101 
‘‘(C) earnings; and 
‘‘(D) hours (in the aggregate) of community 
service employment-based training pursuant to 
subparagraphs 
(A) 
and 
(B)(I) 
of 
section 
502(b)(1); and 
‘‘(2) ADDITIONAL INDICATORS.—The additional 
indicators of performance described in subsection 
(a)(2)(A)(ii) shall consist of— 
‘‘(A) retention in unsubsidized employment 
for 1 year; 
‘‘(B) the number of eligible individuals 
served, including the number of participating in-
dividuals described in section 516(2)(A)(ii), and 
‘‘(C) any other indicators of performance 
that the Secretary determines to be appropriate 
to evaluate services and performance. 
‘‘(c) DEFINITIONS
OF INDICATORS.—The Secretary, 
after consultation with national and State grantees, rep-
resentatives of business and labor organizations, and pro-
viders of services, shall issue rules that define the indicators 
of performance described in subsection (b). 
‘‘(d) CORRECTIVE EFFORTS.— 
‘‘(1) NATIONAL GRANTEES.— 
‘‘(A) IN
GENERAL.—Not later than 120 
days after the end of each program year, the Sec-
102 
retary shall determine if a national grantee 
awarded a grant under section 514 has met the 
expected levels of performance established under 
subsection (a)(2)(c) (including any adjustments 
to such levels made in accordance with to sub-
section (a)(2)(D)) for the core indicators of per-
formance described in subsection (b)(1). 
‘‘(B) TECHNICAL ASSISTANCE AND CORREC-
TIVE ACTION PLAN.— 
‘‘(i) IN GENERAL.—If the Secretary de-
termines that a grantee fails to meet the ex-
pected levels of performance described in 
paragraph (1), the Secretary shall provide 
technical assistance and require such grant-
ee to submit a corrective action plan not 
later than 160 days after the end of the pro-
gram year. 
‘‘(ii) CONTENT.—The plan submitted 
under subparagraph (A) shall detail the 
steps the grantee will take to meet the na-
tional performance measures in the next 
program year. 
‘‘(2) STATE GRANTEES.— 
‘‘(A) IN
GENERAL.—Not later than 120 
days after the end of the program year, the Sec-
103 
retary shall determine if a State grantee allotted 
funds under section 506(e) has met the expected 
levels of performance established under subsection 
(a)(2)(C) (including any adjustments to such 
levels made in accordance with to subsection 
(a)(2)(D)) for the core indicators of performance 
described in subsection (b)(1). 
‘‘(B) TECHNICAL ASSISTANCE AND CORREC-
TIVE ACTION PLAN.—If a State fails to meet the 
levels of performance described in subparagraph 
(A), the Secretary shall provide technical assist-
ance and require the State to submit a corrective 
action plan not later than 160 days after the end 
of the program year. 
‘‘(C) CONTENT.—The plan described in sub-
paragraph (B) shall detail the steps the State 
will take to meet the standards. 
‘‘(D) FAILURE
TO
MEET
PERFORMANCE 
MEASURES FOR SECOND AND THIRD YEARS.— 
‘‘(i) AFTER
SECOND
YEAR
OF
FAIL-
URE.—If a State fails to meet the levels of 
performance described in subparagraph (A) 
for a second consecutive program year, the 
Secretary shall provide for the conduct by 
the State of a competition to award, for the
104 
first full program year following the deter-
mination (minimizing, to the extent pos-
sible, the disruption of services provided to 
participants), an amount equal to 25 per-
cent of the funds available to the State for 
such year. 
‘‘(ii) AFTER
THIRD
YEAR
OF
FAIL-
URE.—If the State fails to meet the levels of 
performance described in subparagraph (A) 
for a third consecutive program year, the 
Secretary shall provide for the conduct by 
the State of a competition to award the 
funds allocated to the State for the first full 
program year following the Secretary’s de-
termination that the State has not met the 
performance measures. 
‘‘SEC. 514. COMPETITIVE REQUIREMENTS RELATING TO 
GRANT AWARDS. 
‘‘(a) PROGRAM AUTHORIZED.—From the funds avail-
able for national grants under section 506(d), the Secretary 
shall award grants to eligible applicants to carry out 
projects under this title through a competitive process that 
is conducted every 3 years.
105 
‘‘(b) ELIGIBLE APPLICANTS.—An applicant shall be 
eligible to receive a grant under subsection (a) in accord-
ance with section 502(b)(1), and subsections (c) and (d). 
‘‘(c) CRITERIA.—The Secretary shall select the eligible 
applicants to receive grants under subsection (a) based on 
the following: 
‘‘(1) The applicant’s ability to administer a pro-
gram that serves the greatest number of eligible indi-
viduals, giving particular consideration to individ-
uals with greatest economic need, greatest social need, 
poor employment history or prospects, and over the 
age of 65. 
‘‘(2) The applicant’s ability to administer a pro-
gram that provides employment for eligible individ-
uals in the communities in which such individuals re-
side, or in nearby communities, that will contribute 
to the general welfare of the community. 
‘‘(3) The applicant’s ability to administer a pro-
gram that moves eligible individuals into unsub-
sidized employment. 
‘‘(4) The applicant’s prior performance, if any, 
in meeting performance measures under this title and 
under other Federal or State programs.
106 
‘‘(5) The applicant’s ability to move individuals 
with multiple barriers to employment into unsub-
sidized employment. 
‘‘(6) The applicant’s ability to coordinate with 
other organizations at the State and local level. 
‘‘(7) The applicant’s plan for fiscal management 
of the program to be administered with funds received 
under this section. 
‘‘(8) Any additional criteria that the Secretary 
considers to be appropriate in order to minimize dis-
ruption for current participants. 
‘‘(d) RESPONSIBILITY TESTS.— 
‘‘(1) IN GENERAL.—Before final selection of a 
grantee, the Secretary shall conduct a review of avail-
able records to assess the applicant’s overall responsi-
bility to administer Federal funds. 
‘‘(2) REVIEW.—As part of the review described 
in paragraph (1), the Secretary may consider any in-
formation, including the organization’s history with 
regard to the management of other grants. 
‘‘(3) FAILURE TO SATISFY TEST.—The failure to 
satisfy any 1 responsibility test that is listed in para-
graph (4), excluding those listed in subparagraphs 
(A) and (B), does not establish that the organization
107 
is not responsible unless such failure is substantial or 
persists for 2 or more consecutive years. 
‘‘(4) TEST.—The responsibility tests include re-
view of the following factors: 
‘‘(A) Unsuccessful efforts by the organiza-
tion to recover debts, after 3 demand letters have 
been sent, that are established by final agency 
action, or a failure to comply with an approved 
repayment plan. 
‘‘(B) Established fraud or criminal activity 
of a significant nature within the organization. 
‘‘(C) Serious administrative deficiencies 
identified by the Secretary, such as failure to 
maintain a financial management system as re-
quired by Federal rules or regulations. 
‘‘(D) Willful obstruction of the audit proc-
ess. 
‘‘(E) Failure to provide services to appli-
cants as agreed to in a current or recent grant 
or to meet applicable performance measures. 
‘‘(F) Failure to correct deficiencies brought 
to the grantee’s attention in writing as a result 
of monitoring activities, reviews, assessments, or 
other activities.
108 
‘‘(G) Failure to return a grant closeout 
package or outstanding advances within 90 days 
of the grant expiration date or receipt of closeout 
package, whichever is later, unless an extension 
has been requested and granted. 
‘‘(H) Failure to submit required reports. 
‘‘(I) Failure to properly report and dispose 
of Government property as instructed by the Sec-
retary. 
‘‘(J) Failure to have maintained effective 
cash management or cost controls resulting in 
excess cash on hand. 
‘‘(K) Failure to ensure that a subrecipient 
complies with its Office of Management and 
Budget Circular A-133 audit requirements speci-
fied at section 667.200(b) of title 20, Code of 
Federal Regulations. 
‘‘(L) Failure to audit a subrecipient within 
the required period. 
‘‘(M) Final disallowed costs in excess of 5 
percent of the grant or contract award if, in the 
judgment of the grant officer, the disallowances 
are egregious findings.