AGREEMENT FUNDED UNDER THE CLEARWATER COMMUNITY DEVELOPMENT BLOCK GRANT PROGRAM (6)
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AGREEMENT FUNDED UNDER
THE CLEARWATER COMMUNITY DEVELOPMENT
BLOCK GRANT PROGRAM
THIS AGREEMENT is entered into as of the 1st day of October, 1990, by
the CITY OF CLEARWATER, Florida, a political subdivision of the State of Florida,
hereinafter referred to as the "CITY", and ERVINS ALL AMERICAN YOUTH CLUB, INC.
as further identified in Appendix A, hereinafter referred to as the "PSA". This
Agreement consists of this document and the Appendices attached hereto.
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 City of Clearwater Planning & Development Department,
hereinafter called the "Department", will act in behalf of the City in conducting
the Program, and
WHEREAS, the PSA provides a program as identified in Appendix A of benefit
to low and moderate income residents within the City of Clearwater and proposes
to perform the work and carry out the specific services as identified in Appendix
A, 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 fulfillment
of the purposes of the Act;
THEREFORE, the parties agree as follows:
1. The PSA shall, in a satisfactory and proper manner as determined by
the Department, conduct the Project outlined in Appendix A.
2. The term of th i s Agreement sha 11 commence on October 1, 1990, and
terminate on September 30, 1991, unless earlier cancelled as provided herein.
The Agreement may be extended for up to one additional year upon the request of
the PSA and the written authorization of the City Community Development Manager.
The need and merit shall be at the determination of the Manager. The Department
may issue written or oral instructions to clarify any other details or provisions
of this Agreement. Such instruction must be within the intent of the project
and not be of such nature to affect cost or period of performance.
3. The City representative to PSA as regards conduct of services under
this contract shall be the Community Development Manager. The PSA1s services
shall be carried out under the supervision of the Agent as identified in Appendix
A.
4. The PSA shall not exceed its budgeted amount and shall use the funds
in accordance with the award to be paid with Community Development Funds included
in Appendix B. Funds shall not be obligated when payment has been suspended or
termi nated pursuant to paragraph 19 hereof. Any funds wh i ch 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-llO,
provided in Appendix G, and with the provisions of OMB Circular 122, provided
in Appendix H, or the appropriate successors documents of these documents. The
PSA shall permit the City to audit the PSA's financial operation including but
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not limited to compliance with applicable provlslons of Federal law and
regulations. All PSA financial records relating to the Project are subject to
review by the City.
6. All subcontractors under this Agreement shall be approved by the City.
7. All purchases of consumable materials, capital equipment and services
shall be in conformity with the Procurement Standards set forth in OMB Circular
A-110, Attachment O. 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 specified in Attachment B. No advance
payments sha 11 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 official documentation 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 be clearly identified and readily accessible.
The final request 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 PSA shall upon the expiration of this Agreement transfer to the
City any CDSG funds on hand and any accounts receivable attributable to the use
of CDBG funds. Program income funds are excluded from this provision as provided
below.
Program income funds shall be retained by the PSA so long as the activities
that will be undertaken with the program income are the specific activities that
meet the provisions of this Agreement. These funds shall be adjusted by the City
according to the principles described in paragraphs (b)(2)(i) and (ii) of Section
570.504 of the Housing and Community Development Act 1974, as amended of which
state that:
(1) Program income in the form of repayments to, or interest earned on
a revolving fund as defined in Section 570.500(b) shall be substantially
disbursed from the fund before additional cash withdrawals are made from the U.S.
Treasury for the same activity.
(2) Substantially all other program income shall be disbursed for eligible
activities before additional cash withdrawals are made from the U.S. Treasury.
10. 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 $200
or more with a remaining 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
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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 used and location of the property, and, if applicable,
the continued need for the property. No real or personal property or custody
thereof, purchased with funds provided to the PSA under this Agreement, shall
be disposed of, transferred, assigned, or loaned by the PSA without prior written
consent of the City.
11. Any rea 1 property under the PSA. s control that was acqu ired or
improved in whole or in part with CDBG funds in excess of $25,000 must:
(1) Be used to meet one of the national objectives in Section 570.901 of
the Housing and Community Development Act of 1974 as amended until five years
after expiration of this Agreement, or for such longer period of time as
determined to be appropriate by the City; or
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(2) Disposed of in a manner that results in the City being reimbursed in
the amount of the current fair market value of the property less any portion of
the value attributable to expenditures of non-CDBG funds for the acquisition of,
or improvement to, the property. (Reimbursement is not required after the period
of time specified in paragraph (b)(8)(i) of Section 570.503 of the Housing and
Community Development Act of 1974, as amended.
12. 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 Florida law pertaining to public records requires public inspection of
records containing said information.
13. The PSA shall obtain prior written approval by addendum to this
Agreement for any of the following changes:
a. Substantial changes in the project work plan.
b. Changes in any budget line item.
14. 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.
15. PSA shall establish and maintain on an accrual basis an accounting
system in accordance with the Standards of Grantee Financial Management System
as set forth in OMB Circular A-110 or the appropriate successor document and in
accordance with generally accepted accounting principals and standards where
these principals and standards are not in conflict with A-110 or its successor.
PSA agrees to modify or correct said systems in accordance with the City. s
requirements.
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16. 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 avaiiable for audit, inspection or copying purposes at any time during normal
business hours and as often as the City, HUD, or representatives of the Comptroller
General of the United States, or other federal agency, may deem reasonably 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 request 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.
17. The PSA shall hold and save the City, its officers, agents, and employees
harmless from liability of any nature or kind, including costs and expenses, for or
on account of any su i ts or damages of any character whatsoever resu 1 t i ng from
injuries or damages sustained by any persons or property resulting in whole or in
part from the negligent performance or omission of the PSA or any employee, agent
or representative of the PSA.
18. The PSA shall not assign this Agreement or any interest of the PSA in this
Agreement without the prior written consent of the City.
19. The City may suspend, withhold, or terminate payment of the project, in
whole or in part, for cause or convenience. Cause shall included the following:
a. Use of funds that does not follow project guidelines.
b. Failure to comply with any term or condition hereunder.
c. Refusal to accept conditions imposed by HUD.
d. Refusal to accept conditions imposed by the City.
e. Submittal of reports which are incorrect or incomplete in any material
respect.
f. 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.
g. Convenience shall be according to the regulations in 24 CFR 85.43 and
85.44.
If the City suspends payment, it shall advise the PSA and specify in writing the
reason for suspension of payment, the actions that must be taken as a condition
precedent to the resumption of payment, and a reasonable date for compliance.
20. Both parties will use their best efforts to ensure that services under
this Agreement are provided so as to best meet the needs of residents with priority
to those residents who reside in the Community Development target areas. 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.
21. 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. No participant shall 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 sex, as set forth in Other Program Requirements in Appendix D,
(CFR 570.601).
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22. 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 identifiable ties. Prior to requesting any continued
project funding beyond the term covered by this Agreement or for a 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 shall 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 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.
23. 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 Appendix E.
24. The PSA will comply with Equal Employment Opportunities Executive Order
11246, as amended, attached hereto as Appendix F.
25. 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 Implementation of the 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 prOV1Slons and the Davis-Bacon Act:
The Civil Rights Act of 1964:
National Flood Insurance Program:
all as amended from time to time and in effect during the term this Agreement.
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IN WITNESS WHEREOF, the parties hereto have caused th i s Agreement
executed as of the day and year first above written.
ERVINS ALL AMERICAN YOUTH CLUB, INC.
to be
ATTEST:
B
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CITY OF CLEARWATER, FLORIDA
er
ATTEST:
Approved as to form & correctness:
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ynth i a ~owe_au -." _ _-- '.~
Clty CTe-l".k_.___-~.- .:. ".:.
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M.A. Galbraith,
City Attorney
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Agency: Ervin's Youth
Club
Year: 1990 - 1991
APPENDIX A
Identification of AQencv and SDecific Services to be Provided
AGENCY
Name:
Ervin's All American Youth Club, Inc.
Legal classification:
A non-profit corporation organized and existing under
the laws of the State of Florida.
Principal Office:
1250 Holt Avenue in the City of Clearwater, Florida
34615
Mailing Address:
P.O. Box 815, Clearwater, FL 34617
Agent:
Ervin A. Harris, Executive Director
813-443-2061
PROGRAM OF AGENCY
Ervin's Youth Club primarily serves minority
neighborhood and provides self-development
athletics, tutoring, motivational counseling,
Parental involvement is encouraged.
youths in the North Greenwood
and self-awareness training,
and related youth activities.
SPECIFIC SERVICES TO BE PROVIDED UNDER THIS AGREEMENT
II. Operating Support
Funds will be provided to Ervin's All American Youth Club will continue general
operation of the youth activities as noted above. Operational support will
include the funding of the cost of administration in particular a portion of the
salaries of the Executive Director, Assistant Director, and one aide.
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SCHEDULE
I. Ervin's All American Youth Club, Inc.
General Statements
A. Program shall begin operation no later than the later October 1, 1990
or one month after the full execution of this Agreement.
B. Funds for this project shall be expended by September 30,1990. Any
request for an extension will have to be approved by the Community
Development Manager.
C. Monthly activity reports shall be forwarded to the City by the Agency
on a monthly bases and shall reflect program activity from the previous
month. These reports shall be forwarded to the City no later than the
15th of the end of the previous month. Reports shall be forwarded for
the entire term of the agreement which covers October 1, 1990 through
September 30, 1991.
D. Special Data requests will be responded to in such a manner as to have
the response received by the City within 15 calendar days, subject to
the request being of reasonable limited scope.
E. Records will periodically be viewed by the City to verify reimbursement
accuracy and as part of the yearly monitoring process.
F. Payment will be in accordance with the payment schedule
identified in Appendix C.
G. At no time shall payments be forwarded to the agency by the City if they
have not satisfactorily completed the tasks identified in this agreement.
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Agency: Ervin's Youth Club
Year: 1990 - 1991
APPENDIX B
Proiect Award
I. Operating Support
Operating support of up to $14,000.00 will be provided to Ervin's All
American Youth Club. Operational support will include funding for a portion
of the salaries of the Executive Director, Assistant Director and an aide
and special conferences.
BUDGET
Ervin's All American Youth Club
October 1, 1990 - September 30, 1990
SALARIES JWB CDBG DOE TOTAL
benefits
Executive Director $25,430 $ 3,800 $ 7,834 $37,064
Assistant Director $15,558 $ 3,447 $ 5,100 $24,105
Aide #1 $ 5,598 $ 6,675 $ 0 $12,273
Aide #2 $ 0 $ 0 $10,606 $10,606
Aide #3 $ 0 $ 0 $13,300 $13,300
Secretary $ 0 $ 0 $10,500 $10,500
Subtotal $46,586 $13,922 $47,340 $107,848
OTHER EXPENSES
Special Advertising $ 0 $ 0 $ 160 $ 168
Special Conferences $ 0 $ 78 $ 0 $ 78
TOTAL
$46,586
$14,000
$47,400 $108,094
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APPENDIX C
METHOD OF PAYMENT
All payments shall be on a reimbursement basis only.
All requests for reimbursement for salaries shall be Supported by a copy of the
checks paid to employees and other documentation as requested. Payroll and other
support documentation must be kept by the agency in an appropriate file.
All requests for reimbursement for purchases
invoices and a copy of the check paid
documentation shall be kept by agency in an
shall be Supported by a copy of the
to the supplier. Other support
appropriate file.
All requests for reimbursement for construction projects shall be supported by
a copy of the check paid to the contractor and a copy of a progress or final
payment affidavit, whichever is appropriate. Payroll data for Davis Bacon related
projects and other source documentation shall be kept by the agency in an
appropriate file.
All requests for reimbursement shall be certified by the agency's designee that
they are accurate and within the guidelines of the agreement.
All requests for reimbursement shall be forwarded to the City of Clearwater
Planning and Development Department, P.O. Box 4748, Clearwater, Florida 34618.
Any program income shall be submitted to the CITY through the DEPARTMENT at least
quarterly. Fees collected, if any, shall be reported but are not to be construed
as program income.
Requests for reimbursement shall not be reduced by any program income received.
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subpart K-Qther prooram
Requirements
I 570.&00 General .
{u} Section l04(b} c.! the Act provides
Ihal an)' granl under >>ection 100 of the
Act ,hall be li. ,G' nly if the gronlee
certifies '10 Ihe IIllisC aClion of the
Secrelilry, among olher lllinss, lllotthe
granl "wilf ~e.conducled and
adminislered in confonnily with Pub.!..
68-352 and rub. L 00-284," and. further.
thaI the granlee "will comply with lhe
olher provisiona of this tille and with
olher applicable lawa." SectioD l04(d)(l)
of Ihe Act requires thai the Secrelary
dl:lermine with respect 10 granls made
pursuanl 10 section l06(b) (Entillement
Granls) and 106(d)(2)(B) (HUD-
Adminislered Small Cilies Grants), al
leasl on an aMual basis. among other
Ihings. "",'hether the gran lee haa carried
oul Ii IS) certifications in compliance
with the requirements and the primary
objectives of this Litle and with other
applicable laws' . . :' Certain other
alalules are expressly made applicable
\0 RcliviLies assisled under the Act by
Ihe Act ilself. while other laws not
referred to in the Act may be applicable
to auch activities by their own tenns.
Cerlain slatutea or Executive Orders
which may ue applicable 10 activities
assisled under the Act by Lbeir own
lerm; are administered or enforced by
governmenlal departmenu or agencies
other than the Secrelarv or the
DepartmenL This Subp~rt K enumerates
laws which the Secrelary will treat 81
applicable 10 grants made under section
106 of Lbe Act. oth~r th~ grants to
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OJER PROGRAH REQUIREl-IENTS
Stales made pursuant to section l00(d}
of Ihe Act. for purpOlel 01 the
delenninaliona deacriued above to ue
made hy Ihe Secretary under aeclion
l04(dlll) of the Act. including alotules
expressly mode applicable by the Act
and certain other alalules snd Executive
Orden for which Ihe Secrelary hu
enforcement respon:libility. The absence
oC men lion herein of any olher stalule '
lor which the Secretory docs not have
direct enforcement responaibilily is nol
intended 10 be laken as aD indicotion
thai, in the Secrelor)"a opinion, such
alalule or ueculive Order Is nol
applicable to activiliel assisled under
Ihe Act. For lows which the Secrelory
will Ireal II applicoble 10 gronll made
10 Slalel under lection loo(d) of the Act
for purposea of the dete~inolion
required 10 be made by the Secrelary
pursuant 10 .ection 104ld)(2) oC Ihe Act,
see t 570.496.
(b) This Subpart also lell eorth certain
addilional program ~quirementa which
the Secretary haa delennined to be
applicable 10 gran. provided under the
Act a.s a matter of administralive
dlscrelion.
(c) in addilion to sranll made
pursuant to lection 106(b) and
lOG(d)(2)lB) of tbe ."ct (Subpartl 0 and F
of this Part. respectiJ'ely), lbe '
requirements of this Subpart K are
applicable to grants made pursuanllo
sections 107 and 119 of the Act
(Subparts E and G, respectively).
~ 570.601 Pub. L 11&-352 and Pub. L 90-
284; Executive Order 11063-
Section l04(b) oC the Act provides that
any grant under section 106 of the Acl
shall be made only if the gran lee
ce'rtifies to \he aatisfaction of the
Secrelary that the grant "will be
conducted and adminialered in
confonnity with Pub.!.. 8&-35Z and Pub.
1.. 90-284." Similarlv, sectioD 107
provides thai no gr~nt may be made
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under that .eclion (Secrelar)".
Diacrelionary Fund) or .ection 119
(UDAG) ",'ithoul .alisfaclory allurance,
10' the aame errec\.
(a) "'Pub. 1.. ~52" relen 10 Tille VI
oC the Civil Rlghla Act of 1004 (,(2 U.S.C.
200C><i' e( .eq.). which provides thai no
person In the Uniled SIDles aholl on the
ground oC race. color. or DOlionol origin.
be excluded [rom po.rticipo tion In. be
denied the benefila of. or be aubjected 10
discrimination under any program or
actlvlly receiving Federal financlal
Duislanco, Section 602 of the Civll
Rights Act of 1004 diracts each Federal
departmenl and agency empowe~d 10
extend Federul financial auialonce 10
any progT'om or activity by wa)' oC gront
to eflectuale the foregoing prohibilion
by i"uing rule.. re&ulaliona. or orden oC
general appllcllbilily which shlill be
consilient with achievemenl of Ihe
" stotule authoritifli the financial
IISsislance. HUIJ regula lions
implemenling the requiremenls oC Title
VI wilh respecl 10 HUn program' are.
conlained in 24 ern Part 1. '
(b) "Pub. I... 90-~" refers 10 TilleVlIl
of the Civil Rights Acl of 1968 [42 U.S.c.
3001 e( 6eq.). popularl)' blown lIS the
Fair Housing Act. which provides that il
is the policy of the United Sla lea to
pro\'ide. within constitutional
Iimitationl. for fair housing throughout
the United Stales and prohibill any
penon from eli.criminaling in Ihe sale or
rental of hou.ing, Ihe financing of
housing. or the proviaion of brokerage
services. including in any wey making
unavailable or denying a dwelling 10
any.penon. because oJ race. color.
religion. aex. or national origin. Tille
VllI further requires the Secrelal")' to
adminiller the programs and ac\ivilies
relaling 10 housing and urban
development in a manner affirmalively
10 Curther the purpoaes of Tille Vlll.
pUrBuanllo this slatutOry direclion. Ihe
Secretary requirel that grantees
adminiater all program a and aCliyilies
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relaled 10 housing nnd communily
devclopml!nl in s manner 10
affinnHlivcly furlher fllir housing.
(c) Execulive Order 11003. B5
amended by Executive Order 12259.
dirccU Ihe Deporlmenl 10 loke all action
necessory and 0 ppropria Ie to prevenl
discriminalion because of race. color.
religion (creed). sex. or nalional origin.
in Ihe sole. leasing. rental. or other
disposition of residential property and
related facHitiel (including land 10 be
developed for residential use). or in the
use or occupancy thereof. if luch
property and rein led facilities are.
among olher Ihings, provided in whole
or in part with Ihe aid of loans.
advances, grants, or conlribulions
II ~ree~ to be made b)' Ihe Federal
Government. HUD rr.gulalions
implementing Exccutive Order 11003 are
contained in 24 CFR Part 107.
~ 570.602 Section 109 ollhe Act.
(il) Section 109 of Ihe 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 10 the
Act. For purposes of this section
"program or activit;" is defined as any
function conducted by an identifiable
administrative unit of the recipient or
by any unit of governmenl. subrecipienl.
or private COnLrOlctor receiVing .
comrnunil)' development funds or loans
from the recipient. "Funded in whole or
in pari with community develcpment
[unds" means that community
developmenl funds in any amount in the
form o[ grants or proceeds from HUD .
guaranleed loans have beelJ.lransferred
by the recipienl or a subrecipienl 10 an
identiH..ble adminislrali\'e unit and
disbursed in a program .:r activily.
(b) Specific discriminotory actiolJs
pro/Jibiled and correcti,'e aclions.
(1) A recipient may nolo und'er any
program or activity 10 which the
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regulations of this Pari may apply
direcll~' or Ihrour,h conlractua: or olhcr
IIrran!1rmenls. on the sround of race,
colur, nalional origin. or ICX:
(i) Deny allr facilities. ,er"iccs.
financial aid or olher bcncfill pro\'ided
under lhe program or aClivity.
(ii) I'ro\'ide an)' facililies, .ervices,
financial aid or olher benclils which are
different or are provided in 8 different
form [rom lhut provided 10 olhers under
the program or aClivilY,
(iii) Subject 10 segregated or leparale
IreOllmenl in Dny fucilily in. or in any
mailer o[ process rclOltc;d 10 receipl of
any service or benefil under Ihe prosram
or aClivity.
(iv) Reslrict in any way DccesS 10, or
in the enjoymenl of any advanlage or
pri\'ilcge enjoyed by olhers in
cOMeclion wilh facililies, services.
financial aid or olher benefits under lhe
progrOlm or activity.
(v) Treal an individual differently
from olhers in determining whether Ihe
individual salisfies any admission,
enrollmenl. eligibility, membership. or
olher requirement or condilion which
lhe individual must meet in order 10 be
provided any lacilities. lervices or olher
benefit pro\'ided under the program or
aClivi:v.
(vi) Den)' an opportunity to participate
in a program or activity as an employee.
(2) ^ recipienl may nol ulilize crileria
or melhods of administralion which
hIve the effecl of subjecling individuals
10 discriminalion on the basis of race.
color. nalional origin, or sex. or have Ihe.
effect of defeating or substantially
impairing accomplishment of the
objectives of the program or activity
wilh respect to individuals of a
parlicular race. color. national origin. or
se~.
131 A recipient in determining Ihe site
or localion of housing or facililies
provided in whole or in pari with funds.
under Ihis part. may not make selections
of such sile or localion which have Ihe
effect of excluding individuals from.
denying them tbe benefits of. or
subjecting lhem to discrimination on the
0-2
I
gruund of race. color, national criSin, Clr
ICX: or whic:h have the purpo~e or errecl
of dcfralinll or subslanliall)' inlpairing
lhe accomplishmenl of Ihe objeclives cf
Ihe Act and of Ihis seCtion.
(4)li)In administering a program or
aclivily funded in whole or in part wilh
conc funds regOlrdinR which Ihe .
recipient haa previously discriminated
ogaiml persons on Ihe ground of race.
color, no lional origin or lex.. the
recipient musltuke aCfinnative aclion 10
ovcrcome the eCfeclS o[ prior
discrimina lion.
{ii) E\'cn in Ihe absence of 6uch prior
discrimination. a recipient in
adminislering a program or aclivily
funded in whole or in part with COBC
funds should luke affirmalive action 10
overcome Ihc clfecls of conditions
which would otherwise resull in limiting
parlicipatiun by persons or a parlicular
race. clllor. nalional origin or sex.
Where previous discriminatory praclice
or usage lends. on Ihe ground of race.
color. nalional origin or sex. 10 exclude
individuals [rom participalion in. 10
deny Ihem Ihe benefits or. or to subject
Ihem 10 discriminalic)n under any
program or aClivity 10 which this part.
applies. the recipieni has an obligc:lion
10 take reasonable action to remove or
overcome the consequences of the prior
discriminatOr)' prlictice or usage. and \0
accomplish the purpose o{ lhe Act.
(iii) A recipient shall not be prohibited
by Ihis pari from laking any aclion
eligible under Subpart C \0 ameliorate
an imbalance in services or facilities
provided to any geographic area or
specific group of persona within its
jurisdiclion. where .Ihe purpose of such
action in to overcome prior
discriminalory practice or usage.
(5) Notwilhstanding anylhing to lhe
contrary in this aection. nOlhing
conlained herein shall be conslrued to
prohibit any r~cipient {rom mainlaining
or conslrucling separate living facililies
or res I room facilities for'the difierenl .
sexes. Furlhennore. selectivity on lhe
basis of sex. ia nol prohibiled when
inslitutional or cuslodial services can
,1 APPEND IX E
I SECTION 3 CLAUSE I
TilE FOLLO\.llNG SECTION 3 CLAUSE SHALL aE INCLUDED IN ALL CONTRACTS FOR \.lORK IN
CONNEcrION 'riITIi A SEcrION 3 PROJECT:
A. The ....ork to be performed under this contract is on a project assisted
under a program providing direct Federal financial assistance from
the Department of HousinK and Urban Development and is subject to the
requirements of Section 3 of the Housing and Urban Development Act of 1968,
as amended, 12 U.S.C. 170u. Section 3 requires that to the greatest extent
feasible opportunities for training and employment be given lo....er income
residents of the project area and contractS for ....ork in connection ....1th the
project be a....arded to business concerns ....hich are located in, or owned in
substantial part by persons residing in the area of the project.
B. The parties to this contract ....ill comply ....ith the provisions of said Section 3
and the regulations issued pursuant thereto by the Secrecary of \lousing and
Urban Developmenc set forth in 24 CFR, and all applicable rules and orders of
che Department issued thereunder prior to the execution of' this cont ract. The
parties co this concract certify and agree that they are under no contractural
oc other disability ....hich ....ould prevent them from complying ....ith these
requirements.
C. The contractor ....ill send to each labor organization or representative of
....orkers _ \.lith ....hich he has a collective bargaining agreement or other contract
of understanding, if any, a notice advising the said labor organization of
....orkers' 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 ....ill include this Section 3 Clause in every subcontract for
....ork in connectiqn ....ith the project and ....ill, at the direction of the
applicant for or recipient of Federal financial assistance, take appropriate
actio'n pursuant to the subcontract: upon a finding that che subcontracto r is
in violation of regulations issued by the Secretary of Housing and Urban
Development, 24 CFR. The contractor ....ill not subcontract ....ith any subcontractor
where it has notice or kno....ledge that the latter has been found in violation 'of
regulations under 24 CFR, and ....ill not let any subcontract unless the
subcontractor has first provided it ~~th a preliminary statement of ability to
comply ....ith the requirements of these regulations.
E. Complianc~ \.lith 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 Feder!l financial
assistance provided to the project, binding upon the applicant or recipient for
such assistance, its successors ,and assigns. Failure to fulfill these
requirements shali subject the applicant or recipient, its contractors and sub-
contractors, its successors, and assigns to those sanctions specified by the
grant or loan agreemenc or contract through yhich Federal assistance is provided,
and to such sanctions as are specified by 24 CFR 135.
E-l
APPENDIX F
'.
NOTICE Oil _'QUIRE..1Eh"I' rOR lJTIRo.(,ATIV! ACT'
TO ENSURE EQUAL EMPLOYMENT OPPORTUNITY
(EXECUTIVE ORDER 11246)
1. TIle Offeror's or Bidder's attention is called to the "Equal Opportunity
Clause" a.nd the ns ta.nd4.rd rederal Eq\Ul.l E::nploYlnent Opportu...J.. ty Cons t.r\.1C-
tion Concract Specificationsft set forth herein.
2. The goals and timetables for minority and female participation, expressed
in percentage ter=s for the contractor's aggregate workforce in ea.ch
trade on all const--uction work in the covered area, are as follows:
A. Goals for Female Utilization. ~ll T~ade9:
AREA COV!Rm
Goals for Women apply nationwide.
GOALS AND T!METABLES
Timetable
Goals
(percen t)
F=om Ap=. 1, 1978 until M.aZ . 31, 19 7 9 . . . . 3.1
From Ap=. 1, 1979 until Mar. 31, 1980.... 5.1
From Apr. 1, 1980 until Ma:. 31, 1981. . . . 6.9
B. Goals for ~~noritv Utilization:
TAMPA- ST. p:::~:?.sBtJRG , FIA., AR!:A
Area covered: E;11sborough, Pasco, and Pi~ellas
counties, Fla.
Goals and Ti.meULblesl
Trade
Goal
(percen t)
..
All. . . . . . . . . . . . . . . . . . . . . . . . . .
17.9'
IFor ~e life of the project.
These goals are applicable to all the Con~actor's const--uction work
(whe~~er or not: it is Federal or federally assisted) performed in the
covered area..
The Contractor's co=pliance wi:h the Exec~~ve Order and ~~e regulations
'in 41 C:R Part 60-4 shall be based on its i~?lementation of ~~e Equal
o?port:a~ity Clause, specific afzi:mative action obligatior~ reauired by
F-l
~"le specificadons tec fort.~ in ~l erR 60-4. J (a), ani '":3 effort.S t.o =lee~
the goals est.ablished for the geographical area ~he~ ~"le conc:act.
resulting from this solici<a<ion i. <0 be performed. The ho~S of ~nority
and femAle emplo~nt. and tra.ining must be substant.ially u.,."iform throughout.
the length of the contract., and in each c:ade, and the cont:act.or shall
cake a good fai~' .ffort to employ .~norities .nd women .venly on each of
i 0 pro j ec":.S . The transfer of minori t:y or fe.male employees or c:a.inees
from contra.ct.or to Contractor or from project. to project. for ~"le sole
pcrpose of meeting the Contr.ctOr's go.l' shall be · violation of the
contract., the Executive Order and the regulations in 41 CFR Part. 60-4.
Compliance ~ith t."le goals ~ill be measured against. the tot.al ~ork ho~S
performed.
3. The Con tr.ctor shul provide _",itten notific. tion to the Director of ~'e
Office of Federal Contract. Compliance programs within 10 working days of
a~ard of any cons~ct.ion subcontract. in exceSS of S10,000 at any tier
for const:.rUction work Wlder the contract. result.ing from t.his solicit.at.ion.
The notification shall list. t."le name, addresS and telephone number of the
subcontract.or; employer ident.ification number; es~t.ed dollar amoWl~ of
the subcontract; estimated st.arting and complet.ion dates of the subcontract. I
and the geographical a.rea in ~hich the contract. is t.o be perfo~ed.
4 . As us ed in this No tic e , and in ~'e con tr.C t r esul ting from chi s so li c it. ti on ,
the "covered area" is Pinellas CountY, Florida.
60-4.3 (a)
During the performance of this contrac~, the contrac~or agrees as followS:
EQUAL OPPORTm~IT1 CLAUSE
1. The contract.or ~ll not discriminate against, any employee or applicant
for employment bec.use of race, color, religion, sex, or national origin.
The contractor ~ill take af=i:mative a~tion to ensure t.~at. a.pplicants are
employed, and that employeeS are tre.ted d~in9 employment wi~,out r.gard
to their race, color, religion, seX, or nation.l origin. such .ction sh.ll
include, but not be limi~ed to the follo~ing: Employment, upgrading,
demotion, or transfer; rec::-uit::nent or recrui~"'llent ac.vertising; layoff or
~erminat.ipn, rates of pay or o~er fo=ms of compensation; and selection
for c=aining, including apprenticeShiP. The cont:ac'tor agrees to PO$~
in conspicuous places, available to employees and applican~s for ~ploy-
ment, notices to be provioeo setting forth ~e provisions of this non-
disc=imina~ion clause.
2. The cont.racto~ ~ill, in all solicitations or advertisePents for employeeS
placed by or on behalf of the contractor, s~te ~~at all Qualified
- .
applicants ~ill receive consideration for employmen~ ~ithout regard to .
race, color, religion, sex, or national origin.
3. The contractor ~ill send ~o each labor union or represent.ative of ~orkers
~ith ~hich he has a collec~ive bargaining agreement or other contract or
~aers~nding, a notice ~o be provided advising the said labor union or
~orkers' represent.atives of the.cont=actor's co~~~~ts under this
section, and shall post copies of ~~e notice in conspicuoUS places avail-
able to elI:ployees and applicants for employment.
F-2
c
-\
The cont=act.or '.dlll-":~~?li' \o':'~"I all provisions of [Xl .ive Order 11246
.of September 24, 19E:l, and of t.."le rules, regulations and rele.....ant oroers
of the Secretary of Labor.
5. The contractor ....ill furnish all information and report.s reqcired by
Executive Order 11246 of Sept~~er 24, 1965, and by rules, regulat.ions,
and orders of ~~e Secretary of Labor, or pursuant t.."lereto, and ....ill permit
acceSS to his books, records, and accounts by ~"le a~~nistering agency
and ~~e Secret.ary of Labor for purposes of investigaticn to ascertain
cocpliance ....ith such rules, regulations, And orders.
6. In the event of the contractor's non-compliance ....i~~ the nondiscrimination
clauses of this contract or ....ith any of the said rules, regulations, or
orders, this contract may be canceled, terminated, or suspended in ....hole
or in part and the contractor may be declared ineligible for further
Goverr~ent contracts or federally assisted cons~ct.ion contracts in
accordance ....ith procedures authorized in Executive Order 11246 of
Septecber 24, 1965, or by rule, regulation, or order of the Secretary
of Labor, or as otherwise provided by la.....
7. l~e contractor ....ill include ~~e portion of the sentence ~ediately
preceding paragraph (1) and the provisions of paragraphs (1) ~h~ough (7)
in every subcontract or purchase order unless exempted by rules, regul~-
tions, or orders of the Secretary of Labor issued pursuant. to section
204 of ~xecutive Order 11246 of September 24, 1965, so ~~at such provisions
....ill be bineing upon each subcontractor or vendor. The contIactor ....ill
take such action ....ith respect to any subcontract or purchase order ~
~"le administering agency may direct as a means of enforcing such provisions,
including sanctions for non-compliance: Provided, however, That in t~e
ev.en~ a contractor becomes involved in, or is threatened ....ith, litigat.ion
....i th a ~ubcont.=actor or veneor ~s a result of such direction by the
administering agency, the contractor may ~equest the Onited States to enter
into such litigation to protect the interests of the united States.
SV..NDAPD F::::DE."Ul..L EQUAL D1PLOYM-l:'"NT OPPORTUNI'I'Y CONS7P.UCT!ON CONTRACT
SPECIFICATIONS (E)~CUTIVE: ORDER 11246)
1. ;..s used in these specifications:
a. ~Covered area~ means ~~e geographical area described in ~~e solicita-
tion fro~ ....hich this contract resulted.
b. "Direct.or" means Director, O:fice of Federal Contract Complia..~ce
Progr~s, Onited States Depar~nt of Laber, or any person to ....ho~
the Director delegates authori~.
c. "~?loyer identification n~ber" means the Federal Social Securi~
number used OD ~~e ~loyer's Quarterly Federal Tax Return, O. S.
Treasury Depa.r-=ment For::n 941.
d. "I".inori ty" includes:
F-3
"
\
(1)
Black (all plrsons having origins in any of qJ~ Black
hf:ican racial groups noe of Hispanic origin).
(2 )
Hispanic (all persons of Hexic~, pueruo Rican, Cub~,
Central or South American or other Spanish Culture or
origin, regar~less ~f race) I
(3) hsian and Pacific Islander (~ll persons having origins
in any of the original peoples of ~~e far Ease, Southeast
Asia, the Indian Subcontinent, or the Pacific Islands); and
(4) American Indian or Alas~an Native (all persons having
origins in any of ~'e original peoples of Nor~ ~rica and
maintaining identifiable tribal affiliations ~~rough member-
ship and participation or communicy identification).
2. Whenever the Contractor, or any Subcontractor ae any tier, subcontracts
a portion of the work involving any const.-uction trade, it shall
physically include in each subcontIact in excess of $10,000 the provi-
~tons of "these specifications and ~~e Notice which con~ns the ~p-
pllcable goals for minority and female participation and which is set
forth in the solicitations from which this con~act resulted.
3. If the ContIactor is participating (pursuant to 41 CFR 60-4.5) in a
Hometo~_Plan approved by ~'e c. 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 _hich have unions
pa:ticipa:ing in the Plan. ContIactors must be able to demonstIate their
participation in and ccmpliance wi~~ ~~e provisions of any such Horneto~
Plan. Each Contractor or Subcontractor participating in an approved Plan
is individually required to comply with its obligations under .the EE:O
clause, and to make a good fai~~ effort to achieve each goal uncer the
Plan in each trade in which it has employees. The overall good faith
perfcrmance by o~'er ContIactors or Subcontractors toward a goal in an
approved Plan does not excuse any covered Contractor's or Subcontractor's
failure to take good faith efforts eo achieve ~~e Plan goals and ~ime-
cable.
4. The ContIactor shall implement the specific affirmative action standarcs
provided in paragraphs Ja through p of these specifications. The goals
set forth in the solicitation from which this con~act resul~ed are
expressed as perc'e.ntages of the total hou:s of employmen~ and training
of minorit:y and female -utiliz.ation tile Con-=ractor should reasona.bi.y be
able to achieve in each const--uction trade in-vhich "it has employees in
the covered area. The Contractor is expected to make substantially
unifo~ progress toward its goals in each craft during the period
specified.
5 . Neither the provisions of any collective bargaining agreement, nortbe
failure by a ~~ion with whom ~~e Cont:ractor has a collective bargaining
agreement, to refer eitiler minorities or wom~ shall excuse the Contrac-
tor's obligatior~ under these specifications, Executive Order 11246, or
the regulations promulgated purs~a.n: thereto.
F-4
.0.. ....... orc-c= f== ~..e ::c:'.....'c=/~~:--., :.~a.:..;~.:..;-I;; :lO''';'':S C.:. c.:.rj;..~'...;..._--I..~ --".- -- -
~ be cou..'~ed in meet" ,t.:le goals, such apprentices :!!"" -=.=ainees must.
be employed by the C\ ~ctc= during ~~e t=aining pe=~' and the
Contrac~o= must have .ade a co~mi~ent to employ the 1Pprentices and
trainees at the completion of their training, subjec't to the avail~il-
ity of employment opportunities. - Trainees must be trained pursuant to
training programs dpproved by the U. S. Depar~ent of Labor.
7. ~e Contra~tor shall take specific affirmative actions to ensure equal
employment opportunity. Th.e evaluation of the Contractor's corr,pliance
....ith these si-,ecifications. shall be based upon its effort to achieve
max.iInum resul ts from its actions. The Contractor shall document these
efforts fully, and shall implement affirmative action steps at least as
extensive as the follo....ing:
a. Ensure and maintain a ....orking environment free of harrassment,
intimidation, and coercion at all sites, and in all facilities at
~hich the Contractor's employees are assigned to ....ork. The
Con tractor, where possible, ....ill 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 awa=e of and carry out the Contractor's obligation to maintain
such a ....orking environment, ....ith specific attention to minority or
female individuals ....orking at such sites or in such facilities.
b. Establish arid maintain a current list of minori ty and female
recrui onen t sources, provide wri tten notifica tion to minori t::y and
female recruitment sources and to community organizations ....hen the
Contractor or its unions have employment opportunities available,
and maintain a record of t..'1e organizations' responses..
c. Maintain a curren~ file of the names, addresses and telephone
numbers of each minority and female off-the-street applicant and
minori~ or female referral from a union, a rec~i~ent source or
co~unity organi%a~ion and of what 'action ....as taken ....i~~ respect
to each such individual. If such individual ....as sent to t.~e u..,ion
hiring hall for referral and was not referred back to t.'1e Cont=actor
by t.~e union or, if referred, not e.mployed by the Contractor, this
shall be documented in the file ....ith the reason therefor, along ....ith
whatever addit.ional actions the Contractor may have t.aken.
'\
d. Provide immediate ....ritten notification to the Director ....hen the
union or unions ....i~~ which the Cont:actor has a collective
bargaining agreement. has not referred to the Contractor a minority
person or ....oman sent by the Contractor, or ....hen the Contractor has
other infonnation that the union referral process has i.J:lpeded.the
Contractor's efforts to meet its obligations.
e. Develop on-the-jOb training opportunities and/or participate in
training programs for the area ~hich expressly include minorities
and women, including upgrading programs and apprenticeship and
trainee programs relevant to the Contractor's employment needs,
especially those programs fu...,ded or approved by the Department of
~abor. The Contractor shall provide notice of these programs to
the sources compiled under 7b above.
f. Disseminate the Contractor's EEO policy by providing notice of the
policy to unions and training programs and requesting t.~eir coopera-
tion in assisting the Contractor in ~eeting its EEO obligations; by
including it. in any policy ~~nual and collective bargaining agreement; by
F-S
I
I
publicizing it in the co~y newspaper, ~r~ual repo~, etc.; by
specific review of the policy with ~ll manag~ent personnel and
~~th all minority and female employeeS at least once a year; and
by pos ting the company tEO policy on bu.lle tin boards access ible
tD all employees at each location where cons~~ction work is
performed.
g. Review, at least annually, the company's 0:0 policy and affi.r1l".ative
action obligations under thes~ specifications ~i~~ all ~ployees
having any responsibility for hiring, assignment, layoff, te~ina-
tion or o~~er employment decisions including specific review of
these items ..n. d. onsi te supervisory personnel such as Superintendents,
General Foramen, etc., prior'to ~~e initiation of constrUction work
at any job si~. A w~ittenrecord shall be made and main~ined
identifying the time and place of these meetings, persons attending,
subject n~tter discussed, and disposition of ~'e subject matter.
h. Disseminate the Contractor's EEO policy externally by including
it in any -dvertising in the neWS media, specifically including
minori~ and female news media, and providing written notification
to and dis;:ussing the Contractor's 0::0 policy ....ith other Contrac-
cqrs and Subcontractors with. whom the Contzactor does or antici-
pates doing business.
i. Direc~ its recrui tJDent efforts, bo th oral and wri tten, to minori'=Y,
.female and community organizations, to schools ....i':..'1 mi,nority and
female students and to minority and felr.ale recrui t.cent and training
organizations serving the Cont:actor's rec:uicment area and employ-
ment needs~ Not later than one month prior to ~~e cate for the
ac=eptance of applications for apprenticeship or other training
by any recruitment source, the Cont:actor shall send written
notification to organizations such as the above describing ~'1e
openings, screening procedures, and tests to be used in the selection
process.
j. Encourage present minority and ~emale employees to recruit other
minori~ persons and ....omen and, where reasonable, provide after
school, S'UIl%!Iler and vacation ~:Jlo~ent to :ninorit:y and fe-male you'cl1
both on the site'and in other ~e~s of a Cont:actor's workforce.
Ok. valida-=.e all tes'tS and other selection requirament.S where the.=e
is an obligation to do so ~~der.41 CTR Par-=. 60-3.
...
1. Conduc~, at least annually, an inventory and evaluation at least of
of all minority and female personnel for pro~~onal oppor~ities
and encourage ~'1ese employees to seek or to prepare for, ~~ough
appropriate t:aining, etc., such oppor~~it.ies
m. Er~u:e that seniority practices, job classifications, work assign-
.men'tS and ot.">1er personnel prac~ces, do not have a discrimi.:1a tory
effect by continually monitoring all personnel a:1d employment
related activities to ensure 'cl1at the EZO policy and the Contractor's
F-6
obliga~ions undel these s?eciiica~ions are being I-.:ied oU~.
n. Ensure thAt All facilities and company activities are non-
segrated except that sepuate 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 of:ers
for subcontracts from minority and female const--Uction
contractors and suppliers, including circulation of solicitations
to cinority and female contrac~r associations ~d other business
associa tions.
p. Conduct A review, at least annually, of all supervisors' adherence
to and performance under the Contrac~r's EEO policies and
affirmative action obligations.
a, Contractors are encouraged to participate in voluntary associatior~
which assist in fulfilling one or more of their affirmative action
obligations (7a through p). The efforts of a contrac~r association,
'joint cont.ract.cr-union, contract.or-community, or other similar q=-oup
of which the contractor is a. member and participant, !:laY be asserted
as fulfilling anyone or more of its obligations under 7a through P
of these Specifications provided that the contractor actively partic-
ipates ~n the group, makes every effort to assure that the group has
a positive impact on the employment of minorities and wocen in the
indust--y, ensures that tbe concrete benefits of the program are
reflected in tbe Contractor's cinority 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. !he
obligation to comply, however, i~ the contractor's and failure of such
a group to fulfill an obligation shall not be a defense for the
Contractor's noncompliance.
9. ~ single goal for ~~norities and a separate single goa.l for women have
been established. The Contractor, however, is required to provide
equal emp~oyment opportunity and to take a==i~tive ac':.ion for all
minority qroupS, both male and f~~le, and all women, bom Cl.inori-;:y
and non-minority. Consequently, ~~e Contractor may be in violation
of the E.xecuti ve Order if a particular group is employed in a substan-
tially disparate manner (for example, even ~~ough the Cont=actor has
achieved its goals for. women generally, the Contractor ~~y be in
violation of the Executive Order i= a specific minority group o~ women
is underutilized).
10_ The Contrac~or shall not use the goals and timetables or af=irmative
action standards to discriminate against any person beca~se of race,
color, religion, sex, or national origin.
11. The Contractor shall not enter into any Subcontract wi~~ any person
or fi~ debarred from Government contIacts pursuant to Executive
Ord~:!;' 11246.
F-7
12.
The Con,==ac~or Sh~...... 'carry out. such sanct.ions anc.J .:.. ties for .
vio1a~ion of chese specificatior~ a.nd of the Equa. opport.unity Clause,
-incluc.ing suspension, termination and ~ancellation of existing s~-
contraCCS as cay be imposed or ordered pursuant to Executive Order
11246, as ~ended, and its i~plementing regulations, by ~~e o!tice
of federal Contract Compliance Programs. MY Con,==act.or who fails
to carry out such sanctions and penalties shall be in violation of
these specifications and Execut.ive Order 11246, as amended.
The Contract.or, in fulfilling its obligations under ~~ege specifications,
shall implement specific affirmative action steps, at least. as exten-
sive as those standards prescribed in paragraph 7 of ~~ese specifica-
tions, so as to achieve ~imum resultS from i.cs efforts co ensure
equal employ'ment opportuni t::y. If the Contractor fails co comply ....i th
the requirements of the Executive Order, the implementing regula. clons,
or these specifications, the cirect.or shall proceed in accordance ....i~~
n crR 60- 4 . 8.
The Contractor shall designate a responsible official to oonitor all
employmen t related acti vi t::y to ensure that the company ::EO policy is
being carried out, to submit. repo~s relating to the provisions hereof
as may be required by the Government and CO keep records. Records
shall at least include for each employee the name, addresS, telephone
numbers, cons~'l""'\Jction t:ade, uni"on a.ffilia tion if any, eI:lployee
identification number when assigned, social security number, race,
sex, s~atus (e.g., mechanic, apprentice, trainee, helper, or laborer),
cates of changes in stat.uS, hours ....orked per week in the indica.ted
t.rade, rate of pay, and locations at which the ....ork 'olas performed.
Records shall be maintained in an easily ~~derstandable and retrievable
fo~; however, to the degree that existing records satisfy this
requirement, contract.ors shall not be required to ~aint.ain separate
records.
Nothing herein provided shall be construed as a limi~tion upon the
application of other la....s 'olhich establish di=ferent st.ancards of
compliance or upon the application of requirements for ~~e hiring of
local or other area resiaents (e.g., those under ~~e Public works
Employment Ac~ of 1977 and 'the Comm~~i~y Development Elock Grant
program) .
13.
14.
15.
..
F-8
"
,
APPENDIX G
OMB
Circ'lllar A-110
I
..
1
.I
Office of Management and Budget Circular A-110 (7/30/76)
A-110:1
OFACE OF MANAGEMENT AND
BUDGET
IClrCul&r No. A-IIO)
. GRANTS AND AGREEMENTS WITH INSTI.
TUTIONS OF HIGHER EDUCATION,
HOSPITALS. AND OTHER NONPROFIT
ORGANIZATIONS
Uniform Administrative Requirements
JULY 1. 1976.
To the heads of executive departments
and est.ll.blishments.
SUbject: Uniform administrnLive re-
quirements for grants and other asree-
ments with institutions of hi;hcr edu-
c:a.Lion. hospitais, and ot.her nonprofit
organizations
1. Purposc.-This Circular' promul-
gates st.a.ndards for obtaining consist.cn-
cy and unJformity among Federal asen-
cies 10 !.he n.dministratlon of grants to.
and other agreements with. publlc and
private Institutions or higher educat.lon,
publlc and private hospitais, and other
qua.sl-publlc and private nonprofit. or-
ganiutions. This Circular does not. apply
to grants, cont.ra.cts, or other agreements
. between the Federal Government and
units ot State or local governments
covered by Federa.1 Management elr-
c:ul&r 74-7.
2. Etfective date.-The st.a.ndards in
the attachments to this Circular 'Will ~e
a.ppl1ed a.s soon as pract.icable but. not.
l&t.er than January I, 1977.
3. Supersession.---This Circular res-
cinds and replaces parts m and rv of
the APpendix to Federal Management
Circular 73-7, Administl'ation of college
and universit.y reseuch gran'ts.
<l. Policy intcnt.-The unlform stand.
ards and requirements included in' the
at.tachments to t.his Circular replace t.he
van'ing and often confiicting require-
ments th&t have been imposed by Fed-
eral B.G'encles a.s conditions of grants and
other agreements 'With recipient.:;. ..
5, Applicability and. scopc.-Except a.s
provided below. the stand.uds promul-
gated by this Circular are applicable to
all Federa.l agencies. If an}' statue ex-
pressly prescribes policies or specific re-
quirements tha.t dilTer from the stand-
ards prOVided herein, the provisions of
the statu te shall govern.
The provisiOns of the at.tachments of
this Circular shall be applled to subre-
e1pients per!ormin!:' substantive work
under grants that a.re passed through or
awarded b3' the priman' recipient. if such
subreclplents are organizations de-
scribed In parqraph 1.
6. DefinitioN.
... The t.erm "grs.nt." means mone3' or
propert.y provided in lieu of money paid
o~ furnished by the Federal Government.
to recipients under programs t.hat pro-
vide financial assistance or that provide
support or st.imulo.tion t.o' accomplish a
publlc purpose. The term "other agrei!-
ments" does not. include contracts which
ue required to be enteree into and s.d-
ministered under procurement lav;s and
regulations. Grants and ot.her a.gree-
ments exclude (a) t.echnica.1 assistance
prOgT'ams. v:hlch provide services instead
_I ~____. ~, .
general revenue sharing, 10:l.ns. low
gUR.rantees, or insurance, and tc) direct
payments of any kind 1.0 individuals.
b. The t.erm "recipient" includes t.he
followins types of nonprofit organiza-
!.ions that are receiving FedenJ funds
from a Federal 8~ency or through R.
St.at.c or local government:
Public and privat.e Inst.lt.ut.ions of high-
er education: pUblic and private hos-
pil.als: and other qua.si-publlc and pri-
vat.c nonprofit organizat.ions such as (but
not limited to) commlUlity lI.ct.ion ascn-
cies, resenrch lnst.it.utcs, educational as-
soclat.ions, a.nd healUl centers.
The term does not Include foreisn or
internationa.l org:mizatlons (such a.s
agencies of !.he United Nations) and
Government.-owned contractor operated
facillties or research centers providing
cont.inued support for mission-orient.ed,
large scale programs tha.t lU'e Govern-
ment-owned or controlled, or are de-,
signed as federally-funded resenrch and
development. centers.
7. RCQv.csts for C%ccption.t.-The Omce
of Management and Budget may srant.
exceptions from the requirements of t.his
Circular '\I.'hen except.ions are not pro-
hibited under e"ist.ing laws.
However, In the 1ot.erest of maximum
uniformity, exceptions from the re-
quirements of the Circular ~W be per-
mlt.t.ed only In unusual ca.ses. Agencies
may apply more rest.rictlve requirements
to a class of recipients when a'Pproved by
the Office of Management and Budset..
a. Attachments.-The standards pro-
mulga.t.ed b3' this Circular a.re set forth
in the Attachments, which are:
Attachment A cuh"deposltorles.
Attachment B Bonding &nd Insur&nce.
Attachment C Reuntlon and cust.oc1l&1 reo
qulremenu for records,
AttAch meN. D PT~ Income.
Attachment E Cost shnrlng and matching.
Atl.&Chment T Stand&l'ds tor finanCial man-
ogement SYSl.efnS.
AttAchment G 1"In&ncl&1 reporting require-
ments.
.....ttachment H Monitoring &nd reporting
progr"m pertormlUlce.
Atr.acnment I Pa)'ment requirements.
Attachment J Revision at ftn&ncl&1 pl&n&.
Atta.chmen.~ K Closeout procedures.
AttAchment L S.uspenalon &nd I.ermln&t1on
procedures.
At.tAchment M Standard form for &pplylng
for federal &SStST.&nce.
Attachment. N PToPert)' D'Ianacemcnt stand-
&rds.
Attachment 0 Procurement standards.
9. E%Ce1'tioN far certa.in recipicn.ts.-
Notwithstanding the provisiOns of parlL-
graph 7 if an applicant/recipient has a
history of poor performance. is DOt ft-
nanda.1h' stable. or its management. sys-
t.em does not meet the standards pre-
scribed in the Circular, Federal agencies
may Impose additiona.l requirements as
needed provided that. such applicant!
recipient is not.ifted in writ.ing as to:
a. Why the additional standards are
being imposed:
b. what correctlve action is needed.
Copies of such notificatJons shall be
sent. to the Otnce of Management and
Budget a.nd other agencies funding t.hlLt
recipient. at L'1e same t.ime the recipicnt.
: - _..;1": _ ~
10. Rcsponsibilities.-M:encies respon-
sible for administering proSrams Ulat in-
\'oh'e srant.s ancl other asreements wit.h
reciplent.s shall issue the appropriate
regula.tlons necessary to implement t.he
provisions of lhis Circulnr. All portions
of such regulat.ions that involve record-
keeping :md/or report.lng requiremcnts
subject. to !.he proviSions of lhe Federal
Reports Act and OMB Circular A-40
must. be submlt.ted to OMB for c1carance
before (,eing inlroduced int.o use. Upon
request. all regulat.ions and inst.ruct.ion:;
implemcnlins this Circular shall be
lurnished t.o tIle Office of MlLnngement
and Budset. Agencies shall a.lso desig-
naLe an official t.o serve as the agcncy
representative on matters relat.ing to the
!mplement.ation of t.hls Circular. TIle
name and t.IL1e of such representative
shall be furnishcd t.o the Office of Man-
:1.sement. and Budget not. later than Au-
!Just 30, 1976. '
11. Inquiries.-FurUlcr informat.ion
concerning !.his Circular mo.)' be obtained
br contracting the Fina.ncial ManaGe-
ment Branch. Budget Review Division,
Office of Management. a.nd Budget.
Washingt.on, D,C. 20503, !.elcphone 395-
3993.
J.u.II:S T. LYNN,
Director.
ATT"CHMENT A.-oCIllCVL"R No, A-IIO
CASII DEI"OSlTOan:s
I. This attachment sets forth st.andard.s
governing the use of b&nks &nd ot.her In-
stItutiOns &a cleposltorlcs at func1.~ "d"&l1ced
under gronts &nd ot.her &greeD'lent.S. .
2. Except tor situations described In pa.ra-
b"lphs 3. .. &nd 5, no Feder&1 'Sponsoring
&genc1 sh&ll:
Po. Require physical segrcgatlon ot cnsh de-
positories lor funcl.s which are prOVIded to a
reclpleDlt.
O. Establish any eligibility rcqulr.ements
for casb deposltorle.s for tuncl.s ",'hlch &re pro-
vleleel to & reclplcnt. '.
3. Jo.. separ&l.e tl&nk &l'count sh&l1 be requLre
when &ppllcable letter-of-credit. &greement.s
provide th&t e1rawelo...'n'! wlll be me.de ",'hen
t.he recipient's checkS a.re presented to the
O&nk for payment.
t. Any moneys &dvn.l1ced to a recipient
which &re subJe~t 1.0 th! contr~1.. or rl'gula-
',Ion af the Unlt.ed St&t.es or any at Its oll\cen.
rgents or emplol'ecs' (publiC moneys is de-
tlned In Treasury Clrcula.r No. 1:76, BS
amended) must. be deposited In & .b&n." with
f'ec1er&l Deposit lnsur&nce Corpor&t1on
(TOlC) Insurance cover&ge and U'le hal&nce
exceeding the TOlC cover.age must be col-
I&terally secured.
5. Consistent with the n&tlon&1 ItO,,1 at
exp&ndlng U'le opport\lnltles tor Inlnorlty
business enterprISes, recipients &nc1 "\Ib-
reCIpients sh&1I be encour&geel '1.0 use minor-
Ity b&nks (& b&nlt which Is owned &t least 50
percent by D'\lnor\t.y group znemberl').
ATT..CHMICNT B.-oCDlC"t...R No. A-ItO
BONDI...e ....." INSUlt..NCJ:
:. Tbls &tt&chznent sets farth bonellng nnd
InSur&nce requlrement.s tor gr&n\.S and other
agreements v.1th reCIpients. No other bond-
Ing and Insurance requlremen.\,S "hall be Im-
posed other th&n those norD'l&lIy required by
the recIpient.
2. Except as otherwise required b}' 1&"". a
grant or other &greeroent th&t requires the
contracting (or subcontr"cllni:) for con-
~tr\lC'tlon or tnclll~~' Improvemenl~ shRII pro-
, - - ...... - - - ~ I _ _ _' . - '."''''' _. 1.__
I
Office of Management and Budget Circular A-110 (7/30/76)
quire menta relr.ung to bid guuant.eea. per-
10rm&llcO bonda. IloDd payment bonda unl_
tbe conatrucuon contract or subcontr6Ct e1-
ceeda 6100,000. 1"or those coMracta or sub-
contf'Cta exceeding 1100,000, tbe 1"ederal
agency may accept tho bondlng polley and
requlrementa or tbe grantee provided tbe
Federal ..genc}' hY made".. determln..tlon
tbat the OoYernment's InlArest Ia adequat.ely
pro\.ected. l( such .. e1elArmlnatlon baa not
been made. tbe minimum requlrementa shan
be a.s lollows:
... A ln4 VUIVAn.tee Irom etu:h bl4d.er equiV-
alent 10 JIve percen.t of the b~ pMce,-
Tbe "bid gUllraOltee" shall conslat 01 a firm
commJtment such a.s s blel bonel. cerUAed
cbeek. or other negotiable InstrumenL IlC-
companyIng a blel u aasurance tbat tbe blel-
der ",UI. upon acceptance ot bls blel. eaecu\.e
such contractual e10cumenta u may be re-
quired wlUlln the time specU1ed.
b. A pcr/ormAn.cc b0n4 on the pArI of the
contrtu:tor lor ~ 00 percent of the c:ontrtu:t
Jlfl'v:e.-II. "performAnce bond" Is one executed
In connection wltb a contract to secure lul-
lillment or all the con tractor's obligatiON
under eucb contract.
c. .A. pIlJlment bond on the pArt of the con-
trtu:tor lor 100 J'erccnt Of the c:ontrtu:t
pnl:c.-II. "parment bond" Is one eltecu\.ed In
connection witb a contract to aasure poy-
ment u required br la.... or ..n perllOna sup-
plying labor and malArl..lln tbe eaecutlon or
Ule work provided tor In t.be contnLct..
3. Where !.be Pederal Oovernment guaran-
tees or Insuru tn.. repayment or money
borrowed by the recipient. Ule P'ec1eral
agancy. at ItII dlacretlon, may require 84a-
qualA bonc1lng aDc1 lnauranc.e 1( the bon41Dg
and lnaurance reqUlT'llmenta 01 t.be recipient
are not deemed 84equalA to protect t.be In-
l.ereat ot the P'ec1era.1 Oovernment.
ofo. Tbe l"ecl.eul lponaorlng &iencr may "-
quire ~equate fidelity bond COTera(e wbere
the recipient baa no co"era(e &Dc1 the bond Ia
. neeeied ItO protect tbe Oo"ernment'l Intereet.
6. Wbere bonda are requlT'lld In the lltu..-
tlona e1eecrtOec1 abon. !.be bonda Ihall be ob-
taUled lrom compaDles boldlng certU1catee ot
authority aa acceptable luret1es (31 CP'R
223).
II.TTACKJoaJ'C'T C.--CmcvI-UL No. 11.-110
an'ZH'nOlf AKll CVIlTOOLU. &SQVDZWZJfTll roa
aECOIUlS
i. 'I111a ..tt.&Cbment....ta fortb recorel reten-
tion requlremenLII lor gr&DtII a.nel other e.gree-
menta wlUl reclplenta. Pederal lponaorUll;
&C'8n.cles lIbAll not Impose ..ny reoon1 reten-
Llon requirements upon redplenta oUler UlWl
;boae eiescr1 bed below.
2. Excejtl tor p&R~pb 1. UlIs att.acbment
also applies \0 lubredplenta a.a referred to
In puagrapb 6 ot the bulc ClTcul&l.
3. J"ln&Dclal recorc1a, .upportlng documenta.
statlst1cal reoorcla, &nd all other recorda perti-
nent \0 an &gr'eement llJ)all be ret&tned lor a
perIOd ot Ulree ye&n!. with Ule tollowing
quall!:lc:atloDS :
L It ILDY litigation. claim or ..uellt Is st.a.rtec1
bet ore Ule erplratlon or Ule 3-ye..r perloc1 ;be
recorcla shAll be ret.&lned until ..II IItlll'aUona
clalma, or ..udlt Onc1.lnp Ul"oITUlg the.recor~
ba"e been Ml8Olved.
b. Recon1s lor nODerpendAble property ac-
q\llred WILtl !"edereJ tuncla sheJl be ret&tned
lor :I ye..". &Zter Ita On&! e1lsposltIOI1.
e. Wben rf'<'~rc1s ue tnLDlllerred to or mun
talnecl by tb e "'ed I -
3 . era spoDl5OMng ..gencr the
b-IYeat' retention reqUlrament Is not appilca-
e to tbe recipient.
t. The retention period 1t&.'"t4 from Ule
~lA at tbe l\lbmJMlon ot the final upenc1l-
ture r"port or, lor gT&DLII e.nel oUler
:&~ta o~"~ &Ie M!new~ a.nnually, Iro~~
" " llubm""'lon ot Ule &lU1ual
.U1~cl..1 .t.&tWl r.-port.
6, RecipIent organtzauona sho\llei be au-
thor1ZeCl br the !"ederal sponsormg ageney,
It th"y &0 desire. to eub5t.1tut" microfilm
copies In lieu 01 onrlnAl recorcla.
e. Tbe P'ec1ereJ aponaorl.D.C ageney &ban re-
quest traMler of cen&ln rec:orell to Its cus-
tody lrom recipient orge.nlzatloaa wben It
eietennJnes U1at U1e recorda poes_ long-
tenn retent10n yalue. However, In on1er to
avoid duplicate record-keeping. a P'ec1eral
apONlOrUlg aceney may m<e &lrangementa
WIth recelplent orga.nlz.atlona to reta.1n any
recon1a that ..re continuously neecled lor
Joint Ullo.
7. The head ot the Federa.l sponsoring &ien-
c}' and t.Ile Comptroller Oeneral ot Lhe United
St.&t.. or any ot U1elr duly ..ut.llortzed repre-
lentatlves, shan have &Cceea to MY pertinent
booles. documents, papers. aDd recorda ot the
reCIpient organlZa.tlon &lid their lubre-
clplenta to auUte audita. ea..DlInatloDII. u-
cerpta ..nd tr&Dllcrlpta.
8. OnlC6ll oUlerwlae required by law, no
Federal lponaorlng ..gency ...'1all place re-
strlctlona on recipient orga.nt2:ll tlODS that will
limit public a.cc:_ to .Ule recon1a ot recipient
organlzat1ona that ..re pert1nent to a gr&Dt
or a.greement ucep-t wtll:D ;be &iency can
deDlOMtnLte th..t s\lcb rec:orda must be kept
colUldentlAl &Dd woulei have been excepted
from dlacloeure pUJ'1lluant to.the I"reeclom ot
Inlorm&t1on Act 16 O.5.C. 662) It the recon1a
ha.d beloDged to ;be Peaeral sponaonng
&ieney.
A't'TACHKJ:JfT D.--Cmcvl.A& No. A-110
nOGUM tJfCOJoa
1. l"ederal eponaonng a('Dn~es shAll applY
U1e ltandan1a let 10rUl In UlIa att.acbment In
requiring recipient orga.nlzatloDS \0 a.ccount
for program lnoomerelated to proJOCU
Ona.nced In wbole or In pe.rt wit.b 1"ederal
tuncla. !'rognm Income repreeenta groee In-
come earned by !.be recipient trom the led-
erally supported act1"ltles. Sueb e&l'nlnp ex-
clueie Interest earned on a4,,&Dces ILDd may
Include. but wUl not be IlmJted to, Income
trom aervlce fHl!, laJe ot comznod1t1ee. usa.ge
or rent.&l t_. lLDeI. royal~l_ on paten.ta e.nel
coprlgbta.
2. Inter..t O&1Ded on adV&Dces at Federal
tunda sh&11 be remlttec1 \0 Ule 1"ec1ual &ieney
ercept tor lnt..erwt ee.rued on a.dftDcea t.o
States or 1n.stnuDen.t.&Iltlee ot .. State sa p~
Tided by Ule In~vernmeD.tal C~
Act ot 19se (Public 1.6w GO-li77).
3. Proceeds from tbe aAle ot rea.! &Dd per-
IOnaJ property either pro"lded byUle !"eel-
eTal. Oovernment or purebUed Ul wbole or In
p~ W1t.h !"eeleral funda. ab&11 be ba.ndled Ul
accon1e.ncc 91U1 II.ttaebment ~ to this cir-
cular pert.&lDlng to property Dl&AACement.
~. OD.less the acreement prOvleiea other-
wISe. rec:lplenta lIb&ll bave no obllgat1on \0
Ule l'ederal OoYe=ent 91th r.pect to
roy<1es received u a result .ot COPYTlgbta or
pateDta proc1uced under Ule graDt or oUler
&ireelDent Ieee pangraJ)b 8. Att.a.cbment N).
6. AJl other program Income earned dunng
;be project pcnoc1 shall be ret.&lD~ by Lbe
rectpleD~ &Dc1. In a.ccon1a:1ce ....Ith Ule gn.nt
or oUler acreement. ehall be:
~., Mded to funda cOmmJttec1 to the proJ-
by !.be !"edual lponllOrUll; &iency &Dd
rectplent org&nl%atJon a.nd be uaed to furtber
ellglble PI"OSTIUZl obJectlYeS:
b. Used to nnance the non-Federal &bare
ot the project wben approved by Ule Federal
sponaonng &leney; or
e. Deducted from Ule \Otal project COIlta
In e1etermUlIng Ule net 008la on wblch the
l'"ec1enJ. . &hue 01 COIltll wUl be baaed.
ATTACB~. :E:.--CDlevt..U ~o. A-IIO
c:orr SKA&DfC A.1fD WAT'CHOfO
1. This attachmenL seta 10rUl erlteMa ..nd
procedurN for the "lIo""",bUlt~ o~ (".A.r.h n"~
_I
A-110:2
In-kind contributions made by reClplenl.6 or
subreclplenu (a.s referred \.0 In puagraph 5
ot Ule bulC clrculu). or tblrei p..rtles In ~..I-
Ialylng COlIt Iharlng aDeI matcblng requlre-
menu ot Feder..1 sponsorUlg agenclea. This
"tl.&chment alao establlahea criteria lor Ule
..aluatlon or In-kind contrlbutlona ma.de by
tblrd parties. and lupplementll the guidance
eet torth In Federal MaDagement Clrcul..r
73-3 wlllh respect to cost 5bulng on leder-
allY-lponsored researcb.
2. The lollowlng definitions apply lor the
purpose 01 this attacbment:
a. ProjeCI eo't~.-ProJect costa lore all al-
lo....ble costa (a.s seL lortb In the ..ppllcable
Federal cost principles) Incurred by.. recipi-
ent and tbe v..lue of t.he In,lltInd contrlbu-
tlona maele by the recipient or third puLl...
In accompl1ahlng the obJectlY.. ot tbe p;rllnL
or other agreement e1urlng tbe project or pro-
gram perloc1.
b. Co,, ~/I.4rln" c17w1 Tn4tehln".-lD general,
cost sbarlng and matching represent that
portion 01 proJect or program costa not borne
by the Federa.l Oovernment.
c. Cuh c:ontr1buUoYU.--Cub contl1butlona
tepreaent the reclplent.'s cub outlay. lnclud-
lng the outlay 01 money contributed to the
raclplent by non-Federal Ullrc1 putles.
d. In-Iclnd con'r1butlons.-Ln-ltlnd eontrl-
butlona repreaent tbe v..l\le of nonca.eb oon-
trlb\ltlona pro"lded by the recipient a.nd
non-I"ederal th1l"'c1 parties. OD.ly ....ben ..u-
Ilborlzed by l"eQeral legislation. may property
purebaaed wl;b Pec1eral funds be coMlc1.ered
... the reCipIent'. In-ltInei contrlbutlona. In-
kUld cont:1butklna m..y be In the form ot
cbarges lor real property aDc1 nonooUpand-
able penoDAI property. anei Ule value of
gOOClS "Dd services dlrect1y beneOtlng ..nd
lpec~c..l1y lel.ent14..ble to t.be proJoct or
program.
3, General gutdeUnell lor computing cost
eb.....lng or matcblng ue ... tOUOWll:
a. Coat &harlng or matdlJog may con.alst-
or:
(1) Charges lncurrec1 by the recipient u
proJect costa. (Not &lI ebuoges require ca&b
OUtla11l by ;be recipient e1W'1ng "!lbe project
perloc1; eumples ve c1epreclat1on aDei use
ebarges lor buUc11D.g:I anel. equipment.)
(2) Project coela fil1&Dcec1 ..nUl ca&h con-
tTlbuted or donated to Ule rec:lplent by oLber
DOn-P'ecleral pubUC acenCIea aDd lnatltutlona.
aDd private org1tnb:&tlona &Dd lnc1lvlelua1.&,
..nd
(3) PI'o Ject COIl ta repreaen tec1 by aerrlcee
..nd real aDd peTllODalpropcrty, or use there-
ot, e10n.a.tec1 by other DOn-P'ecleral publlc
acen~ea &Dd 1Dlltl tutlODll. -.ac1 pr1A'..te OTg'a-
nl%atlona &Dd lnc1lT1cl.ua1.&. 'I
b. AJI cont:1but1on&, both ca&h and 1n-
ltlnc1. &h..ll be acceptec1 u part of tbe recipi-
ent'. COIlt sbarmg and ma1Cblng when 8ucb
contrlbutlona meet &11 ot tb"e tolloWUlg
criteria :
(1) Are Yert.4able from the re~plent..
record.s: -
(2) An not InclUded U CQDt:-lbut1OM tor
any other lec1erallr-aaalated pr~m:
(3) Are noc.......,. anel. r_n.a.ble lor prop-
er ..nd ell1clent a.coompU&bment of proJe<:t
obJectlY..:
(4) Are types ot cbarges tbat would be al-
lo...ble uneler the applicable ooet prlnClples:
(II) Are not palel br the l"8c1cral 00".."1:1-
ment under another ...1st&Dce ~ment
(unless tbe a.greement Ia ..ut.bor1Zec1 br P'ecI-
eral Ia.... \0 be uaec1 lor cost ehs.rln I; or ma tcb -
Ingl:
(II) ~ proYlc1edlor In Lbe ..ppro"ed budg-
et ....ben reqUired by Ule !"ederal a('eney: a.nd
(7) CoDJorm to oUler provlsloDS 01 this
atta.cbment.
t. V&lues for reclpleot Ul-ltlnd contrlbu-
tlona ....Ul be establlstled In &ccorel&DCll w1th
the applicable COIlt I'rlnClples. .
5. Speocl!le I'rocedU"", lor ;be reclpl..nta In
~"'t!..n~ll..h1:1C"' ~h.. ~r.J"~ ,,1' !n...t"~!"~ t"'f""'~t.~'hl!-
'I
Office of Management and Budget Circular A-110 (7/30/76)
tlons from non-FederlLl thIrd pa.rtles are ~et
forth below:
a. Valllation 01 ,'olllnterr ~rrl'iees.-\'olun-
teer servlres mny be turnlllhed by professlon:>l
and technlcnl personnel, consult.nnts. nnd
other sklllednnd un>;kllled labor. Volllnu:er
ser\'lees mllY be counted all cost 1I11:1.rl1\1; or
mlltchln!; If the ser\'lee III an'lIaegml and
necessary part o( an a pl'lro\'ed prl'J:rnn1.
II) natr~ lor volunteer serviees.-R:\tes for
volunteer" "hollld be con"lslent ,,'Ith t.I1l'l'C
paid for sImilar work In the recIpient's
or!;1\I117~'\tI0I\, In tholle Instances In which the
reqlllred lIkllls are nol. lound In lhe recIpient
or!;anI7.ntlon, rates lIhOllld be conslslent with
thallI' pl\ld tor similar work In 'the labor mar-
ket In which the recipIent competes for the
kInd of lIen'lces In\'olved.
(2) Volunteers <:771ployed by other organi-
::alions.-When an emplo)'er other thnn the
recipient furnl"hes the services of an em-
ployee, these services shl\lI pc valued at the
employee's re!;ular rl\te at pal' (exclllsl,'e of
trln!;e benefits llnd overhead costs) provIded
tl1ese "ervlces nre In the same skill (or whIch
the employee Is normally pl\ld.
b. VaLuation. 01 donated, c::~e71dabLe per-
s07lal pr07'erty.-Donated. expendable per-
sonal proper\)" Includes SUCh l\.ems as ex-
pendable eqUipment. office supplies, labora-
tor)' . supplies or workshop and classroom
supplies. Value assessed to expendable per-
$onal property Included In the cost or match-
Ing' share should be reasonable and should
not exceed the market vAJue o( the property
lot the tlme o( the donatlon.
c, Valuation. 01 don.ated, non.e:pc:JUt4ble
1"!f'$O'ftaL ~roperty, butldings. and. Land or
lUe th.ereof.
(1) The method used tor Chargln!; cost
sharIng or mlltchlng tor donated nonex-
pendable personal property, buildIngs and
Ilond may differ according to the purpose oC
the grant or other "greement as !ollows:
(al It the purpose oC the ,rant or other
agreement Is to assist the reCIpient In the
acquisition o! equipment, bulldln~s or land.
the totAJ value o( the donated pro pert). may
be cllllmed as cost sharing or matching.
(b) It the purpose oC the asreement Is to
support actl\'It1es that reqUire the use of
equipment. buildings or Illnc1. depreclat.lon
or use charSes for equipment and buildings
may be made. The tull value of equloment or
other capital assets Rnd faIr rent~1 chlU'ges
for land mil)' be allowed prOVIded that the
Federal agenc)' has npproved the charges.
(2) The vnlue o( c10nated property w1l1 be
determined In accordance "'Ith the usual
accountln!; policies oC the recipient with the
follOwing quallftea.ttons:
(a) l.and and buildings.-The value of
donated land and buildings mill' not.uceec1
Its fall' market value. at the time oC donation
to the recIpient aa establlsheCl bj an Inde-
pendent appraiser (e.g_ cerUfted real prop-
erty appraiser or GSA repre!entatlve5) and
certIfied b)' a responsible official oC the
recIpient.
(b) Nonc:pc1ld4blc pcrsonAI pr~1'ert)l.-
The value ot donated nonexpenda.ble personnl
propert}. shall not exceed the fair marKet
value Of equIpment nnd property of the same
age and condItion at the tIme of donaLlon.
(C) Use 01 spcce.-The vl\lue of donMed
space shall not exceed the fa.lr rent.'\1 ,'all:e
ot compar"ble space lL~ establllUled by an
Independent appraIsal of compnnble space
and facilities In " prh'nlely-owned bulldln!;
In t.he same loc.'\l1t)':'
(d) l.oaned cquipmcnt.-The \,,,1 lie of
loaned equipment shall not exceed Its talr
renl.l\l value.
6. The (ollo,,'ln!; requlremenu pet!..'\ln to
the recIpient's supporting rc:co:-Qs tor In-
kind con~rlblll1ons from non-Fedt'rlLl third.
n!;t.I~,C::
a. Volllntt'er sf'rvlres m\lst. bf' dnc\lmenl.t'd
and. \0 the t'xtent fl'Mible. supJlOrted b~' the
sallie methods \Ised by the recipient for I:.'
employees.
b. The basis for determinIng the valul\lInn
(or I'lerson1\1 ser,'lces, mlllerlnl, eqlllpment,
buildings and l"nd must be docllment"d.
ATTACIIMeNT F.-CUlCUI.Aa No. A-IIO
STANDAI\DS FOI\ FINANCIAL MAHAGeMeNT
sl'STeMs
1. '11lls attnchment prescribes al.l\ndl\rds for
lin"ncl,,1 manngement systems of recIpients.
Fetlernl sponSOrln!; n{:enClc.o shall not Impose
nddltlOnal sl.l\ndartls on recipient.' IInles.~ ape-
cllicall)' prO\'lded tor In the I\ppllcable $\.Q-
tutes (e.g.. the Joint Funding Slmplllicl\tlon
Act. P.L. 93-510) or other aLlAchment.s to this
cIrcular. Howe\'er. Federl\l sponsorIng aGen-
Cies are encour"ged 1.0 m"ke suggestlons and
l\.'lSlst recipients In estbllllshlng or Improving
l\nanelal manl,!;ement systems when such as-
sistanCE' Is needed or requested.
2. ReClplenl.~' l\nancllll manllgement S)'S-
tems shall provide for:
a. Accurate. current. and coml'llet.e dl~lo-
sure oC the ftnanC1al rcsults o( cnch tedcrnlly
sponsored project or prOllrnm In accordl\nce
with the reporting requirements set forth In
AtI.:l.cl)ment G 1.0 this circular. When n Fed-
eral sponsoring "gency requires reportln!; on
nn Roccrunl basis, the recIpient shall not be
required to estn.bllsh an accrllll.l accountln!;
s"stem but shall develop such accrual dAta
lor Its reports on the bnsls oC all an"IY"ls oC
Ule documentatIon on hand.
b. Records that Identity adequately thc
source and application o! tunds (or tedemll)'
sponsored :l.ctlYILles. These records shall con-
tain Inlormatlon pertaining to FedcrAJ
awards. authorIZations. obligations, unobli-
gated b&1ll.nces. assets. outlays. and Income.
C. Elleetlye :ontrol over and accountability
for all funds. property and other asse~. Re-
elplenta shall adequately saCel;Uard all suc:b.
ll.SSets Iond shall assure that they lore used
solely (or authorized purposes,
d. Comparison of actual outlnys ...Ith bud-
~et amounts tor each grant or other agree-
ment. Whenever appropriate or requlred by
the Federal sponsortng agency,. financial In-
formation should b, related to performance
and unn. cost data.
e. Procedures to mlnlml:ae the tUne elap.~lng
bct..'een the transfer ot funds Cram the U.s.
Treasury and the disbursement by the recip-
Ient. whenever tunds are advanced b)' the
Fede"",1 Goyernment. When advances Arc
made by a letter-of-credit method. thc recip-
Ient shall make dra...do....ns as clORe all pos-
sible 1.0 the time of making disbursements.
t. Procedures lor determlnlng the reason-
ableness, allowablllty and a.lloc:ablllty ot costs
In accordance ...Ith the proYIsIOnS o( the ap-
pllcable Federal cost prtnclple:o and the terms
oC the grant. or other agreement..
g. Jic:countlng records that are supported
by souru documentation.
h. Examinations In the torm ot :l.udlt.s or
Internal audits. Such audits shall be made
by qualified Indh'lduals who nre sufficlentl}'
Independent oC those whO autl1~rizc the ex-
penditure a! Fedel'll.l funds. to produce un-
biased opinions. conclu510ns or Jud:ments'
They shall mee~ the Independence erlterln
alon!; the lines of Chapter 3. Part 3 of the
U.S. General Accountln!; omee publlcatlon.
St.'\ndnrd~ for Audit o( Oovernment.:l.1 Orl;"n-
Iz-'\tions. Prol;rnms. Acth;ltlCll and Functions.
'111es~ examinationS "re Intendcd 1.0 ascer-
1.1\171. the ctfectlveness of the l\nancl,,1 man-
al;ement s~'stems and Internal procedures'
tha.t h"ve beell est.'\bll.,>hed 1.0 meet the terms
lLnd cClndltlons of the ngTeemenl..~. 1t I" noL
Intendcd thllt e:l.ch :ll;reement "warded to the
recIpient be eX:lmlned. Oenerl\lly, exnmln,,-
tlonll shoultl be conducted on an or(:l\nl:O.l\-
~1('lt~.'_,'~C'i"" ~r\~!~ 10 ~~~~ tht:' f:~(":'\! Int,..r'~!~_\" or
I
A-110:3
finane!1\1 t.rnns"ctlollS. M \Io'ell as cnml'llnnce
with the terms nnd condltion$ of the Federal
!;rRonl.'> and other R.!;rt'ements. Such tes\.S
would include Ron apprOprlR.U> sR.mpllng of
Federa.l "~ret'ment.s. Examination" ,,'111 be
conducted with reasonable trequency, on a
conllnuln!; b.."ls or Rot "cheduled Inter\'als.
u"ul\lI)' annually. but not lellS trequentl)' thl\n
e"ery t..,o years, The frequency o( these ex-
"mlnatlons' shnll dl'pend upon the n"tllre,
s17.e and the complexlt~ ot the nct\'llty. Tlle"e
eXl\mlll"tlons do not relieve ~eral n!;enCleS
o( their nudlL responsibilities. but ml\Y affect
the trequenr}' and scope ot such nudlts.
l. ^ s\'steml\tlc method to a5SlIre tlmel\' I\nd
approp~lnte resolution of I\udlt l\ndlnl;S and
recommendatiOns,
3. Primary recIpients shl\lI requIre subre-
elplents (.Ul del\lIed In pl\rasrnph 5 o( the
ooslc cIrcular) to ndopt the standnrds In
pamgTllph 2, above except for the requIre-
ment In sUbpnragTaph 2e, reg:\rdlll~ the use'
of the letter-of -credit method I\nd Lh"t pl\rt
ot .:oubparagrllph 21\, resnrdlng reportIng
forms and lrequencles prescribed In Attll.ch-
ment, G to this circular. .
ATTACHMeNT G.-CIBCULAa No, A-liD
,.INANCtAL IU2'OItTnn:: RJ:QtlIReMENT'S
I. This atl.l\chmcnt prescrIbes unlCorm re-
portln!; proc:edures for reCipients to: sum-
marize expenditures mad,e Rond Federal tunds
unexpended tor ell.ch award, report the st/l.tus
o( Federal c&.,>h advanced, request ad\'1l.nces
and reimbursement ..'hen the letter-oC-eredlt
method Is not used; llnd promulgates stand-
I\rt'. forms Incident thereto.
2. The follo...lng definitions apply for pur-
poses of this attachment;
a. Accrued e:pend.itures.-Acerued ex-
pendItures are the charges Incurred by the
recIpIent durIng a given period requirIng the
provision ot funds tor: (1) goods and other
I.I\nglble property recelve<1; (2) services per-
formed by employees. contractors, subreclpl-
ents. and otner payees. and (3) other
amounts becoming o...ed under prosrams tor
whIch no current servIces or performance Is
required.
b. Accrued i7lCO'7le.-Accrued Income Is the
sum at (1) earnings durIn!; a gl"C'en period
Irom (l) serylces .,performed by the recIpI-
ent: and (II) gOO<1.s and other tangIble
property delivered to purchasers; anc (2)
amounts becomIng o...ed to the recipient for
wh~h no current sen'lces or pertormance !S
reqUired by the recIpient.
c. Federcl lufl.iU cuth.orized.-Federal
tunds authorized art the IioIAI amount oC
Fcderal funds obligated by the Federal Oov-
ernment tor use b)' the reCipient.' This
llmount may Include any authorl~e<1 carry-
O\'CT o! unobligated funds trom prior ftsc:al
)'e.'\TS when permitted b)' I a,.' or agency
regulll.Uon.
d. In-kind contributiOn.l.-In-klnd con-
trIbutions are deftned In Attachment E to
thl!: circular.
e. Obligcti07lS.-0bllgnUons are the
amounts o( orders placed, contracts and
grants a"'nrded. servIces receIved. and simI-
lar t.ranSllctlons during a given period t.h"t
will reqUIre j')llyment by the recipIent during
the same or a future period.
e. Outla)ls.-Outln~'" or expendItures repre-
sent charges made to the project or program.
They may be reported on a cash or accrual
bllSls, For reports prepared on a cash basis.
outll\~'s are the ~um ot actual cash dlsburse-
ment_' for dIrect char!;es for goods nnd $en'-
Ices. the amount o( Indirect cxpense chl\r!;ed.
the ,'a)ue of In-kind contrlbuilon~ npplled,
and the amount of c"-Sh ILd\'anCes and pay-
mcnl.~ mnde \.('l subreclpienu. For report.!l pre-
I':lred on an accrual basi>;, outlllYs are the
sum of I\ctu,,1 cash dlllbut5ements for direct
chl\rl!cll for I!ood.' :lnd servICe.;. the "mount
('l( In(!l:(''''~ ~x!"('n!'(' trH"\Jrr~d. the '..n.lut' o~ In-
I
Office of Management and Budget Circular A-110 (7/30/76)
kind contributions applied. and the net In-
crease ,(or decrease) In the "mounl.S owed by
the recipient tor f:OOds and other property
received. tor services performed b)' emplol'-
ees, contracl.Drs, subreclplent.s and other
payees and other amount.s becoming owed
under programs tor ....hlch no current serv-
Icee or pertormance are required.
g. Program income,-Program Income Is
dellned In AU.achment 0 of thla circular. It
lnay be reported on a cuh or accrUAl bUll.
whichever II used tor reporting outlAl's,
h. urwbligated balancc.-The unobligAted
balance Is the portion ot the funds author-
Ized by the FederAl sponllOrlng agency that
hu not been obligated by the recipient and 1lI
determined by deducting the cumulative
obligatiON! from tbe cumulative funds au-
thorlud,
I. Unliquidated obIl901t1o,,",,-1''or reporta
prepared on a cash' bl\.sls. unliquIdated obll-
!:atlon.s represent the'-6mount of obllgatlona
Incurred by the reCipient that haa not been
pAid. For reporta prepared on an accrued ex-
penditure bUll, tney represent the amount
of obllpl.lons Incurred by the recipient tor
which an OUI.IAY haa not been recorded.
3. Only tne following torms wtll be au-
thorlzel1 for obtaining llnanclal Intormatlon
from reclplenta,
a. FIn4ncial Statu.s 1/.eport (!:zh.lbit !), .
(1) Each Federal sponsoring agency ahllll
require reclplenta to use the standardized
l"1nanclal Statui Report to report the status
of 'unds 'or all nonconstructlon proJecta or
programs, The Federal sponsoring agencies'
may, lSo....ever. have the option of not re-
quiring the !"Inanclal Status Report when
tne Request for Advance or RelmbW'Mment
(paracnph 4a) or Report of P'el1eral Cuh
Transactlona (paragraph3b) II determlnel1
to provide adequate Information to meet
their needs. except that annal !"Inanclal
StatUS Report snail be requlrel1 Ilt the com-
pletion. Of the project when tne Request for
Advance or Reimbursement form II usel1 only
for advances.
(2) The Federal spoMOrlng agency shall
prescribe ....bether the report shall be on a
cub or accrual buls. It the 1"el1eralsponsor-
Ing agency requires accrual Information and
tbe re<:lplent's accounting records are not
normally kept on the accru&l buls, the re-
cipient shall not be required to convert Ita
accounting system. but shall denioI' such
accrual Intormatlon throush best estimates
bued on an analysis of the documentation
on hand.
(3J The Fel1eral spoMOrlng agency shall
determine the frequency, of the !"Inanclal
S;.atus Report for each project or program
considering the size and complexity of the
particular project or program. Howe....r, the
report shall not be required more frequently
than quarterly or I~ frequently than an-
nually except u prOVided In subparagn.ph
310 (II above. A. nnal report shall be required
at the completion ot the agreement.
f 4) Federal sponsoring agencies shall re-
quire reclplent.s to submIt the FinanCial
Status Report lorlglnal and no more than
two cl'lples) no I"ter thlln 30 d"ys ..aer the
end ot each specified reporung period lor
quarterly and seml-..nnuAI reports, ..nd 90
days 'or annual and nnal reporl". Extensions
to reporting due l1ates mo.)' be granted upon
request of the recipient.
b. Re'JlOrt 01 Federal C43h TrCln~Clctio,,",
(Ezhibit 2).
(I) When tunds are advanced to
reclplenta through let:ers of credit or with
TreLllur, checks. tne Feder..1 sponsoring
..gencles shall require each reclplent to ..ub-
mlt a Report ot I"edcral Cash Tran..u:t1ons.
The l"eder:11 spcHuorln!: I\seney 8h..1I use this
report to monitor cash advanced to recipients
"nd to obl.&ln dlsbursement'ln'ormaUon for
eACh agreement trom the recipients.
(2) Federal sponsorIng agencies m"y re-
quire 'oreclUl.S ot Federal cuh requirements
In the "Remarks" .ectlon ot the report.
(3) When pr"ctlcAI and deemed neersnr)'.
the Federal sponsoring agencies m..y require
receipts to report In the ..Rem....ks.. ~ectlon
the amount 01 CAsh a.dvancea In excess of
three clays' requirements In tne hands 0' sub-
recipients and l.D provide short narraUve u.
planetlons of ..ctlons taken by the recipients
tQ rcl1uce the exceS3 balances.
(4) Recipients shall be required to submIt
not more than the original and twO copies ot
the Report ot Federal Cuh Tr..nsactlona 15
working da)'s following tne end ot each
quarter. The Federal spon.~orlng agencies
may require :1 monthly repor". 'rom those
recipients receiVIng "dvan.:.. l.Dl.&Ung $1
million or more per year.
(5) Federal sponsoring agencies m..)' waive
the requlrement for submUslon of the Report
ot P'ederal Cash Transactions when monthly
advances ~o not exceed 510.000 per recIpient.
provided tnat such advance.s are monitored
tnrough other forms contained In_~ls at-
tachment, or It. In tbe Feder&! sponsoring
Ilgency's opinion. the reCIpient's ~ccountlng
controls Are adequ..te to minimIZe excessive
Feder:u advances.
4. Except as noted belo..... only the follow-
lng torms will be authorized tor the reclpl-
en:.! In requesting ..dvances anli relmburae-
menta.
a. 1/.equut lor AdvClnce or Reimbursement
(!::lLibtt J).
(1) Ea.ch Federal spon:orlng agency Ih..1I
adopt the Request tor Advance or Reimburse-
ment as a stanliarcllzed torm tor all noncon-
:tructlon progranu when letters-at-credit or
predetermined. advance methods are not used.
Federal sponsoring agencies. however. have
tne option of using this form tor construc-
tion programs In lieu ot the Outlay Report
and Re~uest for Reimbursement for Con-
struction Programs (subp....acraph 4b).
(2) Reclplent.s shall be Authorized to sub-
mit requests for al19ances and. reimburse-
ments at least monthly ....hen letters-ot-
credl t are not used. P'e<lerILJ spon.sorlng
agencies snail not require the sul:lmlalon of
more than the orlg1nal and two copies of the
Request lor Advance or Reimbursement.
J
A-110:4
b. Outlay report and Tcquest jar Tel m-
burumcnt I~ construction program.. (E:l-
hibi! 4).
(I) EllCh Federal'r.pon50rlni: "i:ency shall
Adopt the Outlay Report. and Request tor Re-
Imbursement 'or Construction I"rosrams as
the H1ndardlzcd tormAt to be used for re-
questing reimbursement tor construcLlon
programs. The Feder:u sponsorlr.g I\gencles
mal'. however. have the opuon ot subsLltut-
lng the Request tor Advance or Relmbu'rse-
ment I"orm (subparagrapn 4a) when the
Feder,,1 agencies determine that It provides
"c\equl\l.e IntorlTU\t1on to meet their needs.
(2) Recipients shl\1I be Authorized to sul:l-
mlt requests :or relmburscmen~ "t lelLSt
monU11}' ,,'hen letten-ot-credlt I\re not used.
Feeler,,1 sponsorlns asencles shall not require
m(>r~ thAn the orIginal and t...,o copIes of the
OUtIAI' Report and Request for Reimburse-
ment for Construction PrOgTams.
5, When the Fed.eral spon.sorlng agencIes
need "ddlUonal Information In usIng these
forms or more frequen~ reports, the follo...'lng
shall be observed:
. a. When additional Intormatlon Is needed
to comply with Icglsll\tlve requirements,
Federa.l sponsorIng I\l:encles shall Issue In-
structions to requIre reclplenl.S to submIt
such Informa.tlon under the "Remarks" sec.
Uon at the report.~,
b. When necessllry to meet specll'lc pro-
!;am neecls Federal sponsoring agencies shall
submit th~ proposed reporting requirements
to the P'ln..ncI..l M&n..gement Branch. BUdget
RevIew Division. omce ot Manaltement and
Bu~et lor approval prior to submISsion of
the reporl.4 for cleuance under the pro-
vIsions of OMB Circular No. A-IO.
c. When" Federal sponsorIng agenc}' has
determined that a recipient's accounting sys-
tem does not meet the Standards for 1"1-
n"ncl~1 Management contained. In Attach-
ment P' to this circular, additional pertinent
Intormatlon to further monitor granl.S and
otner agreemenl.S mllY be obtaIned upon
....rltten notice to the recipIent until such
time :1.5 the sy\\<t.em Is brought up to standard.
d. The Federal sponsoring agenc}'. In Ob-
taining InformatIon a.s In pAragraphs a, 1:1
and c above. mu.... comply ....Ith report clear-
ance requlremen~s at the Omce ot Man&ge-
ment and. Budget Circular No. A-IO. u re-
vIsed.
6. Federa.l sponsoring agencies have the
option of shading out any line Item on any
report that Is unnecessar}' lor deetslon-mak-
Ing purposes.
7: Federal sponsortng agencle:; should. ac-
ccpt ~he IdentIcal Informatltln 110m the re-
CI!)lenl" In machine usablc torm..t ,r. com-
puter printouts In lieu ot prescrIbed tormats.
8. Fedcral sponsoring asencle. may p.ro-
vIde com!)uter ou~puts to recipients when It
will expedite or contribute tQ l.b.e accuracy
of reporting,
9. Feder,,1 sponsonng agencies are author-
Ized to reproduce these torms. The torms tor
reproductlon purposes can be obtaIned trom
the Omce of Man:l.sement and Budget.
"
I
Office of Management and Budget Circular A-110 (7/30/76)
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.1
Office of Management and Budget Circular A-110 (7/30/76)
INSTRUCTIONS
Please type or print lesib1y. Items 1. 2. 3. 6. 7, 9, lCd, lOe, 109. IOi. 101, Ill, and 12 are self.explanatory.
specific: inslruc:tions tor other items are as tollows;
1.- E"'",
, En..' .n. _Ill...,., 1cI.nUnCll'..... n__ oui,_ by
th. U.S. In'eme. R""enut Scrwic;.e Of Flet (In.."vtion)
code. If requltltd by 'h. FeCI".a lpanlOf'''' _,Iney.
5 Thl. lpeel It rn.ef'Wtld for In account numbref' or at"'"
iGtntityfnl "umIM" that may be asail""' by U''It!
,.opi..nt.
8 Ent., the month. day. and Y'" of 'h. be,inn'", ,nd
eNtlne of 'nit p""eet ,",Iod. for fo,",ula .,ants 'h.,
".. not ....",eG on , pro,ect be.'I. IMw the I'lnl
pe.-.
10 Th. IlU_ of ~I..I column" tol.h_rh tIll. '0
prov'd, (Inanei., dati tor ...en pro,,.m. tuncUon. 1f'N1
ICllvity in 110. bud,,,, .. oop_ by 'n. r_..1 ........
sorln, I,.ney, If 'oddi'lonl' column. or. _ed, UIO IS
mlny IcIcIltlonol lorm. II n_ed Ind IndlCale .....
num_ In .poc. on:tvldoct In uo_ riJftC _.. U\o
''''"1. of III plorr"ms. lundio,," o. IClivlll.1 IIlouId bo
IhOWft in column (.) of th. nrst P.... For "'Mml'ftts
pert.inln. '0 MV.'" CoIeIoC of F..,..., DomosUc
Assistanc. proru,"1 ",.. do not reQul~ . 'uttft.,
functional or IC'ttvtty dIInJf.caUon bre.kdowft. enler
und.. columns C.) Ift"'UCft (I) 1ft. litl. of 'h. ptOrlm.
For rtwnu or 0'1".' IUf,tlne. 1"..menU contain'",
multloll pnt".ml wher. on. or morl prorrams reQuire
. fu""er breakdo-n by 'unctlol:' or Ictlvtty. use a
,..prera.1 'orm tar .ach 0101"1'" showlna the aODhc.bl.
'unctlons or Ichvltie In the leOlr.tt eolumns. For
,_nts or other ....i....ncl: .,reemenU contlininl se""
.rll tuftctlon' or .ctivniu which art funded trom
....,.,.1 prolrlm&. PNoer. a 'SeD."'.. .ann for each
.ctl~1'y or lunction .....n requested by thl Feden;
__n, .,oney.
100 Em... ,... not outley. TIll. Imount .hould bo tllo sam.
I. the amount reDOtted 1ft Line 10. of the ,.It ~w
If t"e" "" biN" In .dtuatment to tlM lmouttt "'own
prwvoously, pl.... .1UIC11 """I.natlon. S_ ...... IIlhlo
II 'h. Inlll.1 r.OOf'\. .
lOb Enl.r 'h. to'"1 moo' p......m outl->," Closs r.bol...
",'unds. Ind other diSCOUftts) 'or th's "DOIt period.
IftClvdlftl dlsbutHma"ts of Ulh realized a. profram
inco,".. '0' ,.po", t..t .,. "'.N.... on . cash
bo.... outlays Ire tho sum of letUal ..... disburse-
m.r::s tor roods .nd .'McIS. t.... lmount of Indirwd
uDeM4 chl'1Jed. the vllua of In....ind contrtbutioM
a.polied. Ind the amount of cash HV8ftCtS Ind
PoIyments ",.d. to contractors Ind .utllrantHL For
,..po", pret)af'"f!ld on In ICCrued ..pendltur. balis. out.
lays .re th. sU"' of actuII Clsh ditburHment'. t,,_
amount of Iftdl~ eapen'l incurred. the vahle of In.
"'ind contribution, apohed. Ind tM net Inc,.... (Of
OK"''') in Ute .mounts owed by tit. rectDien1 tor
rood" Incl olh.. ptOoeny 'OCO_ Ind tor _es
pertorm.c by employoes. COftl..eton, 1V"'..nt.... .nd
"'hor ...y....
1.- EA'",
J Dc (nt.., t.... .meum 01 all Prot,.,., Inco",. r..lln<l In
t"is penod tt\a' .. 'eQUIf..cl t-r '''. ,."", and eon-
d.hoM of th. f l'der.1 ...nI to M aPduC1Kt f,om to"t
Pn"tf'C't cost~. ror '100'" O'''r'llre-cs on I c..h balis.
e"'.' 'n.. .mount 0' ush 'ncerne ,.c.,..,.o du,in, In,
,..oort"'E lM',iod. rOl '.pon, D,eD.r.cf on an .ccrual
blSII. In'.r 'M I mount - 0' Inco~ ~ar"fId sine. 1"-
be,in",", of '''. ,epo"'"1 period. Wt'1'1'I I'" 11'""' 0'
conditions "krw DlOfr.'" Income 10 be addl'd to In.
lotal _._rcII. ....I.m in '.m.,.... .". sourct. amount
Ind dilOOlition 0' 'h. Incorna.
lot [ntff .mount pen,'nl". 10 ttM non.rl"dt,.1 ,nl'l of
Of'OI'lm outll~ tncluded In thl .mount .~..n line c.
lOll Enl.. ''''al _nt 0' unliquid.'ed obliCIUonl lOt 1101.
Protect Of oro"a",. inc'udin, unllQuld.led obh,aho",
10 lublftn.... and con'rectors. Un'iqutdlted abliSI.
tions If.:
Cash bo.t_I'.'...... Incurrod but nol .p.id;
Accrved eaO!"di'ufI b"la--obIiSltion, Incurred but
tor which. In outlay t\.. not been recorded.
Do not indudl I"" amounts that hlVI bMn Included
on tinn a I"r""," ,. On the fin.1 report. line h should
hev. I zero bAlancl.
101 Ent.r ,he F_..I ...... of unliquldl'oct obli,ltlonl
s"own on line h. Th. .mounl st\owf'l on this lin. snOUid
be t". difterence be,..." lhe lmounts on lines h .nd I.
10k Ent... th. lum ot 1110 .mounts s_ on lin" i .nd I.
It the regort Is final the r.pon shOUk1 not contain ."Y
unllQulGetM obI..1I0M,
10m En'.. 110. unobllpled bola.... 01 F.d....1 lunds. Thi.
amount chaukS be the dlnetenct between Iinel k .nd L
11 b Ent.r.... In efted dunn, 1ft. ..oortin! oor1ocl.
Ilc tnt... I.-nt of tho bo.. 10 ....icIl'h. ...,. ... appli..,.
Ild Ent.. 'otal _nl O. indited COli chlfCod dunn. '110
re""" ooriod.
111 [nte, .mount of t". Fed..-al sh". charged during the
IOl>Ort perlOcl,
It more the" one 'I'. was aoptied durin! the project
period. incl,",' I seoarate scft4!dule 'ho....". EM..'
.,..rtSt Wftk:h tt\e tnchrect cost "'ft were IQDfted. Ihe
rnoective .ndtrea r.'" Ihe monlh. dlY. Ind yel' 'h.
inchntd rat.., were ,,, e"ect. .mounl, of indirect ea'
pe.... CIl..,od 10 .,.. pn>joct. Incl'ft. F..,.ral .har. of
iftCIi.ocl _nso _"oct 10 110. ptO;eCI'o clall.
A-l10:6
.
...
I
Office of Management and Budget Circular A-110 (7/30/76)
.1
A-110:7
App.....od by Olliee of l,hnel~monl <<nd Bud,.t, No. 8o-RO 182
FEDERAL CASH TRANSACTIONS REPORT 1. hdenl ........,;"1 'II'M'Y I"d .f,."iuliOfll.1 .1."".,,( \0 w+-,(h Ih" "pot1
i. IUM.n..
(See i1lStructi~ 071 tht. bcu:k. If report i.. for more th.an one pront or
assistance agreement. atuuh. completed StanlUlrd Form t7:-A.)
2- RECIPIENT ORGANIZATION 4.- f....... In..' . at". i.....ifia. L Aeci,....'.. acCOU". ..."'", ..
11_- i....titri... ItUfftbe,
No.".. : 6. Lot..... ..odil .u..... 7. lat' .,..__ ...tlCh., IIIVMOef
H..."~ Give tl'ltol number for tltis period
ANt Str_d :
I. P.,....", Vour".n cudi"" Ie 9. Tr..ury th,e'. Ut<ei.... I wlwOarr
)'OtI' aClC8Uftt (1'f" ftoOt dC7"o.iuJ)
CilII. S"'., 10. PERIOD COVERED BY THIS REPORT
aYWI ZIT' Cod.:
3. FEDERAL E"-1PLOYER ~ FROM (......11\, cIoo II. "...r I TO 1...."11>, aa" "car I
IDENTIFICATION NO.
a. Cash on hand beginning of reporting period $
b. Letter of credit withdrawals ,
c. Treasury check payments
11. STATUS OF
FEDERAL d. Total receipts (Sum of lines b aM c)
CASH e. Total cash available (Sum of lin.es Q..J1.n.d. d)
f. Gross disbursements
(See .'Pecifie g. Federal share of program income
i1lStruct.i01lS
on the ba.ek) h. Net disbursements (Line f minu.s Line g)
i. Adjustments of prior periods
j. Cash on hand end of period $
12. THE A\10UNT SHOWN 13. OTHER INFORMATION
ON LINE llJ. ABOVE.
REPRESENTS CASH RE. a. Interest income $
QUIREMENTS FOR THE
ENSUING
Davs b. Advances to subgrantees or subcontractors $
.
,
14. REMARKS (A tta.eh addltA07\.4l sheet..s of plQ.1n paper, If more space 1.S required)
15.
I certify to the best of my
knowledge and belief that AUTHORIZED
this report is true in all reo
spects and that all disburse' CERTIFYING
ments have been made for
the purpose and conditions j OFFICIAL
of the grant or agreement
THIS SPACE FOR AGENCY USE
272-101
EXHIBIT 2
CERTIFICATION
SICHA TURE
TYPED OR.PRINTED NAME AND TITLE
( A roo C..u)
(N.....b.t-)
TELEPHONE
DATE REPORT SU810llTTED
(E:h_...)
ST"''''OARtl rORW 272 (7-76)
F"''''.'IJ':rin...,.j by Office nt "".n"Cl!'rn.nt "nd ~ud...t
I
.1
Office of Management and Budget Circular A-110 (7/30/76)
A-110:8
INSTRUCTIONS
P1eese type or print legibly. Items 1, 2, 8, 9, 10, lId, lIe, lIh, and 15 are self explanatory, specific
Instn.Jctions for other items are as follows:
/'-
E"try
3
Enter employer ioentification number assigned by the
U.S. Internal Revenue Service or the FICE (institution)
code.
If this report coyen more than one grent or other
.gntement, leave Items 4 and 5 blank and provide the
information on Standard Form 272-A, Report of Fed.
eral Cash Trensactio..........continued; otherwise;
4 Enter Federal grant number, agreement number, or
other Identlfyini numben if requested by sponsoring
agency.
5 This space rlrMrved tor an account number or other
Identifying number that may be auillned by the M!-
clplent.
6 Enter the hitter of credit number' that applies to this
report. I'f all advances _re made by Treasury check.
enter "NA" for not applicable and leave items 7 and 8
blank.
7 Enter the voucher number of tM last letter-of-credit
PllYlT1ent voUCher (Fonn TUS 5401) that was credited
to you.r account.
11. Enter the total amount of Federel cash on hand at the
beginning of the reporting period Including all of tlte
Federal funds on deposit, Imp...st funds, and unde-
posited Treuury ch1lcks.
llb Enter total .mount of Federal funds r.eeived through
peyment youchen (Fonn TUS 5401) that were credo
ited to )'OUr a~ during the reporttng period.
llc E~ the total amount of all Feder'lH funds received
during the reportinc period through Treasury checks,
wt\eth.ef Of' not deQ05ited.
llf EM<< tM ~af Fadenl cash dhbunements, maee
6Yrin( tn. ~ period, Includlng cash receiv.c:f
... Pf'09r'8m income. Disbunements as used h"eA also
lncIud~ tne amown( ot advances and peyments less
refunds to subg..nt..s or QO"tracton, the cross
amount o! dir.ct I&lariec and 'tIMI8'ec, includi", the
E"try
It'""
emplC)ge'e's share of benefits if trellted as a direct cost,
interde1)artmentlll cha~es for supplies ilnd services.
and the amount to which the recipient is entitled for
Indirect costs.
111: Entltf' the Fed.ral share of program income that was
required to be used on the project or program by the
terms of the irant or asreement.
., "
11i
Enter the amount of all adjustments pertaining to prior
periods llnectinR the ending balance that have not
bnn includ.cj in any lines above. Identify each grant or
.',....m.nt for which adJustment was made, and enter
an explanation for each adjustment under "Remarks."
Use plain sheets of peper If additional space is reQuired.
llj
Enter the total amount of Fedenll cash on hand at the
end of the reporting period. This amount should include
all funds on deposit, imprest funds, and undeposited
funds (line e, less line h, plus or minus line I).
12
Emer the estimated number of days until the cash on
hand. shown on Itne 111. will be expended. If more than
three days cash ~irements are on hand, provide an
explanation under "Remarks" as to why the drawdown
_. made prematurely, or other r.asons for the excess
cash. The requirement tor the explanation does not
apply to presc;:heduled or automatic adVlinces.
13a
Enter the amount of Interest eerned on advances of
Federal \unds but not remitted to the Federal agency.
If this Includes eny amount earned and not remitted to
the Federal sponsorine arency for over 60 days, explain
under "R.marks." Do not report Interest earned on
advances to States.
13b
Enter amount of advance to secondary recipients in-
duded in item llh. ..
...
14
'n addition to providing explanations as reQuired above,
,iw additional explanenon deemed l'Iecessary by the
recipMnt and for irttonnation required by the Faderal
sponsoring agency in complianc. with governing legis.
!Mian. Use plain sh..ts of paper If additional space i&
~uired.
("
I
I
Office of Management and Budget Circular A-110 (7/30/76)
A-110:9
FEDERAL CASH TRANSACTIONS REPORT I
CONTINUATION
(Tltu /....... u __"I".d..net allJl<",d I. Sl......rd F.- f7% ,,"Iv ",h,..
rrrortin.17 .".." 0\0" ",." pr4'" (tr Q,,.utl',,,r.r Cll1rcflft.CftL.)
2. RECIPIENT ORGANIZATION (Gi.,. ........ oNl/ ... .ho,"," i.. il'... t, SF"
fH)
A.pCtroved by Office 0' Man.,em.nt .nc. 8ud,... No.
80_R0182
1. FEDERAL SPONSORING AGEI<CY ~ND ORGANIZ....
TIONAl ElEMENT TO WHICH THI& REPORT IS SUB.
MinEO
J. PERIOO COVERED BY THIS R(1)ORT (A. .h""". 0" SF
flt)
'.0" t~It, ..,. .....1
TO C ""..,.. ..... ......,
4. List information belOW 'or each grant Of oU,er Igreement covered by tnll ,eoort. Vie ."(lIhonel 10lml if mOt. space I' required.
FEDEII"'- ""ANT DR OTHER IOEHTIF.I RECIPIENT ACCOUNT ...U....(R FEOERAl SliARE OF NET OISBURSEME NTS
CATIDH 0" C7THE"
IDIHTlF"YIHG HUM8ER NCT OIS8UASrW[HTS Iv.. CUMUL."t.T1V(
[Sh.... .. ""bliivisil>" bv .I".r id...li. ......__.... I... ,......'" i_ Nn DtS8UASEW("'S
Il'mv ....m.I>." if ~.qwr.d bl/ ch, e...... ..........t 'OR RtPORflNG
F ..c...Gl S".....""..~ A g...CV) PER'OO
In) Ihl Cel Idl
$ $
" .
,
.
.
\ .
..
",
5. TOTALS (511.0..14 c...-r.."tmd ""LA .......un~ ._ ... SF' !71 ....1
/.lIow" c.I....... (cIIM........... Ii... lIk; cGl....... (d) I". ,..... 01 lines
Ilh ond J /I, .f IhlS!SF tl1 ..nd "".....I4Livc duo......m....c.. ."....... ....
t...c r.,,_L A !loch .",,,r..-LUm .f ....V di/..........) S S
...
217-:01
srf.NOf.RO FORM 27:<-" (l.76)
P'..I!',I,"~ ~... OHi... rol ...o"'o~.-..., !,"d B..d,....'
Office of Management and BUdg1
'cular A-110 (7/30/76)
.1
REOUEST FOR ADVANCE
OR REIMBURSEMENT
,,~ by Ollie. of "'.n.......... and
BUD..'. No. 80-110183
a. -r.............
o ADVANCE 0 :'t:,u..a.
~ .... .~ ...
'ACt
0'
"AGES
Z. BASIS Of REQUEST
o CAlM
..
TYK 0'
~"'''M&"'
aEQUOTED
o ..lInA, 0 .CCIIUAI.
'" ".. 'A" J'ii'"w'("' ..(OU~
Nu..eu 'Oil TMII RtOUi.'
(See ,...tf'tld'''' OR bock)
r-fiiiliAl S "'SOlllHG AG[NC'1' AND . tONAL. EMENf
WHICH 'HII "U'Oltr IS su....nO)
o nN.,
4. or...... MN OR O'H(.
IOENTlnlNO MU".P ASSIGflIED
.y n.olML MKHCY
"""01'[ IDUll'FlCA ON
NU".I,III
. III [S UN' HU".[II a. Pl:RIOO COVERED BY THIS RE U ST
0" IDUf"""'NG NUM.ER 11IO" {.-fA. ~ ...... 0 C-'A...... .-.1
I. II
a.. PI. c............ '-........... .,~ u.-....,.
OR
I N
It._
It_
It__
... .,.....
It_
-.- .se....
c..... .....
..J %,,. c.... :
t:iI...s..,.
... ,,'l!"..:
11. COIoIruT" TlOIC Of AMOUNT OF WM8UR$EWEHT$/ADYAHCES REOUanD ..-
(.1 (., (el
,
PROG"""'I/FUHCTIONS/ACTMTIES . TOTAL
I. Tot.l _..... tAl ., deWl
_,_ 'D Oat. $ $ $ $
b. LMe: Cum..lat.... _lncDlM
c. ::: ~ _.YO tLiM . .........
O. ~... _ Coo" -.,. fat__
..--
.. T_I tS.....f ,..... d: III
f. _'......, _.. of .mount ....-_.
I. '_owl .110.. 01 ._nt .... w... .
h. '_owI"."...-. _iDuoly _u_ ..
I. =11i::.~ - -... (Line r
J. -- ,...,i,..s by 1st rnonm
_II. - --...
by'_ fNntor.._
'Of u.. in "'_"'ft. PN- 2nd ........"
_..I'" _n....
31'1I .......11I
l%.
ALn:RNATl COIoIP'UTATlON P'Olt AOYAHCES ONLY
I. EstimII.... ,......, c:.ollll DUl!eys IIlaI will bo ...- duri... petlod _ by tho _.....
$
... Lou: EIII........ bolonc.o 01 '-'1 c:.oall .... _ .. 01 ......... of _ period
c. _nt ~_ (!.O........_ n- .,
11.
$
c:ERTIFlCMIOH
_TUM M "~IO CZIlt.......ND lWnc:tAl.
OA n: II[OUEST
lua..mm
I c....., ."at '" .... bo.. 01 my _..
.nd boli.f 1110 ".t. . _ .ra c:arncI and
.110. .u DUll.,. __ mad. i.. 1ICCOrd..-
MI" tile .rant condltioM or _ ......
__ and ._ po,--t t. ..... .nd 1101 _
-....-.." --.
'I'/'PU) _ _NTUI "_ ....D lULl
11-
.-
..... ~
nu_.
No_fat__
2_IDI EXHIBIT J
'TM~ ~ no (7-11)
............... .,. QIIIk.- ell ............... aM .......
OIlC:ULA.ll MO. A.1l0
Feder~1 Grants Management Handbook September 1978
A-110:10
'\
..
Appendix I
I
I
Office of Management and Budget Circular A-110 (7/30/76)
A-110:11
INSTRUCTIONS
Plene type or print legibly. Items 1. 3. 5, 9, 10, Ilc, lIe. Ill. Ilg. IIi, 12 and 13 are sell.explanatory;
specilic instructions tor other items are as lollows:
/t_ E..lrI/
2 Indiu'_ .net"'" reQuest is p,epared Oft cash or ac.
cruM .."anditu.. b...s.. All ,equelll for adVances
,".'1 " prapred on . c.sh beai$,.
4 Ente, the Fedefl' ,rent number. or other identity'''.
number ...ilned by '''I' 'ede,.' .ponMrinl .,ency. If
tne My.nee or retmtMInernent i. Cor more thl" Oft.
,,..,,t or ot.,., ..,eemenl. in..rt H/A: then. .how the
-.,,,,.,. amount.. 0" . MIM'.'. .nNt. lilt ..e"
,r.nt or .,reement number and the Ft'CMf'.' ,,,.,. ot
ouU.,. made _,.,nlt ,tM .fln, or ..reefl\eftt.
6 Ent.' the employ" leIeneifielhOf' number IlIifned by
'h. U.S. ,nurnl' R....nu. SeMCI. 0' II.. FleE (i".lltu.
'_I cocl. II _ueal... by Ih. f......1 I.eney.
Thi. ,pac. is me""" tor In account number or OCM'
Idontllyonlt num_ 'hi' ....Y be ...j...... by II..
reci\ti.nt..
8 E"11f tho month. cleY. Ind Y'" I.... 'hI .....nnln. .nd
.ndinl 01 ,,,,, pHIOCI ~... in lhi. .."unl. II tho ...
Que'" is tor In aCS_nee or tor both ." advance .ftCI I.-
Imburs__ .- tho poriod lhat 'hI _.nce win
CDW'r. .f the feqvnt .. tOl' r.imbursement.. shOw Uw
poriod t..... wftlch ''''' _Dun.......' i. ...uest....
"ote: Th. F ........ .__... ',Inci.' ...... 1M ootion 01
.eQui"nl ~. 10 complete Items 11 .... 12.. but -
bot... lI.m 12 ._1eI be u_ _ only . '"'__
amount of ifttomWhoft d ,....sed to me.. .n actveftCe
Ind _81 in_lion __ In It_ 11 cln ...
aotliMd "' . ttme" manner from CIIher reportL
t1 Th. ",,_.01'''' __ .....umn. I')' (b). .ndIC). i.
to provide soece tor ..perw'e colt ."..kdOWftI wfttln a
rroject hII. _ ...."n... Ind _...ed by _...m.
luncUon. or IClMty. II "'dltioNl column. Ire -,
It_ E..lrI/
ule I' ....ny additio".1 101m' .s nH'CIed Ind indicate
pe,_ """'__ in IPlce pnHtded in upper rifht: haw'
..ef. tM wmmary toe.., of aU prol,.m,. functions.
01 aCh",hn sbould be sftGwn ,n tp,. "total" colum" on
the fu" ""e.
! 1. En'er in .... 01 det""', the month, day, and Y." 0' the
end'''1 of the KCou"linl penod lo whiC"" this .mount
IPphes. Ent... PfOI'lm ouUaya to d.,. , ,.et 0,' relu""'.
rebelK. and discounts). in tne IPPlapnate: columnl.
For NQUftIS rwepa,ed on I cas" b..is. outt'YI Ire the
Wfft ot actual usn d..burMmenta lor ,GOd. and wt'Ya
kn. the amoun' ot indirect .Ipenan en....ed. the
".Iue of tn.1Und COfttribuhons. .pplied. .nd the .mount
of C8S" ..,.nces and IYym.,." made to subcon,,..c-
'orI ... Wbr.apieftt~. for request. prwcNred on In
eccrved eapend.t"re basi... ouUeys .,. 'he s.um of ,he
actu" ~sh Clt&bun.emertt.. "Ul' amount oIlnditect ..-
petKes iftCUned. and tn. net lncr.... (or decre_H) In
thl ,_, ..- by tho ,ecipien' tor ._. Ind -....
pro""" __ Ind tor ..Nic.. P<',.onnect by .....
1Il_ --'..cts. ,ubl..n'... .ncI otho, po-..
I1b E"'1f ,... cumu..l.... ..... i_ 'OC_ 10 dllo, II
reQu..u ar. prepand Oft . cash basis.. For r..qUfttI
.,...,.red Oft an eccrved u:peftdn."r. b..... en'er th.
cvmulatiwrc income ..med to date. Undtll" .lthI" bresil.
enter onty the amount eopltc.ab6. to pl"OtJRm jl'lcome
""" _ ...ulred to be u.... lot the lJ'Oiect .... p....
I"'" by the t."". of tM r,.nt or OC"" ..reement.
lId Only _ _lUnl 'eQUlI" t.... _ne. ...ymontl.
_... '''" totll .st__ I..-nt 01 ca... oul"", 110.1
wiN be moclo durinl'''' poriod ~...a by 'he _"nc..
13 Complot. thl ...rtlflCllion be..... ...bmlftinl 'hi.
...uest.
..
,
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I
Office of Management and Budget Circular A-110 (7/30/76)
"1I""",od by Ollleo of Men.,ement ."d ,....GE or
OUTLA Y REPORT AND REQUEST FOR REIMBURSE. BudSft, No. llO-ROIBI PAGE:!
MENT fOR CONSTRUCTION PROGRAMS 1. 1"Yrc 0' "lourST 1. Ill....'. or .IOUlS1
(s.. '''.4"'1'1....... .. bock) OriN..... o "M'IA'- DCA,,, o ACCoUA~
:a. ,[o(aAL J"'OHSOIll'NQ AGrNeT "'NO ORGANILATION"" IU..tHT TO f. nO(lUl GIlIAJlfT O. 0'''(. '" "'''''''4l,. ,..."..tH' "lOUtU NO.
WHICH 1HII "lrolll' IS sU....nI.D 10(N'."",,,, "U".llll AUIGNIO
.T , lOtAAl. AGUtCT
.. ~::...at';.t.. IO~T1"CATtO" /7. O(C,"(..T ACCOU'" 00 O'H(O ,.... coraD ., "'fI ....,
IOl.Nn"ING NUWeu
'MIll tll--., .... ...-.. 10 eM.......... __t
to "CCI"lHT OItGNCI&ATIO.. - .&. ,"'l'U........................,....... ~.....,
If_ : 1'_ :
Ii.. ... He. ...
..- : ...... :
Cu". C<ow.
.s.... .... .s'.e"~
~/' C... : %" c...:
II. STATUS 0' F\JNOS
PROGRAM$-I'UNCTIONs--ACTlYlTltS
CLASSII'lCATlON (., (., (., TOTAL.
..'
., Admift..tr.tM ."Den,. $ $ $ . $
b. Pre"m'".". .XlMny
c. L.nd, Ilrvcluru, I1ml...f....y I
d. ~"itectu,... .",in..I1", beltc ,... I
o. Ot"., Irchtlec:'lur.1 .",,""nn, tH. I
I. ""'foct In._Ion I_ I
S. L..nd dewlopmonl I
h. R..oc.UOI'I ..pen.. I
I. Rel.....,1On lMYfI'.nl5 10 ImlMOu.l. .mI
buSinesMI
J. Oemollllon and ~m_1 .
"- Construction and pro;ect Im~ ,
eosl
I. [aui""",nl
m. Mlacell.-... eost
n, TOll' curnuil',ve ui d.'. (Iurn 0,...".. I I
o Inrv m)
o. De-ductiO"t tor .,rorram iftcome I I
O. Net cumulauve to dl'l CLin. n minus ,
line 0) .
~. Fede,.'s".,. to dale I
to Reh.bilitalion "Inti (100% -/ I
burs.m.nl)
L To.., 'eeI.,.1 51>.", l...m 01 U.... Q I I
.nd r)
L 'eelerol POym"'l5 IIr~.1y ... I I
Que,ted
u. Amount reouested lor r.."'bu"ement Is Is s Is
.. Pf'~e"t... of ,,")'Sic.' comDldiOft of
"",,eCl % % % %
12. CERTI'ICATlON SIG"ATUtltl 01' AI/THO.'ZCD CIIt"r'Y'HG lOAn .(OOOT
O""ClAa. aU."InCD
I e.nll)' .hal 10 'he besl 0' my knowleelS.
'nd belief 'h. btued costs or distlun". .. RECIPt tNT n~ED all ~'H1'tD ......( A"D 111\.[ I T(LC""""( ,..- ......
mints Ire in aCCOrdlnce wrth the II'"," ............. _e_t
of ,ft. project .nd 11"81 Ute ~imbu,.,ement
represent, the Federal sh.r. due which SIONATU"E 0' AUTHO.'Z[O etItT.rY.HO lOAn $leH(D
hat not been previously ,eQuested .nd 0" IClAL
that In i"SplCtlon ".S been ~er1ormed b. R~Drese"t.tive
Ind .11 work ;1 In Iccorda"cl with t", certify'"1 to JiM
11.. n~co 011 ""INTED N....l NeD '111.t I T(U."O"( ....- .-
erms 01 the eW'll'd. ..-... .... ~I
27J-IDl - ~ -
t.XH/oll
,T."'O"'''O ro".. :71 r7_16!
,.......~,~.... ,.. ,,~.~. ,.' u......._.""I .~ "u~
A-110:12
..
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Office of Mamlgement and Budget Circular A-110 (7/30/76)
INSTRUCTIONS
PIN,. type Of prinlleflbly. t\ema 3.4,5,8,9,10. lIs., and Ilv _ MIf.uplll""IOry; specitic: inslruc:tions
lor oth.,. Itema _ as to/lows:
to- .wWy
....,. .... ............... .... " 1M ,...,.. .. AAet. lite
______-.....-01-
--.
% ........ .......... ..........a .... ........... ... .. ~
UIII)e........ ., .- .............. ........
a a_ _ _ ""'".,_ .vm_ __ by
,... U.S. 1",.,- R__ _,.... net 1--->
_. w __ ~_ foCl_ _J.
T "'I. ..... .. ~ .., en ~ """'..... <<l!IIC't\w
_...".... ___ _.. M'-"_ ""_
~
11 'no. _ of _. _ ~ "'-'" tel Ie lD
,.~ ..... .. .......... .... w..~ ...... .
..... IN'DI"'"t _ - ,-.- .... ~ by _
w...... _ .... ~. " _ _ ...
_oCI, .... .. Men!' __ _.. _ ....
....,10.. _ _... _..- iJI_""",=
-, .... -,., -.. ., .. -- "'-
-......-._ t., _....... ~
_m.. _ _ _ ""... 11M _... ~_ _
a ......v_ .......
lw 1..- __ -",,_ let _ _... _, 1etP'
_. _, of __ ."" .... _ eelmlnl_~
_-. -. _ .m_nl of _ _
-- ._ by _..... ......._. Nee .-
.. -amoullt .4 .,..... ____ _ . _~,.. ___
11" _ _ -,_, ...... _ of _i"l .""
.........L _.... ..."..,.. .... _... ....Id.., _
-. - .. - _ __.. prior ID -..
............
1M _.._.....,.______.
- . 10... ...... _ _ _0.1 riPt~.
_.
IW .......__let_of__.....-
11. Em<< - __... .... ;...( -. Do _
IftCl______t1.
11' (Mer................... __ of _ ~ -'tN....__
--
llr 1_ oil _ _ ..... _ ........~ _.1 of
---~_flt-...nlis_
i 1lfI..... t. 'The ........ ,....."".... .. .... ~
- ---"Y -- _.. -;0. __
_ M _ -.. _ _......, _ ....__
_Ir..
11.. r-____.........._
........, ........... ... .... ams ........" 1 ._ 4( ........
1ftc~_).Do____.....
......ioft ~ .......-; D"'- .............
-...-"'----..
Iii tMe,__nl.____~-
--"'d;__..l___
-......--.---.
I... 'wWy
11' [Ioow _ __ ..... _ fit -rk>Y-I of ....
....... _ .....--.. ... I"'" ...'" co..."""..... .,;.
.-., ___ ;., ...-. _"'" or '........i 01
.fUIICIUrwa ....... ~ ........ Nt pt'VC!"". tram 'h.
.... .. --.. _ .... IWnlIJIWlII of IItNCtUI.. thoutd ~
_eel ... ..... ~: lheNOy ..lIoct;"1 _
_ if __ by _ rod...I...-r,
1 III E.., "'-- wnoM..... euoc_" wft" th. .au.. con.
~ aC. IIddllttcM _. 01' reostor.lton of . lacility.
Aha. NiIdude Nt 'he.~. the amouM. 'Ot pro;.et
.....,_~_,-"Is ....a. .. ~ st.....cs. le.aec..P'''Ie
- ........
III [no.. _ .... .. _-to _ II... .... "'"".
'llIe. _. __ _ ..... COft.lrvc:tioft. '0<
.......... _'Y -..... ..._tc,,., 1.1>1... built.
No _;0 *-' .,..._ _1>10 CI..k.. .he;,., ....
--,~
110.. _ _ _ .... .. -.. _ ....../IIea,.,. .......
--..
11.. [no.... ,... ..... cu_lI.. '_n1 10 do.. wille"
IIhouW ..... ..... 04 .... . ..~ m.
'II.. _ _ __ _n1 fit _..'" ............ .POl;ed 10
... rant ., CDnt"" ~ Deepl 6ncome I,...
....... ... .... J. .......", ... . .......t. .he.( of pre.,...
---~._-.
u, __ _ _ __ ._nllO d.......icn ._Id
... ChI ........ ...... on Kne " nunua ,.... amount
--..
U"" --__01___0..11......
llr [fttw IN _ of .....bf_.. wnt'" ...yme....
....... . .......... ....... cwawrw", ....i...tioR provides
100 __ ~ ~ 11M fed_ '.-.cy.
11, E_ _ _ _ . F_..I ...,--13 -",v.1y
--. " _ "'"" Ie _ ..... ~I ,.;m.
--.
u. ----...."Ii____,...
~ ..". ...-. ....... ... tM ..ift....M. ~"
11M: ......... ....... _ ....... I aM t. If dUI...."l. ...
,.,... -. --.
U. T. M _ed ~ _ ~ --.. ...... it reo
............ ... ttw 0PW'Wti0" 0/ .... PfOI""". Th. det."
WtotM ... t... ...au.a.l ..... 'M ...".. is .ubmifted 'c) the
r_._.
121> T. be ~"eeI ~ _ olllciooI ............11_
- .. -Itt""I .. - _... 01 I>"'>ict mmt>l.I_
- .........., tot ill IfW ......... of tIM ,.."t eN' .C......,."t.
A-110:13
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Office of Management and Budget Circular A-110 (7/30/76)
ATTACHMENT H.-C1RCut.AR No. A-IIO
MONITOR1NC AND u:rORTINC rS:OGRAM
rERFORMANCI:
1. This attachment seta forth the proce-
dures for monitoring and reportlns prosram
performance of reclplenta.
2. Reclplenta shall monitor the performa:lce
under srants and other agreementa and.
where approprlaU, ensure that time sched-
ules are being met. proJecteel work units by
tlme periods are being ..ccompllshed. ..nd
other -performance go..ls are bel ns achieved.
This review shall be made for eneh prosrllm,
function. or actlvlt.y .of each asreement AS set
forth In the approved application or award
document.
3. Reclplenta shall submit l\ performance
report (technlcnl report) for each agreement
that brlefty presents the follOWing Informa-
tlon for each program, function, or "Ctlvlty
Involved AS prescribed by the Federal. spon-
soring agency:
a. A comparison of actual accomplishments
with the goals established for the period. the
~nc!lngs of the Investlg-ator, or both. If the
output of programs or projects can be readily
quantlfted. such quantitative eata should
be relatee to cost data for computation oC
unit costs.
b. Reasons why esta.bllshed goals were not
met..
c. Other pertinent Information InCluding.
when appropriate, anall'sls and expla.natlon
of cost overruns or high unit costa.
. 4. Except as provided In a and b below,
and In subparagraph 3a( I ), Attachment G,
reCIpients shall submit the performance or
teennlcal reports to Teeeral sponsoring agen-
CIes and the FinanCial Status Reports cov-
ering the same periOd In the frequency estab-
lished by Attachment G of this Circular ane,
where approprlAte, a tlnal technical or per-
formance report after com.pletlon 0: the
project on a date speclftec1 by the FederILI
sponsoring agency. The Federal sponsoring
agency shall .prescrlbe the frequency with
.....hlch the performance reports wl11 be sub-
mltteel "'"1th the rcquest for advance or relm-
bursement when that form Is useel In lieu
0: the Financial Status Report. Except as pro-
vided tor In paragraph 5 below, performance
reports $hall not be required more !requently
:"'lan quarterly or less trequently than an-
nually. Federal sponsoring agencies may
"'-a.lve the requirement for reCipients to sub-
:nIt pertormlLnce report.s with the nnanclal
reports under the tolloWlng circumstances:
a. When the recipient ts reqUired to sub-
mit a performance report with a continua-
tion or renewal applicatIon.
b. When the Fedcral sponsoring agency de-
termines thILt .on-slte technical InspectIons
and certlfted completion dM:! will be sum-
clent to eVILlulLt.e construction projects.
c. When the Feeeral sponsoring agency re-
questa ILnnual tlnanclal reports on a ftscal
yur buu but It Is necessary to get ILnnuILI
prcgress reports on IL calendar year buts.
5. Between the reqUired pertormlLn':e re-
porting d&;es. .events may occur th:1t have
SI!;:'lIftcILnt Impact upon the project or pro-
.ram. In such Instances, the reCipient shall
:ntorm the Federal sponsorln!; agenc}' as soon
as the tOllo""lng t}'pes 0: conditions become
known:
a. Problems. delays. or ad\'erse Conditions
t:!at ....11I m&terlally alJect the ablllt~. to at-
a!n program obJectives, prevent the meet-
In~ or time schedules ILnd gORls. or preclUde
the &ttalnment of project work units byes-
ubllshed time periOdS. This d!!'oclosure shall
be accomplLnled bJ' a stlltement at the l\ctlon
aken. or contemplated. &nd any Federal as-
Sistance Deeded to resolve the situatIon.
b. Favorabl.e developments or e\'en:.s that
e"&ble time schedules to be met sooner than
l\ntlClpated or more work units to be pro-
duced th&n orlglnl\lIy projected.
6. If an~' perform&nce review conducted
by the reCipient dL~closes the need tor change
In the bueget estImates In l\ccord&nce "'Ith
Lhe crlterl& establlsheel In Attachment J Co
this Circular. the recipient shall submit a re-
quest for budget reVision.
7. The Federal sponsoring agency shall
make site VISits &S frequentl}' as practicable
to:
a. Review program accomplishments and
management control systems. and
b, Provide such LechIUcal asslsLance as
may be required.
8, Federal sponsoring "gencles shall submit
proposed technical and per/orm&nce r"ports
to Lhe Omce ot Management and Budget for
approval In &ccordance wi th the report clear-
ance requirements at OMB Clrculu No. A-40
as re\'lSed.
AnACIfMEJfT I,-CDlcul.AR No. A-110
rATMrN'T REQUIREMENTS
1. This attAchment esta~lshes the re-
quired methods at makIng payments to reCip-
Ients. These methOds will minimize the time
elILpslng between the dlsbw-aement b)' these
recipients and the tranater of tunds from the
United StILtes Treuury to these reCipients
whether such disbursement occurs prior to
or subsequent to the trILnster at tunds.
2. Payments can be made to recIpients
through a letter-at -credit, an adYll,nc.e by
Treasury check. or a reimbursement b)' Treas-
sury check.. The fOllOwing deftnltlons &pply
for the purpose of thiS ILttachment:
a. l.cUer-o/-Crcd.lt.-A letter-ot-creellt IS
..n InsU'Ument cer;lfted by an authorIZed om-
clILI at a FederILI sponsorIng agency thILt au-
thorizes & reCipient to drILw tunclS when
needeel trom the Treasury. through s Fed-
eral Reserve b&nk and the reCipient's com-
mercial bank.. In accordance with the provi-
sions of Treasury Circular No. 1075. &S re-
vised.
.b. Ad.VAnec by Treruury ch.ccJc.-An ad-
v&nce bv Treasury cheCk Is a payment made
by a Trea.sury check to a recIpient upon I~
request betore outllLYs ILre maee bJ' the
recipient, or through the use ot predeter-
mined payment schedules.
c. Rcimbur8emCftt by Trccuury cll.eck.-A
reimbursement by Treuury cheCk IS IL Treas-
ury cbeck paid to & reCipient upon request
tor reimbursement trom the recipient.
3. Except tor construction grants ILnd
other construction agreements tor which op-
tional payment .methods ILre authorized. as
described In paragraph 5. the lett.er-ot-credlt
methOd shall be used by Federal sponsorln.g
agencies It allot the tollowlng conditions
exist:
a. If there Is or wUI be a continuing rela-
tionshIp between a recipient and a Feeenl
sponsoring al1ency for ILt lea.st a 12-month
periOd and the total &mount of ILdvance pay-
ments expeCted to be received ..1thln that pe-
rloC! from the FederILI sronsorlng agency Is
$250,000 or more. as prescrtbeel by Treasury
CIrcular No. 1075. For JOint tunded projects
the Treasury has authorIZed a dollar criteria
ot 5120.000. ,
b. if the reCipient has established or dem-
onstrated toO the Feeleral sponsorinG Rgency
the wllllngnCS$ ILnd ability to maIntain pro-
cedures th&t WIll minimize the Ume elaps-
InS' bctween the transfer of funds and their
disbursement by the reCipient.
c. If the reclplent.s ftnanclal management
S\.stem meeta the standardS lor tund control
and accountAblllt). prescribed In Attachment
F to this ClrcullLr. "StandardS tor FUl&nclal
Management Systems,"
0(. The methocl ot advILnclng funds by
TreR..~ur\' cheek shall be used. In accordnnce
""Ith the prO\'lslons of Treasury Circular No.
I
A-110:14
1075, when the recipient meets all of the re-
quirements speCified In para!:raph 3. above.
.except Lhofe In subparasraph 3a.
5. 11,e reImbursement by Treasury check
methocl shall be the pre/erred mcthod If Lhe
recipient does not meet Lhe requirements
!peCllied In subparagraphs 3b and 3c. above.
At the option of the Feeleral sponsorlns
a~enc)', this methocl may also be used on any
constructlon agreement. or If the major por-
tion at the proglam Is accomplished through
prIvate market finanCIng or Feder..) loans,
l\nd the Feder&l aSSistance constitutes a
minor par Lion at Lhe progrlLm. When the re-
Imbursement methocl Is used, thc Federal
sponsorIng allenc)' shl\l! make p"~'l'Dent
within Lhlrty da~'s a!Lcr receipt ot the billing.
unlcss the blllln!: 15 Improper.
G. When the letter-ol-credlt procedure Is
used. the recipIent shall be Issued one con-
solldnted letter-of -credit whenever possible
to cover antlclp..ted cash needs tor ..II gr..nts
and other agreements ..warded by the SpOIl-
sorlng a!:enc)'. Wkewllle. to the extent po:!sl-
ble. when th.i advance by Treasury check
method Is used, ac!Yances should be clln-
sollllated (pooled) tor l\1l grants ..nd other
agreementa made by the sponaorlng agency
to that recipient. . ,
7. Unless otherwise required by law. FeeI-
eral sponsoring agencies shall not withhold
paym,nts for proper charges made by recipi-
ents at l\ny time during the project or pro-
l[ram periOd unless (a) a recipient has 1I11led
to compl)' with the pro(:ram obJectives. award.
condl tlons. or Federnl reporting require-
ments: or (b) the recipient Is Indebted to
the United States. and collection 0/ the In-
debtedness ....Ill not Impair ILccompllshment
0/ the objectives ot & project or program
sponsored by the United States.
Under such condItions. the sponsoring
agenc)' may. upon reasonable notice. Intorm
the recipient that pa)'ments will not be mSde
IDr obl1gatlons Incurred arter a specltleel date
un tll the conditions are corrected or the ID-
debUdnes, to the Feeleral Government Is
liquidated.
ATTACHMrNT J.-Cmcul.Aa No. A-IIO
REVISION or rrNANClAl. I'1.ANS
1. This &ttachment sets lorth criteria and
procedures to be tollowed b)' Federal spon-
soring agenCies In requiring recipients to re-
port .devlatlons trom tlnanclal plans and toO
request appro\'&ls for tlnanclILI plan re~
\'lslons.
2. The financial plan Is the ftnanclILI ex-
pression o! the project or program as ap-
proved during the application and/or .....ard
proceSS. It mILY InclUde either 4he Federa) and
non-Tederal shue. or only the Federal shue:
dependinG upon sponsoring agency requlre.-
menta. It should be relatec\ to pertormance
tor prollr&m evaluation purposes ....henever
appropriate and required by the Federal
sponsoring agency.
3. For nonconltructlon awarc1S. recipients
Ehall Immeell&tely request ILpprovals from
Federal sponsoring agencies when there Is
re:sson to believe that within the next seven
days a revision wl11 be necessary tor the
tollowlns reuons:
a, Changes In the scope or the obJecth"e of
the project or proGTlLm.
b. The need tor additional Feeleral fund-
Ing.
c. The transfer of amounts buegcted fcr
IndIrect costs to absorb Increases Indirect
costs or vice versa. If approval Is required
by the Federal sponsoring agency.
d. The expenditures as require approval In
accordance with FMC 73-8. "Cost Prlnclnles
for Educational InsUtutlons." For all other
awards. appro\'al requirements tor other
Itcms of expenditures may be Imnosed If they
are consistent with those In FMC 73-8. No
othcr rcqulremenlS tor speclftc Items mIL)' be
I
Office of Management and Budget Circular A-110 (7/30/76)
Imposed un!esa .. elevla.tlon haa been 1.1'-
proyed by the OOlce of Ma.n8.Gemen 1. 8.I1d
Budget.
e. Recipients plan to trans.ler funds a.llott.cd
ror training ..lIo.....nces (direct paymeot.s to
trainees) to o!.ber ca.U!gorlea of expense.
t. None of the subsl.8.ntlye programmatic
work W'Ider a. grlUlt or other agreement ma.y
be subcontracU!d or transferred ...Ithout prior
a.pproyal ot the Federa.l sponsoring agency.
This provision does not apply to the purchase
ot supplies. mAU!rlal. equipment. or general
support serYlces.
5. The Federal spoO'...Or1ng "Gency may
..150, s.t Its option, rC!rtrlct translers at funds
o.lJ\ons dlre<:t .co.qt cn.l.Cgorlcs lor awlU'ds 10
which the Federal s!1Anl exceeds "100.000
when the cumullLtlye s.IDount or suCb traM-
I era exceeds or Is expected to exceec1 0 ve
percgn.t ot Ute totaJ bUdget BS Ia.qt approved
b)' the aponsorLng agency. The s&me crll,erla
shall ..pply to tohe cumula.l.IVe &mOUDt of
tranaren among prognw:na. tunctlons. and
..aLlYl ties ",'hen bUdgeted sepa.ra.U!ly ror an
"wn.rd. eu:ept Uta.t tbe Fedoral ~onsortog
"Gency shoJI pernu~ no trlU1Srer !.bat would
e8.use 8.ny Federal a.pproprla.lJon, or part
thereot. to be used for PW1J08CS o!.ber tba.n
those Intended.
6. All other. changes to oooconstructlon
buelgets. except for Lbe cbanges elescrlbed
In paragra.ph 8, below. do not require "1'-
proyal. This Inclueles tbe .use or recipient
funclS In furthera.nce of progra.m objectives
oyer a.nd a.lXlye the recipient mlnlmum sbare
Included In the approved budget.
7. For construction awardS. reclplenta
shall request prior a.pproY1Lls promptly from
Federa.l sponsoring agencies for budget re-
YlSlons wherever:
..... The reYlSlon results Crom changes In
the scope or the objective of Lbe project or
program. s.nd
b. The revISion Increases !.be budget
..mounts of helera.l funclS neec1c:d to com-
plete the proJeet.
8. When .. Federal sponsoring a.gen:y
m..kes ..n ..warel ths.t provides support.for
boton construction s.nd nonconstructlon work.
the Federal sponsorlns agency may require
the recipient to request prior s.pprovoJ from
the Federa.! sponsoring agency bc!ore m~klng
a.ny fund or budget tnLn.sfers botwccn t~e
two types oC work supported.
9. For both construction and nonconstTUe-
tlon s.warclS. Federal sponsoring a.gencles
shAll require recipients to notlly Lbe Fed-
er...1 Sp:lnsorlng ..gcncy promptly .....hcnever
Ute amount of FCderaJ "utborlZed funclS IS
expected to exceed the needs oC the recipient
by more th..n $5.000 or five percent of the
Feeleral a.ward. whichever IS greater. ThIS
notification wUI not be requlreel It applica-
tions lor addltlonal lunl11ng are submJtle:l
lor contlnuLng gra.nts or contra.cts.
10. When requestlng approyal for budget
r~"lSlons. reo! plen ts sha.n use the bUdgo~
lonna tha.t were used In 1.110 a.ppl1catlOD
unless a. letter request ...111 sumce.
11. WithIn 30 calendAr dAys from the elate
0: receipt of the requcst Cor budget revi-
sions. Federal sponsoring "gencles shall re-
..Ie.... the request and notlty tbe reCipient
whether the budget reYlslons ha..e been ap-
proYed~ If the reYllllon Is stili under con-
sleleratlon at the end of 30 calendsr days,
the Fe4eral sponsor1ng ",eney shall lnIorm
the recipient In wrltin~ or the elatc wben the
rectplent m..y ex;>ect the decL~'on.
ATTACHMENT K.--Cll\cu.:..... No. A-IIO
C1.0SEOUT rnocmOlu:s
1. This ..tta.ehment ,. prescr1bes untform
closeout procedures for Feder..1 gra.nl.s S.Dd
other I\greemcnLs with reclplcnt.s
2. The fOllOwing definitions sba.il apply for
the purp06C at thl.q attachment:
a. Clooeout.-The closeout of s. grant
agTCement Is the proc:etOa by whleb 8. Federal
spol18Orlng "Gency deU!rm1Del1 1.11&1. all "1'-
pllca.ble lldm1nlStratlve a.cUOD.S and all re-
qu1red work of tbe ~ment have been
completed by tbe nlClplent and tbe Federal
sponsoring -cency.
b. Date of c:ompLctiOn.-The daU! o( com-
pletion III tbe daU! on wblch all 'IIrOrk under
~la U1d other agreemeDt.s III complcU!d or
tbe daU! on "U:ae award eloc:ument. or any
, supplement or &mencllnent tbereto. on wblch
Federal aponsonblp ends.
c. DuollolDCd cost3.-01saJ\owcd cosla a.rc
those cbl\rges to a l;T'&l1t or other ~l"Cement
tha 1. Ule l"llderal spoD.~r!ng al:c ncy or Il.q
reprcsenlAUve eleU!rmLncs to be unl\lInw-
able. In accordance wtth the appllea.ble Fed-
eral cost principles or other conditions con-
tained U1 tbo s.creements.
3. All Federal sponaorlng agenCies sh..1I ea-
tabllsb closeout prvc:edun:a that Include the
following requirements: ,
s.. Upon requcst, the J"ederal sponsor In);
..(:ency sball make prompt p..yments to s.
reclpleot lor anowable reimbursable costs
under the gTIUIt or otbcr a.greement being
clO!lCd out.
b. Tbe recipient $ball Lmmedl..U!ly refund
"ny balILDcc 01 unobl1gated (unencumbered)
cub tbat tbe Fcc\eral sponsoring agency has
a.dyanced or paid and tb&t IS not authorl7.cd
to be ret.&loed by the nlClplent lor use 10
otber grants or other ~eements.
c. The Federal sponsoring agcncy sball ob-
tain (rom the recipient ""thin 90 calenelar
da.ys after the date of completion of tbe
a.greement all 6nauclAl. performance, and
other reports required as the condition 01 thc
8.lP'eement. The a.gency may grant extcDSlons
...ben requested by the reclpleDt.
d.. When authorized by the gT&Dt or otber
agreement. the Federal sponsoring &gency
sball make a settlement (or any upwarel or
dO"'Dwanl adjustments to the Federal sba.n:
ot costa a!ter these report.s are rcccl"ed.
e. Tbe reclpleDt sbaU aCCOUDt (or any prop-
erty acquired wltb- Federal (unds. or re-
ceIved from the Government In a.ccordance
with the pro'l'laloDS at AttaCbment 1'1' to thiS
Clrcular. Property Manacement StAndards.
r. In the c..ent a QI1&I audit ball not been
performed pr10r to tbe closeout o( the gT&nt
or oLber B.CTftment. the Federal sponsoring
'agency shall retain the rtgbt to reco"er ..n
approprtaU! amount aJ'U!r rully conaldertns
the recommendations on disallowed costs re-
sulting from the 6na1 audlL.
t. Suspension and U!rmlnatlon procedurcs
are contained 10 Attachment. L to tbls Cir-
cular.
ATTACHMDfT L.-cmctn.Aa 1'1'0. A-ll0
SU_HSlOH .unI n:IlMUfAnOH PIlOCEDOIIZS
1. ThIS a.tt.acbment prescr1bes unUorm
suspension a.nd termination prxec1ures lor
Feeleral gT&nts and other &CTeements with
re::lplents.
2. The follow Lng de6nltlons shall a.pply
ler the purpc:sc: of U1ls attachment:
a. TerminGUon,-The U!rmlnatlon 01 a
grAnt or otber agreement means tohe can-
cclla.tlon 01 FecSeral.spol1l'Orshlp, in whOlc or
In part. under an agreement at any time
pr10r to the da\.e of complctlon.
b. SlUpen.ti.on.-The suspension o( a grant
or other agreement III &D action by a P'edcr..1
sponsor1og &geney that U!mpora.rUy su.~-
pends Feelcra.l spOOa::lnblp under tbe grant
or other agTee~ent, pending corrective AC-
Lloo by the recipient or pend10S a deciSion
to t.ermlna.\.e tbe grant or ot.ber agreemcot
by the Federal sponsonng acency.
;1. All Federal sponsortng a.gencles sh..1I
provlele procedures to be foUo...ed whcn a
recipient bas faUed to comply wtth Ute t.crm.s
.1
A-110:15
of the grant or other "!;Teement "nel conell-
tlOI\$ or ~tanel..rds. When th..t occurs, the
Ft'deral sponsoring ac~nc)' mAY, on reason-.
able notice to the recipient. suspend the
grant or other &gTeement. ..nd ....Ithhold fur-
tber pa.ymenta, prohibit the recipient from
Incurring a.ddltlonal obligations 01 tunels,
pend1ng corrective Action b)' the recipient, or
a decision to termination In a.ccorels.n~ ....Ith
para.graph t. The l"eelenJ sponsoring a.geney
Shall allow 1.11 necessary anel proper COSLa
t.ha.t the recipient could not reaaonablv "yold
during the period of suspension prOVlel~d tha.t
they meet the prOYlslOns of t.he applicable
Jo'ederAI C05t principles,
t. Federal sponsoring I\gencles ShAll pro-
vldc for t.he sysU!matlc settlement or ter-
minated grants or other s.greemenLa Incluel-
Ing tbe following:
a.. Termination far cau.se.-The Feeleral
.ponaorlng ..gencr !riI\Y reserve the right to
U!rmJnate Any grant or other agTeement In
wbole or In ps.rt at ..ny time before the daU!
o( completion. whenever It Is eletermlned that
the reCipient has Called to comply with the
condltloll.l at the agreement, The F.ederal
sponaorlng asenc)' ShAll promptly notUy the
reclplen\ In writing 01 the eletermlnl\tlOn and
tbe reasons for the termination, together
with the etTectlye da.te. Payments made. to
recipients or recOyerles b)' the Federal spon-
501'1ng agencies under gran ts or other agree-
ments U!rmlnl\U!d for cause ~;hl\1\ be In ..c-
cordance with the legal rlshts ..nd liAbilities
o( the parties.
b. TermiR4tion far convenicn.ce.-The Fed-
eral sponsoring agency or recipient mI.)' ter-
mlna.U! grants and other agreemcnts In whole
or Ln part when both parties agree that the
continuation 01 the project woulel not pro-
duce bene6cla.I resulLs commensurate wiLh
the further expenellture of funds. The two
pArties shall BgTee upon the terminatiOn cnn-
dltlons. Inclualng the etIectlye elAte and. in
the case of partial terminations, the portion
to be U!rmlnated. The reo!plent shall not
Incur new obligations for the termlna~ed por-
tlon aCter the errectl\'e date. anel shall CAn.
cel &s man)' outstanellng obligations &S pos-
sible. The Federal sponsoring agenc)' shall
allow full credit to the recipient for the
Fcderal share of the noncancellable obllsa-
tlons. properly Incurred b)' the reCipient prIor
to term1na.t.lon.
ATTACHMENT M.-CnC'Ut.AR No. A-I10
STANDARD TORM TOR AJ'PLTINC FOR
TciEItA1. ASSISTANCE
1. TbIS attachment4PrOmuIgates a stand-
a.n1 form (SF t2t) t.o be used by putlllc ana
.prlvate InstltutloD15 01 higher education.
publiC and prlyate hospItals ana other quasl-
public and. prlya.\.e nonproftt org"nlzatlons as
a face sheet for applicationS when appl)'lng
for Federal grants under progrs.ms covered
by Part 1, Attachment A. OMB Crlcular No.
A-95. In adelltlon. agencies are partlcUIR.Tly
encouragea to etxend the use of SF 424 to
common programs 'lIo1th State aneS 10CRI gov-
ernments where this form 15 now required by
FMC 74-7.
2. The SF t2t ma.y also be used. on an OD-
tlonal buls. to fulftll the requlremenLa oC
OM.B Circular A-95 for a not:1\cll.tlon or :n-
tent. Irom ..ppllcant to clearinghouses. that
Federal assistance ...111 be applied for. Local
or Statc clearinghouse procedures wU: goyern
the use of the form for t.hlS purpose.
3. The standard form will also be used 1)\'
Fedcral agencl~ to report to the Clearing:'
houses on mAjor Actions taken on "!lpllca-
tlons revl~wed by clearlnShouses In aCCQrel-
ancc with OMB Circular A-95. "nel to notlty
Sl.8.t.cs of l;TAnts-In-Alel "",'ardeel In accord-
Ance ...'Ith Treasury Clrcula.r 1082.
I
I
A-110:16
Office of Management and Budget Circular A-110 (7/30/76)
FEDERAL ASSISTANCE
1. _L1.
CArers
APP\.~
CA TlOfC
1. ~PE 0 PREAPl'llCATlOH
ACTION 0 N'I'lICUlOH
IM-."" 0 "OTIFlCATJOft Of IKTUCT ~)
~.,......
_I 0 IIUORT Of FtDERAL ACT10fC
4. LEGAL APPLICANT IRECIPIENT
!.H_
lIlA....
.. .......;..nl 111_ :
~. Orllniulio" u.1t :
.. SIIMC/' .0. - :
d. Cily : L ..... \J :
I. S'"" : .. II' todt:
10. AREA 0' P!'lO.)eeT IMPACT (N...... a( ......, .--
s..-. ....)
.. _KII
~. DA1t
r___
19
11. ESTlM"Te'9 """-
SER 07' t1!IUONI
BVtUlTING
11.
P~ED PUNOIN6
~. CONaRUSfONAL DISTRICTS ~:
... PllOseer
00 lL PftOJECT START
. o.t.Tt 7_ -..A "-
d. LOCAL. .00 19
.. OTlfEK ,00 160 W~:Jfh~~T,+JO
I. TOTAL S .00 I 'EDER.o.l. .-GENCY ~ 19
I za. FEDERAL AGENCY TO RECEIVE REQUEST IIf_C..... a_ Ul' ~
.. F!D!1I"'l l
b. Al'l'I.ICo\IIT I
I
.00 .. Al'l'UlIAM'
.08
.. STATE
111. Pl'lOJ ECT
DURATION
AI ...no.
7_ --" dAlI
OMB A."........ 1 No. 19--'IOtl.
S. ITAn
AoO'nJC'Ao
nON
I DEPI'1lo
'1 VI:
10 _IU
1..,. ~."
.....
~. OATt
ASSICIIED
19
I. 'WE....... EMPLOY&R IOCI'ITt'ICATlOl'4 NO.
..
PRO.
GRAM
cr...
'ed...ol
0.....'
I I \. 1 1 I I
I. IlUIIBER
b. TIT\,[
M'PLlOAN"f "'fe/PlENT
~....Ily ""'loa "-
.., t t"::I:~ T~~::-ti..... """"Ii...
II.-OIn. l.s,..ntlll,
I. TY~ Of'
. Sial.
11-I..-.10
C-SulllUla
DIItricI
o-c-nc,
(-CIty
f- $cMaI D IfItlCl
'i="'-
s"""" .~,...." I.cu.- 0
'" TYf't: QT A&&ISTANCE
.......... '_I 0........_
_......_...at ~n...
C-WO.
6.t~ ...,...... IT]
,...;..u I.. LIt'!.)
12.. TYPE
"-'1-
_._1
Of A Pf"I.ICA Tl 0 N
C-_.... (-'-._..11....
~II....II.. 0
,E",... .PJ""o"..;..&. I.U....
1.5. TYPE 0' CHANcr: IT... u. ... u.)
.....1_.. DoItI" F-OllMI (SJ>ofliflll:
a-D__ DoIl.n
c-l_" 1)...._
0-0....... O.,.U_
(~KoIllli..
.",.,., ."po.... rrrI
,....... I.t.....!.) L-L...J-J
19. EXISTlI'IG PEDERAL IDENTIFICATION NUMBER
%1. REMARKS ACCEC
n""" 0 No
~. " ,.._ '" OMt Ci_I... .....11 _ ....,"..1_ _ _lnOCl. pu......l Ie i..
.tnactt... VI...,.., .. ...,...,i... ................ .ad .n. '.00.... IN .naca.c:
N.Y'."
.-.
R__.
......uw.I
no
~
.. THE
~ APPLICANT
~ CEI'lTIf'IES
~ : THAT ~
JI
!
c
.
..
I I. 1, .". _. ., ,., kn....... ..wi .......
dill i. Uti. "....Uc.U..,.,.UuU. ,re
,",I I.d _,MI.. lito "-"'"'" h.. -
...... ...nori"d br ... r__i'r beGr 01
ttt. ,,,,Iiunl ...4 tal ...utl( ..iN __
wi'n lA. ....cMd __ It 1M ......
In.. i. .o:~.
II)
lID
t31
%3. I
CERTIFYINC1
REPRE.
SENTATlVE
.. nrr.D ICA.IoIE AIlO T1lU
!
i ZSI. ....CORESI
~
~
r
.
i
~. 111""1\111[
I 31. AOMltUST""TIVt O'I'ICE
0 0
8 0
. 0
.. OATE SIOIf[I)
Y_r ......u. dAlI .
), 1
IZs. APPUCA. r_ -- ...
TION
RECEIVED 19
260 FEDERAL APPLICATION
10ENTlFlCATION
10. FECERAL OF:ANT
IOENTII'ICATlON
y- ~ ...
o I. AWAAOED
o ~. !tEJICTrO
o .. 1lE'TVll1IC0 POll
AN. E/fOUVtT
~ 0 (. OEnlUlE1l
:I 0 I. W1nlDItAWII
I ~ERAL ACEN'CY
A-95 ACnON
r_ _......'1 J4.
.,. AflT,"G
.00 U. ACTIO" DATE ~ ), CATE 19
.00 I ~':. COHTACT ,~ IIOOtTIOf'tAL ,"'OtlNA'I:K. r.... ......u. ..."
tK)N (I{..- .... ....~ ....-....) [NOIN(O
.. SlATt.OO DATE 19
~. LOOA~.oo 37. REMARKS AOOEO
.. Ontell .DO
l. TO'TIIl S .00
I'" .. ""'''r ...... 1ctNH\. .., ......- ....... ..... d.rinr___ ..... ....
"'.'M. II ........ _.. 10 _ ...at ,...w- 01 roll 1. Oldl C1......... .0.-95.
II .... ..... at II -. __.
31. ACTION TAKEN
JL
FUNOfNG
.. P!DEIIAI.
~. Al'PI. tC.Altf
o Yel
~. I'tDEIIAL ACEHCY .Ii Of'FICIIIl
IN..... .owl Wl.,wo.- _.l
No
...__..-..._.... ...-.....' ,.., ".,.... , ,,1"1 "'.1
"
I
I
Office of Management and Budget Circular A-110 (7/30/76)
A-110:17
SEC11Ot1 IV-REMARKS (Picou reference tA. prvpcr item ",u7Lb,.,.from SectioN! I. II O'f' III, if 471P~Le)
to '\
STANDARD "'ORM ~24 PAGE 2 (1C-7~)
I
.I
Office of Management and Budget Circular A-110 (7/30/76)
A-110:18
GENERAl ItCSTRUCTIONS
This is a multi. purpose standard form. First. it will be used by applicants as a required facesheet for pre.
applications and applications submitted in accordance with Federal Management Circular 74-7. Second, it will
be used by Federal agencies to report to Clearinghouses on major actions taken on applications reviewed by
clearinghouses in accordance with OMS Circular A-95. Third, it will be used by Federal agencies to notify
States of grants-in.aid awarded in accordance with Treasury Circular 1082. Fourth, it may be used, on an
optional basis, asa notification of intent from applicants to clearinghouses, as an early initial notice that Federal
assistance is to be applied for (clearinghouse procedures will govern).
APPUCM{T PROCEDl,;IlES FOR SECTION
^pplicant will complete all items in Section I. If an item is not applicable. write "NA". If additional space is needed. insert
an asterisk ...... and use the remarks section on the beck of the form. /vi expla08'tion follows lor each item:
'tem
1. Mark appropriate bolt. Pnt.appllcatiQn and applica-
tion guidance is in FMC 74-7 and Federal agency
Pl"08ram instn.lC:tions. Notlfic:Jotion of intent RUid.
Bnce is in Circular A-95 procedures from clear.
inghouse. Applicant will not use "Report at Federal
Action" bolt.
2a. Applicant's own control number. If dllSil"lld.
2b. Date SecUon I Is PrllP8rlld.
38. Number DSlIlgnocl by State clearinghouse. or If dele-
gated by State, by araawide clearinghouse. All ~
quests to Federal agencies must contain this ldenti.
fier if the prosram is COYered by Cin:ular 10-95 and
required by applicable. State/areawide dearing-
house proc:edUrll'S. If in doubt. consult your deer.
inghouse.
3b. Ode applicant notJned at c1earinBhoUH Id=ntifior.
4a-4h. Legal name olappllcent/reclplent. name at primary
oFlranizational unit ...."hid'! will undartalce the assist-
ance activity. comp:=te address at applicent. a~
name and telephone number of person who cen pr0-
vide further information about this request.
5. Employer identification number of applicant as as-
signed by Internal RllYDnue Sennca.
611. Use Catalog of Federel Domestic Assistance num-
ber assigned to prognsm under wtlich aS3istance is
raquested. If mora than one prosram (e.g.. )oint-
funding) write "multiple" and explain in ramarics..
If unknown. crte Public Law or U.s. ~.
6b. Program title from Fed.....1 ~talog. AbbnMate If
necessary.
7. Brief title and appropriate description of prqect.
For notlftCZltion of intent. continue in ramerks sec-
tion if necessary to COIMI)' proper description.
8. Mostly self-explanatory. "City" includes town. town.
ship or other municipality.
9. Check the type(s) of assist2nce raquested. The
definitions of the terms ara:
A.. Basic Grant. /vi original raquest for Federal
funds. This would not include any contribution
provided under a supplemental grant.
B. Supplemental Grant. A raquest to increase a
basic grant in certain CIIs~ where the eligible
applicant cannot supply the raquired matching
share of the basic Federel program (c.g.. grants
a_nled by the I\ppalaehian Regional Commis.
sion to provide the applicant e matching shan=).
C. Loan. Sell explanlltory.
Itwn
10.
11.
12.
13.
O. Insurance. Self explanatory.
E. Other. ExpMtin on nmlarks page.
Goowemmental' unit wtlcnt ltignil\cant and meaning'
fvI impect could be obsefYed. List only IaFlrest unit
or units af'lect.ed. such as Sbrte. county, or city. If
entirll unit a1hlctocI. list it rather than subunits.
Estimlltocl number of persons diractly benefiting
f1"om project.
Use appropriate code Itltter. Definitions ara:
A.. N_. A submittal for the finst time for a nsw
pro;ec:t.
B. Renewal. /vi extension for an addttlonal funding/
buc18et period for a project having no projected
compMrtion data. but for wnlch Federal support
must be ~ each year.
C. Rrtision. A modification to pro;ect natura or
- scope wtlid'! may result i.. hlnding change (in.
c:r.-e or decnlase).
D. Cont:tnU8tion. /vi extension for an additional
fundlng/bucIeet period for apro~ the agency
initially agreed to hind for a definite number 01
yeers.
E. Augmonbltion. A requirement for additional
hinds for a protect pnNiously awanled funds in
the same hlnding/budget period. Project na.tura
and scope unchanged.
Amount requested or to be contributed during ,the
fim hlndlng/budget period by each i:ontribut/)r.
Value of in-kind contributions will be Included. If
the ItCtion is a change in dollar amount 01 an exist-
inS srant (a ~sion or augmentl!ltion). indicate
only the amount of the change. For decreases en.
cJose the amount in pan:ntheses. If both basic and
MJppiem"ental amounts ara included. brukout in
n=marks. For multiple proeram lunding. use totals
and show program breakouts in n:marks. Item defi.
nitions: 13a. amount requested; tram Federal Gov.
ernment: 13b. amount applicant will contribute:
13<:. amount from State. if applicant is not a State;
l3d, amount from local gOllemment. if applicant is
not a local government: 13e, amount from any other
.ources. explain in n:marks.
Setf explanatory.
The district(s) where most of achJal work will be
aa:omplished. If city-wide or State-wide, covering
sever.ll districts. write "city-w>de" or ..$tate.wide."
Comphlte only for revisions Crtem 12c). or augmen.
bItions (item 12.).
1441.
14b.
15.
STMOJ\RO FORM 424 PAGE 3 (10-75)
I
I
Office of Management and Budget Circular A-110 (7/30/76)
A-110:19
Ir.m
16.
17.
18.
Approximate date project expected to beF!n (usually
associatt'd with estimated date of availability of
t\Jnding).
Estimated number of months to co~lete project
after Federal funds are available.
Estimated date preappliC'.atlon/eppllcation will be
submitted to Federal agenc:y It this project requires
clearinghouse review. If review not required, this
date would usually be ~me as date in Item 2b.
/lem
19.
EJclsting Fed e 111 I Identification number If this Is not
a new request and directly ralales to a previous
Fedel1ll action. Otherwiu write "NA",
Indicate Federel agenc:y to which thiS request is
addressed. Street eddress not required, but do un
ZIP.
20.
21.
Check appropriate bt':ll as to whether Section IV of
fonn contains rem.nu and/or additional remerks
are atucho'd.
^PPLlCANT PROCEDURES FOR SECTION \I
Applicants will always complete Items 23a, 23b, and 23c. If clearinghouse review Is required, Item 22b must be fully com.
pleted. An explanl1tion follows for each item:
Item
22b.
23&.
Ust clearinghOUSe!: to which submitted and show
In appropriate blocks the Slatus of their nrsponses.
For more then three clearinghouses, continue In
nlmarks section. All written comment: aubmltted
by or through clearinghouses must bo ettached.
Name and title of authorized representative of legal
applicant.
Ir.m
23b.
Self explanatory.
23c.
Self explanatory.
Note:
Applicant completes only sections I and II. Se<:tIon
III is completed by Federal agencies.
FEDERAL AGENCY PROCEDURES FOR SECTION 1\1
Item
24.
Executive department or Independent agenc:y having
program admlnistTll~lon responsibility.
Self explanetory.
Primary orvanizatlonal unit below department level
having direct program management I'1l5ponslbillty.
Office directly monitoring the program.
Use to Identify non-aWllrd actions where Federal
grant identifillr in item 30 Is not applicable or will
not sumce.
Complete addn::so:s of administering omca shown in
Item 26.
Use to identIfy award actions where dlfTerent from
Federal application identifier In item 28_
Self explanatory. Use remarks section to amplify
where appropriate.
Amount to bo contributed during the first fundingi
budgct period by each contributor. Value of in-kind
contributions will bo included. If the action is a
change in dollar amount of an uisting grant (a reYi.
sion or augmentation), indicate only the amount of
change. For decreases. enclose the amount in pa.
rentheses. If both basic and supplemental amounts
are included. breakcut in ",marks. For multiple pro-
grllm funding. use totals and show program break.
outs in remarks. Item definitions: 32a, amount
awarded by Fedc!al Government; 32b. amount ap'
plicant will contribute; 32c. amount from State, if
applicant is not a State; 32d, amount from local
govemment if applicant is not a local government:
32e, amount from any other sources, expl3in in
remarks.
D9te i1ctlon was taken on this roquest.
Date lunds will become available.
If applicant.supplied infonnation in Sections I and II neees no upclating or adjustment to fit the final Federal action, the
Federal agllney will complete Section III only. An uplanatlol'l for each Item follows:
25.
26.
27.
28.
29.
30.
31.
32.
33.
34.
Item
35.
Name and telephone no. of agenc:y person who can
provide more infonnation regarding thl~ assistance.
Date after which funds will no longer be available.
Check appropriate box as to whsther Section IV of
lonn contains Federal remarks and/or attachment
of additional remarks.
For use with A-95 action notices only. Name and
telephone of person who can assure that appropri-
ate A-95 action has been taken--If same as person
shown in Item 35, write "same". If not applicable,
write "NA".
36_
37.
38.
Federal Agency Procedures-special consi~erat;ons
A. Trllllsury Circular 1082 compliance. FHeral agency will
assure proper completion of Sections I and III. If Sectioil I
is boing completed by Federalagenc:y. all applicable items
must be filled in. Addresses of State Information Recep-
tion Aeencies (SCIRA's) ara provided by Tre.:lsury Depart.
ment to each agenc:y. This fonn replaces SF' 240, wtlich
will no longer be used.
S. OMS Circular A-95 compliance. Fedel1ll agency will as.
sure proper completion of Sections I, II, and III. This fonn
is required for notifying all reYi_ing clearinehouses of
major actions on all programs reviewed under A-95.
Addresses of State and areawide clearinghouses art. pro.
vided by OMS to each agenc:y. Substantive differences
between applicant's request and/or cleiringhouse recom.
mendations. and the project as finally awarded will be
explained in A-95 notifications to cle:lringhouses,
C. Special note. In most, but not all S.lites. the A-95 Stat'!!
clearinghouse and the (TC loe:!' scrRA are the. same
office. In such cases. the A-95 aWl!rd notice to the Sta\e
clearinghouse will fulfill the TC 1082 award notice reo
Quirement to the State SCIRA. Duplicate notification
should bo avoided.
STANDARD FOnM 424 PAGE 4 (10-75)
I
Office of Management and Budget Circular A-110 (7/30/76)
. ATT'ACHMENT N.~lIlCt1LA1l No. A-liD
rllorEIlTT MANACEM!:NT STU'OAIlDS
I. TIllS Attachment prescrlbt-s uniform
stAndard.s guvernlng manl\gement of prop-
erty furnlshec1 by the Fec1erAI Go\'ernment or
whose COlI'- wAS ch""g~ 1.0 A project sup-
por\Cc1 by a F~eral grlUlt or other _((reement..
FederAl sponsorlng Agencies shall require 1'1.'-
ClplenL~ 1.0 observe these sL&ndArds under
grants and other agTeements And shall not
Imp050 Ac1c1IUonal requirements unless spe-
cUlcnll)' required by Federal law. TIll.' reCipi-
ent mllY use Its own property manallement
s\.llndl\rds And procedures provided It observes
the prO\'ISIOIIS of thiS IIottachment. TIllA ILt-
tAchment Also Applies 1.0 subreclplenl.s U
referred 1.0 In pamgrAph 5 of the basic cir-
cular.
2. TIle following dellnlUons Apply for \.be
purpose of thIS att8.chment:
8.. Reol propcrtll.-.1'-C8.lproperty mea.DS
land. 1I1cludlllg lanc1 Improvemen... struc-
tures and appurtcmlUlces theret.o, but ex-
cluding movablo maclllnery and eqUipment.
b. Pt:rMn41 prOJ'Crtll.-personal property
of any klnc1 except reLl property. It may be
l.anglble-bavlng physical exIStence. or Intan-
rlble-bavlng no physical existence. such U
pal.cnu, Inventions anc1 copyright&.
c. Nonupc:ncL4blc pcr.sonGl propCrtll.-NoD-
expendable personal property means lJ\nglble
personal propert). having Il useful IUe oC
morlt than one year IIonc1 lion Acquisition cost
ot 8300 or more per unit exempt that reclp-
leDt6 subject. to Coat Aceount1ng SL&nc1ard.s
Bo&rll regulAtiOns may use the CASB sLa.nd-
an1 of r.soo per unit anc1 \Uetul lite oC two
years. A recipient may use II.s own c1edllltloD
of nonexpendable personal propertyprovlc1ed
that thlt deJl.nltlon woulc1 At leut Incluc1e &11
tanglbllt personal propert). 11.& dellned above.
c1. E%pmd4blc: penonal propertll.-Expend-
able personal property reters t.o all t.a.nglble
per:sonal property other than nonexpenc161)le
property.
e. E=us property.-Exces& property meaDS
property unc1er the control ot any Federal
~ncy that, aa del.crm1Dec1 by tbe hea.cl.
thereof. IS no longer require<! for 1\.& neec1a
or the c1lsc:harge of 1t6 responslbl1ltles.
f. Acqui.fiUon cost of purc:Auclt n.cmc::-
pcNi4blc personal propertll.-AcqulsltlOIl cost
of IU1 Item of purchued Donell:penc1able per-
sonal property means the net Invoice unit
prlce ot the property Includlllg the cost of
moc1ICcat1ons, Il.tt.a.chmen Ls. acceDorles or
aUXUlaT)' llPPCU'll.tu.s necessary 1.0 mll.ll:e' the
prope:tr~ usable for the purpose lor wblch It
was acqulreC. Other charqes such RS the cost
of Installatloll, transporl.atlon, !.aXes. c1uty
or prot.c:c:tlve In-transit In6\1rance. shall be
1Dcluc1ed.or excluc1ec1 from the unit acqwsl-
Uon cost In accordance with the reclplent's
regular AccounUng practices.
g. Ezempt property.-Elcempt property
means tAnglblo perzonll.l propertj ac:qulrec1 In
whole or In .part with Federal funds. anc1
Utle \.0 which Is vested In the recipient with-
out further obligation t.o the P'ec1eral Govern-
ment except aa provlc1ec1 In subparagrapb 6a
below. Such unconditional vesUnG or tlt.le
",UI be pursuant to any :Federal legISlation
that provIdes the Federal sponsor1nl; agency
with n:lequate Authorltj.
3. Real property.-Each Federal spor:sorlng
&gency shILII prellcrlbe requlremenl.S tor re-
cipients concernln!: the use And dlSl)Osltlon
ot real propert). aeq ulred partl y or wholly
under (:ran\.& or other agreenlent.s. Unless
other"'I.~e prO\'lded by S\.Iltut.e. such requlre-
:nt'na. &5 a minimum, Sll1111 C"Ol1WlI:: Ule
:;)1I0""1n1; :
a. TILle \.Oreal property shAll vest In the
recipient subject lO the condition that the
recipient shall use the real propert,' 10: the
lIoutllorlZec1 purpose of the proJect..ru long IlS
It IS needed.
b. The recipient shall obl.Aln approval by
the l"ec1eral spon50rlng. aj:ency tor tile WIC of
real prClperly ID other projects when tbe re-
cipient dcl.crmlncs. lhat 1.111.' property Is 1\0
loncer needec1lor the purpose of the orlglnal
project. Use In other projects shall be limited
1.0 thOAC under oUler lec1erally sponaorcc1 proJ-
ecLs (I.e.. grlU1ts or other -<<rcements) or pro-
grams that have .purposes consistent wlUl
tllOllO author17.ec1 for support ~y the t'ederal
sponsorlnc ~ellcy.
Co When the real property la 1\0 101l1tCf'
IIccdec1 &II provlc1r:c1 In a 1U1c1 b above. Ule
reCipient ShAll request disposition Instruc-
tions 11'001 the Federal sponsnrlnc ILl:emcl' or
Its $UCCeSllOr Pederl\! IIpollsorllll: ",:ell"Y. The
Federal llpon~rlng Ilgency shall observe the
followln; rules In the dlSposltlOD In."truc-
tlons:
(I) The recipient may be permltte,d t.o M!-
taln tl t1e alter It compensates the :Federal
Government In II.Il amount computec1 by ap-
plyln; tbe Federal percentage of participa-
tion In tbe cost of tbe orll:lnal project 1.0 the
fair market value of tbe property.
(2) The recipient may be directed 1.0 ..ell
t1le property unc1er gulc1c:llnes proVided by
the Fec1eral sponsoring AGency anil pay tbe
Fe:Jeral Government an amount computed
by applying the Fec1eral pcrcc:n~ oC par-
ticipation In the cost of the orl~nal project
t.o thc procecc1a from &&Ie (atter deducting
actual and reaaonable seUlng and fix-up es-
penses. If allY. frora the sales procCCC1S).
When the reclplent 1s authorl:r.ed or requlrec1
t.o sell the property. proper sales procec1W'C11
&ball be est&bllllbec1 that provllle for competl-
Uon to the extent practicable and result \Q
\.be highest poalble return.
(3) The recipient may be dlreCtod t.o trans-
ter t1t1e to the property to the Fecieral Ooy-
emment proYldr:c1 tbat. In such ca.ses \.be
recipient &ball bit ent1tlec1 1.0 compensation
compu1.el1 by applying the rcc1plcnt's per-
centage ot partlelpatlOD In the coat ot the
pro~am or project to the cWTent falr market
value oC the property.
4. Fed.cralY-Dutn.e4 non=pen.doblc personal
propertJl.-nt1e \.0 fedcrally-owned. property
remains 9Cated In the Fc:1eral Goyernmcnt..
Rttclplents lIball submit annually an In Yell-
tory 11st1Dg oC Cec1erally-oWD~ propen:y In
their custody 1.0 the J"ederal spoD80ring
agency. Upon compleUon ot the ~c:nt
or wben the property Is no longer Deedec1.
the reclplent shall report the property to
the Federal' sponsoring agency for furtber
Ilc;cncy utilization.
If the Federal sponsorln, agene; bas no
lurther necc1 for the property. It sball be
c1ec1arc:1 excess and repon.cc1 to the General
Senlces AdmlnlstrUon. Appropriate dlspo."l-
tlon InstrucUoDS will be 1SlIu~ \.0 the re-
clplen\. atl.CT compleUoD ot the Federal
agency re"lew.
5. EzemJJt property.-Whc:n statutory au-
tbOrl"y eXISts. le.g~ P.L. ~934. 42 U..s.C.
1892) UUe t.o nonexpenc1able personal prop-
erty acqulre:S wi\.b project tunds. aball be
"esl.C:1 In the reclplmt upon acquisition un-
less It II c1etennlnec1 tha\. t.o do so Is not In
furtherance of the obJect1ves oC the Federal
sponllOrlng agency. Wben tlt1e Is vltSte:1 In
the recipient. \.be recipient sball haye no
other obU,auon or accountablll"y 1.0 the
Feller,,1 Goftmment for Its use or c1lsf'OSl-
Uon except lIS provlc1ed. In Ga belOw.
G. Oth.er nonapcnd4blc propc:rty.-When
other nonexpenc1sble lJ\nglble personal prop-
erty IS acqUired by a recipient wltb project
func1s. UtiI.' shall not be lakcn by the Fe:!-
t'r:ll Go"'C'rnmt'n~ but shall ,"cst In lh!' M!-
clplent ",ubJect 1.0 thc lollo",'ln.: conc1ltlons:
a. R.gh.t to trans/er titlc.-For I terns of
nonexpc:ndable penona. property h""lng a
unit acquisluon cost of '1.000 or more. the
Fecleral spon:sorlDg ILgency mRY ~erye the
rl;h\. 1.0 transfer the lltle \.0 the f'ec1eral
I
A-110:20
Government or t.o a third parly namcd by
the }o'cderal Government when such third
puty 15 otherwl.~e ellj:lble under exlstlllg
.....tlltes. Such reservation shnll be subject to
the tollowlng ll.anClarcls:
(I) Tbe property sl1all be ...pproprlately
Identltic:1 In the grallt or otber Agreement
or otherwise made known t.o tile recipient
In wrl tin!;.
e 2) TIle Federal spoJUlOrlng allenc)' IIhall
Issue dlsposlLlon . Instructions within 120 cnl-
eudar days atl.Cr the encl of the Federal SIlP-
port of the project tor which It WAS AcqUired.
If the FederAl A,X.lnlOOrlnl; Agency I ails to I....ue
dISI'o!:ltlOn Inlltructlons within tile 120 CAl-
endAr day rerlod, the reclrlcnt shall Apply
tile "l.ILtld.Lrds of 5ub'pllragTaphs Gb IIolld Gc
ILS AppropriAte.
(3) When the Federal sponlOOrlnc Allency
exerclllCS Its rlgh t 1.0 take tl tie. the personal
property Ilh.1I be subject to the provisions
tur fcderally-ownec1 nonexpenc1able property
dIECUS.~d In paragraph 4, llbon.
(4) When tlUe Is transferred eIther 1.0 the
Federal aoyenunent or t.o a tblrd party. the
rroylslons of llubparB.4:T1lpb 6c(2) (b) &lIould
be lollowed.
b. Use of oth.er tAngiblc nonapen4oble
property lor 1Dh.il:h th.e recipicnt h.G.'I Utlc.
(1) Tbe recipient &hall \lEOC the property
In Ule project or program for whlcb It WlLS
Acquired &II .Iong as needeC, whether or not
the project or program conLlnues t.o be sup-
ported by Federal funds. Whcn no longer
necaec1 for the orlglnal pro~t or progrnm,
Ule recipient shall use tbe property In con-
nection with Its other fedcrally sponsored
1\C\.lvltlcs. In the follo",lng order oC priori ty:
(a) Activities. In tbe 10110wlng order of
prlorl\.y:
(b) Ac:t1vlties spolUlOrec1 by other Federal
agencies.
(2) ."h.are4 use.-Durlng tbe t1me tbat
noacxemp.t nonexpenclable pertlOn&! proper-
ty 15 helc1 for WIC on the project or pr01;T1Lm
for wblch It waa acqU1rec1. the recipient
sball make It avallable for use on other proJ-
ects or progr-nD1a 11 such other u.se will not
InLerfcrc: with Ule work on the project or
program lor wlllch the property w&5 origi-
nally aoqu1rec1. PUst preference for sucb
other WIC lIball be given to other prOJecLs or
1'1'Olt"lIm& 5ponsorecl by .tJ>e :Feder8.1 IIogency
\.bat lln&ncec1 tbe property: lleCODd prefer-
CDCC &ball be given t.o projects or programs
"JlOnsorec1 by O\.ber Fec1eral agencies. 11 the
property 1s ownec1 by the :Federal Govern-'
ment. use on oUlCf' acUvlLles DOt &ponsored
by the Fede",,1 Government shall be per-
missible It autborlzcc1 by tbe Federal agency.
UlIlCr cha.rges shoulc1 be co~lder~ 11 IIppro-
prla te. .
c. DUJ'Ontion of oth.er non~endoble
prOJJC"ly,-Wben the reclplen\. no longer
neec1s the property &II provtd~ In 6b above.
the property may be usecI. for ot~er actl?l-
\.1= In ac:c:ordancc wllob the following stand-
ardS :
(1) Nonerpend4blc: property with a unit
acqui.rition cost Of It:.ss th.an SJ.OOO.-TIle re-
cipient may use the property for other activi-
ties without relmburtlCment to the Federnl
Guvernment or $ell the property anc1 re-
\.aln the proceed&.
(2) NOnC%J)e1lcL4blc: personol properl" with.
a unit acq.uisition cost 01 SJ ,000 or morc.-
The recipient may retain the property lor
other uses provldec1 tbat compensatiOn Is
made to \.be original F~eral sponsorinG
Ill:ency or 11$ successor. The amount ot com-
pcn!:Atlon shall be Ct1mput.ec1 b)' al'pl)'ln(:
Ill.. prreentAge tlf F'rdt'ml pll.TtlC'II'!I:IOIl III
the enst ot the original project or prugrnm to
the curn:nt lair I1ll\I'kct value of the property.
H the recipient has no nccc1 lor the properly
and Wle properly has further use value. the
recipient shull rr.<lue5t c1ISpo.~lllon Instruc-
tluns from tbe orl~llaJ sponsorsng Asency.
I
Office of Management and Budget Circular A-110 (7/30/76)
'Ibe 1"eC1e",1 Iponaorlng a!:~nc; shall dl't~r-
mIne whether th~ property can b~ lI!'~d to
m~et the a~ency', requlr~ments. It no rt'-
qUlrem~nt edsU within that ag~nC)'. the
"v"lIablllty 0' the property shall be r~port-
ed to the General Services AdmInIstratIon
by the Federal agen"" to de~rmlne whether a
requIrement for the properlY exlsU In o\her
Yederal ,,!:encICll. TIle Federal sponsorlnK
agency shall IS5ue 1n.'lrUCllOII~ to the recIpI-
ent no Il\ter than 120 days aUer the reclpl-
~nt'5 request "nd the followIng procedures
shall govern:
(al It ~o Instructed Or If dl~po~IUon In-
structIons !Lre not I,,-~ued wIthIn 120 calen-
dar dl\v~ atter the reclplent's reqllest. the
reclpleilt shl\lI ~ell the propert)' and r~lm-
burse the Federal "pon50rlng agency Iln
I\mount computed by apfll)'ln!; to the sales
proceeds the pereentl\ge of !"ederal parllcl-
patlon In the COlt ot the orIginal project or
progrl\m. However. the recIpient 5hall be
permitted to deduct I\nd retaIn trom the Fed-
eral share liDO or ten percent of the pro-
ceeds, whIchever II greater, for \.he reclplent's
selling and handling expenses.
(b) It the recIpIent. Is Inl"tructed to ship
tile propert.y elsewhere, the recipient shall
be reimbursed by t.he beneftUng Federal
arency .wlth an amount whIch Is computed
by appl)'lng the percentage 0' \.he reclplent.'s
part.lclpl\L10n In the cost of the origInal grant.
proJect. or program to Ute current faIr market
value 0' \he. propert)', plus Ilny reasODable
shipping or Intel'lm storage costs Incure<l.
IC) It the recIpIent Is Instruct.ed to o!.her-
wIse dISpose 0' the property. \.he recipient
shall be reimbursed by the Federal sponsor-
Ing ..gency 'or .uch coalS Incurred In IU
dll<p051t.lon.
c1. Propcrty ma1\Gpemc1\t sta1\darc1.s lor
nonc:pc1\c1ablc prop~rty.-'Ibe recIpIent'.
propert.y management S\.and&rC1s for nonex-
pendable personal property shall Include the
fonowlng procedural requirements:
(1) Property records .han be malntalne<l
accura~ly and shaH Include:
(a) A ducrlpt.lon of the property.
(b) Manufacturer's serla.! number, model
number, Federal st.oell: number. nauonal
Itock number, or ot.her IdenUftcat.loD num-
ber.
(c) Source 0' the property, Including
grant. or ot.her "greement number.
(d) Whether tItle vesLl In the recIpIent. or
the Federal Gove.rnmen t.
'(e) AcqUllltlon date (or d..te recelve<l, It
\.he prop crt). w... rurnl5hed by the Federal
Government.) and COlt.
(r) Percentage (..t. the end of the budget
yur) of Federal part.lclpa~lon In the cost. or
the prOject or program fOT whICh the prop-
erty ...... ..cqulred. (Not applicable to prop-
"'t.y :urnlahed by t.he I".deral Government.)
(g) Locat.lon. uac and condlLlon of the
property and the da~ the IntOTmatlon was
reported.
(h) Unit acqua-Itlon cost.
lI) UltImate dllpoalt.lon data. IncludIng
dat.c of dIsposal and SAles pl'lce or the methOd
used W determine current fair m..rket v..lue
...here .. reCIpIent compenJ...tes the Federal
IopOnsorlns agency for I~ share.
(2) Proper;,. owned by the 1'eder..1 Gov-
ernment mUlt be m&rll;ed to IndIcate Yed-
eral ownerahlp.
(3) A physical Inventory or property shall
be taken And the resulu reconciled wIth \he
propert.)' recorda ..t least once every twO
yeATS. An)' dlfterences between qu..ntltles de-
termIned by the phYSical Inspection llnd
those aho..'n In t.he accountIng records shall
be Inves~lgated to determine the causes or
~he dlll'erence. 'The recIpient sh..n, In connec-
tion wIth the Inventory. verlt)' the existence,
current. ut.lIlza~lon, and contlnued need for
the propcrt)',
(4) A control 5y.trm shAll be In e:Tect to
Inlure s.de-qu"te IIlt.1:'ull~d6 :.0 ;lre~ent lc.-..o.
damage, or theft of the property. Any 10",
dl\mll.ge. or thrtt of nnnt'Xpl'ndl\ble prop.rty
shall be Inve.ugated I\nd tully documented;
If the property WILl owned b)' the l"eder..1
Government. the r~rtplent shall promptly no-
tify the Federal sl"'nsorlng asency.
(5) AdeqUately m"lntenance procedures
~hall be Implemented to keep the property
In good condlUon.
(6) Where the recipient. Is I\uthorlz.ed or
reqUIred to sell the property, proper ...Ies
proced\lrCll shall be established whIch wO\lld
provide tor compeLltlOn to the ext.ent practi-
cable "nd res\llt In the h1ghest pos.~1 ble re-
turn.
7. L'Z71cndablc pcnonat proprrly.-T1tle to
expendal)le personal property ShAll Yltst In
~he recIpient upon a.cqulsltlOn. It there 'Is a
residual Inventory of such property exceeding
$1,000 In tOt.AI aggregate lair mnrket val \Ie.
upon termlnaLlon or completiOn of the gr..nt
or other I\greement, and the property Is not
needed for nn)' other teder..lly spanlOred
project or program, the reCIpIent sh,,1I retain
the property for u.,e on nonlederally span-
50rcd act.lvltles, or Mil It. but. mu..t In eltlTer
. case. compensat.e the Federal Oovermnent
(or Ita Ihare, The amount ot compensat.lon
shall be computed In \he aame m..nner Il.5
noncllpendable personal property.
8. IntanVible property.
a. InventiON I1nd patC1\t.s.-It any progrllm
producCll patentable It.ems, p..tent rlghl.'l.
processes, or Inventions, In the course of
work sponaored by Ute Federal Go'W'ernment.
sucb fact shall be promptly and fully report-
ed to the Federal sponsoring agency. UnlCSll
!.here Is .. prIor agreement. bet....een the re-
cipient. .nd t.he Federal sponsoring agency
on dISpositIon of 5uch It.erns. the ~ederal
spon.wrlng agency shall determine whether
protect.lon on the InventIon or dlscOyery shllU
be BOught. The Federal sporuorlng agency
wlll also det.ennlne how the rlgh~ In the In-
ventIon or dIscOvery-Including rl;ht.a under
any patent lft8Ued thereon_hall be ..lIocat.ec1
and aclmlnlstered In order to protect the pub-
lic Interest consistent wIth "Government
Patent 'Polley" (Presldent.'s Memorandum
tor Heads ot E:llecutlve Departments and
Agenclell, August 23. 1971, and statement or
Government. Patent Policy u prlnt~ 1n 30
P'.1\. 18889).
b. COpyr1pll.t.s.-Except ... otherwlae pro-
TICSed In the terma and conditIons of t.be
agreemeDt. !.he ..uthor or the recipient orran-
IzatlOn IS free 1.0 copyrlr:M any tlookl. pub-
llcat.lons, or ot.Iler CQp~":'lghtable m..~rlaJl
developed In the coune ot or under .. P.d-
eral &8reement. but the Pederal sponaorlnc
agency shall rue"e a royalty-free. nonex-
clullve and Irrnoca.ble right to reproduce.
publish, or otherwise Ullt, and to ..uthorlae
ot.hen t.o lise, the worlt for Oo.ernment pur-
po.es.
A.1"1'ACHMEJfT O.-CzaCVLAll No, A-liD
rtlOCVtaIWE,", ITAJCZlAaDtl
1. Th~ r.ttachment provides ltandard. for
ule by re~lplent.a In establlehlnt procedures
for the procurement ot supplies, eqUIpment.
c:or.structlon and ot.her le"lc" with Federal
fUllds. Theae standard, are lurnlshed to en-
sure th..t .\lcb m..t.l1als ..nd servlcn are ob-
tained In ..n effectlv. manner ..nd In com-
pliance wlt.h the provisiON or ..ppllc"ble Fed-
eral law and executl.. orden. No addltlon..1
procurement. standards or requlremenu .h..1I
be Imposed b)' the F.der..1 sponlorlng ..gen-
CIl"S \lpon reclplent.a unless speclnc..lly re-
quired b)' Federal StAt.ute or executive orden;.
:. The standards contaIned In t.hls ..L....ch-
m.nt do not. relieve the recIpIent. of the con-
~ractual responsibilities &Tlslng under IIoa
contracl&. The recipIent Is the r..pon~ble "u-
thorn,.. wlt.hout recoune to the l"ederal spnn-
sorln!:' "Sellcy rel:"rdlng the settlement and
IAtls:actlon 01 ..1I contu,ctual and ..clmlnlJ,-
I
A-110:21
Lr..Uu Isau" artstng out ot proc:url'ments
~nterl'd Into, In lupport of " graat or other
"f::reeml'nt. Thl, Inc:l.de. dl!>putes, clalm."
prOU,"u at a....ard. OO\trM .v"lulI.tlon or othf'r
m"uen or a c:ontractu,,1 natun. Matlt'"' c:on-
crrnln, vlolaunn of law are tCl b~ rclerred to
s\lc:h local. State or I"ederal authorIty.... may
han propf'r JUrlec\lcUon. .
3. Reclplenloa may.... 'h.lr o..'n procure-
ment pollcle. and proced\lr".. ltowever. ..II rl'-
clfllents shall "CSh.re to \I.. standards let
torth In parl\~raphs :I "nd (.
a. The reclplen\ Ih,,1I mlllntaln a c:ode or
standard.. of conduct that sh..1I l:oycrn the
performll.nc:e of IIoa otllcera, employ.... or
nr,enu enc"ced In the awardIng nlld "dmln-
Istrl\tlon of euntrl'ClS ""Ing P'edernl tund~.
No employee, onloer or agent shnll pl\rtlclpllte
In the .electlon. award or "dmlnlst.ratlon of
a conlr"ct In whIch rederal runds "re ,...ed.
where. \0 hll knowledge, he or his Immediate
tamlly. p..nnen, or or!;anlZl\tlon In ....hlcll he
or his ImmedIate fl\mlly or partner hM a
nnantl..1 Intere.t or vdth whom he l~ n~l:o-
tlatlng or hna any ..rran!;emen\ concerning
pro.p..ctlYe emplo)'ment. Th. reclplent..s' of-
neen. employees or ngents sh,,1I neither solic-
It nor &Ce'rt gratultl..., fl\vora or anything
of monetary vl\lue from contrllctors orpoten-
tlal contractol"5. :Ouch It.andllrds shall provide
tor discIplinary actions to be "pplled for vlo-
lat.lons of sucl\, stAndards by the reclplenta'
omcers. employe.. or "4:enta.
b. All procurement tranaacUon.s 5hall b.
conduct.ed In .. mann.,. 10 provide. to the
.maxlmum extent pr"ctlcl\l. open and free
c:omp.tltlon. 'The reelplent should be ..Iert
to OfT&nlzatlona.1 CQDmCLl 0' InLerest. or non-
oomp..tltlve prACUces among contrl\oCtoMS
th..t may restnc:t Of' eliminate c:ompe>;ltlon
or otnerwl&c restr.... tr&4e, In Qf'c\er to en-
sure objecuve contractor performl\nce ..nd
ellznlnat& unlllJr cOl'ftl)eUtlv. ad..ant.n.ge. con-
trl\oCllOrs \h"t. develop or orN:t spocJncaUons,'
reqUlrementa, .t4Le1nen18 ot ..orl!:, In.lt.6-
UOM lor bIds and/or requearta tor prcpoe&ll
sh~uld be excluded from com.?Ct!.ng for fuC'h
procurement.a. A_raa abeJJ be made to the
bl4der /oC'eror ..hose bt4/0tl'<< I.s rC!lpOnalTe
to llhe '.ollcltatllon s.oc1 "' moat aava.nt.aeeoua
to the reclpWmt, p<'lce ..nd other rocto" c:on-
sl4ered. 501lcll&tlo... ah&1I clearly set. tort.'b
aU reqUIrements thCLt C\e bld4er/oC'en:lr must
fu.1nll In ord~ for ilia bKl/otler 1.0 be e_lu-
at.ed by Ohe reelplen>;. Any Uld all bl<13/oll'er3
ITl&Y be reJ.0M4 when It II In t!:!e recp\en1.'1I
In..r..t. to 00.0.
c. All reclplent.a &hall ..tabllsh pTOCUl'e-
IIMn\ proceaurCl t.b6t PTov\d, for, at a mln-
Imum, the follo..l~ Jl":OCCdur~Tequlrem&nta.
(1) P'?oopOIIed pr~ent IlCtlOJU shall
follow a p~ut'e to _ure the avotdll.nc.
or purcltaalng unneceary or cNpllca.Lln
l\.eme. VI'ltere &pp<'OP/"Ml.\oC. an "nal".. ah&n
be -oc of Ie.... and purchaM, lUt.e'rn&~"'''
110 d<!t.ermlnc whldl woWd be the znaet.
.conomlca.l. pract.1oW pPOC"UI"lrD4lnt.
(2) 6oIlcll..\ION for !ooOe a.nd SoeM'lces
.han be 'b&aec\ upon .. cka.r ..nd a.ccurate
c1eoc:r1ptlOn ot \he \eet\nH:&l requ1nm.en14
fcr \he JmI,,",I..I. prodvet or ~1Ce to be
procur.c1. Such .. d_tpt.6.0n &hAJJ not. In
compeLltlve p!'OOur.menu. eon\&ln I_turps
..hleh und\lly r.cl1et ~t.It1on. "Bran4
"w,u or eqUAl" descr~1.lOru lNlY be Uled
&lI .. me...'. to ()ellne t.he pel'l'onna.noo 0:-
other _1I...t requlr,,",.nta of a procuremr"t.
..nd when N) \Iaed t.h. 5pec\flc features CI: the
n"m.c1 bMLnd ...lllc:.h m'\l$t De met by blddenl
olTer:lrs ahall be clee.:-ly ~edne<l.
(31 Poslt.he elfor~ ~"II be lnAC\e by the
reclplenta to utilIze sm..lI bualneM af'd ml-
norltv-owne<l bU51neu 50urces or supollea
..nd ~.rvl(\e.. Such efto~ should all".... 1.heM
souren the maximum f......lble opportunIty
to eo",p'lc for coneracu utllll:lng l"wderal
tunl\a.
(4) The t;pe of JW'OCurlnl: Irut..-'lmentJI
u.e<!. '.1;., I\xed prlCI cont"..;:~,. _L r.\nI-
I
Office of Management and Budget Circular A-110 (7/30/76)
burSl"ble cnn~ra.c.t.s. purchR.$C! orders. In~n-
~Ive contmc\.'I, ShlUl be del.C:rml.lleQ by U1e
rf'Clplen~ bu~ mU5~ be n.pprt,prlB.tc ror the
I'ArUClull\r procuromen~ ILlld for prnmt>ullr.
~he bes~ Inl.C:rU!:t at Ule proj,'rlU11 ",,'ol\'r.d.
The "cos~_ph.loi-a-p4!n:en\.age-ol-c05t" meU1-
ad 01 conlZn.c~lng shAll not be used.
(51 COn~ra.ct.'I ShAI be nvu:1e ani}' with re-
sponsible oon~rl\Cl.Ors who PU;SCti6 \.he po-
~enUon..J ablll~y t.o pertorm succc.5l'ltully
uncler the 1.C:rm.<; ~nd (XIncll~lons of A pro-
posed procuremen~. Conllldern.Uon 5hl\J1 be
j,'lven t.o such mA~l.ers 8.<; conl.n\Ct.or InteSTlty.
record ot pa.s~ pertormAnce, finAnclal lu\d
t.eehnlcnl resources or accC6.31blllt)' to other
ncce~y reso\trr-..cs.
(G) All propo~ed sole source conUDe\.<; or
",'h..re only one hid ()r propo:ll\J Is recel\'cd
In ,,'hial\ \.he ~j:'rCl:n\.e cxpcn<ll1.ure IS ex-
f"!'Cl.C:cl l.n excce<l ,-S,UOO shnll ue subject to
prior B.l'provAl I\~ \.he dl.'\CreU"n ot U'le Fcd-
crl\J sponsorln~ "Gellcy.
(71 Same torm ot price or coot l\l\ail-S1S
should bc made In connecUon with e~er}'
p:-ocuremen~ acUOII. I'rlc.. 1\""lyslS rN\1' be
a.ccompll.she<l In \'n.rlou6 ...n.ys, Includlnj:' U1e
compe..rlson at price quotAUons s\lbmIUed.
mn.rket prices n.nd slmll&r Indicia, to(:ether
...1 tJ\ d.I.""",u n t.s. C<tRt &N\.IY51S Is the review
r.nd eval\l:ll.Uon ot eaGh elemcn~ ot c~ to
del.C:mUne rOllSOno.bleness, alloca.blllt\' and
allowl\.bUlty. .
(8) Procurement recorc:lS a.nd nics tor pur-
cha.ses In excoss ot $10,000 &hall Include U'le
t 01l0...'J t16:
(&) BaalS tor contra.ctorseleetlon:
(b) JusU~ca.~lon tor lack ot competitIOn
,,'hcn competJtlve bids or oilers a.re not
o I:lloll..11 CI:1:
(c) Ba&ls tor a....azod cost or price.
(9) A s)'Stem tor con tract a.<InUnlatrR.tlon
ah&ll be ma.lntlUneC to ensllTe conlZactor
contormance ....Ith terms. conditions &nd
speciftca tlons 0: the COD tMloCt. and to ensure
a4equs.u; a.nd t.1mcly lollowup 0: al! pur-
cha.ses.
{. The rec~plent sha.1I Include. In a4<I1t1on
to provisions to define a. sound ane: complete
. ab-cement. tbe followIng pronslons In all
COD trActs. These proVislOl1ll shs.11 also be s.p:
piled to suboontl'lLC:~.
a. Contm.ct.s In excess at 110,000 shftJl con-
taIn contrn.etual pI'O\"\slOns or condl!.lonl
that ....m e 110.... lor R4m1nlGtl"lLt.lve. con:Ta.C-
tua.l or 1l:l;"1 I'OmedJes In lns\a.nces In ""Ulcn
contractors vlol.1.C: or bren.ch conlZB.Ct t.enn.s,
and provide lor such rezn.edlal ..ctlons a.s
may be s.pproprlal.C:.
b. All oontrn.ct.s In exces.o ot "10.000 shn.lI
conlnln suitable pm\'lSlons tor l.C::"T'I'Llnr.Llon
br U'le reclplent Including tJ\e mann~ bv
,,'hlch t.ermJnat.lon "'11I be e:Tect.:cl ..nd th~
'oAsIS tor settlemen.t. In a.ddltlon. suc.'1 con-
t.n.ctoS shall describe conditions under ....hlch
.1
A-110:22
t1mL<; (29 CFR. Part 5), Undl'r ~ectlon 103
"t ~he Act, ~I\ch eOlltrl\c~or ~h,,11 be re-
'1..I....d to ''''mJl..~e WI" wl\!:e" ()( every Illl'-
chl\nle alld In!)urer on ~he b""ls ot 1\ standnrd
.....ork c1R~. uf P. h(HI~ Knd a :;t.u.ndlLrd wurk
w....k 01 40 hours. Work 11\ exc...ss ot the
standnrd "'orkdn}' or work wel'lo: 1:'1 l'ermls.<;lllle
pro\'lded ~h...~ thc ""urkcr IS cOl1\pell"l\led n ~ 1\
raLe 01 nol less Lhn.n - I Y. lime" 111e ul\51c
mlc ot pay ror "II hours ""orl:cd in exeess
ut 8 hours in I\n}' cI.lend..r dn.}' or 40 hUlIr:'!
In the ....ork...ee.... Section 107 01 the Act 15
"ppllcl\ble to ('OIL<;l.tuCUon work 'lIld provides
thA~ no Il\borer or meel11lnic sl\l\lI11c req'lIred
to ....ork 11\ slIrrollndln!:" or ..nder worklllG
enlldltl()n.'l ",'hlch I\re II n.<;1\1l I l.Rry, hn7.nrdn.."
ur dn.lll:ero1l5 \A. hl~ hCl\lth nlld ,,"l('ly '\,'I d,'-
l,,"nulfled under consLfur.Unn SAfely I\nd
health "Lalld:trd" promulj.;I\~..d uy ~he Seerl'-
Lnry at Labur. These re'1"irelll..Ill-'; do '10t
appl)' 1.0 the pllrchl\ScS nl slIl'I'lIl':'I "I' mnt..-
rillls or "rUdes ordlllnrlly I\vl.llable Oil the
opell llIarket, or con\.rl\ct.S tor tTl\ll~pOrl&\.lon
or lrall"mll'-'IOn otlnl.l'lIlb-.:ncc.
h. Cuntract., or I\lctcements. Lhe prtnclpl\l
)lurpoRc at. which I., to creale. de\'elop or Im-
prove I'roduct.S, proce~..~ClI or melhods; or tor
cllplor..uon Into !lelds thl\L dlrectl}' concern
pllbllC health. sale~r or weltare: or conlrllCt.S
In the neld 01 scll'nce or lcchnolog)' '" whiCh
Lhere hn.s been IItLle ~.,:nHicnnt experience
ou\.~lde at work tunded by Fedel"lLl 1L'I$lst-
an~, "hall con~all\ a notlce ~o the eflect .that
the oont.rllGt lTU\~' be tcm\llln.l.ed tor defalllt
lW ,.'eU a.s con<lI~lons where L11e COI\Lrl\Gt nll'y
be terrnlllRleQ bC'C""~e ot OIn:UlllSl"nct'Ol 00-
rond lhe control o( u\e conl.T"ctDr.
c. In ..i1 ('on~r1\ct.s tor cOJ\.'II.t\lc:.lIon or ta-
"lIlty Impro\'emenl ....a.r<te<1 lor more Lhan
fo I 00,000, reclplen14 sl\1LI1 observe tile bolld-
IlIg req ulremen t.S proV\de<l In AI.~lInelll D
t.o !.hIS circular.
d. All conl.ta.cUI awarded by reciplent.'I and
~helr oonl.n\Ct.ou or ~ubr.T"nteas h"vlng ·
vn.lue ot more than 510.000, ShILlI conlAln 1\
provIsion requlrU\g oompllAnce ..1th &xC'Cu-
t1ve Order 11246. entllled "Equal F..mJ'loy-
ment Opportuill~Y," a5 amended ll)' Exccullve
Order 11375, I\nd n.s slIpplernen~ed In DCl'l\rt-
nll'nt ot Labor regulaUolls (41 CFR, I"lu't GO).
e. All c(ll\tracts And suhllrAnt.S In exces.<; ot
"2,000 lor constructlon or repair awarded b)'
reclpient.S and subrecll'len'\.~ 5hall Includc 1\
provllllnn ror complll\nce Wl\.h the Copell\lld
"Anti-Kick BILck" Act (18 U.l:;.C. 874) as
supplemenl.ed In Depar~men~ ot Labor
regulaUons (29 crR. I'n.rL 3), This hct 1'1'0-
\'Ides thnL each contractor or subgrnntee
sha.1I be prohibited from Inducing, by I\ny
means. any person employed In the COIL<;truc-
tlon. complellon. or repair at publiC work.. to
give up any part ot the compensntlon to
....hlch he IS otherwise entitled. The- FectrJ~L
shall report 11.11 suspecl.eC orrepOtte<L \\tOt....
tlOM t.o the Federal sponsoring agency. \
r. When reqUIred by the Federal progrl\ml
leglsla.tlon. &11 construction conr.ta.ct.S1 matters re!;l\rdlnr. right.' to Inven~lons I\nd
a...arded by the-reCipIents and subreclplcnt.S ,-maLerll\ls genera~ed under the contrn.ct or
ot more tha.n f.2.000 shllll Include a. prnvlslon : Agreement &re "ubJeet to the regulntlonll Is-
tor cornpllance "'ItJ\ the Davls-Bacon- hct (40 '..5I1ed by the Federal "pnnsorll\j; I\(:ency I\nd
V.S.C. 276a,to a-7) and as suppl.emel\Ol.cd by the recipient. The contrn.ctor 5hall Ix' "d-
nepartment ot Labor regula.UOns (29 crn. \'I::ed I\S to .the source ot additional Intorma-
Plll't 5). Under tJ\ls Act contractors Shll~l be Ion 1'Cj;lU'd.ng these n\R\.ters.
requirea to pay_ ...ag~.to Ia.borers and me- I. All neGnllated contrl\ot.S (excel't those
chanica a.t a rate 'not leu tha.n the mIni at $10,000 or less) I\"',,rded by reclplent.S
",'a.scs speclfted In a wa.ge determination lnlLde 5hall Include a provisIon t.o U~e ellect that
by .tJ\e Secretal'T ot La.bor. In a.dditlon, con- the recipIent. lhe Federl\J spon.'IOrtnG acency.
tractors shlLlI oe required to pa.v wages not the Comptroller Q1:neral ot thc Unlt.ed StAI.C:S,
less than once" week., The reCipient shall or I\n1 ot I\.helr dilly authorl7.cd representll-
place a copy 01 the current preva.lllng wn.Ge lives, shllll have accCM to "n.' ~okS, docu-
determlna.tion Issued bv .the Depa.rtment at ment.s. papers and records at the con~r"ctor
Labor In each solicitation 1\nd t.he a....ard ...hlch R1'e directly pertInent to a speclnc pro-
ot " contl'a.ct shall be condl,t1oned upon the !;rl\m tnr the purpose ot ma.kl ng audits.
acceptance ot the -B.Ge determIDa.tlon. The examlnl\tlons, excerpts and trAnscrIptions.
recIpIent shall report &.11 suspected 0: re- j. Contract.S and subfrl'llnt.S ot amollnts In
ported violations to the Fe<lerlLl sponsortng excess 0: $100.000 5ha.1I contllln a pro\'lslon
agency. that requll'es the reclplen~ to agree to com-
g. Where appllca.ble, a.1I conU'&cts a....arded ply _I.th all applicable standuds. orders or
by recipients In excess ot !-2.ooo 101' construc- TClrula.lons Issued purSUAnt to thc Clenr A:r
tlon conotract.S a.nd In excen 0: :'2.500 lor Act at :\\70 (42 U.S.C. 1857 et sec:;.) and the
other conl.tact.S that Involve ~he emplo\'ment Federal W.ter Pollution C"ntrt'! ...ct (33
ot mechaniCS or laborers. shall Include '& pro- u.s.c. 1251 et seq.) l\S "mended. :'lnlaUQns
VISion tor compliance "'I~h sections 103 "nd shAll be reported to the Federal sP9lUOrlnli
107 ot the Contract Work Hours aDd Satety I\r:ency ..nd the ReltlOnal tlmcc ot the 1;:n-
Standards Act t40 U.s.C. 3:i-330) u sup- \'lI'onmental F'Totec:t1on Agency.
plementec1 by OepartmeDot. 0: La.bor regula- I FR Doc.76-21904 FIled 7-29-76: B :45 am I
I
APPENDIX H
OMB
Circular A-122
.1
.
I
Office of Management and Budget Circular A-122 (6/27/BO)
OFf'l~ OF MAj,4AGEMENT AND
BUDGET
CIroular A~122. '~st Principles for
Nonprofit Organizations"
AGENCY: Office of Managf!nlent and
l3udCel.
ACTION: Final Policy.
Junc :!7, l!IOO
To The Heads of Executive
Departments and Estnblishments
Subjcct: Cost principles for nonprofit
organiza tions: .
1. Purpose. This Circular estalJli::hes
principl.:ls for determining costs of
~rants. conlra::ts and other agrt!emenls
wilh nonprofit organizations. It docs nol
apply to collcges and universilies which
nre covered by Circular A-Zr. Slnte.
local. and fc.dernlly :-ccogn:zed !ndian
tribal governml.'mts which are covered
by Circular 74-4: or hos;:Hals. The
principles are desi~ned to provide that
the Federal Government bear its fair
share of costs excent where restrit:ted or
prohibilcd by law. The principles do not
allemptlo prescribe~the extent of cost
shari~8 or matching on'grants. contracts,
or othe:- agrecmel:ts. However, such cost
sharing or matching shall no: be
accom.,lished tht'ough arbitrary
limitations on indi\'idual cost elemcnts
by Fedcl"31 agencies. Provision fer profit
or other increment above cost is outside
the scope of this Circular.
z. St:perse$sion. This Circular
!:upersedcs cost principl~s issueo:l by
individual agencies for non'profit .
organization.
3. Appficabili(v. a. These principles
shall be used by all .Federal agencies in
determining the .costs of work periormed
by nonprofit organiza lions under gmnts.
cooperative a~reements. cost
reimbur::ement contracts. and other
contracts in which costs are used in
prir.ing. administration. or settlement.
All of these instruments are hereafter
referred to as awards. The principles do
not apply to awards under which an
organization is not required to account
to the Governmcnt for actual costs
incurred.
IJ. All cost reimbursement suba.....ards
(subgrants. subcontracts, etc.) are
subi~cl to those Federal cost principles
applicable lo the parlicular organization
concerned. Thus, if a subaward 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
R college or unil'ers:ty. Circulur A-Zl
~hall Rrjll\': if a ~\Jbil\\'"rd i~ In R ~1;i1r.,
local:or fedepally' recO~ized in.d.iani
tribal government. Circular 7~ SbiH1
apply,
4. Definitions. a. "Nonprofit
organization" means any corporation.
trust. nsociation. cooperative. or other
organization WM::h (1) ill. operated.
primarily' for screntific. educational.
service. charitable. or similar purposes
in the public intere5t; (Z) 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; (ii) hospitals; (iii) State.
local. and federa!!y recognized Indian
tribal governments: and liv) those
nonprofit organizations which are .
excluded from coverage of this Circular
in accordance with pRragroph 5 bclow.
b. "Prior approval" means secu:ing
the awarding agency's permission in
advance to-incur cost for those items
that are de:lignatcd llS requiring prior
approval by the Circular. Generally this
permission will be in writing. Where an
item of cost rp,quiring prior approval is
specified in the budget of an.a ward.
approval of the budset conslilutes
approval of that cost.
5. Exc/usio/l of some nonprofit
organizations. Some nonprofit
organizations. because of their size and
nature of operations. can be considered
to be similar to cOlllmercialconccrns for
purpose of applicability of eost
principles. Such nonprofit organizations
shall operate under Federal cost
principles applicable to commercial
concerns. A listing of these
organiza tion. is coa.tained.il\.
Attacbment C. Other organization8 may
be added from time to time.
6. Respo.nsibilities. Agcllciea
responsible for adminislerll1g programs
that involve awards 10 nonprofit
organizations sball implement thc
provision. of this Circular. Upon
request. implementing instruction shall
be furui.shed to the Office of
ManagelDent t1.ld Budget. Agencies &ball
designate a liaison official to serve as
the agency representative on motters
relating to the implementation of this
Circular. The name and title of such
representative shall be furnished to tbe
Office of Management aDd Bu~et
within 30 ciav! of the date of this
Circular. .
7. Atwchments. The principles and
related policy guides are set forth in tile
follo,,~..inB Attachments:
Attachment A-Ceneral Principles
Attachment B-Selected llems of Cost
Attaclunent C-Nonprofit
Organizations Not Subject !J1 Tbis
Circular
.1
A-122:1
8. Requests {or exceptioJls. Tbe OUice
of Management sod Budget ma~' ~rant
exceptions to the requirements of this
Circular when permissible undr.r
existing law. However, in the interest of
achieving maximum uniIom1it}'.
exceptions will be pennitted only in
highly unusual circumstances.
9. Effecti,'e Dote. The Qrovisions of
this Circular are effective immediatel\'.
Implementation shall be phased in by.
incorporating the provisions into new
awards mode after the start of the.
organization's next fiscal year. For
existi~ awards the new principles may
be applied if an organiz~lion a.ad the
cognizant Federal agency agree. Earlier
imJ1lementation. or a delay in
implemeotation of individual luvrisions
is also permitted by mutual agreemenl
between ilO'organization and the
cognizant Federal agency.
10. Inquiries. Further information
concerning this Circular may be
obtained by contacting the Financial
Management Branch. Budget Revicw
Division. Office of Management and
Budget. Washington. D.C. 20503.
telephone (Z02) 395-47i3. -
James T. Mctnt~'re. Jr..
Director.
ICircular No. A-1ZZ]
Allachmenl A
General Principles
Table of Contents
A. Basic Consideralions
1. Composition of lolal cost.
Z. Factors aCIccting allowll'bUity of cosls
3. Reasonable COlts
4. Allocable costs
S. Applicable credits
o. Advance understandings
B. Direct COSIS
C. Indirect Costs
,
..
D. Allocation of Indirect Costs ~d'
Determination of Indirect Cost Rates
1. Genp.ral
z. SimpliIied allocation method
3. Mul1iple allocation base method
4. Direct allocation method
5. Special indirect cost rates
E. Negotiation and Approval of Indirect Cost
Rates
1. Definitions
z. Ncgotiations and approval of rates
(Circulllf No. A-1z:!j
AllachmcDI A
Ger:erl1l Principles
A. Basic Considerations.
1. Composition of-totol CQsts. The tolal cost
of an award is the ~um of lhe allowable
direct ond allocable indircct Cosls less aoy
applicablc crcdits.
Z. Faclors o.(fccting clJu...abilily of r:osts.
I
Office of Management and Budget Circular A-122 (6/27/80)
To be allowable under an award, costs mtr$t
IDfttthe following tfeneral criteria:
e. Be rell80nable for the performance of the
_ard and be eUocable thereto under these
pmsciplea.
b.. ConCorm 10 aoylimilations or exclu.ionl
set forth in these principles or in the aWlIrd
as tv I)'pel or smow,t oC cosl.i1em.s.
c.. Be coilsislcl.1t wj1h policics and
procedures thot apply uniformly \0 bOlh
federally financed and other activities of the
oqtarozation.
cL Be accorded consistent treatment.
B. Be determined in accordance wIth
generally accepted accounling principles.
Co Not be included as a cost or used to meet
cast sharing or mat.chintl requirements of any
ather Cedel1lJly IinanC8d program in either the
cummt or !I. prior period. .
g. Be adequately doi:umenred.
1. lleusunable casU. A cosl is rl'Bsonuble
it in ita nnture or amount. jr:does not exceed
that which would be Incurnd by 'a preaenl
!PErson under the circumal.mces prevailing al
the time the decision was made to incur the
casts. The question of the re3sonablenen.oC
51lUific costs must be scrutinized wHh
)Jarticular care in connecticm with
orpni:alions or separaie ~ivisit,:Jns thereoC
which receive the preponderance of their
support Crom awards made' by Fede'ral
apnCies. In determining the reasonableness
aL. given cost. consider:ltien shall be given
1m
a. Whether the cost is oC a type generally
recognized as ordinary and necessary for the
ap.eralion oC the o..ganiza lion or the
performance of the award.
b. The restraints or rer'Juirements imposed
l1y such Cactors as generally accepted sound
business practices. arms length bargaining.
Federal and State laws and regulations. and
terms and condilions of the award.
c.. Whether the indivldHli.concemed acted
-..,nh prudence in Ihe circumstances.
amsidering their responsibilities to Ihe
organization. its members. employees. and
clients. the public at large. nnd the
Government.
d. Significaril devia tions from the
established pracllces of the org:.mizalion
which mayunjustiCiabl)' increase the award
ClIIlIIs.
(. Allocable costs.
a. A cost is allocable to a particular cost
objective. such as a grant. project. service. or
ather activity. in accordance with the relative
benefits received. A cost is allocable to a
Government award iC it is treated
l:DnSistently with other costs incurrcd for the
same purpose in like circumstances and if j't:
{1} Is inculTed specifically for Ihe sward.
(Z) Benefits both the award and other work
BOld can be distributed in reasonable
proportion to the benefits received.
(3) Is neccssary to the overall opera lion oC
the organization. althoul.lh a direct
relationship to any particular cost objeclive
cannot be shown.
b. Any cost allocable to a particular award
or other cost objective under these prinr.iples
may not be shifted to olher Federal a....uds to
overcome fundin!; deficiencies. or to avoid
restrictions imposed by law or by the lerms
oJ .he award.
5. Applicable cred.iL.',
a. The term epplicable credit~ reCers 10
lhose receipts, or reduction of expenditures
which operate \0 oreset or reduce expanses
items that are allocaule to awards as direct
or indirect costs. Typic. I example. oC auch
transoctions are: purchaae discounts. rebates
or allowances. recoveries or indemnitiea on
losses. insurance reCund., and adjustmenls oC
overpayments or errODeoWl chargea. To the
extent thai such credils accruing or received
by the o'llanization relale to allowable cost
they shall be credited 10 lhe Government
either II a cost reduction or ca~h rdund as
appropriate.
b. In some instances. the amounts received
Corm the Federal Government to linance
orgRnizational actiyities or service operations
should be trealed as applicable credits.
Specifically. lhe concept of nelling such
credit items 8gainst related expenditures
should be a;:plied by Ille organizaton in
deterruing the roles or amounts to be
orsaniurion in determining the ralea or
amaounts tobe charged \0 Federal awards
for services Tendered whenever the Cacilities
or other resources used in providing such
'services have been financed rlireclly. in
whole or in pari. by Federal Cunds~
a( c) For rules covering program income
(i.e~ gross income earned Crom federaUy
supported activities) see AlIaclunenl 0 oC
OMB Circular A-110.
6. Advance and understandings. Under any
giveri'award Ihe rea60nablenirss and
allocability of certain items oJ costs may be
difficuit to determine. This particularly true in
cOnDecti~~ with oltiz8liona thal,receive e
preponderance oC their support Crom Federul
agencies. In -order to avoid subsequant
disallowance'or dispute based on
unreasonablenells or nonallocabilitv. It is
oCten desirable to seek a wriileil ag~eemenl
with the cogniunt or awarding .a~encY in
advance oC the incurrence of special or
unusal costs. The absence oC an advance
all"Cemenl on any alement of cost will not. in
i1l1elf. affect th, reasonableness or
aliocability oC that element.
3. Direct Costs
1. Direct costs are those thai can be
identified specifically with a particular final
cost nbjc.c:tive: i.e~ a particular award.
project. service. or other direct activit}. oC an
cfJllnization. However. a cosl mal' not be
assi'tned to an award as a direct cost if all\'
olh~r cost inculTed for the sama purpose. i~
like circumstance. has be!!n allor.ated to nn
award lIB an indirecl cost. Cost idenlilied
s~CICAII)' with Awards are direct cost of the
a,,'ards and are to be lIssigned directly
thereto. Cost identified specilicali)' with olher
filial cost objectives of the ofJsnization are
direct costs oC those cosl objectives and are
not 10 be assigned 10 other award. directl)' or
indirectl\'.
2. An)" direct cosl oC a minor'amount m:l)'
be Ireated i1S an indil":!cl ~st o(or reasons of
prucHca!ilr where the account treatment for
such cost is consistently applied to 311 fin:ll
cosl objecth'es.
3. The cosl oC certain acth'ilies arc nol
allowable liS charg!!s 10 Federal awnrds (lice.
for e>:a:':lple, fund raising COstll in para:;r:Jph
I
A~122:2
21 of Allachment B). However. even Ihollgh
these co~ts are unallowable for purposes of
computing charges to Federal sW:lrds. they
nonetheless must be treated at direct cost for
purposes oC determining indirect cost rate.
and be allocaled their share oC the
orgAnization's indirect costs ir they represent
acth'illeswhich (1) include Ihe salaries of
personnel. (2) occupy sp~ce. and (3) benefit
from the organization's indirecl costs.
4. The costs of activitie. perlormed
prim;lrily 81 a service to members. clients. or
the gr.neral public when fiillnificanl and
necessary to the organization's mission muat
be trealed a8 direct cosls when or not
allowable and be allocaled an equitahle
share of indirect costs, Some examplesoC
these types of activities include:
A. Milintenunce qf membeuhip rolls,
SUusc..riptions. publica lions. and rein led
( unctions.
b. Providing services and information to
members. legilllative or administrative
bodies. or the public.
c. Promotion. lobb)'ing. and other forms of
public relatiuns.
Ii. Meetings and conferences except those
held to conduct the general administration of
Ihe organization.
3. Mninlenacne. protection. and investment
of ~pecial runds not used in operation of the
orgunization.
f. Administration or sroup benefits on
behel! 01 members 01 clienls includinlllife
.and hospital insurance. annuity or retirement
plans, financial aid. etc.
C. Indirect Cost.
1. Indirect cosls are those that have been
inc::rred lor common or joint objectives and
cannollJe readiiy. identified with a p:lrticulur
final CDst objective. Direct c.Jsl of minur
amounts may be trealed as indirect costs
under Ihi! Cl)nditions de,cribed in paragraph
B.2. abo"e. Aller dir!!ct costs have been
detllrmilled and assi@ned directly 10 awards
or (lther work as appropriale. indIrect cosls
1Irt' :hose rerr.::ining to be allocated to
benefiting COF. objectives. A co,t ml\Y not be
allocalad to an award as an indirect cost if
,illY othp.r cosl inculTflfl for the ;an:le purpose.
ill like circWIUtancell. ,has been as~i~ned lo
an ,,":ard as a direct cost. :
2. B!!C8USe oC Ihe diverse characterislica
I\:ld accounting practices oC nonprofit
crganizations. it is not possible to speciCy Ule
lrpAS of cost which may be classified as
indirect cost in all situation. Howe\'er. typical
examples oC indirect cosl Cor many nonprofit
o'1lanizalions ma~' include depreciation or
use allowance~ on buildings and equipment.
the costs oC operating and maintaining
f"cililies. and gcneraladmiDistra lion and
lwnerlll expenses. sllch as the sallltiefi and
expenses oC executive oC!icers. personnel
odrr.inislralion. anci ac:ounting.
D. A/Jl>calion of Indirect Cost and
Drtemli!lation af indirect Cost Rutes.
1. General.
a, Where a nonprufit ot!!anization hdS only
une rr.lOjur function, or \\':,el"e ail its major
(unctions benefit frum i1s indirecl costs to
ai'prn..imalely the Slime degrr'c. the
i!llo::r.tion of indi:r.cl COllIs Held lhe
I
Office of Management and Budget Circular A-122 (6/27/80)
computation oC an indirect cost rate..,. be
accomplished through simplified allocation
procedure. as doscribed in para8l'apb Z
below.
b. Where an ofianization has several major
function. which benefil from ils indirect costs
in varying degrees. allocation of indirect
cosls may require the accumulation oC .uch
costs Inlo separale cost groupings which then
are allocated individually 10 benefiting
functions bv mealU of a base which be.t
measures lhe r'!lnlive degree of benefil, The
indirecl cosls Ii.llocaled 10 each function are
then distribuled 10 individual awards and
olher activilies included in lhal dunction by
means of IlD indirect co.1 rale(s).
c. The determinotionoC whal constilules an
o'llaniution'. major functions will depend on
ils purpose in beins: Ihe typel of se",'ices it
renriers 10 Ihe J1ublic. it. clienls, nnd il.
members: ond lhe IImollnl of cHurl IIllevoles
to such activities 08 fund raising. public . ......
information and membership activilies.
d. Specific melhod. for allocating indirect
costs and compuling indirect cost roles along
with Ihe conditions under which each method
should be used are described in paragraph. 2
through 5 below.
e. The base period for Ihe allocation DC
indirec.l cosls is Ibe period in .....hich such
costl are incurred and accumulated for
allocation wo work performed in Ihat period.
The base period normally should coincide
wilh the organization'. fiscal yeu. but in any
evn!. shall be so selected as 10 avoid
tnequities in the allocation of the costs.
2. Simplified oJ/oeotion method.
a. Where an organintion's major functions
benefit from ils indirect costs 10
approximalel)' the same degre, the lI!localion
or indirect costs may be acco:nplished br (i)
separaling the organization'. 10lal costs for
lhe bue period as eilher direcl or indirect.
..nd (ii) dividing tbe lotal allowable indirect
costs (net of appjjr.able credits) b)' an
equilaule dislribulion base. The result of lhis
process is an indirect cost rate ......hich is used
to distribule indirect cos Is to indh'idual
awards. The rate shouid be expr~ssed a. lhe
percenlage which the tOlal amount of
allo......lIule indircct costs bcars 10 the base
seleCled. Tnis metnod should alos be used
where an organization has onl)" one major
function encompas.in5! a number of
individual J1rojecls or acth;tiea. and may be
used where the level of Fedcral awards to an
organization is rellltivcly .malL
b. both the diroct costs Rnd the indirect
cests shall exclude capasl expenditures ond
una:lowalJle coslS. J iowever. unallowable
costs which represent. activities must QC
included in the direct costs under the
conditions. described in paragraph B.3. above.
c. The distribution base ma)' be lotal direct
Cosls (excluding capital expenditures and
olher distorting ilems. such lIS major
subcontracts or s:.lb!;rar:IM). direct slllaries
and ""lIges. Dr olher base which results in an
equitable distribulion. TIle distribution base
shllll generally exclude pa.-tir.ipa:lt suport
cosl!; .os defined In paragraph Zg of
Allar-hmenl B.
d. ~xc~~.t where a SlJccia! ridels) j,
rC'qulred In accordance wilh pllragraph 0.5
belDw. t.be1ndirecl-GQtlt Tale d.r.W1lloped.ndar
the above pnnGipw...l. aRPlicaul.e.ID aU
a ward. al.lbe Ol"Ill&ni&&lioa.. JI a .poc:ial
rale(s) ~ required.appropnale mocUIiCllliolU
shall be made ill order 1.0 develop .the .pecial
rate(.).
3. MullipIe alIocalion ban R/s:hod.
a. ""'here an ol"[lanizallon'. indiroct costs
benefil ils majoduDctiolUl in \'arying degrees.
such costs shall be accumulaled into separale
cost groupings. Each grouping .haUthen be
allocaled individuolly 10 benofiUng funcliolU
bv means oC a uue which uesl measures lhe
r~lotive benefil..
b. 111e grouping. .hall be eSlnullshed so as
to permit the allocalion of each 8rouj1ins'on
the b811il of benefils provided 10 lhe major
Cunctions. Each sroupil\3 should constitute a
pool of expen.es thaI ore of like chanicter-in
lemll or lhe function. they lrenefilllnd in
h:rm. ullhe ullucllliul\ lUll'': whluh lrml'
. measure the relative benefits providd to each
function. The number of .cparlte groupings
should be beld within practical limits. laking
inlo considerution the materiality of lhe
Imounls in\'olved and the degree oC precision
d esi red.
c. Actual conditions must be taken into
accounl in selecting the bose to be used in
allocating the expenses in !lach grouping to
benefiling functions. When an allocation can
be made by assignment oC a cost grouping
directl)' to the function benefiled. lhe
allocation shall be made in thaI manner.
When the expenses in a grouping are more
general in nature. the allocation should be
made through the use of a .elected base
which produces results that are equitable to
bOlh the Government iuld the ol'8anization. In
generaL any cost element or cost relaled
faclor associaled with the organintion's
work is potentiall}' adaptable for use as an
allocalion base provided Ii) it can reldily be
expressed In lerm. oC dollars or olber
quanlilative measure. (total direct costs.
direct salaries and ....alllls. .taff hours applied.
square feet used. hours of usage. number of
documents processed. populltlion served. and
the like) and (ii) it i. common to the
benefiting functions during the hllse period.
d. Except where a special indirect cost
rllle(s) is required in accordance with
paragroJph D.5. below. the separale grouping.
or indimct co.ts allocated to each major
Cunction sholl be Bgregated and treated as a
common pool for that function. The costs in
the common pool shall then be distributed to
indivisualawars included In thetfunction by
use of II single indirect cost rate.
e. The distribution base used in computing
the indirect cost rete for each function mov
be lotal direct costs (excluding capital .
c::penditures and other distorting items such
as major subcontracts and subsranls). direct
~alaries and wages. or other ase which
results in In equitable distribution. The
dislribution base shall generally exclude
participant support costs as defined in
paragraph 29. Allachmenl B. An indirect cost
rale should be developed fir each Sl!parate
indirect cost pool developed. The role in each
clIse should be staled as the percentage
which the amount of the particular indirect
cosl pool is of lhe dislribution base identified
I
A-122:3
witn that JlOOi.
.t. DiI't!C1 o/Jocotion nnnhod.
a. Some nonprofil organizations, treat all
costs II direct costs expect general
administration snd general expenses. These
organizations generally separale their costs
inlo lhre ba.ic categories: Ii) General
administration and general expenses. (ii)
fund raising. and (iii) olher direct functions
(including projecls performed under Federol
owards). Joint costs. .uch as depreciation.
renllll cosls, oJ1eration snd mainlenance oC
facilities, telephone expenses. and lhe like
are proraled indivisually a. direcl cost 10
each catellor}' ond to each oward, or other
activity using B base most BJ1J1ropriate 10 the
particular cost being proroted.
b. This method is Rcceplable provided each
joint co.st is prorated using a base which
IIcellrnlely mell~lIres the benl!lil~ I"rovirll!d to
cllch nWIII'u ur ulher IIcllvll\'. Tlu: \JIINON 111,,"1
be eSlablished in accordance with resonable
criteria. and be sUJ1Ported by curren I dllta.
This method is compatible with the
Slandards of Accounting and Financilll
ReJ1arling ror Voluntary Heallh and WeUore
Ol'8anizalions issued jointly by lhe National
Heallh Council. Inc.. the NalionalAssembly
of Volunla",' Heallh and Social Welfare
Organizati~ns. and lhe United Way of
America.
c. Und..r this method. indirect costs consist
eclusively of gl!neral administralion and
genera I expenses. In all olher respects. the
orgllni:ation's indirect Cosl ratess shal be
computed in lhe same manner as that
described in paragraph D.2 auove.
5: Special indi."ect Cosl rates. In some
inslances. a single indirect cost ra Ie Cor all .
activities of an organization or for eacl: major
function of lhe ol'8anization ay not be
appropriale. since it would not lake into
account those different factors .....hich may
subslantiallv afCectthe indirect costs
applicable t~ a particular segment of worr_
For this purpose. a particular segment of
work. For this purpose. a particular segment
of wOlk may be that performed under a single
award or it mav consist of work under a
group of awards performed in a common
environment. the factor( may inClude lhe
ph~'sicallocation of the work. the levp.r oC
administralive support required. the nature of
the facilities or order resources employed. the
scientific disciplines or technical skills
involved. the organizalionol arrangements .
used. or any combinalion thereoC. When a
particular segment of work is performed in an
environment which appears to genera Ie a
significantly dirCerenllevel of indirect costs.
provisions should be made for a separate
indirect co.t pool applicable 10 such work.
The seperate indirect cost pool should be
developed during the course of the regular
ollocatio:l process. and the separale indirect
cost rale re.ulting therefrom should be used
pro\.jded it is determined that (i) Ihe rate
differs significantly Crom lhat which would
have been oblained under paragrllph D.%. 3.
and 4 sbo\'e. and (ii) the volume of work to
which lhe rate would apply is malerial.
E. Negotiation o/Jd Approval of Indirect Cost
Rotes.
I
ffice of Management and Budget Circular A-122 (6/27/80)
1. Definitions. As used in this section, thl!
following terms have the meanin;s set forth
below:
I. "Cognl%ant agency" menns the Federal
agency re,ponsible for negotiating and
approving indirect cost rale, for a nonprofil
organi%ation on behalr oC all Federol
agencies.
b. "Predelermined role" means an indirecl
cllsl rale. applicable to a specified cUlTenl or
fo..Jlure period. lIsually the organi%ation's fillcal
\'ear. The rale is based on an estimate of the
~OSIS 10 be incurred during Ihe period. A
;::edetermined rate is nol 8ubjeclto
adjustmenL
c. "Fixed rale" means an indirect cost rate
which has Ihe slime characterislic$ as a
predetermined rale. except thai the difference
between the eslimaled cosls and the actullI
Cllst, or the period covered bl' the rale is
carried forward aa an adjustment to lhe rale
compulation of a 8ubsequenl period.
d. "Final rale" meana an indirect cost rate
applicable to a specified post period which i,
based on Ihe aClual coals or the period. A
final rale is nol subjecllo adjustment,
e. "Provisional rale" or billing rate means a
temporary indirect co,1 rale applicable to a
specified period which i, used for funding.
interim reimbursemenL and reporting indirect
co, Is on awards pending Ihe establishmenl oC
a rate ror the period.
r. "Indirect cost proposal" means the
documenlation prepared by an o~nnintion
tosubslantiale ita claim for the
reimbursemenl of indirect costs. This
propcsai provides the basis for the review
and negotiation leading to the establishment
of an organization's indirect cosl rate.
g. "Cosl objective" means a function.
organizalional subdivision. conlracl. grant. or
other work unit for which cosl dllta are
de,ired and for which provision i, made to
accumulate and measure Ihe cosl of
p:ocesses. project.. jobs and capitalized
projecls.
%.. Negotiotion ond Opprol'OJ of rotes.
a. Unless dirferenl arrangements are
agreed 10 by the egencies concerned. the
Federall!gp.nc)' with the largesl dollar value
oi awards wilh an organi4alion will be
c:esignale:l as the cogniunl agency ror Ihe
n~golialion and approval or indirect cosl
ralel! and. where necessarv. other rales such
as rringe benefil and compuler charge-out
ra les. Once an agency is assigned cognizance
ior a particular nonpro"1 organization. the
assignmenl will not be changed unless Ihere
i! 1 major long.lerm shift in 1he dollar volwu
c;f Ihe Federal awards 10 Ihe orgllnizalion. All
concerned Federal agencies shall be given the
opportunity 10 participale in the negolilllion
process. bul aller a rate has been agreed
\:pon it will be accepled by all Federal
agencies. When a Federal agency hlls reason
to believe thaI special operating factors
a!i.~cting its awards necessitale special
;:lOlrect cosl rates in accordance wilh
~aragraph D.S above. it will. prior to Ihe lime
::11 rales are negolialed. notify Ihe cognizanl
agency.
b. A nonprofil orgoniution which hllS nol
previously established an indirecl cosl rale
.....ilh a Federal agency shall afler Ihe
crsani42tion is advised lhal nn nward will be
made and. in no e\'ent. laler than three
monlhs aller the effeclive dale of Ihe award.
c. Orllaninlions Ihal have previously
eslllblished indirect cosl rales musl suumit a
new indirecl cosl proposal to the cognizant
agency wilhin six months afler Ihe close or
each !iscal year.
d. ^ predelermined rale ma)' be negolialed
ror use on awards where Ihere is reasonable
assurance. based on pasl experience and
reliable projection of the organization's costs.
thallhe rate is nOllikely to exceed a rale
ba~ed on the organization's nctual costs.
e. Fixed rnles may be negoliated where
predelermined rales are nol considered
al"propriale. A fixed rale. however. sholl not
be negotia led ir (i) all or 1 ,ubslunlial portion
of the organinlion's awards are expected 10
expire before Ihe cllrry.forward ndjuslmenl
can be made: (ii) Ihe mix of Covernmenl and
non.governmenl work allhe organiulion is
100 erralic 10 permit an equitable carry.
forward adjustment: or (iii) the organi%alion's
operations fluctuale significanlly from year 10
year.
f. Provisional and final rales shall be
negolialed ,where neither predelennined nor
!ixed rales are appropriale.
g. The results of eoch negotiation shall be
formllli%ed in a writlen agreemenl between
Ihe cogninnl agency and the nonprofit
organization. The cognizanl agency shall
distribute copies of Ihe agreement to all
concerned Federal agencie,.
h. l! a dispute arises in a negotia tion of an
indirect cosl rate belween Ihe cognizanl
agency and the nonprofit organization. Ihe
dispule shall be resolved in accordance with
lhe appeals procedure, of the cogninnl
agency.
i. To Ihe extent Ihal problems ure
encounlered among Ihe Federal agencies in
connection with Ihe negolilltion and approval
process. Ihe Office or Managemenl lInd
Budgcl will lead 8Isislance as required 10
resolve such problems in a limely manner.
[Circular No. A-IZ2)
Allachment B
Selecled lIems or <Ast
Tobie of Contents
1. Advertising coslS
Z. Sad debts
3. Bid and proposal COlts (reserved) -
4. Bonding costs
S. Communicalion cost,
B. <Ampensation for personal sen-ice,
7. Contingent)' provisions
6. <Antributions
;. Depreciation and use allowllnce,
10. Donations
11. Emplo}'ee morale. health and -welfare
costs and credit.
1::' Ent!!r!ainrnenl costs
1:1. Equipment and olher capilal expenditures
H. Fines and penalties .
15. Frillge benefit.
15. Idle facililies and idle capncH)'
17. Inuepl!ndenl research and developmenl
(resen'ed)
1S. Insurance and indemnification
19. Inlere~t. fund-raising. and-investmenl
monOlgeml:nt cosls
20_ La bar re!0IIio:15 Ctl5ts
I
A-122:4
21, LC'5~("S on olhe. a...-ardi
::::. Mainlenance a:1d r':I"/lir costs
23. M3h:rials /Vld SUPl"liell
24, Meelin~s. conrerencr.s
2.>. Meml.erships. suuscriptions. and
prefessional acli\"iI)' cusls
26. Orlll1niZOltion coslS
1:1. O,'p.rtirne. exlra.pa)' shin. and mullishil't
prcmium.
28. Pase cha'1ll'S in professional journala
::9. I"artjcipanl support costs
J!l. Patenl cosls
31. Pension plan.
32. Planl security costs
33. Preaward coslS
3~. Profession/ll service costs
36. Profits and IOlSes on disposition or
depreciuule prol"eny or olher capilol
assels
:If}. Public i~formalion sen'ice casts
37. Jlublication and rrinting co~ls
:in. Rearrangemenl and Illeralion cosls
39. Recon,'ersion costs
40. Recruiting Cosls
41. Relocation costs
4z. Rcntol cosl.
43. ROYlIhies and other costs for U1;e of
plllents and cnprrights
44. Se\"erllnce pay
45. Specialized service facilities
46, TlIxes
47. Termir.alion cosls
46. Training and education costs
4!1. Transportation cosls
50. Tra\'Cl costs
[Circular No. A-1Z2]
Allachment B
Selccted Items or Co,t
ParagTaphs 1 Ihrough 50 provide principles
10 be lIpplied in establishing the aHowubility
of certoin items of cosL These principles
opply whether a COlt i. trealed as direct or
indirect. Failure to mention 1 particular item
of cosl is not inlended to implr thai it is
unallo>\'oble: ralher delermination os 10
allowabilitv in each case should be based 00
Ih~ trcalnl~nl or principles provided for
similar or rela ted items of cosL
1. Advertising co~t.s. .. '\
I. Advertising costs mean the costs of. -
media services and associated costs. Media
advertising includes magazines. newspap~rs.
radio and lelevision programs. direcl mail.
exhibits. and the lilte.
b. The only advenising costs allowable are
Ihoae which are solelr for (i) Ihe recrulttnenl
of personnel when considered in conjunctioa
_with sll olher rec:ruiunent costs. as set forlb
in pllrasraph 40:,(ii) the procurement of good,
and sllrvices: (iii)lhe dilposal or surplus
materials acquired in the performance of the
award except when organiz:aliolU are
rei-mbursed for disposals at a predetermined
amounl in accordance wilh Attachmenl N of
OMU Circular A-11O: or (i,,) specific
.requirements or Ihe award.
z. Bod dobts. Bad-debts. includinglones
(whether aclual or estimaled) arising from
uncollectible accounts and other claims.
related collection Cosls. and relalll-:llegaJ
COllis. are unallowable.
3. Bid ond propo!lol costs. (reserved)
4_ n"nding costs.
--..,
I
Office of Management and Budget Circular A-122 (6/27/80)
a. Bonuin!! COf;ts ari5e wh(!n the .
Cmrernmenl requirea.llSsurance a!lRlllal
fitlllnciallO!5 to il.aelf or nthers k>y reason of
the act nr default of the ol"gllniza lion. The)'
l.:ise also in instances where the ofllanir.ation
,..quirds similar allluranee. Included are sucll
bonds 8$ bid. perfonnance. payment.. ,
.dunce pa)'1I\enl. Infringement. and f.dehly
bvtIOS.
b. Cusll of bonding required punuanllo
the terms of Ihe award ar.. allowlIhle,
c. COlluof bnnding required br the
org..,nizalion in the general conduct of its
opr.rations arc allowable 10 the exlcntlhat
such bonding Is in accordnnce with sound
business practice and lhe rotes and premium.
are reilsonable un.jer lhe circumslances,
5. Communication CORU.CosI5 incurred for
h:le~hone lle/,\'icea. local and long distance
tc:lephone colli. lelegrAms, radiogralD5.
postage /lnd the hl.;e. are al1owable.
6. Compensation for personal sen'iccs.
a. Definition. Compensation for penlonal
services includes 1111 compensalion paid
c:um:ntly or accrued by the orgnnization Cor
scrvice~ of eml'loyep.s rer.dered during lhe
period or theawarei. (except as otherwille
provided in paragraph g. below). It includes.
but is. not limited to. salaries. wages.
director's and executive commiUee member's
fees, incenth'e awards. [ringe bene[jU.
pension plan coaU. allowances [or 0fI'-5ite
pay. incentive pay. location allowances.
hudship pal'. aDd cost of Ii\'ing differentials.
b. Allowability. Except as otherwin
s;JeCifically provided in this paragrapb the
costs of such compensation are allowable 10
the ex lent that:
(1) Total compensation to. individual
employees is reasonable for the services
rendered and conIonns 10 the established
policy of the organintion consistently
applied to both Governmenl and 1100-
Government activities: and
(Z) Charges to awards whether treated as
dill:ct or indirect cosls are determined and
supported a's required in this paragraph.
c. Reasonableness.
(1) Wben the organization is predominantly
engaged in acti'l.'ilies other than those
sponsored by the Government. compensalion
[or employees on GovammoDl-sponsored
work wiD be considered reasonable 10 the
extent thai It i. consistenl with thai paid for
similar work in lhe organization's other
activilies.
(Z) When the organization ia predominantly
engaged in Government.sponsored activities
and in cases where the kind of employees
required for the Government activiliesare
npt found in tile organizatioo's other
activities. campanaation lor emplo)'ees on
Go\'ernment-sponsored work will be
considered rOBBonable.to the exlentthal it is
comp;lI'sble to that paid for similar work in
the labor markets in which the organir.ation
competes for the kind of employees involved.
d. Speciol considerations in determining
ollowabilitJ'. Certain conditions require
5pecial consideration and possible Iimitalion5
in delermining .cost. under Federal award.
where amounls or types of compensation
appear unreasonable. Among such conditions
ore the following:
(1) CompenslI lion 10 memuers of nonprofil
oq:aniztlions, trusll'es. direrlol'l, Ruoci"II'S.
officer.. or Ihe immediate faunilies thr.reor.
Drlennination shollld he made Ihal such
compenllation is reasonable ror the actual
per!onlll services rendered ralher than a
dislribution of earnings in Cltcell& or cns~.
(Z) Any change in an ortlallization's
compensalion policy resulting in a
substantial increBBe in the organiution's
level ol compenSlltion. particularly when it
was concurrent with on increase in lhe ralio
of Government ewards to other activities ol
the organization or any chnnge io the
Ireatment of allowaoility ol specific Iypes of
compensation due 10 changes in Governmenl
policy,
e. Unollowoble costs. Costs which are
unnllowable under olher paragraphs of lhis
AlIachment shall nol be allowable under this
paragraph solely on the basis Ihalthey
constitule per!onal compensalion.
[, Fringe benefits.
(1) F:inge benefils in lhe lorm o[ regular
compensalion paid 10 emplo)'ees during.
periods of aulhorized absences [rom Ihe lob.
such as vacalion leave, sick leave. mililary
leave. and lhe like. are allowable provided
such costs are absorbed by a\l organization
activities in proportion 10 the relalive amounl
of time or errort actually de\'oted to each.
(Z) Fringe benefil. in tbe form o[ employer
contributions or expenses [or social securil)'.
employee insurance. workmen's
compensation insurance. pension plan costs
(see paragrapb g. below). and the like. are
allowable provided such bene[jU are granted
in accordsnce witb established wrillen
organization policies. Such benefit. whether
treated as indirect cosU or as direct costs.
shall be distributed to particular awards and
other activities in a manner consislent with
the pattern or benefiU accruing to the
individuals or group or en\ployees whose
salaries and wage. ara chargeable 10 such
awards and other acfivilies.
(3)(a) provisions for a reserve \1."lder a self-
Insurance program for unemployment
compensation or workmen's compensalion
ere allowable 10 lhe extent that the
provisions represent reasonable eslimates of
the liabilities Ior .och compensation. and tho
types of coverage. extenl o[ coverage. and
rates and premiums would have been
allowabla had insurance been purchased to
cover the risks. However. provisions [or self-
insured liabilities which do Dot become
payable for man than one year after the
provision ia made shall nol exceed the
present value or the liability.
(b) Where an organization follows a
consisteDt poley of expensing aClual
pa)'l11ents to. or.OD beba.lI ot employees or
fOrmer employees lor unemployment
:COmpensation or workmen's compansation.
such,payments are allowable in the year o[
'Payment with the prior approval o[ the
awarding agency provided they are allocated
to -all activities of the organizalion.
(4) Casu or insurance on the lives o[
lru.tl'es. officers. or other employees holding
positions or similar responsibililY are
allowable only to the extent thaI the
insurance represents additional
compensation. The costs of such insuran!=e
when the organizalion is named as.
I
A-122:5
beneficiary are unallowable.
g. Pension plan costs. .
(1) Cosls o[ the organi7.alion's pensIOn plan
which are incurred in sccordance wilh the
established policies of Ihe organization are
allowable. provided:
(a) Such pulicies meet the lest o[
reasonableness:
(b) The melhods oC cost allocation are nol
discriminatory: .
lc) The cost assigned to each fiscal year is
delermined in accordance with generally
acccpled accounting principle~ as prescribed
in Accounting Principles Board Opmion .~o. 6
issued by the American Inslitute o[ Cerhlled
Public Accountanls: and
(d) The cosls assigned 10 a given fi~caJ yenr
ere lunded for all plan participants wlthm SIX
monlhs aileI' lhe end of thaI year. However.
increases to nonnal and past service pension
Cosls caused by a delay in lunding lhe
actuarial liability beyond 30 days after each
qunrler of the year 10 which such costs are
assignable are unallowable,
('1.) Pen5ion plan tenninalion insurance
premiums paid pursuant to the Employee
Retiremenllncome Security Act of 19i4 (Pub.
L. 93-(06) are allowable. Late pa)'ment
chllrges on such premiums are unallowable.
(3) Excise laxes on accumulated lunding
deficiencies and olher penalties imposed
under the Employee Reliremenllncome
Security Acl are unallowable.
h. Incentive compensation. Incentive
compensation to employees based on cost
reduction. or efficient perConnance.
Buggestion awards. safety awards. etc.. are
allowable to lhe extent that the overall
compensalion is delermined to be reasonable
and such cosls are poid or actnled pursuant
to an agreement enlered inlo in good faith
between the organization and the employees
before the services were rendered. or
pursuanlto an eSlablished plan folluwed by
the organiution so-consislently as to imply,
in errect. an agreement to make such
paymcnl. .,' .
i, Overtime. extra pay shift, and mult/shift
premiums. See paragraph '1.7.
j. Severance pay. See paragraph 44,
k. Training and education oosts, See
paragraph 48. .. '.,
I. Support of salaries and wages. -
(1) Charges to awards lor salaries and
wages, whether treated 115 direct costs or
indirect costa. will be based on documented
payrolls approved by a responsible official(s)
of the organization. The distribution or
salaries and wages 10 awards musl be
supported by per!onnel activity reports as
prescribed in subparagraph (Z) below, except
when a substitute syslem has been approved
in wriling by the the cogniunl agency. (See
poragraph E.Z ol Attachment A)
(Z) Reporta renecting the distribution of
aclivity o[ each employee must be
maintained lor all starf member!
(professionals and nonprofessionals) whose
compensation is charged. in whole or in par\,
directly to awards, In addition. in order to
supporllhe allocation of indirect costs. such
reports must also be mainlained [or olher
employees whose work involves two or more
funcitons or activities if a distribution o[ lheir
compenllalion between 6uch functions or
nclivities is nceded in the determinalion of
I
.1
Office of Management and Budget Circular A.122 (6/27/80)
the organization's indirect cost rRtels) (e,g..
an. employee engaged part-time in indirect
cost activities and part-time in a direct
function). Reports maintained bynonprofil
orpn~tion. to sati.fy these requirements
muat meet the following .tandards:
(a) The reports must renect an after-the-
{act detennination of the actual activity of
each l'mployee. Dudget estimate. (i.e.,
estimates detennined beCore the services are
performed) do not qualify as support Cor
c1';tr~es to awards.
(bl Each report must account for the 10101
activity for which employees are
compensated and which is required in
fulfillment of their obligations to the
orgunization.
(c) The reports must be signed by the
individual employee, or by 8 responsible
supervisory official having first hand
knowledce of the activities perfonned by the
employee. that the distribution oC activity
represent. a reasoncble estimate oC the
actual work perlo:tned by the employee
ciuring the periods covered by the reports.
(d.} The reports must be prepared at least
mQJI1h!y and must coincide with one or more
!lay periods.
13) Charge. for the salaries and wages of
nonprofeSSional employees. in addilion to the
'supportins documentation described in
subparagraphs (I) and (2) above. must also
be supported by records indicating the total
number of hours worked each day
maintaiued In confor:nance with Department
oC Labor regulations implementing the Fair
Labor Standards Act (29 ern Part 516). For
this purpose. the tenn "nonprofessional
emplo!ee" shall have the same meaning as
"nonexempt emplo}'lle." under the Fair Labor
Standards Act.
(4) Salaries and wages oj employees used
in_meeting cost sharing or matching
requirements on IIwards must be supported in
the same manner as salaries and wages
claimed for reimbursement from awarding
asencies.
7. Contingency provisions. Contributions to
a contingency reserve or any similar
provision made for events the occurrence of
which cannot be icretoJd with certaint\' as to
limp.. intensity. or with an assurance oC their
::aJ;Pening. are unallowable. The term
"cantinrency reserve" excludes self.
in&U.-ance reserves (tee paragraph 6.r.(3) and
IG.a.{2J(d)): pension funds (see parasraph '
6,(g)); and reserves for nonnal severance pay
(see paragraph 44.(b)(I).
8. Co:rtributions. Contributions and
donations by the organization to olhers are
t:ltallowable.
9. Depreciaiion and use allowances.
a. Compcnsalion for the use.of buildings.
o:her capital imprclVeme:lIs. and ~quipment
(:~ l-nnd m2:;' be made through use
..!iuwan!:es or depreCiation. However. excepl
as )'l'f'lvided in paragraph r. below a
coanuii'lation 01 the two methods mav not be
1:5ed in cOn!\l!clion with a sin~le c1a~s of
fiwd li5l>ets le.g.. buildinss. oWee equipment.
computer equipment. etc.).
b. The compa:ta!ion of use allo....ances or
,..~pr"eiatiCln shall be bascd on the
;,C!l'uisi:ion cosl of the assets involved. The
U~Qt:is.ilion cost Clf an nssel co::alcd 10 the
or~anizllticn by a Ihird party shall be Its lair
market value allhe time 01 the donation.
c. The compulalion oC use allowances or
depreciation will exclude.
(1) The cost of land:
(Z) Any portion of the co.t of buildings and
equipmenl borne by or donated by the
Federal Government irrespective 01 where
tille was oriJ:inally vested or where it
presently resides: and
(3) Any portilJn of Ihe cost of buildings and
equipmenl co!:lributed b~' or for Ihe
or!lanizaLiun ill sntisfaclion of a stlltutOry
matching retirement.
d. Where the use allowance method is
followed. the use allownnce for buildings and
improvement (including land improvements
such 81 Pllved ;,srking sreas. lences. and
sidllwlllks) will be computed at an annual
rule not exceec!ing two percent of acquisition
cost. The use allowance lor equipment will
be computed at an annual rate not exceedir:g
six and two-thirds pereent of ncquisition cost.
When the use allowance method ill used lor
buildings. the entire building must be trealed
as a single asset: tile building's components
(e.g. plumbing system. heating and air
conditioning. etc.) ClIMOt be segre~uted Crom
Ihe building's shell. The two percent
limitation. howev~r. need not be applied to
equipment which is merely attached or
fastened 10 the building but not pl'nnanently
fixed to it and which i. used as furnishings or
decorations or lor specialized purposes (e.s~
dentist chairs and dental treatment units.
counters. laboratory benches bolted to tha
nuor. dishwashers. carpeting. etc.). Such
equipment will be considered as not being
permanently fixed to the builJir:g if it can be
removed without !."ae need lor costly or
extensive alterations or repilirs 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 uselul service (usefullile)
established in each case for usable capital
essets musl take i:\to consideration such
factors as type of construction. nat~re of the
equipment used. technological developments
in the particular program areB. and the
renawal and replacement policies lollowed
for the the individual items or classes of
assets invol~ Tne method 01 depreciation
used to assign the cost of an Asset (or group
oC assets) to accounting periods shall reflect
the paltem of consumption of the asset
during its useful life. In the absence of clear
evidence indicating that the expected
consumption of the asset will be significantly
greater or lesser in the early portions oC ils
u!;efullife than in the later portions. the
strai;ht-Iine method shall be presumed to be
the appropriate method. Depreciation
methods once used shall not be changed
IInless upproved in advance br the co~niUlnt
Fec!!ral agener, When the deprecilition
method is introduced for application to assets
previousl~' subject to a use allowance, the
combination of use a1l-owances and
dcpreciat.on applic;,ble 10 such assets must
not exceed the total acqui!;ilion cost of the
:!s!;ets, ,^'hen Ihe depreciation method is used
f:'r huildinl!!;, a buildinl(s snell may ue
A-122:6
~l'gregaled Irom each building component
(e,!!.. ph:mbinfl $}'stem. heating, and air
conditioning syslem. etc.) and each item
depreciated over its estima 'ed useful life; or
the entire building (i,e.. the shell and all
cumponenls) may be Ireuled 88 a sir:gle Bsset
ond depreciated over 8 single useful life.
r. When the dellreciation method is used
for a particular class oC assets, no
deprecialion may be allowed on any such
asr-ets Ihat. under purasroph e. above, would
he viewed 8S lully depreciated. However. II
rcnsonHble use allowance may be negotiated
lor such assets il warranted after laking into
consideration the amount of depreciation
pre\'iously charged \0 the Governmenl, the
estimated uscfullife remaining at time oC
nr.gotiulion. l:he effect of any increased
m...intenaoce charges or decreased efficiency
due 10 sge. and any other factors pertinent to
.lhe uliliution oC the asset Cor the purpose
contemplated.
g. Charges lor use lillowance~ or
depreciation must be supported by ndequate
property records Bnd ph)'sical inventories
must be laken at least once every two years
(<I $Ialiatical sampling basis is acceptable) to
ensure that assets exist and are usable and
needed. When the depreciation method is
lollowed. adequate de;.treciation records
indicating the amount of depreciotion taken
cnch period must also be maintained.
10. Donations
a. Sera'ices received.
(1) Dunated or volunteer services may be
fum!shed to an organization by prolessional
and technical personnel. consultants, and
other skilled and unskilled labor. The value
01 these' services is not reimbursable either as
a direct or indirect (:ost.
(;:1 Tne value of donated services utilized
in tile perfonnance oC a direct Cosl activity
shall be cnnsidered in the delennination oC
the organization's indirect cost rate(s) and.
accordingly, shall be allocated a
proportion'll! share uC applicable indirect
costs when the following circumstances exist:
(a) "he ass~egate \"alue oi the services is
1lI11lerial;
(bl The services arc supported b~'il
j;ignifir.ant amnlmt 01 Ihe iflPirect costs. . .
incurred by the org:miza lion:
Ie) The dirr.ct cost activily is not pursued
priOlllrily lor the benefit of the Federal
Gow,mmenl.
(:I) In those instances where there is no
.basis for determining the fair market value of
the services rendCTed. the recipient and the
CO!inizant agency shall negotiate an
appropriate aiioc..tion of indirect cost to the
sen'ices.
(4) Where donated l'ervices directly benelit
a ~roject supported by an a....ard. the indirect
costs allocaled to the services ,^:l1 be
considered as a part of the lotal costs 01 the
projecl. Such indirect costs ma)' be
rr.imbursed under the award or used to meet
cust sharing or matching requirements.
(5) The villue o! Ihe donated ser\'icf:s may
b,~ used to mect cost sharing or matching
requirements under condilions dt:scribed in
".!lachment E. OMB Circular ;-':0. A-1I0,
\\'here donated services ure trealed as
inrlirect cests. indirect cost rates will
s"paral~ the value 01 the donaliuns so that
I
Management and Budget Circular A-122 (6/27/80)
nl will Dot be made.
rket value oC donated services
uted ., Collows:
"Dr vahuJleer services. Rates Cor
all be consistent with those
ptH4 Cor similar work In other
IheClllJ8lUzation.ln cases where
&kiJ& involved are not Cound in
'vitia oC Ihe organization, the
, all' be consistent with those paid
ork in the labor market in which
iolt competes Cor such skills.
sdoDD.ll!d by other
s. When an employer donates
of an, employee. these services
ed at the emplo)'ee's regular rate
sivll cK Cringe benefits and
5) pnIlrided the services are in
,I Cor-which the employee is
d. If the services are not in the
whidt tbe employee is normally
rket value ahallbe computed in
.th,aubparagraph (a) above.
nr! sptICIlo .
goenlS; i.e.. expendable
ertylnpplies. and donated use
be' fUDllisbed to an organization.
Ihll'gaaGs and space is not
either as. a direct or indirect
lue oc. tlie donations may be used
shariD&; or matching share.
s under the conditions described
nt Eo OJ.fB Circular No. A-110.
the doaaliona shall be
In ac:cardance with Allachment
nations are treated as indirect
ct cast rales wil1separate th,
donationaso that reimbursement
aee.
ee l11OrrPe. health. and welfare.
dl~ The cosls of house
haaith or fU'St-aid clinics. and/
s~ recreational activities.
0l111HiiD1r services. and other
urred in accordance with tbe
's ellta:blished practice or custom
"ement oC working conditions.
piol'U relalions. employee
employee performance are
ch costs wiU be equitabl)'
to all activities oC the
. Income seneratp.d Crom an~' oC
ies wiU be credited to the cost
s sucl; income has been
set over to employe~ wellare .
s. .
inment casts. Costs oC
,di~'ersion. social activi lies.
ancicosts relating therelo, sucl.
ginlJl rentals. transportalion. and
unaUowable (but see
11 and %5).
en! and other capitol
in this paragraph, the Call owing
e.nm:!ninm; ~U9rlh belov.":
ment- means an article oC
ble tangible personal property
efulliCe oC more than two vears
isilion cost oC S500 or more per
aniza,tion mav use its own
ovided Ihat ii alleast includes all
ble: tangible personal property as
in.
(ll "Acquisition cosl" means the net
invoice unit price oC an item oC equipment.
includinglhe cost ol any modifications.
allachment., accesaories. or auxiliary
apparatua necessary to make it usable Cor the
purpose Cor which it is acquired. Ancillary
charges. such as laxes. duty. protective in-
transit inaurance. Creight. and inslallation
shall be included in or excluded Cram
acquisition cost in accordance with the
organizalion's regular wrilten accounting
practiceR.
(3) "Special purpose equiplalenl" means
equipmcnt which is usable only for research.
medical. scientific. or lechnical activities.
Examples oC special purpose equipment
include microscopes. x-ra,- machines. surgical
instruments, and spectrometers.
(4) "General purpose equipmenl" means
equipment which is usable for other Ihan
research. medicaL scientific. or technical
activilies. whether or not special
modifications are needed to make them
suitable Cor a particular purpoae. Examples oC
general purpose equipment include office
equipment and Curnishings. air condilioning
equipment. rep~oduclion and printing
equipment. motor vehiclea. and automalic
dala processing equipment.
b. (1) Capital expenditures Cor general
purpoae equipment are unallowable as a
direct cost except with the prior approval oC
the awarding agency.
(Z) Capital expendilures for special purpose
equipment are allowable as direct costs
providad that items with a unit cost of $1000
or more have the prior approval oC the
awarding agency.
c. Capital expenditur:es for land or
buildings are unallowable a. a direct cost
except .....ilh the prior approval of the
awarding agency.
d. Capital expenditures Cor improvements
to land. bl.:i1dings. or equipment w.hich
materially increase their value or useCulliCe
are unallowable 81 a direct cost except with
the prior approval oC the awarding agency.
e. Equipment and other capital
expenditures are unallowable as indirect
costs. Howe,'er, see paragraph 9 for
allowabilit,. oC use allowances or
dcprecialion on buildings. capital
improvements. and equipment. Also. see
paragra~h 4Z Cor allowability oC rental costs
Cor land. buildings. and equipment.
14. Fines and penalties. Costs oC fines and
penalties resulting Crom violations at or
Cailure of the organization to comply with
Federal. State. and local laws and reS'llations
are unallowabie excepl when incurn!d as a
result of compliance with specific provisions
of en award or instructions in writing Crom
the awarding agenC}'. .
15. Fringe benefits. See paragraph 6. C.
16. Idle facilities and idle copoci(v. .
a. As used in this paragraph the following
lenns hnve the meanings set forth below:
(1) "Facilities" means land and buildings or
an,. po:1ion thereof. equipment individually
or collectively, or any other tangible capital
asset. whercver located. and whether owned
or Ip.OIsed by the o'ilsni%alion.
(:!) "Idle facilities" means comple:el\'
unlllU:d facilities Iha: art! e....cess 10 the'
organi2.alion's curren I needs.
(~i "Idle cJ;Jncily" means the unll~ed
I
A-122:7
cOlpacity oC partially used facilities. It is lhe
differmce between that which a faeilil)'
could achieve under roo per cent operating
lime on a one-shin basis less opera ling
inlerruptions resultinl!' from time lost [or
repairs, .elups. unsatisfactory materials. ane!
olhr.r normal delays. and the extent to which
lhr. facility was actDally used lD meet
demands durin8 the accountinll period, A
mullishift basis may be used if it can be
shown that this amoun1 oC usage could
normallr be expected for the type oC facility
involved.
(4) "CoslS of idle Cac.llities or idle capacityN
menns coslll such 8JI DlaUllenance. repair,
housing. rent. and other related cosUt; e.g..
property laxes. insurance. and depreciation
or use allowances.
b. The cosls or idle Cacililoies are
uMllo\ysble exceptIo the exllmllbAlt:
(1) They are unnecesaary to meet
nuctualions in workload; or
(Z) AlIhough nol necel4ary to meet
nuctualions in workload. they were
n/lcessary when acquired and are now idle
becOluse of changes in program requiremenls.
efforts to achieve more economical
operalioOlI. reorganiz:ltion. termination. or
olher causes which could nol have been
re:Jsonably foreseen. Under the exception
slaled in Ibis subparagraph. cosls of idle
facilities are allowable for a reosonable
period oC lime. ordinarily nollo exc~ed one
year. depending upon the initiative laken to
use. lease. or dispose oC such facilities (but
see paragraphs 47.b. and d.).
e. The costs of jdle capacit)' are normal
cosls oC doing business and are a Cactor in the
norm:!1 nuctualions of usage OT indirect cost
rales from period to period. Such costs are
allowHble. provided thl! capacity is
reasonably anticipated 10 be necessary or
waa origi.'lally reasonable and is sl:bject to
reduction or elimination by sublettin~
renting. or sale. in accordance with sound
business. economics. or security practices.
Widesprel'ld icle capacily throughout an
enlire facility or among a group oC assets
ha~,jng substantially the same Cunction may
be idle f3cili bes. .
17. J.ltl"'p,mdcnt rescCl{Ch QJld dav~loP11lent
IReserv"d\. -
18. Insurance and indemnification. I
a. Insurance includes insurance .....hich Ihe
organization is required to caMi'. or which is
approved. under the lerms oC Ihe .:ward and
any other insurance which the organization
maintains in connection with the (Ieneral
condl:ct of its operations. Thi~ para@raph
does nol apply 10 insurance which represenls
frinpe bent'filS for emr10yees [l:l!e pa:aliraph
6.r. and 6.!!.(2)).
(1) Costs oi ini:JranCe r~quired or
approved. and maintained. pursuilnllo the
award are allowable.
(:!) Costs of other inSllrance mHintained bv
lhe org..ni%8tion in connection with the .
[!zneral conduct oC its opera lions are
allowable subject 10 the followin!llimitations.
(a) Trp~s nnd extenl of coverage shall be
in accordAnce ",'ith .o:.nd business praclice
and the ...Ies and premiums shall be
reasonAble uncer the cir::umstances.
[bl C(l~:~ Allowed for busjness interr\lption
or olhp.r similar insurance shl'lll be limited 10
I
Office of Management and Budget Circular A-122 (6/27/80)
ncr-olilJ\ion and in anticipalion of the ..ward
Whl!II' suc.h co~ts is neccSSlIry 10 comply with
:he prujlo~eu delivery schedule or period or
l'er/orm;Jl1ce, Such COsls lire allowable only
tu :hc c:o<lent Ihatthey would have been
l<iluwable ir incurred lifter Ihe dRtr. of the
;:ward lmd only .....ilh Ihe wrillt'n 8pprov:.1 t:f
lhe ",w..rdins nsen~r.
J4. I'm(cssional sen'icc cosls.
a. Costs or profl'!':sional and consullant
services renelered by persons who arc
r;,,"',bers of II pnrticular prore~sion or po~~ess
iI ~llc(:;;d skill. and who arc nol omcers ur
l'~.,iuyces of Ihe orglfnizlltion. llre allowable.
,~biecllo b, c. nnd d. of lhis pnragraph when
rp'lSsl1lOalJle'in r-.:lntion ,10 the servicp.s
renderr.d IInu when not conlingentullon
rt!l:over" of Ihe eosls from Ihe Go\'crnmenl.
b. tn det::rming the allowability or c:osts in
a particular case, no single faclor or any
speciul combinalion or ractors is necessnril)'
determinalive. However. the rollowing
facl"rs are relevanl:
(1) The nolure and scope or Ihe service
rendered in relation to the service required.
(21 The necesllily or conlracting ror thll
~er,:ice. considering the organi%lltion's
C'..'\pahilily in Ihe particular area.
(~) The pasl pallern or such costs,
particularly in the years prior to Government
awnrds.
. (4) The impact of Government aWirds on
Ihe organizlItion's business (i.e.. what new
problems have arisen),
(51 Whether the proportion of Government
work to the organi:z:ation's tOlal !Jusinesa ia
su,;h as 10 influence the organization in favor
of incurring the cost. particularly where the
services rendered are not of a continuing
nnture and have liltle relationship :0 work
under Government grants and contrucls.
(6) Whether the service can be performed
more economically by direct employment
rather than conlracting.
(7) The qualifications of Ihe individual ur
concern rendering Ihe service and Ihe
cuStOlTlllT}' fees charged. especially on non-
Covernment awards.
{Ol Adequacy of the contrnctual agreement
for the service (e.g.. description of the service.
eslimale of time required. rale of
compenllntion, and terminalion provisions).
c. In addilion 10 the racton in PicaS.lIph b
above. relainer fees 10 Ihe allowable mu.t be
supported by evidence of bona fide services
avnilable or rendered.
d. COSI of Ii!glll. accounting. and consulting
~eT\'ices. and relaled co&ls incurred in
co"n~clion wilh defense of antitrust suits..
nnd the proseculinn of clai.:ns allainstlhe
Guvernment. arc ullallowable. COSIS of legal.
ac::.:uunling and consul ling services. and
rr.l:lled casts. incurred in connection with
palenl iIlCrins'!menllitisation. organization
and reorganization. are unallowable unless
otherwise prClvided fQL in the award (but see
parll!!raph 47e),
35. Profils ond losses on disposilion of
depreciable propertJ' or other capitol assets.
a. (1) Gains and 10R~"s on sale, retirement.
or other disposilion uf cit:preciable property
shi:1l be inclurled in the year in .....hich they
occur as cred:', or charges 10 cost grouping(8)
in which the depreciation applicable to such
property was included. The amount :"f the
f:ai:1 or Ion to be induded as a credit ur
c"it~e to the appropriale cost ~r(1\1piog(s)
sh..illul the dilierc:1ce between Ihe amounl
rl'lili:z:ed on the property and the
,,"uepreciated basis of the property.
(2) C..ins and lo&ses nn Ihe disposiliun or
dCf.reciable propert}. shall nol be recognized
/Ill II separale credit or charge under Ihe
Coilo.....ing conditions.
Iii) The llnin or loss ia proceueJ thro\l(:h II
uepreciatiun reserve account allll is rl:necled
ill the Jepreciation 1I110walJie unuer
paraJ.:raph 9.
(iI) The properly is given in exchan(:e IU
part or the purchaRe price of a similnr ilem
&:1d the gain or loss is laken into accounl in
dr.~en1\illillgthe depreciation cost basis of the
new item.
Ic) A 10&8 rellulls from the fuilure to
mainlain permiuilJle insurnnce. excepl n.
ulhl!rwise pl'''''ided in pural/raph 10.n.(3).
(d) Compensalion ror the use or the
prt'pert}. was provided through use
allowanCCll in lieu of deprecintion in
accordance with paragraph 9.
(e) Cnins and losses arising from mass or
nxtraordinarv sales. retiremenls. or other
dispositions shall be considered on a cllse-
b".ca~e basis.
.b. Gains or losses of nny nalure arising
from the sale or exchnnge of property olher
than the property covered in paragroph a.
above shall be excluded in compuling nwara-
cuslS.
35. Public infarmatiun sen'ice costs.
a. Public information service costs include
the cost associated 'with pamphlets. news
relesses. and other forms of information
services. Such cosll are normally incurred to:
(1) infurm or ins1ruct indi\'idunls. groups. or
the general public.
(2) Interes. individuals or groups in
participating in a ser:ice prosram of the
Olganiution.
(3) Disseminate the results of sponsored
and nonsponsored activities.
b. Public info:mation service costs are
allowable as direct costs with the prior
a?proval of thP. awarding agentj'. Such cosls
are unallowable as indirect costs.
37. Publication and printing CoslS.
a. Publication costs include the coslS of
prinling (including the proce~<es'tlf
composi:ion. plate-making, press work.
binding. and the end products produced by
auch processes). distribulion. promolion.
:nailing. and general handlins.
b. If thelle costs up. not identifiable with a
particular 'COst objective. they should be
allocated as indirect costs to all benefiting
activities olthe organization.
c. Publication and printing cosls are
unuilowable as direct costs except with the
prior llpproval of the awarding agency.
d. The cost of page charges in journals is
addressed paragraph 28.
38. Rearrangement. and altero/ion costs.
Costs incurred ror ordinarv or normal
rearrangement and alteralion or facilities arc
allowable. Specialll:rrangement and
alteration costa incurred specifically for Ihe
project are allowable with the prior approval
of the awarding "seney,
39. Reconversion costs. Cosls incurred in
the restoration or rehabilitation of the
organization's fodlltiC'll 10 approximately the
.1
A-122:9
lame condition existing inunedialely prior 10
commencement of Covernment swards. fl<ie
wear and lear excepted. are ailowahle.
40. Recruiting costs. The following
recruiting coslS are allowllble: cost of "help
wanled" adverti.ing, operating coslS of an
employmenl oHice. costs of opera ling an
educntionallestUlS program, travel expenses
including food and lodgins or employees
while ensaged in recruiting penonncl, travel'
cost. of applicnnts for iolervie\\'s for
prospective employment, and relul::ltion COSIS
incurred incidenllo rr.cruilment of new
employees (lice paragraph 41C). Where the
organiz;alion uses employment agencies,
cosls not in excess of standard commercial
rales Cor such lervicel are allOWAble.
41.11elocation cosLs.
a. Relocalion cosls are cosls induent 10 Ihe
permnnent change of duly assiflTlment (for an
indefjnile period or for a slIIted period or nol
less than 12 montbs) of an exi~tiOl!! employee
or upon recruitment of a new employee.
Relocation cosls are allowublc, subject to the
limitation described In paragraphs b, c. and d.
below, provided that:
(1) The move II ror the benefit of Ihe
employer.
(2) Reimbursement to the employee is in
accordance with an established written
policy consislently followed by the employer.
(3) The reimbunement does not exceed the
employee's aClual (or reasonably estimated)
expenses.
b. Allowable relocalion coslS ror current
employees are limited 10 the rollowinS:
(1) The costa of transportation or the
employee. members of his immediate ramily
nnd his bouserold. and I'enonal effects to the
new location.
(2) The coslS of finding a new home. such
as advance trips by employees and spouses
to locate living quarten and temporary
lod!!ing during the Iransition period, up to a
maximum period of 30 deys. including
advance lrip time. .
(3) Closing costs. such as brokerage. legal.
and appraisal fees. incideotto the disposition
of the employee's lormer nome. These coslS,
logether with tliose described in (4) below,
are limited to 8 per cent ol tl1e"lsales price or
the employec's fl>rmqr nome. '.
(4) The conlinuin8 costs ol owoe.rship of
Ihe vacanl former bome after tl1e settlemenl
or lease date of the employee's new
permanent home. such as mainteoance of
buildings and grounds (exclusive of fIXing up
expensea). utilities. taxes. and property
insurance.
(5) Other necessary and reasonable
expenses normaliy incident to reloca lion.
such as the coats or canceUi::18 an unexpired
lease, disconnecting and reinslalllns
household appliances. aod purcilasing
insurance againal loss of or damages to
personal property. The cost of cancelling an
unexpired le88e i. limited to threa times the
monlhly rentaL
c. Allowable rlUocation coslS for new
employees are limited 10 tl10se described in
(1) and (Z) 01 paragraph b. above. Wben
relocation cosls incurred iocident 10 tl1e
recruiunenl or new employees have been
allowed eitber Ba a direct or iRdirecl GOBI and
Ihe employee MM1igns for reasons within bill
:\
I
Office of Management and Budget Circular A-122 (6/27/80)
control within 12 months after hire. the
organization shall relund or credilthe
Government lor its share ol tbe cost.
However. the costs ol travel to an overseas
location shall be considered travel costs in
accordance with paragraph SO and not
relocation costs for the purpose o( this
paragraph Ii dependents are not permilled at
the location (or any reason and the costs do
not include costs oC transporting household
goods.
d. The (ollowing costs related to relocation
are unilllowable:
(1) Fees and olhr.r costs associ~led with
acquiring a new home.
(2) A loss on the sille o( a (ormer home.
(3) Continuing mortgfllic princ:pal and
interest payments on a home being sold.
(4) Income taxes pllid by 6n employee
relaled to reimbursed relocation cosls.
42. Ren/al C{lsts.
a. Subject to the limitations described in
paros:oaphs b. through d. oC this pilragraph,
rental costs are allowable to the extenl that
the rates are renonable in IiBht o( such
Cactors i1S: rental costs of comparable
p:-opert)'. if an}': market conclitions in the
area: alternatives available: 'and the type. lire
expectanc}'. condition, and value of the
property leased.
b. Rental costs under sale and leaseback
arnngements are allowable only up 10 tbe
amount that would be allowed had the
organization continued 10 own the property.
c. Rental costs und~r less-than-length
leases a~ allowable only up to the amount
that wouJd be allowed had title to the
p:-operty vested in the organization. For thls
purpose. a less-than-anns-length lease is one
under which one party to the lease agreement
is able to control or substantially inauence
the actions of the other. Such leases include.
but are not limited to those between (i)
di\'isions of an organization: (ii) orgonizations
I:ncier c:ommon control througb common
officers. directors. or members: and (iii) an
organization and a director. trustee. officer,
0: kay p.mployee of the organ~tion or his
immediate famiiy either dlrectly or through
corpnrations, trusta. or aimilar arrangements
in which they hold a controlling interest.
d. Rental costs under leases which create a
::laterial equity in the leasel.i I'rop~rty are
ailowable only up to the amo~: that would
be a!lowed had the orsanizatiun pw'r.:hased
the property on the date the lease agreel:~enl
was executed: e.g.. depreciation or use
allowancea. maintenance. taxes. insurance
but excluding interest expense and other
unallowable costs. For this purpose. a
material equity in the pl'opert\' exists if the
lease in noncancelable or is c:"ancelable on!y
I:pon the occurrence of some remote
contingency and has one or"more ol the
iollowing characteristics: .
(1) The organizalio'n has the right to
purchase the property lor a price which atlne
beginning ol the lease appears to be
substantially less than Ihe probable fair
::lar~et value at the time il is permitted 10
purcnase the property (commonlv called a
lease with a bargain purchase option):
(Z) Tille to the property paslles to the
llrganization at some lime during or aller the
iease period:
(3) The term of the lease (iniliillte:m plus
periods covered by barGain renewal options.
If any) is equal to 7S per cent or more o( the
economic life of the leased propert}~ i.e.. the
period the property Is expected to be
econoJ:licall~' usable by one or more users.
43 Iloya/ties and other costs for use of
pal "r and copyrights.
a.l ;yalties on a patent or copyright or
amortization of the cost of acquiring by
purchase a cOllyrighl. patent. or rights
thereto. necessary for the proper performance
of Ihe award are allowable unless:
(1) The Go\'ernment has a license or the
right to free use o( the pnlent or copyright.
[2) The palent or cop~'right has been
adjudicated to be invalid. or has been
administ:ativelv detennined to be invalid.
(3) The palen't or cOllyrighl is considered 10
be unenforceable.
(4) The patent or copyright is expirr.d.
b. SpeCial care should be exercised in
determining reasonableness where the
royalties may hllve been arrived at as a result
of less then arm's length bargaining: e;g.:
(11 Ro}'alties paid to persons. including
corporations. affiliated wilh the organization.
(2) Royalties paid 10 unaffiliated parties.
including corporations. under an agreement
entered into in contemplalion that a
Government award wouJd be made.
(3) Royalties paid under an agreement
entered into after an award is made to an
organiza tion.
c. In al1Y case involving a patent or
copyright formerly owned bl' the
organization. the amount of royalty allowed
shouJd not e.''Cceed the cost which would have
been ~lJowed had the ofllanization retained
tille thereto,
44. Severance pay.
a. Severance pay. also commonly referred
to as dismissal wages. is a payment in
addition to ~ar salaries and wages. \iy
organizations to workers whose employment
is being terminated. Costs of severance pay
are allowable onlv to the extent that in each
case. it is required by (i) law. (ii) employer-
employee agreement. (iii) eSlnblished policy
that con;;!itutes. in effect. an implied
agreement on the organi:ation's part. or (iv)
circ-.:ms:a:lccs of the particuJar employment.
b. Costs of sever:lOce p:lyments are dh'ideu
into two calegories as follows:
(1) Aclual nOn1laltrunover sevel'll:!c.
~aymenls shall be allocaled to all ac:ti\'ilies:
0:. where the organization prnvides for a
. rellerve for normal severanc:<!s such method
will be acceptable if the charge 10 current
operations is reasona!:'le in li~hl of payments
actual!}' made for nonnal sev'!rances oyer ;I
representative past period. and if amount5
ch"/'ied are allocaled 10 all acti\'i1ies of the
organiza tion.
(21 Abnonnal or mass severance puy is of
such a conjectural nalure Ihat measurement
of costs bv means of an accrual will net
ochieve equily to bolh parties. Thus. accruals
for this purpose are not allowable. However.
th~ Go\'crnment rccognize:: i:s obligation to
participate to the extent o( :ts fair shme, in
any specific pa~'ment. Thus. allowability will
be considered on a case-b}'-case basis in the
event or nccurrence.
45. Speciali:.ed sen'ice focilities.
a. The costs of serviccs provided by highly
.1
A-122:10
complex or ~pecialized facilities operated by
the organization. Ruch as electronic
computers and wind tunnels. are allowable
provided the charges for the services meet
the condilions of eilher b. or c. of this
paragraph and. in addilion. take into account
any items of income or Federal financing that
qualify as applicable credits under paragraph
A.S. of Attachment A.
b. The cosls of such services. when
material, must be charged direcLl)' to
applic:lble lIward5 bued on actual u.o;age of
Ihe services on the basis of a schedule of
rales or established methodology thai {iJ docs
not discriminate against federally supported
nctivities of the organization. including USD!!e
by the organization ror internal purposes. and
(ii) is designed 10 reco\'er only lile aggregute
costs o(.H1e sen-ices. The costs of eilch
service shall consist normally of both Hs
direct r.osts find its allocable share of all
indirer.t costs. Advance agreements pursuant
10 parugraph A.6. of Allachment A arc
porticularly important in this siluation.
c. Where the costs incurred ror a service
Arc not material, they may be allocated as
Indirect costs.
4G. Taxes.
3. In general. laxes which the organization
.s required to pay and whi:;h are paid or
.lIcr.rued inaccordunce with generally
accepted accounting principles. and
payments mnde to local governments in lieu
of taxes which are commensurate with the
local government ~ervices received are
allowoble. except for (i) taxes from which
exemptiuns are available to the organization
directi\' or which are availuble to the
o'1lani~:llion based on an exemption afforded
the Government and in the laller case when
Ihe awarding aBency make5 8\'ai!oble the
nP.ce!sary exem;llion certifica tes, (ii) special
aSGCS:lmen!s on land which rcpresent capital
improvements. and (iii) Federal income taxes.
b. Any refund of taxes. and any payment 10
the ol'llanizalion of inlerest thereon. which
were allowed as award costs. wl\l be
r.reuiled eilher as a cost reduction or cash
refund. as appropriate, to the Government.
47. Termina/ion casts. Terminatitin of
:Jwarus generally give rid. to the incurr~ilcc
ur costs. or the neeo for special treatment of
costs. which would not have arisen had the
award not been terminated. COllI principies
cl)vering these items arr. set forth below.
They are 10 be usr.d in conjunction with the
'other provisio:1s of this Circular in
termination situations.
R. Common ilp.ms. The C\J1I1 or items
reasona~ly usable on the organi~ation's o:her
work sholl nol be a!lowable unless the
ol'Jl:lr.ization submits evidcncr. that it would
not re:ain such ilems at cost without
sustaining a loss. In deciding whether such
Hems are reasonnbly uS:1uie cn other work or
Ihe organizalion, Ihe awarding agency shuujd
consider the organization's plans and urders
far current and scheduled aClivily.
Contemporaneous purchases of common
Hems by the o~anization shull be rr.llilrded
as e\'idence that such items are reusonabh'
usable on the organization's other wurk. Any
lIccept:Jnce of common Hems as allocable 10
the terminated portion or the awore shall be
limited 10 the cxlcnt Ihat the qllanlilil!1I of
I
Office of Management and Budget Circular A-122 (5/27/80)
such item. on hand. in lransiL and on order
are ineltcen of the reasonable quantitative
~uiremenu of other work.
b. Cosu CDntinuing after t.enninatiar~ II in
Ipanicular caM. despite all reasonable
eIforts by the ofianiution. certain co.1I
cannot be di'CDntinued immediete!y alter the
effective date oC termination. such ca.u are
,enerally allowable withiA the limitations let
forth i:1 this Circular. except that any such
costs continuing alter termination due to the
negligent or willful failW'1l oC the ol'llani:ation
to discontinue such costs shall b.
unallowable. .
c.. !.Dss of r:seful value. Loll o{ useful value
DC sredal tooling. machinery and equipment
wr:!:h wu not charged 10 tbe swvd as a
c.:l",..al '!:xpenditure is generally allowable if:
i : . Such special tooling. rr.acinery. or
eq. :;,ment is not reBlonably capable oC un in
UE ...!her work o{ the ol'llanaution.
(::1 The interest o{ the Govemme:\t is
~:-r ~,=ti!d by transfer DC title or I,y other
nU':I:'\s deemed apprapriate by the awarding
at' nc:y.
,L Rental costs. Rental costs under
c:"l:xpired lease. are generaHy allowable
....~'Ilre clearly shown to have been
",.,~onably necessary for the performance oC
Ib" tenninated award less the residua! value
0:' such leases. iC (i) the amou"'1t aC such rental
cl..imftd does not exceed the reasonable use
val:.le of the praperty lea.ed for the period oC
U:.. 'lw"rd and such fu:1her period as may be
f?,:.lrn;,;ble. and (liJ the ol'lllll1iution makes
all reasonable efforu to terminate. assign.
settle. or otherwise reduce the cost of such
lea.e. There also may be included the co.t of
altentions oC such le.ued prapert)'. pravided
IUch al:erations were necesa&r'; {or the
performance oC the award. and oi reasonable
l"estor:otion required by the provi.ioDl olthe
]el1,e.
e. Settlement e:xpensn. Sett1ememt
expenses including the fonowing ano
8en~rally allowable:
(1) Ac::ounting. l~aL clerical. and similu
costs reasonably necessary ior:
(a) The preparation lUId presentation 10
awarding al!ency oC settlement claims a.od
sU;7porting data with reaped to the
terminated portion of the sward. unless the
termination is for defauJL (See parllgraph 4.a.
oi Aturchmcnt 1.. OM:B C1rcular No. A-llO:
and
(h) The termination Gd uttlement of
suoaward".
(21 Rea.onable co.u Cor the storage.
lransponauon. Ilratection. a.od dispoaitiOl1 oC
property Ilravided by tbe Covernment or
a~quired or produced for the aware!: except
whea grantees are reimbursed Jor dispollaJa
at a precietermined amo~t in accordance
with Attac:.b.ment N oC OMB Cir.:ular A-no.
(3) Indirect CO.tl related 10 salaries Gd
wage. inCUrT'ed as .ettlement expenses in
s~bparagraph. (1) and (ZI o{ this paragraph.
NOmlally. such indirect co.u shall be llmited
~o lrin~e beneiiu. oc:::upancy cost. az:c
ltnJIleQlate supervision.
f. Claims under $ubowards. Claims under
lubawards. including the allocable portion oC
claims wbich are common to the award. &nd
to other work oC Ihe o~aniution are
generally allowaole. A.a ap;7ropriale shnre oC
the ortaninlion', indirect expense may be
allocated to the amount oC settiemenr. with
subcontrlctorlsubgraolee.; pravided that the
amount allocated is otherwiie consistent
with the buic guidelines contained in
Attachment A. The indirect expense so
allocated shall exclude tha same and similar
COlts claimed directly or indirectly sa
.ettJement expen.ea.
48. Training and education co.u.
L COlts olllreparation lUId alaintenance of
a program oC instruction including but not
limited 10 on.the-job. elaasroom. and
apprenticeship training. designed to increase
the vocat1onaJ effectivenesl ol empluyees.
including trainin8 materiall. lextbook.s.
salaries or wages oC trainee. (excluding
overtime compenaation which might ariSoll
therefrom). and (iJ salaries ol the direclor DC
training a.ad staLI wben the training prag=
is conducted by the Ol'llani%atioa: or (iiJ
tuition and fees when the training i. in an
inatitutiOr1 not operated by the Ol'llanUation.
ue allowable.
b. Co.ts ol part-time education. at an
UDdergraduate or po.tgraduate collelrl: level
including that pravtded at the ol'llaniution'.
own facilities. are allowabl. only when the
course or degree punued is relative 10 the
field in which the employee il now work.izlg
or may reasonably be expected to work.. and
are limited to:
(1) Trainini materials.
(Zl TextbooJc..
'(3) Fees charge5 by the lIfiDQlti~n;J
institution.
(4) Tuition c:bazted by the educational
insti tution. or in lieu of tuition. instructors'
salaries and the mlated shara of indirect
costs oC the educational institution to the
extent that the sum thereof ia not in excess oC
the tuition which would bave ben peid to the
participating educational institution.
(5) Saillrie. and related COlt. oC instru.ctors
who are employee. oC the org.ani:atiua.
(6) Straight-time compensation oC each
employ" for time spent attending das.ee
during wcrldng hours Dot in excelS oC 158
hoW"S per year and only to liie extent that
cin:unutanC&5 do not permit the operation of
classe. or attendance at dauas aiter regular
worlcinsj hours: otherwi.e auch competuation
is UDallowable.
c.. l:.:lsts oC tuition. feea. traizli:1g material..
and textboob (but not subsi.tence. salary. or
any other emolumenu) in CClnnectiOl1 with
full-time education. including thalllravided al
the organization's own facilities. at a
postgraduate (but not undefil"llduateJ college
leveL are allcwable only waen the course or
degree punued is related to the field in which
the empLoyee i. now working. or may
reasoaably be expected to work. and only
where the cosU receive the prior appraval of
the awarding agency. Suci1 CON are W:1ited
to the co.1I attributable to . total period not
to excee: one school year for eaci1 employee
so trained. In unusual cases the period may
be extended.
d. Costs DC attendance o{ up to 16 wet:~
per e:ployee per year at spedalized
programs specifically designed to enhance
:he eCfectiveness oC executives or ma:1agen
or to prepare empioyees for IUQ positions
are allowable. Such cosu include enrollment
I
A-122:11
Cee.. training alaterial.. textbooJc. and
reiated charge.. employeel' Illaries.
subsiltence. and traveL Casu allowable
under this paragraph do not include tnOH for
coune. that are part of a d~ented
cumC'.Jwn. which are allowable only 10 the
extenl sel Corth in b. and c.. above.
e. Maintenance expense. and normal
depreciation or fair rental on faciliUes
owned or leased by the organiution for
lraining pW"po.es are allowable to the extent
set fortb in paragl'1lph. 9. z:. and 42-
f. Cuntributioru or donations to
educational or training inaUtuDons. including
t~e 00081ion oC facilities or otber prapp.rties..
and Bchollll'Snips or fellowlhipa. are
unallowable.
g, Training and education costs in excess oj
Ihose otherwise allowable under par8graphl
...b. and c.. o{this paragraph may be allowed
.....ith prior appraval oLthe awarding agency.
To be conlidered ror .ppraval. the
organization must demonstrate that such
cost, are con.istently inc:u.rred pursuant 10 an
eSlublished training and education pragrum.
and that the course or degree pursued is
relative 10 the field in which the employee is
now working or may reasoncoly be expected
to work.
49. TlTJJ'Ispanation costs. TrlUlsportation
CUlts include freight. express. cartage. lUId
po.tage chal'lles reiating either 10 goods
p\lrchased. in pracesa. or delivered. These'
coslS are allowable. When such cn.la can
readil}' be identified with the itezns involved.
Ihey a1ay be oirectly charged 81
transportation cnsU or added to the co.l ol
such iten1ll (lee paragraph Z3). Where
identification with the materials received
cannot readlly be made. tra.n!portat1on co.ts
may be charged to the apprapriate indirect
cost ac::tlunta if the organ.i:.alion follow. a
consistent. equitable procedure in this
r!, pe-:t.
so. Travel CDSU.
a. Travel COlta are the expenses Cor
transportation. lodging. suo.i.tence. lUId
related items incurnd by employees who are
in Ira vel statw on official business of the
organization. Travel co.t. are allowable
subject to paragraph. b. uirol,l~ e. below,
wh~n Ihey are ~ectly attributaole to spec:i1ic
work under an award. or 4re incur.-ed in the
normal course oC aciminislntion oC the
orgnni:ation.
b. Such co.t. may be c:hafied on an actual
b..sis. on a per diem or mileage basis in lieu
of actual COlts incurnd. or on a combination
oJ the rWo. pra~ded the method used rellulta
in charges con.istent with tbose normally
allowed by the ofian.i:.ation in its regular
opera tions..
c.. The cillIerence in c:.cst between first-class
air ac::nmmodationa and 1.ess than first-c!au
air accommodation. is unallowable except
when less than lir.st-clal8 ai:
accoll'.modatioas L-': oot re8l0nabl:;
available to meet neceslll1jl mission
requirements. BUch 81 where less than fint.
clus accommodation. would (iJ require
ci:cuilous roufu:tg. (il) require t:'avel during
unreuonable noun. {iiiJ great.ly inc..~8Ie the
duration. of the night. (iv) result :n additional
costs which would offset the transtlortation
savir:p. or (v) offer Ilcco=odntio'na which
. .
.'
-I
ffice of Management and Budget Circular A-122 (6i27/80)
not. re..onably adequate {or the medical
cf the Ira vele!'.
C: Neeaaar'Y aDd raaaonalM COlts o(
. y movemenU aDd perwonnelmovemeDta
. a ~al or mall nature UlI allowable.
unWUlt tG paragnpha 40 aDd 41. IUbject to
irocaUoG 01\ the ba.i. of work or time period
e::.efited when appropriate. A~vaDce
~ are particularly impo:"tant.
e. DireCt charges {or {oreign travel co.t, are
!low.bIe only when the travel hu rectlived
nOr lI~val o{ the awarding agency. Each
e;luate foreign trip mUlt be approved. For
QOMS of thi. provision. foreign trDvol il
.ii.nedi as any travel outside o{ Canada and
e Untted Stales aDd ils territories and
C.1RS5i.oI!.. However. (or an organi%ation
c:atec iD foreign countries. the term "foreign
vti- a1teans travel outside that COW1Uj'.
CraLsr.No. A-1ZZ!
'~OfianizatiODS nol Subject to t.bia
;.~
;CO$p8C2 Corporation. El Segundo.
c.lifamia
.;..-;o=e Universitie.s Association. Chicago.
IIli.nois
'>>coated Univerwities. Incorporated.
Wa.sbmgton. D.C.
'~socialed Universities Cor Research and
AstnlmQaly. Tucson. .o\ri%ona
:"tomic Casualty Commission. Washi.ngton.
D.C.
aUeHe Memorial Institute. Headquartered in
Columbus. Ohio
:ookl1aven National Laboratory. Upton.
New York
~ter- fen" Eneti)' and E."I.vironmental
Resurch (CE:ER). (University of Puerto
Ric:of
>.A=oawealth o{ Puerto Rico. Charles Stark
Draper Laboratory, lncoZ1'orated
:a::bridlje. Massachusetts. Comparative
AI'.imal Researc!l Laboratol1' {CARLl
~~:u~e:'Sity of Tennessee).-Oakricige.
'Tel'.nen~e
::'~...;ron..nental institute or Michigan. An."I.
.^.reo:. Michigan
!".ar:!oni Environmental Health Foundation.
Ric:hland. Washi.tli\on
i:T Raearclllnstitute. Chicago. illinois
l;::otirute ior Deien,e Analysi.. Arlington.
ViJ'iinia
!:%stitute of Gas Tecl1nology. Chicago. IllinDis
!.{;dwttSl Research Institute. Headquartered.
in Kiln585 Cit}.. Miuoun
~~tre Co~oraticn. Bedford. MusacnWletu
~~nt&na Energj" Research and Development
I:uctutL. lnc:.. (MERDI). Butte. Montana
~ticnal Radiological As:ronomy
Ob,ervatol1". Green Bank. West Vlrjfinia
Calcridg8 Auocated Univenitiea. Oakrid8e.
Tennessee
?':-ojed Management Corporation. Oakrid;e.
'Ter:::essee
F.a~d Corporation. Santa Monica. CalUornia
F.esearch Trial1ile I."l.stitute. Reeearc:.'l
'Triangie pari;. North Carolina
:;.i;-ersicie Research Institute. New York. New
York
Sandia Corporation. Albuquerque. New
'~_/!"l~: -....
Southem Raeearc:l:t llutftute. Blrmin3ham.
Alabama
Southwe.l Retearc:l:t llut1tute. San AntonLo.
Texa.
SRlInterDlltfODaL Menlo Park. CallIomia
Syracuae RaHarch CorporatioD, $yrac:uae.
New York
Universitiee Research Allocation.
IncoZ1'orated (NatiODal Acceleration Lab).
Az1onne. llllnou
Universitie, Cor"oration for Atmolpheric
Relearch. Bowder. Colorado
Nonproflllnsurance Companies JUch .. Blue
Cross and Blue Shield Organi:aUone
Other nonprofit organi%alionl .. negotiated
with awarding 8gencie,.
(FR Doc. ~ flied 7_7"- 8:.. ...1
~ ~ 3"0-0'~
Editorial Corrections to
OMB A.122
OFFICE OF MANAGEMENT AND
BUDGET
Circular A-122., "Cost Principles lor
Nonprofit O~nizations"; Correction
AGENCY: Office of Management and
Dudget.
ACTION: Final policy correction.
SUMMARY: This notice corrects errors in
the printing of cost principles for
nonprofit organizations. (45 FR 460Z2..
July 8. 1980).
FOR FURTHER IHFORMATIOf'l COHTACT:
Palmer Marcantonio. Financial
Management Branch. Office of
Management and Budget. Washington.
D.C. Z0503. (ZOZ) 39&-4773.
o Page 46022. column 2 lhe second
PClrllgraph 1. change Paragraph 5
"Compensalion for. Personnel Services'.
10 Paragraph 6.
o POr!e 46022. column 2 Ihe second
Pllragriph Z. change Paragraph 6
"Contingencies" to Paragraph 7.
o Page 46022. column 3:
Paragraph 4. chanEle Paragraph 31.
"Equipment and Other Capital
Expenditures" to Paragraph 13.
o Paragraph 5. change Paragraph Z6
"Meetings" to Paragraph M.
o Paragraph B. change Paragraph 21.
"Organiution Costs" to Paragraph.ZO.
o Paragraph 7, change' Paragraph 30
"Page cna'lles in ProCesstional Journals"
to Paragraph 28.
o Paragraph 8. change paragraph 37
"Public lnfonnalion Service Costs" to
Parngraph 36.
o Paragraph 9. change Paragraph 43
"Rental Costs" to Paragraph 4Z.
o Paragraph 9a: in the fourth line. add
"up" between the words "only" and
"10"; in the sixlh line change "they" 10
"it" .
. Parngraph 10, change Paragraph 51
"T...,":,.l rnr,IC:" \("'1 r:1r:1fH.~nn ~n
-- -'II ,-
A-122:12
. Page 46024, .column J Paragraph
4(a)(Z) after "benefils reccived" add ";
or",
. Page 46025, column 1 ParagrAph D3.
chllnge the refercnce, "Paragraph Z1 of
Attachment B" to "Paragraph 19 of
Allachment D."
o Page 46026, column 1 Paragraph
4a.iii. in the sixth line. chonge "direct
cosl" 10 "direcl costs."
o Page 46026, column 2 Paragrllph
E1c, change "c'slablishmcnt of a rate" 10
"cstablishmcnt of a final ra tc."
o Page 48026. column 3 Paragraph
E2b, in the third line add the following
After "a Federal agency shall"-"submit
its initial indirect cost proposal
immediatelv."
o Page 4ix'27, column J Pllragraph
" (3)(a). change "workmen's
compensation" 10 "workerF'
compensation."
o Page 46028. column 1 Paragraph
6f3{b). (the second line of column 1)
chunge "Workmen's compensalion"to
"workers' compensation."
. Page 40030, .column 3. parllgrllph
z4b" the sixth line. change "allowable"
to "allowability",
Daniel F. Maon.
Dudgcl and Management Officer.
(FR Doc. n~ flied 3-11.-81: 6:45 .ml
81WHG CQOE ",0-0,....
Circular A-122., "Cost Principles for
Nonprofit Organizations"
Correction
In FR Doc. 81-Z0210. appearing al
pllge 46022 in the issue of Tuesday, July
6. 1900. lhe following changes should be
made:
1. On page 460Z4. column Ihree. lhe
second sentence in paragraph 'A.5.b.
should reed. "Specific_I)'. the concept
of netting such credit items against'
related expenditures should be applied
by the organization in determining the
rates or amounts to be charged to
Federal awards Tor services rendered
whenever the facilities or other
resources used in providing such
services have been fmanced directly, in
whole or in part. by Federal funds."
Z. On page 46024.. colwnn three. the
second complete sentence in paragraph
A.e. should read. "This is particularly
true in connection y,'ith organizations
lhat receive a preponderance of their
support from Federal agencies."
3. On pllge 46025. column one,
paragraph B.Z. should read. "2. Any
direcl cost of a minor amount may be
treated as an indirect cost for reasons of
practicality where the account~
trcatmenl for such cosl is consislenlly
nrml!..d In nil finRl r.o~t ('Ihirr.tiv(,!I."
\ ..
I
Office at Management and Budget Circular A-' 22 (6/27/80)
4. On page 46025. column oae,
paragraph EA.!. should read. "!.
Administration of group benefits on
behalf of members or clients including
liCe and hospilal insurance, annuity or
retirement plans. financial aid. etc."
S. On page 4G02S. column two. the fU'st
Rntence in paragraph O.l.e. should
read. 'The base period for the allocation
of indirect costs is the period in which
IUch costs are incurred and acc\lmulllted
for allocation to .....ork performed in thot
period."
6. On page 4G02G, column one, the
second sentence in paragraph 0.3.d
should rend. "The costs in the common
pool shall then be distributed to
individual awards included in that
flU1c~~on by use of a single indirect cost
rate.
7. On page 46026. column one. the first
sentence in puragraph 0.3.e. should
resd. "The distribution based used in
computing the indirect cost rale for each
function may be total direct costs
(excluding capilal expenditures and
ather distorting items such as major
subconlracts and subgrants), direct
:alanes and wa~es. or olher base which
I:Uults in an equitable d'istribution."
a. On page 46020. column one. Ihe first
and second sentences in paragraph
Th4.a. should read. "Some nonprofit
ar:ganizations treat all costs as direct
costs except general administration and
-general expenses. These organizations'
generally separate their costs into three
basic ca tellories:' . .:.
g~ On page 46026. the last sentence in
column one (extending to column two),
in paragraph 0.5. should read. "The
factors may include the physical
location of the work. the level of
administrative suppor~ required. the
nature of the facilities or other resources
employed, the scientific disciplines or
technical skills involved, the
organizational arrangements used. or
any combination thereo!."
10. On page 46026. column three.
paragraph E.2.i. should read. "i, To the
extent that problems are encountered
among the Federal agencies in
connection with the negotiation and
approval process. the Office of
Management and Budget will lend
assistance as required to resolve such
problems in a timely manner."
11. On page 46030, column one. the
in.lroductory text of paragraph 16.b. and
paragraph IG.b.(l) should read. "b. The
costs of idle facililies are unallowable
except to the extent that: (1) They are
necessary to meet fluctuations in
workloads: or",
1Z. On pose 46030. column one, the
second sentence in pOTagraph 16.c.
should read. "Such costs are allowable,
pro\'ided the capacity is reasonably
antir:ipated to be necessary or WitS
originally reasonable and is nol subject
to reduction or elimination by sublelling.
renting. 9r sale. in accordance with
sound business. economics or security
practices,"
13. On page 46031. second column,
paragraph 34.c. should read, "In addition
to the factors in paragraph b. above.
retainer fees to be allowable must be
supported by c\'idence of bona fide
services available or rendered."
81LUHG CODE 1505....(11-M
I
A-1 22:1 3
'\
..
l",..UMML...:'tlTl DEVELOPME.""t-r 09:1551
APPENDIX":r:. HDR RF-372
ADMINISTRAtiVE REQUIREMENTS FOR GRA~TS AND COOPERA TrVE 4-25-88
AGREEMENTS TO STATE, LOCAL AND FEDERALLY RECOGNIZED INDIAN TRtBAl
GOVERNMENTS
(24 CFR 85)
i
" -l"
-)
PART 15-ADUlHrSTRA nVE
REOUIREMENTS FOR GRANTS AHD
COOPERA nVE AGREEMEHTS TO
STATE. LOCAL AND FEDERAL!. Y
RECOGNIZED INDIAN TRIBAL
GOVERNMENTS
,.
,
':"0
:#
s...bp.rt A-GeneraI
!'wIc.
85.1 Purpose and scope or this pON.
85.2 Scope o( subpart.
85.3 Definitions.
85.4 Applicability.
85.5 Effect on olher illsuances.
85.6 Addition. .nd Exceptions.
s...bpart &-Pt.-Award Requirements
85.10 Forms (or .pplying ror gran Is.
85.11 Slale plans.
85.12 Special granl or subgranl condiliulU
(ur "high-risk" gran lees.
SUbpart C-Post-Award Requirements
rmanca/AdmWU'U3UoD
85.20 Slandards for financial manallcment
'YlItem..
85.21 PlIyment requiremllnls.
as.ZZ Allowable cosls.
as.z3 Period o( availability of !unds.
as.Z-I Malching or COSI sharing.
85.25 Prosram income.
85.26 Non-Federal audils.
Changes. Property, and Subllwards
as.3O Changes under discrelionllf)' (projecl)
awards.
as.31 Real property.
85.32 Equipmenl.
85.33 Supplies.
85.34 Copyrignls.
85.35 Subawards 10 debarred and
suspended parties.
es.36 Procuremeni.
85.37 SubgranlS.
Reports. Records Relealion. and Enforcement
8.i..;{) MonilOring and reporlin:: program
performance.
as.41 Financial repONing.
85.42 Retention and acc~ss requirement' for
records.
85.43 Enforcement.
8.i.4-; Terminalion ror convenience.
Subpart D-Atler-the-Grant Requirements
85.50 Clo!eout.
85.51 1...ler disallowances and ild;u,lmenls.
85.52 Collection of amounts due.
Subpart E-Entltlemenu (Reserved]
AUlhorit)': Section 7[dl, Departmenl of
Housing and Urban Development Act. 42
U.S.c. 3S3S{d).
[53 FR 8068. 8088. Mar. 18. 1988]
.~:
Subpart '-'General
f 85.1 Purpose. ud ICOpe oC thiI part.
This put estabMher unifcmn
administnrtive rules lOT' Federal grant.
and Cooperalive ~entr and
subaward. 10 Slate. local and Indian
tribal governments.
f 85.2 Scope oC subpart.
This subpart contains geaeral rules
pertaining tet ~i"parland procedures
for control af exceptions (rom tnh, part.
~ 85.3 DefiJdtioDS.
As u~ed in this pa~
"Accnn:d expendilUre" mean the
charger incmTed by the gnnlef: during r
gi.,en period requirin! tne proviSKm or
lunds for: (1) Good. and othe!- taft!ible
property received: (2) services
performed by employees. contractors.
subgranlees. subcontractors. and other
pavees: and {3J other lrmount. be'Comin8
o~ed under progrann fOT' which no
currenl services or performancr: is
required. such as annuities. insurance
claims. and ather beJJml paymeDLs.
"Accrued income" means the sum of:
(1) Eaminp during a grren period from
seI"\'ices p.::dotbled. by the ~Lee and.
goods and other tangibko property
deliYe!'ed to pun:huers. ed (2) amounts
becoming owed to the grantee fOT' which
no CWTeDI aervices or perlomsance La
required by the grantee.
"A:cquisili..oc C05I" Q{ an il~ of
purchased equipment means the !let
invoice unit price of the property
including the cost of modifications.
a ttachmenu. acassories. Ol'" anxiliary
apparatus necessary to make the
property usable lor the purpose for
which it was acquired. Other charges
such as the cosl aI iDstallation.
transportation. taxes. duty or protective
in-transit insurance. sh.U be inclnded or
excluded from the unit acquisition cost
in accordance with the grantee's regular
accounting practices.
"Administrative" requireme1lts mean
those matters common to grants in
generaL such as financial management.
kinds and frequency of repom. and
. retention of recani:&. 'I'hese lire
distinguished from "programmatic"
requirements.. wbidJ cancem matters
that can be treated only on a p~-
by-program or granl-by-grant basis. such
a~ kinds of activities that can be
supported by grants under a particular
program.
Published by Warren, Gorham & Lamont, Inc.
"Awarding agency" mean. (11 with
~sped to a grant. the Fede:raJ agency.
and (2) with respect to a ,ubganl. the
party that awarded lhe .~Dl.
"Casb contributions" mean. the
grantee', cuit outlay. including the
outlay of money contributed 10 tbe
granlee or 1Ilbrranlee by olber pablic
ageDCies BDd inlritanon.. aDd private
ol'8aniuboa&.nd lndivi.cNd&'. Wben
authorized by FedenlJ legialatioa.
FedenU Nncb rea:ived frcm other
assistance agn=ements IDa)' be
coasidered U graDtee oraubgranteC'
cash contributions.
"Contract" meaDS (except as used in
the definiooo& lor "grznt~ &lid
"subgrant" in this section and except
where qualified by "federal"l a
procurement CODtraCt under a granl 0:
subgranr.. aDd meana a proa..~ent
,ubcontract under . contract.
"Coal sharing or mstclUng" me:m& the
value of lbe. third. p.rty io-kind
contributions &Ild the portion of the
costs of a {edually usisted )1lOteCI ex:
program DOt borne by t.h2 F edual
Government..
"Cost-type col:1trad." m.e.a.us a contract
or su.bcan.tract under a grant in which
the contrador or subcoD.tractor is paid
on the basis of the. costs it incurs. with
or without a fee.
"Equipment- meaIU tangible.
nonexpendable. personal property
having a useful life Q[ mare than one
year and an acquisition cost of s:s.ooo or
more per unit. A grantee may use its
own definition of equipment provided
that such def1.D.ition would at least
include all equipment aefUled above.
"Expenditure report''' means: (1) Fo!"
nonconstructioD. grants. the SF-zes
"Financial Status R~ort" (ar other-
equivalent l'e'portr, (zt for Comtrt1ctian
grant!. the SF-Z7'1 ~Outiay Report md
ReCjU~t far Reimbarsement~ (or other'
equivalent report).
"FederaHy recognized Indian tribal
80vemment~ means the govemin; body
or a governmental agency of any Indian
tribe. band. nation. OT' other organized
group or community (including any
Nati~e YiIlage as defined in section 3 of
the Alaska Ncrtive Claims Se't1Iement
Act. 85 Stat 688) certified by the
Secretary of the hTterior a, dtgib1e for
the spedal P"O!1'sms and 'ervi~
provided by him through the Bureao ol
Indian Affairs.
"Government" means a State or local
government 0:' a federalty recognized
indian tribal ~ve:'nment.
41
, 09:1552'
"Grant" meana IIIl awed of fiDam:ial
..sistance. including cooperative
agreements. in the form or maney. or
property in lieu of money, by the Federal
Government to an eligible grantee. The
term does not include technical
assiatance which provides semce.
instead of !DOlley. or other amst&llC8' in
the form of nmma~ sb8rins. Ioms. Joan
guarantees. intereat sublidies.
insuraa.ce. or direct appropriationa.
Also. the term doe. nol include
asaiataace. sucb _ . feDowahip or oCher
lump aum award. wbid lite zraatee is
not required to account for.
"Grantee" meana the government lD
which a grant ia awarded and which is
accountable for the ule of the funds
provided. The grant.ee ia the entire legal
entity even if only a particular
component of the eatity is designated in
the grant award document.
"Local govem.m.eAt" means a county.
munic:ipallly. cit.y. tOW11. township. local
pu~ aut.bority (iDdudins any public
and Indian bousina agency under the
United Statea HOWIiD8 Act. of 1931}
school district. special cU&&rict. imra~la
district. coWICil of IOvemmaUa
(whether or not iDCOrparated IJS a
nonprofit corporatiOll UDder stata y.w).
any otbel' resioAai or intaratatl'
govemmenl entity. 01' ....y agency or
instrumentality of a ~ govemment.
"ObDptioaa" me8DI the amoUJlta or
orders ptaced. cantI'IICSS aDd ~
awarded. BOode amd services received.
and similar tra~ during a giveD
period tbat Will mqaire payraEJlt by the
graDtee cbIrias the same or a futare
period.
"OMS" mt!8DS the Uaited Sa'"
Office of Ma~meut ad Blrdpt.
"Outlays" (expenditures} mean.
charges made to the project or program.
They may be reported an a cash or
accrual basis. For reports prepared on a
cash basis. outlays are the sum of actual
cash disbursement far direct charges for
goods and semces. the amount of
indirect expense incurred. the value of
in-kind contributions apptied. and the
amount of cash advan~S' and payments
made to cootractonr and mbgrantees.
For reportS prepared an an accrued
expenditure basis. outlays are th~ sum
of actual cash disbursements. the
amount of indirect expeDM iDa&rred. the
value of inkind contributions applied.
and the new in.c1'ease (or decrease} in
the amount& owed by the grantee for
goods and. other property rec&ived. !el'
services performed by employees.
contractor&. subgraDtees..
subcootrac1orS. and other payees.. and
other amoWlta becoming owed under
programs for which no CWTent services
or performance are required. such as
annuities, inaura.nce claims. and other
benefit payments..
.
I
HOUSING AND DEVELOPMENT REPORTER
of thJ authority by .the grantee or
subgrantee. "Termination" does not
include: (1) Withdrawal of funds
awarded on the basts of the grantee's
underestimate of the unobligated
balance in a prior period: (2)
Withdrawal of the W10bligated balance
as of the expiration of a grant: (3)
Refusal to extend a grant or award
additional funds. to make a competing
or noncompeting continuation. renewal.
extension. or supplemental award: or (4)
voiding of a grant upon determination
that the award was obtained
fraudulently, or was otherwise illegal or
invalid from inception.
''Tenns of 8 grant or subsrant" mean
all requirements of the grant or
subgrant. whether in statute.
regulations. or the award document.
''Third party in.kind contributions"
mean property or services which benefit
a federally assisted project or program
and which are contributed by non.
Federal third parties without charge to
the grantee. or a cost-type contractor
under the grant agreement.
"Unliquidated obligations" for reports
prepared on a cash basis mean the
amount of obligations incurred by the
grantee that has not been paid. For
reports prepared on an accrued
expendit\;l'e basis, they represent the
amount of obligations incurred by the
grantee for which an outlay has not
been recorded.
"Unobligated balance" means the
portion of the funds authorized by the
Federal agency that has not been
obligated by the grantee and is
determined by deducting the cumulative
obligations from the cumulative funds
authorized.
~ 85.4 Applicability.
"Percentage of compLetioa method"
refers to a llJstelll lUIder which
payment. are made for constnu:tion
work accordi.D& to the percentase of
completion of the work. rather than lo
the grantee'. cnt Ulaarred.
"Prior approval" meau
documentaticm evideDcUtg consent prior
to inc:mriDg specific coat.
"Real property" meana land. including
land improvementa. stnlcturel and
appurtBlWlcel thereto. excluding
movable machinery and equipment.
"Share". when referring to the
awarding agency's portion of real
property. equipment or supplies. means
the same percentage 8S the awarding
agency's portion of the acquiring party's
total costs under the grant to which the
acquisition costs under the grant to
which the acquisition cost of the
property waa-Gharged. Only costs are to
be counted-not the value of third-party
in-kind contributions.
"State" means any of the several
States of the United States. the District
of Columbia. the Commonwealth of
Puerto Rico. any territory or possession
of the United States. or any agency or
instrumentality of a State exclusive of
local govemments. The term does not
include any public and Indian housing
agency W1der United States Housing Act
of 1937. -
"Subgrant" means an award of
financial assistance in the form of
money. or property in lieu of money,
made under a grant by a grantee to an
eligible subgrantee. The term includes
fmancial aisistance when provided by
contractual legal agreement. but does
nut include procurement purchases. nor
does it include any form of assistance
which is excluded from the defmition of
"grant" in this part.
"Subgrantee" means the govemment
or other legal entity to wbich a subgrant
is awarded and wbich is accountable to
the grantee for the use of the funds
provided.
"Supplies" means all tangible
personal property other than
"equipment" as defined in this part.
"Suspension" means depending on the
context. either (1) temporary withdrawal
of the authority to obligate grant funds
pending corrective action by the grantee
or ~ubgrantee or a decision to terminate
the grant. or (2) an action taken by a
suspending official in accordance with
agency regulations implementing E.O.
l2S49 to immediately exclude a person
from participating in grant transactions
for a period. pending completion of an
investigation and such'legal or
debarment proceedings as may ensue.
''TerminJltioo'' means permanent
withdrawal of the authority to obligate
previously-awarded grant funds before
that authority would otherwise expire. It
also means the voluntary relinquishment
(a) GeneraL Subparts A-D of this part
apply to all grants and subgrants to
governments, except where inconsistent
with Federal statutes or with regulations
authorized in accordance with the excep-
tion provision of ~ 85,6, or;
(1) Grants and subgrants to State and
local institutions of higher education or
State and local hospitals.
(2) The block grants authorized by the
Omnibus Budget Reconciliation Act of
1981 (Community Services: J7eventive
Health and Health Services;' Alcohol.
Drug Abuse. and Mental Health
Services; Maternal and Child Health
Services; Social Services; Low-Income'
Home Energy Assistance: States'
Program of Community Development
Block Grants for Small Cities; and
Elementary and Secondary Education
other than programs administered by the
Secretary of Education under Title V,
Subtitle 0, Chapter Z, Section 583-the
Secretary's discretionary grant program)
and Titles I-III of the Job Training
Published by Warren. Gomam & Lamont Inc.
42
COMMUNITY DEVELOPMENT
I
)
Partnership Act of 1982 and under the
Public Health Services Act (Section
1921). Alcohol and Drug Abuse
Treatment and Rehabilitation Block
Grant and Part C of Title V. Mental
Health Service for the Homeless Block
Grant).
(3) Entitlement grants to carry out the
following programs of the Social
Security Act:
(i) Aid to Needy Families with
Dependent Children (Title IV-A of the
Act. not including the Work Incentive
Program (WIN) authorized by section
402(a)19(G): HHS grants for WIN are
subject to this part}:
(H) Child Support Enforcement and
Establishment oC Paternity (Title IV-D of
the Act):
(iii) Foster Care and Adoption
Assistance (Title IV-E oC the Act);
(iv) Aid to the Aged. Blind. and
Disabled (Titles L X. XIV. and XVI-
AABD of the Act): and .
(v) Medical Assistance (Medicaid)
(Title XIX of the Act) not including the
State Medicaid Fraud Control program
authorized by section 1903(a)(6)(8).
(4) Entitlement grants under the
following programs of The National
School Lunch Act
(i) School Lunch (section 4 of the Act).
(ii) Commodity Assistance (section 6
of the Act).
(iii) Special Meal Assistance (section
11 of the Act).
(iv) Summer Food Service for Children
(section 13 of the Act). and
(v) Child Care Food Program (section
17 of the Act).
(5) Entitlement ~ts under the
following programS of The Child
Nutrition Act of 1966:
(i) Special Milk (section 3 oC the Act).
and
(ii) School Breakfast (section 4 of the
Act).
(6) Entitlement grants for State
Administrative expenses under The
Food Stamp Act of 1977 (section 16 oC
the Act).
(7) A grant for an experimentaL pilot.
or demonstration project that is also
supported by a grant listed in paragraph
(a)(3) of this section:
(8) Grant funds awarded under
subsection 412(e) of the Immigration and
Nationality Act (8 US.c. 1522{e)) and
subsection 501(a) of the Refugee
Education Assistance Act of 1980 (Pub.
1- 96-422. 94 Stat. 1809). for cash
assistance. medical assistance. and
supplemental security income benefits
to refugees and entrants and the
administrative costs of providing the
nssistance and benefits:
(9) Grants to local education agencies
under 20 U.S.C. 236 through 241-1(a).
-:,'\.
.J
.......,:'
and 242 through 244 (portions of the
Impact Aid program). except for 20
U.s.c. 238(d)(2)(c) and 240(0
(Entitlement Increase for Handicapped
Children): and
(1(ij Paymeta ... the V.teraD~
Administration's State' Home Per Oaem
Prqnua (3& UJU:. M16aU.
(b) Entitlem~nt pl'DfTGtnS. Entitlcm~t
programs enumerated above m
t 85.4(a)(3)-(8) are subject to Subpart E.
~ 85.5 Effect oa other illaaDces.
All other grants administration J'!'Ovi-
sions of codified program regulations,
program manuals, handbooks and other
nonregu!atory materials which are incon.
sistent with this part. are superseded.
except to the extent they are required .by
swute, or authorized in accordance WIth
the exception provision in ~ 85.6.
~ 85.6 Additioas and exceptions.
(a) For cia.... of gran.. aDd grantees
subject to this put. Federal apncies
ma, not impoee additional ,
administrative requirements exC1!pt m
codified resuJatione published in th.
Federal .........
(b) Exceptions for cla_ of grant8 or
grantees may be authorized only by
O~ .-
(c) Exceptions on a case-by-case.buis
and _ sabgraatees may be a.utbarized
by the affected Federal agencies.
Sabp8rt 8 PN-A..-d R........_.tl.
~ 85.10 Forms for applying for grants.
(a) Scope. (1) This section pnscribes
forms and instractiona to be ased by
governmentaJ ol'pJtizations (except
hospitals and institutions of higher
education operated by a government) in
applying for grants. This section is not
applicabie. hv.......er. 10 formula grant
programs which do not require
applicant8 to apply for &ands on a
project basis.
(2l This sect:ioD applies only to
applications to Federal agencies for .
grams. and is not required to be applied
by grantees in dulin, with appDcanta
fof' subgranta. HoweYl!I'. paIItees arE
encouraged to avoid more det~ed or
burdensome applicatioD requirements
for subgraDts.
(b) Aalhoriz.ed forfD& and instrut:tiOllll
for goverruneniIJJ orsallizDtiGIIS. (t) In
applying foe graDts.lIppiicaaas shan only
use standard applicatian farms or tbose
prescribed by the gnmtiag agency with
the approval of OMS lIDder the
Paperwork Reduction Act of 1980.
(2) ApplicaDls are not required to
submit more than t.he original and two
copies of preappHcatioos or
applications.
Published by Warren, Gorham & Lamont, Inc.
I
09: 1553
HDR RF-372
4-25-88
(3) AppticaDta JIWIt follow all
applicable iaalnN:nona that bear OMS
clearance numbers. Federal qeDCies
mayapecifJ aDd deecrikwt the program...
functions. or activities tha t will be used
to plan. blldsel. and evaluate the work
under a plUlL Other- Mlpp1emeDlcy
instnadiou may be issued om! with the
approvaJ of OMS to the e:xleDt required
UDder the Paperwork R.eciudiOB Act of
198Q. FoI-any.taDdard fOJ'lD. except the
SF-4Z4 facesheet. Federal a88DDes ma,
sbada out 01 inatruc:t the appJicaDt to
disregard any line item that is DOt
needed. .
(4) When a FaIltee applies far
additional fundin8 (auch as a
continuation or aapp1emental award) 01
amend& a previowdy a.ubmitted
a ppllcatioD. cmly the afiedad palles
need be &ubmitted. Prerioualy Slolbmitted
pages with information that is still
CWTent need BOt be resubmitted.
~ 85.11 State plans.
(a) Scope. The statutes Cor some
programs require States to submit plans
before n!ceiving grants. Under
regulatioDS implementing ExeClltive
Order 1%37%. '.Intergovernmental Review.
oC Federal Programs." States are
allowed to simplify. consolidate and
substitute plans. This section contains
additional provisions for-plans Usat are
subject to regulations implementing the
Executive Order.
(b} Requil'tffMna. A State need meet
only Fedef'lll adminift!'ative or
programmatic requiremeatlf for a pfarr
that lU'e i:n statute:r or codified
regulations. .
(c) Assurances. In each plan the State
will include an assurance that the State
shall comply with all applicable Federal
statutes and regulations in effect with
respect to the periods for which it
receives grant funding. For this
assurance and other assurances
required in the plan. the State may:
(1) Cite by number the statutory or-
regulatory provisions requiring the-
assurance'll and atrum that it gives the
assurances required by those provisions.
[Z) Repeat the- assurance language ia
the statutelf or regulation.. or
(3} ~Jop it. own language to the
extent permitted by law.
(d) Amendments. A State will amend
a plan wheneYer necessary 10 reflect: (1)
New or revised Federal .latutes or
regulations or (2} . material change in
anv State lew. orgBuization, policy. or
State agency operation. The State wi))
obtain approval for the amendment and
its effective date but need submit for
approval only the amended portions of
the plan.
43
09:1554. I
~ 85.12 Special gnat or IUbgnat
coaditioaa for "biP-riak" gnateeL
(a) A ..ntee Or' s~aDtee maJ be
considered "high risk" if aD awarding
agency detm'minea that a grantee or
subgrantec
(1) Hu a hia&ory 0{ W1...U..r....\ory
perfOrJDaDC:L or
[2) I. not fiDaDCially stable. or
[3) Haa . ~t syatem wbic:h
doe. not meet the 1It8D8I.....
.tandard:a HI forth ill Ibi8 put. or
(4) Ha. DOl canfunned to __ ud
conditione of previCMlS .... or
fSJ Is otherwise not responsible: and if
the awerding agency determines that an
award will be made, ~al condiliona
and/or restriction. sb.JI.......~~ to
the high risk condition and sheD b.
included in the award.
[b) Special COnditiOM or restrictions
.may inctude:-
l1t Payment on a reimbursement
basis;
(%1 Withholding authority to proceed
to the next phue until receipt of
evidence of acceptable performance
within a given funding period:
(3) Requiring additioaa.L.m.ore detailed
financial reports:
(4) Additional project mcmiloriDg;
(5) RequiriDg the graDte or subgrantee
to obtain tecimica1 or maDagement
assiatance; or .
(6) Establishiq additioDal prior
approvall.
(c) U aD awwins apDq decides to
impose such: condiboDs. the .warding
official will DOtify the grotee or
subsJantee lIS early ...posai~e. in
writing. of:
(1J Tbe nature of the special
conditions,! restrictions;
(Z) The Feasanf.) for imposiD~ them:
(3) 1'M corrective actions which must
be taken before they will be remO\'ed
and the time allowed for completing the
corrective actions and
(4) The method of requesting
reconsidenrtion of the conditionsl
restrictions imposed.
Subp8rt c-Post-Awwd Requirements
FiDaDciaI. ....d.....i.~.
~ 85.20 Standards for fiaaacial
JlUllUlgement systems.
(al A State must expaDd and account
for grant funds in accordance with State
laws and procedures for expending and
accouDting for itsoWD funds. F"uca!
control and accounting proc.edures of
the SLate. as well as its subgrantees and
cost-type contractors. must be sufficient
te>-
{l} Permit preparation of reports
required by this part and the &LaLutes
authorizing the grant. and
HOUSING AND DE1LOPME~-r REPORTER
[2) Permit the tIKiDg of fwds to a electronic tran8fer of funds methods. the
level of expeoditurea adequate lo grantee must make drawdo~s 8IIr close
establish that IDCb NadI have not been as poII.ible to the time or malnng
used in.violatioa 0{ tbe restriclicma and disbursements. GrantIJes must monitor
prohibttiolls of applicable statutea. cash drawdowns by their subgrantees to
assure that they conform substantially
to the same standards of timing and
amount as apply to advances to the
grantees.
(c) An awarding agency may review
the adequacy of the financial
management system of any applicant for
financial aaaistance as part of a
preaward review or at any time
subsequent to award.
~ 85.21 Paymeat.
(a) Scope. This section prescribes the
basic standard and the methods under
which a Federal agency will make
paymentato grantees. and grantees will
make payments to subgrantees and
contractors,
(b) Basic standard. Methods and
procedures for payment shall minimize
the time elapsing between the transfer
of funds and disbursement by the
grantee or subgrantee. in accordance
with Treasury regulations at 31 CFR Part
205,
(c) Advances. Grantees aad
subgrantees shall be paid in advance.
provided they maintain or demonstrate
the willingness and ability to maintain
procedures to. minimize the time
elapsing between the transfer of the
funds and their disbursement by the
grantee or subgrantee.
(d) Rsimbursement. Reimbursement
shall be the preferred method when the
requirements in paragraph (c) of UUs
section are Dot meL Grantees and
subgrantees may also be paid by
reimbursement for any construction
granL Except as otherwise specified in
regulation. Federal agenCIes shall not
use the percentage of completion
method to pay construction grants, The
grantee or subgrantee may-use that
method to pay its construction
contractor. and if it does. the awarding
agency's payments to the grantee or
subgrantee will be based on the
grantee's or subgrantee'" actual rate of
disbursement
(e) Working capital advances. If a
grantee cannot meet the criteria for
advance payments described in
paragraph [c) of this section. and the
Federal agency has determined that
reimbursement is not feasible because .
the grantee lacks sufficient working
capital, the' awarding agency may
provide cash or a working capital
advance basis, Under this procedure the
awarding agency shall advance cash to
the grantee to cover its estimated
disbursement needs for an initial period
generally geared to the grantee's
disbursing cycle. Thereafter, the
awarding agency shall reimburse the
grantee for its actual cash
(bl The rmancial management systems
of other grantees and subgrantees must
meet the following standards:
(1) Financial reporting. Accurate,
currenL and complete di8closure of the
financial rauJ.. of fiDancially assisted
activities must be mach. in accordance
with the financial reporting
requirements of the grant or .ubgranL
(2) Accounting recard& Grantees and
subgrantees must maintain records.
which adequately identify the source
and applicatiOD of funds provided for
financiaUy-assisted activities. These
recorda must cDatain information
pertaiDing to grant or subgrant awards
and authorizations. obligations.
unobligated balances. useta. liabilities.
outlay. or expenditures. ud income.
(3) InternoJ controL Effec:t:i'ft control
and accountability must be maintaiDed
for all pnt and .ubgrant ca.h. real and
personal property, and other aueta.
Grantees and subgrantees must
adequately safeguard all such property
and must assure tbat it is used solely for
authorized purp08es.
(4) Buciaet coll/Jol. Actual
expenditures or outlays must be
compared with budaeted &mOOD" for
each grant or subgranL Financial
information must be relatad to
performance or productivity data.
including tha development of anit. COlt
information wbenever appI'Opriate or
specifically required in the grant or
subgrant agreement II unit cost data are
required. estimates baaed on available
documentation will be accepted
whenever possible.
(5) Allowable cosL Applicable OMS
cost principles. agency prosram
regulations. and the terms of grant aDd
subgrant agreemen.. will be fonowed in
determining the reasonableness.
allowability. and allocability of costa.
(6) Source document/Jtion. Accounting
records must be supported by such
source documentation aa C&IIceDed
checks. paid bills, payroDs. time aDd
attendance recorda. contract and
subgrant award documenta. ete.
(7) Co6h manapmtult. Procedures for
minimizing the time elapsing between
the transfer of fund. from the US,
Treasury and di.banement by grantees
and subgranten must be foll.wed
whenever advance p&;r4n.ut pl'OCl:dmes
are used. GraDtees mu,* establish
reasonable procedures to ensure the
receipt of reports on sub!rantees' cash
balances and cash disbursements in
sufficimt time to enable them to prepere
complete and accurate cash transactions
report. to the awarding agency. When
advances are made by letter-o!-credit or
Published by Warren, Gorham & Lamont. Inc.
44
coMMUNITY DEVELOPMENT
I
\
,
disbursements. The working capital
advance method of payment shall not be
used by grantees or subgrantees if lhe
reason for using such method is lhe
unwillingness or inability of the gNlllee
to provide timely advance~e '
subgrantee to meet the subgrantee's
actual cash disbursements.
(0 Effect of progrom income. refunds.
and audit recoven'es on payment (1)
Grantees and subgrantees shall disburse
repayments to and iDterest earned on a
revolving fund before requesting
additional cash payments for the same
activity.
(2) Except a. provided in paragraph
(0(1) of thia section. grantees and
subgrantees shall disburse program
income. rebates. refunds. contract
settlements, audit recoveries and
interest eamed on such funds before
requesting additional cash payments.
(g) Withholding payments. (1) Unless
otherwise required by Federal statute.
IIwarding agencies shall not withhold
payments for proper charges incurred by
grantees or subgrantees unless-
(i) The grantee or subgrantee has
f~iled to comply with grant award
conditicns or
(ii) The grantee or subgrantee is
indebted to the United States.
(2) Cash withheld for failure to comply .
with grant award condition. but without
suspension of the gnat, shall be released
to the grantee upon subsequent compli-
ance. When a grant is SUSP""'ded. payment
adjustments will be made in accordaDce
with ~ 85.43(c).
(3) A Federal agency shall not make
payment to grantees for amounts that
are withheld by grantees or subgrantees
from payment to contractors to aasura
satisfactory completion of work.
Payment. shan be made by the Federal
agency when the grantees or
subgrantees actually disburse the
withheld fuDda to the contradors or to
escrow acccnmta established to assure
satisfactDl"Y completion of work.
(h) Cash depasiton.es. (1) Consistent
with the natioDal goal of expanding lhp.
opportunities for minority business
enterprises. grantees and subgrantees
are encoUr88ed to use minority banks (a
bank which is owned at least 50 percent
by minority group members). A list of
minority owned banks can be obtained
from the ~linority Business Development
Agency. Department of Commerce.
Washington. DC 20230.
(2) A grantee or subgrantee shall
maintain a separate bank account only
when required by Federal-State
agreement.
(iJ Interest earned an advances.
Except Cor interest earned on advances
of funds exempt under the
f
_:~
:]:
.....;..4..
Intergovernmental Cooperation Act (31
U.S.c. 6501 et seq.) and the Indian Self-
Determination Act (23 U.S.C. 450).
gran lees and subgrantees shall
promptly. but at least quarterly. remit
interest earned on advances to lhe
Federal agency. The grantee or
subgrantee may keep interest amounts
up lo $100 per year for administrative
expenses.
~ 85..u Allowable COltS.
(a) Limitation on use offunds. Grant
funds may be used only for:
(1) The allowable costs of the
grantees. suDjrantees and cost-type
contractors. incJuding allowable costs in
the form of payments to flxed.price
contractors: and
(2) Reasonable fees or profit to cost-
type contractors but not any fee or profit
(or other increment above allowable
costs) lo the grantee or subgrantee.
(b) Applicable cost principles. For
each kind of organization. there is a set
of Federal principles for determining
allowable costa. Allowable costs will be
determined in accordance with the cost
principles applicable to the organization
irJcurring the costs. The following chart
lists the kinds of organizations and the
applicable cost principles.
For the COllIS 01 _
Use !tie princ:ipIes in-
51.... IOc8II:1' IndiM OMS Cin:uIar A-<J7.
lrllMI llO'-4IlWMIlL
Private nonprofiI 09M o.c...a. A-l22.
Ol'ganizalion 0lIler trIM
llI'l I') _btulion 01
higher educatiOn. (2)
I'IOSOitaI. 1:1' (3)
organization namecl in
OMS ClICUIar A-l22
as noI subjeet to !hat
arcuIar.
EduCalionll inIlilulionI--l OMS Circular A-21.
Fl:I'.profit org&nIZ8IIOl'I 48 CFR Pan 31.
01lW lftan . /lCMpItaI Connct Cos1
and an 01 g811iZallOft PnnciIlIes and
named in oeM Procedures. or uniform
CircaIar A-l22 as noI cost accounllng
sulljec:t to !hat arcuIat. standaras lIlat comply
wtlI'I cost pnnc:IDleS
acceplabIe 10 the
FedInI agency.
~ 85.23 Period of aftiJability of fuDds.
(a) General. Where a funding period is
specified. a grantee may charge to the
award only costa resulting from
obligations of the funding period unless
carryover of unobligated balances is
permitted. in which case the carryover
balances may be charged for costs
resulting from obligations of the
subsequent funding period.
(b) Liquidation of obligations. A
grantee must liquidate all obligations
incurred under the award not later than
Published by Warren, Gortlam & Lamont. In<:.
I
09:1555
HDR RF -372
4-25-88
90 days after the end of the funding
period (or as specified in a program
regulation) to coincide with the
submission of the annual Financial
Slatus Report (SF-269). The Federal
agency may extend this deadline at the
request of the grantee.
~ 85.24 Matchiag or cost sharia&.
(a) Basic rule: Costs and contributions
acceptable. With the qualifications and
exceptions listed in paragraph (b) of this
section. a matching or cost sharing
requirement may be satisfied by either
or both of the following:
(1) Allowable costs incurred. by the
. grantee. subgrantee or a cost-type
contractor under the assistance
agreement. This includes allowable
costs borne by non-Federal grants or by
others cash donations from non-Federal
third parties.
(2) The value of third party in-kind
contributions applicable lo the period to
which the cost sharing or matching
requirements applies.
(b) Qualifications and exceptions-{l)
Costs borne by other Federal gront
agreements. Except as provided by
Federal statute. a cost sharing or
matching requirement may not be met
by costs borne by' another Federal grant.
This prohibition does not apply to
income earned by a grantee or
subgrantee from a contract awarded
under another Federal grant.
(2) General revenue sharing. For the
purpose of this section. general revenue
sharing funds distributed under 31
U.S.c. 6702 are not considered Federal
grant funds.
(3) Cost or contributions counted
toword~ other Federal cDJ:tJ:-8harina
requirements. Neither costs nor the
values of third party in-kind
contributions may count towards
satisfying a cost sharing or matching
requirement of a grant agreement if they
have been or will be counted towards
satisfying a cost sharing or matching
requirement of another Federal grant
agreement. a Federal procurement
contract, or any other award of Federal
funds.
(4) Costs financed by program income.
Costs financed by program income. as
defined in ~ 85.25, shall not count towards
satisfying a cost sharing or matching
requiremetn unless they are expressly per-
mined in the terms of the assistance
agreement. (This use of general program
income is described in ~ 85.25(g).)
(5) Services or property financed by
income earned by contractors.
Contractors under a grant may eam
income from the activities carried out
undel"'the contract in addition to the
amounts earned from the party
awarding the contract. No costs of
services or property supported by this
45
09:1556
income may COlUlt tqward satisfying a
cost sharing or matching requirement
unless other provisions of the grant
agreement expressly permit this kind of
income to be used to meet the
requirement.
(6) Records. Costs and third party in-
kind contributions counting towards
satisfying a cost sharing or matching
requirement must be verifiable from the
records of grantees and subgrantee or
cost-type contractors. These recorda
must show how the value placed on
third party in-kind contributions was
derived. To the extent feasible.
volunteer services will be supported by
the same methoda that the organization
uses to support the allocability of
regular personnel costs.
(7) Special standards for third party
in-kind contributions. (i) Third party in-
kind contributions count towards
satisfying a cost sbaring or matching
requirement only where. if the party
receiving the contributions were to pay
for them. the payments would be
allowable costs.
(H) Some third party in-kind
contributions are goods and services
that. if the grantee. subgrantee. or
contractor receiving the contribution
had to pay for them. the payme"ts
would have been an indirect costs.
Costs sbaringor matching credit for
such contributions shall be given only if
the grantee. subgrantee. or contractor
has establisbed. along with its regular
indirect cost rate. a special rate for
allocating to individUAl project. or
programs the value of the contributions.
(iii) A third party in-kind contribution
to a fixed-price contract may count
towards satisfying a cost sharing or
matching requirement only if it results
in:
(A) An increase in the services or
property provided under the contract
(without additional cost to the grantee
or subgrantee) or
(B) A cost savings to the grantee or
subgrantee. .
(iv) The values placed on third party
in-kind contributions for cost sharing or
matching purposes will conform to the
rules in the succeeding sections of this
part. If a third party in-kind contribution
is a type not treated in those sections.
the value placed upon it shall be fair
and reasonable.
(c) Valuation of donated services-(l)
Volunteer services. Unpaid services
provided to a grantee or subgrantee by
individuals. will be valued at rates
consistent with those ordinarily paid for
similar work in tbe grantee's or
subgrll!1tee's organization. If the grantee
or subgrantee does not have employees
HOUSING AND DEVELOPMENT REPORTER
1 I
perfonning similar work. the rates will and only depreciation or use allo!,ances
be consistent with those ordinarily paid may be. ~unted for doD&~. eqwpment
by other employers for similar work in and buildings. ~e depreci.abon or use
h I k.th allowances for this property are not treat-
t e same abor mar et. ~ el er case-, a ed as third party in-kind contnbutioDS.
reasonable amount for fringe benefits I tead. th are treated as costs incurred
may be included in the valuation. byDS th ey tee or subgrantee. They are
(2) Employees of other organizations. com :~and allocated (usually as indi-
When an employer other than a grantee. reel p costs) in accordance with the cost
subgrantee. or cost-type contractor principles specified in ~ 8S.22, in the same
furnishes free of charse the services of wa as depreciation or use allowances for
an employee in the employee's normal p~ equipment and buildings. The
line of work. the services will be valued amount of depreciation or use ~0!'8"~
at the employee's regular rate of pay for doDated equipmcat and buildings IS
exclusive' of the employee'. fringe based on the property's market value at
benefits and overhead costL If the the time it was donated.
service. are in a diff~nt ~e of w~rk. . (0 Valuation of grantee or subgrantee
paragraph (cl(l) of ~s .ection applies. donated real property for construction I
(d) ,!aluotJon of third /HZrty donated acquisition. If a grantee or subgrantee
supplies ~nd loaned equIpment o.r space. donates real property for a construction
(1) If ~ ~ p~ donates supplies, the or facilititts acquisition project. the
contnbution Will be valu~ at the, current market value of that property
market ~alue of the supplies at the time b ounted as cost sharing or
of donation. may ~ c
(2) If a third party donates the use of matchlDg. If any p~rt of ~e donated
equipment or space in a building but property was acqUired With Federal
retains title. the contribution will be funds. only the non-federal share of ~e
valued at the fair rental rate of the property .may be counted as cost shanng
equipment or space. or matchlDg~
(el ValuatJ'on of third party donated (g) Appro/sol of real property. In some
equipment. buildings. and land. If a third cases un.der pa~graphs (d). (e) and (0 of
party donates equipment. buildings. or thiS sectIon. It Will be necessary to
land. and titJe passes to a grantee or establish the market value of land or a
subgrantee. the treatment of the donated building ~r the f~ir. rental rate of land or
property will depend upon the purpose of space In a buiJdlJ1g. In ~ese cases. the
of the grant or subgrant. as follows: Federal agency may requU'e the market
(1) A wards for capitol expenditures, If value or fair rental value be set by an
the-purpose of the grant or subgrant is to independent appraiser, and that the
assist the grantee or subgrantee in the value or rate be certified by the grantee.
acquisition of property, the market value This requirement will also be imposed
of that property at the time of donation by the grantee on subgranteelJ.
may be counted as cost sharing or .... '__ .
matching. ~ 8S...... .. &u.-_ mcome.
(2) Other awards. If assisting in the
acquisition of property is not the
purpose of the grant or subgrant.
paragraphs (e)(2) (i) and (il) of this
section apply:
(i) If approval is obtained from the
awarding agency. the market value at
the time of donation of the donated
equipment or tluildings and the fair
rental rate of :he donated land may be
counted as cosl sharing or matching. In
~e case of a subgrant. the terms of the
grant agreemt'nt may require that the
approval be obtained from the Federal
agency as well as the grantee. In all
cases. the approval may be given only.u
a purchase of the equipment or rental ~f
the land would be approved as an
allowable direct cost. If any part of the
donated property was acquired with
Federal funds. only the non-federal
share of the property may be counted as
cost-sharing or ~tching.
(ii) If approval is not obtained under
paragraph (eX2Xi) of this section. no
amount may be counted for donated land,
Publistled by Warren, Gorham & Lamont, Inc.
(a) General. Grantees are encouraged
to earn income to defray program costs.
Program income includes income from
fees for services performed. from the use
or rental of real or personal property
acquired with grant funds. from the sale
of commodities or items fabricated
under a grant agreement. and from
payments of principal and interest on
loans made with grant funds. Except as
otherwise provided in regulations of the
Federal agency. program income does
not include interest on grant funds.
rebates. credits. discounts. refunds. ete.
and interest earned on any of them.
(b) Definition of program income.
Program income means gross income
received by the grantee or subgrantee
directly generated by a grant supported
activity, or earned only as a result of the
grant agreement during the grant period.
"During the grant period" is the time
between the effective date of the award
and the ending date of the awa,rd
reflected in the final financial report.
46
t
::l
~~
.........:
(c) Cost o/generating progra~1
income. If authorized by Federal
regulations or the grant agreement. r:osts
incident to the generation of program
income may be deducted from gross
income to determine program income.
(d) GovemmentDI revenues. Taxes.
special assessments. levies. fines. and
other such revenues raised by a grantee
or subgrantee are not program income
unless the revenues are specifically
identified in the grant agreement or
Federal agency regulations as program
income.
(e) ROytIlda. Incoaie froai royalties and
. license fees for copyrighted material, pat-
o cots, and inventions developed by a grant-
ee or subgrantee is program income only if
the revenues arc specifically identified in
the grant agreement or Federal agency
regulations as program income. (See
~ 85.34.)
r 0 Propel'tJl. Proceeds from the sale of
real property or equipment will be ban-
cUed in accordance with the requirements
of U 85.31 and 85.32-
(g) Use of pragram income. Program
income shall be deducted from outlays
which may be both Federal and non-
Federal as described below. unless the
Federal agency regulations or the grant
agreement specify another alternative
(or a combination of ate aJtematives).In
specifying alternatives. the Federal
agency may distinguish between income
earned by the grantee and income
earned by subgrantees and between the
sources. kinds. or amounts of income.
When Federal agencies authorize the
alternatives in paragraphs (g) (2) and (3)
of this section. program income in
excess of any limi&. stipulated shan also
be deducted from'6utlays.
(1) Deduction. Ordinarily program
income shall be deducted from total
allowable costs to determine the net
allowable costs. Program income shall
be used for current costs unless the
Federal agency authorizes otherwise.
Program income which the grantee did
not anticipate at the time of the award
shall be used to reduce the Federal
agency and grantee r.ontributions rather
than to increase the funds committed to
the project.
(2) Addition. When authorized.
program income may be added to the
funds committed to the grant agreement
by the Federal agency and the grantee.
The program income shall be used for
the purposes and under the conditions of
the grant agreement.
(3) Cost sharing or matching. When
authorized. program income may be
used to meet the cost sharing or
matching requirement of the grant
agreement. The amount of the Federal
grant award remains the same.
(h) lnCOllHl after tM award period. I
There are no Federal requirements
governing the disposition of program
income earned after the end of the
award period (i.e.. until the endiDg date
of the final financial report. see
paragraph (a) of this section). unle.. the
terma of the agreement or the Federal
agency regulations provide otherwi~~
i 85.26 NOD-Federal audiL
(a) Basic Rule. Grantees and
subsnmteea are responsible for
obtaining audilf.,in accordance with the
Single Audit Act of 1984 (31 U.s.e. 7501-
. 7) and Federal agency implementinS
. reguiationa. 'l11e audita shall be made by
an independent auditor in accordance
with generally accepted government
auditing standards covering financial
and compliance audits.-
(b) Subgrantees. State or locnl
governments. as those terms are defined
for purposes of the Single Audit Act.
that ~eive Federal financial assistance
and provide $25.000 or more of it in a
fiscaJ year to a subgrantee shall:
(1) Determine whether State or local
subgranleet have met the audit
requirements of the Act and whether
subgrantees covered by OMB Circular
A-ll0. "Uniform Requirements for
Granta and Other Agreements with
Institutions of Higher Education.
Hospitals and Other Nonprofit
Organizations" have met the audit
requirement. Commercial contractors
(private forprofit and private and
governmental organizations) providing
goods and services to State and local
governments are not required to have a
single audit performed. State and local
govenments should use their own
procedures to ensure that the contractor
has complied with laws and regulations
affecting the expenditure of Federal
funds:
(2) Determinewhather the subgrantee
spent Federal assistance funds provided
in accordance with applicable laws and
regulations. This may be accomplished
by reviewing an audit of the subgrantee
made in accordance with th9 Act.
Circular A-ll0.'or through other means
(e.g.. program reviews) if the subgrantee
has not had such an audit
(3) Ensure that appropriate corrective
action is taken within six montha after
receipt of the audit report in instance of
noncompliance with Federal laws and
regulations:
(4) Consider whether subgrantee
audits necessitate adjustment of the
grantee's own records: and
(5) Require each 8ubgrantee to permit
independent auditors to have access to
the records and financial statements.
Published by Werren, Gorham & L.amont. . Inc.
V:7;,Li)v ,
HDRRF-372-
4-25-88
(c) A.uditor ul<<:tion. hi arraiiging - for
audit service&. ~ 85.36 shall be fonowed.
Cbang~ Property. au~ Subawarda
~ 85.30 Owtges.
(a) General. Grantees and subgrantees
are permitted to rebudget within the
approved di~t cost budget to meet
unanticipated requirements and may
make limited program changes to the
approved project. However. unless
. waived by the awarding agency. certain
types of post-award changes in budgets
and projects shall require the prior
written approval of the awarding
agency.
(b) Relation to cost princip/~' The appli-
cable cost principles (see ~ 85.22) contain
requirements for prior approval of certain
types of costs. Except where waived. those
requirements apply to all grants and sub-
grants even if paragraphs (c) through (0 of
this section do nOL
(c) Budget changes. (1)
Nonconstruction projects. Except as
stated in other regulations or an award
document. grantees or subgrantees shall
obtain the prior approval of the
a warding agency whenever any of the
following changes is anticipated under a
nonconstruction award:
(i) Any revision which would result in
the need for additional funding.
(H) Unless waived by the awarding
agency. cumuJative transfers among
direct cost categories. or. if applicable.
among separately budgeted programs.
projects. functions. or activities which
exceed or are expected to exceed ten
percent of the current total approved .
budget. whenever the awarding agency's
share exceeds $100.000."
(Hi) Transfer of funds allotted for
training allowances (i.e.. from direct
payments to trainees to other expense
ca tegories).
(2) Construction prajects. Granrees
and subgrantees shall obtain prior
written approval for any budget revision
which would result in the need for
additional funds.
(3) Combined construction and
nonconstruction prajects. When a grant
or subgrant provides funding for both
construction and nonconstruction
activities. the grantee or subgrantee
must obtain prior written approval from
the awarding agency before making any
fund or budget transfer from
nonconstruction to construction or vice
versa.
[d) Programmatic changes. Grantees
or subgrantees must obtain the prior
approval of the awarding agency
whenever any of the following actions is
anticipated:
47
09-.1558
(t) Any revision of the scope or
objec:tives 01 the project (regardless of
whether there is an associ a ted budget
revision requiring prior approval).
(2) Need to extend the period of
availability of funds.
(3) Changes in key persons in cases
where specified in an application or a
8fllnt award. In research projecta. a
change in the project director or
principal investigator shall always
require approval unless waived by the
awarding agency.
(4) Under nonconsttuCtion projects.
contracting out. subgranting (if authorized
by law) or otherwise obtaining the services
of a third party to perform activities which
are. ceoual to the pu:poses of the award.
This approval requirement is in addition
to the approval requirements of ~ 85.36
but does not apply to the procurement of
equipment. supplies, and general support
scrvu:es.
(e) Additional prior approval
requirements. The awarding agency may
not require prior approval for any .
budget revision which is not described
in paragraph (c) of this section.
(0 Requesting prior approval. (1) A
requ~st for, prior approval of any budget
reViSIon Will be in Lbe same budget
formal the grantee used in its
. application and shall be accompanied
by a narrative justification for the
proposed revision.
(2) A ~uest Jor a prior approval und~
the applicable Federal cost principles (see
~ 85.22) may be made by letter.
(3) A request by a liubgrantee for prior
approval will be addressed in writing to
the grantee. The grantee will promDtly
review such request and shall approve
or disapprove the request in writing. A
grantee will not approve any budget or
project revision which is inconsistent
with the purpose or terms and
conditions of the Federal grant to the
grantee. If the revision. requested by the
$ubgrantee would result in a change to
the grantee's approved project whic:h
requires Federal prior approval. tt,e
grantee will obtain the Federal d~f!ncy's
approval before approving the
subgrantee's request.
~ 85.31 Real property.
(a) Title. Subject to the obligations
and conditions set forth in this section.
title to real property acquired under a
g:ant or subgrant will vest upon
acquisition in the grantee or sub~rl4n!ee
respective Iv.
. (b) Use. Except as otherwise provided
:::y Federal statutes, real propertv will be
used for the originally authorized
purposes as long as needed for thl!t
purposes. and the grantee or subgrantee
shall not dispose of or encumber its title
or other interests,
I
HOUSING AND DEVELOPMENT REPORTER
I
(c) Dispo8itioD. When real property i.
no longer needed for the originally
authorized purpoee. the grantee or
subgrantee will request disposition
instructiona from the awarding agency.
The inatructiona will provide for one of
the followiq alternatives:
(1) RstlUltion of title. Retain title after
compenaatiq the awarding qency. The
amount paid to the awarding agency
will be computed by applying the
awarding qency'. percentage of
participatiOD ill the coat of the original
purchaae to the fair market value of the
property. However. in those .ituationa
where a grantee or .ubgrantee ~
disposing of real property acquired with
grant funda and acquirin8 replacement
real property under the same program.
the net proceeds &om the diapoaition
may be und as an offset to the cost of
the replacement property.
(2) Sale of property. Sell the property
!tnd compeDNte the awarding qency.
The amount due to the awarding agency
will be calculated by applying the
awarding agency's percentage of
participation in the cost of the original
purchase to the proceeds of the sale
after deduction of any actual and
reasonable selling and fixing-up
expenses. If the grant is still active, the
net proceeds from sale may be offaet
against the original cost of the property.
When a grantee or subgrantee is
directed to sell property. sales
procedures sball be followed that
provide for competition to the extent
practicable and result in the highest
poaaible retum.
(3) Transfer of title. Transfer title to
the awarding agency or to a third-party
designated/approved by the awarding
agency. The grantee or subgrantee sball
be paid an amount calculated by
applying the grantee or subgrantee'.
percentage of participation in the
purchase of the real property to the
current fair marketvaiue of the
property.
~ 85.32 Equipmeat.
(a) Title. Subject to the obligations
and conditions set forth in rm. section.
title to equipment acquired under a
grant or subgrant will vest upon
acquisition in the grantee or subgrantee
respectively.
(b) Stoles. A State will ute. manase.
and dispose of equipment acquired
under a grant by the State in accordance
with State laws and procedures. Other
grantees and subgrantees will follow
pa~pba(c)Uuoush(e)oftlUs
section.
(e) Use. (1) Equipment shall be used
by the grantee or subgrantee in the
program or project for which it was
Published by Warren, GorIlam & Lamont, Inc.
acquired as long as needed. whether or
not the project or program continues to
be supported by Federal funds. When no
longer needed for the original program
or project, the equipment may be used in
other activities currently or previously
supported by a Federal asency.
(2) The grantee or subgrantee shall
also make equipment available foruse
on other projects or programa currently
or previously supported by the Federal
Government. providing such use will not
interfere with the work on the projects .
or program for which it was Originally
acquired. First preference for other ute
shall be given to other programs or
projects supported by the awarding
agency. User fees should be considered
if appropriate.
(3) Notwithstanding the encouragement
in ~ 85.25(a) to earn program income, the-
grantee or subgrantee must not use equip-
ment acquired with grant funds to provide
services for a fee to compete unfairly with
private companies that provide equivalent
services, unless specifically permitted or
col1templated by Fede:ra1 statute.
[4) When acquiring replacement
equipment. the grantee or subgrantee
may use the equipment to be replaced aa
a trade-in or sell the property and use
the proceeds to offset the cost of the
replacement property. subject to the
approval of the awarding agency.
(d) Management requirements.
Procedw-es for managing equipment
(including replacement equipment).
whether acquired in whole or in part
with grant funds. until disposition takes
place wilL as a minimum. meet the
following requirements:
(t) Property records must be
maintained that include a description of
the property. a serial number or other
identification number. the source of
property, who hokis title. the acquisition
date. and cost of the property,
percentage of Federal participation in
the cost of the property. the location. use
and condition of the property, and any
ultimate disposition data including the
date of disposal and sale price of the
property.
(2) A physical inventory of the
property must be taken and the results
reconciled with the property records at
least once every two.years.
(3) A control system must be
developed to ensure adequate
safeguards to prevent loss. damage. or
theft of the property. Any losl. damage.
or theft shall be investi~8ted.
(4) Adequate maintenance procedures
must tie developed to keep the property
in good condition.
(5) If the grantee or subgrantee is
auLPtorized or required to sell the
property, proper sales procedures must
48
COMMUNITY DEVELOPMENT
\
\
I
I
be establiahed to ensure the highest
possible return.
(e) Disposition. When original or
replacement equipment acquired under
a grant or IUbgrant i. no longer needed
for the original project or program or fOI
other activities currently or previously
supported by a Federal agency,
disposition of the equipment will be
made as follows:
(1) Items of equipment with a current
per-unit fair market value of lea. than
55.000 may be retained. sold c)r
otherwise dispoeed of with no further
obligation to the awarding agency.
(2) Items of equipment with a current
per unit fair market value in excess of
55.000 may be retained or sold and the
awarding agency shall have a right to an
amount calculated by multiplying tbe
current market value or proceeds from
sall'! by the awarding agency's share of
the equipment.
(3) In cases where a grantee or
subgrantee fails to take appropriate
dispo.ition actions. the awarding agency
may direct the grantee or subgrantee to
take excess and disposition actions.
(I) Federal equipment. In the event a
grantee or subgrantee is provided
federally-owned equipmen t:
(1) Title will remain vested in the
F~eraIGovenunent.
(2) Grantees or subgrantee. will
manage the equipment in accordance
with Federal agency rules and
procedures. and submit an annual
inventory listing.
(3) When the equipment is no longer
needed. the grantee or subgrantee will
request disposition instructions from the
Federal agency.
(g) Right to transfer title. The Federal
awarding agency may reserve the right
to transfer title to the Federal
Govenunent or a third part named by
the awarding agency wben such a third
party is otherwise eligible under existing
statutes. Such transfers shall be subject
to the following standards:
(1) The property shall be identified in
the grant or otherwise made known to
the grantee in writing.
(2) The Federal awarding agency shall
issue disposition instruction within 120
calendar days after the end of the Federal
support of the project for which it was
acquired. If the Federal awarding agency
fails to issue disposition instructions with-
in the 120 calendar-day period the grantee
stu&ll follow 85.32(e).
(3) When title to equipment is
transferTed. the grantee shall be paid an
amount calculated by applying the
percentage of participation in the
purchase to thp current fair market
value of the property.
.~
.!
~ 15.33 Supplies.
(a) Title. ntle to supplies acquired
under a grant or IJUbgrant wilJ vest. upon
acquisition. in the grantee or subgrantee
respectiveiy .
(b) Disposition. If tbere !s a residu~l
inventory of unuaed supphes exceedll18
55.000 in total ag8regate rairmark~t
value upon termination or completion of
the award. and if the supplies are not
needed for any other federally
sponsored prosraml or projects. the
grantee or IUbgrantee shaD compensate
the awardins agency for its share.
~ 85.34 Co1J)'IiIbts.
The Federal.Wllrding agency
reserves Q royalty-free. nonexclusive.
and inevocable license to reproduca.
publiah or otherwise use. and to
authorize others to use. for Federal
Government purposes:
(a) The copyright in any work
developed under a 8l'ant. sub8l'ant. or
contract under a grant or subgrant and
(b) Any rights of copyright to which a
grantee. subgrantee or a contractor
purchases ownership with grant support.
~ 85.35 Subawards .to debarred and
suspeaded parties.
GranLees and subgrantees must not
make any award or permit an~ award
(subgrant or contract) at any tier to any
"party which is debarred or suspen~~d or
is otherwise excluded from or ~eligibl..
for participation in Federal assistance
programs under Executiv~ O~er 12549.
"Oebarment and SUSpeDS10n.
~ 85.36 Proc:uremeDt
(a) States. When procuring prope~
and services under a grant. a State will
follow the same policies and procedures
it uses for procurements from ita non-
Federal funds. The State will ensure that
every purchase order ar o~er contract
includes any clauses requltld by
Federal statutes and executive orders
and their implementing regulation~.
Other grantees and subgrantees ~Ill .
follow paragraphs (h) through (i) m this
section.
(bl Procurement standards. (lJ
Grantees and subgrantees will use their
own procurement procedures which
reflect applicable State and l~ laws
and regulations. pro\ided that tile
procurements conform to applicable
Federal law and the standards identified
in this section.
(2) Grantees and su~~tees .wiU
maintain a contract admlDlstratlon
system which ensures th~t c~ntractors
perform in accordance WI~h tne term,s.
conditions. and specifications of their
Published by Warren, Gomam & Lamont Inc.
I
W:lOfil:l
HDR RF -372
~25-88
contracts or purchase orden. .
(3) Grantees and subgrantees WIll
maintain a written code of standarda of
conduct govemiDg the pe~ormance of
their employee. engaged m the award
and acimiDiatration of contracts. No
employee. officer or agent of the grantee
or subgrantee shall participate in
selection. or in the award or
administration of a contract supported
by Federal funds if a conflict of interest.
real or apparent. would be involved.
Such a conflict w9u1d arise when:
(i) nae employee. o~~r or a8~t.
(ii) Any member of his lDIJDediate
family.
(iiiJ His or her partner. or
(iv) An organization which employs.
or is about to employ. any of the above.
has a rmancial or other interest in the
firm selected for award. The grantee's or
subgrantee's officers. employees or
agents will neither solicit ~or accept
gratuities. favors or anything of
monetary value from contractors.
potential contractors. or parties to
subagreements. Grantee and
subgrantees may set minimum rules
where the financial interest is not
substantial or the gift is an unsolicited
item of nominal intrinsic value. To the
extent permitted by State or local law or
regulations. such stan~ards or c~nduct
will provide for penalties. sanctions. or
other disciplinary actions for violations
of such standards by the grantee's and
subgrantee's officers. employees. or
agents. or by contractors o~ their age~ta.
Tha awarding agency may m regulation
provide additional prohibitions relative
to real. apparent. or potential conflicts
of interest.
(4) Grantee ~d su~grantee. .
procedures wid proVIde far a review of
proposed procurements to avoid, .
purchase of unnecessary or dupli.cative
ilems. Consideration should be gIven to
consolidating or breaking out
prQQ11'8ments to obtain a mare
economical purchase. Where
appropriate. an analysis will be made of
lease versus purchase alternatives. and
anv other appropriate analysis to
determine the most economical
approach.
(5) To foster greater economy and
efficiency. grantees and subgranlees are
encouraged to enter into State and local
intergovernmental agreements for
procurement or use of common goods
and services.
(6) Grantees and subgrantees are
encouraged to use Federal excess and
surplus property in lieu of purchasing
new .quipment and property whenever
such use is feasible and reduces project
costs.
49
09:1560
(1J Grantees and .ubgrantees are
encoW'llged to ue vallie engineering
clauses in contract. for construction
projects of sufficient size to offer
reuonable oppornurities for cost
reductions. Value engineering i. a
systematic and creative anaylsis of each
ccmtract item or task to ensure that ita
essential function is provided at the
overall lower coat.
(8) Grant... aDa subgraDtees wiU
make awards only to re.po~bie
contractors po.selSin. the ability to
peftQrm .uccesafully aDder the terms
and conditions of . proposed
procur8lDeJ1L Couideratioa wiD be
given to .uch matten as contractor
integrity, compliance with public policy,
record of past performance. and
financial and teclmical resources.
(9) Grantee. and .ubgrantees will
maintain record. .ufficient to detail the
silP1ificant history of a procurement.
These recorda will inc1udlit. but are not
necessarily limited to the following:
rational. for the method of proc;urement.
selection of contract type. contractor
selection or rejection. and the ballis for
the contract price.
(10) Grant... and subgrantees will
use time aDd material type contracta
only-
(i) Alter a determination that no other
contract is suitable, and
(il) If the contract includes a ceiling
price that the contractor exceeds at its
own risle.
(11) Grantees and subgrantees alone
will be responsible. in accordance with
good administrative practice and sound
business judgment. for the settlement of
all contractual and administrative issues
arising out of procurements. These
issues include, but are not limited to
source evaluation. protests. disputes.
and claims. These standards do not
relieve the grantee or subgrantee of any
contractual responsibilities under its
contracts. Federal agencies will not
substitute their judgment for that of the
grantee or subgrantee unless the matter
is primarily a Federal concern.
Violations oflaw will be referred to the
local. State. or Federal authority having
proper jurisdiction.
(12) Grantees and subgrantees will
have protest procedures to handle and
resolve disputes relating to their
procurements and shall in all instanc~
disclose information regarding the
protest to the awarding agency. A
protestor must exhaust all
administrative remedies with the
grantee and subgrantee before pursuing
a protest with the Federal agency.
Reviews of protests by tbe Federal
agency will be limited to:
(i) Violations of Federal law or
regulations and the standards of tbis
section (violations of State or local law
HOUSING AND DEVELOPMENT REPORTER
I will be under tbe jurisdiction of State or
local authorities) and
(ii) Violations of the grantee's or
subgrantee's protest procedures for
failure to review a complaint or protest.
Protests received by the Federal agency
otber than' those specified above will be
referred to the grantee or subgrantee.
(e) CompsitiolL (1) All procurement
tJ"lftCAt'tions will be conducted in a maD-
ner providing full and open competition
consistcDt with the SWldards ~ 8S.36.
Some of the situations consicicred to be
restrictive oC competition include but are
not limited to:
(i) Placing unreasonabie requin:ments
un firms in order for them to qualify to
do business.
(ii) Requiring wmecesaary experience
and excessive bonding.
(iii) NOQcompetitive pricing practices
between firms or between affiliated
companies.
(iv) Noncompetitive awards to
consultants that are on retainer
contracts.
(v) Organizational conflicts of
interest.
(vi) Specifying only a "brand name"
product instead of allowing "an equal"
product to be offered and describing the
performance of other relevant
requirements of the procurement. and
(vHl Any arbitrary action in the
procurement process.
(2) Grantees and subgrantees will
conduct procurements in a manner that
prohibits the use of aaJUtorily or
administratively imposed in-State or
local geographical preferences in the
evaluation of bids or proposals. except
in those cases where applicable Federal
statutea ~xpressly mandate or
encourage geographic preference.
Nothing in this section preempts State
licensing laws. When contracting fot'
architectural and engineering (AiEl
services. geographic location may be a
selection criteria provided its
application leaves aa appropriate
number of qualified finRa. given the
nature and size of the project. to
compete for the COIltraCt.
(3) Grantees willllaM written
selection procedures for procurement
transactions. These procedures will
ensure that all solidtatioos:
(i) Incorporate a clear and accurate
description of the technical
requirements for the material. product.
or service \0 be procured. Such
description shall not. in competitive
procurements. contain features which
um1wy restrict competition. The
description may include a statement of
the qualitative nature of the maleriaL
product or service to be procured. and
when necessary. shall set forth Ihose
minimum essential characteristics and
standards to which it must conform if it
is to satisfy its intended use. Detailed
Published by Warren. Gornam & Lamont, Inc.
prol.ct Ipecu1C8tions sbould be
8volit:ci if at all possible. Wnen it is
impractical or uneconomical to make a
clear and accurate description of the
technical requirements. a "brand name
or equal" description may be used as a
means to define the performance or
other salient requirements oC a
procurement. The specific features of th.
named brand which must be met by
offerors shall be clearly stated: and
(ii) Identify all requirementa which tbe
ufferors lD'iat fulfill and all other facton
to be used in evaluatinS bids or
proposals.
(4) Grantees and subgrantees will
ensure that all prequalified lists of .
persons. rums. or products which, are
used in acquiring goods and servIces are
current and include enough qualified
sources to ensure maximum open and
free competition. Also, grantees and
subsrantees will Dot preclude potential
bidders from qualifying during the
solicitation period.
(d) Methods of procurement to be
followed. tl) Procurement by small
purchau procedWIIS. Small purchase
procedures are those relatively simple
and informal procurement methods for
securing services. supplies. or oUter
property that do not cost more than
$25.000 in the aggregate. If small
purchase procurements are used. price
or rale quotations will be obtained from
an adequate number of qualified
sources.
(2) Procurement by SeD/ed. bids (f~~
advertising). Bids ate publicly solicited
and a firm-fiXed-price contract (lump sum
or unit price) is awarded to the responsible
bidder whose bid. conforming with all the
material termS and conditions of the invi-
tation for bids, is the lowest in price. The
sealed bid method is the preferred method
for procuring constrUCtion, if the condi-
tions in ~ 8S.36(d)(2)(i) apply.
(i) In ordec for sealed bidding to be
feasible. the. following conditions should
be present
(A) A complete. adequate. and
realistic specification or purchase
description is available:
(B) Two or 1D0re responsible bidders
are willing and able to compete
effectively for the business; and
(C) The procurement lends itself to a
flml fixed price contract aDd the
selection of the successful bidder can be
made principally on the basis of price.
(ii) If sealed bids are used. the
following requirements apply:
(A) The invitation for bids will be
publicly advertised and bids shall be
solicited from an adequate number of
known suppliers. providing them
sufficient time prior to the date set for
opening the bids;
(B) The invitation for bids, which will
include any specifications and pertinent
50
COMMUNITY DEVELO(MENT
attachments. shall define the items or
services in order for the bidder to
properly respond:
(C) All bids will be publicly opened at
the time and place prescribed in the
invitation for bids;
(D) A firm fixed-price contract award
will be made in writing to the lowest
responsive ad responsible bidder.
Where specified in bidding docwnents.
factors sach al cD8C01IDts. transportation
cost. and life cycle costs shall be
considwed in detennisUng which bid is
lowest. Paymezat disccnmts will only be
used to detenaine the. low bid when
priorexpe~indlcatesthatsuch
discounts ate usually taken advantage
of: and
(E) Any or an bids may be rejected if
there is a 80and documented reason.
{31 Procurement by competiti?e
proposals. The technique of competitive
proposal. is normally conducted with
more than one source submittins an
offer. ami either a fixed-price or cost-
reimbursement type contract is
awarded. It i. generally used when
conditions are not appropriate for the
use of sealed bids. If this method is
uRd. the following requirements apply:
(i) Requests for proposals will be
publicized and identify all evaluation
factors and their rehtti'V'e importance.
Any response to publicized requests for
proposals shall be honored to the
maximum extent practical:
(ii) Proposais will be solicited from ~n
adequate number of qualified sources:
(Hi) Grantees and subgrantees will
have a method for conducting technical
evaluations of the pfoposais received
and for selecting awardees:
(iv) Awards will be mad1! to the
responsible firm whose proposal is most
advantageous to the program. with price
and other factors considered: and
(v) Grantees and subgrantees may use
competitive proposal procedures for
qualifications-based procurement of
architectural/engineering (A/E)
professional serYices whereby
competitors' quaUfications are
evaluated and the most qualified
competitor il selected. subject to
negotiation of fair and reasonable
compensation. The method. where prict!
is not used as a selection factor. can
only be used in procurement of AlE
professional services. It cannot be used
to purchase other types of services
though A/E firms are a potential source
to perform the proposed effort.
(4) Procurement by noncompetitive
proposals is procurement through
solicitation of a proposal from only one
source. or after solicitation of a number
of sources. competition is determined
inadequate.
Ii} Procurement by noncompetitive
)
I
ll.
...
1.'"
.to,..
--' .
proposals may be used only when the
award of a contract is infeasible under
small purchase procedures. sealed bids
or competitl.... proposals and one of the
following circumstances applies:
(A) The item il available only from 8
single source:
(B) The public exigency or emel"8ency
for the requirement will not permit a
delay resulting from competitive
solicita tion.
(C) The awarding agency authorizes
noncompetitive proposals: or
(D) After solicitation of a number of
sources. competition is detennined
inadequate.
(ii) Cost analysis! i.e~ verifying the
proposed COlt data. the projections of
the data. and the evaluation of the
specific elements of costs and profit. is
required.
(iii) Grantees and subgrantees may be
required to submit the proposed
procurement to the awarding agency for
pre-award review in accordance with
paragraph (g) of this section.
(e) Contracting with smaJJ and
minority firms. women's business
enterprise and labor surplus area firms.
(1) The grantee and subgrantee will take
all nece!" 1ry affirmative steps to assure
that minority firms. women's business
enterprises. and labor surplus area firms
are used when possible. '.
(2) Affirmative steps shall include:
(i) Placing qualified small and
minority businesses and women's
business enterprises on solicitation lists:
(ii) Assuring that small and minority
businesses. and women's business
enterprises are solicited whenever they
are potential sources:
(iii) Dividing total requirements. when
economically feasible. into smaller tasks
or quantities to permit maximum
participation by small and minority
business. and women's business
enterprises:
(iv) Establishing delivery schedules.
where the requirement permits. which
encourage participation by small and
minority business. and women's
business enterprises:
(v) Using the services and assistance
of the.SmallBusiness Administration.
and the Minority Business Development
Agency of the Department of Commerce:
and
(vi) Requiring the prime contractor. if
subcontracts are to be let. to take the
affirmative steps listed in paragraphs
(e)(2) (i) through (v) of this section.
(f) Contract cost and price. (1)
Grantees and subgrantees must perform
a cost or price analysis in connection
with every procurement action including
contract modifications. The method and
degree of analysis is dependent on the
facts surrounding the particular
procurement situation. but al a starting
Published by Warren. Gomam & Lamont, Inc.
I
09:1561
HDR RF -372
4-25-88
point. grantees must make independent
estimates before receiving bids or
proposals. A cost analysis must be
performed when the offeror is required
to subinit the elements of his estimated
cost. e.g~ under professional. consulting,
and architectural engineering services
contracts. A cost analysis will be
neceslary when adequate price
competition is lacking. and for sole
source procurements. including contract
modifications or change orders. unless
price resonableness can be established
on the basis of a catalog or market price
of a commercial product sold in
substantial quantities to the general
public or based on prices set by law or
regulation. A price analysiS will be used
in all other instances to determine the
reasonableness of the proposed contract
price.
. (2) Grantees and subgrantees will
negotiate profit as a separate element of
the price for each contract in which
there is no price competition and in all
cases where cost analysis is performed.
To establish a fair and reasonable profit.
consideration will be given to the
complexity of the work to be performed.
the risk borne by the contractor. the
contractor's investment. the amount of
subcontracting. the quality of its record
of past performance. and industry profit
rates in the surrounding geographical
area for similar work.
(3) CostS or prices based on estimated
costs for contractS imder grants will be
allowable only to the extent that costs
incurred or cost estimates included in
negotiated prices are consistent with Fed-
eral cost principles (see ~ 85.22). Grantees,
may reference their own cost principles
that comply with the applicable Federal
cost principles.
(4) The cost plus a percentage of cost
and percentage of construction cost
methods of contracting shall not be
used.
(g) A warding agency review. (1)
Grantees and subgrantees must make
available. upon request of the awarding
agency. technical specifications on
proposed procurements where the
awarding agency believes such review
is needed to ensure that the item and/or
service specified is the one being
proposed for purchase. This review
generally will take place prior to ttu!
time the specification is incorporated
into a solicitation document. However. if
the grantee or subgrantee desires .to
have the review accomplished after a
solication has been developed. the
awarding agency may still review the
specifications. with such review usually
limited to the technical aspects of the
proposed purchase. '
(2) Grantees and subgrantees must on
request make available for awarding
agency pre-award review [ delete ","J
51
09:1562
procurement documents, such as
requests for proposals or invitations for
bids. independent cost estimates, etc.,
when:
(iJ A grantee's or subgrantee's
procurement procedures or operation
fails to comply with the procurement
standarda in this seaton: or
(ii) The procurement is expected to
exceed $25.000 and is to be awarded
without competition or only one bid or
offe..r is received in response to a
solicita tion: or
(iii) The procurement. which is
. expected to exceed $25.000, specifies a
"brand name" product: or
(iv) The proposed award over $25,000
is to be awarded to other than the
apparent low bidder under a sealed bid
procurement: or
(v) A proposed contract modification
changes the scope of a contract or
increases the contract amount by more.
than S2S.000.
(3) A grantee or subgrantee will be
exempt from the pre-award review in
paragraph (g}(2) of this section if the
awarding agency determines that its
procurement systems comply with the
standards of this section.
(i) A grantee or subgrantee may
.request that its procurement system be
reviewed by the awarding agency to
determine whether its system meets
these standards in order for its svstem
to be certified. Generally. these reviews
shall occur where there is a continuous
high-doUar funding. and third-party
contracts are awarded on a regular
basis: '
(ii) A grantee or subgrantee may self-
certify its pcocurement system. Such
seU-certification shall not limit the
awarding agency's right to survey the
system. Under a.seU-certification
procedure, awarding agencies may wish
to rely on written assurances from the
grantee or subgrantee that it is
complying with these standards. A
grantee or subgrantee will cite specific
procedures. regulations. standards. etc..
as being in compliance with these
requirements and have its system
available for review.
Qt) Bonding requirements. For
construction or facility improvement
contracts or subconstracts exceeding
$100.000. the awarding agency may
accept the bonding policy and
requirements of the grantee or
subgrantee provided the awarding
agency has made a determination that
t~e awarding agency's interest is
adequately protected. If such a
determination has not been made. the
minimum requirements shall be as
follows:
(1) A bid guarantee from each bidder
,equivalent to five percent of the bid
price. The "bid guarantee" shall consist
of 3 firm commitment such as a bid
HOUSING AND
I bond. certified check. or other
nE'gotiable instrument acco:npanying a
bid liS assurance that the bidder will,
upon acceptance of his bid. execute
such contractual documents as may be
rp.quired within the time specified.
(2) A performance bond on the port o.f
the contractor for 100 percent of the
contract price. A "performance bond" is
one executed in connection with a
contract to secure fulfillment of aU the
contractor's obligations under such
contract.
(3) A payment bond on the part of the
contractor for 100 percent of the
contract price. A "payment bond" is one
executed in connection with a contract
to assure payment al required by law of
all personslupplying labor and material
in the execution of the work provided
for in the contract.
(i) Contract pravisions. A grantee's
and subgrantee's contracts must contain
provisions in paragraph (i) of this
Section. Federal agencies are permitted
to require changes.. remedies. changed
conditions. access and records
retention. suspension of work. and other
clauses approved by the Office of
Procurement Policy.
(1) Administrative. contractual. or
legal remedies in instances where
contractors violate or breach contract
te~. and provide for such sanctions
and penalties ail may be appropriate.
(Contracts other than small purchases)
(2) Termination for cause and for
convenience by the grantee or
subgrantee including the manner by
which it will be effected and the basis
for settlement. (All contracts in excess
of $10.000)
(3) Compliance with Executive Order
11248 of September 24. 1965 entitled
"Equal Employment Opportunity," as
amended by Executive Order 11375 of
October 13. 1967 and as supplemented in
Department of Labor regulations (41
CFR Part 60). (All construction contracts
awarded in excess of $10.000 by
grantees and their contractors or
subJrrantees )
(4) Compliance with the Copeland
"Anti-Kickback" Act (18 U.S.c. 874) as
supplemented in Department of Labor
regulations (29 CFR Part 3). (All
contracts and subgrants for construction
or repair)
(5) Compliance with the Davis-Bacon
Act (40 U.S.C. 276a to a-7) al
supplemented by Department of Labor
regulations (29 CFR Part 5).
(Construction contracts in excess of
52.000 awarded by grantees and
subgrantees when required by Federal
grant program legislation)
(6) Compliance with Sections 103 and
107 of the Contract Work Hours and
Safety Standards Act (40 U.S.c. 327-330)
as supplemented by Department of
Labor regulations (29 CFR Part 5).
Published by Warren, Gorham & Lamont, Inc.
DEVE~OPMENT REPORTER\
(Conlruction contracts awarded by \
grantees and lubgrantees in excess of
52.000. and in excess of 52.500 for other
contracts which involve the employment
of mechanics or laborers)
(7) Notice of awarding agency
requirements and regulations pertaining
to reporting.
(8) Notice of awarding agency
requirements and regulations pertaining
to patent rights with respect to any
discovery or invention which arises or is
developed in the course of or under such
contract.
(9) Awarding agency requirements
and regulations pertaining to copyrights
and rights in data.
(10) Access by the grantee, the
subgrantee. the Federal grantor agency,
the Comptroller General of the United
States. or any of their duly authorized
representatives to any books,
documents. papers. and records of the
contractor which are directly pertinent
to that specific contract for the purpose
of making audit. examination. excerpts.
and transcriptions. .
(11) Retention of all required records
for three years after grantees or
subgrantees make final payments and
all other pending matters are closed.
(12) Compliance with all applicable
standards. orders. or requirements
issued under section 306 of the Clear Air
Act (42 U.S.C. 1857(h)). section 508 of the
Clean Water Act (33 U.S.c. 1388).
Executive Order 11738. and
Environmental Protection Agency
regulations (40 CFR Part 15). (Contracts.
subcontracts. and subgrants of amounts
in excess of $100.000)
(13) Mandatory standards and policies
relating to energy efficiency which are
contained in the state energy
conservation plan issued in compliance
with the Energy Policy and
Conservation Act (Pub. 1.. 94-163).
t 85.37 Subgnmts.
ia) Stales. States shall follow state
law and procedures when awarding and
administering subgrants (whether on a
cost reimbursement or fixed amount
basis) of financial assistance to local
and u.iian tribal governments. States
shall:
(1) Ensure that every subgrant
includes any clauses required by
Federal statute and executive orders
and their implementing regulations:
(2) Ensure that subgrantees are aware
of requirements imposed upon them by
Federal statute and regulation:
(3) Ensure that a provision lor compli-
ance with Section 85.42 is placed in every
cost reimbursement subJU'lUlt: and
(4) Conform any advances of grant
funds to subgrantees substantially to the
same standards of timing and amount
that apply to cash advances by Federal
agencies.
S7
COMMUNITY DEVELOPMfNT
(b) ALL other grantees. All other grantees
shall follow the provisions of this part
which are applicable to awarding agencies
when awarding and administering sub-
grants (whether on a cost reimbursement
or fixed amount basis) of financial assis-
tance to local and Indian tribal govern-
ments. .Grantees shall:
(I) Ensure that every subgrant includes
a provision for compliance with this part;
(2) Ensure that every subgrant includes
any clauses required by Federal statute
and executive orders and their imple-
menting regulations; and
(3) Ensure that subgrantees are aware
of requirements imposed upon them by
Federal statutes and regulations.
(c) Exceptions. By their own terms,
certain provisions of this part do not
apply to the award and administration of
subgrants:
(1) Section 85.10;
(2) Section 85.11;
(3) The letter-of-credit procedures spec-
ified in Treasury Regulations at 31 CFR
Part 205, cited in ~ 85.21; and
(4) Section 85.50.
.~
.'i
~.
..1'.
Reports, Records, Retention, and
Enforcement
~ 85.40 Monitoring and reporting
program performance.
/ (a) Monitoring Oy grantees. Grantees
are responsible for managing the dav-to-
day operations of grant and subgrant
supported activities. Grantees must mon-
itor grant and subgrant supported activi-
ties to assure compliance with applicable
Federal requirements and that perfor-
mance goals are being achieved. Grantee
monitoring must cover each program,
function or activity.
(b) Nonconstruction performance re-
ports. The Federal agency may, if it
decides that performance information
available from subsequent applications
contains sufficient information to meet
its programmatic needs, require the
grantee to submit a performance report
only upon expiration or termination of
grant support. Unless waived by the Fed-
eral agency this report will be due on the
same date as the final Financial StatuS
Report.
(I) Grantees shall submit annual per- t
formance reports unless the awarding
agency requires quarterly or semiannual
reports. However, performance reports
will not be required more frequently than
quarterly. Annual reports shall be due 90
da~ after the grant year, quarterly or
semI-annual reports shall be due 30 davs
after the reporting period. The final per-
formance report will be due 90 days after
the expiration or termination of grant
support. If a justified request is submitted
by a grantee, the Federal agency may
extend the due date for any performance
report. Additionally, requirements for un-
necessary performance reports may be
waived by the Federal agency.
(2) Performance reports will contain,
for each grant, brief information on the
following:
(i) A comparison of actual accomplish-
ments to the objectives established for the
period. Where the output of the project
can be quantified, a computation of the
cost per unit of output may be required if
that information will be useful.
(ii) The reasons for slippage if estab-
lished objectives were not met.
(iii) Additional pertinent information
including, when appropriate, analysis and
explanation of cost overruns or high unit
costs.
(3) Grantees will not be required to
submit more than the original and two
copies of performance reports.
(4) Grantees will adhere to the stan-
dards in this section in prescribing perfor-
mance reporting requirements for sub-
grantees.
(c) Construction performance reports.
For the most part, on-site technical in-
spections and certified percentage-of
completion data are relied on heavily by
Federal agencies to monitor progress un-
der construction grants and subgrants.
The Federal agency will require addition-
al formal performance reports only when
considered necessary, and never more
frequently than quanerly.
(d) SignifictUll developments. Events
may occur between the scheduled perfor-
mance reporting dates which have signifi-
cant impact upon the grant or subgrant
supported activity. In such cases, the
grantee must inform the Federal agency
as soon as the following types of condi-
tions become known:
(I) Problems, delays, or adverse condi-
tions which will materially impair the
ability to meet the objective of the award.
This disclosure must include a statement
of the action taken, or contemplated, and
any assistance needed to resolve the situa-
tion.
(2) Favorable developments which en-
able meeting time schedules and objec-
tives sooner or at less cost than antici-
pated or producing more beneficial re-
sults than originally planned.
(e) Federal agencies may make site
visits as warranted by program needs.
(f) Wahlers. extensions. (1) Federal
agencies may waive any performance
report required by this part if not needed.
(2) The grantee may waive any perfor-
mance report from a subgrantee when not
needed. The grantee may extend the due
date for any performance report from a
subgrantee if the grantee will still be able
Published by warren. Gornam & Lamont. Inc.
I
09:1563
HDR RF-417
1-15-90
to meet its performance reporting obliga-
tions to the Federal agency.
~ 85.41 Financial reporting.
(a) GeneraL. (1) Except as provided in
paragraphs (a)(2) and (5) of this section,
grantees will use only the forms specified
in paragraphS (a) through (e) of this
section, and such supplementary or other
forms as may from time to time be
authorized by OMB, for:
(i) Submitting financial reports to Fed-
eral agencies, or
(ii) Requesting advances or reimburse-
ments when letters of credit are not used.
(2) Grantees need not apply the forms
prescribed in this section in dealing with
their subgrantees. However, grantees shall
not impose more burdensome require-
ments on subgrantees.
(3) Grantees shall follow all applicable
standard and supplemental Federal agen-
cy instructions approved by OMB to the
extend required under the Paperwork
Reduction Act of 1980 for use in connec-
tion with forms specified in paragraphs'
(b) through (e) of this section. Federal
agencies may issue substantive supple-
mentary instructions only with the ap-
proval of OMB. Federal agencies may
shade out or instruct the grantee to disre-
gard any line item that the Federal agency
finds unnecessary for its decisionmaking
purposes. . .
(4) Grantees will not be required to
submit more than the original and two
copies of forms required under this part.
(5) Federal agencies may provide com-
puter outputs to grantees to expedite or
contribute to the accuracy of reporting.
Federal agencies may accept the required
information from grantees in machine
usable format or computer printouts in-
stead of prescribed forms.
(6) Federal agencies may waive any
report required by this section if not
needed.
(7) Federal agencies may extend the
due date of any financial report upon
receiving a justified request from a grant-
ee.
(b) Financial Status Report-(l) Form.
Grantees will use Standard Form 269 or
269A, Financial Status Report, to report
the status of funds for all nonconstruction
grants and for construction grants when
required in accordance with
~ 85.41 (e)(2)(iii) of this section.
(2) Accounting basis. Each grantee will
report program outlays and program in-
come on a cash or accrual basis as pre-
scribed by the awarding agency. If the
Federal agency requires accrual informa-
tion and the grantee's accounting records
are not normally kept on the accrual
basis, the grantee shall not be required to
convert its accounting system but shall
15
09: 1564
develop such accrual information through
and analvsis of the documentation on
hand. .
(3) FrequenC}'. The Federal agency may
prescribe the frequency of the report for
each project or program. However, the
report will not be required more frequent-
ly than quarterly. If the Federal agency
does not specify the frequency of the
report, it will be submitted annual Iv. A
final report will be required upon expira-
tion or termination of grant support.
(4) Due date. When reports are re-
quired on a quarterly or semiannual ba-
sis, they will be due 30 days after the
reporting period. When required on an
annual basis, they will be due 90 days
after the grant year. Final reports will be
due 90 days after the expiration or termi-
nation of grant support.
(c) FederaL Cash Transactions Report-
(I) Form. (i) For grants paid by letter or
credit, Treasury check advances or elec-
tronic transfer of funds, the grantee will
submit the Standard Form 272, Federal
Cash Transactions Report, and when nec-
essary, its continuation sheet, Standard
Form 272a, unless the terms uf the award
exempt the grantee from this require-
ment.
(ii) These reports will be used by the
Federal agency to monitor cash advanced
to grantees and to obtain disbursement or
outlay information for each grant from
grantees. The format of the report may be
adapted as appropriate when reporting is
to be accomplished with the assistance of
automatic data processing equipmenL
provided that the information to be sub-
mitted is not changed in substance.
(2) Forecasts of FederaL cash require-
ments. Forecasts of Federal cash require-
ments may be required in the "Remarks"
section of the report.
(3) Cash in hands of subgrantees. When
considered necessary and feasible. by the
Federal agency, grantees may be required
to report the amount of cash advances in
excess of three days' needs in the hands of
their subgrantees or contractors and to
provide short narrative explanations of
aEtions taken by the grantee to reduce the
excess balances.
(4) Frequency and due date. Grantees
must submit the report no later than 15
working days following the end of each
quarter. However, where an advance ei-
ther by letter of credit or electronic
transfer. of funds is authorized at an
annualized rate of one million dollars or
more, the Federal agency may require the
report to be submitted within 15 working
days following the end of each month.
(d) Request for advance or reimburse-
ment-( 1) Advance payments. Requests
for Treasury check advance payments will
be submitted on Standard' Form 270,
Request for Advance or Reimbursement.
I
HOUSING AND DEVElOPMENT REPORTER
(This form will not be used for draw-
downs under a letter of credit, electronic
funds transfer or when Treasury check
advance payments are made to the grant-
ee automatically on a predetermined ba-
sis.)
(2) Reimbursemems. Requests for
reimbursement under nonconstruction
grants will also be submitted on Standard
Form 270. (For reimbursement requests
under construction grants, see paragraph
(e)( I) of this section.)
(3) The frequency for submitting pay-
ment requests is treated in ~S5.4I(b)(3).
(e) Outlay report and request for reim-
bursement for construction programs-( 1 )
Grants that support construction activi-
ties paid by reimbursement method. (i)
Requesters for reimbursement under con-
struction grants will be submitted on
Standard Form 271, Outlay Report and
Request for Reimbursement for Con-
struction Programs. Federal agencies
may, however, prescribe the Request for
Advance or Reimbursement form, speci-
lied in ~ S5.41 (d), instead of this form.
(ii) The frequency for submitting reim-
bursement requests is treated. in
~ S5.4I(b)(3).
(2) Grants that support construction
activities paid by Letter of credit, eLectronic
funds transfer or Treasury check advance.
(i) When a construction grant is paid by
letter of credit. electronic funds transfer
01' Treasury check advances, the grantee
will report its outlays to the Federal
agency using Standard Form 271, Outlay
Report and Request for Reimbursement
for Construction Programs. The Federal
agency will provide any necessary special
instruction. However, frequency and due
date shall be governed by ~ S5.41(b)(3)
and (4).
(ii) When a construction grant is paid
by Treasury check advances based on
periodic requests from the grantee, the
advances will be requested on the form
specified in ~ S5.4l(d).
(iii) The Federal agency may substitute
the Financial Status Report specified in
~ S5.4l(b) for the Outlay Report and
Request for Reimbursement for Con-
struction Programs.
(3) Accounting basis. The accounting
basis for the Outlay Report and Request
for Reimbursement for Construction Pro-
grams shall be governed by ~ S5.41(b)(2).
~ 85.42 Retention and access
requirements for records.
(a) Applicability. (I) This section ap-
plies to all financial and programmatic
records, supporting documents, statistical
records, and other records of grantees or
subgrantees which are:
PubliShed by Warren. Gornam & Lamont. Inc.
(i) Required to be maintained by the
terms of this part, program regulations or
the grant agreement, or
(ii) Otherwise reasonably considered as
pertinent to program regulations or the
grant agreement.
(2) This section does not apply to
records maintained by contractors or sub-
contractors. For a requirement to place a
provision concerning records in certain
kinds of contracts, see ~ S5.36(i)(10).
(b) Length of retention period. (I) Ex-
cept as otherwise provided, records must
be retained for three vears from the
starting date specified in 'paragraph (c) of
this section.
(2) If any litigation, claim, negotiation,
audit or other action involving the rec-
ords has been started before the expira-
tion of the 3-year period, the records
must be retained until completion of the
action and resolution of all issues which
arise from it, or until the end of the
regular 3-year period, whichever is later.
(3) To avoid duplicate recordkeeping,
awarding agencies may make special ar-
rangements with grantees and subgran-
tees to retain any records which are
continuously needed for joint use. The
awarding agency will request transfer of
records to its custody when it determines
that the records possess long-term reten-
tion value. When the records are trans-
ferred to or maintained by the Federal
agency, the 3-year retention requirement
is not applicable to the grantee or sub-
grantee.
(c) Starting date of retention period-
(l) General. When grant support is con-
tinued or renewed at annual or other
intervals, the retention period for the
records of each funding period starts on
the day the grantee or subgrantee submits
to the awarding agency its single or last
expenditure report for that period. How-
ever, if grant support is continued or
renewed quarterly, the retention period
for each year's records starts on the day
the grantee submits its expenditure report
for the last quarter of the Federal fiscal
year. In all other cases, the retention
period starts on the day the grantee
submits its final expenditure report. If an
expenditure report has been waived, the
retention period starts on the day the
report would have been due.
(2) Real property and equipment rec-
ords. The retention period for real proper-
ty and equipment records starts from the
date of the disposition or replacement or
transfer at the direction of the awarding
agency .
(3) Records for income transactions
after grant or subgrant support. In some
cases grantees must report income after
the period of grant support. Where there
is such a requirement, the retention peri-
od for the records pertaining to the earn-
16
COMMUNITY DEVELOPMENT
I
~
ing of tbe income starts from the end of
the grantee's fiscal vear in which the
income is earned. .
(4) Indirect cost rate proposals. cost
allocations pLans. etc. This paragraph ap-
plies to the following types of documents,
and their supporting records: IndireCt
cost rate computations or proposals, cost
~Uocation plans, and any similar aClrount-
mg computations of the rate at wbich a
particular group of costs is chargeable
(such as computer usage chargeback rates
or composite fringe benefit rates).
(i) If submitted for negotiation. If the
proposal, plan, or other computation is
required to be submitted to the Federal
Government (or to the grantee) to form
the basis for negotiation of the rate, then
the ~-year retention period for its sup-
portmg records starts from the date of
such submission.
(ii) If not submitted for negotiation. If
~he proposal, plan, or other computation
IS not required to be submitted to the
Federal Government (or to the grantee)
for n~otiati,?n purposes, then the 3-year
retentIon penod fo~ the proposal plan, or
computatIon and Its supporting records
~tarts fr,?m end of the fiscal year (or other
accounttng period) covered by the pro-
posal, plan, or other computation.
(d) Substitution of microfiLm. Copies
~a~e by microfilming, photocopying, or
slmllar methods mav be substituted for
the original records.'
(e) Access to records-(l) Records of
grantees and subgrantees. The awarding
agency and the ComptroUer General of
t~e United States, or any of their autho-
nzed representatives, shall have the right
of access to any pertinent books, docu-
ments, papers, or other records of grant-
ees and subgrantees which are pertinent
to the grant, in order to make audits
examinations, excerpts, and transcripts.'
. (2) Expiration of right of access. The
~g~ts of access in this section must not be
hmlted to the required retention period
but shaU last as long as the records are
retained.
(f) Restrictions on public access. The
Federal Freedom of Information Act (5
U.S.C. 552) does not apply to records
Unless required by Federal, State, or local
law, grantees and subgrantees are not
required to permit public access to their
records.
if
~ 85.43 Enforcement.
(a) Remedies for noncompliance. If a
grantee or subgrantee materiallv fails to
comply with any term of an award,
whether stated in a Federal statute or
regulation. an assurance, in a State plan
or application, a notice of award or
elsewhere, the awarding agency may take
one or more of the following actions, as
appropriate in the circumstances:
(1) Temporarily withhold cash pay-
ments pending correction of the deficien-
cy by the grantee or subgrantee or more
~ere enforcement action by the award-
mg agency.
(2) Disallow (that is, deny both use of
funds and matching credit for) all or part
of the cost of the activity or action not in
compliance,
(3) Wholly or partly suspend or termi-
nate the current award for the grantee's or
subgrantee's program,
(4) Withhold further awards for the
program, or
(5) Take other remedies that may be
legally available.
(b) Hearings. appeals. In taking an
enforcement action, the awarding agency
will provide the grantee or subgrantee an
opportunity for such hearing, appeal, or
other administrative proceeding to which
the grantee or subgrantee is entitled under
any statute or regulation applicable to the
action involved.
(c) Effects of suspension and termina-
tion. Costs of grantee or subgrantee re-
sulting from obligations incurred by the
grantee or subgrantee during a suspension .
or after termination of an award are not
allowable unless the awarding agency
expressly authorizes'them in the notice of
suspension or termination or subsequent-
ly. Other grantee or subgrantee costs
during suspension or after termination
whi~ are necessary and not reasonably
aVOIdable are allowable if:
<:I) The costs result from Obligations
whIch were properly incurred by the
grantee or subgrantee before the effective
date of suspension or termination, are not
in anticipation of it., and, in the case of a
termination, are noncancellable, and,
(2) The costs would be allowable if the
award were not suspended or expired
normally at the end of the funding period
in wbich the termination takes effect.
(d) Relationship 10 debarment and sus-
pension. The enforcement remedies iden-
t~fied in this section, including suspen-
sIon and termination, do not preclude
grantee or subgrantee from being subject
to "Debarment and Suspension" under
E.O. 12549 (see ~ S5,35).
~ 85.44 Termination for convenience.
Except as provided in ~ S5.43 awards
may be terminated in whole or in part
onlv as follows:
(a) By the awarding agency with the
co~sent of the grantee or subgrantee in
whlcb case the two parties shall agree
upon the termination conditions, includ-
ing the effective date and in the case of
panial termination, the portion to be
terminated, or
f>ubIished by Warren. Gornam & Lamcint. Inc.
I
09:1565
HDR RF-417
1-15-90
(b) By the grantee or subgrantee upon
written notification to the awarding agen-
cy, setting forth the reasons for such
termination, the effective date, and in the
case of partial termination, the portion to
be terminated. However, if, in the case of
a partial termination, the awarding agen-
cy determines that the remaining portion
of the award will not accomplish the
purposes for which the award was made,
the awarding agency may terminate the
award in its entirety under either ~ 85.43
or paragraph (a) of this section.
Subpart O-After- The-Grant
Requirements
~ 85.50 Ooseout.
(a) General. The Federal agency will
close out the award when it determines
that aU applicable administrative actions
and aU required work of tbe grant has
been completed.
(b) Reports. Within 90 days after the
expiration or termination of the grant, the
grantee must submit all financial, perfor-
mance, and other reports required as a
condition of the grant. Upon request by
th~ gr~tee, Federal agencies may extend
thIS umeframe. These mav include but
are not limited to: .
( I) Final performance or progress re-
port.
(2) Financial Status Report (SF 269) or
OutLay Report and Request for Reimburse-
ment for Construction Programs (SF-271)
(as applicabLe).
(3) FinaL request for payment (SF-270)
(if applicable). .
(4) Invention disclosure (if applicable).
(5) Federally-owned property report: In
accordance with g 85.32(f), a grantee
must submit an inventorY of aU federaUv
own~d pro~erty (as distinCt from property
acqUIred WIth grant fundS) for which it is
accountable and request disposition in-
structions from the Federal agency of
property no longer needed.
(c) . Cost .adjustment. The Federal agen-
cy wIll, wlthm 90 days after receipt of
reports in paragraph (b) of this section,
make upward or downward adjustments
to the aUowable costs.
(d) Cash adjustments. (1) The Federal
agency wiU make prompt payment to tbe
grantee for allowable reimbursable costs.
(2) The grantee must immediately re-
fund to the Federal agenCY any balance of
unobligated (unencumbered) cash ad-
vanced that is not authorized to be re-
tained for use on other grants.
~ S5.51 Later disallowances and
adjustments.
The closeout of a grant does not affect:
17
09:1566
(a) The Federal agency's right to disal-
low costs and recover funds on the basis
of a later audit or other review;
(b) The grantee's obligation to return
anv funds due as a result of later refunds,
coirections, or other transactions;
(c) Records retention as requIred in
~ S5.42;
(df Property management requirements
in ~ S5.31 and S5.32; and
(e Audit requirements in ~ S5.26.
~ 85.52 Collection o( amounts due.
(a) Any funds paip to a grantee in
excess of the amount to which the grantee
I
HOUSING AND DEVELDf!.1ENT tU:PORTER
is finally determined to be entitled under
the terms of the award constitute a debt
to the Federal Government. If not paid
within a reasonable period after demand,
the Federal agency may .reduce the debt
by:
(1) Making an administrative offset
against other requests for reimburse-
ments,
(2) Withholding advance payments
otherwise due to the grantee, or
(3) Other action permitted by law.
(b) Except where otherwise provided by
statutes or regulations, the Federal agency
Published by Warren. Gorham & Lamont, Inc.
will charge interest on an overdue debt in
accordance with the Federal Claims Col-
lection Standards (4 CFR Ch. II). The
date from which interest is computed is
not extended by litigation or the filing of
any form of appeal.
Subpart E-Entittement [Reserved]
Dated: February 10, 1988.
Carl D. Covitt,
Acting Secretary.
18
I
09: 1501
HDR RF -185
3 - 9- 81
COMMUNITY DEVELOPMENT BLOCK GRANTS
, I APPENDIX J
COST PRINCIPLES FOR STATE AND LOCAL GOVERNMENTS
OMB CIRCULAR A -87
OFFlCE OF MAHAGEMENT AND
BUDGET
eoat Principia for State and Local
Govemmenta
[46 FR 9548. Jan. 28.1981)
. ".;\
....
~~
-
ACTlOH: Final policy.
SUMMARY: This notice advises that
Federal Management Circular 74-4
(Revised). dated July 18. 1974. is
reissued under its original desilZI1ation of
Office of Management and Budget
Circular No. A-a7. No substantive
changes are made in L~e Circular. The
Circular is set forth below in its entirety.
EFFECnvE DATE: The revision was
effective January 15. 1981.
FOR FURTHER INFORMAnON CONTACT:
Palmer Marcantonio. Deputy ChieL
Financial Manegement Branch. Budget
Review Division. 6002 New Executive
Office Building. Wnshington. D.C. 20503.
202/3954773.
TO OBTAIN SINGLE COPIES OF THE
CtRCULAR, CONTACT: Document
Distributio:1 Center. Office of
Administl"8tion. G-Z.16 New Executive
Office Building, Washington. D.C. 20503.
TO OBTAIN MUr..TtPLE COPIES. CO~"TACT:
Superintendent of Documents. U.S.
Govemr.1ent Printing Office.
Washington. D.C. 20~C2.
Daniel F. MaDn.
Budget a."la' ....1unogement Officer.
Janua!'}' 15. 1981.
To: The Heads of Executive Departments and
Esta ~iishml!nts.
Subject: Cost ~rinr::;:lcs for Slate and luc'l.l
governments.
1, Purpose. This Circular establishes
principles and standards for determining
costs applicable to groints. conlracts. and
other agreemena with S:ate and 101".:11
governments and fE!dernlly-recognized Indian
tribal governmenls.
2.. Supersession. This Circular supersedes
Federal Management Circular 74-4 as
revised. The Circular is reissued under its
original designation of OMB Circular A-87.
3. SlJmma!'J: of changes. No substantive
chang~s are !!lade in t~e Circular.
4. PoliC}' inter-t. This Circular provices
principles for determining the allownble costs
of programs administered b)' Slate. locaL and
federally-recognized Indian trihal
governments under ~rants fro:n IInd contracts
with the Federal Government. The" are
. designed to pro~'ide t1:e basis for a' uniform
approach to the pro~lcm of determining costs
and to promote efikien,;v and ll(:t1er
relationships between g;nntees and the
Federal Govern::;cnt. The principles are for
detennining co~s only and are not intended
to identify the Cil'ClJmSlanCes nor to dictate
the extent of Federal and State or local
. participalion in the linClncing of a particular
projecL They are desit!ned 10 provide that
federally-assisted progr;;ms bear their fair
.bare of colli rec:ogniz.ed UDder the..
principle. except wbere re.mcted or
prohibited by itIw. No provi.ion for profit or
other increment above coat i. inlended.
So Applicability and .cope.
a. The provi.icma of thia Circulu apply 10
aU Federal agenci.. relpoDlible for
acimini.tering provam. that involve vanll
and contracll with Slale.locaL and federally-
recognized Indian tribal govenunenls.
b. III provisioDl do nOI apply to grant. and
contract. with:
(1) Publicly-nnanced educational
insUluUon. .ubjecl to Offic:c of Mllnagement
and Budget CircuJar A-:1. and
(Z) Publicly owned huspitals and olher
providen of medical care lubiect to
requiremenll promulgated by the .ponloring
Federal agencies.
Any other exception. will be approved by
the Office of Managecll:nl and Budget in
particular caBes where IIdequate justifiCAtion
il presented.
8. At:.Dchments. The prindplellllnd relKted
poliC)' guides are set lorth III the attachmenls.
which IU"e:
Altachment A-Principles for determining
COSIs applicable to lZrana lInd contracts
with Slate. local. and ledomll!y-recogni:Led
lndilU1 tribal governmllJltl!.
Altachment s-5tllndanis tor r.elected items
. or cO'L.
7. Inquiries. F~her Infonnatiun concerning
this Circular !lJay be ob!alned by conticting
Ihe Financi~ M&.nalZeml!nt .eran::h. B'!cl8et
Review Dh-ision. Office: of Mllna~ement and
BudgeL Wuhinglcn. D.C. :msas.. leiephll!!!!
20:-395-477'3.
James T. MclnIYn!. Jr.
Director.
[Circular No. A~7J
Attachment A-Principles for
Determining Costs Applicable to Grants
aDd Contracts With Slale, Local. aDd
Federally Recogni%et:! I:Joi..1::1 Tribal
Govemmects
TABLE OF COr...-rDr"TS
A. Purpose and scope
1. Obje,cti,'es
Z. Policy guide.
3. Application
B. Definitions
1. Approval or alZt.'lorization of thl! j!T8ntor
Fe<ieralagency
2.. Cost allocaliun plan
3. CosI .
4. Cost objective
So Federal agency
6. Federally-recoplized Indi;lil tribal
governments
7. Grant
8. Grant progr:lm
9. Grantee
10. Local unit
11. Other State o~ 10C'.a1 ag~ncics
12.. Services
13. Supporting services
C. Basic guidelilles
1. Factors affecting allowllbHily of costs
2.. Allocable Co,ls
3. Applicable credits
D. Composition of t:O$t
1. TOlal cost .
Pubhsned by Warren. Gornam & Lamont. Inc
Z. On.meation of co.t.
E. Direct CO$U
1. General
z. Application
F. Indirect COS18
1. General
z.. Grantee departmental indirect co.t.
3. UmJtallon on indirect cosu
G. Cost incurred by agencies other than the
grantee
t. General
2.. Alternative method. of detennining
indirect co.t
H. Cost incurred by grantee department for
others
1. General
J. Cost allocation plan
1. General
z. Requirements
3. lnstructions for preparation of co,l
Klloeation plan.
(. Negotialion and approval of indirect Cosl
proposals for Slale.
5. Negotiation and approVKI of indirect cost
propoaals for local governments
6. Negotiation and approval of indirect cosl
proposals ror federaUy-rerogni%.cd lndian
lribalgovernments
7. Resolution of problems
A. Purpose and scope.
1. Objectives. This Attachment sets
forth principles for determining the
allowable costs of programs
admmistered by State. local. and
fedl?rally-recognized lndia.'1 tribal
go\'emme:llS under grants from a~rl
contracts with the Federal Government.
Thp. principles are for the pu:yose of
cost determination ?nd are not intenued
to identify the circumstances or dictate
the extent oi Federal and State 0:' local.
participa tion in the financing of a
particular grant. They are designed to
provide that federally-assisted programs
bear their fair share of costs recognized
under these principles. except where
restricted or prohibitp.d by law. No
provision for profit or other incremenl
above cost is intended.
Z. Poiicy gl:ides. The application of
these pril.ciples is based on the
fundamental premises that:
a. Stale. local. and federallv
recognized Indian tribal governments
are responsible for the efficient and
effective administration of grant and
contract programs through the
application of sound management
practices.
b. The grantee or contractor assumes
the responsibility for seeing that
federally-ass:sted program funds have
been expended and accou-'1ted for
consistent with underlying agreernents
and p:'ogram objectives.
c. Each grantee or contractor
organization. in recognition of its own
unique combination of staff facilities
and experience. will have the pn."TIa'1'
responsibility for employing whatever
form of organization and management
09: 1502
techniques may be necessary to assure
proper and efficient administration.
3. Application. These principles will
be applied by all Federal agencies in
determining costs incurred by State.
local. and federally recognized Indian
tribal governments Under Federal grants
and cost reimbursement type contracts
(including subgrants and subcontracts)
except those with (a) publicly-financed
educational institutions subject to Office
of Management and Budget Circular A-
21. and (b) publicly-owned hospitals and
other providers of medical care subject
to requirements promulgated by the
sponsoring Federal agencies.
B. Definitions.
1. Approval or authorization of the
grantor Federal agenc)' means
documentation evidencing consent prior
to incurring specific cost.
2. Cost allocation plan means the
documentation identifying,
accumulating. and distributing
allowable costs under lVants and
contracts together with the allocation
mcthods used.
J. Cost. as used herein. means cost as
dctermined on a casR. accrual. or other
basis acceptable to the Fedcral grantor
agency as a discharge of the grantec's
accountability for Federal funds.
4. Cost objective means a pool. center.
or area established for the accumulation
of cosl Such areas include
organizational units. functions. objects
or items. of expense. as well all ultimate
cost.objectives including specific grants.
projects. contracts. and other activities.
5. Federal agency means any
department. agency. commission. or
instrumentality in the executive branch
of the Federal Government which makes
grants to or contracts with State. local.
or federally-recognized Indian tribal
governments.
6. Federally-recognized Indian tribal
~o"'emments means the governing body
or a governmental agency of any Indian
tribe. band. nation. or other organized
group or community (including any
native village as defined in Section J of
the Alaska Native Claims Settlement
Act. 85 Stat. 688) certified by the
Secretary of the Interior as eligible for
the special programs and services
provided by him through the Bureau of
Indian Affairs.
7. Grant means an agreement between
the Federal Government and a State.
local. or federally-recognized Indian
tribal government whereby the Fedcral
Government provides funds or aid in
kind to carry out specified programs.
services. or activities. The principles
and policies stated in this Circular as
applicable to grants in general also
apply to any federally-sponsored cost
reimbursement-type of agreement
I
HOUSING & DEVELOPMENT REPORTER
I
performed by a Slate. local. or federally-
recognized Indian tribal government.
8. Grant program means those
activities and operations of the grantee
which are necessary to carry out the
purposes of the grant. including any
portion of the program financed by the
grantee. . .
9. Grantee means the department or
agency of State. locaL. or federally
recognized ~dian tribal government
which is responsible for administration
of the granl
10. Local unit means any political
subdivision of go"'ernment. below the
Stll te level.
11. Ocher Slate or local agencies
means department or agencies of the
State or local unit which provide goods.
facilities. and services to a grantee.
12. Sennces. as uscd hert!in. means
goods and facilities. as well as services.
13. Supporting services means
auxiliary functions necessary to sustain
the direct effort involved in
administcring a gr-dnl program or an
activity providing service to the grant
progrClm. These sen'ices may be
l,;entralized in the grantee department or
in sc:ne other agency. and inlcude .
procurcmant. payroll. personnel
functions. maintenance and operation of
spClce. data p'rocessing. accounting.
budgeting. auditing. mail and messenger
service. and the like.
C. Basic guidelines.
1. Factors a.ffeeting allowability of
costs. To allowauie under a grant
program. costs must meet the following
general criteria:
a. Be necessary and reasonable for
proper and efficient administration of
the grant programs. be allocable thereto
under these principles. and except as
specifically provided herein. not be a
general expense required to carry out
the overall responsibilities of State,
local or federally-recognized Indian
tribal governments.
b. Be authorized or not prohibited
under State or local laws or regulations.
c. Conform to any limitations or
exclusions set forth in these principles.
Federallliws. or other governing
limitations as to t)-pes or amounts of
cost items.
d. Be consistent with policies.
regulations. and procedures that apply
uniformly to both federally assisted and
other activities of the unit of government
of which the grantee is a part.
e. De accorded consistent treatment
through application of generally
accepted accounting principles
appropriate 10 the circumstances.
r. Not be allocable to or included as a
cost of any other federally financed
program in eithcr the current or a prior
period.
PubliShed by Warren. Gorham & Lamont. Inc.
g. Be net of all applicable credits.
Z. Allucable costs.
a. A cost is allocable to a particular
cost objectin to the extent of benefits
received by such objective. .
b. Any cosl allocable to a particular
grant or cost objective under the .
principles provided for in this Circular
mav not be shifted to other Federal
grant programs to overcome fund
deficiencies. avoid restrictions imposed
by law or grant agreements. or for other
rea lions.
c. Where an ailocation of joint cost
will ultimately result in chargcs to a
grant program. an allocation plan will be
'required liS prescribed in Section J.
3. Applicable credits.
a. App!icaLle credits refer to those
receipts or reduction of expenditure-
type transactions .which offset or reduce
expense items allocable 10 grants as
direct or indirect costs, Examples of
such transactions are: purchase
discounts; I'euates or allowances.
recoveries or indeminties on losses: sltle
of pubiicationll. equipmtlnt. and scrap:
inl:ome from personc:sl or incidcntal
services: ar.d adjustments of
overpayments or erroneous charges.
b. Applicable credits may also arise
when Federal funds are reeeh'ed or are
available from sources other than the
grant program involved to finance
operations or capital items of the
grantee. This includes costs arising from
the use or depreciation of items donated
or financed by the Federal Government
to fulfill matching requirments under
another grant program. These types of
credits should likewise be used to
reduce related eXDenditures in
determining the rates or amounts
applicable to a given grant.
D. Composition of Cost
1. Total cost. The total cost of a grant
program is comprised of the allowable
direct cost incident to its performance.
plus its allocable portion of allowable
indirect costs. less applicable credits.
2. ClaSSIfication of costs. There is no
universal rule for classifying certain
costs as either direct or indirect under
every accounting system. A cost may be
direct with respect to some specific
service or function. but indirect with
respect to the grant or other ultimate
cost objective. It is essential. therefore.
that each item of cost be treated
consistently either as a direct or an
indirect cost. Specific guides for
determining direct and indirect costs
allocable under grant programs are
provided in the sections which follow:
E. Direct Costs
1.. General. Direct costs are those that
can be identified specifically with a
COMMUNITY DEVELOprENT BLOCK GRANTS
j
particular cost objective. These costa
may be charged directly to grants,
contracts. or to other programs agamat
which costs are finally lodged. Direct
costs may also be charged to Cost
objectives used for the accumulation or
costs pending distribution in due course
to grants and other ultimate cost
objectives.
%. Application. Typical direct costs
chargeable to grant programs are:
a. Compenaation or employees for the
time and efforts devoted specifically to
the execution of grant programs.
b. Cost of materials acquired.
consumed. or expended specifically for
the purpose of the grant.
c. Equipment and other approved
ca;Jital expenditures.
d. Other items of expense incurred
specifically to carry out the grant
agreement.
e. Services furnished specifically for
the grant program by other agencies.
provided such charges are consistent
with criteria outlined in Section C of
these principles.
F. Indirect Costs
1. General. Indirect costs are those (a)
incUlTed for a common or joint purpose
benefiting more than one cost objective,
and (b) not readily assignable to the coct
objectives" specifically benefited.
without effort disproportionate to the
results achieved. The term "indirect
costa," as used herein. apphes to costa
of this type originating in the grantee
department. as well as those incurred by
other departmenta in supplying goods.
services..and facilities. to the grantee
department. To facilitate equitable
distribution or indirect expenses to the
cost objectives served. it may be
necessary to establish a number or pools
of indirect cost within a grantee
depa'rtment or in other agencies
providing services to a grantee
department. Indirect cost pools should
be distributed to benefiting cost
objectives on bases which will produce
an equitable reault in consideration of
relative benefits derived.
%. Grantee departmental indirect
costs. All grantee departmental indirect
costs, including the various levels of
supervision. are eligible for allocation to
grant programs provided they meet the
conditions set forth in this Circular. In
lieu of determining the actual amount or
grantee departmental indirec. cost
allocable to a grant program. the
following methods may be used.
a. Predetermined fbced rates for
indirect costs. A predetermined fixed
rate for computing indirect costs
applicable to a grant may be negotiated
annually in situations where the cost
experience and other pertinent facta
:~
i
~-
available are deemed sufficient to
enable the contracting parties to reach
an informed judgment (1) as to the
probable level of indirect costs in the
grantee department during the period to
be covered by the negotiated rate. and
(2) that the amount allowable under the
predetermined rate would not exceed
actuallniiirect cost.
b. Negotiated lump sum for overhl1Od.
A negotiated fIXed amount in lieu of
indirect costs may be appropriate under
circumstances where the benefits
derived from a grantee department's
indirect services cannot be readily
determined as in the case of smalL self-
contained or isolated activity. When this
method Is used. a detennina tion should
be made that the amount negotiated will
be approximately the same al the actual
indirect COlt that may be incurred. Such
amounts negotiated in lieu of indirect
costs will be treated aD an offlet to total
indirect expensel of the grantee
department before allocation to
remaining activities. The base on which
IUch remaining expenses are allocated
should be appropriately adjusted.
3. Limitation on indirect costs.
a. Federal grants may be subject to
laws that limit the amount of indirect
costs that may be allowed. Agencies
that sponsor grants of this type will
establish procedures which will assure
that the amount actually allowed for
indirect costs under each such grant
doel not exceed the maximum
allowable under the statutory limitation
or the amount otherwile allowable
under this Circular, whichever il the
llmaller.
b. When the amount allowable under
a Itatutory limitation is leiS than the
amount otherwise allocable al indirect
costs under this Circular, the amount not
recoverable as indirect costs under a
grant not be shifted to another federally-
sponaored grant program or contract.
G. Cost Incurred by Agencies Other
Than the Grantse
1. General. The cost of service
provided by other agencies may only
include allowable direct costs of the
lervice plus a pro rata share of
allowable IUpporting COlts (Section
B.l%.) and lupervialon directly required
in performing the service, but not
supervi.lion of a general nature such as
that provided by the head of a
department md his Itaff alsistants not
directly involved in operationl.
However. supervision by the head of a
department or agency whose sole
function is providing the service
furnished would be an eligible cost..
Supporting costs include thole fumilhed
by other unitl of the supplying
department or by other agencies.
Published by Warren. Gomam & Lamont Inc.
I
09: 1503
HDR RF -185
3-9-81
%. Altltmatin method. of detMmining
indil'flCt cost. In lieu of determining
actual indirect cost related to a
particular service furnished by another
agency, either of the following
alternative method. may be u.ed
provided only one method is uaedfar a
specific lervice durlllK the fiscal year
involved. .
a. Standard indirect rats. An amount
equal to ten percent of direct labor cost
in providing the lervice performed by
another State agency (excluding
overtime, lbilt. or holiday premhiml and
fringe benefitl) may be allowed in lieu
of actual allowable indirect COlt for that
service.
b. Predetermined fixed rata. A
predetermined fiXed rate for indirect
cost of the unit or activity providing
lervice may be negotiated as let forth in
Section F.%.a.
H. Cost Incurred by Grantee
Department for Others
1. General. The prindpies provided in
Section G will also be uled ill
determining the COlt of service.
'Provided by the grantee department to
another agency.
J. Cost Allocation Plan
1. General. A plan for allocation or
costs Will be required to IUpport the
distribution of any joint COlta related to
the grant program. All costa included in
the plan will be lupported by Cormal
accounting records which w'l1l
substantiate the .propriety of eventual
charges.
%. Rsquirements. The allocation plan .,
of the grantee department Ihould cover
all joint COlts of the department as well
al COlts to be allocated under plana of
other agencies or organizational units
which are to be included in the costs of
federallY-lponsored programs. The cost
anocation plana of all the agencies
rendering lervicel to the grantee
department. to the extent feasible,
should be presented in a single
document. The allocation plan should
contain, but not necessarily be limited
to, the followinS.
a. The nature and extent or "ervices
provided and their relevance to the
federaIlY-lponllored program&.
b. The items of o!xpense to be
included.
c. The methods to be uled ill
distributing cost.
~. Instructions for preparation of cost
oJ/ocation plans. The Department of
Health and Humsr. Se1'\o1cel'in
consultation withthe_oL~er Federal
agencies co~cemed. will be responsible
for developing and ilsuing the
inltructions for use by grantees in
preparation of cost allocationl)lana.
. 0'9: 1504
This responsibility applies to both
central .upport .ervice. at the State.
local. and Indian tribal level and
indirect cost proposal. of individual
grantee departments.
4. Negotiation and approval of
indirect cost proposals for Stotes.
a. The Department of Health and
Human Services, in collaboration with
the other Federal agencies concerned.
will be responsible for negotiation.
approvaL and audit of cost allocation
plans. which. will be submitted to it by
the States. 11I8se plans will cover
central support service costs of the
State.
b. At the grantee department level in a
State. a single cognizant Federal agency
will have responsibility similar to that
set forth in a. above. for the negotiation.
approval. and audit of the indirect cost
proposal. A current list of agency
assignments i. maintained by the Office
of Management and Budget.
c. Questions conceming the cost
allocation plans approved under a. and
b. above. should be directed to the
agency responsible for, such .ctpprovals.
s. Negotiation and approval of
indirect cost proposals for local
governments.
a. Cost allocation plans will be
retained at the local government level
for audit by a designated Federal agency
except in those cases where that agency
requests that cost ~location plans be
submitted to it for negotiation and
approval .
b. A list of cognizant Federal agencies
assigned responsibility for negotiation.
approval and audit of central support
service cost allocation plans at the local
govemmentlevel is maintained by the
the Office of Management and Budget.
c. At the grantee department level of
local governments. the Federal agency
with the predominant interest in the
wodc of the grantee department will be
responsible for necessary negotiation.
approval and audit of the indirect cost
proposal
6. Negotiation and approval of
indirect COl't proposals for federally
recognir,ed Indian tribal governments.
The Federal agency with the
predominant interest in the work of the
grantee department will be responsible
for necessary negotiation. approval and
audit of the indirect cost proposal.
7. Resolution of problems. To the
extent that problems are encountered
among the Federal agencies in
connection with 4 and 5 above, the
Office of Management and Budget will
lend assistance as' required.
I
HOUSING & DEVELOPMENT REPORTER
I
(CIrQlIar No. A-I7]
Attachment B-Standards for Selected
llems of Cotts
Table of,Cont...
A. Purpose and appliClJbiJity
t. Objective
z. Application
B. ....//owable CD$ts
t. Accountinl
Z. Advertising
3. Advisory councils
4. ....udll service
S. Bonding
6. Budpting
7. Buildins Ie... management
8, Central slores
9. Communicalions
10. Cumpensation Cor personal services
11. Depreciation and use allowances
12. Disbursing service
13. F.mployee Crinle benefits
14. Employee morale. health andwelCare
costs
15. Exhibits.
'6. Legalexpenaes
17. Maintenance and repair
1L Malerials and supplies'
19. Memberships. subscriptions and
proCessional activites
20. Motor pools
21. Payroll preparation
22. Personnel administration
23. Printinl and reproduction
24. Procurement service
25. Tax!!s
28. Training and educalion
21. Transportation
Z8. Travel
C. Costs allowable with approval of grantor
agency
1. Aulomatic data processing
z. Bui1dinlSpace and related facilities
3. Capital expenditures
4. Insurance and indemnification
S. Management studies
6. Preasreement COlts
7. ProCessional services
8. Proposal com
D. Unallowable CD$ts
1. Bad debts
z. Contift8'!tlcies
3. Contributions and donations
4. Entertainment
5. Fines and penalties
8. Governor's expenses
'I. Interest and other financial costs
L Legislative expeDtes
9. Uoderrecovery of COIta under jp'ant
agreements
A. Purpose and applieoUflity.
1. Objective. This Attachment
provides standards for determining the
allowability or nlected items of cost.
2. Applicotion. These standards will
apply irrespective of whether a
particular item or cost is trea ted as
direct or indirect cost. Failure to
mention a particular item of cost in the
standards is not intended to imply that it
is either allowable or unallowable,
rather determination of allowability in
each case should be based on the
treatment of standards provided for
Published by Warren. Gorham & Lamont. Inc.
SImilar or related items or cost. The
allowability of lbe selected items of cost
is subject to the general policies and
principles stated in Attachment A of this
Circular.
B. Allowable costs.
1. Accounting. The cost of establishing
and maintaining accounting and other
information systems required for the
management of grant programs is
allowable. This includes costa incurred
by central service agen.Cies for theie
purposes. The cost of maintaining
cenlral accounting records required for
overall Slale or Indian tribal
government purposes, such as
appropnation and fund accounts by the
Treasurer, Comptroiler. or similar
officials. is considered to be a general
expense of government and is not
allowable.
Z. Advertising. Advertising media
includes newspapers. magazines, radio
and television programs, direct mail,
trade papers. and the like. The
advertising costs allowable are those
which are solely for:
a. Recruitment of personnel required
for the grant program.'
b. solicitation of bids for the
procurement of goods and services
required.
c. disposal of scrap or surplus
materials acquired in the performance of
the grant agreement.
d. Other purposes specifically
provided for in the grant agreemenL
3. Advisory councils. Costs incurred
by State advisory councils or
committees established pursuant to
Federal requirements to carry out grant
programs are allowable. The cost of like
organizations is allowable when
provided for in the grant agreement.
4. Audit servies. The cost of audits
necessary for the administration and
management of functions related to
grant programs is allowable.
5. Bonding. Costso! premiums on
bonds covering employees who handle
grantee agency funds are allowable.
6. Budgeting. Costs incurred for the
development, preparation. presentation.
and execuJon of budgets are allowable.
Costs for services of a central budget
office are generally not allowable since
these are costs of general government.
However, where employees of the
central budget office actively participate
in the grantee agency's budget process.
the cost of identifiable services is
allDwable.
7. Building lease management. The
administrative COlt for lease
management which includes review of
leue proposals. maintenance of a list of
available property for lease, and related
activities ill allowable.
,. COMMUNITY DEVELiPMENT BLOCK GRANTS
...
t
.!'-
8. CentJ'rJ1 stores. The cost of
maintaining and operating a central
stor.s organization for supplies,
equipment. and materials UHd either
directly or indirectly for grant programa
is allowable.
9. Communications. Communication
costa incurred for telephone calls or
service. teletype service. wide area
telephone service (WATS). centrex.
telpak (tie lines). postage, mellenger
service and similar expenses are
allowable.
10. Compensation for personal
services.
a. General. Compensation Cor
personal services includes all
remuneration. paid currently or ttccured.
for services rendered during the period
of performance under the grant
agreement. including but not necessarily
limited to wages, salaries. and
supplementary compensation and
benefita (Section B.13.). The costs of
such compensation are allowable to the
extent that total compensation for
individual employees: (1) is reasonable
for the services rendered: (2) follows an
appointment made in accordance with
State, local, or Indian tribal government
laws and rules and which meets Federal
merit system or other requirements.
where applicable: and (3) is determined
and supported as provided in b. below.
Compensation for employees engaged in
federally-assisted activities will be
considered reasonable to the extent that
it is consistent with that paid for similar
work in other activitieS" of the State,
locaL or Indian tribal governmenL In
cases where the kind,9 of employees
required for the federally-assisted
activities are not found in the other
activities of the State, local, or Indian
tribal government. compensation will be
considered reasonable to the extent that
it is comparable to that paid for similar
work in the labor market in which the
employing government competes for the
kind of employees involved.
Compensation surveys providing data
representative of the labor market
involved will be an acceptable basis for
evaluating reasonableness.
b. Payrall and distribution of time.
Amounts charged to grant prograJDS for
personal services, regardless of whether
treated as direct or indirect costs. will
be based on payrolls documented and
provided in accordance with generally
accepted practice of the State. local. or
Indian tribal governmenL Payrolls must,
be supported by time and attendance or
equivalent records for Individual
employees. Salaries and wages of
employees chargeable to more than one
grant program or other cost objective
will be supported by appropriate time
distribution records. ThEr method used
--
should produce an equitable distribution
of time aDd efforL
11. Depreciation.and uss aJ/owanca.
a. Grantees may be compenaated for
the UH of building.. capital
improvements. and equipment thrOIlgb
use allowances or depreciation. Use
allowances are the means of providing
campensation in lieu of depreciation or
other eq\livalent costs. However. a
combination of the two methods may
not be UHd in connection with a single
class of fixed assets.
b. The computation of depreciation or
use allowance will be based on
acquisition cost. Where actual cost
records have not been maintained. a
reasonable estimate of the original
acquisition cost may be used in the
computation. The computation will
exclude the cost or any portion of the
cost of buildings and equipment donated
or borne directly or indirectly by the
Federal Go\'ernment through charges to
Federal grant propgrams or otherwise.
irrespective of where title was originally
vested or where it presently resides. In
additioft. the computation will also
exclude the cost oiland. Depreciation or
a use allowance on idle or excess
facilities is not allowable, except when
specifically authorized by the graDtor
Federal agency.
c. Where the depreciation method is
followed. adequate property records
must be maintained. and any generally-
accepted method of computing
depreciation may be used. However, the
method of computing depreciation must
be consistently applied for any specific
asset or class oi assets for all affected
federally-sponsored programs aDd must
result in equitable charges considering
the exteDt of the use of the asseta for the
benefit of such programs.
d. In lieu of depreciation. a use
allowance for buildings and
improvementa may be computed at an
annual rate not exceeding two percent
of acquisition cosL The use allowance
for equipment (excluding items properly
capitalized as building cost) will be
computed at aD annual rate not
exceeding six and two-thirds percent oi
acquisitioD cost of usuable equipmenL
e, No depreciation or use charge may
be allowed on any asseta that would be
considered as fully depreciated.
provided. however. that reasonable use
charges may be negotiated for any such
asseta if warranted after taking into
consideration the cost of the facility or
item involved. the estimated usefulliie
remaining at time of negotiation. the
effect of any increased maintenance
charges or decreased efficiency due to
age, and any. other factors .pertinent to
the utilizatiCll"l 'oftbe f.cility or item for
the purpose contemplated.
Published by Warren. Gomam & Lamont. Inc.
I
09: 1505
HDR RF -185
3 - 9- 81
12. Disbursing servics. The cost of
disbuning grant program funds by the
T teasurer or other designated officer is
allowable. Diabuning services cover the
processing of checka or warranls. from
preparation to redemption. including the
necessary records of accountability and
reconciliation of such records with
related casb accounts.
13. EmploYBfl fringe benefits. Costs
identified under a. and b. below are
allowable to the extent that total
compensation for employees is
reasonable as defmed in Section B.I0.
a. Employee benefits in the fonn of
regular compensation paid to employees
during periods of authorized absences
from tbe job. such as for annual leave.
sick leave. court leave, military leave,
and the like, il they are: (1) provided
prusuant to an approved leave system:
and (2) the cost thereof is equitably
allocated to all related activities.
including grant programs.
b. Employee benefits in the form of
employers' contribution or expenses for
social security. employees' life and
health insurance plans, unemployment
insuraDce coverage. workmen's
compensation insurance, pension plans,
severaDce pay, and the like. provided
such benefits are granted under
approved plans and are distributed
equitably to grant programa and to other
activities.
14. Employee morale. hsalth and
welfare costs. The" costs of health or
fU'S.t-aid clinics andlor infumaries,
recreational facilities. employees'
counseling SErMCeS, employee
information publications. and any
related expenses incurred in accordance
with general State, local or Indian tribal
policy, are allowable. Income generated
from any oi these activities will be
offset against expenses.
15. Exhibits. Costa of exhibits relating
specifically to the grant programs are
allowable.
16. Legal expenses. The cost of legal
expenses required in the administratiOD
of grant progralDS is allowable. Legal
services furnished by the chief legal
officer of a State. local or Indian tribal
government or his staff solely for the
purpose of discharging his geDeral
responsibilities as legal officer are
unallowable. Legal expenses for the
prosecution of claims against the
Federal Government are unallowable.
17. Maintenance and repair. Costa
incurred for necessary maintenance.
repair, or upkeep of property which
neither add to the permanent value of
lbe property nor appreciably prolong its
intended lile. but keep It In an efficient .
operating condition. are allowable~
18. Materials and supplies. The cost of
materials and supplies necessary to
,.
09: 1506
carry out the grant programs is
allowable. Purchases made specifically
for the grant program should be charged
thereto at their actual prices after
deducting aU cash diacounts. trade
discounts. rebates. and allowances
received by the grantee. Withdrawals
Crom general stores or stockrooms
should be charged at co.t under any
recognized method of pricing
consistently applied. Incoming
. transportation charge. ue a proper part
of material cost.
19. Memberships, subscriptions and
professional activities.
a. Memberships. The c;ost oC
membership in civic. business. technical
and proCessional organizations is
allowable provided: (1) the benefit from
the membership is related to the grant
program; (2) the expenditure is Cor
agency membership; (3) the cost of the
membership is reasonably related to the
value of the services or benefits
receivf:d: and (4) the expenditure is not
for membership in an organization
which devotes a substantial part of its
activities to influencing legislation.
b. Rsference material. The cost of
books. and subscriptions to civic.
business, professional. and technical
periodicals is allowable wben related to
the grant program.
c. Meetings and conferences. Costs
are allowable when the primary purpose
of the meeting is the dissemination ol
technical information relating to the
grant program and they are consistent
with regular practices followed lor other
activities of the ~antee.
ZOo Motor pooli. The costs of a service
organization which provides
automobiles to user grantee agencies at
a mileage or fIXed rate and/or provides
vehicle maintenance. inspection and
repair services are allowable.
21. Payroll preparation. The cost ol
preparing payrolls and maintaining
necessary related wage records is
allowable.
zz. Personnel administration. Costs
for the recruitment. examination.
cenification. classification. training.
establishment of pay standards. and
related activities for grant programs. are
allowable.
23. Printing and reproduction. Costs
for printing and reproduction services
necessary for grant administration.
including but not limited to forms.
reports, manuals. and informational
literature, are allowable. Publication
costs oC reports or other media relating
to grant program accomplishments or
results are allowable wben provided Cor
in the grant agreement.
24. Procurement service. The cost of
procurement service. including
'olicitation oC bids. preparation and
I
HOUSING & DEVEfPMENT REPOR'rE~
award oC contracts. and all phases oC
contract administration in PJ'Oviding
goods. facilities and services for grant'
programs. is allowable.
25. Taxes. In general. taxes or
payments in lieu of taxes which the
grantee agency is legally.required to pay
are allowable.
28. Training and education. The cost
of in-service training. customarily
provided for employee development. .
which directly or indirectly benefits
grant programs is allowable. Out-oC-
service training involving extended
periods of time is allowable only when
speciCically authorized by tbe grantor
agency.
27. Transportation. Costs incurred Cor
freight. cartage. express. postage and
other transportation costs relating either
to goods purchased. delivered, or moved
from one location to another are
allowable.
28. Travel. Travel costs are llllowable
for expenses Cur transportation. lodging.
subsistence. and related items incurred
by employees who are in travel status
on oCficial business incident to a grant
program. 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 is
applied to an entire trip, and results in
charges consistent with those normally
allowed in like circumstances in non.
federally sponsored activities. The
difference in cost between first.class air
acconunodationa and less-than-first.
class air accommodations are not is
unallowable except when lese-than.
first-class air accommodations
reasonably available. Notwithstanding
the prov18iona of paragrapba 0.6. and 8..
travel costs of omcials covered by those
paragraphs. when specifically related to
grant programs. an! allowable with the
prior approval of a grantor agency.
C. eoS" Allowable With Approval of
Crantor Agency
1. AutolTlatic data processing. The
cost of data processin& services to grant
programs 18 allowable. This cost may
include rental of equipment or
depreciation on grantee-owned
equipment. The acquisition of
equipment. whether by outright
purchase. rental-purchase agreement or
other method of purchase. 18 allowable
only upon specific prior approval of the
grantor Federal agency as provided
under the selected item for capital
expenditures.
2. Building space and related
facilities. The cost of space in privately
or publicly owned buildings used for the
benefit of the grant program is allowable
subject to the conditions stated below.
Published by Warren. Gornam & Lamont, Inc.
The total cost of space. whether in a
privately or publicly owned building.
may not exceed the rental cost ol
comparable space and facilities in a
privately-owned building in the same
locality. The cost of space procured for
grant program usage mal' not be charged
to the program for periods of
nonoccupancy.-wHhout authorization of
the grantor Federal agency.
a. Rental cost. The rental cost of
space in a privately-owned building is
allowable. Similar costs for publicly
owned buildings newly occupied on or
after October 1. 1980. are allowable
where "rental rate" systems. or
equivalent systems that adequately
reflect actual costs. are employed. Such
charges must be determined on the basis
oC actual cost (including depreciation
based on the useful liCe t)f the building.
interest paid or accrued. operation and
mliintenance. and other allowable
costs). Where these costs are included
in rental charges. they may not be
charged elsewhere~ No costs will be
included for purchases or construction
that were originally fmanced by the
Fp.deral GovemmenL
b. Maintenance and operation. The
cost of utilities. ins:Jrance. security.
janitorial services. elevator servi.ce,
upkeep of punds. nc~al repairs and
alterations and the like. are allowable to
the extent they an! not otherwise
included in rental or other charges for
space.
c. Rearrangemer:ts and olterations.
Costs incurred for rearrangement and
alteration oC facilities required
speCifically for the grant program or
those that materially increase tbe value
or usefullile of the facilities (Section
C.3.) are allowable when specifically
approved by the grantor agency.
d. Depreciation and just allowances
on pubJicly-owned buildings. The costs
are allowable as provided in Section
B.ll.
e. Occupancy of space under rental.
purchase or a lease with option-to-
purchase agreement. The cost of space
procured under such arrangements is
allowable when specifically approved
by the Federal grantor agency.
3. Captial expenditures. The 'cost of
facilities. equipment. other capital
assets, and repairs which materially
increastl the value or useful life oC
capital assets i. allowable when such
procurement is specifically approved by
the Federal grantor agency. When assets
acquired with Federal grant funds are
(a) sold: (b) no longer available for use
in a federally-sponsored program: or (c)
used for purposes not authorized by the
grantor agency. the Federal grantor
agency's equity in the asset will be
reCunded in the same proportion as
OG:06€.O
(e) Prior notification. The recipient
shall provide the HUD field office with
written notification of the amount of
funds to be distributed to a private finan-
cial institution before distribution under
the provisions of this section.
(f) Recordkeeping requirements. The
recipient shall maintain in its files a copy
of the written agreement and related
documents establishing conformance
with this section and concerning perfor-
mance by a financial institution in
accordance with the agreement.
Subpart K-Other Program
Requirements
~ 570.600 General.
(a) Section 104(b) of the Act provides
that any grant under section 106 of the
Act shall be made only if the grantee
cenifies to the satisfaction of the Secre-
tary, among other things, that the grant
"will be conducted and administered in
confonnitv with Pub. L 88-352 and Pub.
L 90-284,"" and, further, that the grantee
"will comply with tbe other provisions of
this title and with otber applicable laws."
Section I 04(e)(1) of the Act requires that
the Secretary determine with respect to
grants made pursuant to section 106(b)
(Entitlement Grants) and 106(d)(2)(B)
(HUD-administered Small Cities Grants),
at least on an annual basis, among other
things, "whether the grantee has carried
out [its] certifications in compliance with
the requirements and the primary objec-
tives of this title and with other applica-
ble laws. . .." Cenain 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 bv
their own terms. Certain statutes or Exec-
utive Orders which may be applicable to
activities assisted under the Act bv their
own terms are administered or enforced
by governmental depanments or agencies
other than the Secretary or the Depart-
men,t. This Subpart K enumerates laws
which .the Secretary will treat as applica-
ble to grants made under section 106 of
the Act, other than grants to States made
pursuant to section 106(d) of the Act, for
purposes of the determinations described
above to be made by the Secretary under
section 1 O4(e)( I) of the Act, including
statutes expressly made applicable by the
Act and cenain other statutes and Execu-
tive Orders for which the Secretary has
I
HOUSING AND DEVELfPMEJ'\r-r REPORTER
APPENDIX K
enforcement responsibility. The absence
of mention herein of any other statute for
which the Secretary does not bave direct
enforcement responsibility is not intend-
ed to be taken as an indication that, in the
Secretary's opinion, such statute or Exec-
utive 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 106(d) of
the Act for purposes of the determination
required to be made by the Secretary
pursuant to section 104(e)(2) of the Act,
see ~ 570.496.
(b) This subpart also sets forth certain
additional program requirements which
the Secretary has determined to be appli-
cable 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)(2)(B) of the
Act (Subparts D and F, respectively), the
requirements of this Subpart K are appli-
cable to grants made pursuant to sections
107 and 119 of the Act (Subparts E and
G, respectivelyJ, and to loans guaranteed
pursuant to Subpart M.
~ 570.601 Public Law 88-352 and
Public Law 90-284; affirmatively
funhering {air housing; Exec:utin Order
11063.
Section I O4(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 adminis-
tered in conform it v with Pub. L 88-352
and Pub. L 90-284 and the grantee will
affirmatively funher fair housing." Simi-
larly, section 107 provides that no grant
may be made under that section (Secre-
tary's Discretionary Fund) or section 119
(UDAG) without satisfactory assurances
that the grantee's program will be con-
ducted and administered in conformity
with Pub. L 88-352 and Pub. 1.. 90-284.
(a) "Pub. L 88-352" refers to title VI of
the Civil Rights Act of 1964 (42 U.S.C.
2000d 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 assis-
tance. Section 602 of the Civil Rights Act
of 1964 directs each Federal depanment
and agency empowered to extend Federal
financial assistance to any program or
Published by Warren. Gomam & Lamont. Inc.
--'1
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activity by way of grant to effectuate the
foregoing prohibition by issuing rules,
regulations, or orders of general applica-
bility which shall be consistent with
achievement of the statute authorizing
the financial assistance. HUD regulations
implementing the requirements of Title
VI with respect to HUD programs are
contained in 24 CFR Part 1.
(b) "Public Law 90-284" refers to The
Fair Housing Act (42 U.S.C. 3601-20),
popularly known as the Fair Housing Act,
which states that it is the policy of the
United States to provide, within the con-
stitutional limitations, for fair housing
throughout the United States and prohib-
its any person from discriminating in the
sale or rental of housing, the financing of
housing, or the provision of brokerage
services, including otherwise making un-
available or denying a dwelling to any
person, because of race, color, religion,
sex, national origin, handicap, or familial
status. The Fair Housing Act further
requires the Secretary to administer the
programs and activities relating to hous-
ing and urban development in a manner
affirmatively to further the policies of
the Fair Housing Act. In accordance with
this statutory direction, the Secretary
requires that grantees administer all pro-
grams and activities related to housing
and community development in a man-
ner to affirmatively further the policie;s of
the Fair Housing Act, furthermore, sec-
tion 104(b)(2) of the Act requires that
each grantee receiving funds under sec-
tion 106 of the Act (entitlement or small
cities grantees) certify to the satisfaction
of the Secretary that it will affinnatively
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 discrimina-
tion 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 resi-
dential use), or in the use or occupancy
thereof, if such property and related facil-
ities 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 Execu-
tive Order 11063 are contained in 24
CFR Part 107.
.
~
~
8
COMMUNITY DEVELOP1ENT
~ 570.601 Section 109 o( 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 pur-
poses of this section "program or activity"
is defined as any function conducted by an
identifiable administrative unit of the re-
cipient, or by any unit of government,
subrecipient, or private contractor receiv-
ing community development funds or
loans from the recipient. "Funded in
whole or in part with community develop-
ment funds" means that community devel-
opment funds in any amount in the form
of grants or proceeds from HUD guaran-
teed loans have been transferred by tbe
recipient or a subrecipient to an identifi-
able administrative unit and disbursed in a
program or activity. In subsection (b) of
this section, "recipient" means recipient as
defined in 24 CFR 1.2(f).
(b) Specific discriminatory actions pro-
hibited and corrective actions.
(1) A recipient may not, under any
program or activity to which the regula-
tions of this part may apply, directly or
through contractual or other arrange-
ments, on the ground of race. color,
national origin. or sex:
(i) Deny any individual any facilities,
services, financial aid or other benefits
provided under the program or activity.
(ii) Provide any facilities, services, fi-
nancial aid or other benefits which are
different, or are provided in a different
fonn, from that provided to others under
the program or activity.
(iii) Subject an individual to segregated
or separate treatment in any matter of
process related to receipt of any service or
benefit under the program or activity.
(iv) Restrict an individual in any way in
access to, or in the enjoyment of, any
~vantage or p~vilege enjoyed by others
ID connection with facilities, services, fi-
nancial aid or other benefits under the
program or activity.
(v) Treat an individual differently from
others in determining whether the individ-
ual satisfies any admission, enrollment,
eligibility, membership, or other require-
ment or condition which the individual
m~~ .meet in. order to be provided any
facilIties, semces or other benefit provid-
ed under the program or activity.
I
(vi) Deny an individual an opportunity
to participate in a program or activity as
an employee.
(2) A recipient may not use criteria or
methods of administration which have the
. effect of subjecting persons to discrimina-
tion on the basis of race. color, national
origin, or sex, or have the effect of
defeating or substantially impairing ac-
complishm~t of the objectives of the
program or activity with respeCt to per-
sons of a particular race. color, national
origin, or sex.
(3) A recipient, in determining the site
or location of housing or facilities provid-
ed 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 persons from, denying them the
benefits of, or subjecting them to discrimi-
nation on the ground of race. color,
national origin, or sex; or which have the
purpose or effect of defeating or substan-
tially impairing the accomplishment of the
objectives of the Act and of this section.
(4)(i) In administering a program or
activity funded in whole or in. part with
CDBG funds regarding which the recipi-
ent has previously discriminated against
persons on the ground of race. color,
national origin or. sex, or if there is
sufficient evidence to conclude that such
discrimination existed. the recipient must
take remedial affirmative action to over-
come the effectS of prior discrimination.
The word "previously" does not exclude
current discriminatory practices.
(ti) In the absence of discrimination. a
recipient, in administering a program or
activity funded in whole or in part with
funds made available under this part, may
take any nondiscriminatory affinnative
action necessary to ensure that the pro-
gram or activity is open to allow without
regard to race. color, national origin or
sex.
(iii) After a finding of noncompliance or
after a recipient has a. fmu basis to
conclude that discrimination has oc-
curTed. a recipient shall not be prohibited
by this section 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 is to remedy prior
discriminatory practice or usage.
(5) Notwithstanding anything to the
contrary in this section. nothing contained
herein shall be construed to prohibit any
recipient from maintaining or constructing
separate living facilities or rest room
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09:0661
HDR RF -383
9-26-88
facilities for the different sexes. Further-
more, selectivity on the basis of sex is not
prohibited when institutional or custodial
services can properly be performed only
by a member of the same sex as the
recipients of the services.
(c) Section 109 of the Act further
provides that any prohibition against dis-
crimination on the basis of age under the
Age Discrimination Act of 1975 (42
U.S.C. 6101 et seq.) or with respect to an
otherwise qualified handicapped person as
provided in section 504 of the Rehabilita-
tion Act of 1973 (29 U.S.C. 794) shall also
apply to any program or activity funded in
whole or in part with funds made available
pursuant to the Act. HUD regulations
implementing the Age Discrimination Act
are contained in 24 CFR Part 146 and the
regulations implementing section 504 are
contained in 24 CFR Part 8.
~ 570.603 Labor staDdarcls.
Section 110 of the Act requires that all
laborers and mechanics employed by con-
tractors or subcontractors on construction
work fmanccd in whole or in part with
assistance received under the Act shall be
paid wages at rates not less than those
prevailing on similar construction in the
locality as determined by the Secretary of
Labor in accordance with the Davis-Ba-
con Act, as amended (40 U.S.C. 267a-
276a-5). By reason of the foregoing re-
quirement, the Contract Work Hours and
Safety Standards Act (40 U.S.c. 327 et
seq.) also applies. However, these require-
ments apply to the rehabilitation of resi-
den~ property only if such property
contalDS not less than 8 units. With
respect to the labor standards specified in
this section. the Secretary of Labor has' the
authority and functions set forth in Reor-
ganization Plan Number 14 of 1950 (5
U.S.c. 1332-15) and section 2 of the Act
of June 13, 1934, as amended (40 U.S.C.
276c).
~ 570.604 Environmental standards.
Section 104(g) expresses the intent that
..the policies of the National Environmen-
tal Policy Act of 1969 and other provi-
sions of law which further the purposes of
such Act (as specified in regulations issued
by the Secretary) · · · [be] most effec-
tively implemented in cOnnection with the
expenditure of funds under" the Act. Such
other provisions of law which further the
purposes of the National Environmental
Policy Act of 1969 are specified in regula-
65
09:0662
tions issued pursuant to section 1000g) of
thc Act and contained in 24 CFR Part 58.
Section 104(g) also provides that, in lieu of
the environmental protection procedures
otherwise applicable, thc Secretary may
under regulations provide for the release
of funds for particular projects to grantees
who assume all of the responsibilities for
environmental review, decisionmaking,
and action pursuant to the National Envi-
ronmental Policy Act of 1969, and the
other provisions of law specified by the
Secretary as described above, that would
apply to the Secretary werc he/she to
undertake such projects as Fedcral
projects. Grantees assumc such environ-
mental review, decision'making, and action
responsibilities by execution of grant
agreements with the Secretary. The proce-
dures for carrying out such environmental
responsibilities are contained in 24 CFR
Part 58.
~ 570.605 National Flood Insurance
Program.
Section 202(a) of the Flood Disaster
Protection Act of 1973 (42 U.S.C. 4106)
provides that no Federal officer or agency
shall approve any financial assistance for
acquisition or construction purposes (as
defined under section 3(a) of said Act (42
U.S.C. 400(a)), one year after a communi-
ty has been formally notified of its identifi-
cation as a community containing an area
of special flood hazard, for use in any area
that has been identified by the Director of
the Federal Emergency Management
Agency as an area having special flood
hazards unless the community in which
such area is situated is then participating
in the National Flood Insurance Program.
Notwithstanding the date of HUD ap-
proval of the recipient's application (or, in
the case of grants made under Subpart D,
the date of submission of the grantee's
final statemcnt pursuant to ~ 570.302),
funds provided under this pan shall not be
e:cpended for acquisition or construction
putpOSCS in an area that has been identi-
fied by the Federal Emergency Manage-
ment Agency (FEMA) as having special
flood hazards unless the community in
which the area is situated in participating
in the. National Flood Insurance Program
in accordance with 44 CFR Parts 59-79,
or less..than a year has passed since FEMA
notification to the community regarding
such hazards; and flood insurance is ob-
tained in accordance with section 102(a)
of the Flood Disaster Protection Act of
1973 (42 U.S.C. 4(01).
I
HOUSING AND DEVlLOPMENT REPORTER
~ 570.606 Relocation, displacement and
acquisition.
(a) Uniform Relocation Act. (1) The
Uniform Relocation Assistance and Real
Property Acquisition Policies Act of 1970
(URA) (42 U.S.C. 4601) and HUD imple-
menting regulations at 24 CFR Part 42
apply to the acquisition of real properly by
a State agency for an activity assisted
under this part and to the displacement of
any family, individual, business, nonprofit
organization or farm that results from
such acquisition. The grantee's certifica-
tion of compliance with thc URA is
required in thc grant agreemcnt.
(2) An acquisition and resulting dis-
placement by a State agency is "for an
assisted activity" if it occurs on or after
the date of the initial submission of a final
statement under 24 CFR 570.302(a)(2)
(Entitlement Grants); the initial submis-
sion of an application to HUD by a unit of
general local government under
~fi 570.426, 570.430, or 570.435(d) that is
granted for the requested activity (HUD
administered Small Cities Program); or
the submission of an application to HUD
by a city or urban county under ~ 570.458
that is granted for the requested activity
(UDAG). However, an acquisition or
displacement that occurs on or after the
described date is not subject to the URA if
the grantee determines that the acquisition
or displacement was not carried out for an
assisted activity, and the HUD Field
Office concurs in that determination. An
acquisition or displacement that occurs
before the described date is subject to the
URA, if the grantee or the HUD Field
Office determines that the acquisition or
displacement was carried out for the
assisted activity. The grantee may, at any
time, request a HUD determination
whether an acquisition or displacement
will be considered to be for an assisted
activity and thus subject to these regula-
tions. To be eligible for relocation assis-
tance, however, a person must also meet
the eligibility criteria in 24 CFR Part 42.
(b) ResidentiaL antidisplaament and
nlocation assistance p/an. Under section
104(d) of the Act, each grantee must
adopt, make public and certify that it is
following a residential antidisplacement
and relocation assistance plan providing
one-for-onc replacement units (paragraph
(b)(l) of this section), and relocation
assistance (paragraph (b)(2) of this sec-
tion). The plan must also indicate the
steps that will be taken consistent with
other goals and objectives of this part to
Published by Warren, Gorham, & Lamont. Inc.
minimizc thc displacement of persons
from their homes as a rcsult of any
activities assisted under this part.
(1) One-for-one nplacement units. (i)
All occupied and vacant occupiable
low/moderatc-income dwelling units th1lt
are demolished or converted to a use other
than as low/moderate-income dwelling
units as a direct result of an activity
assisted under this part must be replaced
by govcrnmental agencies or privale devel-
opers with low/moderate-income dwelling
units. Rcplacement low/moderatc-income
dwelling units may include public hous-
ing, or existing housing receiving Section 8
project-based assistance under the United
States Housing Act of 1937. The replacc-
ment low/moderate-income dwelling units
must be provided within three years of the
commencement of the demolition or reha-
bilitation related to the conversion, and
must meet the following requirements:
(A) Thc units must be located within
the grantee's jurisdiction.
(B) The units must be sufficient in
number and. size to house at least the
number of occupants that could have been
housed in the units that are demolished or
convened. The number of occupants that
maybe housed in units shall be deter-
mined in accordance with lccal housing
occupancy codes.
(C) The units must be provided in
standard condition. ReplaCement
low/moderate-income dwelling units may
include units that hav~ been raised to
standard from substandard condition.
(D) The units must be designed to
remain low/moderate-income dwelling
units for at least 10 years from the date of
initial occupancy.
(ii) Before obligating or expending
funds provided under this part for any
activity that will directly result in the
demolition of low/moderate-income
dwelling. units or the conversion of
low/moderate-income dwelling units to
another use, the grantee must make pub-
lic, and submit the following information
in writing to HUD:
(A) A description of the proposed assis-
ted activity;
(B) The general location on a map and
approximate number of dwelling units by
size (number of bedrooms) that will be
demolished or converted to a use other
than for lcw/moderate-income dwelling
units as a direct result of the assisted
activity;
(C) A timc schedule for the commence.
ment and completion of the demolition or
conversion;
66
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. . COMMUNITY DEVELOPMENT
I
(D) The general location on a map and
approximate number of dwelling units by
size (number of bedrooms). that will be
provided as. .replacement dwelling units;
(E) The source of funding and a time
schedule for the provision of replacement
dwelling units;.'. .::: . _ .
. (F) The basis for. concluding that each
replacement dwelling unit will remain a
low/moderate-income dwelling unit for at
least 10 years from the date of initial
occupancy.- _... .
, (iii)(A) The requirements of paragraph
(b)(1) of this section do not apply if the
HUD Field Office determines, based upon
objective data, that there is an adequate
supply of vacant low/mod~t.e.inco~e
dwelling units in stan~ard condltl.on a.v~-
able on a nondiscrinunatory basIS wlthm
the grantee's jurisdiction. In making t~is
determination, the HUD Field Office wtll
consider the housing vacancy rate for the
jurisdiction, the number of vacant
low/moderate-income dwelling units in
the jurisdiction (excluding units that will
be demolished or convened) and the
number of eligible families on waiting lists
for housing assisted under the United
States Housing Act of 1937 in the jurisdic-
tion.
. (B) The HUD Field Office may consid-
er the supply of vacant low/moderate-
income dwelling units in a standard condi-
tion available on a nondiSCriminatory ba-
sis in an area that is larger than the
grantee's jurisdiction. Such additional
dwelling units shall be considered if the
HUD Field Office determines that the
units would be suitable to serve the needs
of the low-and moderate income house-
holds that could be served by the
low/moderate-income dwelling units that
are to be demolished or converted to
another use. The HUD Field Office must
base this determination or geographic and
demographic factors, such as location and
access to places of employment and to
other facilities.
(C) The grantee must submit a request
for a determination under paragraph
(b)(1 )(iii) of this section directly to the
HUD Field Office.
(2) ReLocation assistance. (i) Each low-
or moderate-income household that is
displaced by demolition or by the conver-
sion of a low/moderate income dwelling
unit to another use as a direct result of an
activity assisted under this part shall be
provided with relocation assistance. The
low- or moderate.income household may
elect to receive relocation assistance de-
scribed at 24 CFR Part 42 (HUD's regula-
tions implementing the URA), or may
elect to receive the. following relocation
assistance:
(A) The relocation assistance described
at 24 CFR Part 42, Subpart C (General
Relocation Requirements) and Subpart D
(Payment for Moving and Related Ex-
penses). Relocation notices must be issued
consistent with, and in the manner pre-
scribed under, 24 CFR 42.203. The defmi-
tion of "comparable replacement dwell-
ing" used in 24 CFR Part 42 is modified
as described in paragraph (b)(3)(i) of this
section. Displaced . households provided
,,-;ith replacement housing assistance under
paragraph (b)(2)(i)(C) of this section, in
the form of a cenificate or housing vouch.
er under Section 8 of the United States
Housing Act of 1937, must be provided
referrals to comparable replacement
dwelling units whose owners are willing to
participate in the housing voucher or
certificate program. The grantee shall
advise tenants of their rights under the
Federal Fair Housing Law (Title VIII)
and of replacement housing opportunities
in such a manner that, whenever feasible,
they will have a choice between relocating
within their neighborhoods and other
neighborhoods consistent with the grant-
ee's responsibility to affirmatively further
fair housing.
(B) The reasonable and necessary cost
of any security deposit required to rent the
replacement dwelling unit, and credit
checks required to rent or purchase the
replacement dwelling unit; and
(C) Replacement housing assistance.
Households are eligible to receive one of
the following forms of replacement hous-
ing assistance:
(1) Each household must be otTered
compensation designed to ensure that, for
a five-year period, the displaced household
will not bear, after relocation, a ratio of
shelter costs to income that exceeds 30
percenL Such compensation shall be ei-
ther:
(1) A certificate or housing voucher for
rental assistance provided through the
local Public Housing Agency under Sec-
tion 8 of the United States Housing Act of
1937; or:
(ii) Cash rental assistance equal to 60
times the amount. that is obtained by
subtracting 30 percent of the displaced
household's monthly gross income (with
such adjustments as the grantee may deem
appropriate) from the lesser of: the month-
ly cost of rent and utilities at a comparable
replacement dwelling unit or the monthly
cost of rent and utilities at the decent, safe
Published by Warren. Gorham. & Lamont, Inc.
I
09:0663
HDR RF~388
12-5-88
and sanitary replacement dwelling to
which the household relocates. The grant-
ee may provide the cash payment in either
a lump sum or in installments. The grant-
ee may at its discretion otTer the house.
hold a choice between the cenifi-
catelhousing voucher or cash rental assis-
tance.
(2) If the household purchases an inter-
est in a housing cooperative or mutual
housing association and occupies a decent,
safe and sanitary unit in the cooperative or
association, the household may elect to
receive a lump sum paymenL This lump
sum payment shall be equal to the capital-
ized value of 60 monthly installments of
the amount that is obtained by subtracting
30 percent of the displaced household's
monthly gross income (with such adjust-
ments as the grantee may deem appropri-
ate) from the monthly cost of rent and
utilities at a comparable replacement
dwelling unit. To compute the capitalized
value, the installments shall be discounted
at the rate of interest paid on passbook
savings deposits by a federally-insured
bank or savings and loan institution con-
ducting business within the grantee's juris-
diction. To the extent necessary to mini-
mize hardship to the household, the grant-
ee shall, subject to appropriate safeguards,
issue a payment in advance of the pur-
chase of the interest in the housing cooper-
ative or mutual housing association.
(ii) Eligibility for relocation assistance.
(A) A low- or moderate-income household
that is required to move as a direct result
of demolition or conversion- of a
low/moderate income dwelling unit to
another use, is eligible for relocation assis-'
tance under paragraph (b)(2) of this sec-
tion if:
(l) The household is required to move
from the dwelling unit on or after the date
that the owner submits a request to the
grantee for financial assistance that is later
approved for the requested activity. (This
applies to dwelling units owned by a
person other than a Federal or State
agency, as defined under the URA).
(2) The household is required to move
from the dwelling unit on or after the date
of the initial submission of a final state-
ment under 24 CFR 570.302(a)(2) (Enti-
tlement Grants); the initial submission of
an application to HUD by a unit of
general local government under
~~ 570.426, 570.430, or 570.435(d) this is
granted for the requested activity (HUD
administered Small Cities Program); or
the submission of an application to HUD
by a city or urban county under ~ 570.458
23
that is granted for the requested activity
(UDAG). ("This applies to dwelling units
owned by a Federal or State agency as
defined under the URA.)
(B) If the dispJaci:ment occurs on or
after the'. appropriate. date described in
paragraph (b)(2)(ii)(A) of this section, the
low- or moderate-income household is not
eligible for relocation assistance if:
(1) The household is evicted for cause;
(2) The household moved into the prop-
erty on or after the date described in
paragraph (b)(2)(ii)(A) of this section,
after receiving written notice of the ex-
pected displacement; or
(3) The grantee determines that the
displacement was not a direct result of the
assisted activity, and the HUD office
concurs in that determination.
(C) If the displacement occurs before
the appropriate date described in para-
graph (b)(2)(ii)(A) of this section, the low-
or moderate-income household is eligible
for relocation assistance if the grantee or
HUD determines that the displacement
was a direct result of an activity assisted
under this part.
(3) Definitions. For the purpose of
para@:raph (b) of this section:
(i) "Comparable replacement dwelling
unit" means a. dwelling unit that:
(A) Meets the criteria of 24 CFR
42.2(c)(I) through (4); and
(B) Is available at a. monthly cost for
rent plus estimated average monthly utili-
ty costs that does not exceed 30 percent of
the household's average gross monthly
income (with such adjustments to income
as the grantee may deem appropriate)
after taking into account any rental assis-
tance the household would receive. Where
a certificate or housing voucher is provid-
ed to a household under paragraph
(b)(2){i){C)(1)(i) of this section, the dwell-
ing unit must be available to the house-
hold at a monthly cost for rent and
estimated average monthly utility cost
that does not exceed the Fair Market Rent
or the payment standard, respectively.
(ii) "Decent, safe and sanitary dwelling"
means a decent, safe and sanitary dwelling
as defined in 24 CFR.42.2(e).
(iii) "Low/moderate income dwelling
unit" means a dwelling unit with a market
rental (including utility costs) that does
not exceed the applicable Fair Market
Rent (FMR) for existing housing and
moderate rehabilitation established under
24 CFR Part 888.
(iv) "Occupiable dwelling unit" means a
dwelling unit that is in a standard condi-
I
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HOUSING AND DEV1LOPMENT REPORTER~~~::}:;: ~
-- _::':-'._-~~P ~
tion, or is in a substandard condition, but
is suitable for rehabilitation.
(v) '"Standard condition" and "substan-
dard condition suitable for rehabilitation."
If the grantee has a HUD-approved.Hous-
ing Assistance Plan, the definitions of
"standard condition" and "substandard
condition suitable for rehabilitation" es-
tablished in the plan will apply. If the
grantee does not have a HUD-approved
Housing Assistance Plan, the grantee
must establish and make public its defini-
tion of these terms consistent with the
requirements of ~ 570.306(e)(I).
. (4) Effective date. For all grants except
those made under Subpart D of this part
(Entitlement Grants), the provisions of
paragraph (b) of this section are applicable
to grants made. QU. or after October I,
1988. For grants made under Subpart D,
these provisions will govern all activities
for wbich funds are first obligated by the
Jf&ntee on or after the date the first grant
IS made after September 30, 1988, without
regard to the source year of the funds used
for the activity.
(c) Section J04(k) reLOCDtion require-
ments. Section 1000k) of the Act requires
that reasonable relocation assistance be
provided to persons (families, individuals,
businesses, nonprofit organizations, or
farms) displaced (LE.. moved permanently
and involuntarily) as a result of the use of
assistance received under this part to
acquire or substantially rehabilitate prop-
erty. If such displacement is subject to
paragraph (a) or (b) of this section, above,
this paragraph does not apply. The grant-
ee must develop, adopt and provide to
persons to be displaced a written notice of
the relocation assistance for which they
are eligible. The minimum requirements
for such assistance under the UDAG
Program are described at ~ 570.457(b).
Under CDBG programs, persons entitled
to assistance under this paragraph must be
provided relocation assistance, including
at It" minimum:
(I) Reasonable moving expenses;
(2) Advisory services needed to help in
relocating. The grantee shall advise tCll-
ants of their rights under the Federal Fair
Housing Law (Title VIII) and of replace.
ment housing opportunities in such a
manner that, whenever feasible, they will
have a choice between relocating within
their neighborhoods and other neighbor-
hoods consistent with the grantee's reo
sponsibility to affirmatively further fair
housing; and
(3) Fmancial assistance sufficient to
enable any person displaced from his or
Publisned by Warren, Gorham. & Lamont, Inc.
her dwelling to lease and occupy a suit-
able. decent, safe and sanitary replacement
dwelling where the cost of rent and utili-
ties does not exceed 30 percent of the
household's gross income.
(d) OptionaL reLocation assistance. Under
section 105(a)(11) of the Act, the grantee
may provide relocation payments and
other relocation assistance for individuals
families, businesses, nonprofit organiza:
tions and farms displaced by an activity
not subject to paragraphs (a), (b) or (c) of
this section. The grantee may also provide
relocation assistance to persons covered
under paragraphs (a), (b) or (c) of this
section beyond that required. Unless such
assistance is provided pursuant to State or
local law, the grantee must provide the
assistance only upon the basis of a written
determination that the assistance is appro-
priate and must adopt a written policy
available to the public that describes the
relocation assistance that the grantee has
elected to provide and that provides for
equal relocation assistance within each
class of displacees.
(e) Appeals. If a person disagrees with
the grantee's determination concerning
the person's eligibility for, or the amount
of a relocation payment under this section,
the person may file a written appeal of
that determination with the grantee. The
appeal procedure to be followed are de-
scribed in 24 CFR 42.10. A low- or
moderate-income household that has been
displaced from a dwelling may file a
written request for review of the grantee
decision, to the HUD Field Office.
(f) Responsibility of grantee. (I) The
grantee is responsible for ensuring compli-
ance with the requirements of this section,
notwithstanding any third party's contrac.
tual obligation to the grantee to comply
with the provisions of this part.
(2) The cost of assistance required
under this section may be paid from local
public funds, funds provided under this
part, or funds available from other'
sources.
(3) The grantee must maintain records
in sufficient detail to demonstrate compli.
ance with the provisions of this section.
(g) DispLacement. For the purposes of
this section, a "displaced person" is a
person that is required to move perma.
nently and involuntarily and includes a
residential tenant who moves from the real
property if:
(1) The tenant has not been provided
with a reasonable opportunity to lease and
occupy a suitable, decent, safe and sani-
tary dwelling in the same building or in a
24
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.
COMMUNITY DEVELOPMENT
I
nearby building on the real propeny fol-
lowing the completion of the assisted
activity at a monthly rent and estimated
average cost for utilities that does not
exceed the greater of:
(i) 30 percent of the tenant household's
average monthly gross income; or
(ii) The tenant's monthly rent and
average cost for utilities before:
(A) The date that the owner submits a
request to the grantee for financial assis-
tance that is later approved for the reo
quested activity. (This applies to dwelling
units owned by a person other than a
Federal or State agency, as defmed under
the URA); or
(B) The date of the initial submission of
a final statement under ~ 570.302(a)(2)
(Entitlement Grants); the initial submis-
sion of an application to HUD by a unit of
general local government under ~ 570.426,
570.430, or 570.435(d) that is granted for
the requested activity (HUD administered
Small Cities Program); or the submission
of an application to HUD by a city or
urban county under ~ 570.458 that is
granted for the requested activity
(UDAG). (This applies to dwelling units
owned by a Federal or State agency as
defmed under the URA); or
(2) The tenant is required to move to
another dwelling in the real property but
is not reimbursed for all actual reasonable
out-of-pocket costs incurred in coMection
with the move; or
(3) The tenant is required to move to
relocate temporarily and:
(i) Is not reimbursed for all reasonable
out-of-pocket expenses incurred in con-
nection with the temporary relocation,
including moving costs and any increased
rent and utility costs; or
(ii) OtJ1er conditions of the temporary
relocation are not reasonable.
~ 570.607 Employment and contracting
opportunities.
(a) Grantees shall comply with Execu-
tive Order 11246, as amended by Execu-
tive Order 12086, and the regulations
issued pursuant thereto (41 CFR Chapter
60) which provide that no person shall be
discriminated against on the basis of race,
color, religion, sex, or national origin in all
phases of employment during the perfor-
mance of Federal or federally assisted
construction contracts. As specified in
Executive Order 11246 and the imple-
menting regulations, contractors and sub-
contractors on Federal or federally assis-
ted construction contracts shall take affir-
mative action to ensure fair treatment in
employment, upgrading, demotion or
transfer, recruitment or recruitment ad-
venising, layoff or termination, rates of
pay, or other forms of compensation and
selection for training and apprenticeship.
(b) Section 3 of the Housing and Urban
Development Act of 1968 (12 U.S.C.
170Iu) requires, in COMec:tion with the
planning and carrying out of any project
assisted under the Act, that to the greatest
extent feasible opportunities for training
and employment be given to low and
moderate income persons residing within
the unit of local government or the metro-
politan area (or nonmetropolitan county)
as determined by the Sec:retary, in which
the project is located, and that contracts
for work in connection with the project be
awarded to eligible business concerns
which are located in, or owned in substan-
tial part by persons residing in the same
metropolitan area (or nonmetropolitan
county) as the project. Grantees shall
adopt appropriate procedures and require-
ments to assure good faith efforts toward
compliance with the statutory directive.
HUD regulations at 24 CFR Part 135 are
not applicable to activities assisted under
this part but may be referred to as guid-
ance indicative of the Secretary's view of
the statutory objec:tiv~ in other contexts.
. ~ 570.608 Lead.based paint.
(a) Prohibition against the use of lead-
based paint. Section 401(b) of the Lead-
Based Paint Poisoning Prevention Act (42
U.S.c. 483l(b)) directs the Secretary to
prohibit the use of lead-based paint in
residential structures constructed or reha-
bilitated 'with Federal assistance. Such
prohibitions are contained in 24 CFR Pan
35, Subpart B, and are applicable to
residential structures constructed or reha-
bilitated with assistance provided under
this part.
(b) Notification of hazards of lead-based
paint paisoning. (I) The Secretary has
promulgated requirements regarding noti-
fication to purchasers and tenants of
HUD-associated housing constructed pri-
or to 1978 of the hazards of lead-based
paint poisoning at 24 CFR Part. 35,
Subpart A. This paragraph is promulgated
pursuant to the authorization granted in
24 CFR 35.5(c) and supersedes, with
respect to all housing to which it applies,
the notification requirements prescribed
by Subpart A of 24 CFR Part 35.
(2) For properties constructed prior to
1978, applicants for rehabilitation assis-
Published by Warren. Gorham. & Lamont. Inc.
I
09:0665
HDR RF-388
12-5-88
tance provided under this part and tenants
or purchasers of propenies owned by the
grantee or its subrecipient and acquired or
rehabilitated with assistance provided un-
der this part !>hall be notified:
(i) That the propeny may contain lead-
based paint;
(ii) Of the hazards of lead"based paint;
(iii) Of the symptoms and treatment of
lead-based poisoning;
(iv) Of the precautions to be taken to
avoid lead-based paint poisoning (includ-
ing maintenance and removal techniques
for eliminating such hazards);
(v) Of the advisability and availability of
blood lead level screening for children
under seven years of age; and
(vi) That in the event of lead-based
paint is found on the property, appropriate
abatement procedures may be undertaken.
(c) Elimination of lead-based paint haz-
ards. The purpose of this paragraph is to
implement the provisions of section 302 of
the Lead-Based Paint Poisoning Prcven-
tion Act, 42 U.S.C. 4822, by establishing
prOcedures to eliminate as far as practica-
ble the hazards due to the presence of
paint which may contain lead and to
which children under seven years of agc
may be exposed in existing housing which
is rehabilitated with assistance provided
under this part. The Secretary has promul-
gated requirements regarding the elimina-
tion of lead-based paint hazards in HUD-
associated housing at 24 CFR Part 35,
Subpart C. This paragraph is promulgated
punuant to the authorization granted in
24 CFR 35.24(bX4) and supercedes, with
respect to all housing to which it applies,
the requirements prescribed by SubpartC
of 24 CFR Part 35.
(1) Applicability. This paragraph applies
to the rehabilitation of applicable surfaces
in existing housing which is assisted under
this part. The following activities assisted
under the Community Development
Block Grant program are not covered by
this paragraph:
(i) Emergency repairs (not including
lead-based paint-related emergency re-
pairs);
(ii) Weatherization:
(iii) Water or sewer hook-ups;
(iv) Installation of security devices;
(v) Facilitation of tax exempt bond
issuances which provide funds for rehabili-
tation;
(vi) Other similar types of single-pur-
pose programs that do not include physi-
cal repairs or remodeling of applicable
surfaces (as defmed in 24 CFR 35.22) of
residential structures; and
25
09:0666
(vii) Any non-single purpose rehabilita-
tion that does not involve applicable sur-
faces (as defined in 24 CFR 35.22) that
does not exceed S3,000 per unit.
(2) Deji(litions.
"Applicable surface. " All intact and
nonintact interior and exterior painted
surfaces of a residential struCture.
"Chewable surfaces." All chewable pro-
truding painted surfaces up to five feet
from the floor or ground, which are
readily accessible to children under seven
years of age, e.g., protruding corners,
windowsills and frames, doors and frames,
and other protruding woodwork.
"Defective paint surface. Paint on appli-
cable surfaces that is cracking, scaling,
chipping, peeling or loose."
"Elevated blood lead level or EBL."
Excessive absorption of lead. that is, a
confirmed concentration of lead in whole
blood of 25 v./dl (micrograms of lead per
deciliter of whole blood) or greater.
"Lead-based paint surface. " A paint
surface, whether or not defective, identi-
fied as having a lead content greater than
or equal to I mg/cmz.
(3) Inspection and Testing-(j) Defective
paint surfaces. The grantee shall inspect
for defective paint surfaces in all units
constructed prior. to 1978 which are occu-
pied by families with children under seven
years of age and which are proposed for
rehabilitation assistance. The inspection
shall occur at the same time the property
is being inspected for rehabilitation. De-
fective paint conditions shaH be included
in the work write-up for the remainder of
the rehabilitation work.
(ii) Chewable surfaces. The grantee shall
be required to test the lead content of
chewable surfaces if the family residing in
a unit, constructed prior to 1978 and
receiving rehabilitation assistance, in-
cludes a child under seven years of age
with an identified EBL condition. Lead
. content shall be tested by using an X-ray
fluorescence analyzer (XRF) or other
method approved by HUD. Test readings
of lmg/cmz or higher using an XRF shall:
be considered positive for presence oflead-
based paint.
(iii) Abatement without testing. In lieu of
the procedures set forth in paragraph
(c)(3)(ii) of this section, in the case of a
residential structure constructed prior to
1978, the grantee may forgo testing and
abate all applicable surfaces in accordance
with the methods set out in 24 CFR
35.24(b)(2)(ii).
(4) Abatement Actions. (1) For inspec-
tions performed under ~ 570.608(c)(3)(i)
and where defective paint surfaces are
found, treatment shall be provided to
I
HOUSING AND DEVElOPMENT REPORTER -
defective areas. Treatment shall be per-
formed before final inspection and approv-
al of the work.
(ii) For testing performed under
~ S70.608(c)(3)(ii) and where interior
chewable surfaces are found to contain
lead-based paint, . all interior chewable
surfaces in any affected room shall be
treated. Where exterior chewable surfaces
are found to contain lead-based paint, the
entire exterior chewable surface shall be
treated. Treatment shall be performed
before final inspection and approval of the
work.
(iii) When weather prohibits repainting
exterior surfaces before final inspection,
the grantee may permit the owner to abate
the defective paint or chewable lead-based
paint as required by this section and agree
to repaint by a specified date. A separate
inspection is required.
(5) Abatement methods. At a minimum,
treatment of the defective areas and chew-
able lead-based paint surfaces shall consist
of covering or removal of the painted
surfaces as described in 24 CFR
35.24(b )(2)(ii).
(6) Funding for inspection. testing and
abatemenL Program requirements and lo-
cal program design will determine wheth-
er the cost of inspection, testing or abate-
ment is to be borne by the own-
er/developer and the grantee.
(7) TelUmt protection. The own-
er/developer shall take appropriate action
to protect tenants from hazards associated
with abatement procedures. Where neces-
sary, these actions may include the tempo-
rary relocation of tenants during the
abatement process. The owner/developer
shall notify the grantee of all such actions
taken.
(S) Records. The grantee shall keep a
copy of each inspection and/or test report
for at least three years.
(9) Monitoring and enforcement. HUD
field office monitoring of rehabilitation
programs includes reviews for compliance
with applicable program requirements for
lead-based paint. The CPO Field Monitor-
ing Handbook which currently includes
instructions for monitoring lead-based
paint requirements will be amended as
appropriate. Incases of noncompliance,
HUD may impose conditions or sanctions
on grantees to encourage prompt compli-
ance.
(10) Compliance with other program
requirements. Federal. State and local
laws.
(i) Other program requirements. To the
extent that assistance from any of the
programs covered by this section is used in
conjunction with other HUD program
I>ubtished by Warren. Gomam. & Lamont. Inc.
,
j
assistance which have lead-based paint
requirements which may have more or less
stringent requirements, the more stringent
requirements will prevail.
(ii) HUD responsibility. If HUD deter-
mines that a State or local law, ordinance.
code or regulation provides for lead-based
paint testing or hazard abatement in a
manner which provides a level of protec-
tion from the hazards of lead-based paint
poisoning at least comparable to that
provided by the requirements of this sec-
tion and that adherence to the require-
ments of this subpart would be duplicative
or otherwise cause inefficiencies, HUD
may modify or waive the requirements of
this section in such manner as may be
appropriate to promote efficiency while
ensuring such comparable level of protec-
tion.
(iii) Grantee responsibility. Nothing in
this section is intended to relieve any
grantee in the programs covered by this
section of any responsibility for compli-
ance with State or local laws, ordinances,
codes or regulations governing lead-based
paint testing or hazard abatement.
(iv) DisposDL of lead-based paint debris.
Lead-based paint and defective paint de-
bris shall be disposed of in accordance
with applicable Federal, State or local
requirements. (See e.g., 40 CFR Parts 260
through 271.)
€.......,
~
~ 570.609 Use of debarred, . suspended
or ineligible contractors or
subrecipients.
Assistance under this part shall not be
used directly or indirectly to employ,
award contracts to, or otherwise engage
the services of, or fund any contractor or
subrecipient during any period of debar-
ment, suspension, or placement in ineligi-
bility status under the provisions of 24
CFR Part 24.
~ 570.610 Uniform administrative
requirements and cost principles.
The recipient, its agencies or instrumen-
talities, and subrecipients shall comply
with the policies, guidelines, and require-
ments of 24 CFR Part SS and OMB
Circulars A-87, A-IlO, A-122, and A-12S:
implemented at 24 CFR Part 44), as
applicable, as they relate to the acceptance
'See footnote I for ~ 570.200(a)(5).
~.
~
26
COMMUNITY DEVELOPMENT
I
and use of Federal funds under this part.
The applicable sections of 24 CFR Part 85
and OMB Circular A-I 10 are set forth at
~ 570.502.
~ 570.611 Conflict of interest.
~:"'J
_.
(a) Applicability. (I) In the procurement
of supplies, equipment, construction, and
services by recipients, and by subrecipients
(including those specified at ~ 570.204(c)),
the conflict of interest provisions in 24
CFR 85.36 and OMB Circular A-I 10,
respectively, shall apply.
(2) In all cases not governed by 24 CFR
85.36 and OMB Circular A-I 10, the pro-
visions of this section shall apply. Such
cases include the acquisition and disposi~
tion of real property and the provision of
assistance by the recipient, by. itssubreci-
pients, or to individuals, businesses or
other private entities under eligible activi-
ties which authorize such assistance (e.g.,
rehabilitation, preservation, and other im-
provements or private properties of facili-
ties pursuant to ~ 570.202, or grants, loans
and other assistance to businesses, individ-
uals and other private entities pursuant to
~ 570.203, ~ 570.204 or ~ 570.455).
(b) Conflicts prohibited. Except for the
use of CDBG funds to pay salaries and
other related administrative or personnel
costs, the general rule is that no persons
described in paragraph (c) of this section
who exercise or have exercised any func-
tions or responsibilities with respect to
CDBG activities assisted under this part
or who are in a position to panicipate in a
decision making process or gain inside
information with regard to such activities,
may obtain a personal or financial interest
or benefit from a CDBG assisted activity,
or have an interest in any contract, sub-
contract or agreement with respect there-
to, or the proceeds thereunder, either for
themselves or those with whom they have
family or business ties, during their tenure
or for one year thereafter. For the UDAG
program, the above restrictions shall apply
to all activities that are a pan of the
UDAG project, and shall cover any such
interest or benefit during, or at any time
after, such person's tenure.
(c) Persons covered. The conflict of
interest provisions of paragraph (b) of this
section apply to any person who is an
employee, agent, consultant, officer, or
elected official or appointed official of the
recipient, or of any designated public
agencies, or subrecipients which are re-
ceiving funds under this pan.
....
.:..C
.L
.~
.-
(d) Exceptions: threshold requirements.
Upon the written request of the recipient,
HUD may grant an exception to the
provisions of paragraph (b) of this section
on a case-by-case basis when it determines
that such an exception will serve 10 further
the purpoSes of the Act and the effective
and efficient administration of the recipi-
ent's program or project. An exception
may be considered only after the recipient
has provided the following:
(I) A disclosure of the nature of the
conflict, accompanied by an assurance
that there has been public disclosure of the
conflict and a description of how the
public disclosure was made; and
(2) An opinion of the recipient's attor-
ney that the interest for which the excep-
tion is sought would not violate State or
'Iocal law,
(e) Factors to be considered for ucep-
tions. In determining whether to grant a
requested exception after the recipient has
satisfactorily met the requirements of
paragraph (d) of this section. HUD shall
consider the cumulative effect of the fol-
lowing factors, where applicable:
(I) Whether the exception would pro-
vide a significant cost benefit or an essen-
tial degree of expertise to the program or
project which would otherwise not be
available;
(2) Whether an opportunity was provid-
ed for open competitive bidding or negoti-
ation;
(3) Whether the person affected is a
member of a group or class of low. or
moderate-income persons intended to be
the beneficiaries of the assisted activity,
and the exception will permit such person
to receive generally the same interests or
benefits as are being made available or
provided to the group or class;
(4) Whether the affected person has
withdrawn from his or her functions or
responsibilities, . or the decisionmaking
process with respect to the specific assisted
activity in question;
(5) Whether the interest or benefit was
present before the affected person was in a
position as described in paragraph (b) of
this section;
(6) Whether undue hardship will result
either to the recipient or the person
affected when weighed against the public
interest served by avoiding the prohibited
conflict; and
(7) Any other relevant considerations.
Published by Warren. Gorham, & Lamont, Inc.
I
09:0667
HDR RF-388
12-5-88
9 570.612 Executive Order 12372.
(a) GeneraL Executive Order 12372.
Intergovernmental Review of Federal Pro-
grams, and the Depanment's implement-
ing regulations at 24 CFR Part 52, allow
each State to establish its own process for
review and comment on proposed Federal
financial assistance programs.
(b) Applicability. Executive Order 12372
applies to the CDBG Entitlement pro-
gram and the UDAGprogram. The Exec-
utive Order applies to all activities pro-
posed to be assisted under UDAG, but it
applies to the Entitlement program only
where a grantee proposed to use funds for
the planning or construction (reconstruc-
tion or installation) of water or sewer
facilities. Such facilities include storm
sewers as well as all sanitary sewers, but
do not include water and sewer lines
connecting a structure to the lines in the
public right-of-way or easement. It is the
responsibility of the grantee to initiate the
Executive Order review process if it pro.
poses to use its CDBG or UDAG funds
for activities subject to review.
Subpart M-Loan Guarantees
~ 570.700 Eligible applicants.
(a) Units of general local government
entitled to' receive a grant under section
106(b) of the Act (metropolitan cities and
urban counties) may apply for loan guar-
antee assistance under this subpart.
(b) Public agencies may be designated
by eligible units of general local govern-
ment to receive a loan guarantee on notes
or other obligations issued by the public
agency in accordance with this subpart. In
such case the applicant unit of general
local government shall be required to
pledge its current and future grants under
the Act as security for the notes or other
obligations issued- by the public agency.
~ 570.701 Eligible activities.
Loan guarantee assistance under this
subpart may be used for the following
activities undertaken by the unit of general
local government or its designated public
agency provided such activities meet the
requirements of ~ 570.200. However, guar_
anteed loan funds may not be used to
reimburse the program account or letter of
credit for costs incurred by the unit of
general local government or designated
public agency and paid with other CDBG
funds.
27
09:0668
(a) Acquisition of improved or unim-
proved real property in fee or by long-
term lease, including acquisition for eco-
nomic development purposes.
(b) Rehabilitation of real property
owned or acquired by the unit of general
local government or its designated public
agency.
(c) Payment of interest on obligations
guaranteed under this subpart.
(d) Relocation payments and assistance
for individuals, families. businesses, non-
profit organizations and farm operations
displaced as a result of activities financed
with loan guarantee assistance.
(e) Clearance, demolition and removal,
including movement of structures to other
sites, of buildings and improvements on
real property acquired or rehabilitated
pursuant to paragraphs (a) and (b) of this
section.
(f) Site preparation, including construc-
tion, reconstruction, or installation of
public improvements, utilities, or facilities
(other than buildings) related to the rede-
velopment or use of the real property
acquired or rehabilitated pursuant to para-
graphs (a) and (b) of this section.
(g) Payment of issuance, underwriting,
servicing, and other costs associated with
private sector financing of notes or other
obligations guaranteed under this subpart.
(h) Housing rehabilitation eligible under
~ 570.202-
(i) Activities eligible under ~ 570.203.
(j) Community economic development
projects eligible under ~ 570.204.
(k) Acquisition, construction, recon-
struction, rehabilitation, or installation of
public facilities (except for buildings for
the general conduct of government), site
improvements. and utilities, for an ec0-
nomic development purpose.
~ 570.702 Application requirements.
(a) Presubmission requirements. (1) Pri-
or to submission of an application for loan
guarantee assistance to HUO, the appli-
cant must comply with the presubmission
requirements specified in ~ 570.301 with
resJkc;t to the activities proposed for loan
guarantee assistance.
(2) If an application for loan guarantee
assistance is simultaneous with the appli-
cant's submission for its entitlement grant,
the applicant may use the statement of
community development objectives and
projected use of funds prepared for its
annual grant pursuant to ~ 570.301 b~'
including and identifying the activities to
I
HOUSING AND DEVELOPMENT REPORTER
I
be undertaken with the guaranteed loan
funds.
(b) Submission requirements. An appli-
cation for loan guarantee assistance shall
be submitted to the appropriate HUO
field office and shall consist of the follow-
ing:
(1) A copy of the applicant's final
statement of community development ob-
jectives and projected use of guaranteed
loan funds.
(2) A description of how each of the
activities to be carried out with the guar-
anteed loan funds meets one of the criteria
in ~ 570.208.
(3) A schedule for repayment of the
loan which identifies the sources of repay-
ment.
(4) A certification providing assurance
that the applicant possesses legal authority
to make the pledge of grants required
under ~ 570.703(b)(2).
(5) A certification providing assurance
that the applicant has made efforts to
obtain financing for activities described in
the application without the use of the loan
guarantee, the applicant will maintain
documentation of such efforts for the term
of the loan guarantee, and the applicant
cannot complete such financing consistent
with the timely execution of the program
plans without such guarantee.
(6) Certifications required pursuant to
~ 570.303. For the purposes of this re-
quirement, the terms "grant" and
"COBG" in such certifications shall also
mean guaranteed loan.
(c) Economic feasibiLiry and financial
risk.. The Secretary will make no determi-
nation with respect to the economic feasi-
bility of projects proposed to be funded
with the proceeds of guaranteed loans;
such determination is the responsibility
whether a loan guarantee constitutes an
acceptable financial risk, the Secretary will
consider the applicant's current and future
entitlement block grants as the primary
source of loan repayment. Approval of a
loan guarantee under this subpart is not to
be construed, in any way, as indicating
that HOO has agreed to the feasibility of a
project beyond recognition that pledged
grant funds should be sufficient to retire
the debt.
(d) HUD review and approwzL of appLica-
tions. (1) HUO will normally accept the
grantee's certifications. The Secretary re-
serves the right, however, to consider
relevant information which challenges the
certifications and to require additional
information or assurances from the grant-
ee as warranted by such information.
Published by Warren, Gorham, & Lamont. Inc.
(2) The field office shall review the
application for compliance with require-
ments specified in this subpart and for-
ward the application together with its
recommendalion for approval or disap-
proval of the requested loan guarantee to
HUO Headquarters.
(3) The Secretary may disapprove an
application, or may approve loan guaran-
tee assistance for an amount less than
requested, for any of the following rea-
sons:
(i) The Secretary determines that the
guarantee constitutes an unacceptable fi-
nancial risk. Factors that will be consid-
ered in assessing financial risk shall in-
clude, but nol be limited to, the following:
(A) The length of the proposed repay-
ment period;
(B) The ratio of expected annual debt
service requirements to expected annual
grant amount;
(C) The applicant's status as a metro-
politan city or urban county during the
proposed repayment period; and
(0) The applicant's ability to furnish
adequate security pursuant to
~ 570.703(b).
(ii) The guarantee requested exceeds the
maximum loan amount specified under
~ 570.703(a).
(iii) Funds are not available in the
amount requested.
(iv) The applicant's performance does
not meet the standards prescribed in
Subpart O.
(v) Activities to be undertaken with the
guaranteed loan funds are not listed as
eligible under ~ 570.701(a) through (k).
(vi) Activities to be undertaken with the
guaranteed loan funds do not meet the
criteria in ~ 570.208 for compliance with
one of the national objectives of the Act.
(4) The Secretary will notify the appli-
cant in writing that the loan guarantee
request has either been approved, reduced
or disapproved. If the request is reduced
or disapproved, the applicant shall be
informed of the specific reasons for reduc-
tion or disapproval. If the request is
approved. the Secretary shall issue an offer
of commitment to guarantee obligations of
the applicant or the designated public
agency subject to such conditions as the
Secretary may prescribe, including the
conditions for release of funds described in
paragraph (e) of this section.
(5) Amendments to the loan guarantee
shall comply with the requirements of
~ 570.305. If the applicant wishes to carry
out an activity not previously described in
its final statement or to substantially
28
COMMUNITY DEVELOPMENT
I
APPENDIX L
)
09:1601
HDR RF-42~
6-10-90
I
NON-FEDERAL GOVERNMENTAL AUDIT REQUIREMENTS
(24 CFR 44)
OEP ARTMENT OF HOUSING ANO
URBAN OEVELOPMENT
Office df the Secretary,
24 CFR PART 44
Non-Federal Government Audit
Requirements
AGENCY: Office of the Secretary, HUO.
ACTION: Final Rule
[50 FR 39086, Sept. 27, 1985)
PART 44-NON-FEOERAL
GOVERNMENTAL AUOIT
REQUIREMENTS
!" .:.~~
;~
.......i?'
Sec.
44.1 Purpose.
44.2 Definitions.
44.3 Scope of audit.
44.4 Frequency of audit.
44.5 Internal control and compliance
reviews.
44.6 Subrecipients.
44.7 Relationship to other audit require-
ments.
44.8 Cognizant agency responsibilities.
44.9 Illegal acts or irregularities.
44.10 Audit reports.
44.11 Audit resolution.
44.12 Audit workpapers and reports.
44. 13 Audit costs.
44.14 Sanctions.
44.15 Auditor selection.
44. I 6 Small and minoritv audit firms.
44.17 Reponing. .
44.18 HUO audits.
Appendix to Part 44-0efinition of
Major Program as provided in the Single
Audit Act of 1984.
Authority: Single Audit Act of I 98~ (3 I
U.S.c. 7501-7507); sec. 7(d) of the De-
panment of Housing and Urban Devel-
opment Act (42 U.S.C. 3535(d)).
~ 44.1 Purpose.
(a) This pan implements the general
audit requirements for recipient organiza-
tions in OMS Circular A-128 "Audits of
State and local governments." The OMS
Circular was issued under the Sin2le
Audit Act of 1984.31 U.S.C. 7501-7507.
OMB Circular A- 128 supersedes Attach-
ment P, "Audit requirements:' of Circu-
lar A-I02. "Uniform requirements for
grants to Slate and local governments."
. (I) This part repeats all substantive
audit requirements in OMS Circular A-
128. If any of the substantive audit re-
quirements in OMB Circular A-128 are
revised in the future, HUO shall promul-
gate regulations to conform this part to
those revisions.
(2) The diffcrence between the lan-
guage of this part and of OMS Circular A-
128 generally reflects only the substitu-
tion of cenain terms and phrases reflect-
ing the implementation of the Circular
into the codification for HUO regula-
tions. For example. in certain sections of
this part. references to "Federal agencies"
in the Circular have been changed to
"HUO" and references to "this Circular"
are replaced with "OMB Circular A-128:'
(b) The Single Audit Act requires State
or local governments that receivc
S I 00.000 or morc a year in Federal funds
to have an audit made for that year.
Section 7505 of the Act requires the
Director of the Office of Management
and Budget cOMB) to prescribe policies,
procedures and guidelines to implement
the Act. It specifies that OMS shall
designate "cognizant". Federal agencies,
determine critcria for making appropriate
charges to Fcderal programs for the cost
of audits, and provide procedures to
assure that small firms or firms owned
and controlled by disadvantage individu-
als have the opportunity to panicipate in
contracts for single audits.
(c) Concerning the applicability of the
audit requiremcnts of the Single Audit
Act. the Act requires:
(I) State or local governments that
receive S I 00,000 or more a year in Feder-
al financial assistance shall havc an audit
conducted in accordance with the Act's
requirements;
(2) State or local govcrnmcnts that
receive between S25.000 and S I 00.000 a
year shall have an audit conducted in
accordance with the Act's requirements
(Government-, Depanment-, agcncy- or
establishment-wide audit), or a grant-spe-
cific financial audit. Such financial audits
shall be performed in accordance with the
Government Auditing Standards for fi-
nancial audits issued by the Comptroller
General of the United States and include
the compliance tests described in OMB's
Compliance Supplement for Single Au-
dits of State and Local Governments for
the specific Federal assistance programs
invoived. For those programs not covered
by the Compliance Supplement. the fi-
nancial audit shall include any specific
compliance tests required bv HUD.
If the Federal assistance program is not
covered by the Compliance Supplement
PutlIisnec: oy W2rren. Gomam & Lamonl. Inc.
and if no compliance requirements have
been established by HUO, the auditor
shall design appropriate compliance tests
in accordance with government auditing
standards. Audits shall be conducted with
the frequency described at ~ 44.4.
(3) State or local governments that
receive less than S25,OOO a year shall be
exempt from compliance with the Act
and other Federal audit requirements.
These State and local governments shall
comply with audit requirements pre-
scribed by State or local law or regulation.
(d) The Act does not exempt State or
local governments from maintaining rec-
ords of Federal financial assistance or
from providing access to such records to
Federal agencies. as provided in Federal
law or in 24 CFR Part 85.
(e) The Act is applicable to State and
local governments with respect to any
fiscal year that begins after December 31.
1984.
~ 44.2 Definitions.
"Cognizant agency" means the Federal
agency assigned by OMS to carry out the
responsibilities described in this pan,
which incorporates OMS Circular A-128.
"Federal financial assistance" means
assistance provided by a Federal agency
in the form of grants, contracts, coopera-
tjve agreements, loans, loan guarantees,
property, interest subsidies. insurance, or
direct appropriations, but does not in-
clude direct Federal cash assistance to
individuals. It includes awards received
directl\' from Federal aeencies. or indi.
rectly 'through other units of State and
local governments.
"Federal agency" has the same mean-
ing as the term "agency" in section 551(1)
of Title 5. United States Code.
"Generally accepled accounting princi-
ples" has the meaning specified in the
generally accepted government auditing
standards.
"Generally accepted government audit-
ing standards" means the Standards For
Audit of Government Organi:arions. Pro-
grams. Acrivities. and Functions. devel-
oped by the Comptroller General. dated
February 27, 1981.
"HUO" means the Depanment of
Housing and Urban Development.
"Independent auditor" means:
(I) A Stale or local government auditor
who meets the independence standards
specified in generally accepted govern-
ment auditing standards: or
3
'09:1602
(2) A public accountant who meets
such independence standards.
"Indian tribe" means any Indian tribe,
band, nation, or other organized group or
community, including any Alaskan Na-
tive village or regional or village corpora-
tion (as defined in. or established under,
the Alaskan Native Oaims Settlement
Act) that is recognized by the United
States as eligible for the special programs
and services provided by the United
States to Indians because of their status as
Indians.
"Internal controls" means the plan of
organization and methods and proce-
dures adopted by management to ensure
that:
(I) Resource use is consistent with
laws. regulations, and policies;
(2) Resources are safeguarded against
waste, loss. and misuse; and
(3) Reliable data are obtained, main-
tained, and fairly disclosed in reports.
"Local government" means any unit of
local government within a State, includ-
ing a county, a borough, municipality,
city, town, township. parish, local public
authority, special district, school district,
intrastate district, council of govern-
ments, and any other instrumentality of
local government.
"Major Federal Assistance Program" is
defined in the Appendix to this part.
"Public accountants" means those in-
dividuals who meet the qualification
standards included in generally accepted
government auditing standards for per-
sonnel performing government audits.
I
HOUSING AND DE10PMENT REFORTEF.
"State" means any State of the United
States, the District of Columbia, the
Commonwealth of Puerto Rico, the Vir-
gin Islands, Guam. American Samoa, the
Commonwealth of the Northern Mariana
Islands, and the Trust Territory of the
Pacific Islands, any instrumentality there-
of, and any multi-State, regional, or inter-
state entity that has governmental func-
tions and any Indian tribe.
"Subrecipient" means any penon or
government department, agency, or es-
tablishment that receives Federal finan-
cial assistance through a State or local
government, but does not include an
individual that is a beneficiarY of such
assistance. A subrecipient may' also be a
direct recipient of Federal financial assis-
tance.
~ 44.3 Scope of audit.
(a) The audit shall be made by an
independent auditor in accordance with
generally accepted government auditing
standards covering financial and compli-
ance audits.
(b) The audit shall cover the entire
operations of a State or local government
or, at the option of that government, it
may cover departments, agencies or es-
tablishments that received, expended, or
otherwise administered Federal fmancial
assistance during the year. However, if a
State or local government receives
$25,000 or more in General Revenue
Sharing Funds in a flSCai year, it shall
have an audit of its entire operations. A
series of audits of individual depart-
PubIishecI by Warren. Gornam & Lamont Inc.
ments, agencies, and establishments for
the same fiscal year may be considered a
single audit.
(c) Public hospitals and public colleges
and universities may be excluded from
State and local audits and from the
requirements of this part. However, if
such entities are excluded, audits of these
entities sball be made in accordance with
statutory requirements and the provisions
of Circular A-I 10, "Uniform require-
ments for grants to universities, hospitals,
and other nonprofit organizations."
(d) The auditor shall determine wheth-
er:
(1) The financial statements of the
government, department. agency or es-
tablishment present fairly its financial
position and the results of its financial
operations in accordance with generally
accepted accounting principles;
(2) The organization has internal ac-
counting and other control systems to
provide reasonable assurance that it is
managing Federal financial assistance
programs in compliance with applicable
laws and regulations; and
(3) The organization has complied with
laws and regulations that may have a
material effect on its financial statements
and on each major Federal assistance
program.
~ 44.4 Frequency of audit.
Audits shall
unless the State
has adopted by
constitutional or
be made annually
or local government
January 1, 1987, a
statutory requirement
4
COMMUNITY DEVELtPMENT BLOCK GRANTS
:."
j
for less frequent audits. For those
governments, the cognizant agency shall
permit biennial audits. covering both
years, if the government 80 requests. It
sh.u, also honor requests for biennial
audits by governments that have an
administrative policy calling for audits
less frequent than annual. but only for
fiscal years beginning before Januai-y 1,
1987.
~.....5 1ntef'Mi controt 8IId compI'-'ce
revlewL
The independent auditor shall
determine and report on whether the
organization has internal control
systems to provide reasonable
assurance that it is managing Federal
assistance programs in compliance with
applicable laws and regulations.
(a) Internal control review. In order to
provide the above-described assurance,
the auditor shall conduct a study and
evaluation of internal control systems
used in administering Federal assistance
programs. The sludy and evaluation
shall be made whether or not the auditor
intends to place reliance on such
systems. As part of this review, the
auditor shall:
(1) Test whether these internal control
systeins are functioning in accordance
with prescribed procedures. and
(2) Examine the recipient's system for
monitoring subrecipients and obtaining
and acting on subrecipient audit reports.
(b) Compiiance review. The auditor
shall determine whether the
organization has complied with laws
and regulations that may have a
material effect on each major Federal
assistance program.
(1) In order to determine which major
programs are to be tested for
compliance, State and local
governments shall identify in their
accounts all Federal funds received and
expended and the programs under
which they were received. This shall
include funds received directly from
Federal agencies and through othet
State and local governments.
(2) The review shall include the
selection and testing of a representative
number of charges from each major
Federal assistance program. The
selection and testing of transactions
shall be based on the auditor's
professional judgment considering such
factors as the amount of expenditures
for the program and the individual
awards; the newness of the program or
changes in its conditions: prior
experience with the program.
particularly 8S revealed in audits and
other evaluations (e.g., inspections.
program.reviews): the extent to which
the program is carried ou. through
subrecipients:the extent to which the
program contracts for goods or services:
the level to which the program is
already subject to program reviews or
other forms. of independent oversight:
the adequacy of the controls for
ensuring compliance: the expectation of
adherence or lack of adherence to the
applicable laws and regulations: and the
potential impact of adverse findings.
(i) In making the test of transactions.
the auditor shall determine whether the
amounts reported as expenditures were
for allowable services or benefits, and
whether the records show that those
who received services or benefits were
eligible to receive them.
(ii) In addition to transaction testing,
the auditor shall determine whether
matching requirements. levels of effort
and earmaking limitations were met:
whether Federal financial reports and
claims for advances and
reimbursements contain information
that is supported by the books and
records from which the basic fmancial
statements have been prepared: and
whether amounts claimed or usej for
matchiD.g were determined in
accordance with OMB Circular A-87;
"Cost principles for State and local
governments." artd Attachment F of
OMB Circular A-I02.
(iU) The principal compliartce
requirements of the largest Federal aid
programs may be ascertained by
referring to the Compliance Supplement
for Single Audits of State and Local
Governments. issued by OMB and
ava.ilable from the Government Printing
Office. For those programs not covered
in the Compliance Supplement. the
F'ubIished by Warren. Gomam & Lamont, Inc.
I.
09:1603
HDR RF-306
10-28-85
auditor may ascertain compliance
requirements by researching the
statutes. regulations, and agreements
governing individual programs.
(3) Transactions related to other
. Federal assistance programs that are
selected in connection with
examinations of finartcial statements
artd evaluations of inft!rnal controls
shall be tested for compliance with
Federal laws artd regulations that apply
to such transactions.
(Approved by the Office of Management and
Budget under OMB control number 2535-
0094).
f 44.6 SubrectplentL
State and local governments that
receive Federal financi1ll assistance and
provide $25,000 or more of it in a fiscal
year to a subrecipient shall:
(a) Determine whether State or local
subrecipients have met the audit
requirements of this part artd whether
subrecipients covered by OMB Circular
A-UO. "Uniform requirements for grants
to universities, hospitals, and other
nonprofit organizations," have met those
requirements:
(b) Determine whether the
subrecipient spent Federal assistartce
funds provided in accordance with
applicable laws artd regulations. This
may be accomplished by reviewing an
audit of the subrecipient made in
accordance with this part. Circular A-
110. or through other means (e.g.,
program reviews) if the subrecipient has
not yet had such an audit;
(e) Ensure that appropriate corrective
action is taken within six months after
receipt of the audit report in instances of
noncompliance .With Federal laws and
regulations:
(d) Consider whether subrecipient
audits necessitate adjustment of the
recipient's own records: and .
(e) Require each subrecipient to
permit independent auditors to have
access to the records and finartcial
statements as necessary to comply with
this part. .
09: 1604
f 44.7 AeJatloMhlp to other 8UdIt
requlrwnenta.
(a) The Single Audit Act provides that
an audit made in accordance with OMS
Circular A-128 shall be in lieu of any
financial or financial compliance audit
required under individual Federal
assistance programs. To the extent that
a single audit provides HUD with
information and assurances the
Department needs to carry out its
overall program responsibilities. such
information shall be used. However. any
additional audits that are necessary to .
carry out responsibilities under Federal
law and regulation shall be planned and
carried out in such a manner as to avoid
duplication.
(b) HUD audifrequirements in this
part do not limit the authority of the
Department to conduct or contract for
audits and evaluations of Federal
financial assistance programs, nor do
these audit requirements limit the
authority of the HUD Inspector General
or other Federal audit officials.
(c) HUD audit requirements in this
part do not authorize any State or local
government or subrecipient thereof to
constrain HUD in any manner, from
carrying out additional audits.
(d) If HUD conducts or contracts for
audits in addition to the audits
conducted by recipients under this part.
the Department shall. consistent with
other applicable laws and regulations.
arrange for funding the cost of such
additional audits.
f 44.8 Cognizant agency responsibIIItIe
(a) The Single Audit Act provides for
cognizant Federal agencies to oversee
the implementation of this part. OMB
will assign cognizant agencies for States
and their subdivisions. and for larger
local governments and their
subdivisions. HUD may participate with
an assigned cognizant agenci. in order
to fulfill the cognizant responsibilities.
Smaller governments not assigned a
cognizant agency will be under the
general oversight of the Federal agency
that provides them the most funds.
whether directly or indirectly.
I
HOUSING AND DEVtLOPME1'\T REPORTER
(blIfHUD is designated as a
cognizant agency, it will:
(1) Ensure that audits are made and
reports are received in a timely manner
and in accordance with audit
requirements of this part.
(2) Provide technical advice and
liaison to State and local governments
and independent auditors.
(3) Obtain or make quality control
reviews of selected audits made by non-
Federal audit organizations..and provide
the results. when appropriate. to other
interested organizations.
(4) Promptly inform other affected
Federal agencies and appropriate
Federal law enforcement officials of any
reported illegal acts or irregularities.
They should also inform State or local
law enforcement and prosecuting
authorities. if not advised by the
recipient, of any violation of law within
their jurisdiction.
(5) Advise the recipient of audits that
have been found not to have met the
requirements in this part. In such
instances, the recipient will be expected
to work with the auditor to take
corrective action. If corrective action is
not taken. HUD shall notify the recipient
and Federal awarding agencies of. the
facts and make recommendations for
follow-up action. Major inadequacies or
repetitive substandard performance of
independent auditors shall be referred
to appropriate professional bodies for
disciplinary action.
(6) Coordinate. to the extent
practicable, audits made by or for
Federal agencies that are in addition to
the audits conducted under this part, so
that the additional audits build upon
such audits.
(7) Oversee the resolution of audit
findings that affect the programs of more
than one agency.
f 44.9 ....... 8Cts or ImtguI8rItIeL
If the auditor becomes aware of illegal
acts or other irregularities. prompt
notice shall be given to recipient
management officials above the level of
involvement. The recipient. in turn. shall
promptly notify the cognizant agency of
Published by Warren, Gorham & Lamont. Inc.
the illegal acts or irregularities and of
proposed and actual actions. if any.
Illegal acts and irregularities include
such matters as conflicts of interest.
falsification of records or reports. and
misappropriations of funds or other
assets.
f 44.10 Audit report&.
(a) Audit reports shall be prepared at
the completion of the audit. The audit
report shall state that the audit was
made in accordance with the provisions
of HUD requirements at 24 CFR Part 44.
The report shall be made up of at least:
(1) The auditor's report on financial
statements and on a schedule of Federal
assistance: the financial statements: and
a schedule of Federal assistance.
showing the total expenditures for each
Federal assistance program as identified
in the Catalog of Federal Domestic
Assistance. Federal programs or grants
that have not been assigned a catalog
number shall be identified under the
caption "other Federal assistance."
(2) The auditor's report on the study
and evaluation of internal control
systems must identify the organization's
significant internal accounting controls.
and those controls designed to provide
reasonable .assurance that Federal
programs are being managed in
compliance with laws and regulations. It
must also identify the controls that were
evaluated. the controls that were not
evaluated. and the material weaknesses
identified as a result of the evaluation.
(3) The auditor's report on compliance
containing:
(i) A statement of positive assurance
with respect to those items tested for
compliance. including compliance with
law and regulations pertaining to
fmancial reports and claims for
advances and reimbursements:
(ii) Negative assurance on those items
not tested:
(Hi) A summary of all instances of
noncompliance: and -
(iv) An identification of total amounts
questioned. if any. for each Federal
assistance award. as a result of
noncompliance. .
COMMUNITY DEVElOPMENT BLOCK GRANTS
i
I
/
/
/
(b) The three parts of the audit report
may be bound into a single report, or
presented at the same time as separate
documents.
(c) All fraud. abuse, or illegal acts or
indications of such acts. including ..n
questiOned costs found ... the result of
these acts that auditors become aware
of. should normaUy be covared in a
separate written report submitted in
accordance wilD: paragraph (f).
(d) In addition to the audit report. the
recipient shall provide qamments on the
findings and recommendations in the
report; including a plan for corrective
action taken or planned and comments
on the status of corrective actions taken
on prior findings. If corrective action is
not necessary, a statement describing
the reason it is not should accompany
the audit report.
(e) The reports shall be made
available by the State or local .
government for public inspection within
30 days after the completion of the
audiL
(f) In accordance witjl generally
accepted government audit standards.
reports shall be submitted by the auditor
to the organization audited and to tho,e
requiring or arranging for the audiL In
addition, the recipient shall submit
copies of the reports to each Federal
. department or agency that provided
Federal assistance funds to the
recipienL Subrecipients shall submit
copies to recipients that provided them
Federal assistance funds. The reports
shall be sent within 30 days after the
completion of the audit,. but no later
than one year after the end of the audit
period. unless a longer period is agreed
to with the cognizant agency.
_ (g) Recipients of more than S100,000 in
Federal funds shall submit one copy of
the audit report. within 30 days after
issuance, to a central clearing hoWle,
desipated by OMS. The clearing house
will keep completed audits on me and
follow up with State and local
governments that have not submitted
required audit reports.
(h) Recipients shall keep audit reports
on me for three yeais after their
iauance.
(Approved by the Office of ....n..........t and
Badpt UDder OMS coatrol Dumber 2535-
OOM.) -
, .....11 AudIt ............
(a) Aa described in 144.8, the
cognizant agency shall be responsible
for monitoriDg the resolution of audit
findinss that affect the prognans of more
than one Federal agency. Resolution of
findings that relate to the programs of a
single Federal agency will be the
responsibility of the recipient and that
agency. Alternative arrangements may
be made on a case-by-cue basis by
&greeIIlettt among the agencies
concerned.
(b).Reso1ution.aha1l be made within
six months after receipt of the report by.
the Federal departmena and agencies.
CorreCtive action should proceed as
rapidly 88 poeaible.
'.....12 AUdIt~ ~ reparD.
WorkjJapers and repor1a shall be
retained for a minimum of three yeus
from the date of the audit report. unless
the auditor is notified in writing by the
cognizant agency to extend the retention
period. Auditworkpapera shall be made
available upon request to the cognizant
agency or its desigpee or the Gener8l
Accounting Office. at the completion of
the audit
(Approved by the Office of Maaqement and
Budpt under OMS control number 2535-
OOM.)
'.....13 AudIt C08tL
The cost of audits made in accordance
with the audit requirements of this part
are allowable charges to Federal
assistance programa.
(a) The charges may be considered a
direct cost or an allocated indirect coat,
determined in accordance with the
provisions of OMB Circular A~, "Coat
principles for State and local
govemments. "
Published by Warren. Gorham & Lamont. Inc.
I
09: 1605
HDR RF-373
5-9-88
(b) Generally, the percentage of coats.
charged to Federal assistance prosrams
for a single audit shall. not. exceed the
percentage that Federal funds expended
represent of total funds expended by the
recipient during the fiscal year. The
percentage may be exceeded. however,
if appropriate documentation
demonstrates higher. actual. cosL
f 44.14 s.nctIonL
No cost may be charged to Federal
assistance programa for audits that are
reqUired by this part. but.are not
conducted in accordance with the audit
requirements of this part. In case of a
recipient's con~u8dinability or'
unwillinsn~s!, t.6 ha~a proper-ndit.
Federal agencies shall conaider- other
appropriate sanctions. inc1udin8:
(a) Withholding a percentage of
assistancep.YlDents until the audit is
completed satisfactorily;
(b) Witholding or disallowing
overhead costs; and
(c) Suppendingthe Federal assistance
agreeli1eiif until the audit is made. .
~ 44.15 Auditor selection.
In arranging for audit services. State
and local governments shall follow the
procurement standards prescribed 24
CFR Part 85.36. The standards provide
that while recipients are encouraged to
enter into intergovernmental agreements
for audit and other services, analysis
should be made to determine whether it
would be more economical to purchase the
services from private firms. In instances
where use of such intergovernemntal
agreements are required by a State statute
(e.g., audit services) the State statute will
take precedence.
f .....18 Sm8II 8IId IMIortty 8UdIt tInn&.'
Small audit firms, and audit firms
owned and controlled by socially and
economically disadvantaged
individuals. shall bavethe maximum
7
f .
'. 09:1606
practicable opportunity to participate in
contracts awarded to fulfill the audit
requirements of this part. (As used in
this. section, tbeterm "small. audit firms"
includes the term "audit firms controlled
by socially and economically
diladvantage individuals''.) Recipients
of Federal assistance sball take the
following steps to further this goal:
(a) Assure thatsmall audit firms are
used to the fullest extent practicable;
(b) Make information on forthcoming
opportunities available to. and arrange
time schedules for the audit so as to
encourage and facilitate participation
by, small audit firms;
(e) Consider in the contract proce88
whether firms competing for larger
audits intend to subcontract with small
audit fmns;
(d) Encourage contracting with small
audit fmns that have traditionally
audited government programs and, in
cases where this is not possible, asaure
that these firms are given consideration
for audit subcontracting opportunities;
(e) Encourage contracting with
conaortiuma ohmall audit firms when a
I
HOUSING AND DEVILOPMENT REPORTER
contract is too large for an individual
small firm: and
(f) Use the services and auistanC8, as
appropriate, of the Small Business
Adin1aistration in the solicitation and-
utillaUon of imall audit firms.
144.17 RlportII..
HUD shall report to the Director of
OMBon or before March 1, 1987. and
annually thereafter. on the effectiveness
of State and local governments in
carrying out the requirements of the
OMB Circular. The report shall identify
each State or local government or Indian
tribe that. in the opinion ofHUD, has
failed to comply with OM! Circular or
with this'part.
144.1" MUD.....
(8) The Secretary of HUDor the
Secretary's authorized representative
shall have acceas to all books. accounts.
recorda, reports, files and other papers
or property of a recipient organization
pertaining to Federal aaaistance
supplied by'HUD to the recipient
ol'li~tion, for the purpose ofmaking
Published by Warren. Gorham & Lamont, Inc.
specific suveys, audits. examinations,
excerpts and transcripts.
Appeadix to. Part *-DefiDitioD of Major
Program .. Provided iD the SiDgle Audit Act
of 1"
'"Major Federal Assistance Program." for.
State and local govemmeBts haviD8 Federal
aAistance expenditures between $100.000
and $100 million dol1ara, nieans any prolJl'lUD
far which Federal expenditures during the
applicable year excaed the larger of S3OO.000.
or 3 percent of such total expenditures.
Where total expenditures of Federal
assistance exceed $100 milllon. the following
criteria apply:
Tllc.I ~ of ~ .........
......... for all pIOQI'8IlIlI
Majer. ~
~
pougram
-- any
progrwn 1Ilat
~
Mare __
IluI _ __
5100 rniIIlan._ 51 bIIIIlln._..___ S3 miIlIan;
51 bIIIlln S2 bIIIlln______ 54 million.
S2 IiIIlan S3 llIIlian---,... $7 milIian.
S3 bIIIlln__ 54 biIIion_.. $10 milliOn.
54 bIIIlln_~ 55 lliUIon___ 513 million.
55 billion sa IIilIian $18 miHIon.
58 tiIIian__ $7 billion $19 millian.
0.. 57 bIIIlln___. ______ S20 miIIIan.
8