18.1 Purpose and scope of this part.
18.2 Scope of subpart.
18.3 Definitions.
18.4 Applicability.
18.5 Effect on other issuances.
18.6 Additions and exceptions.
18.20 Standards for financial management systems.
18.21 Payment.
18.22 Allowable costs.
18.23 Period of availability of funds.
18.24 Matching or cost sharing.
18.25 Program income.
18.26 NonFederal audits.
Changes, Property, and Subawards
18.30 Changes.
Reports, Records Retention, and Enforcement
18.40 Monitoring and reporting program performance.
18.31 Real property.
18.32 Equipment.
18.33 Supplies.
18.34 Copyrights.
18.35 Subawards to debarred and suspended parties.
18.36 Procurement.
18.37 Subgrants.
18.41 Financial reporting.
18.42 Retention and access requirements for records.
18.43 Enforcement.
18.44 Termination for convenience.Subpart D -- After-the-Grant Requirements
18.50 Closeout.
18.51 Later disallowances and adjustments.
18.52 Collection of amounts due.
Source: 53 FR 8086 and 8087, Mar. 11, 1988, unless otherwise noted.
Editorial Note: For additional information, see related documents published at 49 FR 24958, June 18, 1984, 52 FR 20198, May 29, 1987, and 53 FR 8028, March 11, 1988.
This part establishes uniform administrative rules for Federal grants and cooperative agreements and subawards to State, local and Indian tribal governments.
Sec. 18.2 Scope of subpart.
This subpart contains general rules pertaining to this part
and procedures for control of exceptions from this part.
Sec. 18.3 Definitions.
As used in this part:
Accrued expenditures mean the charges incurred by the grantee
during a given period requiring the provision of funds for: (1)
Goods and other tangible property received; (2) services performed
by employees, contractors, subgrantees, subcontractors, and other
payees; and (3) other amounts becoming owed under programs for
which no current services or performance is required, such as
annuities, insurance claims, and other benefit payments.
Accrued income means the sum of: (1) Earnings during a given
period from services performed by the grantee and goods and other
tangible property delivered to purchasers, and (2) amounts becoming
owed to the grantee for which no current services or performance
is required by the grantee.
Acquisition cost of an item of purchased equipment means the
net invoice unit price of the property including the cost of modifications,
attachments, accessories, or auxiliary apparatus necessary to
make the property usable for the purpose for which it was acquired.
Other charges such as the cost of installation, transportation,
taxes, duty or protective in-transit insurance, shall be included
or excluded from the unit acquisition cost in accordance with
the grantee's regular accounting practices.
Administrative requirements mean those matters common to grants
in general, such as financial management, kinds and frequency
of reports, and retention of records. These are distinguished
from "programmatic" requirements, which concern matters
that can be treated only on a program-by-program or grant-by-grant
basis, such as kinds of activities that can be supported by grants
under a particular program.
Awarding agency means (1) with respect to a grant, the Federal
agency, and (2) with respect to a subgrant, the party that awarded
the subgrant.
Cash contributions means the grantee's cash outlay, including
the outlay of money contributed to the grantee or subgrantee by
other public agencies and institutions, and private organizations
and individuals. When authorized by Federal legislation, Federal
funds received from other assistance agreements may be considered
as grantee or subgrantee cash contributions.
Contract means (except as used in the definitions for "grant"
and "subgrant" in this section and except where qualified
by "Federal") a procurement contract under a grant or
subgrant, and means a procurement subcontract under a contract.
Cost sharing or matching means the value of the third party
in--kind contributions and the portion of the costs of a federally
assisted project or program not borne by the Federal Government.
Cost-type contract means a contract or subcontract under a
grant in which the contractor or subcontractor is paid on the
basis of the costs it incurs, with or without a fee.
Equipment means tangible, nonexpendable, personal property
having a useful life of more than one year and an acquisition
cost of $5,000 or more per unit. A grantee may use its own definition
of equipment provided that such definition would at least include
all equipment defined above.
Expenditure report means: (1) For nonconstruction grants,
the SF-269 "Financial Status Report" (or other equivalent
report); (2) for construction grants, the SF271 "Outlay Report
and Request for Reimbursement" (or other equivalent report).
Federally recognized Indian tribal government means the governing
body or a governmental agency of any Indian tribe, band, nation,
or other organized group or community (including any Native village
as defined in section 3 of the Alaska Native Claims Settlement
Act, 85 Stat 688) certified by the Secretary of the Interior as
eligible for the special programs and services provided by him
through the Bureau of Indian Affairs.
Government means a State or local government or a federally
recognized Indian tribal government.
Grant means an award of financial assistance, including cooperative
agreements, in the form of money, or property in lieu of money,
by the Federal Government to an eligible grantee. The term does
not include technical assistance which provides services instead
of money, or other assistance in the form of revenue sharing,
loans, loan guarantees, interest subsidies, insurance, or direct
appropriations. Also, the term does not include assistance, such
as a fellowship or other lump sum award, which the grantee is
not required to account for.
Grantee means the government to which a grant is awarded and
which is accountable for the use of the funds provided. The grantee
is the entire legal entity even if only a particular component
of the entity is designated in the grant award document.
Local government means a county, municipality, city, town,
township, local public authority (including any public and Indian
housing agency under the United States Housing Act of 1937) school
district, special district, intrastate district, council of governments
(whether or not incorporated as a nonprofit corporation under
state law), any other regional or interstate government entity,
or any agency or instrumentality of a local government.
Obligations means the amounts of orders placed, contracts
and subgrants awarded, goods and services received, and similar
transactions during a given period that will require payment by
the grantee during the same or a future period.
OMB means the United States Office of Management and Budget.
Outlays (expenditures) mean charges made to the project or
program. They may be reported on a cash or accrual basis. For
reports prepared on a cash basis, outlays are the sum of actual
cash disbursement for direct charges for goods and services, the
amount of indirect expense incurred, the value of inkind contributions
applied, and the amount of cash advances and payments made to
contractors and subgrantees. For reports prepared on an accrued
expenditure basis, outlays are the sum of actual cash disbursements,
the amount of indirect expense incurred, the value of in-kind
contributions applied, and the new increase (or decrease) in the
amounts owed by the grantee for goods and other property received,
for services performed by employees, contractors, subgrantees,
subcontractors, and other payees, and other amounts becoming owed
under programs for which no current services or performance are
required, such as annuities, insurance claims, and other benefit
payments.
Percentage of completion method refers to a system under which
payments are made for construction work according to the percentage
of completion of the work, rather than to the grantee's cost incurred.
Prior approval means documentation evidencing consent prior
to incurring specific cost.
Real property means land, including land improvements, structures
and appurtenances thereto, excluding movable machinery and equipment.
Share, when referring to the awarding agency's portion of
real property, equipment or supplies, means the same percentage
as the awarding agency's portion of the acquiring party's total
costs under the grant to which the acquisition costs under the
grant to which the acquisition cost of the property was charged.
Only costs are to be counted--not the value of third-party in-kind
contributions.
State means any of the several States of the United States,
the District of Columbia, the Commonwealth of Puerto Rico, any
territory or possession of the United States, or any agency or
instrumentality of a State exclusive of local governments. The
term does not include any public and Indian housing agency under
United States Housing Act of 1937.
Subgrant means an award of financial assistance in the form
of money, or property in lieu of money, made under a grant by
a grantee to an eligible subgrantee. The term includes financial
assistance when provided by contractual legal agreement, but does
not include procurement purchases, nor does it include any form
of assistance which is excluded from the definition of "grant"
in this part.
Subgrantee means the government or other legal entity to which
a subgrant is awarded and which is accountable to the grantee
for the use of the funds provided.
Supplies means all tangible personal property other than "equipment"
as defined in this part.
Suspension means depending on the context, either (1) temporary
withdrawal of the authority to obligate grant funds pending corrective
action by the grantee or subgrantee or a decision to terminate
the grant, or (2) an action taken by a suspending official in
accordance with agency regulations implementing E.O. 12549 to
immediately exclude a person from participating in grant transactions
for a period, pending completion of an investigation and such
legal or debarment proceedings as may ensue.
Termination means permanent withdrawal of the authority to
obligate previouslyawarded grant funds before that authority would
otherwise expire. It also means the voluntary relinquishment of
that authority by the grantee or subgrantee. "Termination''
does not include: (1) Withdrawal of funds awarded on the basis
of the grantee's underestimate of the unobligated balance in a
prior period; (2) Withdrawal of the unobligated balance as of
the expiration of a grant; (3) Refusal to extend a grant or award
additional funds, to make a competing or noncompeting continuation,
renewal, extension, or supplemental award; or (4) voiding of a
grant upon determination that the award was obtained fraudulently,
or was otherwise illegal or invalid from inception.
Terms of a grant or subgrant mean all requirements of the
grant or subgrant, whether in statute, regulations, or the award
document.
Third party in-kind contributions mean property or services
which benefit a federally assisted project or program and which
are contributed by non-Federal third parties without charge to
the grantee, or a cost-type contractor under the grant agreement.
Unliquidated obligations for reports prepared on a cash basis
mean the amount of obligations incurred by the grantee that has
not been paid. For reports prepared on an accrued expenditure
basis, they represent the amount of obligations incurred by the
grantee for which an outlay has not been recorded.
Unobligated balance means the portion of the funds authorized
by the Federal agency that has not been obligated by the grantee
and is determined by deducting the cumulative obligations from
the cumulative funds authorized.
Sec. 18.4 Applicability.
(a) General. Subparts A through D of this part apply to all
grants and subgrants to governments, except where inconsistent
with Federal statutes or with regulations authorized in accordance
with the exception provision of Sec. 18.6, or:
(2) The block grants authorized by the Omnibus Budget Reconciliation
Act of 1981 (Community Services; Preventive Health and Health
Services; Alcohol, Drug Abuse, and Mental Health Services; Maternal
and Child Health Services; Social Services; LowIncome Home Energy
Assistance; States' Program of Community Development Block Grants
for Small Cities; and Elementary and Secondary Education other
than programs administered by the Secretary of Education under
title V, subtitle D, chapter 2, Section 583-the Secretary's discretionary
grant program) and titles I-III of the Job Training Partnership
Act of 1982 and under the Public Health Services Act (Section
1921), Alcohol and Drug Abuse Treatment and Rehabilitation Block
Grant and part C of title V, Mental Health Service for the Homeless
Block Grant).
(3) Entitlement grants to carry out the following programs
of the Social Security Act:
(ii) Child Support Enforcement and Establishment of Paternity
(title IV-D of the Act);
(iii) Foster Care and Adoption Assistance (title IV-E of the
Act);
(iv) Aid to the Aged, Blind, and Disabled (titles I, X, XIV,
and XVI-AABD of the Act); and
(v) Medical Assistance (Medicaid) (title XIX of the Act) not
including the State Medicaid Fraud Control program authorized
by section 1903(a)(6)(B).
(2) Commodity Assistance (section 6 of the Act),
(3) Special Meal Assistance (section 11 of the Act),
(4) Summer Food Service for Children (section 13 of the Act), and
(5) Child Care Food Program (section 17 of the Act).
(ii) School Breakfast (section 4 of the Act).
(7) A grant for an experimental, pilot, or demonstration project
that is also supported by a grant listed in paragraph (a)(3) of
this section;
(8) Grant funds awarded under subsection 412(e) of the Immigration
and Nationality Act (8 U.S.C. 1522(e)) and subsection 501(a) of
the Refugee Education Assistance Act of 1980 (Pub. L. 96422, 94
Stat. 1809), for cash assistance, medical assistance, and supplemental
security income benefits to refugees and entrants and the administrative
costs of providing the assistance and benefits;
(9) Grants to local education agencies under 20 U.S.C. 236
through 241-1(a), and 242 through 244 (portions of the Impact
Aid program), except for 20 U.S.C. 238(d)(2)(c) and 240(f) (Entitlement
Increase for Handicapped Children); and
(10) Payments under the Veterans Administration's State Home
Per Diem Program (38 U.S.C. 641(a)).
Sec. 18.5 Effect on other issuances.
All other grants administration provisions of codified program
regulations, program manuals, handbooks and other nonregulatory
materials which are inconsistent with this part are superseded,
except to the extent they are required by statute, or authorized
in accordance with the exception provision in Sec. 18.6.
Sec. 18.6 Additions and exceptions.
(a) For classes of grants and grantees subject to this part,
Federal agencies may not impose additional administrative requirements
except in codified regulations published in the Federal Register.
(b) Exceptions for classes of grants or grantees may be authorized
only by OMB.
(2) [Reserved]
(2) [Reserved]
(a) Scope.
(2) This section applies only to applications to Federal agencies
for grants, and is not required to be applied by grantees in dealing
with applicants for subgrants. However, grantees are encouraged
to avoid more detailed or burdensome application requirements
for subgrants.
(3) Forms and procedures for Federal Highway Administration
(FHWA) projects are contained in 23 CFR part 630, subpart B, 23
CFR part 420, subpart A, and 49 CFR part 450.
(2) Applicants are not required to submit more than the original
and two copies of preapplications or applications.
(3) Applicants must follow all applicable instructions that
bear OMB clearance numbers. Federal agencies may specify and describe
the programs, functions, or activities that will be used to plan,
budget, and evaluate the work under a grant. Other supplementary
instructions may be issued only with the approval of OMB to the
extent required under the Paperwork Reduction Act of 1980. For
any standard form, except the SF-424 facesheet, Federal agencies
may shade out or instruct the applicant to disregard any line
item that is not needed.
(4) When a grantee applies for additional funding (such as
a continuation or supplemental award) or amends a previously submitted
application, only the affected pages need be submitted. Previously
submitted pages with information that is still current need not
be resubmitted.
Sec. 18.11 State plans.
(a) Scope. The statutes for some programs require States to
submit plans before receiving grants. Under regulations implementing
Executive Order 12372, "Intergovernmental Review of Federal
Programs," States are allowed to simplify, consolidate and
substitute plans. This section contains additional provisions
for plans that are subject to regulations implementing the Executive
order.
(b) Requirements. A State need meet only Federal administrative
or programmatic requirements for a plan that are in statutes or
codified regulations.
(c) Assurances. In each plan the State will include an assurance
that the State shall comply with all applicable Federal statutes
and regulations in effect with respect to the periods for which
it receives grant funding. For this assurance and other assurances
required in the plan, the State may:
(2) Repeat the assurance language in the statutes or regulations,
or
(3) Develop its own language to the extent permitted by law.
Sec. 18.12 Special grant or subgrant conditions for "high-risk"
grantees.
(a) A grantee or subgrantee may be considered "high risk"
if an awarding agency determines that a grantee or subgrantee:
(2) Is not financially stable, or
(3) Has a management system which does not meet the management
standards set forth in this part, or
(4) Has not conformed to terms and conditions of previous
awards, or
(5) Is otherwise not responsible; and if the awarding agency
determines that an award will be made, special conditions and/or
restrictions shall correspond to the high risk condition and shall
be included in the award.
(2) Withholding authority to proceed to the next phase until
receipt of evidence of acceptable performance within a given
funding period;
(3) Requiring additional, more detailed financial reports;
(4) Additional project monitoring;
(5) Requiring the grantee or subgrantee to obtain technical
or management assistance; or
(6) Establishing additional prior approvals.
(2) The reason(s) for imposing them;
(3) The corrective actions which must be taken before they
will be removed and the time allowed for completing the corrective
actions; and
(4) The method of requesting reconsideration of the conditions/restrictions
imposed.
Sec. 18.20 Standards for financial management systems.
(a) A State must expand and account for grant funds in accordance
with State laws and procedures for expending and accounting for
its own funds. Fiscal control and accounting procedures of the
State, as well as its subgrantees and cost-type contractors, must
be sufficient to--
(2) Permit the tracing of funds to a level of expenditures
adequate to establish that such funds have not been used in violation
of the restrictions and prohibitions of applicable statutes.
(2) Accounting records. Grantees and subgrantees must maintain
records which adequately identify the source and application of
funds provided for financiallyassisted activities. These records
must contain information pertaining to grant or subgrant awards
and authorizations, obligations, unobligated balances, assets,
liabilities, outlays or expenditures, and income.
(3) Internal control. Effective control and accountability
must be maintained for all grant and subgrant cash, real and personal
property, and other assets. Grantees and subgrantees must adequately
safeguard all such property and must assure that it is used solely
for authorized purposes.
(4) Budget control. Actual expenditures or outlays must be
compared with budgeted amounts for each grant or subgrant. Financial
information must be related to performance or productivity data,
including the development of unit cost information whenever appropriate
or specifically required in the grant or subgrant agreement. If
unit cost data are required, estimates based on available documentation
will be accepted whenever possible.
(5) Allowable cost. Applicable OMB cost principles, agency
program regulations, and the terms of grant and subgrant agreements
will be followed in determining the reasonableness, allowability,
and allocability of costs.
(6) Source documentation. Accounting records must be supported
by such source documentation as cancelled checks, paid bills,
payrolls, time and attendance records, contract and subgrant award
documents, etc.
(7) Cash management. Procedures for minimizing the time elapsing
between the transfer of funds from the U.S. Treasury and disbursement
by grantees and subgrantees must be followed whenever advance
payment procedures are used. Grantees must establish reasonable
procedures to ensure the receipt of reports on subgrantees' cash
balances and cash disbursements in sufficient time to enable them
to prepare complete and accurate cash transactions reports to
the awarding agency. When advances are made by letter-of-credit
or electronic transfer of funds methods, the grantee must make
drawdowns as close as possible to the time of making disbursements.
Grantees must monitor cash drawdowns by their subgrantees to
assure that they conform substantially to the same standards of
timing and amount as apply to advances to the grantees.
(d) Certain Urban Mass Transportation Administration (UMTA)
grantees shall comply with the requirements of section 15 of the
Urban Mass Transportation (UMT) Act of 1964, as amended, as implemented
by 49 CFR part 630, regarding a uniform system of accounts and
records and a uniform reporting system for certain grantees.
[53 FR 8086 and 8087, Mar. 11, 1988, as amended at 53 FR 8086,
Mar. 11, 1988]
(1) Grants and subgrants to State and local institutions of
higher education or State and local hospitals.
(b) Entitlement programs. Entitlement programs enumerated
above in Sec. 18.4(a) (3) through (8) are subject to subpart E.
(i) Aid to Needy Families with Dependent Children (title IV-A
of the Act, not including the Work Incentive Program (WIN) authorized
by section 402(a)19(G); HHS grants for WIN are subject to this
part);
(4) Entitlement grants under the following programs of The
National School Lunch Act:
(i) School Lunch (section 4 of the Act),
(5) Entitlement grants under the following programs of The
Child Nutrition Act of 1966:
(i) Special Milk (section 3 of the Act), and
(6) Entitlement grants for State Administrative expenses under
The Food Stamp Act of 1977 (section 16 of the Act).
(1) All Departmental requests for exceptions shall be processed
through the Assistant Secretary of Administration.
(c) Exceptions on a case-by-case basis and for subgrantees
may be authorized by the affected Federal agencies.
(1) All case-by-case exceptions may be authorized by the affected
operating administrations or departmental offices, with the concurrence
of the Assistant Secretary for Administration.
[53 FR 8086 and 8087, Mar. 11, 1988, as amended at 60 FR 19646,
Apr. 19, 1995]
Subpart B -- Pre-Award Requirements
Sec. 18.10 Forms for applying for grants.
(1) This section prescribes forms and instructions
to be used by governmental organizations (except hospitals and
institutions of higher education operated by a government) in
applying for grants. This section is not applicable, however,
to formula grant programs which do not require applicants to apply
for funds on a project basis.
(b) Authorized forms and instructions for governmental organizations.
(1) In applying for grants, applicants shall only use standard
application forms or those prescribed by the granting agency with
the approval of OMB under the Paperwork Reduction Act of 1980.
[53 FR 8086 and 8087, Mar. 11, 1988, as amended at 53 FR 8086,
Mar. 11, 1988]
(1) Cite by number the statutory or regulatory provisions
requiring the assurances and affirm that it gives the assurances
required by those provisions,
(d) Amendments. A State will amend a plan whenever necessary
to reflect: (1) New or revised Federal statutes or regulations
or (2) a material change in any State law, organization, policy,
or State agency operation. The State will obtain approval for
the amendment and its effective date but need submit for approval
only the amended portions of the plan.
(1) Has a history of unsatisfactory performance, or
(b) Special conditions or restrictions may include:
(1) Payment on a reimbursement basis;
(c) If an awarding agency decides to impose such conditions,
the awarding official will notify the grantee or subgrantee as
early as possible, in writing, of:
(1) The nature of the special conditions/restrictions;
Subpart C -- Post-Award Requirements
Financial Administration
(1) Permit preparation of reports required by this part and
the statutes authorizing the grant, and
(b) The financial management systems of other grantees and
subgrantees must meet the following standards:
(1) Financial reporting. Accurate, current, and complete
disclosure of the financial results of financially-assisted activities
must be made in accordance with the financial reporting requirements
of the grant or subgrant.
(c) An awarding agency may review the adequacy of the financial
management system of any applicant for financial assistance as
part of a preaward review or at any time subsequent to award.
For the costs of a | Use the principles in-- |
State, local or Indian tribal government. | OMB Circular A-87. |
Private nonprofit organization other than an (1) institution of higher education, (2) hospital, or (3) organization named in OMB Circular A122 as not subject to that circular. | OMB Circular A-122. |
Educational institutions. | OMB Circular A-21. |
For-profit organization other than a hospital and an organization named in OMB Circular A122 as not subject to that circular. | 48 CFR part 31. Contract Cost Principles and Procedures, or uniform cost accounting standards that comply with cost principles acceptable to the Federal agency. |
(c) The overhead cost principles of OMB Circular A-87 shall not apply to State highway agencies for FHWA funded grants.
(d) Sections 3(1) and 9(p) of the UMT Act of 1964, as amended, authorize the Secretary to include in the net project cost eligible for Federal assistance, the amount of interest earned and payable on bonds issued by the State or local public body to the extent that the proceeds of such bonds have actually been expended in carrying out such project or portion thereof. Limitations are established in sections 3 and 9 of the UMT Act of 1964, as amended.
(e) Section 9 of the UMT Act of 1964, as amended, authorizes grants to finance the leasing of facilities and equipment for use in mass transportation services provided leasing is more cost effective than acquisition or construction.
[53 FR 8086 and 8087, Mar. 11, 1988, as amended at 53 FR 8086, Mar. 11, 1988]
Sec. 18.23 Period of availability of funds.
(a) General. Where a funding period is specified, a grantee
may charge to the award only costs resulting from obligations
of the funding period unless carryover of unobligated balances
is permitted, in which case the carryover balances may be charged
for costs resulting from obligations of the subsequent funding period.
(b) Liquidation of obligations. A grantee must liquidate
all obligations incurred under the award not later than 90 days
after the end of the funding period (or as specified in a program
regulation) to coincide with the submission of the annual Financial
Status Report (SF-269). The Federal agency may extend this deadline
at the request of the grantee.
Sec. 18.24 Matching or cost sharing.
(a) Basic rule: Costs and contributions acceptable. With
the qualifications and exceptions listed in paragraph (b) of this
section, a matching or cost sharing requirement may be satisfied
by either or both of the following:
(2) The value of third party inkind contributions applicable
to the period to which the cost sharing or matching requirements
applies.
(2) General revenue sharing. For the purpose of this section,
general revenue sharing funds distributed under 31 U.S.C. 6702
are not considered Federal grant funds.
(3) Cost or contributions counted towards other Federal costs-sharing
requirements. Neither costs nor the values of third party in-kind
contributions may count towards satisfying a cost sharing or matching
requirement of a grant agreement if they have been or will be
counted towards satisfying a cost sharing or matching requirement
of another Federal grant agreement, a Federal procurement contract,
or any other award of Federal funds.
(4) Costs financed by program income. Costs financed by program
income, as defined in Sec. 18.25, shall not count towards satisfying
a cost sharing or matching requirement unless they are expressly
permitted in the terms of the assistance agreement. (This use
of general program income is described in Sec. 18.25(g).)
(5) Services or property financed by income earned by contractors.
Contractors under a grant may earn income from the activities
carried out under the contract in addition to the amounts earned
from the party awarding the contract. No costs of services or
property supported by this income may count toward satisfying
a cost sharing or matching requirement unless other provisions
of the grant agreement expressly permit this kind of income to
be used to meet the requirement.
(6) Records. Costs and third party in-kind contributions
counting towards satisfying a cost sharing or matching requirement
must be verifiable from the records of grantees and subgrantee
or cost-type contractors. These records must show how the value
placed on third party in-kind contributions was derived. To the
extent feasible, volunteer services will be supported by the same
methods that the organization uses to support the allocability
of regular personnel costs.
(7) Special standards for third party in-kind contributions.
(ii) Some third party in-kind contributions are goods and
services that, if the grantee, subgrantee, or contractor receiving
the contribution had to pay for them, the payments would have
been an indirect costs. Costs sharing or matching credit for
such contributions shall be given only if the grantee, subgrantee,
or contractor has established, along with its regular indirect
cost rate, a special rate for allocating to individual projects
or programs the value of the contributions.
(iii) A third party in-kind contribution to a fixed-price
contract may count towards satisfying a cost sharing or matching
requirement only if it results in:
(B) A cost savings to the grantee or subgrantee.
(9) Section 4(a) of the UMT Act of 1964, as amended, provides
that the Federal grant for any project to be assisted under section
3 of the UMT Act of 1964, as amended, shall be in an amount equal
to 75 percent of the net project costs. Net project cost is
defined as that portion of the cost of the project which cannot
be reasonably financed from revenues.
(10) Section 18(e) of the UMT Act of 1964, as amended, limits
the Federal share to 80 percent of the net cost of construction,
as determined by the Secretary of Transportation. The Federal
share for the payment of subsidies for operating expenses, as
defined by the Secretary, shall not exceed 50 percent of the net
cost of such operating expense projects.
(2) Employees of other organizations. When an employer other
than a grantee, subgrantee, or cost-type contractor furnishes free
of charge the services of an employee in the employee's normal
line of work, the services will be valued at the employee's regular
rate of pay exclusive of the employee's fringe benefits and overhead
costs. If the services are in a different line of work, paragraph
(c)(1) of this section applies.
(3) Section 5(g) of the Department of Transportation Act (49
U.S.C. 1654(g)) limits in-kind service contributions under the
local Rail Service Assistance Program to "the cash equivalent
of State salaries for State public employees working in the State
rail assistance program, but not including overhead and general
administrative costs.'"
(2) If a third party donates the use of equipment or space
in a building but retains title, the contribution will be valued
at the fair rental rate of the equipment or space.
(2) Other awards. If assisting in the acquisition of property
is not the purpose of the grant or subgrant, paragraphs (e)(2)
(i) and (ii) of this section apply:
(ii) If approval is not obtained under paragraph (e)(2)(i)
of this section, no amount may be counted for donated land, and
only depreciation or use allowances may be counted for donated
equipment and buildings. The depreciation or use allowances for
this property are not treated as third party in-kind contributions.
Instead, they are treated as costs incurred by the grantee or
subgrantee. They are computed and allocated (usually as indirect
costs) in accordance with the cost principles specified in Sec.
18.22, in the same way as depreciation or use allowances for purchased
equipment and buildings. The amount of depreciation or use allowances
for donated equipment and buildings is based on the property's
market value at the time it was donated.
(g) Appraisal of real property. In some cases under paragraphs
(d), (e) and (f) of this section, it will be necessary to establish
the market value of land or a building or the fair rental rate
of land or of space in a building. In these cases, the Federal
agency may require the market value or fair rental value be set
by an independent appraiser, and that the value or rate be certified
by the grantee. This requirement will also be imposed by the grantee
on subgrantees.
[53 FR 8086 and 8087, Mar. 11, 1988, as amended at 53 FR 8086,
Mar. 11, 1988]
Sec. 18.25 Program income.
(a) General. Grantees are encouraged to earn income to defray
program costs. Program income includes income from fees for services
performed, from the use or rental of real or personal property
acquired with grant funds, from the sale of commodities or items
fabricated under a grant agreement, and from payments of principal
and interest on loans made with grant funds. Except as otherwise
provided in regulations of the Federal agency, program income
does not include interest on grant funds, rebates, credits, discounts,
refunds, etc. and interest earned on any of them.
(b) Definition of program income. Program income means gross
income received by the grantee or subgrantee directly generated
by a grant supported activity, or earned only as a result of the
grant agreement during the grant period. ``During the grant period''
is the time between the effective date of the award and the ending
date of the award reflected in the final financial report.
(c) Cost of generating program income. If authorized by Federal
regulations or the grant agreement, costs incident to the generation
of program income may be deducted from gross income to determine
program income.
(d) Governmental revenues. Taxes, special assessments, levies,
fines, and other such revenues raised by a grantee or subgrantee
are not program income unless the revenues are specifically identified
in the grant agreement or Federal agency regulations as program
income.
(e) Royalties. Income from royalties and license fees for
copyrighted material, patents, and inventions developed by a grantee
or subgrantee is program income only if the revenues are specifically
identified in the grant agreement or Federal agency regulations
as program income. (See Sec. 18.34.)
(f) Property. Proceeds from the sale of real property or equipment
will be handled in accordance with the requirements of Secs. 18.31
and 18.32.
(g) Use of program income. Program income shall be deducted
from outlays which may be both Federal and non-Federal as described
below, unless the Federal agency regulations or the grant agreement
specify another alternative (or a combination of the alternatives).
In specifying alternatives, the Federal agency may distinguish
between income earned by the grantee and income earned by subgrantees
and between the sources, kinds, or amounts of income. When Federal
agencies authorize the alternatives in paragraphs (g) (2) and
(3) of this section, program income in excess of any limits stipulated
shall also be deducted from outlays.
(2) Addition. When authorized, program income may be added
to the funds committed to the grant agreement by the Federal agency
and the grantee. The program income shall be used for the purposes
and under the conditions of the grant agreement.
(3) Cost sharing or matching. When authorized, program income
may be used to meet the cost sharing or matching requirement of
the grant agreement. The amount of the Federal grant award remains
the same.
(4) Section 3(a)(1)(D) of the UMT Act of 1964, as amended,
provides that the Secretary shall establish requirements for the
use of income derived from appreciated land values for certain
UMTA grants. Specific requirements shall be contained in grant
agreements.
(5) UMTA grantees may retain program income for allowable
capital or operating expenses.
(6) For grants awarded under section 9 of the UMT Act of 1964,
as amended, any revenues received from the sale of advertising
and concessions in excess of fiscal year 1985 levels shall be
excluded from program income.
(7) 23 U.S.C. 156 requires that States shall charge fair market
value for the sale, lease, or use of rightofway airspace for non-transportation
purposes and that such income shall be used for projects eligible
under 23 U.S.C.
[53 FR 8086 and 8087, Mar. 11, 1988, as amended at 53 FR 8087,
Mar. 11, 1988]
Sec. 18.26 Non-Federal audits.
(a) Basic rule. Grantees and subgrantees are responsible for
obtaining audits in accordance with the Single Audit Act Amendments of 1996
(31 U.S.C. 7501-7507) and revised OMB Circular A-133, "Audits of States, Local Governments, and Non-Profit Organizations." The audits shall be made by an independent auditor in accordance
with generally accepted government auditing standards covering
financial audits.
(b) Subgrantees. State or local governments, as those terms
are defined for purposes of the Single Audit Act Amendments of 1996, that provide Federal awards to a subgrantee, which expends $300,000 or more (or other amount as specified by OMB) in Federal awards in a fiscal year, shall:
(2) Determine whether the subgrantee spent Federal assistance
funds provided in accordance with applicable laws and regulations.
This may be accomplished by reviewing an audit of the subgrantee
made in accordance with the Act, Circular A-110, or through other
means (e.g., program reviews) if the subgrantee has not had such
an audit;
(3) Ensure that appropriate corrective action is taken within
six months after receipt of the audit report in instance of noncompliance
with Federal laws and regulations;
(4) Consider whether subgrantee audits necessitate adjustment
of the grantee's own records; and
(5) Require each subgrantee to permit independent auditors
to have access to the records and financial statements.
[53 FR 8086 and 8087, Mar. 11, 1988, as amended at 61 FR 21387,
May 10, 1996, amended at 62 FR 45939 and 45947, August 29, 1997]
Changes, Property, and Subawards
Sec. 18.30 Changes.
(a) General. Grantees and subgrantees are permitted to rebudget
within the approved direct cost budget to meet unanticipated requirements
and may make limited program changes to the approved project.
However, unless waived by the awarding agency, certain types
of post-award changes in budgets and projects shall require the
prior written approval of the awarding agency.
(b) Relation to cost principles. The applicable cost principles
(see Sec. 18.22) contain requirements for prior approval of certain
types of costs. Except where waived, those requirements apply
to all grants and subgrants even if paragraphs (c) through (f)
of this section do not.
(c) Budget changes
(ii) Unless waived by the awarding agency, cumulative transfers
among direct cost categories, or, if applicable, among separately
budgeted programs, projects, functions, or activities which exceed
or are expected to exceed ten percent of the current total approved
budget, whenever the awarding agency's share exceeds $100,000.
(iii) Transfer of funds allotted for training allowances (i.e.,
from direct payments to trainees to other expense categories).
(3) Combined construction and nonconstruction projects. When
a grant or subgrant provides funding for both construction and
nonconstruction activities, the grantee or subgrantee must obtain
prior written approval from the awarding agency before making
any fund or budget transfer from nonconstruction to construction
or vice versa.
(2) Need to extend the period of availability of funds.
(3) Changes in key persons in cases where specified in an
application or a grant award. In research projects, a change in
the project director or principal investigator shall always require
approval unless waived by the awarding agency.
(4) Under nonconstruction projects, contracting out, subgranting
(if authorized by law) or otherwise obtaining the services of
a third party to perform activities which are central to the purposes
of the award. This approval requirement is in addition to the
approval requirements of Sec. 18.36 but does not apply to the
procurement of equipment, supplies, and general support services.
(f) Requesting prior approval.
(2) A request for a prior approval under the applicable Federal
cost principles (see Sec. 18.22) may be made by letter.
(3) A request by a subgrantee for prior approval will be addressed
in writing to the grantee. The grantee will promptly review such
request and shall approve or disapprove the request in writing.
A grantee will not approve any budget or project revision which
is inconsistent with the purpose or terms and conditions of the
Federal grant to the grantee. If the revision, requested by the
subgrantee would result in a change to the grantee's approved
project which requires Federal prior approval, the grantee will
obtain the Federal agency's approval before approving the
subgrantee's request.
(a) Title. Subject to the obligations and conditions set forth
in this section, title to real property acquired under a grant
or subgrant will vest upon acquisition in the grantee or subgrantee
respectively.
(b) Use. Except as otherwise provided by Federal statutes,
real property will be used for the originally authorized purposes
as long as needed for that purposes, and the grantee or subgrantee
shall not dispose of or encumber its title or other interests.
(c) Disposition. When real property is no longer needed for
the originally authorized purpose, the grantee or subgrantee will
request disposition instructions from the awarding agency. The
instructions will provide for one of the following alternatives:
(2) Sale of property. Sell the property and compensate the
awarding agency. The amount due to the awarding agency will be
calculated by applying the awarding agency's percentage of participation
in the cost of the original purchase to the proceeds of the sale
after deduction of any actual and reasonable selling and fixing-up
expenses. If the grant is still active, the net proceeds from
sale may be offset against the original cost of the property.
When a grantee or subgrantee is directed to sell property, sales
procedures shall be followed that provide for competition to the
extent practicable and result in the highest possible return.
(3) Transfer of title. Transfer title to the awarding agency
or to a third-party designated/approved by the awarding agency.
The grantee or subgrantee shall be paid an amount calculated by
applying the grantee or subgrantee's percentage of participation
in the purchase of the real property to the current fair market
value of the property.
[53 FR 8086 and 8087, Mar. 11, 1988, as amended at 53 FR 8087,
Mar. 11, 1988]
Sec. 18.32 Equipment.
(a) Title. Subject to the obligations and conditions set forth
in this section, title to equipment acquired under a grant or
subgrant will vest upon acquisition in the grantee or subgrantee
respectively.
(b) States. A State will use, manage, and dispose of equipment
acquired under a grant by the State in accordance with State laws
and procedures. Other grantees and subgrantees will follow paragraphs
(c) through (e) of this section.
(c) Use.
(2) The grantee or subgrantee shall also make equipment available
for use on other projects or programs currently or previously
supported by the Federal Government, providing such use will not
interfere with the work on the projects or program for which it
was originally acquired. First preference for other use shall
be given to other programs or projects supported by the awarding
agency. User fees should be considered if appropriate.
(3) Notwithstanding the encouragement in Sec. 18.25(a) to
earn program income, the grantee or subgrantee must not use equipment
acquired with grant funds to provide services for a fee to compete
unfairly with private companies that provide equivalent services,
unless specifically permitted or contemplated by Federal statute.
(4) When acquiring replacement equipment, the grantee or subgrantee
may use the equipment to be replaced as a tradein or sell the
property and use the proceeds to offset the cost of the replacement
property, subject to the approval of the awarding agency.
(2) A physical inventory of the property must be taken and
the results reconciled with the property records at least once
every two years.
(3) A control system must be developed to ensure adequate
safeguards to prevent loss, damage, or theft of the property.
Any loss, damage, or theft shall be investigated.
(4) Adequate maintenance procedures must be developed to keep
the property in good condition.
(5) If the grantee or subgrantee is authorized or required
to sell the property, proper sales procedures must be established
to ensure the highest possible return.
(2) Items of equipment with a current per unit fair market
value in excess of $5,000 may be retained or sold and the awarding
agency shall have a right to an amount calculated by multiplying
the current market value or proceeds from sale by the awarding
agency's share of the equipment.
(3) In cases where a grantee or subgrantee fails to take appropriate
disposition actions, the awarding agency may direct the grantee
or subgrantee to take excess and disposition actions.
(2) Grantees or subgrantees will manage the equipment in accordance
with Federal agency rules and procedures, and submit an annual
inventory listing.
(3) When the equipment is no longer needed, the grantee or
subgrantee will request disposition instructions from the Federal
agency.
(2) The Federal awarding agency shall issue disposition instruction
within 120 calendar days after the end of the Federal support
of the project for which it was acquired. If the Federal awarding
agency fails to issue disposition instructions within the 120
calendar-day period the grantee shall follow Sec. 18.32(e).
(3) When title to equipment is transferred, the grantee shall
be paid an amount calculated by applying the percentage of participation
in the purchase to the current fair market value of the property.
(a) Title. Title to supplies acquired under a grant or subgrant
will vest, upon acquisition, in the grantee or subgrantee respectively.
(b) Disposition. If there is a residual inventory of unused
supplies exceeding $5,000 in total aggregate fair market value
upon termination or completion of the award, and if the supplies
are not needed for any other federally sponsored programs or projects,
the grantee or subgrantee shall compensate the awarding agency
for its share.
Sec. 18.34 Copyrights.
The Federal awarding agency reserves a royaltyfree, nonexclusive,
and irrevocable license to reproduce, publish or otherwise use,
and to authorize others to use, for Federal Government purposes:
(b) Any rights of copyright to which a grantee, subgrantee
or a contractor purchases ownership with grant support.
Grantees and subgrantees must not make any award or permit
any award (subgrant or contract) at any tier to any party which
is debarred or suspended or is otherwise excluded from or ineligible
for participation in Federal assistance programs under Executive
Order 12549, "Debarment and Suspension."
Sec. 18.36 Procurement.
(a) States. When procuring property and services under a grant,
a State will follow the same policies and procedures it uses for
procurements from its non-Federal funds. The State will ensure
that every purchase order or other contract includes any clauses
required by Federal statutes and executive orders and their implementing
regulations. Other grantees and subgrantees will follow paragraphs
(b) through (i) in this section.
(b) Procurement standards.
(2) Grantees and subgrantees will maintain a contract administration
system which ensures that contractors perform in accordance with
the terms, conditions, and specifications of their contracts or
purchase orders.
(3) Grantees and subgrantees will maintain a written code
of standards of conduct governing the performance of their employees
engaged in the award and administration of contracts. No employee,
officer or agent of the grantee or subgrantee shall participate
in selection, or in the award or administration of a contract
supported by Federal funds if a conflict of interest, real or
apparent, would be involved. Such a conflict would arise when:
(ii) Any member of his immediate family,
(iii) His or her partner, or
(iv) An organization which employs, or is about to employ,
any of the above, has a financial or other interest in the firm
selected for award. The grantee's or subgrantee's officers, employees
or agents will neither solicit nor accept gratuities, favors or
anything of monetary value from contractors, potential contractors,
or parties to subagreements. Grantee and subgrantees may set minimum
rules where the financial interest is not substantial or the gift
is an unsolicited item of nominal intrinsic value. To the extent
permitted by State or local law or regulations, such standards
or conduct will provide for penalties, sanctions, or other disciplinary
actions for violations of such standards by the grantee's and
subgrantee's officers, employees, or agents, or by contractors
or their agents. The awarding agency may in regulation provide
additional prohibitions relative to real, apparent, or potential
conflicts of interest.
(5) To foster greater economy and efficiency, grantees and
subgrantees are encouraged to enter into State and local intergovernmental
agreements for procurement or use of common goods and services.
(6) Grantees and subgrantees are encouraged to use Federal
excess and surplus property in lieu of purchasing new equipment
and property whenever such use is feasible and reduces project
costs.
(7) Grantees and subgrantees are encouraged to use value engineering
clauses in contracts for construction projects of sufficient size
to offer reasonable opportunities for cost reductions. Value engineering
is a systematic and creative analysis of each contract item or
task to ensure that its essential function is provided at the
overall lower cost.
(8) Grantees and subgrantees will make awards only to responsible
contractors possessing the ability to perform successfully under
the terms and conditions of a proposed procurement. Consideration
will be given to such matters as contractor integrity, compliance
with public policy, record of past performance, and financial
and technical resources.
(9) Grantees and subgrantees will maintain records sufficient
to detail the significant history of a procurement. These records
will include, but are not necessarily limited to the following:
rationale for the method of procurement, selection of contract
type, contractor selection or rejection, and the basis for the
contract price.
(10) Grantees and subgrantees will use time and material type
contracts only--
(ii) If the contract includes a ceiling price that the contractor
exceeds at its own risk.
(12) Grantees and subgrantees will have protest procedures
to handle and resolve disputes relating to their procurements
and shall in all instances disclose information regarding the
protest to the awarding agency. A protestor must exhaust all administrative
remedies with the grantee and subgrantee before pursuing a protest
with the Federal agency. Reviews of protests by the Federal agency
will be limited to:
(ii) Violations of the grantee's or subgrantee's protest procedures
for failure to review a complaint or protest. Protests received
by the Federal agency other than those specified above will be
referred to the grantee or subgrantee.
(ii) Requiring unnecessary experience and excessive bonding,
(iii) Noncompetitive pricing practices between firms or between
affiliated companies,
(iv) Noncompetitive awards to consultants that are on
retainer contracts,
(v) Organizational conflicts of interest,
(vi) Specifying only a "brand name" product instead
of allowing "an equal" product to be offered and describing
the performance of other relevant requirements of the procurement, and
(vii) Any arbitrary action in the procurement process.
(3) Grantees will have written selection procedures for procurement
transactions. These procedures will ensure that all solicitations:
(2) Identify all requirements which the offerors must fulfill
and all other factors to be used in evaluating bids or proposals.
(2) Procurement by sealed bids (formal advertising). Bids
are publicly solicited and a firmfixedprice contract (lump sum
or unit price) is awarded to the responsible bidder whose bid,
conforming with all the material terms and conditions of the invitation
for bids, is the lowest in price. The sealed bid method is the
preferred method for procuring construction, if the conditions
in Sec. 18.36(d)(2)(i) apply.
(B) Two or more responsible bidders are willing and able to
compete effectively and for the business; and
(C) The procurement lends itself to a firm fixed price contract
and the selection of the successful bidder can be made principally
on the basis of price.
(B) The invitation for bids, which will include any specifications
and pertinent attachments, shall define the items or services
in order for the bidder to properly respond;
(C) All bids will be publicly opened at the time and place
prescribed in the invitation for bids;
(D) A firm fixed-price contract award will be made in writing
to the lowest responsive and responsible bidder. Where specified
in bidding documents, factors such as discounts, transportation
cost, and life cycle costs shall be considered in determining
which bid is lowest. Payment discounts will only be used to determine
the low bid when prior experience indicates that such discounts
are usually taken advantage of; and
(E) Any or all bids may be rejected if there is a sound documented
reason.
(ii) Proposals will be solicited from an adequate number of
qualified sources;
(iii) Grantees and subgrantees will have a method for conducting
technical evaluations of the proposals received and for selecting
awardees;
(iv) Awards will be made to the responsible firm whose proposal
is most advantageous to the program, with price and other factors
considered; and
(v) Grantees and subgrantees may use competitive proposal
procedures for qualifications-based procurement of architectural/engineering
(A/E) professional services whereby competitors' qualifications
are evaluated and the most qualified competitor is selected, subject
to negotiation of fair and reasonable compensation. The method,
where price is not used as a selection factor, can only be used
in procurement of A/E professional services. It cannot be used
to purchase other types of services though A/E firms are a potential
source to perform the proposed effort.
(B) The public exigency or emergency for the requirement will
not permit a delay resulting from competitive solicitation;
(C) The awarding agency authorizes noncompetitive proposals; or
(D) After solicitation of a number of sources, competition
is determined inadequate.
(iii) Grantees and subgrantees may be required to submit the
proposed procurement to the awarding agency for pre-award review
in accordance with paragraph (g) of this section.
(2) Affirmative steps shall include:
(ii) Assuring that small and minority businesses, and women's
business enterprises are solicited whenever they are potential
sources;
(iii) Dividing total requirements, when economically feasible,
into smaller tasks or quantities to permit maximum participation
by small and minority business, and women's business enterprises;
(iv) Establishing delivery schedules, where the requirement
permits, which encourage participation by small and minority business,
and women's business enterprises;
(v) Using the services and assistance of the Small Business
Administration, and the Minority Business Development Agency of
the Department of Commerce; and
(vi) Requiring the prime contractor, if subcontracts are to
be let, to take the affirmative steps listed in paragraphs (e)(2)
(i) through (v) of this section.
(2) Grantees and subgrantees will negotiate profit as a separate
element of the price for each contract in which there is no price
competition and in all cases where cost analysis is performed.
To establish a fair and reasonable profit, consideration will
be given to the complexity of the work to be performed, the risk
borne by the contractor, the contractor's investment, the amount
of subcontracting, the quality of its record of past performance,
and industry profit rates in the surrounding geographical area
for similar work.
(3) Costs or prices based on estimated costs for contracts
under grants will be allowable only to the extent that costs incurred
or cost estimates included in negotiated prices are consistent
with Federal cost principles (see Sec. 18.22). Grantees may reference
their own cost principles that comply with the applicable Federal
cost principles.
(4) The cost plus a percentage of cost and percentage of construction
cost methods of contracting shall not be used.
(2) Grantees and subgrantees must on request make available
for awarding agency pre-award review procurement documents, such
as requests for proposals or invitations for bids, independent
cost estimates, etc. when:
(ii) The procurement is expected to exceed the simplified
acquisition threshold and is to be awarded without competition
or only one bid or offer is received in response to a
solicitation; or
(iii) The procurement, which is expected to exceed the simplified
acquisition threshold, specifies a "brand name"
product; or
(iv) The proposed award is more than the simplified acquisition
threshold and is to be awarded to other than the apparent low
bidder under a sealed bid procurement; or
(v) A proposed contract modification changes the scope of
a contract or increases the contract amount by more than the simplified
acquisition threshold.
(ii) A grantee or subgrantee may self-certify its procurement
system. Such self-certification shall not limit the awarding agency's
right to survey the system. Under a self-certification procedure,
awarding agencies may wish to rely on written assurances from
the grantee or subgrantee that it is complying with these standards.
A grantee or subgrantee will cite specific procedures, regulations,
standards, etc., as being in compliance with these requirements
and have its system available for review.
(2) A performance bond on the part of the contractor for 100
percent of the contract price. A "performance bond'' is one
executed in connection with a contract to secure fulfillment of
all the contractor's obligations under such contract.
(3) A payment bond on the part of the contractor for 100 percent
of the contract price. A "payment bond'" is one executed
in connection with a contract to assure payment as required by
law of all persons supplying labor and material in the execution
of the work provided for in the contract.
(2) Termination for cause and for convenience by the grantee
or subgrantee including the manner by which it will be effected
and the basis for settlement. (All contracts in excess of $10,000)
(3) Compliance with Executive Order 11246 of September 24,
1965, entitled ``Equal Employment Opportunity,'' as amended by
Executive Order 11375 of October 13, 1967, and as supplemented
in Department of Labor regulations (41 CFR chapter 60). (All construction
contracts awarded in excess of $10,000 by grantees and their contractors
or subgrantees)
(4) Compliance with the Copeland "AntiKickback'' Act
(18 U.S.C. 874) as supplemented in Department of Labor regulations
(29 CFR part 3). (All contracts and subgrants for construction
or repair)
(5) Compliance with the DavisBacon Act (40 U.S.C. 276a to
276a-7) as supplemented by Department of Labor regulations (29
CFR part 5). (Construction contracts in excess of $2000 awarded
by grantees and subgrantees when required by Federal grant program
legislation)
(6) Compliance with Sections 103 and 107 of the Contract Work
Hours and Safety Standards Act (40 U.S.C. 327-330) as supplemented
by Department of Labor regulations (29 CFR part 5). (Construction
contracts awarded by grantees and subgrantees in excess of $2000,
and in excess of $2500 for other contracts which involve the employment
of mechanics or laborers)
(7) Notice of awarding agency requirements and regulations
pertaining to reporting.
(8) Notice of awarding agency requirements and regulations
pertaining to patent rights with respect to any discovery or invention
which arises or is developed in the course of or under such contract.
(9) Awarding agency requirements and regulations pertaining
to copyrights and rights in data.
(10) Access by the grantee, the subgrantee, the Federal grantor
agency, the Comptroller General of the United States, or any of
their duly authorized representatives to any books, documents,
papers, and records of the contractor which are directly pertinent
to that specific contract for the purpose of making audit, examination,
excerpts, and transcriptions.
(11) Retention of all required records for three years after
grantees or subgrantees make final payments and all other pending
matters are closed.
(12) Compliance with all applicable standards, orders, or
requirements issued under section 306 of the Clean Air Act (42
U.S.C. 1857(h)), section 508 of the Clean Water Act (33 U.S.C.
1368), Executive Order 11738, and Environmental Protection Agency
regulations (40 CFR part 15). (Contracts, subcontracts, and subgrants
of amounts in excess of $100,000)
(13) Mandatory standards and policies relating to energy efficiency
which are contained in the state energy conservation plan issued
in compliance with the Energy Policy and Conservation Act (Pub.
L. 94-163, 89 Stat. 871).
(k) Section 3(a)(2)(C) of the UMT Act of 1964, as amended,
prohibits the use of grant or loan funds to support procurements
utilizing exclusionary or discriminatory specifications.
(l) 46 U.S.C. 1241(b)(1) and 46 CFR part 381 impose cargo
preference requirements on the shipment of foreign made goods.
(m) Section 165 of the Surface Transportation Assistance Act
of 1982, 49 U.S.C. 1601, section 337 of the Surface Transportation
and Uniform Relocation Assistance Act of 1987, and 49 CFR parts
660 and 661 impose Buy America provisions on the procurement of
foreign products and materials.
(n) Section 105(f) of the Surface Transportation Assistance
Act of 1982, section 106(c) of the Surface Transportation and
Uniform Relocation Assistance Act of 1987, and 49 CFR part 23
impose requirements for the participation of disadvantaged business
enterprises.
(o) Section 308 of the Surface Transportation Assistance Act
of 1982, 49 U.S.C. 1068(b)(2), authorizes the use of competitive
negotiation for the purchase of rolling stock as appropriate.
(p) 23 U.S.C. 112(b) provides for an exemption to competitive
bidding requirements for highway construction contracts in emergency
situations.
(q) 23 U.S.C. 112 requires concurrence by the Secretary before
highway construction contracts can be awarded, except for projects
authorized under the provisions of 23 U.S.C. 17l.
(r) 23 U.S.C. 112(e) requires standardized contract clauses
concerning site conditions, suspension or work, and material changes
in the scope of the work for highway construction contracts.
(s)23 U.S.C. 140(b) authorizes the preferential employment
of Indians on Indian Reservation road projects and contracts.
(t) FHWA, UMTA, and Federal Aviation Administration (FAA)
grantees and subgrantees shall extend the use of qualifications-based
(e.g., architectural and engineering services) contract selection
procedures to certain other related areas and shall award such
contracts in the same manner as Federal contracts for architectural
and engineering services are negotiated under Title IX of the
Federal Property and Administrative Services Act of 1949, or equivalent
State (or airport sponsor for FAA) qualifications-based requirements.
For FHWA and UMTA programs, this provision applies except to the
extent that a State adopts or has adopted by statute a formal
procedure for the procurement of such services.
[53 FR 8086 and 8087, Mar. 11, 1988, as amended at 53 FR 8087,
Mar. 11, 1988; 60 FR 19639, 19647, Apr. 19, 1995]
Sec. 18.37 Subgrants.
(a) States. States shall follow state law and procedures when
awarding and administering subgrants (whether on a cost reimbursement
or fixed amount basis) of financial assistance to local and Indian
tribal governments. States shall:
(2) Ensure that subgrantees are aware of requirements imposed
upon them by Federal statute and regulation;
(3) Ensure that a provision for compliance with Sec. 18.42
is placed in every cost reimbursement subgrant; and
(4) Conform any advances of grant funds to subgrantees substantially
to the same standards of timing and amount that apply to cash
advances by Federal agencies.
(2) Ensure that every subgrant includes any clauses required
by Federal statute and executive orders and their implementing
regulations; and
(3) Ensure that subgrantees are aware of requirements imposed
upon them by Federal statutes and regulations.
(2) Section 18.11;
(3) The letter-of-credit procedures specified in Treasury
Regulations at 31 CFR part 205, cited in Sec. 18.21; and
(4) Section 18.50.
Sec. 18.40 Monitoring and reporting program performance.
(a) Monitoring by grantees. Grantees are responsible for managing
the day-to-day operations of grant and subgrant supported activities.
Grantees must monitor grant and subgrant supported activities
to assure compliance with applicable Federal requirements and
that performance goals are being achieved. Grantee monitoring
must cover each program, function or activity.
(b) Nonconstruction performance reports. The Federal agency
may, if it decides that performance information available from
subsequent applications contains sufficient information to meet
its programmatic needs, require the grantee to submit a performance
report only upon expiration or termination of grant support. Unless
waived by the Federal agency this report will be due on the same
date as the final Financial Status Report.
(2) Performance reports will contain, for each grant, brief
information on the following:
(ii) The reasons for slippage if established objectives were
not met.
(iii) Additional pertinent information including, when appropriate,
analysis and explanation of cost overruns or high unit costs.
(4) Grantees will adhere to the standards in this section
in prescribing performance reporting requirements for subgrantees.
(2) [Reserved]
(2) Favorable developments which enable meeting time schedules
and objectives sooner or at less cost than anticipated or producing
more beneficial results than originally planned.
(f) Waivers, extensions.
(2) The grantee may waive any performance report from a subgrantee
when not needed. The grantee may extend the due date for any performance
report from a subgrantee if the grantee will still be able to
meet its performance reporting obligations to the Federal agency.
Sec. 18.41 Financial Reporting.
(a) General.
(ii) Requesting advances or reimbursements when letters of
credit are not used.
(3) Grantees shall follow all applicable standard and supplemental
Federal agency instructions approved by OMB to the extent required
under the Paperwork Reduction Act of 1980 for use in connection
with forms specified in paragraphs (b) through (e) of this section.
Federal agencies may issue substantive supplementary instructions
only with the approval of OMB. Federal agencies may shade out
or instruct the grantee to disregard any line item that the Federal
agency finds unnecessary for its decisionmaking purposes.
(4) Grantees will not be required to submit more than the
original and two copies of forms required under this part.
(5) Federal agencies may provide computer outputs to grantees
to expedite or contribute to the accuracy of reporting. Federal
agencies may accept the required information from grantees in
machine usable format or computer printouts instead of prescribed
forms.
(6) Federal agencies may waive any report required by this
section if not needed.
(7) Federal agencies may extend the due date of any financial
report upon receiving a justified request from a grantee.
(2) Accounting basis. Each grantee will report program outlays
and program income on a cash or accrual basis as prescribed by
the awarding agency. If the Federal agency requires accrual information
and the grantee's accounting records are not normally kept on
the accrual basis, the grantee shall not be required to convert
its accounting system but shall develop such accrual information
through and analysis of the documentation on hand.
(3) Frequency. The Federal agency may prescribe the frequency
of the report for each project or program. However, the report
will not be required more frequently than quarterly. If the Federal
agency does not specify the frequency of the report, it will be
submitted annually. A final report will be required upon expiration
or termination of grant support.
(4) Due date. When reports are required on a quarterly or
semiannual basis, they will be due 30 days after the reporting
period. When required on an annual basis, they will be due 90
days after the grant year. Final reports will be due 90 days after
the expiration or termination of grant support.
(3) Cash in hands of subgrantees. When considered necessary
and feasible by the Federal agency, grantees may be required to
report the amount of cash advances in excess of three days needs
in the hands of their subgrantees or contractors and to provide
short narrative explanations of actions taken by the grantee to
reduce the excess balances.
(4) Frequency and due date. Grantees must submit the report
no later than 15 working days following the end of each quarter.
However, where an advance either by letter of credit or electronic
transfer of funds is authorized at an annualized rate of one million
dollars or more, the Federal agency may require the report to
be submitted within 15 working days following the end of each
month.
(2) Reimbursements. Requests for reimbursement under nonconstruction
grants will also be submitted on Standard Form 270. (For reimbursement
requests under construction grants, see paragraph (e)(1) of this
section.)
(3) The frequency for submitting payment requests is treated
in Sec. 18.41(b)(3).
(ii) The frequency for submitting reimbursement requests is
treated in Sec. 18.41(b)(3).
(ii) When a construction grant is paid by Treasury check advances
based on periodic requests from the grantee, the advances will
be requested on the form specified in Sec. 18.41(d).
(iii) The Federal agency may substitute the Financial Status
Report specified in Sec. 18.41(b) for the Outlay Report and Request
for Reimbursement for Construction Programs.
[53 FR 8086 and 8087, Mar. 11, 1988, as amended at 53 FR 8087,
Mar. 11, 1988]
Sec. 18.42 Retention and access requirements for records.
(a) Applicability.
(ii) Otherwise reasonably considered as pertinent to program
regulations or the grant agreement.
(2) If any litigation, claim, negotiation, audit or other
action involving the records has been started before the expiration
of the 3-year period, the records must be retained until completion
of the action and resolution of all issues which arise from it,
or until the end of the regular 3-year period, whichever is later.
(3) To avoid duplicate recordkeeping, awarding agencies may
make special arrangements with grantees and subgrantees to retain
any records which are continuously needed for joint use. The
awarding agency will request transfer of records to its custody
when it determines that the records possess long-term retention
value. When the records are transferred to or maintained by the
Federal agency, the 3-year retention requirement is not applicable
to the grantee or subgrantee.
(2) Real property and equipment records. The retention period
for real property and equipment records starts from the date of
the disposition or replacement or transfer at the direction of
the awarding agency.
(3) Records for income transactions after grant or subgrant
support. In some cases grantees must report income after the
period of grant support. Where there is such a requirement, the
retention period for the records pertaining to the earning of
the income starts from the end of the grantee's fiscal year in
which the income is earned.
(4) Indirect cost rate proposals, cost allocations plans,
etc. This paragraph applies to the following types of documents,
and their supporting records: indirect cost rate computations
or proposals, cost allocation plans, and any similar accounting
computations of the rate at which a particular group of costs
is chargeable (such as computer usage chargeback rates or composite
fringe benefit rates).
(ii) If not submitted for negotiation. If the proposal, plan,
or other computation is not required to be submitted to the Federal
Government (or to the grantee) for negotiation purposes, then
the 3-year retention period for the proposal plan, or computation
and its supporting records starts from the end of the fiscal year
(or other accounting period) covered by the proposal, plan, or
other computation.
(e) Access to records
(2) Expiration of right of access. The right of access in
this section must not be limited to the required retention period
but shall last as long as the records are retained.
Sec. 18.43 Enforcement.
(a) Remedies for noncompliance. If a grantee or subgrantee
materially fails to comply with any term of an award, whether
stated in a Federal statute or regulation, an assurance, in a
State plan or application, a notice of award, or elsewhere, the
awarding agency may take one or more of the following actions,
as appropriate in the circumstances:
(2) Disallow (that is, deny both use of funds and matching
credit for) all or part of the cost of the activity or action
not in compliance,
(3) Wholly or partly suspend or terminate the current award
for the grantee's or subgrantee's program,
(4) Withhold further awards for the program, or
(5) Take other remedies that may be legally available.
(c) Effects of suspension and termination. Costs of grantee
or subgrantee resulting from obligations incurred by the grantee
or subgrantee during a suspension or after termination of an award
are not allowable unless the awarding agency expressly authorizes
them in the notice of suspension or termination or subsequently.
Other grantee or subgrantee costs during suspension or after
termination which are necessary and not reasonably avoidable are
allowable if:
(2) The costs would be allowable if the award were not suspended
or expired normally at the end of the funding period in which
the termination takes effect.
Sec. 18.44 Termination for convenience.
Except as provided in Sec. 18.43 awards may be terminated
in whole or in part only as follows:
(b) By the grantee or subgrantee upon written notification
to the awarding agency, setting forth the reasons for such termination,
the effective date, and in the case of partial termination, the
portion to be terminated. However, if, in the case of a partial
termination, the awarding agency determines that the remaining
portion of the award will not accomplish the purposes for which
the award was made, the awarding agency may terminate the award
in its entirety under either Sec. 18.43 or paragraph (a) of this
section.
(a) General. The Federal agency will close out the award
when it determines that all applicable administrative actions
and all required work of the grant has been completed.
(b) Reports. Within 90 days after the expiration or termination
of the grant, the grantee must submit all financial, performance,
and other reports required as a condition of the grant. Upon request
by the grantee, Federal agencies may extend this timeframe. These
may include but are not limited to:
(2) Financial Status Report (SF 269) or Outlay Report and
Request for Reimbursement for Construction Programs (SF271) (as
applicable).
(3) Final request for payment (SF270) (if applicable).
(4) Invention disclosure (if applicable).
(5) Federally-owned property report. In accordance with Sec.
18.32(f), a grantee must submit an inventory of all federally
owned property (as distinct from property acquired with grant
funds) for which it is accountable and request disposition instructions
from the Federal agency of property no longer needed.
(d) Cash adjustments.
(2) The grantee must immediately refund to the Federal agency
any balance of unobligated (unencumbered) cash advanced that is
not authorized to be retained for use on other grants.
The closeout of a grant does not affect:
(b) The grantee's obligation to return any funds due as a
result of later refunds, corrections, or other transactions;
(c) Records retention as required in Sec. 18.42;
(d) Property management requirements in Secs. 18.31 and 18.32; and
(e) Audit requirements in Sec. 18.26.
(a) Any funds paid to a grantee in excess of the amount to
which the grantee is finally determined to be entitled under the
terms of the award constitute a debt to the Federal Government.
If not paid within a reasonable period after demand, the Federal
agency may reduce the debt by:
(2) Withholding advance payments otherwise due to the grantee,
or
(3) Other action permitted by law.
(1) Allowable costs incurred by the grantee, subgrantee or
a cost-type contractor under the assistance agreement. This includes
allowable costs borne by non-Federal grants or by others cash
donations from non-Federal third parties.
(b) Qualifications and exceptions
(1) Costs borne by other Federal grant agreements. Except as provided by Federal
statute, a cost sharing or matching requirement may not be met by costs
borne by another Federal grant. This prohibition does not apply
to income earned by a grantee or subgrantee from a contract awarded
under another Federal grant.
(c) Valuation of donated services
(i) Third party in-kind contributions count towards satisfying
a cost sharing or matching requirement only where, if the party
receiving the contributions were to pay for them, the payments
would be allowable costs.
(8) 23 U.S.C. 121(a) permits reimbursement for actual construction
cost incurred by States for highway construction projects. Except
for private donations of right-of-way, contributions and donations
shall not be considered State costs, and shall not be allowable
for matching purposes for highway construction contracts. 23 U.S.C.
323 permits private donations of right-of-way to be used for a
State's matching share, and establishes procedures for determining
the fair market value of such donated right-of-way.
(A) An increase in the services or property provided under
the contract (without additional cost to the grantee or
subgrantee) or
(iv) The values placed on third party inkind contributions
for cost sharing or matching purposes will conform to the rules
in the succeeding sections of this part. If a third party in-kind
contribution is a type not treated in those sections, the value
placed upon it shall be fair and reasonable.
(1) Volunteer services.
Unpaid services provided to a grantee or subgrantee by individuals
will be valued at rates consistent with those ordinarily paid
for similar work in the grantee's or subgrantee's organization.
If the grantee or subgrantee does not have employees performing
similar work, the rates will be consistent with those ordinarily
paid by other employers for similar work in the same labor market.
In either case, a reasonable amount for fringe benefits may be
included in the valuation.
(d) Valuation of third party donated supplies and loaned equipment
or space.
(1) If a third party donates supplies, the contribution
will be valued at the market value of the supplies at the time
of donation.
(e) Valuation of third party donated equipment, buildings,
and land. If a third party donates equipment, buildings, or land,
and title passes to a grantee or subgrantee, the treatment of
the donated property will depend upon the purpose of the grant
or subgrant, as follows:
(1) Awards for capital expenditures. If the purpose of the
grant or subgrant is to assist the grantee or subgrantee in the
acquisition of property, the market value of that property at
the time of donation may be counted as cost sharing or matching,
(f) Valuation of grantee or subgrantee donated real property
for construction/acquisition. If a grantee or subgrantee donates
real property for a construction or facilities acquisition project,
the current market value of that property may be counted as cost
sharing or matching. If any part of the donated property was acquired
with Federal funds, only the non-federal share of the property
may be counted as cost sharing or matching.
(i) If approval is obtained from the awarding agency, the
market value at the time of donation of the donated equipment
or buildings and the fair rental rate of the donated land may
be counted as cost sharing or matching. In the case of a subgrant,
the terms of the grant agreement may require that the approval
be obtained from the Federal agency as well as the grantee. In
all cases, the approval may be given only if a purchase of the
equipment or rental of the land would be approved as an allowable
direct cost. If any part of the donated property was acquired
with Federal funds, only the non-federal share of the property
may be counted as costsharing or matching.
(1) Deduction. Ordinarily program income shall be deducted
from total allowable costs to determine the net allowable costs.
Program income shall be used for current costs unless the Federal
agency authorizes otherwise. Program income which the grantee
did not anticipate at the time of the award shall be used to reduce
the Federal agency and grantee contributions rather than to increase
the funds committed to the project.
(h) Income after the award period. There are no Federal requirements
governing the disposition of program income earned after the end
of the award period (i.e., until the ending date of the final
financial report, see paragraph (a) of this section), unless the
terms of the agreement or the Federal agency regulations provide
otherwise.
(1) Determine whether State or local subgrantees have met
the audit requirements of the Act and whether subgrantees covered
by OMB Circular A-110, "Uniform Administrative Requirements for Grants and Agreements with Institutions of Higher Education, Hospitals
and Other Nonprofit Organizations," have met the audit requirements of the Act.
Commercial contractors (private for profit and private and governmental
organizations) providing goods and services to State and local
governments are not required to have a single audit performed.
State and local governments should use their own procedures to
ensure that the contractor has complied with laws and regulations
affecting the expenditure of Federal funds;
(c) Auditor selection. In arranging for audit services, Sec.
18.36 shall be followed.
(1) Nonconstruction projects. Except
as stated in other regulations or an award document, grantees
or subgrantees shall obtain the prior approval of the awarding
agency whenever any of the following changes is anticipated under
a nonconstruction award:
(d) Programmatic changes. Grantees or subgrantees must obtain
the prior approval of the awarding agency whenever any of the
following actions is anticipated:
(i) Any revision which would result in the need for additional
funding.
(2) Construction projects. Grantees and subgrantees shall
obtain prior written approval for any budget revision which would
result in the need for additional funds.
(1) Any revision of the scope or objectives of the project
(regardless of whether there is an associated budget revision
requiring prior approval).
(e) Additional prior approval requirements. The awarding agency
may not require prior approval for any budget revision which is
not described in paragraph (c) of this section.
(1) A request for prior approval
of any budget revision will be in the same budget formal the grantee
used in its application and shall be accompanied by a narrative
justification for the proposed revision.
Sec. 18.31 Real property.
(1) Retention of title. Retain title after compensating the
awarding agency. The amount paid to the awarding agency will be
computed by applying the awarding agency's percentage of participation
in the cost of the original purchase to the fair market value
of the property. However, in those situations where a grantee
or subgrantee is disposing of real property acquired with grant
funds and acquiring replacement real property under the same program,
the net proceeds from the disposition may be used as an offset
to the cost of the replacement property.
(d) If the conditions in 23 U.S.C. 103(e) (5), (6), or (7),
as appropriate, are met and approval is given by the Secretary,
States shall not be required to repay the Highway Trust Fund for
the cost of right-of-way and other items when certain segments
of the Interstate System are withdrawn.
(1) Equipment shall be used by the grantee or subgrantee
in the program or project for which it was acquired as long as
needed, whether or not the project or program continues to be
supported by Federal funds. When no longer needed for the original
program or project, the equipment may be used in other activities
currently or previously supported by a Federal agency.
(d) Management requirements. Procedures for managing equipment
(including replacement equipment), whether acquired in whole or
in part with grant funds, until disposition takes place will,
as a minimum, meet the following requirements:
(1) Property records must be maintained that include a description
of the property, a serial number or other identification number,
the source of property, who holds title, the acquisition date,
and cost of the property, percentage of Federal participation
in the cost of the property, the location, use and condition of
the property, and any ultimate disposition data including the
date of disposal and sale price of the property.
(e) Disposition. When original or replacement equipment acquired
under a grant or subgrant is no longer needed for the original
project or program or for other activities currently or previously
supported by a Federal agency, disposition of the equipment will
be made as follows:
(1) Items of equipment with a current per-unit fair market
value of less than $5,000 may be retained, sold or otherwise disposed
of with no further obligation to the awarding agency.
(f) Federal equipment. In the event a grantee or subgrantee
is provided federally-owned equipment:
(1) Title will remain vested in the Federal Government.
(g) Right to transfer title. The Federal awarding agency may
reserve the right to transfer title to the Federal Government
or a third part named by the awarding agency when such a third
party is otherwise eligible under existing statutes. Such transfers
shall be subject to the following standards:
(1) The property shall be identified in the grant or otherwise
made known to the grantee in writing.
Sec. 18.33 Supplies.
(a) The copyright in any work developed under a grant, subgrant,
or contract under a grant or subgrant; and
Sec. 18.35 Subawards to debarred and suspended parties.
(1) Grantees and subgrantees will
use their own procurement procedures which reflect applicable
State and local laws and regulations, provided that the procurements
conform to applicable Federal law and the standards identified
in this section.
(c) Competition.
(i) The employee, officer or agent,
(4) Grantee and subgrantee procedures will provide for a review
of proposed procurements to avoid purchase of unnecessary or duplicative
items. Consideration should be given to consolidating or breaking
out procurements to obtain a more economical purchase. Where appropriate,
an analysis will be made of lease versus purchase alternatives,
and any other appropriate analysis to determine the most economical
approach.
(i) After a determination that no other contract is suitable, and
(11) Grantees and subgrantees alone will be responsible, in
accordance with good administrative practice and sound business
judgment, for the settlement of all contractual and administrative
issues arising out of procurements. These issues include, but
are not limited to source evaluation, protests, disputes, and
claims. These standards do not relieve the grantee or subgrantee
of any contractual responsibilities under its contracts. Federal
agencies will not substitute their judgment for that of the grantee
or subgrantee unless the matter is primarily a Federal concern.
Violations of law will be referred to the local, State, or Federal
authority having proper jurisdiction.
(i) Violations of Federal law or regulations and the standards
of this section (violations of State or local law will be under
the jurisdiction of State or local authorities) and
(1) All procurement transactions will be
conducted in a manner providing full and open competition consistent
with the standards of Sec. 18.36. Some of the situations considered
to be restrictive of competition include but are not limited to:
(d) Methods of procurement to be followed
(i) Placing unreasonable requirements on firms in order for
them to qualify to do business,
(2) Grantees and subgrantees will conduct procurements in
a manner that prohibits the use of statutorily or administratively
imposed in-State or local geographical preferences in the evaluation
of bids or proposals, except in those cases where applicable Federal
statutes expressly mandate or encourage geographic preference.
Nothing in this section preempts State licensing laws. When contracting
for architectural and engineering (A/E) services, geographic location
may be a selection criteria provided its application leaves an
appropriate number of qualified firms, given the nature and size
of the project, to compete for the contract.
(i) Incorporate a clear and accurate description of the technical
requirements for the material, product, or service to be procured.
Such description shall not, in competitive procurements, contain
features which unduly restrict competition. The description may
include a statement of the qualitative nature of the material,
product or service to be procured, and when necessary, shall set
forth those minimum essential characteristics and standards to
which it must conform if it is to satisfy its intended use. Detailed
product specifications should be avoided if at all possible. When
it is impractical or uneconomical to make a clear and accurate
description of the technical requirements, a "brand name
or equal" description may be used as a means to define the performance
or other salient requirements of a procurement. The specific features
of the named brand which must be met by offerors shall be clearly
stated; and
(4) Grantees and subgrantees will ensure that all prequalified
lists of persons, firms, or products which are used in acquiring
goods and services are current and include enough qualified sources
to ensure maximum open and free competition. Also, grantees and
subgrantees will not preclude potential bidders from qualifying
during the solicitation period.
(1) Procurement by small purchase procedures. Small purchase procedures are those
relatively simple and informal procurement methods for securing
services, supplies, or other property that do not cost more than
the simplified acquisition threshold fixed at 41 U.S.C. 403(11)
(currently set at $100,000). If small purchase procedures are
used, price or rate quotations shall be obtained from an adequate
number of qualified sources.
(e) Contracting with small and minority firms, women's business
enterprise and labor surplus area firms.
(i) In order for sealed bidding to be feasible, the following
conditions should be present:
(3) Procurement by competitive proposals. The technique of
competitive proposals is normally conducted with more than one
source submitting an offer, and either a fixed-price or cost-reimbursement
type contract is awarded. It is generally used when conditions
are not appropriate for the use of sealed bids. If this method is used,
the following requirements apply:
(A) complete, adequate, and realistic specification or purchase
description is available;
(ii) If sealed bids are used, the following requirements apply:
(A) The invitation for bids will be publicly advertised and
bids shall be solicited from an adequate number of known suppliers,
providing them sufficient time prior to the date set for opening
the bids;
(i) Requests for proposals will be publicized and identify
all evaluation factors and their relative importance. Any response
to publicized requests for proposals shall be honored to the maximum
extent practical;
(4) Procurement by noncompetitive proposals is procurement
through solicitation of a proposal from only one source, or after
solicitation of a number of sources, competition is determined
inadequate.
(i) Procurement by noncompetitive proposals may be used only
when the award of a contract is infeasible under small purchase
procedures, sealed bids or competitive proposals and one of the
following circumstances applies:
(A) The item is available only from a single source;
(ii) Cost analysis, i.e., verifying the proposed cost data,
the projections of the data, and the evaluation of the specific
elements of costs and profits, is required.
(1) The grantee and subgrantee
will take all necessary affirmative steps to assure that minority
firms, women's business enterprises, and labor surplus area firms
are used when possible.
(f) Contract cost and price.
(i) Placing qualified small and minority businesses and women's
business enterprises on solicitation lists;
(1) Grantees and subgrantees must perform a cost or price analysis in
connection with every procurement action including contract modifications.
The method and degree of analysis is dependent on the facts surrounding the
particular procurement situation, but as a starting point, grantees must make
independent estimates before receiving bids or proposals. A cost analysis must
be performed when the offeror is required to submit the elements of his estimated
cost, e.g., under professional, consulting, and architectural engineering services
contracts. A cost analysis will be necessary when adequate price competition is
lacking, and for sole source procurements, including contract modifications or
change orders, unless price reasonableness can be established on the basis of a
catalog or market price of a commercial product sold in substantial quantities to
the general public or based on prices set by law or regulation. A price analysis
will be used in all other instances to determine the reasonableness of the proposed
contract price.
(g) Awarding agency review.
(1) Grantees and subgrantees must
make available, upon request of the awarding agency, technical
specifications on proposed procurements where the awarding agency
believes such review is needed to ensure that the item and/or
service specified is the one being proposed for purchase. This
review generally will take place prior to the time the specification
is incorporated into a solicitation document. However, if the
grantee or subgrantee desires to have the review accomplished
after a solicitation has been developed, the awarding agency may
still review the specifications, with such review usually limited
to the technical aspects of the proposed purchase.
(h) Bonding requirements. For construction or facility improvement
contracts or subcontracts exceeding the simplified acquisition
threshold, the awarding agency may accept the bonding policy and
requirements of the grantee or subgrantee provided the awarding
agency has made a determination that the awarding agency's interest
is adequately protected. If such a determination has not been
made, the minimum requirements shall be as follows:
(i) A grantee's or subgrantee's procurement procedures or
operation fails to comply with the procurement standards in this
section; or
(3) A grantee or subgrantee will be exempt from the pre-award
review in paragraph (g)(2) of this section if the awarding agency
determines that its procurement systems comply with the standards
of this section.
(i) A grantee or subgrantee may request that its procurement
system be reviewed by the awarding agency to determine whether
its system meets these standards in order for its system to be
certified. Generally, these reviews shall occur where there is
a continuous high-dollar funding, and third-party contracts are
awarded on a regular basis.
(1) A bid guarantee from each bidder equivalent to five percent
of the bid price. The "bid guarantee'' shall consist of a
firm commitment such as a bid bond, certified check, or other
negotiable instrument accompanying a bid as assurance that the
bidder will, upon acceptance of his bid, execute such contractual
documents as may be required within the time specified.
(i) Contract provisions. A grantee's and subgrantee's contracts
must contain provisions in paragraph (i) of this section. Federal
agencies are permitted to require changes, remedies, changed conditions,
access and records retention, suspension of work, and other clauses
approved by the Office of Federal Procurement Policy.
(1) Administrative, contractual, or legal remedies in instances
where contractors violate or breach contract terms, and provide
for such sanctions and penalties as may be appropriate. (Contracts
more than the simplified acquisition threshold)
(j) 23 U.S.C. 112(a) directs the Secretary to require recipients
of highway construction grants to use bidding methods that are
"effective in securing competition." Detailed construction contracting
procedures are contained in 23 CFR part 635, subpart A.
(1) Ensure that every subgrant includes any clauses required
by Federal statute and executive orders and their implementing
regulations;
(b) All other grantees. All other grantees shall follow the
provisions of this part which are applicable to awarding agencies
when awarding and administering subgrants (whether on a cost reimbursement
or fixed amount basis) of financial assistance to local and Indian
tribal governments. Grantees shall:
(1) Ensure that every subgrant includes a provision for compliance
with this part;
(c) Exceptions. By their own terms, certain provisions of
this part do not apply to the award and administration of subgrants:
(1) Section 18.10;
Reports, Records, Retention, and Enforcement
(1) Grantees shall submit annual performance reports unless
the awarding agency requires quarterly or semi-annual reports.
However, performance reports will not be required more frequently
than quarterly. Annual reports shall be due 90 days after the
grant year, quarterly or semi-annual reports shall be due 30 days
after the reporting period. The final performance report will
be due 90 days after the expiration or termination of grant support.
If a justified request is submitted by a grantee, the Federal
agency may extend the due date for any performance report. Additionally,
requirements for unnecessary performance reports may be waived
by the Federal agency.
(c) Construction performance reports. For the most part, on-site
technical inspections and certified percentage-of-completion data
are relied on heavily by Federal agencies to monitor progress
under construction grants and subgrants. The Federal agency will
require additional formal performance reports only when considered
necessary, and never more frequently than quarterly.
(i) A comparison of actual accomplishments to the objectives
established for the period. Where the output of the project can
be quantified, a computation of the cost per unit of output may
be required if that information will be useful.
(3) Grantees will not be required to submit more than the
original and two copies of performance reports.
(1) Section 12(h) of the UMT Act of 1964, as amended, requires
pre-award testing of new buses models.
(d) Significant developments. Events may occur between the
scheduled performance reporting dates which have significant impact
upon the grant or subgrant supported activity. In such cases,
the grantee must inform the Federal agency as soon as the following
types of conditions become known:
(1) Problems, delays, or adverse conditions which will materially
impair the ability to meet the objective of the award. This disclosure
must include a statement of the action taken, or contemplated,
and any assistance needed to resolve the situation.
(e) Federal agencies may make site visits as warranted by
program needs.
(1) Federal agencies may waive any
performance report required by this part if not needed.
[53 FR 8086 and 8087, Mar. 11, 1988, as amended at 53 FR 8087,
Mar. 11, 1988]
(1) Except as provided in paragraphs (a) (2)
and (5) of this section, grantees will use only the forms specified
in paragraphs (a) through (e) of this section, and such supplementary
or other forms as may from time to time be authorized by OMB,
for:
(b) Financial Status Report
(i) Submitting financial reports to Federal agencies, or
(2) Grantees need not apply the forms prescribed in this section
in dealing with their subgrantees. However, grantees shall not
impose more burdensome requirements on subgrantees.
(1) Form. Grantees will use Standard
Form 269 or 269A, Financial Status Report, to report the status
of funds for all nonconstruction grants and for construction grants
when required in accordance with Sec. 18.41(e)(2)(iii).
(c) Federal Cash Transactions Report
(1) Form. (i) For grants
paid by letter or credit, Treasury check advances or electronic
transfer of funds, the grantee will submit the Standard Form 272,
Federal Cash Transactions Report, and when necessary, its continuation
sheet, Standard Form 272a, unless the terms of the award exempt
the grantee from this requirement.
(d) Request for advance or reimbursement
(ii) These reports will be used by the Federal agency to monitor
cash advanced to grantees and to obtain disbursement or outlay
information for each grant from grantees. The format of the report
may be adapted as appropriate when reporting is to be accomplished
with the assistance of automatic data processing equipment provided
that the information to be submitted is not changed in substance.
(2) Forecasts of Federal cash requirements. Forecasts of Federal
cash requirements may be required in the "Remarks'' section
of the report.
(1) Advance payments.
Requests for Treasury check advance payments will be submitted
on Standard Form 270, Request for Advance or Reimbursement. (This
form will not be used for drawdowns under a letter of credit,
electronic funds transfer or when Treasury check advance payments
are made to the grantee automatically on a predetermined basis.)
(e) Outlay report and request for reimbursement for construction
programs.
(1) Grants that support construction activities paid
by reimbursement method.
(f) Notwithstanding the provisions of paragraphs (a)(1) of
this section, recipients of FHWA and National Highway Traffic
Safety Administration (NHTSA) grants shall use FHWA, NHTSA or
State financial reports.
(i) Requests for reimbursement under
construction grants will be submitted on Standard Form 271, Outlay
Report and Request for Reimbursement for Construction Programs.
Federal agencies may, however, prescribe the Request for Advance
or Reimbursement form, specified in Sec. 18.41(d), instead of
this form.
(2) Grants that support construction activities paid by letter
of credit, electronic funds transfer or Treasury check advance.
(i) When a construction grant is paid by letter of credit, electronic
funds transfer or Treasury check advances, the grantee will report
its outlays to the Federal agency using Standard Form 271, Outlay
Report and Request for Reimbursement for Construction Programs.
The Federal agency will provide any necessary special instruction.
However, frequency and due date shall be governed by Sec. 18.41(b)
(3) and (4).
(3) Accounting basis. The accounting basis for the Outlay
Report and Request for Reimbursement for Construction Programs
shall be governed by Sec. 18.41(b)(2).
(1) This section applies to all financial
and programmatic records, supporting documents, statistical records,
and other records of grantees or subgrantees which are:
(b) Length of retention period.
(i) Required to be maintained by the terms of this part, program
regulations or the grant agreement, or
(2) This section does not apply to records maintained by contractors
or subcontractors. For a requirement to place a provision concerning
records in certain kinds of contracts, see Sec. 18.36(i)(10).
(1) Except as otherwise provided,
records must be retained for three years from the starting date
specified in paragraph (c) of this section.
(a) Starting date of retention period
(1) General. When grant support is continued or renewed at annual or other intervals,
the retention period for the records of each funding period starts
on the day the grantee or subgrantee submits to the awarding agency
its single or last expenditure report for that period. However,
if grant support is continued or renewed quarterly, the retention
period for each year's records starts on the day the grantee submits
its expenditure report for the last quarter of the Federal fiscal
year. In all other cases, the retention period starts on the
day the grantee submits its final expenditure report. If an expenditure
report has been waived, the retention period starts on the day
the report would have been due.
(d) Substitution of microfilm. Copies made by microfilming,
photocopying, or similar methods may be substituted for the original
records.
(i) If submitted for negotiation. If the proposal, plan,
or other computation is required to be submitted to the Federal
Government (or to the grantee) to form the basis for negotiation
of the rate, then the 3-year retention period for its supporting
records starts from the date of such submission.
(1) Records of grantees and subgrantees.
The awarding agency and the Comptroller General of the United
States, or any of their authorized representatives, shall have
the right of access to any pertinent books, documents, papers,
or other records of grantees and subgrantees which are pertinent
to the grant, in order to make audits, examinations, excerpts,
and transcripts.
(f) Restrictions on public access. The Federal Freedom of
Information Act (5 U.S.C. 552) does not apply to records unless
required by Federal, State, or local law, grantees and subgrantees
are not required to permit public access to their records.
(1) Temporarily withhold cash payments pending correction
of the deficiency by the grantee or subgrantee or more severe
enforcement action by the awarding agency,
(b) Hearings appeals. In taking an enforcement action, the
awarding agency will provide the grantee or subgrantee an opportunity
for such hearing, appeal, or other administrative proceeding to
which the grantee or subgrantee is entitled under any statute
or regulation applicable to the action involved.
(1) The costs result from obligations which were properly
incurred by the grantee or subgrantee before the effective date
of suspension or termination, are not in anticipation of it, and,
in the case of a termination, are noncancellable, and,
(d) Relationship to debarment and suspension. The enforcement
remedies identified in this section, including suspension and
termination, do not preclude grantee or subgrantee from being
subject to "Debarment and Suspension'' under E.O. 12549 (see
Sec. 18.35).
(a) By the awarding agency with the consent of the grantee
or subgrantee in which case the two parties shall agree upon the
termination conditions, including the effective date and in the
case of partial termination, the portion to be terminated, or
Subpart D--After-The-Grant Requirements
Sec. 18.50 Closeout.
(1) Final performance or progress report.
(c) Cost adjustment. The Federal agency will, within 90 days
after receipt of reports in paragraph (b) of this section, make
upward or downward adjustments to the allowable costs.
(1) The Federal agency will make prompt payment to the grantee
for allowable reimbursable costs.
Sec. 18.51 Later disallowances and adjustments.
(a) The Federal agency's right to disallow costs and recover
funds on the basis of a later audit or other review;
Sec. 18.52 Collection of amounts due.
(1) Making an administrative offset against other requests
for reimbursements,
(b) Except where otherwise provided by statutes or regulations,
the Federal agency will charge interest on an overdue debt in
accordance with the Federal Claims Collection Standards (4 CFR
Ch. II). The date from which interest is computed is not extended
by litigation or the filing of any form of appeal.