Federal Register / Vol. 60, No. 65 / Wednesday, April 5, 1995 / Rules and Regulations 17237

comments. However, in a separate

document in this Federal Register

publication, the EPA is proposing to

approve the SIP revision should adverse

or critical comments be filed. This

action will be effective June 5, 1995

unless, within 30 days of its

publication, adverse or critical

comments are received.

If the EPA receives such comments,

this action will be withdrawn before the

effective date by publishing a

subsequent notice that will withdraw

the final action. All public comments

received will be addressed in a

subsequent final rule based on this

action serving as a proposed rule. The

EPA will not institute a second

comment period on this action. Any

parties interested in commenting on this

action should do so at this time. If no

such comments are received, the public

is advised that this action will be

effective June 5, 1995.

The EPA has reviewed this request for

revision of the federally-approved SIP

for conformance with the provisions of

the 1990 Clean Air Act Amendments

enacted on November 15, 1990. The

EPA has determined that this action

conforms with those requirements.

Nothing in this action should be

construed as permitting or allowing or

establishing a precedent for any future

request for revision to any SIP. Each

request for revision to the SIP shall be

considered separately in light of specific

technical, economic and environmental

factors and in relation to relevant

statutory and regulatory requirements.

This action has been classified as a

Table 2 action by the Regional

Administrator under the procedures

published in the Federal Register on

January 19, 1989 (54 FR 2214–2225), as

revised by an October 4, 1993

memorandum from Michael H. Shapiro,

Acting Assistant Administrator for Air

and Radiation. The OMB has exempted

this regulatory action from E.O. 12866

review.

Under section 307(b)(1) of the Clean

Air Act, petitions for judicial review of

this action must be filed in the United

States Court of Appeals for the

appropriate circuit by June 5, 1995.

Filing a petition for reconsideration by

the Administrator of this final rule does

not affect the finality of this rule for the

purposes of judicial review nor does it

extend the time within which a petition

for judicial review may be filed and

shall not postpone the effectiveness of

such rule or action. This action may not

be challenged later in proceedings to

enforce its requirements. (See section

307(b)(2), 42 U.S.C. 7607(b)(2).

List of Subjects in 40 CFR Part 52

Environmental protection, Air

pollution control, Carbon monoxide,

Incorporation by reference, Reporting

and recordkeeping requirements.

Note: Incorporation by reference of the

Implementation Plan for the state of Alaska

was approved by the Director of the Office of

Federal Register on July 1, 1982.

Dated: March 2, 1995.

Chuck Clarke,

Regional Administrator.

Part 52, chapter I, title 40 of the Code

of Federal Regulations is amended as

follows:

PART 52—[AMENDED]

1. The authority citation for part 52

continues to read as follows:

Authority: 42 U.S.C. 7401–7671q.

Subpart C—Alaska

2. Section 52.70 is amended by

adding paragraph (c) (21) to read as

follows:

§ 52.70 Identification of plan.

* * * * *

(c) * * *

(21) On July 11, 1994 ADEC submitted

a SIP revision for a basic motor vehicle

inspection and maintenance (I/M)

program in the Municipality of

Anchorage (MOA) and the Fairbanks

North Star Borough (FNSB).

(i) Incorporation by reference.

(A) July 11, 1994 letter from the

Governor of Alaska to the Regional

Administrator of EPA submitting

Alaska’s amendments to the Air Quality

Control Plan and to 18 AAC 52,

Emissions Inspection and Maintenance

Requirements for Motor Vehicles; the

amendments to 18 AAC 52 (52.005,

.015, .020, .030, .035, .040, .045, .050,

.055, .060, .065, .070, .075, .080, .085,

.090, .095, .100, .105, .400, .405, .410,

.415, .420, .425, .430, .440, .445, .500,

.505, .510, .515, .520, .525, .527, .530,

.535, .540, .545, .550, and .990),

effective February 1, 1994; and the State

Air Quality Control Plan, Vol. II:

Analysis of Problems, Control Actions,

Modifications to Section I, June 9, 1994;

Vol. II: Analysis of Problems, Control

Actions, Modifications to Section I, II,

III and V, adopted January 10, 1994; Vol.

III: Appendices, Modifications to

Section III.A, June 9, 1994; Vol. III:

Appendices, Modifications to Section

III.B, June 9, 1994; and Vol. III:

Appendices, Modifications to Section

III.C, June 9, 1994.

[FR Doc. 95–8313 Filed 4–4–95; 8:45 am]

BILLING CODE 6560–50–P

DEPARTMENT OF THE INTERIOR

Office of the Secretary

43 CFR Part 12

RIN 1090–AA42

Uniform Administrative Requirements

for Grants and Agreements With

Institutions of Higher Education,

Hospitals, and Other Non-Profit

Organizations

AGENCY: Office of the Secretary, Interior.

ACTION: Final rule.

SUMMARY: This action finalizes an

interim final rule the Department

published in response to the publication

by the Office of Management and

Budget (OMB) of revised OMB Circular

A–110, ‘‘Uniform Administrative

Requirements for Grants and

Agreements With Institutions of Higher

Education, Hospitals, and Other NonProfit Organizations.’’

Agencies were required to adopt those

standards which would be imposed on

grantees in codified regulations within

six months after publication in the

Federal Register.

Over 200 comments were received by

OMB from Federal agencies, non-profit

organizations, professional

organizations, and others in response to

the notice published on August 27,

1992, (57 FR 39018) requesting

comments on proposed revisions. The

comments were considered in

developing the final version.

Consequently, the Department

published an interim final rule because

of the previous request for comment

process used in the development of the

Circular, the large number of comments

already received and considered by

OMB and the Federal agencies, and due

to the limited flexibility to revise the

rule provided by OMB.

EFFECTIVE DATE: May 5, 1995.

FOR FURTHER INFORMATION CONTACT:

Dean A. Titcomb, (Chief, Acquisition

and Assistance Division), (202) 208–

6432.

SUPPLEMENTARY INFORMATION: OMB

Circular A–110 (58 FR 62991) covers

both grants made by Federal agencies

and subgrants made by States to

nongovernmental organizations.

Following the August 26, 1994,

publication in the Federal Register (59

FR 44040), no public comments were

received by the Department.

This final rule essentially adopts all

the language in the Circular with two

exceptions. At Section 12.904, language

has been added to describe the

procedure for handling requests for
17238 Federal Register / Vol. 60, No. 65 / Wednesday, April 5, 1995 / Rules and Regulations

class deviations and case-by-case

exceptions. At Section 12.915, the

Department is revising the provision

concerning use of the metric system of

measurement. This revision indicates

that the system should be used to the

maximum extent possible and that both

metric and inch-pound units (dual

units) may be used if necessary during

any transaction period(s).

The reference to the small purchase

threshold currently being $25,000 in

section 12.944(e)(2) has been changed to

$100,000. This change is based on a

provision of the Federal Acquisition

Streamlining Act of 1994.

The Circular inadvertently misstates

the applicability of the statute

commonly known as the Byrd AntiLobbying Amendment, 31 U.S.C. 1352.

The statute applies to organizations

which apply or bid for an award

exceeding $100,000, not $100,000 or

more. We have made this correction in

Appendix A.

Two other changes have been made to

Appendix A because of recent changes

brought about by the Federal

Acquisition Streamlining Act of 1994.

The threshold for the requirement to

include a provision for compliance with

the Copeland ‘‘Anti-Kickback Act’’ (18

U.S.C. 874) was raised from $2,000 to

$100,000.

The threshold for the requirement to

include the provision for compliance

with sections 102 and 107 of the

Contract Work Hours and Safety

Standards Act (40 U.S.C. 327–333) was

raised to $100,000.

Other minor editorial changes are

being made to conform with language in

the Circular.

The Department is amending 43 CFR

part 12, by revising subpart F to

implement these requirements.

Executive Order 12866, Paperwork

Reduction Act, and Regulatory

Flexibility Act

This final rule was not subject to

Office of Management and Budget

review under Executive Order 12866.

The Department has determined that

this rule will not have a significant

economic impact on a substantial

number of small entities because it does

not affect the amount of funds provided

in the covered programs, but rather

modifies and updates administrative

and procedural requirements. This final

rule does not contain a collection of

information subject to the Paperwork

Reduction Act of 1980 (44 U.S.C. 3501

et seq.).

Environmental Effects

The Department has determined that

this rule does not constitute a major

Federal action having a significant

impact on the human environment

under the National Environmental

Policy Act of 1969.

Executive Order No. 12778

The Department has certified to the

Office of Management and Budget that

this proposed rule meets the applicable

standards provided in Sections 2(a) and

2(b)(2) of Executive Order 12778.

List of Subjects in 43 CFR Part 12

Cooperative agreements, Grants

administration, Grant program.

Dated: March 15, 1995.

Bonnie R. Cohen,

Assistant Secretary-Policy, Management and

Budget.

For the reasons set forth in the

preamble, Title 43, part 12 of the Code

of Federal Regulations is amended as set

forth below:

PART 12—ADMINISTRATIVE AND

AUDIT REQUIREMENTS AND COST

PRINCIPLES FOR ASSISTANCE

PROGRAMS

1. The authority citation for part 12 is

revised to read as follows:

Authority: 5 U.S.C. 301; 31 U.S.C. 6101

note, 7501; 41 U.S.C. 252a, 701 et seq.; sec.

307, Pub. L. 103–332, 108 Stat. 2499; sec.

501, Pub. L. 103–316, 108 Stat. 1723; E.O.

12549, 3 CFR, 1986 Comp., p. 189; E.O.

12674, 3 CFR, 1989 Comp., p. 215; E.O.

12731, 3 CFR, 1990 Comp., p. 306; OMB

Circular A–102; OMB Circular A–110; OMB

Circular A–128; and OMB Circular A–133.

2. Part 12 is amended by revising

subpart F to read as follows:

Subpart F—Uniform Administrative

Requirements for Grants and

Agreements With Institutions of Higher

Education, Hospitals, and Other NonProfit Organizations

General

Sec.

12.901 Purpose.

12.902 Definitions.

12.903 Effect on other issuances.

12.904 Deviations.

12.905 Subawards.

Pre-Award Requirements

12.910 Purpose.

12.911 Pre-award policies.

12.912 Forms for applying for Federal

assistance.

12.913 Debarment and suspension.

12.914 Special award conditions.

12.915 Metric system of measurement.

12.916 Resource Conservation and Recovery

Act (RCRA) (Pub. L. 94–580 codified at

42 U.S.C. 6962).

12.917 Certifications and representations.

Post-Award Requirements

Financial and Program Management

12.920 Purpose of financial and program

management.

12.921 Standards for financial management

systems.

12.922 Payment.

12.923 Cost sharing or matching.

12.924 Program income.

12.925 Revision of budget and program

plans.

12.926 Non-Federal audits.

12.927 Allowable costs.

12.928 Period of availability of funds.

Property Standards

12.930 Purpose of property standards.

12.931 Insurance coverage.

12.932 Real property.

12.933 Federally-owned and exempt

property.

12.934 Equipment.

12.935 Supplies and other expendable

property.

12.936 Intangible property.

12.937 Property trust relationship.

Procurement Standards

12.940 Purpose of procurement standards.

12.941 Recipient responsibilities.

12.942 Codes of conduct.

12.943 Competition.

12.944 Procurement procedures.

12.945 Cost and price analysis.

12.946 Procurement records.

12.947 Contract administration.

12.948 Contract provisions.

Reports and Records

12.950 Purpose of reports and records.

12.951 Monitoring and reporting program

performance.

12.952 Financial reporting.

12.953 Retention and access requirements

for records.

Termination and Enforcement

12.960 Purpose of termination and

enforcement.

12.961 Termination.

12.962 Enforcement.

After-the-Award Requirements

12.970 Purpose.

12.971 Closeout procedures.

12.972 Subsequent adjustments and

continuing responsibilities.

12.973 Collection of amounts due.

Appendix A to Subpart F—Contract

Provisions

General

§ 12.901 Purpose.

This subpart establishes uniform

administrative requirements for Federal

grants and agreements awarded to

institutions of higher education,

hospitals, and other non-profit

organizations.

§ 12.902 Definitions.

Accrued expenditures means the

charges incurred by the recipient during

a given period requiring the provision of

funds for:
Federal Register / Vol. 60, No. 65 / Wednesday, April 5, 1995 / Rules and Regulations 17239

(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.

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.

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.

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.

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.

Cash contributions means the

recipient’s cash outlay, including the

outlay of money contributed to the

recipient by third parties.

Closeout means the process by which

a Federal agency determines that all

applicable administrative actions and

all required work of the award have

been completed by the recipient and

Federal awarding agency.

Contract means a procurement

contract under an award or subaward,

and a procurement subcontract under a

recipient’s or subrecipient’s contract.

Cost sharing or matching means that

portion of project or program costs not

borne by the Federal Government.

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.

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.

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.

Excess property means property under

the control of any Federal awarding

agency that, as determined by the

Secretary, is no longer required for its

needs or the discharge of its

responsibilities.

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.

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.

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.

Funding period means the period of

time when Federal funding is available

for obligation by the recipient.

Intangible property and debt

instruments means, but is not limited to,

trademarks, copyrights, patents and

patent applications and such property

as loans, notes and other debt

instruments, lease agreements, stock

and other instruments of property

ownership, whether considered tangible

or intangible.

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.

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.

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.

Prior approval means written

approval by an authorized official

evidencing prior consent.

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 § 12.924 (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

patients 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.

Project costs means all allowable

costs, as set forth in the applicable

Federal cost principles, incurred by a
17240 Federal Register / Vol. 60, No. 65 / Wednesday, April 5, 1995 / Rules and Regulations

recipient and the value of the

contributions made by third parties in

accomplishing the objectives of the

award during the project period.

Project period means the period

established in the award document

during which Federal sponsorship

begins and ends.

Property means, unless otherwise

stated, real property, equipment,

supplies, intangible property and debt

instruments.

Real property means land, including

land improvements, structures and

appurtenances thereto, but excludes

movable machinery and equipment.

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, at the

discretion of the Federal awarding

agency, foreign or international

organizations (such as agencies of the

United Nations) which are recipients,

subrecipients, or contractors or

subcontractors of recipients or

subrecipients. The term does not

include government-owned contractoroperated facilities or research centers

providing continued support for

mission-oriented, large-scale programs

that are government-owned or

controlled, or are designated as

federally-funded research and

development centers.

Research and development means all

research activities, both basic and

applied, and all development activities

that are supported at universities,

colleges, and other non-profit

institutions.

(1) Research is defined as a systematic

study directed toward fuller scientific

knowledge or understanding of the

subject studied.

(2) 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.

Small awards means a grant or

cooperative agreement not exceeding

the small purchase threshold fixed at 41

U.S.C. 403(11) (currently $100,000).

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 this section.

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.

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.’’

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 the

Department of the Interior Regulations

implementing E.O.’s 12549 and 12689,

‘‘Debarment and Suspension.’’ See

subpart D of 43 CFR part 12.

Termination means the cancellation

of Federal sponsorship, in whole or in

part, under an agreement at any time

prior to the date of completion.

Third party in-kind contributions

means the value of noncash

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.

Unliquidated obligations, for financial

reports prepared on a cash basis, means

the amount of obligations incurred by

the recipient that have not been paid.

For reports prepared on an accrued

expenditure basis, they represent the

amount of obligations incurred by the

recipient for which an outlay has not

been recorded.

Unobligated balance means the

portion of the funds authorized by

Federal awarding agency that has not

been obligated by the recipient and is

determined by deducting the

cumulative obligations from the

cumulative funds authorized.

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.

Working capital advance means a

procedure whereby funds are advanced

to the recipient to cover its estimated

disbursement needs for a given initial

period.

§ 12.903 Effect on other issuances.

For awards subject to this subpart, all

administrative requirements of codified

program regulations, program manuals,

handbooks and other nonregulatory

materials which are inconsistent with

the requirements of this subpart shall be

superseded, except to the extent they

are required by statute, or authorized in

accordance with the deviations

provision in Section 12.904.

§ 12.904 Deviations.

The Office of Management and Budget

(OMB) may grant exceptions for classes

of grants or recipients subject to the

requirements of this subpart when

exceptions are not prohibited by statute.

However, in the interest of maximum

uniformity, exceptions from the

requirements of this subpart shall be

permitted only in unusual

circumstances. Federal awarding

agencies may apply more restrictive

requirements to a class of recipients

when approved by OMB. All requests

for class deviations shall be processed

through the Assistant Secretary-Policy,

Management, and Budget. 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. Bureau/office application of

less restrictive requirements when

awarding small awards, except for those

requirements which are statutory, as

well as exceptions on a case-by-case

basis, will be handled by designated

officials identified in bureau/office

procedures.

§ 12.905 Subawards.

Unless sections of this subpart

specifically exclude subrecipients from
Federal Register / Vol. 60, No. 65 / Wednesday, April 5, 1995 / Rules and Regulations 17241

coverage, the provisions of this subpart

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,’’ 43 CFR part 12.

Pre-Award Requirements

§ 12.910 Purpose.

Sections 12.011 through 12.917

prescribe forms and instructions and

other pre-award matters to be used in

applying for Federal awards.

§ 12.911 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. 6301–6308) 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 their funding priorities for

discretionary grant programs, unless

funding priorities are established by

Federal statute.

§ 12.912 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. (See also 43

CFR part 9).

(d) Federal awarding agencies that do

not use the SF–424 form will indicate

whether the application is subject to

review by the State under E.O. 12372.

§ 12.913 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,’’ subpart D of 43 CFR part

12. 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.

§ 12.914 Special award conditions.

(a) Federal awarding agencies may

impose additional requirements as

needed, if an applicant or recipient:

(1) Has a history of poor performance;

(2) Is not financially stable;

(3) Has a management system that

does not meet the standards prescribed

in this part;

(4) Has not conformed to the terms

and conditions of a previous award; or

(5) Is not otherwise responsible.

(b) Additional requirements may only

be imposed provided that the applicant

or recipient is notified in writing as to:

(1) The nature of the additional

requirements;

(2) The reason why the additional

requirements are being imposed;

(3) The nature of the corrective action

needed;

(4) The time allowed for completing

the corrective actions; and

(5) The method for requesting

reconsideration of the additional

requirements imposed.

(c) Any special conditions shall be

promptly removed once the conditions

that prompted them have been

corrected.

§ 12.915 Metric system of measurement.

The Metric Conversion Act, as

amended by the Omnibus Trade and

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

declares that the metric system is the

preferred measurement system for U.S.

trade and commerce. The Act requires

each Federal agency to establish a date

or dates in consultation with the

Secretary of Commerce when the metric

system of measurement will be used in

the agency’s procurements, grants, and

other business-related activities. Metric

implementation may take longer where

the use of the system is initially

impractical or likely to cause significant

inefficiencies in the accomplishment of

federally-funded activities. Federal

awarding agencies will follow the

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

in Federal Government Programs.’’

When applicable, the awarding agency

shall request that measurementsensitive information to be included as

part of the application, be expressed in

metric units. When required by the

awarding agency, for grants to

recipients, the following term and

condition will be incorporated into the

grant:

Provision

All progress and final reports, other

reports, or

All progress and final reports, other

reports, or publications produced under this

award shall employ the metric system of

measurements to the maximum extent

practicable. Both metric and inch-pound

units (dual units) may be used if necessary

during any transition period(s). However, the

recipient may use non-metric measurements

to the extent that the recipient has supporting

documentation that the use of metric

measurements is impracticable or is likely to

cause significant inefficiencies or loss of

markets to the recipient, such as when

foreign competitors are producing competing

products in non-metric units.

End of Provision

§ 12.916 Resource Conservation and

Recovery Act (RCRA) (Pub. L. 94–580

codified at 42 U.S.C. 6962).

Under the Act, any State agency or

agency of a political subdivision of a

State that is using appropriated Federal

funds must comply with section 6002 of

RCRA. Section 6002 of RCRA 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 and hospitals that

receive direct Federal awards or other

Federal funds shall give preference in

their procurement programs funded

with Federal funds to the purchase of
17242 Federal Register / Vol. 60, No. 65 / Wednesday, April 5, 1995 / Rules and Regulations

recycled products pursuant to the EPA

guidelines.

§ 12.917 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.

Post-Award Requirements

Financial and Program Management

§ 12.920 Purpose of financial and program

management.

Sections 12.921 through 12.928

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.

§ 12.921 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

§ 12.952. 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 their 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)

(31 U.S.C. 6501 note) 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 in § 12.921

(c) and (d), 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.’’

§ 12.922 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

or demonstrate written procedures that

minimize the time elapsing between the

transfer of funds and disbursement by

the recipient, and financial management

systems that meet the standards for fund

control and accountability as

established in § 12.921. 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

purposes 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 will

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.

(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) of this section 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.
Federal Register / Vol. 60, No. 65 / Wednesday, April 5, 1995 / Rules and Regulations 17243

(2) Recipients shall be authorized to

submit a 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

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

apply:

(1) A recipient has failed to comply

with the project objectives, the terms

and conditions of the award, or Federal

reporting requirements; 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) of this section, 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 opportunities for womenowned and minority-owned business

enterprises, recipients are 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 paragraph

(k)(1), (2) or (3) apply:

(1) The recipient receives less than

$120,000 in Federal awards per year.

(2) The best reasonably available

interest bearing account would not be

expected to earn interest in excess of

$250 per year on Federal cash balances.

(3) The depository would require an

average or minimum balance so high

that it would not be feasible within the

expected Federal and non-Federal cash

resources.

(l) 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,

P.O. Box 6021, Rockville, MD 20852.

Interest amounts up to $250 per year

may be retained by the recipient for

administrative expense. In keeping with

Electronic Funds Transfer rules, (31

CFR part 206), interest should be

remitted to the HHS Payment

Management System through an

electronic medium such as the

FEDWIRE Deposit system. Recipients

which do not have this capability

should use a check. 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

subpart, 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 where 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.

§ 12.923 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

subpart, 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

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

paragraph (c) (1) or (2) of this section:

(1) The certified value of the

remaining life of the property recorded

in the recipient’s accounting records at

the time of donation.

(2) the current fair market value.

However, when there is sufficient

justification, the Federal awarding

agency may approve the use of the

current fair market value of the donated
17244 Federal Register / Vol. 60, No. 65 / Wednesday, April 5, 1995 / Rules and Regulations

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

section apply:

(1) If the purpose of the award is to

assist the recipient to acquire

equipment, buildings, or land, the total

value of the donated property may be

claimed as cost sharing or matching.

(2) If the purpose of the award is to

support activities that require the use of

equipment, buildings or land, normally

only depreciation or use charges for

equipment and buildings may be made.

However, the full value of equipment or

other capital assets and fair rental

charges for land may be allowed,

provided that 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 their 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.

(i) The following requirements pertain

to the recipient’s supporting records for

in-kind contributions from third parties.

(1) Volunteer services shall be

documented and, to the extent feasible,

supported by the same methods used by

the recipient for its own employees.

(2) The basis for determining the

valuation for personal service, material,

equipment, buildings and land shall be

documented.

§ 12.924 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) of this section, 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 following ways:

(1) added to funds committed to the

project or program 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; or

(3) deducted from the total project or

program allowable cost in determining

the net allowable costs upon 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) of

this section, program income in excess

of any limits stipulated shall be used in

accordance with paragraph (b)(3) of this

section.

(d) If 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) of this section shall apply

automatically to all projects or programs

except research. For awards that support

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

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 § 12.914.

(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 §§ 12.930 through 12.937).

(h) Unless Federal awarding agency

regulations or the terms and conditions

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.

§ 12.925 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

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
Federal Register / Vol. 60, No. 65 / Wednesday, April 5, 1995 / Rules and Regulations 17245

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

award, 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

paragraph (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

subpart and OMB Circulars A–21 and

A–122. Such waivers may include

authorizating 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.

The conditions that prevent issuance of

a one-time extension are:

(i) the terms and conditions of award

prohibit the extension;

(ii) the extension requires additional

Federal funds; or

(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)(1) through (3) of this

section are automatically waived (i.e.,

recipients need not obtain such prior

approvals) unless one of the conditions

included in paragraph (e)(2) 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 the transfer

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) No other changes to

nonconstruction budgets, except for the

changes described in paragraph (j) of

this section, require prior approval.

(h) For construction awards,

recipients shall request prior written

approval promptly from Federal

awarding agencies for budget revisions

whenever paragraph (h) (1), (2) or (3) of

this section apply:

(1) the revision results from changes

in the scope or the objective of the

project or program;

(2) additional Federal funds are

needed to complete the project; or

(3) the recipient requests a revision

that involves specific costs for which

prior written approval requirements

may be imposed under § 12.927.

(i) No other prior approval

requirements for specific items will be

imposed unless OMB approves a

deviation.

(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

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 that a letter of request

suffices.

(m) Within 30 calendar days from the

date of receipt of the request for budget

revisions, the 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.

§ 12.926 Non-Federal audits.

Certain recipients and subrecipients

shall be subject to non-Federal audits in

accordance with the applicable directive

from the table in this section.

Type of recipient Applicable directive

Institution of higher education or other non-profit organization.OMB Circular A–133.

State or local government .................................. Single Audit Act 31 U.S.C. 7501–7507 and 43 CFR part 12, subpart B.

Hospital ............................................................... OMB Circular A–133 or audit requirements of the Federal awarding agency.
17246 Federal Register / Vol. 60, No. 65 / Wednesday, April 5, 1995 / Rules and Regulations

§ 12.927 Allowable costs.

Federal awarding agencies shall determine allowable costs in accordance with the type of entity incurring the costs,

using the appropriate directive from the table below.

Entity incurring costs Applicable directive

State, local, or Federally recognized Indian

Tribe.

OMB Circular A–87, Cost Principles for State and Local Governments.

Non-profit organization ....................................... OMB Circular A–122, Cost Principles for Non-profit Organizations and 43 CFR 12.927(b).

Institution of Higher Education ........................... OMB Circular A–21, Cost Principles for Educational Institutions.

Hospital ............................................................... 45 CFR part 74, appendix E, Principles for Determining Costs Applicable to Research and Development Under Grants and Contracts with Hospitals.

Commercial organization or non-profit organization listed in Attachment C of OMB Circular

A–122.

48 CFR part 31, Contract Principles and Procedures or uniform cost accounting standards that

comply with cost principles acceptable to the Federal agency.

§ 12.928 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

§ 12.930 Purpose of property standards.

Sections 12.931 through 12.937 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

§§ 12.931 through 12.937.

§ 12.931 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.

§ 12.932 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 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 Department of the

Interior.

(c) When the real property is no

longer needed as provided in

paragraphs (a) and (b) of this section,

the recipient shall request disposition

instructions from the Federal awarding

agency or its successor. The Federal

awarding agency will give 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.

§ 12.933 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 to the

Federal awarding agency an inventory

listing of federally-owned property in

their custody. 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 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. 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.

§ 12.934 Equipment.

(a) Title to equipment acquired by a

recipient with Federal funds shall vest
Federal Register / Vol. 60, No. 65 / Wednesday, April 5, 1995 / Rules and Regulations 17247

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, then (2)

Activities sponsored by other Federal

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 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 will be reimbursed by the

Federal awarding agency for such costs

incurred in its disposition.

(h) 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 the third party is otherwise

eligible under existing statutes. The

transfer shall be subject to the following

standards.

(1) The equipment shall be

appropriately identified in the award or

otherwise made known to the recipient

in writing.

(2) The Federal awarding agency shall

issue disposition instructions within

120 calendar days after receipt of a final

inventory. The final inventory shall list

all equipment acquired with Federal

funds and federally-owned equipment.
17248 Federal Register / Vol. 60, No. 65 / Wednesday, April 5, 1995 / Rules and Regulations

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.

(3) When the Federal awarding agency

exercises its right to take title, the

equipment shall be subject to the

provisions for federally-owned

equipment.

§ 12.935 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.

§ 12.936 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) reserves a

royalty-free, nonexclusive and

irrevocable right to reproduce, publish,

or otherwise use the work for Federal

purposes, and to authorize others to do

so.

(b) 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 the

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

§ 12.934(g).

§ 12.937 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 Standard

§ 12.940 Purpose of procurement

standards.

Sections 12.941 through 12.948 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.

§ 12.941 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.

§ 12.942 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.

§ 12.943 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 bids 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

rejected when it is in the recipient’s

interest to do so.
Federal Register / Vol. 60, No. 65 / Wednesday, April 5, 1995 / Rules and Regulations 17249

§ 12.944 Procurement procedures.

(a) All recipients shall establish

written procurement procedures. These

procedures shall provide, 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 use 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.’’

See 43 CFR part 12.

(e) Recipients shall, on request, make

available for the Federal awarding

agency, pre-award review of

procurement documents, such as

requests for proposals or invitations for

bids, independent cost estimates, etc.,

when any of the following conditions

apply:

(1) A recipient’s procurement

procedures or operation fails to comply

with the procurement standards in this

part.

(2) The procurement is expected to

exceed the small purchase threshold

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

$100,000) and is to be awarded without

competition or only one bid or offer is

received in response to a solicitation.

(3) The procurement, which is

expected to exceed the 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.

§ 12.945 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.

§ 12.946 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.

§ 12.947 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 documents,

as appropriate, whether contractors

have met the terms, conditions and

specifications of the contract.

§ 12.948 Contract provisions.

The recipient shall include, in

addition to provisions to define a sound

and complete agreement, the provisions

below in all contracts and 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.

(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
17250 Federal Register / Vol. 60, No. 65 / Wednesday, April 5, 1995 / Rules and Regulations

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 subpart, as applicable.

Reports and Records

§ 12.950 Purpose of reports and records.

Sections 12.951 through 12.953 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.

§ 12.951 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 § 12.926.

(b) The Federal awarding agency shall

prescribe the frequency of submission

for performance reports. Except as

provided in § 12.951(f), performance

reports will 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 semiannual 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) A final technical or performance

report shall be required after completion

of the project only if the awarding

agency determines this to be

appropriate.

(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.

§ 12.952 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 will

require recipients to use either 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

accrual information through best

estimates based upon 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

annual and final reports. Extensions of

reporting due dates may be approved by

the Federal awarding agency upon

request by the recipient.

(2) SF–272, Report of Federal Cash

Transactions.
Federal Register / Vol. 60, No. 65 / Wednesday, April 5, 1995 / Rules and Regulations 17251

(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

§ 12.921, 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 action

expedites or contributes to the accuracy

or reporting.

§ 12.953 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. 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

allocation plans, etc., as specified in

§ 12.953(g).

(c) Copies of original records may be

substituted for the original records if

authorized by the Federal awarding

agency.

(d) The Federal awarding agency will

request transfer of certain records to its

custody from recipients when it

determines that the records possess long

term retention value. However, in order

to avoid duplicate recordkeeping, 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

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

and (g)(2) of this section apply to the

following types of documents, and their

supporting records: indirect cost rate

computations or proposals, cost

allocation plans, and any similar

accounting computations of the rate at

which a particular group of costs is

chargeable (such as computer usage

chargeback rates or composite fringe

benefit rates).

(1) If submitted for negotiation. If the

recipient submits to 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

the 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.

Termination and Enforcement

§ 12.960 Purpose of termination and

enforcement.

Sections 12.961 and 12.962 set forth

uniform suspension, termination and

enforcement procedures.
17252 Federal Register / Vol. 60, No. 65 / Wednesday, April 5, 1995 / Rules and Regulations

§ 12.961 Termination.

(a) Awards may be terminated in

whole or in part only if paragraph (a)(1),

(a)(2) or (a)(3) of this section applies.

(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.

(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

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

(b) If costs are allowed under an

award, the responsibilities of the

recipient referred to in § 12.971(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.

§ 12.962 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

§ 12.914, 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 Federal 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 paragraphs (c)

(1) and (2) of this section apply:

(1) The costs result from obligations

which are properly incurred by the

recipient before the effective date of

suspension or termination, are not in

anticipation of it, and in the case of a

termination, are noncancellable.

(2) The costs would be allowable if

the award were not suspended or

expired normally at the end of the

funding period in which the termination

takes effect.

(d) Relationship to debarment and

suspension. The enforcement remedies

identified in this section, including

suspension and termination, do not

preclude a recipient from being subject

to debarment and suspension under

E.O.s 12549 and 12689 and the Federal

awarding agency implementing

regulations (see 43 CFR part 12).

After-the-Award Requirements

§ 12.970 Purpose.

Sections 12.971 through 12.973

contain closeout procedures and other

procedures for subsequent

disallowances and adjustments.

§ 12.971 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

§§ 12.931 through 12.937.

(g) If 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.

§ 12.972 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 § 12.926.

(4) Property management

requirements in §§ 12.931 through

12.937.

(5) Records retention as required in

§ 12.953.

(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 § 12.973(a),

including those for property

management as applicable, are

considered and provisions made for

continuing responsibilities of the

recipient, as appropriate.

§ 12.973 Collection of amounts due.

(a) Any funds paid to a recipient in

excess of the amount to which the

recipient is finally determined to be

entitled under the terms and conditions

of the award constitute a debt to the

Federal Government. If not paid within

a reasonable period after the demand for

payment, the Federal awarding agency

may reduce the debt by paragraph (a)

(1), (2) or (3) of this section:
Federal Register / Vol. 60, No. 65 / Wednesday, April 5, 1995 / Rules and Regulations 17253

(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.

(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.’’

Appendix A to Subpart F—Contract

Provisions

All contracts awarded by a recipient,

including small purchases, shall contain the

following provisions as applicable:

1. 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.’’

2. Copeland ‘‘Anti-Kickback’’ Act (18

U.S.C. 874 and 40 U.S.C. 276c)—All

contracts and subgrants in excess of $100,000

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.

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

276a to a–7)—When required by Federal

program legislation, all construction

contracts awarded by the recipients and

subrecipients of more than $2,000 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.

4. Contract Work Hours and Safety

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

applicable, all contracts awarded by

recipients in excess of $100,000 for

construction contracts and for other contracts

that involve the employment of mechanics or

laborers 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.

5. 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.

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

and the Federal Water Pollution Control Act

(33 U.S.C. 1251 et seq.), as amended—

Contracts and subgrants of amounts in excess

of $100,000 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).

7. Byrd Anti-Lobbying Amendment (31

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

for an award of more than $100,000 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.

8. Debarment and Suspension (E.O.s 12549

and 12689)—No contracts shall be made to

parties listed on the General Services

Administration’s ‘‘Lists 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 their

exclusion status and that of their principals.

[FR Doc. 95–8175 Filed 4–4–95; 8:45 am]

BILLING CODE 4310–RF–M

FEDERAL COMMUNICATIONS

COMMISSION

47 CFR Part 73

[MM Docket No. 93–278; RM–8344]

Radio Broadcasting Services; Pequot

Lakes, MN

AGENCY: Federal Communications

Commission.

ACTION: Final rule.

SUMMARY: This document allots Channel

261A to Pequot Lakes, Minnesota, as

that community’s second FM broadcast

service in response to a petition filed by

Minnesota Christian Broadcasters, Inc.

See 58 FR 62318, November 26, 1993.

Canadian concurrence has been

obtained for this allotment at

coordinates 46–36–11 and 94–18–33

without a site restriction. With this

action, this proceeding is terminated.

DATES: Effective May 12, 1995. The

window period for filing applications

for Channel 261A at Pequot Lakes will

open on May 12, 1995, and close on

June 12, 1995.

FOR FURTHER INFORMATION CONTACT:

Kathleen Scheuerle, Mass Media

Bureau, (202) 418–2180.

SUPPLEMENTARY INFORMATION: This is a

summary of the Commission’s Report

and Order, MM Docket No. 93–278,

adopted March 21, 1995, and released

March 28, 1995. The full text of this

Commission decision is available for

inspection and copying during normal

business hours in the Commission’s

Reference Center (Room 239), 1919 M

Street, NW, Washington, D.C. The

complete text of this decision may also

be purchased from the Commission’s

copy contractors, International

Transcription Services, Inc., 2100 M

Street, NW, Suite 140, Washington, D.C.

20037, (202) 857–3800.