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award grants under section 502(b) to eligible appli-
cants, through a competitive process that emphasizes 
meeting performance requirements, to carry out 
projects under this title for a period of 4 years, ex-
cept as provided in paragraph (2). The Secretary 
may not conduct a grant competition under this title 
until the day described in section 513(e). 
‘‘(2) CONTINUATION OF APPROVAL BASED ON 
PERFORMANCE.—If the recipient of a grant made 
under paragraph (1) meets the expected levels of 
performance described in section 513(d)(2)(A) for 
each year of such 4-year period with respect to a 
project, the Secretary may award a grant under sec-
tion 502(b) to such recipient to continue such 
project beyond such 4-year period for 1 additional 
year without regard to such process. 
‘‘(b) ELIGIBLE APPLICANTS.—An applicant shall be 
eligible to receive a grant under section 502(b) in accord-
ance with subsections (a), (c), and (d). 
‘‘(c) CRITERIA.—For purposes of subsection (a)(1), 
the Secretary shall select the eligible applicants to receive 
grants based on the following: 
‘‘(1) The applicant’s ability to administer a 
project that serves the greatest number of eligible 
individuals, giving particular consideration to indi-
169
viduals with greatest economic need, individuals with 
greatest social need, and individuals described in 
subsection (a)(3)(B)(ii) or (b)(2) of section 518. 
‘‘(2) The applicant’s ability to administer a 
project that provides employment for eligible individ-
uals in the communities in which such individuals 
reside, or in nearby communities, that will con-
tribute to the general welfare of the communities in-
volved. 
‘‘(3) The applicant’s ability to administer a 
project that moves eligible individuals into unsub-
sidized employment. 
‘‘(4) The applicant’s prior performance, if any, 
in meeting core measures of performance and ad-
dressing additional indicators of performance under 
this title and the applicant’s ability to address core 
indicators of performance and additional indicators 
of performance under this title and under other Fed-
eral or State programs in the case of an applicant 
that has not previously received a grant under this 
title. 
‘‘(5) The applicant’s ability to move individuals 
with multiple barriers to employment, including indi-
viduals described in subsection (a)(3)(B)(ii) or 
(b)(2) of section 518, into unsubsidized employment.
170
‘‘(6) The applicant’s ability to coordinate activi-
ties with other organizations at the State and local 
level. 
‘‘(7) The applicant’s plan for fiscal manage-
ment of the project to be administered with funds 
received in accordance with this section. 
‘‘(8) The applicant’s ability to administer a 
project that provides community service. 
‘‘(9) The applicant’s ability to minimize disrup-
tion in services for participants and in community 
services provided. 
‘‘(10) Any additional criteria that the Secretary 
considers to be appropriate in order to minimize dis-
ruption in services for participants. 
‘‘(d) RESPONSIBILITY TESTS.—
‘‘(1) IN GENERAL.—Before final selection of a 
grantee, the Secretary shall conduct a review of 
available records to assess the applicant’s overall re-
sponsibility to administer Federal funds. 
‘‘(2) REVIEW.—As part of the review described 
in paragraph (1), the Secretary may consider any in-
formation, including the applicant’s history with re-
gard to the management of other grants. 
‘‘(3) FAILURE TO SATISFY TEST.—The failure 
to satisfy a responsibility test with respect to any 1
171
factor that is listed in paragraph (4), excluding 
those listed in subparagraphs (A) and (B) of such 
paragraph, does not establish that the applicant 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 applicant 
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 
or agency involved. 
‘‘(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 partici-
pants for a current or recent grant or to meet 
applicable core measures of performance or ad-
dress applicable indicators of performance.
172
‘‘(F) 
Failure 
to 
correct 
deficiencies 
brought to the grantee’s attention in writing as 
a result of monitoring activities, reviews, assess-
ments, or other activities. 
‘‘(G) Failure to return a grant closeout 
package or outstanding advances within 90 
days of the grant expiration date or receipt of 
the 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 
Secretary. 
‘‘(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 
specified 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
173
judgment of the grant officer, the disallowances 
are egregious. 
‘‘(N) Failure to establish a mechanism to 
resolve a subrecipient’s audit in a timely fash-
ion. 
‘‘(5) DETERMINATION.—Applicants that are de-
termined to be not responsible shall not be selected 
as grantees. 
‘‘(6) DISALLOWED
COSTS.—Interest on dis-
allowed costs shall accrue in accordance with the 
Debt Collection Improvement Act of 1996, including 
the amendments made by that Act. 
‘‘(e) GRANTEES SERVING INDIVIDUALS WITH BAR-
RIERS TO EMPLOYMENT.—
‘‘(1) DEFINITION.—In this subsection, the term 
‘individuals with barriers to employment’ means mi-
nority individuals, Indian individuals, individuals 
with greatest economic need, and individuals de-
scribed in subsection (a)(3)(B)(ii) or (b)(2) of sec-
tion 518. 
‘‘(2) SPECIAL CONSIDERATION.—In areas where 
a substantial population of individuals with barriers 
to employment exists, a grantee that receives a na-
tional grant in accordance with this section shall, in 
selecting subgrantees, give special consideration to