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CIRCULAR A-110
REVISED 11/19/93
As Further
Amended 9/30/99

TO THE HEADS OF EXECUTIVE DEPARTMENTS AND
ESTABLISHMENTS

SUBJECT:

Uniform Administrative Requirements for Grants and
Agreements With Institutions of Higher Education, Hospitals, and
Other Non-Profit Organizations

1. Purpose. This Circular sets forth standards for
obtaining consistency and uniformity among Federal agencies in the
administration of grants to and agreements with institutions of higher
education, hospitals, and other non-profit organizations.

2. Authority. Circular A-110 is issued under the
authority of 31 U.S.C. 503 (the Chief Financial Officers Act), 31 U.S.C.
1111, 41 U.S.C. 405 (the Office of Federal Procurement Policy Act),
Reorganization Plan No. 2 of 1970, and E.O. 11541 ("Prescribing the Duties
of the Office of Management and Budget and the Domestic Policy Council in
the Executive Office of the President").

3. Policy. Except as provided herein, the standards
set forth in this Circular are applicable to all Federal agencies. If any
statute specifically prescribes policies or specific requirements that
differ from the standards provided herein, the provisions of the statute
shall govern.

The provisions of the sections of this Circular shall be applied by
Federal agencies to recipients. Recipients shall apply the provisions of
this Circular to subrecipients performing substantive work under grants
and agreements that are passed through or awarded by the primary
recipient, if such subrecipients are organizations described in paragraph
1.

This Circular does not apply to grants, contracts, or other agreements
between the Federal Government and units of State or local governments
covered by OMB Circular A-102, "Grants and Cooperative Agreements with
State and Local Governments," and the Federal agencies' grants management
common rule which standardized and codified the administrative
requirements Federal agencies impose on State and local grantees. In
addition, subawards and contracts to State or local governments are not
covered by this Circular. However, this Circular applies to subawards made
by State and local governments to organizations covered by this Circular.
Federal agencies may apply the provisions of this Circular to commercial
organizations, foreign governments, organizations under the jurisdiction
of foreign governments, and international organizations.

4. Definitions. Definitions of key terms used in this
Circular are contained in Section ___.2 in the Attachment.

5. Required Action. The specific requirements and
responsibilities of Federal agencies and institutions of higher education,
hospitals, and other non-profit organizations are set forth in this
Circular. Federal agencies responsible for awarding and administering
grants to and other agreements with organizations described in paragraph 1
shall adopt the language in the Circular unless different provisions are
required by Federal statute or are approved by OMB.

6. OMB Responsibilities. OMB will review agency
regulations and implementation of this Circular, and will provide
interpretations of policy requirements and assistance to insure effective
and efficient implementation. Any exceptions will be subject to approval
by OMB, as indicated in Section ___.4 in the Attachment. Exceptions will
only be made in particular cases where adequate justification is
presented.

7. Information Contact. Further information concerning
this Circular may be obtained by contacting the Office of Federal
Financial Management, Office of Management and Budget, Washington, DC
20503, telephone (202) 395-3993.

8. Termination Review Date. This Circular will have a
policy review three years from date of issuance.

9. Effective Date. The standards set forth in this
Circular which affect Federal agencies will be effective 30 days after
publication of the final revision in the Federal
Register. Those standards which Federal agencies impose
on grantees will be adopted by agencies in codified regulations within six
months after publication in the Federal
Register. Earlier implementation is encouraged.

Attachment

Grants and Agreements with Institutions of Higher
Education,
Hospitals, and Other Non-Profit Organizations

SUBPART A - GENERAL

Sec.

___.1 Purpose.

___.2 Definitions.

___.3 Effect on
other issuances.

___.4 Deviations.

___.5 Subawards.

SUBPART B - PRE-AWARD REQUIREMENTS

___.10 Purpose.

___.11 Pre-award
policies.

___.12 Forms for
applying for Federal assistance.

___.13 Debarment
and suspension.

___.14 Special
award conditions.

___.15 Metric
system of measurement.

___.16 Resource
Conservation and Recovery Act.

___.17 Certifications
and representations.

SUBPART C - POST-AWARD REQUIREMENTS

Financial and Program Management

___.20 Purpose
of financial and program management.

___.21 Standards
for financial management systems.

___.22 Payment.

___.23 Cost
sharing or matching.

___.24 Program
income.

___.25 Revision
of budget and program plans.

___.26 Non-Federal
audits.

___.27 Allowable
costs.

___.28 Period of
availability of funds.

___.29 Conditional
exemptions.

Property Standards

___.30 Purpose
of property standards.

___.31 Insurance
coverage.

___.32 Real
property.

___.33 Federally-owned
and exempt property.

___.34 Equipment.

___.35 Supplies
and other expendable property.

___.36 Intangible
property.

___.37 Property
trust relationship.

Procurement Standards

___.40 Purpose
of procurement standards.

___.41 Recipient
responsibilities.

___.42 Codes of
conduct.

___.43 Competition.

___.44 Procurement
procedures.

___.45 Cost and
price analysis.

___.46 Procurement
records.

___.47 Contract
administration.

___.48 Contract
provisions.

Reports and Records

___.50 Purpose
of reports and records.

___.51 Monitoring
and reporting program performance.

___.52 Financial
reporting.

___.53 Retention
and access requirements for records.

Termination and Enforcement

___.60 Purpose
of termination and enforcement.

___.61 Termination.

___.62 Enforcement.

SUBPART D - AFTER-THE-AWARD
REQUIREMENTS

___.70 Purpose.

___.71 Closeout
procedures.

___.72 Subsequent
adjustments and continuing responsibilities.

___.73 Collection
of amounts due.

APPENDIX A - CONTRACT PROVISIONS

SUBPART A - General

___.1 Purpose.
This Circular establishes uniform administrative requirements for Federal
grants and agreements awarded to institutions of higher education,
hospitals, and other non-profit organizations. Federal awarding agencies
shall not impose additional or inconsistent requirements, except as
provided in Sections ___.4, and ___.14 or unless specifically required by
Federal statute or executive order. Non-profit organizations that
implement Federal programs for the States are also subject to State
requirements.

___.2 Definitions.

(a) Accrued expenditures means the charges incurred
by the recipient during a given period requiring the provision of funds
for: (1) goods and other tangible property received; (2) services
performed by employees, contractors, subrecipients, and other payees;
and, (3) other amounts becoming owed under programs for which no current
services or performance is required.

(b) Accrued income means the sum of: (1) earnings
during a given period from (i) services performed by the recipient, and
(ii) goods and other tangible property delivered to purchasers, and (2)
amounts becoming owed to the recipient for which no current services or
performance is required by the recipient.

(c) Acquisition cost of equipment means the net
invoice price of the equipment, including the cost of modifications,
attachments, accessories, or auxiliary apparatus necessary to make the
property usable for the purpose for which it was acquired. Other
charges, such as the cost of installation, transportation, taxes, duty
or protective in-transit insurance, shall be included or excluded from
the unit acquisition cost in accordance with the recipient's regular
accounting practices.

(d) Advance means a payment made by Treasury check
or other appropriate payment mechanism to a recipient upon its request
either before outlays are made by the recipient or through the use of
predetermined payment schedules.

(e) Award means financial assistance that provides
support or stimulation to accomplish a public purpose. Awards include
grants and other agreements in the form of money or property in lieu of
money, by the Federal Government to an eligible recipient. The term does
not include: technical assistance, which provides services instead of
money; other assistance in the form of loans, loan guarantees, interest
subsidies, or insurance; direct payments of any kind to individuals;
and, contracts which are required to be entered into and administered
under procurement laws and regulations.

(f) Cash contributions means the recipient's cash
outlay, including the outlay of money contributed to the recipient by
third parties.

(g) Closeout means the process by which a Federal
awarding agency determines that all applicable administrative actions
and all required work of the award have been completed by the recipient
and Federal awarding agency.

(h) Contract means a procurement contract under an
award or subaward, and a procurement subcontract under a recipient's or
subrecipient's contract.

(i) Cost sharing or matching means that portion of
project or program costs not borne by the Federal Government.

(j) Date of completion means the date on which all
work under an award is completed or the date on the award document, or
any supplement or amendment thereto, on which Federal sponsorship ends.

(k) Disallowed costs means those charges to an award
that the Federal awarding agency determines to be unallowable, in
accordance with the applicable Federal cost principles or other terms
and conditions contained in the award.

(l) Equipment means tangible nonexpendable personal
property including exempt property charged directly to the award having
a useful life of more than one year and an acquisition cost of $5000 or
more per unit. However, consistent with recipient policy, lower limits
may be established.

(m) Excess property means property under the control
of any Federal awarding agency that, as determined by the head thereof,
is no longer required for its needs or the discharge of its
responsibilities.

(n) Exempt property means tangible personal property
acquired in whole or in part with Federal funds, where the Federal
awarding agency has statutory authority to vest title in the recipient
without further obligation to the Federal Government. An example of
exempt property authority is contained in the Federal Grant and
Cooperative Agreement Act (31 U.S.C. 6306), for property acquired under
an award to conduct basic or applied research by a non-profit
institution of higher education or non-profit organization whose
principal purpose is conducting scientific research.

(o) Federal awarding agency means the Federal agency
that provides an award to the recipient.

(p) Federal funds authorized means the total amount
of Federal funds obligated by the Federal Government for use by the
recipient. This amount may include any authorized carryover of
unobligated funds from prior funding periods when permitted by agency
regulations or agency implementing instructions.

(q) Federal share of real property, equipment, or
supplies means that percentage of the property's acquisition costs and
any improvement expenditures paid with Federal funds.

(r) Funding period means the period of time when
Federal funding is available for obligation by the recipient.

(s) Intangible property and debt instruments means,
but is not limited to, trademarks, copyrights, patents and patent
applications and such property as loans, notes and other debt
instruments, lease agreements, stock and other instruments of property
ownership, whether considered tangible or intangible.

(t) Obligations means the amounts of orders placed,
contracts and grants awarded, services received and similar transactions
during a given period that require payment by the recipient during the
same or a future period.

(u) Outlays or expenditures means charges made to
the project or program. They may be reported on a cash or accrual basis.
For reports prepared on a cash basis, outlays are the sum of cash
disbursements for direct charges for goods and services, the amount of
indirect expense charged, the value of third party in-kind contributions
applied and the amount of cash advances and payments made to
subrecipients. For reports prepared on an accrual basis, outlays are the
sum of cash disbursements for direct charges for goods and services, the
amount of indirect expense incurred, the value of in-kind contributions
applied, and the net increase (or decrease) in the amounts owed by the
recipient for goods and other property received, for services performed
by employees, contractors, subrecipients and other payees and other
amounts becoming owed under programs for which no current services or
performance are required.

(v) Personal property means property of any kind
except real property. It may be tangible, having physical existence, or
intangible, having no physical existence, such as copyrights, patents,
or securities.

(w) Prior approval means written approval by an
authorized official evidencing prior consent.

(x) Program income means gross income earned by the
recipient that is directly generated by a supported activity or earned
as a result of the award (see exclusions in paragraphs ___.24 (e) and
(h)). Program income includes, but is not limited to, income from fees
for services performed, the use or rental of real or personal property
acquired under federally-funded projects, the sale of commodities or
items fabricated under an award, license fees and royalties on patents
and copyrights, and interest on loans made with award funds. Interest
earned on advances of Federal funds is not program income. Except as
otherwise provided in Federal awarding agency regulations or the terms
and conditions of the award, program income does not include the receipt
of principal on loans, rebates, credits, discounts, etc., or interest
earned on any of them.

(y) Project costs means all allowable costs, as set
forth in the applicable Federal cost principles, incurred by a recipient
and the value of the contributions made by third parties in
accomplishing the objectives of the award during the project period.

(z) Project period means the period established in
the award document during which Federal sponsorship begins and ends.

(aa) Property means, unless otherwise stated, real
property, equipment, intangible property and debt instruments.

(bb) Real property means land, including land
improvements, structures and appurtenances thereto, but excludes movable
machinery and equipment.

(cc) Recipient means an organization receiving
financial assistance directly from Federal awarding agencies to carry
out a project or program. The term includes public and private
institutions of higher education, public and private hospitals, and
other quasi-public and private non-profit organizations such as, but not
limited to, community action agencies, research institutes, educational
associations, and health centers. The term may include commercial
organizations, foreign or international organizations (such as agencies
of the United Nations) which are recipients, subrecipients, or
contractors or subcontractors of recipients or subrecipients at the
discretion of the Federal awarding agency. The term does not include
government-owned contractor-operated facilities or research centers
providing continued support for mission-oriented, large-scale programs
that are government-owned or controlled, or are designated as
federally-funded research and development centers.

(dd) Research and development means all research
activities, both basic and applied, and all development activities that
are supported at universities, colleges, and other non-profit
institutions. "Research" is defined as a systematic study directed
toward fuller scientific knowledge or understanding of the subject
studied. "Development" is the systematic use of knowledge and
understanding gained from research directed toward the production of
useful materials, devices, systems, or methods, including design and
development of prototypes and processes. The term research also includes
activities involving the training of individuals in research techniques
where such activities utilize the same facilities as other research and
development activities and where such activities are not included in the
instruction function.

(ee) Small awards means a grant or cooperative
agreement not exceeding the small purchase threshold fixed at 41 U.S.C.
403(11) (currently $25,000).

(ff) Subaward means an award of financial assistance
in the form of money, or property in lieu of money, made under an award
by a recipient to an eligible subrecipient or by a subrecipient to a
lower tier subrecipient. The term includes financial assistance when
provided by any legal agreement, even if the agreement is called a
contract, but does not include procurement of goods and services nor
does it include any form of assistance which is excluded from the
definition of "award" in paragraph (e).

(gg) Subrecipient means the legal entity to which a
subaward is made and which is accountable to the recipient for the use
of the funds provided. The term may include foreign or international
organizations (such as agencies of the United Nations) at the discretion
of the Federal awarding agency.

(hh) Supplies means all personal property excluding
equipment, intangible property, and debt instruments as defined in this
section, and inventions of a contractor conceived or first actually
reduced to practice in the performance of work under a funding agreement
("subject inventions"), as defined in 37 CFR part 401, "Rights to
Inventions Made by Nonprofit Organizations and Small Business Firms
Under Government Grants, Contracts, and Cooperative Agreements."

(ii) Suspension means an action by a Federal
awarding agency that temporarily withdraws Federal sponsorship under an
award, pending corrective action by the recipient or pending a decision
to terminate the award by the Federal awarding agency. Suspension of an
award is a separate action from suspension under Federal agency
regulations implementing E.O.s 12549 and 12689, "Debarment and
Suspension."

(jj) Termination means the cancellation of Federal
sponsorship, in whole or in part, under an agreement at any time prior
to the date of completion.

(kk) Third party in-kind contributions means the
value of non-cash contributions provided by non-Federal third parties.
Third party in-kind contributions may be in the form of real property,
equipment, supplies and other expendable property, and the value of
goods and services directly benefiting and specifically identifiable to
the project or program.

(ll) Unliquidated obligations, for financial reports
prepared on a cash basis, means the amount of obligations incurred by
the recipient that have not been paid. For reports prepared on an
accrued expenditure basis, they represent the amount of obligations
incurred by the recipient for which an outlay has not been recorded.

(mm) Unobligated balance means the portion of the
funds authorized by the Federal awarding agency that has not been
obligated by the recipient and is determined by deducting the cumulative
obligations from the cumulative funds authorized.

(nn) Unrecovered indirect cost means the difference
between the amount awarded and the amount which could have been awarded
under the recipient's approved negotiated indirect cost rate.

(oo) Working capital advance means a procedure where
by funds are advanced to the recipient to cover its estimated
disbursement needs for a given initial period.

___.3 Effect
on other issuances. For awards subject to this Circular, all
administrative requirements of codified program regulations, program
manuals, handbooks and other nonregulatory materials which are
inconsistent with the requirements of this Circular shall be superseded,
except to the extent they are required by statute, or authorized in
accordance with the deviations provision in Section ___.4.

___.4 Deviations.
The Office of Management and Budget (OMB) may grant exceptions for
classes of grants or recipients subject to the requirements of this
Circular when exceptions are not prohibited by statute. However, in the
interest of maximum uniformity, exceptions from the requirements of this
Circular shall be permitted only in unusual circumstances. Federal
awarding agencies may apply more restrictive requirements to a class of
recipients when approved by OMB. Federal awarding agencies may apply
less restrictive requirements when awarding small awards, except for
those requirements which are statutory. Exceptions on a case-by-case
basis may also be made by Federal awarding agencies.

___.5 Subawards.
Unless sections of this Circular specifically exclude subrecipients from
coverage, the provisions of this Circular shall be applied to
subrecipients performing work under awards if such subrecipients are
institutions of higher education, hospitals or other non-profit
organizations. State and local government subrecipients are subject to
the provisions of regulations implementing the grants management common
rule,"Uniform Administrative Requirements for Grants and Cooperative
Agreements to State and Local Governments," published at 53 FR 8034
(3/11/88).

SUBPART B - Pre-Award Requirements

___.10 Purpose.
Sections ___.11 through ___.17 prescribes forms and instructions and
other pre-award matters to be used in applying for Federal awards.

___.11 Pre-award
policies.

(a) Use of Grants and Cooperative Agreements, and Contracts. In each
instance, the Federal awarding agency shall decide on the appropriate
award instrument (i.e., grant, cooperative agreement, or contract). The
Federal Grant and Cooperative Agreement Act (31 U.S.C. 6301-08) governs
the use of grants, cooperative agreements and contracts. A grant or
cooperative agreement shall be used only when the principal purpose of a
transaction is to accomplish a public purpose of support or stimulation
authorized by Federal statute. The statutory criterion for choosing
between grants and cooperative agreements is that for the latter,
"substantial involvement is expected between the executive agency and
the State, local government, or other recipient when carrying out the
activity contemplated in the agreement." Contracts shall be used when
the principal purpose is acquisition of property or services for the
direct benefit or use of the Federal Government.

(b) Public Notice and Priority Setting. Federal awarding agencies
shall notify the public of its intended funding priorities for
discretionary grant programs, unless funding priorities are established
by Federal statute.

___.12 Forms
for applying for Federal assistance.

(a) Federal awarding agencies shall comply with the applicable report
clearance requirements of 5 CFR part 1320, "Controlling Paperwork
Burdens on the Public," with regard to all forms used by the Federal
awarding agency in place of or as a supplement to the Standard Form 424
(SF-424) series.

(b) Applicants shall use the SF-424 series or those forms and
instructions prescribed by the Federal awarding agency.

(c) For Federal programs covered by E.O. 12372, "Intergovernmental
Review of Federal Programs," the applicant shall complete the
appropriate sections of the SF-424 (Application for Federal Assistance)
indicating whether the application was subject to review by the State
Single Point of Contact (SPOC). The name and address of the SPOC for a
particular State can be obtained from the Federal awarding agency or the
Catalog of Federal Domestic Assistance. The SPOC shall
advise the applicant whether the program for which application is made
has been selected by that State for review.

(d) Federal awarding agencies that do not use the SF-424 form should
indicate whether the application is subject to review by the State under
E.O. 12372.

___.13 Debarment
and suspension. Federal awarding agencies and recipients shall
comply with the nonprocurement debarment and suspension common rule
implementing E.O.s 12549 and 12689, "Debarment and Suspension." This
common rule restricts subawards and contracts with certain parties that
are debarred, suspended or otherwise excluded from or ineligible for
participation in Federal assistance programs or activities.

___.14 Special
award conditions. If an applicant or recipient: (a) has a history of
poor performance, (b) is not financially stable, (c) has a management
system that does not meet the standards prescribed in this Circular, (d)
has not conformed to the terms and conditions of a previous award, or
(e) is not otherwise responsible, Federal awarding agencies may impose
additional requirements as needed, provided that such applicant or
recipient is notified in writing as to: the nature of the additional
requirements, the reason why the additional requirements are being
imposed, the nature of the corrective action needed, the time allowed
for completing the corrective actions, and the method for requesting
reconsideration of the additional requirements imposed. Any special
conditions shall be promptly removed once the conditions that prompted
them have been corrected.

___.15 Metric
system of measurement. The Metric Conversion Act, as amended by the
Omnibus Trade and Competitiveness Act (15 U.S.C. 205) declares that the
metric system is the preferred measurement system for U.S. trade and
commerce. The Act requires each Federal agency to establish a date or
dates in consultation with the Secretary of Commerce, when the metric
system of measurement will be used in the agency's procurements, grants,
and other business-related activities. Metric implementation may take
longer where the use of the system is initially impractical or likely to
cause significant inefficiencies in the accomplishment of
federally-funded activities. Federal awarding agencies shall follow the
provisions of E.O. 12770, "Metric Usage in Federal Government
Programs."

___.16 Resource
Conservation and Recovery Act (RCRA) (Pub. L. 94-580 codified at 42
U.S.C. 6962). Under the Act, any State agency or agency of a
political subdivision of a State which is using appropriated Federal
funds must comply with Section 6002. Section 6002 requires that
preference be given in procurement programs to the purchase of specific
products containing recycled materials identified in guidelines
developed by the Environmental Protection Agency (EPA) (40 CFR parts
247-254). Accordingly, State and local institutions of higher education,
hospitals, and non-profit organizations that receive direct Federal
awards or other Federal funds shall give preference in their procurement
programs funded with Federal funds to the purchase of recycled products
pursuant to the EPA guidelines.

___.17 Certifications
and representations. Unless prohibited by statute or codified
regulation, each Federal awarding agency is authorized and encouraged to
allow recipients to submit certifications and representations required
by statute, executive order, or regulation on an annual basis, if the
recipients have ongoing and continuing relationships with the agency.
Annual certifications and representations shall be signed by responsible
officials with the authority to ensure recipients' compliance with the
pertinent requirements.

SUBPART C - Post-Award Requirements

Financial and Program Management

___.20 Purpose
of financial and program management. Sections ___.21 through ___.28
prescribe standards for financial management systems, methods for making
payments and rules for: satisfying cost sharing and matching
requirements, accounting for program income, budget revision approvals,
making audits, determining allowability of cost, and establishing fund
availability.

___.21 Standards
for financial management systems.

(a) Federal awarding agencies shall require recipients to relate
financial data to performance data and develop unit cost information
whenever practical.

(b) Recipients' financial management systems shall provide for the
following.

(1) Accurate, current and complete disclosure of the financial
results of each federally-sponsored project or program in accordance
with the reporting requirements set forth in Section ___.52. If a
Federal awarding agency requires reporting on an accrual basis from a
recipient that maintains its records on other than an accrual basis, the
recipient shall not be required to establish an accrual accounting
system. These recipients may develop such accrual data for its reports
on the basis of an analysis of the documentation on hand.

(2) Records that identify adequately the source and application of
funds for federally-sponsored activities. These records shall contain
information pertaining to Federal awards, authorizations, obligations,
unobligated balances, assets, outlays, income and interest.

(3) Effective control over and accountability for all funds, property
and other assets. Recipients shall adequately safeguard all such assets
and assure they are used solely for authorized purposes.

(4) Comparison of outlays with budget amounts for each award.
Whenever appropriate, financial information should be related to
performance and unit cost data.

(5) Written procedures to minimize the time elapsing between the
transfer of funds to the recipient from the U.S. Treasury and the
issuance or redemption of checks, warrants or payments by other means
for program purposes by the recipient. To the extent that the provisions
of the Cash Management Improvement Act (CMIA) (Pub. L. 101-453) govern,
payment methods of State agencies, instrumentalities, and fiscal agents
shall be consistent with CMIA Treasury-State Agreements or the CMIA
default procedures codified at 31 CFR part 205, "Withdrawal of Cash from
the Treasury for Advances under Federal Grant and Other Programs."

(6) Written procedures for determining the reasonableness,
allocability and allowability of costs in accordance with the provisions
of the applicable Federal cost principles and the terms and conditions
of the award.

(7) Accounting records including cost accounting records that are
supported by source documentation.

(c) Where the Federal Government guarantees or insures the repayment
of money borrowed by the recipient, the Federal awarding agency, at its
discretion, may require adequate bonding and insurance if the bonding
and insurance requirements of the recipient are not deemed adequate to
protect the interest of the Federal Government.

(d) The Federal awarding agency may require adequate fidelity bond
coverage where the recipient lacks sufficient coverage to protect the
Federal Government's interest.

(e) Where bonds are required in the situations described above, the
bonds shall be obtained from companies holding certificates of authority
as acceptable sureties, as prescribed in 31 CFR part 223, "Surety
Companies Doing Business with the United States."

___.22 Payment.

(a) Payment methods shall minimize the time elapsing between the
transfer of funds from the United States Treasury and the issuance or
redemption of checks, warrants, or payment by other means by the
recipients. Payment methods of State agencies or instrumentalities shall
be consistent with Treasury-State CMIA agreements or default procedures
codified at 31 CFR part 205.

(b) Recipients are to be paid in advance, provided they maintain or
demonstrate the willingness to maintain: (1) written procedures that
minimize the time elapsing between the transfer of funds and
disbursement by the recipient, and (2) financial management systems that
meet the standards for fund control and accountability as established in
Section ___.21. Cash advances to a recipient organization shall be
limited to the minimum amounts needed and be timed to be in accordance
with the actual, immediate cash requirements of the recipient
organization in carrying out the purpose of the approved program or
project. The timing and amount of cash advances shall be as close as is
administratively feasible to the actual disbursements by the recipient
organization for direct program or project costs and the proportionate
share of any allowable indirect costs.

(c) Whenever possible, advances shall be consolidated to cover
anticipated cash needs for all awards made by the Federal awarding
agency to the recipient.

(1) Advance payment mechanisms include, but are not limited to,
Treasury check and electronic funds transfer.

(2) Advance payment mechanisms are subject to 31 CFR part 205.

(3) Recipients shall be authorized to submit requests for advances
and reimbursements at least monthly when electronic fund transfers are
not used.

(d) Requests for Treasury check advance payment shall be submitted on
SF-270, "Request for Advance or Reimbursement," or other forms as may be
authorized by OMB. This form is not to be used when Treasury check
advance payments are made to the recipient automatically through the use
of a predetermined payment schedule or if precluded by special Federal
awarding agency instructions for electronic funds transfer.

(e) Reimbursement is the preferred method when the requirements in
paragraph (b) cannot be met. Federal awarding agencies may also use this
method on any construction agreement, or if the major portion of the
construction project is accomplished through private market financing or
Federal loans, and the Federal assistance constitutes a minor portion of
the project.

(1) When the reimbursement method is used, the Federal awarding
agency shall make payment within 30 days after receipt of the billing,
unless the billing is improper.

(2) Recipients shall be authorized to submit request for
reimbursement at least monthly when electronic funds transfers are not
used.

(f) If a recipient cannot meet the criteria for advance payments and
the Federal awarding agency has determined that reimbursement is not
feasible because the recipient lacks sufficient working capital, the
Federal awarding agency may provide cash on a working capital advance
basis. Under this procedure, the Federal awarding agency shall advance
cash to the recipient to cover its estimated disbursement needs for an
initial period generally geared to the awardee's disbursing cycle.
Thereafter, the Federal awarding agency shall reimburse the recipient
for its actual cash disbursements. The working capital advance method of
payment shall not be used for recipients unwilling or unable to provide
timely advances to their subrecipient to meet the subrecipient's actual
cash disbursements.

(g) To the extent available, recipients shall disburse funds
available from repayments to and interest earned on a revolving fund,
program income, rebates, refunds, contract settlements, audit recoveries
and interest earned on such funds before requesting additional cash
payments.

(h) Unless otherwise required by statute, Federal awarding agencies
shall not withhold payments for proper charges made by recipients at any
time during the project period unless (1) or (2) apply.

(1) A recipient has failed to comply with the project objectives,
the terms and conditions of the award, or Federal reporting
requirements.

(2) The recipient or subrecipient is delinquent in a debt to the
United States as defined in OMB Circular A-129, "Managing Federal Credit
Programs." Under such conditions, the Federal awarding agency may, upon
reasonable notice, inform the recipient that payments shall not be made
for obligations incurred after a specified date until the conditions are
corrected or the indebtedness to the Federal Government is
liquidated.

(i) Standards governing the use of banks and other institutions as
depositories of funds advanced under awards are as follows.

(1) Except for situations described in paragraph (i)(2), Federal
awarding agencies shall not require separate depository accounts for
funds provided to a recipient or establish any eligibility requirements
for depositories for funds provided to a recipient. However, recipients
must be able to account for the receipt, obligation and expenditure of
funds.

(2) Advances of Federal funds shall be deposited and maintained in
insured accounts whenever possible.

(j) Consistent with the national goal of expanding the opportunities
for women-owned and minority-owned business enterprises, recipients
shall be encouraged to use women- owned and minority-owned banks (a bank
which is owned at least 50 percent by women or minority group members).

(k) Recipients shall maintain advances of Federal funds in interest
bearing accounts, unless (1), (2) or (3) apply.

(1) The recipient receives less than $120,000 in Federal awards per
year.

(2) The best reasonably available interest bearing account would not
be expected to earn interest in excess of $250 per year on Federal cash
balances.

(3) The depository would require an average or minimum balance so
high that it would not be feasible within the expected Federal and
non-Federal cash resources.

(l) For those entities where CMIA and its implementing regulations do
not apply, interest earned on Federal advances deposited in interest
bearing accounts shall be remitted annually to Department of Health and
Human Services, Payment Management System, Rockville, MD 20852. Interest
amounts up to $250 per year may be retained by the recipient for
administrative expense. State universities and hospitals shall comply
with CMIA, as it pertains to interest. If an entity subject to CMIA uses
its own funds to pay pre-award costs for discretionary awards without
prior written approval from the Federal awarding agency, it waives its
right to recover the interest under CMIA.

(m) Except as noted elsewhere in this Circular, only the following
forms shall be authorized for the recipients in requesting advances and
reimbursements. Federal agencies shall not require more than an original
and two copies of these forms.

(1) SF-270, Request for Advance or Reimbursement. Each Federal
awarding agency shall adopt the SF-270 as a standard form for all
nonconstruction programs when electronic funds transfer or predetermined
advance methods are not used. Federal awarding agencies, however, have
the option of using this form for construction programs in lieu of the
SF-271, "Outlay Report and Request for Reimbursement for Construction
Programs."

(2) SF-271, Outlay Report and Request for Reimbursement for
Construction Programs. Each Federal awarding agency shall adopt the
SF-271 as the standard form to be used for requesting reimbursement for
construction programs. However, a Federal awarding agency may substitute
the SF-270 when the Federal awarding agency determines that it provides
adequate information to meet Federal needs.

___.23 Cost
sharing or matching.

(a) All contributions, including cash and third party in-kind, shall
be accepted as part of the recipient's cost sharing or matching when
such contributions meet all of the following criteria.

(1) Are verifiable from the recipient's records.

(2) Are not included as contributions for any other
federally-assisted project or program.

(3) Are necessary and reasonable for proper and efficient
accomplishment of project or program objectives.

(4) Are allowable under the applicable cost principles.

(5) Are not paid by the Federal Government under another award,
except where authorized by Federal statute to be used for cost sharing
or matching.

(6) Are provided for in the approved budget when required by the
Federal awarding agency.

(7) Conform to other provisions of this Circular, as
applicable.

(b) Unrecovered indirect costs may be included as part of cost
sharing or matching only with the prior approval of the Federal awarding
agency.

(c) Values for recipient contributions of services and property shall
be established in accordance with the applicable cost principles. If a
Federal awarding agency authorizes recipients to donate buildings or
land for construction/facilities acquisition projects or long-term use,
the value of the donated property for cost sharing or matching shall be
the lesser of (1) or (2).

(1) The certified value of the remaining life of the property
recorded in the recipient's accounting records at the time of donation.

(2) The current fair market value. However, when there is sufficient
justification, the Federal awarding agency may approve the use of the
current fair market value of the donated property, even if it exceeds
the certified value at the time of donation to the project.

(d) Volunteer services furnished by professional and technical
personnel, consultants, and other skilled and unskilled labor may be
counted as cost sharing or matching if the service is an integral and
necessary part of an approved project or program. Rates for volunteer
services shall be consistent with those paid for similar work in the
recipient's organization. In those instances in which the required
skills are not found in the recipient organization, rates shall be
consistent with those paid for similar work in the labor market in which
the recipient competes for the kind of services involved. In either
case, paid fringe benefits that are reasonable, allowable, and allocable
may be included in the valuation.

(e) When an employer other than the recipient furnishes the services
of an employee, these services shall be valued at the employee's regular
rate of pay (plus an amount of fringe benefits that are reasonable,
allowable, and allocable, but exclusive of overhead costs), provided
these services are in the same skill for which the employee is normally
paid.

(f) Donated supplies may include such items as expendable equipment,
office supplies, laboratory supplies or workshop and classroom supplies.
Value assessed to donated supplies included in the cost sharing or
matching share shall be reasonable and shall not exceed the fair market
value of the property at the time of the donation.

(g) The method used for determining cost sharing or matching for
donated equipment, buildings and land for which title passes to the
recipient may differ according to the purpose of the award, if (1) or
(2) apply.

(1) If the purpose of the award is to assist the recipient in the
acquisition of equipment, buildings or land, the total value of the
donated property may be claimed as cost sharing or matching.

(2) If the purpose of the award is to support activities that require
the use of equipment, buildings or land, normally only depreciation or
use charges for equipment and buildings may be made. However, the full
value of equipment or other capital assets and fair rental charges for
land may be allowed, provided that the Federal awarding agency has
approved the charges.

(h) The value of donated property shall be determined in accordance
with the usual accounting policies of the recipient, with the following
qualifications.

(1) The value of donated land and buildings shall not exceed its
fair market value at the time of donation to the recipient as
established by an independent appraiser (e.g., certified real property
appraiser or General Services Administration representative) and
certified by a responsible official of the recipient.

(2) The value of donated equipment shall not exceed the fair market
value of equipment of the same age and condition at the time of
donation.

(3) The value of donated space shall not exceed the fair rental value
of comparable space as established by an independent appraisal of
comparable space and facilities in a privately-owned building in the
same locality.

(4) The value of loaned equipment shall not exceed its fair rental
value.

(5) The following requirements pertain to the recipient's supporting
records for in-kind contributions from third parties.

(i) Volunteer services shall be documented and, to the extent
feasible, supported by the same methods used by the recipient for its
own employees.

(ii) The basis for determining the valuation for personal service,
material, equipment, buildings and land shall be
documented.

___.24 Program
income.

(a) Federal awarding agencies shall apply the standards set forth in
this section in requiring recipient organizations to account for program
income related to projects financed in whole or in part with Federal
funds.

(b) Except as provided in paragraph (h) below, program income earned
during the project period shall be retained by the recipient and, in
accordance with Federal awarding agency regulations or the terms and
conditions of the award, shall be used in one or more of the ways listed
in the following.

(1) Added to funds committed to the project by the Federal awarding
agency and recipient and used to further eligible project or program
objectives.

(2) Used to finance the non-Federal share of the project or program.

(3) Deducted from the total project or program allowable cost in
determining the net allowable costs on which the Federal share of costs
is based.

(c) When an agency authorizes the disposition of program income as
described in paragraphs (b)(1) or (b)(2), program income in excess of
any limits stipulated shall be used in accordance with paragraph (b)(3).

(d) In the event that the Federal awarding agency does not specify in
its regulations or the terms and conditions of the award how program
income is to be used, paragraph (b)(3) shall apply automatically to all
projects or programs except research. For awards that support research,
paragraph (b)(1) shall apply automatically unless the awarding agency
indicates in the terms and conditions another alternative on the award
or the recipient is subject to special award conditions, as indicated in
Section ___.14.

(e) Unless Federal awarding agency regulations or the terms and
conditions of the award provide otherwise, recipients shall have no
obligation to the Federal Government regarding program income earned
after the end of the project period.

(f) If authorized by Federal awarding agency regulations or the terms
and conditions of the award, costs incident to the generation of program
income may be deducted from gross income to determine program income,
provided these costs have not been charged to the award.

(g) Proceeds from the sale of property shall be handled in accordance
with the requirements of the Property Standards (See Sections ___.30
through ___.37).

(h) Unless Federal awarding agency regulations or the terms and
condition of the award provide otherwise, recipients shall have no
obligation to the Federal Government with respect to program income
earned from license fees and royalties for copyrighted material,
patents, patent applications, trademarks, and inventions produced under
an award. However, Patent and Trademark Amendments (35 U.S.C. 18) apply
to inventions made under an experimental, developmental, or research
award.

___.25 Revision
of budget and program plans.

(a) The budget plan is the financial expression of the project or
program as approved during the award process. It may include either the
Federal and non-Federal share, or only the Federal share, depending upon
Federal awarding agency requirements. It shall be related to performance
for program evaluation purposes whenever appropriate.

(b) Recipients are required to report deviations from budget and
program plans, and request prior approvals for budget and program plan
revisions, in accordance with this section.

(c) For nonconstruction awards, recipients shall request prior
approvals from Federal awarding agencies for one or more of the
following program or budget related reasons.

(1) Change in the scope or the objective of the project or program
(even if there is no associated budget revision requiring prior written
approval).

(2) Change in a key person specified in the application or award
document.

(3) The absence for more than three months, or a 25 percent reduction
in time devoted to the project, by the approved project director or
principal investigator.

(4) The need for additional Federal funding.

(5) The transfer of amounts budgeted for indirect costs to absorb
increases in direct costs, or vice versa, if approval is required by the
Federal awarding agency.

(6) The inclusion, unless waived by the Federal awarding agency, of
costs that require prior approval in accordance with OMB Circular A-21,
"Cost Principles for Educational Institutions," OMB Circular A-122,
"Cost Principles for Non-Profit Organizations," or 45 CFR part 74
Appendix E, "Principles for Determining Costs Applicable to Research and
Development under Grants and Contracts with Hospitals," or 48 CFR part
31, "Contract Cost Principles and Procedures," as applicable.

(7) The transfer of funds allotted for training allowances (direct
payment to trainees) to other categories of expense.

(8) Unless described in the application and funded in the approved
awards, the subaward, transfer or contracting out of any work under an
award. This provision does not apply to the purchase of supplies,
material, equipment or general support services.

(d) No other prior approval requirements for specific items may be
imposed unless a deviation has been approved by OMB.

(e) Except for requirements listed in paragraphs (c)(1) and (c)(4) of
this section, Federal awarding agencies are authorized, at their option,
to waive cost-related and administrative prior written approvals
required by this Circular and OMB Circulars A-21 and A-122. Such waivers
may include authorizing recipients to do any one or more of the
following.

(1) Incur pre-award costs 90 calendar days prior to award or more
than 90 calendar days with the prior approval of the Federal awarding
agency. All pre-award costs are incurred at the recipient's risk (i.e.,
the Federal awarding agency is under no obligation to reimburse such
costs if for any reason the recipient does not receive an award or if
the award is less than anticipated and inadequate to cover such costs).

(2) Initiate a one-time extension of the expiration date of the award
of up to 12 months unless one or more of the following conditions apply.
For one-time extensions, the recipient must notify the Federal awarding
agency in writing with the supporting reasons and revised expiration
date at least 10 days before the expiration date specified in the award.
This one-time extension may not be exercised merely for the purpose of
using unobligated balances.

(i) The terms and conditions of award prohibit the extension.

(ii) The extension requires additional Federal funds.

(iii) The extension involves any change in the approved objectives or
scope of the project.

(3) Carry forward unobligated balances to subsequent funding periods.

(4) For awards that support research, unless the Federal awarding
agency provides otherwise in the award or in the agency's regulations,
the prior approval requirements described in paragraph (e) are
automatically waived (i.e., recipients need not obtain such prior
approvals) unless one of the conditions included in paragraph (e)(2)
applies.

(f) The Federal awarding agency may, at its option, restrict the
transfer of funds among direct cost categories or programs, functions
and activities for awards in which the Federal share of the project
exceeds $100,000 and the cumulative amount of such transfers exceeds or
is expected to exceed 10 percent of the total budget as last approved by
the Federal awarding agency. No Federal awarding agency shall permit a
transfer that would cause any Federal appropriation or part thereof to
be used for purposes other than those consistent with the original
intent of the appropriation.

(g) All other changes to nonconstruction budgets, except for the
changes described in paragraph (j), do not require prior approval.

(h) For construction awards, recipients shall request prior written
approval promptly from Federal awarding agencies for budget revisions
whenever (1), (2) or (3) apply.

(1) The revision results from changes in the scope or the objective
of the project or program.

(2) The need arises for additional Federal funds to complete the
project.

(3) A revision is desired which involves specific costs for which
prior written approval requirements may be imposed consistent with
applicable OMB cost principles listed in Section ___.27.

(i) No other prior approval requirements for specific items may be
imposed unless a deviation has been approved by OMB.

(j) When a Federal awarding agency makes an award that provides
support for both construction and nonconstruction work, the Federal
awarding agency may require the recipient to request prior approval from
the Federal awarding agency before making any fund or budget transfers
between the two types of work supported.

(k) For both construction and nonconstruction awards, Federal
awarding agencies shall require recipients to notify the Federal
awarding agency in writing promptly whenever the amount of Federal
authorized funds is expected to exceed the needs of the recipient for
the project period by more than $5000 or five percent of the Federal
award, whichever is greater. This notification shall not be required if
an application for additional funding is submitted for a continuation
award.

(l) When requesting approval for budget revisions, recipients shall
use the budget forms that were used in the application unless the
Federal awarding agency indicates a letter of request suffices.

(m) Within 30 calendar days from the date of receipt of the request
for budget revisions, Federal awarding agencies shall review the request
and notify the recipient whether the budget revisions have been
approved. If the revision is still under consideration at the end of 30
calendar days, the Federal awarding agency shall inform the recipient in
writing of the date when the recipient may expect the decision.

___.26 Non-Federal
audits.

(a) Recipients and subrecipients that are institutions of higher
education or other non-profit organizations (including hospitals) shall
be subject to the audit requirements contained in the Single Audit Act
Amendments of 1996 (31 USC 7501-7507) and revised OMB Circular A-133,
"Audits of States, Local Governments, and Non-Profit Organizations."

(b) State and local governments shall be subject to the audit
requirements contained in the Single Audit Act Amendments of 1996 (31
USC 7501-7507) and revised OMB Circular A-133, "Audits of States, Local
Governments, and Non-Profit Organizations."

(c) For-profit hospitals not covered by the audit provisions of
revised OMB Circular A-133 shall be subject to the audit requirements of
the Federal awarding agencies.

(d) Commercial organizations shall be subject to the audit
requirements of the Federal awarding agency or the prime recipient as
incorporated into the award document.

___.27 Allowable
costs. For each kind of recipient, there is a set of Federal
principles for determining allowable costs. Allowability of costs shall
be determined in accordance with the cost principles applicable to the
entity incurring the costs. Thus, allowability of costs incurred by
State, local or federally-recognized Indian tribal governments is
determined in accordance with the provisions of OMB Circular A-87, "Cost
Principles for State, Local, and Indian Tribal Governments." The
allowability of costs incurred by non-profit organizations is determined
in accordance with the provisions of OMB Circular A-122, "Cost
Principles for Non-Profit Organizations." The allowability of costs
incurred by institutions of higher education is determined in accordance
with the provisions of OMB Circular A-21, "Cost Principles for
Educational Institutions." The allowability of costs incurred by
hospitals is determined in accordance with the provisions of Appendix E
of 45 CFR part 74, "Principles for Determining Costs Applicable to
Research and Development Under Grants and Contracts with Hospitals." The
allowability of costs incurred by commercial organizations and those
non-profit organizations listed in Attachment C to Circular A-122 is
determined in accordance with the provisions of the Federal Acquisition
Regulation (FAR) at 48 CFR part 31.

___.28 Period
of availability of funds. Where a funding period is specified, a
recipient may charge to the grant only allowable costs resulting from
obligations incurred during the funding period and any pre-award costs
authorized by the Federal awarding agency.

___.29 Conditional
exemptions.

(a) OMB authorizes conditional exemption from OMB administrative
requirements and cost principles circulars for certain Federal programs
with statutorily-authorized consolidated planning and consolidated
administrative funding, that are identified by a Federal agency and
approved by the head of the Executive department or establishment. A
Federal agency shall consult with OMB during its consideration of
whether to grant such an exemption.

(b) To promote efficiency in State and local program administration,
when Federal non-entitlement programs with common purposes have specific
statutorily-authorized consolidated planning and consolidated
administrative funding and where most of the State agency's resources
come from non-Federal sources, Federal agencies may exempt these covered
State-administered, non-entitlement grant programs from certain OMB
grants management requirements. The exemptions would be from all but the
allocability of costs provisions of OMB Circulars A-87 (Attachment A,
subsection C.3), "Cost Principles for State, Local, and Indian Tribal
Governments," A-21 (Section C, subpart 4), "Cost Principles for
Educational Institutions," and A-122 (Attachment A, subsection A.4),
"Cost Principles for Non-Profit Organizations," and from all of the
administrative requirements provisions of OMB Circular A-110, "Uniform
Administrative Requirements for Grants and Agreements with Institutions
of Higher Education, Hospitals, and Other Non-Profit Organizations," and
the agencies' grants management common rule.

(c) When a Federal agency provides this flexibility, as a
prerequisite to a State's exercising this option, a State must adopt its
own written fiscal and administrative requirements for expending and
accounting for all funds, which are consistent with the provisions of
OMB Circular A-87, and extend such policies to all subrecipients. These
fiscal and administrative requirements must be sufficiently specific to
ensure that: funds are used in compliance with all applicable Federal
statutory and regulatory provisions, costs are reasonable and necessary
for operating these programs, and funds are not be used for general
expenses required to carry out other responsibilities of a State or its
subrecipients.

Property Standards

___.30 Purpose
of property standards. Sections ___.31 through ___.37 set forth
uniform standards governing management and disposition of property
furnished by the Federal Government whose cost was charged to a project
supported by a Federal award. Federal awarding agencies shall require
recipients to observe these standards under awards and shall not impose
additional requirements, unless specifically required by Federal
statute. The recipient may use its own property management standards and
procedures provided it observes the provisions of Sections ___.31
through ___.37.

___.31 Insurance
coverage. Recipients shall, at a minimum, provide the equivalent
insurance coverage for real property and equipment acquired with Federal
funds as provided to property owned by the recipient. Federally-owned
property need not be insured unless required by the terms and conditions
of the award.

___.32 Real
property. Each Federal awarding agency shall prescribe requirements
for recipients concerning the use and disposition of real property
acquired in whole or in part under awards. Unless otherwise provided by
statute, such requirements, at a minimum, shall contain the
following.

(a) Title to real property shall vest in the recipient subject to the
condition that the recipient shall use the real property for the
authorized purpose of the project as long as it is needed and shall not
encumber the property without approval of the Federal awarding agency.

(b) The recipient shall obtain written approval by the Federal
awarding agency for the use of real property in other
federally-sponsored projects when the recipient determines that the
property is no longer needed for the purpose of the original project.
Use in other projects shall be limited to those under
federally-sponsored projects (i.e., awards) or programs that have
purposes consistent with those authorized for support by the Federal
awarding agency.

(c) When the real property is no longer needed as provided in
paragraphs (a) and (b), the recipient shall request disposition
instructions from the Federal awarding agency or its successor Federal
awarding agency. The Federal awarding agency shall observe one or more
of the following disposition instructions.

(1) The recipient may be permitted to retain title without further
obligation to the Federal Government after it compensates the Federal
Government for that percentage of the current fair market value of the
property attributable to the Federal participation in the project.

(2) The recipient may be directed to sell the property under
guidelines provided by the Federal awarding agency and pay the Federal
Government for that percentage of the current fair market value of the
property attributable to the Federal participation in the project (after
deducting actual and reasonable selling and fix-up expenses, if any,
from the sales proceeds). When the recipient is authorized or required
to sell the property, proper sales procedures shall be established that
provide for competition to the extent practicable and result in the
highest possible return.

(3) The recipient may be directed to transfer title to the property
to the Federal Government or to an eligible third party provided that,
in such cases, the recipient shall be entitled to compensation for its
attributable percentage of the current fair market value of the
property.

___.33 Federally-owned
and exempt property.

(a) Federally-owned property.

(1) Title to federally-owned property remains vested in the Federal
Government. Recipients shall submit annually an inventory listing of
federally-owned property in their custody to the Federal awarding
agency. Upon completion of the award or when the property is no longer
needed, the recipient shall report the property to the Federal awarding
agency for further Federal agency utilization.

(2) If the Federal awarding agency has no further need for the
property, it shall be declared excess and reported to the General
Services Administration, unless the Federal awarding agency has
statutory authority to dispose of the property by alternative methods
(e.g., the authority provided by the Federal Technology Transfer Act (15
U.S.C. 3710 (I)) to donate research equipment to educational and
non-profit organizations in accordance with E.O. 12821, "Improving
Mathematics and Science Education in Support of the National Education
Goals.") Appropriate instructions shall be issued to the recipient by
the Federal awarding agency.

(b) Exempt property. When statutory authority exists, the Federal
awarding agency has the option to vest title to property acquired with
Federal funds in the recipient without further obligation to the Federal
Government and under conditions the Federal awarding agency considers
appropriate. Such property is "exempt property." Should a Federal
awarding agency not establish conditions, title to exempt property upon
acquisition shall vest in the recipient without further obligation to
the Federal Government.

___.34 Equipment.

(a) Title to equipment acquired by a recipient with Federal funds
shall vest in the recipient, subject to conditions of this section.

(b) The recipient shall not use equipment acquired with Federal funds
to provide services to non-Federal outside organizations for a fee that
is less than private companies charge for equivalent services, unless
specifically authorized by Federal statute, for as long as the Federal
Government retains an interest in the equipment.

(c) The recipient shall use the equipment in the project or program
for which it was acquired as long as needed, whether or not the project
or program continues to be supported by Federal funds and shall not
encumber the property without approval of the Federal awarding agency.
When no longer needed for the original project or program, the recipient
shall use the equipment in connection with its other federally-sponsored
activities, in the following order of priority: (i) Activities sponsored
by the Federal awarding agency which funded the original project, then
(ii) activities sponsored by other Federal awarding agencies.

(d) During the time that equipment is used on the project or program
for which it was acquired, the recipient shall make it available for use
on other projects or programs if such other use will not interfere with
the work on the project or program for which the equipment was
originally acquired. First preference for such other use shall be given
to other projects or programs sponsored by the Federal awarding agency
that financed the equipment; second preference shall be given to
projects or programs sponsored by other Federal awarding agencies. If
the equipment is owned by the Federal Government, use on other
activities not sponsored by the Federal Government shall be permissible
if authorized by the Federal awarding agency. User charges shall be
treated as program income.

(e) When acquiring replacement equipment, the recipient may use the
equipment to be replaced as trade-in or sell the equipment and use the
proceeds to offset the costs of the replacement equipment subject to the
approval of the Federal awarding agency.

(f) The recipient's property management standards for equipment
acquired with Federal funds and federally-owned equipment shall include
all of the following.

(1) Equipment records shall be maintained accurately and shall
include the following information.

(i) A description of the equipment.

(ii) Manufacturer's serial number, model number, Federal stock
number, national stock number, or other identification number.

(iii) Source of the equipment, including the award number.

(iv) Whether title vests in the recipient or the Federal Government.

(v) Acquisition date (or date received, if the equipment was
furnished by the Federal Government) and cost.

(vi) Information from which one can calculate the percentage of
Federal participation in the cost of the equipment (not applicable to
equipment furnished by the Federal Government).

(vii) Location and condition of the equipment and the date the
information was reported.

(viii) Unit acquisition cost.

(ix) Ultimate disposition data, including date of disposal and sales
price or the method used to determine current fair market value where a
recipient compensates the Federal awarding agency for its
share.

(2) Equipment owned by the Federal Government shall be identified to
indicate Federal ownership.

(3) A physical inventory of equipment shall be taken and the results
reconciled with the equipment records at least once every two years. Any
differences between quantities determined by the physical inspection and
those shown in the accounting records shall be investigated to determine
the causes of the difference. The recipient shall, in connection with
the inventory, verify the existence, current utilization, and continued
need for the equipment.

(4) A control system shall be in effect to insure adequate safeguards
to prevent loss, damage, or theft of the equipment. Any loss, damage, or
theft of equipment shall be investigated and fully documented; if the
equipment was owned by the Federal Government, the recipient shall
promptly notify the Federal awarding agency.

(5) Adequate maintenance procedures shall be implemented to keep the
equipment in good condition.

(6) Where the recipient is authorized or required to sell the
equipment, proper sales procedures shall be established which provide
for competition to the extent practicable and result in the highest
possible return.

(g) When the recipient no longer needs the equipment, the equipment
may be used for other activities in accordance with the following
standards. For equipment with a current per unit fair market value of
$5000 or more, the recipient may retain the equipment for other uses
provided that compensation is made to the original Federal awarding
agency or its successor. The amount of compensation shall be computed by
applying the percentage of Federal participation in the cost of the
original project or program to the current fair market value of the
equipment. If the recipient has no need for the equipment, the recipient
shall request disposition instructions from the Federal awarding agency.
The Federal awarding agency shall determine whether the equipment can be
used to meet the agency's requirements. If no requirement exists within
that agency, the availability of the equipment shall be reported to the
General Services Administration by the Federal awarding agency to
determine whether a requirement for the equipment exists in other
Federal agencies. The Federal awarding agency shall issue instructions
to the recipient no later than 120 calendar days after the recipient's
request and the following procedures shall govern.

(1) If so instructed or if disposition instructions are not issued
within 120 calendar days after the recipient's request, the recipient
shall sell the equipment and reimburse the Federal awarding agency an
amount computed by applying to the sales proceeds the percentage of
Federal participation in the cost of the original project or program.
However, the recipient shall be permitted to deduct and retain from the
Federal share $500 or ten percent of the proceeds, whichever is less,
for the recipient's selling and handling expenses.

(2) If the recipient is instructed to ship the equipment elsewhere,
the recipient shall be reimbursed by the Federal Government by an amount
which is computed by applying the percentage of the recipient's
participation in the cost of the original project or program to the
current fair market value of the equipment, plus any reasonable shipping
or interim storage costs incurred.

(3) If the recipient is instructed to otherwise dispose of the
equipment, the recipient shall be reimbursed by the Federal awarding
agency for such costs incurred in its disposition.

(4) The Federal awarding agency may reserve the right to transfer the
title to the Federal Government or to a third party named by the Federal
Government when such third party is otherwise eligible under existing
statutes. Such transfer shall be subject to the following standards.

(i) The equipment shall be appropriately identified in the award or
otherwise made known to the recipient in writing.

(ii) The Federal awarding agency shall issue disposition instructions
within 120 calendar days after receipt of a final inventory. The final
inventory shall list all equipment acquired with grant funds and
federally-owned equipment. If the Federal awarding agency fails to issue
disposition instructions within the 120 calendar day period, the
recipient shall apply the standards of this section, as appropriate.

(iii) When the Federal awarding agency exercises its right to take
title, the equipment shall be subject to the provisions for
federally-owned equipment.

___.35 Supplies
and other expendable property.

(a) Title to supplies and other expendable property shall vest in the
recipient upon acquisition. If there is a residual inventory of unused
supplies exceeding $5000 in total aggregate value upon termination or
completion of the project or program and the supplies are not needed for
any other federally-sponsored project or program, the recipient shall
retain the supplies for use on non-Federal sponsored activities or sell
them, but shall, in either case, compensate the Federal Government for
its share. The amount of compensation shall be computed in the same
manner as for equipment.

(b) The recipient shall not use supplies acquired with Federal funds
to provide services to non-Federal outside organizations for a fee that
is less than private companies charge for equivalent services, unless
specifically authorized by Federal statute as long as the Federal
Government retains an interest in the supplies.

___.36 Intangible
property.

(a) The recipient may copyright any work that is subject to copyright
and was developed, or for which ownership was purchased, under an award.
The Federal awarding agency(ies) reserve a royalty-free, nonexclusive
and irrevocable right to reproduce, publish, or otherwise use the work
for Federal purposes, and to authorize others to do so.

(b) Recipients are subject to applicable regulations governing
patents and inventions, including government-wide regulations issued by
the Department of Commerce at 37 CFR part 401, "Rights to Inventions
Made by Nonprofit Organizations and Small Business Firms Under
Government Grants, Contracts and Cooperative Agreements."

(c) The Federal Government has the right to:

(1) obtain, reproduce, publish or otherwise use the data first
produced under an award; and

(2) authorize others to receive, reproduce, publish, or otherwise use
such data for Federal purposes.

(d) (1) In addition, in response to a Freedom of Information Act
(FOIA) request for research data relating to published research findings
produced under an award that were used by the Federal Government in
developing an agency action that has the force and effect of law, the
Federal awarding agency shall request, and the recipient shall provide,
within a reasonable time, the research data so that they can be made
available to the public through the procedures established under the
FOIA. If the Federal awarding agency obtains the research data solely in
response to a FOIA request, the agency may charge the requester a
reasonable fee equaling the full incremental cost of obtaining the
research data. This fee should reflect costs incurred by the agency, the
recipient, and applicable subrecipients. This fee is in addition to any
fees the agency may assess under the FOIA (5 U.S.C. 552(a)(4)(A)).

(2) The following definitions apply for purposes of paragraph (d)
of this section:

(i) Research data is defined as the recorded factual
material commonly accepted in the scientific community as necessary to
validate research findings, but not any of the following: preliminary
analyses, drafts of scientific papers, plans for future research, peer
reviews, or communications with colleagues. This "recorded" material
excludes physical objects (e.g., laboratory samples). Research data also
do not include:

(A) Trade secrets, commercial information, materials necessary to
be held confidential by a researcher until they are published, or
similar information which is protected under law; and

(B) Personnel and medical information and similar information the
disclosure of which would constitute a clearly unwarranted invasion of
personal privacy, such as information that could be used to identify a
particular person in a research study.

(ii) Published is defined as either when:

(A) Research findings are published in a peer-reviewed scientific
or technical journal; or

(B) A Federal agency publicly and officially cites the research
findings in support of an agency action that has the force and effect of
law.

(iii) Used by the Federal Government in developing an agency
action that has the force and effect of law is defined as when an
agency publicly and officially cites the research findings in support of
an agency action that has the force and effect of law.

(e) Title to intangible property and debt instruments acquired under
an award or subaward vests upon acquisition in the recipient. The
recipient shall use that property for the originally-authorized purpose,
and the recipient shall not encumber the property without approval of
the Federal awarding agency. When no longer needed for the originally
authorized purpose, disposition of the intangible property shall occur
in accordance with the provisions of paragraph ___.34(g).

___.37 Property
trust relationship. Real property, equipment, intangible property
and debt instruments that are acquired or improved with Federal funds
shall be held in trust by the recipient as trustee for the beneficiaries
of the project or program under which the property was acquired or
improved. Agencies may require recipients to record liens or other
appropriate notices of record to indicate that personal or real property
has been acquired or improved with Federal funds and that use and
disposition conditions apply to the property.

Procurement Standards

___.40 Purpose
of procurement standards. Sections ___.41 through ___.48 set forth
standards for use by recipients in establishing procedures for the
procurement of supplies and other expendable property, equipment, real
property and other services with Federal funds. These standards are
furnished to ensure that such materials and services are obtained in an
effective manner and in compliance with the provisions of applicable
Federal statutes and executive orders. No additional procurement
standards or requirements shall be imposed by the Federal awarding
agencies upon recipients, unless specifically required by Federal
statute or executive order or approved by OMB.

___.41 Recipient
responsibilities. The standards contained in this section do not
relieve the recipient of the contractual responsibilities arising under
its contract(s). The recipient is the responsible authority, without
recourse to the Federal awarding agency, regarding the settlement and
satisfaction of all contractual and administrative issues arising out of
procurements entered into in support of an award or other agreement.
This includes disputes, claims, protests of award, source evaluation or
other matters of a contractual nature. Matters concerning violation of
statute are to be referred to such Federal, State or local authority as
may have proper jurisdiction.

___.42 Codes
of conduct. The recipient shall maintain written standards of
conduct governing the performance of its employees engaged in the award
and administration of contracts. No employee, officer, or agent shall
participate in the selection, award, or administration of a contract
supported by Federal funds if a real or apparent conflict of interest
would be involved. Such a conflict would arise when the employee,
officer, or agent, any member of his or her immediate family, his or her
partner, or an organization which employs or is about to employ any of
the parties indicated herein, has a financial or other interest in the
firm selected for an award. The officers, employees, and agents of the
recipient shall neither solicit nor accept gratuities, favors, or
anything of monetary value from contractors, or parties to
subagreements. However, recipients may set standards for situations in
which the financial interest is not substantial or the gift is an
unsolicited item of nominal value. The standards of conduct shall
provide for disciplinary actions to be applied for violations of such
standards by officers, employees, or agents of the recipient.

___.43 Competition.
All procurement transactions shall be conducted in a manner to provide,
to the maximum extent practical, open and free competition. The
recipient shall be alert to organizational conflicts of interest as well
as noncompetitive practices among contractors that may restrict or
eliminate competition or otherwise restrain trade. In order to ensure
objective contractor performance and eliminate unfair competitive
advantage, contractors that develop or draft specifications,
requirements, statements of work, invitations for bids and/or requests
for proposals shall be excluded from competing for such procurements.
Awards shall be made to the bidder or offeror whose bid or offer is
responsive to the solicitation and is most advantageous to the
recipient, price, quality and other factors considered. Solicitations
shall clearly set forth all requirements that the bidder or offeror
shall fulfill in order for the bid or offer to be evaluated by the
recipient. Any and all bids or offers may be rejected when it is in the
recipient's interest to do so.

___.44 Procurement
procedures.

(a) All recipients shall establish written procurement procedures.
These procedures shall provide for, at a minimum, that (1), (2) and (3)
apply.

(1) Recipients avoid purchasing unnecessary items.

(2) Where appropriate, an analysis is made of lease and purchase
alternatives to determine which would be the most economical and
practical procurement for the Federal Government.

(3) Solicitations for goods and services provide for all of the
following.

(i) A clear and accurate description of the technical requirements
for the material, product or service to be procured. In competitive
procurements, such a description shall not contain features which unduly
restrict competition.

(ii) Requirements which the bidder/offeror must fulfill and all other
factors to be used in evaluating bids or proposals.

(iii) A description, whenever practicable, of technical requirements
in terms of functions to be performed or performance required, including
the range of acceptable characteristics or minimum acceptable standards.

(iv) The specific features of "brand name or equal" descriptions that
bidders are required to meet when such items are included in the
solicitation.

(v) The acceptance, to the extent practicable and economically
feasible, of products and services dimensioned in the metric system of
measurement.

(vi) Preference, to the extent practicable and economically feasible,
for products and services that conserve natural resources and protect
the environment and are energy efficient.

(b) Positive efforts shall be made by recipients to utilize small
businesses, minority-owned firms, and women's business enterprises,
whenever possible. Recipients of Federal awards shall take all of the
following steps to further this goal.

(1) Ensure that small businesses, minority-owned firms, and women's
business enterprises are used to the fullest extent practicable.

(2) Make information on forthcoming opportunities available and
arrange time frames for purchases and contracts to encourage and
facilitate participation by small businesses, minority-owned firms, and
women's business enterprises.

(3) Consider in the contract process whether firms competing for
larger contracts intend to subcontract with small businesses,
minority-owned firms, and women's business enterprises.

(4) Encourage contracting with consortiums of small businesses,
minority-owned firms and women's business enterprises when a contract is
too large for one of these firms to handle individually.

(5) Use the services and assistance, as appropriate, of such
organizations as the Small Business Administration and the Department of
Commerce's Minority Business Development Agency in the solicitation and
utilization of small businesses, minority- owned firms and women's
business enterprises.

(c) The type of procuring instruments used (e.g., fixed price
contracts, cost reimbursable contracts, purchase orders, and incentive
contracts) shall be determined by the recipient but shall be appropriate
for the particular procurement and for promoting the best interest of
the program or project involved. The "cost-plus-a-percentage-of-cost" or
"percentage of construction cost" methods of contracting shall not be
used.

(d) Contracts shall be made only with responsible contractors who
possess the potential ability to perform successfully under the terms
and conditions of the proposed procurement. Consideration shall be given
to such matters as contractor integrity, record of past performance,
financial and technical resources or accessibility to other necessary
resources. In certain circumstances, contracts with certain parties are
restricted by agencies' implementation of E.O.s 12549 and 12689,
"Debarment and Suspension."

(e) Recipients shall, on request, make available for the Federal
awarding agency, pre-award review and procurement documents, such as
request for proposals or invitations for bids, independent cost
estimates, etc., when any of the following conditions apply.

(1) A recipient's procurement procedures or operation fails to
comply with the procurement standards in the Federal awarding agency's
implementation of this Circular.

(2) The procurement is expected to exceed the small purchase
threshold fixed at 41 U.S.C. 403 (11) (currently $25,000) and is to be
awarded without competition or only one bid or offer is received in
response to a solicitation.

(3) The procurement, which is expected to exceed the small purchase
threshold, specifies a "brand name" product.

(4) The proposed award over the small purchase threshold is to be
awarded to other than the apparent low bidder under a sealed bid
procurement.

(5) A proposed contract modification changes the scope of a contract
or increases the contract amount by more than the amount of the small
purchase threshold.

___.45 Cost
and price analysis. Some form of cost or price analysis shall be
made and documented in the procurement files in connection with every
procurement action. Price analysis may be accomplished in various ways,
including the comparison of price quotations submitted, market prices
and similar indicia, together with discounts. Cost analysis is the
review and evaluation of each element of cost to determine
reasonableness, allocability and allowability.

___.46 Procurement
records. Procurement records and files for purchases in excess of
the small purchase threshold shall include the following at a minimum:
(a) basis for contractor selection, (b) justification for lack of
competition when competitive bids or offers are not obtained, and (c)
basis for award cost or price.

___.47 Contract
administration. A system for contract administration shall be
maintained to ensure contractor conformance with the terms, conditions
and specifications of the contract and to ensure adequate and timely
follow up of all purchases. Recipients shall evaluate contractor
performance and document, as appropriate, whether contractors have met
the terms, conditions and specifications of the contract.

___.48 Contract
provisions. The recipient shall include, in addition to provisions
to define a sound and complete agreement, the following provisions in
all contracts. The following provisions shall also be applied to
subcontracts.

(a) Contracts in excess of the small purchase threshold shall contain
contractual provisions or conditions that allow for administrative,
contractual, or legal remedies in instances in which a contractor
violates or breaches the contract terms, and provide for such remedial
actions as may be appropriate.

(b) All contracts in excess of the small purchase threshold shall
contain suitable provisions for termination by the recipient, including
the manner by which termination shall be effected and the basis for
settlement. In addition, such contracts shall describe conditions under
which the contract may be terminated for default as well as conditions
where the contract may be terminated because of circumstances beyond the
control of the contractor.

(c) Except as otherwise required by statute, an award that requires
the contracting (or subcontracting) for construction or facility
improvements shall provide for the recipient to follow its own
requirements relating to bid guarantees, performance bonds, and payment
bonds unless the construction contract or subcontract exceeds $100,000.
For those contracts or subcontracts exceeding $100,000, the Federal
awarding agency may accept the bonding policy and requirements of the
recipient, provided the Federal awarding agency has made a determination
that the Federal Government's interest is adequately protected. If such
a determination has not been made, the minimum requirements shall be as
follows.

(1) A bid guarantee from each bidder equivalent to five percent of
the bid price. The "bid guarantee" shall consist of a firm commitment
such as a bid bond, certified check, or other negotiable instrument
accompanying a bid as assurance that the bidder shall, upon acceptance
of his bid, execute such contractual documents as may be required within
the time specified.

(2) A performance bond on the part of the contractor for 100 percent
of the contract price. A "performance bond" is one executed in
connection with a contract to secure fulfillment of all the contractor's
obligations under such contract.

(3) A payment bond on the part of the contractor for 100 percent of
the contract price. A "payment bond" is one executed in connection with
a contract to assure payment as required by statute of all persons
supplying labor and material in the execution of the work provided for
in the contract.

(4) Where bonds are required in the situations described herein, the
bonds shall be obtained from companies holding certificates of authority
as acceptable sureties pursuant to 31 CFR part 223, "Surety Companies
Doing Business with the United States."

(d) All negotiated contracts (except those for less than the small
purchase threshold) awarded by recipients shall include a provision to
the effect that the recipient, the Federal awarding agency, the
Comptroller General of the United States, or any of their duly
authorized representatives, shall have access to any books, documents,
papers and records of the contractor which are directly pertinent to a
specific program for the purpose of making audits, examinations,
excerpts and transcriptions.

(e) All contracts, including small purchases, awarded by recipients
and their contractors shall contain the procurement provisions of
Appendix A to this Circular, as applicable.

Reports and Records

___.50 Purpose
of reports and records. Sections ___.51 through ___.53 set forth the
procedures for monitoring and reporting on the recipient's financial and
program performance and the necessary standard reporting forms. They
also set forth record retention requirements.

___.51 Monitoring
and reporting program performance.

(a) Recipients are responsible for managing and monitoring each
project, program, subaward, function or activity supported by the award.
Recipients shall monitor subawards to ensure subrecipients have met the
audit requirements as delineated in Section ___.26.

(b) The Federal awarding agency shall prescribe the frequency with
which the performance reports shall be submitted. Except as provided in
paragraph ___.51(f), performance reports shall not be required more
frequently than quarterly or, less frequently than annually. Annual
reports shall be due 90 calendar days after the grant year; quarterly or
semi-annual reports shall be due 30 days after the reporting period. The
Federal awarding agency may require annual reports before the
anniversary dates of multiple year awards in lieu of these requirements.
The final performance reports are due 90 calendar days after the
expiration or termination of the award.

(c) If inappropriate, a final technical or performance report shall
not be required after completion of the project.

(d) When required, performance reports shall generally contain, for
each award, brief information on each of the following.

(1) A comparison of actual accomplishments with the goals and
objectives established for the period, the findings of the investigator,
or both. Whenever appropriate and the output of programs or projects can
be readily quantified, such quantitative data should be related to cost
data for computation of unit costs.

(2) Reasons why established goals were not met, if appropriate.

(3) Other pertinent information including, when appropriate, analysis
and explanation of cost overruns or high unit costs.

(e) Recipients shall not be required to submit more than the original
and two copies of performance reports.

(f) Recipients shall immediately notify the Federal awarding agency
of developments that have a significant impact on the award-supported
activities. Also, notification shall be given in the case of problems,
delays, or adverse conditions which materially impair the ability to
meet the objectives of the award. This notification shall include a
statement of the action taken or contemplated, and any assistance needed
to resolve the situation.

(g) Federal awarding agencies may make site visits, as needed.

(h) Federal awarding agencies shall comply with clearance
requirements of 5 CFR part 1320 when requesting performance data from
recipients.

___.52 Financial
reporting.

(a) The following forms or such other forms as may be approved by OMB
are authorized for obtaining financial information from recipients.

(1) SF-269 or SF-269A, Financial Status Report.

(i) Each Federal awarding agency shall require recipients to use
the SF-269 or SF-269A to report the status of funds for all
nonconstruction projects or programs. A Federal awarding agency may,
however, have the option of not requiring the SF-269 or SF-269A when the
SF-270, Request for Advance or Reimbursement, or SF-272, Report of
Federal Cash Transactions, is determined to provide adequate information
to meet its needs, except that a final SF-269 or SF-269A shall be
required at the completion of the project when the SF-270 is used only
for advances.

(ii) The Federal awarding agency shall prescribe whether the report
shall be on a cash or accrual basis. If the Federal awarding agency
requires accrual information and the recipient's accounting records are
not normally kept on the accrual basis, the recipient shall not be
required to convert its accounting system, but shall develop such
accrual information through best estimates based on an analysis of the
documentation on hand.

(iii) The Federal awarding agency shall determine the frequency of
the Financial Status Report for each project or program, considering the
size and complexity of the particular project or program. However, the
report shall not be required more frequently than quarterly or less
frequently than annually. A final report shall be required at the
completion of the agreement.

(iv) The Federal awarding agency shall require recipients to submit
the SF-269 or SF-269A (an original and no more than two copies) no later
than 30 days after the end of each specified reporting period for
quarterly and semi-annual reports, and 90 calendar days for annual and
final reports. Extensions of reporting due dates may be approved by the
Federal awarding agency upon request of the recipient.

(2) SF-272, Report of Federal Cash Transactions.

(i) When funds are advanced to recipients the Federal awarding
agency shall require each recipient to submit the SF-272 and, when
necessary, its continuation sheet, SF-272a. The Federal awarding agency
shall use this report to monitor cash advanced to recipients and to
obtain disbursement information for each agreement with the recipients.

(ii) Federal awarding agencies may require forecasts of Federal cash
requirements in the "Remarks" section of the report.

(iii) When practical and deemed necessary, Federal awarding agencies
may require recipients to report in the "Remarks" section the amount of
cash advances received in excess of three days. Recipients shall provide
short narrative explanations of actions taken to reduce the excess
balances.

(iv) Recipients shall be required to submit not more than the
original and two copies of the SF-272 15 calendar days following the end
of each quarter. The Federal awarding agencies may require a monthly
report from those recipients receiving advances totaling $1 million or
more per year.

(v) Federal awarding agencies may waive the requirement for
submission of the SF-272 for any one of the following reasons: (1) When
monthly advances do not exceed $25,000 per recipient, provided that such
advances are monitored through other forms contained in this section;
(2) If, in the Federal awarding agency's opinion, the recipient's
accounting controls are adequate to minimize excessive Federal advances;
or, (3) When the electronic payment mechanisms provide adequate
data.

(b) When the Federal awarding agency needs additional information or
more frequent reports, the following shall be observed.

(1) When additional information is needed to comply with
legislative requirements, Federal awarding agencies shall issue
instructions to require recipients to submit such information under the
"Remarks" section of the reports.

(2) When a Federal awarding agency determines that a recipient's
accounting system does not meet the standards in Section ___.21,
additional pertinent information to further monitor awards may be
obtained upon written notice to the recipient until such time as the
system is brought up to standard. The Federal awarding agency, in
obtaining this information, shall comply with report clearance
requirements of 5 CFR part 1320.

(3) Federal awarding agencies are encouraged to shade out any line
item on any report if not necessary.

(4) Federal awarding agencies may accept the identical information
from the recipients in machine readable format or computer printouts or
electronic outputs in lieu of prescribed formats.

(5) Federal awarding agencies may provide computer or electronic
outputs to recipients when such expedites or contributes to the accuracy
of reporting.

___.53 Retention
and access requirements for records.

(a) This section sets forth requirements for record retention and
access to records for awards to recipients. Federal awarding agencies
shall not impose any other record retention or access requirements upon
recipients.

(b) Financial records, supporting documents, statistical records, and
all other records pertinent to an award shall be retained for a period
of three years from the date of submission of the final expenditure
report or, for awards that are renewed quarterly or annually, from the
date of the submission of the quarterly or annual financial report, as
authorized by the Federal awarding agency. The only exceptions are the
following.

(1) If any litigation, claim, or audit is started before the
expiration of the 3-year period, the records shall be retained until all
litigation, claims or audit findings involving the records have been
resolved and final action taken.

(2) Records for real property and equipment acquired with Federal
funds shall be retained for 3 years after final disposition.

(3) When records are transferred to or maintained by the Federal
awarding agency, the 3-year retention requirement is not applicable to
the recipient.

(4) Indirect cost rate proposals, cost allocations plans, etc. as
specified in paragraph ___.53(g).

(c) Copies of original records may be substituted for the original
records if authorized by the Federal awarding agency.

(d) The Federal awarding agency shall request transfer of certain
records to its custody from recipients when it determines that the
records possess long term retention value. However, in order to avoid
duplicate recordkeeping, a Federal awarding agency may make arrangements
for recipients to retain any records that are continuously needed for
joint use.

(e) The Federal awarding agency, the Inspector General, Comptroller
General of the United States, or any of their duly authorized
representatives, have the right of timely and unrestricted access to any
books, documents, papers, or other records of recipients that are
pertinent to the awards, in order to make audits, examinations,
excerpts, transcripts and copies of such documents. This right also
includes timely and reasonable access to a recipient's personnel for the
purpose of interview and discussion related to such documents. The
rights of access in this paragraph are not limited to the required
retention period, but shall last as long as records are retained.

(f) Unless required by statute, no Federal awarding agency shall
place restrictions on recipients that limit public access to the records
of recipients that are pertinent to an award, except when the Federal
awarding agency can demonstrate that such records shall be kept
confidential and would have been exempted from disclosure pursuant to
the Freedom of Information Act (5 U.S.C. 552) if the records had
belonged to the Federal awarding agency.

(g) Indirect cost rate proposals, cost allocations plans, etc.
Paragraphs (g)(1) and (g)(2) apply to the following types of documents,
and their supporting records: indirect cost rate computations or
proposals, cost allocation plans, and any similar accounting
computations of the rate at which a particular group of costs is
chargeable (such as computer usage chargeback rates or composite fringe
benefit rates).

(1) If submitted for negotiation. If the recipient submits to the
Federal awarding agency or the subrecipient submits to the recipient the
proposal, plan, or other computation to form the basis for negotiation
of the rate, then the 3-year retention period for its supporting records
starts on the date of such submission.

(2) If not submitted for negotiation. If the recipient is not
required to submit to the Federal awarding agency or the subrecipient is
not required to submit to the recipient the proposal, plan, or other
computation for negotiation purposes, then the 3-year retention period
for the proposal, plan, or other computation and its supporting records
starts at the end of the fiscal year (or other accounting period)
covered by the proposal, plan, or other computation.

Termination and Enforcement

___.60 Purpose
of termination and enforcement. Sections ___.61 and ___.62 set forth
uniform suspension, termination and enforcement procedures.

___.61 Termination.

(a) Awards may be terminated in whole or in part only if (1), (2) or
(3) apply.

(1) By the Federal awarding agency, if a recipient materially fails
to comply with the terms and conditions of an award.

(2) By the Federal awarding agency with the consent of the recipient,
in which case the two parties shall agree upon the termination
conditions, including the effective date and, in the case of partial
termination, the portion to be terminated.

(3) By the recipient upon sending to the Federal awarding agency
written notification setting forth the reasons for such termination, the
effective date, and, in the case of partial termination, the portion to
be terminated. However, if the Federal awarding agency determines in the
case of partial termination that the reduced or modified portion of the
grant will not accomplish the purposes for which the grant was made, it
may terminate the grant in its entirety under either paragraphs (a)(1)
or (2).

(b) If costs are allowed under an award, the responsibilities of the
recipient referred to in paragraph ___.71(a), including those for
property management as applicable, shall be considered in the
termination of the award, and provision shall be made for continuing
responsibilities of the recipient after termination, as appropriate.

___.62 Enforcement.

(a) Remedies for noncompliance. If a recipient materially fails to
comply with the terms and conditions of an award, whether stated in a
Federal statute, regulation, assurance, application, or notice of award,
the Federal awarding agency may, in addition to imposing any of the
special conditions outlined in Section ___.14, take one or more of the
following actions, as appropriate in the circumstances.

(1) Temporarily withhold cash payments pending correction of the
deficiency by the recipient or more severe enforcement action by the
Federal awarding agency.

(2) Disallow (that is, deny both use of funds and any applicable
matching credit for) all or part of the cost of the activity or action
not in compliance.

(3) Wholly or partly suspend or terminate the current award.

(4) Withhold further awards for the project or program.

(5) Take other remedies that may be legally available.

(b) Hearings and appeals. In taking an enforcement action, the
awarding agency shall provide the recipient an opportunity for hearing,
appeal, or other administrative proceeding to which the recipient is
entitled under any statute or regulation applicable to the action
involved.

(c) Effects of suspension and termination. Costs of a recipient
resulting from obligations incurred by the recipient during a suspension
or after termination of an award are not allowable unless the awarding
agency expressly authorizes them in the notice of suspension or
termination or subsequently. Other recipient costs during suspension or
after termination which are necessary and not reasonably avoidable are
allowable if (1) and (2) apply.

(1) The costs result from obligations which were properly incurred
by the recipient before the effective date of suspension or termination,
are not in anticipation of it, and in the case of a termination, are
noncancellable. <

(2) The costs would be allowable if the award were not suspended or
expired normally at the end of the funding period in which the
termination takes effect.

(d) Relationship to debarment and suspension. The enforcement
remedies identified in this section, including suspension and
termination, do not preclude a recipient from being subject to debarment
and suspension under E.O.s 12549 and 12689 and the Federal awarding
agency implementing regulations (see Section ___.13).

SUBPART D - After-the-Award Requirements

___.70 Purpose.
Sections ___.71 through ___.73 contain closeout procedures and other
procedures for subsequent disallowances and adjustments.

___.71 Closeout
procedures.

(a) Recipients shall submit, within 90 calendar days after the date
of completion of the award, all financial, performance, and other
reports as required by the terms and conditions of the award. The
Federal awarding agency may approve extensions when requested by the
recipient.

(b) Unless the Federal awarding agency authorizes an extension, a
recipient shall liquidate all obligations incurred under the award not
later than 90 calendar days after the funding period or the date of
completion as specified in the terms and conditions of the award or in
agency implementing instructions.

(c) The Federal awarding agency shall make prompt payments to a
recipient for allowable reimbursable costs under the award being closed
out.

(d) The recipient shall promptly refund any balances of unobligated
cash that the Federal awarding agency has advanced or paid and that is
not authorized to be retained by the recipient for use in other
projects. OMB Circular A-129 governs unreturned amounts that become
delinquent debts.

(e) When authorized by the terms and conditions of the award, the
Federal awarding agency shall make a settlement for any upward or
downward adjustments to the Federal share of costs after closeout
reports are received.

(f) The recipient shall account for any real and personal property
acquired with Federal funds or received from the Federal Government in
accordance with Sections ___.31 through ___.37.

(g) In the event a final audit has not been performed prior to the
closeout of an award, the Federal awarding agency shall retain the right
to recover an appropriate amount after fully considering the
recommendations on disallowed costs resulting from the final audit.

___.72 Subsequent
adjustments and continuing responsibilities.

(a) The closeout of an award does not affect any of the following.

(1) The right of the Federal awarding agency to disallow costs and
recover funds on the basis of a later audit or other review.

(2) The obligation of the recipient to return any funds due as a
result of later refunds, corrections, or other transactions.

(3) Audit requirements in Section ___.26.

(4) Property management requirements in Sections ___.31 through
___.37.

(5) Records retention as required in Section ___.53.

(b) After closeout of an award, a relationship created under an award
may be modified or ended in whole or in part with the consent of the
Federal awarding agency and the recipient, provided the responsibilities
of the recipient referred to in paragraph ___.73(a), including those for
property management as applicable, are considered and provisions made
for continuing responsibilities of the recipient, as appropriate.

___.73 Collection
of amounts due.

(a) Any funds paid to a recipient in excess of the amount to which
the recipient is finally determined to be entitled under the terms and
conditions of the award constitute a debt to the Federal Government. If
not paid within a reasonable period after the demand for payment, the
Federal awarding agency may reduce the debt by (1), (2) or (3).

(1) Making an administrative offset against other requests for
reimbursements.

(2) Withholding advance payments otherwise due to the recipient.

(3) Taking other action permitted by statute.

(b) Except as otherwise provided by law, the Federal awarding agency
shall charge interest on an overdue debt in accordance with 4 CFR
Chapter II, "Federal Claims Collection Standards."

Appendix A

Contract Provisions

All contracts, awarded by a recipient including small purchases,
shall contain the following provisions as applicable:

1. Equal Employment Opportunity - All contracts
shall contain a provision requiring compliance with E.O. 11246, "Equal
Employment Opportunity," as amended by E.O. 11375, "Amending Executive
Order 11246 Relating to Equal Employment Opportunity," and as
supplemented by regulations at 41 CFR part 60, "Office of Federal
Contract Compliance Programs, Equal Employment Opportunity, Department
of Labor."

2. Copeland "Anti-Kickback" Act (18 U.S.C. 874 and 40 U.S.C.
276c) - All contracts and subgrants in excess of $2000 for
construction or repair awarded by recipients and subrecipients shall
include a provision for compliance with the Copeland "Anti-Kickback" Act
(18 U.S.C. 874), as supplemented by Department of Labor regulations (29
CFR part 3, "Contractors and Subcontractors on Public Building or Public
Work Financed in Whole or in Part by Loans or Grants from the United
States"). The Act provides that each contractor or subrecipient shall be
prohibited from inducing, by any means, any person employed in the
construction, completion, or repair of public work, to give up any part
of the compensation to which he is otherwise entitled. The recipient
shall report all suspected or reported violations to the Federal
awarding agency.

3. Davis-Bacon Act, as amended (40 U.S.C. 276a to
a-7) - When required by Federal program legislation, all
construction contracts awarded by the recipients and subrecipients of
more than $2000 shall include a provision for compliance with the
Davis-Bacon Act (40 U.S.C. 276a to a-7) and as supplemented by
Department of Labor regulations (29 CFR part 5, "Labor Standards
Provisions Applicable to Contracts Governing Federally Financed and
Assisted Construction"). Under this Act, contractors shall be required
to pay wages to laborers and mechanics at a rate not less than the
minimum wages specified in a wage determination made by the Secretary of
Labor. In addition, contractors shall be required to pay wages not less
than once a week. The recipient shall place a copy of the current
prevailing wage determination issued by the Department of Labor in each
solicitation and the award of a contract shall be conditioned upon the
acceptance of the wage determination. The recipient shall report all
suspected or reported violations to the Federal awarding agency.

4. Contract Work Hours and Safety Standards Act (40 U.S.C.
327-333) - Where applicable, all contracts awarded by
recipients in excess of $2000 for construction contracts and in excess
of $2500 for other contracts that involve the employment of mechanics or
laborers shall include a provision for compliance with Sections 102 and
107 of the Contract Work Hours and Safety Standards Act (40 U.S.C.
327-333), as supplemented by Department of Labor regulations (29 CFR
part 5). Under Section 102 of the Act, each contractor shall be required
to compute the wages of every mechanic and laborer on the basis of a
standard work week of 40 hours. Work in excess of the standard work week
is permissible provided that the worker is compensated at a rate of not
less than 1 ½ times the basic rate of pay for all hours worked in excess
of 40 hours in the work week. Section 107 of the Act is applicable to
construction work and provides that no laborer or mechanic shall be
required to work in surroundings or under working conditions which are
unsanitary, hazardous or dangerous. These requirements do not apply to
the purchases of supplies or materials or articles ordinarily available
on the open market, or contracts for transportation or transmission of
intelligence.

5. Rights to Inventions Made Under a Contract or
Agreement - Contracts or agreements for the performance of
experimental, developmental, or research work shall provide for the
rights of the Federal Government and the recipient in any resulting
invention in accordance with 37 CFR part 401, "Rights to Inventions Made
by Nonprofit Organizations and Small Business Firms Under Government
Grants, Contracts and Cooperative Agreements," and any implementing
regulations issued by the awarding agency.

6. Clean Air Act (42 U.S.C. 7401 et seq.) and the Federal
Water Pollution Control Act (33 U.S.C. 1251 et seq.), as amended
- Contracts and subgrants of amounts in excess of $100,000
shall contain a provision that requires the recipient to agree to comply
with all applicable standards, orders or regulations issued pursuant to
the Clean Air Act (42 U.S.C. 7401 et seq.) and the Federal Water
Pollution Control Act as amended (33 U.S.C. 1251 et seq.). Violations
shall be reported to the Federal awarding agency and the Regional Office
of the Environmental Protection Agency (EPA).

7. Byrd Anti-Lobbying Amendment (31 U.S.C. 1352) -
Contractors who apply or bid for an award of $100,000 or more shall file
the required certification. Each tier certifies to the tier above that
it will not and has not used Federal appropriated funds to pay any
person or organization for influencing or attempting to influence an
officer or employee of any agency, a member of Congress, officer or
employee of Congress, or an employee of a member of Congress in
connection with obtaining any Federal contract, grant or any other award
covered by 31 U.S.C. 1352. Each tier shall also disclose any lobbying
with non-Federal funds that takes place in connection with obtaining any
Federal award. Such disclosures are forwarded from tier to tier up to
the recipient.

8. Debarment and Suspension (E.O.s 12549 and 12689)
- No contract shall be made to parties listed on the General Services
Administration's List of Parties Excluded from Federal Procurement or
Nonprocurement Programs in accordance with E.O.s 12549 and 12689,
"Debarment and Suspension." This list contains the names of parties
debarred, suspended, or otherwise excluded by agencies, and contractors
declared ineligible under statutory or regulatory authority other than
E.O. 12549. Contractors with awards that exceed the small purchase
threshold shall provide the required certification regarding its
exclusion status and that of its principal employees.

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