[Federal Register Volume 65, Number 74 (Monday, April 17, 2000)]
[Proposed Rules]
[Pages 20698-20704]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-9558]



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Part V





Department of Education





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34 CFR Part 75



Direct Grant Programs; Proposed Rule

Federal Register / Vol. 65, No. 74 / Monday April 17, 2000 / Proposed 
Rules

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DEPARTMENT OF EDUCATION

34 CFR Part 75

RIN 1880-AA02


Direct Grant Programs

AGENCY: Office of the Chief Financial Officer, Department of Education.

ACTION: Notice of proposed rulemaking.

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SUMMARY: The Secretary proposes to amend the Education Department 
General Administrative Regulations (EDGAR) that govern discretionary 
grant programs. These proposed amendments would implement new options 
for the Department of Education's (Department's) application review 
process for discretionary grants. These changes are intended to improve 
the quality of the review process, provide additional flexibility, and 
provide greater opportunities for inexperienced, ``novice applicants'' 
to receive funding.

DATES: We must receive your comments on or before June 1, 2000.

ADDRESSES: Address all comments about these proposed regulations to 
Valerie A. Sinkovits, U.S. Department of Education, 400 Maryland Avenue 
SW., room 3652, ROB-3, Washington, DC 20202-4248. If you prefer to send 
your comments through the Internet use the following address: 
<a href="/cdn-cgi/l/email-protection#01626e6c6c646f75724164652f666e77"><span class="__cf_email__" data-cfemail="2e4d4143434b405a5d6e4b4a00494158">[email protected]</span></a>
    You must include the term ``Redesign'' in the subject line of your 
electronic message.

FOR FURTHER INFORMATION CONTACT: Valerie Sinkovits. Telephone: (202) 
708-7568. If you use a telecommunications device for the deaf (TDD), 
you may call the Federal Information Relay Service (FIRS) at 1-800-877-
8339.
    Individuals with disabilities may obtain this document in an 
alternative format (e.g., Braille, large print, audiotape, or computer 
diskette) on request to the contact person listed in the preceding 
paragraph.

SUPPLEMENTARY INFORMATION:

I. Invitation to Comment

    We invite you to submit comments and recommendations regarding 
these proposed regulations. To ensure that your comments have maximum 
effect in developing the final regulations, we urge you to identify 
clearly the specific section or sections of the proposed regulations 
that each of your comments addresses and to arrange your comments in 
the same order as the proposed regulations.
    We invite you to assist us in complying with the specific 
requirements of Executive Order 12866 and its overall requirement of 
reducing regulatory burden that might result from these proposed 
regulations. Please let us know of any further opportunities we should 
take to reduce potential costs or increase potential benefits while 
preserving the effective and efficient administration of the programs 
affected by these regulations.
    During and after the comment period, you may inspect all public 
comments about these proposed regulations in room 3652, Regional Office 
Building 3, Seventh and D Streets, S.W., Washington, DC, between the 
hours of 8:30 a.m. and 4:00 p.m., Eastern time, Monday through Friday 
of each week except Federal holidays.

Assistance to Individuals With Disabilities in Reviewing the Rulemaking 
Record

    On request we will supply an appropriate aid, such as a reader or 
print magnifier, to an individual with a disability who needs 
assistance to review the comments or other documents in the public 
rulemaking record for these proposed regulations. If you want to 
schedule an appointment for this type of aid, you may call (202) 205-
8113 or (202) 260-9895. If you use a TDD, you may call the Federal 
Information Relay Service at 1-800-877-8339.

II. Background of the Department's Redesign of the Discretionary 
Grants Process

    The Secretary takes this action to implement several 
recommendations made by a Department discretionary grants reengineering 
team (team). In January of 1995, the Department's Reinvention 
Coordinating Council (RCC), chaired by the Deputy Secretary of 
Education, chartered a team of Department staff to redesign the 
discretionary grants process, including the application review process, 
to increase customer satisfaction and to ensure the best use of the 
Department's resources. The team was comprised of staff members from 
across the Department who had a wealth of knowledge of, and experience 
with, the Department's discretionary grants process and programs. 
Current and former Department grant recipients, as well as unsuccessful 
applicants, provided helpful comments, suggestions, and recommendations 
to the team for improving the discretionary grants process. The team 
received input from a variety of organizations, including institutions 
of higher education, State educational agencies, local educational 
agencies, and nonprofit organizations. In addition, numerous Department 
staff who are involved in all phases of the discretionary grants 
process, from appropriations through grant close-out, provided input 
and recommendations on ways to improve the grants process. Furthermore, 
the team researched the discretionary grants processes of other Federal 
agencies, including the National Science Foundation and the National 
Institutes of Health.
    The team presented its preliminary design for the new discretionary 
grants process in May of 1995 at a design review conference for 
Department staff and customers. Based on participant recommendations 
and comments, the team made changes and refinements to the design. In 
December of 1995, the final design was approved for implementation by 
the Department's Executive Management Committee. Pilot tests of various 
aspects of the new process were conducted during fiscal year 1996 by 
several departmental program offices, and additional refinements were 
made based on the results of an external evaluation. The Department 
began to implement the approved redesigned discretionary grants process 
on October 1, 1996. Some of the most noticeable changes implemented 
since 1996 include: eliminating the Department's centralized grants 
office and forming discretionary grant teams in the Department's 
program offices that provide ``one-stop shopping'' for both grants 
administration and programmatic information; eliminating unnecessary 
and time-consuming processes such as grant negotiations prior to award; 
and establishing partnerships with Department grantees to ensure 
successful project outcomes.

III. The Team's Findings

    Although the team gathered data on all phases of the Department's 
discretionary grants process, the majority of comments and suggestions 
from customers and staff alike focused on the review of grant 
applications--a crucial activity that plays a major role in determining 
which applicants will be funded.

A. Review Procedures

    The team's analysis of the Department's current application review 
process showed that the same basic review procedures are generally used 
for all program competitions, regardless of the number of applications 
received, the average amount of the awards, or the nature of the 
program. Both staff and customers questioned whether it was cost-
effective and efficient for the Department to employ the same review

[[Page 20699]]

procedures for the smallest grants as it does for the largest, most 
complex grants.
    Perhaps more importantly, they questioned whether using the same 
standard review procedures for each of the Department's highly diverse 
programs would ultimately result in the selection of the best projects 
that would meet unique program goals.
    The team determined that the two most common elements of the 
Department's application review process are: (1) using numerical scores 
to rate applications and (2) using primarily ``outside reviewers'' to 
review applications; that is, experts who are not employees of the 
Federal Government.
1. Numerical Scores
    Under current practice, the Department establishes the maximum 
numerical score that an application may receive under a set of 
selection criteria for a competition. The Department then selects 
panels of reviewers to rate the applications under these selection 
criteria. Each member of a peer review panel rates applications by 
assigning numerical scores under the selection criteria. The scores of 
individual panel members are typically averaged together or, in some 
cases, added together by Department staff to produce a panel score for 
each application. Based on the panel scores, Department staff prepare 
rank order lists of the applications to assist in making funding 
determinations
    Some departmental program offices also use a statistical 
standardization process that adjusts the scores of each reviewer to 
eliminate biases that result from the scoring preferences of certain 
reviewers. For example, some reviewers may consistently score all 
assigned applications higher or lower than other reviewers.
    Because often there are so many highly qualified applications that 
score very close together, the Department may need to calculate scores 
to one-tenth or even one one-hundredth of a point to determine the rank 
order. For example, due to limited program funds, the Department might 
be able to fund an application scoring 97.2. However, an application 
scoring 97.1, only one-tenth of a point less, may not be funded.
2. Peer Reviewers
    Both Department staff and customers placed great importance on the 
qualifications of the peer reviewers. Customers indicated that they 
expected a review process that assured a fair and high quality 
application review by trained reviewers with appropriate backgrounds 
and subject matter expertise.
    Department staff stressed the importance of using high-quality 
reviewers, but also indicated significant challenges in engaging 
``outside'' reviewers. Often, qualified, prospective reviewers have 
numerous professional commitments that preclude their participation in 
the Department's review process. Further, for certain program specialty 
areas, the pool of qualified experts to draw from is limited and the 
experts' time and services are in high demand.

B. Inexperienced Applicants

    Many unsuccessful applicants, as well as grantees who had received 
a grant only after submitting numerous unsuccessful applications, 
expressed frustrations and concerns about the difficulty that 
inexperienced applicants have in obtaining Department discretionary 
grant funding. These customers felt that there was not always a ``level 
playing field'' among applicants competing for grants. They noted 
several factors inhibiting success, including the lack of 
organizational resources to hire professional grant writers with a 
proven track record for producing winning proposals, and the lack of 
resources to establish institutional grant or sponsored research 
offices with the mission of securing grant funding.

C. Building Better Projects

    Although the primary goal of the application review process is to 
identify high quality projects that are worthy of funding, customers 
indicated that they expected additional benefits from the Department's 
review process. Numerous customers stated that thoughtful, substantive 
reviewers' comments identifying the strengths and weaknesses of the 
proposed project were critical to both the successful applicant and the 
unsuccessful applicant.
    Successful applicants felt that receiving substantive reviewers' 
comments prior to the start of their grant was an especially timely and 
helpful tool for improving an already high-quality project. 
Unsuccessful applicants felt that reviewers' comments identifying 
weaknesses in their proposed project and suggestions for improvement 
would help them strengthen their proposals for the next competition. 
Both successful and unsuccessful applicants saw constructive reviewers' 
comments as a form of technical assistance that should be an integral 
part of the review process.

IV. Goals for the Redesigned Application Review Process

    In redesigning the discretionary grants process, particularly the 
application review process, the team had several goals:
    <bullet> Given the range and diversity of the Department's 
discretionary grant programs, program offices should have the 
flexibility to employ procedures for reviewing and selecting grants 
that most closely meet their individual program needs and result in the 
selection of quality projects and the timely award of grants.
    <bullet> Regardless of the application review procedures the 
Department uses for a particular program, the Department must ensure 
that, in all cases, trained and qualified reviewers, with appropriate 
backgrounds and expertise, conduct a high quality review.
    <bullet> The entire discretionary grants process must be fair, 
efficient, cost-effective, and result in the issuance of grant awards 
when the customers need them.

V. The Redesigned Application Review Process

    The redesigned application review process increases the options 
available for reviewing and selecting grants so that the Department can 
better tailor the method used for a competition to meet the needs of 
the program. Program offices could continue to use current review and 
selection methods, but would be encouraged to examine the 
appropriateness of using the new methods for their competitions.

A. Quality Band Ratings

    The redesigned application review process presents a new option for 
rating applications that focuses on a qualitative description of the 
application's merit, rather than a quantitative description (i.e., 
numerical scores). Under the redesigned process, the Department could 
request that reviewers group applications of comparable merit into 
quality bands, rather than using numerical ratings to score and rank 
applications. The reviewers would place applications into one of five 
possible groupings or quality bands to denote distinctions in quality 
among the applications. Quality bands would range from highest to 
lowest quality (i.e., ``Excellent,'' ``Very Good,'' ``Good,'' ``Fair'' 
and ``Unacceptable'').
    Under the quality band system of rating applications, all of the 
applications that place in a particular quality band would be 
considered comparable in quality, and therefore, the Department could 
support funding

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any of the applications in a fundable quality band.
    In any competition using quality bands, the Department would rely 
heavily on the professional judgement of the reviewers in the rating of 
applications. The individual reviewers would be instructed to provide 
strong written justifications for the quality band rating assigned to 
each application, and include comments that identify the strengths and 
weaknesses of the application. In addition to justifying the ratings 
that a reviewer has given to an application, constructive narrative 
reviewers' comments provide critical technical assistance that can help 
successful applicants improve and refine their projects and will help 
unsuccessful applicants improve the quality of their proposals for the 
next competition. Peer reviewers would receive training by Department 
staff prior to the start of the review regarding how to provide 
constructive comments that are integral to the quality band rating 
system.
    The Department would first fund all of the applications in the 
highest quality band (i.e., the ``Excellent'' band) and then proceed to 
fund all of the applications in the next band (i.e., the ``Very Good'' 
band), and so on, until all of the applications in the last band that 
merits funding have been funded. If faced with the inability to fund 
all of the applications in a particular quality band due to limited 
program funds, the Secretary would have discretion in determining which 
applications to fund within the band. As recommended by the team, in 
exercising that discretion, the Secretary might use a random selection 
procedure to select applications from within the band until available 
funds were exhausted. Because the Department could commit to funding 
any of the applications in that particular quality band, a random 
selection procedure is both a feasible and fair way of selecting among 
applications in a quality band.
    It should be noted that the Department has experience with 
qualitative ratings in specific program competitions. Several 
Department programs, such as the Technology Innovation Challenge Grants 
Program and the Field-Initiated Studies Research Grant Program, have 
used qualitative rating systems. In reviewing the applications, 
reviewers provided written justifications supporting the qualitative 
ratings assigned to each application and comments focusing on the 
strengths and weaknesses of the applications.

B. Staff Panel Reviews

    Another application review option recommended by the team was the 
increased use of review panels comprised solely of highly qualified 
Department staff. This review option is available currently to 
Department programs, but is not widely used.
    However, the Department believes that this kind of review process 
might be appropriate for programs in which the awards issued were of a 
relatively small size or in which a high percentage of the applications 
under the program would ultimately be funded. Further, in competitions 
involving a multiple tier review process, in which two or three review 
panels or tiers evaluate applications, Department staff might be used 
by program offices to participate in one of the initial tiers of review 
to help determine which applications should be forwarded to the next 
tier for further consideration.
    The team noted the following beneficial aspects of using an 
internal review and evaluation process for certain program 
competitions: (1) A high quality review is conducted by ``in-house'' 
Department experts, with appropriate backgrounds and subject matter 
expertise, who are familiar with the laws, regulations, and policies 
affecting the program and (2) the review process is more cost-effective 
and efficient, as the need to conduct application reviews off-site is 
reduced or eliminated, and the fiscal and logistical considerations of 
recruiting, selecting, and engaging non-Federal readers is reduced, or, 
in some cases, eliminated.

C. Novice Applicants

    In order to address customer concerns about the difficulties that 
inexperienced applicants face in getting discretionary grant funding 
from the Department, the team recommended that, if legally permissible 
and consistent with the intent and purpose of the program, Department 
program offices could set aside funds to be awarded to novice 
applicants. The team suggested a streamlined application process for 
novice applicants, consisting of a brief application, submitted by the 
applicants for a smaller than average grant under the program; review 
and evaluation by Department staff members to establish that the 
applications are of sufficient quality to merit funding; use of a 
random selection process when the Department does not have sufficient 
funds to fund all of the qualified novice applications; and closer 
monitoring and technical assistance after award for novice grantees.
    To meet individual program needs, program offices might use other 
review and selection procedures to assist novice applicants in 
obtaining funding. For example, instead of conducting a separate 
competition for novice applicants, a program office might hold only one 
competition open to all eligible applicants, including novice 
applicants. Under a competitive preference for a program competition 
using numerical scores, a novice applicant could receive a certain 
number of additional points based on its status as a novice. Likewise, 
in a program competition using quality bands, the Secretary could take 
into consideration the applicants' ``novice'' status in making funding 
decisions. For example, if all of the applications in a quality band 
could not be funded due to limited program funds, the Secretary could 
fund all, or a certain percentage of the novice applications in that 
band before funding other applications in that band.
    In all cases, novice grantees would be required to follow the same 
regulations and requirements as other grantees under the program, and, 
as mentioned earlier, more stringent conditions might be imposed, if 
needed, on novice grantees, such as more frequent monitoring by the 
Department.

VI. Section-by-Section Analysis of the Proposed Regulations

A. Section 75.105  Annual Priorities

    This section would be amended to reflect the use of annual 
priorities in competitions that use quality bands to evaluate 
applications. Under proposed paragraph (c)(2)(i)(B) of this section, 
when selecting applications in quality bands, the Secretary may 
consider the extent to which or how well the application meets the 
priority in selecting applications for funding.
    The following hypothetical example illustrates how this would work. 
The Secretary publishes an application notice for a competition under 
the ABC School Technology Program, telling applicants that the 
Secretary will use quality bands to evaluate applications. The notice 
also states that the Secretary will give competitive preference to 
applications under this competition based on the extent to which or how 
well an application meets the following priority: significant 
involvement by members of the business community in the design and 
implementation of the project. In response to the application notice, 
the Secretary receives many applications under the ABC School 
Technology Program. The Secretary has sufficient funds to select all of 
the applications in the ``Excellent'' band,

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but only has sufficient funds to select 10 of the 30 applications in 
the ``Very Good'' band. Twelve of the 30 applications in the ``Very 
Good'' band address the priority.
    In deciding which 10 applications to fund, the Secretary may 
consider the extent to which or how well the 12 applications address 
the priority. The Secretary may conclude, after reviewing the 
applications and the peer reviewers' comments, that eight of the 12 
applications extensively address the priority and provide detailed 
information about how the applicant would implement the priority. The 
Secretary would select the 8 applicants that effectively addressed the 
priority, before funding other applications.
    The Secretary would document how the Secretary made the decision as 
to which of the eight applications addressed the priority effectively 
such that they deserved to be selected over other applications and 
would include that documentation in the file for each application that 
addressed the priority.
    The four applications that did not address the priority effectively 
enough to be given priority selection would be treated as equal to the 
18 remaining applications that did not address the priority at all. The 
Secretary would then select the final two applications from the 
remaining 22 applications. The Secretary either could use random 
selection, or could rely on information regarding the selection 
criteria or other requirements relevant to the selection of 
applications in making the final selection, regardless of whether the 
applications addressed the priority.

A. Section 75.201  How the Selection Criteria Will Be Used.

    This section would be amended to state that the application package 
or notice published in the Federal Register provided to applicants 
includes certain information for competitions that use quality bands to 
evaluate applications.

B. Section 75.209  Selection Criteria Based on Statutory Provisions

    This section would be amended to reflect how the Secretary would 
use statutory criteria, along with other criteria established by the 
Department, in competitions that use quality bands to evaluate 
applications.

C. Section 75.217  How Does the Secretary Select Applications for 
Grants?

    Paragraph (c) of this section would be revised to reflect the use 
of quality bands to evaluate applications. Under proposed paragraph 
(d), the Secretary would continue to make the final decision as to 
which applications to fund, whether the Secretary used rank ordering or 
quality bands. The proposed regulations would continue the Secretary's 
authority to determine which applications to fund after considering the 
information in the application, and the quality of the application, as 
determined under paragraph (c). Proposed paragraph (d) would also 
retain the provision that the Secretary could consider more information 
than was available to reviewers to make sure that all factors were 
properly weighed in the selection process. For example, a group of 
reviewers might rank an application very high. However, the Secretary 
might have information about the applicant's unsatisfactory past 
performance under prior Department grants (e.g., improper use of funds 
or failure to achieve its approved project goals and objectives). The 
Secretary could consider this information under paragraph (d)(1)(iii) 
and decide not to fund the application.
    A new paragraph (e) would be added to reflect the Secretary's 
ability to refuse consideration of applications that do not meet a 
minimum cut-off score or minimum quality band rating. The Secretary 
would have flexibility in deciding whether the cut-off score or quality 
band rating should be established in the application notice for the 
competition or after determining the overall quality of applications 
submitted under a competition.

D. Section 75.223  What Procedures Apply When the Secretary Uses 
Quality Bands to Evaluate Applications?

    A new section 75.223 would be added to describe the procedures the 
Secretary would use under competitions that use quality bands to 
evaluate applications. These proposed regulations would permit 
reviewers to group applications under the following five quality bands: 
``Excellent,'' ``Very Good,'' ``Good,'' ``Fair,'' and ``Unacceptable.'' 
Under proposed Sec. 75.223(b), the Secretary would not fund any 
application placed in the ``Unacceptable'' band.
    In cases where the Secretary selected an application for funding 
from the ``Fair'' band, the Secretary would maintain, in the grant 
file, changes the applicant made to the application showing how the 
applicant addressed those aspects of the proposed grant that were 
lacking. Further, the Secretary could impose additional requirements on 
the grant to ensure that those aspects that were lacking in the 
original application are implemented properly.
    Under proposed paragraph (c) of this section the experts would rate 
the applications against the program's selection criteria and then 
group applications of comparable merit into the same quality band, so 
that there would be no rank order within a quality band.
    Proposed paragraph (d) would add a provision outlining what would 
happen if the Secretary grouped applications in non-numerical quality 
bands and there were more applications within any one quality band 
worthy of funding than available funds would allow. In such situations, 
the Secretary would use his discretion to select applications and could 
select randomly from within the quality band in exercising that 
discretion.
    Proposed paragraph (d) would also address the possibility that 
different members of a panel might put the same application in 
different quality bands. In these cases, the Secretary would have to 
resolve the conflict, using all available information. For example, if 
two reviewers rated an application in the ``Very Good'' and one rated 
the application in the ``Excellent'' band, the Secretary might conclude 
that the application should be considered with the applications that 
were rated in the ``Very Good'' band, as that view predominated in the 
consideration of the reviewers. In other cases, the Secretary might 
find that one of the reviewers misunderstood portions of the 
application and misjudged the application. This might produce a three-
reviewer split, where one member rated the application in the 
``Excellent'' band, one member rated the application in the ``Very 
Good'' band and the third member rated the application in the 
``Unacceptable'' band. If the Secretary determined that the third 
reviewer misjudged the application, the Secretary would look at the 
ratings of the other two reviewers to decide in which band to rate the 
application. This kind of judgement is similar to what happens under 
the current system, when the Secretary decides not to fund an 
application that was within the funding range because the average of 
the scores for an application was unjustifiably high due to a 
misreading of the application by one of the reviewers.
    The Secretary would direct employees of the Department who act as 
competition managers or monitors to point out to reviewers variances in 
evaluations so these kinds of conflicts can be resolved in most cases 
during the review process. In any case, these issues would be resolved 
before the Secretary makes final selection decisions. In no case would 
a reviewer be directed to change an evaluation, only to consider 
whether the reviewer fully considered all of the information in the 
application.

[[Page 20702]]

    The Secretary will monitor the development of the Department's use 
of quality bands to determine if any further regulatory clarification 
is needed to resolve issues that may arise from reviewers placing 
applications in different quality bands.

E. Section 75.224  What Are the Procedures for Using a Multiple Tier 
Review Process To Evaluate Applications?

    Proposed Sec. 75.224 would codify a practice that has evolved in 
some program offices of the Department involving the use of more than 
one review of an application. This review by more than one group of 
reviewers is known as ``multiple tier review.'' A multiple tier review 
process might be used by a program office to gain different 
perspectives on an application. For example, one panel of researchers 
and another panel of practitioners might be asked to review the 
applications for a particular program competition. More commonly, a 
multiple tier review process is used to narrow the pool of applicants 
that will be considered for funding. After the first or second tiers of 
the review, only some of the applications are forwarded to the next 
tier for further consideration. Under the multiple tier review process, 
the Secretary could refuse to consider an application in the second or 
third tier of review if it did not meet a minimum score or place in a 
certain minimum quality band level in the previous tier's review. The 
Secretary could establish the minimum score or quality band either in 
the application notice for the competition or after considering the 
overall range in the quality of the applications. For example, if a 
large number of the applications were rated in the ``Excellent'' and 
``Very Good'' bands in the first tier of the review, and funds were 
only available to fund a small number of the applications, the 
Secretary could decide to eliminate from further review any 
applications that rated below the ``Excellent'' band.
    When a multiple tier review process is used as a means for 
narrowing the pool of applications that will be considered for funding, 
it would not be unusual for an application to receive a considerably 
different rating in the second or third tier than it did under the 
previous tier's review, even from the same reviewers. Although the 
reviewers in the second or third tier are still rating applications 
under the same selection criteria, the applications are now being 
reviewed within the context of a higher quality pool of applications, 
which has the potential for affecting the reviewers' rating practices. 
For this reason, the Secretary does not believe that these differences 
in ratings indicate errors in judgement at the prior tier.
    The Secretary would also have discretion under proposed paragraph 
(d) to refuse consideration of an application that was rejected by any 
one of the groups evaluating the application in the same tier. For 
example, in a competition for a major statistical grant, the Secretary 
might choose at the first tier to have applications reviewed by a panel 
of statisticians and another panel of educators and citizens. If the 
statistical panel found the statistical model of an application valid 
but the panel of educators and citizens found that the result of the 
applicant's analysis would not advance education issues, the Secretary 
could refuse to consider that application in the next tier of the 
review process.

F. Section 75.225  What Procedures Does the Secretary Use if the 
Secretary Decides to Give Special Consideration to Novice Applicants?

    Proposed new section 75.225 would be added to respond to the 
concerns of some applicants that they could not get a grant from the 
Department unless they had already received a grant. Proposed section 
75.225 (a) would define novice applicants as applicants that have never 
received a grant or a subgrant from the Department program under which 
they seek funding, and have not had an active discretionary grant from 
the Federal Government in the five years before the deadline date for 
applications under the program.
    In cases where an applicant had participated in a group that 
received a grant from the Department, such as a consortium or 
partnership, but had not acted as the grantee (fiscal agent) under the 
regulations for group applications in Secs. 75.127-75.129, the 
applicant would not be treated as having had a previous grant under 
that program. However, if the applicant had been the grantee for the 
group application, then the applicant would be treated as having had a 
grant under the program that made the award.
    When applying for assistance under a program that would use the 
novice application procedures, an applicant that met the definition of 
``novice applicant'' and wanted to receive special consideration as a 
novice applicant would check a box on the Department's Application for 
Federal Education Assistance form (ED 424) to certify that it met all 
novice applicant requirements for the funding program.
    Under proposed paragraph (c), the Secretary would have discretion 
in appropriate circumstances to set up a separate competition for 
novice applicants. This novice competition would not be used when the 
Department would be funding a highly complicated research project, or 
large projects that would require coordination among a group of 
organizations. As an example, the Department could set up a novice 
competition in which novice applicants compete for small ``seed money'' 
grants and are required to submit only brief applications addressing 
how they meet the selection criteria for the program. The information 
about how the novice competition would be managed would appear in the 
application notice for the competition.
    The Secretary would also have discretion under proposed paragraph 
(c) to give special consideration to novice applications as part of a 
competition not explicitly restricted to novice applicants. If the 
Secretary chose this means of considering novice applications in a 
rank-order competition, the Secretary would give a novice application a 
certain number of additional points, as stated in the application 
notice for the competition, based on its status as a novice. Also, as 
mentioned earlier in this preamble, a program office using quality band 
ratings could give priority to novice applications by selecting a 
certain percentage of, or all, novice applications within a band before 
selecting other applications in that band.
    Finally, proposed paragraph (d) would authorize the Secretary to 
place special conditions on a novice grantee to help ensure that it 
successfully completes the project. For example, to facilitate close 
monitoring of the grant, the novice grantee might be required to submit 
performance reports on a quarterly basis.

Clarity of the Regulations

    Executive Order 12866 and the President's Memorandum of June 1, 
1998 on ``Plain Language in Government Writing'' require each agency to 
write regulations that are easy to understand.
    The Secretary invites comments on how to make these proposed 
regulations easier to understand, including answers to questions such 
as the following:
    <bullet> Are the requirements in the proposed regulations clearly 
stated?
    <bullet> Do the proposed regulations contain technical terms or 
other wording that interferes with their clarity?
    <bullet> Does the format of the proposed regulations (grouping and 
order of sections, use of headings, paragraphing, etc.) aid or reduce 
their clarity?
    <bullet> Would the proposed regulations be easier to understand if 
we divided them

[[Page 20703]]

into more (but shorter) sections? (A ``section'' is preceded by the 
symbol ``Sec. '' and a numbered heading; for example, Sec. 75.217 How 
the Secretary selects applications for new grants.)
    <bullet> Could the description of the proposed regulations in the 
SUPPLEMENTARY INFORMATION section of this preamble be more helpful in 
making the proposed regulations easier to understand? If so, how?
    <bullet> What else could we do to make the proposed regulations 
easier to understand?
    Send any comments that concern how the Department could make these 
proposed regulations easier to understand to the person listed in the 
ADDRESSES section of the preamble.

Regulatory Flexibility Act Certification

    The Secretary certifies that these proposed regulations would not 
have a significant economic impact on a substantial number of small 
entities. The small entities affected would be small local educational 
agencies, tribal governments, community-based organizations, nonprofit 
organizations, and institutions of higher education. The novice 
applicant procedures in these regulations would benefit small entities 
by giving them a greater opportunity to receive awards from the 
Department. The flexibility in these regulations would benefit all 
entities, including small entities, by improving customer service and 
increasing the quality of the application review process.

Paperwork Reduction Act of 1995

    These proposed regulations do not contain any information 
collection requirements.

Intergovernmental Review

    These proposed regulations are not subject to the requirements of 
Executive Order 12372 and the regulations in 34 CFR part 79. However, 
many of the programs that these proposed regulations would apply to are 
subject to Executive Order 12372 and the regulations in 34 CFR part 79.

Assessment of Educational Impact

    The Secretary particularly requests comments on whether the 
proposed regulations would require transmission of information that any 
other agency or authority of the United States gathers or makes 
available.

Electronic Access to This Document

    You may view this document, as well as all other Department of 
Education documents published in the Federal Register, in text or Adobe 
Portable Document Format (PDF) on the Internet at either of the 
following sites:
http://ocfo.ed.gov/fedreg.htm
http://www.ed.gov/news.html

To use the PDF you must have the Adobe Acrobat Reader Program with 
Search, which is available free at either of the previous sites. If you 
have questions about using the PDF, call the U.S. Government Printing 
Office (GPO), toll free, at 1-888-293-6498; or in the Washington, D.C., 
area at (202) 512-1530.

    Note:
    The official version of this document is the document published 
in the Federal Register. Free Internet access to the official 
edition of the Federal Register and the Code of Federal Regulations 
is available on GPO Access at: http://www.access.gpo.gov/nara/index.html

(Catalog of Federal Domestic Assistance Number does not apply.)

List of Subjects in 34 CFR Part 75

    Administrative practice and procedure, Education Department, Grant 
programs--education, Grant administration, Incorporation by reference, 
Performance reports, Reporting and recordkeeping requirements, 
Unobligated funds.

    Dated: April 12, 2000.
Richard W. Riley,
Secretary of Education.
    For the reasons discussed in the preamble, the Secretary proposes 
to amend part 75 of title 34 of the Code of Federal Regulations as 
follows:

PART 75--DIRECT GRANT PROGRAMS

    1. The authority citation for Part 75 continues to read as follows:

    Authority: 20 U.S.C. 1221e-3 and 3474, unless otherwise noted.

    2. Section 75.105 is amended by revising paragraph (c)(2)(i) to 
read as follows:


Sec. 75.105  Annual priorities.

* * * * *
    (c) * * *
    (2) * * *
    (i)(A) If the Secretary prepares a rank order of the applications, 
the Secretary may assign some or all bonus points to an application 
depending upon the extent to which or how well the application meets 
the priority. These points are in addition to any points the applicant 
earns under the selection criteria (see Sec. 75.200(b)). The 
application notice states the maximum number of additional points that 
the Secretary may award to an application depending upon the extent to 
which or how well the application meets the priority.
    (B) If the Secretary selects applications in quality bands, the 
Secretary may consider the extent to which or how well the application 
meets the priority in selecting applications.
* * * * *
    3. Section 75.201 is revised to read as follows:


Sec. 75.201  How the selection criteria will be used.

    (a) In the application package or a notice published in the Federal 
Register, the Secretary informs applicants of--
    (1) The selection criteria chosen;
    (2) The factors selected for considering the selection criteria, if 
any; and
    (3) The Secretary's decision whether to prepare a rank order of 
applications or group applications in non-numerical quality bands. (See 
34 CFR 75.217(c))
    (b) If the Secretary prepares a rank order of applications, the 
Secretary also informs applicants of--
    (1) The total possible score for all of the criteria for a 
competition; and
    (2) The assigned weight or maximum possible score for each 
criterion or factor under that criterion.
    (c) If the Secretary prepares a rank order of applications and no 
points or weights are assigned to the selection criteria and factors 
used for the competition, the Secretary evaluates each selection 
criterion equally and within each criterion, each factor equally.

    (Authority: 20 U.S.C. 1221e-3 and 3474)

    4. Section 75.209 is amended by revising paragraph (a)(2) to read 
as follows.


Sec. 75.209  Selection criteria based on statutory provisions.

    (a) * * *
* * * * *
    (2)(i) If the Secretary prepares a rank order of applications, 
assigning the maximum possible score for each of the criteria 
established under paragraph (a)(1) of this section.
    (ii) If the Secretary groups applications in non-numerical quality 
bands, the Secretary considers statutory criteria with the other 
criteria under Sec. 75.223(c).
* * * * *
    5. Section 75.217 is revised to read as follows:


Sec. 75.217  How does the Secretary select applications for new grants?

    (a) The Secretary selects applications for new grants on the basis 
of the authorizing statute, the selection

[[Page 20704]]

criteria, and any priorities or other requirements that have been 
published in the Federal Register and apply to the selection of 
applications.
    (b)(1) The Secretary may use experts to evaluate the applications 
submitted under a competition.
    (2) These experts may include individuals who are not employees of 
the Federal Government.
    (c) Based solely on the evaluation of the quality of the 
applications according to the selection criteria, the Secretary 
either--
    (1) Prepares a rank order of the applications; or
    (2) Groups applications into non-numerical quality bands in 
accordance with the procedures in Sec. 75.223.
    (d) The Secretary determines the order in which applications will 
be selected, after considering the following:
    (1) The information in each application.
    (2) The quality of the applications as determined under 
Sec. 75.217(c).
    (3) Any other information--
    (i) Relevant to a criterion, priority, or other requirement that 
applies to the selection of applications for new grants;
    (ii) Concerning the applicant's performance and use of funds under 
a previous award under any Department program; and
    (iii) Concerning the applicant's failure under any Department 
program to submit a performance report or its submission of a 
performance report of unacceptable quality.
    (e)(1) The Secretary may refuse to consider applications that do 
not meet a minimum cut-off score or minimum quality band.
    (2) The Secretary may establish the minimum cut-off score or 
quality band--
    (i) In the application notice published in the Federal Register; or
    (ii) After reviewing the applications to determine the overall 
range in the quality of applications received.

(Authority: 20 U.S.C. 1221e-3 and 3474)

    5. New Secs. 75.223, 75.224 and 74.225 are added to subpart D under 
the undersignated center heading ``selection procedures'' to read as 
follows:


Sec. 75.223  What procedures apply when the Secretary uses quality 
bands to evaluate applications?

    (a) If the Secretary uses quality bands to evaluate applications, 
the quality bands are--
    (1) Excellent, if the application is outstanding in all respects 
and deserves the highest priority for support;
    (2) Very good, if the application is of high quality in nearly all 
respects and should be supported if at all possible;
    (3) Good, if the application is a quality proposal that is worthy 
of support;
    (4) Fair, if the application is acceptable but lacking in one or 
more aspects and there are issues that need to be addressed before it 
can be considered for funding;
    (5) Unacceptable, if the application has serious deficiencies and 
should not be funded.
    (b) The Secretary does not fund any application that is placed in 
the Unacceptable band.
    (c) The experts must assign an overall band rating for each 
application, after considering the quality of the application under 
each criterion.
    (d) If there are more applications within any one quality band than 
can be funded with remaining funds, the Secretary decides which 
applications to fund based solely on the Secretary's discretion and may 
select randomly in exercising that discretion.

(Authority: 20 U.S.C. 1221e-3 and 3474).


Sec. 75.224  What are the procedures for using a multiple tier review 
process to evaluate applications?

    (a) The Secretary may use a multiple tier review process to 
evaluate applications.
    (b) The Secretary may refuse to review applications in any tier 
that do not meet a minimum cut-off score or minimum quality band 
established for the prior tier.
    (c) The Secretary may establish the minimum cut-off score or 
quality band--
    (1) In the application notice published in the Federal Register; or
    (2) After reviewing the applications to determine the overall range 
in the quality of applications received.
    (d) The Secretary may, in any tier--
    (1) Use more than one group of experts to gain different 
perspectives on an application; and
    (2) Refuse to consider an application if the application is 
rejected under paragraph (b) of this section by any one of the groups 
used in the prior tier.

(Authority: 20 U.S.C. 1221e-3 and 3474)


Sec. 75.225  What procedures does the Secretary use if the Secretary 
decides to give special consideration to novice applications?

    (a) As used in this section, ``Novice applicant'' means an 
applicant for a grant from ED that--
    (1) Has never received a grant or subgrant under the program from 
which it seeks funding; and
    (2) Has not had an active discretionary grant from the Federal 
Government in the five years before the deadline date for applications 
under the program.
    (b) For the purposes of paragraph (a)(2) of this section, a grant 
is active until the end of the grant's project or funding period, 
including any extensions of those periods that extend the grantee's 
authority to obligate funds.
    (c) If the Secretary determines that special consideration of 
novice applications is appropriate, the Secretary may either--
    (1) Establish a separate competition for novice applicants; or
    (2) Give competitive preference to novice applicants under the 
procedures in 34 CFR 75.105(c)(2).
    (d) Before making a grant to a novice applicant, the Secretary 
imposes special conditions, if necessary, to ensure the grant is 
managed effectively and project objectives are achieved.

(Authority: 20 U.S.C. 1221e-3 and 3474)

[FR Doc. 00-9558 Filed 4-14-00; 8:45 am]
BILLING CODE 4000-01-P


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