Illinois Administrative Code › Title 47 - HOUSING AND COMMUNITY DEVELOPMENT › Part 1 - STANDARD GRANT ADMINISTRATIVE REQUIREMENTS › Appendix A - Office of Management and Budget Circular A-102

Current through Register Vol. 48, No. 28, July 12, 2024
Uniform Requirements for Assistance to State and Local
				Governments (January, 1981)
Attachment A: Cash Depositories
1. This Attachment sets forth standards governing the use of
				banks and other institutions as depositories of funds advanced under
				grants.
2. Except for situations described in paragraphs 3, 4, and 5,
				no grantor agency shall:
a. Require physical segregation of cash depositories
				for funds which are provided to a grantee.
b. Establish any eligibility requirements for cash
				depositories for funds which are provided to a grantee.
3. A separate bank account shall be required when applicable
				letter-of-credit agreements provide that drawdowns will be made when the
				grantee's checks are presented to the bank for payment.
4. Any moneys advanced to a grantee which are subject to the
				control or regulation of the United States or any of its officers, agents or
				employees (public moneys as defined in Treasury Circular No. 176 ( 31 CFR
				202(1984) ), as amended) must be deposited in a bank with Federal Deposit
				Insurance Corporation (FDIC) insurance coverage and the balance exceeding the
				FDIC coverage must be collaterally secured.
5. Consistent with the national goal of expanding the
				opportunities for minority business enterprises, grantees and subgrantees shall
				be encouraged to use minority banks (a bank which is owned at least 50 percent
				by minority group members). A list of minority owned banks can be obtained from
				the Office of Minority Business Enterprise, Department of Commerce, Washington,
				D.C. 20230
Attachment B: Bonding and Insurance
1. This Attachment sets forth bonding and insurance
				requirements for grants. No other bonding and insurance requirements shall be
				imposed other than those normally required by the grantee.
2. Except as otherwise required by law, a grant that requires
				the contracting (or subcontracting) for construction or facility improvements
				shall provide for the grantee to follow its own requirements relating to bid
				guarantees, performance bonds, and payment bonds unless the construction
				contract or subcontract exceeds $100,000. For those contracts or subcontracts
				exceeding $100,000, the Federal agency may accept the bonding policy and
				requirements of the grantee provided the Federal agency has made a
				determination that the Government's interest is adequately protected. If such a
				determination has not been made, the minimum requirements shall be as
				follows:
a. 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 will, upon acceptance of his
				bid, execute such contractual documents as may be required within the time
				specified.
b. 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 contractor's
				obligations under such contract.
c. 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 law of all persons
				supplying labor and material in the execution of the work provided for in the
				contract.
3. Where the Federal Government guarantees or insures the
				repayment of money borrowed by the grantee, the Federal agency, at its
				discretion, may require adequate bonding and insurance if the bonding and
				insurance requirements of the grantee are not deemed adequate to protect the
				interest of the Federal Government. (See 47 Ill. Adm. Code
				1.50(c),
				Cash Management)
4. Where bonds are required in the situations described above,
				the bonds shall be obtained from companies holding certificates of authority as
				acceptable sureties ( 31 CFR 223 ).
Attachment C: Retention and Custodial Requirements for
				Records
1. This Attachment sets forth record retention requirements for
				grants. Federal grantor agencies shall not impose any record retention
				requirements upon grantees other than those described below.
2. Financial records, supporting documents, statistical
				records, and all other records pertinent to a grant shall be retained for a
				period of three years, with the following qualifications.
a. If any litigation, claim or audit is started
				before the expiration of the 3-year period, the records shall be retained until
				all litigations, claims, or audit findings involving the records have been
				resolved.
b. Records for nonexpendable property acquired with
				Federal funds shall be retained for 3 years after its final disposition.
c. When records are transferred to or maintained by
				the Federal sponsoring agency, the 3-year retention requirement is not
				applicable to the grantee.
3. The retention period starts from the date of the submission
				of the final expenditure report or, for grants that are renewed annually, from
				the date of the submission of the annual financial status report.
4. Grantees should be authorized by the Federal grantor agency,
				if they so desire, to substitute microfilm copies in lieu of original records.
				(The Department will forward all requests to microfilm records to the Secretary
				of State's Record Commission, which will render a decision based on the
				Secretary of State Regulations (44 Ill. Adm. Code 4000) of the Local Records
				Commission and Local Records Act (Ill. Rev. Stat. 1983, ch. 116, pars. 43.102
				et seq.).)
5. The Federal grantor agency shall request transfer of certain
				records to its custody from grantees when it determines that the records
				possess long-term retention value. However, in order to avoid duplicate
				record-keeping, a Federal grantor agency may make arrangements with grantees to
				retain any records that are continuously needed for joint use. (The Department
				will take possession of grant records only when the Grantee no longer
				exists.)
6. The head of the Federal grantor agency and the Comptroller
				General of the United States, or any of their duly authorized representatives,
				shall have access to any pertinent books, documents, papers, and records of
				grantees and subgrantees to make audits, examinations, excerpts and
				transcripts.
7. Unless otherwise required by law, no Federal grantor agency
				shall place restrictions on grantees that will limit public access to the
				records of grantees that are pertinent to a grant except when the agency can
				demonstrate that such records must be kept confidential and would have been
				excepted from disclosure pursuant to the Freedom of Information Act (
				5
				U.S.C. 552 ) if the records had belonged to
				the grantor agency.
Attachment E: Program Income
1. Federal grantor agencies shall apply the standards set forth
				in this Attachment in requiring grantees to account for program income related
				to projects financed in whole or in part with Federal grant funds. Program
				income means gross income earned by the grantee from grant-supported
				activities. Such earnings exclude interest earned on advances and may include,
				but will not be limited to, income from service fees, sale of commodities,
				usage or rental fees, and royalties on patents and copyrights.
2. Interest earned on advances of Federal funds shall be
				remitted to the Federal agency except for interest earned on advances to States
				or instrumentalities of a State as provided by the Intergovernmental
				Cooperation Act of 1968 ( Public Law 90-577 )) and advances made to tribal
				organizations pursuant to section 102, 103, or 104 of the Indian Self
				Determination Act ( Public Law 93-638 ).
3. Proceeds from the sale of real and personal property, either
				provided by the Federal Government or purchased in whole or part with Federal
				funds, shall be handled in accordance with Attachment N to this Circular
				pertaining to Property Management.
4. Unless the grant agreement provides otherwise, grantees
				shall have no obligation to the Federal Government with, respect to royalties
				received as a result of copyrights or patents produced under the grant or other
				agreement. (See paragraph 7, Attachment N.)
5. All other program income earned during the grant period
				shall be retained by the grantee and, in accordance with the grant agreement,
				shall be:
a. Added to funds committed to the project by the
				grantor and grantee and be used to further eligible program objectives.
b. Used to finance the non-Federal share of the
				project when approved by the Federal Sponsoring agency; or
c. Deducted from the total project costs for the
				purpose of determining the net costs on which the Federal share of costs will
				be based.
6. Federal grantor agencies shall require the grantees to
				record the receipt and expenditure of revenues (such as taxes, special
				assessments, levies, fines, etc.) as a part of grant project transactions when
				such revenues are specifically earmarked for a grant project in accordance with
				grant agreements.
Attachment F: Matching Share
1. This Attachment sets forth criteria and procedures for the
				allowability of cash in-kind contributions made by grantees, subgrantees or
				third parties in satisfying cost sharing and matching requirements of Federal
				grantor agencies.
2. The following definitions apply for the purpose of this
				Attachment:
a. Project Costs. Project costs are all allowable
				costs as set forth in Federal Management Circular No. 74-4 incurred by a
				grantee and the value of the in-kind contribution made by the grantee or third
				parties in accomplishing the objectives of the grant during the project or
				program period.
b. Cost Sharing and Matching. In general, cost
				sharing and matching represents that portion of project costs not borne by the
				Federal Government. Usually, a minimum percentage for matching share is
				prescribed by program legislation, and matching share requirements are included
				in the grant agreements.
c. Cash Contributions. Cash contributions represent
				the grantee's cash outlay, including the outlay of money contributed to the
				grantee by other public agencies and institutions, and private organizations
				and individuals. When authorized by Federal legislation, Federal funds received
				from other grants may be considered as grantees' cash contributions.
d. In-kind Contributions. In-kind contributions
				represent the value of noncash contributions provided by the grantee, and
				non-Federal parties. Only when authorized by Federal legislation may property
				purchased with Federal funds be considered as the grantee's in-kind
				contributions. In-kind contributions may be in the form of charges for real
				property and nonexpendable personal property and the value of goods and
				services directly benefiting and specifically identifiable to the project or
				program.
3. General guidelines for computing cost sharing or matching
				are as follows:
a. Cost sharing or matching share may consist
				of:
1) Charges incurred by the grantee as project costs.
				(Not all charges require cash outlays during the grant period by the grantee;
				examples are depreciation and use charges for buildings and equipment.)
2) Project costs financed with cash contributed or
				donated to the grantee by other non-Federal public agencies and institutions,
				and private organizations and individuals.
3) Project costs represented by services and real or
				personal property, or use thereof, donated by other public agencies and
				institutions, and private organizations and individuals.
b. All contributions, both cash and in-kind, shall
				be accepted as part of the grantee's matching share when such contributions
				meet all of the following criteria:
1) Are verifiable from the grantee's records;
2) Are not included as contributions for any other
				federally-assisted program;
3) Are necessary and reasonable for proper and
				efficient accomplishment of project objectives;
4) Are types of charges that would be allowable
				under FMC 74-4.
5) Are not paid by the Federal Government under
				another assistance agreement unless authorized under the other agreement and
				the laws and regulations it is subject to.
6) Are provided for in the approved budget when
				required by the Federal agency; and
7) Conform to other provisions of this
				Attachment.
4. Values for grantee in-kind contributions will be established
				at the grantee's actual cost in accordance with FMC 74-4.
5. Specific procedures for the grantees in establishing the
				value of in-kind contributions from non-Federal third parties are set forth
				below:
a. Valuation of volunteer services. Volunteer
				services may be furnished by professional and technical personnel, consultants,
				and other skilled and unskilled labor. Volunteered service may be counted as
				cost sharing or matching if the service is an integral and necessary part of an
				approved program. ("Integral and necessary" is defined as an allowable cost for
				the program if purchased.)
1) Rates for volunteer services. Rates for
				volunteers should be consistent with those paid for similar work in other
				activities of the State or local government. In those instances in which the
				required skills are not found in the grantee organization, rates should be
				consistent with those paid for similar work in the labor market in which the
				grantee competes for the kind of services involved. (Rates shall be based on
				the Department of Employment Security's Occupational Employment Statistic
				Survey.)
2) Volunteers employed by other organizations. When
				an employer other than the grantee furnishes the services of an employee, these
				services shall be valued at the employee's regular rate of pay (exclusive of
				fringe benefits and overhead cost) provided these services are in the same
				skill for which the employee is normally paid.
b. Valuation of donated expendable personal
				property. Donated expendable personal property includes such items as
				expendable equipment, office supplies, laboratory supplies, or workshop and
				classroom supplies. Values assessed to expendable personal property included in
				the cost or matching share should be reasonable and should not exceed the fair
				market value of the property at the time of the donation.
c. Valuation of donated nonexpendable personal
				property, buildings and land or use thereof.
1) The method used for charging matching share for
				donated nonexpendable personal property, buildings, and land may differ
				depending upon the purpose of the grant as follows:
a) If the purpose of the grant is to furnish
				equipment, buildings, or land to the grantee or otherwise provide a facility,
				the total value of the donated property may be claimed as a matching
				share.
b) If the purpose of the grant is to support
				activities that require the use of equipment, buildings, or land on a temporary
				or part-time basis, depreciation or use charges for equipment and buildings may
				be made. The full value of equipment or other capital assets and fair rental
				charges for land may be made provided that the grantor agency has approved the
				charges.
2) The value of donated property will be determined
				in accordance with the usual accounting policies of the grantee with the
				following qualifications:
a) Land and Buildings. The value of donated land and
				buildings may not exceed its fair market value, at the time of donation to the
				grantee as established by an independent appraiser (e.g., certified real
				property appraiser or GSA representatives) and certified by a responsible
				official of the grantee.
b) Nonexpendable personal property. The value of
				donated nonexpendable personal property shall not exceed the fair market value
				of equipment and property of the same age and condition at the time of
				donation.
c) Use of space. 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.
d) Loaned equipment. The value of loaned equipment
				shall not exceed its fair rental value.
6. The following requirements pertain to the grantee's
				supporting records for in-kind contributions from non-Federal third
				parties.
a. Volunteer services must be documented and, to the
				extent feasible, supported by the same methods used by the grantee for its
				employees.
b. The basis for determining the valuation for a
				personal services, material, equipment, buildings, and land must be
				documented.
Attachment G: Standards for Grantee Financial Management
				Systems
1. This Attachment prescribes standards for financial
				management systems of grant-supported activities of State, local, and federally
				recognized Indian tribal governments. Federal grantor agencies shall not impose
				additional standards on grantees unless specifically provided for in other
				Attachments to this Circular. However, grantor agencies are encouraged to make
				suggestions and assist the grantees in establishing or improving financial
				management systems when such assistance is needed or requested.
2. Grantee financial management systems shall provide
				for:
a. Accurate, current, and complete disclosure of the
				financial results of each grant program in accordance with reporting
				requirements set forth in Attachment H to this Circular. When a Federal grantor
				agency requires reporting on an accrual basis, the grantee shall not be
				required to establish an accrual accounting system but shall develop such
				accrual data on its reports on the basis of an analysis of the documentation on
				hand.
b. Records that identify adequately the source and
				application of funds for grant-supported activities. These records shall
				contain information pertaining to Federal awards and authorizations,
				obligations, unobligated balances, assets, liabilities, outlays, and
				income.
c. Effective control over and accountability for all
				funds, property, and other assets. Grantees shall adequately safeguard all such
				assets and shall assure that they are used solely for authorized purposes. (See
				47 Ill. Adm. Code
				1.90,
				Financial Management Standards.)
d. Comparison of actual outlays with budgeted
				amounts for each grant. Also, relation of financial information with
				performance or productivity data, including the production of unit cost
				information whenever appropriate and required by the grantor agency.
e. Procedures to minimize the time elapsing between
				the transfer of funds from the U.S. Treasury and the disbursement by the
				grantee, whenever funds are advanced by the Federal Government. When advances
				are made by a letter-of-credit method, the grantee shall make drawdowns from
				the U.S. Treasury as close as possible to the time of making the disbursements.
				Advances made by primary recipient organizations (those which receive payments
				directly from the Federal Government) to secondary recipients shall conform
				substantially to the same standards of timing and amount as apply to advances
				by Federal agencies to primary recipient organizations.
f. Procedures for determining reasonableness,
				allowability and allocability of costs in accordance with the provisions of
				Federal Management Circular 74-4.
g. Accounting records that are supported by source
				documentation.
h. A systematic method to assure timely and
				appropriate resolution of audit findings and recommendations.
3. Primary grantees shall require subgrantees to adopt the
				standards in paragraph 2, above, except for the requirement in subparagraph 2a,
				regarding reporting forms and frequencies prescribed in Attachment H to this
				Circular.
Attachment H: Financial Reporting Requirements
1. This Attachment prescribes uniform reporting procedures for
				grantees to: summarize expenditures made and Federal funds unexpended for each
				award, report the status of Federal cash advanced, request advances and
				reimbursement when the letter-of-credit method is not used; and promulgates
				standard forms incident thereto. Grantees when obtaining financial information
				required by Federal agencies from subgrantees are not required to use the forms
				contained in this Attachment.
2. The following definitions apply for purposes of this
				Attachment:
a. Accrued expenditures. Accrued expenditures are
				the charges incurred by the grantee during a given period requiring the
				provision of funds for: (1) goods and other tangible property received; (2)
				services performed by employees, contractors, subgrantees, and other payees;
				and (3) other amounts becoming owed under programs for which no current
				services or performance is required such as annuities, insurance claims, and
				other benefit payments.
b. Accrued income. Accrued income is the sum of (1)
				earnings during a given period from (i) services performed by the grantee; and
				(ii) goods and other tangible property delivered to purchasers; and (2) amounts
				becoming owed to the grantee for which no current services or performance is
				required by the grantee.
c. Federal funds authorized. Federal funds
				authorized are the total amount of Federal funds obligated by the Federal
				Government for use by the grantee. This amount may include any authorized
				carryover of unobligated funds from prior fiscal years when permitted by law or
				agency regulation.
d. In-kind contributions. In-kind contributions are
				defined in Attachment F to this Circular.
e. Obligations. Obligations are the amounts of
				orders placed, contracts and grants awarded, services received, and similar
				transactions during a given period that will require payment by the grantee
				during the same or a future period.
f. Outlays. Outlays or expenditures represent
				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
				actual cash disbursements for direct charges for goods and services, the amount
				of indirect expense charged, the value of in-kind contributions applied, and
				the amount of cash advances and payments made to subgrantees. For reports
				prepared on an accrual basis, outlays are the sum of actual 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 grantee for goods and other property
				received, for services performed by employees, contractors, subgrantees and
				other payees and other amounts becoming owed under programs for which no
				current services or performance are required such as annuities, insurance
				claims, and other benefit payments.
g. Program income. Program income is defined in
				Attachment E of this Circular. It may be reported on a cash or accrual basis,
				whichever is used for reporting outlays.
h. Unobligated balance. The unobligated balance is
				the portion of the funds authorized by the Federal agency that has not been
				obligated by the grantee and is determined by deducting the cumulative
				obligations from the cumulative funds authorized.
i. Unliquidated obligations. For reports prepared on
				a cash basis, unliquidated obligations represent the amount of obligations
				incurred by the grantee that has not been paid. For reports prepared on an
				accrued expenditure basis, they represent the amount of obligations incurred by
				the grantee for which an outlay has not been recorded.
Attachment I: Monitoring and Reporting of Program
				Performance
1. This Attachment sets forth the procedures for monitoring and
				reporting program performance under Federal grants. These procedures are
				designed to place greater reliance on grantees to manage the day-to-day
				operations of the grant-supported activities.
2. Grantees shall constantly monitor the performance under
				grant-supported activities to assure that time schedules are being met,
				projected work units by time periods are being accomplished, and other
				performance goals are being achieved. This review shall be made for each
				program, function, or activity of each grant as set forth in the approved grant
				application or award document.
3. Grantees shall submit a performance report for each grant
				which briefly presents the following for each program, function, or activity
				involved as prescribed by the Federal agency:
a. A comparison of actual accomplishments to the
				goals established for the period. Where the output of grant programs can be
				readily quantified, such quantitative data should be related to cost data for
				computation of unit costs.
b. Reasons why established goals were not
				met.
c. Other pertinent information including, when
				appropriate, analysis and explanation of cost overruns or high unit
				costs.
4. Between the required performance reporting dates, events may
				occur which have significant impact upon the project or program. In such cases,
				the grantee shall inform the grantor agency as soon as the following types of
				conditions become known:
a. Problems, delays, or adverse conditions which
				will materially affect the ability to attain program objectives, prevent the
				meeting of time schedules and goals, or preclude the attainment of project work
				units by established time periods. This disclosure shall be accompanied by a
				statement of the action taken, or contemplated, and any Federal assistance
				needed to resolve the situation.
b. Favorable developments or events which enable
				meeting time schedules and goals sooner than anticipated or producing more work
				units than originally projected.
5. If any performance review conducted by the grantee discloses
				the need for change in the budget estimates, the grantee shall submit a request
				for budget revision.
6. The grantor agency shall make site visits as frequently as
				practicable to:
a. Review program accomplishments and management
				control systems.
b. Provide such technical assistance as may be
				required.
Attachment L: Grant Closeout Procedures
1. This Attachment prescribes uniform closeout procedures for
				grantees.
2. The following definitions shall apply for the purpose of the
				Attachment:
a. Grant closeout. The closeout of a grant is the
				process by which a Federal grantor agency determines that all applicable
				administrative actions and all required work of the grant have been completed
				by the grantee and the grantor.
b. Date of completion. The date when all work under
				a grant is completed or the date in the grant award document, or any supplement
				or amendment thereto, on which Federal assistance ends.
c. Termination. The termination of a grant means the
				cancellation of Federal assistance, in whole or in part, under a grant at any
				time prior to the date of completion.
d. Suspension. The suspension of a grant is an
				action by a Federal grantor agency which temporarily suspends Federal
				assistance under the grant pending corrective action by the grantee or pending
				a decision to terminate the grant by the grantor agency.
e. Disallowed costs. Disallowed costs are those
				charges to a grant which the grantor agency or its representative determines to
				be unallowable. (See Federal Management Circular No. 74-4.)
3. All Federal grantor agencies shall establish grant closeout
				procedures which include the following requirements:
a. Upon request, the Federal grantor agency shall
				make prompt payments to a grantee for allowable reimbursable costs under the
				grant being closed out.
b. The grantee shall immediately refund to the
				grantor agency any balance of unobligated (unencumbered) cash advanced to the
				grantee that is not authorized to be retained by the grantee for use on other
				grants.
c. The grantor agency shall obtain from the grantee
				within 90 days after the date of completion of the grant all financial,
				performance, and other reports required as a condition of the grant. The agency
				may grant extensions when requested by the grantee. (This federal requirement
				is further restricted by the Grants Funds Recovery Act (Ill. Rev. Stat. 1984
				Supp., ch. 127, pars. 2301 et seq.) which does not allow extensions.)
d. When authorized by the grant the grantor agency
				shall make a settlement for any upward or downward adjustments to the Federal
				share of costs after these reports are received.
e. The grantee shall account for any property
				acquired with grant funds, or received from the Government in accordance with
				the provisions of Attachment N to this Circular.
f. In the event a final audit has not been performed
				prior to the closeout of the grant, the grantor agency shall retain the right
				to recover an appropriate amount after fully considering the recommendations on
				disallowed costs resulting from the final audit.
4. All Federal grantor agencies shall provide procedures to be
				followed when a grantee has failed to comply with the grant award stipulations,
				standards,or conditions. When that occurs, the grantor agency may, on
				reasonable notice to the grantee, suspend the grant, and withhold further
				payments, or prohibit the grantee from incurring additional obligations of
				grant funds, pending corrective action by the grantee or a decision to
				terminate in accordance with paragraph 5.a. The grantor agency shall allow all
				necessary and proper costs which the grantee could not reasonably avoid during
				the period of suspension provided that they meet the provisions of Federal
				Management Circular No. 74-4.
5. Subject to the provisions of paragraph 5 of the basic
				Circular, of which this Attachment is a part, all Federal grantor agencies
				shall provide for the systematic settlement of terminated grants including the
				following:
a. Termination for cause. The grantor agency may
				terminate any grant in whole, or in part, at any time before the date of
				completion, whenever it is determined that the grantee has failed to comply
				with the conditions of the grant. The grantor agency shall promptly notify the
				grantee in writing of the determination and the reasons for the termination,
				together with the effective date. Payments made to grantees or recoveries by
				the grantor agencies under grants terminated for cause shall be in accord with
				the legal rights and liabilities of the parties.
b. Termination for convenience. The grantor agency
				or grantee may terminate grants in whole, or in part, when both parties agree
				that the continuation of the project would not produce beneficial results
				commensurate with the further expenditure of funds. The two parties shall agree
				upon the termination conditions, including the effective date and, in the case
				of partial terminations, the portions to be terminated. The grantee shall not
				incur new obligations for the terminated portion after the effective date, and
				shall cancel as many outstanding obligations as possible. The Federal agency
				shall allow full credit to the grantee for the Federal share of the
				noncancellable obligations, properly incurred by the grantee prior to
				termination.
Attachment N: Property Management Standards
1. This Attachment prescribes uniform standards governing the
				utilization and disposition of property furnished by the Federal Government or
				acquired in whole or in part with Federal funds or whose cost was charged to a
				project supported by a Federal grant. Federal grantor agencies shall require
				grantees to observe these standards under grants from the Federal Government
				and shall not impose additional requirements unless specifically required by
				Federal law. The grantees shall be authorized to use their own property
				management standards and procedures as long as the provisions of this
				Attachment are included.
2. The following definitions apply for the purpose of this
				Attachment:
a. Real property. Real property means land,
				including land improvements, structures and appurtenances thereto, excluding
				movable machinery and equipment.
b. Personal property. Personal property of any kind
				except real property. It may be tangible -- having physical existence, or
				intangible -- have no physical existence, such as patents, inventions, and
				copyrights.
c. Nonexpendable personal property. Nonexpendable
				personal property means tangible personal property having a useful life of more
				than one year and an acquisition cost of $300 or more per unit. A grantee may
				use its own definition of nonexpendable personal property provided that such
				definition would at least include all tangible personal property as defined
				above.
d. Expendable personal property. Expendable personal
				property refers to all tangible personal property other than nonexpendable
				property.
e. Excess property. Excess property means property
				under the control of any Federal agency which, as determined by the head
				thereof, is no longer required for its needs or discharge of its
				responsibilities.
f. Acquisition cost of purchased nonexpendable
				personal property. Acquisition cost of an item of purchased nonexpendable
				personal property means the net invoice unit price of the property 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 grantee's regular
				accounting practices.
g. Exempt property. Exempt property means tangible
				personal property acquired in whole or in part with Federal funds, and title to
				which is vested in the recipient without further obligation to the Federal
				Government except as provided in subparagraph 6a below. Such unconditional
				vesting of title will be pursuant to any Federal legislation that provides the
				Federal sponsoring agency with adequate authority.
3. Real property. Each Federal grantor agency shall prescribe
				requirements for grantees concerning the use and disposition of real property
				funded partly or wholly by the Federal Government. Unless otherwise provided by
				statute, such requirements, as a minimum, shall contain the following:
a. Title to real property shall vest in the
				recipient subject to the condition that the grantee shall use the real property
				for the authorized purpose of the original grant as long as needed.
b. The grantee shall obtain approval by the grantor
				agency for the use of the real property in other projects when the grantee
				determines that the property is no longer needed for the original grant
				purposes. Use in other projects shall be limited to those under other Federal
				grant programs, or programs that have purposes consistent with those authorized
				for support by the grantor.
c. When the real property is no longer needed as
				provided in a and b above, the grantee shall request disposition instructions
				from the Federal agency or its successor Federal agency. The Federal agency
				shall observe the following rules in the disposition instructions:
1) The grantee may be permitted to retain title
				after it compensates the Federal Government in an amount computed by applying
				the Federal percentage of participation in the cost of the original project to
				the fair market value of the property.
2) The grantee may be directed to sell the property
				under guidelines provided by the Federal agency and pay the Federal Government
				an amount computed by applying the Federal percentage of participation in the
				cost of the original project to the proceeds from sale (after deducting actual
				and reasonable selling and fix-up expenses, if any, from the sales proceeds).
				When the grantee 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 grantee may be directed to transfer title to
				the property to the Federal Government provided that in such cases the grantee
				shall be entitled to compensation computed by applying the grantee's percentage
				of participation in the cost of the program or project to the current fair
				market value of the property.
4. Federally-owned nonexpendable personal property. Title to
				federally-owned property remains vested in the Federal Government. Recipients
				shall submit annually an inventory listing of federally-owned property in their
				custody to the Federal agency. Upon completion of the agreement or when the
				property is no longer needed, the grantee shall report the property to the
				Federal agency for further agency utilization.
If the Federal agency has no further need for the property, it
				shall be declared excess and reported to the General Services Administration.
				Appropriate disposition instructions will be issued to the recipient after
				completion of the Federal agency review.
5. Exempt property. When statutory authority exists title to
				nonexpendable personal property acquired with project funds shall be vested in
				the recipient upon acquisition unless it is determined that to do so is not in
				the furtherance of the objectives of the Federal sponsoring agency. When title
				is vested in the recipient the recipient shall have no other obligation or
				accountability to the Federal Government for its use or disposition except as
				provided in 6a below.
6. Other nonexpendable property. When other nonexpendable
				tangible property is acquired by a grantee with project funds title shall not
				be taken by the Federal Government but shall vest in the grantee subject to the
				following conditions:
a. Right to transfer title. For items of
				nonexpendable personal property having a unit acquisition cost of $1,000 or
				more, the Federal agency may reserve the right to transfer the title to the
				Federal Government or to a third party named by the Federal Government when
				such third party is otherwise eligible under existing statutes. Such
				reservation shall be subject to the following standards:
1) The property shall be appropriately identified in
				the grant or otherwise made known to the grantee in writing.
2) The Federal agency shall issue disposition
				instructions within 120 calendar days after the end of the Federal support of
				the project for which it was acquired. If the Federal agency fails to issue
				disposition instructions within the 120 calendar-day period, the grantee shall
				apply the standards of subparagraph 6b and 6c as appropriate.
3) When the Federal agency exercises its right to
				take title, the personal property shall be subject to the provisions for
				federally-owned nonexpendable property discussed in paragraph 4, above.
4) When title is transferred either to the Federal
				Government or to a third party, the provisions of subparagraph 6c(2)(b) should
				be followed.
b. Use of other tangible nonexpendable property for
				which the grantee has title.
1) The grantee shall use the property 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. When no longer
				needed for the original project or program, the grantee shall use the property
				in connection with its other federally sponsored activities, in the following
				order of priority:
a) Activities sponsored by the same Federal
				agency.
b) Activities sponsored by other Federal
				agencies.
2) Shared use. During the time that nonexpendable
				personal property is held for use on the project or program for which it was
				acquired, the grantee 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 property was originally acquired. First preference for
				such other use shall be given to other projects or programs sponsored by the
				Federal agency that financed the property; second preference shall be given to
				projects or programs sponsored by other Federal agencies. If the property is
				owned by the Federal Government, use on other activities not sponsored by the
				Federal Government shall be permissible if authorized by the Federal agency.
				User charges should be considered if appropriate.
c. Disposition of other nonexpendable property. When
				the grantee no longer needs the property as provided in 6b above, the property
				may be used for other activities in accordance with the following
				standards:
1) Nonexpendable property with a unit acquisition
				cost of less than $1,000. The grantee may use the property for other activities
				without reimbursement to the Federal Government or sell the property and retain
				the proceeds.
2) Nonexpendable personal property with a unit
				acquisition cost of $1,000 or more. The grantee may retain the property for
				other uses provided that compensation is made to the original Federal 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 property. If the grantee has no
				need for the property and the property has further use value, the grantee shall
				request disposition instructions from the original grantor agency.
The Federal agency shall determine whether the
				property can be used to meet the agency's requirements. If no requirement
				exists within that agency, the availability of the property shall be reported,
				in accordance with the guidelines of the Federal Property Management
				Regulations (FPMR), to the General Services Administration by the Federal
				agency to determine whether a requirement for the property exists in other
				Federal agencies. The Federal agency shall issue instructions to the grantee no
				later than 120 days after the grantee request and the following procedures
				shall govern:
a) If so instructed or if disposition instructions
				are not issued within 120 calendar days after the grantee's request, the
				grantee shall sell the property and reimburse the Federal 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
				grantee shall be permitted to deduct and retail from the Federal share $100 or
				ten percent of the proceeds, whichever is greater, for the grantee's selling
				and handling expenses.
b) If the grantee is instructed to ship the property
				elsewhere the grantee shall be reimbursed by the benefiting Federal agency with
				an amount which is computed by applying the percentage of the grantee
				participation in the cost of the original grant project or program to the
				current fair market value of the property, plus any reasonable shipping or
				interim storage costs incurred.
c) If the grantee is instructed to otherwise dispose
				of the property, the grantee shall be reimbursed by the Federal agency for such
				costs incurred in its disposition.
d. Property management standards for nonexpendable
				property. The grantee's property management standards for nonexpendable
				personal property shall include the following procedural requirements:
1) Property records shall be maintained accurately
				and shall include:
a) A description of the property.
b) Manufacturer's serial number, model number,
				Federal stock number, national stock number, or other identification
				number.
c) Source of the property including grant or other
				agreement number.
d) Whether title vests in the grantee or the Federal
				Government.
e) Acquisition date (or date received, if the
				property was furnished by the Federal Government) and cost.
f) Percentage (at the end of the budget year) of
				Federal participation in the cost of the project or program for which the
				property was acquired. (Not applicable to property furnished by the Federal
				Government.)
g) Location, use and condition of the property and
				the date the information was reported.
h) Unit acquisition cost.
i) Ultimate disposition data, including date of
				disposal and sales price or the method used to determine current fair market
				value where a grantee compensates the Federal agency for its share.
2) Property owned by the Federal Government must be
				marked to indicate Federal ownership.
3) A physical inventory of property shall be taken
				and the results reconciled with the property 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 grantee shall, in connection with the
				inventory, verify the existence, current utilization, and continued need for
				the property.
4) A control system shall be in effect to insure
				adequate safeguards to prevent loss, damage, or theft of the property. Any
				loss, damage or theft of nonexpendable property shall be investigated and fully
				documented; if the property was owned by the Federal Government, the grantee
				shall promptly notify the Federal agency.
5) Adequate maintenance procedures shall be
				implemented to keep the property in good condition.
6) Where the grantee is authorized or required to
				sell the property, proper sales procedures shall be established which would
				provide for competition to the extent practicable and result in the highest
				possible return.
7. Expendable personal property. Title to expendable personal
				property shall vest in the grantee upon acquisition. If there is a residual
				inventory of such property exceeding $1,000 in total aggregate fair market
				value, upon termination or completion of the grant, and if the property is not
				needed for any other federally sponsored project or program, the grantee shall
				retain the property for use on nonfederally sponsored activities, or sell it,
				but must in either case, compensate the Federal Government for its share. The
				amount of compensation shall be computed in the same manner as nonexpendable
				personal property.
8. Intangible property.
a. Inventions and patents. If any program produces
				patentable items, patent rights, processes, or inventions, in the course of
				work sponsored by the Federal Government, such fact shall be promptly and fully
				reported to the Federal agency. Unless there is a prior agreement between the
				grantee and the Federal agency on disposition of such items, the Federal agency
				shall determine whether protection on the invention or discovery shall be
				sought. The Federal agency will also determine how the rights in the invention
				or discovery, including rights under any patent issued thereon, shall be
				allocated and administrated in order to protect the public interest consistent
				with "Government Patent Policy" (President's Memorandum for Heads of Executive
				Department and Agencies, August 23, 1971, and statement of Government Patent
				Policy as printed in 36 FR 16889).
b. Copyrights. Except as otherwise provided in the
				terms and conditions of the agreement the author or the grantee organization is
				free to copyright any books, publications, or other copyrightable materials
				developed in the course of or under a Federal agreement, but the Federal agency
				shall reserve a royalty-free nonexclusive and irrevocable right to reproduce,
				publish, or otherwise use, and to authorize others to use the work for
				Government purposes.
9. Excess personal property. When title to excess property is
				vested in grantees such property shall be accounted for and disposed of in
				accordance with paragraphs 6c and 6d of this Attachment.
Attachment O: Procurement Standards
1. Applicability
a. This Attachment establishes standards and
				guidelines for the procurement of supplies, equipment, construction and
				services for Federal assistance programs. These standards are furnished to
				ensure that such materials and services are obtained efficiently and
				economically and in compliance with the provisions of applicable Federal law
				and executive orders.
b. No additional procurement requirements or
				subordinate regulations shall be imposed upon grantees by executive agencies
				unless specifically required by Federal law or executive orders or authorized
				by the Administrator for Federal Procurement Policy. This prohibition is not
				applicable to payment conditions issued in accordance with Treasury Circular
				1075, individual grantee requirements pursuant to Section 10 of the basic
				circular or the provisions of this or other OMB circulars.
c. Provisions of current subordinate requirements
				not conforming to this Attachment shall be rescinded by grantor agencies unless
				approved by the Office of Federal Procurement Policy (OFPP).
2. Grantee/Grantor Responsibility
a. These standards do not relieve the grantee of any
				contractual responsibilities under its contracts. The grantee is responsible,
				in accordance with good administrative practice and sound business judgment,
				for the settlement of all contractual and administrative issues arising out of
				procurements entered in support of a grant. These include but are not limited
				to source evaluation, protests, disputes, and claims. Executive agencies shall
				not substitute their judgement for that of the grantee unless the matter is
				primarily a Federal concern. Violations of law are to be referred to the local,
				State, or Federal authority having proper jurisdiction.
b. Grantees shall use their own procurement
				procedures which reflect applicable State and local laws and regulations,
				provided that procurements for Federal Assistance Programs conform to the
				standards set forth in this Attachment and applicable Federal law.
3. Grantee Procurement Improvement. Executive agencies awarding
				Federal grants or other assistance which require or allow procurement by the
				recipients are encouraged to assist recipients in improving their procurement
				capabilities by providing them with technical assistance training,
				publications, and other aid.
4. Procurement System Reviews
a. Executive agencies are encouraged to perform
				reviews of their grantees' procurement systems if a continuing relationship
				with the grantee is anticipated or a substantial amount of the Federal
				assistance is to be used for procurement and review of individual contracts is
				anticipated. The purpose of the review shall be to determine: (1) whether a
				grantee's procurement system meets the standards prescribed by this Attachment
				or other criteria acceptable to the OFPP, such provisions of the Model
				Procurement Code for State and local government; and (2) whether the grantee's
				procurement system should be certified by the reviewing agency. Such a review
				will also give an agency an opportunity to give technical assistance to a
				grantee to remedy its procurement system if it does not fully comply. In
				addition, such a review may provide a basis for deciding whether the grantee's
				contracts and related procurement documents should be subject to the grantor's
				prior approval, as provided by Section 6.
b. In conducting procurement system review, grantor
				agencies will evaluate a grantee's procurement system in terms of whether it
				complies with the standards prescribed by this Attachment and represents a
				fair, efficient and effective procurement system. To the maximum extent
				feasible, reviewers will rely upon State or local evaluations and analyses
				performed by agencies or organizations independent of the grantee contracting
				activity.
c. When a Federal grantor agency completes a
				procurement review, it shall furnish a report to the grantee, with a copy to
				OFPP.
d. All agencies should normally rely upon the
				resultant findings or certification for a period of 24 months before another
				review is performed.
e. Reviews shall be conducted in accordance with
				standards and guidelines approved or issued by OFPP.
f. The reviews authorized by Section 6 are waived if
				a grantee's procurement system is certified.
5. Protest Procedures
a. Grantor agencies may develop an administrative
				procedure to handle complaints or protests regarding grantee contractor
				selection actions. The procedure shall be limited as follows:
b. No protest shall be accepted by the grantor
				agency until all administrative remedies at the grantee level have been
				exhausted.
c. Review is limited to:
1) Violations of Federal law or regulations.
				Violations of State or local law shall be under the jurisdiction of State or
				local authorities.
2) Violations of grantee's protest procedures or
				failure to review a complaint or protest.
6. Grantor Review of Proposed Contracts. Federal grantor
				pre-award review and approval of the grantee's proposed contracts and related
				procurement documents, such as requests for proposal and invitations for bids,
				is permitted only under the following circumstances:
a. The procurement is expected to exceed $10,000 and
				is to be awarded without competition or only one bid or offer is received in
				response to solicitation.
b. The procurement expected to exceed $10,000
				specifies a "brand name" product; or
c. The grantee's procurement procedures or operation
				fails to comply with one or more significant aspects of this Attachment. The
				grantor agency shall notify the grantee in writing, with a copy of such
				notification to the OFPP.
7. Code of Conduct. Grantees shall maintain a written code or
				standards of conduct which shall govern the performance of their officers,
				employees or agents engaged in the award and administration of contracts
				supported by Federal funds. No employee, officer or agent of the grantee shall
				participate in selection, or in the award or administration of a contract
				supported by Federal funds if a conflict of interest, real or apparent, would
				be involved. Such a conflict would arise when:
a. The employee, officer or agent;
b. Any member of his immediate family;
c. His or her partner; or
d. An organization which employs, or is about to
				employ, any of the above, has a financial or other interest in the firm
				selected for award.
The grantee's officers, employees or agents shall
				neither solicit nor accept gratuities, favors or anything of monetary value
				from contractors, potential contractors, or parties to subagreements. Grantees
				may set minimum rules where the financial interest is not substantial or the
				gift is an unsolicited item of nominal intrinsic value.
To the extent permitted by the State or local law or
				regulations, such standards of conduct shall provide for penalties, sanctions,
				or other disciplinary actions for violations of such standards by the grantee's
				officers, employees, or agents, or by contractors or their agents.
8. Procurement Procedures. The grantee shall establish
				procurement procedures which provide that proposed procurement actions shall be
				reviewed by grantee officials to avoid the purchase of unnecessary or
				duplicative items. Consideration should be given to consolidation or breaking
				out to obtain a more economical purchase. Where appropriate, an analysis shall
				be made of lease versus purchase alternatives, and any other appropriate
				analysis to determine which approach would be the most economical. To foster
				greater economy and efficiency, grantees are encouraged to enter into State and
				local intergovernmental agreements for procurement or use of common goods and
				services.
9. Contracting with Small and Minority Firms, Women's Business
				Enterprise and Labor Surplus Area Firms
a. It is national policy to award a fair share of
				contracts to small and minority business firms. Accordingly, affirmative steps
				must be taken to assure that small and minority businesses are utilized when
				possible as sources of suppliers, equipment, construction and services.
				Affirmative steps shall include the following:
1) Including qualified small and minority businesses
				on solicitation lists.
2) Assuring that small and minority businesses are
				solicited whenever they are potential sources.
3) When economically feasible, dividing total
				requirements into smaller tasks or quantities so as to permit maximum small and
				minority business participation.
4) Where the requirement permits, establishing
				delivery schedules which will encourage participation by small and minority
				business.
5) Using the services and assistance of the Small
				Business Administration, the Office of Minority Business Enterprise of the
				Department of Commerce and the Community Services Administration as
				required.
6) If any subcontracts are to be let, requiring the
				prime contractor to take the affirmative steps in 1 through 5 above.
b. Grantees shall take similar appropriate
				affirmative action in support of women's business enterprises.
c. Grantees are encouraged to procure goods and
				services from labor surplus areas.
d. Grantor agencies may impose additional
				regulations and requirements in the foregoing areas only to the extent
				specifically mandated by statute or presidential direction.
10. Selection Procedures
a. All procurement transactions, regardless of
				whether by sealed bids or by negotiation and without regard to dollar value,
				shall be conducted in a manner that provides maximum open and free competition
				consistent with this Attachment. Procurement procedures shall not restrict or
				eliminate competition. Example of what is considered to be restrictive of
				competition include, but are not limited to: (1) placing unreasonable
				requirements on firms in order for them to qualify to do business; (2)
				noncompetitive practices between firms; (3) organizational conflicts of
				interest; and (4) unnecessary experience and bonding requirements.
b. The grantee shall have written selection
				procedures which shall provide, as a minimum, the following procedural
				requirements:
1) Solicitations of offers, whether by competitive
				sealed bids or competitive negotiation shall:
a) Incorporate a clear and accurate description of
				the technical requirements for the material, product, or service to be
				procured. Such description shall not, in competitive procurements, contain
				features which unduly restrict competition. The description may include a
				statement of the qualitative nature of the material, product or service to be
				procured, and when necessary, shall set forth those minimum essential
				characteristics and standards to which it must conform if it is to satisfy its
				intended use. Detailed product specifications should be avoided if at all
				possible. When it is impractical or uneconomical to make a clear and accurate
				description of the technical requirements, a "brand name or equal" description
				may be used as a means to define the performance or other salient requirements
				of a procurement. The specific features of the named brand which must be met by
				offerors shall be clearly stated.
b) Clearly set forth all requirements which offerors
				must fulfill and all other factors to be used in evaluating bids or
				proposals.
2) Awards shall be made only to responsible
				contractors that possess the potential ability to perform successfully under
				the terms and conditions of a proposed procurement. Consideration shall be
				given to such matters as contractor integrity, compliance with public policy,
				record of past performance, and financial and technical resources.
11. Method Procurement. Procurement under grants shall be made
				by one of the following methods, as described herein: (a) small purchase
				procedures; (b) competitive sealed bids (formal advertising); (c) competitive
				negotiation; (d) noncompetitive negotiation.
a. Small purchase procedures are those relatively
				simple and informal procurement methods that are sound and appropriate for a
				procurement of services, supplies or other property, costing in the aggregate
				not more than $10,000. Grantees shall comply with State or local small purchase
				dollar limits under $10,000. If small purchase procedures are used for a
				procurement under a grant, price or rate quotations shall be obtained from an
				adequate number of qualified sources.
b. In competitive sealed bids (formal advertising),
				sealed bids are publicly solicited and a firm-fixed-price contract (lump sum or
				unit price) is awarded to the responsible bidder whose bid, conforming with all
				the material terms and conditions of the invitation for bids, is lowest in
				price.
1) In order for formal advertising to be feasible,
				appropriate conditions must be present, including, as a minimum, the
				following:
a) A complete, adequate and realistic specification
				or purchase description is available.
b) Two or more responsible suppliers are willing and
				able to compete effectively for the grantee's business.
c) The procurement lends itself to a
				firm-fixed-price contract, and selection of the successful bidder can
				appropriately be made principally on the basis of price.
2) If formal advertising is used for a procurement
				under a grant the following requirements shall apply:
a) A sufficient time prior to the date set for
				opening of bids, bids shall be solicited from an adequate number of known
				suppliers. In addition, the invitation shall be publicly advertised.
b) The invitation for bids, including specifications
				and pertinent Attachments, shall clearly define the items or services needed in
				order for the bidders to properly respond to the invitation.
c) All bids shall be opened publicly at the time and
				place stated in the invitation for bids.
d) A firm-fixed-price contract award shall be made
				by written notice to that responsible bidder whose bid, conforming to the
				invitation for bids, is lowest. Where specified in the bidding documents,
				factors such as discounts, transportation costs and life cycle costs shall be
				considered in determining which bid is lowest. Payment discounts may only be
				used to determine low bid when prior experience of the grantee indicates that
				such discounts are generally taken.
e) Any or all bids may be rejected when there are
				sound documented business reasons in the best interest of the program.
c. In competitive negotiation, proposals are
				requested from a number of sources and the Request for Proposal is publicized,
				negotiations are normally conducted with more than one of the sources
				submitting offers, and either a fixed-price or cost-reimbursable type contract
				is awarded, as appropriate. Competitive negotiation may be used if conditions
				are not appropriate for the use of formal advertising. If competitive
				negotiation is used for a procurement under a grant, the following requirements
				shall apply:
1) Proposals shall be solicited from an adequate
				number of qualified sources to permit reasonable competition consistent with
				the nature and requirements of the procurement. The Request for Proposal shall
				be publicized and reasonable requests by other sources to compete shall be
				honored to the maximum extent practicable.
2) The Request for Proposal shall identify all
				significant evaluation factors, including price or cost where required and
				their relative importance.
3) The grantee shall provide mechanisms for
				technical evaluation of the proposals received, determinations of responsible
				offerors for the purpose of written or oral discussions, and selection for
				contract award.
4) Award may be made to the responsible offeror
				whose proposal will be most advantageous to the procuring party, price and
				other factors considered. Unsuccessful offerors should be notified
				promptly.
5) Grantees may utilize competitive negotiation
				procedures for procurement of architectural/engineering professional services,
				whereby competitors' qualifications are evaluated and the most qualified
				competitors' is selected, subject to negotiation of fair and reasonable
				compensation.
d. Noncompetitive negotiation is procurement through
				solicitation of a proposal from only one source, or after solicitation of a
				number of sources, competition is determined inadequate. Noncompetitive
				negotiation may be used when the award of a contract is unfeasible under small
				purchase, competitive bidding (formal advertising) or competitive negotiation
				procedures. Circumstances under which a contract may be awarded by
				noncompetitive negotiation are limited to the following:
1) The item is available only from a single
				source;
2) Public exigency or emergency when the urgency for
				the requirement will not permit a delay incident to competitive
				solicitation;
3) The Federal grantor agency authorizes
				noncompetitive negotiation; or
4) After solicitation of a number of sources,
				competition is determined inadequate.
e. Additional innovative procurement methods may be
				used by grantees with the approval of the grantor agency. A copy of such
				approval shall be sent to the OFPP.
12. Contract Pricing. The cost plus a percentage of cost and
				percentage of construction cost method of contracting shall not be used.
				Grantees shall perform some form of cost or price analysis in connection with
				every procurement action including contract modifications. Costs or prices
				based on estimated costs for contracts under grants shall be allowed only to
				the extent that costs incurred or cost estimates included in negotiated prices
				are consistent with Federal cost principles.
13. Grantee Procurement Records. Grantees shall maintain
				records sufficient to detail the significant history of a procurement. These
				records shall include, but are not necessarily limited to information pertinent
				to the following: rationale for the method of procurement, selection of
				contract type, contractor selection or rejection, and the basis for the cost or
				price.
14. Contract Provision. In addition to provisions defining a
				sound and complete procurement contract, any recipient of Federal grant funds
				shall include the following contract provisions or conditions in all
				procurement contracts and subcontracts as required by the provision, Federal
				law or the grantor agency.
a. Contracts other than small purchases shall
				contain provisions or conditions which will allow for administrative,
				contractual, or legal remedies in instances where contractors violate or breach
				contract terms, and provide for such sanctions and penalties as may be
				appropriate.
b. All contracts in excess of $10,000 shall contain
				suitable provisions for termination by the grantee including the manner by
				which it will 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. All contracts awarded in excess of $10,000 by
				grantees and their contractors or subgrantees shall contain a provision
				requiring compliance with Executive Order 11246, entitled "Equal Employment
				Opportunity," as amended by Executive Order 11375, and as supplemented in
				Department of Labor regulations ( 41 CFR Part 60 ).
d. All contracts and subgrants for construction or
				repair shall include a provision for compliance with the Copeland
				"Anti-Kickback" Act (
				18 U.S.C.
				874 ) as supplemented in Department of Labor
				regulations ( 29 CFR, Part 3 ). This Act provides that each contractor or
				subgrantee 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 grantee shall report
				all suspected or reported violations to the grantor agency.
e. When required by the Federal grant program
				legislation, all construction contracts in excess of $2,000 awarded by grantees
				and subgrantees shall include a provision for compliance with the Davis-Bacon
				Act ( 40 U.S.C. 276 a to a-7) as supplemented by Department of Labor
				regulations ( 290 CFR, Part 5 ). 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 often than once a
				week. The grantee 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 grantee shall report all suspected or reported violations to
				the grantor agency.
f. Where applicable, all contracts awarded by
				grantees and subgrantees in excess of $2,000 for construction contracts and in
				excess of $2,500 for other contracts which involve the employment of mechanics
				or laborers shall include a provision for compliance with Sections 103 and 107
				of the Contract Work Hours and Safety Standards Act (
				40 U.S.C.
				327 -
				330 ) as supplemented by
				Department of Labor regulations ( 29 CFR, Part 5 ). Under Section 103 of the
				Act, each contractor shall be required to compute the wages of every mechanic
				and laborer on the basis of standard workday of 8 hours and a standard workweek
				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 1-1/2 times the basic
				rate of pay for all hours worked in excess of 8 hours in any calendar day or 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 to his health and safety as determined under construction, safety and
				health standards promulgated by the Secretary of Labor. 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.
g. The contract shall include notice of grantor
				agency requirements and regulations pertaining to reporting and patent rights
				under any contract involving research, developmental, experimental or
				demonstration work with respect to any discovery or invention which arises or
				is developed in the course of or under such contract, and of grantor agency
				requirements and regulations pertaining to copyrights and rights in
				data.
h. All negotiated contracts (except those awarded by
				small purchase procedures) awarded by grantees shall include a provision to the
				effect that the grantee, the Federal grantor 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 that specific contract, for the purpose of making audit,
				examination, excerpts, and transcriptions.
Grantees shall require contractors to maintain all
				required records for three years after grantees make final payments and all
				other pending matters are closed.
i. Contracts, subcontracts, and subgrants of amounts
				in excess of $100,000 shall contain a provision which requires compliance with
				all applicable standards, orders, or requirements issued under Section 306 of
				the Clean Air Act ( 42 U.S.C. 1857(h) ), Section 508 of the Clean Water Act (
				33 U.S.C.
				1368 ), Executive Order 11738, and
				Environmental Protectional Agency (USEPA) regulations ( 40 CFR, Part 15 ),
				which prohibit the use under non-exempt Federal contracts, grants or loans of
				facilities included on the EPA List of Violating Facilities. The provision
				shall require reporting of violations to the grantor agency and to the USEPA
				Assistant Administrator for Enforcement (EN-329).
j. Contracts shall recognize mandatory standards and
				policies relating to energy efficiency which are contained in the State energy
				conservation plan issued in compliance with the Energy Policy and Conservation
				Act ( P.L. 94-163 ).
Grantor agencies are permitted to require changes,
				remedies, changed conditions, access and record retention and suspension of
				work clauses approved by the Office of Federal Procurement Policy.
15. Contract Administration. Grantees shall maintain a contract
				administration system ensuring that contractors perform in accordance with the
				terms, conditions, and specifications of their contracts or purchase
				orders.
Attachment P: Audit Requirements
1. This Attachment establishes audit requirements for State and
				local governments, and Indian tribal governments that receive Federal
				assistance. It provides for independent audits of provisions of Federal law and
				regulation. The requirements are established to ensure that audits are made on
				an organization-wide basis, rather than on a grant-by-grant basis. Such audits
				are to determine whether (a) financial operations are conducted properly, (b)
				the financial statements are presented fairly, (c) the organization has
				complied with laws and regulations affecting the expenditure of Federal funds,
				(d) internal procedures have been established to meet the objectives of
				federally assisted programs, and (e) financial reports to the Federal
				Government contain accurate and reliable information. Except where specifically
				required by law, no additional requirements for audit will be imposed unless
				approved by the Office of Management and Budget.
2. Definitions. "Cognizant agency" means the Federal agency
				that is assigned audit responsibility for a particular recipient organization
				by the Office of Management and Budget.
"Recipient organization" means a State department, a local
				government, an Indian tribal government, or a subdivision of such entities,
				that receives Federal assistance. It does not include State and local
				institutions of higher education or hospitals, which are covered by Circular
				A-110.
3. State and local governments and Indian tribal governments
				shall use their own procedures to arrange for independent audits, and to
				prescribe the scope of audits, provided that the audits comply with the
				requirements set forth below. Where contracts are awarded for audit services,
				the contracts shall include a reference to this Attachment.
4. The provisions of this Attachment do not limit the authority
				of Federal agencies to make audits of recipient organizations. However, if
				independent audits arranged for by recipients meet the requirements prescribed
				below, all Federal agencies shall rely on them, and any additional audit work
				shall build upon the work already done.
5. Audits shall be made in accordance with the General
				Accounting Office Standards for Audits of Governmental Organizations, Programs,
				Activities and Functions, the Guidelines for Financial and Compliance Audits of
				Federally Assisted Programs, any compliance supplements approved by OMB, and
				generally accepted auditing standards established by the American Institute of
				Certified Public Accountants.
6. Audits will include, at a minimum, an examination of the
				systems of internal control, systems established to ensure compliance with laws
				and regulations affecting the expenditure of Federal funds, financial
				transactions and accounts, and financial statements and reports of recipient
				organizations. These examinations are to determine whether:
a. There is effective control over and proper
				accounting for revenues, expenditures, assets, and liabilities.
b. The financial statements are presented fairly in
				accordance with generally accepted accounting principles.
c. The Federal financial reports (including
				Financial Status Reports, Cash Reports, and claims for advances and
				reimbursements) contain accurate and reliable financial data, and are presented
				in accordance with the terms of applicable agreements, and in accordance with
				Attachment H of this Circular.
d. Federal funds are being expended in accordance
				with the terms of applicable agreements and those provisions of Federal law or
				regulations that could have a material effect on the financial statements or on
				the awards tested.
7. In order to accomplish the purposes set forth above, a
				representative number of charges to Federal awards shall be tested. The test
				shall be representative of (1) the universe of Federal awards received, and (2)
				all costs categories that materially affect the award. The test is to determine
				whether the charges:
a. Are necessary and reasonable for the proper
				administration of the program.
b. Conform to any limitations or exclusions in the
				award.
c. Were given consistent accounting treatment and
				applied uniformly to both federally assisted and other activities of the
				recipient.
d. Were net of applicable credits.
e. Did not include costs properly chargeable to
				other federally assisted programs.
f. Were properly recorded (i.e., correct amount,
				date) and supported by source documentation.
g. Were approved in advance, if subject to prior
				approval in accordance with Circular 74-4.
h. Were incurred in accordance with competitive
				purchasing procedures if covered by Attachment O of this Circular.
i. Were allocated equitably to benefiting
				activities, including non-Federal activities.
8. Audits usually will be made annually, but not less
				frequently than every two years.
9. If the auditor becomes aware of irregularities in the
				recipient organization, the auditor shall promptly notify the cognizant agency
				and recipient management officials above the level of involvement.
				Irregularities include such matters as conflicts of interest, falsification of
				records or reports, and misappropriation of funds or other assets.
10. The audit report shall include:
a. Financial statements, including footnotes, of the
				recipient organization.
b. The auditors' comments on the financial
				statements which should:
1) Identify the statements examined, and the period
				covered.
2) Identify the various programs under which the
				organization received Federal funds, and the amount of the awards
				received.
3) State that the audit was done in accordance with
				the standards in paragraph 5.
4) Express an opinion as to whether the financial
				statements are fairly presented in accordance with generally accepted
				accounting principles. If an unqualified opinion cannot be expressed, state the
				nature of the qualification.
c. The auditors' comments on compliance and internal
				control should:
1) Include comments on weaknesses in and
				noncompliance with the system of internal control, separately identifying
				material weaknesses.
2) Identify the nature and impact of any noted
				instances of noncompliance with the terms of agreements and those provisions of
				Federal law or regulations that could have a material effect on the financial
				statements and reports.
3) Contain an expression of positive assurance with
				respect to compliance with requirements for tested items, and negative
				assurance for untested items.
d. Comments on the accuracy and completeness of
				financial reports and claims for advances or reimbursement of Federal
				agencies.
e. Comments on the accuracy and completeness of
				financial reports and claims for advances or reimbursement to Federal
				agencies.
11. Work papers and reports shall be retained for a minimum of
				three years from the date of the audit report unless the auditor is notified in
				writing by the cognizant agency of the need to extend the retention period. The
				audit workpapers shall be made available upon request to the cognizant agency
				or its designees and the General Accounting Office or its designees.
12. The Office of Management and Budget will work with Federal
				agencies and State and local governments to assure that recipient audits are
				made in accordance with the standards set forth in paragraph 5.
13. The Office of Management and Budget will designate
				cognizant agencies for major recipient organizations.
14. The cognizant agency shall have the following
				responsibilities:
a. Obtain or make quality assessment reviews of work
				of non-Federal audit organizations, and provide the results to other interested
				audit agencies. (If a non-Federal audit organization is responsible for audits
				of recipients that have different cognizant audit agencies, a single quality
				assessment review should be arranged.)
b. Assure that all audit reports of recipients that
				affect federally assisted programs are received, reviewed, and distributed to
				appropriate Federal audit officials. These officials will be responsible for
				distributing audit reports to their program officials.
c. Whenever significant inadequacies in an audit are
				disclosed, the recipient organization will be advised and the auditor will be
				called upon to take corrective action. If corrective action is not taken, the
				cognizant agency shall notify the recipient organization and Federal awarding
				agencies of the facts and its recommendation. Major inadequacies or repetitive
				substandard performance of independent auditors shall be referred to
				appropriate professional bodies.
d. Assure that satisfactory audit coverage is
				provided in a timely manner and in accordance with the provisions of this
				Attachment.
e. Provide technical advice and act as a liaison
				between Federal agencies, independent auditors, and recipient
				organizations.
f. Maintain a followup system on audit findings and
				investigative matters to assure that audit findings are resolved.
g. Inform other affected audit agencies of
				irregularities uncovered. The audit agencies, in turn, shall inform all
				appropriate officials in their agencies. State or local government law
				enforcement and prosecuting authorities shall also be informed of
				irregularities within their jurisdiction.
15. Recipients shall require subrecipients that are State and
				local governments or Indian tribal governments to adopt the requirements in
				paragraph 1 through 11 above. The recipient shall ensure that the subrecipient
				audit reports are received as required, and shall submit the reports to the
				cognizant agency. The cognizant agency will have the responsibility for these
				reports described in paragraph 14.
16. Small business concerns and business concerns owned and
				controlled by socially and economically disadvantaged individuals shall have
				the maximum practicable opportunity to participate in the performance of
				contracts awarded with Federal funds. Grantees of Federal funds shall take the
				following affirmative action to further this goal:
a. Assure that small audit firms and audit firms
				owned and controlled by socially and economically disadvantaged individuals as
				defined in P.L. 95-507 are used to the fullest extent practicable.
b. Make information on forthcoming opportunities
				available, and arrange time frames for the audit so as to encourage and
				facilitate participation by small or disadvantaged audit firms.
c. Consider in the contract process whether firms
				competing for larger audits intend to subcontract with small or disadvantaged
				firms.
d. Encourage contracting with small or disadvantaged
				audit firms which have traditionally audited government programs, and in such
				cases where this is not possible, assure that these firms are given
				consideration for audit subcontracting opportunities.
e. Encourage contracting with consortiums of small
				or disadvantaged audit firms as described in paragraph a. when a contract is
				too large for an individual small or disadvantaged audit firm.
f. Use the services and assistance, as appropriate,
				of the Small Business Administration, the Minority Business Development Agency
				of the Department of Commerce, and the Community Services Administration in the
				solicitation and utilization of small or disadvantaged audit
				firms.