Att E Circular A-102

August 29, 1997
MEMORANDUM FOR THE RECORD
FROM:

Norwood J. Jackson
Deputy Controller
Office of Federal Financial Management

SUBJECT: Recompilation of OMB Circular A-102
I certify that the attached document constitutes a recompilation of Office of Management
and Budget Circular A-102, "Grants and Cooperative Agreements with State and Local
Governments." The recompilation consists of the last complete revision of the Circular
published at 59 FR 52224 (dated October 7, 1994, published October 14, 1994), as further
amended at 62 FR 45934 (August 29, 1997).

CIRCULAR A-102 (REVISED 10/7/94, As Further Amended 8/29/97)
CIRCULAR NO. A-102
Revised
TO THE HEADS OF EXECUTIVE DEPARTMENTS AND ESTABLISHMENTS
SUBJECT: Grants and Cooperative Agreements with State and Local Governments
1. Purpose. This Circular establishes consistency and uniformity among Federal agencies in
the management of grants and cooperative agreements with State, local, and federallyrecognized Indian tribal governments. This revision supersedes Office of Management and
Budget (OMB) Circular No. A-102, dated March 3, 1988.
2. Authority. This Circular is issued under the authority of the Budget and Accounting Act
of 1921, as amended; the Budget and Accounting Procedures Act of 1950, as amended;
Reorganization Plan No. 2 of 1970; Executive Order 11541 and the Chief Financial Officers
Act, 31 U.S.C. 503. Also included in the Circular are standards to ensure consistent
implementation of sections 202, 203, and 204 of the Intergovernmental Cooperation Act of
1968, the Office of Federal Procurement Policy Act Amendments of 1983, and sections
6301-08, title 31, United States Code.
3. Background. On March 12, 1987, the President directed all affected agencies to issue a

grants management common rule to adopt government-wide terms and conditions for grants
to State and local governments, and they did so. In 1988, OMB revised the Circular to
provide guidance to Federal agencies on other matters not covered in the common rule.
4. Required Action. Consistent with their legal obligations, all Federal agencies
administering programs that involve grants and cooperative agreements with State, local and
Indian tribal governments (grantees) shall follow the policies in this Circular. If the enabling
legislation for a specific grant program prescribes policies or requirements that differ from
those in this Circular, the provisions of the enabling legislation shall govern.
5. OMB Responsibilities. OMB may grant deviations from the requirements of this Circular
when permissible under existing law. However, in the interest of uniformity and consistency,
deviations will be permitted only in exceptional circumstances.
6. Information Contact. Further information concerning this Circular may be obtained
from:
Office of Federal Financial Management

Office of Management and Budget

Room 6025

New Executive Office Building

Washington, DC 20503

(202) 395-3993

7. Termination Review Date. The Circular will have a policy review three years from the
date of issuance.
8. Effective Date. The Circular is effective on publication.
Attachment
Top of Page

ATTACHMENT
Circular No. A-l02
GRANTS AND COOPERATIVE AGREEMENTS
WITH STATE AND LOCAL GOVERNMENTS
1. Pre-Award Policies.

a. Use of grants and cooperative agreements. Sections 6301-08, title 31, United
States Code govern the use of grants, contracts and cooperative agreements. A grant
or cooperative agreement shall be used only when the principal purpose of a
transaction is to accomplish a public purpose of support or stimulation authorized by
Federal statute. Contracts shall be used when the principal purpose is acquisition of
property or services for the direct benefit or use of the Federal Government. The
statutory criterion for choosing between grants and cooperative agreements is that for
the latter, "substantial involvement is expected between the executive agency and the
State, local government, or other recipient when carrying out the activity
contemplated in the agreement."
b. Advance Public Notice and Priority Setting.
(1) Federal agencies shall provide the public with an advance notice in the Federal
Register, or by other appropriate means, of intended funding priorities for
discretionary assistance programs, unless funding priorities are established by Federal
statute. These priorities shall be approved by a policy level official.
(2) Whenever time permits, agencies shall provide the public an opportunity to
comment on intended funding priorities.

(3) All discretionary grant awards in excess of $25,000 shall be reviewed for
consistency with agency priorities by a policy level official.

c. Standard Forms for Applying for Grants and Cooperative Agreements.
(1) Agencies shall use the following standard application forms unless they obtain
Office of Management and Budget (OMB) approval under the Paperwork Reduction
Act of 1980 (44 U.S.C. 35) and the 5 CFR Part 1320, "Controlling Paperwork
Burdens on the Public":
SF-424 Facesheet

SF-424a Budget Information (Non-Construction)

SF-424b Standard Assurances (Non-Construction)

SF-424c Budget Information (Construction)

SF-424d Standard Assurances (Construction)

When different or additional information is needed to comply with legislative
requirements or to meet specific program needs, agencies shall also obtain prior
OMB approval.
(2) A preapplication shall be used for all construction, land acquisition and land
development projects or programs when the need for Federal funding exceeds

$100,000, unless the Federal agency determines that a preapplication is not needed. A
preapplication is used to:
(a) Establish communication between the agency and the applicant,
(b) Determine the applicant's eligibility,
(c) Determine how well the project can compete with similar projects from
others, and
(d) Discourage any proposals that have little or no chance for Federal funding
before applicants incur significant costs in preparing detailed applications.
(3) Agencies shall use the Budget Information (Construction) and Standard
Assurances (Construction) when the major purpose of the project or program is
construction, land acquisition or land development.
(4) Agencies may specify how and whether budgets shall be shown by functions or
activities within the program or project.
(5) Agencies should generally include a request for a program narrative statement
which is based on the following instructions:
(a) Objectives and need for assistance. Pinpoint any relevant physical,
economic, social, financial, institutional, or other problems requiring a
solution. Demonstrate the need for the assistance and state the principal and
subordinate objectives of the project. Supporting documentation or other
testimonies from concerned interests other than the applicant may be used.
Any relevant data based on planning studies should be included or footnoted.
(b) Results or Benefits Expected. Identify costs and benefits to be derived. For
example, show how the facility will be used. For land acquisition or
development projects, explain how the project will benefit the public.
(c) Approach. Outline a plan of action pertaining to the scope and detail how
the proposed work will be accomplished for each assistance program. Cite
factors which might accelerate or decelerate the work and reasons for taking
this approach as opposed to others. Describe any unusual features of the
project, such as design or technological innovations, reductions in cost or
time, or extraordinary social and community involvements. Provide for each
assistance program quantitative projections of the accomplishments to be
achieved, if possible. When accomplishments cannot be quantified, list the
activities in chronological order to show the schedule of accomplishments and
target expected completion dates. Identify the kinds of data to be collected and
maintained, and discuss the criteria to be used to evaluate the results and

success of the project. Explain the methodology that will be used to determine
if the needs identified and discussed are being met and if the results and
benefits identified are being achieved. List each organization, cooperator,
consultant, or other key individuals who will work on the project along with a
short description of the nature of their effort or contribution.
(d) Geographic location. Give a precise location of the project and area to be
served by the proposed project. Maps or other graphic aids may be attached.
(e) If applicable, provide the following information: for research and
demonstration assistance requests, present a biographical sketch of the
program director with the following information: name, address, telephone
number, background, and other qualifying experience for the project. Also, list
the name, training and background for other key personnel engaged in the
project. Describe the relationship between this project and other work
planned, anticipated, or underway under Federal assistance. Explain the
reason for all requests for supplemental assistance and justify the need for
additional funding. Discuss accomplishments to date and list in chronological
order a schedule of accomplishments, progress or milestones anticipated with
the new funding request. If there have been significant changes in the project
objectives, location, approach or time delays, explain and justify. For other
requests for changes, or amendments, explain the reason for the change(s). If
the scope or objectives have changed or an extension of time is necessary,
explain the circumstances and justify. If the total budget has been exceeded or
if the individual budget items have changes more than the prescribed limits,
explain and justify the change and its effect on the project.
(6) Additional assurances shall not be added to those contained on the standard
forms, unless specifically required by statute.

d. Debarment and Suspension. Federal agencies shall not award assistance to
applicants that are debarred or suspended, or otherwise excluded from or ineligible
for participation in Federal assistance programs under Executive Order 12549.
Agencies shall establish procedures for the effective use of the List of Parties
Excluded from Federal Procurement or Nonprocurement programs to assure that they
do not award assistance to listed parties in violation of the Executive Order. Agencies
shall also establish procedures to provide for effective use and/or dissemination of the
list to assure that their grantees and subgrantees (including contractors) at any tier do
not make awards in violation of the nonprocurement debarment and suspension
common rule.
e. Awards and Adjustments.

(1) Ordinarily awards shall be made at least ten days prior to the beginning of the
grant period.
(2) Agencies shall notify grantees immediately of any anticipated adjustments in the
amount of an award. This notice shall be provided as early as possible in the funding
period. Reductions in funding shall apply only to periods after notice is provided.
Whenever an agency adjusts the amount of an award, it shall also make an
appropriate adjustment to the amount of any required matching or cost sharing.
f. Carryover Balances. Agencies shall be prepared to identify to OMB the amounts of
carryover balances (e.g., the amounts of estimated grantee unobligated balances
available for carryover into subsequent grant periods). This presentation shall detail
the fiscal and programmatic (level of effort) impact in the following period.
g. Special Conditions or Restrictions. Agencies may impose special conditions or
restrictions on awards to "high risk" applicants/grantees in accordance with section
__.12 of the grants management common rule. Agencies shall document use of the
"Exception" provisions of section __.6 and "High-risk" provisions of section __.12 of
the grants management common rule.
h. Waiver of Single State Agency Requirements.
(1) Requests to agencies from the Governors, or other duly constituted State
authorities, for waiver of "single" State agency requirements in accordance with
section 31 U.S.C. 6504, "Use of existing State or multi-member agency to administer
grant programs," shall be given expeditious handling and, whenever possible, an
affirmative response.
(2) When it is necessary to refuse a request for waiver of "single" State agency
requirements under section 204 of the Intergovernmental Corporation Act, the
Federal grantor agency shall advise OMB prior to informing the State that the request
cannot be granted. The agency shall indicate to OMB the reasons for the denial of the
request.
(3) Legislative proposals embracing grant-in-aid programs shall avoid inclusion of
proposals for "single" State agencies in the absence of compelling reasons to do
otherwise. In addition, existing requirements in present grant-in-aid programs shall be
reviewed and legislative proposals developed for the removal of these restrictive
provisions.
i. Patent Rights. Agencies shall use the standard patent rights clause specified in
"Rights to Inventions made by Non-profit Organizations and Small Business
Firms" (37 CFR Part 401), when providing support for research and development.
j. Metric System of Measurement. The Metric Conversion Act of 1975, as amended,

declares that the metric system is the preferred measurement system for U.S. trade
and commerce. The Act requires each Federal agency to establish a date(s), in
consultation with the Secretary of Commerce, when the metric system of
measurement will be used in the agency's procurement, grants, and other businessrelated activities. Metric implementation may take longer where the use of the system
is initially impractical or likely to cause significant inefficiencies in the
accomplishment of federally-funded activities. Heads of departments and agencies
shall establish a process for a policy level and program level review of proposed
exceptions to metric usage in grants programs. Executive Order 12770 ("Metric
Usage in Federal Government Programs") elaborates on implementation of the Act.
2. Post-award Policies.
a. Cash Management. Agency methods and procedures for transferring funds shall
minimize the time elapsing between the transfer to recipients of grants and
cooperative agreements and the recipient's need for the funds.
(1) Such transfers shall be made consistent with program purposes, applicable law
and Treasury regulations contained in 31 CFR Part 205, Federal Funds Transfer
Procedures.
(2) Where letters-of-credit are used to provide funds, they shall be in the same
amount as the award.
b. Grantee Financial Management Systems. In assessing the adequacy of an
applicant's financial management system, the awarding agency shall rely on readily
available sources of information, such as audit reports, to the maximum extent
possible. If additional information is necessary to assure prudent management of
agency funds, it shall be obtained from the applicant or from an on-site review.
c. Financial Status Reports.
(1) Federal agencies shall require grantees to use the SF-269, Financial Status ReportLong Form, or SF-269a, Financial Status Report-Short Form, to report the status of
funds for all non-construction projects or programs. Federal agencies need not require
the Financial Status Report when the SF-270, Request for Advance or
Reimbursement, or SF-272, Report of Federal Cash Transactions, is determined to
provide adequate information.
(2) Federal agencies shall not require grantees to report on the status of funds by
object class category of expenditure (e.g., personnel, travel, equipment).
(3) If reporting on the status of funds by programs, functions or activities within the
project or program is required by statute or regulation, Federal agencies shall instruct

grantees to use block 12, Remarks, on the SF-269, or a supplementary form approved
by the OMB under the Paperwork Reduction Act of 1980.
(4) Federal agencies shall prescribe whether the reporting shall be on a cash or an
accrual basis. If the Federal agency requires accrual information and the grantees's
accounting records are not normally kept on an accrual basis, the grantee shall not be
required to convert its accounting system but shall develop such accrual information
through an analysis of the documentation on hand.
d. Contracting With Small and Minority Firms, Women's Business Enterprises
and Labor Surplus Area Firms. It is national policy to award a fair share of
contracts to small and minority business firms. Grantees shall take similar appropriate
affirmative action to support of women's enterprises and are encouraged to procure
goods and services from labor surplus areas.
e. Program Income.
(1) Agencies shall encourage grantees to generate program income to help defray
program costs. However, Federal agencies shall not permit grantees to use grantacquired assets to compete unfairly with the private sector.
(2) Federal agencies shall instruct grantees to deduct program income from total
program costs as specified in the grants management common rule at paragraph
__.25 (g)(1), unless agency regulations or the terms of the grant award state
otherwise. Authorization for recipients to follow the other alternatives in paragraph
__.25 (g) (2) and (3) shall be granted sparingly.
f. Site Visits and Technical Assistance. Agencies shall conduct site visits only as
warranted by program or project needs. Technical assistance site visits shall be
provided only (1) in response to requests from grantees, (2) based on demonstrated
program need, or (3) when recipients are designated "high risk" under section __.12
of the grants management common rule.
g. Infrastructure Investment. Agencies shall encourage grantees to consider the
provisions of the common rule at Section __. 31 and Executive Order 12803
("Infrastructure Privatization"). This includes reviewing and modifying procedures
affecting the management and disposition of federally-financed infrastructure owned
by State and local governments, with their requests to sell or lease infrastructure
assets, consistent with the criteria in Section 4 of the Order. Related guidance
contained in Executive Order 12893 ("Principles for Federal Infrastructure
Investments") requiring economic analysis and the development of investment
options, including public-private partnership, shall also be applied. On March 7,
1994, OMB issued guidance on Executive Order 12893 in OMB Bulletin No. 94-16.

h. Resource Conservation and Recovery Act. Agencies shall implement the Resource
Conservation and Recovery Act of 1976 (RCRA) (42 U.S.C. 6962). Any State
agency or agency of a political subdivision of a State which is using appropriated
Federal funds must comply with Section 6002 of RCRA. Section 6002 requires that
preference be given in procurement programs to the purchase of specific products
containing recycled materials identified in guidelines developed by the
Environmental Protection Agency (EPA). Current guidelines are contained in 40
CFR Parts 247-253. State and local recipients of grants, loans, cooperative
agreements or other instruments funded by appropriated Federal funds shall give
preference in procurement programs to the purchase of recycled products pursuant to
the EPA guidelines.
i. Procurement of Goods and Services. Agencies should be aware of and comply with
the requirement enacted in Section 623 of the Treasury, Postal Service and General
Government Appropriations Act, 1993, and reenacted in Section 621 of the fiscal
year 1994 Appropriations Act. This Section requires grantees to specify in any
announcement of the awarding of contracts with an aggregate value of $500,000 or
more, the amount of Federal funds that will be used to finance the acquisitions.
j. Conditional exemptions.
(1) OMB authorizes conditional exemption from OMB administrative requirements
and cost principles circulars for certain Federal programs with statutorily-authorized
consolidated planning and consolidated administrative funding, that are identified by
a Federal agency and approved by the head of the Executive department or
establishment. A Federal agency shall consult with OMB during its consideration of
whether to grant such an exemption.
(2) To promote efficiency in State and local program administration, when Federal
non-entitlement programs with common purposes have specific statutorily-authorized
consolidated planning and consolidated administrative funding and where most of the
State agency's resources come from non-Federal sources, Federal agencies may
exempt these covered State-administered, non-entitlement grant programs from
certain OMB grants management requirements. The exemptions would be from all
but the allocability of costs provisions of OMB Circulars A-87 (Attachment A,
subsection C.3), "Cost Principles for State, Local, and Indian Tribal Governments,"
A-21 (Section C, subpart 4), "Cost Principles for Educational Institutions," and A­
122 (Attachment A, subsection A.4), "Cost Principles for Non-Profit Organizations,"
and from all of the administrative requirements provisions of OMB Circular A-110,
"Uniform Administrative Requirements for Grants and Agreements with Institutions
of Higher Education, Hospitals, and Other Non-Profit Organizations," and the
agencies' grants management common rule.
(3) When a Federal agency provides this flexibility, as a prerequisite to a State's

exercising this option, a State must adopt its own written fiscal and administrative
requirements for expending and accounting for all funds, which are consistent with
the provisions of OMB Circular A-87, and extend such policies to all subrecipients.
These fiscal and administrative requirements must be sufficiently specific to ensure
that: funds are used in compliance with all applicable Federal statutory and regulatory
provisions, costs are reasonable and necessary for operating these programs, and
funds are not be used for general expenses required to carry out other responsibilities
of a State or its subrecipients.
3. After-the-grant Policies.
a. Closeout. Federal agencies shall notify grantees in writing before the end of the grant
period of final reports that shall be due, the dates by which they must be received,
and where they must be submitted. Copies of any required forms and instructions for
their completion shall be included with this notification. The Federal actions that
must precede closeout are:
(1) Receipt of all required reports,
(2) Disposition or recovery of federally-owned assets (as distinct from property
acquired under the grant), and
(3) Adjustment of the award amount and the amount of Federal cash paid the
recipient.
b. Annual Reconciliation of Continuing Assistance Awards. Federal agencies shall
reconcile continuing awards at least annually and evaluate program performance and
financial reports.
Items to be reviewed include:
(1) A comparison of the recipient's work plan to its progress reports and project
outputs,
(2) the Financial Status Report (SF-269),
(3) Request(s) for payment,
(4) Compliance with any matching, level of effort or maintenance of effort
requirement, and
(5) A review of federally-owned property (as distinct from property acquired under
the grant).