[Code of Federal Regulations]

[Title 28, Volume 2]

[Revised as of July 1, 2005]

From the U.S. Government Printing Office via GPO Access

[CITE: 28CFR66.21]



[Page 177-178]

 

                    TITLE 28--JUDICIAL ADMINISTRATION

 

              CHAPTER I--DEPARTMENT OF JUSTICE (CONTINUED)

 

PART 66_UNIFORM ADMINISTRATIVE REQUIREMENTS FOR GRANTS AND COOPERATIVE 

AGREEMENTS TO STATE AND LOCAL GOVERNMENTS--Table of Contents

 

                    Subpart C_Post-Award Requirements

 

Sec. 66.21  Payment.



    (a) Scope. This section prescribes the basic standard and the 

methods under which a Federal agency will make payments to grantees, and 

grantees will make payments to subgrantees and contractors.

    (b) Basic standard. Methods and procedures for payment shall 

minimize the time elapsing between the transfer of funds and 

disbursement by the grantee or subgrantee, in accordance with Treasury 

regulations at 31 CFR part 205.

    (c) Advances. Grantees and subgrantees shall be paid in advance, 

provided they maintain or demonstrate the willingness and ability to 

maintain procedures to minimize the time elapsing between the transfer 

of the funds and their disbursement by the grantee or subgrantee.

    (d) Reimbursement. Reimbursement shall be the preferred method when 

the requirements in paragraph (c) of this section are not met. Grantees 

and subgrantees may also be paid by reimbursement for any construction 

grant. Except as otherwise specified in regulation, Federal agencies 

shall not use the percentage of completion method to pay construction 

grants. The grantee or subgrantee may use that method to pay its 

construction contractor, and if it does, the awarding agency's payments 

to the grantee or subgrantee will be based on the grantee's or 

subgrantee's actual rate of disbursement.

    (e) Working capital advances. If a grantee cannot meet the criteria 

for advance payments described in paragraph (c) of this section, and the 

Federal agency has determined that reimbursement is not feasible because 

the grantee lacks sufficient working capital, the awarding agency may 

provide cash or a working capital advance basis. Under this procedure 

the awarding agency shall advance cash to the grantee to cover its 

estimated disbursement needs for an initial period generally geared to 

the grantee's disbursing cycle. Thereafter, the awarding agency shall 

reimburse the grantee for its actual cash disbursements. The working 

capital advance method of payment shall not be used by grantees or 

subgrantees if the reason for using such method is the unwillingness or 

inability of the grantee to provide timely advances to the subgrantee to 

meet the subgrantee's actual cash disbursements.

    (f) Effect of program income, refunds, and audit recoveries on 

payment. (1) Grantees and subgrantees shall disburse repayments to and 

interest earned on a revolving fund before requesting additional cash 

payments for the same activity.

    (2) Except as provided in paragraph (f)(1) of this section, grantees 

and subgrantees shall disburse program income, rebates, refunds, 

contract settlements, audit recoveries and interest earned on such funds 

before requesting additional cash payments.

    (g) Withholding payments. (1) Unless otherwise required by Federal 

statute, awarding agencies shall not withhold payments for proper 

charges incurred by grantees or subgrantees unless--

    (i) The grantee or subgrantee has failed to comply with grant award 

conditions or

    (ii) The grantee or subgrantee is indebted to the United States.

    (2) Cash withheld for failure to comply with grant award condition, 

but without suspension of the grant, shall be released to the grantee 

upon subsequent compliance. When a grant is suspended, payment 

adjustments will be made in accordance with Sec. 66.43(c).

    (3) A Federal agency shall not make payment to grantees for amounts 

that are withheld by grantees or subgrantees from payment to contractors 

to assure satisfactory completion of work. Payments shall be made by the 

Federal agency when the grantees or subgrantees actually disburse the 

withheld funds to the contractors or to escrow accounts established to 

assure satisfactory completion of work.

    (h) Cash depositories. (1) Consistent with the national goal of 

expanding the



[[Page 178]]



opportunities for minority business enterprises, grantees and 

subgrantees are encouraged to use minority banks (a bank which is owned 

at least 50 percent by minority group members). A list of minority owned 

banks can be obtained from the Minority Business Development Agency, 

Department of Commerce, Washington, DC 20230.

    (2) A grantee or subgrantee shall maintain a separate bank account 

only when required by Federal-State agreement.

    (i) Interest earned on advances. Except for interest earned on 

advances of funds exempt under the Intergovernmental Cooperation Act (31 

U.S.C. 6501 et seq.) and the Indian Self-Determination Act (23 U.S.C. 

450), grantees and subgrantees shall promptly, but at least quarterly, 

remit interest earned on advances to the Federal agency. The grantee or 

subgrantee may keep interest amounts up to $100 per year for 

administrative expenses.