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Review/Selection and Application Phase

Objectives:

At the end of this chapter you will be able to:
1. Understand what types of reviews are required.
2. Describe the selection for award process.
3. Understand how the selection for award dispute process works.
4. Identify the contents of an application package.
5. Understand the importance of negotiating a complete work-plan.
6. Be aware of Information Collection Requirements (ICR), Quality Assurance (QA) requirements and Confidential Business Information claims under assistance agreements.
7. Conduct a cost review of an application budget.
8. Define in-kind assistance and cost share.

Administrative Review

Programs must perform an administrative review to ensure that the applicant submitted all information requested in the RFA and is eligible to receive the assistance. Typically, this review begins when the office responsible for the RFA receives the applications and begins organizing them by:

40 CFR Part 40 Research Relevancy Review

40 CFR Part 40 requires a relevancy review. It is performed by EPA technical experts (other than the PO).

If used, the review plan includes a description of who will conduct the relevancy review and the criteria to be used. The decision to eliminate applications due to a lack of relevancy should be documented in some fashion and approved at a level above the PO.

CAUTION: Institutions that have not worked with EPA in the past may have good research ideas and capabilities, but not be skillful in demonstrating their relevance to EPA. Unless the application is obviously technically deficient and has no chance of award, the relevancy review should assume that the application would pass a technical review. Then, consider whether we should reject the application because:

Any applicant eliminated during the relevancy screening should be notified in writing.

40 CFR Part 40 Peer Review

Finally, 40 CFR Part 40 requires that research projects undergo a peer review, also known as a technical merit review. This review is performed by "at least one reviewer within EPA and at least two reviewers outside EPA." (Radiation agreements must be reviewed by a National Advisory Council.) Your office may have additional restrictions on who can perform these reviews. You should check with them to determine the policy.

Peer review criteria usually include at least three broad areas:

Peer reviewers may also comment on relevancy and appropriateness of the budget.

Formal peer reviews are not needed for:

Despite these exemptions from formal review, as addressed in GPI 90-03, your GMO requires at least one internal technical review on any application for an assistance agreement. This review will be addressed in the funding recommendation.

Review Timeframe

EPA's general goal is to complete its application review and evaluation within 90 days after the agency receives the application, unless there is a statutory or program requirement to review the application sooner. Applicants for Environmental Program grants , under 40 CFR 35, Subparts A and B should request assistance well before the 60 day application due date to allow sufficient time for a thorough review.

Roles for the Reviewers in a Competitive Process

Please contact your office to determine if your office has specific programmatic procedures that you need to follow

Project Officers

POs have three responsibilities in reviews:

Note: ORD/NCER uses Science Review Administrators (SRAs) to conduct peer reviews. Each Office may specify its own approach.

Approval Official

The Approval Official has two responsibilities in reviews:

Reviewers

Reviewers (internal and external) have at least four responsibilities in reviews:

Volume of Applications

If practical, a single panel should review all applications, and all members of the panel review all applications. But you may need to take a different approach if you have many applications, or if they are lengthy, or cover subjects too diverse to permit a single panel approach. In addition, in the announcement you may limit the number of pages of text, tables, and attachments; or you may require applicants to focus their applications on one of several project areas, convening a separate panel for each area. The number of applications affects the time needed for the reviewers to conduct their review[s].

Finding Technical Reviewers

Draw your list of potential technical/peer reviewers from a broad base. Seek reviewers from a variety of technical perspectives, organizations (e.g., industrial, academic, public interest). They should represent a balanced range of technically legitimate points of view.

For internal reviewers, develop a list of names using recommendations from any of the following, dependent upon your office's established review policies: Branch, Division, and/or Lab, Center or Office management, the Science Advisory Board, relevant program staff, or regional staff.

For external reviewers develop a list of names using recommendations from any of the following: other Agency scientists or engineers, contacts recommended by your management, NCER (for information on Agency or Governmental peer reviewer data bases), Federal, state, or local agencies, the National Research Council, technical or business associations, environmental groups, public interest groups, parties affected by the proposed areas of research or institutions of higher education.

Conflict of Interest (COI)

Technical/Peer reviewers must be impartial, independent, and free from actual or perceived conflict of interest. Reviewers who have worked in the field or are known to have a professional bias or some historical connection to the applicant institution are not necessarily disqualified as reviewers, so long as the facts are known and both the reviewers and the Approval Official are comfortable that they will be impartial and not influenced by their connection to the applicant.

Technical/Peer reviewers are often chosen before applications come in, so they may not know they have a COI until they receive the applications for review. Programs must ask reviewers to sign a form that covers both COI and confidentiality. The form should include a promise to disclose COIs that are discovered later in the review. It works on the honor system. Since COIs may be a matter of degree or perception (such as the presence of a past collaborative relationship), the Approval Official may, on occasion, use a reviewer with a disclosed COI, provided the facts and rationale are documented. However, such occasions are uncommon.

Instructions for Reviewers

Give specific instructions to the reviewers, describing the details of their process and the required timing, format, and content of their reviews. There are no requirements of what to include, but we suggest the following.

Technical/Peer Review Report

You should provide a basic format for the reviewers to use to report their findings that track your selection criteria.

The quality of the technical/peer report is critical to the success of the review, both to give EPA what it needs to make award decisions and to maintain public confidence in the integrity of our process. Ask the reviewers to:

If applicable, tell the reviewers that the panel chair or some other person will summarize the findings of the individual reviewers to organize their independent findings. Using a common format will aid that process.

Pay for Peer Reviewers

Whether or not to pay reviewers is a difficult question. Some believe that paid reviewers deliver a higher quality product and report on schedule. This is especially the case as we make more and more demands on the external community to do peer reviews for us.

Others believe that peer reviewers consider it an honor to be asked to do a peer review, that they have a professional obligation to contribute their reviews gratis, and that working without payment increases the independence of the reviewers from Agency influence. But it is hard to manage the quality and timing of gratis reviewers. In addition, unpaid work may constitute Avolunteer@ services, which create a liability to pay unless the worker has signed a written agreement waiving all rights to payment.

The cost of an external review is variable. Reviewers expect to be reimbursed for out of pocket expenses, especially travel expenses. For their time, however, many reviewers are willing to accept a modest professional service fee that is below their normal pay rate. Few firm rules exist on what is customary, but you can get an idea of what to pay by discussing your plans with co workers who have experience in reviews. Or you may work with the Contracts Office to establish a fair rate. Be sure you have a commitment for funding from management before you make any arrangements

Engaging Peer Reviewers

EPA Managed

Have unpaid reviewers sign an agreement to waive payment. The agreement confirms their obligation and states that they are serving without pay.

Have paid reviewers sign a AProfessional Service Contract@ (not to be confused with APersonal Service Contracts@), using simplified acquisition procedures. Consult your servicing Contracts Management Division for particulars, but you should allow about 30 days to award a contract for less than $2,500. For any contract that exceeds $2,500, including all travel and other direct costs, you will need to compete the contract or justify a non competitive procurement. In either case, allow an extra 15 to 30 days.

Be sure to have the contract or waiver of compensation agreement signed before you send any applications to external reviewers for review. Otherwise you may be making an unauthorized commitment, with significant liability for yourself and EPA.

Some reviewers donate their time, but want to be reimbursed for travel expenses. You cannot write a purchase order solely to pay travel, but you can write one for the complete review, and allow the reviewer to propose a price that will cover only the travel part of the cost. Reviewers who wish to recover only their travel expenses may be brought in on invitational travel orders; however, this requires the use of EPA travel funds, which are often limited. Consult your management and budget staff about using this alternative.

Equal Review

When practical, have reviewers review each application in full. If a panel is to be convened, each reviewer will still review and report on all applications, but the panel chair may assign one or two reviewers to lead the discussions on each application. Some RFAs may draw hundreds of applications. When it is not possible to have each application reviewed by all of the panel members, the alternative approach and reasons should be documented and approved by the Approval Official.

Timing

The time allowed for the review will vary depending on the size of the panel, whether or not there is to be a meeting, and the number and the complexity of the applications. It is helpful to remind reviewers of their due date mid-way through the review.

Selection for Award

This section deals with the selection of applications for award.

When to Select

In most cases, Recommending Officials will be able to recommend an award based upon the results of the administrative and technical reviews. No technical discussions should be held with applicants prior to completion of the reviews. Each proposal must receive equal consideration based upon the information submitted within the deadline established in the RFA.

If it is necessary to hold discussions after the reviews but prior to making a selection recommendation, you should consult with the Recommending Official to determine how to proceed. To ensure the fairness of the process, each applicant with a potential for award should be allowed to address salient issues raised during the review process.

When circumstances warrant, the Recommending Official may wish to seek concurrence of the Approval Official on the proposed decision prior to proceeding with negotiations.

How to Select

Relevancy, coupled with the results of the technical review, will usually provide the basis for funding recommendations. Final funding decisions are delegated to the Approval Official. In most cases, the proposal(s) with the highest technical merit will be selected for further processing and consideration by the Agency. However, the decision is at the discretion of the Approval Official who is at liberty to consider other factors as long as they are disclosed in the RFIP/RFA; e.g., the desire to expand the pool of recipients who have recently received awards from the organization or to ensure geographic equity among projects selected.

You, the PO do not have the delegated authority to tell any applicant that they have been selected for award. DON'T DO IT!

Application Selection Disputes

This guidance supplements 40 CFR 30.63 and 40 CFR Part 31, Subpart F. Disputes should be resolved at the lowest level possible.

EPA establishes assistance agreement competition-related dispute
resolution procedures as follows:

1. The authority citation for the assistance agreement competition-
related disputes resolution procedures in this document is the Federal
Grant and Cooperative Agreement Act, 31 U.S.C. 6301(3).

2. The disputes resolution procedures that will apply to EPA
assistance agreement competition-related disputes and disagreements
will be referenced or included in competitive announcements and are as
follows:

Dispute Resolution Procedures

a. Whenever practicable, disputes and disagreements relating to
assistance agreement competition-related decisions and actions must be
resolved at the lowest level possible.

b. The procedures and time frames specified below are designed to
provide for an efficient, effective, and meaningful dispute resolution
process. EPA Program Offices may use ``substantially the same'' dispute
procedures as those specified herein if they are approved by the EPA
Grants Competition Advocate (GCA) and provide applicants with a
meaningful dispute resolution process. A meaningful dispute resolution
process is one that affords unsuccessful applicants the opportunity for
an effective remedy if they succeed on their dispute.

c. Notification: (1) The Program Office conducting the competition
must provide applicants with timely written or e-mail notification that
they were (i) determined to be ineligible for award consideration as a
result of the threshold eligibility review of their application/
proposal (e.g., the application/proposal failed to meet the threshold
eligibility criteria in the announcement), or (ii) not selected for
award based on their ranking/scoring after an evaluation of their
application/ proposal against the ranking and selection factors in section V of the announcement.

(2) Notification of ineligibility must be provided by the Program
Office to the applicant within fifteen calendar days of the decision
finding that the applicant was not eligible for award consideration
because of a failure to meet the threshold eligibility criteria in the
announcement; notification to applicants that they were not selected
for award based on the ranking/scoring of their proposal/application
must be provided by the Program Office to the applicant within fifteen
calendar days of the final selections for award.

(3) The notification letter or e-mail must indicate, as
appropriate, that the applicant and/or its application/proposal was not
eligible for award consideration based on the threshold eligibility
review, or not selected for award based on the ranking/scoring of its
application/proposal, and generally explain the reasons why. It must
also advise the applicant that it may request a fuller debriefing (and
notify the applicant that it must make its debriefing request within
fifteen calendar days of receiving the notification letter or e-mail)
of the basis for the ineligibility determination or selection decision.
Debriefings, however, are not required when an applicant's proposal/
application is rejected solely because it failed to meet a submission
deadline date specified in section IV of the announcement (e.g., it was
received, postmarked, etc., after the deadline established in the
announcement making it a late proposal/application).

d. Debriefings: (1) Debriefings may be done orally (e.g., face to
face, telephonically) or in writing at the discretion of the Program
Office, although oral debriefings are strongly preferred because they
provide a better opportunity to resolve questions and issues in an
expedited manner. For oral debriefings, the Program Office will conduct
the debriefing of the unsuccessful applicant at a mutually agreeable
time and place as soon as practicable after receiving the debriefing
request; for written debriefings, the Program Office will provide the
unsuccessful applicant with a written debriefing as soon as practicable
after receiving the debriefing request. All debriefings, but
particularly those for applicants that were deemed ineligible for award
consideration for failure to meet the threshold eligibility factors in
the announcement, must be conducted in a timely manner so that the
applicant has the opportunity to obtain a meaningful remedy if they
successfully challenge the ineligibility determination.

(2) Upon receiving a debriefing request from an unsuccessful
applicant, the Program Office must promptly notify the Director, Office
of Grants and Debarment, or regional award official, as appropriate, so
that a Grants Competition Dispute Decision Official (GCDDO) can be
designated.

(3) The oral or written debriefing will be limited to explaining
why the applicant was found ineligible for award consideration or why
it was not selected for award and must not disclose any information
protected from disclosure by applicable law or regulation (e.g., the
Freedom of Information Act, Privacy Act), including trade secrets,
privileged or confidential commercial, financial or other information
exempt from disclosure under the Freedom of Information Act, or the
identity of review panel members or other reviewers. The Program Office
should consult with Office of General Counsel/Office of Regional
Counsel (OGC/ORC) attorneys before any oral debriefing and allow them
to review any written debriefing response before it is sent. Further,
any questions relating to what type of information may be disclosed at
a debriefing must be directed to OGC/ORC attorneys or the Grants
Competition Advocate.

(4) The debriefing explanation will, as appropriate:

(A) Identify the threshold eligibility criteria that the applicant
failed to meet and specify the basis for the Agency's determination
that the proposal/application or applicant was not eligible for award
consideration because of failure to meet the threshold eligibility
criteria.

(B) Provide the applicant with the numerical (e.g., points) or
other basis for scoring/ranking its proposal/application under the
evaluation criteria used in the competition.

(C) Provide the applicant with information on the strengths and
weaknesses of its proposal/application in terms of the specific
evaluation criteria used in the competition.

(D) Provide responses to relevant questions regarding whether the
evaluation and selection procedures contained in the announcement were
followed and why the applicant was not selected for award. However, the
debriefing must not include point by point comparisons of the
applicant's proposal/application to other proposals/applications.

(E) Identify the GCDDO.

e. Filing of a Dispute: (1) After receiving a debriefing, an
unsuccessful applicant or their representative may file a written
dispute with the appropriate GCDDO. When there was an oral debriefing,
the written dispute must be received by the GCDDO within fifteen
calendar days of the debriefing date; when there was a written
debriefing, the written dispute must be received by the GCDDO within
fifteen calendar days of when the applicant received the written
debriefing letter. The written dispute must include a detailed
statement of the legal and/or factual basis for the dispute, the remedy
that the applicant is seeking, information on how to communicate with
the applicant or its representative (e.g., phone and fax numbers, e-
mail address), and any documentation relevant to the dispute. Disputes
may only be filed with the GCDDO after a debriefing; disputes filed
before, or in the absence of, a debriefing will be dismissed.
Furthermore, the GCDDO is only required to consider disputes on the
following grounds:

(A) Where an applicant challenges the EPA determination that it
and/or its proposed project is ineligible for funding based on the
applicable statute, regulation, or announcement requirements; or

(B) Where the applicant challenges the decision that it is not
eligible for award consideration because EPA determined that its
proposal/application did not meet the threshold eligibility
requirements contained in the announcement.

(2) Unsuccessful applicants whose proposal/application was rejected
solely because it was received late, or who were not selected for award
based on the ranking/scoring of its proposal/application after a full
evaluation by EPA based on the ranking and selection criteria in
section V of the announcement (e.g., challenges to the Agency's
technical evaluation or ranking/scoring of the applicant based on the
ranking and selection factors in section V of the announcement), are
not entitled to file disputes with the GCDDO. Such disputes will be
dismissed by the GCDDO except as may be provided for in paragraph (3)
below. In addition, the GCDDO may dismiss any dispute that is clearly
untimely filed, raises issues that the GCDDO will not consider, or that
fails to set forth a detailed statement of the legal and/or factual
basis for the dispute.

(3) The GCDDO, for good cause shown and where there are compelling
reasons, or where he/she determines that a dispute raises significant
issues of widespread interest to the assistance agreement community,
may consider an untimely filed dispute or any other dispute filed by an
unsuccessful applicant. The GCDDO will invoke this discretion sparingly.

f. If a dispute is filed, the GCDDO must consult with the Program
Office, OGC/ORC, and the GCA, and then determine whether it is in the
Agency's best interest to delay the award process pending resolution of
the dispute, particularly for disputes involving threshold eligibility
issues.

g. Unsuccessful applicants must be provided with reasonable access
to Agency records relevant to the dispute in a manner consistent with
the standards contained in the Freedom of Information Act. EPA will not
disclose materials exempt from disclosure under the Freedom of
Information Act.

h. Upon receiving a dispute, the GCDDO will establish a process and
schedule for resolving the dispute and communicate this to the
applicant and affected Program Office. At his or her discretion, the
GCDDO may (i) request additional information from the applicant or
Program Office and/or (ii) meet by phone or in person with the
unsuccessful applicant and/or Program Office.

i. After reviewing all of the information relevant to the dispute,
the GCDDO, after consultation with the GCA, and with the concurrence of
the OGC/ORC, will timely issue a final written decision regarding the
dispute. The GCDDO's decision will constitute final agency action and
is not subject to further review within the Agency.

The Application Package

The Application Consists Of:

The SF 424, "Application for Federal Assistance",

Detailed budget,

A Narrative/Work plan, and

Certification attachments.

The application package may also contain program specific requirements, such as the Intended Use Plan for the State Revolving Fund program, or the Community Relations plan, Health and Safety Plan, and Enforcement Letter for the Superfund program.

The following is a description of the contents of a basic application package and the PO's responsibilities in reviewing the package.

The application (SF 424) consists of four parts -- the Face sheet, Budget
information, Assurances, and a Program Narrative/Workplan.

Even if an application has been through a preapplication evaluation, the GMO and PO may still have to work with the applicant to revise the application further before it is approvable.

GMOs, in partnership with the PO, are responsible for reviewing and analyzing the application to ensure all information is complete and correct. This includes ensuring all costs are allowable and that assistance is the appropriate funding mechanism. GMOs also ensure the application meets statutory, regulatory, and legal requirements. This is usally done when the PO sends the package to the GMO for funding.

The SF 424 application is used for all EPA programs. except for the Fellowship programs (which use EPA Form 5770- 2 a form specifically developed for Fellowships).

The applicant is responsible for filling out and providing all required forms to the EPA. Project Officers must not complete applications for applicants.

The Face sheet of the SF424 includes:

General administrative information about the applicant, e.g., type of entity, location of the project, name of the applicant's contact person, Congressional district, DUN's number and summary information about the proposed project, e.g., budget, length of budget and project periods.

The GMO will review the Face sheet to ensure that all items are properly completed.

SF 424-A Identifies Total Project Costs:

Section A- Budget Summary
Section B - Budget by Object Class Category
Section C - Non- Federal Resources
Section D - Forecasted Cash Needs
Section E - Budget Estimates of Federal Funds Needed
for Balance of Project
Section F - Other Budget Information

The budget is the financial expression of the project or program and includes both the Federal and non-Federal share. Sections A, B, C, and D call for budget estimates for the entire project, except for projects funded on an annual or other incremental basis. In the latter case, Section E provides the budget information for subsequent budget periods. The form itself provides detailed instructions for completing the form. The applicant is responsible for preparing the budget.

Standard Form 424-B

The purpose of the assurances in the SF 424-B is to emphasize the Federal laws and requirements applicable to all Federally assisted projects, i.e., "crosscutting" requirements.

The applicant must sign this page as well as the Face sheet. Usually, the same person signs both places, but whoever signs must have the authority to bind the organization to the terms of the assistance agreement.

By signing the Assurance page, the applicant is indicating they will comply with each of these requirements. Some of the major requirements the applicant is agreeing to are:

Certifications

The applicant must include the following certifications in their application package;

The Anti-lobbying requirements in 40 CFR Part 34, require that applicants certify that no appropriated funds will be expended to pay any person for influencing or attempting to influence an officer or employee of any agency, a Member of Congress, an officer or employee of Congress, or an employee of a Member of Congress, in connection with any Federal award in excess of $100,000. 40 CFR Part 34 requires applicants and recipients to submit the Standard Form LLL. "Disclosure of Lobbying Activities, " if they used non- Federal funds to "lobby" in relation to certain Federal contracting and financial transactions. This form is not required if the entity did not "lobby" for the assistance agreement. The Lobbying Disclosure Act of 1995 provides that organizations described in Section 501(c) (4) of the Internal Revenue Code of 1986 which engage in lobbying activities are not eligible to receive Federal grants, cooperative agreements, or loans.

The Preaward Compliance Review Report (EPA Form 4700-4) enables EPA to determine whether applicants are developing projects, programs and activities on a nondiscriminatory basis as required by statutes.

The Procurement System Certification Form (EPA Form 5700- 48) indicates whether or not the applicant will follow its own procurement system (provided systems) comply with EPA requirements). The form does not apply to State governments except under the Superfund program [see 40 CFR 35.6550(a)]. Local governments and Indian Tribal governments may use the form to self-certify under the self- certification provision in 40 CFR Part 31. Part 30 recipients are no longer required to submit the form with their application but must comply with the procurement standards under 40 CFR 30.41 through 30.48.

PROJECT NARRATIVE/WORK-PLAN

The approved project narrative/work-plan is the basis for making an award and is used by the PO to manage and evaluate performance under the agreement.

The purpose of the project narrative is to outline all activities to be performed by the recipient. It is especially critical for the PO to spend time negotiating with the recipient on this portion of the application package.

A narrative/work-plan must justify proposed financial, facility, equipment, and resource needs as requested in the application and provide technical and other information required by program- specific regulations/requirements. The narrative/work-plan also must describe the need for the project/program; its objectives; the method to accomplish the objectives; the geographical location of the project; and the "public" benefits or results expected to be obtained from the assistance, e.g., why the activity should be funded with an assistance relationship and not a contact.

The PO performs a technical review of the narrative/work plan. If the PO does not have the technical expertise to perform the review, the PO must obtain assistance from other EPA staff with expertise. The PO needs to ensure that the activities in the work-plan are eligible under the program statute(s), guidance, and regulations, and the work is allocable to the project.

A narrative/work-plan is generally composed of the elements below (narratives may vary by grant type):

1. The introduction explains who the entity is.
2. The needs statement identifies the problem to be addressed.
3. The objectives explain how the project will resolve the problems identified in the needs statement and establishes measurable benchmarks for success.
4. The activities are the specific tasks that the applicant will undertake in order to accomplish the objectives.
5. The methodology explains how the activities will be undertaken.
6. The schedule/milestones establishes the timetable for accomplishing the objectives and sets milestones for implementing project activities.
7. The staff and personnel description explains the qualifications of each key staff position required to complete the project and identifies the individuals selected to fill those staffing requirements.
8. Other resources include the equipment, supplies, facilities, and training required to complete the project.
9. The organizational capabilities establish the applicant's ability to carry out the project and explain how the project will be managed.
10. The evaluation plan sets out procedures which will be used to measure how well the project meets its objectives.
11. The dissemination plan lays out how the project results will be distributed.

Tips for Negotiating Work-plans

Generally, in conducting negotiations, PO's: Must assure their negotiating posture reflects the official EPA position. It may be necessary to establish that position through discussions with appropriate office management.

In conducting negotiations with applicants selected under competitive processes, PO's must ensure that negotiations do not result in material changes to the proposal that was submitted and evaluated. PO's may not negotiate with applicants selected under competitive processes to bring about significant changes such as those that:

PO's may negotiate with applicants selected under competitive processes to bring about less significant changes (not affecting how the applicant was evaluated) that:

Environmental Outcomes

Identifying Environmental Outcomes in assistance agreements support effective implementation of Government Performance and Results Act (GPRA). In addition, consideration of environmental outcomes in the workplan development process is critical to ensuring that assistance agreements contribute to EPA's mission of protecting human health and the environment. As noted in the Office of Inspector General's final audit report entitled "Surveys, Studies Investigations and Special Purpose Grants," (Report Number 2002-P-00OG5, March 21, 2002),: " In the planning phase of assistance agreements, it is important to anticipate the expected outcomes so that activities are planned to achieve behavioral changes that lead to desired programmatic or environmental results." In short, EPA assistance agreements should focus not only on outputs (i.e., the activities performed by an assistant agreement during a funding period) but also on outcomes (i.e., the consequences of a recipient's activities).

The work plan for each State and Tribal Environmental Program(40 CFR 35, Subparts A and B) must also specify:

The work plan components to be funded:

For research awards, the work plan should contain biographical sketches of the Key Person/s. A summary of specific objectives, expected outcomes and deliverables and a discussion of the budget and how it relates to the objectives, outcomes and deliverables in the work plan.

EPA Order 5700.7, "Environmental Results under EPA Assistance Agreements", is now in effect. The Order establishes Agency policy/procedures for making assistance agreements more outcome-oriented and aligned with EPA's Strategic Plan.

OGD will also be working with Headquarters and Regional Offices on strategies for providing additional training to project officers.

In addition, we would like to clarify the implementation of two provisions in Section 8 of the Order dealing with the content of funding recommendations/decision memoranda. These provisions include a description of the linkage to the Agency's Strategic Plan (Section 8.a.), and an
assurance that outputs/outcomes have been negotiated (Section 8.b.). Program offices must address both Section 8.a. and Section 8.b. in non-competitive funding recommendations/decision memoranda submitted to the Grants Management Offices (GMOs) after January 1, 2005, and in competitive funding recommendations/decision memoranda submitted to the GMOs that result from competitive funding announcements issued after January 1, 2005. For these funding recommendations, we enhanced the electronic funding recommendation in the Integrated Grants Management System (IGMS) to require (1) an assurance that the program office has reviewed the assistance agreement work plan and that the work plan contains well-defined outputs, and, to the maximum extent practicable, well-defined outcomes; (2) an identification of EPA Strategic Plan goal(s), objective(s) and, where available, sub-objective(s), that the agreement supports; and (3) a description of how the agreement fits within those goal(s), objective(s) and sub-objective(s).

Scope of the Environmental Results Order

?? ? affects the entire grant process ??

1. Competitive Award Announcement
2. Decision Memorandum
2. Work Plan Negotiation
3. Performance Reporting
4. Post-Award Phase

Competitive Award Announcement

Section 1 of Announcement

Describe the linkage between the work intended to be accomplished under the assistance agreement and EPA's Strategic Plan/GPRA Architecture
Include a concise discussion of any expected outputs and outcomes.

Section 5 of Announcement

Include a ranking factor for evaluating the applicant's plan for tracking and
measuring its progress toward achieving expected outputs and outcomes identified in Section 1.

Include a ranking factor that evaluates the applicant's past performance in reporting on outputs and outcomes. Criteria: Focus on an applicant's past
performance in filing timely progress and final technical reports that adequately document the achievement of expected outputs and outcomes or satisfactory explain why expected outputs and outcomes were not achieved.

Example Competitive Announcement

Linkage to EPA Strategic Plan This project supports progress towards EPA Strategic Plan Goal 4 (Healthy Communities and Ecosystems), Objective 4.2 (Communities), and Sub-objective 4.2.3 (Assess and Cleanup Brownfields). Specifically, recipients of this grant will further goals of the Brownfields Job Training Program by training and placing residents, from communities impacted by brownfields, in careers in the environmental field. This in turn promotes the facilitation and cleanup of brownfield sites contaminated with hazardous
substances, pollutants, contaminants, or petroleum, while simultaneously ensuring
economic benefits derived from brownfields redevelopment activities remain with affected residents in those communities. EPA, in negotiating an assistance agreement work plan after an award under this competition, will ensure that the work plan contains well-defined outputs, and, to the maximum extent practicable, well-defined outcomes.

Outcome Through this project EPA anticipates increasing the capacity of governmental entities and nonprofit organizations to 1) help residents take advantage of jobs created by the assessment and cleanup of brownfields; 2) provide training that leads to sustainable employment in the environmental field; 3) improve community involvement and stimulate the development of constructive partnerships; 4) foster self sufficiency, in communities impacted by brownfields, with the skills needed to conduct assessment and remediation of brownfields sites; and 5) enable residents to participate in the promotion of environmental health and occupational safety, both on the job and in their communities.

Outputs The anticipated output for this project is recruitment, training, and placement of individuals from brownfields impacted communities in environmental careers. EPA anticipates a minimum of at least 200 persons completing training by the end of Fiscal Year 2006 with a minimum job placement rate of at least 65%. Other outputs include: class room style training, practical training and curricula modules, appropriate certification in environmental technology related subjects, including OSHA, HAZWOPER, lead and asbestos abatement, and specialized knowledge of brownfields problems and solutions.

Funding Recommendations Must

Include description of how the project fits within the Agency's Strategic Plan/GPRA Architecture. Specifically, description must identify all applicable EPA strategic goal(s), objective(s), and where available, subobjective(s), consistent with the appropriate Program Results Code(s). Include an assurance that the Program Office has reviewed the work plan, and that it contains well-defined outputs and, to the maximum extent practicable, well defined outcomes.

Example

EPA Strategic Plan Linkage and Anticipated Outcomes/Outputs.

a. Linkage to EPA Strategic Plan. This project supports progress towards
EPA Strategic Plan Goal 1 (Clean Air and Global Climate Change), Objective
1.6 (Enhance Science and Research), Sub-Objective 1.6.2 (Conduct Air
Pollution Research, Technology Development and Assessment). This project
supports EPA efforts to develop advanced clean and fuel-efficient technology
for a wide range of societal benefits including reducing our national
dependence on imported oil, conserving capital for domestic economy and
reducing carbon dioxide and greenhouse gas emissions.

Outcomes Through this project, EPA anticipates increasing fuel
efficiently and reducing emissions in its hybrid vehicles to continue improving and demonstrating advanced hydraulic hybrid vehicle technology to meet Clean Air Act (CAA) emission standards and climate program goals.
Outputs The anticipated output for this project is refinement of existing,
and identification of new hydraulic hybrid components and systems needed to
achieve ultra clean and efficient hybrid vehicles.

Work Plan Negotiations

Project Officers must ensure the work plan includes well-defined outputs and to the extent practicable well defined outcomes. Before approving a work plan, Project Officers must ensure they can link the work plan to EPA's Strategic Plan/GPRA Architecture.

Performance Reporting

Project Officer must review interim & final reports to: Determine if recipient achieved the work plans agreed upon outputs and outcomes. If outputs and outcomes are not yet fully achieved, assure progress toward achieving agreed upon outputs and outcomes is adequately addressed in reports. If applicable, assure included in the reports is a satisfactory explanation of why expected outcomes or
outputs were not achieved.

** Project officer must document reviews in the official project file **

Terms and Conditions

The assistance agreements must include the applicable term and condition on recipient performance reporting specified in Appendix B of the Order, or a program specific term and condition approved by the Director of the Office of Grants and Debarment. Exception include State and Tribal assistance
agreements under 40 C.F.R. Part 35, Subparts A and B.

**Responsibility of Award Officials to include in assistant agreements.

Terms and Conditions

Recipients subject to 40 C.F.R. Part 30 Performance Reports
In accordance with 40 C.F.R. § 30.51 (d), the recipient agrees to include in performance reports submitted under this agreement brief information on each of the following areas: 1) a comparison of actual accomplishments with the anticipated outputs/outcomes specified in the assistance agreement work plan; 2) reasons why anticipated outputs/outcomes were not met; and 3) other pertinent information, including, when appropriate, analysis and explanation of cost overruns or high unit costs.

In accordance with 40 C.F.R. § 30.51 (f), the recipient agrees that it will notify EPA of problems, delays, or adverse conditions which materially impair the ability to meet the outputs/outcomes specified in the
assistance agreement work plan. Recipients subject to 40 C.F.R. Part 31 (other than recipients of State or Tribal Program grants under 40 C.F.R. Parts 35 Subparts A or B) Performance Reports. In accordance with 40 C.F.R. §31.40, the recipient agrees to submit performance reports that include brief information on each of the following areas: 1) a comparison of actual accomplishments to the outputs/outcomes established in the assistance agreement workplan for the period; 2) the reasons for slippage if established outputs/outcomes were not met; and 3) additional pertinent information,
including, when appropriate, analysis and information of cost overruns or high unit costs. In accordance with 40 C.F.R. § 31.40 (d), the recipient agrees to inform EPA as soon as problems, delays or adverse conditions become known which will materially impair the ability to meet the outputs/outcomes specified in the assistance agreement work plan.

Post Award Phase

Advanced Monitoring: Must include an assessment of the recipient's progress in achieving agreed-upon outputs and outcomes. Results of assessment must be recorded in the Grants Compliance Database.

Reporting: Project officer must report on "significant results information from completed assistance agreements". Process of how to report TBD by the National Managers. Until process is established, Project officer must retain at a minimum, paper copies of final performance reports from completed assistance agreements.

Performance

During the negotiations, PO's should explain how progress and performance will be evaluated. Evaluation plans should include reporting requirements and schedules, describe the contents expected in the reports and define consequences of inadequate performance. In most cases, the PO will be EPA's lead negotiator. The PO also may often need to negotiate internally to establish the program's official position in dealing with the applicant.

! Evaluation Plan. Introduce your plan for evaluating progress and performance EARLY in your negotiating process. Define consequences of inadequate and/or nonperformance. Include reporting plans and schedules and describe the contents expected in the reports. Most importantly, start the process early; provide guidance timely; if necessary, convene a meeting with the applicant early in the process to answer questions.

! Terms and Conditions: As part of your work plan review and development of the evaluation plan the PO should consider what terms and conditions should be added to ensure the recipient is progressing satisfactorily or where the PO needs to oversee progress.

Other Things To Consider When Reviewing A Work plan

Printing:

An assistance agreement awarded for the principal purpose of obtaining printing for EPA is prohibited.

Assistance agreements can be awarded for:

Human Subjects

All research supported or performed by EPA using human subjects must comply with both:

40 CFR 26, Protection of Human Subjects (the Common Rule), and

EPA Order 1000.17A, Policy and Procedures on Protection of Human Subjects in EPA Conducted for Supported Research (the Order)

When do the Common Rule and the Order apply?

If the project involves humans, including just asking them questions, categorize the project as follows:

(1) Does it involve Human Subjects? See Common Rule 26.102(f). If not, the Order and Common Rule do not apply. Note: The definition includes only asking questions even if no medical-type data taking is done. If human subjects are involved ask:

(2) Is the project Research? See Common Rule 26.102(d). If not, the Common Rule and the Order do not apply. If the project is research, ask:

(3) Is the research Exempt? See Common Rule 26.101(b). If the research is exempt, this finding must be made in writing by EPA's Human Subjects Research Review Official (HSRRO).

(4) Finally, if the project(s) (i) does involve Human Subjects, (ii) is Research, and (iii) is not Exempt, then it must be approved in writing by the HSRRO as being in compliance with the Common Rule and the Order.

To secure HSRRO approval to conduct non-exempt human subject research, institutions must submit the following items for review and approval.

Documentation that the institution conducting the research has an approved program to review and monitor human subject research. [The documentation demonstrates that the institution has Multiple Project Assurance (MPA) on file with the HHS Office of Protection from Research Risks (OPRR) which is currently approved for Federal-wide use by the Secretary/HHS. Submitting OMB Optional Form 310, Protection of Human Subjects, Assurance Identification/ Certification/Declaration will also fulfill this requirement.]

If an institution does not have an applicable MPA, it must negotiate an EPA assurance as described in 40 CFR 26.103:

Written certification from the Institutional Review Board (IRB) that the proposed human subject research has been reviewed and approved in accordance with MPA assurance

A copy of the research proposal, including the protocol

A written description of the procedures already used to obtain informed consent from subjects participating in the study and a copy of the consent form to be used

Secure the approval of the HSRRO for any assistance or interagency agreement involving the research testing of human subjects prior to the submission of the funding package to your GMO. The GMO will include a standard term and condition if human subject research is involved.

Laboratory Animals

An assistance application for a project involving the use of warm-blooded animals must include written assurance that the applicant has registered with the Department of Agriculture. Applicants must also sign an assurance that they will comply with the Animal Welfare Act of 1966 and the rules, regulations, and standards of the Department of Health and Human Services. The GMO will include a standard term and condition when the project includes laboratory animal research.

Data, Patents and Copyrights

Data: All assistance agreements and sub-agreements are subject to 40 CFR Parts 30.36 and 31.34. These provide the Federal government with the unrestricted right to use data or information that is developed with assistance funds, and received by EPA in the assistance agreement. The Federal government has a royalty-free, irrevocable license to use any copyrighted data in any manner for Federal government purposes.

You should be aware that data published under Agency extramural agreements might be releasable to the public under the Freedom of Information Act (FOIA). Consult your FOIA coordinator if you receive a request for data.

Copyright: A recipient may copyright any work that is subject to copyright if it was developed or bought under an assistance award. EPA reserves a royalty-free non-exclusive and irrevocable right to reproduce, publish, or otherwise use such work for Federal purposes, and to authorize others to do so. This right may be subject to interpretation. If you anticipate sharing of outputs (e.g., software, models, reports, training materials, etc.) with non-Federal entities, you should add a term and condition to the agreement at the time of award that says that. Remember that assistance cannot be used to acquire goods for the direct use of the government; so any outputs distributed by EPA should not be identified as EPA materials.

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

As provided in 40 CFR Part 40.160-3 for research, all inventions must be reported fully and immediately to the EPA. A final invention statement must also be filed within 90 days of the end of the project period. When a principal investigator changes institutions or ceases to direct a project, the recipient must promptly submit an invention statement to GAD with a list of all inventions made during his/her administration of the grant.

A recipient must report any invention(s), and notify EPA of decisions regarding retention of rights within the periods specified in the patent rights clause cited in 40 CFR 30.36. If a recipient does not retain the rights to an invention, EPA may acquire the title. Even if the recipient retains title, EPA has the royalty-free, irrevocable license to use the invention throughout the world by, and on behalf of, the Federal government.

Applications Involving International Activities

All applications where all or part of the project is to be performed in a foreign country by a US recipient, a foreign recipient, or an international organization regardless of where it is located must be: Approved by the Assistant Administrator for International Affairs; and, if necessary; submitted to the Department of State for clearance. A minimum of 35 calendar days must be allowed to obtain State Department clearance. The OIA will submit the applications to the Department of State.

Any agreement where there will be foreign travel must go through OIA. The program office is responsible for sending a copy of the application to OIA for approval. This approval must be obtained before the program office submits the funding recommendation to the GMO. The program office is responsible for sending a copy of the application to OIA for approval. This approval must be obtained before the program office submits the funding recommendation to the GMO.

The Assistant Administrator for International Affairs will review each proposal with an international component to determine whether it is in accordance with the EPA's and US Government's International Environmental Mission as well as EPA's and the US Government's overall relationship with the foreign country concerned. Regulations for foreign awards are subparts from 40 CFR Part 30.

The "Fly America Act" requires that all government- financed foreign air travel must be on U. S. air carriers certified under 49 U. S. C. §1371 to the extent that service by such carriers is available. This applies to Federal employees and their dependents, consultants, contractors, recipients, and others traveling for the U.S. Government.

If you have any questions, call the Office of International Affairs.

Information Collection Requirements (ICR)

Under the Paperwork Reduction Act, Federal agencies must obtain approval from the Office of Management and Budget (OMB) to collect information from the public. To comply with this requirement, an "Information Collection Request (ICR)" must be submitted to OMB for review and approval. An ICR explains what information will be collected, why the information is needed, who will need to respond, and gives an estimate of the burden hours the public will need to get and report the information. This requirement is required under assistance agreements when:

In these instances, GMOs must include the following term and condition in the assistance agreement:

EPA Project Officers are responsible for requesting assistance from EPA's Office of Policy, Regulatory Information Division, to complete the ICR and obtain OMB's approval. No work dealing with data collection should be initiated by a recipient until the Project Officer obtains OMB's approval.

Quality Assurance

EPA uses its Quality System to manage the quality of its environmental data collection, generation, and use. The primary goal of the Quality System is to ensure that our environmental data are of sufficient quantity and quality to support the data's intended use. Under the EPA Quality System, EPA organizations develop and implement supporting quality systems. Similar specifications may also apply to contractors, grantees, and other recipients of financial assistance from EPA.
Generally, quality assurance (QA) requirements apply if any part of the agreement involves: Direct measurements or data generation, environmental modeling, compilation of data from literature or electronic media or data supporting the design, construction, and operation of environmental technology EPA applies the industry consensus standard, ANSI/ASQC E-4 "Specifications and Guidelines for Quality Systems for Environmental Data Collection and Environmental Technology Programs." The quality requirements for organizations receiving financial assistance from EPA through assistance agreements are discussed in the following documents:

EPA QA/R-2: EPA Requirements for Quality Management Plans (QMP).
QA/R-2 contains the specifications and requirements for QMPs for organizations with which EPA has assistance agreements. The QMP defines the process to be used to ensure that the assistance agreement addresses Quality Systems issues and complies with ANSI/ASQC E-4.

EPA QA/R-5: EPA Requirements for Quality Assurance Project Plans QAPPs). QA/R-5 establishes the requirements for QAPPs prepared for activities funded by EPA. The QAPP identifies the policies, organizational structure, objectives, functional activities, and specific QA and Quality Control (QC) activities designed to achieve the quality objectives of a specific project. Please clarify the specific elements you are looking for in a QMP or a QAPP before the applicant or other agency starts to develop the documentation. Consult your QAM early in the process to establish the best approach for addressing QA issues under the proposed agreement.

EPA advocates a graded approach to QA documentation so some discretion is available for applying the E-4 standards to a specific project. Projects of larger scope and significance might require more QA documentation than smaller, less significant projects.

All applicants for EPA assistance involving environmental programs must submit a Quality Management Plan prepared in accordance with QA/R-2 or documentation determined by EPA to be equivalent to QA/R-2. (Some organizations have "corporate" QMPs that address our needs. You don't have to ask for another document when their existing plan will do.)

If required, a Quality Assurance Management Plan is generally developed by the recipient and submitted to EPA for approval within 60 days of the award. You would ask, with support from your Quality Assurance Manager for a QAPP within 60 days, reminding the recipient not to proceed with environmental analysis or data generation until the plan is approved by EPA. The Office of Environmental Information's Quality Staff is responsible for developing Agency-wide policy for quality assurance, developing guidance and tools, providing training and outreach, and overseeing the implementation by EPA organizations.

http://www.epa.gov/quality/

In-Kind Assistance

In addition to transferring money to an authorized assistance recipient, EPA may use an assistance agreement to transfer anything of value, such as equipment or services to a recipient. This type of award without funds is called in-kind assistance.

If it is more efficient in terms of cost or time for EPA rather than the recipient to purchase equipment or services, EPA may do so and provide the equipment or services to the recipient under the assistance agreement. This approach would be appropriate, for example, where a piece of equipment necessary for an assistance project can be purchased at a considerably lower price or be delivered much earlier using an existing EPA contract. Likewise, EPA may provide the services of an EPA contractor to an assistance recipient in lieu of money, where appropriate.

To use in-kind assistance, the program office must comply with the following conditions:

Cost Share

Cost Share is defined as the portion of allowable project costs that a recipient contributes toward completing its project - costs not borne by the Federal Government (40 CFR Part 30.2 (i)). In-kind services can also be added to an assistance award by the recipient. Some examples of a recipient's in-kind contribution to an award are: volunteer hours, personnel hours, equipment, supplies and so on. Recipients' may choose to meet their cost share or match requirements through in-kind contributions.

Determining Programmatic Capability

In addition to determining that grant recipients have the technical qualifications to be able to carry out their proposed project, it is vital that the PO determine the extent to which an applicant's proposal/application demonstrates that they possess the programmatic capacity to effectively and successfully perform the proposed project.

The term "programmatic capability" means the technical capability of an applicant or recipient to successfully carry out a project taking into account such factors as the applicant's (i) past performance in successfully completing federally and/or non-federally funded projects similar in size, scope, and relevance to the proposed project, (ii) history of meeting reporting requirements on prior or current assistance agreements with federal and/or non-federal organizations and submitting acceptable final technical reports, (iii) organizational experience and plan for timely and successfully achieving the objectives of the project, and (iv) staff expertise/qualifications and knowledge, resources or the ability to obtain them, to successfully achieve the goals of the project.

Factors to be considered for non-profit organizations are:

(1) Before sending a non-profit funding recommendation to the Grants Management Office (GMO), Program Offices must assess the applicant's programmatic capability. At a minimum, it must include an analysis of information from the application and the Grantee Compliance Database. If the assessment identifies weaknesses in programmatic capability, the Program Office may not approve the application for funding until it determines that the applicant has taken, or is on schedule to take, satisfactory corrective action.

(2) The Program Office must provide an assurance in the funding recommendation that it has conducted the review required by paragraph (1), that it believes the applicant possesses, or will possess, the necessary programmatic capability, and that any problems identified during the review have been appropriately addressed. The Program Office must also include in the funding recommendation any recommended award conditions necessary to ensure programmatic capability.

Evaluation of Applications for Competitive Awards to Non-Profit Organizations

Competitive announcements under which non-profit organizations may compete for an award must contain a ranking factor, or ranking factors, for evaluating all applicants on their ability to demonstrate the programmatic capability to successfully carry out the proposed project. The ranking factor(s), must, at a minimum, evaluate all applicants on the programmatic capability criteria described in the Pre-Award Order. The programmatic capability criteria included under the ranking factor(s) must be given significant weight in the evaluation process.

Section IV of competitive announcements must require applicants to submit information relating to the programmatic capability criteria to be evaluated under the ranking factor(s) in Section V of the announcement. The announcement must also indicate that in evaluating an applicant for programmatic capability purposes under the relevant ranking factor(s), EPA will consider information provided by the applicant and may consider information from other sources including agency files.

Competitive announcements which may involve individual non-profit awards in excess of the pre-award threshold must contain a provision in Section VI of the announcement, Award Administration Information, stating that non-profit applicants which qualify for funding under the announcement are subject to a pre-award review for administrative capability under the Pre-Award Order. The provision must explain that these applicants will be required to fill out and submit to the GMO, with supporting documents, the Administrative Capability Form contained in Appendix A of the Pre-Award Order.

Factors to be considered for all other applicants are:

o The applicant's past performance in performing projects similar in size, scope and relevance to the proposed project under prior or current grants with federal and non-federal organizations. This serves as an indicator of their ability to successfully perform the project. The currency and relevance of the information, source of the information, general trends in performance, and problems encountered and corrective actions taken will be considered.

o The extent to which the applicant has the necessary organizational experience, operational controls, prior experience, and management plan for timely and successfully achieving the objectives of the proposed project within budget.

o The applicant's history of submitting timely and complete progress and other reports on prior or current grants with federal and non-federal organizations.

o The extent to which the applicant's key personnel (e.g., principal investigator, co-investigators) are qualified and possess the relevant knowledge, expertise, experience, and capabilities to successfully and effectively perform and manage the project.

o The extent to which the proposal demonstrates that the roles, responsibilities and time commitments of the proposed project staff (including consultants, subcontractors and partners) are clearly defined and will facilitate successful completion of the project.

o The extent to which the applicant has the necessary technical equipment, resources, and facilities, or the ability to obtain them, to successfully and effectively perform the project.

Budget Review Responsibilities

Negotiating a comprehensive, clearly defined workplan is a critical component to ensuring the adequacy of the proposed budget. The narrative/ work plan must justify the necessity for every item.

The PO is responsible for reviewing the proposed budget against the Narrative/ Workplan to determine whether the budget is reasonable from a programmatic perspective. In making this determination, the PO should consider the technical necessity for and price reasonableness of proposed personnel, travel, equipment, supplies, procurements, and other items in the budget. There is no one way to determine the reasonableness of any particular item. If the PO questions whether a particular item is "reasonably" priced, they should ask other POs, call various suppliers, ask the GMO for advice, or ask the applicant how it arrived at the cost. The PO must document in the file that a cost review was performed. Many Programs have cost review checksheets that are required to be completed. Please check with your office to see if there is a checklist available.

Criteria for Reviewing and Approving Proposed Costs

Recipients must maintain and report costs in accordance with the regulation that governs the agreement, i.e., either 40 CFR 30.27 or 40 CFR 31.20. Each recipient must follow the Federal cost principles applicable to that type of organization. (See Chapter 2 for a list of the cost principles.) The recipient cannot be reimbursed for costs that are contrary to the specific terms of the agreement or are outside its scope. The recipient may only charge costs if they resulted from obligations made during the approved funding period. The next few pages explain "eligible," "reasonable," "allowable," and "allocable" in detail.

Costs Must Also be Eligible, Reasonable, Allowable and Allocable

The PO shares the responsibility with the GMO to determine that costs are:

Eligible: A cost is eligible, if it is permitted by statute, program guidance, or regulations. The costs must also conform to any Federal limitations (e.g., real property purchases under the Construction Grants program, mobile treatment systems under Superfund);

Reasonable: A cost is reasonable if it does not exceed that which would be incurred by a prudent person under the circumstances prevailing at the time the decision was made to incur the cost. To determine the reasonableness of a specific cost, consideration must be given to:

Allocable: A cost is "allocable" to an assistance agreement to the extent that it ;

Allowable: To be allowable, the costs must be necessary and reasonable for the performance of the award.

The GMO has final responsibility for ensuring that budget information is complete and costs are consistent with Federal cost principles and policies including whether costs are allowable and allocable. The GMO also reviews the indirect cost rate (if indirect costs are claimed) and will verify that the applicant has a current, approved rate (provisional or final).

Applicants Budget Narrative

In order to adequatly conduct a cost review, the applicant must provide the PO a narrative explanation of the components of the budget. The following discuss the minimun level of detail a applicant should provide.

Personnel:

The applicant must identify all staff positions by title, annual salary, and the percentage of time each position will be assigned to the project/ program. Any person placed on this line must be actual employees of the applicants organization, not contractors or consultants. Therefore the PO must examine staffing requirements for the project and must determine whether project staff support is adequate and the right mix to meet the project objectives. Some questions the PO should consider are:

Who is charged with the ultimate responsibility to manage the project?
Will key staff members participate full time?
Are the staff identifyed necessary to complete the project?

Fringe Benefits:

Fringe benefit costs are those costs for personnel employment other than the employees' direct income (i.e., employer's portion of FICA insurance, retirement, sick leave, holiday pay, and vacation costs) that will be paid by the recipient. Fringe benefits are typically not subject to negotiation. The GMO will review fringe benefit costs for reasonableness.

Equipment:

For Federal purposes equipment is defined as an item with a unit acquisition cost of $5,000 or greater and a useful life of more than one year. The applicant must identify each item of equipment and its cost. Applicants cannot rebudget into or out of this category without prior EPA approval.

Some programs (such as Superfund) require applicant to conduct a cost/ benefit analysis of purchasing equipment, leasing, or letting a contractor purchase the equipment. The PO is responsible for ensuring that the applicant complies with any preaward program specific requirements regarding equipment.

The title to equipment purchased with assistance funds vests with the recipient subject to the obligations and conditions described in the assistance agreement or program regulation. Therefore, the PO should make a decision on the ultimate disposition of equipment during the pre-award phase of an assistance agreement if possible. The following are options for the disposition of equipment:

Option 1: The recipient may keep the equipment and continue to use it on the project originally funded through the assistance agreement or on other federally funded projects whether or not the project or program continues
to be supported by Federal funds. Unless otherwise instructed by the PO, the grant specialist will automatically select this default option for assistance agreements with equipment appearing in the budget. An administrative term and condition indicating this choice may be placed on assistance agreements.

Option 2: EPA may direct the recipient to transfer the title of the equipment from the recipient to a third party once the project funded by the assistance agreement is complete. If the PO decides the EPA will want the equipment transferred to a third party the PO should notify the GMO and contact their EPA Facilities Office to discuss this option. The EPA is required to issue equipment disposition instructions within 120 calendar days after the receipt of the final equipment inventory. Costs for the transfer of the equipment should be included in the budget.

The PO should note this option in the Funding Recommendation if possible. The grant specialist will include a programmatic term and condition acknowledging this choice in the assistance agreement.

Option 3: The EPA may direct the recipient to transfer title of equipment from the recipient to the EPA once the project funded by the assistance agreement is complete. The PO should note this option in the Funding Recommendation or Decision Memorandum . The grant specialist will include a programmatic term and condition acknowledging this choice in the assistance agreement . If the PO is taking this option they should contact their EPA Facilities Office and discuss the option.

Special Cases

States: State agencies may manage and dispose of equipment acquired under assistance agreements in accordance with state laws and procedures.

Superfund: Equipment purchased under Superfund projects are subject to specific disposal options. Refer to 40 CFR 35.6345 when dealing with such equipment.

Supplies: The applicant must only request supplies which are needed to complete the proposed work plan. The PO must review these costs to determine that they are reasonable compared to the proposed work plan. Some examples of supplies could be computers, software, or film.

Travel: The applicant must identify the number of trips planned, the destination for each trip, the number of travelers, and the estimated cost of each trip. The PO must review these costs to ensure that the trips are necessary to complete the scope of work and that the number of travelers is consistent with the purpose of the trip. The GMO also will review these costs prior to award to verify the costs are reasonable, e.g., airline ticket costs, per diem rates, mileage rates. If the applicant wants to travel but the location has not been determined it should be stated in the budget narrative.

Contractual Costs: The applicant must identify what contracts they intend to award during the budget period. Additionally, proposed consultants are listed in this area.

Project Officers must: Review proposed procurements against the narrative/work plan to determine whether the procurements are reasonable and necessary from a programmatic perspective. In making this determination, the PO should consider the technical necessity for and price reasonableness of the proposed procurements. This review must be documented in writing in the PO's grant file.

PO's must question contracts for cost reasonableness if grant applicants propose sole-source contracts in their narrative/work plan. If an applicant proposes to award a sole-source contract, it must provide the reasoning so the PO and GMO can determine if there is adequate justification. The PO must remind the applicant that although EPA may award a grant, EPA is not approving their contractors and the applicant must follow the appropriate procurement procedures outlined in the regulations.

For contract actions under $100,000 the PO should inform recipients of their obligation to follow applicable procurement regulations which include that all contract actions have a cost or price analysis and if applicable a sole-source justification.

For contract actions over the $100,000 small purchase threshold inform the recipient that the PO may request the contract be made available to the EPA for pre-award review. The PO can provide a technical review of the qualifications of the contractor but cannot recommend selection. If the PO has concerns over a applicants proposed procurements they should talk to their Program contact and the GMO.

It is inappropriate for Agency staff to direct or require the use of particular persons or firms by assistance recipients in the performance of a grant or cooperative agreement.

Consultant Cap

EPA limits the Agency's participation in the amounts recipients pay to consultants to the maximum daily rate of pay for Level IV of the Executive Schedule.

A consultant is an individual with specialized skills who, although not on the recipient's payroll as an employee, provides personal services to the recipient under an agreement that essentially establishes an employer-employee relationship between the recipient and the individual providing the services. Consultants are typically individuals who are experts with excellent qualifications and are usually regarded as authorities or practitioners of unusual competence and skill by other individuals engaged in the same profession. An employer-employee relationship may be found to exist when the recipient selects the individual based on expertise in a particular field, directs the individual's work, and exercises day-to-day control of the individual's activities.

Consultant fee cap is the daily or hourly salary of Federal employees at Level IV of the Executive Schedule. EPA will not participate in any amount greater than that rate; recipients may, however, pay more. As of January 1, 2005, the limit is $537.76 per day and $67.22 per hour. This rate does not include transportation and subsistence costs for travel performed (the recipient will pay these in accordance with their normal travel reimbursement practices).
Applicant's budgets must break down consultant fees by either an hourly or daily rate. A lump sum is not adequate for the PO to perform a budget review.

Recipients may pay more than the consultant fee cap, but EPA will not participate in any amount over the maximum. The consultant fee cap also applies to consultants hired by a recipient's contractors.

If the recipient, or its contractor, chooses to pay more than the consultant fee cap, the recipient must use its own funds to pay the difference. (If the assistance agreement includes a recipient indirect cost rate, the recipient can apply it only to allowable costs, not to amounts in excess of the consultant fee cap). Further, recipients cannot use the amount in excess of the consultant fee cap for cost sharing purposes. The consultant fee cap does not apply to reasonable consultant overhead or travel direct costs. Recipients may reimburse these costs in accordance with their normal practices.

The consultant fee cap does not apply to contracts awarded to firms or individuals that are awarded under the procurement procedures under 40 CFR Parts 30 and 31 (40 CFR §30.27(b) and 40 CFR §31.36(j)(2)) so long as the terms of the contract do not provide the recipient with responsibility for the selection, direction, and control of the individual(s) who will be providing services under the contract. Conversely, the consultant fee cap does apply to contracts awarded to firms or individuals that are awarded under the procurement procedures of 40 CFR Parts 30 and 31 if the terms of the contract provide the recipient with responsibility for the selection, direction, and control of the individuals who will be providing services under the contract at an hourly or daily rate of compensation. The cap does not apply to fixed priced or lump sum contracts for specified products such as reports or delivery of a training course.

For example, a contract with a multi-person firm that does not require the firm to provide to the recipient the services of a particular individual, and that does not require the recipient to exercise control and direction over the individual, would not be subject to the cap. On the other hand, the consultant fee cap would apply to a contract awarded to a firm with one or more persons that is justified on the basis of the qualifications of a designated individual with specialized skills if the terms of the contract require the firm to provide the recipient with the services of that individual at an hourly or daily rate of compensation and the recipient will exercise direction and control over that individual in the performance of the contract. Questions regarding whether a particular individual under a contract may be performing as a consultant and thus be subject to the consultant fee cap should be directed to the Office of General Counsel or Office of Regional Counsel, as appropriate.

In addition, the consultant fee cap does not apply to contracts for technical advisory services awarded competitively under EPA's Superfund Technical Assistance Grant (TAG) program regulations at 40 CFR 35.4205 provided that the terms of the contract indicate that the technical advisor has the discretion of an independent contractor and do not vest the TAG recipient with responsibility for the direction and control of the technical advisor.

Project officers should alert Grants Management Offices (GMOs) if they find indications that a recipient is using consultants, e.g., statements in work plans or findings as a result of post award monitoring activities. If the application or other information, including the budget, indicates the recipient will use funds for contracts or consultants, the Grants Specialist must include the "Consultant Fee" Term and Condition in the award document

Other category of costs:

Examples of other costs could be postage, printing, sub-grants or stipends.

The PO must review the other costs to determine the costs are consistent with the proposed work plan and are necessary to complete the approved work plan.

General Subaward Information

Generally, unless prohibited by statute, an entity/individual is eligible to receive a subaward even if it is not eligible to receive an assistance agreement from EPA directly as long as the subaward is consistent with applicable EPA regulations, EPA policies, EPA guidance, and OMB Circulars. Recipients may not subaward to another entity for a purpose not authorized by, or an activity not eligible under, the federal grant statute. Unless authorized by statute federal entities are not eligible for subawards. Recipients may not use subawards to transfer or delegate their responsibility for successful completion of their EPA assistance agreement and must monitor the performance of their subrecipients and ensure that they comply with applicable Federal assistance agreement requirements.

Program Offices are responsible for: reviewing proposed subaward work specified in an assistance agreement application work plan, or work plan changes requiring prior approval, in order to ensure compliance with the Subaward Directive and in accordance with cost review guidance provided/approved by OGD; ensuring that proposed subaward work is for an authorized assistance purpose and not to acquire goods and services for use by the recipient as part of their cost reviews (see Section 210(a)-(d) of OMB Circular A-133); obtaining necessary OIA consent for work to be performed in a foreign country or any work by a foreign recipient or international organization; and informing the recipient of any program-specific restrictions or statutory restrictions on subawards. Please see the Subaward Directive for additional information.

Competition

Recipients are encouraged, but are not required, to subaward competitively. Subawards may not be used to circumvent procurement requirements or EPA competition policies. Program Offices may require the recipient to conduct a competition for subawards if the office determines that the subaward competition is necessary for the effective and efficient implementation of the assistance program. When the Program Office requires the recipient to conduct a subaward competition, the award must include a programmatic term and condition requiring the recipient to conduct the subaward competition consistent with the negotiated work plan. When the Program Office requires the recipient to conduct a subaward competition under a competitive EPA assistance agreement, the Agency’s competitive funding announcement must include ranking factors for evaluating the applicants’ proposed procedure for conducting the subaward competition.

Grant and cooperative agreement recipients are responsible for selecting their subrecipients and conducting their subaward competitions. In addition, EPA personnel may not direct recipients to make subawards to particular organizations, suggest the use of specific subrecipients, or interfere with the recipient’s subaward selection decisions. EPA personnel may serve as technical advisors and/or members of a recipient’s subaward evaluation panel provided that they do not unduly influence the panel or selection decisions and are free of any conflicts of interest, or appearances that they may be violating ethical standards with respect to any competing subrecipients.

Indirect Costs:

In addition to direct costs, the EPA supports a policy of full reimbursement of indirect costs also known as facilities and administrative (F&A) costs or overhead for most grant programs. The Grants Management Office will review the indirect cost budget line. Universitys negotiate their rates with the Department of Health and Human Services. Tribes negotiate their rates with the Department of Interior. EPA accepts rates negotiated by other Federal agencies. If the applicant does not have an approved rate the GMO will term and condition the grant appropriately.

What are Indirect Costs:

Indirect costs are those costs of an institution or organization that are not readily identifiable with a particular project or activity but are necessary to the general operation of the organization and the conduct of its grant activities.

Allowable indirect costs may include:

These costs are documented and assigned to the indirect pool from which they are distributed to all activities of an organization on the basis of a rate. The rate is a ratio of the indirect costs to a direct cost base.
An indirect cost rate is simply a device for determining fairly and expeditiously the proportion of general (non-direct) expenses that each project will bear. It is the ratio between the total indirect costs of an applicant and some equitable direct cost base.

The applicant must comply with the applicable OMB Circular

Cost Sharing

Cost sharing may be match, maintenance of effort or level of effort.

Cost sharing requirements for a program may be required by statute (e.g., Air §105 grants require States to provide a 40% match), program policy (Toxic Substances Control Act §10 grants), or by regulation ( Superfund Technical Assistance Grants.)

Recipients can claim only allowable and eligible costs to meet cost sharing requirements. For example a recipient could not use alcohol or entertainment costs from a reception to meet its match. Recipients subject to OMB Circular A-110 (40 CFR 30) may claim unrecovered indirect costs as part of their cost share, with the prior approval of the EPA Award Official.

Funds awarded under assistance programs of other Federal agencies cannot be used to meet EPA cost sharing requirements unless legislation explicitly authorizes such use, e.g., Department of Housing and Urban Development's Community Development Block Grant program, or the Indian Self-Determination Act.

Funds for recipient cost sharing may include:

Third Party in-kind contributions e.g., facilities, equipment, materials, professional services, volunteer staff time provided by non- Federal public agencies, organizations, or individuals.

Recipients cannot decide which task, sub task, or item of equipment is funded with Federal dollars and which is not. Each assistance-related dollar includes both Federal and recipient shares. Recipients cannot avoid Federal statutory or regulatory requirements by separating recipient funds from Federal funds.

Program Income

"Program Income" is the gross income received by the recipient or subrecipient: directly generated by an assistance supported activity, or earned as a result of the assistance agreement during the project period

"Program Income" does not include interest earned on assistance funds, rebates, credits, discounts, refunds, or income from royalties and license fees for copyrighted materials. Patents and inventions developed by a recipient or sub-recipient is not "program income" unless specifically identified as program income in the assistance agreement or EPA regulations.

Recipients must use program income:

1. Added to funds committed to the project by EPA and recipient and used to further eligible project or program objectives;
2. To finance the non-Federal share of the project or program (for cost-share purposes); or
3. To deduct from the total project or program allowable cost in determining the net allowable costs on which the Federal share of costs is based.

NOTE: The PO should determine prior to award which of the three options is the most appropriate for the project.

Unless the terms of the agreement or EPA regulations provide otherwise, there are no Federal requirements governing disposition of program income earned after the project period end date.

Further program income which was not anticipated at the time of award shall be used to reduce the Federal and recipient contributions rather than increase the funds committed to the project unless the award is amended to permit the funds to be used differently.

Preaward Costs

State, Local Governments and Indian Tribes

Generally state and local governments and Indian Tribes, subject to 40 CFR Part 31, may be reimbursed for pre-award costs if the costs meet the following definition:

"Costs incurred prior to the effective date of the award directly pursuant to the negotiation and in anticipation of the award where such costs are necessary to comply with the proposed delivery schedule or period of performance and are in conformance with the appropriate statute and costs principles". This policy was established in Grants Policy Issuance (GPI-00-02) dated March 30, 2000.

The policy made the treatment of Part 31 grantees consistent with that afforded to universities and non-profits under 40 CFR Part 30.25. Some part 31 recipients vary, and may be subject to additional limits on preaward costs. For example for awards subject to 40 CFR Part 35 the following applies:

Construction Grants: The Award Official must specifically approve preaward costs before they are allowable. (See 40 CFR 35.2118 for the limitations on pre-award costs.)

State and Tribal Environmental Program Awards: EPA will reimburse the applicant for allowable costs incurred from the beginning of the funding period established in the agreement, provided such costs are contained in the approved application and that the application was submitted before the expiration of the prior budget period. (40 CFR 35,113 and 35.513)

If an application is not received before the end of the prior budget period, a deviation from the regulation must be approved if the preaward costs are to be allowed.

Superfund Awards: Except as permitted in §35.6285 (credits and advanced match), the Award Official must sign the assistance agreement before costs are incurred. The recipient may incur costs between the date the Award Official signs the assistance agreement and the date the recipient signs the agreement, if the costs are identified in the agreement and the recipient does not change the agreement.

Institutions of Higher Education and Other Non-Profits (Subject to 40 CFR Part 30)

Preaward costs may be incurred up to 90 calendar days before the award without prior approval from EPA.

Preaward costs incurred more than 90 calendar days prior to award are allowable only with prior approval from the EPA Award Official.

The Applicants must include all preaward costs in it application.

All Applicants (40 CFR Parts 30, 31 and 35) incur preaward costs at their own risk, EPA is not obligated to pay for any costs if:

The applicant does not receive an award,
The award is less than anticipated,
The award is inadequate to cover preaward costs, or
The costs do not conform to the cost principles.

Additional cost review guidance is available in GPI 00-05.

Note: Profit is not allowable under assistance agreements unless there is specific statutory authority allowing profit.

When the PO is reviewing the budget they should consider if it may be necessary to add the term and condition requiring the recipient to notify the PO if major cost components change.

Summary:

At the beginning of the chapter, we identified several objectives you would accomplish after reading the chapter. The objectives are listed below, each followed by a brief summary of the key points the chapter covered.

1. Understand what types of reviews are required. Programs must perform an administrative review to ensure that the applicant submitted all information requested by the announcement and is eligible to receive the assistance. After the administrative review, the regulation for research 40 CFR Part 40 requires a relevancy review. It is performed by EPA technical experts (not including the PO). For research you need at least one internal and two external reviewers, and you may have more. Internal reviewers must come from within EPA and should come from outside of the chain of command. They must be impartial and independent. The external reviewers must be external to EPA, technically qualified, and independent. Use as many reviewers as necessary to assure that you have the required expertise. Non-research awards require one technical review be performed on the scope of work.

2. Describe the selection for award process. Relevancy, coupled with the results of the technical review, will usually provide the basis for funding recommendations. Final funding decisions are delegated to the Approval Official. In most cases, the proposal(s) with the highest technical merit will be selected for further processing and consideration by the Agency.

3. Understand how the selection for award dispute process works. An unsuccessful applicant may appeal a decision not to select its initial or final proposal to the EPA disputes decision official appointed by the Award Official for the assistance funding that will be awarded as a result of the competition (for example, the Grants Administration Division for Headquarters competitions, or the Regional Grants Management Office for regional competitions) for his/her final decision. The EPA disputes decision official must consult with OGC or ORC, as appropriate, to determine whether it is in the Agency's best interest to delay the award process pending resolution of the dispute.

4. Identify the contents of an application package. The application (SF 424) consists of four parts -- the Face sheet, Budget information, Assurances, and a Program Narrative/Workplan.

5. Understand the importance of negotiating a complete work-plan. The approved project narrative/work-plan is the basis for making an award and is used by the PO to manage and evaluate performance under the agreement. The purpose of the project narrative is to outline all activities to be performed by the recipient. It is especially critical for the PO to spend time negotiating with the recipient on this portion of the application package.

6. Conduct a cost review of an application budget. The PO is responsible for reviewing the proposed budget against the Narrative/ Workplan to determine whether the budget is reasonable from a programmatic perspective. In making this determination, the PO should consider the technical necessity for and price reasonableness of proposed personnel, travel, equipment, supplies, procurements, and other items in the budget. Additional guidance is available in GPI 00-5.

7. Be aware of Quality Assurance (QA) requirements under assistance agreements. EPA uses its Quality System to manage the quality of its environmental data collection, generation, and use. The primary goal of the Quality System is to ensure that our environmental data are of sufficient quantity and quality to support the data's intended use.

8. Define in-kind assistance and cost share. In-kind assistance in awards allows EPA to use an assistance agreement to transfer anything of value, such as equipment or services to a recipient. In-kind assistance can also be where the recipient contributes anything of value to the award. Cost share is defined as the portion of allowable project costs that a recipient contributes toward completing its project - costs not borne by the Federal Government (40 CFR Part 30.2 (i))

Questions

1. What does the application package consist of? Who fills out the application package?

2. Who is responsible for reviewing the proposed budget against the Narrative/ Workplan to determine whether the budget is reasonable from a programmatic perspective?

3. Who signs the application and accompanying certifications?

4. What will an effective narrative/work plan do?

5. Why must programs perform an administrative review?

6. Why must reviewers be impartial, independent, and free from conflict of interest?

7. A programmatic review must?

Exercise

Using your text please review the following work-plan and budget identifying any deficiencies and areas that need to be addressed.

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