24768 Federal Register / Vol. 65, No. 82 / Thursday, April 27, 2000 / Proposed Rules

SOCIAL SECURITY ADMINISTRATION

20 CFR Part 435

RIN 0960–AE25

Uniform Administrative Requirements

for Grants and Agreements With

Institutions of Higher Education,

Hospitals, Other Non-Profit

Organizations, and Commercial

Organizations

AGENCY: Social Security Administration

(SSA).

ACTION: Notice of Proposed Rule Making

(NPRM).

SUMMARY: The proposed rule would

create a new Part in the Code of Federal

Regulations. The new part would

provide standards in the administration

of grants and agreements with

institutions of higher education,

hospitals, other non-profit

organizations, and commercial

organizations.

The Social Security Independence

and Program Improvements Act of 1994,

enacted August 15, 1994, established

SSA as an independent agency separate

from the Department of Health and

Human Services (HHS), effective March

31, 1995. To implement its own set of

grants regulations, SSA proposes to

codify almost verbatim the text of the

Office of Management and Budget

(OMB) Circular Number A–110

‘‘Uniform Administrative Requirements

for Grants and Agreements with

Institutions of Higher Education,

Hospitals, and Other Non-profit

Organizations.’’ These regulations

would establish SSA grants regulations,

separate from the HHS regulations. We

plan to publish additional regulations

on the subject of grants at a future date.

DATES: To be sure your comments are

considered, we must receive them no

later than June 26, 2000.

ADDRESSES: Comments should be

submitted in writing to the

Commissioner of Social Security, P.O.

Box 1585, Baltimore, Maryland 21235–

6401. Comments may be sent by telefax

to (410) 966–2830, sent by E-mail to

‘‘regulations@ssa.gov,’’ or delivered to

the Social Security Administration,

2109 West Low Rise Building, 6401

Security Boulevard, Baltimore, MD

21235–6401, between 8:00 a.m. and 4:30

p.m. on regular business days.

Comments may be inspected during

these same hours by making

arrangements with the contact person

shown below. The electronic file of this

document is available on the Internet at

www.access.gpo.gov/su— docs/aces/

aces140.htm at 6:00 a.m. on the date of

publication in the Federal Register. It is

also available on the Internet site for

SSA (i.e., SSA Online), http://

www.ssa.gov/.

FOR FURTHER INFORMATION CONTACT: E.

Joe Smith, Grants Management Officer,

Office of Operations Contracts and

Grants, Office of Acquisition and

Grants, SSA, 1710 Gwynn Oak Ave.,

Baltimore, MD 21207–5279; telephone

(410) 965–9503; fax (410) 966–9310.

SUPPLEMENTARY INFORMATION:

I. Background

OMB Circular A–110 (Circular)

provides standards for obtaining

consistency and uniformity among

Federal agencies in the administration

of grants and agreements with

institutions of higher education,

hospitals, and other non-profit

organizations. The Circular was

originally issued in 1976 and, except for

a minor revision in 1987, it remained

unchanged until it was revised by OMB

in 1993 (58 FR 62992). It was

subsequently amended in 1997 (62 FR

45934) and 1999 (64 FR 54926).

In 1987, OMB convened an

interagency task force to update the

Circular. The work of the task force

resulted in the publication of a 1988

notice in the Federal Register (53 FR

44716) proposing that the Circular be

merged with OMB Circular A–102,

‘‘Uniform Administrative Requirements

for Grants and Cooperative Agreements

to State and Local Governments’’ as a

consolidated ‘‘common rule.’’ The

public response led to a decision by

OMB to not finalize the proposal.

In November 1990, another

interagency task force was established to

revise the Circular and develop a set of

common principles for the

administration of grants and agreements

with institutions of higher education,

hospitals and other non-profit

organizations. The task force solicited

suggestions for changes to the Circular

from university groups, non-profit

organizations and other interested

parties and compared, for consistency,

the provisions of similar provisions

applied to State and local governments.

As a result, in August 1992, OMB

published a notice in the Federal

Register (57 FR 39018) requesting

comments on proposed revisions to the

Circular. OMB received over 200

comments from Federal agencies, nonprofit organizations, professional

organizations and others. OMB

considered all comments in developing

the final revision to the Circular. The

Circular issued in 1993 reflects the

results of these efforts. The revised

Circular was developed in a model rule

format to facilitate regulatory adoption

by affected Federal agencies. OMB’s

notice directed each affected agency to

promulgate its own rules adopting the

language as it appears in the Circular

unless different provisions are required

by Federal statute or are approved by

OMB (58 FR 62992–93). The notice

states that OMB will review agency

regulations and implementation of the

Circular and will provide

interpretations of policy requirements

and assistance to insure effective and

efficient implementation. Any

exceptions will be subject to approval

by OMB and will only be made in

particular cases where adequate

justification is presented.

Except as provided therein, the

standards set forth in the Circular are

applicable to all Federal agencies. If any

statute specifically prescribes policies or

specific requirements that differ from

the standards provided in the Circular,

the provisions of the statute shall

govern. Federal agencies must apply the

provisions of the Circular in making

awards to the covered entities.

Recipients must apply the provisions of

the Circular to subrecipients performing

substantive work under grants and

agreements that are passed through or

awarded by the primary recipient, if

such subrecipients are organizations

that are covered entities. The Circular

does not apply to grants, contracts, or

other agreements between the Federal

Government and units of State or local

governments covered by OMB Circular

A–102, ‘‘Grants and Cooperative

Agreements with State and Local

Governments.’’ And, it does not apply to

the Federal agencies’ grants

management common rule that

standardized and codified the

administrative requirements Federal

agencies impose on State and local

grantees. In addition, the Circular does

not cover subawards and contracts to

State or local governments. However,

the Circular applies to subawards made

by State and local governments to

organizations covered by the Circular.

Federal agencies may apply the

provisions of the Circular to commercial

organizations, foreign governments,

organizations under the jurisdiction of

foreign governments, and international

organizations.

HHS applies the provisions of

Circular A–110 in making awards to

institutions of higher education,

hospitals, other non-profit

organizations, and commercial

organizations through its regulations at

45 CFR part 74. Prior to March 31, 1995,

SSA was an operating component of

HHS. As a result of Public Law 103–296,

SSA became an independent agency on

Federal Register / Vol. 65, No. 82 / Thursday, April 27, 2000 / Proposed Rules 24769

March 31, 1995. However, pursuant to

section 106(b) of that law, the HHS

regulations at 45 CFR part 74 have

remained applicable to SSA. In order to

implement our own set of grant

regulations, we propose to adopt almost

verbatim the text of Circular A–110. The

result will be the SSA grants

administration regulations at 20 CFR

part 435. HHS regulations at 45 CFR

part 74 will cease to be applicable to

SSA on the effective date of these

regulations, in accordance with section

106(b) of Public Law 103–296.

SSA’s new part 435 at 20 CFR will be

similar to OMB Circular A–110.

Consistent with the guidance provided

in Circular A–110, this rule will apply

to SSA awards made to institutions of

higher education, hospitals, other nonprofit organizations, and commercial

organizations. When appropriate, this

rule will also apply to foreign

governments, organizations under the

jurisdiction of foreign governments, and

international organizations. The

proposed rule does not apply to grants

under programs commonly referred to

as ‘‘entitlement programs.’’

As noted above, OMB directed each

affected agency to promulgate its own

rules adopting the provisions of the

Circular. Any exceptions or deviations,

unless required by Federal statute,

require OMB approval. Therefore, in

support of OMB’s desired uniformity,

this proposed rule incorporates the

provisions and language of revised

Circular A–110, ‘‘Uniform

Administrative Requirements for Grants

and Agreements with Institutions of

Higher Education, Hospitals, and Other

Non-Profit Organizations,’’ published by

OMB on November 29, 1993 (58 FR

62992), as further amended August 29,

1997 (62 FR 45934) and November 8,

1999 (64 FR 54926).

II. Proposed Differences Between Part

435 and Circular A–110

The proposed rule contains a

‘‘SUBPART E—DISPUTES,’’ which sets

forth the SSA appeal process for

disputes arising under SSA grants and

agreements. OMB Circular A–110 does

not contain an appeal process for

disputes.

Also, the proposed rule contains the

following clarifying language and

updates to procedures:

A. To be less generic and more agency

specific, where appropriate, the terms

‘‘federal awarding agency(ies)’’ have

been replaced by ‘‘SSA’’.

B. In support of the plain language

initiative, throughout the proposed rule,

the word ‘‘shall’’ has been replaced by

‘‘must’’ or ‘‘will.’’ Our reason for this

change is, the term ‘‘shall’’ sounds

especially legalistic and could be open

to interpretation. Also, in the interest of

making it easier for users to locate

material, we have used identifying

labels for many of our first level

paragraphs (i.e., a, b, c).

C. To be consistent with section 4(11)

of the Office of Federal Procurement

Policy Act (41 U.S.C. 403(11)), as

amended by section 4001 of the Federal

Acquisition Streamlining Act of 1994

(FASA), Pub. L. 103–355, the following

updates have been made:

Sections 435.2 (definition for ‘‘Small

awards’’); 435.44(e)(2), (3), (4) and (5);

435.46; 435.48(a) (b) and (d); and

Appendix A, ‘‘Debarment and

Suspension’’ (paragraph 8) have been

updated to replace the term ‘‘small

purchase threshold’’ with the term

‘‘simplified acquisition threshold.’’

And, where appropriate, the current

threshold dollar amount of $100,000 is

reflected (instead of $25,000).

D. According to FASA, the threshold

for the requirement to include the

provision for compliance with sections

102 and 107 of the Contract Work Hours

and Safety Standards Act (40 U.S.C.

327–333) has been raised to $100,000.

This update has been made in Appendix

A.

E. Under the statute commonly

referred to as the Byrd Anti-Lobbying

Amendment, 31 U.S.C. 1352, the

disclosure requirements apply to

organizations that apply or bid for an

award exceeding $100,000 (not

$100,000 or more). This correction has

been made in Appendix A.

III. Proposed Differences Between Part

435 and 45 CFR Part 74

In order to mirror the provisions and

language of the Circular, SSA’s

proposed 20 CFR part 435 deviates from

45 CFR part 74. Also, Part 74’s Subpart

E (Special Provisions for Awards to

Commercial Organizations) is not

included in Part 435. We believe,

however, the omission of this subpart

will not have a negative effect on the

quality and administration of the SSA

grants program. The provisions of

Subpart E are not needed in Part 435.

Unless SSA provides otherwise in the

terms and conditions of the award, and

except where provided under the

provisions of Circular A–110, SSA will

make no distinction between awards to

commercial organizations and awards to

its other grantee organizations covered

by the Circular.

Additionally, Part 74’s ‘‘Subpart FDisputes’’ is not included in the

proposed rule. Instead, as noted in

section II, above, the proposed rule

contains a ‘‘SUBPART E—DISPUTES,’’

which sets forth the SSA appeal process

for disputes arising under SSA grants

and agreements.

Clarity of This Regulation

Executive Order 12866 and the

President’s memorandum of June 1,

1998, require each agency to write all

rules in plain language. We invite your

comments on how to make this

proposed rule easier to understand. For

example:

• Have we organized the material to

suit your needs?

• Are the requirements in the rule

clearly stated?

• Does the rule contain technical

language or jargon that isn’t clear?

• Would a different format (grouping

and order of sections, use of headings,

paragraphing) make the rule easier to

understand?

• Would more (but shorter) sections

be better?

• Could we improve clarity by adding

tables, lists, or diagrams?

• What else could we do to make the

rule easier to understand?

IV. Regulatory Procedures

Executive Order 12866

We have consulted with the Office of

Management and Budget (OMB) and

have determined that these proposed

rules do not meet the criteria for a

significant regulatory action under

Executive Order 12866. Thus, they are

not subject to OMB review.

Regulatory Flexibility Act

We certify that these proposed rules,

if promulgated, will not have a

significant economic impact on a

substantial number of small entities

because they merely reflect the adoption

of existing grant policies and procedures

by SSA and do not promulgate any new

policies or procedures which would

impact the public. Therefore, a

regulatory flexibility analysis as

provided in the Regulatory Flexibility

Act, as amended, is not required.

Paperwork Reduction Act

These proposed rules contain

reporting requirements in 20 CFR part

435 in §§ 435.12, 435.22 and 435.52.

However, the reporting forms specified

in these sections have already been

approved by the Office of Management

and Budget and, therefore, we are not

seeking approval of the reporting

requirements in these sections. The

forms are as follows: SF–269, SF–269A,

SF–424, SF–270, SF–271 and SF–272.

The proposed regulation contains

additional reporting and recordkeeping

requirements in the sections listed

below. As required by the Paperwork

Reduction Act of 1995, we have

24770 Federal Register / Vol. 65, No. 82 / Thursday, April 27, 2000 / Proposed Rules

submitted the information requirements

to the Office of Management and Budget

(OMB) for its review. Organizations and

individuals desiring to submit

comments on these requirements should

direct them to the Office of Information

and Regulatory Affairs, OMB, New

Executive Office Building, Room 10235,

Washington, D.C. 20503, ATTENTION:

OMB Desk Officer for SSA.

Following is a table of the reporting

(Rpt) and recordkeeping (Rec-kp)

burdens imposed on the public:

Section No. No. of

respondents

Frequency of

response

Average burden per

response

(hours)

Estimated

annual burden

(hours)

435.21 (Rec-kp) ............................................................................................... 1 N/A 40 40

435.23 (Rec-kp) ............................................................................................... 7 Monthly 1 84

435.25 (Rpt) ..................................................................................................... 14 Biannually 4 112

435.33 (Rpt) ..................................................................................................... 1 Annually 1 1

435.44 (Rpt) ..................................................................................................... 1 Annually 2 2

435.51 (Rpt) ..................................................................................................... 17 Quarterly 12 816

435.53 (Rec-kp) ............................................................................................... 17 Annually 8 136

435.81 (Rpt) ..................................................................................................... 1 Annually 16 16

435.82 (Rpt) ..................................................................................................... 1 Annually 8 8

Total estimated annual burden: ................................................................ ........................ ........................ ........................ 1215

The public burden includes the time

it will take to understand what is

needed, gather the necessary facts, and

provide the information or maintain the

specified records. If you have any

comments or suggestions on the

estimates, write to the Social Security

Administration, ATTN: Reports

Clearance Officer, 1–A–21 Operations

Building, Baltimore, MD 21235.

SSA is soliciting comments from the

public in order to:

• Evaluate whether the proposed

collection of information is necessary

for the proper performance of the

functions of the agency, including

whether the information will have

practical utility;

• Evaluate the accuracy of the

agency’s estimate of the burden of the

proposed collection of information,

including the validity of the

methodology and assumptions used;

• Enhance the quality, utility, and

clarity of the information to be

collected; and

• Minimize the burden of the

collection of information on those who

are to respond including through the

use of appropriate automated,

electronic, mechanical, or other

technological collection techniques, or

other forms of information technology

(e.g., permitting electronic submission

of responses).’’

(Catalog of Federal Domestic Assistance

Program No. 96.007—Social Security—

Research and Demonstration)

List of Subjects in 20 CFR Part 435

Accounting, Administrative practice

and procedure, Colleges and

universities, Grant programs—health,

Grant programs—social programs,

Hospitals, Nonprofit organizations,

Reporting and recordkeeping

requirements.

Dated: April 5, 2000.

Kenneth S. Apfel,

Commissioner of Social Security.

For the reasons set out in the

preamble, we propose to add a new Part

435 to Chapter III of Title 20 of the Code

of Federal Regulations to read as

follows:

PART 435—UNIFORM

ADMINISTRATIVE REQUIREMENTS

FOR GRANTS AND AGREEMENTS

WITH INSTITUTIONS OF HIGHER

EDUCATION, HOSPITALS, OTHER

NON-PROFIT ORGANIZATIONS, AND

COMMERCIAL ORGANIZATIONS

Subpart A—General

435.1 Purpose.

435.2 Definitions.

435.3 Effect on other issuances.

435.4 Deviations.

435.5 Subawards.

Subpart B—Pre-award Requirements

435.10 Purpose.

435.11 Pre-award policies.

435.12 Forms for applying for Federal

assistance.

435.13 Debarment and suspension.

[Reserved]

435.14 Special award conditions.

435.15 Metric system of measurement.

435.16 Resource Conservation and

Recovery Act.

435.17 Certifications and representations.

Subpart C—Post-award Requirements

Financial and Program Management

435.20 Purpose of financial and program

management.

435.21 Standards for financial management

systems.

435.22 Payment.

435.23 Cost sharing or matching.

435.24 Program income.

435.25 Revision of budget and program

plans.

435.26 Non-Federal audits.

435.27 Allowable costs.

435.28 Period of availability of funds.

Property Standards

435.30 Purpose of property standards.

435.31 Insurance coverage.

435.32 Real property.

435.33 Federally-owned and exempt

property.

435.34 Equipment.

435.35 Supplies and other expendable

property.

435.36 Intangible property.

435.37 Property trust relationship.

Procurement Standards

435.40 Purpose of procurement standards.

435.41 Recipient responsibilities.

435.42 Codes of conduct.

435.43 Competition.

435.44 Procurement procedures.

435.45 Cost and price analysis.

435.46 Procurement records.

435.47 Contract administration.

435.48 Contract provisions.

Reports and Records

435.50 Purpose of reports and records.

435.51 Monitoring and reporting program

performance.

435.52 Financial reporting.

435.53 Retention and access requirements

for records.

Termination and Enforcement

435.60 Purpose of termination and

enforcement.

435.61 Termination.

435.62 Enforcement.

Subpart D—After-the-award Requirements

435.70 Purpose.

435.71 Closeout procedures.

435.72 Subsequent adjustments and

continuing responsibilities.

435.73 Collection of amounts due.

Federal Register / Vol. 65, No. 82 / Thursday, April 27, 2000 / Proposed Rules 24771

Subpart E—Disputes

435.80 Appeal process.

435.81 Initial appeal.

435.82 Appeal of decision of ACOAG.

Appendix A to Part 435—Contract Provisions

Authority: 5 U.S.C. 301.

Subpart A—General

§ 435.1 Purpose.

This Part establishes SSA’s

administrative requirements for SSA

grants and agreements awarded to

institutions of higher education,

hospitals, other non-profit

organizations, and commercial

organizations. The regulations in this

part do not differ from the uniform

regulations published in OMB Circular

A–110 except as provided in §§ 435.4

and 435.14. Non-profit organizations

that implement Federal programs for the

States are also subject to State

requirements. For availability of OMB

circulars, see 5 CFR 1310.3.

§ 435.2 Definitions.

(a) Accrued expenditures means the

charges incurred by the recipient during

a given period requiring the provision of

funds for:

(1) Goods and other tangible property

received;

(2) Services performed by employees,

contractors, subrecipients, and other

payees; and,

(3) Other amounts becoming owed

under programs for which no current

services or performance is required.

(b) Accrued income means the sum of:

(1) Earnings during a given period

from—

(i) Services performed by the

recipient, and

(ii) Goods and other tangible property

delivered to purchasers, and

(2) Amounts becoming owed to the

recipient for which no current services

or performance is required by the

recipient.

(c) Acquisition cost of equipment

means the net invoice price of the

equipment, including the cost of

modifications, attachments, accessories,

or auxiliary apparatus necessary to

make the property usable for the

purpose for which it was acquired.

Other charges, such as the cost of

installation, transportation, taxes, duty

or protective in-transit insurance, must

be included or excluded from the unit

acquisition cost in accordance with the

recipient’s regular accounting practices.

(d) Advance means a payment made

by Treasury check or other appropriate

payment mechanism to a recipient upon

its request either before outlays are

made by the recipient or through the use

of predetermined payment schedules.

(e) Award means financial assistance

that provides support or stimulation to

accomplish a public purpose. Awards

include grants and other agreements in

the form of money or property in lieu

of money, by the Federal Government to

an eligible recipient. The term does not

include: technical assistance, which

provides services instead of money;

other assistance in the form of loans,

loan guarantees, interest subsidies, or

insurance; direct payments of any kind

to individuals; and, contracts which are

required to be entered into and

administered under procurement laws

and regulations.

(f) Cash contributions means the

recipient’s cash outlay, including the

outlay of money contributed to the

recipient by third parties.

(g) Closeout means the process by

which SSA determines that all

applicable administrative actions and

all required work of the award have

been completed by the recipient and

SSA.

(h) Contract means a procurement

contract under an award or subaward,

and a procurement subcontract under a

recipient’s or subrecipient’s contract.

(i) Cost sharing or matching means

that portion of project or program costs

not borne by the Federal government.

(j) Date of completion means the date

on which all work under an award is

completed or the date on the award

document, or any supplement or

amendment thereto, on which SSA

sponsorship ends.

(k) Disallowed costs means those

charges to an award that the Federal

awarding agency determines to be

unallowable, in accordance with the

applicable Federal cost principles or

other terms and conditions contained in

the award.

(l) Equipment means tangible

nonexpendable personal property

including exempt property charged

directly to the award having a useful life

of more than one year and an

acquisition cost of $5000 or more per

unit. However, consistent with recipient

policy, lower limits may be established.

(m) Excess property means property

under the control of SSA that, as

determined by the head thereof, is no

longer required for its needs or the

discharge of its responsibilities.

(n) Exempt property means tangible

personal property acquired in whole or

in part with Federal funds, where SSA

has statutory authority to vest title in

the recipient without further obligation

to the Federal Government. An example

of exempt property authority is

contained in the Federal Grant and

Cooperative Agreement Act (31 U.S.C.

6306), for property acquired under an

award to conduct basic or applied

research by a non-profit institution of

higher education or non-profit

organization whose principal purpose is

conducting scientific research.

(o) SSA means the Federal agency that

provides an award to the recipient.

(p) Federal funds authorized means

the total amount of Federal funds

obligated by the Federal Government for

use by the recipient. This amount may

include any authorized carryover of

unobligated funds from prior funding

periods when permitted by agency

regulations or agency implementing

instructions.

(q) Federal share of real property,

equipment, or supplies means that

percentage of the property’s acquisition

costs and any improvement

expenditures paid with Federal funds.

(r) Funding period means the period

of time when Federal funding is

available for obligation by the recipient.

(s) Intangible property and debt

instruments means, but is not limited to,

trademarks, copyrights, patents and

patent applications and such property

as loans, notes and other debt

instruments, lease agreements, stock

and other instruments of property

ownership, whether considered tangible

or intangible.

(t) Obligations means the amounts of

orders placed, contracts and grants

awarded, services received and similar

transactions during a given period that

require payment by the recipient during

the same or a future period.

(u) Outlays or expenditures means

charges made to the project or program.

They may be reported on a cash or

accrual basis.

(1) Cash basis. For reports prepared

on a cash basis, outlays are the sum of

cash disbursements for direct charges

for goods and services, the amount of

indirect expense charged, the value of

third party in-kind contributions

applied and the amount of cash

advances and payments made to

subrecipients.

(2) Accrual basis. For reports

prepared on an accrual basis, outlays are

the sum of cash disbursements for direct

charges for goods and services, the

amount of indirect expense incurred,

the value of in-kind contributions

applied, and the net increase (or

decrease) in the amounts owed by the

recipient for goods and other property

received, for services performed by

employees, contractors, subrecipients

and other payees and other amounts

becoming owed under programs for

which no current services or

performance are required.

(v) Personal property means property

of any kind except real property. It may

24772 Federal Register / Vol. 65, No. 82 / Thursday, April 27, 2000 / Proposed Rules

be tangible, having physical existence,

or intangible, having no physical

existence, such as copyrights, patents,

or securities.

(w) Prior approval means written

approval by an authorized SSA official

evidencing prior consent.

(x) Program income means gross

income earned by the recipient that is

directly generated by a supported

activity or earned as a result of the

award (see exclusions in §§ 435.24(e)

and (h)). Program income includes, but

is not limited to, income from fees for

services performed, the use or rental of

real or personal property acquired under

federally-funded projects, the sale of

commodities or items fabricated under

an award, license fees and royalties on

patents and copyrights, and interest on

loans made with award funds. Interest

earned on advances of Federal funds is

not program income. Except as

otherwise provided in SSA regulations

or the terms and conditions of the

award, program income does not

include the receipt of principal on

loans, rebates, credits, discounts, etc., or

interest earned on any of them.

(y) Project costs means all allowable

costs, as set forth in the applicable

Federal cost principles, incurred by a

recipient and the value of the

contributions made by third parties in

accomplishing the objectives of the

award during the project period.

(z) Project period means the period

established in the award document

during which Federal sponsorship

begins and ends.

(aa) Property means, unless otherwise

stated, real property, equipment,

intangible property and debt

instruments.

(bb) Real property means land,

including land improvements,

structures and appurtenances thereto,

but excludes movable machinery and

equipment.

(cc) Recipient means an organization

receiving financial assistance directly

from SSA to carry out a project or

program. The term includes public and

private institutions of higher education,

public and private hospitals, and other

quasi-public and private non-profit

organizations such as, but not limited

to, community action agencies, research

institutes, educational associations, and

health centers. The term may include

commercial organizations, foreign or

international organizations (such as

agencies of the United Nations) which

are recipients, subrecipients, or

contractors or subcontractors of

recipients or subrecipients at the

discretion of SSA. The term does not

include government-owned contractoroperated facilities or research centers

providing continued support for

mission-oriented, large-scale programs

that are government-owned or

controlled, or are designated as

federally-funded research and

development centers.

(dd) Research and development

means all research activities, both basic

and applied, and all development

activities that are supported at

universities, colleges, and other nonprofit institutions. ‘‘Research’’ is

defined as a systematic study directed

toward fuller scientific knowledge or

understanding of the subject studied.

‘‘Development’’ is the systematic use of

knowledge and understanding gained

from research directed toward the

production of useful materials, devices,

systems, or methods, including design

and development of prototypes and

processes. The term research also

includes activities involving the training

of individuals in research techniques

where such activities utilize the same

facilities as other research and

development activities and where such

activities are not included in the

instruction function.

(ee) Small awards means a grant or

cooperative agreement not exceeding

the simplified acquisition threshold

fixed at 41 U.S.C. 403(11) (currently

$100,000).

(ff) Subaward means an award of

financial assistance in the form of

money, or property in lieu of money,

made under an award by a recipient to

an eligible subrecipient or by a

subrecipient to a lower tier subrecipient.

The term includes financial assistance

when provided by any legal agreement,

even if the agreement is called a

contract, but does not include

procurement of goods and services nor

does it include any form of assistance

which is excluded from the definition of

‘‘award’’ in paragraph (e) of this section.

(gg) Subrecipient means the legal

entity to which a subaward is made and

which is accountable to the recipient for

the use of the funds provided. The term

may include foreign or international

organizations (such as agencies of the

United Nations) at the discretion of the

Federal awarding agency.

(hh) Supplies means all personal

property excluding equipment,

intangible property, and debt

instruments as defined in this section,

and inventions of a contractor

conceived or first actually reduced to

practice in the performance of work

under a funding agreement (‘‘subject

inventions’’), as defined in 37 CFR part

401, ‘‘Rights to Inventions Made by

Nonprofit Organizations and Small

Business Firms Under Government

Grants, Contracts, and Cooperative

Agreements.’’

(ii) Suspension means an action by

SSA that temporarily withdraws Federal

sponsorship under an award, pending

corrective action by the recipient or

pending a decision to terminate the

award by SSA. Suspension of an award

is a separate action from suspension

under Federal agency regulations

implementing Executive Orders 12549

and 12689, ‘‘Debarment and

Suspension.’’

(jj) Termination means the

cancellation of Federal sponsorship, in

whole or in part, under an agreement at

any time prior to the date of completion.

(kk) Third party in-kind contributions

means the value of non-cash

contributions provided by non-Federal

third parties. Third party in-kind

contributions may be in the form of real

property, equipment, supplies and other

expendable property, and the value of

goods and services directly benefiting

and specifically identifiable to the

project or program.

(ll) Unliquidated obligations, for

financial reports prepared on a cash

basis, means the amount of obligations

incurred by the recipient that have not

been paid. For reports prepared on an

accrued expenditure basis, they

represent the amount of obligations

incurred by the recipient for which an

outlay has not been recorded.

(mm) Unobligated balance means the

portion of the funds authorized by SSA

that has not been obligated by the

recipient and is determined by

deducting the cumulative obligations

from the cumulative funds authorized.

(nn) Unrecovered indirect cost means

the difference between the amount

awarded and the amount which could

have been awarded under the recipient’s

approved negotiated indirect cost rate.

(oo) Working capital advance means a

procedure whereby funds are advanced

to the recipient to cover its estimated

disbursement needs for a given initial

period.

§ 435.3 Effect on other issuances.

For awards subject to this Part, all

administrative requirements of codified

program regulations, program manuals,

handbooks and other nonregulatory

materials which are inconsistent with

the requirements of this Part are

superseded, except to the extent they

are required by statute, or authorized in

accordance with the deviations

provision in § 435.4.

§ 435.4 Deviations.

The Office of Management and Budget

(OMB) may grant exceptions for classes

of grants or recipients subject to the

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requirements of this Part when

exceptions are not prohibited by statute.

However, in the interest of maximum

uniformity, exceptions from the

requirements of this Part will be

permitted only in unusual

circumstances. SSA may apply more

restrictive requirements to a class of

recipients when approved by OMB. SSA

may apply less restrictive requirements

when awarding small awards, except for

those requirements which are statutory.

Exceptions on a case-by-case basis may

also be made by SSA.

§ 435.5 Subawards.

Unless sections of this Part

specifically exclude subrecipients from

coverage, the provisions of this Part will

be applied to subrecipients performing

work under awards if such

subrecipients are institutions of higher

education, hospitals, other non-profit, or

commercial organizations.

Subpart B—Pre-award Requirements

§ 435.10 Purpose.

Sections 435.11 through 435.17

prescribe forms and instructions and

other pre-award matters to be used in

applying for Federal awards.

§ 435.11 Pre-award policies.

(a) Use of grants and cooperative

agreements, and contracts. In each

instance, SSA will decide on the

appropriate award instrument (i.e.,

grant, cooperative agreement, or

contract). The Federal Grant and

Cooperative Agreement Act (31 U.S.C.

6301–08) governs the use of grants,

cooperative agreements and contracts.

(1) Grants and cooperative

agreements. A grant or cooperative

agreement will be used only when the

principal purpose of a transaction is to

accomplish a public purpose of support

or stimulation authorized by Federal

statute. The statutory criterion for

choosing between grants and

cooperative agreements is that for the

latter, ‘‘substantial involvement is

expected between the executive agency

and the State, local government, or other

recipient when carrying out the activity

contemplated in the agreement.’’

(2) Contracts. Contracts will be used

when the principal purpose is

acquisition of property or services for

the direct benefit or use of the Federal

Government.

(b) Public Notice and priority setting.

SSA will notify the public of its

intended funding priorities for

discretionary grant programs, unless

funding priorities are established by

Federal statute.

§ 435.12 Forms for applying for Federal

assistance.

(a) SSA must comply with the

applicable report clearance

requirements of 5 CFR part 1320,

‘‘Controlling Paperwork Burdens on the

Public,’’ with regard to all forms used by

SSA in place of or as a supplement to

the Standard Form 424 (SF–424) series.

(b) Applicants must use the SF–424

series or those forms and instructions

prescribed by SSA.

(c) For Federal programs covered by

Executive Order 12372,

‘‘Intergovernmental Review of Federal

Programs’’ (3 CFR, 1982 Comp., p. 197),

the applicant must complete the

appropriate sections of the SF–424

(Application for Federal Assistance)

indicating whether the application was

subject to review by the State Single

Point of Contact (SPOC). The name and

address of the SPOC for a particular

State can be obtained from SSA or the

Catalog of Federal Domestic Assistance.

The SPOC will advise the applicant

whether the program for which

application is made has been selected

by that State for review.

§ 435.13 Debarment and suspension.

[Reserved]

§ 435.14 Special award conditions.

(a) When special conditions may

apply. SSA may impose additional

requirements, as needed, if an applicant

or recipient:

(1) Has a history of poor performance,

(2) Is not financially stable,

(3) Has a management system that

does not meet the standards prescribed

in this Part,

(4) Has not conformed to the terms

and conditions of a previous award, or

(5) Is not otherwise responsible.

(b) Notice of special conditions. When

imposing additional requirements, SSA

will notify the recipient in writing as to:

(1) The nature of the additional

requirements,

(2) The reason why the additional

requirements are being imposed,

(3) The nature of the corrective action

needed,

(4) The time allowed for completing

the corrective actions, and

(5) The method for requesting

reconsideration of the additional

requirements imposed.

(c) Any special conditions will be

promptly removed once the conditions

that prompted them have been

corrected.

§ 435.15 Metric system of measurement.

The Metric Conversion Act, as

amended by the Omnibus Trade and

Competitiveness Act (15 U.S.C. 205)

declares that the metric system is the

preferred measurement system for U.S.

trade and commerce. The Act requires

each Federal agency to establish a date

or dates, in consultation with the

Secretary of Commerce, when the metric

system of measurement will be used in

the agency’s procurements, grants, and

other business-related activities. Metric

implementation may take longer where

the use of the system is initially

impractical or likely to cause significant

inefficiencies in the accomplishment of

federally-funded activities. SSA follows

the provisions of Executive Order

12770, ‘‘Metric Usage in Federal

Government Programs’’ (3 CFR, 1991

Comp., p. 343).

§ 435.16 Resource Conservation and

Recovery Act.

Any State agency or agency of a

political subdivision of a State which is

using appropriated Federal funds must

comply with section 6002 of the

Resource Conservation and Recovery

Act (RCRA) (Public Law 94–580; 42

U.S.C. 6962). Section 6002 requires that

preference be given in procurement

programs to the purchase of specific

products containing recycled materials

identified in guidelines developed by

the Environmental Protection Agency

(EPA) (40 CFR parts 247–254).

Accordingly, State and local institutions

of higher education, hospitals, and nonprofit organizations that receive direct

Federal awards or other Federal funds

must give preference in their

procurement programs funded with

Federal funds to the purchase of

recycled products pursuant to the EPA

guidelines.

§ 435.17 Certifications and

representations.

Unless prohibited by statute or

codified regulation, SSA will allow

recipients to submit certifications and

representations required by statute,

executive order, or regulation on an

annual basis, if the recipients have

ongoing and continuing relationships

with the agency. Annual certifications

and representations must be signed by

responsible officials with the authority

to ensure recipients’ compliance with

the pertinent requirements.

Subpart C—Post-award Requirements

Financial and Program Management

§ 435.20 Purpose of financial and program

management.

Sections 435.21 through 435.28

prescribe standards for financial

management systems, methods for

making payments and rules for:

satisfying cost sharing and matching

requirements, accounting for program

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income, budget revision approvals,

making audits, determining allowability

of cost, and establishing fund

availability.

§ 435.21 Standards for financial

management systems.

(a) Introduction. SSA requires

recipients to relate financial data to

performance data and develop unit cost

information whenever practical.

(b) Basic requirements. Recipients’

financial management systems must

provide for the following:

(1) Accurate, current and complete

disclosure of the financial results of

each federally-sponsored project or

program in accordance with the

reporting requirements set forth in

§ 435.52. If SSA requires reporting on an

accrual basis from a recipient that

maintains its records on other than an

accrual basis, the recipient will not be

required to establish an accrual

accounting system. These recipients

may develop such accrual data for its

reports on the basis of an analysis of the

documentation on hand.

(2) Records that identify adequately

the source and application of funds for

federally-sponsored activities. These

records must contain information

pertaining to Federal awards,

authorizations, obligations, unobligated

balances, assets, outlays, income and

interest.

(3) Effective control over and

accountability for all funds, property

and other assets. Recipients must

adequately safeguard all such assets and

assure they are used solely for

authorized purposes.

(4) Comparison of outlays with budget

amounts for each award. Whenever

appropriate, financial information

should be related to performance and

unit cost data.

(5) Written procedures to minimize

the time elapsing between the transfer of

funds to the recipient from the U.S.

Treasury and the issuance or

redemption of checks, warrants or

payments by other means for program

purposes by the recipient. To the extent

that the provisions of the Cash

Management Improvement Act (CMIA)

(Pub. L. 101–453; 31 U.S.C. 6501)

govern, payment methods of State

agencies, instrumentalities, and fiscal

agents must be consistent with CMIA

Treasury-State Agreements or the CMIA

default procedures codified at 31 CFR

part 205, ‘‘Withdrawal of Cash from the

Treasury for Advances under Federal

Grant and Other Programs.’’

(6) Written procedures for

determining the reasonableness,

allocability and allowability of costs in

accordance with the provisions of the

applicable Federal cost principles and

the terms and conditions of the award.

(7) Accounting records including cost

accounting records that are supported

by source documentation.

(c) Bonding and insurance

requirements. Where the Federal

Government guarantees or insures the

repayment of money borrowed by the

recipient, SSA, at its discretion, may

require adequate bonding and insurance

if the bonding and insurance

requirements of the recipient are not

deemed adequate to protect the interest

of the Federal Government.

(d) Fidelity bond coverage

requirements. SSA may require

adequate fidelity bond coverage where

the recipient lacks sufficient coverage to

protect the Federal Government’s

interest.

(e) Obtaining bonds. Where bonds are

required in the situations described

above, the bonds must be obtained from

companies holding certificates of

authority as acceptable sureties, as

prescribed in 31 CFR part 223, ‘‘Surety

Companies Doing Business with the

United States.’’

§ 435.22 Payment.

(a) Introduction. Payment methods

must minimize the time elapsing

between the transfer of funds from the

United States Treasury and the issuance

or redemption of checks, warrants, or

payment by other means by the

recipients. Payment methods of State

agencies or instrumentalities must be

consistent with Treasury-State CMIA

agreements or default procedures

codified at 31 CFR part 205.

(b) Advance payment method and

requirements. (1) Recipients will be

paid in advance, provided they

maintain or demonstrate the willingness

to maintain:

(i) Written procedures that minimize

the time elapsing between the transfer of

funds and disbursement by the

recipient, and

(ii) Financial management systems

that meet the standards for fund control

and accountability as established in

§ 435.21.

(2) Cash advances to a recipient

organization will be limited to the

minimum amounts needed and be timed

to be in accordance with the actual,

immediate cash requirements of the

recipient organization in carrying out

the purpose of the approved program or

project. The timing and amount of cash

advances must be as close as is

administratively feasible to the actual

disbursements by the recipient

organization for direct program or

project costs and the proportionate

share of any allowable indirect costs.

(c) Advance payment consolidation

and mechanisms. Whenever possible,

advances must be consolidated to cover

anticipated cash needs for all awards

made by SSA to the recipient.

(1) Advance payment mechanisms

include, but are not limited to, Treasury

check and electronic funds transfer.

(2) Advance payment mechanisms are

subject to 31 CFR part 205.

(3) Recipients are authorized to

submit requests for advances and

reimbursements at least monthly when

electronic fund transfers are not used.

(d) How to request advance payment.

Requests for Treasury check advance

payment must be submitted on SF–270,

‘‘Request for Advance or

Reimbursement,’’ or other forms as may

be authorized by OMB. This form is not

to be used when Treasury check

advance payments are made to the

recipient automatically through the use

of a predetermined payment schedule or

if precluded by special SSA instructions

for electronic funds transfer.

(e) Reimbursement method.

Reimbursement is the preferred method

when the advance payment

requirements in paragraph (b) of this

section cannot be met. SSA may also

use this method on any construction

agreement, or if the major portion of the

construction project is accomplished

through private market financing or

Federal loans, and the Federal

assistance constitutes a minor portion of

the project.

(1) When the reimbursement method

is used, SSA will make payment within

30 days after receipt of the billing,

unless the billing is improper.

(2) Recipients will be authorized to

submit request for reimbursement at

least monthly when electronic funds

transfers are not used.

(f) Working capital advance method.

If a recipient cannot meet the criteria for

advance payments and SSA has

determined that reimbursement is not

feasible because the recipient lacks

sufficient working capital, SSA may

provide cash on a working capital

advance basis. Under this procedure,

SSA will advance cash to the recipient

to cover its estimated disbursement

needs for an initial period generally

geared to the awardee’s disbursing

cycle. Thereafter, SSA will reimburse

the recipient for its actual cash

disbursements. The working capital

advance method of payment will not be

used for recipients unwilling or unable

to provide timely advances to their

subrecipient to meet the subrecipient’s

actual cash disbursements.

(g) Requesting additional cash

payments. To the extent available,

recipients must disburse funds available

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from repayments to and interest earned

on a revolving fund, program income,

rebates, refunds, contract settlements,

audit recoveries and interest earned on

such funds before requesting additional

cash payments.

(h) Withholding of payments. Unless

otherwise required by statute, SSA will

not withhold payments for proper

charges made by recipients at any time

during the project period unless

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

apply.

(1) A recipient has failed to comply

with the project objectives, the terms

and conditions of the award, or Federal

reporting requirements.

(2) The recipient or subrecipient is

delinquent in a debt to the United States

as defined in OMB Circular A–129,

‘‘Managing Federal Credit Programs.’’

Under such conditions, SSA may, upon

reasonable notice, inform the recipient

that payments will not be made for

obligations incurred after a specified

date until the conditions are corrected

or the indebtedness to the Federal

Government is liquidated.

(i) Standards governing the use of

banks and other institutions as

depositories of funds advanced under

awards. (1) Except for situations

described in paragraph (i)(2) of this

section, SSA will not require separate

depository accounts for funds provided

to a recipient or establish any eligibility

requirements for depositories for funds

provided to a recipient. However,

recipients must be able to account for

the receipt, obligation and expenditure

of funds.

(2) Advances of Federal funds must be

deposited and maintained in insured

accounts whenever possible.

(j) Use of women-owned and minorityowned banks. Consistent with the

national goal of expanding the

opportunities for women-owned and

minority-owned business enterprises,

recipients will be encouraged to use

women-owned and minority-owned

banks (a bank which is owned at least

50 percent by women or minority group

members).

(k) Use of interest bearing accounts.

Recipients must maintain advances of

Federal funds in interest bearing

accounts, unless paragraph (k) (1), (2) or

(3) of this section apply.

(1) The recipient receives less than

$120,000 in Federal awards per year.

(2) The best reasonably available

interest bearing account would not be

expected to earn interest in excess of

$250 per year on Federal cash balances.

(3) The depository would require an

average or minimum balance so high

that it would not be feasible within the

expected Federal and non-Federal cash

resources.

(l) Remittance of interest earned. For

those entities where CMIA and its

implementing regulations do not apply,

interest earned on Federal advances

deposited in interest bearing accounts

must be remitted annually to

Department of Health and Human

Services, Payment Management System,

Rockville, MD 20852. Interest amounts

up to $250 per year may be retained by

the recipient for administrative expense.

State universities and hospitals must

comply with CMIA, as it pertains to

interest. If an entity subject to CMIA

uses its own funds to pay pre-award

costs for discretionary awards without

prior written approval from SSA, it

waives its right to recover the interest

under CMIA.

(m) Forms for requesting advances

and reimbursements. Except as noted

elsewhere in this Part, only the

following forms are authorized for the

recipients in requesting advances and

reimbursements. SSA will not require

more than an original and two copies of

these forms.

(1) SF–270, Request for Advance or

Reimbursement. SSA has adopted the

SF–270 as a standard form for all

nonconstruction programs when

electronic funds transfer or

predetermined advance methods are not

used. SSA, however, has the option of

using this form for construction

programs in lieu of the SF–271, ‘‘Outlay

Report and Request for Reimbursement

for Construction Programs.’’

(2) SF–271, Outlay Report and

Request for Reimbursement for

Construction Programs. SSA has

adopted the SF–271 as the standard

form to be used for requesting

reimbursement for construction

programs. However, SSA may substitute

the SF–270 when SSA determines that

it provides adequate information to

meet Federal needs.

§ 435.23 Cost sharing or matching.

(a) All contributions, including cash

and third party in-kind, will be accepted

as part of the recipient’s cost sharing or

matching when such contributions meet

all of the following criteria:

(1) Are verifiable from the recipient’s

records.

(2) Are not included as contributions

for any other federally-assisted project

or program.

(3) Are necessary and reasonable for

proper and efficient accomplishment of

project or program objectives.

(4) Are allowable under the applicable

cost principles.

(5) Are not paid by the Federal

Government under another award,

except where authorized by Federal

statute to be used for cost sharing or

matching.

(6) Are provided for in the approved

budget when required by SSA.

(7) Conform to other provisions of this

Part, as applicable.

(b) Unrecovered indirect costs may be

included as part of cost sharing or

matching only with the prior approval

of SSA.

(c) Values for recipient contributions

of services and property will be

established in accordance with the

applicable cost principles. If SSA

authorizes recipients to donate

buildings or land for construction/

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

property for cost sharing or matching

will be the lesser of paragraph (c)(1) or

(2) of this section.

(1) The certified value of the

remaining life of the property recorded

in the recipient’s accounting records at

the time of donation.

(2) The current fair market value.

However, when there is sufficient

justification, SSA may approve the use

of the current fair market value of the

donated property, even if it exceeds the

certified value at the time of donation to

the project.

(d) Volunteer services furnished by

professional and technical personnel,

consultants, and other skilled and

unskilled labor may be counted as cost

sharing or matching if the service is an

integral and necessary part of an

approved project or program. Rates for

volunteer services must be consistent

with those paid for similar work in the

recipient’s organization. In those

instances in which the required skills

are not found in the recipient

organization, rates must be consistent

with those paid for similar work in the

labor market in which the recipient

competes for the kind of services

involved. In either case, paid fringe

benefits that are reasonable, allowable,

and allocable may be included in the

valuation.

(e) When an employer other than the

recipient furnishes the services of an

employee, these services must be valued

at the employee’s regular rate of pay

(plus an amount of fringe benefits that

are reasonable, allowable, and allocable,

but exclusive of overhead costs),

provided these services are in the same

skill for which the employee is normally

paid.

(f) Donated supplies may include

such items as expendable equipment,

office supplies, laboratory supplies or

workshop and classroom supplies.

Value assessed to donated supplies

included in the cost sharing or matching

24776 Federal Register / Vol. 65, No. 82 / Thursday, April 27, 2000 / Proposed Rules

share must be reasonable and may not

exceed the fair market value of the

property at the time of the donation.

(g) The method used for determining

cost sharing or matching for donated

equipment, buildings and land for

which title passes to the recipient may

differ according to the purpose of the

award, if paragraph (g)(1) or (2) of this

section apply.

(1) If the purpose of the award is to

assist the recipient in the acquisition of

equipment, buildings or land, the total

value of the donated property may be

claimed as cost sharing or matching.

(2) If the purpose of the award is to

support activities that require the use of

equipment, buildings or land, normally

only depreciation or use charges for

equipment and buildings may be made.

However, the full value of equipment or

other capital assets and fair rental

charges for land may be allowed,

provided that SSA has approved the

charges.

(h) The value of donated property

must be determined in accordance with

the usual accounting policies of the

recipient, with the following

qualifications:

(1) The value of donated land and

buildings may not exceed its fair market

value at the time of donation to the

recipient as established by an

independent appraiser (e.g., certified

real property appraiser or General

Services Administration representative)

and certified by a responsible official of

the recipient.

(2) The value of donated equipment

may not exceed the fair market value of

equipment of the same age and

condition at the time of donation.

(3) The value of donated space may

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

may not exceed its fair rental value.

(5) The following requirements

pertain to the recipient’s supporting

records for in-kind contributions from

third parties:

(i) Volunteer services must be

documented and, to the extent feasible,

supported by the same methods used by

the recipient for its own employees.

(ii) The basis for determining the

valuation for personal service, material,

equipment, buildings and land must be

documented.

§ 435.24 Program income.

(a) Introduction. SSA will apply the

standards set forth in this section in

requiring recipient organizations to

account for program income related to

projects financed in whole or in part

with Federal funds.

(b) Use of program income. Except as

provided in paragraph (h) of this

section, program income earned during

the project period must be retained by

the recipient and, in accordance with

SSA regulations or the terms and

conditions of the award, must be used

in one or more of the following ways.

Program income must be:

(1) Added to funds committed to the

project by the Federal awarding agency

and recipient and used to further

eligible project or program objectives.

(2) Used to finance the non-Federal

share of the project or program.

(3) Deducted from the total project or

program allowable cost in determining

the net allowable costs on which the

Federal share of costs is based.

(c) Use of excess program income.

When an agency authorizes the

disposition of program income as

described in paragraph (b)(1) or (b)(2) of

this section, program income in excess

of any limits stipulated must be used in

accordance with paragraph (b)(3) of this

section.

(d) When the use of program income

is not specified. In the event that SSA

does not specify in its regulations or the

terms and conditions of the award how

program income is to be used, paragraph

(b)(3) of this section will apply

automatically to all projects or programs

except research. For awards that support

research, paragraph (b)(1) of this section

will apply automatically unless SSA

indicates in the terms and conditions

another alternative on the award or the

recipient is subject to special award

conditions, as indicated in § 435.14.

(e) Program income earned after end

of project period. Unless SSA

regulations or the terms and conditions

of the award provide otherwise,

recipients will have no obligation to the

Federal Government regarding program

income earned after the end of the

project period.

(f) Costs incident to generation of

program income. If authorized by SSA

regulations or the terms and conditions

of the award, costs incident to the

generation of program income may be

deducted from gross income to

determine program income, provided

these costs have not been charged to the

award.

(g) Proceeds from sale of property.

Proceeds from the sale of property must

be handled in accordance with the

requirements of the Property Standards

(See §§ 435.30 through 435.37).

(h) Program income from license fees

and royalties. Unless SSA regulations or

the terms and condition of the award

provide otherwise, recipients have no

obligation to the Federal Government

with respect to program income earned

from license fees and royalties for

copyrighted material, patents, patent

applications, trademarks, and

inventions produced under an award.

However, Patent and Trademark

Amendments (35 U.S.C. 18) apply to

inventions made under an experimental,

developmental, or research award.

§ 435.25 Revision of budget and program

plans.

(a) The budget plan is the financial

expression of the project or program as

approved during the award process. It

may include either the Federal and nonFederal share, or only the Federal share,

depending upon SSA requirements. It

must be related to performance for

program evaluation purposes whenever

appropriate.

(b) Recipients are required to report

deviations from budget and program

plans, and request prior approvals for

budget and program plan revisions, in

accordance with this section.

(c) For nonconstruction awards,

recipients must request prior approvals

from SSA for one or more of the

following program or budget related

reasons:

(1) Change in the scope or the

objective of the project or program (even

if there is no associated budget revision

requiring prior written approval).

(2) Change in a key person specified

in the application or award document.

(3) The absence for more than three

months, or a 25 percent reduction in

time devoted to the project, by the

approved project director or principal

investigator.

(4) The need for additional Federal

funding.

(5) The transfer of amounts budgeted

for indirect costs to absorb increases in

direct costs, or vice versa, if approval is

required by SSA.

(6) The inclusion, unless waived by

SSA, of costs that require prior approval

in accordance with OMB Circular A–21,

‘‘Cost Principles for Educational

Institutions,’’ OMB Circular A–122,

‘‘Cost Principles for Non-Profit

Organizations,’’ or 45 CFR part 74

Appendix E, ‘‘Principles for

Determining Costs Applicable to

Research and Development under

Grants and Contracts with Hospitals,’’ or

48 CFR part 31, ‘‘Contract Cost

Principles and Procedures,’’ as

applicable.

(7) The transfer of funds allotted for

training allowances (direct payment to

trainees) to other categories of expense.

(8) Unless described in the

application and funded in the approved

awards, the subaward, transfer or

Federal Register / Vol. 65, No. 82 / Thursday, April 27, 2000 / Proposed Rules 24777

contracting out of any work under an

award. This provision does not apply to

the purchase of supplies, material,

equipment or general support services.

(d) No other prior approval

requirements for specific items may be

imposed unless a deviation has been

approved by OMB.

(e) Except for requirements listed in

paragraphs (c)(1) and (c)(4) of this

section, SSA may waive cost-related and

administrative prior written approvals

required by this Part and OMB Circulars

A–21 and A–122. Such waivers may

include authorizing recipients to do any

one or more of the following:

(1) Incur pre-award costs 90 calendar

days prior to award or more than 90

calendar days with the prior approval of

SSA. All pre-award costs are incurred at

the recipient’s risk (i.e., SSA is under no

obligation to reimburse such costs if for

any reason the recipient does not

receive an award or if the award is less

than anticipated and inadequate to

cover such costs).

(2) Initiate a one-time extension of the

expiration date of the award of up to 12

months unless one or more of the

following conditions apply. For onetime extensions, the recipient must

notify SSA in writing with the

supporting reasons and revised

expiration date at least 10 days before

the expiration date specified in the

award. This one-time extension may not

be exercised merely for the purpose of

using unobligated balances.

(i) The terms and conditions of award

prohibit the extension.

(ii) The extension requires additional

Federal funds.

(iii) The extension involves any

change in the approved objectives or

scope of the project.

(3) Carry forward unobligated

balances to subsequent funding periods.

(4) For awards that support research,

unless SSA provides otherwise in the

award or in the SSA regulations, the

prior approval requirements described

in paragraph (e) of this section are

automatically waived (i.e., recipients

need not obtain such prior approvals)

unless one of the conditions included in

paragraph (e)(2) of this section applies.

(f) SSA may, at its option, restrict the

transfer of funds among direct cost

categories or programs, functions and

activities for awards in which the

Federal share of the project exceeds

$100,000 and the cumulative amount of

such transfers exceeds or is expected to

exceed 10 percent of the total budget as

last approved by SSA. No transfers are

permitted that would cause any Federal

appropriation or part thereof to be used

for purposes other than those consistent

with the original intent of the

appropriation.

(g) All other changes to

nonconstruction budgets, except for the

changes described in paragraph (j) of

this section, do not require prior

approval.

(h) For construction awards,

recipients must request prior written

approval promptly from SSA for budget

revisions whenever paragraph (h)(1), (2)

or (3) of this section apply.

(1) The revision results from changes

in the scope or the objective of the

project or program.

(2) The need arises for additional

Federal funds to complete the project.

(3) A revision is desired which

involves specific costs for which prior

written approval requirements may be

imposed consistent with applicable

OMB cost principles listed in § 435.27.

(i) No other prior approval

requirements for specific items will be

imposed unless a deviation has been

approved by OMB.

(j) When SSA makes an award that

provides support for both construction

and nonconstruction work, SSA may

require the recipient to request prior

approval before making any fund or

budget transfers between the two types

of work supported.

(k) For both construction and

nonconstruction awards, recipients

must notify SSA in writing promptly

whenever the amount of Federal

authorized funds is expected to exceed

the needs of the recipient for the project

period by more than $5000 or five

percent of the Federal award, whichever

is greater. This notification is not

required if an application for additional

funding is submitted for a continuation

award.

(l) When requesting approval for

budget revisions, recipients must use

the budget forms that were used in the

application unless SSA indicates a letter

of request suffices.

(m) Within 30 calendar days from the

date of receipt of the request for budget

revisions, SSA will review the request

and notify the recipient whether the

budget revisions have been approved. If

the revision is still under consideration

at the end of 30 calendar days, SSA will

inform the recipient in writing of the

date when the recipient may expect the

decision.

§ 435.26 Non-Federal audits.

(a) Recipients and subrecipients that

are institutions of higher education or

other non-profit organizations

(including hospitals) are subject to the

audit requirements contained in the

Single Audit Act Amendments of 1996

(31 U.S.C. 7501–7507) and revised OMB

Circular A–133, ‘‘Audits of States, Local

Governments, and Non-Profit

Organizations.’’

(b) State and local governments are

subject to the audit requirements

contained in the Single Audit Act

Amendments of 1996 (31 U.S.C. 7501–

7507) and revised OMB Circular A–133,

‘‘Audits of States, Local Governments,

and Non-Profit Organizations.’’

(c) For-profit hospitals not covered by

the audit provisions of revised OMB

Circular A–133 are subject to the audit

requirements of SSA.

(d) Commercial organizations are

subject to the audit requirements of SSA

or the prime recipient as incorporated

into the award document.

§ 435.27 Allowable costs.

For each kind of recipient, there is a

set of Federal principles for determining

allowable costs. Allowability of costs

will be determined in accordance with

the cost principles applicable to the

entity incurring the costs. Thus:

(a) Allowability of costs incurred by

State, local or federally-recognized

Indian tribal governments is determined

in accordance with the provisions of

OMB Circular A–87, ‘‘Cost Principles

for State, Local, and Indian Tribal

Governments.’’

(b) Allowability of costs incurred by

non-profit organizations is determined

in accordance with the provisions of

OMB Circular A–122, ‘‘Cost Principles

for Non-Profit Organizations.’’

(c) Allowability of costs incurred by

institutions of higher education is

determined in accordance with the

provisions of OMB Circular A–21, ‘‘Cost

Principles for Educational Institutions.’’

(d) Allowability of costs incurred by

hospitals is determined in accordance

with the provisions of Appendix E of 45

CFR part 74, ‘‘Principles for

Determining Costs Applicable to

Research and Development Under

Grants and Contracts with Hospitals.’’

(e) Allowability of costs incurred by

commercial organizations and those

non-profit organizations listed in

Attachment C to Circular A–122 is

determined in accordance with the

provisions of the Federal Acquisition

Regulation (FAR) at 48 CFR part 31.

§ 435.28 Period of availability of funds.

Where a funding period is specified,

a recipient may charge to the grant only

allowable costs resulting from

obligations incurred during the funding

period and any pre-award costs

authorized by SSA.

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Property Standards

§ 435.30 Purpose of property standards.

Sections 435.31 through 435.37 set

forth uniform standards governing

management and disposition of property

furnished by the Federal Government

whose cost was charged to a project

supported by a Federal award.

Recipients must observe these standards

under awards and SSA may not impose

additional requirements, unless

specifically required by Federal statute.

The recipient may use its own property

management standards and procedures

provided it observes the provisions of

§§ 435.31 through 435.37.

§ 435.31 Insurance coverage.

Recipients must, at a minimum,

provide the equivalent insurance

coverage for real property and

equipment acquired with Federal funds

as provided to property owned by the

recipient. Federally-owned property

need not be insured unless required by

the terms and conditions of the award.

§ 435.32 Real property.

SSA will prescribe requirements for

recipients concerning the use and

disposition of real property acquired in

whole or in part under awards. Unless

otherwise provided by statute, such

requirements, at a minimum, will

contain the following.

(a) Title. Title to real property will

vest in the recipient subject to the

condition that the recipient will use the

real property for the authorized purpose

of the project as long as it is needed and

will not encumber the property without

approval of SSA.

(b) Use in other projects. The

recipient must obtain written approval

by SSA for the use of real property in

other federally-sponsored projects when

the recipient determines that the

property is no longer needed for the

purpose of the original project. Use in

other projects is limited to those under

federally-sponsored projects (i.e.,

awards) or programs that have purposes

consistent with those authorized for

support by SSA.

(c) Disposition. When the real

property is no longer needed as

provided in paragraphs (a) and (b) of

this section, the recipient must request

disposition instructions from SSA or its

successor Federal awarding agency. SSA

will observe one or more of the

following disposition instructions:

(1) The recipient may be permitted to

retain title without further obligation to

the Federal Government after it

compensates the Federal Government

for that percentage of the current fair

market value of the property attributable

to the Federal participation in the

project.

(2) The recipient may be directed to

sell the property under guidelines

provided by SSA and pay the Federal

Government for that percentage of the

current fair market value of the property

attributable to the Federal participation

in the project (after deducting actual

and reasonable selling and fix-up

expenses, if any, from the sales

proceeds). When the recipient is

authorized or required to sell the

property, proper sales procedures will

be established that provide for

competition to the extent practicable

and result in the highest possible return.

(3) The recipient may be directed to

transfer title to the property to the

Federal Government or to an eligible

third party provided that, in such cases,

the recipient will be entitled to

compensation for its attributable

percentage of the current fair market

value of the property.

§ 435.33 Federally-owned and exempt

property.

(a) Federally-owned property. (1) Title

to federally-owned property remains

vested in the Federal Government.

Recipients must submit annually an

inventory listing of federally-owned

property in their custody to SSA. Upon

completion of the award or when the

property is no longer needed, the

recipient must report the property to

SSA for further Federal agency

utilization.

(2) If SSA has no further need for the

property, it will be declared excess and

reported to the General Services

Administration, unless SSA has

statutory authority to dispose of the

property by alternative methods (e.g.,

the authority provided by the Federal

Technology Transfer Act (15 U.S.C.

3710 (I)) to donate research equipment

to educational and non-profit

organizations in accordance with

Executive Order 12821, ‘‘Improving

Mathematics and Science Education in

Support of the National Education

Goals’’ (3 CFR, 1992 Comp., p. 323).

Appropriate instructions will be issued

to the recipient by SSA.

(b) Exempt property. When statutory

authority exists, SSA has the option to

vest title to property acquired with

Federal funds in the recipient without

further obligation to the Federal

Government and under conditions SSA

considers appropriate. Such property is

‘‘exempt property.’’ Should SSA not

establish conditions, title to exempt

property upon acquisition will vest in

the recipient without further obligation

to the Federal Government.

§ 435.34 Equipment.

(a) Title to equipment acquired by a

recipient with Federal funds will vest in

the recipient, subject to conditions of

this section.

(b) The recipient may not use

equipment acquired with Federal funds

to provide services to non-Federal

outside organizations for a fee that is

less than private companies charge for

equivalent services, unless specifically

authorized by Federal statute, for as

long as the Federal Government retains

an interest in the equipment.

(c) The recipient may use the

equipment in the project or program for

which it was acquired as long as

needed, whether or not the project or

program continues to be supported by

Federal funds and may not encumber

the property without approval of SSA.

When no longer needed for the original

project or program, the recipient must

use the equipment in connection with

its other federally-sponsored activities,

in the following order of priority:

(1) Activities sponsored by SSA, then

(2) activities sponsored by other

Federal awarding agencies.

(d) During the time that equipment is

used on the project or program for

which it was acquired, the recipient

must make it available for use on other

projects or programs if such other use

will not interfere with the work on the

project or program for which the

equipment was originally acquired. First

preference for such other use must be

given to other projects or programs

sponsored by SSA; second preference

must be given to projects or programs

sponsored by other Federal awarding

agencies. If the equipment is owned by

the Federal Government, use on other

activities not sponsored by the Federal

Government will be permissible if

authorized by SSA. User charges will be

treated as program income.

(e) When acquiring replacement

equipment, the recipient may use the

equipment to be replaced as trade-in or

sell the equipment and use the proceeds

to offset the costs of the replacement

equipment subject to the approval of

SSA.

(f) The recipient’s property

management standards for equipment

acquired with Federal funds and

federally-owned equipment must

include all of the following:

(1) Equipment records must be

maintained accurately and must include

the following information:

(i) A description of the equipment.

(ii) Manufacturer’s serial number,

model number, Federal stock number,

national stock number, or other

identification number.

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(iii) Source of the equipment,

including the award number.

(iv) Whether title vests in the

recipient or the Federal Government.

(v) Acquisition date (or date received,

if the equipment was furnished by the

Federal Government) and cost.

(vi) Information from which one can

calculate the percentage of Federal

participation in the cost of the

equipment (not applicable to equipment

furnished by the Federal Government).

(vii) Location and condition of the

equipment and the date the information

was reported.

(viii) Unit acquisition cost.

(ix) Ultimate disposition data,

including date of disposal and sales

price or the method used to determine

current fair market value where a

recipient compensates the Federal

awarding agency for its share.

(2) Equipment owned by the Federal

Government must be identified to

indicate Federal ownership.

(3) A physical inventory of equipment

must be taken and the results reconciled

with the equipment records at least once

every two years. Any differences

between quantities determined by the

physical inspection and those shown in

the accounting records must be

investigated to determine the causes of

the difference. The recipient must, in

connection with the inventory, verify

the existence, current utilization, and

continued need for the equipment.

(4) A control system must be in effect

to insure adequate safeguards to prevent

loss, damage, or theft of the equipment.

Any loss, damage, or theft of equipment

must be investigated and fully

documented; if the equipment was

owned by the Federal Government, the

recipient must promptly notify SSA.

(5) Adequate maintenance procedures

must be implemented to keep the

equipment in good condition.

(6) Where the recipient is authorized

or required to sell the equipment,

proper sales procedures must be

established which provide for

competition to the extent practicable

and result in the highest possible return.

(g) When the recipient no longer

needs the equipment, the equipment

may be used for other activities in

accordance with the following

standards. For equipment with a current

per unit fair market value of $5000 or

more, the recipient may retain the

equipment for other uses provided that

compensation is made to SSA or its

successor. The amount of compensation

will be computed by applying the

percentage of Federal participation in

the cost of the original project or

program to the current fair market value

of the equipment. If the recipient has no

need for the equipment, the recipient

must request disposition instructions

from SSA. SSA will determine whether

the equipment can be used to meet the

agency’s requirements. If no

requirement exists within that agency,

the availability of the equipment will be

reported to the General Services

Administration by SSA to determine

whether a requirement for the

equipment exists in other Federal

agencies. SSA will issue instructions to

the recipient no later than 120 calendar

days after the recipient’s request and the

following procedures will govern:

(1) If so instructed or if disposition

instructions are not issued within 120

calendar days after the recipient’s

request, the recipient must sell the

equipment and reimburse SSA an

amount computed by applying to the

sales proceeds the percentage of Federal

participation in the cost of the original

project or program. However, the

recipient is permitted to deduct and

retain from the Federal share $500 or

ten percent of the proceeds, whichever

is less, for the recipient’s selling and

handling expenses.

(2) If the recipient is instructed to

ship the equipment elsewhere, the

recipient will be reimbursed by the

Federal Government by an amount

which is computed by applying the

percentage of the recipient’s

participation in the cost of the original

project or program to the current fair

market value of the equipment, plus any

reasonable shipping or interim storage

costs incurred.

(3) If the recipient is instructed to

otherwise dispose of the equipment, the

recipient will be reimbursed by SSA for

such costs incurred in its disposition.

(4) SSA may reserve the right to

transfer the title to the Federal

Government or to a third party named

by the Federal Government when such

third party is otherwise eligible under

existing statutes. Such a transfer will be

subject to the following standards:

(i) The equipment must be

appropriately identified in the award or

otherwise made known to the recipient

in writing.

(ii) SSA must issue disposition

instructions within 120 calendar days

after receipt of a final inventory. The

final inventory must list all equipment

acquired with grant funds and federallyowned equipment. If SSA fails to issue

disposition instructions within the 120

calendar day period, the recipient must

apply the standards of this section, as

appropriate.

(iii) When SSA exercises its right to

take title, the equipment will be subject

to the provisions for federally-owned

equipment.

§ 435.35 Supplies and other expendable

property.

(a) Title to supplies and other

expendable property will vest in the

recipient upon acquisition. If there is a

residual inventory of unused supplies

exceeding $5000 in total aggregate value

upon termination or completion of the

project or program and the supplies are

not needed for any other federallysponsored project or program, the

recipient may retain the supplies for use

on non-Federal sponsored activities or

sell them, but must, in either case,

compensate the Federal Government for

its share. The amount of compensation

will be computed in the same manner

as for equipment.

(b) The recipient may not use supplies

acquired with Federal funds to provide

services to non-Federal outside

organizations for a fee that is less than

private companies charge for equivalent

services, unless specifically authorized

by Federal statute as long as the Federal

Government retains an interest in the

supplies.

§ 435.36 Intangible property.

(a) Copyright. The recipient may

copyright any work that is subject to

copyright and was developed, or for

which ownership was purchased, under

an award. SSA reserves a royalty-free,

nonexclusive and irrevocable right to

reproduce, publish, or otherwise use the

work for Federal purposes, and to

authorize others to do so.

(b) Patents and inventions. Recipients

are subject to applicable regulations

governing patents and inventions,

including government-wide regulations

issued by the Department of Commerce

at 37 CFR part 401, ‘‘Rights to

Inventions Made by Nonprofit

Organizations and Small Business Firms

Under Government Grants, Contracts

and Cooperative Agreements.’’

(c) Rights of Federal Government. The

Federal Government has the right to:

(1) Obtain, reproduce, publish or

otherwise use the data first produced

under an award; and

(2) Authorize others to receive,

reproduce, publish, or otherwise use

such data for Federal purposes.

(d) FOIA requests for research data.

(1) In addition, in response to a

Freedom of Information Act (FOIA)

request for research data relating to

published research findings produced

under an award that were used by the

Federal Government in developing an

agency action that has the force and

effect of law, SSA shall request, and the

recipient shall provide, within a

reasonable time, the research data so

that they can be made available to the

public through the procedures

24780 Federal Register / Vol. 65, No. 82 / Thursday, April 27, 2000 / Proposed Rules

established under the FOIA. If SSA

obtains the research data solely in

response to a FOIA request, SSA may

charge the requester a reasonable fee

equaling the full incremental cost of

obtaining the research data. This fee

should reflect costs incurred by SSA,

the recipient, and applicable

subrecipients. This fee is in addition to

any fees SSA may assess under the

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

(2) The following definitions apply for

purposes of this paragraph (d):

(i) Research data is defined as the

recorded factual material commonly

accepted in the scientific community as

necessary to validate research findings,

but not any of the following:

preliminary analyses, drafts of scientific

papers, plans for future research, peer

reviews, or communications with

colleagues. This ‘‘recorded’’ material

excludes physical objects (e.g.,

laboratory samples). Research data also

do not include:

(A) Trade secrets, commercial

information, materials necessary to be

held confidential by a researcher until

they are published, or similar

information which is protected under

law; and

(B) Personnel and medical

information and similar information the

disclosure of which would constitute a

clearly unwarranted invasion of

personal privacy, such as information

that could be used to identify a

particular person in a research study.

(ii) Published is defined as either

when:

(A) Research findings are published in

a peer-reviewed scientific or technical

journal; or

(B) A Federal agency publicly and

officially cites the research findings in

support of an agency action that has the

force and effect of law.

(iii) Used by the Federal Government

in developing an agency action that has

the force and effect of law is defined as

when an agency publicly and officially

cites the research findings in support of

an agency action that has the force and

effect of law.

(e) Title to intangible property and

debt instruments. Title to intangible

property and debt instruments acquired

under an award or subaward vests upon

acquisition in the recipient. The

recipient must use that property for the

originally-authorized purpose, and the

recipient may not encumber the

property without approval of SSA.

When no longer needed for the

originally authorized purpose,

disposition of the intangible property

will occur in accordance with the

provisions of § 435.34(g).

§ 435.37 Property trust relationship.

Real property, equipment, intangible

property and debt instruments that are

acquired or improved with Federal

funds must be held in trust by the

recipient as trustee for the beneficiaries

of the project or program under which

the property was acquired or improved.

Agencies may require recipients to

record liens or other appropriate notices

of record to indicate that personal or

real property has been acquired or

improved with Federal funds and that

use and disposition conditions apply to

the property.

Procurement Standards

§ 435.40 Purpose of procurement

standards.

Sections 435.41 through 435.48 set

forth standards for use by recipients in

establishing procedures for the

procurement of supplies and other

expendable property, equipment, real

property and other services with Federal

funds. These standards are furnished to

ensure that such materials and services

are obtained in an effective manner and

in compliance with the provisions of

applicable Federal statutes and

executive orders. No additional

procurement standards or requirements

may be imposed by SSA upon

recipients, unless specifically required

by Federal statute or executive order or

approved by OMB.

§ 435.41 Recipient responsibilities.

The standards contained in this

section do not relieve the recipient of

the contractual responsibilities arising

under its contract(s). The recipient is

the responsible authority, without

recourse to SSA, regarding the

settlement and satisfaction of all

contractual and administrative issues

arising out of procurements entered into

in support of an award or other

agreement. This includes disputes,

claims, protests of award, source

evaluation or other matters of a

contractual nature. Matters concerning

violation of statute are to be referred to

such Federal, State or local authority as

may have proper jurisdiction.

§ 435.42 Codes of conduct.

The recipient must maintain written

standards of conduct governing the

performance of its employees engaged

in the award and administration of

contracts. No employee, officer, or agent

may participate in the selection, award,

or administration of a contract

supported by Federal funds if a real or

apparent conflict of interest would be

involved. Such a conflict would arise

when the employee, officer, or agent,

any member of his or her immediate

family, his or her partner, or an

organization which employs or is about

to employ any of the parties indicated

herein, has a financial or other interest

in the firm selected for an award. The

officers, employees, and agents of the

recipient may neither solicit nor accept

gratuities, favors, or anything of

monetary value from contractors, or

parties to subagreements. However,

recipients may set standards for

situations in which the financial interest

is not substantial or the gift is an

unsolicited item of nominal value. The

standards of conduct must provide for

disciplinary actions to be applied for

violations of such standards by officers,

employees, or agents of the recipient.

§ 435.43 Competition.

All procurement transactions must be

conducted in a manner to provide, to

the maximum extent practical, open and

free competition. The recipient must be

alert to organizational conflicts of

interest as well as noncompetitive

practices among contractors that may

restrict or eliminate competition or

otherwise restrain trade. In order to

ensure objective contractor performance

and eliminate unfair competitive

advantage, contractors that develop or

draft specifications, requirements,

statements of work, invitations for bids

and/or requests for proposals must be

excluded from competing for such

procurements. Awards must be made to

the bidder or offeror whose bid or offer

is responsive to the solicitation and is

most advantageous to the recipient,

price, quality and other factors

considered. Solicitations must clearly

set forth all requirements that the bidder

or offeror must fulfill in order for the

bid or offer to be evaluated by the

recipient. Any and all bids or offers may

be rejected when it is in the recipient’s

interest to do so.

§ 435.44 Procurement procedures.

(a) All recipients must establish

written procurement procedures. These

procedures must provide for, at a

minimum, that paragraphs (a) (1), (2),

and (3) of this section apply.

(1) Recipients avoid purchasing

unnecessary items.

(2) Where appropriate, an analysis is

made of lease and purchase alternatives

to determine which would be the most

economical and practical procurement

for the Federal Government.

(3) Solicitations for goods and

services provide for all of the following:

(i) A clear and accurate description of

the technical requirements for the

material, product or service to be

procured. In competitive procurements,

such a description may not contain

Federal Register / Vol. 65, No. 82 / Thursday, April 27, 2000 / Proposed Rules 24781

features which unduly restrict

competition.

(ii) Requirements which the bidder/

offeror must fulfill and all other factors

to be used in evaluating bids or

proposals.

(iii) A description, whenever

practicable, of technical requirements in

terms of functions to be performed or

performance required, including the

range of acceptable characteristics or

minimum acceptable standards.

(iv) The specific features of ‘‘brand

name or equal’’ descriptions that

bidders are required to meet when such

items are included in the solicitation.

(v) The acceptance, to the extent

practicable and economically feasible,

of products and services dimensioned in

the metric system of measurement.

(vi) Preference, to the extent

practicable and economically feasible,

for products and services that conserve

natural resources and protect the

environment and are energy efficient.

(b) Positive efforts must be made by

recipients to utilize small businesses,

minority-owned firms, and women’s

business enterprises, whenever possible.

Recipients of Federal awards must take

all of the following steps to further this

goal:

(1) Ensure that small businesses,

minority-owned firms, and women’s

business enterprises are used to the

fullest extent practicable.

(2) Make information on forthcoming

opportunities available and arrange time

frames for purchases and contracts to

encourage and facilitate participation by

small businesses, minority-owned firms,

and women’s business enterprises.

(3) Consider in the contract process

whether firms competing for larger

contracts intend to subcontract with

small businesses, minority-owned firms,

and women’s business enterprises.

(4) Encourage contracting with

consortiums of small businesses,

minority-owned firms and women’s

business enterprises when a contract is

too large for one of these firms to handle

individually.

(5) Use the services and assistance, as

appropriate, of such organizations as the

Small Business Administration and the

Department of Commerce’s Minority

Business Development Agency in the

solicitation and utilization of small

businesses, minority-owned firms and

women’s business enterprises.

(c) The type of procuring instruments

used (e.g., fixed price contracts, cost

reimbursable contracts, purchase orders,

and incentive contracts) may be

determined by the recipient but must be

appropriate for the particular

procurement and for promoting the best

interest of the program or project

involved. The ‘‘cost-plus-a-percentageof-cost’’ or ‘‘percentage of construction

cost’’ methods of contracting may not be

used.

(d) Contracts may be made only with

responsible contractors who possess the

potential ability to perform successfully

under the terms and conditions of the

proposed procurement. Consideration

must be given to such matters as

contractor integrity, record of past

performance, financial and technical

resources or accessibility to other

necessary resources. In certain

circumstances, contracts with certain

parties are restricted by agencies’

implementation of Executive Orders

12549 and 12689, ‘‘Debarment and

Suspension’’ (3 CFR, 1986 Comp., p.

189 and 3 CFR, 1989 Comp., p. 235).

(e) Recipients must, on request, make

available for SSA, pre-award review and

procurement documents, such as

request for proposals or invitations for

bids, independent cost estimates, etc.,

when any of the following conditions

apply:

(1) A recipient’s procurement

procedures or operation fails to comply

with the procurement standards in this

Part.

(2) The procurement is expected to

exceed the simplified acquisition

threshold fixed at 41 U.S.C. 403 (11)

(currently $100,000) and is to be

awarded without competition or only

one bid or offer is received in response

to a solicitation.

(3) The procurement, which is

expected to exceed the simplified

acquisition threshold, specifies a ‘‘brand

name’’ product.

(4) The proposed award over the

simplified acquisition threshold is to be

awarded to other than the apparent low

bidder under a sealed bid procurement.

(5) A proposed contract modification

changes the scope of a contract or

increases the contract amount by more

than the amount of the simplified

acquisition threshold.

§ 435.45 Cost and price analysis.

Some form of cost or price analysis

must be made and documented in the

procurement files in connection with

every procurement action. Price analysis

may be accomplished in various ways,

including the comparison of price

quotations submitted, market prices and

similar indicia, together with discounts.

Cost analysis is the review and

evaluation of each element of cost to

determine reasonableness, allocability

and allowability.

§ 435.46 Procurement records.

Procurement records and files for

purchases in excess of the simplified

acquisition threshold must include the

following at a minimum:

(a) Basis for contractor selection,

(b) Justification for lack of

competition when competitive bids or

offers are not obtained, and

(c) Basis for award cost or price.

§ 435.47 Contract administration.

A system for contract administration

must be maintained to ensure contractor

conformance with the terms, conditions

and specifications of the contract and to

ensure adequate and timely follow up of

all purchases. Recipients must evaluate

contractor performance and document,

as appropriate, whether contractors

have met the terms, conditions and

specifications of the contract.

§ 435.48 Contract provisions.

The recipient must include, in

addition to provisions to define a sound

and complete agreement, the following

provisions in all contracts. The

following provisions must also be

applied to subcontracts:

(a) Contracts in excess of the

simplified acquisition threshold must

contain contractual provisions or

conditions that allow for administrative,

contractual, or legal remedies in

instances in which a contractor violates

or breaches the contract terms, and

provide for such remedial actions as

may be appropriate.

(b) All contracts in excess of the

simplified acquisition threshold must

contain suitable provisions for

termination by the recipient, including

the manner by which termination will

be effected and the basis for settlement.

In addition, such contracts must

describe conditions under which the

contract may be terminated for default

as well as conditions where the contract

may be terminated because of

circumstances beyond the control of the

contractor.

(c) Except as otherwise required by

statute, an award that requires the

contracting (or subcontracting) for

construction or facility improvements

must provide for the recipient to follow

its own requirements relating to bid

guarantees, performance bonds, and

payment bonds unless the construction

contract or subcontract exceeds

$100,000. For those contracts or

subcontracts exceeding $100,000, SSA

may accept the bonding policy and

requirements of the recipient, provided

SSA has made a determination that the

Federal Government’s interest is

adequately protected. If such a

determination has not been made, the

minimum requirements are as follows:

(1) A bid guarantee from each bidder

equivalent to five percent of the bid

24782 Federal Register / Vol. 65, No. 82 / Thursday, April 27, 2000 / Proposed Rules

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 his bid, execute

such contractual documents as may be

required within the time specified.

(2) A performance bond on the part of

the contractor for 100 percent of the

contract price. A ‘‘performance bond’’ is

one executed in connection with a

contract to secure fulfillment of all the

contractor’s obligations under such

contract.

(3) A payment bond on the part of the

contractor for 100 percent of the

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

executed in connection with a contract

to assure payment as required by statute

of all persons supplying labor and

material in the execution of the work

provided for in the contract.

(4) Where bonds are required in the

situations described herein, the bonds

must be obtained from companies

holding certificates of authority as

acceptable sureties pursuant to 31 CFR

part 223, ‘‘Surety Companies Doing

Business with the United States.’’

(d) All negotiated contracts (except

those for less than the simplified

acquisition threshold) awarded by

recipients must include a provision to

the effect that the recipient, SSA, the

Comptroller General of the United

States, or any of their duly authorized

representatives, will have access to any

books, documents, papers and records

of the contractor which are directly

pertinent to a specific program for the

purpose of making audits, examinations,

excerpts and transcriptions.

(e) All contracts, including small

purchases, awarded by recipients and

their contractors must contain the

procurement provisions of Appendix A

to this Part, as applicable.

Reports and Records

§ 435.50 Purpose of reports and records.

Sections 435.51 through 435.53 set

forth the procedures for monitoring and

reporting on the recipient’s financial

and program performance and the

necessary standard reporting forms.

They also set forth record retention

requirements.

§ 435.51 Monitoring and reporting program

performance.

(a) Recipients are responsible for

managing and monitoring each project,

program, subaward, function or activity

supported by the award. Recipients

must monitor subawards to ensure

subrecipients have met the audit

requirements as delineated in § 435.26.

(b) SSA will prescribe the frequency

with which the performance reports

must be submitted. Except as provided

in paragraph (f) of this section,

performance reports will not be required

more frequently than quarterly or, less

frequently than annually. Annual

reports are due 90 calendar days after

the grant year; quarterly or semi-annual

reports are due 30 days after the

reporting period. SSA may require

annual reports before the anniversary

dates of multiple year awards in lieu of

these requirements. The final

performance reports are due 90 calendar

days after the expiration or termination

of the award.

(c) If inappropriate, a final technical

or performance report will not be

required after completion of the project.

(d) When required, performance

reports must generally contain, for each

award, brief information on each of the

following:

(1) A comparison of actual

accomplishments with the goals and

objectives established for the period, the

findings of the investigator, or both.

Whenever appropriate and the output of

programs or projects can be readily

quantified, such quantitative data

should be related to cost data for

computation of unit costs.

(2) Reasons why established goals

were not met, if appropriate.

(3) Other pertinent information

including, when appropriate, analysis

and explanation of cost overruns or high

unit costs.

(e) Recipients will not be required to

submit more than the original and two

copies of performance reports.

(f) Recipients must immediately

notify SSA of developments that have a

significant impact on the awardsupported activities. Also, notification

must be given in the case of problems,

delays, or adverse conditions which

materially impair the ability to meet the

objectives of the award. This

notification must include a statement of

the action taken or contemplated, and

any assistance needed to resolve the

situation.

(g) SSA may make site visits, as

needed.

(h) SSA will comply with clearance

requirements of 5 CFR part 1320 when

requesting performance data from

recipients.

§ 435.52 Financial reporting.

(a) Authorized forms. The following

forms or such other forms as may be

approved by OMB are authorized for

obtaining financial information from

recipients:

(1) SF–269 or SF–269A, Financial

Status Report. (i) SSA requires

recipients to use the SF–269 or SF–

269A to report the status of funds for all

nonconstruction projects or programs.

However, SSA has the option of not

requiring the SF–269 or SF–269A when

the SF–270, Request for Advance or

Reimbursement, or SF–272, Report of

Federal Cash Transactions, is

determined to provide adequate

information to meet its needs, except

that a final SF–269 or SF–269A will be

required at the completion of the project

when the SF–270 is used only for

advances.

(ii) SSA may prescribe whether the

report will be on a cash or accrual basis.

If SSA requires accrual information and

the recipient’s accounting records are

not normally kept on the accrual basis,

the recipient will not be required to

convert its accounting system, but must

develop such accrual information

through best estimates based on an

analysis of the documentation on hand.

(iii) SSA will determine the frequency

of the Financial Status Report for each

project or program, considering the size

and complexity of the particular project

or program. However, the report will not

be required more frequently than

quarterly or less frequently than

annually. A final report is required at

the completion of the agreement.

(iv) SSA will require recipients to

submit the SF–269 or SF–269A (an

original and no more than two copies)

no later than 30 days after the end of

each specified reporting period for

quarterly and semi-annual reports, and

90 calendar days for annual and final

reports. Extensions of reporting due

dates may be approved by SSA upon

request of the recipient.

(2) SF–272, Report of Federal Cash

Transactions. (i) When funds are

advanced to recipients, SSA will require

each recipient to submit the SF–272

and, when necessary, its continuation

sheet, SF–272a. SSA will use this report

to monitor cash advanced to recipients

and to obtain disbursement information

for each agreement with the recipients.

(ii) SSA may require forecasts of

Federal cash requirements in the

‘‘Remarks’’ section of the report.

(iii) When practical and deemed

necessary, SSA may require recipients

to report in the ‘‘Remarks’’ section the

amount of cash advances received in

excess of three days. Recipients must

provide short narrative explanations of

actions taken to reduce the excess

balances.

(iv) Recipients are required to submit

not more than the original and two

copies of the SF–272 15 calendar days

following the end of each quarter. SSA

may require a monthly report from those

Federal Register / Vol. 65, No. 82 / Thursday, April 27, 2000 / Proposed Rules 24783

recipients receiving advances totaling

$1 million or more per year.

(v) SSA may waive the requirement

for submission of the SF–272 for any

one of the following reasons:

(A) When monthly advances do not

exceed $25,000 per recipient, provided

that such advances are monitored

through other forms contained in this

section;

(B) If, in SSA’s opinion, the

recipient’s accounting controls are

adequate to minimize excessive Federal

advances; or

(C) When the electronic payment

mechanisms provide adequate data.

(b) When SSA needs additional

information or more frequent reports,

the following will be observed:

(1) When additional information is

needed to comply with legislative

requirements, SSA will issue

instructions to require recipients to

submit such information under the

‘‘Remarks’’ section of the reports.

(2) When SSA determines that a

recipient’s accounting system does not

meet the standards in § 435.21,

additional pertinent information to

further monitor awards may be obtained

upon written notice to the recipient

until such time as the system is brought

up to standard. SSA, in obtaining this

information, will comply with report

clearance requirements of 5 CFR part

1320.

(3) SSA may shade out any line item

on any report if not necessary.

(4) SSA may accept the identical

information from the recipients in

machine readable format or computer

printouts or electronic outputs in lieu of

prescribed formats.

(5) SSA may provide computer or

electronic outputs to recipients when

such expedites or contributes to the

accuracy of reporting.

§ 435.53 Retention and access

requirements for records.

(a) Purpose. This section sets forth the

requirements for record retention and

access to records for awards to

recipients. SSA may not impose any

other record retention or access

requirements upon recipients.

(b) Retention periods. Financial

records, supporting documents,

statistical records, and all other records

pertinent to an award must be retained

for a period of three years from the date

of submission of the final expenditure

report or, for awards that are renewed

quarterly or annually, from the date of

the submission of the quarterly or

annual financial report, as authorized by

SSA. The only exceptions are the

following:

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

started before the expiration of the 3-

year period, the records must be

retained until all litigation, claims or

audit findings involving the records

have been resolved and final action

taken.

(2) Records for real property and

equipment acquired with Federal funds

must be retained for 3 years after final

disposition.

(3) When records are transferred to or

maintained by SSA, the 3-year retention

requirement is not applicable to the

recipient.

(4) Indirect cost rate proposals, cost

allocations plans, etc. as specified in

paragraph (g) of this section.

(c) Use of copies. Copies of original

records may be substituted for the

original records if authorized by SSA.

(d) Records with long term retention

value. SSA will request transfer of

certain records to its custody from

recipients when it determines that the

records possess long term retention

value. However, in order to avoid

duplicate recordkeeping, SSA may make

arrangements for recipients to retain any

records that are continuously needed for

joint use.

(e) Federal access to records. SSA, the

Inspector General, Comptroller General

of the United States, or any of their duly

authorized representatives, have the

right of timely and unrestricted access

to any books, documents, papers, or

other records of recipients that are

pertinent to the awards, in order to

make audits, examinations, excerpts,

transcripts and copies of such

documents. This right also includes

timely and reasonable access to a

recipient’s personnel for the purpose of

interview and discussion related to such

documents. The rights of access in this

paragraph are not limited to the

required retention period, but will last

as long as records are retained.

(f) Public access to records. Unless

required by statute, SSA may not place

restrictions on recipients that limit

public access to the records of recipients

that are pertinent to an award, except

when SSA 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) if the

records had belonged to SSA.

(g) Retention of indirect cost rate

proposals, cost allocations plans, etc.

Paragraphs (g)(1) and (g)(2) of this

section apply to the following types of

documents, and their supporting

records: indirect cost rate computations

or proposals, cost allocation plans, and

any similar accounting computations of

the rate at which a particular group of

costs is chargeable (such as computer

usage chargeback rates or composite

fringe benefit rates).

(1) If submitted for negotiation. If the

recipient submits to SSA or the

subrecipient submits to the recipient the

proposal, plan, or other computation to

form the basis for negotiation of the rate,

then the 3-year retention period for its

supporting records starts on the date of

such submission.

(2) If not submitted for negotiation. If

the recipient is not required to submit

to SSA or the subrecipient is not

required to submit to the recipient the

proposal, plan, or other computation for

negotiation purposes, then the 3-year

retention period for the proposal, plan,

or other computation and its supporting

records starts at the end of the fiscal

year (or other accounting period)

covered by the proposal, plan, or other

computation.

Termination and Enforcement

§ 435.60 Purpose of termination and

enforcement.

Sections 435.61 and 435.62 set forth

uniform suspension, termination and

enforcement procedures.

§ 435.61 Termination.

(a) Awards may be terminated in

whole or in part only under the

following circumstances—

(1) By SSA, if a recipient materially

fails to comply with the terms and

conditions of an award.

(2) By SSA with the consent of the

recipient, in which case the two parties

will agree upon the termination

conditions, including the effective date

and, in the case of partial termination,

the portion to be terminated.

(3) By the recipient upon sending to

SSA written notification setting forth

the reasons for such termination, the

effective date, and, in the case of partial

termination, the portion to be

terminated. However, if SSA determines

in the case of partial termination that

the reduced or modified portion of the

grant will not accomplish the purposes

for which the grant was made, it may

terminate the grant in its entirety under

either paragraph (a)(1) or (a)(2) of this

section.

(b) If costs are allowed under an

award, the responsibilities of the

recipient referred to in § 435.71(a),

including those for property

management as applicable, will be

considered in the termination of the

award, and provision will be made for

continuing responsibilities of the

recipient after termination, as

appropriate.

24784 Federal Register / Vol. 65, No. 82 / Thursday, April 27, 2000 / Proposed Rules

§ 435.62 Enforcement.

(a) Remedies for noncompliance. If a

recipient materially fails to comply with

the terms and conditions of an award,

whether stated in a Federal statute,

regulation, assurance, application, or

notice of award, SSA may, in addition

to imposing any of the special

conditions outlined in § 435.14, take

one or more of the following actions, as

appropriate in the circumstances:

(1) Temporarily withhold cash

payments pending correction of the

deficiency by the recipient or more

severe enforcement action by SSA.

(2) Disallow (that is, deny both use of

funds and any applicable matching

credit for) all or part of the cost of the

activity or action not in compliance.

(3) Wholly or partly suspend or

terminate the current award.

(4) Withhold further awards for the

project or program.

(5) Take other remedies that may be

legally available.

(b) Hearings and appeals. In taking an

enforcement action, SSA must provide

the recipient an opportunity for hearing,

appeal, or other administrative

proceeding to which the recipient is

entitled under any statute or regulation

applicable to the action involved.

(c) Effects of suspension and

termination. Costs of a recipient

resulting from obligations incurred by

the recipient during a suspension or

after termination of an award are not

allowable unless SSA expressly

authorizes them in the notice of

suspension or termination or

subsequently. Other recipient costs

during suspension or after termination

which are necessary and not reasonably

avoidable are allowable if—

(1) The costs result from obligations

which were properly incurred by the

recipient before the effective date of

suspension or termination, are not in

anticipation of it, and in the case of a

termination, are noncancellable.

(2) The costs would be allowable if

the award were not suspended or

expired normally at the end of the

funding period in which the termination

takes effect.

(d) Relationship to debarment and

suspension. The enforcement remedies

identified in this section, including

suspension and termination, do not

preclude a recipient from being subject

to debarment and suspension under

Executive Orders 12549 and 12689.

Subpart D—After-the-Award

Requirements

§ 435.70 Purpose.

Sections 435.71 through 435.73

contain closeout procedures and other

procedures for subsequent

disallowances and adjustments.

§ 435.71 Closeout procedures.

(a) Recipients must submit, within 90

calendar days after the date of

completion of the award, all financial,

performance, and other reports as

required by the terms and conditions of

the award. SSA may approve extensions

when requested by the recipient.

(b) Unless SSA authorizes an

extension, a recipient must liquidate all

obligations incurred under the award

not later than 90 calendar days after the

funding period or the date of

completion as specified in the terms and

conditions of the award or in agency

implementing instructions.

(c) SSA will make prompt payments

to a recipient for allowable reimbursable

costs under the award being closed out.

(d) The recipient must promptly

refund any balances of unobligated cash

that SSA has advanced or paid and that

is not authorized to be retained by the

recipient for use in other projects. OMB

Circular A–129 governs unreturned

amounts that become delinquent debts.

(e) When authorized by the terms and

conditions of the award, SSA will make

a settlement for any upward or

downward adjustments to the Federal

share of costs after closeout reports are

received.

(f) The recipient must account for any

real and personal property acquired

with Federal funds or received from the

Federal Government in accordance with

§§ 435.31 through 435.37.

(g) In the event a final audit has not

been performed prior to the closeout of

an award, SSA will retain the right to

recover an appropriate amount after

fully considering the recommendations

on disallowed costs resulting from the

final audit.

§ 435.72 Subsequent adjustments and

continuing responsibilities.

(a) The closeout of an award does not

affect any of the following:

(1) The right of SSA to disallow costs

and recover funds on the basis of a later

audit or other review.

(2) The obligation of the recipient to

return any funds due as a result of later

refunds, corrections, or other

transactions.

(3) Audit requirements in § 435.26.

(4) Property management

requirements in §§ 435.31 through

435.37.

(5) Records retention as required in

§ 435.53.

(b) After closeout of an award, a

relationship created under an award

may be modified or ended in whole or

in part with the consent of SSA and the

recipient, provided the responsibilities

of the recipient referred to in

§ 435.73(a), including those for property

management as applicable, are

considered and provisions made for

continuing responsibilities of the

recipient, as appropriate.

§ 435.73 Collection of amounts due.

(a) Methods of collection. Any funds

paid to a recipient in excess of the

amount to which the recipient is finally

determined to be entitled under the

terms and conditions of the award

constitute a debt to the Federal

Government. If not paid within a

reasonable period after the demand for

payment, SSA may reduce the debt by:

(1) making an administrative offset

against other requests for

reimbursements;

(2) withholding advance payments

otherwise due to the recipient; or

(3) taking other action permitted by

statute.

(b) Charging of interest. Except as

otherwise provided by law, SSA will

charge interest on an overdue debt in

accordance with 4 CFR Chapter II,

‘‘Federal Claims Collection Standards.’’

Subpart E—Disputes

§ 435.80 Appeal process.

(a) Levels of appeal. Grantee

institutions (grantees) may appeal

certain post-award adverse grant

administration decisions made by SSA

officials in the administration of

discretionary grant programs. SSA has

two levels of appeal:

(1) initial appeal to the Associate

Commissioner for the Office of

Acquisition and Grants (ACOAG) from

an adverse decision rendered by the

Grants Management Officer (GMO); and

(2) final appeal to the Commissioner

of Social Security from an adverse

decision rendered by the ACOAG.

(b) Decisions that may be appealed.

The following types of adverse postaward written decisions by the GMO

may be appealed:

(1) A disallowance or other

determination denying payment of an

amount claimed under an award. This

does not apply to determinations of

award amount or disposition of

unobligated balances, or selection in the

award document of an option for

disposition of program-related income.

(2) A termination of an award for

failure of the grantee to comply with

any law, regulation, assurance, term, or

condition applicable to the award.

(3) A denial of a noncompeting

continuation award under the project

period system of funding where the

denial is for failure to comply with the

Federal Register / Vol. 65, No. 82 / Thursday, April 27, 2000 / Proposed Rules 24785

terms and conditions of a previous

award.

(4) A voiding of an award on the basis

that it was fraudulently obtained or

because the award was not authorized

by statute or regulation.

(c) Notice of adverse decision and

requirements of grantee response. The

Grants Management Officer’s (GMO)

adverse post-award written decision

should include the following statement:

This is the final decision of the Grants

Management Officer. It will become the final

decision of the Social Security

Administration unless you submit a request

for review of this decision to the Associate

Commissioner for the Office of Acquisition

and Grants, 1710 Gwynn Oak Avenue,

Baltimore, Maryland 21207–5279. Your

request for review must be in writing,

include a copy of this decision, and fully

state why you disagree with it. The request

for review must be received by the ACOAG

no later than 30 calendar days after the date

of this decision.

§ 435.81 Initial appeal.

(a) Timeliness of appeal to ACOAG. A

grantee may appeal an adverse decision

rendered by the GMO by submitting to

the ACOAG a written request for review

of the adverse decision. The written

request for review must be received by

the ACOAG no later than 30 calendar

days after the date of the GMO’s adverse

decision. Any request for review that is

received after the thirtieth day will be

dismissed as untimely.

(b) Content of appeal to ACOAG. The

written request for review should fully

explain why the grantee disagrees with

the GMO’s decision, state the pertinent

facts and law relied upon, and provide

any relevant documentation in support

of the grantee’s position.

(c) Decision of ACOAG. The ACOAG,

or the ACOAG’s delegate, will issue a

written decision within 30 calendar

days of the date of receipt of the written

request for review. If the written

decision is adverse to the grantee, the

decision will include the following

statement:

This is the final decision of the Office of

Acquisition and Grants. It will become the

final decision of the Social Security

Administration unless you submit a request

for review of this decision to the

Commissioner of Social Security, Social

Security Administration, Baltimore,

Maryland 21235–0001. Your request for

review must be in writing, include a copy of

this decision, and fully state why you

disagree with it. The request for review must

be received by the Commissioner no later

than 15 calendar days after the date of this

decision. You should also send a copy of the

request for review to the ACOAG.

§ 435.82 Appeal of decision of ACOAG.

(a) Timeliness of appeal to

Commissioner. A grantee may appeal an

adverse decision rendered by the

ACOAG by submitting to the

Commissioner of Social Security a

written request for review of the

ACOAG’s decision. The written request

for review must be received by the

Commissioner no later than 15 calendar

days after the date of the ACOAG’s

adverse decision. Any request for

review that is filed after the fifteenth

day will be dismissed as untimely. The

grantee should also send a copy of the

request for review to the ACOAG.

(b) Content of appeal to

Commissioner. The written request for

review should fully explain why the

grantee disagrees with the ACOAG’s

decision, state the pertinent facts and

law relied upon, and provide any

relevant documentation in support of

the grantee’s position. A copy of the

ACOAG’s decision should also be

appended to the request for review.

(c) Decision of Commissioner. The

Commissioner, or the Commissioner’s

delegate, will issue a written decision

on the request for review. Generally, the

decision will be issued within 90

calendar days of the date of receipt of

the request for review. If a decision is

not issued within 90 days, the

Commissioner, or the Commissioner’s

delegate, will inform the grantee in

writing when a decision can be

expected.

(d) Final decision of SSA. The

decision of the Commissioner, or of the

Commissioner’s delegate, shall be the

final decision of the Social Security

Administration on the matter(s) in

dispute.

Appendix A to Part 435—Contract

Provisions

All contracts, awarded by a recipient

including small purchases, must contain the

following provisions as applicable:

1. Equal Employment Opportunity—All

contracts must contain a provision requiring

compliance with Executive Order 11246,

‘‘Equal Employment Opportunity,’’ as

amended by Executive Order 11375,

‘‘Amending Executive Order 11246 Relating

to Equal Employment Opportunity,’’ and as

supplemented by regulations at 41 CFR part

60, ‘‘Office of Federal Contract Compliance

Programs, Equal Employment Opportunity,

Department of Labor.’’

2. Copeland ‘‘Anti-Kickback’’ Act (18

U.S.C. 874 and 40 U.S.C. 276c)—All

contracts and subgrants in excess of $2000

for construction or repair awarded by

recipients and subrecipients must include a

provision for compliance with the Copeland

‘‘Anti-Kickback’’ Act (18 U.S.C. 874), as

supplemented by Department of Labor

regulations (29 CFR part 3, ‘‘Contractors and

Subcontractors on Public Building or Public

Work Financed in Whole or in Part by Loans

or Grants from the United States’’). The Act

provides that each contractor or subrecipient

will be prohibited from inducing, by any

means, any person employed in the

construction, completion, or repair of public

work, to give up any part of the

compensation to which he is otherwise

entitled. The recipient must report all

suspected or reported violations to the

Federal awarding agency.

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

276a to a–7)—When required by Federal

program legislation, all construction

contracts awarded by the recipients and

subrecipients of more than $2000 must

include a provision for compliance with the

Davis-Bacon Act (40 U.S.C. 276a to a–7) and

as supplemented by Department of Labor

regulations (29 CFR part 5, ‘‘Labor Standards

Provisions Applicable to Contracts Governing

Federally Financed and Assisted

Construction’’). Under this Act, contractors

are required to pay wages to laborers and

mechanics at a rate not less than the

minimum wages specified in a wage

determination made by the Secretary of

Labor. In addition, contractors are required to

pay wages not less than once a week. The

recipient must place a copy of the current

prevailing wage determination issued by the

Department of Labor in each solicitation and

the award of a contract will be conditioned

upon the acceptance of the wage

determination. The recipient must report all

suspected or reported violations to the

Federal awarding agency.

4. Contract Work Hours and Safety

Standards Act (40 U.S.C. 327–333)—Where

applicable, all contracts awarded by

recipients in excess of $100,000 for

construction contracts and for other contracts

that involve the employment of mechanics or

laborers must include a provision for

compliance with Sections 102 and 107 of the

Contract Work Hours and Safety Standards

Act (40 U.S.C. 327–333), as supplemented by

Department of Labor regulations (29 CFR part

5). Under Section 102 of the Act, each

contractor is required to compute the wages

of every mechanic and laborer on the basis

of a standard work week of 40 hours. Work

in excess of the standard work week is

permissible provided that the worker is

compensated at a rate of not less than 11⁄2

times the basic rate of pay for all hours

worked in excess of 40 hours in the work

week. Section 107 of the Act is applicable to

construction work and provides that no

laborer or mechanic will be required to work

in surroundings or under working conditions

which are unsanitary, hazardous or

dangerous. These requirements do not apply

to the purchases of supplies or materials or

articles ordinarily available on the open

market, or contracts for transportation or

transmission of intelligence.

5. Rights to Inventions Made Under a

Contract or Agreement—Contracts or

agreements for the performance of

experimental, developmental, or research

work must provide for the rights of the

Federal Government and the recipient in any

resulting invention in accordance with 37

CFR part 401, ‘‘Rights to Inventions Made by

Nonprofit Organizations and Small Business

24786 Federal Register / Vol. 65, No. 82 / Thursday, April 27, 2000 / Proposed Rules

Firms Under Government Grants, Contracts

and Cooperative Agreements,’’ and any

implementing regulations issued by the

awarding agency.

6. Clean Air Act (42 U.S.C. 7401 et seq.)

and the Federal Water Pollution Control Act

(33 U.S.C. 1251 et seq.), as amended—

Contracts and subgrants of amounts in excess

of $100,000 must contain a provision that

requires the recipient to agree to comply with

all applicable standards, orders or regulations

issued pursuant to the Clean Air Act (42

U.S.C. 7401 et seq.) and the Federal Water

Pollution Control Act as amended (33 U.S.C.

1251 et seq.). Violations must be reported to

the Federal awarding agency and the

Regional Office of the Environmental

Protection Agency (EPA).

7. Byrd Anti-Lobbying Amendment (31

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

for an award of more than $100,000 must file

the required certification. Each tier certifies

to the tier above that it will not and has not

used Federal appropriated funds to pay any

person or organization for influencing or

attempting to influence an officer or

employee of any agency, a member of

Congress, officer or employee of Congress, or

an employee of a member of Congress in

connection with obtaining any Federal

contract, grant or any other award covered by

31 U.S.C. 1352. Each tier must also disclose

any lobbying with non-Federal funds that

takes place in connection with obtaining any

Federal award. Such disclosures are

forwarded from tier to tier up to the

recipient.

8. Debarment and Suspension (Executive

Orders 12549 and 12689)—No contract will

be made to parties listed on the General

Services Administration’s List of Parties

Excluded from Federal Procurement or

Nonprocurement Programs in accordance

with Executive Orders 12549 and 12689,

‘‘Debarment and Suspension.’’ This list

contains the names of parties debarred,

suspended, or otherwise excluded by

agencies, and contractors declared ineligible

under statutory or regulatory authority other

than Executive Order 12549. Contractors

with awards that exceed the simplified

acquisition threshold must provide the

required certification regarding its exclusion

status and that of its principal employees.

[FR Doc. 00–9399 Filed 4–26–00; 8:45 am]

BILLING CODE 4191–02–U