Quick Navigation: Resources by Topic Business
& Economy Education
Environment
Food
& Drugs Grants
& Awards Health
& Safety Military
& Security Science
& Technology Social
Programs Transportation

Site
Search:
advanced

•

Browse

•

Simple
Search

•

Advanced Search

*
Boolean

* Proximity

•

Search
History

•

Search
Tips

•

Corrections

•

Latest
Updates

•

User
Info

•

FAQs

•

Agency
List

•

Incorporation
by Reference

•

e-CFR
Main Page

•

Code of Federal
Regulations

•

Federal
Register

•

List of
CFR
Sections Affected

•

Regulations.gov

•

Unified
Agenda

•

All NARA
Publications

Ben's
Guide
to U.S.
Government

Home
Page > Executive
Branch > Code of
Federal Regulations > Electronic Code of Federal
Regulations

e-CFR
Data is current as of July 2, 2010

Title 7:
Agriculture

Browse
Previous | Browse
Next

PART 3019—UNIFORM ADMINISTRATIVE REQUIREMENTS FOR GRANTS AND
AGREEMENTS WITH INSTITUTIONS OF HIGHER EDUCATION, HOSPITALS, AND OTHER
NON-PROFIT ORGANIZATIONS

Section Contents

Subpart
A—General
§ 3019.1   Purpose.
§ 3019.2   Definitions.
§ 3019.3   Effect
on other issuances.
§ 3019.4   Deviations.
§ 3019.5   Subawards.

Subpart
B—Pre-Award Requirements
§ 3019.10   Purpose.
§ 3019.11   Pre-award
policies.
§ 3019.12   Forms
for applying for Federal assistance.
§ 3019.13   Debarment
and suspension.
§ 3019.14   Special
award conditions.
§ 3019.15   Metric
system of measurement.
§ 3019.16   Resource
Conservation and Recovery Act.
§ 3019.17   Certifications
and representations.

Subpart
C—Post-Award Requirements

Financial
and Program Management
§ 3019.20   Purpose
of financial and program management.
§ 3019.21   Standards
for financial management systems.
§ 3019.22   Payment.
§ 3019.23   Cost
sharing or matching.
§ 3019.24   Program
income.
§ 3019.25   Revision
of budget and program plans.
§ 3019.26   Non-Federal
audits.
§ 3019.27   Allowable
costs.
§ 3019.28   Period
of availability of funds.

Property
Standards
§ 3019.30   Purpose
of property standards.
§ 3019.31   Insurance
coverage.
§ 3019.32   Real
property.
§ 3019.33   Federally-owned
and exempt property.
§ 3019.34   Equipment.
§ 3019.35   Supplies
and other expendable property.
§ 3019.36   Intangible
property.
§ 3019.37   Property
trust relationship.

Procurement
Standards
§ 3019.40   Purpose
of procurement standards.
§ 3019.41   Recipient
responsibilities.
§ 3019.42   Codes
of conduct.
§ 3019.43   Competition.
§ 3019.44   Procurement
procedures.
§ 3019.45   Cost
and price analysis.
§ 3019.46   Procurement
records.
§ 3019.47   Contract
administration.
§ 3019.48   Contract
provisions.

Reports
and Records
§ 3019.50   Purpose
of reports and records.
§ 3019.51   Monitoring
and reporting program performance.
§ 3019.52   Financial
reporting.
§ 3019.53   Retention
and access requirements for records.

Termination
and Enforcement
§ 3019.60   Purpose
of termination and enforcement.
§ 3019.61   Termination.
§ 3019.62   Enforcement.

Subpart
D—After-the-Award Requirements
§ 3019.70   Purpose.
§ 3019.71   Closeout
procedures.
§ 3019.72   Subsequent
adjustments and continuing responsibilities.
§ 3019.73   Collection
of amounts due.
Appendix
A to Part 3019—Contract Provisions

Authority:   5 U.S.C. 301; 31 U.S.C.
901–903; 7 CFR 2.28.

Source:   60 FR 44124, Aug. 24, 1995,
unless otherwise noted.

Subpart A—General

top

§ 3019.1   Purpose.

top

(a) This part establishes uniform administrative requirements for
Federal grants and agreements awarded to institutions of higher education,
hospitals, and other non-profit organizations. Federal awarding agencies
shall not impose additional or inconsistent requirements, except as
provided in §§3019.4, and 3019.14 or unless specifically required by
Federal statute or executive order. Non-profit organizations that
implement Federal programs for the States are also subject to State
requirements.

(b) This part also applies specifically to the grants, agreements and
subawards to institutions of higher education, hospitals, and other
non-profit organizations that are awarded to carry out the following
entitlement programs:

(1) Entitlement grants under the following programs authorized by The
Richard B. Russell National School Lunch Act:

(i) National School Lunch Program, General Assistance (section 4 of the
Act),

(ii) Commodity Assistance (section 6 of the Act),

(iii) National School Lunch Program, Special Meal Assistance (section
11 of the Act),

(iv) Summer Food Service Program for Children (section 13 of the Act),
and

(v) Child and Adult Care Food Program (section 17 of the Act).

(2) Entitlement grants under the following programs authorized by The
Child Nutrition Act of 1966:

(i) Special Milk Program for Children (section 3 of the Act), and

(ii) School Breakfast Program (section 4 of the Act).

(3) Entitlement grants for State Administrative Expenses under The Food
Stamp Act of 1977 (section 16 of the Act).

[60 FR 44124, Aug. 24, 1995, as amended at 65 FR 49480, Aug. 14,
2000]

§ 3019.2   Definitions.

top

(a) Accrued expenditures means the charges incurred by the
recipient during a given period requiring the provision of funds for:

(1) Goods and other tangible property received;

(2) Services performed by employees, contractors, subrecipients, and
other payees; and

(3) Other amounts becoming owed under programs for which no current
services or performance is required.

(b) Accrued income means the sum of:

(1) Earnings during a given period from:

(i) Services performed by the recipient, and

(ii) Goods and other tangible property delivered to purchasers, and

(2) Amounts becoming owed to the recipient for which no current
services or performance is required by the recipient.

(c) Acquisition cost of equipment means the net invoice price of
the equipment, including the cost of modifications, attachments,
accessories, or auxiliary apparatus necessary to make the property usable
for the purpose for which it was acquired. Other charges, such as the cost
of installation, transportation, taxes, duty or protective in-transit
insurance, shall be included or excluded from the unit acquisition cost in
accordance with the recipient's regular accounting practices.

(d) Advance means a payment made by Treasury check or other
appropriate payment mechanism to a recipient upon its request either
before outlays are made by the recipient or through the use of
predetermined payment schedules.

(e) Award means financial assistance that provides support or
stimulation to accomplish a public purpose. Awards include grants and
other agreements in the form of money or property in lieu of money, by the
Federal Government to an eligible recipient. The term does not include:
technical assistance, which provides services instead of money; other
assistance in the form of loans, loan guarantees, interest subsidies, or
insurance; direct payments of any kind to individuals; contracts which are
required to be entered into and administered under procurement laws and
regulations; and those agreements that are entered into under the
authorities provided by sections 1472(b), 1473A, and 1473C of the National
Research Extension, and Teaching Policy Act of 1977 (as amended by the
Food Security Act (7 U.S.C. 3318, 3319a and 3319c.) and subsequent
authorizations.

(f) Cash contributions means the recipient's cash outlay,
including the outlay of money contributed to the recipient by third
parties.

(g) Closeout means the process by which a Federal awarding
agency determines that all applicable administrative actions and all
required work of the award have been completed by the recipient and
Federal awarding agency.

(h) Contract means a procurement contract under an award or
subaward, and a procurement subcontract under a recipient's or
subrecipient's contract.

(i) Cost sharing or matching means that portion of project or
program costs not borne by the Federal Government.

(j) Date of completion means the date on which all work under an
award is completed or the date on the award document, or any supplement or
amendment thereto, on which Federal sponsorship ends.

(k) Disallowed costs means those charges to an award that the
Federal awarding agency determines to be unallowable, in accordance with
the applicable Federal cost principles or other terms and conditions
contained in the award.

(l) Equipment means tangible nonexpendable personal property
including exempt property charged directly to the award having a useful
life of more than one year and an acquisition cost of $5000 or more per
unit. However, consistent with recipient policy, lower limits may be
established.

(m) Excess property means property under the control of any
Federal awarding agency that, as determined by the head thereof, is no
longer required for its needs or the discharge of its
responsibilities.

(n) Exempt property means tangible personal property acquired in
whole or in part with Federal funds, where the Federal awarding agency has
statutory authority to vest title in the recipient without further
obligation to the Federal Government. An example of exempt property
authority is contained in the Federal Grant and Cooperative Agreement Act
(31 U.S.C. 6306), for property acquired under an award to conduct basic or
applied research by a non-profit institution of higher education or
non-profit organization whose principal purpose is conducting scientific
research.

(o) Federal awarding agency means the U.S. Department of
Agriculture (USDA) or any subagency of the U.S. Department of Agriculture
that provides an award to the recipient.

(p) Federal funds authorized means the total amount of Federal
funds obligated by the Federal Government for use by the recipient. This
amount may include any authorized carryover of unobligated funds from
prior funding periods when permitted by agency regulations or agency
implementing instructions.

(q) Federal share of real property, equipment, or supplies means
that percentage of the property's acquisition costs and any improvement
expenditures paid with Federal funds.

(r) Funding period means the period of time when Federal funding
is available for obligation by the recipient.

(s) Intangible property and debt instruments means, but is not
limited to, trademarks, copyrights, patents and patent applications and
such property as loans, notes and other debt instruments, lease
agreements, stock and other instruments of property ownership, whether
considered tangible or intangible.

(t) Obligations means the amounts of orders placed, contracts
and grants awarded, services received and similar transactions during a
given period that require payment by the recipient during the same or a
future period.

(u) Outlays or expenditures means charges made to the project or
program. They may be reported on a cash or accrual basis. For reports
prepared on a cash basis, outlays are the sum of cash disbursements for
direct charges for goods and services, the amount of indirect expense
charged, the value of third party in-kind contributions applied and the
amount of cash advances and payments made to subrecipients. For reports
prepared on an accrual basis, outlays are the sum of cash disbursements
for direct charges for goods and services, the amount of indirect expense
incurred, the value of in-kind contributions applied, and the net increase
(or decrease) in the amounts owed by the recipient for goods and other
property received, for services performed by employees, contractors,
subrecipients and other payees and other amounts becoming owed under
programs for which no current services or performance are required.

(v) Personal property means property of any kind except real
property. It may be tangible, having physical existence, or intangible,
having no physical existence, such as copyrights, patents, or
securities.

(w) Prior approval means written approval by an authorized
official evidencing prior consent.

(x) Program income means gross income earned by the recipient
that is directly generated by a supported activity or earned as a result
of the award (see exclusions in §§3019.24 (e) and (h)). Program income
includes, but is not limited to, income from fees for services performed,
the use or rental of real or personal property acquired under
federally-funded projects, the sale of commodities or items fabricated
under an award, license fees and royalties on patents and copyrights, and
interest on loans made with award funds. Interest earned on advances of
Federal funds is not program income. Except as otherwise provided in
Federal awarding agency regulations or the terms and conditions of the
award, program income does not include the receipt of principal on loans,
rebates, credits, discounts, etc., or interest earned on any of them.

(y) Project costs means all allowable costs, as set forth in the
applicable Federal cost principles, incurred by a recipient and the value
of the contributions made by third parties in accomplishing the objectives
of the award during the project period.

(z) Project period means the period established in the award
document during which Federal sponsorship begins and ends.

(aa) Property means, unless otherwise stated, real property,
equipment, intangible property and debt instruments.

(bb) Real property means land, including land improvements,
structures and appurtenances thereto, but excludes movable machinery and
equipment.

(cc) Recipient means an organization receiving financial
assistance directly from Federal awarding agencies to carry out a project
or program. The term includes public and private institutions of higher
education, public and private hospitals, and other quasi-public and
private non-profit organizations such as, but not limited to, community
action agencies, research institutes, educational associations, and health
centers. The term may include commercial organizations, foreign or
international organizations (such as agencies of the United Nations) which
are recipients, subrecipients, or contractors or subcontractors of
recipients or subrecipients at the discretion of the Federal awarding
agency. The term does not include government-owned contractor-operated
facilities or research centers providing continued support for
mission-oriented, large-scale programs that are government-owned or
controlled, or are designated as federally-funded research and development
centers.

(dd) Research and development means all research activities,
both basic and applied, and all development activities that are supported
at universities, colleges, and other non-profit institutions. “Research”
is defined as a systematic study directed toward fuller scientific
knowledge or understanding of the subject studied. “Development” is the
systematic use of knowledge and understanding gained from research
directed toward the production of useful materials, devices, systems, or
methods, including design and development of prototypes and processes. The
term research also includes activities involving the training of
individuals in research techniques where such activities utilize the same
facilities as other research and development activities and where such
activities are not included in the instruction function.

(ee) Small awards means a grant or cooperative agreement not
exceeding the small purchase threshold fixed at 41 U.S.C. 403(11)
(currently $25,000).

(ff) Subaward means an award of financial assistance in the form
of money, or property in lieu of money, made under an award by a recipient
to an eligible subrecipient or by a subrecipient to a lower tier
subrecipient. The term includes financial assistance when provided by any
legal agreement, even if the agreement is called a contract, but does not
include procurement of goods and services nor does it include any form of
assistance which is excluded from the definition of “award” in paragraph
(e) of this section.

(gg) Subrecipient means the legal entity to which a subaward is
made and which is accountable to the recipient for the use of the funds
provided. The term may include foreign or international organizations
(such as agencies of the United Nations) at the discretion of the Federal
awarding agency.

(hh) Supplies means all personal property excluding equipment,
intangible property, and debt instruments as defined in this section, and
inventions of a contractor conceived or first actually reduced to practice
in the performance of work under a funding agreement (“subject
inventions”), as defined in 37 CFR part 401, “Rights to Inventions Made by
Nonprofit Organizations and Small Business Firms Under Government Grants,
Contracts, and Cooperative Agreements.”

(ii) Suspension means an action by a Federal awarding agency
that temporarily withdraws Federal sponsorship under an award, pending
corrective action by the recipient or pending a decision to terminate the
award by the Federal awarding agency. Suspension of an award is a separate
action from suspension under Federal agency regulations implementing E.O.s
12549 and 12689, “Debarment and Suspension.”

(jj) Termination means the cancellation of Federal sponsorship,
in whole or in part, under an agreement at any time prior to the date of
completion.

(kk) Third party in-kind contributions means the value of
non-cash contributions provided by non-Federal third parties. Third party
in-kind contributions may be in the form of real property, equipment,
supplies and other expendable property, and the value of goods and
services directly benefiting and specifically identifiable to the project
or program.

(ll) Unliquidated obligations, for financial reports prepared on
a cash basis, means the amount of obligations incurred by the recipient
that have not been paid. For reports prepared on an accrued expenditure
basis, they represent the amount of obligations incurred by the recipient
for which an outlay has not been recorded.

(mm) Unobligated balance means the portion of the funds
authorized by the Federal awarding agency that has not been obligated by
the recipient and is determined by deducting the cumulative obligations
from the cumulative funds authorized.

(nn) Unrecovered indirect cost means the difference between the
amount awarded and the amount which could have been awarded under the
recipient's approved negotiated indirect cost rate.

(oo) Working capital advance means a procedure where by funds
are advanced to the recipient to cover its estimated disbursement needs
for a given initial period.

[60 FR 44124, Aug. 24, 1995, as amended at 65 FR 49482, Aug. 14,
2000]

§ 3019.3   Effect on other issuances.

top

For awards subject to this part, all administrative requirements of
codified program regulations, program manuals, handbooks and other
nonregulatory materials which are inconsistent with the requirements of
this part shall be superseded, except to the extent they are required by
statute, or authorized in accordance with the deviations provision in
§3019.4.

§ 3019.4   Deviations.

top

The Office of Management and Budget (OMB) may grant exceptions for
classes of grants or recipients subject to the requirements of this part
when exceptions are not prohibited by statute. However, in the interest of
maximum uniformity, exceptions from the requirements of this part shall be
permitted only in unusual circumstances. Federal awarding agencies may
apply more restrictive requirements to a class of recipients when approved
by OMB. Federal awarding agencies may apply less restrictive requirements
when awarding small awards, except for those requirements which are
statutory. Exceptions on a case-by-case basis may also be made by Federal
awarding agencies.

§ 3019.5   Subawards.

top

Unless sections of this part specifically exclude subrecipients from
coverage, the provisions of this part shall be applied to subrecipients
performing work under awards if such subrecipients are institutions of
higher education, hospitals or other non-profit organizations. State and
local government subrecipients are subject to the provisions of
regulations implementing the grants management common rule, “Uniform
Administrative Requirements for Grants and Cooperative Agreements to State
and Local Government,” codified at 7 CFR part 3016.

Subpart B—Pre-Award Requirements

top

§ 3019.10   Purpose.

top

Sections 3019.11 through 3019.17 prescribe forms and instructions and
other pre-award matters to be used in applying for Federal awards.

§ 3019.11   Pre-award policies.

top

(a) Use of grants and cooperative agreements, and contracts. In
each instance, the Federal awarding agency shall decide on the appropriate
award instrument ( i.e. , grant, cooperative agreement, or
contract). The Federal Grant and Cooperative Agreement Act (31 U.S.C.
6301–08) governs the use of grants, cooperative agreements and contracts.
A grant or cooperative agreement shall be used only when the principal
purpose of a transaction is to accomplish a public purpose of support or
stimulation authorized by Federal statute. The statutory criterion for
choosing between grants and cooperative agreements is that for the latter,
“substantial involvement is expected between the executive agency and the
State, local government, or other recipient when carrying out the activity
contemplated in the agreement.” Contracts shall be used when the principal
purpose is acquisition of property or services for the direct benefit or
use of the Federal Government.

(b) Public notice and priority setting. Federal awarding
agencies shall notify the public of its intended funding priorities for
discretionary grant programs, unless funding priorities are established by
Federal statute.

§ 3019.12   Forms for applying for Federal
assistance.

top

(a) Federal awarding agencies shall comply with the applicable report
clearance requirements of 5 CFR part 1320, “Controlling Paperwork Burdens
on the Public,” with regard to all forms used by the Federal awarding
agency in place of or as a supplement to the Standard Form 424 (SF–424)
series.

(b) Applicants shall use the SF–424 series or those forms and
instructions prescribed by the Federal awarding agency.

(c) For Federal programs covered by E.O. 12372, “Intergovernmental
Review of Federal Programs,” the applicant shall complete the appropriate
sections of the SF–424 (Application for Federal Assistance) indicating
whether the application was subject to review by the State Single Point of
Contact (SPOC). The name and address of the SPOC for a particular State
can be obtained from the Federal awarding agency or the Catalog of Federal
Domestic Assistance. The SPOC shall advise the applicant whether the
program for which application is made has been selected by that State for
review. The U.S. Department of Agriculture procedures implementing E.O.
12372 are found at CFR part 3015.

(d) Federal awarding agencies that do not use the SF–424 form should
indicate whether the application is subject to review by the State under
E.O. 12372.

§ 3019.13   Debarment and suspension.

top

Federal awarding agencies and recipients shall comply with the
nonprocurement debarment and suspension common rule implementing E.O.s
12549 and 12669, “Debarment and Suspension,” codified at 7 CFR 3017. This
common rule restricts subawards and contracts with certain parties that
are debarred, suspended or otherwise excluded from or ineligible for
participation in Federal assistance programs or activities.

§ 3019.14   Special award conditions.

top

If an applicant or recipient.

(a) Has a history of poor performance,

(b) Is not financially stable,

(c) Has a management system that does not meet the standards prescribed
in this part,

(d) Has not conformed to the terms and conditions of a previous award,
or

(e) Is not otherwise responsible,

Federal awarding agencies may impose additional requirements as needed,
provided that such applicant or recipient is notified in writing as to:
the nature of the additional requirements, the reason why the additional
requirements are being imposed, the nature of the corrective action
needed, the time allowed for completing the corrective actions, and the
method for requesting reconsideration of the additional requirements
imposed. Any special conditions shall be promptly removed once the
conditions that prompted them have been corrected.

§ 3019.15   Metric system of
measurement.

top

The Metric Conversion Act, as amended by the Omnibus Trade and
Competitiveness Act (15 U.S.C. 205) declares that the metric system is the
preferred measurement system for U.S. trade and commerce. The Act requires
each Federal agency to establish a date or dates in consultation with the
Secretary of Commerce, when the metric system of measurement will be used
in the agency's procurements, grants, and other business-related
activities. Metric implementation may take longer where the use of the
system is initially impractical or likely to cause significant
inefficiencies in the accomplishment of federally-funded activities.
Federal awarding agencies shall follow the provisions of E.O. 12770,
“Metric Usage in Federal Government Programs.”

§ 3019.16   Resource Conservation and Recovery
Act.

top

Under the Resource Conservation and Recovery Act (RCRA) (Pub. L. 94–580
codified at 42 U.S.C. 6962), any State agency or agency of a political
subdivision of a State which is using appropriated Federal funds must
comply with section 6002. Section 6002 requires that preference be given
in procurement programs to the purchase of specific products containing
recycled materials identified in guidelines developed by the Environmental
Protection Agency (EPA) (40 CFR parts 247–254). Accordingly, State and
local institutions of higher education, hospitals, and non-profit
organizations that receive direct Federal awards or other Federal funds
shall give preference in their procurement programs funded with Federal
funds to the purchase of recycled products pursuant to the EPA
guidelines.

§ 3019.17   Certifications and
representations.

top

Unless prohibited by statute or codified regulation, each Federal
awarding agency is authorized and encouraged to allow recipients to submit
certifications and representations required by statute, executive order,
or regulation on an annual basis, if the recipients have ongoing and
continuing relationships with the agency. Annual certifications and
representations shall be signed by responsible officials with the
authority to ensure recipients' compliance with the pertinent
requirements.

Subpart C—Post-Award Requirements

top

Financial and Program Management

top

§ 3019.20   Purpose of financial and program
management.

top

Sections 3019.21 through 3019.28 prescribe standards for financial
management systems, methods for making payments and rules for: satisfying
cost sharing and matching requirements, accounting for program income,
budget revision approvals, making audits, determining allowability of
cost, and establishing fund availability.

§ 3019.21   Standards for financial management
systems.

top

(a) Federal awarding agencies shall require recipients to relate
financial data to performance data and develop unit cost information
whenever practical.

(b) Recipients' financial management systems shall provide for the
following.

(1) Accurate, current and complete disclosure of the financial results
of each federally-sponsored project or program in accordance with the
reporting requirements set forth in §3019.52. If a Federal awarding agency
requires reporting on an accrual basis from a recipient that maintains its
records on other than an accrual basis, the recipient shall not be
required to establish an accrual accounting system. These recipients may
develop such accrual data for its reports on the basis of an analysis of
the documentation on hand.

(2) Records that identify adequately the source and application of
funds for federally-sponsored activities. These records shall contain
information pertaining to Federal awards, authorizations, obligations,
unobligated balances, assets, outlays, income and interest.

(3) Effective control over and accountability for all funds, property
and other assets. Recipients shall adequately safeguard all such assets
and assure they are used solely for authorized purposes.

(4) Comparison of outlays with budget amounts for each award. Whenever
appropriate, financial information should be related to performance and
unit cost data.

(5) Written procedures to minimize the time elapsing between the
transfer of funds to the recipient from the U.S. Treasury and the issuance
or redemption of checks, warrants or payments by other means for program
purposes by the recipient. To the extent that the provisions of the Cash
Management Improvement Act (CMIA) (Pub. L. 101–453) govern, payment
methods of State agencies, instrumentalities, and fiscal agents shall be
consistent with CMIA Treasury-State Agreements or the CMIA default
procedures codified at 31 CFR part 205, “Withdrawal of Cash From the
Treasury for Advances Under Federal Grant and Other Programs.”

(6) Written procedures for determining the reasonableness, allocability
and allowability of costs in accordance with the provisions of the
applicable Federal cost principles and the terms and conditions of the
award.

(7) Accounting records including cost accounting records that are
supported by source documentation.

(c) Where the Federal Government guarantees or insures the repayment of
money borrowed by the recipient, the Federal USDA awarding agency, at its
discretion, may require adequate bonding and insurance if the bonding and
insurance requirements of the recipient are not deemed adequate to protect
the interest of the Federal Government.

(d) The Federal awarding agency may require adequate fidelity bond
coverage where the recipient lacks sufficient coverage to protect the
Federal Government's interest.

(e) Where bonds are required in the situations described in paragraphs
(c) and (d) of this section, the bonds shall be obtained from companies
holding certificates of authority as acceptable sureties, as prescribed in
31 CFR part 223, “Surety Companies Doing Business With the United
States.”

§ 3019.22   Payment.

top

(a) Payment methods shall minimize the time elapsing between the
transfer of funds from the United States Treasury and the issuance or
redemption of checks, warrants, or payment by other means by the
recipients. Payment methods of State agencies or instrumentalities shall
be consistent with Treasury-State CMIA agreements or default procedures
codified at 31 CFR part 205.

(b) Recipients are to be paid in advance, provided they maintain or
demonstrate the willingness to maintain: written procedures that minimize
the time elapsing between the transfer of funds and disbursement by the
recipient, and financial management systems that meet the standards for
fund control and accountability as established in §3019.21. Cash advances
to a recipient organization shall be limited to the minimum amounts needed
and be timed to be in accordance with the actual, immediate cash
requirements of the recipient organization in carrying out the purpose of
the approved program or project. The timing and amount of cash advances
shall be as close as is administratively feasible to the actual
disbursements by the recipient organization for direct program or project
costs and the proportionate share of any allowable indirect costs.

(c) Whenever possible, advances shall be consolidated to cover
anticipated cash needs for all awards made by the Federal awarding agency
to the recipient.

(1) Advance payment mechanisms include, but are not limited to,
Treasury check and electronic funds transfer.

(2) Advance payment mechanisms are subject to 31 CFR part 205.

(3) Recipients shall be authorized to submit requests for advances and
reimbursements at least monthly when electronic fund transfers are not
used.

(d) Requests for Treasury check advance payment shall be submitted on
SF–270, “Request for Advance or Reimbursement,” or other forms as may be
authorized by OMB. This form is not to be used when Treasury check advance
payments are made to the recipient automatically through the use of a
predetermined payment schedule or if precluded by special Federal awarding
agency instructions for electronic funds transfer.

(e) Reimbursement is the preferred method when the requirements in
paragraph (b) of this section cannot be met. Federal awarding agencies may
also use this method on any construction agreement, or if the major
portion of the construction project is accomplished through private market
financing or Federal loans, and the Federal assistance constitutes a minor
portion of the project.

(1) When the reimbursement method is used, the Federal awarding agency
shall make payment within 30 days after receipt of the billing, unless the
billing is improper.

(2) Recipients shall be authorized to submit request for reimbursement
at least monthly when electronic funds transfers are not used.

(f) If a recipient cannot meet the criteria for advance payments and
the Federal awarding agency has determined that reimbursement is not
feasible because the recipient lacks sufficient working capital, the
Federal awarding agency may provide cash on a working capital advance
basis. Under this procedure, the Federal awarding agency shall advance
cash to the recipient to cover its estimated disbursement needs for an
initial period generally geared to the awardee's disbursing cycle.
Thereafter, the Federal awarding agency shall reimburse the recipient for
its actual cash disbursements. The working capital advance method of
payment shall not be used for recipients unwilling or unable to provide
timely advances to their subrecipient to meet the subrecipient's actual
cash disbursements.

(g) To the extent available, recipients shall disburse funds from
repayments to and interest earned on a revolving fund, program income,
rebates, refunds, contract settlements, audit recoveries and interest
earned on such funds before requesting additional cash payments.

(h) Unless otherwise required by statute, Federal awarding agencies
shall not withhold payments for proper charges made by recipients at any
time during the project period unless paragraphs (h)(1) and (h)(2) of this
section apply.

(1) A recipient has failed to comply with the project objectives, the
terms and conditions of the award, or Federal reporting requirements.

(2) The recipient or subrecipient is delinquent in a debt to the Untied
States as defined in OMB Circular A–129, “Managing Federal Credit
Programs.”

(3) Under such conditions, the Federal awarding agency may, upon
reasonable notice, inform the recipient that payments shall not be made
for obligations incurred after a specified date until the conditions are
corrected or the indebtedness to the Federal Government is liquidated.

(i) Standards governing the use of banks and other institutions as
depositories of funds advanced under awards are as follows.

(1) Except for situations described in paragraph (i)(2) of this
section, Federal awarding agencies shall not require separate depository
accounts for funds provided to a recipient or establish any eligibility
requirements for depositories for funds provided to a recipient. However,
recipients must be able to account for the receipt, obligation and
expenditure of funds.

(2) Advances of Federal funds shall be deposited and maintained in
insured accounts whenever possible.

(j) Consistent with the national goal of expanding the opportunities
for women-owned and minority-owned business enterprises, recipients shall
be encouraged to use women-owned and minority-owned banks (a bank which is
owned at least 50 percent by women or minority group members).

(k) Recipients shall maintain advances of Federal funds in interest
bearing accounts, unless paragraphs (k)(1), (k)(2) or (k)(3) of this
section apply.

(1) The recipient receives less than $120,000 in Federal awards per
year.

(2) The best reasonably available interest bearing account would not be
expected to earn interest in excess of $250 per year on Federal cash
balances.

(3) The depository would require an average or minimum balance so high
that it would not be feasible within the expected Federal and non-Federal
cash resources.

(l) For those entities where CMIA and its implementing regulations do
not apply, interest earned on Federal advances deposited in interest
bearing accounts shall be remitted annually to Department of Health and
Human Services, Payment Management System, P.O. Box 6021, Rockville, MD
20852. Interest amounts up to $250 per year may be retained by the
recipient for administrative expense. In keeping with the Electronic Funds
Transfer rules, (31 CFR Part 206), interest should be remitted to the HHS
Payment Management System through an electronic medium such as the FEDWIRE
Deposit system. Recipients which do not have this capability should use a
check. State universities and hospitals shall comply with CMIA, as it
pertains to interest. If an entity subject to CMIA uses its own funds to
pay pre-award costs for discretionary awards without prior written
approval from the Federal awarding agency, it waives its right to recover
the interest under CMIA.

(m) Except as noted elsewhere in this part, only the following forms
shall be authorized for the recipients in requesting advances and
reimbursements. Federal agencies shall not require more than an original
and two copies of these forms.

(1) SF–270, Request for Advance or Reimbursement. Each Federal awarding
agency shall adopt the SF–270 as a standard form for all nonconstruction
programs when electronic funds transfer or predetermined advance methods
are not used. Federal awarding agencies, however, have the option of using
this form for construction programs in lieu of the SF–271, “Outlay Report
and Request for Reimbursement for Construction Programs.”

(2) SF–271, Outlay Report and Request for Reimbursement for
Construction Programs. Each Federal awarding agency shall adopt the SF–271
as the standard form to be used for requesting reimbursement for
construction programs. However, a Federal awarding agency may substitute
the SF–270 when the Federal awarding agency determines that it provides
adequate information to meet Federal needs.

§ 3019.23   Cost sharing or matching.

top

(a) All contributions, including cash and third party in-kind, shall be
accepted as part of the recipient's cost sharing or matching when such
contributions meet all of the following criteria.

(1) Are verifiable from the recipient's records.

(2) Are not included as contributions for any other federally-assisted
project or program.

(3) Are necessary and reasonable for proper and efficient
accomplishment of project or program objectives.

(4) Are allowable under the applicable costs principles.

(5) Are not paid by the Federal Government under another award, except
where authorized by Federal statute to be used for cost sharing or
matching.

(6) Are provided for in the approved budget when required by the
Federal awarding agency.

(7) Conform to other provisions of this part, as applicable.

(b) Unrecovered indirect costs may be included as part of cost sharing
or matching only with the prior approval of the Federal awarding
agency.

(c) Values for recipient contributions of services and property shall
be established in accordance with the applicable cost principles. If a
Federal awarding agency authorizes recipients to donate buildings or land
for construction/facilities acquisition projects or long-term use, the
value of the donated property for cost sharing or matching shall be the
lesser of paragraphs (c)(1) or (c)(2) of this section.

(1) The certified value of the remaining life of the property recorded
in the recipient's accounting records at the time of donation.

(2) The current fair market value. However, when there is sufficient
justification, the Federal awarding agency may approve the use of the
current fair market value of the donated property, even if it exceeds the
certified value at the time of donation to the project.

(d) Volunteer services furnished by professional and technical
personnel, consultants, and other skilled and unskilled labor may be
counted as cost sharing or matching if the service is an integral and
necessary part of an approved project or program. Rates for volunteer
services shall be consistent with those paid for similar work in the
recipient's organization. In those instances in which the required skills
are not found in the recipient organization, rates shall be consistent
with those paid for similar work in the labor market in which the
recipient competes for the kind of services involved. In either case, paid
fringe benefits that are reasonable, allowable, and allocable may be
included in the valuation.

(e) When an employer other than the recipient furnishes the services of
an employee, these services shall be valued at the employee's regular rate
of pay (plus an amount of fringe benefits that are reasonable, allowable,
and allocable, but exclusive of overhead costs), provided these services
are in the same skill for which the employee is normally paid.

(f) Donated supplies may include such items as expendable equipment,
office supplies, laboratory supplies or workshop and classroom supplies.
Value assessed to donated supplies included in the cost sharing or
matching share shall be reasonable and shall not exceed the fair market
value of the property at the time of the donation.

(g) The method used for determining cost sharing or matching for
donated equipment, buildings and land for which title passes to the
recipient may differ according to the purpose of the award, if paragraphs
(g)(1) or (g)(2) of this section apply.

(1) If the purpose of the award is to assist the recipient in the
acquisition of equipment, buildings or land, the total value of the
donated property may be claimed as cost sharing or matching.

(2) If the purpose of the award is to support activities that require
the use of equipment, buildings or land, normally only depreciation or use
charges for equipment and buildings may be made. However, the full value
of equipment or other capital assets and fair rental charges for land may
be allowed, provided that the Federal awarding agency has approved the
charges.

(h) The value of donated property shall be determined in accordance
with the usual accounting policies of the recipient, with the following
qualifications.

(1) The value of donated land and buildings shall not exceed its fair
market value at the time of donation to the recipient as established by an
independent appraiser (e.g., certified real property appraiser or General
Services Administration representative) and certified by a responsible
official of the recipient.

(2) The value of donated equipment shall not exceed the fair market
value of equipment of the same age and condition at the time of
donation.

(3) The value of donated space shall not exceed the fair rental value
of comparable space as established by an independent appraisal of
comparable space and facilities in a privately-owned building in the same
locality.

(4) The value of loaned equipment shall not exceed its fair rental
value.

(5) The following requirements pertain to the recipient's supporting
records for in-kind contributions from third parties.

(i) Volunteer services shall be documented and, to the extent feasible,
supported by the same methods used by the recipient for its own
employees.

(ii) The basis for determining the valuation of personal service,
material, equipment, buildings and land shall be documented.

§ 3019.24   Program income.

top

(a) Federal awarding agencies shall apply the standards set forth in
this section in requiring recipient organizations to account for program
income related to projects financed in whole or in part with Federal
funds.

(b) Except as provided in paragraph (h) of this section, program income
earned during the project period shall be retained by the recipient and,
in accordance with Federal awarding agency regulations or the terms and
conditions of the award, shall be used in one or more of the ways listed
in the following.

(1) Added to funds committed to the project by the Federal awarding
agency and recipient and used to further eligible project or program
objectives.

(2) Used to finance the non-Federal share of the project or
program.

(3) Deducted from the total project or program allowable cost in
determining the net allowable costs on which the Federal share of costs is
based.

(c) When an agency authorizes the disposition of program income as
described in paragraphs (b)(1) or (b)(2) of this section, program income
in excess of any limits stipulated shall be used in accordance with
paragraph (b)(3) of this section.

(d) In the event that the Federal awarding agency does not specify in
its regulations or the terms and conditions of the award how program
income is to be used, paragraph (b)(3) of this section shall apply
automatically to all projects or programs except research. For awards that
support research, paragraph (b)(1) of this section shall apply
automatically unless the awarding agency indicates in the terms and
conditions another alternative on the award or the recipient is subject to
special award conditions, as indicated in §3019.14.

(e) Unless Federal awarding agency regulations or the terms and
conditions of the award provide otherwise, recipients shall have no
obligation to the Federal Government regarding program income earned after
the end of the project period.

(f) If authorized by Federal awarding agency regulations or the terms
and conditions of the award, costs incident to the generation of program
income may be deducted from gross income to determine program income,
provided these costs have not been charged to the award.

(g) Proceeds from the sale of property shall be handled in accordance
with the requirements of the Property Standards (See §§3019.30 through
3019.37).

(h) Unless Federal awarding agency regulations or the terms and
condition of the award provide otherwise, recipients shall have no
obligation to the Federal Government with respect to program income earned
from license fees and royalties for copyrighted material, patents, patent
applications, trademarks, and inventions produced under an award. However,
Patent and Trademark Amendments (35 U.S.C. 18) apply to inventions made
under an experimental, developmental, or research award.

§ 3019.25   Revision of budget and program
plans.

top

(a) The budget plan is the financial expression of the project or
program as approved during the award process. It may include either the
Federal and non-Federal share, or only the Federal share, depending upon
Federal awarding agency requirements. It shall be related to performance
for program evaluation purposes whenever appropriate.

(b) Recipients are required to report deviations from budget and
program plans, and request prior approvals for budget and program plan
revisions, in accordance with this section.

(c) For nonconstruction awards, recipients shall request prior
approvals from Federal awarding agencies for one or more of the following
program or budget related reasons.

(1) Change in the scope or the objective of the project or program
(even if there is no associated budget revision requiring prior written
approval).

(2) Change in a key person specified in the application or award
document.

(3) The absence for more than three months, or a 25 percent reduction
in time devoted to the project, by the approved project director or
principal investigator.

(4) The need for additional Federal funding.

(5) The transfer of amounts budgeted for indirect costs to absorb
increases in direct costs, or vice versa, if approval is required by the
Federal awarding agency.

(6) The inclusion, unless waived by the Federal awarding agency, of
costs that require prior approval in accordance with OMB Circular A–21,
“Cost Principles for Institutions of Higher Education,” OMB Circular
A–122, “Cost Principles for Non-Profit Organizations,” or 45 CFR part 74
Appendix E, “Principles for Determining Costs Applicable to Research and
Development under Grants and Contracts with Hospitals,” or 48 CFR part 31,
“Contract Cost Principles and Procedures,” as applicable.

(7) The transfer of funds allotted for training allowances (direct
payment to trainees) to other categories of expense.

(8) Unless described in the application and funded in the approved
awards, the subaward, transfer or contracting out of any work under an
award. This provision does not apply to the purchase of supplies,
material, equipment or general support services.

(d) No other prior approval requirements for specific items may be
imposed unless a deviation has been approved by OMB.

(e) Except for requirements listed in paragraphs (c)(1) and (c)(4) of
this section, Federal awarding agencies are authorized, at their option,
to waive cost-related and administrative prior written approvals required
by this part and OMB Circulars A–21 and A–122. Such waivers may include
authorizing recipients to do any one or more of the following.

(1) Incur pre-award costs 90 calendar days prior to award or more than
90 calendar days with the prior approval of the Federal awarding agency.
All pre-award costs are incurred at the recipient's risk ( i.e. ,
the Federal awarding agency is under no obligation to reimburse such costs
if for any reason the recipient does not receive an award or if the award
is less than anticipated and inadequate to cover such costs).

(2) Initiate a one-time extension of the expiration date of the award
of up to 12 months unless one or more of the following conditions apply.
For one-time extensions, the recipient must notify the Federal awarding
agency in writing with the supporting reasons and revised expiration date
at least 10 days before the expiration date specified in the award. This
one-time extension may not be exercised merely for the purpose of using
unobligated balances.

(i) The terms and conditions of award prohibit the extension.

(ii) The extension requires additional Federal funds.

(iii) The extension involves any change in the approved objectives or
scope of the project.

(3) Carry forward unobligated balances to subsequent funding
periods.

(4) For awards that support research, unless the Federal awarding
agency provides otherwise in the award or in the agency's regulations, the
prior approval requirements described in this paragraph (e) are
automatically waived ( i.e. , recipients need not obtain such prior
approvals) unless one of the conditions included in paragraph (e)(2) of
this section applies.

(f) The Federal awarding agency may, at its option, restrict the
transfer of funds among direct cost categories or programs, functions and
activities for awards in which the Federal share of the project exceeds
$100,000 and the cumulative amount of such transfers exceeds or is
expected to exceed 10 percent of the total budget as last approved by the
Federal awarding agency. No Federal awarding agency shall permit a
transfer that would cause any Federal appropriation or part thereof to be
used for purposes other than those consistent with the original intent of
the appropriation.

(g) All other changes to nonconstruction budgets, except for the
changes described in paragraph (j) of this section, do not require prior
approval.

(h) For construction awards, recipients shall request prior written
approval promptly from Federal awarding agencies for budget revisions
whenever paragraphs (h)(1), (h)(2) or (h)(3) of this section apply.

(1) The revision results from changes in the scope or the objective of
the project or program.

(2) The need arises for additional Federal funds to complete the
project.

(3) A revision is desired which involves specific costs for which prior
written approval requirements may be imposed consistent with applicable
OMB cost principles listed in §3019.27.

(i) No other prior approval requirements for specific items may be
imposed unless a deviation has been approved by OMB.

(j) When a Federal awarding agency makes an award that provides support
for both construction and nonconstruction work, the Federal awarding
agency may require the recipient to request prior approval from the
Federal awarding agency before making any fund or budget transfers between
the two types of work supported.

(k) For both construction and nonconstruction awards, Federal awarding
agencies shall require recipients to notify the Federal awarding agency in
writing promptly whenever the amount of Federal authorized funds is
expected to exceed the needs of the recipient for the project period by
more than $5000 or five percent of the Federal award, whichever is
greater. This notification shall not be required if an application for
additional funding is submitted for a continuation award.

(l) When requesting approval for budget revisions, recipients shall use
the budget forms that were used in the application unless the Federal
awarding agency indicates a letter of request suffices.

(m) Within 30 calendar days from the date of receipt of the request for
budget revisions, Federal awarding agencies shall review the request and
notify the recipient whether the budget revisions have been approved. If
the revision is still under consideration at the end of 30 calendar days,
the Federal awarding agency shall inform the recipient in writing of the
date when the recipient may expect the decision.

§ 3019.26   Non-Federal audits.

top

(a) Recipients and subrecipients that are institutions of higher
education or other non-profit organizations (including hospitals) shall be
subject to the audit requirements contained in the Single Audit Act
Amendments of 1996 (31 U.S.C. 7501–7507) and revised OMB Circular A–133,
“Audits of States, Local Governments, and Non-Profit Organizations.”

(b) State and local governments shall be subject to the audit
requirements contained in the Single Audit Act Amendments of 1996 (31
U.S.C. 7501–7507) and revised OMB Circular A–133, “Audits of States, Local
Governments, and Non-Profit Organizations.”

(c) For-profit hospitals not covered by the audit provisions of revised
OMB Circular A–133 shall be subject to the audit requirements of the
Federal awarding agencies.

(d) Commercial organizations shall be subject to the audit requirements
of the Federal awarding agency or the prime recipient as incorporated into
the award document.

(e) In USDA, revised OMB Circular A–133 is implemented in 7 CFR part
3052, “Audits of States, Local Governments, and Non-Profit
Organizations.”

[60 FR 44124, Aug. 24, 1995, as amended at 62 FR 45939, Aug. 29,
1997]

§ 3019.27   Allowable costs.

top

For each kind of recipient, there is a set of Federal principles for
determining allowable costs. Allowability of costs shall be determined in
accordance with the cost principles applicable to the entity incurring the
costs. Thus, allowability of costs incurred by State, local or
federally-recognized Indian tribal governments is determined in accordance
with the provisions of OMB Circular A–87, “Cost Principles for State and
Local Governments.” The allowability of costs incurred by non-profit
organizations is determined in accordance with the provisions of OMB
Circular A–122, “Cost Principles for Non-Profit Organizations.” The
allowability of costs incurred by institutions of higher education is
determined in accordance with the provisions of OMB Circular A–21, “Cost
Principles for Educational Institutions.” The allowability of costs
incurred by hospitals is determined in accordance with the provisions of
Appendix E of 45 CFR part 74, “Principles for Determining Costs Applicable
to Research and Development Under Grants and Contracts with Hospitals.”
The allowability of costs incurred by commercial organizations and those
non-profit organizations listed in Attachment C to Circular A–122 is
determined in accordance with the provisions of the Federal Acquisition
Regulation (FAR) at 48 CFR part 31.

§ 3019.28   Period of availability of
funds.

top

Where a funding period is specified, a recipient may charge to the
grant only allowable costs resulting from obligations incurred during the
funding period and any pre-award costs authorized by the Federal awarding
agency.

Property Standards

top

§ 3019.30   Purpose of property
standards.

top

Sections 3019.31 through 3019.37 set forth uniform standards governing
management and disposition of property furnished by the Federal Government
whose cost was charged to a project supported by a Federal award. Federal
awarding agencies shall require recipients to observe these standards
under awards and shall not impose additional requirements, unless
specifically required by Federal statute. The recipient may use its own
property management standards and procedures provided it observes the
provisions of §§3019.31 through 3019.37.

§ 3019.31   Insurance coverage.

top

Recipients shall, at a minimum, provide the equivalent insurance
coverage for real property and equipment acquired with Federal funds as
provided to property owned by the recipient. Federally-owned property need
not be insured unless required by the terms and conditions of the
award.

§ 3019.32   Real property.

top

Each Federal awarding agency shall prescribe requirements for
recipients concerning the use and disposition of real property acquired in
whole or in part under awards. Unless otherwise provided by statute, such
requirements, at a minimum, shall contain the following.

(a) Title to real property shall vest in the recipient subject to the
condition that the recipient shall use the real property for the
authorized purpose of the project as long as it is needed and shall not
encumber the property without approval of the Federal awarding agency.

(b) The recipient shall obtain written approval by the Federal awarding
agency for the use of real property in other federally-sponsored projects
when the recipient determines that the property is no longer needed for
the purpose of the original project. Use in other projects shall be
limited to those under federally-sponsored projects ( i.e. ,
awards) or programs that have purposes consistent with those authorized
for support by the Federal awarding agency.

(c) When the real property is no longer needed as provided in
paragraphs (a) and (b), the recipient shall request disposition
instructions from the Federal awarding agency or its successor Federal
awarding agency. The Federal awarding agency shall observe one or more of
the following disposition instructions.

(1) The recipient may be permitted to retain title without further
obligation to the Federal Government after it compensates the Federal
Government for that percentage of the current fair market value of the
property attributable to the Federal participation in the project.

(2) The recipient may be directed to sell the property under guidelines
provided by the Federal awarding agency and pay the Federal Government for
that percentage of the current fair market value of the property
attributable to the Federal participation in the project (after deducting
actual and reasonable selling and fix-up expenses, if any, from the sales
proceeds). When the recipient is authorized or required to sell the
property, proper sales procedures shall be established that provide for
competition to the extent practicable and result in the highest possible
return.

(3) The recipient may be directed to transfer title to the property to
the Federal Government or to an eligible third party provided that, in
such cases, the recipient shall be entitled to compensation for its
attributable percentage of the current fair market value of the
property.

§ 3019.33   Federally-owned and exempt
property.

top

(a) Federally-owned property. (1) Title to federally-owned
property remains vested in the Federal Government. Recipients shall submit
annually an inventory listing of federally-owned property in their custody
to the Federal awarding agency. Upon completion of the award or when the
property is no longer needed, the recipient shall report the property to
the Federal awarding agency for further Federal agency utilization.

(2) If the Federal awarding agency has no further need for the
property, it shall be declared excess and reported to the General Services
Administration, unless the Federal awarding agency has statutory authority
to dispose of the property by alternative methods (e.g., the authority
provided by the Federal Technology Transfer Act (15 U.S.C. 3710(I)) to
donate research equipment to educational and non-profit organizations in
accordance with E.O. 12821, “Improving Mathematics and Science Education
in Support of the National Education Goals”). Appropriate instructions
shall be issued to the recipient by the Federal awarding agency.

(b) Exempt property. When statutory authority exists, the
Federal awarding agency has the option to vest title to property acquired
with Federal funds in the recipient without further obligation to the
Federal Government and under conditions the Federal awarding agency
considers appropriate. Such property is “exempt property.” Should a
Federal awarding agency not establish conditions, title to exempt property
upon acquisition shall vest in the recipient without further obligation to
the Federal Government.

§ 3019.34   Equipment.

top

(a) Title to equipment acquired by a recipient with Federal funds shall
vest in the recipient, subject to conditions of this section.

(b) The recipient shall not use equipment acquired with Federal funds
to provide services to non-Federal outside organizations for a fee that is
less than private companies charge for equivalent services, unless
specifically authorized by Federal statute, for as long as the Federal
Government retains an interest in the equipment.

(c) The recipient shall use the equipment in the project or program for
which it was acquired as long as needed, whether or not the project or
program continues to be supported by Federal funds and shall not encumber
the property without approval of the Federal awarding agency. When no
longer needed for the original project or program, the recipient shall use
the equipment in connection with its other federally-sponsored activities,
in the following order of priority:

(1) Activities sponsored by the Federal awarding agency which funded
the original project, then

(2) Activities sponsored by other Federal awarding agencies.

(d) During the time that equipment is used on the project or program
for which it was acquired, the recipient shall make it available for use
on other projects or programs if such other use will not interfere with
the work on the project or program for which the equipment was originally
acquired. First preference for such other use shall be given to other
projects or programs sponsored by the Federal awarding agency that
financed the equipment; second preference shall be given to projects or
programs sponsored by other Federal awarding agencies. If the equipment is
owned by the Federal Government, use on other activities not sponsored by
the Federal Government shall be permissible if authorized by the Federal
awarding agency. User charges shall be treated as program income.

(e) When acquiring replacement equipment, the recipient may use the
equipment to be replaced as trade-in or sell the equipment and use the
proceeds to offset the costs of the replacement equipment subject to the
approval of the Federal awarding agency.

(f) The recipient's property management standards for equipment
acquired with Federal funds and federally-owned equipment shall include
all of the following.

(1) Equipment records shall be maintained accurately and shall include
the following information.

(i) A description of the equipment.

(ii) Manufacturer's serial number, model number, Federal stock number,
national stock number, or other identification number.

(iii) Source of the equipment, including the award number.

(iv) Whether title vests in the recipient or the Federal
Government.

(v) Acquisition date (or date received, if the equipment was furnished
by the Federal Government) and cost.

(vi) Information from which one can calculate the percentage of Federal
participation in the cost of the equipment (not applicable to equipment
furnished by the Federal Government).

(vii) Location and condition of the equipment and the date the
information was reported.

(viii) Unit acquisition cost.

(ix) Ultimate disposition data, including date of disposal and sales
price or the method used to determine current fair market value where a
recipient compensates the Federal awarding agency for its share.

(2) Equipment owned by the Federal Government shall be identified to
indicate Federal ownership.

(3) A physical inventory of equipment shall be taken and the results
reconciled with the equipment records at least once every two years. Any
differences between quantities determined by the physical inspection and
those shown in the accounting records shall be investigated to determine
the causes of the difference. The recipient shall, in connection with the
inventory, verify the existence, current utilization, and continued need
for the equipment.

(4) A control system shall be in effect to ensure adequate safeguards
to prevent loss, damage, or theft of the equipment. Any loss, damage, or
theft of equipment shall be investigated and fully documented; if the
equipment was owned by the Federal Government, the recipient shall
promptly notify the Federal awarding agency.

(5) Adequate maintenance procedures shall be implemented to keep the
equipment in good condition.

(6) Where the recipient is authorized or required to sell the
equipment, proper sales procedures shall be established which provide for
competition to the extent practicable and result in the highest possible
return.

(g) When the recipient no longer needs the equipment, the equipment may
be used for other activities in accordance with the following standards.
For equipment with a current per unit fair market value of $5000 or more,
the recipient may retain the equipment for other uses provided that
compensation is made to the original Federal awarding agency or its
successor. The amount of compensation shall be computed by applying the
percentage of Federal participation in the cost of the original project or
program to the current fair market value of the equipment. If the
recipient has no need for the equipment, the recipient shall request
disposition instructions from the Federal awarding agency. The Federal
awarding agency shall determine whether the equipment can be used to meet
the agency's requirements. If no requirement exists within that agency,
the availability of the equipment shall be reported to the General
Services Administration by the Federal awarding agency to determine
whether a requirement for the equipment exists in other Federal agencies.
The Federal awarding agency shall issue instructions to the recipient no
later than 120 calendar days after the recipient's request and the
following procedures shall govern.

(1) If so instructed or if disposition instructions are not issued
within 120 calendar days after the recipient's request, the recipient
shall sell the equipment and reimburse the Federal awarding agency an
amount computed by applying to the sales proceeds the percentage of
Federal participation in the cost of the original project or program.
However, the recipient shall be permitted to deduct and retain from the
Federal share $500 or ten percent of the proceeds, whichever is less, for
the recipient's selling and handling expenses.

(2) If the recipient is instructed to ship the equipment elsewhere, the
recipient shall be reimbursed by the Federal Government by an amount which
is computed by applying the percentage of the recipient's participation in
the cost of the original project or program to the current fair market
value of the equipment, plus any reasonable shipping or interim storage
costs incurred.

(3) If the recipient is instructed to otherwise dispose of the
equipment, the recipient shall be reimbursed by the Federal awarding
agency for such costs incurred in its disposition.

(4) The Federal awarding agency may reserve the right to transfer the
title to the Federal Government or to a third party named by the Federal
Government when such third party is otherwise eligible under existing
statutes. Such transfer shall be subject to the following standards.

(i) The equipment shall be appropriately identified in the award or
otherwise made known to the recipient in writing.

(ii) The Federal awarding agency shall issue disposition instructions
within 120 calendar days after receipt of a final inventory. The final
inventory shall list all equipment acquired with grant funds and
federally-owned equipment. If the Federal awarding agency fails to issue
disposition instructions within the 120 calendar day period, the recipient
shall apply the standards of this section, as appropriate.

(iii) When the Federal awarding agency exercises its right to take
title, the equipment shall be subject to the provisions for
federally-owned equipment.

§ 3019.35   Supplies and other expendable
property.

top

(a) Title to supplies and other expendable property shall vest in the
recipient upon acquisition. If there is a residual inventory of unused
supplies exceeding $5000 in total aggregate value upon termination or
completion of the project or program and the supplies are not needed for
any other federally-sponsored project or program, the recipient shall
retain the supplies for use on non-Federal sponsored activities or sell
them, but shall, in either case, compensate the Federal Government for its
share. The amount of compensation shall be computed in the same manner as
for equipment.

(b) The recipient shall not use supplies acquired with Federal funds to
provide services to non-Federal outside organizations for a fee that is
less than private companies charge for equivalent services, unless
specifically authorized by Federal statute as long as the Federal
Government retains an interest in the supplies.

§ 3019.36   Intangible property.

top

(a) The recipient may copyright any work that is subject to copyright
and was developed, or for which ownership was purchased, under an award.
The Federal awarding agency(ies) reserve a royalty-free, nonexclusive and
irrevocable right to reproduce, publish, or otherwise use the work for
Federal purposes, and to authorize others to do so.

(b) Recipients are subject to applicable regulations governing patents
and inventions, including government-wide regulations issued by the
Department of Commerce at 37 CFR part 401, “Rights to Inventions Made by
Nonprofit Organizations and Small Business Firms Under Government Grants,
Contracts and Cooperative Agreements.”

(c) The Federal Government has the right to:

(1) Obtain, reproduce, publish or otherwise use the data first produced
under an award; and

(2) Authorize others to receive, reproduce, publish, or otherwise use
such data for Federal purposes.

(d) (1) In addition, in response to a Freedom of Information Act (FOIA)
request for research data relating to published research findings produced
under an award that were used by the Federal Government in developing an
agency action that has the force and effect of law, the Federal awarding
agency shall request, and the recipient shall provide, within a reasonable
time, the research data so that they can be made available to the public
through the procedures established under the FOIA. If the Federal awarding
agency obtains the research data solely in response to a FOIA request, the
agency may charge the requester a reasonable fee equaling the full
incremental cost of obtaining the research data. This fee should reflect
costs incurred by the agency, the recipient, and applicable subrecipients.
This fee is in addition to any fees the agency may assess under the FOIA
(5 U.S.C. 552(a)(4)(A)).

(2) The following definitions apply for purposes of this paragraph
(d):

(i) Research data is defined as the recorded factual material
commonly accepted in the scientific community as necessary to validate
research findings, but not any of the following: preliminary analyses,
drafts of scientific papers, plans for future research, peer reviews, or
communications with colleagues. This “recorded” material excludes physical
objects (e.g., laboratory samples). Research data also do not
include:

(A) Trade secrets, commercial information, materials necessary to be
held confidential by a researcher until they are published, or similar
information which is protected under law; and

(B) Personnel and medical information and similar information the
disclosure of which would constitute a clearly unwarranted invasion of
personal privacy, such as information that could be used to identify a
particular person in a research study.

(ii) Published is defined as either when:

(A) Research findings are published in a peer-reviewed scientific or
technical journal; or

(B) A Federal agency publicly and officially cites the research
findings in support of an agency action that has the force and effect of
law.

(iii) Used by the Federal Government in developing an agency action
that has the force and effect of law is defined as when an agency
publicly and officially cites the research findings in support of an
agency action that has the force and effect of law.

(e) Title to intangible property and debt instruments acquired under an
award or subaward vests upon acquisition in the recipient. The recipient
shall use that property for the originally-authorized purpose, and the
recipient shall not encumber the property without approval of the Federal
awarding agency. When no longer needed for the originally authorized
purpose, disposition of the intangible property shall occur in accordance
with the provisions of §3019.34(g).

[60 FR 44124, Aug. 24, 1995, as amended at 65 FR 14407, 14408, Mar. 16,
2000]

§ 3019.37   Property trust
relationship.

top

Real property, equipment, intangible property and debt instruments that
are acquired or improved with Federal funds shall be held in trust by the
recipient as trustee for the beneficiaries of the project or program under
which the property was acquired or improved. Agencies may require
recipients to record liens or other appropriate notices of record to
indicate that personal or real property has been acquired or improved with
Federal funds and that use and disposition conditions apply to the
property.

Procurement Standards

top

§ 3019.40   Purpose of procurement
standards.

top

Sections 3019.41 through 3019.48 set forth standards for use by
recipients in establishing procedures for the procurement of supplies and
other expendable property, equipment, real property and other services
with Federal funds. These standards are furnished to ensure that such
materials and services are obtained in an effective manner and in
compliance with the provisions of applicable Federal statutes and
executive orders. No additional procurement standards or requirements
shall be imposed by the Federal awarding agencies upon recipients, unless
specifically required by Federal statute or executive order or approved by
OMB.

§ 3019.41   Recipient responsibilities.

top

The standards contained in this section do not relieve the recipient of
the contractual responsibilities arising under its contract(s). The
recipient is the responsible authority, without recourse to the Federal
awarding agency, regarding the settlement and satisfaction of all
contractual and administrative issues arising out of procurements entered
into in support of an award or other agreement. This includes disputes,
claims, protests of award, source evaluation or other matters of a
contractual nature. Matters concerning violation of statute are to be
referred to such Federal, State or local authority as may have proper
jurisdiction.

§ 3019.42   Codes of conduct.

top

The recipient shall maintain written standards of conduct governing the
performance of its employees engaged in the award and administration of
contracts. No employee, officer, or agent shall participate in the
selection, award, or administration of a contract supported by Federal
funds if a real or apparent conflict of interest would be involved. Such a
conflict would arise when the employee, officer, or agent, any member of
his or her immediate family, his or her partner, or an organization which
employs or is about to employ any of the parties indicated herein, has a
financial or other interest in the firm selected for an award. The
officers, employees, and agents of the recipient shall neither solicit nor
accept gratuities, favors, or anything of monetary value from contractors,
or parties to subagreements. However, recipients may set standards for
situations in which the financial interest is not substantial or the gift
is an unsolicited item of nominal value. The standards of conduct shall
provide for disciplinary actions to be applied for violations of such
standards by officers, employees, or agents of the recipient.

§ 3019.43   Competition.

top

All procurement transactions shall be conducted in a manner to provide,
to the maximum extent practical, open and free competition. The recipient
shall be alert to organizational conflicts of interests as well as
noncompetitive practices among contractors that may restrict or eliminate
competition or otherwise restrain trade. In order to ensure objective
contractor performance and eliminate unfair competitive advantage,
contractors that develop or draft specifications, requirements, statements
of work, invitations for bids and/or requests for proposals shall be
excluded from competing for such procurements. Awards shall be made to the
bidder or offeror whose bid or offer is responsive to the solicitation and
is most advantageous to the recipient, price, quality and other factors
considered. Solicitations shall clearly set forth all requirements that
the bidder or offeror shall fulfill in order for the bid or offer to be
evaluated by the recipient. Any and all bids or offers may be rejected
when it is in the recipient's interest to do so.

§ 3019.44   Procurement procedures.

top

(a) All recipients shall establish written procurement procedures.
These procedures shall provide for, at a minimum, that paragraphs (a)(1),
(a)(2), and (a)(3) of this section apply.

(1) Recipients avoid purchasing unnecessary items.

(2) Where appropriate, an analysis is made of lease and purchase
alternatives to determine which would be the most economical and practical
procurement for the Federal Government.

(3) Solicitations for goods and services provide for all of the
following:

(i) A clear and accurate description of the technical requirements for
the material, product or service to be procured. In competitive
procurements, such a description shall not contain features which unduly
restrict competition.

(ii) Requirements which the bidder/offeror must fulfill and all other
factors to be used in evaluating bids or proposals.

(iii) A description, whenever practicable, of technical requirements in
terms of functions to be performed or performance required, including the
range of acceptable characteristics or minimum acceptable standards.

(iv) The specific features of “brand name or equal” descriptions that
bidders are required to meet when such items are included in the
solicitation.

(v) The acceptance, to the extent practicable and economically
feasible, of products and services dimensioned in the metric system of
measurement.

(vi) Preference, to the extent practicable and economically feasible,
for products and services that conserve natural resources and protect the
environment and are energy efficient.

(b) Positive efforts shall be made by recipients to utilize small
businesses, minority-owned firms, and women's business enterprises,
whenever possible. Recipients of Federal awards shall take all of the
following steps to further this goal.

(1) Ensure that small businesses, minority-owned firms, and women's
business enterprises are used to the fullest extent practicable.

(2) Make information on forthcoming opportunities available and arrange
time frames for purchases and contracts to encourage and facilitate
participation by small businesses, minority-owned firms, and women's
business enterprises.

(3) Consider in the contract process whether firms competing for larger
contracts intend to subcontract with small businesses, minority-owned
firms, and women's business enterprises.

(4) Encourage contracting with consortiums of small businesses,
minority-owned firms and women's business enterprises when a contract is
too large for one of these firms to handle individually.

(5) Use the services and assistance, as appropriate, of such
organizations as the Small Business Administration and the Department of
Commerce's Minority Business Development Agency in the solicitation and
utilization of small businesses, minority-owned firms and women's business
enterprises.

(c) The type of procuring instruments used (e.g., fixed price
contracts, cost reimbursable contracts, purchase orders, and incentive
contracts) shall be determined by the recipient but shall be appropriate
for the particular procurement and for promoting the best interest of the
program or project involved. The “cost-plus-a-percentage-of-cost” or
“percentage of construction cost” methods of contracting shall not be
used.

(d) Contracts shall be made only with responsible contractors who
possess the potential ability to perform successfully under the term and
conditions of the proposed procurement. Consideration shall be given to
such matters as contractor integrity, record of past performance,
financial and technical resources or accessibility to other necessary
resources. In certain circumstances, contracts with certain parties are
restricted by agencies' implementation of E.O.s 12549 and 12689,
“Debarment and Suspension.”

(e) Recipients shall, on request, make available for the Federal
awarding agency, pre-award review and procurement documents, such as
request for proposals or invitations for bids, independent cost estimates,
etc., when any of the following conditions apply.

(1) A recipient's procurement procedures or operation fails to comply
with the procurement standards in the Federal awarding agency's
implementation of this part.

(2) The procurement is expected to exceed the small purchase threshold
fixed at 41 U.S.C. 403(11) (currently $25,000) and is to be awarded
without competition or only one bid or offer is received in response to a
solicitation.

(3) The procurement, which is expected to exceed the small purchase
threshold, specifies a “brand name” product.

(4) The proposed award over the small purchase threshold is to be
awarded to other than the apparent low bidder under a sealed bid
procurement.

(5) A proposed contract modification changes the scope of a contract or
increases the contract amount by more than the amount of the small
purchase threshold.

§ 3019.45   Cost and price analysis.

top

Some form of cost or price analysis shall be made and documented in the
procurement files in connection with every procurement action. Price
analysis may be accomplished in various ways, including the comparison of
price quotations submitted, market prices and similar indicia, together
with discounts. Cost analysis is the review and evaluation of each element
of cost to determine reasonableness, allocability and allowability.

§ 3019.46   Procurement records.

top

Procurement records and files for purchases in excess of the small
purchase threshold shall include the following at a minimum:

(a) Basis for contractor selection,

(b) Justification for lack of competition bids or offers are not
obtained, and

(c) Basis for award cost or price.

§ 3019.47   Contract administration.

top

A system for contract administration shall be maintained to ensure
contractor conformance with the terms, conditions and specifications of
the contract and to ensure adequate and timely follow up of all purchases.
Recipients shall evaluate contractor performance and document, as
appropriate, whether contractors have met the terms, conditions and
specifications of the contract.

§ 3019.48   Contract provisions.

top

The recipient shall include, in addition to provisions to define a
sound and complete agreement, the following provisions in all contracts.
The following provisions shall also be applied to subcontracts.

(a) Contracts in excess of the small purchase threshold shall contain
contractual provisions or conditions that allow for administrative,
contractual, or legal remedies in instances in which a contractor violates
or breaches the contract terms, and provide for such remedial actions as
may be appropriate.

(b) All contracts in excess of the small purchase threshold shall
contain suitable provisions for termination by the recipient, including
the manner by which termination shall be effected and the basis for
settlement. In addition, such contracts shall describe conditions under
which the contract may be terminated for default as well as conditions
where the contract may be terminated because of circumstances beyond the
control of the contractor.

(c) Except as otherwise required by statute, an award that requires the
contracting (or subcontracting) for construction or facility improvements
shall provide for the recipient to follow its own requirements relating to
bid guarantees, performance bonds, and payment bonds unless the
construction contract or subcontract exceeds $100,00. For those contracts
or subcontracts exceeding $100,000, the Federal awarding agency may accept
the bonding policy and requirements of the recipient, provided the Federal
awarding agency has made a determination that the Federal Government's
interest is adequately protected. If such a determination has not been
made, the minimum requirements shall be as follows.

(1) A bid guarantee from each bidder equivalent to five percent of the
bid price. The “bid guarantee” shall consist of a firm commitment such as
a bid bond, certified check, or other negotiable instrument accompanying a
bid as assurance that the bidder shall, upon acceptance of his bid,
execute such contractual documents as may be required within the time
specified.

(2) A performance bond on the part of the contractor for 100 percent of
the contract price. A “performance bond” is one executed in connection
with a contract to secure fulfillment of all the contractor's obligations
under such contract.

(3) A payment bond on the part of the contractor for 100 percent of the
contract price. A “payment bond” is one executed in connection with a
contract to assure payment as required by statute of all persons supplying
labor and material in the execution of the work provided for in the
contract.

(4) Where bonds are required in the situations described herein, the
bonds shall be obtained from companies holding certificates of authority
as acceptable sureties pursuant to 31 CFR part 223, “Surety Companies
Doing Business with the United States.”

(d) All negotiated contracts (except those for less than the small
purchase threshold) awarded by recipients shall include a provision to the
effect that the recipient, the Federal awarding agency, the Comptroller
General of the United States, or any of their duly authorized
representatives, shall have access to any books, documents, papers and
records of the contractor which are directly pertinent to a specific
program for the purpose of making audits, examinations, excerpts and
transcriptions.

(e) All contracts, including small purchases, awarded by recipients and
their contractors shall contain the procurement provisions of Appendix A
to this part, as applicable.

Reports and Records

top

§ 3019.50   Purpose of reports and
records.

top

Sections 3019.51 through 3019.53 set forth the procedures for
monitoring and reporting on the recipient's financial and program
performance and the necessary standard reporting forms. They also set
forth record retention requirements.

§ 3019.51   Monitoring and reporting program
performance.

top

(a) Recipients are responsible for managing and monitoring each
project, program, subaward, function or activity supported by the award.
Recipients shall monitor subawards to ensure subrecipients have met the
audit requirements as delineated in Section 3019.26.

(b) The Federal awarding agency shall prescribe the frequency with
which the performance reports shall be submitted. Except as provided in
paragraph (f) of this section, performance reports shall not be required
more frequently than quarterly or, less frequently than annually. Annual
reports shall be due 90 calendar days after the grant year; quarterly or
semi-annual reports shall be due 30 days after the reporting period. The
Federal awarding agency may require annual reports before the anniversary
dates of multiple years awards in lieu of these requirements. The final
performance reports are due 90 calendar days after the expiration or
termination of the award.

(c) If inappropriate, a final technical or performance report shall not
be required after completion of the project.

(d) When required, performance reports shall generally contain, for
each award, brief information on each of the following.

(1) A comparison of actual accomplishments with the goals and
objectives established for the period, the findings of the investigator,
or both. Whenever appropriate and the output of programs or projects can
be readily quantified, such quantitative data should be related to cost
data for computation of unit costs.

(2) Reasons why established goals were not met, if appropriate.

(3) Other pertinent information including, when appropriate, analysis
and explanation of cost overruns or high unit costs.

(e) Recipients shall not be required to submit more than the original
and two copies of performance reports.

(f) Recipients shall immediately notify the Federal awarding agency of
developments that have a significant impact on the award-supported
activities. Also, notification shall be given in the case of problems,
delays, or adverse conditions which materially impair the ability to meet
the objectives of the award. This notification shall include a statement
of the action taken or contemplated, and any assistance needed to resolve
the situation.

(g) Federal awarding agencies may make site visits, as needed.

(h) Federal awarding agencies shall comply with clearance requirements
of 5 CFR part 1320 when requesting performance data from recipients.

§ 3019.52   Financial reporting.

top

(a) The following forms or such other forms as may be approved by OMB
are authorized for obtaining financial information from recipients.

(1) SF–269 or SF–269A, Financial Status Report.

(i) Each Federal awarding agency shall require recipients to use the
SF–269 or SF–269A to report the status of funds for all nonconstruction
projects or programs. A Federal awarding agency may, however, have the
option of not requiring the SF–269 or SF–269A when the SF–270, Request for
Advance or Reimbursement, or SF–272, Report of Federal Cash Transactions,
is determined to provided adequate information to meet its needs, except
that a final SF–269 or SF–269A shall be required at the completion of the
project when the SF–270 is used only for advances.

(ii) The Federal awarding agency shall prescribe whether the report
shall be on a cash or accrual basis. If the Federal awarding agency
requires accrual information and the recipient's accounting records are
not normally kept on the accrual basis, the recipient shall not be
required to convert its accounting system, but shall develop such accrual
information through best estimates based on an analysis of the
documentation on hand.

(iii) The Federal awarding agency shall determine the frequency of the
Financial Status Report for each project or program, considering the size
and complexity of the particular project or program. However, the report
shall not be required more frequently than quarterly or less frequently
than annually. A final report shall be required at the completion of the
agreement.

(iv) The Federal awarding agency shall require recipients to submit the
SF–269 or SF–269A (an original and no more than two copies no later than
30 days after the end of each specified reporting period for quarterly and
semi-

annual reports, and 90 calendar days for annual and final reports.
Extensions of reporting due dates may be approved by the Federal awarding
agency upon request of the recipient.

(2) SF–272, Report of Federal Cash Transactions.

(i) When funds are advanced to recipients the Federal awarding agency
shall require each recipient to submit the SF–272 and, when necessary, its
continuation sheet, SF–272a. The Federal awarding agency shall use this
report to monitor cash advanced to recipients and to obtain disbursement
information for each agreement with the recipients.

(ii) Federal awarding agencies may require forecasts of Federal cash
requirements in the “Remarks” section of the report.

(iii) When practical and deemed necessary, Federal awarding agencies
may require recipients to report in the “Remarks” section the amount of
cash advances received in excess of three days. Recipients shall provide
short narrative explanations of actions taken to reduce the excess
balances.

(iv) Recipients shall be required to submit not more than the original
and two copies of the SF–272 15 calendar days following the end of each
quarter. The Federal awarding agencies may require a monthly report from
those recipients receiving advances totaling $1 million or more per
year.

(v) Federal awarding agencies may waive the requirement for submission
of the SF–272 for any one of the following reasons:

(A) When monthly advances do not exceed $25,000 per recipient, provided
that such advances are monitored through other forms contained in this
section;

(B) If, in the Federal awarding agency's opinion, the recipient's
accounting controls are adequate to minimize excessive Federal advances;
or

(C) When the electronic payment mechanisms provide adequate data.

(b) When the Federal awarding agency needs additional information or
more frequent reports, the following shall be observed.

(1) When additional information is needed to comply with legislative
requirements, Federal awarding agencies shall issue instructions to
require recipients to submit such information under the “Remarks” section
of the reports.

(2) When a Federal awarding agency determines that a recipient's
accounting system does not meet the standards in §3019.21, additional
pertinent information to further monitor awards may be obtained upon
written notice to the recipient until such time as the system is brought
up to standard. The Federal awarding agency, in obtaining this
information, shall comply with report clearance requirements of 5 CFR part
1320.

(3) Federal awarding agencies are encouraged to shade out any line item
on any report if not necessary.

(4) Federal awarding agencies may accept the identical information from
the recipients in machine readable format or computer printouts or
electronic outputs in lieu of prescribed formats.

(5) Federal awarding agencies may provide computer or electronic
outputs to recipients when such expedites or contributes to the accuracy
of reporting.

§ 3019.53   Retention and access requirements for
records.

top

(a) This section sets forth requirements for record retention and
access to records for awards to recipients. Federal awarding agencies
shall not impose any other record retention or access requirements upon
recipients.

(b) Financial records, supporting documents, statistical records, and
all other records pertinent to an award shall be retained for a period of
three years from the date of submission of the final expenditure report
or, for awards that are renewed quarterly or annually, from the date of
the submission of the quarterly or annual financial report, as authorized
by the Federal awarding agency. The only exceptions are the following.

(1) If any litigation, claim, or audit is started before the expiration
of the 3-year period, the records shall be retained until all litigation,
claims or audit findings involving the records have been resolved and
final action taken.

(2) Records for real property and equipment acquired with Federal funds
shall be retained for 3 years after final disposition.

(3) When records are transferred to or maintained by the Federal
awarding agency, the 3-year retention requirement is not applicable to the
recipient.

(4) Indirect cost rate proposals, cost allocations plans, etc. as
specified in paragraph (g) of this section.

(c) Copies of original records may be substituted for the original
records if authorized by the Federal awarding agency.

(d) The Federal awarding agency shall request transfer of certain
records to its custody from recipients when it determines that the records
possess long term retention value. However, in order to avoid duplicate
recordkeeping, a Federal awarding agency may make arrangements for
recipients to retain any records that are continuously needed for joint
use.

(e) The Federal awarding agency, the Inspector General, Comptroller
General of the United States, or any of their duly authorized
representatives, have the right of timely and unrestricted access to any
books, documents, papers, or other records of recipients that are
pertinent to the awards, in order to make audits, examinations, excerpts,
transcripts and copies of such documents. This right also includes timely
and reasonable access to a recipient's personnel for the purpose of
interview and discussion related to such documents. The rights of access
in this paragraph are not limited to the required retention period, but
shall last as long as records are retained.

(f) Unless required by statute, no Federal awarding agency shall place
restrictions on receipts that limit public access to the records of
recipients that are pertinent to an award, except when the Federal
awarding agency can demonstrate that such records shall be kept
confidential and would have been exempted from disclosure pursuant to the
Freedom of Information Act (5 U.S.C. 552) if the records had belonged to
the Federal awarding agency.

(g) Indirect cost rate proposals, cost allocations plans, etc.
Paragraphs (g)(1) and (g)(2) of this section apply to the following types
of documents, and their supporting records: indirect cost rate
computations or proposals, cost allocation plans, and any similar
accounting computations of the rate at which a particular group of costs
is chargeable (such as computer usage chargeback rates or composite fringe
benefit rates).

(1) If submitted for negotiation. If the recipient submits to the
Federal awarding agency or the subrecipient submits to the recipient the
proposal, plan, or other computation to form the basis for negotiation of
the rate, then the 3-year retention period for its supporting records
starts on the date of such submission.

(2) If not submitted for negotiation. If the recipient is not required
to submit to the Federal awarding agency or the subrecipient is not
required to submit to the recipient the proposal, plan, or other
computation for negotiation purposes, then the 3-year retention period for
the proposal, plan, or other computation and its supporting records starts
at the end of the fiscal year (or other accounting period) covered by the
proposal, plan, or other computation.

Termination and Enforcement

top

§ 3019.60   Purpose of termination and
enforcement.

top

Sections 3019.61 and 3019.62 set forth uniform suspension, termination
and enforcement procedures.

§ 3019.61   Termination.

top

(a) Awards may be terminated in whole or in part only if paragraphs
(a)(1), (a)(2) or (a)(3) of this section apply.

(1) By the Federal awarding agency, if a recipient materially fails to
comply with the terms and conditions of an award.

(2) By the Federal awarding agency with the consent of the recipient,
in which case the two parties shall agree upon the termination conditions,
including the effective date and, in the case of partial termination, the
portion to be terminated.

(3) By the recipient upon sending to the Federal awarding agency
written notification setting forth the reasons for such termination, the
effective date, and, in the case of partial termination, the portion to be
terminated. However, if the Federal awarding agency determines in the case
of partial termination that the reduced or modified portion of the grant
will not accomplish the purposes for which the grant was made, it may
terminate the grant in its entirety under either paragraphs (a)(1) or (2)
of this section.

(b) If costs are allowed under an award, the responsibilities of the
recipient referred to in §3019.71(a), including those for property
management as applicable, shall be considered in the termination of the
award, and provision shall be made for continuing responsibilities of the
recipient after termination, as appropriate.

§ 3019.62   Enforcement.

top

(a) Remedies for noncompliance. If a recipient materially fails
to comply with the terms and conditions of an award, whether stated in a
Federal statute, regulation, assurance, application, or notice of award,
the Federal awarding agency may, in addition to imposing any of the
special conditions outlined in §3019.14, take one or more of the following
actions, as appropriate in the circumstances.

(1) Temporarily withhold cash payments pending correction of the
deficiency by the recipient or more severe enforcement action by the
Federal awarding agency.

(2) Disallow (that is, deny both use of funds and any applicable
matching credit for) all or part of the cost of the activity or action not
in compliance.

(3) Wholly or partly suspend or terminate the current award.

(4) Withhold further awards for the project or program.

(5) Take other remedies that may be legally available.

(b) Hearings and appeals. In taking an enforcement action, the
awarding agency shall provide the recipient an opportunity for hearing,
appeal, or other administrative proceeding to which the recipient is
entitled under any statute or regulation applicable to the action
involved.

(c) Effects of suspension and termination. Costs of a recipient
resulting from obligations incurred by the recipient during a suspension
or after termination of an award are not allowable unless the awarding
agency expressly authorizes them in the notice of suspension of
termination or subsequently. Other recipient costs during suspension or
after termination which are necessary and not reasonably avoidable are
allowable if paragraphs (c)(1) and (c)(2) of this section apply.

(1) The costs result from obligations which were properly incurred by
the recipient before the effective date of suspension or termination, are
not in anticipation of it, and in the case of a termination, are
noncancellable.

(2) The costs would be allowable if the award were not suspended or
expired normally at the end of the funding period in which the termination
takes effect.

(d) Relationship to debarment and suspension. The enforcement
remedies identified in this section, including suspension and termination,
do not preclude a recipient from being subject to debarment and suspension
under E.O.s 12549 and 12689 and the Federal awarding agency implementing
regulations (see §3019.13).

Subpart D—After-the-Award Requirements

top

§ 3019.70   Purpose.

top

Sections 3019.71 through 3019.73 contain closeout procedures and other
procedures for subsequent disallowances and adjustments.

§ 3019.71   Closeout procedures.

top

(a) Recipients shall submit, within 90 calendar days after the date of
completion of the award, all financial, performance, and other reports as
required by the terms and conditions of the award. The Federal awarding
agency may approve extensions when requested by the recipient.

(b) Unless the Federal awarding agency authorizes an extension, a
recipient shall liquidate all obligations incurred under the award not
later than 90 calendar days after the funding period or the date of
completion as specified in the terms and conditions of the award or in
agency implementing instructions.

(c) The Federal awarding agency shall make prompt payments to a
recipient for allowable reimbursable costs under the award being closed
out.

(d) The recipient shall promptly refund any balances of unobligated
cash that the Federal awarding agency has advanced or paid and that is not
authorized to be retained by the recipient for use in other projects. OMB
Circular A–129 governs unreturned amounts that become delinquent
debts.

(e) When authorized by the terms and conditions of the award, the
Federal awarding agency shall make a settlement for any upward or downward
adjustments to the Federal share of costs after closeout reports are
received.

(f) The recipient shall account for any real and personal property
acquired with Federal funds or received from the Federal Government in
accordance with §§3019.31 through 3019.37.

(g) In the event a final audit has not been performed prior to the
closeout of an award, the Federal awarding agency shall retain the right
to recover an appropriate amount after fully considering the
recommendations on disallowed costs resulting from the final audit.

§ 3019.72   Subsequent adjustments and continuing
responsibilities.

top

(a) The closeout of an award does not affect any of the following.

(1) The right of the Federal awarding agency to disallow costs and
recover funds on the basis of a later audit or other review.

(2) The obligation of the recipient to return any funds due as a result
of later refunds, corrections, or other transactions.

(3) Audit requirements in §3019.26.

(4) Property management requirements in §§3019.31 through 3019.37.

(5) Records retention as required in §3019.53.

(b) After closeout of an award, a relationship created under an award
may be modified or ended in whole or in part with the consent of the
Federal awarding agency and the recipient, provided the responsibilities
of the recipient referred to in §3019.73(a), including those for property
management as applicable, are considered and provisions made for
continuing responsibilities of the recipient, as appropriate.

§ 3019.73   Collection of amounts due.

top

(a) Any funds paid to a recipient in excess of the amount to which the
recipient is finally determined to be entitled under the terms and
conditions of the award constitute a debt to the Federal Government. If
not paid within a reasonable period after the demand for payment, the
Federal awarding agency may reduce the debt by:

(1) Making an administrative offset against other requests for
reimbursements.

(2) Withholding advance payments otherwise due to the recipient.

(3) Taking other action permitted by statute.

(b) Except as otherwise provided by law, the Federal awarding agency
shall charge interest on an overdue debt in accordance with 4 CFR Chapter
II, “Federal Claims Collection Standards.”

Appendix A to Part 3019—Contract Provisions

top

All contracts, awarded by a recipient including small purchases, shall
contain the following provisions as applicable:

1. Equal Employment Opportunity —All contracts shall contain a
provision requiring compliance with E.O. 11246, “Equal Employment
Opportunity,” as amended by E.O. 11375, “Amending Executive Order 11246
Relating to Equal Employment Opportunity,” and as supplemented by
regulations at 41 CFR part 60, “Office of Federal Contract Compliance
Programs, Equal Employment Opportunity, Department of Labor.”

2. Copeland “Anti-Kickback” Act (18 U.S.C. 874 and 40 U.S.C. 276c)
—All contracts and subgrants in excess of $2000 for construction or
repair awarded by recipients and subrecipients shall include a provision
for compliance with the Copeland “Anti-Kickback” Act (18 U.S.C. 874), as
supplemented by Department of Labor regulations (29 CFR part 3,
“Contractors and Subcontractors on Public Building or Public Work Financed
in Whole or in Part by Loans or Grants from the United States”). The Act
provides that each contractor or subrecipient shall be prohibited from
inducing, by any means, any person employed in the construction,
completion, or repair of public work, to give up any part of the
compensation to which he is otherwise entitled. The recipient shall report
all suspected or reported violations to the Federal awarding agency.

3. Davis-Bacon Act, as amended (40 U.S.C. 276a to a–7) —When
required by Federal program legislation, all construction contracts
awarded by the recipients and subrecipients of more than $2000 shall
include a provision for compliance with the Davis-Bacon Act (40 U.S.C.
276a to a–7) and as supplemented by Department of Labor regulations (29
CFR part 5, “Labor Standards Provisions Applicable to Contracts Governing
Federally Financed and Assisted Construction”). Under this Act,
contractors shall be required to pay wages to laborers and mechanics at a
rate not less than the minimum wages specified in a wage determination
made by the Secretary of Labor. In addition, contractors shall be required
to pay wages not less than once a week. The recipient shall place a copy
of the current prevailing wage determination issued by the Department of
Labor in each solicitation and the award of a contract shall be
conditioned upon the acceptance of the wage determination. The recipient
shall report all suspected or reported violations to the Federal awarding
agency.

4. Contract Work Hours and Safety Standards Act (40 U.S.C. 327–333)
—Where applicable, all contracts awarded by recipients in excess of
$2000 for construction contracts and in excess of $2500 for other
contracts that involve the employment of mechanics or laborers shall
include a provision for compliance with Sections 102 and 107 of the
Contract Work Hours and Safety Standards Act (40 U.S.C. 327–333), as
supplemented by Department of Labor regulations (29 CFR part 5). Under
Section 102 of the Act, each contractor shall be required to compute the
wages of every mechanic and laborer on the basis of a standard work week
of 40 hours. Work in excess of the standard work week is permissible
provided that the worker is compensated at a rate of not less than
11/2times the basic rate of pay for all hours worked in excess of
40 hours in the work week. Section 107 of the Act is applicable to
construction work and provides that no laborer or mechanic shall be
required to work in surroundings or under working conditions which are
unsanitary, hazardous or dangerous. These requirements do not apply to the
purchases of supplies or materials or articles ordinarily available on the
open market, or contracts for transportation or transmission of
intelligence.

5. Rights to Inventions Made Under a Contract or Agreement
—Contracts or agreements for the performance of experimental,
developmental, or research work shall provide for the rights of the
Federal Government and the recipient in any resulting invention in
accordance with 37 CFR part 401, “Rights to Inventions Made by Nonprofit
Organizations and Small Business Firms Under Government Grants, Contracts
and Cooperative Agreements,” and any implementing regulations issued by
the awarding agency.

6. Clean Air Act (42 U.S.C. 7401 et. seq.) and the Federal Water
Pollution Control Act (33 U.S.C. 1251 et seq.), as amended —Contracts
and subgrants of amounts in excess of $100,000 shall contain a provision
that requires the recipient to agree to comply with all applicable
standards, orders or regulations issued pursuant to the Clean Air Act (42
U.S.C. 7401 et seq. ) and the Federal Water Pollution Control Act
as amended (33 U.S.C. 1251 et seq. ). Violations shall be reported
to the Federal awarding agency and the Regional Office of the
Environmental Protection Agency (EPA).

7. Byrd Anti-Lobbying Amendment (31 U.S.C. 1352) —Contractors
who apply or bid for an award of $100,000 or more shall file the required
certification. Each tier certifies to the tier above that it will not and
has not used Federal appropriated funds to pay any person or organization
for influencing or attempting to influence an officer or employee of any
agency, a member of Congress, officer or employee of Congress, or an
employee of a member of Congress in connection with obtaining any Federal
contract, grant or any other award covered by 31 U.S.C. 1352. Each tier
shall also disclose any lobbying with non-Federal funds that takes place
in connection with obtaining any Federal award. Such disclosures are
forwarded from tier to tier up to the recipient.

8. Debarment and Suspension (E.O.s 12549 and 12689) —All parties
doing business with the Department of Agriculture should consult the
Department's regulations for debarment and suspension found at 7 CFR 3017.
No contract shall be made to parties listed on the General Services
Administration's List of Parties Excluded from Federal Procurement or
Nonprocurement Programs in accordance with E.O.s 12549 and 12689,
“Debarment and Suspension.” This list contains the names of parties
debarred, suspended, or otherwise excluded by agencies, and contractors
declared ineligible under statutory or regulatory authority other than
E.O. 12549. Contractors with awards that exceed the small purchase
threshold shall provide the required certification regarding its exclusion
status and that of its principal employees.

Browse
Previous | Browse
Next

For questions or comments regarding e-CFR
editorial content, features, or design, email [email-masked].

For questions
concerning e-CFR programming and delivery issues, email [email-masked].

Section
508 / Accessibility