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Title 43: Public Lands: Interior
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PART 12—ADMINISTRATIVE AND AUDIT REQUIREMENTS AND COST PRINCIPLES
FOR ASSISTANCE PROGRAMS
Section Contents
Subpart A—Administrative and Audit Requirements and Cost Principles for Assistance
Programs
§ 12.1 Scope of part.
§ 12.2 What policies are financial assistance awards and subawards in the form of grants
and cooperative agreements subject to?
§ 12.3 Effect on prior issuances.
§ 12.4 Information collection requirements.
§ 12.5 Waiver.
Subpart B [Reserved]
Subpart C—Uniform Administrative Requirements for Grants and Cooperative
Agreements to State and Local Governments
General
§ 12.41
§ 12.42
§ 12.43
§ 12.44
§ 12.45
§ 12.46
Purpose and scope of this part.
Scope of subpart.
Definitions.
Applicability.
Effect on other issuances.
Additions and exceptions.
Pre-Award Requirements
§ 12.50 Forms for applying for grants.
§ 12.51 State plans.
§ 12.52 Special grant or subgrant conditions for “high-risk” grantees.
Post-Award Requirements
§ 12.60 Standards for financial management systems.
§ 12.61 Payment.
§ 12.62 Allowable costs.
§ 12.63 Period of availability of funds.
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§ 12.64 Matching or cost sharing.
§ 12.65 Program income.
§ 12.66 Non-Federal audit.
Changes, Property, and Subawards
§ 12.70 Changes.
§ 12.71 Real property.
§ 12.72 Equipment.
§ 12.73 Supplies.
§ 12.74 Copyrights.
§ 12.76 Procurement.
§ 12.77 Subgrants.
Reports, Records Retention, and Enforcement
§ 12.80 Monitoring and reporting program performance.
§ 12.81 Financial reporting.
§ 12.82 Retention and access requirements for records.
§ 12.83 Enforcement.
§ 12.84 Termination for convenience.
After-the-Grant Requirements
§ 12.90 Closeout.
§ 12.91 Later disallowances and adjustments.
§ 12.92 Collection of amounts due.
Entitlements [Reserved]
Subpart D [Reserved]
Subpart E—Buy American Requirements for Assistance Programs
Buy American Act—Supplies
§ 12.700 Scope.
§ 12.705 Definitions.
§ 12.710 Policy.
§ 12.715 Evaluating offers.
§ 12.720 Excepted articles, materials, and supplies.
§ 12.725 Solicitation provisions and contract clause.
§ 12.730 Buy American Act—Supplies.
Buy American Act—Construction Materials
§ 12.800 Scope.
§ 12.805 Definitions.
§ 12.810 Policy.
§ 12.815 Evaluating offers.
§ 12.820 Violations.
§ 12.825 Solicitation provision and contract clause.
§ 12.830 Buy American Act—Construction materials.
Subpart F—Uniform Administrative Requirements for Grants and Agreements With
Institutions of Higher Education, Hospitals, and Other Non-Profit Organizations
General
§ 12.901
§ 12.902
§ 12.903
§ 12.904
Purpose.
Definitions.
Effect on other issuances.
Deviations.
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§ 12.905 Subawards.
Pre-Award Requirements
§ 12.910 Purpose.
§ 12.911 Pre-award policies.
§ 12.912 Forms for applying for Federal assistance.
§ 12.914 Special award conditions.
§ 12.915 Metric system of measurement.
§ 12.916 Resource Conservation and Recovery Act (RCRA) (Pub. L. 94–580 codified at 42
U.S.C. 6962).
§ 12.917 Certifications and representations.
Post-Award Requirements
§ 12.920 Purpose of financial and program management.
§ 12.921 Standards for financial management systems.
§ 12.922 Payment.
§ 12.923 Cost sharing or matching.
§ 12.924 Program income.
§ 12.925 Revision of budget and program plans.
§ 12.926 Non-Federal audits.
§ 12.927 Allowable costs.
§ 12.928 Period of availability of funds.
§ 12.930 Purpose of property standards.
§ 12.931 Insurance coverage.
§ 12.932 Real property.
§ 12.933 Federally owned and exempt property.
§ 12.934 Equipment.
§ 12.935 Supplies and other expendable property.
§ 12.936 Intangible property.
§ 12.937 Property trust relationship.
§ 12.940 Purpose of procurement standards.
§ 12.941 Recipient responsibilities.
§ 12.942 Codes of conduct.
§ 12.943 Competition.
§ 12.944 Procurement procedures.
§ 12.945 Cost and price analysis.
§ 12.946 Procurement records.
§ 12.947 Contract administration.
§ 12.948 Contract provisions.
§ 12.950 Purpose of reports and records.
§ 12.951 Monitoring and reporting program performance.
§ 12.952 Financial reporting.
§ 12.953 Retention and access requirements for records.
§ 12.960 Purpose of termination and enforcement.
§ 12.961 Termination.
§ 12.962 Enforcement.
After-the-Award Requirements
§ 12.970 Purpose.
§ 12.971 Closeout procedures.
§ 12.972 Subsequent adjustments and continuing responsibilities.
§ 12.973 Collection of amounts due.
Appendix A to Subpart F of Part 12—Contract Provisions
Authority: E.O 12549 (3 CFR, 1986 Comp., p. 189); E.O. 12689 (3 CFR, 1989 Comp., p.
235); sec. 2455, Pub. L. 103–355, 108 Stat. 3327 (31 U.S.C. 6101 note); 5 U.S.C. 301; U.S.C
6101 note.Cross Reference:
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See also Office of Management and Budget notice published at 55 FR 21679, May 25, 1990, and 60 FR
33036, June 26, 1995.
Editorial Note: For additional information, see related documents published at 49 FR 24958, June 18,
1984; 52 FR 20178 and 20360, May 29, 1987; 53 FR 8028, Mar. 11, 1988; 53 FR 19160, May 26, 1988;
and 53 FR 34474, Sept. 6, 1988.
Subpart A—Administrative and Audit Requirements and Cost Principles for Assistance
Programs
top
Source: 50 FR 6176, Feb. 14, 1985; 56 FR 45898, Sept. 9, 1991, unless otherwise noted.
§ 12.1 Scope of part.
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This part prescribes administrative requirements and cost principles for grants and cooperative
agreements entered into by the Department.
§ 12.2 What policies are financial assistance awards and subawards in the form of
grants and cooperative agreements subject to?
top
(a) All financial assistance awards and subawards, in the form of grants and cooperative agreements, in
accordance with paragraph (b) of this section, are subject to subparts C, D, E, and F of this part, OMB
Circulars A–102, “Grants and Cooperative Agreements with State and Local Governments,” A–110,
“Grants and Other Agreements with Institutions of Higher Education, Hospitals, and Other Non-Profit
Organizations,” A–87, “Cost Principles for State and Local Governments,” A–21, “Cost Principles for
Educational Institutions,” A–122, “Cost Principles for Non-Profit Organizations,” and A–133, “Audits of
States, Local Governments, and Non-Profit Organizations.”
(b)(1) Governmental recipients and subrecipients are subject to subparts C, D, and E of this part,
Circulars A–87 and A–133.
(2) Institutions of higher education which are recipients or subrecipients are subject to subparts D, E,
and F of this part, Circulars A–110, A–21, and A–133.
(3) Non-profit organizations which are recipients or subrecipients are subject to subparts D, E, and F of
this part, Circulars A–110, A–122, and A–133.
(c) The circulars prescribed by this part published in theFederal Registerare made a part of this
regulation and include changes published in theFederal Registerby OMB.
(d)(1) Federal ethics and conduct regulations contained in 5 CFR part 2635 implement Executive Order
12674, 3 CFR, 1989 Comp., p. 215 (as modified by Executive Order 12731, 3 CFR, 1990 Comp., p.
306), “Principles of Ethical Conduct for Government Officers and Employees,” by prohibiting employees
from endorsing in an official capacity the proprietary products or processes of manufacturers or the
services of commercial firms for advertising, publicity, or sales purposes. The Department's use of
materials, products, or services does not constitute official endorsement.
(2) The policy in paragraph (d)(1) of this section applies to a grant/cooperative agreement whose
principal purpose is a partnership where the recipient/partner contributes resources to promote agency
programs, publicize agency activities, assists in fundraising, or provides assistance to the agency. In the
event that such a grant/cooperative agreement is awarded to a recipient, other than a State government,
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a local government, or a Federally-recognized Indian tribal government, and authorizes joint
dissemination of information and promotion of activities being supported, the following provision shall be
made a term and condition of the award:
Grant/Cooperative Agreement Provision
Recipient shall not publicize or otherwise circulate, promotional material (such as
advertisements, sales brochures, press releases, speeches, still and motion pictures, articles,
manuscripts or other publications) which states or implies governmental, Departmental,
bureau, or government employee endorsement of a product, service, or position which the
recipient represents. No release of information relating to this award may state or imply that
the Government approves of the recipient's work products, or considers the recipient's work
product to be superior to other products or services.
All information submitted for publication or other public releases of information regarding this
project shall carry the following disclaimer:
The views and conclusions contained in this document are those of the authors and should
not be interpreted as representing the opinions or policies of the U.S. Government. Mention of
trade names or commercial products does not constitute their endorsement by the U.S.
Government.
Recipient must obtain prior Government approval for any public information releases
concerning this award which refer to the Department of the Interior or any bureau or employee
(by name or title). The specific text, layout photographs, etc. of the proposed release must be
submitted with the request for approval.
A recipient further agrees to include this provision in a subaward to any subrecipient, except
for a subaward to a State government, a local government, or to a Federally-recognized
Indian tribal government.
(End of provision)
(3) Recipient requests for clearance of public releases will be reviewed using existing public information
mechanisms through the appropriate Public Affairs Office and with consultation with the cognizant Ethics
Officer.
(e) (1) What does Executive Order 13043, “Increasing Seat Belt Use in the United States,” dated April
16, 1997, do?
(i) If you are a Federal grantee, you are encouraged to—
(A) Adopt and enforce on-the-job seat belt use policies and programs for your employees when
operating company-owned, rented, or personally owned vehicles.
(B) Conduct education, awareness, and other appropriate programs for your employees about the
importance of wearing seat belts and the consequences of not wearing them.
(ii) [Reserved]
(2) When does the policy apply?
(i) If a grant/cooperative agreement is being awarded by the bureau/office of the Department—The
policy applies.
(ii) If the recipient awards a grant or cooperative agreement to a subrecipient—The policy applies.
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(3) What terms and conditions will be incorporated into the grant/cooperative agreement or sub-award, if
use of a specific provision is desired and general applicability to 43 CFR Part 12 is not used instead?
(i) The following provision will be incorporated into the grant/cooperative agreement or sub-award:
The Seat Belt Provision
Recipients of grants/cooperative agreements and/or sub-awards are encouraged to adopt and
enforce on-the-job seat belt use policies and programs for their employees when operating
company-owned, rented, or personally owned vehicles. These measures include, but are not
limited to, conducting education, awareness, and other appropriate programs for their
employees about the importance of wearing seat belts and the consequences of not wearing
them.
(End of provision)
(ii) [Reserved]
[50 FR 6176, Feb. 14, 1985, as amended at 53 FR 8077, Mar. 11, 1988; 56 FR 45898, Sept. 9, 1991; 59
FR 17712, Apr. 14, 1994; 62 FR 45944, Aug. 29, 1997; 65 FR 39822, June 28, 2000]
§ 12.3 Effect on prior issuances.
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(a) All provisions of Department of the Interior nonregulatory program manuals, handbooks and other
materials which are inconsistent with the above OMB Circulars are superseded, except to the extent that
they are (1) required by statute, or (2) authorized in accordance with the exceptions provisions of each
circular.
(b) Except to the extent inconsistent with the regulations in 43 CFR part 12, subpart C, all existing
Department of the Interior regulations in 25 CFR parts 23, 27, 39, 40, 41, 256, 272, 278, and 276; 30
CFR parts 725, 735, 884, 886, and 890; 36 CFR parts 60, 61, 63, 65, 67, 72, and 800; 43 CFR parts 26
and 32; and 50 CFR parts 80, 81, 82, 83, and 401 are not superseded by these regulations nor are any
paperwork approvals under the Paperwork Reduction Act.
[50 FR 6176, Feb. 14, 1985, as amended at 53 FR 8077, Mar. 11, 1988]
§ 12.4 Information collection requirements.
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Information collections in addition to those required by applicable OMB Circulars will be cleared by
responsible bureaus and offices on an individual basis.
§ 12.5 Waiver.
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Only OMB can grant exceptions from the requirements of these Circulars when exceptions are not
prohibited under existing laws.
Subpart B [Reserved]
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Subpart C—Uniform Administrative Requirements for Grants and Cooperative
Agreements to State and Local Governments
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Source: 53 FR 8077, 8087, Mar. 11, 1988, unless otherwise noted.
General
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§ 12.41 Purpose and scope of this part.
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This part establishes uniform administrative rules for Federal grants and cooperative agreements and
subawards to State, local and Indian tribal governments.
§ 12.42 Scope of subpart.
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This subpart contains general rules pertaining to this part and procedures for control of exceptions from
this part.
§ 12.43 Definitions.
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As used in this part:
Accrued expenditures mean the charges incurred by the grantee during a given period requiring the
provision of funds for: (1) Goods and other tangible property received; (2) services performed by
employees, contractors, subgrantees, subcontractors, and other payees; and (3) other amounts
becoming owed under programs for which no current services or performance is required, such as
annuities, insurance claims, and other benefit payments.
Accrued income means the sum of: (1) Earnings during a given period from services performed by the
grantee and goods and other tangible property delivered to purchasers, and (2) amounts becoming
owed to the grantee for which no current services or performance is required by the grantee.
Acquisition cost of an item of purchased equipment means the net invoice unit price of the property
including the cost of modifications, attachments, accessories, or auxiliary apparatus necessary to make
the property usable for the purpose for which it was acquired. Other charges such as the cost of
installation, transportation, taxes, duty or protective in-transit insurance, shall be included or excluded
from the unit acquisition cost in accordance with the grantee's regular accounting practices.
Administrative requirements mean those matters common to grants in general, such as financial
management, kinds and frequency of reports, and retention of records. These are distinguished from
“programmatic” requirements, which concern matters that can be treated only on a program-by-program
or grant-by-grant basis, such as kinds of activities that can be supported by grants under a particular
program.
Awarding agency means (1) with respect to a grant, the Federal agency, and (2) with respect to a
subgrant, the party that awarded the subgrant.
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Cash contributions means the grantee's cash outlay, including the outlay of money contributed to the
grantee or subgrantee by other public agencies and institutions, and private organizations and
individuals. When authorized by Federal legislation, Federal funds received from other assistance
agreements may be considered as grantee or subgrantee cash contributions.
Contract means (except as used in the definitions for “grant” and “subgrant” in this section and except
where qualified by “Federal”) a procurement contract under a grant or subgrant, and means a
procurement subcontract under a contract.
Cost sharing or matching means the value of the third party in-kind contributions and the portion of the
costs of a Federally assisted project or program not borne by the Federal Government.
Cost-type contract means a contract or subcontract under a grant in which the contractor or
subcontractor is paid on the basis of the costs it incurs, with or without a fee.
Equipment means tangible, nonexpendable, personal property having a useful life of more than one year
and an acquisition cost of $5,000 or more per unit. A grantee may use its own definition of equipment
provided that such definition would at least include all equipment defined above.
Expenditure report means: (1) For nonconstruction grants, the SF–269 “Financial Status Report” (or
other equivalent report); (2) for construction grants, the SF–271 “Outlay Report and Request for
Reimbursement” (or other equivalent report).
Federally recognized Indian tribal government means the governing body or a governmental agency of
any Indian tribe, band, nation, or other organized group or community (including any Native village as
defined in section 3 of the Alaska Native Claims Settlement Act, 85 Stat 688) certified by the Secretary
of the Interior as eligible for the special programs and services provided by him through the Bureau of
Indian Affairs.
Government means a State or local government or a Federally recognized Indian tribal government.
Grant means an award of financial assistance, including cooperative agreements, in the form of money,
or property in lieu of money, by the Federal Government to an eligible grantee. The term does not
include technical assistance which provides services instead of money, or other assistance in the form of
revenue sharing, loans, loan guarantees, interest subsidies, insurance, or direct appropriations. Also, the
term does not include assistance, such as a fellowship or other lump sum award, which the grantee is
not required to account for.
Grantee means the government to which a grant is awarded and which is accountable for the use of the
funds provided. The grantee is the entire legal entity even if only a particular component of the entity is
designated in the grant award document.
Local government means a county, municipality, city, town, township, local public authority (including
any public and Indian housing agency under the United States Housing Act of 1937) school district,
special district, intrastate district, council of governments (whether or not incorporated as a nonprofit
corporation under State law), any other regional or interstate government entity, or any agency or
instrumentality of a local government.
Obligations means the amounts of orders placed, contracts and subgrants awarded, goods and services
received, and similar transactions during a given period that will require payment by the grantee during
the same or a future period.
OMB means the U.S. Office of Management and Budget.
Outlays (expenditures) mean charges made to the project or program. They may be reported on a cash
or accrual basis. For reports prepared on a cash basis, outlays are the sum of actual cash disbursement
for direct charges for goods and services, the amount of indirect expense incurred, the value of in-kind
contributions applied, and the amount of cash advances and payments made to contractors and
subgrantees. For reports prepared on an accrued expenditure basis, outlays are the sum of actual cash
disbursements, the amount of indirect expense incurred, the value of inkind contributions applied, and
the new increase (or decrease) in the amounts owed by the grantee for goods and other property
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received, for services performed by employees, contractors, subgrantees, subcontractors, and other
payees, and other amounts becoming owed under programs for which no current services or
performance are required, such as annuities, insurance claims, and other benefit payments.
Percentage of completion method refers to a system under which payments are made for construction
work according to the percentage of completion of the work, rather than to the grantee's cost incurred.
Prior approval means documentation evidencing consent prior to incurring specific cost.
Real property means land, including land improvements, structures and appurtenances thereto,
excluding movable machinery and equipment.
Share, when referring to the awarding agency's portion of real property, equipment or supplies, means
the same percentage as the awarding agency's portion of the acquiring party's total costs under the
grant to which the acquisition costs under the grant to which the acquisition cost of the property was
charged. Only costs are to be counted—not the value of third-party in-kind contributions.
State means any of the several States of the United States, the District of Columbia, the Commonwealth
of Puerto Rico, any territory or possession of the United States, or any agency or instrumentality of a
State exclusive of local governments. The term does not include any public and Indian housing agency
under United States Housing Act of 1937.
Subgrant means an award of financial assistance in the form of money, or property in lieu of money,
made under a grant by a grantee to an eligible subgrantee. The term includes financial assistance when
provided by contractual legal agreement, but does not include procurement purchases, nor does it
include any form of assistance which is excluded from the definition of “grant” in this part.
Subgrantee means the government or other legal entity to which a subgrant is awarded and which is
accountable to the grantee for the use of the funds provided.
Supplies means all tangible personal property other than “equipment” as defined in this part.
Suspension means depending on the context, either (1) temporary withdrawal of the authority to obligate
grant funds pending corrective action by the grantee or subgrantee or a decision to terminate the grant,
or (2) an action taken by a suspending official in accordance with agency regulations implementing E.O.
12549 to immediately exclude a person from participating in grant transactions for a period, pending
completion of an investigation and such legal or debarment proceedings as may ensue.
Termination means permanent withdrawal of the authority to obligate previously-awarded grant funds
before that authority would otherwise expire. It also means the voluntary relinquishment of that authority
by the grantee or subgrantee. “Termination” does not include: (1) Withdrawal of funds awarded on the
basis of the grantee's underestimate of the unobligated balance in a prior period; (2) Withdrawal of the
unobligated balance as of the expiration of a grant; (3) Refusal to extend a grant or award additional
funds, to make a competing or noncompeting continuation, renewal, extension, or supplemental award;
or (4) voiding of a grant upon determination that the award was obtained fraudulently, or was otherwise
illegal or invalid from inception.
Terms of a grant or subgrant mean all requirements of the grant or subgrant, whether in statute,
regulations, or the award document.
Third party in-kind contributions mean property or services which benefit a Federally assisted project or
program and which are contributed by non-Federal third parties without charge to the grantee, or a costtype contractor under the grant agreement.
Unliquidated obligations for reports prepared on a cash basis mean the amount of obligations incurred
by the grantee that has not been paid. For reports prepared on an accrued expenditure basis, they
represent the amount of obligations incurred by the grantee for which an outlay has not been recorded.
Unobligated balance means the portion of the funds authorized by the Federal agency that has not been
obligated by the grantee and is determined by deducting the cumulative obligations from the cumulative
funds authorized.
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§ 12.44 Applicability.
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(a) General. Subparts A–D of this part apply to all grants and subgrants to governments, except where
inconsistent with Federal statutes or with regulations authorized in accordance with the exception
provision of §12.46, or:
(1) Grants and subgrants to State and local institutions of higher education or State and local hospitals.
(2) The block grants authorized by the Omnibus Budget Reconciliation Act of 1981 (Community
Services; Preventive Health and Health Services; Alcohol, Drug Abuse, and Mental Health Services;
Maternal and Child Health Services; Social Services; Low-Income Home Energy Assistance; States'
Program of Community Development Block Grants for Small Cities; and Elementary and Secondary
Education other than programs administered by the Secretary of Education under Title V, Subtitle D,
Chapter 2, Section 583—the Secretary's discretionary grant program) and Titles I-III of the Job Training
Partnership Act of 1982 and under the Public Health Services Act (Section 1921), Alcohol and Drug
Abuse Treatment and Rehabilitation Block Grant and Part C of Title V, Mental Health Service for the
Homeless Block Grant).
(3) Entitlement grants to carry out the following programs of the Social Security Act:
(i) Aid to Needy Families with Dependent Children (Title IV-A of the Act, not including the Work Incentive
Program (WIN) authorized by section 402(a)19(G); HHS grants for WIN are subject to this part);
(ii) Child Support Enforcement and Establishment of Paternity (Title IV-D of the Act);
(iii) Foster Care and Adoption Assistance (Title IV-E of the Act);
(iv) Aid to the Aged, Blind, and Disabled (Titles I, X, XIV, and XVI-AABD of the Act); and
(v) Medical Assistance (Medicaid) (Title XIX of the Act) not including the State Medicaid Fraud Control
program authorized by section 1903(a)(6)(B).
(4) Entitlement grants under the following programs of The National School Lunch Act:
(i) School Lunch (section 4 of the Act),
(ii) Commodity Assistance (section 6 of the Act),
(iii) Special Meal Assistance (section 11 of the Act),
(iv) Summer Food Service for Children (section 13 of the Act), and
(v) Child Care Food Program (section 17 of the Act).
(5) Entitlement grants under the following programs of The Child Nutrition Act of 1966:
(i) Special Milk (section 3 of the Act), and
(ii) School Breakfast (section 4 of the Act).
(6) Entitlement grants for State Administrative expenses under The Food Stamp Act of 1977 (section 16
of the Act).
(7) A grant for an experimental, pilot, or demonstration project that is also supported by a grant listed in
paragraph (a)(3) of this section.
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(8) Grant funds awarded under subsection 412(e) of the Immigration and Nationality Act (8 U.S.C. 1522
(e)) and subsection 501(a) of the Refugee Education Assistance Act of 1980 (Pub. L. 96–422, 94 Stat.
1809), for cash assistance, medical assistance, and supplemental security income benefits to refugees
and entrants and the administrative costs of providing the assistance and benefits.
(9) Grants to local education agencies under 20 U.S.C. 236 through 241–1(a), and 242 through 244
(portions of the Impact Aid program), except for 20 U.S.C. 238(d)(2)(c) and 240(f) (Entitlement Increase
for Handicapped Children); and
(10) Payments under the Veterans Administration's State Home Per Diem Program (38 U.S.C. 641(a)).
(b) Entitlement programs. Entitlement programs enumerated above in §12.44(a) (3) through (8) are
subject to subpart E.
§ 12.45 Effect on other issuances.
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All other grants administration provisions of codified program regulations, program manuals, handbooks
and other nonregulatory materials which are inconsistent with this part are superseded, except to the
extent they are required by statute, or authorized in accordance with the exception provision in §12.46.
§ 12.46 Additions and exceptions.
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(a) For classes of grants and grantees subject to this part, Federal agencies may not impose additional
administrative requirements except in codified regulations published in theFederal Register.
(b) Exceptions for classes of grants or grantees may be authorized only by OMB.
(c) Exceptions on a case-by-case basis and for subgrantees may be authorized by the affected Federal
agencies.
Pre-Award Requirements
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§ 12.50 Forms for applying for grants.
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(a) Scope. (1) This section prescribes forms and instructions to be used by governmental organizations
(except hospitals and institutions of higher education operated by a government) in applying for grants.
This section is not applicable, however, to formula grant programs which do not require applicants to
apply for funds on a project basis.
(2) This section applies only to applications to Federal agencies for grants, and is not required to be
applied by grantees in dealing with applicants for subgrants. However, grantees are encouraged to
avoid more detailed or burdensome application requirements for subgrants.
(b) Authorized forms and instructions for governmental organizations. (1) In applying for grants,
applicants shall only use standard application forms or those prescribed by the granting agency with the
approval of OMB under the Paperwork Reduction Act of 1980.
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(2) Applicants are not required to submit more than the original and two copies of preapplications or
applications.
(3) Applicants must follow all applicable instructions that bear OMB clearance numbers. Federal
agencies may specify and describe the programs, functions, or activities that will be used to plan,
budget, and evaluate the work under a grant. Other supplementary instructions may be issued only with
the approval of OMB to the extent required under the Paperwork Reduction Act of 1980. For any
standard form, except the SF–424 facesheet, Federal agencies may shade out or instruct the applicant
to disregard any line item that is not needed.
(4) When a grantee applies for additional funding (such as a continuation or supplemental award) or
amends a previously submitted application, only the affected pages need be submitted. Previously
submitted pages with information that is still current need not be resubmitted.
§ 12.51 State plans.
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(a) Scope. The statutes for some programs require States to submit plans before receiving grants.
Under regulations implementing Executive Order 12372, “Intergovernmental Review of Federal
Programs,” States are allowed to simplify, consolidate and substitute plans. This section contains
additional provisions for plans that are subject to regulations implementing the Executive order.
(b) Requirements. A State need meet only Federal administrative or programmatic requirements for a
plan that are in statutes or codified regulations.
(c) Assurances. In each plan the State will include an assurance that the State shall comply with all
applicable Federal statutes and regulations in effect with respect to the periods for which it receives
grant funding. For this assurance and other assurances required in the plan, the State may:
(1) Cite by number the statutory or regulatory provisions requiring the assurances and affirm that it gives
the assurances required by those provisions,
(2) Repeat the assurance language in the statutes or regulations, or
(3) Develop its own language to the extent permitted by law.
(d) Amendments. A State will amend a plan whenever necessary to reflect: (1) New or revised Federal
statutes or regulations or (2) a material change in any State law, organization, policy, or State agency
operation. The State will obtain approval for the amendment and its effective date but need submit for
approval only the amended portions of the plan.
§ 12.52 Special grant or subgrant conditions for “high-risk” grantees.
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(a) A grantee or subgrantee may be considered “high risk” if an awarding agency determines that a
grantee or subgrantee:
(1) Has a history of unsatisfactory performance, or
(2) Is not financially stable, or
(3) Has a management system which does not meet the management standards set forth in this part, or
(4) Has not conformed to terms and conditions of previous awards, or
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(5) Is otherwise not responsible; and if the awarding agency determines that an award will be made,
special conditions and/or restrictions shall correspond to the high risk condition and shall be included in
the award.
(b) Special conditions or restrictions may include:
(1) Payment on a reimbursement basis;
(2) Withholding authority to proceed to the next phase until receipt of evidence of acceptable
performance within a given funding period;
(3) Requiring additional, more detailed financial reports;
(4) Additional project monitoring;
(5) Requiring the grante or subgrantee to obtain technical or management assistance; or
(6) Establishing additional prior approvals.
(c) If an awarding agency decides to impose such conditions, the awarding official will notify the grantee
or subgrantee as early as possible, in writing, of:
(1) The nature of the special conditions/restrictions;
(2) The reason(s) for imposing them;
(3) The corrective actions which must be taken before they will be removed and the time allowed for
completing the corrective actions and
(4) The method of requesting reconsideration of the conditions/restrictions imposed.
Post-Award Requirements
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Financial Administration
§ 12.60 Standards for financial management systems.
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(a) A State must expand and account for grant funds in accordance with State laws and procedures for
expending and accounting for its own funds. Fiscal control and accounting procedures of the State, as
well as its subgrantees and cost-type contractors, must be sufficient to—
(1) Permit preparation of reports required by this part and the statutes authorizing the grant, and
(2) Permit the tracing of funds to a level of expenditures adequate to establish that such funds have not
been used in violation of the restrictions and prohibitions of applicable statutes.
(b) The financial management systems of other grantees and subgrantees must meet the following
standards:
(1) Financial reporting. Accurate, current, and complete disclosure of the financial results of financially
assisted activities must be made in accordance with the financial reporting requirements of the grant or
subgrant.
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(2) Accounting records. Grantees and subgrantees must maintain records which adequately identify the
source and application of funds provided for financially-assisted activities. These records must contain
information pertaining to grant or subgrant awards and authorizations, obligations, unobligated balances,
assets, liabilities, outlays or expenditures, and income.
(3) Internal control. Effective control and accountability must be maintained for all grant and subgrant
cash, real and personal property, and other assets. Grantees and subgrantees must adequately
safeguard all such property and must assure that it is used solely for authorized purposes.
(4) Budget control. Actual expenditures or outlays must be compared with budgeted amounts for each
grant or subgrant. Financial information must be related to performance or productivity data, including
the development of unit cost information whenever appropriate or specifically required in the grant or
subgrant agreement. If unit cost data are required, estimates based on available documentation will be
accepted whenever possible.
(5) Allowable cost. Applicable OMB cost principles, agency program regulations, and the terms of grant
and subgrant agreements will be followed in determining the reasonableness, allowability, and
allocability of costs.
(6) Source documentation. Accounting records must be supported by such source documentation as
cancelled checks, paid bills, payrolls, time and attendance records, contract and subgrant award
documents, etc.
(7) Cash management. Procedures for minimizing the time elapsing between the transfer of funds from
the U.S. Treasury and disbursement by grantees and subgrantees must be followed whenever advance
payment procedures are used. Grantees must establish reasonable procedures to ensure the receipt of
reports on subgrantees' cash balances and cash disbursements in sufficient time to enable them to
prepare complete and accurate cash transactions reports to the awarding agency. When advances are
made by letter-of-credit or electronic transfer of funds methods, the grantee must make drawdowns as
close as possible to the time of making disbursements. Grantees must monitor cash drawdowns by their
subgrantees to assure that they conform substantially to the same standards of timing and amount as
apply to advances to the grantees.
(c) An awarding agency may review the adequacy of the financial management system of any applicant
for financial assistance as part of a preaward review or at any time subsequent to award.
§ 12.61 Payment.
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(a) Scope. This section prescribes the basic standard and the methods under which a Federal agency
will make payments to grantees, and grantees will make payments to subgrantees and contractors.
(b) Basic standard. Methods and procedures for payment shall minimize the time elapsing between the
transfer of funds and disbursement by the grantee or subgrantee, in accordance with Treasury
regulations at 31 CFR part 205.
(c) Advances. Grantees and subgrantees shall be paid in advance, provided they maintain or
demonstrate the willingness and ability to maintain procedures to minimize the time elapsing between
the transfer of the funds and their disbursement by the grantee or subgrantee.
(d) Reimbursement. Reimbursement shall be the preferred method when the requirements in paragraph
(c) of this section are not met. Grantees and subgrantees may also be paid by reimbursement for any
construction grant. Except as otherwise specified in regulation, Federal agencies shall not use the
percentage of completion method to pay construction grants. The grantee or subgrantee may use that
method to pay its construction contractor, and if it does, the awarding agency's payments to the grantee
or subgrantee will be based on the grantee's or subgrantee's actual rate of disbursement.
(e) Working capital advances. If a grantee cannot meet the criteria for advance payments described in
paragraph (c) of this section, and the Federal agency has determined that reimbursement is not feasible
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because the grantee lacks sufficient working capital, the awarding agency may provide cash or a
working capital advance basis. Under this procedure the awarding agency shall advance cash to the
grantee to cover its estimated disbursement needs for an initial period generally geared to the grantee's
disbursing cycle. Thereafter, the awarding agency shall reimburse the grantee for its actual cash
disbursements. The working capital advance method of payment shall not be used by grantees or
subgrantees if the reason for using such method is the unwillingness or inability of the grantee to provide
timely advances to the subgrantee to meet the subgrantee's actual cash disbursements.
(f) Effect of program income, refunds, and audit recoveries on payment. (1) Grantees and subgrantees
shall disburse repayments to and interest earned on a revolving fund before requesting additional cash
payments for the same activity.
(2) Except as provided in paragraph (f)(1) of this section, grantees and subgrantees shall disburse
program income, rebates, refunds, contract settlements, audit recoveries and interest earned on such
funds before requesting additional cash payments.
(g) Withholding payments. (1) Unless otherwise required by Federal statute, awarding agencies shall not
withhold payments for proper charges incurred by grantees or subgrantees unless—
(i) The grantee or subgrantee has failed to comply with grant award conditions, or
(ii) The grantee or subgrantee is indebted to the United States.
(2) Cash withheld for failure to comply with grant award condition, but without suspension of the grant,
shall be released to the grantee upon subsequent compliance. When a grant is suspended, payment
adjustments will be made in accordance with §12.83(c).
(3) A Federal agency shall not make payment to grantees for amounts that are withheld by grantees or
subgrantees from payment to contractors to assure satisfactory completion of work. Payments shall be
made by the Federal agency when the grantees or subgrantees actually disburse the withheld funds to
the contractors or to escrow accounts established to assure satisfactory completion of work.
(h) Cash depositories. (1) Consistent with the national goal of expanding the opportunities for minority
business enterprises, grantees and subgrantees are encouraged to use minority banks (a bank which is
owned at least 50 percent by minority group members). A list of minority owned banks can be obtained
from the Minority Business Development Agency, Department of Commerce, Washington, DC 20230.
(2) A grantee or subgrantee shall maintain a separate bank account only when required by FederalState agreement.
(i) Interest earned on advances. Except for interest earned on advances of funds exempt under the
Intergovernmental Cooperation Act (31 U.S.C. 6501 et seq.) and the Indian Self-Determination Act (23
U.S.C. 450), grantees and subgrantees shall promptly, but at least quarterly, remit interest earned on
advances to the Federal agency. The grantee or subgrantee may keep interest amounts up to $100 per
year for administrative expenses.
§ 12.62 Allowable costs.
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(a) Limitation on use of funds. Grant funds may be used only for:
(1) The allowable costs of the grantees, subgrantees and cost-type contractors, including allowable
costs in the form of payments to fixed-price contractors; and
(2) Reasonable fees or profit to cost-type contractors but not any fee or profit (or other increment above
allowable costs) to the grantee or subgrantee.
(b) Applicable cost principles. For each kind of organization, there is a set of Federal principles for
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determining allowable costs. Allowable costs will be determined in accordance with the cost principles
applicable to the organization incurring the costs. The following chart lists the kinds of organizations and
the applicable cost principles.
For the costs of a—
State, local or Indian tribal government
Private nonprofit organization other
than an (1) institution of higher
education, (2) hospital, or (3)
organization named in OMB Circular
A–122 as not subject to that circular
Educational institutions.
For-profit organization other than a
hospital and an organization named in
OBM Circular A–122 as not subject to
that circular
Use the principles in—
OMB Circular A–87.
OBM Circular A–122.
OMB Circular A–21.
48 CFR Part 31. Contract Cost
Principles and Procedures, or uniform
cost accounting standards that
comply with cost principles
acceptable to the Federal agency.
§ 12.63 Period of availability of funds.
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(a) General. Where a funding period is specified, a grantee may charge to the award only costs resulting
from obligations of the funding period unless carryover of unobligated balances is permitted, in which
case the carryover balances may be charged for costs resulting from obligations of the subsequent
funding period.
(b) Liquidation of obligations. A grantee must liquidate all obligations incurred under the award not later
than 90 days after the end of the funding period (or as specified in a program regulation) to coincide with
the submission of the annual Financial Status Report (SF–269). The Federal agency may extend this
deadline at the request of the grantee.
§ 12.64 Matching or cost sharing.
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(a) Basic rule: Costs and contributions acceptable. With the qualifications and exceptions listed in
paragraph (b) of this section, a matching or cost sharing requirement may be satisfied by either or both
of the following:
(1) Allowable costs incurred by the grantee, subgrantee or a cost-type contractor under the assistance
agreement. This includes allowable costs borne by non-Federal grants or by others cash donations from
non-Federal third parties.
(2) The value of third party in-kind contributions applicable to the period to which the cost sharing or
matching requirements applies.
(b) Qualifications and exceptions —(1) Costs borne by other Federal grant agreements. Except as
provided by Federal statute, a cost sharing or matching requirement may not be met by costs borne by
another Federal grant. This prohibition does not apply to income earned by a grantee or subgrantee
from a contract awarded under another Federal grant.
(2) General revenue sharing. For the purpose of this section, general revenue sharing funds distributed
under 31 U.S.C. 6702 are not considered Federal grant funds.
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(3) Cost or contributions counted towards other Federal costs-sharing requirements. Neither costs nor
the values of third party in-kind contributions may count towards satisfying a cost sharing or matching
requirement of a grant agreement if they have been or will be counted towards satisfying a cost sharing
or matching requirement of another Federal grant agreement, a Federal procurement contract, or any
other award of Federal funds.
(4) Costs financed by program income. Costs financed by program income, as defined in §12.65, shall
not count towards satisfying a cost sharing or matching requirement unless they are expressly permitted
in the terms of the assistance agreement. (This use of general program income is described in §12.65
(g).)
(5) Services or property financed by income earned by contractors. Contractors under a grant may earn
income from the activities carried out under the contract in addition to the amounts earned from the party
awarding the contract. No costs of services or property supported by this income may count toward
satisfying a cost sharing or matching requirement unless other provisions of the grant agreement
expressly permit this kind of income to be used to meet the requirement.
(6) Records. Costs and third party in-kind contributions counting towards satisfying a cost sharing or
matching requirement must be verifiable from the records of grantees and subgrantee or cost-type
contractors. These records must show how the value placed on third party in-kind contributions was
derived. To the extent feasible, volunteer services will be supported by the same methods that the
organization uses to support the allocability of regular personnel costs.
(7) Special standards for third party in-kind contributions. (i) Third party in-kind contributions count
towards satisfying a cost sharing or matching requirement only where, if the party receiving the
contributions were to pay for them, the payments would be allowable costs.
(ii) Some third party in-kind contributions are goods and services that, if the grantee, subgrantee, or
contractor receiving the contribution had to pay for them, the payments would have been an indirect
costs. Costs sharing or matching credit for such contributions shall be given only if the grantee,
subgrantee, or contractor has established, along with its regular indirect cost rate, a special rate for
allocating to individual projects or programs the value of the contributions.
(iii) A third party in-kind contribution to a fixed-price contract may count towards satisfying a cost sharing
or matching requirement only if it results in:
(A) An increase in the services or property provided under the contract (without additional cost to the
grantee or subgrantee) or
(B) A cost savings to the grantee or subgrantee.
(iv) The values placed on third party in-kind contributions for cost sharing or matching purposes will
conform to the rules in the succeeding sections of this part. If a third party in-kind contribution is a type
not treated in those sections, the value placed upon it shall be fair and reasonable.
(c) Valuation of donated services —(1) Volunteer services. Unpaid services provided to a grantee or
subgrantee by individuals will be 6valued at rates consistent with those ordinarily paid for similar work in
the grantee's or subgrantee's organization. If the grantee or subgrantee does not have employees
performing similar work, the rates will be consistent with those ordinarily paid by other employers for
similar work in the same labor market. In either case, a reasonable amount for fringe benefits may be
included in the valuation.
(2) Employees of other organizations. When an employer other than a grantee, subgrantee, or cost-type
contractor furnishes free of charge the services of an employee in the employee's normal line of work,
the services will be valued at the employee's regular rate of pay exclusive of the employee's fringe
benefits and overhead costs. If the services are in a different line of work, paragraph (c)(1) of this section
applies.
(d) Valuation of third party donated supplies and loaned equipment or space. (1) If a third party donates
supplies, the contribution will be valued at the market value of the supplies at the time of donation.
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(2) If a third party donates the use of equipment or space in a building but retains title, the contribution
will be valued at the fair rental rate of the equipment or space.
(e) Valuation of third party donated equipment, buildings, and land. If a third party donates equipment,
buildings, or land, and title passes to a grantee or subgrantee, the treatment of the donated property will
depend upon the purpose of the grant or subgrant, as follows:
(1) Awards for capital expenditures. If the purpose of the grant or subgrant is to assist the grantee or
subgrantee in the acquisition of property, the market value of that property at the time of donation may
be counted as cost sharing or matching,
(2) Other awards. If assisting in the acquisition of property is not the purpose of the grant or subgrant,
paragraphs (e)(2) (i) and (ii) of this section apply:
(i) If approval is obtained from the awarding agency, the market value at the time of donation of the
donated equipment or buildings and the fair rental rate of the donated land may be counted as cost
sharing or matching. In the case of a subgrant, the terms of the grant agreement may require that the
approval be obtained from the Federal agency as well as the grantee. In all cases, the approval may be
given only if a purchase of the equipment or rental of the land would be approved as an allowable direct
cost. If any part of the donated property was acquired with Federal funds, only the non-Federal share of
the property may be counted as cost-sharing or matching.
(ii) If approval is not obtained under paragraph (e)(2)(i) of this section, no amount may be counted for
donated land, and only depreciation or use allowances may be counted for donated equipment and
buildings. The depreciation or use allowances for this property are not treated as third party in-kind
contributions. Instead, they are treated as costs incurred by the grantee or subgrantee. They are
computed and allocated (usually as indirect costs) in accordance with the cost principles specified in
§12.62, in the same way as depreciation or use allowances for purchased equipment and buildings. The
amount of depreciation or use allowances for donated equipment and buildings is based on the
property's market value at the time it was donated.
(f) Valuation of grantee or subgrantee donated real property for construction/acquisition. If a grantee or
subgrantee donates real property for a construction or facilities acquisition project, the current market
value of that property may be counted as cost sharing or matching. If any part of the donated property
was acquired with Federal funds, only the non-Federal share of the property may be counted as cost
sharing or matching.
(g) Appraisal of real property. In some cases under paragraphs (d), (e) and (f) of this section, it will be
necessary to establish the market value of land or a building or the fair rental rate of land or of space in a
building. In these cases, the Federal agency may require the market value or fair rental value be set by
an independent appraiser, and that the value or rate be certified by the grantee. This requirement will
also be imposed by the grantee on subgrantees.
§ 12.65 Program income.
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(a) General. Grantees are encouraged to earn income to defray program costs. Program income
includes income from fees for services performed, from the use or rental of real or personal property
acquired with grant funds, from the sale of commodities or items fabricated under a grant agreement,
and from payments of principal and interest on loans made with grant funds. Except as otherwise
provided in regulations of the Federal agency, program income does not include interest on grant funds,
rebates, credits, discounts, refunds, etc. and interest earned on any of them.
(b) Definition of program income. Program income means gross income received by the grantee or
subgrantee directly generated by a grant supported activity, or earned only as a result of the grant
agreement during the grant period. “During the grant period” is the time between the effective date of the
award and the ending date of the award reflected in the final financial report.
(c) Cost of generating program income. If authorized by Federal regulations or the grant agreement,
costs incident to the generation of program income may be deducted from gross income to determine
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program income.
(d) Governmental revenues. Taxes, special assessments, levies, fines, and other such revenues raised
by a grantee or subgrantee are not program income unless the revenues are specifically identified in the
grant agreement or Federal agency regulations as program income.
(e) Royalties. Income from royalties and license fees for copyrighted material, patents, and inventions
developed by a grantee or subgrantee is program income only if the revenues are specifically identified
in the grant agreement or Federal agency regulations as program income. (See §12.74.)
(f) Property. Proceeds from the sale of real property or equipment will be handled in accordance with the
requirements of §§12.71 and 12.72.
(g) Use of program income. Program income shall be deducted from outlays which may be both Federal
and non-Federal as described below, unless the Federal agency regulations or the grant agreement
specify another alternative (or a combination of the alternatives). In specifying alternatives, the Federal
agency may distinguish between income earned by the grantee and income earned by subgrantees and
between the sources, kinds, or amounts of income. When Federal agencies authorize the alternatives in
paragraphs (g) (2) and (3) of this section, program income in excess of any limits stipulated shall also be
deducted from outlays.
(1) Deduction. Ordinarily program income shall be deducted from total allowable costs to determine the
net allowable costs. Program income shall be used for current costs unless the Federal agency
authorizes otherwise. Program income which the grantee did not anticipate at the time of the award shall
be used to reduce the Federal agency and grantee contributions rather than to increase the funds
committed to the project.
(2) Addition. When authorized, program income may be added to the funds committed to the grant
agreement by the Federal agency and the grantee. The program income shall be used for the purposes
and under the conditions of the grant agreement.
(3) Cost sharing or matching. When authorized, program income may be used to meet the cost sharing
or matching requirement of the grant agreement. The amount of the Federal grant award remains the
same.
(h) Income after the award period. There are no Federal requirements governing the disposition of
program income earned after the end of the award period (i.e., until the ending date of the final financial
report, see paragraph (a) of this section), unless the terms of the agreement or the Federal agency
regulations provide otherwise.
§ 12.66 Non-Federal audit.
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(a) Basic rule. Grantees and subgrantees are responsible for obtaining audits in accordance with the
Single Audit Act Amendments of 1996 (31 U.S.C. 7501–7507) and revised OMB Circular A–133, “Audits
of States, Local Governments, and Non-Profit Organizations.” The audits shall be made by an
independent auditor in accordance with generally accepted government auditing standards covering
financial audits.
(b) Subgrantees. State or local governments, as those terms are defined for purposes of the Single Audit
Act Amendments of 1996, that provide Federal awards to a subgrantee, which expends $300,000 or
more (or other amount as specified by OMB) in Federal awards in a fiscal year, shall:
(1) Determine whether State or local subgrantees have met the audit requirements of the Act and
whether subgrantees covered by OMB Circular A–110, “Uniform Administrative Requirements for Grants
and Agreements with Institutions of Higher Education, Hospitals, and Other Non-Profit Organizations,”
have met the audit requirements of the Act. Commercial contractors (private for-profit and private and
governmental organizations) providing goods and services to State and local governments are not
required to have a single audit performed. State and local governments should use their own procedures
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to ensure that the contractor has complied with laws and regulations affecting the expenditure of Federal
funds;
(2) Determine whether the subgrantee spent Federal assistance funds provided in accordance with
applicable laws and regulations. This may be accomplished by reviewing an audit of the subgrantee
made in accordance with the Act, Circular A–110, or through other means (e.g., program reviews) if the
subgrantee has not had such an audit;
(3) Ensure that appropriate corrective action is taken within six months after receipt of the audit report in
instance of noncompliance with Federal laws and regulations;
(4) Consider whether subgrantee audits necessitate adjustment of the grantee's own records; and
(5) Require each subgrantee to permit independent auditors to have access to the records and financial
statements.
(c) Auditor selection. In arranging for audit services, §12.36 shall be followed.
[53 FR 8077 and 8087, Mar. 11, 1988, as amended at 62 FR 45939, 45945, Aug. 29, 1997]
Changes, Property, and Subawards
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§ 12.70 Changes.
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(a) General. Grantees and subgrantees are permitted to rebudget within the approved direct cost budget
to meet unanticipated requirements and may make limited program changes to the approved project.
However, unless waived by the awarding agency, certain types of post-award changes in budgets and
projects shall require the prior written approval of the awarding agency.
(b) Relation to cost principles. The applicable cost principles (see §12.62) contain requirements for prior
approval of certain types of costs. Except where waived, those requirements apply to all grants and
subgrants even if paragraphs (c) through (f) of this section do not.
(c) Budget changes —(1) Nonconstruction projects. Except as stated in other regulations or an award
document, grantees or subgrantees shall obtain the prior approval of the awarding agency whenever
any of the following changes is anticipated under a nonconstruction award:
(i) Any revision which would result in the need for additional funding.
(ii) Unless waived by the awarding agency, cumulative transfers among direct cost categories, or, if
applicable, among separately budgeted programs, projects, functions, or activities which exceed or are
expected to exceed ten percent of the current total approved budget, whenever the awarding agency's
share exceeds $100,000.
(iii) Transfer of funds allotted for training allowances (i.e., from direct payments to trainees to other
expense categories).
(2) Construction projects. Grantees and subgrantees shall obtain prior written approval for any budget
revision which would result in the need for additional funds.
(3) Combined construction and nonconstruction projects. When a grant or subgrant provides funding for
both construction and nonconstruction activities, the grantee or subgrantee must obtain prior written
approval from the awarding agency before making any fund or budget transfer from nonconstruction to
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construction or vice versa.
(d) Programmatic changes. Grantees or subgrantees must obtain the prior approval of the awarding
agency whenever any of the following actions is anticipated:
(1) Any revision of the scope or objectives of the project (regardless of whether there is an associated
budget revision requiring prior approval).
(2) Need to extend the period of availability of funds.
(3) Changes in key persons in cases where specified in an application or a grant award. In research
projects, a change in the project director or principal investigator shall always require approval unless
waived by the awarding agency.
(4) Under nonconstruction projects, contracting out, subgranting (if authorized by law) or otherwise
obtaining the services of a third party to perform activities which are central to the purposes of the
award. This approval requirement is in addition to the approval requirements of §12.76 but does not
apply to the procurement of equipment, supplies, and general support services.
(e) Additional prior approval requirements. The awarding agency may not require prior approval for any
budget revision which is not described in paragraph (c) of this section.
(f) Requesting prior approval. (1) A request for prior approval of any budget revision will be in the same
budget formal the grantee used in its application and shall be accompanied by a narrative justification for
the proposed revision.
(2) A request for a prior approval under the applicable Federal cost principles (see §12.62) may be made
by letter.
(3) A request by a subgrantee for prior approval will be addressed in writing to the grantee. The grantee
will promptly review such request and shall approve or disapprove the request in writing. A grantee will
not approve any budget or project revision which is inconsistent with the purpose or terms and
conditions of the Federal grant to the grantee. If the revision, requested by the subgrantee would result
in a change to the grantee's approved project which requires Federal prior approval, the grantee will
obtain the Federal agency's approval before approving the subgrantee's request.
§ 12.71 Real property.
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(a) Title. Subject to the obligations and conditions set forth in this section, title to real property acquired
under a grant or subgrant will vest upon acquisition in the grantee or subgrantee respectively.
(b) Use. Except as otherwise provided by Federal statutes, real property will be used for the originally
authorized purposes as long as needed for that purposes, and the grantee or subgrantee shall not
dispose of or encumber its title or other interests.
(c) Disposition. When real property is no longer needed for the originally authorized purpose, the grantee
or subgrantee will request disposition instructions from the awarding agency. The instructions will
provide for one of the following alternatives:
(1) Retention of title. Retain title after compensating the awarding agency. The amount paid to the
awarding agency will be computed by applying the awarding agency's percentage of participation in the
cost of the original purchase to the fair market value of the property. However, in those situations where
a grantee or subgrantee is disposing of real property acquired with grant funds and acquiring
replacement real property under the same program, the net proceeds from the disposition may be used
as an offset to the cost of the replacement property.
(2) Sale of property. Sell the property and compensate the awarding agency. The amount due to the
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awarding agency will be calculated by applying the awarding agency's percentage of participation in the
cost of the original purchase to the proceeds of the sale after deduction of any actual and reasonable
selling and fixing-up expenses. If the grant is still active, the net proceeds from sale may be offset
against the original cost of the property. When a grantee or subgrantee is directed to sell property, sales
procedures shall be followed that provide for competition to the extent practicable and result in the
highest possible return.
(3) Transfer of title. Transfer title to the awarding agency or to a third-party designated/approved by the
awarding agency. The grantee or subgrantee shall be paid an amount calculated by applying the
grantee or subgrantee's percentage of participation in the purchase of the real property to the current fair
market value of the property.
§ 12.72 Equipment.
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(a) Title. Subject to the obligations and conditions set forth in this section, title to equipment acquired
under a grant or subgrant will vest upon acquisition in the grantee or subgrantee respectively.
(b) States. A State will use, manage, and dispose of equipment acquired under a grant by the State in
accordance with State laws and procedures. Other grantees and subgrantees will follow paragraphs (c)
through (e) of this section.
(c) Use. (1) Equipment shall be used by the grantee or subgrantee in the program or project for which it
was acquired as long as needed, whether or not the project or program continues to be supported by
Federal funds. When no longer needed for the original program or project, the equipment may be used
in other activities currently or previously supported by a Federal agency.
(2) The grantee or subgrantee shall also make equipment available for use on other projects or
programs currently or previously supported by the Federal Government, providing such use will not
interfere with the work on the projects or program for which it was originally acquired. First preference for
other use shall be given to other programs or projects supported by the awarding agency. User fees
should be considered if appropriate.
(3) Notwithstanding the encouragement in §12.65(a) to earn program income, the grantee or subgrantee
must not use equipment acquired with grant funds to provide services for a fee to compete unfairly with
private companies that provide equivalent services, unless specifically permitted or contemplated by
Federal statute.
(4) When acquiring replacement equipment, the grantee or subgrantee may use the equipment to be
replaced as a trade-in or sell the property and use the proceeds to offset the cost of the replacement
property, subject to the approval of the awarding agency.
(d) Management requirements. Procedures for managing equipment (including replacement equipment),
whether acquired in whole or in part with grant funds, until disposition takes place will, as a minimum,
meet the following requirements:
(1) Property records must be maintained that include a description of the property, a serial number or
other identification number, the source of property, who holds title, the acquisition date, and cost of the
property, percentage of Federal participation in the cost of the property, the location, use and condition
of the property, and any ultimate disposition data including the date of disposal and sale price of the
property.
(2) A physical inventory of the property must be taken and the results reconciled with the property
records at least once every two years.
(3) A control system must be developed to ensure adequate safeguards to prevent loss, damage, or
theft of the property. Any loss, damage, or theft shall be investigated.
(4) Adequate maintenance procedures must be developed to keep the property in good condition.
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(5) If the grantee or subgrantee is authorized or required to sell the property, proper sales procedures
must be established to ensure the highest possible return.
(e) Disposition. When original or replacement equipment acquired under a grant or subgrant is no longer
needed for the original project or program or for other activities currently or previously supported by a
Federal agency, disposition of the equipment will be made as follows:
(1) Items of equipment with a current per-unit fair market value of less than $5,000 may be retained, sold
or otherwise disposed of with no further obligation to the awarding agency.
(2) Items of equipment with a current per unit fair market value in excess of $5,000 may be retained or
sold and the awarding agency shall have a right to an amount calculated by multiplying the current
market value or proceeds from sale by the awarding agency's share of the equipment.
(3) In cases where a grantee or subgrantee fails to take appropriate disposition actions, the awarding
agency may direct the grantee or subgrantee to take excess and disposition actions.
(f) Federal equipment. In the event a grantee or subgrantee is provided Federally-owned equipment:
(1) Title will remain vested in the Federal Government.
(2) Grantees or subgrantees will manage the equipment in accordance with Federal agency rules and
procedures, and submit an annual inventory listing.
(3) When the equipment is no longer needed, the grantee or subgrantee will request disposition
instructions from the Federal agency.
(g) Right to transfer title. The Federal awarding agency may reserve the right to transfer title to the
Federal Government or a third part named by the awarding agency when such a third party is otherwise
eligible under existing statutes. Such transfers shall be subject to the following standards:
(1) The property shall be identified in the grant or otherwise made known to the grantee in writing.
(2) The Federal awarding agency shall issue disposition instruction within 120 calendar days after the
end of the Federal support of the project for which it was acquired. If the Federal awarding agency fails
to issue disposition instructions within the 120 calendar-day period the grantee shall follow 12.72(e).
(3) When title to equipment is transferred, the grantee shall be paid an amount calculated by applying
the percentage of participation in the purchase to the current fair market value of the property.
§ 12.73 Supplies.
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(a) Title. Title to supplies acquired under a grant or subgrant will vest, upon acquisition, in the grantee or
subgrantee respectively.
(b) Disposition. If there is a residual inventory of unused supplies exceeding $5,000 in total aggregate
fair market value upon termination or completion of the award, and if the supplies are not needed for any
other Federally sponsored programs or projects, the grantee or subgrantee shall compensate the
awarding agency for its share.
§ 12.74 Copyrights.
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The Federal awarding agency reserves a royalty-free, nonexclusive, and irrevocable license to
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reproduce, publish or otherwise use, and to authorize others to use, for Federal Government purposes:
(a) The copyright in any work developed under a grant, subgrant, or contract under a grant or subgrant;
and
(b) Any rights of copyright to which a grantee, subgrantee or a contractor purchases ownership with
grant support.
§ 12.76 Procurement.
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(a) States. When procuring property and services under a grant, a State will follow the same policies and
procedures it uses for procurements from its non-Federal funds. The State will ensure that every
purchase order or other contract includes any clauses required by Federal statutes and executive orders
and their implementing regulations. Other grantees and subgrantees will follow paragraphs (b) through
(i) in this section.
(b) Procurement standards. (1) Grantees and subgrantees will use their own procurement procedures
which reflect applicable State and local laws and regulations, provided that the procurements conform to
applicable Federal law and the standards identified in this section.
(2) Grantees and subgrantees will maintain a contract administration system which ensures that
contractors perform in accordance with the terms, conditions, and specifications of their contracts or
purchase orders.
(3) Grantees and subgrantees will maintain a written code of standards of conduct governing the
performance of their employees engaged in the award and administration of contracts. No employee,
officer or agent of the grantee or subgrantee shall participate in selection, or in the award or
administration of a contract supported by Federal funds if a conflict of interest, real or apparent, would
be involved. Such a conflict would arise when:
(i) The employee, officer or agent,
(ii) Any member of his immediate family,
(iii) His or her partner, or
(iv) An organization which employs, or is about to employ, any of the above, has a financial or other
interest in the firm selected for award. The grantee's or subgrantee's officers, employees or agents will
neither solicit nor accept gratuities, favors or anything of monetary value from contractors, potential
contractors, or parties to subagreements. Grantee and subgrantees may set minimum rules where the
financial interest is not substantial or the gift is an unsolicited item of nominal intrinsic value. To the
extent permitted by State or local law or regulations, such standards or conduct will provide for penalties,
sanctions, or other disciplinary actions for violations of such standards by the grantee's and subgrantee's
officers, employees, or agents, or by contractors or their agents. The awarding agency may in regulation
provide additional prohibitions relative to real, apparent, or potential conflicts of interest.
(4) Grantee and subgrantee procedures will provide for a review of proposed procurements to avoid
purchase of unnecessary or duplicative items. Consideration should be given to consolidating or
breaking out procurements to obtain a more economical purchase. Where appropriate, an analysis will
be made of lease versus purchase alternatives, and any other appropriate analysis to determine the
most economical approach.
(5) To foster greater economy and efficiency, grantees and subgrantees are encouraged to enter into
State and local intergovernmental agreements for procurement or use of common goods and services.
(6) Grantees and subgrantees are encouraged to use Federal excess and surplus property in lieu of
purchasing new equipment and property whenever such use is feasible and reduces project costs.
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(7) Grantees and subgrantees are encouraged to use value engineering clauses in contracts for
construction projects of sufficient size to offer reasonable opportunities for cost reductions. Value
engineering is a systematic and creative analysis of each contract item or task to ensure that its
essential function is provided at the overall lower cost.
(8) Grantees and subgrantees will make awards only to responsible contractors possessing the ability to
perform successfully under the terms and conditions of a proposed procurement. Consideration will be
given to such matters as contractor integrity, compliance with public policy, record of past performance,
and financial and technical resources.
(9) Grantees and subgrantees will maintain records sufficient to detail the significant history of a
procurement. These records will include, but are not necessarily limited to the following: rationale for the
method of procurement, selection of contract type, contractor selection or rejection, and the basis for the
contract price.
(10) Grantees and subgrantees will use time and material type contracts only—
(i) After a determination that no other contract is suitable, and
(ii) If the contract includes a ceiling price that the contractor exceeds at its own risk.
(11) Grantees and subgrantees alone will be responsible, in accordance with good administrative
practice and sound business judgment, for the settlement of all contractual and administrative issues
arising out of procurements. These issues include, but are not limited to source evaluation, protests,
disputes, and claims. These standards do not relieve the grantee or subgrantee of any contractual
responsibilities under its contracts. Federal agencies will not substitute their judgment for that of the
grantee or subgrantee unless the matter is primarily a Federal concern. Violations of law will be referred
to the local, State, or Federal authority having proper jurisdiction.
(12) Grantees and subgrantees will have protest procedures to handle and resolve disputes relating to
their procurements and shall in all instances disclose information regarding the protest to the awarding
agency. A protestor must exhaust all administrative remedies with the grantee and subgrantee before
pursuing a protest with the Federal agency. Reviews of protests by the Federal agency will be limited to:
(i) Violations of Federal law or regulations and the standards of this section (violations of State or local
law will be under the jurisdiction of State or local authorities) and
(ii) Violations of the grantee's or subgrantee's protest procedures for failure to review a complaint or
protest. Protests received by the Federal agency other than those specified above will be referred to the
grantee or subgrantee.
(c) Competition. (1) All procurement transactions will be conducted in a manner providing full and open
competition consistent with the standards of §12.76. Some of the situations considered to be restrictive
of competition include but are not limited to:
(i) Placing unreasonable requirements on firms in order for them to qualify to do business,
(ii) Requiring unnecessary experience and excessive bonding,
(iii) Noncompetitive pricing practices between firms or between affiliated companies,
(iv) Noncompetitive awards to consultants that are on retainer contracts,
(v) Organizational conflicts of interest,
(vi) Specifying only a “brand name” product instead of allowing “an equal” product to be offered and
describing the performance of other relevant requirements of the procurement, and
(vii) Any arbitrary action in the procurement process.
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(2) Grantees and subgrantees will conduct procurements in a manner that prohibits the use of statutorily
or administratively imposed in-State or local geographical preferences in the evaluation of bids or
proposals, except in those cases where applicable Federal statutes expressly mandate or encourage
geographic preference. Nothing in this section preempts State licensing laws. When contracting for
architectural and engineering (A/E) services, geographic location may be a selection criteria provided its
application leaves an appropriate number of qualified firms, given the nature and size of the project, to
compete for the contract.
(3) Grantees will have written selection procedures for procurement transactions. These procedures will
ensure that all solicitations:
(i) Incorporate a clear and accurate description of the technical requirements for the material, product, or
service to be procured. Such description shall not, in competitive procurements, contain features which
unduly restrict competition. The description may include a statement of the qualitative nature of the
material, product or service to be procured, and when necessary, shall set forth those minimum
essential characteristics and standards to which it must conform if it is to satisfy its intended use.
Detailed product specifications should be avoided if at all possible. When it is impractical or
uneconomical to make a clear and accurate description of the technical requirements, a “brand name or
equal” description may be used as a means to define the performance or other salient requirements of a
procurement. The specific features of the named brand which must be met by offerors shall be clearly
stated; and
(ii) Identify all requirements which the offerors must fulfill and all other factors to be used in evaluating
bids or proposals.
(4) Grantees and subgrantees will ensure that all prequalified lists of persons, firms, or products which
are used in acquiring goods and services are current and include enough qualified sources to ensure
maximum open and free competition. Also, grantees and subgrantees will not preclude potential bidders
from qualifying during the solicitation period.
(d) Methods of procurement to be followed —(1) Procurement by small purchase procedures. Small
purchase procedures are those relatively simple and informal procurement methods for securing
services, supplies, or other property that do not cost more than the simplified acquisition threshold fixed
at 41 U.S.C. 403(11) (currently set at $100,000). If small purchase procedures are used, price or rate
quotations shall be obtained from an adequate number of qualified sources.
(2) Procurement by sealed bids (formal advertising). Bids are publicly solicited and a firm-fixed-price
contract (lump sum or unit price) is awarded to the responsible bidder whose bid, conforming with all the
material terms and conditions of the invitation for bids, is the lowest in price. The sealed bid method is
the preferred method for procuring construction, if the conditions in §12.76(d)(2)(i) apply.
(i) In order for sealed bidding to be feasible, the following conditions should be present:
(A) A complete, adequate, and realistic specification or purchase description is available;
(B) Two or more responsible bidders are willing and able to compete effectively and for the business;
and
(C) The procurement lends itself to a firm fixed price contract and the selection of the successful bidder
can be made principally on the basis of price.
(ii) If sealed bids are used, the following requirements apply:
(A) The invitation for bids will be publicly advertised and bids shall be solicited from an adequate number
of known suppliers, providing them sufficient time prior to the date set for opening the bids;
(B) The invitation for bids, which will include any specifications and pertinent attachments, shall define
the items or services in order for the bidder to properly respond;
(C) All bids will be publicly opened at the time and place prescribed in the invitation for bids;
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(D) A firm fixed-price contract award will be made in writing to the lowest responsive and responsible
bidder. Where specified in bidding documents, factors such as discounts, transportation cost, and life
cycle costs shall be considered in determining which bid is lowest. Payment discounts will only be used
to determine the low bid when prior experience indicates that such discounts are usually taken
advantage of; and
(E) Any or all bids may be rejected if there is a sound documented reason.
(3) Procurement by competitive proposals. The technique of competitive proposals is normally
conducted with more than one source submitting an offer, and either a fixed-price or cost-reimbursement
type contract is awarded. It is generally used when conditions are not appropriate for the use of sealed
bids. If this method is used, the following requirements apply:
(i) Requests for proposals will be publicized and identify all evaluation factors and their relative
importance. Any response to publicized requests for proposals shall be honored to the maximum extent
practical;
(ii) Proposals will be solicited from an adequate number of qualified sources;
(iii) Grantees and subgrantees will have a method for conducting technical evaluations of the proposals
received and for selecting awardees;
(iv) Awards will be made to the responsible firm whose proposal is most advantageous to the program,
with price and other factors considered; and
(v) Grantees and subgrantees may use competitive proposal procedures for qualifications-based
procurement of architectural/engineering (A/E) professional services whereby competitors' qualifications
are evaluated and the most qualified competitor is selected, subject to negotiation of fair and reasonable
compensation. The method, where price is not used as a selection factor, can only be used in
procurement of A/E professional services. It cannot be used to purchase other types of services though
A/E firms are a potential source to perform the proposed effort.
(4) Procurement by noncompetitive proposals is procurement through solicitation of a proposal from only
one source, or after solicitation of a number of sources, competition is determined inadequate.
(i) Procurement by noncompetitive proposals may be used only when the award of a contract is
infeasible under small purchase procedures, sealed bids or competitive proposals and one of the
following circumstances applies:
(A) The item is available only from a single source;
(B) The public exigency or emergency for the requirement will not permit a delay resulting from
competitive solicitation;
(C) The awarding agency authorizes noncompetitive proposals; or
(D) After solicitation of a number of sources, competition is determined inadequate.
(ii) Cost analysis, i.e., verifying the proposed cost data, the projections of the data, and the evaluation of
the specific elements of costs and profits, is required.
(iii) Grantees and subgrantees may be required to submit the proposed procurement to the awarding
agency for pre-award review in accordance with paragraph (g) of this section.
(e) Contracting with small and minority firms, women's business enterprise and labor surplus area firms.
(1) The grantee and subgrantee will take all necessary affirmative steps to assure that minority firms,
women's business enterprises, and labor surplus area firms are used when possible.
(2) Affirmative steps shall include:
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(i) Placing qualified small and minority businesses and women's business enterprises on solicitation
lists;
(ii) Assuring that small and minority businesses, and women's business enterprises are solicited
whenever they are potential sources;
(iii) Dividing total requirements, when economically feasible, into smaller tasks or quantities to permit
maximum participation by small and minority business, and women's business enterprises;
(iv) Establishing delivery schedules, where the requirement permits, which encourage participation by
small and minority business, and women's business enterprises;
(v) Using the services and assistance of the Small Business Administration, and the Minority Business
Development Agency of the Department of Commerce; and
(vi) Requiring the prime contractor, if subcontracts are to be let, to take the affirmative steps listed in
paragraphs (e)(2) (i) through (v) of this section.
(f) Contract cost and price. (1) Grantees and subgrantees must perform a cost or price analysis in
connection with every procurement action including contract modifications. The method and degree of
analysis is dependent on the facts surrounding the particular procurement situation, but as a starting
point, grantees must make independent estimates before receiving bids or proposals. A cost analysis
must be performed when the offeror is required to submit the elements of his estimated cost, e.g., under
professional, consulting, and architectural engineering services contracts. A cost analysis will be
necessary when adequate price competition is lacking, and for sole source procurements, including
contract modifications or change orders, unless price resonableness can be established on the basis of
a catalog or market price of a commercial product sold in substantial quantities to the general public or
based on prices set by law or regulation. A price analysis will be used in all other instances to determine
the reasonableness of the proposed contract price.
(2) Grantees and subgrantees will negotiate profit as a separate element of the price for each contract in
which there is no price competition and in all cases where cost analysis is performed. To establish a fair
and reasonable profit, consideration will be given to the complexity of the work to be performed, the risk
borne by the contractor, the contractor's investment, the amount of subcontracting, the quality of its
record of past performance, and industry profit rates in the surrounding geographical area for similar
work.
(3) Costs or prices based on estimated costs for contracts under grants will be allowable only to the
extent that costs incurred or cost estimates included in negotiated prices are consistent with Federal
cost principles (see §12.62). Grantees may reference their own cost principles that comply with the
applicable Federal cost principles.
(4) The cost plus a percentage of cost and percentage of construction cost methods of contracting shall
not be used.
(g) Awarding agency review. (1) Grantees and subgrantees must make available, upon request of the
awarding agency, technical specifications on proposed procurements where the awarding agency
believes such review is needed to ensure that the item and/or service specified is the one being
proposed for purchase. This review generally will take place prior to the time the specification is
incorporated into a solicitation document. However, if the grantee or subgrantee desires to have the
review accomplished after a solicitation has been developed, the awarding agency may still review the
specifications, with such review usually limited to the technical aspects of the proposed purchase.
(2) Grantees and subgrantees must on request make available for awarding agency pre-award review
procurement documents, such as requests for proposals or invitations for bids, independent cost
estimates, etc. when:
(i) A grantee's or subgrantee's procurement procedures or operation fails to comply with the
procurement standards in this section; or
(ii) The procurement is expected to exceed the simplified acquisition threshold and is to be awarded
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without competition or only one bid or offer is received in response to a solicitation; or
(iii) The procurement, which is expected to exceed the simplified acquisition threshold, specifies a “brand
name” product; or
(iv) The proposed award is more than the simplified acquisition threshold and is to be awarded to other
than the apparent low bidder under a sealed bid procurement; or
(v) A proposed contract modification changes the scope of a contract or increases the contract amount
by more than the simplified acquisition threshold.
(3) A grantee or subgrantee will be exempt from the pre-award review in paragraph (g)(2) of this section
if the awarding agency determines that its procurement systems comply with the standards of this
section.
(i) A grantee or subgrantee may request that its procurement system be reviewed by the awarding
agency to determine whether its system meets these standards in order for its system to be certified.
Generally, these reviews shall occur where there is a continuous high-dollar funding, and third-party
contracts are awarded on a regular basis.
(ii) A grantee or subgrantee may self-certify its procurement system. Such self-certification shall not limit
the awarding agency's right to survey the system. Under a self-certification procedure, awarding
agencies may wish to rely on written assurances from the grantee or subgrantee that it is complying with
these standards. A grantee or subgrantee will cite specific procedures, regulations, standards, etc., as
being in compliance with these requirements and have its system available for review.
(h) Bonding requirements. For construction or facility improvement contracts or subcontracts exceeding
the simplified acquisition threshold, the awarding agency may accept the bonding policy and
requirements of the grantee or subgrantee provided the awarding agency has made a determination that
the awarding agency's interest is adequately protected. If such a determination has not been made, the
minimum requirements shall be as follows:
(1) A bid guarantee from each bidder equivalent to five percent of the bid price. The “bid guarantee” shall
consist of a firm commitment such as a bid bond, certified check, or other negotiable instrument
accompanying a bid as assurance that the bidder will, upon acceptance of his bid, execute such
contractual documents as may be required within the time specified.
(2) A performance bond on the part of the contractor for 100 percent of the contract price. A
“performance bond” is one executed in connection with a contract to secure fulfillment of all the
contractor's obligations under such contract.
(3) A payment bond on the part of the contractor for 100 percent of the contract price. A “payment bond”
is one executed in connection with a contract to assure payment as required by law of all persons
supplying labor and material in the execution of the work provided for in the contract.
(i) Contract provisions. A grantee's and subgrantee's contracts must contain provisions in paragraph (i)
of this section. Federal agencies are permitted to require changes, remedies, changed conditions,
access and records retention, suspension of work, and other clauses approved by the Office of Federal
Procurement Policy.
(1) Administrative, contractual, or legal remedies in instances where contractors violate or breach
contract terms, and provide for such sanctions and penalties as may be appropriate. (Contracts more
than the simplified acquisition threshold)
(2) Termination for cause and for convenience by the grantee or subgrantee including the manner by
which it will be effected and the basis for settlement. (All contracts in excess of $10,000)
(3) Compliance with Executive Order 11246 of September 24, 1965, entitled “Equal Employment
Opportunity,” as amended by Executive Order 11375 of October 13, 1967, and as supplemented in
Department of Labor regulations (41 CFR chapter 60). (All construction contracts awarded in excess of
$10,000 by grantees and their contractors or subgrantees)
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(4) Compliance with the Copeland “Anti-Kickback” Act (18 U.S.C. 874) as supplemented in Department
of Labor regulations (29 CFR Part 3). (All contracts and subgrants for construction or repair)
(5) Compliance with the Davis-Bacon Act (40 U.S.C. 276a to 276a–7) as supplemented by Department
of Labor regulations (29 CFR Part 5). (Construction contracts in excess of $2000 awarded by grantees
and subgrantees when required by Federal grant program legislation)
(6) Compliance with Sections 103 and 107 of the Contract Work Hours and Safety Standards Act (40
U.S.C. 327–330) as supplemented by Department of Labor regulations (29 CFR Part 5). (Construction
contracts awarded by grantees and subgrantees in excess of $2000, and in excess of $2500 for other
contracts which involve the employment of mechanics or laborers)
(7) Notice of awarding agency requirements and regulations pertaining to reporting.
(8) Notice of awarding agency requirements and regulations pertaining to patent rights with respect to
any discovery or invention which arises or is developed in the course of or under such contract.
(9) Awarding agency requirements and regulations pertaining to copyrights and rights in data.
(10) Access by the grantee, the subgrantee, the Federal grantor agency, the Comptroller General of the
United States, or any of their duly authorized representatives to any books, documents, papers, and
records of the contractor which are directly pertinent to that specific contract for the purpose of making
audit, examination, excerpts, and transcriptions.
(11) Retention of all required records for three years after grantees or subgrantees make final payments
and all other pending matters are closed.
(12) Compliance with all applicable standards, orders, or requirements issued under section 306 of the
Clean Air Act (42 U.S.C. 1857(h)), section 508 of the Clean Water Act (33 U.S.C. 1368), Executive
Order 11738, and Environmental Protection Agency regulations (40 CFR part 15). (Contracts,
subcontracts, and subgrants of amounts in excess of $100,000)
(13) Mandatory standards and policies relating to energy efficiency which are contained in the State
energy conservation plan issued in compliance with the Energy Policy and Conservation Act (Pub. L.
94–163, 89 Stat. 871).
[53 FR 8077 and 8087, Mar. 11, 1988, as amended at 60 FR 19639, 19644, Apr. 19, 1995]
§ 12.77 Subgrants.
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(a) States. States shall follow State law and procedures when awarding and administering subgrants
(whether on a cost reimbursement or fixed amount basis) of financial assistance to local and Indian tribal
governments. States shall:
(1) Ensure that every subgrant includes any clauses required by Federal statute and executive orders
and their implementing regulations;
(2) Ensure that subgrantees are aware of requirements imposed upon them by Federal statute and
regulation;
(3) Ensure that a provision for compliance with §12.82 is placed in every cost reimbursement subgrant;
and
(4) Conform any advances of grant funds to subgrantees substantially to the same standards of timing
and amount that apply to cash advances by Federal agencies.
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(b) All other grantees. All other grantees shall follow the provisions of this part which are applicable to
awarding agencies when awarding and administering subgrants (whether on a cost reimbursement or
fixed amount basis) of financial assistance to local and Indian tribal governments. Grantees shall:
(1) Ensure that every subgrant includes a provision for compliance with this part;
(2) Ensure that every subgrant includes any clauses required by Federal statute and executive orders
and their implementing regulations; and
(3) Ensure that subgrantees are aware of requirements imposed upon them by Federal statutes and
regulations.
(c) Exceptions. By their own terms, certain provisions of this part do not apply to the award and
administration of subgrants:
(1) Section 12.50;
(2) Section 12.51;
(3) The letter-of-credit procedures specified in Treasury Regulations at 31 CFR part 205, cited in §12.61;
and
(4) Section 12.90.
Reports, Records Retention, and Enforcement
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§ 12.80 Monitoring and reporting program performance.
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(a) Monitoring by grantees. Grantees are responsible for managing the day-to-day operations of grant
and subgrant supported activities. Grantees must monitor grant and subgrant supported activities to
assure compliance with applicable Federal requirements and that performance goals are being
achieved. Grantee monitoring must cover each program, function or activity.
(b) Nonconstruction performance reports. The Federal agency may, if it decides that performance
information available from subsequent applications contains sufficient information to meet its
programmatic needs, require the grantee to submit a performance report only upon expiration or
termination of grant support. Unless waived by the Federal agency this report will be due on the same
date as the final Financial Status Report.
(1) Grantees shall submit annual performance reports unless the awarding agency requires quarterly or
semi-annual reports. However, performance reports will not be required more frequently than quarterly.
Annual reports shall be due 90 days after the grant year, quarterly or semi-annual reports shall be due
30 days after the reporting period. The final performance report will be due 90 days after the expiration
or termination of grant support. If a justified request is submitted by a grantee, the Federal agency may
extend the due date for any performance report. Additionally, requirements for unnecessary
performance reports may be waived by the Federal agency.
(2) Performance reports will contain, for each grant, brief information on the following:
(i) A comparison of actual accomplishments to the objectives established for the period. Where the
output of the project can be quantified, a computation of the cost per unit of output may be required if
that information will be useful.
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(ii) The reasons for slippage if established objectives were not met.
(iii) Additional pertinent information including, when appropriate, analysis and explanation of cost
overruns or high unit costs.
(3) Grantees will not be required to submit more than the original and two copies of performance reports.
(4) Grantees will adhere to the standards in this section in prescribing performance reporting
requirements for subgrantees.
(c) Construction performance reports. For the most part, on-site technical inspections and certified
percentage-of-completion data are relied on heavily by Federal agencies to monitor progress under
construction grants and subgrants. The Federal agency will require additional formal performance
reports only when considered necessary, and never more frequently than quarterly.
(d) Significant developments. Events may occur between the scheduled performance reporting dates
which have significant impact upon the grant or subgrant supported activity. In such cases, the grantee
must inform the Federal agency as soon as the following types of conditions become known:
(1) Problems, delays, or adverse conditions which will materially impair the ability to meet the objective
of the award. This disclosure must include a statement of the action taken, or contemplated, and any
assistance needed to resolve the situation.
(2) Favorable developments which enable meeting time schedules and objectives sooner or at less cost
than anticipated or producing more beneficial results than originally planned.
(e) Federal agencies may make site visits as warranted by program needs.
(f) Waivers, extensions. (1) Federal agencies may waive any performance report required by this part if
not needed.
(2) The grantee may waive any performance report from a subgrantee when not needed. The grantee
may extend the due date for any performance report from a subgrantee if the grantee will still be able to
meet its performance reporting obligations to the Federal agency.
§ 12.81 Financial reporting.
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(a) General. (1) Except as provided in paragraphs (a) (2) and (5) of this section, grantees will use only
the forms specified in paragraphs (a) through (e) of this section, and such supplementary or other forms
as may from time to time be authorized by OMB, for:
(i) Submitting financial reports to Federal agencies, or
(ii) Requesting advances or reimbursements when letters of credit are not used.
(2) Grantees need not apply the forms prescribed in this section in dealing with their subgrantees.
However, grantees shall not impose more burdensome requirements on subgrantees.
(3) Grantees shall follow all applicable standard and supplemental Federal agency instructions approved
by OMB to the extend required under the Paperwork Reduction Act of 1980 for use in connection with
forms specified in paragraphs (b) through (e) of this section. Federal agencies may issue substantive
supplementary instructions only with the approval of OMB. Federal agencies may shade out or instruct
the grantee to disregard any line item that the Federal agency finds unnecessary for its decisionmaking
purposes.
(4) Grantees will not be required to submit more than the original and two copies of forms required under
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this part.
(5) Federal agencies may provide computer outputs to grantees to expedite or contribute to the accuracy
of reporting. Federal agencies may accept the required information from grantees in machine usable
format or computer printouts instead of prescribed forms.
(6) Federal agencies may waive any report required by this section if not needed.
(7) Federal agencies may extend the due date of any financial report upon receiving a justified request
from a grantee.
(b) Financial Status Report —(1) Form. Grantees will use Standard Form 269 or 269A, Financial Status
Report, to report the status of funds for all nonconstruction grants and for construction grants when
required in accordance with §12.81(e)(2)(iii).
(2) Accounting basis. Each grantee will report program outlays and program income on a cash or
accrual basis as prescribed by the awarding agency. If the Federal agency requires accrual information
and the grantee's accounting records are not normally kept on the accural basis, the grantee shall not be
required to convert its accounting system but shall develop such accrual information through and
analysis of the documentation on hand.
(3) Frequency. The Federal agency may prescribe the frequency of the report for each project or
program. However, the report will not be required more frequently than quarterly. If the Federal agency
does not specify the frequency of the report, it will be submitted annually. A final report will be required
upon expiration or termination of grant support.
(4) Due date. When reports are required on a quarterly or semiannual basis, they will be due 30 days
after the reporting period. When required on an annual basis, they will be due 90 days after the grant
year. Final reports will be due 90 days after the expiration or termination of grant support.
(c) Federal Cash Transactions Report —(1) Form. (i) For grants paid by letter or credit, Treasury check
advances or electronic transfer of funds, the grantee will submit the Standard Form 272, Federal Cash
Transactions Report, and when necessary, its continuation sheet, Standard Form 272a, unless the
terms of the award exempt the grantee from this requirement.
(ii) These reports will be used by the Federal agency to monitor cash advanced to grantees and to
obtain disbursement or outlay information for each grant from grantees. The format of the report may be
adapted as appropriate when reporting is to be accomplished with the assistance of automatic data
processing equipment provided that the information to be submitted is not changed in substance.
(2) Forecasts of Federal cash requirements. Forecasts of Federal cash requirements may be required in
the “Remarks” section of the report.
(3) Cash in hands of subgrantees. When considered necessary and feasible by the Federal agency,
grantees may be required to report the amount of cash advances in excess of three days' needs in the
hands of their subgrantees or contractors and to provide short narrative explanations of actions taken by
the grantee to reduce the excess balances.
(4) Frequency and due date. Grantees must submit the report no later than 15 working days following
the end of each quarter. However, where an advance either by letter of credit or electronic transfer of
funds is authorized at an annualized rate of one million dollars or more, the Federal agency may require
the report to be submitted within 15 working days following the end of each month.
(d) Request for advance or reimbursement —(1) Advance payments. Requests for Treasury check
advance payments will be submitted on Standard Form 270, Request for Advance or Reimbursement.
(This form will not be used for drawdowns under a letter of credit, electronic funds transfer or when
Treasury check advance payments are made to the grantee automatically on a predetermined basis.)
(2) Reimbursements. Requests for reimbursement under nonconstruction grants will also be submitted
on Standard Form 270. (For reimbursement requests under construction grants, see paragraph (e)(1) of
this section.)
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(3) The frequency for submitting payment requests is treated in §12.81(b)(3).
(e) Outlay report and request for reimbursement for construction programs —(1) Grants that support
construction activities paid by reimbursement method. (i) Requests for reimbursement under
construction grants will be submitted on Standard Form 271, Outlay Report and Request for
Reimbursement for Construction Programs. Federal agencies may, however, prescribe the Request for
Advance or Reimbursement form, specified in §12.81(d), instead of this form.
(ii) The frequency for submitting reimbursement requests is treated in §12.81(b)(3).
(2) Grants that support construction activities paid by letter of credit, electronic funds transfer or
Treasury check advance. (i) When a construction grant is paid by letter of credit, electronic funds
transfer or Treasury check advances, the grantee will report its outlays to the Federal agency using
Standard Form 271, Outlay Report and Request for Reimbursement for Construction Programs. The
Federal agency will provide any necessary special instruction. However, frequency and due date shall
be governed by §12.81(b) (3) and (4).
(ii) When a construction grant is paid by Treasury check advances based on periodic requests from the
grantee, the advances will be requested on the form specified in §12.81(d).
(iii) The Federal agency may substitute the Financial Status Report specified in §12.81(b) for the Outlay
Report and Request for Reimbursement for Construction Programs.
(3) Accounting basis. The accounting basis for the Outlay Report and Request for Reimbursement for
Construction Programs shall be governed by §12.81(b)(2).
§ 12.82 Retention and access requirements for records.
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(a) Applicability. (1) This section applies to all financial and programmatic records, supporting
documents, statistical records, and other records of grantees or subgrantees which are:
(i) Required to be maintained by the terms of this part, program regulations or the grant agreement, or
(ii) Otherwise reasonably considered as pertinent to program regulations or the grant agreement.
(2) This section does not apply to records maintained by contractors or subcontractors. For a
requirement to place a provision concerning records in certain kinds of contracts, see §12.76(i)(10).
(b) Length of retention period. (1) Except as otherwise provided, records must be retained for three
years from the starting date specified in paragraph (c) of this section.
(2) If any litigation, claim, negotiation, audit or other action involving the records has been started before
the expiration of the 3-year period, the records must be retained until completion of the action and
resolution of all issues which arise from it, or until the end of the regular 3-year period, whichever is later.
(3) To avoid duplicate recordkeeping, awarding agencies may make special arrangements with grantees
and subgrantees to retain any records which are continuously needed for joint use. The awarding
agency will request transfer of records to its custody when it determines that the records possess longterm retention value. When the records are transferred to or maintained by the Federal agency, the 3year retention requirement is not applicable to the grantee or subgrantee.
(c) Starting date of retention period —(1) General. When grant support is continued or renewed at
annual or other intervals, the retention period for the records of each funding period starts on the day the
grantee or subgrantee submits to the awarding agency its single or last expenditure report for that
period. However, if grant support is continued or renewed quarterly, the retention period for each year's
records starts on the day the grantee submits its expenditure report for the last quarter of the Federal
fiscal year. In all other cases, the retention period starts on the day the grantee submits its final
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expenditure report. If an expenditure report has been waived, the retention period starts on the day the
report would have been due.
(2) Real property and equipment records. The retention period for real property and equipment records
starts from the date of the disposition or replacement or transfer at the direction of the awarding agency.
(3) Records for income transactions after grant or subgrant support. In some cases grantees must report
income after the period of grant support. Where there is such a requirement, the retention period for the
records pertaining to the earning of the income starts from the end of the grantee's fiscal year in which
the income is earned.
(4) Indirect cost rate proposals, cost allocations plans, etc. This paragraph applies to the following types
of documents, and their supporting records: indirect cost rate computations or proposals, cost allocation
plans, and any similar accounting computations of the rate at which a particular group of costs is
chargeable (such as computer usage chargeback rates or composite fringe benefit rates).
(i) If submitted for negotiation. If the proposal, plan, or other computation is required to be submitted to
the Federal Government (or to the grantee) to form the basis for negotiation of the rate, then the 3-year
retention period for its supporting records starts from the date of such submission.
(ii) If not submitted for negotiation. If the proposal, plan, or other computation is not required to be
submitted to the Federal Government (or to the grantee) for negotiation purposes, then the 3-year
retention period for the proposal plan, or computation and its supporting records starts from end of the
fiscal year (or other accounting period) covered by the proposal, plan, or other computation.
(d) Substitution of microfilm. Copies made by microfilming, photocopying, or similar methods may be
substituted for the original records.
(e) Access to records —(1) Records of grantees and subgrantees. The awarding agency and the
Comptroller General of the United States, or any of their authorized representatives, shall have the right
of access to any pertinent books, documents, papers, or other records of grantees and subgrantees
which are pertinent to the grant, in order to make audits, examinations, excerpts, and transcripts.
(2) Expiration of right of access. The rights of access in this section must not be limited to the required
retention period but shall last as long as the records are retained.
(f) Restrictions on public access. The Federal Freedom of Information Act (5 U.S.C. 552) does not apply
to records Unless required by Federal, State, or local law, grantees and subgrantees are not required to
permit public access to their records.
§ 12.83 Enforcement.
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(a) Remedies for noncompliance. If a grantee or subgrantee materially fails to comply with any term of
an award, whether stated in a Federal statute or regulation, an assurance, in a State plan or application,
a notice of award, or elsewhere, the awarding agency may take one or more of the following actions, as
appropriate in the circumstances:
(1) Temporarily withhold cash payments pending correction of the deficiency by the grantee or
subgrantee or more severe enforcement action by the awarding agency,
(2) Disallow (that is, deny both use of funds and matching credit for) all or part of the cost of the activity
or action not in compliance,
(3) Wholly or partly suspend or terminate the current award for the grantee's or subgrantee's program,
(4) Withhold further awards for the program, or
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(5) Take other remedies that may be legally available.
(b) Hearings, appeals. In taking an enforcement action, the awarding agency will provide the grantee or
subgrantee an opportunity for such hearing, appeal, or other administrative proceeding to which the
grantee or subgrantee is entitled under any statute or regulation applicable to the action involved.
(c) Effects of suspension and termination. Costs of grantee or subgrantee resulting from obligations
incurred by the grantee or subgrantee during a suspension or after termination of an award are not
allowable unless the awarding agency expressly authorizes them in the notice of suspension or
termination or subsequently. Other grantee or subgrantee costs during suspension or after termination
which are necessary and not reasonably avoidable are allowable if:
(1) The costs result from obligations which were properly incurred by the grantee or subgrantee before
the effective date of suspension or termination, are not in anticipation of it, and, in the case of a
termination, are noncancellable, and,
(2) The costs would be allowable if the award were not suspended or expired normally at the end of the
funding period in which the termination takes effect.
(d) Relationship to Debarment and Suspension. The enforcement remedies identified in this section,
including suspension and termination, do not preclude grantee or subgrantee from being subject to
“Debarment and Suspension” under E.O. 12549 (see §12.75).
§ 12.84 Termination for convenience.
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Except as provided in §12.83 awards may be terminated in whole or in part only as follows:
(a) By the awarding agency with the consent of the grantee or subgrantee in which case the two parties
shall agree upon the termination conditions, including the effective date and in the case of partial
termination, the portion to be terminated, or
(b) By the grantee or subgrantee upon written notification to the awarding agency, setting forth the
reasons for such termination, the effective date, and in the case of partial termination, the portion to be
terminated. However, if, in the case of a partial termination, the awarding agency determines that the
remaining portion of the award will not accomplish the purposes for which the award was made, the
awarding agency may terminate the award in its entirety under either §12.83 or paragraph (a) of this
section.
After-the-Grant Requirements
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§ 12.90 Closeout.
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(a) General. The Federal agency will close out the award when it determines that all applicable
administrative actions and all required work of the grant has been completed.
(b) Reports. Within 90 days after the expiration or termination of the grant, the grantee must submit all
financial, performance, and other reports required as a condition of the grant. Upon request by the
grantee, Federal agencies may extend this timeframe. These may include but are not limited to:
(1) Final performance or progress report.
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(2) Financial Status Report (SF 269) or Outlay Report and Request for Reimbursement for Construction
Programs (SF–271) (as applicable.)
(3) Final request for payment (SF–270) (if applicable).
(4) Invention disclosure (if applicable).
(5) Federally-owned property report: In accordance with §12.72(f), a grantee must submit an inventory of
all Federally owned property (as distinct from property acquired with grant funds) for which it is
accountable and request disposition instructions from the Federal agency of property no longer needed.
(c) Cost adjustment. The Federal agency will, within 90 days after receipt of reports in paragraph (b) of
this section, make upward or downward adjustments to the allowable costs.
(d) Cash adjustments. (1) The Federal agency will make prompt payment to the grantee for allowable
reimbursable costs.
(2) The grantee must immediately refund to the Federal agency any balance of unobligated
(unencumbered) cash advanced that is not authorized to be retained for use on other grants.
§ 12.91 Later disallowances and adjustments.
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The closeout of a grant does not affect:
(a) The Federal agency's right to disallow costs and recover funds on the basis of a later audit or other
review;
(b) The grantee's obligation to return any funds due as a result of later refunds, corrections, or other
transactions;
(c) Records retention as required in §12.82;
(d) Property management requirements in §§12.71 and 12.72; and
(e) Audit requirements in §12.66.
§ 12.92 Collection of amounts due.
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(a) Any funds paid to a grantee in excess of the amount to which the grantee is finally determined to be
entitled under the terms of the award constitute a debt to the Federal Government. If not paid within a
reasonable period after demand, the Federal agency may reduce the debt by:
(1) Making an administrative offset against other requests for reimbursements,
(2) Withholding advance payments otherwise due to the grantee, or
(3) Other action permitted by law.
(b) Except where otherwise provided by statutes or regulations, the Federal agency will charge interest
on an overdue debt in accordance with the Federal Claims Collection Standards (4 CFR Ch. II). The
date from which interest is computed is not extended by litigation or the filing of any form of appeal.
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Entitlements [Reserved]
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Subpart D [Reserved]
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Subpart E—Buy American Requirements for Assistance Programs
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Source: 59 FR 36715, July 19, 1994, unless otherwise noted.
Buy American Act—Supplies
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§ 12.700 Scope.
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This subpart implements section 307 of the Omnibus Consolidated Appropriations Act of 1997 (Public
Law 104–208, 110 Stat. 3009) and section 501 of the Energy and Water Development Appropriations
Act, 1997 (Public Law 104–206, 110 Stat. 2984). For awards made under the authority of section 307(a)
of Public Law 104–208, this subpart requires that no funds made available in the Act may be expended
by an entity unless the entity agrees that in expending the funds the entity will comply with sections 2
through 4 of the Act of March 3, 1933 (41 U.S.C. 10a–10c; popularly known as the “Buy American Act”).
It applies to procurement contracts under grants and cooperative agreements which provide for the
purchase of equipment and products. Section 501 of Public Law 104–206, 110 Stat. 2984, only applies
to awards made by the Bureau of Reclamation. In addition, for these awards, there is only a requirement
that in providing financial assistance to, or entering into any contract with, any entity using funds made
available in this Act, the Secretary, to the greatest extent practicable, will provide to the entity a notice
describing a statement within the Act made by Congress. This statement concerns the sense of the
Congress that to the greatest extent practicable, all equipment and products purchased with funds made
available in the Act, should be American-made. Therefore, for Fiscal Year 1997 awards, only the
requirements in Section 12.700 and 12.710 will apply to awards made by the Bureau of Reclamation.
[61 FR 68667, Dec. 30, 1996]
§ 12.705 Definitions.
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Components, as used in this subpart, means those articles, materials, and supplies incorporated directly
into the end products.
Concern, as used in this subpart, means any business entity organized for profit (even if its ownership is
in the hands of a nonprofit entity) with a place of business located in the United States and which makes
a significant contribution to the U.S. economy through payment of taxes and/or use of American
products, to an individual, partnership, corporation, joint venture, association, or cooperative.
Domestic end product, as used in this subpart, means (a) an unmanufactured end product mined or
produced in the United States; or (b) an end product manufactured in the United States, if the cost of its
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components mined, produced, or manufactured in the United States exceeds 50 percent of the cost of
all its components. (In determining if an end product is domestic, only the end product and its
components shall be considered.) The cost of each component includes transportation costs to the place
of incorporation into the end product and any applicable duty (whether or not a duty-free entry certificate
is issued). Components of foreign origin of the same class or kind for which determinations have been
made in accordance with Section 12.710(d) (3) and (4) are treated as domestic. Scrap generated,
collected, and prepared for processing in the United States is considered domestic. On acquisitions
above $25,000 in value, components of Canadian origin are treated as domestic.
Domestic offer, as used in this subpart, means an offered price for a domestic end product, including
transportation to destination.
End product, as used in this subpart, means those articles, materials, and supplies to be acquired for
public use under the grant, cooperative agreement, or procurement contract awarded under the grant or
cooperative agreement.
Foreign end product, as used in this subpart, means an end product other than a domestic end product.
Foreign offer, as used in this subpart, means an offered price for a foreign end product, including
transportation to destination and duty (whether or not a duty-free entry certificate is issued).
Instrumentality, as used in this subpart, does not include an agency or division of the government of a
country.
Labor surplus area, as used in this subpart, means a geographical area identified by the Department of
Labor in accordance with 20 CFR part 654, subpart A, as an area of concentrated unemployment or
underemployment or an area of labor surplus.
Labor surplus area concern, as used in this subpart, means a concern that together with its first-tier
subcontractors will perform substantially in labor surplus areas. Performance is substantially in labor
surplus areas if the costs incurred under the contract on account of manufacturing, production, or
performance of appropriate services in labor surplus areas exceed 50 percent of the contract price.
United States, as used in this subpart, means the states thereof, the District of Columbia, and the
territories and possessions of the United States.
[59 FR 36715, July 19, 1994, as amended at 61 FR 68668, Dec. 30, 1996]
§ 12.710 Policy.
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(a) In the case of any equipment or product that may be authorized to be purchased with financial
assistance provided using funds made available under Public Law 104–208, it is the sense of Congress
that entities receiving the assistance should, in expending the assistance, purchase only Americanmade equipment and products.
(b) In awarding financial assistance under Public Law 104–208, 110 Stat. 3009, bureaus and offices
excluding the Bureau of Reclamation will provide to each recipient of the assistance the following notice:
Notice:Pursuant to sec. 307 of the Omnibus Consolidated Appropriations Act of 1997, Public
Law 104–208, 110 Stat. 3009, please be advised of the following:
In the case of any equipment or product that may be authorized to be purchased with financial
assistance provided using funds made available in this act, it is the sense of the Congress
that entities receiving the assistance should, in expending the assistance, purchase only
American-made equipment and products.
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(c) In awarding financial assistance using funds made available under Public Law 104–206, to the
greatest extent practicable, the Bureau of Reclamation will provide to each recipient of the assistance
the following notice:
Notice:Pursuant to sec. 501 of the Energy and Water Development Appropriations Act, 1997,
Public Law 104–206, 110 Stat. 2984, please be advised of the following:
It is the sense of the Congress, that to the greatest extent practicable, all equipment and
products purchased with funds made available in this act should be American-made.
(d) The Buy American Act requires that only domestic end products be acquired for public use, except
articles, materials, and supplies—
(1) For use outside the United States;
(2) For which the cost would be unreasonable, as determined in accordance with §12.715;
(3) For which the agency head determines that domestic preference would be inconsistent with the
public interest; or
(4) That are not mined, produced, or manufactured in the United States in sufficient and reasonable
available commercial quantities, of a satisfactory quality (see §12.720).
(e) The grantee's contracting officer may make a nonavailability determination under §12.710(d)(4) for a
procurement contract awarded under the grant or cooperative agreement if—
(1) The procurement action was conducted by full and open competition;
(2) The procurement action was publicly advertised; and
(3) No offer for a domestic end product was received; or
(f) The head of the grantee's contracting activity or designee may make a nonavailability determination
under §12.710(d)(4) for any circumstance other than specified in paragraph (e) of this section.
[59 FR 36715, July 19, 1994, as amended at 59 FR 65500, Dec. 20, 1994; 61 FR 39084, July 26, 1996;
61 FR 68668, Dec. 30, 1996]
§ 12.715 Evaluating offers.
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(a) Unless the head of the grantee organization or a designee at a level no lower than the grantee's
designated awarding official determines otherwise, the offered price of a domestic end product is
unreasonable when the lowest acceptable domestic offer exceeds the lowest acceptable foreign offer
(see §12.705), inclusive of duty, by—
(1) More than 6 percent, if the domestic offer is from a large business that is not a labor surplus area
concern; or
(2) More than 12 percent, if the domestic offer is from a small business concern or any labor surplus
area concern.
(b) The evaluation in paragraph (a) of this section shall be applied on an item-by-item basis or to any
group of items on which award may be made as specifically provided by the solicitation.
(c) If an award of more than $250,000 would be made to a domestic concern if the 12-percent factor
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were applied, but not if the 6-percent factor were applied, the head of the grantee organization or a
designee at a level no lower than the grantee's designated awarding official shall decide whether award
to the domestic concern would involve unreasonable cost.
§ 12.720 Excepted articles, materials, and supplies.
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(a) As indicated in the Federal Acquisition Regulation (FAR), one or more agencies have determined
that the articles, materials, and supplies on the list referred to in paragraph (b) of this section are not
mined, produced, or manufactured in the United States in sufficient and reasonably available
commercial quantities of a satisfactory quality. This referenced list in paragraph (b) of this section is
furnished for information only; an article, material or supply listed therein may be treated as domestic
only when the head of the grantee organization or a designee at a level no lower than the grantee's
designated awarding official has made a determination that it is not mined, produced, or manufactured in
the United States in sufficient and reasonably available quantities of a satisfactory quality.
(b) Refer to the current list of excepted articles, materials, and supplies in FAR 25.108 (48 CFR 25.108).
§ 12.725 Solicitation provisions and contract clause.
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(a) When quotations are obtained orally, vendors shall be informed that only domestic end products,
other than end products excepted on a blanket or individual basis (see §12.720), shall be acceptable,
unless the price for an offered domestic end product is unreasonable (see §12.715).
(b) The grantee awarding officer shall insert the clause at §12.730, Buy American Act—Supplies, in
solicitations for procurement contracts awarded under the grant or cooperative agreement for the
purchase of supplies, or for services involving the furnishing of supplies, for use within the United States.
§ 12.730 Buy American Act—Supplies.
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As prescribed in §12.725, insert the following clause:
Buy American Act—Supplies
(a) The Buy American Act (41 U.S.C. 10) provides that the Government give preference to
domestic end products.
Components, as used in this clause, means those articles, materials, and supplies
incorporated directly into the end products.
Domestic end product, as used in this clause, means an unmanufactured end product mined
or produced in the United States, if the cost of its components mined, produced, or
manufactured in the United States exceeds 50 percent of the cost of all its components.
Components of foreign origin of the same class or kind as the products referred to in
paragraphs (b)(2) or (3) of this clause shall be treated as domestic.
End products, as used in this clause, means those articles, materials, and supplies to be
acquired for public use under this contract.
(b) The contractor shall deliver only domestic end products, except those—
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(1) For use outside the United States;
(2) That the Government determines are not mined, produced, or manufactured in the United
States in sufficient and reasonably available commercial quantities of a satisfactory quality;
(3) For which the head of the grantee organization or a designee at a level no lower than the
grantee's designated awarding official determines that domestic preference would be
inconsistent with the public interest; or
(4) For which the head of the grantee organization or a designee at a level no lower than the
grantee's designated awarding official determines the cost to be unreasonable (see §12.715).
(End of clause)
Buy American Act—Construction Materials
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§ 12.800 Scope.
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This subpart implements the Buy American Act (41 U.S.C. 10). It applies to procurement contracts
awarded under a grant or cooperative agreement for the construction, alteration, or repair of any public
building or public work in the United States.
§ 12.805 Definitions.
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Components, as used in this subpart, means those articles, materials, and supplies incorporated directly
into construction materials.
Construction, as used in this subpart, means construction, alteration, or repair of any public building or
public work in the United States.
Construction materials, as used in this subpart, means an article, material, and supply brought to the
construction site for incorporation into the building or work.
Construction material also includes an item brought to the site pre-assembled from articles, materials,
and supplies. However, emergency life safety systems, such as emergency lighting, fire alarm, and
audio evacuation systems, which are discrete systems incorporated into a public building or work and
which are produced as a complete system, shall be evaluated as a single and distinct construction
material regardless of when or how the individual parts or components of such systems are delivered to
the construction site.
Domestic construction material, as used in this section, means: (a) An unmanufactured construction
material mined or produced in the United States, or (b) a construction material manufactured in the
United States, if the cost of its components mined, produced, or manufactured in the United States
exceeds 50 percent of the cost of all its components. (In determining whether a construction material is
domestic, only the construction material and its components shall be considered.) The cost of each
component includes transportation costs to the place of incorporation into the construction material and
any applicable duty (whether or not a duty-free entry certificate is issued). Components of foreign origin
of the same class or kind for which determinations have been made in accordance with §12.810(a)(3)
are treated as domestic.
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Foreign construction material, as used in this section, means as construction material other than a
domestic construction material.
United States (see §12.705).
§ 12.810 Policy.
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(a) The Buy American Act requires that only domestic construction materials be used in construction in
the United States, except when—
(1) The cost would be unreasonable as determined in accordance with §12.815;
(2) The head of the grantee organization or a designee at a level no lower than the grantee's designated
awarding official determines that use of a particular domestic construction material would be
impracticable; or
(3) The head of the grantee organization or a designee at a level no lower than the grantee's designated
awarding official determines the construction material is not mined, produced, or manufactured in the
United States in sufficient and reasonably available commercial quantities of a satisfactory quality (see
§12.720).
(b) When it is determined for any reasons stated in this section that certain foreign construction materials
may be used, the excepted materials shall be listed in the agreement. Findings justifying the exception
shall be available for public inspection.
§ 12.815 Evaluating offers.
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(a) The restrictions of the Buy American Act do not apply when the head of the grantee organization or a
designee at a level no lower than the grantee's designated awarding official determines that using a
particular domestic construction material would unreasonably increase the cost or would be
impracticable.
(b) When proposed awards are submitted to the head of the grantee organization or a designee at a
level no lower than the grantee's designated awarding official for approval, each submission shall
include a description of the materials, including unit and quantity, estimated costs, location of the
construction project, name and address of the proposed contractor, and a detailed justification of the
impracticability of using domestic materials.
§ 12.820 Violations.
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Violation of the Buy American Act in the performance of a procurement construction contract under a
grant or cooperative agreement is a cause for debarment. Information concerning a failure to comply
with the clause at §12.830, Buy American Act—Construction Materials, shall be promptly reported,
investigated, and referred, when appropriate to the appropriate U.S. Department of the Interior employee
responsible for administering the grant or cooperative agreement. (For debarment procedures, see
subpart D of this part).
§ 12.825 Solicitation provision and contract clause.
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The grantee awarding official shall insert the clause at §12.830, Buy American Act—Construction
Materials, in solicitations for procurement contracts awarded under a grant or cooperative agreement for
construction inside the United States.
§ 12.830 Buy American Act—Construction materials.
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As prescribed in §12.825, insert the following clause in solicitations for procurement contracts awarded
under a grant or cooperative agreement for construction inside the United States:
Buy American Act—Construction Materials
(a) The Buy American Act (41 U.S.C. 10) provides that the Government give preference to
domestic construction material.
Components, used in this clause, means those articles, materials, and supplies incorporated
directly into construction materials.
Construction material, as used in this clause, means an article, material, or supply brought to
the construction site for incorporation into the building or work. Construction material also
includes an item brought to the site pre-assembled from articles, materials or supplies.
However, emergency life safety systems, such as emergency lighting, fire alarm, and audio
evacuation systems, which are discrete systems incorporated into a public building or work
and which are produced as a complete system, shall be evaluated as a single and distinct
construction material regardless of when or how the individual parts or components of such
systems are delivered to the construction site.
Domestic construction material, as used in this clause, means (a) an unmanufactured
construction material mined or produced in the United States, or (b) a construction material
manufactured in the United States, if the cost of its components mined, produced, or
manufactured in the United States exceeds 50 percent of the cost of all its components.
Components of foreign origin of the same class or kind as the construction materials
determined to be unavailable pursuant to §12.810(a)(3) of 43 CFR part 12, subpart E shall be
treated as domestic.
(b) The contractor agrees that only domestic construction material will be used by the
contractor, subcontractors, materialmen, and suppliers in the performance of this agreement,
except for foreign construction materials, if any, listed in this agreement.
(End of clause)
Subpart F—Uniform Administrative Requirements for Grants and Agreements With
Institutions of Higher Education, Hospitals, and Other Non-Profit Organizations
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Source: 60 FR 17238, Apr. 5, 1995, unless otherwise noted.
General
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§ 12.901 Purpose.
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This subpart establishes uniform administrative requirements for Federal grants and agreements
awarded to institutions of higher education, hospitals, and other non-profit organizations.
§ 12.902 Definitions.
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Accrued expenditures means the charges incurred by the recipient during a given period requiring the
provision of funds for:
(1) Goods and other tangible property received;
(2) Services performed by employees, contractors, subrecipients, and other payees; and,
(3) Other amounts becoming owed under programs for which no current services or performance is
required.
Accrued income means the sum of:
(1) Earnings during a given period from:
(i) Services performed by the recipient, and
(ii) Goods and other tangible property delivered to purchasers, and
(2) Amounts becoming owed to the recipient for which no current services or performance is required by
the recipient.
Acquisition cost of equipment means the net invoice price of the equipment, including the cost of
modifications, attachments, accessories, or auxiliary apparatus necessary to make the property usable
for the purpose for which it was acquired. Other charges, such as the cost of installation, transportation,
taxes, duty or protective in-transit insurance, shall be included or excluded from the unit acquisition cost
in accordance with the recipient's regular accounting practices.
Advance means a payment made by Treasury check or other appropriate payment mechanism to a
recipient upon its request either before outlays are made by the recipient or through the use of
predetermined payment schedules.
Award means financial assistance that provides support or stimulation to accomplish a public purpose.
Awards include grants and other agreements in the form of money or property in lieu of money, by the
Federal Government to an eligible recipient. The term does not include: technical assistance, which
provides services instead of money; other assistance in the form of loans, loan guarantees, interest
subsidies, or insurance; direct payments of any kind to individuals; and, contracts which are required to
be entered into and administered under procurement laws and regulations.
Cash contributions means the recipient's cash outlay, including the outlay of money contributed to the
recipient by third parties.
Closeout means the process by which a Federal agency determines that all applicable administrative
actions and all required work of the award have been completed by the recipient and Federal awarding
agency.
Contract means a procurement contract under an award or subaward, and a procurement subcontract
under a recipient's or subrecipient's contract.
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Cost sharing or matching means that portion of project or program costs not borne by the Federal
Government.
Date of completion means the date on which all work under an award is completed or the date on the
award document, or any supplement or amendment thereto, on which Federal sponsorship ends.
Disallowed costs means those charges to an award that the Federal awarding agency determines to be
unallowable, in accordance with the applicable Federal cost principles or other terms and conditions
contained in the award.
Equipment means tangible nonexpendable personal property including exempt property charged directly
to the award having a useful life of more than one year and an acquisition cost of $5,000 or more per
unit. However, consistent with recipient policy, lower limits may be established.
Excess property means property under the control of any Federal awarding agency that, as determined
by the Secretary, is no longer required for its needs or the discharge of its responsibilities.
Exempt property means tangible personal property acquired in whole or in part with Federal funds,
where the Federal awarding agency has statutory authority to vest title in the recipient without further
obligation to the Federal Government. An example of exempt property authority is contained in the
Federal Grant and Cooperative Agreement Act (31 U.S.C. 6306), for property acquired under an award
to conduct basic or applied research by a non-profit institution of higher education or non-profit
organization whose principal purpose is conducting scientific research.
Federal funds authorized means the total amount of Federal funds obligated by the Federal Government
for use by the recipient. This amount may include any authorized carryover of unobligated funds from
prior funding periods when permitted by agency regulations or agency implementing instructions.
Federal share of real property, equipment, or supplies means that percentage of the property's
acquisition costs and any improvement expenditures paid with Federal funds.
Funding period means the period of time when Federal funding is available for obligation by the
recipient.
Intangible property and debt instruments means, but is not limited to, trademarks, copyrights, patents
and patent applications and such property as loans, notes and other debt instruments, lease
agreements, stock and other instruments of property ownership, whether considered tangible or
intangible.
Obligations means the amounts of orders placed, contracts and grants awarded, services received and
similar transactions during a given period that require payment by the recipient during the same or a
future period.
Outlays or expenditures means charges made to the project or program. They may be reported on a
cash or accrual basis. For reports prepared on a cash basis, outlays are the sum of cash disbursements
for direct charges for goods and services, the amount of indirect expense charged, the value of third
party in-kind contributions applied and the amount of cash advances and payments made to
subrecipients. For reports prepared on an accrual basis, outlays are the sum of: cash disbursements for
direct charges for goods and services; the amount of indirect expense incurred; the value of in-kind
contributions applied; and the net increase (or decrease) in the amounts owed by the recipient for goods
and other property received, for services performed by employees, contractors, subrecipients and other
payees and other amounts becoming owed under programs for which no current services or
performance are required.
Personal property means property of any kind except real property. It may be tangible, having physical
existence, or intangible, having no physical existence, such as copyrights, patents, or securities.
Prior approval means written approval by an authorized official evidencing prior consent.
Program income means gross income earned by the recipient that is directly generated by a supported
activity or earned as a result of the award (see exclusions in §12.924 (e) and (h)). Program income
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includes, but is not limited to, income from fees for services performed, the use or rental of real or
personal property acquired under Federally-funded projects, the sale of commodities or items fabricated
under an award, license fees and royalties on patients and copyrights, and interest on loans made with
award funds. Interest earned on advances of Federal funds is not program income. Except as otherwise
provided in Federal awarding agency regulations or the terms and conditions of the award, program
income does not include the receipt of principal on loans, rebates, credits, discounts, etc., or interest
earned on any of them.
Project costs means all allowable costs, as set forth in the applicable Federal cost principles, incurred by
a recipient and the value of the contributions made by third parties in accomplishing the objectives of the
award during the project period.
Project period means the period established in the award document during which Federal sponsorship
begins and ends.
Property means, unless otherwise stated, real property, equipment, supplies, intangible property and
debt instruments.
Real property means land, including land improvements, structures and appurtenances thereto, but
excludes movable machinery and equipment.
Recipient means an organization receiving financial assistance directly from Federal awarding agencies
to carry out a project or program. The term includes public and private institutions of higher education,
public and private hospitals, and other quasi-public and private non-profit organizations such as, but not
limited to, community action agencies, research institutes, educational associations, and health centers.
The term may include, at the discretion of the Federal awarding agency, foreign or international
organizations (such as agencies of the United Nations) which are recipients, subrecipients, or
contractors or subcontractors of recipients or subrecipients. The term does not include governmentowned contractor-operated facilities or research centers providing continued support for missionoriented, large-scale programs that are government-owned or controlled, or are designated as Federallyfunded research and development centers.
Research and development means all research activities, both basic and applied, and all development
activities that are supported at universities, colleges, and other non-profit institutions.
(1) Research is defined as a systematic study directed toward fuller scientific knowledge or
understanding of the subject studied.
(2) Development is the systematic use of knowledge and understanding gained from research directed
toward the production of useful materials, devices, systems, or methods, including design and
development of prototypes and processes. The term research also includes activities involving the
training of individuals in research techniques where such activities utilize the same facilities as other
research and development activities and where such activities are not included in the instruction
function.
Small awards means a grant or cooperative agreement not exceeding the small purchase threshold
fixed at 41 U.S.C. 403(11) (currently $100,000).
Subaward means an award of financial assistance in the form of money, or property in lieu of money,
made under an award by a recipient to an eligible subrecipient or by a subrecipient to a lower tier
subrecipient. The term includes financial assistance when provided by any legal agreement, even if the
agreement is called a contract, but does not include procurement of goods and services nor does it
include any form of assistance which is excluded from the definition of “award” in this section.
Subrecipient means the legal entity to which a subaward is made and which is accountable to the
recipient for the use of the funds provided. The term may include foreign or international organizations
(such as agencies of the United Nations) at the discretion of the Federal awarding agency.
Supplies means all personal property excluding equipment, intangible property, and debt instruments as
defined in this section, and inventions of a contractor conceived or first actually reduced to practice in
the performance of work under a funding agreement (“subject inventions”), as defined in 37 CFR part
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401, “Rights to Inventions Made by Nonprofit Organizations and Small Business Firms Under
Government Grants, Contracts, and Cooperative Agreements.”
Suspension means an action by a Federal awarding agency that temporarily withdraws Federal
sponsorship under an award, pending corrective action by the recipient or pending a decision to
terminate the award by the Federal awarding agency. Suspension of an award is a separate action from
suspension under the Department of the Interior Regulations implementing E.O.'s 12549 and 12689,
“Debarment and Suspension.” See subpart D of 43 CFR part 12.
Termination means the cancellation of Federal sponsorship, in whole or in part, under an agreement at
any time prior to the date of completion.
Third party in-kind contributions means the value of noncash contributions provided by non-Federal third
parties. Third party in-kind contributions may be in the form of real property, equipment, supplies and
other expendable property, and the value of goods and services directly benefiting and specifically
identifiable to the project or program.
Unliquidated obligations, for financial reports prepared on a cash basis, means the amount of obligations
incurred by the recipient that have not been paid. For reports prepared on an accrued expenditure basis,
they represent the amount of obligations incurred by the recipient for which an outlay has not been
recorded.
Unobligated balance means the portion of the funds authorized by Federal awarding agency that has not
been obligated by the recipient and is determined by deducting the cumulative obligations from the
cumulative funds authorized.
Unrecovered indirect cost means the difference between the amount awarded and the amount which
could have been awarded under the recipient's approved negotiated indirect cost rate.
Working capital advance means a procedure whereby funds are advanced to the recipient to cover its
estimated disbursement needs for a given initial period.
§ 12.903 Effect on other issuances.
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For awards subject to this subpart, all administrative requirements of codified program regulations,
program manuals, handbooks and other nonregulatory materials which are inconsistent with the
requirements of this subpart shall be superseded, except to the extent they are required by statute, or
authorized in accordance with the deviations provision in Section 12.904.
§ 12.904 Deviations.
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The Office of Management and Budget (OMB) may grant exceptions for classes of grants or recipients
subject to the requirements of this subpart when exceptions are not prohibited by statute. However, in
the interest of maximum uniformity, exceptions from the requirements of this subpart shall be permitted
only in unusual circumstances. Federal awarding agencies may apply more restrictive requirements to a
class of recipients when approved by OMB. All requests for class deviations shall be processed through
the Assistant Secretary-Policy, Management, and Budget. Federal awarding agencies may apply less
restrictive requirements when awarding small awards, except for those requirements which are statutory.
Exceptions on a case-by-case basis may also be made by Federal awarding agencies. Bureau/office
application of less restrictive requirements when awarding small awards, except for those requirements
which are statutory, as well as exceptions on a case-by-case basis, will be handled by designated
officials identified in bureau/office procedures.
§ 12.905 Subawards.
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Unless sections of this subpart specifically exclude subrecipients from coverage, the provisions of this
subpart shall be applied to subrecipients performing work under awards if such subrecipients are
institutions of higher education, hospitals, or other non-profit organizations. State and local government
subrecipients are subject to the provisions of regulations implementing the grants management common
rule, “Uniform Administrative Requirements for Grants and Cooperative Agreements to State and Local
Governments,” 43 CFR part 12.
Pre-Award Requirements
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§ 12.910 Purpose.
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Sections 12.011 through 12.917 prescribe forms and instructions and other pre-award matters to be
used in applying for Federal awards.
§ 12.911 Pre-award policies.
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(a) Use of Grants and Cooperative Agreements, and Contracts. In each instance, the Federal awarding
agency shall decide on the appropriate award instrument (i.e., grant, cooperative agreement, or
contract). The Federal Grant and Cooperative Agreement Act (31 U.S.C. 6301–6308) governs the use of
grants, cooperative agreements and contracts. 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. 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.” Contracts shall be used when the principal purpose is acquisition of property or services for
the direct benefit or use of the Federal Government.
(b) Public Notice and Priority Setting. Federal awarding agencies shall notify the public of their funding
priorities for discretionary grant programs, unless funding priorities are established by Federal statute.
§ 12.912 Forms for applying for Federal assistance.
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(a) Federal awarding agencies shall comply with the applicable report clearance requirements of 5 CFR
part 1320, “Controlling Paperwork Burdens on the Public,” with regard to all forms used by the Federal
awarding agency in place of or as a supplement to the Standard Form 424 (SF–424) series.
(b) Applicants shall use the SF–424 series or those forms and instructions prescribed by the Federal
awarding agency.
(c) For Federal programs covered by E.O. 12372, “Intergovernmental Review of Federal Programs,” the
applicant shall complete the appropriate sections of the SF–424 (Application for Federal Assistance)
indicating whether the application was subject to review by the State Single Point of Contact (SPOC).
The name and address of the SPOC for a particular State can be obtained from the Federal awarding
agency or the Catalog of Federal Domestic Assistance. The SPOC shall advise the applicant whether
the program for which application is made has been selected by that State for review. (See also 43 CFR
part 9).
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(d) Federal awarding agencies that do not use the SF–424 form will indicate whether the application is
subject to review by the State under E.O. 12372.
§ 12.914 Special award conditions.
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(a) Federal awarding agencies may impose additional requirements as needed, if an applicant or
recipient:
(1) Has a history of poor performance;
(2) Is not financially stable;
(3) Has a management system that does not meet the standards prescribed in this part;
(4) Has not conformed to the terms and conditions of a previous award; or
(5) Is not otherwise responsible.
(b) Additional requirements may only be imposed provided that the applicant or recipient is notified in
writing as to:
(1) The nature of the additional requirements;
(2) The reason why the additional requirements are being imposed;
(3) The nature of the corrective action needed;
(4) The time allowed for completing the corrective actions; and
(5) The method for requesting reconsideration of the additional requirements imposed.
(c) Any special conditions shall be promptly removed once the conditions that prompted them have been
corrected.
§ 12.915 Metric system of measurement.
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The Metric Conversion Act, as amended by the Omnibus Trade and Competitiveness Act (15 U.S.C.
205) 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 or dates in consultation with the
Secretary of Commerce when the metric system of measurement will be used in the agency's
procurements, grants, and other business-related 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. Federal awarding agencies will follow the provisions of
E.O. 12770, “Metric usage in Federal Government Programs.” When applicable, the awarding agency
shall request that measurement-sensitive information to be included as part of the application, be
expressed in metric units. When required by the awarding agency, for grants to recipients, the following
term and condition will be incorporated into the grant:
Provision
All progress and final reports, other reports, or
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All progress and final reports, other reports, or publications produced under this award shall
employ the metric system of measurements to the maximum extent practicable. Both metric
and inch-pound units (dual units) may be used if necessary during any transition period(s).
However, the recipient may use non-metric measurements to the extent that the recipient has
supporting documentation that the use of metric measurements is impracticable or is likely to
cause significant inefficiencies or loss of markets to the recipient, such as when foreign
competitors are producing competing products in non-metric units.
(End of provision)
§ 12.916 Resource Conservation and Recovery Act (RCRA) (Pub. L. 94–580 codified at
42 U.S.C. 6962).
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Under the Act, any State agency or agency of a political subdivision of a State that is using appropriated
Federal funds must comply with section 6002 of RCRA. Section 6002 of RCRA 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) (40 CFR parts 247–
254). Accordingly, State and local institutions of higher education and hospitals that receive direct
Federal awards or other Federal funds shall give preference in their procurement programs funded with
Federal funds to the purchase of recycled products pursuant to the EPA guidelines.
§ 12.917 Certifications and representations.
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Unless prohibited by statute or codified regulation, each Federal awarding agency is authorized and
encouraged to allow recipients to submit certifications and representations required by statute, executive
order, or regulation on an annual basis, if the recipients have ongoing and continuing relationships with
the agency. Annual certifications and representations shall be signed by responsible officials with the
authority to ensure recipients' compliance with the pertinent requirements.
Post-Award Requirements
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Financial and Program Management
§ 12.920 Purpose of financial and program management.
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Sections 12.921 through 12.928 prescribe standards for financial management systems, methods for
making payments and rules for: satisfying cost sharing and matching requirements, accounting for
program income, budget revision approvals, making audits, determining allowability of cost, and
establishing fund availability.
§ 12.921 Standards for financial management systems.
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(a) Federal awarding agencies shall require recipients to relate financial data to performance data and
develop unit cost information whenever practical.
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(b) Recipients' financial management systems shall provide for the following:
(1) Accurate, current and complete disclosure of the financial results of each Federally-sponsored
project or program in accordance with the reporting requirements set forth in §12.952. If a Federal
awarding agency requires reporting on an accrual basis from a recipient that maintains its records on
other than an accrual basis, the recipient shall not be required to establish an accrual accounting
system. These recipients may develop such accrual data for their reports on the basis of an analysis of
the documentation on hand.
(2) Records that identify adequately the source and application of funds for Federally-sponsored
activities. These records shall contain information pertaining to Federal awards, authorizations,
obligations, unobligated balances, assets, outlays, income and interest.
(3) Effective control over and accountability for all funds, property and other assets. Recipients shall
adequately safeguard all such assets and assure they are used solely for authorized purposes.
(4) Comparison of outlays with budget amounts for each award. Whenever appropriate, financial
information should be related to performance and unit cost data.
(5) Written procedures to minimize the time elapsing between the transfer of funds to the recipient from
the U.S. Treasury and the issuance or redemption of checks, warrants or payments by other means for
program purposes by the recipient. To the extent that the provisions of the Cash Management
Improvement Act (CMIA) (31 U.S.C. 6501 note) govern, payment methods of State agencies,
instrumentalities, and fiscal agents shall be consistent with CMIA Treasury-State Agreements or the
CMIA default procedures codified at 31 CFR part 205, “Withdrawal of Cash from the Treasury for
Advances under Federal Grant and Other Programs.”
(6) Written procedures for determining the reasonableness, allocability and allowability of costs in
accordance with the provisions of the applicable Federal cost principles and the terms and conditions of
the award.
(7) Accounting records, including cost accounting records, that are supported by source documentation.
(c) Where the Federal Government guarantees or insures the repayment of money borrowed by the
recipient, the Federal awarding agency, at its discretion, may require adequate bonding and insurance if
the bonding and insurance requirements of the recipient are not deemed adequate to protect the interest
of the Federal Government.
(d) The Federal awarding agency may require adequate fidelity bond coverage where the recipient lacks
sufficient coverage to protect the Federal Government's interest.
(e) Where bonds are required in the situations described above in §12.921 (c) and (d), the bonds shall
be obtained from companies holding certificates of authority as acceptable sureties, as prescribed in 31
CFR part 223, “Surety Companies Doing Business with the United States.”
§ 12.922 Payment.
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(a) Payment methods shall minimize the time elapsing between the transfer of funds from the United
States Treasury and the issuance or redemption of checks, warrants, or payment by other means by the
recipients. Payment methods of State agencies or instrumentalities shall be consistent with TreasuryState CMIA agreements or default procedures codified at 31 CFR part 205.
(b) Recipients are to be paid in advance, provided they maintain or demonstrate the willingness to
maintain or demonstrate written procedures that minimize the time elapsing between the transfer of
funds and disbursement by the recipient, and financial management systems that meet the standards for
fund control and accountability as established in §12.921. Cash advances to a recipient organization
shall be limited to the minimum amounts needed and be timed to be in accordance with the actual,
immediate cash requirements of the recipient organization in carrying out the purposes of the approved
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program or project. The timing and amount of cash advances shall be as close as is administratively
feasible to the actual disbursements by the recipient organization for direct program or project costs and
the proportionate share of any allowable indirect costs.
(c) Whenever possible, advances will be consolidated to cover anticipated cash needs for all awards
made by the Federal awarding agency to the recipient.
(1) Advance payment mechanisms include, but are not limited to, Treasury check and electronic funds
transfer.
(2) Advance payment mechanisms are subject to 31 CFR part 205.
(3) Recipients shall be authorized to submit requests for advances and reimbursements at least monthly
when electronic fund transfers are not used.
(d) Requests for Treasury check advance payment shall be submitted on SF–270, “Request for Advance
or Reimbursement,” or other forms as may be authorized by OMB. This form is not to be used when
Treasury check advance payments are made to the recipient automatically through the use of a
predetermined payment schedule or if precluded by special Federal awarding agency instructions for
electronic funds transfer.
(e) Reimbursement is the preferred method when the requirements in paragraph (b) of this section
cannot be met. Federal awarding agencies may also use this method on any construction agreement, or
if the major portion of the construction project is accomplished through private market financing or
Federal loans, and the Federal assistance constitutes a minor portion of the project.
(1) When the reimbursement method is used, the Federal awarding agency shall make payment within
30 days after receipt of the billing, unless the billing is improper.
(2) Recipients shall be authorized to submit a request for reimbursement at least monthly when
electronic funds transfers are not used.
(f) If a recipient cannot meet the criteria for advance payments and the Federal awarding agency has
determined that reimbursement is not feasible because the recipient lacks sufficient working capital, the
Federal awarding agency may provide cash on a working capital advance basis. Under this procedure,
the Federal awarding agency shall advance cash to the recipient to cover its estimated disbursement
needs for an initial period generally geared to the awardee's disbursing cycle. Thereafter, the Federal
awarding agency shall reimburse the recipient for its actual cash disbursements. The working capital
advance method of payment shall not be used for recipients unwilling or unable to provide timely
advances to their subrecipient to meet the subrecipient's actual cash disbursements.
(g) To the extent available, recipients shall disburse funds available from repayments to and interest
earned on a revolving fund, program income, rebates, refunds, contract settlements, audit recoveries
and interest earned on such funds before requesting additional cash payments.
(h) Unless otherwise required by statute, Federal awarding agencies shall not withhold payments for
proper charges made by recipients at any time during the project period unless paragraph (h)(1) or (h)(2)
of this section apply:
(1) A recipient has failed to comply with the project objectives, the terms and conditions of the award, or
Federal reporting requirements; or
(2) The recipient or subrecipient is delinquent in a debt to the United States as defined in OMB Circular
A–129, “Managing Federal Credit Programs.” Under such conditions, the Federal awarding agency may,
upon reasonable notice, inform the recipient that payments shall not be made for obligations incurred
after a specified date until the conditions are corrected or the indebtedness to the Federal Government
is liquidated.
(i) Standards governing the use of banks and other institutions as depositories of funds advanced under
awards are as follows.
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(1) Except for situations described in paragraph (i)(2) of this section, Federal awarding agencies shall
not require separate depository accounts for funds provided to a recipient or establish any eligibility
requirements for depositories for funds provided to a recipient. However, recipients must be able to
account for the receipt, obligation and expenditure of funds.
(2) Advances of Federal funds shall be deposited and maintained in insured accounts whenever
possible.
(j) Consistent with the national goal of expanding opportunities for women-owned and minority-owned
business enterprises, recipients are encouraged to use women-owned and minority-owned banks (a
bank which is owned at least 50 percent by women or minority group members).
(k) Recipients shall maintain advances of Federal funds in interest bearing accounts, unless paragraph
(k) (1), (2) or (3) apply:
(1) The recipient receives less than $120,000 in Federal awards per year.
(2) The best reasonably available interest bearing account would not be expected to earn interest in
excess of $250 per year on Federal cash balances.
(3) The depository would require an average or minimum balance so high that it would not be feasible
within the expected Federal and non-Federal cash resources.
(l) For those entities where CMIA and its implementing regulations do not apply, interest earned on
Federal advances deposited in interest bearing accounts shall be remitted annually to Department of
Health and Human Services, Payment Management System, P.O. Box 6021, Rockville, MD 20852.
Interest amounts up to $250 per year may be retained by the recipient for administrative expense. In
keeping with Electronic Funds Transfer rules, (31 CFR part 206), interest should be remitted to the HHS
Payment Management System through an electronic medium such as the FEDWIRE Deposit system.
Recipients which do not have this capability should use a check. State universities and hospitals shall
comply with CMIA, as it pertains to interest. If an entity subject to CMIA uses its own funds to pay preaward costs for discretionary awards without prior written approval from the Federal awarding agency, it
waives its right to recover the interest under CMIA.
(m) Except as noted elsewhere in this subpart, only the following forms shall be authorized for the
recipients in requesting advances and reimbursements. Federal agencies shall not require more than an
original and two copies of these forms.
(1) SF–270, Request for Advance or Reimbursement. Each Federal awarding agency shall adopt the
SF–270 as a standard form for all nonconstruction programs where electronic funds transfer or
predetermined advance methods are not used. Federal awarding agencies, however, have the option of
using this form for construction programs in lieu of the SF–271, “Outlay Report and Request for
Reimbursement for Construction Programs.”
(2) SF–271, Outlay Report and Request for Reimbursement for Construction Programs. Each Federal
awarding agency shall adopt the SF–271 as the standard form to be used for requesting reimbursement
for construction programs. However, a Federal awarding agency may substitute the SF–270 when the
Federal awarding agency determines that it provides adequate information to meet Federal needs.
§ 12.923 Cost sharing or matching.
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(a) All contributions, including cash and third party in-kind, shall be accepted as part of the recipient's
cost sharing or matching when such contributions meet all of the following criteria:
(1) Are verifiable from the recipient's records.
(2) Are not included as contributions for any other Federally-assisted project or program.
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(3) Are necessary and reasonable for proper and efficient accomplishment of project or program
objectives.
(4) Are allowable under the applicable cost principles.
(5) Are not paid by the Federal Government under another award, except where authorized by Federal
statute to be used for cost sharing or matching.
(6) Are provided for in the approved budget when required by the Federal awarding agency.
(7) Conform to other provisions of this subpart, as applicable.
(b) Unrecovered indirect costs may be included as part of cost sharing or matching only with the prior
approval of the Federal awarding agency.
(c) Values for recipient contributions of services and property shall be established in accordance with the
applicable cost principles. If a Federal awarding agency authorizes recipients to donate buildings or land
for construction/facilities acquisition projects or long-term use, the value of the donated property for cost
sharing or matching shall be the lesser of paragraph (c) (1) or (2) of this section:
(1) The certified value of the remaining life of the property recorded in the recipient's accounting records
at the time of donation.
(2) The current fair market value. However, when there is sufficient justification, the Federal awarding
agency may approve the use of the current fair market value of the donated property, even if it exceeds
the certified value at the time of donation to the project.
(d) Volunteer services furnished by professional and technical personnel, consultants, and other skilled
and unskilled labor may be counted as cost sharing or matching if the service is an integral and
necessary part of an approved project or program. Rates for volunteer services shall be consistent with
those paid for similar work in the recipient's organization. In those instances in which the required skills
are not found in the recipient organization, rates shall be consistent with those paid for similar work in
the labor market in which the recipient competes for the kind of services involved. In either case, paid
fringe benefits that are reasonable, allowable, and allocable may be included in the valuation.
(e) When an employer other than the recipient furnishes the services of an employee, these services
shall be valued at the employee's regular rate of pay (plus an amount of fringe benefits that are
reasonable, allowable, and allocable, but exclusive of overhead costs), provided these services are in
the same skill for which the employee is normally paid.
(f) Donated supplies may include such items as expendable equipment, office supplies, laboratory
supplies or workshop and classroom supplies. Value assessed to donated supplies included in the cost
sharing or matching share shall be reasonable and shall not exceed the fair market value of the property
at the time of the donation.
(g) The method used for determining cost sharing or matching for donated equipment, buildings and
land for which title passes to the recipient may differ according to the purpose of the award, if paragraph
(g) (1) or (2) of this section apply:
(1) If the purpose of the award is to assist the recipient to acquire equipment, buildings, or land, the total
value of the donated property may be claimed as cost sharing or matching.
(2) If the purpose of the award is to support activities that require the use of equipment, buildings or
land, normally only depreciation or use charges for equipment and buildings may be made. However,
the full value of equipment or other capital assets and fair rental charges for land may be allowed,
provided that the Federal awarding agency has approved the charges.
(h) The value of donated property shall be determined in accordance with the usual accounting policies
of the recipient, with the following qualifications.
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(1) The value of donated land and buildings shall not exceed their fair market value at the time of
donation to the recipient as established by an independent appraiser (e.g., certified real property
appraiser or General Services Administration representative) and certified by a responsible official of the
recipient.
(2) The value of donated equipment shall not exceed the fair market value of equipment of the same age
and condition at the time of donation.
(3) The value of donated space shall not exceed the fair rental value of comparable space as
established by an independent appraisal of comparable space and facilities in a privately-owned building
in the same locality.
(4) The value of loaned equipment shall not exceed its fair rental value.
(i) The following requirements pertain to the recipient's supporting records for in-kind contributions from
third parties.
(1) Volunteer services shall be documented and, to the extent feasible, supported by the same methods
used by the recipient for its own employees.
(2) The basis for determining the valuation for personal service, material, equipment, buildings and land
shall be documented.
§ 12.924 Program income.
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(a) Federal awarding agencies shall apply the standards set forth in this section in requiring recipient
organizations to account for program income related to projects financed in whole or in part with Federal
funds.
(b) Except as provided in paragraph (h) of this section, program income earned during the project period
shall be retained by the recipient and, in accordance with Federal awarding agency regulations or the
terms and conditions of the award, shall be used in one or more of the following ways:
(1) Added to funds committed to the project or program by the Federal awarding agency and recipient
and used to further eligible project or program objectives;
(2) Used to finance the non-Federal share of the project or program; or
(3) Deducted from the total project or program allowable cost in determining the net allowable costs
upon which the Federal share of costs is based.
(c) When an agency authorizes the disposition of program income as described in paragraph (b)(1) or
(b)(2) of this section, program income in excess of any limits stipulated shall be used in accordance with
paragraph (b)(3) of this section.
(d) If the Federal awarding agency does not specify in its regulations or the terms and conditions of the
award how program income is to be used, paragraph (b)(3) of this section shall apply automatically to all
projects or programs except research. For awards that support research, paragraph (b)(1) of this section
shall apply automatically unless the awarding agency indicates in the terms and conditions another
alternative on the award or the recipient is subject to special award conditions, as indicated in §12.914.
(e) Unless Federal awarding agency regulations or the terms and conditions of the award provide
otherwise, recipients shall have no obligation to the Federal Government regarding program income
earned after the end of the project period.
(f) If authorized by Federal awarding agency regulations or the terms and conditions of the award, costs
incident to the generation of program income may be deducted from gross income to determine program
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income, provided these costs have not been charged to the award.
(g) Proceeds from the sale of property shall be handled in accordance with the requirements of the
Property Standards (See §§12.930 through 12.937).
(h) Unless Federal awarding agency regulations or the terms and conditions of the award provide
otherwise, recipients shall have no obligation to the Federal Government with respect to program
income earned from license fees and royalties for copyrighted material, patents, patent applications,
trademarks, and inventions produced under an award. However, Patent and Trademark Amendments
(35 U.S.C. 18) apply to inventions made under an experimental, developmental, or research award.
§ 12.925 Revision of budget and program plans.
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(a) The budget plan is the financial expression of the project or program as approved during the award
process. It may include either the Federal and non-Federal share, or only the Federal share, depending
upon Federal awarding agency requirements. It shall be related to performance for program evaluation
purposes whenever appropriate.
(b) Recipients are required to report deviations from budget and program plans, and request prior
approvals for budget and program plan revisions, in accordance with this section.
(c) For nonconstruction awards, recipients shall request prior approvals from Federal awarding agencies
for one or more of the following program or budget related reasons:
(1) Change in the scope or the objective of the project or program (even if there is no associated budget
revision requiring prior written approval).
(2) Change in a key person specified in the application or award document.
(3) The absence for more than three months, or a 25 percent reduction in time devoted to the project, by
the approved project director or principal investigator.
(4) The need for additional Federal funding.
(5) The transfer of amounts budgeted for indirect costs to absorb increases in direct costs, or vice versa,
if approval is required by the Federal awarding agency.
(6) The inclusion, unless waived by the Federal awarding agency, of costs that require prior approval in
accordance with OMB Circular A–21, “Cost Principles for Institutions of Higher Education,” OMB Circular
A–122, “Cost Principles for Non-Profit Organizations,” or 45 CFR part 74, appendix E, “Principles for
Determining Costs Applicable to Research and Development under Grants and Contracts with
Hospitals,” or 48 CFR part 31, “Contract Cost Principles and Procedures,” as applicable.
(7) The transfer of funds allotted for training allowances (direct payment to trainees) to other categories
of expense.
(8) Unless described in the application and funded in the approved award, the subaward, transfer or
contracting out of any work under an award. This provision does not apply to the purchase of supplies,
material, equipment or general support services.
(d) No other prior approval requirements for specific items may be imposed unless a deviation has been
approved by OMB.
(e) Except for requirements listed in paragraph (c)(1) and (c)(4) of this section, Federal awarding
agencies are authorized, at their option, to waive cost-related and administrative prior written approvals
required by this subpart and OMB Circulars A–21 and A–122. Such waivers may include authorizating
recipients to do any one or more of the following:
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(1) Incur pre-award costs 90 calendar days prior to award or more than 90 calendar days with the prior
approval of the Federal awarding agency. All pre-award costs are incurred at the recipient's risk (i.e., the
Federal awarding agency is under no obligation to reimburse such costs if for any reason the recipient
does not receive an award or if the award is less than anticipated and inadequate to cover such costs).
(2) Initiate a one-time extension of the expiration date of the award of up to 12 months unless one or
more of the following conditions apply. For one-time extensions, the recipient must notify the Federal
awarding agency in writing, with the supporting reasons and revised expiration date, at least 10 days
before the expiration date specified in the award. This one-time extension may not be exercised merely
for the purpose of using unobligated balances. The conditions that prevent issuance of a one-time
extension are:
(i) The terms and conditions of award prohibit the extension;
(ii) The extension requires additional Federal funds; or
(iii) The extension involves any change in the approved objectives or scope of the project.
(3) Carry forward unobligated balances to subsequent funding periods.
(4) For awards that support research, unless the Federal awarding agency provides otherwise in the
award or in the agency's regulations, the prior approval requirements described in paragraph (e)(1)
through (3) of this section are automatically waived (i.e., recipients need not obtain such prior approvals)
unless one of the conditions included in paragraph (e)(2) applies.
(f) The Federal awarding agency may, at its option, restrict the transfer of funds among direct cost
categories or programs, functions and activities for awards in which the Federal share of the project
exceeds $100,000 and the cumulative amount of the transfer exceeds or is expected to exceed 10
percent of the total budget as last approved by the Federal awarding agency. No Federal awarding
agency shall permit a transfer that would cause any Federal appropriation or part thereof to be used for
purposes other than those consistent with the original intent of the appropriation.
(g) No other changes to nonconstruction budgets, except for the changes described in paragraph (j) of
this section, require prior approval.
(h) For construction awards, recipients shall request prior written approval promptly from Federal
awarding agencies for budget revisions whenever paragraph (h) (1), (2) or (3) of this section apply:
(1) the revision results from changes in the scope or the objective of the project or program;
(2) additional Federal funds are needed to complete the project; or
(3) the recipient requests a revision that involves specific costs for which prior written approval
requirements may be imposed under §12.927.
(i) No other prior approval requirements for specific items will be imposed unless OMB approves a
deviation.
(j) When a Federal awarding agency makes an award that provides support for both construction and
nonconstruction work, the Federal awarding agency may require the recipient to request prior approval
before making any fund or budget transfers between the two types of work supported.
(k) For both construction and nonconstruction awards, Federal awarding agencies shall require
recipients to notify the Federal awarding agency in writing promptly whenever the amount of Federal
authorized funds is expected to exceed the needs of the recipient for the project period by more than
$5,000 or five percent of the Federal award, whichever is greater. This notification shall not be required if
an application for additional funding is submitted for a continuation award.
(l) When requesting approval for budget revisions, recipients shall use the budget forms that were used
in the application unless the Federal awarding agency indicates that a letter of request suffices.
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(m) Within 30 calendar days from the date of receipt of the request for budget revisions, the Federal
awarding agencies shall review the request and notify the recipient whether the budget revisions have
been approved. If the revision is still under consideration at the end of 30 calendar days, the Federal
awarding agency shall inform the recipient in writing of the date when the recipient may expect the
decision.
§ 12.926 Non-Federal audits.
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(a) Recipients and subrecipients that are institutions of higher education or other non-profit organizations
(including hospitals) shall be subject to the audit requirements contained in the Single Audit Act
Amendments of 1996 (31 U.S.C. 7501–7507) and revised OMB Circular A–133, “Audits of States, Local
Governments, and Non-Profit Organizations.”
(b) State and local governments shall be subject to the audit requirements contained in the Single Audit
Act Amendments of 1996 (31 U.S.C. 7501–7507) and revised OMB Circular A–133, “Audits of States,
Local Governments, and Non-Profit Organizations.”
(c) For-profit hospitals not covered by the audit provisions of revised OMB Circular A–133 shall be
subject to the audit requirements of the Federal awarding agencies.
[60 FR 17238, Apr. 5, 1995, as amended at 62 FR 45939, 45945, Aug. 29, 1997]
§ 12.927 Allowable costs.
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Federal awarding agencies shall determine allowable costs in accordance with the type of entity
incurring the costs, using the appropriate directive from the table below.
Entity incurring costs
State, local, or Federally
recognized Indian Tribe
Non-profit organization
Applicable directive
OMB Circular A–87, Cost Principles for State
and Local Governments.
OMB Circular A–122, Cost Principles for
Non-profit Organizations and 43 CFR 12.927
(b).
Institution of Higher Education OMB Circular A–21, Cost Principles for
Educational Institutions.
Hospital
45 CFR part 74, appendix E, Principles for
Determining Costs Applicable to Research
and Development Under Grants and
Contracts with Hospitals.
Commercial organization or
48 CFR part 31, Contract Principles and
non-profit organization listed in Procedures or uniform cost accounting
Attachment C of OMB Circular standards that comply with cost principles
A–122
acceptable to the Federal agency.
§ 12.928 Period of availability of funds.
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Where a funding period is specified, a recipient may charge to the grant only allowable costs resulting
from obligations incurred during the funding period and any pre-award costs authorized by the Federal
awarding agency.
Property Standards
§ 12.930 Purpose of property standards.
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Sections 12.931 through 12.937 set forth uniform standards governing management and disposition of
property furnished by the Federal Government whose cost was charged to a project supported by a
Federal award. Federal awarding agencies shall require recipients to observe these standards under
awards and shall not impose additional requirements, unless specifically required by Federal statute.
The recipient may use its own property management standards and procedures provided it observes the
provisions of §§12.931 through 12.937.
§ 12.931 Insurance coverage.
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Recipients shall, at a minimum, provide the equivalent insurance coverage for real property and
equipment acquired with Federal funds as provided to property owned by the recipient. Federally-owned
property need not be insured unless required by the terms and conditions of the award.
§ 12.932 Real property.
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Each Federal awarding agency shall prescribe requirements for recipients concerning the use and
disposition of real property acquired in whole or in part under awards. Unless otherwise provided by
statute, such requirements, at a minimum, shall contain the following.
(a) Title to real property shall vest in the recipient subject to the condition that the recipient shall use the
real property for the authorized purpose of the project as long as it is needed and shall not encumber the
property without approval of the awarding agency.
(b) The recipient shall obtain written approval by the Federal awarding agency for the use of real
property in other Federally-sponsored projects when the recipient determines that the property is no
longer needed for the purpose of the original project. Use in other projects shall be limited to those under
Federally-sponsored projects (i.e., awards) or programs that have purposes consistent with those
authorized for support by the Department of the Interior.
(c) When the real property is no longer needed as provided in paragraphs (a) and (b) of this section, the
recipient shall request disposition instructions from the Federal awarding agency or its successor. The
Federal awarding agency will give one or more of the following disposition instructions:
(1) The recipient may be permitted to retain title without further obligation to the Federal Government
after it compensates the Federal Government for that percentage of the current fair market value of the
property attributable to the Federal participation in the project.
(2) The recipient may be directed to sell the property under guidelines provided by the Federal awarding
agency and pay the Federal Government for that percentage of the current fair market value of the
property attributable to the Federal participation in the project (after deducting actual and reasonable
selling and fix-up expenses, if any, from the sales proceeds). When the recipient is authorized or
required to sell the property, proper sales procedures shall be established that provide for competition to
the extent practicable and result in the highest possible return.
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(3) The recipient may be directed to transfer title to the property to the Federal Government or to an
eligible third party provided that, in such cases, the recipient shall be entitled to compensation for its
attributable percentage of the current fair market value of the property.
§ 12.933 Federally owned and exempt property.
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(a) Federally-owned property. (1) Title to Federally-owned property remains vested in the Federal
Government. Recipients shall submit annually to the Federal awarding agency an inventory listing of
Federally-owned property in their custody. Upon completion of the award or when the property is no
longer needed, the recipient shall report the property to the Federal awarding agency for further
utilization.
(2) If the Federal awarding agency has no further need for the property, it shall be declared excess and
reported to the General Services Administration, unless the Federal awarding agency has statutory
authority to dispose of the property by alternative methods (e.g., the authority provided by the Federal
Technology Transfer Act (15 U.S.C. 3710(I)) to donate research equipment to educational and non-profit
organizations in accordance with E.O. 12821, “Improving Mathematics and Science Education in
Support of the National Education Goals.”) Appropriate instructions shall be issued to the recipient by
the Federal awarding agency.
(b) Exempt property. Exempt property. When statutory authority exists, the Federal awarding agency
has the option to vest title to property acquired with Federal funds in the recipient without further
obligation to the Federal Government and under conditions the Federal awarding agency considers
appropriate. Such property is “exempt property.” Should a Federal awarding agency not establish
conditions, title to exempt property upon acquisition shall vest in the recipient without further obligation to
the Federal Government.
§ 12.934 Equipment.
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(a) Title to equipment acquired by a recipient with Federal funds shall vest in the recipient, subject to
conditions of this section.
(b) The recipient shall not use equipment acquired with Federal funds to provide services to non-Federal
outside organizations for a fee that is less than private companies charge for equivalent services, unless
specifically authorized by Federal statute, for as long as the Federal Government retains an interest in
the equipment.
(c) The recipient shall use the equipment in the project or program for which it was acquired as long as
needed, whether or not the project or program continues to be supported by Federal funds, and shall not
encumber the property without approval of the Federal awarding agency. When no longer needed for
the original project or program, the recipient shall use the equipment in connection with its other
Federally-sponsored activities, in the following order of priority:
(1) Activities sponsored by the Federal awarding agency, then
(2) Activities sponsored by other Federal agencies.
(d) During the time that equipment is used on the project or program for which it was acquired, the
recipient shall make it available for use on other projects or programs if such other use will not interfere
with the work on the project or program for which the equipment was originally acquired. First preference
for such other use shall be given to other projects or programs sponsored by the Federal awarding
agency that financed the equipment; second preference shall be given to projects or programs
sponsored by other Federal agencies. If the equipment is owned by the Federal Government, use on
other activities not sponsored by the Federal Government shall be permissible if authorized by the
Federal awarding agency. User charges shall be treated as program income.
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(e) When acquiring replacement equipment, the recipient may use the equipment to be replaced as
trade-in or sell the equipment and use the proceeds to offset the costs of the replacement equipment
subject to the approval of the Federal awarding agency.
(f) The recipient's property management standards for equipment acquired with Federal funds and
Federally-owned equipment shall include all of the following.
(1) Equipment records shall be maintained accurately and shall include the following information.
(i) A description of the equipment.
(ii) Manufacturer's serial number, model number, Federal stock number, national stock number, or other
identification number.
(iii) Source of the equipment, including the award number.
(iv) Whether title vests in the recipient or the Federal Government.
(v) Acquisition date (or date received, if the equipment was furnished by the Federal Government) and
cost.
(vi) Information from which one can calculate the percentage of Federal participation in the cost of the
equipment (not applicable to equipment furnished by the Federal Government).
(vii) Location and condition of the equipment and the date the information was reported.
(viii) Unit acquisition cost.
(ix) Ultimate disposition data, including date of disposal and sales price or the method used to determine
current fair market value where a recipient compensates the Federal awarding agency for its share.
(2) Equipment owned by the Federal Government shall be identified to indicate Federal ownership.
(3) A physical inventory of equipment shall be taken and the results reconciled with the equipment
records at least once every two years. Any differences between quantities determined by the physical
inspection and those shown in the accounting records shall be investigated to determine the causes of
the difference. The recipient shall, in connection with the inventory, verify the existence, current
utilization, and continued need for the equipment.
(4) A control system shall be in effect to insure adequate safeguards to prevent loss, damage, or theft of
the equipment. Any loss, damage, or theft of equipment shall be investigated and fully documented; if
the equipment was owned by the Federal Government, the recipient shall promptly notify the Federal
awarding agency.
(5) Adequate maintenance procedures shall be implemented to keep the equipment in good condition.
(6) Where the recipient is authorized or required to sell the equipment, proper sales procedures shall be
established which provide for competition to the extent practicable and result in the highest possible
return.
(g) When the recipient no longer needs the equipment, the equipment may be used for other activities in
accordance with the following standards. For equipment with a current per unit fair market value of
$5,000 or more, the recipient may retain the equipment for other uses provided that compensation is
made to the original Federal awarding agency or its successor. The amount of compensation shall be
computed by applying the percentage of Federal participation in the cost of the original project or
program to the current fair market value of the equipment. If the recipient has no need for the equipment,
the recipient shall request disposition instructions from the Federal awarding agency. The Federal
awarding agency shall determine whether the equipment can be used to meet the agency's
requirements. If no requirement exists within that agency, the availability of the equipment shall be
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reported to the General Services Administration by the Federal awarding agency to determine whether a
requirement for the equipment exists in other Federal agencies. The Federal awarding agency shall
issue instructions to the recipient no later than 120 calendar days after the recipient's request and the
following procedures shall govern:
(1) If so instructed or if disposition instructions are not issued within 120 calendar days after the
recipient's request, the recipient shall sell the equipment and reimburse the Federal awarding agency an
amount computed by applying to the sales proceeds the percentage of Federal participation in the cost
of the original project or program. However, the recipient shall be permitted to deduct and retain from the
Federal share $500 or ten percent of the proceeds, whichever is less, for the recipient's selling and
handling expenses.
(2) If the recipient is instructed to ship the equipment elsewhere, the recipient shall be reimbursed by the
Federal Government by an amount which is computed by applying the percentage of the recipient's
participation in the cost of the original project or program to the current fair market value of the
equipment, plus any reasonable shipping or interim storage costs incurred.
(3) If the recipient is instructed to otherwise dispose of the equipment, the recipient will be reimbursed by
the Federal awarding agency for such costs incurred in its disposition.
(h) The Federal awarding agency may reserve the right to transfer the title to the Federal Government or
to a third party named by the Federal Government when the third party is otherwise eligible under
existing statutes. The transfer shall be subject to the following standards.
(1) The equipment shall be appropriately identified in the award or otherwise made known to the
recipient in writing.
(2) The Federal awarding agency shall issue disposition instructions within 120 calendar days after
receipt of a final inventory. The final inventory shall list all equipment acquired with Federal funds and
Federally-owned equipment. If the Federal awarding agency fails to issue disposition instructions within
the 120-calendar-day period, the recipient shall apply the standards of this section, as appropriate.
(3) When the Federal awarding agency exercises its right to take title, the equipment shall be subject to
the provisions for Federally-owned equipment.
§ 12.935 Supplies and other expendable property.
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(a) Title to supplies and other expendable property shall vest in the recipient upon acquisition. If there is
a residual inventory of unused supplies exceeding $5,000 in total aggregate value upon termination or
completion of the project or program and the supplies are not needed for any other Federally-sponsored
project or program, the recipient shall retain the supplies for use on non-Federal sponsored activities or
sell them, but shall, in either case, compensate the Federal Government for its share. The amount of
compensation shall be computed in the same manner as for equipment.
(b) The recipient shall not use supplies acquired with Federal funds to provide services to non-Federal
outside organizations for a fee that is less than private companies charge for equivalent services, unless
specifically authorized by Federal statute as long as the Federal Government retains an interest in the
supplies.
§ 12.936 Intangible property.
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(a) The recipient may copyright any work that is subject to copyright and was developed, or for which
ownership was purchased, under an award. The Federal awarding agency(ies) reserves a royalty-free,
nonexclusive and irrevocable right to reproduce, publish, or otherwise use the work for Federal
purposes, and to authorize others to do so.
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(b) Recipients are subject to applicable 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.”
(c) The Federal Government has the right to:
(1) Obtain, reproduce, publish or otherwise use the data first produced under an award; and
(2) Authorize others to receive, reproduce, publish, or otherwise use such data for Federal purposes.
(d)(1) In addition, in response to a Freedom of Information Act (FOIA) request for research data relating
to published research findings produced under an award that were used by the Federal Government in
developing an agency action that has the force and effect of law, the Federal awarding agency shall
request, and the recipient shall provide, within a reasonable time, the research data so that they can be
made available to the public through the procedures established under the FOIA. If the Federal
awarding agency obtains the research data solely in response to a FOIA request, the agency may
charge the requester a reasonable fee equaling the full incremental cost of obtaining the research data.
This fee should reflect costs incurred by the agency, the recipient, and applicable subrecipients. This fee
is in addition to any fees the agency may assess under the FOIA (5 U.S.C. 552(a)(4)(A)).
(2) The following definitions apply for purposes of this paragraph (d):
(i) Research data is defined as the recorded factual material commonly accepted in the scientific
community as necessary to validate research findings, but not any of the following: preliminary analyses,
drafts of scientific papers, plans for future research, peer reviews, or communications with colleagues.
This “recorded” material excludes physical objects (e.g., laboratory samples). Research data also do not
include:
(A) Trade secrets, commercial information, materials necessary to be held confidential by a researcher
until they are published, or similar information which is protected under law; and
(B) Personnel and medical information and similar information the disclosure of which would constitute a
clearly unwarranted invasion of personal privacy, such as information that could be used to identify a
particular person in a research study.
(ii) Published is defined as either when:
(A) Research findings are published in a peer-reviewed scientific or technical journal; or
(B) A Federal agency publicly and officially cites the research findings in support of an agency action
that has the force and effect of law.
(iii) Used by the Federal Government in developing an agency action that has the force and effect of law
is defined as when an agency publicly and officially cites the research findings in support of an agency
action that has the force and effect of law.
(e) Title to intangible property and debt instruments acquired under an award or subaward vests upon
acquisition in the recipient. The recipient shall use that property for the originally-authorized purpose,
and the recipient shall not encumber the property without approval of the Federal awarding agency.
When no longer needed for the originally authorized purpose, disposition of the intangible property shall
occur in accordance with the provisions of §12.934(g).
[63 FR 12188, Mar. 12, 1998, as amended at 65 FR 14407, 14418, Mar. 16, 2000]
§ 12.937 Property trust relationship.
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Real property, equipment, intangible property and debt instruments that are acquired or improved with
Federal funds shall be held in trust by the recipient as trustee for the beneficiaries of the project or
program under which the property was acquired or improved. Agencies may require recipients to record
liens or other appropriate notices of record to indicate that personal or real property has been acquired
or improved with Federal funds and that use and disposition conditions apply to the property.
Procurement Standards
§ 12.940 Purpose of procurement standards.
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Sections 12.941 through 12.948 set forth standards for use by recipients in establishing procedures for
the procurement of supplies and other expendable property, equipment, real property and other services
with Federal funds. These standards are furnished to ensure that such materials and services are
obtained in an effective manner and in compliance with the provisions of applicable Federal statutes and
executive orders. No additional procurement standards or requirements shall be imposed by the Federal
awarding agencies upon recipients, unless specifically required by Federal statute or executive order or
approved by OMB.
§ 12.941 Recipient responsibilities.
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The standards contained in this section do not relieve the recipient of the contractual responsibilities
arising under its contract(s). The recipient is the responsible authority, without recourse to the Federal
awarding agency, regarding the settlement and satisfaction of all contractual and administrative issues
arising out of procurements entered into in support of an award or other agreement. This includes
disputes, claims, protests of award, source evaluation or other matters of a contractual nature. Matters
concerning violation of statute are to be referred to such Federal, State or local authority as may have
proper jurisdiction.
§ 12.942 Codes of conduct.
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The recipient shall maintain written standards of conduct governing the performance of its employees
engaged in the award and administration of contracts. No employee, officer, or agent shall participate in
the selection, award, or administration of a contract supported by Federal funds if a real or apparent
conflict of interest would be involved. Such a conflict would arise when the employee, officer, or agent,
any member of his or her immediate family, his or her partner, or an organization which employs or is
about to employ any of the parties indicated herein, has a financial or other interest in the firm selected
for an award. The officers, employees, and agents of the recipient shall neither solicit nor accept
gratuities, favors, or anything of monetary value from contractors, or parties to subagreements.
However, recipients may set standards for situations in which the financial interest is not substantial or
the gift is an unsolicited item of nominal value. The standards of conduct shall provide for disciplinary
actions to be applied for violations of such standards by officers, employees, or agents of the recipient.
§ 12.943 Competition.
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All procurement transactions shall be conducted in a manner to provide, to the maximum extent
practical, open and free competition. The recipient shall be alert to organizational conflicts of interest as
well as noncompetitive practices among contractors that may restrict or eliminate competition or
otherwise restrain trade. In order to ensure objective contractor performance and eliminate unfair
competitive advantage, contractors that develop or draft specifications, requirements, statements of
work, invitations for bids and/or requests for proposals shall be excluded from competing for such
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procurements. Awards shall be made to the bidder or offeror whose bids or offer is responsive to the
solicitation and is most advantageous to the recipient, price, quality and other factors considered.
Solicitations shall clearly set forth all requirements that the bidder or offeror shall fulfill in order for the bid
or offer to be evaluated by the recipient. Any and all bids or offers may be rejected when it is in the
recipient's interest to do so.
§ 12.944 Procurement procedures.
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(a) All recipients shall establish written procurement procedures. These procedures shall provide, at a
minimum, that:
(1) Recipients avoid purchasing unnecessary items.
(2) Where appropriate, an analysis is made of lease and purchase alternatives to determine which would
be the most economical and practical procurement for the Federal Government; and
(3) Solicitations for goods and services provide for all of the following:
(i) A clear and accurate description of the technical requirements for the material, product or service to
be procured. In competitive procurements, such a description shall not contain features which unduly
restrict competition.
(ii) Requirements which the bidder/offeror must fulfill and all other factors to be used in evaluating bids or
proposals.
(iii) A description, whenever practicable, of technical requirements in terms of functions to be performed
or performance required, including the range of acceptable characteristics or minimum acceptable
standards.
(iv) The specific features of “brand name or equal” descriptions that bidders are required to meet when
such items are included in the solicitation.
(v) The acceptance, to the extent practicable and economically feasible, of products and services
dimensioned in the metric system of measurement.
(vi) Preference, to the extent practicable and economically feasible, for products and services that
conserve natural resources and protect the environment and are energy efficient.
(b) Positive efforts shall be made by recipients to use small businesses, minority-owned firms, and
women's business enterprises, whenever possible. Recipients of Federal awards shall take all of the
following steps to further this goal.
(1) Ensure that small businesses, minority-owned firms, and women's business enterprises are used to
the fullest extent practicable.
(2) Make information on forthcoming opportunities available and arrange time frames for purchases and
contracts to encourage and facilitate participation by small businesses, minority-owned firms, and
women's business enterprises.
(3) Consider in the contract process whether firms competing for larger contracts intend to subcontract
with small businesses, minority-owned firms, and women's business enterprises.
(4) Encourage contracting with consortiums of small businesses, minority-owned firms and women's
business enterprises when a contract is too large for one of these firms to handle individually.
(5) Use the services and assistance, as appropriate, of such organizations as the Small Business
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Administration and the Department of Commerce's Minority Business Development Agency in the
solicitation and utilization of small businesses, minority-owned firms and women's business enterprises.
(c) The type of procuring instruments used (e.g., fixed price contracts, cost reimbursable contracts,
purchase orders, and incentive contracts) shall be determined by the recipient but shall be appropriate
for the particular procurement and for promoting the best interest of the program or project involved. The
“cost-plus-a-percentage-of-cost” or “percentage of construction cost” methods of contracting shall not be
used.
(d) Contracts shall be made only with responsible contractors who possess the potential ability to
perform successfully under the terms and conditions of the proposed procurement. Consideration shall
be given to such matters as contractor integrity, record of past performance, financial and technical
resources or accessibility to other necessary resources. In certain circumstances, contracts with certain
parties are restricted by agencies' implementation of E.O.s 12549 and 12689, “Debarment and
Suspension.” See 43 CFR part 12.
(e) Recipients shall, on request, make available for the Federal awarding agency, pre-award review of
procurement documents, such as requests for proposals or invitations for bids, independent cost
estimates, etc., when any of the following conditions apply:
(1) A recipient's procurement procedures or operation fails to comply with the procurement standards in
this part.
(2) The procurement is expected to exceed the small purchase threshold fixed at 41 U.S.C. 403 (11)
(currently $100,000) and is to be awarded without competition or only one bid or offer is received in
response to a solicitation.
(3) The procurement, which is expected to exceed the small purchase threshold, specifies a “brand
name” product.
(4) The proposed award over the small purchase threshold is to be awarded to other than the apparent
low bidder under a sealed bid procurement.
(5) A proposed contract modification changes the scope of a contract or increases the contract amount
by more than the amount of the small purchase threshold.
§ 12.945 Cost and price analysis.
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Some form of cost or price analysis shall be made and documented in the procurement files in
connection with every procurement action. Price analysis may be accomplished in various ways,
including the comparison of price quotations submitted, market prices and similar indicia, together with
discounts. Cost analysis is the review and evaluation of each element of cost to determine
reasonableness, allocability and allowability.
§ 12.946 Procurement records.
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Procurement records and files for purchases in excess of the small purchase threshold shall include the
following at a minimum:
(a) Basis for contractor selection;
(b) Justification for lack of competition when competitive bids or offers are not obtained; and
(c) Basis for award cost or price.
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§ 12.947 Contract administration.
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A system for contract administration shall be maintained to ensure contractor conformance with the
terms, conditions and specifications of the contract and to ensure adequate and timely follow up of all
purchases. Recipients shall evaluate contractor performance and documents, as appropriate, whether
contractors have met the terms, conditions and specifications of the contract.
§ 12.948 Contract provisions.
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The recipient shall include, in addition to provisions to define a sound and complete agreement, the
provisions below in all contracts and subcontracts.
(a) Contracts in excess of the small purchase threshold shall contain contractual provisions or conditions
that allow for administrative, contractual, or legal remedies in instances in which a contractor violates or
breaches the contract terms, and provide for such remedial actions as may be appropriate.
(b) All contracts in excess of the small purchase threshold shall contain suitable provisions for
termination by the recipient, including the manner by which termination shall be effected and the basis
for settlement. In addition, such contracts shall describe conditions under which the contract may be
terminated for default as well as conditions where the contract may be terminated because of
circumstances beyond the control of the contractor.
(c) Except as otherwise required by statute, an award that requires the contracting (or subcontracting)
for construction or facility improvements shall provide for the recipient to follow its own requirements
relating to bid guarantees, performance bonds, and payment bonds unless the construction contract or
subcontract exceeds $100,000. For those contracts or subcontracts exceeding $100,000, the Federal
awarding agency may accept the bonding policy and requirements of the recipient, provided the Federal
awarding agency has made a determination that the Federal Government's interest is adequately
protected. If such a determination has not been made, the minimum requirements shall be as follows:
(1) A bid guarantee from each bidder equivalent to five percent of the bid price. The “bid guarantee” shall
consist of a firm commitment such as a bid bond, certified check, or other negotiable instrument
accompanying a bid as assurance that the bidder shall, upon acceptance of his bid, execute such
contractual documents as may be required within the time specified.
(2) A performance bond on the part of the contractor for 100 percent of the contract price. A
“performance bond” is one executed in connection with a contract to secure fulfillment of all the
contractor's obligations under such contract.
(3) A payment bond on the part of the contractor for 100 percent of the contract price. A “payment bond”
is one executed in connection with a contract to assure payment as required by statute of all persons
supplying labor and material in the execution of the work provided for in the contract.
(4) Where bonds are required in the situations described herein, the bonds shall be obtained from
companies holding certificates of authority as acceptable sureties pursuant to 31 CFR part 223, “Surety
Companies Doing Business with the United States.”
(d) All negotiated contracts (except those for less than the small purchase threshold) awarded by
recipients shall include a provision to the effect that the recipient, the Federal awarding agency, the
Comptroller General of the United States, or any of their duly authorized representatives, shall have
access to any books, documents, papers and records of the contractor which are directly pertinent to a
specific program for the purpose of making audits, examinations, excerpts and transcriptions.
(e) All contracts, including small purchases, awarded by recipients and their contractors shall contain the
procurement provisions of appendix A to this subpart, as applicable.
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Reports and Records
§ 12.950 Purpose of reports and records.
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Sections 12.951 through 12.953 set forth the procedures for monitoring and reporting on the recipient's
financial and program performance and the necessary standard reporting forms. They also set forth
record retention requirements.
§ 12.951 Monitoring and reporting program performance.
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(a) Recipients are responsible for managing and monitoring each project, program, subaward, function
or activity supported by the award. Recipients shall monitor subawards to ensure subrecipients have met
the audit requirements as delineated in §12.926.
(b) The Federal awarding agency shall prescribe the frequency of submission for performance reports.
Except as provided in §12.951(f), performance reports will not be required more frequently than quarterly
or less frequently than annually. Annual reports shall be due 90 calendar days after the grant year;
quarterly or semi-annual reports shall be due 30 days after the reporting period. The Federal awarding
agency may require annual reports before the anniversary dates of multiple year awards in lieu of these
requirements. The final performance reports are due 90 calendar days after the expiration or termination
of the award.
(c) A final technical or performance report shall be required after completion of the project only if the
awarding agency determines this to be appropriate.
(d) When required, performance reports shall generally contain, for each award, brief information on
each of the following:
(1) A comparison of actual accomplishments with the goals and objectives established for the period, the
findings of the investigator, or both. Whenever appropriate and the output of programs or projects can be
readily quantified, such quantitative data should be related to cost data for computation of unit costs.
(2) Reasons why established goals were not met, if appropriate.
(3) Other pertinent information including, when appropriate, analysis and explanation of cost overruns or
high unit costs.
(e) Recipients shall not be required to submit more than the original and two copies of performance
reports.
(f) Recipients shall immediately notify the Federal awarding agency of developments that have a
significant impact on the award-supported activities. Also, notification shall be given in the case of
problems, delays, or adverse conditions which materially impair the ability to meet the objectives of the
award. This notification shall include a statement of the action taken or contemplated, and any
assistance needed to resolve the situation.
(g) Federal awarding agencies may make site visits, as needed.
(h) Federal awarding agencies shall comply with clearance requirements of 5 CFR part 1320 when
requesting performance data from recipients.
§ 12.952 Financial reporting.
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top
(a) The following forms or such other forms as may be approved by OMB are authorized for obtaining
financial information from recipients.
(1) SF–269 or SF–269A, Financial Status Report. (i) Each Federal awarding agency will require
recipients to use either the SF–269 or SF–269A to report the status of funds for all nonconstruction
projects or programs. A Federal awarding agency may, however, have the option of not requiring the
SF–269 or SF–269A when the SF–270, Request for Advance or Reimbursement, or SF–272, Report of
Federal Cash Transactions, is determined to provide adequate information to meet its needs, except that
a final SF–269 or SF–269A shall be required at the completion of the project when the SF–270 is used
only for advances.
(ii) The Federal awarding agency shall prescribe whether the report shall be on a cash or accrual basis.
If the Federal awarding agency requires accrual information and the recipient's accounting records are
not normally kept on the accrual basis, the recipient shall not be required to convert its accounting
system, but shall develop accrual information through best estimates based upon an analysis of the
documentation on hand.
(iii) The Federal awarding agency shall determine the frequency of the Financial Status Report for each
project or program, considering the size and complexity of the particular project or program. However,
the report shall not be required more frequently than quarterly or less frequently than annually. A final
report shall be required at the completion of the agreement.
(iv) The Federal awarding agency shall require recipients to submit the SF–269 or SF–269A (an original
and no more than two copies) no later than 30 days after the end of each specified reporting period for
quarterly and semi-annual reports, and 90 calendar days for annual and final reports. Extensions of
reporting due dates may be approved by the Federal awarding agency upon request by the recipient.
(2) SF–272, Report of Federal Cash Transactions. (i) When funds are advanced to recipients, the
Federal awarding agency shall require each recipient to submit the SF–272 and, when necessary, its
continuation sheet, SF–272a. The Federal awarding agency shall use this report to monitor cash
advanced to recipients and to obtain disbursement information for each agreement with the recipients.
(ii) Federal awarding agencies may require forecasts of Federal cash requirements in the “Remarks”
section of the report.
(iii) When practical and deemed necessary, Federal awarding agencies may require recipients to report
in the “Remarks” section the amount of cash advances received in excess of three days. Recipients
shall provide short narrative explanations of actions taken to reduce the excess balances.
(iv) Recipients shall be required to submit not more than the original and two copies of the SF–272 15
calendar days following the end of each quarter. The Federal awarding agencies may require a monthly
report from those recipients receiving advances totaling $1 million or more per year.
(v) Federal awarding agencies may waive the requirement for submission of the SF–272 for any one of
the following reasons:
(A) When monthly advances do not exceed $25,000 per recipient, provided that such advances are
monitored through other forms contained in this section;
(B) If, in the Federal awarding agency's opinion, the recipient's accounting controls are adequate to
minimize excessive Federal advances; or
(C) When the electronic payment mechanisms provide adequate data.
(b) When the Federal awarding agency needs additional information or more frequent reports, the
following shall be observed:
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(1) When additional information is needed to comply with legislative requirements, Federal awarding
agencies shall issue instructions to require recipients to submit such information under the “Remarks”
section of the reports.
(2) When a Federal awarding agency determines that a recipient's accounting system does not meet the
standards in §12.921, additional pertinent information to further monitor awards may be obtained upon
written notice to the recipient until such time as the system is brought up to standard. The Federal
awarding agency, in obtaining this information, shall comply with report clearance requirements of 5
CFR part 1320.
(3) Federal awarding agencies are encouraged to shade out any line item on any report if not necessary.
(4) Federal awarding agencies may accept the identical information from the recipients in machine
readable format or computer printouts or electronic outputs in lieu of prescribed formats.
(5) Federal awarding agencies may provide computer or electronic outputs to recipients when such
action expedites or contributes to the accuracy or reporting.
§ 12.953 Retention and access requirements for records.
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(a) This section sets forth requirements for record retention and access to records for awards to
recipients. Federal awarding agencies shall not impose any other record retention or access
requirements upon recipients.
(b) Financial records, supporting documents, statistical records, and all other records pertinent to an
award shall be retained for a period of three years from the date of submission of the final expenditure
report or, for awards that are renewed quarterly or annually, from the date of the submission of the
quarterly or annual financial report. The only exceptions are the following:
(1) If any litigation, claim, or audit is started before the expiration of the 3-year period, the records shall
be retained until all litigation, claims or audit findings involving the records have been resolved and final
action taken.
(2) Records for real property and equipment acquired with Federal funds shall be retained for 3 years
after final disposition.
(3) When records are transferred to or maintained by the Federal awarding agency, the 3-year retention
requirement is not applicable to the recipient.
(4) Indirect cost rate proposals, cost allocation plans, etc., as specified in §12.953(g).
(c) Copies of original records may be substituted for the original records if authorized by the Federal
awarding agency.
(d) The Federal awarding agency will request transfer of certain records to its custody from recipients
when it determines that the records possess long term retention value. However, in order to avoid
duplicate recordkeeping, a Federal awarding agency may make arrangements for recipients to retain
any records that are continuously needed for joint use.
(e) The Federal awarding agency, the Inspector General, Comptroller General of the United States, or
any of their duly authorized representatives, have the right of timely and unrestricted access to any
books, documents, papers, or other records of recipients that are pertinent to the awards, in order to
make audits, examinations, excerpts, transcripts and copies of such documents. This right also includes
timely and reasonable access to a recipient's personnel for the purpose of interview and discussion
related to such documents. The rights of access in this paragraph are not limited to the required
retention period, but shall last as long as records are retained.
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(f) Unless required by statute, no Federal awarding agency shall place restrictions on recipients that limit
public access to the records of recipients that are pertinent to an award, except when the Federal
awarding agency can demonstrate that such records shall be kept confidential and would have been
exempted from disclosure pursuant to the Freedom of Information Act (5 U.S.C. 552) if the records had
belonged to the Federal awarding agency.
(g) Indirect cost rate proposals, cost allocation plans, etc. Paragraphs (g)(1) and (g)(2) of this section
apply to the following types of documents, and their supporting records: indirect cost rate computations
or proposals, cost allocation plans, and any similar accounting computations of the rate at which a
particular group of costs is chargeable (such as computer usage chargeback rates or composite fringe
benefit rates).
(1) If submitted for negotiation. If the recipient submits to the Federal awarding agency or the
subrecipient submits to the recipient the proposal, plan, or other computation to form the basis for
negotiation of the rate, then the 3-year retention period for its supporting records starts on the date of
the submission.
(2) If not submitted for negotiation. If the recipient is not required to submit to the Federal awarding
agency or the subrecipient is not required to submit to the recipient the proposal, plan, or other
computation for negotiation purposes, then the 3-year retention period for the proposal, plan, or other
computation and its supporting records starts at the end of the fiscal year (or other accounting period)
covered by the proposal, plan, or other computation.
Termination and Enforcement
§ 12.960 Purpose of termination and enforcement.
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Sections 12.961 and 12.962 set forth uniform suspension, termination and enforcement procedures.
§ 12.961 Termination.
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(a) Awards may be terminated in whole or in part only if paragraph (a)(1), (a)(2) or (a)(3) of this section
applies.
(1) By the Federal awarding agency, if a recipient materially fails to comply with the terms and conditions
of an award.
(2) By the Federal awarding agency with the consent of the recipient, in which case the two parties shall
agree upon the termination conditions, including the effective date and, in the case of partial termination,
the portion to be terminated.
(3) By the recipient upon sending to the Federal awarding agency written notification setting forth the
reasons for such termination, the effective date, and, in the case of partial termination, the portion to be
terminated. However, if the Federal awarding agency determines in the case of partial termination that
the reduced or modified portion of the grant will not accomplish the purposes for which the grant was
made, it may terminate the grant in its entirety under either paragraph (a) (1) or (2) of this section.
(b) If costs are allowed under an award, the responsibilities of the recipient referred to in §12.971(a),
including those for property management as applicable, shall be considered in the termination of the
award, and provision shall be made for continuing responsibilities of the recipient after termination, as
appropriate.
§ 12.962 Enforcement.
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(a) Remedies for noncompliance. If a recipient materially fails to comply with the terms and conditions of
an award, whether stated in a Federal statute, regulation, assurance, application, or notice of award, the
Federal awarding agency may, in addition to imposing any of the special conditions outlined in §12.914,
take one or more of the following actions, as appropriate in the circumstances.
(1) Temporarily withhold cash payments pending correction of the deficiency by the recipient or more
severe enforcement action by the Federal awarding agency.
(2) Disallow (that is, deny both use of funds and any applicable matching credit for) all or part of the cost
of the activity or action not in compliance.
(3) Wholly or partly suspend or terminate the current award.
(4) Withhold further awards for the project or program.
(5) Take other remedies that may be legally available.
(b) Hearings and appeals. In taking an enforcement action, the awarding agency shall provide the
recipient an opportunity for hearing, appeal, or other administrative proceeding to which the recipient is
entitled under any statute or regulation applicable to the action involved.
(c) Effects of suspension and termination. Costs of a recipient resulting from obligations incurred by the
recipient during a suspension or after termination of an award are not allowable unless the Federal
awarding agency expressly authorizes them in the notice of suspension or termination or subsequently.
Other recipient costs during suspension or after termination which are necessary and not reasonably
avoidable are allowable if paragraphs (c) (1) and (2) of this section apply:
(1) The costs result from obligations which are properly incurred by the recipient before the effective
date of suspension or termination, are not in anticipation of it, and in the case of a termination, are
noncancellable.
(2) The costs would be allowable if the award were not suspended or expired normally at the end of the
funding period in which the termination takes effect.
(d) Relationship to debarment and suspension. The enforcement remedies identified in this section,
including suspension and termination, do not preclude a recipient from being subject to debarment and
suspension under E.O.s 12549 and 12689 and the Federal awarding agency implementing regulations
(see 43 CFR part 12).
After-the-Award Requirements
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§ 12.970 Purpose.
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Sections 12.971 through 12.973 contain closeout procedures and other procedures for subsequent
disallowances and adjustments.
§ 12.971 Closeout procedures.
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(a) Recipients shall submit, within 90 calendar days after the date of completion of the award, all
financial, performance, and other reports as required by the terms and conditions of the award. The
Federal awarding agency may approve extensions when requested by the recipient.
(b) Unless the Federal awarding agency authorizes an extension, a recipient shall liquidate all
obligations incurred under the award not later than 90 calendar days after the funding period or the date
of completion as specified in the terms and conditions of the award or in agency implementing
instructions.
(c) The Federal awarding agency shall make prompt payments to a recipient for allowable reimbursable
costs under the award being closed out.
(d) The recipient shall promptly refund any balances of unobligated cash that the Federal awarding
agency has advanced or paid and that is not authorized to be retained by the recipient for use in other
projects. OMB Circular A–129 governs unreturned amounts that become delinquent debts.
(e) When authorized by the terms and conditions of the award, the Federal awarding agency shall make
a settlement for any upward or downward adjustments to the Federal share of costs after closeout
reports are received.
(f) The recipient shall account for any real and personal property acquired with Federal funds or received
from the Federal Government in accordance with §§12.931 through 12.937.
(g) If a final audit has not been performed prior to the closeout of an award, the Federal awarding
agency shall retain the right to recover an appropriate amount after fully considering the
recommendations on disallowed costs resulting from the final audit.
§ 12.972 Subsequent adjustments and continuing responsibilities.
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(a) The closeout of an award does not affect any of the following.
(1) The right of the Federal awarding agency to disallow costs and recover funds on the basis of a later
audit or other review.
(2) The obligation of the recipient to return any funds due as a result of later refunds, corrections, or
other transactions.
(3) Audit requirements in §12.926.
(4) Property management requirements in §§12.931 through 12.937.
(5) Records retention as required in §12.953.
(b) After closeout of an award, a relationship created under an award may be modified or ended in whole
or in part with the consent of the Federal awarding agency and the recipient, provided the
responsibilities of the recipient referred to in §12.973(a), including those for property management as
applicable, are considered and provisions made for continuing responsibilities of the recipient, as
appropriate.
§ 12.973 Collection of amounts due.
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(a) Any funds paid to a recipient in excess of the amount to which the recipient is finally determined to be
entitled under the terms and conditions of the award constitute a debt to the Federal Government. If not
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paid within a reasonable period after the demand for payment, the Federal awarding agency may reduce
the debt by paragraph ( a ) (1), (2) or (3) of this section:
(1) Making an administrative offset against other requests for reimbursements.
(2) Withholding advance payments otherwise due to the recipient.
(3) Taking other action permitted by statute.
(b) Except as otherwise provided by law, the Federal awarding agency shall charge interest on an
overdue debt in accordance with 4 CFR chapter II, “Federal Claims Collection Standards.”
Appendix A to Subpart F of Part 12—Contract Provisions
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All contracts awarded by a recipient, including small purchases, shall contain the following provisions as
applicable:
1. Equal Employment Opportunity —All contracts shall contain a provision requiring compliance with
E.O. 11246, “Equal Employment Opportunity,” as amended by E.O. 11375, “Amending Executive Order
11246 Relating to Equal Employment Opportunity,” and as supplemented by regulations at 41 CFR part
60, “Office of Federal Contract Compliance Programs, Equal Employment Opportunity, Department of
Labor.”
2. Copeland “Anti-Kickback” Act (18 U.S.C. 874 and 40 U.S.C. 276c) —All contracts and subgrants in
excess of $100,000 for construction or repair awarded by recipients and subrecipients shall include a
provision for compliance with the Copeland “Anti-Kickback” Act (18 U.S.C. 874), as supplemented by
Department of Labor regulations (29 CFR part 3, “Contractors and Subcontractors on Public Building or
Public Work Financed in Whole or in Part by Loans or Grants from the United States”). The Act provides
that each contractor or subrecipient shall be prohibited from inducing, by any means, any person
employed in the construction, completion, or repair of public work, to give up any part of the
compensation to which he is otherwise entitled. The recipient shall report all suspected or reported
violations to the Federal awarding agency.
3. Davis-Bacon Act, as amended (40 U.S.C. 276a to a–7) —When required by Federal program
legislation, all construction contracts awarded by the recipients and subrecipients of more than $2,000
shall include a provision for compliance with the Davis-Bacon Act (40 U.S.C. 276a to a–7) and as
supplemented by Department of Labor regulations (29 CFR part 5, “Labor Standards Provisions
Applicable to Contracts Governing Federally Financed and Assisted Construction”). Under this Act,
contractors shall be required to pay wages to laborers and mechanics at a rate not less than the
minimum wages specified in a wage determination made by the Secretary of Labor. In addition,
contractors shall be required to pay wages not less than once a week. The recipient shall place a copy
of the current prevailing wage determination issued by the Department of Labor in each solicitation and
the award of a contract shall be conditioned upon the acceptance of the wage determination. The
recipient shall report all suspected or reported violations to the Federal awarding agency.
4. Contract Work Hours and Safety Standards Act (40 U.S.C. 327–333) —Where applicable, all
contracts awarded by recipients in excess of $100,000 for construction contracts and for other contracts
that involve the employment of mechanics or laborers shall include a provision for compliance with
sections 102 and 107 of the Contract Work Hours and Safety Standards Act (40 U.S.C. 327–333), as
supplemented by Department of Labor regulations (29 CFR part 5). Under section 102 of the Act, each
contractor shall be required to compute the wages of every mechanic and laborer on the basis of a
standard work week of 40 hours. Work in excess of the standard work week is permissible provided that
the worker is compensated at a rate of not less than 11/2times the basic rate of pay for all hours worked
in excess of 40 hours in the work week. Section 107 of the Act is applicable to construction work and
provides that no laborer or mechanic shall be required to work in surroundings or under working
conditions which are unsanitary, hazardous or dangerous. These requirements do not apply to the
purchases of supplies or materials or articles ordinarily available on the open market, or contracts for
transportation or transmission of intelligence.
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5. Rights to Inventions Made Under a Contract or Agreement —Contracts or agreements for the
performance of experimental, developmental, or research work shall provide for the rights of the Federal
Government and the recipient in any resulting invention in accordance with 37 CFR part 401, “Rights to
Inventions Made by Nonprofit Organizations and Small Business Firms Under Government Grants,
Contracts and Cooperative Agreements,” and any implementing regulations issued by the awarding
agency.
6. Clean Air Act (42 U.S.C. 7401 et seq.) and the Federal Water Pollution Control Act (33 U.S.C. 1251 et
seq.), as amended —Contracts and subgrants of amounts in excess of $100,000 shall contain a
provision that requires the recipient to agree to comply with all applicable standards, orders or
regulations issued pursuant to the Clean Air Act (42 U.S.C. 7401 et seq. ) and the Federal Water
Pollution Control Act as amended (33 U.S.C. 1251 et seq. ). Violations shall be reported to the Federal
awarding agency and the Regional Office of the Environmental Protection Agency (EPA).
7. Byrd Anti-Lobbying Amendment (31 U.S.C. 1352) —Contractors who apply or bid for an award of
more than $100,000 shall file the required certification. Each tier certifies to the tier above that it will not
and has not used Federal appropriated funds to pay any person or organization for influencing or
attempting to influence an officer or employee of any agency, a member of Congress, officer or
employee of Congress, or an employee of a member of Congress in connection with obtaining any
Federal contract, grant or any other award covered by 31 U.S.C. 1352. Each tier shall also disclose any
lobbying with non-Federal funds that takes place in connection with obtaining any Federal award. Such
disclosures are forwarded from tier to tier up to the recipient.
8. Debarment and Suspension (E.O.s 12549 and 12689) —No contracts shall be made to parties listed
on the General Services Administration's “Lists of Parties Excluded from Federal Procurement or
Nonprocurement Programs” in accordance with E.O.s 12549 and 12689, “Debarment and Suspension.”
This list contains the names of parties debarred, suspended, or otherwise excluded by agencies, and
contractors declared ineligible under statutory or regulatory authority other than E.O. 12549. Contractors
with awards that exceed the small purchase threshold shall provide the required certification regarding
their exclusion status and that of their principals.
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Section 508 / Accessibility
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| File Type | application/pdf |
| File Title | http://ecfr.gpoaccess.gov/cgi/t/text/text-idx?c=ecfr&sid=3e7afe |
| Author | HGrey |
| File Modified | 2008-05-15 |
| File Created | 2008-05-15 |