406.1 - Grants and Cooperative Agreements

406.1 – Grants and Cooperative Agreements

DATE: 10/02/2008

OPR: APS/Acquisition and Grants

Instruction: This revises Survey Manual (SM) Chapter 406.1.8.C(4), dated February 27, 2007, to remove the $750,000 threshold for Solicitor’s office review and update 505 DM 2 citations.

The purpose of this chapter is to provide authorities, policies, and procedures for the issuance and management of USGS assistance awards. Coverage of this chapter includes assistance awards to educational and other nonprofit institutions, State, local, and federally recognized Indian tribal governments, and for-profit organizations.

This chapter pertains to Federal financial assistance awards (grants and cooperative agreements) awarded by the USGS to eligible recipients. This chapter does not apply to agreements with foreign governments, interagency agreements (FAR 17.5), or to other memorandums of understanding or agreements that do not provide for transfer of funds or other things of value from the USGS to another party or make commitments regarding future funding. Joint Funding Agreements in which the USGS receives funds from a cooperator are not covered by this chapter (although a grant or cooperative agreement transferring such funds to another party would be covered).

A. Public Law 95 224, Federal Grant and Cooperative Agreement Act (codified as 31 U.S.C. Chapter 63 [6301 through 6308]) established the basic criteria for use of contracts, grants, and cooperative agreements.

B. Office of Management and Budget (OMB) establishes administrative and audit requirements and cost principles for assistance awards in Title 2 of the Code of Federal Regulations and through a series of Circulars, as listed below.

(a) 2 CFR 220, Cost Principles for Educational Institutions (OMB Circular A-21).

(b) 2 CFR 225, Cost Principles for State, Local, and Indian Tribal Governments (OMB Circular A-87).

(d) Cost principles for commercial organizations, individuals, and nonprofit organizations excluded from coverage of A-122 (listed in the Circular's Attachment C) are covered by Federal Acquisition Regulation, Subpart 31.2, Contracts with Commercial Organizations.

(2) Administrative requirements for award and administration of assistance awards:

(a) OMB Circular A 102, Uniform Administrative Requirements for Grants and Cooperative Agreements to State and Local Governments.

(b) OMB Circular A 110, Uniform Administrative Requirements for Grants and Agreements with Institutions of Higher Education, Hospitals and Other Nonprofit Organizations (also applies to for-profit organizations), now found in 2 CFR Part 215.

(a) OMB Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations.

A. Assistance Awards. Legal instruments where the principal purpose is to transfer funds to a recipient in order to accomplish a purpose of support or stimulation authorized by statute. The authorized assistance purpose of USGS funds derives from the authorities of the program for which the funds were appropriated. USGS uses two types of assistance awards: grants and cooperative agreements.

B. Recipient. An individual or organization who has accepted an assistance award from the Federal Government.

C. Discretionary Awards. Awards made according to specific authorizing legislation allowing the Federal agency to exercise judgment in selecting the project, grantee/recipient organization, and/or the amount of the award through a competitive process. All USGS assistance awards are considered discretionary unless the authorizing or appropriation statute makes the award mandatory.

D. Formula Awards. Allocations of money to States or their subdivisions in accordance with distribution formulas prescribed by law or administrative regulation, for activities of a continuing nature not confined to a specific project, such as awards under Section 104 (b) of the Water Institute Program statute.

E. Mandatory Award. An award directed by Congress in legislation identifying the specific recipient and the award amount. Formula awards are a form of mandatory award. These awards are excluded from requirements applicable to "discretionary awards."

F. Matching Requirement. A requirement for the recipient to provide additional funds (its own or funds raised from other, non-Federal sources) so that the Federal share of the project cost does not exceed a specified percentage. This requirement is usually expressed in statute as a requirement for the recipient to match each Federal dollar on a share ratio (such as 1:1 or 2:1). A matching requirement alone does not make a project a formula award.

Effective administration and management of USGS assistance awards requires the active participation of staff who are trained and experienced in a variety of professional disciplines. Understanding of the responsibilities of these various participants is vital in order to achieve program objectives.

A. Office of Acquisition and Grants (OAG). Responsible for interpreting and implementing Federal assistance statutes and regulations, management of assistance policies and procedures, and oversight of the administrative aspects of Federal assistance programs, including conducting periodic reviews of grant and cooperative agreement award activities, as described in SM 401.2.4.B.

(1) Chief, OAG, or designee serves as the Bureau Federal Financial Assistance Communication Liaison (FFACL), as described in 507 DM 1.5.C. The FFACL is responsible for coordinating submissions to the Catalog of Federal Domestic Assistance (CFDA).

(2) Chief, OAG, is authorized to make the determination that a USGS recipient should be designated as high risk, necessitating special award conditions pursuant to OMB Circular A-102 (Attachment paragraph 1.C.5.g ) or A-110 (2 CFR Sec 215.14)

B. Project Officer (or Program Coordinator or Program Officer). The Program Coordinator or individual Project Officer is the employee from the requisitioning program office or science center who serves as the technical expert, coordinator, or manager for one or more assistance awards. The Program or Project Officer is responsible for:

(1) Identifying and understanding applicable program authorities and developing operating guidelines for the project or program, ensuring the provisions of any applicable specific program legislation are followed.

(3) Informing the Contracting Officer (CO) of any applicable statutory matching or cost- sharing requirements. In the case of cooperative projects involving USGS in-house costs, the project office is responsible for tracking the total cooperative project costs (recipient in-kind contributions, recipient agreement costs, USGS agreements costs, and USGS in- house contributions) to ensure compliance with any statutory share limits.

(6) For multiple award programs, defining eligibility criteria and evaluation/selection procedures, and providing a written selection plan.

(7) Providing the CO with information required for issuing public announcements inviting applications for anticipated assistance awards.

(8) Obtaining Paperwork Reduction Act approval for information requested in applications and for report or data submission required in the resultant awards for programs involving 10 or more applicants or awardees and for projects involving public information collection to be performed by recipient(s).

(9) Assuring a fair and impartial evaluation of the scientific merit of competing and/or unsolicited proposals, including reviewing and evaluating project proposals, convening a peer review panel when appropriate, making funding selection decisions, and providing a written report of those evaluations and selections to the CO for the program announcement or individual award file.

(10) Reviewing selected applicants' budget proposals and providing the CO with an evaluation of the proposed direct costs from a technical standpoint (excluding indirect rates).

(11) Ensuring that any Government involvement commitments made in a cooperative agreement are performed in a timely and appropriate manner to enable the recipient to accomplish his stated objectives.

(12) Providing technical oversight required to monitor and evaluate recipient's performance during the award, using reports and other communications with recipients, or conducting site visits, as necessary to review recipient's operation and adherence to project plans.

(13) Serving as USGS contact for allegations of scientific misconduct by a recipient, its subrecipient, or employee; coordinating investigation of allegations with the recipient organization; notifying the USGS Headquarters Office of Human Resources of allegations and/or findings of scientific misconduct by a recipient or employee of a recipient organization; and reporting any potential criminal violations, such as misappropriation of Federal funds, to the USGS CO and the Department of the Interior Inspector General.

(14) Tracking deliverable reports and following up to obtain delinquent reports. Reviewing technical reports and other deliverables and notifying the CO of the results.

(15) Assisting the CO in exploring and resolving issues arising from the review of the recipient's quarterly and final financial reports.

C. Contracting Officer. The role of the CO is to provide expertise in the business and other non-programmatic areas of assistance award and administration that complements the Project Officer's scientific or technical knowledge. The CO must ensure that the USGS and recipients meet their legal, regulatory, and administrative requirements. The CO is responsible for the following:

(1) Advising and assisting Program Coordinators and Project Officers in developing, implementing, and evaluating program plans, strategies, regulations, announcements, guidelines, procedures, etc.

(2) Determining the proper award instrument (contract, grant, or cooperative agreement).

(3) Interpreting and carrying out assistance management policies and procedures in coordination with project managers and management officials to assure that awards and their administration are performed in accordance with OMB and regulatory guidelines.

(4) Working with the appropriate officials to establish timetables for publishing program announcements, receiving applications, and issuing awards.

(5) Issuing assistance program announcements, other notices of competitive and/or collaborative opportunities involving outlays of Federal funds, and notices of awards and modification(s).

(6) Serving as the Bureau's point of contact for the processing of assistance applications and related documents.

(7) After receiving funding recommendations, performing a business review of the application, including budget review, and negotiating a reasonable estimate for performance of the funded work and the terms of any cost-sharing or matching agreement.

(8) Verifying that any intended recipient is not currently debarred, suspended, or ineligible from receiving Federal awards and has management and accounting systems capable of complying with the terms of an award.

(9) Assuring that funds are available for obligation before executing the award or modification or making other binding agreements with a recipient.

(10) Notifying the Office of Congressional Affairs before making an award with a potential value exceeding the notice threshold established by the Chief, OAG.

(11) Reporting all assistance awards and their modifications to the Federal Assistance Award Data System (FAADS) promptly after award.

(12) Monitoring submission of required financial reports, reviewing reports, investigating any significant changes in the rate of the expenditure from that budgeted, and ensuring that recipients are not drawing funds in excess of their immediate disbursement needs.

(13) Providing for the continuing surveillance of the financial and management aspects of awards through reviews of reports, recipient correspondence, site visits, or other appropriate means.

(14) Issuing any notices of suspension or termination of an award, after consultation with the Project Officer.

(15) Initiating all necessary actions to close out awards when all applicable administrative actions and funded work under the award have been completed by the recipient.

(16) Recommending when a recipient should be designated as high risk based on performance, accounting, or management problems, as provided in 43 CFR Part 12, Section 12.52 (A-102 recipients) or 2 CFR Section 215.14 (A-110 recipients) and referring the information to Chief, OAG, for a decision.

6. Selection of Award Instrument.

The criteria defining the appropriate uses of contracts, grants, and cooperative agreements are established in 31 U.S.C. Chapter 63 (6301 through 6308) and Departmental Manual 505 DM Chapter 2.

A. Instrument selection begins with a determination whether the purpose is one of a contract or of financial assistance.

(1) A contract is a legal instrument reflecting a relationship, the principal purpose of which is to acquire (by purchase, lease, or barter) property or services for the direct benefit or use of the Government, including services required by the Government to fulfill its legal obligations to a third party. In determining an award's principal purpose, one must look at the purpose of the immediate relationship between the USGS and the awardee rather than any indirect or subsequent benefits to the public or other parties.

(2) An assistance agreement is a legal instrument, the principal purpose of which is to transfer a thing of value (e.g., money) to the recipient in order to provide support or stimulation to the recipient's activities for a purpose authorized by law. The authorized assistance purpose must be found in the Organic Act or an authorizing USGS program statute. Some of these statutes provide specific assistance program authority; for others, assistance authority is inferred from a broad research mission. This inference is supported by language appearing in the Administrative Provisions of our annual appropriations that reads "... activities funded by appropriations herein made may be accomplished through the use of contracts, grants, or cooperative agreements as defined in 31 U.S.C. 6302 et seq." To spend another agency's funds on an assistance award, the authorized purpose of support or stimulation must be found in that agency's statutes. Assistance agreements must not be used as vehicles for hiring support staff to work under the supervision or direction of USGS employees, except when the program statute specifically authorizes a jointly staffed unit.

(3) USGS has no general authority for federally-assisted construction, whether on Federal or non-Federal lands. USGS may fund recipient construction only when the construction project and funding level are specifically identified in an authorizing or appropriation statute. Improvements to Federal property are considered an acquisition need and may not be obtained through Federal assistance awards without specific statutory language authorizing the project to be acquired using a grant or cooperative agreement.

B. Substantial Involvement. The nature and extent of USGS involvement with the recipient during performance of the funded activity is the basic criterion that distinguishes a grant relationship from a cooperative agreement relationship. In general, when the assistance agreement indicates that the recipient can expect USGS collaboration, participation, or intervention in the management or performance of the project, substantial Federal involvement is anticipated. See 505 DM 2.9.B. for examples of activities which do and do not constitute substantial involvement.

(1) In a grant, the recipient is responsible for determining the method and manner of performance and direction of the sponsored activity. Successful accomplishment of project objectives does not require or include substantial participation by the USGS or involvement in directing the project. The Bureau is essentially a "patron" of and contributor to the recipient.

(2) A cooperative agreement is an assistance award to sponsor the recipient's participation in a cooperative activity, with substantial involvement by the Bureau in carrying out the activity. There is a participatory relationship between the USGS and the recipient during performance, with shared performance responsibility.

C. Documentation. The selection of a grant or cooperative agreement as the appropriate award instrument must be supported by a written determination signed by a CO appointed under the DOI CO Certificate of Appointment Program, identifying the principal purpose of support or stimulation to be achieved, the statute that authorizes this assistance, and the nature and extent of USGS involvement in the performance of funded work.

(1) Notwithstanding the principal purpose test, 31 U.S.C. 6303 (b) authorizes the agency to determine in a specific instance that the use of a procurement contract is appropriate. This determination must be made in writing, as required by 505 DM 2.8.E(2), and approved by the Chief, OAG, or Regional Acquisition and Grants Branch Chief.

(2) The Federal Grant and Cooperative Agreement Act also allows the Director, OMB, to exempt individual transactions or programs from the Act. The Chief, OAG, is responsible for coordinating the request with the Office of the Solicitor and its submission to DOI Office of Acquisition and Property Management. (See 505 DM 2.7.)

Maximum competition in awarding discretionary grants and cooperative agreements is encouraged. Opportunities to submit proposals should be afforded to all eligible sources on a fair and objective basis. Except for awards directed by Congress to the National Academy of Sciences, it is Congressional policy that any program, project, or technology identified in legislation be awarded through merit-based selection procedures. (41 U.S.C. 266)

A. Publicizing Assistance Opportunity. The availability of USGS funds for discretionary assistance awards (competitive and noncompetitive) shall be publicized as appropriate on Grants.gov in accordance with procedures issues by Grants.gov, the Department of the Interior, and OAG. Additional methods used to publicize USGS program opportunities may include posting a notice on the USGS internet; placing advertisements or notices in scientific journals or other forums calculated to attract new or additional interest; and sending mail or email announcements to entities on a USGS mailing list. Any such notices or announcements must include a link to Grants.gov.

B. Restricting Assistance Opportunities. Requests for assistance awards with limited opportunity (including noncompetitive) must be justified in writing by the Project Officer. Congressional language regarding research awards must meet the criteria in 41 U.S.C. 266 (b) in order be considered a Congressionally directed noncompetitive award. A noncompetitive justification requires signature of the CO.

C. Evaluation of Competing Applications. Applications for competitive assistance awards shall be submitted to a technically qualified Review Committee designated by the Project Officer. The Committee will evaluate the proposals or applications in accordance with announced criteria and priorities. A written record of the evaluator scores and considerations must be provided to the CO for review. This record will be returned to the funding (program) office for retention and a summary record will be retained in the CO’s program announcement file. The Review Committee will provide the CO with a rank order listing of applications with recommendation for disposal (i.e., fund or decline). The Committee's evaluation and recommended funding levels are to be based on merit of the proposal in light of the criteria included in the application announcement. Any disposition recommendations that deviate from the panel's rank order must be justified in writing. Final funding amounts will be determined by the CO after budget review and negotiations. Review Committee members must regard these deliberations as privileged information and not to be disclosed outside the USGS. Any communication with applicants regarding evaluations or recommendations must be made by the CO or Project Officer.

D. Notification to Unsuccessful Applicants Under Competitive Announcements. Unsuccessful applicants whose applications will not be funded shall be promptly notified in writing of the actions taken on their application, by either the CO or the Project Officer, as agreed between them. Unsuccessful applicants are entitled to a full explanation of the reasons why their applications were not selected for funding.

A. Preparation of DI-1 Requisitions. Prior to the issuance of notices and announcements or requests for sole source awards, the Project Officer will prepare Form DI-1. For an unsolicited proposal, the DI-1 is prepared after the proposal has been evaluated and recommended for funding by the technical reviewer(s). The DI 1 will be forwarded through appropriate program and fiscal channels to the servicing Acquisition and Grants office. The DI-1 requisition for each funded project must be provided to the CO well before the requested start date so that the recipient can receive the award before starting work.

B. USGS assistance awards may only be executed by COs in OAG and the Regional Acquisition and Grants Branches as specified in SM 205.4. The CO has the authority to sign and issue assistance awards and assistance award modifications and to make determinations involving business management aspects of assistance. Only the CO is authorized to modify the funding or terms and conditions of an assistance award.

(1) Review of Proposals. For competing and unsolicited applications, the CO will evaluate proposals for completeness and accuracy and forward them to the Project Officer or Review Committee for technical review. If a proposal is recommended for funding, the CO will also review the budget proposal to assure that the proposed costs are allowable and reasonable for the proposed work. Profit, fee, or any increment above cost is not allowable on USGS assistance awards. The CO will also verify that the intended recipient is eligible to receive an award and is compliant with the Single Audit Act provisions of OMB Circular A-133. (See 9.D.2 below.)

(2) Agreement. The CO shall negotiate and reach agreement with the prospective recipient on business and legal matters in compliance with applicable laws and regulations.

(3) Document. The contents of the award document must include items described in 505 DM 2, paragraphs 10–12. Until a DOI-wide award instrument is provided, USGS grants and cooperative agreements will use USGS form 9-2092 as the award cover form.

(4) Legal Review. Assistance actions require review and approval by the DOI, Office of the Solicitor, in the following circumstances:

(a) Before issuance of a program announcement or individual award involving new programs or new or changed interpretation of the relevant statute or assistance authority.

(b) Any time when review of a program announcement, award, or modification of award is considered advisable because of complexity or other legal issues or concerns, as described in 505 DM 2.8.E(5).

(a) Grant Acceptance. Grants may be issued unilaterally or may require an acceptance signature by an authorized representative of the grantee organization. Acceptance is defined as the start of work, drawing down funds, or accepting the award by signature or electronic means.

(b) Cooperative Agreement Acceptance. All new cooperative agreements must be signed by an authorized representative of the recipient organization before the agreement becomes binding.

A. Administration of assistance awards shall be performed by the cognizant CO in coordination with the Project Officer. Any modification or termination will be accomplished by the CO upon receipt of proper documentation from the Project Officer.

(1) The CO will monitor recipient submission of financial reports, while the Project Officer monitors technical reports. For continuing awards of 2 or more years duration, the CO and Project Officer must reconcile the award at least annually and evaluate program performance and financial reports, including:

(a) Comparison of the recipient's work plan to its progress reports and project outputs.

(e) Review of federally owned property used under this award. (See OMB Circular A-102, Attachment, Paragraph 3.b.)

(2) Each CO will monitor receipt of annual SF-269, Financial Status Reports, in coordination with the sponsoring USGS program/project office. In the interests of maintaining positive relationships, initial attempts to obtain overdue reports should be informal. When more formal action is considered necessary, the CO will establish revised due dates for the overdue reports in writing. If the recipient does not meet the new dates, the CO must issue a delinquency letter as described in DOI "Policy Regarding Financial Status Reporting Requirements Related to Grants," section 6.H and 6.I. Copies of any extension requests by the recipient, correspondence establishing new due dates, or delinquency letters will be retained in the award file. A copy of any delinquency letters must be provided to OAG. The CO will notify OAG when the delinquency is resolved.

(3) No award may be supplemented or renewed unless or until the applicant has met its current reporting obligations. The CO must obtain current financial status and determine the balance. Before adding renewal funding to the award, the CO will evaluate the need for any carryover balance. In the case of supplemental work or incremental funding added during the project period, the CO should verify that recipient expenditures to date are consistent with planned activities and outlays. Exceptions are:

(a) When a short-term supplement or extension is necessary to avoid damage to the scientific usefulness of the project, such as disruption of data collection or monitoring activities, the CO may instead obtain any overdue reports and perform the funds status review promptly after award.

(b) When award was made or a review conducted within the previous 3 months, this review is premature and not required.

C. Closeout. The CO is responsible for ensuring that all requirements of the award have been accomplished. The Project Officer shall provide assistance at the CO's request in certifying that all programmatic aspects of the award have been satisfied.

D. Audit. Audits of recipients receiving Federal assistance awards are rarely required. The USGS will rely on single audits conducted under OMB Circular A 133. The cognizant CO is responsible for resolution of any audit findings relating to a specific USGS award. OAG is responsible for resolution of any crosscutting findings on organizations for which the USGS has the lead Government-wide cognizance.

Requirements for furnishing copies of publications produced under the award shall be specifically incorporated in the terms of the agreement. The Project Officer is responsible for insuring that the Department and USGS libraries receive their designated copies, as follows:

(b) Two copies each for the USGS libraries in Reston, VA; Denver, Co; Menlo Park, CA; and Flagstaff, AZ.

Copies of publications should be sent with a transmittal that identifies the sender, the publication, and states that the publication is intended for deposit in the library. Journal articles are exempt from this requirement.

A. All awards under which the recipient is authorized to acquire permanent equipment must: (1) identify the equipment to be acquired and (2) state whether title will vest in the recipient or is reserved by the Federal Government.

B. Authority to vest title in the recipient is limited by statute and 505 DM 2.16.A to institutions of higher education and nonprofit organizations whose primary purpose is conducting scientific research. The CO's determination that vesting of title will further the objectives of the program, as provided in 31 U.S.C. 6306 and SM 205.3.5, must be documented in writing, based on Project Officer recommendations, and retained in the official grant or cooperative agreement file.

C. Title to personal property acquired by the recipient will vest in the Federal Government upon acquisition when the recipient is not an educational institution nor a nonprofit whose primary purpose is conducting scientific research.

Program income represents gross income earned by the recipient during the grant or cooperative agreement that is directly generated from an assistance-supported activity. It includes, but is not limited to, income from the sale of items manufactured under the assistance award, fees for services performed, or fees from the use or rental of property acquired with Federal assistance funds. Unless provided otherwise in the assistance award, program income does not include interest on cash advances or royalties received as a result of copyrights or patents produced under the award. Accountability and distribution of program income are addressed in OMB Circulars A-102 and A-110.

A. If the recipient is an educational institution or nonprofit research organization, program income will normally be added to funds committed to the project by the Federal awarding agency and recipient and be used to further eligible project or program objectives, as described in 43 CFR 12.924(b)(1).

B. For all other types of recipients, program income will normally be deducted from total allowable costs to determine the net allowable costs before calculating the Government's share of reimbursable costs, as provided in 3 CFR 12.65(g)(1) or 43 CFR 12.924(b)(3).

__Karen D. Baker_____________ Date ___10/2/08____________
Karen D. Baker
Associate Director, Administrative Policy and Services