44 CFR Part 13

PART 13— UNIFORM ADMINISTRATIVE REQUIREMENTS FOR GRANTS AND COOPERATIVE AGREEMENTS
TO STATE AND LOCAL GOVERNMENTS
Subpart A— General Section
13.1 Purpose and scope of this part.
13.2 Scope of subpart.
13.3 Definitions.
13.4 Applicability.
13.5 Effect on other issuances.
13.6 Additions and exceptions.
Subpart B— Pre- Award Requirements
13.10 Forms for applying for grants.
13.11 State plans.
13.12 Special grant or subgrant conditions for ‘‘ high- risk’ grantees.
Subpart C— Post- Award Requirements
FINANCIAL ADMINISTRATION
13.20 Standards for financial management systems.
13.21 Payment.
13.22 Allowable costs.
13.23 Period of availability of funds.
13.24 Matching or cost sharing.
13.25 Program income.
13.26 Non-Federal audit.
CHANGES, PROPERTY, AND SUBAWARDS
13.30 Changes.
13.31 Real property.
13.32 Equipment.
13.33 Supplies.
13.34 Copyrights.
13.35 Subawards to debarred and suspended parties.
13.36 Procurement.
13.37 Subgrants.
REPORTS, RECORDS RETENTION, AND ENFORCEMENT
13.40 Monitoring and reporting program performance.
13.41 Financial reporting.
13.42 Retention and access requirements for records.
13.43 Enforcement.
13.44 Termination for convenience.
Subpart D— After- the- Grant Requirements
13.50 Closeout.
13.51 Later disallowances and adjustments.
13.52 Collection of amounts due.
Subpart E— Entitlement [Reserved]
AUTHORITY: Reorganization Plan No. 3 of 1978; 43 FR 41943,3 CFR, 1978 Comp, p. 329; E. O. 12148, 44 FR 43239,3
CFR, 1979 Comp, p. 412.
SOURCE: 53 FR 8078, 8087, Mar. 11, 1988, unless otherwise noted.
EDITORIAL NOTE: For additional information, see related documents published at 49
FR 24958, June 18, 1984; 52 FR 20178, May 29, 1987; and 53 FR 8028, Mar. 11, 1988.

Subpart A— General
§ 13.1 Purpose and scope of this part.
This part establishes uniform administrative rules for Federal grants and cooperative agreements and subawards to State,
local and Indian tribal governments.
§ 13.2 Scope of subpart.
This subpart contains general rules pertaining to this part and procedures for control of exceptions from this part.
§ 13.3 Definitions.
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.
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 ora future period.
OMB means the United States 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 in kind
contributions applied, and the new increase (or decrease) in the amounts owed by the grantee for goods and other
property 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 ora 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 cost- type 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.
§ 13.4 Applicability.
(a) General. Subparts A through 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 section
13.6, 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;
(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 § 13.4(a)(3) through (8) are subject to subpart E.
§ 13.5 Effect on other issuances.
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 § 13.6.
§ 13.6 Additions and exceptions.
(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 the FEDERAL 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.
Subpart B— Pre- Award Requirements
§ 13.10 Forms for applying for grants.
(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.
(2) Applicants are not required to submit more than the original and two copies of pre-applications 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.
§ 13.11 State plans.
(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.
(c) 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.
§ 13.12 Special grant or subgrant conditions for‘‘ high- risk’ grantees.
(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
(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 grantee 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.
Subpart C— Post- Award Requirements
FINANCIAL ADMINISTRATION
§ 13.20 Standards for financial management systems.
(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 costtype 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.
(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 transaction
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.
(d) 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.
§ 13.21 Payment.
(a) Scope. This section prescribes the basic standard and the methods under which a Federal agency will make payments
to grantees, and grantees will make payments to subgrantees and contractors.
(b) Basic standard. Methods and procedures for payment shall minimize the time elapsing between the transfer of funds
and disbursement by the grantee or subgrantee, in accordance with Treasury regulations at 31 CFR part 205.
(c) Advances. Grantees and subgrantees shall be paid in advance, provided they maintain or demonstrate the willingness
and ability to maintain procedures to minimize the time elapsing between the transfer of the funds and their
disbursement by the grantee or subgrantee.
(d) Reimbursement. Reimbursement shall be the preferred method when the requirements in paragraph (c) of this
section are not met. Grantees and subgrantees may also be paid by reimbursement for any construction grant.
Except as otherwise specified in regulation, Federal agencies shall not use the percentage of completion method to pay
construction grants. The grantee or subgrantee may use that method to pay its construction contractor, and if it does, the
awarding agency’s payments to the grantee or subgrantee will be based on the grantee’s or subgrantee’s actual rate of
disbursement.
(e) Working capital advances. If a grantee cannot meet the criteria for advance payments described in paragraph (c) of
this section, and the Federal agency has determined that reimbursement is not feasible because the grantee lacks
sufficient working capital, the awarding agency may provide cash or a working capital advance basis. Under this
procedure the awarding agency shall advance cash to the grantee to cover its estimated disbursement needs for an initial
period generally geared to the grantee’s disbursing cycle. Thereafter, the awarding agency shall reimburse the grantee
for its actual cash disbursements. The working capital advance method of payment shall not be used by grantees or
subgrantees if the reason for using such method is the unwillingness or inability of the grantee to provide timely advances
to the subgrantee to meet the subgrantee’s actual cash disbursements.
(e) 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.
(f) 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 § 13.43(c).
(3) A Federal agency shall not make payment to grantees for amounts that are withheld by grantees or subgrantees
from payment to contractors to assure satisfactory completion of work. Payments shall be made by the Federal
agency when the grantees or subgrantees actually disburse the withheld funds to the contractors or to escrow
accounts established to assure satisfactory completion of work.
(g) 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 Federal-State agreement.
(h) 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.
§ 13.22 Allowable costs.
(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 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. Use the principles in—OMB Circular A– 87.
For the costs of a— 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. Use the principles in—OBM Circular A–
122.
For the costs of a—Educational institutions. Use the principles in— OMB Circular A– 21.
For the costs of a—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—48 CFR part 31. Contract Cost Principles and Procedures, or
uniform cost accounting standards that comply with cost principles acceptable to the Federal agency.
§ 13.23 Period of availability of funds.
(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.
§ 13.24 Matching or cost sharing.
(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.
(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 § 13.25, 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 § 13.25 (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 valued 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.
(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 § 13.22, 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 nonFederal 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.
§ 13.25 Program income.
(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 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 § 13.34)
(f) Property. Proceeds from the sale of real property or equipment will be handled in accordance with the requirements of
§§ 13.31 and 13.32.
(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.
(i) 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.
§ 13.26 Non- Federal audit.
(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 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, § 13.36 shall be followed.
[53 FR 8079, 887, Mar. 11, 1988, as amended at 62 FR 45939, 45945, Aug. 29, 1997]
CHANGES, PROPERTY, AND SUBAWARDS
§ 13.30 Changes.
(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 § 13.22) 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 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 § 13.36 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 § 13.22) 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.
§ 13.31 Real property.
(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 purpose, 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 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.
§ 13.32 Equipment.
(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 § 13.25 (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.
(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 § 13.32(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.
§ 13.33 Supplies.

(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.
§ 13.34 Copyrights.
The Federal awarding agency reserves a royalty- free, nonexclusive, and irrevocable license to 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.
§ 13.35 Subawards to debarred and suspended parties.
Grantees and subgrantees must not make any award or permit any award (subgrant or contract) at any tier to any party
which is debarred or suspended or is otherwise excluded from or ineligible for participation in Federal assistance
programs under Executive Order 12549, ‘‘ Debarment and Suspension.’’
§ 13.36 Procurement.
(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.
(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 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 section 13.36. 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.
(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 pre-qualified 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 § 13.36(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;
(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:
(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 reasonableness 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 § 13.22.)
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 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.)
(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 8078, 8087, Mar. 11, 1988, as amended at 60 FR 19639, 19645, Apr. 19, 1995]
§ 13.37 Subgrants.
(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 § 13.42 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.
(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 13.10;
(2) Section 13.11;
(3) The letter- of- credit procedures specified in Treasury Regulations at 31 CFR part 205, cited in § 13.21; and
(4) Section 13.50.
REPORTS, RECORDS RETENTION, AND ENFORCEMENT
§ 13.40 Monitoring and reporting program performance.
(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.
(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.
§ 13.41 Financial reporting.
(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 decision-making purposes.
(4) Grantees will not be required to submit more than the original and two copies of forms required under 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 paragraph (e)(2)(iii) of this
section.
(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.)
(3) The frequency for submitting payment requests is treated in paragraph (b)(3) of this section.
(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 paragraph (d) of this section, instead of this form.
(ii) The frequency for submitting reimbursement requests is treated in paragraph (b)(3) of this section.
(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 paragraphs (b) (3) and (4) of this section.
(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 paragraph (d) of this section.
(iii) The Federal agency may substitute the Financial Status Report specified in paragraph (b) of this section 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 paragraph (b)(2) of this section.
§ 13.42 Retention and access requirements for records.
(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 § 13.36( 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 record-keeping, 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 long-term retention value. When the

records are transferred to or maintained by the Federal agency, the 3-year 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 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.
(3) 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.
§ 13.43 Enforcement.
(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
(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 non-cancelable,
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 § 13.35.)
§ 13.44 Termination for convenience.
Except as provided in § 13.43 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 § 13.43 or paragraph (a) of this section.
Subpart D— After- The- Grant Requirements
§ 13.50 Closeout.
(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.
(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.
(4) Federally- owned property report: In accordance with § 13.32(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.
§ 13.51 Later disallowances and adjustments.
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 § 13.42;
(d) Property management requirements in §§ 13.31 and 13.32; and
(e) Audit requirements in § 13.26
§ 13.52 Collection of amounts due.
(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 Chapter II.) The date from which interest is
computed is not extended by litigation or the filing of any form of appeal.
Subpart E— Entitlement [Reserved]