Federal Register / Vol. 60, No. 47 / Friday, March 10, 1995 / Rules and Regulations 13055

Source of flooding and location

#Depth in

feet above

ground.

*Elevation

in feet

(NGVD)

Approximately 75 feet upstream of

Rainbow Drive ................................ *224

Maps available for inspection at the

Springdale Town Hall, 2915 Platt

Spring Road, Springdale, South

Carolina.

(Catalog of Federal Domestic Assistance No.

83.100, ‘‘Flood Insurance.’’)

Dated: March 1, 1995.

Richard T. Moore,

Associate Director for Mitigation.

[FR Doc. 95–5973 Filed 3–9–95; 8:45 am]

BILLING CODE 6718–03–P

CORPORATION FOR NATIONAL AND

COMMUNITY SERVICE

45 CFR Part 2543

Uniform Administrative Requirements

for Grants and Agreements With

Institutions of Higher Education,

Hospitals and Other Non-Profit

Organizations

AGENCY: Corporation for National and

Community Service.

ACTION: Final rule.

SUMMARY: This final rule amends the

Corporation for National and

Community Services regulations to

incorporate the changes established by

revised OMB Circular 1–110, ‘‘Uniform

Administrative Requirements for Grants

and Agreements with Institutions of

Higher Education, Hospitals and Other

Non-Profit Organizations,’’ published by

the Office of Management and Budget

(OMB) on November 29, 1993.

Consistent with the Circular, this rule

applies to Corporation for National and

Community Service awards to

institutions of higher education,

hospitals, and other non-profit

organizations.

EFFECTIVE DATE: March 10, 1995.

ADDRESSES: The Corporation for

National and Community Service, 1201

New York Ave. NW., Washington, DC.

20525.

FOR FURTHER INFORMATION CONTACT: Rina

Tucker, (202) 606–5000 x257 between

the hours of 9 a.m. and 5 p.m. This

document will be made available in an

alternative format upon request.

SUPPLEMENTARY INFORMATION:

I. Background and Purpose

In November of 1990, OMB

established an interagency task force to

review the Circular with a view toward

its revision based on recommendations

solicited from affected organizations

such as universities and other non-profit

groups. The task force developed a

proposed revision of the Circular, which

OMB published on August 27, 1992 (57

FR 39018). After considering the over

200 comments from a wide variety of

federal and non-federal respondents,

OMB published the final revised

Circular in the Federal Register on

November 29, 1993 (58 FR 62992).

OMB Circular A–110 sets forth

government-wide standards governing

Federal agency administration of grants

and other agreements with institutions

of higher education, hospitals, and other

non-profit organizations. Federal

agencies must apply the provisions of

the Circular in making awards to the

covered entities; all primary recipients

(including governments) of Federal

awards must also apply the Circular’s

provisions to any subawards they make

to such entities. Those provisions that

affect Federal agencies were effective on

December 29, 1993 (58 FR 62992–93).

With respect to the Circular’s

application to recipients of Federal

agency awards, OMB’s notice directed

each affect agency to promulgate its own

rules adopting the provisions of the

Circular (58 FR 62992–93).

Accordingly, the Corporation is

publishing this final rule whose primary

purpose is to incorporate the provisions

of OMB Circular A–110 into the

Corporation’s grants administration

regulations at 45 CFR part 25.

Consistent with the Circular, this rule

applies to Corporation awards made to

institutions of higher education,

hospitals and other non-profit

organizations.

II. Regulatory Impact Analysis

In keeping with the requirements of

44 U.S.C. 3504(h), the information

collection requirements contained in

this rule have been approved by OMB

as Standard Forms. This rule will not

have a substantial impact on a

significant number of small entities,

thus a regulatory flexibility analysis has

not been prepared pursuant to the

Regulatory Flexibility Act, 5 U.S.C. 601

et seq. The agency has determined that

this rule does not have sufficient

federalism implications to warrant the

preparation of a Federalism Assessment

pursuant to Executive Order 12612. In

addition, the Agency has determined

that implementation of this action will

not have any significant impact on the

quality of the human environment

pursuant to the National Environmental

Policy Act.

List of Subjects in 45 CFR Part 2543

Accounting, Administrative practice

and procedures, Grant programs—

health, Grant programs—social, Grants

administration, Reporting and

recordkeeping requirements.

Dated: March 2, 1995.

Terry Russell,

General Counsel.

Accordingly, as set forth in the

preamble, the Corporation amends title

45, chapter XXV of the Code of Federal

Regulations by adding part 2543 to read

as follows:

PART 2543—GRANTS AND

AGREEMENTS WITH INSTITUTIONS

OF HIGHER EDUCATION, HOSPITALS,

AND OTHER NON-PROFIT

ORGANIZATIONS

Subpart A—General

Sec.

2543.1 Purpose.

2543.2 Definitions.

2543.3 Effect on other issuances.

2543.4 Deviations.

2543.5 Subawards.

Subpart B—Pre-Award Requirements

2543.10 Purpose.

2543.11 Pre-award policies.

2543.12 Forms for applying for Federal

assistance.

2543.13 Debarment and suspension.

2543.14 Special award conditions.

2543.15 Metric system of measurement.

2543.16 Resource Conservation and

Recovery Act.

2543.17 Certifications and representations.

Subpart C—Post-Award Requirements

Financial and Program Management

2543.20 Purpose of financial and program

management.

2543.21 Standards for financial

management systems.

2543.22 Payment.

2543.23 Cost sharing or matching.

2543.24 Program income.

2543.25 Revision of budget and program

plans.

2543.26 Non-Federal audits.

2543.27 Allowable costs.

2543.28 Period of availability of funds.

Property Standards

2543.30 Purpose of property standards.

2543.31 Insurance coverage.

2543.32 Real property.

2543.33 Federally-owned and exempt

property.

2543.34 Equipment.

2543.35 Supplies and other expendable

property.

2543.36 Intangible property.

2543.37 Property trust relationship.

Procurement Standards

2543.40 Purpose of procurement standards.

2543.41 Recipient responsibilities.
13056 Federal Register / Vol. 60, No. 47 / Friday, March 10, 1995 / Rules and Regulations

2543.42 Codes of conduct.

2543.43 Competition.

2543.44 Procurement procedures.

2543.45 Cost and price analysis.

2543.46 Procurement records.

2543.47 Contract administration.

2543.48 Contract provisions.

Reports and Records

2543.50 Purpose of reports and records.

2543.51 Monitoring and reporting program

performance.

2543.52 Financial reporting.

2543.53 Retention and access requirements

for records.

Termination and Enforcement

2543.60 Purpose of termination and

enforcement.

2543.61 Termination.

2543.62 Enforcement.

Subpart D—After-the-Award Requirements

2543.70 Purpose.

2543.71 Closeout procedures.

2543.72 Subsequent adjustments and

continuing responsibilities.

2543.73 Collection of amounts due.

Subpart E—Statutory Compliance

2543.80 Contract Provisions.

2543.81 Equal Employment Opportunity.

2543.82 Copeland Anti-Kickback Act

2543.83 Davis-Bacon Act

2543.84 Contract Work Hours and Safety

Standards Act

2543.85 Right to Inventions Made Under

Contract or Agreement

2543.86 Clean Air Act and the Federal

Water Pollution Control Act

2543.87 Byrd Anti-Lobbying Amendment

2543.88 Debarment and Suspension

Authority: 42 U.S.C. 12501 et seq.

Subpart A—General

§ 2543.1 Purpose.

This Circular establishes uniform

administrative requirements for Federal

grants and agreements awarded to

institutions of higher education,

hospitals, and other non-profit

organizations. Federal awarding

agencies shall not impose additional or

inconsistent requirements, except as

provided in Sections 2543.4, and

2543.14 or unless specifically required

by Federal statute or executive order.

Non-profit organizations that implement

Federal programs for the States are also

subject to State requirements.

§ 2543.2 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, shall

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 a Federal awarding agency

determines that all applicable

administrative actions and all required

work of the award have been completed

by the recipient and Federal awarding

agency.

(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 Federal

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 $5,000 or more per

unit. However, consistent with recipient

policy, lower limits may be established.

(m) Excess property means property

under the control of any Federal

awarding agency 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 the

Federal awarding agency 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) Federal awarding agency 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
Federal Register / Vol. 60, No. 47 / Friday, March 10, 1995 / Rules and Regulations 13057

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. 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. 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

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 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 paragraphs

§ 2543.24 (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 Federal awarding agency

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 Federal awarding agencies 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 the Federal awarding

agency. The term does not include

government-owned contractor-operated

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 small purchase threshold fixed at 41

U.S.C. 403(11) (currently $25,000).

(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).

(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 a

Federal awarding agency that

temporarily withdraws Federal

sponsorship under an award, pending

corrective action by the recipient or

pending a decision to terminate the

award by the Federal awarding agency.

Suspension of an award is a separate

action from suspension under Federal

agency regulations implementing E.O.s

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
13058 Federal Register / Vol. 60, No. 47 / Friday, March 10, 1995 / Rules and Regulations

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 the

Federal awarding agency 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 where by funds are advanced

to the recipient to cover its estimated

disbursement needs for a given initial

period.

§ 2543.3 Effect on other issuances.

For awards subject to this Circular, all

administrative requirements of codified

program regulations, program manuals,

handbooks and other nonregulatory

materials which are inconsistent with

the requirements of this Circular shall

be superseded, except to the extent they

are required by statute, or authorized in

accordance with the deviations

provision in Section § 2543.4.

§ 2543.4 Deviations.

The Office of Management and Budget

(OMB) may grant exceptions for classes

of grants or recipients subject to the

requirements of this Circular when

exceptions are not prohibited by statute.

However, in the interest of maximum

uniformity, exceptions from the

requirements of this Circular shall be

permitted only in unusual

circumstances. Federal awarding

agencies may apply more restrictive

requirements to a class of recipients

when approved by OMB. Federal

awarding agencies 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 Federal awarding

agencies.

§ 2543.5 Subawards.

Unless sections of this Circular

specifically exclude subrecipients from

coverage, the provisions of this Circular

shall be applied to subrecipients

performing work under awards if such

subrecipients are institutions of higher

education, hospitals or other non-profit

organizations. State and local

government subrecipients are subject to

the provisions of regulations

implementing the grants management

common rule, ‘‘Uniform Administrative

Requirements for Grants and

Cooperative Agreements to State and

Local Governments,’’ published at 53 FR

8034.

Subpart B—Pre-Award Requirements

§ 2543.10 Purpose.

Sections § 2543.11 through § 2543.17

prescribes forms and instructions and

other pre-award matters to be used in

applying for Federal awards.

§ 2543.11 Pre-award policies.

(a) Use of Grants and Cooperative

Agreements, and Contracts. In each

instance, the Federal awarding agency

shall 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. A grant or cooperative

agreement shall 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.’’

Contracts shall 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.

Federal awarding agencies shall notify

the public of its intended funding

priorities for discretionary grant

programs, unless funding priorities are

established by Federal statute.

§ 2543.12 Forms for applying for Federal

assistance.

(a) Federal awarding agencies shall

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 the Federal awarding agency in

place of or as a supplement to the

Standard Form 424 (SF–424) series.

(b) Applicants shall use the SF–424

series or those forms and instructions

prescribed by the Federal awarding

agency.

(c) For Federal programs covered by

E.O. 12372, ‘‘Intergovernmental Review

of Federal Programs,’’ the applicant

shall 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

the Federal awarding agency or the

Catalog of Federal Domestic Assistance.

The SPOC shall advise the applicant

whether the program for which

application is made has been selected

by that State for review.

(d) Federal awarding agencies that do

not use the SF–424 form should indicate

whether the application is subject to

review by the State under E.O. 12372.

§ 2543.13 Debarment and suspension.

Federal awarding agencies and

recipients shall comply with the

nonprocurement debarment and

suspension common rule implementing

E.O.s 12549 and 12689, ‘‘Debarment and

Suspension.’’ This common rule

restricts subawards and contracts with

certain parties that are debarred,

suspended or otherwise excluded from

or ineligible for participation in Federal

assistance programs or activities.

§ 2543.14 Special award conditions.

If an applicant or recipient:

(a) has a history of poor performance,

(b) is not financially stable,

(c) has a management system that

does not meet the standards prescribed

in this Circular,

(d) has not conformed to the terms

and conditions of a previous award, or

(e) is not otherwise responsible,

Federal awarding agencies may impose

additional requirements as needed,

provided that such applicant or

recipient is notified in writing as to: the

nature of the additional requirements,

the reason why the additional

requirements are being imposed, the

nature of the corrective action needed,

the time allowed for completing the

corrective actions, and the method for

requesting reconsideration of the

additional requirements imposed. Any

special conditions shall be promptly

removed once the conditions that

prompted them have been corrected.

§ 2543.15 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
Federal Register / Vol. 60, No. 47 / Friday, March 10, 1995 / Rules and Regulations 13059

federally-funded activities. Federal

awarding agencies shall follow the

provisions of E.O. 12770, ‘‘Metric Usage

in Federal Government Programs.’’

§ 2543.16 Resource Conservation and

Recovery Act.

Under the Act Resource Conservation

and Recovery Act (42 U.S.C. 6962), any

State agency or agency of a political

subdivision of a State which is using

appropriated Federal funds must

comply with Section 6002. 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 non-profit organizations

that receive direct Federal awards or

other Federal funds shall give

preference in their procurement

programs funded with Federal funds to

the purchase of recycled products

pursuant to the EPA guidelines.

§ 2543.17 Certifications and

representations.

Unless prohibited by statute or

codified regulation, each Federal

awarding agency is authorized and

encouraged to 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 shall 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

§ 2543.20 Purpose of financial and

program management.

Sections 2543.21 through 2543.25

prescribe standards for financial

management systems, methods for

making payments and rules for:

satisfying cost sharing and matching

requirements, accounting for program

income, budget revision approvals,

making audits, determining allowability

of cost, and establishing fund

availability.

§ 2543.21 Standards for financial

management systems.

(a) Federal awarding agencies shall

require recipients to relate financial data

to performance data and develop unit

cost information whenever practical.

(b) Recipients’ financial management

systems shall 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

§ 2543.51. If a Federal awarding agency

requires reporting on an accrual basis

from a recipient that maintains its

records on other than an accrual basis,

the recipient shall 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 shall 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 shall

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) govern, payment

methods of State agencies,

instrumentalities, and fiscal agents shall

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) Where the Federal Government

guarantees or insures the repayment of

money borrowed by the recipient, the

Federal awarding agency, 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) The Federal awarding agency may

require adequate fidelity bond coverage

where the recipient lacks sufficient

coverage to protect the Federal

Government’s interest.

(e) Where bonds are required in the

situations described above, the bonds

shall 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.’’

§ 2543.22 Payment.

(a) Payment methods shall 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 shall be consistent

with Treasury-State CMIA agreements

or default procedures codified at 31 CFR

part 205.

(b) Recipients are to be paid in

advance, provided they maintain or

demonstrate the willingness to

maintain:

(1) written procedures that minimize

the time elapsing between the transfer of

funds and disbursement by the

recipient, and

(2) financial management systems that

meet the standards for fund control and

accountability as established in

§ 2543.21. Cash advances to a recipient

organization shall 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 shall 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) Whenever possible, advances shall

be consolidated to cover anticipated

cash needs for all awards made by the

Federal awarding agency 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 shall be authorized to

submit requests for advances and

reimbursements at least monthly when

electronic fund transfers are not used.
13060 Federal Register / Vol. 60, No. 47 / Friday, March 10, 1995 / Rules and Regulations

(d) Requests for Treasury check

advance payment shall 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 Federal

awarding agency instructions for

electronic funds transfer.

(e) Reimbursement is the preferred

method when the requirements in

paragraph (b) cannot be met. Federal

awarding agencies 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, the Federal awarding agency

shall make payment within 30 days after

receipt of the billing, unless the billing

is improper.

(2) Recipients shall be authorized to

submit request for reimbursement at

least monthly when electronic funds

transfers are not used.

(f) If a recipient cannot meet the

criteria for advance payments and the

Federal awarding agency has

determined that reimbursement is not

feasible because the recipient lacks

sufficient working capital, the Federal

awarding agency may provide cash on a

working capital advance basis. Under

this procedure, the Federal awarding

agency shall advance cash to the

recipient to cover its estimated

disbursement needs for an initial period

generally geared to the awardee’s

disbursing cycle. Thereafter, the Federal

awarding agency shall reimburse the

recipient for its actual cash

disbursements. The working capital

advance method of payment shall not be

used for recipients unwilling or unable

to provide timely advances to their

subrecipient to meet the subrecipient’s

actual cash disbursements.

(g) To the extent available, recipients

shall disburse funds available 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) Unless otherwise required by

statute, Federal awarding agencies shall

not withhold payments for proper

charges made by recipients at any time

during the project period unless:

(1) A recipient has failed to comply

with the project objectives, the terms

and conditions of the award, or Federal

reporting requirements, or

(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, the Federal

awarding agency may, upon reasonable

notice, inform the recipient that

payments shall 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 are as follows:

(1) Except for situations described in

paragraph (i)(2), Federal awarding

agencies shall 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 shall be

deposited and maintained in insured

accounts whenever possible.

(j) Consistent with the national goal of

expanding the opportunities for womenowned and minority-owned business

enterprises, recipients shall 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) Recipients shall maintain

advances of Federal funds in interest

bearing accounts, unless:

(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) For those entities where CMIA and

its implementing regulations do not

apply, interest earned on Federal

advances deposited in interest bearing

accounts shall 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 shall

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 the Federal

awarding agency, it waives its right to

recover the interest under CMIA.

(m) Except as noted elsewhere in this

Circular, only the following forms shall

be authorized for the recipients in

requesting advances and

reimbursements. Federal agencies shall

not require more than an original and

two copies of these forms.

(1) SF–270, Request for Advance or

Reimbursement. Each Federal awarding

agency shall adopt the SF–270 as a

standard form for all nonconstruction

programs when electronic funds transfer

or predetermined advance methods are

not used. Federal awarding agencies,

however, have 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. Each Federal

awarding agency shall adopt the SF–271

as the standard form to be used for

requesting reimbursement for

construction programs. However, a

Federal awarding agency may substitute

the SF–270 when the Federal awarding

agency determines that it provides

adequate information to meet Federal

needs.

§ 2543.23 Cost sharing or matching.

(a) All contributions, including cash

and third party in-kind, shall 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 the Federal

awarding agency.

(7) Conform to other provisions of this

Circular, as applicable.

(b) Unrecovered indirect costs may be

included as part of cost sharing or

matching only with the prior approval

of the Federal awarding agency.

(c) Values for recipient contributions

of services and property shall be

established in accordance with the

applicable cost principles. If a Federal
Federal Register / Vol. 60, No. 47 / Friday, March 10, 1995 / Rules and Regulations 13061

awarding agency authorizes recipients

to donate buildings or land for

construction/facilities acquisition

projects or long-term use, the value of

the donated property for cost sharing or

matching shall be the lesser of:

(1) The certified value of the

remaining life of the property recorded

in the recipient’s accounting records at

the time of donation, or.

(2) The current fair market value.

However, when there is sufficient

justification, the Federal awarding

agency 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 shall 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 shall 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 shall 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

share shall be reasonable and shall 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:

(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, or.

(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 the Federal awarding

agency has approved the charges.

(h) The value of donated property

shall be determined in accordance with

the usual accounting policies of the

recipient, with the following

qualifications.

(1) The value of donated land and

buildings shall 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

shall 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 shall

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

shall 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 shall 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 shall be

documented.

§ 2543.24 Program income.

(a) Federal awarding agencies shall

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) Except as provided in paragraph

(h) below, program income earned

during the project period shall be

retained by the recipient and, in

accordance with Federal awarding

agency regulations or the terms and

conditions of the award, shall be used

in one or more of the ways listed in the

following:

(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) When an agency authorizes the

disposition of program income as

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

program income in excess of any limits

stipulated shall be used in accordance

with paragraph (b)(3).

(d) In the event that the Federal

awarding agency does not specify in its

regulations or the terms and conditions

of the award how program income is to

be used, paragraph (b)(3) shall apply

automatically to all projects or programs

except research. For awards that support

research, paragraph (b)(1) shall apply

automatically unless the awarding

agency indicates in the terms and

conditions another alternative on the

award or the recipient is subject to

special award conditions, as indicated

in § 2543.14.

(e) Unless Federal awarding agency

regulations or the terms and conditions

of the award provide otherwise,

recipients shall have no obligation to

the Federal Government regarding

program income earned after the end of

the project period.

(f) If authorized by Federal awarding

agency 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 the sale of property

shall be handled in accordance with the

requirements of the Property Standards.

(See § 2543.28 through § 2543.36.)

(h) Unless Federal awarding agency

regulations or the terms and condition

of the award provide otherwise,

recipients shall 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.

§ 2543.25 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 Federal awarding

agency requirements. It shall be related
13062 Federal Register / Vol. 60, No. 47 / Friday, March 10, 1995 / Rules and Regulations

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 shall request prior approvals

from Federal awarding agencies for one

or more of the following program or

budget related reasons:

(1) Change in the scope or the

objective of the project or program (even

if there is no associated budget revision

requiring prior written approval).

(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 the Federal awarding

agency.

(6) The inclusion, unless waived by

the Federal awarding agency, of costs

that require prior approval in

accordance with OMB Circular A–21,

‘‘Cost Principles for Institutions of

Higher Education,’’ 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

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, Federal awarding agencies are

authorized, at their option, to waive

cost-related and administrative prior

written approvals required by this

Circular 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

the Federal awarding agency. All preaward costs are incurred at the

recipient’s risk (i.e., the Federal

awarding agency 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 the Federal awarding agency 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 the Federal awarding agency

provides otherwise in the award or in

the agency’s regulations, the prior

approval requirements described in

paragraph (e) are automatically waived

(i.e., recipients need not obtain such

prior approvals) unless one of the

conditions included in paragraph (e)(2)

applies.

(f) The Federal awarding agency 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 the Federal awarding

agency. No Federal awarding agency

shall permit a transfer 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), do

not require prior approval.

(h) For construction awards,

recipients shall request prior written

approval promptly from Federal

awarding agencies for budget revisions

whenever (1), (2) or (3) 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 Section

§ 2543.27.

(i) No other prior approval

requirements for specific items may be

imposed unless a deviation has been

approved by OMB.

(j) When a Federal awarding agency

makes an award that provides support

for both construction and

nonconstruction work, the Federal

awarding agency may require the

recipient to request prior approval from

the Federal awarding agency before

making any fund or budget transfers

between the two types of work

supported.

(k) For both construction and

nonconstruction awards, Federal

awarding agencies shall require

recipients to notify the Federal

awarding agency 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 $5,000 or five

percent of the Federal award, whichever

is greater. This notification shall not be

required if an application for additional

funding is submitted for a continuation

award.

(l) When requesting approval for

budget revisions, recipients shall use

the budget forms that were used in the

application unless the Federal awarding

agency indicates a letter of request

suffices.

(m) Within 30 calendar days from the

date of receipt of the request for budget

revisions, Federal awarding agencies

shall review the request and notify the

recipient whether the budget revisions

have been approved. If the revision is

still under consideration at the end of

30 calendar days, the Federal awarding

agency shall inform the recipient in

writing of the date when the recipient

may expect the decision.

§ 2543.26 Non-Federal audits.

(a) Recipients and subrecipients that

are institutions of higher education or

other non-profit organizations shall be

subject to the audit requirements

contained in OMB Circular A–133,

‘‘Audits of Institutions of Higher

Education and Other Non-Profit

Institutions.’’

(b) State and local governments shall

be subject to the audit requirements

contained in the Single Audit Act (31
Federal Register / Vol. 60, No. 47 / Friday, March 10, 1995 / Rules and Regulations 13063

U.S.C. 7501–7) and Federal awarding

agency regulations implementing OMB

Circular A–128, ‘‘Audits of State and

Local Governments.’’

(c) Hospitals not covered by the audit

provisions of OMB Circular A–133 shall

be subject to the audit requirements of

the Federal awarding agencies.

(d) Commercial organizations shall be

subject to the audit requirements of the

Federal awarding agency or the prime

recipient as incorporated into the award

document.

§ 2543.27 Allowable costs.

For each kind of recipient, there is a

set of Federal principles for determining

allowable costs. Allowability of costs

shall be determined in accordance with

the cost principles applicable to the

entity incurring the costs. Thus,

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

and Local Governments.’’ The

allowability of costs incurred by nonprofit organizations is determined in

accordance with the provisions of OMB

Circular A–122, ‘‘Cost Principles for

Non-Profit Organizations.’’ The

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.’’

The 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.’’

The 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.

§ 2543.28 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 the Federal awarding

agency.

Property Standards

§ 2543.30 Purpose of property standards.

Sections 2543.31 through 2543.37 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. Federal

awarding agencies shall require

recipients to observe these standards

under awards and shall 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

§ 2543.31 through § 2543.37.

§ 2543.31 Insurance coverage.

Recipients shall, 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.

§ 2543.32 Real property.

Each Federal awarding agency shall

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, shall contain the

following:

(a) Title to real property shall vest in

the recipient subject to the condition

that the recipient shall use the real

property for the authorized purpose of

the project as long as it is needed and

shall not encumber the property without

approval of the Federal awarding

agency.

(b) The recipient shall obtain written

approval by the Federal awarding

agency for the use of real property in

other federally-sponsored projects when

the recipient determines that the

property is no longer needed for the

purpose of the original project. Use in

other projects shall be limited to those

under federally-sponsored projects (i.e.,

awards) or programs that have purposes

consistent with those authorized for

support by the Federal awarding agency.

(c) When the real property is no

longer needed as provided in

paragraphs (a) and (b), the recipient

shall request disposition instructions

from the Federal awarding agency or its

successor Federal awarding agency. The

Federal awarding agency shall 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 the Federal awarding

agency 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 shall 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 shall be entitled to

compensation for its attributable

percentage of the current fair market

value of the property.

§ 2543.33 Federally-owned and exempt

property.

(a) Federally-owned property.

(1) Title to federally-owned property

remains vested in the Federal

Government. Recipients shall submit

annually an inventory listing of

federally-owned property in their

custody to the Federal awarding agency.

Upon completion of the award or when

the property is no longer needed, the

recipient shall report the property to the

Federal awarding agency for further

Federal agency utilization.

(2) If the Federal awarding agency has

no further need for the property, it shall

be declared excess and reported to the

General Services Administration, unless

the Federal awarding agency has

statutory authority to dispose of the

property by alternative methods (e.g.,

the authority provided by the Federal

Technology Transfer Act (15 U.S.C.

3710(I)) to donate research equipment to

educational and non-profit

organizations in accordance with E.O.

12821, ‘‘Improving Mathematics and

Science Education in Support of the

National Education Goals’’).

Appropriate instructions shall be issued

to the recipient by the Federal awarding

agency.

(b) Exempt property. When statutory

authority exists, the Federal awarding

agency 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 the Federal awarding agency

considers appropriate. Such property is

‘‘exempt property.’’ Should a Federal

awarding agency not establish

conditions, title to exempt property

upon acquisition shall vest in the

recipient without further obligation to

the Federal Government.
13064 Federal Register / Vol. 60, No. 47 / Friday, March 10, 1995 / Rules and Regulations

§ 2543.34 Equipment.

(a) Title to equipment acquired by a

recipient with Federal funds shall vest

in the recipient, subject to conditions of

this section.

(b) The recipient shall 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 shall 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 shall not encumber

the property without approval of the

Federal awarding agency. When no

longer needed for the original project or

program, the recipient shall use the

equipment in connection with its other

federally-sponsored activities, in the

following order of priority:

(1) Activities sponsored by the

Federal awarding agency which funded

the original project; 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

shall 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 shall be

given to other projects or programs

sponsored by the Federal awarding

agency that financed the equipment;

second preference shall 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

shall be permissible if authorized by the

Federal awarding agency. User charges

shall 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 the

Federal awarding agency.

(f) The recipient’s property

management standards for equipment

acquired with Federal funds and

federally-owned equipment shall

include all of the following:

(1) Equipment records shall be

maintained accurately and shall 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.

(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 shall be identified to

indicate Federal ownership.

(3) A physical inventory of equipment

shall 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 shall be

investigated to determine the causes of

the difference. The recipient shall, in

connection with the inventory, verify

the existence, current utilization, and

continued need for the equipment.

(4) A control system shall be in effect

to insure adequate safeguards to prevent

loss, damage, or theft of the equipment.

Any loss, damage, or theft of equipment

shall be investigated and fully

documented; if the equipment was

owned by the Federal Government, the

recipient shall promptly notify the

Federal awarding agency.

(5) Adequate maintenance procedures

shall be implemented to keep the

equipment in good condition.

(6) Where the recipient is authorized

or required to sell the equipment,

proper sales procedures shall 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 $5,000 or

more, the recipient may retain the

equipment for other uses provided that

compensation is made to the original

Federal awarding agency or its

successor. The amount of compensation

shall 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

shall request disposition instructions

from the Federal awarding agency. The

Federal awarding agency shall

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 shall be reported to the

General Services Administration by the

Federal awarding agency to determine

whether a requirement for the

equipment exists in other Federal

agencies. The Federal awarding agency

shall issue instructions to the recipient

no later than 120 calendar days after the

recipient’s request and the following

procedures shall govern.

(1) If so instructed or if disposition

instructions are not issued within 120

calendar days after the recipient’s

request, the recipient shall sell the

equipment and reimburse the Federal

awarding agency 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 shall

be 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 shall 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 shall be reimbursed by the

Federal awarding agency for such costs

incurred in its disposition.

(4) The Federal awarding agency 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

transfer shall be subject to the following

standards.

(i) The equipment shall be

appropriately identified in the award or

otherwise made known to the recipient

in writing.

(ii) The Federal awarding agency shall

issue disposition instructions within
Federal Register / Vol. 60, No. 47 / Friday, March 10, 1995 / Rules and Regulations 13065

120 calendar days after receipt of a final

inventory. The final inventory shall list

all equipment acquired with grant funds

and federally-owned equipment. If the

Federal awarding agency fails to issue

disposition instructions within the 120

calendar day period, the recipient shall

apply the standards of this section, as

appropriate.

(iii) When the Federal awarding

agency exercises its right to take title,

the equipment shall be subject to the

provisions for federally-owned

equipment.

§ 2543.35 Supplies and other expendable

property.

(a) Title to supplies and other

expendable property shall vest in the

recipient upon acquisition. If there is a

residual inventory of unused supplies

exceeding $5,000 in total aggregate

value upon termination or completion

of the project or program and the

supplies are not needed for any other

federally-sponsored project or program,

the recipient shall retain the supplies

for use on non-Federal sponsored

activities or sell them, but shall, in

either case, compensate the Federal

Government for its share. The amount of

compensation shall be computed in the

same manner as for equipment.

(b) The recipient shall 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.

§ 2543.36 Intangible property.

(a) The recipient may copyright any

work that is subject to copyright and

was developed, or for which ownership

was purchased, under an award. The

Federal awarding agency(ies) reserve 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) Recipients are subject to

applicable regulations governing patents

and inventions, including governmentwide 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) Unless waived by the Federal

awarding agency, 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) Title to intangible property and

debt instruments acquired under an

award or subaward vests upon

acquisition in the recipient. The

recipient shall use that property for the

originally-authorized purpose, and the

recipient shall not encumber the

property without approval of the

Federal awarding agency. When no

longer needed for the originally

authorized purpose, disposition of the

intangible property shall occur in

accordance with the provisions of

paragraph § 2543.34 (g).

§ 2543.37 Property trust relationship.

Real property, equipment, intangible

property and debt instruments that are

acquired or improved with Federal

funds shall 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

§ 2543.40 Purpose of procurement

standards.

Sections § 2543.41 through § 2543.48

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

shall be imposed by the Federal

awarding agencies upon recipients,

unless specifically required by Federal

statute or executive order or approved

by OMB.

§ 2543.41 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 the Federal awarding

agency, 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.

§ 2543.42 Codes of conduct.

The recipient shall maintain written

standards of conduct governing the

performance of its employees engaged

in the award and administration of

contracts. No employee, officer, or agent

shall 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 shall 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 shall provide for

disciplinary actions to be applied for

violations of such standards by officers,

employees, or agents of the recipient.

§ 2543.43 Competition.

All procurement transactions shall be

conducted in a manner to provide, to

the maximum extent practical, open and

free competition. The recipient shall 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 shall be

excluded from competing for such

procurements. Awards shall 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 shall clearly

set forth all requirements that the bidder

or offeror shall fulfill in order for the bid

or offer to be evaluated by the recipient.

Any and all bids or offers may be
13066 Federal Register / Vol. 60, No. 47 / Friday, March 10, 1995 / Rules and Regulations

rejected when it is in the recipient’s

interest to do so.

§ 2543.44 Procurement procedures.

(a) All recipients shall establish

written procurement procedures. These

procedures shall provide for, at a

minimum, that:

(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, and

(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 shall not contain

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 shall be made by

recipients to utilize small businesses,

minority-owned firms, and women’s

business enterprises, whenever possible.

Recipients of Federal awards shall 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) shall be

determined by the recipient but shall be

appropriate for the particular

procurement and for promoting the best

interest of the program or project

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

cost’’ methods of contracting shall not

be used.

(d) Contracts shall be made only with

responsible contractors who possess the

potential ability to perform successfully

under the terms and conditions of the

proposed procurement. Consideration

shall 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 E.O.s 12549 and

12689, ‘‘Debarment and Suspension.’’

(e) Recipients shall, on request, make

available for the Federal awarding

agency, 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 the

Federal awarding agency’s

implementation of this Circular.

(2) The procurement is expected to

exceed the small purchase threshold

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

$25,000) 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 small purchase

threshold, specifies a ‘‘brand name’’

product.

(4) The proposed award over the

small purchase 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 small purchase

threshold.

§ 2543.45 Cost and price analysis.

Some form of cost or price analysis

shall 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.

§ 2543.46 Procurement records.

Procurement records and files for

purchases in excess of the small

purchase threshold shall 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.

§ 2543.47 Contract administration.

A system for contract administration

shall 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 shall evaluate

contractor performance and document,

as appropriate, whether contractors

have met the terms, conditions and

specifications of the contract.

§ 2543.48 Contract provisions.

The recipient shall include, in

addition to provisions to define a sound

and complete agreement, the following

provisions in all contracts. The

following provisions shall also be

applied to subcontracts.

(a) Contracts in excess of the small

purchase threshold shall 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 small

purchase threshold shall contain

suitable provisions for termination by

the recipient, including the manner by

which termination shall be effected and

the basis for settlement. In addition,

such contracts shall 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.
Federal Register / Vol. 60, No. 47 / Friday, March 10, 1995 / Rules and Regulations 13067

(c) Except as otherwise required by

statute, an award that requires the

contracting (or subcontracting) for

construction or facility improvements

shall 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, the

Federal awarding agency may accept the

bonding policy and requirements of the

recipient, provided the Federal

awarding agency has made a

determination that the Federal

Government’s interest is adequately

protected. If such a determination has

not been made, the minimum

requirements shall be as follows.

(1) A bid guarantee from each bidder

equivalent to five percent of the bid

price. The ‘‘bid guarantee’’ shall consist

of a firm commitment such as a bid

bond, certified check, or other

negotiable instrument accompanying a

bid as assurance that the bidder shall,

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

shall 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 small purchase

threshold) awarded by recipients shall

include a provision to the effect that the

recipient, the Federal awarding agency,

the Comptroller General of the United

States, or any of their duly authorized

representatives, shall 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 shall contain the

procurement provisions of Appendix A

to this Circular, as applicable.

Reports and Records

§ 2543.50 Purpose of reports and records.

Sections § 2543.51 through § 2543.53

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.

§ 2543.51 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

shall monitor subawards to ensure

subrecipients have met the audit

requirements as delineated in Section

§ 2543.26.

(b) The Federal awarding agency shall

prescribe the frequency with which the

performance reports shall be submitted.

Except as provided in paragraph

§ 2543.51(f), performance reports shall

not be required more frequently than

quarterly or, less frequently than

annually. Annual reports shall be due

90 calendar days after the grant year;

quarterly or semi-annual reports shall be

due 30 days after the reporting period.

The Federal awarding agency 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 shall not be

required after completion of the project.

(d) When required, performance

reports shall 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 shall not be required to

submit more than the original and two

copies of performance reports.

(f) Recipients shall immediately notify

the Federal awarding agency of

developments that have a significant

impact on the award-supported

activities. Also, notification shall 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 shall

include a statement of the action taken

or contemplated, and any assistance

needed to resolve the situation.

(g) Federal awarding agencies may

make site visits, as needed.

(h) Federal awarding agencies shall

comply with clearance requirements of

5 CFR part 1320 when requesting

performance data from recipients.

§ 2543.52 Financial reporting.

(a) 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) Each Federal awarding agency

shall require recipients to use the SF–

269 or SF–269A to report the status of

funds for all nonconstruction projects or

programs. A Federal awarding agency

may, however, have 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 shall be

required at the completion of the project

when the SF–270 is used only for

advances.

(ii) The Federal awarding agency shall

prescribe whether the report shall be on

a cash or accrual basis. If the Federal

awarding agency requires accrual

information and the recipient’s

accounting records are not normally

kept on the accrual basis, the recipient

shall not be required to convert its

accounting system, but shall develop

such accrual information through best

estimates based on an analysis of the

documentation on hand.

(iii) The Federal awarding agency

shall 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 shall not

be required more frequently than

quarterly or less frequently than

annually. A final report shall be

required at the completion of the

agreement.

(iv) The Federal awarding agency

shall 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 semiannual reports, and 90 calendar days for
13068 Federal Register / Vol. 60, No. 47 / Friday, March 10, 1995 / Rules and Regulations

annual and final reports. Extensions of

reporting due dates may be approved by

the Federal awarding agency upon

request of the recipient.

(2) SF–272, Report of Federal Cash

Transactions.

(i) When funds are advanced to

recipients the Federal awarding agency

shall require each recipient to submit

the SF–272 and, when necessary, its

continuation sheet, SF–272a. The

Federal awarding agency shall use this

report to monitor cash advanced to

recipients and to obtain disbursement

information for each agreement with the

recipients.

(ii) Federal awarding agencies may

require forecasts of Federal cash

requirements in the ‘‘Remarks’’ section

of the report.

(iii) When practical and deemed

necessary, Federal awarding agencies

may require recipients to report in the

‘‘Remarks’’ section the amount of cash

advances received in excess of three

days. Recipients shall provide short

narrative explanations of actions taken

to reduce the excess balances.

(iv) Recipients shall be required to

submit not more than the original and

two copies of the SF–272 15 calendar

days following the end of each quarter.

The Federal awarding agencies may

require a monthly report from those

recipients receiving advances totaling

$1 million or more per year.

(v) Federal awarding agencies 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 the Federal awarding

agency’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 the Federal awarding agency

needs additional information or more

frequent reports, the following shall be

observed.

(1) When additional information is

needed to comply with legislative

requirements, Federal awarding

agencies shall issue instructions to

require recipients to submit such

information under the ‘‘Remarks’’

section of the reports.

(2) When a Federal awarding agency

determines that a recipient’s accounting

system does not meet the standards in

Section § 2543.21, 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. The

Federal awarding agency, in obtaining

this information, shall comply with

report clearance requirements of 5 CFR

part 1320.

(3) Federal awarding agencies are

encouraged to shade out any line item

on any report if not necessary.

(4) Federal awarding agencies may

accept the identical information from

the recipients in machine readable

format or computer printouts or

electronic outputs in lieu of prescribed

formats.

(5) Federal awarding agencies may

provide computer or electronic outputs

to recipients when such expedites or

contributes to the accuracy of reporting.

§ 2543.53 Retention and access

requirements for records.

(a) This section sets forth

requirements for record retention and

access to records for awards to

recipients. Federal awarding agencies

shall not impose any other record

retention or access requirements upon

recipients.

(b) Financial records, supporting

documents, statistical records, and all

other records pertinent to an award

shall 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 the Federal awarding

agency. 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 shall 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

shall be retained for 3 years after final

disposition.

(3) When records are transferred to or

maintained by the Federal awarding

agency, 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) Copies of original records may be

substituted for the original records if

authorized by the Federal awarding

agency.

(d) The Federal awarding agency shall

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 record keeping, a

Federal awarding agency may make

arrangements for recipients to retain any

records that are continuously needed for

joint use.

(e) The Federal awarding agency, 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 shall last

as long as records are retained.

(f) Unless required by statute, no

Federal awarding agency shall place

restrictions on recipients that limit

public access to the records of recipients

that are pertinent to an award, except

when the Federal awarding agency can

demonstrate that such records shall 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 the Federal awarding agency.

(g) Indirect cost rate proposals, cost

allocations plans, etc. Paragraphs (g)(1)

and (g)(2) 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 the Federal

awarding agency 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 the Federal awarding agency 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.
Federal Register / Vol. 60, No. 47 / Friday, March 10, 1995 / Rules and Regulations 13069

Termination and Evaluation

§ 2543.60 Purpose of termination and

enforcement.

Sections § 2543.61 and § 2543.62 set

forth uniform suspension, termination

and enforcement procedures.

§ 2543.61 Termination.

(a) Awards may be terminated in

whole or in part only if:

(1) By the Federal awarding agency, if

a recipient materially fails to comply

with the terms and conditions of an

award,

(2) By the Federal awarding agency

with the consent of the recipient, in

which case the two parties shall agree

upon the termination conditions,

including the effective date and, in the

case of partial termination, the portion

to be terminated, or

(3) By the recipient upon sending to

the Federal awarding agency written

notification setting forth the reasons for

such termination, the effective date,

and, in the case of partial termination,

the portion to be terminated. However,

if the Federal awarding agency

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

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

(b) If costs are allowed under an

award, the responsibilities of the

recipient referred to in paragraph

§ 2543.71(a), including those for

property management as applicable,

shall be considered in the termination of

the award, and provision shall be made

for continuing responsibilities of the

recipient after termination, as

appropriate.

§ 2543.62 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, the Federal awarding

agency may, in addition to imposing

any of the special conditions outlined in

Section § 2543.14, 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 the

Federal awarding agency.

(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, the awarding

agency shall 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 the awarding agency

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, and

(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

E.O.s 12549 and 12689 and the Federal

awarding agency implementing

regulations (see Section § 2543.13).

Subpart D—After-the-Award

Requirements

§ 2543.70 Purpose.

Sections § 2543.71 through § 2543.73

contain closeout procedures and other

procedures for subsequent

disallowances and adjustments.

§ 2543.71 Closeout procedures.

(a) Recipients shall 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. The Federal awarding agency

may approve extensions when requested

by the recipient.

(b) Unless the Federal awarding

agency authorizes an extension, a

recipient shall 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) The Federal awarding agency shall

make prompt payments to a recipient

for allowable reimbursable costs under

the award being closed out.

(d) The recipient shall promptly

refund any balances of unobligated cash

that the Federal awarding agency 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, the Federal

awarding agency shall make a

settlement for any upward or downward

adjustments to the Federal share of costs

after closeout reports are received.

(f) The recipient shall account for any

real and personal property acquired

with Federal funds or received from the

Federal Government in accordance with

Sections § 2543.31 through § 2543.37.

(g) In the event a final audit has not

been performed prior to the closeout of

an award, the Federal awarding agency

shall retain the right to recover an

appropriate amount after fully

considering the recommendations on

disallowed costs resulting from the final

audit.

§ 2543.72 Subsequent adjustments and

continuing responsibilities.

(a) The closeout of an award does not

affect any of the following:

(1) The right of the Federal awarding

agency 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 Section

§ 2543.26.

(4) Property management

requirements in Sections § 2543.31

through § 2543.37.

(5) Records retention as required in

Section § 2543.53.

(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 the Federal

awarding agency and the recipient,

provided the responsibilities of the

recipient referred to in paragraph

§ 2543.73(a), including those for

property management as applicable, are

considered and provisions made for

continuing responsibilities of the

recipient, as appropriate.

§ 2543.73 Collection of amounts due.

(a) Any funds paid to a recipient in

excess of the amount to which the
13070 Federal Register / Vol. 60, No. 47 / Friday, March 10, 1995 / Rules and Regulations

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, the Federal awarding agency

may reduce the debt by:

(1) Making an administrative offset

against other requests for

reimbursements,

(2) Withholding advance payments

otherwise due to the recipient,

(3) Taking other action permitted by

statute, or

(b) Except as otherwise provided by

law, the Federal awarding agency shall

charge interest on an overdue debt in

accordance with 4 CFR Chapter II,

‘‘Federal Claims Collection Standards.’’

Subpart E—Statutory Compliance

§ 2543.80 Contract Provisions.

All contracts, awarded by a recipient

including small purchases, shall contain

the following provisions as applicable:

§ 2543.81 Equal Employment Opportunity.

All contracts shall contain a provision

requiring compliance with E.O. 11246,

‘‘Equal Employment Opportunity,’’ as

amended by E.O. 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.’’

§ 2543.82 Copeland ‘‘Anti-Kickback’’ Act.

All contracts and subgrants in excess

of $2000 for construction or repair

awarded by recipients and subrecipients

shall 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 shall 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 shall report all

suspected or reported violations to the

Federal awarding agency.

§ 2543.83 Davis-Bacon Act.

When required by Federal program

legislation, all construction contracts

awarded by the recipients and

subrecipients of more than $2000 shall

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 shall be 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 shall be required to pay

wages not less than once a week. The

recipient shall place a copy of the

current prevailing wage determination

issued by the Department of Labor in

each solicitation and the award of a

contract shall be conditioned upon the

acceptance of the wage determination.

The recipient shall report all suspected

or reported violations to the Federal

awarding agency.

§ 2543.84 Contract Work Hours and Safety

Standards Act.

Where applicable, all contracts

awarded by recipients in excess of

$2000 for construction contracts and in

excess of $2500 for other contracts that

involve the employment of mechanics

or laborers shall 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

shall be required to compute the wages

of every mechanic and laborer on the

basis of a standard work week of 40

hours. Work in excess of the standard

work week is permissible provided that

the worker is compensated at a rate of

not less than 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 shall 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.

§ 2543.85 Rights to Inventions Made Under

a Contract or Agreement.

Contracts or agreements for the

performance of experimental,

developmental, or research work shall

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 Firms Under

Government Grants, Contracts and

Cooperative Agreements,’’ and any

implementing regulations issued by the

awarding agency.

§ 2543.86 Clean Air Act and the Federal

Water Pollution Control Act.

Contracts and subgrants of amounts in

excess of $100,000 shall 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 shall be

reported to the Federal awarding agency

and the Regional Office of the

Environmental Protection Agency

(EPA).

§ 2543.87 Byrd Anti-Lobbying Amendment.

Contractors who apply or bid for an

award of $100,000 or more shall 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 shall 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.

§ 2543.88 Debarment and Suspension.

No contract shall be made to parties

listed on the General Services

Administration’s List of Parties

Excluded from Federal Procurement or

Nonprocurement Programs in

accordance with E.O.s 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 E.O. 12549.

Contractors with awards that exceed the

small purchase threshold shall provide

the required certification regarding its

exclusion status and that of its principal

employees.

[FR Doc. 95–5625 Filed 3–9–95; 8:45 am]

BILLING CODE 6050–28–P