 

(ii) At the time of the audit, lacked 

adequate documentation to support 

compliance; or 

(iii) Appeared unreasonable and did 

not reflect the actions a prudent person 

would take in the circumstances. 

(2) The questioned cost amount under 

(1)(ii) is calculated as if the portion of 

a transaction that lacked adequate 

documentation were confirmed 

noncompliant. 

(3) There is no questioned cost solely 

because of: 

(i) Deficiencies in internal control; or 

(ii) Noncompliance with reporting 

requirements if this noncompliance 

does not affect the amount expended or 

received from the Federal award. 

(4) Known questioned cost means a 

questioned cost specifically identified 

by the auditor. Known questioned costs 

are a subset of likely questioned costs. 

(5) Likely questioned cost means the 

auditor’s best estimate of total 

questioned costs, not just the known 

questioned costs. Likely questioned 

costs are developed by extrapolating 

from audit evidence obtained, for 

example, by projecting known 

questioned costs identified in an audit 

sample to the entire population from 

which the sample was drawn. In 

evaluating the effect of questioned costs 

on the opinion on compliance, the 

auditor considers the likely questioned 

costs, not just the known questioned 

costs. 

Real property means land, including 

land improvements, structures, 

appurtenances thereto, and legal 

interests in land such as a fee title, 

licenses, rights of way, easements, but 

excludes moveable machinery and 

equipment. 

Recipient means an entity that 

receives a Federal award directly from 

a Federal agency to carry out an activity 

under a Federal program. The term 

recipient does not include subrecipients 

or individuals that are participants and 

beneficiaries of the award. 

Renewal award means an award made 

after the expiration of a Federal award 

for which the start date is contiguous 

with, or closely follows, the end of the 

expiring Federal award. The start date of 

a renewal award begins a new and 

distinct period of performance. 

Research and Development (R&D) 

means all basic and applied research 

activities and all development activities 

performed by a recipient or 

subrecipient. The term research also 

includes activities involving the training 

of individuals in research techniques 

where such activities use the same 

facilities as other research and 

development activities and where such 

activities are not included in the 

instruction function. ‘‘Research’’ is the 

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 to 

produce useful materials, devices, 

systems, or methods, including 

designing and developing prototypes 

and processes. 

Simplified acquisition threshold 

means the dollar amount below which 

a recipient or subrecipient may 

purchase property or services using 

small purchase methods (see § 200.320). 

Recipients and subrecipients adopt 

small purchase procedures to expedite 

the purchase of items at or below the 

simplified acquisition threshold. The 

simplified acquisition threshold set in 

the FAR at 48 CFR part 2, subpart 2.1 

is used in this part as the simplified 

acquisition threshold for secondary 

procurement activities administered 

under Federal awards. The recipient or 

subrecipient is responsible for 

determining an appropriate simplified 

acquisition threshold, which is less than 

or equal to the dollar value established 

in the FAR, based on internal controls, 

an evaluation of risk, and its 

documented procurement procedures. 

Recipients and subrecipients should 

also determine if local government 

purchasing laws apply. This threshold 

must never exceed the dollar value 

established in the FAR. 

Special purpose equipment means 

equipment that is used only for 

research, medical, scientific, or other 


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technical activities. Examples of special 

purpose equipment include 

microscopes, x-ray machines, surgical 

instruments, spectrometers, and 

associated software. See also the 

definitions of equipment and general 

purpose equipment in this section. 

State means any State of the United 

States, the District of Columbia, the 

Commonwealth of Puerto Rico, 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 

U.S.C. 1070–1099d), which the U.S. 

Department of Education administers, 

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 

contribute to the goals and objectives of 

the project by carrying out part of a 

Federal award received by the passthrough entity. It does not include 

payments to a contractor or to an 

individual that is a Federal program 

beneficiary. A subaward may be 

provided through any legal agreement, 

including an agreement the passthrough entity considers a contract. 

Subrecipient means an entity that 

receives a subaward from a pass-through 

entity to carry out part of a Federal 

award. It does not include an individual 

that is a Federal program beneficiary or 

participant. A subrecipient may also be 

a recipient of other Federal awards 

directly from a Federal agency. 

Subsidiary means an entity in which 

more than 50 percent of the entity is 

owned or controlled directly by a parent 

corporation or through another 

subsidiary of a parent corporation. 

Supply means all tangible personal 

property other than those described in 

the equipment definition. A computing 

device is a supply if the acquisition cost 

is below the lesser of the capitalization 

level established by the recipient or 

subrecipient for financial statement 

purposes or $10,000, regardless of the 

length of its useful life. See this 

section’s definitions of computing 

devices and equipment. 

Telecommunications cost means the 

cost of using communication 

technologies such as mobile phones, 

landlines, and the internet. 

Termination means the action a 

Federal agency or pass-through entity 

takes to discontinue a Federal award, in 

whole or in part at any time before the 

planned end date of the period of 

performance. Termination does not 

include discontinuing a Federal award 

(for example, not issuing continuation 

funding which is at the discretion of a 

Federal agency), or a lack of available 

funds. 

Third-party in-kind contributions 

means the value of non-cash 

contributions (meaning, property or 

services) that: 

(1) Benefit a federally-assisted project 

or program Federal award; and 

(2) Are contributed by non-Federal 

third parties, without charge, to a 

recipient or subrecipient under a 

Federal award. 

Unliquidated financial obligation 

means financial obligations incurred by 

the recipient or subrecipient but not 

paid (liquidated) for financial reports 

prepared on a cash basis. For reports 

prepared on an accrual basis, these are 

financial obligations incurred by the 

recipient or subrecipient but not 

recorded. 

Unobligated balance means the 

amount of funds under a Federal award 

that the recipient or subrecipient has 

not obligated. The amount is computed 

by subtracting the cumulative amount of 

the recipient’s or subrecipient’s 

unliquidated financial obligations and 

expenditures under the Federal award 

from the cumulative amount of funds 

the Federal agency or pass-through 

entity authorized the recipient or 

subrecipient to obligate. 

Voluntary committed cost sharing 

means cost sharing specifically pledged 

voluntarily in the proposal’s budget on 

the part of the recipient or subrecipient, 

which becomes a binding requirement 

of the Federal award. See § 200.306. 

Subpart B—General Provisions 

§ 200.100 Purpose. 

(a) Purpose. (1) This part establishes 

uniform administrative requirements, 

cost principles, and audit requirements 

for Federal awards. Federal agencies 

must not impose additional 

requirements except as allowed in 

§§ 200.102, 200.211, or unless 

specifically required by Federal statute, 

regulation, or Executive order. 

(2) This part provides Federal 

agencies with the policy for collecting 

and submitting information on all 

Federal financial assistance programs to 

the Office of Management and Budget 

(OMB) and communicating this 

information to the public. It also 

establishes Federal policies related to 

the delivery of this information to the 

public, including through the use of 

electronic media. It also sets forth how 

the General Services Administration 

(GSA), OMB, and Federal agencies 

implement the Federal Program 

Information Act (31 U.S.C. 6101–6106). 

(b) Administrative requirements. 

Subparts B through D set forth the 

uniform administrative requirements for 

Federal financial assistance. This 

includes establishing requirements for 

Federal agencies management of Federal 

financial assistance programs before a 

Federal award is made, and 

requirements that Federal agencies may 

impose on recipients and subrecipients 

throughout the lifecycle of a Federal 

award. 

(c) Cost principles. Subpart E 

establishes principles for determining 

allowable costs incurred by recipients 

and subrecipients under Federal 

awards. These principles are for the 

purpose of cost determination. They do 

not address the circumstances nor 

dictate the extent of Federal 

Government funding of a particular 

program or project. 

(d) Single Audit Requirements and 

Audit Follow-up. Subpart F is issued 

pursuant to the Single Audit Act 

Amendments of 1996 (31 U.S.C. 7501– 

7507). Subpart F sets forth the standards 

for achieving consistency and 

uniformity among Federal agencies for 

the audit of non-Federal entities 

administering Federal awards. Subpart 

F also provides the policies and 

procedures for Federal agencies or passthrough entities when using the results 

of these audits. 

§ 200.101 Applicability. 

(a) General applicability to Federal 

agencies. (1) Subparts A through F 

apply to Federal agencies that make 

Federal awards to non-Federal entities. 

(2) Federal agencies may apply 

subparts A through E to Federal 

agencies, for-profit organizations, 

foreign public entities, or foreign 

organizations as permitted in agency 

regulations or program statutes, except 

when a Federal agency determines that 

the application of these subparts would 

be inconsistent with the international 

responsibilities of the United States or 

the laws of a foreign government. If a 

Federal agency does not apply subpart 

E to for-profit organizations, the cost 

principles of the Federal Acquisition 

Regulations (FAR) will apply. Subpart F 

only applies to non-Federal entities as 

defined in the Single Audit Act 

Amendments of 1996 (31 U.S.C. 7501– 

7507). Federal agencies should apply 

the requirements to all recipients in a 

consistent and equitable manner to the 


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extent permitted within applicable 

statutes, regulations, and policies. 

(b) Applicability to different types of 

Federal awards. (1) Throughout 

subparts A through F, the word ‘‘must’’ 

indicates a requirement. The word 

‘‘should’’ or ‘‘may’’ indicates a 

recommended approach and permits 

discretion. 

(2) Paragraphs (b)(3) through (6) of 

this section describe what portions of 

this part apply to specific types of 

Federal financial assistance. The terms 

and conditions of Federal awards and 

the requirements of this part flow down 

to subrecipients unless indicated 

otherwise in Federal statute, regulation, 

or the terms and conditions of the 

Federal award. Pass-through entities 

must comply with the requirements 

described in §§ 200.331 through 

200.333, and any other sections directed 

toward pass-through entities. 

(3) Subparts A and B apply to all 

Federal financial assistance with the 

following exceptions: 

(i) Sections 200.111, 200.112, and 

200.113 do not apply to agreements for 

loans, loan guarantees, interest 

subsidies, insurance, and procurement 

contracts under the FAR and 

subcontracts under those contracts. 

(4) Subparts C and D apply only to 

grants and cooperative agreements with 

the following exceptions: 

(i) Section 200.203 also applies to 

agreements for loans, loan guarantees, 

interest subsidies, and insurance; 

(ii) Section 200.216 also applies to 

loans and loan guarantees; and 

(iii) Sections 200.303 and 200.331 

through 200.333 also apply to all types 

of Federal financial assistance. 

(5) Subpart E applies to grants, 

cooperative agreements, and certain 

procurement contracts under the FAR 

but does not apply to the following: 

(i) Grants and Cooperative 

Agreements providing food 

commodities; 

(ii) Fixed Amount Awards; 

(iii) Agreements for loans, loan 

guarantees, interest subsidies, and 

insurance; 

(iv) Procurement contracts under the 

FAR that are not negotiated; and 

(v) Federal awards to hospitals (See 

Appendix IX—Hospital Cost Principles) 

(6) Subpart F only applies to the 

following: 

(i) Grants and cooperative agreements 

(including fixed amount awards); 

(ii) Contracts and subcontracts 

awarded under the FAR (except for 

fixed price contracts and subcontracts); 

(iii) Agreements for loans, loan 

guarantees, interest subsidies, and 

insurance; and 

(iv) Any other form of Federal 

financial assistance as defined by the 

Single Audit Act Amendment of 1996. 

(c) Federal award of a costreimbursement contract under the 

Federal Acquisition Regulations (FAR) 

to a non-Federal entity. When a nonFederal entity is awarded a costreimbursement contract under the FAR, 

only subpart D, §§ 200.331 through 

200.333, and subparts E and F are 

incorporated by reference into the 

contract. The requirements of subparts 

D, E, and F are supplementary to the 

FAR and the contract. In cases of 

conflict, the FAR and the terms and 

conditions of the contract awarded 

under the FAR shall prevail over the 

incorporated requirements from this 

part. When the Cost Accounting 

Standards (CAS) are applicable to the 

contract, they also take precedence over 

the incorporated requirements from this 

part. In addition, costs that are 

identified as unallowable under 41 

U.S.C. 4304(a) and as stated in the FAR 

(48 CFR part 31, subpart 31.2, and 48 

CFR 31.603) are always unallowable. 

For requirements other than those 

covered in subpart D, §§ 200.331 

through 200.333, and subparts E and F, 

the terms of the contract and the FAR 

apply. 

(d) Governing provisions. With the 

exception of subpart F, which is 

required by the Single Audit Act, 

Federal statutes or regulations govern in 

any circumstances where they conflict 

with the provisions of this part. For 

agreements with Indian Tribes, this 

includes the provisions of the Indian 

Self-Determination and Education and 

Assistance Act (ISDEAA), as amended 

(see 25 U.S.C. 5301–5423. 

(e) Program applicability. Except for 

§§ 200.203, 200.216, and 200.331 

through 200.333, the requirements in 

subparts C, D, and E 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 

subpart E apply to subrecipients of 

Community Services Block Grant funds 

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

(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). 

(f) Additional program applicability. 

Except for §§ 200.203 and 200.216, the 

guidance in subpart C does not apply to 

the following programs: 

(1) Entitlement 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) Federal Payments for Foster Care, 

Prevention, and Permanency (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 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). 

(2) A Federal award for an 

experimental, pilot, or demonstration 

project that is also supported by a 

Federal award listed in paragraph (f)(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); 


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(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. 

§ 200.102 Exceptions. 

(a) OMB exceptions. Except for 

subpart F, OMB may allow either 

exceptions to or deviations from 

requirements of this part for classes of 

Federal awards, or of recipients, 

subrecipients, or both, when not 

prohibited by statute. For example, 

OMB may allow exceptions or 

deviations in support of innovative 

program designs or emergency 

situations. Deviation means applying 

more or less restrictive requirements to 

a class of Federal awards, recipients, or 

subrecipients. 

(b) Statutory exceptions. When 

required by Federal statute, a Federal 

agency does not need OMB approval to 

allow exceptions to or deviations from 

requirements of this part (except for 

subpart F) for a class of Federal awards 

or recipients, subrecipients, or both. 

(c) Agency exceptions. Federal 

agencies may allow exceptions to 

requirements of this part for individual 

Federal awards, or recipients, or 

subrecipients on a case-by-case basis 

when the exceptions are not prohibited 

by statute and OMB approval is not 

expressly required by this part. Only the 

cognizant agency for indirect costs may 

authorize exceptions related to cost 

allocation plans or indirect cost rate 

proposals. A Federal agency may also 

apply less restrictive requirements when 

issuing fixed amount awards (see 

§ 200.1), except for those requirements 

imposed by statute or in subpart F. 

§ 200.103 Authorities. 

This part is issued under the 

following authorities. 

(a) Subparts B through D are 

authorized under 31 U.S.C. 503 (the 

Chief Financial Officers Act, Functions 

of the Deputy Director for Management); 

the Federal Program Information Act 

(Pub. L. 95–220 and Pub. L. 98–169, as 

amended, codified at 31 U.S.C. 6101– 

6106); the Federal Grant and 

Cooperative Agreement Act of 1977 

(Pub. L. 95–224, as amended, codified at 

31 U.S.C. 6301–6309); 41 U.S.C. 1101– 

1131 (the Office of Federal Procurement 

Policy Act); Reorganization Plan No. 2 

of 1970 and Executive Order 11541 

(‘‘Prescribing the Duties of the Office of 

Management and Budget and the 

Domestic Policy Council in the 

Executive Office of the President’’); and 

the Single Audit Act Amendments of 

1996 (31 U.S.C. 7501–7507). 

(b) Subpart E 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. 1101–1126); the Chief Financial 

Officers Act of 1990 (31 U.S.C. 503– 

504); Reorganization Plan No. 2 of 1970; 

and Executive Order 11541, 

‘‘Prescribing the Duties of the Office of 

Management and Budget and the 

Domestic Policy Council in the 

Executive Office of the President.’’ OMB 

also relies on authority under 31 U.S.C. 

503 and 31 U.S.C. 6307. 

(c) Subpart F is authorized under the 

Single Audit Act Amendments of 1996, 

(31 U.S.C. 7501–7507). OMB also relies 

on authority under 31 U.S.C. 503 and 31 

U.S.C. 6307. 

§ 200.104 Supersession. 

This part supersedes previous OMB 

guidance issued under Title 2, subtitle 

A, chapter I of the Code of Federal 

Regulations related to uniform 

administrative requirements, cost 

principles, and audit requirements for 

Federal awards. 

§ 200.105 Effect on other issuances. 

(a) Superseding inconsistent 

requirements. For Federal awards made 

subject to this part by a Federal agency, 

this part takes precedence over any 

administrative requirements, program 

manuals, handbooks, and other nonregulatory materials that are 

inconsistent with the requirements of 

those subparts upon implementation of 

this part by the Federal agency, except 

to the extent that they are required by 

statute or authorized in accordance with 

§ 200.102. 

(b) Imposition of requirements on 

recipients. Agencies may only impose 

legally binding requirements on 

recipients and subrecipients through: 

(1) Notice and public comment 

procedures through an approved agency 

process, including as authorized by this 

part, other statutes, or regulations; or 

(2) Incorporating requirements into 

the terms and conditions of a Federal 

award as permitted by Federal statute, 

regulation, or this part. 

§ 200.106 Agency implementation. 

The specific requirements and 

responsibilities of Federal agencies, 

non-Federal entities, recipients, and 

subrecipients are set forth in this part. 

Federal agencies making Federal awards 

to non-Federal entities must implement 

the language in subparts C through F of 

this part in codified regulations unless 

different provisions are required by 

Federal statute or are approved by OMB. 

§ 200.107 OMB responsibilities. 

OMB will review Federal agency 

regulations and implementation of this 

part. OMB will provide interpretations 

of policy requirements and assistance to 

ensure effective, efficient, and 

consistent implementation. Any 

exceptions will be subject to approval 

by OMB and only with adequate 

justification from the Federal agency. 

§ 200.108 Inquiries. 

Inquiries from Federal agencies 

concerning this part may be directed to 

OMB. Inquiries from recipients or 

subrecipients should be addressed to 

the Federal agency, the cognizant 

agency for indirect costs, the cognizant 

agency for audit, or the pass-through 

entity as appropriate. 

§ 200.109 Review date. 

OMB will review this part 

periodically. 

§ 200.110 Effective date. 

(a) The standards set forth in this part 

affecting the administration of Federal 

awards by Federal agencies become 

effective once implemented by Federal 

agencies or when any future amendment 

to this part becomes final. 

(b) Existing negotiated indirect cost 

rates will remain in place until they 

expire. The effective date of changes to 

indirect cost rates must be based upon 

the date a newly re-negotiated rate goes 

into effect for the recipient’s or 

subrecipient’s fiscal year. Therefore, for 

indirect cost rates and cost allocation 

plans, the revisions to this part (as of the 

publication date for revisions to this 

guidance) become effective in 

generating proposals and negotiating a 

new rate (when the rate is renegotiated). 

§ 200.111 English language. 

(a) All Federal financial assistance 

announcements, applications, and 

Federal award information should be in 

the English language and must be in 

terms of U.S. dollars. However, Federal 

agencies, recipients, and subrecipients 

may issue or translate a Federal award 


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or other documents into another 

language. A Federal agency may 

translate formal or informal 

announcements of the availability of 

Federal funding through a financial 

assistance program, such as a notice of 

funding opportunity, when translations 

may serve to increase the pool of 

applicants or the participation of a 

specific community (for example, 

programs administered in foreign 

countries where the primary language is 

not English). There must be official 

controlling English versions of 

announcements and award documents. 

(b) Applications, reports, and official 

correspondence may be submitted in 

languages other than English if specified 

in the notice of funding opportunity or 

the terms and conditions of the Federal 

award. 

(c) In the event of inconsistency 

between English and another language, 

the English language meaning will 

control. When a significant portion of 

the recipient’s or subrecipient’s 

employees administering a Federal 

award are not fluent in English, the 

Federal award should be provided in 

English and the language(s) with which 

employees are more familiar. 

§ 200.112 Conflict of interest. 

Federal agencies must establish 

conflict of interest policies for Federal 

awards. A recipient or subrecipient 

must disclose in writing any potential 

conflict of interest to the Federal agency 

or pass-through entity in accordance 

with the established Federal agency 

policies. 

§ 200.113 Mandatory disclosures. 

An applicant, recipient, or 

subrecipient of a Federal award must 

promptly disclose whenever they have 

credible evidence of a violation of 

Federal criminal law potentially 

affecting the Federal award (for 

example, fraud, embezzlement, bribery, 

gratuity violations, identity theft, or 

sexual assault and exploitation) or a 

violation of the civil False Claims Act. 

(See also 2 CFR 175.105 regarding the 

obligation to report credible information 

related to conduct prohibited by the 

Trafficking Victims Protection Act, 22 

U.S.C. 7104c). The disclosure must be 

made in writing to the Federal agency, 

pass-through entity (if applicable), and 

the agency’s Office of Inspector General. 

Recipients and subrecipients are 

required to report matters related to 

recipient integrity and performance in 

accordance with Appendix XII of this 

part. Failure to make required 

disclosures can result in any of the 

remedies described in § 200.339. (See 

also 2 CFR part 180, 31 U.S.C. 3321, and 

41 U.S.C. 2313.) 

Subpart C—Pre-Federal Award 

Requirements and Contents of Federal 

Awards 

§ 200.200 Purpose. 

Sections 200.201 through 200.216 

prescribe instructions and other preaward matters to be used by Federal 

agencies in the program planning, 

announcement, application, and award 

processes. 

§ 200.201 Use of grants, cooperative 

agreements, fixed amount awards, and 

contracts. 

(a) Federal awards. The Federal 

agency or pass-through entity must 

decide on the appropriate type of 

agreement for a Federal award (for 

example, a grant, cooperative 

agreement, subaward, or contract) in 

accordance with this guidance. See the 

Federal Grant and Cooperative 

Agreement Act (31 U.S.C. 6301–6309). 

(b) Fixed amount awards. The Federal 

agency or pass-through entity (see 

§ 200.333) may use fixed amount awards 

(see Fixed amount awards in § 200.1) for 

which the following conditions apply: 

(1) The Federal award amount is 

negotiated using the cost principles (or 

other pricing information) as a guide. 

The Federal agency or pass-through 

entity may use fixed amount awards if 

the project scope has measurable goals 

and objectives and if adequate cost, 

historical, or unit pricing data is 

available to establish a fixed budget 

based on a reasonable estimate of actual 

costs. Accountability must be based on 

performance and results, which can be 

communicated in performance reports 

or through routine monitoring. Except 

in the case of termination before the 

completion of the Federal award, there 

is no review of the actual costs incurred 

by the recipient or subrecipient under 

the Federal award. Therefore, no 

financial reporting is required. This 

does not absolve the awardee from the 

record retention requirements contained 

in sections 200.334 through 200.338. 

Payments must be based on meeting 

specific requirements of the Federal 

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 payment as well as the 

‘‘milestone’’ or event triggering the 

payment, should be agreed to in 

advance and included in the Federal 

award; 

(ii) On a unit price basis. The defined 

unit(s) or price(s) should be agreed to in 

advance and included in the Federal 

award; or 

(iii) In one payment at the completion 

of the Federal award. 

(2) A fixed amount award may not be 

used in programs that require 

mandatory cost sharing. 

(3) A fixed amount award may 

generate and use program income in 

accordance with the terms and 

conditions of the Federal award; 

however, the requirements of § 200.307 

do not apply. 

(4) At the end of a fixed amount 

award, the recipient or subrecipient 

must certify in writing to the Federal 

agency or pass-through entity that the 

project was completed as agreed to in 

the Federal award and that all 

expenditures were incurred in 

accordance with § 200.403. When the 

required activities were not carried out, 

including fixed amount awards paid on 

a unit price basis under 

200.201(b)(1)(ii), the amount of the 

Federal award must be reduced by the 

amount that reflects the activities that 

were not completed in accordance with 

the Federal award. When the required 

activities were completed in accordance 

with the terms and conditions of the 

Federal award, the recipient or 

subrecipient is entitled to any 

unexpended funds. 

(5) Periodic reports may be 

established for fixed amount awards. 

(6) Prior approval requirements that 

apply to fixed amount awards are 

§ 200.308 (paragraphs 1 through 3, 6, 

and 10) and § 200.333. 

§ 200.202 Program planning and design. 

(a) The Federal agency must design a 

program and create an Assistance 

Listing before announcing the Notice of 

Funding Opportunity. A program must 

be designed: 

(1) With clear goals and objectives 

that provide meaningful results 

consistent with the Federal authorizing 

legislation of the program; 

(2) To measure performance based on 

the goals and objectives developed 

during program planning and design. 

Performance measures may differ 

depending on the type of program. See 

§ 200.301 for more information on 

performance measurement; 

(3) To align with the strategic goals 

and objectives within the Federal 

agency’s performance plan and should 

support the Federal agency’s 

performance measurement, 

management, customer service 

initiatives, and reporting as required by 

Part 6 of OMB Circular A–11 

(Preparation, Submission, and 

Execution of the Budget); 

(4) To align with the Program 

Management Improvement 

Accountability Act (Pub. L. 114–264) as 


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well as the Foundations for EvidenceBased Policymaking Act (Pub. L. 115– 

435), as applicable; and 

(5) To encourage the recipient to 

engage members of the community that 

will benefit from or be impacted by a 

program during the design phase, when 

practicable. 

(b) Federal agencies should develop 

programs in consultation with 

communities benefiting from or 

impacted by the program. In addition, 

Federal agencies should consider 

available data and evaluation results 

from past programs and make every 

effort to extend eligibility requirements 

to all potential applicants. Federal 

agencies are encouraged to coordinate 

with other agencies during program 

planning and design, particularly when 

the goals and objectives of a program or 

project align with those of other 

agencies. 

§ 200.203 Requirement to provide public 

notice of Federal financial assistance 

programs. 

(a) The Federal agency must maintain 

an accurate list of Federal programs in 

the Assistance Listings maintained by 

the General Services Administration 

(GSA) at SAM.gov. 

(1) The Assistance Listings is the 

comprehensive government-wide source 

of Federal financial assistance program 

information produced by the executive 

branch of the Federal Government. 

(2) The information that the Federal 

agency must submit to GSA for approval 

by OMB is listed in paragraph (b). GSA 

must prescribe the format for the 

submission in coordination with OMB. 

(3) The Federal agency must assign 

the appropriate Assistance Listing 

before making the Federal award unless 

exigent circumstances require otherwise 

(for example, timing requirements 

imposed by a Federal statute). 

(b) To the extent practicable, the 

Federal agency must create, update, and 

manage Assistance Listing entries based 

on the authorizing statute for the 

program and comply with additional 

guidance provided by GSA (in 

consultation with OMB) to ensure 

consistent and accurate information is 

available to prospective applicants. 

Assistance Listings should be 

communicated to the public in plain 

language. Accordingly, Federal agencies 

must submit the following information 

to GSA when creating an Assistance 

Listing: 

(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 performance measurement should 

align with the strategic goals and 

objectives within the Federal agency’s 

performance plan and should support 

the Federal agency’s performance 

measurement, management, customer 

service initiatives, and reporting as 

required by Part 6 of OMB Circular A– 

11; 

(2) Identification. Identification of 

whether the program will issue Federal 

awards on a discretionary or nondiscretionary basis; 

(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 the agency, 

sub-agency, or specific program unit 

that will issue the Federal awards (to 

the extent possible) and associated 

funding identifier (for example, 

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 

(for example, type of recipient); and 

(6) Applicability of Single Audit 

Requirements. Applicability of Single 

Audit Requirements as required by 

subpart F. 

§ 200.204 Notices of funding 

opportunities. 

The Federal agency must announce 

specific funding opportunities for 

Federal financial assistance that will be 

openly competed. The term openly 

competed means opportunities that are 

not directed to one or more specifically 

identified applicants. To the extent 

possible, the Federal agency should 

communicate opportunities to the 

public in plain language to ensure the 

announcement is accessible to diverse 

communities of eligible applicants, 

including underserved communities. 

The Federal agency should also make 

efforts to limit the length and 

complexity of the announcement and 

only include the information that is 

necessary for the effective 

communication of the program 

objectives. Federal agencies may offer 

pre-application technical assistance or 

provide clarifying information for 

funding opportunities. However, 

Federal agencies must ensure these 

resources are made accessible and 

widely available to all potential 

applicants; for example, by posting 

answers to questions and requests on 

Grants.gov. The Federal agency should 

make every effort to identify in the 

NOFO all eligible applicants (for 

example, different types of nonprofit 

organizations such as labor unions). The 

following information must be provided 

in a public notice: 

(a) Summary information in notices of 

funding opportunities. The Federal 

agency must display the following 

information on Grants.gov, in a location 

preceding the full text of the 

announcement: 

(1) Federal Agency Name; 

(2) Funding Opportunity Title; 

(3) Announcement Type (whether the 

funding opportunity is the initial 

announcement or a modification of a 

previously announced opportunity); 

(4) Funding Opportunity Number 

(required, if the Federal agency has 

assigned a number to the funding 

opportunity announcement); 

(5) Assistance Listing Number(s); 

(6) Funding Details. To the extent 

appropriate, the total amount of funding 

that the Federal agency expects to 

award, the anticipated number of 

awards, and the expected dollar values 

of individual awards, which may be a 

range or average; 

(7) Key Dates. Key dates include due 

dates for submitting applications or 

Executive Order 12372 submissions, as 

well as for any letters of intent or 

preapplications. 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 Federal agency. If 

possible, the Federal agency should 

provide an anticipated award date. If the 

NOFO states that applications will be 

evaluated on a ‘‘rolling’’ basis (that is, 

at different points during a specified 

period of time), the Federal agency 

should provide an estimate of the time 

needed to process an application and 

notify the applicant of the Federal 

agency’s decision; 

(8) Executive Summary. A brief 

description that is written in plain 

language and summarizes the goals and 

objectives of the program, the target 

audience, and eligible applicants. The 

text of the executive summary should 

not exceed 500 words; and 

(9) Agency contact information. 

(b) Availability period. The Federal 

agency should make all funding 

opportunities available for application 

for at least 60 calendar days. However, 

the Federal agency may extend the 

availability period of an opportunity as 

needed. For example, extending the 

period may be necessary to provide 

technical assistance to an applicant pool 

that was not anticipated when the 


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announcement was made or has less 

experience with applying for Federal 

financial assistance. The Federal agency 

may also determine that an availability 

period of less than 60 days is sufficient 

for a particular funding opportunity. 

However, no funding opportunity 

should be available for less than 30 

calendar days unless the Federal agency 

determines that exigent circumstances 

justify this. 

(c) Full text of funding opportunities. 

(1) The Federal agency must include the 

information in Appendix I for every 

funding opportunity. 

(2) Federal agencies should ensure 

that funding opportunities are written 

using plain language. To the extent 

possible Federal agencies must 

streamline opportunities to make them 

accessible, particularly for funding 

opportunities that are new, targeted to 

underserved communities, or intended 

to reach inexperienced applicants. 

(3) To reduce application burden, 

Federal agencies should consider 

whether programmatic or administrative 

requirements specific to the agency, 

program, or funding opportunity must 

be met at the time of application or as 

a requirement of receiving a Federal 

award. 

§ 200.205 Federal agency merit review of 

proposals. 

Unless prohibited by Federal statute, 

the Federal agency must design and 

execute a merit review process of 

applications for discretionary Federal 

awards. The objective of a merit review 

process is to select recipients most 

likely to be successful in delivering 

results based on the program objectives 

as outlined in section § 200.202. A merit 

review is an objective process of 

evaluating Federal award applications 

in accordance with the written 

standards of the Federal agency. If 

utilizing external peer reviewers, these 

standards should identify the number of 

people the agency requires to participate 

in the merit review process and provide 

opportunities for a diverse group of 

participants, including those 

representing underserved communities. 

This process must be described or 

incorporated by reference in the 

applicable funding opportunity. See 

Appendix I to this part. See also 

§ 200.204. The Federal agency must also 

periodically review its merit review 

process. 

§ 200.206 Federal agency review of risk 

posed by applicants. 

(a) Review of OMB-designated 

repositories of government-wide data. 

(1) Prior to making a Federal award, the 

Federal agency is required to review 

eligibility information for applicants 

and financial integrity information for 

applicants available in OMB-designated 

databases per the Payment Integrity 

Information Act of 2019 (Pub. L. 116– 

117), the ‘‘Do Not Pay Initiative’’ (31 

U.S.C. 3354), and 41 U.S.C. 2313. 

(2) The Federal agency is required to 

review the responsibility and 

qualification records available in the 

non-public segment of the System for 

Award Management (SAM.gov) prior to 

making a Federal award where the 

Federal share is expected to exceed the 

simplified acquisition threshold. See 41 

U.S.C. 2313. The Federal agency must 

consider all of the information available 

in SAM.gov with regard to the applicant 

and any immediate highest-level owner, 

predecessor (meaning, an organization 

that is replaced by a successor), or 

subsidiary, identified for that applicant 

in SAM.gov. See Public Law 112–239, 

National Defense Authorization Act for 

Fiscal Year 2013. The information in the 

system for a prior recipient of a Federal 

award must demonstrate a satisfactory 

record of administering programs or 

activities under Federal financial 

assistance or procurement awards, and 

integrity and business ethics. The 

Federal agency may make a Federal 

award to a recipient that does not fully 

meet these standards if it is determined 

that the information is not relevant to 

the Federal award under consideration 

or there are specific conditions that can 

appropriately mitigate the risk 

associated with the recipient in 

accordance with § 200.208. 

(b) Risk Assessment. (1) The Federal 

agency must establish and maintain 

policies and procedures for conducting 

a risk assessment to evaluate the risks 

posed by applicants before issuing 

Federal awards. This assessment helps 

identify risks that may affect the 

advancement toward or the achievement 

of a project’s goals and objectives. Risk 

assessments assist Federal managers in 

determining appropriate resources and 

time to devote to project oversight and 

monitor recipient progress. This 

assessment may incorporate elements 

such as the quality of the application, 

award amount, risk associated with the 

program, cybersecurity risks, and 

impacts on local jobs and the 

community. If the Federal agency 

determines that the Federal award will 

be made, specific conditions that 

address the assessed risk may be 

implemented in the Federal award. The 

risk criteria to be evaluated must be 

described in the announcement of the 

funding opportunity described in 

§ 200.204. 

(2) In evaluating risks posed by 

applicants, the Federal agency should 

consider the following items: 

(i) Financial stability. The applicant’s 

record of effectively managing financial 

risks, assets, and resources; 

(ii) Management systems and 

standards. Quality of management 

systems and ability to meet the 

management standards prescribed in 

this part; 

(iii) History of performance. The 

applicant’s record of managing previous 

and current Federal awards, including 

compliance with reporting requirements 

and conformance to the terms and 

conditions of Federal awards, if 

applicable; 

(iv) Audit reports and findings. 

Reports and findings from audits 

performed under subpart F or the 

reports and findings of any other 

available audits, if applicable; and 

(v) Ability to effectively implement 

requirements. The applicant’s ability to 

effectively implement statutory, 

regulatory, or other requirements 

imposed on recipients of Federal 

awards. 

(c) Adjustments to the Risk 

Assessment. The Federal agency may 

modify the risk assessment at any time 

during the period of performance, 

which may justify changes to the terms 

and conditions of the Federal award. 

See § 200.208. 

(d) Suspension and debarment 

compliance. (1) The Federal agency 

must comply with the government-wide 

suspension and debarment guidance in 

2 CFR part 180 and individual Federal 

agency suspension and debarment 

requirements in title 2 of the Code of 

Federal Regulations. Federal agencies 

must also require recipients to comply 

with these requirements. These 

requirements restrict making Federal 

awards, subawards, and contracts with 

certain parties that are debarred, 

suspended, or otherwise excluded from 

receiving Federal awards participating 

in Federal awards. 

§ 200.207 Standard application 

requirements. 

(a) Paperwork clearances. The Federal 

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 and in 

alignment with OMB-approved, 

government-wide data elements 

available from the OMB-designated 

standards lead. OMB will authorize 

additional information collections only 

on a limited basis and consistent with 

these requirements. 


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(b) Information collection. The 

Federal agency may inform applicants 

that they do not need to provide certain 

information already being collected 

through other means. 

§ 200.208 Specific conditions. 

(a) Federal agencies are responsible 

for ensuring that specific Federal award 

conditions and performance 

expectations are consistent with the 

program design (See § 200.202 and 

§ 200.301) 

(b) The Federal agency or passthrough entity may adjust specific 

conditions in the Federal award based 

on an analysis of the following factors: 

(1) Review of OMB-designated 

repositories of government-wide data 

(for example, SAM.gov) or review of its 

risk assessment (See § 200.206); 

(2) The recipient’s or subrecipient’s 

history of compliance with the terms 

and conditions of Federal awards; 

(3) The recipient’s or subrecipient’s 

ability to meet expected performance 

goals as described in § 200.211; or 

(4) A determination that a recipient or 

subrecipient has adequate financial 

resources to perform the Federal award. 

(c) Specific conditions may include 

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; 

(3) Requiring additional or more 

detailed financial reports; 

(4) Requiring additional project 

monitoring; 

(5) Requiring the recipient or 

subrecipient to obtain technical or 

management assistance; or 

(6) Establishing additional prior 

approvals. 

(d) Prior to imposing specific 

conditions, the Federal agency or passthrough entity must notify the recipient 

or subrecipient as to: 

(1) The nature of the specific 

condition(s); 

(2) The reason why the specific 

condition(s) is being imposed; 

(3) The nature of the action needed to 

remove the specific condition(s); 

(4) The time allowed for completing 

the actions; and 

(5) The method for requesting the 

Federal agency or pass-through entity to 

reconsider imposing a specific 

condition. 

(e) Any specific conditions must be 

promptly removed once the conditions 

that prompted them have been satisfied. 

§ 200.209 Certifications and 

representations. 

Unless prohibited by the U.S. 

Constitution, Federal statutes, or 

regulations, each Federal agency or 

pass-through entity is authorized to 

require a recipient or subrecipient to 

submit certifications and 

representations annually in SAM.gov. 

Submission may be required more 

frequently if a recipient or subrecipient 

fails to meet a requirement of a Federal 

award. When a recipient or subrecipient 

is provided an exception to the 

requirements of 2 CFR 25.110, the 

recipient or subrecipient must submit 

the appropriate assurance form (for 

example, SF–424B). 

§ 200.210 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 § 200.458. 

§ 200.211 Information contained in a 

Federal award. 

The Federal award must include the 

following information: 

(a) Federal award performance goals. 

Where applicable, performance goals, 

indicators, targets, and baseline data 

must be included in the Federal award. 

The Federal agency must also specify in 

the terms and conditions of the Federal 

award how performance will be 

assessed, including the timing and 

scope of expected performance. See 

§§ 200.202 and 200.301 for more 

information on Federal award 

performance goals. 

(b) General Federal award 

information. The Federal agency must 

include the following information in 

each Federal award: 

(1) Recipient Name (which must 

match the name associated with its 

unique entity identifier as defined at 2 

CFR 25.400); 

(2) Recipient’s Unique Entity 

Identifier; 

(3) Unique Federal Award 

Identification Number (FAIN); 

(4) Federal Award Date (see Federal 

award date in § 200.1); 

(5) Period of Performance Start and 

End Date; 

(6) Budget Period Start and End Date; 

(7) Amount of Federal Funds 

Obligated by this Action; 

(8) Total Amount of Federal Funds 

Obligated; 

(9) Total Approved Cost Sharing, 

where applicable; 

(10) Total Amount of the Federal 

Award including, approved Cost 

Sharing; 

(11) Budget Approved by the Federal 

Agency; 

(12) Federal Award Description (to 

comply with statutory requirements (for 

example, FFATA)); 

(13) Name of the Federal agency 

(including contact information for the 

awarding official), 

(14) Assistance Listings Number and 

Title; 

(15) 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 § 200.414). 

(c) General terms and conditions. (1) 

Federal agencies must incorporate the 

following general terms and conditions 

either in the Federal award or by 

reference, as applicable: 

(i) Administrative requirements. 

Administrative requirements 

implemented by the Federal 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 § 200.300 Statutory and 

national policy requirements. 

(iii) Recipient integrity and 

performance matters. When the total 

Federal share of the Federal award may 

include more than $500,000 over the 

period of performance, the Federal 

agency must include the terms and 

conditions available in Appendix XII. 

See also § 200.113. 

(iv) Future budget periods. When it is 

anticipated that the period of 

performance will include multiple 

budget periods, the Federal agency must 

indicate that subsequent budget periods 

are subject to the availability of funds, 

program authority, satisfactory 

performance, and compliance with the 

terms and conditions of the Federal 

award. 

(v) Termination provisions. Federal 

agencies must inform recipients of the 

termination provisions in § 200.340, 

including the applicable termination 

provisions in the Federal agency’s 

regulations or terms and conditions of 

the Federal award. 

(2) The Federal award must 

incorporate, by reference, all general 

terms and conditions of the Federal 

award, which must be maintained on 

the Federal agency’s website. 

(3) The Federal agency must provide 

a copy of the full text of the general 

terms and conditions if a recipient 

requests it. 

(4) The Federal agency must maintain 

an archive of previous versions of the 

general terms and conditions, with 

effective dates, for use by a recipient, 

auditors, or others. The archive should 

be located on the Federal agency’s 


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website in the same place where current 

terms and conditions are available. 

(d) Federal award specific terms and 

conditions. The Federal agency must 

include in each Federal award any 

specific terms and conditions that are in 

addition to the general terms and 

conditions. See also § 200.208. 

Whenever practicable, these specific 

terms and conditions should also be 

available on the Federal agency’s 

website and in notices of funding 

opportunities (as outlined in § 200.204). 

(e) Federal agency requirements. Any 

other information required by the 

Federal agency. 

§ 200.212 Public access to Federal award 

information. 

(a) Except as noted in paragraph (c) of 

this section, the Federal agency must 

publish the required Federal award 

information on USAspending.gov in 

accordance with the guidance provided 

by OMB and the U.S. Department of the 

Treasury’s DATA Act Information 

Model Schema (DAIMS). 

(b) All responsibility and qualification 

records posted in SAM.gov will be 

publicly available after a waiting period 

of 14 calendar days, except for: 

(1) Past performance reviews required 

by Federal Government contractors (See 

Federal Acquisition Regulation (FAR) 

48 CFR part 42, subpart 42.15); 

(2) Information that was entered prior 

to April 15, 2011; or 

(3) Information that is withdrawn 

during the 14-calendar day waiting 

period by a Federal agency. 

(c) 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. 

§ 200.213 Reporting a determination that 

an applicant is not qualified for a Federal 

award. 

(a) The Federal agency must report in 

SAM.gov if it does not make a Federal 

award to an applicant because it 

determines that the applicant does not 

meet the minimum qualification 

standards as described in 

§ 200.206(a)(2). The Federal agency 

must report that determination only if 

all of the following apply: 

(1) The only basis for the 

determination is the applicant’s prior 

record of performance on administering 

Federal awards or its record of integrity 

and business ethics, as described in 

§ 200.206(a)(2) (meaning, the applicant 

was determined to be qualified based on 

all factors other than those two 

standards); and 

(2) The total Federal share of the 

Federal award was expected to exceed 

the simplified acquisition threshold 

over the period of performance. 

(b) The Federal agency is not required 

to report a determination that an 

applicant is not qualified for a Federal 

award if they issue the Federal award in 

accordance with the requirements of 

§ 200.208. 

(c) If the Federal agency reports a 

determination that an applicant is not 

qualified for a Federal award, the 

Federal agency also must notify the 

applicant that: 

(1) The determination was made and 

reported in SAM.gov and provides an 

explanation of the determination; 

(2) The information will be kept in the 

system for a period of five years from 

the date of the determination and then 

archived (See section 872 of Pub. L. 

110–417, as amended, codified at 41 

U.S.C. 2313); 

(3) Each Federal agency that considers 

making a Federal award to the applicant 

during that five-year period will 

consider that information in 

determining the applicant’s 

qualification to receive a Federal award 

when the total Federal share of a 

Federal award is expected to exceed the 

simplified acquisition threshold over 

the period of performance; 

(4) The applicant may review the 

responsibility/qualification records 

accessible in SAM.gov and comment on 

any information the system contains 

about the applicant; and 

(5) Federal agencies must consider the 

applicant’s comments in determining 

whether the applicant is qualified for a 

future Federal award. 

(d) If the Federal agency enters 

information into SAM.gov about a 

determination that an applicant is not 

qualified for a Federal award and 

subsequently: 

(1) Learns that any of that information 

is erroneous, the Federal agency must 

correct the information in the system 

within three business days; and 

(2) Obtains an update to that 

information that could be helpful to 

other Federal agencies, the Federal 

agency should amend the information in 

the system within 30 days. 

(e) Federal agencies must not post any 

information that will be made publicly 

available in the non-public segment of 

the responsibility/qualification records 

that is covered by a disclosure 

exemption under the Freedom of 

Information Act. If a recipient asserts 

within seven calendar days to a Federal 

agency that some or all of the publicly 

available information is covered by a 

disclosure exemption under the 

Freedom of Information Act, the Federal 

agency that posted the information must 

remove the posting within seven 

calendar days of receiving the assertion. 

Prior to reposting the releasable 

information, the Federal agency must 

resolve the issue in accordance with the 

agency’s Freedom of Information Act 

procedures. 

§ 200.214 Suspension and debarment. 

Recipients and subrecipients are 

subject to the non-procurement 

debarment and suspension regulations 

implementing Executive Orders 12549 

and 12689, as well as 2 CFR part 180. 

The regulations in 2 CFR part 180 

restrict making Federal awards, 

subawards, and contracts with certain 

parties that are debarred, suspended, or 

otherwise excluded from receiving or 

participating in Federal awards. 

§ 200.215 Never contract with the enemy. 

Federal agencies, recipients, and 

subrecipients are subject to the guidance 

implementing Never Contract with the 

Enemy in 2 CFR part 183. The guidance 

in 2 CFR part 183 affects covered 

contracts, grants, and cooperative 

agreements that are expected to exceed 

$50,000 during the period of 

performance, are performed outside the 

United States and its territories, and are 

in support of a contingency operation in 

which members of the Armed Forces are 

actively engaged in hostilities. 

§ 200.216 Prohibition on certain 

telecommunications and video surveillance 

services or equipment. 

(a) Recipients and subrecipients are 

prohibited from obligating or expending 

Federal funds to: 

(1) Procure or obtain; 

(2) Extend or renew a contract to 

procure or obtain; or 

(3) Enter into a contract (or extend or 

renew a contract) to procure or obtain 

equipment, services, or systems that 

uses covered telecommunications 

equipment or services as a substantial or 

essential component of any system, or 

as critical technology as part of any 

system. As described in section 889 of 

Public Law 115–232, covered 

telecommunications equipment is 

telecommunications equipment 

produced by Huawei Technologies 

Company or ZTE Corporation (or any 

subsidiary or affiliate of such entities). 

(i) For the purpose of public safety, 

security of government facilities, 

physical security surveillance of critical 

infrastructure, and other national 

security purposes, video surveillance 

and telecommunications equipment 

produced by Hytera Communications 

Corporation, Hangzhou Hikvision 

Digital Technology Company, or Dahua 


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Technology Company (or any subsidiary 

or affiliate of such entities). 

(ii) Telecommunications or video 

surveillance services provided by such 

entities or using such equipment. 

(iii) Telecommunications or video 

surveillance equipment or services 

produced or provided by an entity that 

the Secretary of Defense, in consultation 

with the Director of the National 

Intelligence or the Director of the 

Federal Bureau of Investigation, 

reasonably believes to be an entity 

owned or controlled by, or otherwise 

connected to, the government of a 

covered foreign country. 

(b) In implementing the prohibition 

under section 889 of Public Law 115– 

232, heads of executive agencies 

administering loan, grant, or subsidy 

programs shall prioritize available 

funding and technical support to assist 

affected businesses, institutions and 

organizations as is reasonably necessary 

for those affected entities to transition 

from covered communications 

equipment and services, to procure 

replacement equipment and services, 

and to ensure that communications 

service to users and customers is 

sustained. 

(c) A recipient or subrecipient may 

use covered telecommunications 

equipment or services for their own 

purposes (not program activities) 

provided they are not procured with 

Federal funds. 

(d) The prohibition on covered 

telecommunications equipment or 

services applies to funds generated as 

program income, indirect cost 

recoveries, or to satisfy cost share 

requirements. 

(e) The recipient or subrecipient is not 

required to certify that funds were not 

expended on covered 

telecommunications equipment or 

services beyond the certification 

provided upon signing the award. 

(f) For additional information, see 

section 889 of Public Law 115–232 and 

§ 200.471. 

§ 200.217 Whistleblower protections. 

An employee of a recipient or 

subrecipient may not be discharged, 

demoted, or otherwise discriminated 

against as a reprisal for disclosing to a 

person or body described in paragraph 

(a)(2) of 41 U.S.C. 4712 information that 

the employee reasonably believes is 

evidence of gross mismanagement of a 

Federal contract or grant, a gross waste 

of Federal funds, an abuse of authority 

relating to a Federal contract or grant, a 

substantial and specific danger to public 

health or safety, or a violation of law, 

rule, or regulation related to a Federal 

contract (including the competition for 

or negotiation of a contract) or grant. See 

statutory requirements for 

whistleblower protections at 10 U.S.C. 

4701, 41 U.S.C. 4712, 41 U.S.C. 4304, 

and 10 U.S.C. 4310. 

Subpart D—Post Federal Award 

Requirements 

§ 200.300 Statutory and national policy 

requirements. 

(a) The Federal agency or passthrough entity 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 the U.S. Constitution, 

applicable Federal statutes (including 

statutes that prohibit discrimination) 

and regulations, and the requirements of 

this part. The Federal agency or passthrough entity must communicate to a 

recipient or subrecipient all relevant 

requirements, including those contained 

in general appropriations provisions, 

and incorporate them directly or by 

reference in the terms and conditions of 

the Federal award. 

(b) In administering Federal awards 

that are subject to Federal statutes 

prohibiting discrimination based on sex, 

the Federal agency or pass-through 

entity must ensure that the award is 

administered in a way that does not 

unlawfully discriminate based on sexual 

orientation or gender identity, 

consistent with the Supreme Court’s 

reasoning in Bostock v. Clayton County, 

140 S. Ct. 1731 (2020). 

(c) In administering awards in 

accordance with the U.S. Constitution, 

the Federal agency must take account of 

the heightened constitutional scrutiny 

that may apply under the Constitution’s 

Equal Protection clause for government 

action that provides differential 

treatment based on sexual orientation or 

gender identity. 

§ 200.301 Performance measurement. 

(a) The Federal agency must measure 

the recipient’s performance to show 

achievement of program goals and 

objectives, share lessons learned, 

improve program outcomes, and foster 

the adoption of promising practices. The 

Federal agency should establish 

program goals and objectives during 

program planning and design (see 

§ 200.202). The Federal agency should 

clearly communicate the specific 

program goals and objectives in the 

Federal award, including how the 

Federal agency will measure the 

achievement of the goals and objectives, 

the expected timeline, and information 

on how the recipient must report the 

achievement of program goals and 

objectives. The Federal agency should 

also clearly communicate in the Federal 

award any expected outcomes, 

indicators, targets, baseline data, or data 

collections that the recipient is 

responsible for measuring and reporting. 

The Federal agency must ensure all 

requirements for measuring 

performance align with the Federal 

agency’s strategic goals, strategic 

objectives, or performance goals 

relevant to a program (see OMB Circular 

A–11, Preparation, Submission, and 

Execution of the Budget Part 6). 

(b) When establishing performance 

reporting frequency and content, the 

Federal agency should consider what 

information will be necessary to 

measure the recipient’s progress, to 

identify promising practices of 

recipients, and build the evidence upon 

which the Federal agency makes 

program and performance decisions. 

The Federal agency should not require 

additional information that is not 

necessary for measuring program 

performance. See § 200.329 for more 

information on reporting program 

performance. 

(c) The Federal agency should also 

specify in the Federal award any 

requirements of the recipients’ 

participation in federally-funded 

evaluations. 

§ 200.302 Financial management. 

(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 funds. All 

recipient and subrecipient 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 the terms and 

conditions; and tracking expenditures to 

establish that funds have been used in 

accordance with Federal statutes, 

regulations, and the terms and 

conditions of the Federal award. See 

§ 200.450 

(b) The recipient’s or subrecipient’s 

financial management system must 

provide for the following (see 

§§ 200.334, 200.335, 200.336, and 

200.337): 

(1) Identification of all Federal awards 

by the Assistance Listings title and 

number, Federal award identification 

number, Federal award year, and name 

of the Federal agency or pass-through 

entity. 

(2) Accurate, current, and complete 

disclosure of the financial results of 

each Federal award or program in 

accordance with the reporting 


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requirements in §§ 200.328 and 200.329. 

When a Federal agency or pass-through 

entity requires reporting on an accrual 

basis from a recipient or subrecipient 

that maintains its records other than on 

an accrual basis, the recipient or 

subrecipient must not be required to 

establish an accrual accounting system. 

This recipient or subrecipient may 

develop accrual data for its reports 

based on an analysis of the 

documentation on hand. 

(3) Maintaining records that 

sufficiently identify the source and 

expenditure of Federal funds for Federal 

awards. These records must contain 

information necessary to identify 

Federal awards, authorizations, 

financial 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 assets. The recipient or subrecipient 

must safeguard all assets and ensure 

they are used solely for authorized 

purposes. See § 200.303. 

(5) Comparison of expenditures with 

budget amounts for each Federal award. 

(6) Written procedures to implement 

the requirements of § 200.305. 

(7) Written procedures for 

determining the allowability of costs in 

accordance with subpart E and the 

terms and conditions of the Federal 

award. 

§ 200.303 Internal controls. 

The recipient or subrecipient must: 

(a) Establish, document, and maintain 

effective internal control over the 

Federal award that provides reasonable 

assurance that the recipient or 

subrecipient is managing the Federal 

award in compliance with Federal 

statutes, regulations, and the terms and 

conditions of the Federal award. These 

internal controls should comply with 

the guidance in ‘‘Standards for Internal 

Control in the Federal Government’’ 

issued by the Comptroller General of the 

United States or the ‘‘Internal ControlIntegrated Framework’’ issued by the 

Committee of Sponsoring Organizations 

of the Treadway Commission (COSO). 

(b) Comply with the U.S. 

Constitution, Federal statutes, 

regulations, and the terms and 

conditions of the Federal award. 

(c) Evaluate and monitor the 

recipient’s or subrecipient’s compliance 

with statutes, regulations, and the terms 

and conditions of Federal awards. 

(d) Take prompt action when 

instances of noncompliance are 

identified. 

(e) Take cybersecurity and other 

measures as appropriate to safeguard 

information including protected 

personally identifiable information (PII). 

This also includes information the 

Federal agency or pass-through entity 

designates as sensitive or other 

information the recipient or 

subrecipient considers sensitive and is 

consistent with applicable Federal, 

State, local, and tribal laws regarding 

privacy and responsibility over 

confidentiality. 

§ 200.304 Bonds. 

(a) Where the Federal Government 

guarantees or insures the repayment of 

money borrowed by the recipient, the 

Federal agency may require adequate 

bonding and insurance if the bonding 

and insurance requirements of the 

recipient are not deemed adequate to 

protect the interest of the Federal 

Government. 

(b) The Federal agency may require 

adequate fidelity bond coverage where 

the recipient entity lacks coverage to 

protect the interest of the Federal 

Government. 

(c) Where bonds, insurance, or both 

are required in the situations described 

above, the bonds and insurance must be 

obtained from companies holding 

certificates of authority issued by the 

U.S. Department of Treasury (see 31 

CFR part 223). 

§ 200.305 Federal payment. 

(a) Payments for States. Payments for 

states are governed by Treasury-State 

Cash Management Improvement Act 

(CMIA) agreements and default 

procedures codified at 31 CFR part 205 

and Treasury Financial Manual (TFM) 

4A–2000, ‘‘Overall Disbursing Rules for 

All Federal Agencies.’’ 

(b) Payments for recipients and 

subrecipients other than States. The 

payment methods must minimize the 

time elapsing between the transfer and 

disbursement of funds regardless of 

whether the payment is made by 

electronic funds transfer or by other 

means. See § 200.302(b)(6). Except as 

noted in this part, the Federal agency 

must require recipients to use only 

OMB-approved, government-wide 

information collections to request 

payment. 

(1) The recipient or subrecipient must 

be paid in advance, provided it 

maintains or demonstrates the 

willingness to maintain written 

procedures. Such procedures must 

minimize the time elapsing between the 

transfer and disbursement of funds. The 

procedures must also establish a 

financial management system that meets 

the standards for fund control and 

accountability as established in this 

part. Advance payments to a recipient 

or subrecipient must be limited to the 

minimum amounts needed and be timed 

with actual, immediate cash 

requirements 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 for direct program or 

project costs and the proportionate 

share of any allowable indirect costs. 

The recipient or subrecipient must make 

timely payments to contractors in 

accordance with the contract provisions. 

(2) Whenever possible, advance 

payment requests by the recipient or 

subrecipient must be consolidated to 

cover anticipated cash needs for all 

Federal awards received by the recipient 

from the Federal agency or pass-through 

entity. 

(i) Advance payment mechanisms 

must comply with 31 CFR part 208 and 

include, but are not limited to, Treasury 

checks and electronic funds transfers. 

(ii) Recipients and subrecipients must 

be authorized to submit payment 

requests as often as necessary when 

electronic fund transfers are used or at 

least monthly when electronic transfers 

are not used. See Electronic Fund 

Transfer Act (15 U.S.C. 1693–1693r). 

(3) Reimbursement is preferred when 

the requirements in paragraph (b) 

cannot be met, when the Federal agency 

or pass-through entity sets a specific 

condition per § 200.208, when requested 

by the recipient or subrecipient, when a 

Federal award is for construction, or 

when a significant 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 Federal agency or 

pass-through entity must make payment 

within 30 calendar days after receipt of 

the payment request unless the Federal 

agency or pass-through entity 

reasonably believes the request to be 

improper. 

(4) If the recipient or subrecipient 

cannot meet the criteria for advance 

payments and the Federal agency or 

pass-through entity has determined that 

reimbursement is not feasible because 

the recipient or subrecipient lacks 

sufficient working capital, the Federal 

agency or pass-through entity may 

provide cash on a working capital 

advance basis. Under this procedure, 

the Federal agency or pass-through 

entity must advance cash payments to 

the recipient or subrecipient to cover its 

estimated disbursement needs for an 

initial period generally aligned to the 

recipient’s or subrecipient’s disbursing 

cycle. After that, the Federal agency or 


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pass-through entity must reimburse the 

recipient or subrecipient for its actual 

cash disbursements. Use of the working 

capital advance payment method 

requires that the pass-through entity 

provide timely advance payments to any 

subrecipients to meet the subrecipient’s 

actual cash disbursements. The passthrough entity must not use the working 

capital advance method of payment 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) If available, the recipient or 

subrecipient must disburse funds 

available from program income 

(including repayments to a revolving 

fund), rebates, refunds, contract 

settlements, audit recoveries, and 

interest earned on Federal funds before 

requesting additional cash payments. 

(6) Payments for allowable costs must 

not be withheld at any time during the 

period of performance unless required 

by Federal statute, regulations, or in one 

of the following instances: 

(i) The recipient or subrecipient has 

failed to comply with the terms and 

conditions of the Federal award; or 

(ii) The recipient or subrecipient is 

delinquent in a debt to the United States 

as defined in OMB Circular A–129, 

‘‘Policies for Federal Credit Programs 

and Non-Tax Receivables.’’ Under such 

conditions, the Federal agency or passthrough entity may, upon reasonable 

notice, inform the recipient that 

payments must not be made for 

financial obligations incurred after a 

specified date until the conditions are 

corrected or the debt is repaid to the 

Federal Government. 

(7) A payment withheld for failure to 

comply with the terms and conditions 

of the Federal award must be released 

to the recipient or subrecipient upon 

subsequent compliance. When a Federal 

award is suspended, payment 

adjustments must be made in 

accordance with § 200.343. 

(8) A payment must not be made to 

a recipient or subrecipient for amounts 

that the recipient or subrecipient 

withholds from contractors to assure 

satisfactory completion of work. 

Payment must be made when the 

recipient or subrecipient disburses the 

withheld funds to the contractors or to 

escrow accounts established to ensure 

satisfactory completion of work. 

(9) The Federal agency or passthrough entity must not require separate 

depository accounts for funds provided 

to the recipient or subrecipient or 

establish any eligibility requirements for 

depositories. However, the recipient or 

subrecipient must be able to account for 

all Federal funds received, obligated, 

and expended. 

(10) Advance payments of Federal 

funds must be deposited and 

maintained in insured accounts 

whenever possible. 

(11) The recipient or subrecipient 

must maintain advance payments of 

Federal funds in interest-bearing 

accounts unless one of the following 

applies: 

(i) The recipient or subrecipient 

receives less than $250,000 in Federal 

funding per year; 

(ii) The best available interest-bearing 

account would not reasonably 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 with the 

expected Federal and non-Federal cash 

resources; 

(iv) A foreign government or banking 

system prohibits or precludes interestbearing accounts; or 

(v) An interest-bearing account is not 

readily accessible (for example, due to 

public or political unrest in a foreign 

country). 

(12) The recipient or subrecipient may 

retain up to $500 per year of interest 

earned on Federal funds to use for 

administrative expenses of the recipient 

or subrecipient. Any additional interest 

earned on Federal funds must be 

returned annually to the Department of 

Health and Human Services Payment 

Management System (PMS) through 

either the Automated Clearing House 

(ACH) network or a Fedwire Funds 

Service payment. All interest in excess 

of $500 per year must be returned to 

PMS regardless of whether the recipient 

or subrecipient was paid through PMS. 

Instructions for returning interest can be 

found at https://pms.psc.gov/grantrecipients/returning-funds-interest.html. 

(13) All other Federal funds must be 

returned to the payment system of the 

Federal agency. Returns should follow 

the instructions provided by the Federal 

agency. All returns to PMS should 

follow the instructions provided at 

https://pms.psc.gov/grant-recipients/ 

returning-funds-interest.html. 

§ 200.306 Cost sharing. 

(a) Cost sharing may not be used as a 

factor during the merit review of 

applications or proposals unless 

allowed by the Federal agency’s 

regulations, and the information is 

included in the notice of funding 

opportunity. Voluntarily committed cost 

sharing is not expected under Federal 

research grants. See §§ 200.414, 200.204, 

and Appendix I. 

(b) The Federal agency or passthrough entity must accept any cost 

sharing or in-kind contributions as part 

of the recipient’s or subrecipient’s 

contributions to a program when they: 

(1) Are verifiable in the recipient’s or 

subrecipient’s records; 

(2) Are not included as contributions 

for any other Federal award; 

(3) Are necessary and reasonable for 

achieving the objectives of the Federal 

award; 

(4) Are allowable under subpart E; 

(5) Are not paid by the Federal 

Government under another Federal 

award, except where the program’s 

Federal authorizing statute specifically 

provides that Federal funds made 

available for the program can be applied 

to cost sharing requirements of other 

Federal programs; 

(6) Are provided for in the approved 

budget when required by the Federal 

agency; and 

(7) Conform to other applicable 

provisions of this part. 

(c) Unrecovered indirect costs, 

including indirect costs on cost sharing, 

may be included as part of cost sharing 

with the prior approval of the Federal 

agency or pass-through entity. 

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 recipient’s or 

subrecipient’s approved indirect cost 

rate. 

(d) Values for recipient or 

subrecipient contributions of services 

and property must be established in 

accordance with the cost principles in 

subpart E. When a Federal agency or 

pass-through entity authorizes the 

recipient or subrecipient to donate 

buildings or land for construction/ 

facilities acquisition projects or longterm use, the value of the donated 

property for cost sharing must be the 

lesser of paragraph (d)(1) or (2) below. 

(1) The value of the remaining life of 

the property recorded in the recipient’s 

or subrecipient’s accounting records at 

the time of donation. 

(2) The current fair market value. 

However, when there is sufficient 

justification, the Federal agency or passthrough may approve using the current 

fair market value of the donated 

property, even if it exceeds the value 

described in paragraph (d)(1) at the time 

of donation. 

(e) Volunteer services furnished by 

third-party professional and technical 

personnel, consultants, and other labor 

may be counted as cost sharing if the 

service is necessary for the program. 

Rates for third-party volunteer services 

must be consistent with those paid for 


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similar work by the recipient or 

subrecipient. When the required skills 

are not found in the recipient’s or 

subrecipient’s workforce, rates must be 

consistent with those paid for similar 

work in the labor market where the 

recipient or subrecipient competes for 

the services involved. In either case, 

fringe benefits that are allowable, 

allocable, and reasonable 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 are 

allowable, allocable, and reasonable. 

These services may also include indirect 

costs at either the third-party 

organization’s federally-negotiated 

indirect cost rate or a rate in accordance 

with § 200.414(d). These services are 

allowable if they 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 items such as 

equipment, office supplies, laboratory 

supplies, or workshop and classroom 

supplies. The assessed value of donated 

property included as cost sharing must 

not exceed the property’s fair market 

value at the time of the donation. 

(h) The method used for determining 

the value of donated equipment, 

buildings, and land for which title 

passes to the recipient or subrecipient 

may differ according to the following: 

(1) If the purpose of the Federal award 

is to assist the recipient or subrecipient 

in acquiring equipment, buildings, or 

land, the aggregate value of the donated 

property may be claimed as cost 

sharing. 

(2) If the purpose of the Federal award 

is to support activities that require the 

use of equipment, buildings, or land, 

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 if 

provided in the terms and conditions of 

the Federal award. See § 200.420. 

(i) The value of donated property 

must be determined in accordance with 

the accounting policies of the recipient 

or subrecipient 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 recipient or subrecipient as 

established by an independent appraiser 

(for example, certified real property 

appraiser or General Services 

Administration representative) and 

certified by a responsible official of the 

recipient or subrecipient as required by 

the Uniform Relocation Assistance and 

Real Property Acquisition Policies Act 

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

4655) except as provided in the 

implementing regulations at 49 CFR part 

24, ‘‘Uniform Relocation Assistance 

And Real Property Acquisition For 

Federal And Federally-Assisted 

Programs.’’ 

(2) The value of donated equipment 

must not exceed the fair market value 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) The fair market value of third-party 

in-kind contributions must be 

documented and, to the extent feasible, 

supported by the same methods used 

internally by the recipient or 

subrecipient. 

(k) For institutions of higher 

education (IHE), voluntary uncommitted 

cost sharing should be treated 

differently from mandatory or voluntary 

committed cost sharing and should not 

be included in the organized research 

base for computing the indirect cost rate 

or reflected in any allocation of indirect 

costs. Voluntary uncommitted cost 

sharing effort, is faculty-donated 

additional time above that agreed to as 

part of the award. See OMB 

memorandum M–01–06, dated January 

5, 2001, Clarification of OMB A–21 

Treatment of Voluntary Uncommitted 

Cost Sharing and Tuition Remission 

Costs. 

§ 200.307 Program income. 

(a) General. The recipient or 

subrecipient is encouraged to earn 

income to defray program costs when 

appropriate. Program income must be 

used for the original purpose of the 

Federal award. Program income earned 

during the period of performance may 

only be used for costs incurred during 

the period of performance or allowable 

closeout costs. Program income must be 

expended prior to requesting additional 

Federal funds. Program income 

exceeding amounts specified in the 

Federal award may be added to or 

deducted from the total allowable costs 

in accordance with the terms and 

conditions of the Federal award. 

(b) Use of program income. There are 

three methods of applying program 

income: deduction; addition; and costsharing. The Federal agency should 

specify how program income will be 

used in the terms and conditions of the 

Federal award. The deduction method 

will be used if the Federal agency does 

not specify a method for applying 

program income. However, the addition 

method will be used when no method 

is specified for awards made to 

institutions of higher education (IHE) 

and nonprofit research institutions. In 

specifying alternatives to the deduction 

and addition methods, the Federal 

agency may distinguish between income 

earned by the recipient and income 

earned by subrecipients as well as 

between the sources, kinds, or amounts 

of income. 

(1) Deduction. Program income is 

deducted from the total allowable costs, 

reducing the overall total amount of the 

Federal award. 

(2) Addition. Program income is 

added to the total allowable costs, 

increasing the overall total amount of 

the Federal award. If no program 

income method is specified in the 

Federal award, prior approval is 

required to use the addition method. 

(3) Cost sharing. Program income is 

used to meet the Federal award’s cost 

sharing requirement. If no program 

income method is specified in the 

Federal award, prior approval is 

required to use the cost sharing method. 

(c) Income after the period of 

performance. There are no requirements 

governing the disposition of program 

income earned after the end of the 

period of performance of the Federal 

award unless stipulated in the Federal 

agency regulations or the terms and 

conditions of the Federal award. The 

Federal agency may negotiate 

agreements with recipients regarding 

appropriate uses of income earned after 

the end of the period of performance as 

part of the closeout process. See 

§ 200.344. 

(d) Cost of generating program 

income. If authorized by Federal 

regulations or the Federal award, costs 

incidental to generating program income 

may be deducted from gross income to 

determine program income, provided 

these costs have not been charged to the 

Federal award. 

(e) Not considered program income. 

The following are not considered 

program income unless specified in 

Federal statutes, regulations, or the 

terms and conditions of the Federal 

award: 

(1) Governmental revenues. Taxes, 

special assessments, levies, fines, and 

similar revenues the recipient or 

subrecipient raised. 


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(2) Property. Proceeds from the sale of 

real property, equipment, or supplies. 

The proceeds must be handled in 

accordance with the requirements of the 

Property Standards of §§ 200.311, 

200.313, 200.314, or as explicitly 

identified in Federal statutes, 

regulations, or the terms and conditions 

of the Federal award. 

(3) License fees and royalties. License 

fees and royalties for copyrighted 

material, patents, patent applications, 

trademarks, and inventions made under 

the Federal award subject to 37 CFR part 

401. 

§ 200.308 Revision of budget and program 

plans. 

(a) Approved budget in general. 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 the Federal share, non-Federal 

share, or both depending upon Federal 

agency requirements. 

(b) Deviations from approved budget. 

The recipient or subrecipient must 

report deviations from the approved 

budget, project or program scope, or 

objective(s) in accordance with 

§ 200.329. The recipient or subrecipient 

must request prior approvals from the 

Federal agency or pass-through entity 

for budget and program plan revisions 

in accordance with this section. 

(c) Requesting approval for budget 

revisions. When requesting approval for 

budget revisions, the recipient or 

subrecipient must use the same format 

for budget information that was used in 

their application. However, the Federal 

agency or pass-through entity may 

inform the recipient or subrecipient that 

a letter of request is sufficient. 

(d) Federal agency or pass-through 

entity review. The Federal agency or 

pass-through entity must review the 

request for budget or program plan 

revision and notify the recipient or 

subrecipient whether the revisions have 

been approved within 30 days of receipt 

of the request. The Federal agency or 

pass-through entity must inform the 

recipient or subrecipient in writing 

when a decision can be expected if more 

than 30 days is required for a review. 

(e) Limitation on other prior approval 

requirements. Unless specified in this 

guidance, the Federal agency may not 

impose other prior approval 

requirements for specific items not 

approved by OMB. See also §§ 200.102 

and 200.407. 

(f) Revisions Requiring Prior 

Approval. A recipient or subrecipient 

must request prior written approval 

from the Federal agency or pass-through 

entity for the following reasons: 

(1) Change in the scope or the 

objective of the project or program (even 

if there is no associated budget revision 

requiring prior written approval). 

(2) Change in key personnel specified 

in the recipient’s or subrecipient’s 

application and included in the Federal 

award. 

(3) The disengagement from a project 

for more than three months, or a 25 

percent reduction in time and effort 

devoted to the Federal award over the 

course of the period of performance, by 

the approved project director or 

principal investigator. 

(4) Incurring costs that require prior 

approval in accordance with subpart E. 

The Federal agency may waive prior 

approval of these costs when the costs 

requiring prior approval are included in 

the recipient’s or subrecipient’s 

application, and also included in the 

Federal award. 

(5) The transfer of funds budgeted for 

participant support costs to other budget 

categories. 

(6) Subaward activities not proposed 

in the application and approved in the 

Federal award. A change in subrecipient 

only requires prior approval if the 

Federal agency or pass-through entity 

includes the requirement in the terms 

and conditions of the Federal award. In 

general, a Federal agency or passthrough entity should not require prior 

approval of a change to the subrecipient 

unless the inclusion was a determining 

factor in the merit review or eligibility 

process. This requirement does not 

apply to acquiring equipment, supplies, 

or general support services. 

(7) Changes in the total approved costsharing amount. 

(8) Requesting additional Federal 

funds to complete the project. If 

approved, the Federal agency must 

ensure that adequate funds are available 

to avoid a violation of the 

Antideficiency Act. 

(9) Transferring funds between the 

construction and nonconstruction work 

under a Federal award. 

(10) A no-cost extension (meaning, an 

extension of time that requires no 

additional Federal funds) of the period 

of performance, other than any one-time 

extension authorized by the Federal 

agency in accordance with paragraph 

(g)(2). All requests for no-cost 

extensions should be submitted at least 

10 calendar days before the conclusion 

of the period of performance. The 

Federal agency may approve multiple 

no-cost extensions under a Federal 

award if not prohibited by Federal 

statute or regulation. 

(g) Waiver of certain prior approvals. 

Except for the requirements listed in 

paragraphs (f)(1) through (10), the 

Federal agency is authorized to waive 

other prior written approvals contained 

in subparts D and E. Such waivers may 

include authorizing recipients to do one 

or more of the following: 

(1) Pre-award costs. Incur project 

costs 90 calendar days before the 

Federal award date. Expenses incurred 

more than 90 calendar days before the 

Federal award date requires prior 

approval of the Federal agency. All costs 

incurred before the Federal award date 

are at the recipient’s own risk (for 

example, the Federal agency is not 

required to reimburse such costs if the 

recipient does not receive the Federal 

award or if the Federal award is less 

than anticipated and inadequate to 

cover such costs). Pre-award costs must 

be charged to the initial budget period 

of the Federal award unless otherwise 

specified by the Federal agency. See 

also § 200.458. 

(2) One-time extensions. 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 (g)(2)(i) through (iii) of 

this section apply. Prior approval is not 

required if a recipient is authorized in 

the terms and conditions of the Federal 

award to initiate a one-time extension. 

However, the recipient must notify the 

Federal agency in writing with the 

supporting justification and a revised 

period of performance at least 10 

calendar days before the conclusion of 

the period of performance. A one-time 

extension may not be exercised for the 

sole purpose of using unobligated 

balances. This paragraph does not 

preclude the Federal agency from 

approving further no-cost extensions to 

the Federal award. One-time extensions 

require prior approval from the Federal 

agency 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 scope of the 

project. 

(3) Unobligated Balances. Carry 

forward unobligated balances to 

subsequent budget periods. 

(h) Prior approvals for research 

awards. The prior approval 

requirements described in paragraph (g) 

are automatically waived for Federal 

awards that support research unless 

stipulated in the Federal agency’s 

regulations or terms and conditions of 

the Federal award. However, one-time 

extensions require the Federal agency’s 

prior approval when one of the 

conditions in paragraph (g)(2) of this 

section applies. 


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(i) Awards above the Simplified 

Acquisition Threshold. The Federal 

agency cannot permit a transfer that 

would cause any Federal appropriation 

to be used for purposes other than those 

consistent with the appropriation. The 

Federal agency may restrict the transfer 

of funds among direct cost categories 

(for example, personnel, travel, and 

supplies) or programs, functions, and 

activities when: 

(1) The Federal share of the Federal 

award exceeds the simplified 

acquisition threshold; and 

(2) The cumulative amount of a 

transfer exceeds 10 percent of the total 

budget, including cost share, as last 

approved by the Federal agency. 

§ 200.309 Modifications to Period of 

Performance. 

When the Federal agency or passthrough entity extends the Federal 

award, the period of performance will 

be amended to end at the completion of 

the extension. When the Federal agency 

decides not to continue a Federal award 

with multiple budget periods, the 

period of performance will be amended 

to end at the completion of the 

authorized budget period. If termination 

occurs, the period of performance will 

be amended to end upon the effective 

date of termination. A renewal award 

means an award made after the 

expiration of a Federal award for which 

the start date is contiguous with, or 

closely follows, the end of the expiring 

Federal award. The start date of a 

renewal award begins a new and 

distinct period of performance. 

Property Standards 

§ 200.310 Insurance coverage. 

The recipient or subrecipient must, at 

a minimum, provide the equivalent 

insurance coverage for real property and 

equipment acquired or improved with 

Federal funds as provided to property 

and equipment owned by the recipient 

or subrecipient. Insurance is not 

required for Federally-owned property 

unless required by the terms and 

conditions of the Federal award. 

§ 200.311 Real property. 

(a) Title. Subject to the requirements 

and conditions set forth in this section, 

title to real property acquired or 

improved under the Federal award will 

vest upon acquisition in the recipient or 

subrecipient. 

(b) Use. Except as otherwise provided 

by Federal statutes or the Federal 

agency, real property must be used for 

the originally-authorized purpose as 

long as it is needed for that purpose. 

While the property is being used for the 

originally-authorized purpose, the 

recipient or subrecipient must not 

dispose of or encumber its title or other 

interests except as provided by the 

Federal agency. An encumbrance is a 

claim or liability that is attached to the 

property or some other right held by a 

party that is not the owner. An 

encumbrance may lessen the value of 

the property and restrict its free use 

until the encumbrance is lifted. 

(c) Appraisals. Appraisals of real 

property must be as conducted by an 

independent appraiser (for example, 

certified real property appraiser or 

General Services Administration 

representative) and certified by a 

responsible official of the recipient or 

subrecipient as required by the Uniform 

Relocation Assistance and Real Property 

Acquisition Policies Act of 1970, as 

amended, (42 U.S.C. 4601–4655) except 

as provided in the implementing 

regulations at 49 CFR part 24, ‘‘Uniform 

Relocation Assistance And Real 

Property Acquisition For Federal And 

Federally-Assisted Programs.’’ 

(d) Disposition. When real property is 

no longer needed for the originallyauthorized purpose, the recipient or 

subrecipient must obtain disposition 

instructions from the Federal agency or 

pass-through entity. The instructions 

must specify one of the following 

disposition methods: 

(1) Retain title after compensating the 

Federal agency. When the recipient or 

subrecipient retains title to the property, 

it must pay the Federal agency an 

amount calculated by multiplying the 

percentage of the Federal agency’s 

contribution towards the original 

purchase (and costs of any 

improvements) by the current fair 

market value of the property. However, 

in situations where the recipient or 

subrecipient is disposing of real 

property acquired or improved with the 

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 Federal agency. When a recipient or 

subrecipient sells the property, it must 

pay the Federal agency an amount 

calculated by multiplying the 

percentage of the Federal agency’s 

contribution towards the original 

purchase (and cost of any 

improvements) by the proceeds of the 

sale after deducting any actual and 

reasonable expenses paid to sell or fix 

up the property for sale. When the 

Federal award has not been closed out, 

the net proceeds from the sale may be 

offset against the original cost of the 

property. When directed to sell the 

property, the recipient or subrecipient 

must sell the property utilizing 

procedures that provide for competition 

to the extent practicable and that results 

in the highest possible return. 

(3) Transfer title to the Federal agency 

or a third party designated/approved by 

the Federal agency. When a recipient or 

subrecipient transfers title to the 

property to a Federal agency or third 

party designated or approved by the 

Federal agency, the recipient or 

subrecipient is entitled to be paid an 

amount calculated by multiplying the 

percentage of the recipient’s or 

subrecipient’s contribution towards the 

original purchase of the real property 

(and cost of any improvements) by the 

current fair market value of the 

property. 

§ 200.312 Federally owned and exempt 

property. 

(a) Title to Federally-owned property 

remains vested in the Federal 

Government. The recipient or 

subrecipient must submit an inventory 

listing of Federally owned property in 

its custody to the Federal agency or 

pass-through entity on an annual basis. 

The recipient or subrecipient must 

request disposition instructions from 

the Federal agency or pass-through 

entity upon completion of the Federal 

award or when the property is no longer 

needed. 

(b) If the Federal 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 Federal 

agency has statutory authority to 

dispose of the property by alternative 

methods (for example, the authority 

provided by the Federal Technology 

Transfer Act (15 U.S.C. 3710(i)). The 

Federal agency or pass-through entity 

must issue appropriate instructions to 

the recipient or subrecipient. 

(c) Exempt property means property 

acquired under the Federal award where 

the Federal agency has chosen to vest 

title to the property to the recipient or 

subrecipient without further 

responsibility to the Federal 

Government. The Federal agency may 

only exercise this option when 

permitted by Federal statute and set 

forth in the terms and conditions of the 

Federal award. Absent statutory 

authority and specific terms and 

conditions of the Federal award, the 

title to exempt property acquired under 

the Federal award remains with the 

Federal Government. 

§ 200.313 Equipment. 

See also § 200.439. 


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(a) Title. Title to equipment acquired 

under the Federal award will vest upon 

acquisition in the recipient or 

subrecipient subject to the conditions of 

this section. This title must be a 

conditional title unless a Federal statute 

specifically authorizes the Federal 

agency to vest title in the recipient or 

subrecipient without further 

responsibility to the Federal 

Government (and the Federal agency 

elects to do so). A conditional title 

means a clear title is withheld by the 

Federal agency until conditions and 

requirements specified in the terms and 

conditions of a Federal award have been 

fulfilled. Title for equipment vested in 

a recipient or subrecipient is 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) While the equipment is being used 

for the originally-authorized purpose, 

the recipient or subrecipient must not 

dispose of or encumber its title or other 

interests without the approval of the 

Federal agency or pass-through entity. 

An encumbrance is a claim or liability 

that is attached to the property or some 

other right held by a party that is not the 

owner. An encumbrance may lessen the 

value of the property and restrict its free 

use until the encumbrance is lifted. 

(3) Use and dispose of the property in 

accordance with paragraphs (b), (c), and 

(e) of this section. 

(b) General. A State must use, manage 

and dispose of equipment acquired 

under a Federal award in accordance 

with State laws and procedures. Indian 

Tribes must use, manage, and dispose of 

equipment acquired under a Federal 

award in accordance with tribal laws 

and procedures. If such laws and 

procedures do not exist, Indian Tribes 

must follow the guidance in this 

section. Other recipients and 

subrecipients must follow paragraphs 

(c) through (e) of this section. 

(c) Use. (1) The recipient or 

subrecipient must use equipment for the 

project or program for which it was 

acquired and for as long as needed, 

whether or not the project or program 

continues to be supported by the 

Federal award. The recipient or 

subrecipient must not encumber the 

equipment without prior approval of the 

Federal agency or pass-through entity. 

The Federal agency may require the 

submission of the applicable common 

forms for reporting on equipment. When 

no longer needed for the original project 

or program, the equipment may be used 

in other activities in the following order 

of priority: 

(i) Activities under other Federal 

awards from the Federal agency that 

funded the original project; then 

(ii) Activities under Federal awards 

from other Federal agencies. These 

activities include 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 recipient or 

subrecipient must also make the 

equipment available for use on other 

programs or projects supported by the 

Federal Government, provided that such 

use will not interfere with the purpose 

for which it was originally acquired. 

First preference for other use of the 

equipment must be given to other 

programs or projects supported by the 

Federal agency that financed the 

equipment. Second preference must be 

given to programs or projects under 

Federal awards from other Federal 

agencies. Use for non-federally-funded 

projects is also permissible, provided 

such use will not interfere with the 

purpose for which it was originally 

acquired. The recipient or subrecipient 

should consider charging user fees as 

appropriate. 

(3) Notwithstanding the 

encouragement in § 200.307 to earn 

program income, the recipient or 

subrecipient must not use equipment 

acquired with the Federal award to 

provide services for a fee that is less 

than a private company would charge 

for similar services. This restriction is 

effective as long as the Federal 

Government retains an interest in the 

equipment or as authorized by Federal 

statute. 

(4) When acquiring replacement 

equipment, the recipient or subrecipient 

may either trade-in or sell the 

equipment and use the proceeds to 

offset the cost of the replacement 

equipment. 

(d) Management requirements. 

Regardless of whether equipment is 

acquired in part or its entirety under the 

Federal award, the recipient or 

subrecipient must manage equipment 

(including replacing equipment) 

utilizing procedures that meet the 

following requirements: 

(1) Property records must include a 

description of the property, a serial 

number or another identification 

number, the source of funding for the 

property (including the FAIN), the title 

holder, the acquisition date, the cost of 

the property, the percentage of the 

Federal agency contribution towards the 

original purchase, the location, use and 

condition of the property, and any 

disposition data including the date of 

disposal and sale price of the property. 

The recipient is responsible for 

maintaining and updating property 

records when there is a change in the 

status of the property. 

(2) A physical inventory of the 

property must be conducted, and the 

results must be reconciled with the 

property records at least once every two 

years. 

(3) A control system must be in place 

to ensure safeguards for preventing 

property loss, damage, or theft. Any 

loss, damage, or theft of equipment must 

be investigated and reported to the 

Federal agency or pass-through entity. 

(4) Regular maintenance procedures 

must be in place to ensure the property 

is in proper working condition. 

(5) If the recipient or subrecipient is 

authorized or required to sell the 

property, proper sales procedures must 

be in place to ensure the highest 

possible return. 

(e) Disposition. When equipment 

acquired under a Federal award is no 

longer needed for the original project, 

program, or for other activities currently 

or previously supported by a Federal 

agency, the recipient or subrecipient 

must request disposition instructions 

from the Federal agency or pass-through 

entity if required by the terms and 

conditions of the Federal award. 

Disposition of the equipment will be 

made as follows, in accordance with 

Federal agency or pass-through entity 

disposition instructions: 

(1) Equipment with a current fair 

market value of $10,000 or less (per 

unit) may be retained, sold, or otherwise 

disposed of with no further 

responsibility to the Federal agency or 

pass-through entity. 

(2) Except as provided in § 200.312(b), 

or if the Federal agency or pass-through 

entity fails to provide requested 

disposition instructions within 120 

days, items of equipment with a current 

fair market value in excess of $10,000 

(per-unit) may be retained or sold by the 

recipient or subrecipient. However, the 

Federal agency is entitled to an amount 

calculated by multiplying the 

percentage of the Federal agency’s 

contribution towards the original 

purchase by the current market value or 

proceeds from the sale. If the equipment 

is sold, the Federal agency or passthrough entity may permit the recipient 

or subrecipient to retain $1,000 or 10 

percent (whichever is less) from the 

Federal share of the proceeds to cover 

expenses associated with the selling and 

handling of the equipment. 

(3) The recipient or subrecipient may 

transfer title to the property to the 

Federal Government or to an eligible 

third party provided that the recipient 

or subrecipient must be entitled to 


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compensation for its attributable 

percentage of the current fair market 

value of the property. 

(4) In cases where a recipient or 

subrecipient fails to take appropriate 

disposition actions, the Federal agency 

or pass-through entity may direct the 

recipient or subrecipient to take 

disposition actions. 

(f) Equipment retention. When 

included in the terms and conditions of 

the Federal award, the Federal agency 

may permit the recipient to retain 

equipment with no further obligation to 

the Federal Government unless 

prohibited by Federal statute or 

regulation. 

§ 200.314 Supplies. 

See also § 200.453. 

(a) Title to supplies acquired under 

the Federal award will vest upon 

acquisition in the recipient or 

subrecipient. When there is a residual 

inventory of unused supplies exceeding 

$10,000 in aggregate value at the end of 

the period of performance, and the 

supplies are not needed for any other 

Federal award, the recipient or 

subrecipient may retain or sell the 

unused supplies. Unused supplies 

means supplies that are in new 

condition, not having been used or 

opened before. The aggregate value of 

unused supplies consists of all supply 

types, not just like-item supplies. The 

Federal agency or pass-through entity is 

entitled to compensation in an amount 

calculated by multiplying the 

percentage of the Federal agency’s or 

pass-through-through entity’s 

contribution towards the cost of the 

original purchase(s) by the current 

market value or proceeds from the sale. 

If the supplies are sold, the Federal 

agency or pass-through entity may 

permit the recipient or subrecipient to 

retain $500 or 10 percent (whichever is 

less) from the Federal share of the 

proceeds to cover expenses associated 

with the selling and handling of the 

supplies. 

(b) Unless expressly authorized by 

Federal statute, the recipient or 

subrecipient must not use supplies 

acquired with the Federal award to 

provide services for a fee that is less 

than a private company would charge 

for similar services. This restriction is 

effective as long as the Federal 

Government retains an interest in the 

supplies or as authorized by Federal 

statute. 

§ 200.315 Intangible property. 

(a) Title to intangible property 

acquired under a Federal award vest 

upon acquisition in the recipient or 

subrecipient. The recipient or 

subrecipient must use that intangible 

property for the originally-authorized 

purpose and must not encumber the 

property without the approval of the 

Federal agency or pass-through entity. 

An encumbrance is a claim or liability 

that is attached to the property or some 

other right held by a party that is not the 

owner. An encumbrance may lessen the 

value of the property and restrict its free 

use until the encumbrance is lifted. 

When no longer needed for the 

originally-authorized purpose, 

disposition of the intangible property 

must occur in accordance with the 

provisions in § 200.313(e). 

(b) To the extent permitted by law, the 

recipient or subrecipient is not 

prohibited from asserting any copyright 

it may own in any work resulting from 

or acquired under the Federal award. To 

the extent permitted by law, the Federal 

agency reserves a royalty-free, 

nonexclusive, and irrevocable right to 

reproduce, publish, or otherwise use the 

work for Federal purposes and to 

authorize others to do so. This includes 

the right to require recipients and 

subrecipients to make such works 

available through agency-designated 

public access repositories. 

(c) The recipient or subrecipient is 

subject to applicable regulations 

governing patents and inventions, 

including government-wide regulations 

in 37 CFR 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 the 

data for Federal purposes. 

(e)(1) The recipient or subrecipient 

must provide research data relating to 

published research findings produced 

under the Federal award and that were 

used by the Federal Government in 

developing an agency action that has the 

force and effect of law if requested by 

the Federal agency in response to a 

Freedom of Information Act (FOIA) 

request. When the Federal agency 

obtains the research data solely in 

response to a FOIA request, the Federal 

agency may charge the requester a fee 

for the cost of obtaining the research 

data. This fee should reflect the costs 

incurred by the Federal agency and the 

recipient or subrecipient. This fee is in 

addition to any fees the Federal agency 

may assess under the FOIA (5 U.S.C. 

552(a)(4)(A)). 

(2) Published research findings mean: 

(i) Research findings published in a 

peer-reviewed scientific or technical 

journal; or 

(ii) Research findings publicly cited 

by a Federal agency in developing 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. Research 

data does not include any of the 

following: 

(i) Preliminary analyses, drafts of 

scientific papers, plans for future 

research, peer reviews, or 

communications with colleagues. This 

‘‘recorded’’ material excludes physical 

objects (for example, laboratory 

samples). 

(ii) 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 

(iii) Personnel, medical, and other 

personally identifiable information that, 

if disclosed, would constitute an 

invasion of personal privacy. 

Information that could identify a 

particular person in a research study is 

not considered research data. 

§ 200.316 Property trust relationship. 

Real property, equipment, and 

intangible property acquired or 

improved with the Federal award must 

be held in trust by the recipient or 

subrecipient as trustee for the 

beneficiaries of the project or program 

under which the property was acquired 

or improved. The Federal agency or 

pass-through entity may require the 

recipient or subrecipient 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. 

Procurement Standards 

§ 200.317 Procurements by States and 

Indian Tribes. 

When conducting procurement 

transactions under a Federal award, a 

State or Indian Tribe must follow the 

same policies and procedures it uses for 

procurements with non-Federal funds. If 

such policies and procedures do not 

exist, States and Indian Tribes must 

follow the procurement standards in 

§§ 200.318 through 200.327. In addition 

to its own policies and procedures, a 

State or Indian Tribe must also comply 

with the following procurement 

standards: §§ 200.321, 200.322, 200.323, 

and 200.327. All other recipients and 

subrecipients, including subrecipients 

of a State, must follow the procurement 


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standards in §§ 200.318 through 

200.327. 

§ 200.318 General procurement standards. 

(a) Documented procurement 

procedures. The recipient or 

subrecipient must maintain and use 

documented procedures for 

procurement transactions under a 

Federal award or subaward, including 

for acquisition of property or services. 

These documented procurement 

procedures must be consistent with 

State, local, and tribal laws and 

regulations and the standards identified 

in §§ 200.317 through 200.327. 

(b) Oversight of contractors. 

Recipients and subrecipients must 

maintain oversight to ensure that 

contractors perform in accordance with 

the terms, conditions, and specifications 

of their contracts or purchase orders. 

(c) Conflicts of interest. (1) The 

recipient or subrecipient 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, agent, 

or board member with a real or apparent 

conflict of interest may participate in 

the selection, award, or administration 

of a contract supported by the Federal 

award. A conflict of interest includes 

when the employee, officer, or agent, 

any member of their immediate family, 

their partner, or an organization that 

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 an entity 

considered for a contract. An employee, 

officer, and agent of the recipient or 

subrecipient may neither solicit nor 

accept gratuities, favors, or anything of 

monetary value from contractors. 

However, the recipient or subrecipient 

may set standards for situations where 

the financial interest is not substantial 

or a gift is an unsolicited item of 

nominal value. The recipient’s or 

subrecipient’s standards of conduct 

must also provide for disciplinary 

actions to be applied for violations by 

its employees, officers, agents, or board 

members. 

(2) If the recipient or subrecipient has 

a parent, affiliate, or subsidiary 

organization that is not a State or Indian 

Tribe, the recipient or subrecipient must 

also maintain written standards of 

conduct covering organizational 

conflicts of interest. Organizational 

conflicts of interest mean that because 

of relationships with a parent company, 

affiliate, or subsidiary organization, the 

recipient or subrecipient is unable or 

appears to be unable to be impartial in 

conducting a procurement action 

involving a related organization. 

(d) Avoidance of unnecessary or 

duplicative items. The recipient’s or 

subrecipient’s procedures must avoid 

the acquisition of unnecessary or 

duplicative items. Consideration should 

be given to consolidating or breaking 

out procurements to obtain a more 

economical purchase. When 

appropriate, an analysis should be made 

between leasing and purchasing 

property or equipment to determine the 

most economical approach. 

(e) Procurement arrangements using 

strategic sourcing. When appropriate for 

the procurement or use of common or 

shared goods and services, recipients 

and subrecipients are encouraged to 

enter into State and local 

intergovernmental agreements or interentity agreements for procurement 

transactions. These or similar 

procurement arrangements using 

strategic sourcing may foster greater 

economy and efficiency. Documented 

procurement actions of this type (using 

strategic sourcing, shared services, and 

other similar procurement 

arrangements) will meet the competition 

requirements of this part. 

(f) Use of excess and surplus Federal 

property. The recipient or subrecipient 

is encouraged to use excess and surplus 

Federal property instead of purchasing 

new equipment and property when it is 

feasible and reduces project costs. 

(g) Use of value engineering clauses. 

When practical, the recipient or 

subrecipient is encouraged to use value 

engineering clauses in contracts for 

construction projects of sufficient size to 

offer reasonable opportunities for cost 

reductions. Value engineering means 

analyzing each contract item or task to 

ensure its essential function is provided 

at the overall lowest cost. 

(h) Responsible contractors. The 

recipient or subrecipient must award 

contracts only to responsible contractors 

that possess the ability to perform 

successfully under the terms and 

conditions of a proposed contract. The 

recipient or subrecipient must consider 

contractor integrity, public policy 

compliance, proper classification of 

employees (see the Fair Labor Standards 

Act, 29 U.S.C. 201, chapter 8), past 

performance record, and financial and 

technical resources when conducting a 

procurement transaction. See also 

§ 200.214. 

(i) Procurement records. The recipient 

or subrecipient must maintain records 

sufficient to detail the history of each 

procurement transaction. These records 

must include the rationale for the 

procurement method, contract type 

selection, contractor selection or 

rejection, and the basis for the contract 

price. 

(j) Time-and-materials type contracts. 

(1) The recipient or subrecipient 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. Timeand-materials type contract means a 

contract whose cost to a recipient or 

subrecipient 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) Because 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 recipient or 

subrecipient awarding such a contract 

must assert a high degree of oversight to 

obtain reasonable assurance that the 

contractor is using efficient methods 

and effective cost controls. 

(k) Settlement of contractual and 

administrative issues. The recipient or 

subrecipient is responsible for the 

settlement of all contractual and 

administrative issues arising out of its 

procurement transactions. These issues 

include but are not limited to, source 

evaluation, protests, disputes, and 

claims. In resolving these issues, the 

Federal agency may not substitute its 

judgment for that of the recipient or 

subrecipient unless the matter is 

primarily a Federal concern. Proper 

oversight does not relieve the recipient 

or subrecipient of any of its contractual 

responsibilities. Violations of law must 

be referred to the Federal, State, or local 

authority with proper jurisdiction. 

(l) Examples of labor and employment 

practices. The procurement standards in 

this subpart do not prohibit recipients 

or subrecipients from using Project 

Labor Agreements (PLAs) or similar 

forms of pre-hire collective bargaining 

agreements; requiring construction 

contractors to use hiring preferences or 

goals for people residing in high-poverty 

areas, disadvantaged communities as 

defined by the Justice40 Initiative OMB 

Memorandum M–21–28, or highunemployment census tracts within a 

region no smaller than the county where 

a federally funded construction project 

is located, consistent with the policies 

and procedures of the recipient or 

subrecipient, provided that a recipient 

or subrecipient may not prohibit 

interstate hiring; requiring a contractor 

to use hiring preferences or goals for 

individuals with barriers to employment 


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(as defined in section 3 of the Workforce 

Innovation and Opportunity Act (29 

U.S.C. 3102(24)), including women and 

people from underserved communities 

as defined by Executive Order 13985; 

using agreements intended to ensure 

uninterrupted delivery of services; using 

agreements intended to ensure 

community benefits; or offering 

employees of a predecessor contractor 

rights of first refusal under a new 

contract. Federal agencies may allow 

recipients and subrecipients to use such 

practices if consistent with the U.S. 

Constitution, applicable Federal statutes 

and regulations, the objectives and 

purposes of the applicable Federal 

financial assistance program, and other 

requirements of this part. 

§ 200.319 Competition. 

(a) All procurement transactions 

under the Federal award must be 

conducted in a manner that provides 

full and open competition and is 

consistent with the standards of this 

section and § 200.320. 

(b) To ensure objective contractor 

performance and eliminate unfair 

competitive advantage, contractors that 

assist recipients and subrecipients with 

developing or drafting specifications, 

requirements, statements of work, or 

invitations for bids must be excluded 

from competing on those procurements. 

(c) Examples of requirements that may 

restrict competition include, but are not 

limited to: 

(1) Placing unreasonable requirements 

on firms 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. 

(d) The recipient or subrecipient must 

have written procedures for 

procurement transactions. These 

procedures must ensure that all 

solicitations: 

(1) Are made in accordance with 

§ 200.319(b); 

(2) Incorporate a clear and accurate 

description of the technical 

requirements for the property, 

equipment, or service being procured. 

The description may include a 

statement of the qualitative nature of the 

property, equipment, or service to be 

procured. When necessary, the 

description must provide minimum 

essential characteristics and standards 

to which the property, equipment, or 

service must conform. Detailed product 

specifications should be avoided if at all 

possible. When it is impractical or 

uneconomical to clearly and accurately 

describe the technical requirements, a 

‘‘brand name or equivalent’’ description 

of features may be used to provide 

procurement requirements. The specific 

features of the named brand must be 

clearly stated; and 

(3) Identify any additional 

requirements which the offerors must 

fulfill and all other factors that will be 

used in evaluating bids or proposals. 

(e) The recipient or subrecipient must 

ensure that all prequalified lists of 

persons, firms, or products used in 

procurement transactions are current 

and include enough qualified sources to 

ensure maximum open competition. 

When establishing or amending 

prequalified lists, the recipient or 

subrecipient must consider objective 

factors that evaluate price and cost to 

maximize competition. The recipient or 

subrecipient must not preclude 

potential bidders from qualifying during 

the solicitation period. 

(f) To the extent consistent with 

established practices and legal 

requirements applicable to the recipient 

or subrecipient, this subpart does not 

prohibit recipients or subrecipients from 

developing written procedures for 

procurement transactions that 

incorporate a scoring mechanism that 

rewards bidders that commit to specific 

numbers and types of U.S. jobs, 

minimum compensation, benefits, onthe-job-training for employees making 

work or products providing services on 

a contract, and other worker protections. 

This subpart also does not prohibit 

recipients and subrecipients from 

making inquiries of bidders about these 

subjects and assessing the responses. 

Any scoring mechanism must be 

consistent with the U.S. Constitution, 

applicable Federal statutes and 

regulations, and the terms and 

conditions of the Federal award. 

(g) Noncompetitive procurements can 

only be awarded in accordance with 

§ 200.320(c). 

§ 200.320 Procurement Methods. 

There are three types of procurement 

methods described in this section: 

informal procurement methods (for 

micro-purchases and simplified 

acquisitions); formal procurement 

methods (through sealed bids or 

proposals); and noncompetitive 

procurement methods. For any of these 

methods, the recipient or subrecipient 

must maintain and use documented 

procurement procedures, consistent 

with the standards of this section and 

§§ 200.317, 200.318, and 200.319. 

(a) Informal procurement methods for 

small purchases. These procurement 

methods expedite the completion of 

transactions, minimize administrative 

burdens, and reduce costs. Informal 

procurement methods may be used 

when the value of the procurement 

transaction under the Federal award 

does not exceed the simplified 

acquisition threshold as defined in 

§ 200.1. Recipients and subrecipients 

may also establish a lower threshold. 

Informal procurement methods include: 

(1) Micro-purchases—(i) Distribution. 

The aggregate amount of the 

procurement transaction does not 

exceed the micro-purchase threshold 

defined in § 200.1. To the extent 

practicable, the recipient or subrecipient 

should distribute micro-purchases 

equitably among qualified suppliers. 

(ii) Micro-purchase awards. Micropurchases may be awarded without 

soliciting competitive price or rate 

quotations if the recipient or 

subrecipient considers the price 

reasonable based on research, 

experience, purchase history, or other 

information. Purchase cards may be 

used as a method of payment for micropurchases. 

(iii) Micro-purchase thresholds. The 

recipient or subrecipient is responsible 

for determining and documenting an 

appropriate micro-purchase threshold 

based on internal controls, an 

evaluation of risk, and its documented 

procurement procedures. The micropurchase threshold used by the 

recipient or subrecipient must be 

authorized or not prohibited under 

State, local, or tribal laws or regulations. 

The recipient or subrecipient may 

establish a threshold higher than the 

Federal threshold established in the 

Federal Acquisition Regulations (FAR) 

in accordance with paragraphs (a)(1)(iv) 

and (v) of this section. 

(iv) Recipient or subrecipient increase 

to the micro-purchase threshold up to 

$50,000. The recipient or subrecipient 

may establish a threshold higher than 

the micro-purchase threshold identified 

in the FAR in accordance with the 

requirements of this section. The 

recipient or subrecipient may selfcertify a threshold up to $50,000 on an 

annual basis and must maintain 

documentation to be made available to 

the Federal agency or pass-through 

entity and auditors in accordance with 

§ 200.334. The self-certification must 

include a justification, clear 


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identification of the threshold, and 

supporting documentation of any of the 

following: 

(A) A qualification as a low-risk 

auditee, in accordance with the criteria 

in § 200.520 for the most recent audit; 

(B) An annual internal institutional 

risk assessment to identify, mitigate, 

and manage financial risks; or, 

(C) For public institutions, a higher 

threshold is consistent with State law. 

(v) Recipient or subrecipient increase 

to the micro-purchase threshold over 

$50,000. Micro-purchase thresholds 

higher than $50,000 must be approved 

by the cognizant agency for indirect 

costs. The recipient or subrecipient 

must submit a request that includes the 

requirements in paragraph (a)(1)(iv) of 

this section. The increased threshold is 

valid until any factor that was relied on 

in the establishment and rationale of the 

threshold changes. 

(2) Simplified acquisitions—(i) 

Simplified acquisition procedures. The 

aggregate dollar amount of the 

procurement transaction is higher than 

the micro-purchase threshold but does 

not exceed the simplified acquisition 

threshold. If simplified acquisition 

procedures are used, price or rate 

quotations must be obtained from an 

adequate number of qualified sources as 

determined appropriate by the recipient 

or subrecipient. 

(ii) Simplified acquisition thresholds. 

The recipient or subrecipient is 

responsible for determining an 

appropriate simplified acquisition 

threshold based on internal controls, an 

evaluation of risk, and its documented 

procurement procedures, which may be 

lower than, but not exceed, the 

threshold established in the FAR. 

(b) Formal procurement methods. 

Formal procurement methods are 

required when the value of the 

procurement transaction under a 

Federal award exceeds the simplified 

acquisition threshold of the recipient or 

subrecipient. Formal procurement 

methods are competitive and require 

public notice. The following formal 

methods of procurement are used for 

procurement transactions above the 

simplified acquisition threshold 

determined by the recipient or 

subrecipient in accordance with 

paragraph (a)(2)(ii) of this section: 

(1) Sealed bids. This is a procurement 

method in which bids are publicly 

solicited through an invitation and a 

firm fixed-price contract (lump sum or 

unit price) is awarded to the responsible 

bidder whose bid conforms with all the 

material terms and conditions of the 

invitation and is the lowest in price. 

The sealed bids procurement method is 

preferred for procuring construction 

services. 

(i) For sealed bidding to be feasible, 

the following conditions should be 

present: 

(A) A complete, adequate, and 

realistic specification or purchase 

description is available; 

(B) Two or more responsible bidders 

have been identified as willing and able 

to compete effectively for the business; 

and 

(C) The procurement lends itself to a 

firm-fixed-price contract, and the 

selection of the successful bidder can be 

made principally based on price. 

(ii) If sealed bids are used, the 

following requirements apply: 

(A) Bids must be solicited from an 

adequate number of qualified sources, 

providing them with sufficient response 

time prior to the date set for opening the 

bids. For local governments, the 

invitation for bids must be publicly 

advertised. 

(B) The invitation for bids must define 

the items or services with specific 

information, including any required 

specifications, for the bidder to properly 

respond; 

(C) All bids will be opened at the time 

and place prescribed in the invitation 

for bids. For local governments, the bids 

must be opened publicly. 

(D) A firm-fixed-price contract is 

awarded in writing to the lowest 

responsive bid and responsible bidder. 

When specified in the invitation for 

bids, factors such as discounts, 

transportation cost, and life-cycle costs 

must be considered in determining 

which bid is the lowest. Payment 

discounts must only be used to 

determine the low bid when the 

recipient or subrecipient determines 

they are a valid factor based on prior 

experience. 

(E) The recipient or subrecipient must 

document and provide a justification for 

all bids it rejects. 

(2) Proposals. This is a procurement 

method used when conditions are not 

appropriate for using sealed bids. This 

procurement method may result in 

either a fixed-price or costreimbursement contract. They are 

awarded in accordance with the 

following requirements: 

(i) Requests for proposals require 

public notice, and all evaluation factors 

and their relative importance must be 

identified. Proposals must be solicited 

from multiple qualified entities. To the 

maximum extent practicable, any 

proposals submitted in response to the 

public notice must be considered. 

(ii) The recipient or subrecipient must 

have written procedures for conducting 

technical evaluations and making 

selections. 

(iii) Contracts must be awarded to the 

responsible offeror whose proposal is 

most advantageous to the recipient or 

subrecipient considering price and other 

factors; and 

(iv) The recipient or subrecipient may 

use competitive proposal procedures for 

qualifications-based procurement of 

architectural/engineering (A/E) 

professional services whereby the 

offeror’s qualifications are evaluated, 

and the most qualified offeror is 

selected, subject to negotiation of fair 

and reasonable compensation. The 

method, where the price is not used as 

a selection factor, can only be used to 

procure architectural/engineering (A/E) 

professional services. The method may 

not be used to purchase other services 

provided by A/E firms that are a 

potential source to perform the 

proposed effort. 

(c) Noncompetitive procurement. 

There are specific circumstances in 

which the recipient or subrecipient may 

use a noncompetitive procurement 

method. The noncompetitive 

procurement method may only be used 

if one of the following circumstances 

apply: 

(1) The aggregate amount of the 

procurement transaction does not 

exceed the micro-purchase threshold 

(see paragraph (a)(1) of this section); 

(2) The procurement transaction can 

only be fulfilled by a single source; 

(3) The public exigency or emergency 

for the requirement will not permit a 

delay resulting from providing public 

notice of a competitive solicitation; 

(4) The recipient or subrecipient 

requests in writing to use a 

noncompetitive procurement method, 

and the Federal agency or pass-through 

entity provides written approval; or 

(5) After soliciting several sources, 

competition is determined inadequate. 

§ 200.321 Contracting with small 

businesses, minority businesses, women’s 

business enterprises, veteran-owned 

businesses, and labor surplus area firms. 

(a) When possible, the recipient or 

subrecipient should ensure that small 

businesses, minority businesses, 

women’s business enterprises, veteranowned businesses, and labor surplus 

area firms (See U.S. Department of 

Labor’s list) are considered as set forth 

below. 

(b) Such consideration means: 

(1) These business types are included 

on solicitation lists; 

(2) These business types are solicited 

whenever they are deemed eligible as 

potential sources; 

(3) Dividing procurement transactions 

into separate procurements to permit 


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maximum participation by these 

business types; 

(4) Establishing delivery schedules 

(for example, the percentage of an order 

to be delivered by a given date of each 

month) that encourage participation by 

these business types; 

(5) Utilizing organizations such as the 

Small Business Administration and the 

Minority Business Development Agency 

of the Department of Commerce; and 

(6) Requiring a contractor under a 

Federal award to apply this section to 

subcontracts. 

§ 200.322 Domestic preferences for 

procurements. 

(a) The recipient or subrecipient 

should, to the greatest extent practicable 

and consistent with law, provide a 

preference for the purchase, acquisition, 

or use of goods, products, or materials 

produced in the United States 

(including but not limited to iron, 

aluminum, steel, cement, and other 

manufactured products). The 

requirements of this section must be 

included in all subawards, contracts, 

and purchase orders under Federal 

awards. 

(b) For purposes of this section: 

(1) ‘‘Produced in the United States’’ 

means, for iron and steel products, that 

all manufacturing processes, from the 

initial melting stage through the 

application of coatings, occurred in the 

United States. 

(2) ‘‘Manufactured products’’ means 

items and construction materials 

composed in whole or in part of nonferrous metals such as aluminum; 

plastics and polymer-based products 

such as polyvinyl chloride pipe; 

aggregates such as concrete; glass, 

including optical fiber; and lumber. 

(c) Federal agencies providing Federal 

financial assistance for infrastructure 

projects must implement the Buy 

America preferences set forth in 2 CFR 

part 184. 

§ 200.323 Procurement of recovered 

materials. 

(a) A recipient or subrecipient 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 of 1976 as amended, 42 

U.S.C. 6962. The requirements of 

Section 6002 include procuring only 

items designated in the 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. 

(b) The recipient or subrecipient 

should, to the greatest extent practicable 

and consistent with law, purchase, 

acquire, or use products and services 

that can be reused, refurbished, or 

recycled; contain recycled content, are 

biobased, or are energy and water 

efficient; and are sustainable. This may 

include purchasing compostable items 

and other products and services that 

reduce the use of single-use plastic 

products. See Executive Order 14057, 

section 101, Policy. 

§ 200.324 Contract cost and price. 

(a) The recipient or subrecipient must 

perform a cost-benefit or price analysis 

for every procurement transaction, 

including contract modifications, in 

excess of the Simplified Acquisition 

Threshold. The method and degree of 

analysis conducted depend on the facts 

surrounding the particular procurement 

transaction. For example, the recipient 

or subrecipient should consider 

potential workforce impacts in their 

analysis if the procurement transaction 

will displace public sector employees. 

However, as a starting point, the 

recipient or subrecipient must develop 

their own estimates before receiving 

bids or proposals. 

(b) Costs or prices based on estimated 

costs for contracts under the Federal 

award are allowable only to the extent 

that the costs incurred or cost estimates 

included in negotiated prices would be 

allowable for the recipient or 

subrecipient under subpart E of this 

part. The recipient or subrecipient may 

reference its own cost principles as long 

as they comply with subpart E of this 

part. 

(c) The recipient or subrecipient may 

not use the ‘‘cost plus a percentage of 

cost’’ and ‘‘percentage of construction 

costs’’ methods of contracting. 

§ 200.325 Federal agency or pass-through 

entity review. 

(a) The Federal agency or passthrough entity may review the technical 

specifications of proposed procurements 

under the Federal award if the Federal 

agency or pass-through entity believes 

the review is needed to ensure that the 

item or service specified is the one 

being proposed for acquisition. The 

recipient or subrecipient must submit 

the technical specifications of proposed 

procurements when requested by the 

Federal agency or pass-through entity. 

This review should take place prior to 

the time the specifications are 

incorporated into a solicitation 

document. When the recipient or 

subrecipient desires to accomplish the 

review after a solicitation has been 

developed, the Federal agency or passthrough entity may still review the 

specifications. In those cases, the review 

should be limited to the technical 

aspects of the proposed purchase. 

(b) When requested, the recipient or 

subrecipient must provide procurement 

documents (such as requests for 

proposals, invitations for bids, or 

independent cost estimates) to the 

Federal agency or pass-through entity 

for pre-procurement review. The 

Federal agency or pass-through entity 

may conduct a pre-procurement review 

when: 

(1) The recipient’s or subrecipient’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 is expected 

to be received in response to a 

solicitation; 

(3) The procurement is expected to 

exceed the Simplified Acquisition 

Threshold and specifies a ‘‘brand name’’ 

product; 

(4) The procurement is expected to 

exceed the Simplified Acquisition 

Threshold, and a sealed bid 

procurement is to be awarded to an 

entity other than the apparent low 

bidder; 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 recipient or subrecipient is 

exempt from the pre-procurement 

review in paragraph (b) of this section 

if the Federal agency or pass-through 

entity determines that its procurement 

systems comply with the standards of 

this part. 

(1) The recipient or subrecipient may 

request that the Federal agency or passthrough entity review its procurement 

system to determine whether it meets 

these standards for its system to be 

certified. Generally, these reviews must 

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

are awarded regularly. 

(2) The recipient or subrecipient may 

self-certify its procurement system. 

However, self-certification does not 

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through-through entity’s right to review 

the system. Under a self-certification 

procedure, the Federal agency or passthrough entity may rely on written 

assurances from the recipient or 

subrecipient that it is complying with 

the standards of this part. The recipient 

or subrecipient must cite specific 

policies, procedures, regulations, or 

standards as complying with these 

requirements and have its system 

available for review. 

§ 200.326 Bonding requirements. 

The Federal agency or pass-through 

entity may accept the recipient’s or 

subrecipient’s bonding policy and 

requirements for construction or facility 

improvement contracts or subcontracts 

exceeding the Simplified Acquisition 

Threshold. Before doing so, the Federal 

agency or pass-through entity must 

determine 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 any 

required contractual obligations within 

the specified timeframe. 

(b) A performance bond on the 

contractor’s part for 100 percent of the 

contract price. A performance bond is a 

bond executed in connection with a 

contract to secure the fulfillment of all 

the contractor’s requirements under a 

contract. 

(c) A payment bond on the 

contractor’s part for 100 percent of the 

contract price. A payment bond is a 

bond executed in connection with a 

contract to assure payment as required 

by the law of all persons supplying 

labor and material in the execution of 

the work provided for under a contract. 

§ 200.327 Contract provisions. 

The recipient’s or subrecipient’s 

contracts must contain the applicable 

provisions described in Appendix II of 

this part. 

Performance and Financial Monitoring 

and Reporting 

§ 200.328 Financial reporting. 

(a) The Federal agency must only 

require OMB-approved governmentwide data elements on recipient 

financial reports. At the time of 

publication, this consists of the Federal 

Financial Report (SF–425); however, 

this also applies to any future OMBapproved government-wide data 

elements available from the OMBdesignated standards lead. 

(b) The Federal agency or passthrough entity must collect financial 

reports no less than annually. The 

Federal agency or pass-through entity 

may not collect financial reports more 

frequently than quarterly unless a 

specific condition has been 

implemented in accordance with 

§ 200.208. To the extent practicable, the 

Federal agency or pass-through entity 

should collect financial reports in 

coordination with performance reports. 

(c) The recipient or subrecipient must 

submit financial reports as required by 

the Federal award. Reports submitted 

annually by the recipient or 

subrecipient must be due no later than 

90 calendar days after the reporting 

period. Reports submitted quarterly or 

semiannually must be due no later than 

30 calendar days after the reporting 

period. 

(d) The final financial report 

submitted by the recipient must be due 

no later than 120 calendar days after the 

conclusion of the period of 

performance. A subrecipient must 

submit a final financial report to a passthrough entity no later than 90 calendar 

days after the conclusion of the period 

of performance. See also § 200.344. The 

Federal agency or pass-through entity 

may extend the due date for any 

financial report with justification from 

the recipient or subrecipient. 

§ 200.329 Monitoring and reporting 

program performance. 

(a) Monitoring by the recipient. The 

recipient or subrecipient is responsible 

for the oversight of the Federal award. 

The recipient or subrecipient must 

monitor its activities under Federal 

awards to ensure they are compliant 

with all requirements and meeting 

performance expectations. Monitoring 

by the recipient or subrecipient must 

cover each program, function, or 

activity. See also § 200.332. 

(b) Reporting program performance. 

The Federal agency must use OMBapproved common information 

collections, as applicable, when 

requesting performance reporting 

information. The Federal agency must 

only require OMB-approved 

government-wide data elements in 

collection of performance information 

including Research Performance 

Progress Reports if applicable. The 

Federal agency or pass-through entity 

may not collect performance reports 

more frequently than quarterly unless a 

specific condition has been 

implemented in accordance with 

§ 200.208. To the extent practicable, the 

Federal agency or pass-through entity 

should collect performance reports in 

coordination with financial reports. 

When reporting program performance, 

the recipient or subrecipient must relate 

financial data and project or program 

accomplishments to the performance 

goals and objectives of the Federal 

award. Also, the recipient or 

subrecipient must provide cost 

information to demonstrate costeffective practices (for example, through 

unit cost data) when required by the 

terms and conditions of the Federal 

award. In some instances (for example, 

discretionary research awards), this may 

be limited to the requirement to submit 

technical performance reports. 

Reporting requirements must clearly 

indicate a standard against which the 

recipient’s or subrecipient’s 

performance can be measured. As noted 

in OMB Circular A–11, Part 6, Section 

280, measures of customer experience 

are of co-equal importance as traditional 

measures of financial and operational 

performance. Reporting requirements 

should not solicit information from the 

recipient or subrecipient that is not 

necessary for the effective monitoring of 

the Federal award. Federal agencies 

should consult monitoring framework 

documents such as the agency’s 

Evaluation Plan to make that 

determination. 

(c) Submitting performance reports. 

(1) The recipient or subrecipient must 

submit performance reports as required 

by the Federal award. Intervals must be 

no less frequent than annually nor more 

frequent than quarterly except if specific 

conditions are applied (See § 200.208). 

Reports submitted annually by the 

recipient or subrecipient must be due no 

later than 90 calendar days after the 

reporting period. Reports submitted 

quarterly or semiannually must be due 

no later than 30 calendar days after the 

reporting period. Alternatively, the 

Federal agency or pass-through entity 

may require annual reports before the 

anniversary dates of multiple-year 

Federal awards. The final performance 

report submitted by the recipient must 

be due no later than 120 calendar days 

after the period of performance. A 

subrecipient must submit a final 

performance report to a pass-through 

entity no later than 90 calendar days 

after the conclusion of the period of 

performance. See also § 200.344. The 

Federal agency or pass-through entity 

may extend the due date for any 

performance report with justification 

from the recipient or subrecipient. 

(2) As applicable, performance reports 

should contain information on the 

following: 


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(i) A comparison of accomplishments 

to the objectives of the Federal award 

established for the reporting period (for 

example, comparing costs to units of 

accomplishment). Where performance 

trend data and analysis would be 

informative to the Federal agency 

program, the Federal agency should 

include this as a performance reporting 

requirement. 

(ii) Explanations on why established 

goals or objectives were not met; and 

(iii) Additional information, analysis, 

and explanation of cost overruns or 

higher-than-expected unit costs. 

(d) Construction performance reports. 

Federal agencies or pass-throughthrough entities rely on on-site technical 

inspections and certified percentage of 

completion data to monitor progress 

under Federal awards for construction. 

Therefore, the Federal agency or passthrough entity may require additional 

performance reports when necessary to 

ensure the goals and objectives of 

Federal awards are met. 

(e) Significant developments. The 

recipient or subrecipient must inform 

the Federal agency or pass-through 

entity of any significant developments 

between performance reporting due 

dates that could impact the Federal 

award. Significant developments 

include events that enable meeting 

milestones and objectives sooner or at 

less cost than anticipated or that 

produce different beneficial results than 

originally planned. Significant 

developments also include problems, 

delays, or adverse conditions which will 

impact the recipient’s or subrecipient’s 

ability to meet milestones or the 

objectives of the Federal award. When 

significant developments occur that 

negatively impact the Federal Award, 

the recipient or subrecipient must 

include information on their plan for 

corrective action and any assistance 

needed to resolve the situation. 

(f) Site visits. The Federal agency or 

pass-through entity may conduct inperson or virtual site visits as 

warranted. 

(g) Performance report requirement 

waiver. The Federal agency may waive 

any performance report that is not 

necessary to ensure the goals and 

objectives of the Federal award are 

being achieved. 

§ 200.330 Reporting on real property. 

The Federal agency or pass-through 

entity must require the recipient or 

subrecipient to submit at least annual 

reports on the status of real property in 

which the Federal Government retains 

an interest. In instances where the 

Federal Government’s interest in the 

real property extends for 15 years or 

more, the Federal agency or passthrough entity may require the recipient 

or subrecipient to report at various 

multi-year frequencies. Reports 

submitted at multi-year frequencies may 

not exceed a five-year reporting period. 

The Federal agency must only require 

OMB-approved government-wide data 

elements on recipient real property 

reports. 

Subrecipient Monitoring and 

Management 

§ 200.331 Subrecipient and contractor 

determinations. 

An entity may concurrently receive 

Federal awards as a recipient, a 

subrecipient, and a contractor. The 

recipient or subrecipient is responsible 

for making case-by-case determinations 

to determine whether the entity 

receiving Federal funds is a subrecipient 

or a contractor. The Federal agency may 

require the recipient or subrecipient to 

comply with additional guidance to 

inform these determinations. The 

Federal agency does not have a direct 

legal relationship with subrecipients or 

contractors of any tier. All of the 

characteristics listed below may not be 

present in all cases, and some 

characteristics from both categories may 

be present at the same time. Therefore, 

the recipient or subrecipient is 

responsible for determining the nature 

of an agreement. The substance of the 

relationship is more important than the 

form of the agreement. 

(a) Subrecipients. A subaward is for 

the purpose of carrying out a portion of 

the Federal award and creates a Federal 

financial assistance relationship with a 

subrecipient. See the definition of 

Subaward in § 200.1. Characteristics 

that support the classification of the 

entity as a subrecipient include, but are 

not limited to, when the entity: 

(1) Determines who is eligible to 

receive what Federal assistance; 

(2) Has its performance measured in 

relation to whether the 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) Implements a program for a public 

purpose specified in authorizing statute, 

as opposed to providing goods or 

services for the benefit of the passthrough entity. 

(b) Contractors. A contract is for the 

purpose of obtaining goods and services 

for the recipient’s or subrecipient’s use 

and creates a procurement relationship 

with a contractor. See the definition of 

contract in § 200.1. Characteristics that 

support a procurement relationship 

between the recipient or subrecipient 

and a contractor include, but are not 

limited to, when the contractor: 

(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 implementation of a 

Federal program; and 

(5) Is not subject to compliance 

requirements of a Federal program as a 

result of the agreement. However, 

similar requirements may apply for 

other reasons. 

§ 200.332 Requirements for pass-through 

entities. 

A pass-through entity must: 

(a) Confirm in SAM.gov that a 

potential subrecipient is not suspended, 

debarred, or otherwise excluded from 

receiving Federal funds. 

(b) Ensure that every subaward is 

clearly identified to the subrecipient as 

a subaward and includes the 

information provided below. A passthrough entity must provide the best 

available information when some of the 

information below is unavailable. A 

pass-through entity must amend a 

subaward if additional information 

becomes available or data elements 

change. Required information includes: 

(1) Federal award identification. 

(i) Subrecipient’s name (must match 

the name associated with its unique 

entity identifier); 

(ii) Subrecipient’s unique entity 

identifier; 

(iii) Federal Award Identification 

Number (FAIN); 

(iv) Federal Award Date; 

(v) Subaward Period of Performance 

Start and End Date; 

(vi) Subaward Budget Period Start and 

End Date; 

(vii) Amount of Federal Funds 

Obligated in the subaward; 

(viii) Total Amount of Federal Funds 

Obligated to the subrecipient by the 

pass-through entity, including the 

current financial obligation; 

(ix) Total Amount of the Federal 

Award committed to the subrecipient by 

the pass-through entity; 

(x) Federal award project description, 

as required by the Federal Funding 

Accountability and Transparency Act 

(FFATA); 

(xi) Name of the Federal agency, passthrough entity, and contact information 

for awarding official of the pass-through 

entity; 

(xii) Assistance Listings title and 

number; the pass-through entity must 


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identify the dollar amount made 

available under each Federal award and 

the Assistance Listings Number at the 

time of disbursement; 

(xiii) Identification of whether the 

Federal award is for research and 

development; and 

(xiv) Indirect cost rate for the Federal 

award (including if the de minimis rate 

is used in accordance with § 200.414). 

(2) All requirements of the subaward, 

including requirements imposed by 

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 for the pass-through entity 

to meet its responsibilities under the 

Federal award. This includes 

information and certifications (see 

§ 200.415) required for submitting 

financial and performance reports that 

the pass-through entity must provide to 

the Federal agency; 

(4) Indirect Cost Rate; 

(i) An approved indirect cost rate 

negotiated between the subrecipient and 

the Federal Government. If no approved 

rate exists, a pass-through entity must 

determine the appropriate rate in 

collaboration with the subrecipient. The 

indirect cost rate may be either: 

(A) An indirect cost rate negotiated 

between the pass-through entity and the 

subrecipient. These rates may be based 

on a prior negotiated rate between a 

different pass-through entity and the 

subrecipient. In these instances, the 

pass-through entity is not required to 

collect information justifying the rate 

but may elect to do so; or 

(B) The de minimis indirect cost rate. 

(ii) The pass-through entity must not 

require the use of the de minimis 

indirect cost rate if the subrecipient has 

an approved indirect cost rate 

negotiated with the Federal 

Government. Subrecipients may elect to 

use the cost allocation method to 

account for indirect costs in accordance 

with § 200.405(d). 

(5) A requirement that the 

subrecipient permit the pass-through 

entity and auditors to access the 

subrecipient’s records and financial 

statements for the pass-through entity to 

fulfill its monitoring requirements; and 

(6) Appropriate terms and conditions 

concerning the closeout of the 

subaward. 

(c) Prior to issuing a subaward, 

evaluate each subrecipient’s risk of 

noncompliance with a subaward to 

determine the appropriate subrecipient 

monitoring described in paragraph (e) of 

this section. When evaluating a 

subrecipient’s risk, a pass-through entity 

should consider the following: 

(1) The subrecipient’s prior 

experience with the same or similar 

subawards; 

(2) The results of previous audits. 

This includes considering whether or 

not the subrecipient receives a Single 

Audit in accordance with subpart F and 

the extent to which the same or similar 

subawards have been audited as a major 

program; 

(3) Whether the subrecipient has new 

personnel or new or substantially 

changed systems, policies, or 

procedures; and 

(4) Any Federal agency monitoring 

results (for example, if the subrecipient 

also receives Federal awards directly 

from the Federal agency). 

(d) If appropriate, consider 

implementing specific conditions in a 

subaward described in § 200.208 and 

notify the Federal agency of the specific 

conditions. 

(e) Monitor the activities of a 

subrecipient to ensure that a subaward 

complies with Federal statutes, 

regulations, and the terms and 

conditions of the subaward. The passthrough entity is responsible for 

monitoring the overall performance of a 

subrecipient to ensure that the goals and 

objectives of the subaward are achieved. 

In monitoring a subrecipient, a passthrough entity must: 

(1) Review financial and performance 

reports. 

(2) Ensure that the subrecipient takes 

corrective action on all significant 

developments that negatively affect the 

subaward. Significant developments 

include Single Audit findings related to 

the subaward, other audit findings, site 

visits, and written notifications from a 

subrecipient of adverse conditions 

which will impact their ability to meet 

the milestones or the objectives of a 

subaward. When significant 

developments negatively impact the 

subaward, a subrecipient must provide 

the pass-through entity with 

information on their plan for corrective 

action and any assistance needed to 

resolve the situation. 

(3) Issue a management decision for 

audit findings pertaining only to the 

Federal award provided to the 

subrecipient from the pass-through 

entity as required by § 200.521. 

(4) Resolve audit findings specifically 

related to the subaward. However, the 

pass-through entity is not responsible 

for resolving cross-cutting findings that 

apply to the subaward and other Federal 

awards or subawards. If a subrecipient 

has a current Single Audit report and 

has not been excluded from receiving 

Federal funding (meaning, has not been 

debarred or suspended), the passthrough entity may rely on the 

subrecipient’s cognizant audit agency or 

cognizant oversight agency to perform 

audit follow-up and make management 

decisions related to cross-cutting 

findings in accordance with section 

§ 200.513(a)(4)(viii). Such reliance does 

not eliminate the responsibility of the 

pass-through entity to issue subawards 

that conform to agency and awardspecific requirements, to manage risk 

through ongoing subaward monitoring, 

and to monitor the status of the findings 

that are specifically related to the 

subaward. 

(f) Depending upon the pass-through 

entity’s assessment of the risk posed by 

the subrecipient (as described in 

paragraph (c) 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; 

(2) Performing site visits to review the 

subrecipient’s program operations; and 

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

§ 200.425. 

(g) Verify that a subrecipient is 

audited as required by subpart F of this 

part. 

(h) Consider whether the results of a 

subrecipient’s audit, on-site reviews, or 

other monitoring necessitate 

adjustments to the pass-through entity’s 

records. 

(i) Consider taking enforcement action 

against noncompliant subrecipients as 

described in § 200.339 and in program 

regulations. 

§ 200.333 Fixed amount subawards. 

With prior written approval from the 

Federal agency, the recipient may 

provide subawards based on fixed 

amounts. Fixed amount subawards must 

meet the requirements of § 200.201. 

Record Retention and Access 

§ 200.334 Record retention requirements. 

The recipient or subrecipient must 

retain all Federal award records for 

three years from the date of submission 

of the final financial report. For awards 

that are renewed quarterly or annually, 

the recipient or subrecipient must retain 

records for three years from the date of 

submission of the quarterly or annual 

financial report, respectively. Records to 

be retained include but are not limited 

to, financial records, supporting 

documentation, and statistical records. 

Federal agencies or pass-throughthrough entities may not impose any 

other record retention requirements 

except for the following: 


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(a) The records must be retained until 

all litigation, claims, or audit findings 

involving the records have been 

resolved and final action taken if any 

litigation, claim, or audit is started 

before the expiration of the three-year 

period. 

(b) When the recipient or subrecipient 

is notified in writing by the Federal 

agency or pass-through entity, cognizant 

agency for audit, oversight agency for 

audit, or cognizant agency for indirect 

costs to extend the retention period. 

(c) The records for property and 

equipment acquired with the support of 

Federal funds must be retained for three 

years after final disposition. 

(d) The three-year retention 

requirement does not apply to the 

recipient or subrecipient when records 

are transferred to or maintained by the 

Federal agency. 

(e) The records for program income 

earned after the period of performance 

must be retained for three years from the 

end of the recipient’s or subrecipient’s 

fiscal year in which the program income 

is earned. This only applies if the 

Federal agency or pass-through entity 

requires the recipient or subrecipient to 

report on program income earned after 

the period of performance in the terms 

and conditions of the Federal award. 

(f) The records for 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) must be retained according 

to the applicable option below: 

(1) If submitted for negotiation. When 

a proposal, plan, or other computation 

must be submitted to the Federal 

Government to form the basis for 

negotiation of an indirect cost rate (or 

other standard rates), then the three-year 

retention period for its supporting 

records starts from the date of 

submission. 

(2) If not submitted for negotiation. 

When a proposal, plan, or other 

computation is not required to be 

submitted to the Federal Government to 

form the basis for negotiation of an 

indirect cost rate (or other standard 

rates), then the three-year retention 

period for its supporting records starts 

from the end of the fiscal year (or 

another accounting period) covered by 

the proposal, plan, or other 

computation. 

§ 200.335 Requests for transfer of records. 

The Federal agency must request the 

transfer of records to its custody from 

the recipient or subrecipient when it 

determines that the records possess 

long-term retention value. However, the 

Federal agency may arrange for the 

recipient or subrecipient to retain the 

records that have long-term retention 

value so long as they are continuously 

available to the Federal Government. 

§ 200.336 Methods for collection, 

transmission, and storage of information. 

When practicable, the Federal agency 

or pass-through entity and the recipient 

or subrecipient must collect, transmit, 

and store Federal award information in 

an open file, non-licensed, and 

machine-readable formats. A machinereadable format is a format in a standard 

computer language (not English text) 

that can be read automatically by a 

computer system. Upon request, the 

Federal agency or pass-through entity 

must always provide or accept paper 

versions of Federal award information 

to and from the recipient or 

subrecipient. The Federal agency or 

pass-through entity must not require 

additional copies of Federal award 

information submitted in paper 

versions. The recipient or subrecipient 

does not need to create and retain paper 

copies when original records are 

electronic and cannot be altered. In 

addition, the recipient or subrecipient 

may substitute electronic versions of 

original paper records through 

duplication or other forms of electronic 

conversion, provided that the 

procedures are subject to periodic 

quality control reviews. Quality control 

reviews must ensure that electronic 

conversion procedures provide 

safeguards against the alteration of 

records and assurance that records 

remain in a format that is readable by 

a computer system. 

§ 200.337 Access to records. 

(a) Records of recipients and 

subrecipients. The Federal agency or 

pass-through entity, Inspectors General, 

the Comptroller General of the United 

States, or any of their authorized 

representatives must have the right of 

access to any records of the recipient or 

subrecipient pertinent to the Federal 

award to perform audits, execute site 

visits, or for any other official use. This 

right also includes timely and 

reasonable access to the recipient’s or 

subrecipient’s personnel for the purpose 

of interview and discussion related to 

such documents or the Federal award in 

general. 

(b) Extraordinary and rare 

circumstances. The recipient or 

subrecipient and Federal agency or 

pass-through entity must take measures 

to protect the name of victims of a crime 

when access to the victim’s name is 

necessary. Only under extraordinary 

and rare circumstances would such 

access include a 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. Any such access, other 

than under a court order or subpoena 

pursuant to a bona fide confidential 

investigation, must be approved by the 

head or delegate of the Federal agency. 

(c) Expiration of right of access. The 

Federal agency’s or pass-throughthrough entity’s rights of access are not 

limited to the required retention period 

of this part but last as long as the 

records are retained. Federal agencies or 

pass-through-through entities must not 

impose any other access requirements 

upon recipients and subrecipients. 

§ 200.338 Restrictions on public access to 

records. 

Federal agencies or pass-throughthrough entities may not place 

restrictions on the recipient or 

subrecipient that limit public access to 

the records of the recipient or 

subrecipient pertinent to a Federal 

award, except for protected personally 

identifiable information (PII) or other 

sensitive information when the Federal 

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 Federal 

agency. The Freedom of Information Act 

(5 U.S.C. 552) (FOIA) does not apply to 

records that remain under the 

recipient’s or subrecipient’s control 

except as required by § 200.315. Unless 

required by Federal, State, local, and 

tribal law, recipients and subrecipients 

are not required to permit public access 

to their records. The recipient’s or 

subrecipient’s records provided to a 

Federal agency generally will be subject 

to FOIA and applicable exemptions. 

Remedies for Noncompliance 

§ 200.339 Remedies for noncompliance. 

The Federal agency or pass-through 

entity may implement specific 

conditions if the recipient or 

subrecipient fails to comply with the 

U.S. Constitution, Federal statutes, 

regulations, or terms and conditions of 

the Federal award. See § 200.208 for 

additional information on specific 

conditions. When the Federal agency or 

pass-through entity determines that 

noncompliance cannot be remedied by 

imposing specific conditions, the 

Federal agency or pass-through entity 


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may take one or more of the following 

actions: 

(a) Temporarily withhold payments 

until the recipient or subrecipient takes 

corrective action. 

(b) Disallow costs for all or part of the 

activity associated with the 

noncompliance of the recipient or 

subrecipient. 

(c) Suspend or terminate the Federal 

award in part or in its entirety. 

(d) Initiate suspension or debarment 

proceedings as authorized in 2 CFR part 

180 and the Federal agency’s 

regulations. Pass-through entities must 

recommend suspension or debarment 

proceedings for a subrecipient or 

subcontractor be initiated by the Federal 

agency. 

(e) Withhold further Federal funds 

(new awards or continuation funding) 

for the project or program. 

(f) Pursue other legally available 

remedies. 

§ 200.340 Termination. 

(a) The Federal award may be 

terminated in part or its entirety as 

follows: 

(1) By the Federal agency or passthrough entity if the recipient or 

subrecipient fails to comply with the 

terms and conditions of the Federal 

award; 

(2) By the Federal agency or passthrough entity with the consent of the 

recipient or subrecipient, in which case 

the two parties must agree upon the 

termination conditions. These 

conditions include the effective date 

and, in the case of partial termination, 

the portion to be terminated; 

(3) By the recipient or subrecipient 

upon sending the Federal agency or 

pass-through entity a written 

notification of the reasons for such 

termination, the effective date, and, in 

the case of partial termination, the 

portion to be terminated. However, if 

the Federal agency or pass-through 

entity determines that the remaining 

portion of the Federal award will not 

accomplish the purposes for which the 

Federal award was made, the Federal 

agency or pass-through entity may 

terminate the Federal award in its 

entirety; or 

(4) By the Federal agency or passthrough entity pursuant to the terms and 

conditions of the Federal award. 

(b) The Federal agency or passthrough entity must clearly and 

unambiguously specify all termination 

provisions in the terms and conditions 

of the Federal award. 

(c) When the Federal agency 

terminates the Federal award prior to 

the end of the period of performance 

due to the recipient’s material failure to 

comply with the terms and conditions 

of the Federal award, the Federal agency 

must report the termination in SAM.gov. 

A Federal agency must use the 

Contractor Performance Assessment 

Reporting System (CPARS) to enter 

information in SAM.gov. 

(1) The information required under 

paragraph (c) of this section is not to be 

reported in SAM.gov until the recipient 

has either: 

(i) Exhausted its opportunities to 

object or challenge the decision (see 

§ 200.342); or 

(ii) Has not, within 30 calendar days 

after being notified of the termination, 

informed the Federal agency that it 

intends to appeal the decision to 

terminate. 

(2) If a Federal agency, after entering 

information about a termination in 

SAM.gov, subsequently: 

(i) Learns that any of that information 

is erroneous, the Federal agency must 

correct the information in the system 

within three business days; 

(ii) Obtains an update to that 

information that could be helpful to 

other Federal agencies. The Federal 

agency is strongly encouraged to amend 

the information in the system to 

incorporate the update in a timely way. 

(3) The Federal agency must not post 

any information that will be made 

publicly available in the non-public 

segment of SAM.gov that is covered by 

a disclosure exemption under the 

Freedom of Information Act (FOIA). 

When the recipient asserts within seven 

calendar days to the Federal agency 

which posted the information that a 

disclosure exemption under FOIA 

covers some of the information made 

publicly available, the Federal agency 

that posted the information must 

remove the posting within seven 

calendar days of receiving the assertion. 

Before reposting the releasable 

information, the Federal agency must 

resolve the issue in accordance with the 

agency’s FOIA procedures. 

(d) When the Federal award is 

terminated in part or its entirety, the 

Federal agency or pass-through entity 

and recipient or subrecipient remain 

responsible for compliance with the 

requirements in §§ 200.344 and 200.345. 

(e) A Federal agency determination to 

not award continuation funding does 

not constitute a termination. For 

example, if an award no longer 

effectuates the program goals or agency 

priorities or continued Federal funding 

is not available. 

§ 200.341 Notification of termination 

requirement. 

(a) The Federal agency or passthrough entity must provide written 

notice of termination to the recipient or 

subrecipient. The written notice of 

termination should include the reasons 

for termination, the effective date, and 

the portion of the Federal award to be 

terminated, if applicable. 

(b) If the Federal award is terminated 

for the recipient’s material failure to 

comply with a Federal award, the 

notification must state the following: 

(1) The termination decision will be 

reported in SAM.gov; 

(2) The information will be available 

in SAM.gov for five years (and then 

archived) from the date of the 

termination; 

(3) A Federal agency that considers 

making a Federal award to the recipient 

during that five-year period that is 

expected to exceed the simplified 

acquisition threshold over the period of 

performance must consider the 

information regarding the recipient’s 

material failure to comply in judging 

whether the entity is qualified to receive 

the Federal award. 

(4) The recipient may comment on 

any information in SAM.gov about the 

recipient for future consideration by 

Federal agencies. The recipient may 

submit comments in SAM.gov. 

(5) Federal agencies should consider 

the recipient’s comments when 

determining whether the recipient is 

qualified for a Federal award. 

(c) Upon termination of the Federal 

award, the Federal agency must provide 

the information to USAspending.gov as 

required by the Federal Funding 

Accountability and Transparency Act 

(FFATA). In addition, the Federal 

agency must update or notify any other 

relevant government-wide systems or 

entities of any indications of poor 

performance as required by 41 U.S.C. 

2313 and 31 U.S.C. 3321. 

§ 200.342 Opportunities to object, 

hearings, and appeals. 

The Federal agency or pass-through 

entity must maintain written procedures 

for processing objections, hearings, and 

appeals. Upon initiating a remedy for 

noncompliance (for example, 

disallowed costs, a corrective action 

plan, or termination), the Federal 

agency or pass-through entity must 

provide the recipient or subrecipient 

with an opportunity to object and 

provide information challenging the 

action. The Federal agency or passthrough entity must comply with any 

requirements for hearings, appeals, or 

other administrative proceedings to 

which the recipient or subrecipient is 

entitled under any statute or regulation 

applicable to the action involved. 


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§ 200.343 Effects of suspension and 

termination. 

Costs to the recipient or subrecipient 

resulting from financial obligations 

incurred by the recipient or subrecipient 

during a suspension or after the 

termination of a Federal award are not 

allowable unless the Federal 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 financial 

obligations which were properly 

incurred by the recipient or subrecipient 

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. 

Closeout 

§ 200.344 Closeout. 

(a) The Federal agency or passthrough entity must close out the 

Federal award when it determines that 

all administrative actions and required 

work of the Federal award have been 

completed. When the recipient or 

subrecipient fails to complete the 

necessary administrative actions or the 

required work for an award, the Federal 

agency or pass-through entity must 

proceed with closeout based on the 

information available. This section 

specifies the administrative actions 

required at the end of the period of 

performance. 

(b) A recipient must submit all reports 

(financial, performance, and other 

reports required by the Federal award) 

no later than 120 calendar days after the 

conclusion of the period of 

performance. A subrecipient must 

submit all reports (financial, 

performance, and other reports required 

by a subaward) to the pass-through 

entity no later than 90 calendar days 

after the conclusion of the period of 

performance of the subaward (or an 

earlier date as agreed upon by the passthrough entity and subrecipient). When 

justified, the Federal agency or passthrough entity may approve extensions 

for the recipient or subrecipient. When 

the recipient does not have a final 

indirect cost rate covering the period of 

performance, a final financial report 

must still be submitted to fulfill the 

requirements of this section. The 

recipient must submit a revised final 

financial report when all applicable 

indirect cost rates have been finalized. 

(c) The recipient must liquidate all 

financial obligations incurred under the 

Federal award no later than 120 

calendar days after the conclusion of the 

period of performance. A subrecipient 

must liquidate all financial obligations 

incurred under a subaward no later than 

90 calendar days after the conclusion of 

the period of performance of the 

subaward (or an earlier date as agreed 

upon by the pass-through entity and 

subrecipient). When justified, the 

Federal agency or pass-through entity 

may approve extensions for the 

recipient or subrecipient. 

(d) The Federal agency or passthrough entity must not delay payments 

to the recipient or subrecipient for costs 

meeting the requirements of subpart E of 

this part. 

(e) The recipient or subrecipient must 

immediately refund any unobligated 

funds that the Federal agency or passthrough entity paid and that are not 

authorized to be retained. See OMB 

Circular A–129 and § 200.346. 

(f) The Federal agency or pass-through 

entity must make all necessary 

adjustments to the Federal share of costs 

after closeout reports are received. For 

example, the disallowance of any costs 

or the deobligation of an unliquidated 

balance. 

(g) The recipient or subrecipient must 

account for any property acquired with 

Federal funds or received from the 

Federal Government in accordance with 

§§ 200.310 through 200.316 and 

200.330. 

(h) The Federal agency must make 

every effort to complete all closeout 

actions no later than one year after the 

end of the period of performance. If the 

indirect cost rate has not been finalized 

and would delay closeout, the Federal 

agency is authorized to mutually agree 

with the recipient to close an award 

using the current or most recently 

negotiated rate. However, the recipient 

is not required to agree to a final rate for 

a Federal award for the purpose of 

prompt closeout. 

(i) If the recipient does not comply 

with the requirements of this section, 

including submitting all final reports, 

the Federal agency must report the 

recipient’s material failure to comply 

with the terms and conditions of the 

Federal award in SAM.gov. A Federal 

agency must use the Contractor 

Performance Assessment Reporting 

System (CPARS) to enter or amend 

information in SAM.gov. Federal 

agencies may also pursue other 

enforcement actions as appropriate. See 

§ 200.339. 

Post-Closeout Adjustments and 

Continuing Responsibilities 

§ 200.345 Post-closeout adjustments and 

continuing responsibilities. 

(a) The closeout of the Federal award 

does not affect any of the following: 

(1) The right of the Federal agency or 

pass-through entity to disallow costs 

and recover funds on the basis of a later 

audit or review. However, the Federal 

agency or pass-through entity must 

make determinations to disallow costs 

and notify the recipient or subrecipient 

within the record retention period. 

(2) The recipient’s or subrecipient’s 

requirement to return funds or right to 

receive any remaining and available 

funds as a result of refunds, corrections, 

final indirect cost rate adjustments 

(unless the Federal award in closed in 

accordance with § 200.344(h)), or other 

transactions. 

(3) The ability of the Federal agency 

or pass-through entity to make financial 

adjustments to a previously closed 

Federal award, such as resolving 

indirect cost payments and making final 

payments. 

(4) Audit requirements in subpart F of 

this part. 

(5) Property management and 

disposition requirements in §§ 200.310 

through 200.316. 

(6) Records retention as required in 

§§ 200.334 through 200.337. 

(b) After the closeout of the Federal 

award, a relationship created under the 

Federal award may be modified or 

ended in whole or in part. This may 

only be done with the consent of the 

awarding Federal agency or passthrough entity and the recipient or 

subrecipient, provided the 

responsibilities of the recipient or 

subrecipient 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 

recipient or subrecipient, as 

appropriate. 

Collection of Amounts Due 

§ 200.346 Collection of amounts due. 

Any Federal funds paid to the 

recipient or subrecipient in excess of the 

amount that the recipient or 

subrecipient is determined to be entitled 

to under the Federal award constitutes 

a debt to the Federal Government. The 

Federal agency must collect all debts 

arising out of its Federal awards in 

accordance with the Standards for the 

Administrative Collection of Claims (31 

CFR 901). 


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Subpart E—Cost Principles 

General Provisions 

§ 200.400 Policy guide. 

The application of these cost 

principles is based on the fundamental 

premises that: 

(a) The recipient or subrecipient is 

responsible for the efficient and 

effective administration of the Federal 

award through sound management 

practices. 

(b) The recipient or subrecipient is 

responsible for administering Federal 

funds in a manner consistent with 

Federal statutes, regulations, and the 

terms and conditions of the Federal 

award. 

(c) The recipient or subrecipient, in 

recognition of its unique combination of 

staff, facilities, and experience, is 

responsible for employing organization 

and management techniques necessary 

to ensure the proper and efficient 

administration of the Federal award. 

(d) The accounting practices of the 

recipient or subrecipient must be 

consistent with these cost principles 

and support the accumulation of costs 

as required by these cost principles, 

including maintaining adequate 

documentation to support costs charged 

to the Federal award. 

(e) The cognizant agency for indirect 

costs should ensure that the recipient or 

subrecipient consistently applies these 

cost principles when reviewing, 

negotiating, and approving cost 

allocation plans or indirect cost 

proposals. Where wide variations exist 

in the treatment of a given cost item by 

the recipient or subrecipient, the 

reasonableness and equity of such 

treatments should be fully considered. 

See the definition of indirect costs in 

§ 200.1. 

(f) For recipients and subrecipients 

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 recipient or subrecipient 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 § 200.307. 

§ 200.401 Application. 

(a) General. The recipient or 

subrecipient must apply these 

principles in determining allowable 

costs under Federal awards. The 

recipient or subrecipient must also use 

these principles as a guide in pricing 

fixed-price contracts and subcontracts 

when costs are used in determining the 

appropriate price. These cost 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 items 

such as education allowance or 

published tuition rates and fees. 

(2) Capitation awards to Institutions 

of Higher Education (IHEs) based on 

case counts or the number of 

beneficiaries. 

(3) Fixed amount awards. See 

200.201. 

(4) Federal awards to hospitals (see 

Appendix IX of this part). 

(5) Grants and cooperative agreements 

for food commodities. 

(6) Other awards under which the 

recipient or subrecipient is not required 

to account for actual costs incurred. 

(b) Federal contract. A Federal 

contract awarded to a recipient is 

subject to the Cost Accounting 

Standards (CAS). It must incorporate the 

applicable CAS requirements per 48 

CFR Chapter 99 and 48 CFR part 30 

(FAR Part 30). With respect to the 

allocation of costs, the Cost Accounting 

Standards at 48 CFR parts 9904 or 9905 

take precedence over the cost principles 

in subpart E. When a contract with a 

recipient 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 (for example, 

CAS 414—48 CFR 9904.414—Cost of 

Money as an Element of the Cost of 

Facilities Capital, and CAS 417—48 CFR 

9904.417—Cost of Money as an Element 

of the Cost of Capital Assets Under 

Construction, apply instead of the 

allowability provisions of § 200.449). 

For example, the allowability of costs in 

CAS-covered costs is determined first by 

the allocation provisions of the Cost 

Accounting Standards rather than the 

allowability provisions in § 200.449 

(unless the CAS does not address the 

specific costs). In complying with those 

requirements, the recipient’s application 

of cost accounting practices for 

estimating, accumulating, and reporting 

costs for Federal awards and CAScovered contracts must be consistent 

with the cost accounting practices for 

the CAS-covered contracts. The 

recipient must maintain only one set of 

accounting records supporting the 

allocation of costs if the recipient 

administers both Federal awards and 

CAS-covered contracts. 

(c) Exemptions. Some nonprofit 

organizations, because of their size and 

nature of operations, can be considered 

to be similar to for-profit organizations 

in terms of the applicability of cost 

principles. These nonprofit 

organizations must operate under 

Federal cost principles that apply to forprofit organizations located at 48 CFR 

31.2. Appendix VIII contains a list of 

these nonprofit organizations. Other 

organizations may be added to this list 

if approved by the cognizant agency for 

indirect costs. 

Basic Considerations 

§ 200.402 Composition of costs. 

The total cost of a Federal award is 

the sum of the allowable direct and 

allocable indirect costs minus any 

applicable credits. 

§ 200.403 Factors affecting allowability of 

costs. 

Except where otherwise authorized by 

statute, costs must meet the following 

criteria 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 recipient or subrecipient. 

(d) Be accorded consistent treatment. 

For example, 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 requirements of any 

other federally-financed program in 

either the current or a prior period. See 

§ 200.306(b). 

(g) Be adequately documented. See 

§§ 200.300 through 200.309. 

(h) Administrative closeout costs may 

be incurred until the due date of the 

final report(s). If incurred, these costs 

must be liquidated prior to the due date 

of the final report(s) and charged to the 

final budget period of the award unless 

otherwise specified by the Federal 

agency. All other costs must be incurred 

during the approved budget period. At 

its discretion, the Federal agency is 

authorized to waive prior written 

approvals to carry forward unobligated 

balances to subsequent budget periods. 

See § 200.308(g)(3). 


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§ 200.404 Reasonable costs. 

A cost is reasonable if it does not 

exceed an amount that a prudent person 

would incur under the circumstances 

prevailing when the decision was made 

to incur the cost. In determining the 

reasonableness of a given cost, 

consideration must be given to the 

following: 

(a) Whether the cost is generally 

recognized as ordinary and necessary 

for the recipient’s or subrecipient’s 

operation 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 costs 

for the geographic area; and 

(d) Whether the individuals 

concerned acted with prudence in the 

circumstances considering their 

responsibilities to the recipient or 

subrecipient, its employees, its students 

or membership (if applicable), the 

public at large, and the Federal 

Government. 

(e) The degree to which the cost 

represents a deviation from the 

recipient’s or subrecipient’s established 

written policies and procedures for 

incurring costs. 

§ 200.405 Allocable costs. 

(a) Allocable costs in general. A cost 

is allocable to a Federal award if the 

cost is assignable to that Federal award 

in accordance with the relative benefits 

received. This standard is met if the cost 

satisfies any of the following criteria: 

(1) Is incurred specifically for the 

Federal award; 

(2) Benefits both the Federal award 

and other work of the recipient or 

subrecipient and can be distributed in 

proportions that may be approximated 

using reasonable methods; or 

(3) Is necessary to the overall 

operation of the recipient or 

subrecipient and is assignable in part to 

the Federal award in accordance with 

these cost principles. 

(b) Allocation of indirect costs. All 

activities which benefit from the 

recipient’s or subrecipient’s indirect 

cost, including unallowable activities 

and donated services by the recipient or 

subrecipient or third parties, will 

receive an appropriate allocation of 

indirect costs. 

(c) Limitation on charging certain 

allocable costs to other Federal awards. 

A cost allocable to a particular Federal 

award may not be charged to other 

Federal awards (for example, to 

overcome fund deficiencies or to avoid 

restrictions imposed by Federal statutes, 

regulations, or the terms and conditions 

of the Federal awards). However, this 

prohibition would not preclude the 

recipient or subrecipient 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. However, when those 

proportions cannot be determined 

because of the interrelationship of the 

work involved, then, notwithstanding 

paragraph (c), 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 §§ 200.310 through 

200.316 and 200.439. 

(e) Costs of contracts subject to CAS. 

Costs of contracts subject to CAS must 

be allocated according to the Cost 

Accounting Standards, which take 

precedence over the allocation 

provisions in this part. 

§ 200.406 Applicable credits. 

(a) Applicable credits refer to 

transactions that offset or reduce direct 

or indirect costs allocable to a Federal 

award. Examples of such transactions 

are purchase discounts, rebates or 

allowances, recoveries or indemnities 

on losses, insurance refunds or rebates, 

adjustments of overpayments, or 

erroneous charges. To the extent that 

such credits accruing to or received by 

the recipient or subrecipient 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 recipient or 

subrecipient should be treated as 

applicable credits. Specifically, the 

concept of netting such credit items 

(including any amounts used to meet 

cost sharing requirements) must be 

recognized in determining the rates or 

amounts to be charged to the Federal 

award. See §§ 200.436 and 200.468 for 

potential application areas. 

§ 200.407 Prior written approval (prior 

approval). 

The reasonableness and allocability of 

certain costs under Federal awards may 

be difficult to determine. To avoid 

subsequent disallowance or dispute 

based on unreasonableness or 

nonallocability, the recipient may seek 

the prior written approval of the Federal 

agency (or, for indirect costs, the 

cognizant agency for indirect costs) 

before incurring the cost. The absence of 

prior written approval on any element 

of cost will not, in itself, affect the 

reasonableness or allocability of that 

cost unless prior approval is specifically 

required for allowability as described 

under certain circumstances in the 

following sections: 

(a) Section 200.306 Cost sharing; 

(b) Section 200.307 Program income; 

(c) Section 200.308 Revision of 

budget and program plans; 

(d) Section 200.333 Fixed amount 

subawards; 

(e) Section 200.430 Compensation— 

personal services, paragraph (h); 

(f) Section 200.431 Compensation— 

fringe benefits; 

(g) Section 200.439 Equipment and 

other capital expenditures; 

(h) Section 200.441 Fines, penalties, 

damages and other settlements; 

(i) Section 200.442 Fund raising and 

investment management costs; 

(j) Section 200.445 Goods or services 

for personal use; 

(k) Section 200.447 Insurance and 

indemnification; 

(l) Section 200.455 Organization 

costs; 

(m) Section 200.458 Pre-award costs; 

(n) Section 200.462 Rearrangement 

and reconversion costs; 

(o) Section 200.475 Travel costs. 

§ 200.408 Limitation on allowance of 

costs. 

Statutory requirements may limit the 

allowability of costs. Any costs that 

exceed the maximum amount allowed 

by statute may not be charged to the 

Federal award. Only the amount 

allowable by statute may be charged to 

the Federal award. 

§ 200.409 Special considerations. 

Other sections in this part 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 recipients and 

subrecipients, as specified in the 

following sections: 


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(a) Direct and Indirect Costs 

(§§ 200.412–200.415); 

(b) Special Considerations for States, 

Local Governments and Indian Tribes 

(§§ 200.416 and 200.417); and 

(c) Special Considerations for 

Institutions of Higher Education 

(§§ 200.418 and 200.419). 

§ 200.410 Collection of unallowable costs. 

Payments made for costs determined 

to be unallowable by either the 

awarding Federal agency, cognizant 

agency for indirect costs, or passthrough entity must be refunded with 

interest to the Federal Government. 

Unless directed by Federal statute or 

regulation, repayments must be made in 

accordance with the instructions 

provided by the Federal agency or passthrough entity that made the 

allowability determination. See 

§§ 200.300 through 200.309, and 

§ 200.346. 

§ 200.411 Adjustment of previously 

negotiated indirect cost rates containing 

unallowable costs. 

(a) Federal negotiated indirect 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 intended to 

correct the proposals used to establish 

the rates and do not constitute a 

reopening of the rate negotiation. The 

adjustments or refunds must be made 

regardless of the type of rate negotiated 

(predetermined, final, fixed, or 

provisional). 

(b) For rates covering a future fiscal 

year of the recipient or subrecipient, the 

unallowable costs must be removed 

from the indirect cost pools and the 

rates must be adjusted. 

(c) For rates covering a past period, 

the Federal share of the unallowable 

costs must be computed for each year 

involved, and a cash refund (including 

interest) must be made to the Federal 

Government in accordance with the 

directions provided by the cognizant 

agency for indirect costs. When cash 

refunds are made for past periods 

covered by provisional or fixed rates, 

appropriate adjustments must be made 

when the rates are finalized to avoid 

duplicate recovery of the unallowable 

costs. 

(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 Costs 

§ 200.412 Classification of costs. 

There is no universal rule for 

classifying certain costs as direct or 

indirect costs. A cost may be direct for 

some specific service or function but 

indirect for the Federal award or other 

final cost objective. Therefore, each cost 

incurred for the same purpose in like 

circumstances must be treated 

consistently either as a direct or an 

indirect cost to avoid possible doublecharging of Federal awards. Guidelines 

for determining direct and indirect costs 

charged to Federal awards are provided 

in this subpart. 

§ 200.413 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 direct or 

indirect costs. See § 200.405. 

(b) Application to Federal awards. 

The association of costs with a Federal 

award (rather than the nature of the 

procurement transaction) determines 

whether costs are direct or indirect. 

Costs charged directly to a Federal 

award are typically incurred specifically 

for that Federal award (including, for 

example, supplies needed to achieve the 

award’s objectives and the proportion of 

staff salary expended in relation to that 

specific award). However, costs that 

otherwise would be treated as indirect 

costs may also be considered direct 

costs if they are directly related to a 

specific award (including, for example, 

extraordinary utility consumption, the 

cost of materials supplied from stock or 

services rendered by specialized 

facilities, cybersecurity, integrated data 

systems, asset management systems, 

performance management costs, 

program evaluation costs, or other 

institutional service operations). 

(c) Administrative and clerical staff 

salaries. Administrative and clerical 

staff salaries should normally be treated 

as indirect costs. Direct charging of 

these costs may be appropriate only if 

they meet all of the following 

conditions: 

(1) The administrative or clerical 

services are integral to a Federal award; 

(2) Individuals involved can be 

specifically identified with a Federal 

award; and 

(3) The costs are not also recovered as 

indirect costs. 

(d) Minor items. A minor direct cost 

may be treated as an indirect cost when 

it is practical to do so and provided that 

it is treated consistently for all Federal 

and non-Federal purposes. 

(e) Treatment of unallowable costs in 

determining indirect cost rates. 

Unallowable costs for Federal awards 

must be treated as direct costs when 

determining indirect cost rates. 

Additionally, unallowable costs must be 

allocated their equitable share of the 

recipient’s or subrecipient’s indirect 

costs if they represent activities which: 

(1) Include the salaries of personnel; 

(2) Occupy space; and 

(3) Benefit from the recipient’s or 

subrecipient’s indirect costs. 

(f) Treatment of certain costs for 

nonprofit organizations. For nonprofit 

organizations, the costs of activities 

performed by the nonprofit organization 

primarily as a service to members, 

clients, or the general public when 

significant and necessary to the 

organization’s mission must be treated 

as direct costs whether or not allowable, 

and be allocated an equitable share of 

indirect costs. Some examples of these 

types of activities include: 

(1) Maintenance of membership rolls, 

subscriptions, publications, and related 

functions. See § 200.454. 

(2) Providing services and information 

to members, the government, or the 

public. See §§ 200.454 and 200.450. 

(3) Promotion, lobbying, and other 

forms of public relations. See §§ 200.421 

and 200.450. 

(4) Conferences (except in support of 

the general administration of the 

recipient or subrecipient). See also 

§ 200.432. 

(5) Maintenance, protection, and 

investment of special funds not used in 

the recipient’s or subrecipient’s 

operation. See also § 200.442. 

(6) Group benefits on behalf of 

members or clients, including life and 

hospital insurance, annuity or 

retirement plans, and financial aid. See 

also § 200.431. 

§ 200.414 Indirect costs. 

(a) Facilities and administration 

classification. For major Institutions of 

Higher Education (IHE) and major 


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nonprofit organizations, indirect costs 

must be classified within two broad 

categories: ‘‘Facilities’’ and 

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

defined as depreciation on buildings, 

equipment and capital improvements, 

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 IHEs, 

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. Major nonprofit 

organizations are those which receive 

more than $10 million in direct Federal 

funding. 

(b) Diversity of nonprofit 

organizations. It is not always possible 

to specify the types of costs that may be 

classified as indirect costs for nonprofit 

organizations due to the diversity of 

their accounting practices. Identification 

with a Federal award rather than the 

nature of the procurement transaction 

involved is the determining factor in 

distinguishing direct from indirect costs 

of Federal awards. However, typical 

examples of indirect 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 

§ 200.306.) 

(1) Negotiated indirect cost rates must 

be accepted by all Federal agencies. A 

Federal agency may only use a rate 

different from the negotiated rate for 

either a class of Federal awards or a 

single Federal award when required by 

Federal statute, regulation, or when 

approved by the awarding Federal 

agency based on documented 

justification described in paragraph 

(c)(3) of this section. 

(2) The Federal agency must notify 

OMB of any approved deviations. The 

recipient or subrecipient may notify 

OMB of any disputes with Federal 

agencies regarding the application of a 

federally negotiated indirect cost rate. 

(3) The Federal 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) The Federal agency must include 

the policies relating to indirect cost rate 

reimbursement or cost share as 

approved under paragraph (e) in the 

notice of funding opportunity. As 

appropriate, the Federal agency should 

incorporate discussion of these policies 

into its outreach activities with 

applicants before posting a notice of 

funding opportunity. See § 200.204. 

(d) Pass-through entities. Pass-through 

entities are subject to the requirements 

in § 200.332(b)(4) and must accept all 

federally negotiated indirect costs rates 

for subrecipients. 

(e) Appendices. Requirements for 

development and submission of indirect 

cost rate proposals and cost allocation 

plans are contained in the following 

Appendices: 

(1) Appendix III to Part 200—Indirect 

(F&A) Costs Identification and 

Assignment, and Rate Determination for 

Institutions of Higher Education (IHEs); 

(2) Appendix IV to Part 200—Indirect 

(F&A) Costs Identification and 

Assignment, and Rate Determination for 

Nonprofit Organizations; 

(3) Appendix V to Part 200—State/ 

Local Government-wide 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) De minimis rate. Recipients and 

subrecipients that do not have a current 

Federal negotiated indirect cost rate 

(including provisional rate) may elect to 

charge a de minimis rate of up to 15 

percent of modified total direct costs 

(MTDC). The recipient or subrecipient is 

authorized to determine the appropriate 

rate up to this limit. Federal agencies 

may not require recipients and 

subrecipients to use a de minimis rate 

lower than this standard unless required 

by Federal statute. The de minimis rate 

must not be applied to cost 

reimbursement contracts issued directly 

by the Federal Government in 

accordance with the FAR. Recipients 

and subrecipients are not required to 

use the de minimis rate and may submit 

an indirect cost proposal in accordance 

with the appropriate Appendix 

referenced in paragraph (e) of this 

section. When applying the de minimis 

rate, costs must be consistently charged 

as either direct or indirect costs and 

may not be double charged or 

inconsistently charged as both. The de 

minimis rate does not require 

documentation to justify its use and 

may be used indefinitely. Once elected, 

the recipient or subrecipient must use 

the de minimis rate for all Federal 

awards until the recipient or 

subrecipient chooses to receive a 

negotiated rate. A governmental 

department or agency that receives more 

than $35 million in direct Federal 

funding during its fiscal year may not 

elect to use the de minimis rate (see 

Appendix VII, paragraph D.1.b.). 

(g) One-time extension of indirect 

rates. A recipient or subrecipient with a 

current Federal negotiated indirect cost 

rate may apply for a one-time extension 

of that agreement for up to four years. 

This extension will be subject to review 

and approval by the cognizant agency 

for indirect costs. If granted, the 

recipient or subrecipient may only 

request a rate review when the 

extension period ends. The recipient or 

subrecipient must re-apply to negotiate 

a new rate when the extension ends. 

When a new rate is negotiated, the 

recipient or subrecipient may again 

apply for a one-time extension of the 

new rate in accordance with this 

paragraph. 

§ 200.415 Required certifications. 

(a) Financial reports and payment 

requests under Federal awards must 

include a certification, signed by an 

official who is authorized to legally bind 

the recipient or subrecipient, 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) Subrecipients under the Federal 

award must certify to the pass-through 

entity whenever applying for funds, 

requesting payment, and submitting 

reports: ‘‘I certify to the best of my 

knowledge and belief that the 

information provided herein is true, 

complete, and accurate. I am aware that 

the provision of false, fictitious, or 

fraudulent information, or the omission 

of any material fact, may subject me to 

criminal, civil, or administrative 

consequences including, but not limited 


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to violations of U.S. Code Title 18, 

Sections 2, 1001, 1343 and Title 31, 

Sections 3729–3730 and 3801–3812.’’ 

Each such certification must be 

maintained pursuant to the 

requirements of § 200.334. This 

paragraph applies to all tiers of 

subrecipients. 

(c) Certification of cost allocation plan 

or indirect cost rate proposal. Each cost 

allocation plan or indirect cost rate 

proposal must comply with the 

following: 

(1) A proposal to establish a cost 

allocation plan or an indirect cost rate, 

whether submitted to a Federal 

cognizant agency for indirect costs or 

maintained on file by the recipient, 

must be certified by the recipient using 

the Certificate of Cost Allocation Plan or 

Certificate of Indirect Costs as set forth 

in appendices III through VII, and IX of 

this part. The certificate must be signed 

on behalf of the recipient by an 

individual at a level no lower than the 

vice president or chief financial officer 

of the recipient that submits the 

proposal. 

(2) The Federal Government may 

either disallow all indirect costs or 

unilaterally establish an indirect cost 

rate when the recipient fails to submit 

a certified proposal for establishing a 

rate. This rate should be based upon 

audited historical data or other data 

furnished to the cognizant agency for 

indirect costs and for which it can be 

demonstrated that all unallowable costs 

have been excluded. The rate 

established must ensure that potentially 

unallowable costs are not reimbursed. 

Alternatively, the recipient may use the 

de minimis indirect cost rate. See 

§ 200.414(f). 

(d) Nonprofit organizations must 

certify that they did not meet the 

definition of a major nonprofit 

organization as defined in § 200.414(a), 

if applicable. 

(e) The recipient must certify that the 

requirements and standards for lobbying 

(see § 200.450) have been met when 

submitting its annual indirect cost rate 

proposal. 

Special Considerations for States, Local 

Governments and Indian Tribes 

§ 200.416 Cost allocation plans and 

indirect cost proposals. 

(a) Awards to states, local 

governments, and Indian Tribes are 

often implemented at the level of 

department within the State, local 

government, or Indian Tribe. A central 

service cost allocation plan is 

established to allow such department to 

claim a portion of centralized service 

costs that are incurred in proportion to 

the award’s activities. Examples of 

centralized service costs may include 

motor pools, computer centers, 

purchasing, and accounting. 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 

establishes this process. 

(b) Individual departments typically 

charge Federal awards for indirect costs 

through an indirect cost rate. A separate 

indirect cost rate proposal for each 

operating department is usually 

necessary to claim indirect costs under 

Federal awards. Indirect costs include: 

(1) The indirect costs originating in 

each operating department of the State, 

local government, or Indian Tribe 

carrying out Federal awards; and 

(2) The costs of central governmental 

services distributed through the central 

service cost allocation plan and not 

otherwise treated as direct costs. 

(c) The requirements for developing 

and submitting cost allocation plans (for 

central service costs and public 

assistance programs) and indirect cost 

rate proposals are contained in 

Appendices V, VI, and VII of this part. 

§ 200.417 Interagency service. 

An operating department may provide 

services to another operating 

department of the same State, local 

government, or Indian Tribe. In these 

instances, the cost of services provided 

may include allowable direct costs of 

the service plus a pro-rated share of 

indirect costs. A standard indirect cost 

rate equal to 10 percent of the direct 

salaries and wages for providing the 

service (excluding overtime, shift 

premiums, and fringe benefits) may be 

used instead of determining the actual 

indirect costs of the service. These 

services do not include centralized 

services that are included in central 

service cost allocation plans described 

in Appendix V of this part. 

Special Considerations for Institutions 

of Higher Education 

§ 200.418 Costs incurred by states and 

local governments. 

Costs incurred or paid by a State or 

local government on behalf of and in 

direct benefit to its IHEs are allowable. 

These costs include but are not limited 

to fringe benefit programs such as 

pension costs and Federal Insurance 

Contributions Act (FICA) costs. These 

costs are allowable regardless of 

whether or not they are recorded in the 

accounting records of the institutions, 

subject to the following conditions: 

(a) The costs meet the requirements of 

§ 200.402—200.411; 

(b) The costs are properly supported 

by approved cost allocation plans in 

accordance with the applicable cost 

accounting principles of this part; and 

(c) The costs are not otherwise borne 

directly or indirectly by the Federal 

Government. 

§ 200.419 Cost accounting standards. 

An IHE that receive an aggregate total 

$50 million or more in Federal awards 

and instruments subject to this subpart 

(as specified in § 200.101) 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. CAScovered contracts and subcontracts 

awarded to the IHEs are subject to the 

broader range of CAS requirements at 48 

CFR 9900 through 9999 and 48 CFR part 

30 (FAR Part 30). 

General Provisions for Selected Items of 

Cost 

§ 200.420 Considerations for selected 

items of cost. 

(a) This section provides principles to 

be applied in establishing the 

allowability of certain items involved in 

determining cost, in addition to other 

requirements of this subpart. These 

principles apply whether or not a 

particular cost item is properly treated 

as a direct or indirect cost. 

(b) The following sections are not 

intended to be a comprehensive list of 

potential items of cost encountered 

under Federal awards. Failure to 

mention a particular item of cost, 

including as an example in certain 

sections, is not intended to imply that 

it is either allowable or unallowable. 

When determining the allowability for 

an item of cost, each case should be 

based on the treatment provided for 

similar or related items of cost and 

based on the principles described in 

§§ 200.402 through 200.411. In case of a 

discrepancy between the provisions of a 

specific Federal award and the 

provisions below, the Federal award 

governs. Criteria outlined in § 200.403 

must be applied in determining 

allowability. 

§ 200.421 Advertising and public relations. 

(a) The term advertising costs means 

the costs of advertising media and 

corollary administrative costs. 

Advertising media includes, but is not 

limited to, magazines, newspapers, 

radio and television, direct mail, 

exhibits, and electronic or computer 

transmittals. 


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(b) The only allowable advertising 

costs are those which are solely for: 

(1) The recruitment of personnel 

required by the recipient or subrecipient 

for the performance of a Federal award 

(See also § 200.463); 

(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 the 

recipient or subrecipient is reimbursed 

for disposal costs at a predetermined 

amount; or 

(4) Program outreach and other 

specific purposes necessary to meet the 

Federal award requirements. 

(c) The term ‘‘public relations’’ 

includes community relations and 

means those activities dedicated to 

maintaining the recipient’s or 

subrecipient’s image 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 about specific 

activities or accomplishments which 

result from the 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 or financial 

matters. 

(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, 

conferences, or other events related to 

other activities of the entity (see also 

§ 200.432), 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; 

(4) Costs of advertising and public 

relations designed solely to promote the 

recipient or subrecipient. 

§ 200.422 Advisory councils. 

An advisory council or committee is 

a body that provides advice to the 

management of such entities as 

corporations, organizations, or 

foundations. Costs incurred by advisory 

councils or committees are unallowable 

unless authorized by statute, the Federal 

agency, or as an indirect cost where 

allocable to Federal awards. See 

§ 200.444, which applies to States, local 

governments, and Indian Tribes. 

§ 200.423 Alcoholic beverages. 

The cost of alcoholic beverages is 

unallowable. 

§ 200.424 Alumni activities. 

Costs incurred by IHEs for, or in 

support of, alumni activities are 

unallowable. 

§ 200.425 Audits conducted in accordance 

with the Single Audit Act. 

(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), and the 

requirements of this part are allowable. 

However, the following audit costs are 

unallowable: 

(1) Any costs for audits that are not 

required by and performed in 

accordance with the Single Audit Act, 

and the requirements of this part; and 

(2) Any costs of auditing a recipient 

or subrecipient exempt from having an 

audit conducted under the Single Audit 

Act and the requirements of this part. 

(b) The costs of a financial statement 

audit of a recipient or subrecipient 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 §§ 200.331–333) exempt from 

having an audit conducted under the 

Single Audit Act and the requirements 

of this part. This cost is allowable only 

if the agreed-upon procedures 

engagements are: 

(1) Conducted in accordance with 

GAGAS or applicable international 

attestation standards, as appropriate; 

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

(3) Limited in scope to one or more 

of the following compliance 

requirements: activities allowed or 

unallowed; allowable costs/cost 

principles; eligibility; and reporting. 

§ 200.426 Bad debts. 

Bad debts (debts 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 are also 

unallowable. See § 200.428. 

§ 200.427 Bonding costs. 

(a) Bonding costs arise when the 

Federal agency requires assurance 

against financial loss to itself or others 

because of an act or default of the 

recipient. They also arise when the 

recipient requires similar assurance, 

including bonds as bid, performance, 

payment, advance payment, 

infringement, and fidelity bonds for 

employees and officials. 

(b) Bonding costs required under the 

Federal award’s terms and conditions 

are allowable. 

(c) Bonding costs required by the 

recipient 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. 

§ 200.428 Collections of improper 

payments. 

The costs incurred by a recipient or 

subrecipient to recover improper 

payments, including improper 

overpayments, are allowable as either 

direct or indirect costs, as appropriate. 

The recipient or subrecipient may use 

the amounts collected in accordance 

with cash management standards 

described in § 200.305. 

§ 200.429 Commencement and 

convocation costs. 

For IHEs, costs incurred for 

commencements and convocations are 

unallowable, except as activity costs 

provided for in Appendix III, (B)(9) 

Student Administration and Services. 

§ 200.430 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 

personal services may also include 

fringe benefits addressed in § 200.431. 

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: 


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(1) Is reasonable for the services 

rendered and conforms to the 

established written policy of the 

recipient or subrecipient consistently 

applied to both Federal and non-Federal 

activities; 

(2) Follows an appointment made in 

accordance with the recipient’s or 

subrecipient’s laws, rules, or written 

policies and meets the requirements of 

Federal statute, where applicable; and 

(3) Is determined and supported as 

provided in paragraph (g) of this 

section, when applicable. 

(b) Reasonableness. Compensation for 

employees engaged in work on Federal 

awards will be reasonable to the extent 

that it is consistent with that paid for 

similar work in other activities of the 

recipient or subrecipient. In cases where 

the kinds of employees required for 

Federal awards are not found in the 

different activities of the recipient or 

subrecipient, 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 

recipient or subrecipient competes for 

the kind of employees involved. 

(c) Professional activities outside the 

recipient or subrecipient. Unless the 

Federal agency expressly authorizes an 

arrangement, a recipient or subrecipient 

must follow its written policies and 

procedures concerning the permissible 

extent of professional services that can 

be provided outside the recipient or 

subrecipient for non-organizational 

compensation. Where the recipient or 

subrecipient does not have written 

policies or procedures, or they do not 

adequately define the permissible extent 

of consulting or other nonorganizational activities undertaken for 

extra outside pay, the Federal 

Government may require the recipient 

or subrecipient to allocate the effort of 

professional staff working on Federal 

awards between: 

(1) Recipient or subrecipient 

activities, and 

(2) Non-organizational professional 

activities. Appropriate arrangements 

governing compensation must be 

negotiated on a case-by-case basis if the 

Federal agency considers the extent of 

non-organizational professional effort 

excessive or inconsistent with the 

conflicts-of-interest terms and 

conditions of the Federal award. 

(d) Unallowable costs. (1) Costs 

unallowable under other sections of 

these principles must not be allowable 

under this section solely because they 

constitute personnel compensation. 

(2) The allowable compensation for 

certain employees is subject to a ceiling 

in accordance with Federal statute. See 

10 U.S.C. 2324(e)(1)(P), 41 U.S.C. 1127, 

and 41 U.S.C. 4304(a)(16) for the ceiling 

amount, covered compensation subject 

to the ceiling, covered employees, and 

other relevant provisions for costreimbursement contracts. For different 

types of Federal awards, other statutory 

ceilings may apply. 

(e) Special considerations. Special 

considerations in determining the 

allowability of compensation will be 

given to any change in a recipient’s or 

subrecipient’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, efficient performance, 

suggestion awards, or safety awards is 

allowable to the extent that the overall 

compensation is determined to be 

reasonable and such costs are paid or 

accrued according to an agreement 

entered into in good faith between the 

recipient or subrecipient and the 

employees before the services were 

rendered, or according to an established 

plan followed by the recipient or 

subrecipient so consistently as to imply, 

in effect, an agreement to make such 

payment. 

(g) 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 that provides reasonable 

assurance that the charges are accurate, 

allowable, and properly allocated; 

(ii) Be incorporated into the official 

records of the recipient or subrecipient; 

(iii) Reasonably reflect the total 

activity for which the employee is 

compensated by the recipient or 

subrecipient, not exceeding 100 percent 

of compensated activities (for IHEs, this 

is the IBS); 

(iv) Encompass federally-assisted and 

all other activities compensated by the 

recipient or subrecipient on an 

integrated basis but may include the use 

of subsidiary records as defined in the 

recipient’s or subrecipient’s written 

policy; 

(v) Comply with the established 

accounting policies and procedures of 

the recipient or subrecipient (See 

paragraph (i)(1)(ii) of this section for 

treatment of incidental work for IHEs.); 

and 

(vi) 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 allocated using 

different allocation bases; or an 

unallowable activity and a direct or 

indirect cost activity. 

(vii) Budget estimates (meaning, 

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 

performed; 

(B) Significant changes in the related 

work activity (as defined by the 

recipient’s or subrecipient’s written 

policies) are promptly identified and 

entered into the records. Short-term 

(such as one or two months) fluctuation 

between workload categories do not 

need to be considered as long as the 

distribution of salaries and wages is 

reasonable over the longer term; and 

(C) The recipient’s or subrecipient’s 

system of internal controls includes 

processes to perform periodic after-thefact reviews of interim charges made to 

a Federal award based on budget 

estimates. All necessary adjustments 

must be made so that the final amount 

charged to the Federal award is 

accurate, allowable, and properly 

allocated based on actual work 

performed. 

(viii) Because practices vary as to the 

activity constituting a full workload (for 

example, IBS for IHEs), records may 

reflect categories of activities expressed 

as a percentage distribution of total 

activities. 

(ix) It is recognized that teaching, 

research, service, and administration are 

often inextricably intermingled in an 

academic setting. Therefore, a precise 

assessment of factors contributing to 

costs is not required when IHEs record 

salaries and wages are charged to 

Federal awards. 

(2) For records that meet the 

standards required in paragraph (g)(1) of 

this section, the recipient or 

subrecipient is not required to provide 

additional support or documentation for 

the work performed other than that 

referenced in paragraph (g)(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 


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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 

requirements on Federal awards must be 

supported in the same manner as 

salaries and wages claimed for 

reimbursement from Federal awards. 

(5) States, local governments, and 

Indian Tribes may use substitute 

processes or systems for allocating 

salaries and wages to Federal awards 

either in place of or in addition to the 

records described in paragraph (g)(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 that use 

sampling methods (primarily for 

Temporary Assistance for Needy 

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 (g)(5)(iii); 

(B) The sample must cover the entire 

period involved; and 

(C) The results must be statistically 

valid and applied to the period being 

sampled. 

(ii) Allocating charges for the sampled 

employees’ supervisors and clerical and 

support staff, based on the results of the 

sampled employees, will be acceptable. 

(iii) Less than full compliance with 

the statistical sampling standards noted 

in paragraph (5)(i) may be accepted by 

the cognizant agency for indirect costs 

if it concludes that the amounts 

allocated to Federal awards will be 

minimal or if it concludes that the 

system proposed by the recipient or 

subrecipient 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 

when these are clearly documented. 

These plans are acceptable as an 

alternative to requirements in paragraph 

(g)(1) of this section when approved by 

the cognizant agency for indirect costs. 

(7) For Federal awards of similar 

purpose activity or instances of 

approved blended funding, a recipient 

or subrecipient may submit performance 

plans that incorporate funds from 

multiple Federal awards and account for 

their combined use based on 

performance-oriented metrics, provided 

the plans are approved in advance by all 

involved Federal agencies. In these 

instances, the recipient or subrecipient 

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 recipient or subrecipient 

whose records do not meet the 

standards described in this section, the 

Federal Government may require 

personnel activity reports, including 

prescribed certifications, or equivalent 

documentation supporting the records 

as required in this section. 

(h) Nonprofit organizations. This 

paragraph provides guidance specific to 

only nonprofit organizations. For 

compensation to members of nonprofit 

organizations, trustees, directors, 

associates, officers, or the immediate 

families thereof, a determination must 

be made that the compensation is 

reasonable for the actual personal 

services rendered rather than a 

distribution of earnings above actual 

costs. Compensation may include 

director’s and executive committee 

member’s fees, incentive awards, off-site 

or incentive pay, location allowances, 

hardship pay, and cost-of-living 

differentials. 

(i) Institutions of Higher Education 

(IHEs). This paragraph provides 

guidance specific to only IHEs. 

(1) Determining allowable personnel 

costs. 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, etcetera), 

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 the 

written institutional policy (at a rate not 

to exceed institutional base salary) do 

not need to be included in the records 

described in paragraph (g) to charge 

payments of incidental activities 

directly, such activities must either be 

expressly authorized in the Federal 

award budget or receive prior written 

approval by the Federal agency. 

(2) Salary basis. Charges for work 

performed on Federal awards by faculty 

members during the academic year are 

allowable at the institutional base salary 

(IBS) rate. Except as noted in paragraph 

(i)(1)(ii), 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 the faculty at an institution. 

IBS is 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 an individual earns outside of 

duties performed for the IHE. Unless 

there is prior approval by the Federal 

agency, charges of a faculty member’s 

salary to a Federal award may not 

exceed the proportionate share of the 

IBS for the period during which the 

faculty member worked on the Federal 

award. 

(3) Intra-Institution of Higher 

Education (IHE) consulting. Intra-IHE 

consulting by faculty should be 

undertaken as an IHE responsibility 

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 members 

is in addition to their regular 

responsibilities, any charges for such 

work representing additional 

compensation above IBS are allowable 

provided that such consulting 

arrangements are expressly authorized 

in the Federal award or approved in 

writing by the Federal agency. 

(4) Extra service pay. Extra service 

pay typically represents overload 

compensation, subject to institutional 

compensation policies for services 

above and beyond IBS. Where extra 

service pay results from Intra-IHE 

consulting, it is subject to the same 

requirements of paragraph (b) of this 

section. It is allowable if all of the 

following conditions are met: 

(i) The IHE establishes consistent 

written policies which apply uniformly 

to all faculty members, not just those 

working on Federal awards. 


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(ii) The IHE 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 

definition may be described in 

appointment letters or other 

documentation. 

(iii) The supplementation amount 

paid is commensurate with the IBS pay 

rate and additional work performed. See 

paragraph (i)(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 

IHE. 

(v) The total salaries charged to 

Federal awards, including extra service 

payments, are subject to the standards of 

documentation as described in 

paragraph (g). 

(5) Periods outside the academic year. 

(i) Except as specified for teaching 

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

section, charges for work performed by 

faculty members on Federal awards 

during periods not included in the base 

salary period must be at a rate not more 

than the IBS. 

(ii) Charges for teaching activities 

performed by faculty members on 

Federal awards during periods not 

included in IBS period must be based 

on the 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 must be determined at a 

rate not more than that regularly paid 

for part-time assignments. 

(7) Sabbatical leave costs. Rules for 

sabbatical leave are as follows: 

(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. These costs must be allocated 

equitably among all related activities of 

the IHE. 

(ii) Where sabbatical leave is included 

in fringe benefits as a direct charge, the 

aggregate amount of assessments 

applicable to all work of the institution 

during the base period must be 

reasonable in relation to the IHE’s 

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 recipient’s written policy and 

paragraph (i)(1)(i). 

§ 200.431 Compensation—fringe benefits. 

(a) General. Fringe benefits are 

allowances and services employers 

provide 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, family, sick, or 

military), employee insurance, 

pensions, and unemployment benefits. 

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, 

an organization-employee agreement, or 

an established policy of the recipient or 

subrecipient. 

(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 

recipient or subrecipient or a specified 

grouping of employees. 

(i) When a recipient or subrecipient 

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 and must be allocated as a 

general administrative expense to all 

activities. These costs may be included 

in fringe benefit rates with the approval 

of the cognizant agency for indirect 

costs. 

(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 

recipient or subrecipient uses the 

accrual basis of accounting, allowable 

leave costs are the lesser of the amount 

accrued or funded. 

(c) Fringe benefits. 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 § 200.447); pension plan 

costs; and other similar benefits are 

allowable, provided such benefits are 

permitted under established written 

policies. The recipient or subrecipient 

must allocate fringe benefits 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 

following the recipient’s or 

subrecipient’s accounting practices. 

(d) Cost objectives. The recipient or 

subrecipient may assign fringe benefits 

to cost objectives by identifying specific 

benefits to specific individual 

employees or by allocating them based 

on 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 

recipient or subrecipient demonstrates 

that costs in relationship to salaries and 

wages do not differ significantly for 

different groups of employees. 

(e) Insurance. See also § 200.447(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, the 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) Insurance costs 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 cost of 

such insurance is unallowable when the 

recipient or subrecipient is named as 

beneficiary. 

(3) Actual claims paid to or on behalf 

of employees or former employees for 

workers’ compensation, unemployment 

compensation, severance pay, and 

similar employee benefits (for example, 

post-retirement health benefits) are 

allowable in the year of payment 

provided that the recipient or 

subrecipient follows a consistent costing 

policy. 

(f) Automobiles. That portion of 

automobile costs furnished by the 

recipient or subrecipient that relates to 

personal use by employees (including 

transportation to and from work) is 

unallowable as a fringe benefit or 


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indirect costs regardless of whether the 

cost is reported as taxable income to the 

employees. 

(g) Pension plan costs. Pension plan 

costs incurred in accordance with the 

established written policies of the 

recipient or subrecipient are allowable, 

provided that: 

(1) Such policies meet the test of 

reasonableness. 

(2) The methods of cost allocation are 

not discriminatory. 

(3) The cost assigned to each fiscal 

year should be determined in 

accordance with GAAP, except for State 

and local governments. 

(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. The 

recipient or subrecipient may follow the 

‘‘Cost Accounting Standard for 

Composition and Measurement of 

Pension Costs’’ (48 CFR 9904.412). 

(5) Premiums for pension plan 

termination insurance that are paid 

according 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 actuarial cost method recognized 

by GAAP and following the recipient’s 

or subrecipient’s established written 

policies. 

(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 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 six months (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 if an appropriate adjustment 

is made to compensate for the timing of 

the charges to the Federal Government 

and related Federal reimbursement and 

the recipient’s or subrecipient’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 recipient 

or subrecipient in excess of the costs 

calculated using an actuarial cost-based 

method recognized by GAAP for a fiscal 

year may be used as the recipient’s or 

subrecipient’s contribution in future 

periods. 

(iv) When a recipient or subrecipient 

establishes or 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) Payments for unfunded pension 

costs must be charged in accordance 

with the allocation principles of this 

subpart. Specifically, the recipient or 

subrecipient may not charge unfunded 

pension costs directly to a Federal 

award if those unfunded pension costs 

are related to compensation not 

allocable to that award. In all cases, the 

payments for unfunded pension costs 

may not exceed the contribution rate of 

the employee’s current pension costs. 

Payments for unfunded pension costs 

may only be charged to a Federal award 

with the prior approval of the awarding 

Federal agency or cognizant agency for 

indirect costs if included as part of an 

approved negotiated indirect cost rate 

agreement. The recipient or subrecipient 

must notify the awarding Federal 

agency or cognizant agency for indirect 

costs, as applicable, if unfunded 

pension costs are re-amortized. 

(vi) The recipient or subrecipient 

must provide the Federal Government 

an equitable share of any previously 

allowed pension costs (including 

subsequent earnings) that the recipient 

or subrecipient receives through a 

refund, withdrawal, or other credit. 

(h) Post-retirement health. A postretirement health plan (PRHP) refers to 

the costs of health insurance or health 

services not included in a pension plan 

covered by paragraph (g) for retirees and 

their spouses, dependents, and 

survivors. PRHP costs may be computed 

using a pay-as-you-go method or an 

actuarial cost method recognized by 

GAAP and following the recipient’s or 

subrecipient’s established written 

policies. 

(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 for a given fiscal 

year if they are funded for that year 

within six months after the end of that 

year. Costs funded after six months (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 if an appropriate adjustment 

is made to compensate for the timing of 

the charges to the Federal Government 

and related Federal reimbursement and 

the recipient’s or subrecipient’s 

contributions to the PRHP fund. 

Adjustments may be made by cash 

refund, reduction in the 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 by the recipient 

or subrecipient in excess of the costs 

calculated using an actuarial cost-based 

method recognized by GAAP for a fiscal 

year may be used as the recipient’s or 

subrecipient’s contribution in future 

periods. 

(4) If a recipient or subrecipient 

establishes or converts to an 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) Payments for unfunded PRHP 

costs must be charged in accordance 

with the allocation principles of this 

subpart. Specifically, the recipient or 

subrecipient may not charge unfunded 

PRHP costs directly to a Federal award 

if those unfunded PRHP costs are 

related to compensation not allocable to 

that award. In all cases, the payments 

for unfunded PHRP costs may not 

exceed the contribution rate of the 

employee’s current health benefit costs. 

Payments for unfunded PRHP costs may 

only be charged to a Federal award with 

the prior approval of the awarding 

Federal agency or cognizant agency for 

indirect costs if included as part of an 

approved negotiated indirect cost rate 

agreement. The recipient or subrecipient 

must notify the awarding Federal 

agency or cognizant agency for indirect 

costs, as applicable, if unfunded PHRP 

costs are re-amortized. 

(6) 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 that will 

maintain a trust fund or reserve for the 

sole purpose of providing postVerDate Sep<11>2014 20:04 Oct 04, 2023 Jkt 262001 PO 00000 Frm 00084 Fmt 4701 Sfmt 4702 E:\FR\FM\05OCP2.SGM 05OCP2

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retirement benefits to retirees and other 

beneficiaries. 

(7) The recipient or subrecipient must 

provide the Federal Government an 

equitable share of any previously 

allowed post-retirement benefit costs 

(including subsequent earnings) that the 

recipient or subrecipient receives 

through 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 recipients 

and subrecipients to workers whose 

employment is being terminated. 

Severance pay is allowable only to the 

extent that, in each case, it is required 

by: 

(i) Law; 

(ii) Employer-employee agreement; 

(iii) Established policy that 

constitutes, in effect, an implied 

agreement on the recipient’s or 

subrecipient’s part; or 

(iv) Circumstances of the particular 

employment. 

(2) Costs of severance payments are 

divided into two categories as follows: 

(i) Actual severance payments for 

normal turnover must be allocated to all 

activities; or, where the recipient or 

subrecipient provides for a reserve for 

normal severances, such method is 

acceptable if the charge to current 

operations is reasonable in light of 

payments made for normal severances 

over a representative past period, and if 

amounts charged are allocated to all 

activities of the recipient or 

subrecipient. 

(ii) Measuring the costs of abnormal 

or mass severance pay by means of an 

accrual method will not achieve equity 

for both parties. Therefore, accruals are 

not allowable. However, the Federal 

Government recognizes its 

responsibility to contribute its fair share 

toward a specific payment. Prior 

approval by the Federal agency or 

cognizant agency for indirect cost, as 

appropriate, is required. 

(3) Costs incurred in severance pay 

packages that are in excess of the 

standard severance pay provided by the 

recipient or subrecipient to an employee 

upon termination of employment and 

that are paid to the employee contingent 

upon a change in management control 

over, or ownership of, the recipient’s or 

subrecipient’s assets, are unallowable. 

(4) Severance payments to foreign 

nationals employed by the recipient or 

subrecipient outside the United States, 

to the extent that the amount exceeds 

the customary or prevailing practices for 

the recipient or subrecipient in the 

United States, are unallowable unless 

they are required by applicable foreign 

law or necessary for the performance of 

Federal programs and approved by the 

Federal agency. 

(5) Severance payments to foreign 

nationals employed by the recipient or 

subrecipient 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 

recipient or subrecipient in that 

country, are unallowable unless they are 

required by applicable foreign law or 

necessary for the performance of Federal 

programs and approved by the Federal 

agency. 

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

the form of undergraduate and graduate 

tuition or tuition remission for 

individual employees are allowable, 

provided such benefits are granted in 

accordance with established written 

policies of the IHE and are distributed 

to all IHE activities on an equitable 

basis. Tuition benefits for family 

members other than the employee are 

unallowable. 

(2) Fringe benefits in the form of 

undergraduate and graduate tuition or 

tuition remission for individual 

employees not employed by the IHE are 

limited to the tax-free amount allowed 

by the Internal Revenue Code as 

amended (26 U.S.C. 127). 

(3) IHEs may offer employees tuition 

waivers or reductions, provided that the 

benefit does not discriminate in favor of 

highly compensated employees. 

Employees can exercise these benefits at 

other institutions according to 

institutional policy. See § 200.466, for 

treatment of tuition remission provided 

to students. 

(k) Fringe benefit programs and other 

benefit costs. For IHEs whose costs are 

paid by a State or local government, 

fringe benefit programs (such as pension 

costs and FICA) and any other benefits 

costs incurred specifically on behalf of, 

and in direct benefit to, the IHE, are 

allowable. These costs do not need to be 

recorded in the accounting records of 

the IHE but are subject to the following: 

(1) The costs meet the requirements of 

Basic Considerations in §§ 200.402 

through 200.411; 

(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. 

§ 200.432 Conferences. 

A conference means an event whose 

primary purpose is to disseminate 

technical information beyond the 

recipient or subrecipient and is 

necessary and reasonable for successful 

performance under the Federal award. 

Allowable conference costs paid by the 

recipient or subrecipient as a sponsor or 

host of the conference may include 

rental of facilities, speakers’ fees, costs 

of meals and refreshments, local 

transportation, and other incidental 

items to such conferences unless further 

restricted by the terms and conditions of 

the Federal award. The costs of 

identifying and providing locally 

available dependent-care resources for 

participants are allowable as needed. 

Conference hosts/sponsors must 

exercise discretion and judgment in 

ensuring that conference costs are 

appropriate, necessary, and managed to 

minimize costs to the Federal award. 

The Federal agency may authorize 

exceptions for programs including 

Indian Tribes, children, and the elderly. 

See also §§ 200.438, 200.456, and 

200.475. 

§ 200.433 Contingency provisions. 

(a) Contingency provisions are part of 

a budget estimate of future costs 

(typically of large construction projects, 

IT systems, or other items approved by 

the Federal agency) which are 

associated with possible events or 

conditions arising from causes for 

which the precise outcome is 

indeterminable at the time of estimate 

and that are likely to result, in the 

aggregate, in additional costs for the 

approved activity or project. 

Contingency costs for major project 

scope changes, unforeseen risks, or 

extraordinary events are not allowable. 

(b) It is permissible for contingency 

costs other than those excluded in 

paragraph (a) of this section to be 

explicitly included in budget estimates 

to the extent necessary to improve their 

precision. Contingency costs must be 

estimated using broadly-accepted cost 

estimating methodologies, specified in 

the budget documentation of the Federal 

award, and accepted by the Federal 

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 

of this part (see §§ 200.300 and 

200.403), be necessary and reasonable 

for proper and efficient accomplishment 

of project or program objectives, and be 

verifiable from the recipient’s or 

subrecipient’s records. 

(c) Payments to a recipient’s or 

subrecipient’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 §§ 200.431 and 200.447. 


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§ 200.434 Contributions and donations. 

(a) Costs of contributions and 

donations, including cash, property, and 

services, from the recipient or 

subrecipient to other entities are 

unallowable. 

(b) The value of services and property 

donated (including in-kind) to the 

recipient or subrecipient may not be 

charged to the Federal award either as 

a direct or indirect cost. The value of 

donated services and property may be 

used to meet cost sharing requirements 

(see § 200.306). Depreciation on donated 

assets is permitted so long as the 

donated property is not counted 

towards meeting cost sharing 

requirements (see § 200.436). 

(c) Services donated or volunteered to 

the recipient or subrecipient may be 

provided 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 as a direct or indirect 

cost. However, the value of donated 

services may be used to meet cost 

sharing requirements in accordance 

with the provisions of § 200.306. 

(d) To the extent feasible, services 

donated to the recipient or subrecipient 

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 a nonprofit 

organization and used in the 

performance of a direct cost activity 

must be considered in the determination 

of the recipient’s or subrecipient’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 recipient or 

subrecipient; 

(i) In those instances where there is 

no basis for determining the fair market 

value of the services rendered, the 

recipient or subrecipient and the 

cognizant agency for indirect costs must 

negotiate an appropriate allocation of 

indirect cost to the services. 

(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 project’s total 

costs. Such indirect costs may be 

reimbursed under the Federal award or 

used to meet cost sharing requirements. 

(f) Fair market value of donated 

services must be computed as described 

in § 200.306. 

(g) Personal Property and Use of 

Space. 

(1) Donated personal property and use 

of space may be furnished to a recipient 

or subrecipient. 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 requirements 

described in § 200.300. The recipient or 

subrecipient must value the donations 

in accordance with § 200.300. Where the 

recipient or subrecipient treats 

donations as indirect costs, indirect cost 

rates must separate the value of the 

donations so that reimbursement is not 

made. 

§ 200.435 Defense and prosecution of 

criminal and civil proceedings, claims, 

appeals and patent infringements. 

(a) Definitions for 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 recipient or subrecipient before, 

during, and after the commencement of 

a judicial or administrative proceeding 

that bears 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 that violate the False Claims 

Act (31 U.S.C. 3729–3732) or the Antikickback Act (42 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 

the 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 

recipient or subrecipient, (or 

commenced by third parties or a current 

or former employee of the recipient or 

subrecipient who submits a 

whistleblower complaint of reprisal in 

accordance with 10 U.S.C. 4701 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 recipient or subrecipient 

(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 recipient or 

subrecipient liability. 

(C) In the case of any civil or 

administrative proceeding, the 

disallowance of costs, the imposition of 

a monetary penalty, or an order issued 

by the Federal agency head or delegate 

to the recipient or subrecipient to take 

corrective action under 10 U.S.C. 4701 

or 41 U.S.C. 4712. 

(D) A final decision by an appropriate 

Federal official to debar or suspend the 

recipient or subrecipient, to rescind or 

void a Federal award, or to terminate a 

Federal award because 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) Allowability of costs for 

proceeding commenced by Federal 

Government. 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 recipient or subrecipient and the 

Federal Government, then the costs 

incurred may be allowed to the extent 

expressly authorized in the agreement. 

(d) Allowability of costs for 

proceeding commenced by State, local, 

or foreign government. If a proceeding 

referred to in paragraph (b) of this 

section is commenced by a State, local 

or foreign government, then the costs 

incurred may be allowed if the 

authorized Federal 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 Federal 

agency. 


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(e) Allowability of costs in general. 

Costs incurred in connection with 

proceedings described in paragraph (b), 

and that are not unallowable, may be 

allowable to the extent that: 

(1) The costs are reasonable and 

necessary for 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 

other factors that may be appropriate. 

This percentage must not exceed 80 

percent unless the agreement under 

paragraph (c) has explicitly considered 

this limitation and permitted a higher 

percentage. In that case, the total 

amount of costs incurred may be 

allowable. 

(f) Major Fraud Act. Costs incurred by 

the recipient or subrecipient 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 the employee whole, where the 

recipient or subrecipient was found 

liable or settled, are unallowable. 

(g) Un-allowability of costs for 

prosecuting claims against Federal 

Government. Costs for prosecuting 

claims against the Federal Government, 

including appeals of final Federal 

agency decisions, are unallowable. 

(h) Costs of legal, accounting, 

consultant services. Costs of legal, 

accounting, consultant services, and 

related costs incurred in connection 

with patent infringement litigation, are 

unallowable unless otherwise provided 

for in the Federal award. 

(i) Potentially unallowable costs. 

Costs that 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 

withhold payment of such costs. 

However, if in its best interests, the 

Federal Government may provide for 

conditional payment upon a 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. 

§ 200.436 Depreciation. 

(a) Depreciation is the method for 

allocating the cost of fixed assets to 

periods benefitting from asset use. The 

recipient or subrecipient may be 

compensated for the use of its buildings, 

capital improvements, equipment, and 

software projects capitalized in 

accordance with GAAP provided that 

they are needed and used in the 

recipient’s or subrecipient’s activities 

and correctly allocated to Federal 

awards. The compensation must be 

made by computing the proper 

depreciation. 

(b) The allocation for depreciation 

must be made in accordance with 

Appendices III through IX of this part. 

(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 recipient or 

subrecipient 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 cost sharing but not both. 

When computing depreciation charges, 

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 the title was 

originally vested or is presently located; 

(3) Any portion of the cost of 

buildings and equipment contributed by 

or for the recipient or subrecipient that 

is already claimed as cost sharing or 

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 the 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 for indirect costs. The 

depreciation methods used to calculate 

the depreciation amounts for indirect 

cost rate purposes must be the same 

methods used by the recipient or 

subrecipient 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 may be 

depreciated over its estimated useful life 

in this case. The building components 

must be grouped into three general 

components: building shell (including 

construction and design costs), building 

services systems (for example, elevators, 

HVAC, and plumbing system), and fixed 

equipment (for example, sterilizers, 

casework, fume hoods, cold rooms, and 

glassware/washers). A cognizant agency 

for indirect costs may authorize a 

recipient or subrecipient to use more 

than these three groupings in 

exceptional cases. When a recipient or 

subrecipient elects to depreciate its 

buildings by their components, the same 

depreciation method must be used for 

indirect and financial statements 

purposes, as described in paragraphs 

(d)(1) and (2). 

(4) No depreciation may be allowed 

on 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 meaning, 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 before the 

conversion from the use allowance 

method and depreciation after the 

conversion) may not exceed the total 

acquisition cost of the asset. 

(e) Adequate property records must 

support depreciation charges, and 

physical inventories must be taken at 

least once every two years to ensure that 

the assets exist and are usable, used, 

and needed. The recipient or 

subrecipient may use statistical 

sampling techniques when taking these 

inventories. In addition, the recipient or 

subrecipient must maintain adequate 

depreciation records showing the 

amount of depreciation. 


ddrumheller on DSK120RN23PROD with PROPOSALS2
69476 Federal Register / Vol. 88, No. 192 / Thursday, October 5, 2023 / Proposed Rules 

§ 200.437 Employee health and welfare 

costs. 

(a) Costs incurred in accordance with 

the recipient’s or subrecipient’s 

established written policies for 

improving working conditions, 

employer-employee relations, employee 

health, and employee performance are 

allowable. 

(b) These costs must be equitably 

apportioned to all activities of the 

recipient or subrecipient. Income 

generated from these activities must 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 

recipient’s or subrecipient’s objective is 

to operate food services on a break-even 

basis. Losses sustained because of 

operating objectives other than the 

above are allowable only when: 

(1) The recipient or subrecipient can 

demonstrate unusual circumstances; 

and 

(2) Approved by the cognizant agency 

for indirect costs. 

§ 200.438 Entertainment and prizes. 

(a) Entertainment costs. Costs of 

entertainment, including amusement, 

diversion, and social activities and any 

associated costs (such as gifts), are 

unallowable unless they have a specific 

and direct programmatic purpose and 

are included in a Federal award. 

(b) Prizes. Costs of prizes or 

challenges are allowable if they have a 

specific and direct programmatic 

purpose and are included in the Federal 

award. Federal agencies should refer to 

OMB guidance in M–10–11 ‘‘Guidance 

on the Use of Challenges and Prizes to 

Promote Open Government,’’ issued 

March 8, 2010, or its successor. 

§ 200.439 Equipment and other capital 

expenditures. 

(a) See § 200.1 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 generalpurpose equipment, buildings, and land 

are unallowable as direct charges, 

except with the prior written approval 

of the Federal agency or pass-through 

entity. 

(2) Capital expenditures for special 

purpose equipment are allowable as 

direct costs, provided that items with a 

unit cost of $10,000 or more have the 

prior written approval of the Federal 

agency or pass-through entity. 

(3) Capital expenditures for 

improvements to land, buildings, or 

equipment that materially increase their 

value or useful life are unallowable as 

a direct cost except with the prior 

written approval of the Federal agency 

or pass-through entity. See § 200.436 on 

the allowability of depreciation on 

buildings, capital improvements, and 

equipment. See § 200.465 on the 

allowability of real property and 

equipment rental costs. 

(4) When approved as a direct charge 

in accordance with paragraphs (b)(1) 

through (3), capital expenditures must 

be charged in the period in which the 

expenditure is incurred or as otherwise 

determined appropriate and negotiated 

with the Federal agency. 

(5) The recipient or subrecipient may 

claim the unamortized portion of any 

equipment written off as a result of a 

change in capitalization levels 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 cognizant agency for 

indirect cost. 

(6) Cost of equipment disposal. If the 

Federal agency instructs the recipient or 

subrecipient to otherwise dispose of or 

transfer the equipment, the costs of 

disposal or transfer are allowable. 

(7) Equipment and other capital 

expenditures are unallowable as 

indirect costs. See § 200.436. 

§ 200.440 Exchange rates. 

Cost increases for fluctuations in the 

exchange rate are allowable costs 

subject to funding availability. The 

recipient or subrecipient must conduct 

reviews of fluctuations in the exchange 

rate to determine if there is the need for 

additional Federal funding before the 

end date of the Federal award. 

Subsequent adjustments for currency 

increases may be allowed only when the 

recipient or subrecipient provides the 

Federal agency or pass-through entity 

with adequate source documentation 

from a commonly used source in effect 

when the cost was incurred and to the 

extent that sufficient Federal funds are 

available. 

§ 200.441 Fines, penalties, damages and 

other settlements. 

Costs resulting from recipient or 

subrecipient violations of, alleged 

violations of, or failure to comply with, 

Federal, State, local, tribal, or foreign 

laws and regulations are unallowable, 

except when incurred as a result of 

compliance with specific provisions of 

the Federal award, or with the prior 

written approval of the Federal agency. 

See § 200.435. 

§ 200.442 Fundraising and investment 

management costs. 

(a) Costs of organized fundraising, 

including financial campaigns, 

endowment drives, solicitation of gifts 

and bequests, and similar expenses 

incurred to raise capital or obtain 

contributions, are unallowable. 

Fundraising costs for meeting the 

Federal program objectives are 

allowable with the prior written 

approval of the Federal agency. 

(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 

fundraising and investment activities 

must be allocated as an appropriate 

share of indirect costs in accordance 

with § 200.413. 

§ 200.443 Gains and losses on the 

disposition of depreciable assets. 

(a) The recipient or subrecipient must 

include gains and losses on the sale, 

retirement, or other disposition of 

depreciable property in the year they 

occur as credits or charges to the asset 

cost grouping(s) of the property. The 

amount of the gain or loss 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 §§ 200.436 and 200.439. 

(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 failing to 

maintain proper insurance, except as 

provided in § 200.447. 

(4) Compensation for the use of the 

property was provided through use 

allowances instead of depreciation. 

(5) Gains and losses arising from 

extraordinary or bulk sales, retirements, 

or other dispositions must be 

considered on an individual 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 


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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 §§ 200.310 

through 200.316. 

§ 200.444 General costs of government. 

(a) For states, local governments, and 

Indian Tribes, the general costs of 

government are unallowable except as 

provided in § 200.475. 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, or 

school board, 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 § 200.435; and 

(5) Costs of other general types of 

government services normally provided 

to the general public, such as fire and 

police, unless provided as a direct cost 

under a program statute or regulation. 

(b) Indian Tribes and Councils of 

Governments (COGs) (see definition for 

Local government in § 200.1) may 

include up to 50 percent of salaries and 

expenses directly attributable to 

managing and operating Federal 

programs by the chief executive and 

their staff in the indirect cost 

calculation without documentation. 

§ 200.445 Goods or services for personal 

use. 

(a) Costs of goods or services for the 

personal use of the recipient’s or 

subrecipient’s employees are 

unallowable regardless of whether the 

cost is reported as taxable income to the 

employees. 

(b) Housing costs (for example, 

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 

the employees. In addition, these costs 

must be approved in advance by a 

Federal agency to be allowable. 

§ 200.446 Idle facilities and idle capacity. 

(a) Definitions for the purpose of 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 recipient or 

subrecipient. 

(2) Idle facilities mean completely 

unused facilities that exceed the 

recipient’s or subrecipient’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 maintenance, repair, 

housing, rent, and other related costs 

(for example, 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 (for example, 

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 this exception, costs of 

idle facilities are allowable for a 

reasonable period, 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. These 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. 

§ 200.447 Insurance and indemnification. 

(a) Costs of insurance required or 

approved and maintained by the terms 

and conditions of 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) The types, extent, and cost of 

coverage are in accordance with the 

recipient’s or subrecipient’s established 

written policy and sound business 

practices. 

(2) Costs of insurance or contributions 

to any reserve covering the risk of loss 

of, or damage to, Federal Government 

property are unallowable except to the 

extent that the Federal agency has 

approved the costs. 

(3) Costs allowed for business 

interruption or other similar insurance 

must exclude coverage of management 

fees. 

(4) Insurance costs on the lives of 

trustees, officers, or other employees 

holding positions of similar 

responsibilities are allowable only when 

the insurance represents additional 

compensation (see § 200.431). This 

insurance is unallowable when the 

recipient or subrecipient is identified as 

the beneficiary. 

(5) Insurance costs to correct defects 

in the recipient’s or subrecipient’s 

materials or workmanship are 

unallowable. 

(6) Medical liability (malpractice) 

insurance. Medical liability insurance is 

an allowable cost of a Federal research 

program only when the program 

involves human subjects or training of 

participants in research techniques. 

Medical liability insurance costs must 

be treated as a direct cost and assigned 

to individual projects based on how 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 authorized 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 


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hand tools, which occur in the ordinary 

course of operations, are allowable. 

(d) Contributions to a reserve for a 

self-insurance program, including 

workers’ compensation, unemployment 

compensation, and severance pay, are 

allowable subject to the following 

requirements: 

(1) The type, extent, and cost of 

coverage and the rates and premiums 

would have been allowed had the 

insurance (including reinsurance) been 

purchased to cover the risks. However, 

a 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 considering factors such 

as the recipient’s or subrecipient’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, and other 

relevant factors or information. Reserve 

levels related to employee-related 

coverages must 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 exceeding the 

above-mentioned value 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 the types of insured 

risk and losses generated by the various 

insured activities or agencies of the 

recipient or subrecipient. If individual 

departments or agencies of the recipient 

or subrecipient experience significantly 

different levels of claims for a particular 

risk, those differences must be 

recognized by using separate allocations 

or other techniques resulting in an 

equitable allocation. 

(5) Whenever funds are transferred 

from a self-insurance reserve to other 

accounts (for example, 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 the claims collection regulations of 

the cognizant agency for indirect cost. 

(e) Insurance refunds must be credited 

against insurance costs in the year the 

refund is received. 

(f) Indemnification includes securing 

the recipient or subrecipient against 

liabilities to third persons and other 

losses not compensated by insurance or 

otherwise. The Federal Government is 

obligated to indemnify the recipient or 

subrecipient only to the extent expressly 

provided for in the Federal award, 

except as provided in paragraph (c). 

§ 200.448 Intellectual property. 

(a) Patent and copyright 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 

the Federal Government requires that a 

title or a royalty-free license 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 

§ 200.459). 

(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 the 

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 

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 when the 

royalties may have been obtained as a 

result of less-than-arm’s-length 

bargaining, such as: 

(i) Royalties paid to persons, 

including corporations, affiliated with 

the recipient or subrecipient. 

(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 recipient or 

subrecipient. 

(3) In any case involving a patent or 

copyright formerly owned by the 

recipient or subrecipient, the amount of 

royalty allowed must not exceed the 

cost which would have been allowed 

had the recipient or subrecipient 

retained the title. 

§ 200.449 Interest. 

(a) General. Costs incurred for interest 

on borrowed capital, temporary use of 

endowment funds, or the use of the 

recipient’s or subrecipient’s own funds 

are unallowable. Financing costs 

(including interest) to acquire, 

construct, or replace capital assets are 

allowable, subject to the requirements of 

this section. 

(b) Capital assets. (1) Capital assets is 

defined in § 200.1. An asset cost 

includes (as applicable) acquisition 

costs, construction costs, and other costs 

capitalized in accordance with GAAP. 

(2) For recipient or subrecipient 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 recipients and 

subrecipients. (1) The recipient or 

subrecipient 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 recipient or subrecipient from an 

unrelated (arm’s length) third party. 

(3) The recipient or subrecipient 

obtains the financing via an arm’slength transaction (meaning, a 

transaction with an unrelated third 

party); or claims reimbursement of 

actual interest cost at a rate available via 

such a transaction. 


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(4) The recipient or subrecipient 

limits claims for Federal reimbursement 

of interest costs to the least expensive 

alternative. For example, a lease 

contract that transfers ownership by the 

end of the contract may be determined 

less costly than purchasing through 

other types of debt financing, in which 

case reimbursement must be limited to 

the amount of interest determined if 

leasing had been used. 

(5) The recipient or subrecipient 

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 recipient or 

subrecipient 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 recipient or subrecipient for the 

acquisition of facilities prior to 

occupancy. 

(i) The recipient or subrecipient 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 recipient or subrecipient must 

impute interest on excess cash flow as 

follows: 

(A) Annually, the recipient or 

subrecipient must prepare a cumulative 

(from the project’s inception) 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 recipient or 

subrecipient must divide the abovementioned annual amounts by the 

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 

allowable interest cost. The interest rate 

to be used must be the three-month 

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 interest costs to be allowable for 

states, local governments, and Indian 

Tribes, the recipient or subrecipient 

must have incurred the interest costs for 

buildings after October 1, 1980, or after 

September 1, 1995, for land and 

equipment. 

(1) The requirement to offset the 

interest earned on borrowed funds 

against allowable interest cost 

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

applies to earnings on debt service 

reserve funds. 

(2) The recipient or subrecipient must 

negotiate the amount of allowable 

interest cost related to the acquisition of 

facilities with asset costs of $1 million 

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

of this section. For this purpose, a 

recipient or subrecipient 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 

interest costs to be allowable, the IHE 

must have incurred the interest costs 

after July 1, 1982, in connection with 

acquisitions of capital assets that 

occurred after that date. 

(f) Additional condition for nonprofit 

organizations. For interest costs to be 

allowable, the nonprofit organization 

must have 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 nonprofit 

organization’s Federal awards are 

instead subject to CAS 414 (48 CFR 

9904.414), ‘‘Cost of Money as an 

Element of the Cost of Facilities 

Capital,’’ and CAS 417 (48 CFR 

9904.417), ‘‘Cost of Money as an 

Element of the Cost of Capital Assets 

Under Construction.’’ 

§ 200.450 Lobbying. 

(a) Lobbying costs associated with 

obtaining Federal assistance awards. 

The costs of certain influencing 

activities associated with obtaining 

grants, cooperative agreements, 

contracts, or loans are unallowable. 

Lobbying with respect to certain grants, 

cooperative agreements, contracts, and 

loans is governed by relevant statutes, 

including the provisions of 31 U.S.C. 

1352, as well as the common rule, ‘‘New 

Restrictions on Lobbying,’’ published on 

February 26, 1990, including 

definitions, and the Office of 

Management and Budget ‘‘Governmentwide Guidance for New Restrictions on 

Lobbying’’ and notices published on 

December 20, 1989, June 15, 1990, 

January 15, 1992, and 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 merit. 

(c) Restrictions on nonprofit 

organizations and IHEs. In addition, the 

following restrictions apply 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 to influence 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, fundraising 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 


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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 recipient’s or subrecipient’s member 

of congress, legislative body, 

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 to directly 

reduce the cost, or to avoid material 

impairment of the recipient’s or 

subrecipient’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 to retain their 

charitable deduction status and avoid 

punitive excise taxes, 26 U.S.C. (I.R.C.) 

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 

I.R.C. 4911(d)(2) and 26 CFR 56.4911– 

2(c)(1) through (c)(3). 

(v) When a recipient or subrecipient 

seeks reimbursement for indirect costs, 

total lobbying costs must be identified 

separately in the indirect cost rate 

proposal and thereafter be treated as 

other unallowable activity costs in 

accordance with § 200.413. 

(vi) The recipient or subrecipient 

must submit a certification that the 

requirements and standards of this 

section have been complied with as part 

of its annual indirect cost rate proposal. 

(See § 200.415.) 

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

similar records are not required to be 

created for purposes of complying with 

the record-keeping requirements in 

§ 200.302 with respect to lobbying costs 

during a particular calendar month 

when: 

(1) The employee engages in lobbying 

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

(c)(2) of this section) for 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 recipient or subrecipient 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, recipients and subrecipients 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) In consultation with OMB, the 

Federal agency must establish 

procedures for resolving, in advance, 

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 

recipient or subrecipient from 

contesting the lawfulness of such a 

determination. 

§ 200.451 Losses on other awards or 

contracts. 

Any excess costs over income under 

any other award or contract of any 

nature is unallowable. This includes, 

but is not limited to, the recipient’s or 

subrecipient’s contributed portion by 

reason of cost sharing agreements or any 

under-recoveries through negotiation of 

flat amounts for indirect costs. Also, any 

excess of costs over authorized funding 

levels transferred from any award or 

contract to another is unallowable. All 

losses are not allowable indirect costs 

and must be included in the appropriate 

indirect cost rate base for allocating 

indirect costs. 

§ 200.452 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 that add to the 

permanent value of the buildings and 

equipment or appreciably prolong their 

intended life must be treated as capital 

expenditures (see § 200.439). These 

costs are only allowable to the extent 

not paid through rental or other 

agreements. 

§ 200.453 Materials and supplies costs, 

including costs of computing devices. 

(a) Costs incurred for materials, 

supplies, and fabricated parts necessary 

for the performance of 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 an allowable part of 

materials and supplies costs. 

(c) Materials and supplies used for the 

performance of a Federal award may be 

charged as direct costs. Charging 

computing devices 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, the 

materials will be used without charge. 

§ 200.454 Memberships, subscriptions, 

and professional activity costs. 

(a) Costs of the recipient’s or 

subrecipient’s membership in business, 

technical, and professional 

organizations are allowable. 

(b) Costs of the recipient’s or 

subrecipient’s subscriptions to business, 

professional, and technical periodicals 

are allowable. 

(c) Costs of membership in any civic 

or community organization are 

allowable. 

(d) Costs of membership in any 

country club or social or dining club or 

organization are unallowable. 


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(e) Costs of membership in 

organizations whose primary purpose is 

lobbying are unallowable. See § 200.450. 

§ 200.455 Organization costs. 

(a) Costs such as incorporation fees, 

brokers’ fees, fees to promoters, 

organizers or management consultants, 

attorneys, accountants, or investment 

counselors, whether or not employees of 

the recipient or subrecipient in 

connection with the establishment or 

reorganization of an organization, are 

unallowable except with prior approval 

of the Federal agency. 

(b) The costs of any activities 

undertaken to persuade employees of 

the recipient or subrecipient, or any 

other entity, to exercise or not to 

exercise, or concerning the manner of 

exercising, the right to organize and 

bargain collectively through 

representatives of the employees’ own 

choosing, are unallowable. 

(c) The costs related to data and 

evaluation are allowable and include 

(but are not limited to) the expenditures 

needed to gather, store, track, manage, 

analyze, disaggregate, secure, share, 

publish, or otherwise use data to 

administer or improve the program, 

such as data systems, personnel, data 

dashboards, cyber security, and related 

items. Data costs may also include 

direct or indirect costs associated with 

building integrated data systems—data 

systems that link individual-level data 

from multiple State and local 

government agencies for purposes of 

management, research, and evaluation. 

§ 200.456 Participant support costs. 

Participant support costs are 

allowable (see § 200.1). The 

classification of items as participant 

support costs must be documented in 

the recipient’s or subrecipient’s written 

policies and procedures and treated 

consistently across all Federal awards. 

§ 200.457 Plant and security costs. 

Necessary and reasonable expenses 

incurred for the 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 § 200.439. 

§ 200.458 Pre-award costs. 

Pre-award costs are those incurred 

before the start date of the Federal 

award or subaward 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. These 

costs are allowable only to the extent 

that they would have been allowed if 

incurred after the start date of the 

Federal award and only with the prior 

written approval of the Federal agency. 

If approved, these costs must be charged 

to the initial budget period of the 

Federal award unless otherwise 

specified by the Federal agency or passthrough entity. 

§ 200.459 Professional service 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 

recipient or subrecipient 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 § 200.435. 

(b) In determining the allowability of 

costs in a particular case, no single 

factor or any combination of factors is 

necessarily determinative. However, the 

following factors are relevant: 

(1) The nature and scope of the 

service rendered in relation to the 

service required. 

(2) The necessity of contracting for the 

service, considering the recipient’s or 

subrecipient’s capability in the 

particular area. 

(3) The past pattern of such costs, 

particularly in the years prior to 

receiving a Federal award(s). 

(4) The impact of Federal awards on 

the recipient’s or subrecipient’s 

business (meaning, what new problems 

have arisen). 

(5) Whether the proportion of Federal 

work to the recipient’s or subrecipient’s 

total business influences the recipient or 

subrecipient 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 entity providing the 

service and the customary fees charged, 

especially on non-federally funded 

activities. 

(8) Adequacy of the contractual 

agreement for the service (for example, 

description of the service, estimate of 

the time required, rate of compensation, 

and termination provisions). 

(c) To be allowable, retainer fees must 

be supported by evidence of bona fide 

services available or rendered in 

addition to the factors in paragraph (b) 

of this section. 

§ 200.460 Proposal costs. 

Proposal costs are the costs of 

preparing bids, proposals, or 

applications on potential Federal and 

non-Federal awards or projects, 

including developing data necessary to 

support the recipient’s or subrecipient’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 to all 

current activities of the recipient or 

subrecipient. No proposal costs of past 

accounting periods may be allocated to 

the current period. 

§ 200.461 Publication and printing costs. 

(a) Publication costs for electronic and 

print media, including distribution, 

promotion, and general handling, are 

allowable. These costs should be 

allocated as indirect costs to all 

benefiting activities of the recipient or 

subrecipient if they are not identifiable 

with a particular cost objective. 

(b) Page charges, article processing 

charges, or similar open access fees for 

professional journal publications and 

other peer-reviewed publications 

developed under a Federal award 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. 

(3) The recipient or subrecipient may 

charge the Federal award during 

closeout for the costs of publication or 

sharing of research results if the costs 

were not incurred during the period of 

performance of the Federal award. If 

incurred, these costs must be charged to 

the final budget period of the award 

unless otherwise specified by the 

Federal agency. 

§ 200.462 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 are 

allowable as a direct cost if the costs are 

incurred specifically for a Federal award 

and with the prior approval of the 

Federal agency or pass-through entity. 

(b) Costs incurred in restoring or 

rehabilitating the recipient’s or 

subrecipient’s facilities to 

approximately the same condition 


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existing immediately before the 

commencement of a Federal award(s), 

less costs related to normal wear and 

tear, are allowable. 

§ 200.463 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 

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 recipient’s 

or subrecipient’s standard recruitment 

program. When the recipient or 

subrecipient 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 recipient or 

subrecipient, are unallowable. 

(c) If relocation costs incurred 

incident to recruitment of a new 

employee have been funded in whole or 

in part by a Federal award, and the 

newly hired employee resigns for 

reasons within the employee’s control 

within 12 months after hire, the 

recipient or subrecipient must refund or 

credit the Federal Government for its 

share of the cost. See § 200.464. 

(d) Short-term 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 and 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 recipient’s 

or subrecipient’s cost accounting 

practices and established written policy; 

and 

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

as described in the applicable cost 

principles. 

§ 200.464 Relocation costs of employees. 

(a) Relocation costs are costs incident 

to the permanent change of duty 

assignment (for an indefinite period or 

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 their immediate 

family and their 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 a maximum period of 30 

calendar days. 

(3) Closing costs, such as brokerage, 

legal, and appraisal fees, incidental to 

the disposition of the employee’s former 

home. These costs, together with those 

described in paragraph (b)(4) of this 

section, are limited to eight percent 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 

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 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. If relocation costs incurred 

incident to the recruitment of a new 

employee have been funded in whole or 

in part by a Federal award, and the 

newly hired employee resigns for 

reasons within the employee’s control 

within 12 months after hire, the 

recipient or subrecipient must refund or 

credit the Federal Government for its 

share of the cost. If a new employee is 

relocating to an overseas location and 

dependents are not permitted for any 

reason, and the costs do not include 

transporting household goods, the costs 

must be considered travel costs in 

accordance with § 200.474, not 

relocation costs under § 200.464). 

(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. 

§ 200.465 Rental costs of real property and 

equipment. 

(a) Subject to the limitations 

described in paragraphs (b) through (d) 

of this section, rental costs are allowable 

to the extent that the rates are 

reasonable in light of such factors as 

costs of comparable rental properties; 

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 if other options are 

available. 

(b) Rental costs under ‘‘sale and lease 

back’’ arrangements are allowable only 

up to the amount allowed if the 

recipient or subrecipient had 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 described 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 can control or 

substantially influence the actions of the 

other. Such leases include, but are not 

limited to, those between: 

(1) Divisions of the recipient or 

subrecipient; 

(2) The recipient or subrecipient 

under common control through 

common officers, directors, or members; 

and 

(3) The recipient or subrecipient and 

a director, trustee, officer, or key 

employee of the recipient or 

subrecipient or an immediate family 

member, either directly or through 

corporations, trusts, or similar 

arrangements in which they hold a 

controlling interest. For example, the 

recipient or subrecipient may establish 


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a separate corporation to own property 

and lease it back to the recipient or 

subrecipient. 

(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. 

(d) Rental costs under leases which 

are required to be accounted for as a 

financed purchase under GASB 

standards or a finance lease under 

GAAP are allowable only up to the 

amount (described in paragraph (b) of 

this section) allowed if the recipient or 

subrecipient had purchased the 

property on the date the lease agreement 

was executed. Interest costs related to 

these leases are allowable if they meet 

the criteria in § 200.449. Unallowable 

costs include costs that would not have 

been incurred if the recipient or 

subrecipient had purchased the 

property, such as amounts paid for 

profit, management fees, and taxes. 

(e) Rental or lease payments are 

allowable under lease contracts where 

the recipient or subrecipient is required 

to recognize an intangible right-to-use 

lease asset under GASB standards or 

right-of-use operating lease workspace 

asset under GAAP for purposes of 

financial reporting in accordance with 

GAAP. 

(f) The rental of any property owned 

by any individuals or entities affiliated 

with the recipient or subrecipient, 

including commercial or residential real 

estate, for purposes such as the home 

office is unallowable. 

§ 200.466 Scholarships and student aid 

costs. 

(a) Costs of scholarships, fellowships, 

and student aid programs at IHEs are 

allowable only when the purpose of the 

Federal award is to provide training to 

participants, and the Federal agency 

approves the cost. However, tuition 

remission and other forms of 

compensation paid as, or instead 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 the established written 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) The student is enrolled in an 

advanced degree program at the IHE or 

an affiliated institution during the 

academic period and the student’s 

activities under the Federal award are 

related to their 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) The IHE compensates students 

under Federal awards as well as other 

activities in similar manners. 

(b) Charges for tuition remission and 

other forms of compensation paid to 

students as, or instead of, salaries and 

wages are subject to the reporting 

requirements in § 200.430. The charges 

must be treated as a direct or indirect 

cost in accordance with the actual work 

performed. Tuition remission may be 

charged on an average rate basis. See 

§ 200.431. 

§ 200.467 Selling and marketing costs. 

Costs of selling and marketing any 

products or services of the recipient or 

subrecipient are unallowable unless 

they are allowed under § 200.421 and 

are necessary to meet the requirements 

of the Federal award. 

§ 200.468 Specialized service facilities. 

(a) The costs of services provided by 

highly complex or specialized facilities 

operated by the recipient or 

subrecipient are allowable provided the 

charges for the services meet the 

conditions of either paragraph (b) or (c) 

of this section and take into account any 

items of income or Federal financing 

that qualify as applicable credits under 

§ 200.406. These costs include charges 

for facilities such as computing 

facilities, wind tunnels, and reactors. 

(b) The costs of such services, when 

material, must be charged directly to the 

applicable Federal awards based on 

actual usage of the services on the basis 

of a schedule of rates or established 

methodology that: 

(1) Does not discriminate between 

activities under Federal awards and 

other activities of the recipient or 

subrecipient, including usage by the 

recipient or subrecipient for internal 

purposes; and 

(2) Is designed to recover only the 

aggregate costs of the services. Each 

service’s costs must normally consist of 

its direct costs and an allocable share of 

all indirect costs. Rates must be adjusted 

at least biennially and must consider 

any over or under-applied costs of the 

previous period(s). 

(c) Where the costs incurred for a 

service are not material, they may be 

allocated as indirect costs. 

(d) Under extraordinary 

circumstances, the cognizant agency for 

indirect costs and the recipient or 

subrecipient may negotiate and 

establish an alternative costing 

arrangement if it is in the Federal 

Government’s best interest. 

§ 200.469 Student activity costs. 

Costs incurred for intramural 

activities, student publications, student 

clubs, and other student activities are 

unallowable unless expressly 

authorized in the Federal award. 

§ 200.470 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 selfassessed 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 Federal agency to 

identify taxes where Federal 

participation is inappropriate. The 

cognizant agency for indirect costs may 

accept a reasonable approximation in 

circumstances where determining the 

amount of unallowable taxes would 

require an excessive amount of effort. 

(b) For nonprofit organizations and 

IHEs. (1) Taxes that the recipient or 

subrecipient is required to pay and 

which are paid or accrued in accordance 

with GAAP are generally allowable. 

These costs include payments made to 

local governments instead of taxes and 

that are commensurate with the local 

government services received. The 

following taxes are unallowable: 

(i) Taxes for which exemptions are 

available to the recipient or subrecipient 

directly or which are available to the 

recipient or subrecipient based on an 

exemption afforded the Federal 

Government and, in the latter case, 

when the Federal 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 interest 

thereon, which were allowed as Federal 


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award costs, must be credited to the 

Federal Government as a cost reduction 

or cash refund, as appropriate. However, 

any interest paid or credited to a 

recipient or subrecipient 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 Federal Government has 

reimbursed the recipient or subrecipient 

for the taxes, interest, and penalties. 

(c) Value Added Tax (VAT). Foreign 

taxes charged for procurement 

transactions that a recipient or 

subrecipient is legally required to pay in 

a country is allowable. 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 recipient or subrecipient 

relate to allowable cost, these costs must 

be credited to the Federal agency as a 

cost reduction or cash refunds, as 

appropriate. In cases where the costs are 

credited back to the Federal award, the 

recipient or subrecipient may reduce the 

Federal share of costs by the amount of 

the foreign tax reimbursement, or where 

Federal award has not expired, the 

Federal agency may allow the recipient 

or subrecipient to use the foreign 

government tax refund for approved 

activities under the Federal award. 

§ 200.471 Telecommunication and video 

surveillance costs. 

(a) Costs incurred for 

telecommunications and video 

surveillance services or equipment such 

as phones, internet, video surveillance, 

and cloud servers are allowable except 

for the following circumstances: 

(b) Obligating or expending covered 

telecommunications and video 

surveillance services or equipment or 

services as described in § 200.216 to: 

(1) Procure or obtain, extend or renew 

a contract to procure or obtain; 

(2) Enter into a contract (or extend or 

renew a contract) to procure; or 

(3) Obtain the equipment, services, or 

systems. 

§ 200.472 Termination and standard 

closeout costs. 

(a) 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 must be used in 

conjunction with the other termination 

requirements of this part. 

(1) The cost of items reasonably 

usable on the recipient’s or 

subrecipient’s other work is 

unallowable unless the recipient or 

subrecipient submits evidence that it 

would not retain such items without 

sustaining a loss. In deciding whether 

such items are reasonably usable on 

other work of the recipient or 

subrecipient, the Federal agency or 

pass-through entity should consider the 

recipient’s or subrecipient’s plans and 

orders for current and scheduled 

activity. Contemporaneous purchases of 

common items by the recipient or 

subrecipient must be considered 

evidence that the items are reasonably 

usable on the recipient’s or 

subrecipient’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 do not 

exceed the reasonable quantitative 

requirements of other work. 

(2) If the recipient or subrecipient 

cannot discontinue certain costs 

immediately after the effective 

termination date, despite making all 

reasonable efforts, then the costs are 

generally allowable within the 

limitations of this part. Any costs 

continuing after termination due to the 

negligent or willful failure of the 

recipient or subrecipient to immediately 

discontinue the costs are unallowable. 

(3) Loss of useful value of special 

tooling, machinery, and equipment is 

generally allowable if: 

(i) Such special tooling, special 

machinery, or equipment is not 

reasonably capable of use in the other 

work of the recipient or subrecipient; 

(ii) The interest of the Federal 

Government is protected by transfer of 

title or by other means deemed 

appropriate by the Federal agency (see 

§ 200.313 (d)); and 

(iii) The loss of useful value for one 

terminated Federal award is limited to 

the 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. 

(4) 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: 

(i) The amount of claimed rental costs 

does not exceed the reasonable use 

value of the property leased for the 

period of the Federal award and a 

further period as may be reasonable; and 

(ii) The recipient or subrecipient 

makes all reasonable efforts to 

terminate, assign, settle, or otherwise 

reduce the cost of the lease. The cost of 

alterations of the leased property 

provided they were necessary for the 

performance of the Federal award, and 

the cost of reasonable restoration 

required by the lease may be included. 

(5) The following settlement expenses 

are generally allowable. 

(i) Accounting, legal, clerical, and 

similar costs that are reasonably 

necessary for: 

(A) The preparation and presentation 

to the Federal agency or pass-through 

entity of settlement claims and 

supporting data with respect to the 

terminated portion of the Federal award, 

unless the termination is for cause (see 

§§ 200.339–200.343); and 

(B) The termination and settlement of 

subawards. 

(ii) Reasonable costs for the storage, 

transportation, protection, and 

disposition of property provided by the 

Federal Government or acquired or 

produced for the Federal award. 

(6) Claims under subawards, 

including the allocable portion of claims 

common to the Federal award and other 

work of the recipient or subrecipient, 

are generally allowable. An appropriate 

share of the recipient’s or subrecipient’s 

indirect costs may be allocated to the 

amount of settlements with contractors 

and subrecipients, provided that the 

amount allocated is consistent with the 

requirements of § 200.414. These 

allocated indirect costs must exclude 

the same and similar costs claimed 

directly or indirectly as settlement 

expenses. 

(b) Closeout Costs. Administrative 

costs associated with the closeout 

activities of a Federal award are 

allowable. The recipient or subrecipient 

may charge the Federal award during 

the closeout for the necessary 

administrative costs of that Federal 

award (for example, salaries of 

personnel preparing final reports, 

publication and printing costs, and the 

costs associated with the disposition of 

equipment and property). These costs 

may be incurred until the due date of 

the final report(s). If incurred, these 

costs must be liquidated prior to the due 

date of the final report(s) and charged to 

the final budget period of the award 

unless otherwise specified by the 

Federal agency. 


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§ 200.473 Training and education costs. 

The cost of training and education 

provided for employee development is 

allowable. 

§ 200.474 Transportation costs. 

Costs incurred for freight, express, 

cartage, postage, and other 

transportation services relating to goods 

purchased, in process, or delivered, are 

allowable. When the costs can be 

readily identified with the items 

involved, they may be charged directly 

as transportation costs or added to the 

cost of such items. When identification 

with the materials received cannot be 

readily identified, the inbound 

transportation cost may be charged to 

the appropriate indirect cost accounts if 

the recipient or subrecipient follows a 

consistent, equitable procedure in this 

respect. If reimbursable under the terms 

and conditions of the Federal award, 

outbound freight should be treated as a 

direct cost. 

§ 200.475 Travel costs. 

(a) General. Travel costs include the 

transportation, lodging, subsistence, and 

related items incurred by employees 

who are in travel status on official 

business of the recipient or 

subrecipient. These costs may be 

charged on an actual cost basis, a per 

diem or mileage basis, 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. The 

method used must be consistent with 

those normally allowed in like 

circumstances in the recipient’s or 

subrecipient’s other activities and in 

accordance with the recipient’s or 

subrecipient’s established written 

policies. Notwithstanding the 

provisions of § 200.444, travel costs of 

officials covered by that section are 

allowable with the prior written 

approval of the Federal agency or passthrough 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 recipient or 

subrecipient in its regular operations as 

the result of the recipient’s or 

subrecipient’s established written 

policy. In addition, if these costs are 

charged directly to the Federal award 

documentation must justify that: 

(1) Participation of the individual is 

necessary for the Federal award; and 

(2) The costs are reasonable and 

consistent with the recipient’s or 

subrecipient’s established written 

policy. 

(c) Dependent costs. (1) Temporary 

dependent care costs (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 

recipient’s or subrecipient’s established 

written policy for all travel; and 

(iii) Are only temporary during the 

travel period. 

(2) Travel costs for dependents are 

unallowable, except for travel of six 

months or more with prior approval of 

the Federal agency. See § 200.432. 

(d) Establishing rates and amounts. In 

the absence of an established written 

policy regarding travel costs, the rates 

and amounts established under 5 U.S.C. 

5701–11 (‘‘Travel and Subsistence 

Expenses; Mileage Allowances’’), by the 

Administrator of General Services, or by 

the President (or their 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 recipient or 

subrecipient must justify and document 

these conditions on a case-by-case basis 

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 recipient’s or 

subrecipient’s determinations that 

customary standard airfare or other 

discount airfare is unavailable for 

specific trips if the recipient or 

subrecipient can demonstrate that such 

airfare was not available in the specific 

case. 

(f) Air travel by other than 

commercial carrier. Travel costs by 

recipient or subrecipient-owned, 

-leased, or -chartered aircraft include 

the cost of the lease, charter, operation 

(including personnel costs), 

maintenance, depreciation, insurance, 

and other related costs. The portion of 

these costs that exceed the cost of 

airfare, as provided for in paragraph (d), 

is unallowable. 

§ 200.476 Trustees. 

Travel and subsistence costs of 

trustees (or directors) at IHEs and 

nonprofit organizations are allowable. 

See § 200.475. 

Subpart F—Audit Requirements 

General 

§ 200.500 Purpose. 

This part sets forth standards for 

obtaining consistency and uniformity 

among Federal agencies for the audit of 

non-Federal entities expending Federal 

awards. 

Audits 

§ 200.501 Audit requirements. 

(a) Audit required. A non-Federal 

entity that expends $1,000,000 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 $1,000,000 in Federal 

awards during its fiscal year must have 

a single audit conducted in accordance 

with § 200.514 except when it elects to 

have a program-specific audit 

conducted in accordance with 

paragraph (c) or (d) of this section. 

(c) Program-specific audit election (in 

general). A non-Federal entity may elect 

to have a program-specific audit 

conducted in accordance with § 200.507 

if the following conditions are met: 

(1) The non-Federal entity expends 

Federal awards under only one Federal 

program (excluding research and 

development); and 

(2) The Federal program’s statutes or 

regulations, or terms and conditions of 

the Federal award, do not require a 

financial statement audit of the nonFederal entity. 

(d) Program-specific audit election for 

research and development. A nonFederal entity may elect to have a 

program-specific audit for research and 

development conducted in accordance 

with § 200.507, but only if all of the 

following conditions are met: 

(1) The non-Federal entity expends 

Federal awards only from the same 

Federal agency, or the same Federal 

agency and the same pass-through 

entity; and 

(2) The Federal agency, or passthrough entity in the case of a 

subrecipient, approves a programspecific audit in advance. 


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(e) Exemption when Federal awards 

expended are less than $1,000,000. A 

non-Federal entity that expends less 

than $1,000,000 in Federal awards 

during its fiscal year is exempt from 

Federal audit requirements for that year, 

except as noted in § 200.503. However, 

in all instances, the records of the nonFederal entity must be available for 

review or audit by appropriate officials 

of the Federal agency, pass-through 

entity, and the Government 

Accountability Office (GAO). 

(f) 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. 

(g) 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. Payments 

received for goods or services provided 

as a contractor under a Federal award 

(see § 200.331) are not subject to audit 

under this part. 

(h) Compliance responsibility for 

contractors. In most cases, the auditee’s 

compliance responsibility for 

contractors is to ensure that the 

procurement, receipt, and payment for 

goods and services comply with Federal 

statutes, regulations, and the terms and 

conditions of a Federal award. Federal 

award compliance requirements 

normally do not flow down to 

contractors. However, the auditee is 

responsible for ensuring compliance for 

procurement transactions that require a 

contractor to be responsible for program 

compliance and 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 a determination that these 

transactions comply with Federal 

statutes, regulations, and the terms and 

conditions of a Federal award. 

(i) For-profit subrecipient. This part 

does not apply to for-profit 

organizations. As necessary, the passthrough entity is responsible for 

establishing requirements to ensure 

compliance by for-profit subrecipients. 

The subaward with a 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 

throughout the performance of the 

subaward, and post-award audits (see 

§ 200.332). 

§ 200.502 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 related to the Federal award 

pertains to events that require the nonFederal entity to comply with Federal 

statutes, regulations, and the terms and 

conditions of Federal awards, such as: 

(1) Expenditure/expense transactions 

associated with grants, cooperative 

agreements, cost-reimbursement 

contracts under the FAR, compacts with 

Indian Tribes, and direct 

appropriations; 

(2) The disbursement of funds to 

subrecipients; 

(3) The use of loan proceeds under 

loan and loan guarantee programs; 

(4) The receipt of property (including 

surplus property); 

(5) The receipt or use of program 

income; 

(6) The distribution or use of food 

commodities; 

(7) The disbursement of amounts 

entitling the non-Federal entity to an 

interest subsidy; and 

(8) The period when insurance is in 

force. 

(b) Loan and loan guarantees (loans). 

Loan and loan guarantees retain their 

Federal character through the end of the 

Federal award period of performance 

unless otherwise specified in statute or 

Federal agency regulations. The Federal 

Government is at risk for loans until the 

debt is repaid. Therefore, 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)): 

(1) The value of new loans made or 

received during the audit period; plus 

(2) The balance of loans from previous 

years at the beginning of the audit 

period 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 Institutions of Higher Education 

(IHE). When loans are made to students 

of an IHE, but the IHE itself does not 

have continuing compliance 

requirements for the loans, then only 

the value of loans made during the audit 

period are 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 

Federal statutes, regulations, and the 

terms and conditions of Federal awards 

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 is 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 is 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 

that is received as part of a Federal 

award to carry out a Federal program) 

must be valued at fair market value at 

the time of receipt or the assessed value 

provided by the Federal agency and 

must be included in determining 

Federal awards expended under this 

part 

(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 from the 

National Credit Union Share Insurance 

Fund and the Central Liquidity Facility 

funded by contributions from insured 

non-Federal entities are not considered 

Federal awards expended. 

§ 200.503 Relation to other audit 

requirements. 

(a) Other financial audits. 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 an audit provides 

a Federal agency with the information it 

requires to carry out its responsibilities 

under Federal statute or regulation, a 


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Federal agency must rely upon and use 

that information. 

(b) Conducting additional audits. 

Notwithstanding paragraph (a) of this 

section, a Federal agency, Inspectors 

General, or GAO may conduct or 

arrange additional audits 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 not to 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) Authority to conduct additional 

audits. 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 officials. 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. A Federal 

agency may request that an auditee have 

a particular Federal program audited as 

a major program in lieu of the Federal 

agency conducting or arranging for the 

additional audits. Such requests should 

be made at least 180 calendar days prior 

to the end of the fiscal year to be 

audited to allow for planning. After 

consultation with its auditor, the 

auditee should promptly respond to 

such a request by informing the Federal 

agency whether the program would 

otherwise be audited as a major program 

using the risk-based audit approach 

described in § 200.518 and, if not, the 

estimated incremental cost. The Federal 

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 Federal agency 

request, and the Federal agency agrees 

to pay the full incremental costs, then 

the auditee must have the program 

audited as a major program. With 

approval of the Federal agency, a passthrough entity may use the provisions of 

this paragraph for a subrecipient. 

§ 200.504 Frequency of audits. 

Audits required by this part must be 

performed annually except as provided 

in paragraphs (a) and (b) of this section: 

(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 biennial (every 

other year) audits pursuant to this part. 

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 biennial audits pursuant to this 

part. Biennial audits must cover both 

fiscal years within the biennial period. 

§ 200.505 Remedies for noncompliance. 

In cases of continued inability or 

unwillingness to have an audit 

conducted in accordance with this part, 

Federal agencies or pass-throughthrough entities must take appropriate 

action as provided in § 200.339. 

§ 200.506 Audit costs. 

See § 200.425. 

§ 200.507 Program-specific audits. 

(a) Program-specific audit guide 

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

provide specific guidance to the auditor 

concerning 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 

(Appendix VI, Program-Specific Audit 

Guides). When a current programspecific audit guide is available, the 

auditor must follow Generally Accepted 

Government Auditing Standards 

(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 basically have 

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 a schedule of 

expenditures of Federal awards for the 

program and notes that describe the 

significant accounting policies used in 

preparing the schedule, a summary 

schedule of prior audit findings 

consistent with the requirements of 

§ 200.511(b), and a corrective action 

plan consistent with the requirements of 

§ 200.511(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 for a major program in 

accordance with§ 200.514(c); 

(iii) 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 for a major program under 

§ 200.514(d); 

(iv) Follow up on prior audit findings 

and perform procedures to assess the 

reasonableness of the summary 

schedule of prior audit findings 

prepared by the auditee in accordance 

with the requirements of § 200.511 

When the auditor concludes that the 

summary schedule of prior audit 

findings materially misrepresents the 

status of any prior audit finding, the 

auditor must report this condition as a 

current-year audit finding.; and 

(v) Report any audit findings 

consistent with the requirements of 

§ 200.516. 

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

the form of either combined or separate 

reports. It 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 that 

includes an opinion (or disclaimer of 

opinion) as to whether the auditee 

complied with laws, regulations, and 

the terms and conditions of Federal 


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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 

§ 200.515(d)(1) and findings and 

questioned costs consistent with the 

requirements of § 200.515(d)(3). 

(c) Report submission for programspecific audits. (1) Audit period. The 

audit must be completed and submitted 

in accordance with paragraph (c)(2) or 

(c)(3) of this section. Unless a different 

period is specified in the programspecific audit guide, the audit must be 

submitted within 30 calendar days after 

receiving the auditor’s report(s) or nine 

months after the end of the audit period 

(whichever is earlier). The reporting 

package is due the next business day 

when the due date falls on a Saturday, 

Sunday, or Federal holiday. Unless 

restricted by Federal law or regulation, 

the auditee must make copies of the 

report(s) 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) Program-specific audit guide 

available. When a program-specific 

audit guide is available, the auditee 

must electronically submit the data 

collection form prepared in accordance 

with § 200.512(b), as applicable to the 

program-specific audit, to the Federal 

Audit Clearinghouse (FAC). The 

submission must also include the 

reporting required by the programspecific audit guide. 

(3) Program-specific audit guide not 

available. When a program-specific 

audit guide is not available, the auditee 

must electronically submit the data 

collection form prepared in accordance 

with § 200.512(b) to the FAC. The 

submission must consist of the financial 

statement(s) of the Federal program, a 

summary schedule of prior audit 

findings, a corrective action plan as 

described in paragraph (b)(2), and the 

auditor’s report(s) described in 

paragraph (b)(4). 

(d) Other sections of this part may 

apply. Program-specific audits are 

subject to: 

(1) 200.500 Purpose through 200.503 

Relation to other audit requirements, 

paragraph (d); 

(2) 200.504 Frequency of audits 

through 200.506 Audit costs; 

(3) 200.508 Auditee responsibilities 

through 200.509 Auditor selection; 

(4) 200.511 Audit findings followup; 

(5) 200.512 Report submission, 

paragraphs (e) through (h); 

(6) 200.513 Responsibilities; 

(7) 200.516 Audit findings through 

200.517 Audit documentation; 

(8) 200.521 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 

§ 200.508 Auditee responsibilities. 

The auditee must: 

(a) Arrange for the audit required by 

this part in accordance with § 200.509, 

and ensure it is properly performed and 

submitted in accordance with § 200.512. 

(b) Prepare financial statements, 

including the schedule of expenditures 

of Federal awards in accordance with 

§ 200.510. 

(c) Promptly follow up and take 

corrective action on audit findings. This 

includes preparing a summary schedule 

of prior audit findings and a corrective 

action plan in accordance with 

§ 200.511(b) and (c), respectively. 

(d) Provide the auditor access to 

personnel, accounts, books, records, 

supporting documentation, and any 

other information needed for the auditor 

to perform the audit required by this 

part. 

§ 200.509 Auditor selection. 

(a) Auditor procurement. When 

procuring audit services, the auditee 

must follow the procurement standards 

in §§ 200.317 through 200.327 of 

subpart D or the FAR (48 CFR part 42), 

as applicable. When 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 must 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 efforts 

to contract with businesses as stated in 

§ 200.321 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 be selected 

to perform the audit required by this 

part when the indirect costs recovered 

by the auditee during the prior year 

exceed $1 million. This restriction 

applies to the base year used to prepare 

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 

fully comply with the requirements of 

this part. 

§ 200.510 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 

chosen to meet this part’s requirements. 

However, organization-wide financial 

statements of the non-Federal entity 

may also include departments, agencies, 

and other organizational units that have 

separate audits in accordance with 

§ 200.514(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. 

The schedule must include the total 

Federal awards expended as determined 

in accordance with § 200.502. The 

auditee may choose to provide 

information requested by Federal 

agencies or pass-through-through 

entities to make the schedule easier to 

use. For example, when a Federal 

program has multiple Federal award 

years, the auditee may separately list the 

amount of Federal awards expended for 

each year of a Federal award. The 

schedule must: 

(1) List individual Federal programs 

by Federal agency using the applicable 

Assistance Listing number(s). For a 

cluster of programs, the non-Federal 

entity must provide the cluster name, a 

list of individual Federal programs 

within the cluster, and provide the 

Federal agency name and the applicable 

Assistance Listing number(s). For 

research and development, 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 within the 

Department of Health and Human 

Services. 

(2) For audits covering multiple 

recipients (such as departments, 

agencies, IHEs, and other organizational 


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units), identify the recipient of the 

Federal award. 

(3) 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. 

(4) Provide total Federal awards 

expended for each individual Federal 

program and the Assistance Listings 

number or other identifying number 

when the Assistance Listings 

information is unavailable. For a cluster 

of programs, the auditee must also 

provide the total for the cluster. 

(5) Include the total amount provided 

to subrecipients from each Federal 

program. 

(6) For loan or loan guarantee 

programs described in § 200.502(b), 

identify in the notes to the schedule the 

balances outstanding at the end of the 

audit period. This requirement is in 

addition to including the total Federal 

awards expended for loan or loan 

guarantee programs in the schedule. 

(7) Include notes describing the 

significant accounting policies used in 

preparing the schedule and whether the 

auditee elected to use the 15 percent de 

minimis indirect cost rate (see 

§ 200.414). 

§ 200.511 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 § 200.516(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 must 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 only partially corrected, the 

summary schedule must describe the 

reasons for the finding’s recurrence, 

planned corrective action, and any 

partial corrective action taken. When 

the corrective action taken significantly 

differs from the corrective action 

previously reported in a corrective 

action plan or the Federal agency’s or 

pass-through-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 a corrective action plan to 

address each audit finding included in 

the auditor’s report for the current year. 

The corrective action plan must be a 

document separate from the auditor’s 

findings described in § 200.516. The 

corrective action plan must also provide 

the name(s) of the contact person(s) 

responsible for the corrective action, the 

corrective action to be taken, and the 

anticipated completion date. When the 

auditee does not agree with the audit 

findings or believes corrective action is 

not required, the corrective action plan 

must include a detailed explanation of 

the reasons. 

§ 200.512 Report submission. 

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

completed and include the data 

collection form described in paragraph 

(b) of this section and the reporting 

package described in paragraph (c) of 

this section. The audit must be 

submitted within 30 calendar days after 

receiving the auditor’s report(s) or nine 

months after the end of the audit period 

(whichever is earlier). If the due date 

falls on a Saturday, Sunday, or Federal 

holiday, the reporting package is due 

the next business day. 

(2) The auditee must make copies 

available for public inspection unless 

restricted by Federal statute or 

regulation. 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 

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 the 

required data collection form (SF–SAC) 

described in Appendix X of this part. 

This form provides information about 

the auditee, its Federal programs, the 

results of the audit, and whether the 

audit was completed in accordance with 

this part. The form must include all 

information required by this part that is 

necessary for Federal agencies to use the 

audit to ensure the integrity of Federal 

programs. The form includes data 

elements and a format that OMB must 

approve, is available from the FAC, and 

include collections of information from 

the reporting package described in 

paragraph (c). 

(2) A senior-level representative of the 

auditee (for example, a 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 form stating that 

the auditee complied with the 

requirements of this part, including that: 

(i) The data collection form was 

prepared in accordance with this part 

(and the instructions accompanying the 

form); 

(ii) The reporting package does not 

include protected personally 

identifiable information; 

(iii) The information included in its 

entirety is accurate and complete; and 

(iv) The FAC is authorized to make 

the reporting package and the form 

publicly available on a website. 

(3) An auditee that is an Indian Tribe 

or a tribal organization (as defined in 

the Indian Self-Determination, 

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 website. To opt-out, an Indian Tribe or 

tribal organization must exclude the 

authorization described in paragraph 

(b)(2)(iv) of this section. In these 

instances, the Indian Tribe is 

responsible for submitting the reporting 

package directly to any pass-through 

entities through which it has received a 

Federal award and to pass-through 


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entities for which the summary 

schedule of prior audit findings 

reported the status of any findings 

related to those Federal awards that the 

pass-through entity provided. Unless 

restricted by Federal statute or 

regulation, if the auditee opts not to 

authorize publication, the Indian Tribe 

must make copies of the reporting 

package available for public inspection. 

(4) The auditor must complete the 

applicable data elements of the data 

collection form using the information 

included in the reporting package 

described in paragraph (c) of this 

section. The auditor must sign a 

statement to be included as part of the 

data collection form stating: 

(i) The source of information included 

in the data collection form; 

(ii) The auditor’s responsibility for the 

information; 

(iii) The data collection form is not a 

substitute for the reporting package 

described in paragraph (c); and 

(iv) The content of the form is limited 

to the collection of information 

prescribed by OMB. 

(c) Reporting package. The reporting 

package must include the following: 

(1) Financial statements and schedule 

of expenditures of Federal awards 

discussed in § 200.510(a) and (b), 

respectively; 

(2) Summary schedule of prior audit 

findings discussed in § 200.511(b); 

(3) Auditor’s report(s) discussed in 

§ 200.515; and 

(4) Corrective action plan discussed in 

§ 200.511(c). 

(d) Submission to FAC. The auditee 

must electronically submit the data 

collection form described in paragraph 

(b) of this section and the reporting 

package described in paragraph (c) of 

this section to the FAC. 

(e) Requests for management letters 

issued by the auditor. Auditees must 

submit a copy of any management 

letters issued by the auditor when 

requested by a Federal agency or passthrough entity. 

(f) Report retention requirements. 

Auditees must keep a copy of the data 

collection form described in paragraph 

(b) of this section and a copy of the 

reporting package described in 

paragraph (c) on file for three years from 

the date of submission to the FAC. 

Copies of audit records must be 

maintained in accordance with 

§ 200.336. 

(g) FAC responsibilities. The FAC 

must make available the reporting 

packages received in accordance with 

paragraph (c) of this section and 

§ 200.507(c) to the public, except for 

Indian Tribes exercising the option in 

paragraph (b)(3) of this section, and 

maintain a database of completed 

audits, provide appropriate information 

to Federal agencies, and follow up with 

known auditees that the FAC knows 

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 a 

manner as may be approved by OMB. 

Federal Agencies 

§ 200.513 Responsibilities. 

(a) Cognizant agency for audit 

responsibilities. (1) A non-Federal entity 

expending more than $50 million a year 

in Federal awards must have a 

cognizant agency for audit. The 

cognizant agency for audit must be the 

Federal agency that provides the largest 

amount of direct funding to a nonFederal entity (as listed on the Schedule 

of expenditures of Federal awards, see 

§ 200.510(b)) to a non-Federal entity 

unless OMB designates a specific 

cognizant agency for audit. When the 

direct funding represents less than 25 

percent of the total expenditures (as 

direct and subawards) by the nonFederal entity, then the Federal agency 

with the predominant amount of total 

funding is the designated 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 2019 and 

every fifth year after that. 

(3) Notwithstanding how audit 

cognizance is determined, a Federal 

agency may reassign cognizance to 

another Federal agency that provides 

substantial funding to an auditee if it 

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 notify 

the change to the FAC, the auditee, and, 

if known, the auditor. 

(4) The cognizant agency for audit 

must: 

(i) Provide technical audit advice and 

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. 

(iii) Cooperate and support the 

Federal agency designated by OMB to 

lead a government-wide analysis to 

assess the quality of single audits. The 

government-wide analysis may rely on 

the current and ongoing quality control 

review work performed by Federal 

agencies, State auditors, and 

professional audit associations. This 

government-wide audit analysis must be 

performed at an interval determined by 

OMB, and the results must be posted 

publicly. In providing support to the 

government-wide analysis, a Federal 

agency must provide the following: 

(A) An assessment of the extent to 

which single audits conform to the 

requirements, standards, and 

procedures of this part; and 

(B) Recommendations to address 

audit quality issues, including 

recommendations for any changes to 

this part’s requirements, standards, and 

procedures. 

(iv) Promptly inform the appropriate 

Federal law enforcement officials and 

impacted Federal agencies of any direct 

reporting by the auditee or its auditor 

required by GAGAS, Federal statute, or 

regulation. 

(v) 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. 

(vi) Advise the auditor, Federal 

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 Federal awarding agencies 

and pass-through entities of the facts 

and make recommendations for followup action. Major inadequacies or 

repetitive substandard performance by 

auditors must be referred to appropriate 

State licensing agencies and 

professional bodies for disciplinary 

action. 

(vii) 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. 

(viii) Coordinate a management 

decision for cross-cutting audit findings 

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. Cross-cutting audit finding 

means an audit finding where the same 

underlying condition or issue affects all 

Federal awards (including Federal 


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awards of more than one Federal agency 

or pass-through entity). 

(ix) Coordinate the audit work and 

reporting responsibilities among 

auditors to achieve the most costeffective audit. 

(x) Provide advice to auditees as to 

how to handle changes in fiscal year. 

(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 § 200.1 

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 and 

assistance to auditees and auditors. 

(2) May assume all or some of the 

responsibilities normally performed by 

a cognizant agency for audit. 

(c) Awarding Federal agency 

responsibilities. In addition to all other 

requirements of this part, the awarding 

Federal agency must: 

(1) Ensure that audits are completed, 

and reports are received in a timely 

manner in accordance with the 

requirements of this part. 

(2) Provide technical advice and 

assistance to auditees and auditors. 

(3) Follow-up on audit findings to 

ensure that non-Federal entities take 

appropriate and timely corrective 

action. Follow-up includes: 

(i) Issuing a management decision in 

accordance with § 200.521; 

(ii) Monitoring the non-Federal 

entity’s progress implementing a 

corrective action; 

(iii) Using a cooperative audit 

resolution approach to improve Federal 

program outcomes through better audit 

resolution, follow-up, and corrective 

action, which means the use of audit 

follow-up techniques promoting 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: 

(A) A strong commitment by Federal 

agency and non-Federal entity 

leadership to Federal program integrity; 

(B) Federal agencies strengthening 

partnerships and working cooperatively 

with non-Federal entities and their 

auditors; non-Federal entities and their 

auditors working cooperatively with 

Federal agencies; 

(C) A focus on current conditions and 

corrective action going forward; 

(D) Federal agencies offering 

appropriate relief for past 

noncompliance when audits show 

prompt corrective action has occurred; 

and 

(E) Federal agency leadership sending 

a clear message that continued failure to 

correct conditions identified by audits 

likely to cause improper payments, 

fraud, waste, or abuse is unacceptable 

and will result in sanctions. 

(iv) Tracking the effectiveness of the 

Federal agency’s follow-up processes, 

the effectiveness of single audits in 

improving non-Federal entity 

accountability, and the use of single 

audits in making Federal award 

decisions. The Federal agency should 

develop a baseline, metrics, and targets 

to track, over time, the effectiveness of 

the Federal agency’s process to follow 

up on audit findings. 

(4) Provide OMB with annual updates 

to the compliance supplement. These 

updates include working with OMB to 

ensure that the compliance supplement 

focuses the auditor on testing the 

compliance requirements most likely to 

cause improper payments, fraud, waste, 

abuse, or generate audit findings for 

which the Federal agency with take 

action in accordance with § 200.505. 

Federal agencies are encouraged to 

engage with external audit stakeholders 

and the Federal agency’s Office of 

Inspector General’s National Single 

Audit Coordinator (NSAC) prior to 

submitting compliance supplement 

drafts to OMB. 

(5) Provide OMB with the name of a 

single audit accountable official from 

among the senior policy officials of the 

Federal agency. The accountable official 

must be: 

(i) Responsible for ensuring that the 

Federal agency fulfills the requirements 

of this section and effectively uses the 

single audit process to reduce improper 

payments and improve Federal program 

outcomes. 

(ii) Accountable for improving the 

effectiveness of the Federal agency’s 

single audit processes in accordance 

with paragraph (c)(3)(iv). 

(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. 

The liaison must: 

(i) Serve as the Federal agency’s point 

of contact for the single audit process 

within and outside the Federal 

Government. 

(ii) Promote interagency coordination, 

consistency, and information sharing. 

This includes coordinating audit followup, identifying high-risk non-Federal 

entities, providing input on single audit 

and follow-up policy, enhancing the 

utility of the FAC, and identifying ways 

to use single audit results to improve 

Federal award accountability and best 

practices. 

(iii) Oversee training for the Federal 

agency’s program management 

personnel related to the single audit 

process. 

(iv) Promote the Federal agency’s use 

of a cooperative audit resolution 

approach as described in paragraph 

(c)(3)(iii) of this section. 

(v) Coordinate the Federal agency’s 

audit follow-up processes and ensure 

non-Federal entities implement 

corrective actions for audit findings. 

(vi) Manage the Federal agency’s audit 

follow-up processes for the cognizant 

agency for an audit if there are crosscutting audit findings. Cross-cutting 

audit findings means an audit finding 

where the same underlying condition or 

issue affects all Federal awards 

(including Federal awards of more than 

one Federal agency or pass-through 

entity). 

(vii) Ensure the Federal agency 

provides OMB with annual updates to 

the compliance supplement consistent 

with the compliance supplement 

preparation guide. 

(viii) Support the mission of the 

Federal agency’s single audit 

accountable official and coordinate with 

the Federal agency’s Office of Inspector 

General’s National Single Audit 

Coordinator (NSAC). 

Auditors 

§ 200.514 Scope of audit. 

(a) General. The audit must be 

conducted in accordance with GAGAS. 

The audit must also 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 the audit period. In these 

instances, the audit must include 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 auditee’s 

financial statements are presented fairly 


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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 ControlIntegrated 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: 

(i) Plan the testing of internal control 

over compliance for major programs to 

support a low assessed level of control 

risk for 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 

§ 200.516, 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. 

(4) The compliance testing must 

include tests of transactions and other 

auditing procedures necessary to 

provide the auditor with sufficient audit 

evidence to support an opinion on 

compliance. 

(e) Audit follow-up. The auditor must 

follow up on prior audit findings 

regardless of whether a prior audit 

finding is related to a major program in 

the current year. Audit follow-up 

includes performing procedures to 

assess the reasonableness of the 

summary schedule of prior audit 

findings prepared by the auditee in 

accordance with the requirements of 

§ 200.511. When the auditor concludes 

that the summary schedule of prior 

audit findings materially misrepresents 

the status of any prior audit finding, the 

auditor must report this condition as a 

current-year audit finding. 

(f) Data collection form. As required 

in § 200.512(b)(4), the auditor must 

complete and sign specified sections of 

the data collection form. 

§ 200.515 Audit reporting. 

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

form of either combined or separate 

reports. It 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) from the auditor determining 

whether the financial statement(s) of the 

auditee is presented fairly in all material 

respects in accordance with generally 

accepted accounting principles (or a 

special purpose framework such as 

cash, modified cash, or regulatory as 

required by State law). The auditor must 

also decide 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. 

(b) A report on internal control over 

financial reporting and compliance with 

provisions of laws, regulations, 

contracts, and award agreements, 

noncompliance with which could have 

a material effect on the financial 

statements. This report must describe 

the scope of internal control and 

compliance testing and the results of the 

tests. Where applicable, the report must 

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 and 

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 that 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 (unmodified opinion, qualified 

opinion, adverse opinion, or disclaimer 

of opinion) on whether the audited 

financial statements were prepared in 

accordance with GAAP; 

(ii) A statement about whether 

significant deficiencies or material 

weaknesses in internal control were 

disclosed by the audit of the financial 

statements, if applicable; 

(iii) A statement as to whether the 

audit disclosed any noncompliance that 

is material to the financial statements of 

the auditee; 

(iv) A statement about whether 

significant deficiencies or material 

weaknesses in internal control over 

major programs were disclosed by the 

audit, if applicable; 

(v) The type of report the auditor 

issued (unmodified opinion, qualified 

opinion, adverse opinion, or disclaimer 

of opinion) on compliance for major 

programs; 

(vi) A statement as to whether the 

audit disclosed any audit findings that 

the auditor is required to report under 

§ 200.516(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 for a cluster of programs; 

(viii) The dollar threshold used to 

distinguish between Type A and Type B 

programs, as described in 

§ 200.518(b)(1) or (3) when a 


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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§ 200.520. 

(2) Findings relating to the financial 

statements required to be reported in 

accordance with GAGAS. 

(3) Findings and questioned costs for 

Federal awards which must include 

audit findings as defined in § 200.516(a) 

and be reported in the following 

manner: 

(i) Audit findings (for example, 

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 passthrough entity. 

(ii) Audit findings that relate to both 

the financial statements (paragraph 

(d)(2) of this section) and Federal 

awards (this paragraph (d)(3)) must be 

reported in both sections of the 

schedule. However, the reporting in one 

section of the schedule may be in 

summary form and reference a detailed 

reporting in the other section. 

(e) Nothing in this part precludes 

combining the reporting required by this 

section with the reporting required by 

§ 200.512(b) when allowed by GAGAS 

and Appendix X of this part. 

§ 200.516 Audit findings. 

(a) Audit findings reported. The 

auditor must report the following as an 

audit finding in the schedule of findings 

and questioned costs: 

(1) Significant deficiencies and 

material weaknesses in internal control 

over major programs. The auditor’s 

determination of whether a deficiency 

in internal control is a significant 

deficiency or a 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 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 when 

either known or likely questioned costs 

are greater than $25,000 for a type of 

compliance requirement for a major 

program. When reporting questioned 

costs, the auditor must include 

information to provide proper 

perspective for evaluating the 

prevalence and consequences of the 

questioned costs. 

(4) Known questioned costs greater 

than $25,000 for a Federal program that 

is not audited as a major program. 

Except for audit follow-up, the auditor 

is not required 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 (for example, as part of audit 

follow-up or other audit procedures) 

and the known questioned costs are 

greater than $25,000, 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. This must be 

included unless the circumstances are 

otherwise reported as audit findings in 

the schedule of findings and questioned 

costs. 

(6) Known or likely fraud affecting a 

Federal award, unless the fraud is 

otherwise reported as an audit finding 

in the schedule of findings and 

questioned costs. This paragraph does 

not require the auditor to publicly 

report information that 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 § 200.511(b) 

materially misrepresents the status of 

any prior audit finding. 

(b) Audit finding detail and clarity. 

Audit findings must be presented with 

sufficient detail and clarity for both the 

auditee to prepare a corrective action 

plan and take corrective action and for 

Federal agencies or pass-throughthrough entities to arrive at a 

management decision. As applicable, 

the following information must be 

included in audit findings: 

(1) The Federal program and specific 

Federal award identification, including 

the Assistance Listings title and 

number, Federal award identification 

number and year, the name of the 

Federal agency, and name of the 

applicable pass-through entity. When 

information, such as the Assistance 

Listings title and number or Federal 

award identification number, is 

unavailable, the auditor must provide 

the best information available to 

describe the Federal award. 

(2) The criteria or specific 

requirement for the audit finding (for 

example, the specific Federal statute, 

regulation, or term and condition of the 

Federal award). The criteria or specific 

requirement provides a context for 

evaluating evidence and understanding 

findings. As a result, the criteria should 

generally identify the required or 

desired state or expectation with respect 

to the program or operation. 

(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 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) The identification of known 

questioned costs, by applicable 

Assistance Listing number(s) and 

Federal award identification number(s), 

and how these questioned costs were 

computed. 

(7) When there are known questioned 

costs but the dollar amount is 

undetermined or not reported, a 

description of why the dollar amount 

was undetermined or otherwise could 

not be reported. 

(8) Information to provide proper 

perspective for evaluating the 

prevalence and consequences of the 

audit finding. For example, whether the 

audit finding represents 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. In 

addition, the audit should indicate 

whether the sampling was a statistically 

valid sample. 

(9) The identification of whether the 

audit finding is a repeat of a finding in 

the immediately prior audit. The audit 

must identify the applicable prior year 


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audit finding numbers in these 

instances. 

(10) Recommendations to prevent 

future occurrences of the deficiency 

identified in the audit finding. 

(11) Views of the 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 (see § 200.512(b)). 

§ 200.517 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. The cognizant agency for audit, 

oversight agency for audit, cognizant 

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

period by providing written notification 

to the auditor. When the auditor is 

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

an audit finding, the auditor must 

contact the parties contesting the audit 

finding for guidance prior to the 

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. 

§ 200.518 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 consider 

current and prior audit experience, 

oversight by Federal agencies and passthrough entities, and the inherent risk of 

the Federal program. The process 

described in paragraphs (b) through (h) 

of this section must be followed. 

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

identify and label the larger Federal 

programs as 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 1: 

TABLE TO PARAGRAPH (b)(1) 

Total Federal awards expended Type A threshold 

Equal to or exceed $1,000,000 but less than or equal to $25 million .................................. $750,000. 

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

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

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

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

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) Including large loans and loan 

guarantees (loans) must not result in the 

exclusion of other programs as Type A 

programs. A Federal program providing 

loans is considered a large loan program 

when it exceeds four times the largest 

non-loan program. For these large loan 

programs, the auditor must consider the 

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 this paragraph, 

a program is only considered a Federal 

program providing loans if the value of 

Federal awards expended for loans 

within the program comprises 50 

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 § 200.502. 

(4) For biennial audits (see § 200.504), 

the determination of Type A and Type 

B programs must be based on the 

Federal awards expended during the 

two-year audit period. 

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

identify Type A programs that are lowrisk. In making this determination, the 

auditor must consider whether the 

requirements in § 200.519(c), the results 

of audit follow-up, or any changes in 

personnel or systems affecting the 

program indicate significantly increased 

risk and therefore 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 not have had: 

(i) Internal control deficiencies that 

were identified as material weaknesses 

in the auditor’s report on internal 

control for major programs as required 

under § 200.515(c); 

(ii) A modified opinion on the 

program in the auditor’s report on major 

programs as required under 

§ 200.515(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 a 

Federal agency request that a Type A 

program not be considered low-risk for 

a specific recipient. For example, it may 

be necessary for a large Type A program 

to be audited as a major program each 

year for a particular recipient for the 

Federal agency to comply with 31 

U.S.C. 3515. The Federal agency must 

notify the auditee 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 high-risk Type B programs 

using professional judgment and the 

criteria in § 200.519. However, the 

auditor is not required to identify more 

high-risk Type B programs than at least 

one-fourth of the number of low-risk 

Type A programs identified as low-risk 

under step two. Except for known 

material weakness in internal control or 

compliance problems as discussed in 

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

criterion in risk would rarely cause a 

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

programs to assess for risk, the auditor 

is encouraged to use an approach that 

provides an opportunity for different 

high-risk Type B programs to be audited 

as major programs 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 


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exceed 25 percent (0.25) of the Type A 

threshold determined in step one. 

(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. 

(2) All Type B programs identified as 

high-risk under step three. 

(3) Additional programs as necessary 

to comply with the percentage of 

coverage rule described in paragraph (f). 

This rule may require the auditor to 

audit more programs as major programs 

than the number of Type A programs. 

(f) Percentage of coverage rule. When 

the auditee meets the criteria in 

§ 200.520, the auditor only needs to 

audit the major programs identified in 

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

and such additional Federal programs 

with Federal awards expended that, in 

the 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 paragraphs 

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

additional Federal programs with 

Federal awards expended that, in the 

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 used for 

determining major programs. 

(h) Auditor’s judgment. The auditor’s 

judgment in applying the risk-based 

approach to determine major programs 

must be presumed correct when the 

determination was performed and 

documented in accordance with this 

part. Challenges by a Federal agency or 

pass-through entity must only be for 

clearly improper use of the 

requirements in this part. However, a 

Federal agency or pass-through entity 

may provide auditors guidance about 

the risk of a particular Federal program. 

The auditor must consider this guidance 

in determining major programs in audits 

not yet completed. 

§ 200.519 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 

those 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. Therefore, 

consideration should be given to the 

control environment over Federal 

programs. This includes considering 

factors such 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 (for example, one college 

campus) or pervasive throughout the 

entity. 

(ii) A weak system for monitoring 

subrecipients would indicate higher risk 

when significant parts of a Federal 

program are passed to subrecipients 

through subawards. 

(2) Prior audit findings would 

indicate higher risk, especially when the 

situations identified in the audit 

findings could significantly impact a 

Federal program or have not been 

corrected. 

(3) Federal programs not recently 

audited as major programs may be of 

higher risk than those recently audited 

as major programs without audit 

findings. 

(c) Oversight exercised by Federal 

agencies and pass-through entities. (1) 

The oversight exercised by Federal 

agencies or pass-through-through 

entities may 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) With the concurrence of OMB, a 

Federal agency may identify Federal 

programs that are higher risk. OMB will 

identify these Federal programs 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 higher 

risk. Federal programs primarily 

involving staff payroll costs may be at 

high risk for noncompliance with the 

requirements of § 200.430 but otherwise 

be at low risk. 

(2) The phase of a Federal program in 

its lifecycle 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 lifecycle 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 the 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. 

§ 200.520 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 § 200.518. 

(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 § 200.512. A 

non-Federal entity that has biennial 

audits does not qualify as a low-risk 

auditee. 

(b) The auditor issued unmodified 

opinions on both the schedule of 

expenditures of Federal awards and 

whether the financial statements were 

prepared in accordance with GAAP (or 

a basis of accounting required by State 

law). 

(c) No internal control deficiencies 

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 § 200.515(c); 

(2) A modified opinion on a major 

program in the auditor’s report on major 

programs as required under 

§ 200.515(c); or 


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(3) Known or likely questioned costs 

that exceeded five percent (.05) of the 

total Federal awards expended for a 

Type A program during the audit 

period. 

Management Decisions 

§ 200.521 Management decisions. 

(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 followup 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 

statements, which are required to be 

reported in accordance with GAGAS. 

(b) Federal agency. The cognizant 

agency for audit is responsible for 

coordinating a management decision for 

audit findings that affect the programs 

of more than one Federal agency (see 

§ 200.513(a)(4)(vii)). The awarding 

Federal agency is responsible for issuing 

a management decision for audit 

findings that affect the Federal awards 

it makes to a non-Federal entity (see 

§ 200.513(c)(3)(i)). 

(c) Pass-through entity. The passthrough entity is responsible for issuing 

a management decision for audit 

findings that affect subawards it issues 

to subrecipients under a Federal award 

(see § 200.332(d)). 

(d) Time requirements. The Federal 

agency or pass-through entity 

responsible for issuing a management 

decision must do so within six months 

of the FAC’s 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 

§ 200.516(c). 

■ 12. Revise appendix I to part 200 to 

read as follows: 

Appendix I to Part 200—Full Text of 

Notice of Funding Opportunity 

(a) General Requirements. 

(1) In developing a notice of funding 

opportunity (NOFO), Federal agencies must: 

(i) Be concise and use plain language per 

the guidance at PlainLanguage.gov wherever 

possible. 

(ii) For electronic NOFOs and other 

information about them, comply with Section 

508 of the Rehabilitation Act of 1973 (29 

U.S.C. 794d). 

(2) Federal agencies may: 

(i) Link to standard content to include 

required information rather than including 

the full language in the NOFO. The NOFO 

should make clear if linked information is 

critical—for example, standard terms and 

conditions, administrative and national 

policy requirements, and standard templates. 

(ii) Include links to relevant regulations 

and other sources. 

(iii) Use cross-references between the 

sections, including hyperlinks in electronic 

versions. 

(3) Required Consistency. Potential 

applicants must be able to find similar 

information across all Federal NOFOs. To 

that end, Federal agencies must include the 

same or similar section headings and a table 

of contents with at least these sections: 

(i) Basic Information 

(ii) Eligibility 

(iii) Program Description 

(iv) Application Contents and Format 

(v) Submission Requirements and Deadlines 

(vi) Application Review Information 

(vii) Award Notices 

(viii) Post-Award Requirements and 

Administration 

(b) Required Sections and Information. 

As required below, the Federal agency 

must include the following sections and 

information in the text of a NOFO and a table 

of contents. 

(1) Basic Information. 

This section provides sufficient 

information to help an applicant make an 

informed decision about whether to submit a 

proposal. 

(i) This section must include the following: 

(A) Federal Agency Name. 

(B) Funding Opportunity Title. 

(C) Announcement Type (whether the 

funding opportunity is the initial 

announcement or a modification of a 

previously announced opportunity). 

(D) Funding Opportunity Number 

(required, if the Federal agency has assigned 

a number to the funding opportunity 

announcement). 

(E) Assistance Listing Number(s). 

(F) Funding Details. The total amount of 

funding that the Federal agency expects to 

award, the anticipated number of awards, 

and the expected dollar values of individual 

awards, which may be a range. 

(G) Key Dates. Key dates include due dates 

for submitting applications or Executive 

Order 12372 submissions, as well as for any 

letters of intent or preapplications. 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 Federal agency. If possible, the Federal 

agency should provide an anticipated award 

date. If the NOFO is evaluated on a ‘‘rolling’’ 

basis, the Federal agency should provide an 

estimate of the time needed to process an 

application and notify the applicant of the 

Federal agency’s decision. 

(H) Executive Summary. A brief 

description that is written in plain language 

and summarizes the goals and objectives of 

the program, the target audience, and eligible 

recipients. The text of the executive summary 

should not exceed 500 words. 

(I) Agency contact information. 

(ii) This section could include the 

following: 

(A) The amount of funding per Federal 

award, on average, experienced in previous 

years. 

(B) Whether this is a new program or a onetime initiative. 

(2) Eligibility. 

This section addresses the factors that 

determine applicant or application eligibility. 

(i) Eligible Applicants. This subsection 

must identify the following: 

(A) A complete and specific list of entity 

types eligible to apply. 

(B) Any additional restrictions on 

eligibility beyond the type of entity. 

(C) Eligibility factors for the principal 

investigator or project director, if any. 

(D) Criteria that would make any particular 

projects ineligible. 

(E) A reference to any funding restriction 

elsewhere in the NOFO that could affect an 

applicant’s or project’s eligibility. 

(F) A reference or link to any other factors 

that would disqualify an applicant or 

application, such as the responsiveness 

criteria in 6a. 

(G) Any limit on the number of 

applications an applicant may submit under 

the announcement. Make clear whether the 

limitation is on the submitting organization, 

individual investigator or program director, 

or both. 

(ii) Cost Sharing. This subsection must 

state: 

(A) Whether there is required cost sharing. 

This statement must be clear that not 

committing to the required cost sharing will 

make the application ineligible. If cost 

sharing is not required, the announcement 

must say so. 

(B) An explanation of the calculation for 

the required cost sharing. Required cost 

sharing may be a certain percentage or 

amount or in the form of contributions of 

specified items or activities (for example, 

provision of equipment). 

(C) Any restrictions on the types of cost, 

such as in-kind contributions, acceptable as 

cost sharing. 

(D) Any requirement to commit to cost 

sharing. This section should refer to the 

appropriate portions of section D stating any 

pre-award requirements for the submission of 

letters or other documentation to verify 

commitments to meet cost-sharing 

requirements if a Federal award is made. 

(3) Program Description. 

This section contains the full program 

description of the funding opportunity. 

(i) This section must include the following: 


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(A) The general purpose of the funding and 

what it is expected to achieve for the public 

good. 

(B) The Federal agency’s funding priorities 

or focus areas, if any. 

(C) Program goals and objectives. 

(D) A description of how the award will 

contribute to achieving the program’s goals 

and objectives. 

(E) The expected performance goals, 

indicators, targets, baseline data, data 

collection, and other outcomes the Federal 

agency expects recipients to achieve. 

(F) For cooperative agreements, the 

‘‘substantial involvement’’ that the Federal 

agency expects to have or should reference 

where the potential applicant can find that 

information. 

(G) Information on program specific 

unallowable costs so that the applicant can 

develop an application and budget consistent 

with program requirements and any limits on 

indirect costs. 

(H) Any eligibility criteria for beneficiaries 

or program participants other than Federal 

award recipients. 

(I) Citations for authorizing statutes and 

regulations for the funding opportunity. 

(ii) This section could also include the 

following: 

(A) Any program history, such as whether 

it is a new program or a new or changed area 

of program emphasis. 

(B) Examples of successful projects funded 

in the past. 

(C) Other information the Federal agency 

finds necessary. 

(4) Application Contents and Format. 

This subsection must identify the required 

content of an application and the forms or 

formats an applicant must use. If any 

requirements are stated elsewhere, 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. 

(i) This subsection must specifically 

address content and form or format 

requirements for: 

(A) Pre-applications, letters of intent, or 

white papers are required or encouraged if 

they apply. 

(B) The application as a whole. 

(C) Component pieces of the application. 

(D) Information that successful applicants 

must submit after notification of intent to 

make a Federal award but prior to a Federal 

award. For example, 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 et seq.). 

(ii) Within each of the categories above, 

this subsection must include, where relevant: 

(A) Limitations on page numbers. 

(B) Formatting requirements, including 

font and font size, margins, paper size, and 

color limitations. 

(C) Any requirements for file naming, file 

size limitations, or file format such as PDF. 

(D) The number of copies required if paper 

submissions are allowed. 

(E) The sequence required for application 

sections or components. 

(F) Signature requirements, including those 

for electronic submissions. 

(G) Any requirements for third-party 

information such as references, letters of 

support, or letters of commitment to the 

project or to contribute to cost sharing. 

(H) A reference to any requirements in 

Section 6 to provide documentation to 

support an eligibility determination, such as 

proof of 501(c)(3) status or an authorizing 

tribal resolution. 

(I) Instructions needed to develop the 

narrative portions of the application. Include 

any requirements for its order, format, or 

required headings. 

(J) If applicable, the need to identify 

proprietary information. Include how to do 

so and how the Federal agency will handle 

it. 

(5) Submission Requirements and 

Deadlines. 

(i) Address to Request Application 

Package. This subsection must include the 

following: 

(A) How to get application forms, kits, or 

other materials needed to apply. If the 

announcement contains everything needed, 

this section needs only say so. If not, the 

guidance must include: 

(1) An internet address where the materials 

can be accessed. 

(2) An email address. 

(3) A U.S. Postal Service mailing address. 

(4) Telephone number. 

(5) Telephone Device for the Deaf (TDD), 

Text Telephone (TTY) number, or other 

appropriate telecommunication relay service. 

(ii) Unique entity identifier and System for 

Award Management (SAM.gov). This 

subsection must state the requirements for 

unique entity identifiers and registration in 

SAM.gov. It must include the following: 

(A) Each applicant must: 

(1) Be registered in SAM.gov before 

submitting its application; 

(2) Provide a valid unique entity identifier 

in its application; and 

(3) Continue to maintain an active 

registration in SAM.gov with current 

information at all times during which it has 

an active Federal award or an application or 

plan under consideration by a Federal 

agency. 

(B) If individuals are eligible to apply, they 

are exempt from this requirement under 2 

CFR 25.110(b). 

(C) If the Federal agency exempts any 

applicants from this requirement under 2 

CFR 25.110(c) or (d), a statement to that 

effect. 

(iii) Submission Instructions. This 

subsection addresses how the applicant will 

submit the application. It must include the 

following: 

(A) Actions needed prior to applying: 

(1) Instructions on any registrations 

required to access electronic submission 

systems or links to them. Where possible, 

provide the expected time frames needed to 

complete the registration process. 

(B) The methods for submitting the 

application: 

(1) Whether the applicant must submit in 

electronic or paper form or whether the 

applicant has an option. Applicants should 

not be required to submit in more than one 

format. 

(2) Instructions on how to submit 

electronically or links to them. Must include 

the URL to the electronic submission system 

and information on or links to information 

about the system or software requirements 

needed by the system. 

(3) If the Federal agency allows paper 

submissions, the process used to approve this 

option if it is not automatically allowed. 

(4) If the Federal agency allows paper 

submissions, the method for submitting the 

application. This information must include a 

postal address and ‘‘care of’’ information 

needed to route the application to the 

appropriate person, office, or email address, 

if the Federal agency allows such 

submissions. 

(C) If applicable, this subsection also must 

say how applicants must submit preapplications, letters of intent, third-party 

information, or other information required 

before the award. It must include the 

following: 

(1) Instructions on how to submit 

electronically or links to them. 

(2) Whether the applicant must submit in 

electronic or paper form or whether the 

applicant has an option. 

(3) If the Federal agency allows paper 

submissions, the method for submitting the 

required information. This information must 

include a postal address and ‘‘care of’’ 

information needed to route the application 

to the appropriate person, office, or email 

address. 

(D) This subsection must also include what 

to do in the event of system problems and a 

point of contact who will be available if the 

applicant experiences technical difficulties. 

(iv) Submission Dates and Times. This 

subsection must include due dates and times 

for all submissions. If they are different for 

electronic and paper submissions, be clear 

about the differences. This includes the 

following: 

(A) Full applications. 

(B) Any preliminary submissions, such as 

letters of intent, white papers, or preapplications. 

(C) Any other submissions required before 

Federal award separate from the full 

application. 

(D) 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. 

(v) Intergovernmental Review. This section 

must include the following: 

(A) Whether or not the funding 

opportunity is subject to Executive Order 

12372, ‘‘Intergovernmental Review of Federal 

Programs’’. 

(B) If it is applicable, include the 

following: 

(1) A short description of this requirement. 

(2) Where applicants can find their State’s 

Single Point of Contact, learn whether their 

State has an intergovernmental review 

process, and if so, get information on their 

State’s process. The list of SPOCs is on the 

Office of Management and Budget’s website. 

(6) Application Review Information. 

(i) Responsiveness Review. This section 

includes information on the criteria that 

make an application or project ineligible. 

These are sometimes referred to as 


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‘‘responsiveness’’ criteria, ‘‘go-no-go’’ 

criteria, or ‘‘threshold’’ criteria. Federal 

agencies may change the title of this section 

as appropriate. This section must include the 

following: 

(A) A brief understanding of the Federal 

agency responsiveness review process. 

(B) A list and enough detail to understand 

the criteria or disqualifying factors to be 

reviewed. 

(C) A reference to the regulation or 

requirement that describes the restriction, if 

applicable. For example, if entities that have 

been found to be in violation of a particular 

Federal statute are ineligible, say so. 

(ii) Review Criteria. This section must 

address the review criteria that the Federal 

agency will use to evaluate applications for 

merit. This information includes the merit 

and other review criteria evaluators will use 

to judge applications, including any 

statutory, regulatory, or other 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 the fairness of the 

process. 

(A) This section must include the 

following: 

(1) A clear description of each criterion 

and sub-criterion used. 

(2) If criteria vary in importance, the 

relative percentages, weights, or other means 

used to distinguish between them. 

(3) For statutory, regulatory, or other 

preferences, an explanation of those 

preferences with an explicit indication of 

their effect, for example, if they result in 

additional points being assigned. 

(4) How an applicant’s proposed cost 

sharing will be considered in the review 

process if it is not an eligibility criterion in 

Section 2b. For example, 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. 

Do not include statements that cost sharing 

is encouraged without providing clarity 

about what that means. 

(5) The relevant information if the Federal 

agency permits applicants to nominate 

reviewers of their applications or suggest 

those, they feel may be inappropriate due to 

a conflict of interest. 

(B) This section could include the 

following: 

(1) The types of people responsible for 

evaluation against the merit criteria. For 

example, peers external to the Federal agency 

or Federal agency personnel. 

(2) The number of people on an evaluation 

panel and how it operates, how reviewers are 

selected, reviewer qualifications, and how 

conflicts of interest are avoided. 

(iii) Review and Selection Process. 

This section may vary in the level of detail 

provided. 

(A) It must include the following: 

(1) Any program policy, factors, or 

elements that the selecting official may use 

in selecting applications for the award. For 

example, geographical dispersion, program 

balance, or diversity. 

(2) A brief description of the merit review 

process, including how the Federal agency 

uses merit review outcomes in final decisionmaking. For example, whether they are 

advisory only. 

(B) It could also include the following: 

(1) Who makes the final selections for 

awards. 

(2) Any multi-phase review methods. For 

example, an external panel that advises on, 

makes, or approves final recommendations to 

the deciding official. 

(iv) Risk Review. 

(A) This section must include the 

following: 

(1) A brief description of the factors used 

for the Federal agency’s risk review as 

required by § 200.206. 

(2) If the Federal agency expects that any 

award under the NOFO will be more than the 

simplified acquisition threshold during its 

period of performance, include the following 

information: 

(i) That before making a Federal award 

with a total amount of Federal share greater 

than the simplified acquisition threshold, the 

Federal agency must review and consider any 

information about the applicant that is in the 

responsibility/qualification records available 

in SAM.gov (see 41 U.S.C. 2313). 

(ii) That an applicant can review and 

comment on any information in the 

responsibility/qualification records available 

in SAM.gov. 

(iii) That before making decisions in the 

risk review required by § 200.206 the Federal 

agency will consider any comments by the 

applicant, along with information available 

in the responsibility/qualification records in 

SAM.gov. 

(7) Award Notices. 

This section must address what a 

successful applicant can expect to receive 

following selection. 

(i) It must include the following: 

(A) If the Federal agency’s practice is to 

provide a separate notice stating that an 

application has been selected before it makes 

the Federal award, indicate that the letter is 

not an authorization to begin performance 

and that the Federal award is the authorizing 

document. 

(B) If pre-award costs are allowed, 

beginning performance is at the applicant’s 

own risk. 

(C) This section should indicate that the 

notice of Federal award signed by the grants 

officer, or equivalent, is the official document 

that obligates funds, and whether it is 

provided through postal mail or by electronic 

means and to whom. 

(D) The timing, form, and content of 

notifications to unsuccessful applicants. See 

also § 200.211. 

(8) Post-Award Requirements and 

Administration. 

(i) Administrative and National Policy 

Requirements. Providing information on 

administrative and policy requirements lets a 

potential applicant identify any requirements 

with which it would have difficulty 

complying. This section must include the 

following: 

(A) A statement related to the ‘‘general’’ 

terms and conditions of the award, including 

requirements that the Federal agency 

normally includes. 

(B) Any relevant special terms and 

conditions. 

(C) Any special requirements that could 

apply to specific awards after the review of 

applications and other information based on 

the particular circumstances of the effort to 

be supported. For example, if human subjects 

were to be involved or if some situations may 

justify special terms on intellectual property, 

data sharing, or security requirements. 

(D) As in other sections, the announcement 

need not include all terms and conditions of 

the award but may refer to documents with 

details on terms and conditions. 

(ii) Reporting. 

This section includes information needed 

to understand the post-award reporting 

requirements. Highlight any special reporting 

requirements for Federal awards under this 

funding opportunity that differ from what the 

Federal agency’s Federal awards usually 

require. For example, differences in report 

type, frequency, form, format, or 

circumstances for use. This section must 

include the following: 

(A) The type of reporting required, such as 

financial or performance. 

(B) The reporting frequency. 

(C) The means of submission, such as 

paper or electronic. 

(D) References to all relevant requirements, 

such as those at 2 CFR 180.335 and 180.350. 

(E) If the Federal share of any Federal 

award may include more than $500,000 over 

the period of performance, this section must 

inform potential applicants about the postaward reporting requirements reflected in 

appendix XII to this part. 

(9) Other Information—Optional. 

This section may include any additional 

information to help potential applicants. For 

example, the section could include the 

following: 

(i) Related programs or other upcoming or 

ongoing Federal agency funding 

opportunities for similar activities. 

(ii) Current internet addresses for Federal 

agency websites that may be useful to an 

applicant in understanding the program. 

(iii) Routine notices to applicants. For 

example, the Federal Government is not 

obligated to make any Federal award as a 

result of the announcement, or only grants 

officers can bind the Federal Government to 

the expenditure of funds. 

■ 13. Amend appendix III to part 200 by 

revising the heading of section A.1. and 

paragraph C.2 to read as follows: 

Appendix III to Part 200—Indirect 

(F&A) Costs Identification and 

Assignment, and Rate Determination 

for Institutions of Higher Education 

(IHEs) 

* * * * * 

A. General 

* * * * * 


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1. Major Functions/Activities of an IHE 

* * * * * 

C. Determination and Application of Indirect 

(F&A) Cost Rate or Rates 

* * * * * 

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) 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 $50,000 of each 

subaward (regardless of the period covered 

by the subaward). MTDC is defined in 

§ 200.1. 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. 

■ 14. Amend appendix IV to part 200 by 

revising paragraphs B.2.c. and B.4.a.iii 

to read as follows: 

Appendix IV to Part 200—Indirect 

(F&A) Costs Identification and 

Assignment, and Rate Determination 

for Nonprofit Organizations 

* * * * * 

B. Allocation of Indirect Costs and 

Determination of Indirect Cost Rates 

* * * * * 

2. * * * 

c. The distribution base may be total direct 

costs (excluding capital expenditures and 

other distorting items, such as subawards for 

$50,000 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 § 200.1. 

* * * * * 

4. * * * 

a. * * * 

(iii) other direct functions (including 

projects performed under Federal awards). 

Joint costs, such as depreciation, rental costs, 

operation and maintenance of facilities, 

telephone expenses, information technology 

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. 

■ 15. Amend appendix VII to part 200 

by 

■ a. Revising paragraphs C.2.c.(1), 

C.3.e.(1), and D.1.b.; 

■ b. Redesignating paragraphs D.1.c. 

and D.1.d. as D.1.d. and D.1.e; and 

■ c. Adding a new paragraph D.1.c. 

The revisions and addition read as follows: 

C. Allocation of Indirect Costs and 

Determination of Indirect Cost Rates 

* * * * * 

2. * * * 

c. * * * 

(1) total direct costs (excluding capital 

expenditures and other distorting items, such 

as pass-through funds, subcontracts in excess 

of $50,000, and participant support costs), 

* * * * * 

3. * * * 

e. * * * 

(1) total direct costs (excluding capital 

expenditures and other distorting items such 

as pass-through funds, subawards in excess 

of $50,000, and participant support costs), 

* * * * * 

D. Submission and Documentation of 

Proposals 

* * * * * 

1. * * * 

b. A governmental department or agency 

(such as a state or local Department of 

Health, Department of Transportation, or 

Department of Housing) that receives more 

than $35 million in direct Federal funding 

during its fiscal year must submit its indirect 

cost rate proposal to its cognizant agency for 

indirect costs. 

c. If a governmental department or agency 

(such as a state or local Department of 

Health, Department of Transportation, or 

Department of Housing) receives $35 million 

or less in direct Federal funding during its 

fiscal year, it must develop an indirect cost 

proposal in accordance with the 

requirements of this part and maintain the 

proposal and related supporting 

documentation for audit. This established 

rate must be accepted by any Federal agency 

to which the governmental department or 

agency applies for funding. Federal agencies 

must not compel the governmental 

department or agency to accept the de 

minimis rate or some other rate established 

by the Federal agency. 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. 

* * * * * 

■ 16. Revise appendix X to part 200 to 

read as follows: 

Appendix X to Part 200—Data 

Collection Form (Form SF–SAC) 

The Data Collection Form SF–SAC is 

available as a webform on the Federal Audit 

Clearinghouse (FAC). Form and submission 

instructions can be found at https://

www.fac.gov/. 

■ 25. Revise appendix XII to part 200 to 

read as follows: 

Appendix XII to Part 200—Award 

Term and Condition for Recipient 

Integrity and Performance Matters 

I. Reporting of Matters Related to Recipient 

Integrity and Performance 

(a) General Reporting Requirement. 

(1) If the total value of your active grants, 

cooperative agreements, and procurement 

contracts from all Federal agencies exceeds 

$10,000,000 for any period of time during the 

period of performance of this Federal award, 

then you as the recipient must ensure the 

information available in the responsibility/ 

qualification records through the System for 

Award Management (SAM.gov), about civil, 

criminal, or administrative proceedings 

described in paragraph (b) of this award term 

is current and complete. This is a statutory 

requirement under section 872 of Public Law 

110–417, as amended (41 U.S.C. 2313). As 

required by section 3010 of Public Law 111– 

212, all information posted in responsibility/ 

qualification records in SAM.gov on or after 

April 15, 2011 (except past performance 

reviews required for Federal procurement 

contracts) will be publicly available. 

(b) Proceedings About Which You Must 

Report. 

(1) You must submit the required 

information about each proceeding that— 

(i) Is in connection with the award or 

performance of a grant, cooperative 

agreement, or procurement contract from the 

Federal Government; 

(ii) Reached its final disposition during the 

most recent five-year period; and 

(iii) Is one of the following— 

(A) A criminal proceeding that resulted in 

a conviction; 

(B) A civil proceeding that resulted in a 

finding of fault and liability and payment of 

a monetary fine, penalty, reimbursement, 

restitution, or damages of $5,000 or more; 

(C) An administrative proceeding that 

resulted in a finding of fault and liability and 

your payment of either a monetary fine or 

penalty of $5,000 or more or reimbursement, 

restitution, or damages in excess of $100,000; 

or 

(D) Any other criminal, civil, or 

administrative proceeding if— 

(1) It could have led to an outcome 

described in paragraph (b)(1)(iii)(A) through 

(C); 

(2) It had a different disposition arrived at 

by consent or compromise with an 

acknowledgment of fault on your part; and 

(3) The requirement in this award term to 

disclose information about the proceeding 

does not conflict with applicable laws and 

regulations. 

(c) Reporting Procedures. 

Enter the required information in SAM.gov 

for each proceeding described in paragraph 

(b) of this award term. You do not need to 

submit the information a second time under 

grants and cooperative agreements that you 

received if you already provided the 

information in SAM.gov because you were 

required to do so under Federal procurement 

contracts that you were awarded. 

(d) Reporting Frequency. 

During any period of time when you are 

subject to the requirement in paragraph (a) of 

this award term, you must report proceedings 

information in SAM.gov for the most recent 

five-year period, either to report new 

information about a proceeding that you have 

not reported previously or affirm that there 

is no new information to report. If you have 

Federal contract, grant, and cooperative 

agreement awards with a cumulative total 

value greater than $10,000,000, you must 

disclose semiannually any information about 

the criminal, civil, and administrative 

proceedings. 


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(e) Definitions. 

For purposes of this award term— 

Administrative proceeding means a nonjudicial process that is adjudicatory in nature 

to make a determination of fault or liability 

(for example, Securities and Exchange 

Commission Administrative proceedings, 

Civilian Board of Contract Appeals 

proceedings, and Armed Services Board of 

Contract Appeals proceedings). This includes 

proceedings at the Federal and State level but 

only in connection with the performance of 

a Federal contract or grant. It does not 

include audits, site visits, corrective plans, or 

inspection of deliverables. 

Conviction means a judgment or conviction 

of a criminal offense by any court of 

competent jurisdiction, whether entered 

upon a verdict or a plea, and includes a 

conviction entered upon a plea of nolo 

contendere. 

Total value of currently active grants, 

cooperative agreements, and procurement 

contracts includes the value of the Federal 

share already received plus any anticipated 

Federal share under those awards (such as 

continuation funding). 

II. [Reserved] 

Deidre A. Harrison, 

Deputy Controller, performing the delegated 

duties of the Controller Office of Federal 

Financial Management. 

[FR Doc. 2023–21078 Filed 9–28–23; 4:15 pm] 

BILLING CODE 3110–01–P 


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