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	Ben's=20 Guide to U.S. Government

Home=20 Page > Executive=20 Branch > Code of=20 Federal Regulations > Electronic Code of Federal = Regulations

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e-CFR=20 Data is current as of July 2, 2010

Title 7:=20 Agriculture

Browse=20 Previous | Browse=20 Next

PART 3015=97UNIFORM FEDERAL ASSISTANCE REGULATIONS

Section Contents

Subpart=20 A=97General
=A7 3015.1  = Purpose=20 and scope of this part.
=A7 3015.2  = Applicability.
=A7 3015.3  = Conflicting=20 policies and deviations.
=A7 3015.4  = Special=20 restrictive terms.

Subpart=20 B=97Cash Depositories
=A7 3015.10  = ; Physical=20 segregation and eligibility.
=A7 3015.11  = ; Separate=20 bank accounts.
=A7 3015.12  = ; Moneys=20 advanced to recipients.
=A7 3015.13  = ; Minority=20 and women-owned banks.

Subpart=20 C=97Bonding and Insurance
=A7 3015.15  = ; General.
=A7 3015.16  = ; Construction=20 and facility improvement.
=A7 3015.17  = ; Fidelity=20 bonds.
=A7 3015.18  = ; Source=20 of bonds.

Subpart=20 D=97Record Retention and Access=20 Requirements
=A7 3015.20  = ; Applicability.
=A7 3015.21  = ; Retention=20 period.
=A7 3015.22  = ; Starting=20 date of retention period.
=A7 3015.23  = ; Microfilm.
=A7 3015.24  = ; Access=20 to records.
=A7 3015.25  = ; Restrictions=20 to public access.

Subpart=20 E=97Waiver of =93Single=94 State Agency=20 Requirements
=A7 3015.30  = ; Waiver=20 of =93single=94 State agency requirements.

Subpart=20 F=97Grant Related Income
=A7 3015.40  = ; Scope.
=A7 3015.41  = ; General=20 program income.
=A7 3015.42  = ; Proceeds=20 from sale of real property and from sale of equipment and supplies = acquired for use.
=A7 3015.43  = ; Royalties=20 and other income earned from a copyrighted = work.
=A7 3015.44  = ; Royalties=20 or equivalent income earned from patents or from=20 inventions.
=A7 3015.45  = ; Other=20 program income.
=A7 3015.46  = ; Interest=20 earned on advances of grant funds.

Subpart=20 G=97Cost-Sharing or Matching
=A7 3015.50  = ; Scope.
=A7 3015.51  = ; Acceptable=20 contributions and costs.
=A7 3015.52  = ; Qualifications=20 and exceptions.
=A7 3015.53  = ; Valuation=20 of donated services.
=A7 3015.54  = ; Valuation=20 of donated supplies and loaned equipment or = space.
=A7 3015.55  = ; Valuation=20 of donated equipment, buildings, and land.
=A7 3015.56  = ; Appraisal=20 of real property.

Subpart=20 H=97Standards for Financial Management=20 Systems
=A7 3015.60  = ; Scope.
=A7 3015.61  = ; Financial=20 management standards.

Subpart=20 I [Reserved]

Subpart=20 J=97Financial Reporting = Requirements
=A7 3015.80 &nbs= p; Scope=20 and applicability.
=A7 3015.81 &nbs= p; General.
=A7 3015.82 &nbs= p; Financial=20 status report.
=A7 3015.83 &nbs= p; Federal=20 cash transactions report.
=A7 3015.84 &nbs= p; Request=20 for advance or reimbursement.
=A7 3015.85 &nbs= p; Outlay=20 report and request for reimbursement for construction=20 programs.

Subpart=20 K=97Monitoring and Reporting Program=20 Performance
=A7 3015.90 &nbs= p; Scope.
=A7 3015.91 &nbs= p; Monitoring=20 by recipients.
=A7 3015.92 &nbs= p; Performance=20 reports.
=A7 3015.93 &nbs= p; Significant=20 developments.
=A7 3015.94 &nbs= p; Site=20 visits.
=A7 3015.95 &nbs= p; Waivers,=20 extensions and enforcement actions.

Subpart=20 L=97Payment Requirements
=A7 3015.100 &nb= sp; Scope.
=A7 3015.101 &nb= sp; General.
=A7 3015.102 &nb= sp; Payment=20 methods.
=A7 3015.103 &nb= sp; Withholding=20 payments.
=A7 3015.104 &nb= sp; Requesting=20 advances or reimbursements.
=A7 3015.105 &nb= sp; Payments=20 to subrecipients.

Subpart=20 M=97Programmatic Changes and Budget=20 Revisions
=A7 3015.110 &nb= sp; Scope=20 and applicability.
=A7 3015.111 &nb= sp; Cost=20 principles.
=A7 3015.112 &nb= sp; Approval=20 procedures.
=A7 3015.113 &nb= sp; Programmatic=20 changes.
=A7 3015.114 &nb= sp; Budgets=97general.
=A7 3015.115 &nb= sp; Budget=20 revisions.
=A7 3015.116 &nb= sp; Construction=20 and nonconstruction work under the same grant, subgrant, or = cooperative=20 agreement.

Subpart=20 N=97Grant and Subgrant Closeout, Suspension and=20 Termination
=A7 3015.120 &nb= sp; Closeout.
=A7 3015.121 &nb= sp; Amounts=20 payable to the Federal government.
=A7 3015.122 &nb= sp; Violation=20 of terms.
=A7 3015.123 &nb= sp; Suspension.
=A7 3015.124 &nb= sp; Termination.
=A7 3015.125 &nb= sp; Applicability=20 to subgrants.

Subparts=20 O=96P [Reserved]

Subpart=20 Q=97Application for Federal = Assistance
=A7 3015.150 &nb= sp; Scope=20 and applicability.
=A7 3015.151 &nb= sp; Authorized=20 forms.
=A7 3015.152 &nb= sp; Preapplication=20 for Federal assistance.
=A7 3015.153 &nb= sp; Notice=20 of preapplication review action.
=A7 3015.154 &nb= sp; Application=20 for Federal assistance (nonconstruction = programs).
=A7 3015.155 &nb= sp; Application=20 for Federal assistance (construction = programs).
=A7 3015.156 &nb= sp; Application=20 for Federal assistance (short form).
=A7 3015.157 &nb= sp; Authorized=20 form for nongovernmental organizations.
=A7 3015.158 &nb= sp; Competition=20 in the awarding of discretionary grants and cooperative=20 agreements.

Subpart=20 R=97Property
=A7 3015.160 &nb= sp; Scope=20 and applicability.
=A7 3015.161 &nb= sp; Additional=20 requirements.
=A7 3015.162 &nb= sp; Title=20 to real property, equipment and supplies.
=A7 3015.163 &nb= sp; Real=20 property.
=A7 3015.164 &nb= sp; Statutory=20 exemptions for equipment and supplies.
=A7 3015.165 &nb= sp; Rights=20 to require transfer of equipment.
=A7 3015.166 &nb= sp; Use=20 of equipment.
=A7 3015.167 &nb= sp; Replacement=20 of equipment.
=A7 3015.168 &nb= sp; Disposal=20 of equipment.
=A7 3015.169 &n= bsp; Equipment=20 management requirements.
=A7 3015.170 &n= bsp; Damage,=20 loss, or theft of equipment.
=A7 3015.171 &n= bsp; Unused=20 supplies.
=A7 3015.172 &n= bsp; Federal=20 share of real property, equipment, and = supplies.
=A7 3015.173 &n= bsp; Using=20 or returning the Federal share.
=A7 3015.174 &n= bsp; Subrecipient's=20 share.
=A7 3015.175 &n= bsp; Intangible=20 personal property.

Subpart=20 S=97Procurement
=A7 3015.180 &nb= sp; Scope=20 and applicability.
=A7 3015.181 &nb= sp; Standards=20 of conduct.
=A7 3015.182 &nb= sp; Open=20 and free competition.
=A7 3015.183 &nb= sp; Access=20 to contractor records.
=A7 3015.184 &nb= sp; Equal=20 employment opportunity.

Subpart=20 T=97Cost Principles
=A7 3015.190 &nb= sp; Scope.
=A7 3015.191 &nb= sp; Governments.
=A7 3015.192 &nb= sp; Institutions=20 of higher education.
=A7 3015.193 &nb= sp; Other=20 non-profit organizations.
=A7 3015.194 &nb= sp; For-profit=20 organizations.
=A7 3015.195 &nb= sp; Subgrants=20 and cost-type contracts.
=A7 3015.196 &nb= sp; Costs=20 allowable with approval.

Subpart=20 U=97Miscellaneous
=A7 3015.200 &nb= sp; Acknowledgement=20 of support on publications and audiovisuals.
=A7 3015.201 &nb= sp; Use=20 of consultants.
=A7 3015.202 &nb= sp; Limits=20 on total payments to the recipient.
=A7 3015.203 &nb= sp; [Reserved]
=A7 3015.204 &nb= sp; Federal=20 Register publications.
=A7 3015.205 &nb= sp; General=20 provisions for grants and cooperative agreements with institutions = of=20 higher education, other nonprofit organizations, and=20 hospitals.

Subpart=20 V=97Intergovernmental Review of Department of Agriculture Programs = and=20 Activities
=A7 3015.300 &nb= sp; Purpose.
=A7 3015.301 &nb= sp; Definitions.
=A7 3015.302 &nb= sp; Applicability.
=A7 3015.303 &nb= sp; Secretary's=20 general responsibilities.
=A7 3015.304 &nb= sp; Federal=20 interagency coordination.
=A7 3015.305 &nb= sp; State=20 selection of programs and activities.
=A7 3015.306 &nb= sp; Communication=20 with State and local elected officials.
=A7 3015.307 &nb= sp; State=20 comments on proposed Federal financial assistance and direct = Federal=20 development.
=A7 3015.308 &nb= sp; Processing=20 comments.
=A7 3015.309 &n= bsp; Accommodation=20 of intergovernmental concerns.
=A7 3015.310 &n= bsp; Interstate=20 situations.
=A7 3015.311 &n= bsp; Simplification,=20 consolidation, or substitution of State plans.
=A7 3015.312 &n= bsp; Waivers.
Appendix=20 A to Part 3015=97Definitions
Appendix=20 B to Part 3015=97OMB Circular A=96128, =93Audits of State and = Local=20 Governments=94

Authority: 5 U.S.C. 301; 31 = U.S.C.=20 901=96903; 7 CFR 2.28, unless otherwise noted.=20

Source: 46 FR 55639, Nov. = 10, 1981,=20 unless otherwise noted.=20

Subpart A=97General

=20 top=20

=A7 3015.1 Purpose and scope of this=20 part.

=20 top=20

(a)(1) This part specifies the set of principles for = determining=20 allowable costs under USDA grants and cooperative agreements to = State and=20 local governments, universities, non-profit and for-profit = organizations=20 as set forth in OMB Circulars A=9687, A=9621, A=96122, and 48 CFR = 31.2,=20 respectively. This part also contains the general provisions that = apply to=20 all grants and cooperative agreements made by USDA.

(2) Additionally, this part establishes intergovernmental = review=20 provisions required by Executive Order 12372 for any programs = listed in=20 theFederal Registeras covered, and policy on = competition in=20 awarding discretionary grants and cooperative agreements.

(3) Rules for grants and cooperative agreements to State and = local=20 governments are found in part 3016 of this chapter.

(4) Rules for grants and cooperative agreements to institutions = of=20 higher education, hospitals, and other non-profit organizations = are found=20 in part 3019 of this chapter.

(b) These rules supersede and take precedence over any = individual USDA=20 agency regulations and directives dealing with the administration = of=20 grants and cooperative agreements to the extent such regulations = and=20 directives are inconsistent with this part, unless such = inconsistency is=20 based on a statutory provision or an exception has been obtained = from OMB.=20 (See =A73015.3.) Definitions for the terms used in this part are = set forth=20 in Appendix A. Definitions for the implementation of standard = audit=20 requirements for State and local governments and Indian Tribal = governments=20 are contained in Subpart I=97Audits.

(c) The purpose of this part is to simplify, standardize, and = improve=20 the administration of USDA grants and cooperative agreements.

(d) Responsibility for developing and interpreting the material = for=20 this part and in keeping it up-to-date is delegated to the Office = of the=20 Chief Financial Officer.

[46 FR 55639, Nov. 10, 1981, as amended at 62 FR 45949, Aug. = 29, 1997;=20 65 FR 49479, Aug. 14, 2000]

=A7 3015.2 Applicability.

=20 top=20

(a) Grants and cooperative agreements. This part applies = to USDA=20 grants and cooperative agreements. For each substantive provision = in this=20 part, either the words of the provision itself or other words in = the same=20 subpart tell whether the provision applies to subgrants. = Exemptions to=20 this part may be applicable to certain kinds of recipients. (See = paragraph=20 (d) of this section.)

(b) Terminology applicable to this part. This part's = substantive=20 rules are the same for grants and cooperative agreements. Many of = the=20 rules are also the same for subgrants. Therefore, certain = simplified=20 terminology is used in the text. Specifically in all portions of = this=20 part:

(1) Each provision that applies to grants also applies = to=20 cooperative agreements, even though the latter term does = not appear=20 in the provisions.

(2) Each provision that applies to recipients of grants = applies=20 to recipients of cooperative agreements, even though the = latter=20 term does not appear in the provision.

(3) The term recipient refers equally to recipients of = grants=20 and recipients of cooperative agreements.

(4) The term awarding agency refers equally to a USDA = agency=20 that awards a grant and to one that awards a cooperative = agreement.

(5) The term subgrant refers equally to certain awards = under=20 grants and to the same kinds of awards under cooperative = agreements.

(c) Public institutions of higher education and hospitals.=20 Grants, cooperative agreements and subgrants awarded to = institutions=20 of higher education and hospitals operated by a government are = subject=20 only to the provisions of this part that apply to non-governmental = organizations.

(d) Recipients to which this part does not automatically = apply.=20 This part does not automatically apply to the kinds of = recipients=20 listed below unless other conditions set forth in the grant, = cooperative=20 agreement, subgrant, or specific subpart in this part make all or=20 specified portions apply:

(1) Foreign governments or organizations,

(2) International organizations, such as the United = Nations,

(3) Agencies or instrumentalities of the Federal = government,

(4) Individuals,

(5) State and local governments, and

(6) Institutions of higher education, hospitals and other = non-profit=20 organizations.

(e) Collaborative arrangements. (1) Where permitted by = the terms=20 of the award, a recipient may enter into collaborative = arrangements with=20 other organizations to jointly carry out activities with grant or=20 cooperative agreement funds. In this kind of situation, the = arrangement=20 between the recipient and each collaborating organization is = subject to=20 the rules in this part that apply to subgrants awarded by the = recipients.=20 (See the example shown in =A73015.195.)

(2) This paragraph (e) does not apply to arrangements where the = organizations receive an award jointly. In this case, they are not = a=20 recipient and subrecipient but, as the award notice states, joint=20 recipients.

[46 FR 55639, Nov. 10, 1981, as amended at 53 FR 8044, Mar. 11, = 1988;=20 65 FR 49480, Aug. 14, 2000]

=A7 3015.3 Conflicting policies and=20 deviations.

=20 top=20

(a) Statutory provisions. Federal statutes that apply to = some=20 USDA grant programs may contain provisions that conflict with this = part.=20 Those statutory provisions take precedence over this part.

(b) Nonstatutory provisions. USDA awarding agencies = occasionally=20 develop grant provisions that are inconsistent with this part. = USDA=20 attempts to keep these provisions to a minimum by internal = procedures that=20 require these provisions to be justified to appropriate officials = of USDA=20 and OMB. If the conflicting provisions are of long-term and = general=20 applicability, O&F may require that the awarding agency (1) = publish=20 the conflicting provision as a notice in theFederal=20 Registerand (2) give the public an opportunity to comment = before=20 making the regulations final.

(c) Nonstatutory provisions-subgrants. If a provision of = a=20 subgrant conflicts with this part, the recipient is considered as=20 violating the provisions of the grant, unless the subgrant = provision is=20 authorized in writing, by the awarding agency.

(d) OMB exceptions. In some cases, OMB grants exceptions = from=20 the requirements of the Circulars, when permissible under existing = laws.=20 In those instances where a program receives an exception to a = particular=20 provision of a Circular, the exception takes precedence over this=20 part.

=A7 3015.4 Special restrictive = terms.

=20 top=20

(a) Occasionally an awarding agency, or a recipient awarding a=20 subgrant, may find that a particular recipient:

(1) Is financially unstable,

(2) Has a history of poor performance, or

(3) Has a management system that does not meet the standards in = this=20 part.

In these cases the awarding agency may impose special = conditions that=20 are more restrictive than otherwise permitted by this part. If so, = the=20 awarding agency must tell the recipient in writing why it is = imposing the=20 special conditions and what corrective action is needed.

(b) At the time an awarding agency imposes a special grant = condition=20 under paragraph (a) of this section, the awarding agency, through = O&F,=20 shall notify OMB and other interested parties.

(c) At the time a recipient imposes a special restrictive = subgrant=20 condition under paragraph (a) of this section, it must notify the = awarding=20 agency, giving full particulars. The awarding agency, through = O&F,=20 shall then notify OMB and other interested parties.

(d) A special restrictive grant or subgrant condition under = paragraph=20 (a) of this section is considered consistent with this part.

Subpart B=97Cash Depositories

=20 top=20

=A7 3015.10 Physical segregation and=20 eligibility.

=20 top=20

Except as provided in =A73015.11, awarding agencies shall not = impose=20 grant or subgrant conditions which:

(a) Require the recipient to use a separate bank account for = the=20 deposit of grant or subgrant funds, or

(b) Establish any eligibility requirements for banks or other = financial=20 institutions in which recipients deposit grant or subgrant = funds.

=A7 3015.11 Separate bank = accounts.

=20 top=20

A separate bank account shall be required when applicable = letter of=20 credit agreements provide that funds will not be drawn until the=20 recipient's checks are presented to the bank for payment.

=A7 3015.12 Moneys advanced to=20 recipients.

=20 top=20

Any moneys advanced to recipients which are subject to the = control or=20 regulation of the United States or any of its officers, agents, or = employees (public moneys as defined in Treasury Circular 176, as = amended),=20 must be deposited in a bank with Federal Deposit Insurance = Corporation=20 (FDIC) insurance coverage and the balance exceeding the FDIC = coverage must=20 be collaterally secured.

=A7 3015.13 Minority and women-owned=20 banks.

=20 top=20

Consistent with the national goal of expanding opportunities = for=20 minority business enterprises, recipients, and subrecipients are=20 encouraged to use minority and women-owned banks. Upon request, = awarding=20 agencies will furnish a listing of minority and women-owned banks = to=20 recipients.

Subpart C=97Bonding and Insurance

=20 top=20

=A7 3015.15 General.

=20 top=20

In administering grants, subgrants, and cooperative agreements, = recipients shall observe their regular requirements and practices = with=20 respect to bonding and insurance. No additional bonding and = insurance=20 requirements, including fidelity bonds, shall be imposed by the = provisions=20 of the grant, subgrant, or cooperative agreement except as = provided in=20 =A7=A73015.16 through 3015.18.

=A7 3015.16 Construction and facility=20 improvement.

=20 top=20

(a) Scope. This section covers requirements for bid = guarantees,=20 performance bonds, and payment bonds when the recipients will = contract or=20 subcontract for construction or facility improvement (including=20 alterations and renovations of real property) under a grant or=20 subgrant.

(b) Bids and contracts or subcontracts of $100,000 or less.=20 Unless otherwise required by law, the recipients shall follow = its own=20 requirements and practices relating to bid guarantees, performance = bonds,=20 and payment bonds.

(c) Bids and contracts or subcontracts exceeding $100,000.=20 Unless otherwise required by law, the recipient may follow its = own=20 regular policy and requirements if the USDA awarding agency has = decided=20 that the Federal government's interest will be adequately = protected. If=20 this decision has not been made, the minimum requirements shall be = as=20 follows:

(1) A bid guarantee from each bidder equivalent to 5 percent of = the bid=20 price;

(2) A performance bond on the part of the contractor for 100 = percent of=20 the contract price; and

(3) A payment bond on the part of the contractor for 100 = percent of the=20 contract price.

=A7 3015.17 Fidelity bonds.

=20 top=20

(a) If the recipient is not a unit of government, the awarding = agency=20 may require the recipient to carry adequate fidelity bond coverage = where=20 the absence of coverage for the grant-supported activity is = considered as=20 created an unacceptable risk.

(b) If the subrecipient is not a unit of government, the = awarding=20 agency or the recipient may require that the subrecipient carry = adequate=20 fidelity bond coverage where the absence of coverage for the=20 subgrant-supported activity is considered as creating an = unacceptable=20 risk.

=A7 3015.18 Source of bonds.

=20 top=20

Any bonds required under =A73015.16(c) (1) through (3) or = =A73015.17 shall=20 be obtained from companies holding certificates of authority as = acceptable=20 sureties (31 CFR part 223). A list of these companies is published = annually by the Department of the Treasury in its Circular = 570.

Subpart D=97Record Retention and Access = Requirements

=20 top=20

=A7 3015.20 Applicability.

=20 top=20

(a) This subpart applies to all financial records, supporting=20 documents, statistical records and other records of recipients, = which=20 are:

(1) Required to be maintained by the provisions of a USDA grant = or=20 cooperative agreement, or

(2) Otherwise reasonably considered as pertinent to a USDA = grant or=20 cooperative agreement.

(b) This subpart does not apply to the records of contractors = and=20 subcontractors under grants, subgrants and cooperative agreements. = For a=20 requirement to place a provision concerning these records in = certain kinds=20 of contracts, see Subpart S of this part.

=A7 3015.21 Retention period.

=20 top=20

(a) Except as provided in paragraphs (b) and (c) of this = section,=20 records shall be kept for 3 years from the starting date specified = in=20 =A73015.22.

(b) If any litigation, claim, negotiation, audit or other = action=20 involving the records has been started before the end of the = 3-year=20 period, the records shall be kept until all issues are resolved, = or until=20 the end of the regular 3-year period, whichever is later.

(c) In order to avoid dual recordkeeping, awarding agencies may = make=20 special arrangements for recipients to keep any records which are=20 continuously needed for joint use. The awarding agency shall = request a=20 recipient to transfer records to its custody when the awarding = agency=20 decides that the records possess long-term retention value. When = the=20 records are transferred to or maintained by the awarding agency = the 3-year=20 retention requirement shall not apply to the recipient.

(d) Records for nonexpendable property acquired in whole or in = part,=20 with Federal funds shall be retained for three years after its = final=20 disposition.

=A7 3015.22 Starting date of retention=20 period.

=20 top=20

(a) General. The retention period starts from the date = of the=20 submission of the final expenditure report or, where USDA grant = support is=20 continued or renewed at annual or other intervals, the 3-year = retention=20 period for the records of each funding period starts on the day = the=20 recipient submits to USDA its annual or final expenditure report = for that=20 period. If an expenditure report has been waived, the 3-year = retention=20 period starts on the day the report would have been due. = Exceptions to=20 this paragraph are contained in paragraphs (b) through (d) of this = section.

(b) Equipment records. The 3-year retention period for = the=20 equipment records required by Subpart R starts from the date of = the=20 equipment's disposition, replacement, or transfer at the direction = of the=20 awarding agency.

(c) Records for income transactions after grant or subgrant = support.=20 (1) In cases where USDA requires that program income (as = defined in=20 Appendix A) be applied to costs incurred after expiration or = termination=20 of grant or subgrant support, the 3-year retention period for = these cost=20 records starts from the end of the recipient's fiscal year in = which the=20 costs are incurred.

(2) Where USDA requires the disposition of copyright royalties = or other=20 program income earned after expiration or termination of grant or = subgrant=20 support, the 3-year retention period for those income records = starts from=20 the end of the recipient's fiscal year in which the income was = earned.=20 (See Subpart F, =A73015.44.)

(d) Indirect cost rate proposals, cost allocation plans, = etc.=20 =97(1) Applicability. This paragraph applies to the = following=20 types of documents and their supporting records:

(i) Indirect cost rate computations or proposals;

(ii) Cost allocation plans; and

(iii) Any similar accounting computations of the rate at which = a=20 particular group of costs is chargeable (such as computer usage = chargeback=20 rates or composite fringe benefit rates).

(2) If submitted for negotiation. If the Federal = government=20 requires submission of the proposal; plan, or other computation = for=20 negotiation of the rate chargeable for particular costs, then the = 3-year=20 retention period for the plan, proposal or other computation and = the=20 supporting records starts from the date of such submission.

(3) If not submitted for negotiation. If the Federal = government=20 does not require submission of the proposal, plan, or other = computation=20 for negotiation of the rate chargeable for particular costs, then = the=20 3-year retention period for the proposal, plan, or other = computation and=20 the supporting records starts from the end of the fiscal year = covered by=20 such proposal, plan, or other computation.

=A7 3015.23 Microfilm.

=20 top=20

Copies made by microfilming, photocopying, or similar methods = may be=20 substituted for the original records.

=A7 3015.24 Access to = records.

=20 top=20

(a) Records of recipients. USDA and the Comptroller = General of=20 the United States, or any of their authorized representatives, = shall have=20 the right of access to any books, documents, papers, or other = records of=20 the recipient which are pertinent in a specific USDA award in = order to=20 make audit, examination, excerpts, and transcripts.

(b) Records of subrecipients. USDA and the Comptroller = General=20 of the United States, and the recipient, or any of their = authorized=20 representatives, shall have the right of access to any books, = documents,=20 papers, or other records of the subrecipient which are pertinent = to a=20 specific USDA grant or cooperative agreement, in order to make = audit,=20 examination, excerpts, and transcripts.

(c) Expiration of right of access. The rights of access = in this=20 section shall not be limited to the required retention period but = shall=20 last as long as the records are kept.

=A7 3015.25 Restrictions to public=20 access.

=20 top=20

Unless required by law, no awarding agency shall impose grant = or=20 subgrant conditions which limit public access to records covered = by this=20 subpart, except when the awarding agency determines that such = records must=20 be kept confidential and would have been excepted from disclosure = pursuant=20 to USDA's =93Freedom of Information=94 regulations if the records = had belonged=20 to USDA (7 CFR 1.1=961.16).

Subpart E=97Waiver of =93Single=94 State Agency = Requirements

=20 top=20

=A7 3015.30 Waiver of =93single=94 State = agency=20 requirements.

=20 top=20

Section 204 of the Intergovernmental Cooperation Act of 1968 = authorizes=20 Federal agencies to waive =93single=94 State agency requirements = on request of=20 the Governor or other duly constituted State authorities.

(a) Approval authority. The awarding agency has approval = authority for waiver requests, and shall handle them as quickly as = feasible. Approval should be given whenever possible.

(b) Refusal procedures. When it is necessary to refuse a = request=20 for waiver of the =93single=94 State agency requirements under = section 204,=20 the awarding agency shall, through O&F, advise OMB that the = request=20 cannot be granted. Such advice should indicate the reasons for the = denial=20 of the request. Notification, through O&F, to OMB shall occur = prior to=20 informing the State of the refusal.

Subpart F=97Grant Related Income

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=A7 3015.40 Scope.

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This subpart contains policies and requirements related to = program=20 income and interest and other investment income earned on advances = of=20 grant funds. Appendix A defines the term =93program income.=94 = There are five=20 categories of program income covered in this subpart. Each is = treated in a=20 separate section. The categories are:

(a) General program income;

(b) Proceeds from sale of real property and from sale of = equipment and=20 supplies acquired for use;

(d) Royalties or equivalent income earned from patents or = inventions;=20 and

(e) Income after the period of grant or subgrant support not = otherwise=20 treated.

=A7 3015.41 General program = income.

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(a) Applicability. This section applies to =93general = program=20 income=94 as defined in Appendix A.

(b) Use. (1) General program income shall be retained by = the=20 recipient and used in accordance with one or a combination of the=20 alternatives in paragraphs (c), (d), and (e) of this section, as = follows:=20 The alternative in paragraph (c) may always be used by recipients = and must=20 be used if neither of the other two alternatives is permitted by = the=20 provisions of the grant award. The alternatives in paragraph (d) = or (e) of=20 this section may be used only if expressly permitted by the = provisions of=20 the grant award. In specifying alternatives that may be used, the=20 provisions of the grant award may distinguish between income = earned by the=20 recipient and income earned by subrecipients and between the = sources,=20 kinds, or amounts of income.

(2) The provisions of a subgrant award may restrict the use of = general=20 program income earned by the subrecipient to only one or some of = the=20 alternatives permitted by the provisions of the grant, but the = alternative=20 in paragraph (c) of this section shall always be permitted.

(c) Deduction alternative. (1) Under this alternative, = the=20 income is used for allowable costs of the project or program. If = there is=20 a cost-sharing or matching requirement, costs supported by the = income may=20 not count toward satisfying that requirement. Therefore, the = maximum=20 percentage of Federal cost-sharing is applied to the net amount = determined=20 by deducting the income from total allowable costs and third party = in-kind=20 contributions. The income shall be used for current costs unless = the=20 awarding agency authorizes the income to be used in a later = period.

(2) To illustrate this alternative, assume a project in which = the=20 recipient incurs $100,000 of allowable costs and receives no third = party=20 in-kind contributions. If the recipient earns $10,000 in general = program=20 income and this alternative applies, that $10,000 must be deducted = from=20 the $100,000 before applying the maximum percentage of Federal=20 cost-sharing. If that percentage is 90 percent, the most that = could be=20 paid to the recipient would therefore be $81,000 (90 percent times = $90,000).

(d) Cost-sharing or matching alternative. (1) Under this = alternative, the income is used for allowable costs of the project = or=20 program but, in this case, the costs supported by the income may = count=20 toward satisfying a cost-sharing or matching requirement. = Therefore, the=20 maximum percentage of Federal cost-sharing is applied to total = allowable=20 costs and third party in-kind contributions. The income shall be = used for=20 current costs unless the awarding agency authorizes its use in a = later=20 period.

(2) To illustrate this alternative, assume the same situation = as in=20 paragraph (c)(2) of this section. Under this alternative, the 90 = percent=20 maximum percentage of Federal cost-sharing would be applied to the = full=20 $100,000, and $90,000 could therefore be paid to the = recipient.

(e) Additional costs alternative. Under this = alternative, the=20 income is used for costs which are in addition to the allowable = costs of=20 the project or program but which nevertheless further the = objectives of=20 the Federal statute under which the grant was made. Provided that = the=20 costs supported by the income further the broad objectives of that = statute, they need not be of a kind that would be permissible as = charges=20 to Federal funds. Examples of purposes for which the income may be = used=20 are:

(1) Expanding the project or program.

(2) Continuing the project or program after grant or subgrant = support=20 ends.

(3) Supporting other projects or programs that further the = broad=20 objectives of the statute.

(4) Obtaining equipment or other assets needed for the project = or=20 program or for other activities that further the statute's=20 objectives.

=A7 3015.42 Proceeds from sale of real = property=20 and from sale of equipment and supplies acquired for = use.

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The following kinds of program income shall be governed by = Subpart R of=20 this part:

(a) Proceeds from the sale of real property purchased or = constructed=20 under a grant or subgrant.

(b) Proceeds from the sale of equipment and supplies created or = purchased under a grant or subgrant and intended primarily for use = in the=20 grant or subgrant-supported project or program rather than for = sale or=20 rental.

=A7 3015.43 Royalties and other income = earned from=20 a copyrighted work.

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(a) This section applies to royalties, license fees, and other = income=20 earned by a recipient from a copyrighted work developed under the = grant or=20 subgrant. Income of that kind is covered by this section whether a = third=20 party or the recipient acts as the publisher, seller, exhibitor, = or=20 performer of the copyrighted work. In some cases the recipient = incurs=20 costs to earn the income but does not charge these costs to USDA = grant=20 funds, to required cost-sharing or matching funds, or to other = program=20 income. Costs of that kind may be deducted from the gross income = in order=20 to determine how much must be treated as program income.

(b) The provisions of the grant award govern the disposition of = income=20 subject to this section. If the provisions of the grant award do = not treat=20 this kind of income, there are no USDA requirements governing its=20 disposition. A recipient is not prohibited from imposing = requirements of=20 its own on the disposition of this kind of income which is earned = by its=20 subrecipients provided those requirements are in addition to, and = not=20 inconsistent with, any requirements imposed by the provisions of = the grant=20 award.

=A7 3015.44 Royalties or equivalent = income earned=20 from patents or from inventions.

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Disposition of royalties or equivalent income earned on patents = or=20 inventions arising out of activities assisted by a grant or = subgrant shall=20 be governed by the provisions of the grant or subgrant agreement. = If the=20 agreement does not provide for the disposition of the royalties or = equivalent income, the disposition shall be in accordance with the = recipient's own policies.

=A7 3015.45 Other program = income.

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(a) This section applies to program income not treated = elsewhere in=20 this part which subsequently results from an activity supported by = a grant=20 or subgrant but which does not accrue until after the period of = grant or=20 subgrant support. An example is proceeds from the sale or rental = of a=20 residual inventory of merchandise created or purchased by a=20 grant-supported workshop during the period of support.

(b) The provisions of the grant award govern the disposition of = income=20 subject to this section. If the provisions do not treat this kind = of=20 income, there are no USDA requirements governing its disposition. = A=20 recipient may impose requirements of its own on the disposition of = this=20 kind of income which is earned by its subrecipients provided those = requirements are in addition to and not inconsistent with any = requirements=20 imposed by the provisions of the grant award.

=A7 3015.46 Interest earned on advances = of grant=20 funds.

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(a) Except when exempted by Federal statute (see paragraph (b) = of this=20 section for the principal exemption), recipients shall remit to = the=20 Federal government any interest or other investment income earned = on=20 advances of USDA grant funds. This includes any interest or = investment=20 income earned by subrecipients and cost-type contractors on = advances to=20 them that result from advances of USDA grant funds to the = recipient.=20 Unless the recipient receives other instructions from the = responsible USDA=20 awarding agency, the recipient shall remit the amount due by check = or=20 money order payable to the awarding agency. This requirement may = not be=20 administratively waived.

(b) In accordance with the Intergovernmental Cooperation Act of = 1968=20 (42 U.S.C. 4213), States, as defined in the Act, shall not be = accountable=20 to the Federal government for interest or investment income earned = by the=20 State itself, or by its subrecipents, where this income is = attributable to=20 grants-in-aid, as defined in the Act.¹

¹ =93State=94 is defined in the Act to include any = agency or=20 instrumentality of a State, and the definition does not exclude a = hospital=20 or institution of higher education which is such an agency or=20 instrumentality. =93Grant-in-aid=94 is defined in the Act to = exclude payments=20 under research and development contracts or grants which are = awarded=20 directly and on similar terms to all qualifying organizations, = whether=20 public or private. (42 U.S.C. 4201)

(c) Recipients are cautioned that they are subject to the = provisions of=20 Subpart L for minimizing the time between the transfer of advances = and=20 their disbursement. Those provisions apply even if there is no=20 accountability to the Federal government for interest or other = investment=20 income earned on the advances.

Subpart G=97Cost-Sharing or Matching

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=A7 3015.50 Scope.

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This subpart contains rules reflecting Federal requirements for = cost-sharing or matching. These rules apply whether cost-sharing = or=20 matching is required by Federal statute, awarding agency = regulations, or=20 by other provisions established by the specific grant = agreement.

=A7 3015.51 Acceptable contributions and = costs.

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A cost-sharing or a matching requirement may be satisfied after = qualifications and exceptions are met in =A73015.52 and by = satisfying either=20 or both of the following:

(a) Allowable costs incurred by the recipient or by any = subrecipient=20 under the grant or subgrant. This includes allowable costs = supported by=20 non-Federal grants or by cash donations from non-Federal third = parties.=20 Allowable costs shall be determined in accordance with the cost = principles=20 set forth in Subpart T.

(b) The value of third party in-kind contributions applicable = to the=20 same period when a cost-sharing or matching requirement = applies.

=A7 3015.52 Qualifications and=20 exceptions.

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(a) Costs supported by other Federal grants. (1) A = cost-sharing=20 or a matching requirement shall not be met by costs supported by = another=20 Federal grant, except as provided by Federal statute. This = exception=20 however, does not apply to costs supported by general program = income=20 earned from a contract awarded under another Federal grant.

(2) For the purpose of this part, funds provided under General = or=20 Countercyclical Revenue Sharing Programs (31 U.S.C. 1221 et = seq.=20 and 42 U.S.C. 6721 et seq. ) are not considered Federal = grants.=20 Therefore, allowable costs supported by these funds may be used to = satisfy=20 a cost-sharing or a matching requirement.

(b) Costs or contributions applied towards other Federal=20 cost-sharing requirements. Recipient costs or the value of = third party=20 in-kind contributions shall not count towards satisfying a = cost-sharing or=20 matching requirement of a USDA grant if they are or will be = counted=20 towards satisfying a cost-sharing or matching requirement of = another=20 Federal grant, a Federal procurement contract, or any other award = of=20 Federal funds.

(c) Costs financed by general program income. Costs = financed by=20 general program income as defined in Appendix A shall not count = towards=20 satisfying a cost-sharing or matching requirement of a USDA grant=20 supporting the activity unless the provisions of the grant award = expressly=20 permit the income to be used for cost-sharing or matching = purposes. (This=20 is the alternative for use of general program income described in=20 =A73015.41).

(d) Services or property financed by income earned by = contractors.=20 Contractors under a grant or subgrant may earn income from the = activities carried out under the contract in addition to the = amounts=20 earned from the party awarding the contract. No costs of services = or=20 property supported by this income may count toward satisfying a=20 cost-sharing or matching requirement unless other provisions of = the grant=20 award expressly permit this kind of income to be used to meet the=20 requirement.

(e) Records. In order to count cost and third party = in-kind=20 contributions towards satisfying a cost-sharing or a matching = requirement,=20 there must be verification and accurate documentation from the = records of=20 recipients or cost-type contractors. These records shall show how = the=20 value placed on third party in-kind contributions was decided. = Special=20 standards and procedures for calculating these contributions are = discussed=20 in paragraph (f) of this section. Volunteer services, to the = extent=20 possible, shall be supported by the same pay procedures and rates = employed=20 by the organization when paying for similar work performed by its=20 personnel.

(f) Special standards for third party in-kind contributions = =97(1)=20 Contributions to recipients or cost-type contractors. A = third party=20 in-kind contribution to a recipient or cost-type contractor may = count=20 towards satisfying a cost-sharing or matching requirement only = where, if=20 the recipient or cost-type contractor were to pay for it, the = payment=20 would be an allowable cost.

(2) Contributions to fixed-price contractors. A third = party=20 in-kind contribution to a fixed-price contractor may count towards = satisfying a cost-sharing or matching requirement only if it = results=20 in:

(i) An increase in the services or property provided under the = contract=20 (without additional cost to the recipient or subrecipient), or

(ii) A cost savings to the recipient or subrecipient.

=A7 3015.53 Valuation of donated=20 services.

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(a) Volunteer services. Unpaid services provided to a = recipient=20 by an individual shall be valued at rates consistent with the = rates=20 normally paid for similar work in the recipient organization. If = there is=20 no similar work in the recipient organization, the rate of pay for = volunteer services should be consistent with those regular rates = paid for=20 similar work in the same labor market. In either case, a = reasonable amount=20 for fringe benefits may be included in the valuation.

(b) Employees of other organizations. When an employer, = other=20 than a recipient or cost-type contractor, furnishes the services = of an=20 employee without cost to perform the employee's normal line of = work, the=20 services shall be valued at the employee's regular rate of pay, = exclusive=20 of the employer's fringe benefits and overhead cost. If the = services are=20 in a different line of work, paragraph (a) of this section shall=20 apply.

=A7 3015.54 Valuation of donated = supplies and=20 loaned equipment or space.

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(a) If a third party donates supplies, the contributions shall = not=20 exceed the cost of the supplies to the donor or the market value = of the=20 supplies, at the time of the donation, whichever is less.

(b) If a third party donates the use of equipment or space in a = building but retains the title, the contribution shall be valued = at the=20 fair rental rate of the equipment or space.

=A7 3015.55 Valuation of donated = equipment,=20 buildings, and land.

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When a third party donates equipment, buildings or land, and = the title=20 is given to the recipient, the treatment of this donated property = shall=20 depend upon the purpose of the grant or subgrant as follows:

(a) Awards for capital expenditures. If the purpose of = the grant=20 or subgrant is to assist the recipient in acquiring property, such = as=20 equipment, buildings, and land, then the market value of that = property at=20 the time of donation may be counted as cost-sharing or = matching.

(b) Other awards. If the nature of the grant or subgrant = is not=20 for the purpose of acquiring property, the following rules shall=20 apply:

(1) If approval is obtained from the awarding agency, the = market value=20 at the time of donation of the equipment or buildings and the fair = rental=20 rate of the donated land may be counted as cost-sharing or = matching. In=20 the case of a subgrant, the provisions of the USDA grant should = require=20 that the approval be obtained from the awarding agency as well as = the=20 recipient. In all cases, the approval may be given only if a = purchase of=20 the equipment or rental of the land would be approved as an = allowable=20 direct cost.

(2) If approval is not obtained under paragraph (b)(1) of this = section,=20 no amount shall be counted for donated land. Instead, only = depreciation or=20 use allowances may be counted for donated equipment and buildings = and=20 treated as costs incurred by the recipient. They are computed and=20 allocated (usually as indirect costs) in accordance with the cost=20 principles specified in Subpart T of this part. They will thus be = handled=20 in the same way as depreciation or use allowances for purchased = equipment=20 and buildings. The amount of depreciation or use allowances for = donated=20 equipment and buildings is based on the property's market value at = the=20 time it was donated.

=A7 3015.56 Appraisal of real = property.

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In some cases, it will be necessary to establish the market = value of=20 land or a building or the fair rental rate of land or of space in = a=20 building. In these cases, the awarding agency must require that = the market=20 value or fair rental rate be set by an independent appraiser (or = by a=20 representative of the U.S. General Services Administration, if = available)=20 and that the value or rate be certified by a responsible official = of the=20 party to which the property or its use is donated. This = requirement must=20 also be imposed by the recipient on subgrants.

Subpart H=97Standards for Financial Management = Systems

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=A7 3015.60 Scope.

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This subpart contains standards for financial management = systems of=20 recipients. No additional financial management standards or = requirements=20 shall be imposed by awarding agencies. Awarding agencies will, = however,=20 provide recipients with suggestions and assistance on establishing = or=20 improving financial management systems when such assistance is = needed or=20 requested.

=A7 3015.61 Financial management=20 standards.

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The following standards shall be met by recipients and = subrecipients in=20 managing their financial management system.

(a) Financial reporting. Complete, accurate, and current = disclosure of the financial results of each USDA sponsored project = or=20 program shall be made in accordance with the financial reporting=20 requirements set forth in the grant or subgrant. When a USDA = awarding=20 agency requires reporting on an accrual basis, the recipient shall = not be=20 required to establish an accrual accounting system, but shall = develop such=20 accrual data for its reports on the basis of an analysis of the=20 documentation on hand.

(b) Accounting records. The source and application of = funds=20 shall be readily identified by the continuous maintenance of = updated=20 records. Records, as such, shall contain information pertaining to = grant=20 or subgrant awards, authorizations, obligations, unobligated = balances,=20 assets, outlays, and income. When the recipient is a governmental = entity,=20 the records shall also contain liabilities.

(c) Internal control. Effective control over and = accountability=20 for all USDA grant or subgrant funds, real and personal property = assets=20 shall be maintained. Recipients shall adequately safeguard all = such=20 property and shall ensure that it is used solely for authorized = purposes.=20 In cases where projects are not 100 percent Federally funded, = recipients=20 must have effective internal controls to assure that expenditures = financed=20 with Federal funds are properly chargeable to the grant supported=20 project.

(d) Budgetary control. The actual and budgeted amounts = for each=20 grant or subgrant shall be compared. If appropriate, or required = by the=20 awarding agency, financial information shall be related to = performance and=20 unit cost data. When unit cost data is required, estimates based = on=20 available documentation may be accepted whenever possible.

(e) Advance payments. There shall be specific procedures = established to minimize the time elapsing between the advance of = Federal=20 grant or subgrant funds and their subsequent disbursement by the=20 recipient. When advances are made by a letter of credit method, = the=20 recipients shall make drawdowns as close as possible to the time = of making=20 the disbursements. This same procedure shall be followed by = recipients who=20 advance cash to subrecipients to ensure that timely fiscal = transactions=20 and reporting requirements are conducted.

(f) Allowable costs. Established procedures shall be = used for=20 determining the reasonableness, allowability, and allocability of = costs in=20 accordance with the cost principles prescribed by Subpart T of = this part=20 and the provisions of the grant award.

(g) Source documentation. Accounting records shall be = supported=20 by source documentation. These documentations include, but are not = limited=20 to, cancelled checks, paid bills, payrolls, contract and subgrant = award=20 documents.

(h) Audit resolution. A systematic method shall be = employed by=20 each recipient to assure timely and appropriate resolution of = audit=20 findings and recommendations.

Subpart I [Reserved]

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Subpart J=97Financial Reporting Requirements

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=A7 3015.80 Scope and = applicability.

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(a) This subpart prescribes requirements and forms for = recipients to=20 report financial information to USDA and to request grant payments = when a=20 letter of credit is not used.

(b) This subpart need not be applied by recipients in dealing = with=20 their subrecipients. Recipients are encouraged not to impose on=20 subrecipients more burdensome requirements than USDA imposes on=20 them.

=A7 3015.81 General.

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(a) Except as provided in paragraphs (d) and (e) of this = section,=20 recipients shall use only the forms specified in =A7=A73015.82 = through=20 3015.85, and such other forms as may be authorized by OMB for:

(1) Submitting grant financial reports to awarding agencies, = or

(2) Requesting grant payments when letters of credit or = automatic=20 prescheduled Treasury check advances are not used.

(b) Recipients shall follow all applicable standard = instructions issued=20 by OMB for use in connection with the forms specified in = =A7=A73015.82 through=20 3015.85. Awarding agencies may not issue substantive supplementary = instructions that are inconsistent with this subpart or impose = additional=20 requirements on recipients without the approval of O&F and = OMB.=20 However, awarding agencies may shade out or instruct the recipient = to=20 disregard any line item that the awarding agency finds unnecessary = for its=20 decision-making purposes.

(c) Recipients shall not be required to submit more than one = original=20 and two copies of the forms required under this subpart.

(d) Awarding agencies may provide computer outputs to = recipients to=20 expedite or contribute to the accuracy of reporting. Awarding = agencies may=20 accept the required information from recipients in machine = readable form=20 or computer printouts instead of prescribed formats.

(e) When an awarding agency determines that a recipient's = accounting=20 system does not meet the standards for financial management = systems=20 contained in Subpart H of this part, it may require more frequent=20 financial reports or more detail (or both) upon written notice to = the=20 recipient (without regard to =A73015.4) until such time as the = standards are=20 met.

(f) Awarding agencies may waive any report required by this = subpart, if=20 not needed.

(g) Awarding agencies may extend the due date for any financial = report=20 upon receiving a justified request from the recipient. The = recipient=20 should not wait until the due date if an extension is to be = requested, but=20 should submit the request as soon as the need becomes known. = Failure by a=20 recipient to submit a report by its due date may result in severe=20 enforcement actions by USDA. These may include withholding of = further=20 grant payments, suspension or termination of the grant, etc. = Therefore=20 recipients are urged to submit reports on time.

=A7 3015.82 Financial status = report.

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(a) Form. Recipients shall use Standard Form 269, = Financial=20 Status Report, to report the status of funds for all = nonconstruction=20 projects or programs.

(b) Accounting basis. Unless specified in the provisions = of the=20 grant or subgrant each recipient shall report program outlays and = program=20 income on the same accounting basis, i.e. , cash or = accrual, which=20 it uses in its accounting system.

(c) Frequency. The awarding agency may prescribe the = frequency=20 of the report for each project or program. However, the report = shall not=20 be required more frequently than quarterly except as provided in = =A7=A73015.4,=20 3015.81(e), or by statute. If the awarding agency does not specify = the=20 frequency of the report, it shall be submitted annually. Upon = expiration=20 or termination of the grant or cooperative agreement, if a period = of time=20 remains not covered by a periodic report ( i.e. , a = quarterly,=20 semi-annual or annual report), a final report shall be = required.

(d) Due date. When reports are required on a quarterly = or=20 semiannual basis, they shall be due 30 days after the reporting = period.=20 When required on an annual basis, they shall be due 90 days after = the end=20 of the grant or agreement period. In addition, final reports as = defined in=20 =A73015.82(c) shall be due 90 days after the expiration or = termination of=20 grant or agreement support, except in those instances where an = extension=20 has been granted.

(e) Final reports. (1) Final reports ( i.e. , the = last=20 report submitted) must not show any unpaid obligations.

(2) If the recipient will still have unpaid obligations when = the final=20 report is due, the recipient shall submit a provisional final = report=20 (showing the unpaid obligations) by the due date, and a true final = report=20 when all obligations have been paid. When submitting a provisional = final=20 report, the recipient shall tell the awarding agency when it = expects to=20 submit a true final report.

(3) As provided in =A73015.81(f), awarding agencies may waive = provisional=20 final reports.

=A7 3015.83 Federal cash transactions=20 report.

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(a) Form. (1) For grants or cooperative agreements paid = by=20 letters of credit (or Treasury check advances) through any USDA = payment=20 office, the recipient shall submit to USDA a Standard Form 272, = Federal=20 Cash Transactions Report, and, when necessary, its continuation = sheet,=20 SF=96272a. Recipients under the Regional Disbursing Office (RDO) = system=20 shall not be required to submit a SF=96272. For these recipients, = awarding=20 agencies shall use information contained in the Request for = Payment to=20 monitor recipient cash balances and to get disbursement = information.

(2) The SF=96272 will be used by USDA to monitor cash advanced = to=20 recipients and to obtain disbursement or outlay information from=20 recipients for each grant or cooperative agreement. The format of = the=20 report may be adapted, as appropriate, when reporting is to be=20 accomplished with the assistance of automatic data processing = equipment,=20 provided that the identical information is submitted.

(b) Forecasts of Federal cash requirements. Awarding = agencies=20 may require that forecasts of Federal cash requirements be = provided in the=20 =93Remarks=94 section of the report.

(c) Cash in hands of subrecipients or contractors. When=20 considered necessary and feasible by the responsible USDA awarding = agency,=20 recipients may be required to:

(1) Show in the =93Remarks=94 section of the report the amount = of cash=20 advances exceeding three days needs in the hands of their = subrecipients or=20 contractors, and

(2) Provide short narrative explanations or actions taken by = the=20 recipient to reduce such excess balances.

(d) Frequency and due date. Recipients shall submit the = report=20 no later than 15 working days following the end of each quarter. = However,=20 the USDA payment office may require recipients receiving advances = of one=20 million dollars or more per year to submit a report within 15 = working days=20 following the end of each month. Awarding agencies may waive the=20 requirement for submission of the SF=96272 when monthly advances = do not=20 exceed $10,000 per recipient, provided that such advances are = monitored=20 through other forms contained in this subpart, or if, in the = awarding=20 agency's opinion, the recipient's accounting controls are adequate = to=20 minimize excessive Federal advances.

=A7 3015.84 Request for advance or=20 reimbursement.

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(a) Advance payments. Recipients of nonconstruction = grants or=20 cooperative agreements shall request Treasury check advance = payments on=20 Standard Form 270, Request for Advance or Reimbursement. This form = is not=20 used for letter of credit drawdowns or predetermined automatic = advance=20 payments.

(b) Reimbursements. Recipients of nonconstruction grants = or=20 cooperative agreements shall request reimbursement on Standard = Form 270,=20 Request for Advance or Reimbursement (for reimbursement request = under=20 construction grants or cooperative agreements, see = =A73015.85).

=A7 3015.85 Outlay report and request = for=20 reimbursement for construction programs.

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(a) Construction grants paid by reimbursement method. = (1)=20 Requests for reimbursement under construction grants shall be = submitted on=20 Standard Form 271, Outlay Report and Request for Reimbursement for = Construction Programs. Awarding agencies may, however, prescribe = the=20 Request for Advance or Reimbursement form specified in =A73015.84 = instead of=20 this form.

(2) The frequency for submitting reimbursement requests is = treated in=20 =A73015.104.

(b) Construction grants paid by letter of credit or Treasury = check=20 advance. (1) When a construction grant or a cooperative = agreement is=20 paid by letter of credit or Treasury check advances, the recipient = shall=20 report its outlays to the awarding agency using Standard Form 271, = Outlay=20 Report and Request for Reimbursement for Construction Programs. = The=20 awarding agency will provide any necessary special instructions. = However,=20 frequency and due date shall be governed by =A73015.82 (c) and = (d).

(2) When a construction grant or cooperative agreement is paid = by=20 Treasury check advances based on periodic requests from the = recipient, the=20 advances shall be requested on the form specified in = =A73015.84.

(3) The awarding agency may substitute the Financial Status = Report=20 specified in =A73015.82 for the Outlay Report and Request for=20 Reimbursement.

(c) Accounting basis. The accounting basis for the = Outlay Report=20 and Request for Reimbursement for Construction Programs shall be = governed=20 by =A73015.82(b).

Subpart K=97Monitoring and Reporting Program = Performance

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=A7 3015.90 Scope.

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This subpart establishes procedures for monitoring and = reporting=20 program performance of recipients. These procedures place = responsibility=20 on recipients to manage the day-to-day operations of their grant = and=20 subgrant supported activities.

=A7 3015.91 Monitoring by = recipients.

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Recipients shall monitor the performance of grant and=20 subgrant-supported activities to assure that performance goals are = being=20 achieved. Recipient monitoring shall cover each program, function, = or=20 activity.

=A7 3015.92 Performance = reports.

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(a) Nonconstruction. The awarding agency shall, if it = decides=20 that performance information available from subsequent = applications=20 contains sufficient information to meet its programmatic needs, = require=20 the recipient to submit a performance report only upon expiration = or=20 termination of grant support. Unless waived by the awarding agency = this=20 report will be due on the same date as the final Financial Status = Report=20 (as provided in =A73015.82 (d) and (e)).

(1) Recipients shall submit annual peformance reports unless = the=20 awarding agency requires quarterly or semi-annual reports or = unless=20 covered under paragraph (a) of this section. Annual reports shall = be due=20 90 days after the grant year; quarterly or semi-annual reports = shall be=20 due 30 days after the reporting period. The final performance = report shall=20 be due 90 days after the expiration or termination of grant = support. If a=20 justified request is submitted by a recipient, the awarding agency = may=20 extend the due date for any performance report. Additionally, = requirements=20 for unnecessary performance reports may be waived by the awarding=20 agency.

(2) Performance reports shall contain, for each grant, brief=20 information on the following:

(i) A comparison of actual accomplishments to the goals = established for=20 the period. Where the output of the project can be readily = expressed in=20 numbers, a computation of the cost per unit of output may be = required if=20 that information will be useful.

(ii) The reasons for slippage if established goals were not = met.

(iii) Additional pertinent information including, when = appropriate,=20 analysis and explanation of cost overruns or high unit costs.

(3) Recipients shall not be required to submit more than the = original=20 and two copies of performance reports.

(4) Recipients shall adhere to the standards in paragraph (a) = of this=20 section in prescribing performance reporting requirements for=20 subrecipients.

(b) Construction. For the most part, on-site technical=20 inspections and certified percentage-of-completion data are relied = on=20 heavily by awarding agencies to monitor progress under = construction grants=20 and subgrants. The awarding agency shall require additional formal = performance reports only when considered necessary, and never more = frequently than quarterly.

=A7 3015.93 Significant = developments.

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Events may occur between the scheduled performance reporting = dates=20 which have significant impact upon the grant or subgrant supported = activity. In such cases, the recipient shall inform the awarding = agency as=20 soon as the following types of conditions become known:

(a) Problems, delays, or adverse conditions which will = materially=20 impair the ability to meet the objective of the award. This = disclosure=20 shall include a statement of the action taken, or contemplated, = and any=20 assistance needed to resolve the situation.

(b) Favorable developments which enable meeting time schedules = and=20 goals sooner or at less cost than anticipated or producing more = beneficial=20 results than originally planned.

=A7 3015.94 Site visits.

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The awarding agency shall make site visits as frequently as = practicable=20 to:

(a) Review program accomplishments and manage control = systems.

(b) Provide such technical assistance as may be required.

=A7 3015.95 Waivers, extensions and = enforcement=20 actions.

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(a) Reports from recipients. USDA may waive any = performance=20 report required by this subpart if not needed.

(b) Reports from subrecipients. The recipient may waive = any=20 performance report from a subrecipient when not needed. The = recipient may=20 extend the due date for any performance report from a subrecipient = if the=20 recipient will still be able to meet its performance reporting = obligations=20 to the USDA awarding agency.

Subpart L=97Payment Requirements

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=A7 3015.100 Scope.

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This subpart prescribes the basic standards and methods under = which a=20 USDA awarding agency will make grant payments to recipients, and=20 recipients will make subgrant payments to their = subrecipients.

=A7 3015.101 General.

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Methods and procedures for making payments to recipients shall = minimize=20 the time elapsing between the transfer of funds and the = recipient's=20 disbursements.

=A7 3015.102 Payment methods.

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(a) Non-construction. (1) Letters of credit will be used = to pay=20 USDA recipients when all the following conditions exist:

(i) There is or will be a continuing relationship between the = recipient=20 and the USDA awarding agency for at least a 12 month period and = the total=20 amount of advances to be received within that period from the = awarding=20 agency is $120,000 or more per year.

(ii) The recipient has established or demonstrated to the USDA = awarding=20 agency the willingness and ability to establish procedures that = will=20 minimize the time elapsing between the transfer of funds from the = Treasury=20 and their disbursement by the recipient.

(iii) The recipient's financial management system meets the = standards=20 for fund control and accountability prescribed in Subpart H of = this=20 part.

(2) Advances by Treasury check will be used, in accordance with = Treasury Circular No. 1075, when the recipient does not meet the=20 requirements in paragraph (a)(1)(i) of this section but does meet = the=20 requirements in paragraphs (a)(1) (ii) and (iii) of this = section.

(3) Reimbursement by Treasury check shall be the preferred = method when=20 the recipient does not meet the requirements specified in either = paragraph=20 (a)(1)(ii) or paragraph (a)(1)(iii) of this section. This method = may also=20 be used when USDA financial assistance makes up only a minor = portion of=20 the program and where the major portion of the program is = accomplished=20 through private financing or Federal loans.

(b) Construction. (1) Reimbursement by Treasury check = shall be=20 the preferred method when the recipient does not meet the = requirements=20 specified in =A73015.102(a)(1) (ii) or (iii), and may be used for = any USDA=20 construction grant unless USDA has entered into an agreement with = the=20 recipient to use a letter of credit for all USDA grants, including = construction grants.

(2) When the reimbursement by Treasury check method is not = used,=20 =A73015.102(a) (1) and (2) shall apply to the construction grants. = Implementing procedures under =A73015.102(a) (1) and (2) will be = the same=20 for construction grants as for nonconstruction grants awarded to = the same=20 recipient, insofar as possible.

(3) USDA awarding agencies will not use the = percentage-of-completion=20 method to pay its construction grants. The recipient may use that = method=20 to pay its construction contractor, but if it does, USDA payments = to the=20 recipient will nevertheless be based on the recipient's actual = rate of=20 disbursements.

=A7 3015.103 Withholding = payments.

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(a) Unless otherwise required by Federal statute, payments for = proper=20 charges incurred by recipients will not be withheld at any time = during the=20 grant period unless (1) the recipient has failed to comply with = the=20 program objectives, grant award conditions, or Federal reporting=20 requirements, or (2) the recipient is indebted to the United = States and=20 collection of the indebtedness will not impair accomplishment of = the=20 objectives of any grant program sponsored by the United States, or = (3) the=20 grant is suspended pursuant to Subpart N of this part.

(b) Payments withheld for failure of a recipient to comply with = reporting requirements, but without suspension of the grant, will = be=20 released to the recipient upon subsequent compliance. When a grant = is=20 suspended, payment adjustments will be made in accordance with = Subpart N=20 of this part. When a debt is to be collected, USDA awarding = agencies may=20 withhold payments or require appropriate accounting adjustments to = recorded cash balances for which the recipient is accountable to = the=20 Federal government, in order to liquidate the indebtedness.

=A7 3015.104 Requesting advances or=20 reimbursements.

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(a) Advances. If advance payments are by Treasury check = and are=20 not prescheduled, the recipient shall submit its payment requests = at least=20 monthly. Less frequent requests are not permitted for they result = in=20 advances covering excessive periods of time. Recipient requests = for=20 advances shall not be made in excess of the Federal share of = reasonable=20 estimates of outlays for the month covered. These estimates shall = be made=20 on a cash basis, even if the recipient uses an accrual accounting=20 system.

(b) Reimbursements. If payments are made through = reimbursement=20 or by Treasury check:

(1) Requests for reimbursements may be submitted monthly or = more=20 frequently if authorized to do so by the awarding agency. = Ordinarily,=20 payment will be made within 30 days after receipt of a proper = request for=20 reimbursement.

(2) The recipient shall not request reimbursement for the = Federal share=20 of amounts withheld from contractors to ensure satisfactory = completion of=20 work until after it makes those payments.

=A7 3015.105 Payments to = subrecipients.

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Recipients shall observe the requirements of this subpart in = making (or=20 withholding) payments to subrecipients, with the following = exceptions:

(a) Advance payment by Treasury check may be used instead of = letter of=20 credit;

(b) The forms specified in Subpart J of this part for = requesting=20 advances and reimbursements are not required to be used by = subrecipients;=20 and

Subpart M=97Programmatic Changes and Budget = Revisions

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=A7 3015.110 Scope and = applicability.

=20 top=20

(a) Scope. This subpart deals with prior approval = requirements=20 for post-award programmatic changes and budget revisions by=20 recipients.

(b) Exemption of mandatory or formula grants. Sections = 3015.113=20 through 3015.115 do not apply to programmatic changes or budget = revisions=20 made by recipients under State plans or other grants which the = awarding=20 agency is required by law to award if the applicant meets all = applicable=20 requirements for entitlement.

(c) Exemption of certain subgrants. Sections 3015.113 = through=20 3015.115 do not apply to subgrants from States to their local = governments=20 under a mandatory or formula grant, if the local government is not = required to apply for the subgrant on a project basis. Generally, = such=20 exempt subgrants will occur under a State plan which provides for = local=20 administration of a State-wide program under State = supervision.

=A7 3015.111 Cost principles.

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(a) The cost principles prescribed by subpart T of this part = require=20 prior approval of certain types of costs. Except when waived, = those prior=20 approval requirements apply to all grants and subgrants, whether = or not=20 =A7=A73015.113 through 3015.115 apply.

(b) Procedures for prior approvals required by the cost = principles are=20 in =A73015.196. Procedures for prior approvals required by this = subpart are=20 in =A73015.112.

=A7 3015.112 Approval = procedures.

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(a) For grants or cooperative agreements. When = requesting a=20 prior approval required by this subpart, recipients shall address = their=20 requests to the responsible official of the awarding agency. = Approvals=20 shall not be valid unless they are in writing and signed by either = the=20 responsible officer, the head of the awarding agency, or the head = of the=20 awarding agency's regional office.

(b) For subgrants. Recipients shall be responsible for = reviewing=20 requests from their subrecipients for the approvals required by = this=20 subpart and for giving or denying the approval. A recipient shall = not=20 approve any action which is inconsistent with the purpose or terms = of the=20 Federal grant or cooperative agreement. If an action by a = subrecipient=20 will result in a change in the overall grant project or budget = requiring=20 approval from the awarding agency, the recipient shall obtain that = approval before giving its approval to the subrecipient. Approvals = shall=20 not be valid unless they are in writing and signed by an = authorized=20 official of the recipient organization.

(c) Timing. Within 30 days from the date of receipt of a = request=20 for approval, the approval authority shall review the request and = notify=20 the recipient of its decision. If the request for approval is = still under=20 consideration at the end of 30 days, the approval authority shall = inform=20 the recipient in writing as to when to expect the decision.

=A7 3015.113 Programmatic = changes.

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(a) Scope. This section contains requirements for prior = approval=20 of departures, other than budget revisions, from approved project = plans.=20 In addition to the requirements in this section, awarding agencies = may=20 require prior approval for other kinds of programmatic changes to = an=20 approved cooperative agreement, grant, or subgrant project.

(b) Changes to project scope or objectives. The = recipient shall=20 obtain prior approval for any change to the scope or objectives of = the=20 approved project. (For construction projects, any material change = in=20 approved space utilization or functional layout shall be = considered a=20 change in scope).

(c) Changes in key people. This section applies to = grants,=20 subgrants, and cooperative agreements for research. This section = does not=20 apply to other types of grants, subgrants, or cooperative = agreements=20 unless other terms of the award make it apply. The recipient shall = obtain=20 prior approval:

(1) To continue the project during any continuous period of = more than=20 three months without the active direction of an approved project = director=20 or principal investigator;

(2) For its selection of a replacement for the project director = of=20 principal investigator;

(3) For its selection of a replacement for any other persons = named and=20 expressly designated as key project people in the grant, subgrant, = or=20 cooperative agreement award document; or

(4) To permit the project director or principal investigator = (or anyone=20 covered by paragraph (c)(3) of this section) to devote = substantially less=20 effort to the project than was anticipated when the award was = made.

(d) Transferring work and providing financial assistance to = others.=20 Recipients shall obtain prior approval for transferring to = another=20 party the actual performance of the substantive programmatic work, = and for=20 providing any form of financial assistance to another party.

(e) Audiovisual activities. (1) Except to the extent = explicitly=20 included in the project plan approved at the time of award, using = grant=20 support for any of the following requires prior approval:

(i) Producing an audiovisual.

(ii) Buying ownership of any of the rights in the work embodied = in the=20 audiovisual. (This does not apply to merely buying a license in = any of the=20 rights. For the remainder of this section, buying ownership of the = rights=20 is referred to simply as buying or purchasing an audiovisual).

(iii) Presenting or distributing to the general public an = audiovisual=20 that was produced or bought with grant support.

(2) Prior approval is not required for:

(i) Any audiovisual activity under a subgrant.

(ii) Any audiovisual whose direct production or purchase cost = to the=20 recipient is $5,000 or less.

(iii) The production or purchase of an audiovisual as a = research=20 instrument or for documenting experimentation or findings, if the=20 audiovisual is not intended for presentation or distribution to = the=20 general public.

(3) Following are examples of presentation or distribution of = an=20 audiovisual to the general public.

(i) Broadcast on commercial, cable, or educational television, = or=20 radio.

(ii) Showing in commercial motion picture theaters.

(iii) Showing in public places such as airports, waiting rooms, = bus or=20 railroad depots, and vacation resorts.

(iv) Showing to civic associations, schools (except when used = as a=20 teaching tool in a classroom setting), clubs, fraternal = organizations, or=20 similar lay groups.

=A7 3015.114 Budgets=97general.

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(a) Research and non-research project budgets. For = research and=20 non-research projects which involve cost-sharing or matching, = approved=20 budgets shall ordinarily consist of a single set of figures = covering total=20 project cost (the sum of the awarding agency's share and the = recipient's=20 share). However, the awarding agency may specify that the = recipient's=20 share not be included in the approved budget. In no case, however, = shall=20 the approved budget be in the form of a separate set of figures = for each=20 share.

(b) Subdivision by programmatic segments. Some grants,=20 subgrants, and cooperative agreements contain two or more = programmatic=20 segments (such as discrete programs, projects, functions, or types = of=20 activities). In these cases, the awarding agency may require that = the=20 approved budget be subdivided to show the anticipated cost of each = programmatic segment.

=A7 3015.115 Budget = revisions.

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(a) Nonconstruction projects. (1) Except as provided in=20 paragraph (a)(2) of this section, the recipient of a grant, = subgrant, or=20 cooperative agreement having an approved budget shall obtain prior = approval for any budget revision which will:

(i) Involve transfer of amounts budgeted for indirect costs to = absorb=20 increases in direct costs, or

(ii) Involve transfer of amounts previously budgeted for = training=20 allowances (direct payments to trainees), or

(iii) Result in a need for the award of additional funds, e.g., = an=20 increase in the base upon which indirect costs are calculated = which will=20 increase allocable indirect costs and result in a claim for a=20 supplementary award.

(2) Any or all of the prior approval requirements in paragraph = (a) of=20 this section may be waived by the awarding agency.

(3) Except as provided in =A73015.116 other budget changes = under=20 nonconstruction grants do not require approval.

(b) Construction projects. Unless provided otherwise by = the=20 terms of the grant, subgrant, or cooperative agreement, revisions = to=20 construction project budgets do not require approval.

=A7 3015.116 Construction and = nonconstruction work=20 under the same grant, subgrant, or cooperative = agreement.

=20 top=20

When a grant, subgrant, or cooperative agreement provides = support for=20 both construction and nonconstruction work, the awarding agency = may=20 require prior approval for any fund or budget transfers between = the two=20 types of work.

Subpart N=97Grant and Subgrant Closeout, Suspension and=20 Termination

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=A7 3015.120 Closeout.

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(a) Each grant or subgrant shall be closed out as soon as = possible=20 after expiration or notice of termination.

(b) The following shall apply when closing out USDA grants:

(1) Upon request from the recipient, any allowable reimbursable = cost=20 not covered by previous payments shall be promptly paid by = USDA.

(2) Any unobligated balance of cash advanced to the recipient = shall be=20 immediately refunded to the awarding agency or managed in = accordance with=20 USDA instructions.

(3) Within a maximum period of 90 days following the date of = expiration=20 or termination of a grant, all financial performance and related = reports=20 required by the terms of the agreement shall be submitted to the = awarding=20 agency by the recipient. USDA reserves the option of extending the = due=20 date for any report and may waive any report that it considers to = be=20 unnecessary.

(4) The provisions formally expressed and agreed to within the = grant=20 arrangement shall dictate the settlement of any upward or downward = adjustments of the Federal share of costs.

(c)(1) A grant closeout shall not affect the retention period = for, or=20 Federal rights of access to, grant records. (See Subpart D of this = part).

(2) The closeout of a grant does not affect the recipient's=20 responsibilities regarding property under Subpart R of this part = or with=20 respect to any program income the recipient is still accountable = for under=20 Subpart F of this part.

(3) Final audits (See Attachment L, Circular A=96102 and = Attachment K of=20 Circular A=96110) are not a required part of the grant or subgrant = closeout=20 procedures. Normally, a final audit should not be needed unless = there are=20 problems with a grant or subgrant that require audit attention. If = a USDA=20 agency considers a final audit to be necessary, it shall contact = the OIG=20 Region within which the recipient or subrecipient is located and = inform=20 OIG of the situation. OIG shall be responsible for assuring that = necessary=20 final audits are performed and for any necessary coodination with = other=20 Federal cognizant audit agencies, recipients or State and local = auditors.=20 Audits performed in accordance with Subpart I may serve as final = audits=20 providing such audits meet the needs of the requesting agency.

(4) If a grant is closed out without audit, the awarding agency = reserves the right to disallow and recover an appropriate amount = after=20 fully considering any recommended disallowances resulting from an = audit=20 which may be conducted later.

=A7 3015.121 Amounts payable to the = Federal=20 government.

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The following outstanding sums for each grant shall be = considered as a=20 debt or debts owed by the recipient to the Federal government. = They shall,=20 if not paid upon demand, be subject to recovery by the awarding = agency=20 from the recipient or its successor or assignees by set off or = other=20 action provided by law:

(a) Any grant funds paid to the recipient by the Federal = government=20 which exceed the amount the recipient is finally determined to be = entitled=20 to under the provisions of the grant award;

(b) Any interest or other investment income earned on advances = of grant=20 funds which is due the Federal government;

(c) Any royalties or other special classes of program income = which,=20 under the provisions of the grant award, are required to be = returned to=20 the Federal government;

(d) Any amount the Federal government is entitled to under = Subpart R of=20 this part; and

(e) Under the provisions of the grant award, any other amounts = finally=20 determined to be due to the Federal government.

=A7 3015.122 Violation of = terms.

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(a) Whenever it is determined that the recipient has materially = failed=20 to comply with the provisons of the grant award, the awarding = agency may=20 suspend or terminate, in accordance with =A7=A73015.123 and = 3015.124, any=20 grant in whole, or in part, at any time before the date of = completion, or=20 take such other remedies as may be legally available and = appropriate.

(b) A grant may be suspended or terminated in the current = period for=20 failure to submit a report still due from a prior period. This = action is=20 applicable when a project or program is supported over two or more = funding=20 periods.

=A7 3015.123 Suspension.

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(a) When a recipient has materially failed to comply with the=20 provisions prescribed in the grant agreement, the awarding agency = may,=20 after reasonable notice to the recipient, suspend the grant in = whole or in=20 part. A suspension notice shall be issued by the awarding agency = stating=20 the reasons for the suspension, any corrective action required of = the=20 recipient, and the effective date. Suspension may go into effect=20 immediately if the awarding agency deems it necessary to protect = its=20 interest and if a delayed effective date would be unreasonable = considering=20 the awarding agency's responsibilities to protect the Federal = government's=20 interest. Suspension shall remain in effect until the recipient = has taken=20 corrective action satisfactory to the awarding agency, or given = evidence=20 that such corrective action will be taken, or until the awarding = agency=20 terminates the grant.

(b) Unless specifically authorized by the awarding agency in = the notice=20 of suspension or subsequently expressed in an amendment to it, new = obligations incurred by the recipient during the suspension period = shall=20 not be allowed. Necessary and otherwise allowable costs which the=20 recipient could not reasonably avoid during the suspension period = will be=20 allowed, if they result from obligations properly incurred by the=20 recipient before the effective date of the suspension and not in=20 anticipation of suspension or termination. If the awarding agency=20 approves, third party in-kind contributions applicable to the = suspension=20 period may be allowed in satisfaction of cost-sharing or matching=20 requirements.

(c) During the suspension period, appropriate adjustments to = payments=20 under the suspended grant will be made by not giving credit to the = recipient for disbursements made in payment of unauthorized = obligations=20 incurred during the suspension period or by withholding subsequent = payments.

=A7 3015.124 Termination.

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(a) Termination for cause. The awarding agency may = terminate any=20 grant or other agreement in whole, or in part, at any time before = the date=20 of expiration, whenever it is determined that the recipient has = materially=20 failed to comply with the conditions of the agreement. The = awarding agency=20 shall promptly notify the recipient in writing of the = determination and=20 reasons for the termination, together with the effective date.

(b) Termination by mutual agreement. Except as provided = in=20 paragraph (a) of this section, grants may be terminated in whole, = or in=20 part, only as follows:

(1) When the awarding agency and recipient agree upon the = termination=20 conditions, including the effective date and, in the case of = partial=20 termination, the portion to be terminated.

(2) By written notification by the recipient to the awarding = agency=20 setting forth the reasons for termination, the effective date, and = in the=20 case of partial termination, the portion to be terminated. In the = case of=20 a partial termination, if the awarding agency decides that the = remaining=20 portion of the grant will not accomplish the purposes for which = the grant=20 was made, the awarding agency may terminate the award in its = entirety=20 under either paragraph (a) or paragraph (b)(1) of this = section.

(c) Termination settlements. Upon termination of a = grant, the=20 recipient shall not incur any new obligations for the terminated = portion=20 of the agreement after the effective date, and shall cancel as = many=20 outstanding obligations as possible. The awarding agency, however, = shall=20 allow full credit to the recipient for the Federal share of the=20 non-cancellable obligations properly incurred by the recipient = prior to=20 termination.

=A7 3015.125 Applicability to=20 subgrants.

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Recipient subgrants shall be subjected to the same standards = regarding=20 closeout, suspension, and termination of subgrants as prescribed = in this=20 subpart for awarding agencies.

Subparts O=96P [Reserved]

=20 top=20

Subpart Q=97Application for Federal Assistance

=20 top=20

=A7 3015.150 Scope and = applicability.

=20 top=20

(a) This subpart prescribes forms and instructions to be used = by=20 governmental organizations (except hospitals, non-profit = organizations,=20 and institutions of higher education operated by a government) in = applying=20 to USDA for discretionary grants. This subpart is not applicable, = however,=20 to mandatory or formula grants or programs which do not require = applicants=20 to apply to USDA for funds on a project basis.

(b) This subpart permits awarding agencies to prescribe the = form of=20 applications by nongovernmental organizations (including = hospitals,=20 non-profit organizations and institutions of higher education = operated by=20 a government), but prescribes the use of a standard facesheet for = certain=20 of these applications.

(c) This subpart applies only to applications for grants or = cooperative=20 agreements and is not required to be applied by recipients in = dealing with=20 applicants for subgrants. However, recipients are encouraged not = to adopt=20 more detailed or burdensome application requirements for = subgrants.

(d) This subpart also prescribes standards for competition to = be used=20 by USDA agencies in awarding discretionary cooperative agreements = and=20 grants. (This subpart is not applicable to cooperative agreements = awarded=20 pursuant to the provisions of sections 1472(b) and 1473C of the = National=20 Agricultural Research, Extension and Teaching Policy Act of 1977, = as=20 amended.)

[46 FR 55639, Nov. 10, 1981, as amended at 51 FR 17172, May 9,=20 1986]

=A7 3015.151 Authorized = forms.

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(a) Sections 3015.152 through 3015.156 specify the forms that=20 governmental organizations shall use to apply to USDA for a = discretionary=20 grant.

(b) Governments need not submit more than the original and two = copies=20 of application forms. When less will suffice, the awarding agency = shall=20 notify potential applicants.

(c) When a government agency amends a previously submitted = application=20 or applies for additional funding (such as a continuation or = supplemental=20 award) only the facesheet and any other affected pages are = required to be=20 submitted. Previously submitted pages whose information is still = current=20 may be resubmitted, but are not required to be resubmitted.

=A7 3015.152 Preapplication for Federal=20 assistance.

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(a) When a government submits a preapplication, it shall use = the=20 Preapplication for Federal Assistance form prescribed by Circular = A=96102.=20 The purposes of these preapplications shall be to:

(1) Establish communication between the potential applicant and = the=20 awarding agency;

(2) Determine the potential applicant's eligibility;

(3) Identify projects which have little or no chance for = Federal=20 funding before applicants incur significant costs for preparing an = application.

(b) Preapplication is always required if the potential = applicant is a=20 government and the proposed project (1) is for construction, land=20 acquisition, or land development, and (2) would require more than = $100,000=20 of Federal funding. If these conditions are not present, potential = applicants need not submit preapplications unless required to do = so by the=20 awarding agency. Any government may submit a preapplication even = when not=20 required.

=A7 3015.153 Notice of preapplication = review=20 action.

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Awarding agencies shall inform governmental applicants of the = results=20 of their review of preapplications by using the Notice of = Preapplication=20 Review Action form prescribed by Circular A=96102. If the review = cannot be=20 completed within 45 days, the awarding agency shall inform the = applicant,=20 in writing, when it will complete the review.

=A7 3015.154 Application for Federal = assistance=20 (nonconstruction programs).

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Governments shall use the Application for Federal Assistance=20 (Nonconstruction Programs) form prescribed by OMB Circular A=96102 = in=20 applying for discretionary grants unless a form specified in = =A73015.155 or=20 =A73015.156 is to be used.

=A7 3015.155 Application for Federal = assistance=20 (construction programs).

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Governments shall use the Application for Federal Assistance = (for=20 Construction Programs) form prescribed by Circular A=96102 in = applying for=20 any grant whose purpose is solely or primarily construction, land=20 acquisition, or land development.

=A7 3015.156 Application for Federal = assistance=20 (short form).

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Governments shall use the Application for Federal Assistance = (Short=20 Form) form prescribed by Circular A=96102 in applying for any=20 single-purpose, one-time grant of less than $10,000 not requiring = Circular=20 A=9695 clearinghouse review, an environmental impact statement, or = the=20 relocation of persons, businesses, or farms. Awarding agencies = may, at=20 their discretion, authorize or require this form for applications = for=20 larger amounts.

=A7 3015.157 Authorized form for = nongovernmental=20 organizations.

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Nongovernmental organizations shall use application forms = prescribed by=20 the awarding agency. The facesheet of these applications shall be = Standard=20 Form 424.

=A7 3015.158 Competition in the awarding = of=20 discretionary grants and cooperative agreements.

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(a) Standards for competition. Except as provided in = paragraph=20 (d) of this section, awarding agencies shall enter into = discretionary=20 grants and cooperative agreements only after competition. An = awarding=20 agency's competitive award process shall adhere to the following=20 standards:

(1) Potential applicants must be invited to submit proposals = through=20 publications such as theFederal = Register,professional trade=20 journals, agency or program handbooks, the Catalog of Federal = Domestic=20 Assistance, or any other appropriate means of solicitation. In so = doing,=20 awarding agencies should consider the broadest dissemination of = project=20 solicitations in order to reach the highest number of potential=20 applicants.

(2) Proposals are to be evaluated objectively by independent = reviewers=20 in accordance with written criteria set forth by the awarding = agency.=20 Reviewers should make written comments, as appropriate, on each=20 application. Independent reviewers may be from the private sector, = another=20 agency, or within the awarding agency, as long as they do not = include=20 anyone who has approval authority for the applications being = reviewed or=20 anyone who might appear to have a conflict of interest in the role = of=20 reviewer of applications. A conflict of interest might arise when = the=20 reviewer or the reviewer's immediate family members have been = associated=20 with the applicant or applicant organization within the past two = years as=20 an owner, partner, officer, director, employee, or consultant; has = any=20 financial interest in the applicant or applicant organization; or = is=20 negotiating for, or has any arrangement, concerning prospective=20 employment.

(3) An unsolicited application, which is not unique and = innovative,=20 shall be competed under the project solicitation it comes closest = to=20 fitting. Awarding agency officials will determine the solicitation = under=20 which the application is to be evaluated. When the awarding agency = official decides that the unsolicited application does not fall = under a=20 recent, current, or planned solicitation, a noncompetitive award = may be=20 made, if appropriate to do so under the criteria of this section.=20 Otherwise, the application should be returned to the = applicant.

(b) Project solicitations. A project solicitation by the = awarding agency shall include or reference the following, as=20 appropriate:

(1) A description of the eligible activities which the awarding = agency=20 proposes to support and the program priorities;

(2) Eligible applicants;

(3) The dates and amounts of funds expected to be available for = awards;

(4) Evaluation criteria and weights, if appropriate, assigned = to=20 each;

(5) Methods for evaluating and ranking applications;

(6) Name and address where proposals should be mailed and = submission=20 deadline(s);

(7) Any required forms and how to obtain them;

(8) Applicable cost principles and administrative = requirements;

(9) Type of funding instrument intended to be used (grant or=20 cooperative agreement); and

(10) The Catalog of Federal Domestic Assistance number = and=20 title.

(c) Approval of applications. The final decision to = award is at=20 the discretion of the awarding/approving official in each agency. = The=20 awarding/approving official shall consider the ranking, comments, = and=20 recommendations from the independent review group, and any other = pertinent=20 information before deciding which applications to approve and = their order=20 of approval. Any appeals by applicants regarding the award = decision shall=20 be handled by the awarding agency using existing agency appeal = procedures=20 or good administrative practice and sound business judgment.

(d) Exceptions. The awarding/approving official may make = a=20 determination in writing that competition is not deemed = appropriate for a=20 particular transaction. Such determination shall be limited to=20 transactions where it can be adequately justified that a = noncompetitive=20 award is in the best interest of the Government and necessary to = the=20 accomplishment of the goals of the program. Reasons for = considering=20 noncompetitive awards may include, but are not necessarily limited = to, the=20 following:

(1) Nonmonetary awards of property or services;

(2) Awards of less than $75,000;

(3) Awards to fund continuing work already started under a = previous=20 award;

(4) Awards which cannot be delayed due to an emergency or a = substantial=20 danger to health or safety;

(5) Awards when it is impracticable to secure competition; = or

(6) Awards to fund unique and innovative unsolicited = applications.

[51 FR 17172, May 9, 1986]

Subpart R=97Property

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=A7 3015.160 Scope and = applicability.

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(a) Except as explained in paragraphs (c), (d), and (e) of this = section, this subpart applies to real property, equipment = (including ADP)=20 and supplies whose acquisition is supported by a grant.

(b) Also contained in this subpart are standards covering = inventions,=20 patents, and copyrights arising out of activities supported by a=20 grant.

(1) Property for which only depreciation or use allowances are=20 charged;

(2) Property donated entirely as a third party in-kind = contribution;=20 or

(3) Equipment or supplies acquired primarily for sale or = rental, rather=20 than for use.

(d) This subpart applies to equipment or supplies acquired by a = contractor under a grant or subgrant only if, by terms of the = contract,=20 title vests in the recipient or subrecipient.

(e) For research grants that are subject to an institutional=20 cost-sharing agreement, real property, equipment, and supplies = shall be=20 subject to this subpart only if at least some part of the = acquisition cost=20 is supported as a direct cost by Federal grant funds.

=A7 3015.161 Additional = requirements.

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Provided they observe the requirements of this subpart, = recipients may=20 follow their own property management policies and procedures. = Unless=20 specifically required by Federal statutes or Executive Orders, = awarding=20 agencies may not impose on recipients property requirements = (including=20 property reporting requirements) not authorized by this = subpart.

=A7 3015.162 Title to real property, = equipment and=20 supplies.

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Subject to the obligations and conditions specified in this = subpart,=20 title to real property, equipment, and supplies acquired under a = grant or=20 subgrant shall vest, upon acquisition, in the recipient or = subrecipient,=20 respectively. In certain cases, money due the Federal government = upon=20 disposition of real property may be authorized to be used for = allowable=20 costs rather than paid to USDA. (See =A73015.173.)

=A7 3015.163 Real property.

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Except as stated otherwise by Federal statutes, real property=20 applicable to this subpart shall be subject to the following = requirements,=20 in addition to any other requirements imposed by the provisions of = the=20 grant award:

(a) Use. The property shall be used for the originally=20 authorized purpose as long as needed for that purpose. When no = longer so=20 needed, the awarding agency may approve the use of the property = for other=20 purposes. These uses shall be limited to:

(1) Projects or programs supported by other Federal grants or=20 assistance agreements.

(2) Activities not supported by other Federal grants or = assistance=20 agreements but having purposes consistent with those of the = legislation=20 under which the original grant was made.

(b) Transfer of title. In accordance with paragraph (a) = of this=20 section, approval may be requested from the awarding agency to = transfer=20 title to an eligible third party for continued use for authorized=20 purposes. If approval is permissible under Federal statutes, and = is given,=20 the terms of the transfer shall provide that the transferee shall = assume=20 all the rights and obligations of the transferor set forth in this = subpart=20 or in other terms of the grant or subgrant.

(c) Disposition. When the real property is no longer to = be used=20 as provided in paragraphs (a) and (b) of this section, the = disposition=20 instructions of the awarding agency shall be followed. Those = instructions=20 will provide for one of the following alternatives:

(1) The property shall be sold and the Federal government shall = have a=20 right to an amount computed by multiplying the Federal share of = the=20 property times the proceeds from sale (after deducting actual and=20 reasonable selling and fix-up expenses, if any, from the sales = proceeds).=20 Proper sales procedures shall be followed which provide for = competition to=20 the extent practicable and result in the highest possible = return.

(2) The recipient shall have the option either of selling the = property=20 in accordance with paragraph (c)(1) of this section or of = retaining title.=20 If title is retained, the Federal government shall have a right to = an=20 amount computed by multiplying the market value of the property by = the=20 Federal share of the property.

(3) The recipient shall transfer the title to either the = Federal=20 government or an eligible non-Federal party named by the awarding = agency.=20 The recipient shall be entitled to be paid an amount computed by=20 multiplying the market value of the property by the non-Federal = share of=20 the property. In cases where the property belonged to a = subrecipient, see=20 =A73015.172 for the subrecipient's share.

=A7 3015.164 Statutory exemptions for = equipment=20 and supplies.

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(a) In certain circumstances some Federal statutes permit title = to=20 equipment or supplies acquired with grant funds to vest in the = recipient=20 without further obligation to the Federal government or on such = terms and=20 conditions set forth in the grant award, as deemed appropriate. = The=20 Federal Grant and Cooperative Agreement Act of 1977, Pub. L. = 95=96224, is an=20 example of such a statute. It provides this authority for = equipment and=20 supplies purchased with the funds of grants (and Federal contracts = and=20 cooperative agreements) for the conduct of basic or applied = scientific=20 research at non-profit institutions of higher education or at = non-profit=20 organizations whose primary purpose is the conduct of scientific=20 research.

(b) If equipment is subject to a statute of the kind described = in=20 paragraph (a) of this section, it shall be exempt from the = requirements in=20 the remaining sections of this subpart. However, when an equipment = item=20 has a unit acquisition cost of $1,000 or more, it shall be subject = to=20 =A73015.165 concerning rights to require transfer, and, while = subject to=20 such a right, to the rules on replacement in =A73015.167.

(c) If supplies are subject to a statute of the kind described = in=20 paragraph (a) of this section, they shall be exempt from all = provisions of=20 the remainder of this subpart which would otherwise apply.

=A7 3015.165 Rights to require transfer = of=20 equipment.

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(a) USDA right. The awarding agency shall have the right = to=20 require the transfer of equipment (including title) for items of = equipment=20 having a unit cost of $1,000 or more to the Federal government or = to an=20 eligible non-Federal party named by the awarding agency. Normally, = USDA=20 agencies will only exercise this right if the project or program = for which=20 the equipment was acquired is transferred from one recipient to = another.=20 The following conditions shall govern this right:

(1) The property shall be appropriately identified in the grant = award.

(2) In order for the awarding agency to exercise the right, = disposition=20 instructions must be issued no later than 120 days after the end = of USDA=20 grant support for the project or program for which the equipment = was=20 acquired. Furthermore:

(i) If the equipment is eligible for the exemptions in = =A73015.164 and=20 ceases to be needed for the project or program for which it was = acquired=20 while the project or program is still being performed by the = recipient,=20 the disposition instructions must have been received by the = recipient=20 while the equipment was still needed for that project or = program.

(ii) If the equipment is not eligible for those exemptions, = disposition=20 instructions must have been received by the recipient before other = permissible disposition of the equipment took place in accordance = with=20 =A73015.168.

(3) If the right is exercised, the recipient shall be entitled = to be=20 paid any reasonable, resulting shipping or storage costs incurred, = plus an=20 amount computed by multiplying the market value of the equipment = by the=20 non-Federal share of the equipment.

(b) Right of parties awarding subgrants. A recipient may = reserve=20 for itself, when awarding a subgrant, rights similar to those = found in=20 paragraph (a) of this section which covers items of equipment = having a=20 unit acquisition cost of $1,000 or more which are acquired under = that=20 subgrant. Without the approval of the awarding agency, the right = may be=20 exercised only if the project or program for which the equipment = was=20 acquired is transferred to another subrecipient and only for the = purpose=20 of transferring the equipment to the new subrecipient for = continued use in=20 the project or program.

(c) Equipment lists. If at any time an awarding agency = is=20 considering exercising its right to require transfer of equipment, = it may=20 require the recipient to furnish it with a list of all items of = equipment=20 that are subject to the right. As such, the awarding agency will = decide=20 which items, if any, should be transferred.

=A7 3015.166 Use of = equipment.

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(a) Basic rule. Whenever the equipment is not = transferred under=20 the provisions set forth in =A73015.165, it shall be used by the = recipient=20 in the project or program for which it was acquired as long as = needed,=20 whether or not the project or program continues to be supported by = Federal=20 funds. When the equipment is no longer needed for the original = project or=20 program the recipient shall use the equipment, if needed, in other = projects or programs currently or previously funded by the Federal = government, in the following order of priority:

(1) Projects or programs currently or previously funded by the = same=20 USDA awarding agency.

(2) Projects or programs currently or previously funded by any = USDA=20 awarding agency.

(3) Projects or programs currently or previously funded by = other=20 Federal agencies.

(b) Shared use. When equipment is used less than full = time in=20 the original project or program, the recipient shall make it = available for=20 use in other projects or programs currently or previously funded = by the=20 Federal government. Provided, such other use will not interfere = with the=20 work on the original project or program. First preference for such = use,=20 however, shall be given to other projects or programs funded by = the same=20 USDA awarding agency.

(c) Use by other recipients. When the recipient can no = longer=20 use the equipment as required by paragraph (a) of this section, it = may=20 voluntarily make the equipment available for use on projects or = programs=20 currently or previously funded by the Federal government which the = recipient is supporting through subgrants or through non-Federal = grants. A=20 subrecipient may also voluntarily make the equipment available for = use in=20 projects or programs currently or previously funded by the Federal = government which are being conducted or supported by the = recipient.

(d) Other uses. Unless the awarding agency provides = otherwise,=20 while equipment is being used as described in the preceding = paragraphs of=20 this section, it may also be used part-time for other purposes. = The use as=20 described in the previous paragraphs, however, shall be given = priority=20 over other uses.

=A7 3015.167 Replacement of = equipment.

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(a) If needed, equipment may be exchanged for replacement = equipment.=20 Replacement of equipment may be done either through trade-in or = through=20 sale and application of the proceeds to the acquisition cost of=20 replacement equipment. In either case, the transaction must be one = which a=20 prudent person would make in like circumstances.

(b) If an additional outlay to acquire the replacement = equipment is=20 charged as a direct cost to either Federal funds or required = cost-sharing=20 or matching under a Federal award, the replacement equipment shall = be=20 subject to whatever property requirements or exemptions are = applicable to=20 that award. If the award is a grant from USDA, the full = acquisition cost=20 of the replacement equipment shall determine which provisions of = this=20 subpart apply.

(c) For any replacement not covered by paragraph (b) of this = section,=20 the provisions of this subpart applicable to the equipment = replaced shall=20 carry over to the replacement equipment. None of the provisions of = this=20 subpart shall carry over if (1) the Federal share of the equipment = replaced was 10 percent or less or (2) the product of that share = times the=20 amount received for trade-in or sale is $100 or less.

=A7 3015.168 Disposal of = equipment.

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When original or replacement equipment is no longer to be used = in=20 projects or programs currently or previously sponsored by the = Federal=20 government, disposal of the equipment shall be made as = follows:

(a) Equipment with a unit acquisition cost of less than $1,000 = may be=20 sold, retained or otherwise disposed of with no further obligation = to the=20 Federal government.

(b) All other equipment may be retained or sold. The Federal = government=20 shall have a right to an amount calculated by multiplying the = current=20 market value or proceeds from sale by the Federal share of the = equipment=20 (see =A73015.172). If part of the Federal share of the equipment = came from=20 an award under which the exemptions in =A73015.164 were = applicable, the=20 amount due shall be reduced pro rata. In any case, if the = equipment is=20 sold, $100 or 10 percent of the total sales proceeds, whichever is = greater, may be deducted and retained from the amount otherwise = due for=20 selling and handling expenses. If the recipient's project or = program for=20 which or under which the equipment was acquired is still receiving = grant=20 support from the same Federal program and if the awarding agency = approves,=20 the net amount due may be used for allowable costs of that project = or=20 program. Otherwise, the net amount must be returned to the = awarding agency=20 by check or money order.

=A7 3015.169 Equipment management=20 requirements.

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Recipient procedures for managing equipment shall, as a = minimum, meet=20 the following requirements (including replacement equipment) until = such=20 actions as transfer, replacement or disposal takes place:

(a) Property records shall be maintained accurately. (Subpart D = of this=20 part contains retention and access requirements for these = records.) The=20 records shall include for each item of equipment the = following:

(1) A description of the equipment including manufacturer's = serial=20 numbers.

(2) An identification number, such as the manufacturer's serial = number.

(3) Identification of the grant under which the recipient = acquired the=20 equipment.

(4) The information needed to calculate the Federal share of = the=20 equipment (see =A73015.172).

(5) Acquisition date and unit acquisition cost.

(6) Location, use and condition of the equipment and the date = the=20 information was reported.

(7) All pertinent information on the ultimate transfer, = replacement, or=20 disposal of the equipment.

(b) Every two years, at a minimum, a physical inventory shall = be=20 conducted and the results reconciled with the property records to = verify=20 the existence, current utilization, and continued need for the = equipment.=20 Any discrepancies between quantities determined by the physical = inspection=20 and those shown in the accounting records shall be investigated to = determine the causes of the differences.

(c) In order to insure adequate safeguards to prevent loss, = damage or=20 theft of equipment, a control system shall be used. Any loss, = damage or=20 theft of equipment shall be investigated and fully documented. The = awarding agency may require a report of the circumstances = involving the=20 loss, damage, or theft of equipment.

(d) In order to keep the equipment in good condition, adequate=20 maintenance procedures shall be implemented.

(e) Where equipment is to be sold and the Federal government is = to have=20 a right to part or all of the proceeds, selling procedures shall = be=20 established which will provide for competition to the extent = practicable=20 and result in the highest possible return.

=A7 3015.170 Damage, loss, or theft of=20 equipment.

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(a) Applicability. This section applies to equipment = with a unit=20 acquisition cost of $1,000 or more that, before disposal (see = =A73015.168),=20 is damaged beyond repair, lost, or stolen.

(b) Recipient at fault =97(1) Applicability. This = paragraph=20 applies if:

(i) At the time of the damage, loss, or theft, the recipient = does not=20 have a control system in effect as required by =A73015.169, = and

(ii) The damage, loss, or theft is not due to an act of = God.

(2) Equipment replaced. If the equipment is replaced, = the=20 replacement is governed by =A73015.167. When that happens, the = market value=20 of the original equipment at the time it was damaged, lost, or = stolen is=20 used instead of the amount received for trade-in or sale.

(3) Equipment not replaced. If the equipment is not = replaced,=20 the Federal government has a right to an amount calculated by = multiplying=20 the Federal share in the equipment by its market value at the time = of=20 damage, loss, or theft. The amount is reduced pro rata if part of = the=20 Federal share of the equipment comes from an award under which the = exemption in =A73015.164 applied.

(4) Other remedies. The provisions in this paragraph (b) = are in=20 addition to other remedies available to the awarding agency if a = recipient=20 acquires equipment with grant support but fails to establish the = control=20 system required by =A73015.169.

(i) At the time of the damage, loss, or theft, the recipient = does have=20 a control system in effect as required by =A73015.169(c) or

(ii) The damage, loss, or theft is due to an act of God.

(2) Recipient not compensated. If the recipient is not=20 compensated for the damage, loss, or theft, through insurance or = some=20 other means, there is no obligation to USDA for the equipment.

(3) Recipient compensated. If the recipient is = compensated for=20 the damage, loss, or theft and replaces the equipment, =A73015.167 = applies=20 to the replacement equipment. If the recipient is compensated but = does not=20 replace the equipment, =A73015.168 applies as though the recipient = had sold=20 the equipment. (All of =A73015.168 applies including the rule = permitting the=20 amount due the Federal government to be reduced by 10 percent of = the=20 proceeds or $100, whichever is greater.) The amount received for = trade-in=20 or sale is considered the lesser of (i) the amount of compensation = or (ii)=20 the market value of the equipment at the time it was damaged, = lost, or=20 stolen.

(d) Waivers. The awarding agency may waive in whole or = in part=20 any provision of this section.

=A7 3015.171 Unused supplies.

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(a) If unused supplies exceeding $1,000 in total aggregate = market value=20 are left over upon termination or expiration of the grant or = subgrant for=20 which they were acquired and the supplies are not needed for any = project=20 or program currently or previously funded by the Federal = government, the=20 grant shall be credited by an amount computed by multiplying the = Federal=20 share of the supplies times the current market value or, if the = supplies=20 are sold, the proceeds from sale. If the supplies are sold, 10 = percent of=20 the proceeds may be deducted and retained from the credit, for = selling and=20 handling expenses.

(b) For possible exemptions from this section, see = =A73015.164.

=A7 3015.172 Federal share of real = property,=20 equipment, and supplies.

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This subpart contains principles necessary to determine the = Federal (or=20 non-Federal) share of real property, equipment or supplies.

(a) General. (1) Except as explained in the following = paragraphs=20 of this section, the Federal share of the property shall be the = same=20 percentage as the Federal share of the acquiring party's total = cost under=20 the grant during the grant or subgrant year (or other funding = period) to=20 which the acquisition cost of the property was charged. For this = purpose,=20 =93costs under the grant=94 means allowable costs which are either = supported=20 by the grant or counted toward satisfying a cost-sharing or = matching=20 requirement of the grant.

(2) If the property is acquired by a subrecipient, the Federal = share of=20 the subrecipient's costs under the grant and hence of the property = shall=20 be calculated by multiplying the Federal share of the recipient's = costs by=20 the latter's share of the subrecipient's costs. (For example, if = the=20 Federal share of the recipient's costs is 50 percent and the = subgrant=20 bears only 50 percent of a subrecipient's costs, then the Federal = share of=20 that subrecipient's costs (and of the property acquired by that=20 subrecipient) is 25 percent.)

(3) The provisions of some grant awards set different maximum=20 percentages of Federal financial participation for different = categories of=20 costs. In these cases, for the purposes of this section, the costs = in each=20 category are considered as costs under a separate grant. If two = categories=20 have the same maximum percentage of Federal participation and = costs in one=20 category are permitted to count toward satisfying a cost-sharing = or=20 matching requirement of the other, they are a single category for = the=20 purposes of this rule. Also, all categories with a 100 percent = rate are=20 considered a single category for the purposes of this rule.

(b) Property acquired only partly under a grant. (1) = Sometimes=20 only a part of the acquisition cost of an item of property is = supported as=20 a direct cost by the grant or counted as a direct cost towards a=20 cost-sharing or matching requirement. Occasionally, the amount = paid for=20 the property is only a part of its value. The remainder is donated = as an=20 in-kind contribution by the party that provided the property.

(2) To determine the Federal share of such property, first = calculate=20 the Federal share of the acquiring party's total costs under the = grant as=20 explained in paragraph (a) of this section. Next multiply that = share by=20 the percentage of the property's acquisition cost (or its market = value, if=20 the item was partly donated) which was supported as a direct cost = by the=20 grant or counted as a direct cost towards a cost-sharing or = matching=20 requirement.

(c) Replacement equipment. To calculate the Federal = share of=20 replacement equipment the following procedures shall be = followed:

(1) Step 1: Determine the Federal share (percentage) of = the=20 equipment replaced.

(2) Step 2: Determine the percentage of the replacement=20 equipment's costs that was covered by the amount received for = trade-in or=20 the sale proceeds from the equipment replaced.

(3) Step 3: Multiply the step 1 percentage by the step 2 = percentage.

(4) Step 4: If an additional outlay for the replacement=20 equipment was charged as a direct cost either to USDA grant funds = or to=20 required cost-sharing or matching funds, calculate the Federal = share=20 attributable to that additional outlay as explained in paragraph = (b)(2) of=20 this section. Add that additional percentage to the step 3=20 percentage.

=A7 3015.173 Using or returning the = Federal=20 share.

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(a) This section applies when, under =A73015.163, 3015.168 or = 3015.170,=20 the Federal government has a right to an amount of money upon = disposal or=20 loss, theft, or damage of property.

(b) If the recipient's project or program for which the = property was=20 acquired is still receiving grant support from the same Federal = program,=20 the awarding agency may authorize use of the net money due for = allowable=20 costs of that project or program.

=A7 3015.174 Subrecipient's = share.

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Where this subpart requires a sharing of the market value or = sale=20 proceeds of property acquired under a subgrant, the non-Federal = share=20 shall be proportionally divided between the recipient and the=20 subrecipient. The subrecipient shall be entitled to the amount it = would=20 have received or retained if the award to it had been made = directly by the=20 Federal government. The remainder of the non-Federal share shall = belong to=20 the recipient.

=A7 3015.175 Intangible personal=20 property.

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(a) Inventions and Patents. (1) If the recipient is a = small=20 business or nonprofit organization (including universities and = other=20 institutions of higher education), the allocation of rights in = inventions=20 produced under a grant or cooperative agreement shall be = determined in=20 accordance with the provisions of sections 200 through 206 of Pub. = L.=20 96=96517 (35 U.S.C. 200=96206) and OMB Circular A=96124.

(2) For all other recipients, the allocation of rights in = inventions=20 shall be determined in accordance with the =93Government Patent = Policy=94=20 (President's Memorandum for Heads of Executive Departments and = Agencies,=20 February 18, 1983) and OMB Circular A=96124.

(b) Copyrights =97(1) Applicability. This section = applies=20 to the copyright in any original work of authorship prepared with = grant=20 support. Additionally, if ownership of a copyright or of any of = the=20 exclusive rights comprising a copyright are purchased with grant = support,=20 this section applies to the purchased copyright or rights.

(2) Basic rules. (i) USDA reserves a royalty-free, = nonexclusive,=20 and irrevocable license to exercise, and to authorize others to = exercise,=20 the rights for Federal Government purposes. Subject to this = license, the=20 owner is free to exercise, preserve, or transfer all its rights. = The=20 recipient shall ensure that no agreement is entered into for = transferring=20 the rights which would conflict with the nonexclusive license of = USDA.

(ii) One way that USDA may exercise its nonexclusive license is = to=20 authorize exercise of the rights in another project or activity = that=20 receives or has received grant support from the Federal = Government.

(iii) A recipient awarding a subgrant is allowed to impose = subgrant=20 terms reserving a nonexclusive license for itself, similar to the = one=20 reserved by this section for USDA, with respect to any copyright = or rights=20 subject to this section that arise under the subgrant.

[48 FR 35875, Aug. 8, 1983]

Subpart S=97Procurement

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=A7 3015.180 Scope and = applicability.

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(a) This subpart contains information for complying with = Attachment 0,=20 =93Procurement Standards=94, of OMB Circulars A=96102 and A=96110. = Circular A=96102=20 covers grant and cooperative agreement programs with State and = local=20 governments and Indian Tribal governments. Circular A=96110 covers = grant and=20 cooperative agreement programs with institutions of higher = education,=20 hospitals, and other nonprofit organizations. Copies of both = Circulars may=20 be obtained from O&F.

(b) This subpart applies to recipient procurements (by = purchase,=20 rental, or barter) of supplies, equipment, and services (including = construction).

(c) This subpart applies only to procurements that are = supported in=20 whole or in part by a grant or cooperative agreement.

(d) This subpart does not apply to procurements of land, = existing land=20 improvements or structures, or any other existing real = property.

(e) The Attachment 0 of Circulars A=96102 and A=96110 apply to = procurements=20 under subgrants as well as grants.

=A7 3015.181 Standards of = conduct.

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(a) Recipients shall maintain a written code or standards of = conduct=20 governing the performance of their officers, employees or agents = engaged=20 in awarding and administering contracts supported by Federal = funds:

(1) No employee, officer or agent shall participate in the = selection,=20 award, or administration of contracts using Federal funds where to = his=20 knowledge, such employee, officer or agent or his immediate = family,=20 partners or organizations has a financial interest in, is = negotiating=20 with, or has any arrangements concerning prospective employment = with the=20 proposed contractor.

(2) The recipient's officers, employees or agents shall neither = solicit=20 nor accept gratuities, favors, or anything of monetary value from=20 contractors or proposed contractors.

(3) Provisions shall be made for disciplinary actions against = the=20 recipient's officers, employees, or agents or by contractors or = their=20 agents violating the standards of conduct.

(b) Awarding agencies may review the written standards of = conduct to=20 determine if they meet the minimum standards of Attachment 0 of = OMB=20 Circulars A=96110 and A=96102. Recipients will be notified of = deficiencies and=20 make corrective action.

=A7 3015.182 Open and free = competition.

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All procurement transactions, regardless of whether by sealed = bids or=20 by negotiation and without regard to dollar value shall be = conducted in a=20 manner that provides maximum open and free competition.

=A7 3015.183 Access to contractor=20 records.

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The Attachment 0 requires recipients to include in specified = kinds of=20 contracts a provision for access to the contractor's records by = the=20 recipient and the Federal government. The following applies to the = provision:

(a) The provision must require the contractor to place the same = provision in any subcontract which would have to have the = provision were=20 it awarded by the recipient.

(b) The provision must require retention of records for three = years=20 after final payment is made under the contract or subcontract and = all=20 pending matters are closed. The provision must also require that, = if any=20 audit, litigation, or other action involving the records is = started before=20 the end of the three year period, the records must be retained = until all=20 issues arising out of the action are resolved or until the end of = the=20 three year period, whichever is later.

(c) In contracts and subcontracts under a subgrant, the = provision must=20 require that access to the records be provided to the recipient as = well as=20 the subrecipient and the Federal government.

=A7 3015.184 Equal employment=20 opportunity.

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(a) The Attachment 0 requires recipients to include in = contracts in=20 excess of $10,000 a provision requiring compliance with Executive = Order=20 11246, concerning equal employment opportunity as amended by = Executive=20 Order 11375, and as supplemented in Department of Labor = regulations (41=20 CFR Chapter 60).

(b) If construction is to be assisted by a grant or subgrant, = the=20 Executive Order and the Department of Labor supplementing = regulations=20 apply, unless an exemption is granted by or under those = regulations.=20 Recipients shall observe all applicable requirements of the Order = and=20 regulations and include in their nonexempt construction contracts = the=20 specific clauses prescribed by 41 CFR 60=961.4(b) and, if = applicable, 41 CFR=20 60=964.3.

Subpart T=97Cost Principles

=20 top=20

=A7 3015.190 Scope.

=20 top=20

This subpart makes the allowable costs incurred by the = recipient the=20 maximum amount of money a recipient is entitled to receive from = USDA. In=20 addition, this subpart identifies the principles to be used in = determining=20 allowable costs. These cost principles shall apply to transactions = and=20 activities conducted under grants, subgrants, cooperative = agreements,=20 cost-type contracts and cost-type subcontracts under grants.

(a) Allowable costs. Grant funds may be used only for = allowable=20 costs of the activities for which the grant was awarded. This = means that=20 the total amount of money that the recipient is entitled to = receive from=20 USDA may not exceed the allowable costs incurred by the recipient = for=20 those activities.

(b) The following rules apply in computing maximum allowable = costs:

(1) Third party in-kind contributions. Because they are = not=20 allowable costs of the party that receives them, the value of = third party=20 in-kind contributions received may not be included in determining = maximum=20 allowable costs. However, as provided in Subpart G of this part, = third=20 party in-kind contributions may count towards satisfying a = cost-sharing or=20 matching requirement of the Federal grant.

(2) Costs supported by another grant. Allowable costs = incurred=20 by the recipient and supported by another Federal grant (or by a=20 non-Federal grant) awarded to the recipient may not be included in = determining maximum allowable costs. The basic intent of this rule = is to=20 prevent double compensation. It does not, however, prevent = proration of=20 costs that are allowable under two or more awards.

(3) Costs used to match another Federal grant. A cost = that the=20 recipient uses to meet a cost-sharing or matching requirement of = one=20 Federal grant may not count towards determining maximum allowable = costs=20 under another Federal grant, unless specifically authorized by a = Federal=20 statute.

(4) Costs supported by general program income. A grant = may not=20 pay for a cost which is supported by general program income earned = by the=20 recipient or by a subrecipient under the grant. Therefore, these = costs may=20 not be included in determining maximum allowable costs.

(5) Use of money due Federal government. In accordance = with=20 =A73015.173, an awarding agency, under certain circumstances, may = authorize=20 a recipient to use certain money due the Federal government for = allowable=20 costs of the project or programs, instead of returning the money = to the=20 Federal Government. Costs supported by the money may not be = included as=20 part of the maximum allowable costs charged to USDA.

(6) Subgrant and contract costs. The recipient's = allowable costs=20 include allowable outlays, if any, to its subrecipients and = contractors.=20 If the recipient pays a subrecipient more than the allowable costs = incurred by the subrecipient, the excess is not an allowable cost = of the=20 recipient and may not be included as part of the maximum allowable = costs=20 charged to USDA. However, for cost-type contracts a reasonable fee = or=20 profit paid by the recipient to the contractor, in addition to the = contractor's allowable costs, may be included in this maximum = unless=20 prohibited by the provisions of the grant award.

=A7 3015.191 Governments.

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(a) OMB Circular No. A=9687, and any subsequent amendments to = this=20 Circular published in theFederal Registerby OMB, = shall be=20 used in determining the allowable costs of activities conducted by = governments.

(b) Additional amendments to the Circular, unless otherwise = prescribed=20 by OMB, shall go into effect at the start of a government's first = fiscal=20 year following the amendment's publication in theFederal=20 Register.

=A7 3015.192 Institutions of higher=20 education.

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(a) OMB Circular No. A=9621, including any amendments to the = Circular=20 published in theFederal Registerby OMB, shall be = used in=20 determining the allowable costs of activities conducted by = institutions of=20 higher education (other than for-profit institutions).

(b) Additional amendments to the Circular, unless otherwise = prescribed=20 by OMB, shall go into effect at the start of an institution's = first fiscal=20 year following the amendment's publication in theFederal=20 Register.

=A7 3015.193 Other non-profit=20 organizations.

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(a) OMB Circular No. A=96122, including any subsequent = amendments to the=20 Circulars published in theFederal Registerby OMB, = shall be=20 used in determining the allowable costs of activities conducted by = nonprofit organizations under grants, cooperative agreements, cost = reimbursement contracts, and other contracts in which costs are = used in=20 pricing, administration, or settlement. It does not apply to = colleges or=20 universities which are covered by Circular A=9621; State, local = and=20 federally recognized Indian Tribal governments which are covered = by=20 Circular A=9687, or hospitals.

(b) Future amendments to the Circular, unless otherwise = prescribed by=20 OMB, shall go into effect at the time the initial award is made to = the=20 recipient.

=A7 3015.194 For-profit = organizations.

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The principles to be used when determining the allowable costs = of=20 activities conducted by for-profit organizations are contained in = the=20 Federal Acquisition Regulation at 48 CFR Subpart 31.2. Exception:=20 Independent research and development costs including any indirect = costs=20 allocable to them are unallowable. Independent research and = development=20 are defined in the Federal Acquisition Regulation at 48 CFR = 31.205=9618.

[60 FR 44124, Aug. 24, 1995]

=A7 3015.195 Subgrants and cost-type=20 contracts.

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USDA cost principles applicable to a cost-type contractor or a=20 subrecipient will not necessarily be the same as those applicable = to the=20 recipient. For example, where a State government awards a = subrecipient or=20 cost-type contract to an institution of higher education, OMB = Circular=20 A=9621 would apply to the costs incurred by the institution of = higher=20 education even though OMB Circular A=9687 would apply to the costs = incurred=20 by the State.

=A7 3015.196 Costs allowable with=20 approval.

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Each set of cost principles specifically identifies certain = costs that,=20 in order to be allowable, must be approved by the awarding agency. = Other=20 costs do not require approval. The following procedures govern = approval of=20 these costs:

(a) When costs are allocated in accordance with a = government-wide cost=20 allocation plan or when treated as indirect costs, acceptance of = the costs=20 as part of the indirect cost rate or cost allocation plan shall = constitute=20 approval.

(b)(1) All direct costs must be approved in advance by the = awarding=20 agency.

(2) When costs are specified in the budget, approval of the = budget=20 shall constitute approval of the cost.

(3) Specific prior approval in writing from the awarding agency = is=20 required if the costs are not specified in the budget, or if there = is no=20 approved budget. For this purpose the prior approval procedures of = Subpart=20 M shall be followed, except that, for formula or mandatory grants, = the=20 awarding agency's written approval may be signed by any authorized = official of the awarding agency.

(c) The awarding agency may waive or conditionally waive the=20 requirement for its approval of the costs. A waiver, as such, = shall be=20 applicable only to the requirement for approval. If it is = determined, by=20 audit or otherwise, that the costs do not meet other requirements = or tests=20 for allowability specified by the applicable cost principles, such = as=20 reasonableness and necessity, the costs may be disallowed.

(d) In the case of subgrants and cost-type contracts, no = approval shall=20 be given which is inconsistent with the purpose or the provisions = of the=20 Federal grant.

Subpart U=97Miscellaneous

=20 top=20

=A7 3015.200 Acknowledgement of support = on=20 publications and audiovisuals.

=20 top=20

(a) Definitions. Appendix A defines =93audiovisual,=94 = =93production=20 of an audiovisual,=94 and =93publication.=94

(b) Publications. Recipients shall have an = acknowledgement of=20 awarding agency support placed on any publications written or = published=20 with grant support and, if feasible, on any publication reporting = the=20 results of, or describing, a grant-supported activity.

(c) Audiovisuals. Recipients shall have an = acknowledgement of=20 awarding agency support placed on any audiovisual which is = produced with=20 grant support and which has a direct production cost to the = recipient of=20 over $5,000. Unless the other provisions of the grant award make = it apply,=20 this requirement does not apply to:

(1) Audiovisuals produced under mandatory or formula grants or = under=20 subgrants.

(2) Audiovisuals produced as research instruments or for = documenting=20 experimentation or findings and not intended for presentation or=20 distribution to the general public.

(d) Waivers. Awarding agencies may waive any requirement = of this=20 section.

=A7 3015.201 Use of = consultants.

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(a) Definition. Appendix A defines =93consultant.=94

(b) Applicability. This section applies only to the use = of=20 consultants whose fees are supported by a grant, subgrant, or = cost-type=20 contract.

(c) Basic policy =97(1) Prior approval. Awarding = agencies=20 shall not require prior approval for the use of consultants.

(2) Exceptions. (i) In unusual cases, using a consultant = may=20 constitute a transfer of substantive programmatic work, which = requires=20 prior approval under discretionary grants.

(ii) Consulting fees paid by an organization to its own = employees=20 require prior approval.

(d) Use of an organization's own employees =97(1) = Faculty=20 members of education institutions. Charges representing extra=20 compensation (above base salary) paid by an educational = institution to a=20 salaried member of its faculty for consulting work are allowable = only in=20 unusual cases, and only if both of the following conditions = exist:

(i) The consultation is across departmental lines or involves a = separate or remote operation; and

(ii) The work performed by the consultant is in addition to his = or her=20 regular departmental load.

(2) All other cases. In all other cases, consulting fees = paid in=20 addition to salary by recipients or cost-type contractors to = people who=20 are also their employees may be supported by a grant, subgrant, or = cost-type contract only in unusual cases, and only if all of the = following=20 three conditions exist:

(i) The policies of the recipient or contractor permit such = consulting=20 fee payments to its own employees regardless of whether Federal = grant=20 funds are involved;

(ii) The work involved is clearly outside the scope of the = person's=20 salaried employment; and

(iii) It would be inappropriate or not feasible to compensate = for the=20 additional work by paying additional salary to the employee.

(3) Requirement for approval. Consulting fees paid under = this=20 section must have a specific prior approval in writing from the = Head of=20 the recipient or contractor or from his or her designated = representative.=20 If the recipient or contractor is a government, the approval may = be given=20 by the Head (or a designated representative of the Head) of the = government=20 agency which is primarily responsible for administering or = carrying out=20 the project or program. If the designated representative is = personally=20 involved in the project or program under consideration, the = approval may=20 be given only by the Head. If the Head is personally involved in = the=20 project or program under consideration, prior approval from the = awarding=20 agency is required. Such prior approval must include a = determination that=20 the applicable requirements in paragraph (d) (1) or (2) of this = section=20 are present.

(e) Documentation standards. (1) Charges for consulting = payments=20 must be supported in the records of the recipient or cost-type = contractor=20 by an invoice from the consultant and a copy of the written report = (if a=20 report is appropriate) or other documented evidence of the work = performed=20 from the consultant.

(2) If any of the following information is not shown on the = invoice=20 and/or report from the consultant, the information must be shown = in a=20 memorandum or other document prepared by the recipient or = contractor for=20 its files, or noted in handwriting on the consultant's invoice by = the=20 recipient or contractor. The memorandum, other document, or = handwritten=20 notation must be signed by an official of the recipient or = contractor and=20 show:

(i) The name of the consultant;

(ii) The nature of the services provided (such as statistical = analysis=20 of data, participation on project advisory committee, or specified = medical=20 services to eligible beneficiaries);

(iii) The relevance of the services to the project or program, = if not=20 apparent from the nature of the services; and

(iv) Whichever of the following is applicable:

(A) (If the fee was based on a rate per day or hours worked) = the rate=20 and the dates and/or hours worked;

(B) (If the fee was based on a rate per unit of service = provided, such=20 as the number of patients examined by a physician) the rate, the = number of=20 units of service provided, and the beginning and ending dates of = the=20 overall period of service; or

(C) (If the fee was determined on some other basis) the basis = for=20 determining the fee and the beginning and ending dates of the = period in=20 which services were provided.

=A7 3015.202 Limits on total payments to = the=20 recipient.

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(a) This section summarizes the four most widely applicable = limits on=20 the total amount of money the recipient is entitled to receive = from USDA=20 as a result of a grant. It is permissible for the terms of a grant = to=20 provide one or more additional limits.

(b) For each grant, the lowest of the applicable limits is the = one that=20 governs the final settlement upon expiration or termination of the = grant.

(1) The amount of Federal funds authorized.

(2) The Federal share of the allowable costs incurred by the=20 recipient.

(d) Grants that require a specified percentage of cost-sharing = or=20 matching are subject to the limit described in Subpart G.

(e) For each budget period of an incrementally funded = discretionary=20 grant, the Federal share of that period's approved budget is a=20 limit.

=A7 3015.203 [Reserved]

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=A7 3015.204 Federal Register=20 publications.

=20 top=20

(a) Program regulations. Most grant programs have=20 program-specific regulations, which are published in theFederal=20 Registerand codified in the Code of Federal Regulations. In = some cases=20 the program-specific regulations are promulgated in the form of = agency=20 directives or manuals which may be obtained from the awarding = agency.

(b) Program announcements. For each program, the = awarding agency=20 may publish in theFederal Registerone or more = program=20 announcements. Program announcements invite applications for one = or more=20 stated program objectives. They include at least the following=20 information:

(1) An estimate of how much money will be available for = competing=20 awards, and the expected size of the awards, broken down by = subprogram or=20 priority area when appropriate;

(2) Who is eligible;

(3) How to obtain application kits;

(4) Where to submit applications; and

(5) The deadline for submitting applications.

(c) Cooperative agreements. If any or all of the awards = are=20 likely to be cooperative agreements rather than grants, the = program=20 announcement so states. In that case, if feasible, the program=20 announcement also describes the anticipated substantial Federal=20 involvement in performance. (This paragraph does not prevent the = award of=20 cooperative agreements under a program announcement that mentioned = only=20 grants. Nor does it prevent the award of grants under a program=20 announcement that mentioned only cooperative agreements.)

(d) Evaluation criteria. The awarding agency publishes = its=20 criteria for evaluating grant applications either in the program=20 regulations or the program announcement. If the criteria are not = all equal=20 in importance, their relative weights are also published. The = criteria=20 cover at least the following factors (except where the nature of = the=20 eligible projects makes one or more of these factors = irrelevant):

(1) How well qualified the project's personnel will be;

(2) The adequacy of the applicant's facilities and = resources;

(3) The adequacy of the project plan or methodology;

(4) The cost-effectiveness of the project; and

(5) How closely the project objectives fit the objectives for = which=20 applications were invited.

(e) Funding priorities. If the awarding agency will give = priority to one or more particular kinds of projects, the priority = (and=20 how it will be applied in deciding which applications to fund) is=20 described in the program announcement.

(f) Competing continuations vs. =93new=94 projects. If = the awarding=20 agency will give a preference to competing continuation = applications over=20 applications for projects not already receiving support under the = program,=20 or vice versa, the preference is described in the program=20 announcement.

(g) Programs with few potential applicants. In some = programs the=20 number of potential applicants is relatively small. (For example, = in some=20 programs only the States are eligible.) In these situations the = awarding=20 agency may send a copy of the program announcement directly to = every=20 potential applicant instead of publishing it in theFederal=20 Register.

(h) Register=97Other information which is available. In = addition=20 to the items specified above, each awarding Agency makes available = to the=20 public the following information and materials for each = program:

(1) A copy of, or reference to, the authorizing statutes for = the=20 program;

(2) All guidelines of general applicability for administration = of the=20 program;

(3) A description of the procedures the awarding agency will = use for=20 evaluating applications; and

(4) Any other information that the awarding agency believes = will be=20 helpful.

(i) Consulting with applicants. Each awarding agency = publishes=20 as much information as practicable to reduce the need for = consultation by=20 applicants. If the awarding agency does provide consultation, its = staff=20 members try to give consistent interpretations and fair treatment = to all=20 requestors.

=A7 3015.205 General provisions for = grants and=20 cooperative agreements with institutions of higher education, = other=20 nonprofit organizations, and hospitals.

=20 top=20

(a) Scope. This section sets forth general provisions = which=20 apply, in whole or in part, to grants and cooperative agreements = awarded=20 by USDA to institutions of higher education, other nonprofit=20 organizations, and hospitals. (General provisions applicable to = grants and=20 cooperative agreements with State and local governments are set = forth in=20 the Office of Management and Budget (OMB) Circular A=96102, = Attachment M and=20 are made a condition of each grant or cooperative agreement = awarded to=20 such recipients). Any statutory provisions that apply to the = particular=20 agreement at hand, that are not included herein, shall be made a = part of=20 the award document. All administrative requirements contained in = subparts=20 A through U of 7 CFR part 3015 shall apply, as appropriate.

(b) Assurances and compliance. It shall be a condition = of every=20 USDA grant or cooperative agreement awarded to institutions of = higher=20 education, other nonprofit organizations and hospitals that the = recipient=20 assure and certify compliance with the following general = requirements to=20 the extent applicable:

(1) It will comply with the following provisions regarding the = rights=20 and welfare of human subjects:

(i) The recipient organization is responsible for safeguarding = the=20 rights and welfare of any human subjects involved in research,=20 development, and related activities supported by this agreement. = The=20 recipient organization may conduct research involving human = subjects only=20 as described in the proposal and as approved by the recipient=20 organization's cognizant Institutional Review Board. Prior to = conducting=20 such research, the recipient organization shall obtain and = document a=20 legally sufficient informed consent from each human subject = involved. No=20 such informed consent shall include any exculpatory language = through which=20 the subject is made to waiver, or to appear to waiver, any of his = or her=20 legal rights, including any release of the recipient organization = or its=20 agents from liability for negligence.

(ii) The recipient organization agrees to comply with U.S. = Department=20 of Health and Human Services' regulations regarding human = subjects,=20 appearing in 45 CFR part 46 (as amended).

(iii) It will comply with USDA policy which is to assure that = the risks=20 do not outweigh either potential benefits to the subjects or the = expected=20 value of the knowledge sought.

(iv) Selection of subjects or groups of subjects shall be made = without=20 regard to sex, race, color, religion, or national origin unless = these=20 characteristics are factors to be studied.

(2) It will comply with the Animal Welfare Act, as amended, 7 = U.S.C.=20 2131, et seq., and the regulations promulgated thereunder = by the=20 Secretary of Agriculture (9 CFR, Subchapter A) pertaining to the = care,=20 handling, and treatment of warm-blooded animals held or used for = research,=20 teaching, or other activities supported by Federal funds. = Recipient=20 organizations may request registration of facilities and a current = listing=20 of licensed dealers from the Regional Office of the Animal and = Plant=20 Health Inspection Service (APHIS), USDA, for the Region in which = their=20 facility is located. The location of the appropriate APHIS = Regional=20 Office, as well as information concerning this requirement, may be = obtained by contacting the Senior Staff Officer, Animal Care = Staff,=20 USDA/APHIS, Federal Center Building, Hyattsville, Maryland = 20782.

(3) It will assume primary responsibility for implementing = proper=20 conduct or recombinant DNA research and it will comply with the = national=20 Institute of Health Guidelines for Recombinant DNA Research, as=20 revised.

(4) It will comply with Section 5 of the International Air=20 Transportation Fair Competitive Practices Act of 1974, 49 U.S.C. = 1517,=20 which requires:

(i) Any air transportation to, from, between, or within a = country,=20 other than the U.S., of persons or property, the expense of which = will be=20 assisted by USDA funding, to be performed on a U.S.-flag carrier = if=20 service provided by such carrier is =93available.=94

(ii) For the purposes of this requirement:

(A) Passenger or freight service by a certificated air carrier = is=20 considered =93available=94 even though:

( 1 ) Comparable or a different kind of service by a=20 noncertificated air carrier costs less; or

( 2 ) Service by a noncertificated air carrier can be = paid for=20 in excess foreign currency; or

( 3 ) Service by a noncertificated air carrier is = preferred by=20 the recipient organization contractor or traveler needing air=20 transportation.

(B) Passenger service by a certificated air carrier is = considered to be=20 =93unavailable=94:

( 1 ) When the traveler, while enroute, has to wait six = hours or=20 more for an available U.S. carrier; or

( 2 ) When any flight by a U.S. carrier interrupted by a = stop=20 anticipated to be six hours or more for refueling, reloading = repairs,=20 etc., and no other flight by a U.S. carrier is available during = the=20 six-hour period; or

( 3 ) When the flight by a U.S. carrier takes 12 or more = hours=20 longer than a foreign carrier.

(5) It possesses legal authority to enter into the agreement; = that a=20 resolution, motion or similar action has been duly adopted or = passed as an=20 official act of its governing body, authorizing the acceptance of = the=20 agreement including all understandings and assurances contained = therein=20 and directing and authorizing the person identified as the = official=20 representative of the recipient organization to act in connection = with the=20 agreement and to provide such additional information as may be=20 required.

(6) It will comply with Title VI of the Civil Rights Act of = 1964, 42=20 U.S.C. 2000d, and in accordance with Title VI of that Act, no = person in=20 the United States shall, on the ground of race, color, or national = origin,=20 be excluded from participation in, be denied the benefits of, or = be=20 otherwise subjected to discrimination under any program or = activity for=20 which the recipient receives Federal financial assistance and will = immediately take any measures necessary to effectuate this = agreement.

(7) It will establish safeguards to prohibit employees from = using their=20 positions for a purpose that is or gives the appearance of being = motivated=20 by a desire for private gain for themselves or others, = particularly those=20 with whom they have family, business, or other ties.

(8) It will give USDA, the awarding agency or the Comptroller = General,=20 through any authorized representative, access to and the right to = examine=20 all records, books, papers or documents related to the award.

(9) It will comply with all requirements imposed by the = awarding agency=20 concerning special requirements of law, program requirements, and = other=20 administrative requirements.

(10) It will insure that the facilities under its ownership, = lease or=20 supervision which shall be utilized in the accomplishment of the = project=20 are not listed on the Environmental Protection Agency's (EPA) list = of=20 violating facilities and that it will notify the awarding agency = of the=20 receipt of any communication from the Director of the EPA, Office = of=20 Federal Activities, indicating that a facility to be utilized in = the=20 project is under consideration for listing by the EPA.

(11) It will comply with the flood insurance purchase = requirements of=20 the National Flood Insurance Act of 1968, as amended, and the = Flood=20 Disaster Protection Act of 1973, 42 U.S.C. 4001=964127. Section = 102(a)=20 requires, on and after March 2, 1975, the purchase of flood = insurance in=20 communities where such insurance is available as a condition for=20 construction or acquisition purposes for use in any area that has = been=20 identified by the Secretary of the Department of Housing and Urban = Development as an area having special flood hazards.

(12) It will assist the awarding agency in its compliance with = Section=20 106 of the National Historic Preservation Act of 1966, 16 U.S.C. = 470,=20 Executive Order 11593, and the Archaeological and Historic = Preservation=20 Act of 1974, 16 U.S.C. 496a=961, et. seq., by (i) = consulting with the=20 State Historic Preservation Officer on the conduct of = investigations, as=20 necessary, to identify properties listed in or eligible for = inclusion in=20 the National Register of Historic Places that are subject to = adverse=20 effects (see 36 CFR 800.8) by the activity, and notifying the = awarding=20 agency of the existence of any such properties, and by (ii) = complying with=20 all requirements established by the awarding agency to avoid or = mitigate=20 adverse effects upon such properties.

(13) It will comply with Title IX of the Education Amendments = of 1972,=20 20 U.S.C. 1681, et. seq., which prohibits discrimination on = the=20 basis of sex in Federally assisted education programs.

(14) It will comply with Section 504 of the Rehabilitation Act = of 1973,=20 as amended, 29 U.S.C. 794. Section 504 provides that no otherwise=20 qualified handicapped individual shall solely by reason of his = handicap,=20 be excluded from the participation in, be denied the benefits of, = or be=20 subjected to discrimination under any program or activity = receiving=20 Federal financial assistance.

(15) It will comply with the Age Discrimination Act of 1975, 42 = U.S.C.=20 6101=966107, which prohibits unreasonable discrimination based on = age, in=20 programs or activities receiving Federal financial assistance.

(16) It is in compliance with the Clean Air Act of 1970, 42 = U.S.C. 7401=20 et seq., which requires federally assisted activities to be = in=20 conformance with State (Clean Air) Implementation Plan.

(17) It will establish safeguards to ensure that USDA funds are = properly spent. In particular, except nonprofit organizations = which are=20 subject to the lobbying provisions of paragraph B.21. of OMB = Circular=20 A=96122, it will assure that funds are not used for partisan or = political=20 activity purposes.

(c) USDA awarding agencies shall obtain the required assurances = and=20 certifications by including the following clause in each grant or=20 cooperative agreement awarded to institutions of higher education, = other=20 nonprofit organizations and hospitals:

As a condition of this grant or cooperative agreement, the = recipient=20 assures and certifies that it is in compliance with and will = comply in the=20 course of the agreement with all applicable laws, regulations, = Executive=20 Orders and other generally applicable requirements, including = those set=20 out in 7 CFR 3015.205(b), which hereby are incorporated in this = agreement=20 by reference, and such other statutory provisions as are = specifically set=20 forth herein.

[48 FR 27222, June 14, 1983, as amended at 49 FR 38534, Oct. 1, = 1984]

Subpart V=97Intergovernmental Review of Department of = Agriculture=20 Programs and Activities

=20 top=20

Authority: E. O. 12372, July = 14, 1982=20 (47 FR 30959), as amended Apr. 8, 1983 (48 FR 15887): Sec. 401 of = the=20 Intergovernmental Cooperation Act of 1968, as amended (31 U.S.C. = 6506);=20 sec. 204 of the Demonstration Cities and Metropolitan Development = Act of=20 1966, as amended (42 U.S.C. 3334).=20

Source: 48 FR 29112, June = 24, 1983,=20 unless otherwise noted.=20

=A7 3015.300 Purpose.

=20 top=20

(a) The regulations in this part implement Executive Order = 12372,=20 =93Intergovernmental Review of Federal Programs=94, issued July = 14, 1982, and=20 amended on April 8, 1983. These regulations also implement = applicable=20 provisions of section 401 of the Intergovernmental Cooperation Act = of 1968=20 and section 204 of the Demonstration Cities and Metropolitan = Development=20 Act of 1966.

(b) These regulations are intended to foster an = intergovernmental=20 partnership and a strengthened Federalism by relying on State = processes=20 and on State, arewide, regional and local coordination for review = of=20 proposed Federal financial assistance and direct Federal = development.

(c) The regulations are intended to aid the internal management = of the=20 Department, and are not intended to create any right or benefit=20 enforceable at law by a party against the Department or its=20 officers.

=A7 3015.301 Definitions.

=20 top=20

Department means the U.S. Department of Agriculture.

Order means Executive Order 12372, issued July 14, 1982, = and=20 amended April 8, 1983, and titled Intergovernmental Review of = Federal=20 Programs.

Secretary means the Secretary of the U.S. Department of=20 Agriculture or an official or employee of the Department acting = for the=20 Secretary under a delegation of authority.

State means any of the 50 states, the District of = Columbia, the=20 Commonwealth of Puerto Rico, the Commonwealth of the Northern = Mariana=20 Islands, Guam, American Samoa, the U.S. Virgin Island, or the = Trust=20 Territory of the Pacific Islands.

=A7 3015.302 Applicability.

=20 top=20

The Secretary publishes in theFederal Registera = list of=20 the Department's programs and activities that are subject to these = regulations and identifies which of these are subject to the = requirements=20 of section 204 of the Demonstration Cities and Metropolitan = Development=20 Act.

=A7 3015.303 Secretary's general=20 responsibilities.

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(a) The Secretary provides opportunities for consultation by = elected=20 officials of those State and local governments that would provide = the=20 non-Federal funds for, or that would be directly affected by, = proposed=20 Federal financial assistance from, or direct Federal development = by, the=20 Department.

(b) If a State adopts a process under the Order to review and=20 coordinate proposed Federal financial assistance and direct = Federal=20 development, the Secretary, to the extent permitted by law:

(1) Uses the State process to determine official views of State = and=20 local elected officials;

(2) Communicates with State and local elected officials as = early in a=20 program planning cycle as is reasonably feasible to explain = specific plans=20 and actions;

(3) Makes efforts to accommodate State and local elected = officials'=20 concerns with proposed Federal financial assistance and direct = Federal=20 development that are communicated through the State process;

(4) Allows the States to simplify and consolidate existing = Federally=20 required State plan submissions;

(5) Where State planning and budgeting systems are sufficient = and where=20 permitted by law, encourages the substitution of State plans for = Federally=20 required State plans;

(6) Seeks the coordination of views of affected State and local = elected=20 officials in one State with those of another State when proposed = Federal=20 financial assistance or direct Federal development has an impact = on=20 interstate metropolitan urban centers or other interstate areas; = and

(7) Supports State and local governments by discouraging the=20 reauthorization or creation of any planning organization which is=20 Federally-funded, which has a limited purpose, and which is not = adequately=20 representative of, or accountable to, State or local elected=20 officials.

=A7 3015.304 Federal interagency=20 coordination.

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The Secretary, to the extent practicable, consults with and = seeks=20 advice from all other substantially affected Federal departments = and=20 agencies in an effort to assure full coordination between such = agencies=20 and the Department regarding programs and activities covered under = these=20 regulations.

=A7 3015.305 State selection of programs = and=20 activities.

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(a) A State may select any program or activity published in = theFederal Registerin accordance with =A73015.302 of = this subpart=20 for intergovernmental review under these regulations. Each State, = before=20 selecting programs and activities, shall consult with local = elected=20 officials.

(b) Each State that adopts a process shall notify the secretary = of the=20 Department's programs and activities selected for that = process.

(c) A State may notify the Secretary of changes in its = selections at=20 any time. For each change, the State shall submit to the Secretary = an=20 assurance that the State has consulted with elected local = officials=20 regarding the change. The Department may establish deadlines by = which=20 States are required to inform the Secretary of changes in their = program=20 selections.

(d) The Secretary uses a State's process as soon as feasible, = depending=20 on individual programs and activities, after the Secretary is = notified of=20 its selections.

=A7 3015.306 Communication with State = and local=20 elected officials.

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(a) The Secretary provides notice to directly affected State, = areawide,=20 regional, and local entities in a State of proposed Federal = financial=20 asssistance or direct Federal development if:

(1) The State has not adopted a process under the Order; or

(2) The assistance or development involves a program or an = activity=20 that is not covered under the State process.

(b) This notice may be made by publication in theFederal=20 Registeror other appropriate means, which the Department in = its=20 discretion deems appropriate.

(c) In order to facilitate communication with State and local = officials=20 the Secretary has established an office within the Department to = receive=20 all communications pertinent to this Order. All communications = should be=20 sent to the Office of Finance and Management, Room 143=96W, = Administration=20 Building, Washington, DC 20250, Attention: E.O. 12372.

=A7 3015.307 State comments on proposed = Federal=20 financial assistance and direct Federal development.

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(a) Except in unusual circumstances, the Secretary gives State=20 processes or directly affected State, areawide, regional, and = local=20 officials and entities:

(1) At least 30 days from the date established by the Secretary = to=20 comment on proposed Federal financial assistance in the form of=20 noncompeting continuation awards; and

(2) At least 60 days from the date established by the Secretary = to=20 comment on proposed direct Federal development or Federal = financial=20 assistance other than noncompeting continuation awards.

(b) This section also applies to comments in cases in which the = review,=20 coordination and communication with the Department have been=20 delegated.

(c) Applicants for programs and activities subject to section = 204 of=20 the Demonstration Cities and Metropolitan Development Act shall = allow=20 areawide agencies a 60-day opportunity for review and = comment.

=A7 3015.308 Processing = comments.

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(a) The Secretary follows the procedures in =A73015.309 if:

(1) A State office or official is designated to act as a single = point=20 of contact between a State process and all Federal agencies; = and

(2) That office or official transmits a State process = recommendation=20 for a program selected under =A73015.305.

(b)(1) The single point of contact is not obligated to transmit = comments form State, areawide, regional or local officials and = entities=20 where there is no State process recommendation.

(2) If a State process recommendation is transmitted by a = single point=20 of contact, all comments from State, areawide, regional, and local = officials and entities that differ from it must also be = transmitted.

(c) If a State has not established a process, or is unable to = submit a=20 State process recommendation, State, areawide, regional and local=20 officials and entities may submit comments either to the applicant = or to=20 the Department.

(d) If a program or activity is not selected by a State = process, State,=20 areawide, regional and local officials and entities may submit = comments=20 either to the applicant or to the Department. In addition, if a = State=20 process recommendation for a non-selected program or activity is=20 transmitted to the Department by the single point of contact, the=20 Secretary follows the procedures of =A73015.309 of this = subpart.

(e) The Secretary considers comments which do not constitute a = State=20 process recommendation submitted under these regulations and for = which the=20 Secretary is not required to apply the procedures of =A73015.309 = of this=20 subpart, when such comments are provided by a single point of = contact by=20 the applicant, or directly to the Department by a commenting = party.

=A7 3015.309 Accommodation of = intergovernmental=20 concerns.

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(a) If a State process provides a State process recommendation = to the=20 Department through its single point of contact, the Secretary = either=97

(1) Accepts the recommendations;

(2) Reaches a mutually agreeable solution with the State = process;=20 or

(3) Provides the single point of contact with a written = explanation of=20 the decision, as the Secretary in his or her discretion deems = appropriate.=20 The Secretary may also supplement the written explanation by also=20 providing the explanation to the single point of contact by = telephone,=20 other telecommunication, or other means.

(b) In any explanation under paragraph (a)(3) of this section, = the=20 Secretary informs the single point of contact that:

(1) The Department will not implement its decision for at least = ten=20 days after the single point of contact receives the explanation; = or

(2) The Secretary has reviewed the decision and determined = that,=20 because of unusual circumstances, the waiting period of at least = ten days=20 is not feasible.

(c) For purposes of computing the waiting period under = paragraph (b)(1)=20 of this section, a single point of contact is presumed to have = received=20 written notification five days after the date of mailing of such=20 notification.

=A7 3015.310 Interstate = situations.

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(a) The Secretary is responsible for:

(1) Identifying proposed Federal financial assistance and = direct=20 Federal development that have an impact on interstate areas;

(2) Notifying appropriate officials in States which have = adopted a=20 process and which selected the Department's program or = activity;

(3) Making efforts to identify and notify the affected State, = areawide,=20 regional, and local officials and entities in those States that = have not=20 adopted a process under the Order or do not select the = Department's=20 program or activity; and

(4) Responding, pursuant to =A73015.309 of this subpart, if the = Secretary=20 receives a recommendation from a designated areawide agency = transmitted by=20 a single point of contact, in cases in which the review, = coordination, and=20 communication with the Department have been delegated.

(b) The Secretary uses the procedures in =A73015.309 if a State = process=20 provides a State process recommendation to the Department through = a single=20 point of contact.

=A7 3015.311 Simplification, = consolidation, or=20 substitution of State plans.

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(a) As used in this section:

(1) Simplify means that a State may develop its own = format,=20 choose its own submission date, and select the planning period for = a State=20 plan.

(2) Consolidate means that a State may meet statutory = and=20 regulatory requirements by combining two or more plans into one = document=20 and that the State can select the format, submission date, the = planning=20 period for the consolidated plan.

(3) Substitute means that a State may use a plan or = other=20 document that it has developed for its own purposes to meet = Federal=20 requirements.

(b) If not inconsistent with law, a State may decide to try to=20 simplify, consolidate, or substitute Federally required State = plans=20 without prior approval by the Secretary.

(c) The Secretary reviews each State plan a State has = simplified,=20 consolidated or substituted and accepts the plan only if its = contents meet=20 Federal requirements.

=A7 3015.312 Waivers.

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In an emergency, the Secretary may waive any provision of these = regulations.

Appendix A to Part 3015=97Definitions

=20 top=20

Section I =93Grant=94 and =93Cooperative = Agreement=94

(a) =93Grant=94 unless qualified by =93non-Federal=94 means an = award by the=20 Federal government of money, property instead of money, services, = or=20 anything of value, to the State or other recipient, with the = following=20 characteristics:

(1) The principal purpose of the award is to accomplish a = public=20 purpose of support or stimulation authorized by Federal statute, = rather=20 than acquisition, by purchase, lease, or barter, of property or = services=20 for the direct benefit or use of the Federal government; and

(2) At the time the award is made, no substantial involvement = is=20 anticipated between the executive agency, acting for the Federal=20 government, and the State or local government or other recipient = during=20 performance of the contemplated activity.

(b) =93Cooperative agreement=94 has the same meaning as = =93grant,=94 except=20 that, at the time a cooperative agreement is awarded, substantial=20 involvement is anticipated between the executive agency, acting = for the=20 Federal government, and the State or local government or other = recipient=20 during performance of the contemplated activity.

(c) =93Grants=94 and =93cooperative agreements=94 do not = include technical=20 assistance, which provides services instead of money; revenue = sharing;=20 loans; loan guarantees; capital contributions to loan funds; = interest=20 subsidies; insurance; or direct appropriations. (See the = definition of=20 =93Non-Federal grant=94 in Section II of this appendix.)

Section II Other Definitions.

=93Acquisition=94 of property includes purchase, construction, = or=20 fabrication of property. It does not include rental of property or = alterations and renovations of real property.

=93Acquisition cost=94 of an item of purchased equipment means = the net=20 invoice price of the equipment. It includes the cost of = modifications,=20 attachments, accessories, or auxiliary apparatus necessary to make = the=20 equipment useable for the purpose for which it was acquired. Other = charges, such as the cost of installation, transportation, taxes, = duty, or=20 protective in-transit insurance shall be included in or excluded = from the=20 unit acquisition cost in accordance with the regular accounting = practices=20 of the organization purchasing the equipment.

If an item of equipment is acquired by trading in another item = and=20 paying an additional amount, =93acquisition cost=94 means the = amount received=20 for trade-in plus the additional outlay. (See the definition of = =93amount=20 received for trade-in.=94)

For purposes of the rules on equipment and supplies, = =93acquisition cost=94=20 of a copy of a work of authorship (such as a book, print of a = motion=20 picture, or tape of a television program) refers to the cost of=20 fabricating or purchasing the individual copy, considered as a = material=20 object. It does not include the cost of developing, or acquiring = rights=20 to, the work embodied in the copy.

=93Advance by Treasury check=94 is a payment made by a Treasury = check to a=20 recipient of a grant or cooperative agreement, before payments are = made by=20 the recipient of the grant or cooperative agreement. Advances by = Treasury=20 check are based on either a periodic request from the recipient or = a=20 predetermined payment schedule.

=93Amount received for trade-in=94 of an item of equipment = traded in for=20 replacement equipment means the amount that would have been paid = for the=20 replacement equipment without a trade-in, minus the amount paid = with the=20 trade-in. The term refers to the actual difference, not = necessarily the=20 trade-in value, shown on an invoice. For example, suppose that a = recipient=20 can buy a new machine for $5,000 in cash. The recipient actually = buys this=20 machine by trading in a used machine and paying $3,000 in cash. In = this=20 case, the amount received for trade-in would be $2,000 ($5,000 = minus=20 $3,000) regardless of the trade-in allowance shown on the = invoice.

=93Approved budget=94 means a budget (including any revised = budget) which=20 has been approved in writing by the awarding agency. (See the = definition=20 of =93budget.=94)

=93Audiovisual=94 means a product containing visual imagery or = sound or=20 both. Examples of audiovisuals are motion pictures, live or = prerecorded=20 radio or television programs, slide shows, filmstrips, audio = recordings,=20 and multimedia presentations.

=93Awarding agency=94 means (1) for grants and cooperative = agreements, the=20 USDA agency making the award, and (2) for subgrants, the = recipient.

=93Bid guarantee=94 means a firm commitment such as a bid bond, = certified=20 check, or other negotiable instrument, accompanying a bid as = assurance=20 that the bidder will, if its bid is accepted, execute the required = contractual documents within the time specified.

=93Budget=94 means the recipient's financial expenditure plan = approved by=20 the awarding agency to carry out the purposes of the = Federally-supported=20 project. The budget is comprised of both the Federal share and any = non-Federal share of such plan and any subsequent authorized = rebudgeting=20 of funds.

For those programs that do not involve Federal approval of the=20 non-Federal share of costs, such as research grants, the term = =93budget=94=20 means the financial expenditure plan approved by the awarding = agency=20 including any subsequent authorized rebudgeting of funds, for the = use of=20 Federal funds only. Any expenditures charged to an approved budget = consisting of Federal and non-Federal shares are deemed to be = supported by=20 the grant in the same proportion as the percentage of = Federal/non-Federal=20 participation in the overall budget.

=93Budget period=94 means the period specified in the grant or = cooperative=20 agreement during which Federal funds awarded are authorized to be=20 expended, obligated, or firmly committed by the recipient for the = purposes=20 specified in the agreement.

=93Closeout=94 of a grant or cooperative agreement means the = process by=20 which an awarding agency determines that all applicable = administrative=20 actions and all required work of the grant or cooperative = agreement have=20 been completed by the recipient and the awarding agency.

=93Consultant=94 means a person who gives advice or services = for a fee, but=20 not as an employee. The term includes guest speakers when not = acting as=20 employees of the party that engages them. Note that in unusual = cases it is=20 possible for a person to be both an employee and a consultant at = the same=20 time. (See =A73015.201.)

=93Contract=94 means a procurement contract awarded under a = grant,=20 cooperative agreement, or subgrant; and =93subcontract=94 means a = procurement=20 subcontract under such a contract. Procurement contracts and = subcontracts=20 are ones which place the parties in a buyer-seller relationship,=20 regardless of the label used by the parties to describe the = relationship=20 (e.g., purchase-of-service agreement). The terms =93contract=94 = and=20 =93subcontract=94 do not include any agreements between = organizational=20 components of the same legal entity, even if one of the components = provides property or services to or for the other. (See = definitions of=20 =93subgrant,=94 =93cost-type contract,=94 and =93fixed price = contract.=94)

=93Cost-sharing=94 and =93matching=94 each mean the value of = third party=20 in-kind contributions plus that portion of the allowable costs of=20 recipients not supported by the Federal Government. (The terms=20 =93cost-sharing=94 and =93matching,=94 in this part, are = synonymous.)

=93Cost-type contract=94 means a contract or subcontract in = which the=20 contractor or subcontractor is paid on the basis of the costs it = incurs.=20 The term includes cost-plus-fixed-fee contracts and subcontracts.=20 (However, the term does not include any subcontracts under a = =93fixed-price=20 contract.=94)

=93Discretionary=94 grants and cooperative agreements are ones = which a=20 Federal statute authorizes but does not require USDA to award.

=93Equipment=94 means an article of tangible personal property = that has a=20 useful life of more than two years and acquisition cost of $500 or = more.=20 Any recipient may use its own definition of equipment if its = definition=20 would at least include all items of equipment as defined here.

=93Expenditure report=94 means (1) for nonconstruction awards, = the=20 =93Financial Status Report=94 (or other equivalent report); (2) = for=20 construction awards, the =93Outlay Report and Request for = Reimbursement for=20 Construction Programs=94 (or other equivalent report).

=93Federal funds authorized=94 means the total amount of = Federal funds=20 obligated by the Federal Government for use by the recipient. This = amount=20 is a limit on the total amount of money that the recipient is = entitled to=20 receive from the Federal Government as a result of the award. In = addition=20 to this limit, there are other limits. Refer to =A73015.202 for a = summary of=20 these.

=93Federally recognized Indian Tribal government=94 means the = governing=20 body or a governmental agency of any Indian tribe, band, nation, = or other=20 organized group or community (including any Native village as = defined in=20 section 3 of the Alaska Native Claims Settlement Act, 85 Stat. = 688)=20 certified by the Secretary of the Interior as eligible for the = special=20 programs and services provided by him or her through the Bureau of = Indian=20 Affairs.

=93Fidelity bond=94 means a bond indemnifying the recipient = against losses=20 resulting from the fraud or lack of integrity, honesty or fidelity = of one=20 or more employees, officers or other persons holding a position of = trust.

=93Fixed-price contract=94 means any contract except a = cost-type contract.=20 The term includes firm-fixed price contracts. It also includes = contracts=20 under which the contractor is paid at a fixed rate per unit of = service or=20 unit of labor time. (See the definitions of =93contract=94 and = =93cost-type=20 contract.=94)

=93General program income=94 means all program income except = the special=20 categories treated in =A7=A73015.43 through 3015.46. The term = =93general program=20 income=94 is limited to amounts that accrue to a recipient of = grant or=20 cooperative agreement during the period of Federally assisted = support, or=20 to a subrecipient during the period of sub-award support.

=93Local government=94 means a local unit of government = including=20 specifically, a county, municipality, city, town, township, local = public=20 authority, school district, special district, intra-state = district,=20 council of governments (whether or not incorporated as a nonprofit = corporation under State law), sponsor or sponsoring local = organization of=20 a watershed project (as defined in 7 CFR 620.2, 40 FR 12472, March = 19,=20 1974), any other regional or interstate government entity, or any = agency=20 or instrumentality of a local government.

=93Mandatory=94 or =93formula=94 grants and cooperative = agreements are ones=20 which a Federal statute requires USDA to award if the applicant = meets=20 specified conditions.

=93Non-Federal grant=94 means an award of financial assistance = in the form=20 of money which includes no Federal funds, and for which the = recipient must=20 account to the donor on an actual cost basis. The term does not = include=20 any award that would be excluded from the definitions of = =93grant=94 and=20 =93cooperative agreement=94 if it were made by the Federal = government.

=93Obligations=94 means the amounts of orders placed, contracts = and=20 subgrants awarded, services received, and similar transactions = during a=20 given period, which will require payment during the same or future = period.

=93O&F=94 means the Office of Operations and Finance, which = is an=20 organizational component in USDA reporting to the Assistant = Secretary for=20 Administration.

=93OMB=94 means the Office of Management and Budget in the = Executive Office=20 of the President.

=93Outlays=94 means charges made to the grant project or = program. Outlays=20 may be reported on a cash or accrual basis.

=93Payment bond=94 means a bond executed in connection with a = contract, to=20 assure payment as required by law of all persons supplying labor = and=20 materials in the execution of the work provided in the = contract.

=93Percentage-of-completion method=94 refers to a system under = which=20 payments are made for construction work according to the = percentage of=20 completion of the work, instead of the recipient's rate of=20 disbursements.

=93Performance bond=94 means a bond executed in connection with = a contract=20 to secure fulfillment of all the contractor's obligations under = the=20 contract.

=93Personal property=94 means property of any kind except real = property. It=20 may be tangible=97having physical existence, or = intangible=97having no=20 physical existence, such as patents, inventions, and = copyrights.

=93Production of an audiovisual=94 means any of the steps that = lead to a=20 finished audiovisual, including design, layout, script-writing, = filming,=20 editing, fabrication, sound recording, or taping. The term does = not=20 include the placing of captions for the hearing impaired on films = or=20 videotapes not originally produced for use with the hearing = impaired.

=93Program income=94 means gross income earned by a recipient = from=20 activities supported by a grant or cooperative agreement. (See = definition=20 of =93supported by a grant or cooperative agreement.=94) It = includes but is=20 not limited to income in the form of fees for services performed = during=20 the life of the grant, cooperative agreement, or subgrant, = proceeds from=20 sale of tangible personal or real property, usage or rental fees, = and=20 patent or copyright royalties. If income meets this definition, it = shall=20 be considered program income regardless of the method used to = calculate=20 the amount paid to the recipient whether, for example, by a=20 cost-reimbursement method or fixed price arrangement. Nor will the = income's classification as program income be affected by the fact = that the=20 recipient earns it from a procurement contract awarded to the = recipient=20 (1) by the Federal government or (2) by another recipient acting = under=20 another Federal grant, cooperative agreement, or subgrant.

The following are not considered program income:

(1) =93Revenues=94 raised by a government recipient under its = governing=20 powers, such as taxes, special assessments, levies, and fines. = (However,=20 the receipt and expenditure of these revenues shall be recorded as = a part=20 of the transactions of the Federally-assisted project or program = when the=20 revenues are specifically earmarked for the project in accordance = with the=20 terms of the grant, cooperative agreement, or subgrant.)

(2) Tuition and related fees received by an institution of = higher=20 education for a regularly offered course taught by an employee = performing=20 under a grant, cooperative agreement, or subgrant.

(3) Income earned by contractors or subcontractors.

(4) Internal reimbursements or transfers of funds between=20 organizational components of the same legal entity (e.g., between = agencies=20 of the same government).

(5) Third party in-kind contributions.

(6) Gifts or financial assistance from another source, such as = (i) a=20 non-Federal grant, (ii) another Federal grant, and (iii) = charitable=20 contributions (whether or not for a restricted purpose), and

(7) Interest or other investment income earned from investing = advances=20 of Federal cash. (This kind of income is treated in = =A73015.46.)

=93Project period=94 means the total time for which the = recipient's project=20 or program is approved for support including any extensions. = Project=20 periods may consist of one or more budget periods.

=93Publication=94 means a published book, periodical, pamphlet, = brochure,=20 flier, or similar item. It does not include any audiovisuals.

=93Real property=94 means land, land improvements, structures, = and things=20 attached to them so as to become a part of them. Movable machinery = and=20 other kinds of equipment are not real property. If a question = comes up=20 about whether certain property should be classified as real = property, the=20 law of the State or foreign country in which the property is = located=20 governs.

=93Recipient=94 means a State or local government, Federally = recognized=20 Indian Tribe, university, non-profit, for profit, or other = organization=20 that is a recipient of grants or cooperative agreements from a = USDA=20 agency.

=93Replacement equipment=94 means property acquired to take the = place of=20 other equipment. To qualify as replacement equipment, it must = serve the=20 same function as the equipment replaced and must be of the same = nature or=20 character, although not necessarily the same model, grade, or = quality.

=93State=94 means any of the several States of the United = States, the=20 District of Columbia, the Commonwealth of Puerto Rico, any = territory,=20 possession, or trust territory of the United States, or any agency = or=20 instrumentality of a State. The term does not include local=20 governments.

=93Subgrant=94 means an award of money, or property instead of = money,=20 which:

(1) Is made under a grant or cooperative agreement by the = recipient of=20 the grant or cooperative agreement; and

(2) Is made principally to accomplish a purpose of support of=20 stimulation rather than to establish a buyer-seller relationship = between=20 the two parties.

Any award which meets that definition is a subgrant even if the = parties=20 to the award use some other label such as =93grant,=94 = =93agreement,=94=20 =93cooperative agreement,=94 =93contract,=94 =93allotment,=94 or = =93delegation=20 agreement.=94 Also, if the award meets that definition, it is a = subgrant=20 whether or not the awarding agency is expected to be substantially = involved in its performance. However, the term =93subgrant=94 does = not include=20 any type of assistance which is excluded from the definitions of = =93grant=94=20 and =93cooperative agreement=94 by Section I(c) of this = Appendix.

=93Supplies=94 means all tangible personal property other than=20 equipment.

=93Supported by a grant or cooperative agreement,=94 as applied = to a cost=20 or an activity, means that the cost or the cost of the activity is = entirely or partly (1) treated as a direct cost under a grant, = cooperative=20 agreement, subgrant, or cost-type contract, and (2) either = supported by=20 Federal funds or counted towards a Federal cost-sharing or = matching=20 requirement.

=93Suspension=94 of an award means temporary withdrawal of the = recipient's=20 authority to obligate the funds awarded pending corrective action = by the=20 recipient or a decision to terminate the award.

=93Termination=94 of an award means permanent withdrawal of the = recipient's=20 authority to obligate previously awarded funds before that = authority would=20 otherwise expire. It also means the voluntary relinquishment of = that=20 authority by the recipient.

=93Termination=94 does not include:

(a) Withdrawal of the unobligated balance upon expiration of = award;

(b) Refusal by the awarding agency to extend an award or to = award=20 additional funds (such as refusal to make a competing or = noncompeting=20 continuation, renewal, extension, or supplemental award);

(c) Annulment, i.e. , voiding of an award upon = determination=20 that the award was obtained fraudulently or was otherwise illegal = or=20 invalid from inception;

(d) Withdrawal of surplus Federal funds from a discretionary = grant or=20 any analogous withdrawal of funds by a recipient from a = subrecipient;=20 or

(e) Withdrawal from a mandatory or formula grant of surplus = Federal=20 funds authorized which the recipient will not obligate during the = fiscal=20 year, or any analogous withdrawal of funds by a recipient from a=20 subrecipient.

=93Terms=94 of a grant, cooperative agreement, subgrant, or = contract means=20 all rights and duties created by the award, whether stated in = statute,=20 this part or other regulations, the award document itself, or any = other=20 document.

=93Third party=94 means, with respect to a grant or cooperative = agreement,=20 any entity except (1) the Federal government, (2) the recipient of = the=20 cooperative agreement, and (3) subrecipients under that grant or=20 cooperative agreement. Note that contractors of recipients are = third=20 parties under this definition, although subrecipients are not.

=93Third party in-kind contributions=94 means property or = services=20 benefiting the federally assisted project or program which are = contributed=20 by third parties without charge. Note that the term does not = include any=20 costs incurred by the recipient or subrecipient.

=93Unliquidated obligations,=94 means, for financial reports = prepared on a=20 cash basis, the amount of obligations incurred by the recipient = that has=20 not been paid. For reports prepared on an accrued expenditure = basis, they=20 are the amount of obligations incurred by the recipient for which = an=20 outlay has not been recorded.

=93Unobligated balance=94 is the portion of Federal funds = authorized which=20 has not been obligated by the recipient. It is calculated by = subtracting=20 the Federal share of the recipient's cumulative obligations from = the=20 cumulative Federal funds authorized.

Appendix B to Part 3015=97OMB Circular A=96128, =93Audits of = State and Local=20 Governments=94

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Executive Office of the President

Office of Management and Budget

Circular No. A=96128

April 12, 1984

To the Heads of Executive Departments and Establishments.

Subject: Audits of State and Local Governments.

1. Purpose. This Circular is issued pursuant to the = Single Audit=20 Act of 1984, Pub. L. 98=96502. It establishes audit requirements = for State=20 and local governments that receive Federal aid, and defines = Federal=20 responsibilities for implementing and monitoring those = requirements.

2. Supersession. The Circular supersedes Attachment P, = =93Audit=20 Requirements,=94 of Circular A=96102, =93Uniform requirements for = grants to=20 State and local governments.=94

3. Background. The Single Audit Act builds upon earlier = efforts=20 to improve audits of Federal aid programs. The Act requires State = or local=20 governments that receive $100,000 or more a year in Federal funds = to have=20 an audit made for that year. Section 7505 of the Act requires the = Director=20 of the Office of Management and Budget to prescribe policies, = procedures=20 and guidelines to implement the Act. It specifies that the = Director shall=20 designate =93cognizant=94 Federal agencies, determine criteria for = making=20 appropriate charges to Federal programs for the cost of audits, = and=20 provide procedures to assure that small firms or firms owned and=20 controlled by disadvantaged individuals have the opportunity to=20 participate in contracts for single audits.

4. Policy. The Single Audit Act requires the = following:

a. State or local governments that receive $100,000 or more a = year in=20 Federal financial assistance shall have an audit made in = accordance with=20 this Circular.

b. State or local governments that receive between $25,000 and = $100,000=20 a year shall have an audit made in accordance with this Circular, = or in=20 accordance with Federal laws and regulations governing the = programs they=20 participate in.

c. State or local governments that receive less than $25,000 a = year=20 shall be exempt from compliance with the Act and other Federal = audit=20 requirements. These State and local governments shall be governed = by audit=20 requirements prescribed by State or local law or regulation.

d. Nothing in this paragraph exempts State or local governments = from=20 maintaining records of Federal financial assistance or from = providing=20 access to such records to Federal agencies, as provided for in = Federal law=20 or in Circular A=96102, =93Uniform requirements for grants to = State or local=20 governments.=94

5. Definitions. For the purposes of this Circular the = following=20 definitions from the Single Audit Act apply:

a. Cognizant agency means the Federal agency assigned by = the=20 Office of Management and Budget to carry out the responsibilities=20 described in paragraph 11 of this Circular.

b. Federal financial assistance means assistance = provided by a=20 Federal agency in the form of grants, contracts, cooperative = agreements,=20 loans, loan guarantees, property, interest subsidies, insurance, = or direct=20 appropriations, but does not include direct Federal cash = assistance to=20 individuals. It includes awards received directly from Federal = agencies,=20 or indirectly through other units of State and local = governments.

c. Federal agency has the same meaning as the term = =91agency=92 in=20 section 551(1) of Title 5, United States Code.

d. Generally accepted accounting principles has the = meaning=20 specified in the generally accepted government auditing = standards.

e. Generally accepted government auditing standards = means the=20 Standards For Audit of Government Organizations, Programs, = Activities,=20 and Functions, developed by the Comptroller General, dated = February=20 27, 1981.

f. Independent auditor means:

(1) A State or local government auditor who meets the = independence=20 standards specified in generally accepted government auditing = standards;=20 or

(2) A public accountant who meets such independence = standards.

g. Internal controls means the plan of organization and = methods=20 and procedures adopted by management to ensure that:

(1) Resource use is consistent with laws, regulations, and=20 policies;

(2) Resources are safeguarded against waste, loss, and misuse; = and

(3) Reliable data are obtained, maintained, and fairly = disclosed in=20 reports.

h. Indian tribe means any Indian tribe, band, nations, = or other=20 organized group or community, including any Alaskan Native village = or=20 regional or village corporations (as defined in, or established = under, the=20 Alaskan Native Claims Settlement Act) that is recognized by the = United=20 States as eligible for the special programs and services provided = by the=20 United States to Indians because of their status as Indians.

i. Local government means any unit of local government = within a=20 State, including a county, a borough, municipalitity, city, town,=20 township, parish, local public authority, special district, school = district, intrastate district, council of governments, and any = other=20 instrumentality of local government.

j. Major Federal Assistance Program, as defined by Pub. = L=20 98=96502, is described in the Attachment to this Circular.

k. Public accountants means those individuals who meet = the=20 qualification standards included in generally accepted government = auditing=20 standards for personnel performing government audits.

l. State means any State of the United States, the = District of=20 Columbia, the Commonwealth of Puerto Rico, the Virgin Islands, = Guam=20 American Samoa, the Commonwealth of the Northern Mariana Islands, = and the=20 Trust Territory of the Pacific Islands, any instrumentality = thereof, and=20 any multi-State, regional, or interstate entity that has = governmental=20 functions and any Indian tribe.

m. Subrecipient means any person or government = department,=20 agency, or establishment that receives Federal financial = assistance to=20 carry out a program through a State or local government, but does = not=20 include an individual that is a beneficiary of such a program. A=20 subrecipient may also be a direct recipient of Federal financial=20 assistance.

6. Scope of audit. The Single Audit Act provides = that:

a. The audit shall be made by an independent auditor in = accordance with=20 generally accepted government auditing standards covering = financial and=20 compliance audits.

b. The audit shall cover the entire operations of a State or = local=20 government or, at the option of that government, it may cover = departments,=20 agencies or establishments that received, expended, or otherwise=20 administered Federal financial assistance during the year. = However, if a=20 State or local government receives $25,000 or more in General = Revenue=20 Sharing Funds in a fiscal year, it shall have an audit of its = entire=20 operations. A series of audits of individual departments, = agencies, and=20 establishments for the same fiscal year may be considered a single = audit.

c. Public hospitals and public colleges and universities may be = excluded from State and local audits and the requirements of this=20 Circular. However, if such entities are excluded, audits of these = entities=20 shall be made in accordance with statutory requirements and the = provisions=20 of Circular A=96110, Uniform requirements for grants to = universities,=20 hospitals, and other nonprofit organizations.

d. The auditor shall determine whether:

(1) The financial statements of the government, department, = agency or=20 establishment present fairly its financial position and the = results of its=20 financial operations in accordance with generally accepted = accounting=20 principles;

(2) The organization has internal accounting and other control = systems=20 to provide reasonable assurance that it is managing Federal = financial=20 assistance programs in compliance with applicable laws and = regulations;=20 and

(3) The organization has complied with laws and regulations = that may=20 have material effect on its financial statements and on each major = Federal=20 assistance program.

7. Frequency of audit. Audits shall be made annually = unless the=20 State or local government has, by January 1, 1987, a = constitutional or=20 statutory requirement for less frequent audits. For those = governments, the=20 cognizant agency shall permit biennial audits, covering both = years, if the=20 government so requests. It shall also honor requests for biennial = audits=20 by governments that have an administrative policy calling for = audits less=20 frequent than annual, but only for fiscal years beginning before = January=20 1, 1987.

8. Internal control and compliance reviews. The Single = Audit Act=20 requires that the independent auditor determine and report on = whether the=20 organization has internal control systems to provide reasonable = assurance=20 that it is managing Federal assistance programs in compliance with = applicable laws and regulations.

a. Internal control review. In order to provide this = assurance=20 the auditor must make a study and evaluation of internal control = systems=20 used in administering Federal assistance programs. The study and=20 evaluation must be made whether or not the auditor intends to = place=20 reliance on such systems. As part of this review, the auditor = shall:

(1) Test whether these internal control systems are functioning = in=20 accordance with prescribed procedures.

(2) Examine the recipient's system for monitoring subrecipients = and=20 obtaining and acting on subrecipient audit reports.

b. Compliance review. The law also requires the auditor = to=20 determine whether the organization has complied with laws and = regulations=20 that may have a material effect on each major Federal assistance=20 program.

(1) In order to determine which major programs are to be tested = for=20 compliance, State and local governments shall identify in their = accounts=20 all Federal funds received and expended and the programs under = which they=20 were received. This shall include funds received directly from = Federal=20 agencies and through other State and local governments.

(2) The review must include the selection and testing of a=20 representative number of charges from each major Federal = assistance=20 program. The selection and testing of transactions shall be based = on the=20 auditor's professional judgment considering such factors as the = amount of=20 expenditures for the program and the individual awards; the = newness of the=20 program or changes in its conditions; prior experience with the = program,=20 particularly as revealed in audits and other evaluations (e.g.,=20 inspections, program reviews); the extent to which the program is = carried=20 out through subrecipients; the extent to which the program = contracts for=20 goods or services; the level to which the program is already = subject to=20 program reviews of other forms of independent oversight; the = adequacy of=20 the controls for ensuring compliance; the expectation of adherence = or lack=20 of adherence to the applicable laws and regulations; and the = potential=20 impact of adverse findings.

(a) In making the test of transactions, the auditor shall = determine=20 whether:

=97The amounts reported as expenditures were for allowable = services,=20 and

=97The records show that those who received services or = benefits were=20 eligible to receive them.

(b) In addition to transaction testing, the auditor shall = determine=20 whether:

=97Matching requirements, levels of effort and earmarking = limitations=20 were met,

=97Federal financial reports and claims for advances and = reimbursements=20 contain information that is supported by the books and records = from which=20 the basic financial statements have been prepared, and

=97Amounts claimed or used for matching were determined in = accordance=20 with OMB Circular A=9687, =93Cost principles for State and local = governments,=94=20 and Attachment F of Circular A=96102, =93Uniform requirements for = grants to=20 State and local governments.=94

(c) The principal compliance requirements of the largest = Federal aid=20 programs may be ascertained by referring to the Compliance = Supplement=20 for Single Audits of State and Local Governments, issued by = OMB and=20 available from the Government Printing Office. For those programs = not=20 covered in the Compliance Supplement, the auditor may ascertain = compliance=20 requirements by researching the statutes, regulations, and = agreements=20 governing individual programs.

(3) Transactions related to other Federal assistance programs = that are=20 selected in connection with examinations of financial statements = and=20 evaluations of internal controls shall be tested for compliance = with=20 Federal laws and regulations that apply to such transactions.

9. Subrecipients. State or local governments that = receive=20 Federal financial assistance and provide $25,000 or more of it in = a fiscal=20 year to a subrecipient shall:

a. Determine whether State or local subrecipients have met the = audit=20 requirements of this Circular and whether subrecipients covered by = Circular A=96110, =93Uniform requirements for grants to = universities,=20 hospitals, and other nonprofit organizations,=94 have met that=20 requirement;

b. Determine whether the subrecipient spent Federal assistance = funds=20 provided in accordance with applicable laws and regulations. This = may be=20 accomplished by reviewing an audit of the subrecipient made in = accordance=20 with this Circular, Circular A=96110, or through other means = (e.g., program=20 reviews) if the subrecipient has not yet had such an audit;

c. Ensure that appropriate corrective action is taken within = six months=20 after receipt of the audit report in instances of noncompliance = with=20 Federal laws and regulations;

d. Consider whether subrecipient audits necessitate adjustment = of the=20 recipient's own records; and

e. Require each subrecipient to permit independent auditors to = have=20 access to the records and financial statements as necessary to = comply with=20 this Circular.

10. Relation to other audit requirements. The Single = Audit Act=20 provides that an audit made in accordance with this Circular shall = be in=20 lieu of any financial or financial compliance audit required under = individual Federal assistance programs. To the extent that a = single audit=20 provides Federal agencies with information and assurances they = need to=20 carry out their overall responsibilities, they shall rely upon and = use=20 such information. However, a Federal agency shall make any = additional=20 audits which are necessary to carry out its responsibilities under = Federal=20 law and regulation. Any additional Federal audit effort shall be = planned=20 and carried out in such a way as to avoid duplication.

a. The provisions of this Circular do not limit the authority = of=20 Federal agencies to make, or contract for audits and evaluations = of=20 Federal financial assistance programs, nor do they limit the = authority of=20 any Federal agency Inspector General or other Federal audit = official.

b. The provisions of this Circular do not authorize any State = or local=20 government or subrecipient thereof to constrain Federal agencies, = in any=20 manner, from carrying out additional audits.

c. A Federal agency that makes or contracts for audits in = addition to=20 the audits made by recipients pursuant to this Circular shall, = consistent=20 with other applicable laws and regulations, arrange for funding = the cost=20 of such additional audits. Such additional audits include economy = and=20 efficiency audits, program results audits, and program = evaluations.

11. Cognizant agency responsibilities. The Single Audit = Act=20 provides for cognizant Federal agencies to oversee the = implementation of=20 this Circular.

a. The Office of Management and Budget will assign cognizant = agencies=20 for States and their subdivisions and larger local governments and = their=20 subdivisions. Other Federal agencies may participate with an = assigned=20 cognizant agency, in order to fulfill the cognizance = responsibilities.=20 Smaller governments not assigned a cognizant agency will be under = the=20 general oversight of the Federal agency that provides them the = most funds=20 whether directly or indirectly.

b. A cognizant agency shall have the following = responsibilities:

(1) Ensure that audits are made and reports are received in a = timely=20 manner and in accordance with the requirements of this = Circular.

(2) Provide technical advice and liaison to State and local = governments=20 and independent auditors.

(3) Obtain or make quality control reviews of selected audits = made by=20 non-Federal audit organizations, and provide the results, when=20 appropriate, to other interested organizations.

(4) Promptly inform other affected Federal agencies and = appropriate=20 Federal law enforcement officials of any reported illegal acts or=20 irregularities. They should also inform State or local law = enforcement and=20 prosecuting authorities, if not advised by the recipient, of any = violation=20 of law within their jurisdiction.

(5) Advise the recipient of audits that have been found not to = have met=20 the requirements set forth in this Circular. In such instances, = the=20 recipient will be expected to work with the auditor to take = corrective=20 action. If corrective action is not taken, the cognizant agency = shall=20 notify the recipient and Federal awarding agencies of the facts = and make=20 recommendations for followup action. Major inadequacies or = repetitive=20 substandard performance of independent auditors shall be referred = to=20 appropriate professional bodies for disciplinary action.

(6) Coordinate, to the extent practicable, audits made by or = for=20 Federal agencies that are in addition to the audits made pursuant = to this=20 Circular; so that the additional audits build upon such = audits.

(7) Oversee the resolution of audit findings that affect the = programs=20 of more than one agency.

12. Illegal acts or irregularities. If the auditor = becomes aware=20 of illegal acts or other irregularities, prompt notice shall be = given to=20 recipient management officials above the level of involvement. = (See also=20 paragraph 13(a)(3) below for the auditor's reporting = responsibilities.)=20 The recipient, in turn, shall promptly notify the cognizant agency = of the=20 illegal acts or irregularities and of proposed and actual actions, = if any.=20 Illegal acts and irregularities include such matters as conflicts = of=20 interest, falsification of records or reports, and = misappropriations of=20 funds or other assets.

13. Audit Reports. Audit reports must be prepared at the = completion of the audit. Reports serve many needs of State and = local=20 governments as well as meeting the requirements of the Single = Audit=20 Act.

a. The audit report shall state that the audit was made in = accordance=20 with the provisions of this Circular. The report shall be made up = of at=20 least:

(1) The auditor's report on financial statements and on a = schedule of=20 Federal assistance; the financial statements; and a schedule of = Federal=20 assistance, showing the total expenditures for each Federal = assistance=20 program as identified in the Catalog of Federal Domestic = Assistance.=20 Federal programs or grants that have not been assigned a = catalog=20 number shall be identified under the caption =93other Federal=20 assistance.=94

(2) The auditor's report on the study and evaluation of = internal=20 control systems must identify the organization's significant = internal=20 accounting controls, and those controls designed to provide = reasonable=20 assurance that Federal programs are being managed in compliance = with laws=20 and regulations. It must also identify the controls that were = evaluated,=20 the controls that were not evaluated, and the material weaknesses=20 identified as a result of the evaluation.

(3) The auditor's report on compliance containing:

=97A statement of positive assurance with respect to those = items tested=20 for compliance, including compliance with law and regulations = pertaining=20 to financial reports and claims for advances and = reimbursements;

=97Negative assurance on those items not tested;

=97A summary of all instances of noncompliance; and

=97An identification of total amounts questioned, if any, for = each=20 Federal assistance award, as a result of noncompliance.

b. The three parts of the audit report may be bound into a = single=20 report, or presented at the same time as separate documents.

c. All fraud abuse, or illegal acts or indications of such = acts,=20 including all questioned costs found as the result of these acts = that=20 auditors become aware of, should normally be covered in a separate = written=20 report submitted in accordance with paragraph 13f.

d. In addition to the audit report, the recipient shall provide = comments on the findings and recommendations in the report, = including a=20 plan for corrective action taken or planned and comments on the = status of=20 corrective action taken on prior findings. If corrective action is = not=20 necessary, a statement describing the reason it is not should = accompany=20 the audit report.

e. The reports shall be made available by the State or local = government=20 for public inspection within 30 days after the completion of the=20 audit.

f. In accordance with generally accepted government audit = standards,=20 reports shall be submitted by the auditor to the organization = audited and=20 to those requiring or arranging for the audit. In addition, the = recipient=20 shall submit copies of the reports to each Federal department or = agency=20 that provided Federal assistance funds to the recipient. = Subrecipients=20 shall submit copies to recipients that provided them Federal = assistance=20 funds. The reports shall be sent within 30 days after the = completion of=20 the audit, but no later than one year after the end of the audit = period=20 unless a longer period is agreed to with the cognizant agency.

g. Recipients of more than $100,000 in Federal funds shall = submit one=20 copy of the audit report within 30 days after issuance to a = central=20 clearinghouse to be designated by the Office of Management and = Budget. The=20 clearinghouse will keep completed audits on file and follow up = with State=20 and local governments that have not submitted required audit = reports.

h. Recipients shall keep audit reports on file for three years = from=20 their issuance.

14. Audit Resolution. As provided in paragraph 11, the = cognizant=20 agency shall be responsible for monitoring the resolution of audit = findings that affect the programs of more than one Federal agency. = Resolution of findings that relate to the programs of a single = Federal=20 agency will be the responsibility of the recipient and that = agency.=20 Alternate arrangements may be made on case-by-case basis by a = case-by-case=20 basis by agreement among the agenices concerned.

Resolution shall be made within six months after receipt of the = report=20 by the Federal departments and agencies. Corrective action should = proceed=20 as rapidly as possible.

15. Audit workpapers and reports. Workpapers and reports = shall=20 be retained for a minimum of three years from the date of the = audit=20 report, unless the auditor is notified in writing by the cognizant = agency=20 to extend the retention period. Audit workpapers shall be made = available=20 upon request to the cognizant agency or its designee or the = General=20 Accounting Office, at the completion of the audit.

16. Audit Costs. The cost of audits made in accordance = with the=20 provisions of this Circular are allowable charges to Federal = assistance=20 programs.

a. The charges may be considered a direct cost or an allocated = indirect=20 cost, determined in accordance with the provision of Circular = A=9687, =93Cost=20 principles for State and local governments.=94

b. Generally, the percentage of costs charged to Federal = assistance=20 programs for a single audit shall not exceed the percentage that = Federal=20 funds expended represent of total funds expended by the recipient = during=20 the fiscal year. The percentage may be exceeded, however, if = appropriate=20 documentation demonstrates higher actual cost.

17. Sanctions. The Single Audit Act provides that no = cost may be=20 charged to Federal assistance programs for audits required by the = Act that=20 are not made in accordance with this Circular. In cases of = continued=20 inability or unwillingness to have a proper audit, Federal = agencies must=20 consider other appropropriate sanctions including:

=97Withholding a percentage of assistance payments until the = audit is=20 completed satisfactorily,

=97Withholding or disallowing overhead costs, and

=97Suspending the Federal assistance agreement until the audit = is=20 made.

18. Auditor Selection. In arranging for audit services = State and=20 local governments shall follow the procurement standards = prescribed by=20 Attachment O of Circular A=96102, =93Uniform requirements for = grants to State=20 and local governments.=94 The standards provide that while = recipients are=20 encouraged to enter into intergovernmental agreements for audit = and other=20 services, analysis should be made to determine whether it would be = more=20 economical to purchase the services from private firms. In = instances where=20 use of such intergovernmental agreements are required by State = statutes=20 (e.g., audit services) these statutes will take precedence.

19. Small and Minority Audit Firms. Small audit firms = and audit=20 firms owned and controlled by socially and economically = disadvantaged=20 individuals shall have the maximum practicable opportunity to = participate=20 in contracts awarded to fulfill the requirements of this Circular. = Recipients of Federal assistance shall take the following steps to = further=20 this goal:

a. Assure that small audit firms and audit firms owned and = controlled=20 by socially and economically disadvantaged individuals are used to = the=20 fullest extent practicable.

b. Make information on forthcoming opportunities available and = arrange=20 timeframes for the audit so as to encourage and facilitate = participation=20 by small audit firms and audit firms owned and controlled by = socially and=20 economically disadvantaged individuals.

c. Consider in the contract process whether firms competing for = large=20 audits intend to subcontract with small audit firms and audit = firms owned=20 and controlled by socially and economically disadvantaged = individuals.

d. Encourage contracting with small audit firms or audit firms = owned=20 and controlled by socially and economically disadvantaged = individuals=20 which have traditionally audited government programs and, in such = cases=20 where this is not possible, assure that these firms are given=20 consideration for audit subcontracting opportunities.

e. Encourage contracting with consortiums of small audit firms = as=20 described in paragraph (a) above when a contract is too large for = an=20 individual small audit firm or audit firm owned and controlled by = socially=20 and economically disadvantaged individuals.

f. Use the services and assistance, as appropriate, of such=20 organizations as the Small Business Administration in the = solicitation and=20 utilization of small audit firms or audit firms owned and = controlled by=20 socially and economically disadvantaged individuals.

20. Reporting. Each Federal agency will report to the = Director=20 of OMB on or before March 1, 1987, and annually thereafter on the=20 effectiveness of State and local governments in carrying out the=20 provisions of this Circular. The report must identify each State = or local=20 government or Indian tribe that, in the opinion of the agency, is = failing=20 to comply with the Circular.

21. Regulations. Each Federal agency shall include the=20 provisions of this Circular in its regulations implementing the = Single=20 Audit Act.

22. Effective date. This Circular is effective upon = publication=20 and shall apply to fiscal years of State and local governments = that begin=20 after December 31, 1984. Earlier implementation is encouraged. = However,=20 until it is implemented, the audit provisions of Attachment P to = Circular=20 A=96102 shall continue to be observed.

23. Inquiries. All questions or inquiries should be = addressed to=20 Financial Management Division, Office of Management and Budget, = telephone=20 number 202/395=963993.

24. Sunset review date. This Circular shall have an = independent=20 policy review to ascertain its effectiveness three years from the = date of=20 issuance.

David A. Stockman,

Director.

Definition of Major Program as Provided in Pub. L. = 98=96502

=93Major Federal Assistance Program,=94 for State and local = governments=20 having Federal assistance expenditures between $100,000 and = $100,000,000,=20 means any program for which Federal expenditures during the = applicable=20 year exceed the larger of $300,000, or 3 percent of such total=20 expenditures.

Where total expenditures of Federal assistance exceed = $100,000,000, the=20 following criteria apply:

Total = expenditures of=20 Federal financial assistance for all programs	Major=20 federal assistance program means any program that = exceeds
More than	But less than
$100 = million	$1 billion	$3 million
1 billion	2 billion	4 million
2 billion	3 billion	7 million
3 billion	4 billion	10 million
4 billion	5 billion	13 million
5 billion	6 billion	16 million
6 billion	7 billion	19 million
Over 7 = billion		20=20 million

[50 FR 28763, July 16, 1985]

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For questions or comments = regarding e-CFR=20 editorial content, features, or design, email ecfr@nara.gov.

For = questions=20 concerning e-CFR programming and delivery issues, email webteam@gpo.gov.

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