AGREEMENT FUNDED UNDER THE CLEARWATER COMMUNITY DEVELOPMENT BLOCK GRANT PROGRAM (2)
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AGREEMENT FOR PUBLIC SERVICES FUNDED
UNDER THE CLEARWATER COMMUNITY DEVELOPMENT
BLOCK GRANT PROGRAM
PART I
This
jd-
agreement is entered into this
day of OL 7~O ~
198~, by the CITY OF CLEARWATER, FLORIDA, a political subdivision of the
State of Florida, hereinafter referred to as the "CITY", and ERVIN'S ALL
AMERICAN YOUTH CLUB, INC., COMMUNITY SERVICES, INC., hereinafter referred
to as the "PSA", a non-profit corporation organized and existing under the
laws of the State of Florida, having its principal office in the City of
Clearwater, 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 1974, 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 youth club program of
direct benefit to low and moderate income residents within the Community
Development Program target areas of Clearwater, hereinafter referred 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
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any details or provisions of thi~ 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 which 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 chaRges 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 assure 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
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 and 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 0f 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.
following:
Cause shall include the
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
continuation.
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 in 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 the 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 funding and/or private funding for such project.
The PSA
will not 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 Housing and Urban Development Act of 1968, as amended and the HUD
regulations issued pursuant thereto, attached hereto as AppendixE.
22. The PSA will comply with Equal Employment Opportunities
Executive Order 11246, as amended, attached 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;
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
IN WITNESS WHEREOF, the parties hereto have caused this
ofl this
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agr~ement
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Agreement.
to be executed as of the day and year first above written.
ZSES'
ERVINS
By:
Attest:
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Couflt;,x'signed:
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Attest:
Approved as to form andv
correctness:
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ERVIN'S ALL AMERICAN YOUTH CLUB INC.
PURPOSE
PROVIDE A CLUB FOR DISADVANTAGED YOUTH OF THE UPPER PINELLAS COUNTY
AREA, EMPHASIZING THE DEVELOPMENT OF SCHOLASTIC ACHIEVEMENT, SOCIAL
SKILLS, AND PHYSICAL ABILITIES.
THIS EFFORT WILL HELP PREVENT JUVENILE DELINQUENCY, REDUCE TRUANCY,
AND ENHANCE EMPLOYABILITY. THIS, IN TURN, WILL LEAD TO THE DEVELO
MENT OF BETTER CITIZENS FOR THE FUTURE.
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ERVIN'S ALL AMERICAN YOUTH CLUB INC.
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OBJECTIVES AND METHODS
1.
Insti II in these youths
of education and health
ment.
an understanding of the combined importance
(sports, exercise, hygiene) in their c1evelop-
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METHOD !
Organize an athletic program consisting of, but not limited t ,
A.A.U. boxing, gymnastics, track and field, dance, weight lif,ing,
drill team and bicycling. The program would be for youths wh6
norn~lly would not have the opportunity to participate in suc~
activities because of income or other factors. Ongoing parti~i-
pat ion in these programs would be I inked to scholastic achievdment
and school attendance goals.
2. Assist students having specific academic problems.
METHOD
Establ ish a tutorial program by working with parents and schoql
officials. PROJECT STUDY (see attached), devised by the Pinel;las
County School Administration for this youth club, will be the!
base point for this effort.
3. Assist students having specific behavioral problems.
METHOD
The process wi 1 I include a self governing Youth Council which
wi I I establ ish its own rules and self discipline (including a
weekly review of any infractions). A Parents Advisory Board
and the club's Executive Director wil I oversee the activities
of this Youth Council.
4. Seek opportunities for part time and summer employment.
METHOD
Work closely with:
'.
o Private Industry (i .e., Clearwater Chamber of Commerce,
Pinellas County Business and Industry Counci 1)
o Local Governments (i.e., City of Clearwater)
o County Government (i .e., Professional Employment Training
Service)
o State/Federal Government (i .e., Florida State Employment
Service)
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ERVIN'S ALL AMERICAN YOUTH CLUB INC.
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5. Education to reduce drug, alcohol and tobacco abuse and, to
discourage del inquent behavior.
METHOD
Field trips to and presentations about:
o Detoxification Centers
o Florida Informed Teens (FIT)/Chemical People
o Operation PAR (Drug Rehabilitation)
o J~i Is/Prisons
o Law and the Court System
o Health Department
etc.
6. Understanding and developing good citizenship and family living
concepts.
METHOD
Voter education and family counsel ing activities (i.e., Family
Service Center)
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Salaries
Insurance
Taxes
Office Supplies
Telephone
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BUDGET
$ 9,100
300
400
100
200
$10,100
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3201(,
OFFICE OF MANAGEMENT AND
BUDGET
IClrcula.r No. A-] ]0)
GRANTS AND AGREEMENTS WITH INSTI.
TUTlONS OF HIGHER EDUCATION,
HOSPITALS, AND OTHER NONPROFlT
ORGANIZATIONS
UnifOfm Administrativll Requirements
JULY I, 1976.
To the heads of executive departments
and estAblishments.
Subject: Unlform admlnlstratlve re-
quirements for grants Ilnd other agree-
ments wIth Institutions of hl;::her edu-
cation, hospitals. and other nonprofit
org anlzatlons
1. Purpose,-This Circular. promul-
gates standards for obtaIning consisten-
cy and uniformity among Federal agen-
cIes In the administratlon of grants to.
and other agreements with. public and
private institutions of higher education,
public and private hospitals. and other
quasi-public and private nonprofit or-
gan.izat1ons.This Circular does not apply
to grants. contracts. or other agreements
'between the Federal Government and
units of State or local governments
covered by Federal Management Cir-
cular 74-7,
2. Effective date.-The standards In
the attachments to this Circular will be
applied as soon as practicable but not
19.ter than January I, 1977.
3. Supersession.-This CIrcular res-
cbds !Uld replaces parts III and IV of
the Appendlx to Federal Management
Clrcu!ar 73-7. Administration of college
and university research grants.
4. Policll inter-t.-The uniform stand-
ards and requirements included In'the
attachments to this Circular replace the
varying and often conflicting require-
ments that have been Imposed by Fed-
eral agencles as conditions of 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. Il any statue ex-
pressly prescribes policies or specific re-
qUirements that differ from the stand-
ards provIded herein. the provisions of
the statute shall govern.
The provisions of the attachments of
this Circular shall be applled to 8ubre-
clpients performing substantIve work
under grants that are passed through or
awarded by the pnmary reclplent l! such
subreclplents are organJzatlons de-
scribed In paragraph 1.
6, D/!/lnitions.
a. The term "grant" means money or
property provided In Ueu of money paid
or furnished by the Federal Government
to recipients under programs that pro-
vide financial assistance or that provIde
$;Upport or stimulation to accomplish a
public purpos.e. The term "other agree-
ments" does not Include contracts wh\ch
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 assisl.n.nce in the form of
NOTICES
general revenue sharing, loans, loe.n
guarantees, or insurance,; and (c) direct.
payments of any k!nd to Individuals.
b, The term "recipJent" Includes the
following types of nonprofi t organ1z.a,-
tions that are receiving Federal funds
from a Federal ~ency or through a
State or local 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 Nations) and
Government-owned contra.ctor operated
facilities or research centers providing
continued support for 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 e.:rceptiD1u.-The OIDce
of Management and Budget may grant
exceptions from the requirements of this
Circular when exceptions are not pro~
hibited under exlstlng laws.
However, in the Interest of maximum
unlformity, excepUons from the re-
quirements of the' Circular will be per-
mitted only In unusual cases. Agencles
may apply more restrictive requirements
to a class of recipients when approved by
the OIDce of Management and Budget.
8. Attachments.-The standards pro-
. mulgated by this Circular are set forth
In the Attachments, which are:
Attachment A Cub depooltoTles.
AttachmentB Bondlng and 1nsurance.
Attachment C ~tentlon II.lld cwtO<1UJ. re-
quirements fot' recorcl.B.
Attachment D Progra.m 1ncome.
Att.&chment E Cost sha.r1ng and, m.totchlng.
Attachment F StAndArds for f1DADcJ&lIllAD-
agement syster=.
Attachment 0 FlDADclaJ. reporting require-
menta.
Attachment H Mon1torlng IU1d reporting
progn.m per1orIIlADce.
Atta.chment I Payment Nqull'ementa.
Atta.chment J ~vWon or OonanclaJ. pllLD&.
Atta.chrnent K Cloeeout prooe<iures.
Atta.chment L BUApenalOn II.lld term1nation
procedures.
Attacbment M Bt.and&rd Corm Cew applyJ.ng
for Ceder&l .......Ista.nce.
Attachment N Property IIlADagement stand-
ards.
Attachment 0 Procurement .u.nd.&nb.
9. E.:rceptiom lor certain reci~.-
Notwl thstandlng the provisions of para-'
graph 7 if an applicant/recipient has a
history of poor performance, U not fl.-
'nanclaUy stable, or Its management sys-
tem does not meet the slanda.rd.s pre-
scribed In the Circular, Federn.1 agencles
may impose additional requ~ment.s as
needed provIded that lIuch applicant/
recipIent 13 notified In writing as to:
a.. Why the addiUon&! standards are
being Imposed:
b. what correcUve acUon Is needed.
Copies of roch DOtltlcatiOl13 shall be
~nt to the Ornce of Management and
Budget and other agencIes funding that
recipIent at the same Urne the recipient
Is notltled.
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10. Respcm.sibilitieJ.-Agencies respon-
sible for administering programs Utat in-
volve grant., and other agreements with
recipients Iihall Issue the ap;:Jroprlat.e
~6uIatloJU necesSary to Implement the
provisions of Utls Circular. All portloru.
of such regulations that involve record-
keeping nod/or reporting requirements
subject to the prOVisions of the Federal
Reports Act and OMB Circular A-40
must be submitted to OMB lor clearance
beIore being Introduced into use. Upon
t~UE::St all regulations and instructions
lnlplementing th1s Circular shall be
furnished to tl-Je Omce of Management
and Budget. Agencies shall also desig-
nate an official to serve as the agency
representative on matters relating to the
!mplementation of this Circular. The
name and title of such representative
shall be furnished to the Ornce of Man-
agement and Budget not later than Au-
gust 30. 1976. .
11, Inquiries.---"-Further information
concerning this Circular may be obtained
by contracting the Financial Manage-
ment Branch. BUdget Review Division,
Ornce of Management and Bud~et,
Washington, D.C. 20503, telephone 395-
3993.
JAl4ES T. LYNl~,
Director.
ATTACBXJ:NT ^,~Ct1Lo\ll No. A-] 10
CASH D!:POIUTOJlI!:S
1. Th13 att.a.chment sets forth standards
governlng the use of bsnlLs and other In-
IItltutlons as deposltorles or Cun~ advanced
under grllnts II.lld other agreeme..ts.
:2. Except for situations described In para-
grapha 3. 4, 1l.Ila. 5, no FederAl llpon~:)flllg
&.gencyahAll:
a. Require phyalca1 &egregatlon o~ cash de-
poettorles for fund.s which are pro\.tded to a
n-c1pleot.
b. Elllabllsb any eligIbility requu:eme:ots
Cor C4Sh deposlUJrlesCor Cunds whIch are pro-
'T1ded to a recipient. .
3. A sepAute bank account shan be require
wben appUcable tetur-or-cred1t agreements
provide that drawdowns will be made when
the ~Iplent's chee1u are presen:.ed to tbe
bank for payment.
i. Any moneys advanced to II recipient
whlch are subject to the contn.1 or regula-
tIon oC the United Statts or any of Its om~ers..
rgenta or employees' (public: moneys AS de-
nned In Treasury Circular No. 176. as
e.mendetl) mU3t be deposited 1n a banle wIth
Federal DeposIt Insurance Corporation
(PUIG) Insurance coverage and the bal,.nce
~ng the !"DIC coverage must be col-
la teraJly secured.
II. Consl.tent with tbe national goal of
expand1ng the opportunities for mtnorlly
b~lneM enterprLsu. reClplenla and aub-
recipients IIh&l1 be encouragect.UJ use minor-
Ity ban.lLe (a bank whlcb Is owned at least 50
perce?t by rnlnor1ty group members).
ATT4CR1,UNT B,-CDlCt7LA1l No. A-liO
~1<Pl"'C .\ND Uf8tTa"NCE
:. ThlA ..tta.chment sets forth bonding and
losurance requIrements for grsnts and otber
It.gn>ementa with recipients. No other bona..
Ing and Insurance requlreme~ts sball be Im-
~ otber than thoee DOrm&lly ~ulred by
the recipient.
2. Except u otherwIse required by la..,. a
grant or other ~meDt that requlreJ the
contracting (or auboontracttng) Cor coo-
IttruC'llon or facility tmproy..m..ota shAll pro-
Tlde Cor C1e recipient to follow Its own r..-
FEDEUot IEGISTU, VOL 41, NO, 14~IDA"', JULY JO, 1916
ItP:/' , C,
qua-m*nt& rel~Ut1.i to bid. lfUan.n~. per-
tor~ bonda. ..nd ~"rDan~ bon..d.a unl_
the c:onatzUcuon con~~ or lIubc:ontr:..c~ ox-
~ '100.000. l"'or thOM c:oc.tn.<:t.a Ol' eub-'
oon u-..c:t.a u.c.-d..l~ '100.000. Cl. ~uw
e.pnc:y nay -.c.cept th. bondLna polley and
nquiretnJlnto 01 tn. gn,ntH proYlded the
]"o<1Drtol ~.ncy bu ~e'" de\.DrmlllJ>UOn
\bat tha Oo..~n~'a intAr.,.t U :t.dbqUAt.aly
protoc:~ It auch " dDt.ormlllJ>tlon hu not
be-e n [OA.d..e. the m1n.l.m um r.q ulre m.a n to ahlr.ll
be.. tollows:
a. A tn4 guar~- froM eoclL bid4<tr ..quI"",
(1.\4t1\t to fla. peroenl 01 th4 bid prlc',-
Tn' "bld iUtn..Dot.be" abAll co~ ot .11rm
c:onu::utniant auch .... a bld bond, c.rtUloc:l
c:b'aa. or olb.r oeiOUable lnatrutnJln~ ~-
com;>anylnll a bid U DoUunnc.- that tha bid-
der will. ur;-on &CCtlpanc:.a of b1a bid. U6CUt.a
auch contrr.c:tu&1 doc:UrDaot.a u may ~ n-
qulr&d within tho U:ne .I~l.Aed.
b, .A. rwr /0r-m4rt.C' boNS em t.h-e part 01 tM
ccnCroctM lor ~OO pncC"1\t 01 tn. contTlSd
pice.:....A ..~rlorm&."Q.OO bond" L1 one exacuW<1
In conne.c:tlon with ..con~~ to a.a<:Unl tul-
Wmen~ of all tho contn.c:tol".. obllptlon..
under such contr.ct..
c. A pll)'m4t1\t boNS on th.4 pllrt 0/ the con-
tTllCtM lor 100 percent 01 the controct
prlc..-A "pitoymlnt. bond" u ooe .x.ecuUKl. In
coQ.C6Ctlon lt1tb a cont.raGt to $.MU" pay-
mu.t u required by b...,.' of all penona IlUP-
ply1.ng boor .nd lXUtartalln the ex&cuUon of
the worle ilroTidl>d for In th. cont:n.ct.
3. Wblre the hden.l Government ~-
UM or lIuUrN the repayment 01 ClOIMlY
borro'r.Pd by the ro<:lplent. the l"cdent.1
~snc,. a~ ItlI c11acntlon. m.ay r-oquire ad.e-
qua t.e bo n ell n i an.d 1Iu \1l1lor..oe it the bon c11n.i
and huunnoe r-oqulnmlnta ot the ro<:tptent
are not d~o:ed a.<1oqu.r.t.e to protoc:t th. In-
t.aMl'lt or the1"odenl Gonrnm.ant.
4. Tb. l"'o<l,enJ lpoIUOrln,i ~ncy may "-
quire ad~\Ut.e tidellty bond cove~e whl'f1l
tbe rorclplan t. au no con~e lUld the bond U
~&d oto pro:.e<:t the Go-urnment's lnt.e-re.t.
ll. WAnD bo~ IU"tI required In the altuA-
t10na dt1lCrt~ above. tbe bond:A ah.u be Db-
~lDl>d from compa.::lle.. holding urtU1cr.tM of
.uthorlty u a.cc:ep4bl.aunt1e.e (31 C7R
:03).
A rrM:H)O KT C.----cn.cvx.u No. A-II0
knTNnOH ...w:> C'OlITOOUJ. u.o~JoL1}fU )'011
~oa.DtI
1. 'nllll ..tta.cbm.nt uto forth ~ reten-
tion n>q\llrementa for ~t:.s &.nd other a.gree-
tn.au with r<<:lplinta. l"e<1.nJ apon.aortni
a.g-on.c:le.. shaJl not tmpow .ny r&OOrd retan-
tlon requ1.-emeatll u;>oJirec1plana ather tha.D
th oa.o d eocrt be4 be 10....
2. Eue!:110r p~b 1. thb atta.chJ:Dollnt.
r.lw "Ppllea to llubre-clplento... re!errod to
In panr.&Tapb II of tbO) bul.c etrc:u1u,
3. FtlI..:l clltJ r-ooorda. II np port lDi d.ocu ID.lm ta.
at.atlat\.c~ rKOI'"d.I. and eJl othet' ~rd.a putl-
nDnt to nn ~ment sbt.ll ~ nlt:aJntd lor .
pa-rlod of .~r_J~. with the 10llo..nna
qlUJlticAtlona:-~-
... If LIlY Htlpt!on. claim or audit la .t.ut.ed
b..rore thllll:rpl~t!on 01 the 3-y~ ~1od. the
I'"ZlOO rda a.h &.\ I bit re 41.0 ~ un tll l> 11 11 tip Uo IIA
ct:.l..au. or ~udlt lln<11nplnyolylo.jr the ~
hAyO bMn rNOln4.
b. R.&oorda for nonexpendMlle property &C-
qul.n>d W1t.b Pedertol tunc1a lhaJl be malntd
tor 3 J bo>.n ...r te r Ita ll.naJ d la po.ltJ on..
c. When recorda ue ~fernd to or au.U1-
t.Jntd by Cu 7'l>d..ral lIpODIOr111J ~.ney. the
3-yee.l' "untlon r.qulrerIUlnt Unot ..ppu.c...-
ble to tbe r<<1plant. .
4. The rot.ot!on period ata.rt.e from th.
~t. of the lub<rJ.ulon of the ft.n~.
us.-repc>,J:L.or_ f or ll'f1U1 to a.n d 0 th &l"
'a:enlothat ~e_!""nnbd .i..ti.Duiillz.:::lio~:;
.. ~~_ of the aub01la4lol1-or-tilo a.n.nUAl
--..lClltJ a ~ t u.a report,
I
NOTICES .
I
3.20 17
II. Reclpllllt orp..nlz.Atlona Ihould'be au-
thoI'u..d by the Pedual aponaorlDg ~ency.
If they eo dll4lre. to lIublUtuto mlcrolUm
cop \.M In Iii u 0 f om \nAl re<:otc1a.
C. Tne l"t>4&rw ~na.or\:ni: &&..ncy "baJl re-
Q U /la t tn.n&f er ot C8rla.In NoCOTd.a to 1 ta c w-
tody from rt>Clple.nt or~tlollA when U
deurmln_ that tho ~ ~ lonl-
urm ret.onUon yalue, Howe.,n. In order to
...,old dupllc.-t.a record-ltoepLni. .. ~ral
lponaorlDi &.680CY may DJJU;.e a.:TAIlgemento
With r6Ulplint orfflLD\z.I.tlona to ret.a1n r.ny
re<Xlro. tha; u. con~lDuou.ely nHded. lor
Joint. \l.H.
7. Tne hu.d of tho Pedere.1 aponaorlol -.gen-
CJ lLDd the Comptrollar GenenJ or the Un.lt.ed
Bt&u.t. or ..ny o! their duly authortud ~pre-
unt..f.UT-ee. ahall h..ve ~ to any p-erllnent
boo'u. docum..nta. p..pen. r.nd rooords'o! the
recipient organJ..r.a.tlon &.nd theLr aUbro-
e1plenta to ~it ..uc11t.s. e:u.mI.n lotio 011. ex-
ce.. -p La &D d tn.c.5Cr1 P ta,
II. Un.I"," otharwt.M r-equlrod by laW. no
Peden.l llpon.aorlng ~cy ah&ll p~ N-
atrl.ctloDA on ro<:lptent otg&ZililaUona th.&t will
lInllt public ~ to tho rt>C:Oro. ot r<<:lplent
Ofilo.DlzAUOIU \bat"" pe.rtlDant to a snnt
or ~mant except "hen th. agency =
domon.atn.te that Buch reoom. mwt be kept
oonMBnUr.l a.nd would b..t.90 ~n excepted
lrom tUac:l08ure punUAnt to tho ~om or
lnfOtm:iotlon Act (5 U.s.C. ~:nlt thBreoorda
hAd belong-ed to the ~eDl apCllUOrlnS
&&ancy.
A'tTJoCl0LJUn D,----c=t..u No. 1..-110
no<lUK OfCO!loO
1. l"'&d.bnJ apon.sorlnt ~nd.M allall apply
the atA.nd;t.rda ~t forUlln tht>> ..tUcluneAt In
uqUlrIng N>Clptent o~tlona to ~unt
for p~ In:ome Nb~ to proJecta
fl.n.a.noed In whole or In p~ with J"flderal
lundJl. J>ro.sn.m Inooma "pNoUn ta e-r-c- 10-
oome e.rned. by the recipient trom the Ied.-
or&l1y IIUppo~ a.ctlvltlM. Such eunlDp u-
chuh 1nt41~t MrD~ on a.<1n.DCM a:ld ~y
lnclude. but w1ll not t>. llmtt.ed to: Inooma
from urnce f_. sale of ooJ::O..lDO<1J.t1M. uu.go
or nonW f'*'. and roye.1UtoI on p.t4n"ta LIld
coprlghte. .
2. In UNII I'. o torn td on e.d n.tlCola or !"ec1an1
tuna. a.hall be ~~~ to the ~~~ey
o~~~~too
8t&tM u ~n.t:a.Utlbe of . Bt&tc!l ... pro-
T11Uod by tho Inter.fonrnmantal ~
Act. ot lW3 (Public lAw P<HS77).
". ~_tro~ tba ~ of r-x aD4 --
&I<?~ ~tll.t.b...u;ro;;lClid'blth. -;;":
eral-OoVBrn.lIU>nt or purclll.M.d In whole or in
pU't w1\h hderal tunda. ahal1 ~ handlbd In
aooor<bnee With At~nt'N to th1a cir-
culAr pert.a.1n.J.tl, to1i'~~amBnt.
"- Unl_ tho ~Illt proY1dllolother-
w1u. reclplenta ~ ha.,.. no obll.g&Uon to
th e :ro.>dera.t 00 nrn.m.en t lt1 th res p6Ct toO
l'01AlUee reolllyed all & rNult of oopyrtpt. or
pat.enta produCf>(\ una.r tho (t1llt or oClv
ll.iu~ment (.... p~b a. ..UUclun.ant M).
15. AU othtr profT"In incomo MJ'nl>d d~
tho project potrlod ahA.ll ~ reta.t.ned by the
J'edplant and., In ~~ with th. JnOt
or oUler &iT...ment. ah.\U be: .
.... A.dd.)d to rund.l COm.mlt~_t;o_tp. proJ-
ect by th.J"tod#a1-apCl~~ AJ_nCj-&.nd
t1:dJ>jon~lsat1011 a.n~
.n~i ....~.o.m..Q.~lKt1n.;
b. 1L,..,.;t~_Jl.D"'nOL.th~n.:::~ml1 ~
ot ~e p~j~~ppro,td b1f,hii l"ed~
r;aorlnl qency: or
c. D.lod uc t.ed from th. t.c>t&l pro j oct cc:. t.
In deunn1n1D.ll tho nn ~te on 1rh1cl1 the
l"DdenJ &lure of OOlIte wtl1 ~ bwed.
Arr4C1llloOOfT ll:.--(:lJa.cvL.ul No. 1..-110
oo..T eJU.UXo AXP N.A.Tt:HI:'fO
1, ThIJl attActunant ll!rla forth cr1t.arlA> a.n4
procodllZ'M tor the aUO'W'&bWtt 01 ca.&h 101\4
1n-klnd contrlbu~ ~e by I"9C1p\.antA or
subreclpl&nLa (LI nferrl>d to lD p~;>h ~
of th. b1toA.lc clrcuw) . or thW putlu In IoAt-
W ytna OCWI"t l\h.a.rln.6 LI1 d IIa t.ch ~ n>q u Lr..-
menu ot l"'&<1ere.1 llpolUOrlni ....=1..., Thla
.. ttAchm.o n t. a.lao CA~ b I Lab... crt t.erla for the
eY~u.r.t1on of In-Xlnd contrlbuUona mt-d. by
t.h1rd putlbl. ILnd supplem.onu. th.e ~
aet forth In l"e<.Il1l"a.l ~a.m.nt etreul&.r
73-3 wltlb rf)/l~ to COoIt ~ on !~r-
al1Y~lpolUO~ r--.rcb.
,2. The tollo....1ng d.<l.o.n1tlOla apply for th.
pllrpOM ot thlA ..~tAc~~nt: .
a. PToj ec t cc>> tI.- Pro J &Ct ooe to are &U &.1-
107nobt. coet.a (LI "t forth In th.e applLc&.:ll.
l"ednal COI"t prlDclplu) lDcurrbd by .. reocl;>l-
ent a.nd the value ot the lD-lUn4 oontrlbu-
UC>%U nu.db hy th.. roctp~at or tb.l.rd plol"t~
1n &ccomplLahmg the obJe<:tl.,/lA ot thl ifYont
or othar agrMrm..nt durin. tb" project or pro-
i"-m ~l.od.
b. C~' V\.4rlng ond m4tchlng.-lzI genan,1.
003t Ilhartng a.nd matching re;lreHnt thAt.
portion of proJto<:t or p~m COtta not borna
by th.. V1)(\!lrIl Go? e rnJ:n.8n t,
C,. Ccuh contrlbull.o1l..l.-cuh oontrtbutlona
rapr'll&ant tho. rac:lpl"-Ilt'. c:s.ah outLAy. lDclud-
1na the outlay of roone, contributed t.o the
reclplant by non-~nJ tb.l.rd p&rt1ea. .
d. In-ktnd COl\trlOu~.-In-klnd aJntrl-
butlo~ rapt_nt tho n.lue at' nonc&ah con-
trlbutlollA proTide.:1 by the rec\;llent and
non-~en..l third poLrtl..... Only unen I.U-
tboriud by l"edeDllegla~Uon. nay pro.,.rty
pu.reb.J>a.ed Wi th l"'Ildara 1 tunc1a be txl~
all ~ r<<: I p\ul t'. In -ld n.d. con t.rtb u tIona. In-
klru1 contrtbutlon.a IIUY be In the lorm of
chMg&l tor n&1 proparty a..n.d. ~-upe.nd-
able penonAl ~rtJ'. an.d tb.t u.lue at
JOOCd8 lUld ~ dlnctty bene!ltl.o;i &.:>d
.~lJlce.1.1y !d.en~le to the pro}oct C'.
pro:p-am.
3. Genll'Mll iU1delln..N toc oompuUnlr c:oo~
Uar\l1i or ma~ ara u toUO'llf3:
a. Coat ~~ or PUtchlnZ I:U1 consJat
of:
(I) ~ Incurre<1 by the roClp~nt. U
pf(>J~t c:cca. (Mot all c:h1rgelI ~ulN uu.h
oullilya by tha roctpl..nt. (1ur!.nj: tb. proJl>Ct
per1od; eXAmpl... U'& d3?t"OC~t.!on a.o4 u.M
cha.r3Dl1 ler buUdInp "-Il.c1 e.quJpment.)
(2) l'roJoct OOAU f'\,.,,,.n..-i 'With ~ con-
trlbu tbd or dona t.ed to the t1>ctp\.an t by otha'
J)(m-~r;U PUbUc&.61l=\oolI &nod lnatltut.lon.e.
e.nd prl n to orp.nlA ~ Il.04 lnd1 Tid w.U.
an4 .
(3) Pro joect coa ta J'1lP"'" n t:.a b" l><lM' I~
&ncl r-x a.nd penocal ~~. QC' \1.M th.u-e-
01. d.o~ted b1 oth.r DOD-~ publl.c
~n.c1N and In.rl1tutlona, and prtnt.e orp-
nJ..u. tlona ..nd Ind.l......d u...a. .
b. All c:ontrtbu tiot:u, both' ca.ah and In-
klnd. ah?oll b& a.oce-p t.bCl o.a pan at' th. noel p l-
ent'. coat. ~ and rna.tcl1~ "h~ ruch
conb1buUona ~t all 01 tli. fol~
crt t.arJ.a:
(1) An Tn1~t. from tho. .. .>t.o \..
~rda;
(:I) An not 1nch1~ a.a coz:. trlbu Uon.a tor
any othar t.den.l1y~ progn.m;
(3) Are ~ t..oC ,r, >lO.DAbla tor prop-
er and eJll.eUnt a.ooo~nt of proJ~
objectln&;
( i ) A-.... tn>- of c.b.&l'r-o th.&; 1POUl d be e.1-
lo~ble under the a.ppUct.bll con prt.ndp\.all;
(II) An not p.ald by Cl. l"'ed-*TaJ Go'l' ern-
~n t under' &DQthet' 110>> tau..n os ~r::>8n t
(unl~ the ajp'"Hman\ u auth.orlsed by ;r.d-
U&l la." to ~ uH<1 for con alu.rtnJ Of' rna. t.ch-
!nI):
(()) Are prondeod tor 1.0 the appro" ad budl-
.t wb.en Nqu\red by the 7"edanl ~.'f8nCJ': &::ld
(7) ConIonn t.o ot.hn proYl". o.a ot tbJ.a
at t...chxxu D t.
6. V.o.l\.l.M tor roclpt.nt lD-kl.n4 cont...1bu-
Uon. wUl be ..u.b\l.&h~ lD ~ w1th
the .. p p lice b 1. 00. t pr1..nclplM.
8. Bped(Ic pl'1X*1UJ'"M tor t.be roc:JpJeala In
..tAbl~ the nJu. 01 In-lr.1od contrlbU-
tfO!lI.\l HOlm,. VOl. 41. tlO_ t41~--J'lH"~,Y HHY 'HI ,~.,,!.
32018
I
lions from non-Federal third parties are ut
forth below:
a. Valuation 01 voIunte/!1" 3/!1"vtce3.-Volun-
teer r.ervlc~ may be furnished by profe3slonat
and ~hnlcal personnel. consultants, and.
other skilled and unskilled labor. Volunteer
a.enlc~ may be counted as cost sha.rlng or
matching tr the service 15 an. Integral and
necenar}' part of an approved program.
(I) Ratu lor Volunteer 5ervice.3.-Rat.es for
volun~rs should be consistent with thObe
paId for similar work In the recipient's
organization. In those Instances tn which the
required skills are not found In the recipient
organlZAtlon. rates should be consistent with
those p&1d for similar work In the tabor mar-
ket 10 which the recIpient competes for the
kind of urvlces Involved.
(:2) VoluntuTs employed by otl1eT organl-
2atlo7U.-When an employer other than the
recIpient furnishes the services of an em-
ployee. these 8enlces shall pe valued at the
emplo7ee's reli:ular rate of pay (exclusive of
frln&e benefits and overhead costs) provided
these senlces are In the same sitU! for whIch
the employee Is normally paid.
b. Valuation 01 donated, ezpendable per-
.cm<1l propeTty.-Donatcd. expendAble per-
sonal property Includes such ItelXU as ex-
pendable equipment. ornce supplies. labora-
tory supplies or workshop and classroom
supplies. Value as3e'SSed to expendable per-
8On&1 property tncluded In the cost or match-
IDS" share 8houtd be reasonable and should
not exceed the lDuket value of the property
'..t the time of the donatlon.
c. Valuation. 01 donated. nonezpendable
~3onai property, buildings, and land or
we tl1e:reo/.
(I) The method used for chuglng cO&t
sho..rlng or rnatchtng for donated nonex-
pendable personal property, buildings ..nd
la.nd may dl/l'er accordIng to the pu~ of
the grant or other l\.gTeement I.] tollows:
(a) Ir the purpoh of the grant or other
..gnement 15 to assist the recipient In the
~qulsltlon of equipment, buildings or land.
. the tota.! value of the donated property may
be ctalmed M cost 8harlng or matchlog.
(b) Ir the purpose of the agreement 13 to
support activities that require the use of
equtpment, buildings or land. depreclatlon
or us.e charg~ forequtpment and buildings.
. may be nade. The full value of equl9ment or
other capital a.3.Sets llul1 fair rent~1 char,ge3
for IUld may be Illlowed provided that the
Federal agency bAs approved the charge3.
(2) The. value of donatcd property wUl ~
detcrmlned in accordance wIth the uaual
~countlng policies of the reclptent with the
.follo...lng quallncatloIUl:
(A) Land and bul/dlng3.-The value of
donated land and building.. mllY not.exceed
Ita blr ma.rket value. ..t the time of donation
to the recipient as estabtl3hed by an Inde-
pendent appraiser te.g., certlned real prop-
erty appnlser or OSA representatives) ..nd
cutl/ied by a responsIble omclal of the
re<:lplent.,
(b) Ncnu:~nd.obte 1'e1'3ona1 prop/!1"tll.-
The vI'lue of donate-d nonexpendable personal
property shall not exceed the fatr muket
value of eqUIpment and property of the same
age and condItion at the time of dona.tlon,
(c) Uu 01 3pace.-The va.lue of donated
Ipa.ce shall not exceed the flllr rental value
of compa.rAble spAce as e3tabllshed by an
Independent apprlllsal of compllrJ.ble sp~e
and facllllles In Il privately-owned building
In the r.ame locality:'
(d I Loaned equlpment.-The vatue of
toaned equipment shall not exceed I~ ratr
rental value,
6. The followIng requIrements pertain to
the recIpIent'!; !illpporllng recorda for In-
kInd contributions from non-Federal thIrd
parties.
NOTICES
I
a. Volun~r servIces must ~ documented
and. to the extent fe&.Slble, supported by the
same methods used by the recipient. for I~
employees. .
b. The bllSls for determining the vatuatton
for personal &enlces. materia.!, equipment.
buildings and land must be document.o!d.
ATTACJlMEI<T P.--Cn<cuu.. No. A-Ill)
tl.nancllll tran~t\ons.1III well IlS compliance
with the terlTU and conditIons of the Federal
granta and other agTeements. Such t..es:.a
would Include an approprl&te Lampllng or
Federal agreelJlen~. Examinations will be
conducted wIth reLSOl1Able frequency. on a
continuing basis or at acbeduled tn~rv~
usually annually. but not leM frequently than
every two yeo.rs. The frequency of these ex-
a.m Inlltlons shall" depend upon the nature,
sIze and thl> complexity of the actvUty. Tb~
eXAminations do not relieve Federal ...gencl~
of their audIt responsibilities, but lDJlY a!l'ect
the frequency and 1lC0pe of such audl~.
I. ^ sys~mlltlc method to assure timely Ilnd
approprIate resolution of ..udlt tl.ndlngs Cld.
rrx:ommendatlons. .
3. Primary recipients shaU require suhre-
clplents (ILS defined In paragraph !) of the
basic cIrcular) to adopt the sUndllJds In.
paragraph 2. above except for the require-
ment Ln subpa.ragraph 211, regardIng the US8
of the letter-of-credlt ~thod And thllt pa.rt
of subparagraph 2&, regarding reporting
forms and frequencIes prescrl~ In Attach-
ment. G to this cIrcular.
BTAtroAlUlS Foa T1NANClAL MANACEMZNT
SYSTEMS
1. This attachment pra;crlbu standard., for
nnanclal management systelnS of reclplenta.
Federal sponsoring agentles sball not ImpoBO!'
addlllo'nal standards on recipients unless spe-
clncally provIded for In the applicable sta-
tutcs (e.g.. the Jol.ot Funding Blmplltl.callon.
Act, PL. 93-510) or other attacbmenta to thts
ctrcular. However. Federal 8po~lng agen-
cIes are encouraged to make Sugge3tlOns and
assist recipients In estballshlng or Improving
nnancll!..l management systelIlJl when IJUch as-
sistance Is neede-d or requested. .
2. Recipients' nnancLaJ ~~nt JSya-
tems shall provIde for:
.... Accuratc, current and complete d1aclo-
sure of the nnanclal results of each federally
8ponsored project or program In accordance
with the reporting requirements set forth In
Atta.chment 0 to tbls clrcutar. When a Fed- 1. This attachment prescribes unlform re-
eral spoosoring agency requires reporting on. porting procedures for recipients to: aum-
an accrual bLsl3, the recipIent 8hall not be m.a.rLze expendltures mAde and Pederal fUDela
required to est.&bIlAh an accrual accountlng unexpI"nde-d for each award. report the 8ta~UlI
s}'Btem but shall develop such accrual dAta of Federal cash advanced. request advances
for Its reports on the ba313 of an an.alyllla of and reimbursement when thllletter-of-cre<1lt
thll documentation on hand. method Is not \l!W:d; ADd promulgates sta::ld.
b. Records that Identify adequately the ItJd forIDS Incident thereto.
source and application of fuods for federally 2. The 10tlowtng deflnltloIll apply for pur-
8ponsored activities. Theee recordA ah.all con- poM:8 of this attachment:
taln InIormatlon pertaIning to Federal a. ACcnLed apendlture.t.-Accrued ex-
awardA, authorizations, obligations, uDobll- pendltures are the charges In.curred by the
gated balAnces. IlllM:ts. outlay:!, and l.o00rne. recipient during a given ~riod requirlDS" the
c, ElI'ectlve control over and accounUbUlty provl3ton of funds for: (I) goods and other
for all funela, property lUld other ~t.s. Re- tangible property received: (:I) senlces ~r-
clplents shall adeqUAtely Bafegu&rd all such. formed by employees, contractors, 8ubreclpl-
8.S!Iets and 8hall &aSUre that they are u.aed enUl. and other payees. ..nd (3) o:.her
solely for authorlz.ed purpa:ea. amounts becoming owed under progTlltnS for
d. CamparOOn of actual outlaJ1l wIth bud- which no current &ervlces or perfOrmAnce Is
get lUIlounta for each gn.nt or other agree- required.
roent, Whenever. ..pproprtat.ll ~ requ\nld by b. ACcnLed inc~e.-Accrued Income Is the
the Federal 8ponsorlng ~ncy, tl.mu1c\Al 1.0- Ilum of (1) earnlhg3 dUrlng II. given period
formation abould btt related to performance from (I) aenlces performed by tbll reclpl.
and unlt C08t da.ta. ent: and (11) good.s and other tangIble
e. Procedures to mlnl.m.be the time elllpe.l.ng ;;. property deUvered to purcba.sen: and (2)
~tween the tra..na1'er of funds !rom thO!' U.8. 1UD0unts becomIng owed to the redplent for
Treasury and thll d.1abu~ment by thll reclp- ...~h no current servIces or performAnce 13
lent, wbeneVllr funda are advanced by the required by the recipient. . .
Peder&l Government, When adnnces ani . c. Federal furuU auth~.-Pe-deral
mad.. by a letter-of-cred.lt method, the reclp- funds authorized are the total amount of
lent ab..u m.ake drllwdowna u c108ll' .... poa- :r'ederal funda oblLgat.ed by the Fe-deral Gov-
Blbte to the time of IDAk.lng ~b\lBf:menta. e-rnment for use by the recipient. Thls
f. Procedurea for determining ~ realIQn- 1UD0unt may Include any authorized carry-
ablene&.'!. allowablUty knd a.1JocablUty of c0ct3 over of unobligated funds from prior tl.scal
in accordance with the provisions or the ap- yea.ra wben permitted by law or agency
pllc..blO!' Federal C08~ prlnclples and the t.enn.s regulation.
of the gTlt.nt or ol.ber agreement. d. In-kind contnbutioru.-In-kl.od con-
g. Atoountlng I'!>OOt'da that are BUp~ trlbutl005 are detl.ne-d in Att.t..cluDent E to
by source documentation. th1s circular,
h. En.mlnallons in the form of audlta or e. Obti9otlon.s.--obllgatlons are the
mternal ..udlta. Such audita 8hal1 be made amounta of orders. pl~e-d, contraclS and
by qUllllfied Individual. who a.r-e IIUmclently granta awarded. urvlces rlli:elve-d, and slml-
independent of lboee who authorl2>e the eX- la.r tran&a.ctlona durIng.. given period tlat
pendlture of Federal funds, to produce un- will requIre pIl}'1Dent by tbe recipIent during
blA&ed opinions. conclUlllons 01' Judgmenta. the &ame or a tuture period.
They shaU m~t the I.odependenC:e crlterta f. Out/.ay..--OUUa.Yll or upendltures reprO!'-
along the llne3 .ot ChapLeT 3, Part S of the Ilf!nt charges made to .the project or progT&m.
U.S. Of:oeral Accouotlng omat publication. They may be reported on a cash or accrual
Standard'!; fOT Audit or Government.a.l Organ- be..s13. For reporta prepared on a cash b....~llI,
lzatlons. PrograD'Ul, Activities and Functlons. outlays are the sum of ~tu..1 cash dlsburse-
These examinations are Intcnded to ascer- ment:o for dlrl>Ct cbarges for goe>ds and Strv-
taln the enectlveness of the nnanc\J>1 manJ Ic~, the amount of Indlrlli:t expense chl\rged,
..gement Ilyatcms and Internal procedures' the ""Iue of In-ktnd contrlbullolU applied.
that have b~n esbbllshed to lJl~t the tcrnu and the amount of cash adYAnC~ and puy-
and condltlons of the p,greements. It Is not menta made to subreclptents. For reporU pre-
Intcnded that ello.Ch ~eement awarded to the ~ on An accrual bluls. outla)'~ aT" the
recipIent be examined. O<:n,,",lIy, examlna- sum of actual cash dl3bursemenlS for dlTt'Ct
lions should ~ conducted on an organl:ta- charges tor gOO<b and services. th.. amount
tlon-wlde basU to test the ~I integrity of of IndIrect expense Incurred. the niue, or ID-
ATTACHMrNT G.--Cntcvt..uI No. A-110
nN AN C1JI1. 1LD'0l\TD'l"C BIX/t1 IS Dolz:HTB
FEDEUl IEGISTU; VOL 41, NO. 141--fll1DAY. JULY 30, 1976
/J;?p C
kind eontrl!:lutlo~ applied, and tho naot In-
er_ .lor deer",,"")' In tho amounta owed by
tho reclplen~ for good& and other prop<lTty
received, for eervlc~ perforrnod. by employ-
"", cootractors. eubreclplenta ILnd other
plloyeee 11.:1<1 other Amounta b<<omlng owed
undu prograau for wblcb no cunent ..n-
tellS or p<lrforma:lce 1L1'0 required.
g. Program Incom..-Progn..rn Income III
deOned In Att.acbment D or tbla clrcw..r. n
!nAY be reported on a ca.ab or &ccruAl bu1a.
whlcbever u u.s.a for reporting outLloya,
h. Unobll;ratcd bal.a~..~'I'ho unobllpted
~I.0Cll la tho portion ot tho funds author-
lu<1 by the Fede",l aporuorl08 agency thAt
hu oat woo obl1pted by the recipient and la
detuml:led by deductlng tho cumulatlvo
oblli.tloo.s from the cumu~tlvt funca au-
thoru..d.
I. qnltqu~led ob/IgGU.oN.-l"or reporU
prepMl<1 00 a ~'ba.llls. unliquidAted obll-
ptlons represent the--.mount of obll:g1.tlODJI
Incurre<1 by the recipient. that haa not bHn
- pllold. !'or reporta prep&led on 1m acc.-ued ex-
pend.1tun butJI. they repreMnt tho AlnO\ln.t
of obllptloDJI Incurred hy the r-eclpl.ent tor
wblcl1 u outlay n.r.. not bHn recorded.
3. ()D..Iy tho followIng forma will be au-
thorlu<!. tor ob:&1nlng f1DAncLAl lntOrmAUon
tl'1lm uclptenta.
.. FII>4nc141 StGt\LJ Report (Exhibit 1).
(1) ......"h l"'ederal epo=tog &gency Ilball
~Ulre re<:tplent.ll to ~ the lItand.a.rdlud
1"ln..nc!.A1 Statw Report to report the su.tua
oC tU:lca for all nonconstructlon proJecta or
progn.:ns. The Yede",1 sporuorlng &genclee
rru.l, tlowe're:-. have the optlon of not re-
quirIng the Ftn8oncu.1 5tAtua Report when
t~e P~qUe5t fIX Advance or RelmbUJ'Nment
lp&;~jlh h) or Report ot l"ederal Cub
'I'n~:IOlU (p,,",gnph 3b) u determtned
to provide adeqta140 Infor~t1on to m~t
thelr n~. except thAt a 1l.nAl l"InancW
StAt\U P...epol"t shAU be requlred &.t the com-
pletlo~ oC .thlt project when tho Rl>queat for
Adv..nce or Relmbureement torm Ia \U6d only
tor adva.oce.J.
(2) The l"ede",l llponaorlng agency IIhJUl
pr~n~ whether the report ahAll be 6n 1&
cuh or ~cn1al bAsta. It tbe l"edenJ. Ilpo~r-
lng a.i'ocy requlrea r.ccru.tJ lntorm.&tlon rand
the recl;ltent'lI r.ccountlni recorcU are not
nonr~l\y kept on the a,(;cruaJ baals, the re-
cIpient shltJl not be requlred to convert 1~
accounting ~~t..rn. but II~U dev"lop lIuch
~ru..l InformAtion througb b-edt estimate.
~<1 0:1 an r.n8oI)"3tJ1 at the documentaUon
on hand.
(3) The Federal .po~rlng agency ah&ll
determl:llt the trequency of the l"\n.a.11cW
8tatu.s Report tor eacb project or program
comlderlniJ the s1ze and comple.:dty ot the
partlcuta.r project or prosnm. Howll'fer. the
repon shaH not be required more frequently
than qu.arterly or I~ frequently than an-
nually except e.s provIded In llubpL.....gra.ph
3all) ..bove. II. 00..1 repoTt aha.ll be required
at th~ completion ot tbe e.greemant.
(~) Tederal epotuOrtng &gencl"" ahall re-
qui", re<:lplents to aubmlt the l'lIaocW
I
NOTICES
I
321)19
eu.tua R..eport (orlglnltJ .....ld no more than
two cop..s) no later thlln 30 dAye lL~r the
end at .......h spe<:U\ed reporting perIod for
quarterly ..nd uml-annu801 reportA. and 90
dAys for annu..t and OnAl reports. Extanslons
to reporting due dates may be granUd. upon
request of the re<:lplent..
b. RtpOTt 01 Ft:rf~al C~h Tral\3ocllolU
(ExhIbit 2).
(1) When tunds are ad va.nced to
reclplenta throl!gh I"turs at credIt or with
Trouury checlu, the l"ed.erltJ apoll.5Orlng
&.aencl". ab80lI require ea.ch recipient to aub-
mlt .. Report. ot l"'edenJ ClUb Trarn.a.ct10lU,
The l"'llderiU aporuorlog lI.Sency ah..1I Ulwl tha
report to mooltor cuh Ad.vanced to Mtclplento
IUld to obtalo dhbunement lntormatlon tor
eloCh ~sre-ement from tho reclpumta.
(:1) Federal sponaorlng &gOncl~ m80Y re-
quire torecutA at Feder&!. cilollh requirements
In the "R6mlU'lu" Bactlon ot tbe report.
(3) Wben pra.ctlcal and deemed nece5ury.
the !"eder&!. sporuorlng a.ienclu m..y require
recelpta to report In the "Renuru" e.!lcllon
the L:r.ount of CJUb ~v~oee. In 'ex.eeu of
thne daya' requlrem..enh tn thl: handa olaub-
recipients 80nd to pronde short OJJI'"ILtlve ax-
planatlor:u of actions taken by the reolplents
to re<1uCll the eXCIl5J bala.ncell.
(4) Reclple:lta sh&!.l be required to subm1t
not. m::lnt th8on. the original and two copl~ at
tbe Report. ot FederllJ. Cull. Tran.u.::Uona 15
working dtoy.a following the end of each
qUAlur. Thlt 1"ed~r.al apolUOrlng ~enclu
m.a.y require :lo montbly report tram tbo&8
reclplenta recelnng advranc.ee totaling ,1
mUllon or mOrl' per yeu.
(6) Pederal spollllOrlng ~eni:le5 may waive
the re~ulrement tor subm~lon of the Report
oC PederiU Caah TranaacUona when monthly
advllonce5 do not exceed. no,COO per reclplllnt.
provldod. th80t auch adv.ncM a.re monltortld
through other torou conhln.a l~j.bl.e at-
b-Chment, or It, In the 1".aenJ Ilpoll&Orlng
llg1:ncy's opinion. the reclplent's &Ccountlng
cont.ols are Miequaw to mlnlmlz.e ex~ve
1"ederal advances,
t. Except ~ DOted below. only the tollow-
lng forou ..nil be authori.z.a<!. for the reclpl-
entJ In raque,tl:lg adv~es and relmburM-
nu:nta.
a. RI!qu.ut lor Advance or Reimburnm~nt
(EVilbit J).
(1) Each 1"ederJ.l Ilpon50rlng ag1lncy alall
adopt the Requut tor Advlm~ or Re1mbW"M-
ment aa . llundJl.rd1zed torm tor .all nonoon-
Iltruction progruna when latun-of-cred1t or
predetarmlnad advan~ mathoda an not USbd.
_ hderal Ilpon:lOrlng &gancle5, however. hAve
the optton of using thb form tor construc-
tion progTlUIU In lieu of the OutilloY Report.
and Rbque,t tor RblmburMme:l.t tor Con-
atruct.lon Progra:lnl (aubpan.grAph ~b). .
(:1) ~lplents 1lhJl.l1 l;Hl authorIZed .to auh-
Inlt requeata tor advanca-a and relmburM-
menta at leaat monthly when letUrll-of-
credit are not. 11304. !"ederal apoll6Orlng
&gencles ehall not reqw.r. the aubmlsalon at
more than the ortg1nal and two copl.eo of the
lUqu~t tor Adva.nce or Rblmb\U'3llment.
b. Outlay repcwt an4 .eque3t 10'f' ,etm-
bur3ement lor cOlUtrllCtlo" program3 (Er-
hlblt 4).
(1) Each Federllol Ilpol\3Orln8' .:gency shall
adopt the Outl8oY Report and Request for Ra-
1mbursement for Corutructton J>rogrltoma as
t.he et.&nd.a.rdlz.e<1 forlT1At to be w.e<1 for re-
que511ng retmbun>ement tor conatructlon
progr8oma. The l"eder&!. epo:15Orlr.g' agencld
m..y. however. have the optlon of aub&tltut.-
Ing the lUquest for AdvlLOce or Relmbu~
ment P'orm(eubpu..gn.ph ....) wben the
l"'edeml e.genclea determine that It pro'rldM
adequate lnIorrru.t1on to ~t their need.a..
(2) RecipIents ahJill be ..uthortzed to aub-
mlt 'nqu~ts for relmbu~lIU!n1. at leut
monthly when letura-of-credlt are oot ~.
Federal sponaorlng 8ogencle5 ahall not requirlt
mono th..n the ortgtne.l and two coptca of the
Outlay Report 80nd Request for Relmburw-
ment for Conatructlon Programs.
II. When the P'cderal epol1JlOrlng e.genctea
need additiona.l InIoruutlon In ualng theM
for~ or morll frtlquene reporta., the following
abalt be ohserved:
a.. ~en a.ddltlonal tnrormatlon tJI ncedltd
to comply with legWativa requ~mmts.
FederiU sponaortng aler.cles ehall lsaue 10-
Structlon.e to require re<:lplentA to aubmlt
such lnforme.t1on under the "RaIDAllta" e.ec-
t.lon at the reporta.
b. Wluln nec~u.ry. to m&et epe<:lne pro-
gr3.m neecU Federal spo~rtng a.genclea .mall
aubml~ th~ propo~ reporting requlrem~nta
to thl> PlolLOclal-Management Banch. Budilet
Review Dlvtstoo. Omce of M&ne.gement 80nd
Budget for approval prIor to aubmwloo or
the rcporta tor ct63.I'an~' uoder the- pro-
Vlston, or OMB Clrcuiar No. A~O.
c. When&. 1"&<leral aponsortng agency hu
dl>hrmtnltd that a. reclplent'a a.ccountlng ays-
um does not Intel. the St<Uld8orda for Ft~
nanclal Management. conUlned In Atta(:h-
tnent P to this cIrcular. addltloIUloI pertinent
lntorm8otlon to further mooltor granta and
other s.greementa IJ'U\Y be obtAined upon
wrltun notice to the rei:lplent until such
time- a.s thl> IlYilt.em b brought up to atAndud.
d. The Ye<1er&!. spoll.5Orlng e.gency. In ob-
tAlnlng lntormatlon a.s In pa.ra>!'uph5 a.. b
and c ll.bove. mllAt comply with report clHor-
ImCl> requlrement4 of the O/tlce of M.,r~-
ment and Budget ClrcuilU' No. A-lO, lU re-
vtaed,
e, P'edl>ra1 spon.aorlng a.ienclu have the
option of Ilha.dlo.g out rany line l140m on any
",port tha.t tJI uoneceMarY tor de<:lalon-ma.k-
10"8 Purpc6M,
7. l"edoral apon&Ol'lng aaencl~ Mould ..c-
cept the Identical Information trom thl: re-
clplenta In m.e.chlne usable form8o.t or com-
puter prlntouta In lIou ot pre5(;rlbed forma.U.
8, Federal apo~rlng Il.gencte3 me.y pro-
vide computu outPUtA to recipients when It
will expe<1IUi or contribute to the accuncy
at reportliJg.
9. l"e<leral apon.aorlng agencies are author-
tzed to reproduce these fomu. The fornu for
reproduction purpoua CAn be obtll.lne<1 f"lOm
the om~ at Ma.n~ement and Budget.
PlOllAL UOISTU. VOL 41. NO. 141--o1.IOAY, JULY 3D, 1916
Arr^CHMl:l'lT 1l.-CI~CU1-^~ No. A-1IO
MONrroiuNG ^NO I\EP01\T1NG PJl.OGA^M
pJ:1\f'Q~M^,'CE
1. This llott.llochment sel.!l forth the pr(,ce-
dures for monitoring Ilond reporting program
performl\nce of recipients.
2. Recipients shall monItor the perform&nce
under gr&nts !lnd other agreements and.
where npproprlate. ensure th&t time sched-
ules are being met. projected work units by
time perlorts &re being &ccompllshed. and
other performance goals llore being llochteved.
Thl.> review sball be m..cte for each progr"m.
function. or activitY of elloch "greement e..s set
forth I n the approved Iloppllcllotlon or awe.rd
document.
3. Recipients Shlloll submit & performan~
report t technlcllol report) for each agreement
that brleny presents the following InCormllo-
tlon for each pro;:;ram. function. or nctlvlty
Involved e..s prescribed by the Federal spon-
soring "geney:
a. A comparlson oC actullol lloccompllshments
wtt.h the gOllols established Co.r the period. the
nnc!Jngs of the Investlg&tor. or both. If the
output of progr..m.s or projects e"n be readily
qu&ntll1ed. such qu&ntlts.tlve datil. should
be ret&ted to cost dllot& for computllot:on of
unit costs.
b. Reasons why established gosls were not
met.
c. Other pertlnent Information Including.
when approprl..te. an&tysls and explanation
of cost overruns or htgh unit costs.
4. Except as provided In " a.nd b below,
and tn subilaraoraph 3..( I), Att..chment G.
recipients Shllll submit the pertormance or
technical reilorts to Federal sponsoring 1i-gen-
cl~ and the Flnllnclal Status Reports cov-
ering the sane pHlod In the frequency estab-
lished by AttllChr:l~nt G oC this Circular and.
",here approilr""te. a. I1nlll technical or per-
fcrr:-unce report &rter completion of the
project on & date speclfted by the Federllol
sponsoring agency. The Federal sponsoring
Ilgency shall prescrIbe the frequency with
whiCh the perform..nce report.~ will be sub-
mitted with the request for llodvance or relm-
burs-.ment when thllot form Is uoed In lieu
of tho Financial 5tllotus Report. Except as pro-
vided for Inpllragraph 5 betow, performance
reports shsll not be required morD frequently
than quarterlY or leM frequently th..n an-
nu"Uy. Federal sponsoring agencleli may
waive the requIrement for rectplent.5 to sub-
mit pertormllnce reports with the l\nanclal
reports under the foUowtng clrcumstances:
a. When the rectptent ls required to sub-
mit a per/ormaDce report with B contlnu&-
tlOD or renewlll application.
b. When the Federat spomorlng agency de4
termlnes that on-site technical Inspections
and certlfted completion data. wl\\ .be sum-
clent to evaluate construction projects.
c. When the Federal s;><:>:130rlng agency re-
quests annual t\nllnclal reports on B nscal
year basis but It Is n~essarY to get annu&!
prcgresa reports on B calendar year be..sls.
6. Between the requIred performan~e re-
portlng dates. events may occur tll:!.t have
.51gnlt\cant Impact upon the project or pro-
gram. In auch Imtances. the recIpient shsU
Inform the Federllol sponsoring agency as soon
as the following types oC condltlotU become
known:
llo. Problems, delays. or adverse conditions
thllot wlll mllou,rllllly alTect the lloblllty to at-
tllotn prcRre.m objectives. prevent the meet-
Ing of time schedules e.nd goals. or prectude
the attaInment of project work unlu by es-
tablished time perIods. Thls disclosure shall
be accompanied by & statement of the action
te.kcn. or contemplllted. and any Federal as-
alstance needed to resolve tho sltullotlon.
b. Fa,'ora.ble developments or evenl.!l th..t
enable time schedules to be met soon~r than
NOTICES
I
e.ntlclplloU,d or more work units to be pro-
duced thllon orlglnlllly projected.
6. If any perCormllonC& revle.... conducted
by the recipient discloses the need. for change
tn the budget estimates In accordance with
the crlterle. estabUshed In Attachment J Co
this Circular. the reclptent shaU submit a re-
quest Cor budget revIsIon.
1. The Federal sponsoring ..gency sh&U
make site visits e.s trequently e.s practlcable
to:
llo. Review program e.ccompllshments and
management control systel115. llond
b. Provide such techrUclloI asslstllnce a.s
may be required.
8. Federal sponsoring agencies Shlloll submit
proposed technical and perCormance repor~
to the omce of Mllona6ement and Budget for
llopprovalln e.ccord..nce wlth the report clellr-
ance requirements of OMB Circular No. A--40
as revised.
ATr^CH~El'lT I.--CDtCULAla No. A-lIO
P^TM!:NT AEQUDlE!loI!:.NTS
1. This att!loChment establishes the re-
quired methods of makIng payments to recip-
Ients. These methods will m!nlmlz.e the time
el..pslng between tbe disbursement by theR
reclplenUl and the transfer of funds from the
United St..tes Treasury to these recipients
whether ouch disbursement occurs prIor to
or subsequent to the transfer oC funds.
2. Paymenl.!l can be made to recipients
through a letter-of-credlt, an advance by
Treasury check. or & relmbur~ment by TreB.S-
sury check, The following del1nltlons apply
for the pur;:>ose of thls atte.chment:
llo. Lecter-o/-Crecilt.-A letttr-of-credlt Is
an Ill3trum~nt certltled by an llouthorlzed om-
clal of a Federal sponsoring agency that.au-
thorlz.es .. recipient to dr!l.w funds when
needed from the Treasury. through a Fed-
eral Reserve bank and the reciplent's com-
mercial bank. In I!oCcorda~ce with the provl-
slomof Treasury Clrcula..: No. 1075. e..5 re-
vised.
b. Advance by TreMury check.-...n ad-
vance by Treasury check Is a psyment made
by a Tre8.3ury check to ~. recipient upon Its
request before outlays llore rnllode by the
recipient. or through the U5e of predeter-
mined payment schedules. -
c. Relmbur3ement by Trea.w.ry check.-A
retmbursement by Tree.sury check 15 ll. Treas-
ury cheek paid to So recipient upon request
tor reimbursement trom the recIpient.
3. Exceilt for comtructlon grllonts and
other constructlon agreements Cor which op-
tlonal payment meth0d3 e.re authorized. Il.3
described In pllrfl.graph 5, the letter-of-credit
method shall be med by Federal sponsortng
agencies IC all of the follo7llng condltlo:'\B
exist:
a, If there ls or wUl be a contlnuln~ rel..-
tlor.shlp between & reclptent and a Feder..l
spGnsorlng llgency Cor llot lee..st a 12-month
period and the total amount of advance pay-
ments expected to be received within th!l.t pe-
riod from the Federal sponaorlng agency \3
$250.000 or more. e..s pres~rlbed by Treasury
Clrculllor No. 1075. For jolnt funded projects
the Treasury he..s ..uthor~ a dolle.r crlu,rl&
oC $120.000.
b. if the recipIent h!13 establlshed or dem-
onstr..ted to the Federa.l sporuorlng agency
the willingness and ablllty to maintain pro-
cedures thllot will .mlnlmlz.e the time elaps-
Ing between the tr..nster oC funds and. lhelr
dlsbuxaement by the reclplant.
c. It the recipIent'. t\nsnctllol management
system meets the stands.rds for fund control
and ..ccounts.bl\lty prescribed In Au"chment
P' to this CIrcular. "Standards for Financial
M..nagement Sys~ems."
4. The method of ad'...nclng funds by
Trea.sury check Shlloll be used. In accord"flce
with the provlalons of Treuury Clrcutar No.
ItrvISION OJ' T1N^~ClAL PLANS
1. This attllochment se'.... forth criteria and
procedures to be follow.aby pederal s;x)O-
sorlng agencies In requiring reclplenl.!l to re-
port'devlat\.on5 from n=nclal plans and to
request a;>provals for nnanclAl plan re-
visions.
2. The !lnllonclAl plan Is the financial ex-
pre salon of the project or program as ap-
pro'/ed during the appllc..tlon and/or a..,ard
proceas. H may Include either the Federal and
non-Federat share, or only the Federal shue,
d~pendlng upon sponsor1ng agency requlre-
m~nta. It should be rela~ to performance
for prob-'a.rn evaluation purposes whenever
ailproprla ~ and requIred by the Federa.l
spolUor:r.g agency.
3. For nonconstructlonllowards. recipients
[hall Immediately request lloppro.,als from
Federal sponsoring agencies when there Is
re:lson to belleve that within the next s!ven
d..ys a revision will be neces.sary for the
following rel>SOn5:
a. Chllnges In the sco~ or the obJectlre of
the proJ~t or program.
b. The need for additional Federal fund-
Ing.
c. The transfer of amounts budgeted Ccr
Indirect C0.5ts to absorb Increues Indirect
costs or vice versa. If ailpro.,al Is required
by the Fe<!erat sponsortng agency.
d. The expenditures s.s require Ilpproval In
accordance with FMC 73--8. "Cost Prlncloles
for Educatlonllt lnstltullons." For ..11 other
awards. ailproval requirements for other
Item' of expenditures may be Imoosed IC they
are consistent ",Ith those In FMC 73--8. No
other requirements for sileclt\c Items may be
fEOUAL REGISTU, VOL 41, NO. 1oU-fktOAY, JULY 30, 1976
~PC
32030
Impoat'd uWeu .. don-Uon h&Jl ~n ~-
proved by lbe Otllce of Ib..Iu.gemLD~ &Dd
Budget.
e. Reclplenta plan to tn.Iuler funda allotLOd
for "tNolnlng allow..ncca (dlrect paymenta 1.0
trsln~s) 1.0 other C&t.egorlea or upensa.
fo. None of lbe aubat.&.Dtlve progt"&ID.tIl&UC
worle under.. gra..nt or other a.gn:ement ma.y
be subcontracted or tr&.I1A1erred without. prIor
..pprov~ of lbe Feder1lJ apoWlOrlog agoocy.
This proylslon does not "ilPly 1.0 tho purch.t.:l.e
of auppUea. IDA t.erl al, equ1puu:nt, or ~n.eraJ
aupport urvlcea.
5. The Feder1lJ &pOnsortng a.ge=y IDAY
&130, ..I. Ita opUon. I"CllftTtct tn.nsren Of tunda
among d1roct C08t ~orlee for awa.n\.a In
whlcb the Fedaal ~ uceeda '100.000
when the cumu1..lIye &mount of auch tr'aD6. .
fen ex~ or la upected to exceed Ilve
pel'CJtnt of the total budget u lut approved
by l.he &pO~rlng agency. The same crlt.erla
shall a.ppty 1.0 !.be cumuJ.JLtlve &mount of
traruofers &along progra.lD6. functlon..' and
activIties when budgeted ~plU'a\.ely for a.n
..ward. eX(:esx. thAt the Foderal WQlUOrtng
agency shiloH perml.~ no tra..nsfer that would
CAuse a.ny Fed"rai' approprts.Uon. or' part
thereof. 1.0 be used for purp0&e6 other lban .
th06b Intended.
6. All other changes 1.0 noncoostrucllon
bU::lgets. excepl. for the ch&ngea deacr1bed
In paraKraph 8, below. do not requLre ..p-
prov&l, ThI3 locludcs the u.se Of recipient
funds In furthera..nce of program objectives
over and above the recIpient minimum ..hue
lncluded In the e.pproved budget.
7. For construcUon ..wards. recIpIents
shall request prior a.pproV'lll.3 promptly from
Pedeal sponsorlng agencIes for budget re-
visIons wherever:
a. The reviston results from cb&nge5 In
the scope or the obJecllve or lbe project or
program. a.nd
b, The revLslon lru:rease:s tbe budget
lUTlounts of Federal fuods needed 1.0 com-
plet.8 the project.
8. When a Pederal Ilpoosorlng agen::y
makes lui &wa.rd tha.t provides support ,for
botb construction and noncoostrucllon work,
the Federal s;lonsorlng agency lnRY requLre
the recIpIent to request prtor approval from
the Federa.! spon.'>Orlog agency before mulng
. &n,. fund or budget tJaIUrers botween t~e
two types of work supported.
9. For both con5t.ructlon and nonconstruc-
tlon &wards. Pederal spoosorlng agencies
sh3.11 require recIpIents to. notlry the Fed-
er~l sp:msort.."lg agency promptly whenever
the &mount of Feder1lJ &utl1orlz.ed funds 18
expected 1.0 exceed the needs of the reclpleot
by more than '5.000 or Ilve percent of the
Fe::lera.! &ward. whichever I.s greater. Thl.s
notlDca.tlon wUl not be requlred.1! appll::a-
tlons ror &ddltlonAl funding lU'e lIul:lmltted
for cootlnulng grants or contr&Cts. .
10. When reque-stlng approv~1 for budget
revLslons. recIpients shall use the budg!>t
fonns that were used In the applicatIon
unle~ .. letler request will Ilumce.
11. WIthin 30 ca.lendar dl>ys from tbe d..te
of receIpt of the request for budget reYI-
Illons. Federal Ilponsorlng ageocte:s IIhall re-
view the request &nd notlry the recipIent
whblher the budget revIsIons have been ap-
proveO. If the revl>llon 13 stili under con-
Illder&lIon &t the end or 30 c&.Iendu daY".
the Federal aponsorlng agency ah.I>Jl Inform
the recIpient In wrIting of the d~t.e when the
recipient may expect the decLslon.
ATTACHJ,IZHT K,-CucULAll No. A-1IO
CU>51:0UT P1IOCD:>U1lES
J. ThIs &tt&chment prescribes unIform
cl05M>ut procedures ror Feder&l gr&nts ..nd
other aKreements wltb reclplenl.&.
2. The rolluwHl1t deDnlllons 5h&II &pply for
the purpo6e or thl. ~tl.a.chment:
I
NOnca
I
of the gror.nt or other agreement and oondl-
UOtU or lIt..&ndud3. When that occun tho
Pe<ler1lJ II1'On&orlng agenc; may. on r...:aon-
able notIce to the re<:lplent. au.a~c,d the
grant 01 other ~eemeot. and wIthhold fur-
t.hbr paym..eota, prohIbit the rectplent rrom
lncurrLng &adltlooAl obllptlotU of fun<ls
pondLng corrective &ctlon by the reCipient 0;
.. dl>C!.5lon to termln",t1on In a.ccordance w'lth
panr.grlloph ~, ~e Federal Ilporuorlng "'irency
ahAlI allow ..11 DeCOlU&rY and pro~r C06ta
that the recIpient could not relloSOnably avoid
durlng th.. period of ausperulon provtded that
they meet the. provLslona of the appliCAble
P'cderal cost prtnclptes. .
, ~. l"ederal Ilponsorlng agenctes sha.!l pro-
vide for the systematic setllement of ter-
minated granta or other agreementa InclUd-
Ing the followIng:
... T.,.-mlnation Jar cau3e,-The Pederal
IlpODllOr1ng agency may reserve the rIght to
terminate any grant or other agreement In
whole or In part at any time berore the date
of completIon. wh~never It Is determIned that
the reclplen-t ha.:s faUed to compty with the
condltloDB of the "'greement. The Peaeral
sponsorIng agency shaU p~omptty notlly the-
recIpient In wrItIng of the determlnatlon a::d
lbe reasons tor the termination. together
with the ell'ecttve date. Payments made to
reclptents or recoveries by the Fede~al IIpO:l-
aorLng agencIes under grants or other BJree-
ments terminated for cause shall be In ac-
cordance with the legal rIghts and lIabUltles
at the plLrtles.
b. Termi1l<lt.icm Jar convenieru:e_-The Fed-
eral sponsorlng BJency or rect;llent ma}' ter-
minate granto e.nd other &gTeements In whole
or In part when both parties ai:ree that the
contlnuatlon of the project would not pro-
duce benetlclal results corruriensurate wIth
the further expendtture or tunds. The t',110
plLrttes shall agree upon the termInation con-
dltlona. locludlng the ell'ectlve date and. In
the case Of plLrtlal termJne.tlons. the portion
to be termlna.ted. The recipIent sha!l u:>t
incur new obligations for the termlnated por-
Uon after the etrectlve date. and shall can-
cel as many outstandtog obllgatlons ~ pos-
a1ble, The Federal sponsorIng agency shall
allow full credIt 1.0 the reCipient, for tho
Federal share or the noncancell"ble obltga-.
t1on.s, properly Incurred by the reclptent prior
to t.ermlnattoD.
.ATTAcH~ M.--cmCt1LAR No. A-IIO
lJTAND.LlI.Il roaw. rOil APll'LYINC roa
J"XIll!:Jl.A.L ASSIST A H a:
1. This att.a.chment promulgates & stand-
a.rd torm (BF' -i24) to be use<! by publlc and
.prlV&te Inst1tuttoM of higher educlltlon.
public and prlvat.e hospItals II.nd other quasi-
public a.nd private nonprollt organIzations a.:s
a face 8h~t for &ppl1catlons when :>p;>:ylng
for Pederal gr&nta \Inder programs conred
by Part 1. Attachment A. OMB CrlculH !'io.
A-95. In additIon. agencies are p..rtlcularly
encoun.ged to etxend the use of SF 42~ to
common progra.m.a with State and local gov-
ernmenta where thLs form Is now required by
PMC 7~7. .
2. The S1" 424 mllY lobo be used. onan op-
tIonal bul.s. to fullll! the requIrements or
OMB CIrcular A-95 tor... notlncatlon of :1\-
Utnt. tr-om ..ppllcant to clearinghouses. th3t
Federal e.M1.sl&nce will be applled for. Lac:>1
or St&te ct01lrlnghouse proced ures wUl govern
the use of the form for thl:s purpose.
3. The atandard {orm will also be used hy
Feder1lJ agenctes to report to the clearlng-
bouae& on naJor &tUons taken 01\ a?pIlCll-
t10DB re...le..ed by cleAringhouses In accllrd-
a..nce WIth OMB Circular A-95. and to notHy
St&t.e.. of grants-In-aId awarded 11\ bccord-
ance with TreLSW'Y CLrcular IOB2.
n:nnA' !tH':I'~'" VOL 41. NO. U---.n'OA". JULY 30, 1916
a, Czo"eout.-The c1Q6eOut of a grant
agreem.ent b the p~ by wbleb a ~ra.1
..ponaorlng agency daterm.!W>OI th&t. all ap-
pl1ot,ble &dmIn1.atn.tlu &CUona &n.d all re-
quired worlt of the. a,greement. hAve been
comp 1 e ted by th e red pIe 0 t and t.ha l"oc1 en.l
apon30rtng agency.
b. Date oJ com'pldiml.-The date of com-
plellon 15. the data on ...\;llch aU work under
granta ana other agreemeota la completed 'or
thl> date on \he &ward document, or. any
'lIupplement or &m.endml>nt thereto, on 'Nblcb
P'cder1lJ Ilpon.sor.mlp enda.
c. DUall.c>-u>ed. ~ t.J .-Dl.sa11owed 008ta are
th06e chArges 1.0 a gra.nt or other agreement
th&t tbe Federal lipoo.sor.log ag-ency or ita
representallve det.erm1.n.es to be UDJlllow-
..ble. In accordance with the &ppltea.ble Ped-
eral cosl.'prlnclplcs or olber condItions con-
Wned In tbe agreements.
3. All l"ederal spo~rtng agencies abalJ es-
tablish clO6eout procedures that lnclude the
foUowlng requlre:mebta:
a. Upon request, lbe Fedet1l1 llponsorlng
agency shall make prompt payment.s to a
reclpIeot for aUoW'llb]e nilmburnable COIlta
under the grant or othcr '~eement. beIng
clo:>ed out, .
b. The rectplent 6tu.ll Immedlat.ely refund
any balance of unobllKated {unenCumbered)
~b that the Pt>deral aponsorlng agency bas
advanced or pald and that III not autborlud
to be .retalned by tbe re<:lplent for, use In
other grbots or otber agreements.
c, The Pederal f;pon.sorlng agency shall ob-
taln trom the re<:lplent within 90 calendar
days after the date of oompleUon Of the
agreement All t1nancW, perform.llJlce. and
other reporta required as tbe condItion of the
agreement. The agency may grant ext.eIlll.loIlJl.
wben requested by the recIpIent.
. d. When authortz.ed by the grant or other
agreement. the Federal sponsorLng agency
lIball rolle ... settlement for any upwud. or
downward adjustments to the Federal Ilhare
of costa after tbese reports a.re receIved.
e. The recipient shall llCOOunt for &ny prop-
erty acqUired wIth Federal funda, or re-
ceived from tbe Government In accorda..nce
wIth tbe provlslo08 of Atl.a.chment N tothla
CLrcular. Property Management Bta.ndards.
f. 10 the "V lOot a Ilnal &udlt ba.& not heeD
performed prlor 1.0 the clO6!'Out of the grant
or other agreement. the Peder1lJaponsorlng
agency 1lhaJ1 retaIn tha right to recover or.n
approprlate 1UD0uot after fuUy CODlllder1ng
the re=mmendaUona on dJ..sal1owed CXl8ta re-
lIultlng from the 11na.1 &udlt.
4. B=penslon a.nd. termination procedures
are contaJned In ^ttachment L to tbls CLr-
cular.
^TTACHWZHT L.--CncuI-.u. No. ^-llO
IIUsntH;ilON AND n:aW.lHATlOH PlWCED1nltS
1. Thl:s attachment prescr1bes unUonn
llU!lpen.:slon and termInation prxedurea for
Pederal granta and other agreementa with
reclplenta.
:l, The following delln1t1ons IIha.ll ..pply
fcr the purpcse of this &ttschmen,;:
a. Termin.ation.-Th" termInatIon of a
gTant or other agreement meaD:l t.he can-
cellation of Pederal spolUOrshlp. In wbole or
In part. under an agreement ..t any time
prtor 1.0 the dat.e of completion.
b. Su.s~iDn.-Tbe ouapenslon of a grant
or other agreemeot Ia a.n action by a FederAl
Ilpon.oor1ng &geney th&t temporarUy aua-
ponds Federa.! aponA:lrablp under the grant
or . other a.gree~ent. pending corredlve &e-
tiDn by tbe reclpleDt or pending ... decision
to t.erm'oate tbe grant or other a.gn:emen~
by the P'l:deraJ llpoosortng ~ncy.
OJ. All PedeMll Ilpol1llOrlng &gencles lIban
pro.,lde procedures 1.0 be foUowbd when ..
reclpleot h&a ra.Ueod 1.0 comply wtth the Lerma
~'
^TTACHlolU<T l'l.--CacULAR No, A-110 I
I'IOHKrT ).!ANAC;OUr<T STANDARDS
1. Thls att'\.Chmenl. prescribeS unUorm
stlU)dMcU goverulng m..nagernent oC prop-
erty curnlshed by tho Federal OovernmenL or
wh~ coet was cba.rged to a proJ~t sup-
porud b)' A Fe<:!eral gre.nl. or other a~re<!ment.
FederAl sponsvrlng lLllencl~ shall require re-
Cipients to observe these atandards under
g....nt.s ..nd other agreement.s and shall not
Impll'lO additional requlrementa unless spe-
clllcally requLred by Federal laW. The ~clpl-
ent mAY u~ 1t.3 own property nun~ement
st.1Ildards and procedurea provtded It oboervea
tbe pro'lt.lolU of thla attachment. Thls a.t-
uchment ..130 applies to subr~lplentB IL3
referred to ill paragraph II of tbe bMlc clr-
c ular.
2. The following del1nltlon.a e.pply for the
purpOJl.e of ~hls ..ue.chment:
... Real proper1y.-1R.eal property mee.na
land. including land ImprovementB. atruc-
tUTea &.nd e.ppurtenAIlcea. there to. but ex-
cluding mov&ble ma.chlnery and equipment.
b. Peoon4l property.-Per:lOnal property
oC e.ny kind except real property. It may be
bnglble-havlng pbyalCAl exuunce. or lotan-
gUlIe--havlng no physical ex.1stence. aucl:) a.a
paunt.3. Inventlon.s ..nd c<i'pyrlghta,
c, NonezpendllbLl: pcrlon4lpropertll.-Non-
expend&ble Pf'~:)Oal property mee.ns u.ng1ble
personal prope,rty having e. uoeCul liCe of
more than one year 1lJl<1 ..n acquultton cost
of .300 or more per unit exempt that reclp-
lenta aubJect to Coat Accounting Sandard5
Bolord rei\ulatloM may use the Ch3B stand-
'cd or a.:;oo per unit and u~Cul 1110 of two
yeara. A r~lplent may U-"& Ita own dellnltlon
ot non~xpenJ,.ble personal property provided
!.h..t tbe dellnltlon would ..t least Include aU
unglble personal property a.& del1ned &.boye.
d. E~nd4ble pc~n4l prOpctll.-Expend-
. a~le personal property ~fefll to all tAngible
peraoc.Al property other tha.n nonexpend&ble
pro;>erty.
e, Exee" propertll.-E:xce:l& property mea.nA
property under the ~ontrol ot any l"edeul
Ilil:ency that.' a.& determined by the he:.d
. thereof. la no longer required for Ita needs
or the dl.$Charge of Ita re-'POnslbllltl~. .
r. AcquultlDn COJt of purcha.sed. non-u-
pcnd<1bl~ )Xr.Kmal propertv.-^cqulaltton co.st
of r.n Item oC pUl"cha.s<:d nonexpend..ble pu-
1IO:a.l property meatu the net invoIce unit
price of the property Including the COlIt of
. modlncstlon,. att.a.cbmentB. ..cce~orlee. or
auxUIUY appuILtu.s nece~ry to ~e the
property u~b1.. for the purp~ ror which It
w.... acquired. Other charl!es auch ..., the cOlIt
ot ID3t.allatlon. transportation. tlLXea. duty
or protective In-tr&Il3lt lnM1ranu, r.haU be
In-::luded.or excluded rrom the unit a.cqulsl-
tlon coot In accordance with the reclplent'a
regular accounting pra.ctlcea.
g.' E:umpt propertll.-E:xempt pr~rty
mealU tangible personal property a.cqulre<iln
whole or In put wI th l"ederal fund.". &Ild
tlth, to which l.s vested In the recipIent wIth-
out turth~r obtlgatlon to the Federal Govern-
ment except B.S provided In subparagrapb 6&
belo..". Buch unconditional vesting of title
wUl b" pursuant to ..ny Federal leglAl..tlon
that p'O'lldes the Federal aponaor\nJf Ilil:ency
with Mlequa~ authority.
3. R~111 propertll.-E;lch FederlolspocllOrlng
agency shall prucrlbe requLrementB ror re-
cipients concerning the use and dl'POsltlon
or real property acquired parUy or wholly
under J;rants or other agref:menta. Unl~
otherwls-, provided by statuu,. such requlre-
mellts. as a minimum. ah..1I contain the
follo....lng:
a. TI tl.. to real property ,hall v~t In the
reclpler.L subject to the conditIon thAt the
recipIent -,hall u.... the real property for the
authortzed purpo,e of the proJect:...., long u
It \.s nHded.
NOTICES
b. The recipient shall obtain approval by
the Federal spo<uorlng agency Cor Lhe use. or
real property In other projects when the re-
cipient deurmlnes that the property IS no
tonger needed Cor the purpose of the original
project. X,Jr.e In other projects ahall be IImttea
to th05e under other rederally sponsored proJ-
ects tl.e.. grlUlts or. other Il&reements) or pro-
grl\ms that have purposes cOll.5lstent with
those authorIZed for support by the Federal
sponsoring Biency.
c. When the real property I' no longer
neede<:! as provided In .. IUld b above. the
recipient shan request dlspool tlon Instruc-
tlon.s rrom the Federal spon.sorlng agency or
Its successor Federal sponsor1ng ailency. The
Federal spon>orlng agency shall observe the
. tollowlng rules In the dlapoaltlon Instruc-
tlon.s :
(l) The r~lplent may be permitted to re-
hln title ..!ter It compensat.e& the Federal
Government In a.n amount computed by ap-
plying the Federal percent~e at pMtlclpa-
tlon In the cost of the original project to the
falr ma.rket value of the propnty.
(2) The recipient may be directed to aell
the property under guidelines provided by
the Federal apon.sorlng agency and pay the
Pe:ieral Oovernment lLD a.mount computed
by applying the Federal percentage of pM.
tlclpatlon In the co,t oC the ortglnal proJ~t
to the proceeds from we (af~r deducting
actual ..nd rea.sonable selllng and fix-up ex-
penae,. It any. trom the sales proceeds).
When the recipient 13 authorl:r-e:i or required
to aeU the property, pr~r &ales procedures
&hall be established that provide for competi-
tion to the extent prloctl~ble '..nd result In
the highest posslblo return.
(3) The r~lplent m~y be dlrec~ to trans-
fer title to t.'n property to the Federal Gov-
ernment provided that In such c~a the
recipient ahall bs entltled to compe~tlon
c:>mputed by applying the rectplent'a per-
centAge of partlc.lpa.tlon In the cost or the
pro61'lLID or project to the current h.lr mAr1<.et
value of the property,
4. FedeTll!;I-OtD~d r..o=rpendllbLl: pc.r<maI
prOpeTtll.-Tltle to federally-owned property
remain, vested In the l"e:ieral Government.
p...eclplent.3 ahall lubmlt annually an Inven-
tory llAtlng ot rederally-owned property In
their custody to the l"edere..l apollXlr1ng
Ilil:ency. upon completlon or the a.greement
or when the property 15 no longer nr:<<1ed,
the recipient &hall report the property to
the Federal lponsorlng agency for rurther
agency utUlzatlon.
It tile Fe:1eral aponsorlng agency b.... no
further need for the property, It &hall be
decla.re:1 exc,," and rt:pOrUd to the General
Sernces Adm1nlstrtlon. Approprl&Ul d\spO"1-
tlon Instructlona wUl be laaued to the ~-
c1plent After compleUon or the F'edllltJ
&gency revtew, .
II. E:rempt propctV.-Wben au.tu~ry au-
thortty ax\4ta. (e.g.. P.L. 85-95-6. .~ UB.C.
18G~) title to nonexpend..ble personal prop-
erty acqulre:1 with pro]~t tunda. ahall be
ves~:1 In the recipient upon r.cqulaltlon un-
less tt 1'1 detumlned that to do Il.Q Is not tn
furtherance of the ObJecUv" of the F~deral
sponsoring agency. When title 15 vute:! In
the reclptent. the recipient &hall hue no
other obllg..tlon or ..ccounublllty to the
Feder~l Oovernment for Its U~ or dl..spOl.l-
tlon eJtcept .... provtded In 6.. beloW'.
6. other rwn=pen.dl>bLl: prope-rty._Wben
other nonexpendable tr.nglble penontJ prop-
erty Is acquire<:! by a recipient with project
fund,. title ahall not be tal<en by the Fe:!-
eral Government but &hall ve,t In the re-
cipient eubJ~t to the following condltloOJl:
... RIght to trllM/er tlt!e.-For I~ms of
nonexpendable per!ona.1 properly h&vtn;3; ..
unit acquhltton cost of 11.000 or more. the
Federal ,ponsor1ng "iency may ""erve the
right to transrer the Utle to the Feder.I
~oYernment or to .. thLrd po..rty na.med by
he Federal Government when auch third
arty Is otherwls.. eligIble under eXisting
atatUu,s. Such r~rvatlon &hall be subJ~t to
the rollowlng stBndard.s:
(I) The property sh..1l be ..pproprlately
Identllle:1 In the grr.nt or other Ilil:reement
or other....l~ rnJLde known to the r-,clplent
In writing. ' .
(~) The Federal ~pon.sortnlr Ilil:ency sb..1l
ISSUe disposition InstructlolU within 120 ca.l-
end..,. da.ys aCter the end of the Federal sup-
port oC the project tor whtcb It.wlLS acqutre<l.
It the Federal spon.sorlng agency falls to IMue
dlaposltlon InstructloIU wttbln the 120 cal-
endar day period. the recipient sball ..pply
the standards of subpa.r..gupba 6b r.nd &c
a.5 approprlau,.
(3) When the Federal aponsor1ng ~ency
exercI"",s I t~ right to lAke title, the person&!
property ahall be subject to the pro',utons
for federally-owned nonexpendable property
dlllC~d In para.gnph 4. ..bon,
(4) When title 15 tnnaferred eltber to the
Federal Government or to & third putT the
provisions ot ,ubpa.r~ph &c(2) (bl should
be [ollo....ed.
b. Uu 01 other tangibLl: nQ1Uzpend<1bLl:
pro~rtll lor which the recipient ha.J tlt~.
(1) The reclptent shall UlWl the property
In the project or program for wblcb It Wll.S
&cqulred .... .Iong .... needed. whetber or not
the project or progTam continues to be sup-
ported by Fe<:!eral fund5. When no longer
. n~ded for the orlgttal pro}ect or pr~:am.
the recipient ah!UI use the property In con~
nectlon with Its other te<leralty sponsored
acUvltles. In the following order of prlorlty:
(a) Actlvltle". In the following order or
priority:
(b) Actlvltles Ilporuored by other Fc<le",1
Agencies.
(:1) Shllre4 u..se.-Durtng the time that
nonexempt nonexpendable persOnal proper-
ty ls held for ~ on the project or progt'&.C1
tor which It W:!oS acqulred. the recl;>lent
sh:u1 DUlte It aVlllllloble for UM on othH proJ-
ectB or prosr&lD.8 I! auch other UM .....Cl not
ln~rlere with the worlt on the project or
prop;ra..m tor which the property""" orIgi-
nally l1Oqulred. F\rllt preter-ence for auch
other U30 s.la1l be given to other projects or
pfOlr"'IDll apolUOl'ed by .the l"ederal af:ency
th..t tlwr.nced the property; ucond preter-
enceahJ.l1 be given to proJec~ or progra~
aponAOre<l by other Federal Ilil:encles. It the
property la owned by. the l"ederal Govern-
ment. UlWl on other r.ctlvltlee not s;>o~red
by tho Fede....1 Government sh..ll be per-
mlulble I! ..uthorlu:<1 by the Federal Lgency.
Uaer ch.argt:& ahould be considered I! appro-
prl" t.e,
C. DUporltfOft of other l1O.u:rpen.dllb!e
propertll.-When the recipient no longer
nee<1a the proputy LS provided In 6b above,
t.ha property m..y be ~ ror otber actIvi-
tieS In t.C(:of"Cllonce wlth.the following stAnd-
arcLI :
(1) N01H!rpend<>bLl: propntll 1Cith c 'unit
cu:quuHlon ~t 01 LI:.u than If.OOO.-The re-
cipient tnJoy u~ the property tor other ..ctlvl-
tiea wIthout relmbunement to the Feder&!.
Government or acU the property r.nd ~-
taln the proceed,.
(2) NOM:rpcndllbLl: J'C',0J\41 property with
a unIt cu:qul.rltlon COJt of $1.000 ~ mOT~.-
The rt>Clp\.ent D'Uoy rewn the property ror
othe1' UAelI provided tbat compensation \.s
mAde to the orlg1na1 f'ederal sponsor1ng
agency or ItB BUCU~. The ..mount oC com-
penutlon ahall be computed by "pplylng
the percentage of ~e",l putlclpUlon In
the r;ot\t or the original project or p~ognm to
the current ralr nurltet .alue or the property.
It the rectplent hu no n~d Cor the proper!)'
..nd the property ha.s further u~ value, the
recipient ~h&!1 request dls)lOllltton InstruC-
t100Jl rrom the orlgtnr.l sponsoring agency.
ffDUAL UGISTU, VOL. 41, NO. 14~IDAY. JULY 30, 1976
4(JP L
32036
'n>olr ~ IIpOlUOrtnll &3ency ah~1 deter-
rnlne whether th. property can be u~ to
ro.eet the agency'.. requlrem.nta. Ir no re-
qulr-ement ex!.ata within that Agency. the
aVl'lIabllLty of the pr~rty ah~1 be report-
ed to the Oeneral Sentces Admlnl.ltratlon
by the Federal agenr.y to deterrnlne whether a
Nqulrem.nt for the property exl.lta In 'other'
l"'e<1er..l agencle8. The Pederal sponsorIng
agency &hall u.ue tnstruct.LolU to the reclpL-
ent no later than 120 daT-> ..ner the rec!pt-
ent.. requeat and the follawt.ng, procedures
Uull govern:
(a' If ao In.atructed or If dlsp08lUon In-
ItrUctlona . a.re not l.Mued wltbln 1:l0 CAlen-
dAr dAys after tbe recipient'. requeat. the
recipient ahall ~II the property and rdm-
bu:~ tbe. l"'e<1eral Dporuorlng agency "n'
amount computed by applying to the 3lLIes
pro<:~ the percen""ge of :Federal pulld-
patton In the co.'It of the original project or
progra.m. However. the recipient sball be
permitted to deduct IUld Ntaln from the Fed-
erAl ahare .100 or ten percent of the pro-
c.eed.3. whtchever 1.5 gre..ter. for the reclplent's.
selling and handling expe~.
(b) l! the recipient 1.5 Instructed to ahlp
tbe property elsewhere. the recipient ahall
be reimbursed by the benentlng Federal
agency with an amount ....hlch Is computed
by applytng th. percentAge of the reclplent'a
pr.rtlclpaUon In the co.'It or the original grant
project or progra.m to the current fill muket
value of the property. pl\U any reasonlOblil
ahlpplng or Interim atOn.ge C08ta Incured,
(c) l! the recipient b In.trucUld to other-
~ dlspose of the property.. the recipient
alall be relmb\ll'lloed by the l"edera.t aporulOr-
Ing D.geocy tor. auch coato lncurred tn Its
dl..5poaltlon.
d. PToptTty maJ\4gement 3tandard.s lor
no7U~ble pr~rty.-The ~Iplent's
prop<".rty. mAnLgement su.ndll.%'cU for nonex-
. pend..ble person..1 property ah..lI Include the
followtog procedureJ requlrementa:
(I) Property record. ahILIl be ms.1ntalned
&.OCu..-ately and 8b..lllnclude:
(a) A ckacrlptlon of the property.
(b) ).Ianufs.cturcr'a urtal number, model
number, Federal at.ocx number. QAUonlLl
atock number, or other Ident1tlcatlon num-
ber.
(c) Source of the property, Inc1ud.1ng
~nt or other a.gre-ement number.
(d) Whether title vests In tha r<>clplent or
the ?e-<1eral Go"~""Ilment. '
'(e) AcQuWtlon date (or date rec~lved. It
the property "'&It turn1shed by the Federal
Governcent) and coat.
(f) Percentage (at the end ot tbe budtlet
year) or P'ederal Jnortlclpatlon In the coet of
the project or program tor which the prop-
erty Wa.1 acquired. tNot applicable to prop-
erty turnlabed by the Federal Government.)
(g) ~t1on. ~ and condlUon ot 'the
property and the date the Intonnatlon waa
reported. .
(h) Unit acqulaltlon ceet,
(I) Ultimate dlapoaltlon d.a.ta. tncludlng.
date of disposal and aale3 price or the method
tue<I to determine current tD.lr m~ket yalue
wh.re a recipient compen.s.ateA tbe l"'e<1erAl
apon"orlng &gency tor Ita shlLl'lI
(:I) Property owned by the :FedeMlLl Oov-
ernment mu.:it be marked U> Indicate I"ed-
erlLl owner3hlp.
(3) ^ physical Inventory of property ..hall
be tAken and the re8uH.s reconciled wIth the
property record.& at lell..$t Ollce eyery two
)'ears. Any dll'rerencC1l betw"n Quantltlll8 dll-
termlned by the physical InIIJ>eCUon and
th~ &hown ID the accounting recorda lIhl/Jl
be Invll3Ugat.ei1 to determtne the ca~ ot
the dllTerenee. The rtclplenl sh&lI. In connec-
tion ",Ilh the Inventory. verify the elll5tence,
current utllu.allon. and contlnued n"d tor
the properly.
14) A control "Y"lem ahaJl be In el'ro<:t to
IlUure adequate ureguardl to p~vent 10$ll.
I
NOTICES
dILmB-tlc. or theft of the property. Any 10&8,
dama.ge. or theft ot nonexpend..ble property
ahILH be InvestlgILUH1 and fully docum.nted;
If the property W8Ji owned by the Federal
Government. the rtclplent shall promptly no-
tlty the :FederD.l sporulOrln!t l4;ency.
. (6) Adequ&tely maintenance procedurea
ahall be Imptemented to keep the property
In good condition.
(6) Where the redplent Ls authorized or
required to ull the property, proper sa.les
procedures ahall be eatabllahed whIch would
provide for competitIon to the extent pra.ctl-
cable and r~uh: In the. highest poe.slble re-
turn.
7. Expendable peT30nal property.-'I1Ue to
expenda.ble pe~nlLl property ehall Ve5t In
the recipient upon a.cqulaltlon. It there 15 a
residuAl tnventory ot such property exceeding
'1.000 In total aggregate blr muket value.
upon tumlnatloI:\ or comptetlon of the grD.1lt
or other ~ment, &nd the property la not
needed tor a:ny other f!>derally 8ponsored
project or program. the recipient shall retaIn
the property tor u.:wi on nonfederalty spon- .
ao~ actlvltles. or &ell It. but must in either
caae. compen.&ate. the Federal Government
for Ita aha.re. The &mount of compelUlaUon
Ilh...ll be computed In the .....me manner lLS
nonexpenclAblepersonal property.
8. Intangible propeTty.
a. Inventlon3 and patent.s.-It any program
produces patentable Item.s; p...tent rlghtB.
proc~. or Inventions. In the cou~ of
work 8poD!lOred by the :Fede",,1 QQvel'nment.
auch f..ct shall be promptly and fully report-
ed to the l"ederAl apoMOrlng e.gency, Unleea
there 1.3 a. prIor &gT~ment between the re-
cIpient IUld the Pederal spoll&Orlng &gency
on dl.5poeltlon ot auch lterna. the PederAl
eporulOrlng a.gency Ilhall determine whether
protection on the InventIon or dl.3cQvery shlUl
be &Ought. The :Federal sponsoring &gency
will "Iso determine how the rlghta In the In-
ventlon o. dl.aCovery-tnc1udl.n6 rlghta under
any p..tent ~ed thereoD--ilh..lI be alloc...ted
and t..dmlnlatered in order to prot.ect the pub-
lic Interest con.sLstent witb "Oovernment
Patent Pollcy"(~ldent'" ')Jemo",udum
tor He.dB ot Executl..e Departmenta a.nc1
4encles. August :13. 1971, and ..t.t.tement of
Government Patent Policy aa printed In 3/1
F.R.l8889),
b. Copyrlghb.-Except U otherw1be pro-
vld!>d tn the term and conditions of UHt
&gN;ement. the author or the re-clpl.nt org&n-
\u.tlon Ls free to copyrtght any boo1c4. pub-
lications, or other copyrightable m.a.terlW
developed In the COW'M ot or under 110 I"ed-
enJ ~ment, but the hdenJ IIpOn.&orlng
agency ahJL!t rea<:rY1I 110 royalty-rre-e, nonex-
chllllve and trrev~ble r.ght to reproduce,
publlah. or otbe~ U3Il. and to ..utborIU
others to u.&e, the work tor QQvernment pur-
po6e8.
ATrACHWENT O.-GDICtTLAll No. A-ll0
noct11EWDi7 IITANt>4U>8.
1. ThLs lL~hment proY1des atandarda for
use by reclplenta In estabUshlng procedures
tor the procurement of supplies. equipment,
construction and other aervlcee wtth :Federal
tunda. These ilt&ndardB are turnl4hed to en-
aure tha.t such m..t.ertal4 and servlces are ob-
tained In e.n etrecUVtI ma.:a.ner and In com-
pliance w1th thll provUlOOJl ot applicable l"ed-
eN.l I..w and exeeuUve ordent. No additional
procurement lItand.a.r<b or requlrementa ..hall
be lmpol>ed by the Federal eponaorlng "Ben-
cles upon reclplenta unleu spedtlclLlly n-
qulred by Feden.1 statute or executive ordent.
2. The ...ta.ndarda cont..tned In tbl.3 attAch-
ment do not relieve the ~Iplent ot the con-
tNoCtUAl ~pon.s'bllltl~ ul.51ng under Ita
contracts. The recipient Is the "",poru1ble au-
thority. without ~un& to the l"'e<1en>J apon-
sorlng t.8ency ~r.rdlng thll Httlement e.nd
....tl.lra.ctlon of ILlI contractual an4 ad..rntnl.l-.
I
tr..Uve WUIl1l ~15lng out or procurements
entered Into. In support ot .. grll.!lt or other
AKre-ement. Thla Includes dlsputea, cl:oltn.'l.
pro~ta ot ..w..rd, source ey..luatlon or other '
rnatten of .. contractu..1 nature. M..ttera con-
cerning vlol..tlon or 1..10' are to be.reter.ed to
such local. State or P'edenJ ..uthe>rlty 1\.8 O""'y
have pro;:>u JurUdlctlOD.
3. ~Ipients ~..y use theIr owr: procure-
ment policies It.1ld procedul'll5. Howeyer. all re-
cipients ...h...ll ...dhere to the stand..rc1.5 set
forth In p..ra6T'pha 3 ILnd 4. .
a.. The recl;:>len~ shall tnAlnt..ln a code or
standa.rdB of conduct that shall govern the
performance of Its o/llcen. employ~ or
agents engaged In the aWlUdlng and admln-
Istratlon ot con tracts using Pedera.l tuntb.
No employee, omcer or agent shall p>.rtlclpate
tn the selectIon. award or admtnlstratlon or
II. contract In which Federal fUDd.3 are U5ed.
where, to bls knowledge. he or hu ImmedtAte
tamlly. partnen. or orglLnlutlon In which he
or hla ImmedJat.e f..mlly or plU"tner h..... a
On..nclAI Inter~t or with whom he ls n,&o-
tlAtlng or haa &.Ily a.rrangement concemlr\~
p~J>eCtI..e employment. The. rect;>lents' of-
ficer.!, employees or.agents shall neIther &OlI=-
tt nor accept goatultles. ravors or anything
or monetary value trom contrr.ctoMl or pOlen- '
ttal contractoMl. Such I>tandarda ...hall proVhh
for disciplinary ..ctl.oru to be Applied for '010-
1..t10113 ot such standards by the. rei:lplent4'
Omcer8. employees or aoentll.
b. All procurement t.rILruactlon3 ahall ba
conducted In ... manner to p.07tde. to the
m..xlmum extent practical. open and free
competition. The recipient llhould be alert.
to OI1!"'Lr.lutlO-~...1 conlUct..s of In~r~t Or r.on-
oom;:>etIU..e 'Praottces a.mong oontrIL-C:<lnt
th at m:o. y I'e" trl c t 0:- ellmlnA te com.,.,U:J 0 n
or oth<!~ ~tra.ln. uade. In order to en-
suro obJ~tlve contrltoCtor pertoruunu. and
fllLmlnata unteJr competltlve e,dYILn:.a.ge, CO:1-
tra.ctol's th..tdevelop or dra.!t spKltlc.a:Jons.
requ.1roments. ~t.ement8 of war):. In.-!ta-
tlons for bJc1.5 ..nd/or requeoJt.a t(Jr prq:.<::6ilJ.B
Mould be excluded trom c:om;>etln,,>: tor such
procur..,menta. AW'!IrcU ah6ll be m..ao to tbll '.
bl.dder lon'eror "'hroe bId/otter la reo!ipO~ Vll
to tb e eo IIc I ta tlon and Ia m.oe t ad v an tag e-ou.a
to the r-.eclpUnt. price and othe-r bctor.! con-
..\.ckr<<!. Sollcltatlona &hAil c.leuly ut torth
Iill req~nta that th~ bld.der!o::l'= must
fuUllI to order for hla bid/oefer to be eY1Llu-
1IoUd by the rt>Cl>>lent. Any and all bld.J/o!1er3
mot.y be rejected when It I.s In the redplent.s
tn~rest to do /lO.
c. .All ree I p ~ ts ehall e>S tabllah proct.ll' e-
ment prooedures th&t provide for. ..t. a :n.ln-
1mum, the following proetodura.1 requlrl:'menu,
(I) ~ prOC\1I"<C><lnt actloIU ah..n
follow a proce<1ure to _urc t.be avoidance
of purch....tng unoeoc-.-y or duPlicative
ltenu. Wbere "Ppr09r1"te. an aratyslos shILn
be InJI.de or leu... ..nd purch&5oC. alt.e'rOl'tive.s
to d1!>term1ne which would . be the moet
eoooomJC&l. pra.ct\cal proc:urement.
(2) Sollcltatlom for gooda and ,...,mellS
ahall be 'b6sed upon a clear ..nd accurst.<:
dC6Crlptlon ot the tedhntC1l1 requlre~nlB
fcr the ~te'r1al. product or &ervlce to be
procured. 8uch a des.cr1pUOn lL.'lall not. In
=peUtI...., procurements. contain t...~ur<<l
whtch unduty rOOltr1et competition. "Bund
n~ or equlLl" de.scrlptlon.\ tn&Y be u5<<l
....a me.....u to den nil the performance or
otber ......1I~nt requtr~nbs ot a procurement.
and wben &0 ~ the specUk feAtures or the
na.med brand which must be met by blddersl
o tr erJr.! 1la.1I ba cl ear\-y ~ed n cd
(3) PO<lve e!'foru .sh..n be nu.de by the
n>clplana to utlllu em&lI buslee..... al'd mI-
norlty-owned busln~ sources ot aupolle.
and ~rvtCH, Such etfol'U should allow th~
sour~s the m..xlmum t......lble op;>ortuollY
to compete for contr..cls utilIZing F'edtrr.l
tun~.
(4) The type or procuring tIUt.-umenta
uaed. .,!t., Qxed price 000 tra.c ta. OQ&t re:.m-
...'tl"....~' \l .........".___,., ,,""', .'" .~'" .,,~ .""'''''',V UlIY "In \...~..
bunM>le contracts. purc'='""", ordent, Inun-
U,e contracta. shaJl be det..ermlnt'd by the
re<:lplent but must be 8.p'pC""UPrla.te for the
p"rtloular procurament a.nd for promoUng
Ule be"t Int..er...t of the progrfUI\ Involved.
\he "cost-pllU-a-pe~nt.age-of-c08t" meth-
od of contr..ctlng s.h&1I not be W>ed.
(5) Contracts shill be made only w1th re-
sponsible rontre.ctor3 who ~ the po-
t.entlonsJ ability to perform succe~fuUy
under the t.emu o.nd conditions of & pro-
J>O&t'd procurement. Co""ldera.t1on s.haJI be
given to such nur.~t..era ..... cont.ra.ct.or lnt..egTlty.
rooord of pa.:;t performa.nce, nnanclaJ and
~hnl",,1 rMOurCe3 or a.ccMJIbll\ty to o!.ber
nec""""""y resour~.
(6) Ail proposed :5Ole GOurce contracts or
where only one bid or propo5Al L~ received
In whIch the ~te e>q>endlt.ure 13 ...,-
~~ to ex~ &.5.000 shall be subject to
p:-Ior approvlLl Jot the dl3creU<ln of Ule Fed-
e:-al "po:1:lorlng ~ency.
(7) Some form oC price or CQ6t anal~l.s
should be mAde In connection with every
procurement s.cUon. Prt.ce IUlAlyel3 may be
&CComplLs..'1t'd In varloUJI w~7:>. l:lcludlng the
compa.rlGOn of price quota.UOD.5 submlttt'd,
tnCket prIces Lnd slmllar Indlcl.., together
w1 th <ll5cou n t.s. C<l6 t &n&l ys.l.s l.s th ere v Ie""
&nd ev&lu..atlon oC each element ot c;o.,-t, to
det..ereUne rea80nableneM. allOCAbility and
allo W&b III t Y .
(8) Procurement reoordA and tlles for pur-
ch~s In exces.s oC tlO,ooo Mall Include !.be
follo...1n.g'
(1\) ~l~ for contractor ""I ectton'
t b) . JustlOc&tlon for la.cle. of co'mpetltlon
~'hen compeUtl.e bleb or ol!ers are not
obtained;
(c) Bas\3 for award CC8t or pT~.
(9) A. system Cor contract M1=1n!.st.r...tlon
nhall be rT"..a.IntaJ ne>d to ensure oont:'actor
conformance wIth t.emu. condltlolU and
e~clncatlolU or the contn.ct. ..nd to eIUunl
t.d"qu,,~ end Urn"ly tollcnro;> of &II pur-
che..ses.
4. The reclplent nh..1I Inctuck. In addition
to ;Jro"~lons to ~tlne & IlOUIld &nd comple~
'''6''eement. the rollow1ng premlore In a.1I
coCltract.s. TIle5e provlslol\ll ahAll 1'1:50 be lop:
plied to su Ooon tro..ct:s.
a. Con~t.s In exceM ot *10.000 ah8.lJ con-
tain contnu:tual promlol\3 or condltlon.
that ""Ill allow Cor a.dm1nlJrtratlve. oontrs.c-
tu~1 qr legal N>tned1... In lnstance'!l In 'Ill"hlch
contractors vlo\a.te or ~er.c.h contr&et t..ei'=s
..nd pro. Ide ror sucb rem.edl..l actlOl\JJ ~
mAr be ..ppropr...te.
b. ^\1 contrllCt.! 1n eXCeM ot ~10.000 ahAlI
con\Ol'.ln sulta.ble proV\8lons tor t.ennJn.e.t1an
by the rec~plent Including the rrunner by
which t.ermln&Uon will be effected ..od the
basb for settloment. In a.ddltlon. suoo con-
tra.ct.s shall describe condltloD.5 under which
I
NOTICES
I
tlOIlA (~ CYR. Put Ii). Under M'Ctlon 103
ot the Act. each oont.n.ctor ahtJl be reo.
qul~d to romput..e tho w1gea ot every mt-
chanlc and \abort:r on the b....15 or .. stAndard
....orll: day or 8 houn and .. atAndar<1 worle.
week ot 40 hours. Worle. In exceu oC the
al.&ndard. ....orkd..y or worle. we.:lt-Ls permls.slble
provided th.t the worker Ls comp'!lI"at.e<1 &t ..
rat..e oC not Ie&!!> than 1'n Urnes tpe blL3lc
r..t.<>. at p..y tor ..II hours worked In exuss
or 8 hours In ..ny calendlU' day or ol.O hours
In the workwe;,k. &-CUon 101 ot the ^ct la
applicable 1..0 construction work and provld.",
th..t no laborer or rnechantc ehall be requlrt'd
to work In eurroundtn~ or under workIng
condltlons which ....e uDSAnlta.ry. h..urdous
or dangeroU5 to his health Lnd saCety as de-
t.ermtne<1 undH COMtructlon u.1~t, and
health at.&ndard.s promlllg..t...d by the Secre-
tuy ot Labor. The:;e requirements do .I,Ot
apply to the purch.....s o! supplies or ma~-
rlats or artlcles ordinarily avallable on the
oPf'n mari::.et. or contracl.s for trao.sp',rtatlon
or tran.srnl.Mlon oC lntelltKeflce.
h. Contnct.5 or ~""ment.s. the prinCipal
purpC>E;e or which Is to create, develop or lm-
prove prod '.lct3, proces.se.~ or methods; or tor
exploration Into tleld.s th!lt dlre<:t\v concern
public hes..lth. sa!ety or welCare: or'l:ontr3.ct3
In the rteld oC scIence or technology in which
there hl'3 ~.m little significant experience
ou!.!>lde oC work tundffi by F~eT31 ~~st-
..n~. shall rontatn a notlu. to tl1.~ ~nect th!'t
matt..e~ .r~dlng rIghts to Inventloru ..nd
m..u,rta.ls g~neratt'd under thll contr"ct or
a.gTeement LI'e subject to the regull.tlon,. IS-
aue<! by the ~d~r..1 spoll50rln~ llgency and
the recipIent. The contractor !In a:! be ad-
v~d a..s to the eource or addltlonal InCorma-
tlon regardtng th~ matt..er.!.
1. All negotlat..ed contra.ots (except those
or 110.000 or 1""4) aWArded by redplents
shall Include a prov1.8lon to the er:ect that
t!l~ recipient. th~ P..ders..l sponsoring agency.
the Comptroller ~neral or the Unlt.e<i St..u.e
or any ot tileLr duly &uthor17~ repre5e:lta~
tlve". ah.IJI have o..c= to any book". d<Y.u-
menta. pap.us and records or the contra'. lor
which L~ dIrectly p~rtlnent to a. sptClnc pro-
gram for tile purpose or malcln& a'.ldlte.
eXAmlnaUon... ex~rp!.!> and tl'1lnscrlp~lor:3.
J. Contr-a.cta o.nd subgnDt.~ ot ..mount:. In
eXCeM of aloo.ooo ehlLlt contain.. pr....;13lon
th..t requl..-es the rectplent to o.gree to com-
ply wlth Lll applicable el.&nda.rd3, orders or
regulatlo= \..5.sued pursusnt to th" Clear Air
Act ot 1970 (4:l UB.C. lM7 et uq,) and the
J>edel"!Ll Wa.ter Pollution Con trot Act 133
U..3.C. 1251 et uq.) LS ..mendt'd. Violations
shall be uport.ed to the Federal sponsoring
~ncy ..nd the Reglon!'1 atTIc. or the En-
vLronm~Dt..1 Pro~t1on ^<I;ency. .
IP'R Doc.76-219Oi FlIed 7-29-78.8:45 am)
"DUAL u<mnlt, VOL 41, NO. 141--UIDAY, JULY 30, 197~
the contract m.a.y be t..ennln...t..e<2 tar de1..ult
lU weU a.s oondltlolU where the contract ro"1
be t.ermln..ted bec1l.u~ or oln:umslAnCes be-
yond the controt of the oontr&cl.oI',
c. In &.il contr..cts lor conatru<:tlon or ta-
cUlty Improvement a~ed roc more than
"100.000. recipient.. shall ohf;.,.-ve uie bond-
Ing ~ulrement.s pronded In Att&chm.ent B
to this clC'Cula.r.
d. Alt oontract.8 a..,.tded by recipients o.nd
thllLr contno.cton or subgT'ant..ees tu.Vlng a
value ot more than '10.000. ~1Ll1 conteJn ..
provl.slon requlrLng cornpllance w1t.ll Execu-
tive Order 11:li6. entltl~ "Equal Employ-
ment Opportunity." u arn~nded by Execullvll
Order 11375. and &.3 supplemenu,d In Dep..rt-
ment oC ~bor r"lilubUons (4-1 C?R, Put 60)_
e. ^" contract3 and subgran!.!> In excess or
'2.000 ror construction or repair a.warded by
recipients and 5ubr~clple",\JI shall Include ..
provisIon tor compll,,"ce with the Copelo..nd
"Antl-Klck llacll:" Act (18 U..S.C. 874) as
lIuppt~mented In D<:p:lrtment or Labor'
rtgulatloD.S (29 CFR. Part 3). Th\3 Act prcr
V1d.... that et.Ch contr""tor Or' 6u~!>,,"nu-e
stuJI be prohibited rrom Inducing. :'y any
m~&D.5. any person employt'd In tbe construc-
tion. completion. or repair of public worle.. to
give up any part ot the compensfltlon to
whleh he \3 otherwLse entltled. The recipient
eh..ll report ..11 lIU3Pf'cud or reported vlola-
tlons to the l"ederal spol\.3oOrtng &g~ncy.
r. When requtred by the 7~d~ral program
legtel!lotlon, &ll COD..ltructlon contr:lCt3
aW1lrded by the recipients and subreclpteot.s
ot more than ~:l.OOO ah&lllnclude a. provision
tor compllanc~ with thll D..vls-Bacon Act (10
U.B.C. :176.. to 1.-7) and M supplemen.t..e<2 by
~p1ftment ot ~bor n:gW&t1ons (:29 CPR.
Part 5). Under thts Act contractors sh..U be
requLrcd to pay wages to l&borers and me-
cha.nlCll at a rate not les.s than th~ minimum
w~~ epeclned tn .. w~ile d"termlnatlon made
by the Secretary or LAbor. In e.ddltlon. con-
tr&Ctol'B lib ILl I be r-equlred to pay wlLges not
leaa than onu .. week. Thll recipient IIhul
place a copy oC the current prev!'l1lng wage
d"urmlnstlon IMued by the Department of
Lllbor In ea.cb l>OlIclt.atton and the awa.rd
or .. contrllCt sball be conditioned upon !.be
acceptAnCb of the wage det.ermlna.tlon. Thll
recIpient wall report &II lIU3pecud or re-
po~ vlol..t1oD.S to th~ Federal sponaorlng
&iency.
g. v.oe", ..ppllc!lbte. aU oontr..cts awude<1
by reclpten!.!> 1n eXCeM ot .:1.000 tor construc-
tion coDtDCts and In exce.llll ot ':l.!>OO tor
other cont.n.cta that Involve !.be ~mployment
of mecbanlcs or laborers. shaUlnclude .. pro-
vl.slon for complla.nu with a.ectloru 103 and
107 ot the Contract Work Houl'B and Satety
Btandard.l Act (40 U B.C. 3:17-330) a.a IIUP-
ptement.ed by Depa.rt.men.t oC Labor regul..-
;:} (J f' c...
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METHOD 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 doc'$lentation as requested.
Any program income shall be submitted (0 the CITY through the
DEPAR~NT at least quarterlv. FeeS collected, if any, shall ~e re?orted
but are not to be construed as prograc income.
Requests for rei~burse~ent shall not be reduced by any orogr2w income
received.
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SECTION 3 CLAUSE
I
THE FULLOWING SECTION 3 CLAUSE SHALL lJE INCLUDED IN ALL CONTRACTS FUR WORK IN
CONNECfION WITH A SECfION 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 subj ect 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 24 CFR, and all applicable rules and orders of
the Department issued thereunder prior to the execution ot' this contract. The
parties to this contract certify and agree that they are under nocontractural
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 shall 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.
./}PPFilJO/A. E-l
I I
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 herein.
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, FIA., 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 CPR 60-4.3(a), and its efforts to meet
the goals established for the geographical area where the contract
res).l.lting from this solicitation is to be performed. The hours of minority
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 evenly on each of
i t.s 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 SlO,OOO 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 affirmat~ve action 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 con tractor will, in all solici ta tions 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
~derstanding, 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 tabor, 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 contractor's 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 subcontractor 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 number" means the Federal Social Security
number used on the Employer's Quarterly Federal Tax Return, U. S.
Treasuzy Department Form 941.
d. "Minority" 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) 1
(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 the provi-
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~~~r 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-whichi t 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 prOV1Sl.ons 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 tra~n~ng hours of apprentices and trainees
to be counted in., meeting the goals, such apprentires and trainees must
be employed by tie Contractor during the training 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
employment opportunity. The evaluation of the Contractor'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 lis t of minori ty 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 opportuni ties 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 employment 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 reques ting t.~eir coopera-
tion in assisting the Contractor in meeting its EEO obligations; by
including it in any policy manual and collective bargaining agreement; by
F-S
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publicizing it in the company newspaper, annual report, etc.; by
specific review of the policy with all management personnel and
with all minority and female employees at least once a year; 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.
i. Direct its recrui tlnent efforts, both oral and wri tten, to minori ty ,
female and community organizations, to schools with minority and
female 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 p). 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.
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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 opportunity. 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 different standards of
compliance or upon the application of requirements for the hiring of
local or other area residents (e.g., those under G~e Public Works
Employment Act of 1977 and the Community Development Block Grant
Program) .
F-8
Jgreement during the period of the
agreement and based on either:
(iJ Prior level of reha bilitation-activity:
or
(ii) Rehabilitation staffing and
management plans of the locality for the
period of the agreement.
Subpart K-other Program
Requirements
~ 570.600 General
(a) Section l04(b) cJ the Act provides
that any grant under section 106 of the
Act shall be IT_ c:; - 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 l06(b) (Entitlement
Grants) and 106(dJ(2J(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 as
applicable to grants made under section
106 of the Act, other than grants to
I
States made pursuant to section l06(d)
of the Act. for purposes of the
determinations described above to be
made by the Secretary under section
l04(dJ(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
applicable to activities assisted under
the Act. For laws which the Secretary
will treat as applicable to grants made
to States under section l06(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.
(c) In addition to grants made
pursuant to section 106(b) and
106(d)(2J(B) of the Act (Subparts D and F
of this Part, respectiyely), 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 end 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
G-l
I
under that section (Secretary's
Discretionary Fund) or section 119
(UDAG) without satisfactory assurances
to' the same effect.
(a) "Pub. L. 88-352" refert \0 Title VI
of the Civil Rights Act of 1964 (42 U.S,C.
2OOO<i et seq,), 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. HUU 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 VlII
of the, Civil Rights Act of 1968 (42 U.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
perton from discriminating in the sale or
rental of housing. the financing of
housing, or the provision of brokerage
services, including in any way making
unavailable or denying a dwelling to
any.person. because of race. color,
religion, sex. or national origin. Title
VIlI further requires the Secretary to
administer the programs and activities
relating to ho~sing and urban
development in a manner affirmatively
to further the purposes of Title VIlI.
Pursuant to this statutory direction, the
Secretary requires that grantees
administer all programs and activities
/J/:Jr,-:-)~/()I>( G
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 crn Part 107.
~ 570.602 Section 109 01 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 contractor 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 acti\'ity to which the
I
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 allY 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
activity.
(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.
(411i) In administering a program or
activity funded in whole or in pari 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
discrimina lion.
(ii) Even in the absence of such prior
discrimination, B 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 obligation
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 aection, 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"
A~;:'E7VDIX I.J.
46022
I
I
Federal Register I Vol. 45. No. 132 / Tuesday. July 8, 1980 I Notices
OFFICE OF MANAGEMENT AND
BUDGET
Circular A-122. "Cost Principles for
Nonprofit Organizations"
INote: This reprint incorporales corrections
published at 46 FR 17185. Tlwsuay. March 17.
19111./
AGENCY: Office of Management and
Budget.
ACTION: Final Policy.
SUMMARY: This notice advises of a new
OMS Circular dealing with principles for
determining costs of grants. contracts.
kind 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
understanding 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
others. 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
have tried to make the language of this
Circular consistent with that of cost
principles for educational institutions
ICircular A-21). and State and local
govl~rnments (Circular 74-4).
SIIII/II/(J/)' uf Signi{icant Changes:
Sl!t forth are changes thai have been
made in the final Circular as a result of
public comments. The more significant
changes to the basic Circular and
Allachment A include:
1. Paragraph 2. "Supersession" was
added to the basic Circular to make it
clear that 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 reasonableness of allocability
of that element. Also, this paragcaph
was amended to make it clear tha t
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 (0 which nonprofit organizations
would not be covered by the Circular.
Now, Appendix C to the Circular lists all
exclusions.
4. Paragraph 8 was added (0 the basic
Circular to permit Federal agencies to
request exceptions from the
requirements of the Circular.
5. Paragraph E.2. was added to
Allachment A to cover the negotiation
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 {or
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 allocated to donated services to be
charged to an agreement or used to meet
cost sharing or matching requirements.
4. Paragraph 13. Equipment and Other
Capital Expenditures. was changed.
Capital equipment is now defined as
having an acquisition cost of $500 and a
useful life of more than two years.
5. Paragraph 24, kleetings.
Con{erences. The prior :qlproval
requirement for charging meetings and
conferences as a direct cost was
deleted. A sentence was added to make
it clear such costs were allowuble
provided they meet the criterion for the
allowability of cost shown in
Attachment A.
6. Paragraph 26. O';l}anization Costs.
was amended to provide that
organization costs may be ullowable
when approved in writing by the
awarding agency.
7. Paragraph 28. Page ChUl~'ies in
Pro{essional Journals. was revised (0
provide that page charges may be
allowable. .
8. Paragraph 36, Public fn(urll/ut i/Jn
Service Costs, was modified to make
public information costs allowuble uS
direct costs with awarding agency
approval.
9. Paragraph 42. Rental Cus/s. was
rewrillen 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 that the
organization would have been allowed
had it purchased the properly; e.g..
depreciation or use allowances.
maintenance. taxes. insurance. dc,
b. Clarify the criteria for material
equity leases.
10. Paragraph 50. Trovel Custs. 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 ,gister I Vol. 45, No, 132 I Tuesday, July 8, 19aO I Notices
Response. The cost principles are
designed 10 cover most situations;
however. there are always exceptions
that must be considered on a case-by-
case basis. The Circular contains a
provision for Federal agencies to request
exceptions.
Comment. Several respondents
questioned why interest is nol an
allowable cost. since it is an ordinary
and necessary cost of doing business.
Response. It has been a longstanding
policy not to recognize interest as a cost.
However. this policy has recently been
revised for State and local governments
in Circular 74--4. with respect to the cost
of office space. The revision provides
that "rental" rates for publicly owned
buildings may be based on actual costs,
including depreciation. interest,
operation and 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
reluctant to 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 they are within the scope of work
of a particular agreement.
Comment. 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.
Comment. One respondent said the
requirements of the Cost Accounting
.Standards Board should be applied to
cover contracts with nonprofit
organiza tions.
Response. It is unlikely that the type
of grantees 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
allocation of indirect cost to donated
services would pose a tremendous
difficulty to the organization. The
organization relies on a corps of
approximately 1l.000 committee members
to carry oul oLligations in response to
Cll\'l~rnmenl 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 commillee members
spend many thousands of hours outside
the organization's premises conducting
research.
Response. It would appear that 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 commillee-type arrangements 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).
John J, 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
organiza tions.
1. Purpose, This Citcular 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. This Circular
supersedes cost principles issued by
46023
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 selllement.
All of these instruments are hereafter
referred to as a wards. The principles do
not apply to awards under which an
organization is nol required to account
to the Government for actual costs
incurred.
b. All cost reimbursement subawards
(subgrants. subcontracts. etc.) are
subject to those Federal cost principles
applicable to the particuliJr organiz!llion
concerned. Thus. if a suba ward is to a
nonprofit organization, this Circular
shall apply; if a subaward is to a
commercial organization. the cost
principles applicable to commercial
concerns shall apply; if a subaward is to
a college or university. Circular A-21
shall apply; if a subaward is to a Srate.
local. or federally recognized Indi!ln
trib!ll government. Circular 74-4 shall
apply.
4. Definitions. a. "Nonprofit
organization" means any corpora tion.
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
universities; Iii) hospitals; (iii) Sta,e.
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 organiza tions
shall operate under Federal cost
principles applicable to commercial
concerns. A listing of these
~
46024
Federal Register I ~ol. 45, No. 132 I Tuesday, July a, 1980 I Notices
organizations is contained in
Attachment 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 matters
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 Attachments:
Attachment A-General Principles
Attachment B-Selected Items of Cost
Attachment C-Nonprofit
Organizations Not Subject 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 Dote. 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 permilled 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. Jr..
Directur.
[Circular No. A-1221
Allachment A
General Principles
Tablt.. or COllt/!nts
A. Basic Considerations
1. Composilion of tOI,,) costs
2. Factors affecting allowability of costs
3. R,~asonable cosls
4. Allocable costs
5. Applicable credits
6. Advance understandings
B. Direct Costs
C. Indirect Costs
D. Allocation of Indirect Costs and
Determination ofIndirect Cost Rates
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]
AUachment 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 allocable indirect costs less any
applicable credits.
2. Factors affecting allowability of costs.
To be allowable under an award. costs must
meet 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
opera tion of the organiza tion 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 to the
organiza tion, its members. employees. and
clients. Ihe public at large. and the
Government.
d. Significant deviations from the
established practices of the organization
which may unjustifiably increase the 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 cost is allocable 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 to the benefits received. or
(3) Is necessary to the overall operation of
the organization. allhough a direct
relationship to any particular 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 to
overcome funding deficiencies. or 10 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 to awards as direct
or indirect costs. Typical examples of such
transactions are: purchase discounts. rebates
or allowances. recoveries or indemnities on
losses. insurance refunds. and adjustments of
overpayments or erroneous charges. To the
extent that such credits accruing or reccived
by the organization rclatc to allowable cost
they shall be credited to the Government
either as a cost reduction or cash refund as
appropria te.
b. In some instanccs. the amounts received
from the Federal Government to finance
organizational activities or service opl!rations
should be treated as applicable credits,
Specifically. the concept of nelling such
credit items against related expenditures
should be applied by the organization ill
determining the rates or amounts to be
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.
lc) For rules covering program income
lLe.. gross income earned from federally
supported activities) see Attachment 0 of
OMB Circular A-110.
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 that receive
a preponderance of their support from
Federal agencies. In order to a void
subsequent disallowance or dispute based on
unreasonableness or nonalloc"bility. it is
often desirable to seek a wrillen agreement
with the cognizant or awarding agency in
advance of the incurrence of special or
unusual costs. The absence of an advance
agreement on any element of cost will no!. in
itself. affcclthe reasonilhl,~nl~ss or
allocability of that elenwlll.
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46025
8. Direct Costs
1. Direct cosls are those that can be
identified specifically with a particular final
cost objective: Le.. a particular award.
project. service. or other direct activity of an
organization. However. a cost may not be
ussigned to an award as a direct cosl if any
other cost incurred for Ihe same purpose. in
like circumslances. has becn 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 lhe organizalion
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 trcatcd as an indirect cost for reasons of
practicality where the accounting treatment
for such cost is consistently applied to all
final cost objectivcs,
3. The cost of cerlain activities are not
allowable as chargcs to Federal awards (see.
for example. fund raising costs in paragraph
19 of Atlachment B). However. even though
thcse costs are unallowable for purposes of
computing chargcs to Federal awards. they
nonetheless must be treatcd as dircct cost for
purposes of detcrmining indircct cost rates
and be allocatcd their share of the
organization's indircct costs if Ihey 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 treatcd as dircct costs whether or not
allowable and be alloca1ed an equitable
share of indirect costs. Some examples of
thcse types of activities include:
a. Maintenance of membership rolls.
subscriptions. publications. and related
functions,
b. Providing services and information to
membcrs. legislative or administrative
bodies. or the public.
c. Promotion. lobbying. and other forms of
public rclations.
d. Mcetings and conferences except those
hcld to conduct thc gcneral administration of
the organization.
3. Maintenance. protection. and investment
of special funds not used in operation of the
organization.
f. Administralion 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
cannot be readily identified with a particular
final cost objcctive. Direct cost of minor
amoonts may be treated as indirect costs
undcr thc conditions described in paragraph
B.2. ahove. After direct costs have been
dctcrmined and assigned dircctly to awards
or other work as appropriate. indirect costs
are lhose rcmaining to be allocated to
bencfiting cost objectives. A cost may not be
allocated 10 an award as an indirect cost if
any other cost incurrcd 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
Iypes of costs which may be classified as
indirect cost in all situations. However.
typical examples of indirect cost for many
nonprofil organizations may include
depreciation or use allowances on buildings
and equipment. the costs of operating and
maintaining facilities. and general
administra tion and general expenses. such as
the salaries and expenses of executive
officers. personnel administration. and
accounting.
D. Allocation of Indirect Costs and
Determination of Indirect Cost Rates.
1. General.
a.Where a nonprofit organization has only
one major function. or where all its major
functions benefit from its indirecl costs to
approximately the same degree. the
allocation of indirect costs and the
computation of an indirect cost 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. alloca tion 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 relative 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 funct,ions 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 alloca ting 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 indirect cost rale which is used to
distribute indirect costs to individual awards.
The rate should be expressed as the
percentage which the total amount of
allowuble indirect costs bears to 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 expenditures and
unallowable cosls. 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 lexcluding 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
Allachment B.
d. Except where a special rale(s) is
required in accordance with paragraph U.5
below. the indirect cost rate developed 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 Ihe special
raters).
3. Multiple allocation base method.
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 likc character in
terms of the functions they benefit and in
terms of the allocation base which best
measures the relative benefils provided to
each function. The number of scpara tc
groupings should be held within practical
limits. taking into consideration the
materiality of the amounts involved and the
degree of precision desired.
c. Actual conditions must be taken into
account in selecting the base to be used in
allocating the expenses in each 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 Ihat 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 the 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 pcriod.
d. Except where II special indirect cost
raters) is required in accordance with
46026
Federal Register
pilragraph D.S. below. the separate groupings
of indirect costs allocated to each major
funclion shall be aggregated and treated as a
common pool for that function. The costs in
the common pool shall then be distributed to
individualllwards 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 cllpital
expenditures and other distorting items such
as major subcontracts and subgrants). direct
salaries and wages. or other base which
resulls 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: Ii) 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 ~ach award or other
activity using a base most appropriate to the
particular cost being prorated.
b. This melhod is acceptable provided each
joint cost is prorated using a base which
accurately measures the benefits 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 0.2 above.
5. Special indirect cost rates. In some
instances. a single indirect cost ra te for all
activities of an organiza tion 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 of awurds performed in a common
environment. The factors may include the
physical location of the work. the level of
administrative support re4uired. the nature of
the facilities or other resources employed. the
scientific disciplines or technical skills'
...
~ Vol. 45, No, 132 I Tuesday, July 8, 1980 II Notices
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 separate
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 (ii) the volume of work to
which the rate would apply is material.
E. Negotiation and Approval 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 tales for a nonprofit
organiza tion on behalf of all Federal
agencies.
b. "Predetermined rate" means an indirect
cost rate. applicable to a specified current or
future period, usually the organiza tion's fiscal
year. The rate is based on an estimate of the
costs 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 ra te, except that the difference
between the estimated costs and the actual
costs of the period covered by the rate 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 approval 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 ra Ic 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.S above. it will. prior to the time
the rates are ncgotiated. notify th~ cognizant
agency.
b. A nonprofit organization which has not
previously established an indirect cost ra te
with a Federal agency shall submit its initial
indirect cost proposal to the cognizant
agency. The proposal shall be submitted us
soon as possible aftcr the organization is
advised that an award will be made and. in
no event. luter thun three months ufler lhe
effective dale of the awurd.
c. Organizations thaI have previously
established indirect cost rates must submit a
new indirect cost proposal to the cognizant
agency within six months after the close of
each fiscal year.
d. A predelermined rale muy be negoliated
for use on awards where there is reasonable
assurance. based on past experience and
reliable projection of the organization's cosls,
that the rate is not likely to exceed a rute
based on the organization's actual costs.
e. Fixed rates may be negotiated where
predetermined rates are n~t considered
appropriate. A fixed rate. however. shall nol
be negotiated if (i) 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 organizalion is
too erratic to permit an equitable carry-
forward adjustment: or (iii) the orgunization's
operations fluctuate significantly from year to
year.
f. Provisional and final rates shall be
negotiated where neither predetermined nor
fixed rates are appropriate.
g. The resulls of each negotiation shall 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 wi th
the appeals procedures of the cognizant
agency.
i. To the extent that problems are
encountered among the Federal agencies in
connection with the negotiation and approvul
process. the Office of Management and
Budget will lend assistance as required to
resolve such problems in a timely manner.
[Circular No. A-1221
Attachment B
Selected Items of Cost
Table of Contents
1. Advertising costs
2. Bad debts
3. Bid and proposal costs (reserved)
I
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Federal Register I Vol. 45, No. 132 I Tuesday, July a, 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. Employce morale. health and welfare
costs and credits
12. Entertainment cosls
13. Equipment and other capital expenditures
14. Fines and pcnallies
15. Fringe benefils
16. Idle facilities and idle capacity
17. Independent research and development
(reserved)
16. Insurance and indemnification
19. Inlerest. fund raising. and investment
management costs
20, Labor relations costs
21. Losses on other awards
22. Maintenance and repair costs
23, Materials and supplies
24. Meetings. conferences
25. Memberships. subscriptions. and
profcssional activity costs
26. Organization costs
27. Overtime. extra.pay shift. and multishift
premiums
28. Page charges in professional journals
29. Participant supporl costs
30. Patent costs
31. Pension plans
32. Plant security costs
33. Preawnrd costs
34. Professional service costs
35. Profits and losses on disposition of
depreciable property or other capital
assets .
36. Puhlic information service costs
37. Publica tion and printing costs
38. Rearrangement and alteration costs
39. Rcconversion 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
[Circular No. A-122]
Altachment B
'Selected Items of Cost
Paragraphs 1 through 50 provide principles
10 be ilPplied in eSlablishing the allowability
of cerlain items of cost. These principles
apply whether il cost is treated as direct or
indirect. Failure to mention a particular item
of cost is not intended to imply that it is
unllllowable; ralher determination as to
allowability in each case should be based on
the trealment or print:iples provided for
similar or relilted items of cost.
1.lIdl'(,r/lsill!i GUS/S.
il. Advertising costs mean the costs of
media services and associated costs. Media
udvertising includes magazines. newspapers,
radio and lelevision programs, direct mail.
exhibits. and the like.
b. The only advertising costs allowable are
those which are solely for (i) the recruitment
of personnel when considered in conjunction
with all other recruitment costs. as set forth
in paragraph 40; (ii) the procurement of goods
and services; liii) 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 Atlachment N of
OMB Circular A-110; or (iv) specific
requirements of the award.
2. Bad debts. Bad debts. including losses
(whether actual or estimated) 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 default 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 terms 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 10. salaries. wages.
director's and executive commitlee 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. Allowability. Except as otherwise
specifically provided in this paragraph. the
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 .consistently
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 considerations 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:
(lJ Compensation to mcmbers of nonprofit
organizations, trustees. directors. associates.
officers. or the immediate families thereof.
Delermination should be made that such
compensation is reasonable for the aClual
personal services rendered ra ther than a
distribution of earnings in excess of costs.
(2) Any change in an organization's
compensa tion policy resulting in a
substantial increase in the organization's ,
level of compensation. particularly when it
was concurrent with an innease 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 efforl actually devoted 10 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 writlen
organization policies. Such benefits whether
trea ted 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 reserve 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 been 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 Ihe liability.
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Federal Register I Vol. 45. No. 132 I Tuesday, July 8, 1980 I Notices
(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
to all activities of the organization.
(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
reasona bleness;
(b) The methods of cost allocation are not
discrimina tory;
Ie) 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
(dJ 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
Retiremenl Income Security Act of 1974 lPub.
L. 93-406) are allowable. Late payment
charges on such premiums are unallowable.
(3J Excise taxes on accumulated funding
deficiencies and other penalties imposed
under the Employee Retiremenl 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
paymenl.
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.
J. Support of salaries ond 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 organizlltion. The dislribution of
salaries Ilnd wages to awards must be
supported by personnel activity reports as
prescribed in subparagraph (2J below. except
when a substitute system has been approved
in writing by the the cognizant agency. (See
paragraph E.2 of Allachment A)
(2) Reports reflecting the distribution of
activity of each emplayee must be
maintained for all staff members
(professionals 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 Junctions 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:
(a) 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
fulfillment of their obligations to the
organization.
(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. in addition 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 Standl\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 wa'ges
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.(2)(d)); pension funds lsee paragraph
6.(g)); and reserves for normal severance pay
(see paragraph 44.1b)(1).
8. Contributions. Contributions and
donations by the organization to others are
unallowable.
9. Depreciation and use allowances.
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 le.g.. buildings. office equipment.
computer equipment. etc.J.
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 retiremenl.
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 annuul
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 cosl.
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 permunently
fixed to it and which is used as furnishings or
decorations or for specialized purposes (e.g..
dentist chairs and dental treatment units,
counters. laboratory benches bolted to the
floor. dishwashers, carpeting. etc.J. 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 capitul
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 reflecl
the pallern of consumption of the asset
during its useful life. In the abscncc of clear
evidence indicating thalthc cxpected
consumption of the asset will bc significantly
greater or lesser in the early pori ions uf ils
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46029
useful life than in the later portions. the
slraight-line method shall be presumed to be
the appropriate method. Depreciation
melhods once used shall not be changed
unless approved in advance uy the cognizant
Federal agency, When the depreciation
method is introdoced for application to assets
previously suujectto a use allowance. the
combination of use allowanccs and
depreciation applicaule to such assets must
not exceed the total acquisition cost of the
assets. When the depreciation method is used
for buildings. a building's shell may ue
segregated from cach building componcnt
(e,g,. plumbing syslem. heating. and air
conditioning system. etc.) and each item
depreciall~d over its estimated useful life; or
the entire building (i.c". the shell and all
components) may be treated as a single asset
and depreciated over a single uscfullife.
, r. When thc depreciation mcthod is used
for a particular class of assets, no
depreciation may be allowed on any such
assels thaI. under paragraph e. abovc. would
be viewed as fully dcpreciated. Ilowever. a
reasonablr, use allowance may be negotiated
for such assels if warranted after taking into
consideration the amount of depreciation
previously charged to the Government. the
estimatcd useful life remaining at time of
negotiation. the effect of any increased
mainlenance 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
propcrty records and physical inventories
must bc laken at least once every two years
(a statistical sampiing 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. D~nations
a. Sen'ices received.
(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 the performance of a direct cost activity
shall be considered in the determination of
the organization's indirect cost rate(s) and.
accordingly. shall be allocated a
'proportionate share of applicable indirect
costs when the following circumstances exist:
(a) The aggrcgate value of the services is
material:
(bJ 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 negoliate an
appropriate allocation of indirect cost to the
services,
(4) Where donated services directly benefit
a project supported by an award. the indirect
costr. allocated to the services will be
considered as a part of the total costs of the
project. Such indirect costs may be
reimbursed under the award or used to meet
cost sharing or matching requirements.
(5) The value of the donated services may
be used to meet cost sharing or matching
requirements under conditions described in
Allachment E. OMB Circular No. A-110.
Where donated scrvices are trealed 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 acliviti"es 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. Ifthe 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 Attachment E, OMB Circular No. A-110.
The value of the 'donations shall be
determined in accordance with Attachment
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 10 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 lbut see
paragraphs 11 and 25).
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 langible personal property
having a useful life of more than two years
and an acquisition cost of $500 or more per
unil. An organization may use its own
definition provided that it at least includes all
nonexpcndable tangible personal property as
defined herein.
(2J "Acquisition cost" means the net
invoice unit price of an item of equipment,
including the cosl of any modifications.
allachments. accessories. or auxiliary
apparatus necessary to make it usable for the
purpose fur 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 written accounting
practices.
(3) "Special purposc equipmenl" means
equipment which is usable only for research.
medical. scientific. or technical activities.
Examples of special purpose equipmenl
include microscopes. x-ray machines. surgical
instruments. and spectrometers.
(4) "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 equipmenl.
b. (1) Capital expenditures for general
purpose equipment are unallowable 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 unallowable except when incurred as a
result of compliance with specific provisions
of an award or instructions in writing from
the awarding agency.
15. Fringe benefits. See paragraph 6. f.
16. Idle facilities and idle capacity.
a. As used in this paragraph the following
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" mellns land and buildings or
any portion thereof. equipment individually
or collectively. or any other tangible capital
assel. wherever located. and whether owned
or leased by the organization.
(2) "Idle facilities" means completely
unused facilities thai are excess to the
organization's current needs.
(:J) "Idle capacity" means the unused
capacity of partially used facilities. It is the
difference between that which a facility
could achieve under 100 per cent opera ting
time 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
multishift basis may be used if it can be
shown that this amount of usage could
. normally be expected for the type of facility
imolved.
(4) "Costs of idle facilities or idle 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 meet fluctuations
in workload; or
(2) Although not necessary to meet
fluctuations 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 to
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
normal fluctuations of usage or indirect cost
rates from period to period. Such costs ani
allowable. provided the capacity is
reasonably anlicipated to be necessary or
was originally reasonable and is not subject
10 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
I 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
does not apply to insurance which represents
fringe bcnefits for employees (see paragraph
6.f. and 6.g.(2)).
III Costs of insurance rcquired or
approved. and maintained. pursuant to the
award are ullowable.
(2) Costs of other insurance maintained by
thc orl!unization in conneclion with Ihe
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.
Ie) 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
insurance represents additional
compensation (see paragraph 6). The cost of
such insurance when the organization is
identified as the beneficiary is unallowable.
(3) Actual losses which could have been
covered by permissible insurance (through
the purchase of insurance or a self-insurance
program) are unallowable unless expressly
provided for in the award. except:
(a) Costs incurred because of losses not
covered under nominal deductible insurance
coverage provided in keeping with sound
business practice are allowable.
(b) Minor losses not 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 1055 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 investment 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 Allachment A.
20. Labor relations costs. Co'sts incurred in
maintaining satisfactory relations between
the organization and its employees, including
costs of labor management commillees.
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 notlimitcd to. the
organization's contributed portion by reason
of cost sharing agreements 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 permanent value of the property nor
appreciably prolong its intended life. but
keep it in an efficient operating conJition. are
allowaule. Costs incurred for iP1prC'......nwnts
which add to the permanent value of the
buildings and equipment or appreciably
prolong their intended life shall be treated as
capital expendilures (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
chargcd at their actual prices after deducting
all cash discounts. trade discounts, rebates,
and allowances received by the organization.
Withdrawals from general stores or
stockrooms should be charged a t cost under
any recognized method of pricing
consistently applied. Incoming Iransporlation
charges may be a proper part of material
cost. Materials and supplies charged ati 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
ma terials or supplies retained. or returned to
vendors.
24. Meetings. conferences.
a. Costs associated with the conduct of
meelings and conferences. include the cost of
renting facilities. meals. speakers' fees. and
the like. Bul see paragraph 12. Entertuilllll/!nt
costs. and paragraph 29, Participant suppurt
costs.
b. To the extent that these costs 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
Attachment 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 costs.
a. Costs of the organization's membership
in civic. business. technical and profetisional
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 dissemina tion of
technical informalion. are allowable. This
includes costs of meals. transportation. and
other items incidental to such allendance.
26. Organization costs. Expenditures. such
as incorporation fees. brokcrs' fees. fees tu
promoters. organizers or management
consultants, attorneys. accountants. or
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FederallRegister I Vol. 45, No, 132 I Tuesday, JU'y 8, 1980 I Notices
46031
investment counselors. whether or not
employees of the organization. in connection
with establishment or reorganization of an
organization. are unallowable except with
prior approval of Ihe awarding agency.
27. Overtime, extra.pay shIft, and
multishlft premiums. Premiums for overtime.
extra-pay shifts. and multishift work are
allowable only with the prior approval of the
awarding agency except:
a. When necessary to cope with
emergcncies. such as those resulting from
accidents. natural disasters. breakdowns of
equipmenl. or occasional operational
bolllenecks of a sporadic nature.
b. Whcn employees are performing indirect
functions such as adminislration.
maintenance. or accounting.
C. In the performance of tests. laboratory
procedures. or other similar operations which
'are continuous in nature and cannot
reasonably be interrupted ur otherwise
completed.
d. When lower overall cost to the
Govcrnment will rcsult.
28. Puge charges iu professional journals.
Page chargcs for profession;;1 journal
publications are allowable as a necessary
part of research costs. where:
a. The research p;;pers report work
supported by the Government: ;;nd
b. The ch;;rges are levied imparti;;lIy on all
research papers poblishcd by the journal.
whether or not by Governmenl-sponsored
authors.
29. Parlic:ipan/ Sllppurt costs, Participant
support costs are direct costs for items such
as stipends or subsistence allowances, travel
allowances. and registr;;tion fees paid to or
on behalf of participants or trainees (but not
employees) in connection with meetings.
conferences. symposia. or training projects.
These costs are allowable with the prior
approval of the awarding agency.
30, Patent costs.
a. Costs of Ii) preparing disclosures.
reports. and other documents required by the
award and of searching the art to the extend
necess;;ry to make such disclosures. (ii)
preparing documents and any other patent
costs in connection with the filing and
prosecution of a United 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 matlers. soch as advice on patent
and copyright laws, regulations. clauses, and
. employee agreements are allowable (but see
paragraph 34).
b. Coslof preparing disclosures. reports.
and other ducumf!nts and of searching the art
to the extent necessary to make disclosures.
if not required by the award. are
unallowable, Costs in con{1ection with (i)
filing and prosccuting any foreign patent
application. or Iii) any United States patent
application. where the ilward does not
require conveying title or a royalty.free
license 10 tht' Governnwnl. ilre unallowable
(also sel: I"llilgraph 4:Jj.
:J1, P,'usiou pIous. See paragraph 6. g.
32. IJ/oul SI.'l"III'ilJ' (;osls, Necessary
eXIll!nSeS incurred to comply with
Government security reqllin!ments or for
facilities pmtection. including wages.
uniforms. and equipment of personnel are
allowable.
33, Preaward costs. Preaward costs are
those incurred prior to the effective date of
the ilward directly pursuant to the
negotiatiun and in anticipation of the award
whcre such costs is necessary to comply with
the proposed delivery schedulc or period of
performance. Such costs are allowable only
to the extent thatlhey 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 pcrsons who are
members of a particular profession or possess
a spccial 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 relalion to the service required.
(2) The n~cessity 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 lLe.. what new
problems have arisen).
(5) Whether the proportion of Government
work to the organization's total business is
such as to innuence the organization in favor
of incurring the cost. particularly where the
services rendered are not of a con tinuing
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 (e.g.. description of the service.
estimate of time required, rate of
compensation. and terinination 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
conneclion 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 (but 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 olher 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 to be included as a credit or
charge to the appropriate cost grouping(s)
shall bc the difference between the amount
realized on the property and the
undepreciated basis of the property.
(2) Gains and losses on lhe disposition of
depreciable property shall not be recognized
as a separate credit orchar'ge under the
following conditions.
tal The gain or loss is processed through a
depreciation reserve account and is renected
in the depreciation allowable under
paragraph 9.
(b) The properly is given in exchange as
part 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 frum the failure to
maintain permissible insurance. ex!;ept as
otherwise provided in paragraph 18.a.(3J.
[d) Compensation for the use of the
property was provided through use
allowances in lieu of depreciation in
accordance with paragraph 9.
Ie) Gains and losscs arising from mass or
extraordinary sales. retirements. or other
dispositions shall be consiJered on a case-
by-case basis.
'b. Gains or losses of any nature arising
from the salc or exchange of property other
than the property covered in paragraph a.
above shall be excluded in cumputing award
costs.
36. Public information service custs.
a. Public information service costs include
the cost associatcd with pamphlets. news
releases. and other forms of informa lion
services. Soch cosls 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 uf the
organization.
(3) Disseminate the results of sponsored
and nonsponsored a!;tivities.
b. Public information servicc 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 costs.
a. Publication costs includc the costs of
printing (including the processes of
composition. plate-making. press work.
binding. and lhe end products produced by
such processes). distribution. promotion.
mailing. and general handling.
b. If these costs are not identifiable with a
particular cost objecti\'e, tlwy should be
allocated as indirt~ct 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 agency.
d. The cosl of page chargl" in journals is
addressed paragraph 2!l.
38 ReurrOnl;PIl1f?nt (lnd (lItem/ion costs.
Costs incurre'd for ordinilry ur normal
rearrangement and alteration of facilities are
allowable. Special arrangenwnt ilnd
alteration costs int:url"l~d specifically for the
project are allowablc with tht~ prior approval
of the awarding agt~ncy.
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Federal Register I Vol. 45, No. 132 I Tuesday, July 8, 1980 I Notices
...
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 Government 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 recruitment of new
employees (see 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 costs are costs incident to the
permanent change of duty 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 transportation 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 (exclusive 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 againslloss of or damages to
pI,rsonal property. The cost of cancelling an
unexpired lease is limited to three times the
monthly rental.
c. Allowable relocalion costs for new
employees are limited to lhose described in
(1) and 121 of paragraph b, above. When
relocation costs incurred incident to the
n~c:ruitment of new employees 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 (he 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-Iength
leases are allowable only up to the amount
thai would be allowed had title to the
property vested in the organization. For this
purpose. a less-than-arms-length 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 Ii)
divisions of an organization; (ii) organizations
under common control through common
officers. directors, or members; and liii) 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 date 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) Tille to the property passes to the
organization at some time during or after the
lease period;
(3) The term of the lease linitialterm 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 patent or 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 bc 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 at 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 wagcs. by
organizations to workers whose employment
is being terminated. Costs of severance pay
are allowable only 10 the extentlhat in each
case. it is required by (i) law. Iii) employer-
employee agreement. liii) established policy
that constitutes. in effect, an implied
agreement on the organization's part. or (iv)
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 organiza tion 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 iI
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, allowauility will
be considered on a case-by-case basis in 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
46033
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 account
any items of income or Federal financing that
qualify as applir.able credils under paragraph
A.S. of Allachment A.
b. The costs of such services. when
material. must be charged directly 10
applicable awards based on actual usage of
the services on the basis of a schedule of
rates or established methodology that Ii) does
not discriminate against federally supported
activities of the organization. including usage
by the organization for internal purposes. and
Iii) is designed to 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
indirect cos ts.
46. Taxes.
a. In general. taxes which the organization
is required to pay and which are paid or
accrued in accordance with generally
accepled accounting principles. and
payments made to local governments in lieu
of taxes which are commensurate 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 laller 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 gencrally give rise 10 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 used in conjunction with the
other provisions of this Circular in
termination situations.
a. Common items. The cost of items
reasonably usal>le on the organization's other
work shall not be allowal>le unless the
organization submits evidence that it would
not relain such items at cost without
sustaining a loss, In deciding whcther such
items are reasonal>ly usable 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
acccptance uf common items as allocable to
the terminatetl portion of the award shall be
limited to the e"tel1tthat the quanlities of
such items on hand. in transit. and on order
an, in excess of the n",sonahle qoantilative
requin!ml!nts 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 willfuUailure 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 the organization.
(2) The interest 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 Ii) 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 efforts 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. Selllement expenses. Settlement
expenses including the following are
generally allowable:
(1) Accounting. legal. clerical. and similar
costs reasonably necessary for:
la) The preparation and presentation to
awarding agency of selllement claims and
supporting data with respect to thc
terminated portion of the award. unless the
termination is for default. (See paragraph 4.a.
of Attachment L, OMB Circular No. A-ll0;
and
lb) 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-ll0.
(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 indirecl expense may be
allocated 10 the amount of settlements with
suhconlractor/subgrantees; provided that the
amount allocated is otherwise consistent
with the basic guideli!nes contained in
Allachment A. The i~direct expense so
allocated shall exclude the same and similar
costs claimed directl~ or indirectly as
settlement expenses. I
48. Training and education costs.
a. Costs of preparajion and maintenance of
a program of instruct\on including but not
limited to on-the-job. iclassroom. and
apprenticeship traini~g. designed to increase
the vocational effectiyeness of employees.
including training ma,erials. textbooks.
salaries or wages of trainees [excluding
overtime compensatililn which might arise
therefrom). and [i) salaries of the director of
training and staff wh~n the training program
is conducted by the organization: or (ii)
tuition and fees wheH the training is in an
institution not operated by the organization.
are allowable. !
b. Costs of part.tim:e education. at an
undergraduate or poslgraduate college level.
including that provided at the organiLiltion's
own facilities. are ull!)wable only when the
course or degree pursiued is relative to the
field in which the emrloyee is now working
or may reasonably be expected to work. 'lnd
are limited to: I
(1) Training malcri<jds,
(2) Textbooks. j
(3) Fees charges by! the educational
institution. ;
(4) Tuition charged:by the educational
institution. or in lieu 0r tuition. instructors'
salaries and the re1ated share of indircct
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 rel~ted costs of instructors
who are employees or the organization.
(6) Straight-time compensation of each
employee for time spent allending c1asscs
during working hoursi not in excess of 156 .
hours per year and only to the extent that
circumstances do notjpermit the ol'f'riltion of
classes or attendanc~ at classes after regular
working hours; otherliVise such comp.'nsation
is unallowable. '
c. Costs of tuition. ~ees. training materials.
and textbooks [but n6t subsistence. salary. or
any other emoluments) in connection with
full-time education. i~c1uding that provided at
the organization's oW1n facilities. at a
postgraduate (but not: undergraduate] college
level. are allowable o:nly when the course or
degree pursued is rel~ted to the field in which
the employee is now )Norking or may
reasonably be expected to work. and only
where the costs receiye the prior approval of
the awarding agency.; Such costs are limited
to the cosls attributal~le to a toud period not
to exceed one school iyear for each employee
so trained. In unusual cases the period may
be extendcd. j
d. Costs of allenda~ce of up to 16 wecks
per employee per yea:r at specialized
programs specifically! designed to enhance
the effectiveness of ekecutivcs or managers
or to prepare employ~es for such positions
are allowable. Such costs include enrollment
fees. training materials. textbooks and
related charges. employces' s,daries.
subsistence. and travel. Costs allowable
under this paragraph :do not includc those for
courses that are part' a degl"l,e-orientl'd
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46034
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Federal RegIster I ~ol. 45, No. 132 / Tuesday, July 8, 1980 I Nbtlces
curriculum, which are allowable only to the
extcnt set forth in b. and c. above.
e. Maintenance expense. and normal
dcprecialion or fair rental. on facilities
owncd or leased by the organization for
training purposes are allowable to thc cxtent
set forth in paragraphs 9. 22. and 42.
f. Contributions or donations to
educational or training institutions, including
the donation of facilities or other propcrties.
and scholarships or fellowships. are
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 lIgency.
To be considcred for approval, the
organization must dcmonstrate that such
cosls are consistently incurred pursuant to an
established training and cducation program.
and that' the course or dcgree pursued is
relative to the field in which the employee is
now working or may reasonably be expected
to work.
4!J. Trunsporlatioll costs. Transporta tion
costs include freight. express. cartage, and
postllge charges relllting either to goods
purchased. in process. or delivered. These
costs are allowable. When such costs can
readily be identified with the items involved.
they may be directly chllrged as
transportation costs or added to the cost of
such items (see paragraph 23). Where
identification with the materials received
cannot readily be made. transportation costs
may be chllrged to the appropriate indirect
cost accounts if the organization follows a
consistent. equitable procedure in this
respect.
50. Tra~'el costs.
a', Travel costs are the expenses for
transportation. lodging. subsistence. and
relaled items incurred oy employees who are
in trllvel status on officilll business of the
organization. Travel costs are 1I1l0wable
subject to paragraphs b. through e. below.
when they are directly allributable to specific
work under lIn award or lire incuned in the
normal course of administration of the
organization.
b. Such costs may be charged 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 charges consistent with those normally
allowed by the orgllnization in its regular
opera tions.
c. The difference in cost between first-class
lIir 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
requiremenls. such as where less than first-
class accommodlltions would (i) require
circuitous routing. (ii) rcquire travel during
unreasonable hours. (iiij greatly increase the
duration of the flight. (iv) result in additional
costs which would offset the transportation
savings. or (v) offer accommodations which
are not rellsonably adequate for the medical
nel!ds of thc traveler.
d, Necessary and rea son a ole costs of
Lllllily nlllvenwnts and personnel movements
of a special or mass nature arc allowable.
pursuant to paragraphs 40 and 41. subject to
alloca tion on the basis of work or time period
bcnefited 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 thai country.
ICircular No. A-122]
Allachment C
Nonprofit Organizations not Subject 10 this
Circular
Aerospace Corporation. EI Segundo,
California
Argonne Universities Association. Chicago.
Illinois
Associated Universities. Incorporated.
Washington. D.C.
Associated Universities for Research and
Astronomy. Tucson. Arizona
Atomic Casualty Commission. Washington.
D.C.
Battellp MI'muriallnstitute. Headquartered in
Columbus, Ohio
Brookhaven National Laboratory. Upton.
New York
Center for Energy and Environmental
Research (CEERj. (University of Puerto
Rico) Commonwealth of Puerto Rico
Charlcs Stark Draper Laboratory,
Incorporated, Cambridge. Massachusetts
Comparative Animal Research Laboratory
(CARL)
(University of Tennessee). Oak Ridge,
Tenncssee
Environmental Institute of Michigan. Ann
Arbor. Michigan
Hanford Environmental Health Foundation,
Richland. Washington
lIT Research Institute. Chicago, Illinois
Institutp for Defense Analysis, Arlington.
Virginia
Instilute of Gas Technology, Chicago. Illinois
Midwest Research Instilute. Headquartered
in Kansas City. Missouri
Mitre Corporation. Bedford, Massachusells
Montana Energy Research and Development
Institute. Inc., (MERDl). Butte, Montana
Na tional Radiological Astronomy
Observatory. Green Bank, West Virginia
Oak Ridge Associaled Universities. Oak
Ridge. Tennessee
Project MlInagement Corporation. Oak Ridge.
Tennessee
Rand Corporation. Santa Monica. California
Research Triangle Insli!ute. Research
Triangle Park. North Carolina
Riverside Research Institute. New York. New
York
Sandia Corporation, Albuquerque. New
Mexico .
Southern Resellrch 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. Illinois
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.
(FR Doc. 00-20270 Filed 7-7-lJO: 8:45 ami
BILLING CODE 3110-01-"
[Note: This reprint incorporates' corrections
published at 46 FR 17185. Tuesday. March 17.
1981.J
I.
i
i
CIT~ OF CLE~RWATER
Interdepartment Corres~ondence Sheet
i
i
"c
TO:
M. A. Galbraith, Jr. - City Attorney
FROM:
Joseph R. McFate - Planning & Urban Development
Directo1'rJL72
COPIES:
SUBJECT:
CDBG Subgrantee Agreements
DATE:
October 17, 1985
I am enclosing three copies each of agreements between the City and Ervin s
All American Youth Club, Inc., Religious Community Services, Inc., a~d
Community pride Child Care Center of Clearwater, Inc., and two agreements
wi th the Clear'water Housing Authority. These are standard gr'ant agreement;s
providing for the use of Block Grant Funds by other' agencies. The~e
projects for the purposes and in the amounts contained in each contract
were approved by the City Commission on August 15th and September 19, 19851.
All of them have been executed by the appropriate agencies. i
I
Please review these agreements and if they meet with your approval, havr
them executed by the appropriate City officials. The City Clerk is tp
retain one copy for the permanent City records and two copies are to be
returned to me for' distribution.
JRM:nt
.l E I/l -W !l' V' ': :'"
- )<Jf l.a h ,-l.. w r-i
OCT 17 1~P,5
j:Uy ~. 'IT.:; .;~Li' 'n!i