AGREEMENT FOR PUBLIC SERVICES FUNDED UNDER THE CLEARWATER COMMUNITY DEVELOPMENT BLOCK GRANT PROGRAM
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AGREEMENT FOR PUBLIC SERVICES FUNDED
UNDER THE CLEARWATER COMMUNITY DEVELOPMENT
BLOCK GRANT PROGRAM
PART I
This
agreement is entered into fr!lrf~4 day of t:J~
198~, by the CITY OF CLEARWATER, FLORIDA, a political subdivision of the
State of Florida, hereinafter referred to as the "CITY", and COfilMUNITY
PRIDE CHILD CARE CENTER OF CLEARWATER, INC., hereinafter referred to as the
"PSA", a non-profit agency organized and existing under the laws of the
State of Florida, having its principal office at 1235 Holt Avenue, Clear-
water, Florida, and consists of Part I and Appendices.
WHEREAS, the City has agreed with the United States Department of
Housing and Urban Development to conduct a Community Development Program,
hereinafter referred to as the "Program", with federal financial assistance
under Title I of the Housing and Community Development Act of ]974, as
amended, hereinafter called the "Act", and
WHEREAS, the Community Development Department, hereinafter called
the "Department", will act in behalf of the City in conducting the Program,
and
WHEREAS, the PSA proposes to operate a child care program of
direct benefit to low and moderate
income residents within the Community
{J.tb. IJ/.
Clearwater, ~ hereinafter referred
Development Program target areas of
to as the "Project", and desires federal financial assistance through the
City to effect this proposal, and
WHEREAS, the City finds the project to be meritorious and In ful-
fillment of the purposes of the Act;
THEREFORE, the parties agree as follows:
1. The PSA shall, in a satisfactory and proper manner as deter-
mined by the Department, conduct the Project outlined in the attached
Narrative and Budget attached as Appendix A.
2. The term of this agreement shall commence on October 1, 1986
and terminate on September 30,
1987, unless earlier cancelled as provided
herein.
The Department may issue written or oral instructions to clarify
a~ " (=lMB.Atft. If""
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any details or provisions of this Agreement.
Such instructions must be
within the intent of the project and may not be of such nature to affect
cost or period of performance.
3. The City representative with the PSA as regards conduct of
services under this contract shall be the Director of Planning & Urban De-
velopment and the PSA's services shall be carried out under the supervision
of its director or executive director.
4. The PSA shall use the funds to support the Project serving
residents of Neighborhood Target Areas and particularly within the PSA's
area of operation.
The PSA shall not" exceed its budgeted amount and shall
use the funds in accordance with the budget to be paid with Community
Development Funds included in Appendix A.
Funds shall not be obligated
when the Project has been suspended or terminated pursuant to Paragraph 17
hereof.
Any funds which the Department determines were not properly
expended shall be refunded to the City.
5. The PSA shall comply with the provisions of OMB Circular A-
110 wllich is attached as Appendix C and with the provisions of OMB Circular
A-122, attached as Appendix H. The PSA shall permit the City to audit the
PSA's financial operation including compliance with certain provisions of
Federal law and regulations. ~ All PSA financial records relating to the
Project are subject to review by the City.
6. All subcontractors to this agreement must be approved by the
City.
7. All purchases of consumables, capital equipment and services
shall be in conformity with the Procurement Standards set forth in Appendix
C. Accountability for project . property and equipment shall be in
accordance with the requirements therein set forth.
8. The City agrees to make payment of budgeted costs on a
reimbursement basis. Requests for payment shall be as detailed in Appendix
D. No advance payments shall be made to the PSA. All costs, and invoices
for requests for payment shall be supported by properly executed payrolls,
time records, invoices, contracts, or vouchers, or other offical documenta-
tion evidencing in proper detail the nature and propriety of the charges.
All checks, payrolls, invoices, contracts, vouchers, orders or other
accounting documents pertaining in whole or in part to the agreement shall
,
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be clearly identified and readily accessible.
Final requests
for
reimbursement hereunder shall be submitted within 30 days after completion
of all services to be performed by the PSA and the City shall not be
responsible for payment of any charges, claims or demands hereunder not
received within said thirty day period.
9. The City shall retain custody upon termination of this
agreement of any and all property purchased with Community Development
Funds.
"Property" as used in this Paragraph shall mean nonexpendable
tangible property' valued at $50.00 or. more with a life expectancy of one
year or more.
The PSA shall retain custody of property acquired with
federal funds so long as the property is used for the purposes described in
Appendix A.
When no longer used for such purpose the City shall assume
custody of the property upon written notice to the PSA.
Upon purchase and
receipt of property, the PSA shall submit to the Department a Property
Receiving Report.
stolen,
lost or returned property shall be reported
immediately to the Department.
Thirty days prior to the end of the grant
year or immediately upon termination of this agreement, the PSA shall
submit in a Property Report a physical inventory of all property purchased
with Community Development "Funds.
The report shall also contain a
verification of the existence and current use and location of the property,
and,
if applicable, the continued need for the property.
No real or
personal property or custody thereof purchased with such funds shall be
disposed of, transferred, assigned, or loaned by the PSA without prior
written consent of the City.
10. Nothing in this agreement shall be construed to permit
invasion of the privacy of individuals who are served by the project, nor
shall this agreement be construed to require the PSA to publish or release
information to third parties which would invade the privacy of such
individuals.
Information obtained by the Department as required by this
agreement shall not be used or disclosed in such a way as to invade
individual privacy and client relationships, unless Flordia law pertaining
to public records requires disclosure of said information.
11. The PSA shall obtain prior written approval by addendum to
this agreement for any of the following changes:
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a. Substantial changes in the project work plan
b. Changes in any budget line item.
12. The PSA agrees to fully participate in the implementation
and maintenance of an evaluation system to continually monitor the project.
This shall include, but not be limited to, periodic submission of data
reports which will be used by the Department for inclusion in the Annual
Grantee Performance Report, periodic monitoring visits by the Department
for conformance with this agreement,
and continuing assessments of
performance
hereunder.
PSA agrees to comply with evaluation
and
information requirements of the Department.
A final report shall be
submitted by the PSA within 30 days after the end of the contract term.
This final report shall consolidate reporting of all project participants.
13. PSA shall establish and maintain on an accrual basis an
accounting system in accordance with the Standards of Grantee Financial
Management Systems as set forth in Appendix C and in accord with generally
accepted accounting principals and standards. PSA agrees to modify or cor-
rect said systems in accordance with the City's requirements.
14. PSA shall maintain such records and accounts as are deemed
necessary by the city to assu~e a proper accounting for all project funds.
"
All such records shall be available for audit,
inspection or copying pur-
poses at any time during normal business hours and as often as the City,
HUD, and/or representatives of the Comptroller General of the united
States, or other federal agency, may deem necessary. Such records shall be
retained for such period as required by applicable laws and regulations and
may thereafter be destroyed only with the prior written approval of the
City.
Such records shall include financial records, audits,
supporting
documents, statistical reports and client files. PSA will comply with such
additional requirements as to maintenance of records as the City may re-
quest in writing.
In the event the PSA cannot continue to be responsible
for maintenance of the records, then the City shall be so notified in order
to take custody of the records.
The City may, at any time, on written
notice to the PSA take custody of any and all records established under
r
this Agreement.
15. The PSA shall hold and save the City, its officers, agents,
and employees harmless from liability of any nature or kind,
including
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costs ~nd expenses, for or on account of any suits or damages of any
character whatsoever resulting from injuries or damages sustained by any
persons or property resulting in whole or in part from the negligent
performance or omission of any employee, agent or representative of the
PSA.
16. The PSA shall not assign any interest in this Agreement
without the prior written consent of the City.
17. The City may suspend, withhold, or terminate payment of the
project,
in whole or in part,
for cause.
Cause shall include the
following:
a. Ineffective or improper use of project funds
b. Failure to comply with any term or condition hereunder
c. Refusal to accept conditions imposed by HUD
d. Submittal of reports which are incorrect or incomplete
in any material respect
e. If carrying out this Agreement is rendered impossible or
infeasible for any reason including changes in law or
the unavailability of HUD funds necessary for
continuatibn.
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If the City suspends payment, it shall advise the PSA and specify in
writing the actions that must be taken as a condition precedent to the
resumption of payment and specify a reasonable date for compliance.
18. Both parties will use their best effots to ensure that
services under this Agreement are provded so as to best meet the needs of.
residents with priority to those residents who reside in the target areas
set forth 1n Appendix B.
The PSA shall make every effort to assure that a
minimum of two-thirds of those persons receiving services hereunder are
low- and moderate-income.
19. No person with responsibilities in the operation of the
project will discriminate with respect to any project participant because
of race, color, national origin, or sex.
Nor shall any participant be
excluded from participation in,
be denied of, or be subjected to
~
discrimination under any program of activity funded in whole or in part
with Community Development Funds because of race, color, national origin or
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sex, as set forth in Appendix G, Other Program Requirements CFR 570.601).
20. The PSA will establish safeguards to prohibit employees from
using their positions for a purpose that is or gives the appearance of
being motivated by a desire for private gain for themselves or others,
particularly those with whom they - have family,
business or
other
indentifiable ties.
prior to requesting any continued project funding
beyond tile term covered by this agreement or for new public services not
covered by this Agreement, the PSA shall attempt to secure other local,
state or federal tunding and/or private funding for such project.
The PSA
will Ilot as a result of receiving funding for the project reduce its
support for other similar services already being provided by the PSA in the
area of its operation, and will,
in fact, affirmatively seek additional
assistance and support from other sources for increasing services where
needs demand such increase. The PSA will not use these funds for publicity
or propaganda purposes designed to support or defeat legislation pending
before federal, state or local governments.
21. The PSA shall comply with the requirements of section 3 of
the Ilousing and Urban Development Act of 1968, as amended and the HUD
regulations issued pursu~t tnereto, attached hereto as Appendix E.
. '
22. The PSA will comply with Equal Employment Opportunities
Executive Order 11246, as-amended, pttached hereto as Appendix F.
23. The PSA -will comply with applicable federal law and
regulations, including but not limited to:
National Environmental Policy Act of 1969;
Flood Disaster Protection Act of 1973;
HUD Lead-Based Paint Poisoning Prevention Act;
Clean Air Act;
Historic Preservation Requirements of P.L. 89-656;
Archeological and Historic preservation Act of 1974;
Executive Order 11593;
Architectural Barriers Act of 1968;
Hatch Act;
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Federal Water pollution Control Act;
Federal Labor Standards provisions and the Davis-Bacon Act;
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The Civil Rights Act of 1964;
National flood insurance program;
all as amended from time to time and in effect during the term of this
Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this agreement
to be executed as of the day and year first above written.
COMMUNITY PRIDE CHILD CARE CENTER OF CLEARWATER, INC.
By:
{1~~ II- i1!tbUi~
Chairman
At:~;<<, ~
SecretarY
By:
Attest:
Approved as to form and
correctness:
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City At, rney
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CITY OF CLEARWATER
Community Development Block Grant
1986-1987 Budget
COMMUNITY PRIDE CHILD CARE CENTER
Holt Avenue Renovation
(See detail attached)
South Madison Avenue Facility
Total
$21,900
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$2-4,780 I/;2/1;?~
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com~unitY Pride Child Care cen\;r Of Clearwater, Ine.
1235 Holt Avenue . Clearwater, Florida 33515 . (813)443-0958 . (813)443-0948
Mr. Don Jass
City Hall Annex
10 South Missouri Avenue
Clearwater, Florida 33516
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\Jt\i: MAY 221,,' '. : \
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May 16, 1986
CO:~'1"-flV1'!rnr OE\iS~C-F .Ij~,'..~ r
Dear Mr. Jass;
Community Pride Child Care has found a location for its second Center
at St. James AME Church, 1436 South Madison Avenue. We anticipate
the facility will be ready to open for 28 children August 25, 1986
for the new school year. The Community Development Grant we received
for FY 85 86 was for the amount of $13,900. The $10,500 designated
for improvements and equipment for the building will be spent before
October 1, 1986. The remaining $3,400 is for Title XX match or scho-
larships.
We anticipate our funding needs for scholarships for children on a
sliding scale as follows:
Fiscal 85-86
August 25, 1986 to September 30, 1986
27 days x 28 children x 7.70 per day -13% for parent fees = $5,064.44
Fiscal 86-137
October 1, 1986 to January 2, 1987
68 days x 28 children x 7.70 per day- 13% for parent fees = $12,754.90
January 5, 1987 to September 30, 1987
(Anticipate United Way supporting 4 students)
193 days x 24 children x 8.00 per day - 13% for parent fees = $32,238.72
Total:
FY 85-86
$5,064.44
3,400.00
1,664.44
F Y 8 6 -8 7
44,993.62
committed
deficit
The above figures represent no funding through Title XX. If we are
able to receive Title XX slots our request will be dramatically re-
duced. The need for a Center with subsidized care in the South
Greenwood area has been well documented. We will make every effort
to obtain Title XX funds which would necessitate funding for match
only) (l2~%).
As always Community Pride will strive to provide affordable, quality
child care to low and moderate income families.
Sincerely;
/fto.4~ '712 ,jJ)uH~
License # C62513
APPE/l) D/x A
.
Martha Skelton, Director
A UNITED WAY AGENCY
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United Way
This Agency is Funded in Part by the Department of Health and Rehabilitative Services, State of Florida. and Title XX of the Social Security Act.
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com~unitY Pride Child Care ce~\er Of Clearwater, Ine.
1235 Holt Avenue . Clearwater, Florida 33515 . (813)443-0958 . (813)443.0948
July 21, 1986
Mr. Don Jass
City Hall Annex
10 S. Missouri Avenue
Clearwater, Florida 33516
License # C62513
Dear Mr. Jass;
11m sure you are aware that our building at 1235 Holt Avenue
is over 25 years old. Although we have made improvements
over the years there are some major repairs and improvements
that are facing us presently.
1) In the summer of 1985 we had major leaks ln our plumbing
system. Our regular plumber felt that all the pipes were
'disintegrating and that running new pipes on the roof
would not necessitate ripping up our floors. Thissystem
has proved to be very unsatisfactory. We have had major
leaks on the roof resulting from the heat and the cold.
We anticipate more problems as the pipes are exposed to
the elements.
2 )
The office by the front door measures 9\ feet by 14>:; feet.
I t was b u i 1 t w hen the c e n toe r had 0 n 1 yon e 1 a r g e cIa s s roo m.
This office is used by our secretary and book-keeper.
Confidential re~ords and financial papers are worked on
here. A 6 ft. x 6 ft. area is used as a reception area
for parents. This office is also used as a staff break
room, a staff meeting room and a hallway to classrooms.
We need to enlarge the office area, add on a 9 ft. x 9 ft.
reception room with a counter for paying fees, etc. As
our s e r v ice sex pan d) 0 urn e e d for t his 'e x pan s ion b e com e s
more necessary. (See diagram)
.
This Agency is Funded in Part by the Department of Health and Rehabilitative Services. State of Florida. and Title XX of the Sooial Security Act
A UNITED WAY AGENCY
/JP';?-EN/)/x J}
(3)
United Way
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3) We have had leaks in our ronf which have been temporarily
repaired. Our roof is tar with stones and needs to be
completely replaced'with a shingle roof. We hope to be
able to expand the office before replacing the roof since
the remodeling will affect the roof.
4) It has been at least eight years since the building has
has been painted. The paint is faded and is peeling in
areas.
Costs:
1) Replace present plumbing
2) Renovate office
3) Replace roof
4) Paint building and retainer wall
3,000.00
7,800.00
8,500.00
2,600.00
Total, 21,900.00
If you can help us with any of these projects we would be
most grateful.
Sincerely;
/)t~~fMJ~
Martha Skelton
Director
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Present set up of main office and reception area
with front door.
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Proposed enlarging of main office with additional
reception area and new front door.
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OFFICE OF MANAGEMENT AND
BUDGET
I Circular No, A-lIO)
GRANTS AND AGREE~ENTS WITH INSTI.
TUTlONS OF HIGHER EDUCATION,
HOSPITALS, AND OTHER NONPROFIT
ORGANIZATIONS
UnifOlm Administrativll Requirements
JULY I, 1976,
To the heads of executh'e departments
and establishments.
Subject: UnUorm administrative re-
Quirements ior grants and other agree-
ments wIth Institutions of hl:;:her edu-
catIon, hospitals, and other nonprofit
organizations
1, Purpase.-Thls Circular' promul-
gates standards for obtaining consisten-
cy and un1Iormity among Federal agen-
cIes in the administration of grants to,
and other agreements with. public and
private Instltutlons oC higher education.
public and private hospitals, and other
quasi-public and private nonprofit or-
ganizatlons, This Circular does not apply
to grants. contracts. or other agreements
'between the Federal Government and
nnlts of State or local governments
covered by Federal Management. Cir-
cular 74--7.
2. Effective date.-The standarcls In
the attachments to thIs Circular will be
applied as soon as practlcable but not
later than January 1,1977.
3. Supersession_-This Circular res-
cL'1cls ~d replaces parts ill and IV or
the Appendix to Federal Management
Circular 73-7, Administration of college
and university research grants.
4. PolicV inter-t.-The uniform stand-
ards and reqUirements included In' the
attachments to this Circular replace the
varying and often confiictlng' require-
ments that have been imposed by Fed-
eral agencles as conditIons or grants and
other agreements wIth recipIents.
5, ,Applicability and scope,-Except as
provided below, the standards promul-
gated by this Circular are applicable to
all Federal agencIes. II any statue ex-
pressly prescribes policies or specific re-
qUirements that differ irom the stand-
ants provIded herein, the provisIons of
the statute shall govern.
The provisions of the attachments oi
this Circular shall be applied to 8ubre-
clplents perlorming substantive work
under grants that are passed through or
awarded by the primary recipient if such
lIubreclplents are organizations de-
scribed in paragraph 1.
6. Dellnitions,
8. The tenn "grant" means money or
property provided In lieu or money paid
or furnished by the Federal Government
to recIpIents nnder programs that pro-
vide financial assistance or that provide
support or stimulation to accomplish a
public purpose. The term "other agree-
ments" does not Include contracts which
are required to be entered Into and ad-
ministered under procurement laws and
regulations, Grants and other agree-
ments exclude (a) technical assistance
programs, whIch provide services instead
of money. (bl assistance in the form of
NOTICES
general revenue sharing, Joans, Joe.n
guarantees. or lnsurance,:aIld (c) direct
payments of any kind to indIvIduals.
b. The tenn "recIpient" includes the
following types of nonprofit organ1z.a-
tlons that are receiving Federal funds
irom a Federal agency Or through a
State or Jocal government:
Public and private institutions of high-
er education; public and private hos-
pitals; and other quasi-public and pri-
vate nonprofit organizations such as (but
not limited to) community action agen-
cies. research institutes, educational as-
sociations, and health centers.
The term does not include foreign or
international organizations (such as
agencies of the United Natlonsl and
Government-owned contra.c:tor operated
facilities or research centers providing
continued support ior mission-oriented,
large scale programs that are Govern-
ment-owned or controlled. or are de-
signed as federally-funded research and
development centers.
7. Requests lor exceptio-n.!.-....:.The Omce
of Management and Budget may grant
exceptions irom the requirements of this
Circular when exceptions are not pro-
hibited under existLng laws.
However. in the interest of maximum
nnUormlty. exceptions from the re-
qulrementsof the Circular wlll be per-
mItted only in nnusual cases. Agencies
may apply more restrictive requirements
to a class of recIpients when approved by
the Oroce of Management and Budget.
8. Attachments.-The standards pro-
. mulgated by this Circular are set. forth
in the Attachments, which are:
Att.&chment A Cub depo6ltori tII.
Attachment. B BoncUng IUld Insurance.
Att.&chment C lUt.entlon &Ild cU3todUJ. re-
quirements for records,
Att.a.c:hment,D Program Income.
Attachment E Coat sbartng a.nd, mAtching.
^tt.a.c:bment F Standards for nDADclal IDJI.Il-
e.gement systerIl3,
Att.a.c:bment 0 F1n.a.nclal reporting requIre-
ments,
Attacbment H Monitoring and reportIng
program performADce,
Att.&cbment J Payment requirement,.,.
Att.&cbment.J lU.,Won of financial pl&D.&.
Att.a.chmeGt K Cloeeout procedures.
Att.&cbment L Suapenalon &Ild termlnatlon
procedures.
AtLacbment N standard form for applying
for feder&! .......lstanC-e.
Att.&cbment N Property nuo.n-.gement IJta.nd-
....d.s.
Attachment 0 Procurement 1Jt&n~,
9. Exceptiom lor certain Tecipienb.-
NotwIthstanding the provisIons of para--
graph 7 if an applicant/recipient has a
history of poor performance. 13 not 11-
nanclaUy stable. or Its management sys-
tem does not meet the standards pre-
scribed In the Circular, FedernJ agencies
may impose additional requ~men~ a.5
needed provIded that lIUch applicant!
recipIent 13 noUfted In writing as to:
a.. Why the additional standards are
being imposed: .
b. what corrective action is needed,
CopIes or ruch notU\catlons shall be
sent to the Oroce 01 Management and
Budget and other agencIes funding that
recIpient at the same time the recipIent
is notU\ed.
I
10, Responsibilitie.t.-Agenc1es respon-
sible for administering programs that in-
volve grant.s and other agreements with
recIpients shall issue the appropriate
re6UlatIQns necessary to Implement the
provisions oC this Circular. All portlom
of such regulations that inVOlve record-
k.e-eping nnd/or reporting requirements
subject to the prOVisions of the Federal
Reports Act and OMB Circular A-40
must be submitted to OMB for clearance
before oeing Introduced into use. Upon
re!luest all regulations and instructions
implementing this Circular shall be
furnished to tl-Je Omce of Management
and Budget. Agencies shall also desig:.
nate an oIDclal to serve as the agency
representative on matters relating to the
!mplementation oC this Circular, The
name and title oC such representative
shall be furnished to the Omce of Man-
agement and Budget not later than Au-
gust 30. 1976,
11, Inquiries,-Further information
concerning this Circular ma.y be obtained
by contracting the Financial Manage-
ment Branch, Budget Heview Division,
Oroce of Management and Budget.
Wash1ngton, D_C. 20503, telephone 395--
3993.
JAlIES T, LYNN,
Director.
ATl'ACBJoUNT A.--CmCULAll No, A-liD
CASH DD"O&rrOan:,s
1, Thb attachment uts fortb standards
governIng the use of banks and ot6H In-
stltUUoDS as deposlOOrlcs of fun~ advanced
under grants a.nd other a.greemeats_
2, Except for situations descrIbed In para.
grapba 3, 4. &Ild 5, DO Feder&! apon~:.rlJl"
~ncy shall:
&. Requ1re pbY8lc.al segregation o~ casb de-
po&loorles for funds wblcb .re provIded to a
recIpient.
b, Entabllsb any eligIbility requtu:ne:lts
for CMb deposttones for funds wblcb are pro-
-Tided to a re<:lplent.
3. A uparat.e bani account sha.1I be require
wben appllcable letter-of--credU agreements
provide that drawdo;vns wlU be made when
the N>Clplent'a cbeclu are pre5en~ to tbe
bulk for payment.
,. Any moneys ad.,anced to a recipient
whIch are aubJect to the contn.1 or rtgula-
tlon of the UnIted Sta~ or any of Its ot:kers.-
rgents or employ~' (public moneys as de-
tined lD Treasury Circular No, ) 76. as
amended) mU3t be deposited In & bank wl:h
Federal Depo< In.surance Corporation
(FDIC) Insurance co.,erage and the bal,mce
e.xceedIng the FDIC conrage must be col-
Lat.enJly secured_
&. Consl,tent wltb tbe national goal of
expanding the opportunIties for rnlnorlly
b=tness ent.erprlsu. reclpl"nta and aub-
reelplents shall be encouraged '00 use minor-
Ity ban1ul (a bank wblcb Is owned at least 50
pe~?t by mlnonty group members).
AruounHT B,-(;tac:trLAa No_ A-IIO
~/'fP1NC AND lH501lAHCE
:. This attachment sets forth bonding and
Insurance requl~ments for grants and otber
avo.emenla lI'Itb re<:lplents. No other bond-
Ing kIld "",uranel: requlreme",~ sball be Im-
~ other lhkll thoee normally required by
the re<:lplent,
2. Except as otherwIse required by la;oo. a
graDt or other ~ment that requires the
contracUIl8 (or aubcontractlng) for con-
atruC'lJon or faclllly Impro.,,,meDla shall pro-
T1d& for C,e recipient to follow Its own re-
non~l IEGISTn, VOl. 41. NO. 14t-RIDAY. JULY 30. 1916
AP;?, c.. ,
qua.~nta' re\.~ to bid i'lannu-. per-
for~ bond.t. t.nd ~yman~ boo.d.a unl_
the conaUUc:uon contrMlt. or lIubcont.r~t ex-
~ .100,000, l"or t.bOM ooc.trMlta or eub-'
oon u-..c:ta eJ;CM<11I11 '100,000. e. hden.1
8-i'lncy aay r.cc:apt the bondlna polley ~d
~u1reJIlJlnta of ~ grantM pcoYld6<l the
)01l<1er-tJ '-1\eocy by tDA-de' . det-ermlnAUOO
that the QonrnIX1"nt'l InlAroat la ;to.(1bqUAtelY
prot.oGc..d. It luch .. determlnation hN not
been uuA-e. t.h.e !I11n1lDum nqulremen t,a sh.all
be .. foUows:
.. A bU guar~jljJ frem' eoc~ b~ .qul~
4l61\t to flD' ~ 01 th4 ~ pnce,-
nil "bid. gu~Uloe" Ib-All conaln of .. 1l.rm
coQl!:11tm.nt luch .... .. bid. bond, certUhd.
ch'.u. or oth.r negoU..b\. lnStrumant ll-C-
COI:D;lIoDl'lng . bid... l\oWuBnCot Uat. the bid-
der will, U;lOtlo a-c:uptAn~ of b1a bid, executa
luch contr~tu.al Qoc:Umanta ... may be n-
qulr&d within the u:oe ap4lCltled.
b. A pn/0rT7'>4'M:' boM em ~ p4rl 01 tM
c:cmtroctof' lor ~(1) pncent 01 the COIltTlId
pnce,-A "porlOrm.JoD.C:lll bon4" l:I one execu~
In connection with IIocontra.c:t to &&cUrl rul-
tUlment. of all the contn.Ctoz'. obllptlona
under IUch OClntr~t.
c. A ~1'"""'t bon4 em tM ~rt 01 the COIl-
tT/lCtof' lor loopen:ent 01 the contract
prlce.-A "paym.nt bond" la Doe eXbC\lUd In
connection 'tI'1th .. contra.ct to e,Mure p.y-
m.nt .... ~ulred by bow of all pen-Ona BUP-
plying boor ilnll nuu.rtalln the execuUon of
the 'JI/'Orlt proTided for tn the contn<:t.
3. Wb.1"& tbe hden.1 Qovernment 1fW'T2oD--
toN or tn.1u.roa the rep..yment of coney
borro'lr.>d by the roclplent. the l"'ode~
a-g,ncy. at Ita c11aCntlon. may J"llqu1re &de-
quat.e oondloi IUl.d 1n3unr..oe l! the boncUo.i
and lnaunooe J"llqutnmenta of the roclplent
are not d~c:ed adDQUAt-e to prot.oct the tn-
u"",t of the ?t>der-&\ Qo'Yenun-ant.
-t.. n. l"ed,anJ. lPOD-3Ol1D.i ~ncy nuy "-
quire ad"'l~t.a tidellty bond covon.ie when
tbe roclplent b.... no conraie ~d the bon4 U
~ed .w proteet the QoYllrnment'. InterNt.
&, Whore borut1 are required In the altwlo-
tloOl de-6Crto.<! .bove. the bond:l ehall be Db-
u,lDed fcom compa.:llee'holdlng ~rt1t1c:atN of
.uthorlt}' u ~p~ble IUt'$t1N (31 C?a
:a3).
ATT4-CH)o~ C,---cncm..u No. 10,-110
lLXTX'NTlaM A)r.) CV5TOOU1o u.o;;vn:lw:1MU YOtl
~(lILI)4I
1. 'r.lts ~tt.a..chment wta forth ~ retJtn-
tkln rDqulrementa for ~ta and other~-
menta with reclplenta. 1"od.f'Al aponaorlni
a-ge=lc. .hAlI not I~ "ny rooord ret..n-
tlOQ uqUI.-ementa upon lectpLanta other th&D
thClM dt&CT1~ belo",
2. E:u:el:l tor p~b 1. thl.5 ~tta.ch~nt
alAo "-P p II eft to !I U brecl p len ta ... referred to
In 'p ar-&gr &p b ~ at t b!l baoa Lc c: 1rc:'UJ..ar.
3, l"tna.:l cllU r-ocorc1o, . tI P pan lDi docU mlU1 b.
e t. t I.a t Ie>>-l r ecord..l, and Jl.l1 oth er /'"bOOrd.a pt<ttl-
n.nt to ~Q ~metlt ahllll be ~talntocl tor ..
pnlod ot _t4~J...n. wlth the i'aUo-.r1D-l
quAlttlc.lotlODl: --==----
.. It l.I1y n:lptlDn. claim or ..udlt la ltart.ec1
be!or-e the e:rpl~tIDn of the 3-yeu ~rlod. the
/"<lCO rda ab 1.11 be re l.a.l.o ~ ell tll c.lI 11 tip Uo DA
c~~, or ..udlt nndlnp. lDyol'Yll1i the ~
h.a.. e bMn J"NOlYed
b. R-ooord.a tor n~nn:pendAble prop-arty .c-
qul.~ W1t.b P'eder-.1 func1l ah...tl be nt&lnel1
for 3 y___ o.!t-er It. lIn.toJ dlapoelt.lon.
c, When rllCorda a.re tr'&1UC.rnd. to or naln-
t.&ln~ by th~ Fedef'AlIlpODeOI'tnJ &.!leney. the
3-y~ nlAntlon r.qulrezn.ant U not ..ppu.e"...
hie to tbe rtdpl'Xlt. .
4. ne rot-entIDn ~rlod I..an. tr-oo:l th.
cUt-e .of the .ub~lon ot the ~
tw__repo,d-.ar_for ll'f'IU1tl1 e.nd otb&f -
nUQ~ th..t lLl:e_~n.wfld &nnuo;trz..::ho~
~ oC the aubmlwlOn-ot- the -.n.nUAl
CIa.! Il.a.tua repo~,
I
NOTICES '
I
32017
II. R6clp\ant orp.n1z.AtI.ona ahould -be ..U-
thorued by the l"<><lere.1 ~naot'lDil a.&ancy.
l! they 10 dMlre. to eub4Utut,e mlcroCUm
ooplM In llau of ortg\n..to.l reooi'da.
0, ne l"!4eral ~n.sortD-a ~ancy aha.ll re-
queat tn.n,ahr of eerlaJtl. ~ to Ita C:UA-
tod1 from recipient or~t1ona when It
det-ermln... th.t the ~ ~ wnl(-
'term r-t.antlon 'YAlue, Be_VIT. In order to
.volA duplicate rocord-kOoll'plni. .. ~re.1
epanaorlng agency rray ~e lLtI'AJl3emllnta
'W1th floUlplent orp.n~lona to ret&.ln any
~rc1a that an oontlnuoualy nMded tor
}oInt \l.H.
'1. ne head .of the ?t>du...t lIpon.sorlnjl ~an-
C'f e.:1d the Comptroller o.nef'Al ot the Unlt.ec1
Bt.a.~. or .ny of their duly authortz.ed I'1lpre-
:aa n U. U 'I'e8. lIhall b a ve ItoCC<lN to an y pffi In ant
boola. documllnU. ptop.ers, and n><:orc4of the
recipient ol1la.n.\.Uotlon and thalr lIubre-
c1plent.ll to ~e lIouc11ta. e.u.mtnatloDII, ex-
oe.. '"'P t.e ~ d trs.D.&Crl p ta,
II. UnlC!l& otherwIM requlnd by b.w. no
P'edlJBl llponaorlni ~cy ahall plAce n-
lItrLct.IDDA on roclplent o~UoD.lo Uat will
llml t pub lie ItoCCb06 to th e rec:orc1o ot reclplan t
al1lanlzaUona that are ~ent to . sn-nt
or ~ment except ."ban the a-geney =
demonatnt.t.a th:r.t Buc;h r-eoordll must be kept
cotLtldllntl>>-l IUl.d would ban ~Q excopt-&<!
trom ~\OIure puraUAllt to the ]l'rMdom .or
InfOrmAtion Act (6 u.s.e. ~:1) l! therooorc1a
had belonged to the l"od~ .polUOrlni
~ency.
ATlAoCH)uJfT D,~ No. 1.-110
no<1UK o.caxs
1. l"&dbrBl UPOIUOrlnt a,gtnc!M .:hall foPpl'1
thll Il.A.Llol:Urc1a Mt t otth lD Ul L. At t.acllmen t In
requll"1ng roclplent o~tklD.lo to ~unt
for p~ In=- r-ela~ to projl>Cta
1Ilu.noed In whol. or In pltol't wtt.b J"ed!ll'eJ
funda, Pro:fnr.m Income N'pre&eota rrroea In-
oomll t>iU'Il6d. by the recipient trom the f6d-
erall yaup parUd ...:t Iv I tI.... au ch llAl'1llnp u-
elude Int.er-e.&t &Arned an adn..nCM lkld ~y
bclude. but will not ~ llmlt.lld to. Income
trom ur71co to-ee, we of oommoc11t1-e8. ta.toge
or rental f_. and lO1altlM on pauntll and
c:oprlghta.
2. Inur-eat earned on adn.nOM of ~
funds aball be T!-l1!!!~ to the ~_~~cy
.~!4-~W
8l.a.t.eoa or tn.rtru:m.antaUtlblI of .. Bl.a."" .. pro-
~ by the IntbrgOnrnm-ent.t.1 ~
Acl 01 1 W3 (PubUc IAow PO--6TT).
~~~~~-ij~~~~~:'::
\JTa1-Qoyern..mbnt or pu.rChUeci In whole or in
put 'tI'1th 1"edenl funda. ahall be ba-ndled In
&ooord&n.oe 'tI'1t.b AttAch~nt N to thla cir-
cular ~ toP~~emllnt
"- Unl_ the ~ment proTid.. oeb.-
w1H. rt>Clplenta Ilhall hue no obllifaUon to
th e 1"ed1lf'Al Gonrnm..en t 'lIF1 th res:pect to
l'01AlU... reoelved ... .. NlIIu\t ot copyrtihU or
p.t.anb produ~ under the rn-nt or other
a&r~meDt (s-M p~h a. AtUcllment N).
15. All othl!' p~ Incom. Mtned durl-n,r
the project poulod ahall be nt&lnecl by the
nclplllnt and.. In ~OII wtth the annt
or oUler lL$l'eement. &hall be: .
.... Md,}d to fundA C:OmmJtt~(U:(Lth. proJ-
Kt by th.l"-ed~.pon.oor~ at,uic,.--and
rl)(:1I>Je-o~lsMl.on ~~
~.,Q~Je.cUY-:
b. 1L M.dJo _t\.o.t.noa...tll---.no~'hd lIf1l.1 a.bA.re
of th.ep~Ja:r;L.~pproud b;tii. hdtnl
r~rIn.J ageney: or
C. o..d uc ted from the total pro J act CXllIta
tn d .ten:n1DJ na- t.b e 11 11; OCl&U on w11lcl1 the
}'.den! alaN of coate WUl N bued.
ATT~lIoODfT,J:,~ No. 1.-110
CX>iI"t . JU.U:lfO AJ(D JoU Tt:KOI'G
1. Tb\JI .ttA"~t'n">:lt /lIIU torth cr1u.n. and
p~urM tor the .U~Wt7 of ~ ~
tn-kind contrtbuUona ~e by ~..lIlnta ~
eubreclpleQU (loll referrod to In p~;lb to
ot th e baA! c c Ircula.r) , ()(' t.hl.nl pe.rtlU tn w.t-
Wy1n& con l\b.a.r~ e.nd tDAtchlni rDqulre-
manu of Y1>derIU apoa.o.ortnl ~I... 'I'b1.to
. t t.a..cl:u:a.d D t .ao e&l.a. b 11.toh.. crt t.erI-a for tha
eYa.lUAUon of 1n-1ln-d contrlbuUon.t O1&4e by
thln1 ptortlbl. J.nd. ~pplem.oQU t.h.e ~
...t torth In l'e<1enol ~em.nt etreul.to.r
'13-3 wlllb r08~ to COAt ah.tocInJ on t~r-
ally ~.poD-.JO~ r CM.Io.l"Ch,
. ,2. ne tollD",1ng ~.o.n1tlOlU apply for the
purpoe.e of th!A Atu.c:!:l.mant:
... PToject c<uta.-ProJect. 0001.& are aU aJ.
10'lnbl.-e COlIt.e (u Ht Corth In tha appll.c~l.
1"ederal co.-t. prlDclpl.,.) lnc'.1lTed by ~ rDCI:>I-
ent and the value of the tn-lt1.n4 oontrl~U-
tlCon.lo m..t.db by th. r-t>C I P to n t or thlrd p....t ~
1n accompll&bmg the obje<:tlYlIa ot the graDt
or othar ..gr~m.nt durt~ tbe proJe<:t or pro-
il"'m ~tod.
b. Cod VI4rlng and m4t<::hlng.-ln lrDn.anl.
oo.t. lllarlng t..nd ma.t.cblng ~ilfee-ent thAt
partIDn ot project or p~m co.t4 not bome
by the Ved~ Go?ernment.
c. CQ.JJh co-nbibutlo1U.--cuh contrlbutl.oD.t
"preMnt the reclple.nt'. P4h out~y. Includ-
lna the outlay of monlY contrlbutad to the
roclplent by non-~r-tJ thlrd p&rt1ee. -
ct. 11\- lei n4 C01\ trl bu tlo-u.-In .klD.d co n tJ1-
butIDnA "preMnt the value of no~ con-
trlbutlona proTic1..:1 by the rilClplent and
non-!'1:IdenJ third p.anlbl. only "Wben lIoU-
~rlud by l""edft'allegU~Uon. may proputy
p~ W1th ~ral func1l be co~
.... ~ reclp1-ant'. tn-kln4 oontrlhutlonl. In-
Il:IrU1 oontnbutklna ~y be In the torm of
c:h~ tor J'oe.I p~rty t..nd ncn..,up&lld-
IIbla peno1U\ propeTtJ'. IUl.d t.Ce 'Y>>-lu. of
f>OCda a.nd ~ d \nctr, benea tlo;l a.:>d
1;pKtl1C-:1lly iden~le to the pro}oCt- or
pro:p-lUD.
3. Genenl ~Idau.n.e. toc computlnl( cor.
alarlnl( or ~tcblo.i' a.rD ~ foUoln:
... Co.t ahulnl or )JU t:c.b.lDJ l:1.o'y cotUlIIt
of:
(1) ~ IncUJ'l"6<t by t.h.e rocI-Ptont loll
pl'OjilCt co.te. (Not aU cb1rgeoI nqu1N c:uh
outlaye by thlt reclpl"ot l1~ tn. project
~; examplN t.n de-pn<:~UoD e.nd. UM
c:hAr31l11 ter buUl1lnp &n-cI ~ulpmen t.)
(2) l"rojeoct ClO6ta n"..n.--1 'With ~ con-
trlbuUd or dona t.ec1 to the rec1p\.ent by 0 ther
noo-1!"edaf'Al pubUcap=* a.n4 InJItltu WOOl.
IU:l.cl pl'ln. ~ orp..nUa tlc-N e.n4 lnd1 Y1d w.U
and - .
(3) Pro}tct OOIItII ~p......n~ by !><It'lloee
and r-.l a:od penoo.al. ~. QC' UN th.ue--
of. doDA t.ed b1 0 th.r DOn - J"I>d,t..nJ P U bl Lc
arndN Jl.D.l1 IDrt1tutklN, and prln.w Of'i'&-
nI%a t10D.:l tt.n4 1nc11 v1d u.a.:..a.. '
b. All oontrtbu t1on.to, both- CNh and In-
klw1. ~ be ~t.bd o.a p..n of the roclpl-
ent'. OCl&t ~ IUld ma.:cl11nj' when ~ch
c:ontrlbutJona mMt all ot the fol}owtnJ
c:rltarl& :
( 1 ) Ant ?IIrteaJ> \.e !rom t.h.f .) l400 t..
r>KOrda;
(:3) Are not lnch1c1ed ... ~ trlbut.Lona for
any oth-er fedenll,.~ pros-nm:
(3) Are ~ ~ ,r, .oonAble for Pt09-
er and emeunt &OOO~nt of proJW"t
ob j lieU 'I"M;
(~) A-"'1> typee. or cha.rro Uat would be al-
lo~b\.e undar the ~Ucabl. oo.-t prt=1p\.N;
(II) Are not ~l.c\ by the ~ Qo'l'ero-
men t under ~t.be:r .....tat.an oe -.greec:.on t
(unle.o-a the I&T"II>D-nt la euthor~ by ~-
~ law to be UHd for oo.-t ~ 01' mAtch-
1nJ):
(0) Are proYtded fOf' In the appTOYe<1 boo,-
et 'Wh-tn r-toquJred by the JI"ed-' ~-'fDney: e.:1d
(7) Conlorm tJ3 utbn proTl-' _ 0.1 of I.hla
. tta.ch1nJll D \.
.. VlI-lu-ee tot' r6c1pl.nt In-lI:Ln4 COI>t.lbu-
tlon.a will be Nt.ahlllhOod In ~ with
the appUcable OOIIt prtnctp1M.
a. ~ ~ U1'M r~ th.a recJpl..,lIl l.o
..t.bl~ tN'noI~ 0( 1n-lr.1nd oontr1bU-
t1P'''''l '!-<11m, Ynl ., tlorJ. '~'-___""f"'" ""......., ,...,.~
32018
Uons from non-Federal third puUes are &et
forth below:
a. Valuation 01 volunteer- ~er-vfce~.-Volun-
teer ur-vICe:I may be furnished by professional
and technIcal personnel, consultants, and
other skilled and unskilled labor, Volunteer
urvlces may be counted as cost sharing or
In&tchl ng tr the servlcl' Is an Integral and
nK~ part of an approved program.
(I) RotOlJ lor Volunteer Jervice.J_-Rates for
volun~rs should be consistent with thObe
p..ld for almll..r work In the recipient's
org..n\z.aUon. In those Instances In which the
required skills are not found In the recipient
organ\z&t1on, rates should be consistent with
those pald for sImilar work In the labor mllT-
\tet In whIch the recipient competes for the
\tlnd 01 lIervices Involved,
(21 Volunteen employed by othtT organ 1-
zatlonJ_-When an employer other than the
recipIent furnishes the services 01 an em-
ployee. these services shall pc valued at the
empl07ee's regular rate 01 pay (exclusIve 01
lrlnge beneftts ..nd o'\lerhead costs) provided
these services are In the same skU! for whicb
the employ~ Is normally paId,
b, Valuation 01 donllted. expendable per-
'01lal proper-ty.-Donated. expendable per-
sonal property Includes such Items as ex-
pendable equIpment. omce supplies. bbora-
tory supplies or workshop and cla'lSroom
supplles, Value assessed to expendable per-
&onal property Included In the cost or match-
In<> share should be reasona.ble and should
not exce-e<1 the lDarket value of the property
, at' the Ume 01 the donation,
c_ Valuation 01 donated. nonezpendable
~Jonai propertll. building!, and land or
UJe thereol, -
(I) The method used for charging cost
IIhe.rlng or matching for donated nonex-
pendable per.>onal property, bulldln~ and
lo.nd may dltrer according to the purpoM of
tbe grant or other agreement au tollows:
(..) Ir the purpose of the grant or other
agn-ement Is to assist the recipient In the
acquisition 01 equipment, buildings or land.
, the tota.! value of the don..ted property may
be claimed as C06t sbarlng or matching.
Ib) Ir the PUrp06e of the agreement Is to
support activities that require tbe use of
equipment. building, or land, depreCiation
or use charges for equipment and buildings,
. OlAy be JnAde. The full value of equl!)ment or
other capital a3Sets 81111 fair rent~l Ch.....gC3
for land may be allowed provided that the
Federal ..gency bas approved th'e chargC3.
(2) The value of donated property wUl be
determined in accordance with the wmal
accounting policies of the recipient with the
,follo....lng quallncatloIlll:
(a) Lan.d and bufldfng~,-The value of
donated land and buildings may not.exce-e<1
Ita blr market value, at the time of donation
to the recipient as establl3hed by an Inde-
pendent appralsu (e,g_. certlned real prop-
erty ..ppulser or aSA reprenntatlvcs) and
urtltled by a responsible omclal of the
redplent.,
Ib) Ncnu:~nd4ble pV"~onnl proper-tJl.-
The value of donated nonexpendable personal
property shall not exceed the fair muket
value or equipment and property 01 the same
age ..nd condItion at the time of donation,
Ic) Uu 01 Jpa.ce.-The '\Ialue 01 donated
spa.ce shall not exceed the fair rental value
or compa.rable space as established by an
Independent appralssl or companble apace
and racllltle5 In a privately-owned building
In the r.ame locallty:-
Idl Loaned eqIJlpmen!.-The value of
loaned equipment Shall not exceed Its fair
rental ~alue,
6, The following requirements pertain to
the recipIent'. li\lpporllng records for In-
I<lnd ,contributions from non-Federal third
pntles.
I
NOTICES
I
a. Volun~r services must be documented
and, to the u~ent feasible, lIupported by the
same methods used by the recipient for Its
employ~s.
b, The basis for determining the valuation
ror personal services, materll>J. equipment.
buildings and land mU8t be docuDlllnUd.
ArrACJlMEUT F.--CDtcULJ\ll No. A-Ill>
nnanclal transactions. M '\I(ell as compliance
with the terms and conditions or the Federal
granla and other agr~ments_ Such tes:.e
would Include an approprIate sampling 01
Federal agreements. EumLlltotlolU will be
conducted '\I(lth ~asonable frequency, on a
continuing b&sls or at acheduled Intervlto!5.
W1ually annually, but not les.s frequently than
every two yea.rs, The f,equency of the5e ex-
amInations shl>JJ'- depend Upon the nature.
sIze and t.he complexity of the act'\lllty_ TheM
examinations do not. relieve ~eral ..gencl~
of thel, audit responsibilIties, but may all'"ct
the frequency snd scope of such audlU.
-I. A systematic method to assure timely and
appropriate resolution of audit. ftndlngs &:ld
recommendations. .
3_ Primary reclplenta shall requln subre~
clplents las denned In paragraph $ of the
basic circular) to adopt the st.a.ndarcls In
paragraph.2, above except. for the require_
ment In subpa.ragraph 2e, regardIng the U54
of tbe letter-of-cndlt method and that part
of subparagraph 2&. regarding reporung
torms and frequenclC3 prescrtbed In Attach-
ment, G to this circular.
BTAtfDAllDS ,.aa FlNANClAL KANACEWZH'T
BTSTl:NS
1, This attachment pre6Crlbes standard.! for
financial management. sysl.elJl3 01 re<:lplent.a.
Federal sponsoring agentles shall not Impose
addltlo-nal standards on recipients unless spe-
clflcally provided for In the applicable sta-
tutes le.g-. the Jolnt. Funding 8lmpllncatlon.
Act. P.L, 93--$10) or other attachments to this
circular. However. ~eral 8ponsorlng agen-
cies are encouraged to make sugge.stlons and
assLst recipients In estb&llliblng or Improving
tlnancllll management systems when Il'\Ich as-
sistance Is needed or requested.
2. Recipients' llnanclaJ J:nJIo.IlAgCment rry&-
ums sball pro'\llde for:
... Accurate. current and complete d1sclo-
sure of t.he financial results of ea.ch federally
sponsored project or program In s.ccordance
with the reporting requirements !WOt forth In
Attachment a to this clrcul....., When a Fed- 1. Thl.s attachment prescrlbC3 unilorm re-
eral sponsortng agency requires reporting on porting procedures for recIpients to: sum-
an accrual basl.s. the reelple_nt sball not be IDArIre expenditures made and Federal fund&
required to establLoh an accrual accounting unexpended for each award. report the su.:\a
lI}'lItem but shall develop 5Uch accrua.1 data. 01 Pederal CBoBb advanced, request ad'\l'a:lces
10r Its reports on the basl.s of an an.aJ}'lI1s or and reimbursement when the letur-of-cre<11t
thll documentation on band, method Is not us-e-d; and promulpus &ta.JJd-
b, Records that. Identify adeqUAtely the ard forms Incident thereto,
source and application of funds for federally 2, The following definition. apply for pur-
spoWlOred a.ctl'\lltlC3. These ncordIJ shall con- JX>"e8 or tbLs attacbment:
taln In.1ormatlo,n pertaining to F'ederal a. Accrued e.rpendlturQ.-Accrued CJ:-
awarda, authorizations, obllgatlona. unobJl- pendltures are the chargeS Incurred by the
gated balances, BlIMlla. ouUaya. and income. ~Iplent during a glnn pertod requiring the
c, Elle<:tl'\le control over and accountabUlty provl.slon of funda for: (1) goods and other
for all funda, property and other &:l&ew. Re- tangtl?le property received; (:l) services per-
clplenta shall adequa.tely lIafegu&rd &l1 lIuch- formed by employees. contractoT'll, lIubreclpl-
assets and shall &B8Unl that they ...-e used ents, and other payees, ..nd (3) other
solely 10r author1z.ed purpoe;elI. 1UD0unts becoming owed under programs for
d, Comparison of actUAl. outlaJ1l with bud- which no current services or performance Is
get. 1UD0unta for elLCb grant. or other agree- required.
ment. Whenever appropriate or requl.nld by b. Accrued '7\C01/'le,-Accrued Income Is the
the Pedera.1l1poWlOrtng agency. I1n.lLnclal In- lIum or (1) earnlhgs durtng a ghen pertod
tormatlon should ~ related to performance from (I) I>Cnlces performed by the rKlpl-
and un..lt OO8t data. ent; and (11) goods and other tangible
e. Procedures to m1n1.m.be the time elapelng ~ property delivered to purchasen; and (2)
bet.ween the trans.1er of funds tram the U.8. IUDounta becomIng owed to the rKlplent for
Treasury and the dlsbu~ment. by the reelp- w~h no current services or performance Is
lent. wheneVllr funda a.re advanced by the required by the recipient. - ,
P'edel'1lol Government. When adn.ncm are . c. Federal /llnd3 outhoriud,-Federal
made by a letter-of-crecUt method.. the reclp- funds authorized are the total amount of
lent shall make drawdOWDll lla c1cee aa poa- Pederal funda obligated b1the Federal GO'\l-
alble to the time of IDAk1Dg dlsb\1TlM!ments. ernment for US<! by the recipient. This
t. Procedures for determln..lng the reasou- IUDOunt. mAY Include any autborLud carry-
ablenllll-ll, allowablllty and allocabWty or c0et8 over of unobligated funda from prior l1.sc81
in accordanu with the provisions of the ap- years wben permitted by law or agency
pllcable Fedel'1lol ccet prtnctples and the t.enna regulation.
or the grant. or other ~men"- d. In-kind contribJJ.ti.o7U,-In-klnd con-
g. A~untlng reoonla that an supported trlbutloDB are dellned 1n Attachment E to
by source documentation, this circular.
b. Examlnatlona in the form of audita or e. Obligatloru.-obUgatlotlS are the
interna.1 audits., Such audita shall be made amounla of ordel'3 placed. CODtr&CU And
by qualltled Indlvld\aJa wbo are IJUmclently granla awarded, services received. aDd slml-
lndependent of th08e wbo authorUJe the ex- ~r tran.sac:tlona during a given period, that
pendlture of ~eral funds, to produce un- will require payment. by the recipient durlDg
bIAsed oplnloD3. conclusloD3 or Judgmenla. the same or a future perlod_
'Ibey shall meet the lndependenC:e crtterta f. Ou!/Dy..--OUUays or expeDdltures repre-
along tbe lines of Chapter 3. Part 3 of the sent chargCll made to the project or program.
V.S, OeDeral Accounting omOll publication. 'Ibey rn&y be reported on a cash or accrual
Btandardos for Audit of GovemmenbJ Orga.n- bas 13. For reporla prepared on a cash basts.
lutlons. Programs. Activities and P'unctloD.a. outlays are the sum or actual cash dlsbur.;e-
The5e examinations are Intended to ascer- ment.! for dlrbCt. charges for goods and scrv-
taln the elfectlvene531 of the nnanclAl man~ Ices, the amount of Indirect expense chl\rged.
agement s,stems and Internal procedurt:&' the value 01 In-kind contributions spplled.
that have b~n established to meet the term.s and the amount or cash ..dvances and p"y-
and condltloJU of thl' l'ogTe-t:ments_ It I.s not meDla m&de to lIubreclplents_ For reports pre-
Intended that each agreement awarded to \.he pared on an accrual bub. oulla)'S are the
recipient be examlned_ OeneJ'1\lIy, examlna- 8um of actual cash dlsb~menu for dlrKt
t101U should be conducted on an organlza- charges for gOO<b and services, tbe amount
t1on-wlde bul.J to test the fbc&l integrity of of Indirect expense Incurred. the niue, ot In-
ATrACHMrNT G.--CDcvt.AA No. A-lIO
nN A NClAL LEPOl\Tnf'G . J;QtI IJl o.r Z2fT8
FfDUAL tfGIsrn; VOL 41, NO. ,..-AIDAY, JULY 30. 1976
/ltJp C
,kind contrl~uUona I.ppll..s. I.nd the net In-
ueu-e _(or decr~)' In the amounta o....ed by
the roc:lplent tor good& .nd other pro~rty
recelYe<1. tor aervlc~ pertormed by em~loy-
e--ee. con~t.ora. .ubredplenta and other
pIoYHe I.nl1 otber ..mounta b<<:omlng owed
under prog....ma tor wblcb no current lHTV-
\ellS or ~rtorm.r.nce are requLred.
g. Frcxpam i7\COm..-Pro~ Income Is
deQne<1 In Attacbnunt D at tbla clrculu. It
DUoy be reported on . caab or ac:cnal be.ala,.
whichever Is \CIed tor reporting OUu.ya,
h. Un.obll,ated balG~.,-Tbe unabllpte4
t..ll.nce la tho portion ot the funds ..uthor-
lud by the l"l)de~1 lpolaOrlng agency tta.t
hu not been obllpted by the recIpient and la
determined by deducting the cumulative
obl1.6l.ti005 trom the cumulAUve tund.5 au.
thOf"IUd.
I. t{nllqut&1ted oblf9aUo?U,-l'or report>>
pr.;>a.r*<1 on a u.sh bula. unllquldAtad obU-
pt:ons represent the'&lJWunt ot obll:g1.tlona
Incurred by the recIPI.nt., that h.... not been
p& Id. l"or r a pom prep&l'ed on r.n a.c:c:.""U ed ex-
p-encUture hula. th.y repreaent the a.mOUIlt.
ot obllptlo05 Incurred by the reclplont tor
wblcb Cl outlAY hAa not been recorded.
3. Only tbe tollo....lniJ torma will be ..u-
thorlud tor ob~nlnl nnanclal lntormatlon
from nclplenta.
a, FI"-Gnci41 StatWl Report (Emlbit 1). ,
(1) ~'l. l'e:1eral .po=tng agency ahall
N:qUlre reclplent.a to w.o the etAncla.rdlzed
nn..ncal St.a.tw Report to report the .t.a.tua
of tu:::d.5 tor ILII noncoIUtructlon proJecta or
pro~- The Yede...l .poruorlng agenclee
rIU"j. 110....eYer, have the option ot not re-
quirIng the F1na.ncbl 8tAtua Report when
tt.e Request :or Advance or RelmbW'Mment
(y.&~a.;r:-&i1h h) or Report at l"'ederal CUb
-rr.~:IOlU lpa.ra.gr-.ph 3b) Is det.ermlned
to provIde adequate lntor~Uon to mD"t
their n~. except thAt .. tl.nal 1"in~nclal
S:.a.t\CI P.eport .h..U be required at the com-
ple:lo~ ot .tha project when tho RlOqUeet for
Adnnce or Reimbursement torm La \Ued only
tor adonnc.."
(2) The l"e<1e~l IlpoOllOrlng a~:ncy IlhAll
pr~;1~ whether tha report ahAU be on ·
cub or &ecrul.l ba.:lLa, It tho P'eden.1 apolaOr-
lng "i~ncy requires ac:CTU.a1 lntormAtlon r.nd
the recl;llent'e aceountlng rec:ord5 a.re not
nortr.Ally kept on the accrual but.a. the r&-
clplent shall not ba requlrod to CQnvort it.
a-ccou:nlng s~t.em. but s~U devo!llop lIuch
au:rual Intormatlon througl:l host eetlma~
b&.R<1 on An ualyala or the document.a.Uon
on hand.
(3) The Fed.....l epon.sorlng ag.ncy ah.a11
de:erml:uthe trequency at the l"tJUnclal
Btatla Report tor e&Ch project or progra.m
coruldertng the s!zA and complexity or the
partlc'.lla.r project or prosratn. Howner. the
report shall n01: be required more frequently
than quarterly or 10M rrequently than ..n-
nu..lly except a.s provided In .ubp.......graph
3& (I) ..bon_ A nn..l report &hall be required
at th.. CQmpletlon at the agreement.
(' I l"ederal spolUOrlng agenclea ahall re-
qulro rOClplent.s to aubmit the nn.a.ncU.l
I
NOTICES
I
32019
Bta.tua 'R-oport (original am1 no more th..n
two CQpIU) no lat.er than 30 cay.. anor the
end ot '04Ch ,pec:ltled reporting period tor
quarterly and uml-e.nnual reportA. and 90
cays tor a.nnual and nnal report.'J, Extenalona
to reporting duo datea may be gunt.ed upon
request ot the recipient.
b, Rtport 01 Ferfl'Tal C~" TralUactloN
(Emfbit 2).
(1) When funds e.re adva.nced to
rec:lplenta through lett.era at credit or with
Trt>lUury checlu. the Yedaral aponaorlng
lLienel.. sba.1l require eaA:h recipient to sub-
ml1: .. Report at !"eder&1 ClI.Sb Tra~tlona.
The }Oedefill sporuorlng &GencyahAIl UM this
report to monitor cull Advanced to r-eclplenta
and to obt.a.ln dl.bunement InformaUon tor
01oC~ losr~ment trom tho reclplsnta.
(:1) Faderal .ponaorlng agfInclea may re-
qUI" torecuta or Federal cuh requlrement.s
In the "Rbmaru" ~ctlon or the report,
(3) When practlcal and dumed necesury.
tha l"ederal spolUOrlng "io:ncIU m..y require
rec.lpt.s to report In the "R.em.a.ru" Ncuon
the L:l:.ount ot ca.th -a.du~ to 'e~ or
thne d"YS' requirements tn the hand.l ot sub-
r&elplont.s a.nd to provido short nvnU'" ex-
pl~natlolU or actions taken by the reolplent.s
to reduce the "xces) balaoncee.
(4) ~clplenta shall be requlred to submit
not. tn::lr-D tha.n the orlg!nala.nd two copies of
tbe iUport or Federal C....h, Tran~tlon.a 15
working daoya tollowlng the end or ea.c:h
qUArter, Tha l"eder&l apo~rlng &-gencles
mAY requIre ~ monthly- repOrt from thor.e
reclplenta receiving ILdvan.:-etl totaling $1
mUllon or morll per yu.z.
(5) Federal apoDllOrlng Aieric1es may WAive
the requirement tor aubm~lon ot the Report
ot Pederal Caosh Tranu.cUOILS when monthly
advsnces ~o not excead UO,OOO per recipient.
proYld&d tha.t euch advances are monJtored
through other fornu conhlned 1q...J,bt.a at-
b-Chment. or It. In the Yederal sponaorlng
ngency'a optn\.on, the redplent'e accounting
controla are adaqUAW to mtnlmlu oxcou1ve
Federal a.dvancea,
4, Except a.s Doted below. only the tollow-
lng torm3 wtU be author'!u4 tor the reclpl-
Ilnt.5 II\. rf>questlng a.dva.ncea and relmbu~-
menta.
a, Rllquut 1M Ac1llanu eyr RdmburlO'm.ent
(EVilblt 3),
(1) Es-ch F'edera1 aponlOrlng agency ahsll
a.dopt the Requut tor Advance or Roe1mbune-
ment u a eunc1Artllud torm ror all noncon-
etrucUon progra.m.a when lottera-of-cred1t or
predetermined advanco method. e.n not UMd.
_ l"odenJ spon)Orlng -.goncle" ho....ever. have
the optton of using thls form tor CQnstTUC-
Uon progr~ In Ueu ot the OuUsy Report
and Ro:j,uest tor Relmb\lra-eme::.t tor Con-
atrUct\.on ProgrlUlU (subparagraph -40b). '
(:I) iUc:lplenta shAll be authorlUd _to aub-
mtt reque.sta tor advances and relmbW'M-
menta at le&at monthlY whon lett.el"ll-or-
credit are not \Ued. l"edenJ Ilponaorlng
agancles lIhall not reqUln the lIubmlAlon of
more than the orlgtnt.l and two copte. or the
R-equut. for Advance or Relmb\1rllOmont.
b, Outfav report aM ,equeJt lo-r reim-
burum..", lo-r C01UtrILCtlon pTogramJ (1:%-
hlMt, 4).
(1) Each Federal lIpolUOrlng igency ehkll
"dopt the Outlay Report and Request for Ra-
Imbur~ment for Corutructlon Progn.m.a. &s
the su.nd.A.rdlu<1 format to be uud tor re-
questing relmburallment tor construction
progra.nu, The hderlLl aponsorlr:g' "iencl"
m..y. ho....ever. have the option at aub-atltut-
lng the Request tor Adv&Ilce or Relmbu~
ment l"orm (aubpu..gn.ph 41.) when the
FedeMlol &genclea det.:rmlne th"-t It prOYlcI"
adequate Intormatlon to ~t their nee<14.
(:I) Reclplent.'J shall be Authortu<1 to sub-
mit 'requMt.'J for relmbu~ment. at lust
monthly wben lett.:ra-ot-cre<1lt ue not w.e<1.
Federllo\ aponaorlng a.genclu ahall not requlre
moro th...n the orlg1nal a.nd two copies of the
Outlay Report a.nd R.cqunt tor Relmbur-..-
ment for Construction PrOgrILms.
5, When the 1"cderal spolUOrlng aatilcl~
need &delltlonAl Intornutlon 1n wing theM
fOfm!l or mora rrequent rr:.porta. the toll owing
ahllo\l b& ob~rved:
... wpen a.ddltlonal InrormAtlon Is needed
to comply with legWa.t1vlr requlremmt.s.
Jl'eder<?1 sponsortng aier.cles ahkll tsaue 111-
structloIa to require reclplent.s to eubmlt
.ucl:l lntormlotlon under the "RAImark." r,ee-
t\.on ottha reporta,
b. When nec~'a.ry, to mM:t epeeU3c pro-
gr"-m needs P'ederal sporuortng agencies ah~1
aubml~ the propo~ reporting requlremenu
to the P1na.nclal-MJUlagement B~anch, Buelist
RevIew Division. Omce or Ma.na.gement And
Budget tor a.pprovsl prior to aubm~lon of
the reporta tor eloara.nCfl' under the, pro-
vlslon, ot OMB Circular No, A40.
c, When & l"&deral apor.sortng "iency hu
determln!ld that a. reclplent'e accounting ays-
tem doe!> not m.eet the Stllo.nda.rca for 1"1~
nanclal Management. contained In Attach-
ment P' to thIs cIrcular. adclltloJaI p-ertlnent
Intorma.tlon to turther monitor grAnts a.nel
other agree menta may be obtalne<1 upon
wrltt.en notice to the recipient until auch
Uma &oS th!> s}"llUlm It. brought up to sundarel,
d, The Yederal epon30rlng &geney, In ob-
tAining Intorml.tlon a.s In p&rJ.gr&PM ... b
and c &bove. must comply with report cl~r-
IUlCO reqUlrementa of the Olllce ot M..ru.ge-
ment and Buelget Circular No. A--400. &a re-
vlaed.
8, Yedetal eponaorlng a.gencl~ have the
option ot ah...cllng out any line Item on any
report th~t Is unnece~ tor decision-mAk-
Ing purpoeea.
7. Yedor&1 aponaorlng aaencl~ a.hould ac.
cept the Identical Intorma.t1on from the re-
cipient.. In [D&Chlne USAble torma.t or com-
puter prlntouta. In lieu of prescribed formatA.
B. Federal apoIUOrlng agsnc1e3 ma.y pro-
vide computer outputa to recipIents when It
will expedlti or contribute to the accuracy
ot reportlng.
9. Yederkl sponsorIng agencies ILre author-
Ized to reproduce theM fon::ns. The forrru for
reproduction purpoua can be obtAIned troOl
the omce of MAn~ement ILnd Buclget.
flOIlA1. UOISTU. VOt... 4'. NO. ,""""'.10"'1'. JULY 30. 1976
ArrllcHMENT }I,-CIRCtT1.IIR No_ A-110
MONlTOR'NG IINO REPOI\TlNG PllOCKIIM
Po.J"OKMIINCI:
1, Thl, o.ttachment sels rorth the pr(,ce-
dures (or monitoring o.nd reporting progro.m
perCorm"nce o( recipients,
2. Reclplenls 5ho.II monItor the perCormo.nce
under sro.nts snd other agreemenls o.nd,
where approprl..te, ensure tha.t time sched-
ules o.re being met. projected work unIts by
time perlocts ..re being accomplished, and
other perCorm..nclt go..ls are being achIeved.
Thb review shall be made ror each progro.m.
runctlon, or activity of e..ch o.greement lU s-et
rorth In the approved ..ppllcatlon or awa.rd
document_
3. RecIpients shall submIt a perrorman~
report (technlc..1 report) ror eAch agreement
that brlefiy presents the rollowlng Informa-
tion ror each pro~ram, Cunctlon. or actlvlty
Involved lU'prescrlbed by the Fedenl spon-
soring agency:
a. A comparison or o.ctuo.l o.ccompllshmenls
wtt,h the gOo.ls es:abllshed Cor the perIod, the
tlnclngs or the Investlgo.\()r, or both. It the
output oC progro.ms or projects cOon be readily
qUAntified, such qUAntitative data should
be relo.ted to co,t d..ta for computo.t:on or
unIt costs,
b, Reasons why established goals were not
met.
c, Other pertinent Informatlon Including,
when approprl..te, ana!ysls and explanation
of cost overruns or high unit costs,
4. E;xcept lU provided In a and b below.
and In subparagraph 30.( 1). Att..chment G,
recipIents shall submIt the perCormance or
technical reports to Federal sponsoring 1>gen-
cl", o.Dd the Flnancl..l 6to.tus Reports cov-
ering the sane period In the frequency estab-
lished by At:achrnent G oC this Clrcul..r and,
where approprl!l.te, a fin..l technIcal or per-
forr:unce' report Arter completion of the
project on A date specIfied by the Federal
sponsorIng agency. The Federal spon!lOrlng
agency sho.lI prescrIbe the- rrequency with
WhiCh the perCorm..nce report3 wlll be sub-
mltte-d wlth the request for advance or relm-
burs~ment when that rorm 19 uoed In lleu
or thlt Financial Status Report. Except IL!I pro-
vided ror In paragraph 5 below, perrormo.nce
reports sh90ll not be required morc frequently
than qu..rterly or less rrequently than an-
nually. Federal sponsoring agencIes may
wslve the requIrement for recIpients to sub-
mit perCormance reporls with the nnancW
reports under the rollowing clrcumstances:
a.. WheD the recipient b required to 8ub-
mlt a perrormance report wtth a contlnua.-
tlon or renewal appllcatlon.
b. When the FederAl sponsorlng agency de-
termIne! that on-site technical Inspectlon9
and certified cOlnpletlon data. will -be BUm-
clent to evaluate construction projects.
c. "'''hen the Federal s'iX)1uorlng agency re-
quests ann~.1a.1 financial reporls on a ttscal
yeo.r bll3ls but It 18 nC(:e5Sary to get annual
prcgresa report! on a. calendo.r year blUu.
6. Between the required perCorman~e re-
porting dates, evenu. may occur th3t h..ve
slgnlnc..nt Impact upon the proJec~ or pro-
gram_ In such Instances, the recIpient shall
InCorm the Federal sponsoring agency lU soon
.., the Collowlng types or conditions become
known:
a, Problems, delays. or adverse conditions
that will materially affect the o.blllty to at-
tain prGJtram obJectives, prevent the meet-
Ing of tIme schedules and goal', or preclude
the o.ttalnment of project work unlt3 by es-
tablished time perlods_ Thb disclosure shall
be accomp..nled by .. statement of the action
taken, or contemplated, and any Federal 1!03-
slstance needed to resolve tho sltu..tlon.
b, F..\'or:\ble developments or evenls th..t
enable time schedule, to be met sooner than
I
NOTICES
1015.lhen the recipient meets all or the re-
quirements speCIfied In p..:ailraph 3. abo',e,
except tho~e In subparbbraph Ja.
5_ The reimbursement by Treasury cbeck
method shaH be the prererred method It the
reCipient doe, not meet the requirements
speclned In subpa,ailraphs 3l> ..nd 3c. above.
At the option or the Feder..1 sponsoring
agency. this method may alSo be u~c1 on any
cO:lstructlon agreement. or If the m"'Jor por-
tion or the prog. am 1.1 accornpllshec1 throug~
prlv..te maricet nnanclng or Federal 10a.1\5.
and the Federal asslst":lce, constltu~ a
minor portion oC the progro..m, When the re-
Imbursem~nt metho<! Is wec1, the Federal
sponsoring agency shall make payment
within thirty days after receipt or the bl1llog.
unte" the bllllng Is Improper_
6. When the letter-of-credit procedure 15
used, the recipient sh..1I be Issued one con-
so1!dated letter-vC-credlt whenever possible
to cover a!ltlclpate<1 clUh n~eds for all granls
and other Agreement3 aw..rded by the spon-
soring agency, Ukewlse, to the extent poul-
ble. when the adv..nce by Treasury check
method Is used, IUIvances should be c\ln-
soHdated Cpooled) ror all gTanls and other
agreement-s made by the sponsoring agency
to tbat reclplent_ '
7. Unles; otherwise req",lred by law, Fed-
en,l sponsoring agencies shaH not withhold
payr-nnta for proper charges made by recipi-
ents at a~y time during t!1e project or pro-
~ram period unless (a) a recIpient has fa lied
to comply ..'Ith the progam obJectlve9, aw..rd
conditions. or Federal reportln~ require-
ments; or (b) the recipient h Indebted to
the Unl:ed States, and collection or the I~-
de~tedness wlll not Imp..:r accomplishment
o! the ob!ectlves or a pmJect or program
spons:lred ~y the United St..te.s.
Under such condltlo:13. the spon50rlng
agency maj'. upon reasonal>le notice, Inrorm
the reclp!~:1t that parme::ts will not hi! rn;.de
fo: cb1!ga.::::>ns Incurred a!ter a speclned date
Until the condItions are cor,ected or the In-
debtedness to the Federal Government 15
IIquldated_
ATTIICH:>lENT J,--Cv.ct:U\ll No. A-110
ItEV15ION 01" 7'NA~ClAL PLANS
1. This atto.chment sets Corth crltula ..nd
~r:x:edures to be follo...'w by Federal s;>en-
sorlng agencies In reqUIring reclplenls to re-
port -devIations rrom n=elal plans and to
request approvals for l1n..nclal plan re-
vlsloD9_
2. The tlnanclal plan Is the I3nanclllol ex-
pression oC the project or program as ap-
proved during the appllcatlon and/or award
process. It m..y Include either the Federal and
non-Federal sha.re, or only the Federal sha..re.
d~pendlr:g upon sponsorlng agency require-
ments_ It should be rela':-ed to perroraur.nce
Cor pro6-'''-_rn evaluation purposes whenever
ap.,roprla:.e and required by the Federal
aponsorlr.g agency.
3. For nonconstructlon awards. reclplent.s
!hall Imme:ll..tely request approvals from
Fe:!eral sponsoring agencies when there Is
re..son to believe that wl:hln the next B~ven
days .. revision will be necessary for the
(ollo....log reasons:
Il. Chllnges In the sco~ or tbe obJectlH of
the project or progTam_
b. The need for addltlonal Federal CUOlt-
Ing.
c. The transrer or amount.s budgeted fcr
Indirect costs to a.bsorb Increases Indirect
casls or vIce ver5.'l, IC a"pro1'al Is required
by the Federal sponsorl:lg agency.
d. The expendlture.s as relOulre a.pproval In
accordance with FMC 1J--a. "Cost Prlncl:l\es
ror Educa:lon..1 Instltullons." For all other
a....ards. approval requirements ror other
Item, or expendIture, may be Imoosed If they
are cons":ent with those In FMC 73-8, No
other req ulrements ror ."eclfie Ite[JUI may be
FEOEllAL REGISTU, VOL. 41, NO, 14S-fllIOAY, JULY 30, 1976
antlclpated or more worlc unIts to be pro-
duced than orIgInally proJected_
6_ It any performanclt revle'... conducted
by the recipient discloses the need for, change
In the budget estimates In accordance with
the criterIa established In Atta.chment J Co
this Circular, the reCipient shall submit a re-
quest Cor budget revl,lon, '
7. The Federal sponsoring o.gency sh"lI
make site vlslt3 lU frequently Il.'I plllctlcable
to:
... RevIew progro.m accompllshment.s and
ma.n..gement control systems, and
b, Provide such technlc..1 !lSSlst..nce AS
may be reqUired.
8, Federal sponsoring agencies shall submit
proposed technical o.nd performance r.,ports
to the Omce or Management and Budget for
approval In accordance with the report clear-
ance requlremenls o( OMB Clreul..r No. A-40
as revised.
ATTIICH~ENT I.--CmeuU\ll No. A-110
PIIYMJ:NT KEQUDlE!olUfTS
1, This atta.c:hment ests.bllshes the re-
quired methods or making payments to recIp-
Ients_ These methods wl11 m!nlmlze the time
elapsing between the dlsbW"~:nent by these
recipients and the tra.nsCer or funds Crom the
United States Trea.9ury to these recipients
whether ouch disbursement occurs prior to
or subsequent to tbe transrer or funds.
2. Paymenls can be m..de to recIpients
through a letter-or-credlt, an adv3nce by
Trea.9ury check, or a reimbursement by Treas-
sury check. The following dennltlons apply
Cor the purpose or this attachment:
a. Letter-o/-Crer!.tt.-A letttr-or-credlt Is
aD Instrument certified by an authorized om-
clal or a Federal sponsorIng agency that_eu-
thorlzes a. reclpleDt to draw runds whe:\
needed Cram the Treasury, through a. Fed-
eral Reserve bank and the reetplent's com-
mercia! ba:\k. In accorda:lce with the provi-
sions or Treasury Clrcula.r No, 1075. as re-
vised.
b, Advance by Trell-.t'Ury check.-....n ad-
vance by Trel\sury cbeck Is a payment mo.de
by a Trel!o.3ury cheek to lr._ reCipIent upon Its
request be rare- outlays are made by the
re-:lplent. or through tbe use or predeter-
mined payment schedules. -
c. Relmbur3emt:7lt by Trea.mry check,-A
relmbur~ment bY Treasury cbeck Is 0. Treas-
ury check paid to a. recipient upon request
for reimbursement from the recipient.
3. Except ror constructlon granls and
other eonstructlon agreement.s for which op-
tional payment metb0d3 a.re authorized, as
described In paragraph 5, the letter-oC-credlt
method shall be used by Federal sponsorIng
agencies It all of the Collo.,..lng condltlo:\a
exist:
a, rr there Is or will be a continUIng reb-
tlonshlp hi!tween a recIpIent and a Federal
spcnsorlng agency for a.t least a l2-month
period and the total amount of a.dvance pay-
ments expected to be received within that pe-
riod Crom the Federal spolUOrlng agency Is
t150,OOO or more, as pres~rlbed by TrelUury
Clrculo.r No, 1015. For Joint runded prOjects
the Treasury has a.utbor~ a dollar criteria
or tl20,ooo,
b. ir the recipient hlL!l establbhed or dem-
onstrated to the Fedsral sponsorIng agency
the wllllngness a.nd ability to malnt..ln pre>-
cedures tho.t wlll mlnlmlUt the time ela.ps-
Ing between tbe tro.nsCer of rUDds aDd. their
disbursement by the reclpl,nt.
C, If the rC(:lplent's fimr.ncl..l management
system meets the stand..rds for fund control
an:! accounta.blllty prescrl~d In Attachment
p to thu Clrcul..r, "Standards for FInancIal
Management System,'"
4. The method or advancing funds by
Treasury check shall be used, In accordance
with the provlolons oC Treasury CIrcular No.
/)pPc..
32030
I
Imposed unleu .. don-Uon bu bMn ap-
proyed by the om~ of ~\ and
Budget.
e. Reclplenta pllloD to tn.nafer fWlca allotUld
tor tnLlnlDg allowancea (dlrect paymenta to
trslD~') to other a.tegorlea of up.eosa,
... None of the aubat.a.nUve progrllJJUIaUC
."ork under.. grlUlt or other agreement may
be &ul:>con~t.ed or t.nt.IU!errc<l .Itbou\-pclor
&pproY~ ot thef'ederal aponwrlng ageocy.
Thl. pro.,ulon does not apply to the pun:hA:l.a
of auppUea. nuterial, equlp=t. or genu-al
support a-enlcea.
:;, The Federal apoo.soring a.gew:y may
aJ.so, a.t Ita opUon. restrict tra.D.5fera of tu.o.c:ta
-=ong dlrect coat ~or1C11 for awa.rda In
w hi ch th e F'e<I eral D-h-a.nt ex ceeda .100.000
when the cumula.U.,e amount of lIucb tr'aD6-
fera excee<U or La expected to exceed f1ye
percan.t of tho tot.a.l budgetu last appro9tOd
by the apotuloOrlDg agency. The &&me criteria.
shall &pply to the cumula-tlve amou.o.,\ of
transfe~ among prognw:na, function., and
activities when budgeted lleparately lor an
award. except. that the Federal woD30rtng
~ency shall perm.l.~ no U"lloIlSfer that would
a.wo any Fed"ral' appropria.UoD. or part
thereof. to be us-ed tor purp0&e6 other than -
tho&& Intended.
6. All other changes to nODconstructlon
bu:lge~, except for the cb..ange&, deacr1bed
In paragraph 8, below, do not r-equlro ap-
proyal: This Includes tho use of ,recipient
funds In furtherance ot program objectives
over and above the recipient mln1mum aha.re
lDcluded In the &pproved budget.
7. For construction a.wards, reclplen~
shall request prior approV1l1s promptly from
Federsl sponsoring ageo.cles tor budget re-
visions wherever:
a, The revision resull:3 from changes lD
the scope or lhe objective or the project or
program. IUld
b, The revisIon Increases the budget
lUJlounts of Federal funds needed to com-
ple\.e the project.
8. When a. Federa.l Ilpon50rlng agen::y
makes an a.wax-d th...t provides support,for
both construction and nonconstructlon work,
the Fede""l sjlonsorlng agency may requlre
the recipient to request prior a.pprova.l from
the Federal spon.'IOrlng agency before mulng
_ any fund or budget tJatUfers between t~e
two type5 of work sUjlported, -
9. For both construcUon and noncolUtruc-
Uon awuds. Federal sponsoring agencies
s~1 require recipients to, DOUfy the Fed-
eral ap:>n.sorLng agency promptly whenever
the amount of Federal authorized funds Is
exp.ected to exceed the needs of tho recipient
by more than .5.000 or nve percent of the
Federal IIowa.rd. whichever I.s grellter. Thl.s
not.lDca.UOD wUI not be required 11 a.ppll;:a-
tlons for addlUonAl funding are submJtted
for contlnuLng granl:3 or contra.cts. .
10. When reque-st.lng a.pproval for budget.
revisions. recipients sha.1I U50 the budget
forms th:o.t were used In the a.ppllcatlon
unleM a letter reque,t will aumce.
11, Within 30 ca.lendar days from the date
of receIpt of the request for budget re.,l.
III on.. Fede""l llponsorlng agencIes ahall re-
view the request and noUfy lobe recipient
wh&ther the budget revlslona have been a.p-
proved. If the revblon Is mill under con-
IIlderatlon at the end of 30 calendu days,
the Federal IIpon,orIng agency sh.a11 Worm
the recipient In writing of the date when the
reolplent may expect the decision,
ATTACHME"T K.-Cu.cl1LAa No. A-ll0
CLOSEOUT PllOCI!XlUJlES
I. This at~hment prescribes uniform
c1o~eout procedures for Federal grantA and
other agreements with reclplentA_
2_ The follow 1111{ deDnltloru. shall apply for
the purpo6e of thL~ l"t~hment:
HOneES
... Cw.eout.-The doeeout of .. grant
agn:emen I. La th. p~ by wh lch .. l"edanJ.
aponaortng agency d.term1~ that all ap-
plta.ble adm1nlat.no.UVO a.ct1ona An4 ..u re-
quired work of tbe ,....--m.nt ha.,o been
completed by the rec1plent and the Pode.ra1
apoo.sortng "'8e ncy,
b. Date 0/ compldion,-Th. date of com-
plellon la_ the date on wblch all work under
gra.nt& IUld other a.g-reementA la completed -or
the date on l.bo awud document. or - any
'supplement or am.en.dment thereto. on wblcb
l"cderalaponsor.lhlp ends. ,
c. Di.tall.atoed Co.Jt.1.-D1saI.lowed c:aJU are
thO&e cbJLrgea to .. gno.nt or other agreement
that the Federal llpooaorlng &g1Oncy or Its
representative determ1nes to be uWlllow-
able. lD acconance with the applicable Fed-
eral cost'princlples or other conditions con-
Wned lD the agreements.
3, All Federal spotlSOring agencies ahall es-
tabllsb clO&eout procedures that Include the
following requlr-emebts:
a. Upon request. the Pede",1 spoo.sorlng
agency shall mue prompt payments to Do
reelp.lent for a.llo~ble reimbursable costs
under the grant or other 'agreement. being
clOl5ed out,
b. The recipient Bhall lmmedla.tely refund
any balance or unobllp;llted (unenCumbere<l)
C!loSh that the ~deral aponsoring agency has
advanced Dr p&ld IIond that la not l'uthorlU:d
to be ,retslned by the recipient tor use In
other grants or other agreements,
c. The F'e<leral sponsoring agency aba.lI ob-
tain rrom the recipient withIn 90 calendar
w.ys after the date or completion of the
a.greement all financIAl, p.erfoTIIULtlce.and
other reports required &S tbe condition of the
agreement, The agency may grant exteDBIona
when requested by tho recipient.
- d. When authorized by the grant or other
e.greement. the Federal sponsoring agency
Bball mlle I' settlement ror a.ny upward, or
downward adjustments to the Fede""l share
of C06l:3 after these reports arc received.
e, The recipient shllU a.ccount for any prop-
erty a.cqulred with Federal funda. or re-
ceived from tbe Government In a.ccordance
with theprovlslooa of At~hlnent N to thl8
Circular, Proparty Mawt.gement. Btandar-cls.
t. In the event a Dotal audit has not been
performed prior to the clO8!'Out of the grant
or other agreement, the Federalapoo.sorlng
agency lIhall retain the rlgbt to recover an
appropriate amount alter tully conaldertng
the recommeodatlotl&' on dUallowed COlIts re-
sulting from the I1nal audit,
4. BwpenSlon a:ndtermlnatlon procedurea
are conta1ntd In Att.a.chment L to thla ctr-
cula.r.
ArrAcR)U:KT L.--CDcuLU No. A-ll0
B USJ"XN ;>10" ANt> TVlW lli A TlO" PlI-OCltD1l'SSa
1. This attachment prescribes unllonn
suspanslon and termination pr:>cedures for
Federal granta and other agreements with
recipients.
:'l, Tho following def1n1t1olU Bhall apply
fcr the purpcse of this att.achmen~:
a. Te-rmination,-The termination of a
grant or other agreement meADS the can-
cellation of Federal sponsorship. In whole or
In part. under an agreement at. any time
prior to the date of completion.
b. sw~lon,-The ouap.enslon of .. grant
or other agreement La an action by a Pederal
spo=orlng agency that UmporarUy SWl-
pends Pederal llpona;)nlhlp under the grant
or other agreeplent. pending corrective ac-
tion by the recipient or pending ... decLslon
to tennlnate tho gTIU1t or other agreement
by the ~eMl1 aponsorlng agenC}'.
iJ. All Federal sponsoring agencies &hall
provlae prt)Cedu",s to be followtld when a
n:clplent haa h,Ued to comply with the terma
I
of the grant or other agTe:ement and condi-
tions or at.a.nda.rds. When that OCCUTII the
Poderal BJ'OtI!lOring agency may. on r~n-
able notice to th.., recIpient, lluapec,d the
grant ~ other agreement. and wltbhold fur-
tbbr paym.ents, prohibit the recIpient from
lDcurrlng additional obllptloD.II of funds
peodlDg corrective action by the recipIent 0;
a decLolon to t.umJnatlon In accordance w'lth
paragraph 4, ~e J"edera.l IIporuorlng "'il'ency
Bball allow all DeceMary and proper COlIt8
that the recipient could not re8.&Onably avoid
durlDg the period of lIuspenslon prOvided that
they ~t the provlslona of the appliCAble
l"cderal caet principles, .
_ 4. Pederal aponsorlng agencies shall pro-
vide tor th~ lIystematlc settlement of ter-
minated gr&ntA or other Ilgreementa Includ-
lDg the following:
a_ TeTmlnl1tion /ur caU3t:,-The :Pedenl
sponaorlng agency m.a.y reserve the right to
term.lnat.e a.ny grant or other agreement In
whole Dr In part at &ny time be rOte the date
of completIon. wh~never It Is determIned that
the rectplen-t has faUed to comply w1th th~
CDndltlot18 of the agreement. The Federal
6'pOnsorlng &geney shall p~ompt1y notlty the
recipient In writing of the determlnat,lon 1l0:1
the reasons for the termination, together
with the etl'ectlve date. Payments made to
recipients or recoverIes by the Federal spon-
IKlrlng agencles under grants or other aaree-
ments termlnaU!Q for cause shall be In ac-
cordance with the legal rights and llabUltles
of the parties.
b. Termin<ltion /ur convenIe nee.-The Fed-
eral sponsorlDg aaency or recIpient ma}" ter-
minate grants aDd other &6Teements In whole
or lD part when both parties abree that the
continuatIon of the project would not pro-
duce beDetlclal results commensurate wIth
the further expenditure of funds. The two
parties shall agree upon the termination cnn-
dltlotl8. Including the etl'ectlve dllte and In
the case of partial termlna.t1ons. the portinn
to be termlnated_ The recipient shall Il~t
Incur new obligations for the termJnated por-
Uon after the etTecUve date, and shall can-
cel &S many outstanding obligations as pos-
sible. The Fed e ",,1 sponsoring agency shall
IIollow full credit to the recipient, for the
Pe<1eral share of the noncancellable obllga-_
tlona. properly IDcurred by the recipient prior
to t.ermlDa.Uon,
ATTACHWLNT M,-caC'l1LAR No, A-liD
lIT,umun Foaw rOIL APPLYINll FOil
J'"D)rA.\L ASSlSTA"CE
1. ThLs atta<:hment promulgate, a stilnd-
a.rd form (SF 424) to be used by public and
'private ltutttutlona of higher educllt!on.
publlC Ilnd private hosplt&h and other qUlUl-
public and private nonprof1t organization' as
.. bee 8h~t for applications when ~P?:ylr.g
tor :Pede""l grantA under programs covered
by Part I. Attachment A, o~m Crlcullr ~o.
A-9S. In addition. s.gencles are plirt'cularly
encouraged to etxend the use of SF 42~ to
common progrlllJU with State &nd local gov-
ernments where this torm Is now required by
PMC 7t-7, , ,
:'l. The 5l" '124 may also he used, on an op-
tional b....I.5, to fulf111 the requirements of
OMB Circular A-9S for.. notlncatlon of :1\-
tent. f'l"om appllc&nt to clearlnghollses, th:lt
Federal lLMlstance will be "pplled for. 1,oc:11
or State cle1lrlnghouse procedures wUl govern
the ~ of the form for this purpose_
3. The standard fonn Will also be used by
Federal agenclH to report to the cleerlng-
houlle!J on ~jor actions taleen on a?pllra-
tlona revIewed by cleArlnghou'.e~ In ~cc()rd-
a.nce with OMB Circular A-9S. and to notlry
State" of granU-ln-ald awarded III accord-
ance wlth Treuury Circular 1082_
f'fO FII.. , ..'o~r<~ VOL 41. >>0- 14------.AIDAV, JULY 30. 1976
"
^TIACH:-lU.T N.--CncULAa No. ^-1l0 I
PllOPU\TY ).lA.t'lACI:MEtfT STAtfDA.aOS
1. Thts a.tt...:hmenl. prescribeS unUorm
sta.nducU goverulng m..nagern.,nt or prop-
erty rurnUh.,d by the Fed.,ral Oovernm.,nl or
wh~ CllIIt was cbarged 1.0 a projKt sup-
porud b)' ... Fed.,ral gre.nt. or other o.l!r~ment.
Federal sponwrlog ag.,nclf!S shall require re-
Clplen~ 1.0 obsuve the311 standards under
grsnu and other agreements and shall not
Impose additiona.l requlrem.,nts unless sp.,-
clDca.lly requlred by Federa.l law. The recipi-
ent mtoi' U3e Its own property II\:l.n....,m.,nt.
standards and proceduru provided It oboervM
the pro'/lslODJI of thla at.ta.chment., Thls at-
uchment alsO a.pplles 1.0 subrKlpl.,nts ll3
ref.,rred 1.0 In paragraph Ii of the baalc clr-
c ular.
:I. n& following del1nltl.on.a r.pply for the
purpo&e or ~hls attlloChment.:
... Real proptrfy.--.Real prop.,rty me&Os
land. tpcludlog land lmprovements, struc-
turu and a.ppurteIULIlCea thereto, but ex-
cluding mov&.bl& mlloChlnery and equipment.
b, penon-al property,-Per=nal property
of any kind except real property, It may be
tangible-having physical ex15unce. or Intan-
gUlI.,.....h..vlng no physical ell1st.,nce, aucb aa
paunl.3. Inv.,ntlona and cOpyrights,
c, Nonezpendcb~ ~r3on-alpropertll.-Non-
expf!nd&.ble per.l:lnal property m.,&Os ungtble
personal prop."rty having a uaerul lire of
more tha.n 00& y.,a.r and an acqul3lt1oo cost
of '300 or more per unit .,x.,mpt thr.t reclp-
lenta aubject to Coat A.ccountlng 5~da.rds
Bond regulatlon3 may use the CASB st.a.nd-
'cd of ~ per unit and u~ful IlIe of two
yean. ^ reclpl.,nt mAY U$& Ita own deDoltlon
of ooo~x~n.J"ble personal property provided
that. tbe de-nnltlon would a.t leMt tnclude Boll
tangible puwnal property u del1ned a.OO'1e.
d. E~nd<1ble pcr.wn-al prOpcrtll.-Expend-
_ ,,~Ie penon.al prop.,rty r-deTll 1.0 all tAnzlblll
perll{)!:lAl property other tha.n nonexpanda-ble
pro;>erty.
e, EueH propertll,-Exc~ property melloDa
property under the ~ontrol of any ~deral
agency that, as deurmln.,d by the he:l.d
_ thtrtQr. la no longer required for Ita ne~
or the dts-charge of Ita re.3POnslbllltlea, -
f. AcquuttlDn coot of purch.a.sed. ncn.e.:t-
~n.d4b~ ~T.t01Ial propertll.-^cquLiltlon cost
of &0 Item of pu:'eha.aed non.,xpendable per-
5O:al prop.,rty mean.a the net invoice unIt
price of the property Includlng the COlIt. of
. modlflcatl.on,. attachments. acceUlorles, or
awcUIlIY appa.ra.tU3 neeeMAry to ~e the
prop.,rty uaabls for the purpos-e ror which It
WM a-cqUI~. Other cha.rl!es such as the coat.
of 11l3t-alla.tlon, traosporutlon. tues, duty
or protective In-trarult. InM1rance, ahBoll M
In-:luded,or excluded from the unit lloCqulll-
tlon coat In a.ccordance with the reclplent'a
ngular lloCcountlng prlloCtlces.
g.' E~mpt propertll.-Exempt property
/D.,ans tOlonglbl& persona.l property -.cqulred In
whol& or In part wlt.h ~d.,ral runds, and
Uti.. 1.0 which Is vested tn the r.,clplent with-
out furth~r obllga.t1on to the Federal Oovern-
ment exc"pt as provided tn subpa.ra..graph 6&
belo..... Buch unconditional v."tlng of tlUe
wUI b~ pursua.nt. to any Fed.,r-a.l legLala.tlon
that provides the Federal ap<lllBorlnJi agency
With ~e-quate a.uthorlty.
3_ Real propertll.-E;och Fed.,ral apocaorlng
agency shall prucrlbe requlr.,ments for n-
clplents conc.,rnlog the use and dlsposttlon
of real prop.,rty acqulr.,d parUy or wholly
under Gra.nts or oth.,r a.greemeota. Unl","
otherwls" provld.,d by 5tAtuU. such r.,qulre-
mel\ts, ILS a minimum, ah..n contain the
follo""lng:
a. TI~I& to real property ahall v~t In th.,
reclpler.\ subject. to th., condition that th.,
r.,clplenl shall uu.' th., real property for the
t.utho,lzed purpoo;e or the project: 1U long u
It -18 needed.
NOTICES
b. The r.,clplent shall obtain ..ppronl by
the Federal sponsoring ag.,ncy ror the use_ or
real property In olher projects when lh., r.,-
clpl.,nt deurmln~ tha.l lhe property Is no
longer needed for the purpose of th., original
project. Ur.e In other 'projects shall be limited
to tho&e under oth.,r red.,reJly sponsored proJ-
.,cts (1,e" grants or other Il-&reements) or pro-
grf\ms that. have purposes conslsl.,nt. with
tho~ authorized ror support by th., Fed.,ral
sponsorIng ~ency.
c. Wh.,n the real property Is no 10ngH
ne.,ded ..,. provld.,d In a and b above, the
recipient. shall r"qu."t. dlr.poaltlon InstTUc-
tlon,s from the Federal sponsoring agency or
Its successor F.,d.,ral 5ponsor1ng agency. Th.,
Fed.,ral sponsoring agency ahall observe the
- following rules In the dlspoaltlon Instruc-
tions :
(1) The recipient may b., permltt.ed to re-
tain tlUe a!ter It compensate6 th., Fed.,ral
Oovernm.,nt In ..n amount compuud by ap-
plying the Fed.,ral perc.,ntlLge of participa-
tion In the cost oC th., origina.l project. to toe
fair market value of the property.
(2) The recipIent ma.y be dlrl:Cted 1.0 sell
the property und.,r guld.,\Ine~ provided by
the Fed.,ral sponsoring ag.,ncy and p"y the
Fe:!.,ral Oovernment an amount computed
by applying the Federal percentage of pt.r~
tlclpatlon tn the co,t. of th., original project.
to the proc.,eds from we (a.fur de<luctlng
actua.l a.nd rea.sona.ble selling and fix-up ex-
pena.,s, If any, from th., 581"$ proceeds).
Wh.,n th., recipient ls authorize:! or requlred
to sell the property, proper sales procedures
shall be established tha.t pro 'lId., tor competi-
tion to the extent. practicable 'and reault In
the highest possible ret.urn,
(3) The recipient m"y be directed 1.0 UlUlS-
fer title to t..'le property 1.0 the Fed.,ral 00'1-
ernment provided toa.t In such ca.aea the
recipient shall be enUUed to compe~uon
computed by applying the reclplent's per-
centage of partlclp!l.tlon In the cost of the
program or project to the curr.,nt blr mArket
value of toe property.
.... FedeTalll-Owned r.o~zpenacb~ pcr.r<rn4l
propcrtll,-Tltle to federally-owned property
remains veated In the l"1I:1eral Ooverom.,nt.
P...eclpl.,nl.3 shall submit annually an Inven-
tory 114tlng or fed.rally-owned pro~rty In
their cu.stody to the ~dera1 epo~rtng
agency. upon completion of the a.g-reement
or when the property Is no lo~r netded,
the nClpl.,nt Bhall report the property 1.0
the Federal spon~rlD.i agency for further
agency utUlzatlon,
It Ule Fe:!eral sponsoring agency ha.a no
rurther need tor the property, It wall be
declare:! excesa and ~rted to the ~D-llr-al
Semcn AdmJnlstrtlon. Approprla.t.e d\5pO"1-
tlon lnstrUctlona wUl be laaued to the re-
cipient ,a!ter CQmpletlon or the l"ede.ra.!
&gency review. .
Ii. Exempt propcrtll.-When atAtutory au-
thority ex LAta. (e.g., P.L. ~S4. 4:1 U.B,C.
189:1) title to non.,xpenda.ble personal prop-
erty acquired wtth project funde, sh&1I M
vest.e:1ln the reclpl.,nt upon acquisition un-
1.,$3 It Is detumlned tha.t to do 50 I' not tn
turtherance of the objectlves of th., F~d.,r-al
apon~rlng agency. When title 11 vuUl:! In
the recIpient. the recipient Bhall have no
other obllgatlon or accountAbility 1.0 the
Feder~l Oonmment. for Its uoe or dlspOal-
tlon uc.,pt. ... provided In 6a belo....
6. Otha non.u~n4cb~ propcty._Wben
other non.,xpendable ta,nglble persona.! prop-
erty ls a.cqulred by a recipient with project
fund'. title shall not be t.aken by the 1"d-
.,ral Oovenunent but Bhall vnt In the re-
cipient aubjl:Ct to the followlng condltlOU.:
a, RIght to trcns/eT tftle.-For lums of
nonexpendable pereonal property having a
unit. acquisItion cost or tI,ooo or more, the
Federal sponsortng f\i.,ncy may reserv" the
right to trllmrer the Utili 1.0 the Federal
tivernment. or 1.0.. thlrd party nlt.lned by
l e Feder... Government wh.,n such third
p ty Is olherwl,.. eligIble under eXI,tlng
atatuus_ Such r~rva.t:on 1Sh&\1 be subject to
the foHowln!; standards:
(1) The property sh..1l be appropriately
Id.,ntlD.,:1 In th., gra.nt or other agreement
or other....lse nu.de known to the r~clplent
In writing,
(:I) The p.,deral ~ponsorlnlJ ag.,ncy slall
Issue dl,posltlon In.structlolU wlthln 120 cal-
.,ndar days arur the end of the Federal sup-
port or toe project ror which It.-was lloCqUlTed.
It the Federal aponsorlng a-genCY taUs to laaue
dlaposltlon Instructlol1Jl wtthln the 120 ca.l-
eodar d..y period, the r.,clplent so all a?p17
the lIt-aoduds or aub-paragrapb.a 6b LCd 6c
as approprlaUl.
(3) When the Pederal epon:lOrtng a.s.,ncy
exercl""s It~ right to l&k.e title, th., persoos.!
p~oP'!'rty ahall be subj.,ct. to the pro'/ts:ons
for federally-owned oon.,,,pendable p~operty
dlscllSS"d In paragr_aph 4, abon.
(4) When title Is tr~&f.,rred either to the
Federal Oovernm.,nt or 1.0 a thlrd ps,H7 the
provisions or lIubp&T8.6TaPh 6c:(2) (b) should
be followed.
b. Uu of other tcngib~ no"upen.d4b~
propertil lor whf.ch the recipi.,nt hcu tlt~,
(l) n., r.,clpl.,nt shall use t.he property
In the project or progr&m for which It wa.s
acquired u-Ioog as ntedf!d. whether or not
the proJl:Ct or prog-ram continues 1.0 be sup-
ported by Federal runds. When no longer
_ needed for the originAl pro}ect. or pr~~am.
the r.,clpl.,nt IShsJl u~ the prop<<rty In con~
nf!(:t1on with Ita other fe<1enJly spon:lOred
actlvitlt3. tn the followlog order of priority:
(a) Actlv1t.1ea, In the foUowlng order of
priority;
(b) AcUvltles apoD30red by other Fed.,ral
agencies.
(2) Shared toe_-Durlng the time that.
nonex.,mpt non.,xpendable person.al proper-
t.y ls held for ~ on the pro~t or prograJ;:l
for which It w~ ~qulred. the rl:Clt>lent
shsJl nuxe tt avs.lIable for UM on other proJ-
ects or progra.ma II such other UM ...U1 not
lnurlere with the worle on the proJ.,ct or
progum for which the property 'III71U origi-
nAlly &Oqulred. P1r3t. prererence for Bueo
other U.le shall be given to other proJe<:th or
progn.m.s spon=red by ,the Federal agency
tha.t. ll.tu.Dce06 the property: ucond prd.,r-
enee ahsll be given 1.0 projects or programs
aponsored by other Federal agencIes. If the
property LA o-.roed by the l"ed.,ral Oovern-
ment. ua.e on othf!T actlvltlee not 5?On.sored
by the ~der-al Oovernment 6hal\ be per-
mlaalble 11 author~ by the FederAl a.gency.
U&er charges should be coDIIldered 11 appro-
priate,
c. lXJpo-ritfoft 01 other no~%perurab~
propcrtll.-Wh.,n the recipient no long'.,r
needa the propert.y &3 provided In 6b a.bove,
the property ma.y be UMd for oth.,r actln-
tieS tn accorda.nce with_the followIng SlAnd-
a.rda :
(1) No-nezpend<1b~ propertll ICith a 'unit
cu:quf.J-ftfon C!Ut olles.! than I1,OOO.-The re-
clpl.,nt tn20y U~ the property for other activi-
ties w1t.hout rf!\mb\1r!llllment 1.0 the Feders.\
Oovernment. or ull the property and re-
tain the proceed5,
(:I) No~zpendcb~ per.t07\41 properly wilh
a unIt acquUftlDn COJlol 11.000 or TTlore_-
ne reclpLAnt DUoy retain the property Cor
other u..ea provld.,d that comperuatlon Is
made to the or~na-1 l"edel'1l1 Ilponsor1ng
agency or Its aucceS3Ol', The amount or com-
penu.Uon Bhall be comput.e<S by applying
the percentage of F'tderal putlclptoUOn In
the COf\t of the original proJeet or progTllm to
the curnnt fall' ma.rlt.,t value of the property.
Ie the nlClpl.,ot has no netd ror t.h., properlY
and the property ha.3 furth.,r u~ value_ the
reclpl.,nt ahall request dla;>asltlon Instruc-
tlona trom the orlglna.l sponsoring agency.
nDU,U REGISnR, val.. 41, HO, 14a---flIDAY. JULY :aD. 1976
4(JP L
32036
'n>oe ~ BpOlUOrlng atlency ahJtJl deter-
mine whether the property c..n be u~ W
tn&et the agency'a requlrementa, If no re-
quirement ex~ta within that agency, the
anllablllty ot the property ahJtJI be report-
ed to the Oeneral Senlces Admlnutratlon
by the Pederal &genr.y to determine whether a
requirement tor the property exuta In other
l"ederal ..gencl..., The Pederal sponsoring
a.gency ahall wue Instructions to the recipi-
ent no l..ter th..n 120 d..~ ..rter the recipi-
ent'. requeat .nd the tOlloM_ng prOCedure.
aluJl govern:
(..) It 150 1n.atructed or, It dLspot'ltlon In-
strUctlOll4are not wued wlthln 120 ealen-
c1JLl' days ..tter the recipient'. request, the
recipIent ahall ~n the property and relm-
bu:s.e the l"e-deral aporu>onng &gency an-
unount computed by applying W the llILles
proceeds the percentage of Pederal partici-
pation In the coat of the orlglnJtJ project or
progra.m. However, the recipient ahall be
permitted to deduct IUld retain from the Fed-
er,al 5hare .100 or ten percent of the pro-
eeed.\, whichever 1a gre..ter. tor the reclplent's_
IICIUng and handling expe~,
(b) It the recipient 15 ID!ltructed to 5hlp
tbe property elaewhere. the recipient ah&ll
be relmbur-sed by the benentlng Federal
a<rency ....Ith an amount which Is computed
by ..pplylng th. percentAie ot the recIpient's
putlclpatlon In the coat of the original grant
project or prognun to the current hJr nurltet
value of the property, plw ..ny rea.sona.ble
ahlpplng or Intenm aton.ge COlIta Incured,
(c) It the recipient 1a Inatructed to otber-
wtu d15!,ose of the property" the recipIent
&lull be relmb\lJ"&ed by tbe Pederal sporu>or-
Ing a.gency tor sucb coeta Incurred In Ita
d!.5poaltlon. '
d, PTop~ty ma7\4gement .standllTd..t lor
no7U~ble property.-The fe(:lplent's
pro~rty' mana.gement 5t.anducU tor nonex-
_ pendOoble penon..1 property ah..ll Include the
tollo'oVtog procedunJ. requlrementa:
(1) Property recorda shan be mslntalned
a.ccu:-ately ..nd sh..1l1nclude:
(..) A ckacr1ptlOD of the property.
(b) ).It.tluta.c:turer'a unal number, model
number. Poderal .t.o<:lt number. IlAUonlll
lltock number. or other Identlficatlon num-
ber.
(c) Source at the property. lncluc11ng
grant or ot!:ler a.greement number.
(d) Whether tit!. vesta La tb.e recipIent or
the hderal Gov~-nment.
'(0) AcquWtlon d..te (or dAte ~lved. 1l
the property waa turnished by the Federal
Governc:lent) ..nd coat.
(f) Percentage (at the end ot the budaet
year) ot P'eder-al }norUclpatlon In the coet. at
the project or program tor which the prop-
erty w..a ACquired. (Not appllcable to, prop-
erty turn1.>hed by-the Feder..1 Oovernment.)
(g) I..outl"n. ~ ..nd ooncllUon ot the
property and the date the Intormatlon waa
report&d. .
(h) Unit ~qul.altlon coet,
(I) Ultimate d'lbpo.altlon lhta, Includlng_
d..te of dlspoul and ul~ pnce or the method
~ to deurmlne current tllolr market value
,..here ... recipient compelUAtell tbe P'e<leral
sponllOrlng ag"ncy tor Ita share
(:1) Property owned by the hderal Gov-
ernment mu,;t be marked to Indicate Fed-
eral ow nerahlp,
(3) A physical Inventory ot property 5hall
be ta.ken ..nd the results reconciled with the
property recorda ..t lello.St once every two
,ears. Any dltferl'ncell between Qu..ntltles de-
termined by t.he phys'cal Inapi:CUon IUld
those- ahown 10 the ~countlng records aha.1t
be Inv~Ug..t.ed to determine the c..us.ea ot
the dltrerence, The ~Iplent shall. In connec-
Uon ,.,Ith the Invenwry, verHy the elllstence.
current utlllZ.atlon. ..nd contlnued nNd tor
the property.
14) A control .)'IItem shall be In elT&c:t to
lneure ..dequ..te utcguarda to pr-ennt lou,
J
NOTICES
d..m8oJc, or t.heft ot the property. Any 1068.
dam-se, or theft ot nonellpendable property
shall be Investlg..t.ttd and tully documenud;
It the property waa owned by the Federal
Oovernment, the ~Iplent ab&ll promptly no-
tify the Pederal aporuorlng Agency.
. (6) Adequately malntenaoce procedures
s,hall be Implemented to l<.~p t.he property
La good condition.
(6) Where the redplent 1& authorized or
required to IH':II the property, proper 5>.1...
procedures shall be eat.abll.ahed wblch would
provide tor competltlon to the extent pra.ctl-
c..ble ..nd reautt In the- highest poe.slble re-
turn.
7, Expendable p~'onal proper-ty.-Tltle to
expendable personal property shall vest In
the recipient Upon &Cqu1<lon. It there 1& llo
resIdual Inventory ot such property exceedIng
11,000 In total atlgregat.e b1r IlllLrket value.
upon termlnatlon or completion at the grlUlt
or other agreement. a.nd tbe property 1& not
needed tor a.i.y other t&<1erllolly sponsored
project or program, the recipient sh..n retain
the property Cor \L:Wl' on nonte<lerally spon-'
8Ore1:I activIties, or Mil It, but must In either
ca&e, compelUl&u- the F'rderal Government
for Ita shue, The &.mount ot compensaUon
5hall be computed In the u.me manner as
Donexpen<lAble pe~nal property.
8. IntangIble propary.
a. Invention.! and pafent,_-Itany prognun
produces p..tentable Items; patent rights.
procCS3e3. or Inventlona. In the courae ot
work 5poD-!lOred by the I"ede~1 Government.
euch bct shall be promptly and fully report-
ed to the l"ederal 5pon-'Orlng e.gency. UnleM
there 15 & prior agr~ment betw~n the re-
cipient and the Feder-a.l 5ponaorlng Ilgency
on dl5poeltlon ot such ltema. t.he PederAl
spo~rlng agency shall d,etermlne whether
prot-ectlon on the Invention or dUcovery sb&ll
be l>Ought. The hder-a.l spoIl.!lOnng agency
wlll ~13o determine how the rlgbta In the in-
vention o. dlBcovery-lncludln<r rlghta under
any pll,tent lMued tbereoD---llha.n be allocated
and admlnlatned In order to protect the pub-
lic Intereat cona14t-ent with "(}Qvernment
Patent Pollcy"(~ldent's 'Memorandum
tor He..ds ot Executive Departmenta and
Agencies, August :13. 1971. t.tld statement ot
Government Patent Polley u prtnt.ttd In 38
P.R. l~).
b. Copj(11ghb_-Except a.a otherw1J>e pro-
vIded In the UrtD.a and condltlona ot the
agreement, the ..uthor or the recipient o~-
Lzatlon 111 tre<< to cop;rr1ght any boob. pub-
lIcatlona. or other copyrightable maur'1-W
developed In the COW'M ot or under.. Fed-
oral e.gr-eement. but the Pedera.l lIpOD.50rlng
Ilgency sh&ll r~rn .. royalty-~. nonex-
clualve and lrrev~ble r-t..ght to nproduc&,
publ14h, or othe~ cu. and to ..uthorlu
othem w ua.e. the wer); tor Government pur-
pceea.
ATTACHWIUfT O.--cnCt1I.All No. A-110
n OCtTlU!:K)OfT 1ST A NJ>.\.1DIl
1. Thl.a atucbment proYldes standards tor
us.e by reclplenta tn establ1ahlng procedures
tor the procurement ot aupplles. eqUipment.
conatructlon and other aervleee with PederaJ.
tunds. These lltandards are turn1ahed to en-
5ure that such m..t-er1ala kIlli &ervlCQ are 01>-
Wned In an eltecUva manner and tn com-
pll..nce with the promlol1ll ot ..ppllcable Fed-
eral law anel executive orde/'ll. No ..ddltlonal
procurement IltandArda or roqulrementa IlhJtJI
be Impo<>ed by the Pedenl spozaorLag Ilgen-
clr3 upon reclplenta unless specUlcJtJly re-
quired by Federal statute or executive ordent..
2. The Iltanda.rda contained In th1& atta.ch-
ment do not relieve the ~Iplent ot the con-
tn.ctUAI rnpol1lllbllltles lLI'lslng under Ita
contr..:ta. The recIpient 111 the rMponslble ..u-
thonty, without re<:t>Ul'N to the P'edenoJ spon-
&Onog -.gency reg..r<llng the Httlement and
...t\Afactlon of all contractual anel ..d.mlnu-_
I
tr..Uve ls.sUe.l arblng out at procurementa
entered InUl. In support ot a grlUlt or other
"Sr~ment. Th1& InclUdes dlspul.ea. clalou.
prote3ta at .......rd, source evalu..tlon or other
matters ot .. contractu..1 nature, Matters con-
cerning vlol..tlon ot law ..re Ul bereterred to
such local. BtAu or hdenJ authNlty M tr...y
have proper Jurls-dlctlon.
3. Re<:lplents l:11"y u.&e their own- procure-
ment pollcl"" ILnd procedurn, However. all re-
clplenta shall adhere to the ataodarc15 set
torth!n p"~~pha 3 and 4. -
Ilo. The reclplen~ ahaJI DlAlntaln a code or
standa.rc15 ot conduct th..t ahall govern the
pertormance or Its omcers, emplciy~ or
agents en,ga,ged In the awarding and ..dmln-
Istratlon of con tracts using Pederll tund3.
No employee; orncer or agent shall pUUclpate
In the selection. award or admln15tno.tlon ot
a contr&Ct In which hderal funcU are, U3Cd.
where. to bl3 kno....ledge. he o~ hl3 Immedla.te
family, partners, or organization In which he
or hl5 Immedlllo!.e tamily or partner ha..~ a
Onancl..1 Interest or with whom he 15 n.go-
tlAtlng or haa any arrangement coocernln~
_ PT03pectlve employment. The recl;>lenta' of-
Ocers, employees or_agents shall neither 50110;-
It nor~cept gratuities, tavors or llonythlng
of monetary va.lue from contrr.ctoMl or poteo-
tlal contractora, Such sand area ahall proV1(},
tor disciplinary a.ctl.oM to be applied tor vlo-
l..tlons ot 8'Uch atandarcU by the- reclplenta'
otncel'll, employetll or lL6ents.
b. All procurement traosa.c:t1ona aba.11 be
-' conducted In a manner to p.07Ide. to the
maximum extent prlloCtlCAI. open ..nd tree
competltlon. The recipient ahould be alert
to Df1r!'r.I=t1o.~l\1 conlUcb ot Int.erest 01: r."n-
oom;:>etlt1ve practices among ootltro.c~1"lI
that uuj' f'oe6b1ct or ellml1ute com;>etl:Jon
or oth<!~ ~t'aln tl'ade. In order wen.
lJUro obJ~t1v!> contra.cUlr pertol"Il"....nu and
ellmlnata untalr compet1t1ve advant-aie, COn-
tra<::tol"s th..t develop 01' dra.!t SP'f'CltlCAtJODS,
requlrom.ents. lIt6t.ementa ot work, In~lta-
tlona, tor blc15 and/or requetJla tor p~
should be ex.clud~ trom com;:>etlng tor such
procurementa' AWllotd.s a.h&l1be made to Cle .
b\.dckr/or:'eror ~hQ.3!> bld/olt.... u re.spolUlve
to th!> !01lc1t&t1on t.tld la moat I'dva.nta.g~
to the %'!lC1~nt. price a.nd othet' b.cwrs con-
sidered. SollcltAUol1ll &hall e1euly ut toI'tb
all t'tlqu1rementa that Cle bldder!o:!cror muat
tul1l.ll In ordl:!' tor his bid/on'er w be eVlrJu-
..ted by the r-..clplent, Any and &11 bld.J/o!l'e:':l
may be r-eJtoted when it 15 In the r-edp\ent's
Inter...t to do 1lO.
C. AU reclp~ ta &hall eete.bl1.ab procwe-
m.ent prooedures thAt provide for. lot .. :n1D-
lmum. the followltl3 pl"OCtdunJ. requlrem.ents,
(1) ~ procur-em-ent a.ctloD.! ahOon
tallow a procedure to _ure the ..V'O\dOooce
ot purchaalog unoec~ or d,.,pllcatJve
lteou. Wbere lloppropr1..te, ..0 ~IJlI18 shall
be mAde o! 1e1<be ..nd purc:ba..s.e, lllte-rn...tJ.....
to det.errnlne wh1ch would 'be the Jn08t
ecooomlcal. pra.ctbl p~m.ent.
(2) SolicitatIons tar gooda and &ervlceo
shall be ~ upon .. clea.r ..nd J.Ccunt.c:
de.&<:t1ptlon ot the te>dhrUC1l1 re-qulrenunts
t~ the ~t-e-r1al, product or eenlce to be
procured_ Buch .. de$CnpUOn &.'lall not. In
competitive procurementa, contain tb4ture&
which unduly re6t.r1et competltlon. "Brand
n~ 01' equal" descrlptlOlU may be ur;ed
as -.. Iriea.'"U to detlne the performance or
other 5AlIent requlr~nbs of .. procurement,
ktld when so u~ the speclllc tealures or the
nam~ bn.nd wh1ch must be met by bidden/
olter:lrs ahall be clce.rty :opec.lnod_
(S) PO<<ltlve ell'orta shOotl be l'IUlle by the
n>clplenta to utlllu small busloe-,^ aI'd mI-
norlty-owned busln~ sources ot aupolles
..nd a-ervICH Such etroru should allow lheu
source. the m..xlmum teulble op;>ortunlty
to compete tor contncto utllUlng F'edtnU
runDe.
(4) The type of procurIng lrur.-umtnbl
undo .-1.. tllted price 000 tra<: te. oo&t re:.m-
........,....._1 ......,...lr-.,......... """" .., ,...,/'\ 1 ~'" ......,"'"" ",tV 1rtr"l \11III"''''
bunM>le oontra.c:ta, pUN:>;'a,s.e C>l'dens. Inun-
the contrncta, shoJI be detumlned by the
redplent but must be "-P?f'OPrlLto tOf' the
partlO\llar procUl"NTIent a.nd tor promoting
Lhe be_.t In~r...t ot tho pl"ogrlLln Involved.
!"he "cost-pltu-L-percent...ge--<>f-G06t" meth-
<I of contra.ctlng shall not be ~,
(5) Oontro.cls shal be made only wHh re-
:lponslbl~ contractors who ~ the po-
tt:ntlonsJ abIlity to pertorm suocc.;.sfuUy
under the ~n:n.s e.net oondl!.1ons ot .. pro-
pooed procuremen~_ Corullders.t\on shoJI be
given to such nu.~~ns a.s cont.r...:tor lnugTlty.
record or ps.:;t pertorlNUlce, nnanclal ..net
technl~1 ro.>oUl"ces Of" acce>:ulblllty to other
nec~y ""souru..,
(6) All prop~d sole BOurce contracta or
where only one bid or pr-c:>p<naJ L~ received
In wh,lch the ~te expenditure Is ex-
~!..ed to ex~ -':;,000 6hall be .ubJect to
Jrlor approv!!.1 .lot the dl.screUnn or the Fed-
eral spon:oorlns "iency.
(7) So::ne torm ot price or cost ana.l~\.s
6hould be made In connection with every
procur..ment It.CUon. Pr\.ce ILD&lyala may be
a.ccompll!J1ed 10 ",rlou. W[l.7.., Indudlng the
compe.rle.on of price Q uotaUOIl.5 s-ul;>ml tled.
m&rk~t prices LJld similar IndlcJa, together
wt th dl!w:-ou n ts. Co6 t ILllAI y6-\.s \.s th ere v I lOW
and evalUAtiOn ot each ele:ment or co..-t to
det..en:\lne rCl6BOna.blenees. alloca.blllty a-od
aJlow-sbUlty_
(8) Procurement reoorda and tll... tor pur-
chs...>e. In exce6.1 ot tlO,ooo Mull Include tho
toI10,,"1ng:
(a) _8&313 ror oontnt.ctor llelectlOl1:
(b) JU6tlllcatlon tor luk of competition
v.-hen competitlVO bleb or otl'era lU'e not
obtained.;
(c) Bas13 ror AWLrd COIIt or p1"1ca,
(9) A 6)"5t<lffi tor contract :>dm!nlatr&tlon
&hall be rr.AJ n ta.! n e<t to e ns-u r e 00 n tnr.ct.or
conrormance with term..o, rondltloru and
e~clncatlolU ot the contTl>Ct, and to e03ure
o..::!"q u.,.~ and Urnely toll()";l(Uj) or all pur-
chases_
4, The r-ecLpl~t !!hall tnctu~, In addltl.on
to ..ro,.tftlons to ~tlne 110 !lOUOd ..nd complete
. lIo6l'eement, the rollowlng prorlslone In all
co::>.tract.:l. TII~~ provl3lona lIhAlI also be IIop:
p\l~d to subcontracts.
a. Can~ts In exCft\.S or '10,000 ahIill con-
tain contt'rlCtual pl"ovtsloT\3 01' condition.
U,..t wIll al\ow tor e.d.m1nllrtraUve, contrsc-
tlJ!l.1 qr legal remMlea In lnstancell 10 which
contracl.ot's vlola.te or bt'ell.Cb oontrs.ct tHma.
and provide for such re m.e<I 10.1 ~tlona u
1TUo}" be a ;:>propr1a te.
b. ^II contr&Cla 10 eXCeN or $10,000 IlhAll
con~ln sulta.ble provlelons rOf' tennlra.tlon
by the re-clplent Including the nu.nnOf' by
which termln..Uon will be ell'ect.e<t ~d the
1>4:;13 for settlament. 10 a.ddltlon. such COD-
tracts sh..lI describe condltloD3 under whIch
I
NOTICES
UOD4 '2g CPR. Put 6), Under M-Ctlon 103
at the Act, each cont.n.ctor sha.ll be re.,
qulred \..0 comput..e the w1iea of every me-
chanic and laboN:r 00 the b&3la or .. stanc1ard
worlc day ot 8 hou" and .. standard worlt
week or 40 houri. Work In exCe$5 or the
standudworltday or work ""Mlt-13 permls.slble
provided that the wor"~r Ls com~D.&&t.ed at ..
note ot not le&!o than 1'h Umes the b....lc
rllot&_ ot pay tor ..11 hoUl1l work~ In excess
of 8 hours In any caJem1ar day or ~ hours
In the workweek. 8e<:tlon 101 of the Act U
applicable 1.0 constructlon worlt s.nc1 provides
that no laborer or mechanic shall be requlr~
to worlt In surroundlng--s or under working
conditions which are uO.&anlb.ry, hu.ardous
or dangero~ to h11l health and aarety as de-
tt:rmlne<t under ronstructlon ulH1 and
health standArds promllI611t...d by the Secre-
t..ry ot Labor. These requirements do ',.ot
apply to the purch&&es o! supplies or ma~-
rials or arLlcles ordinarily avaIlable on the
opeo marlcet. or contract.-> lor trloosp<.r'.atlon
or transrnl.Mlon or Int,lIl;{ence.
h. Contnc:S or a.;(l'e-ements. the prInCipal
PUrp06e ot which 13 to create. develop or lm-
prove product.>, proce~1 or methods; or tor
exploratloo In-to nelw th!.t dlrectlv conc~rn
public he<..'l, s.a!ety or w~Hare: or' con!r!.ct.>
10 the neld or 5Clence or t.echnology in which
there ho.3 been little sl6nlflcant experience
ou13lde or worle tunded by F~el"31 n.5-5ll1t-
an~, shall rontaln a notl~ to the ellect that
matt..er.o _r~dl~ rights 1.0 Inventions and
m..terlals g~nerated under tb.. contro.ct or
lLgTeemeot ..,e 6ubJect to the regul..tloru. IS-
sued by th.. ~der..1 spollsorln.t agency and
th.. recipient, The contra.ctor sh..a be ad-
v~d "" 1.0 the llOurc.. or &<ldltlonal Inrorma-
t10n reglLrd!ng th~ mAt~l'3.
1. All negotl..ted con~raots (except those
ot UO,OOO or .""") a....rded by re"I..lents
shall include a ..rovl1llon to the et:ect that
the redplent, the PNCter&l spoD.1Orlllg agency,
the Comptroller ~oeral or the United St..tes,
or any ot -their duly authorlud represe:lta-
tlves. ..ba.! I hsve acc=3 to any book,.. do--:u-
menta, pa~Tll and records or the contra'. lor
which ...~ directly ~rtloent to a specl(lc p~o-
gra.m tor tile purpose or malclll6 audl:.s,
examInations, ex~rp13 and transcrlptlor.5_
J. Contr-scta a.nd subgraDt.~ or amount" In
eXCe54 of 1100,000 shall contalo .. p~V'.-!3lon
that requl......" the rec1plent to ...gree to com-
ply with a.ll applicable sundard3, orde~s or
regulatlO:>.5 Is.sued pUrllu~nt to th~ Clear Air
Act of 1970 (4:l U..9.C. 1~7 et UQ_) and the
Federal W..ter Pollution Control Act (33
U..9.C. 12.51 et UQ.) .., ..mended. VloJatlor.s
shall be r-eported to the Federal sponsoring
&;(-onc}' and the Regional omce ot the En,
vlIonment..1 Pro~tlon A&ency.
IFR Doc.7&--21904 Flied 7-29-75,B:45 amI
HDUAl UGISTlll, VOL 41, NO, l4I---BID....V, JUlY 30, 197~
the oontract may be ~nnln..t.ed tar de1'ault
a.s weU a.s oondltloru where the cont.r&ct may
be ~rmln..ted ~uSl! or ol..-cUlT\St.a.nces be-
yond the control or the oOntrs.ctor.
c. In &.11 contracts tor con.atruetlon or ra-
cUlty Improvement awa.:-tled foc m.ore thao
tloo,Ooo, recIpients shall ob6erve the bond-
Ing ~ulremenls pronded 10 Att&ch.ment B
to thIs clrcuLlU'.
d_ All oontracta a_roed by r-e.cl;>lenta a.nd
th..lr contractors or subgTantee.s ~VIll6 a
value of more th..n UO,Ooo, shall contaln a
p"ovblon requiring oompllanoe with Execu-
tive Order 112i6, entitled "Equal Employ-
ment Opportunity." a& a..mended by Executive
Order 11375, and all supplementad In Depart-
ment ot La.bor regubtlons ("1 CP'R. Pvt 60).
e. All contracts and subgranu In excCM or
t2,OOO tor construction or repair awarded by
recipients and 5ubreclpleno13 shall Include a
provision ror compll..nce with the Copela.nd
hAntl-Klci< :BAck" ^ct (IB U.S_C. 874) as
aupplemented In ~p:lrtment or Labot'
regulatlolU 129 CYR, Part 3), ThI3 Act pro-
Vldea that e1Ch contr~tor or 6ubgrant=
slull be prohibited trom Inducing, by any
me..=. any person employed In the construc-
tIon, completion, or repair ot public worlt, 1.0
give up any part of the compensation to
which he 13 otherwl.3e entitled. The recipient
shall report all SU!l~cted or report.ed viola-
tions to the Federal sporuKlr1ng agency.
t. wnen required by the i"ederal prognun
legislatton. a.ll roD.3tructlon contr1Cu
awarded by the r-eclplents and 6ubreclplenu
ot more than 1:l,CQO shall Include a provision
for compliance with tho Davl3-Bacon Act (~
U.8_C. 27610 to a.-7) and 11-5 aupplemenot.ed by
~pll.Ttment ot !.:abor regul..tloll3 (29 CPR.
PArt 6). Under thl, Act coo tractors shaU be
required to pay wag~ to laborers and me-
ChlUllca at Il. rllote not leM th..n the minimum
w"itlS s~lned In a waile de~rmln..tlon mwe
hy -the Secretary or La.bor. In a.ddltlon, con-
tractora shall be required to pay wages not
less than once 9. weele. The recIpient Ilhall
place a copy or the curretlt prevailing w.ge
determll1Atlon Iuutd by the Department ot
Labor In es.ch eollcltatlon a.nd the award
ot .. contract shall be rondl,t1oned upon the
acceptAnce of the w"'3t1 determlnatlon. The
r-edplent ahAlI report all awpected or re-
ported violations to the hderal sponeorlog
~ncy.
g, VYoer-e appllc!.ble, aU contracts a..,SIded
by reclplen13 10 exceaa ot '2,000 for corutruc-
tlon contracta LJlel In exCUll or t2,500 tor
other conlracta that InTolve the employment
ot mecbanlcs or labor-eT3, shaU Include.. pro-
v\.slon for compllanc.e with ae<:ttons 103 anel
107 of the ContrlloCt Worlt Hours and 8&tety
BundardJo Act (40 U..9_C. 3:l7-330) U sup-
plemented by Dep:ortmeo.t or La.bor regul..-
A{?f' c-
I
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XETHOD OF, PA~NT
All payments shall be on a reimburse~ent basis only.
All requests for reimbursement shall be supported by proper i~voices,
payrolls, checks, receipts and other documentation as requested.
Any program income shall be submitted to the CITY through the
DEPAR~NT at least quarterly. tees collected, if any, shall De re?orted
but are not to be construed as prograo income.
Requests for rei~burse~ent shall not be reduced by any pro~raw income
received.
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SECTION 3 CLAUSE
I
THE FULLOWING SECTION 3 CLAUSE SHALL JJE INCLUDED IN ALL CONTRACTS FUR WORK IN
CONNECTION WITH A SECTION 3 PROJECT:
A. The work to be performed under this contract is on a project assisted
under a program providing direct Federal financial assistance from
the Department of Housing and Urban Development and is subject to the
requirements of Section 3 of the Housing and Urban Development Act of 1968,
as amended, 12 U.S.C. l70u. Section 3 requires that to the greatest extent
feasible opportunities for training and employment be given lower income
residents of the project area and contracts for work in connection with the
project be awarded to business concerns which are located in, or owned in
substantial part by persons residing in the area of the project.
B. The parties to this contract will comply with the provisions of said Section 3
and the regulations issued pursuant thereto by the Secretary of Housing and
Urban Development set forth in 24CFR, and all applicable rules and orders of
the Department issued thereunder prior to the execution of this contract. The
parties to this contract certify and agree that they are under no contractural
or other disability which would prevent them from complying with these
requirements.
C. The contractor will send to each labor organization or representative of
workers with which he has a collective bargaining agreement or other contract
of understanding, if any, a notice advising the said labor organization of
workers' representative of his commitments under this Section 3 Clause and
shall post copies of the notice in conspicuous places available to employees
and applicants for employment or training.
D. The contractor will include this Section 3 Clause in every subcontract for
work in connection with the project and will, at the direction of the
applicant for or recipient of Federal financial assistance, take appropriate
action pursuant to the subcontract upon a finding that the subcontractor is
in violation of regulations issued by the Secretary of Housing and Urban
Development, 24 CFR. The contractor will not subcontract with any subcontractor
where it has notice or knowledge that the latter has been found in violation of
regulations under 24 CFR, and will not let any subcontract unless the
subcontractor has first provided it with a preliminary statement of ability to
comply with the requirements of these regulations.
E. Compliance with the provisions of Section 3, the regulations set forth in 24 CFR,
and all applicable rules and orders of the Department issued thereunder prior to
the execution of the contract, shall be a condition of the Federal financial
assistance provided to the project, binding upon the applicant or recipient for
such assistance, its successors, and assigns. Failure to fulfill these
requirements shaJl subject the applicant or recipient, its contractors and sub-
contractors, its successors, and assigns to those sanctions specified by the
grant or loan agreement or contract through which Federal assistance is provided,
and to such sanctions as are specified by 24 CFR 135.
/lPP0VDI^ E-l
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NOTICE OF REQUIREMENT FOR AFFIRMATIVE ACTION
TO ENSURE EQUAL EMPLOYMENT OPPORTUNITY
(EXECUTIVE ORDER 11246)
1. The Offeror's or Bidder's attention is called to the "Equal Opportunity
Clause" and the "Standard Federal Equal Employment Opportunity Construc-
tion Contract Specifications" set forth here~.
2. The goals and timetables for minority and female participation, expressed
in percentage terms for the Contractor's aggregate workforce in each
trade on all construction work in the covered area, are as follows:
A. Goals for Female Utilization, All Trades:
AREA COVERED
Goals for Women apply nationwide.
GOALS AND TIMETABLES
Timetable
Goals
(percent)
From Apr. 1, 1978 until Mar. 31, 1979.... 3.1
From Apr. 1, 1979 until Mar. 31, 1980.... 5.1
From Apr. 1, 1980 until Mar. 31, 1981. . . . 6.9
B. Goals for Minority Utilization:
TAMPA-ST. PETERSBURG, FLA., AREA
Area covered: Hillsborough, Pasco, and Pi~ellas
Counties, Fla.
Goals and Timetablesl
Trade
Goal
(percen t)
All. . . . . . . . . . . . . . . . . . . . . . . . . .
17.9
lFor the life of the project.
These goals are applicable to all the Contractor's construction work
(whether or not it is Federal or federally assisted) performed in the
covered area.
The Contractor's compliance with the Executive Order and the regulations
in 41 CFR Part 60-4 shall be based on its implementation of the Equal
Opportunity Clause, specific affirmative action obligations required by
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the specifications set forth in 41 CFR 60-4.3(a), and its efforts to meet
the goals established for the geographical area where the contract
res,ll ting from this solicitation is to be performed. The hours of minori ty
and female employment and training must be substantially uniform throughout
the length of the contract, and in each trade, and the contractor shall
make a good faith effort to employ minorities and women eve~ly on each of
its projects. The transfer of minority or female employees or trainees
from Contractor to Contractor or from project to project for the sole
purpose of meeting the Contractor's goals shall be a violation of the
contract, the Executive Order and the regulations in 41 CFR Part 60-4.
Compliance with the goals will be measured against the total work hours
performed .
3. The Contractor shall provide written notification to the Director of the
Office of Federal Contract Compliance Programs within 10 working days of
award of any construction subcontract in excess of $10,000 at any tier
for construction work under the contract resulting from this solicitation.
The notification shall list the name, address and telephone number of the
subcontractor; employer identification number; estimated dollar amount of
the subcontract; estimated starting and completion dates of the subcontract;
and the geographical area in which the contract is to be performed.
4. As used in this Notice, and in the contract resulting from this solicitation,
the "covered area" is Pinellas County, Florida.
60-4.3 (a) EQUAL OPPORTUNITY CLAUSE
During the performance of this contract, the contractor agrees as follows:
1. The contractor will not discriminate against any employee or applicant
for employment because of race, color, religion, sex, or national origin.
The contractor will take affirmative a~tion to ensure that applicants are
employed, and that employees are treated during employment wi~~out regard
to their race, color, religion, sex, or national origin. Such action shall
include, but not be limited to the following: Employment, upgrading,
demotion, or transfer; recruitment or recruitment advertising; layoff or
termination, rates of payor other forms of compensation; and selection
for training, including apprenticeship. The contractor agrees to post
in conspicuous places, available to employees and applicants for employ-
ment, notices to be provided setting forth the provisions of this non-
discrimination clause.
2. The contractor will, in all solicitations or advertiseI:lents for employees
placed by or on behalf of the contractor, state that all qualified
applicants will receive consideration for employment without regard to
race, color, religion, sex, or national origin.
3. The contractor will send to each labor union or representative of workers
with which he has a collective bargaining agreement or other contract or
cnderstanding, a notice to be provided advising the said labor union or
workers' representatives of the contractor's commitments under this
section, and shall post copies of the notice in conspicuous places avail-
able to employees and applicants for employment.
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4. The contractor will comply with all prov~s~ons of Executive Order 11246
of September 24, 1965, and of th~ rules, regulations, and relevant orders
of the Secretary of Labor.
5. The contractor will furnish all information and reports required by
Executive Order 11246 of September 24, 1965, and by rules, regulations,
and orders of the Secretary of Labor, or pursuant thereto, and will permit
access to his books, records, and accounts by the administering agency
and the Secretary of Labor for purposes of investigation to ascertain
compliance with such rules, regulations, and orders.
6. In the event of the contractor1s non-compliance with the nondiscrimination
clauses of this contract or with any of the said rules, regulations, or
orders, this contract may be canceled, terminated, or suspended in whole
or in part and the contractor may be declared ineligible for further
Government contracts or federally assisted constrUction contracts in
accordance with procedures authorized in Executive Order 11246 of
September 24, 1965, or by rule, regulation, or order of the Secretary
of Labor, or as otherwise provided by law.
7. The contractor will include the portion of the sentence immediately
preceding paragraph (1) and the provisions of paragraphs (1) through (7)
in every subcontract or purchase order unless exempted by rules, regula-
tions, or orders of the Secretary of Labor issued pursuant to section
204 of Executive Order 11246 of September 24, 1965, so that such provisions
will be binding upon each subcontractor or vendor. The contractor will
take such action with respect to any subcontract or purchase order as
the administering agency may direct as a means of enforcing such provisions,
including sanctions for non-compliance: Provided, however, That in the
event a contractor becomes involved in, or is threatened with, litigation
wi th a ~ubcontractor or vendor as a result of such direction by the
administering agency, the contractor may request the United States to enter
into such litigation to protect the interests of the United States.
STANDARD FEDERAL EQUAL EMPLOYMENT OPPORTUNITY CONSTRUCTION CONTRACT
SPECIFICATIONS (EXECUTIVE ORDER 11246)
1. As used in these specifications:
a. "Covered area" means the geographical area described in the solicita-
tion from which this contract resulted.
b. "Director" means Director, Office of Federal Contract Compliance
Programs, United States Department of Labor, or any person to whom
the Director delegates authority.
c. "Employer identification nmnber" means the Federal social Security
number used on the ElIIployer I s Quarterly Federal Tax Return, u. S.
Treasury Department Form 941.
d. ItMinority" includes:
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(1) Black (all persons having origins in any of the Black
African racial groups not of Hispanic origin);
(2) Hispanic (all persons of Mexican, Puerto Rican, Cuban,
Central or South American or other Spanish Culture or
origin, regardless of race);
(3) Asian and Pacific Islander (~ll persons having origins
in any of the original peoples of the Far East, Southeast
Asia, the Indian Subcontinent, or the Pacific Islands); and
(4) American Indian or Alaskan Native (all persons having
origins in any of the original peoples of North America and
maintaining identifiable tribal affiliations through member-
ship and participation or community identification).
2. Whenever the Contractor, or any Subcontractor at any tier, subcontracts
a portion of the work involving any construction trade, it shall
physically include in each subcontract in excess of $10,000 theprovi-
sions of these specifications and the Notice which contains the ~p-
plicable goals for minority and female participation and which is set
forth in the solicitations from which this contract resulted.
3. If the Contractor is participating (pursuant to 41 CFR 60-4.5) in a
Hometown Plan approved by ~~e u. S. Department of Labor in the covered
area either individually or through an association, its affirmative action
obligations on all work in the Plan area (including goals and timetables)
shall be in accordance with that Plan for those trades which have unions
participating in the Plan. Contractors must be able to demonstrate their
participation in and compliance wi~~ the provisions of any such Hometown
Plan. Each Contractor or Subcontractor participating in an approved Plan
is individually required to comply with its obligations under .the EEO
clause, and to make a good faith effort to achieve each goal under the
Plan in each trade in which it has employees. The overall good faith
performance by o~~er Contractors or Subcontractors ~oward a goal in an
approved Plan does not excuse any covered Contractor's or Subcontractor's
failure to take good faith efforts to achieve the Plan goals and time-
table.
4. The Contractor shall implement the specific affirmative action standards
provided in paragraphs 7a through p of these specifications. The goals
set forth in the solicitation from which this contract resulted are
expressed as percentages of the total hours of employment and training
of minority and female utilization the Contractor should reasonably be
able to achieve in each construction trade in-~ichit has employees in
the covered area. The Contractor is expected to make substantially
uniform progress toward its goals in each craft during the period
specified.
5. Neither the proV1s1ons of any collective bargaining agreement, nor the
failure by a union with whom the COntractor has a collective bargaining
agreement, to refer either minorities or women shall excuse the Contrac-
tor's obligations under these specifications, Executive Order 11246, or
the regulations promulgated pursuant -thereto.
F-4
,6. In order for the nonworking t=a~n~ng hours of apprentices and trainees
to be counted i~., meeting the goals, such apprent\Fes and trainees must
be employed by t}1e Contractor during the traininsl period, and the
Contractor must have made a commitment to employ the apprentices and
trainees at the completion of their training, subject to the availabil-
ity of employment opportunities. - Trainees must be trained pursuant to
training programs approved by the U. S. Department of Labor.
7. The Contractor shall take specific affirmative actions to ensure equal
employmen t opportuni ty . The eval ua tion of the Con tractor's compliance
with these specifications shall be based upon its effort to achieve
maximum results from its actions. The Contractor shall document these
efforts fully, and shall implement affirmative action steps at least as
extensive as the following:
a. Ensure and maintain a working environment free of harrassment,
intimidation, and coercion at all sites, and in all facilities at
which the Contractor's employees are assigned to work. The
Contractor, where possible, will assign two or more women to each
construction project. The Contractor shall specifically ensure that
all foremen, superintendents, and other on-site supervisory personnel
are aware of and carry out the Contractor's obligation to maintain
such a working environment, with specific attention to minority or
female individuals working at such sites or in such facilities.
b. Establish and maintain a current list of minority and female
recruitment sources, provide written notification to minority and
female recruitment sources and to community organizations when the
Contractor or its unions have employment opportunities available,
and maintain a record of the organizations' response~.
c. ~~intain a current file of the names, addresses and telephone
numbers of each minority and female off-the-street applicant and
minority or female referral from a union, a recruitment source or
community organization and of what 'action was taken with respect
to each such individual. If such individual was sent to ~~e union
hiring hall for referral and was not referred back to ~~e Contractor
by the union or, if referred, not employed by the Contractor, this
shall be documented in the file with the reason therefor, along with
whatever additional actions the Contractor may have taken.
d. Provide immediate written notification to the Director when the
union or unions with which the Contractor has a collective
bargaining agreement has not referred to the Contractor a minority
person or woman sent by the Contractor, or when the Contractor has
other information that the union referral process has impeded the
Contractor's efforts to meet its obligations.
e. Develop on-the-job training opportunities and/or participate in
training programs for the area which expressly include minorities
and women, including upgrading programs and apprenticeship and
trainee programs relevant to the Contractor's emp19yment needs,
especially those programs funded or approved by the Department of
Labor. The Contractor shall provide notice of these programs to
the sources compiled under 7b above.
f. Disseminate the Contractor's EEO policy by providing notice of the
policy to unions and training programs and requesting ~~eir coopera-
tion in assisting the Contractor in meeting its EEO obligations; by
including it in any policy manual and collective bargaining agreement; by
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publicizing it in the company newspaper, annual report, etc. i by
specific review of the policy with all management personnel and
with all minority and female employees at least once a yeari and
by posting the company EEO policy on bulletin boards accessible
to all employees at each location where construction work is
performed.
g. Review, at least annually, the company's EEO policy and affirmative
action obligations under these specifications with all employees
having any responsibility for hiring, assignment, layoff, termina-
tion or other employment decisions including specific review of
these items with onsite supervisory personnel such as Superintendents,
General Foremen, etc., prior to the initiation of construction work
at any job site. A written record shall be made and maintained
identifying the time and place of these meetings, persons attending,
subject matter discussed, and disposition of the subject matter.
h. Disseminate the Contractor's EEO policy externally by including
it in any advertising in the news media, specifically including
minority and female news media, and providing written notification
to and discussing the Contractor's EEO policy with other Contrac-
tors and Subcontractors with whom the Contractor does or antici-
pates doing business.
L Direct its recruitment efforts, both oral and written, to minority,
female and community organizations, to schools with minority and
~emale students and to minority and female recruitment and training
organizations serving the Contractor's recruitment area and employ-
ment needs~ Not later than one month prior to the date for the
acceptance of applications for apprenticeship or other training
by any recruitment source, the Contractor shall send written
notification to organizations such as the above describing the
openings, screening procedures, and tests to be used in the selection
process.
j. Encourage present minority and female employees to recruit other
minority persons and women and, where reasonable, provide after
school, summer and vacation employment to minority and female youth
both on the site and in other areas of a Contractor's workforce.
k. Validate all tests and other selection requirements where there
is an obligation to do so under 41 CFR Part 60-3.
1. Conduct, at least annually, an inventory and evaluation at least of
of all minority and female personnel for promotional opportunities
and encourage these employees to seek or to prepare for, through
appropriate training, etc., ,such opportunities
m. Ensure that seniority practices, job classifications, work assign-
ments and other personnel practices, do not have a discriminatory
effect by continually monitoring all personnel and employment
related activities to ensure that the EEO policy and the Contractor's
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obligations under these specifications are being carried out.
n. Ensure that all facilities and company activities are non-
segrated except that separate or single-user toilet and
necessary changing facilities shall be provided to assure
privacy between the sexes.
o. Document and maintain a record of all solicitations of offers
for subcontracts from minority and female construction
contractors and suppliers, including circulation of solicitations
to minority and female contractor associations and other business
associa tions .
p. Conduct a review, at least annually, of all supervisors' adherence
to and performance under the Contractor's EEO policies and
affirmative action obligations.
B. Contractors are encouraged to participate in voluntary associations
which assist in fulfilling one or more of their affirmative action
obligations (7a through pl. The efforts of a contractor association,
joint contractor-union, contractor-community, or other similar group
of which the contractor is a member and participant, may be asserted
as fulfilling anyone or more of its obligations under 7a through p
of these Specifications provided that the contractor actively partic-
ipates in the group, makes every effort to assure that the group has
a positive impact on the employment of minorities and women in the
industry, ensures that the concrete benefits of the program are
reflected in the Contractor's minority and female workforce partic-
ipation, makes a good faith effort to meet its individual goals and
timetables, and can provide access to documentation which demonstrates
the effectiveness of actions taken on behalf of the Contractor. The
obligation to comply, however, is the Contractor's and failure of such
a group to fulfill an obligation shall not be a defense for the
Contractor's noncompliance.
9. A single goal for minorities and a separate single goal for women have
been established. The Contractor, however, is required to provide
equal emp:!.oyment opportunity and to take affirmative action for all
minority groups, both male and female, and all women, both minority
and non-minority. Consequently, the Contractor may be in violation
of the Executive Order if a particular group is employed in a substan-
tially disparate manner (for example, even though the Contractor has
achieved its goals for women generally, the Contractor may be in
violation of the Executive Order if a specific minority group of women
is underutilized).
10_ The Contractor shall not use the goals and timetables or affirmative
action standards to discriminate against any person because of race,
color, religion, sex, or national origin.
11. The Contractor shall not enter into any Subcontract with any person
or firm debarred from Government contracts pursuant to Executive
Order 11246.
F-7
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12. The Contractor shall carry out such sanctions and penalties for
violation of these specifications and of the Equal Opportunity Clause,
including suspension, termination and cancellation of existing sub-
contracts as may be imposed or ordered pursuant to Executive Order
11246, as amended, and its implementing regulations, by the Office
of Federal Contract Compliance Programs. Any Contractor who fails
to carry out such sanctions and penalties shall be in violation of
these specifications and Executive Order 11246, as amended.
13. The Contractor, in fulfilling its obligations under these specifications,
shall implement specific affirmative action steps, at least as exten-
sive as those standards prescribed in paragraph 7 of these specifica-
tions, so as to achieve maximum results from i~ efforts to ensure
equal employment opportuni ty. If the Contractor fails to comply with
the requirements of the Executive Order, the implementing regulations,
or these specifications, the Director shall proceed in accordance with
41 CFR 60-4.8.
14. The Contractor shall designate a responsible official to monitor all
employment related activity to ensure that the company EEO policy is
being carried out, to submit reports relating to the provisions hereof
as may be required by the Government and to keep records. Records
shall at least include for each employee the name, address, telephone
numbers, construction trade, union affiliation if any, employee
identification number when assigned, social security number, race,
sex, status (e.g., mechanic, apprentice, trainee, helper, or laborer),
dates of changes in status, hours worked per week in the indicated
trade, rate of pay, and locations at which the work was performed.
Records shall be maintained in an easily understandable and retrievable
form; however, to the degree that existing records satisfy this
requirement, contractors shall not be required to maintain separate
records.
IS. Nothing herein provided shall be construed as a limitation upon the
application of other laws which establish di!ferent standards of
compliance or upon the application of requirements for the hiring of
local or other area residents (e.g., those under ~'e Public Works
Employment Act of 1977 and the Community Development Block Grant
Program) .
F-8
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:1greemenl during the period of the
agreement and based on either:
(i) Prior level of rehabilitation.activity:
or
(ii) Rehabilitation staffing and
management plans of the locality for the
period of the alP'eement.
Subpart K-other Program
RequIrements
~ 570.600 General
(a) Section l04(b) rJ the Act provides
that any grant under section 106 of the
Act shall be Ii: .<: - nly if the grantee
certifies to the satisfaction of the
Secretary. among other things, that the
grant "will be conducted and
administered in conformity with Pub. L.
88-352 and Pub, L. 90-284." and. further.
that the grantee "will comply with the
other provisions of this title and with
other applicable laws," Section l04(d)(l)
of the Act requires that the Secretary
determine with respect to grants made
pursuant to section lOO(b) (Entitlement
Grants) andl06(d)(2)(B) (HUD-
Administered Small Cities Grants), at
least on an annual basis, among other
things, "whether the grantee has carried
out [its] certifications in compliance
with the requirements and the primary
objectives of this title and with other
applicable laws · · · ." Certain other
statutes are expressly made applicable
to activities assisted under the Act by
the Act itself, while other laws not
referred to in the Act may be applicable
to such activities by their own terms.
Certain statutes or Executive Orders
which may be applicable to activities
assisted under the Act by their own
terms are administered or enforced by
governmental departments or agencies
other than the Secretary or the
Department This Subpart K enumerates
laws which the Secretary will treat 88
applicable to grants made under section
106 of the Act. other than grants to
I
States made pursuant to section l00(d)
of the Act. for purposes of the
determinations described above to be
made by the Secretary under section
l04(d)(l) of the Act, including statutes
expressly made applicable by the Act
and certain other statutes and Executive
Orders for which the Secretary has
enforcement responsibility, The absence
of mention herein of any other statute -
for which the Secretary does not have
direct enforcement responsibility is not
intended to be taken as an indication
that, in the Secretary's opinion, such
statute or Executive Order Is not
applicabte to activities assisted under
the Act. For laws which the Secretary
will treat as applicable to grants made
to States under section 100(d) of the Act
for purposes of the determination
required to be made by the Secretary
pursuant to section 104(d)(2) of the Act,
see I 570.496.
(b) This Subpart also sets forth certain
additional program requirements which
the Secretary has determined to be
applicable to grants provided under the
Act as a matter of administrative
discretion.
(cJ In addition to grants made
pursuant to section lOO(b) and
106(d)(2)(B) of the Act (Subparts D and F
of this Part. respecti,vely). the
requirements of this Subpart K are
applicable to grants made pursuant to
sections 107 and 119 of the Act
(Subparts E and G, respectively).
f 570.601 Pub. L 88-352 and Pub. L 90-
284; Executive Order 11063.
Section l04(b) of the Act provides that
any grant under section 106 of the Act
shall be made only if the grantee
certifies to the satisfaction of the
Secretary that the grant "will be
conducted and administered in
conformity with Pub. L. 88-352 and Pub,
L, 90-284." Similarly, section 107
provides that no grant may be made
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I
under that section (Secretary's
Discretionary Fund) or section 119
(UDAG) without satisfactory assurances
to' the same effect.
(a) ~Pub. L. 88-352" refers to Title VI
of the Civil Rights Act of 1964 (42 U.S.C.
2000ci et Beq.). which provides that no
person In the United States shall on the
ground of race. color. or national origin.
be excluded from participation In. be
denied the benefits of. or be subjected to
discrimination under any program or-
activity receiving Federal financial
assistance. Section 602 of the Civil
Rights Act of 1964 directs each Federal
department and agency empowered to
extend Federal financial assistance to
any program or activity by way of grant
to effectuate the foregoing prohibition
by issuing rules, regulations, or orders of
general applicability which shall be
consistent with achievement of the
statute authoriting the financial
assistance. HUD regulations
implementing the requirements of Title
VI with respect to HUD programs are
contained in 24 CFR Part 1,
(b) "Pub. L. 90-284" refers to Title VIII
of the, Civil Rights Act of 1968 (42 V.S.C.
3601 et seq.), popularly known as the
Fair Housing Act, which provides that it
is the policy of the United States to
provide. within constitutional '
limitations, for fair housing throughout
the United States and prohibits any
person from discriminating in the sale or
rental of housing. the financing of
housing. or the provision of brokerage
sen/ices. Including in any WilY making
unavailable or denying a dwelling to
any.person. because of race, color,
religion, sex, or national origin, Title
VIII further requires the Secretary to
administer the programs and activities
relating to ho~sing and urban
development In 8 manner affirmatively
to further the purposes of Title VIII.
Pursuant to this statutory direction. the
Secretary requires that grantees
administer all programs and activities
,/J,.-Jj'>'-hl.:) ) >( r;,
~
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I
related to housing and community
development in a manner to
affirmatively further fair housing.
(c) Executive Order 11063, as
amended by Executive Order 12259,
directs the Department to take all action
necessary and appropriate to prevent
discrimination because of race. color,
religion (creed), sex, or national origin,
in the sale, leasing, rental, or other
disposition of residential property and
related facilities (including land to be
developed for residential use), or in the
use or occupancy thereof. if such
property and related facilities are,
among other things, provided in whole
or in part with the aid of loans,
advances, grants, or contributions
agreed to be made by the Federal
Government. HUD regulations
implementing Executive Order 11063 ,are
contained in 24 CFR Part 107.
f 570.602 Section 109 of the Act.
(a) Section 109 of the Act requires that
no person in the United States shall on
the ground of race, color. national origin
or sex, be excluded from participation
in. be denied the benefits of, or be
subjected to discrimination under. any
program or activity funded in whole or
in part with community development
funds made available pursuant to the
Act. For purposes of this section
"program or activity" is defined as any
function conducted by an identifiable
administrative unit of the recipient. or
by any unit of government, subrecipient.
or private conlractor receiving
community development funds or loans
from the recipient. "Funded in whole or
in part with community development
funds" means that community
development funds in any amount in the
form of grants or proceeds from HUD
guaranteed loans have been transferred
by the recipient or a subrecipient to an
identifiable administrative unit and
disbursed in a program or activity,
(b) Specific discriminatory actions
prohibited and corrective actions,
(1) A recipient may not, under any
program or activity to which the
regulations of this Part may apply
directly or through contractual or other
arrangements, on the ground of race,
color, national origin, or sex:
(i) Deny any facilities, services.
financial aid or other benefits provided
under the program or activity.
(ii) Provide any facilities, services,
financial aid or other benefits which are
different, or are provided in a different
form from that provided to others under
the program or activity,
(iii) Subject to segregated or separate
treatment in any facility in, or in any
matter of process relat~d to receipt of
any service or benefit under the program
or activity,
(iv) Restrict in any way access to, or
in the enjoyment of any advantage or
privilege enjoyed by others in
connection with facilities, services,
financial aid or other benefits under the
program or activity.
(v) Treat an individual differently
from others in determining whether the
individual satisfies any admission.
enrollment. eligibility. membership, or
other requirement or condition which
the individual must meet in order to be
provided any facilities, services or other
benefit pro\'ided under the program or
activit v,
(vi) Deny an opportunity to participate
in a program or activity as an employee.
(2) A recipient may not utilize criteria
or methods of administration which
have the effect of subjecting individuals
to discrimination on the basis of race,
color, national origin, or sex, or have the
effect of defeating or substantially
impairing accomplishment of the
objectives of the program or activity
with respect to individuals of a
particular race, color, national origin, or
sex.
(3) A recipient, in determining the site
or location of housing or facilities
provided in whole or in part with funds
under this part, may not make selections
of such site or location which have the
effect of excluding individuals from,
denying them the benefits of, or
subjecting them to discrimination on the
G-2
I
ground of race. color. national origin, or
sex: or which have the purpose or effect
of defeating or substantiall)' Impairing
the accomplishment of the objectives of
the Act and of this section,
(4)(i) In administering a program or
activity funded in whole or in part with
CDBG funds regarding which the
recipient has previously discriminated
against persons on the ground of race,
color, national origin or sex, the
recipient must take affirmative action to
overcome the effects of prior
discrimination.
(ii) Even in the absence of such prior
discrimination, a recipient in
administering a program or activity
funded in whole or in part with CDBG
funds should take affirmative action to
overcome the effects of conditions
which would otherwise result in limiting
participation by persons of a particular
race, color, national origin or sex,
Where previous discriminatory practice
or usage tends, on the ground of race,
color, national origin or sex, to exclude
individuals from participation in. to
deny them the benefits of, or to subject
them to discrimination under any
program or activity to which this part
applies. the recipient has an obligstion
to take reasonable action to remove or
overcome the consequences of the prior
discriminatory practice or usage, imd to
accomplish the purpose of the Act.
(iii) A recipient shall not be prohibited
by this part from taking any action
eligible under Subpart C to ameliorate
an imbalance in services or facilities
provided to any geographic area or
specific group of persons within its
jurisdiction, where the purpose of such
action in to overcome prior
discriminatory practice or usage,
(5) Notwithstanding anything to the
contrary in this section, nothing
contained herein shall be construed to
prohibit any recipient from maintaining
or constructing separate living facilities
or rest room facilities for the different
sexes, Furthermore. selectivity on the
basis of sex is not prohibited when
institutional or custodial serVices can
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I
Tuesday
July 8, 1980
Note: This reprint incorporates
corrections published at 46 FR 17185,
Tuesday, March 17, 1981.
Part III
Office of
Management and
Budget
Circular A-122, "Cost Principles for
Nonprofit Organizations"
/jP/'E,vD/X .fl.
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46022
Federal Register I Vol. 45. No. 132 I Tuesday. July 8. 1980 I Notices
OFFICE OF MANAGEMENT AND
BUDGET
Circular A-122, "Cost Principles for
Nonprofit Organizations"
INote: This reprint incorporales corrections
puulished al 46 FR 17185. Tuesday, March 17.
19B1,1
AGENCY: Office of Management and
Budget.
ACTION: Final Policy.
SUMMARY: This notice advises of a new
OMS Circular dealing with principles for
dp.termining costs of grants. contracts.
and other agreements with nonprofit
organizations.
The Circular is the product of an
interagency review conducted over a
two-year period. Its purpose is to
provide a set of cost principles to
replace existing principles issued by
individual agencies, These have often
contained varying and conflicting
requirements, and created confusion
among agency administrators. auditors,
and nonprofit officials. The new Circular
will provide a uniform approach to the
problem of determining costs. and
promote efficiency and better
urderstanding between recipients and
the Federal Government.
EFFECTIVE DATE: The Circular becomes
effective on issuance,
FOR FURTHER INFORMATION CONTACT:
Palmer A. Marcantonio. Financial
Management Branch. Office of
Management and Budget. Washington.
D_C. 20503, (202) 395--4773.
SUPPLEMENTARY INFORMATION: Before
the Circular became final there was
extensive coordination with the affected
nonprofit organizations. professional
associations. Federal agencies and
olhers, All interested persons were
given an opportunity to comment on the
proposed Circular through informal
consultations and a notice in, the Federal
Register. In response to our requests for
comment, we received about 100 letters
from Federal agencies, nonprofit
organizations, associations, and other
interested members of the public, These
comments were considered in the final
version of the Circular. There follows a
summary of the major comments and the
action taken on each,
In addition to the changes described.
other changes have been made to
improve the clarity and readability of
the Circular. To the extent possible, we
hHve tried 10 make the language of this
Circular consistent with that of cost
principles for educational institutions
(CirclIliir A-21). and State and local
guvl:rnments (Circular 74--4).
SUIIII1I(Jr)' of Sigll/[icant Changes:
Sl:t flJrth are changes that have been
nHHJe :11 the final Circular as a result of
public comments, The more significant
changes to Ihe basic Circular and
Attachment A include:
1. Paragraph 2. "Supersession" WaS
added to the basic Circular to make it
clear tha t this Circular supersedes cost
principles issued by individual agencies.
2. Paragraph 4 of the basic Circular
has been amended to make it clear that
the absence of an advance agreement on
any element of cost will not in itself
affect the reasonablene'ss of allocability
of that element. Also. this parag~aph
was amended to make it clear thai
where an item of cost requiring prior
approval is specified in the budget.
approval of the budget constitutes
approval of the cost.
3, Paragraph 5 of the basic Circular
has been changed to remove any doubt
as to which nonprofit organiza tions
would not be covered by the Circular.
Now. Appendix C to the Circular Iisls all
exclusions,
4. Paragraph 8 was added to, the basic
Circular to permit Federal agencies to
request exceptions from the
requirements of the Circular.
S, Paragraph E.2. was added to
Attachment A to cover the negotia tion
and approval of indirect cost rates. and
to provide for cognizance arrangements.
The more significant changes to
Attachment B to the Circular include:
1. Paragraph 6. Compensation for
Personal Services. was modified to:
a. Permit Federal agencies to accept a
substitute system for documenting
personnel costs through means other
than personnel activity reports,
b. Clarify provisions covering the
allowability of costs for unemployment
compensation or workers'
compensation. and costs of insurance
policies on the lives of trustees. officers.
or other employees.
c. Make unallowable any increased
costs of pension plans caused by
delayed funding.
d. Delete a paragraph dealing with
review and approval of compensation of
individual employees.
2. Paragraph 7. Contingencies. was
changed to make it clear that the term
"contingency reserves" excludes self-
insurance reserves or pension funds.
3. Paragraph 10 was modified to
provide that the value of donated
services used in the performance of a
direct cost activity shall be allocated a
share of indirect cost only when (a) the
aggregate value of the service is
material. (b) the services are supported
by a significant amount of the indirect
cost incurred by the organization. and
(c) the direct cost activity is not pursued
primarily for the benefit of the Federal
Government. Provisions were also
added to this paragraph for the
cognizant agency and the recipient to
negotiate when there is no basis for
determining the fair market value of the
services rendered. and to permit indirect
costs alloca ted to dona ted services to be
charged to an agreement or used to meel
cost sharing or matching requirements.
4. Paragraph 13, Equipment and Other
Capital Expenditures. was changed,
Capital equipment is now defined as
having an acquisition cosl of $500 and a
useful life of more than two ye,Hs.
5. Paragraph 24. Afeetin,'.}s,
Conferences_ The prior approval
requirement for charging meetings and
conferences as a direct cost was
deleted. A sentence was added to make
it clear such costs were allowable
provided lhey meelthe criterion for lhl:
allowability of cosl shown in
Allachment A.
6, Paragraph 2G. OI;'.}(Jnization CJsts,
was amended to provide thai
organization costs may be allowable
when approved in writing by thl'
awarding agency.
7. Paragraph 28, Page ChU/;'.}L's in
Professional Journals, was J'(~vised to
provide that page charges may be
allowable, .
8. Paragraph 36. Public In f()fJ1IUI iUII
Service Costs. was modified to n1ilke
public information costs allowallle as
direct costs with awarding agency
approval.
9. Paragraph 42. Rental Costs. was
rewritten to:
a. Make it clear that rental costs
under leases which crea te a ma terial
equity on the leased property are
allowable only up to the amount thai the
organization would have bel:n allowed
had it purchased the property; e_g"
depreciation or use allowances,
maintenance. taxes. insurance. etc_
b, Clarify the criteria for ma teria I
equity leases,
10. Paragraph 50. Travel Costs, was
amended to delete the prior apprOVal
requirement for domestic travel. In
addition to the above. a number of
editorial changes were made to the
original document.
Suggested Changes Not Considered
Necessary.
Comment. Several respondents
questioned the provision tha t, for "less
than arm's length" leases. rental costs
are allowable only up to the amount that
would be allowed had title to the
property been vested in the grantee
organization, In their opinion this rule
will result in unnecessary cost to the
Federal Government, since it would
encourage an organization to lease
space on the commercial market at a
higher rate.
'...
Federal egisler I Vol. 45, No, 132 I Tuesday, Jul 8, 1980 I Notices
46023
Response. The cost principles are
designed to cover most situations:
however. lhere are always exceptions
that musl be considered on a case-by-
case basis, The Circular contains a
provision for Federal <lgencies to request
exceptions.
Coml/U!I/t. Several respondents
questioned why interest is not an
allowable cost, since it is an ordinary
and necessary cost of doing business,
Response. It h<ls been a longstanding
policy not to recognize interest as a cost.
However, this policy h<ls recently been
revised for State and local governments
in Circular 74-4, with respect to the cost
of office space. The revision provides
thai "rental" rates for publicly owned
buildings may be based on actual costs,
including depreciation, interest,
operation <lnd maintenace costs, and
other allowable costs. This revision was
under consideration for some time. It
was studied extensively by OMB. the
General Accounting Office and others.
and considerable analysis went into its
formulation, Suggestions for extending it
to nonprofit organizations would have to
be examined with equal care. This has
not yet been done;- and we were
reluctanlto further delay issuance of
this Circular.
Comment. Several respondents
questioned why public information costs
were not allowable as an indirect cost.
Response. Public information costs
are often direct services to an
organization's other programs. They are
allowable. however, as a direct charge
when lhey are within the scope of work
of a particular agreement.
Commel/t, One respondent suggested
that smaller grantees be excluded from
complying with the Circular.
Response. Similar rules for the 50
selected items of cost would be needed
regardless of the size of the grantee, To
the extent possible, the Circular
provides simplified methods for smaller
grantees.
Commel/t. One respondent said the
requirements of the Cost Accounting
,Standards Board should be applied to
cover contracts with nonprofit
organizations.
Ill!spol/se. It is unlikely that the type
of granlees covered by this Circular
would have contracts large enough to be
covered by the CASB, In the event that
they do. however, the regulations of the
CASB would apply.
Comment, One respondent said the
iJllocalion of indirect cost to donated
services would pose a tremendous
difficulty to the organization, The
organization relies on a corps of
approximiJlely 6.000 commillee members
to carry oul obligalions in response to
C()\'(!rnrnenl requests, There is no
employer relationship in the
arrangements for this assistance, nor are
there committee members normally
reimbursed for such services. Further, it
was pointed out the committee members
spend many thousands of hours outside
the organization's premises conducting
research.
Response. It would appear thai this
type of committee arrangement would
not be considered in the determination
of the organization's indirect cost rate
provided that Federal agreements do not
bear an unreasonable share of indirect
cost. However, the cognizant agency
will be responsible for evaluating the
allocation of indirect cost where there
are committee-type arrangemenls on a
case-by-case basis.
Comment. One respondent suggested
that wherever possible the language in
the Federal Procurement Regulations be
used for nonprofit organizations,
Response, The language in the Federal
Procurement Regulations was
designated primarily for commercial
firms, and is not necessarily well suited
to nonprofit organizations. At the
suggestion of the General Accounting
Office, the nonprofit cost principles
were written to conform as closely as
possible to those of educational
institutions (Circular A-21), and State
and local governments (Circular 74-4),
lohn I, Lordan,
Chief. Financial Management Branch.
[Circular No. A-122]
June 27, 1980
To The Heads of Executive
Departments and Establishments
Subject: Cost principles for nonprofit
organizations.
1, Purpose. This Circular establishes
principles for determining costs of
grants, contracts and other agreements
with nonprofit organizations. It does not
apply to colleges and universities which
are covered by Circular A-21; State,
local, and federally recognized Indian
tribal governments which are covered
by Circular 74-4; or hospitals. The
principles are designed to provide that
the Federal Government bear its fair
share of costs except where restricted or
prohibited by law, The principles do not
attempt to prescribe the extent of cost
sharing or matching on grants, contracts,
or other agreements. However. such cost
sharing or matching shall not be
accomplished through arbitrary
limitations on individual cost elements
by Federal agencies, Provision for profit
or other increment above cost is outside
the scope of this Circular,
2. Supersession, TlJis Circular
supersedes cost principles issued by
individual agencies for nonprofit
organiza tion,
3. Applicability, a. These principles
shall be used by all Federal agencies in
determining the costs of work performed
by nonprofit organizations under grants,
cooperative agreements, cost
reimbursement contracts, and other
contracts in which costs are used in
pricing. administration, or settlement.
All of these instruments are hereafter
referred to as awards. The principles do
not apply to awards under which iln
organization is not required to account
to lhe Government for actual costs
incurred.
b. All cost reimbursement subilwards
(subgrants. subcontracts. etc.) are
subjeclto those Federal cost principles
applicable to the particuliJr orgilnization
concerned. Thus, if a subaward is 10 a
nonprofit organiza tion, this Circular
shall apply; if a subaward is 10 a
commercial organization, the cost
principles applicable to commercial
concerns shall apply: if iJ subaward is to
a college or university, Circular A-21
shall apply; if a subaward is to a Srate.
local, or federally recognized Indian
tribal government. Circular 74--4 shall
apply,
4, Definitions. a. "Nol/profit
organization" means any corporation,
trust, association, cooperative, or other
organization which (1) is operated
primarily for scientific. educational,
service. charitable, or similar purposes
in the public interest; (2) is not
organized primarily for profit: and (3)
uses its net proceeds to maintain,
improve. and/or expand its operations.
For this purpose, the term "nonprofit
organization" excludes (i) colleges and
universilies; (ii) hospitals; (iii) Staie.
local, and federally recognized Indian
tribal governments: and (iv) those
nonprofit organizations which are
excluded from coverage of this Circular
in accordance with paragraph 5 below.
b, "Prior approval" means securing
the awarding agency's permission in
advance to incur cost for those items'
that are designated as requiring prior
approval by the Circular, Generally this
permission will be in writing, Where an
item of cost requiring prior approval is
specified in the budget of an award,
approval of the budget constitutes
_approval of that cost.
5, Exclusion of some nonprofit
organizations, Some nonprofit
organizations, because of their size and
nature of operations, can be considered
to be similar to commercial concerns for
purpose of applicability of cost
principles, Such nonprofit organizations
shall operate under Federal cosl
principles applicable to commercial
concerns. A listing of these
..
46024
Federal Register / Jot. 45. No, 132 / Tuesday, July 8. 1980 / ~otices
organizations is contained in
Allachment C. Other organizations may
be added from time to time.
6. Responsibilities. Agencies
responsible for administering programs
that involve awards to nonprofit
organizations shall implement the
provisions of this Circular, Upon
request, implementing instruction shall
be furnished to the Office of
Management and Budget. Agencies shall
designate a liaison official to serve as
the agency representative on mailers
relating to the implementation of this
Circular, The name and title of such
representative shall be furnished to the
Office of Management and Budget
within 30 days of the date of this
Circular.
7, Attachments. The principles and
related policy guides are set forth in the
following Allachments:
Attachment A-General Principles
Attachment B-Selected Items of Cost
Allachment C-Nonprofit
Organizations NolSubject to This
Circular
8. Requests for exceptions. The Office
of Management and Budget may grant
exceptions to the requirements of this
Circular when permissible under
existing law. However, in the interest of
achieving maximum uniformity,
exceptions will be permitted only in
highly unusual circumstances,
9, Effective Date. The provisions of
this Circular are effective immediately,
Implementation shall be phased in by
incorporating the provisions into new
awards made after the start of the
organization's next fiscal year. For
existing awards the new principles may
be applied if an organization and the
cognizant Federal agency agree. Earlier
implementation, or a delay in
implementation of individual provisions
is also permitted by mutual agreement
between an organization and the
cognizant Federal agency.
10, Inquiries. Further information
concerning this Circular may be
obtained by contacting the Financial
Management Branch. Budget Review
Division, Office of Management and
Budget, Washington, D.C. 20503.
telephone (202) 395--4773.
James T, Mcintyre, Ir"
Dirl'r-tor,
ICircular No. A-122]
Attachment A
General Principles
Tabll! /If COlltl'llts
A, Basic Consideralions
1, Composilion of total costs
2, Factors affecting iJlIowauility of costs
3, Rl~asonable costs
4, Allocable cosls
5. Applicable credits
6, Advance understandings
B, Direct Costs
C. Indirect Costs
D. Allocation of Indirect Costs and
Determination of Indirect Cost Rales
1. General
2, Simplified allocation method
3, Multiple allocation base method
4. Direct allocation method
5. Special indirect cost rates
E, Negotiation and Approval of Indirect Cost
Rates
1. Definitions
2. Negotiations and approval of rates
(Circular No. A-122]
Attachment A
General Principles
A. Basic Considerations.
1. Composition of total costs, The total cost
of an award is the sum of the allowable
direct and alloca ble indirect costs less any
applicable credits.
2. Factors affecting allowability of costs,
To be allowable under an award, costs must
meel the following general criteria:
a, Be reasonable for the performance of the
award and be allocable thereto under these
principles.
b. Conform to any limitations or exclusions
set forth in these principles or-in the award
as to types or amount of cost items,
c. Be consistent with policies and
procedures that apply uniformly to both
federally financed and other activities of the
organization.
d, Be accorded consistent treatment.
e. Be determined in accordance with
generally accepted accounting principles,
f. Not be included as a cost or used to meet
cost sharing or matching requirements of any
other federally financed program in either the
current or a prior period.
g. Be adequately documented.
3. Reasonable costs. A cost is reasonable
if. in its nature or amount, it does not exceed
that which would be incurred by a prudent
person under the circumstances prevailing at
the time the decision was made to incur the
costs. The question of the reasonableness of
specific costs must be scrutinized with
particular care in connection with
organizations or separate divisions thereof
which receive the preponderance of their
support from awards made by Federal
agencies. In determining the reasonableness
of a given cost. consideration shall be given
to:
a. Whether the cost is of a type generally
recognized as ordinary and necessary for the
operation of the organization or the
performance of the award.
b. The restraints or requirements imposed
by such factors as generally accepted sound
business practices. arms length bargaining.
Federal and State laws and regulations, and
terms and conditions of the award.
c. Whether the individuals concerned acted
with prudence in the_ circumstances,
considering their responsibilities 10 the
organization, its members, employees. and
clients, the public at large. and the
Government.
d, Significant deviations from the
established practices of the organization
which may unjustifiably increase Ihe award
costs.
4. Allocable costs,
a, A cost is allocable to a particular cost
objective. such as a grant, project. service. or
other activity, in accordance with the relative
benefits received, A cosl is allocaule to a
Government award if it is treated
consistently with other costs incurred for the
same purpose in like circumstances and if it:
(1) Is incurred specifically for the award.
(2) Benefits both the award and other work
and can be distributed in reasonable
proportion 10 the benefits received, or
(3) Is necessary 10 the overall operation of
the organization, although a direct
relationship to any particuliJr cost objective
cannot be shown_
b. Any cost allocable to a particular award
or other cost objective under these principles
may not be shifted to other Federal awards 10
overcome funding deficiencies. or to avoid
restrictions imposed by law or by the terms
of the award.
5. Applicable credits,
a. The term applicable credits refers to
those receipts, or reduction of expenditures
which operate to offset or reduce expense
items that are allocable 10 awards as direct
or indirect costs, TypiciJl examples of such
transactions are: purchase discounts, reuates
or allowances, recoveries or indemnities on
losses. insurance refunds, ~nd adjustments of
overpayments or erroneous charges_ To the
extent that such credits accruing or received
by the organization relate to allowable cost
they shall be credited to the Guvernment
either as a cost reduction or cash refund as
appropriate.
b. In some instances, the amounts received
from the Federal Government to finance
organizational activities or service operations
should be treated as applicable credits_
Specifically, the concept of netting such
credit items against related expenditures
should be applied by the organization in
determining the rates or amounts to ue
charged to Federal awards for services
rendered whenever the facilities or other
resources used in providing such services
have been financed directly, in whole or in
part. by Federal funds,
(c) For rules covering program income
(Le.. gross income earned from federally
supported activities) see Attachment 0 of
OMB Circular A-ll0,
6. Advance understandings_ Under any
given award the reasonableness and
allocability of certain items of costs may be
difficult to determine, This is particularly true
in connection with organizations thai receive
a preponderance of their support from
Federal agencies. In order to avoid
subsequent disallowance or dispule based on
unreasonableness or nonallocability, it is
often desirable to seek a wrillen agreement
with Ihe cognizant or awarding agency in
advance of the incurrence of spec:iiJl or
unusual costs. The ausence of iJn advance
agreement on any element of cost will nol, in
itself. affect the reasonahll~ness or
allocability of that elenwnt.
~ J
Federal Legister I Vol. 45, No. 132 I Tuesday, JUI8. 1980 I Notices
46025
B. Direct Costs
1. Direct costs are those that can be
identified specifically with a particular final
cosl objective: Le.. a parlicular award.
project. service. or other direct activity of an
organization. However. a cost may not be
assigned to an award as a direct cost if any
other cosl incurred for the same purpose. in
like circumstances. has been allocated to an
award as an indirect cost. Costs identified
specifically with awards are direct costs of
the awards and are to be assigned directly
thereto. Costs identified specifically with
other final cost objectives of the organization
are direct costs of those cost objectives and
are not to be assigned to other awards
directly or indirectly.
2. Any direct cost of a minor amount may
be treated as an indirect cost for reasons of
practicality where the accounting treatment
for such cost is consistently applied 10 all
final cost objectives.
3. The cosl of cerlain activities are not
allowable as charges to Federal awards lsee.
for example. fund raising costs in paragraph
19 of Allachment B). However. even though
these costs are unallowable for purposes of
compoting charges to Federal awards. they
nonelheless must be treated as direct cost for
purposes of determining indirecl cost rates
and be allocated their share of the
organization's indirect costs if they represent
activities which (1) include the salaries of
personnel. (2) occupy space. and (3) benefit
from the organization's indirect costs.
4. The costs of activities performed
primarily as a service to members. clients. or
the general public when significant and
necessary to the organization's mission must
be treated as direct costs whether or not
allowable and be alloca1ed an equitable
share of indirect costs. Some examples of
these types of activities include:
a. Maintenance of membership rolls.
subscriptions, publications. and related
functions.
b. Providing services and information to
members. legislative or administrative
bodies. or the public.
c. Promotion. lobbying. and olher forms of
public relations.
d. Meetings and conferences except those
held to conduct the general administration of
the organization.
3. Mainttmance. prolection. and investment
of special funds not used in operation of the
organization.
r. Administration of group benefits on
behalf of members or clients including life
and hospital insurance. annuity or retirement
plans. financial aid. etc.
e. Indirect Cost.
1. Indirect costs are those that have been
incurred for common or joint objectives and
cannol be readily identified with a particular
final cost objective. Direct cost of minor
amounts mav be trealed as indirect costs
under the c,,'nditions described in paragraph
B.2. a!J()\'I'. After direct costs have been
determined and assigned directly to awards
or other work as appropriale. indirect costs
are those remaining to be allocated to
benefiting cost objectives. A cost may not be
allocated to an award as an indirect cost if
any other cost incurred for the same purpose,
in like circumstances. has been assigned to
an award as a direct cost.
2. Because of the diverse characteristics
and accounting practices of nonprofit
organizations, it is not possible to specify the
types of costs which may be classified as
indirect cost in all situations. However.
typical examples of indirect cost for many
nonprofit organizations may include
depreciation or use allowances on buildings
and equipment. the costs of operating and
maintaining facilities. and general
administration and general expenses. such as
the salaries and expenses of executive
officers. personnel administration. and
accounting.
D. Allocation of Indirect Costs and
Determina/ion of Indirec/ Cost Rates.
1. General.
a.,Where a nonprofit organizalion has only
one major function. or where all its major
functions benefit from its indirect costs to
approximately the same degree. the
allocation of indirect costs and the
computation of an indirect cosl rate may be
accomplished through simplified allocation
procedures as described in paragraph 2
below.
b. Where an organization has several major
functio:Js which benefit from its indirect costs
in varying df'grees. allocation of indirect
costs may require the accumulation of such
costs into separate cost groupings which then
are allocated individually to benefiting
functions by means of a base which best
measures the rela tive degree of benefit. The
indirect costs allocated to each function are
then distributed to individual awards and
other activities included in that function by
means of an indirect cost ratels).
c. The determination of what constitutes an
organization's major functions will depend on
its purpose in being; the types of services it
renders to the public. its clients. and its
members; and the amount of effort it devotes
to such activities as fund raising. public
information and membership activities.
d. Specific methods for allocating indirect
costs and computing indirect cost rates along
with the conditions under which each method
should be used are described in paragraphs 2
through 5 below.
e. The base period for the allocation of
indirect costs is the period in which such
costs are incurred and accumulated for
allocation to work performed in that period.
The base period normally should coincide
with the organization's fiscal year. but in any
event. shall be so selected as to avoid
inequities in the allocation of the costs.
2. Simplified allocation method.
a. Where an organization's major functions
benefit from its indirect costs to
approximately the same degree. the
allocation of indirect costs may be
accomplished by (i) separating the
organization's total costs for the base period
as either direct or indirect, and (ii) dividing
the total allowable indirect costs (net of
applicable credits) by an equitable
distribution base. The result of this process is
an indirecl cost rate which is used to
distribute indirect costs 10 individual awards.
The rate should be expressed as the
percentage which the total amount of
allowable indirect costs. bears 10 the base
selected. This method should also be used
where an organization has only one major
function encompassing a number of
individual projects or activities, and may be
used where the level of Federal awards to an
organization is relatively small.
b. Both the direct costs and the indirect
costs shall exclude capital expenditl1res and
unallowable costs.. However. unallowable
costs which represent activities must be
included in the direct costs under the
conditions described in paragraph B.3. above.
c. The distribution base may be total direct
costs (excluding capital expenditures and
other distorting items. such as major
subcontracts or subgrants). direct salaries
and wages. or other base which results in an
equitable distribution. The distribution base
shall generally exclude participant support
costs as defined in paragraph 29 of
Attachment B.
d. Excepl where a special nltc(s) is
required in accordance with piHagraph 0.5
below. the indirect cost rate dcveloped under
the above principles is applicable to all
awards at the organization. If a special
raters) is required. appropriate modifications
shall be made in order to develop the spccial
ratels).
3. Multiple allocation base 1Il('/hod.
a. Where an organization's indirect costs
benefit its major functions in varying degrees.
such costs shall be accumulated into separate
cost groupings. Each grouping shall then be
allocated individually to benefiting functions
by means of a base which best measures the
relative benefits.
b. The groupings shall be established so as
to permit the allocation of each grouping on
the basis of benefits provided to the major
functions. Each grouping should constitute a
pool of expenses that are of like character in
terms of the functions they benefit and in
terms of the allocation base which best
measures the relative benefits provided to
each function. The number of separate
groupings should be held within practical
limits. taking into consideration the
materiality of the amounts involved and the
degree of precision desired.
c. Actual condilions must be taken into
account in selecting the base to be uscd in
allocating the expenses in eacli grouping to
benefiting functions. When an allocation can
be made by assignment of a cost grouping
directly to the function benefited. the
allocation shall be made in that manner.
When the expenses in a grouping are more
general in nature. the allocation should be
made through the use of a selected base
which produces results that are equitable to
both the Government and the organization. In
general, any cost element or cost related
factor associated with thc organization's
work is potentially adaptable for use as an
allocation base provided (i) it can readily be
expressed in terms of dollars or other
quantitative measures [total direct costs.
direct salaries and wages. staff hours applied.
square feet used. hours of usage. number of
documents processed. population served. and
the like) and (ii) it is common to the
benefiting functions during the base period.
d. Except where R special indirect cost
rate(s) is required in accordance with
.'..
..
46026
J I
Federal Register I Vol. 45. No. 132 I Tuesday, July 8, 1980 I Notices
paragraph D.5. below. the separate groupings
of indirect costs allocated to each major
function shall be aggregated and treated as a
common pool for that function. The costs in
the common pool shall then be distributed to
individual awards included in that function
by use of a single indirect cost rate.
e. The distribution base used in computing
the indirect cost rate for each function may
be total direct costs (excluding capital
expenditures and other distorting items such
as major subcontracts and subgrants). direct
salaries and wages. or other base which
results in an equitable distribution. The
distribution base shall generally exclude
participant support costs as defined in
paragraph 29. Attachment B. An indirect cost
rate should be developed for each separate
indirect cost pool developed. The rate in each
case should be stated as the percentage
which the amount of the particular indirect
cost pool is of the distribution base identified
with that pool.
4. Direct allocation method.
a. Some nonprofit organizations, treat all
costs as direct costs except general
administration and general expenses. These
organizations generally separate their costs
into three basic categories: (i) General
administration and general expenses. (ii)
fund raising. and (iii) other direct functions
(including projects performed under Federal
awards). Joint costs. such as depreciation.
rental costs. operation and maintenance of
facilities, telephone expenses. and the like
are prorated individually as direct costs to
each category and to each award or other
activity using a base most appropriate to the
particular cost being prora ted.
b. This method is acceptable provided each
joint cost is prorated using a base which
accura tely measures the benefi ts provided to
each award or other activity. The bases must
be established in accordance with reasonable
criteria. and be supported by current data.
This method is compatible with the
Standards of Accounting and Financial
Reporting for Voluntary Health and Welfare
Organizations. issued jointly by the National
Health Council. Inc.. the National Assembly
of Voluntary Health and Social Welfare
Organizations. and the United Way of
America.
c. Under this method. indirect costs consist
exclusively of general administration and
general expenses. In all other respects, the
organization's indirect cost rates shall be
computed in the same manner as that
described in paragraph D.2 above.
5. Special indirect cost rates. In some
instances. a single indirect cosl rate for all
activities of an organization or for each major
function of the organization may not be
appropriate. since it would not take into
account those different factors which may
substantially affect the indirect costs
applicable to a particular segment of work.
For this purpose. a particular segment of
work may be that performed under a single
award or it may consist of work under a
group uf awards performed in a common
envirunment. The factors may include the
physical location of the work. the level of
administrative support required. the nature of
the facilities or other resources employed. the
scientific disciplines or technical skills'
involved. the organizational arrangements
used. or any combination thereof. When a
particular segment of work is performed in an
environment which appears to generate a
significantly different level of indirect costs,
provisions should be made for a separa te
indirect cost pool applicable to such work.
The separate indirect cost pool should be
developed during the course of the regular
allocation process. and the separate indirect
cost rate resulting therefrom should be used
provided it is determined that (i) the rate
differs significantly from that which would
have been obtained under paragraph 0.2. 3.
and 4 above. and Iii) the volume of work to
which the rate would apply is material.
E. Negotiation and Appro vol of Indirect Cost
Rates.
1. Definitions. As used in this section. the
following terms have the meanings set forth
below:
a. "Cognizant agency" means the Federal
agency responsible for negotiating and
approving indirect cost rates for a nonprofit
organization on behalf of all Federal
agencies.
b. "Predetermined rate" means an indirect
cost rate. applicable to a specified current or
future period, uRually the organiza tion's fiscal
year. The rate is based on an estimate of the
cosls to be incurred during the period. A
predetermined rate is not subject to
adjustment.
c. "Fixed rate" means an indirect cost rate
which has the same characteristics as a
predetermined rate. except that the difference
between the estimated costs and the aclual
costs of the period covered by the ra te is
carried forward as an adjustment to the rate
computation of a subsequent period.
d. "Final rate" means an indirect cost rate
applicable to a specified past period which is
based on the actual costs of the period. A
final rate is not subject to adjustment.
e. "Provisional rate" or billing rate means a
temporary indirect cost rate applicable to a
specified period which is used for funding.
interim reimbursement. and reporting indirect
costs on awards pending the establishment of
a final rate for the period.
f. "Indirect cost proposal" means the
documentat'ion prepared by an organization
to substantiate its claim for the
reimbursement of indirect costs. This
proposal provides the basis for the review
and negotiation leading to the establishment
of an organization's indirect cost rate.
g. "Cost objective" means a function.
organizational subdivision, contract. grant. or
other work unit for which cost data are
desired and for which provision is made to
accumulate and measure the cost of
processes, projects. jobs and capitalized
projects.
2. Negotiation and opproval of rates.
a. Unless different arrangements are
agreed to by the agencies concerned. the
Federal agency with the largest dollar value
of awards with an organization will be
designated as the cognizant agency for the
negotiation and approval of indirect cost
rates and, where necessary. other rates such
as fringe henefit and computer charge-out
rates. Once an agency.is assigned cognizance
for a particular nonprofit organization. the
assignment will not be changed unless there
is a major long-term shift in the dollar volume
of the Federal awards to the organization. All
concerned Federal agencies shall be given the
opportunity to participate in the negotiation
process. but after a rate has been agreed
upon it will be accepted by all Federal
agencies. When a Federal agency has reason
to believe that specialoperating factors
affecting its awards necessitate special
indirect cost rates in accordance with
paragraph D.5 above. it will. prior to the time
the rates are negotiated. notify th~ cognizant
agency.
b. A nonprofit organization which has not
previously established an indirect cost rate
with a Federal agency shall submit its initial
indirect cost proposal to the cognizant
agency. The proposal shall be submitted as
soon as possible after the organiza tion is
advised that an award will be made and. in
no event. later than three months after the
effective date of the awurd.
c. Organizations thai have previuusly
established indirect cost rules must submit a
new indirect cost proposal to the cognizant
agency within six months after Ihe close of
each fiscal year.
d. A predetermined rule may be negotiated
for use on awards where there is reasonable
assurance. based on past experience and
reliable projection of the organization's costs,
that the rate is not likely to exceed a rate
based on the organization's actual custs.
e. Fixed rates may be negotiated where
predetermined ra tes are not considered
appropriate. A fixed rate. however. shall nol
be negotiated if Ii) all or a substantial portion
of the organization's awards are expected to
expire before the carry-forward adjustment
can be made: (ii) the mix of Government and
non-government work at the organization is
too erratic to permit an equitable carry-
forward adjustment; or (iii) the organization's
operations fluctuate significanlly from year to
year.
f. Provisional and final rates shall be
negotiated where neither predetermined nor
fixed rates are appropriate.
g. The results of each negotiation shull be
formalized in a written agreement between
the cognizant agency and the nonprofit
organization. The cognizant agency shall
distribute copies of the agreement to all
concerned Federal agencies.
h. If a dispute arises in a negotiation of an
indirect cost rate between the cognizant
agency and the nonprofit organization. the
dispute shall be resolved in accordance with
the appeals procedures of the cognizant
agency.
L To the extent that problems are
encountered among the Federal agencies in
connection with the negotiation and approval
process. the Office of Management and
Budget will lend assistance as required to
resolve such problems in a timely manner.
[Circular No. A-122)
Attachment B
Selected I1ems of Cost
Table of Contents
1. Advertising costs
2. Bad debts
3. Bid and proposal costs lreserved)
I
I
Federal Register I Vol. 45, No. 132 I Tuesday, July 8, 1980 I Notices
46027
4. Bonding costs
5. Communication costs
6. Compensation for personal services
7. Contingency provisions
8. Contributions
9. Depreciation and use allowances
10. Donations
11. Employee morale. heallh and welfare
costs and credits
12. Entertainment costs
13. Equipment and olher capital expenditures
14. Fines and penalties
15. Fringe benefits
16. Idle facilities and idle capacity
17. Independent research and development
(reserved)
18. Insurance and indemnification
19. Interest. fund filising. and investment
management costs
20, Labor relations costs
21. Losses on other awards
22. Mainlenance and repair costs
23. Materials and supplies
24. Meetings. conferences
25. Memherships. subscriptions, and
professional activity costs
26. Organization costs
27. Overtime. extra-pay shift. and multishift
premioms
28. Page charges in professional journals
29. Participanl support costs
30. Patent costs
31. Pension plans
32. Planl security costs
33. Preawurd costs
34. Professional service costs
35. Profits and losses on disposition of
depreciable property or other capital
assets .
36. Puhlic information service costs
37. Publication and printing costs
38: Rearrangement and alleration costs
39. Reconversion costs
40. Recruiting costs
41. Relocation costs
42. Rental costs
43. Royalties and other costs for use of
patents and copyrights
44. Severance pay
45. Specialized service facilities
46. Taxes
47. Termination costs
48. Training and education costs
49. Transportation costs
50. Travel costs
ICircular No. A-1221
Altachment B
'Selected Hems of Cost
Paragraphs 1 through 50 provide principles
to be applied in establishing the allowability
of certHin ilems of cost. These principles
apply whether a cost is treated as direct or
indirect. Failure to mention a particular item
of cost is not intended to imply Ihat it is
unallowahle: rather determination as to
allowability in each case should be based on
the treatment or principles provided for
similar or relHted items of cost.
1. IIdL,.,rtisill}l costs.
a. Advertising costs mean the costs of
media sl,,'vices and associated costs. Media
advertising includes magazines, newspapers.
rHdio and television programs. direct mail,
exhibils. and the like.
b. The only advertising costs allowable are
those which are solely for (il the recruilment
of personnel when considered in conjunction
with all other recruitment costs. as set forth
in paragraph 40: (ii) the procurement of goods
and services: (iii) the disposal of surplus
materials acquired in the performance of the
award except when organizations are
reimbursed for disposals at a predetermined
amount in accordance with Altachment N of
OMB Circular A-ll0; or (iv) specific
requirements of the award.
2. Bad debts. Bad debts. including losses
lwhether actual or estimaled) arising from
uncollectible accounts and other claims.
related collection costs. and related legal
costs. are unallowable,
3. Bid and proposal costs. (reserved)
4. Bonding costs.
a. Bonding costs arise when the
Government requires assurance against
financial loss to itself or others by reason of
the act or defaull of the organization. They
arise also in instances where the organization
requires similar assurance. Included are such
bonds as bid, performance. payment.
advance payment. infringement. and fidelity
bonds.
b. Costs of bonding required pursuant to
the lerms of the award are allowable.
c. Costs of bonding required by the
organization in the general conduct of its
operations are allowable to the extent that
such bonding is in accordance with sound
business practice and the rates and premiums
are reasonable under the circumstances.
5, Communication costs. Costs incurred for
telephone services. local and long distance
telephone calls. telegrams. radiograms.
postage and the like. are allowable.
6. Compensation for personal services.
a. Definition. Compensation for personal
services includes all compensation paid
currently or accrued by ihe organization for
services of employees rendered during the
period of the award (except as otherwise
provided in paragraph g. below). It includes.
but is not limited to. salaries. wages.
director's and executive commiltee member's
fees, incentive awards. fringe benefits.
pension plan costs. allowances for off-site
pay. incentive pay. location allowances.
hardship pay. and cost of living differentia.ls.
b. Allowobility. Except as otherwise
specifically provided in this paragraph. Ihe
costs of such compensation are allowable to
the extent that:
(1) Total compensation to individual
employees is reasonable for the services
rendered and conforms to the established
policy of the organization ~onsistently
applied to both Government and non-
Government activities; and
(2) Charges to awards whether treated as
direct or indirect costs are determined and
supported as required in this paragraph.
c. Reasonableness.
(1) When the organization is predominantly
engaged in activities other than those
sponsored by the Government. compensation
for employees on Government-sponsored
work will be considered reasonable to the
extent that it is consistent with that paid for
similar work in the organization's other
activities.
(2) When the organization is predominantly
engaged in Government-sponsored activities
and in cases where the kind of employees
required for the Government activities are
not found in the organization's other
activities. compensation for employees on
Government-sponsored work will be
considered reasonable to the extent that it is
comparable to that paid for similar work in
the labor markets in which the organization
competes for the kind of employees involved.
d. Special considerotions in determining
allowability. Certain conditions require
special consideration and possible limitations
in determining costs under Federal awards
where amounts or Iypes of compensation
appear unreasonable. Among such conditions
are the following:
(1) Compensation to members of nonprofit
organizations. trustees. directors, assuciates.
officers. or the immediate families thereof.
Determination should be made that such
compensation is reasonable for Ihe actual
personal services rendered rather than a
distribution of earnings in excess of costs.
(2) Any change in an organization's
compensation policy resulting in a
substantial increase in the organization's .
level of compensation. particularly when it
was concurrent with an increase in the ratio
of Government awards to other activities of
the organization or any change in the
treatment of allowability of specific types of
compensation due to changes in Government
policy.
e. Unallowable costs. Costs which are
unallowable under other paragraphs of this
Allachment shall not be allowable under this
paragraph solely on the basis that they
constitute personal compensation.
f. Fringe benefits.
(1) Fringe benefits in the form of regular
compensation paid to employees during
periods of authorized absences from the job.
such as vacation leave. sick leave. military
leave. and the like. are allowable provided
such costs are absorbed by all organization
activities in proportion to the relative amount
of time or effort actually devoted to each.
(2) Fringe benefits in the form of employer
contributions or expenses for social security.
employee insurance. workmen's
compensation insurance. pension plan costs
(see paragraph g. below). and the like. are
allowable provided such benefits are granted
in accordance with established written
organization policies. Such benefits whether
treated as indirect costs or as direct costs.
shall be distributed to particular awards and
other activities in a manner consistent with
the pallern of benefits accruing to the
individuals or group of employees whose
salaries and wages are chargeable to such
awards and other activities.
(3)(a) Provisions for a rescrve under a self-
insurance program for unemployment
compensation or workers' compensation are
'allowable to the extent that the provisions
represent reasonable estimates of the
liabilities for such compensation. and the
types of coverage. extent of coverage. and
rates and premiums would have been
allowable had insurance becn purchased to
cover the risks. However. provisions for seif-
insured liabilities which do not become
payable for more than one year after the
provision is made shall not exceed the
present value of the liability.
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(b) Where an organization follows a
consistent policy of expensing actual
payments to, or on behalf of. employees or
former employees for unemployment
compensation or workers' compensation,
such payments are allowable in the year of
payment with the prior approval of the
awarding agency provided they are allocated
10 all activities of the organiza tion.
(4) Costs of insurance on the lives of
trustees. officers. or other employees holding
positions of similar responsibility are
allowable only to the extent that the
insurance represents additional
compensation. The costs of such insurance
when the organization is named as
beneficiary are unallowable.
g. Pension plan costs.
(1) Costs of the organization's pension plan
which are incurred in accordance with the
established policies of the organization are
allowable. provided:
(a) Such policies meet the test of
reasonableness:
lb) The methods of cost allocation are not
discrimina tory;
(c) The cost assigned to each fiscal year is
determined in accordance with generally
accepted accounting principles as prescribed
in Accounting Principles Board Opinion No.8
issued by the American Institute of Certified
Public Accountants: and
ld) The costs assigned to a given fiscal year
are funded for all plan participants within six
months after the end of that year. However.
increases to normal and past service pension
costs caused by a delay in funding the
actuarial liability beyond 30 days after each
quarter of the year to which such costs are
assignable are unallowable.
(2) Pension plan termination insurance
premiums paid pursuant to the Employee
Retirement Income Security Act of 1974 lPub.
L. 93-406) are allowable. Late payment
charges on such premiums are unallowable.
(3) Excise taxes on accumulated funding
deficiencies and other penalties imposed
under the Employee Retirement Income
Security Act are unallowable.
h. Incentive compensation. Incentive
compensation to employees based on cost
reduction. or efficient performance.
suggestion awards. safety awards. etc.. are
allowable to the extent that the overall
compensation is determined to be reasonable
and such costs are paid or accrued pursuant
to an agreement entered into in good faith
between the organization and the employees
before the services were rendered. or
pursuant to an established plan followed by
the organization so consistently as to imply,
in effect. an agreement to make such
payment.
L Overtime. extra pay shift, and multishift
premiums. See paragraph 27.
j. Severance pay. See paragraph 44.
k. Training and education costs. See
paragraph 48.
I. Support of salaries and wages.
(1) Charges to awards for salaries and
wages. whether treated as direct costs or
indirect costs. will be based on documented
payrolls approved by a responsible official(s)
of the organization. The distribution of
salaries and wages to awards must be
supported by personnel activity reports as
prescribed in subparagraph (2) below. except
when a substitute system has been approved
in writing by the the cognizant agericy. (See
paragraph E.2 of Allachment A)
(2) Reports reflecting the distribution of
activity of each employee must be
maintained for all staff members
lprofessionals and nonprofessionals) whose
compensation is charged. in whole or in part.
directly to awards. In addition. in order to
support the allocation of indirect costs. such
reports must also be maintained for other
employees whose work involves two or more
funcitons or activities if a distribution of their
compensation between such functions or
activities is needed in the determination of
the organization's indirect cost raters) (e.g..
an employee engaged part-time in indirect
cost activities and part-time in a direct
function). Reports maintained by nonprofit
organizations to satisfy these requirements
must meet the following standards:
la) The reports must reflect an after-the-
fact determination of the actual activity of
each employee. Budget estimates (Le..
estimates determined before the services are
performed) do not qualify as support for
charges to awards. .
(b) Each report must account for the total
activity for which employees are
compensated and which is required in
fulfillmen t of their obliga tions to the
organiza tion.
(c) The reports must be signed by the
individual employee. or by a responsible
supervisory official having first hand
knowledge of the activities performed by the
employee. that the distribution of activity
represents a reasonable estimate of the
actual work performed by the employee
during the periods covered by the reports.
(d) The reports must be prepared at least
monthly and must coincide with one or more
pay periods.
(3) Charges for the salaries and wages of
nonprofessional employees. ihaddition to the
supporting documentation described in
subparagraphs (1) and (2) above, must also
be supported by records indicating the total
number of hours worked each day
maintained in conformance with Department
of Labor regulations implementing the Fair
Labor Stand!\rds Act (29 CFR Part 516). For
this purpose. the term "nonprofessional
employee" shall have the same meaning as
"nonexempt employee," under the Fair Labor
Standards Act.
(4) Salaries and wages of employees used
in meeting cost sharing or matching
requirements on awards must be supported in
the same manner as salaries and wages
claimed for reimbursement from awarding
agencies.
7. Contingency provisions. Contributions to
a contingency reserve or any similar
provision made for events the occurrence of
which cannot be foretold with certainty as to
time. intensity. or with an assurance of their
happening, are unallowable. The term
"contingency reserve" excludes self-
insurance reserves (see paragraph 6.f.(3) and
18.a.(2J(d)): pension funds (see paragraph
6.1g)): and reserves for normal severance pay
(see paragraph 44.(bJ(l).
8. Contributions. Contributions and
dona tions by the organiza tion to others are
unallowable.
9. Depreciation and use alJowances.
a. Compensation for the use of buildings.
other capital improvements. and equipment
on hand may be made through use
allowances or depreciation. However. except
as provided in paragraph f. below a
combination of the two methods may not be
used in connection with a single class of
fixed assets (e.g.. buildings. office equipment.
computer equipment, etc.).
b. The computation of use allowances or
depreciation shall be based on the
acquisition cost of the assets involved. The
acquisition cost of an asset donated to the
organization by a third party shall be its fair
market value at the time of the donation.
c. The computation of use allowances or
depreciation will exclude.
(1) The cost of land:
(2) Any portion of the cost of buildings and
equipment borne by or donated by the
Federal Government irrespective of where
title was originally vested or where it
presently resides: and
(3) Any portion of the cost of buildings and
equipment contributed by or for the
organization in satisfaction of a statutory
matching retirement.
d. Where the use allowance method is
followed. the use allowance for buildings and
improvement (including land improvements
such as paved parking areas. fences. and
sidewalks) will be computed at an annual
rate not exceeding two percent of acquisition
cost. The use allowance for equipment will
be computed at an annual rate not exceeding
six and two-thirds percent of acquisition cost.
When the use allowance method is used for
buildings. the entire building must be treated
as a single asset; the building's components
(e.g. plumbing system, heating and air
conditioning, etc.) cannot be segregated from
the building's shell. The two percent
limitation. however. need not be applied to
equipment which is merely allached or
fastened to the building but not permanently
fixed to it and which is used as furnishings or
decorations or for specialized purposes fe.g..
dentist chairs and dental treatment units.
counters. laboratory benches bolted to the
floor. dishwashers. carpeting. etc.). Such
equipment will be considered as not being
permanently fixed to the building if it can be
removed without the need for costly or
extensive alterations or repairs to the
building or the equipment. Equipment that
meets these criteria will be subject to the six
and two-thirds percent equipment use
allowance limitation.
e. Where depreciation method is followed.
the period of useful service (useful life)
established in each case for usable capital
assets must take into consideration such
factors as type of construction. nature of the
equipment used. technological developments
in the particular program area. and the
renewal and replacement policies followed
for the the individual items or classes of
assets involved. The method of depreciation
used to assign the cost of an asset (or group
of assets) to accounting periods shall reOcct
the pallern of consumption of the asset
during its useful life. In the a bsencc of clear
evidence indicating that the expected
consumption of the asset will be significantly
greater or lesser in the early portions of its
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46029
useful life thlln in the laler portions. the
straight-line method shall be presumed to be
the appropriate method. Depreciation
methods once used shall not be changed
unless approved in advance by the cognizant
Federal agency. When thl' depreciation
method is introduced for application to assets
previously subject to a use allowance. the
combinalion of use allowances and
depreciation applicable to such assets must
not excecd the total acquisition cost of the
assets. When the depreciation method is used
for buildings. a building's shell may be
segregated from each building componcnt
(e.g.. plumbing system. heating. and air
conditioning system. etc.) and each item
deprecialed over its estimated useful life; or
the entire building (i.e.. the shell and all
components) may be treated as a single asset
and depreciated over a single useful life.
, f. When the depreciation method is used
for a particular class of assets. no
depreciation may be allowed on any such
assets thaI. under paragraph e. above. would
be viewed as fully deprecia ted. However, a
reasonable use allowance may be negotiated
for such assets if warranted after taking into
consideration the amount of depreciation
previously charged to the Government. the
eslimated useful life remaining at time of
negotiation. the effect of any increased
maintenilnce charges or decreased efficiency
due to age. and any other factors pertinent to
the utilization of the asset for the purpose
contemplated,
g. Charges for use allowances or
depreciation must be supported by adequate
property records and physical inventories
must be taken alleast once every two years
(a statistical sampling basis is acceptable) to
ensure that assets exist and are usable and
needed. When the depreciation method is
followed. adequate depreciation records
indicating the amount of depreciation taken
each period must also be maintained.
10. Donations
a. Services recei>'ed.
(1) Donated or volunteer services may be
furnished to an organization by professional
and technical personnel. consultants. and
other skilled and unskilled labor. The value
of these services is not reimbursable either as
a direct or indirect cost.
(2) The value of donated services utilized
in Iheperformance of a direct cost aclivity
shall be considered in the determination of
the organization's indirect cost rale(s) and.
accordingly. shall be allocaled a
'proportionate share of applicable indirect
costs when the following circumstances exist:
la) The aggregate value of the services is
material:
(b) The services are supported by a
significant amount of the indirect costs
incurred by the organization:
(c) The direct cost activity is not pursued
primarily for the benefit of the Federal
Government.
(3) In those instances where there is no
basis for determining the fair market value of
the services rendered. the recipient and the
cognizant agency shall negotiale an
appropriate allocation of indirect cost to the
services.
(4) Where donated services directly benefit
a project supported by an award. the indirect
costs allocated to the services will be
considered as a part of Ihe total costs of the
project. Such indirect costs may be
reimbursed under the award or used to meet
cost sharing or matching requirements.
(S) The value of the donated services may
be used to meet cost sharing or matching
requirements under conditions described in
AlIachmenl E. OMB Circular No. A-l10.
Where donated services are treated as
indirect costs. indirect'cost rates will
separate the value of the donations so that
reimbursement will not be made.
(6) Fair market value of donated services
shall be computed as follows:
(a) Rates for volunteer services. Rates for
volunteers shall be consistent with those
regular rates paid for similar work in other
activities of the organization. In cases where
the kinds of skills involved are not found in
the other activities of the organization. the
rates used shall be consistent with those paid
for similar work in the labor market in which
the organization competes for such skills.
(b) Services donated by other
organizations. When an employer donates
the services of an employee, these services
shall be valued at the employee's regular rate
of pay (exclusive of fringe benefits and
indirect costs) provided the services are in
the same skill for which the employee is
normally paid. If the services are not in the
same skill for which the employee is normally
paid. fair market value shall be computed in
accordance with subparagraph (a) above.
b. Goods and space.
(1) Donated goods: i.e.. expendable
personal property/supplies. and donated use
of space may be furnished to an organization.
The value of the goods and space is not
reimbursable either as a direct or indirect
cost.
(2) The value of the donations may be used
to meet cost sharing or matching share
requirements under the conditions described
in Allachment E, OMB Circular No. A-110.
The value of the donations shall be
determined in accordance with Allachment
E. Where donations are treated as indirect
costs, indirect cost rates will separate the
value of the donations 80 that reimbursement
will not be made.
11. Employee morale. health. and welfare.
costs and credits. The costs of house
publications. health or first-aid clinics. and/
or infirmaries. recreational activities,
employees' counseling services. and other
expenses incurred in accordance with the
organization's established practice or custom
for the improvement of working conditions.
employer-employee relations. employee
morale. and employee performance are
allowable. Such costs will be equitably
apportioned to all activities of the
organization. Income generated from any of
these activities will be credited to the cost
thereof unless such income has been
irrevocably set over to employee welfare
organizations.
12. Entertainment costs. Costs of
amusement, diversion, social activities.
ceremonials. and costs relating thereto. such
as meals. lodging. rentals. transportation. and
gratuities are unallowable (but see
paragraphs 11 and 2S).
13. Equipment and other capital
expenditures.
a. As used in this paragraph. the following
terms have the meanings set forth below:
(1) "Equipment" means an article of
nonexpendable tangible personal property
having a useful life of more than two years
and an acquisition cost of $SOO or more per
unit. An organization may use its own
definition provided that it at least includes all
nonexpendable tangible personal properly as
defined herein.
(2J "Acquisition cost" means the net
invoice unit price of an item of equipment.
including the cost of any modificalions.
allachments. accessories. or auxiliary
apparatus necessary to make it usable for the
purpose for which it is acquired. Ancillary
charges. such as taxes. duty. protective in-
transit insurance. freight. and installation
shall be included in or excluded from
acquisition cost in accordance with the
organization's regular wrillen accounting
practices.
(3) "Special purpose equipment" means
equipment which is usable only for research,
medical. scientific. or technical activities.
Examples of special purpose equipment
include microscopes. x-ray machines. surgical
instruments. and spectrometers.
14l "General purpose equipment" means
equipment which is usable for other than
research. medical. scientific. or technical
activities. whether or not special
modifications are needed to make them
suitable for a particular purpose. Examples of
general purpose equipment include office
equipment and furnishings. air conditioning
equipment. reproduction and printing
equipment. motor vehicles. and automatic
data processing equipment.
b. (1) Capital expenditures for general
purpose equipment are unalluwable as a
direct cost except with the prior approval of
the awarding agency.
(2) Capital expenditures for special purpose
equipment are allowable as direct costs
provided that items with a unit cost of $1000
or more have the prior approval of the
awarding agency.
c. Capital expenditures for land or
buildings are unallowable as a direct cost
except with the prior approval of the
awarding agency.
d. Capital expenditures for improvements
to land. buildings. or equipment which
materially increase their value or useful life
are unallowable as a direct cost except with
the prior approval of the awarding agency.
e. Equipment and other capital
expenditures are unallowable as indirect
costs. However. see paragraph 9 for
allowability of use allowances or
depreciation on buildings. capital
improvements. and equipment. Also. see
paragraph 42 for allowability of rental costs
for land. buildings. and equipment.
14. Fines and penalties. Costs of fines and
'penalties resulting from violations of. or
failure of the organization to comply with
Federal. State. and local laws and regulations
are unallawable except when incurred as a
result of compliance with specific provisions
of an award or instructions in writing from
the awarding agency.
lS. Fringe benefits. See paragraph 6. f.
16. Idle facilities and idle capacity.
a. As used in this paragraph the folluwing
terms have the meanings set forth below:
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Federal Register I Vol. 45. No. 132 I Tuesday, July 8, 1980 I Notices
(1) "Facilities" means land and buildings or
any portion thercof. equipment individually
or collectively, or any othcr tangiple capital
assel. wherever located. and whether owned
or leascd by the organization.
(2) "Idle facilities" means completely
unused facilities thai are excess to the
organization's current necds.
(3) "Idle capacity" means the unused
capacity of partially used facilities. It is the
diffcrence between thai which a facility
could achievc under 100 per cent operating
timc on a one-shift basis less operating
interruptions resulting from time lost for
repairs. setups. unsatisfactory materials. and
other normal delays. and the extent to which
the facility was actually used to meet
demands during the accounting period. A
mullishift basis may be used if it can be
shown that this amount of usage could
normally be expccted for the type of facility
involved.
(4) "Costs of idle facilities or idlc capacity"
means costs such as maintenance. repair.
housing. rent. and other related costs: e.g.,
property taxes. insurance. and depreciation
or use allowances.
b. The costs of idle facilities are
unallowable except to the extent that:
(1) They are necessary to meetlluctuations
in workload; or
(2) Although not necessary to meet
Iluctuations in workload, they were
necessary when acquired and are now idle
because of changes in program requirements.
efforts to achieve more economical
operations. reorganization. termination. or
other causes which could not have been
reasonably foreseen. Under the exception
stated in this subparagraph. costs of idle
facilities are allowable for a reasonable
period of time. ordinarily not to exceed one
year. depending upon the initiative taken 10
use. lease. or dispose of such facilities (but
see paragraphs 47.0. and d.).
c. The costs of idle capacity are normal
costs of doing business and are a factor in the
normallluctuations of usage or indirect cost
rates from period to period. Such costs are
allowable. provided the capacity is
reasonably anticipated to be necessary or
was originally reasonable and is not subject
to reduction or elimination by sublelling.
renting. or sale. in accordance with sound
business. economics, or security practices.
Widespread idle capacity throughout an
entire facility or among a group of assets
having substantially the same function may
be idle facilities.
17. Independent research and development
[Reserved].
18. Insurance and indemnification.
a. Insurance includes insurance which the
organization is required to carry. or which is
approved. under the terms of the award and
any other insurance which the organization
maintains in connection with the general
conduct of its operations. This paragraph
dotos not apply to insurance which represents
fringe benefits fur employees (see paragraph
6.f. and 6.g.1211.
111 Costs of insurancto required or
approvcd. and maintained. pursuant to the
award are allowable.
(2) Costs of other insurance maintained by
the of!~anization in connection with the
general conduct of its operations are
allowable subject to the following limitations.
(a) Types and extent of coverage shall be
in accordance with sound business practice
and the rates and premiums shall be
reasonable under the circumstances.
lb) Costs allowed for business interruption
or other similar insurance shall be limited to
exclude coverage of management fees.
[c) Costs of insurance or of any provisions
for a reserve covering the risk of loss or
damage to Government property are
allowable only to the extent that the
organization is liable for such loss or damage.
(d) Provisions for a reserve under a .self-
insurance program are allowable to the
extent that types of coverage, extent of
coverage. rates. and premiums would have
been allowed had insurance been purchased
to cover the risks. However. provision for
known or reasonably estimated self-insured
liabilities. which do not become payable for
more than one year after the provision is
made shall not exceed the present value of
the liability.
(e) Costs of insurance on the lives of
trustees, officers. or other employees holding
positions of similar responsibilities are
allowable only to the extent that the
il)surance represents additional
compensation (see paragraph 6). The cost of
such insurance when the org,!nization is
identified as the beneficiary is unallowable.
(3) Actual losses which could have been
covered by permissible insurance lthrough
the purchase of insurance or a self-insurance
program) are unallowable unless expressly
provided for in the award. except:
(al Costs incurred because of losses not
covered under nominal deductible insurance
coverage provided in keeping with sound
business practice are allowable.
lb) Minor losses nol covered by'insurance.
such as spoilage. breakage. and
disappearance of supplies, which occur in the
ordinary course of operations. are allowable.
b. Indemnification includes securing the
organization against liabilities to third
persons and any other loss or damage. not
compensated by insurance or otherwise. The
Government is obligated to indemnify the
organization only to the extent expressly
provided in the award.
19. Interest. fund raising, and investment
management costs.
a. Costs incurred for interest on borrowed
capital or temporary use of endowment
funds. however represented, are unallowable,
b. Costs of organized fund raising.
including financial campaigns. endowment
drives. solicitation of gifts and bequests. and
similar expenses incurred solely to raise
capital or obtain contributions are
unallowable.
c. Costs of investme'1t counsel and staff
and similar expenses incurred solely to
enhance income from investments are
unallowable.
d. Fund raising and investment activities'
shall be allocated an appropriate share of
indirect costs under the conditions described
in paragraph B of Attachment A.
20. Labor relations costs. Costs incurred in
maintaining satisfactory relations between
the organization and its employees. including
costs of labor management committees.
employee publications. and other related
activities are allowable.
21. Losses on other awards. Any excess of
costs over income on any award is
unallowable as a cost of any other award.
This includes. but is not limited 10. the
organization's contribuled portion by reason
of cost sharing agreemcnts or any
underrecoveries through negotia tion of lump
sums for, or ceilings on. indirect costs.
22. Maintenance and repair costs. Costs
incurred for necessary maintenance" repair.
or upkeep of buildings and equipment
(including Government property unless
otherwise provided for) which neither add to
the permancnt value of the property nor
appreciably prolong its intended life. but
keep it in an efficient operating con:Jilion. are
allowable. Cosls incurred for il"'1prc.",nwnts
which add to the permanent value of the
buildings and equipment or appreciably
prolong their intended life shall be treated as
capital expenditures (see paragraph 13).
23. Materials and supplies, The costs of
materials and supplies necessary to carry out
an award are allowable. Such costs should be
charged at their actual prices after deducting
all cash discounls. trade discounls. rebales.
and allowances received by Ilw organization.
Withdrawals frum gcneral stures or
stockrooms should be charged al cost under
any recognized method of pricing
consisttontly applied. Incoming transportation
charges may be a proper part of ma terial
cost. Materials and supplies charged as a
direct cost should include only the materials
and supplies actually used for the
performance of the contract or grant. and due
credit should be given for any excess
materials or supplies retained. or returned to
vendors.
24. Meetings. conferences.
a. Costs associated with the conduct of
meetings and conferences. include the cosl of
renting facilities. meals. speakers' fees. and
the like. But see paragraph 12. Entertainment
costs. and paragraph 29. Participant support
costs.
b. To the extent that these custs are
identifiable with a particular cost objective.
they should be charged to that objective. (See
paragraph B. of Attachment A.) These costs
are allowable provided that they meet the
general tests of allowability. shown in
Allachment A to this Circular.
c. Costs of meetings and conferences held
to conduct the general administration of the
organization are allowable.
25. Memberships, subSCriptions. and
professional activity casts.
a. Costs of the organization's membership
in civic. business. technical and professional
organizations are allowable.
b. Costs of the organization's subscriptions
to civic. business. profeSSional. and technical
periodicals are allowable.
c. Costs of attendance at meetings and
conferences sponsored by others when the
primary purpose is the dissemination of
technical information. are allowable. This
includes costs of meals. transportatiun. and
other items incidental to such attendance.
26. Organization costs. Expcnditures. such
as incorporation fees. brokers' fees, fees tu
promoters. organizers or management
consultants. allorneys. accountants. or
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46031
investment counselors. whether or not
employees of the organization. in connection
with eslablishment or reorganization of an
organization. are unallowable except with
prior approval of the awarding agency.
27. Overtime. extra-pay shift. and
multishift premiums. Premiums for overtime,
extra-pay shifts. and multi shift work are
allowable only with the prior approval of the
awarding agency except:
a. When necessary to cope with
emergencies. such as those resulting from
accidents. natural disasters. breakdowns of
equipment. or occasional operaliollal
bottlcnecks of a sporadic nature.
b. Whcn employees are performing indirect
functions such as administration.
maintenance. or accounting.
c. In the performance of tests. laboratory
procedures, or other similar operations which
arc conlinuous in naturc and cannot
reasonably be inlerrupted or olherwise
completcu.
d. Whcn lower overall cost to the
Governmenl will result.
28. Poge chorges ill professional journals.
Page charges for professional journal
publications are allowable as a necessary
part of rcsearch costs. when;:
a. The research papers rcport work
supported by the Governmcnt: and
b. The charges are levieu impartially on all
research papers publishcd by the journal.
whether or not by Government-sponsored
authors,
29. Porlu;ipanl support costs. Participant
support costs are direct costs for items such
as stipends or subsistence allowances. travel
allowances, and registration fees paid to or
on behalf of participants or trainees (but not
employees) in connection with meetings.
conferences. symposia. or training projects.
Thesc costs are allowable with the prior
approval of the awarding agency.
30. Potent costs.
a. Costs of Ii) preparing disclosures.
rcports. and other documents required by the
award and of searching the art to the extend
neceSSiJry to make such disclosures. (ii)
preparing documents and any other patent
costs in connection with the filing and
proseculinn of a Uniteu states patent
application where title or royalty-free license
is required by the Government to be
conveyed to the Government. and (iii) general
counseling services relating to patent and
copyright mailers. such as advice on palent
and copyright laws. regulations. clauses. and
. employee agreemenls are allowable (but see
paragruph 34),
b. Cost of prepiJring disclosures. reports.
and other documents and of searching the art
to Ihe extent necessary to make disclosures.
if not required by the award. are
unallowable, Costs in connection with (i)
filing and prosccuting any foreign patent
application. or Iii) any United States patent
application. where Ihe award does not
fl'quire conveying title or a royalty-free
licensl' In the (;overnment. are unallowable
(also sec p'nagriJph '!:II,
:11. P"lIsi"ll plulls. See piJragraph 6. g.
3~, /'/11111 sl'('ul'll)' (;(}sls. Necessary
expenSl's incurred to comply with
Cnvernnll'nt security requirements or for
facilities protection. incloding wages.
uniforms; and equipment of personnel are
allowa ble.
33. Preaward costs. Preaward costs are
those incurred prior to the effective date of
Iheaward directly pursuant to the
negotiation and in anticipation of the award
where such costs is necessary to comply with
the proposed delivery schedule or period of
performance. Such costs are allowable only
10 the extent that they would have been
allowable if incurred after the date of the
award and only with the wrillen approval of
the awarding agency.
34. Professional service costs.
a. Costs of professional and consultant
services rendered by persons who are
members of a particular profession or possess
a special skill. and who are not officers or
employees of the organization. are allowable.
subject to b. c, and d. of this paragraph when
reasonable in relation to the services
rendered and when not contingent upon
recovery of the costs from the Government.
b. In determing the allowability of costs in
a particular case. no single factor or any
special combination of factors is necessarily
determinative. However, the following
factors are relevant:
(1) The nature and scope of the service
rendered in relation to the service required.
(2) The necessity of contracting for the
service. considering the organization's
capability in the particular area.
(3) The past pattern of such costs.
particularly in the years prior to Government
awards.
(4) The impact of Government awards on
the organization's business (Le.. what new
problems have arisen).
(5) Whether the proportion of Government
work to the organization's total business is
such as to influence the organization in favor
of incurring the cost, particularly where the
services rendered are not of a continuing
nature and have little relationship to work
under Government grants and contracts.
(6) Whether the service can be performed
more economically by direct employment
rather than contracting.
(7) The qualifications of the individual or
concern rendering the service and the
customary fees charged, especially on non-
Government awards.
(8) Adequacy of the contractual agreement
for the service I e.g.. description of the service,
estimate of time required. rate of
compensation. and termination provisions).
c. In addition to the factors in paragraph b
above, retainer fees to be allowable must be
supported by evidence of bona fide services
available or rendered.
d. Cost of legal. accounting. and consulting
services. and related costs incurred in
connection with .defense of antitrust suits.
and the prosecution of claims against the
Government. are unallowable. Costs of legal.
accounting and consulting services. and
related costs. incurred in connection with
patent infringement litigation. organization
and reorganization. are unallowable unless
otherwise provided for. in the award lbut see
paragraph 47e).
35. Profits and losses on disposition of
depreciable property or other capital assets.
a. (1) Gains and losses on sale. retirement.
or other disposition of depreciable property
shall be included in the year in which they
occur as credits or charges to cost grouping(s)
in which the depreciation applicable to such
property was included. The amount of the
gain or loss 10 be included as a credit or
charge to the appropriate cost grouping(s)
shall be the difference between the amount
rcalized on the property and the
undepreciated basis of the property.
(2) Gains and losses on the disposition of
depreciable property shall not be recognized
as a separate credit or char'ge under the
following conditions.
la) The gain or loss is processed through a
depreciation reserve account and is reflected
in the depreciation allowable under
paragraph 9.
(b) The property is given in exchange as
pari of the purchase price of a similar item
and the gain or loss is taken into account in
determining the depreciation cost basis of the
new item.
(c) A loss results from the failure to
mainlain permissible insurance. except as
otherwise provided in paragraph 1/l.a.(3).
ld) Compensation for the use of the
property was provided through use
allowances in lieu of depreciation in
accordance with paragraph 9.
(e) Gains and losses arising from mass or
extraordinary sales. retirements, or other
dispositions shall be considered on a case-
by-case basis.
'b. Gains or losses of any nalure arising
from the sale or exchange of property other
than the property covered in paragraph a.
above shall be excluded in computing award
costs.
36. Public information service costs.
a. Public information service costs include
the cost associated with pamphlets. news
releases. and other forms of information
services. Such costs are normally incurred to:
(1) Inform or instruct individuals. groups. or
the general public.
(2) Interest individuals or groups in
participating in a service program of thc
organization.
(3) Disseminate the results of sponsored
and non sponsored activities.
b. Public information service costs are
allowable as direct costs with the prior
approval of the awarding agency. Such costs
are unallowable as indirect costs.
37. Publication and printing casts.
a. Publication costs include the costs Of
printing (including the processes of
composition. plate-making. press 'work.
binding. and the end products produced by
such processes). distribution. promotion.
mailing. and general handling.
b. If these costs are not identifiable with a
particular cost ohjecti\C. tllPY should be
allocaled as indirect costs to all benefiting
activities of the organization.
c. Publication and printing costs are
. unallowable as direct costs except with the
prior approval of till! awarding agcncy.
d. The cost of pagl~ charge~ in journals is
addressed paragraph 211
38 Reurrangpmp.nl und ultl'mtion costs.
Cosls inctJrreJ for ordinary or normal
rearrangement and alteration of facilities are
allowahle. Special arrangeml'nt and
alleration costs illl:UITl,J specifically for the
project are allowahle with thl! prior approval
of the awarding agency,
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--
39 Reconversion costs. Costs incurred in
the restoration or rehabilitation of the
organization's facilities to approximately the
same condition existing immediately prior to
commencement of Governmenl awards. fair
wear and tear excepted. are allowable.
40. Recruiting costs. The following
recruiting costs are allowable: cost of "help
wanted" advertiSing. operating costs of an
employment office. costs of operating an
educational testing program. travel expenses
including food and lodging of employees
while engaged in recruiting personnel. travel
costs of applicants for interviews for
prospective employment. and relocation costs
incurred incident to recruitmenl of new
employees lsee paragraph 41c). Where the
organization uses employment agencies.
costs not in excess of standard commercial
rates for such services are allowable.
41. Relocation costs.
a. Relocation cosls are costs incident to the
permanent change of duly assignment (for an
indefinite period or for a stated period of not
less than 12 months) of an existing employee
or upon recruitment of a new employee.
Relocation costs are allowable. subject to the
limitation described in paragraphs b. c. and d.
below. provided that:
(1) The move is for the benefit of the
employer.
(2) Reimbursement to the employee is in
accordance with an established written
policy consistently followed by the employer.
(3) The reimbursement does not exceed the
employee's actual (or reasonably estimated)
expenses.
b. Allowable relocation costs for current
employees are limited to the following:
(1) The costs of transporta tion of the
employee. members of his immediate family
and his household. and personal effects to the
new location.
(2) The costs of finding a new home. such
as advance trips by employees and spouses
to locate living quarters and temporary
lodging during the transition period. up to a
maximum period of 30 days. including
advance trip time.
(3) Closing costs. such as brokerage. legal.
and appraisal fees. incident to the disposition
of the employee's former home. These costs,
together with those described in (4) below.
are limited to 6 per cent of the sales price of
the employee's former home.
(4) The continuing costs of ownership of
the vacant former home after the settlement
or lease date of the employee's new
permanent home, such as maintenance of
buildings and grounds lexclusive of fixing up
expenses). utilities, taxes. and property
insurance.
(5) Other necessary and reasonable
expenses normally incident to relocation.
such as the costs of cancelling an unexpired
lease. disconnecting and reinstalling
household appliances. and purchasing
insurance against loss of or damages to
pl'rsllnal property. The cost of cancelling an
onexpired lease is limited to three times the
monthly Tental.
c. Allowable relocation costs for new
employees are limited to those described in
(1) and 121 of paragraph b, above. When
relocation costs incurred incidl!nt to the
recruitnwnt of new cmployees have been
allowed either as a direct or indirect cost and
the employee resigns for reasons within his
control within 12 months after hire. the
organization shall refund or credit the
Government for its share of the cost.
However. the costs of travel to an overseas
location shall be considered travel costs in
accordance with paragraph 50 and not
relocation costs for the purpose of this
paragraph if dependents are not permitted at
the location for any reason and the costs do
not include costs of transporting household
goods.
d. The following costs related to relocation
are unallowable:
(1) Fees and other costs associated with
acquiring a new, home.
(2) A loss on the sale of a former home.
(3) Continuing mortgage principal and
interest payments on a home being sold.
(4) Income taxes paid by an employee
related to reimbursed relocation costs.
42. Rental costs.
a. Subject to the limitations described in
paragraphs b. through d, of this paragraph.
rental costs are allowable to the extent that
the rates are reasonable in light of such
factors as: rental costs of comparable
property. if any; market conditions in the
area; alternatives available; and the type, life
expectancy. condition, and value of the
property leased.
b. Rental costs under sale and leaseback
arrangements are allowable only up to the
amount that would be allowed had the
organization continued to own the property.
c. Rental costs under less-than-length
leases are allowable only up to the amount
that would be allowed had title to the
property vested in the organization. For this
purpose. a less-than-arms-Iength lease is one
under which one party to the lease agreement
is able to control or substantially influence
the actions of the other. Such leases include.
but are not limited to those between (i)
divisions of an organization; (ii) organizations
under common control through common
officers. directors, or members; and (iii) an
organization and a director. trustee. officer.
or key employee of the organization or his
immediate family either directly or through
corporations. trusts. or similar arrangements
in which they hold a controlling interest.
d. Rental costs under leases which create a
material equity in the leased property are
allowable only up to the amount that would
be allowed had the organization purchased
the property on the dale the lease agreement
was executed; e.g.. depreciation or use
allowances. maintenance. taxes. insurance
but excluding interest expense and other
unallowable costs. For this purpose. a
material equity in the property exists if the
lease in noncancelable or is cancelable only
upon the occurrence of some remote
contingency and has one or more of the
following characteristics:
(1) The organization has the right to
purchase the property for a price which at the
beginning of the lease appears to be
substantially less than the probable fair
market value at the time it is permitted to
purchase the property (commonly called a
lease with a bargain purchase option);
(2) Title to the property passes to the
organization at some time during or after the
lease period;
(3) The term of the lease (initial term plus
periods covered by bargain renewal options.
if any) is equal to 75 per cent or more of the
economic life of the leased property; Le.. the
period the property is expected to be
economically usable by one or more users.
43. Royalties and other costs for use of
patents and copyrights.
a. Royalties on a patentur copyright or
amortization of the cost of acquiring by
purchase a copyright. patent. or rights
thereto. necessary for the proper performance
of the award are allowable unless: -
(1) The Government has a license or the
right to free use of the patent or copyright.
(2) The patent or copyright has been
adjudicated to be invalid. or has been
administratively determined to be invalid.
(3) The patent or copyright is considered to
be unenforceable.
(4) The patent or copyright is expired.
b. Special care should be exercised in
determining reasonableness where the
royalties may have been arrived al as a result
of less then arm's length bargaining: e.g,:
(1) Royalties paid to persons. including
corporations. affiliated with the organization.
(2) Royalties paid to unaffiliated parties.
including corporations. under an agreement
entered into in contemplation that a
Government award would be made.
(3) Royalties paid under an agreement
entered into after an award is made to an
organization.
c. In any case involving a patent or
copyright formerly owned by.the
organization. the amount of royalty allowed
should not exceed the cost which would have
been allowed had the organization retained
title thereto.
44. Severance pay.
a. Severance pay. also commonly referred
to as dismissal wages. is a payment in
addition to regular salaries and wages, by
organizations 10 workers whose employment
is being terminated. Costs of severance pay
are allowable only to the extent that in each
case. it is required by [i) law. (ii) employer-
employee agreement. liii) established policy
that constitutes. in effect. an implied
agreement on the organization's part. or Ii v)
circumstances of the particular employment.
b. Costs of severance payments are divided
into two categories as follows:
(1) Actual normal turnover severance
payments shall be allocated to all activities;
or. where the organization provides for a
reserve for normal severances such method
will be acceptable if the charge to current
operations is reasonable in light of payments
actually made for normal severances over a
representative past period. and if amounts
charged are allocated to all activities of the
organization.
(2) Abnormal or mass severance pay is of
such a conjectural nature that measurement
of costs by means of an accrual will not
achieve equity to both parties. Thus. accruals
for this purpose are not allowable. However.
the Government recognizes its obligation to
participate to the extent of its fair share. in
any specific payment. Thus. allowabilily will
be considered on a case-by-case basis ill the
event of occurrence.
45. Specialized service facilities.
a. The costs of services provided by highly
complex or specialized facilities operated by
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Federal Register I Vol. 45, No. 132 I Tuesday. July 8. 1980 I Notices
the organization. such as electronic
computers and wind tunnels. are allowable
provided the charges for the services meet
the conditions of either b. or c. of this
paragraph and. in addition. take into accounl
any items of income or Federal financing that
qualify as applicable credits under paragraph
A.5. of Attachment A.
b. The costs of such services. when
material. must be charged directly to
applicable awards based on actual usage of
the services on the basis of a schedule of
rates or established methodology that (i) does
not discriminate against federally supported
activities of the organization. including usage
by Ihe organization for internal purposes. and
(ii) is designed 10 recover only the aggregate
costs of the services. The costs of each
service shall consist normally of both its
direct costs and its allocable share of all
indirect costs. Advance agreements pursuant
to paragraph A.6, of Attachment A are
particularly important in this situation.
c. Where the costs incurred for a service
are not material. they may be allocated as
indirecl costs.
46. Taxes.
a. In general. taxes which the organization
is required to pay and which are paid or
accrued in accordance with generally
accepted accounting principles. and
payments made to local governments in lieu
of taxes which are commcnsurate with the
local government services received are
allowable. except for (i) taxes from which
exemptions are available to the organization
directly or which are available to the
organization based on an exemption afforded
the Government and in the latter case when
the awarding agency makes available the
necessary exemption certificates, Iii) special
assessments on land which represent capital
improvements. and (iii) Federal income taxes.
b. Any refund of taxes. and any payment to
the organization of interest thereon. which
were allowed as award costs. will be
credited either as a cost reduction or cash
refund. as appropria te, to the Government.
47. Termination costs. Termination of
awards generally give rise to the incurrence
of costs. or the need for special treatment of
costs. which would not have arisen had the
award not been terminated. Cost principles
covering these items are set forth below.
They are to be uscd in conjunction with the
other provisions of this Circular in
termination sitoations.
a. Commoll it{!/lIs. The cost of items
reasonably usable on the organization's other
work shall not be allowable unless the
organization submits evidence that it would
not retain such items at cosl without
sustaining a loss, In deciding whcther such
items are reasonably osable on other work of
the organization. the awarding agency should
consider the organization's plans and orders
for current and scheduled activity.
Contemporaneous purchases of common
items by the organization shall be regarded
as evidence that such items are reasonably
usable on the organization's other work. Any
acceptance of common items as allocable to
the terminated portion of the award shall be
limited to the extent that the 4uantities of
such items on hand. in transit. and on order
are in excess of thl' reasonahle quantitative
re4uirenwnts of other work.
b. Costs continuing after termination. If in
a particular case, despite all reasonable
efforts by the organization. certain costs
cannot be discontinued immediately after the
effective date of termination. such costs are
generally allowable within the limitations set
forth in this Circular. except that any such
costs continuing after termination due to the
negligent or willful" failure of the organization
to discontinue such costs shall be
unallowable.
c. Loss of useful value. Loss of useful value
of special tooling. machinery and equipment
which was not charged to the award as a
capital expenditure is generally allowable if:
(1) Such special tooling. machinery, or
equipment is not reasonably capable of use in
the other work of Ihe organization.
(2) The inlerest of the Government is
protected by transfer of title or by other
means deemed appropriate by the awarding
agency:
d. Rental costs. Rental costs under
unexpired leases are generally allowable
where clearly shown to have been
reasonably necessary for the performance of
the terminated award less the residual value
of such leases, if (i) the amount of such rental
claimed does not exceed the reasonable use
value of the property leased for the period of
the award and such further period as may be
reasonable. and (ii) the organization makes
all reasonable efforls to terminate. assign.
settle. or otherwise reduce the cost of such
lease. There also may be included the cost of
alterations of such leased property. provided
such alterations were necessary for the
performance of the award. and of reasonable
restoration required by the provisions of the
lease.
e. Seulement expenses. Settlement
expenses including Ihe following are
generally allowable:
(1) Accounting. legal. clerical. and similar
costs reasonably necessary for:
(a) The preparation and presentation to
awarding agency of settlement claims and
supporting data with respect to the
terminated portion of the award. unless the
termination is for default. (See paragraph 4.a.
of Attachment L. OMB Circular No. A-lID;
and
(b) The termination and settlement of
subawards.
(2) Reasonable costs for the storage.
transportation. protection. and disposition of
property provided by the Government or
acquired or produced for the award; except
when grantees are reimbursed for disposals
at a predetermined amount in accordance
with Attachment N of OMB Circular A-lID.
(3) Indirect costs related to salaries and
wages incurred as settlement expenses in
subparagraphs (1) and (2) of this paragraph.
Normally. such indirect costs shall be limited
to fringe benefits. occupancy cost. and
immediate supervision.
f. Claims under subawards. Claims under
subawards. including the allocable portion of
claims which are common to the award. and
to other work of the organization are
generally allowable. An appropriate share of
the organization's indirect expense may be
allocated to the amount of settlements with
subcontractor/subgrantees: provided that the
amount allocated is otherwise consistent
46033
with the basic guidelines contained in
Attachment A. The indirect expense so
allocated shall exclude the same and similar
costs claimed directly or indirectly as
settlement expenses.
48. Training and education costs.
a. Costs of preparation and maintenance of
a program of instruction including but not
limited to on-the-job. classroom. and
apprenticeship training. designed to increase
the vocational effectiveness of employees.
including training materials. textbooks.
salaries or wages of trainees (excluding
overtime compensation which might arise
therefrom). and (i) salaries of Ihe director of
training and staff when the training program
is conducted by the organization; or (ii)
tuition and fees when the training is in an
institution not operated by the organizution.
are allowable.
b. Costs of part-time edocation, at an
undergraduate or postgraduate college level.
including that provided at the organi,.ation's
own facilities, are ullowable only wlwn the
course or degree pursued is relative to the
field in which the employee is now working
or may reasonably be expected to work, and
are limited to:
(1) Training materials.
(2) Textbooks.
(3) Fees charges by the educational
institution.
(4) Tuition charged by the educationul
institution, or in lieu of tuition. instructors'
salaries and the re1a ted share of indirect
costs of the educational institution to the
extent that the sum thereof is not in excess of
the tuition which would have ben paid to the
participating educational institution.
(5) Salaries and related costs of instructors
who are employees of the organization.
(6) Straight-time compensation of each
employee for time spent attending classes
during working hours not in excess of 156 .
hours per year and only to the extf'ntthat
circumstances do not permit the operation of
classes or allendance at classes after regular
working hours: otherwise such compensation
is unallowable.
c. Costs of tuition, fees. training materials.
and textbooks (but not subsisten{:e, salary. or
any other emoluments) in connection with
full-time education. including Ihat provided at
the organization's own facilities. at a
postgraduate (but not undergraduate) college
level. are allowable only when the course or
degree pursued is related to the field in which
the employee is now working or may
reasonably be expected to work. and only
where the costs receive the prior approval of
the awarding agency. Such costs are limited
to the costs attributable to a totul period not
to exceed one school year for each employee
so trained. In unusual cases the period may
be extended.
d. Costs of allendance of up to 16 weeks
per employee per year a t specialized
programs specifically designed to enhance
the effectiveness of execotives or maoagers
or to prepare employees for such positions
are allowable. Such costs include enrollment
fees. training materials. textbooks and
relaled charges. employees' salari.,s.
subsistence. and travel. Costs allowuhle
under this paragraph do not include those for
courses thai are part of a degfl,e-oriented
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Federal Register I Vol. 45, No. 132 I Tuesday. July 8. 1980 I Notices
curriculum. which arc allowable only to the
extent set forth in b. and c. above.
e. Maintenance expense. and normal
depreciation or fair rental. on facilities
owned or leased by the organization for
training purposes are allowable to the extent
set forth in paragraphs 9. 22. and 42.
f. Contributions or donations 10
educational or training institution~. including
the donation of facilities or other propcrties.
and scholarships or fellowships. ure
unallowable.
g. Training and education costs in excess of
those otherwise allowable under paragraphs
b. and c. of this paragraph may be allowed
with prior approval of the awarding agency.
To be considcred for upproval. thc
organization must demonstrale lhat such
costs are consistcntly incurred pursuant 10 an
establishcd training and education program.
and that' the course or degrec pursucd is
relative to the ficld in which the cmployee is
now working or may reasonably be expected
to work.
49. Trunspurtation casts. Transporta tion
costs includc freight. exprcss. cartage. and
postagc chargcs relating cithcr to goods
purchased. in proccss. or delivcred. These
costs are allowable. When such costs can
readily be identified with the itcms involved.
they may be directly chargcd as
transportation costs or added to th,! cost of
such items (see paragraph 23). Wherc
identification with the m<lterials received
cannot readily be made. transportation costs
may be charged to Ihe appropriate indirect
cost accounts if the organization follows a
consistent. equit<lble procedure in thi~
respect.
50. Travel costs.
<I'. Travel co~ts are the expenses for
transportation. lodging, subsistence. and
related items incurred by employees who are
in travel status on official business of the
organization. Travel costs are allowable
subjcct to paragraphs b. through e. below.
whim they are directly allribulable 10 specific
work under <In award or are incurred in the
normal course of administration of the
organization.
b. Such costs may be chargcd on an actual
basis. on a per diem or mileage basis in lieu
of actual costs incurred. or on a combination
of the two, provided the method used results
in chargcs con~istenl with those normally
allowed by the organization in its regular
operations.
c. The difference in cost between first-class
air accommodations and less than first-class
air accommodations is unallowable except
when less than first-class air
accommodations are not reasonably
available to meet necessary mission
requirements. such as where less than first-
class accommodations would (i) require
circuitous routing. (ii) require travel during
unreasonable hours. (iii) greally increase the
duration of the night. (iv) result in additional
costs which would offset the transportation
savings. or (v) offer accommodations which
are not rea~onably adequate for the medical
net~ds of thc traveler.
d. Necessary and reasonable costs of
Llluily muvenH,nls and personnel movements
of a special or lIlaSS nature are allowable.
pur~uant to paragraphs 40 and 41. subject 10
allocation on the basis of work or time period
benefited when appropriate. Advance
agreements are particularly important.
e. Direct charges for foreign travel costs are
allowable only when the travel has received
prior approval of the awarding agency. Each
separate foreign trip must be approved. For
purposes of this provision. foreign travel is
defined as any travel outside of Canada and
the United States and its territories and
possessions. However. for an organization
located in foreign countries. the term "foreign
travel" means travel outside that country.
ICircular No. A-122]
Allachment C
Nonprofit Organizations not Subject to this
Circular
Aerospace Corporation. EI Segundo.
California
Argonne Univcrsities Association, Chicago.
Illinois
Associated Universities. Incorporated.
Washington. D.C.
Associated Universities for Research and
Astronomy. Tucson. Arizona
Atomic Casualty Commission. Washington.
D.C.
Battelle Memorial Institute. Headquartered in
Columbus. Ohio
Brookhaven National Laboratory, Upton.
New York
Center for Energy and Environmental
Research (CEER). (University of Puerto
Rico) Commonwealth of Puerto Rico
Charles Stark Draper Laboratory.
Incorporated, Cambridge. Massachusells
Comparative Animal Research Laboratory
[CARL)
(University of Tennessee). Oak Ridge,
Tennessee
Environmental Institute of Michigan. Ann
Arbor, Michigan
Hanford Environmental Health Foundation.
Richland. Washington
IIT Research Institute. Chicago. Illinois
Institute for Dcfense Analysis. Arlington.
Virginia
Institute of Gas Technology. Chicago. Illinois
Midwest Research Institute. Headquartered
in Kansas City, Missouri
Mitre Corporation. Bedford, Massachusells
Montana Energy Research and "Development
Institute. Inc.. (MERDI). Bulle. Montana
National Radiological Astronomy
Observatory. Green Bank, West Virginia
Oak Ridge Associated Universities. Oak
Ridge. Tenncssee
Project Management Corporation, Oak Ridge.
Tennessee
Rand Corporation. Santa Monica. California
Research Triangle Institute. Research
Triangle Park. North Carolina
Riverside Research Institute. New York. New
York
Sandia Corporation. Albuquerque. New
Mexico
Southern Research Institute. Birmingham.
Alabama
Southwest Research Institute, San Antonio.
Texas '
SRI International. Menlo Park. California
Syracuse Research Corporation. Syracuse.
New York
Universities Research Association.
Incorporated (National Acceleration Lab),
Argonne, l1Iinois
Universities Corporation for Atmospheric
Research. Boulder. Colorado
Nonprofit Insurance Companies such as Blue
Cross and Blue Shield Organizations
Other nonprofit organizations as negotiated
with awarding agencies.
IFR Doc. 80-20270 Filed 7-7_: 8:45 oml
alLLING CODE 311lHJ1-M
[Note: This reprint incorporates' corrections
published at 46 FR 17185, Tuesday. March 17,
1981.]